London & Associated Properties Regulatory News (LAS)

21 Mar 2005 08:00

FOR IMMEDIATE RELEASE21st March 2005 LONDON & ASSOCIATED PROPERTIES PLC: PRELIMINARY RESULTS FOR 12 MONTHS TO 31ST DECEMBER 2004 London & Associated Properties is fully listed and is focussed on theacquisition of, and long term management of, well located shopping centres andother retail investments. Today it owns and manages ‚£250m of retailinvestments. Over the past 12 months its share price has risen 75% (96% sinceJanuary 2004) and LAP was one of the best performing property shares during2004.HIGHLIGHTS * Fully diluted net assets grew to 111.02p a share + 25% * Wholly owned shopping centres valued at ‚£108.3m + 9.2% * Value of joint venture properties rose to ‚£124m + 14% * Annual rent roll currently ‚£7.8m against ERV of ‚£8.4m * Pre-tax profits increased to ‚£3.02m from ‚£2.81m + 8% * Final dividend of 1.65p per share recommended + 8.2% * Compound dividend growth over past five years + 8.45% * Interim dividend to be restored during current year * Planning consent for partial redevelopment of King Edward Court, Windsor secured and virtually all new space pre-let"LAP is currently in an unprecedented position of strength. We have a number ofsignificant value enhancing projects underway, we have over ‚£30m in cash andundrawn facilities, and we have a carefully chosen core portfolio of shoppingcentres where tenant demand is at a record level. I therefore look forward withconfidence to the future," Michael Heller, Chairman. -more- Contact:John Heller, Chief Executive, LAP Tel: 020 7415 5000Robert Corry, Finance Director, LAP. Tel: 020 7415 5000Baron Phillips, Baron Phillips Associates Tel: 020 7920 3161 CHAIRMAN'S STATEMENTIt gives me great pleasure to report on a year of excellent progress at London& Associated Properties in 2004. We achieved a substantial uplift in the netasset value of the Company reflecting both our management strategy and stronginvestor demand for shopping centres.Over the 12 months to 31 December 2004 LAP's fully diluted net assets grew by25% to 111.02p a share from last year's 88.58p reflecting the uplift in our netassets which, including our listed share portfolio at market value, rose to ‚£91.2 million against ‚£72.8 million in 2003. Indeed, when the market value ofour 42% owned associate Bisichi Mining plc is taken into account, fully dilutednet assets further rise to 114.71p a share and net assets stand at ‚£94.2million.Our wholly owned shopping centres increased in value by 9.2% over the year to ‚£108.3 million while those owned by Analytical Properties, our joint venturewith Bank of Scotland, grew by 14% to ‚£124 million. Today LAP owns or manages,on behalf of Bisichi, Dragon Retail Properties and Analytical, retailproperties valued at over ‚£250 million compared to ‚£219 million a year ago.Pre-tax profits for the period rose by 8% from ‚£2.81 million to ‚£3.02 million. Fully diluted earnings per share fell marginally to 2.80p from 2.97p due to anincreased tax charge.The Board is recommending a final dividend of 1.65p a share, an increase of8.2% which, if agreed by shareholders, will be paid on 8 July 2005 to thoseshareholders on the register as at 17 June 2005. Over the past five yearsthere has been a compound dividend growth of some 8.45%.The Board feels it is no longer appropriate to issue shares as an alternativeto a cash dividend at a discount to net assets, which is dilutive, andconsequently there will be no scrip alternative this year. However, the Boardintends to restore payment of an interim dividend during the course of thecurrent year.Sales during the year amounted to ‚£4.4 million. Since the year end, we havealso disposed of The Moor Centre at Brierley Hill, West Midlands for ‚£4.85million. Total sales over the past two years amount to over ‚£20 million and theproceeds have been added to our cash balances. This reflects our ongoingstrategy of selling mature properties into a strong investment market. On a like for like basis, the net rental income from our directly ownedportfolio rose by ‚£280,000. This figure is made up of ‚£416,000 of new lettingsand rent reviews, while we lost ‚£136,000 as units