RNS Number:6986Q
Forth Ports PLC
11 September 2000
RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE, 2000
Forth Ports today announces interim results for the six months ended 30th
June, 2000. The Group owns and operates seven major commercial ports in the
UK. In addition, Forth has significant property interests which it continues
to develop as part of its ongoing effort to improve shareholder returns.
Financial Highlights
* Turnover of #50.9 million (1999: #51.9 million)
* Operating profit up 5% to #15.4 million (1999: #14.6 million)
* Record pre-tax profit of #12.9 million (1999: #12.5 million)
* Underlying earnings per share: 20.9p (1999: 20.2p)
* 60% increase in interim dividend to 9.0p (1999: 5.6p)
Operational and Strategic Highlights
* Strong performance from all major ports - Ports operating profit rising
by Over 12% during the period
* Valuation of development and investment properties - Open Market Value
of #150.3m representing an asset value of 314 pence per share
* Completion of strategic review to examine options to accelerate the
realisation of shareholder value
Christopher Collins, Chairman of Forth Ports, commented:
"After a good first half performance, the Company is in a strong position to
move forward in the second half. With the growing ports' business and a
valuable, appreciating property portfolio, the future is viewed with
confidence.
"Looking forward, the Board recognises that the current level of gearing is
capable of being increased. Subject to the ongoing requirements for finance,
including capital expenditure and potential acquisitions, it is the Board's
intention to crystallise value by returning to shareholders proceeds from the
disposal of development property assets and further to free funds for
shareholders by increasing the gearing of the Company in order to fund a share
buyback programme."
Enquiries:
Alistair Fleming, Chief Executive Forth Ports PLC Tel: 020 7404 5959
Wilson Murray, Finance Director on 11.09.00
Katharine Sharkey/ Kate Miller Brunswick Tel: 020 7404 5959
Forth Ports PLC is now on the WEB at: www.forthports.co.uk
CHAIRMAN'S STATEMENT
Following my appointment as Chairman on 1st August, I am pleased to present
the results of the Board's Strategic Review and these interim results.
Strategic Review
The Company was approached by Duke Street Capital in late May to explore the
possibility of taking the Company private at a price in the region of #7.50
per share. The approach was highly conditional and was rejected by the Board
as in its opinion, and that of its Advisers, Credit Suisse First Boston, it
undervalued the Company.
On 10th July, 2000 the Company announced it was examining options to
accelerate the realisation of shareholder value. An integral part of this
review has been a valuation of the Group's development and investment property
by DTZ Debenham Tie Leung, Chartered Surveyors ("DTZ").
Looking forward, the Board recognises that the current level of gearing is
capable of being increased. Subject to the ongoing requirements for finance,
including capital expenditure and potential acquisitions, it is the Board's
intention to crystallise value by returning to shareholders proceeds from the
disposal of development property assets and further to free funds for
shareholders by increasing the gearing of the Company in order to fund a share
buyback programme.
In addition, as part of its commitment to shareholder value, the Board has
continued to explore the possible sale of the Company but, to date, the
indications of value have not been satisfactory.
Development of Property Interests
Since the Company was floated in 1992, it has sought to maximise the
utilisation of its assets in its port operations and to develop its extensive
non-port property interests. This has resulted in significant development in
Leith and more recently in Dundee and Tilbury.
The Company expects to achieve a steady profit stream from land sales and
property development. Recent sales have been at prices which have
consistently exceeded expectations.
Plans are well advanced to develop a number of other properties including
retail and residential at Dundee, (60,000 sq.ft. of retail space opening in
October), the construction of the Ocean Terminal Shopping Centre in Leith and
a major distribution park on the Fortress Land at Tilbury.
Property Valuation
The Board commissioned a formal property valuation of its development and
investment properties. DTZ have undertaken a valuation based on: Open Market
Value ("OMV") and a Calculation of Worth ("CoW"). The purpose of the Company
requesting this additional calculation is in order to appraise shareholders
more fully of the development potential of the properties in the portfolio.
The OMV basis is an opinion of the best price at which the sale of an interest
in the property could have been completed unconditionally for a cash
consideration on the date of the valuation. The CoW basis is an estimate at a
stated date of the net monetary worth to the Company of the developments upon
completion, after taking account of the estimated costs of completion and the
time cost of money. In both cases, no adjustment has been made to reflect any
liability to taxation that may arise on disposal. The valuation and CoW were
carried out as at 1st August, 2000 and gave figures for the two bases as
follows: OMV - #150.3m; CoW - #204.7m. This represents an asset value of
314 pence per share and 427 pence per share respectively.
