RNS Number:8744M
Warner Estate Holdings PLC
29 November 2006
WARNER ESTATE JOINS FTSE 250 AS PROPERTY UNDER MANAGEMENT NEARS #3BILLION
Warner Estate Holdings PLC ("Warner Estate") the property investment,
development and fund management group has announced its interim results for the
six months to 30 September 2006.
Financial Highlights
* Adjusted net asset value per share up 8% to 803p(1)
* Net asset value per share up 9% to 722p
* Triple net asset value per share up 8% to 724p(2)
* Profit before tax up #6.7million to #42.5million
* Recurring earnings per share 9.4p (September 2005: 9.5p)(3)
* Earnings per share 73.3p (September 2005: 52.3p)
* Interim dividend up 5% to 10.0p
* Total annualised return 19.9% (September 2005: 21.6%)(4)
Business Highlights
* Property owned and under management up 13.5% to #2.8billion
* Commercial rent roll under management #164m
* Establishment of a Greater London Offices Fund
* Radial Distribution Fund approaches #300m
* Ashtenne Industrial Fund exceeds #1billion
* NWDA select the Ashtenne Industrial Fund as partner
* Goal of attaining FTSE 250 achieved
* Conversion to REIT likely
(1) Adjusted for deferred tax on revaluation gains and other items per Table 10
(2) Adjusted as in 1 and for potential deferred tax and fair value of debt per
Table 10
(3) Adjusted for net fair value gains on investment properties and other items per
Table 5
(4) Adjusted for deferred tax on revaluation gains, fair value of debt and other
items per table 4
Philip Warner, Chairman of Warner Estate commented:
"We have delivered another encouraging performance. Our asset management
business continues to expand and we now own or manage #2.8 billion of property.
We are pleased with progress of the 1.5million sq ft development pipeline, which
will add significant value to properties under management, whether in funds,
joint ventures or wholly owned."
"We are delighted that the growth of the Company has brought admission to the
FTSE 250."
"We are well positioned for the future; we continue to attract investors to our
funds and the introduction of REITs should enhance our track record of dividend
growth."
-ends-
Date: 29 November 2006
For further information contact:
Warner Estate Holdings PLC cityPROFILE
Philip Warner, Chairman Simon Courtenay
Peter Collins, Finance Director Tel: 020-7488-3244
Michael Stevens, Property Director
Tel: 020-7907-5100
Web: www.warnerestate.co.uk
CHAIRMAN'S STATEMENT
Warner Estate has continued to make good progress with an 8% rise in triple net
asset value and an increase in property under management, including that wholly
owned, from #2.5billion to #2.8billion at 30 September. The total return for
the period was a respectable 19.9% on an annualised basis.
This period is the first in which I am able to report on the performance of the
Ashtenne Fund Management business on a wholly owned basis. This business which
had some #690million of assets under management on purchase last year now
manages over #1billion and has proved to be a very profitable acquisition. We
have also recently formed a new joint venture with Barclays Capital to invest in
Greater London offices, purchasing two buildings in the City of London for
#97million.
I am particularly pleased to report the Group's entry into the FTSE 250, which
shareholders may recall was an objective set a number of years ago and the
prospect of conversion to a Real Estate Investment Trust (REIT) should maintain
momentum.
RESULTS
In the six months to September 2006 adjusted net asset value per share increased
by 8.4% from 741p to 803p, net asset value by 9.3% from 660p to 722p and triple
net asset value (TNAV) on which the Group assesses its total return by 8.2% from
669p to 724p. As previously reported, these asset values do not take full
account of the value of the fund management business in that only #11.2million
is included in the accounts for the purchased goodwill. As I report below, the
Apia and AIF asset management businesses generated a recurring operating profit
of #2.2million which does not include any performance fees because these can
only arise in the second half of the year. If these asset management businesses
were valued, the substantial improvement in the profits they make would have
increased further the total return made by the Group in this half year.
Pre-tax profits have increased by #6.7million to #42.5million. Of this
increase, #3million relates to an improvement in profits before fair value gains
and the balance to valuation movements. Recurring profits as detailed in table
5 were #6.5million against #6.4million for the comparable period last year.
This increase would have been greater but for the decision of the Group to bring
property development management in-house. Development costs of some #0.3million
in the first half of this year have been expensed whereas last year, when they
were externally billed, they were capitalised to specific developments within
the Group and the Agora joint venture. If the recurring profits were adjusted
to exclude these development costs which are being incurred to create
non-recurring capital profits then underlying recurring profits would have risen
by 6% to #6.8million and total return would have been even better.
Operating profit before net gain on investments, which excludes the effect of
net finance expenses, was up 8% to #9.4million (September 2005: #8.7million).
A more detailed analysis of the results for the period will be found in the
Finance Report which follows this statement.
The Board has increased the interim dividend to 10p against 9.5p last year, a
rise of 5%. Although the dividend is not covered by recurring earnings of 9.4p
these do not include further earnings from performance fees which can only arise
in the second half of the year. However, the dividend is covered 1.2 times by
realised profits after tax and will be paid on 23 February 2007 to shareholders
on the register at close of business on 26 January 2007.
PROPERTY OVERVIEW
During the period, the main driver for total return across the property
investment market has been continuing yield compression. Investment Property
Databank (IPD) estimate the all property yield has fallen by 33 basis points
over the period and now stands at 4.67%. This compares with our own yield at 30
September 2006 of 5.5% which has fallen by 25 basis points over the period. Our
standing investments, those held throughout the six months whether in funds,
joint ventures or wholly owned, increased overall by 5.9% from #2.37billion to
#2.51billion. Forecasters predict the imminent end of yield compression and a
likely stabilising at current levels over the short to medium term. This should
improve the potential for the more active asset managers, such as Warner Estate,
with their focus on income generation and improvement, reflecting a strategy we
have been pursuing consistently over recent years.
An important part of that asset management is the enhancement of existing
property under management through the development pipeline of almost 1.5million
sq ft with an expected capital spend of #350million over the next four years,
spread over our fund, joint venture and wholly owned properties. We have
continued to make progress with planning consents, pre-letting campaigns and
completions. AIF completed its 66,000 sq ft Colville Park scheme in East
Kilbride, Scotland and achieved planning permission for 85,500 sq ft at
Quedgeley, Gloucestershire. Agora now has over 40% of its 100,000 sq ft
extension in Bolton pre-let and in Middleton, Manchester, has completed 45,000
sq ft of new space.
With Bride Hall Group, the specialist development company in which we have an
investment, the new 200,000 sq ft Bouverie Place Shopping Centre in Folkestone
is scheduled to complete in summer 2007 with 83% of the floor space already
pre-let and we have progressed the 265,000 sq ft extension to Hale Leys Shopping
Centre, Aylesbury where our Collaboration Agreement with Aylesbury Vale District
Council secured preferred developer status in spring this year.
The last six months have seen significant expansion of our Radial Distribution
Fund, which has continued post 30 September, and, as demonstrated by the
formation of the new fund investing in Greater London offices, we shall continue
to consider and research new sectors which further our strategy. As previously
reported, these may include Europe where we still own assets following the
acquisition of Ashtenne last year.
KEY STATISTICS TABLE 1
Total under management Wholly owned*
30 September 2006 31 March 2006 30 September 2006 31 March 2006
Capital Value #2,823million #2,487million #319million #344million
Annualised rent roll #163.8million #151.5million #18.0million #20.7million
Initial Yield 5.5% 5.8% 5.3% 5.6%
Average Unexpired 7.88 yrs 4.25 yrs 6.12 yrs 12.2 yrs
Lease Term
Void Rate** 8.7% 9.5% 4.3% 4.0%
Number of Properties 494 499 53 66
Average Lot Size #5.71million #4.99million #6.02million #5.21million
* Investment properties and properties within the course of development, where
the capital value is before the accounting adjustment for ground lease interest
for leasehold properties of #1.4million (March 2006: #1.1million).
** The void rate of total under management excluding the Ashtenne Industrial
Fund was 3.9%.
The breakdown by sector at 30 September 2006 was as follows:
WHOLLY OWNED TABLE 2
No. of Capital Annual Net
Properties Value Rent Roll ERV initial
yield Weighting
#million #million #million
Retail
Retail Warehouses 5 23.8 1.4
Shopping Centres 2 80.2 4.5
High Street 9 38.3 1.7
Retail sub total 16 142.3 7.6 9.4 5.02% 45%
Offices sub total 26 131.7 8.5 9.4 6.11% 41%
Distribution 3 18.2 1.0
Industrial 3 11.9 0.9
Distribution & Industrial sub total 6 30.1 1.9 1.9 5.91% 9%
Land 4 0.3 - - - -
Development (shopping centres) 1 14.4 - - - 5%
Total wholly owned 53 318.8 18.0 20.7 5.30% 100%
Trading (Inventories) 5 9.8 0.5 0.7 4.72%
Total wholly owned including trading 58 328.6 18.5 21.4 5.32%
UNDER MANAGEMENT Net
No. of Capital initial
Properties Value Income ERV yield
Aggregate of all properties #million #million #million
Apia Regional Offices 20 444.9 25.6 29.0 5.41%
Ashtenne Industrial 396 1,120.6 66.3 82.3 5.60%
Agora Max Shopping Centres* 2 324.6 19.5 23.0 4.78%
Agora Shopping Centres* 4 252.6 13.5 15.5 4.76%
Radial Distribution* 12 253.9 15.3 15.6 5.70%
Greater London Offices* 2 97.6 5.1 5.7 5.07%
Wholly owned including trading* 58 328.6 18.5 21.4 5.55%
Total under management 494 2,822.8 163.8 192.5 5.50%
* Capital value is before accounting adjustments for ground lease interest for
leasehold properties, and certain properties treated as finance lease assets.
