Final Results
Workspace Group PLC
24 June 2002
WORKSPACE POSITIONED FOR FURTHER GROWTH
AS IT REPORTS SOLID PERFORMANCE
Workspace Group PLC ('Workspace') today announces its preliminary results for
the year ended 31 March 2002. Workspace provides approximately 4.8 million sq.
ft of flexible business accommodation for over 3,200 small and medium size
enterprises ('SMEs') in London and the South East.
• Trading pre-tax profits up 21% to £11.5 million (2001: £9.5 million)
• Net asset value per share up 15.3% to £13.53 (31 March 2001: £11.73)
• Trading earnings per share up 19.7% to 52.8p (2001: 44.1p)
• Valuation surplus £26.9 million - equivalent to £1.65 per share
• Annual rent roll £29.6 million (31 March 2001: £24.94 million)*
• Like for like occupancy levels remain stable at 91.0%
• Average rents increased to £7.20 per sq. ft (2001: £6.39)*
• Turnover up 7.9% to £39.1 million (2001: £36.2 million)
• Final dividend of 18.5p - Total dividend up 10.4% to 25.5p (2001: 23.1p)
• Leading IPD performance continues
* Excludes Midlands portfolio sold in June 2001
Commenting on the results, Harry Platt, Chief Executive, said,
' Workspace has had another excellent year. Occupancy levels have remained high,
enquiries were strong and growth in rents and asset values has been encouraging.
' Our market is huge. There are 3.7 million businesses in the UK, of which 1.1
million employ one to 25 people. 35% are based in London and the South East,
with over half of these in London itself. Workspace is the largest provider of
mixed accommodation to SMEs in London. However, our market penetration is still
very low, and this presents us with a significant opportunity. We acquired £60
million of property this year in our core market locations. We can now offer
even greater choice to our customers.
' Looking forward, the prospects for Workspace are bright. Our portfolio has
excellent potential for further growth and the SME market is strong and vibrant.
We have the funding to acquire more properties that will enhance our leading
position in the market.'
-ends-
Date: 24 June 2002
For further information:
Workspace Group PLC City Profile Group
Harry Platt, Chief Executive Simon Courtenay
Mark Taylor, Finance Director Ed Senior
020-7247-7614 020-7448-3244
e-mail: info@workspacegroup.co.uk e-mail: simon.courtenay@city-profile.com
web: www.workspacegroup.co.uk
Chairman's Statement
Results
I am pleased to be able to present the eighth successive year of record
financial results since our flotation on the London Stock Exchange in December
1993. Rental income for 2001/02 was £30.9m, up 8.2% on the previous year, while
turnover was up 7.9% to £39.1m. With occupancy stable throughout the year these
increases are attributable primarily to rental growth. Profit before tax from
trading operations increased by 21.1% to £11.5m. Trading earnings per share were
52.8p, up 19.7%..
The value of the Group's portfolio increased to £414.7m following £71.2m of
acquisitions and capital expenditure on properties, £48.0m of disposals and
increases on valuation of £26.9m. This has resulted in an increase in net asset
value per share of 15.3% to £13.53.
The Group's performance has again been assessed by the Investment Property
Databank (IPD) - the standard industry benchmark - and the results confirm that
our outstanding record of outperformance continues. They show an ungeared total
annual return for our portfolio of 17.4%, against the IPD All-Fund performance
of 7.0%. We achieved top or first percentile ranking when viewed over one,
three, five and eight years.
Dividend
The Board recommends a final dividend payment of 18.5p, making 25.5p for the
year - an increase of 10.4% over last year.
The business year
We serve small and medium-sized enterprises (SMEs) - a sector which is dynamic,
innovative, thriving and resilient. It has shown all these characteristics in
what has been a year of economic uncertainty. The Group's success over the past
15 years stems from its understanding of this sector's changing needs and the
ability to move quickly to meet them. It is to the great credit of management
and staff, and the well-developed business model, that in this challenging year
occupancy has remained at 90%, rental levels have continued to increase and the
value of the property portfolio has grown proportionately.
The Board regards as imperative the need to keep the Workspace offer at the
forefront of our market. This year we have seen the rollout of our digital
services products to many of our London business centres to support broadband
communications and internet services. A voice service using the same fibre
network is currently being examined. Other business services we offer to
customers include insurance, energy and telecommunications. Combined with our
core product of short, flexible leases and an easy in/easy out approach in
interesting, affordable space, this adds up to the best and broadest offer to
the SME sector in London and the South East. Such an excellent offer needs
communicating to the market and we have stepped up our marketing and letting
activities with new ideas, materials, advertising and promotions. The Group's
continued profitable growth is clear evidence of the commercial success of these
activities.
The ability to market and manage our properties effectively is critical to our
success. So too is our property investment activity. The Board has always
critically reviewed the portfolio with the objective of ensuring the best value
from either continued growth as managed workspace or change of use/
redevelopment. The Board does not extend the Group into activities where its
skills are limited. We have always focused on our strengths and our policy is to
work with specialist partners where opportunities outside managed workspace
arise from our estates. This approach has led to some significant successes in
recent years, with scope for more to come. Trading out of lower growth assets
into areas of higher potential continued apace in the year with the finalisation
of the sale of our Midlands portfolio in June 2001 for £42.3m. We reinvested
those funds - plus those from further sales of £6.8m - into £59.6m of new assets
in the South East. This focus on the region of highest growth, where we have a
major presence, plays to our strengths of space management, market knowledge,
direct management and marketing, and to our well-tuned acquisition activity. The
market for new, suitable acquisitions has been competitive. Nevertheless, the
Group's network and reputation for delivery has ensured a steady stream of
excellent opportunities and acquisitions, which we report fully later.
The Board also keeps under constant review our funding arrangements - the other
major component of our business model. As a property investment company with the
clear aim of growing shareholder value Workspace Group has always seen great
virtue in using debt at sensible gearing levels to acquire new properties. No
significant new equity has been required - and therefore raised - since 1994 and
the over four-fold increase in our net worth to £221.3m has been achieved on
borrowing alone. With this record and having proven to the lending market the
reliability of our rental income stream, we are now able to borrow at better
terms than ever before. This year the property loan facility with National
Westminster Bank has been extended from £33 million to £100 million. With its
improved standing the Group is developing further borrowing initiatives.
It may be repetitive to say so, but this has been yet another year of
significant achievement - confirmed by our consistent year-on year-growth. The
effort and drive to achieve and maintain this comes from the team at Workspace
Group. We are a property-based business but what makes us different is our
people. Their ideas, skills and enthusiasm make Workspace Group the successful
investment it is. My thanks go to them all.
