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Share Name | Share Symbol | Market | Type |
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Prudential Financial | TG:PLL | Tradegate | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 114.70 | 114.05 | 114.70 | 0.00 | 07:14:02 |
RNS Number:4130L Pillar Property PLC 22 May 2003 22 May 2003 PILLAR PROPERTY PLC ("Pillar") Preliminary Results for the Year Ended 31 March 2003 Pillar, the property investment and development company, is the UK's largest retail park operator, with 4.7 million sq. ft. on 23 retail parks under management. Financial Highlights 2003 2002 Profit / (Loss) before tax #15.9m (#11.7 m) Turnover* #89.2m #86.3m Earnings / (loss) per share 12.0p (4.5p) Dividend per share 8.0p 7.3p Net asset value per share 520p 433p Funds under management #2,411.4m #2,072.2m *including share of joint ventures Achievements - Net asset value per share increased by 20% - Pillar successfully led the consortium in the #695m bid for the Chartwell portfolio prime retail parks - Acquisition of 11 retail parks (including four from Chartwell) and disposal of 18 parks, in transactions worth a total of #820m - #143m return of capital to shareholders in August 2002 - First investment in Europe, with acquisition of Nassica retail and leisure park, Madrid, the first step in the creation of a European retail park property fund - Increased liquidity in units in Hercules ("HUT"), our retail park unit trust, with total unit sales of #136m (unit holders increased to nearly 50) Raymond Mould, Chairman of Pillar, commented; "This has been an extremely active year for the Group. We have completed the acquisition of 11 parks, and disposals of 18, totalling #820m. In addition, we have made significant progress towards increasing the liquidity of units in Hercules, by achieving unit sales of #136m, thus reducing our holding to 42% and bringing in new investors to the fund. "During the year we invested in a number of prime retail park developments, which, when completed, will be offered to Hercules. With this development pipeline, we are well placed to build our management income in the short to medium term, as these parks are completed, let and sold. "We continue to focus on increasing funds under management and on the long term earnings growth of the business, whilst identifying attractive development opportunities in the UK and Continental Europe. At the same time, we are considering ways in which we can accelerate the release of value from our asset base and increase the focus on management income and earnings growth." Enquiries: Pillar Property PLC Tel: 0207 915 8000 Raymond Mould, Chairman Humphrey Price, Finance Director Further information can be found at www.pillarproperty.com Gavin Anderson & Company Tel: 0207 554 1400 Neil Bennett/Charlotte Stone CHAIRMAN'S STATEMENT This has been another busy year for Pillar. Directly, or indirectly through the Hercules Unit Trust ("HUT"), 11 retail parks have been acquired and 18 sold for an aggregate of #820 million; we have sold all our remaining City offices other than those properties held in The City of London Office Unit Trust ("CLOUT"); we have made our first significant investment in continental Europe and we have returned a further #143 million as part of our strategy of returning capital to shareholders. Profits Profits before tax for the year to 31 March 2003 were #15.9 million compared with a loss of #11.7 million for the previous year. Management and performance fees from HUT and CLOUT amounted to #16.8 million compared to #16 million for the year ended 31 March 2002. Dividend We are recommending a final dividend of 5.7p per share making a total for the year of 8p, an increase of 9.6% over last year's total of 7.3p. The dividend will be paid on 25 July 2003 to shareholders on the register on 11 July 2003. Net assets - valuation Net assets per share were 520p compared with 433p last year, an increase of 20%, most of this increase coming from the strong performance of HUT. A contributing factor was also the recent abolition of stamp duty on sites in regeneration areas which is applicable to some of Pillar's and HUT's properties. Investment strategy As stated last year when we announced the return of capital to shareholders, our focus was to reduce our unitholding in both trusts, particularly HUT, during the year. As at 31 March 2003, Pillar's share in HUT was 42% compared with 48% at 31 March 2002. Whilst we had intended that our holding by now would have been nearer our target of 35%, we had to ensure that the sale process was an orderly one and accommodated unit sales being made by other core investors. During the year to 31 March 2003, units to a total value of #136 million have been sold of which Pillar's share was #55 million. HUT has nearly 50 unit holders and is now one of the widest held specialist property unit trusts. This indicates its increasing liquidity and broadening appeal to institutional investors and we and the fund managers will be continuing to extend this wider ownership during the forthcoming year. The total return to HUT investors during the year to 31 March 2003 was 24.7% compared with the IPD monthly benchmark of 17.9%. HUT currently has 23 parks valued at #1.8 billion with a total floor area of 4.7 million sq ft, 89% of which is on parks in excess of 100,000 sq ft. The HUT portfolio continues to be reversionary. As at 31 March 2003, its rental income is expected to increase from the current level of #88 million to #109 million when reviewed to current levels, this ignoring any future rental growth. Retail parks We continue to experience growth in the retail park sector. Although there has been much recent comment about the current state of retailing in the UK and the reduction in consumer spending, we are still seeing strong demand from occupiers