TIDMDLN
RNS Number : 9312X
Derwent London PLC
25 August 2009
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EMBARGOED UNTIL 07.00 A.M. ON 25TH AUGUST 2009
25 August 2009
DERWENT LONDON PLC
Interim results for the six months ended 30 June 2009
DERWENT LONDON ANNOUNCES STRONG FIRST HALF RESULTS
Derwent London is pleased to announce a strong set of results for the six months
to 30 June 2009 driven by rigorous operational management and its focus on
London's West End office market.
Highlights
· Underlying recurring pre-tax profits up 72% to GBP29.7 million (H1 2008:
GBP17.3 million) driven by enterprising portfolio management
· Adjusted net asset value per share of 993p (31 December 2008: 1,226p)
· Interim dividend maintained at 8.15p per share
· Business model has remained effective with over GBP110 million of completed or
contracted sales since year end
· Continued outperformance against the IPD Central London Office Index
reflecting Derwent London's mid-market focus in the West End (underlying
valuation decline of the Groups portfolio of 12% compared to 14% reduction in
the referenced index)
· Strong lettings performance with 14,400 sq m new lettings in the first half
and a further 2,450 sq m since 1 July including 45 Whitfield Street announced
today (1,130 sq m)
· Reversionary portfolio with low vacancy rates (3.9%)
· Significant financial headroom and the capacity to step up development
activities to capture the upside potential of the next cycle
John Burns, Chief Executive, commented:
"During the first half, rigorous portfolio management helped drive a significant
increase in recurring profits while our continued success in both lettings and
sales demonstrates the attractiveness of our portfolio to a diverse range of
tenants as well as the strength of our business model across the cycle.
"We have made a strong start to the second half. I am encouraged by continued
evidence of yield stabilisation and the demand we are seeing for our properties
as demonstrated again today by the letting of 45 Whitfield Street. Derwent
London retains significant financial fire power and this, combined with the
flexibility we have to initiate developments for delivery in late 2011 or 2012,
means we are well placed to catch the next stage of the cycle and build on our
track record of delivering long term value to our shareholders."
For further information, please contact:
+------------------------------------------------------+------------------------------------------------------+
| Derwent London | Tel: 020 7659 3000 |
| John Burns, Chief Executive | |
+------------------------------------------------------+------------------------------------------------------+
| Brunswick Group LLP | Tel: 020 7404 5959 |
| Andrew Fenwick/Kate Holgate/James Rossiter | |
+------------------------------------------------------+------------------------------------------------------+
DERWENT LONDON INTERIM REPORT 2009
Chairman's statement
Overview
Since the year end, there has been little respite from the recessionary
conditions that characterised the economy throughout the second half of 2008.
The concerted measures taken by governments around the world appear to have
steadied the financial sector, but activity in the real economy remains subdued.
For the property industry, this has resulted in a further decline in values.
Although yields are showing signs of having stabilised, assisted by an
improvement in the capital and property investment markets, concern over tenant
demand, and a consequential reduction in estimated rental values, has resulted
in a fall of 14% in the IPD Central London Offices Capital Growth Index since
31st December 2008.
However, the group entered 2009 well positioned to face these difficult market
conditions. The board had taken early action to reduce capital expenditure, void
space was low, GBP128 million of bank facilities had been renewed in 2008 and
the group had considerable margin over its bank covenants. During the first half
of the year, we focussed successfully on harbouring the group's resources,
exploiting some of the reversionary potential of our portfolio, and renewing
another GBP125 million bank facility.
Results
Adjusted net asset value per share attributable to equity shareholders at 30th
June 2009 was 993p, 19% lower than the year end figure of 1,226p.
The underlying valuation movement for the first half was a reduction of 12.0%
which represents an outperformance of the IPD index referred to above. At 30th
June 2009, the investment portfolio, 93% of which is located in central London,
was valued at GBP1.86 billion. This reflects a decline of GBP253.7 million
before lease incentive adjustments of GBP5.2 million. Those properties held
throughout the period, excluding development properties, were valued at GBP1.74
billion, a fall of GBP229 million (11.6%).
The portfolio's initial yield, based on the annualised contracted rents after
rent free periods, increased to 6.8% at the half year from the 2008 year end
figure of 6.0%. The yield rises on full reversion to 7.6%, showing that the
portfolio remains reversionary.
The underlying recurring profit before tax showed a substantial rise in the
first half of 2009 compared with the equivalent period in 2008. Such profits
rose from GBP17.3 million to GBP29.7 million, an increase of 72%, if adjustment
is made for the 2008 reverse surrender premium and the foreign exchange
translation movements in both years. The recurring profit before tax before
these adjustments was GBP33.3 million compared with GBP9.0 million in 2008.
Evidence of the lettings concluded in 2008 can be seen in the GBP5.6 million
(9.7%) rise in gross property income, while property outgoings benefited from a
detailed review of the group's rates expenditure of this and prior years which
reduced the liability by GBP2.6 million in the period. These, together with the
absence of the 2008 reverse surrender premium at Grosvenor Place and the trading
stock write-down, have contributed to a rise in net property income of GBP17.7
million to GBP59.3 million. The recurring profits were further enhanced by a
GBP4.1 million reduction in finance costs, mainly due to lower interest rates.
Despite the GBP24.3 million increase in recurring profits, the group has
reported a loss before taxation of GBP223.3 million compared with a loss of
GBP144.7 million in the first half of 2008. This is predominantly due to the
property revaluation deficit of GBP258.9 million, with a further GBP1.3 million
arising in the joint ventures. Finally, there was a tax credit of GBP12.1
million after claims for relief of tax losses were agreed by HMRC during the
period.
As described more fully in the business review, despite reduced asset values,
the group's financing position remains sound. Group net debt was GBP16 million
lower at the half year than at the year end, and the sales we have already
achieved in the second half (GBP71 million to date) should ensure that, without
any further acquisitions, debt at the 2009 year end will be lower. At the half
year, our balance sheet gearing was 86.2%, our loan to value ratio was 44.3%,
and we had GBP309 million of undrawn, committed bank facilities.
Dividend
In the 2008 report and accounts, the board set out its revised dividend policy
which committed it to at least maintain the current level of dividend, with a
view to returning to a progressive dividend policy when markets improved.
Accordingly, the board has maintained the interim dividend at last year's level
of 8.15p per share which will be paid as a property income dividend. Payment
will be made on 6th November 2009 to shareholders on the register at the close
of business on 2nd October 2009.
Market and activity update
With underlying business activity continuing to contract, tenant demand has been
muted even in our main operating area, London's West End. In this environment,
our proactive approach to lettings and asset management, and our focus on cash
generation is of increased importance. We continue to develop close
relationships with tenants as an active landlord and this, together with our
lettings, successful retention of tenants and minimal tenant default, has
enabled the group to maintain a low vacancy rate of 3.9% by rental value (31st
December 2008 - 3.8%).
Whilst letting terms have continued to move in favour of tenants, we have let
14,400 sq m of space in the first half, including the last office space at Qube.
This illustrates that there remains demand for the group's particular brand of
high quality space at mid-market rents. These lettings will produce total rental
income of GBP4.6 million per annum and have been achieved at rents approximately
10% below those underlying the December valuation, a reflection of current
market conditions.
There has been some improvement and activity in the property investment market,
particularly for properties let on long leases to strong covenants, driven by
purchasers who require limited debt finance. To take advantage of this, the
board implemented a targeted sales programme of non-core assets and, including
compulsory purchases, we have, since the year end, either completed or exchanged
contracts on disposals to a value of GBP110.2 million, before costs. This
demonstrates the success of our model of recycling capital even in these
challenging markets. The most significant transactions were the sale of a
property on our Fitzrovia estate to the occupier for GBP60 million and the
compulsory purchase of two properties at the junction of Oxford Street
and Charing Cross Road as part of the Crossrail Project. Whilst overall the
sales realised GBP9.8 million less than the December 2008 valuation (before
costs), this is balanced by the benefit derived from releasing capital at a time
when new finance is difficult and expensive to source.
No material acquisitions were made in the first half. Despite the group being
well funded, the potential within our existing portfolio which stems from its
low average rent of GBP269 per sq m, low capital value of GBP3,630 per sq m and
significant development opportunities, means that we can be selective when it
comes to evaluating acquisitions.
The group incurred GBP42 million of capital expenditure in the period,
predominantly on its three major schemes at the Angel Building (Islington), Arup
Phase III (Fitzrovia) and Gresse Street (Noho). Overall, nearly 60% of the
floorspace of these schemes is pre-let. Committed capital expenditure on these
projects is GBP66 million which can be met comfortably from our existing
financial resources. All three projects are progressing according to plan and
budget.
During the period, the group submitted two significant planning applications
which, if successful, will enhance our extensive pipeline of future projects.
With the flexibility provided by the short-term occupancy of the development
properties, we will be considering which schemes to commence in order to deliver
them into the market in 2011 or 2012, when we expect conditions to have
improved.
Prospects
While the timing and strength of any economic recovery is uncertain, the group
continues to benefit from the inherent strengths of both its portfolio and its
market. London remains one of the key global commercial hubs and draws an
eclectic mix of business to its centre, creating a more durable demand and a
diversified tenant base. In addition, a difficult planning regime and limited
new development, provides the West End with a unique defensive quality.
This, combined with our strong balance sheet, enables us not only to face the
demanding future with confidence, but also to be in a position to take advantage
of value enhancing opportunities as we identify them.
