13th Feb 2006 07:01
St. Modwen Properties PLC13 February 2006 St. Modwen Properties PLC Preliminary results for the year ended 30 November 2005 St. Modwen posts record results for thirteenth successive year St. Modwen Properties PLC is a regeneration specialist. It has four particularareas of specialism: town centre regeneration; partnering industry in itsrestructuring; brownfield land renewal; and restoring heritage Highlights * Profit before tax increased by 15% to £46.3m (2004: £40.3m) * Earnings per share up 15% to 28.7p (2004: 25.0p) * Net assets per share increased by 24% to 273.9p (2004: 221.4p) * Proposed final dividend of 5.9p per share (2004: 5.1p) brings total dividends for the year to 8.8p (2004: 7.6p), an increase of 16% * Significant progress in marshalling future major projects Anthony Glossop, Chairman, comments: "We have once again, had a good start to the year, with transactions alreadyexchanged or completed or agreements for lease exchanged that will providefuture investment sales which should give rise to property profits in excess of£16m. The investment property market remains very strong and the occupationalmarket, although variable, offers opportunities for an active developer. Thegeneral economic climate is perhaps more uncertain than for some time butnonetheless, I am looking forward with confidence to another year of progress." 13 February 2006 ENQUIRIES: St. Modwen Properties PLC www.stmodwen.co.ukAnthony Glossop, Chairman On 13 February - 020 7457 2020Bill Oliver, Chief Executive thereafter - 0121 222 9400Tim Haywood, Finance Director College Hill www.collegehill.comGareth David 020 7457 2020Matthew Gregorowski A presentation for analysts will be held at 11.00am today at College Hill, 78Cannon Street, London EC4 ST MODWEN PROPERTIES PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2005 Chairman's Statement Results I am pleased to report on a thirteenth successive year of record results; a yearin which we have not only produced a strong trading and revaluation performancebut have also made good progress in marshalling future projects through ourdevelopment hopper. Profits before tax increased by 15% to £46.3m (2004: £40.3m) earnings per sharegrew by 15% to 28.7p (2004: 25.0p) and net assets per share increased by 24% to273.9p (2004: 221.4p). Our key performance measurement of total pre-tax return on average shareholders'funds was 28.6% (2004: 27.1%), benefiting from a revaluation uplift of 8.8%(£39.2m) (2004: 5.5% (£26m) of our investment property portfolio, including ourshare of joint ventures. Dividends Your board is recommending a final dividend of 5.9p (2004: 5.1p) per ordinaryshare, making a total distribution for the year of 8.8p (2004: 7.6p), anincrease of 16%. This final dividend will be paid on 28 April 2006 toshareholders on the register on 7 April 2006. Trading, Marshalling and Acquisitions Property profits increased by 21% to £41.2m (2004:£34.0m) as a result of 38property disposals, the most significant being: • North City shopping centre at Harpurhey, Manchester,• the Kirkby Shopping Centre,• the remainder of the first phase of Worcester Retail Park,• a distribution facility for Pirelli at Barton Business Park, Staffordshire,• further industrial / distribution schemes at Trentham Lakes, Stoke on Trent, and• residential land sales at Halebank, Widnes, Brierley Hill, West Midlands, Hilton, Derbyshire, and Norton, Stoke on Trent. Net rental income for the year increased by 4% to £39.8m (2004: £38.4m). As aresult of the programme of disposals the gross portfolio rent roll at 30November 2005, including our share of joint ventures, fell to £40.8m (2004:£44.8m). Excellent progress was made in marshalling schemes to produce future profits: • we are on site at two of our major mixed use town centre regeneration schemes in London - Edmonton Green and Wembley Central• we have obtained major planning consents at Farnborough, St Matthew's Quarter, Walsall, and Washwood Heath, Birmingham• we have exchanged development agreements at Bedford, Hatfield, Hednesford, Staffordshire, and Castle Hill, Dudley• Trentham Gardens, our major heritage restoration project in Staffordshire, is progressing well and should be profitable in 2006 Acquisitions, whilst less than in recent years, were still substantial,comprising some 200 acres with significant projects in: • Burton upon Trent• South Ockendon, Essex• Telford• Quedgeley, Gloucestershire, and• Hillington, Glasgow Further details on all these projects and the company's performance can be foundin the Operating and Financial Review ("OFR"). International Financial Reporting Standards ("IFRS") This will be the last year in which we will report under UK Generally AcceptedAccounting Practice ("GAAP"). In future, we will be required to adopt IFRSwhen preparing accounts. IFRS will have an impact on the presentation of the Group's accounts althoughnot on the underlying business or its cashflow, the principal areas of impactbeing referred to in the OFR Governance We have always sought to manage our affairs to the highest standards ofintegrity and business competence and your board takes proper cognisance ofcorporate governance initiatives. Any departures, however minor, will be forgood reasons, in the spirit of the regulations and will be fully and openlyexplained. Directors and Employees The continued run of record results and the good prospects for the future couldnot have been achieved without committed and highly competent people at alllevels in the organisation. My thanks go to all the team for the efforts theyhave put in to achieving yet another successful year. The company continues to benefit from a strong board. The executive team issupported by committed non-executives who are not afraid to question andchallenge. In the year James Shaw, who had been a non-executive director for four years,left the board on taking up a position with UK Coal which we both felt mightlead to a perception of a potential conflict of interest. We were fortunate tofind excellent replacements in Mary Francis and John Salmon. Mary Francis has had a long and distinguished career in both the public andprivate sectors, having worked in a wide variety of roles, including thecorporate finance department of Hill Samuel & Co., for HM Treasury onprivatization and European Union policy, in 10 Downing Street, and as DeputyPrivate Secretary to the Queen. She was Director General of the Association ofBritish Insurers from 1999 until she stepped down last year. She is anon-executive director of the Bank of England, Centrica plc and of Aviva plc. John Salmon was formerly a senior partner at PricewaterhouseCoopers withresponsibility for a range of major listed companies until his retirement lastyear. A member and former Deputy Chairman of PwC's Supervisory Board, he alsoinitiated and led that firm's services to non-executive directors. He is also amember of the council and executive committee of the British Heart Foundation. Prospects The company has, yet again, had a good start to the year with transactionsalready exchanged or completed or agreements for lease exchanged that willprovide future investment sales which should give rise to property profits inexcess of £16m. As reported in the OFR, the investment property market remains very strong andthe occupational market, whilst patchy, offers opportunities for an activedeveloper. The general economic climate is perhaps more uncertain than for sometime but nonetheless, I am looking forward with confidence to another year ofprogress for your