RNS Number:3294L
Warner Estate Holdings PLC
30 May 2000
ACTIVE WARNER FOCUSES
ON GROWTH AFTER MAJOR ACQUISITION
Warner Estate Holdings PLC ("Warner"), the property investment company has
today announced its interim results for the six months ended 31st March 2000.
Warner is a diversified property company that actively manages its #344
million property portfolio with interests in BPT plc and other quoted property
companies.
Highlights
* Pre-tax profits up to #5.50m(1999: #5.26m)
* Property portfolio expanded to #344m (#261m at September 1999)
* Total rent roll up to #26.2m (September 1999: #20.4m)
* Earnings per share up to 8.05p (1999: 7.57p)
* #97 million Winglaw portfolio acquired
* Trade Centre Developments accelerating with 10 projects underway
* Interim dividend per share up to 4.60p (1999: 4.50p)
Philip Warner, Chief Executive commented,
" The acquisition of the Winglaw Group was a major event for the Company in
this last half year. We are delighted to have secured via a corporate
purchase a portfolio with a predominance of South East offices and
industrial properties, bringing with it an average yield of 9% and an average
cost of debt of 6.8%."
" Early indications of sales achieved and interest shown lead us to believe we
will generate both profits and an increase in value for the year end from
this purchase."
" A reduction in the number of joint ventures has allowed management to
accelerate the development programme with TCD and commit to an #8m retail
warehouse unit pre-let to Matalan in Birmingham's City Centre with Midland
Commercial Properties."
" Sales are being encouraged to both reduce gearing and continue with our
policy of selling non-core investment properties where we no longer see our
targeted returns being met. I am confident that we shall achieve continuing
growth for shareholders."
For further information contact:
Philip Warner, Chairman Warner Estate Holdings PLC 020-7487-3312
Peter Collins, Finance Director Warner Estate Holdings PLC 020-7487-3312
Jim Neill, Property Director Warner Estate Holdings PLC 020-7487-3312
Web: www.warnerestate.co.uk
Simon Courtenay City Profile Group 020-7726-8588
CHAIRMAN'S STATEMENT
Overview
I am pleased to report an increase in pre-tax profits to #5.50 million (1999:
#5.26 million). A fall in revenue pre-tax profits (which exclude profits and
losses on fixed asset disposals) to #4.63 million (1999: #4.94 million) was
mainly due to exceptional costs incurred in relation to potential corporate
acquisitions and to the WH Smith lease expiry at Swindon.
Earnings per share were 8.05p (1999: 7.57p) in total and 6.95p (1999: 7.08p)
in revenue terms.
The Board will consider an interim property revaluation next year. In its
absence, net asset value per share fell from 346p at 30 September 1999 to 324p
primarily due to the fall in value of the Group's quoted investments (as at 20
May this had recovered by 10p). Residential sales have been showing
increases of up to 10 % in vacant possession values since 30 September 1999.
We shall continue to report our pro forma net asset value per share, which
shows the relevant net asset value of other property businesses in which we
have invested. As BPT plc in which we hold 13 per cent, has announced that
it will publish its latest net asset value on 14 June 2000, we will
publish our pro forma net asset value shortly thereafter.
The Board has declared an interim dividend per share of 4.60p (1999: 4.50p) to
be paid on 6 October 2000 to shareholders on the register at close of business
on 8 September 2000.
Portfolio
The acquisition of the Winglaw Group properties and associated debt
consideration for which included the issue of one million shares, furthered
the expansion of our commercial investment portfolio, which rose to #230
million from #162 million at 30 September 1999. Sector weightings in
South East offices and industrials have been increased at the expense of
retail as we continue to improve quality and increase average lot size.
The commercial investment rent roll at the period end was #19.2 million
(30 September 1999: #14.1 million) and the total rent roll was #26.2
million (1999: #20.4 million).
Sales of residential property in Walthamstow, London E.17 continue and, as
reported above, prices achieved are well above the valuation at 30 September
1999. At the period end 747 units remained.
Trading activities supported the expansion of the commercial investment
portfolio and have made a useful contribution to profits. After sales and
purchases of #19.8 million and #29.2 million respectively, property trading
stock totalled #54.4 million at 31 March 2000.
