RNS No 4519e
CAPITAL & REGIONAL PROPERTIES PLC
29th September 1997
Interim Results
for the six months ended 24 June 1997
Financial Highlights:
First Half First Half Full Year
1997 1996 1996
Rental Income #11.4m #7.9m #17.8m
Profit before tax # 3.5m #2.5m # 6.1m
Earnings per share 5.9p 5.0p 12.2p
Dividend per share 1.0p 1.0p 3.0p
Key features:
- Acquisition of five shopping centres for #147m, increasing number of
shopping centres in portfolio to nine.
- Acquisition of Blythswood Retail Park, Glasgow for #17.2m
- Completed disposals of #20.4m of investment and trading properties in the
first half. Additional #19.4m of sales completed or exchanged so far in
second half.
- Appointments of Kenneth Ford and Andrew Lewis-Pratt to the Main Board.
- Retail property now accounts for approximately 90% of wholly-owned
portfolio.
Commenting on the results, Martin Barber, Capital and Regional Chairman said:
"This has been an extremely active first half. We have continued our
successful strategy of focusing on the retail and leisure sectors. Our
purchase of the shopping centre portfolio in April marked a major step
forward for the company. We are particularly encouraged that since we
completed the final purchase in June, we have seen rents rising faster
than anticipated and have identified even more opportunities to add
value to the properties. There is therefore every reason to believe
that that we can continue our record of delivering shareholders
excellent growth in the value of their company."
For further information:
Martin Barber Capital and Regional Properties 0171-730 5565
Chairman
Emma Denne Capital and Regional Properties 0171-730 5565
Richard Holloway The Maitland Consultancy 0171-379 5151
CREATING VALUE FOR TENANTS AND SHAREHOLDERS THROUGH THE
DYNAMIC MANAGEMENT OF PROPERTY ASSETS
FINANCIAL HIGHLIGHTS
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
24th June 24th June 25th December
1997 1996 1996
#000 #000 #000
________ ___________ _____________
Rental income 11,439 7,928 17,834
________ ___________ _____________
Profit on ordinary
activities before taxation 3,522 2,519 6,051
________ ___________ _____________
Earnings per share 5.9p 5.0p 12.2p
________ ___________ _____________
Dividends per share 1.0p 1.0p 3.0p
________ ___________ _____________
CHAIRMAN'S STATEMENT
RESULTS
I am pleased to report profit before tax in the six months to 24th June,
1997 of #3.52 million (1996: #2.52 million). Rental income has
increased by 44 per cent to #11.4 million. Earnings per share are up
from 5.0p to 5.9p.
The Directors have resolved to pay an interim dividend of 1.0p (1996:
1.0p) per share on 21st November, 1997 to shareholders on the register
at the close of business at the 24th October, 1997.
MARKET CONDITIONS
In the retail, leisure and industrial property sectors tenant demand
remains strong and rents are rising. This, together with the loss of
advance corporation tax credits, and the generally low interest and
inflation rate environments, is resulting in a renewed and increasing
appetite among institutional investors for direct property investment.
Yields are decreasing and capital values increasing.
REVIEW OF ACTIVITIES
We had an extremely active first half in 1997 with the company
announcing in March the acquisition of Blythswood Retail Park, Glasgow,
for #17.2 million and in April the acquisition of five shopping centres
for an aggregate consideration of #147 million with a Placing and Open
Offer of new equity raising #60.5 million. In the first half, the
Company completed disposals of #20.5 million of investment and trading
properties. So far in the second half #19.4 million of sales have been
completed or exchanged with further disposals at an advanced stage of
negotiation. Retail property investments now account for approximately
90% of the wholly-owned portfolio.
Shopping Centres
The five new centres are Liberty II Shopping Centre, Romford; Selborne
Walk, Walthamstow; Alhambra Centre, Barnsley; Howgate Centre, Falkirk
and the Sauchiehall Centre, Glasgow. The Centres produced, on
acquisition, an aggregate net annual rental income of #9.6 million with
an estimated rental value of #12.4 million once rent free periods have
expired and vacant units have been let.
Completion of the acquisition of the fifth centre occurred at the end of
June by which time we had already made good progress with our plans for
improving the day-to-day management of the centres and letting vacant
units. At Walthamstow, for example, three lettings had been concluded
to Clinton Cards, Supercuts, and Going Places all at rental levels at or
in excess of estimated rental value on acquisition and similar results
have been achieved at the Sauchiehall Centre.
We are further developing and refining our asset enhancement plans for
each of the properties. In particular, at Sauchiehall Street pre-
planning discussions are underway to refocus value to the prime
Sauchiehall Street frontage; in parallel, pre-letting negotiations are
proceeding well. At the Alhambra Centre, Barnsley, one of the existing
major space users is increasing representation by 60 percent. In
addition, we are reconfiguring units and creating new space to meet
demand.