became empty. Of this lostincome, some 70% was as a result of deliberately vacating units pending theirredevelopment. The annual rent roll of our portfolio now stands at ‚£7.8 million against ‚£7.9million previously. Voids remain extremely low and, including those held emptyfor redevelopment, account for less than 2% of the portfolio. The estimatedrental value of the portfolio is ‚£8.4 million.The biggest event during 2004 was our success in obtaining planning permissionfor the redevelopment of part of King Edward Court, Windsor, which is owned byAnalytical Properties in a joint venture with the Bank of Scotland. Our abilityto obtain this planning consent at the first attempt in a sensitive locationreflects our ability to work closely and successfully with local authoritiesand I congratulate our management team on achieving this. Virtually the entireredevelopment, amounting to some 170,000 square feet gross, is pre-let and willincrease the amount of retail space at King Edward Court by over 50,000 squarefeet. The tenants to whom we have pre-let units are of the highest quality, and oncethe scheme is completed we anticipate a substantial uplift in capital value asincome across the entire shopping centre increases to match the rental levelsobtained in these new units. Development is currently underway and funding for the anticipated ‚£16.5 millionconstruction costs is being provided by the Bank of Scotland. A contributiontowards the cost of the development will also be provided by the Royal Boroughof Windsor and Maidenhead as freeholder.During the year we invested ‚£9.4 million in upgrading and improving our whollyowned portfolio. This included the ‚£7.8 million acquisition of a substantial15,000 square foot retail unit in Fargate which adjoins our Orchard Squareshopping centre in Sheffield. We now have extensive frontage to the city'sprincipal retail thoroughfare, and have the opportunity to amalgamate this unitinto our shopping centre over the medium term. We also acquired for ‚£560,000 aPost Office adjacent to our Mall shopping centre in Dagenham, which opens up anumber of development opportunities which we are exploring. During the year we acquired 750,000 of our own shares at an average price of76.6p which have been retained as Treasury shares. The Board continues to lookfor ways to create shareholder value and, in the absence of suitable propertyinvestment opportunities, may acquire further shares in the future. Elsewhere I am pleased to report that Dragon Retail Properties, our jointventure with Bisichi, has also performed well with net assets increasing by14.3% to ‚£3.2 million following a number of profitable disposals. BisichiMining has had a good year with profit before tax rising to ‚£2.0 million (2003:‚£1.5 million). Bisichi's South African coal mining subsidiary has undertakenseveral initiatives during the year that should ensure further good progressover the coming periods with increased coal production and a higher averageselling price.I would like to take this opportunity to thank all my Board colleagues, LAPstaff and advisors for their hard work over the past 12 months. This has beenan exceptional year for LAP and this level of progress would not have beenpossible without the contribution of a large number of people. LAP is in an unprecedented position of strength. We have a number ofsignificant value enhancing projects underway, we have over ‚£30 million in cashand undrawn facilities, and we have a carefully chosen core portfolio ofshopping centres where tenant demand is at a record level. I therefore lookforward with confidence to the future.Michael HellerChairman21 March 2005CHIEF EXECUTIVE'S REPORTThe year under review was another one of outstanding growth in our investmentportfolio. At the end of December 2004 the gross value of our directly ownedportfolio, comprising town centre shopping centres, was valued at ‚£108.3million representing growth of 9.2% on a like for like basis. At the sametime, we sold ‚£4.4 million of mature property and made two strategicacquisitions adjacent to our shopping centres in Sheffield and Dagenham at acombined gross cost of ‚£8.4 million.Analytical