RNS No 7984k
THE CARDIFF PROPERTY PLC
19th January 1998
THE CARDIFF PROPERTY PLC
(The Group's property investment and development activities remain close to
Heathrow Airport, an area bounded by the western sector of the
M25, and the M4 and M3 motorway network)
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 1997
HIGHLIGHTS
Increase
* Turnover #2.923m (1996: #1.077m) +171%
* Profit before tax #474,417 (1996: #292,533) +62%
* Earnings 13.7p per share (1996: 7.7p) +78%
* Dividend 3.10p per share (1996: 2.85p) +9%
* Net asset value 317p per share (1996: 264p) +20%
* Net assets #10.5m (1996: #8.8m) +20%
* Gearing 50% (1996: 32%)
* Net interest payable covered 3.5 times by gross rental income of
#807,304
* The Group should make further positive progress in the coming year
For further information contact:
Richard Wollenberg (Chairman) 01784 437444
Brian Coleman-Smith / Joan Cummings
(Binns & Co Public Relations) 0171 786 9600
Naresh Gudka / Will Martin
(Albert E Sharp) 0171 638 7275
THE CARDIFF PROPERTY PLC
(The Group's property investment and development activities remain close to
Heathrow Airport, an area bounded by the western sector of the
M25, and the M4 and M3 motorway network)
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 1997
Chairman's Statement and Property Review
The Group's development activities have gathered momentum over the year and
I am pleased to report further advances together with record profits and a
substantial uplift in net assets per share.
For the year to 30th September 1997 pre tax profits for the Group increased
by 62% to #474,417 against #292,533 for last year. This figure includes
the Group's share of profits from our 47.62% owned associated undertaking,
Campmoss Property Company Limited, amounting to #59,147 (1996: #81,288) and
profits from the sale of investment property and other investments
amounting to #91,569 (1996: #172,409).
Turnover totalled #2.92m (1996: #1.08m) which included gross rental income
of #807,304 (1996: #713,403), the sale of houses at Reading (#209,902) and
at Pewsey (#716,759) and 3 detached executive houses and 2 remaining
cottages at Chiddingfold, Surrey (#1.19m).
After deduction of tax, mainly irrecoverable ACT, the profit attributable
to shareholders was #453,046 (1996: #256,034). Earnings per share on a net
basis increased by 78% to 13.7p (1996: 7.7p).
Financial
The Group's commercial and residential investment property portfolio,
excluding properties contracted for sale at the year end, was valued
externally by Healey & Baker and Aitchisons Raffety Buckland. The total
value, including those contracted for sale as at 30th September 1997, was
#8.31m (1996: #7.8m) which, when added to the value attributable to
property under construction, other fixed assets and our interest in
Campmoss Property, plus investments, values the Group's total fixed assets
at #12.33m (1996: #9.96m). Net assets totalled #10.53m (1996: #8.76m)
equivalent to 317p per share (1996: 264p).
At the year end, net Group borrowing amounted to #5.3m (1996: #2.8m)
resulting in the Group's gearing increasing to 50% (1996: 32%). Since the
year end the Group's borrowing facilities have been re-negotiated with the
length of term extended and the interest rate reduced. Current facilities
adequately cover the Group's existing development programme with interest
payable at current rates well covered by gross rental income, even allowing
for the expiry of leases over the next ten years. As individual projects
complete and become income producing, additional resources will allow
further acquisitions to take place.
Dividends
Your directors recommend a final dividend of 2.10p per share (1996: 1.95p)
which together with the interim dividend gives a total for the year of
3.10p per share (1996: 2.85p) an increase of 8.8%.
Property within the Western Sector of the M25 Motorway
The presence of Heathrow Airport, and the M25, M3 and M4 motorway network
continues to be of major importance in attracting and persuading national
and multi-national companies to locate in the surrounding areas. In
counties such as Surrey, Berkshire, Buckinghamshire and areas to the west
of London, commercial property rents and residential values have risen by
15% over the year.