PROPERTY FUNDS
These funds are held as investments directly by the Group. As Warner Estate act
as asset managers for both funds we have provided key interim highlights for
readers' information.
Apia Regional Office Fund
Value - #445million (Valuers: DTZ) Rental income - #25.6million pa
Co-managed with Morley Fund Management, this fund continues to attract investors
with a further three joining since March 2006 and now manages #445million of
property across the UK's major central business districts.
In Scotland, there have been letting successes in both Edinburgh and Glasgow.
In July, and within weeks of becoming vacant, Faber Maunsell took the entire
second floor (14,225 sq ft) of 225 Bath Street, Glasgow and The Passport Office
has leased a newly refurbished floor at Apex 123, Edinburgh.
Elsewhere, other significant asset management initiatives have been realised at
Norfolk House, Manchester through a combination of lettings, lease extensions
and rent reviews. The principal highlight was a letting of the part first floor
(7,720 sq ft) to Lloyds TSB Plc at a record rent for the building of #24.33 per
sq ft. Also in Manchester, a significant tenant of Sunlight House, BDP Ltd, has
regeared their lease of c40,000 sq ft at an increased rent of #18.56 per sq ft.
Robert Game, formerly of Citigroup and MEPC, has been appointed Managing
Director of Apia Asset Management.
The Ashtenne Industrial Fund (AIF)
Value - #1.1billion (King Sturge) Rental Income - #66.3million pa
Also co-managed with Morley, the fund acquired #135million and sold #40million
of industrial properties in the nine months to the 30 September 2006 and now has
over #1billion assets under management.
The most notable transactions in the period were the letting at Holgate Park in
York to Network Rail on a five year lease at #948,000 pa and being selected by
the Northwest Development Agency to be their partner in a new #140million
limited partnership which will lead to opening a new regional office in
Liverpool, the business's seventh across the UK.
In addition, the fund raised a further #100million of equity from existing and
new investors in the nine months to the 30 September 2006 at premiums in excess
of 6%.
PROPERTY JOINT VENTURES
Agora Max Shopping Centre Fund
Value - #325million (DTZ) Rental income - #19.5million pa
In July 2006 we completed Phase I of the new development at Pyramids and The
Grange, Birkenhead comprising six units, five of which are already let. We have
also secured vacant possession of the WH Smith unit in readiness to undertake
Phase II, creating a new 25,000 sq ft unit, for which planning consent was
granted in June.
At The Pallasades in Birmingham we have been discussing with Network Rail their
Gateway Development proposals for New Street Station whilst progressing the
reconfiguration and improvement of our retail offer. Through active management
we have increased the rental level of the Stephenson Street units from #45 per
sq ft in terms of zone A (ITZA) to #55 per sq ft ITZA and let eight of the 14
vacant units inherited at purchase in November 2005.
Agora Shopping Centre Fund
Value - #253million (DTZ) Rental income - #13.5million pa
In June 2006 we successfully completed Phase I of our development at Middleton
adding 45,000 sq ft of new retail space, let to Quality Save, Cool Trader and
Streetwise Sports. At Bolton, we served development notices on all the Market
Hall tenants bringing their leases to an end on the 17 January 2007, which
guarantees vacant possession of the Market Hall and will enable the 96,416 sq ft
redevelopment to commence in March 2007, with pre-lets signed with H&M Hennes,
Office, Joy, Starbucks, Lush and Carphone Warehouse. At Cavern Walks,
Liverpool, we completed a new letting to fashion retailer, Cricket, further
expanding their presence in the scheme as one of the key retail anchors.
Radial Distribution Fund
Value - #193million (DTZ), #61million (Directors) Rental income - #15.3million
pa
The fund has continued to grow with purchases of the 218,000 sq ft Accident
Exchange unit at Hams Hall, Birmingham, for #17.6million and the 484,000 sq ft
Howdens Joinery warehouse at Brackmills, Northampton, for #41.7million. Since
30 September the purchase of Marks & Spencer's 184,000 sq ft distribution
facility at Radial Point, Stoke on Trent, for #14.3million completed and
contracts have been exchanged for the purchase of a fourth 222,000 sq ft
warehouse at DIRFT, Daventry, for #17.9million completing in January 2007. This
takes Radial's assets up to 14 with a total floor space of 3.2million sq ft
under management.
Greater London Office Fund
Value - #98million (Directors) Rental income #5.1million pa
In September we launched our new Greater London Office Fund jointly with
Barclays Capital, with the purchase of #96.5million (plus acquisition costs) of
offices at 55 Old Broad Street and Central House, Camperdown Street, both in the
City of London. We shall be looking for further acquisitions throughout the
capital.
WHOLLY OWNED PORTFOLIO and TRADING PORTFOLIO
Value - #266million (Cushman & Wakefield), #62.8million (Directors) Rental
Income - #18.5million
At Hale Leys Shopping Centre, Aylesbury, Zone A rents have increased to #93 per
sq ft ITZA. We are working with Bride Hall Group to promote the extension of
the Centre which is progressing with terms agreed for the acquisition of the
majority of the site from the local authority.
At The Royals Shopping Centre, Southend-on-Sea, rents have improved to #75 per
sq ft ITZA. A second tranche of industrial assets was sold to Ashtenne
Industrial Fund for #41.8million and programmed disposals were achieved at
Wellington House, Leicester (#6.5million), Stockport, Manchester (#4.8million),
Albion House, Leicester (#0.5million) and Edgbaston (#2.5million). In addition,
we re-entered the City of London office market this half year with our purchase
of 24/26 Minories for #10.9million.
PERSONNEL
The Group now employs 198 people of which 129 operate in the asset management
business distributed as follows:
TABLE 3
Total Direct of which service
charge
recoverable
Agora Max Shopping Centres 8 1 7
Agora Shopping Centres 14 5 9
Apia Regional Offices 6 6 -
Ashtenne Industrial 111 85 26
Greater London Offices 1 1 -
Radial Distribution 2 2 -
Wholly Owned & Head Office 56 50 6
Total on payroll at 30 September 2006 198 150 48
REAL ESTATE INVESTMENTS TRUSTS ("REITs")
The Group appointed PricewaterhouseCoopers and Clifford Chance earlier this year
to assist in evaluating the REIT proposals . Subject to the final guidance which
is not yet available the Directors have concluded that conversion would be of
benefit to shareholders and therefore the Group currently intends to convert.
Conversion would not take place before 1 April 2007. As at 30 September 2006 the
conversion charge and related costs would be of the order of #15-20million and
the capital gains tax liability which would be extinguished is #34million.
PROSPECTS
In June, I reported the Group as being well placed for current conditions and
that remains the case with #2.8billion of property now under management. Demand
from investors for property remains strong and the advent of REITs should
provide further encouragement, although it remains to be seen whether recent
rises in interest rates will dampen enthusiasm. Any such dampening may provide
us with further buying opportunities because, although we have continued to find
property to which we can add value, the current climate makes that task more
difficult. However, within the existing portfolio there remain significant
opportunities for value creation, both through development and rental value
uplift. We have the team for ensuring efficient asset management and I am
confident of continuing progress.
FINANCE REPORT
The Group measures its performance on a total return that incorporates both
realised profits and net revaluation surpluses achieved on shareholders' triple
net asset funds. Whilst a total return under IFRS is very similar to the
Group's previously reported return under UK GAAP, there are fundamental
differences in the treatment of deferred tax, finance lease assets and dividends
payable.
TABLE 4
Return: 30 September 2006 30 September 2005 31 March 2006
#million #million #million
Profit for the period attributable to equity 39.0 27.7 74.4
shareholders
Add back / (less) effect of treating investment 0.6 (0.3) 0.3
properties as finance leases
Add back deferred tax on fair value gains (including 1.7 11.8 9.2
joint ventures)
(Less) / add back fair value adjustments on derivative (1.8) 2.2 1.4
financial instruments
Add back goodwill reduction on Ashtenne asset - - 17.7
management business
39.5 41.4 103.0
Deferred tax arising on unrealised gains (6.8) (8.8) (17.2)
Change in fair value of debt, net of tax 2.7 (2.8) (0.5)
Total adjusted return for the period 35.4 29.8 85.3
Shareholders' triple net asset funds at start of 355.2 277.7 277.7
period per table 9
Annualised return on shareholders' triple net asset 19.9% 21.6% 30.7%
funds
Of which
Post tax profit 1.0% 2.4% 10.8%
Net gain from fair value adjustment on investment 11.8% 16.2% 15.1%
properties
Net gain from fair value adjustment on investments 5.6% 5.0% 5.0%
Change in fair value of debt 1.5% (2.0)% (0.2)%
This shows a small decline in total return in the comparable six months. As
explained above this is partly due to the costs of the development business
being accounted for through the income statement rather than capitalised as
previously.