for the parks, particularly for those with full open planning consents. Increasingly, more and more high street retailers are developing out-of-town formats to take advantage of the lower occupational costs, free parking and easy access that our parks offer by comparison with the high street or shopping centres. As it evolves, the retail park market is becoming more sophisticated, with planning and unit flexibility increasingly important as retailers look for smaller units with trading mezzanines to reduce the impact of rising rentals. In January, Pillar led a consortium of four parties, including HUT, which successfully bid for 19 parks being sold by Chartwell, a subsidiary of Kingfisher, for a total consideration of #695 million. The strong competition and interest shown in this prime portfolio indicates that there remains considerable institutional demand in this sector. Of the parks acquired, four were bought by HUT, two development sites by Pillar and the remainder by the other consortium parties. In addition to its investment in HUT, Pillar now has five parks in the course of development, one of which is held in a joint venture. A further three parks are being forward funded by Pillar. These developments, which are being or will be developed when appropriate planning consents are received, will amount to nearly 1.6 million sq ft of space with a value in excess of #750 million and this is a key element in ensuring that a pipeline of modern retail space can be offered to HUT over the next few years. City offices At the beginning of 2002, Pillar's net investment in the City of London was #114 million comprising units in CLOUT, our share in the joint venture owning Cannon Bridge and our ownership of an office building in Cheapside. During the year, Cannon Bridge was sold as was the Cheapside property, these sales reducing our exposure in the City by 25%. Our holding in CLOUT remains unchanged at 36%, but the value has fallen by #14 million to #73 million. The City has been a very difficult market and we believe that this situation will continue for some time to come. However, although we have seen a considerable fall in the value of the two development properties, the valuations of the investment properties which constitute 90% of the CLOUT portfolio have been less affected as they have high quality, long-term sustainable income. We remain actively committed to the long-term prosperity of the City of London and believe that the current difficulties in the market will in due course offer investment opportunities. Retail & Leisure Our two leisure schemes in Fulham and Edinburgh are now complete and are virtually fully let. We will be putting both properties on the market later this year. The Castle Quay shopping centre in Banbury, in which we have a 50% interest, is also in the process of being sold. Europe Our initial expansion into retail parks in continental Europe has been slower than we originally planned. The identification of suitable opportunities has taken time and many prospects have been investigated but discarded. Our first investment, a 530,000 sq ft park to the south of Madrid, was completed in January. We now have in prospect some very attractive opportunities of which we expect four, with an ultimate aggregate value of over #150 million, to have been contracted by the end of June. It is our intention to involve a few major co-investors at an early stage whilst we build up a European portfolio and in time, we plan to set up a European fund along the lines of HUT, in which we would have a meaningful stake and be the property adviser generating management and performance fees. Outlook Last year, I advised of the proposed change in Pillar's strategy to concentrate on assets under management and reduce our capital base by the return of capital. We remain committed to the retail park sector and, as a result, have invested in a number of prime retail park developments which will, when completed, be offered to HUT. These schemes have required capital which, for the time being, has prevented our making further returns to shareholders. With an active HUT, opportunities for CLOUT in the longer term and a promising new European portfolio, we shall be well placed to build up our management income over the next few years. The one issue which we believe has yet to be properly addressed is the lack of recognition of the value of this management income. We are considering ways in which we can accelerate the release of value from our asset base and increase the focus on management income and earnings growth. H R Mould Chairman 22 May 2003 CONSOLIDATED PROFIT & LOSS ----------------------------------------------------------------------------------------------- Joint 2003 Joint 2002 Group ventures Total Group ventures Total Year ended 31 March 2003 Note #m #m #m #m #m #m ----------------------------------------------------------------------------------------------- Turnover 2 36.9 52.3 89.2 44.6 41.7 86.3 Cost of sales 3 (15.0) (10.9) (25.9) (3.0) (12.4) (15.4) ----------------------------------------------------------------------------------------------- Gross profit 21.9 41.4 63.3 41.6 29.3 70.9 ----------------------------------------------------------------------------------------------- Administrative expenses (17.6) (1.7) (19.3) (15.6) (1.9) (17.5) ----------------------------------------------------------------------------------------------- Operating profit - Group 4 4.3 4.3 26.0 26.0 - Joint ventures 4 39.7 39.7 27.4 27.4 ----------------------------------------------------------------------------------------------- Total operating profit 4.3 39.7 44.0 26.0 27.4 53.4 Profit/(loss) on disposal of 5 9.9 8.7 18.6 (4.5) (0.3) (4.8) investment properties and units ----------------------------------------------------------------------------------------------- Net