Given these increases, property developers and investors have responded by
commencing a number of new developments, but the underlying strength of
demand continues to exert an upward pressure, encouraging further
increases. Residential asking values have exceeded previous highs but it
should be noted that commercial rental levels are still below those
achieved in the late eighties.
Commercial property values are in part driven by the prospect of increasing
rental yields, but a major factor over the year has been the positive yield
gap of property relative to long term gilts. In the event that the UK
economy remains in its current buoyant state and gilt yields continue to
decline, commercial property values should improve further as institutional
and private funds seek a competitive return.
Your directors will continue to concentrate the Group's property investment
and development activities close to Heathrow Airport and to the western
sector of the M25 motorway.
The Property Portfolio
Commercial - Investments
The Group's office investment portfolio and that of Campmoss Property
continue to include property located in Windsor, Egham, Hatton Cross and
Woking. These properties provide a secure source of long term income with
the majority of institutional leases having well over 14 years to run.
In Windsor, our 8,000 sq. ft. office building is let to Morganite
International on an institutional lease at an annual rental of #250,000.
The existing lease with five yearly rent reviews has an unexpired term of
17 years. Office rents in Windsor have benefited from an acute shortage of
new stock with asking levels currently over #20 per sq. ft.
At Egham, our shop and office building known as The White House is let to a
number of prime covenants and produces an annual rental of #161,000. The
institutional leases with five yearly rent reviews have an unexpired term
of 14 years.
At Hatton Cross, close to Heathrow Airport, our 3,000 sq. ft. office
property produces an annual rental of #60,000. The institutional lease
expires in 2011 although the tenant has the ability to vacate this year
with six months' prior notice.
At Britannia Wharf, Woking, the 28,750 sq. ft. gross office building is let
to three well known covenants and produces an annual gross rental of just
over #520,000. This property is owned by Campmoss Property.
At Cardiff, our 20,000 sq. ft. postal sorting centre continues to be
occupied by the Royal Mail producing an interim rental of #45,000 per
annum. A dilapidations schedule has been served on the tenant and
negotiations continue with regard to a new lease.
Commercial - Developments
The Group has increased extensively its development programme over the year
with various projects expected to complete within the next 9 months.
At Redhill, following planning consent, 2,000 sq. ft. of office space
within the existing courtyard environment is being totally refurbished.
The adjacent 6,000 sq. ft. building will be upgraded once the tenant has
vacated in March this year. Negotiations with potential tenants are
currently taking place at rents in the region of #18 per sq. ft.
At Station Road, Egham, the development of our 10,000 sq. ft. gross office
building is practically complete and I am pleased to announce that a pre-
letting to Fairey Group plc, one of the top 500 UK quoted public companies,
has been achieved at an annual rental in the region of #165,000. The new
long term lease, with five yearly reviews, has been agreed at an average of
#21 per sq. ft. over the first 5 years. A short rent free period has been
agreed.
In August last year, First Choice Estates acquired a freehold property in
Woking for a cash consideration of #560,000. The property has an outline
planning consent for an 18,000 sq. ft. office scheme and discussions with
the local authority to obtain a detailed approval whilst considering
alternative uses for the site, are currently taking place. The building is
occupied on a short term lease at a rent of #35,000 per annum.
At Windsor, a major refurbishment of our 20,000 sq. ft. industrial and
office building should commence shortly. The completed development is
expected to be available for letting next year. A shortage of similar
buildings in this location is still evident, and an early letting is
anticipated.
Campmoss Property has also been active during the year. At Burnham,
Buckinghamshire, the development of a high grade 26,000 sq. ft.
headquarters office building known as The Priory has been completed. A
marketing programme to let the building is under way and discussions are
currently taking place with prospective tenants.
In May last year, Campmoss Property acquired a 24,000 sq. ft. office
building in Bracknell comprising a ground floor retail showroom with five
upper floors of offices and an adjoining single storey retail unit. Part of
the building has been let on short term leases producing an annual income
of #150,000.
