Last checked at 27 Aug 2010 07:00
FOR IMMEDIATERELEASE 26 August 2010 LONDON& ASSOCIATED PROPERTIES PLC: HALF YEARLY RESULTS TO 30 JUNE 2010
London & Associated Properties is a fully listed UK shopping centre and Central London retail property specialist.
HIGHLIGHTS
Positive first half performance as rental income for the period rises to £8.6 million - annualised rent roll now stands at £16.4 million
Under EPRA net assets are £72.2 million - 88.2p per share (fully diluted)
Portfolio value at balance sheet date of £210.5 million
Average unexpired leases are eight years - 68% of income generated from leases with in excess of five years to run
Completed 12 month extension to revolving credit facility to September 2012.
RCF reduced to £60 million from £90 million with LTV covenant increased to 80% from 70%. LAP remains loan covenant compliant
Since balance sheet date agreed sale of Antiquarius for £17.8 million against book value of £17.0 million
Interim cash dividend of 0.75p per share to be paid on 21 January 2010
"I feel we have a strong core portfolio of properties that are proving resilient to the UK's wider problems. I therefore look forward to the future with reasonable confidence." 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 I am pleased to report on a positive performance during the first 6 months of2010. Once again we have managed to grow our rental income notwithstanding thedifficult economic environment. This increased to £8.6 million for the periodcompared to £8.5 million for the first six months last year. We have carriedout lettings worth an annualised £0.5 million per annum, of which three unitsat King Edward Square, Windsor contribute £0.3 million per annum. Our rent roll on an annualised basis now stands at £16.4million. At the sametime, our net rental income has grown by £0.5 million per annum. This was dueto lower expenses across a number of our properties and particular improvementsat Orchard Square, Sheffield and Antiquarius in London where comprehensiveredevelopments have now been completed. We also carried out a significantnumber of lettings in previously vacant units at our Markets in Brixton,London. Since the balance sheet date, we have exchanged contracts to sell Antiquariusfor £17.8 million. This compares favourably with the book value of £17.0million at the 2009 year end. We will use £12.75 million of the proceeds topay down our revolving credit facility, with the balance being added to cashreserves. This brings the total amount received from disposals to £21.9million over the last 12 months and to £82.2 million over the last three years. Following completion of the Antiquarius disposal, we will be obliged to paydown some of our interest rate swaps. The cost to LAP of doing this cannot beprecisely quantified at this stage as the value of the swaps fluctuates withthe interest rate market. However, during the first 6 months, we spent £1million breaking a nominal £6.8 million of interest rate swaps because we wereover-hedged. The immediate cash saving in interest payments is some £0.5million per annum. Our interest rate swaps had an adverse effect on our net assets as at 30 June2010. Although our net assets were £53.3 million, this figure includes aliability of £14.8 million for marking to market our interest rate swaps. Thisis a non-cash item but we are required to report this under the IFRS accountingstandard. Since we use our swaps to regulate cash flow and do not trade them, we believeit is more appropriate to report our net asset values under the EPRA accountingstandard which does not take into the accounts interest rate derivatives ordeferred tax. Under EPRA, our net assets are £72.2 million.
As at 30 June 2010, our property portfolio was £210.5 million based on 31 December 2009 valuations although, following the sale of Antiquarius, our portfolio will stand at £193 million. Total Group assets including those of Bisichi Mining PLC and Dragon Retail Properties, our joint venture with Bisichi, total £235.5 million.
We have again experienced very limited tenant failure over the last six months,and voids account for just 2% of our portfolio. Cash collection also remainsrobust, with 95% of monies due received within two weeks of the quarter day. This strong cash recovery is in part due the fact that approximately threequarters of our tenants are national multiples. Additionally a significantportion of our income derives from car parks and successful markets where wecontinue to experience very few bad debts. By value, 68% of our income at 30 June 2010 had more than five years to run,while the average unexpired lease term (not including the car parks or markets)is nearly eight years. This gives us a good level of security of income. I am pleased to report that LAP remains covenant compliant with all of itsloans. In the first half of the year, we completed a 12 month extension to theterm of our revolving credit facility (RCF) with the Royal Bank of Scotland. This now expires in September 2012. We agreed at the same time to increase themargin payable from 0.9% to 1.5% with a further increase to 2% in September2010, while the loan to value covenant has been increased from 70% to 80%. Wehave reduced the available amount of the RCF to £60 million from £90 million,of which £45.1 million will be drawn following completion of the Antiquariusdisposal.
