RNS Number:3598R
Bourne End Properties PLC
22 September 2000
CHAIRMAN'S STATEMENT
These results, for the first half of our financial year, reflect the actions
we have taken in the first phase of the process I explained to you in my
letter of 13 June. As you know from that letter we indicated that we intended
to embark upon an orderly realisation of the Company's asset portfolio in
order to return the resulting capital to shareholders. Your board, after
careful thought, had concluded that such action offered the best opportunity
for optimising shareholder value.
During the first half of the year we sold 17 properties realising a total of
#29.8 million after sale costs. This was just #98,000 below book value at
31 December 1999.
Revenue profits after interest of #656,000, although below the comparable
figure for the same period last year, are marginally better than #647,000
achieved for the second six months of 1999. Likewise, earnings per share
on revenue activities of 1.08p compares with 0.94p for the second six
months of 1999.
The Board has decided to declare a second interim dividend of 0.65p per
share, the same as for the interim last year, which will be paid on 18th
October 2000 to shareholders on the register at 6th October 2000. A first
interim dividend for 2000 of 0.65p per share was paid to shareholders on 7
July 2000. Your Board will review the desirability of declaring dividends
from future operating profits in the light of progress on disposals.
Our portfolio was revalued by DTZ Debenham Tie Leung at 30 June to show
#163.0m. This revaluation showed a total reduction of 0.3% compared to
December 1999 values. The values of our nine shopping centres and the
Bridgwater retail park, which represent over 90% of the portfolio, were
practically unchanged. The value of six remaining investments,
predominantly smaller retail properties, fell by 3.0%. Annualised rental
income, net of ground rents, is #13.3m reflecting an overall gross yield of
approximately 8.2%.
As a consequence of this minor reduction in property values and the
declaration of two interim dividends totalling 1.3p per share, net asset
value per share has fallen by 1.2p to 84.6p during the period.
Net debt of #108.0m is #7.2m lower than at the start of the year and
gearing has declined from 220% to 209%. The average interest rate on our
loans is 7.8%. The FRS13 negative adjustment is 0.95p per share net of tax.
The strength and liquidity of the property investment market, evident in
the second half of 1999, ebbed somewhat during a quieter first half of
2000. Uncertainty over the direction of the economy and caution over the
likely direction of interest rates, coupled with concern over the
buoyancy of retail spending, combined to modestly compress levels of
investment activity.
However, we are continuing with plans to realise the portfolio, and we
are currently involved in negotiations which we believe will allow a notable
advance in our disposal programme before the end of the year. As soon as
is appropriate we shall communicate with shareholders and seek your approval
to our proposals.
In the meantime, as well as managing the disposal programme, your management
are pressing ahead with matters such as lettings and planning applications.
We believe that such actions, when completed, will have an immediate
positive impact on income and property values. Tenant demand remains
positive, particularly amongst the value retailers such as Bon Marche which
has taken space at Torquay and Fleet. At Torquay the lettings achieved
since our purchase in January have increased net income by 16% to #1.18m and
we expect further lettings to occur in the near future which will add
significantly to rental income at this centre. Work has commenced on the
development at Fleet to accommodate Woolworths and is on schedule to be
completed by the middle of next year.
Your Board is of the opinion that, based on current market circumstances, we
are under no pressure to revise our estimate of being able to make an ultimate
distribution to our shareholders in the region of 73p per share.
