Interim Results 2001
Slough Estates PLC
30 August 2001
SLOUGH ESTATES plc
INTERIM STATEMENT
FOR THE SIX MONTHS TO 30TH JUNE 2001
Summary of Results
- Core property investment income net of interest up 16.4 per cent to
£66.7 million (2000 £57.3 million)
- Adjusted* profit before tax up 7.4 per cent to £69.9 million (2000
£65.1 million)
- Adjusted* earnings per share up to 13.3 pence
- Interim dividend up 8.5 per cent to 5.1 pence
- Interim property valuation increase of 1.0 per cent
- Diluted net assets per share increase 3.1 per cent to 536 pence
- Occupancy largely unchanged at 93 per cent
- Construction starts made on major schemes at Farnborough, Cambridge and
South San Francisco. Investment development expenditures in six months
amounted to £108 million
- Two City of London offices sold and Elk Grove, Chicago industrial parks
sold. Investment property sale proceeds in six months amounted to £91
million. Toronto industrial properties have been offered for sale.
* Adjusted to exclude investment property sales
Commenting on the results, the Chairman, Sir Nigel Mobbs, said:
'Slough's strategy of investing in prime business centres, both in the UK and
overseas, in a diversity of property sectors, is supported by years of
experience in those locations. This policy should underpin operating
performance as well as provide gains from new developments. The Group's
prudent financial base and its emphasis on increasing and creating new rental
streams should maintain its good interest and dividend cover and ensure that
shareholders continue to receive superior returns on their investment.'
For further information:
Sir Nigel Mobbs, Chairman 01753 537171
Slough Estates plc
Derek Wilson, Chief Executive 01753 537171
Slough Estates plc
Andrew Best 0207 321 5010
Shared Value Limited
Slough Estates Web Site www.sloughestates.com
INTERIM STATEMENT 2001
In the first half of 2001 the Group has continued with its well established
strategy of developing quality buildings in prime business centres whilst
strengthening its existing customer base for the long term good of its
portfolio. Starts have been made on three new business park projects at
Farnborough, Cambridge and Oyster Point, South San Francisco. Two central
London offices have been sold, as have the Elk Grove, Chicago industrial parks
and the Group's Toronto properties have been offered for sale.
Occupancy remains good at 93.3 per cent compared with 93.6 per cent at
December 2000 and new leases signed in the UK in the first half amounted to
69,000 sq.m., 19 per cent higher than in the first six months of 2000.
An interim external valuation has been undertaken for the first time and this
shows a valuation surplus of 1.0 per cent, resulting in a 3.1 per cent
increase in diluted net assets per share from 520p to 536p for the six months
to June.
Results
The half year profit before tax at £70.2 million was £4.4 million higher than
the prior year. Though core property investment income net of interest was
16.4 per cent higher at £66.7 million, income from property trading, utilities
and other activities did not match the levels achieved in the first half of
2000.
Adjusted to exclude the sale of investment properties, profits before tax
increased by 7.4 per cent. With taxation being provided at an effective rate
of 15 per cent compared with a 20 per cent rate in the first half of 2000,
earnings per share adjusted for investment property sales increased by 22.0
per cent to 13.3p.
The estimated effective tax rate of 20 per cent for the half year 2000 was
subsequently reduced for the full year to 8 per cent following agreement with
the Inland Revenue of a significant tax recovery during the second half of
2000.
The contribution to rental income from new developments was £9.1 million
whilst the loss of rental income resulting from property sales was £3.1
million.
Trading property profits of £6.0 million earned mainly on developments sold in
Belgium and Germany were £1.0 million more than 2000, though other income was
£2.2 million lower as a result of the low number of realisations of venture
capital investments due to the current weak market conditions. The reason for
the deterioration in Utilities' performance is dealt with later.
Dividends
An interim dividend of 5.1p per share will be paid on 12 October 2001 to
shareholders on the register on 14 September 2001. This represents an
increase of 8.5 per cent over the 2000 interim dividend of 4.7p per share.