Results
The table below illustrates the different constituents that make up the results
for the period. As can be seen, recurring profits are #6.5million (September
2005: #6.4million). These results are further analysed to show the respective
contribution from asset management and wholly owned activities in tables 6a and
6b.
TABLE 5
Reconciliation of profit before tax 30 September 30 September 31 March 2006
2006 2005
#million #million #million
Recurring profit 6.5 6.4 15.9
Property disposals and other non-recurring profit 1.4 (1.5) 12.2
Profit before net gain from fair value adjustments 7.9 4.9 28.1
Net gain from fair value adjustments 40.4 35.1 71.0
Profit including joint ventures and associates before 48.3 40.0 99.1
tax
Excluding joint ventures and associates
Current tax (3.6) (1.4) (12.8)
Deferred tax 0.1 (6.7) (3.7)
Joint ventures and associates
Current tax - (0.8) (2.9)
Deferred tax (5.8) (3.4) (5.2)
Profit for the period 39.0 27.7 74.5
TABLE 6A
Profit Analysis - Period to 30 Joint Property
September 2006 Ventures Investment
(our 50% and Head
Asset share) Office Other
Management Sub Total Costs Income Total
Under Management Wholly Owned
Asset value #000 #000 #000 #000 #000 #000
100% of Properties Managed / Owned 1,565,000 929,000 2,494,000 329,000 - 2,823,000
Income
Rental and similar income - 12,849 12,849 13,265 - 26,114
Asset management fees receivable 6,353 - 6,353 - - 6,353
Asset management fees payable - (517) (517) - - (517)
Performance fees receivable - - - - - -
Performance fees payable - - - - - -
Expenses (4,124) (3,047) (7,171) (6,548) - (13,719)
Recurring operating profit 2,229 9,285 11,514 6,717 - 18,231
Investment income 2,505 - 2,505 - 79 2,584
Interest receivable / (payable) 530 (8,602) (8,072) (6,259) - (14,331)
Recurring profit 5,264 683 5,947 458 79 6,484
Net gain from fair value adjustments - 16,352 16,352 8,169 - 24,521
on investment properties
Net gain from fair value adjustments 12,176 - 12,176 - 1,073 13,249
on investments
Change in fair value of derivative - 1,997 1,997 710 - 2,707
financial instruments
Profit on sale of investment - - - 1,738 - 1,738
properties
Profit on sale of investments 28 - 28 - - 28
Profit on sale of trading properties - - - 385 - 385
Non-recurring income / (expenses) - - - (452) - (452)
Investment properties treated as - (124) (124) - - (124)
finance lease assets
Cost of employee share option - - - (171) - (171)
schemes
Profits before tax including joint 17,468 18,908 36,376 10,837 1,152 48,365
ventures and associates
Taxation - current - (25) (25) - - (25)
Taxation - deferred - (5,811) (5,811) - - (5,811)
Minority interest - (3) (3) - - (3)
Profit before income tax 17,468 13,069 30,537 10,837 1,152 42,526
Percentage of recurring operating 12% 51% 63% 37% n/a 100%
profit
Note: the interest costs within the Group have not been reapportioned to reflect the cost of the Group's equity
investments in the funds and joint ventures.
TABLE 6B
Profit Analysis - Period to 30 Joint Property
September 2005 Ventures Investment
(our 50% and Head
Asset share) Office Other
Management Sub Total Costs Income Total
Under Management Wholly Owned
Asset value #000 #000 #000 #000 #000 #000
100% of Properties Managed / Owned 261,000 1,517,000 1,778,000 331,000 - 2,109,000
Income
Rental and similar income - 14,325 14,325 13,666 - 27,991
Asset management fees receivable 1,430 1,063 2,493 - - 2,493
Asset management fees payable - (551) (551) - - (551)
Performance fees receivable - - - - - -
Performance fees payable - - - - - -
Expenses (776) (4,731) (5,507) (4,546) - (10,053)
Recurring operating profit 654 10,106 10,760 9,120 - 19,880
Investment income 366 420 786 - 25 811
Interest receivable / (payable) 2,419 (10,381) (7,962) (6,341) - (14,303)
Recurring profit 3,439 145 3,584 2,779 25 6,388
Net gain from fair value adjustments - 15,826 15,826 15,301 - 31,127
on investment properties
Net gain from fair value adjustments 2,648 727 3,375 - 3,695 7,070
on investments
Change in fair value of derivative - (2,986) (2,986) (157) - (3,143)
financial instruments
Profit on sale of investment - 246 246 37 - 283
properties
Profit on sale of investments - 3 3 - - 3
Profit on sale of trading properties - - - 455 - 455
Non-recurring expenses (578) (538) (1,116) (909) - (2,025)
Investment properties treated as - (143) (143) - - (143)
finance lease assets
Cost of employee share option - - - (57) - (57)
schemes
Profits before tax including joint 5,509 13,280 18,789 17,449 3,720 39,958
ventures and associates
Taxation - current - (768) (768) - - (768)
Taxation - deferred - (3,379) (3,379) - - (3,379)
Minority interest - - - - - -
Profit before income tax 5,509 9,133 14,642 17,449 3,720 35,811
Percentage of recurring operating 3% 51% 54% 46% n/a 100%
profit
Note: the interest costs within the Group have not been reapportioned to reflect the cost of the Group's equity
investments in the funds and joint ventures.
Asset Management Businesses
The key constituents of the #2.2million (September 2005: #0.7million) recurring
operating profit are the Ashtenne and Apia asset management businesses which
made profits of some #1.7million and #0.5million respectively. These are
analysed below.
TABLE 7
Ashtenne Asset Management Business
Six months to 30 Four months to 30
September 2006 September 2005
(50% share held
through IFL joint
venture)
#000 #000
Asset management fees 2,579 612
Letting and other fees 1,861 451
Total fees 4,440 1,063
Costs (2,674) (852)
Profit before performance fees 1,766 211
Performance fees - -
Recurring operating profit 1,766 211
Goodwill in financial statements 11,205 -
Investment in Ashtenne Industrial Fund
Distributions from fund 1,126 353 (a)
Value of units at 30 September 42,923 23,552 (b)
% share of fund 6.52% 5.26% (b)
(a) #53k wholly owned, #300k 50% share of income in Industrial Funds
Limited (IFL).
(b) #12,031k (2.68%) wholly owned, #11,521k (2.58%) is 50% share of
investment held in IFL.
This business was owned for four months in the period to September 2005 and then
only through IFL, a 50% joint venture. Therefore the actual improvement in the
performance of this business on a like-for-like basis is not apparent. If the
business had been wholly owned for those six months then the pro-rated operating
profit would have been #0.6million. On this basis the improvement on
performance of #1.1million in the current period is due to a #1.2million
increase in fees arising from both the expansion of the Ashtenne Industrial Fund
over the year and the activity of that fund with costs only increasing
marginally by #0.1million.
TABLE 8
Apia Asset Management Business
Six months to 30 Four months to 30
September 2006 September 2005
#000 #000
Asset management fees 879 327
Costs (380) (155)
Profit before performance fees 499 172
Performance fees - -
Recurring operating profit 499 172
Goodwill in financial statements - -
Investment in Apia Regional Office Fund
Distributions from fund 1,356 313
Value of units at 30 September 71,843 46,705
% share of fund 28.59% 34.83%
Here again the comparable figures are distorted by the fact that Apia was only
in existence for four months in the period to September 2005 although the
overall results for the interims to September 2005 also included the results
from the Group's Skipper joint venture, which became part of Apia in June 2005.
If the Apia business had been in existence for the full six months then the
pro-rated recurring operating profit would have been #0.26million. The
improvement on this basis is #0.24million which is a direct result of the
increase in assets under management with fees up by #0.40million and costs up by
#0.16million.
Earnings Per Share
Earnings per share were 72.3p (September 2005: 52.0p) and recurring earnings
per share were 9.4p (September 2005: 9.5p). Earnings per share include the fair
value gains of 58.3p (September 2005: 50.0p) and one-off profits of 5.6p
(September 2005: 7.2p losses) which are excluded from recurring earnings.
Recurring earnings per share fell while recurring earnings rose because of the
placing of 5% of the Company's shares in April 2005 to help fund the acquisition
of Ashtenne.
Balance Sheet
The underlying elements of the growth in shareholders' funds are analysed in the
table below, but it is not expected that the deferred taxation provided would
become payable in full if the properties and investments were sold.
