August 27, 2008
Good operating results
- EPRA adjusted profit before tax from continuing operations of £67.4m (2007: £68.0m)
- Net rental income up 23.1%,reflecting acquisitions, development activity and letting success
- Profit from sale of trading properties £19.5m (2007: £16.9m)
- Loss for the period reported under IFRS of £324.6m (2007: profit of £226.3m)
Adjusted diluted NAV per share down 11.5% at 623 pence
- Group revaluation deficit on completed investment properties of 7.5%, comprised of a UK deficit of 10.4% (initial yield of 6.3%, equivalent yield of 7.0%) and a gain of 0.7% in Continental Europe (initial yield of 7.0%, equivalent yield of 7.2%)
- In addition, UK land bank values were written down on average by 21.4%, to c.£763,000 per acre
Another strong letting performance, with good occupier demand
- 283,000 sq m of space let in H1 08, similar to the second half of 2007
- 216,000 sq m of space was returned in the period, reflecting a number of significant but planned returns in the UK (including Mars at Slough). 95% of leases expiring in the period were renewed
- Group annualised rents of £16.4m from lettings in the period exceeded annualised rental income of £11.9m lost from space returned
- Rental levels stable or modestly rising across most of our markets. Overall vacancy level in line with expectations at 9.3% (10.0% by ERV)
- Rents being paid on time with occupier insolvencies at low levels, similar to recent years
Successfully delivering the development programme
- 157,000 sq m completed in H1 08 (only 15,000 sq m in UK), 73% already let or sold by end of June
- 395,000 sq m of construction in progress at end June, 85% in Continental Europe, including 193,000 sq m in Central Europe
- 155,000 sq m of the Group’s construction in progress was already pre-let or sold
- New construction starts being tightly controlled and flexed according to letting progress and market demand
Carefully managing the Group’s financial position
- £151.7m of sales in the period (including trading properties) and further disposals of £110.2m announced today. Investment in the period of £307.6m
- Adjusted debt to equity ratio of 79%, loan to value 43%; interest cover of 2.2 times
- £801.5m of cash and available funds at end of June with an average debt maturity period of 9.6 years
- Unchanged interim dividend of 8.3 pence per share
Ian Coull, Chief Executive commented:
“SEGRO has delivered another good operating performance in the first half of 2008. The difficulties in the financial and capital markets have, as expected, negatively impacted the value of our UK property portfolio but there have been few signs to date that the economic conditions are having a significant impact on our customer base. Our leasing levels have remained strong, with low occupier insolvency levels, in line with recent years.
Our strategic move into Continental Europe has delivered the expected benefits of diversifying the risk profile of our portfolio and giving us the flexibility to target our investments in the locations where we can achieve the best returns.
Our business is in good shape. Whilst taking advantage of attractive acquisition, development and divestment opportunities, we are managing our cash position carefully. We continue to be well placed to meet the challenges and opportunities that arise from the evolving market conditions.”
