REG-Lon.&Assoc.Props PLC: Half-year Report <Origin Href="QuoteRef">LAS.L</Origin> - Part 1
31/08/2016 08:05
FOR IMMEDIATE RELEASE
31 August 2016
LONDON & ASSOCIATED PROPERTIES PLC
HALF YEAR RESULTS TO 30 JUNE 2016
London & Associated Properties PLC is a main market listed group which invests
in UK shopping centres and retail property whilst also managing property
assets for institutional clients.
It holds a substantial investment in Bisichi Mining PLC (main market listed)
which operates coal mines in South Africa and owns UK property investments.
HIGHLIGHTS
* Steady progress achieved in challenging market conditions
* Strengthened income quality from longer leases and improved tenant mix saw
group property income, pre-management fees, rise to £3.66m against £3.61m
* Group cash and cash equivalents increased to £4.15m from £2.57m at last
year end following sale of interest in Langney Shopping Centre
* Results of LAP (excluding Bisichi and Dragon) affected by non-cash item of
£0.5m increasing losses to £1.1m (2015: £0.6m)
* Sheffield, Orchard Square improves quality of tenant portfolio by completing
* new 10 year £475,000 a year reversionary lease to TK Maxx at Orchard
Square, Sheffield
* Letting to Virgin Money at £345,000 a year
* New lettings at Kings Square, West Bromwich generate annualised income of
£163,000
* “It is still too early to know the full impact of the result of the
referendum on Europe. However, we believe that our property portfolio is well
placed to meet the challenges that the United Kingdom faces and remain
confident about the future,” commented on the interim results, Sir Michael
Heller, Chairman, and John Heller, Chief Executive.
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Contact:
London & Associated Properties PLC
Tel: 020 7415 5000
John Heller, Chief Executive
Baron Phillips Associates
Tel: 07767 444193
Baron Phillips
Half year results for the period ended
30 June 2016
Half year review
We are pleased to report on another six months of steady progress against
challenging headwinds for London & Associated Properties group
(‘’Group’’), which includes our interest in Bisichi Mining PLC
(“Bisichi”). Group property income, pre-management fees, rose marginally
from £3.61 million to £3.66 million. This is a satisfactory result, as we
continue to strengthen the quality of our income by negotiating longer leases
and improving the quality of our tenant mix. We report more fully on these
asset management initiatives below.
London & Associated Properties’ (“LAP”) losses before tax were higher at
£1.1 million compared to £0.6 million for the same
period last year. However, this half year’s figures are distorted by a
non-cash item. As a result of record low interest rates, we have suffered a
charge of £0.5 million from marking to market our interest rate
derivatives. These derivatives are swaps taken out to hedge 50% of our
Santander loan. The other 50% is hedged by a cap. As we do not intend to
break the swap, this non-cash loss will be reversed either as a result of
higher interest rates or as the swap matures towards its expiry in mid-2019.
LAP finance expenses were lower at £1.92 million over the first 6 months
compared to £1.97 million last year. This is due to lower debenture
payments following the early repayment of £1.25 million of 11.6% debenture
stock in the first half of last year. Further debenture stock will be due
for repayment in the next 2 years and finance expenses will reduce further as
a result.
Group net assets were also affected by the non-cash liability of £1.05
million (2015: £0.52 million) for interest rate derivatives noted above. Net
assets per share at 30 June 2016 were 45.70 pence (31 December 2015: 47.26
pence).
Cash reserves improved following the sale of our equity interest in Langney
Shopping Centre Unit Trust (LSCUT). Cash and cash equivalents increased to
£4.15 million at 30 June 2016 (31 December 2015: £2.57 million).
Langney
In March LSCUT, in which LAP and Bisichi each owned a 12.5% equity interest,
sold the Langney Shopping Centre for £19.3 million. Acquired in 2011 for
£16.5 million and associated costs, the Centre was held in a closed-ended
joint venture with Schroders. During our period of investment and
management, we obtained planning consent for a significant extension to one
side of the Centre. LAP received £1.1million for its 12.5% stake, and our
total cash return including dividends was £1.36 million over the 5 years that
we owned and managed the Centre. Bisichi received a similar amount for its
12.5% share. Additionally, during our period of investment, we received fees
for managing the Centre.
