RNS Number:4736K
International Real Estate Plc
29 April 2003
International Real Estate Plc
PRELIMINARY RESULTS
International Real Estate Plc, ("IRE" or "the Company"), has today announced its
preliminary results for the year ended 31 December 2002.
The main financial highlights include:
* Profits on ordinary activities before taxation of Euro849,000 (2001:
Euro5,768,000)
* Audited Net asset value (NAV) as reported at 31 December 2002 of Euro2.62 per
share (2001: Euro2.69 per share)
* Unrecognised trading stock value adds approximately Euro1.50 per share to the
NAV gross before tax (2001: Euro1.38 per share) or Euro0.98 net of taxes at an
assumed net average rate of 35% (2001: Euro0.90)
* Total NAV gross before tax of Euro4.07 per share (2001: Euro4.07 per share) or
Euro3.56 net of taxes (2001: Euro3.59)
* Proposed final dividend of 3.00 pence or Euro0.05 per share, making a total
for the year of 6.00 pence or Euro0.10 per share (2001: total dividend of 10.00
pence or Euro0.16 per share)
* Earnings per share Euro0.01 or 0.67p per share (2001: Euro0.57 per or 35.43p
share).
Commenting on the results, Rolf L Nordstrom, Chairman, said:
" This has been a year of consolidation for IRE. No major disposals during the
period has meant that our results have not been flattered by the strong profits
on disposals realised last year. However, we have benefited from the underlying
rental stream integral to our portfolio.
We strongly believe that even if 2003 proves to be a tougher year for the
Brussels property market we will be able to improve cash flow and thus property
values. Our strategy of developing a European focus has proved timely. The
market conditions in Belgium, relative to most other European property markets,
remain promising and we have positioned the Company well in this market place.
However, we continue to examine the overall structure of the Group and we are
looking forward to a challenging year.
Although the litigation with Oaktree continues, we are encouraged by the
positive legal advice received and that the Petition for leave to appeal to the
House of Lords has now been granted ."
Daniel Akselson, CEO, commented:
" We are now effectively entirely invested in the Benelux property market.
Despite the tougher market conditions during the year we have been able to
increase rental levels at our flagship property, the IT Tower, and let the
remaining floor at the QPT Tower. Following the year-end we have disposed of our
Aartselaar warehouse and office building for a small profit. Net of debt, the
disposal has generated around Euro5.5m of cash for IRE. Additionally, our rolling
refurbishment of the IT Tower continues to add value to this prestigious site."
Date: 29 April 2003
For further details contact:
International Real Estate Plc City Profile Group
Tel: 00 44 (0) 20 7839 8686 Ed Senior
Rolf L Nordstrom, Chairman Simon Coutenay
Mobile: 00 44 (0) 7776 137 400 Tel: 00 44 (0) 20 7448 3244
Daniel Akselson, Chief Executive e-mail: edward.senior@city-profile.com
Mobile: 00 31 (0)653 30 4590
e-mail:info@IREplc.com
Chairman's Statement
CRITERION PROPERTIES PLC
31 December 2000The Annual Report and Accounts to 31 December 2002 show the
refocused Group with its main operations located in Belgium. The comparative
period for 2001 included the profits from the disposal of the majority of the UK
property portfolio.
To better reflect the activities of the Company the Shareholders decided, at the
AGM, on 30 May 2002 a change of name to INTERNATIONAL REAL ESTATE PLC.
As previously reported we converted into Euro (Euro) accounting from 2001. This has
simplified accounting and better reflects the Group's functional currency. The
share price and dividend continue to be expressed in Pounds Sterling.
Financial Highlights
The main financial highlights for the year ended 31 December 2002 (the year
ended
31 December 2001 within brackets) include:
* Profits on ordinary activities before taxation of Euro849,000 (2001:
Euro5,768,000).
* Audited Net asset value (NAV) as reported at 31 December 2002 Euro2.62 per
share (2001: Euro2.69 per share).