Properties, our joint venture with the Bank of Scotland, also had anexceptional year. Its two properties, King Edward Court in Windsor and ChurchSquare in St Helens, were valued at ‚£124 million, an uplift of 14%. LAPmanages these properties on behalf of Analytical, and today LAP owns or managesmore than ‚£250 million of property on behalf of Analytical, Bisichi Mining andDragon Retail Properties.During 2004 we contracted further net rents in our directly owned portfolio ofover ‚£280,000 following a series of new lettings and rent reviews. Many ofthese were at record rents, and have, in part, been achieved because we stillhave an extremely low void level of 2% of gross rental income. Rental growthhas also been achieved as we have developed new units to meet modern retailerrequirements. These units are then capable of attracting the best retailersable and willing to pay top rents.Rental income from our directly owned properties now stands at ‚£7.8 million perannum compared to ‚£7.9 million in 2003. This is a particularly satisfactoryperformance following the sale of over ‚£20 million of directly owned propertyin the last two years. This year is the first time that the full impact of thelost income, amounting to ‚£815,000, has been reflected in the profit and lossaccount, as the majority of disposals took place in late 2003. Much of therental income lost in these disposals has not yet been replaced except for thestrategic properties acquired in Sheffield and Dagenham. This shows theunderlying growth in the core portfolio which we have retained. I will now report in greater detail on our principal shopping centres.Directly held portfolioOrchard Square, SheffieldIn March, we acquired the freehold of the Dixons unit which is immediatelyadjacent to Orchard Square for ‚£7.8 million gross. The acquisition was paidfor entirely out of a revolving credit facility provided by the Royal Bank ofScotland. Dixons' lease runs until 2012 at over ‚£400,000 per annum with a rentreview in 2007. The acquisition creates an opportunity, over the medium term,to develop a substantial, flagship unit of about 20,000 square feet withextensive frontage on to Fargate.Elsewhere at Orchard Square, we have, once again, created a unit on land thatwas previously non-income producing. We developed a unit to the rear of theshopping centre at a cost of about ‚£200,000 which we have let to Subway, theinternational sandwich retailer, at ‚£35,000 a year. This rent equates toapproximately ‚£68 a square foot, further underpinning future rent reviews atOrchard Square. The rent review programme continues to bring excellent rental growth, and,during the course of 2004, we achieved net growth in rents of over ‚£76,000 ayear, which was ahead of expectations.Saxon Square, ChristchurchSaxon Square continues to perform well for us and retailer demand there is asstrong as ever. During 2004 we continued negotiations with the planningofficers at the local authority over the redevelopment of a number of smallunits at the weakest end of the shopping centre. We are looking to build aunit of around 5,000 square feet to act as an anchor at that end, as well asapproximately 10 residential units. Progress has to date been slow although itmust be recognised that this is a sensitive site in a conservation area. However, both LAP and the council are keen to find a mutually satisfactorysolution, and I remain confident that this will be achieved in the near future.Elsewhere in the centre, we split a unit previously let at ‚£21,900 per annumand re-let part of it to Toni and Guy hairdressers at an annual rent of ‚£32,500. The remainder of the unit will, in due course, be amalgamated with twosmall adjacent shops. We have also obtained planning consent for a cafƒ© in the centre and are at anadvanced stage of negotiation with a national coffee bar operator to take alease. The unit will be created out of what was previously ancillary space inan adjacent unit.We have achieved good growth at rent review at Saxon Square and we added ‚£57,000 to the annual rent roll in 2004.The Mall, DagenhamDuring 2004 we acquired for ‚£560,000 the long leasehold of the Post Officeadjacent to The Mall. This