Final Results - Full Details
BPT PLC
14 June 2000
FULL DETAILS
BPT BEATS NAV MARKET EXPECTATIONS AT 373p PER SHARE
The Directors of BPT plc (formerly called The Bradford Property
Trust PLC), the largest quoted owner of tenanted residential
properties in the private rented sector in the UK, reports its
preliminary audited results for the year ended 5 April 2000.
Financial Highlights
Operating profit increased 13% to £51.0m (1999 £45.3m before
exceptional items)
Profit before tax increased 14% to £38.9m (1999 £34.0m before
exceptional items)
Earnings per ordinary share increased 13% to 18.43p (1999 16.34p before
exceptional items)
Dividend per ordinary share increased 9% to 10.70p (1999 9.80p)
Net asset value increased from £409.5m to £548.9m
Net asset value per ordinary share increased 34% to 373p (1999 279p)
Corporate Highlights
Value of property portfolio increased in year from £565.9m to £760.8m.
Strong growth in housing values, especially in the South East of England,
supported by external sample valuation from Allsop & Co Invested over
£100m in year in acquiring residential properties including five corporate
acquisitions.
Number of residential property units increased in the year from 10,734 to
11,390.
First entry in the public eurobond market through the issue of £75m 6.90% Bonds
2014 in July 1999.
Comment on the prospects for the group, Chairman Philip Warner said:
'Although the exceptional rate of growth since early 1999 in UK
housing capital values is unlikely to be sustained, continuing
favourable fundamentals such as relatively low interest rates lead
the Board to anticipate continued growth throughout 2000.
In addition, the Internet and e-commerce offer new opportunities
for marketing residential properties for rent, which the group is
actively pursuing.
From the number of proposals being reviewed by BPT's management
team, I expect another active year and continuing success in
delivering BPT's strategy.'
For further information contact:
BPT plc Citigate Dewe Rogerson
Tim Watts, Managing Director
Keeley Middleton
Tel: 020 7638 9571 (today)
Tel: 020 7638 9571 (today)
01372 743113 (thereafter)
0113 2979899 (thereafter)
Nigel Denby, Finance Director
Tel: 020 7638 9571 (today)
01274 723181 (thereafter)
CHAIRMAN'S STATEMENT
Review of the Year
I am pleased to report further excellent progress with operating
profit increasing by 13% to £51.0m (1999 £45.3m before exceptional
items relating to the profit generated on the sale of land and
commercial property at Martlesham Heath), profit before tax by 14%
to £38.9m (1999 £34.0m before exceptional items) and earnings per
ordinary share by 13% to 18.43p (1999 16.34p before exceptional
items).
The directors recommend a final dividend per ordinary share of
6.00p (1999 5.40p) making a total for the year of 10.70p (1999
9.80p), an increase of 9%. If approved by shareholders, the final
dividend will be paid on 4 August 2000 to ordinary shareholders on
the register on 7 July 2000.
On revaluation of all property assets and the listed fixed asset
investment (in Mountview Estates PLC) the pre-tax net asset value
of each ordinary share increased by 34% to 373p at 5 April 2000
(1999 279p).
These excellent results arise against the background of strong
growth in housing values and a record year of activity for BPT.
BPT's management team has handled over 2,500 vacant residential
property units, selling £65.7m worth of property and investing over
£100m acquiring residential property assets.
Last year I referred to the introduction in February 1999 of
Government imposed limits on increases in regulated rents.
However, in January 2000 the Court of Appeal decided, following a
judicial review, that the secondary legislation introduced by
Government was unlawful. Since then increases in regulated rents
are only subject to the normal fair rent rules as determined by
rent officers.
In June 1999 Fitch IBCA published a credit rating report on the
Company and assigned a long term investment grade credit rating of
A-. In July 1999 the Company made its first entry into the public
eurobond market by issuing £75m 6.90% Bonds 2014. This improved
the debt term profile and gave the Company competitive fixed rate
longer term debt.
Business Strategy
BPT continues to implement a clear and consistent business
strategy. It is focused on the private rented residential sector
to deliver long term total returns to shareholders through growth
in both earnings and asset value. This year represents another
year of management successfully delivering that strategy.
The private rented residential sector is continuing to gain more
interest and direct investment from institutions. Two particular
features of the sector deserve comment. Firstly, given that this
type of property investment is management intensive, economies of
scale through portfolio size delivers above average performance.
Secondly, returns are related to the quality of residential
management, of which generally in the UK there is a lack, which
presents a significant barrier to new entrants. BPT, with its size,
experienced residential management team and market leadership is in
a strong position.
The Board has become increasingly concerned at the disappointing
share price performance over the past few months, particularly in
view of the Company's excellent operational results. The quoted
property sector now amounts to less than 2% by value of the FTSE
All Share Index and there are clear signs that institutional
investors are marginalising the sector and are looking at other
methods of investing in commercial and residential property.
