Last checked at 28 Aug 2009 07:00
FOR IMMEDIATE RELEASE 28 August 2009
LONDON & ASSOCIATED PROPERTIES PLC: HALF YEARLY RESULTS TO 30 JUNE 2009 London & Associated Properties is a fully listed UK shopping centre and CentralLondon retail property specialist. The company owns and manages 245m of retailinvestmentsHIGHLIGHTS
* Rental income grew by 0.3m (4%) over period to 8.3m
* Net Asset Value per share rose 25% to 66.13p compared to December 2008 year
end * Group gross assets total 310m, including 245m of property
* Low tenant failure - insolvency accounted for only 0.1m out of 16.9m of
annualised rental income
* Current pre-let developments in London - Kings Road, Chelsea and Upper
Street, Islington - to complete in October 2009 and will produce additional
GBP1.5m of annual rent against aggregate costs of 2m * All debt is long term - no loans expire before September 2011 * Company continues to be covenant compliant * 5.5m current cash at bank * Cash dividend of 0.75p per share to be paid "Our portfolio has to date withstood the worst of the tenant defaults andrental declines witnessed elsewhere, and we have no reason to believe that itwill not continue to do so. I therefore feel that LAP can face the future withcautious optimism." Michael Heller, Chairman -more- Contact:
London & Associated Properties PLC Tel: 020 7415 5000
John Heller, Chief Executive or Robert Corry, Finance Director
Baron Phillips Associates Tel: 020 7920 3161
Baron Phillips
HALF YEAR REVIEW
We are pleased to report on a positive performance by LAP during the first halfof 2009. Against a backdrop of considerable economic uncertainty we have grownrental income by some 0.3m pa, or 4%, to 8.3m compared to the first half of2008. This is in spite of two of our properties in London being vacated toenable redevelopment.Of equal importance, we have experienced very few tenant failures during thesix months to 30 June 2009 which reflects the underlying strength of ourportfolio and the quality of tenant it attracts. Since the start of the year wehave lost through insolvency only 0.1m of rental income out of an annualisedrental income of 16.9m. These insolvencies have been from within the smallertenant end of our portfolio. There is a regular turnover of tenants here andhistorically such voids have tended to be filled quickly.During the first half of the year we have let space at a rent of 0.5m inaggregate. All these lettings have been at, or above, the original estimatedrental value (ERV) of the unit in question, and higher than the previouspassing rent. We have in total empty units with a combined ERV of just 0.3mpa, and only two tenants trading while in any form of administration; indeed,one tenant is on the verge of assigning its lease to a new, solvent company. InJune this year, we collected some 95% of all sums due within two weeks of thequarter day. This is comparable to any of the June rent collections of the lastfew years.We benefit from a profile of relatively long lease terms with a strong anddiversified tenant base. By value, 80% of our leases have more than five yearsto run and some 77% are let to major national multiples. This figure is skewedby our two markets in Brixton where there are shorter leases. However weexperience consistent income in these markets as any tenant voids tend to bereplaced within a few weeks. If the two markets are excluded, the percentage ofour leases with more than five years to run rises to 84% while major nationalmultiples account for 84% of our rent roll. Finally our largest single tenantaccounts for only 4.5% of our total rental income.The resilience of our rental income is also in part a result of our successfuldevelopment programme. In particular, we pre-let new units at Orchard Square,Sheffield to TK Maxx, Evans, Starbucks and others during 2008. These units werecompleted in August of that year and are now making a full contribution to ourincome. They generate a total rent of 1.0m per annum, an incremental rent of 0.5m.Our two current developments, at Kings Road, Chelsea, and Upper Street,Islington, in London, are progressing well. They have been pre-let to fashionretailers Anthropologie and Jack Wills respectively, with handover of bothanticipated in October 2009. The two units, amounting to 28,000 sq ft, willproduce further rental income of 1.5m per annum. The costs for both projects,including all fees, are anticipated to be less than 2m in total.We do not value our property portfolio at the interim stage. However, the bookvalue of our properties has increased from 218.5m at December 2008 