Balance Sheet
For the first time an interim valuation of investment properties was
undertaken by external valuers as at 30th June. Overall the valuation
increase was £33.3 million or 1.0 per cent which, together with retained
earnings and other minor capital changes, resulted in a 3.1 per cent increase
in diluted net assets per share to 536 pence.
In the UK the valuation increase was £23.9 million or 0.9 per cent. Increases
of 1.2 per cent for industrial properties arose from continued rental rate
increases offset by valuation yields softening a little. Office properties
increased 0.8 per cent benefiting from recent development completions. The
retail centres, excluding joint ventures, declined in value by 0.9 per cent,
entirely due to yield changes. The overall surplus was better than has been
shown by the leading UK property indices for the same period.
In North America, the Californian portfolio produced a surplus of 1.2 per
cent. The Elk Grove, Chicago industrial assets were sold in May at a small
discount to their prior valuation. In Canada the valuation was unchanged and
the French and Belgian investment portfolios produced a satisfactory increase
of 1.9 per cent.
Following a sustained comparative under-performance by the Canadian real
estate market, the decision has been taken to sell our portfolio. The Toronto
properties should be sold in the second half, whereas the Vancouver assets
will probably not be sold until the current developments are completed and
leased. In aggregate they have a book value of £189 million and the disposal
proceeds will contribute to the funding of the US development programme.
The balance sheet remains very strong and conservatively geared, with a net
debt to equity ratio of 54 per cent. Expenditure of £108 million was incurred
on the purchase and development of investment properties, which is expected to
increase to £250 million for the full year. This is lower than projected in
March and reflects the current economic climate in which new development
starts require greater prudence. Sales of investment properties produced £91
million net proceeds, from office sales in London and Bournemouth and the
realisation of the Chicago industrial portfolio. Other than in Toronto, no
major sales are expected in the second half.
In February the debt profile was enhanced by the issue of a new unsecured
Eurobond which raised £150 million for 21 years at a coupon of 7 per cent. As
at 30th June 2001 the weighted average cost of total borrowings was 7.5 per
cent, down from 7.8 per cent at December 2000.
Review of Activities
Development Programme
In the first half of 2001, 111,000 sq.m. of buildings were completed, of
which 76 per cent have been leased or sold, 240,000 sq.m. is under
construction of which 52 per cent is leased and 107,000 sq.m. of new space is
likely to start construction before the year end.
The Group's development potential on land that it already controls was
reported in March as 1.3 million sq.m. at an incremental development cost of
£1.1 billion and there were no new land acquisitions in the first half.
These developments offer significant opportunities to achieve superior future
cash flow and value growth.
The global economic cooling and decreasing business confidence of the past six
months mean that the time frame for these developments may be extended. If
conditions improve, as some commentators are predicting, the Group is ready to
respond rapidly to customer demand.
United Kingdom
For industrial space, occupier demand continues to be firm in all of our
regions and market rental rates have continued to see some growth. Office
space in the Thames Valley, which has been the subject of much comment in the
light of the serious reversals suffered by leading global TMT companies, has
moved from a phase of excess occupier demand closer to equilibrium. Of the
Group's total UK portfolio of industrial, office and retail space, valued at
£2.59 billion, only 15 per cent is let to businesses in the IT and
communications industries.
The Group's UK occupancy has remained firm at 92.5 per cent and this is
expected to continue. In the six months to June, 69,000 sq.m. was leased to
new tenants, compared with 58,000 sq.m. in the first half of 2000 indicating a
sound occupier market for general business and industrial premises.
Two Bath Road Slough office buildings totalling 10,200 sq.m. were completed,
having been leased early during construction to pharmaceutical companies.
Industrial developments completed at Wokingham, Luton and Uxbridge have all
been letting well and a new phase has begun at Elstree of 10,700 sq.m.
At Farnborough Business Park, which has planning consent for 155,000 sq.m. of
office and R&D space, the first phase of road, landscaping and utilities
infrastructure is under construction as are two office buildings of 8,000
sq.m. net and 3,600 sq.m. net due for completion in January. Further phases
are being progressed through design and planning.