The Board continues to believe that the residential investment
market offers attractive opportunities for BPT and that BPT's
strategy remains sound. However, the Board is concerned that BPT's
ability to continue to expand the business will be constrained by
the limited size of the group's existing balance sheet and lack of
institutional support in the public equity markets to fund BPT's
anticipated growth.
Accordingly, the Board is undertaking a detailed review with its
professional advisors on how BPT can best pursue its strategic
development and achieve value for shareholders. This review will
be completed by the end of July. It will include an analysis of
ways in which BPT can further improve the performance of the
business through enhancing the quality and operational performance
of the asset portfolio (including use of the internet to market
residential property for rent), reducing BPT's cost of capital and
restructuring the Company to allow BPT to access equity and debt
from a wider range of capital markets. The Board's objective is
significantly to reduce the present large and, in the Board's view,
unwarranted discount of the share price to net asset value.
A resolution is being proposed at the Annual General Meeting this
year which, if approved, will increase the authority to buy back up
to 14.9% of the Company's issued ordinary share capital.
Management and the Board
In August 1999 the appointment of Christopher Kemball was announced
as an additional independent non-executive director. In November
1999 it was announced that, with effect from 1 January 2000, James
Story would join the Board as Property Director, North.
Prospects
Although the exceptional rate of growth since early 1999 in UK
housing capital values is unlikely to be sustained, continuing
favourable fundamentals such as relatively low interest rates lead
the Board to anticipate continued growth throughout 2000.
In addition, the Internet and e-commerce offer new opportunities
for marketing residential properties for rent, which the group is
actively pursuing.
From the number of proposals being reviewed by BPT's management
team, I expect another active year and continuing success in
delivering BPT's strategy.
Philip Warner
Chairman
14 June 2000
OPERATING AND FINANCIAL REVIEW
Financial Results for 1999/2000
Operating profits for the year grew by 13% to £51.0m in comparison
to £45.3m (before exceptional items) in the previous year. Net
rental income increased by 9% from £26.9m to £29.2m and property
trading profits increased by 18% from £21.1m to £24.8m. Last year
the group earned an exceptional trading profit of £16.8m. Profit
before tax grew by 14% to £38.9m (1999 £34.0m before exceptional
items).
Earnings per ordinary share were 18.43p (1999 16.34p before
exceptional items), an increase of 13% over last year.
Net rental income as a percentage of gross rental income was 73.2%
this year in comparison to 72.7% the year before. Over the last
ten years the percentage of net to gross rental income has
increased from 61.9% to 73.2%. Costs charged against gross rental
income include those associated with the repair, maintenance,
refurbishment, letting and insurance of property together with an
apportionment of internal management expenses. Local letting
agents' fees increased by £0.1m in the year as progressively more
of the residential portfolio is let at market rents. This includes
the first time letting costs for new residential properties
acquired from housebuilders.
Costs associated with the acquisition of property stock, including
higher rates of stamp duty of up to 31/2% of cost, are written off
against trading profits and were £1.1m in the year.
Interest payable increased from £12.5m to £14.6m this year
reflecting a higher level of borrowings and a premium paid of £0.3m
on the repayment of unsecured sterling bonds. Interest was covered
3.66 times (1999 3.72 times) by profit and by 1.79 times (1999 1.93
times) by net rental income less administration expenses.
An interim dividend of 4.70p (1999 4.40p) per ordinary share was
paid in January 2000. The directors are recommending a final
dividend of 6.00p (1999 5.40p) per ordinary share payable in August
2000, making a total of 10.70p (1999 9.80p) for the year, an
increase of 9%. Dividend cover this year is 1.72 times in
comparison to 1.67 times (before the effect of exceptional items)
last year.
Market Conditions
The reductions in interest rates towards the end of 1998 and early
in 1999 did, as anticipated, create a more favourable climate for
the UK housing market. This year, overall growth in vacant
possession housing values was particularly strong, especially in
the final quarter of the year. Following the trend of previous
years, the South East of England has continued to experience the
strongest levels of growth particularly within the greater London
area. The modest rises in interest rates towards the end of this
financial year, given that interest rates are still at a relatively
low historic level, should not materially affect continuing house
price growth other than to possibly lower its rate.
Over the year as a whole, vacant possession values of the whole
residential portfolio grew by an average of 30%, with a range of
increases of up to 10% in the North of England portfolio, 17% in
the Midlands and 35% in the South of England.
The residential investment market remains strong and competitive as
witnessed by recent auction results. Three residential investment
funds were launched during the year by institutional investors and
have the potential to invest over £800m in the sector.
The expansion of the private investor 'buy-to-let' market, promoted
by managing agents, has increased the supply side, especially in
city centre locations. This has held back growth in some market
rents, most notably central London, however tenant demand
experienced by BPT for new, quality residential properties for rent
remains strong.