unit can be amalgamated into our centre, but moreimportantly, ownership of the Post Office enables us to expand our shoppingcentre to the rear. We are exploring with our professional team a number ofexciting opportunities which have only become available following thispurchase. During the year we contracted a net incremental rent of ‚£79,000 per annum. Kings Square, West BromwichKings Square continues to be popular with retailers and during the year weachieved four new lettings in the centre. These were only possible as a resultof our active participation as we negotiated surrenders with and relocated someexisting tenants, and redeveloped one large unit into two better configuredones. This enabled us to introduce a number of new national tenants to theCentre, all at substantial increases in annual rent compared to theirpredecessors. These include Cardfair, Raid Shoes and Vodafone, which is payingover ‚£70 per square foot compared to the previously achieved highest rent of ‚£65. Joint VenturesKing Edward Court, WindsorIt was a year of dramatic progress at King Edward Court. In July we weregranted planning consent for a development that will see us demolishapproximately 55,000 square feet of buildings comprising an old Waitrosesupermarket, a snooker club and a number of small lock-up shops, as well as27,000 square feet of offices. We will construct in their place over 100,000square feet of new prime retail space and a 113 bed hotel which was pre-let atthe end of 2003 to Travelodge. We will also refurbish the town's principal carpark that forms part of our centre. The retail space has been divided into four units, totalling some 60,000 squarefeet. They have been pre-let to Zara and Hennes who are new to Windsor, aswell as New Look which is relocating from Peascod Street, traditionally seen asWindsor's prime shopping location. On the first floor, we are creating a new42,500 square foot supermarket for Waitrose. These units, plus the Travelodgehotel, will produce ‚£2.2 million per annum gross and we estimate a total annualrental value of over ‚£2.4 million for this block when all lettings arecompleted. The previous rents here totalled ‚£1.1 million a year. These figuresdo not allow for the additional income that we anticipate generating from thecar park following its refurbishment. The new lettings equate to ‚£125 per square foot compared to a current rentallevel of between ‚£97 and ‚£101 per square foot, and rents passing at the time ofacquisition of around ‚£80 per square foot. We have deliberately retained one5,000 square foot unit with a view to marketing it towards the end of 2005. Webelieve that we will achieve higher rental levels as the development nearscompletion.Although demolition is underway, the construction contract will be awarded inthe next three months. We anticipate construction costs of around ‚£16.5million including the car park. The Council, as freeholder, is contributingtowards these costs approximately pro-rata to the head lease gearing. Thebalance of the financing will be provided by the Bank of Scotland as adevelopment loan. Construction is scheduled to complete in late 2006.Waitrose is maintaining its presence at King Edward Court during theconstruction period by taking a temporary lease at a rent of ‚£150,000 per annumon a 4,500 square foot unit which we created by extending a double unit to therear. The unit had previously been let to Superdrug at an annual rent of ‚£118,000. Waitrose will vacate this unit as soon as its new store is ready andwe are already aware of strong tenant demand for this type of larger unit in aprime position. Elsewhere at King Edward Court, the lease renewals of ten units have led tothree tenants deciding to leave. The largest of these units was let to ThomasCook at ‚£87,000 per annum. We are currently on site to divide this poorlyconfigured unit into two better shaped shops. These have been pre-let to CostaCoffee, which is new to the shopping centre, and to Timpsons, the nationalretailer, which was displaced by the redevelopment of its previous unit. Thetotal rent for these units will be over ‚£105,000 a year and construction costswill be around ‚£200,000.The