Mick Newmarch 22nd September 2000
Chairman
Interim consolidated profit and loss account
for the six months ended 30 June 2000
6 months to 6 months to Year to
to 30/06/00 to 30/06/99 31/12/99
Note #000's #000's #000's
Rental income 8,258 9,970 20,092
Property expenditure (1,154) (1,158) (2,055)
------ ------ ------
Net rental income 7,104 8,812 18,037
Administrative expenses (1,172) (1,058) (2,408)
------ ------ ------
Operating profit 5,932 7,754 15,629
Permanent diminution in the value of
investment properties (1,730) - -
Provision for loss on sale of
investment properties - - (4,953)
(Loss)/profit on sale of investment properties (92) 46 452
Loss on sale of subsidiary companies (6) (63) (15,684)
------ ------ ------
Profit on ordinary activities before interest 4,104 7,737 (4,556)
Net interest payable (5,276) (6,791) (14,019)
------ ------ ------
(Loss)/profit on ordinary
activities before taxation (1,172) 946 (18,575)
Taxation 2 - - -
------ ------ ------
Profit attributable to shareholders (1,172) 946 (18,575)
Dividends (791) (451) (449)
------ ------ ------
Amount transferred (from)/to reserves (1,963) 495 (19,024)
====== ====== ======
Earnings per share - basic 3 (1.92)p 1.36p (26.86)p
====== ====== ======
Earnings per share - diluted 3 (1.92)p 1.36p (26.86)p
====== ====== ======
Earnings per share on revenue activities 3 1.08p 1.39p 2.33p
====== ====== ======
Dividends per share 1.30p 0.65p 0.65p
====== ====== ======
Consolidated balance sheet
as at 30 June 2000
30/06/00 30/06/99 31/12/99
Note #000's #000's #000's
Fixed assets
Investment properties 5 162,320 219,980 169,875
Other fixed assets 304 344 287
------ ------ ------
162,624 220,324 170,162
------ ------ ------
Current assets
Stock of properties 700 750 700
Debtors 4,929 3,707 4,711
Cash at bank and in hand 8,562 8,153 2,665
------ ------ ------
14,191 12,610 8,076
Creditors: amounts due within one year (10,180) (13,216) (9,142)
------ ------ ------
Net current liabilities 4,011 (606) (1,066)
------ ------ ------
Total assets less current liabilities 166,635 219,718 169,096
Creditors: amounts due after one year (115,117) (158,579) (116,873)
------ ------ ------
51,518 61,139 52,223
------ ------ ------
Capital and reserves
Called up share 15,225 17,334 15,225
capital
Share premium account 6 11,415 26,915 11,415
Revaluation reserve 6 18,764 10,642 22,208
Capital redemption reserve 6 3,024 3,024 3,024
Non-distributable reserve 351 - 351
Profit and loss account 6 2,739 3,224 -
------ ------ ------
51,518 61,139 52,223
====== ====== ======
Net asset value per share 3 84.6p 88.2p 85.8p
====== ====== ======
Consolidated cash flow statement
for the six months ended 30 June 2000
6 months to 6 months to Year to
to 30/06/00 to 30/06/99 31/12/99
Note #000's #000's #000's
Net cash inflow from operating activities 7 6,071 7,882 16,054
Returns on investments and servicing
of finance 8 (4,844) (7,248) (14,229)
Taxation - (147) (1,994)
Capital expenditure 8 (13,675) 926 (15,224)
------ ------ ------
(12,448) 1,413 (15,393)
Equity dividends paid - (375) (1,277)
Cash balances disposed of - - (2,140)
Disposal of subsidiary undertakings 14,402 - (413)
------ ------ ------
1,954 1,038 (19,223)
Management of liquid resources (1,482) (22) 3,444
Financing 8 3,754 2,112 16,885
------ ------ ------
Increase in cash 4,226 3,128 1,106
====== ====== ======
Reconciliation of net cash flow to movement in net debt
6 months to 6 months to Year to
to 30/06/00 to 30/06/99 31/12/99
Note #000's #000's #000's
Increase in cash in the period 4,226 3,128 1,106
New loans in period (107,550) (25,066) (49,539)
Repayment of loans 103,796 22,954 32,653
Loans repaid on disposal of subsidiaries 5,000 - 57,290
------ ------ ------
5,472 1,016 41,510
Increase/(decrease) in liquid resources 1,482 22 (3,444)
Non-cash movement in financing charges 229 497 (990)
------ ------ ------
Change in net debt 7,183 1,535 37,076
Net debt at beginning of period (115,230) (152,306) (152,306)
------ ------ ------
