21st Feb 2005 07:00
Workspace Group PLC21 February 2005 WORKSPACE REPORT GOOD PROGRESS AS DEMAND FROM SMES REMAINS STRONG Workspace Group PLC ("Workspace"), the leading provider of flexible businessaccommodation to small and medium sized enterprises ("SMEs") in London and theSouth East today announces its financial results for the third quarter and ninemonths to 31 December 2004. Highlights: • Net Asset Value per share at 31 December 2004 £20.00, up 8.5% over the nine months, and up 23% over twelve months (31 March 2004: £18.43; 31 December 2003: £16.25) • Pre-tax profits on trading operations £10.77 million (2003: £10.26 million) • Pre-tax profits £10.40 million (2003: £10.97 million) • Basic earnings per share on trading operations 46.5p (2003: 44.7p) • Basic earnings per share 44.5p, (2003: 47.8p) • Turnover £14.14 million for the quarter, up 7.0% on the same quarter last year, and for the nine month period £41.05 million, up 10.3% • Total rent roll £41.1 million up 7.8% over the nine month period (31 March 2004: £38.1 million) • Average rent of like-for-like portfolio £8.74 per sq. ft up 2.0% over the nine month period (31 March 2004: £8.57 per sq. ft) • One acquisition at Chiswick Studios, value £2.87m, in the quarter with no disposals Commenting on the results, Harry Platt, Chief Executive said, " Workspace has continued its good progress during the quarter. Occupancy on alike-for-like basis remains over 90% and, with robust levels of demand andencouraging enquiry rates, we are confident of maintaining these levelsthroughout 2005, paving the way for future rental growth. " We have continued to invest in property, consolidating our market leadingposition in providing accommodation to SMEs in London and the South East.Progress has also been made on a number of the Group's "added value" schemeswhich should deliver improved net asset values going forward. " During 2005 we anticipate making further acquisitions. Given the positivebackdrop of the SME environment, we are confident that we will continue to makeencouraging progress. " - ends - Date: Monday 21 February For further information contact: Workspace Group PLC City ProfileHarry Platt, Chief Executive Simon CourtenayMark Taylor, Finance Director Oliver Winters020-7247-7614 020-7448-3244e-mail: [email protected]: www.workspacegroup.co.uk Operating & Financial Review Chairman's Statement Once again, these results show the Group continuing to make good progress increating shareholder value with operating profit up 14.4% and trading pre-taxprofits up 5.0% for the nine month period. Furthermore, net assets were up 25%on 12 months ago. Our intensive management approach in our niche market creates long termshareholder value over and above general market movements. Our customer focushas led to high levels of occupancy, good underlying enquiry levels and firmerrents. Progress has also been made on our "added value" schemes (projects whererefurbishment, extension or redevelopment to a more intensive use, createvalue). In our interim statement I indicated that the Board was looking at means toassist the liquidity of your shares. Your Board has decided to call anExtraordinary General Meeting to approve a bonus issue of our stock. It isproposed that a 9 for 1 bonus share issue will be made so that, following thisissue, shareholders will hold 10 shares for each share previously held. Chief Executive's Statement In the third quarter, occupancy has remained at high levels; over 90.0%excluding development schemes. This is within the Group's target range. Withcontinuing good levels of enquiries and robust underlying demand, our target isat least to maintain occupancy around these levels in 2005, providing thefoundations for rental growth. The total rent roll now stands at £41.1m up some 7.8% over the nine month period(31 March 2004: £38.1m). Of this increase of £3.0m some £1.4m reflects the neteffect of acquisitions less disposals. More importantly £1.6m reflects theincrease in the rent roll of the like-for-like portfolio over the nine monthperiod. This is an increase of 4.1%, with "like-for-like" average rents now some£8.74 per sq. ft (compared to £8.57 per sq. ft at the beginning of the year).These movements of course reflect changes in mix as well as underlyingimprovements. Even so, the signs are encouraging, showing improvements in theoccupational markets. The Group does not revalue the portfolio at this third quarter stage. Ourexternal valuations are undertaken at the full year and half year stage. Duringthe last year there has been increasing investor interest in the propertysector, driving yields down and increasing capital values. This has continuedsince 30 September 2004, the date of our last valuation. Our focused portfoliocontinues to be well placed to benefit from such movements in yields. On top ofthis the Workspace approach continues to drive value from our intensivemanagement skills. A number of the Group's "added value" schemes are now at interesting stages. Twoare due to go to Local Authority Planning Committees in February/March (WharfRoad and Aberdeen Studios); one remains in discussions with the PlanningAuthorities (Greenheath); whilst a revised planning application for ThurstonRoad, Lewisham, will be made before the end of March. Other schemes remain atthe formative stage. Some of these will come forward in 2005 - whilst othersdemand longer term work. Each year the Group would target to have an immediateactive list of at least 4 to 6 projects. Clearly, whilst these projects willimprove net asset values they will also give rise to short term reductions inincome as development works are progressed. The programming of these projects istherefore a key issue in determining year on year profit growth. Portfolio One acquisition has been made in the quarter, with no disposals. Details aregiven below: Name of Property Description Acquisition Price Initial Annual Income £000 Chiswick Studios, 14,225 sq.ft £2.87m £211.0 London W4 6 units This property is near to our Barley Mow Centre in Chiswick, and provides acomplementary offer. Fixed reversions on existing leases will give ananticipated 8% yield by 2007. Following the quarter end contracts have been exchanged and completed for thepurchase of Lombard House, Croydon for £7.75m whilst others are in legal handsor in negotiation. Furthermore, contracts have been exchanged on the disposal ofPayne Road for £2.1m, a disposal which will be completed by May. The portfolio statistics and progress through the year to date, may besummarised as follows:________________________________________________________________________________________________________ 31 December 30 September 30 June 31 March 2004 2004 2004 2004________________________________________________________________________________________________________Number of estates 101 100 101 102 ________________________________________________________________________________________________________Total floorspace at end of period (sq. ft.) 5,044,328 5,035,667 5,335,073 5,316,951________________________________________________________________________________________________________of which: Like-for-like portfolio (sq. ft.) 4,782,149 4,787,694 4,763,456 Net Acquisitions/Disposals(sq. ft.) 69,955 55,358 26,012 Three Mills and developments (sq. ft.) 192,224 192,615 545,605________________________________________________________________________________________________________Lettable units (number) 4,629 4,608 4,584 4,547________________________________________________________________________________________________________Annual rent roll of occupied units (£) 41,060,954 40,335,068 38,766,883 38,091,471________________________________________________________________________________________________________Average rent (£/sq. ft) 9.24 9.05 8.62 8.55________________________________________________________________________________________________________Average rent of like-for-like portfolio (£/sq. ft) 8.74 8.58 8.60 8.57________________________________________________________________________________________________________Occupancy overall 88.1% 88.5% 84.3% 83.8%________________________________________________________________________________________________________Occupancy of like-for-like portfolio 90.3% 90.9% 90.0% 88.9%________________________________________________________________________________________________________ Comparisons of overall occupancy and rent roll are distorted by acquisitions,disposals and transfers. The "like-for-like portfolio" is defined as thoseproperties that have been held throughout the year to date and which are notsubject to refurbishment/redevelopment programmes. Overall occupancy increasedbetween the first and second quarters partly due to improved lettings and partlydue to the disposal of Three Mills. Financial Review Over the quarter, the consistent growth pattern reported previously continuedwith turnover up 7.0%, gross profit up 8.5%, operating profit up 15.6% andtrading profits before tax up 5.3% on the comparable period last year. Profitsbefore tax were, however, down on the same quarter last year since that periodbenefited from £0.7m profit on the disposal of Kingsland Viaduct whilst nodisposals were made in the quarter under review. As may be seen in the tablebelow, performance ratios continue to be consistent. The single most significantvariance impacting on trading performance over the quarter was the increase ininterest cost, up 24.7% to £5.0m for the quarter (2003: £4.0m). Averageborrowings increased by just 4.0% or £11.5m to £303.3m (2003: £291.8m). However,LIBOR rates were 0.96% higher than for the comparable period last year (anincrease of almost 25%). Approximately 80% of the increased cost of borrowingsin the period arose from this rate increase. LIBOR rates (both short and longterm) have now stabilised at these levels. As a result, assuming these levelsare maintained through 2005/6, the dilutive effect on earnings growth thatinterest changes have had in 2004/5 will not recur. Interest charges were alsoimpacted by a change in policy in respect of the capitalisation of interest ondevelopment projects. The period of capitalisation has been shortened inreadiness for the implementation of International Financial Reporting Standardsnext year. This resulted in an