Prospects
Workspace Group has a clear strategy of providing space to small and
medium-sized enterprises in London and the South East - a market in which it is
the leading provider. Its clear focus on creating shareholder value has
consistently produced performance levels among the best in the sector. The Group
works constantly on maintaining this record and the current year has started
most encouragingly. I am confident that we have the strategy and the team to
continue this progress in this new year and into the future.
Operating Review
Once again, we have exceeded our targets for the year and delivered I.P.D first
percentile performance (the standard industry benchmark). At the same time we
have refocused our activities to concentrate solely on London and the South East
- further strengthening our position in what has always been our core region.
With the continuing growth and regeneration of London, rental and asset growth
is reinforced, as is the opportunity for adding value from redevelopment.
Trading Review
It is pleasing to present results that include improvements in rental levels,
stable occupancy and growing asset values - particularly in a year which
presented significant challenges for many of the Group's small and medium-sized
enterprise (SME) customers. The Group has also succeeded in reinvesting the
proceeds of the sale of its Midlands portfolio in London-based properties with
excellent potential.
The Group's business model is simple. It focuses on providing small unit
accommodation to new and small businesses. There are 3.7m businesses in the UK,
of which 1.1m employ one to 25 people. Around 35% are based in London and the
South East, with over half of these in London itself. London alone accounts for
20% of business start-ups and closures in the UK each year and sees greatest
growth in the higher 'value-added' activities. Therefore the Group is now
focused on those areas where its target markets are most active. By a
significant margin the Group is the largest provider of mixed accommodation to
SMEs in its target areas. However, with just 3,247 customers at 31 March 2002
its market penetration is still very low. By focusing its activities in London
and the South East the Group has increased brand awareness which has had a
ratchet effect on tenant enquiries. With clusters of properties now held in key
locations throughout London the Group is able to offer greater choice to its
customers and is better able to support their changing requirements as their
businesses develop.
Our new customers are often people looking to move from a home environment to
more formal business premises. Many of them will, in time, relocate within our
portfolio as their need for space increases. Churn - the formation, expansion,
reduction and closure of businesses - is a key characteristic of the SME market.
It provides us with new tenants, the relocation of others, and creates a
continuing opportunity to review and increase rents.
During the year under review we received 4,792 enquiries which yielded 738 new
lettings. The principal generators of enquiries continued to be estate
signboards and referrals from existing tenants. These enquiries are crucial to
the Group's success: not only do they provide new lettings but they are also an
indication of levels of activity within the SME sector and industry sub-sectors,
enabling us to effectively focus our offer on emerging 'value-adding' businesses
- those best able to pay improving rents.
With its in-house management operations - lettings, estate management and credit
control - the Group is attuned to the flexibility needed by the SME marketplace.
This enables us to foster close contact with our customers, to monitor changes
in the market and to maintain exacting standards. We try to work closely with
our customers and to understand and be responsive to their needs. This is
reflected in our flexible leasing approach and through a combination of entry
and exit interviews and active centre management.
These intensive management skills have been essential in a year of many
challenges for our customers, during which we have been able to maintain
like-for-like occupancy in the 89% to 91% range - a level which the Group
regards as effective full occupancy. Low vacancy rates and continuing high
levels of enquiries have aided the rental review programme and improved rentals
on re-lettings (approximately 40% of the Group's portfolio is subject to rental
review or re-letting each year) with the result that rents have again increased
strongly throughout the year. On a like-for-like basis, the increase over the
year was 9.0% (2001: 15.3%) from £6.68 to £7.28 per sq ft. The rolling rent
review and lease renewal programme continued and in the year impacted on 16% of
the opening rent roll (excluding Midlands properties). The uplift achieved
during the year of £1.5 million on reviews and renewals represents a 38%
increase on previous passing levels.
Once again the Group achieved a substantial outperformance of the IPD benchmark.
This illustrates not only the good returns obtainable from its property holdings
but also the lower levels of volatility in its particular sector compared with
commercial property more generally.
The most significant event of the year was the disposal for £42.3m of the
Group's Midlands portfolio and the subsequent reinvestment of the funds realised
into London and the South East. The Midlands portfolio, which was acquired in
1994 had been a steady performer. Given the prospects of much greater growth in
London and South East and our focus in improving shareholder returns, the Board
decided to concentrate its investment in these areas.
During the year we made acquisitions totalling £59.6m. Details of these
acquisitions and sales are given later. With a total reversionary income of
£7.37m it is anticipated that the return from these properties will reach 10.0%
over the next couple of years. Consequently, while the switch from the Midlands
has had the anticipated impact of diluting earnings growth in 2001/02, in the
current year this will be clawed back as returns improve.
Following this investment activity focused around central and west London, at 31
March 2002 the Group held 87 properties comprising 4.8m sq ft with an average
capital value of £78 per sq ft and an average rental value of £7.20 per sq ft.
Of this portfolio nearly 50% (by area) is located within 5 miles of the London
Eye and 80% within the M25
Portfolio
During the year the Group secured 13 acquisitions and made five disposals.
Quality Court was acquired with a view to offering affordable managed office
accommodation in Central London. It will be connected to the Group's digital
network and offer office suites for short-term let. The product offering is
little different to that provided by the Group's existing business centres -
other than that it is located in 'edge-of-prime' space. Another centrally
located property was acquired at Clerkenwell Workshops.
Three acquisitions were completed in South London. Surrey House is located
immediately adjacent to the Group's Great Guildford Street centre in Southwark
and is currently let to the Inland Revenue. The expiry of this tenancy in five
years' time will provide expansion space for this thriving centre in an emerging
location. The Group also acquired Union Court in Clapham and Kingsmill in
Kingston - a development with Greater London Enterprise (GLE) which was
completed shortly before the year-end and is currently being marketed.
The Group has increased significantly its offering to customers in West London.
Westwood Business Centre, Europa House and School Road are all located close to
the Group's existing Acton Business Centre. Likewise, Westbourne Studios and
Ladbroke Hall are close to Pall Mall Deposit, Grand Union Centre and the
Shaftesbury Centre. This clustering of properties helps us to provide a range of
space to customers wishing to relocate - both in terms of size and standard of
accommodation. Westbourne Studios is a new development which wraps around the
A40 Westway, with office pods either side of the flyover and an exhibition area
under it. This centre is focused on the media and links well with the Group's
Soho and 3 Mills Studios properties. In addition to these properties, a further
business centre, Windmill Business Centre, was acquired in Hanwell.