company. ANTHONY GLOSSOPCHAIRMAN ST MODWEN PROPERTIES PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2005 OPERATING AND FINANCIAL REVIEW Our Market The company's core operation is within the UK property development andinvestment market. The UK property investment market is currently very strong and is likely toremain so as long as interest rates and returns from bonds remain low and thecountry's economic performance is satisfactory. The occupational marketremains patchy but in a balanced portfolio there are enough opportunities tocreate a reasonable development programme. Currently the retail market is showing some signs of weakness as consumer spendeases and the stronger retailers satisfy some of their demand by taking spacevacated by weaker retailers. However, the food retail market remains strong asdoes the market for any well differentiated retail offer such as at TrenthamGardens. The industrial building market follows the pattern of recent years withmanufacturing enquiries being limited but distribution and service led enquiriesremaining strong. The office market is the most difficult to read. Increasing strength infinancial and professional services is fuelling greater confidence intraditional office core areas whilst business parks continue to have to fighthard for every bit of business The market for residential land remains strong. There is more uncertainty in theapartment market, but there is a continued demand for a competitively pricedproduct. The company's only other activities relate to limited operating ventures enteredinto to support the core operation such as those at the Avonmouth landfill site,Solihull ice rink and Trentham Gardens. Competitive and Regulatory Environment The UK property market is extremely competitive. Natural barriers to entry arelow. Finance is usually readily available and advantages of scale, althoughthey do exist, are limited. It is rare, therefore, for the company not to be inserious competition whether it is seeking to make an acquisition, to achieveselection as preferred developer, or to secure an occupier. By contrast the regulatory environment is restrictive and becoming increasinglymore so. Attempts to simplify and speed up the planning process have notworked and the cost and timescale involved in obtaining planning permission iscontinuing to escalate. The process of recycling brownfield land is becomingsteadily more challenging with risk based environmental assessments requiring ahigher level of understanding of the decontamination process. To a considerable extent the regulatory challenges create an opportunity inwhich a developer with appropriate skills and determination can build along-term viable business. Business Model and Strategy St. Modwen is at heart a property development company. Many of its assets may beclassified as investments but that is because of long project gestation and thefact that the company is looking for both an income and a capital return. Theaim is that no property, whether held in work-in-progress or classified as aninvestment, should be acquired or retained unless it is believed thatsignificant value can be added to that property by the company's own efforts -asset management, refurbishment or redevelopment - in a flat market over a fiveto fifteen year horizon. A classic challenge for property development companies is how to achieve aconstant or rising stream of profits from an activity which some see asinevitably inconsistent. St. Modwen has sought to meet this challenge by aconstant and long-term strategy. Through a network of six regional offices, wecarry out a programme of development in our areas of speciality. These are towncentre regeneration; partnering industry in its restructuring, brownfield landrenewal and heritage restoration. Much of the programme is carried out withpartners from both the public and private sectors. The skills needed to deliversuccessful partnership projects have become a core feature of our business. Our public sector partnerships include: • long term joint companies with local authorities such as Stoke on Trent Regeneration and Widnes Regeneration (Halton Borough Council), both 81:19 ventures;• development agreements or leases with local authorities such as Bedford, Dudley, Enfield, Liverpool, Manchester, Rushmoor, and Welwyn & Hatfield; and• development agreements with regional development agencies such as Advantage West Midlands and South West England We have a number of partnerships with other property companies, includingPrologis (Barton Business Park), and Rotch (Wembley Central and Woking), but themost significant is our Key Property Investments operation with Salhia RealEstate of Kuwait. This operation which now owns property assets of £309m wasformed in 1997 to enable us to take on larger projects. Starting with a £35mportfolio from Refuge Assurance, it has acquired Farnborough (Kingsmead andQueensmead), the Marconi and Alstom portfolios, Elephant & Castle, and TheMalls, Basingstoke. St Modwen is the operating arm of the joint venture andreceives management, project management and development fees for its work. The key to our strategy is the continuing acquisition of well locatedopportunities to top-up the hopper. The hopper is a bank of development opportunities. It is: • long term - We seldom source properties for development within three years. The normal development horizon is five years or more;• broadly based - St. Modwen is not a sectoral specialist. We can deliver successfully a wide range of outputs. St. Modwen can, therefore, adjust the mix of its development programme to match market opportunities;• geographically spread - Operating through its regional offices, St. Modwen combines the strength of a local developer with the power of a national company;• focused upon regeneration - St. Modwen goes where it is needed, rather than where• it is fashionable. It therefore builds long-term relationships and obtains repeat business;• acquired in its rawest state - Most added value and more flexibility can be achieved if a developer tackles property and risk from the outset of the regeneration process. This needs special skills in: • land assembly including compulsory purchase and occupier relocations;• dealing with derelict or contaminated land;• total understanding of the planning process;• expertise in infrastructure delivery;• and, of course, in development itself and intelligent finance The properties in the hopper are held through a variety of structures, such as: • wholly owned but sometimes with overage to a vendor• joint venture, ranging from 50/50 to 81/19, typically with management, project management or development fees for the company as the active partner• development agreements under which the land or most of it is not acquired until actually required for development In addition projects are carefully structured to optimize cashflow through earlyreceipts. The hopper now comprises more than 4,500 acres of developable land and 18 townor district centre schemes In the past six years the size of the hopper has increased, as follows: 1999 2005Total Acres 3,239 6,929 Developable - Town Centre 105 189 - Employment 702 3,438 - Residential 652 894 1,459 4,521 One of the company's key performance indicators is to acquire 120% ofdevelopable land opportunities used in the year. The hopper's performance in theperiod 1999 to 2005 demonstrates that this indicator has been comfortablyexceeded This business model requires hands on management, a skilled committed team and aflexible medium-term programme of marshalling