At Cambridge Research Park the first phase of construction is also under way
totalling 11,300 sq.m. in nine units ranging from 3,600 sq.m. down to 400
sq.m., designed to meet local demand. With the road and services
infrastructure nearing completion the park will have an outstandingly good
working environment.
In total 64,000 sq.m. of new space has been completed or put under
construction in the first half and starts for the second half could be up to
48,000 sq.m., of which 18,000 sq.m. will be in respect of pre-let agreements
already in hand.
The increase in utilities losses for the first half year to £4.6 million is
very disappointing. The utilities operation, Slough Heat & Power (SH&P), has
suffered seriously from the New Electricity Trading Arrangements (NETA)
introduced by the regulator Ofgem at the end of March. The arrangements,
designed to reduce the potential for price manipulation by large generators,
have created great operational and commercial difficulties for small
generators and renewable energy producers who have been seriously
disadvantaged.
Consequently it has been uneconomic for SH&P to export any electricity to the
Grid since March. The Energy Minister has ordered a review by the regulator
of the impact of NETA on small generators and the outcome is awaited. Unless
this review leads to effective and fair provisions for small, green
generators, it is possible that the carrying value of SH&P's standing plant,
which has a book value of circa £60 million, may have to be reconsidered at
the year end.
The new plant being built to satisfy the NFFO4 supply contract, which is to be
commissioned this autumn, is ring fenced from the implications of NETA. This
plant will generate a guaranteed inflation adjusted revenue stream for 15
years from recycling paper and plastic into electricity.
North America
Following the sale of the 110,000 sq.m. Elk Grove, Chicago industrial
properties, the Group's US interests are concentrated mainly in the San
Francisco Bay area and San Diego, where Slough is the leading developer of
health science research buildings. In California, the health science
industry, in contrast to the TMT sector, continues to grow strongly as
demonstrated by the continued take-up of our developments largely on a pre-let
basis. The Group's built portfolio in California is 73 per cent occupied by
health science businesses, 3 per cent by IT and communications users and the
balance of 24 per cent by general business services.
At the Torrey Pines Science Centre, San Diego, the 58,600 sq.m. research
campus for Pfizer is progressing well, with 9,700 sq.m. occupied, 21,400 sq.m.
under construction completing this year and further phases of 27,500 sq.m. due
for delivery in 2003 and 2004. Of two speculative units totalling 12,240
sq.m. the larger of 7,700 sq.m. is now let. The continued strength of the
health science market and shortage of development land in the Torrey Pines
area will support the start of a further speculative unit of 6,500 sq.m.
later this year on the last available site at this park.
In the Bay Area our occupancy remains high at 99.2 per cent. At the Oyster
Point, South San Francisco research park, which has consent for 53,000 sq.m.,
infrastructure construction commenced in the Spring and work has started on
four initial buildings totalling 27,300 sq.m., all of which have been pre-let
to three companies. Construction can be commenced very quickly on the
remaining phases when occupiers have been confirmed. The take-up of this park
has been exceptionally good. At the nearby 11 hectare East Grand site,
planning consents are being sought for 65,000 sq.m. of similar space.
In Toronto, the market for industrial space has remained good and occupancy is
high at 94.9 per cent. The 27,000 sq.m. office joint venture development at
Burnaby, Vancouver, has 10,200 sq.m. pre-let and completes construction in
2002.
Continental Europe
The Belgian, French and German operations have continued to contribute well to
Group performance. With an increasing rent roll from recent developments in
Brussels and Paris, and a growing trading portfolio in the Dusseldorf area,
returns from these three prime business centres are exceeding our
expectations.
Progress at Pegasus Park, close to Brussels airport, is very strong. Of
49,700 sq.m. of offices recently completed or under construction, 33,700 sq.m.
has been pre-let. A 230 room four star hotel is also under construction on a
site sold to the operator.
In France, the rapid development and letting of the Marly la Ville site during
2000 has resulted in reduced activity in the first half of 2001. At St.
Fargeau, south of Paris, a pre-let 23,000 sq.m. logistics warehouse is under
construction and a similarly sized unit will start later this year.
