+44 (0)207 415 5000
2nd Floor, 12 Little Portland Street, London, W1W 8BJ
FOR IMMEDIATE RELEASE
29 August 2014
LONDON & ASSOCIATED PROPERTIES PLC:
HALF YEARLY RESULTS TO 30 JUNE 2014
London & Associated Properties PLC (`LAP’ or the `Company’), is a fully listed
retail property investor and asset manager.
HIGHLIGHTS
* Completion of new £45 million debt financing
* Substantial reduction in cost of debt – down from 7.58% to the current
5.48%
* Long-dated swaps terminated
* Group’s future underpinned by strength of income with weighted average
unexpired lease term of 8.2 years
* Portfolio performing well:
* Sheffield – vacant space under offer with new leases agreed at £80 Zone A
* Brixton – demand for space driving income; plans for expansion under
consideration
* LAMS trading strongly and looking to expand through further joint ventures
“We are delighted that LAP is now on a secure footing with both long term
financing in place and a very strong income base. We have a new and positive
banking relationship and trading conditions are improving. We therefore look to
the future with confidence.” Sir Michael Heller, Chairman and John Heller,
Chief Executive
-more-
Contact:
London & Associated Properties PLC Tel: 020 7415 5000
John Heller, Chief Executive or
Robert Corry, Finance Director
Baron Phillips Associates Tel: 07767 444193
Baron Phillips
HALF YEAR REVIEW
We are pleased to report on a successful first half of the year. We have
achieved a significant strengthening of the LAP Balance Sheet, following the
refinancing of our short term bank debt and the termination of our long dated
swaps. This has resulted in a substantial reduction in LAP’s average cost of
debt from 7.58% at 31 December 2013 to 5.48% today.
We have put in place a five year £45 million non-recourse financing, provided
by Santander (as senior lender) and Europa Capital Mezzanine Ltd (as mezzanine
lender), replacing the short term Royal Bank of Scotland (RBS) facilities. The
senior facility is fully hedged with 50% being swapped at a rate of 2.25% and
the remaining 50% covered by a cap at the same level. This means that currently
the debt has a blended interest rate of 4.79%.
We actually completed our new financing on 1 July 2014, the day after the half
year accounting period ended. This has had a significant effect on the Group
Balance Sheet and to enable shareholders to understand the impact, we have
included a pro-forma Balance Sheet showing the adjusted position at 1 July. The
key changes are that the Group now has a positive net current assets position
and an extra £3.5 million of cash.
LAP’s long term debt now has three components: the new £45 million financing
expiring in July 2019; and two debentures, one for £10 million, expiring in
August 2022 and one for £5 million of which £1 million is repayable in August
2016, £1 million in August 2017 and the balance of £3 million in August 2018.
We believe this places the Group in a very secure position for the medium term
as we look to acquire new investments either on our own or in joint ventures.
Our half year results have been affected by two exceptional factors. First, we
incurred significant expenses in re-financing the RBS facilities; and second,
we spent £25.3 million on the termination of the long dated swaps which we had
used to hedge our loans from RBS and Lloyds Bank. We had provided for this
anticipated cost in our 2013 year-end figures, based on the mark-to-market
value quoted by the banks at that date. The reduction in the reference
interest rates post the year-end meant that the provision we had made was lower
than the mark-to-market settlement at the time the swaps were
actually terminated. Consequently a further £1.1 million has been charged
against income in the period.
We are confident that LAP will trade strongly now that our legacy financing
issues have been removed. The Group’s future is underpinned by the strength of
our income, with our weighted average unexpired lease term (WAULT) continuing
to be a resilient 8.2 years. Further, if this is adjusted to exclude tenants
whose leases have expired but who continue to trade, WAULT rises to 9.0 years.
Group income is also enhanced by the increasingly successful performance of
London & Associated Management Services Ltd (LAMS), our asset management
business.
We now own £87.5 million of retail property directly, although we manage
and have financial interests in some £240 million of property in total,
including joint ventures and the portfolio of Bisichi Mining PLC,
our associated company.