interest payable and 6 (14.9) (31.8) (46.7) (41.4) (18.9) (60.3) similar charges ----------------------------------------------------------------------------------------------- Profit/(loss) on ordinary (0.7) 16.6 15.9 (19.9) 8.2 (11.7) activities before taxation =============================================================================================== Taxation (charge)/credit on 7 (1.3) 5.3 profit/(loss) on ordinary activities ----------------------------------------------------------------------------------------------- Profit/(loss) attributable 14.6 (6.4) to ordinary shareholders ----------------------------------------------------------------------------------------------- Dividends paid and proposed 8 (8.6) (10.4) ----------------------------------------------------------------------------------------------- Retained profit/(loss) for the year 16 6.0 (16.8) =============================================================================================== Earnings/(loss) per share - 9 12.0p (4.5)p basic Earnings/(loss) per share - 9 12.0p (4.5)p diluted ----------------------------------------------------------------------------------------------- All items in the current and previous year derive from continuing activities BALANCE SHEET Group Group Company 2003 2002 2003 31 March 2003 Note #m #m #m #m #m #m ---------------------------------------------------------------------------------------------- Fixed assets Investment properties 10 476.6 353.1 76.5 Investment in subsidiaries - - 700.7 Investment in joint ventures: - Share of gross assets 1,140.3 1,036.3 - - Share of gross liabilities (619.7) (543.5) - ---------------------------------------------------------------------------------------------- 11 520.6 492.8 - Other tangible assets 0.4 0.6 - ---------------------------------------------------------------------------------------------- 997.6 846.5 777.2 ---------------------------------------------------------------------------------------------- Current assets Development properties 10.4 14.1 - Debtors 12 77.7 101.7 0.1 Cash at bank and in hand 19.6 33.0 - ---------------------------------------------------------------------------------------------- 107.7 148.8 0.1 ---------------------------------------------------------------------------------------------- Creditors: Amounts falling 13 (342.5) (233.8) (212.8) due within one year ---------------------------------------------------------------------------------------------- Net current liabilities (234.8) (85.0) (212.7) ---------------------------------------------------------------------------------------------- Total assets less current 762.8 761.5 564.5 liabilities Creditors: Amounts falling 14 (197.0) (139.7) - due after one year ---------------------------------------------------------------------------------------------- Provisions for liabilities 7 (1.3) (1.3) - and charges - deferred taxation ---------------------------------------------------------------------------------------------- Net assets 564.5 620.5 564.5 ============================================================================================== Capital and reserves Called up share capital 16 10.9 42.2 10.9 Share premium account 16 0.1 - 0.1 Revaluation reserve 16 234.2 184.5 104.6 Capital redemption reserve 16 - - - Merger reserve 16 60.0 172.2 - Profit and loss account 16 259.3 221.6 448.9 ---------------------------------------------------------------------------------------------- Equity shareholders' funds 564.5 620.5 564.5 ============================================================================================== Net assets per share 520p 433p 520p ---------------------------------------------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENT 2003 2002 Year ended 31 March 2003 #m #m #m #m ------------------------------------------------------------------------------ Net cash inflow/(outflow) from operating 1.9 (3.1) activities ------------------------------------------------------------------------------ Distributions received from joint 19.7 6.2 ventures Returns on investments and servicing of finance Interest received 0.9 2.6 Interest paid (17.3) (45.7) ------------------------------------------------------------------------------ (16.4) (43.1) Taxation (1.9) (17.0) ------------------------------------------------------------------------------ Capital expenditure Purchase of investment properties (247.7) (226.4) Sale of investment properties and 210.5 941.9 development expenditure Purchase of tangible fixed assets (0.2) - ------------------------------------------------------------------------------ (37.4) 715.5 ------------------------------------------------------------------------------ Acquisitions and disposals Purchase of subsidiaries - 11.5 Purchase of joint ventures (7.5) (3.7) Sale of joint ventures 54.5 6.1 ------------------------------------------------------------------------------ 47.0 13.9 Equity dividends paid (9.7) (10.5) ------------------------------------------------------------------------------ Net cash inflow before financing 3.2 661.9 ------------------------------------------------------------------------------ Financing Repurchase of ordinary share capital (0.1) - Return of capital (143.5) - Bank loans 239.2 (728.8) ------------------------------------------------------------------------------ 95.6 (728.8) ------------------------------------------------------------------------------ Increase/(decrease) in cash in the year 98.8 (66.9) ============================================================================== NOTES TO THE ACCOUNTS 1 Segmental and geographical information ------------------------------------------------------------------------------------------------------------ Group Group Profit Profit Group Group Group Group Operating Operating before before Net Net Turnover