The DTZ valuation and CoW did not include either the existing operational port
land or the port tenanted properties; the latter will be revalued at the end
of this year as part of the normal five yearly valuation. Appendix A to this
Statement sets out supporting information concerning DTZ's valuation and CoW.
Dividend Policy
The Board has reviewed the dividend policy as part of the overall strategic
review. The Company has consistently increased its dividend year on year (at
a compound rate of nearly 16% since 1992). It has now been decided that a
lower level of dividend cover can be sustained by such a reliably progressive
cash generative business. Accordingly, the dividend policy is to pay
dividends which are twice covered based on a tax charge at the standard rate
of corporation tax. Therefore, an interim dividend of 9 pence net per share,
an increase of over 60%, will be paid on 3rd November, 2000, to shareholders
on the Register as a 13th October 2000. The weighting of the interim and
final dividend will remain broadly one third payable as an interim and the
balance as the final dividend.
Half Year Review
The half year has been successful. Pre-tax profit increased to a record
#12.9m (1999 - #12.5m). During the first half year turnover from port
operations increased by nearly 5% to reach nearly #50m with operating profits
increasing by over 12% to nearly #14.7m (1999 - #13m). The major ports all
performed well during the first half of 2000. As expected, turnover from the
property division was lower and amounted to #1.3m compared with #4.4m for the
equivalent period in 1999. During the previous four years, our interim
pre-tax profits have increased from #8.2m to #12.9m, a compounded annual
growth rate of 12%.
Review of Ports' Business
Dry cargo tonnage increased to 6.6 million tonnes compared with 6.2 million
tonnes, an increase of over 6%. The piped cargo tonnages fell from 21.5
million tonnes to 20.0 million tonnes, most of which was accounted for by a
reduction in tonnage through the Hound Point Marine Terminal.
Scottish Ports
Trading at Grangemouth was particularly encouraging. Most major cargoes
showed increases in tonnage over 1999 with LPG tonnages up 50% at 263,000
tonnes, containers up 13% at over 35,000 boxes (a record performance) and
forest products up 29% at 130,000 tonnes. Steel traffic, after two
particularly good years, was affected by a down-turn in business from Corus.
The Port of Leith recorded a modest improvement in tonnages with good
increases in piped cargo and cement. The tonnage from British Pipe Coaters
increased during the first half but was still at a relatively low level. The
new aggregates traffic contributed a volume of just over 30,000 tonnes in the
first half of the year. The extended Seament facility has been completed and
is now in operation. The new manufacturing facility built by VA Tech Limited
commenced operations this month.
Dundee had another good half year with dry cargo tonnages increasing by 8% to
over 300,000 tonnes. Forest products recorded a 17% increase to reach over
151,000 tonnes. The port has recently been selected as home port for a
Halliburton Oil Well Services vessel. In July, the port officially took over
its new pilot boat, "Taybird", built at a cost of over #400,000.
As part of the acquisition of Rosyth in March this year, we became the
landlord to several MOD tenanted warehouses. An agreement has now been
reached whereby the MOD will continue to lease a major warehouse from us at
the port for a further three years. There continues to be a high degree of
interest in the port from potential customers. Timber traffic has seen a 49%
increase in tonnage. Fortunes at the other Fife Ports were mixed. Methil
tonnages declined by 9% half year on half year. At Burntisland, the pattern
of shipping has changed with fewer, larger ships bringing in bauxite to the
port. As a result, port tonnages at the half year are down by 17% at just
under 110,000 tonnes. However, the annual tonnage is expected to be in line
with 1999.
Tilbury
Our change in the port management structure to highlight specific asset areas
has continued to provide focus to the port and has resulted in an improved
half year performance.
Total volume at Tilbury increased to over 4.8 million tonnes at the half year,
an increase of nearly 8%. In particular, the Finnish terminal saw tonnages
increase to over 460,000 tonnes, grain tonnages increased by 21% to 673,000
tonnes and the tonnages of scrap and cement also showed excellent increases.
In the first quarter, we invested #4.5m on the purchase of eleven new Nelcon
straddle carriers to provide our short-sea container division with robust new
equipment to increase the capacity of the terminal. The speed and reliability
of the new equipment is already showing through in terms of increased
efficiency and reduced maintenance costs at the terminal. We have completed
the erection of an additional 20,000 tonnes of silo capacity at the grain
terminal at a cost of over #3m and this facility is now in full operation.
