RNS No 6823p
HAMMERSON PLC
8th March 1999
PART 2
Consolidated Profit and Loss Account
for the year ended 31 December 1998
Notes 1998 1997
£m £m
Net rental income: Continuing operations 107.4 101.5
Discontinued 20.5 22.1
operations
1 127.9 123.6
Administration expenses (16.3) (15.6)
Operating profit: Continuing operations 93.9 89.1
Discontinued operations 17.7 18.9
111.6 108.0
Exceptional items:
Profit on the sale of Canadian 12.9 -
operations 7.2 (0.9)
Profit/(Loss) on the sale of
investment properties
Profit on ordinary activities 131.7 107.1
before interest
2 (42.8) (45.4)
Cost of finance (net)
Profit on ordinary activities 88.9 61.7
before taxation
3 (20.2) (14.9)
Taxation
Profit on ordinary activities after 68.7 46.8
taxation
(2.3) (1.8)
Equity minority interests
Profit for the financial year 66.4 45.0
Dividends 4 (36.9) (33.9)
Retained profit for the financial 29.5 11.1
year
Earnings per share 5 23.1p 15.8p
Diluted earnings per share 5 23.1p 15.8p
Adjusted earnings per share 5 21.1p 17.0p
Consolidated Balance Sheet
as at 31 December 1998
Notes 1998 1997
£m £m
FIXED ASSETS
Land and buildings 6 2,163.2 1,953.4
Fixtures, fittings and equipment
0.7 1.3
2,163.9 1,954.7
CURRENT ASSETS
Debtors 371.6 36.5
Cash at bank and in hand 7 165.3 81.6
536.9 118.1
CREDITORS FALLING DUE WITHIN ONE
YEAR
8 (31.3) (42.6)
Borrowings (163.1) (111.4)
Other
Net current assets/(liabilities) 342.5 (35.9)
Total assets less current 2,506.4 1,918.8
liabilities
CREDITORS FALLING DUE AFTER MORE
THAN ONE YEAR
Borrowings, including convertible 8 (1,032.6) (619.8)
bonds
Other (14.3) (13.7)
Equity minority interests (60.8) (32.5)
1,398.7 1,252.8
CAPITAL AND RESERVES
Called up share capital 72.1 71.4
Share premium account 525.9 525.9
Revaluation reserve 489.0 391.1
Other reserves 1.5 1.5
Profit and loss account 310.2 262.9
Equity shareholders' funds 1,398.7 1,252.8
Statement of Total Recognised Gains and Losses
for the year ended 31 December 1998
1998 1997
£m £m
Profit for the financial year 66.4 45.0
Unrealised surplus on revaluation of 131.1 138.8
properties (22.8) -
Taxation on realisation of previous (4.2) (5.6)
years' revaluation gains
Exchange translation movements
Total recognised gains and losses for the 170.5 178.2
year
Note of Historical Cost Profits and Losses
for the year ended 31 December 1998
1998 1997
£m £m
Profit on ordinary activities before 88.9 61.7
taxation 30.9 (35.5)
Realisation of previous years' revaluation
gains/(deficits)
Historical cost profit on ordinary 119.8 26.2
activities before taxation
Historical cost profit/(loss) for the
financial year after taxation, 37.6 (24.4)
equity minority interests and dividends
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 December 1998
1998 1997
£m £m
Retained profit for the financial year 29.5 11.1
Other recognised gains and losses 104.1 133.2
Issue of shares 12.3 7.5
Net increase in shareholders' funds 145.9 151.8
Shareholders' funds at 1 January 1252.8 1,101.0
Shareholders' funds at 31 December 1,398.7 1,252.8
Consolidated Cash Flow Statement
for the year ended 31 December 1998
Notes 1998 1997
£m £m
Net cash flow from operating 9 115.9 109.5
activities 9 (52.8) (50.1)
Returns on investment and servicing (26.5) (11.4)
of finance 9 (262.5) 14.9
Corporation tax paid 9 (78.9) (20.4)
Capital expenditure (11.5) (26.6)
Acquisitions and disposals
Equity dividends paid
Cash (outflow)/inflow before use of (316.3) 15.9
liquid resources and financing
(Increase)/Decrease in liquid (74.6) 18.6
resources
Net cash inflow/(outflow) from 399.9 (44.9)
financing
Increase/(Decrease) in cash in the 9.0 (10.4)
year
Reconciliation of Net Cash Flow to Movement in Net Debt
for the year ended 31 December 1998
1998 1997
£m £m
Increase/(Decrease) in cash in the 9.0 (10.4)
year
(Increase)/Decrease in debt (399.2) 47.0
Increase/(Decrease) in liquid 74.6 (18.6)
resources
Change in net debt resulting from (315.6) 18.0
cash flows
Disposal of secured bank debt on 26.5 -
disposal of subsidiary (28.5) -
Adoption of secured bank debt on (0.2) 35.3
acquisition of property
Exchange adjustment
Movement in net debt in the year (317.8) 53.3
Net debt at 1 January (580.8) (634.1)
Net debt at 31 December (898.6) (580.8)
Liquid resources comprise short term deposits and treasury instruments.
