RNS Number:3254J
Minerva PLC
28 March 2003
MINERVA PLC
INTERIM RESULTS FOR THE SIX MONTHS TO 31st DECEMBER 2002
Highlights
* Rental income increased to #26.1 million (2001: #24.3 million).
* Profit before tax of #1.2 million (2001: #4.4 million).
* Interim dividend increased to 1.05 pence per share (2001: 1.03 pence),
payable on 14 May 2003.
* Cash reserves of #85.7 million (June 2002: #120.2 million). Since 31
December 2002, cash reserves have increased to over #140 million.
* The Group's planning application for the Minerva Building comprises a 1
million sq ft prime office development in the City of London, designed by
British architects Nicholas Grimshaw and Partners. The Group is continuing
its consultation process prior to consideration from the Corporation of
London.
* The Group has concluded its discussions with the Greater London Authority
in respect of the Park Place shopping centre development and will imminently
be requesting a decision from the Government Office for London.
* During the period, the Group completed its two property developments at
Wigmore Street, W1 and 90 High Holborn, WC1, and has addressed the
speculative tenant risk in the following manner:
* Wigmore Street: The principal office building which totals 29,000 sq
ft was leased to the Government for 15 years at an annual rent of #1.3
million, which equates to #52 p.s.f. on the best space. There is a
tenant option to determine the lease in June 2013.
* 90 High Holborn: The 181,000 sq ft development was leased in its
entirety to law firm, Olswang, for a term of 20 years at an initial rent
of #6.1 million, rising to #8.1 million in June 2003, #8.3 million in
September 2004 and a minimum of #8.5 million in March 2007. In
addition, the Group restructured its joint venture arrangements with
Olswang such that the Group now has full ownership of the property in
return for paying Olswang #12.5 million
Since 31 December 2002:
* Scarlett Retail Group Limited, a Minerva joint venture with Lehman
Brothers, Terry Green and Phil Cox, successfully acquired Allders plc. The
total cost to Scarlett, which is 60 per cent owned by Minerva, of around
#145 million was funded by a mixture of debt and equity.
* The Group has completed two refinancings totalling approximately #126
million with an average maturity of over 9 years.
Andrew Rosenfeld, Chief Executive of Minerva, said:
"The combination of cash, investment assets and development opportunities
positions us well to face the tough economic environment that prevails at the
present time."
Enquiries:
Andrew Rosenfeld, Chief Executive, Minerva plc Tel: (020) 7535 1000
Richard Evans, The Communication Group plc Tel: (020) 7630 1411
CHAIRMAN'S STATEMENT
What has defined our activities since I reported to you in September of last
year has been our clear policy of further enhancing our property assets whilst
at the same time increasing the Group's cash reserves which now stand at over
#140m.
Having lived through more property cycles than I care to remember, I and my
colleagues recognise that in uncertain times it is an unarguable strength to
focus on the fundamentals of one's core business.
Before I articulate the activities that we have undertaken in this intervening
period I would firstly like to turn to the financial results for the six months
to the 31 December 2002.
Profit before tax was #1.2 million compared to #4.4 million for the
corresponding period last year. The principal reasons for this reduction are
the high level of cash reserves that we choose to hold in our treasury; our
estate management policy relating to our three medium term development
opportunities namely The Minerva Building, Park Place Croydon and the Walbrook
Estate where in each case there is a trade off between current long term income
and significant future returns from redevelopment; and the costs relating to our
recent head office consolidation into 42 Wigmore Street W1, which has now taken
place.
The Directors have resolved to pay an interim dividend of 1.05 pence per share
(2001: 1.03 pence) and this will be paid on 14 May 2003 to those shareholders on
the register at close of business on 11 April 2003.
The recent acquisition of Allders plc, through our 60 per cent subsidiary
Scarlett Retail Group Limited, represents the culmination of a three and a half
year activity which has now enabled us to obtain control of an extremely
important property asset which lies at the very heart of our Park Place
development proposal. The total cost to Scarlett of the Allders acquisition was
approximately #145 million, substantially underpinned by property assets and
financed by a combination of non-recourse debt and a total equity investment of
around #14 million. Our original investment in Allders of #30 million was sold
to Scarlett for #33 million, thus realising a profit of #3 million. As part of
the transaction, Minerva invested approximately #10.5 million for its 60 per
cent share in Scarlett, thus repatriating over #22 million to cash deposits.
Taking account of the #3 million profit, Minerva's net investment in Scarlett
equates to around #7.5 million, in return for which it has secured its
shareholding in Scarlett, which is a partnership with Lehman Brothers and new
management who together will share equally the remaining 40 per cent of the
equity.