We are close to receiving revised planning approval to carry out the
infrastructure works on the Fortress Distribution Park at Tilbury where we are
currently in negotiations to build and lease a 200,000 sq.ft. warehouse to a
port customer. Discussions are at an early stage with a potential customer
for a Regional Distribution Centre in the same development.
Property
Over the last twelve months, there has been a marked increase in the interest
in, and the value of, the land with development potential which we have
available at Leith. As part of our overall masterplan for the non-operational
areas of the port, surplus sites were identified and reclassified in
accordance with market demand and planning guidelines. With the increasing
awareness of the different developments being carried out and proposed within
Leith, such as Ocean Terminal Shopping Centre, land values are rising.
In April, Stewart Milne Homes submitted a detailed planning application in
respect of the Ocean Heights site at Leith. Our joint venture with Morrison
Homes at Newhaven received planning approval in May for the construction of 71
flats. In July, another joint venture with Morrison Homes on the Queens Quay
site at Leith received planning approval for 104 flats. We have also received
an offer to purchase land surrounding our Head Office building which should
generate a significant profit over the next few years as the development
proceeds.
The two outline planning applications which we submitted to the City of
Edinburgh Council covering Granton and Newhaven have now been joined by two
further developments put forward by British Gas and the Council itself on
surrounding land. The whole area around Granton in particular is the subject
of a major multi-million pound regeneration scheme being promoted by the
Council. This augurs well for our own development.
Our other joint venture housing developments with Morrison Homes at Kirkcaldy
and Dundee are making good progress. At Kirkcaldy, three blocks have already
been built and the show flat is about to open. At Dundee, planning approval
has been received for 250 flats. Construction is expected to start towards
the end of the year with a build out over the next three years.
We have recently sold the former hotel site at Leith for a major office
development at a value significantly higher than that for hotel use and in
line with the DTZ valuation for this property asset.
Within the next month, our new development of Factory Outlet Shopping at City
Quay Dundee will be open. The conversion of the old listed warehouses with
new glass frontages, together with a new decked area which has been built out
over the Victoria Dock, looks striking. The rents from this development will
be a good contributor to profits from next year.
Construction of the Ocean Terminal Shopping Centre continues to make good
progress and is on target for opening in Autumn 2001. Significant interest is
being shown by prospective tenants as we move towards the final twelve months
of construction.
Finance
Shareholders' funds at 30th June 2000 rose by #6m to #166m. During the six
months to 30th June 2000, the operating cash inflow amounted to #16.5m (1999 -
#14.9m). Capital expenditure amounted to #17m, all of which related to the
ports' business. In addition, the increase in work in progress of nearly #7m
related principally to the construction of the City Quay Retail Development at
Dundee. Our current expectation is that a slightly lower level of spend on
capital expenditure will be seen in the second half of the year. During the
period under review, we invested a further #4.6m in the Ocean Terminal joint
venture with Bank of Scotland.
The net interest charge for the half year amounted to #2.5m (1999 - #2.1m).
This increase reflects the increased level of indebtedness during the first
half of 2000 compared with the first half of 1999. As a result, the gearing
level of the Company (that is the amount of net debt expressed as a percentage
of shareholders' funds) amounted to 48% (1999 - 43%). At this level of
gearing, the Company has capacity to increase its borrowings to fund a share
buyback programme.
It is estimated that the effective rate of tax in 2000 will be 23% (1999 -
23.6%). This year sees the final year in which the tax losses available to
Port of Tilbury London Limited will be fully utilised. As it is almost
certain that the new Accounting Standard on Deferred Tax will apply in 2001,
the tax charge for that year will be at the standard rate.
A Triennial Valuation of the Tilbury Pension Fund is nearing completion. It is
expected that there will be a shortfall in the Pension Fund which will require
to be considered by the Board this year and incorporated in the full year
accounts.
Prospects
There should be continuing growth at Grangemouth where we expect a significant
increase in container boxes through the port as a result of the recent BP
Chemicals expansion. British Pipe Coaters have won three contracts which will
see a much improved performance from that customer towards the end of this
year and on into next. At Tilbury, there are further exciting opportunities
to grow our existing business. On the property front, we will continue to
carry out the necessary infrastructure work required to add even more value to
the various development sites in and around Leith and Tilbury.
