RNS Number:9612F
Capital & Regional Properties PLC
22 February 2000
PART TWO
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 25 December 1999
Unaudited
1. Accounting policies
The financial statements have been prepared in accordance with applicable UK
accounting standards and, except for the non-depreciation of investment
properties and the treatment of grants referred to below, with the Companies
Act 1985. The financial statements have been prepared under the historical
cost convention, as modified by the revaluation of properties and investments,
using the following principal accounting policies, which have been applied
consistently:
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
Capital and Regional Properties plc and its consolidated entities and
associated companies and joint ventures for the year ended 25 December 1999.
Where necessary, the financial statements of subsidiaries are adjusted to
conform with the Group's accounting policies. Subsidiaries have been
consolidated under the acquisition method of accounting and the results of
companies acquired during the year are included from the date of acquisition.
Goodwill on consolidation represents the difference between the purchase
consideration and the fair value of net assets acquired and is capitalised in
the year in which it arises and is amortised over its useful economic life.
Joint ventures, associates and joint arrangements
In accordance with Financial Reporting Standard No.9, joint ventures are
included in the accounts under the gross equity method of accounting, and
associates under the net equity method. Where the Group has entered into a
joint arrangement with a third party where no separate entity exists, the
Group includes its proportion of assets, liabilities, income and expenditure
within the Group figures. Where necessary the financial statements of
associates and joint ventures are adjusted to conform with the Group's
accounting policies.
Foreign currency
Balances in foreign undertakings and the results for the year are translated
into sterling at the rate of exchange ruling at the balance sheet date of US
$1.62 to the # (1998: US $1.67 to the #).
Exchange differences, which arise from the translation of the share capital
and reserves of foreign subsidiaries, are taken to reserves.
Foreign currency transactions of UK companies are translated at the rates
ruling when they occurred. Their foreign currency monetary assets and
liabilities are translated at the rate ruling at the balance sheet date. Any
differences are taken to the profit and loss account.
Depreciation
Depreciation is provided on all tangible fixed assets, other than investment
properties, over their expected useful lives:
Land and buildings - over fifty years, on a straight line basis.
Fixtures and fittings - over three to five years, on a straight line basis.
Motor vehicles - over four years, on a straight line basis.
Investment properties
Investment properties are included in the financial statements at valuation.
The aggregate surplus or temporary deficit below cost arising from such
valuations is transferred to a revaluation reserve. Deficits that are
expected to be permanent are charged to the profit and loss account.
The Group's policy is to value investment properties twice a year. On
realisation any gain or loss is calculated by reference to the carrying value
at the last financial year end balance sheet date and is included in the
profit and loss account. Any balance in the revaluation reserve is
transferred to the profit and loss account reserve. This represents a change
of accounting policy from the previous year when the Group's policy was to
calculate any gain or loss by reference to the carrying value at the last
valuation. No amendment to the comparative figures is required as a result of
the above change in policy.
In accordance with SSAP19 (Revised) "Accounting for investment properties" no
depreciation or amortisation is provided in respect of freehold investment
properties and leasehold investment properties with over 20 years unexpired.
The Companies Act 1985 requires all properties to be depreciated, but that
requirement conflicts with the generally accepted principle set out in SSAP19
(Revised). Depreciation is only one of many factors reflected in the annual
valuation of properties and the amount of depreciation or amortisation, which
might otherwise have been charged, cannot be separately identified or
quantified.
Properties under development
Interest and directly attributable internal and external costs incurred during
the period of development are capitalised. Interest is capitalised gross
before deduction of related tax relief. A property ceases to be treated as
being under development when substantially all activities that are necessary
to get the property ready for use are complete.
Refurbishment expenditure
Refurbishment expenditure in respect of major works is capitalised.
Renovation and refurbishment expenditure of a revenue nature is written off as
incurred.
Property transactions
Acquisitions and disposals are accounted for at the date of legal completion.
Properties are transferred between categories at the estimated market value on
the transfer date.
Current property assets
Properties held with the intention of disposal and properties held for
development are valued at the lower of cost and net realisable value.
Investments
The investment in shares held in CenterPoint Properties Trust is included in
the financial statements at market value at the balance sheet date translated
at the exchange rate ruling at that date. Investments in other quoted
securities are also stated at market value. The aggregate surplus or
temporary deficit arising from such valuations is transferred to a revaluation
reserve. Deficits that are expected to be permanent are charged to the profit
and loss account.
Loan arrangement costs
Costs relating to the raising of general corporate loan facilities and loan
stock are amortised over the estimated life of the loan and charged to the
profit and loss account as part of the interest expense. The bank loans and
loan stock are disclosed net of unamortised loan issue costs.