The Minerva Board and management will continue, consistent with our policy, to
concentrate on our core property activities whilst our retail subsidiary will be
run by Terry Green and Phil Cox, whose combined reputations are of the highest
calibre having pursued successful careers at Debenhams, Bhs and Asda. We will
of course seek to ensure that the interests of Minerva shareholders are
uppermost on the agenda as the new management seeks to maximize the potential
from a retail business which has a turnover in excess of #550 million per annum.
Turning to The Minerva Building I am able to report that further progress has
been made in our pursuit to obtain planning consent for the City of London's
first headquarters building with a total floor area of over 1 million sq ft.
The detailed design is at an advanced stage, our having now consulted with all
the relevant parties. We hope that our planning application will be considered
by the Corporation of London by the middle of this year and if successful,
notwithstanding the weakness in the current Central London office market, we
will have created a development opportunity which has not yet been achieved in a
single building within the Square Mile. It is important to emphasise at this
juncture that we will not commence development of this or any of our other
projects without having first protected against potential exposure through
pre-leasing prior to commencing construction. We have never been major
speculative developers and we most certainly do not propose changing this long
term philosophy.
Our proposals for Park Place are now at the final stages of the decision making
process. Croydon Council has already resolved to grant consent for this
development but, due to the size and nature of our proposal, the matter has been
referred to the Government Office for London. We feel that the discussions which
we have been having with the Greater London Authority have reached a conclusion
and we will imminently be making a formal request of the Government Office for
London to give permission to Croydon Council to formally issue the planning
consent. We believe that the Park Place development represents one of Greater
London's largest urban regeneration projects and, when complete, will elevate
Croydon to one of the top retail destinations in the United Kingdom.
In administering the activities of the Group we have maintained our focus on our
income producing investments.
In respect of 90 High Holborn, our tenant, Olswang, was also our 50 per cent
joint venture partner. We have now acquired Olswang's interest for #12.5
million and, in so doing, obtained full ownership of the completed office
development. We have subsequently refinanced this project on a long term
investment facility with a leading commercial bank which has enabled us to fully
recover the total development cost along with the additional funds required to
acquire Olswang's stake in the joint venture. This refinancing, which took
place in January, resulted in a #0.5 million charge which will be recognised in
the profit and loss account in the second half of this year. However, as a
consequence we have been able to recover our entire equity investment in this
project whilst retaining 100 per cent ownership of the property.
With regard to our Wigmore Street development, we have leased the 29,000 sq. ft.
of offices available in entirety to the Government who will occupy the building
on a long term basis. Notwithstanding the small scale of this development, our
approach here was aimed at securing certainty of income with the minimum level
of exposure to the speculative office market in Central London.
Looking to the future and the uncertain nature of the economic climate that
prevails, we as a company will continue to focus our attention on maintaining
our property investment income, preserving our high cash reserves and working to
achieve a successful outcome in respect of our three major development
proposals, two of which are currently pursuing their path through the planning
process.
Experience tells me that this is a time for extreme caution and the avoidance of
speculative market risk. By remaining focused on our property assets and
looking to new opportunities that might arise, we will seek to further enhance
returns to you, our shareholders.
Sir David Garrard
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 31 December 2002
(Unaudited) (Audited)
(Unaudited)
Six months to Year to
Six months to
31 December 30 June
31 December
2001 2002
2002
Note #'000 #'000 #'000
Rental income 26,100 24,273 47,782
Net property outgoings (2,870) (1,969) (3,924)
23,230 22,304 43,858
Administrative expenses (3,363) (2,464) (6,577)
Other income 98 42 188
Operating profit 19,965 19,882 37,469
Income from listed investments 943 733 1,401
Net financing costs 3 (19,720) (16,213) (32,597)
Profit on ordinary activities before taxation 1,188 4,402 6,273
Taxation 4 (287) (472) (1,463)
Profit on ordinary activities after taxation 901 3,930 4,810
Dividends 5 (1,682) (1,650) (4,966)
(Withdrawn from) /transferred to reserves (781) 2,280 (156)
Earnings per share:
- basic 6 0.6p 2.5p 3.0p
- diluted 6 0.6p 2.4p 3.0p
CONSOLIDATED BALANCE SHEET
As at 31 December 2002
(Unaudited) (Unaudited) (Audited)
As at As at As at
31 December 31 December 30 June
2002 2001 2002
