RNS Number:6761M
Grainger Trust PLC
24 June 2003
FOR IMMEDIATE RELEASE
24th June 2003
GRAINGER TRUST plc
RESULTS FOR THE HALF YEAR ENDED 31ST MARCH 2003
HIGHLIGHTS
* Pre-tax profits rise to #22.4m from #16.8m + 33%
* Earnings per share up to 53.3p from 29.8p + 79%
* Interim dividend increased to 3.51p per share + 15%
* Tenanted Residential Division:
* Sales exceed vacant possession values by 6.5%
* 382 properties sold for #36m over period generating approx. 20% rise
in trading profits to #15.8m
* Overall operating profits increased by 12% to #18.7m
* Heavy investment programme as 592 units acquired for #45m
* Portfolio investment value stood at #411m comprising 5,138 properties
* Provision of property asset management services new area of
opportunity
* Bromley Joint Venture:
* Sales over period total #81m against cost of #58m - taking total sales
since acquisition to #454m against cost of #400m
* Remaining portfolio valued at #668m, as at 31st March 2003
* JV generated #4.0m of pre-tax profits to Grainger
* Following refinancing of JV in December Grainger has received a #52m
dividend - taking total cash generation to #85.9m against initial investment of
#55.8m
* Development and Trading:
* 7 acres of Kennel Farm housing land sale produced profit of #4.6m
* Since March sold Victoria office block for #8.2m - generating #2.6m of
net profits
* Contracts exchanged on 75% of Pimlico flats - to produce #30m on
completion
* Selected by Islington Council for two mixed-use regeneration schemes
in North London
* Grainger Homes progressing satisfactorily - 77 units sold or reserved
* Division generated operating profits of #5.4m a 10% rise
* Financing and Taxation:
* Net debt fell to #199.4m
* Gearing down to 48% from 52%
* Average interest rate on debt is 6.2% against 6.3% in September
* NNNAV is #294m or #11.88 per share - 1% lower than at year end as
there is no interim property valuation
"Progress in the current year has been satisfactory chiefly because the core
tenanted residential business has performed strongly. We are taking full
advantage of our expertise as residential traders and managers, together with
our local knowledge, to deliver returns in a wide range of related areas. These
include asset and property management, residential and mixed-use development,
and joint venture or partnership arrangements that enable us to apply our skills
and knowledge successfully.
"We believe we have the right people with the experience, knowledge and
reputation to drive forward the Group's development. We look forward to the
future with confidence," Robert Dickinson, Chairman.
Contact:
Grainger Trust plc
Rupert Dickinson, Chief Executive 020 7795 4700
Andrew Cunningham, Deputy Chief Executive and Finance Director 020 7795 4700/
0191 261 1819
Baron Phillips Associates
Baron Phillips 020 7397 8932
CHAIRMAN'S STATEMENT
Once more I am able to report on a very successful period with a strong
performance from the Group. This reflects the continuing strength of our sector
of the residential property market and our ability to recognise opportunities
and maximise value from those opportunities. Demand for the Group's well spread
portfolio has remained strong throughout the period under review.
Results
The impact of this demand is reflected in a 33% increase in Group profit before
tax from #16.8m to #22.4m for the six months to 31st March 2003. Two key factors
contributed to this substantial uplift over the period: a 12% increase in
Grainger's operating profit, mainly from its tenanted residential division; and
a #4m contribution from our Bromley joint venture compared to a small loss last
year.
Earnings per share have risen by 79% to 53.3p from 29.8p, reflecting the lower
effective tax rate in the period especially in the Bromley joint venture
company. Your Directors are recommending an interim dividend of 3.51p per share,
an increase of 15%, which will be payable on 25th July 2003 to shareholders on
the register at close of business on 4th July 2003.
We do not revalue our portfolio at the half-year and therefore at the interim
stage our net asset value per share ("NAV") is decreased by the elimination of
valuation surpluses from properties sold since the year end valuation and not
offset by any increase in values of the retained portfolio. However the NAV is
boosted by retained earnings and therefore the overall impact is only a marginal
2% decline from #17.24 per share at 30th September 2002 to #16.98. When adjusted
to take account of contingent taxation and the market value of our debt (NNNAV),
this falls to #11.88 per share compared to #12.03 at 30th September 2002, a
reduction of only 1%.