TABLE 9
Pence per
#million share
Equity shareholders funds at 31 March 2006 350.6 660.3
Change in weighted average number of shares (1.6)
658.7
Movement in the period to 30 September 2006
Profit before fair value gains 8.7 16.3
Net fair value gains 40.4 75.9
Effect of the treatment of investment properties as finance leases (0.6) (1.1)
Cost of employee share option schemes (0.2) (0.4)
Taxation - current (3.6) (6.7)
Taxation - deferred (5.7) (10.7)
Profit for the period 39.0 73.3
Other equity movements
Dividends paid (5.3) (10.0)
Actuarial losses on retirement benefit obligations (0.1) (0.2)
Equity shareholders' funds at 30 September 2006 384.2 721.8
As at 30 September 2006, equity shareholders' funds were #384.2m (March 2006:
#350.6m) an increase of 9% in the half year, whilst adjusted shareholders' funds
(shown in the table below) rose by 8% to #427.6m (March 2006: #393.5m). In
terms of the adjusted shareholders' funds, this uplift is after deducting the
proposed interim dividend of #5.3m (10p per share) which, if added back would
give an overall uplift of 10% in the half year. The Group's NAV per share is
722p (March 2006: 660p), whilst adjusted NAV per share is 803p (March 2006:
741p) and TNAV is 724p (March 2006: 669p).
TABLE 10
30 September 2006 30 September 2005 31 March 2006
#million Pence per #million Pence per #million Pence per
share share share
Equity shareholders' funds 384.2 721.8 309.0 583.3 350.6 660.3
Add back deferred tax on revaluation 44.6 83.8 39.3 74.1 42.9 80.8
gains (including JVs)
Add back effects of treating investment 4.5 8.5 3.3 6.2 3.9 7.3
properties as finance leases
Less proposed dividend (5.3) (10.0) (5.1) (9.5) (5.3) (10.0)
(Less) / add back fair value adjustments (1.4) (2.6) 1.2 2.3 0.4 0.8
on derivative financial instruments
Add other minor adjustments 1.0 1.9 0.7 1.3 1.0 1.9
Adjusted equity shareholders' funds 427.6 803.4 348.4 657.7 393.5 741.1
Less potential deferred tax (39.7) (74.6) (24.5) (46.3) (32.9) (62.0)
Less fair value adjustment net of tax on (2.7) (5.1) (7.7) (14.5) (5.4) (10.2)
debt
Equity shareholders' triple net asset 385.2 723.7 316.2 596.9 355.2 668.9
funds
The majority of the uplift in the period has arisen from revaluation surpluses
in the Group and in the joint ventures totalling #37.7m, of which #24.5m relates
to investment property and #13.2m to investments.
Bride Hall
As disclosed previously we were required to equity account for this investment
as an associate. We have now renegotiated our equity holding to ensure we are
not able to exert significant influence and we have therefore reclassified our
investment as "investments in listed and unlisted shares." (See notes 14 and 15
to the Financial Statements)
Leasehold Liability Portfolio
The liability on the balance sheet relating to the leasehold liability portfolio
of properties was #8.2million at 30 September 2006. The movement of #3.8million
represents the net payment of liabilities in the period. The Directors have
assessed the value of the liability at 30 September 2006 and remain of the
opinion that the value at which the liability was acquired, less subsequent
payments, remains unchanged and no profit or loss has been recorded. (See note
17 to the Financial Statements)
Borrowings
Debt
Total net borrowings for the Group as at 30 September 2006 were #191.3million
(March 2006: #185.6million). The breakdown of debt at 30 September 2006,
compared with 31 March 2006, is set out below:
TABLE 11
On balance Share of Share of
sheet joint funds
ventures Total
#million #million #million #million
Net short-term (cash) / debt (30.4) (8.2) (3.3) (41.9)
Long term debt 221.7 341.4 86.2 649.3
Total net debt at 30 September 2006 191.3 333.2 82.9 607.4
Of which:
Total net recourse debt 173.3 - - 173.3
Long-term non-recourse debt 18.0 333.2 82.9 434.1
Gearing (on adjusted shareholders' funds) 45% 142%
Recourse gearing 41% 41%
Total net debt at 31 March 2006 185.6 260.2 87.8 533.6
Gearing (on adjusted shareholders' funds) 48% 138%
Recourse gearing 35% 35%
Despite an increase in base rates during the period, the Group's average cost of
debt fell to 5.93% as at 30 September 2006 (March 2006: 6.07%).
The Group had unutilised facilities of #19million (March 2006: #44million) as
at 30 September 2006, which are sufficient to meet our working capital
requirements.
With the introduction of Real Estate Investment Trust legislation, we are
reviewing the Group's borrowing facilities with a view to putting in place the
most appropriate facilities to meet the Group's funding requirements in the
future. As part of this restructure the #25.5million term loan with Bank of
Scotland was repaid on 16 October 2006.
In the joint ventures, the Greater London Office Fund was established during the
period with Barclays Capital. This joint venture had debt of #72.2million at 30
September and is financed 73% by debt and 27% by equity. There is rental income
to interest cover of 1.3 times.
In the Radial Distribution Fund, a new facility of #120million has been put in
place with Bank of Scotland. This will allow the joint venture to acquire
property up to a value of #150million of which #33million had been utilised as
at 30 September 2006.
At 30 September 2006, the Group held investments in the Apia Regional Office
Fund and the Ashtenne Industrial Fund amounting to 28.6% and 6.5% respectively.
Apia has drawn down debt of #196million and AIF has net debt of #444million.
Both Funds have loan to value ratios of less than 50% and more than 2.5 times
rental income to interest cover. There was headroom within the existing
facilities of Apia and AIF of #21million and #36million respectively as at 30
September 2006.
Hedging
The Group is commercially fully hedged on the drawn balances as at 30 September
2006, as shown below. The 10 year cancellable swap, whereby the interest charge
was fixed at 3.5% for the first six months to 30 September 2006 and thereafter
at 4.19% for the remaining 91/2 years, was not cancelled by the bank at 30
September 2006. Therefore, the Group will continue to benefit from the swap at
4.19% until such time as it is cancelled.
In the joint ventures, the new facility in Radial was drawn to #33million at 30
September 2006. A swap of #32million at 4.1% which was surplus to requirements
in the Agora Shopping Centres joint venture, has been novated to hedge the drawn
balance in the new Radial facility.
The Group continues to monitor its interest rate exposure to ensure that there
is certainty over the interest cost on the current level of borrowings.
TABLE 12
On balance sheet Share of joint
ventures
#million #million
Fixed rate debt 74.1 -
Floating rate debt 117.2 333.2
191.3 333.2
Percentage of floating rate loans at 30 September 2006
Covered by swaps 99% 91%
Covered by caps 1% 9%
100% 100%
Percentage of floating rate loans at 31 March 2006
Covered by swaps 91% 75%
Covered by caps 9% 25%
100% 100%
Cash Flow
During the period cash outflows from operations were #6.2million (September
2005: inflows of #4.4million). The reduction in the net cash inflow is largely
due to the net payments made against the provision for the leasehold liability
portfolio of #3.8million along with the repayment of a short term loan of
#5.0million and several creditor balances within the former Ashtenne companies.
In addition there was a decrease in receipts on disposal of trading properties
which is as a result of the increasingly reduced trading property portfolio.
The other main flows resulting in the net outflow of #8.2million arose through
purchases of investment properties of #12.8million, investments made in joint
ventures of #17.8million mainly as a result of setting up the Greater London
Office Fund (#12.1million) and the purchase of Daventry by Radial (#4.2million).
#4.4million was repaid on the Royal Bank of Scotland term loan on disposal of
some of the properties secured under this facility. A dividend of #5.3million
was paid in the period. These are offset by sales of investment properties of
#48.3million and distributions received from joint ventures of #1.3million and
from the investments in Apia and AIF of #3.1million.
It should be noted that intra group cash and borrowing, including finance lease
balances within each subsidiary are required to be separately categorised within
the Warner Estate group. Therefore, movements in these balance sheet accounts
should be considered together and by reference to the interim consolidated cash
flow statement.
Post Balance Sheet Events
Since the end of September we have continued to expand our Radial Distribution
Fund which now approaches #300million in value Following AIF's selection in
early October as preferred bidder to manage jointly a #140million portfolio with
the Northwest Development Agency, this partnership is being formalised.
As stated above, the #25.5million term facility with Bank of Scotland within the
Group was repaid in full on 16 October 2006.
