Final Results
28 February 2003 - 6:00PM
UK Regulatory
RNS Number:0926I
Haslemere N.V.
28 February 2003
Rotterdam, 28 February 2003
PRESS RELEASE
Audited results for the year ended 31 December 2002
Haslemere NV ("Haslemere" or "the Company") reports on a year of major change,
including substantial returns of equity to shareholders ....... and looks
forward to building a business with a twin focus on entrepreneurial development
and the promotion of third party co-investment as "Haslemere Partners".
Haslemere reports a net profit of GBP47.8 (EUR73.5)1 million and a total
performance of GBP60.9 (EUR93.6) million for the year ended 31 December 2002.
The full annual report and accounts will be available to shareholders from 12
March 2003, and will appear on the Company's website from the same date.
HIGHLIGHTS 2
* Controlling (84.4%) interest in the Company acquired by B.C.R.E.
(Brack Capital Real Estate) BV ("BCRE") in May 2002
* Total performance 7.7% of opening equity3 (2001: 17.8%)
* Net profit for the year GBP47.8 (EUR73.5) million, after tax (2001:
GBP71.2 (EUR109.4) million)
* Sales totalling GBP772.4 (EUR1,187.4) million from the portfolio and
RREEF US proceeds GBP104.9 (EUR161.3) million received in line with
expectations
* Major re-financing completed in December 2002
* Dividends totalling GBP852.8 (EUR1,311.0) million paid during the
year, equivalent to GBP37.29, or EUR58.47, per share4
* Closing Net Asset Value per share of GBP11.11 (EUR17.08)
* New brand name of "Haslemere Partners" to promote co-investment with
investors.
EXTRACTS FROM THE ANNUAL REPORT
The financial year 2002 has witnessed a transformation of the Company.
Following the successful tender, BCRE and its shareholders acquired substantial
representation on the Supervisory Board which subsequently authorised the
Management Board to carry out a revised business plan for the Company in line
with the intentions indicated in their Offer Document.
The first stage of the new business plan involved the sale of approximately half
the assets of the Company in order to reduce the overall size of the enterprise
prior to a second phase which would see a rebuilding of the business with a twin
focus on entrepreneurial development and investment management of commercial
property for third party investors, in combination with Haslemere co-investment.
The sales effort was expected to occupy the remainder of 2002 and the whole of
2003 but, in the event, it has been substantially completed within the remaining
months of 2002. That early progress has also enabled the Management Board to
bring forward and conclude the financing arrangements for the ongoing structure
of the Company with The Royal Bank of Scotland plc ("RBS"). The Company is
therefore in a position to move forward into the second phase of the business
plan much earlier than anticipated.
RE-STRUCTURING
The re-structuring of the balance sheet in implementation of the new business
plan has been the dominant feature of the financial year. The final quarter was
a particularly active period, with a large volume of sales giving rise to a
series of special dividends, mainly from the share premium reserve. Shortly
before the year end, new loan facilities were put in place with RBS and the
additional monies raised contributed to a final special dividend in the year,
paid on 23 December.
The year end balance sheet shows a much smaller but more highly leveraged
portfolio than the comparative balance sheet at the previous year end.
NET PROFIT
Haslemere achieved a net profit of GBP47.8 (EUR73.5) million for the financial
year to 31 December 2002. The profit for the year ended 31 December 2001 was
GBP71.2 (EUR109.4) million. As predicted, the sale of the investment in RREEF US
by RoProperty in the first half year and the considerable volume of sales,
mainly in the second half year, have had a dilutive effect on profits.
Financing costs for the year of GBP22.8 (EUR35.0 million) are lower than the
equivalent of GBP31.2 (EUR48.0) million for 2001, reflecting lower average
borrowings during the year. Sales proceeds were initially used to repay short
term bank borrowings which were GBP190.0 (EUR292.0) million at the start of the
year.
Management costs increased to GBP9.0 million (EUR13.8 million) compared to
GBP4.0 (EUR6.1) million for 2001. The accounts include exceptional charges
relating to the unwinding of existing management incentive schemes following the
takeover.
Costs also reflect a new incentive scheme introduced after the takeover which is
linked to progress with the re-structuring of the Company.
The favourable tax treatment received by the Company because of its fiscal BI
status ceased with effect from 3 May 2002, as a consequence of the BCRE decision
to honour its bid offer. Since that date, the Company has been liable to tax on
income arising in the Netherlands. The tax charge for the period of GBP5.6
(EUR8.6) million is equivalent to 10.5% of pre-tax profit.
EARNINGS AND DIVIDENDS
Earnings per share amounted to GBP2.09 (EUR3.21) on the weighted average number
of shares in circulation during the year.