Our property portfolio continues to trade well:
Sheffield
Our largest directly held asset is now Orchard Square in Sheffield and the
shopping centre was effectively fully let at the balance sheet date.
The most significant event during the period under review was the completion
in June of a 10 year reversionary lease to TK Maxx at £475,000 a year.
While this is a significant drop from the £625,000 that it was paying
previously, this transaction secures the major anchor tenant of the scheme for
the long term. TK Maxx had a tenant-only break in 2018 and was being pursued
actively by a number of other property owners in Sheffield. We believe that
this transaction is a significant validation of the quality of our shopping
centre, and will help us to attract top quality tenants should any units
become vacant.
We also completed a letting at the front of the centre to Virgin Money at a
rent of £345,000 a year. The unit is now open, and represents the latest in
banking space. In addition to traditional banking facilities, the unit also
has a bowling alley, cinema, champagne bar, and children’s’ play area as
well as meeting rooms and lounges. We understand that this is the Virgin
Money Group’s most dramatic fit-out so far, and brings an exciting new
retail experience to Sheffield City centre and to Orchard Square.
Elsewhere, we completed a letting to Costa Coffee at £70,000 a year, which
equates to a Zone A rent of £80 psf. This underpins the rental values of
the internal units at the centre.
Finally, we refurbished a floor of offices and have interest from a number of
occupiers. We expect to let this space during the second half of the year.
Brixton
At Brixton, our markets continue to thrive and gross rental income is growing
satisfactorily. There is continued demand/enquiries about vacant unit at the
markets. We are in the process of agreeing an increased share of the net
income with The Market Village Company (formerly In-Shops), our
tenant. The benefit of any agreed increases in net income will
be reported in future periods.
Also in Brixton, we obtained planning consent for a redevelopment of our
smaller property in Coldharbour Lane. The tenant, whose lease expired in
November 2015, subsequently applied for a judicial review of the planning
process. Lambeth Council, the planning authority, declined to defend the
application and the consent was consequently quashed. Our application is
automatically returned to the Council for consent a second time, and we remain
confident that we will be successful.
The tenant is also resisting yielding-up vacant possession, and we are using
legal process to remove them. Our lawyers are confident that we will prevail
and we have allocated funds to pursue this matter to conclusion.
West Bromwich
At Kings Square, West Bromwich, we have competed lettings to Pep & Co and
Everyone’s Choice, a local multiple discounter. These lettings will
improve our cash flow by £163,000 on an annualised basis.
Elsewhere our Group portfolio remains virtually fully let with a void rate of
just 2.5% (31 December 2015: 2.1%) by rental value.
Joint Venture
Our joint venture with Oaktree Capital Management, which owns three shopping
centres, continues to trade well. We are pursuing exciting asset management
opportunities at all three of them. The more significant ones are well
underway, and I look forward to reporting on them in due course.
Bisichi
For the six month period to 30 June 2016, Bisichi Mining PLC, of which we own
42%, achieved earnings before interest, tax, depreciation and amortisation of
£1.0 million (2015: £1.2 million).
Although Black Wattle, Bisichi’s directly owned coal mining asset in South
Africa, continued to operate in an environment of low international coal
prices, demand for its coal has remained strong. In anticipation of the Blue
Nightingale reserves coming to an end, plans are in place to increase
production from Black Wattle’s own reserves. These new opencast areas are
expected to reach full production by the end of the year.
As part of Black Wattle’s production plan for the period, the mine combined
production from its existing reserves with coal received from Blue Nightingale
(under an agreement to purchase Run of Mine coal) and generated total
production for the first six months of the year of 795,000 metric tonnes
(2015: 838,000 metric tonnes).
Looking forward to the rest of this year, Bisichi intends to focus on
maintaining low production costs and improving production levels from existing
reserves at Black Wattle and remains confident in its continuing ability to
achieve significant value from the South African mining operations.