Our plans to add substantially to the leisure and catering facilities at
Walthamstow are evolving well and opportunities for similar developments
at Romford are being examined.
Since completing the purchase of the Howgate Centre at the end of June
we have identified additional opportunities to add value with letting
interest improving and outstanding rent review settlements at budget.
It should be noted that the improvement in retail rental levels, in
general, is accelerating at a faster pace than anticipated.
At our other shopping centres improvements continue to be made. The new
mall entrance at the Trinity Shopping Centre, Aberdeen, designed to
create a prominent statement on Union Street and substantially improve
the visibility of the Centre, will be opening in November. HMV has
committed to a 11,500 sq ft store to anchor the frontage and discussions
continue with a number of other high profile retailers for the remaining
newly-created retail space.
At Eldon Garden, Newcastle-upon-Tyne, the construction works separating
the lower trading area from the main malls are now complete with the
newly created areas let at anticipated rental levels. Allied Domecq is
developing, in the separated space, a unit for their Firkin brand. The
void over the ground floor has been floored over to create space for the
Collection Cafe, a mall brasserie catering attraction in the heart of
the scheme. After only two months of trading, this operation is
already a popular draw and is improving dwell times within the Centre.
Having negotiated, for a substantial capital receipt, the surrender of
the former Debenhams space, 40 per cent has been re-let with the balance
under discussion with high-quality retailers.
At Wood Green outline planning consent has been achieved for a 2,250
seat multi-plex cinema and leisure development to be integrated into
the shopping centre. Negotiations are in hand with a number of
potential operators for the cinema. Further opportunities to
reconfigure the Centre to enhance tenant mix and maximise performance
are being actively pursued.
Out-Of-Town
Excellent progress is being made with the out-of-town portfolio. At
Blythswood planning consent has been received for the redevelopment of
one of the first retail parks in Scotland. Permission has been
obtained for an additional 121,000 sq ft of floor space plus two
restaurants, bringing the total size of the retail park to 228,000 sq
ft. Pre-lettings have already been achieved to MFI, Carpetright,
Harveys and Landmark (Kingsway). These units have been pre-let at rents
of up to #13.50 per square foot which is a significant uplift on the
existing passing rents.
The rest of the retail warehouse portfolio is performing well with
several lettings establishing new rental levels. At Wembley, for
example, we have completed Phase II of the redevelopment and signed
leases with Carpetland, Allied Carpets and Bedland. A further letting
is currently in solicitors' hands at a new benchmark of #12.00 per
square foot. Similar advances are being made at the other retail parks.
Contracts have been exchanged recently for the sale of both the leisure
development at Bentley Bridge Wolverhampton and the retail warehouse
park at Orpington to institutional investors.
With the purchase of Lanham earlier this year we acquired a number of
development projects. Good progress is being made in pre-funding and
pre-letting these and further opportunities are being identified for
out-of-town retail and leisure developments.
In this context it was announced in August that conditional approval had
been received from the Commission for the New Towns to begin
construction of a 505,000 sq ft leisure and retail complex at Milton
Keynes adjacent to the existing shopping centre. The development will
feature a SnoWorld sports centre (180,000 sq ft), other entertainment
facilities and a sports and leisure retail village. It is anticipated
that development will commence early in 1998 with completion towards to
the end of 1999.
Industrial
Our involvement in this sector continues on two fronts. In our 75
percent joint venture investment company, Easter Capital Investment
Holdings, a number of potential acquisitions are in the pipeline and
Easter Holdings (a 50 percent joint venture) continues its expansion
with a number of pre-sold or pre-let developments underway.
OUTLOOK
The Company has achieved considerable success by focusing on specialist
areas and ensuring that each of these activities is entrepreneurially
managed. The promotion of Kenneth Ford and Andrew Lewis Pratt to the
main Board, announced earlier this year, illustrates the depth of
management within our Group. There is every reason to believe that we
are capable of continuing the excellent growth in value which the
Company has delivered for shareholders since flotation in 1986.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(Unaudited) (Unaudited) (Audited)
6 months to 6 months to Year to
24th June 24th June 25th December
1997 1996 1996*
Notes #000 #000 #000
________ ___________ _____________
Rental income 11,439 7,928 17,834
Net property costs 2,077 1,591 3,676
________ ___________ _____________
9,362 6,337 14,158
Profit on sale of trading
and development properties 3 529 - 641
________ ___________ _____________
9,891 6,337 14,799
Management and office
expenses 1,560 1,070 2,504
________ ___________ _____________
8,331 5,267 12,295
Other income 891 662 1,206
Share of results of
associates and property
investment joint ventures (72) 185 1,222
________ ___________ _____________
Operating profit before
interest 9,150 6,114 14,723
Interest receivable 441 246 570
Interest payable (6,910) (4,255) (9,723)
________ ____________ _____________
Operating profit after
interest 2,681 2,105 5,570
Profit on sale of
investment properties 3 841 35 103
Profit on disposal of
investments - 379 378
_________ ____________ ____________
Profit on ordinary activities
before taxation 3,522 2,519 6,051
Taxation 5 458 188 504
_________ ____________ ____________
Profit on ordinary activities
after taxation 3,064 2,331 5,547
Minority interests 9 56 (21)
__________ ____________ ______________
Profit attributable
to shareholders
of the Company 3,055 2,275 5,568
Dividends paid and payable 760 456 1,368
__________ ____________ ______________
Profit retained
in the period 2,295 1,819 4,200
__________ ____________ ______________
Earnings per share 4 5.9p 5.0p 12.2p
__________ ____________ ______________
*As restated - see note 2.