additional charge of £0.4m for the nine monthperiod (reflected in this quarters results). Profits before tax for the nine month period are impacted by the loss on thedisposal of Three Mills. As reported at the interim stage, this loss arose as aresult of a late price adjustment whereas the valuation at 31 March 2004 hadshowed a substantial £4.1m surplus in the previous year. The effective rate of tax, at 31% (2003: 30%) is increased due partly to thecharges arising on disposal of Three Mills and Hooley Lane where substantialdeferred tax liabilities have crystallised. Tax charges in the year to daterelating to these disposals total 22 pence per share. The NAV growth reportedhas been achieved after absorbing this cost. At 31 December 2004, NAV per share was £20.00 up 8.5% over the year to date. Net cash flow from operating activities was up £2.5m at £25.5m for the ninemonths (compared with the same period last year). With the substantial proceedsfrom disposals, the net outflow from net acquisitions and disposals was £3.6mcompared with £59.1m last time. Overall bank debt reduced slightly from £305.8mto £304.4m over the year to date. This coupled with the valuation surplus led toa reduction in gearing from 103% to 94%. Key financial statistics and indicators may be summarised as follows: -_________________________________________________________________________________________________ 9 Months to 6 Months to 12 Months to 9 Months to 31 December 30 September 31 March 2004 31 December 2004 2004 2003_________________________________________________________________________________________________Gross profit: turnover 74% 74% 72% 73%Operating profit:turnover 60% 59% 58% 58%Trading PBT:turnover 26% 26% 28% 29%EPS per share (pence) 44.5 27.6 65.7 47.8NAV per share (£) 20.00 19.87 18.43 16.25Interest cover 1.75 1.73 1.97 1.97Trading interest cover 1.77 1.77 1.91 1.91Gearing 94% 94% 103% 113%Available facilities(£m) 62.6 68.3 15.5 29.0_________________________________________________________________________________________________ Prospects Our view of the Group's prospects remains unchanged from that at the time of theGroup's interim statement. The Group aims to maintain high levels of occupancyof around 90% during 2005. This, together with robust underlying demand, shouldprovide the right environment for rental growth. Our asset values should benefitfrom this. The progress on our selective "added value" programme for theintensification and change of use of certain estates, while impacting rentsshort term, will also benefit medium to long term capital growth; as will theincreased investor interest in commercial property. By the year end weanticipate making further acquisitions. For 2004/05 as a whole we anticipatereporting once again a year of good progress in both our performance andstrengthening our position as the leading provider of flexible, affordable spacefor small and medium sized enterprises (SMEs) in London and the South East. Consolidated Profit and Loss Accountfor the 9 months ended 31 December 2004 Audited Unaudited Unaudited 9 months ended 31 Decemberyear ended 3 months ended 31 March 31 December _____________________ Trading Other Total Total 2004 Operations Items £000 _________________________________________________________________________________________________ Notes 2004 2003 £000 £000 2004 2003 £000 £000 £000 £000_________________________________________________________________________________________________ 51,068 Turnover - 2 14,141 13,213 41,052 - 41,052 37,227 continuing operations (14,229) Rent payable and (3,587) (3,486) (10,687) - (10,687) (10,140) direct costs _________________________________________________________________________________________________ 36,839 Gross profit 10,554 9,727 30,365 - 30,365 27,087 (7,145) Administrative (1,727) (2,091) (5,655) - (5,655) (5,498) expenses _________________________________________________________________________________________________ 29,694 Operating profit 8,827 7,636 24,710 - 24,710 21,589 continuing operations 1,009 (Loss)/profit on 7 673 - (377) (377) 705 disposal of investment property 45 Interest 3 15 22 60 - 60 40 receivable (15,628) Interest payable 4 (4,992) (4,003) (13,997) - (13,997) (11,367) and similar charges_________________________________________________________________________________________________ 15,120 Profit on ordinary 3,857 4,328 10,773 (377) 10,396 10,967 activities before taxation (4,587) Taxation on profit 5 (1,114) (1,298) (3,262) 53 (3,209) (3,316) on ordinary activities_________________________________________________________________________________________________ 10,533 Profit attributable 2,743 3,030 7,511 (324) 7,187 7,651 to shareholders (4,981) Dividends 6 - (1) (1,861) - (1,861) (1,659)_________________________________________________________________________________________________ 5,552 Retained for the 2,743 3,029 5,650 (324) 5,326 5,992 period _________________________________________________________________________________________________ 65.7p Basic earnings per 7 16.9p 18.9p 46.5p (2.0)p 44.5p 47.8p share 63.9p Diluted earnings 7 16.6p 18.3p 45.5p (1.9)p 43.6p 46.6p per