Rental Income
Growth in regulated rents was reported at the interim stage to be
at an equivalent annual average of 6%, the maximum level then
allowed. This is lower than the 9% reported in the previous year
due to the effect of the introduction by the Government of
regulated rent increase capping in February 1999. For the year as
a whole, those regulated rents reviewed (every two years) increased
by 12% or an equivalent annual average of 6%. In January 2000, the
Court of Appeal found the capping to be unlawful and since then
there has been no limit on the level of regulated rent increase
that can be applied for. The Company decided to apply for the
correct fair rents to be charged with effect from the end of March
2000 for those registered rents previously subject to capping.
Growth in those market rents (assured and assured shorthold
tenancies) reviewed and on properties relet within BPT's portfolio
was at an average of 5%, in comparison to 7% last year.
At 5 April 2000, the total annualised rent roll of the group
(excluding ground rent income) was £41.8m, a net increase of £4.8m
in the year. This included an increase of £0.3m in regulated rents
following the removal of rent capping. The factors affecting
movements in the rent roll in the year are analysed as:
Rent Roll Movement
1999/2000 1998/1999
Rent roll at beginning of year £37.0m £34.3m
Rent forgone through sales £(2.5)m £(3.6)m
Rent addition through acquisitions £5.5m £4.1m
Rent increase on rent reviews, tenancy £1.8m £2.2m
conversion to market rents and net effect of
relet of vacants
Rent roll at end of year £41.8m £37.0m
Residential Commercial Total Rent
Market Roll
Regulated Rents
1999 £20.1m £14.9m £2.0m £37.0m
2000 £20.8m £19.2m £1.8m £41.8m
The proportion, by number of units, of the group's residential
portfolio let on regulated and other types of tenancies over the
last five years are:
Regulated Assured,
& Life Assured
Tenancies Shorthold
Tenancies and
Vacants
1996 75% 25%
1997 71% 29%
1998 67% 33%
1999 65% 35%
2000 62% 38%
Sales Activity
The overall level of sales activity increased over the previous
year through the group taking advantage of both the buoyant housing
market and increasing capital values. The total number of
residential properties sold (generally vacant and previously
occupied by regulated tenants) increased by 33% from 775 units last
year to 1,029 units this year. The average residential unit sales
value increased by 4% from £60,200 to £62,600, however this average
can be significantly affected by changes in the geographic sales
mix. This year a larger proportion of sales came from the North of
England.
In addition to sales of residential properties, sales from the
remaining commercial portfolio were made generating revenues of
£1.5m. Further sales of commercial properties can be anticipated
in the future.
Total gross revenues of £55.6m (1999 £46.5m before exceptional
property sales) were realised in the year from sales of property
stock and £10.1m (1999 £1.9m) from sales of investment properties.
Refurbishment Activity
This year saw the completion of the refurbishment projects at the
Upper Rissington, Thurlby St.Hughes, Huntingdon, St.Ives and Yaxley
estates. A further 97 houses on these estates were sold in the
year for gross revenues of £8.9m with the majority of the balance,
at this stage, being retained for the rental market.
The medium term refurbishment programme on the Cooper Lane estate
in Bradford has continued and an extensive refurbishment of the
Moor Court block of 56 apartments in Gosforth, Newcastle, at a cost
of £2.6m, was completed in the year. It is planned that a major
refurbishment of the San Remo apartments in Boscombe, Bournemouth
will commence later in 2000.
Corporate Activities
During the year the Company acquired, at a cost of £22.8m, six
companies which included as part of net assets acquired, an
aggregate residential portfolio of 574 units, valued at £26.6m.
These are described below.
On 30 April 1999 the Company acquired Residential Leases Limited
and Residential Tenancies Limited from Pemberstone PLC for a cash
consideration of £18.7m including funding the repayment of £16.1m
of inter-company loans from the vendors. The portfolio comprised
391 houses and apartments and had an agreed open market value of
£18.8m. On acquisition, the portfolio generated gross annual
rental income of £1.5m and all lettings were at market rents.
On 27 August 1999 the Company acquired UBI Investments Limited
(since renamed BPT (Oulton Properties) Limited) for £1.2m. The
consideration comprised the issue of 400,799 BPT ordinary shares at
a price of 249.5p and a cash payment of £0.2m. The portfolio,
comprising 80 houses and apartments in Oulton, Leeds, with the
majority let on regulated tenancies, had an agreed open market
value of £2.3m, and generated a gross annual rental income of
£0.2m. Net borrowings of £1.1m were assumed with this acquisition.
On 9 November 1999 the Company acquired Hamsard 5064 Limited (since
renamed BPT (Scotland) Limited) from Pemberstone PLC for a cash
consideration of £1.4m. The portfolio, comprising 24 houses and
apartments in Lothian, Scotland, has an agreed open market value of
£1.5m. On acquisition the portfolio generated a gross rental
income of £0.1m, all at market rents.
On 17 February 2000, the Company acquired the 50% of a joint
venture company, Leyton Properties Limited, it did not own from
Warner Estate Holdings PLC, a substantial BPT shareholder, for a
cash consideration of £0.9m. The portfolio, comprising 79
maisonettes and freehold ground interests in a further 322
maisonettes in Leyton, E10 and Walthamstow, E17, had an agreed open
market value of £4.0m and generated a gross rental income of £0.2m.