At Orchard Square, Sheffield, we are pleased to report that we have agreed
terms with River Island at £495,000 per annum on a new 10 year lease with a
break clause (with penalty) at the fifth year. The other large unit which
fronts on to Fargate had previously been let to USC (formerly Republic) but
became vacant earlier this year as that retailer reduced its number of units
significantly. We have received a number of offers on this unit. We are
confident that it will be re-let and income producing in the near future.
We will update shareholders in due course.
In addition, we have recently placed under offer two units inside the centre to
exciting and established retailers at £80 Zone A, while both Waterstones and
Clarks have renewed their leases – also at £80 Zone A. Not only have these new
leases established a rental tone in the Orchard Centre but they have also
strengthened the long term income now being generated.
Our two markets in Brixton continue to go from strength to strength. Income
growth is being driven by the extended waiting list, which now comprises over
200 traders. The local authority has commenced consultation on a new framework
for enhancing Brixton as a town centre, and, as our markets are considered to
be the principal focal point, we would consider investing to expand them.
Indeed, together with Groupe Geraud, we have held initial
discussions with adjacent land owners.
The remainder of our directly held portfolio is trading satisfactorily and
voids remain at a low level. Demand from retailers has continued to show
encouraging signs, and we are confident that we will continue to trade in line
with expectations.
Our joint ventures, which are managed by LAMS, are trading well.
The larger of the two is that with Oaktree Capital Management, which owns and
operates three substantial shopping centres: the Vancouver Quarter in Kings
Lynn; the Rushes in Loughborough; and the Kingsgate centre in Dunfermline,
Scotland. We are pleased to report that in the first half of the year we have
enhanced the income of all three centres, with additional annual lettings of
over £700,000 in total. We are also considering a number of asset management
opportunities within these centres and will report more fully when these have
been progressed further.
The other joint venture is in Langney, near Eastbourne, with Schroders’
Columbus Capital Management Limited. As we reported previously, the roof
collapsed in December 2012 in heavy rain and consequently much of the last year
has been spent dealing with the repercussions of that. I am pleased to report
that these issues are now behind us and the centre is trading well. Our plans
to extend this centre are well progressed and planning consent has been
granted. We have placed the anchor store under offer and are looking to
agree terms for pre-lets on a number of other units.
We continue to look to expand this aspect of LAP’s business. LAMS has been
asked on several occasions to join bidding teams to acquire further
investments that we will asset manage in addition to investing equity in. I
hope to be able to announce further success in this area in the future.
Last month we announced that Robert Corry, LAP’s Finance Director, had decided
to retire after more than 22 years with the Company. He has played an integral
role in the management team over that time and in particular he helped to
secure our new finance facilities. We would like to thank him for his
contribution to LAP’s success and wish him well in his retirement.
We are delighted that LAP is now on a secure footing with both long term
financing in place and a very strong income base. We have a new and positive
banking relationship and trading conditions are improving. We therefore look to
the future with confidence.
Sir Michael Heller John Heller
Chairman Chief Executive
28 August 2014
Consolidated income statement
for the six months ended 30 June 2014
6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2014 2013 2013
(unaudited) (unaudited) (audited)
Notes £’000 £’000 £’000
Gross property income 3,745 3,761 8,229
Net revenue from property 1 1,023 1,701 2,979
Listed investments held for trading 1 1 1 2
Results before finance costs and 1,024 1,702 2,981
valuation movements
Finance income 2 31 28 59
Finance expenses 2 (2,389) (2,582) (5,616)
Interest derivatives break costs 2 (1,117) – –
Results before valuation movements (2,451) (852) (2,576)
Non-cash changes in valuation of assets
and liabilities
Net decrease on revaluation of investment – – (488)
properties
Net increase in value of investments held 1 3 3
for trading
Share of profit/(loss) of joint ventures 289 (10) 99
after tax
Share of (loss)/profit of associate after (95) 447 151
tax
Adjustment to interest rate derivatives 6 – 4,124 4,419
Results including revaluation and other (2,256) 3,712 1,608
movements
Attributable to discontinued operations* 69 6,516 (461)
(Loss)/profit for the period before (2,187) 10,228 1,147
taxation
Income tax 3 589 (1,932) 2,326
(Loss)/profit for the period attributable (1,598) 8,296 3,473
to the owners of the parent
Basic earnings per share 4 (1.89)p 9.85p 4.12p
Diluted earnings per share 4 (1.89)p 9.85p 4.12p
*The results previously reported in the six months ended 30 June 2013 have been
reclassified to reflect discontinued operations.