Note #'000 #'000 #'000
Fixed assets
Investment properties 7 1,089,481 1,016,104 1,075,026
Other fixed assets 1,416 537 412
Investments 29,889 20,831 24,648
1,120,786 1,037,472 1,100,086
Current assets
Debtors 20,953 10,696 8,170
Cash at bank and in hand 85,718 116,651 120,236
106,671 127,347 128,406
Creditors: Amounts falling due within one year (42,444) (37,271) (39,523)
Net current assets 64,227 90,076 88,883
Total assets less current liabilities 1,185,013 1,127,548 1,188,969
Creditors: Amounts falling due after more than one
year (618,892) (577,888) (607,266)
Provisions for liabilities and charges 10 (4,211) (2,933) (3,924)
561,910 546,727 577,779
Equity minority interests - (15,117) (15,088)
Net assets 561,910 531,610 562,691
Capital and reserves
Called up share capital 40,048 40,048 40,048
Share premium account 197,101 197,101 197,101
Revaluation reserve 286,236 252,719 286,236
Other reserves 41,795 41,795 41,795
Profit and loss account (3,270) (53) (2,489)
Equity shareholders' funds 561,910 531,610 562,691
Net assets per share 11 350.8p 331.9p 351.3p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the six months ended 31 December 2002
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Profit on ordinary activities after taxation 901 3,930 4,810
Unrealised surplus on revaluation of properties - - 33,488
Equity minority interest share of surplus on revaluation
of properties
- - 29
Total recognised gains and losses for the period 901 3,930 38,327
NOTE OF HISTORICAL COST PROFITS AND LOSSES
For the six months ended 31 December 2002
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Profit on ordinary activities before taxation 1,188 4,402 6,273
Historical cost profit on ordinary activities before 1,188 4,402 6,273
taxation
Historical cost (loss)/profit for the period retained
after taxation and dividends (781) 2,280 (156)
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
For the six months ended 31 December 2002
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Profit on ordinary activities after taxation 901 3,930 4,810
Dividends (1,682) (1,650) (4,966)
(781) 2,280 (156)
Unrealised surplus on revaluation of investment - - 33,488
properties
Equity minority interest share of surplus on revaluation
of properties - - 29
Net movement in shareholders' funds (781) 2,280 33,361
Opening shareholders' funds 562,691 529,330 529,330
Closing shareholders' funds 561,910 531,610 562,691
SUMMARY CASH FLOW STATEMENT
For the six months ended 31 December 2002
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 December 31 December 30 June
2002 2001 2002
Note #'000 #'000 #'000
Net cash inflow from operating activities 12 a 20,248 15,187 38,101
Returns on investments and servicing of finance (15,720) (14,907) (29,454)
Taxation - - -
Net operating cash inflow 4,528 280 8,647
Capital expenditure and financial investment (21,966) (28,740) (54,846)
Acquisitions (21,209) - -
Equity dividends paid (3,315) (3,203) (4,854)
Cash outflow before use of liquid resources and
financing (41,962) (31,663) (51,053)
Movements in liquid resources 33,884 3,300 2,298
Financing 7,444 24,957 47,932
Decrease in cash 12 b (634) (3,406) (823)
Notes to the accounts
1. Accounting policies
The financial information included in the Interim Report comprises the
consolidated profit and loss account and balance sheet, statement of total
recognised gains and losses, note of historical cost profits and losses,
reconciliation of movement in shareholders' funds, summary consolidated cash
flow statement and summary notes. This has been prepared in accordance with the
normal accounting policies of the Group, except for that disclosed in note 7
regarding valuation of investment properties.
2. Companies Act 1985
The financial information for the year to 30 June 2002 does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
It is extracted from the statutory accounts for that period, on which the
auditors, PricewaterhouseCoopers, gave an unqualified report under Section 236
of the Companies Act 1985 which did not contain a statement under Section 237(2)
or Section 237(4) of the Companies Act 1985. Statutory accounts for the year to
30 June 2002 have been delivered to the Registrar of Companies.
The financial information for the six months to 31 December 2002 has neither
been audited nor reviewed by the Group's auditors.
3. Net financing costs
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Interest receivable 1,988 2,800 5,233
Interest payable and similar charges (23,678) (21,645) (43,790)
Capitalised during the period 1,970 2,632 5,960
(19,720) (16,213) (32,597)
4. Taxation
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
UK corporation tax - - -
Deferred tax 287 472 1,463
287 472 1,463
5. Dividends
The interim dividend of 1.05 pence (2001: 1.03 pence) per ordinary share is
payable on 14 May 2003 to members on the register at close of business on 11
April 2003.
6. Earnings per share
Earnings per share have been calculated on a weighted average 160,193,213
ordinary shares of 25 pence each in issue throughout the period (year to 30 June
2002: 160,193,213 ordinary shares; six months to 31 December 2001: 160,193,213
ordinary shares), and have been based on profit on ordinary activities after
taxation of #901,000 (year to 30 June 2002: #4,810,000; six months to 31
December 2001: #3,930,000).