Tenanted Residential
Sales of properties in our Tenanted Residential division continue to be strong.
Demand for our typical properties, which are often unmodernised and therefore
below average value, remains high as purchasers can see opportunities to create
development value. While we have seen some slowing down in the market since last
Autumn this has been generally concentrated on higher priced areas in London and
the South-East, where our exposure is limited.
Our properties, with a relatively low average vacant possession value of
approximately #108,000 and a wide geographic spread, have been less affected by
the slowdown. Indeed, sales during the period have exceeded 30th September 2002
vacant possession values by 6.5%.
Over the six months to 31st March 2003 we sold 382 properties for a gross
consideration of #36.0m compared to 395 properties for #26.1m during the same
period last year. These sales resulted in a near 20% rise in trading profits to
#15.8m from #13.2m. Net rental income fell slightly by 4% to #4.5m from #4.7m.
Overall the division's total operating profits amounted to #18.7m, a 12%
increase.
A good example of our approach to our tenanted residential trading activities is
shown by a block of flats in London NW8 which we acquired in May last year for
#8.8m. Since then we have completed the sale of seventeen flats for #8m,
generating a #1.4m profit, and retained seven regulated flats with a value of
#2.5m.
Concurrently we have continued to invest heavily in stock replacement and during
the period we acquired 592 units for a total of #45m, of which 426 units
(acquired at a cost of #24m), were in the life tenancy market. We believe this
sector complements our core regulated business and, given the appetite shown by
home-owners to realise some or all of the equity in their properties, presents
us with significant future opportunities.
At 31st March 2003 the investment value (as at 30th September 2002 value,
adjusted for additions at cost) of the division's portfolio was #411m comprising
5,138 properties compared to #394m and 4,928 properties at 30th September 2002 .
The great majority of the portfolio comprises Regulated Tenancies which account
for almost #300m of the total value.
As we noted at the year end, another area of opportunity is provision of
property asset management services which we are successfully providing to the
Schroders Residential Property Unit Trust (ResPUT). ResPUT, with a current
portfolio valued at #120m, invests primarily in new build properties on assured
tenancies.
Bromley Joint Venture
Rationalisation of the BPT portfolio has continued. This is owned in a joint
venture with Deutsche Bank Real Estate Opportunity Fund, and over the period 852
residential properties were sold for #81m against an acquisition cost of #58m.
This takes total sales since acquisition in June 2001 to #454m against a cost of
#377m. As at 31st March 2003 the BPT portfolio comprised a total valuation
#668m. Large scale bulk sales which mainly took place last year are now
virtually complete and we are close to the position of the portfolio being
reduced to core regulated and life tenancy assets only.
Grainger's share of the joint venture profit before tax has improved to #4.0m
from a small loss last year of #0.8m. This has been achieved by a substantial
reduction in interest charges that fell from #15.7m to #8.6m partially offset by
a drop in operating profit from a reducing rent roll as properties are sold.
In December the core Bromley debt was refinanced on terms more appropriate to
medium term funding. A total of #460m was raised which enabled us to repay all
the balance of the existing acquisition debt of #379m and pay a #52m dividend to
each partner. Since acquisition in May 2001 Grainger has received a total of
#85.9m of cash from the joint venture compared to its initial investment of
#55.8m.
Development and Trading
Our development and trading division continues to make a significant
contribution to the Group's results. During the period we sold a further seven
acres of housing land at Kennel Farm for #6.9m producing a profit of #4.6m and
we anticipate additional sales in the second half of the year. We have not sold
any other development sites in the first six months but since the end of March
we have sold the 19,000 sq ft Townsend House office in Victoria for #8.2m,
reflecting a net profit of some #2.6m.
Redevelopment of the former Pimlico bus station is proceeding well. Contracts
have been exchanged on 61 of the 79 flats. The sold flats should produce some
#30m on completion, expected in the next financial year.
Practical completion of our mixed-use scheme Landmark Place, Slough, has now
been achieved at a cost to date of approximately #23m. Following the sale of the
hotel site we have now completed the lease of the health and fitness unit. The
property is a quality asset but the letting of the office element is likely be
affected by the poor market conditions in the Thames Valley.