All our debt is long term with the exception of our overdrafts, and most is hedged at rates between 4.69% and 4.76%, the remainder at fixed rates. We also had £6.2 million cash in the bank at 30 June 2010.
Our main properties continue to perform well. At Windsor, we remaineffectively fully let. Consequently the only letting activity has followed onfrom one of our tenants seeking to surrender its unit. The lack of availableunits in this successful shopping centre resulted in strong interest for thisunit from potential tenants. The unit is now under offer to a nationalretailer at a record rent for the Centre and at a significantly higher figurethan previously received on this unit. Orchard Square, our second largestasset, is also fully let. We are proposing to pay an interim cash dividend of 0.75p on 21 January 2011 tothose shareholders on the register at 24 December 2010. This is at the samelevel as this stage in 2008 and 2009. We expect that the Government's current economic policy and the uncertaininternational conditions will affect consumer confidence. Naturally this willhave an affect on the broader retail property market. However, I feel that wehave a strong core portfolio of properties that are proving resilient to theUnited Kingdom's wider problems. I therefore look forward to the future withreasonable confidence. Michael Heller John HellerChairman ChiefExecutive26 August 2010 Consolidated income statementfor the six months ended 30 June 2010 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2010 2009 2009 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 Gross rental income
Group and share of joint ventures 8,571
8,523 17,067
Less: joint ventures - share of rental income (258)
(255) (519) Revenue 8,313 8,268 16,548 Direct property expenses (970) (1,237) (2,166) Overheads (1,601) (1,826) (4,865) Property overheads (2,571) (3,063) (7,031) Net rental income 1 5,742 5,205 9,517
Listed investments held for trading 1 3
26 148
Profit on sale of investment properties - - 14 Net increase on revaluation of investment properties - - 9,422 Net (decrease)/increase in value of investments held for
trading (18) 59 178 Operating profit 1 5,727 5,290 19,279
Share of loss of joint ventures after tax (7)
(40) (276)
Share of (loss)/profit of associate after tax (69) 1,330 1,485 Profit before interest and taxation 5,651 6,580 20,488 Interest rate derivatives 6 (8,481) 14,362 13,269 Interest rate derivatives break costs 6 (1,000) - - Finance income 2 40 56 90 Finance expenses 2 (6,018) (6,287) (12,440)
(Loss)/profit before taxation (9,808)
14,711 21,407 Income tax 3 3,920 (3,569) (2,355)
(Loss)/profit for the period attributable to the equity shareholders of the company (5,888)
11,142 19,052
Basic (loss)/ earnings per share 4 (7.23)p
14.40p 24.32p
Diluted (loss)/ earnings per share 4 (7.23)p
14.40p 24.32p
The above revenue and operating result relate to continuing operations in the United Kingdom.
