RNS No 8029t
CARDIFF PROPERTY PLC
7th January 1999
THE CARDIFF PROPERTY PLC
(The group specialises in property investment and development activities
located close to Heathrow Airport and the western sector of the M25 and the M4
and M3 motorways)
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 1998
HIGHLIGHTS
Increase
* Net asset value per share 391p* (1997: 317p) + 23%
* Profit before tax #498,114 (1997: #474,417) + 5%
* Earnings per share 14.7p (1997: 13.7p) + 7%
* Dividend for the year 3.5p (1997: 3.1p) + 13%
* Gearing 46% (1997: 50%)
* Group net interest covered 2.5 times by
gross rental income of #775,116
* Dividend cover 4.2 times
Richard Wollenberg, Chairman, commented:
"It is generally acknowledged that office and industrial rents and residential
values, having risen in excess of 25% and 20% respectively, may now soften.
Tenant demand will ease, allowing the investment market to consolidate a fair
proportion of the gain achieved over the past few years. The UK has certainly
entered a low inflationary environment and a slow down is evident. However
with an income differential of 2-3% over gilt yields, property values should
remain underpinned in these uncertain times."
*Refer to chairman's statement for further details.
For further information
The Cardiff Property Plc Richard Wollenberg 01784 437444
Capel-Cure Sharp Will Martin 0171 638 7275
Binns & Co Public Relations Brian Coleman-Smith 0171 786 9600
THE CARDIFF PROPERTY PLC
(The group specialises in property investment and development activities
located close to Heathrow Airport and the western sector of the M25 and the M4
and M3 motorways)
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 1998
Chairman's statement and property review
The group's property portfolio including Campmoss Property has performed well
during the year resulting in an increase in profits and a substantial rise in
net assets per share.
Pre-tax profits for the year ended 30 September 1998 increased to #498,114
(1997: #474,417). This figure includes #68,655 (1997: #59,147) being the
group's share of profits from Campmoss Property Company Limited our 47.62%
owned joint venture undertaking and profits from the sale of investment
properties and other investments amounting to #302,527 (1997: #91,569).
Group turnover amounted to #840,866 (1997: #2,923,539) comprising gross rental
income of #775,116 (1997: #807,304) and sale of development property #65,750
(1997: #2,116,235). In accordance with Financial Reporting Standard 9 the
accounts now also indicate our share of turnover from Campmoss Property of
#542,542 (1997: #268,999) making a combined figure of #1,383,408 (1997:
#3,192,538). Net profit attributable to shareholders amounted to #488,887
(1997: #453,046). Earnings per share on a net basis were 14.7p (1997: 13.7p)
an increase of 7.3%.
Dividends
Your directors recommend a final dividend of 2.4p per share (1997: 2.1p) an
increase of 14.3%.
Shareholders may be aware that changes to the Advance Corporation Tax regime
mean that dividends paid after 5 April 1999 no longer attract ACT. Since your
directors do not anticipate any ACT paid on the final dividend for the year
being recoverable in the near future they recommend that the final dividend be
payable on the 6 April this year, as against 12 March last year. The
recommended increased final dividend has taken into account the short delay in
receiving this year's final dividend payment. The total dividend for the year
amounts to 3.5p (1997: 3.1p) an increase of 12.9%.
Financial
The group's commercial and residential investment property portfolios are
valued annually by Healey & Baker and Aitchison Raffety Buckland respectively.
At the year-end the value attributable to the commercial portfolio was #9.22m
and the residential portfolio #0.44m, totalling #9.66m. These properties plus
investments and other tangible assets amounted to #10.13m (1997: #10.45m)
which when added to the share of net assets of #3.18m (1997: #1.87m)
attributable to our shareholding in Campmoss Property, totals #13.31m (1997:
#12.32m).
Net assets as per the balance sheet totalled #12.47m (1997: #10.53m). The
group's accounting policy is to value stock and work in progress at the lower
of cost or market value. The current value in the balance sheet attributable
to these assets is #3.14m. During the year however, the value of our site at
Windsor rose significantly following a residential planning consent and your
directors consider it appropriate to take into account this increase,
estimated at #0.50m, when assessing underlying net assets. On this basis net
assets would increase to #12.97m, equivalent to 391p (1997: 317p) per share.