Two acquisitions were made in the eastern region: Alpine Way, Beckton, and
Harlow Enterprise Park, a small industrial park in Harlow, Essex. The Alpine Way
development shows how closely the Group works with its customers. EMT, a
long-standing tenant in the distribution sector, had grown to the stage where it
occupied 43% of the units at Bow. Further expansion on the estate was not in the
interest of landlord or tenant. The Group therefore agreed the forward purchase
of a new warehouse unit, under its cooperation agreement with Greater London
Enterprise (GLE), and pre-let the space to EMT, who will relocate there on
completion. The space at Bow will then be re-let at higher rental values than
the current package with EMT.
Although acquired separately, collectively these properties complement and
extend the Group's existing portfolio and enable us to improve our customer
offer.
As described earlier, the Group's Midlands portfolio was the principal disposal
during the period. We also sold Ashburton Estate, situated on the land earmarked
for the proposed new stadium development for Arsenal Football Club. This
proposed development had effectively blighted the site and made it difficult to
let vacant space. A disposal at full value, excluding the effect of the proposed
development, was therefore considered the best course. Arklow Road was sold to a
prospective occupier of a significant proportion of the estate. The land at
Westminster Business Centre was sold under an option agreement linked to the
earlier sale of South Block. The land at Barlby Road had been acquired for
£160,000 for use as an overspill car park for Pall Mall Deposit. Various
development options have been examined for the site but none yielded as high a
site value as that offered by the purchaser. All disposals during the year were
achieved at levels in excess of the book value.
Following these acquisitions and disposals the total value of the Group's
portfolio was £418.5m. Short leasehold assets (Alpha Business Centre, cost £1
value £0.3m) are included in the accounts at cost. Further, property used for
Group occupation (Magenta House, value £1.8m) is reported as a fixed asset.
Adjusting for these and land held for disposal at 3 Mills, treated as stock, the
net value of the Group's portfolio for accounts purposes was £414.7m.
The valuation was conducted by Insignia Richard Ellis in compliance with the
Practice Statements contained in the Appraisal and Valuation Manual prepared by
the Royal Institution of Chartered Surveyors on the basis of open market
valuation as defined in Statement 4.
For properties held throughout the year (comparing their value at 31 March 2001,
plus additions and improvements at cost, with that at 31 March 2002) the uplift
was £26.3 million or 8.07%. A further uplift of £0.6 million or 0.92% arose from
acquisitions.
Again, the Group's performance exceeded the IPD All-Fund benchmark by a wide
margin, achieving highest levels. As may be seen from the table below the
ungeared performance of our portfolio, when compared with IPD (Investment
Property Databank) returns, was top or first percentile over all periods.
One Three Years Five Eight
Total Return (p.a.) Year Years Years
Workspace Group 17.4% 21.9% 21.8% 19.4%
IPD All Fund 7.0% 11.1% 12.6% 11.3%
Workspace Group Percentile Rank 1st top 1st top
The Group has consistently outperformed the IPD index in all periods since this
benchmarking was initiated.
Improvements in valuation arise partly from market movements but also as a
result of value-adding activity through acquisition, management and
refurbishment/redevelopment. Comparison against indices such as these segregates
simple market movement from our value-adding activity. With its top-ranking
performance the Group has demonstrated its consistent ability to generate
enhanced returns from its investments.
The Group's core activity is investment in and letting of small unit
accommodation. As such it is not a property development company but will, when
appropriate, engage and work with partners in development activities to improve
the quality of the assets it holds, and hence the return from these assets.
During the year the Group obtained planning consent for the proposed residential
development at the Bridport site on some vacant land at 3 Mills. It also
submitted applications for schemes at Thurston Road; Hooley Lane, Redhill;
Barley Mow; the Leathermarket; and Artesian Close. The development of 3 Mills
will be undertaken by Copthorn Homes, under a sale agreement providing for both
an initial payment for the land and an overage payment depending on the outcome
of the development.
The proposals at Thurston Road and Redhill are for retail and residential
developments respectively. As such the Group will seek a partner or purchaser
for these sites once the 'added value' has been secured through the granting of
planning consent. The proposal at Barley Mow has been developed jointly with the
local authority and includes the existing library site as well as part of the
Barley Mow site. The scheme extends to the demolition of the existing library
and the construction of a new facility with business centre space over it. As a
major project this will require a substantial pre-development process.
A number of other projects are under examination across the Group's properties.
Many of these schemes respond to the call - both from the Government in its
White Paper and the Mayor of London in his Plan for London - for more intensive
use of land with mixed-use developments. It is anticipated that a number of
proposals for the replacement of existing properties with mixed-use schemes,
including new centres with residential and live-work space, may arise over
future periods.
Services
The Group has for a number of years extended its service offering beyond
accommodation alone. On a number of estates we provide gas and electricity -
currently to 1100 customers - and our business insurance programme now has over
500 customers. Our insurance offering has won two awards, 'Broker Initiative of
the Year' at the British Insurance Awards (1999) and the Insurance Age 'Awards
2000' for its risk management programme. Many of the Group's customers have
benefited from the programme; some by the attractive pricing and extended range
of cover, some by obtaining cover where other insurers had refused the risk.
Some simply benefit by being able to negotiate better terms from their existing
insurer.
In setting its priorities for 2001/02 the Group targeted an extension of its
customer offer through the introduction of digital services at a number of its
properties. Vylan, an initiative to provide customers with the latest broadband
technology on a rental basis, was launched in June 2001 with a pilot study at
three properties: Great Guildford Street, Pall Mall Deposit and Leathermarket.
Connections were also made at Westminster Business Square and Archer Street. The
Group has also linked its head office at Magenta House and 3 Mills Studios to
the network since there were clear benefits from such connections.
The Vylan pilot study showed, as anticipated, that new customers had greater
interest in the offering than existing customers, and that a number of existing
tenants expressed an interest but have to complete existing service contracts.
It demonstrated how our core product can be enhanced, and confirmed that, with
the use of internet and broadband becoming more extensive, the Group will have a
letting advantage at these 'enabled' properties. In view of this, the Board
confirmed the extension of the project to the main phase, incorporating a
further 14 properties - bringing the overall total to 21, representing 1.9m sq
ft in almost 2000 units. At the year end the wide area network was almost
complete and the cabling of properties had commenced. The provision of services
at these properties is scheduled to come on-stream during the summer of 2002. At
the same time approval was given for the investigation of the use of the network
to carry voice traffic.
During the year a survey of customers was undertaken together with focus group
meetings at a number of properties. Alongside the Group's routine entry and exit
interviews, these have confirmed that over 90% of tenants would recommend the
Group to others. It identified also that 60% of our tenants employ five or fewer
staff with the majority of the remainder employing fewer than 20 staff. 78% of
customers had been trading for more than three years with just 6% being
start-ups (trading for less than one year).