remaining two vacant units, which are next door to each other, will beamalgamated and extended to create a single unit with approximately 3,600square feet of trading space at ground floor. Preliminary interest fromretailers has been most encouraging, and this unit, along with the one lettemporarily to Waitrose, will meet some of the demand for medium size unitsthat currently cannot be fulfilled within the town. Church Square, St HelensThe first full year of Analytical's ownership of this shopping centre has beena success, and we have exceeded the targets that were set at the time ofacquisition.In March, Argos vacated its shop which was large and poorly configured. Wedivided the unit into two and these units have now been let to St Helens RugbyClub and Gamestation at a total rent of ‚£137,500 a year compared to ‚£122,000previously. Costs of splitting the unit were ‚£150,000.In 2004, we contracted an additional ‚£193,000 of annual rent at review whichexceeded estimated rental values at the time of acquisition. In addition, wecontracted a further ‚£220,000 a year of space through new lettings. During ourownership since August 2003, the rent has increased by over 6% to ‚£5.5 milliona year.We continue to work closely with the local authority to explore ways ofextending the shopping centre to create additional retail space. Interest fromretailers is encouraging and we expect to continue to make progress during thecoming year. Any development will be subject to negotiating with occupationaltenants and should therefore be considered a medium term project.In line with our ongoing policy, we have continued to dispose of propertieswhere we no longer see opportunities to grow rental income and capital values. During 2004 we disposed of Hebburn Shopping Centre in Hebburn, South Tynesidefor ‚£4.4 million in cash. We have also since the year end disposed of The MoorCentre, Brierley Hill for ‚£4.85 million in cash. Both of these sales were at asurplus to book value.We currently have no further properties under offer although we continue tolook critically at all of our portfolio and will dispose of any investmentswhose potential we feel we have maximised.The year has started well and demand for our shops from occupiers continues tobe encouraging. I remain confident as we progress through 2005.John HellerChief Executive21 March 2005FINANCIAL DIRECTOR'S REPORTCash FlowThe cash and facilities currently available to the group have increased to over‚£30 million (2003: ‚£20 million). The main reason for this increase was thesale of our investments at Hebburn and, since the year end, at Brierley Hill. The increase also reflects the negotiation of new banking facilities togetherwith the cash generated from our property portfolio.In April 2004, we signed a new seven year ‚£20 million Revolving CreditFacility. To date we have drawn ‚£8.4 million to finance the strategic purchaseof the new Dixons unit in Sheffield and the Post Office in Dagenham.During the year we purchased 750,000 shares into treasury at a cost of ‚£581,000. This was paid for with cash below net asset value per share, thusimproving the net asset value and earnings per share.We now have 51.3% of our term debt hedged. 43.3% is at fixed rates of interestwith the balance protected by an 'interest rate collar' to ensure we are notexposed to any wild fluctuations in interest rates. The remainder of ourfloating rate debt is linked to LIBOR.Profit & LossDespite property disposals which resulted in a loss of rental income of ‚£815,000 in 2003, the company's rental income was ‚£7.8 million (2003: ‚£7.9million). This reflects the active management of our portfolio.Following the sale of properties in 2002 and 2003 the increased cash on deposithas led to a rise in interest receivable to ‚£780,000 (2003: ‚£330,000).Even though the base rate has increased from 3.75% to 4.75% during 2004, ouraverage cost of debt has risen only marginally to 7.5% (7.3% in 2003). This isa result of our prudent debt management and the hedging strategies we haveadopted. Group interest payable was ‚£7.1 million (2003: ‚£5.7 million), ofwhich ‚£3.4 million (2003: ‚£2.3 million) relates to joint ventures