projects from the hopper throughto the shorter-term development programme. The consistency of future performancedepends on the successful interaction of these elements. In order to understand local community needs, to develop strong localrelationships, and to exercise on the spot control, the company operates througha network of six regional offices. Office Staff Rent Tenants Assets Roll Managed (#s) 1 (£m) 2 (#s) (£m) 2London & SE 43 19 750 330Midlands 31 22 550 295North Staffs 5 0 50 24North West 15 8 400 96South West 9 1 50 32Yorkshire 2 1 10 24Head Office 36 n/a n/a n/aOperating Ventures 72 1 30 21Total 213 52 1,840 822 1 Staff numbers include site-based personnel 2 Rent roll and assets managed include 100% of joint ventures All development and property management activity is undertaken by the regionaloffices, supported and supplemented by a strong central team, providingconstruction, planning, financial, and commercial expertise. Financial Objectives The company has a straightforward economic model with a target to double netasset value per share every five years. This has been achieved for over a decadeby targeting two key performance indicators, a 20% development return on openingWIP and a 15% total return on fixed assets. Although these returns are notachieved on every project, the company has produced a steady stream ofabove-target returns. We also measure return on shareholders' funds as a key performance indicator.This has remained within a band of 24% to 29% over the past five years. Year Development Total Return on Return on Return on Shareholders' Opening WIP 1 Fixed Assets2 Funds32005 21.6% 19.7% 28.6%2004 17.9% 17.9% 27.1%2003 25.5% 16.4% 24.1%2002 22.9% 14.9% 25.3%2001 20.2% 18.1% 25.3%2000 24.4% 17.4% 25.2%Target 20% 15% 25% 1 Development return on opening wip = property development profit for the yearas a percentage of the carrying value of opening wip (including our share of joint venture results) 2 Total return on fixed assets = profit on sale of fixed assets + net rentalincome + revaluation surplus as a percentage of the carrying value of openingfixed assets (including our share of joint venture results) 3 Return on shareholders' funds = profit before tax + revaluation surplus as apercentage of average shareholders' funds (including our share of joint ventureresults) As a result in the last five year measurement period which ended at 30 November2004 net asset value per share increased by 121% from 100.1p to 221.4p. The 24%uplift in 2005 to 273.9p is an excellent start to the present five year period. Development & Performance of the Business Trading A 21% increase in property profits to £41.2m (2004: 34.0m) was the main driverbehind a 15% increase in pre-tax profits to £46.3m (2004: £40.3m). 38 property disposals were completed in the period with 11 projects earning over£1m. The North City shopping centre (120,000 sq. ft) at Harpurhey, Manchester wassold on completion of its development and the Kirkby shopping centre (216,000sq. ft) was sold on completion of its initial asset management programme afteran adjoining landowner was selected for the next phase of the town centredevelopment. A further part (22,000 sq. ft) of Worcester Retail Park was soldafter we had secured our position on the next phase through a joint venture withHelical Retail Limited. We commenced construction on the first section of the main phase of theredevelopment at Edmonton Shopping Centre in North London. This phase which isthe first of the numerous town centre mixed-use schemes we are planning, isbeing constructed in two sections and includes a 55,000 sq. ft leisure facility,a 26 stand bus station, a 66,000 sq. ft Asda superstore and 150,000sq. ft ofadditional retail space together with a 20,000 sq. ft bingo hall, a 20,000 sq.ft Primary Healthcare Facility and 177 apartments which have been pre-sold to aconsortium of housing associations for both private housing and social rent. We have also started work on our second major mixed-use town-centre scheme atWembley, Central Square Shopping Centre, a joint venture with Rotch. Justbefore the end of the year, we commenced a demolition phase heralding the launchof a scheme comprising 138,000 sq. ft of retail and leisure space, 235residential apartments, of which 85 are affordable and have been pre-sold toGenesis Housing Association, refurbished offices and multi-storey car park and anew public square fronting the High Road all of which will facilitate a majorupgrade of Wembley Central station, one of the transport links that will servethe new Wembley Stadium. In the industrial/distribution sector we completed a pre-sold 365,000 sq. ftdistribution facility for Pirelli at our Barton Business Park in Staffordshire,a joint venture with Prologis, and are constructing a pre-let 70,000 sq. ftmanufacturing facility for Intier which has been sold since the year-end. At Trentham Lakes we are constructing pre-sold facilities for Glen Dimplex,(437,000 sq. ft distribution) and Rieter, (100,000 sq. ft manufacturing) whichwill be completed in the present year. We have also completed or have under construction a number of smaller schemes inAvonmouth, Brighton, Halesowen, Huddersfield, Runcorn, Sheffield, Stoke-on-Trentand Walsall. As the office market has been more difficult our activity in that sector hasbeen relatively subdued. The last building of 10,000 sq. ft from the firstphase at Quinton Business Park, Birmingham let to RPS was sold in the period.The 50,000 sq. ft second phase has been completed with one building (10,000 sq.ft) let and since the year-end sold with fair progress being made on the letting/sales of the other two buildings. We have moved our Midlands regional and HeadOffice into one of these buildings. Good progress has been made on the 45,000 sq. ft office village scheme atEtruria Valley, Stoke-on-Trent. Two of the buildings have been completed one nowbeing under offer to the Probation Service with interest in the other. The thirdbuilding has been let to the Crown Prosecution Service and it will be completedin March. Residential land sales from our brownfield land renewal programme have againfigured prominently in the year with completions at Halebank, Widnes; BrierleyHill, West Midlands; Coalville, North Leicestershire; Hilton, Derbyshire; andNorton, Stoke-on-Trent. Our supporting operating ventures made useful progress in the year. TheAvonmouth landfill made a contribution of £900,000, the Solihull Ice Rink£300,000 (2004: £200,000) and whilst Trentham Gardens made a loss of £500,000this was to be expected in the first year of such a new venture and it isanticipated that it will move into profit in 2006. Net rental income for the year, including our share of rent from joint ventures,increased by 4% to £39.8m (2004: £38.4m). Acquisitions in the year contributedonly £0.5m additional rent (as the majority of properties acquired during theyear came without income). However the full year benefit of acquisitions made in2004 (including the Powertrain facility at Longbridge, The Malls, Basingstokeand Long Marston) was £3.7m, which offset the £2.6m of rental income lost ondisposals (principally Kirkby Shopping Centre, Crewe Hall Industrial Estate andWorcester Retail Park). At 30 November 2005, the gross portfolio rent roll, including our share of rentfrom joint ventures, was £40.8m (2004: £44.8m). A number of our sites such asFarnborough Town Centre are currently being managed in such a way as to enabledevelopment in the near future, and a number of recently-acquired sites(including South