After a good first half performance, the Company is in a strong position to
move forward in the second half. With the growing ports' business and a
valuable, appreciating property portfolio, the future is viewed with
confidence.
Christopher Collins
CHAIRMAN
11th September 2000
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited Unaudited Audited
6 months 6 months year
to to to
30.6.00 30.6.99 31.12.99
Notes #000 #000 #000
Turnover
Group and share of joint ventures 1
- continuing operations 51,162 52,075 108,735
Less: share of joint ventures
turnover (266) (148) (385)
Group turnover 50,896 51,927 108,350
Group operating profit
Continuing operations 14,316 13,505 31,344
Share of operating profit in
- joint ventures 204 95 266
- associates 862 1,017 1,997
Profit on ordinary activities
before interest 15,382 14,617 33,607
Net interest payable 2,463 2,139 4,054
Profit on ordinary activities 1
before taxation 12,919 12,478 29,553
Taxation (estimated) 2 2,971 2,880 6,976
Profit for the period
attributable to shareholders 9,948 9,598 22,577
Proposed dividend 4,272 2,640 8,376
Retained profit for group and its
share of joint ventures
and associates 5,676 6,958 14,201
Basic earnings per share 3 20.9p 20.2p 47.4p
Diluted earnings per share 3 20.8p 20.1p 47.3p
Underlying earnings per share 3 20.9p 20.2p 47.4p
Dividend per share 9.0p 5.6p 17.6p
There were no discontinued
operations during the period.
The results of the business
acquired during the period are
not material.
Unaudited Unaudited Audited
6 months 6 months Year
to to to
30.6.00 30.6.99 31.12.99
#000 #000 #000
Statement of Total Recognised
Gains and Losses
Profit for the period 9,948 9,598 22,577
Gain on disposal of shares within
the
Employee Share Option Plan 22 2 5
Currency translation differences
on foreign currency net investments 9 (7) (74)
Total recognised gains and losses
relating to the period 9,979 9,593 22,508
Prior year adjustment - FRS 12 - 2,943 2,943
Total gains and losses recognised
since 1st January 2000 9,979 12,536 25,451
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
at at At
30.6.00 30.6.99 31.12.99
#000 #000 #000
Fixed assets
Tangible assets 225,552 209,507 213,099
Investments in joint ventures:
-------- ---------- ----------
Share of gross assets 23,013 11,294 15,894
Share of gross liabilities 17,166 11,316 10,096
--------- ---------- ----------
5,847 (22) 5,798
Investments in associates and 3,878 2,823 3,568
own shares held (ESOP)
235,277 212,308 222,465
Current assets
Stocks and work in progress 13,343 8,560 6,706
Debtors 37,791 35,956 32,375
Cash at bank and on deposit 4,838 2,602 3,123
55,972 47,118 42,204
Creditors: amounts falling due
within one year 35,131 36,859 32,246
Net current assets 20,841 10,259 9,958
Total assets less current
liabilities 256,118 222,567 232,423
Creditors: amounts falling due
after more than one year 81,258 61,230 63,115
Provisions for liabilities and
charges 3,359 2,532 3,393
Deferred income 5,669 5,870 5,790
Net assets 165,832 152,935 160,125
Equity shareholders' funds 165,832 152,935 160,125
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months year
to 30.6.00 to 30.6.99 to 31.12.99
#000 #000 #000
Net cash inflow from operating 16,510 14,858 48,886
activities
Dividend received from associated
company 115 - -
Returns on investments and
servicing of finance
Interest received 247 171 468
Interest paid (2,545) (2,093) (4,181)
Interest element of finance lease
rentals (27) (4) (93)
Net cash outflow from returns on
investments and servicing of
finance (2,325) (1,926) (3,806)
Taxation
UK tax paid (1,886) (1,426) (8,474)
Acquisitions
Purchase of subsidiary undertakings (231) - -
Cash acquired with subsidiary
undertakings 468 - -
Net cash inflow from acquisitions 237 - -
Capital expenditure and investing
activities
Purchase of tangible fixed assets (17,069) (15,056) (26,652)
Sale of tangible fixed assets 1 904 2,009
Investment in associated companies (10) - (10,047)
Sale of fixed asset investments 46 3 6
Loan to joint venture company (4,600) - (1,500)
Net cash outflow for capital
expenditure
and investing activities (21,632) (14,149) (36,184)
Equity dividends paid (5,711) (5,236) (7,895)