All but one of the maisonettes were let on regulated tenancies.
Net borrowings of £1.6m were assumed with this acquistion.
Acquisition Activity
During the year the group in total acquired 1,685 residential
property units (including the corporate acquisitions referred to
above) at a cost of £99.3m (1999 £67.7m). Further details are
described below. In addition £3.9m (1999 £5.3m) was incurred
refurbishing vacant houses and apartments, as described earlier.
Completed purchases of property stock in the second half year
totalled £23.9m, in addition to £16.8m previously reported at the
interim stage, making £40.7m (1999 £41.6m) for the year as a whole.
This included £10.7m (1999 £2.8m) on acquiring interests in 289
properties subject to life tenancy reversions under the brand BPT
(Bridgewater) and 299 properties subject to regulated tenancies.
Completed acquisitions of residential investment properties by BPT
(Assured Homes) in the second half year totalled £16.2m, in
addition to £15.8m previously reported at the interim stage, making
£32.0m (1999 £26.7m) for the year as a whole.
Relationships with national housebuilders continue to develop and
acquisitions of 351 new houses and apartments were completed in the
year from Beazer Homes, Bovis Homes, Crest Homes, Linden Homes,
Laing Homes, Prowting Homes, St.David and Wimpey Homes. The
development of a further 46 new houses and apartments by Jackson
Building at Martlesham Heath, near Ispwich was also completed.
A number of tenanted portfolios, let at market rents, were also
acquired including 36 houses, previously in a BES portfolio, from
Persimmon Homes, and 41 houses and apartments from Pemberstone
PLC.
As at the year end, Crest Homes is contracted to convert a block in
Ilkley, West Yorkshire into 18 apartments and land has been
acquired from Crest Homes comprising a site in Swindon, two sites
in Beckenham and a site in Putney, SW15. Crest Homes are
contracted to build 71 apartments on these sites. These land
purchases have only been undertaken with back-to-back fixed price
building contracts. The group is therefore not taking any
development cost risk on new build purchases. In addition, a
contract has been exchanged with Shepherd Homes for the
construction of 12 apartments in York.
Since the year end, a land site in Headingley, Leeds has been
acquired from Crest Homes and they have been contracted to build 36
apartments on the site.
Property Portfolio and Valuation
At 5 April 2000, the directors' open market valuation of the whole
of the investment property portfolio and property stock was £181.2m
(1999 £106.6m) and £579.6m (1999 £459.3m) respectively, making a
total of £760.8m (1999 £565.9m) for the group's property assets.
This results in a valuation surplus on property stock of £297.7m
(1999 £200.9m) above the book value of £281.9m (1999 £258.4m)
reported in the consolidated balance sheet.
The current basis of valuing tenanted residential property is
firstly to assess the current vacant possession value of each
individual unit and then to discount that value due to the type of
tenancy involved. At 5 April 2000 the vacant possession value of
the whole residential portfolio (excluding land sites, garages and
freehold ground interests) was approximately £986.3m (1999
£712.3m). Discounts applied to this value vary due to a number of
factors but broadly comprise around 30% in respect of regulated
tenancies, around 10% in respect of market rented tenancies and
vacants, and the relevant actuarially based discount in respect of
life tenancies.
A broad analysis (based on the open market valuation) between the
residential property portfolio and other types of property assets
is:
Residential Commercial and Total
Property Sundry Property
1998 £467.8m (91%) £47.5m (9%) £515.3m
1999 £547.0m (97%) £18.9m (3%) £565.9m
2000 £743.1m (98%) £17.7m (2%) £760.8m
The residential portfolio of 5 April 2000 is analysed as:
No. of Open Gross Rents
Units Market (5.4.2000)
Value Current ERV
2000 1999 2000 1999
£m £m £m £m
Regulated tenancies 6,273 6,432 403.7 315.4 20.8 26.6
Life tenancy 810 549 34.4 19.4 0.1 0.1
reversions/Occupational
leases
Assured tenancies etc 3,698 3,031 249.9 164.5 18.7 18.7
(market rents)
Vacant property (in progress 609 722 41.9 42.3 - 1.4
to sell/let)
11,390 10,734 729.9 541.6 39.6 46.8
Other interests (land
sites/freehold ground 13.2 5.4 0.4 0.4
rents/garages etc)
743.1 547.0 40.0 47.2
External Valuation Review
Allsop & Co carried out a valuation of 2,158 residential properties
which represent a sample of approximately 20% by number of BPT's
residential property portfolio. The sample was chosen by Allsop &
Co so as to be representative of the group's entire residential
portfolio, including those disclosed as investment properties. All
the properties that Allsop & Co valued were inspected externally
(but no internal inspections were undertaken). Allsop & Co
compared their aggregate Open Market Valuation of the sample
properties in the sum of £144.1m with the corresponding valuation
of the same properties which was prepared by the Company
independently of Allsop & Co in the sum of £142.9m. Allsop & Co is
satisfied that the 20% sample of the portfolio valued is
representative of the whole portfolio, and the Company confirmed
that a uniform approach was adopted in the preparation of the
valuation of the overall portfolio. Accordingly, Allsop & Co have
reported that they feel able to express a high degree of confidence
in the valuation given by the Company of the overall portfolio.