CONSOLIDATED BALANCE SHEET
(Unaudited) (Audited)
As at As at
24th June 25th December
1997 1996
Notes #000 #000
_______ _______
Fixed assets
Property assets 6 387,179 231,132
Other fixed assets 1,019 652
_______ _______
Tangible assets 388,198 231,784
Investments 7 19,069 18,467
Investment in associates and
property investment joint ventures 7,003 7,526
_______ _______
414,270 257,777
Current assets
Property assets 21,855 19,024
Debtors 13,446 12,454
Cash at bank 3,044 6,261
_______ _______
38,345 37,739
Creditors
Amounts falling due within one year 27,897 20,131
_______ _______
Net current assets 10,448 17,608
_______ _______
Total assets less current liabilities 424,718 275,385
Creditors
Amounts falling due after more
than one year 257,859 168,226
_______ _______
Net assets 166,859 107,159
_______ _______
Capital and reserves
Called up share capital 7,526 4,560
Share premium account 103,467 44,997
Revaluation reserves 41,943 42,643
Other reserves 591 591
Profit and loss account 13,285 11,910
_______ ______
Equity shareholders' funds 166,812 104,701
Minority interests 47 2,458
_______ ______
Capital employed 166,859 107,159
_______ ______
Net assets per share 8 221.7p 229.6p
_______ ______
Net assets per share - diluted 8 217.6p 223.1p
_______ ______
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
(Unaudited) (Audited)
6 months to Year to
24th June 25th December
1997 1996
Notes #000 #000
______ ______
Share of unrealised surplus on
valuation of investment properties 6 - 11,694
Share of unrealised surplus/(deficit)
on valuation of properties in
property investment joint ventures 237 (490)
Share of unrealised surplus on
valuation of properties in
associates - 320
Revaluation surplus on
shares in CenterPoint 7 602 4,315
Exchange differences 8 (41)
_____ ______
847 15,798
Profit for the period attributable to
shareholders of the Company 3,055 5,568
_____ ______
Total recognised gains and losses
relating to the period 3,902 21,366
_____ ______
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(Unaudited) (Audited)
6 months to Year to
24th June 25th December
1997 1996
Notes #000 #000
_____ _______
Profit for the period
attributable to
shareholders of the Company 3,055 5,568
Dividends 760 1,368
______ _______
Profit retained in the period 2,295 4,200
New share capital subscribed 63,860 -
Expenses of share issue (2,424) -
Goodwill on acquisition written off (2,467) (179)
Other recognised gains and losses
relating to the period (see above) 847 15,798
_______ _______
Net addition to shareholders' funds 62,111 19,819
Opening shareholders' funds 104,701 84,882
_______ _______
166,812 104,701
_______ _______
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
(Unaudited) (Audited)
6 months to Year to
24th June 25th December
1997 1996
#000 #000
________ _______
Net cash inflow from operating
activities 10,618 15,106
Net cash outflow from returns on
investments and servicing of
finance (5,945) (7,510)
________ ________
4,673 7,596
Taxation (190) (529)
________ ________
Net operating cash flow 4,483 7,067
Capital expenditure and financial
investment (153,517) (94,333)
________ ________
(149,034) (87,266)
Acquisitions and disposals (1,350) (905)
________ ________
(150,384) (88,171)
Equity dividends paid (912) (1,230)
________ ________
Cash outflow before financing (151,296) (89,401)
Financing 147,769 93,426
________ ________
(Decrease)/increase in cash in
the period (3,527) 4,025
________ ________
Reconciliation of net cash flow to
movement in net debt
(Decrease)/increase in cash in the period (3,527) 4,025
Cash inflow from increase in debt
financing (89,389) (93,426)
________ ________
Change in net debt resulting from
cash flows (92,916) (89,401)
Loans and finance leases acquired with
subsidiary (4,178) -
New finance leases (36) -
________ ________
Movement in net debt in the period (97,130) (89,401)
Net debt at 26th December, 1996 (163,959) (74,558)
________ ________
Net debt at 24th June, 1997 (261,089) (163,959)
________ ________
Analysis of net debt At At
24th June 26th December
1997 1996
#000 #000
________ ________
Cash in hand and at bank 3,044 6,261
Overdrafts (311) -
________ ________
2,733 6,261
Bank debt due within
one year (5,053) (868)
Bank debt due after one
year (232,535) (143,298)
Finance leases (180) -
________ ________
(235,035) (137,905)
Convertible Subordinated
Unsecured Loan Stock (26,054) (26,054)
________ ________
Net debt (261,089) (163,959)
________ ________
NOTES TO THE ACCOUNTS
1. Accounting policies
The financial information included in the Interim Report comprises
consolidated profit and loss account and balance sheet, statement of total
recognised gains and losses, reconciliation of movement in shareholders'
funds and summary consolidated cash flow statement. This has been prepared
in accordance with the normal accounting policies of the Group, except for
that disclosed in note 6 regarding valuation of investment properties, and
does not constitute statutory accounts.