1. SEGMENTAL ANALYSIS
1998 1997
Gross Other Net Net
rental Rents property rental rental
income payable income income
outgoings
£m £m £m £m £m
Rental income
United Kingdom 96.4 9.3 7.1 80.0 77.5
France 22.4 - 1.7 20.7 18.3
Germany 9.9 0.3 2.9 6.7 5.7
Continuing operations 128.7 9.6 11.7 107.4 101.5
Discontinued operations 24.1 0.2 3.4 20.5 22.1
- Canada
152.8 9.8 15.1 127.9 123.6
1998 1997
£m £m
Assets employed
United Kingdom 1,354.1 1,168.7
France 442.7 237.8
Germany 175.7 108.7
Continuing operations 1972.5 1,515.2
Discontinued operations - Canada 324.8 318.4
2,297.3 1,833.6
Net debt (898.6) (580.8)
1,398.7 1,252.8
2. COST OF FINANCE (NET)
1998 1997
£m £m
Interest payable on:
Loans repayable within five years 19.3 12.3
Loans not repayable within five years 46.7 42.0
Interest payable and similar charges 66.0 54.3
Less:
Interest payable capitalised 11.8 2.7
Interest receivable 11.4 6.2
42.8 45.4
3. TAXATION
1998 1997
£m £m
United Kingdom corporation tax at 31.0% 14.8 11.8
(1997: 31.5%)
Advance corporation tax written back (10.7) (0.5)
Overseas tax before disposals 1.8 1.2
5.9 12.5
Overseas tax on disposals 14.3 2.4
Tax on profit on ordinary activities 20.2 14.9
Tax on realisation of previous years' 22.8 -
revaluation gains
The tax charge benefits from the recovery of advance corporation tax
previously written off and from allowances for capital expenditure.
Taxation on the disposal of the Canadian business totalling £37.1m has
been allocated pro-rata to the profit in the year and to the realisation
of previous years' revaluation gains.
4. DIVIDENDS
1998 1997
£m £m
Interim 4.13p (1997: 3.8p) per share 11.9 10.8
Final proposed 8.68p (1997: 8.1p) per 25.0 23.1
share
36.9 33.9
5. EARNINGS PER SHARE
In accordance with Financial Reporting Standard 14 Earnings per Share,
earnings per share have been calculated on the profit for the financial
year of £66.4m (1997: £45.0m) and the weighted average number of shares
in issue during the year ended 31 December 1998 of 287.2m (1997: 284.4m).
Fully diluted earnings per share reflect the exercise of conversion
rights relating to the convertible bonds and of options relating to
shares. The adjusted earnings per share exclude exceptional items and
tax on property disposals and are calculated on the adjusted profit for
the year of £60.6m (1997: £48.3m). Exceptional items and their related
tax increased earnings per share by 2.0 pence in 1998 and reduced
earnings per share by 1.2 pence in 1997.
6. LAND AND BUILDINGS
Book value Cost
1998 1997 1998 1997
£m £m £m £m
Investment Properties
Fully developed properties 1,958.7 1,858.8 1,441.7 1,420.6
Properties held for or in the
course of development 204.5 94.6 204.5 94.6
2,163.2 1,953.4 1,646.2 1,515.2
As at 31 December 1998 the market value of properties held for
development was £246.8m (1997: £121.3m). The total amount of interest
included in development properties at 31 December 1998 was £7.4m (1997:
£3.6m).