* Unrecognised trading stock value adds approximately Euro1.50 per share to the
NAV gross before tax (Euro1.38 per share) or Euro0.98 net of taxes at an assumed
net average rate of 35% (2001: Euro0.90).
* Total NAV gross before tax of Euro4.07 per share (Euro4.07 per share) or Euro3.56
net of taxes (2001: Euro3.59).
* Proposed final dividend of 3.00 pence or Euro0.05 per share, making a total
for the year of 6.00 pence or Euro0.10 per share (2001: total dividend of 10.00
pence or Euro0.16 per share)
* Earnings per share Euro0.01 or 0.67p per share (2001: Euro0.57 per or 35.43p
share).
The Group's result this year includes exceptional charges of Euro141,000 relating
to the litigation with Oaktree (an update on this litigation is included later
under Corporate matters), and Euro139,000 provided for the Company's share of the
diminution in value of the Limited Partnership property, Mobius House,
Basingstoke.
Comparative figures for the year ended 31 December 2001 included exceptional
costs amounting to Euro469,000 and a Euro1,163,000 provision for the Company's share
of the diminution in value of the Limited Partnership property.
Property portfolio
The remaining UK property investment consists of a 25% interest in the Limited
Partnership which owns Mobius House, Basingstoke.
As previously reported, the sole tenant in this property, Dolphin
Telecommunication Services Limited, went into administration on 1 August 2001
and vacant possession was obtained on 22 March 2002. The Limited Partnership
generated income through an insurance policy covering one year's loss of rent
from July 2001 to June 2002.
The Limited Partnership is actively working on re-letting or selling the
property. The market is weak due to oversupply of new developments and
refurbished properties in the Basingstoke area. In the meantime the Limited
Partnership is evaluating various refurbishment alternatives. An external
valuation at 31 December 2002 resulted in a further diminution in the value of
the Company's 25% interest in the Limited Partnership which has been written
down from Euro1,226,000 to Euro1,017,000 to reflect the reduction in the underlying
property value.
During 2002 the main activities of the Group related to the IT Tower and the QPT
Tower office blocks in Brussels and the Aartselaar warehouse property in
Antwerp.
Although the Brussels market has held up better than most European property
markets, the slowdown in economic activity had some negative influence on the
letting market.
At the IT Tower, a 22,778 square metre landmark office building prominently
located on Avenue Louise at the corner of Avenue de Mot, we focused on the
letting situation, the rolling refurbishment programme and the improvement
programme for the communal areas. The combination of the refurbishment programme
during the latter part of 2002 and the economic climate during the year resulted
in a lower level of lettings than we originally forecast. However, of the three
floors taken back for refurbishment, one is fully let at an increased rent level
whilst the other two remaining floors are subject to active negotiation. So far
during 2003, a total of 2,032 square metres has been let at rental levels
between Euro180 and Euro190 per square metre, which is higher than the average level
realised during 2002. Some agreements are for areas that are not yet available
as they are let to other tenants or require a fit out. The full effect of these
lettings is unlikely to be realised until January 2004. In April 2003 the
letting situation for the tower portion of the building was 82.0%, including
pre-let areas. Fully let, the building is estimated to produce an income of
approximately Euro4.41 million, equating to a gross yield of 9.8% on cost including
refurbishments. The refurbishment programme for the communal areas including the
entrance, lobby, lifts and parking garage has progressed according to plan and
budget.
The 11,255 square metre QPT Tower, located at Quai aux Pierres de Taille in
central Brussels, is fully let to high quality tenants with the average length
of leases approximately five years. On 3 July 2002 we sold to the Brussels
Municipality 214 square metres of land (out of the total of 2,792 square metres)
following an expropriation procedure, resulting in a pre tax profit of Euro205,000.
The property produces an income of approximately Euro1.07 million and a gross yield
of 11.3% on cost.