Finally, Bisichi’s UK retail property portfolio, managed by London &
Associated Properties PLC, continues to perform well with voids across the
portfolio at the low level of 2.0% (2015: 2.3%).
Outlook and general
These results reflect the hard work of all the LAP directors, employees and
advisors in challenging times. It is still too early to know the full impact
of the result of the referendum on Europe. However, we believe that our
property portfolio is well placed to meet the challenges that the United
Kingdom faces, and remain confident about the future.
The Board is not proposing a half year dividend (2015: nil).
Sir Michael
Heller
John Heller
Chairman
Chief Executive
30 August 2016
Consolidated income statement
for the six months ended 30 June 2016
6 months ended 30 June 2016 (unaudited) 6 months ended 30 June 2015 (unaudited) Year ended 31 December 2015 (audited)
Notes £’000 £’000 £’000
Group revenue 1 14,319 17,335 32,666
Operating costs (12,707) (15,539) (30,675)
Income from listed investments held for trading 3 1 3
Operating profit 1 1,615 1,797 1,994
Finance income 2 65 63 123
Finance expenses 2 (2,099) (2,163) (4,221)
Debenture break cost – (158) (158)
Result before valuation and other movements (419) (461) (2,262)
Non–cash changes in valuation of assets and liabilities and other movements
Decrease in value of investment properties – – (185)
Loss on disposal of investment properties – – (32)
(Decrease)/increase in trading investments 2 (18) (1)
(Decrease)/increase in value of other investments 11 (1) (11)
Adjustment to interest rate derivative (477) 141 84
Share of profit of joint ventures, net of tax – 208 71
Loss on reclassification of asset as held for sale – – (276)
Result including revaluation and other movements (883) (131) (2,612)
Profit from discontinued operations – – 519
Loss for the period before taxation 1 (883) (131) (2,093)
Income tax (charge)/credit 3 (366) (105) 47
Loss for the period (1,249) (236) (2,046)
Attributable to:
Equity holders of the Company (1,327) (443) (1,889)
Non–controlling interest 78 207 (147)
Loss for the period (1,249) (236) (2,046)
(Loss)/profit per share – basic and diluted – continuing operations (1.56)p (0.52)p (2.85)p
(Loss)/profit per share – basic and diluted – discontinued operations – – 0.61p
Total 4 (1.56)p (0.52)p (2.24)p
Consolidated statement of comprehensive income
for the six months ended 30 June 2016
30 June 2016 (unaudited) 30 June 2015 (unaudited) 31 December 2015 (audited)
£'000 £'000 £'000
Loss for the period (1,249) (236) (2,046)
Other comprehensive income:
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of foreign operations 491 (217) (1,167)
Transfer of gain/(loss) on available for sale investments 63 (27) (201)
Taxation (13) 6 41
Other comprehensive income/(expense) for the period, net of tax 541 (238) (1,327)
Total comprehensive expense for the period, net of tax (708) (474) (3,373)
Attributable to:
Equity shareholders (1,126) (531) (2,414)
Non–controlling interest 418 57 (959)
(708) (474) (3,373)
Consolidated balance sheet
at 30 June 2016
30 June 2016 (unaudited) 30 June 2015 (unaudited) 31 December 2015 (audited)
Notes £'000 £'000 £'000
Non–current assets
Market value of properties attributable to Group 104,496 103,700 104,388
Present value of head leases 4,772 4,785 4,784
Property 5 109,268 108,485 109,172
Mining reserves, plant and equipment 6,478 6,348 5,552
Investments in joint ventures 325 3,463 325
Loan to joint venture 1,105 1,029 900
Held to maturity investments 1,874 2,102 1,995
Other investments 28 158 14
Deferred tax 2,027 2,306 2,390
121,105 123,891 120,348
Current assets
Inventories 2,117 1,394 1,049
Assets for sale – – 2,335