SIGNIFICANT EVENTS DURING SIX MONTH PERIOD TO 30 SEPTEMBER 2006
Key Highlights
Date Detail Category
April 2006 Purchase of Alpha 1 at Hams Hall National Distribution Park, Joint venture
Birmingham by Radial Distribution joint venture for #17.62million
May 2006 Purchase of 24-26 Minories, London EC3 for #10.85million Group Investment
Property
September 2006 Sale of industrial portfolio to Ashtenne Industrial Fund for Group Investment
#41.85million Property
September 2006 Establishment of the Greater London Offices Fund, a joint venture Joint venture
with Barclays Capital, and the purchase of 55 Old Broad Street,
London EC2 and Central House, Camperdown Street, London E1 for
#96.5million
September 2006 Purchase of Howdens Joinery Distribution Warehouse, Brackmills Joint venture
Industrial Estate, Northampton by Radial Distribution joint venture
for #41.7million
SIGNIFICANT EVENTS POST 30 SEPTEMBER 2006
Date Detail Category
October 2006 Purchase of Marks & Spencer Distribution Unit, Radial Point, Stoke on Joint venture
Trent by Radial Distribution joint venture for #14.3million.
October 2006 Northwest Development Agency selects Ashtenne Industrial Fund as the Funds
preferred bidder to form Public Private Partnership joint venture for
a portfolio of industrial estates situated across the North West
region.
October 2006 Purchase of Unit 1E, DIRFT, Daventry by Radial Distribution joint Joint venture
venture for #17.95million
October 2006 Repayment of #25.5million term loan with Bank of Scotland Group
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 September 2006
6 months 6 months Year
ended 30 ended 30 ended 31
September September March 2006
Notes 2006 2005
#000 #000 #000
Revenue 21,349 18,520 67,478
Rental and similar income 10,936 12,176 24,003
Revenue from property trading activities 1,731 3,424 31,167
Cost of sales of property trading activities (1,346) (2,969) (24,584)
Service charge and similar income 2,329 1,490 2,972
Service charge expense and similar charges (2,710) (1,723) (3,591)
Net rental and trading income 2 10,940 12,398 29,967
Revenue from asset management activities 6,353 1,430 9,336
Cost of sales of asset management activities (4,124) (776) (3,512)
Net income from asset management activities 2 2,229 654 5,824
Administrative expenses (1,713) (1,099) (2,390)
Property expenses (2,045) (3,225) (7,517)
Operating profit before net gains on investments 2 9,411 8,728 25,884
Net gain from fair value adjustments on 8,169 15,301 27,101
investment properties
Net gain from fair value adjustment on 13,230 6,343 16,050
investments
Profit on sale of investment properties 4 1,738 37 3,102
Profit on sale of investments 5 28 - 3,024
Operating profit 32,576 30,409 75,161
Finance income 6 3,281 3,091 8,306
Finance expense 7 (7,129) (6,665) (14,445)
Change in fair value of derivative financial 710 (157) (72)
instruments
Share of associates' post tax profits 19 - 715
Share of joint ventures' post tax profits 13,069 9,133 21,291
Profit before income tax 42,526 35,811 90,956
Taxation - current 8 (3,617) (1,397) (12,842)
Taxation - deferred 8 98 (6,689) (3,659)
Profit for the period 39,007 27,725 74,455
Attributable to:
Equity holders 39,004 27,721 74,432
Minority interests 3 4 23
p p p
Earnings per share 9 73.28 52.34 140.17
Fully diluted earnings per share 9 72.33 52.03 138.79
UNAUDITED CONSOLIDATED BALANCE SHEET
Notes 30 30 31
September September March 2006
2006 2005
#000 #000 #000
ASSETS
Non-current assets
Goodwill 10 11,205 - 11,205
Investment properties 11 305,768 315,141 333,198
Properties under the course of development 11 14,414 11,000 12,261
Plant and equipment 527 422 465
Investments in joint ventures 12 132,798 127,490 103,372
Investments in funds 13 115,766 58,790 104,081
Investments in listed and unlisted shares 14 21,406 19,213 5,115
Investments in associates 15 155 5,327 15,518
Deferred income tax assets 16 383 509 552
Derivative financial assets - 1 -
Trade and other receivables 97 496 363
602,519 538,389 586,130
Current assets
Inventories 9,819 5,363 10,939
Trade and other receivables 24,417 12,106 23,096
Current income tax assets 358 - -
Cash and cash equivalents 30,813 98,240 98,358
65,407 115,709 132,393
Total assets 667,926 654,098 718,523
LIABILITIES
Non-current liabilities
Borrowings, including finance leases (223,203) (270,230) (283,625)
Derivative financial liabilities (720) (1,378) (1,361)
Deferred income tax liabilities 16 (29,274) (26,864) (29,563)
Retirement benefit obligations 3 (556) (321) (481)
Provisions for other liabilities and charges 17 (8,829) (185) (12,503)
(262,582) (298,978) (327,533)
Current liabilities
Borrowings, including finance leases (417) (22,700) (1,893)
Trade and other payables (17,410) (21,517) (29,569)
Current income tax liabilities - (1,946) (5,608)
(17,827) (46,163) (37,070)
Total liabilities (280,409) (345,141) (364,603)
Net assets 387,517 308,957 353,920
EQUITY
Capital and reserves attributable to the
Company's equity holders
Share capital 19 2,675 2,675 2,675
Reserves 19 382,413 307,345 348,837
Investment in own shares 19 (908) (1,063) (926)
Equity shareholders' funds 384,180 308,957 350,586
Minority interest 22 3,337 - 3,334
Total equity 387,517 308,957 353,920
UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the six months ended 30 September 2006
6 months 6 months Year ended
ended 30 ended 30 31 March
September September 2006
2006 2005
#000 #000 #000
Profit for the period attributable to equity shareholders 39,004 27,721 74,432
Actuarial losses on retirement benefit obligations (109) (21) (219)
Deferred tax arising on retirement benefit obligations 23 (5) 43
Total recognised income and expense for the period 38,918 27,695 74,256
UNAUDITED RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
For the six months ended 30 September 2006
6 months 6 months Year ended
ended 30 ended 30 31 March
September September 2006
2006 2005
#000 #000 #000
Opening equity in shareholders' funds 350,586 272,103 272,103
Shares issued - 127 127
Share premium on shares issued - 13,493 13,493
Acquisition of investment in own shares (341) (76) (139)
Disposal of investment in own shares 359 680 880
350,604 286,327 286,464
Total recognised income and expense for the period 38,918 27,695 74,256
Dividend paid in period (5,342) (5,065) (10,134)
Closing equity shareholders funds 384,180 308,957 350,586
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 September 2006
Notes 30 September 30 September 31 March
2006 2005 2006
#000 #000 #000
Cash flows from operating activities
Cash (outflows) / inflows from operations 20 (6,240) 4,407 24,703
Interest paid (6,445) (6,559) (13,209)
Interest received 186 905 5,285
UK Corporation tax paid (9,400) (2,149) (10,604)
Net cash (outflow) / inflow from operating (21,899) (3,396) 6,175
activities
Cash flows from investing activities
Purchase of investment properties and related (12,771) (11,128) (59,787)
capital expenditure
Sale of investment properties 48,289 28,062 95,063
Purchase of plant and equipment (134) (137) (154)
Purchase of investments in listed and unlisted (209) (56,142) -
shares
Sale of investments in listed shares - - 14,411
Purchase of investments in funds - - (66,910)
Sale of investments in funds 438 - 1,000
Purchase of investments in associates - - (5,000)
Net cash acquired from purchase of shares in 137 9,815 22,600
subsidiary company
Purchase of shares in joint ventures (11,072) (275) (16,676)
Sale of shares in joint ventures - 100 -
Loans to joint ventures (6,724) (46,708) (47,544)
Loans repaid by joint ventures - 29,916 37,559
Loans repaid by associates - - 4,651
Payment received for leasehold liabilities - - 13,750
Dividends received from listed investments 79 25 422
Dividends received from funds 3,153 - 1,566
Dividends received from joint ventures 1,274 1,000 1,000
Dividends received from associates 373 - 5,058
Net cash inflow / (outflow) from investing 22,833 (45,472) 1,009
activities
Cash flows from financing activities
Issue of shares - 13,620 13,620
Purchase of own shares for AESOP scheme (341) (119) (139)
Disposal of own shares for share option scheme 352 681 807
Dividends paid (5,342) (5,065) (10,134)
Increase in bank loans 1,548 36,390 37,915
Repayment of bank loans (5,339) (1,125) (72,232)
Repayment of mortgages and other loans - (57,346) (57,346)
Net cash outflow from financing activities (9,122) (12,964) (87,509)
Net decrease in cash and cash equivalents* (8,188) (61,832) (80,325)
Cash and cash equivalents at beginning of period (77,672) 2,653 2,653
Cash and cash equivalents at end of period (85,860) (59,179) (77,672)
* Includes overdraft facility balances shown in borrowings
UNAUDITED NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Basis of preparation
The interim consolidated financial statements of the Group for the six months to
30 September 2006 have been prepared on the basis of accounting policies set out
in the published accounts of the Group for the year ended 31 March 2006.
The published accounts for the year ended 31 March 2006 were the Group's first
full financial statements under IFRS. The basis of accounting and format of
presentation is subject to change following any further interpretative guidance
that may be issued by the International Accounting Standards Board ("IASB") and
the International Financial Reporting Interpretation Committee ("IFRIC") from
time to time.