Long Short
Freeholds Leaseholde Leaseholds Total
£m £m £m £m
Movements in the year
Balance 1 January 1998 1,080.9 866.6 5.9 1,953.4
Exchange adjustment 0.8 (4.1) 0.1 (3.2)
Additions at cost 263.1 185.3 - 448.4
Disposals at valuation (335.6) (46.5) - (382.1)
Development outgoings 5.8 5.0 - 10.8
capitalised 97.8 36.8 1.3 135.9
Revaluation surplus
Balance 31 December 1,112.8 1,043.1 7.3 2,163.2
1998
7. CASH AT BANK AND IN HAND
1998 1997
£m £m
Cash at bank 16.4 7.4
Short term deposits 148.9 74.2
165.3 81.6
Analysis by currency
Sterling 163.6 78.4
French francs - 2.1
Deutschemarks 1.7 1.1
165.3 81.6
8. BORROWINGS
1998 1997
£m £m
Unsecured
£200 million 7.25%Sterling bonds due 2028 197.0 -
£200 million 10.75% Sterling bonds due 2013 193.6 193.4
£110 million 6.5% Sterling convertible bonds 107.7 107.5
due 2006 84.1 83.7
£86.4 million 7.875% Sterling bonds due 2003 - 120.0
Canadian dollar bonds and commercial paper 452.8 134.1
Bank loans and overdrafts 1.1 -
Other loans
1,036.3 638.7
Exchange difference on currency swaps (29.9) (33.4)
1,006.4 605.3
Secured
Sterling mortgages 6.25%-9.25% due between 14.2 14.3
2022 and 2070 28.5 -
Deutschemark mortgages 5.24%-6.613% due 14.8 14.0
between 1999 and 2006 - 28.8
Deutschemark bank loans 1.92%-7.22% due
between 1999 and 2051
Canadian dollar mortgages 7.75%-9.5% due
between 1999 and 2011
57.5 57.1
1,063.9 662.4
Maturity
Bank loans Other 1998 1997
and loans Total Total
overdrafts
£m £m £m £m
After 5 years 264.2 507.1 771.3 561.6
From 2-5 years 173.1 87.2 260.3 56.8
From 1-2 years 0.4 0.6 1.0 1.4
Due after more than 1 437.7 594.9 1,032.6 619.8
year 29.9 1.4 31.3 42.6
Due within 1 year
467.6 596.3 1,063.9 662.4
Analysis by currency
1998 1997
£m £m
Sterling 319.4 130.1
Canadian dollars 228.5 236.9
French francs 365.3 202.0
Deutschemarks 150.7 93.4
1,063.9 662.4
9. ANALYSIS OF CASH FLOWS
1998 1997
£m £m
Reconciliation of operating profit to net
cash inflow from operating activities
Operating profit 111.6 108.0
Depreciation 0.7 0.6
Letting costs written off 0.2 1.0
(Increase)/Decrease in debtors (5.3) 4.5
Increase/(Decrease) in creditors 8.7 (4.6)
115.9 109.5
Returns on investment and servicing of
finance
11.9 6.0
Interest received (63.8) (54.5)
Interest paid (0.9) (1.6)
Dividends paid to minorities
(52.8) (50.1)
Capital expenditure
Purchase and development of property (330.0) (97.7)
Sales of property 67.5 112.6
(262.5) 14.9
Acquisitions and disposals
Disposal of subsidiary company (14.9) -
Purchase of subsidiary companies (64.0) -
Purchase of equity minority interest in - (20.4)
subsidiary company
(78.9) (20.4)
10. FINANCIAL STATEMENTS
The consolidated profit and loss account and balance sheet set out above
are not statutory accounts as defined in Section 240 of the Companies Act
1985. Statutory accounts for the year ended 31 December 1997 have been
reported on by the Company's auditors and delivered to the Registrar of
Companies. The audit report was unqualified and did not contain a
Statement under Section 237(2) or Section 237(3) of the Companies Act
1985.
Following adoption of Financial Reporting Standard No. 9 Associates and
Joint Ventures, the group's investment in Essen Shopping Center BV has
been reclassified as a joint arrangement. Comparative figures have been
reclassified. The value of shareholders' funds and profit for the year
are not affected by this reclassification.
11. NOTICE OF MEETING
The Annual General Meeting will be held at 10.30 a.m. on Thursday, 13 May
1999 at 100 Park Lane, London W1Y 4AR.
PROPERTY
PORTFOLIO
INFORMATION
at 31 December 1998
Fully Underlying Net Vacancy
developed valuation rental rate
investment change income
properties
£ m % £ m %
United Retail London & South 411.0 5.5 23.4 1.0
Kingdom East 258.3 5.5 13.0 5.1
Midlands &
North of
England
669.3 5.5 36.4 2.6
Office City 375.0 4.3 26.0 1.4
West End 262.8 18.0 13.7 0.8
Other 58.0 12.1 3.9 12.8
695.8 9.7 43.6 3.7
Total United Kingdom 1,365.1 7.6 80.0 3.1
Continental Retail France 392.0 10.3 17.0 1.0
Europe Germany 175.8 2.5 6.7 5.9
567.8 7.8 23.7 3.4
Office France 25.8 (1.9) 3.7 -
Total 593.6 7.3 27.4 3.1
Continental
Europe
Group Retail 1,237.1 6.5 60.1 3.0
Office 721.6 9.3 47.3 3.4
Total Group
(excluding Canada) 1,958.7 7.5 107.4 3.1
Canada (discontinued - - 20.5 -
operations)
Total 1,958.7 7.5 127.9 3.1
Group
Number of
property
holdings
by value
Above Between Between Below Total
£100 m £50 m and £25m and £25 m
£100m £50m
Retail 4 5 5 3 17
Office 2 3 3 14 22
Total 6 8 8 17 39
END
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