Negotiations with prospective tenants continue at the Waterfields Retail
Park, Watford, our 75,000 sq.ft. of retail warehouse development.
Joint Ventures
In February 2000 we disposed of our shares in Leyton Properties Ltd, which
owned residential property in London E.17, at a profit of #0.36 million.
This contributed to the capital earnings for the period. Trade Centre
Developments, which specialises in the development of trade parks, continues
to expand with 10 projects currently underway compared to six at 30 September
1999. Midland Commercial Properties has commited to developing an #8 million
retail warehouse unit pre-let to Matalan in Birmingham's City Centre.
Finance
Borrowings increased during the period to #226 million and gearing from 75% to
134%. Following two substantial acquisitions in six months, disposals are
budgeted to predominate in the current period with a consequent reduction in
gearing. At the period end our average cost of debt was unchanged at 7.47%,
despite base rate increases, due to the low cost of debt acquired with the
Winglaw purchase. Interest payable was covered 2.0 times by profit before
interest and tax. As at 31 March the Group had #58.7 million of unutilised
borrowing facilities.
Prospects
The Winglaw purchase provides an admirable illustration of our strategy,
being a corporate acquisition, which has improved both the balance of our
investment portfolio and our debt profile in addition to providing
opportunities for active management, trading and development. Early
indications of sales acheived and interest shown lead us to believe we will
generate both profits and an increase in value for the year end from this
purchase.
Since 31 March the froth has blown off the "dotcom" market and we have seen a
recovery in the market values of our investments in complementary property
companies where we expect the underlying businesses to continue to perform
well.
Although the cost of money has risen, the yield on our purchases has exceeded
that cost and with sound borrowings in place, I am confident that we shall
manage the substantial increase in our property portfolio over recent months
to achieve continuing growth for shareholders.
P.C.T. Warner
Chairman
30 May 2000
CONSOLIDATED PROFIT & LOSS
For the six months ended 31 March 2000
Unaudited Audited
6 months 6 months Year
Notes to 31/3/00 to 31/3/99 To 30/9/99
______________________________________________________________________________
#'000 #'000 #'000
Turnover:Group and share
of joint ventures and associate 34,719 22,711 51,639
less: Share of joint ventures
and associate (4,998) (2,348) (7,101)
______________________________________________________________________________
Turnover 2 29,721 20,363 44,538
Cost of sales and other
property outgoings (20,151) (13,293) (30,072)
______________________________________________________________________________
Gross profit 2 9,570 7,070 14,466
Administrative expenses (939) (589) (1,479)
______________________________________________________________________________
Group operating profit 2 8,631 6,481 12,987
Share of operating profit in: _______________________________________________
Joint ventures 2 481 613 1,632
Associate 2 600 337 965
_______________________________________________
1,081 950 2,597
______________________________________________________________________________
Total operating profit 9,712 7,431 15,584
Profit on sale of fixed assets 3 871 621 3,064
Investment income 1,249 1,249 2,604
______________________________________________________________________________
Profit on ordinary activities
before interest 11,832 9,301 21,252
Net interest payable and
similar charges 4 (6,333) (4,046) (8,300)
______________________________________________________________________________
Profit on ordinary activities
before taxation 5,499 5,255 12,952
Taxation on profit on
ordinary activities 5 (1,374) (1,381) (2,298)
______________________________________________________________________________
Profit on ordinary activities
after taxation 4,125 3,874 10,654
Dividends (2,398) (2,304) (6,955)
______________________________________________________________________________
Retained profit 1,727 1,570 3,699
==============================================================================
______________________________________________________________________________
Earnings per share 6
p p p
Revenue 6.95 7.08 15.63
Capital 1.10 0.49 5.21
______________________________________________________________________________
8.05 7.57 20.84
==============================================================================
______________________________________________________________________________
Fully diluted earnings
per share 6
Revenue 6.93 7.07 15.62
Capital 1.10 0.49 5.20
______________________________________________________________________________
8.03 7.56 20.82
==============================================================================
______________________________________________________________________________
CONSOLIDATED BALANCE SHEET
Unaudited Audited
6 months 6 months Year
Notes to 31/3/00 to 31/3/99 To 30/9/99
______________________________________________________________________________
#'000 #'000 #'000
Fixed Assets
Investment Properties 7 289,449 175,108 216,555
________________________________________________
Joint Ventures 8
Share of gross assets 17,967 22,007 21,006
Share of gross liabilities (16,593) (19,033) (17,671)
Loan accounts 5,736 7,319 9,153