On 25 July 2002, the Company paid a dividend of GBP2.79 per share, equal to
EUR4.40, in respect of the year ended 31 December 2001. In addition, a series of
special dividends aggregating GBP34.50, equal to EUR54.07, per share were paid
between 23 October 2002 and 23 December 2002. These dividends were paid
predominantly from the share premium reserve in accordance with the
authorization given by shareholders at an extraordinary general meeting on 6
September 2002. In order to comply with relevant tax regulations in The
Netherlands, these special dividends included interim dividends totalling
GBP2.30 per share, as a result of which all the Company's profit reserves
including the profit for the year have been fully distributed. Prior to paying
special dividends, the Company reached an agreement with the Dutch tax
authorities to settle all prospective liabilities to surtax which could arise on
distributions to shareholders on payment of a one-off tax charge of GBP19.5
(EUR30.0) million which has been charged to the share premium reserve.
For the year ended 31 December 2002 the Management Board proposes to determine a
total cash dividend of GBP2.30 per share. Since the Company has already paid
interim dividends during the financial year 2002 amounting to GBP2.30 per share,
the proposed final dividend is nil.
At the Annual General Meeting on 3 April 2003 the Management Board will ask
shareholders to renew the above authorization for dividends to be paid from the
share premium reserve for a further six month period.
REVALUATION AND OTHER MOVEMENTS IN RESERVES
The portfolio showed a revaluation gain of GBP25.8 (EUR39.7) million for the
year. This figure includes profits of GBP22.8 (EUR35.1) million after sale costs
of GBP4.2 (EUR6.5) million on sales from the portfolio and also reflects a
surplus of GBP3.0 (EUR4.6) million on external valuations of the portfolio
carried out as at 30 June and 31 December 2002.
The currency revaluation result for the year amounted to a loss of GBP2.3
(EUR3.6) million which included a loss of GBP3.3 (EUR5.1) million on translation
of US $ cash balances charged as security against Letters of Credit issued by a
UK clearing bank in connection with the RoProperty Guarantee Agreement relating
to the sale of RREEF US. The Company also incurred a currency loss of GBP0.7
(EUR1.1) million on the purchase of euros required for dividend payments. These
losses were partially offset by a gain of GBP1.8 (EUR2.8) million in relation to
the receipt of the Company's share of the proceeds from the sale of RREEF US.
Other currency revaluation differences amounted in aggregate to a loss of GBP0.1
(EUR0.2) million.
The total figure for other movements in equity is a negative amount of GBP5.0
(EUR7.7) million. The principal items making up this figure were costs of
GBP10.9 (EUR16.8) million in connection with the acquisition of the Company by
BCRE, partially offset by a discount of GBP6.8 (EUR10.5) million on the buy-in
of minority interests in subsidiary companies in their entirety.
PROPERTY OVERVIEW
The portfolio consists of over 55 properties. All properties are located in the
UK, and the Company engages in development projects in all three sectors in
which it operates. As at 31 December 2002, the Company's portfolio was stated in
the accounts at GBP752.6 (EUR1,156.9) million and consisted by value of 40.3%
retail, 51.0% office and 8.7% industrial/warehouse.
The portfolio as at 31 December 2001 consisted of over 130 properties, stated in
the accounts at a value of GBP1,477.7 (EUR 2,271.6) million.
During the year, the Company sold properties for an aggregate consideration of
GBP772.4 (EUR1,187.4) million. There were no purchases in 2002.
"HASLEMERE PARTNERS"
The work to create investment partnerships as the first stage of developing a
third party investment management business, with Haslemere co-investment, has
started. It is too early to predict how much will be achieved in the year ahead.
We have branded this third party management activity as "Haslemere Partners" and
will be actively promoting it as part of the overall business plan during the
remainder of 2003.
MANAGEMENT CHANGES
Subject to shareholder approval, it is proposed that Richard Debney (Portfolio
Management), Gary Felce (Investment and Financial Analysis) and David Lee
(Finance) and Maaike Groos (Legal Compliance) all join the Management Board at
the Annual General Meeting on 3 April 2003. The first three persons are
directors of Haslemere Estates Management Ltd and Ms Groos is employed by
Freeland Corporate Advisors N.V. All four have worked within the Haslemere
organisation for some years and it is a very healthy sign for the future of the
business that the management team can evolve by promotions from within the
existing Haslemere management team.
At the end of March, the Management Board will see the retirement of both Andrew
Kearley (Finance Director) and Martyn Lewis (Senior Property Director), both of
whom have given major contributions to the business over a number of years. They
leave with much gratitude from their colleagues on the Management Board and with
very best wishes for the future.
OUTLOOK
The outlook for the commercial property market in the United Kingdom in 2003 is
uncertain, in terms of rental growth prospects. Further falls in rental value
are expected in London Office markets, particularly in the City of London.
Meanwhile, global uncertainties, both economic and political, and real threats
of military conflict and terrorism are likely to create a period of heightened
tension in capital markets in the short term.
Longer term, our view is that the market should stabilize and offer secure
income returns for investors. However, the prospects of renewed high levels of
rental value growth seem relatively remote.