Operating leases
Annual rentals under operating leases are charged to the profit and loss
account as incurred.
Deferred taxation
Provision is made for timing differences between the treatment of certain
items for taxation and accounting purposes to the extent that it is probable
that a liability or asset will crystallise.
Pension costs
Pension liabilities, all of which relate to defined contribution schemes, are
charged to the profit and loss account in the year in which they accrue.
Grants
Grants received relating to the construction or redevelopment of investment
properties have been deducted from the cost of the property. The Companies
Act 1985 requires assets to be shown at their purchase price or construction
cost and hence grants to be presented as deferred income. The departure from
the requirements of the Act is, in the opinion of the directors, not material
to the financial statements.
2. Segmental analysis
Turnover, profit on ordinary activities before taxation and net assets are
attributable to property investment, development and management. Turnover,
profit on ordinary activities before taxation and operations arise in the UK
except #1,184,000 (1998: #1,070,000) of income from listed investments which
originates from the US. Net assets adjusted for minority interests
originating from the US are #21,120,000 (1998: #20,445,000).
3. Property sales
Fixed property Current Total
assets property
assets
1999 1998 1999 1998 1999 1998
#000 #000 #000 #000 #000 #000
Net sale proceeds 16,225 40,371 31,874 7,126 48,099 47,497
Cost of sales (12,805) (39,141) (30,228) (6,609) (43,033) (45,750)
Historical cost profit 3,420 1,230 1,646 517 5,066 1,747
Revaluation surplus (2,136) (1,313) - - (2,136) (1,313)
1,284 (83) 1,646 517 2,930 434
Share of joint
ventures - 45 - - - 45
Profit/(loss)
recognised on sale of
properties 1,284 (38) 1,646 517 2,930 479
4. Interest receivable and similar income
1999 1998
#000 #000
Bank interest 237 233
Interest from joint ventures and associates 348 375
Other interest 119 119
704 727
Share of joint ventures' (see note 12) 12 76
Share of associates' (see note 13) 3 4
719 807
5. Interest payable and similar charges
1999 1998
#000 #000
Bank loans and overdrafts wholly repayable 32,998 23,888
within five years
Other loans 1,757 1,752
34,755 25,640
Capitalised during year (2,033) (856)
32,722 24,784
Share of joint ventures' (see note 12) 251 237
Share of associates' (see note 13) 32 269
33,005 25,290
The interest relating to bank loans, overdrafts and other loans wholly
repayable within five years included #nil (1998: #2,796,000) in respect of
loans repayable by instalments.
The interest charge includes #463,000 (1998: #285,000) of loan arrangement
costs amortised during the year.
6. Taxation
1999 1998
#000 #000
UK corporation tax:
Current period 139 351
Prior periods (19) (130)
Advance corporation tax 188 1
Share of tax of joint ventures (see note 12) 101 125
409 347
The tax liability for the year has been reduced due to the benefit of capital
allowances and the utilisation of losses brought forward.
7. Equity dividends paid and payable
1999 1998
#000 #000
Interim of 2.0p per share paid on 23 August 1999 1,965 1,474
(1998: 1.5p per share) 2,948 2,702
Proposed final of 3.0p per share payable on 12 May
2000 (1998: 2.75p per share)
4,913 4,176
8. Earnings per share
Earnings per share have been calculated on the weighted average number of
Ordinary shares of 10p each in issue during the year 98,258,784 (1998:
91,712,962) and have been based on profit on ordinary activities after
taxation and minority interests of # 12,003,000 (1998: #11,092,000).
Diluted earnings per share have been calculated after allowing for the
exercise of share options which have met the required exercise conditions and
the full conversion of the Convertible Unsecured Loan Stock, if the effect on
earnings per share is dilutive. The weighted average number of Ordinary Shares
of 10p each is 98,611,343 (1998: 92,048,812) and the relevant earnings are
#12,003,000 (1998: #11,092,000).
Earnings per share on revenue activities exclude the profit on the sale of
investment properties and investments, and associated tax charge and minority
interest thereon, of #1,973,000 (1998 loss: #132,000).
9. Property assets
Investment
properties
Properties
Freehold Leasehold under
properties Properties construction Total
Group
#000 #000 #000 #000
Cost or valuation:
At beginning of year 451,595 195,337 7,674 654,606
Additions 94,514 124,928 17,567 237,009
Disposals (14,941) - - (14,941)
Revaluation 26,706 25,478 4,282 56,466
At end of year 557,874 345,743 29,523 933,140
The year end balance is
analysed as follows:
Historical cost 429,667 307,316 22,963 759,946
Revaluation surplus 128,207 38,427 6,560 173,194
A list of the valuers, and the basis of the valuations, are summarised in note
26.