Trade and other receivables 7,262 8,606 6,502
Interest rate derivatives 6 4 – 15
Corporation tax recoverable – 31 29
Available for sale investments 654 768 594
Investments held for trading 22 105 20
Cash and cash equivalents 7,123 6,579 4,809
17,182 17,483 15,353
Total assets 138,287 141,374 135,701
Current liabilities
Trade and other payables (12,407) (11,287) (10,497)
Borrowings (2,981) (5,083) (2,267)
Current tax liabilities (145) (24) (10)
(15,533) (16,394) (12,774)
Non–current liabilities
Borrowings (65,104) (63,647) (64,951)
Interest rate derivatives 6 (1,053) (515) (587)
Present value of head leases on properties (4,772) (4,785) (4,784)
Provisions (1,028) (919) (847)
Deferred tax liabilities (2,155) (2,412) (2,106)
(74,112) (72,278) (73,275)
Total liabilities (89,645) (88,672) (86,049)
Net assets 48,642 52,702 49,652
Equity attributable to the owners of the parent
Share capital 8,554 8,554 8,554
Share premium account 4,866 4,866 4,866
Translation reserve (Bisichi Mining PLC) (962) (776) (1,145)
Capital redemption reserve 47 47 47
Retained earnings (excluding treasury shares) 26,681 29,794 28,238
Treasury shares (294) (422) (482)
Retained earnings 26,387 29,372 27,756
Total equity attributable to equity shareholders 38,892 42,063 40,078
Non – controlling interest 9,750 10,639 9,574
Total equity 48,642 52,702 49,652
Net assets per share 7 45.7p 49.5p 47.26p
Diluted net assets per share 7 45.7p 49.5p 47.26p
Consolidated statement of changes in shareholders’ equity
for the six months ended 30 June 2016
Share capital £’000 Share premium £’000 Translation reserves £’000 Capital redemption reserve £’000 Treasury shares £’000 Retained earnings excluding treasury shares £’000 Total excluding Non– Controlling Interests £’000 Non–controlling Interests £’000 Total equity £’000
Balance at 1 January 2015 8,554 4,866 (696) 47 (883) 30,659 42,547 10,826 53,373
Loss for the period – – – – – (443) (443) 207 (236)
Other comprehensive expense:
Currency translation – – (80) – – – (80) (137) (217)
Loss on available for sale investments (net of tax) – – – – – (8) (8) (13) (21)
Total other comprehensive expense – – (80) – – (8) (88) (150) (238)
Total comprehensive income/(expense) – – (80) – – (451) (531) 57 (474)
Transactions with owners: Share options issued – – – – – 5 5 6 11
Dividends – equity holders – – – – – (133) (133) – (133)
Dividends – non–controlling Interests – – – – – – – (250) (250)
Acquisition of own shares – – – – (51) – (51) – (51)
Disposal of own shares – – – – 226 – 226 – 226
Loss on transfer of own shares – – – – 286 (286) – – –
Transactions with owners – – – – 461 (414) 47 (244) (197)
Balance at 30 June 2015 (unaudited) 8,554 4,866 (776) 47 (422) 29,794 42,063 10,639 52,702
Balance at 1 January 2015 8,554 4,866 (696) 47 (883) 30,659 42,547 10,826 53,373
Loss for year – – – – – (1,899) (1,899) (147) (2,046)
Other comprehensive expense:
Currency translation – – (449) – – – (449) (718) (1,167)
Loss on available for sale investments (net of tax) – – – – – (66) (66) (94) (160)
Total other comprehensive expense – – (449) – – (66) (515) (812) (1,327)
Total comprehensive expense – – (449) – – (1,965) (2,414) (959) (3,373)
Transaction with owners:
Share options issued – – – – – 13 13 18 31
Share options cancelled – – – – – (45) (45) (64) (109)
Dividends – equity holders – – – – – (133) (133) – (133)
Dividends – non–controlling Interests – – end of period 4,150 3,472 2,575
Notes to the half year report
for the six months ended 30 June 2016
1. Segmental analysis 6 months ended 30 June 2016 (unaudited) 6 months ended 30 June 2015 (unaudited) Year ended 31 December 2015 (audited)
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