andassociated companies. The remaining ‚£3.7 million (2003: ‚£3.4 million) iscovered 1.7 times (2003: 1.7 times) by the company's net income.TaxationCurrent year tax charge is 23.8% (2003: 14.4%). Last year's tax charge wasunusually low due to the release of the provisions for capital allowancesrelating to properties sold, under the FRS 19 Accounting Standard.Balance SheetThe group property portfolio, which includes the properties owned by Bisichi,Dragon Retail Properties and Analytical, grew in the year by 11.9% on a likefor like basis. The net assets of the group have grown by 25% to ‚£91.2 million(2003: ‚£72.8 million), while the diluted net assets per share rose by 25% to111.02p (2003: 88.58p) including current assets at market value. BisichiMining's share price at 31 December 2004 showed a surplus over its net assetvalue. This, if added to the net assets of the company, would lead to netassets of ‚£94.2 million and a net asset value per share of 114.77p compared to87.17p last year.Gearing as at 31 December 2004 was 38.4% (2003: 38.6%) net of listedinvestments. If we exclude the cash held as agents for our joint venture,gearing is 41.5%, (2003: 42.4%).The notional adjustment of the debt to 'fair value' of our term debt iscurrently 4.40p per share (2003: 4.83p). This would equate to a reduction innet assets of ‚£3.6 million (2003: ‚£3.9 million). It remains our policy not torepay long term debt early. DividendA dividend of 1.65p is recommended, an 8.20% increase on last year and showinga compound growth of 8.45% over the last five years. The dividend is covered1.7 times by profits after tax. This year we are no longer offering a scripalternative, but it is our intention to pay an interim dividend.Our associated company, Bisichi Mining, in which we hold a 42% stake, producedprofits before tax of ‚£2.0 million, an increase of 34% over the previous year. Shareholder funds grew by 30%. This growth was due to the good performance ofBisichi's coal mining subsidiary.Dragon Retail Properties, our joint venture with Bisichi, also had anotherstrong year with its net assets increasing by a further 14% to ‚£3.2 million.International Financial Reporting Standards (IFRS)We reviewed the effect of the new accounting standards on our statutoryaccounts. The main effect to the balance sheet will be the inclusion of: * The value of the contingent tax (deferred tax) that may arise on the sale of the properties for the year ending 31 December 2004 will be ‚£7.4 million; and * The marking of debt to fair value. This adjustment, which is the difference between the interest rates we are paying and current market rates, will be an increase of ‚£3.6 million in the value of our debt as reported in our balance sheet. These items are both currently shown in the notes to the accounts.The changes to the Profit and Loss account will include certain items which wecurrently take direct to reserves. This may lead to distortions in the profitdeclared in any given year, although the overall cash position of the groupwill be unaffected.As stated above we have cash and facilities of ‚£30 million which will enable usto seize opportunities as they arise. This position of strength followssuccessful implementation of our programme of disposals of those properties wefeel no longer offer opportunities for growth. We continue to look for ways tobuild shareholder value while continuing to prudently manage the company'sfinances.Robert CorryFinance Director21 March 2005London & Associated Properties PLCConsolidated profit and loss accountfor the year ended 31 December 2004 2004 2003 Notes ‚£000 ‚£000 Gross rental income Group and share of joint ventures 12,964 11,360 Less: joint ventures- share of rental income (5,205) (3,469) 7,759 7,891 Less: property overheads- Ground rents (1,677) (1,252) Direct property expenses (1,135) (1,078) Attributable overheads (2,162) (1,787) (4,974) (4,117) Less: joint ventures- share of overheads 1,930 1,169 (3,044) (2,948) Net rental income 1 4,715 4,943 Listed investments- net income 345 62 Operating profit 5,060 5,005 Share of operating profit of joint ventures 1&2 3,279 2,218 Share of operating profit of associate 1 820 