Town Centre Regulatory News (TOWN)

6 Sep 2006 07:02

Town Centre Securities PLC06 September 2006 For Immediate Release Wednesday, 6 September 2006 TOWN CENTRE SECURITIES PLC Preliminary results for the year ended 30 June 2006 Town Centre Securities PLC, the Leeds based property investment and developmentCompany, today announces its preliminary results, for the year ended 30 June2006, the first prepared under International Financial Reporting Standards(IFRS). Highlights • Net asset value (NAV) per share, under IFRS, up 33% to 487p (2005: 368p), benefiting from an £81.1m (2005: £43.0m) surplus on the revaluation of the investment property portfolio: - triple net asset value per share also increased 33% to 472p (2005: 354p)* - adding back the IFRS deferred tax provision, gross NAV per share increased 35% to 591p (2005: 437p) • Statutory profit before tax increased 76% to £90.9m (2005: £51.5m) after inclusion of revaluation surplus • Underlying profit before tax, excluding revaluation surpluses, disposals and exceptional costs, increased 4% to £8.5m (2005: £8.2m) • Basic earnings per share increased 80% to 124.8p (2005: 69.5p), benefiting from the increased revaluation surplus • Underlying earnings per share up 27% to 14.1p (2005: 11.1p) • Proposed final dividend of 5.2p (2005: 4.3p) making a total ordinary dividend per share of 7.2p (2005: 6.2p), an increase of 16.1%: - special dividend of 2.0p (2005: 2.0p) payable with the final - total dividend for the year increased 12.2% to 9.2p (2005: 8.2p) • Gearing 64% (2005: 69%), debt to property value 34% (2005: 36%) • 1.04m shares repurchased during the year at a cost of £4.4m • Major office property sold after the year end for £64.5m before costs *after excluding IFRS deferred tax but taking into account the fair valueadjustment on long-term debt, and estimated capital gains tax Commenting on the results, Chairman and Chief Executive Edward Ziff, said:"These strong results and our future growth are based on a clear strategy ofactive portfolio management, selective, part pre-let development and theacquisition and cancellation of our own equity. Allied to this, in 2006 we haveacquired undervalued real estate equity investments and re-entered the carparking business with a view to developing a meaningful future income stream. "Despite my concerns about competitive prices paid to obtain good qualityproperty investments and more aggressive bidding by both investors and otherproperty companies, Town Centre Securities remains well positioned. We have aportfolio in which quality is steadily improving and an excellent developmentpipeline, backed up by a robust financial position and these factors give megreat confidence in the future prospects for the Group." For further information, please contact: Town Centre Securities PLC www.tcs-plc.com -----------------Edward Ziff, Chairman and Chief Executive 0113 222 1234John Sutcliffe, Finance Director Smithfield 0207 360 4900Reg Hoare / Katie Hunt Chairman's Statement and Chief Executive's Operating Review Results This has been another successful year for the Group with further strongperformance across all of our business. These are the first results to be presented in accordance with InternationalFinancial Reporting Standards (IFRS) which are now obligatory for all LondonStock Exchange listed companies. The main implications for Town CentreSecurities, in common with all listed property companies, is that the annualrevaluation of the investment portfolio is reported in the income statement andthe balance sheet now includes a deferred tax liability based on the valuationof the investment portfolio at the balance sheet date. These changes are unhelpful in demonstrating to shareholders how a traditionalproperty investment company is performing. We have therefore includedinformation to steer shareholders through a complicated set of financialstatements, help them to understand the underlying results and compare them withprevious accounting periods. HighlightsThe investment portfolio enjoyed a substantial revaluation surplus of £44.1m, anincrease of 12.1%. Furthermore the two major developments in Leeds andManchester, completed during the year, were independently valued for the firsttime at £83.5m giving rise to a revaluation surplus of £37m. At the 30 June 2006we owned property assets valued at £506m (2005: £395m), significantly greaterthan at any time in the Company's history. Under IFRS, net assets increased 31%to £269m (2005: £205m), representing an increase, on a per share basis, of 33%to 487p (2005: 368p). Excluding the IFRS deferred tax provision, net assetsincreased 35% to £326m (2005: £242m), resulting in adjusted net assets per shareincreasing 35% to 591p (2005: 437p). Restating again to exclude the IFRSdeferred tax provision and replace it with the estimated capital gains taxliability, and incorporating the fair value adjustment on long-term debt, the"triple" net asset value per share, with which shareholders will be familiar,increased 33% to 472p (2005: 354p). Income StatementNet revenue for the year to 30 June 2006 was marginally higher than last year at£23.1m (2005: £22.8m). Profit before tax increased 76% to £90.9m (2005: £51.5m)after inclusion of the property revaluation surplus of £80.6m (2005: £42.7m),required under IFRS. Included in the share of post tax profit from jointventures is a further revaluation surplus of £0.5m (2005: £0.3m). Excluding theunrealised surpluses, pre-tax profit was 14% higher at £9.7m (2005: £8.5m).Property disposal profit for the year was lower at £1.3m (2005: £2.3m), whilstthe 2005 profit included an exceptional pension accrual of £2.0m not repeatedthis year. Internally, the Board's preferred measure of profit is underlying profit beforetax, which excludes the impact of the revaluation movement, property disposalsand, in 2005, the exceptional pension cost. This measure was 4% higher at £8.5m(2005: £8.2m). Earnings per shareBasic earnings per share were 80% higher at 124.8p (2005: 69.5p per share)because of the revaluation surplus noted above. Without the revaluation surplus,disposal profit and exceptional pension cost, underlying earnings per share were27% higher than last year at 14.1p (2005: 11.1p) helped by a lower tax charge onunderlying profit. Financing and gearingNet interest costs decreased 3% to £11.0m (2005: £11.3m). Interest cover,expressed as the ratio of operating profit (excluding the valuation movement oninvestment properties, disposal profit and, in 2005, exceptional pension cost)to interest was 1.73 times (2005: 1.72), reflecting the Group's continuingprudent financial position. Interest amounting to £1.3m (2005: £0.2m) has beencapitalised on developments completed during the year. Year end borrowings were 22.4% higher at £172.3m (2005: £140.8m) followinginvestment in the development programme and the acquisition of listedinvestments. Gearing, on net assets of £269m, was 64% (2005: net assets £205m,gearing 69%). Gearing, once the IFRS deferred tax provision is added back, fellto 52% (2005: 58%). Long-term fixed interest debt constitutes 49% of totalborrowings, with the balance on floating rates. At 30 June 2006 our weightedaverage cost of debt was 8.0% (2005: 8.5%). The £85m 10.5% mortgage debenturematures in 2021 and at 30 June 2006 had a fair value of £121.1m (2005: £124.8m).This premium over the nominal value results from lower long-term interest ratescompared to when the debenture was issued. Total borrowings compared to totalproperty assets stood at 34% (2005: 35.6%). TaxationThe tax charge for the year is £21.5m (2005: £12.0m). This charge is made up ofthree elements: £18.1m (2005: £12.6m) relating to deferred tax, under IFRS, onthe revaluation surplus; £1.7m (2005 credit: £1.3m) relating to other deferredtax adjustments; and a tax charge on ordinary activities of £1.7m (2005: £0.7m).The balance sheet IFRS deferred tax liability is required to exclude indexationallowances on buildings and estimates the liability arising if all the Group'sassets were disposed of at the amounts stated in the accounts at £65.2m (2005:£45.5m). Shareholders will decide on the relevance of this calculation but maybe interested to know that the Directors' assessment of the capital gains taxliability that would arise if the whole portfolio were sold at the balance sheetdate is £42.2m (2005: £21.1m). Cash flowTotal borrowings increased by £31.5m during the year to £172.3m. Operating cashflow less interest was £8.3m (2005: £4.8m) and property sales generated £17.7m(2005: £31.5m). These inflows were offset by property acquisitions, capitaliseddevelopment costs and purchases of listed investments totalling £51.6m (2005:£31.9m). During the year, we purchased 1.04m shares for cancellation at anaverage price of 417p per share resulting in a cash outflow of £4.4m. Dividendspaid totalled £4.6m (2005: £3.4m) which included the special dividend of 2.0ppaid with the 2005 final dividend. DividendsRecognising the strong portfolio performance, our healthy cash flow andshareholder value created in the year the Directors propose the payment of anincreased final ordinary dividend of 5.2p per share (2005: 4.3p), making a totalordinary dividend for the year of 7.2p (2005: 6.2p), an increase of 16.1%. Inaddition, in recognition of the year's beneficial underlying tax result, theDirectors once again recommend the payment of a special dividend of 2.0p (2005:2.0p), making a total dividend payable for the year of 9.2p per share (2005:8.2p) a total increase in dividend of 12.2%. The final and special dividend willbe paid on 2 January 2007 to shareholders on the register on 1 December 2006. Balance sheet - InvestmentsWe have identified a number of UK quoted companies which we believe areundervalued by the market and where we also identify a strong underlyingproperty portfolio that is likely to outperform direct investment. In the yearwe invested in shares at a net cost of £4.9m (2005: net investment £4.0m) takingthe total cost of our holdings to £9.4m. At 30 June 2006 the market value ofthis share portfolio was £12.7m creating an unrealised surplus