Our third Belgian property, the 36,288 square metre warehouse and office
building in Aartselaar near Antwerp was sold in April 2003 via the disposal of a
company with an attributable value for the property of Euro11.975m. This
transaction will be accounted for in 2003, and resulted in a small profit. The
Company sold its property in Aartselaar to strengthen its liquidity. However
this will also cause a significant reduction in gross rental income going
forward.
Corporate matters
In my last two Chairman's statements, I have reported on the legal situation
relating to the dismissal of Mr Aubrey Glaser as Managing Director on 3 April
2001, and the litigation with Stratford UK Properties LLC ('Oaktree').
A full explanation of the ongoing litigation with Mr. Aubrey Glaser and Oaktree
is included in Note (i) Contingent Liabilities.
The Company applied for Summary Judgment at a hearing on 13 and 14 March 2002,
and on 27 March 2002 Mr. Justice Hart found in favour of the Company and made a
declaration that the Agreement was unenforceable against it.
Oaktree was subsequently successful in its appeal against this decision, with
the result that the case may proceed to trial. The Company challenged the Appeal
Court decision, and a petition for leave to appeal to the House of Lords has now
been granted.
On the basis of the legal advice it has received, the Board of Directors
continues to believe that the Company is unlikely to incur a material loss as a
result of the Agreement and therefore no provision has been included in the
accounts for this contingent liability, but the matter will be kept under
review.
We will continue to focus our attention on the future of the Company and upon
delivering returns from our property assets in Europe. However, 2002 has been a
difficult year for the property markets, and 2003 is unlikely to show much
improvement.
Pending a change in legislation we intend to start publishing and distributing
our annual accounts and interim statements on the internet (www.IREplc.com) in
order to speed up distribution and to reduce costs.
Taxation
The adoption of FRS19, with full provision for deferred tax combined with the
impact of unrelieved UK head office costs, resulted in a tax charge in profit
and loss terms of 88% of net profits. Clearly this is not sustainable in the
long term and we are examining various alternatives.
Cash and Borrowings
Net borrowings at 31 December 2002 of Euro43.885m compared with Euro40.879m at 31
December 2001. The increase reflected the investment programme in our trading
properties of Euro3.72m and this in turn has contributed to the increase in value
of our property portfolio. The year end cash position of Euro2.806m will improve
substantially as a result of the sale of Aartselaar.
Directors and Staff
I would like to take this opportunity to thank my fellow Directors, staff and
advisors for their hard work and dedication during the year helping us to
further develop the Company.
Dividend
The Board considered the results for the year in light of the uncertain economic
climate and the outstanding litigation. In the circumstances your Board proposes
to pay a final dividend of 3 pence per share (Euro0.05) partly payable from revenue
reserves on 21 June 2003 to shareholders on the register on 23 May 2003. An
interim dividend of 3 pence (Euro0.05) was paid on 18 October 2002 making a total
for the year of 6 pence per share (Euro0.10) compared with 10 pence (Euro0.16) for the
previous year, which reflected the unusually high level of realisations in that
year.
The Board continues to be concerned at the share price discount to net asset
value. The possibilities of a limited share buy back programme continue to be
explored together with further property disposals.
Prospects
The prospects for International Real Estate remain uncertain. Despite the
tougher market conditions during the year we have been able to increase rental
levels in the IT Tower and let the remaining floor at the QPT Tower. Even if
2003 proves to be a tougher year for the Brussels market, we believe that we
will be able to improve cash flow and thus property values. However we continue
to examine the overall structure of the Group.
Although the litigation with Oaktree continues we are encouraged by the positive
legal advice received concerning the likely final outcome. The market conditions
in Belgium, relative to most other European property markets, remain promising
and we have positioned the Company well in this market place. We are looking
forward to a challenging year.