________________________________________________
7,110 10,293 12,488
Other Tangible Assets 414 403 389
Investments 57,701 59,792 67,761
______________________________________________________________________________
354,674 245,596 297,193
______________________________________________________________________________
Current Assets
Property stock 54,409 21,275 44,562
Debtors 6,961 9,13 12,325
Deferred taxation 9 - 47 -
Investments 294 323 309
Cash at bank and in hand 8,803 1,007 843
______________________________________________________________________________
70,467 31,789 58,039
Current Liabilities
Creditors: amounts falling
due within one year (104,221) (68,953) (131,733)
______________________________________________________________________________
Net Current Liabilities (33,754) (37,164) (73,694)
______________________________________________________________________________
Total Assets less Current
Liabilities 320,920 208,432 223,499
Creditors: amounts falling
due after one year (151,423) (47,721) (46,354)
Provision for liabilities
and charges (164) - (261)
______________________________________________________________________________
Net Assets 169,333 160,711 176,884
==============================================================================
Capital and Reserves
Called up share capital 2,610 2,560 2,560
Other reserves 158,011 150,170 166,776
Profit and loss account 8,712 7,981 7,548
______________________________________________________________________________
Equity Shareholders' Funds 169,333 160,711 176,884
==============================================================================
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Unaudited Audited
At 31/3/00 At 31/3/99 At 30/9/99
______________________________________________________________________________
#'000 #'000 #'000
Profit on ordinary activities
after taxation 4,125 3,874 10,654
Unrealised surplus on
revaluation of properties 150 - 13,027
Unrealised (deficit)/surplus on
revaluation of investments (11,660) 5,464 6,323
Tax on transfer of an asset to
investment properties (45) - -
Tax on realisation of revalued
properties (42) (195) 199
(Decrease)/increase in deferred
tax provided on investment
properties for sale (91) 34 (202)
______________________________________________________________________________
Total recognised( losses)/gains
relating to the period (7,563) 9,177 30,001
==============================================================================
______________________________________________________________________________
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
Unaudited Audited
At 31/3/00 At 31/3/99 At 30/9/99
______________________________________________________________________________
#'000 #'000 #'000
Profit on ordinary activities
after taxation 4,125 3,874 10,654
Dividends (2,398) (2,304) (6,955)
______________________________________________________________________________
1,727 1,570 3,699
New share capital issued 2,410 - -
Other recognised gains and losses (11,688) 5,303 19,347
______________________________________________________________________________
Net (decrease)/ increase in
shareholders' funds (7,551) 6,873 23,046
Opening shareholders' funds 176,884 153,838 153,838
==============================================================================
______________________________________________________________________________
Closing shareholders' funds 169,333 160,711 176,884
==============================================================================
______________________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Audited
At 31/3/00 At 31/3/99 At 30/9/99
______________________________________________________________________________
#'000 #'000 #'000
Net cash (outflow)/inflow
from operating activities (20,543) 6,052 10,464
Dividends received from joint
ventures and associate 1,309 61 105
Returns on investments and
servicing of finance (3,879) (1,953) (4,316)
Taxation (516) (91) (1,155)
Capital expenditure and
financial investments (69,481) (17,386) (46,497)
Acquisitions and disposals 884 - (765)
Equity dividends paid (2,301) (2,200) (6,750)
______________________________________________________________________________
Net cash outflow before financing (94,527) (15,517) (48,914)
______________________________________________________________________________
Financing 115,431 (887) (1,460)
______________________________________________________________________________
Increase/(decrease) in cash 20,904 (16,404) (50,374)
==============================================================================
______________________________________________________________________________
RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW
Operating profit 8,631 6,481 12,987
Depreciation of tangible
fixed assets 93 84 176
Profit on sale of other
tangible fixed assets - (35) (6)
Increase in stocks (9,847) (1,017) (24,304)
Decrease in current asset investment 17 - 21
Decrease/(increase) in debtors 4,909 (164) (7,262)
(Decrease)/increase in creditors (24,346) 703 28,852
______________________________________________________________________________
Net cash (outflow)/ inflow from
operating activities (20,543) 6,052 10,464
==============================================================================
______________________________________________________________________________
NOTES
1 ACCOUNTING POLICIES
The interim accounts have been prepared using accounting policies
consistent with the previous year.