10. Other fixed assets
Long leasehold Fixtures Motor
land and and vehicles Total
buildings fittings #000
#000 #000
#000
Group
Cost or valuation
At beginning of year - 1,349 558 1,907
Additions 13,746 648 79 14,473
Disposals - (776) (67) (843)
Revaluation (596) - (596)
-
At end of year 13,150 1,221 570 14,941
Depreciation
At beginning of year - 820 243 1,063
Provided for year - 340 139 479
Disposals - (628) (46) (674)
At end of year - 532 336 868
Net book values:
At 25 December 1999 13,150 689 234 14,073
At 25 December 1998 - 529 315 844
The long leasehold land and buildings represents the Group's head office,
which was independently valued on 25 December 1999. The long leasehold land
and buildings was purchased on the 17 December 1999, consequently no provision
for depreciation was provided. A list of the valuers, and the basis of the
valuations, are summarised in note 26.
11. Other investments
Investment
in
CenterPoint Other
listed Total
Properties Investments #000
Trust
#000
#000
Valuation
At beginning of year 20,445 1,555 22,000
Disposals - (1,555) (1,555)
Surplus on revaluation (see note 21) 675 675
-
At end of year 21,120 21,120
-
At 25 December 1999, the Group owned 4.9% of the common stock (4.6% on a fully
diluted basis) of CenterPoint Properties Trust, a Maryland real estate
investment trust operating in Chicago, Illinois, USA. The stock is listed on
the New York Stock Exchange.
12. Investment in joint ventures
1999 1998
#000 #000
At beginning of year 2,267 4,457
Subscription for share capital - 725
Amortisation of goodwill arising on - (5)
additions
Disposals - 26
Dividends and capital distributions received (300) (3,526)
Share of results (see below) 310 628
Share of taxation (see below) (101) (125)
Share of property revaluation surplus 46 87
2,222 2,267
12. Investment in joint ventures (continued)
Exchange
Easter Court
Holdings Properties Others Total
Ltd Ltd #000 #000
#000 #000
Group share of results:
Turnover 6,289 325 - 6,614
Operating profit 582 5 7 594
Interest receivable and 7 - 5 12
similar income
Interest payable and (162) (89) - (251)
similar charges
Equity minority (45) - - (45)
interests
Profit before tax 382 (84) 12 310
Taxation (99) - (2) (101)
Profit after tax 283 (84) 10 209
Group share of:
Investment properties 1,325 - 80 1,405
Development properties 2,389 1,764 70 4,223
at cost
Other current assets 2,765 10 247 3,022
Gross assets 6,479 1,774 397 8,650
Current liabilities 3,562 106 105 3,773
Loans 1,805 850 - 2,655
Gross liabilities 5,367 956 105 6,428
Share of net assets 1,112 818 292 2,222
Effective Group share 50% 50% 37.5% to 50%
Potential recourse to Nil Nil Nil
the Group
Actual recourse at end Nil Nil Nil
of year
A list of valuers and the basis of the valuation are summarised in note 26.
The joint ventures all operate in the UK.
13. Investment in associates
1999 1998
#000 #000
At beginning of year 3,446 3,304
Share of results (see below) 71 419
Share of profit on disposal of investment
properties eliminated on consolidation 31 -
Dividends received (714) (660)
Capital distributions received (2,829) -
Investment in associates - 270
Share of property revaluation surplus - 113
At end of year 5 3,446
13. Investment in associates (continued)
Easter Easter
Industrial Runcorn
Partnership Total
Partnership #000
#000
#000
Group share of results:
Turnover 63 47 110
Operating profit 55 45 100
Interest receivable and similar 2 1 3
income
Interest payable and similar (19) (13) (32)
charges
Profit before tax 38 33 71
Taxation - - -
Profit after tax 38 33 71
Group share of:
Other current assets 5 - 5
Gross and net assets 5 - 5
Effective Group share 25% -
The associates both operated in the UK.
The Easter Runcorn Partnership was dissolved during the year.
14. Current property assets
1999 1998
#000 #000
Properties held for disposal 31,178 18,860
Properties under development 3,482 5,552
34,660 24,412
The net book value of current property assets includes #68,000 (1998: #10,000)
in respect of capitalised interest.