to 219.7min June 2009. This increase reflects capital expenditure on our portfolio inthe last six months, particularly on the two London developments. Our netassets have nevertheless risen from 40.3m at the year end to 51.5m at June30, resulting in a net asset value per share of 66.13p. This is due principallyto a swing of 10.3m net of tax in the mark-to-market value of our interestrate derivatives. This movement in our interest rate derivatives also means weare reporting a pre-tax profit of 14.7m. This figure contrasts to a loss of 0.9m for the interim period a year ago and a loss of 57.2m at the 2008 yearend (when we were obliged to provide 21.1m in relation to these derivatives).Under EPRA, as at 30 June 2009 our net asset value was 62.9m, equivalent to81p per share, compared to 62.7m (82p per share) at 31 December 2008. Grossassets of the group, including those of Bisichi Mining, Dragon RetailProperties and Analytical Ventures were 310m, including property assets of 245m.All our term loans are hedged at rates between 4.69% and 4.76% plus margin. Weuse interest rate derivatives as management tools to regulate our cash flow anddo not trade in them. However, under IFRS we are required to revalue them on ahalf-yearly basis as though they were investments. As can be seen thistreatment creates significant movements in the "market value" of ourderivatives which in turn causes significant swings in our consolidated incomestatement.We are covenant compliant; all our debt, apart from overdrafts, is long termwith none of our loans expiring before September 2011. We also currently have 5.5m cash in the bank, even after expenditure on our two London developments.Throughout our portfolio our properties continue to perform satisfactorily.Some 55% of our centres by value are in prime locations in London and the SouthEast where the retail recession has, to date, been less severe than elsewherein the country. We monitor footfall at all our main centres and we have seen nodecline in the number of weekly shoppers. We can also report that car park usageat King Edward Court, Windsor is showing an increase in the number of visitorsover last year.We are proposing to pay a cash dividend at the half-year stage of 0.75p pershare. This is the same level as at the half year in 2008 and reflects ourconfidence in the group's financial position which is supported by our strongcash collections and the quality of ours tenants. The dividend will be payableon 22 January 2010 to shareholders on the register at 18 December 2009.Although it is too early to say that this current property downturn is easing,we do feel that the dramatic fall in confidence seen around the end of 2008 andinto the early months of this year has abated. Our portfolio has to datewithstood the worst of the tenant defaults and rental declines witnessedelsewhere, and we have no reason to believe that it will not continue to do so.We therefore feel that LAP can face the future with cautious optimism.Michael Heller John HellerChairman Chief Executive28 August 2009Consolidated income statementfor the six months ended 30 June 2009 6 months 6 months Year ended ended ended 30 June 30 June 31 2009 2008 December (unaudited) (unaudited) 2008 (audited) Notes GBP'000 GBP'000 GBP'000 Gross rental income
Group and share of joint ventures 8,523 8,024
16,775
Less: joint ventures - share of rental (255) (47)
(272)income Revenue 8,268 7,977 16,503 Direct property expenses (1,237) (1,324) (3,137) Overheads (1,826) (1,829) (4,408) Property overheads (3,063) (3,153) (7,545) Net rental income 1 5,205 4,824 8,958
Listed investments held for trading 1 26 216
298
Profit on sale of investment properties - 685
897
Net decrease on revaluation of investment - -
(33,125)properties
Net increase/(decrease) in value of 59 (905)
(1,530)investments held for trading Operating profit/(loss) 1 5,290 4,820 (24,502)
Share of loss of joint ventures after tax (40) (108)
(588)
Share of profit of associate after tax 1,330 250
172
Profit/(loss) before interest and taxation 6,580 4,962
(24,918) Interest rate derivatives 14,362 - (21,063) Finance income 2 56 415 681 Finance expenses 2 (6,287) (6,233) (11,966)
Profit /(loss) before taxation 14,711 (856)
(57,266) Income tax 3 (3,569) 984 9,812
Profit/(loss) for the period attributable 11,142 128
(47,454)
to the equity shareholders of the company Basic earnings/(loss) per share 4 14.40p 0.17p
(62.30)p
Diluted earnings/(loss) per share 4 14.40p 0.17p
(62.30)p
The above revenue and operating result relate to continuing operations in the United Kingdom.