Turnover profit profit tax tax assets assets 2003 2002 2003 2002 2003 2002 2003 2002 #m #m #m #m #m #m #m #m ------------------------------------------------------------------------------------------------------------ Business segments: Fund management 16.8 16.0 9.0 7.1 9.0 7.1 18.3 13.8 Investment and 72.4 70.3 39.0 50.5 10.9 (14.6) 552.2 613.6 development Corporate - - (4.0) (4.2) (4.0) (4.2) (6.0) (6.9) ------------------------------------------------------------------------------------------------------------ 89.2 86.3 44.0 53.4 15.9 (11.7) 564.5 620.5 ------------------------------------------------------------------------------------------------------------ Geographical segments: United Kingdom 88.5 86.3 44.3 53.4 16.2 (11.7) 564.3 620.5 Europe 0.7 - (0.3) - (0.3) - 0.2 - ------------------------------------------------------------------------------------------------------------ 89.2 86.3 44.0 53.4 15.9 (11.7) 564.5 620.5 ============================================================================================================ Share of turnover, operating profit, profit before tax and net assets of joint ventures relate entirely to investment and development, wholly within the United Kingdom. 2 Turnover ------------------------------------------------------------------------------- Joint 2003 Joint 2002 Group ventures Total Group ventures Total #m #m #m #m #m #m ------------------------------------------------------------------------------- Rental income 10.0 51.6 61.6 28.2 36.5 64.7 Sales of development 9.0 0.7 9.7 0.4 5.2 5.6 properties Management and 16.8 - 16.8 16.0 - 16.0 performance fees Commission earned 1.1 - 1.1 - - - ------------------------------------------------------------------------------- Total turnover 36.9 52.3 89.2 44.6 41.7 86.3 =============================================================================== 3 Cost of sales ------------------------------------------------------------------------------- Joint 2003 Joint 2002 Group ventures Total Group ventures Total #m #m #m #m #m #m ------------------------------------------------------------------------------- Direct property 0.8 1.8 2.6 1.1 1.2 2.3 costs Costs of development 13.6 0.6 14.2 1.9 3.0 4.9 properties sold Management and - 8.5 8.5 - 8.2 8.2 performance fees Commission paid 0.6 - 0.6 - - - ------------------------------------------------------------------------------- Total cost of sales 15.0 10.9 25.9 3.0 12.4 15.4 =============================================================================== 4 Operating profit ------------------------------------------------------------------------------ 2003 2002 #m #m ------------------------------------------------------------------------------ The operating profit is stated after charging: Directors' and staff remuneration including the CRISP and 8.2 9.7 STARs Social security costs of directors and staff 0.9 0.9 Pension costs of directors and staff 0.5 0.4 Depreciation of owned assets 0.2 0.2 Depreciation of assets held under finance leases and hire - 0.1 purchase agreements ------------------------------------------------------------------------------ Audit fees for the group were #89,000 (2002 - #84,000) and for the company were #nil. Other fees paid to the auditors and its associates were as follows: ---------------------------------------------------------------------------- 2003 2002 #'000 #'000 ---------------------------------------------------------------------------- - advice in respect of scheme of arrangement 190 - - advice in connection with the disposal of - 87 properties to the Hercules Unit Trust - tax compliance services and tax advice on property 531 601 disposals, joint ventures and other transactions ---------------------------------------------------------------------------- - secondment of specialist staff on IT and financial - 74 analysis and recruitment consultancy services ---------------------------------------------------------------------------- KPMG LLP has been appointed as the group's tax adviser and agent as this is considered to be the most cost-efficient means to access the specialist tax advice which Pillar requires, given the size and complexity of the transactions which the group undertakes; such advice necessarily requires a detailed knowledge of the group's structure and corporate history. The Audit Committee has reviewed the level of the fees paid to the auditors and its affiliates, to ensure that the auditors' independence is not compromised. 5 Profit/(loss) on disposal of investment properties and units ------------------------------------------------------------------------------ 2003 2002 Total Total #m #m ------------------------------------------------------------------------------ Initial cost of acquisition 64.7 440.1 Additional capital expenditure 59.8 84.1 ------------------------------------------------------------------------------ Total cost 124.5 524.2 Revaluation surplus 44.2 204.5 ------------------------------------------------------------------------------ Book value 168.7 728.7 ------------------------------------------------------------------------------ Net sales proceeds 178.6 724.2 Historical cost profit 54.1 200.0 ------------------------------------------------------------------------------ Profit/(loss) on sale of investment properties - group 9.9 (4.5) Profit/(loss) on sale of investment properties - share of 8.7 (0.3) joint ventures ------------------------------------------------------------------------------ 18.6 (4.8) ============================================================================== 6 Net interest payable and similar charges -------------------------------------------------------------------------------------- Joint 2003 Joint 2002 Group ventures Total Group ventures Total #m #m #m #m #m #m -------------------------------------------------------------------------------------- Interest