R. A. Rayne
25th August 2009
Business review
The ongoing turbulence in the global economy continued to adversely affect the
UK property market during the first half of 2009. The central London office
market, our chosen operating area, saw half year take-up of 259,000 sq m, 50%
lower than the long-term average. As a consequence, vacancy rates continued to
increase, rent free periods moved out and significant declines in rental values
were reported across all London villages.
At the year end, we stressed the importance of active portfolio and asset
management in this difficult operating environment and we have made good
progress with both in the year to date. The group has achieved a strong letting
performance, maintained a low vacancy rate and concluded a number of disposals.
The portfolio continues to be let off a low average rent of GBP25 per sq ft
(GBP269 per sq m) and this helps to insulate the group against the rental market
declines whilst providing an upside opportunity for when the market recovers.
Valuation
With the continuing weakness of the UK economy and the limited supply of bank
lending, the investment market for most of the first half of 2009 was
characterised by low turnover and falling capital values. In our interim
management statement released in May, we noted that there were tentative signs
that some property yields were beginning to show stability, especially on
properties with secure income from long leases and strong covenants. This trend
has continued, and the investment market has improved, although investor
concerns in recent months have shifted away from yield levels to the valuation
impact caused by the decline in rental values.
Against this background, the groups investment portfolio was valued at GBP1.86
billion on 30th June 2009. Over the six month period, there was a valuation
deficit of GBP253.7 million, before lease incentives of GBP5.2 million. The
value of those properties held throughout the period, excluding development
properties, was GBP1.74 billion. These declined by 11.6%, which equates to a
valuation deficit of GBP229 million. The development properties were valued at
GBP114 million, which reflects a decrease of 17.8% or GBP25 million.
The underlying valuation decline for the first half of the year was 12.0%. This
was an outperformance against the IPD Quarterly Property Index for Central
London Offices, which showed a reduction of 14.0%, and followed an
outperformance against this Index in 2008.
The West End properties, which comprised 73% of the portfolio, decreased in
value by 12.7% and the City Border properties, forming 20% of the portfolio, by
11.8%. Provincial properties, the balance of the portfolio, declined by 5.4%.
The portfolios underlying estimated rental value fell by 11.0% over the first
half of the year, compared to a 4.6% decrease in the second half of 2008. The
weakening rental environment was the primary factor in the valuation movement
over the period. However, middle market rental properties, where the group is
predominantly focused, continued to be more resilient. Estimated rental values
for West End offices of between GBP30-GBP50 per sq ft (GBP323-538 per sq m)
reduced by 12% over the half year, compared to a 19% decline for GBP50+ per sq
ft (GBP538+ per sq m).
As at 30th June 2009, the portfolios initial yield, based upon the annualised
contracted rent and expiry of rent free periods, was 6.8% rising to 7.6% on full
reversion. This compares to 6.0% and 7.6% respectively at the year end. The true
equivalent yield increased from 7.1% to 7.3% over the half year. This is the
smallest yield movement since June 2007, when values were at their peak, and is
an indication that yields are beginning to stabilise.
The total property return for the portfolio was a negative 9.6% for the half
year. However, this outperformed our benchmark measure, the IPD Quarterly
Property Total Return Index for Central London Offices, which saw a negative
return of 11.1%.
Lettings
Letting activity for the group in the first half of the year was robust, in
contrast to the weak take-up statistics seen generally across the central London
office market. During the period, we concluded 50 leasing transactions against
32 for the same period in 2008. Lettings totalled 14,400 sq m which will
generate a rental income of GBP4.6 million per annum. The major letting during
the half year was at the Qube, Fitzrovia where 2,900 sq m over the fourth and
fifth floors was let to EDF Energy for a 15-year term at GBP1.48 million per
annum (GBP47 per sq ft / GBP506 per sq m). There are tenant break options after
five and ten years. A rent free period of 21 months was granted with a further
four months if the fifth year break is not exercised. If the break is exercised,
the tenant will pay a penalty equivalent to nine months rent. Also at the Qube,
600 sq m was let to ScanSafe for a 10-year term, following which the office
space in the property was fully let.
As anticipated, with weakening tenant demand, letting rental levels were 9.6%
lower than the 31st December 2008 estimated rental values. They were 7.7% lower
if short term lettings, which serve to keep future development properties income
producing, are excluded. These levels compare favourably to a 15.8% rental
decline in the IPD Central London Office Index and a 19.4% decrease in the CBRE
Central London Office Index over the period.
Half of the space that was available at the year end has now been let and this
accounted for 85% of the first half year lettings. This activity underlines our
pro-active approach to letting and demonstrates that our attractive,
well-priced, mid-market space continues to find tenants, even in this difficult
market.
Since the half year, a further 5,100 sq m of floorspace with an annual rental
income of GBP1.4 million has been either let or placed under offer.
As reported in the first quarter interim management statement, the groups
vacancy rate (by estimated rental value) increased from 3.8% at the start of the
year to 4.2%. Subsequently, with further letting progress, our vacancy rate
decreased to 3.9% at the half year, which is below the groups ten-year average
of 5.1%. The vacancy rate will increase to 5.4% upon completion of the Gresse
Street development later this year.
Asset management
The momentum of active asset management continues and during the first six
months of the year, we concluded 29 lease renewals and 30 rent reviews at rents
of GBP1.5 million and GBP5.6 million per annum respectively. These levels
reflected a GBP1.2 million uplift over the previous rents, a 20.9% increase,
albeit the rents achieved were 7.8% below the 31st December 2008 estimated
rental values.
During the half year, there were 27 lease break options and 53 lease expiries
across the portfolio, equating to a rent of GBP4.9 million per annum or 3.9% of
the groups annualised contracted rental income. Of this income, 46% was
retained, 11% was vacated and re-let, and 43% remains available. Nearly half of
this available space was from a single tenants lease expiry of 2,100 sq m at
1-3 Grosvenor Place, resulting in the loss of GBP1.0 million of annual rental
income.
The groups rent collection remained strong during the period with 96.0% of rent
collected within 14 days of the quarter date (Q1: 96.5%, Q2: 95.4%). This was
above our key performance indicator target of 95%. Additionally, tenant defaults
remain low with 10 tenants going into administration resulting in a loss of
income of GBP0.1 million in the period.
The groups tenant profile covers a wide range of business sectors including 40%
professional and business services, 22% media, 15% retail and leisure, 7%
government and 7% financial. The overall weighted average unexpired lease length
was 8.0 years (8.3 years at year end 2008).
The ongoing turbulence in the global economy continued to adversely affect the
UK property market during the first half of 2009. The central London office
market, our chosen operating area, saw half year take-up of 259,000 sq m, 50%
lower than the long-term average. As a consequence, vacancy rates continued to
increase, rent free periods moved out and significant declines in rental values
were reported across all London villages.
At the year end, we stressed the importance of active portfolio and asset
management in this difficult operating environment and we have made good
progress with both in the year to date. The group has achieved a strong letting
performance, maintained a low vacancy rate and concluded a number of disposals.
The portfolio continues to be let off a low average rent of GBP25 per sq ft
(GBP269 per sq m) and this helps to insulate the group against the rental market
declines whilst providing an upside opportunity for when the market recovers.
Project update
We have three schemes under construction, two of which are scheduled to complete
this year.
·17 Gresse Street, Noho - 4,400 sq m office development due to complete in
October. This state of the art, seven-storey building, which is designed to be
multi-let, is attracting tenant interest.
·Arup Phase III, 8 Fitzroy Street, Fitzrovia - 7,900 sq m office building, due
to complete at the end of the year. This is now fully clad and internal fit-out
works are underway. The entire building is pre-let to Arup at GBP3.6 million per
annum (GBP42 per sq ft / GBP452 per sq m) on a 25-year term with no lease
breaks. The tenant is currently paying GBP1.2 million per annum during the
construction period.
· Angel Building, Islington - 24,400 sq m office redevelopment due to complete
in summer 2010. The striking form of this new building is now taking shape as
extensions and cladding works are nearing completion. A major proportion of the
building has been pre-let to Cancer Research UK. Whilst completion is still a
year away, interest in the balance of the space is encouraging.
The total cost to complete these three projects is GBP65.5 million.
We continue to upgrade the portfolio through a number of smaller projects and
rolling refurbishments. These include a 26-room boutique hotel at the Tea
Building (pre-let to Soho House at GBP0.3 million per annum), a 1,100 sq m
office refurbishment at 45-51 Whitfield Street on our Fitzrovia estate (pre-let
since the half year at GBP0.3 million per annum) and an 11-unit residential
development at 7-8 Rathbone Place (adjacent to the 17 Gresse Street
development).
Whilst we are not currently progressing any major new projects, our planning
work continues and we have recently submitted two important planning
applications - a 7,100 sq m new-build office at The Turnmill in Clerkenwell and
a 458-unit student accommodation building at 60 Commercial Road in Shoreditch.
If successful, these two applications, totalling 17,900 sq m, would bring our
total planning consents to 92,300 sq m. This diverse and impressive selection of
exciting future schemes would increase the floorspace of the existing properties
by 57,800 sq m (167%).
Disposals
During the first half of the year, demand for both long-term, secure income
investments and smaller properties improved. The group took advantage of this
opportunity to make selective disposals of non-core assets with 20 properties
sold in the period for GBP39.1 million, after costs. Disposals were 8% below the
31st December 2008 valuation. The principal disposals in the first half were 28
Dorset Square in Marylebone for GBP16.8 million, after costs, reflecting a net
initial yield of 6.1% and a 4% premium over the December 2008 valuation, and the
Astoria and 17 Oxford Street in Soho, which were compulsory purchased as part of
the Crossrail project. To date, we have received interim proceeds of GBP14.4
million with the final payment subject to formal valuation. The sale of 17
smaller properties realised GBP7.9 million.