Financial Review
Profits
Trading profits before tax at £11.46 million are 21.1% ahead of last year. In
addition, profits on disposals yielded £0.57m (2001: £10.06m). Trading earnings
per share increased by 19.7% to 52.8p. The valuation surplus of £26.86 million
represents £1.65 per share, taking the net asset value at 31 March 2002 to
£13.53 per share (2001: £11.73), an increase of 15.3%. This continues the
unbroken pattern of growth delivered by the Group since its flotation in
December 1993.
2001/2002 2000/2001 Compound growth
growth growth 1997 - 2002
Improvement in Trading PBT 21.1% 13.6% 18.9%
Improvement in Trading EPS 19.7% 9.8% 16.4%
Improvement in dividends per share 10.4% 10.0% 11.2%
Improvement in NAV 15.3% 29.8% 26.6%
Overheads have increased as a percentage of turnover from 13.8% to 15.3% mainly
due to start up costs for Vylan and increased staffing costs. Net interest
reduced during the year by £1.12 million. This reduction was attributable to a
combination of lower interest rates and the benefit of lower borrowing levels
for part of the year following the disposal of the Midlands portfolio. Interest
costs of £0.24 million (2001: £1.14 million) were capitalised during the year.
The Group considers that, with its careful focus on asset values underpinned by
six-monthly independent valuations, its policy of capitalising interest presents
no risk of overstatement of asset values.
Taxation
The effective rate of Corporation Tax in 2002 was 25.5% (2001: 31.9%). The
effective rate excluding surpluses on property disposals was 25.5% (2001:
25.9%). Prior year values have been restated to take into account the impact of
FRS 19 the application of which has obliged recognition, for the first time, of
deferred taxation liabilities on accelerated capital allowances. This has had
the impact of reducing Net Asset Value per share at 31 March 2002 by 19 pence
per share (restated 2001: 20 pence).
Dividend
A final dividend of 18.5p per share is proposed. The interim dividend was 7.0p
per share, and so the total dividend proposed for the year is 25.5p (an increase
of 10.4%). The dividends are covered 2.14 times by earnings (2.04 times if based
on trading income only).
Internal performance measures
Internal benchmark comparison shows:
Performance measures 2002 2001 2000 1999 1998
Turnover per member of staff (£000) 294 272 277 277 247
Year-end investment in property per member of staff 2,984 2,581 2,340 2,268 1,967
(£000)
Administration costs as a percentage of revenue 15.3% 13.8% 14.5% 15.1% 14.2%
Total return on equity 20.6% 40.7% 36.9% 36.3% 32.5%
Return on equity is computed by reference to pre-tax profits plus valuation
surpluses/deficits divided by opening shareholders' funds (allowing for share
capital increases during the year). Our target is to achieve over a 20% return
on equity year on year, and in due course (with expansion of the portfolio), to
maintain administration costs as a percentage of revenue at below 12%
Financing
The Group again increased and extended its property loan facility with National
Westminster Bank from £33 million to £100 million with a maturity of 5 years at
an interest rate margin of 0.95% over LIBOR. The Group also holds a £2.5 million
overdraft facility with National Westminster Bank at an interest rate of 1.1%
over base.
At the year-end the Group's facilities and drawings thereon were:
2002 2002 2002 2001
Facility Agreement Drawn % Drawn
£m £m £m
Debenture Stock 19.5 19.5 11% 19.5
Convertible Loan Stock 2.9 2.9 2% 4.0
WestLB Loan 122.0 114.5 64% 115.9
NatWest Property Loan 100.0 44.5 25% 21.5
NatWest Overdraft 2.5 2.8 1% 1.8
Deposits - (5.8) (3%) (5.6)
________ ________ ________ ________
246.9 178.4 100% 157.1
________ ________ ________ ________
With the planned investment programme it is anticipated that additional
facilities of approximately £80 million will be sought in 2002/03.
Borrowings over recent years 2002 2001 2000 1999 1998
% Fixed/hedged 77% 89% 93% 93% 59%
Average interest rate (year end) 5.3% 6.99% 8.48% 8.91% 9.56%
Interest cover 2.15 2.70 1.87 2.32 1.98
Trading Interest Cover 2.09 1.82 1.72 2.11 1.88
Year-end gearing % 81% 83% 104% 63% 85%
Year-end gearing remained steady at 81%, as borrowing increases were covered by
valuation surpluses in the year. Both gearing and interest cover levels are
within the levels historically set by the Board of 120% and 1.5 times.
The Board again examined the possibility of redeeming or replacing its original
£19.5 million Debenture Stock, which carries high coupons averaging 11.30%. This
initiative was not pursued due to the potentially high cost of redemption.
However, holders of £1.14m of the Group's Convertible Loan Stock converted this
stock into equity shares, giving rise to the issue of 228,000 shares during the
year. The Debenture and Convertible Loan Stock represent just 13% of total
borrowings. The maturity of net debt at 31 March 2002 is shown below: -
2002 2001
Maturity of net debt % %
Under 12 months 1% -
1 - 5 years 34% 23%
5 - 10 years 65% 29%
10 years + - 48%
Total 100% 100%
At 31 March 2002 the average cost of floating rate funds was a margin of 1.0%
over LIBOR or base rate (2001:1.02%). At 31 March 2002 the secured borrowings
were covered 2.24 times by the value of charged property (with a further £11.8
million uncharged giving an overall cover of 2.31 times).
Balance Sheet and Cash Flow
The Group's net current liabilities at 31 March 2002 were £18.84 million (2001:
£18.59 million). Current liabilities include tenants' deposits in the form of
advance rent payments and quarterly and monthly rents and service charge
payments in advance amounting in aggregate to £9.2 million (2001: £8.2 million).
The Directors consider that in the normal course of business these liabilities
are unlikely to require payment and properly form part of the working capital of
the Group. Net cash inflow for operating activities at £23.4 million (2001:
£22.8 million) improved, principally due to the contribution from the newly
acquired properties together with increased profitability from existing
properties.