share Statement of Total Recognised Gains and Losses _______________________________________________________________________________ Audited Unauditedyear ended 9 months ended 31 March 31 December_______________________________________________________________________________ 2004 2004 2003 £000 £000 £000 10,533 Profit for the financial period 7,187 7,651 49,699 Unrealised surplus on revaluation of 27,033 14,109 investment properties (1,215) Taxation on valuation surpluses realised on (3,643) (968) sale of properties _______________________________________________________________________________ 59,017 Total recognised gains relating to the 30,577 20,792 financial period _______________________________________________________________________________ Note of Historical Cost Profits and Losses Audited Unauditedyear ended 9 months ended 31 March 31 December________________________________________________________________________________ 2004 2004 2003 £000 £000 £000________________________________________________________________________________ 15,120 Reported profits on ordinary activities before 10,396 10,967 taxation 4,408 Realisation of property revaluation gains of 14,252 3,673 previous years ________________________________________________________________________________ 19,528 Historical cost profit on ordinary activities 24,648 14,640 before taxation ________________________________________________________________________________ 8,745 Historical cost profit for the period retained 15,935 8,697 after taxation and dividends ________________________________________________________________________________ Consolidated Balance Sheetas at 31 December 2004 Audited Unaudited 31 March 31 December________________________________________________________________________________(restated) Notes (restated) 2004 2004 2003 £000 £000 £000________________________________________________________________________________ Fixed Assets Tangible assets 626,060 Investment properties 9 658,137 570,639 3,654 Other fixed assets 3,648 3,662________________________________________________________________________________ 629,714 661,785 574,301________________________________________________________________________________ Current Assets - Stock: properties for sale - 10,711 6,795 Debtors 10 6,340 6,579 1,150 Investments 11 2,647 1,423 181 Cash at bank and in hand 4 109________________________________________________________________________________ 8,126 8,991 18,822 (30,942) Creditors: amounts falling due 12 (32,587) (30,905) within one year ________________________________________________________________________________ (22,816) Net current liabilities (23,596) (12,083)________________________________________________________________________________ 606,898 Total assets less current 638,189 562,218 liabilities (305,756) Creditors: amounts falling due 13 (306,904) (296,666) after more than one year (including Convertible Loan Stock) (5,483) Provision for liabilities and 15 (5,842) (4,796) charges ________________________________________________________________________________ 295,659 325,443 260,756________________________________________________________________________________ Capital and reserves 1,673 Called up share capital 16 1,688 1,673 42,912 Share premium account 17 43,586 42,912 209,565 Revaluation reserve 17 222,346 174,710 47,715 Profit and loss account 17 63,650 47,667 (6,206) Investment in own shares 18 (5,827) (6,206)________________________________________________________________________________ 295,659 Shareholders' funds - equity 325,443 260,756 interests ________________________________________________________________________________ £18.43 Net asset value per share (basic) 8 £20.00 £16.25________________________________________________________________________________ £18.04 Adjusted net asset value per share 8 £19.69 £15.97 (diluted) ________________________________________________________________________________ Consolidated Cash Flow Statementfor the 9 months ended 31 December 2004 Audited Unauditedyear ended 9 months ended 31 March 31 December ________________________________________________________________________________ 2004 Notes to 2004 2003 £000 Cash Flow £000 £000________________________________________________________________________________ 31,615 Net cash inflow from operating 1 25,531 23,021 activities (15,692) Return on investments and 2 (13,883) (10,955) servicing of finance (4,110) Taxation (4,129) (2,750) (70,155) Capital (expenditure)/proceeds - 2 (3,568) (59,079) net (4,952) Equity dividends paid (3,349) (3,299)________________________________________________________________________________ (63,294) Net cash inflow/(outflow) before 602 (53,062) use of liquid resources and financing 1,959 Management of liquid resources 2 (1,497) 1,686 59,720 Financing 2 1,889 50,720________________________________________________________________________________ (1,615) Net cash inflow/(outflow) 3 994 (656)________________________________________________________________________________ Reconciliation of net cash flow to movement in net debt (1,615) Increase/(decrease) in cash 994 (656) (1,959) Increase/(decrease) in liquid 1,497 (1,686) resources (59,766) Outflow from movements in debt (1,148) (50,676) financing ________________________________________________________________________________ (63,340) Changes in net debt resulting 3 1,343 (53,018) from cash flows ________________________________________________________________________________ (242,425) Net debt at beginning of period (305,765) (242,425) (305,765) Net debt at period end (304,422) (295,443)________________________________________________________________________________ Notes to the cash flow statementfor the 9 months ended 31 December 2004 1. Reconciliation of operating profit to operating cash flows Audited year Unauditedended 31 March 9 months ended 31 December________________________________________________________________________________ 2004 2004 2003 £000 £000 £000________________________________________________________________________________ 29,694 Operating profit 24,710 21,589 585 Depreciation charges 503 420 56 (Increase)/decrease in debtors (946) (462) 1,280 Increase in creditors 1,264 1,474________________________________________________________________________________ 31,615 25,531 23,021________________________________________________________________________________ 2. Analysis of cash flow Audited year Unaudited ended 31 March 9 months ended 31 December 2004 Notes 2004 2003 £000 to cash flow £000 £000________________________________________________________________________________ Returns on investments and servicing of finance 45 Interest received 60 41 (15,737) Interest paid (including (13,943) (10,996) financing costs) ________________________________________________________________________________ (15,692) Net cash outflow (13,883) (10,955)________________________________________________________________________________ Capital expenditure (81,934) Purchase of tangible fixed (38,907) (67,973) assets 28 Net distribution/(purchase) of 379 28 own shares 11,751 Sale of tangible fixed assets 34,960 8,866________________________________________________________________________________ (70,155) Net cash outflow (3,568) (59,079)________________________________________________________________________________ Management of liquid resources 1,959 (Increase)/decrease in 3 (1,497) 1,686 short-term deposits ________________________________________________________________________________ 1,959 Net cash (outflow)/inflow (1,497) 1,686________________________________________________________________________________ Financing 220 Issue of ordinary share 289 220 capital 59,500 Drawdown of bank loans 3 1,600 50,500________________________________________________________________________________ 59,720 Net cash inflow 1,889 50,720________________________________________________________________________________ 3. Analysis of net debt_______________________________________________________________________________________ At 1 April 2004 Cash flow Non-cash At 31 December Items 2004 £000 £000 £000 £000_______________________________________________________________________________________Cash at bankand in hand 181 (177) - 4Bankoverdrafts (1,340) 1,171 - (169)_______________________________________________________________________________________ (1,159) 994 - (165)_______________________________________________________________________________________Debt due after one year:11% ConvertibleLoan Stock (2,900) - 400 (2,500)11.125% FirstMortgage Debenture (12,500) - - (12,500)11.625% FirstMortgage Debenture (7,000) - - (7,000)Bank loans (284,500) (1,600) - (286,100)Less cost of raisingfinance 1,144 339 (287) 1,196_______________________________________________________________________________________ (305,756) (1,261) 113 (306,904)_______________________________________________________________________________________Short-term deposits 1,150 1,497 - 2,647_______________________________________________________________________________________Total (305,765) 1,230 113 (304,422)_______________________________________________________________________________________ Notes to the Quarterly Results 1. Basis of Preparation The unaudited financial information contained in this quarterly report does not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 March 2004 included an unqualified report of the auditors. The Group's unaudited accounts for the period ended 31 December 2004 have been prepared on the basis of the accounting policies set out in the Annual Report and Accounts for the year ended 31 March 2004 (except for the change noted below). The full accounts for the year ended 31 March 2004 have been filed with the Registrar of Companies. The Company has adopted UITF Abstract 38 - accounting for ESOP trusts in these financial statements. The adoption of this Abstract represents a change in accounting policy and the comparative figures have been restated accordingly. Investment in own shares is now shown as a deduction from shareholders' funds. 