I am pleased to report that we have been selected by Islington Council to
undertake two key developments in the Borough that will provide a mixture of
office space (for the Council) homes for sale, affordable homes and community
buildings. We anticipate receiving planning consent next Spring and commencing
development by late Summer 2004.
Our residential development and regeneration initiative in the former coalfield
areas on the North East Northumbrian coastal plain is bearing fruit. We have
developed a good working relationship with local planners and communities and
the results reflect the benefits of a regeneration partnership between the
public and private sectors. We are focused on areas in the North-East
traditionally overlooked by major developers and housebuilders. Grainger Homes,
our house building subsidiary, has experienced a satisfactory level of demand
for our new build units, and has sold or reserved 77 units in the period.
Overall the trading and development division generated operating profits of
#5.4m, an improvement of 10% over the previous period.
Financing and Taxation
At 31st March net debt totalled #199.4m, down from #223.3m at the year end, and
gearing fell to 48% from 52% as at September 2002. As outlined earlier net
assets were marginally lower at #420m, a fall of #7m comprising the difference
between an increase from retained earnings of #12m and a reduction from
elimination of valuation surpluses of #19m.
The average interest rate on our debt at 31st March 2003 was 6.2% compared to
6.3% at 30th September 2002. Total net interest payable over the period fell by
#5.4m to #14.5m as a result of lower interest rates and debt levels.
FRS13, marking our debt to market value, reduces our NAV by 53p a share, up from
48p a share at the year end, of which 12p a share relates to our share of the
Bromley joint venture. After accounting for both FRS13 and a full provision for
contingent tax liabilities our NNNAV is #294m or #11.88 per share compared to
#298m or #12.03 per share at the year end.
Prospects
Our progress in the current year has been satisfactory chiefly because the core
tenanted residential business has performed strongly. We are taking full
advantage of our expertise as residential traders and managers together with our
local knowledge to deliver returns in a wide number of related areas. These
include asset and property management, residential and mixed use development,
and joint venture or partnership arrangements that enable us to apply our skills
and knowledge successfully.
We believe we have the right people with the experience, knowledge and
reputation to drive forward the Group's development. We look forward to the
future with confidence.
Registered Office:-
Robert Dickinson
Citygate CHAIRMAN
St James Boulevard
Newcastle upon Tyne
NE1 4JE 24th June 2003
GRAINGER TRUST plc
--------------------
CONSOLIDATED PROFIT AND LOSS ACCOUNT
--------------------------------------
FOR THE HALF YEAR ENDED 31ST MARCH 2003
-----------------------------------------
Half year Half year Year
ended ended ended
31.03.03 31.03.02 30.09.02
Note #'000 #'000 #'000
--------- ------- ------- -------
Turnover (including 83,455 104,924 213,847
share of joint
venture)
Less: Share of (26,283) (51,150) (110,339)
turnover of joint
venture
-------- -------- -------
Group turnover 57,172 53,774 103,508
-------- -------- -------
Gross rentals 10,878 10,802 21,954
Trading profits 19,933 17,060 33,679
Other income 363 121 425
-------- -------- -------
31,174 27,983 56,058
Less:
Property expenses (4,821) (4,527) (9,673)
Administration (2,213) (1,943) (4,369)
expenses
-------- -------- -------
Group operating 24,140 21,513 42,016
profit
Share of operating
profit in joint
venture
(after #23,000 (2002 11,106 13,862 32,951
: #10,000)
amortisation of
goodwill)
-------- -------- -------
Total operating 35,246 35,375 74,967