813 9,159 8,036 Interest receivable 1 780 333 Interest payable 1 (7,061) (5,651) Exceptional items- Company- Profit on sale of investment properties 142 157 Associate and joint venture - (67) 3 142 90 Profit on ordinary activities before taxation 1 3,020 2,808 Taxation on profit on ordinary activities 4 719 404 Profit on ordinary activities after taxation 2,301 2,404 Dividend 5 1,346 1,241 Retained profit for the year 6 955 1,163 Earnings per share -basic 7 2.82 p 2.98p -fully diluted 7 2.80 p 2.97p Dividend per share 5 1.65 p 1.525pThe revenue and operating profit for the year is derived from continuing operations in the United Kingdom.Consolidated statement of total recognised gains and lossesfor the year ended 31 December 2004 2004 2003 ‚£000 ‚£000 Profit for the financial year 2,301 2,404 Currency translation difference on foreign currency net investments of associate 116 87 Increase on revaluation of investment properties Company 9,088 10,217 Associate and joint ventures 8,629 5,660 Taxation on gains on disposals of properties (404) (130) Total gains and losses recognised in the year 19,730 18,148 Consolidated Balance sheetat 31 December 2004 Notes 2004 2003 ‚£000 ‚£000 Fixed Assets Tangible assets 8 108,851 94,601 Investments in joint ventures Share of gross assets 67,254 59,129 Share of gross liabilities (49,803) (49,427) Share of net assets 17,451 9,702 Other investments Associated company 6,036 4,636 Other 3,784 3,784 9,820 8,420 27,271 18,122 136,122 112,723 Current assets Debtors 1,923 2,362 Investments at cost 2,681 2,135 (Market value ‚£3,724,000 (2003: ‚£3,011,000)) Bank balances 12,253 11,451 16,857 15,948 Creditors Amounts falling due within one year (11,613) (14,450) Net current assets (liabilities) 5,244 1,498 Total assets less current liabilities 141,366 114,221 Creditors Amounts falling due after more than one year (49,830) (40,988) Provisions for liabilities and charges (1,365) (1,346) Net assets 90,171 71,887 Capital and reserves Share capital 8,232 8,140 Share premium account 5,226 4,837 Capital redemption reserve 47 47 Revaluation reserve 55,404 39,820 Other reserves 429 429 Treasury shares (581) - Retained earnings 21,414 18,614 Shareholders' funds 90,171 71,887 Net assets per share* Basic 7 111.83p 89.39p Diluted 7 111.02p 88.58p *Including current asset investments at market value. Note of historical cost profits and lossesfor the year ended 31 December 2004 2004 2003 ‚£000 ‚£000 Reported profit on ordinary activities before taxation 3,020 2,808 Share of realisation of property revaluation gains of previous years Company 1,954 2,012 Associate and joint ventures 179 308 Historical cost profit on ordinary activities before tax 5,153 5,128 Retained historical cost profit for the year 3,088 3,483 Reconciliation of movement in shareholders fundsfor the year ended 31 December 2004 2004 2003 ‚£000 ‚£000 Profit for the financial year 2,301 2,404 Dividend (1,346) (1,241) Retained profit for the year 955 1,163 Associate's currency translation difference on foreign currency net 116 87 investments Unrealised changes on revaluation of investment properties 17,717 15,787 Gain on realisation of revaluation of property in previous years - 572 Taxation on gains on disposals of properties (404) (130) Shares issued 92 163 Shares purchased (581) (108) Share premium account movement 389 328 18,284 17,862 Shareholders' funds at 1 January 2004 71,887 54,025 Shareholders' funds at 31 December 2004 90,171 71,887 Consolidated cash flow statementfor the year ended 31 December 2004 2004 2003 ‚£000 ‚£000 ‚£000 ‚£000 Net cash inflow from operating activities 2,360 9,642 Returns on investments and servicing of finance Interest received 868 318 Interest paid (3,810) (3,322) Net cash outflow from returns on investments and servicing of finance (2,942) (3,004) Taxation Corporation tax (1,011) (400) Capital expenditure and financial investment Purchase of fixed asset investments - (3,900) Sale of properties 4,360 15,763 Sale of office equipment and motor cars 46 43 Property acquisitions and improvements (9,555) (3,191) Purchase of office equipment and motor cars (206) (200) Net cash (outflow) inflow for capital