It is good to see an increase in interest in the commercial property investment
market from private investors, for whom a number of co-mingled investment
schemes have been established by life assurance companies. This is a new
development in the UK and if their enthusiasm for the sector is sustained, it
will add to the liquidity of the investment market.
In addition and at present, there is ongoing enthusiasm from traditional
institutional investors and leveraged buyers, both of whom recognize the
benefits of the yield which commercial property offers in contrast with the
uncertainty of other markets.
Nevertheless, we must expect that as other markets also change, it is very
possible that the attention will switch at some future date to favour growth
prospects elsewhere. If and when that happens, there could be some softening in
yields.
We therefore anticipate somewhat more volatility in the medium term than
forecasts predict, and we are moving into the second stage of the Company's new
Business Plan with that in mind. Some potential development situations will be
postponed and plans for others may be modified. In general, where there are
active management situations that release hidden value, we are pursuing them
aggressively.
For further information please contact:
Haslemere NV Tel: 020 7467 4500
Chris Bartram, Chief Executive
Andrew Kearley, Finance Director
www.haslemerenv.com
Gavin Anderson & Company Tel: 020 7554 1400
Byron Ousey, Charlotte Stone
Investor Relations Tel: +31 (0)10 201 3604
Wilbert van Twuijver
Constantijn van Rietschoten
EXTRACT FROM THE AUDITED ACCOUNTS for the year ended 31 December 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 December 2002
EUR x million5 GBP x million
2002 2002 2001
Restated6
Income
Gross rental income 148.8 96.8 109.8
Operating costs 20.6 13.4 11.4
_______ _______ _______
Net rental income 128.2 83.4 98.4
Result of participating interest in
RoProperty 5.8 3.8 13.6
Interest income 6.0 3.9 4.5
_______ _____ _____
Total income 140.0 91.1 116.5
Expenses
Interest expense 41.0 26.7 35.7
Management costs 13.8 9.0 4.0
Supervisory directors' fees 0.2 0.1 0.1
Corporation tax 8.6 5.6 2.5
_______ _____ _____
Total expenses 63.6 41.4 42.3
Net profit before minority interests 76.4 49.7 74.2
Minority interests -2.9 -1.9 -3.0
_______ _____ _____
Net profit after minority interests 73.5 47.8 71.2
Movements in the reserves as a result of:
Revaluation of property investments 39.7 25.8 14.8
Revaluation of RoProperty - - 75.3
Revaluation results on currencies -3.6 -2.3 1.3
Management costs -6.0 -3.9 -1.9
Taxation, including deferred taxation -1.2 -0.8 -1.4
Other movements in equity -7.7 -5.0 10.0
Minority interests -1.1 -0.7 -3.5
_______ _____ _____
Total movements in the reserves 20.1 13.1 94.6
_______ _____ _____
Total performance 93.6 60.9 165.8
Net profit per share7 EUR3.21 GBP2.09 GBP3.04
Total performance per share7 EUR4.10 GBP2.67 GBP7.07
EXTRACT FROM THE AUDITED ACCOUNTS for the year ended 31 December 2002
CONSOLIDATED BALANCE SHEET
EUR x million5 GBP x million
31/12/2002 31/12/2002 31/12/2001
Restated6
Assets
Investments
Land and buildings
Property 1,149.7 747.9 1,470.4
Development projects 7.2 4.7 7.3
Participating interest in and loan to 1.7 1.1 103.4
RoProperty
______ ______ ______
Total investments 1,158.6 753.7 1,581.1
Accounts receivable 43.5 28.3 53.3
Other assets
Cash 110.7 72.0 21.9
______ ______ ______
Total assets 1,312.8 854.0 1,656.3
Liabilities
Provisions 2.1 1.4 4.8
External financing
Loans - - 190.0
Mortgages 826.4 537.6 301.3
Accounts payable 93.5 60.8 53.6
______ ______ ______
Total liabilities 922.0 599.8 549.7
Minority interests - - 45.5
______ ______ ______
Shareholders' equity 390.8 254.2 1,061.1
Net asset value per share7 EUR17.08 GBP11.11 GBP46.62
1 Exchange rate GBP1 = EUR1.537279 at 31 December 2002
2 The accounts are prepared in sterling. Amounts in sterling are converted for
convenience into euros at the rate prevailing on 31 December 2002 of GBP1 =
EUR1.537279
3 Based on opening shareholders' equity, as adjusted on a time weighted basis
for the dividends paid during the year, and on total return before charging
costs relating to the take over by BCRE
4 Total dividends include GBP2.79, or EUR4.40, per share paid in July 2002 as
final dividend for 2001
5 Converted to euros at the rate prevailing on 31 December 2002, GBP1 = EUR
1.537279
6 Restated to reflect the implementation of Richtlijn 292 ("straightlining")
7 Computed based on the weighted average number of shares outstanding of
22,834,033 (2001: 23,446,150)
This information is provided by RNS
The company news service from the London Stock Exchange
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