Ockendon, Essex and Brockton Business Park, Telford) wereacquired vacant. Consequently, during the year under review, our overall voidsincreased from 13.1% to 18.7%, which is entirely consistent with our developmentstrategy for the portfolio. In common with most property companies, we experienced a number of tenantfailures during the year, reflecting the increasingly difficult economicconditions for many occupiers. Through the close direct involvement of both ouron-site and central staff, we were able to avoid any write-offs from theadministrations of MG Rover, Klaussner, Gaskell Furniture, and Richard LawsonAutologistics, and to work sympathetically with several other tenants to securetheir immediate futures. In the case of our Longbridge site near Birmingham, we continue to receive renton a monthly basis from the Administrative Receiver of MG Rover, at thepre-administration rate of £5m p.a. The site is being occupied under licence byNanjing Automobile Corporation until 22 February 2006. We are currently indiscussion with this company concerning its potential future requirements, foran extension of that licence, and for long-term arrangements if it should decideto recommence motor manufacturing on this site. Marshalling (projects in active preparation) Progress made on projects in 2005 will contribute to performance in 2006 andbeyond. - The main phases of demolition and construction have been commenced atEdmonton and Wembley, and these major schemes will continue to contribute toprofit in future years - Planning consent was formally obtained for the Farnborough mixed-usescheme, we have exchanged agreements with the foodstore anchor, and we await theoutcome of a highway closure enquiry held in January 2006. - Planning was also obtained for one million sq. ft of distribution space atWashwood Heath, Birmingham; a 99,000 sq. ft. first phase of a business park atHenley Park, near Guildford; a further 50,000 sq. ft phase of officedevelopment at Quinton Business Park, Birmingham; a 118,000 sq. ft super storefor Asda at St. Matthew's Quarter Walsall with an associated 1,000 spacemulti-storey car park, 41 apartments and 6,000 sq. ft of additional retail; anumber of industrial building and car dealership schemes at Trentham Lakes,Stoke-on-Trent; a 500 unit residential and 180,000 sq. ft commercial scheme atTaunton in conjunction with AXA; - Development agreements have been exchanged on a number of schemes where wehave previously been appointed preferred developer such as Bedford; Hednesford,Staffordshire; Great Homer Street, Liverpool; Hatfield and Castle Hill, Dudley.In the last two cases we also have obtained resolutions to grant planningconsent - We are on site constructing pre-let or pre-sold industrial buildingschemes at Barton Business Park; Hilton, Derbyshire; and three at TrenthamLakes. - At Trentham Gardens, the gardens attracted 93,000 visitors (2004: 17,000),and the monkey park, model railway and lake cruiser had good first seasons eventhough they only came on stream progressively from June onwards. The firstphase retail - 65,000 sq. ft garden centre and 36,000 sq. ft. heritage craft andtourist retail traded well and an advanced section of the second phase (8,000sq.ft) was handed over at the end of the year. The remainder of the second phaseis under construction for completion in midsummer and should support thecontinued progress on this major project. - In Newham we continue to progress the scheme at Upton Park wherewe are the preferred developer, and we are one of three on Southwark's shortlistfor the major £1.5bn Elephant & Castle scheme. Acquisitions Because of the highly competitive and fully valued market, and ourdetermination to be able to add value to all of our transactions, 2005 was aquieter year for acquisitions than in the recent past. However, we acquired some 200 acres of land for commercial or futureresidential development principally at Burton upon Trent 21 acres with 425,000sq. ft of existing space; South Ockenden, Essex 29 acres with 600,000 sq. ftexisting space; Telford (two sites totalling 40 acres with 290,000 sq. ftexisting space, Quedgeley, Gloucester (two sites totalling 50 acres) andHillington, Glasgow 31 acres with 800,000 sq. ft. existing space. We also acquired a number of properties to reinforce schemes where we werealready preferred developer such as in Bedford and Hatfield or to create furtherphases of existing schemes such as at Harpurhey and Wythenshawe. Our total expenditure on acquisitions during the year was £40m and our hopperwas boosted to almost 7,000 acres, of which some 4,500 is developable. Since theyear end, we have acquired Melton Park, Hull, a 234 acre developmentopportunity, the principal infrastructure for which is already in place. We havealso been selected as preferred developer at Silverstone, subject toratification by the British Racing Drivers' Club members. Financial Items Overheads increased during the year by £2.4m to £17.3m (inclusive ofemployee share option costs), principally as a result of recruitments and theregional expansion needed to match our increased activity. However as apercentage of profit before tax, overheads remained unchanged at 37%. Duringthe year we recruited an additional 11 staff, principally surveyors orconstruction team members. We now have 94 employees across our six offices, 47on operating sites and 72 in other activities. We continue to adopt the policy of satisfying employee share options, whenexercised, without issuing new share capital, which would dilute returns forexisting shareholders. With 4m outstanding options (held by 162 employees, anda 49% share price increase in the year, the impact has been a charge to theprofit and loss account of £5.5m (2004: £3.8m). The company's option schemes(which comprise the SAYE scheme which is open to all employees, and theexecutive share option scheme, which is available to 37 senior executives)remain an important tool in the recruitment and retention of key staff, and inaligning employee interests with those of shareholders. Pensions - A formal actuarial valuation of the company's final salary pensionscheme (which has been closed to new entrants since 1999) was undertaken, as at5 April 2005. This exercise was brought forward by a year in order to assess theimpact of the changes made to scheme benefits in 2004, as the company sought tolimit its exposure to escalating pension costs. The company also made a specialcash contribution to the scheme of £2m in that year. The valuation showed adeficit of £1.5m (reduced from £3.9m as at 30 April 2003). The company hastherefore provided £0.7m (2004: £1.5m) in the accounts, a sum which includes theregular cost of current service, and the amortisation of the past servicedeficit, as required under SSAP 24. Finance Costs have increased to £19.8m (2004: £17.2m). Average group borrowingsincreased by £27m to £211m due to the steady programme of acquisitions andincreased development activity in the year, while average joint ventureborrowings increased by £29m to £188m, following the acquisition of The MallsBasingstoke in November 2004. In a stable interest rate environment, we havenevertheless managed to achieve a reduction in our effective cost of borrowingthrough a combination of hedging and selective renegotiation of facilities. Thishas resulted in a reduced weighted average rate of interest payable as at 30November 2005 of 5.6% for company borrowings (2004: 6.2%). The cost of jointventure borrowings fell to 5.7% (2004: 5.8%). The Group's borrowings are at variable rates