payable on: Overdrafts and bank loans (13.3) (31.0) (44.3) (29.8) (18.1) (47.9) Less: interest capitalised 2.0 - 2.0 2.1 - 2.1 -------------------------------------------------------------------------------------- (11.3) (31.0) (42.3) (27.7) (18.1) (45.8) Bank finance costs (0.7) (1.5) (2.2) (1.7) (0.8) (2.5) amortised Costs written off on (3.8) - (3.8) (14.6) - (14.6) refinancing and sales -------------------------------------------------------------------------------------- Interest payable and other (15.8) (32.5) (48.3) (44.0) (18.9) (62.9) similar charges Interest receivable 0.9 0.7 1.6 2.6 - 2.6 -------------------------------------------------------------------------------------- Net interest payable (14.9) (31.8) (46.7) (41.4) (18.9) (60.3) ====================================================================================== 7 Taxation ------------------------------------------------------------------------------ 2003 2002 #m #m ------------------------------------------------------------------------------ UK corporation tax (credit) on profit for the year (0.2) (3.4) Adjustments in respect of previous periods 1.5 - Deferred taxation - (1.9) ------------------------------------------------------------------------------ Taxation charge/(credit) 1.3 (5.3) ============================================================================== The tax assessed for the year is lower than the standard rate for corporation tax in the UK (30%). The differences are explained below. ------------------------------------------------------------------------------ 2003 2002 #m #m ------------------------------------------------------------------------------ Profit/(loss) on ordinary activities before tax 15.9 (11.7) ------------------------------------------------------------------------------ Profit on ordinary activities at the standard rate 4.8 (3.4) of corporation tax 30% (2002 - 30%) Effects of: Utilisation of tax losses (5.7) - Current year taxable loss 0.5 - Legal costs on share buy back disallowed 0.9 - Timing differences (1.1) - Permanent disallowable expenditure 0.4 - ------------------------------------------------------------------------------ Actual tax (credit) (0.2) (3.4) ============================================================================== The group allocates the tax charge arising on the sale of investment properties on a pro rata basis between the gain previously recognised in the revaluation reserve and the further gain or loss arising on the sale in the profit and loss account. Group #m ------------------------------------------------------------------------------ Provisions for liabilities and charges - deferred taxation At 31 March 2002 and 31 March 2003 1.3 ------------------------------------------------------------------------------ The full potential deferred taxation liability provided, and the amounts not provided, in the financial statements are as follows: ------------------------------------------------------------------------------ Amount Amount Amount not Amount not provided provided provided provided 2003 2002 2003 2002 #m #m #m #m ------------------------------------------------------------------------------ Group Arising on revaluation of - - 23.8 10.4 investment properties Arising on revaluation of - - 26.2 - holding in unit trusts Accelerated capital 1.3 1.3 - - allowances ------------------------------------------------------------------------------ 1.3 1.3 50.0 10.4 ============================================================================== The amount of deferred taxation not provided at 31 March 2003 has been reduced due to the availability of substantial capital losses and capital allowances. 8 Dividends paid and proposed ----------------------------------------------------------------------------- 2003 2002 #m #m ----------------------------------------------------------------------------- Interim dividend paid of 2.3p (2002 - 2.2p) per share 2.4 3.1 Final dividend proposed of 5.7p (2002 - 5.1p) per share 6.2 7.3 ----------------------------------------------------------------------------- Total paid and proposed 8.6 10.4 ============================================================================= 9 Earnings per share The calculation of earnings/(loss) per ordinary share is based on the profit attributable to ordinary shareholders of #14.6 million (2002 - loss #6.4 million) and on a weighted average number of ordinary shares in issue during the year ended 31 March 2003 of 121,862,188 (2002 - 143,453,726). On a diluted basis the weighted average number of ordinary shares was 122,338,875 (2002 - 143,805,232). The difference between weighted average number of shares on a basic and diluted basis is due to the effect of unexercised share options. 10 Investment properties --------------------------------------------------------------------------------- Group Group Long Company Freehold leasehold Freehold land and land and Group land and Company buildings buildings Total buildings Total #m #m #m #m #m --------------------------------------------------------------------------------- At 31 March 2002 at 311.4 41.7 353.1 - - valuation Additions 228.0 - 228.0 68.9 68.9 Disposals (74.8) (41.7) (116.5) - - --------------------------------------------------------------------------------- Surplus on revaluation 12.0 - 12.0 7.6 7.6 of investment properties --------------------------------------------------------------------------------- At 31 March 2003 at 476.6 - 476.6 76.5 76.5 valuation ================================================================================= As at 31 March 2003, the group's investment portfolio was externally valued on the basis of open market value by FPDSavills Commercial Limited and Montagu Evans, Chartered Surveyors at #231.3 million. The directors have valued certain properties, which are undergoing significant development which were not completed at the year end at #248.1 million, based on formal external assessments of gross development value (prior to adjustment for UITF28) given to the directors by the group's valuers. All of the above valuations were carried out in accordance with the Royal Institution of Chartered Surveyors Statements of Asset Valuation Practice and Guidance Notes. The historical cost of investment properties was #434.8 million (2002 - #297.3 million). 