These Interim Financial Statements do not comprise statutory accounts within the
meaning of Section 240 of the Companies Act 1985.
The statutory accounts for the year ended 31 March 2006 have been delivered to
the Registrar of Companies and include an audit report which was unqualified and
did not contain a statement under either Section 237(2) or 237(3) of the
Companies Act 1985.
The preparation of financial statements in conformity with IFRS requires the use
of certain critical accounting estimates. It also requires management to
exercise judgment in the process of applying the Group's accounting policies.
Although these estimates are based on management's best knowledge of the amount,
events or actions, actual results ultimately may differ from those estimates.
2. SEGMENTAL REPORTING
BUSINESS SEGMENTS
For management purposes the Group is organised into two operating divisions,
Property Investment and Asset Management:
Property Asset Management Unallocated and Group Total
Investment other activities
#000 #000 #000 #000
Six months to 30 September 2006
Rental and similar income 10,936 - - 10,936
Turnover from property trading activities 1,731 - - 1,731
Cost of sales of property trading activities (1,346) - - (1,346)
Service charge and similar income 2,329 - - 2,329
Service charge expense and similar charges (2,710) - - (2,710)
Net rental and trading income 10,940 - - 10,940
Turnover from asset management activities
Management fee income - 6,353 - 6,353
Performance fee income - - - -
- 6,353 - 6,353
Asset management expenses - (4,124) - (4,124)
Administrative expenses (1,713) - - (1,713)
Property management expenses (2,045) - - (2,045)
Operating profit before net gain on investments 7,182 2,229 - 9,411
Net gain from fair value adjustments on investment 8,169 - - 8,169
properties
Net gain from fair value adjustments on investments - 12,157 1,073 13,230
Profit on sale of investment properties 1,738 - - 1,738
Profit on sale of investments - 28 - 28
Operating profit 17,089 14,414 1,073 32,576
Total assets 349,643 263,346 54,937 667,926
Liabilities net of borrowings (28,897) (20,019) (7,873) (56,789)
Borrowing, including finance leases (1,501) - (222,119) (223,620)
Net assets 319,245 243,327 (175,055) 387,517
Other segment items:
Capital expenditure 2,244 - - 2,244
Depreciation - - 72 72
Property Asset Management Unallocated and Group Total
Investment other activities
#000 #000 #000 #000
Six months to 30 September 2005
Rental and similar income 12,176 - - 12,176
Turnover from property trading activities 3,424 - - 3,424
Cost of sales of property trading activities (2,969) - - (2,969)
Service charge and similar income 1,490 - - 1,490
Service charge expense and similar charges (1,723) - - (1,723)
Net rental and trading income 12,398 - - 12,398
Turnover from asset management activities
Management fee income - 1,430 - 1,430
Performance fee income - - - -
- 1,430 - 1,430
Asset management expenses - (776) - (776)
Administrative expenses (1,099) - - (1,099)
Property management expenses (3,225) - - (3,225)
Operating profit before net gain on investments 8,074 654 - 8,728
Net gain from fair value adjustments on investment 15,301 - - 15,301
properties
Net gain from fair value adjustments on investments - 2,648 3,695 6,343
Profit on sale of investment properties 37 - - 37
Profit on sale of investments - - - -
Operating profit 23,412 3,302 3,695 30,409
Total assets 339,385 188,566 126,147 654,098
Total liabilities (38,841) (7,596) (5,774) (52,211)
Borrowing, including finance leases (1,515) - (291,415) (292,930)
Net assets 299,029 180,970 (171,042) 308,957
Other segment items:
Capital expenditure 128 - - 128
Depreciation - - 61 61
Property Asset Management Unallocated and Group Total
Investment other activities
#000 #000 #000 #000
Year ended 31 March 2006
Rental and similar income 24,003 - - 24,003
Turnover from property trading activities 31,167 - - 31,167
Cost of sales of property trading activities (24,584) - - (24,584)
Service charge and similar income 2,972 - - 2,972
Service charge expense and similar charges (3,591) - - (3,591)
Net rental and trading income 29,967 - - 29,967
Turnover from asset management activities
Management fee income - 6,065 - 6,065
Performance fee income - 3,271 - 3,271
- 9,336 - 9,336
Asset management expenses - (3,512) - (3,512)
Administrative expenses (2,390) - - (2,390)
Property management expenses (7,517) - - (7,517)
Operating profit before net gain on investments 20,060 5,824 - 25,884
Net gain from fair value adjustments on investment 27,101 - - 27,101
properties
Net gain from fair value adjustments on investments - 14,968 1,082 16,050
Profit on sale of investment properties 3,102 - - 3,102
Profit on sale of investments - 98 2,926 3,024
Operating profit 50,263 20,890 4,008 75,161
Total assets 361,886 223,477 133,160 718,523
Total liabilities (26,799) (24,577) (27,709) (79,085)
Borrowing, including finance leases (1,514) - (284,004) (285,518)
Net assets 333,573 198,900 (178,553) 353,920
Other segment items:
Capital expenditure 9,255 - - 9,255
Depreciation - - 139 139
All turnover and operating profit has arisen from continuing operations.
3. RETIREMENT BENEFIT OBLIGATIONS
The Group operates and contributes to pension schemes for certain Directors and
employees and makes some discretionary allowances. The costs charged to the
income statement for the six months to 30 September 2006 in respect of these
amounted to #386,000 (September 2005: #149,000; March 2006: #397,000).
Pension premiums paid in advance were #306,000 (September 2005: #35,000; March
2006: #70,000).
The Group operated a defined benefit scheme in the UK, The Warner Estate Group
Retirement Benefits Scheme. A full valuation was carried out at 1 April 2005.
The values at 30 September 2006, 30 September 2005, and 31 March 2006 were
updates of the 1 April 2005 valuation carried out by a qualified independent
actuary.
It has been agreed with the Trustees that the Group contributes are 26.8% of
pensionable salary plus #68,000 per annum.
The value of the assets and liabilities of the Scheme were as follows:
Value at 30 Value at 30 Value at 31
September September March 2006
2006 2005
#000 #000 #000
Total market value of assets 5,791 5,369 5,820
Present value of scheme liabilities (6,347) (5,690) (6,301)
Retirement benefit obligations (556) (321) (481)
Analysis of amount charged to operating profit
6 months 6 months Year
ended 30 ended 30 ended 31
September September March 2005
2006 2005
#000 #000 #000
Current service cost 32 22 44
4. PROFIT ON SALE OF INVESTMENT PROPERTIES
6 months 6 months Year
ended 30 ended 30 ended 31
September September March 2005
2006 2005
#000 #000 #000
Surplus over book value:
Investment properties 1,738 37 3,102
5. PROFIT ON SALE OF INVESTMENTS
6 months 6 months Year
ended 30 ended 30 ended 31
September September March 2005
2006 2005
#000 #000 #000
Surplus over book value:
Listed investments - - 2,975
Unlisted investments 28 - 98
Other - - (49)
28 - 3,024
The profit on sale of listed investments for the year ended 31 March 2006 of
#2.975m arose on the disposal of the Group's investment in East Surrey Holdings
plc for a consideration of #14m in November 2005.
6. FINANCE INCOME
6 months 6 months Year
ended 30 ended 30 ended 31
September September March 2006
2006 2005
#000 #000 #000
Income from investments
Dividends from listed investments 79 25 422
Distributions from funds (see note 13) 2,505 366 3,363
2,584 391 3,785
Interest receivable and similar income:
From joint ventures 530 2,419 3,540
Other interest 161 281 977
Other finance income
Expected return on pension scheme assets 157 - 294
Interest on pension scheme liabilities (151) - (290)
6 - 4
3,281 3,091 8,306
7. FINANCE EXPENSE
6 months 6 months Year
ended 30 ended 30 ended 31
September September March 2006
2006 2005
#000 #000 #000
Interest payable on bank loans and overdrafts, mortgages 7,309 6,622 13,575
and other loans
Charges in respect of cost of raising finance 310 356 1,732
7,619 6,978 15,307
Less: Interest capitalised (551) (371) (991)
7,068 6,607 14,316
Interest payable under finance leases 61 59 129
7,129 6,666 14,445
Other finance cost
Expected return on pension scheme assets - (146) -
Interest on pension scheme liabilities - 145 -
- (1) -
7,129 6,665 14,445
8. 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.
9. EARNINGS PER SHARE
Earnings per share of 73.28p (half year to 30 September 2005: 52.34p; year to
31 March 2006: 140.17p) are calculated on the profit for the period of
#39,004,000 (half year to 30 September 2005: #27,721,000; year to 31 March
2006: #74,432,000) and the weighted average of 53,224,590 (half year to 30
September 2005: 52,970,778; year to 31 March 2006: 53,100,390) shares in issue
throughout the period.
Diluted earnings per share of 72.33p (half year to 30 September 2005: 52.03p;
year to 31 March 2006: 138.79p) are based on the profit for the period as above
divided by the weighted average number of shares in issue, being 53,926,052
(half year to 30 September 2005: 53,285,741; year to 31 March 2006:
53,628,509) after the dilutive impact of share options granted.