of interest, although weactively manage our interest rate exposure using interest rate swaps. At theyear-end, 61% of company net borrowings were hedged in this way (2004: 56%), and61% of joint venture borrowings (2004: 51%). Our strategy is to hedge two thirdsof all borrowings, with the maturity of both hedges and facilities being alignedwith individual schemes where applicable, or over a maximum of 5 years forrevolving facilities. The Group has not capitalised interest on its developments or itsinvestments, but expensed all interest as it has arisen. Taxation - the effective rate of tax charge for the year, including provisionfor deferred taxation, has fallen to 23.9% (2004: 24.5%) due to the availabilityof industrial building and capital allowances and land remediation relief forexpenditure on brownfield renewal. It is anticipated that, with the continuedutilisation of capital allowances, the effective rate will remain below thestandard rate of Corporation Tax. Benefit from tax planning activities is onlyrecognised when the outcome is reasonably certain. Cash Flow -The company continues to produce a strong cash flow, basedon recurring net rental income of £39.8m and an ongoing programme of assetdisposals, which generated £148m in the year. This enabled us to fund a £85mdevelopment programme, together with property acquisitions of £40.3m during theyear, and also achieve a £19.4m reduction in net debt. Balance Sheet Investment Properties - the total value of investment properties,including 100% of joint ventures, increased by £36m during the year to £651m The independent valuation at 30 November 2005 resulted in an uplift onour share of the portfolio including our share of joint ventures of 8.8%(£39.2m). As well as benefiting from our active and hands-on approach to assetmanagement, the revaluation increase reflects the continuing strong investmentmarket for the type of secondary properties that are typical of our portfolio.During the year, we have seen yields move in on all asset classes, butparticularly retail, where we are typically carrying our shopping centres at netinitial yields of around 6%. The removal of the disadvantaged areas relief from Stamp Duty Land Taxhad no adverse effect on our valuations, since we had assumed this to be only atemporary relief, and had therefore not factored any benefit into our carryingvalues. The valuation approach, which accords with the RICS Appraisal and ValuationStandards and which has been, consistently implemented by our external valuers,King Sturge, values investment properties in their current condition reflectingpre-development voids and short-term occupancies and does not anticipate gainsfrom future development activities. Assets held in work in progress are not included in the annual valuation. Other Investments - our 27.2% stake in Northern Racing PLC, an AIM-listedcompany, was accounted for on acquisition in accordance with UITF 31 (Exchangesof businesses) and subsequently as an equity accounted associated undertaking.As a result, the carrying value of our investment at 30 November 2005 is £10.5m.This represents the fair value of the assets acquired, plus post acquisitionprofits. We are not able to recognise the AIM market value of our stake, which,at the share price of 140p on 30 November 2005, was £13.5m. Gearing and Financing At the year end, Group net borrowings had reduced to £209m (2004: £227m),representing a gearing ratio of 63% (2004: 85%). This is below our preferredgearing range of 75% to 125%, but gives us ample headroom and flexibility tomove swiftly to undertake further development and acquisitions. Bank facilities,excluding joint ventures, totalled £309m at the year-end (2004: £327m). At thislevel, we have undrawn committed facilities of £100m. In addition, the Group's share of debt within joint ventures, which is securedsolely upon the assets within the relevant joint venture, was £97m (2004: £99m). The Group is financed by shareholders' funds and bank debt ofvarying maturity profiles, which is appropriate to the needs of the Group andreflects the type of assets in which it invests. At 30 November 2005, theweighted average facility duration was 5 years (2004: 5 years). Net Asset Value per share Basic net asset value per share at 30 November 2005 was 273.9p, anuplift of 23.7% in the year. The triple net asset value increased by 23% to246.7p, after taking into account industry-standard adjustments for marking debtto market values, and providing for capital gains tax on revaluation surpluses.Adjusted net asset value, our preferred measure, which values our investment inNorthern Racing PLC at market value, and discounts the remote likelihood ofpreviously received capital allowances being clawed back, has increased by 20%to 253.1p. A fuller reconciliation is shown in Note 13. International Financial Reporting Standards ("IFRS") The Group will be required to adopt IFRS when preparing accounts forthe year ended 30 November 2006. Our first statements under IFRS will be forthe six months ended 31st May 2006, when we will restate the comparative firsthalf and full year figures for 2005. IFRS will have an impact on the presentation of the Group'saccounts. The principal areas affected are the same as for all property companyaccounts, namely: • property valuation movements - which will be taken through the income statement rather than as a movement on reserves• deferred tax - which must be provided on asset revaluations• dividends - which will only be recognised in the income statement when formally approved, rather than when proposed• head leases - the carrying value of leasehold properties and long term liabilities will both be increased by the present value of future ground rents• lease incentives - which will be spread over the period to the end of the lease or first break, as appropriate• and defined benefit pension schemes - the scheme deficit will be included on the balance sheet During the transition to IFRS we will provide reconciliations between UK GAAP and IFRS to increase understanding of the main changes. It is important to note that, although IFRS will significantly affect the presentation of financial statements, it will not affect the Group's cash flow or its future strategic direction. Financial Statistics 30 Nov 2005 30 Nov 2004Net Borrowings £209m £227mGearing 63% 85%Gearing, incl share of JV debt 103% 137%Average debt maturity 5 years 5 years% debt hedged 61% 56%Interest Cover 3.3 3.3Undrawn committed facilities £100m £96mReturn on capital 28.6% 27.1% THE FUTURE The company's hopper (details of which are set out above) is an underlyingstrength which should provide a stream of future profitability. The key issues determining the company's future performance are: • Whether we can continue to acquire sufficient opportunities to top up the hopper• How we marshal projects through land assembly and planning to create annual programmes, and• Whether the occupational market across the various sectors will be sufficiently strong to support those programmes We have strategies in place to address each of these issues: • Our network of regional offices, supported from the centre, gives us a good prospect of identifying and securing the right opportunities• Regular detailed reviews of all live projects mean that issues associated with marshalling projects can be identified and addressed in a timely manner• By operating across a wide range of property sectors, we spread the risk of an occupational downturn in any particular sector The current view is that, subject only