Since the half year end, the group has either sold or exchanged contracts for
the disposal of a further 13 properties which will realise GBP70.7 million,
before costs. The largest of these was the sale for GBP60.0 million of Arup
Phase I, 13 Fitzroy Street, which was let at GBP4.5 million per annum. This
transaction, due to complete in September, represented a net initial yield of
7.0% and was concluded at 9.8% below the December 2008 valuation.
Debt and cash flow
The severity of the economic downturn, and falling capital values in the real
estate sector, means that cash flow has assumed an even greater importance than
under normal circumstances. Action has been taken on a number of levels to
minimise the cash demands on the business. At an early stage, one of the groups
main cash outflows, capital expenditure, was reduced and, on a different scale,
a review of current and historic rates bills has saved GBP2.6 million.
Meanwhile, recycling of capital has continued with the GBP39.3 million proceeds
from the disposal of a number of investment properties effectively financing the
half years capital expenditure of GBP44.9 million. Three ongoing projects
accounted for GBP34.2 million of capital expenditure: the Angel Building, 17
Gresse Street and Arup Phase III. Investing activities resulted in a cash inflow
of GBP0.9 million. The groups operating activities - rent receivable less
interest and expenses - generated net cash of GBP30.6 million out of which the
payment of the 2008 final dividend absorbed GBP15.7 million. As a result, we
were able to reduce net debt by GBP16.1 million to GBP849.3 million at June
2009.
Despite lower borrowings, falling property values have led to increases in the
key debt ratios although, even at these higher levels, the group continues to
operate well within its banking covenants, and retains considerable available
committed facilities. At the half year, the groups loan to value ratio was
44.3% compared with the year end figure of 39.7%, while balance sheet gearing
increased from 71.2% to 86.2%. Both these ratios will benefit from the GBP71
million of disposals due to be completed by the end of September. These also
will increase the facilities available to the group, which stood at GBP309
million at the end of June 2009.
The strength of the groups balance sheet, together with the flexibility of its
borrowings, has enabled it to manage the problems associated with such a severe
and rapid downturn in the business cycle. Going forward, the group requires
security valued at GBP1.58 billion to fully draw its debt facilities. This
figure compares with the fair value of the investment properties at June 2009 of
GBP1.86 billion. But a better indication of the soundness of the finances is
that, based on current group forecasts, the security value required to support
the 31st December 2011 projected debt is only GBP1.16 billion. Therefore,
property values would have to fall a further 38% from June 2009 levels before
that figure is reached. These figures assume no acquisitions, and no disposals
other than those currently contracted.
The group has concluded its round of refinancings of existing bank debt with the
signing in April 2009 of a new GBP125 million, five year facility with the
existing lender. The next debt maturity is in December 2011.
Although interest rates remain at historically low levels, the yield curve shows
an expectation of sharply rising rates whereby LIBOR could be approaching 4.5%
within three years. While this occurrence, and its timing, is debatable, it is
to protect against this uncertainty, and to lower financial risk, that the group
has maintained its hedging programme. At 30th June 2009, approximately 71% of
debt was either fixed or hedged. This results in a current weighted cost of debt
of 4.5%, inclusive of costs and margins. The derivatives used to hedge the
interest rate exposure are fair valued at each reporting date and, in the period
to end June 2009, the group income statement showed a gain of GBP7 million
arising from this valuation, although this only reduces the cumulative liability
in the balance sheet to GBP20 million. The fair value adjustment of the fixed
rate bond does not need to be taken into the group income statement. The bond
was valued at GBP156 million at June 2009 resulting in no gain or loss for the
period, which compares with the gain of GBP2.2 million for the first half of
2008 and a gain for the year ended December 2008 of GBP18.7 million. The bond
was fair valued upon acquisition of LMS and it is this valuation which is
included in the balance sheet with the fair value adjustment being amortised
over the life of the bond.
J. D. Burns
25th August 2009
Responsibility statement
The directors confirm to the best of their knowledge:
(a) The condensed set of financial statements, which has been prepared in
accordance with IAS 34 "Interim Financial Reporting", gives a true and fair view
of the assets, liabilities, financial position and profit of the group; and
(b) The interim management report includes a fair review of the
information required by Sections DTR 4.2.7R and DTR 4.2.8R of the Disclosure and
Transparency Rules of the UK Financial Services Authority.
On behalf of the board
J. D. Burns
C. J. Odom
Chief Executive Officer
Finance Director 25th August 2009
GROUP CONDENSED INCOME STATEMENT (UNAUDITED)
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | Half year to | Half year to | Year |
| | | 30.06.09 | 30.06.08 | to 31.12.08 |
| | Note | GBPm | GBPm | GBPm |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Gross property income | | 63.1 | 57.5 | 119.0 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Development income | | - | 0.5 | 0.5 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Other income | | 0.6 | 0.1 | 0.9 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Total income | 4 | 63.7 | 58.1 | 120.4 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Property outgoings | | (4.4) | (7.2) | (14.6) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Reverse surrender premium | | - | (8.3) | (8.3) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Write-down of trading property | | - | (1.0) | (2.0) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Total property outgoings | | (4.4) | (16.5) | (24.9) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Net property income | | 59.3 | 41.6 | 95.5 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Administrative expenses | | (9.1) | (9.5) | (18.3) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Movement in valuation of cash-settled | | | | |
| share options | | (0.7) | 1.1 | 1.6 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Total administrative expenses | | (9.8) | (8.4) | (16.7) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Revaluation deficit | | (258.9) | (163.8) | (602.1) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| (Loss)/profit on disposal of investment | | | | |
| properties | 5 | (3.4) | 2.1 | 1.2 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Loss from operations | | (212.8) | (128.5) | (522.1) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Finance income | 6 | 4.3 | 0.4 | 1.7 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Finance costs | 6 | (20.0) | (24.1) | (57.2) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Movement in fair value of derivative | | | | |
| financial | | 7.0 | 7.8 | (28.1) |
| instruments | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Share of results of joint ventures | 7 | (1.8) | (0.3) | (0.8) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Loss before tax | | (223.3) | (144.7) | (606.5) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Tax credit | 8 | 12.1 | 2.2 | 9.3 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Loss for the period | | (211.2) | (142.5) | (597.2) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Attributable to: | | | | |
| - Equity shareholders | | (207.8) | (139.4) | (586.4) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| - Minority interest | | (3.4) | (3.1) | (10.8) |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Loss per share | 9 | (206.13)p | (138.42)p | (581.99)p |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | ________ | ________ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Diluted loss per share | 9 | (206.13)p | (138.42)p | (581.99)p |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | ________ | ________ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | Half year | Half year | Year |
| | to 30.06.09 | to 30.06.08 | to 31.12.08 |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| Loss for the period | (211.2) | (142.5) | (597.2) |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| Actuarial deficit on defined benefit pension scheme | (0.4) | (0.6) | (2.1) |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| Foreign currency translation | (3.6) | - | 8.2 |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| Other comprehensive income recognised directly in | | | |
| equity | (4.0) | (0.6) | 6.1 |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| Total comprehensive income relating to the period | (215.2) | (143.1) | (591.1) |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| Attributable to: | | | |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| - Equity shareholders | (211.8) | (140.0) | (580.3) |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| - Minority interest | (3.4) | (3.1) | (10.8) |
+-----------------------------------------------------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
GROUP CONDENSED BALANCE SHEET (UNAUDITED)
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
| | | 30.06.09 | 30.06.08 | 31.12.08 |
| | Note | GBPm | GBPm | GBPm |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Non-current assets | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Investment property | 10 | 1,718.9 | 2,496.8 | 2,068.1 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Property, plant and equipment | 11 | 1.3 | 1.4 | 1.2 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Investments | | 5.5 | 8.4 | 7.6 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Pension scheme surplus | | 0.6 | 2.5 | 1.0 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Derivatives | 13 | - | 9.1 | - |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Other receivables | | 32.1 | 25.1 | 29.0 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | 1,758.4 | 2,543.3 | 2,106.9 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Current assets | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Trading properties | 12 | 7.5 | 8.4 | 7.5 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Trade and other receivables | | 33.0 | 55.5 | 38.7 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Cash and cash equivalents | | 9.0 | 5.8 | 10.5 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | 49.5 | 69.7 | 56.7 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Non-current assets held for sale | 10 | 110.2 | - | 17.5 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | 159.7 | 69.7 | 74.2 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Total assets | | 1,918.1 | 2,613.0 | 2,181.1 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Current liabilities | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Bank overdraft and loans | 13 | 4.3 | 100.0 | 106.6 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Trade and other payables | | 44.4 | 54.9 | 47.6 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Corporation tax liability | | 2.6 | 11.4 | 7.1 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Provisions | | 0.5 | 0.2 | 0.2 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | 51.8 | 166.5 | 161.5 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Non-current liabilities | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Borrowings | 13 | 854.0 | 751.7 | 769.3 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Derivatives | 13 | 19.9 | - | 26.9 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Provisions | | 1.6 | 1.8 | 1.2 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Deferred tax liability | 14 | 6.1 | 10.3 | 7.2 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | 881.6 | 763.8 | 804.6 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Total liabilities | | 933.4 | 930.3 | 966.1 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Total net assets | | 984.7 | 1,682.7 | 1,215.0 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Equity | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Share capital | | 5.0 | 5.0 | 5.0 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Share premium | | 156.2 | 157.0 | 156.2 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Other reserves | | 921.2 | 914.4 | 923.4 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Retained earnings | | (129.7) | 550.9 | 95.0 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Equity shareholders funds | | 952.7 | 1,627.3 | 1,179.6 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Minority interest | | 32.0 | 55.4 | 35.4 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| Total equity | | 984.7 | 1,682.7 | 1,215.0 |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+-----------------+-----------------+-----------------+