Acquisitions
2001/2002
Name of Property Description Purchase Price Initial Actual Market Rent
Income
£000 at 31/03/02
£000
£000's
Harlow Enterprise Centre, Freehold, 51,851 sq. ft ,
Harlow single storey industrial estate 3,600.0 344.3 371.7
Quality Court, London WC2 Freehold, 24,102 sq. ft 4,220.0 - -
office building £5.6m
(development
+ costs to come)
Westwood Business Centre Freehold, 68,530 sq. ft
98 Victoria Road, Acton NW10 mixed industrial and offices 5,450.0 389.4 572.4
Europa Building, Acton NW10 Freehold 27,592 sq. ft 2,500.0 120.0 385.5
industrial building
Windmill Place, Hanwell Freehold 25,881 sq. ft business 3,350.0 305.0 484.4
centre
Middlesex
Surrey House, London SE1 Freehold 16,869 sq. ft offices 5,000.0 335.0 395.3
Clerkenwell Workshops Freehold 54,598 sq. ft business 9,100.0 109.0 882.5
centre
London EC1
Union Court, Clapham SW4 Freehold 67,427 sq. ft business 6,500.0 301.0 738.9
centre
Alpine Way, Beckton, E6 Freehold, 1.75 acre site 1,200.0
for 35,000 sq. ft warehouse (£2.4m - -
development costs
+ to come)
Westbourne Studios Long leasehold 56,816 sq. ft 12,250.0 807.0 1,471.5
business centre
Ladbroke Grove, W10
School Road, Acton, NW10 Freehold, 2,895 sq. ft 245.0 24.0 -*
industrial unit
Ladbroke Hall, London W10 Freehold, 15,250 sq. ft 1,940.0 134.3 238.4
business centre
Kingsmill Business Park, Long leasehold, 42,450 sq. ft
development of small B1 units
Kingston-upon-Thames 4,200.0 - 631.7
Total 59,555.0 2,869.0 6,172.3
(with development (with £1.2m on
costs of £8.0m letting of
development
to come) properties)
* included in Europa Building
+ properties under development
Disposals
2001/2002
Name of Property Disposal Price Exit Annual Income
£000 £000
Midlands Portfolio 42,300.0 4,361.2
Ashburton Trading Estate, London N7 2,800.0 230.0
Arklow Trading Estate, London SE14 2,900.0 114.9
Land at Westminster Business Square, SE11 500.0 -
Land at Barlby Road, W10 600.0 -
Total 49,100.0 4,706.1
Consolidated Profit and Loss Account
for the year ended 31 March 2002
2002 2001
Notes Trading Other Total Trading Other Total
Operations Items £000 Operations Items (Restated)
£000 £000 (Restated) (Restated) £000
£000 £000
Turnover - continuing operations 2 39,083 - 39,083 36,222 - 36,222
Rent payable and direct costs 2 (11,172) - (11,172) (10,258) - (10,258)
_____ _____ _____ _____ _____
Gross Profit 27,911 - 27,911 25,964 - 25,964
Administrative expenses (5,964) - (5,964) (4,988) - (4,988)
_____ _____ _____ _____ _____
Operating profit 21,947 - 21,947 20,976 - 20,976
Surplus on disposal of investment 3 - 567 567 - 10,063 10,063
properties
Interest receivable 4 333 - 333 418 - 418
Interest payable 5 (10,819) - (10,819) (11,934) - (11,934)
_____ _____ _____ _____ _____
Profit on ordinary activities before 11,461 567 12,028 9,460 10,063 19,523
taxation
Taxation on profit on ordinary activities 6 (2,927) (141) (3,068) (2,447) (3,791) (6,238)
_____ _____ _____ _____ _____
Profit on ordinary activities after 8,534 426 8,960 7,013 6,272 13,285
taxation
Equity Minority Interests - - - - - -
Profit attributable to shareholders 8,534 426 8,960 7,013 6,272 13,285
Dividends 7 (4,192) - (4,192) (3,723) - (3,723)
_____ _____ _____ _____ _____
Retained for the year 4,342 426 4,768 3,290 6,272 9,562
_____ _____ _____ _____ _____
Basic earnings per share 8 52.8p 2.6p 55.4p 44.1p 39.5p 83.6p
Diluted earnings per share 8 51.7p 2.5p 54.2p 43.2p 37.0p 80.2p
Statement of total recognised gains and 2002 2001
losses
£000 £000
Profit for the financial period 8,960 13,285
Unrealised surplus on revaluation of 26,863 38,673
investment properties
Taxation on valuation surpluses realised (150) (510)
on sale of properties
_____ _____
Total recognised gains relating to the 35,673 51,448
financial period
_____ _____
Prior Year Adjustment (3,128) -
_____ _____
Total gains recognised since last annual 32,545 51,448
report
_____ _____
Note of historical cost profits and losses 2002 2001
£000 £000
Reported profits on ordinary activities 12,028 19,523
before taxation
Realisation of property revaluation gains/ 5,014 2,346
(losses) of previous years
Taxation on valuation surpluses realised (150) (510)
on sale of properties
_____ _____
Historical cost profit on ordinary 16,892 21,359
activities before taxation
_____ _____
Historical cost profit for the year 9,632 11,398
retained after taxation and dividends
_____ _____
2001 comparatives have been restated due to the application of FRS 19 (Deferred
Tax). See notes 6 and 15.
BALANCE SHEETS
As at 31 March 2002
Group Group Company Company
2002 2001 2002 2001
(Restated) (Restated)
Notes £000 £000 £000 £000
Fixed assets
Tangible assets
Investment properties 9 414,707 366,525 12,810 44,585
Other fixed assets 3,540 999 233 207
Shares in subsidiary undertakings - - 24 23
Investment in own shares 1,015 1,015 1,015 1,015
______ ______ _____ _____
419,262 368,539 14,082 45,830
Current assets
Stock: properties for sale 150 - 150 -
Debtors 10 6,189 5,844 204,227 125,781
Investments 11 5,443 5,373 - -
Cash at bank and in hand 340 206 - -
_______ ______ _______ _______
12,122 11,423 204,377 125,781
Creditors: amounts falling due within
one year 12 (30,964) (30,013) (54,011) (35,711)
______ ______ _____ _____
Net current (liabilities)/assets (18,842) (18,590) 150,366 90,070
______ ______ _____ _____
Total assets less current liabilities 400,420 349,949 164,448 135,900
Creditors: amounts falling due after
more than one year (including Convertible
Loan Stock) 13/14 (175,730) (158,371) (66,457) (45,040)
Provision for liabilities and charges 15 (3,365) (3,128) (1,252) (1,279)
______ ______ _____ _____
221,325 188,450 96,739 89,581
______ ______ _____ _____
Capital and reserves
Called up share capital 1,648 1,618 1,648 1,618
Share premium account 42,030 40,666 42,030 40,666
Revaluation reserve 144,588 122,739 355 15,703
Profit and loss account 33,059 23,427 52,706 31,594
______ ______ _____ _____
Shareholders' funds - equity interests 221,325 188,450 96,739 89,581
Equity minority interest - - - -
______ ______ _____ _____
Capital employed 221,325 188,450 96,739 89,581
______ ______ _____ _____
Net asset value per share 8 £13.53 £11.73
2001 comparatives have been restated due to application of FRS 19 (Deferred
Tax). See notes 6 and 15.