2. Financial information and presentation
The financial information for the year to 25th December, 1996 does not
constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985. It is extracted from the statutory accounts for that
year, on which the auditors Coopers & Lybrand gave an unqualified report
under Section 236 of the Companies Act 1985 which did not contain a statement
under Section 237(2) or Section 237(4) of the Companies Act 1985. Statutory
accounts for the year ended 25th December, 1996 have been delivered to the
Registrar of Companies. The financial information is unaudited and has not
been reviewed by the Group's auditors.
From 1997, a revised presentation has been adopted to disclose separately
profit on sale of trading and development properties that was previously
included in other income. For comparison purposes, the 1996 figures have
been restated.
3. Property sales
Fixed Current
property property
assets assets Total
#000 #000 #000
_______ _____ ______
Net sales proceeds 15,042 5,106 20,148
Cost of sales (13,142) (4,577) (17,719)
_______ _____ ______
Historical cost profit 1,900 529 2,429
Revaluation surplus (1,059) - (1,059)
_______ _____ ______
Profit recognised on
sale of properties 841 529 1,370
_______ _____ ______
4. Earnings per share
Earnings per share have been calculated on a weighted average of 51,340,551
Ordinary shares of 10p each in issue throughout the period (on 45,594,600
Ordinary shares of 10p each in issue throughout the year to 25th December,
1996 and six months to 24th June, 1996), and have been based on profit on
ordinary activities after taxation and minority interests of #3,055,000 (year
to 25th December, 1996 of #5,568,000, six months to 24th June, 1996 of
#2,275,000).
5. Taxation
The taxation charge for the period has been estimated from the expected
taxable profits of the Group after taking account of losses brought forward
and capital allowances available.
6. Investment properties
Investment properties owned at 25th December 1996 are included in the balance
sheet at 24th June, 1997 at the independent valuation at the last balance
sheet date plus the cost of any refurbishment since that date, less disposals
at prior year valuation. Investment properties acquired during the period
under review are included at the cost of acquisition plus any refurbishment
since the date of acquisition.
Included within investment properties is an amount of #58,130,000 in respect
of the acquisition of two shopping centres completed on 30th June, 1997. In
order to reflect the acquisition, the balance sheet has been adjusted to
include additions to fixed property assets of #58,130,000, a reduction in
debtors of #2,593,000, a reduction in cash at bank of #1,140,000, an increase
in creditors falling due within one year of #997,000 and an increase in
creditors falling due after more than one year of #53,400,000. The inclusion
of these properties has had no effect on the profit and loss account for the
six months to 24th June, 1997.
7. Investments
The investment in shares held in CenterPoint Properties Corporation is
included in the balance sheet at 24th June, 1997 at the market value at that
date of $31.50 per share translated into sterling at the rate of exchange at
24th June, 1997 of $1.67 to the #. The effect of the increase since the last
balance sheet date in the share price as quoted on the New York Stock
Exchange has been recognised in the period by a transfer to reserves.
8. Net assets per share
Net assets per share have been calculated on 75,257,055 Ordinary shares of
10p each (25th December, 1996: 45,594,600) in issue at 24th June 1997 and
have been based on net assets attributable to shareholders of
#166,812,000(25th December, 1996: #104,701,000).
Diluted net assets per share assumes that all of the Convertible Subordinated
Unsecured Loan Stock ("CULS") had converted at the balance sheet date.
Diluted net assets per share have been calculated on 88,229,370 Ordinary
shares of 10p each and have been based on adjusted net assets attributable to
shareholders of #191,969,000 by adding the #25,157,000 balance sheet value of
the CULS.
9. Copies of the Interim Report
Copies of the Interim Report are available from the Company's registered
office at 22 Grosvenor Gardens, London, SW1W 0DH.
END
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