Shareholders Funds/Net Asset Value
Shareholders' funds at 5 April 2000 totalled £242.7m (1999
£201.4m), an increase of £41.3m in the year.
After adjusting for the surplus valuation between the open market
value and book value of property stock, and the revaluation of the
listed fixed asset investment (in Mountview Estates PLC), net asset
value increased in the year by 34% from £409.5m to £548.9m. This
gave a pre-tax net asset value per ordinary share of 373p in
comparison to 279p a year ago, an increase of 34%.
Financing
Net borrowings (before issue costs) increased during the year from
£152.8m at 5 April 1999 to £211.4m at 5 April 2000. At 5 April
2000 this represented gearing of 39% (1999 37%) based on the net
asset value of £548.9m, after incorporating the open market
valuation of property stock, or 87% (1999 76%) based on reported
shareholders' funds of £242.7m. All borrowings are unsecured.
In June 1999 Fitch IBCA published a detailed credit rating report
on the Company and assigned a long term investment grade credit
rating of A-.
In July 1999, the Company issued £75m 6.90% Bonds 2014, listed on
the London Stock Exchange. £15m of the £40m 7.143% unsecured
sterling bonds 2014, originally issued in March 1998, were repaid
during the year. As a consequence the overall average term
profile of the group's borrowings was extended from 6 years to 8.5
years.
At 5 April 2000, 93% (1999 90%) and 7% (1999 10%) of net borrowings
were paying fixed and variable rates of interest respectively. The
Company has a number of interest rate swap contracts on a notional
principal of £30.0m, swapping fixed rate interest payments into
variable rate. After allowing for these swap contracts, interest
costs on 79% (1999 71%) of borrowings are fixed and 21% (1999 29%)
are variable.
Based on the profile of gross borrowings at the year end, the
average annual interest rate cost (after allowing for the effect of
interest rate swap contracts) was 7.4% (1999 7.3%).
Disclosures under FRS 13 are required to show the notional effect
of the fair value adjustment of marking fixed rate debt to current
market rates. As at 5 April 2000, the net overall effect,
including the effect from interest rate swap contracts, would be a
reduced 'liability' of £0.1m before tax (1999 additional
'liability' of £7.4m)
Tim Watts, Managing Director
Nigel Denby, Finance Director
14 June 2000
BPT plc
Consolidated Profit and Loss Account
for the year ended 5 April 2000
2000 Excluding 1999
Exceptional Exceptional
Item Item
Notes £'000 £'000 £'000 £'000
Turnover including share of
joint ventures
Continuing operations 94,060 83,669 28,025 111,694
Acquisitions 1,410 - - -
95,470 83,669 28,025 111,694
Less: Share of joint (70) (97) - (97)
ventures
Turnover 1 95,400 83,572 28,025 111,597
Cost of sales and other (41,395) (35,521) (11,196) (46,717)
property outgoings
54,005 48,051 16,829 64,880
Administrative expenses 1 (3,025) (2,756) - (2,756)
Operating profit 1
Continuing operations 50,356 45,295 16,829 62,124
Acquisitions 624 - - -
50,980 45,295 16,829 62,124
Share of operating profit 60 75
of joint ventures
Operating profit including 51,040 62,199
joint ventures
Profit on sale of 1,524 459
investment properties
Investment income 902 666
Profit on ordinary 53,466 63,324
activities before interest
Interest payable and (14,608) (12,503)
similar charges
Profit on ordinary 38,858 50,821
activities before taxation
Tax on profit on ordinary (11,716) (15,956)
activities
Profit for the financial 27,142 34,865
year
Dividends on equity and non- 2 (15,844) (14,492)
equity shares
Retained profit for the 11,298 20,373
financial year
Earnings per ordinary share 3 18.43p 23.74p
Earnings per ordinary share 3 18.43p 16.34p
(excluding exceptional items)
Fully diluted earnings per 3 18.40p 23.69p
ordinary share
Fully diluted earnings per 3 18.40p 16.31p
ordinary share
(excluding exceptional items)
BPT plc
Other Primary Statements
Statement of Total Recognised Gains and Losses
for the year ended 5 April 2000
2000 1999
Notes £'000 £'000
Profit for the financial year 27,142 34,865
Unrealised surplus on revaluation of 28,396 2,502
investment properties
Share of joint venture's unrealised surplus on
revaluation of 549 224
investment properties
Tax on realisation of property revaluation
gains of (227) (238)
previous years
Total recognised gains for the year 55,860 37,353
Statement of Historical Cost Profits and
Losses
for the year ended 5 April 2000 2000 1999
£'000 £'000
Reported profit on ordinary activities before 38,858 50,821
taxation
Realisation of investment property revaluation 1,881 1,341