Cash outflow before financing (14,692) (7,879) (7,473)
Financing
Issue of ordinary shares less - 22 33
expenses
Net new loans/increase in
utilisation of revolving credit
facility 18,000 9,000 57,500
Net repayment of loans - (1,000) (49,000)
Loan notes repaid (1,482) (2,080) (2,263)
Principal payments under finance (111) (15) (228)
leases
Net cash inflow from financing 16,407 5,927 6,042
Increase/(decrease) in cash 1,715 (1,952) (1,431)
Reconciliation to net debt
Net debt at 1st January (65,262) (57,822) (57,822)
Increase/(decrease) in cash 1,715 (1,952) (1,431)
Movement in borrowings (16,407) (5,905) (6,009)
Net debt at period end (79,954) (65,679) (65,262)
CONSOLIDATED CASH FLOW STATEMENT
Reconciliation of Operating Profit to
Net Cash Inflow from Operating Activities
Unaudited Unaudited Audited
6 months 6 months Year
to 30.6.00 to 30.6.99 to 31.12.99
#000 #000 #000
Operating profit 14,316 13,505 31,344
Depreciation on tangible fixed
assets 3,777 3,987 7,267
Unrealised profit eliminations - - 4,278
Loss on disposal of tangible fixed
assets 1 10 4
Gain on disposal of fixed asset
investments (22) (2) (5)
Release of deferred income - grants (121) (188) (268)
Goodwill written off on investments 6 - 1
(Increase)/decrease in stock and
WIP (6,239) 1,123 2,977
(Increase)/decrease in amounts owed
by joint ventures and associated
undertakings (194) - 4,054
Increase in other debtors
categories (620) (4,273) (3,238)
Increase in creditors 5,640 757 2,456
(Decrease)/increase in provisions (34) (61) 16
Net cash inflow from operating
activities 16,510 14,858 48,886
Analysis of Changes in Net Debt
Other
Cash non-cash
At 1.1.00 flow changes At 30.6.00
#000 #000 #000 #000
Cash at bank and on
deposit 3,123 1,715 - 4,838
Debt due within one
year (5,042) 1,482 250 (3,310)
Debt due outwith one
year (62,500) (18,000) (250) (80,750)
Finance leases (843) 111 - (732)
Total net debt (65,262) (14,692) - (79,954)
The #250,000 change represents the revised repayment date for the ESOP loan
facility.
NOTES:
1. The analysis by class of business of the Group's turnover, profit before
taxation and net assets is set out below:
Unaudited Unaudited Audited
6 months 6 months year
to 30.6.00 to 30.6.99 to
31.12.99
#000 #000 #000
Turnover
Port operations 49,914 47,679 98,123
Investment property and
property development
- group 982 4,248 10,227
- joint ventures 266 148 385
51,162 52,075 108,735
Profit on ordinary activities
before taxation
Port operations 14,664 13,037 28,556
Investment property and
property development
- group 514 1,485 4,785
- joint ventures 204 95 266
15,382 14,617 33,607
Net interest 2,463 2,139 4,054
12,919 12,478 29,553
Net assets
Port operations 223,665 197,351 204,958
Investment property and
property development
- group 16,274 21,285 14,631
- joint ventures 11,504 3,991 10,143
251,443 222,627 229,732
Net interest bearing
liabilities
- group (79,954) (65,679) (65,262)
- joint ventures (5,657) (4,013) (4,345)
165,832 152,935 160,125
Turnover is principally generated in the UK.
2. An effective taxation rate of 23% (1999 - 23%) has been applied in
accordance with current accounting standards to reflect tax losses brought
forward in Port of Tilbury (London) Limited.
3. The basic and underlying earnings per share calculations are based on the
weighted average of Ordinary Shares in issue in the six months ended 30th
June 2000 of 47.61 million (1999 - 47.60 million). The diluted earnings
per share figure is based on the weighted average of Ordinary Shares in
issue adjusted for potential dilutive Ordinary Shares in the six months
ended 30th June 2000 of 47.71 million (1999 - 47.73 million).
4. The property assets of the Group (excluding operational land and buildings
and other land and buildings currently tenanted) were valued as at 1st
August 2000 by DTZ Debenham Tie Leung. The open market value ascribed to
the development and investment property assets amounted to #150m compared
with a cost or net book value in the Balance Sheet at 30th June 2000 of
#57m. DTZ also carried out a "calculation of worth" which amounted to
#205m. This latter calculation is an estimate of the net monetary worth of
the benefits and costs of ownership of the properties to the Company.