CASH FLOW STATEMENT
for the year ended 31 March 2002
Notes 2002 2001
To cashflow £000 £000
Net cash inflow from operating activities 1 23,429 22,793
Returns on investments and servicing of finance 2 (11,261) (12,371)
Taxation (5,564) (3,085)
Net Capital expenditure 2 (23,278) (12,994)
Equity Dividends paid (3,796) (3,428)
Net cash outflow before use of liquid
resources and financing (20,470) (9,085)
Management of liquid resources 2 (70) 6,051
Financing 2 19,751 4,517
Net cash (outflow)/inflow 3 (789) 1,483
Reconciliation of net cash flow to
movement in net debt
(Decrease)/Increase in cash (789) 1,483
Increase/(Decrease) in liquid resources 70 (6,051)
Outflow from movements in debt financing (18,201) (3,848)
Changes in net debt resulting from cash flows 3 (18,920) (8,416)
Net debt at 1 April 2001 (157,147) (148,731)
Net debt at 31 March 2002 (176,067) (157,147)
Notes to the Cash Flow Statement
for year ended 31 March 2002
1. Reconciliation of operating profit to operating cash flows
2002 2001
£000 £000
Operating profit 21,947 20,976
Depreciation charges 554 524
Profit on sale of tangible fixed assets - (38)
Increase in debtors (976) (202)
Increase in creditors 1,904 1,533
_______ _______
23,429 22,793
_______ _______
2.Analysis of cash flow:
Notes 2002 2001
To cashflow £000 £000
Returns on investments and servicing of finance
Interest received 347 391
Interest paid (11,608) (12,762)
________ ________
Net cash outflow (11,261) (12,371)
________ ________
Capital expenditure
Purchase of tangible fixed assets (71,761) (48,436)
Sale of tangible fixed assets 48,300 35,442
Grants Received 183 -
________ ________
Net cash outflow (23,278) (12,994)
________ ________
Management of liquid resources
(Increase)/Decrease in short term deposits 3 (70) 6,051
________ ________
Net Cash (outflow)/inflow (70) 6,051
________ ________
Financing
Issue of ordinary share capital 1,394 898
Drawdown of Bank Loan 3 23,000 3,103
Repayment of Convertible Loan Stock 3 (1,140) -
(Repayment)/Drawdown on mortgage 3 (3,503) 516
________ ________
Net cash inflow 19,751 4,517
________ ________
3.Analysis of Net Debt
At 1.4.01 Cash Flow At 31.3.02 At 1.4.00 Cash Flow At 31.3.01
£000 £000 £000 £000 £000 £000
Cash at bank and in hand 206 134 340 201 5 206
Bank Overdrafts (1,844) (923) (2,767) (3,322) 1,478 (1,844)
________ _______ ______ ________ _______ _______
(1,638) (789) (2,427) (3,121) 1,483 (1,638)
________ _______ ______ ________ _______ _______
Debt due within one year:
Securitised Loan (2,798) (862) (3,660) (2,529) (269) (2,798)
Less Cost of Raising Finance 287 20 307 340 (53) 287
Debt due after one year:
11% Convertible Loan Stock (4,040) 1,140 (2,900) (4,040) - (4,040)
11.125% First Mortgage Debenture (12,500) - (12,500) (12,500) - (12,500)
11.625% First Mortgage Debenture (7,000) - (7,000) (7,000) - (7,000)
Securitised Loan (115,177) 4,365 (110,812) (114,930) (247) (115,177)
Bank Loan (21,500) (23,000) (44,500) (18,397) (3,103) (21,500)
Less Cost of raising of finance 1,846 136 1,982 2,022 (176) 1,846
________ _______ ______ ________ _______ _______
(160,882) (18,201) (179,083) (157,034) (3,848) (160,882)
________ _______ ______ ________ _______ _______
Short term deposits 5,373 70 5,443 11,424 (6,051) 5,373
________ _______ ______ ________ _______ _______
Total (157,147) (18,920) (176,067) (148,731) (8,416) (157,147)
Notes to the Accounts
for the year ended 31 March 2002
1.Basis of Preparation
The audited financial information contained in this preliminary announcement
report does not comprise statutory accounts within the meaning of Section 240 of
the Companies Act 1985.
The figures in this preliminary announcement have been prepared under generally
accepted accounting policies in the United Kingdom. The accounting policies
adopted are those set out in the Annual Report and Accounts for the year ended
31 March 2002 which includes an unqualified report of the auditors.
The adoption of financial reporting standards FRS17 'Retirement Benefits' and
FRS18 'Accounting Policies', required to be implemented this year, has not had
any impact on the reported results and net assets. Adoption of FRS19 'Deferred
Tax' has resulted in a restatement of comparative figures and current year
charges as detailed in note 15.
2. Segmental Analysis
2002 2001
Gross Gross
Turnover Costs Profit Turnover Costs Profit
£000 £000 £000 £000 £000 £000
Rental income 30,864 (628) 30,236 28,534 (946) 27,588
Service charges and other recoveries 6,877 (10,211) (3,334) 6,194 (9,047) (2,853)
Services, fees, commissions and
sundry income 1,342 (333) 1,009 1,494 (265) 1,229
_____ ______ _____ _____ ______ _____
39,083 (11,172) 27,911 36,222 (10,258) 25,964
_____ ______ _____ _____ ______ _____
All business in the Group was continuing and occurred in the United Kingdom.
3. Surplus on Disposal of Investment Properties
The profit arising on the sale of properties is calculated by reference to the
book value at the date of sale. Book value comprises the valuation as at 31
March 2001 plus additions at cost since that date. Proceeds from the sale of
investment properties totalled £49,112,000. Book value of these assets plus
costs of sale totalled £48,545,342 yielding a surplus of £566,658.
4. Interest Receivable
The following amounts were earned during the year:
2002 2001
£000 £000
Short term deposits 325 374
Other 8 44
________ ________
333 418
________ ________
5. Interest Payable
The following amounts were payable during the year: 2002 2001
£000 £000
11% Convertible Loan Stock 2011 361 444
11.125% First Mortgage Debenture Stock 2007 1,391 1,391
11.625% First Mortgage Debenture Stock 2007 814 814
Mortgage interest on securitised loan not wholly repayable within five years* 7,486 8,922
Bank and other interest on amounts wholly repayable within five years 1,007 1,501
________ ________
11,059 13,072
Interest capitalised on development properties (240) (1,138)
________ ________
Charged to profit and loss account 10,819 11,934
________ ________
*Net of amortisation of cost of raising finance £549,800 (2001: £352,000)
6. Taxation
2002 2001
(Restated)
£000 £000
Current tax:
UK corporation tax on profit for the year 2,956 6,219
Prior year adjustments (125) 82
________ ________
Total current tax 2,831 6,301
Deferred tax:
Origination and reversal of timing differences 237 (63)
________ ________
Tax on profit on ordinary activities 3,068 6,238
________ ________
Timing differences are mainly in respect of capital and industrial
allowances and capitalised interest.