to macro-economic conditions, futureprospects are good. The current year has started well. The developments at Edmonton and WembleyCentral continue to make good progress. At Trentham Lakes, Stoke on Trent, wehave completed a 100,000 sq ft manufacturing facility for Rieter, and willcomplete shortly a 437,000 sq ft distribution facility for Glen Dimplex. We havealso pre-let a 64,000 sq ft distribution facility for Portmeirion Potteries. At Barton Business Park, we have sold the 70,000 sq ft manufacturing facilityjust completed for Intier Automotive, at Quedgeley Gloucestershire we havepre-let a 95,000 sq ft facility for Prestoplan, and at Hilton, Derbyshire wehave pre-let a 70,000 sq ft facility for Daher Sawley. A 10,000 sq ft office building on phase two of Quinton Business Park has beenlet and sold, and construction has started on phase three (comprising another50,000 sq ft in three buildings). The 45,000 sq ft Office Village development atEtruria Valley, Stoke on Trent is proving very successful, with one building letto Crown Prosecution Services, and the other two buildings under offer. Residential land sales continue to attract strong interest, with contractsexchanged for the sale of an 11 acre tranche of land at Hilton, Derbyshire beingunder offer. The programme for the rest of the year is taking shape. In the light of this,the Chairman reports in his statement that he is looking forward with confidenceto another year of progress for your company. BILL OLIVER TIM HaywoodCHIEF EXECUTIVE Finance Director ST MODWEN PROPERTIES PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2005 Group Profit and Loss AccountFor the year ended 30 November 2005 2004 Notes £'000 £'000 --------------- ---------------TurnoverGroup and share of joint ventures 1 152,534 130,140Less: share of joint ventures' turnover (22,988) (12,886) --------------- --------------- 129,546 117,254 --------------- ---------------Operating profitGroup operating profit 39,451 33,801Share of operating profit in joint ventures 13,337 9,808Share of operating profit in associates 1,656 967 --------------- --------------- 1 54,444 44,576 Profit on sale of investments 1 11,626 12,964 Net interest payable 2 (19,806) (17,202) --------------- ---------------Profit on ordinary activities before taxation 46,264 40,338 Taxation on profit on ordinary activities 3 (11,079) (9,861) --------------- ---------------Profit on ordinary activities after taxation 35,185 30,477 Equity minority interest (604) (464) -------------- --------------Profit attributable to shareholders 34,581 30,013 Dividends 4 (10,616) (9,132) --------------- ---------------Transferred to reserves 23,965 20,881 ========= ========= Basic and diluted earnings per ordinary share 5 28.7p 25.0pDividend per ordinary share 4 8.8p 7.6p All activities derive from continuing operations. A statement of the movement in reserves is shown in note 10. ST MODWEN PROPERTIES PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2005 Group Balance SheetAs at 30 November 2005 2004 Notes £'000 £'000 --------------- ---------------Fixed assetsTangible assets 6 376,370 367,238InvestmentsJoint venturesShare of gross assets 169,014 147,765Share of gross liabilities (104,794) (105,777)Share of net assets 7 64,220 41,988Associated companies 7 10,971 10,167 --------------- --------------- 451,561 419,393 --------------- ---------------Current assetsStocks 8 121,403 118,032Debtors 20,572 12,312Cash at bank and in hand 680 3,652 --------------- --------------- 142,655 133,996 Current liabilitiesCreditors: amounts falling due within one year (47,824) (46,213) --------------- ---------------Net current assets 94,831 87,783 --------------- ---------------Total assets less current liabilities 546,392 507,176Creditors: amounts falling due after more than one year (206,750) (231,398) Provisions for liabilities and charges 9 (5,408) (5,305) Equity minority interests (3,494) (3,103) --------------- ---------------Net assets 330,740 267,370 ========= =========Capital and reservesCalled up share capital 12,077 12,077Share premium account 10 9,167 9,167Merger reserve 10 9 9Capital redemption reserve 10 356 356Revaluation reserve 10 141,905 114,236Profit and loss account 10 167,670 133,499 --------------- --------------- 331,184 269,344 Treasury shares 10 (444) (1,974) -------------- --------------Equity shareholders' funds 330,740 267,370 ========= =========Net assets per ordinary share 273.9p 221.4pAdjusted net assets per ordinary share 13 253.1p 210.4pGearing 63% 85% ST MODWEN PROPERTIES PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2005 Group Cash Flow StatementFor the year ended 30 November 2005 2004 Notes £'000 £'000 £'000 £'000 ------------ ------------ ------------ ------------Net cash inflow from 11(a) 43,751 14,919operating activities Dividends received from 1,628 1,378joint ventures andassociates Returns on investments andservicing of financeInterest received 380 397Interest paid (13,882) (12,383)Dividends paid to minority (213) (344)shareholders ------------ ------------ Net cash outflow from (13,715) (12,330)returns on investments andservicing of finance Taxation (16,923) (9,902) Capital expenditure andfinancial investmentAdditions to investment (38,868) (106,580)propertiesAdditions to operating (1,476) (1,188)properties and othertangible assetsSale of investment 54,136 31,666propertiesSale of financial 38 10,885investments/tangible assets ----------- ----------- 13,830 (65,217)Acquisitions and disposalsInvestment in joint - (11,669)ventures and associatesEquity dividends paid (9,630) (7,943) ----------- -----------Cash inflow/(outflow) 18,941 (90,764)before use of liquidresources and financing FinancingIncrease in debt 10,815 116,505Decrease in debt (35,688) (16,933) ------------ ------------ (24,873) 99,572Purchases of own shares - (2,320)Amounts received under 460 750share option schemesRedemption of loan notes (22) (14) ------------ ------------ Net cash (outflow)/inflow (24,435) 97,988from financing ------------ ------------(Decrease)/increase in cash 11(b) (5,494) 7,224in the year ======= ======= ST MODWEN PROPERTIES PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2005 Group Cash Flow Statement (Cont'd)For the year ended 30 November Reconciliation of net cash flow to movementin net debt 2005 2004 £'000 £'000 (Decrease)/increase in cash in the year (5,494) 7,224Cash flow from change in debt 24,873 (99,572)Loan notes redeemed during the year 22 14 ----------- ----------- Change in net debt resulting from cash flows 19,401 (92,334)Net debt at 1 December (227,302) (134,968) ------------ ------------Net debt at 30 November (207,901) (227,302) ======= ======= ST MODWEN PROPERTIES PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2005 Supplementary StatementsFor the year ended 30 November 2005 2004 £'000 £'000 ------------- -------------Group Statement of Total Recognised Gains and LossesProfit for the year 34,581 30,013Taxation on realisation of prior years' revaluation surpluses (1,308) (2,213)Unrealised surplus on revaluation of group investment properties 21,593 21,030Unrealised surplus on revaluation of properties held by joint ventures 17,590 5,044 -------------- --------------Total recognised gains and losses since last annual report 72,456 53,874 ========= ========= 2005 2004 £'000 £'000 -------------- --------------Note of Historical Cost Profits and LossesReported profit on ordinary activities before taxation 46,264 40,338Realisation of property revaluation gains of earlier years 11,514 1,812 -------------- -------------- 