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Grainger Trust plc plc Annual ReportGrainger Trust & Accounts 2002 Annual Report Citygate St James’ Boulevard & Accounts 2002 Newcastle upon Tyne NE1 4JE Email: [email protected] www.graingertrust.co.uk HA4 A strong traditional base… BA22 LA12 WF7 OX27 LL58 CV5 LS27 SK14 PE24 RG31E7 LS19 G31S19 CH48 NR15 NG24SR8 HU5 RG4 SR2 HD5 NE61 EH48 ST5 SO40 MK16 EX31YO8 NN6 NR6S015NW2 S62 HG2SW15 DY11 NE9NR12 PO19 SA8 FY4 IP21 YO18 PL4 SW19 AL2 YO51 NN14 L3 TS25 WS7 ST7 RH17 SP1 GU24 KY4 L65 OX18PE4 CA2 N3 NN11 TS18 PO33 OL14 CF31 G73 ST2 LL45 PO31S73 WR11 NE40 TF1NE2 EX2 EH10 …developing for the future Introduction Grainger Trust plc is the UK’s largest Shareholders’ Information quoted residential property investor owning 5,000 units directly, and through the BPT Joint Venture a 50% interest in a further 7,500 units. This is supplemented by our Development and Financial Calendar Share Price Website Trading Division, which is active in the delivery of Annual general meeting During the year ended 30 September Website address www.graingertrust.co.uk 27 February 2003 2002, the range of mid market prices commercial, residential and mixed use developments. of the Company’s Ordinary Shares were: Shareholders’ Enquiries Payment of 2002 final dividend All administrative enquiries relating to 28 February 2003 Price at 30 September 2002 992.5p shareholdings (for example, notification Lowest price during the year 755.0p of change of address, loss of share Payment of half yearly interest Highest price during the year 1,112.5p certificates, dividend payments) should on debenture stock 2024 be addressed to the Company’s 31 March 2003 Daily information on the Company’s Registrar at: share price can be obtained on our Announcement of 2003 website or by telephoning: Capita Registrars, Balfour House, interim results June 2003 The Financial Times Cityline Service 390-398 High Road, Ilford, Essex. on 09068 432 750. Payment of 2003 interim dividend Secretary and Registered Office July 2003 Capital Gains Tax Geoffrey Davis, F.C.A. The market value of the Company’s Citygate Payment of half yearly interest shares for capital gains tax purposes St. James’ Boulevard on debenture stock 2024 at 31 March 1982 was 30.4p. Newcastle upon Tyne 30 September 2003 NE1 4JE. Announcement of 2003 final results December 2003 Advisers Solicitors Bankers Stockbrokers Dickinson Dees, St. Ann’s Wharf, Barclays Bank PLC, Regent Centre, Cazenove & Company, 112 Quayside, Newcastle upon Tyne. Gosforth, Newcastle upon Tyne. 12 Tokenhouse Yard, London. Denton Wilde Sapte, 5 Chancery Lane, Bank of Scotland, 41/51 Grey Street, Brewin Dolphin Securities, Cliffords Inn, London. Newcastle upon Tyne. Commercial Union House, 39 Pilgrim Street, Financial Public Relations Auditors Newcastle upon Tyne. Baron Philips Associates, PricewaterhouseCoopers LLP, 1 Angel Court, London. 89 Sandyford Road, Registrars and Transfer Office Newcastle upon Tyne. Capita Registrars, Balfour House, 390-398 High Road, Ilford, Essex. Contents 01 Financial Highlights 02 Grainger Trust plc at a Glance 04 Chairman’s Statement 06 Chief Executive’s Review 16 Finance Director’s Review 20 The Board of Directors 21 Accounts and Financial Statements 54 Notice of the Annual General Meeting 56 Five Year Record Company Registration No. 125575 Designed and produced by Carnegie Orr +44 (0)20 7610 6140 01 Grainger Trust plc Financial Highlights Financial Highlights Compound annual growth rate over the last five years: Net asset value 34% Profit before tax 42% Earnings per share 30% Dividends 14% Net asset value per share (£)** *** £17.24 4.69 7.13 9.79 13.56 17.24 +27.1% 98 99 00 01 02 Profit before tax (£m)* ** £44.9m 8.4 12.4 16.4 21.1 44.9 +113.0% 98 99 00 01 02 Earnings per share (p)* ** 95.3p 21.4 35.7 44.1 52.5 95.3 +81.5% 98 99 00 01 02 Dividends per share (p) 14.18p 8.10 9.32 10.72 12.33 14.18 +15.0% 98 99 00 01 02 * Before exceptional items and includes share of Joint Venture ** Figures for 1998 to 2001 are restated, where relevant, to take account of FRS 19 *** The net asset value per share is based on the market value of trading properties and the market value of Grainger’s share of the Joint Venture 02 Grainger Trust plc Grainger Trust plc at a Glance At a Glance The Company now comprises two main operating Divisions. Together with the BPT Joint Venture, these provide a significant contribution to the performance of the Group. Tenanted Residential Key figures Tanhouse Farm Road, Solihull Tenanted Residential highlights Property valuation • Purchase of £85m of tenanted stock in the year including £30m Ideal Benefit Portfolio £393.6m (see picture left) • Sale of 785 properties for gross consideration Operating contribution* of £51m • Strong market reflected in both trading £30.0m profits up 41% and valuation of tenanted portfolio up 37% Number of properties • Creation of asset management function advising Schroders ResPUT on strategy, 4,928 fundraising and acquisitions BPT Joint Venture Key figures Barnsbury Road, London N1 BPT Joint Venture highlights Property valuation Grainger share** • £373.8m of sales from portfolio – £332.9m in the year to September 2002 £730.6m £365.3m • Management changes to address changed priorities going forward Operating contribution* Grainger share** • Now undertaking third party property management for Grainger, Schroders ResPUT £80.7m £40.3m and other property owners • Grainger have received cash distributions **50% Grainger share of BPT of £85m (£33m in the year and £52m Number of properties Joint Venture with Deutsche Bank Real Estate since year end) against original investment 7,508 Opportunities Group of £56m Development and Trading Key figures Pimlico Place, London SW1 Development and Trading highlights Property valuation • Award winning distribution development in Thurrock let and sold during the year £132.1m • Construction commenced on our 79 unit apartment scheme at Pimlico Place, SW1. Operating contribution* We have exchanged contracts on 61 units • Further land sales at our Basingstoke £12.1m residential development site. Seven acres sold during the year Number of properties • Grainger Homes, our niche house building operation established and secures 34 sales 53 and reservations on initial projects *Profit on ordinary activities before interest and taxation 03 Grainger Trust plc At a Glance 11 10 08 09 05 06 04 07 01 02 03 Proportion of Group profit* Proportion of property assets by valuation Geographical split by market valuation 01 London 42% 36% 44% 02 South East 14% 03 South West 8% Pricing band breakdown (by vacant possession value) 04 East 5% 05 East Midlands 4% < £50,000: 12% 06 West Midlands 11% £50,000 – £100,000: 18% 07 Wales 0% £100,000 – £250,000: 49% 08 Yorkshire 2% 09 North West 11% £250,000 – £500,000: 17% 10 North East 2% > £500,000: 4% 11 Scotland 1% Proportion of Group profit* Proportion of property assets by valuation Geographical split by market valuation 01 London 46% 49% 41% 02 South East 20% 03 South West 4% Pricing band breakdown (by vacant possession value) 04 East 9% 05 East Midlands 2% < £50,000: 3% 06 West Midlands 8% £50,000 – £100,000: 16% 07 Wales 0% £100,000 – £250,000: 66% 08 Yorkshire 4% 09 North West 5% £250,000 – £500,000: 13% 10 North East 1% > £500,000: 2% 11 Scotland 1% Proportion of Group profit* Proportion of property assets by valuation Geographical split by market valuation 01 London 34% 15% 15% 02 South East 38% 03 South West 1% Lot size breakdown 04 East 6% 05 East Midlands 1% < £1m: 5% 06 West Midlands 6% £1m – £3m: 33% 07 Wales 0% £3m – £5m: 24% 08 Yorkshire 0% £5m – £10m: 9% 09 North West 7% 10 North East 7% > £10m: 29% 11 Scotland 0% *Profit on ordinary activities before interest and taxation 04 Grainger Trust plc Chairman’s Statement Chairman’s Statement Grainger Trust has had an outstanding year, but uncertainty in the property market suggests that caution is the best policy, going forward. 1 This year has seen an excellent performance by the Group with very significant increases in the main indicators of financial performance – profit before tax, earnings per share and net asset value. We have also built a solid platform for future sustainable growth by reducing gearing and putting in place a revised management structure. Our core Tenanted Residential business produced a very strong result, driven by the robust housing market. We have noted some recent slowing in the market, particularly in London and the South East but prices in most other regions of the UK have continued to rise since the year end. We are, however, conscious that the rate of house price increases seen recently cannot be sustained in the long term and we are, therefore, increasingly cautious in our response to market conditions and to opportunities that are presented to us. We are delighted with the progress made in Bromley our Joint Venture Company with Deutsche Bank Real Estate Opportunities Group (‘DBREOG’), which was established to acquire BPT plc in May 2001. The rationalisation of the original BPT portfolio has continued apace and by the year end the Joint Venture had sold approximately 30% of the units acquired. As part of the disposal process management structures have been put in place that provide both BPT and Grainger with opportunities for future profit generation through the receipt of property and asset management fees. The success of the Joint Venture operation can be measured by the cash returns we have received on our original financial investment of £56m. By the year end we had received £33m of loan stock repayments and interest and the refinancing of the Bromley debt in December 2002 Robert Dickinson Chairman enabled a further distribution of £52m to be made to each of the Joint Venture partners.