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
+--------------------------------+-----------+-----------+-----------+-----------+------------+-----------+------------+
| | Attributable to equity shareholders | | |
+--------------------------------+------------------------------------------------------------+-----------+------------+
| | Share | Share | Other | Retained | | Minority | Total |
| | capital | premium | reserves | earnings | Total | interest | equity |
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--------------------------------+-----------+-----------+-----------+-----------+------------+-----------+------------+
| Balance at 1st January 2009 | 5.0 | 156.2 | 923.4 | 95.0 | 1,179.6 | 35.4 | 1,215.0 |
+--------------------------------+-----------+-----------+-----------+-----------+------------+-----------+------------+
| Total comprehensive income for | | | | | | | |
| the period | - | - | (3.6) | (208.2) | (211.8) | (3.4) | (215.2) |
+--------------------------------+-----------+-----------+-----------+-----------+------------+-----------+------------+
| Share-based payments expense | | | | | | | |
| transferred to reserves | - | - | 1.4 | - | 1.4 | - | 1.4 |
+--------------------------------+-----------+-----------+-----------+-----------+------------+-----------+------------+
| Dividends paid | - | - | - | (16.5) | (16.5) | - | (16.5) |
+--------------------------------+-----------+-----------+-----------+-----------+------------+-----------+------------+
| | ______ | ______ | ______ | ______ | ______ | ______ | ______ |
+--------------------------------+-----------+-----------+-----------+-----------+------------+-----------+------------+
| Balance at 30th June 2009 | 5.0 | 156.2 | 921.2 | (129.7) | 952.7 | 32.0 | 984.7 |
+--------------------------------+-----------+-----------+-----------+-----------+------------+-----------+------------+
| | ______ | ______ | ______ | ______ | ______ | ______ | ______ |
+--------------------------------+-----------+-----------+-----------+-----------+------------+-----------+------------+
| | | | | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+------------+-----------+------------+
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+----------+
| | Attributable to equity shareholders | | | |
+--------------------------------+-----------------------------------------------------------+-----------+-----------+----------+
| | Share | Share | Other | Retained | | Minority | Total equity |
| | capital | premium | reserves | earnings | Total | interest | GBPm |
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| Balance at 1st January 2008 | 5.0 | 157.0 | 914.0 | 706.0 | 1,782.0 | 59.9 | 1,841.9 |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| Total comprehensive income for | | | | | | | |
| the period | - | - | - | (140.0) | (140.0) | (3.1) | (143.1) |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| Share-based payments expense | | | | | | | |
| transferred to reserves | - | - | 0.4 | - | 0.4 | - | 0.4 |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| Purchase of minority interest | - | - | - | - | - | (0.4) | (0.4) |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| Dividends paid | - | - | - | (15.1) | (15.1) | (1.0) | (16.1) |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| | ______ | ______ | ______ | ______ | ______ | ______ | ______ | |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+----------+
| Balance at 30th June 2008 | 5.0 | 157.0 | 914.4 | 550.9 | 1,627.3 | 55.4 | 1,682.7 |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| | ______ | ______ | ______ | ______ | ______ | ______ | ______ | |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+----------+
| | | | | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+----------+
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+----------+
| | Attributable to equity shareholders | | | |
+--------------------------------+-----------------------------------------------------------+-----------+-----------+----------+
| | Share | Share | Other | Retained | | Minority | Total equity |
| | capital | premium | reserves | earnings | Total | interest | GBPm |
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| Balance at 1st January 2008 | 5.0 | 157.0 | 914.0 | 706.0 | 1,782.0 | 59.9 | 1,841.9 |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| Total comprehensive income for | | | | | | | |
| the period | - | - | 8.2 | (588.5) | (580.3) | (10.8) | (591.1) |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| Share-based payments expense | | | | | | | |
| transferred to reserves | - | - | 1.2 | - | 1.2 | - | 1.2 |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| Transfer between reserves in | | | | | | | |
| respect of performance share | | | | | | | |
| plan | - | (0.8) | - | 0.8 | - | - | - |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| Purchase of minority interest | - | - | - | - | - | (0.4) | (0.4) |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| Dividends paid | - | - | - | (23.3) | (23.3) | (13.3) | (36.6) |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| | ______ | ______ | ______ | ______ | ______ | ______ | ______ | |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+----------+
| Balance at 31st December 2008 | 5.0 | 156.2 | 923.4 | 95.0 | 1,179.6 | 35.4 | 1,215.0 |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+----------------------+
| | ______ | ______ | ______ | ______ | ______ | ______ | ______ | |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+----------+
| | | | | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+----------+
GROUP CONDENSED CASH FLOW STATEMENT (UNAUDITED)
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | | Half year to | |
| | | Half year to | 30.06.08 | Year |
| | | 30.06.09 | Restated* | to 31.12.08 |
| | | GBPm | GBPm | GBPm |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Operating activities | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Cash received from tenants | | 67.6 | 57.0 | 109.6 |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Development income | | - | 13.1 | 14.1 |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Direct property expenses | | (5.9) | (17.1) | (22.8) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Cash paid to and on behalf of employees | | (5.5) | (8.0) | (10.3) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Other administrative expenses | | (4.0) | (3.6) | (5.9) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Interest received | | 0.5 | 1.5 | 2.9 |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Interest paid | | (21.1) | (23.1) | (48.5) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Tax expense paid in respect of operating | | | | |
| activities | | (1.0) | (0.1) | (0.8) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Net cash from operating activities | | 30.6 | 19.7 | 38.3 |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Investing activities | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Acquisition of investment properties | | (1.5) | (16.9) | (31.9) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Capital expenditure on investment | | (44.9) | (44.4) | (72.9) |
| properties | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Disposal of investment properties | | 39.3 | 55.3 | 72.6 |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Purchase of property, plant and equipment | | (0.2) | (0.1) | (0.2) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Disposal of property, plant and equipment | | - | - | 0.2 |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Receipts/(payments) in relation to joint | | 0.1 | (0.3) | - |
| ventures | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Purchase of minority interest | | - | (0.4) | (0.4) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Advances to minority interest holder | | - | (2.5) | (4.2) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| REIT conversion charge | | - | (53.6) | (53.6) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Tax expense received/(paid) in respect of | | | | |
| investing activities | | 8.1 | (8.1) | (8.1) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Net cash from/(used in) investing | | 0.9 | (71.0) | (98.5) |
| activities | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Financing activities | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Net movement in revolving bank loans | | (18.0) | 67.2 | 86.2 |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Repayment of non-revolving bank loans | | - | (28.0) | (28.0) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Drawdown of non-revolving bank loans | | 0.5 | 56.4 | 56.8 |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Repayment of loan notes | | (0.5) | (28.4) | (28.8) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Dividend paid to minority interest holder | | - | (1.0) | (1.0) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Dividends paid | | (15.7) | (13.5) | (22.5) |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Net cash (used in)/from financing | | (33.7) | 52.7 | 62.7 |
| activities | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| (Decrease)/increase in cash and cash | | | | |
| equivalents in the period | | (2.2) | 1.4 | 2.5 |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Cash and cash equivalents at the beginning | | | | |
| of | | 6.9 | 4.4 | 4.4 |
| the period | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| Cash and cash equivalents at the end of | | | | |
| the | | 4.7 | 5.8 | 6.9 |
| period | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
| | | | | |
+--------------------------------------------+--------+---------------------+--------------------+-----------------+
*See note 19
NOTES TO THE FINANCIAL STATEMENTS
1 The comparative financial information presented herein for the year ended 31st
December 2008 does not constitute full statutory accounts within the meaning of
Section 240 of the Companies Act 1985. The groups annual report and accounts
for the year ended 31st December 2008 have been delivered to the Registrar of
Companies. The groups independent auditors report on those accounts was
unqualified, did not include references to any matters to which the auditors
drew attention by way of emphasis without qualifying their report and did not
contain a statement under section 237(2) or 237(3) of the Companies Act 1985.
The financial information for the half years ended 30th June 2009 and 30th June
2008 are unaudited.
The financial information in these condensed financial statements is
that of the holding company and all of its subsidiaries (the group) together
with the groups share of its joint ventures. It has been prepared in accordance
with IAS 34, Interim Financial Reporting and should be read in conjunction with
the annual report and accounts for the year ended 31st December 2008 which have
been prepared in accordance with International Financial Reporting Standards as
adopted for use in the EU. The accounting policies applied by the group in these
condensed financial statements are the same as those applied by the group in its
financial statements for the year ended 31st December 2008 and which will form
the basis of the 2009 financial statements.
A number of new and amended standards become effective for periods
beginning on or after 1st January 2009. The principal changes that are relevant
to the group are:
IFRS 8 - Operating Segments
IFRS 8 is a disclosure standard only; there has been no effect on the reported
results or previous financial position of the group. The groups reportable
segment as reported under IAS 14 has remained unchanged following the adoption
of this standard.
IAS 1 (revised 2007) - Presentation of Financial Statements
The revised standard has proposed a number of terminology changes (including
revised titles for the primary statements and minority interest) and has
resulted in the following change in presentation and disclosure:
- The statement of changes in equity is now a primary statement, and not part
of the notes to the financial statements.
The group has not chosen to adopt the optional changes to the headings of the
income statement, balance sheet and cash flow statement. There has been no
effect on the reported results or previous financial position of the group.