11 Joint ventures Shares of joint ventures #m -------------------------------------------------------------------------------- Group At 31 March 2002 at valuation 492.8 Net equity divestments (59.2) Surplus on revaluation of investment properties 70.4 Share of profit for the year 16.6 -------------------------------------------------------------------------------- At 31 March 2003 at valuation 520.6 ================================================================================ The group has the following interests in property investment partnerships all of which operate in the United Kingdom with the exception of Hercules Unit Trust and The City of London Office Unit Trust which operate in Jersey, Channel Islands: Hercules Unit Trust 41.7% interest Hercules Limited Partnership 40.7% partnership interest The City of London Office Unit Trust 35.9% interest The Auchinlea Partnership (a partnership 50% partnership interest with Capital & Regional plc) Capability Green Development Joint Venture 50% partnership interest (a partnership with Haslemere Estates) PillarCaisse Partnership (a partnership with Caisse de Depot et Placement du Quebec) PillarCaisse Management Limited 50% of ordinary shares The PillarCaisse Partnership 50% partnership interest The PillarCaisse (Banbury) Partnership 50% partnership interest Champneys CityPoint Limited 50% ordinary shares 11 Joint ventures continued Summarised aggregated financial statements ----------------------------------------------------------------------------------------------------------- City of London Hercules Office Pillar- Total Total Unit Trust Unit Trust Auchinlea Caisse Others 2003 2002 #m #m #m #m #m #m #m ----------------------------------------------------------------------------------------------------------- Profit and loss account Turnover 74.4 38.2 0.8 4.7 3.3 121.4 99.4 ----------------------------------------------------------------------------------------------------------- Operating profit 56.2 34.3 0.6 4.0 (1.5) 93.6 68.8 Profit/(loss) on 20.0 - - - - 20.0 (0.5) disposal of investment properties Interest payable (42.1) (29.4) (0.7) (3.1) (0.1) (75.4) (47.1) =========================================================================================================== Retained profit 34.1 4.9 (0.1) 0.9 (1.6) 38.2 21.2 for the year =========================================================================================================== Balance sheet Investment 1,784.4 627.0 79.0 88.6 - 2,579.0 2,183.1 properties Current assets 162.9 28.4 2.7 10.0 6.6 210.6 127.6 Current liabilities (56.9) (21.7) (1.7) (69.3) (3.3) (152.9) (190.3) ----------------------------------------------------------------------------------------------------------- Borrowings due in (910.5) (432.0) (31.2) - (2.0) (1,375.7) (1,031.6) more than one year ----------------------------------------------------------------------------------------------------------- Net assets 979.9 201.7 48.8 29.3 1.3 1,261.0 1,088.8 =========================================================================================================== Group share ----------------------------------------------------------------------------------- Total Total Percentage interest at 41.7% 35.9% 50% 50% 50% 2003 2002 year end #m #m #m #m #m #m #m ----------------------------------------------------------------------------------- Group share of: Turnover 34.1 13.7 0.4 2.4 1.7 52.3 41.7 Management and performance (7.6) (0.9) - - - (8.5) (8.2) fees Other costs (0.7) (0.5) (0.1) (0.4) (2.4) (4.1) (6.1) ----------------------------------------------------------------------------------- Operating profit 25.8 12.3 0.3 2.0 (0.7) 39.7 27.4 Profit/(loss) on disposal 8.7 - - - - 8.7 (0.3) of investment properties Interest payable (19.3) (10.5) (0.3) (1.6) (0.1) (31.8) (18.9) ----------------------------------------------------------------------------------- Retained profit for the 15.2 1.8 - 0.4 (0.8) 16.6 8.2 year =================================================================================== Revaluation surplus for 75.3 (14.4) 8.3 1.2 - 70.4 24.6 the year =================================================================================== Joint venture investment 743.4 225.3 39.5 44.3 - 1,052.5 979.3 properties =================================================================================== Joint venture net assets 408.2 72.6 24.4 14.7 0.7 520.6 492.8 =================================================================================== As at 31 March 2003, the joint venture investment properties were externally valued at an aggregate value of #2,579.0 million by Insignia Richard Ellis Limited, CB Hillier Parker Limited and Montagu Evans, Chartered Surveyors. The historical cost of investment properties was #2,282.9 million (2002 - #2,029.7 million). In the year to 31 March 2003, the group received management fees of #5.8 million (2002 - #5.3 million) and performance related fees of #11.0 million (2002 - #10.7 million) from various joint ventures. At 31 March 2003 the group was oweed #21.4 million (2002 - #26.1 million) by joint ventures 12 Debtors -------------------------------------------------------------------------------- Group Group Company 2003 2002 2003 #m #m #m -------------------------------------------------------------------------------- Amounts receivable within one