Net debt at period end (108,047) (150,771) (115,230)
====== ====== ======
Statement of total recognised gains and losses
30/06/00 30/06/99 31/12/99
Note #000's #000's #000's
(Loss)/profit for the period (1,172) 946 (18,575)
Unrealised (deficit)/surplus on
revaluation of properties 6 (472) 4,994 10,644
Permanent diminution in
the value of investment properties 1,730 - -
Provision for loss on sale of investment
properties - - 4,953
------ ------ ------
Total recognised gains and losses for
the period 86 5,940 (2,978)
====== ====== ======
Note of historical cost profits and losses
30/06/00 30/06/99 31/12/99
Note #000's #000's #000's
Reported (loss)/profit on ordinary
activities before taxation (1,172) 946 (18,575)
Realisation of property revaluation
gains/(losses) of previous periods 6 4,702 (2,283) (3,246)
------ ------ ------
Historical cost profit/(loss) on ordinary
activities before taxation 3,530 (1,337) (21,821)
====== ====== ======
Retained historical cost profit/(loss)
for the period after taxation
and dividends 2,738 (1,788) (22,270)
====== ====== ======
Notes to the accounts:
1.Basis of preparation
The interim accounts have been prepared using accounting policies unchanged
from those set out in the statutory accounts for the year ended 31 December
1999. The interim accounts are unaudited and have not been reviewed by the
Group's auditors.
The Group's investment properties have been revalued as at 30 June 2000 and
details are provided in Note 5.
The foregoing financial information does not comprise statutory accounts as
defined in Section 240 of the Companies Act 1985 (as amended). The financial
information for the year ended 31 December 1999 is an extract from the
latest Group accounts. These accounts received an unqualified audit report
and have been filed with the Registrar of Companies.
2.Taxation
No provision for taxation is required for the period due to the availability
of losses brought forward and capital allowances.
3.Earnings and net assets per share
Earnings per share has been calculated in accordance with FRS 14.
The basic earnings per share has been calculated on the loss on ordinary
activities after taxation of #1,172,000 (1999: #946,000 profit) and the
weighted average number of shares in issue during the year of 60,899,334
(1999: 69,335,465).
The diluted earnings per share has been calculated on the loss on ordinary
activities after taxation of #1,172,000 (1999: #946,000 profit) and the
weighted average number of shares of 60,990,071 (1999: 69,335,465) including
share options of 99,737 (1999: nil).
Earnings per share on revenue activities has been calculated on the loss on
ordinary activities after taxation but excluding the loss on sale of
subsidiaries of #6,000 (1999: #63,000), the loss on sale of investment
properties of #92,000 (1999: #46,000 profit) and the permanent diminution in
value of investment properties of #1,730,000 (1999: nil). This earnings
figure has been divided into the weighted average number of shares,
including dilutive share options, of 60,990,071 (1999: 69,335,465).
The net assets per share is calculated on net assets of #51,518,000
(1999: #61,139,000) and the number of shares in issue at the period end of
60,899,334 (1999: 69,335,465).
4.Net borrowings
30/06/00 30/06/99 31/12/99
#000's #000's #000's
Bank loans repayable as follows:
Up to one year 1,492 910 1,021
Between one and two years 1,660 1,210 15,569
Between two and five years 113,457 86,927 87,505
After five years - 69,877 13,800
------ ------ ------
116,609 158,924 117,895
Cash 8,562 8,153 2,665
------ ------ ------
108,047 150,771 115,230
====== ====== ======
The Company has provided a guarantee of up to #3.0m to a bank
for a loan facility made to a third party to finance the purchase of a
portfolio of properties from the Company. The guarantee, if enforced by the
bank, grants the Company certain rights. The guarantee expires on the
earlier of March 2004 or when certain conditions attaching to the loan are
met.