Consolidated income statement analysisfor the six months ended 30 June 2010 30 June 2010 30 June 2009 31 December 2009 per per per income income income statement statement statement Cash Non-cash Cash Non-cash
Cash Non-cash
items £ items (unaudited) items £ items (unaudited) items items (audited) '000 £'000 £'000 '000 £'000 £'000 £'000 £'000 £'000 Net rental income 5,742 - 5,742 5,205 - 5,205 9,517 - 9,517 Income and gains on investments held for trading 3 - 3 26 - 26 148 - 148 Profit on sale of investment properties - - - - - - 14 - 14 Net change of revaluation of investment properties - - - - - - - 9,422 9,422 Net (decrease)/ increase in value of investments held for trading - (18) (18) - 59 59 - 178 178 Operating profit / (loss) 5,745 (18) 5,727 5,231 59 5,290 9,679 9,600 19,279 Share of joint ventures and associates 44 (120) (76) - 1,290 1,290 273 936 1,209 Interest rate derivatives - (8,481) (8,481) - 14,362 14,362 - 13,269 13,269 Net interest (5,978) - (5,978) (6,231) - (6,231) (12,350) - (12,350) (Loss) / profit before taxation and exceptional items (189) (8,619) (8,808) (1,000) 15,711 14,711 (2,398) 23,805 21,407 Interest rate derivatives break costs (1,000) - (1,000) - - - - - - (Loss) / profit before taxation (1,189) (8,619) (9,808) (1,000) 15,711 14,711 (2,398) 23,805 21,407
Consolidated statement of comprehensive income for the six months ended 30 June 2010
30 June 30 June 31 December 2010 2009 2009 (unaudited) (unaudited) (audited) £'000 £'000 £'000 (Loss)/profit for the period (5,888) 11,142 19,052 Other comprehensive income
Currency translation in associate 105
109 220
Other comprehensive income for the period 105
109 220
Total comprehensive income for the period attributable to owners of the parent (5,783) 11,251 19,272 Consolidated balance sheetat 30 June 2010 30 June 30 June 31 December 2010 2009 2009 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 Non-current assets
Market value of properties attributable to group 210,442
219,676 213,624 Present value of head leases 29,480 28,550 29,485 Property 5 239,922 248,226 243,109 Plant and equipment 711 825 816 Investments in joint ventures 1,389 1,753 1,396
Investments in associated company 7,908
8,055 8,044 Held to maturity investments 1,985 1,805 1,805 251,915 260,664 255,170 Current assets Trade and other receivables 4,927 4,330 3,976
Financial assets-investments held for trading 696
1,025 702 Cash and cash equivalents 6,214 6,457 8,655 11,837 11,812 13,333 Total assets 263,752 272,476 268,503 Current liabilities Trade and other payables (10,489) (10,444) (11,427)
Financial liabilities -borrowings (6,802)
(7,521) (7,216) Current tax liabilities (741) (2,538) (741) (18,032) (20,503) (19,384) Non-current liabilities
Financial liabilities -borrowings (145,522)
(160,482) (147,788) Interest rate derivatives 6 (14,828) (5,254) (6,347)
Present value of head leases on properties (29,480)
(28,550) (29,485) Deferred tax (2,586) (6,218) (6,395) (192,416) (200,504) (190,015) Total liabilities (210,448) (221,007) (209,399) Net assets 53,304 51,469 59,104
Equity attributable to equity shareholders of the company
Share capital 8,392 8,232 8,392 Share premium account 5,042 5,236 5,042
Translation reserve in associate (179) (395) (284) Capital redemption reserve 47 47 47 Retained earnings (excluding treasury shares) 42,270 43,118 50,465 Treasury shares (2,268) (4,769) (4,558) Retained earnings 40,002 38,349 45,907 Total shareholders' equity 53,304 51,469 59,104 Net assets per share 7 65.17p 66.13p 74.22p Diluted net assets per share 7 65.15p 66.11p 74.19p
Consolidated statement of changes in shareholders' equity for the six months ended 30 June 2010
Retained Earnings Retained Capital Earnings Share Share Translation redemption Treasury ex: treasury Total capital premium reserve reserve Shares shares equity £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2009 8,232 5,236 (504)
47 (6,237) 33,532 40,306 Profit for the period - - - - - 11,142 11,142 Other comprehensive income: Currency translation in associate - - 109 - - - 109 Total other comprehensive income - - 109 - - - 109 Total comprehensive income - - 109 - - 11,142 11,251 Transactions with owners:
Equity share options in associate - - -
- - 49 49 Disposal of own shares - - - - 1,468 - 1,468
Loss on disposal of own shares - - - - - (1,032) (1,032) Dividends paid - - - - - (573) (573) Transactions with owners - - - - 1,468 (1,556) (88) Balance at 30 June 2009 (unaudited) 8,232 5,236 (395) 47 (4,769) 43,118 51,469 Balance at 1 January 2009 8,232 5,236 (504)
47 (6,237) 33,532 40,306 Profit for the year - - - - - 19,052 19,052 Other comprehensive income: Currency translation in associate - - 220 - - - 220
Total other comprehensive income - - 220 - - - 220 Total comprehensive income - - 220 - - 19,052 19,272 Transactions with owners:
Equity share options in associate - - - - - (76) (76) Issue of own shares and expenses 160 (194) -
- - - (34) Disposal of own shares - - - - 521 - 521
Loss on disposal of own shares - - - - 1,158 (1,158) - Dividends paid - - - - - (885) (885) Transactions with owners 160 (194) - - 1,679 (2,119) (474) Balance at 31 December 2009 (audited) 8,392 5,042 (284) 47 (4,558) 50,465 59,104 Balance at 1 January 2010 8,392 5,042 (284)
47 (4,558) 50,465 59,104 Loss for the period - - - - - (5,888) (5,888) Other comprehensive income: Currency translation in associate - - 105 - - - 105
Total other comprehensive income - - 105 - - - 105 Total comprehensive income - - 105 - - (5,888) (5,783) Transactions with owners:
Equity share options in associate - - - - - - - Issue of own shares and expenses - - -
- - - - Disposal of own shares - - - - 907 - 907
Loss on transfer of own shares - - - - 1,383 (1,383) - Dividends paid - - - - - (924) (924) Transactions with owners - - - - 2,290 (2,307) (17) Balance at 30 June 2010 (unaudited) 8,392 5,042 (179)
47 (2,268) 42,270 53,304
All of the above are attributable to the owners of the parent.
Consolidated cash flow statementfor the six months ended 30 June 2010 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2010 2009 2009 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Operating activities
Profit before interest and taxation
5,651 6,580 20,488 Depreciation 105 103 210
Profit on disposal of non-current assets (8) (2) (3) Profit on sale of investment properties - - (14) Net decrease on revaluation of investment properties - - (9,422) Share of loss/(profit) of joint ventures and associate after tax
76 (1,290) (1,209)
Net decrease /(increase) in value of investments held for trading
18 (59) (178)
(Increase)/decrease in net current assets
(1,755) 747 2,303
Cash generated from operations
4,087 6,079 12,175 Income tax repaid/(paid) 111 (36) (444)
Cash inflows from operating activitiIn
4,198 6,043 11,731 Investing activities
Investment in loan stock in joint venture (180) - - Property acquisitions and improvements
(714) (1,405) (3,763) Sale of properties 3,736 - 17,805
Purchase of office equipment and motor cars
(76) (11) (133)
Sale of office equipment and motor cars
84 2 27 Interest received 40 56 90 Dividends received 44 - 273
Cash inflows/(outflows) from investing activities
2,934 (1,358) 14,299 Financing activities Issue expenses - - (34) Sale of treasury shares 907 436 521 Equity dividends paid (597) (573) (885) Interest paid (7,144) (6,301) (12,132) Debt repaid to Dragon - (225) (225)
Repayment of medium term bank loan
(2,325) - (12,750) Cash outflows from financing activities (9,159) (6,663) (25,505)
Net (decrease)/increase in cash and cash equivalents (2,027) (1,978) 525 Cash and cash equivalents at beginning of period 1,439 914 914 Cash and cash equivalents at end of period
(588) (1,064) 1,439 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 2010 2009 2009 (unaudited) (unaudited) (audited) £'000 £'000 £'000
Cash and cash equivalents
6,214 6,457 8,655 Bank overdraft (6,802) (7,521) (7,216)
Cash and cash equivalents at end of period
(588) (1,064) 1,439
£0.6 million of cash deposits at 31 December 2009 was charged as security to Axa Annuity Company. This was released in 2010.