gains of previous years
Share of realisation of joint venture's
investment property 65 30
revaluation gains of previous years
Historical cost profit on ordinary activities 40,804 52,192
before taxation
Historical cost profit for the year retained 13,017 21,506
after taxation and dividends
Reconciliation of Movements in Shareholders'
Funds 2000 1999
£'000 £'000
Profit for the financial year 27,142 34,865
Dividends paid or proposed 2 (15,844) (14,492)
Shares issued in part consideration for 1,000 -
acquisition
Share options exercised 207 150
Other recognised gains and losses (net) 28,718 2,488
Net increase in shareholders' funds 41,223 23,011
Opening shareholders' funds 201,434 178,423
Closing shareholders' funds 242,657 201,434
BPT plc
Consolidated Balance Sheet
at 5 April 2000
Notes Group
2000 1999
£'000 £'000
Fixed assets
Intangible assets 610 -
Tangible assets 183,053 107,840
Investments:
Joint ventures:
Share of gross assets - 1,589
Share of gross liabilites - (162)
Loan accounts - 120
- 1,547
Other investments 16,150 15,564
199,813 124,951
Current assets
Property stock 281,868 258,396
Debtors 4,175 4,288
Cash at bank and in hand 3,985 6,958
290,028 269,642
Creditors
Amounts falling due within one year 4/5 (58,584) (56,717)
Net current assets 231,444 212,925
Total assets less current liabilities 431,257 337,876
Creditors
Amounts falling due after more than 4/5 (188,193) (136,192)
one year
Provisions for liabilities and charges (407) (250)
Net assets 242,657 201,434
Capital and reserves:
Called up share capital 8,890 8,863
Share premium account 8,505 7,325
Revaluation reserve 57,241 30,242
Capital redemption reserve 127 127
Merger reserve 8,891 8,891
Profit and loss account 159,003 145,986
Shareholders' funds
Equity 241,112 199,889
Non-equity 1,545 1,545
242,657 201,434
BPT plc
Consolidated Cash Flow Statement
for the year ended 5 April 2000
2000 1999
Notes £'000 £'000
Net cash inflow before property stock 79,752 91,849
acquisitions
Acquisition of property stock (44,613) (46,551)
Net cash inflow from operating activities 6 35,139 45,298
Dividend received from joint venture 1,000 -
Returns on investments and servicing of 7 (14,007) (11,765)
finance
Taxation (16,774) (10,380)
Capital expenditure and financial investment 8 (23,878) (29,986)
Acquisitions 9 (23,292) -
(41,812) (6,833)
Ordinary dividends paid (equity) (14,786) (13,744)
Net cash outflow before liquid resources and (56,598) (20,577)
financing
Management of liquid resources
(Increase)/decrease in short term deposits 6,900 (6,900)
with banks
Financing
Issue of ordinary share capital 207 150
Debt due within a year:
Increase/(decrease) in short term bank (2,000) 11,500
borrowings
Decrease in bank term loans (2,116) (6,000)
Redemption of 6% guaranteed loan notes 1999 (483) (220)
Debt due beyond a year:
Increase in bank term loans - 20,000
Repayment of 7.143% unsecured sterling bonds (15,000) -
2014
Issue £75m 6.90% bonds 2014 73,951 -
Net cash inflow from financing 54,559 25,430
Increase/(decrease) in cash in the period 10 4,861 (2,047)
BPT plc
Notes to the Financial Statements
for the year ended 5 April 2000
Continuing
Operations Acquisitions 2000 1999
£'000 £'000 £'000 £'000
1. Turnover
Rental income 38,427 1,410 39,837 37,030
Property trading sales 55,563 - 55,563 46,542
93,990 1,410 95,400 83,572
Exceptional property sales - - - 28,025
93,990 1,410 95,400 111,597
Operating Profit
Net rental income 28,540 624 29,164 26,927
Property trading profit 24,841 - 24,841 21,124
53,381 624 54,005 48,051
Profit on exceptional
property sales - - - 16,829
53,381 624 54,005 64,880
Administrative expenses (3,025) - (3,025) (2,756)
50,356 624 50,980 62,124
Turnover and operating profit arises from activities in the UK.
Exceptional property sales in 1999 relates to the sale of a land
site and the commercial property estate at Martlesham Heath near Ipswich.
2. Dividends 2000 1999
Dividends on equity shares: £'000 £'000
Ordinary
Interim paid of 4.70p per share (1999 4.40p) 6,888 6,432
Final proposed of 6.00p per share (1999 5.40p) 8,794 7,898
15,682 14,330
Dividends on non-equity shares:
Preference 10% paid 162 162
15,844 14,492
3. Earnings per Ordinary Share
The calculation of earnings per ordinary share is based on the
weighted average number of ordinary shares in issue during the
year of 146,379,648 (1999 146,197,495) and the profit for the
financial year attributable to ordinary shareholders of
£26,980,000 (1999 £34,703,000). The fully diluted earnings per
ordinary share is based upon the weighted average number of
shares during the year of 146,578, 631 (1999 146,465,373).