profit : group and
share of joint
venture
Net profit on
disposal of & -------- -------- -------
provisions against
fixed assets
- Group 169 198 131
- Joint venture 1,487 1,105 7,392
-------- -------- -------
1,656 1,303 7,523
-------- -------- -------
Profit on ordinary 36,902 36,678 82,490
activities before
interest
Net interest payable
and similar -------- -------- -------
charges
- Group normal (5,885) (4,128) (10,668)
- Group - - (3,767)
exceptional
- Joint venture (8,595) (15,724) (26,945)
-------- -------- -------
(14,480) (19,852) (41,380)
-------- -------- -------
Profit on ordinary 22,422 16,826 41,110
activities before
taxation
Tax on profit on 4 (9,239) (9,476) (20,225)
ordinary
activities
-------- -------- -------
Profit on ordinary 13,183 7,350 20,885
activities after
taxation
Dividends (869) (752) (3,507)
-------- -------- -------
Retained profit for 12,314 6,598 17,378
the period
-------- -------- -------
Earnings per share 3 53.3 p 29.8 p 84.6 p
-------- -------- -------
Diluted earnings per 53.1 p 29.6 p 84.2 p
share
-------- -------- -------
All results relate to continuing operations
GRAINGER TRUST plc
--------------------
STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES
------------------------------------------------------
FOR THE HALF YEAR ENDED 31st MARCH 2003
-----------------------------------------
Half Year Half Year Year
ended ended ended
31.03.03 31.03.02 30.09.02
#'000 #'000 #'000
------- ------- -------
Profit on ordinary activities after 13,183 7,350 20,885
taxation
Taxation on realisation of property - (475) (398)
revaluation gains of previous
years
Unrealised surplus on revaluation of - - 464
properties
Diminution transferred from - - 64
revaluation reserve to profit and
loss account
------- ------- -------
Total gains and losses recognised - 13,183 6,875 21,015
Group
Share of joint venture tax on (79) - -
realisation of revaluation gains of
previous years
Unrealised surplus on revaluation of 474 114 7,762
joint venture properties
------- ------- -------
Total gains and losses recognised 13,578 6,989 28,777
for the period
Prior year adjustment - Group - (1,932) (1,932)
- Joint venture - (850) (850)
Total gains and losses recognised 13,578 4,207 25,995
since the last annual report
- Group and Joint Venture
------- ------- -------
GRAINGER TRUST plc
--------------------
CONSOLIDATED BALANCE SHEET
----------------------------
AT 31ST MARCH 2003
--------------------
31.03.03 31.03.02 30.09.02
Note #'000 #'000 #'000
--------- ------- ------- -------
Fixed assets
Intangible assets (1,029) (868) (858)
Tangible assets 22,197 20,954 21,718
Investments :
Investment in joint venture:
Share of gross assets 270,917 371,996 306,951
Share of gross (294,956) (360,344) (281,092)
liabilities
------- ------- -------
(24,039) 11,652 25,859
Goodwill 303 413 326
------- ------- -------
(23,736) 12,065 26,185
Loan to Joint Venture 13,735 33,718 13,735
------- ------- -------
8 (10,001) 45,783 39,920
Other investments 9,187 1,888 8,882
------- ------- -------
(814) 47,671 48,802
------- ------- -------
20,354 67,757 69,662
------- ------- -------
Current assets
Stocks 334,301 288,086 305,059
Debtors: amounts falling due within 4,005 14,934 3,541
one year 6
Cash at bank and in hand 23,139 23,980 10,477
------- ------- -------
361,445 327,000 319,077
Creditors: amounts falling due 44,527 64,534 52,402
within one year
7
------- ------- -------
Net current assets 316,918 262,466 266,675
------- ------- -------
Total assets less current 337,272 330,223 336,337
liabilities
Creditors: amounts falling due after 200,852 223,452 211,481
more than one year 7
Provision for liabilities and
charges
Deferred taxation 2,602 4,838 3,747
------- ------- -------
Net assets 133,818 101,933 121,109
------- ------- -------
Capital and reserves
Called-up share capital 6,186 6,170 6,186