of £3.3m, ofwhich £2.8m was created in the year. IFRS requires that this surplus is takendirectly to retained earnings as unrealised. Capital reorganisationIn order to simplify the balance sheet reserves and increase the balancestanding to the profit and loss account reserve the Board took the decision toreorganise the Company's balance sheet reserves. In a circular to shareholdersdated 11 July 2006 we announced our intention to reorganise the share premiumaccount, capital redemption reserve and the special reserve, in total £21.7m,and transfer these amounts to the profit and loss account reserve. The proposalwas approved by shareholders at an EGM on 9 August 2006, with over 99.8% ofvotes in favour. We have now made our application to the courts to approve thisproposal. Subject to that approval, it is anticipated that the legal andstatutory requirements of this process will be completed in September 2006. Post balance sheet event, sale of No.1 Whitehall RiversideOn 7 August 2006, following the year end, we announced the sale of No.1Whitehall Riverside for £64.5m before disposal costs of £0.85m and two yearrental guarantees on the un-let space which, as a maximum, could equal £1.2m. At30 June 2006 this building was valued at £56.5m and is disclosed as a"Non-current asset held for resale" in the balance sheet at that date. The fullylet, passing rent of the building was in the region of £3.24m per annum. Performance benchmarking and total shareholder returns (TSR)The Deutsche Bank FTSE Real Estate Index, for the year to 30 June 2006, showedus ranked 7th out of 30 with TSR of 49% (2005: 11th out of 30 with TSR 44%) overone year, 4th out of 30 with TSR 283% (2005: 4th out of 30 with TSR 183%) overthree years and 3rd out of 30 with TSR of 424% (2005: 2nd out of 30 with TSR407%) over five years. TSR is calculated as the increase in share price plusdividends per share. The Board's internal measure of performance is the creation of total shareholdervalue (TSV), calculated as the increase in net asset value plus dividends pershare. For the year ended 30 June 2006, TSV was 128p per share, equating to a35% return on opening net assets. Annual operating reviewI strongly believe that our specialisation in a retail and retail mixed useproperty portfolio has been a key factor in our continuing success. Our incomeand cash flows are derived from long-term rental contracts with an increasinglybetter quality and varied tenant base and are key to our future success. Westrive to maintain a high occupancy level and this allied to efficient cost andcredit control ensure we retain a high proportion of passing rent. In the year to 30 June 2006 the UK property market has seen limited rentalgrowth with capital appreciation resulting from a further downward shift inyields. My view is that the tightening of yields, linked to falling long-terminterest rates, may now be coming to an end. The recent increases in commodityprices have put upward pressure on inflation and, with the global interest rateenvironment shifting to a tighter stance, property yields in general areunlikely to fall much further. Capital appreciation will therefore have to comefrom active portfolio management, rental growth, profitable development andoff-market property opportunities. Within the Group, these key performanceindicators are core to our strategy and with hard work we aim to achieve aboveaverage growth in, what is likely to be, a more challenging time for theproperty market. The strength of the property market has been remarkable over recent years. Iremain very concerned by the very competitive prices paid to obtain good qualityproperty investments and I am certain that this situation cannot be sustainedindefinitely. Whilst there are always opportunities, even in this market, we arevery careful not to be caught up in the more aggressive bidding that has arisenin the year. Portfolio performanceThe revaluation surplus following the independent valuation of our investmentportfolio undertaken by Jones Lang LaSalle was £81.1m, an increase of 19.7% overthe year. This result reflected the first external valuation of our newlyconstructed development properties at Whitehall Road Leeds and Piccadilly BasinManchester, which showed a surplus of £37m, with a surplus of £44.1m over theremaining balance of the portfolio. The underlying performance reflects thecombination of improved rental income and the lowering of investment returnsgenerally in the marketplace. The initial yield on revaluation of our portfoliowas 5.2% at 30 June 2006. Excluding the performance from our new development properties, our retailwarehouses and food stores performed exceptionally, growing in value by 21%.This success reflects our desire to own out of town retail property whichbenefits from open A1 planning consents wherever possible. Our shopping centresgrew by 12.5% and our portfolio of high street shops by over 10%. Our officesand residential portfolios which comprise less than 5% of the portfolioincreased in value by 4%. Combining this capital growth with net income, afterdeduction of all expenses, our portfolio generated a total return of 18.5%during the year. Disposals and acquisitionsWe sold four investment properties at Victoria Street Blackpool, Market Streetand Earle Street Crewe, Phoenix House Nottingham and a non-income producingproperty on York Place, Leeds where we felt that the disposal with planningconsent offered a more certain outcome than undertaking the development. Thesedisposals, when added together with minor properties sold, totalled £18m andgenerated a profit of £1.3m. We also sold a site in Kilmarnock acquired as atrading property within a joint venture where, once again, having obtainedplanning consent we felt that the disposal secured a more favourable return thandevelopment. The investment market has again been characterised by competitive bidding forgood quality assets which has restricted our opportunity to acquire newproperties. We have, however, acquired adjoining retail premises in ShandwickPlace Edinburgh, Buchanan Street Glasgow and Feasegate/Market Street York. Ineach case these acquisitions have added to our core holdings. We have completedthe site assembly for the reconfiguration of our retail park in Rochdale by theacquisition of two small properties. The combined cost of these acquisitions was£10.5m. Asset managementOur occupancy rate has again remained above 97% and our irrecoverable costs havebeen maintained at a similar low level to last year. The passing rental incomewas £23.1m at the year end, reflecting like for like growth of 4%, much of thisgrowth reflects concluded rent reviews and lease renewals. The rental value ofour entire portfolio has increased to £26.2m reflecting like for like growth of5.8%. Following receipt of planning consent for our fire damaged property inWrexham, redevelopment of this site is now underway. The principal tenant ofthis new development will be Arcadia Group trading as Top Man/Top Shop. The lasttwo lettings are expected to be agreed before completion, scheduled for earlySpring 2007. Given that we now own a number of properties with longer term assetmanagement opportunities, I look forward to reporting future progress on anumber of key initiatives as we continue to maximise returns from our portfolio. Property developmentThe development programme continues to form an integral part of our businessactivity where we can secure an acceptable level of pre-let. During the year wecompleted two major developments that were in progress at the end of June 2005,selling the Leeds office building after the year end. Manchester - Piccadilly BasinDuring the year we concluded our 120,000 sq ft stand alone, pre-let retail unitwithin the Piccadilly Basin development, to Danish retailer, ILVA. Furthermorewe completed the adjoining multi-storey car park which our new subsidiary, TownCentre Car Parks, now operates on a commercial basis. We have commencedconstruction of a 33,000 sq ft office building where we obtained detailedplanning consent during the previous year. The building has been fully pre-letto BDP, international architects and consulting engineers. Work has also started on the refurbishment and extension of Carvers Warehouse, alisted building which, upon completion, will provide 20,000 sq ft of officeaccommodation, which is substantially pre let and is due for completion at theend of 2007. We continue to market the remaining commercial and retail space tobe created on the site in line with our development objectives. Leeds - Whitehall RiversideAs noted earlier, following the sale of No.1 Whitehall Riverside, the firstlandmark building on this six acre site which is ideally situated close to therailway station and the core business area of Leeds, interest in the next partof the development of this site is being actively pursued. We have outlineplanning consent for a further 400,000 sq ft of offices and associated carparking on this prime site and have drawn up plans and obtained detailedplanning consent for the next two office buildings. Leeds - Eastgate and Harewood QuarterAn outline planning application was submitted at the end of May for this majorretail-led joint development with Hammerson plc. In total the project comprises1,076,000 sq ft of retail space in over 100 shops, 2,700 car parking spaces andup to 600 residential apartments. The scheme will be anchored by John LewisPartnership with a 260,000 sq ft department store. Directors and staffAs announced last year Robert Bigley joined us in December 2005 as CorporateDevelopment Director. Also John Sutcliffe will be leaving the Group later in theyear and I am pleased to report that he will be replaced by Karen Prior asFinance Director and Company Secretary on 1 October 2006. Karen previouslyworked for Town Centre Securities as Financial Controller and Company Secretarybefore leaving to join Q-Park as their UK Finance Director. Karen's experiencein both property and car parking will be very beneficial. I would like to wishall three well in their new roles. REITSLegislation has now been passed within the 2006 Finance Act which provides for aUK tax transparent property investment vehicle, a REIT. This form of investmentvehicle has been a feature of other jurisdictions for some years and theirintroduction in the UK is welcome. Certain detailed elements of the regulationsare still awaited and of particular interest to Town Centre Securities are thedetailed rules with respect to significant shareholders. Once we have clarity onthese detailed regulations we will consider whether or not a REIT is the mostappropriate corporate structure in the future. OutlookI believe that these strong results and our future growth are based on a clearstrategy of active portfolio management, selective, part pre-let development andthe acquisition and cancellation of our own equity. Allied to this, in 2006 wehave acquired undervalued real estate equity investments and re-entered the carparking business with a view to developing a meaningful future income stream. Despite my concerns about competitive prices paid to obtain good qualityproperty investments and more aggressive bidding by both investors and otherproperty companies, Town Centre Securities remains well positioned. We have aportfolio in which quality is steadily improving and an excellent developmentpipeline, backed up by a robust financial position and these factors give megreat confidence in the future prospects for the Group. Finally, I would like to express my sincere thanks to all my colleagues andstaff. Their commitment and effort has enabled us to continue the outstandingtrack record of achievements. Edward Ziff Chairman and Chief Executive6 September 2006 Consolidated Income StatementYear ended 30 June 2006 Year Year ended Ended 30 June 30 June 2006 2005 Notes £000 £000Continuing operations--------------------------------------------------------------------------------Gross revenue 24,807 23,988Property expenses (1,664) (1,151)--------------------------------------------------------------------------------Net revenue 23,143 22,837Administrative expenses (4,631) (5,707)Other income 598 288Profit on disposal of investment properties 1,312 2,306Valuation movement on investment properties 80,637 42,703--------------------------------------------------------------------------------Operating profit 101,059 62,427Interest payable (11,156) (11,338)Interest receivable 150 48Share of post tax profits from joint ventures 817 364--------------------------------------------------------------------------------Profit before taxation 90,870 51,501Taxation 2 (21,527) (11,952)-------------------------------------------------------------------------------- Profit for the period 69,343 39,549--------------------------------------------------------------------------------All profit for the period is attributable to equityshareholders.Earnings per ordinary share of 25p each: 3Basic 124.8p 69.5pDiluted 123.9p 68.7p Dividends per ordinary share: 5Paid during period 8.3p 6.0pProposed (including a special dividend of 2.0p) 7.2p 6.3p Consolidated Statement of Recognised Income and ExpenseYear ended 30 June 2006 Year Year ended ended 30 June 30 June 2006 2005 £000 £000--------------------------------------------------------------------------------Profit for the period 69,343 39,549Revaluation gains on other investments 2,821 580--------------------------------------------------------------------------------Total recognised income for the period 72,164 40,129-------------------------------------------------------------------------------- All recognised income for the period is attributable to the equity shareholders. 30 June 30 June 2006 2005 Notes £000 £000--------------------------------------------------------------------------------Non-current assetsInvestment properties 6 434,361 363,640Property, plant and equipment 6 13,313 29,100Investments in joint ventures 2,239 2,815Prepaid operating lease payments 950 255Deferred tax assets 510 717--------------------------------------------------------------------------------Total non-current assets 451,373 396,527-------------------------------------------------------------------------------- Current assetsInvestments 12,669 4,902Non-current asset held for sale 7 56,500 -Trade and other receivables 3,865 4,795--------------------------------------------------------------------------------Total current assets 73,034 9,697--------------------------------------------------------------------------------Total assets 524,407 406,224-------------------------------------------------------------------------------- Current liabilitiesFinancial liabilities - borrowings (7,169) (5,579)Trade and other payables (14,288) (11,319)Current tax liabilities (3,624) (3,317)--------------------------------------------------------------------------------Total current liabilities (25,081) (20,215)--------------------------------------------------------------------------------Net current assets/(liabilities) 47,953 (10,518)Non-current liabilitiesFinancial liabilities - borrowings (165,130) (135,196)Deferred tax liabilities (65,281) (45,492)--------------------------------------------------------------------------------Total non-current liabilities (230,411) (180,688)--------------------------------------------------------------------------------Total liabilities (255,492) (200,903)--------------------------------------------------------------------------------Net assets 268,915 205,321-------------------------------------------------------------------------------- Shareholders' equityCalled up share capital 8 13,794 13,963Share premium account 1,114 818Other reserves 20,657 20,396Retained earnings 233,350 170,144--------------------------------------------------------------------------------Total equity 9 268,915 205,321-------------------------------------------------------------------------------- Net assets per share 487p 368p-------------------------------------------------------------------------------- Consolidated Balance SheetAs at 30 June 2006 Year ended Year ended 30 June 30 June 2006 2005 £000 £000 £000 £000--------------------------------------------------------------------------------Cash flows from operating activitiesCash generated from operations 21,725 17,654Interest paid (12,315) (11,413)Interest received 150 29Tax paid (1,224) (1,463)--------------------------------------------------------------------------------Net cash from operating activities 8,336 4,807-------------------------------------------------------------------------------- Cash flows from investing activitiesPurchases of investment properties (13,186) (13,159)Purchases of property, plant and (32,925) (14,646)equipmentPurchase of investments (5,447) (4,116)Proceeds from sale of investment 17,659 31,529propertiesProceeds from sale of property, plant 62 107and equipmentProceeds from sale of investments 545 238Dividends received from joint venture 75 -Loan from/(to) joint venture forpurchase of 1,861 (1,318)investment property --------------------------------------------------------------------------------Net cash used in investing activities (31,356) (1,365)-------------------------------------------------------------------------------- Cash flows from financing activitiesProceeds from issue of share capital 388 398Purchase of own shares for Share (1) (40)Incentive PlanProceeds from other non-current 30,000 9,000borrowingsRepurchase of share capital (4,360) (11,699)Dividends paid to shareholders (4,597) (3,365)--------------------------------------------------------------------------------Net cash generated from/(used in)financing 21,430 (5,706)activities -------------------------------------------------------------------------------- Net increase/(decrease) in cash and cash (1,590) (2,264)equivalentsCash and cash equivalents at 1 July (5,579) (3,315)--------------------------------------------------------------------------------Cash and cash equivalents at 30 June (7,169) (5,579)-------------------------------------------------------------------------------- Consolidated Cash Flow StatementYear ended 30 June 2006 The Cash Flow Statement should be read in conjunction with Note 10. Notes to the Preliminary StatementYear ended 30 June 2006 Basis of preparation This preliminary announcement does not constitute statutory accounts within themeaning of section 240 of the Companies Act 1985. The financial information forthe years ended 30 June 2006 and 30 June 2005 has been extracted from theconsolidated financial statements on which the auditors have given anunqualified opinion and which do not contain a statement under Sections 237(2)or 237(3) of the Companies Act 1985. The announcement has been agreed with theGroup's auditors for release. The financial information included in this preliminary announcement does notinclude all the disclosures required by IFRS and accordingly it does not itselfcomply with IFRS. A copy of the Group's financial statements for the year ended 30 June 2005,which were prepared in accordance with UK Generally Accepted AccountingPrinciples ('UK GAAP'), and on which the auditors gave an unqualified opinionand did not make a statement under section 237 of the Companies Act 1985, hasbeen filed with the Registrar of Companies. The Group's financial statements forthe year ended 30 June 2006 will be delivered to the Registrar of Companiesfollowing the Company's Annual General Meeting. Prior to 2005, the Group prepared its audited financial statements under UKGAAP. From 1 July 2005, the Group was required to prepare its annualconsolidated financial statements in accordance with IFRS and itsinterpretations issued by the International Accounting Standards Board (IASB) asadopted by the European Union (EU). 1. Segmental analysis A business segment is a group of assets and operations engaged in providingproducts or services that are subject to risks and returns that are differentfrom those of other business segments. A geographical segment is engaged in providing products or services within aparticular economic environment that are subject to risks and returns that aredifferent from those of segments operating in other economic environments. The Group's primary segment is business and the Group operates in one businesssegment; comprising property investment and development. The Group's operationsare performed wholly in the United Kingdom. 2. Taxation Taxation has been calculated on profits based on an anticipated effective taxrate of 21.1% on headline earnings for the year to 30 June 2006. Analysis of charge in period 2006 2005 £000 £000--------------------------------------------------------------------------------Current tax- Current year 664 1,591- Adjustment in respect of prior year (1,391) (863)- Corporation tax in respect of property disposal 2,258 --------------------------------------------------------------------------------- 1,531 728--------------------------------------------------------------------------------Deferred tax 19,996 11,224--------------------------------------------------------------------------------Taxation 21,527 11,952-------------------------------------------------------------------------------- 3. Earnings per share Year ended Year ended 30 June 30 June 2006 2005---------------------------------------------------------------------------------- Earnings Earnings Earnings per share Earnings per share £000 Pence £000 Pence----------------------------------------------------------------------------------Earnings and earnings per share 69,343 124.8 39,549 69.5Post tax loss/(profit) ondisposal of investmentproperties 1,427 2.5 (4,129) (7.3)Post tax exceptional pensioncosts - - 1,400 2.5Revaluation movement oninvestment properties reportedin income statement (80,637) (145.1) (42,703) (75.1)Revaluation movement oninvestment properties in jointventures reported in incomestatement (525) (0.9) (290) (0.5)Deferred tax on revaluation ofinvestment properties reportedin income statement 18,233 32.8 12,507 22.0----------------------------------------------------------------------------------Underlying earnings andearnings per share 7,841 14.1 6,334 11.1---------------------------------------------------------------------------------- The earnings per share is calculated on the weighted average of 55.6m ordinaryshares in issue (30 June 2005: 56.9m). The diluted earnings per share as at 30June 2006 is: 123.9p per share and underlying 14.0p (30 June 2005 is: 68.7p andunderlying 11.0p). 4. Underlying profit To assist shareholders in understanding the underlying results and compare tothose results in previous accounting periods: 2006 2005 £000 £000-------------------------------------------------------------------------------- Profit before taxation 90,870 51,501Less: revaluation surplus - Group (80,637) (42,703)Less: revaluation surplus - Joint venture (525) (290)Less: profits on disposal (1,312) (2,306)Add: exceptional pension cost - 2,000Add: tax on joint venture 123 13--------------------------------------------------------------------------------Underlying profit 8,519 8,215-------------------------------------------------------------------------------- "Triple" net asset value per share-------------------------------------------------------------------------------- 2006 2005 £000 £000-------------------------------------------------------------------------------- Closing net assets 268,915 205,321Add: debenture issue premium 2,130 2,196Add: IFRS deferred tax adjustment 57,032 38,902Less: Directors' estimated capital gains tax (42,125) (21,098)Less: debenture mark to market (after tax at 30%) (25,291) (27,879)-------------------------------------------------------------------------------- 260,661 197,442-------------------------------------------------------------------------------- Shares in issue ('000) 55,178 55,853"Triple" net asset value per share 472p 354p-------------------------------------------------------------------------------- 5. Dividends paid 2006 2005 £000 £000-------------------------------------------------------------------------------- 2004 final paid: 4.1p per 25p share - 2,3042005 interim paid: 1.9p per 25p share - 1,0612005 final paid: 4.3p per 25p share 2,380 -2005 special paid: 2.0p per 25p share 1,108 -2006 Interim paid: 2.0p per 25p share 1,109 --------------------------------------------------------------------------------- 4,597 3,365-------------------------------------------------------------------------------- In addition, the Directors are proposing a final ordinary of 5.2p and a specialdividend of 2.0p, totalling 7.2p in respect of the financial year ending 30 June2006 which will absorb an estimated £4,028,000 of shareholders' funds. It willbe paid on 2 January 2007 to shareholders who are on the register of members on1 December 2006. 6. Tangible fixed assets Investment properties Long Freehold leasehold Total £000 £000 £000--------------------------------------------------------------------------------Valuation at 1 July 2005 342,700 20,940 363,640Additions 12,504 958 13,462Disposals (16,601) - (16,601)Increase in value on revaluation 77,825 2,812 80,637Reclassification from development 49,723 - 49,723propertiesReclassification to non-current assetsheld for sale (56,500) - (56,500)--------------------------------------------------------------------------------Balance at 30 June 2006 409,651 24,710 434,361-------------------------------------------------------------------------------- Property, plant and equipment Development properties £000--------------------------------------------------------------------------------Cost at 1 July 2005 28,726Additions 33,651Reclassification to investment properties (49,723)--------------------------------------------------------------------------------Cost at 30 June 2006 12,654-------------------------------------------------------------------------------- Fixtures, equipment and motor vehicles £000--------------------------------------------------------------------------------Net book value at 1 July 2005 374Additions 550Disposals (54)Depreciation (211)--------------------------------------------------------------------------------Balance at 30 June 2006 659--------------------------------------------------------------------------------Total property, plant and equipment at 30 June 2006 13,313-------------------------------------------------------------------------------- 7. Non-current assets held for sale 2006 2005 £000 £000-------------------------------------------------------------------------------- Re-classification from investment properties 56,500 --------------------------------------------------------------------------------- The above freehold property has been revalued to £56,500,000 on transfer fromdevelopment properties to investment properties based on the Directors'valuation. This valuation is supported at 30 June 2006, on the basis of openmarket value by Jones Lang LaSalle in accordance with the Royal Institution ofChartered Surveyors Appraisal and Investment Manual. The above property, No.1 Whitehall Riverside, was disposed of after the year endfor £64.5m before disposal costs of £0.9m and two year rental guarantees on theun-let space which, as a maximum, could equal £1.2m. 8. Called up equity share capital Authorised 164,879,000 (30 June 2005: 164,879,000) ordinary shares of 25p each. Issued and fully paid Number Nominal of shares Value 000 £000--------------------------------------------------------------------------------At 1 July 2005 55,856 13,963Buy back of own shares (1,044) (261)Issued on take-up of options 368 92--------------------------------------------------------------------------------At 30 June 2006 55,180 13,794-------------------------------------------------------------------------------- 9. Statement of changes in shareholders' equity 2006 2005 £000 £000-------------------------------------------------------------------------------- Profit for the period 69,343 39,549Dividends (4,597) (3,365)-------------------------------------------------------------------------------- 64,746 36,184Arising on purchases and cancellation of own shares (4,360) (11,699)New share capital subscribed 388 398Surplus on revaluation of investments 2,821 580Purchase of own shares for Share Incentive Plan (1) (36)--------------------------------------------------------------------------------Net increase in shareholders' equity 63,594 25,427Opening shareholders' equity 205,321 179,894--------------------------------------------------------------------------------Closing shareholders' equity 268,915 205,321-------------------------------------------------------------------------------- 10. Cash flow from operating activities 2006 2005 £000 £000-------------------------------------------------------------------------------- Profit for the period 69,343 39,549Adjustments for:Tax 21,527 11,952Depreciation 211 186Profit on disposal of investment properties (1,312) (2,306)Realised gains on disposal of property, plant andequipment and listed investments (50) (72)Interest received (150) (48)Interest expense 11,156 11,338Share of joint venture profit after tax (817) (364)Movement in revaluation of investment properties (80,637) (42,703)Operating lease incentives and IFRS 2 adjustments - (16)Decrease/(increase) in debtors 235 (2,339)Increase in creditors 2,219 2,477--------------------------------------------------------------------------------Cash generated from operations 21,725 17,654-------------------------------------------------------------------------------- Other information (a) The proposed final dividend will be paid on 2 January 2007 to ordinaryshareholders on the register at the close of business on 1 December 2006. (b) The Annual Report and Accounts will be posted to all shareholders by 20October 2006 and copies will be available to the public from that date at theCompany's registered office, Town Centre House, The Merrion Centre, Leeds, LS28LY. (c) The accounting policies upon which the financial information has beenprepared are as set out in the Group's 2006 Annual Report and Accounts. This announcement was approved by the Board of Directors on 5 September 2006. This information is provided by RNS The company news service from the London Stock Exchange