Notes to the half year reportfor the six months ended 30 June2010 1. Segmental analysis 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2010 2009 2009 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net rental income (property) 5,742 5,205 9,517
Other income (listed investments) 3 26
148 Segment result Property 5,742 5,205 18,953 Listed investments (15) 85 326 5,727 5,290 19,279 Operating profit/(loss) Property 5,742 5,205 18,953 Listed investments (15) 85 326 5,727 5,290 19,279 2. Finance costs 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2010 2009 2009 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Finance income 40 56 90 Finance expenses:
Interest on bank loans and overdrafts (982) (1,865)
(3,013) Other loans (1,052) (1,052) (2,108)
Interest on derivatives adjustment (2,886) (2,373)
(5,338)
Interest on obligations under finance leases (1,067) (997)
(1,981) Other interest (31) - - Total borrowing costs (6,018) (6,287) (12,440) 3. Income tax 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2010 2009 2009 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Current tax (111) 160 (1,232) Deferred tax (3,809) 3,409 3,587 (3,920) 3,569 2,355
Notes to the half year report continued
4. (Loss)/earnings per share 6 months
6 months Year ended ended ended 30 June 30 June 31 December 2010 2009 2009 (unaudited) (unaudited) (audited) Group (loss)/profit after tax (£'000) (5,888) 11,142 19,052
Weighted average number of shares in issue for the period ('000) 81,478
77,386 78,345
Basic (loss) /earnings per share (7.23)p
14.40p 24.32p
Diluted number of shares in issue ('000) 81,478
77,386 78,345
Fully diluted (loss)/earnings per share (7.23)p
14.40p 24.32p 5. Property
Properties at 30 June 2010 are included at valuation as at 31 December 2009, plus additions, less disposals in the period.
During the six months ended 30 June 2010 the group had property additions of £ 0.5 million (30 June 2009: £1.1 million, 31 December 2009: £3.5 million).
Properties with a carrying value of £3.7 million were sold during the six months ended 30 June 2010 (30 June 2009: £Nil, 31 December 2009: £17.8 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 18 year interest rate, which was3.86 per cent at 30 June 2010 against the rate payable under the specifichedge. This has given a liability at 30 June 2010 of £14,828,000 as shown inthe balance sheet. The banks own initial quotations at 30 June 2010 to closeeach of the hedges were £27,144,000. The company reduced the total amount hedged by £6,800,000 in the six months tobring it nearer into line with the actual borrowings outstanding. The cost ofthis reduction was £1,000,000 and it has been taken to the income statement forthe period. 7. Net assets per share 30 June 30 June 31 December 2010 2009 2009 (unaudited) (unaudited) (audited) Shares in issue ('000) 81,786 77,825 79,629
Net assets per balance sheet (£'000) 53,304
51,469 59,104 Basic net assets per share 65.17p 66.13p 74.22p
Shares in issue diluted by outstanding share options ('000) 81,856
77,895 79,699
Net assets after issue of share options (£'000) 53,332
51,497 59,132
Fully diluted net assets per share 65.15p
66.11p 74.19p 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 2009. Thegroup received management fees of £150,000 (30 June 2009: £125,000, 31 December2009: £300,000) from Bisichi Mining PLC, an associated company. During the period the group paid £180,000 for Analytical Ventures Limited's (ajoint venture) loan stock at par; increasing the loan stock held to £1,980,000at 30 June 2010. 9. Capital commitments
The group had contractual capital commitments of £Nil as at 30 June 2010 (30 June 2009: £1.3 million, 31 December 2009: £0.5 million).
Notes to the half year report continued
10. Dividends and capitalisation issue
The interim dividend payable on 21 January 2011 of 0.75p per share (30 June2009: 0.75p per share) would amount to £626k (30 June 2009: £597k). The finaldividend in respect of 2009 of 0.40p per share, amounting to £327k, was paid on2 July 2010. As the 2009 final dividend was approved by the shareholders at theAnnual General Meeting held on 7 June 2010, it is included as a liability inthese interim financial statements. In addition, 1,620,682 new ordinary shares(capitalisation issue in lieu of additional 2009 dividend and equivalent to anaggregate value equal to 0.80p for each ordinary share), was issued toshareholders on 2 July 2010 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 2009 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 informationThe 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 2009 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 and did not contain a statement under Section498(2) or (3) of the Companies Act 2006.
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 areprepared in accordance with IFRS as adopted by the European Union. The sameaccounting policies are used for the six months ended 30 June 2010 as were usedfor the year ended 31 December 2009. The assessment of new standards, amendments and interpretations issued but noteffective, is that these are not anticipated to have a material impact on thefinancial 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 26 August 2010.
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 indicationof important 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 doso.
Signed on behalf of the Board on 26 August 2010
Michael Heller Robert Corry Director Director Directors 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
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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 admin@lap.co.uk
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