Share premium account 21,364 20,800 21,364
Revaluation reserve 10,732 4,664 11,620
Capital redemption 185 185 185
reserve
Profit and loss account 95,351 70,110 81,754
------- ------- -------
Equity shareholders' 133,818 101,929 121,109
funds
Minority interests - 4 -
------- ------- -------
Total capital employed 133,818 101,933 121,109
------- ------- -------
GRAINGER TRUST plc
--------------------
CASHFLOW STATEMENT
--------------------
FOR THE HALF YEAR ENDED 31st MARCH 2003
-----------------------------------------
Half Year Half Year Year
ended ended ended
31.03.03 31.03.02 30.09.02
#'000 #'000 #'000
------- ------- -------
Net cash outflow from operating (10,929) (33,395) (18,293)
activities
Dividends from joint ventures 52,000 - -
and associates
Returns on investments and
servicing of finance
Interest received 1,745 4,221 7,618
Interest paid - normal (7,527) (7,185) (18,570)
- exceptional - - (3,767)
Dividends received 187 19 29
------- ------- -------
(5,595) (2,945) (14,690)
------- ------- -------
Taxation
UK corporation tax paid (6,122) (2,748) (8,149)
------- ------- -------
Capital expenditure and
financial investment
Purchase of fixed asset (1,352) (1,118) (8,119)
investments
Purchase of tangible fixed (277) (437) (845)
assets
Sale of fixed asset - 64 66
investments
Sale of tangible fixed assets 544 7,135 7,138
Repayment of loanstock - - 26,265
------- ------- -------
(1,085) 5,644 24,505
------- ------- -------
Acquisitions and disposals
Purchase of subsidiaries (1,566) (374) (222)
Costs on purchase of (147) (56) (56)
subsidiaries
Cash acquired on purchase of 18 - -
subsidiaries
Sale of subsidiaries - - 180
Cash disposed of on sale of - - (42)
subsidiaries
Investment in Joint Venture - 4,722 (1,560)
------- ------- -------
(1,695) 4,292 (1,700)
------- ------- -------
Equity dividends paid (2,755) (2,389) (3,141)
------- ------- -------
Cash inflow/(outflow) before 23,819 (31,541) (21,468)
financing
------- ------- -------
Financing
New loans raised - 36,600 47,100
Repayment of loans (11,157) (4,169) (38,392)
Issue of shares - - 147
------- ------- -------
Net cash (outflow)/inflow from (11,157) 32,431 8,855
financing
------- ------- -------
Increase/(decrease) in cash in 12,662 890 (12,613)
the period
------- ------- -------
Reconciliation of operating profit to net cash outflow from
operating activities
Half Year Half Year Year
ended ended ended
31.03.03 31.03.02 30.09.02
#000 #000 #000
------ ------ ------
Operating profit 24,140 21,513 42,016
Depreciation 105 113 220
Amortisation of goodwill (215) (435) (445)
(Increase)/decrease in debtors (747) (9,203) 1,047
(Decrease)/increase in (18,169) 6,541 7,892
creditors
Increase in stocks (16,043) (51,924) (69,023)
------- ------- -------
Net cash outflow from operating (10,929) (33,395) (18,293)
activities
------- ------- -------
NOTES TO THE INTERIM STATEMENT
1. Net Asset Value Per Share (NAV)
This consists of balance sheet equity plus the excess of market
value over book cost of trading stock, together with the excess of
market value over book cost of the Group's share of the joint
venture in Bromley Property Holdings Limited (properties valued at 30 September
2002, with subsequent additions at cost).
NAV at 31st March 2003 before the adjustments referred to below was
#16.98 (30th September 2002: #17.24).
Two proforma adjustments are commonly made to NAV:
Contingent tax
This is the tax that would be payable if all Group and Joint Venture
properties were disposed of at valuation, and amounts to #4.57 per
share (30th September 2002: #4.73).
FRS 13
This records the difference between the current market value of
fixed rate debt and derivatives and their book values. After
allowing for tax, this adjustment is 53p (30th September 2002: 48p).
This results in a net net net asset per share (NNNAV) of #11.88
(30th September 2002:#12.03).