expenditure and financial investment (5,355) 8,515 Equity dividends paid (867) (783) Net cash (outflow) inflow before use of liquid resources and financing (7,815) 13,970 Net cash inflow from management of liquid resources Drawdown of short term loan from joint venture 643 307 643 307 Financing Shares issued for cash 115 141 Issue expenses (8) (8) Cost of treasury shares (581) - Cost of shares redeemed - (108) Drawdown/(Repayment) of medium term bank loan 8,525 (5,300) Net cash inflow (outflow) from financing 8,051 (5,275) Increase in cash in the period 879 9,002 Reconciliation of net cash flow to movement in net debt for the year ended 31 December 2004 2004 2003 ‚£000 ‚£000 Increase in cash in the period 879 9,002 Net cash (outflow) inflow from movement in debt (8,525) 5,300 (7,646) 14,302 Other movements on current asset investments 546 (58) Movement in net debt in the period (7,100) 14,244 Net debt at 1 January 2004 (28,998) (43,242) Net debt at 31 December 2004 (36,098) (28,998)Reconciliation of operating profit to net cash inflow from operating activities: 2004 2003 ‚£000 ‚£000 Operating profit 5,060 5,005 Depreciation charges 108 90 Profit on disposal of fixed assets (10) (7) Dividend from associated company 78 65 Dividend from joint ventures 100 93 Decrease (increase) in debtors 208 (641) (Decrease) increase in creditors (2,638) 4,979 (Increase) decrease in current asset investments (546) 58 Net cash inflow from operating activities 2,360 9,642 Analysis of net debt At 1 At 31 December January Cash Other 2004 2004 flow movements ‚£000 ‚£000 ‚£000 ‚£000 Bank balances in hand 11,451 802 - 12,253 Bank overdrafts (984) 77 - (907) Debt due within one year (300) - 300 - Debt due after one year (41,300) (8,525) (300) (50,125) Current asset investments 2,135 - 546 2,681 Net debt (28,998) (7,646) 546 (36,098)Notes31 December 20041 Analysis of profit on ordinary activities before taxation 2004 Joint Company Ventures Associate Total Net rental income 4,715 - - 4,715 Listed investments 345 - - 345 Share of operating profit of joint ventures - 3,279 - 3,279 Share of operating profit of associate - - 820 820 5,060 3,279 820 9,159 Interest receivable 721 48 11 780 Interest payable (3,664) (3,206) (191) (7,061) Exceptional items- Profit on sale of investment properties 142 - - 142 Profit on ordinary activities before taxation 2,259 121 640 3,020 2003 Joint Company Ventures Associate Total Net rental income 4,943 - - 4,943 Listed investments 62 - - 62 Share of operating profit of joint ventures - 2,218 - 2,218 Share of operating profit of associate - - 813 813 5,005 2,218 813 8,036 Interest receivable 305 20 8 333 Interest payable (3,396) (2,052) (203) (5,651) Exceptional items 157 (47) (20) 90 Profit on ordinary activities before taxation 2,071 139 598 2,808 2 Joint venture - Analytical PropertiesAnalytical Properties is a joint venture with Bank of Scotland which acquiredits first shopping centre in December 2002, and a second shopping centre inAugust 2003. These accounts include the group's share of income for the year.3 Exceptional items 2004 2003 ‚£000 ‚£000 Profit on sale of:- Freehold property 98 157 Leasehold property 44 - Joint venture - loss on sale of freehold property - (47) Associate - fixed asset investment- loss on disposal - (20) 142 90 4 Taxation 2004 2003 ‚£000 ‚£000 Based on the results of the year: Corporation Tax at 30 per cent (2003: 30 per cent) 544 494 Deferred taxation - increase (decrease) in provision 19 (311) Adjustment in respect of previous years 5 10 568 193 Joint ventures 23 30 Associate 128 181 719 404 The tax charge for both 2004 and 2003 was reduced due to the effect of accelerated capital allowances. 5 Dividend 2004 2003 Per share ‚£000 Per share ‚£000 Proposed final dividend 1.650p 1,346 1.525p 1,241 The proposed final dividend will be payable on 8th July 2005 to shareholders registered at the close of business on 17th June 2005.6 Profit attributable to London & Associated Properties PLC 2004 2003 ‚£000 ‚£000 Dealt with in the financial statements of: London & Associated Properties PLC 523 795 Joint ventures (2) 16 Associate 434 352 955 1,163 7 Earnings per share and net assets per share