Last checked at 31 Aug 2012 07:00
FOR IMMEDIATE RELEASE
31 August 2012 LONDON & ASSOCIATED PROPERTIES PLC: HALF YEARLY RESULTS TO 30 JUNE 2012
London & Associated Properties is a fully listed UK shopping centre and Central London retail property specialist.
HIGHLIGHTS * Continued progress despite challenging economic environment * Like-for-like income broadly unchanged at £7.7m
* Strength of portfolio reflected by voids of only 2% by rental income and
completed lease renewals/new leases with a £833,000 annual rental value
* Weighted unexpired lease term extended to 8.8 years against 8.6 years in
the comparative period
* Net assets under EPRA now stands at £67.6 million with gross value of total
portfolio including joint ventures of £210 million * Drive to reduce operating costs: * + £400,000 annual savings from office move
+ Listing transferred to standard listing with consequent cost savings
* Further progress in asset management division with appointment by Lloyds
Banking Group on portfolio comprising four North-West shopping centres
* Company remains within banking covenants and continues to negotiate renewal
of £44 million revolving credit facility
"We are pleased with our continued operational progress against the backgroundof a challenging economic climate. The strength of our £210 million propertyportfolio is reflected in the extremely low level of voids and continued newlettings. While conditions remain difficult we believe the Company is in goodhealth and we are well positioned to take full advantage of the upturn when itcomes."
Michael Heller, Chairman. John Heller, Chief Executive.
-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 that London & Associated Properties (LAP) has continued to make progress although the economic environment remains challenging.
LAP's income for the first six months was £7.7 million compared to £8.1 millionin 2011. The slightly reduced gross income arose primarily because of atemporary reduction in rental income at Windsor (£400,000) while the formerBoots store was being redeveloped, and a temporary reduction in revenue fromBrixton Market, before taking account of significant related cost savings,following the lease to Groupe Geraud, which was signed on 1 April 2011.Our portfolio continues to have very few vacancies. Void units as a percentageof our rental income are only 2%. Further, over the last 12 months, we havecompleted lease renewals/new leases with a combined rental value of £833,000per annum.
The average weighted unexpired lease term for our portfolio is 8.8 years compared to 8.6 years 12 months ago. This reflects the quality of the properties and is a satisfactory increase in current market conditions.
In April 2012 the Company moved offices from 7,500 square feet in St. James's,SW1 to 4,500 square feet in Bruton Place. The previous offices had become toolarge for our requirements and we have sub-let the space to a single tenant.
In the half year accounts, there is a provision of £246,000 to cover moving costs but, by 2013, this move will deliver annual savings of over £400,000.
The Group's net assets under European Real Estate Association (EPRA), as usedby most property companies, stood at £67.6 million compared to £71.1 million at30 June 2011.Windsor
During the first half, following the redevelopment of the Boots unit, we have let new units to Cotswold Outdoor and Superdry with strong interest in the third unit. Cotswold Outdoor and Superdry are now open and trading successfully. We are close to completing a lease to an upmarket French boulangerie chain on a shop unit that became vacant following the administration of Game Group. Once completed this letting will demonstrate further rental growth at this centre.
Other Centres
At Orchard Square in Sheffield, our centre has remained effectively fully let and continues to trade well.
We also continue to achieve successful lease renewals at Kings Square, West Bromwich and the Centre is effectively fully let. The opening of Sandwell College to the rear of our centre is driving higher levels of footfall through it and our tenants are benefiting from this.
Market Row and Brixton Village are now recognised as among the most excitingretail and restaurant destinations in the country and are receiving high levelsof positive press coverage. This has led to a much increased level of demandfor units. This in turn is driving rental growth. We benefit from this growththrough our profit share agreement with Groupe Geraud and we anticipate ourincome there will continue to increase.In addition to our traditional property investment activities we have continuedto develop our asset management business. Since the period end, we are pleasedto report that we have been appointed by Lloyds Banking Group as asset manageron a portfolio of four shopping centres in the North West. As a part of thetransaction we have acquired a 50% interest in the company owning the centresfor a nominal amount. We do not expect to receive equity value for thisinterest but will receive fees for managing these assets.At the corporate level we have successfully transferred our Stock Exchangelisting from a premium listing to a standard one. This does not affect eitherthe Company's standing or shareholders ability to trade our shares. However, aswe outlined in our circular detailing this move, it will reduce the cost andtimings of any property sales or purchases above a relatively low figure as wedo not now have to issue a Class 1 Circular. We have also recently appointedWesthouse Securities as our corporate brokers.We are continuing to negotiate the renewal of our £44 million revolving creditfacility with the Royal Bank of Scotland and we remain within all our bankingcovenants.We are pleased with our continued operational progress against the backgroundof a challenging economic climate. The strength of our £210 million propertyportfolio, including Bisichi Mining PLC, our associate company, and DragonRetail Properties, our joint venture with Bisichi is reflected in the extremelylow level of voids and in new lettings.
While market conditions remain difficult we believe the company is in good health and we are well positioned to take full advantage of the upturn when it comes.
We wish to conserve our cash resources in the current climate and consequently will not be paying an interim dividend.
We would like to thank all of the Directors, staff and advisors who have contributed to our progress in these challenging times.
Michael Heller John Heller
Chairman Chief Executive
30 August 2012
Consolidated income statementfor the six months ended 30 June 2012 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 Gross rental income
Group and share of joint ventures 7,702 8,083
16,047 Surrender income - 943 943
Less: joint ventures - share of rental (325) (274)
(611)income Revenue 7,377 8,752 16,379 Direct property expenses (598) (858) (1,819) Overheads a (1,553) (1,226) (2,700) Property overheads (2,151) (2,084) (4,519) Net rental income 1 5,226 6,668 11,860
Listed investments held for trading 1 102 11
24
Profit on sale of investment properties - -
310
Operating profit before financing charges 5,328 6,679
12,194 Finance income 2 13 15 34 Finance expenses 2 (5,663) (5,789) (11,344)
Operating (loss)/profit after financing 1, a (322) 905
884charges
Revaluation and other movements,
associate and joint ventures Net decrease on revaluation of investment - - (1,021)properties
Net (decrease)/increase in value of (1) 21
(104)investments held for trading
Share of profit of joint ventures after 75 56
10tax
Share of profit/(loss) of associate after 482 (388)
(189)tax
Interest rate derivatives break costs 6 - (920)
(920)
Adjustment to the net present value of 6 (294) 1,763 (17,223)interest rate derivatives (Loss)/profit including revaluation and a (60) 1,437 (18,563)other movements Income tax 3 72 (76) 3,742 Profit/(loss) for the period attributable 12 1,361 (14,821)to the owners of the parent Basic earnings/(loss) per share 4 0.01p 1.62p
(17.63)p
Diluted earnings/(loss) per share 4 0.01p 1.62p
(17.63)p
The above revenue and operating result relate to continuing operations in the United Kingdom.
(a) Includes £246,000 provision for office moving costs.
Consolidated income statement analysisfor the six months ended 30 June 2012 30 June 201 30 June 31 2 2011 December 2011 Cash Non-cash per Cash Non-cash per Cash Non-cash per items items income items items income items items income statement statement statement (unaudited) (unaudited) (audited) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Net rental 5,226 - 5,226 6,668 - 6,668 11,860 - 11,860income Income and 102 - 102 11 - 11 24 - 24gains on investments held for trading Profit on - - - - - - 310 - 310sale of investment properties Net change - - - - - - - (1,021) (1,021)of revaluation of investment properties Net - (1) (1) - 21 21 - (104) (104)(decrease)/ increase in value of investments held for trading Operating 5,328 (1) 5,327 6,679 21 6,700 12,194 (1,125) 11,069profit/ (loss) Share of 75 482 557 44 (376) (332) 181 (360) (179)joint ventures and associates Interest - (294) (294) - 1,763 1,763 - (17,223) (17,223)rate derivatives (valuation movements) Net (5,650) - (5,650) (5,774) - (5,774) (11,310) - (11,310)interest (Loss)/p (247) 187 (60) 949 1,408 2,357 1,065 (18,708) (17,643)rofit before taxation and exceptional items Interest - - - (920) - (920) (920) - (920)rate derivatives break costs (Loss)/p (247) 187 (60) 29 1,408 1,437 145 (18,708) (18,563)rofit before taxation
Consolidated statement of comprehensive income for the six months ended 30 June 2012
30 June 30 June 31 December 2012 2011 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Profit/(loss) for the period 12 1,361 (14,821) Other comprehensive income:
Currency translation in associate (28) (66)
(246)
Other comprehensive income for the period net (28) (66) (246)of tax Total comprehensive income for the period (16) 1,295
(15,067)
attributable to owners of the parent
Consolidated balance sheetat 30 June 2012 30 June 30 June 31 December 2012 2011 2011 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 Non-current assets Market value of properties attributable 194,492 194,985 193,748to Group Present value of head leases 28,659 28,664 28,661 Property 5 223,151 223,649 222,409 Plant and equipment 334 573 484 Investments in joint ventures 2,080 2,106 2,039 Investments in associated company 7,294 6,859 7,011 Held to maturity investments 1,912 2,077 1,998 Deferred tax 3,746 - 3,678 238,517 235,264 237,619 Current assets Trade and other receivables 5,080 4,799 4,301
Financial assets-investments held for 14 738
635trading Cash and cash equivalents 8,617 7,351 6,464 13,711 12,888 11,400 Total assets 252,228 248,152 249,019 Current liabilities Trade and other payables (13,175) (10,065) (9,453) Financial liabilities -borrowings (48,007) (4,653) (48,012) (61,182) (14,718) (57,465) Non-current liabilities Financial liabilities -borrowings (91,958) (136,389) (92,114) Interest rate derivatives 6 (31,144) (11,864) (30,850) Present value of head leases on (28,659) (28,664) (28,661)properties Deferred tax - (141) - (151,761) (177,058) (151,625) Total liabilities (212,943) (191,776) (209,090) Net assets 39,285 56,376 39,929
Equity attributable to the owners of
the parent Share capital 8,554 8,554 8,554 Share premium account 4,866 4,866 4,866 Translation reserve in associate (244) (36) (216) Capital redemption reserve 47 47 47 Retained earnings (excluding treasury 27,483 44,307 28,099shares) Treasury shares (1,421) (1,362) (1,421) Retained earnings 26,062 42,945 26,678 Total shareholders' equity 39,285 56,376 39,929 Net assets per share 7 46.77p 66.91p 47.53p Diluted net assets per share 7 46.76p 66.88p 47.53p
Consolidated statement of changes in shareholders' equity for the six months ended 30 June 2012
Retained Earnings Retained Earnings Capital ex: Share Share Translation redemption Treasury treasury Total capital premium reserve reserve Shares
shares equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 8,554 4,866 30 47 (2,078) 44,342 55,761January 2011 Profit for the - - - - - 1,361 1,361period Other comprehensive income: Currency - - (66) - - - (66)translation in associate Total other - - (66) - - - (66)comprehensive income Total comprehensive - - (66) - - 1,361 1,295income Transactions with owners: Equity share - - - - - 3 3options in associate Disposal of own - - - - 281 - 281shares Loss on transfer of - - - - 435 (435) -own shares Dividends paid - - - - - (964) (964) Transactions with - - - - 716 (1,396) (680)owners Balance at 30 June 8,554 4,866 (36) 47 (1,362) 44,307 56,3762011 (unaudited) Balance at 1 8,554 4,866 30 47 (2,078) 44,342 55,761January 2011 Loss for the year - - - - - (14,821) (14,821) Other comprehensive income: Currency - - (246) - - - (246)translation in associate Total other - - (246) - - - (246)comprehensive income Total comprehensive - - (246) - - (14,821) (15,067)income Transactions with owners: Equity share - - - - - 6 6options in associate Acquisition of own - - - - (101) - (101)shares and expenses Disposal of own - - - - 294 - 294shares Loss on disposal of - - - - 464 (464) -own shares Dividends paid - - - - - (964) (964) Transactions with - - - - 657 (1,422) (765)owners Balance at 31 8,554 4,866 (216) 47 (1,421) 28,099 39,929December 2011 (audited) Balance at 1 8,554 4,866 (216) 47 (1,421) 28,099 39,929January 2012 Profit for the - - - - - 12 12period Other comprehensive income: Currency - - (28) - - - (28)translation in associate Total other - - (28) - - - (28)comprehensive income Total comprehensive - - (28) - - 12 (16)income Transactions with owners: Equity share - - - - - 2 2options in associate Dividends paid - - - - - (630) (630) Transactions with - - - - - (628) (628)owners Balance at 30 June 8,554 4,866 (244) 47 (1,421) 27,483 39,2852012 (unaudited)
All of the above are attributable to the owners of the parent.
Consolidated cash flow statementfor the six months ended 30 June 2012 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Operating activities Operating profit before financing charges 5,328 6,679 12,194 Depreciation 93 81 158
(Profit)/loss on disposal of non-current (120) 7
9assets Profit on sale of investment properties - -
(310)
Decrease/(increase) in net current assets 1,104 (976) (1,160)
Cash generated from operations 6,405 5,791 10,891 Income tax repaid - - - Cash inflows from operating activities 6,405 5,791 10,891 Investing activities Repayment/(investment) in shares and loan 86 (131) (940)stock in joint ventures Investment in shares in associate - (889)
(131)
Property acquisitions and improvements (844) 61 (298) Sale of properties - - 910 Purchase of office equipment and motor (16) (69) (70)vehicles
Sale of office equipment and motor 158 23
33vehicles Interest received 13 15 34 Dividends received from associate and 75 44 181joint ventures Cash outflows from investing activities (528) (946) (281) Financing activities Purchase of treasury shares - - (101) Sale of treasury shares - 281 294 Equity dividends paid (630) (627) (964) Interest paid (4,844) (6,522) (10,926) Interest rate derivatives break costs - - (920)paid Payment/(repayment) of short term loan 2,000 -
(910)
(Repayment)/payment of medium term bank (117) - 943loan
Cash outflows from financing activities (3,591) (6,868) (12,584)
Net increase/(decrease) in cash and cash 2,286 (2,023) (1,974)equivalents Cash and cash equivalents at beginning of 2,747 4,721 4,721period Cash and cash equivalents at end of 5,033 2,698 2,747period 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 2012 2011 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Cash and cash equivalents 8,617 7,351 6,464 Bank overdraft (3,584) (4,653) (3,717) Cash and cash equivalents at end of 5,033 2,698 2,747period Notes to the half year reportfor the six months ended 30 June 20121. Segmental analysis 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net rental income 5,226 6,668 11,860 Other income (listed investments) 102 11 24 Segment result Property 5,226 6,668 11,860 Listed investments 101 32 (80) 5,327 6,700 11,780 2. Finance costs 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Finance income 13 15 34 Finance expenses: Interest on bank loans and overdrafts (1,412) (1,219) (2,518) Other loans (1,052) (1,052) (2,103)
Interest on derivatives adjustment (2,204) (2,475) (4,743)
Interest on obligations under finance (995) (1,043) (1,980)leases Total finance expenses (5,663) (5,789) (11,344) 3. Income tax 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Current tax - - - Deferred tax (72) 76 (3,742) (72) 76 (3,742)
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 2012 2011 2011 (unaudited) (unaudited) (audited) Group profit/(loss) after tax (£ 12 1,361 (14,821)'000)
Weighted average number of shares in 84,004 84,067 84,074 issue for the period ('000) Basic earnings/(loss) per share 0.01p 1.62p (17.63)p Diluted number of shares in issue 84,004 84,067 84,074 ('000) Fully diluted earnings/(loss) per 0.01p 1.62p (17.63)p
share 5. Property
Properties at 30 June 2012 are included at valuation as at 31 December 2011, plus additions in the period.
During the six months ended 30 June 2012 the group had property additions of £ 0.744 million (30 June 2011: £0.039 million,
31 December 2011: £0.423 million).
No properties were sold during the six months ended 30 June 2012 (carrying value of properties sold at 30 June 2011: £Nil, 31 December 2011: £0.6 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 16 year interest rate, which was2.65 per cent at 30 June 2012 against the rate payable under the specifichedge. This has given a liability at 30 June 2012 of £31,144,000 as shown inthe balance sheet. The banks own initial quotations at 30 June 2012 to closeeach of the hedges were £37,228,000.Under IAS 39 the hedges are not deemed to be eligible for hedge accounting andany movement in the value of the hedges is charged directly to the consolidatedincome statement. The banks have an option to cancel the hedges in November2014 and January 2015. The cost to the group to cancel the options beforeNovember 2014 and January 2015 has been attributed a cost by the bank of £863,000. It is not the intention of the Directors to exit these instruments andthis cost has not been recognised.7. Net assets per share 30 June 30 June 31 December 2012 2011 2011 (unaudited) (unaudited) (audited) Shares in issue ('000) 84,004 84,260 84,004 Net assets per balance sheet (£'000) 39,285 56,376 39,929 Basic net assets per share 46.77p 66.91p 47.53p Shares in issue diluted by 84,074 84,330 84,074
outstanding share options ('000) Net assets after issue of share 39,313 56,404 39,957options (£'000)
Fully diluted net assets per share 46.76p 66.88p 47.53p
8. Related party transactions
The related parties and the nature of costs recharged are as disclosed in the group's annual financial statements for the year ended 31 December 2011.
The group has management fees receivable of £103,000 (30 June 2011: £137,000, 31 December 2011: £275,000) from Bisichi Mining PLC, an associated company.
During the period the group repaid £86,000 for Analytical Ventures Limited's (ajoint venture) loan stock at par; decreasing the loan stock held to £1,907,000at 30 June 2012.
Notes to the half year report continued
9. Capital commitments
The group has capital commitments of £0.2 million as at 30 June 2012 (30 June 2011: £Nil, 31 December 2011: £0.735 million).
10. Dividends
There is no interim dividend payable for the period (30 June 2011: 0.75p per share amounts to £630,000).
11. Risks and Uncertainties
The group's principal risks and uncertainties are reported on page 18 in the 2011 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) 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 2011 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 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 2012 as were used for the year ended 31 December 2011.
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 30 August 2012.
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.
Signed on behalf of the Board on 30 August 2012
Michael Heller Robert CorryDirector DirectorDirectors 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)
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 Heather A CurtisACIS 24 Bruton Place, London W1J 6NE Director of property Mike J Dignan FRICS Registrars & transfer office Capita Registrars
The Registry, 34 Beckenham Road
Beckenham, Kent BR3 4TU 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 admin@lap.co.uk