With 250,000 sq.m. of large logistics warehouse space having been successfully
developed in Paris in recent years, the experience gained is now benefiting
schemes in Belgium and Germany.
At Bornem and Rumst, between Brussels and Antwerp, two sites have been
acquired and a first phase of 16,500 sq.m. of distribution space has started
whilst at Kapellen, close to Dusseldorf, a large logistics unit of 22,500
sq.m. has also been started.
In Germany, where the Group tends to sell completed developments, three
industrial parks totalling 35,200 sq.m. were sold, realising a profit of £3.2
million.
The Board
As I announced at the Annual General Meeting, Mr Stephen Howard was welcomed
to the Board as a non-executive director with effect from 16th May. He is the
Chief Executive of Cookson Group plc, an appointment he has held since 1997.
He is American and resident in the UK.
Outlook
In times of economic uncertainty and change, the attributes of property as an
investment become more clear. Contractual rental cashflows over the medium to
long term from durable assets not vulnerable to rapid depreciation, in strong
locations will last through economic cycles. Slough's strategy of investing
in prime business centres, both in the UK and overseas, in a diversity of
property sectors, is supported by years of experience in those locations.
This policy should underpin operating performance as well as provide gains
from new developments.
The Group's prudent financial base and its emphasis on increasing and creating
new rental streams should maintain its good interest and dividend cover and
ensure that shareholders continue to receive superior returns on their
investment.
Group profit and loss account
Year to
Half year Half year 31
to to December
30 June 30 June 2000
2001 2000 audited
unaudited unaudited
For the six months ended 30 June Note £m £m £m
2001
Turnover:
Group 2 145.2 153.7 281.3
Joint ventures 7.5 7.4 14.9
======= ======= =======
Operating income:
Property investment 105.9 95.3 196.7
Property trading 6.0 5.0 6.7
Utilities (4.6) (1.2) (3.6)
Other income 1.8 4.0 5.4
Administration expenses (6.6) (6.1) (12.9)
------ ------ ------
Operating profit 2 102.5 97.0 192.3
Share of operating profit of joint
ventures and
associate
Property 6.9 6.9 14.0
Other - - 0.2
------ ------ ------
6.9 6.9 14.2
Profit on sale of investment 0.3 0.7 0.6
properties ------ ------ ------
Profit before interest and taxation 109.7 104.6 207.1
Interest (net) 3 (39.5) (38.8) (78.2)
------ ------ ------
Profit on ordinary activities before
taxation 70.2 65.8 128.9
Taxation 4 (10.5) (13.2) (10.3)
------ ------ ------
Profit on ordinary activities after
taxation 59.7 52.6 118.6
Minority interests - equity 0.6 (1.2) (0.5)
Preference dividends (5.8) (5.8) (11.6)
------ ------ ------
Profit attributable to ordinary
Shareholders 54.5 45.6 106.5
Ordinary dividends 5 (21.1) (19.4) (50.0)
------ ------ ------
Retained profit 9 33.4 26.2 56.5
------ ------ ------
Basic earnings per ordinary share 13.2p 11.1p 25.8p
Adjustment for profits and losses
on sale of investment properties
net of tax and minority 0.1p (0.2p) (0.1p)
------- ------ ------
Adjusted basic earnings per
ordinary share 13.3p 10.9p 25.7p
------ ------- ------
Weighted average number of
ordinary shares in issue (millions) 414.1 413.0 413.3
Statement of Group total recognised gains and losses
Year to
Half year to Half year to 31 December
30 June 2001 30 June 2000 2000
unaudited unaudited audited
For the six months ended 30 June £m £m £m
2001
Profit attributable to ordinary
shareholders 54.5 45.6 106.5
Surplus on revaluation of
properties 33.3 - 247.5
(Deficit)/surplus on revaluation
of
- Joint ventures (1.7) - 6.5
- Associate (0.3) - 0.3
------ ------ -----
31.3 - 254.3
Exchange differences 8.4 11.5 12.5
Other items (0.4) (0.9) (0.5)
Taxation - - (0.5)
Minority interests (0.2) - (4.2)
------ ------ -----
Total other recognised gains and
losses 7.8 10.6 7.3
------ ------ -----
Total recognised gains and losses
for the period 93.6 56.2 368.1
------ ----- -----
The comparative results for the six months ended 30 June 2000 do not include
any adjustments for revaluation of properties or investments held at 30 June
2000.
