Canary Wharf Group - Final Results - Part 3
RNS No 6332q
CANARY WHARF GROUP PLC
17 September 1999
Part 3
(1)Prior to the listing of the company, warrants over 26,867,000 ordinary
shares were granted to IPC Advisors Limited, a company owned by a trust for
the benefit of (inter alios) the Paul Reichmann family. These warrants are
exercisable until 26 December 2005 at a price of 450 pence per share.
(2) In December 1997, the company granted to European Investment Bank ('EIB')
warrants to subscribe for shares in the company in the event of admission
to a recognised stock exchange. Pursuant thereto a total of 8,925,233 such
warrants were issued and became exercisable on 2 April 1999. These warrants
remain exercisable until 1 April 2006 at a price of 330 pence per share.
The subscription price for, and the number of shares subject to,
the warrants issued to IPC Advisors Limited and to EIB are subject to
adjustment in certain circumstances, such as capitalisation or rights
issues.
(3) On 5 March 1999, conditional upon listing, the authorised share
capital of the company was increased by £7,000,000 to £10,000,000
by the creation of 700,000,000 ordinary shares of 1p each ranking pari
passu in all respects as one class of shares with the existing ordinary
shares. On the same date, and also conditional upon listing,
250,000,000 ordinary shares were issued by way of a bonus issue to the
ordinary shareholders pro rata to their holdings of such shares
immediately prior to the admission to listing of the group's ordinary
shares on the London Stock Exchange.
(4) On 3 March 1998 options were granted to seventeen senior
executives including two executive directors under the Canary Wharf Group
plc (formerly CWI Holdings plc) 1997 Executive Share Option Plan to
subscribe for 4,977,000 ordinary shares. As a result of the bonus issue
of shares on 1 April 1999, and in accordance with the terms of this Plan,
the number of ordinary shares under option doubled to 9,954,000 shares
and the option price was halved to 79.5 pence per share.
(5) On 31 March 1999 options over 10,354,167 shares, with an option
price of 400 pence per share, were granted to fifteen senior executives,
including two executive directors. Also on 31 March 1999 an award of
455,579 shares was made to 43 executives under the terms of the
Canary Wharf Long Term Incentive Plan. These awards are all subject
to performance criteria.
(6) Under the terms of an agreement with a former director of CWHL
options over 184,417 shares were granted to him at a price of 330 pence
per share. These options are exercisable until 31 March 2004.
(7) On 1 April 1999 167,000,000 ordinary shares were issued and the
ordinary shares of the company were admitted for listing on the London
Stock Exchange. A further 16,700,000 ordinary shares were issued on 26
April 1999 under the terms of an over-allotment option established prior to
this listing.
(8) On 12 April 1999 176,129 ordinary shares were issued at a
subscription price of 331.5 pence per share to Canary Wharf Trustees
Limited as trustee of the Canary Wharf Share Participation Plan on behalf
of 409 participants.
(9) During the year ended 30 June 1999 184,000 ordinary shares were
issued at a subscription price of 79.5 pence per share following the
exercise of options under the Canary Wharf Group plc 1997
Executive Share Option Plan.
At 30 June 1999 the following warrants to subscribe for, options over and
rights to receive ordinary shares, remained outstanding.
Exercise
Number of price per
Nature of ordinary ordinary Exercise
Person entitled Right shares per share (p) period
IPC Advisors Warrants 26,867,000 450.0 01/04/99 to
Limited 26/12/05
EIB Warrants 8,925,233 330.0 02/04/99 to
01/04/06
Share Option
Plans:
17 employees Options 9,770,000 79.5 50%
(including 2 current,
directors) 25% from
01/01/00,
25% from
01/01/01,
all until
03/03/08
15 employees Options 10,354,167 400.0 Phased,
(including 2 commencing
directors) on
31/03/02,
all until
03/03/09
Former director Options 184,417 330.0 01/04/99 to
of CWHL 31/03/04
Long Term Shares 455,479 - 31/03/02 to
Incentive Plan 30/03/09
(43 employees)
Share Shares 176,129 -
Participation
Plan (409
employees)
18 RESERVES
Share Revalua- Capital Profit Total
Premium tion Reserve & Loss
Account Reserve
Equity reserves: £m £m £m £m £m
At 1 July 1998 - 588.7 61.3 (58.5) 591.5
Bonus issue of
shares - (2.5) - - (2.5)
Premium on issue of
shares 605.1 - - - 605.1
Share issue
expenses (33.8) - - - (33.8)
Revaluation of
investment
properties - 128.0 - - 128.0
Movement for the
financial year - - - (87.4) (87.4)
------ ------ ------ ------ ------
At 30 June 1999 571.3 714.2 61.3 (145.9) 1,200.9
====== ====== ====== ====== ======
The capital reserve arose on the company's acquisition of the CWHL Group on 27
December 1995.
19 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
£m
Shareholders' funds as at 1 July 1998 594.0
Issue of share capital 573.1
Loss for the financial year before dividend (42.8)
Dividend paid on equity shares (44.6)
Revaluation surplus 128.0
-------
Shareholders' funds as at 30 June 1999 1,207.7
=======
20 PENSION SCHEMES
The group operates two defined contribution pension schemes. The
assets of these schemes are held in independently administered funds.
The pension cost charge, which amounted to £1,035,548 in the year (year
ended 30 June 1998 - £932,658) represents contributions payable by the group
to the schemes.
21 RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH
FLOWS
Year Year
ended ended
30 June 30 June
1999 1998
£m £m
Operating profit 25.0 8.5
Depreciation charges 0.2 0.1
Decrease/(Increase) in debtors 5.4 (21.5)
Increase in creditors 12.6 22.3
Decrease in provisions (0.7) -
------ ------
Net cash inflow from operating
activities 42.5 9.4
====== ======
22 ANALYSIS OF CASH FLOWS
Returns on investments and servicing Year ended Year
of finance 30 June ended
1999 30 June
1998
£m £m
Interest received 32.4 28.5
Interest paid (39.1) (50.7)
Interest element of finance
lease rentals (35.0) (21.7)
Financing expenses (1.4) (12.4)
-------- --------
Net cash outflow (43.1) (56.3)
======== ========
Capital expenditure and Year ended Year
financial investment 30 June ended
1999 30 June
1998
£m £m
Additions to investment
properties and properties under
development (297.6) (94.8)
Purchase of tangible fixed
assets (0.7) -
Deferred income relating to
agreements to sell property 426.2 100.1
-------- --------
Net cash inflow 127.9 5.3
======== ========
Acquisitions Year ended Year ended
30 June 30 June
1999 1998
£m £m
Investment in subsidiary
undertaking (7.0) -
Investment in associates - (2.4)
-------- -------
Net cash outflow (7.0) (2.4)
======== =======
Management of liquid resources Year ended Year ended
30 June 30 June
1999 1998
£m £m
Cash placed on deposit not
available on demand (327.9) (395.1)
Cash withdrawn from deposit
accounts 89.2 33.6
-------- --------
Net cash outflow (238.7) (361.5)
======== ========
Financing Year ended Year ended
30 June 30 June
1999 1998
£m £m
Repayment of Senior Secured and
Capital Notes (366.6) (116.9)
Flotation proceeds (net of fees) 572.5 -
Decrease in short term borrowings - (76.0)
Repayment of secured loan - (188.8)
Issue of securitised debt - 555.0
Drawdown of secured loan and
finance lease premiums 132.4 295.5
-------- --------
Net cash inflow 338.3 468.8
======== ========
23 ANALYSIS AND RECONCILIATION OF NET DEBT
Other
1 July Cash non-cash 30 June
1998 flow changes 1999
£m £m £m £m
Cash at bank 602.9 414.0 - 1,016.9
Amounts on deposit not
available on demand (505.4) (238.7) - (744.1)
------ ------ ------ ------
97.5 175.3 - 272.8
------
Debt due after 1 year (836.2) 243.0 (593.2)
Debt due within 1 year (66.8) (27.6) (12.8) (107.2)
Finance leases (471.9) (35.0) 35.1 (471.8)
------ ------ ------ ------
(1374.9) 180.4 22.3 (1,172.2)
------
Amounts on deposit not
available on demand 505.4 238.7 - 744.1
------ ------ ------ ------
Net debt (772.0) 594.4 22.3 (155.3)
====== ====== ====== ======
Year ended
30 June
1999
£m
Increase in cash in the year 414.0
Decrease in debt and lease financing 180.4
------
Change in net debt resulting from cash flows 594.4
Non-cash movement in net debt 22.3
------
Movement in net debt in year 616.7
Net debt at 1 July 1998 (772.0)
------
Net debt at 30 June 1999 (155.3)
======
Major non-cash transactions
During the year ended 30 June 1998 the group entered into finance lease
arrangements in respect of assets with a total capital value at the
inception of the leases of £252.5 million.
24 CONTINGENT LIABILITIES AND FINANCIAL COMMITMENTS
As at 30 June 1999 certain members of the group had given fixed and floating
charges over substantially all of their assets as security for certain of
the group's borrowings and finance lease obligations as referred to in Note
15. In particular, various members of the group had, at 30 June 1999, given
fixed first ranking charges over cash deposits totalling £405.9 million and
may be called upon to make a further cash deposit of up to £19.2 million.
As security for the issue of £555 million of securitised debt (see Note 15)
the company has granted a first fixed charge over the shares of CWF and a first
floating charge has been given over all of the assets of CWF.
In December 1996 the group entered into an agreement for the construction of a
headquarters building for Citibank. In connection with this agreement the group
has agreed to indemnify Citibank in relation to its existing leases if the new
building has not been completed (other than due to Citibank's delay) by a
certain specified date. In addition liquidated damages are payable by the
group from another specified date (as extended by force majeure and Citibank's
delay) until completion of the building.
The directors believe that, on the basis of current progress and the
building programme, no liability to Citibank will arise under the above
provisions. The group has agreed to enter into a finance lease in
connection with this building subject to certain conditions being
satisfied.
Citibank have an option to commute the rent payable under the lease of
their new building during a certain specified period following the
completion of construction. The group has an option to require the rent
to be commuted during another specified period.
In October 1998 the group entered into an agreement for the construction of
a headquarters building for the HSBC Group. Liquidated damages are payable by
the group in the event that it fails to comply with certain
contractual obligations in this agreement by a specified date, which may be
extended by force majeure and delay by the HSBC Group. The directors believe
that, on the basis of current progress and the building programme, no
liability to the HSBC Group will arise under the above provisions.
The group is obliged to make a further contribution to the capital of the
company developing Canary Riverside, by way of subscription for additional
shares, to enable the company to complete the purchase of the southern
parts of Canary Riverside. The maximum amount to be contributed is £2.7
million plus interest.
A writ has been issued against one of the company's subsidiaries and
five senior group executives by WPP Group Plc and Ogilvy and Mather Ltd
for damages for fraudulent misrepresentation, conspiracy to defraud and
unlawful interference with business interests, arising out of abortive
negotiations for the surrender of the Plaintiff's existing lease and the grant
of a lease of new premises. The defendants are defending the claim
which, advised by their solicitors and counsel, they believe to be
without merit. The claim has not been fully quantified but appears to be in
the region of £20 million.
Commitments of the group for future expenditure:
30 June 30 June
1999 1998
£m £m
Under contract 631.6 299.5
====== ======
The commitments for future expenditure relate to the completion of
development properties where construction was committed at 30 June 1999.
Commitments of the group for the next financial year in
respect of operating leases are analysed as follows:
Land and Land and
buildings buildings
30 June 30 June
1999 1998
£m £m
Annual commitment for which the
leases expire:
Between two and five years 0.7 0.7
After five years 0.2 0.2
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