15. Debtors
1999 1998
#000 #000
Amounts falling due after more than one year
Amounts owed by joint ventures 4,840 3,914
4,840 3,914
Amounts falling due within one year
Trade debtors 14,988 12,095
Other debtors 6,042 2,712
Tax recoverable 325 461
Prepayments and accrued income 19,034 3,534
40,389 18,802
16. Creditors: amounts falling due within one year
1999 1998
#000 #000
Bank loans (secured) 3,180 396
Trade creditors 5,929 1,397
Other creditors 1,281 2,858
Taxation and social security 1,443 1,271
Corporation tax 475 511
Accruals and deferred income 42,922 24,511
Proposed dividends 2,948 4,176
58,178 35,120
17. Creditors: amounts falling due after more than one year
1999 1998
#000 #000
Bank loans (secured) (see note 18) 574,620 340,439
Convertible loan stock (unsecured) (see note 24,132 24,041
19)
598,752 364,480
18. Bank loans
1999 1998
#000 #000
Aggregate amount repayable:
Between one and two years 65,529 33,838
Between two and five years 487,319 306,601
Greater than five years 21,772 -
Loans due after more than one year 574,620 340,439
Loans due in one year or less or on demand 3,271 487
Total loans 577,891 340,926
Bank loans are secured on properties valued at #944,467,000.
Bank loans are stated net of unamortised issue expenses totalling #458,000
(1998: #499,000).
19. Convertible subordinated unsecured loan stock
1999 1998
#000 #000
Convertible loan stock 24,642 24,642
Unamortised loan issue costs due after one (510) (601)
year
24,132 24,041
Unamortised loan issue costs due within one (91) (91)
year
24,041 23,950
The Convertible Subordinated Unsecured Loan Stock ("CULS") may be converted by
the holders of the stock into 50.37 Ordinary shares per #100 nominal value
CULS in any of the years 1997 to 2015 inclusive, representing a conversion
price of 199p per Ordinary share. The Company has the right to redeem at par
the CULS in any year from 2006 to 2016. The CULS are unsecured and are
subordinated to all other forms of unsecured debt but rank in priority to the
holders of the Ordinary shares in the Company. The CULS carry interest at an
annual rate of 6.75%, payable in arrears on 30 June and 31 December in each
year.
In accordance with Financial Reporting Standard No. 4 " Capital Instruments ",
the CULS are shown net of its unamortised loan issue costs.
20. Called up share capital
Number of shares Nominal value of
issued and fully shares
paid issued and fully
paid
1999 1998 1999 1998
Number Number #000 #000
Ordinary shares of 10p
each 98,255,271 76,399,235 9,826 7,640
At beginning of year
Issued in respect of - 21,828,352 - 2,183
rights issue
Issued on exercise of
share options 10,426 - 1 -
Issued in respect of
profit sharing scheme - 27,684 - 3
At end of year 98,265,697 98,255,271 9,827 9,826
Authorised
1999 1998
Ordinary shares of 10p 150,000,000 150,000,000
each
There have been no changes to the number of shares in issue since the year
end.
From note 20 to be attached and sent separately
CAPITAL AND REGIONAL PROPERTIES PLC - PRELIMINARY RESULTS - 22ND FEBRUARY 2000
20. Called up share capital
Number of shares Nominal value of
issued and fully shares
paid issued and fully
paid
1999 1998 1999 1998
Number Number #000 #000
Ordinary shares of 10p
each 98,255,271 76,399,235 9,826 7,640
At beginning of year
Issued in respect of - 21,828,352 - 2,183
rights issue
Issued on exercise of 10,426 - 1 -
share options
Issued in respect of 3
profit sharing scheme - 27,684 -
At end of year 98,265,697 98,255,271 9,827 9,826
Authorised
1999 1998
Ordinary shares of 10p 150,000,000 150,000,000
each
There have been no changes to the number of shares in issue since the year
end.
21. Reserves
Revaluation Other
reserves reserves
Share Property Investm Capital Profit
premiu ent redemptio and
m revalua revalua n loss
accoun tion tion reserve account
t reserve reserve #000
#000
#000 #000 #000
Group
At beginning of year 161,863 114,903 16,650 591 26,983
Issue of share capital 13 - - - -
Group share of
revaluation of - 54,520 - - -
investment properties
Group share of
revaluation deficit of - (596) - - -
other fixed assets
Realisation of surplus
on disposal of - (2,136) - - 2,136
investment properties
Share of unrealised
revaluation surplus in - 46 - - -
joint ventures
Revaluation surplus on
other investments - - 675 - -
Realisation of deficit
on disposal of other - - 774 - (774)
investments
Profit for the year - - - - 7,090
Exchange differences
- - - - 1
At end of year 161,876 166,737 18,099 591 35,436
22. Equity minority interests
Profit Balance Profit Balance
and loss sheet and loss sheet
1999 1999 1998 1998
#000 #000 #000 #000
Share of net assets
attributable to minority
shareholders:
At beginning of year - 2,101 - 933
Share of results 381 381 (3) (3)
Share of joint ventures' 45 - 45 -
(see note 12)
Share of movements in - 1,946 - 1,171
revaluation reserve
Dividends paid to minority - (87) - -
interests
At end of year 426 4,341 42 2,101
Minority interests relate to participation in the net equity of subsidiary
companies.