Consolidated statement of comprehensive income
for the six months ended 30 June 2014
30 June 30 June 31
December
2014 2013 2013
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
(Loss) / profit for the period (1,598) 8,296 3,473
Other comprehensive income:
Currency translation in associate (50) (136) (320)
Other comprehensive income for the period net (50) (136) (320)
of tax
Total comprehensive income for the period (1,648) 8,160 3,153
attributable to owners of the parent
Consolidated balance sheet
at 30 June 2014
1 July 30 June 30 June 31
December
2014* 2014 2013 2013
(unaudited) (unaudited) (unaudited) (audited)
£’000 Notes £’000 £’000 £’000
pro-forma
Non-current assets
Market value of properties 87,449 87,449 205,421 87,449
attributable to Group
Present value of head 4,593 4,593 28,655 4,597
leases
Property 92,042 5 92,042 234,076 92,046
Plant and equipment 197 197 238 203
Investments in joint 2,897 2,897 1,396 2,607
ventures
Investments in associated 6,681 6,681 7,418 6,986
company
Held to maturity 2,200 2,200 1,939 2,200
investments
Deferred tax 6,249 6,249 1,392 5,651
110,266 110,266 246,459 109,693
Current assets
Assets held for sale – – – 126,590
Trade and other 4,184 4,184 4,763 3,356
receivables
Financial assets – 24 24 23 23
investments held for
trading
Cash and cash equivalents 7,562 3,939 8,325 6,990
11,770 8,147 13,111 136,959
Total assets 122,036 118,413 259,570 246,652
Current liabilities
Liabilities associated – – – (111,523)
with assets held for sale
Trade and other payables (10,714) (10,357) (12,745) (10,255)
Financial liabilities – (359) (40,464) (52,609) (45,918)
borrowings
(11,073) (50,821) (65,354) (167,696)
Non-current liabilities
Financial liabilities – (58,234) (14,863) (86,825) (15,056)
borrowings
Interest rate derivatives – 6 – (24,044) (9,569)
Present value of head (4,593) (4,593) (28,655) (4,597)
leases on properties
(62,827) (19,456) (139,524) (29,222)
Total liabilities (73,900) (70,277) (204,878) (196,918)
Net assets 48,136 48,136 54,692 49,734
Equity attributable to the
owners of the parent
Share capital 8,554 8,554 8,554 8,554
Share premium account 4,866 4,866 4,866 4,866
Translation reserve in (708) (708) (474) (658)
associate
Capital redemption reserve 47 47 47 47
Retained earnings 36,262 36,262 42,858 38,084
(excluding treasury
shares)
Treasury shares (885) (885) (1,159) (1,159)
Retained earnings 35,377 35,377 41,699 36,925
Total shareholders’ equity 48,136 48,136 54,692 49,734
Net assets per share 56.96p 7 56.96p 64.89p 59.00p
Diluted net assets per 56.96p 7 56.96p 64.87p 59.00p
share
*Balance Sheet amended as at 1 July to reflect the refinancing of the term
loan.