SUMMARY FINANCIAL STATEMENT TABLES
| INCOME STATEMENT |
Six months to |
Six months to |
| Continuing Operations, unless stated |
30 June 2008 |
30 June 2007 |
| Net rental income(1) (£m) |
119.3 |
96.9 |
| Adjusted profit before taxation(2) (£m) |
67.4 |
68.0 |
| Adjusted profit before taxation(2), including discontinued operations (£m) |
67.4 |
86.5 |
| Trading property profits (£m) |
19.5 |
16.9 |
| Property (losses)/gains (£m) |
(389.3) |
118.3 |
| (Loss)/profit before taxation (£m) |
(315.3) |
195.4 |
| Underlying tax rate(3) (%) |
2.8 |
2.1 |
| (Loss)/earnings per share – basic (pence) |
(74.8) |
41.2 |
| Earnings per share – adjusted, diluted(4) (pence) |
15.2 |
14.1 |
| Earnings per share – adjusted, diluted(4), including discontinued operations (pence) |
15.2 |
17.0 |
| Half-year dividend (pence) |
8.3 |
8.3 |
| Total return(5) (%) |
(9.4) |
6.6 |
| BALANCE SHEET |
30 June |
31 December |
| |
2008 |
2007 |
| Total properties, including share of joint ventures (£m) |
5,074.9 |
5,182.6 |
| Net assets excluding minority interests (£m) |
2,629.1 |
2,989.0 |
| Adjusted net assets(6) (£m) |
2,705.3 |
3,056.0 |
| Net assets per share (pence) |
605 |
690 |
| Adjusted diluted net assets per share(7) (pence) |
623 |
704 |
| Net debt (£m) |
2,129.8 |
1,701.1 |
| Debt to equity(8) (%) |
78.7 |
55.7 |
| Loan to value(9) (%) |
43.3 |
34.0 |
| 1 |
Including rental income on trading properties. |
| 2 |
Profit before tax adjusted for EPRA and exceptional items. |
| 3 |
Tax charge, excluding deferred tax on valuation movements, as a percentage of adjusted profit before tax. |
| 4 |
Earnings per share based on adjusted profit before tax and reflecting the dilutive effects shares held by the ESOP trust. |
| 5 |
Adjusted NAV growth plus dividends paid in the period and after adding back the SIIC conversion charge of £14.2 million (H1 07 only). |
| 6 |
Shareholders’ funds adjusted to add back deferred tax associated with investment properties. |
| 7 |
NAV per share adjusted to add back deferred tax associated with investment and development properties and to reflect the dilution caused by shares held by the ESOP trust. |
| 8 |
Net debt as a percentage of net assets adjusted to add back deferred tax associated with investment and development properties. |
| 9 |
Net debt as a percentage of the total property portfolio excluding joint ventures. |
CONFERENCE CALL FOR INVESTORS AND ANALYSTS
At 9:30 AM today BST a live webcast results presentation and Q&A session will be available from the analysts’ presentations page of SEGRO’s website, at:
http://www.segro.com/segro/Investors/AnalystPresentations.htm.
A conference call facility will be available to listen in at 09.30 hours on the following numbers:
| UK |
|
0845 359 0150 |
|
(freephone) |
| International |
|
+44 207 070 5465 |
|
|
From midday the conference call will be available on a replay basis on the following number:
+ 44 (0) 208 196 1998
Access code 546698#
Contact details for investor/analyst and media enquiries respectively:
| SEGRO plc |
The Maitland Consultancy |
| Michael Waring Tel: +44 (0)7775 788 628 |
Colin Browne Tel: +44 (0)20 7379 5151 |
Notes:
About SEGRO SEGRO is the leading provider of Flexible Business Space in Europe. Headquartered in the UK, SEGRO is listed on the London Stock Exchange and on Euronext in Paris. The Company is a UK Real Estate Investment Trust (REIT) with operations in ten countries, serving a diversified customer base of 1,700 customers operating in a wide range of sectors, representing both small and large businesses, from start-ups to global corporations. With property assets of £5.1 billion and around 5.0 million sq m of business space, SEGRO has an annual rent roll of approximately £290 million – these metrics include trading properties, development assets and the Group’s share of joint ventures. www.segro.com
Forward-looking statements This announcement may contain certain forward-looking statements with respect to SEGRO’s expectations and plans, strategy, management’s objectives, future performance, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. The statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in this announcement should be construed as a profit forecast. Past share performance cannot be relied on as a guide to future performance.
Following changes in the UK company disclosure regulations, SEGRO plc is no longer obliged to send half-yearly accounts to shareholders. In the interests of economy and of the environment, SEGRO will henceforth no longer be producing and distributing a half-year report. Copies of this press release and details of the latest SEGRO property portfolio, are available for download from our website at www.SEGRO.com, and hard copies can be requested via the website or by contacting the Company (email CompanySecretariat@SEGRO.com or phone 01753 213344).
Please click here for the full press release in PDF format.
|
PROPERTY ANALYSIS
The SEGRO Property Analysis document is available on the Property Analysis page.
INVESTOR PRESENTATION
An investor presentation takes place at 09.30 and will be available by webcast. Register here for the webcast. Copies of the investor presentation slides will also be available from the Financial Results page. |