2. Segmental Analysis Audited Year Unaudited Unauditedended 31 March 3 months ended 9 months ended 31 December 31 December___________________________________________________________________________________ 2004 2004 2003 2004 2003 £000 £000 £000 £000 £000___________________________________________________________________________________ 39,504 Rental Income 10,950 9,958 32,367 29,044 9,059 Service charge and other 2,506 2,299 7,344 6,440 recoveries 2,505 Services, fees, commissions 685 956 1,341 1,743 and sundry income ___________________________________________________________________________________ 51,068 14,141 13,213 41,052 37,227___________________________________________________________________________________ 3. Interest receivable Audited Year Unaudited Unauditedended 31 March 3 months ended 9 months ended 31 December 31 December___________________________________________________________________________________ 2004 The following amounts were 2004 2003 2004 2003 £000 earned during the year £000 £000 £000 £000___________________________________________________________________________________ 30 Short-term deposits 12 8 53 26 15 Other 3 14 7 14___________________________________________________________________________________ 45 15 22 60 40___________________________________________________________________________________ 4. Interest payable and similar charges Unaudited Unaudited Audited Year 3 months ended 9 months endedended 31 March 31 December 31 December___________________________________________________________________________________ 2004 2004 2003 2004 2003 £000 £000 £000 £000 £000___________________________________________________________________________________ 319 11% Convertible Loan Stock 68 80 217 239 2011 1,391 11.125% First Mortgage 348 348 1,043 1,043 Debenture Stock 2007 814 11.625% First Mortgage 204 203 611 611 Debenture Stock 2007 14,210 Bank and other interest on 4,492 3,685 12,788 10,227 amounts wholly repayable within five years*___________________________________________________________________________________ 16,734 5,112 4,316 14,659 12,120 (1,106) Interest capitalised on (120) (313) (662) (753) development properties ___________________________________________________________________________________ 15,628 Charged to profit and loss 4,992 4,003 13,997 11,367 account ___________________________________________________________________________________ * includes amortisation of cost of raising finance 5. Taxation Unaudited Unaudited Audited Year 3 months ended 9 months endedended 31 March 31 December 31 December________________________________________________________________________________ 2004 2004 2003 2004 2003 £000 £000 £000 £000 £000________________________________________________________________________________ Current tax: 3,534 UK corporation tax on 872 1,004 2,649 2,627 profit for the year (323) Adjustment in respect - - - - of previous years ________________________________________________________________________________ 3,211 Total current tax 872 1,004 2,649 2,627________________________________________________________________________________ Deferred tax: 1,376 Origination and 242 294 560 689 reversal of timing differences________________________________________________________________________________ 4,587 Tax on profit on 1,114 1,298 3,209 3,316 ordinary activities ________________________________________________________________________________ Timing differences are mainly in respect of capital and industrial building allowances and capitalised interest. Notes to the Quarterly Results Continued 6. Dividends Unaudited Unaudited Audited Year 3 months ended 9 months endedended 31 March 31 December 31 December________________________________________________________________________________ 2004 2004 2003 2004 2003 £000 £000 £000 £000 £000________________________________________________________________________________ 1,653 Interim dividend per - - 1,832 1,652 ordinary share 11.3p (2003: 10.3p) 3,321 Final dividend per ordinary - - - - share 7 Under provision in prior - 1 29 7 year ________________________________________________________________________________ 4,981 - 1 1,861 1,659________________________________________________________________________________ 7. Earnings per share The following table shows a reconciliation of profits used in calculating earnings per share: Audited year Unaudited 9 months ended 31 December ended 31 March ___________________________________________________________________________________Profit Earnings per Profit Profit Earnings per Earnings share share per share 2004 2004 2004 2003 2004 2003 £000 Pence £000 £000 Pence Pence ___________________________________________________________________________________10,533 65.7 Profit for the 7,187 7,651 44.5 47.8 period attributable to shareholders (706) (4.4) Other items 324 (495) 2.0 (3.1)___________________________________________________________________________________ 9,827 61.3 Profit for the 7,511 7,156 46.5 44.7 period attributable to shareholders used for calculating earnings per share excluding other items___________________________________________________________________________________ Reconciliation of profit used in calculating diluted earnings per share : Audited year ended 31 March Unaudited 9 months ended 31 December____________________________________________________________________________________Profit Earnings per Profit Profit Earnings per Earnings per share share share 2004 2004 2004 2003 2004 2003 £000 Pence £000 £000 Pence Pence____________________________________________________________________________________10,533 Profit for the 7,187 7,651 period attributable to shareholders used for calculating basic earnings per share 223 Interest saving 152 168 net of taxation on 11% Convertible Loan Stock____________________________________________________________________________________10,756 63.9 Profit for the 7,339 7,819 43.6 46.6 period attributable to shareholders used in calculating the underlying diluted earnings per share (706) (4.2) Other items 324 (495) 1.9 (3.0)____________________________________________________________________________________10,050 59.7 Profit for the 7,663 7,324 45.5 43.6 period attributable to shareholders used in calculating the diluted earnings per share excluding other items____________________________________________________________________________________ The following table shows a reconciliation of the weighted average number of sharesused for calculating the basic and diluted earnings per share: Audited year ended 31 March Unaudited 9 months ended 31 December 2004 2004 2003______________________________________________________________________________________ 16,021,462 Used for calculating basic 16,162,588 16,013,956 earnings per share 227,276 Dilution due to Share Option 184,039 187,960 Scheme 580,000 Dilution due to Convertible Loan 500,000 580,000 Stock ______________________________________________________________________________________ 16,828,738 Used for calculating diluted 16,846,627 16,781,916 earnings per share ______________________________________________________________________________________ 8 Net assets per share Net Assets used for calculating net assets per share: Audited 31 March 2004 Unaudited 31 December (restated) 2004 2003 £000 £000 (restated) £000___________________________________________________________________________________ 295,659 Net Assets 325,443 260,756 2,900 Dilution due to Convertible Loan 2,500 2,900 Stock ___________________________________________________________________________________ 298,559 Diluted net assets 327,943 263,656 5,483 Deferred tax arising from capital 5,842 4,796 allowances and capitalised interest on investment properties___________________________________________________________________________________ 304,042 Adjusted diluted net assets 333,785 268,452___________________________________________________________________________________ Number of ordinary shares used for calculating net assets per share: Audited 31 Unaudited 31 DecemberMarch 2004 2004 2003___________________________________________________________________________________16,733,811 Shares in issue at end of period 16,883,211 16,733,811 (689,666) Less ESOT shares (612,321) (689,666) 580,000 Dilution due to Convertible Loan 500,000 580,000 Stock 227,276 Dilution due to Share Option 184,039 187,960 Scheme ___________________________________________________________________________________16,851,421 Number of shares adjusted for 16,954,929 16,812,105 dilutive instruments ___________________________________________________________________________________ Net assets per share:Audited 31 Unaudited 31 DecemberMarch 2004 2004 2003___________________________________________________________________________________ £18.43 Net assets per share (basic) £20.00 £16.25 £17.72 Diluted net assets per share £19.34 £15.68 £18.77 Adjusted net assets per share £20.36 £16.55 (basic) £18.04 Diluted adjusted net assets per £19.69 £15.97 share ___________________________________________________________________________________ The additional deferred tax liability arising from capital allowances oninvestment properties is excluded from the calculation of adjusted net assets asthe Group's experience is that deferred tax on capital allowances in relation toinvestment properties is unlikely to crystallise in practice. The deferred taxon capitalised interest on these properties is added back as it is a permanenttiming difference. 9 Investment properties Unaudited 31 December__________________________________________________________________________________________________________________ Audited Freehold Mainly Freehold Long leasehold Short leasehold Total Total31 March 2004 £000 £000 £000 £000 2004 2003 £000 £000 £000__________________________________________________________________________________________________________________ 505,490 Balance at 1 469,310 85,875 70,875 - 626,060 505,490 April 2004/ 2003 79,726 Additions during 38,752 519 158 - 39,429 67,999 the period (9,497) Disposals during (13,191) (21,194) - - (34,385) (6,890) the period 642 Reclassification - - - - - 642 from other fixed assets - Reclassification - - - - - (10,711) to current assets 49,699 Revaluation 19,043 5,375 2,615 - 27,033 14,109 during the period__________________________________________________________________________________________________________________ 626,060 Balance at 513,914 70,575 73,648 - 658,137 570,639 period end __________________________________________________________________________________________________________________ The historical cost of investment properties: 416,039 Balance at 341,707 37,974 55,647 7 435,335 401,131 period end __________________________________________________________________________________________________________________ Valuation The Group's investment properties were valued by CB Richard Ellis, CharteredSurveyors, at 30 September 2004 on the basis of open market value and inaccordance with the guidance notes issued by the Royal Institution of CharteredSurveyors. 