Consolidated statement of comprehensive incomefor the six months ended 30 June 2009 30 June 30 June 31 2009 2008 December (unaudited) (unaudited) 2008 (audited) GBP'000 GBP'000 GBP'000 Profit/(loss) for the period 11,142 128 (47,454)
Currency translation in associate 109 (212)
26
Fair value of interest derivatives - 1,034
-
Net gain recognised in equity 109 822
26
Total comprehensive income for the period 11,251 950
(47,428)
attributable to equity shareholders of the
company Consolidated balance sheetat 30 June 2009 30 June 30 June 31 2009 2008 December (unaudited) (unaudited) 2008 (audited) Notes GBP'000 GBP'000 GBP'000 Non-current assets Market value of properties attributable 219,676 260,869 218,532to group Present value of head leases 28,550 32,137 27,238 Property 5 248,226 293,006 245,770 Plant and equipment 825 894 917 Investments in joint ventures 1,753 2,123 1,793
Investments in associated company 8,055 6,488
6,567 Held to maturity investments 1,805 5 1,805 260,664 302,516 256,852 Current assets Trade and other receivables 4,330 9,756 3,974
Financial assets-investments held for 1,025 3,002
2,330trading Cash and cash equivalents 6,457 14,828 8,191 11,812 27,586 14,495 Total assets 272,476 330,102 271,347 Current liabilities Trade and other payables (10,444) (12,317) (11,268) Financial liabilities -borrowings (7,521) (7,221) (7,277) Current tax liabilities (2,538) (2,082) (2,417) (20,503) (21,620) (20,962) Non-current liabilities Financial liabilities -borrowings (160,482) (174,477) (160,417) Interest rate derivatives 6 (5,254) - (19,616) Present value of head leases on (28,550) (32,137) (27,238) properties Deferred tax (6,218) (12,373) (2,808) (200,504) (218,987) (210,079) Total liabilities (221,007) (240,607) (231,041) Net assets 51,469 89,495 40,306 Equity attributable to equity shareholders of the company Share capital 8,232 8,232 8,232 Share premium account 5,236 5,236 5,236
Translation reserve in associate (395) (742)
(504)
Fair value reserve - interest rate - 2,035
- derivatives Capital redemption reserve 47 47 47 Retained earnings (excluding treasury 43,118 81,236 33,532 shares) Treasury shares (4,769) (6,549) (6,237) Retained earnings 38,349 74,687 27,295 Total shareholders' equity 51,469 89,495 40,306 Net assets per share 7 66.13p 117.53p 52.73p Diluted net assets per share 7 66.11p 117.39p 52.70p
Consolidated statement of changes in shareholders' equity for the six months ended 30 June 2009
Retained Earnings Share Share Translation Capital Fair Treasury Earnings Total capital premium reserve redemption value Shares ex: equity reserve reserve treasury shares GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Balance at 1 January 8,232 5,236 (530) 47 1,001 (6,549) 81,554 88,9912008 Fair value of interest - - - - 1,034 - - 1,034derivatives Currency translation - - (212) - - - - (212)in associate Net (losses)/gains - - (212) - 1,034 - - 822recognised in equity Profit for the period - - - - - - 128 128 Total comprehensive - - (212) - 1,034 - 128 950income Equity share options - - - - - - 49 49in associate Dividend - - - - - - (495) (495) Balance at 30 June 8,232 5,236 (742) 47 2,035 (6,549) 81,236 89,4952008 (unaudited) Balance at 1 January 8,232 5,236 (530) 47 1,001 (6,549) 81,554 88,9912008 Reclassification of fair value of interest - - - - (1,001) - 1,001 -Derivatives Currency translation - - 26 - - - - 26in associate Net (losses)/gains - - 26 - (1,001) - 1,001 26recognised in equity Loss for the year - - - - - - (47,454) (47,454) Total comprehensive - - 26 - (1,001) - (46,453) (47,428)income Equity share options - - - - - - 99 99in associate Disposal of own shares - - - - - 312 - 312 Loss on disposal of - - - - - - (183) (183)own shares Dividend - - - - - - (1,485) (1,485) Balance at 31 December 8,232 5,236 (504) 47 - (6,237) 33,532 40,3062008 (audited) As at 1 January 2009 8,232 5,236 (504) 47 - (6,237) 33,532 40,306 Currency translation - - 109 - - - - 109in associate Net (losses)/gains - - 109 - - - - 109recognised in equity Profit for the period - - - - - - 11,142 11,142 Total comprehensive - - 109 - - - 11,142 11,251income Equity share options - - - - - - 49 49in associate Disposal of own shares - - - - - 1,468 - 1,468 Loss on disposal of - - - - - - (1,032) (1,032)own shares Dividend - - - - - - (573) (573) Balance at 30 June 8,232 5,236 (395) 47 - (4,769) 43,118 51,4692009 (unaudited)