Consolidated statement of changes in shareholders’ equity
for the six months ended 30 June 2014
Retained
Retained Earnings
Translation Capital Earnings ex:
Share Share reserve in redemption Treasury treasury Total
capital premium associate reserve Shares shares equity
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 8,554 4,866 (338) 47 (1,421) 34,749 46,457
January 2013
Profit for the – – – – – 8,296 8,296
period
Other comprehensive
income:
Currency – – (136) – – – (136)
translation in
associate
Total other – – (136) – – – (136)
comprehensive
income
Total comprehensive – – (136) – – 8,296 8,160
income
Transactions with
owners:
Equity share – – – – – 13 13
options in
associate
Disposal of own – – – – 62 – 62
shares
Loss on disposal of – – – – 200 (200) –
own shares
Transactions with – – – – 262 (187) 75
owners
Balance at 30 June 8,554 4,866 (474) 47 (1,159) 42,858 54,692
2013 (unaudited)
Balance at 1 8,554 4,866 (338) 47 (1,421) 34,749 46,457
January 2013
Profit for the year – – – – – 3,473 3,473
Other comprehensive
income:
Currency – – (320) – – – (320)
translation in
associate
Total other – – (320) – – – (320)
comprehensive
income
Total comprehensive – – (320) – – 3,473 3,153
income
Transactions with
owners:
Equity share – – – – – 62 62
options in
associate
Disposal of own – – – – 62 – 62
shares
Loss on disposal of – – – – 200 (200) –
own shares
Transactions with – – – – 262 (138) 124
owners
Balance at 31 8,554 4,866 (658) 47 (1,159) 38,084 49,734
December 2013
(audited)
Balance at 1 8,554 4,866 (658) 47 (1,159) 38,084 49,734
January 2014
Loss for the period – – – – – (1,598) (1,598)
Other comprehensive
income:
Currency – – (50) – – – (50)
translation in
associate
Total other – – (50) – – – (50)
comprehensive
income
Total comprehensive – – (50) – – (1,598) (1,648)
income
Transactions with
owners:
Equity share – – – – – 16 16
options in
associate
Acquisition of own – – – – (88) – (88)
shares
Disposal of own – – – – 228 – 228
shares
Loss on disposal of – – – – 134 (134) –
own shares
Dividends paid – – – – – (106) (106)
Transactions with – – – – 274 (224) 50
owners
Balance at 30 June 8,554 4,866 (708) 47 (885) 36,262 48,136
2014 (unaudited)
All of the above are attributable to the owners of the parent.
Consolidated cash flow statement
for the six months ended 30 June 2014
6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2014 2013 2013
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Operating activities
Net revenue from property – continuing 1,023 1,701 2,979
operations
Net revenue from property – discontinued 316 3,876 6,557
operations
Listed investments held for trading 1 1 2
Depreciation 18 30 54
Profit on disposal of non-current assets – (6) (21)
(Increase) / decrease in receivables (378) (198) 792
(Decrease) / increase in payables (1,499) 363 471
Cash generated from operations (519) 5,767 10,834
Income tax paid – – –
Cash (outflow) / inflows from operating (519) 5,767 10,834
activities
Investing activities
(Investment)/repayment in shares and loan – (58) 409
stock in joint ventures
Investment in shares held to maturity – – (2,200)
Property acquisitions and improvements – (9) (34)
Sale of properties – discontinued operations 102,663 – 9,310
Purchase of office equipment and motor (13) (29) (33)
vehicles
Sale of office equipment and motor vehicles – 27 57
Interest received – continuing operations 11 28 41
Interest received – discontinued operations 7 – –
Dividends received from associate and joint 44 44 177
ventures
Cash inflows from investing activities 102,712 3 7,727
Financing activities
Purchase of treasury shares (88) – –
Sale of treasury shares 228 62 62
Equity dividends paid (106) – –
Interest paid – continuing operations (2,992) (2,568) (3,314)
Interest paid – discontinued operations (623) (2,185) (5,990)
Interest paid on obligation under finance (155) (109) (269)
leases – continuing operations
Interest paid on obligation under finance (544) (750) (1,786)
leases – discontinued operations
Debenture stock break costs paid – – – (545)
discontinued operations
Interest rate derivative break costs – (10,686) – –
continuing operations