2 TURNOVER AND OPERATING PROFIT
Property Property Group Joint
Investment trading total Ventures Associate Total
#'000 #'000 #'000 #'000 #'000 #'000
Six months to 31 March 2000
Turnover:
Rents receivable 8,292 1,654 9,946 1,024 555 11,525
Property trading - 19,775 19,775 2,525 894 23,194
_______________________________________________________________________
Total turnover 8,292 21,429 29,721 3,549 1,449 34,719
Cost of sales
and property
outgoings (1,278) (18,873)(20,151)
___________________________________________
Gross profit 7,014 2,556 9,570
Administrative
expenses (828) (111) (939)
_______________________________________________________________________
Operating profit 6,186 2,445 8,631 481 600 9,712
=======================================================================
Six months to 31 March 1999
Turnover:
Rents receivable 6,696 921 7,617 963 350 8,930
Property trading - 12,746 12,746 502 533 13,781
_______________________________________________________________________
Total turnover 6,696 13,667 20,363 1,465 883 22,711
Cost of sales
and property
outgoings (1,131) (12,162)(13,293)
___________________________________________
Gross profit 5,565 1,505 7,070
Administrative
expenses (574) (15) (589)
_______________________________________________________________________
Operating profit 4,991 1,490 6,481 613 337 7,431
=======================================================================
Year to 30 September 1999
Turnover:
Rents receivable 13,940 1,973 15,913 1,954 883 18,750
Property trading - 28,625 28,625 3,214 1,050 32,889
_______________________________________________________________________
Total turnover 13,940 30,598 44,538 5,168 1,933 51,639
Cost of sales
and property
outgoings (2,706) (27,366)(30,072)
___________________________________________
Gross profit 11,234 3,232 14,466
Administrative
expenses (1,281) (198) (1,479)
=======================================================================
Operating profit 9,953 3,034 12,987 1,632 965 15,584
=======================================================================
All turnover and operating profit has arisen from continuing
operations.
Administrative expenses for the six months to 31 March 2000 include
#254,000 of potential acquisition costs.
3 PROFIT ON SALE OF FIXED ASSETS
Unaudited to Audited to
31/3/00 31/3/99 30/9/99
_______________________________________________________________________
#'000 #'000 #'000
Surplus over book value
Investment properties 428 240 2,815
Share of joint ventures 82 71 26
Disposal of joint ventures 361 310 223
_______________________________
871 621 3,064
_______________________________
4 NET INTEREST PAYABLE AND SIMILAR CHARGES
Unaudited to Audited to
31/03/00 31/03/99 30/09/99
______________________________________________________________________
#'000 #'000 #'000
Interest payable on bank loans
and overdrafts, mortgages and
other loans:
Repayable within five years
not by instalments 2,111 1,613 2,889
Repayable wholly or partly in
more than five years 3,923 2,213 4,805
_________________________________
6,034 3,826 7,694
Charge in respect of cost of
raising finance 192 93 304
________________________________
6,226 3,919 7,998
Less capitalised interest (392) (174) (395)
________________________________
5,834 3,745 7,603
Share of joint ventures' net
interest 740 877 1,667
Share of associate's net interest 341 190 475
________________________________
6,915 4,812 9,745
Interest receivable:
From joint ventures (500) (692) (1,249)
Other interest (82) (74) (196)
________________________________
6,333 4,046 8,300
________________________________
5 TAXATION
The taxation charge for the period has been estimated from the expected
taxable profits of the Group after taking account of capital allowances
available.