The tax assessed for the period is lower than the standard rate of
corporation tax in the UK. The differences are explained below: -
2002 2001
£000 £000
Profit on ordinary activities before taxation 12,028 19,523
________ ________
Profit on ordinary activities at standard rate of corporation tax in 3,608 5,857
the UK of 30% (2001: 30%)
Capital allowances in excess of depreciation (510) (283)
Expenses not deductible for tax purposes 13 13
Interest capitalised (72) (341)
Timing differences 20 26
Capital gains adjustments (103) 947
Prior year adjustments (125) 82
________ ________
2,831 6,301
________ ________
7. Dividends
2002 2001
£000 £000
Interim dividend of 7.0p (2001 - 6.5p) per Ordinary Share 1,143 1,070
Proposed final dividend of 18.5p (2001 - 16.6p) per Ordinary Share 3,049 2,653
________ ________
4,192 3,723
________ ________
The interim dividend was paid on 1 February 2002 and the proposed final
dividend is payable on 1 August 2002 to shareholders on the register at the
close of business on 5 July 2002.
8. Earnings Per Share and Net Assets Per share
The following table shows a reconciliation of profit used in calculating
earnings per share.
Profits Earnings per share
2002 2001 2002 2001
(Restated) (Restated)
£000 £000 pence pence
Profit for the year attributable to shareholders 8,960 13,285 55.4 83.6
Other items (426) (6,272) (2.6) (39.5)
Profit for the year attributable to shareholders ____ ____ ____ ____
used for calculating earnings per share excluding other 8,534 7,013 52.8 44.1
items
____ ____ ____ ____
Reconciliation of profit used in calculating diluted earnings per share
Profits Earnings per share
2002 2001 2002 2001
(Restated) (Restated)
£000 £000 pence pence
Profit for the year attributable to shareholders
used for calculating basic earnings per share 8,960 13,285
Interest saving net of taxation on 11% ordinary 253 311
Convertible Loan Stock
________ ________
Profit for the year attributable to shareholders used in 9,213 13,596 54.2 80.2
calculating the underlying diluted earnings per share
Other items (426) (6,272) (2.5) (37.0)
________ ________ ________ ________
Profit for the year attributable to shareholders used in 8,787 7,324 51.7 43.2
calcuating the diluted earnings per share excluding other
items
________ ________ ________ ________
The following table shows a reconciliation of the weighted average number of
shares used for calculating the basic and diluted earnings per share.
2002 2001
Used for calculating basic earnings per share 16,161,670 15,890,584
Dilution due to Share Option Scheme 263,166 244,256
Dilution due to Convertible Loan Stock 580,000 808,000
________ ________
Used for calculating diluted earnings per share 17,004,836 16,942,840
________ ________
Net assets per share have been calculated by dividing net assets of
£221,325,000 (2001: £188,450,000) less investment in own shares of
£1,015,000 by 16,279,405 (2001: 15,979,510) being the number of shares in
issue at 31st March 2002 less investment in own shares of 200,000. Other
items in both years comprise profits on disposal of investment properties.
9(a) Investment Properties-Group
Mainly Long Short
Freehold Freehold Leasehold Leasehold Total
£000 £000 £000 £000 £000
Balance at 1 April 2001 256,913 57,532 52,080 - 366,525
Additions during the year 50,697 3,010 17,509 - 71,216
Disposals during the year (18,950) (3,052) (25,975) - (47,977)
Reclassifications (1,770) (150) - - (1,920)
Revaluation during the year 15,865 8,737 2,261 - 26,863
________ ________ ________ ________ ________
Balance at 31 March 2002 302,755 66,077 45,875 - 414,707
________ ________ ________ ________ ________
The historical cost of investment
properties
Balance at 1 April 2001 154,788 48,564 40,426 7 243,785
________ ________ ________ ________ ________
Balance at 31 March 2002 187,170 47,577 34,605 7 269,359
________ ________ ________ ________ ________
The directors are advised that the value of the properties at 31 March 2002
was not less than their book cost (see Note 9(b)). The reclassifications
arise from the transfer to other fixed assets of the property occupied by
the Company as its head office (at a value of £1,770,000) and to stock
(£150,000) of land to be sold.
Additions during the year are stated net of £91,705 relating to grants
receivable (2001 - £100,000) and include capitalised interest, gross of tax
element, of £240,385.
9(b) Valuation
The Group's investment properties were valued by Insignia Richard Ellis,
Chartered Surveyors, at 31 March 2002 on the basis of open market existing
use value and in accordance with the guidance notes issued by the Royal
Institution of Chartered Surveyors. The valuation at that date amounted to
£418,517,000 (2001 - £366,875,000). This included £300,000 (2001: £350,000)
in respect of the Company's short leasehold interest (expiring 11 February
2011) in the Alpha Business Centre, Walthamstow. For accounts purposes, as
the unexpired term of the leasehold interest in Alpha Business Centre is
less than 20 years, the valuation of the property has been retained at a
nominal £1. It also included property at 3 Mills, classified as trading
stock (value £1,740,000) and Magenta House, classified as a fixed asset
(value £1,770,000). After these adjustments the aggregate valuation for
accounts purposes is £414,707,000 (2001 - £366,525,000).
10. Debtors
Group Company
2002 2001 2002 2001
£000 £000 £000 £000
Amounts falling due within one year:
Trade debtors 4,214 3,202 - -
Amounts owed by subsidiary undertakings - - 202,096 120,785
Deposits on investment acquisitions - 571 - -
Deposit on investment disposal - 50 - -
Taxation and social security 724 42 - -
Corporation Tax - payment on account - - 2,131 4,996
Prepayments and accrued income 1,104 1,792 - -
_____ ____ ______ ______
6,042 5,657 204,227 125,781
_____ ____ ______ ______
Amounts falling due after one year:
Advance Commissions 147 187 - -
_____ _____ ______ _____
Total Debtors 6,189 5,844 204,227 125,781
_____ ____ ______ ______
11. Investments
Investments of £5,443,000 (2001 - £5,373,000) comprise short-term deposits
of £2,401,000 with an original maturity date of less than 3 months (held
short-term for debt service) under the securitised loan facility with WestLB
and other deposits of £3,042,000.