5.Investment properties
Freehold Leasehold Total
#000's #000's #000's
At valuation
At 1 January 2000 128,675 41,200 169,875
Additions 22,709 83 22,792
Disposals (7,625) - (7,625)
Eliminated on subsidiary disposals (21,950) (300) (22,250)
Revaluation deficit (189) (283) (472)
------ ------ ------
At 30 June 2000 121,620 40,700 162,320
====== ====== ======
The Group's investment properties were revalued at 30 June 2000 by DTZ
Debenham Tie Leung, Chartered Surveyors, at open market value. The book
value of these properties has been adjusted to give effect to these
valuations and the resulting surplus or deficit transferred to the
revaluation reserve.
6.Reserves
Share Reval Capital re- Non dist- Profit
premium uation demption ributable and loss
reserve reserve reserve reserve reserve
#000's #000's #000's #000's #000's
At 1 January 2000 11,415 22,208 3,024 351 -
Revaluation of
investment properties
for the period - (472) - - -
Transfer on sale of
revalued properties - (4,702) - - 4,702
Result for the period - - - - (1,963)
Permanent diminution in
the value of investment
properties - 1,730 - - -
------ ------ ------ ------ ------
At 30 June 2000 11,415 18,764 3,024 351 2,739
====== ====== ====== ====== ======
Within the profit and loss reserve there is no goodwill written off.
7.Reconciliation of operating profit to net cash inflow from operating
activities
6 months to 6 months to Year to
to 30/06/00 to 30/06/99 31/12/99
Note #000's #000's #000's
Operating profit 5,932 7,754 15,629
Depreciation charges 49 46 95
Decrease/(increase) in debtors 345 1,256 564
Decrease/(increase) in creditors (255) (1,174) (234)
------ ------ ------
Net cash inflow from operating activities 6,071 7,882 16,054
====== ====== ======
8.Gross cash flows
Six months Six months Year to
30/06/00 30/06/99 31/12/99
#000's #000's #000's
Returns on investment and servicing of finance
Interest received 97 154 330
Interest and finance fees paid (4,941) (7,402) (14,559)
------ ------ ------
(4,844) (7,248) (14,229)
====== ====== ======
Capital expenditure
Payments to acquire tangible fixed assets (21,952) (1,440) (19,931)
Receipts from sales of tangible fixed assets 8,277 846 3,307
Receipts from joint venture - 1,400 1,400
Receipts from sale of joint venture companies - 120 -
------ ------ ------
(13,675) 926 (15,224)
====== ====== ======
Financing
Repayment of loans (103,796) (22,954) (32,654)
New loans 107,550 25,066 49,539
------ ------ ------
3,754 2,112 16,885
====== ====== ======
9.FRS 13 Adjustment
The table below estimates the market value of fixed rate debt by
maturity and reflects the difference between market interest rates
applicable at 30 June 2000 and the rates historically committed in
accordance with Financial Reporting Standard No.13 ("FRS 13") "Derivatives
and other financial instruments: Disclosures". In addition, the market value
of deferred consideration of #1,500,000 receivable in June 2005 is also
given below.
Debt valuation Market Fair value
Loan value adjustment
Year #m #m #m
2001 12.0 12.1 (0.1)
2002 - - -
2003 40.9 41.0 (0.1)
2004 8.5 8.1 0.4
2005 32.0 32.6 (0.6)
------ ------ ------
93.4 93.8 (0.4)
====== ====== ======
Book Market Fair value
value value adjustment
#m #m #m
Deferred consideration receivable
- June 2005 1.5 1.0 (0.5)
====== ====== ======
Total (0.9)
======
Net of tax @ 30% (0.6)
======
The fair value adjustment has a notional adverse impact on net
asset value, on a net of tax basis, of 0.95p per share.
10.Copies of the interim statement are being circulated to shareholders
and further copies are available from the Company's registered office at 9
Queen Anne Street, London W1G 9HW.
Contact: Bourne End Properties Tel: 020 7927 8000
David Roberts, Chief Executive
Duncan Bain, Finance Director
Bankside Consultants Tel: 020 7220 7477
Baron Phillips
Grafico Azioni Bourne End Prop (LSE:BEP)
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