Restatement of earnings per ordinary share to eliminate capital
items only, as recommended by the Institute of Investment
Management and Research, would be immaterial.
The effect of adjusting earnings per ordinary share for
exceptional items is as follows:
2000 1999
£'000 Pence per £'000 Pence per
ordinary ordinary
share share
Earnings as stated 26,980 18.43 34,703 23.74
Less: Exceptional item
(after tax) - - (10,819) (7.40)
Pre-exceptional earnings 26,980 18.43 23,884 16.34
Diluted earnings per ordinary share, excluding exceptional
items, reflect the same adjustment.
4.
Maturity of finance debt (net of issue costs) is a follows
Group
2000 1999
£'000 £'000
In one year or less 25,060 23,139
Between one and two years 13,517 6,343
Between two and five years 40,553 45,571
Between five and ten years 35,902 38,151
Over ten years 98,221 46,127
213,253 159,331
5. Financial Liabilities
The interest rate profile of the group's financial liabilities
at 5 April 2000, after taking account of interest rate swap
contracts taken out by the group was:
Fixed Rate Capped Rate Floating Rate Total
Liabilites Liabilities Liabilities
2000 1999 2000 1999 2000 1999 2000 1999
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Unsecured
notes/
sterling
bonds 81,107 106,192 10,000 10,000 10,000 - 101,107 116,192
Guaranteed
loan notes - 483 - - - - - 483
Bonds 73,424 - - - - - 73,424 -
Bank
borrowings - 1,000 - - 38,722 41,656 38,722 42,656
Total 154,531 107,675 10,000 10,000 48,722 41,656 213,253 159,331
Floating rate liabilities are priced at rates of between Libor and 1.00% over
bank base rate.
The weighted average interest rate on the fixed rate debt and the average
maturity of that debt was as follows:
Fixed Rate Capped Rate
Weighted Weighted Weighted Weighted
Average Average Average Average
Rate Period Rate Period
(Years) (Years)
2000 1999 2000 1999 2000 1999 2000 1999
Unsecured 8.29% 8.13% 6.06 8.11 7.18% 7.18% 0.96 1.96
notes/sterling
bonds
Guaranteed loan - 6.00% - 0.74 - - - -
notes
Bonds 6.90% - 14.5 - - - - -
Bank borrowings - 8.75% - 0.98 - - - -
Total 7.63% 8.13% 10.07 8.01 7.18% 7.18% 0.96 1.96
The fixed and capped rates are inclusive of loan margins and reflect the
effective cost of finance after taking into account the effect of currency and
interest rate swaps.
Currency Exposures
The group has issued US $120m senior unsecured notes which were converted into
sterling at various exchange rates to produce £76.6m. At the same time currency
swaps were undertaken to ensure that, at redemption, the US senior unsecured
notes would cost £76.6m and that the sterling cost of servicing the US dollar
note interest was fixed.
As at 5 April 2000, after taking into account the effects of currency swap
contracts the group had no currency exposure.
Borrowing Facilities
The group has various borrowing facilities that were not fully utilised at the
year end. The undrawn facilities available in which the conditions for
utilising those facilities were met were as follows:
2000 1999
£'000 £'000
Total unutilised facilities - expiring in one year
or less 53,778 78,344
- between two and five
years 12,500 -
66,278 78,344
Fair Values of Financial Liabilities
Book Value Notional Fair Fair Value
Adjustment
(before Principal Value 2000 1999
issue costs)
£'000 £'000 £'000 £'000 £'000
Financial
instruments:
Sterling bonds 25,000 24,422 578 (1,520)
US dollar senior note 76,628 73,158 3,470 (1,547)
Bonds 75,000 75,430 (430) -
Guarantee loan notes - - - (2)
Bank borrowings 38,722 38,038 684 (248)
Derivative financial
instruments:
Currency swaps 76,628 4,019 (4,019) (4,653)
Interest rate 6,329 (298) 298 (389)
swaps - payers
- receivers 30,000 458 (458) 940
Interest rate caps 10,000 (5) 5 8
215,35 215,222 128 (7,411)
The disclosures above do not include the difference between the market
value at 5 April 2000 and the book value of the 10.5% cumulative
preference shares of £1 each which, based on a mid-market price of
152.5p, was £810,900. These shares have no formal terms for redemption.
The fair values were calculated by JC Rathbone Associates Limited using interest
rates and market prices prevailing on 5 April 2000 and reflect
the replacement values of the financial instruments.
All gains and losses arising from hedging instruments crystallising during
the year have been recognised in the profit and loss account.