In addition, in accordance with IAS 34, Interim Financial Reporting, these half
year results are now described as condensed financial statements and each of the
primary statements, whilst they do not differ in content from those at the year
end, are also described as condensed.
None of the other new standards and amendments are expected to
materially affect the group.
The groups results are not materially affected by seasonal variations.
2 Significant judgments, key assumptions and estimates
Some of the significant accounting policies require management to make
difficult, subjective or complex judgments or estimates. The following is a
summary of those policies which management consider critical because of the
level of complexity, judgment or estimation involved in their application and
their impact on the financial statements. These are the same policies identified
at the previous year end and a full discussion of these policies is included in
the 2008 financial statements.
· Trading properties
· Trade receivables
· Investment property valuation
· Outstanding rent reviews
· Compliance with the real estate investment trust (REIT) taxation regime
3 Segmental reporting
During the period, the group had only one (half year to 30th June 2008:
one; year to 31st December 2008: one) business activity, that being property
investment, refurbishment and redevelopment. It operates only in the United
Kingdom and the directors consider that all properties carry a similar risk
profile.
4 Total income
Gross property income includes surrender premiums received from tenants during
the half year to 30thJune 2009 of GBPnil (half year to 30th June 2008: GBP0.2m;
year to 31st December 2008: GBP0.2m). The balance of GBP63.1m (half year to 30th
June 2008: GBP57.3m; year to 31st December 2008: GBP118.8m) is derived solely
from rental income from the groups properties. Of these amounts, GBP2.1m (half
year to 30th June 2008: GBP2.1m; year to 31st December 2008: GBP4.2m) was
derived from a lease to BT of the Angel Building, EC1, where in March 2007, the
group entered into an arrangement with BT to restructure the lease arrangements
such that the group could obtain possession of the building whilst maintaining
rental income from BT until March 2010 (albeit that if the group disposed of
this property, the right to that rental income would pass to the purchaser). The
group has included the income from this building within gross property income
as, although similar to a lease surrender arrangement, the groups entitlement
to this rental income is linked to its continued ownership of the property
rather than being an unconditional amount receivable (whether as an upfront
payment or through a series of instalments).
The development income of GBPnil (half year to 30th June 2008: GBP0.5m; year to
31st December 2008: GBP0.5m) is the proportion of the total profit share
estimated to have been earned by the group from the project management of the
construction and letting of a property on behalf of a third party.
The other income of GBP0.6m (half year to 30th June 2008: GBP0.1m; year to 31st
December 2008: GBP0.9m) relates to fees and commissions earned in relation to
the management of the groups properties.
5 (Loss)/profit on disposal of investment properties
+--------------------------------------+--------+-----------------+-----------------+-----------------+
| | | Half year | Half year | Year |
| | | to 30.06.09 | to 30.06.08 | to 31.12.08 |
| | | GBPm | GBPm | GBPm |
+--------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------+--------+-----------------+-----------------+-----------------+
| Disposal proceeds | | 39.1 | 54.8 | 72.6 |
+--------------------------------------+--------+-----------------+-----------------+-----------------+
| Carrying value | | (41.4) | (52.7) | (71.4) |
+--------------------------------------+--------+-----------------+-----------------+-----------------+
| Adjustment for rents recognised in advance | (1.1) | - | - |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------+--------+-----------------+-----------------+-----------------+
| | | (3.4) | 2.1 | 1.2 |
+--------------------------------------+--------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+--------------------------------------+--------+-----------------+-----------------+-----------------+
| | | | | |
+--------------------------------------+--------+-----------------+-----------------+-----------------+
6 Finance income and costs
+-----------------------------------------------+------------------+-----------------+-----------------+
| | Half year | Half year | Year |
| | to 30.06.09 | to 30.06.08 | to 31.12.08 |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Finance income | | | |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Interest on development funding | 0.2 | 0.1 | 0.1 |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Return on pension plan assets | 0.1 | 0.2 | 0.8 |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Foreign exchange gain | 3.6 | - | - |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Other | 0.4 | 0.1 | 0.8 |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Total finance income | 4.3 | 0.4 | 1.7 |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Finance costs | | | |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Bank loans and overdraft wholly repayable | | | |
| within five years | 13.7 | 14.4 | 35.3 |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Bank loans not wholly repayable within five | | | |
| years | 0.3 | 3.2 | 0.8 |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Loan notes | - | 0.8 | 0.9 |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Secured bond | 5.4 | 5.4 | 10.8 |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Finance leases | 0.3 | 0.3 | 0.6 |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Pension interest costs | 0.1 | - | 0.5 |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Foreign exchange loss | - | - | 8.3 |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Other | 0.2 | - | - |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Total finance costs | 20.0 | 24.1 | 57.2 |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | | | |
| | | | |
+-----------------------------------------------+------------------+-----------------+-----------------+
7 Share of results of joint ventures
+--------------------------------------+--------+-----------------+-----------------+-----------------+
| | Half year | Half year | Year |
| | to 30.06.09 | to 30.06.08 | to 31.12.08 |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Revaluation deficit | (1.3) | (0.3) | (1.3) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Other (loss)/profit from operations after tax | (0.5) | - | 0.5 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | (1.8) | (0.3) | (0.8) |
+--------------------------------------+--------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+--------------------------------------+--------+-----------------+-----------------+-----------------+
8 Tax credit
+-----------------------------------------------+------------------+-----------------+-----------------+
| | Half year | Half year | Year |
| | to 30.06.09 | to 30.06.08 | to 31.12.08 |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Corporation tax credit | | | |
+-----------------------------------------------+------------------+-----------------+-----------------+
| UK corporation tax and income tax on profits | | | |
| for | 0.6 | 2.5 | 1.4 |
| the period | | | |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Adjustment for over-provision in prior | (11.6) | (4.2) | (7.1) |
| periods | | | |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | (11.0) | (1.7) | (5.7) |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Deferred tax credit | | | |
+-----------------------------------------------+------------------+-----------------+-----------------+
| Origination and reversal of temporary | (1.1) | (0.5) | (3.6) |
| differences | | | |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | (1.1) | (0.5) | (3.6) |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | (12.1) | (2.2) | (9.3) |
+-----------------------------------------------+------------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+------------------+-----------------+-----------------+
Of the GBP11.6m over-provision in prior periods in the half year to 30th June
2009 (half year to 30th June 2008: GBP4.2m; year to 31st December 2008:
GBP7.1m), GBP11.9m (half year to 30th June 2008: GBP0.6m; year to 31st December
2008: GBP3.8m) relates to losses not recognised in prior years due to the
uncertainty of their availability.
The tax credit is lower (half year to 30th June 2008 and year to 31st December
2008: lower) than the standard rate of corporation tax in the UK. The
differences are explained below:
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | Half year | Half year | Year |
| | to 30.06.09 | to 30.06.08 | to 31.12.08 |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Loss before tax | (223.3) | (144.7) | (606.5) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Expected tax credit based on the standard | | | |
| rate of corporation tax in the UK of 28% | | | |
| (half year to 30th June 2008: 29%; year to | | | |
| 31st December 2008: 28.5%) | (62.5) | (42.0) | (172.9) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Difference between tax and accounting profit | | | |
| on disposals | 0.9 | (0.6) | 0.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Difference between tax and accounting profit | | | |
| on derivative financial instruments | (2.0) | (2.2) | 7.2 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Revaluation deficit attributable to REIT | | | |
| properties | 72.5 | 47.2 | 171.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| REIT exempt income and capital items | (6.6) | (0.9) | (5.5) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Other differences | (2.8) | 0.5 | (3.2) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Tax (credit)/expense on current periods | (0.5) | 2.0 | (2.2) |
| profit | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustments in respect of prior periods tax | (11.6) | (4.2) | (7.1) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | (12.1) | (2.2) | (9.3) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
9 (Loss)/earnings per share
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | Weighted | |
| | | average | |
| | Loss for | number of | Loss |
| | the period | shares | per share |
| | GBPm | '000 | p |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Half year ended 30th June 2009 | (207.8) | 100,811 | (206.13) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustment for dilutive share-based payments | - | - | - |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Diluted | (207.8) | 100,811 | (206.13) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Half year ended 30th June 2008 | (139.4) | 100,708 | (138.42) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustment for dilutive share-based payments | - | - | - |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Diluted | (139.4) | 100,708 | (138.42) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Year ended 31st December 2008 | (586.4) | 100,758 | (581.99) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustment for dilutive share-based payments | - | - | - |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Diluted | (586.4) | 100,758 | (581.99) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
The diluted loss per share for the half year to 30th June 2009 has been
restricted to a loss of 206.13p per share, (half year to 30th June 2008: 138.42p
loss per share; year ended 31st December 2008: 581.99p loss per share), as the
loss per share cannot be reduced by dilution in accordance with IAS 33, Earnings
per Share.