Rolf L Nordstrom, Chairman
29 April 2003
INTERNATIONAL REAL ESTATE PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2002
Note 2002 2001
Euro'000 Euro'000
As restated*
TURNOVER
Net rental income 5,133 4,733
Property sales 285 37,811
________ ________
(a) 5,418 42,544
Cost of sales (80) (28,607)
________ ________
GROSS PROFIT 5,338 13,937
Exceptional charges - Litigation (b) (141) (469)
Exceptional charges - Other (b) - (740)
Impairment in value of investment property (b) (139) (1,163)
Other administrative expenses (1,959) (1,926)
________ ________
TOTAL ADMINISTRATIVE EXPENSES (2,239) (4,298)
Other operating income 58 -
________ ________
OPERATING PROFIT 3,157 9,639
Impairment of fixed asset investments - (457)
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST 3,157 9,182
AND TAXATION
Interest receivable and similar income 299 492
Interest payable and similar charges (2,355) (2,467)
Exceptional finance costs (c) (252) (1,439)
________ ________
TOTAL INTEREST PAYABLE (2,607) (3,906)
________ ________
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 849 5,768
Tax on profit on ordinary activities (d) (752) (1,581)
________ ________
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION
AND PROFIT FOR THE FINANCIAL YEAR
97 4,187
Equity dividends (f) (697) (1,160)
________ ________
Retained profit for the financial year (600) 3,027
________ ________
Basic and diluted earnings per share (e) Euro0.01 Euro0.57
________ ________
The results for the above years reflect the continuing operations of the Group.
*The comparative figures for the year ended 31 December 2001 have been restated
to reflect the introduction of FRS19 "Deferred Taxation".
INTERNATIONAL REAL ESTATE PLC
CONSOLIDATED BALANCE SHEET
As at 31 December 2002
Note 2002 2001
Euro'000 Euro'000
As restated*
FIXED ASSETS
Investment properties (g) 1,017 1,226
Other tangible assets 37 90
Investments 2 20
________ ________
1,056 1,336
CURRENT ASSETS
Stock - trading properties 65,746 62,026
Debtors 1,426 2,064
Cash at bank and in hand 2,806 7,234
________ ________
69,978 71,324
CURRENT LIABILITIES
CREDITORS: amounts falling due within one
year
- Borrowings (1,234) (725)
- Other (4,281) (4,482)
________ ________
(5,515) (5,207)
NET CURRENT ASSETS 64,463 66,117
________ ________
TOTAL ASSETS LESS CURRENT LIABILITIES 65,519 67,453
CREDITORS: amounts falling due after more
than one year
- Borrowings (45,457) (47,388)
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation (816) (219)
________ ________
19,246 19,846
________ ________
CAPITAL AND RESERVES
Called up share capital 4,683 4,683
Share premium account 7,957 7,957
Capital redemption reserve 291 291
Profit and loss account 6,315 6,915
________ ________
EQUITY SHAREHOLDERS' FUNDS 19,246 19,846
________ ________
*The comparative figures for the year ended 31 December 2001 have been restated
to reflect the introduction of FRS19 "Deferred Taxation".