The expiry profile of the fair value adjustment, split between financial
instruments and unrecognised gains and losses on hedging instruments, of
the group's financial liabilities is:
Financial Hedging
Instruments Instruments Total
2000 1999 2000 1999 2000 1999
£'000 £'000 £'000 £'000 £'000 £'000
In one year 1,275 (1,104) (967) (509) 308 (1,613)
or less
In more than
one year but
not more than
two years 1,825 (695) (815) (635) 1,010 (1,330)
In more than
two years but
not more than
five years 2,683 (850) (1,351) (1,827) 1,252 (2,677)
In more than
five years (1,381) (668) (1,051) (1,123) (2,442) (1,791)
4,302 (3,317) (4,174) (4,094) 128 (7,411)
Changes in the fair value of hedging instruments are not recognised in the
financial statements until the hedged position matures. An analysis of these
unrecognised gains and losses is as follows:
Total net
gains/(losses)
£'000
Unrecognised gains and losses on hedges at 6 April 1999 (4,094)
Gains and losses recognised in the year (572)
Gains and losses arising that were not recognised in the year 492
Unrecognised gains and losses on hedges at 5 April 2000 (4,174)
6. Reconciliation of Operating Profit to Net Cash Inflow 2000 1999
from Operating Activities £'000 £'000
Operating profit 50,980 62,124
Depreciation of tangible fixed assets 639 502
Goodwill amortisation 116 -
(Profit)/loss on sale of tangible fixed assets 20 (20)
Increase in property stock (net) (19,520) (13,893)
(Increase)/decrease in trade and other debtors
and prepayments 263 (933)
Increase/(decrease) in trade creditors 1016 (3,538)
Decrease in other taxation and social security (87) (140)
Increase in accruals and deferred income 1,568 1,136
Increase in tenants' rent deposits 394 310
Decrease in provision for liabilities and charges (250) (250)
Net cash inflow from operating activities 35,139 45,298
Operating profit cashflow includes a net inflow of £Nil (1998
£16,829,000) relating to profit on exceptional property sales.
7. Returns on Investments and Servicing of Finance 2000 1999
£'000 £'000
Interest received 304 56
Interest paid (13,982) (12,268)
Dividends received from fixed asset investments 594 632
Preference dividends paid (non-equity) (162) (162)
Debt issue cost (761) (23)
(14,007) (11,765)
8. Capital Expenditure and Financial Investment 2000 1999
£'000 £'000
Purchase of tangible fixed assets (33,307) (27,432)
Sale of tangible fixed assets 9,895 1,932
Purchase of fixed asset investment (4) (4,498)
Repayment of loans by joint ventures 120 146
Purchase of shares by The BPT Employee Benefits Trust(582) (134)
(23,878)(29,986)
9. Acquisitions 2000 1999
£'000 £'000
Purchase of subsidiaries (21,279) -
Acquisition cost on purchase of subsidiaries (510) -
Net debt acquired with subsidiaries (1,503) -
(23,292) -
10. Reconciliation of Net Cash Flow to Movement
in Net Debt 2000 1999
£'000 £'000
Increase/(decrease) in cash in the period 4,861 (2,047)
Loans acquired with subsidiaries (1,116) -
Increase/(decrease) in short term deposits
with banks (6,900) 6,900
(Increase)/decrease in short term bank borrowings 2,000 (11,500)
(Increase)/decrease in medium term loans from bank 2,116 (14,000)
Repayment of 6% guaranteed loan notes 1999 483 220
Repayment of 7.143% unsecured sterling bonds 2014 15,000 -
Issue of £75m 6.90% Bonds 2014 (73,951) -
Debt issue costs 612 (26)
Movement in net debt in the period (56,895) (20,453)
Opening net debt (152,373) (131,920)
Closing net debt (209,268) (152,373)
Analysis of net debt At Acquisitions Cashflow Other At
movements April non-cash April
1999 changes 2000
£'000 £000 £000
£'000 £'000
Cash at bank and in hand 58 - 3,927 - 3,985
Bank overdrafts (1,656) - 934 - (722)
- 4,861
Short term deposits
with banks 6,900 - (6,900) - -
Debt due within one year
Short term bank
borrowings (20,000) - 2,000 - (18,000)
Bank term loans (1,000) (1,116) 2,116 - -
16% guaranteed loan
notes 1999 (483) - 483 - -
US senior unsecured - - - (6,338) (6,338)
notes
Debt due after one year
Bank term loans (20,000) - - - (20,000)
US senior unsecured
notes (76,372) - 111 6,289) (69,972)
7.143% unsecured
sterling bonds 2014(39,820) - 15,040 (17) (24,797)
6.90% Bonds 2014 - - (73,341) (83) (73,424)
(1,116)(60,491)
(152,373) (1,116)(55,630) (149)(209,268)
Note:
The abridged financial information as set out for the year
ended 5 April 2000 has been extracted from the audited
Financial Statements. The Financial Statements for the year
ended 5 April 2000 have received an unqualified audit opinion.
The information relating to the year ended 5 April 1999 is an
extract from the published Financial Statements which have been
delivered to the Registrar of Companies and received an
unqualified audit opinion.
The Report and audited Financial Statements for the year ended
5 April 2000 will be posted to shareholders on 30 June 2000.
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