Interest rate derivative break costs – (14,599) – –
discontinued operations
Short term loan from joint ventures and – – 700
related parties
Repayment of debenture stocks – discontinued – – (6,700)
operations
(Repayment) / drawdown of short term bank (4,089) – –
loans
Repayment of medium term bank loan – (127) (122) (247)
continuing operations
Repayment of medium term bank loan – (70,000) – –
discontinued operations
Cash outflows from financing activities (103,781) (5,672) (18,089)
Net (decrease) / increase in cash and cash (1,588) 98 472
equivalents
Cash and cash equivalents at beginning of 5,500 5,028 5,028
period
Cash and cash equivalents at end of period 3,912 5,126 5,500
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise
the following balance sheet amounts:
30 June 30 June 31
December
2014 2013 2013
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Cash and cash equivalents 3,939 8,325 6,990
Bank overdraft (27) (3,199) (1,490)
Cash and cash equivalents at end of period 3,912 5,126 5,500
Notes to the half year report
for the six months ended 30 June 2014
ended ended ended
30 June 30 June 31 December
2014 2013 2013
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Net property income 1,023 1,701 2,979
Other income (listed investments) 1 1 2
ended ended ended
30 June 30 June 31 December
2014 2013 2013
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Finance income 31 28 59
Finance expenses:
Interest on bank loans and overdrafts (928) (612) (1,659)
Other loans (796) (764) (1,559)
Interest on derivatives adjustment (510) (1,042) (2,111)
Interest on obligations under finance (155) (164) (287)
leases
(2,389) (2,582) (5,616)
Interest derivatives break costs (1,117) – –
Total finance expenses (3,506) (2,582) (5,616)
ended ended ended
30 June 30 June 31 December
2014 2013 2013
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Current tax (9) – –
Deferred tax 598 (1,932) 2,326
589 (1,932) 2,326
Notes to the half year report continued
ended ended ended
30 June 30 June 31 December
2014 2013 2013
(unaudited) (unaudited) (audited)
Group (loss)/profit after tax (£ (1,598) 8,296 3,473
‘000)
Weighted average number of shares in 84,494 84,247 84,266
issue for the period (‘000)
Basic earnings per share (1.89)p 9.85p 4.12p
Diluted number of shares in issue 84,494 84,247 84,266
(‘000)
Fully diluted earnings per share (1.89)p 9.85p 4.12p
Properties at 30 June 2014 are included at valuation as at 31 December 2013,
plus additions in the period.
During the six months ended 30 June 2013 the group had property additions of £
nil (30 June 2013: £0.009 million,
31 December 2013: £0.014 million).
No properties were sold during the six months ended 30 June 2014 (carrying
value of properties sold at 30 June 2013: £Nil, 31 December 2013: £9.475
million).
The £104.7 million cash for the sale of the Windsor Shopping Centre, the
discontinued assets, was received on 17 January 2014.
All hedging instruments at the year-end were repaid by April 2014.
2014 2013 2013
(unaudited) (unaudited) (audited)
Shares in issue (‘000) 84,508 84,288 84,288
Net assets per balance sheet (£’000) 48,136 54,692 49,734
Basic net assets per share 56.96p 64.89p 59.00p
Shares in issue diluted by 84,528 84,358 84,288
outstanding share options (‘000)
Net assets after issue of share 48,146 54,720 49,734
options (£’000)
Fully diluted net assets per share 56.96p 64.87p 59.00p
The group repaid in May 2014 the balance of its secured £47 million revolving
credit facility.
This was replaced with a short term secured bank loan of £40.1 million.
On 1 July 2014 the group repaid the £40.1 million loan and replaced with a new
secured £45 million five year term financing package.
Taking account of the hedging of interest rates on the senior facilities and
the fixed interest rate on the mezzanine facilities this has a current blended
interest rate of 4.79%.
Following the sale of King Edward Court, Windsor in January 2014, the £70
million term bank loan was repaid.
Notes to the half year report continued
The related parties and the nature of costs recharged are as disclosed in the
group’s annual financial statements for the year ended 31 December 2013.