At the year-end, the group's borrowings amounted to #5.77m (1997: #5.27m)
resulting in gearing of 46% (1997: 50%). Borrowing facilities remain available
to complete the cost of the group's current development programme and to take
advantage of new opportunities as they arise. The rate of interest on our
borrowings remains variable, linked to bank base rate, with interest payable
at current rates well covered by gross rental income. Any further reductions
in interest rates would prove beneficial.
Heathrow, the western sector of the M25 and the M4 and M3 motorways
Commercial property to the west of London and in particular the Heathrow area
is frequently tipped by property professionals as the sector to outperform the
market, prompting competition between institutions, private investors and
development companies to seek opportunities in this area. The supply of modern
high specification office buildings and industrial business units with over
20% of office area remains limited and the requirement for new space continues
to be occupier led.
It is generally acknowledged that office and industrial rents and residential
values, having risen in excess of 25% and 20% respectively over the past two
years, may now soften. I regard this pause as a positive market reaction as
well as reducing some of the speculative element from the market place.
New residential property in the Surrey and Berkshire area above #300,000
remains in short supply, mainly as a result of the difficulty in obtaining
planning permission.
Commercial investments
The group's office investment portfolio is located near Heathrow Airport at
Windsor, Egham, and Hatton Cross. The majority of these properties are let to
well known covenants on institutional leases securing a large part of the
company's income for at least the next ten years. As planning consents are
achieved and building works finalised our development portfolio will become
income producing, increasing gross rental income. Your directors are always
aware however that new buildings let to good covenants can generate a premium
value. When such opportunities present themselves your directors will take
appropriate action.
Our recently completed 8,000 sq ft net office building at Station Road, Egham,
was pre-let to Fairey Group plc at a stepped rental commencing at #165,000 per
annum. Considerable thought and effort was given to the planning and
construction of this building and as a consequence the income-producing
investment has attracted institutional interest. As indicated later in this
statement the property has now been sold.
At Windsor, close to the town centre, our 8,000 sq ft office building is let
to Morganite International on an institutional lease expiring in 2015. Annual
rental is #250,000. The lack of new office space in Windsor makes it difficult
to establish rent levels, but rents in excess of #24.00 per sq ft have been
achieved during the year.
At Egham our shop and office building, known as The White House, produces
#161,000 per annum and is let to six well known covenants on long term leases.
Office rents in Egham have recently reached #25.00 per sq ft making the 5,000
sq ft of office space in the building capable of an increase in rent at review
in 2002.
Our 3,000 sq ft office building at Hatton Cross was re-let during the
financial year to the existing tenant, annual rental being increased by 26% to
#75,840.
In Cardiff we retain a freehold 20,000 sq ft property currently let to The
Royal Mail as a postal sorting centre. The property produces #45,000 per annum
and terms for a new lease remain under discussion.
Commercial developments
The group's development activities have continued throughout the year with
various buildings completed, new planning permissions secured and development
commenced.
At Windsor the major refurbishment of our 20,000 sq ft industrial and office
building is virtually complete. The building has been divided into six
individual business units offering a high office content. Agents have been
appointed to seek either sales to owner-occupiers or suitable lettings.
During the early part of 1998 detailed planning consent for a 16,000 sq ft
office scheme at Brookwood, Woking, was obtained and development of the site
is expected to be completed and the building available for letting towards the
end of November this year.
At Redhill refurbishment and new-build work has now been completed. The two
buildings offer a total of 8,000 sq ft of office space and our retained agents
are seeking either an outright sale to an owner-occupier or suitable lettings.
Residential
At Hambledon, Surrey, an area of outstanding natural beauty, construction of a
new six bedroomed residence set in six acres has commenced. The house expected
to be completed in August this year, will offer 7,000 sq ft of luxurious
living space with panoramic views over the South Downs. In view of its
location the completed house is expected to attract considerable interest when
placed on the market for sale.
At Clarence Road, Windsor, our revised planning application for twenty-one
flats proved successful. Towards the end of last year a planning application
for nine executive houses was also granted. Subject to agreeing final details
with the planning authority your directors will consider either developing the
site or disposing of it to parties who have already shown interest.
The development of seven flats at Egham has now been completed with four units
sold and the remaining three under offer.
No sites were acquired during the year.
Campmoss Property Company Limited
Offices
At Woking, Surrey, the 28,750 sq ft modern office building known as Britannia
Wharf is let to three well known covenants, the majority on long term leases,
producing #530,000 per annum. Rental levels in Woking have reached #25.00 per
sq ft giving the opportunity to increase rental income at review in 2001.