10. GOODWILL
#000
Group
Cost
At 31 March 2006 and 30 September 2006 11,205
Impairments -
At 30 September 2006 -
Net book value at 30 September 2006 11,205
The goodwill was as a result of the acquisition of the remaining 50% of
Industrial Funds Limited on 1 December 2005. Goodwill is not amortised but is
subject to an annual impairment test. The goodwill of #11,205,000 is allocated
to the cash generating unit ("CGU") defined as the fund management business
owned by Industrial Funds Limited. The recoverable amount of the CGU has been
calculated based on the value-in-use calculations. These calculations use cash
flow projections based on financial projections approved by management covering
a five year period.
11. INVESTMENT PROPERTIES AND PROPERTIES UNDER THE COURSE OF DEVELOPMENT
Freehold Leasehold Total Properties
with over Investment Under the
50 years Properties Course of
unexpired Development
#000 #000 #000 #000
At 31 March 2006 279,533 53,665 333,198 12,261
Acquisitions 11,078 - 11,078 -
Capital expenditure 48 43 91 2,153
Disposals (27,264) (19,287) (46,551) -
Exchange differences (217) - (217) -
Net gain from fair value adjustments on investment 8,254 (85) 8,169 -
property
At 30 September 2006 271,432 34,336 305,768 14,414
12. JOINT VENTURES
At 30 At 30 At 31 March
September September 2006
2006 2005
#000 #000 #000
Share of joint ventures
At 31 March 2006 103,372 102,517 102,517
Share of profit for the period 13,069 9,133 21,291
Net equity movements 9,633 (952) 15,415
Net loan movements 6,724 16,792 (35,851)
At 30 September 2006 132,798 127,490 103,372
Unlisted shares at cost less amounts written off 37,798 11,215 27,632
Group's share of post acquisition retained profits and reserves 50,465 25,821 37,929
88,263 37,036 65,561
Amounts owed by joint ventures 44,535 90,454 37,811
132,798 127,490 103,372
Included in share of joint ventures' gross assets and liabilities are:
Agora Radial Bareway Agora Max Greater Others Total
Shopping Distribution Industrial Limited London
Centres Limited Properties (f) Offices (h)
Limited Limited
(a) (c) (d) (g)
#000 #000 #000 #000 #000 #000 #000
Period to 30 September 2006
Group share of results
Revenue 4,332 2,802 - 5,464 - - 12,598
Operating profit before net 2,643 2,568 (6) 3,825 - 4 9,034
gains on investments
Net gain from fair value 4,966 5,711 - 5,675 - - 16,352
adjustments on investment
properties
Net gain from fair value - - - - - - -
adjustments on investments
Profit / (loss) on sale of - - - - - - -
investment properties
Profit on sale of fixed asset - - - - - - -
investments
Operating profit 7,609 8,279 (6) 9,500 - 4 25,386
Net finance expense (2,398) (2,563) - (3,535) - 21 (8,475)
Change in fair value of 234 534 - 1,877 (648) - 1,997
derivative financial
instruments
Share of associate's post tax - - - - - - -
loss
Profit / (loss) before income 5,445 6,250 (6) 7,842 (648) 25 18,908
tax
Taxation - current (2) (17) - - - (6) (25)
Taxation - deferred (1,668) (2,054) - (2,283) 194 - (5,811)
Profit / (loss) after income 3,775 4,179 (6) 5,559 (454) 19 13,072
tax
Minority interests - - - (3) - - (3)
Profit / (loss) for the 3,775 4,179 (6) 5,556 (454) 19 13,069
period
Amounts received and
receivable by Group
Asset management fees 300 302 - 432 - - 1,034
Performance fees - - - - - - -
Interest receivable 272 258 - - - - 530
Group share of
Non-current assets
Investment properties 130,338 118,203 - 177,542 48,792 - 474,875
Investments in unlisted - - - - - 25 25
shares
Finance lease assets - 3,954 - - - - 3,954
Deferred income tax assets - - - - 194 - 194
Derivative financial assets 1,381 245 - 1,928 - - 3,554
Other non-current assets 418 - - - - - 418
132,137 122,402 - 179,470 48,986 25 483,020
Current assets
Finance lease assets - 257 - - - - 257
Other current assets 23,109 3,116 - 5,171 946 3,854 36,196
23,109 3,373 - 5,171 946 3,854 36,453
Total assets 155,246 125,775 - 184,641 49,932 3,879 519,473
Non-current liabilities
Deferred income tax (9,755) (5,486) - (4,462) - - (19,703)
liabilities
Borrowings, including finance (86,669) (103,583) - (131,489) (39,392) - (361,133)
leases
Derivative financial - - - - (648) - (648)
liabilities
(96,424) (109,069) - (135,951) (40,040) - (381,484)
Current liabilities
Deferred income tax - - - - - - -
liabilities
Borrowings, including finance (4,860) - - (7) - - (4,867)
leases
Other current liabilities (14,802) (4,140) - (22,682) (861) (2,374) (44,859)
(19,662) (4,140) - (22,689) (861) (2,374) (49,726)
Total liabilities (116,086) (113,209) - (158,640) (40,901) (2,374) (431,210)
Share of net assets 39,160 12,566 - 26,001 9,031 1,505 88,263
Effective Group share 50% 50% 50% 50% 50% 50%
Potential recourse to the Nil Nil Nil Nil Nil Nil
Group
Agora Skipper Radial Bareway Industrial Others Total
Shopping Offices Distribution Industrial Funds
Centres Limited Limited Properties Limited (h)
Limited
(a) (b) (c) (d) (e)
#000 #000 #000 #000 #000 #000 #000
Period to 30 September 2005
Group share of results
Revenue 7,457 1,545 2,683 496 2,895 - 15,076
Operating profit before net 4,838 996 2,453 422 989 - 9,698
gains on investments
Net gain from fair value 11,463 - 3,632 731 - - 15,826
adjustments on investment
properties
Net gain from fair value - - - - 727 - 727
adjustment on investments
Profit / (loss) on sale of 22 (810) 918 - 116 - 246
investment properties
Profit on sale of fixed asset - - - - 3 - 3
investments
Operating profit 16,323 186 7,003 1,153 1,835 - 26,500
Net finance expense (4,898) (1,486) (2,444) (438) (968) - (10,234)
Change in fair value of (1,664) (305) (1,017) - - - (2,986)
derivative financial
instruments
Profit / (loss) before income 9,761 (1,605) 3,542 715 867 - 13,280
tax
Taxation - current 45 (375) (158) 5 (285) - (768)
Taxation - deferred (3,078) 839 (677) (231) (232) - (3,379)
Profit / (loss) for the period 6,728 (1,141) 2,707 489 350 - 9,133
Amounts received and
receivable by Group
Asset management fees 570 150 292 50 41 - 1,103
Interest receivable 337 537 275 278 992 - 2,419
Group share of
Non-current assets
Intangible assets - - - - 3,373 - 3,373
Investment properties 204,066 - 77,597 14,460 - - 296,123
Investments in unlisted shares - - - - 11,563 25 11,588
Finance lease assets - - 4,210 - - - 4,210
Deferred income tax assets - - 300 - - - 300
Derivative financial assets 937 - - - - - 937
Non-current assets held for - - - 18,779 - 18,779
re-sale
Other non-current assets 506 - - - - - 506
205,509 - 82,107 14,460 33,715 25 335,816
Current assets
Finance lease assets - - 244 - - - 244
Other current assets 3,525 - 11,871 1,057 17,919 - 34,372
3,525 - 12,115 1,057 17,919 - 34,616
Total assets 209,034 - 94,222 15,517 51,634 25 370,432
Non-current liabilities
Deferred income tax (9,430) - (1,979) - (232) - (11,641)
liabilities
Borrowings, including finance (127,092) - (82,898) - - - (209,990)
leases
Derivative financial - - (998) - - - (998)
liabilities
(136,522) - (85,875) - (232) - (222,629)
Current liabilities
Deferred income tax - - - (498) - - (498)
liabilities
Borrowings, including finance (35,811) - - (9,132) (20,872) - (65,815)
leases
Other current liabilities (6,803) - (3,107) (4,614) (29,930) - (44,454)
(42,614) - (3,107) (14,244) (50,802) - (110,767)
Total liabilities (179,136) - (88,982) (14,244) (51,034) - (333,396)
Share of net assets 29,898 - 5,240 1,273 600 25 37,036
Effective Group share 50% 50% 50% 50% 50% 50%
Potential recourse to the Nil Nil Nil 9,150 Nil Nil
Group
Agora Skipper Radial Bareway Industrial Agora Max Others Total
Shopping Offices Distribution Industrial Funds Limited
Centres Limited Limited Properties Limited (f) (h)
Limited
(a) (b) (c) (d) (e)
#000 #000 #000 #000 #000 #000 #000 #000
Year to 31 March 2006
Group share of results
Revenue 14,178 2,086 5,372 686 3,962 2,863 1,261 30,408
Operating profit before net
gains on investments
8,153 996 4,896 564 284 1,582 (361) 16,114
Net gain from fair value
adjustments on investment