The group has management fees receivable of £68,750 (30 June 2013: £68,750, 31
December 2013: £137,500) from Bisichi Mining PLC, an associated company.
The group, during the period, was repaid £64,250 of the unsecured loan by
Langney Shopping Centre Unit Trust (a joint venture).
The group has capital commitments of £Nil as at 30 June 2014 (30 June 2013: £
Nil, 31 December 2013: £Nil).
There is no interim dividend payable for the period (30 June 2013: Nil).
The final dividend in respect of 2013 of 0.125p per share, amounting to £106k,
was paid on 4 July 2014. As the 2013 final dividends was approved by the
shareholders at the Annual General Meeting held on 10 June 2014, it is included
as a liability in these interim financial statements.
The group’s principal risks and uncertainties are reported on page 15 in the
2013 Annual Report. They have been reviewed by the Directors and remain
unchanged for the current period.
The largest area of estimation and uncertainty in the interim financial
statements is in respect of the valuation of investment properties (which are
not revalued at the half year) and the valuation of interest rate derivatives.
The above financial information does not constitute statutory accounts within
the meaning of section 434 of the Companies Act 2006. The figures for the year
ended 31 December 2013 are based upon the latest statutory accounts, which have
been delivered to the Registrar of Companies; the report of the auditor’s on
those accounts was unqualified and did not contain a statement under Section
498(2) or (3) of the Companies Act 2006.
As required by the Disclosure and Transparency Rules of the UK’s Financial
Services Authority, the interim financial statements have been prepared in
accordance with the International Financial Reporting Standards (IFRS) and in
accordance with both IAS 34 ‘Interim Financial Reporting’ as adopted by the
European Union and the disclosure requirements of the Listing Rules.
The half year results have not been audited or subject to review by the
company’s auditor.
The annual financial statements of London & Associated Properties PLC are
prepared in accordance with IFRS as adopted by the European Union. The same
accounting policies are used for the six months ended 30 June 2014 as were used
for the year ended 31 December 2013.
The assessment of new standards, amendments and interpretations issued but not
effective, is that these are not anticipated to have a material impact on the
financial statements.
There is no material seasonal impact on the group’s financial performance.
Taxes on income in the interim periods are accrued using tax rates expected to
be applicable to total annual earnings.
The interim financial statements have been prepared on the going concern basis
as the Directors are satisfied the group has adequate resources to continue in
operational existence for the foreseeable future.
The half year results were approved by the Board of London & Associated
Properties PLC on 28 August 2014.
Directors’ responsibility statement
The Directors confirm that to the best of their knowledge:
(a) the condensed set of financial statements have been prepared in accordance
with applicable accounting standards and IAS 34 Interim Financial Reporting as
adopted by the EU;
(b) the interim management report includes a fair review of the information
required by:
(1) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements ;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
(2) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
Signed on behalf of the Board on 28 August 2014
Sir Michael Heller Robert Corry
Director Director
Directors and advisors
Directors
Executive directors
* Sir Michael Heller MA FCA (Chairman)
John A Heller LLB MBA (Chief Executive)
Robert J Corry BA FCA (Finance Director)
Non-executive directors
† Howard D Goldring BSC (ECON) ACA
#†Clive A Parritt FCA CF FIIA
Robin Priest
* Member of the nomination committee
# Senior independent director
† Member of the audit, remuneration and nomination
committees.
Secretary & registered office
Heather A Curtis ACIS
24 Bruton Place,
London W1J 6NE
Registrars & transfer office
Capita Asset Services
Shareholder Services
The Registry, 34 Beckenham Road
Beckenham, Kent BR3 4TU
Telephone 0871 664 0300
(Calls cost 10p per minute + network
extras, lines are open Mon-Fri 9.00am to
5.30pm)
or +44 208 639 3399 for overseas callers
Website: www.capitaregistrars.com
E-mail: shareholderenquiries@capita.co.uk
Company registration number
341829 (England and Wales)
Website
www.lap.co.uk
admin@lap.co.uk