6 EARNINGS PER SHARE
Earnings per share of 8.05p (half year to 31/3/99 : 7.57p ; year to
30/9/99 : 20.84p) are calculated on the profit on ordinary activities
after taxation of #4,125,000 (half year to 31/3/99 : #3,874,000 ; year
to 30/9/99 : #10,654,000) and the weighted average of 51,272,389 (half
year to 31/3/99 : 51,190,319 ; year to 30/9/99 : 51,132,915) shares in
issue throughout the period. Profit on ordinary activities after
taxation includes capital profits on the sale of investments net of tax
of #564,000 (half year to 31/3/99 : #251,000 ; year to 30/9/99 :
#2,663,000).
Fully diluted earnings per share are based on the profit available for
distribution as above divided by the weighted average number of shares
in issue , being 51,359,871 (half year to 31/3/99 : 51,213,458 ; year
to 30/9/99 : 51,160,386) after the dilutive impact of share options
granted.
7 INVESTMENT PROPERTIES
This includes #17,953,000 (31/3/99 -#6,517,000; 30/9/99 - #12,732,000)
of long leasehold property in the course of development and #1,850,000
of freehold property in the course of development (31/3/99 - #nil ;
30/9/99 - #176,000).
8 JOINT VENTURES
Unaudited Audited
At 31/3/00 At 31/3/99 At 30/9/99
______________________________________________________________________________
#'000 #'000 #'000
Share of joint ventures
At 30 September 12,488 12,325 12,325
Share of loss for the period (237) (225) (47)
Surplus on revaluation of
investments - 290 484
Net equity disposals (1,724) (253) (264)
Net loan movements (3,417) (1,844) (10)
__________________________________
At period end 7,110 10,293 12,488
==================================
Unlisted shares at cost less
amounts written off 1,457 1,401 1,507
Group's share of post acquisition
retained (losses)/profits and
reserves (83) 1,573 1,828
__________________________________
1,374 2,974 3,335
Amount owed by joint ventures 5,736 7,319 9,153
__________________________________
7,110 10,293 12,488
==================================
Included in share of joint ventures gross assets and liabilities are
the following:
Gross assets
Fixed assets 11,355 14,142 14,566
Current assets 6,612 7,865 8,401
__________________________________
17,967 22,007 22,967
==================================
Gross liabilities
Amounts falling due within
one year 2,998 3,016 2,723
Amounts falling due after
more than one year 13,595 16,017 17,082
__________________________________
16,593 19,033 19,805
==================================
During the period to March 2000, the Group disposed of its share in an
investment joint venture at a profit of #361,000 which also reduced
funds employed in joint ventures by #1,573,000.(Period to March 1999:
disposed of two trading joint ventures at a profit of #310,000,
reducing funds employed in joint ventures by #2,261,000).
9 DEFERRED TAXATION
Unaudited Audited
At 31/3/00 At 31/3/99 At 30/9/99
__________________________________
#'000 #'000 #'000
The potential amount of deferred
taxation, for which no provision
has been made and which would arise
if the assets held as long term
investments were sold at the values
at which they appear in the balance
sheet, has been calculated
as follows: 12,978 16,551 15,509
==================================
10 FINANCIAL INSTRUMENTS
Financial Liabilities
The interest rate profile of the Group's financial liabilities at 31st
March 2000, after taking account of interest rate instruments taken out
by the Group was:
Unaudited Audited
At 31/3/00 At 31/3/99 At 30/9/99
__________________________________
#'000 #'000 #'000
Floating rate financial
liabilities 132,753 55,498 89,098
Fixed rate financial liabilities 102,430 44,325 43,928
___________________________________
Total 235,183 99,823 133,026
===================================
The benchmark rate for determining interest payments for the floating
rate financial liabilities was LIBOR / base rate depending upon the
facility.