Reconciliation of movement in Group Shareholders' funds
Year to
Half year to Half year to 31 December
30 June 2001 30 June 2000 2000
unaudited unaudited audited
For the six months ended 30 June
2001 £m £m £m
Profit attributable to ordinary
shareholders 54.5 45.6 106.5
Ordinary dividends (21.1) (19.4) (50.0)
------- ------- -------
33.4 26.2 56.5
Revaluation surpluses 31.3 - 254.3
Other recognised gains and losses 7.8 10.6 7.3
Ordinary shares issued 1.2 1.1 2.1
------- ------- -------
Net increase in shareholders' funds 73.7 37.9 320.2
Shareholders' funds at 1 January 2,427.1 2,106.9 2,106.9
------- ------- -------
Shareholders' funds at 30 June 2,500.8 2,144.8 2,427.1
Summarised Group cash flow statement
Year to
Half year to Half year to 31 December
30 June 2001 30 June 2000 2000
unaudited unaudited audited
For the six months note £m £m £m
ended 30 June 2001
Net cash inflow
from operating
activities 12(1) 93.7 100.5 179.6
Dividends from
joint ventures and
associate 4.4 4.0 8.3
Returns on
investments and
servicing of
finance
Interest received 4.4 3.9 5.6
Interest paid (52.9) (49.0) (99.9)
Dividends paid to
preference and
minority
shareholders (6.1) (6.0) (12.1)
----- ------ ------
(54.6) (51.1) (106.4)
Taxation (6.5) (3.2) (4.3)
------ ------ -----
Net cash inflow
before investing
activities,
financing and 37.0 50.2 77.2
equity Dividends
Capital
expenditure and
financial
investment
Purchase and
development of
investment
Properties (108.2) (144.0) (264.4)
Sales of
investment 90.9 40.0 49.6
properties
Other asset
additions less (15.4) 1.5 (11.5)
sales ------ ------ ------
(32.7) (102.5) (226.3)
Acquisitions and
disposals
Purchase of
subsidiary
undertakings (net
of cash and bank - - (0.1)
overdrafts
acquired)
Net movement on
joint ventures,
associate and 11.7 (0.8) (2.9)
others ------ ------ ------
11.7 (0.8) (3.0)
Equity dividends (30.6) (28.1) (47.5)
paid ------ ----- ------
Net cash outflow
before use of
liquid resources (14.6) (81.2) (199.6)
and financing
Management of
liquid resources
Investment in term
deposits (65.5) (25.8) 14.0
------ ------ ------
Net cash (outflow)
/ inflow from the
management of
liquid resources (65.5) (25.8) 14.0
Financing
Issue of ordinary
shares 1.2 1.1 2.1
Increase in debt 12(2) 119.5 113.2 174.3
------ ------ ------
Cash inflow from
financing 120.7 114.3 176.4
------ ------ ------
Increase /
(decrease) in cash 40.6 7.3 (9.2)
====== ====== ======
Summarised Group balance sheet
31 December
30 June 30 June 2000
2001 2000 audited
unaudited unaudited
As at 30 June 2001 Note £m £m £m
Fixed assets
Tangible assets
- properties 6 3,541.6 3,074.2 3,463.8
- other 7 83.1 69.0 79.7
Investments in joint ventures:
- share of gross assets 224.5 221.2 229.9
- share of gross liabilities (46.0) (41.8) (42.2)
------- ------- -------
8 178.5 179.4 187.7
Investment in associate 8 4.0 3.6 4.1
------- ------- -------
3,807.2 3,326.2 3,735.3
------- ------- -------
Current assets
Stocks 112.9 85.3 106.4
Debtors, prepayments and accrued 60.4 63.7 53.7
income
Trading investments 42.2 37.0 38.9
Assets held for resale 36.4 24.4 29.3
Cash and deposits 146.2 94.0 36.9
------- ------- -------
398.1 304.4 265.2
------- ------- -------
Total assets 4,205.3 3,630.6 4,000.5
======= ======= =======
Capital and reserves
Called up share capital 9 138.7 138.5 138.6
Share premium account 9 328.4 326.4 327.3
Capital reserves 9 1,677.6 1,392.1 1,642.5
Profit and loss account 9 356.1 287.8 318.7
------- ------- -------