The current vacant space is being marketed on a similar short term basis
and if fully let should produce a total annual rental in the region of
#200,000. Discussions are currently taking place with the local authority
with a view to submitting a planning application to achieve further
lettable space.
In August, Campmoss Property acquired an industrial site of just under one
acre in Bracknell for a cash consideration of #514,000. Since the
acquisition a revised planning application to achieve 35,000 sq. ft. of
industrial space has been granted and construction at the site is now well
under way. Completion of the development is expected during the next 4
months and, in view of the strong demand in the Bracknell area for small
industrial units, early lettings are anticipated.
Residential
The Group's residential development activities continue to prove successful
although obtaining planning approvals for our preferred type and style of
property continues to be difficult.
The development and sale of 3 executive houses and 3 cottages at
Chiddingfold Surrey was completed during the year. At Pewsey, Wiltshire, 7
terraced houses on land adjacent to the supermarket development were
completed with 6 sold before the year end and the remaining unit sold
after.
At Hambledon, Surrey, planning approval to replace the existing country
house with a 7 bedroom residence was approved and demolition and building
work is expected to commence during the next few months. A number of
offers have been received for the completed property although it is
intended to commence development before finalising a sale.
At Windsor, our planning application for 21 flats was refused and, whilst
an appeal against this decision is being actively pursued, a revised scheme
has been submitted for a similar number of residential units. The property
has the benefit of a planning consent for a 66 bedroom hotel and a decision
as to which scheme to progress will be made once the current planning
position has been resolved.
At Egham, we have recently acquired a commercial property and achieved a
planning approval for change of use to residential. Construction of 7 flats
is expected to commence within the next 3 months.
Investments
Our holding in Edge Properties Plc, a listed company specialising in the
investment and development of retail warehouses, has performed well.
During the year we sold a small part of our holding which has contributed
to the Group's profitability.
Management and Staff
As announced in December last year, David Whitaker was appointed a director
and secretary of the Company. David is a Chartered Accountant and has
extensive experience of public companies both as finance director and
company secretary. I welcome him to the board.
Reginald Beck has indicated that he wishes to retire at the forthcoming
annual general meeting after 47 years of devoted service to the Company. I
would like to take this opportunity of expressing my deepest appreciation
and gratitude to Mr Beck for his outstanding contribution to the Company.
He has been one of our unsung heroes for many years, serving as company
secretary since 1950 and as a director since 1972. I wish him well in his
retirement.
After consultation with our advisers the Company is proposing to introduce
a limited, unapproved share option scheme and replace the now expired
approved share option scheme, further details of which will be included in
the directors' report in the Annual Report.
As announced in April 1997 the provision of the Finance Act 1996 has
resulted in share options granted by the board in April and July 1996 being
unapproved share options and approval of these options and the new share
option schemes will be put to shareholders at the annual general meeting.
Establishment of both schemes will provide all our directors and employees
with incentives which I believe are important for the future growth of our
Company.
It has been a busy and successful year for the Company and I am sure I
speak on behalf of all shareholders in expressing my thanks to all members
of staff and directors for their support and hard work over the year.
Outlook
Since the year end we have disposed of three properties and part of our
listed investment, raising just under #600,000. In addition we have
subscribed for a 15% stake in General Industries plc (#150,000), an
investment company recently floated on AIM. I was appointed a director of
General Industries plc in July 1997.
On completion of our current development programme, the Group, including
Campmoss Property, expects to have spent approximately #5.7m. The sale or
investment value of these properties on complection is expected to be
approximately #16m. At the time of writing this report we have made offers
to acquire two properties, and if these are successful the above figures
will increase significantly.
The Group's chosen area of operation remains close to Heathrow Airport and
the western sector of the M25 motorway. The maturity of our development
programme and continued strength in the property market should enable the
Group to make further positive progress in the coming year.