All of the above are attributable to the equity shareholders of the company.
Consolidated cash flow statementfor the six months ended 30 June 2009 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2009 2008 2008 (unaudited) (unaudited) (audited) GBP'000 GBP'000 GBP'000 Operating activities Profit/(loss) before interest and taxation 6,580 4,962 (24,918) Depreciation 103 106 200
(Profit)/loss on disposal of non-current (2) 4
(2)assets Profit on sale of investment properties - (685)
(897)
Net decrease on revaluation of investment - - 33,125properties Share of (profit)/loss of joint ventures (1,290) (142) 416and associate after tax Net (increase)/decrease in value of (59) 905 1,530investments held for trading Decrease in net current assets 747 117
2,566
Cash generated from operations 6,079 5,267 12,020 Income tax (paid)/repaid (36) 104 104 Cash inflows from operating activities 6,043 5,371
12,124
Cash outflows from investing activities (1,358) (12,806) (5,280)
Cash (outflows)/inflows from financing (6,663) 4,828 (16,144)activities Net decrease in cash and (1,978) (2,607) (9,300)cash equivalents Cash and cash equivalents at 914 10,214 10,214beginning of period Cash and cash equivalents at (1,064) 7,607 914end of period Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise the following balance sheet amounts:
30 June 30 June 31 December 2009 2008 2008 (unaudited) (unaudited) (audited) GBP'000 GBP'000 GBP'000 Cash and cash equivalents 6,457 14,828 8,191 Bank overdraft (7,521) (7,221) (7,277)
Cash and cash equivalents at end of period (1,064) 7,607 914
Notes to the half year reportfor the six months ended 30 June 20091. Segmental analysis 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2009 2008 2008 (unaudited) (unaudited) (audited) GBP'000 GBP'000 GBP'000 Net rental income (property) 5,205 4,824 8,958
Other income (listed investments) 26 216
298 Segment result Property 5,205 5,509 (23,270) Listed investments 85 (689) (1,232) 5,290 4,820 (24,502) Operating profit/(loss) 5,205 5,509 (23,270) Property Listed investments 85 (689) (1,232) 5,290 4,820 (24,502) 2. Finance costs 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2009 2008 2008 (unaudited) (unaudited) (audited) GBP'000 GBP'000 GBP'000 Finance income 56 415 681 Finance expenses Interest on bank loans and overdrafts (1,865) (5,107) (9,575) Other loans (1,052) (1,052) (2,178) Hedging (2,373) 841 1,614 Interest on obligations under finance (997) (1,028) (1,989)leases Total borrowing costs (6,287) (6,346) (12,128)
Less : amounts included in the cost of - 113
162qualifying assets (6,287) (6,233) (11,966) (6,231) (5,818) (11,285)3. Income tax 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2009 2008 2008 (unaudited) (unaudited) (audited) GBP'000 GBP'000 GBP'000 Current tax 160 116 451 Deferred tax 3,409 (1,100) (10,263) 3,569 (984) (9.812)
Notes to the half year report continued
4. Earnings/(loss) per share 6 months 6 months
Year ended ended ended 30 June 30 June 31 December 2009 2008 2008 (unaudited) (unaudited) (audited) Group profit/loss after tax ( '000) 11,142 128
(47,454)
Weighted average number of shares in
issue for the period ('000) 77,386 76,149 76,172 Basic earnings/(loss) per share 14.40p 0.17p
(62.30)p
Diluted number of shares in issue 77,386 76,215 76,172('000) Fully diluted earnings/(loss) per 14.40p 0.17p (62.30)pshare 5. Property
Properties at 30 June 2009 are included at valuation as at 31 December 2008, plus additions, less disposals in the period.