Shareholders' funds 2,500.8 2,144.8 2,427.1
Minority interests 22.8 17.1 21.4
Provisions for liabilities and 5.2 4.1 6.2
charges
Creditors falling due within one
year
Borrowings 10 49.9 66.6 54.6
Other 184.7 176.6 197.9
Creditors falling due after more
than one year
Borrowings 10 1,438.2 1,214.9 1,289.9
Other 3.7 6.5 3.4
------- ------- -------
4,205.3 3,630.6 4,000.5
======= ======= =======
Shareholders' funds attributable
to:
Equity shareholders - ordinary 2,360.6 2,004.5 2,286.8
shares
Non - equity shareholders
- preference shares 140.2 140.3 140.3
------- ------- -------
2,500.8 2,144.8 2,427.1
------- ------- -------
Ordinary shares in issue 414.4 413.4 413.9
(millions)
Dilutive adjustments (millions) 52.5 52.9 53.0
------- ------- -------
Ordinary shares in issue diluted 466.9 466.3 466.9
(millions) ------- ------- -------
Net assets per ordinary share
- basic 570p 485p 553p
- diluted 536p 460p 520p
Notes to the interim Financial Statements
1. Basis of preparation
The accounting policies used for the audited financial statements at 31
December 2000 have been used in the preparation of the interim financial
statements. The interim financial statements are unaudited and do not comprise
full financial statements. The results for the year to 31 December 2000 are
an abridged statement of the Group financial statements for that year which
have been delivered to the Registrar of Companies, and on which the auditors'
report was unqualified.
Investment properties are included at 30 June 2001 valuations. At 30 June
2000 no formal external valuation of the property portfolio was undertaken.
2. Segmental information
Turnover
Half Year to Half Year to Year to
30 June 30 June 31 December
2001 2000 2000
unaudited unaudited audited
£m £m £m
Business segments:
Property investment 117.0 104.6 216.4
Property trading 19.8 37.4 42.9
Utilities 8.4 11.7 22.0
Other activities
Common costs
------- ------- -------
145.2 153.7 281.3
------- ------- -------
Geographical segments:
United Kingdom 88.4 89.3 179.6
Canada 8.1 6.9 14.5
USA 21.4 15.8 37.2
Europe 27.3 41.7 50.0
------- ------- -------
145.2 153.7 281.3
------- ------- -------
Operating Profit
Half Year to Half Year to Year to
30 June 30 June 31 December
2001 2000 2000
unaudited unaudited audited
£m £m £m
Business segments:
Property investment 105.9 95.3 196.7
Property trading 6.0 5.0 6.7
Utilities (4.6) (1.2) (3.6)
Other activities 1.8 4.0 5.4
Common costs (6.6) (6.1) (12.9)
------- ------- ------
102.5 97.0 192.3
------- ------- -------
Geographical segments:
United Kingdom 70.2 69.5 137.8
Canada 5.8 4.6 10.1
USA 11.2 12.4 23.9
Europe 15.3 10.5 20.5
------- ------- -------
102.5 97.0 192.3
------ ------ -------
3. Net Interest
Half Year Half Year to Year to
to 30 June 31 December
30 June 2000 2000
2001 unaudited audited
unaudited £m £m
£m
Interest paid 56.7 50.1 103.1
Less interest received (3.7) (3.6) (5.9)
Less amount charged to
- the development of trading properties (1.2) (0.6) (1.3)
- the development of investment (12.8) (8.8) (20.5)
properties
- the development of utilities plant (0.9) - (0.5)
------- ------ -------
Charged to profit and loss account
- group 38.1 37.1 74.9
- joint ventures and associate 1.4 1.7 3.3
------- ------- ------
39.5 38.8 78.2
------- ------- -------
4. Taxation
An effective tax charge of 15% (2000 half year 20%, 2000 full year 8%) of
profit on ordinary activities before tax has been included for the six months
and is based on the estimated full year rate.