year: Trade debtors 4.2 18.6 - Amounts receivable on completion of property sales 19.1 64.9 - Other debtors 28.3 14.0 - Prepayments and accrued income 8.6 4.0 - -------------------------------------------------------------------------------- 60.2 101.5 - ================================================================================ Amounts receivable after one year: Amounts receivable on completion of property sales 3.7 - - Other debtors 12.4 - - Prepayments and accrued income 1.4 0.2 0.1 -------------------------------------------------------------------------------- 17.5 0.2 0.1 -------------------------------------------------------------------------------- 77.7 101.7 0.1 ================================================================================ 13 Creditors: Amounts falling due within one year -------------------------------------------------------------------------------- Group Group Company 2003 2002 2003 #m #m #m -------------------------------------------------------------------------------- Bank loans and overdrafts - secured (note 14) 225.2 155.5 22.5 Trade creditors 0.8 6.7 - Amounts owed to subsidiary undertakings - - 142.9 Amount due on completion of property acquisitions 88.4 45.1 41.0 Proposed dividend 6.2 7.3 6.2 Corporation tax 7.5 8.1 - Other taxation and social security 0.1 0.1 - Obligations under finance leases and hire - 0.1 - purchase arrangements Accruals and deferred income 14.3 10.9 0.2 -------------------------------------------------------------------------------- 342.5 233.8 212.8 ================================================================================ 14 Creditors: Amounts falling due after one year -------------------------------------------------------------------------------- Group Group Company 2003 2002 2003 #m #m #m -------------------------------------------------------------------------------- Bank loans 181.1 112.9 - Loan notes 15.9 26.8 - -------------------------------------------------------------------------------- 197.0 139.7 - ================================================================================ Security is provided on bank loans and loan notes by way of fixed charges over property and floating charges over the assets of certain subsidiary undertakings. 15 Financial instruments The group has taken advantage of the exemption under FRS13, that short term debtors and creditors be excluded from the following disclosures. The disclosures include the group's share of financial liabilities of its joint venture partnerships and the associated financial instruments used to manage the interest rate exposures arising therefrom. Financial assets The group's only financial assets are short term debtors (note 12) and cash at bank and in hand. Liquidity risk - The maturity profile of the group's financial liabilities is set out below: -------------------------------------------------------------------------------- Joint Joint Joint Group ventures Group ventures 2003 2003 2002 2002 #m #m #m #m -------------------------------------------------------------------------------- In one year or less or on demand 225.2 30.0 155.5 30.0 In more than two years but 192.1 15.6 103.0 5.8 not more than five years In more than five years 4.9 534.6 36.7 447.7 -------------------------------------------------------------------------------- Total 422.2 580.2 295.2 483.5 ================================================================================ The group has undrawn loan facilities which expire as set out below: -------------------------------------------------------------------------------- Joint Joint Group ventures Group ventures 2003 2003 2002 2002 #m #m #m #m -------------------------------------------------------------------------------- In one year or less 37.2 - 10.7 - In more than two years but 58.5 29.4 59.2 - not more than five years In more than five years - 52.5 18.5 50.0 -------------------------------------------------------------------------------- Total 95.7 81.9 88.4 50.0 ================================================================================ Interest rate risk - profile ---------------------------------------------------------------------------------------------------- Fixed rate Floating rate Fixed rate Floating rate liabilities liabilities Total liabilities liabilities Total 2003 2003 2003 2002 2002 2002 #m #m #m #m #m #m ---------------------------------------------------------------------------------------------------- Group 145.9 276.3 422.2 126.3 168.9 295.2 Group share of 407.6 172.6 580.2 413.1 70.4 483.5 joint ventures ---------------------------------------------------------------------------------------------------- Total 553.5 448.9 1,002.4 539.4 239.3 778.7 =================================================================================================== Hedge profile - type of protection ------------------------------------------------------------------------------- Fixed rate Fixed rate Fixed rate Fixed rate Weighted Weighted Weighted Weighted average average average average rate period rate period 2003 2003 2002 2002 % Years % Years ------------------------------------------------------------------------------- Group 4.8 2.8 6.2 2.3 Group share of joint 5.3 4.5 5.6 4.1 ventures =============================================================================== 15 Financial instruments continued Hedge profile - maturity of protection -------------------------------------------------------------------------------- Joint Joint Group ventures Group ventures 2003 2003 2002 2002 #m #m #m #m -------------------------------------------------------------------------------- In one year or less 46.5 25.0 35.3 25.0 In more than one year but not 9.5 - 46.0 39.9 more than two years In more than two years but not 89.9 270.8 45.0 222.9 more than five years In more than five years - 111.8 - 125.3 ------------------------------------------------------------------------------- 145.9 407.6 126.3 413.1 =============================================================================== Fair values The fair values of the group's financial liabilities, including its share of financial liabilities in joint ventures are set out below: ------------------------------------------------------------------------------- Notional Fair Fair value Fair value principal value adjustments adjustments 2003 2003 2003 2002 #m #m #m #m ------------------------------------------------------------------------------- Derivative financial instruments held to manage the group's interest rate exposure ------------------------------------------------------------------------------- Interest rate swaps 553.5 21.6 (21.6) (2.2) ------------------------------------------------------------------------------- Fair value adjustment 553.5 21.6 (21.6) (2.2) =============================================================================== The fair values as at 31 March 2003 were calculated by JC Rathbone Associates Limited and reflect the replacement values of the financial instruments used to manage the group's exposure to adverse interest rate movements. All gains and losses arising from hedging instruments crystallised during the year have been recognised in the profit and loss account. Foreign exchange - profile -------------------------------------------------------------------------------- Group Group 2003 2002 #m #m -------------------------------------------------------------------------------- Cash at bank and in hand Denominated in Sterling 17.8 33.0 Denominated in Euros 1.8 - -------------------------------------------------------------------------------- 19.6 33.0 ================================================================================ Bank loans and loan notes Denominated in Sterling 369.5 295.2 Denominated in Euros 52.7 - -------------------------------------------------------------------------------- 422.2 295.2 ================================================================================ 16 Reserves -------------------------------------------------------------------------------- Share Capital Share premium Revaluation redemption capital account reserve reserve #m #m #m #m -------------------------------------------------------------------------------- Group At 31 March 2002 42.2 169.0 184.5 0.3 -------------------------------------------------------------------------------- Merger adjustments to reflect (169.0) (0.3) scheme of arrangement -------------------------------------------------------------------------------- At 31 March 2002 on a pro 42.2 - 184.5 - forma basis Scheme of arrangement - 417.9 return of capital Court approval capital (449.2) reduction On issue of ordinary share 0.1 capital Distribution on share redemption Retained profit for the year Transfer on disposal of (33.4) properties Surplus arising on revaluation 12.0 of investment properties - group Surplus arising on revaluation 70.4 of investment properties - joint ventures Gross exchange differences 0.7 on retranslation of net investments and related borrowings. -------------------------------------------------------------------------------- At 31 March 2003 10.9 0.1 234.2 - ================================================================================ Company Issue of shares 460.1 On issue of ordinary share 0.1 capital Court approved capital (449.2) reduction Surplus arising on revaluation 7.6 of investment properties Surplus arising on revaluation 97.0 of investment in subsidiaries Distribution on share redemption Retained profit for the year -------------------------------------------------------------------------------- At 31 March 2003 10.9 0.1 104.6 - ================================================================================ -------------------------------------------------------------------------------- 16 Reserves (Continued.) Merger Profit and reserve loss account Total #m #m #m -------------------------------------------------------------------------------- Group At 31 March 2002 2.9 221.6 620.5 Merger adjustments to reflect scheme of 169.3 - arrangement -------------------------------------------------------------------------------- At 31 March 2002 on a pro forma basis 172.2 221.6 620.5 Scheme of arrangement - return of capital (561.4) (143.5) Court approval capital reduction 449.2 - On issue of ordinary share capital 0.1 Distribution on share redemption (1.7) (1.7) Retained profit for the year 6.0 6.0 Transfer on disposal of properties 33.4 - Surplus arising on revaluation of 12.0 investment properties - group Surplus arising on revaluation of 70.4 investment properties - joint ventures Gross exchange differences on 0.7 retranslation of net investments and related borrowings -------------------------------------------------------------------------------- At 31 March 2003 60.0 259.3 564.5 ================================================================================ Company Issue of shares 460.1 On issue of ordinary share capital 0.1 Court approved capital reduction 449.2 - Surplus arising on revaluation of 7.6 investment properties Surplus arising on revaluation of 97.0 investment in subsidiaries Distribution on share redemption (1.7) (1.7) Retained profit for the year 1.4 1.4 -------------------------------------------------------------------------------- At 31 March 2003 - 448.9 564.5 ================================================================================ 17 Financial information The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2002 or 2003. Statutory accounts for 2002 have been delivered to the registrar of companies, and those for 2003 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange END FR PUURAAUPWGRG
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