12 Creditors: Amounts falling due within one year
Group Company
2002 2001 2002 2001
£000 £000 £000 £000
Secured mortgage borrowings (Note 13) 3,353 2,511 - -
Bank Loan and overdraft (secured) 2,767 1,844 - -
Trade creditors 2,462 1,496 - -
Amounts owed to subsidiary undertakings - - 50,812 32,752
Corporation tax payable 1,993 4,576 - -
Taxation and social security 909 1,676 - 220
Tenants' deposits 4,163 3,255 - -
Accruals 7,203 7,054 150 86
Deferred income-rent and service charges 5,065 4,948 - -
Dividends 3,049 2,653 3,049 2,653
________ ________ ________ ________
30,964 30,013 54,011 35,711
________ ________ ________ ________
See note 13 for details of security in relation to the bank loans and
overdraft.
13. Creditors: Amounts falling due after more than one year.
Group Company
2002 2001 2002 2001
Long-term borrowings consist of: £000 £000 £000 £000
Unsecured:
11% Convertible Loan Stock 2011 2,900 4,040 2,900 4,040
Secured:
11.125% First Mortgage Debenture Stock 2007 12,500 12,500 12,500 12,500
11.625% First Mortgage Debenture Stock 2007 7,000 7,000 7,000 7,000
Other secured loans 156,683 137,342 44,057 21,500
______ ______ _____ _____
179,083 160,882 66,457 45,040
Less: amount falling due within one year (3,353) (2,511) - -
______ ______ _____ _____
175,730 158,371 66,457 45,040
______ ______ _____ _____
The secured loans are secured on properties of value £406,692,000. Interest
on the Debenture Stocks is payable on 31 March and 30 September each year.
Interest on the 11% Convertible Unsecured Loan Stock 2011 is payable on 30
June and 31 December each year. Other secured loans include a loan of
£114,472,000 carrying an interest rate of 1.0% over LIBOR and repayable in
2011 and a loan totalling £44,500,000 carrying an interest rate margin of
0.95% over LIBOR repayable in 2006 together with an overdraft of £2,767,200
at an interest rate margin of 1.1% over base.
Workspace Holdings Ltd, the subsidiary company used for the WestLB
financing, holds an interest rate collar on £120.1 million which has a cap
of 8% and a floor of 4.5% each until 15 July 2009.
The 11% Convertible Unsecured Loan Stock 2011 holders have the option to
convert in each year on the basis of one ordinary share for every £5 of
stock held.
Loans totalling £116,726,600 have a maturity of five years or more.
14. Borrowings and Financial Instruments
(i) Policies
The Group finances its operations through a mixture of retained profits and
borrowings. The Group borrows at both fixed and floating rates of interest
and then uses interest rate swaps and caps to generate the desired interest
and risk profile. Details of the interest rate collar held by the Group to
manage interest rate exposure on its £122m facility with WestLB are given in
Note 13. No premium payment was made for this collar which is financed by a
0.22% adjustment to the interest rate margin paid on the borrowing.
The Group's policy is to fix or cap interest rates on at least 50% of its
borrowings. At the year-end 13% (2001: 15%) of the Group's borrowings were
fixed with a further 64% (2001: 74%) subject to a collar.
The Group's policy is to ensure that at least 50% of borrowings have a
maturity in excess of 5 years. At 31 March 2002 65% (2001: 77%) of the
Group's borrowings mature after 5 years or more.
The Group has taken advantage of the exemption for disclosure of short-term
debtor and creditor balances.
(ii) Financial Assets
All of the Group's financial assets which comprised cash at bank and in hand
are denominated in sterling. The interest rate profile at 31 March 2002 was:
2,002 2001
£000 £000
Fixed rate financial assets 5,783 5,579
________ ________
iii. Financial Liabilities
All of the Group's financial liabilities are denominated in sterling. The
interest rate profile of the Group's financial liabilities at 31 March 2002
was:
2002 2001
£000 £000
Floating rate financial instruments 161,432 141,032
Fixed rate financial liabilities 22,400 23,540
______ ______
183,832 164,572
As noted above (note 13) the Group has the benefit of an interest rate
collar until July 2009.
For its fixed rate financial liabilities:
Weighted average interest rate 11.3%
Weighted average period fixed 6.5 years
Floating rate financial liabilities comprise mortgages that bear
interest at rates based upon 1, 3, 6 or 12 month LIBOR. The average margin
on these borrowings at 31 March 2002 was 1.0%.
iv. Maturity of Financial Liabilities
A maturity analysis of loans is shown below: Group Company
2002 2001 2002 2001
£000 £000 £000 £000
Less than one year 6,120 4,355 - -
Between one year and two years 3,660 3,660 - -
Between two years and three years 3,670 3,660 - -
Between three years and four years 4,275 3,670 - -
Between four years and five years 49,380 25,775 44,500 21,500
In five years and more 116,727 123,452 22,400 23,540
______ ______ ______ _____
183,832 164,572 66,900 45,040
Less cost of raising finance (1,982) (1,846) (443) -
______ ______ ______ _____
181,850 162,726 66,457 45,040
______ ______ ______ _____
Cost of raising finance comprises £1,539,00 being amortised over 10 years and
£443,000 being amortised over 5 years.
(v) Borrowing Facilities
At 31 March 2002 the Group had undrawn borrowing facilities of £27,804,000 on
which conditions precedent had been met (total undrawn £55,232,800). Of the
total undrawn nil had a maturity of less than 12 months with the remainder
having a maturity of in excess of two years.
(vi) Fair Value of Financial Liabilities
Book and fair values of financial liabilities are:
2002 2002 2001 2001
Book Value Fair Value Book Value Fair Value
£000 £000 £000 £000
Primary Financial Instruments
Short term liabilities (6,120) (6,120) (4,355) (4,355)
Long term borrowing (175,730) (181,293) (158,371) (165,299)
Financial Assets 5,783 5,783 5,579 5,579
Derivative Financial Instruments
Interest Rate Swaps 283 (2,298) 322 1,076
______ ______ _______ _______
(175,784) (183,928) (156,825) (162,999)
______ ______ _______ _______
The fair value of the interest rate cap/collar swap have been determined by
reference to market prices and discounted expected cash flows at prevailing
interest rates. All other fair values have been calculated by discounting
expected cash flows at prevailing interest rates. The total fair value
adjustment equates to 48.3 pence per share (29.5 pence based on diluted share
capital).
15. Provision for Liabilities and Charges
Group Company
£000 £000
Deferred Taxation:
Balance at 1 April 2001 (as previously stated) - -
Prior year adjustment 3,128 1,279
________ ________
Balance at 1 April 2001 (as restated) 3,128 1,279
Deferred tax charge/(credit) for the year 237 (27)
________ ________
Balance at 31 March 2002 3,365 1,252
________ ________
If the investment properties were sold for their revalued amounts there would be
a potential liability to corporation tax of £37,597,000 (2001: £29,892,000). In
accordance with FRS 19 no provision has been made for these amounts.
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