5. Ordinary dividends
Half Year to Half Year to Year to
30 June 30 June 31 December
2001 2000 2000
unaudited unaudited audited
£m £m £m
Ordinary dividends payable per share:
Interim dividend at 5.1p per share 21.1 19.4 19.4
(2000 4.7p)
Final 2000 dividend at 7.4p - - 30.6
------- ------- -------
21.1 19.4 50.0
------- ------- -------
6. Tangible assets - investment properties
UK Canada USA Europe Total
£m £m £m £m £m
At 1 January 2001 2,653.9 173.5 425.4 211.0 3,463.8
Exchange movement - 8.8 24.2 (8.8) 24.2
Additions 48.7 7.0 40.5 15.1 111.3
Disposals (48.7) - (32.7) (9.6) (91.0)
Surplus on valuation 23.9 - 5.5 3.9 33.3
------ ------ ------ ------ ------
At 30 June 2001 2,677.8 189.3 462.9 211.6 3,541.6
------- ------- ------- ------- ------
Completed properties 2,413.9 168.5 330.2 179.6 3,092.2
Properties for or under
development 263.9 20.8 132.7 32.0 449.4
------ ------ ------ ------ ------
2,677.8 189.3 462.9 211.6 3,541.6
------- ------ ------ ------ ------
The Group's completed investment properties and land held for development were
externally valued as at 30 June 2001 by Insignia Richard Ellis or Conrad
Colliers Ritblat Erdman or C B Hillier Parker in the United Kingdom, in the
USA by Realty Services International, Inc., in Canada by Fish Marks Jenkins,
in Belgium by King Sturge and in France by Bourdais Expertises s.a.
7. Tangible assets - other
Cost Depreciation Net
£m £m £m
At 1 January 2001 127.1 (47.4) 79.7
Additions 6.3 (2.9) 3.4
Disposals (0.1) 0.1 -
------- ------- -------
At 30 June 2001 133.3 (50.2) 83.1
------- ------- -------
The net book value includes utilities plant and equipment amounting to £80.9
million (31 December 2000 £77.7 million).
8. Investments
Joint Total Total
Associate Ventures 2001 2000
£m £m £m £m
At 1 January 2001 4.1 187.7 191.8 181.7
Exchange movement 0.3 1.2 1.5 1.5
Additions - - - 1.4
Return of capital - (10.0) (10.0) -
Reduction on joint venture becoming
a subsidiary - - - (2.3)
Dividends received (0.2) (4.2) (4.4) (8.2)
Valuation (deficit)/surplus (0.3) (1.7) (2.0) 6.8
Share of profits net of taxation 0.1 5.5 5.6 10.9
------ ------ ------ ------
At 30 June 2001 4.0 178.5 182.5 191.8
------ ------ ------ ------
9. Capital and reserves
Share Capital Capital Profit
Share premium reserve reserve and
capital account unrealised realised loss Total
£m £m £m £m £m £m
At 1 January 2001 138.6 327.3 1,507.7 134.8 318.7 2,427.1
Realisation of
revaluation gains and
losses of previous - - 9.6 (9.6) - -
years
Revaluation surpluses - - 31.3 - - 31.3
Other recognised
gains and losses - - 8.5 (4.1) 3.4 7.8
Retained profit for
the period - - - - 33.4 33.4
Shares issued 0.1 1.1 - - - 1.2
Reserve transfer - - 7.8 (8.4) 0.6 -
------ ------ ------ ------ ------ -------
At 30 June 2001 138.7 328.4 1,564.9 112.7 356.1 2,500.8
------ ------ ------- ------ ------ ------
10. Borrowings
30 June 30 June 31 December
2001 2000 2000
unaudited unaudited audited
£m £m £m
Maturity profile of Group debt
In one year or less 49.9 66.6 54.6
In more than one year but less
than two 73.6 20.5 46.2
In more than two years but less
than five 129.6 152.3 186.5
In more than five years but less