57,778 42,150 ========= =========Historical cost profit for the year after taxation, minority interests 34,171 20,480and dividends ========= ========= 2005 2004 £'000 £'000 -------------- --------------Group Reconciliation of Movements in Shareholders' FundsProfit attributable to shareholders 34,581 30,013Dividends (10,616) (9,132) --------------- --------------- 23,965 20,881 Unrealised surplus on revaluation of group investment properties 21,593 21,030Unrealised surplus on revaluation of properties held by joint ventures 17,590 5,044Taxation on realisation of prior years' revaluation surpluses (1,308) (2,213) Purchase of own shares - (2,320)Shares transferred to employees 1,530 1,611 --------------- ---------------Net additions to shareholders' funds 63,370 44,033Opening shareholders' funds 267,370 223,337 ------------- -------------Closing shareholders' funds 330,740 267,370 ======== ======== ST MODWEN PROPERTIES PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2005 Notes to the Financial Statements 1. Turnover and Profit Analysis 2005 2004 -------------------------------------- -------------------------------------- Cost of Cost of sales sales Turnover Profit Turnover Profit £'000 £'000 £'000 £'000 £'000 £'000Rental income ------------- ----------- ----------- ------------- ----------- -----------Group 32,970 (3,819) 29,151 33,285 (4,139) 29,146Share of joint ventures 12,164 (1,498) 10,666 10,991 (1,692) 9,299 Property developmentGroup 92,662 (65,830) 26,832 82,498 (62,021) 20,477Share of joint ventures 10,824 (8,049) 2,775 1,895 (1,334) 561 Other activities 3,914 (3,295) 619 1,471 (2,461) (990) ------------- ---------- ----------- ------------- ---------- ----------- 152,534 (82,491) 70,043 130,140 (71,647) 58,493 ======= ===== ======= =====Share of operating profit in 1,656 967associates Administrative and other operating expensesGroup (17,151) (14,832)Share of joint ventures (104) (52) ---------- ---------- Operating profit 54,444 44,576 Profit on sale of investment - 4,883Profit on sale of investment 11,626 8,009properties - group- joint ventures - 72 ---------- ----------Profit before interest 66,070 57,540 ====== ====== 2. Net Interest Payable 2005 2004 £'000 £'000 ------------ ------------Interest payable on bank and other loans and overdrafts 14,126 12,397 Interest receivable (372) (437) ------------ ------------Group interest charge 13,754 11,960 Share of joint ventures' net interest 5,759 5,002 Share of associated companies' net interest 293 240 ------------ ------------ 19,806 17,202 ======= ====== 3. Taxation on Profit on Ordinary Activities(a) Analysis of Charge in Period 2005 2004 £'000 £'000 £'000 £'000 ---------- ---------- ---------- ----------Current taxUK corporation tax on profits of the 9,792 9,640periodAdjustments in respect of previous (750) (2,174)periods ---------- ---------- 9,042 7,466 Share of joint ventures' taxation 2,094 1,151Adjustments in respect of previous (175) (460)periods ---------- ---------- 1,919 691 Share of associates' taxation 431 73Adjustments in respect of previous - (391)periods ---------- ---------- 431 (318) ---------- ----------Total current tax (note(b)) 11,392 7,839 Deferred taxOrigination and reversal of timing (243) 1,205differences (note 9)Share of joint ventures' origination and (70) 817reversal of timing differences --------- ---------Taxation on profits on ordinary 11,079 9,861activities ===== ===== (b) Factors Affecting Tax Charge ForPeriod 2005 2004 £'000 £'000 ---------- ----------Profit on ordinary activities before tax 46,264 40,338 ====== ======Profit on ordinary activities at the standard rate of UK 13,879 12,102Corporation Tax of 30%Disallowed expenses and non-taxable income (719) (631)Capital allowances for the period in excess of depreciation (1,325) (1,330)Short term timing differences 500 408Net capital gains on disposal of investment properties - 478Other (18) (163)Adjustments to tax charge in respect of previous periods (925) (3,025)(including joint ventures) ---------- ----------Total current tax 11,392 7,839 ====== ====== 4. Dividends 2005 2004 £'000 £'000 ------------- -------------Ordinary 10p shares - proposed final dividend of 5.9p (2004: 5.1p) 7,117 6,125 - interim dividend of 2.9p (2004: 2.5p) 3,499 3,007 ------------- ------------- 10,616 9,132 ======= ======= 5. Earnings per Share Earnings per ordinary share is calculated as follows: (a) Basic earnings per ordinary share is calculated by dividing the profitattributable to ordinary shareholders of £34,581,000 (2004: £30,013,000) by theweighted average number of shares in issue during the year (excluding the sharesheld for share incentive schemes which are owned by the Employee Benefit Trust)of 120,397,435 (2004: 120,036,689). (b) As the group does not currently intend to issue shares to satisfyoutstanding share options, there will be no dilution of earnings arising fromthe exercise of employee share options. There would be no material dilution ofearnings per share if all shares currently held in the Employee Benefit Trustwere allocated to employees. 6. Tangible Fixed Assets Freehold Long Operating Plant investment leasehold properties machinery properties investment and properties equipment Total £'000 £'000 £'000 £'000 £'000 ----------------- ----------------- -------------- ----------------- ------------ Cost or valuationAt 30 November 2004 258,861 105,011 2,430 1,903 368,205Additions 36,062 2,806 171 1,305 40,344Transfers to work in progress (9,703) - - - (9,703)Disposals (40,903) (1,607) - (93) (42,603)Surplus on revaluation 9,164 12,429 - - 21,593Transfers 188 - (188) - - ------------- ------------ ----------- ------------ ------------ At 30 November 2005 253,669 118,639 2,413 3,115 377,836 ------------- ------------ ----------- ------------ ------------ DepreciationAt 30 November 2004 - - 181 786 967Charge for the year - - 40 514 554Disposals - - - (55) (55) ------------- ------------ ----------- ------------ ------------ At 30 November 2005 - - 221 1,245 1,466 ------------- ------------ ----------- ------------ ------------ Net book valueAt 30 November 2005 253,669 118,639 2,192 1,870 376,370 ======= ====== ====== ======= =======At 30 November 2004 258,861 105,011 2,249 1,117 367,238 ------------- ------------ ------------ ----------- -----------Tenure of operating propertiesFreehold 300Long leasehold 1,892 ----------- 2,192 ====== Freehold and long leasehold investment properties were valued as at 30 November 2005 by King Sturge & Co.,Chartered Surveyors,in accordance with the Appraisal and Valuation Manual of the Royal Institution of CharteredSurveyors, on the basis of open market value. Historical cost of investment properties: 2005 2004 £'000 £'000 ------------- -------------Freehold investment properties 201,134 201,872Long leasehold investment properties 72,821 71,639 ------------- ------------- 273,955 273,511 ------------- ------------- 7. Investments Held as Fixed Assets Investment Investment in joint in associated ventures companies Total £'000 £'000 £'000 ------------ ------------ ----------- At 30 November 2004 41,988 10,167 52,155 Share of revaluation of assets 17,590 - 17,590 Share of post-tax profits less 5,726 932 6,658losses Share of STRGL taxation 416 - 416 Dividends receivable (1,500) (128) (1,628) ------------ ------------ ---------At 30 November 2005 64,220 10,971 75,191 ====== ======= ====== Analysis of Group's Share of the Net Assets of the Joint Ventures: Key Others Total Property Investments Limited £'000 £'000 £'000 --------------- ------------ -------------Fixed assets 139,235 4,158 143,393 Current assets 15,534 10,087 25,621 Current (880) (3,562) (4,442)liabilities Non-current (92,802) (7,550) (100,352)liabilities ----------- ----------- ------------- 61,087 3,133 64,220 ====== ======== ======= 8. Stocks 2005 2004 £'000 £'000 ---------------- ----------------Work in progress: Developments in progress 72,821 77,506 Income-producing development property 48,525 40,450 ----------- ----------- 121,346 117,956 Goods for resale 57 76 ----------- ----------- 121,403 118,032 ====== ====== 9. Deferred Taxation Provided Unprovided 2005 2004 2005 2004 £'000 £'000 £'000 £'000 ----------- ----------- ----------- ----------- The amounts of deferred taxation provided and unprovided in the accounts are: Capital allowances in excess of depreciation 5,519 5,284 2,560 2,663 Appropriations to trading stock 1,482 1,130 - - Other timing differences (1,593) (1,109) - - --------- --------- ---------- ---------- 5,408 5,305 2,560 2,663 Revaluation of properties (including share of joint - - 30,023 21,902ventures) --------- --------- ---------- ---------- 5,408 5,305 32,583 24,565 ===== ===== ===== ===== Reconciliation of movement on deferred tax liability 2005 2004 £'000 £'000 --------- --------- Balance as at 30 November 2004 5,305 2,970 Profit and loss account (243) 1,205 Statement of total recognised gains and losses 346 1,130 --------- --------- Balance as at 30 November 2005 5,408 5,305 ===== ===== 10. Group Reserves Share Merger Capital Revaluation Profit Own Premium Reserve Redemption Reserve & Loss Shares Account Reserve Account £'000 £'000 £'000 £'000 £'000 £'000 ----------- --------- ---------- ------------ ---------- ---------- At 30 November 2004 9,167 9 356 114,236 133,499 (1,974) Revaluation of - - - 21,593 - -investment properties Prior years' revaluation - - - (11,514) 11,514 -surpluses realised Share of joint ventures' - - - 17,590 - -revaluation ofinvestment properties Retained profit for the - - - - 23,965 -year Taxation on realisation - - - - (1,308) -of prior years'revaluations Net share disposals - - - - - 1,530 ----------- --------- ---------- ------------ ---------- ----------At 30 November 2005 9,167 9 356 141,905 167,670 (444) ====== ====== ======== ======== ======== ======= 11. Group Cash Flow Statement (a) Reconciliation of operating profit to operating cash flows 2005 2004 £'000 £'000 ------------- ------------- Operating profit 39,451 33,801 Depreciation 554 308 (Increase)/decrease in debtors (8,260) 11,529 Decrease/(increase) in stocks 6,332 (33,904) Increase in creditors 5,674 3,185 ----------- ----------- Net cash inflow from operating activities 43,751 14,919 ======= ======= (b) Analysis of net debt At At 30 30 November November Cash 2004 Flows 2005 £'000 £'000 £'000 ------------ ------------ ------------ Cash Cash at bank and in hand 3,652 (2,972) 680 Bank overdraft - (2,522) (2,522) ------------ ------------ ------------ 3,652 (5,494) (1,842) ------------ ------------ ------------ Debt Debt due within one year (441) 22 (419) Debt due after one year (230,513) 24,873 (205,640) ------------ ------------ ------------ (230,954) 24,895 (206,059) ------------ ------------ ------------ (227,302) 19,401 (207,901) ====== ====== ===== 12. Financial Instruments a) Maturity Profile of Committed Financial Liabilities 2005 2004 Drawn Undrawn Total Drawn Undrawn Total £000 £000 £000 £000 £000 £000 --------- ------------ ----------- --------- ------------ ----------- One year 2,941 2,478 5,419 441 5,000 5,441 One to two years 52,170 11,163 63,333 27,000 43,000 70,000 Two to five years 63,522 86,442 149,964 110,238 48,325 158,563 More than five years 89,948 5 89,953 93,275 12 93,287 ---------- ------------ ----------- ---------- ------------ -----------Gross financial liabilities 208,581 100,088 308,669 230,954 96,337 327,291 ====== ======= ======= ====== ======= ======= Interest is payable on the above loans at a weighted average of 1.03% above LIBOR. The weighted averageperiod to maturity of borrowings was 5 years (2004: 6 years). b) Interest Rate Profile The following interest rate profiles of the group's financial liabilities are after taking intoaccount interest rate swaps entered into by the group. Fixed Rate Borrowings Floating rate Fixed rate Weighted Weighted average financial financial average time for which Total liabilities* liabilities interest rate is fixed rate (years) £000 £000 £000 % ----------- ------------ ----------- ----------- ---------- At 30 November 2005 208,581 88,581 120,000 4.92 1.3 ======= ======= ======= ======= ======== At 30 November 2004 230,954 110,954 120,000 5.11 1.6 ----------- ------------ ----------- ----------- ---------- * Of which £8,380,000 was hedged by interest rate collars (2004: £8,620,000). c) Fair Values of Financial Assets and Liabilities 2005 2004 Book Fair Book Fair Value Value Value Value £000 £000 £000 £000 ------------ ------------- ------------ -------------Primary financial instruments: Loans to joint ventures and associates 5,325 5,325 5,061 5,061 Cash 680 680 3,652 3,652Short-term loans (419) (419) (441) (441)Overdraft (2,522) (2,522) - -Long-term loans (205,640) (205,640) (230,513) (230,513) Derivative financial instruments: Interest rate swaps and collars - (281) - (538) Market rates have been used to determine the fair value ofderivative financial instruments. 13. Net asset value 2005 2004 p p ------------ ------------Net assets per share 273.9 221.4 FRS19 deferred tax provision for disposal of investment properties (27.0) (20.3) Fair value of interest rate derivatives (post tax) (0.2) (0.3) --------- ---------Triple net asset value per share 246.7 200.8 Fair value of investment in Northern Racing PLC (post tax) 1.8 5.2 FRS19 deferred tax provision on potential clawback of capital 4.6 4.4allowances --------- ---------Adjusted net assets per share 253.1 210.4 ===== ===== ST MODWEN PROPERTIES PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2005 Other information (a) The proposed final dividend will be paid on 28 April 2006 toordinary shareholders on the register at the close of business on 7 April 2006. (b) The annual report and accounts will be posted to allshareholders on 20 March 2006 and copies will be available to the public fromthat date at the company's registered office, Sir Stanley Clarke House, 7Ridgeway, Quinton Business Park, Birmingham, B32 1AF, during normal businesshours or by post. (c) The balance sheet at 30 November 2005 and the results for the yearthen ended and comparative figures for 2004 do not constitute statutory accountsin accordance with Section 240 of the Company's Act 1985. The financialinformation for the year ended 30 November 2004 is derived from the statutoryaccounts for that year which have been delivered to the Registrar of Companies.The auditors reported on the accounts; their report was unqualified and did notcontain a report under section 237 (2) or (3) of the Company's Act 1985. Theauditors, Ernst & Young LLP, have given an unqualified report under Section 235 of the Companies Act 1985, as amended, in respect of the full Groupfinancial statements for both years referred to above The statutory accounts of the year ended 30 November 2005 will be delivered tothe Registrar of Companies following the company's Annual General Meeting. (d) This announcement is prepared on the basis of accounting policiesstated in the previous year's financial statements. (e) This announcement was approved by the board of directors on13 February 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SMP.L