INTERNATIONAL REAL ESTATE PLC
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 2002
2002 2001
Euro'000 Euro'000
As restated
Profit for the financial year 97 4,187
Impairment of investment properties charged to revaluation reserve - (150)
________ ________
Total recognised gains and losses relating to the year 97 4,037
________
Prior year adjustment (127)
________
Total gains and losses recognised since the last annual report (30)
________
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 December 2002
2002 2001
Euro'000 Euro'000
As restated
Profit for the financial year 97 4,187
Dividends (697) (1,160)
________ ________
(600) 3,027
Impairment of investment properties charged to revaluation reserve - (150)
________ ________
Net (reduction in)/addition to Shareholders' funds (600) 2,877
Opening Shareholders' Funds as previously reported 19,973 16,969
Prior year adjustment (127) -
________ ________
Opening Shareholders' Funds as restated 19,846 16,969
Closing Shareholders' Funds 19,246 19,846
________ ________
INTERNATIONAL REAL ESTATE PLC
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2002
2002 2002 2001 2001
Euro'000 Euro'000 Euro'000 Euro'000
Net cash inflow/(outflow) from operating activities 936 (6,127)
Returns on investments and servicing of finance
Interest paid (2,272) (3,263)
Interest received 299 492
________ ________
(1,973) (2,771)
Taxation paid (707) (832)
Capital expenditure and financial investment
Purchase of and additions to investment properties - (3)
Disposal of investment properties - 10,645
Purchase of other tangible fixed assets (14) (13)
________ ________
(14) 10,629
Equity dividends paid (1,196) (829)
________ ________
Cash (outflow)/inflow before financing (2,954) 70
Financing
New loans drawn down - 40,648
Repayment of amounts borrowed (1,322) (35,800)
________ ________
(1,322) 4,848
________ ________
(Decrease)/increase in cash (4,276) 4,918
________ ________
NOTES TO THE ACCOUNTS
for the year ended 31 December 2002
(a) Segmental analysis
31 December 2002 31 December 2001
as restated
Operating Operating
Turnover (loss)/ profit Net assets Turnover profit Net assets
United Kingdom Euro'000 Euro'000 Euro'000 Euro'000 Euro'000 Euro'000
Investment 136 (136) 98 169 (2,711) (363)
Trading (26) (1,519) 154 38,187 9,681 3,747
________ ________ ________ ________ ________ ________
110 (1,655) 252 38,356 6,970 3,384
________ ________ ________ ________ ________ ________
Continental Europe
Trading 5,308 4,812 18,994 4,188 2,669 16,462
________ ________ ________ ________ ________ ________
5,418 3,157 19,246 42,544 9,639 19,846
________ ________ ________ ________ ________ ________
(b) Exceptional charges
2002 2001
Euro'000 Euro'000
Other litigation and related exceptional costs 141 469
Costs associated with the divestment of properties from the UK market - 740
Provision for impairment in value of investment properties 139 1,163
________ ________
280 2,372
________ ________
The provision for impairment in value of investment properties was included
below operating profit in the 2001 financial statements. The Directors have
reclassified it as a charge to operating profit in the comparatives above as
they believe this gives a fairer presentation.
(c) Exceptional finance costs
2002 2001
Euro'000 Euro'000
Loan breakage costs - 402
Other finance costs associated with the divestment from the UK market - 500
Interest rate floor breakage costs 252 537
________ ________
252 1,439
________ ________
(d) Tax on profit on ordinary activities
2002 2001
Euro'000 Euro'000
As restated
The tax charge on the profit on ordinary activities for the year was as follows:
UK corporation tax at 30% (2001 - 30%) - (1,762)
Adjustment in respect of prior year (150) 308
________ ________
Current tax charge (150) (1,454)
Deferred taxation: timing difference (636) (127)
Deferred taxation: decrease in tax rate 34 -
________ ________
(752) (1,581)
________ ________
(e) Earnings per share
2002 2001
As restated
Earnings per share are calculated as follows:
Profit for the year Euro96,706 Euro4,186,915
Weighted average number of shares in issue 7,357,446 7,357,446
________ ________
Basic and diluted earnings per share Euro0.01 Euro0.57
________ ________
(f) Equity dividends
2002 2001
Euro'000 Euro'000
Interim paid of Euro0.05 (3.0p) per share (31 December 2001 - Euro0.05 (3.0p)) 354 343
Proposed final dividend of Euro0.05 (3.0p) per share (31 December 2001 - Euro0.11 (7.0p)) 343 817
________ ________
697 1,160
________ ________
(g) Investment properties
Long
leasehold
Euro'000
Valuation at 1 January 2002 1,226
Foreign exchange translation difference (70)
Impairment (139)
________
At 31 December 2002 1,017
________
This property is held through an investment in a joint arrangement and the
carrying value at 31 December 2002 represents the Company's share of the
investment property.