At Burnham, Buckinghamshire, the headquarters office building totalling 26,000
sq ft was let on long term leases to two U.S. based, NASDAQ quoted, software
groups at an annual rental of #600,000. The average rent of #23.00 per sq ft
reflects the high standard of the building. The value of this investment has
increased substantially over the year.
Industrial
At Bracknell revised planning permission was granted for the development of
twelve business units totalling 35,000 sq ft. Over half the scheme has been
let producing #190,000 per annum and early letting of the remaining units is
anticipated.
A planning application to demolish and rebuild the existing 25,000 sq ft
office building at Bracknell was unsuccessful and an Appeal has been lodged.
The building is multi-tenanted with the majority of space let and currently
produces rental of #160,000 per annum.
Quoted investments
During the year Edge Property plc was taken over by Grantchester Group plc.
Part of our shareholding was sold which contributed substantially to the
group's profitability. Grantchester specialises in the investment and
development of retail warehouses.
We also retain a small shareholding in HACAS Group plc (formerly General
Industries plc) which resulted from our investment in that company acquired
last year. HACAS provides outsourcing and consultancy services to the growing
public and social housing sector. I remain a non-executive director of that
company.
Management and staff
It has been a very active year. The group's success is attributable to all
members achieving their objectives and I am sure therefore that you would wish
to join with me in expressing my thanks to them for their support and hard
work during the year.
Post balance sheet events and outlook
In March last year we completed our pre-let development at Station Road,
Egham. In December we accepted an offer of #2.4m net from an institutional
fund which represented a yield of 6.75% to the purchaser. The sale was
completed on 11 December 1998 securing a satisfactory profit for the group.
Your directors continue to look for new opportunities.
Many opinions have been expressed as to the current and future state of the UK
property market. Tenant demand will ease, allowing the investment market to
consolidate a fair proportion of the gain achieved over the past few years.
The UK has certainly entered a low inflationary environment and a slow-down is
evident. However, with an income differential of approximately 3-4% over
equity yields and 2-3% over gilt yields, property values should remain
underpinned in these uncertain times.
The group and Campmoss Property are in a strong financial position to benefit
from opportunities in the market and completion of our development programme
should increase both rental income and capital values. I am confident that we
are well positioned to remain at the forefront of the market.
J Richard Wollenberg,
Chairman
THE CARDIFF PROPERTY PUBLIC LIMITED COMPANY
AND ITS SUBSIDIARIES
Consolidated profit and loss account
for the year ended 30 September 1998
1998 1997
(restated)
# #
Turnover
Group and share of joint
venture undertaking 1,383,408 3,192,538
Less: share of joint
venture undertaking (542,542) (268,999)
---------- ----------
Group turnover 840,866 2,923,539
Cost of sales (114,881) (2,102,909)
---------- ----------
Gross profit 725,985 820,630
Administrative expenses (403,556) (380,277)
Other operating income 120,559 108,982
---------- ----------
Operating profit
Group 442,988 549,335
Share of operating profit
in joint venture undertaking 386,768 234,919
---------- ----------
Total 829,756 784,254
Profit on sale of investment
property (group) 14,256 5,019
Profit on sale of other
investments (group) 288,271 86,550
---------- ----------
Profit on ordinary
activities before interest 1,132,283 875,823
Interest receivable
and similar income
Group 106,001 90,640
Share of joint
venture undertaking 4,023 3,353
Interest payable
Group (419,057) (316,274)
Share of joint
venture undertaking (325,136) (179,125)
---------- ----------
Profit on ordinary
activities before taxation 498,114 474,417
Tax on profit on
ordinary activities (9,227) (21,371)
---------- ----------
Profit after taxation being
profit for the financial year 488,887 453,046
Dividends (116,112) (102,842)
---------- ----------
Retained profit for
the financial year 372,775 350,204
======= =======
The above results relate entirely to continuing activities. There were no
acquisitions or disposals of businesses in the year. Presentation of the 1997
results and balance sheet has been revised to further show the contribution
from the joint venture undertaking, Campmoss Property Company Limited, in
accordance with Financial Reporting Standard 9 - Associates and Joint
Ventures.