+-----------------------------------------------+-----------------+-----------------+------------------+
| | | Weighted | |
| | | average number | |
| | (Loss)/profit | of shares | (Loss)/earnings |
| | for the period | '000 | per share |
| | GBPm | | p |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Half year ended 30th June 2009 | (207.8) | 100,811 | (206.13) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Adjustment for: | | | |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Disposal of investment properties | (8.2) | - | (8.14) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Group revaluation deficit | 257.5 | - | 255.43 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Share of joint ventures revaluation deficit | 1.3 | - | 1.29 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Fair value movement in derivative financial | | | |
| instruments | (7.0) | - | (6.94) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Minority interests in respect of the above | (5.2) | - | (5.16) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Recurring | 30.6 | 100,811 | 30.35 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Adjustment for dilutive share-based payments | - | 629 | (0.18) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Diluted recurring | 30.6 | 101,440 | 30.17 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Half year ended 30th June 2008 | (139.4) | 100,708 | (138.42) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Adjustment for: | | | |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Disposal of investment properties | (1.2) | - | (1.19) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Group revaluation deficit | 162.1 | - | 160.96 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Share of joint ventures revaluation deficit | 0.3 | - | 0.30 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Fair value movement in derivative financial | | | |
| investments | (7.8) | - | (7.75) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Development income | (0.4) | - | (0.40) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Minority interests in respect of the above | (3.8) | - | (3.77) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Recurring | 9.8 | 100,708 | 9.73 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Adjustment for dilutive share-based payments | - | 513 | (0.05) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Diluted recurring | 9.8 | 101,221 | 9.68 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Year ended 31st December 2008 | (586.4) | 100,758 | (581.99) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Adjustment for: | | | |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Disposal of investment properties | (6.2) | - | (6.15) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Group revaluation deficit | 597.9 | - | 593.40 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Share of joint ventures revaluation deficit | 1.3 | - | 1.29 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Fair value movement in derivative financial | | | |
| instruments | 28.1 | - | 27.89 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Development income | (0.5) | - | (0.50) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Minority interests in respect of the above | (11.2) | - | (11.11) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Recurring | 23.0 | 100,758 | 22.83 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Adjustment for dilutive share-based payments | - | 435 | (0.10) |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+------------------+
| Diluted recurring | 23.0 | 101,193 | 22.73 |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+------------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+------------------+
The recurring earnings per share excludes the after tax effect of fair value
adjustments to the carrying value of assets and liabilities, the profit or loss
arising from the disposal of investment properties, the development income and
any exceptional costs and income in order to show the underlying trend.
10 Investment property
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | Freehold | Leasehold | Total |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Carrying value | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At 1st January 2009 | 1,722.5 | 363.1 | 2,085.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Acquisitions | - | 1.5 | 1.5 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Capital expenditure | 36.1 | 6.2 | 42.3 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Additions | 36.1 | 7.7 | 43.8 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Disposals | (41.4) | - | (41.4) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Revaluation | (208.4) | (50.5) | (258.9) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At 30th June 2009 | 1,508.8 | 320.3 | 1,829.1 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Disclosed in: | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Investment property | 1,400.7 | 318.2 | 1,718.9 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Non-current assets held for sale | 108.1 | 2.1 | 110.2 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | 1,508.8 | 320.3 | 1,829.1 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At 1st January 2008 | 2,224.1 | 430.5 | 2,654.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Acquisitions | 16.2 | - | 16.2 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Capital expenditure | 42.2 | 2.7 | 44.9 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Additions | 58.4 | 2.7 | 61.1 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Disposals | (42.4) | (10.3) | (52.7) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Revaluation | (147.6) | (16.2) | (163.8) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Movement in grossing up of headlease | - | (2.4) | (2.4) |
| liabilities | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At 30th June 2008 | 2,092.5 | 404.3 | 2,496.8 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At 1st January 2008 | 2,224.1 | 430.5 | 2,654.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Transfer | (15.0) | 15.0 | - |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Acquisitions | 27.8 | 4.1 | 31.9 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Capital expenditure | 61.1 | 11.9 | 73.0 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Additions | 88.9 | 16.0 | 104.9 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Disposals | (59.8) | (11.6) | (71.4) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Revaluation | (515.7) | (86.4) | (602.1) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Movement in grossing up of headlease | - | (0.4) | (0.4) |
| liabilities | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At 31st December 2008 | 1,722.5 | 363.1 | 2,085.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Disclosed in: | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Investment property | 1,705.0 | 363.1 | 2,068.1 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Non-current assets held for sale | 17.5 | - | 17.5 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At 31st December 2008 | 1,722.5 | 363.1 | 2,085.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustments from fair value to carrying value | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At 30th June 2009 | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Fair value | 1,542.4 | 313.2 | 1,855.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustment for rents recognised in advance | (33.6) | (1.5) | (35.1) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustment for grossing up of headlease | - | 8.6 | 8.6 |
| liabilities | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Carrying value | 1,508.8 | 320.3 | 1,829.1 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At 30th June 2008 | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Fair value | 2,119.0 | 399.2 | 2,518.2 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustment for rents recognised in advance | (26.5) | (1.5) | (28.0) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustment for grossing up of headlease | - | 6.6 | 6.6 |
| liabilities | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Carrying value | 2,092.5 | 404.3 | 2,496.8 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At 31st December 2008 | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Fair value | 1,752.1 | 355.9 | 2,108.0 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustment for rents recognised in advance | (29.6) | (1.4) | (31.0) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustment for grossing up of headlease | - | 8.6 | 8.6 |
| liabilities | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Carrying value | 1,722.5 | 363.1 | 2,085.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | ________ | _______ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
The investment properties were revalued at 30th June 2009 by external valuers,
on the basis of market value as defined by the Appraisal and Valuation Standards
published by The Royal Institution of Chartered Surveyors. CB Richard Ellis
Limited valued the properties to a value of GBP1,827.1m (30th June 2008:
GBP2,490.2m; 31st December 2008: GBP2,079.6m); other valuers GBP28.5m (30th June
2008: GBP28.0m; 31st December 2008: GBP28.4m).
At 30th June 2009, the historical cost of investment property owned by the group
was GBP2,041.6m (30th June 2008: GBP2,019.3m; 31st December 2008: GBP2,054.5m).
11 Property, plant and equipment
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | 30.06.09 | 30.06.08 | 31.12.08 |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At beginning of period | 1.2 | 1.4 | 1.4 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Additions | 0.2 | 0.1 | 0.2 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Disposals | - | - | (0.2) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Depreciation | (0.1) | (0.1) | (0.2) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At end of period | 1.3 | 1.4 | 1.2 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Net book value | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Cost or valuation | 3.2 | 3.2 | 3.0 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Accumulated depreciation | (1.9) | (1.8) | (1.8) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | 1.3 | 1.4 | 1.2 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
12 Trading properties
The trading properties were written down by GBP2.0m in the year to 31st
December 2008 (half year to 30th June 2008: GBP1.0m). No write-down was
recognised in the half year to 30th June 2009.
13 Borrowings and derivatives
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | 30.06.09 | 30.06.08 | 31.12.08 |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Non-current assets | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Derivative financial instruments | - | (9.1) | - |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Current liabilities | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Bank loans | - | 100.0 | 103.0 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Overdraft | 4.3 | - | 3.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | 4.3 | 100.0 | 106.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Non-current liabilities | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| 6.5% Secured Bonds 2026 | 194.0 | 194.6 | 194.3 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Loan notes | 2.7 | 3.6 | 3.2 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Bank loans | 619.0 | 518.1 | 534.0 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Unsecured loans | 29.7 | 28.8 | 29.2 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Leasehold liabilities | 8.6 | 6.6 | 8.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | 854.0 | 751.7 | 769.3 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Derivative financial instruments | 19.9 | - | 26.9 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Total liabilities | 878.2 | 851.7 | 902.8 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Total net borrowings and derivatives | 878.2 | 842.6 | 902.8 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
14 Deferred tax
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| | Revaluation | | |
| | surplus | Other | Total |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| At 1st January 2009 | 8.9 | (1.7) | 7.2 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Provided during the period in the group | | | |
| income statement | - | (1.1) | (1.1) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Released during the period in the group | | | |
| income statement | (1.4) | 1.4 | - |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| At 30thJune 2009 | | 7.5 | (1.4) | 6.1 |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| | | | | |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| At 1st January 2008 | | 13.1 | (2.3) | 10.8 |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| Provided during the period in the group | | | |
| income statement | (1.7) | 1.2 | (0.5) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| At 30th June 2008 | | 11.4 | (1.1) | 10.3 |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| | | | | |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| At 1st January 2008 | | 13.1 | (2.3) | 10.8 |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| Provided during the period in the group | | | |
| income statement | - | 0.6 | 0.6 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Released during the period in the group | | | |
| income statement | (4.2) | - | (4.2) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| At 31st December 2008 | | 8.9 | (1.7) | 7.2 |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| | | _______ | _______ | _______ |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
| | | | | |
+-----------------------------+-----------------+-----------------+-----------------+-----------------+
Deferred tax on the revaluation surplus is calculated on the basis of the
chargeable gains that would crystallise on the sale of the investment property
portfolio as at each balance sheet date. The calculation takes account of
indexation on the historic cost of the properties and any available capital
losses. Due to the groups conversion to REIT status on 1st July 2007, deferred
tax is only provided at each balance sheet date on properties outside of the
REIT regime.
15 Dividend
The results for the half year to 30th June 2009 do not include the
dividend declared after the end of the accounting
period. In respect of
these results, a dividend of 8.15p per share (2008 interim: 8.15p; 2008 final:
16.35p) will be paid on
6th November 2009 to those shareholders on the
register at the close of business on 2nd October 2009.