During the six months ended 30 June 2009 the group had property additions of 1.1 million (30 June 2008: 13.6 million, 31 December 2008: 18.9 million).
Properties with a carrying value of Nil were disposed of during the six months ended 30 June 2009 (30 June 2008: 0.8 million, 31 December 2008: 15.3 million).
6. Interest rate derivatives
The directors have estimated the financial effect of the fair value to thebusiness of the hedging instruments. This has been calculated as the NetPresent Value of the difference between the 19 year interest rate, which was4.45 per cent at 30 June 2009 against the rate payable under the specifichedge. This has given a liability at 30 June 2009 of 5,254,000 as shown in thebalance sheet. The banks own initial quotations at 30 June 2009 to close eachof the hedges were 14,044,000.7. Net assets per share 30 June 30 June 31 December 2009 2008 2008 (unaudited) (unaudited) (audited) Shares in issue ('000) 77,825 76,149 76,443 Net assets per balance sheet ( '000) 51,469 89,495 40,306 Basic net assets per share 66.13p 117.53p 52.73p Shares in issue diluted by 77,895 76,269 76,563
outstanding share options ('000) Net assets after issue of share 51,497 89,535 40,346options ( '000) Fully diluted net assets per share 66.11p 117.39p
52.70p
8. Related party transactions
The related parties and the nature of costs recharged are as disclosed in thegroup's annual financial statements for the year ended 31 December 2008. Thegroup received management fees of 148,000 (30 June 2008: 148,000, 31 December2008: 355,000) from Bisichi Mining PLC, an associated company.
During the period the group repaid 225,000 of Dragon Retail Properties Limited's (a joint venture) loan, leaving a balance of 1,205,000 at 30 June 2009.
9. Capital commitments
The group had contractual capital commitments of 1.3 million as at 30 June 2009 (30 June 2008: 6.4 million, 31 December 2008: Nil).
Notes to the half year report continued
10. Dividends and capitalisation issue
The interim dividend payable on 22 January 2010 of 0.75p (30 June 2008: 0.75p)will amount to 596k (30 June 2008: 573k). The final dividend in respect of2008, amounting to 311k, was paid on 3 July 2009. In addition, 1,605,057 newordinary shares (capitalisation issue in lieu of additional 2008 dividend) withan aggregate value equal to 0.80p for each ordinary share, was issued toshareholders on 3 July 2009 and are admitted to the Official List and tradingon the London Stock Exchange. The new ordinary shares rank pari passu with theexisting ordinary shares.
11. Risks and Uncertainties
The group's principal risks and uncertainties are reported on page 22 in the 2008 Annual Report. They have been reviewed by the Directors and remain unchanged for the current period.
The largest area of estimation and uncertainty in the interim financial statements is in respect of the valuation of investment properties (which are not revalued at the half year end) and the valuation of interest rate derivatives.