than ten 377.3 327.2 356.4
In more than ten years 857.7 714.9 700.8
------ ------ ------
Total Group debt 1,488.1 1,281.5 1,344.5
------ ------ ------
Split between secured and unsecured
borrowings
Secured (on land and buildings) 204.2 201.8 183.0
Unsecured 1,283.9 1,079.7 1,161.5
------- ------- -------
1,488.1 1,281.5 1,344.5
------- ------- --------
Maturity profile of undrawn
borrowing facilities
In one year or less 42.4 25.6 35.1
In more than one year but less
than two 39.6 52.3 18.0
In more than two years 428.6 469.8 415.0
------- ------- -------
Total available undrawn facilities 510.6 547.7 468.1
------- ------- -------
Fair value of borrowings and
associated derivatives
Book value 1,488.1 1,281.5 1,344.5
Net fair market value 1,562.2 1,329.0 1,457.8
------- ------- -------
Pre-tax mark to market adjustment 74.1 47.5 113.3
Tax relief due on early (14.3)
redemption/termination (22.2) ------- (34.0)
- ------ -------
After tax mark to market adjustment 51.9 33.2 79.3
------- ------- -------
11. Contingent Tax
No provision has been made for taxation estimated at £341.0 million (2000 half
year £247.0 million, 2000 full year £329.0 million) which might become payable
if the Group's properties and plant were sold at their book value.
12. Notes to Group cash flow statement
Half Year Half Year to Year to
to 30 June 31 December
30 June 2000 2000
2001 unaudited audited
unaudited £m £m
£m
(1) Reconciliation of operating profit
to net cash inflow from operating
activities
Operating profit 102.5 97.0 192.3
Less other income reallocated (2.2) (3.2) (5.1)
Add back depreciation 2.9 2.7 5.6
Adjust for other non-cash items - (0.6) (0.5)
Net rental income from trading 0.4 0.6 1.1
properties -------- -------- --------
103.6 96.5 193.4
Other movements arising from operations:
(Increase)/decrease in stocks (6.3) 8.0 (8.7)
Increase in debtors (4.3) (4.6) (3.2)
Increase/(decrease) in creditors 0.7 0.6 (1.9)
------- ------- --------
Net cash inflow from operating 93.7 100.5 179.6
activities ------- ------- -------
(2) Reconciliation of net cash flow to
movement in net debt
Increase/(decrease) in cash in the 40.6 7.3 (9.2)
period
Increase in debt (119.5) (113.2) (174.3)
Increase/(decrease) in liquid resources 65.5 25.8 (14.0)
------- ------- -------
Change in net debt resulting from cash
flows (13.4) (80.1) (197.5)
Reduction of debt due to disposal of
subsidiary - 4.1 4.0
Translation difference (20.9) (21.6) (24.2)
------- ------- -------
Movement in net debt in the period (34.3) (97.6) (217.7)
Net debt at 1 January 2001 (1,307.6) (1,089.9) (1,089.9)
------- ------- -------
Net debt at 30 June 2001 (1,341.9) (1,187.5) (1,307.6)
-------- ------- -------
(3) Analysis of net debt At Cash Exchange At
1 Jan 2001 Flow Movement 30 June
£m £m £m 2001
£m
Cash in hand and at bank * 14.4 43.9 (0.2) 58.1
Overdrafts (2.4) (3.3) (5.7)
-------
40.6
Loan capital (1,342.1) (119.5) (20.8) (1,482.4)
Term deposits * 22.5 65.5 0.1 88.1
------- ------- ------- -------
(1,307.6) (13.4) (20.9) (1,341.9)
------- ------- ------- -------
* Cash per balance sheet
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