Diluted earnings per share have been calculated after allowing for the exercise
of share options, and have been based on 160,375,792 ordinary shares of 25 pence
each in issue throughout the period (year to 30 June 2002: 160,518,401 ordinary
shares; six months to 31 December 2001: 160,502,332 ordinary shares).
7. Investment properties
Investment properties owned at 30 June 2002 are included in the balance sheet at
31 December 2002 at the independent valuation at 30 June 2002, as adjusted for
UITF 28, plus costs incurred on the properties since that date, less disposals
at valuation. Investment properties acquired during the period under review are
included at the cost of acquisition plus any costs incurred on the property
since the date of acquisition.
8. Borrowings
The debt maturity profile of the Group's bank and building society borrowings at
31 December 2002 is as follows:
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Less than one year 7,571 7,203 7,413
Between one and two years 89,817 3,521 77,307
Between two and five years 101,650 105,474 100,540
Over five years 431,492 473,444 434,015
630,530 589,642 619,275
Unamortised loan issue costs allocated to future periods (4,067) (4,551) (4,596)
626,463 585,091 614,679
9. Fair value of financial instruments
A valuation was carried out as at 31 December 2002 by J C Rathbone Associates
Limited, to calculate the market value of the Group's debt instruments on a
replacement basis, taking into account the difference between fixed,
fixed-swapped and collared interest rates for the Group borrowings and the
prevailing interest rates for the respective periods of the appropriate debt
instruments. The fair value at 31 December 2002 was #50,146,000 (30 June 2002:
#25,931,000; 31 December 2001: #21,860,000) greater than the book value, which
if taken to reserves after tax relief at 30 per cent, would reduce the Group's
net asset value by #35,102,000 (30 June 2002: #18,152,000; 31 December 2001:
#15,302,000) or 21.9 pence per share (30 June 2002: 11.3 pence; 31 December
2001: 9.6 pence).
10. Provisions for liabilities and charges
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
At beginning of period 3,924 - -
Adoption of FRS19 - 2,461 2,461
Charge for the period 287 472 1,463
At end of period 4,211 2,933 3,924
The provision is entirely for deferred taxation primarily relating to
accelerated capital allowances and other timing differences.
11. Net assets per share
Net assets per share have been calculated on 160,193,213 ordinary shares of 25
pence each in issue at 31 December 2002 (30 June 2002: 160,193,213; 31 December
2001: 160,193,213) and have been based on net assets attributable to
shareholders of #561,910,000 (30 June 2002: #562,691,000; 31 December 2001:
#531,610,000).
12. Cash flow statement
a. Reconciliation of operating profit to net cash movement from operating activities
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Operating profit 19,965 19,882 37,469
Depreciation charges 293 181 351
Profit on sale of tangible fixed assets (7) (8) (23)
Movement in debtors (3,483) (2,171) 342
Movement in creditors 3,480 (2,697) (38)
Net cash movement from operating activities 20,248 15,187 38,101
b. Reconciliation of net cash flow to net debt
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Decrease in cash during the period (634) (3,406) (823)
Cash inflow from movement in liquid resources (33,884) (3,300) (2,298)
Cash inflow from movement in debt financing (7,444) (24,957) (51,887)
Other movements (4,340) (3,591) (10,204)
Movement in net debt during the period (46,302) (35,254) (65,212)
Opening net debt (494,443) (429,231) (429,231)
Closing net debt (540,745) (464,485) (494,443)
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
Net debt
Debt due within one year (7,571) (3,248) (7,413)
Debt due after one year (618,892) (577,888) (607,266)
(626,463) (581,136) (614,679)
Cash at bank and in hand 85,718 116,651 120,236
(540,745) (464,485) (494,443)
13. Post balance sheet event
Scarlett Retail Group Limited ("Scarlett"), a company registered in England and
Wales, declared on 20 February 2003 that it's recommended cash offer to acquire
the ordinary share capital of Allders plc was unconditional as to acceptances.
The offer of 164.1 pence per share was financed by a combination of paid up
share capital and loan finance.
Minerva has subscribed for 60 per cent of the ordinary share capital of Scarlett
for #60,000. In addition, Minerva has subscribed for approximately #10,375,000
of preference shares in Scarlett. The total investment in Scarlett by Minerva
will be reduced by the profit arising from the sale of its 26.5 per cent
investment in Allders plc to Scarlett.
14. Copies of the Interim Report
Copies of the Interim Report are available from the Company Secretary at 42
Wigmore Street, London W1U 2RY.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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