12. Financial information
The above financial information does not constitute statutory accounts withinthe meaning of section 434 of the Companies Act 2006. The figures for the yearended 31 December 2008 are based upon the latest statutory accounts, which havebeen delivered to the Registrar of Companies; the report of the auditor's onthose accounts was unqualified, but included an emphasis of matter concerningthe fair values of the hedging arrangements entered into by the group and thecompany and did not contain a statement under section 237(2) or (3) of theCompanies Act 1985.
As required by the Disclosure and Transparency Rules of the UK's Financial Services Authority, the interim financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) and in accordance with both IAS 34 'Interim Financial Reporting' as adopted by the European Union and the disclosure requirements of the Listing Rules.
The half year results have not been audited or subject to review by the company's auditor.
The annual financial statements of London & Associated Properties PLC are prepared in accordance with IFRS as adopted by the European Union. The same accounting policies are used for the six months ended 30 June 2009 as were used for the year ended 31 December 2008, except as stated below.
During 2009 the following accounting standards and guidance were adopted by the group:
IAS 1 (revised) `Presentation of Financial Statements;
IAS 7 (amendment) `Statement of Cash Flows';
IAS 16 (amendment) `Property, Plant and Equipment';
IAS 23 (amendment) `Borrowing Costs';
IAS 27 (amendment) `Consolidated and Separate Financial Statements';
IAS 32 (amendment) `Financial Instruments Presentation';
IAS 39 (amendment) `Financial Instruments Recognition and Measurement';
IAS 40 (amendment) `Investment Property';
IFRS 2 (amendment) `Share-based payment'; and
IFRS 8 `Operating Segments'
All of the above were effective for accounting periods beginning on or after 1 January 2009.
The new adopted standards either have no impact on the interim financial statements or resulted in changes to presentation and disclosure only.
The assessment of new standards, amendments and interpretations issued but not effective, not included above, is that these are not anticipated to have a material impact on the financial statements.
There is no material seasonal impact on the group's financial performance.
Taxes on income in the interim periods are accrued using tax rates expected to be applicable to total annual earnings.
The interim financial statements have been prepared on the going concern basisas the Directors are satisfied the group has adequate resources to continue inoperational existence for the foreseeable future.
13. Board approval
The half year results were approved by the Board of London & Associated Properties PLC on 28 August 2009.
Directors' responsibility statement
The Directors confirm that to the best of their knowledge:
(a) the condensed set of financial statements have been prepared in accordancewith applicable accounting standards and IAS 34 Interim Financial Reporting asadopted by the EU;
(b) the interim management report includes a fair review of the information required by:
(1) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication ofimportant events that have occurred during the first six months of thefinancial year and their impact on the condensed set of financial statements ;and a description of the principal risks and uncertainties for the remainingsix months of the year;and:(2) DTR 4.2.8R of the Disclosure and Transparency Rules, being related partytransactions that have taken place in the first six months of the currentfinancial year and that have materially affected the financial position orperformance of the entity during that period; and any changes in the relatedparty transactions described in the last annual report that could do so.Michael Heller Robert CorryChairman Finance Director28 August 2009Directors and advisors Directors Executive directors * Michael A Heller MA FCA (Chairman)
John A Heller LLB MBA (Chief Executive)
Robert J Corry BA FCA (Finance Director)
Michael C Stevens FCA Non-executive directors ** Howard D Goldring BSC (ECON) ACA #**Clive A Parritt FCA CF FIIA * Member of the nomination committee # Senior independent director
** Member of the audit, remuneration and nomination
committees. Secretary & registered office Michael C Stevens FCA Carlton House, 22a St James's Square, London SW1Y 4JH Director of property Mike J Dignan FRICS Registrars & transfer office Capita Registrars Northern House, Woodsome Park
Fenay Bridge, Huddersfield, W. Yorkshire HD8 OLA
Telephone 0871 664 0300 (Calls cost 10p per minute + network extras) or +44 208 639 3399 for overseas callers Website: www.capitaregistrars.com E-mail: ssd@capitaregistrars.com Company registration number 341829 (England and Wales) Website www.lap.co.uk E-mail CompanySecretary@lap.co.uk
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