NOTES:
5. The financial information contained in this statement does not comprise
statutory accounts within the meaning of the phrase as referred to in
Section 240 of the Companies Act 1985. Full accounts for the year ended
31st December 1999 on which the auditors gave an unqualified report have
been filed with the Registrar of Companies.
The principal accounting policies as set out in pages 31-32 of the accounts
for the year ended 31st December 1999 are unchanged.
The figures for the six months ended 30th June 2000 and 1999 have not been
reviewed by the auditors.
6. The interim statement will be posted to shareholders on 14th September
2000.
Copies will be available from the Company's registered office, Forth Ports
PLC, Tower Place, Leith, Edinburgh EH6 7DB.
APPENDIX A
SUPPORTING INFORMATION FOR THE DTZ VALUATION AND CALCULATION OF WORTH
Instructions
DTZ Debenham Tie Leung ("DTZ") have undertaken their Open Market Valuations
("OMV") and Calculations of Worth ("CoW") as defined in the appropriate
section of the Practice Statements ("PS") and Guidance Notes contained
within the Appraisal and Valuation Manual issued by the Royal Institution
of Chartered Surveyors (the "Manual") and have been undertaken by valuers,
acting as external valuers qualified for the purposes of providing OMV's
and CoW's. Their formal report has been signed by Mr Paul Wolfenden FRICS
Director of DTZ Debenham Tie Leung.
In the context of the OMV calculation, DTZ consider it relevant to have
undertaken a CoW to indicate the potential for development inherent in many
of the properties within the portfolio, which OMV is unable to reflect
fully. The CoW basis of assessment is considered by DTZ to be
complementary to OMV, but it is not and should not be regarded as an
opinion of value.
DTZ have not made any adjustments to reflect any liability to taxation that
may arise on disposal of the properties, or for any costs associated with
such disposal incurred by the Company. No allowance has been made to
reflect any liability to repay any government or other grants or taxation
allowances that may arise on disposal.
Report
The Company has received DTZ's report dated 1st August, 2000 which
incorporates the detailed assumptions adopted in arriving at their opinions
of value and calculations of worth.
Definitions
DTZ have adopted the following definitions contained within the Manual.
Calculation of Worth (CoW)
The CoW "means the provision of a written estimate of the net monetary
worth at a stated date of the benefits and costs of ownership of a
specified interest in property to the instructing party reflecting the
purpose(s)specified by that party". DTZ's approach combines their best
estimates relating to the likelihood and timing of the development
potential with discounting in terms of anticipated cash flow.
Open Market Value (OMV)
DTZ have undertaken their valuations on the basis of open market value in
accordance with Practice Statement 4.2.1. Under these provisions the term
"open market value" means:-
"an opinion of the best price at which the sale of an interest in property
would have been completed unconditionally for cash consideration on the
date of valuation, assuming:
(a) a willing seller;
(b) that, prior to the date of valuation, there had been a reasonable
period (having regard to the nature of the property and the state of
the market) for the proper marketing of the interest, for the
agreement of the price and terms and for the completion of the sale;
(c) that the state of the market, level of values and other circumstances
were, on any earlier assumed date of exchange of contracts, the same
as on the date of valuation;
(d) that no account is taken of any additional bid by a prospective
purchaser with a special interest; and
(e) that both parties to the transaction had acted knowledgeably,
prudently and without compulsion."
DTZ have made a deduction of 5.75% to reflect purchasers' normal
acquisition costs.
Calculation of Worth - Methodology
In summary the CoW is the net figure produced by appraising the cashflow
from a development project when completed and leased and deducting the cost
of carrying out that project. DTZ's CoW has estimated future values and
future costs incorporating forecasted growth and inflation rates during the
project period. The figure is then discounted back to the date of
assessment in recognition of the time cost of money.
It is acknowledged that calculations of this nature are guides. A
variation of assumptions will result in a significant range of figures.
The calculations assessed by DTZ are based on assumptions that they
consider reasonable based on their knowledge of the properties, the
information provided and in the context of the individual development
proposals.
DTZ's capital values and rental growth assumptions are based upon their
forecast of each property's future performance in its own market. In this
respect however, it should be noted that capital values and rental levels
can fall as well as rise and that past performance is no guide to future
growth.
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