16 Net asset value per share
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
| | | Deferred | Fair | Fair | |
| | | tax on | value | value | |
| | | revaluation | of | adjustment | Adjusted |
| | Net | surplus | derivative | to secured | net |
| | assets | GBPm | financial | bonds | assets |
| | GBPm | | instruments | GBPm | GBPm |
| | | | GBPm | | |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| At | 984.7 | 7.5 | 19.9 | 20.5 | 1,032.6 |
| 30th | | | | | |
| June | | | | | |
| 2009 | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| Minority | (32.0) | (0.2) | 0.5 | - | (31.7) |
| interests | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
| | _______ | _______ | _______ | _______ | _______ |
+--------------+---------+-------------+-------------+------------+----------+
| Attributable | 952.7 | 7.3 | 20.4 | 20.5 | 1,000.9 |
| to equity | | | | | |
| shareholders | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
| | _______ | _______ | _______ | _______ | _______ |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| Net | | | | | |
| asset | | | | | |
| value | 945 | 8 | 20 | 20 | 993 |
| per | | | | | |
| share | | | | | |
| attributable | | | | | |
| to equity | | | | | |
| shareholders | | | | | |
| (p) | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
| | _______ | _______ | _______ | _______ | _______ |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| At | 1,682.7 | 11.4 | (9.1) | 21.2 | 1,706.2 |
| 30th | | | | | |
| June | | | | | |
| 2008 | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| Minority | (55.4) | (1.0) | - | - | (56.4) |
| interests | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
| | _______ | _______ | _______ | _______ | _______ |
+--------------+---------+-------------+-------------+------------+----------+
| Attributable | 1,627.3 | 10.4 | (9.1) | 21.2 | 1,649.8 |
| to equity | | | | | |
| shareholders | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
| | _______ | _______ | _______ | _______ | _______ |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| Net | | | | | |
| asset | | | | | |
| value | 1,614 | 11 | (9) | 21 | 1,637 |
| per | | | | | |
| share | | | | | |
| attributable | | | | | |
| to equity | | | | | |
| shareholders | | | | | |
| (p) | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
| | _______ | _______ | _______ | _______ | _______ |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| At | 1,215.0 | 8.9 | 26.9 | 20.9 | 1,271.7 |
| 31st | | | | | |
| December | | | | | |
| 2008 | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| Minority | (35.4) | (0.5) | - | - | (35.9) |
| interests | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
| | _______ | _______ | _______ | _______ | _______ |
+--------------+---------+-------------+-------------+------------+----------+
| Attributable | 1,179.6 | 8.4 | 26.9 | 20.9 | 1,235.8 |
| to equity | | | | | |
| shareholders | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
| | _______ | _______ | _______ | _______ | _______ |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| Net | | | | | |
| asset | | | | | |
| value | 1,170 | 8 | 27 | 21 | 1,226 |
| per | | | | | |
| share | | | | | |
| attributable | | | | | |
| to equity | | | | | |
| shareholders | | | | | |
| (p) | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
| | _______ | _______ | _______ | _______ | _______ |
+--------------+---------+-------------+-------------+------------+----------+
| | | | | | |
+--------------+---------+-------------+-------------+------------+----------+
The number of shares at 30th June 2009 was 100,815,896 (30th June 2008:
100,807,146; 31st December 2008: 100,807,146).
Adjusted net assets excludes the deferred tax on the revaluation surplus, the
fair value of derivative financial instruments and the adjustment to the secured
bond, on the basis that these amounts are not relevant when considering the
group as an ongoing business.
17 Recurring profit before tax
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | Half year | Half year | Year |
| | to 30.06.09 | to 30.06.08 | to 31.12.08 |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Loss before tax | (223.3) | (144.7) | (606.5) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustment for: | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Disposal of investment properties | 3.4 | (2.1) | (1.2) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Group revaluation deficit | 258.9 | 163.8 | 602.1 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Share of joint ventures revaluation deficit | 1.3 | 0.3 | 1.3 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Development income | - | (0.5) | (0.5) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Fair value movement in derivative financial | | | |
| instruments | (7.0) | (7.8) | 28.1 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | _______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Recurring profit before tax | 33.3 | 9.0 | 23.3 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ______ | _______ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
18 Total return
Total return for the half year to 30th June 2009 was negative 17.7% (half year
to 30thJune 2008: negative 8.3%; year to 31st December 2008: negative 30.6%).
Total return is the movement in adjusted net asset value per share, as derived
in note 16, plus the dividend per share paid during the period expressed as a
percentage of the adjusted net asset value per share at the beginning of the
period.
19 Cash flow
The previously reported movement in bank loans figure of GBP95.6m for
the half year to 30th June 2008 has been split
between the net
movement in revolving bank loans, and the drawdown and repayment of
non-revolving bank loans in
accordance with IAS 7, Statement of
Cash Flows. This change does not affect the overall net cash flow for the half
year
to June 2008.
20 Post balance sheet events
Since the 30th June 2009, the group has completed or exchanged contracts on the
disposal of 13 properties for a total of GBP70.7m, excluding costs. The
estimated loss on these disposals is GBP7.5m. Of this, GBP7.2m is contained in
the revaluation deficit in the 30th June 2009 group income statement.
21 Risk management and internal control
The board recognises that risk is an inherent part of running a business
and that whilst it aims to maximise returns, the associated risks must be
understood and managed. Overall responsibility for this process rests with the
board whilst executive management is responsible for designing, implementing and
maintaining the necessary systems of control.
Key to this function is the groups risk register which is reviewed
formally once a year. The register is initially prepared by the executive board
which, having created the list of risks, collectively assesses the severity of
the risk, the likelihood of it occurring and the strength of the controls over
the risk. This approach allows the effect of any mitigating procedures to be
considered recognising that risk cannot be totally eliminated and that some
activities incur inherent risk. The register is then reviewed and commented upon
by the audit committee before being considered and adopted by the full board.
The risk register is divided into four parts: strategic risks, corporate
risks, property risks and financial risks. During the review, which was
conducted in December 2008, no unacceptable residual risks were identified by
the board. Some of the more significant risks, together with the controls that
operate over that part of the business, are set out below.
Strategic risks
· That the groups strategy is not achieved due to adverse economic influences
and/or movements in the central London property investment or occupational
market.
The group carries out an annual strategic review covering the next
five years and prepares regular rolling forecasts for the next two years. As
part of both exercises, the effect that changing the various main underlying
assumptions has on the key ratios is considered and the board can vary the
groups short term objectives so as to best realise its long term strategic
goals. The groups policy of maintaining income from properties until a
development starts gives the board flexibility in this regard.
Property risks
· That the cost of the groups development schemes is increased due to delays in
the planning process.
When preparing appraisals for the groups proposed developments,
potential delays on the schemes critical path are identified and the effect
quantified. If material, alternative solutions are evaluated. The group uses
advisers who are fully aware of the current planning requirements specific to
the schemes location so as to reduce the risk of unforeseen delays.
· That a contractor or major sub-contractor becomes insolvent causing a project
to be delayed or otherwise adversely affected.
Generally the group selects contractors from a pool that are well known to
it, and financial information of these companies is regularly reviewed. If the
insolvency of a major sub-contractor is seen to present a material risk to the
critical path of a project, specific strategies are implemented to mitigate the
effect.
· That a major tenant becomes insolvent causing a significant loss of rental
income.
The groups credit committee reviews the financial status of all prospective
tenants and decides on the level of security to be obtained, by way of rent on
deposit, bank guarantees etc. for those tenants that are approved. The groups
asset managers are proactive in collecting amounts due from tenants and maintain
regular contact with tenants which enables them to identify early signs of
distress. In the current economic environment, the group continues to monitor
the need to insure the rent of a limited number of key tenants.
Financial risks
· That the group is unable to raise finance from its preferred sources.
The groups five year strategic review and rolling forecasts enables
any financing requirement to be identified at an early stage. This enables
sources of finance to be identified and evaluated and, to a degree, the finance
to be raised as and when market conditions are favourable.
· That the group breaches one of its financing covenants.
All the groups secured borrowings contain financial covenants based
only on specific security not corporate ratios such as balance sheet gearing.
Treasury control schedules are updated each week whilst the groups rolling
forecast enables any potential problems to be identified at an early stage and
corrective action to be taken.
· That the groups debt facilities become unavailable or are not renewed.
The group develops long term relationships with a small number of
banks and, where possible, arranges facilities that provide an excess over the
requirement identified in the rolling forecast.
The systems that control the risks on the risk register form the groups
system of internal control. The effectiveness of this system and the operation
of the key components thereof have been reviewed for the accounting year and the
period to the date of the financial statements.
Risk management - financial instruments
The group is exposed through its operations to the following financial
risks:
· credit risk;
· fair value or cash flow interest rate risk; and
· liquidity risk
In common with all other businesses, the group is exposed to risks that
arise from its use of financial instruments. The narrative below describes the
groups objectives, policies and processes for managing those risks and the
methods used to measure them.
There have been no substantive changes in the groups exposure to
financial instrument risks, its objectives, policies and processes for managing
those risks or the methods used to measure them from previous periods.
Principal financial instruments
The principal financial instruments used by the group, from which
financial instrument risk arises, are as follows:
- Trade receivables
- Cash at bank
- Bank overdrafts
- Trade and other payables
- Floating rate bank loans
- Secured bonds
- Interest rate swaps
- Interest rate caps
General objectives, policies and processes
The overall objective of the board is to set policies that seek to
reduce risk as far as possible without unduly affecting the groups flexibility
and its ability to maximise returns. Further details regarding these policies
are set out below:
Credit risk
Credit risk is the risk of financial loss to the group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations. The group is mainly exposed to credit risk from its lease
contracts. It is group policy to assess the credit risk of new tenants before
entering contracts as set out above.
As the group operates predominately in central London, it is subject to
some geographical risk. However, this is mitigated by the wide range of tenants
from a broad spectrum of business sectors.
Credit risk also arises from cash and cash equivalents and deposits with
banks and financial institutions. For banks and financial institutions only
independently rated parties with minimum rating of investment grade are
accepted. This risk is reduced by the short periods that money is on deposit at
any one time.