This property, with a value of Euro4,068,000 (2001 - Euro4,904,000) was valued by FPD
Savills, Chartered Surveyors, (2001 - Jones Lang La Salle, Chartered Surveyors)
in accordance with the requirements of the Royal Institution of Chartered
Surveyors, on 31 December 2002, on the basis of market value. The Group's share
of this was Euro1,017,000 (2001 - Euro1,226,000).
(h) Borrowings
31 December 31 December
2001
2002
Euro'000 Euro'000
Falling due within one year
Bank loans and overdrafts 1,234 725
________ ________
Falling due after more than one year
Bank and other loans
- repayable between one and two years 1,440 2,881
- repayable between two and five years 5,264 4,966
- repayable other than by instalments in five years or more 31,490 31,853
- repayable by instalments in five years or more 7,263 7,688
________ ________
45,457 47,388
________ ________
Total borrowings 46,691 48,113
________ ________
Bank and other loans are secured by legal mortgages over the investment
properties and trading properties.
(i) Contingent liabilities
By a circular dated 11 February 1998, the Company announced its entry into a
limited partnership with Stratford UK Properties LLC ('Oaktree'), an entity
owned by Oaktree Capital Management LLC, which is based in the United States of
America. On 30 March 2000 a Supplementary Agreement ('Agreement') was entered
into with Oaktree, purporting to vary the terms of the partnership. It was
executed on behalf of the Company by the then Managing Director, Aubrey Glaser,
and the then Company Secretary. The Agreement purported to give Oaktree the
right (inter alia) to require the Company to buy out Oaktree's share of the
partnership on terms highly beneficial to Oaktree in the event of a change of
control of the Company or the departure or non involvement in management of the
Chairman (who had no knowledge of the Agreement) or Aubrey Glaser.
In June 2001 Oaktree purported to invoke the terms of the Agreement requiring
the Company to buy out Oaktree's share on the basis set out above, which on
current estimates would cost the Company approximately Euro12 million, increasing
annually at a rate of 25% compounded monthly.
The Company claims the Agreement is unenforceable and accordingly on 10 July
2001 issued proceedings in the High Court for an order that the Agreement be set
aside. On the Company's application for summary judgment Mr Justice Hart found
in favour of the Company and made a declaration that the Agreement was
unenforceable against it. The decision was reversed by the Court of Appeal, but
the House of Lords has now granted leave to appeal. On the basis of the legal
advice it has received, the Board of Directors continues to believe that the
Company is unlikely to incur a material loss as a result of the Agreement and
therefore no provision has been included in the accounts for this contingent
liability, but the matter will be kept under review.
In September 2001 the Company received a claim from Mr Glaser for compensation
for loss of office totalling Euro430,000 (#280,000). The Company is vigorously
defending this claim and having regard to the legal advice received by the
Company, no provision has been included in the accounts for this contingent
liability.
(j) Accounting Policies
The financial information set out in this announcement has been prepared on the
basis of the accounting policies stated in the statutory accounts for 31
December 2001, except for the adoption of FRS19 "Deferred Taxation" whereby
prior year balances have been restated.
(k) Financial information
The financial information set out in this announcement does not constitute the
company's statutory accounts for the years ended 31 December 2002 or 2001, but
is derived from those accounts. Statutory accounts for the year ended 31
December 2001 have been delivered to the Registrar of Companies and those for
the year ended 31 December 2002 will be delivered following the company's annual
general meeting. The auditors reported on these accounts; their reports were
unqualified and did not contain a statement under s237(2) or (3) Companies Act
1985
(l) AGM
The Company will hold its AGM at 12.00 pm on 13 June 2003 at the offices of The
City Law Partnership, 99 Charterhouse Street, London EC1M 6NQ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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