THE CARDIFF PROPERTY PUBLIC LIMITED COMPANY
AND ITS SUBSIDIARIES
Consolidated balance sheet
at 30 September 1998
1998 1997
(restated)
# # # #
Fixed assets:
Tangible assets:
Investment 9,665,000 8,310,000
properties
Other 40,302 1,643,614
----------- -----------
9,705,302 9,953,614
Investments:
Investment in joint
venture undertaking
Share of gross 7,545,986 5,653,414
assets
Share of gross
liabilities (4,366,452) (3,782,109)
----------- -----------
3,179,534 1,871,305
Other investments 420,942 500,327
----------- -----------
3,600,476 2,371,632
------------ -----------
13,305,778 12,325,246
Current assets
Stock and work
in progress 3,141,167 1,018,395
Debtors 2,560,062 3,144,819
Investments - 50,332
Cash at bank
and in hand 2,682 6,076
----------- -----------
5,703,911 4,219,622
Creditors: amounts
falling due within
one year (3,340,407) (2,874,937)
----------- -----------
Net current assets 2,363,504 1,344,685
----------- -----------
Total assets less
current liabilities 15,669,282 13,669,931
Creditors: amounts
falling due after
more than one year (3,200,000) (3,139,538)
----------- -----------
Net assets 12,469,282 10,530,393
======== ========
Capital and reserves
Called up share 663,502 663,502
capital
Share premium 4,810,427 4,810,427
account
Investment property 3,875,910 165,050
revaluation reserve
Other revaluation - 773,361
reserve
Other reserves 1,969,031 1,969,031
Profit and loss 1,150,412 2,149,022
account ----------- -----------
Shareholders' funds 12,469,282 10,530,393
======== ========
THE CARDIFF PROPERTY PUBLIC LIMITED COMPANY
AND ITS SUBSIDIARIES
Consolidated cash flow statement
for the year ended 30 September 1998
1998 1997
# #
Cash outflow from
operating activities (52,227) (1,315,937)
Returns on investment and
servicing of finance (267,706) (250,572)
Taxation (20,459) (2,474)
Capital expenditure and
financial investment (116,061) (806,727)
Management of liquid resources 63,879 -
Equity dividends paid (106,160) (97,866)
----------- -----------
Cash outflow before financing (498,734) (2,473,576)
Financing 12 1,300,000
----------- -----------
Decrease in cash in the year (498,722) (1,173,576)
======== ========
Reconciliation of net cash
flow to movement in net debt 1998 1997
# #
Decrease in cash in the year (498,722) (1,173,576)
Cash inflow from disposal
of current asset investment (63,879) -
Cash inflow from loan finance (12) (1,300,000)
----------- -----------
Changes in net debt resulting
from cash flows (562,613) (2,473,576)
Increase in market value of
current asset investment 13,547 3,662
----------- -----------
Movement in net debt in the year (549,066) (2,469,914)
Net debt at beginning of year (5,222,963) (2,753,049)
----------- -----------
Net debt at end of year (5,772,029) (5,222,963)
======== ========
Reconciliation of operating profit to
net cash outflow from operating 1998 1997
activities # #
Operating profit - group 442,988 549,335
Release of diminution in value
of current asset investment - (3,662)
Profit on disposal of current
asset investment (13,547) -
Depreciation charges 13,360 15,454
(Increase)/decrease in stock
and work in progress (1,057,772) 750,373
Decrease/(increase) in debtors 537,111 (2,855,901)
Increase in creditors 25,633 228,464
----------- -----------
Net cash outflow from operating
activities (52,227) (1,315,937)
======== ========
THE CARDIFF PROPERTY PUBLIC LIMITED COMPANY
AND ITS SUBSIDIARIES
Summary preliminary results for the year ended 30 September 1998
1998 1997
# #
Turnover - group 840,866 2,923,539
Gross rental income
(included in the turnover figure) 775,116 807,304
Profit on ordinary activities
before taxation 498,114 474,417
Taxation (9,227) (21,371)
Profit for the financial year
attributable to shareholders 488,887 453,046
Dividend: Interim 1.1p (1997: 1.0p) 36,492 33,174
per share
Final 2.4p (1997: 2.1p) per share 79,620 69,668
Earnings per share - basic 14.7p 13.7p
- fully diluted 14.7p 13.6p
Notes
i) Basic earnings per share has been calculated using the weighted average
number of ordinary shares in issue during the year 3,317,514 (1997:
3,317,514). Fully diluted earnings per share has been calculated in
accordance with Financial Reporting Standard 14.
ii) The taxation charge represents principally irrecoverable ACT.
iii) The board recommends that the final dividend be increased to 2.4p
(1997: 2.1p) payable on 6 April 1999 to shareholders on the register at
5 March 1999, giving a total increase for the year of 12.9%
iv) The annual general meeting will be held on 11 March 1999.
END
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