Final Results-Summary
BPT PLC
14 June 2000
SUMMARY
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
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