The weighted average interest rate on the fixed rate debt and the
average maturity of that debt was as follows:
Unaudited Audited
At 31/3/00 At 31/3/99 At 30/9/99
__________________________________
% % %
Weighted average interest rate:
Group 7.95 9.31 9.30
Joint ventures 8.10 9.17 8.10
years years years
Weighted average period for which
interest rate is fixed:
Group 9.07 12.18 11.68
Joint ventures 2.15 3.08 2.65
Maturity of financial liabilities
Unaudited Audited
At 31/3/00 At 31/3/99 At 30/9/99
__________________________________
#'000 #'000 #'000
Group
Within one year or on demand 83,760 51,742 86,342
Between one and two years 5,252 1,794 1,794
Between two and five years 6,264 5,382 4,932
In five years or more 139,907 40,905 39,958
__________________________________
235,183 99,823 133,026
==================================
Borrowing facilities
The Group has various borrowing facilities that were not fully utilised
at the period end.
Unaudited Audited
At 31/3/00 At 31/3/99 At 30/9/99
__________________________________
#'000 #'000 #'000
Expiring in one year or less:
Total facilities 132,521 71,107 149,913
===================================
Unutilised 58,725 21,188 65,873
===================================
Fair values of financial assets and liabilities
The table below sets out by category the changes to the balance sheet
values that would occur if "fair values" applied.
Unaudited Audited
At 31/3/00 At 31/3/99 At 30/09/99
___________________________________
Fair value Fair value Fair value
adjustment adjustment adjustment
#'000 #'000 #'000
Primary financial instruments
Liabilities (11,132) (11,723) (9,010)
Assets
Financial assets - - -
Derivative instruments held to
manage debt
Interest rate swaps (453) (1,383) (527)
Joint ventures
Primary financial instruments
Liabilities (15) (272) (25)
Assets
Financial assets - - -
Derivative instruments held to
manage debt - - -
__________________________________
(11,600) (13,378) (9,562)
==================================
The calculation of the fair values has been arrived at as follows:
Debt has been calculated by discounting cash flows at prevailing rates
of interest.
The equity assets have been valued at the quoted share price based upon
the strategic nature of the holdings compensating for any placing
discount.
Interest rate swaps have been valued at the market rate for such swaps.
In accordance with FRS4 , debt acquired from the former Winglaw Group
Limited, on 1 March 2000, has been included in the balance sheet at
its fair value resulting in a positive adjustment, after tax, of
#2,000,000.
11 ANALYSIS OF NET DEBT MOVEMENTS
Audited Unaudited
Half year
At 30/9/99 Cashflow At 31/3/00
#'000 #'000 #'000
Cash at bank and in hand 843 7,960 8,803
Bank overdrafts/short
term borrowings (85,548) 12,944 (72,604)
20,904
Debt due within one year
Mortgage and other loans (794) (10,362) (11,156)
Debt due after one year
Mortgage and other loans (42,813) (80,584) (123,397)
Bank loan (3,541) (24,485) (28,026)
(115,431)
_____________________________________
Net debt (131,853) (94,527) (226,380)
======================================
12 YEAR 2000
A program of review and remedial work was undertaken to ensure that the
Group's own systems were Year 2000 compliant and appropriate assurances
were sought from those with whom the Group conducts its business.
To date no problems have occurred but the Group continues to monitor
the situation.
13 PURCHASE OF WINGLAW GROUP LIMITED
On 1 March 2000 the Group completed the purchase of the assets and
liabilities of the former Winglaw Group Limited comprising property
assets of #96,546,000, other net assets of #16,163,000 and borrowings
of #59,792,000, for an aggregate cost of #52,917,000.
14 FINANCIAL STATEMENTS
The consolidated profit and loss accounts and the consolidated balance
sheets are unaudited and do not constitute statutory accounts within
the meaning of section 240 of the Companies Act 1985. The statutory
accounts for 1999, from which the full year comparatives have been
extracted, received an unqualified auditors' report and have been
delivered to the Registrar of Companies.
END
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