THE CARDIFF PROPERTY PUBLIC LIMITED COMPANY
AND ITS SUBSIDIARIES
Consolidated profit and loss account
for the year ended 30 September 1997
1997 1996
# #
Turnover 2,923,539 1,076,903
Cost of sales (2,102,909) (558,854)
---------- ----------
Gross profit 820,630 518,049
Administrative expenses (380,277) (266,518)
Other operating income 108,982 15,771
----------- -----------
Operating profit 549,335 267,302
Income from interest
in associated undertaking 59,147 81,288
Profit on sale of
investment property 5,019 172,409
Profit on sale of
other investments 86,550 -
------------ ------------
Profit on ordinary activities
before interest 700,051 520,999
Interest receivable and
similar income 90,640 30,858
Interest payable (316,274) (259,324)
------------ ------------
Profit on ordinary activities
before taxation 474,417 292,533
Tax on profit on ordinary
activities (21,371) (36,499)
------------ ------------
Profit after taxation being
profit for the financial
year attributable
to shareholders 453,046 256,034
Dividends (102,842) (94,553)
------------ ------------
Retained profit for the
financial year 350,204 161,481
======= =======
1997 1996
Pence per Pence per
share share
On profit attributable
to shareholders
Net basis 13.7 7.7
Nil distribution basis 14.4 8.9
The above results relate entirely to continuing activities. There were no
acquisitions or disposals of businesses in the year.
THE CARDIFF PROPERTY PUBLIC LIMITED COMPANY
AND ITS SUBSIDIARIES
Consolidated balance sheet
at 30 September 1997
1997 1996
# # # #
Fixed assets:
Tangible assets:
Investment 8,310,000 7,800,000
properties
Other 1,643,614 42,673
------------ -----------
9,953,614 7,842,673
Investments 2,371,632 2,119,866
------------ -----------
12,325,246 9,962,539
Current assets
Stock and work in
progress 1,018,395 1,768,768
Debtors 3,144,819 270,549
Investments 50,332 46,670
Cash at bank and
in hand 6,076 400,269
------------ -----------
4,219,622 2,486,256
Creditors: amounts
falling due after
more than one year (2,874,937) (489,336)
------------ ------------
Net current assets 1,344,685 1,996,920
------------ -----------
Total assets less
current liabilities 13,669,931 11,939,459
Creditors: amounts
falling due within
one year (3,139,538) (3,199,988)
------------- ------------
Net assets 10,530,393 8,759,471
======== ========
Capital and reserves
Called up share 663,502 663,502
capital
Share premium 4,810,427 4,810,427
account
Investment property 165,050 (459,629)
revaluation reserve
Other revaluation
reserve 773,361 -
Other reserves 1,969,031 1,969,031
Profit and loss
account 2,149,022 1,776,140
----------- -----------
Shareholders' funds 10,530,393 8,759,471
========== =========
THE CARDIFF PROPERTY PLC
PRELIMINARY ANNUAL RESULTS
Year to 30 September 1997
1997 1996
# #
Turnover 2,923,539 1,076,903
Gross rental income
(included in the turnover figure) 807,304 713,403
Profit on ordinary activities
before taxation 474,417 292,533
Taxation (21,371) (36,499)
Profit for the financial year
attributable to shareholders 453,046 256,034
Dividend: Interim 1.0p
(1996: 0.90p) per share 33,174 29,858
Final 2.1p (1996: 1.95p)
per share 69,668 64,695
Earnings per share (net basis) 13.7p 7.7p
Notes
i) Earnings per share have been calculated using the weighted average
number of ordinary shares in issue during the year 3,317,514 (1996:
3,323,215).
ii) The taxation charge comprises:
UK Corporation Tax on profit for the year - nil (1996: credit
#5,569)
Irrecoverable ACT #25,710 (1996: #40,497):
Adjustment relating to prior years' UK Corporation Tax - credit
#4,339 (1996: charge #1,571).
iii) The profit for the financial year after taxation includes income
from interest in an associated undertaking of #59,147 (1996:
#81,288).
iv) The board recommends that the final dividend is increased to 2.1p
(1996: 1.95p) giving a total increase for the year of 9% per share
payable on 13th March 1998 to shareholders on the register at 6th
February 1998.
v) The annual general meeting will be held on the 12th March 1998.
END
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