2. Pro Forma Net Asset Statement
31.03.03 31.03.02 30.09.02
#'000 #'000 #'000
------- ------- -------
Properties at market value (at 30 September
2002, with subsequent additions at cost):
Tenanted residential 411,203 324,167 393,602
Development and trading 130,909 142,280 132,169
------- ------- -------
542,112 466,447 525,771
------- ------- -------
Investments 99,144 110,642 153,838
Other assets 686 718 673
Cash 23,139 23,980 10,477
------- ------- -------
Total assets 665,081 601,787 690,759
------- ------- -------
Debt (222,581) (257,461) (233,738)
Net current liabilities (18,793) (15,591) (26,604)
Deferred tax (3,541) (4,838) (3,747)
Minority interest - (4) -
------- ------- -------
(244,915) (277,894) (264,089)
------- ------- -------
Market Value Net Assets 420,166 323,893 426,670
------- ------- -------
NAV per share #16.98 #13.12 #17.24
------- ------- -------
3. Earnings Per Share
The calculation of earnings per share is based on the following number of
shares:
31.03.03 31.03.02 30.09.02
No. of No. of No. of
Shares Shares Shares
000's 000's 000's
------- ------- -------
Number of shares for basic earnings per 24,745 24,680 24,682
share (September 2002: weighted average)
------- ------- -------
Weighted average number of shares for 24,831 24,800 24,808
diluted earnings per share
------- ------- -------
4. Taxation
Tax on profit on ordinary activities:-
31.03.03 31.03.02 30.09.02
#'000 #'000 #'000
------- -------- --------
Group:
Normal 6,264 6,413 10,609
Exceptional - - (1,130)
------- -------- --------
6,264 6,413 9,479
Share of joint venture 2,975 3,063 10,746
------- -------- --------
9,239 9,476 20,225
------- -------- --------
5. Dividends
Dividends on ordinary shares:-
31.03.03 31.03.02 30.09.02
#'000 #'000 #'000
------- -------- --------
Interim of 3.51p per share (2002:3.05p) 869 752 752
Final for year ended 30th September 2002 of - - 2,755
11.13p per share
------- -------- --------
869 752 3,507
------- -------- --------
6. Debtors
31.03.03 31.03.02 30.09.02
#'000 #'000 #'000
------- -------- --------
Trade debtors 1,882 11,356 1,674
Other debtors 1,154 1,226 640
Prepayments and accrued income 969 2,352 1,227
------- -------- --------
4,005 14,934 3,541
------- -------- --------
7. Creditors
31.03.03 31.03.02 30.09.02
#'000 #'000 #'000
------- -------- --------
Amounts fallings due within one year:-
Mortgage and other loans 494 12,214 350
Loan notes 1,738 2,757 1,959
Bank loans 19,497 19,038 19,948
Deposits received 616 518 610
Trade creditors 6,476 8,774 7,512
Corporation tax payable 8,620 9,559 8,238
Other taxation and social security 311 290 1,597
Accruals and deferred income 5,906 10,632 9,433
Dividends payable 869 752 2,755
------- -------- --------
44,527 64,534 52,402
------- -------- --------
Amounts falling due after more than one
year
101/2% debenture stock 1,913 6,742 1,913
113/4% debenture stock 620 2,875 925
Mortgages and other loans 28,136 28,745 28,618
Loan notes 728 - 728
Bank loans 169,455 185,090 179,297
------- -------- --------
200,852 223,452 211,481
------- -------- --------
Maturity of finance debt (net of issue
costs) is as follows:
In one year or less 21,729 34,009 22,257
Between one and two years 31,067 20,293 32,519
Between two and five years 54,811 67,600 56,406
Between five and ten years 91,016 85,765 95,652
Over ten years 23,958 49,794 26,904
------- -------- --------
222,581 257,461 233,738
------- -------- --------
8. Investment in Bromley Joint Venture
Market
Statutory Value
Accounts Balance
Basis Sheet
#'000 #'000
-------- --------
Investment at 1 October 2002 39,920 143,994
Share of profit after tax 1,023 1,023
Dividends (52,000) (52,000)
Valuation and other movements 1,056 (1,172)
Goodwill eliminated - (3,132)
-------- --------
Investment at 31 March 2003 (10,001) 88,713
-------- --------
Revaluation surpluses on stock are not reflected in the statutory
accounts basis figures.
9. This announcement does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985.
Statutory accounts for the year ended 30th September 2002 have been
filed with the Registrar of Companies. The auditors have reported on those
accounts; their report was unqualified and did not contain any
statement under Section 237(2) or (3) of the Companies Act 1985.
10. Copies of this statement are being sent to all shareholders. Copies of
this statement can be obtained from the Company's registered office,
Citygate, St. James' Boulevard, Newcastle upon Tyne, NE1 4JE.
Further details of this announcement can be found on our website,
www.graingertrust.co.uk.
11. The Board of Directors approved the interim statement on 24th June
2003. This interim report has neither been audited nor
reviewed by the auditors.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEDFUDSDSELM