Canary Wharf Group - Preliminary Results-Part 2
RNS Number:2187R
Canary Wharf Group PLC
20 September 2000
Part 2
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30
JUNE 2000
Year Year
ended Ended
30 June 30 June
Notes 2000 1999
----- ------- --------
£m £m
Turnover - rents and service 114.4 79.6
charges
Cost of sales
- rents and property
management costs (31.5) (27.9)
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GROSS PROFIT 82.9 51.7
Administrative expenses (23.3) (27.8)
Other operating income
- before exceptional item 3.3 1.1
- exceptional item: net profit on
sale of completed properties
9 39.1 -
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OPERATING PROFIT 2 102.0 25.0
Share of operating loss in
associates 11 (0.1) (0.2)
Interest receivable - group 3 36.9 35.6
Interest payable - group 4 (84.7) (103.2)
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PROFIT/(LOSS) FOR THE
FINANCIAL YEAR 54.1 (42.8)
Dividends paid 7 - (44.6)
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TRANSFERRED TO RESERVES 18 54.1 (87.4)
======= =======
Basic earnings/(loss) per
share 8 7.9p (7.9p)
Diluted earnings/(loss) per
share 8 7.8p (7.9p)
The above results relate to the continuing activities of the
group and its share of associates.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 30 JUNE 2000
Year Year
ended ended
30 June 30 June
Notes 2000 1999
----- ------- -------
£m £m
Profit/(loss) for the financial
year of the group and its
share of associates
- group 54.2 (87.2)
- share of associates (0.1) (0.2)
Unrealised surplus on
revaluation of investment
properties
- group 9 256.9 128.0
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TOTAL RECOGNISED GAINS AND
LOSSES RELATING TO THE YEAR 311.0 40.6
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CONSOLIDATED BALANCE SHEET AT 30 JUNE 2000
30 June 30 June
2000 1999
Notes
----- ------- -------
£m £m
FIXED ASSETS
Investment properties 9 2,196.7 1,479.0
Properties under construction 9 182.4 84.8
Properties held for development 9 147.0 140.6
Other tangible fixed assets 10 3.8 0.6
Investments 11 6.6 6.7
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2,536.5 1,711.7
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CURRENT ASSETS
Properties under construction
and properties held for
development 9 142.6 310.0
Debtors 12 31.9 32.0
Cash at bank and in hand 13 1,020.6 1,016.9
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1,195.1 1,358.9
CREDITORS: Amounts falling due
within one year 14 (185.0) (389.2)
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NET CURRENT ASSETS 1,010.1 969.7
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TOTAL ASSETS LESS CURRENT
LIABILITIES 3,546.6 2,681.4
CREDITORS: Amounts falling due
after more than one year 15 (2,023.6) (1,470.4)
Provisions for liabilities and
charges 16 (2.9) (3.3)
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NET ASSETS 1,520.1 1,207.7
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CAPITAL AND RESERVES
Called up share capital 17 6.9 6.8
Reserves
- Share premium 18 572.6 571.3
- Revaluation reserve 18 971.1 714.2
- Capital reserve 18 61.3 61.3
- Profit and loss account 18 (91.8) (145.9)
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SHAREHOLDERS' FUNDS - EQUITY 1,520.1 1,207.7
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CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE
2000
Year Year
ended ended
30 June 30 June
Notes 2000 1999
----- ------- -------
£m £m
NET CASH INFLOW FROM
OPERATING ACTIVITIES 21 83.2 42.5
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Returns on investments and
servicing of finance 22 (53.1) (43.1)
Capital expenditure and
financial investment 22 (463.5) 127.9
Acquisitions 22 - (7.0)
Equity dividend paid - (44.6)
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(516.6) 33.2
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Cash(outflow)/inflow before
management of liquid
resources and financing (433.4) 75.7
Management of liquid resources 22 (40.0) (238.7)
Financing 22 437.1 338.3
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(DECREASE)/INCREASE IN CASH IN 23
THE YEAR (36.3) 175.3
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The above cash flowended 30 June 1999, fees of £1,773,000 were paid
to the auditors in connection with the company's flotation and
this amount has been charged to the share premium account as
part of the share issue expenses.
3 INTEREST RECEIVABLE
Year Year
ended ended
30 June 30 June
2000 1999
------- -------
£m £m
Bank interest receivable 36.9 35.6
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36.9 35.6
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4 INTEREST PAYABLE
Year Year
ended ended
30 June 30 June
2000 1999
------- -------
£m £m
Notes and debentures 44.4 65.8
Bank loans and overdrafts 7.3 9.2
Finance lease charges 44.7 35.0
------- -------
96.4 110.0
Less:
Interest at 6.7% (year
ended 30 June 1999 6.7%)
on development financings
transferred to
development properties (11.7) (6.8)
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84.7 103.2
======= =======
Interest payable of £11.7 million (year ended 30 June 1999 -
£6.8 million) has been transferred to development properties
(Note 9). The amount transferred in respect of the year ended
30 June 2000 includes £2.7 million attributable to funds
borrowed specifically for the purpose of financing the
construction of development properties. In addition,
following the adoption of FRS15 (Tangible Fixed Assets), the
amount transferred includes £9.0 million attributable to the
cost of funds forming part of the group's general borrowings
which were utilised in financing construction. Of this amount
£5.1 million relates to the six months ended 30 June 2000 and
£3.9 million to the six months ended 31 December 1999. This
latter amount was expensed for the purposes of the group's
interim statement. The additional amount of interest
attributable to the group's general borrowings which would
have fallen to be capitalised under the terms of FRS15 in
respect of periods prior to 30 June 1999 is not material.
5 TAXATION
No provision for corporation tax has been made in the
consolidated results of the group for the year to June 2000
due to the availability of tax losses brought forward from
previous periods and other tax reliefs available to offset the
profit for the period.
6 EMPLOYEE INFORMATION
Staff costs of all employees of the group, including
directors, were:
Year Year
ended ended
30 June 30 June
2000 1999
------- -------
£m £m
Wages and salaries 26.1 19.2
Social Security costs 2.6 1.9
Other pension costs
(Note 20) 1.5 1.0
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30.2 22.1
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The average monthly number of employees, including directors,
of the group during the year to 30 June 2000 was 721 (year
ended 30 June 1999 - 574).
7 DIVIDEND
Year Year
ended ended
30 June 30 June
2000 1999
------- -------
£m £m
Interim dividend - 44.6
======= =======
On 29 January 1999 the directors declared an interim dividend
of 17.8 pence per ordinary share to ordinary shareholders on
the register at the close of business on 31 December 1998
which was paid on 6 April 1999. The directors do not propose
a dividend for the year ended 30 June 2000.
8 EARNINGS PER SHARE
Basic earnings/(loss) per share is calculated by reference to
the profit/(loss) attributable to ordinary shareholders and on
the weighted average of 684.7 million shares in issue (June
1999 - 544.3 million).
The calculation of diluted earnings per share for the year
ended 30 June 2000 is based on profit attributable to ordinary
shareholders of £54.1 million and the diluted weighted average
of 692.4 million shares. The difference between the basic
weighted average number of shares and the diluted weighted
average comprises the following:
Shares
million
Warrants 0.9
Share options 6.3
Long Term Incentive Plan 0.5
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Total 7.7
=======
The calculation of the number of shares which are dilutive is
based on the number of each instrument outstanding (Note 17)
as adjusted for the difference between the exercise price and
the weighted average share price for the year ended 30 June
2000. Such instruments were not dilutive at June 1999 and
were therefore excluded from the calculations for that year in
accordance with FRS14 (Earnings per Share).
9 INVESTMENT PROPERTIES AND PROPERTIES UNDER CONSTRUCTION
AND HELD FOR DEVELOPMENT
Freehold properties held as tangible fixed assets:
Properties Properties
Investment under held for
Properties construction development
------- ------- -------
£m £m £m
As at 1 July 1999 1,479.0 84.8 140.6
Additions including
interest 4.5 154.1 32.4
Acquisition of
investment properties 373.8 - -
Transfer of completed
properties 82.5 (82.5) -
Transfer to properties
under construction - 26.0 (26.0)
Revaluation of completed
and acquired property 256.9 - -
------- ------- -------
As at 30 June 2000 2,196.7 182.4 147.0
======= ======= =======
Of which, subject to
lease and finance
leaseback arrangements
1,182.5
=======
Historical cost 994.0 182.4 147.0
======= ======= =======
Freehold properties held as current assets:
£m
As at 1 July 1999 310.0
Additions including interest 147.9
Disposal of completed properties (315.3)
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As at 30 June 2000 142.6
=======
Properties under construction or held for development where
the group has entered into an agreement for the sale of the
property, subject to the satisfaction of certain conditions
and, where relevant, completion of construction, are
categorised as current assets being held for sale.
During the year ended 30 June 2000 the group completed
construction of four properties, two of which were retained as
investment properties and two of which were sold. The
properties retained as investment properties (17 Columbus
Courtyard and the Canada Place Retail Centre and car park)
were revalued externally at 30 June 2000 on the basis of Open
Market Value in accordance with the Appraisal and Valuation
Manual published by the Royal Institution of Chartered
Surveyors ('Open Market Value'). This resulted in surpluses
upon revaluation of £59.0 million for 17 Columbus Courtyard
and £18.8 million for the Canada Place Retail Centre and car
park, both of which have been taken to the revaluation
reserve.
Construction of 33 Canada Square was completed on 1 December
1999. This building was constructed for Citibank as their UK
headquarters under an agreement for lease entered into in
December 1996 (the 'Agreement for Lease'). Under the terms of
the Agreement for Lease, Citibank was granted a lease of 999
years on 1 December 1999 pursuant to which rent was payable
for a term of 51 years calculated by reference to a formula
agreed in 1996. The first quarter's rent under this lease was
received from Citibank on the date of completion. In
accordance with the Agreement for Lease, the grant of the 999
year lease to Citibank included cross options to commute the
rent exercisable at different times by both Citibank and the
group. As a result of the fixed rent payable under the lease
and the existence of the cross options to commute the rent,
the property was treated as having been disposed of on 1
December 1999. This resulted in a loss on disposal of £5.4
million. Prior to the date of disposal the group entered into
a finance lease transaction (Note 15) which is expected to
generate a benefit to the group of £34 million. In accordance
with applicable accounting standards this benefit will be
recognised over the term of the finance lease.
Subsequently, on 21 December 1999, the group acquired from
Citibank its interest in 33 Canada Square subject to a lease
to Citibank of the building and 120 car parking spaces for a
term of 27 years. This new lease provides for upwards-only
rent reviews to open market every five years. The parties
agreed a valuation of the property, subject to the new
occupational lease, of £288.0 million. A payment of £87.9
million was made by the group to Citibank on acquisition,
which represented the difference between the agreed valuation
and the capitalised value of the amounts receivable by the
group under the terms of the existing 999 year lease. The
building has been revalued externally at 30 June 2000 on the
basis of Open Market Value at £310.0 million, resulting in a
revaluation surplus, after allowing for acquisition costs, of
£21.7 million.
On 27 December 1999 construction of 20 Columbus Courtyard was
completed and the building was sold under the terms of a
development agreement entered into in December 1997. The
disposal of this property resulted in a profit on disposal of
£44.5 million.
On 27 September 1999 the group completed the acquisition of
217,000 square feet of office space in 1 Westferry Circus, for
a consideration of £82.9 million. The building was revalued
externally at 30 June 2000 on the basis of Open Market Value
at £103.0 million resulting in a revaluation surplus, after
allowing for acquisition costs and subsequent tenant works, of
£14.9 million.
The group's investment properties have been valued as at 30
June 2000 by either FPDSavills Commercial Limited, Chartered
Surveyors, or CB Hillier Parker Limited, Surveyors and
Valuers, on the basis of Open Market Value. Each property has
been valued individually on a free and clear basis and not as
part of a portfolio and no account has been taken of any
intragroup leases or arrangements. Also, no allowance has
been made for any seller's expenses of realisation nor for any
taxation which might arise in the event of disposal (see Note
16). The total surplus arising on the year end valuations
(£256.9 million), including those properties completed or
acquired during the year, has been transferred to the
revaluation reserve.
Properties under construction and properties held for
development at 30 June 2000 which are to be retained are
carried at their fair value at the time of the acquisition of
the CWHL group in December 1995, less subsequent disposals
plus additions at cost, subject to any provision for
impairment. Properties under construction and properties held
for development which are contracted to be sold are carried at
the lower of cost (namely fair value at date of acquisition
plus additions at cost) and net realisable value.
At 30 June 2000 properties under construction held as fixed
assets included £6.3 million (30 June 1999 - £2.5 million) in
respect of financing costs. At that date properties under
construction held as current assets included £Nil (30 June
1999 - £5.7 million) in respect of financing costs.
10 OTHER TANGIBLE FIXED ASSETS
Fixtures
and Computer
equipment equipment Total
------- ------- -------
£m £m £m
Cost:
At 1 July 1999 0.8 0.2 1.0
Additions 4.5 0.1 4.6
------- ------- -------
At 30 June 2000 5.3 0.3 5.6
======= ======= =======
Depreciation:
At 1 July 1999 (0.3) (0.1) (0.4)
Charge for the year
(Note 2) (1.3) (0.1) (1.4)
------- ------- -------
At 30 June 2000 (1.6) (0.2) (1.8)
======= ======= =======
Net book amount
At 30 June 2000 3.7 0.1 3.8
======= ======= =======
At 1 July 1999 0.5 0.1 0.6
======= Investments in
associated
undertakings
----------
Cost: £m
At 1 July 1999 9.9
Share of post acquisition loss after tax (0.6)
----------
At June 2000 9.3
----------
Provision against unrealised profit on
sale of land
At 1 July 1999 (3.2)
Release of provision 0.5
----------
At 30 June 2000 (2.7)
----------
Net book amount
At June 2000 6.6
==========
At June 1999 6.7
==========
In May 1997 the group sold an undeveloped plot of land at
Canary Wharf to Canary Riverside Holdings Pty Limited ('CRH')
in which it acquired a 20% equity inte 216 (637)
======= ======= =======
Year ended 30 June
1999 13 (185) (172)
======= ======= =======
Net assets 45,933 165
======= =======
Group share: (20%) (50%)
At 30 June 2000 9,187 83 9,270
======= ======= =======
At 30 June 1999 10,040 (133) 9,907
======= ======= =======
In October 1996 the group sold its interest in the limited
partner companies of the First Tower Limited Partnership for a
nominal consideration. Further consideration may become
payable to the group in the future, contingent upon the
satisfaction of certain conditions.
12 DEBTORS
30 June 30 June
2000 1999
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Due within one year: £m £m
Trade debtors 3.6 1.8
Other debtors 12.6 7.4
Amounts owed by subsidiary undertakings - -
Prepayments and accrued income 15.7 22.8
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31.9 32.0
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