The group does not enter into derivatives to manage credit risk.
The carrying amount of financial assets recorded in the financial
statements represents the groups maximum exposure to credit risk without taking
account of the value of any collateral obtained.
Market risk
Market risk arises from the groups use of interest bearing instruments.
It is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in interest rates (interest rate
risk).
Fair value and cash flow interest rate risk
The group is exposed to cash flow interest rate risk from borrowings at
variable rates. It is currently group policy that between 40% and 75% of
external group borrowings (excluding finance lease payables) are fixed rate
borrowings. Where the group wishes to vary the amount of external fixed rate
debt it holds (subject to it being at least 40% and no more than 75% of expected
group borrowings, as noted above), the group makes use of interest rate
derivatives to achieve the desired interest rate profile. Although the board
accepts that this policy neither protects the group entirely from the risk of
paying rates in excess of current market rates nor eliminates fully cash flow
risk associated with variability in interest payments, it considers that it
achieves an appropriate balance of exposure to these risks.
During both 2009 and 2008, the groups borrowings at variable rate were
denominated in sterling. The group monitors the interest rate exposure on a
regular basis.
The group manages its cash flow interest rate risk by using
floating-to-fixed interest rate swaps. Predominantly, the group raises long-term
borrowings at floating rates and swaps them into fixed.
Liquidity risk
Liquidity risk arises from the groups management of working capital and
the finance charges and principal repayments on its debt instruments. It is the
risk that the group will encounter difficulty in meeting its financial
obligations as they fall due.
The groups policy is to ensure that it will always have sufficient
headroom in its loan facilities to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to maintain committed facilities to
meet the expected requirements. The group also seeks to reduce liquidity risk by
fixing interest rates (and hence cash flows) on a portion of its long-term
borrowings. This is further discussed in the 'Fair value and cash flow interest
rate risk section above.
The executive management receives rolling three-month cash flow
projections on a monthly basis and three-year projections of loan balances on a
regular basis as part of the groups forecasting processes. At the balance sheet
date, these projections indicated that the group expected to have sufficient
liquid resources to meet its obligations under all reasonably expected
circumstances.
The groups loan facilities are spread across a range of UK banks so as
to minimise any potential concentration of risk.
The liquidity risk of the group is managed centrally by the finance
department.
Capital disclosures
The groups capital comprises all components of equity (share capital,
share premium, other reserves, retained earnings and minority interest). The
groups objectives when maintaining capital are:
- to safeguard the entitys ability to continue as a going concern so that it
can continue to provide returns for shareholders; and
- to provide an above average annualised total return to
shareholders.
The group sets the amount of capital it requires in proportion to risk.
The group manages its capital structure and makes adjustments to it in the light
of changes in economic conditions and the risk characteristics of the underlying
assets. In order to maintain or adjust the capital structure, the group may
adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares, or sell assets to reduce debt.
Consistent with others in its industry, the group monitors capital on
the basis of balance sheet gearing and property gearing. Balance sheet gearing
is defined as net debt divided by net assets and property gearing is defined as
the nominal value of borrowed funds divided by the fair value of investment
property. This is equivalent to the loan to value calculations used in the
groups bank covenants. Both of these figures are derived below.
Balance sheet gearing
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | 30.06.09 | 30.06.08 | 31.12.08 |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Total net borrowings and derivatives | 878.2 | 842.6 | 902.8 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Less: derivative financial instruments | (19.9) | 9.1 | (26.9) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Total debt | 858.3 | 851.7 | 875.9 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Less: cash and cash equivalents | (9.0) | (5.8) | (10.5) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Net debt | 849.3 | 845.9 | 865.4 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Net assets | 984.7 | 1,682.7 | 1,215.0 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Balance sheet gearing | 86.2% | 50.3% | 71.2% |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
Property gearing
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | 30.06.09 | 30.06.08 | 31.12.08 |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Net debt | 849.3 | 845.9 | 865.4 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Fair value adjustment to secured bond and | (19.0) | (19.6) | (19.3) |
| issue costs | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Leasehold liabilities | (8.6) | (6.6) | (8.6) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Drawn facilities | 821.7 | 819.7 | 837.5 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Fair value of investment property | 1,855.6 | 2,518.2 | 2,108.0 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Property gearing | 44.3% | 32.6% | 39.7% |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
Profit and loss gearing
Profit and loss gearing is defined as gross property income, excluding surrender
premiums, less ground rent, divided by interest payable on borrowings less
interest receivable. This is similar to the groups most commonly used interest
cover ratio, and is derived below.
+--------------------------------------+--------+-----------------+-----------------+-----------------+
| | Half year to | Half year to | Year to |
| | 30.06.09 | 30.06.08 | 31.12.08 |
| | GBPm | GBPm | GBPm |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Gross property income | 63.1 | 57.5 | 119.0 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Surrender premiums | - | (0.2) | (0.2) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Ground rent | (0.6) | (0.6) | (1.3) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Net rental income | | 62.5 | 56.7 | 117.5 |
+--------------------------------------+--------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Net finance costs | 15.7 | 23.7 | 55.5 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Foreign exchange gain/(loss) | 3.6 | - | (8.3) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Net pension return | - | 0.2 | 0.3 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Finance lease cost | (0.3) | (0.3) | (0.6) |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Amortisation of bond fair value and issue | 0.3 | 0.3 | 0.6 |
| costs | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Net interest payable | 19.3 | 23.9 | 47.5 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Profit and loss gearing | 3.24 | 2.37 | 2.47 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | _______ | ________ | ________ |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | | | |
+--------------------------------------+--------+-----------------+-----------------+-----------------+
22 Copies of this announcement will be available on the companys website,
www.derwentlondon.com, from the
date of this statement. Copies
will also be availablefrom the Company Secretary, Derwent London plc,
25 Savile Row, London, W1S 2ER.
List of definitions
Net assets per share or net asset value (NAV)
Equity shareholders funds divided by the number of ordinary shares at the
balance sheet date.
Adjusted net asset value per share
NAV adjusted to exclude deferred tax on the property revaluation surplus and
fair value adjustments to the carrying value of assets and liabilities.
Recurring net property income
Net property income excluding development income.
Recurring profit before taxation
Profit before tax excluding development income, exceptional items, goodwill
impairment, the revaluation movement in investment properties and financial
instruments and the profit on disposal of properties and investments.
Earnings per share (EPS)
Profit for the year attributable to equity shareholders divided by the weighted
average number of ordinary shares in issue during the period.
Recurring earnings per share
Earnings per share adjusted to exclude the after tax effect of non-recurring
items, profits or losses on sales of properties and investments, and the fair
value adjustments to the carrying value of assets and liabilities.
Diluted earnings per share
Earnings per share adjusted to include the dilutive effects of potential shares
issuable under the groups share option schemes. However, a loss per share
cannot be reduced by dilution in accordance with IAS 33, Earnings per Share.
Net debt
Borrowings plus bank overdraft and loans less cash and cash equivalents.
Balance sheet gearing
Net debt divided by net assets.
Profit and loss gearing
Gross property income, excluding surrender premiums, less ground rent divided by
interest payable on borrowings less interest receivable. This is similar to the
groups most commonly used interest cover ratio covenant.
Property gearing
The nominal value of borrowed funds divided by the fair value of investment
property. This is equivalent to the loan to value calculations used in the
groups bank covenants.
Ground rent
The rent payable by the group at its leasehold properties. Under IFRS, these
leases are treated as finance leases and the cost allocated between interest
payable and property outgoings.
IPD Central London Offices Index
An index, compiled by Investment Property Databank Limited, of the central and
inner London offices in their quarterly valued universe.
Capital return
The valuation movement arising on the groups portfolio expressed as a
percentage return on the valuation at the beginning of the year adjusted for
acquisitions and capital expenditure.
Total return
The movement in adjusted net asset value per share between the beginning and the
end of each period plus the dividend per share paid during the period, expressed
as a percentage of the adjusted net value per share at the beginning of the
year.
Total property return
The annual capital appreciation, net of capital expenditure, plus the net annual
rental income received expressed as a percentage of capital employed.
Total shareholder return
The growth in the ordinary share price as quoted on the London Stock Exchange
plus dividends per share received for the period expressed as a percentage of
the share price at the beginning of the period.
Rent roll
The annualised contracted rental income, net of ground rents.
Initial yield
The rent roll generated by a property or by the portfolio as a whole expressed
as a percentage of its valuation. Where applicable, the valuation is adjusted to
include any capital expenditure required for scheme completion. For the net
initial yield, notional purchasers costs are added to the valuation.
True equivalent yield
The constant capitalisation rate which, if applied to all cash flows from the
portfolio, including current rent, reversions to valuers estimated rental value
and such items as voids and expenditures, equates to the valuation having taken
into account notional purchasers costs. Assumes rent is received quarterly in
advance.
Reversionary yield
The anticipated yield based upon the valuers estimated rental value of a
property or portfolio, expressed as a percentage of its valuation. Where
applicable, the valuation is adjusted to include any capital expenditure
required for scheme completion.
Reversion
The reversion is the difference between the rent roll of a property or portfolio
and the rental value as estimated by the groups external valuers. The reversion
is derived from contractual rental increases, rent reviews, lease renewals and
the letting of vacant space.
Underlying portfolio
Properties that have been held for the whole of the period.
Vacancy rate
The rental value of vacant space in a property or portfolio, that is immediately
available for occupation, expressed as a percentage of the estimated rental
value.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAXPLAFXNEFE
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