23. Non-equity funding by joint arrangement partners
This represents the additional non-equity funding in the 50:50 joint
arrangement, named Xscape Milton Keynes Partnership, by funds managed by
PRICOA Property Investment Management Limited.
24. Net assets per share
Net assets per share have been calculated on Ordinary shares of 10p each
98,265,697 (1998: 98,255,271) in issue at the year end and have been based on
net assets attributable to shareholders of #392,566,000 (1998: #330,816,000).
Diluted net assets per share assume that all the CULS had converted at the
balance sheet date. Diluted net assets per share have been calculated on
110,677,868 (1998:110,667,442) Ordinary shares of 10p each and have been based
on adjusted net assets attributable to shareholders of #416,607,000
(1998:#354,766,000) by adding the #24,041,000 (1998:#23,950,000) balance sheet
value of CULS (see note 19).
25. Deferred taxation
No provision has been made for the tax liability that would arise if assets
were sold at their balance sheet valuation, on the basis that no liability is
expected to crystallise in the foreseeable future.
The potential Group liability is as follows:
1999 1998
#000 #000
Tax on capital gains if investment assets were 45,347 31,985
sold at their current valuation
Accelerated capital allowances 6,818 5,182
Management expenses carried forward (871)
-
52,165 36,296
If deferred tax were provided for it would have an adverse effect on net
assets per share of 53.1p
(1998: 36.9p) and on fully diluted net assets per share of 47.1p (1998:
32.8p).
26. Valuations
The properties were valued at 25 December 1999, as follows:
Valuer Basis of valuation #000
Group properties
DTZ Debenham Tie Open market value 784,910
Leung Properties under 26,362
construction* 116,960
Richard Ellis St Open market value 475
Quintin Open market value
Directors Cost 4,433
Directors
Total fixed 933,140
property assets
Other fixed DTZ Debenham Tie Open market value 13,150
assets Leung
Total property 946,290
assets
Valuer Basis of valuation #000
Properties held by
joint ventures
The Capital
Properties Directors Open market value 160
Partnership
Easter Holdings Easter Holdings Open market value 2,650
Limited Limited
2,810
Valuations are at open market value as defined in the Appraisal and Valuation
Manual of The Royal Institution of Chartered Surveyors.
* The sum reflects the Group's effective interest in properties under
construction.
27. Notes to the cash flow statement
(a) Net cash inflow from operating activities
1999 1998
#000 #000
Group operating profit 40,950 33,434
Profit on the sale of the trading and (1,646) (517)
development properties
39,304 32,917
Depreciation 479 569
Loss on disposal of fixed assets 92 113
Amortisation of goodwill arising on - 5
acquisition of joint venture
Increase in trade debtors, other debtors and (6,183) (5,305)
prepayments
Increase in trade creditors, other creditors,
taxation and social security and accruals 8,577 3,004
Net cash inflow from operating activities 42,269 31,303
(b) Reconciliation of net cash flow movement in net debt
1999 1998
#000 #000
Increase/(decrease) in cash in year 1,912 (3,753)
Cash inflow from increase in debt financing (236,924) (104,203)
Change in net debt resulting from cash flows (235,012) (107,956)
Net debt at beginning of year (360,591) (252,635)
Net debt at end of year (595,603) (360,591)
(c) Analysis of net debt
At At
25 25
December Cash December
1998 flows 1999
#000 #000 #000
Cash in hand and at bank 5,476 1,912 7,388
Debt due within one year (760) (2,761) (3,521)
Debt due after one year (365,307) (234,163) (599,470)
Total (360,591) (235,012) (595,603)
28. Status of financial information
The financial information contained in this announcement does not constitute
statutory financial statements within the meaning of Section 240 Companies Act
1985. The comparative figures have been extracted from the audited financial
statements for the year ended 25 December 1998 which have been filed at
Companies House. The auditors have reported on those accounts; their reports
were unqualified and did not contain statements under S237(2) or (3) Companies
Act 1985. Financial statements for the year ended 25 December 1999 will be
filed at Companies House.
END
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