10. Debtors Audited 31 March Unaudited 31 December 2004 2004 2003 £000 £000 £000_______________________________________________________________________________ Amounts falling due within one year: 4,765 Trade debtors 2,993 4,533 464 Deposits on investment acquisitions - - 4 Taxation and social security - 42 1,562 Prepayments and accrued income 3,347 2,004_______________________________________________________________________________ 6,795 6,340 6,579_______________________________________________________________________________ 11. Investments Audited 31 March Unaudited 31 December 2004 2004 2003 £000 £000 £000_______________________________________________________________________________ - Short-term deposits 1,389 401 1,150 Tenants' deposits 1,258 1,022_______________________________________________________________________________ 1,150 2,647 1,423_______________________________________________________________________________ Short-term deposits have an original maturity date of less than three months.Tenants' deposits represent returnable security deposits received from tenants.These are ring-fenced under the terms of the individual lease contracts andcannot be used to fund the working capital of the Group. They are accordinglyheld separately from other cash balances. Notes to the Quarterly Results Continued 12. Creditors: Amounts falling due within one year Audited 31 March Unaudited 31 December 2004 2004 2003 £000 £000 £000________________________________________________________________________________ 1,340 Bank overdraft (secured) 169 309 1,902 Trade creditors 2,052 3,296 2,242 Corporation tax payable 4,605 2,770 1,757 Taxation and social security 2,119 1,774 5,461 Tenants' deposits 6,029 5,143 9,884 Accruals 11,151 10,462 5,035 Deferred income - rent and service charges 4,630 5,498 3,321 Dividends 1,832 1,653________________________________________________________________________________ 30,942 32,587 30,905________________________________________________________________________________ Tenants' deposits include certain deposits that are ring-fenced in accordancewith the terms of the individual lease contracts (see note 11). 13. Creditors: Amounts falling due after more than one year Audited 31 Unaudited 31 December March 2004 2004 2003 £000 £000 £000________________________________________________________________________________ Long-term borrowings consist of: Unsecured: 2,900 11% Convertible Loan Stock 2011 2,500 2,900 Secured: 12,500 11.125% First Mortgage Debenture Stock 2007 12,500 12,500 7,000 11.625% First Mortgage Debenture Stock 2007 7,000 7,000 283,356 Other secured loans 284,904 274,266________________________________________________________________________________ 305,756 306,904 296,666________________________________________________________________________________ 14. Borrowings and financial instruments i Maturity of financial liabilities A maturity analysis of loans is shown below: Audited 31 Unaudited 31 December March 2004 2004 2003 £000 £000 £000________________________________________________________________________________ 1,340 Less than one year 169 309 - Between two years and three years 219,500 - 304,000 Between three years and four years - 295,000 - Between four years and five years 86,100 - 2,900 In five years and more 2,500 2,900________________________________________________________________________________ 308,240 308,269 298,209 (1,144) Less cost of raising finance (1,196) (1,234)________________________________________________________________________________ 307,096 307,073 296,975 ________________________________________________________________________________ Notes to the Quarterly Results Continued ii Fair value of financial assets and liabilities Book and fair values of financial assets and liabilities are: Audited 31 March Unaudited 31 December Book value 2004 Fair value 2004 Book value Fair value Book value Fair value £000 £000 2004 2004 2003 2003 £000 £000 £000 £000_____________________________________________________________________________________________________ Primary financial instruments (1,340) (1,340) Short-term (169) (169) (309) (309) liabilities (305,756) (312,196) Long-term (306,904) (314,204) (296,666) (302,496) borrowing 1,331 1,331 Financial 2,651 2,651 1,532 1,532 assets Derivative financial instruments 206 (2,639) Interest rate 177 (1,755) 215 (3,105) collars_____________________________________________________________________________________________________Related Shares:
Workspace