properties 13,936 - 7,856 - - 7,123 - 28,915
Net gain from fair value
adjustments on investments
- - - - 1,063 - - 1,063
Profit / (loss) on sale of
investment properties 4,023 (810) 892 664 (80) 11 - 4,700
Profit on sale of fixed asset - - - - 77 - - 77
investments
Operating profit 26,112 186 13,644 1,228 1,344 8,716 (361) 50,869
Net finance expense (10,110) (1,486) (4,731) (584) (832) (1,796) 18 (19,521)
Change in fair value of
derivative financial
instruments (1,454) (305) (308) - - 51 - (2,016)
Share of associate's post tax - - - - (200) - - (200)
loss
Profit / (loss) before income 14,548 (1,605) 8,605 644 312 6,971 (343) 29,132
tax
Taxation - current (1,067) (375) (321) (320) (421) (262) (6) (2,772)
Taxation - deferred (1,735) 839 (2,429) 267 - (2,180) - (5,238)
Profit / (loss) after income 11,746 (1,141) 5,855 591 (109) 4,529 (349) 21,122
tax
Minority interests (4) - - - 185 (12) - 169
Profit / (loss) for the period 11,742 (1,141) 5,855 591 76 4,517 (349) 21,291
Amounts received and
receivable by Group
Asset management fees 1,082 150 596 68 57 208 840 3,001
Performance fees 1,947 - - - - - - 1,947
Interest receivable 674 537 516 370 1,443 - - 3,540
Group share of
Non-current assets
Investment properties 122,561 - 81,802 - - 171,179 - 375,542
Investments in unlisted shares - - - - - - 25 25
Finance lease assets - - 4,085 - - - - 4,085
Deferred income tax assets - - 87 - - - - 87
Derivative financial assets 1,147 - - - - 51 - 1,198
Other non-current assets 272 - - - - - - 272
123,980 - 85,974 - - 171,230 25 381,209
Current assets
Finance lease assets - - 250 - - - - 250
Other current assets 25,812 - 4,245 2,000 - 9,449 4,063 45,569
25,812 - 4,495 2,000 - 9,449 4,063 45,819
Total assets 149,792 - 90,469 2,000 - 180,679 4,088 427,028
Non-current liabilities
Deferred income tax (8,087) - (3,518) - - (2,180) - (13,785)
liabilities
Borrowings, including finance (86,181) - (73,731) - - (131,024) - (290,936)
leases
Derivative financial - - (289) - - - - (289)
liabilities
(94,268) - (77,538) - - (133,204) - (305,010)
Current liabilities
Deferred income tax - - - - - - - -
liabilities
Borrowings, including finance (4,704) - - (108) - (7) - (4,819)
leases
Other current liabilities (15,412) - (4,543) (512) - (27,049) (4,122) (51,638)
(20,116) - (4,543) (620) - (27,056) (4,122) (56,457)
Total liabilities (114,384) - (82,081) (620) - (160,260) (4,122) (361,467)
Share of net assets / 35,408 - 8,388 1,380 - 20,419 (34) 65,561
(liabilities)
Effective Group share 50% 50% 50% 50% 50% 50% 50%
Potential recourse to the Nil Nil Nil Nil Nil Nil Nil
Group
(a) Agora Shopping Centres was set up on 5 March 2003 and subsequently
acquired the Pyramids, Birkenhead on 25 June 2003 and The Grange, Birkenhead on
30 September 2004. On 7 March 2006, The Pyramids, Birkenhead and The Grange,
Birkenhead were disposed of into the Agora Max joint venture group.
(b) Skipper Offices Limited was set up on 23 July 2003. In June 2005, the
properties were disposed of into the Apia Regional Offices Fund and the Group
subsequently acquired the remaining 50% interest of Skipper Offices Limited.
(c) Fairway Industrial Limited was set up on 29 August 2003 and changed its
name to Radial Distribution Limited on 14 October 2004.
(d) Bareway Industrial Properties Limited was set up on 29 August 2003. In
November 2005, the properties were disposed of into the Ashtenne Industrial
Fund. On 11 September 2006 the Group acquired the remaining 50% interest of
Bareway Industrial Properties Limited.
(e) Industrial Funds Limited was set up in March 2005 and completed the
acquisition of Ashtenne Holdings PLC on 13 July 2005. On 1 December 2005, the
Group acquired the remaining 50% interest.
(f) Agora Max Limited was set up on 16 September 2005 and subsequently
acquired The Pallasades, Birmingham on 25 October 2005. The Pyramids and The
Grange, both in Birkenhead, were acquired from Agora Shopping Centres on 7 March
2006.
(g) Greater London Offices Limited was set up and subsequently acquired Old
Broad Street and Central House, London on 28 September 2006.
(h) Net assets relate to #25k investment in the general partner of Apia
Regional Office Fund and a net asset of #1,480k which is the investment in
smaller joint ventures acquired through Ashtenne.
Amounts owed by joint ventures comprise: At 30 At 30 At 31 March
September September 2006
2006 2005
#000 #000 #000
Agora Shopping Centres Limited 25,687 25,687 25,687
Radial Distribution Limited 16,194 12,675 12,016
Bareway Industrial Properties Limited - 7,092 108
Industrial Funds Limited - 45,000 -
Greater London Offices Limited 2,654 - -
44,535 90,454 37,811
13. INVESTMENTS IN FUNDS
#000
As at 31 March 2006 104,081
Disposals (472)
Net gain from fair value adjustments 12,157
At 30 September 2006 115,766
Fund information:
AIF Apia Others Total
(a) (b) (c)
#000 #000 #000 #000
Period to 30 September 2006
Distributions receivable 1,126 1,356 23 2,505
Net assets at 30 September 2006 658,328 251,287 -
Percentage share at 30 September 2006 6.52% 28.59% -
Group share of net assets 42,923 71,843 1,000 115,766
AIF Apia Others Total
(a) (b) (c)
#000 #000 #000 #000
Period to 30 September 2005
Distributions receivable 53 313 - 366
Net assets at 30 September 2005 448,642 134,094 -
Percentage share at 30 September 2005 2.68% 34.83% -
Group share of net assets 12,031 46,705 54 58,790
AIF Apia Others Total
(a) (b) (c)
#000 #000 #000 #000
Year to 31 March 2006
Distributions receivable 1,468 1,886 9 3,363
Net assets at 31 March 2006 546,780 223,774 -
Percentage share at 31 March 2006 7.09% 28.77% -
Group share of net assets 38,752 64,374 955 104,081
(a) The Group invested #12,000,000 in the Ashtenne Industrial Fund in
August 2005. A #23,105,000 investment was acquired on the purchase of the
remaining 50% of Industrial Funds Limited.
(b) Apia was set-up on 7 June 2005 and the Group invested an initial
#44,088,000. A further #10,000,000 was invested in December 2005, of which
#902,000 was disposed of in March 2006. A further #472,000 was disposed of in
April 2006. It is treated as an investment rather than an associate as the Group
does not exert significant influence as a Trustee which is independent of the
Group is responsible for the strategic decisions of the unit trust and the
Group's investment holding in the unit trust will continue to reduce over the
short-term.
(c) This relates to minority interest holdings in Apia IV Unit Trust, Agora
Max Unit Trust, Agora Max Birkenhead Unit Trust and The Pallasades Birmingham
Unit Trust which were acquired during the year to 31 March 2006. The holding in
Apia IV Unit Trust was disposed of on 30 September 2006.
14. INVESTMENTS IN LISTED AND UNLISTED SHARES
At 30 At 30 At 31 March
September September 2006
2006 2005
#000 #000 #000
Listed investments 6,397 19,213 5,115
Unlisted investments (reclassified from Investment in 15,009 - -
Associates)
21,406 19,213 5,115
15. INVESTMENTS IN ASSOCIATES
Bride Hall Other Total
Group Limited
#000 #000 #000
Cost
At 31 March 2006 1,173 509 1,682
Disposals - (373) (373)
Share of profits - 19 19
Reclassified as unlisted investment (1,173) - (1,173)
At 30 September 2006 - 155 155
Goodwill arising on acquisition
At 31 March 2006 13,836 - 13,836
Reclassified as unlisted investment (13,836) - (13,836)
At 30 September 2006 - - -
At 30 September 2006 - 155 155
At 31 March 2006 15,009 509 15,518
16. DEFERRED TAXATION
At 30 At 30 At 31
September September March
2006 2005 2006
#000 #000 #000
Deferred taxation assets
Deferred taxation arising from unrealised derivative 216 413 408
financial instruments valuations
Deferred taxation arising from retirement benefit 167 96 144
obligations
383 509 552
Deferred taxation liabilities
Deferred taxation arising from the temporary
differences noted below:
Capital and industrial buildings allowances claimed on (1,813) (3,450) (2,215)
investment properties
Unrealised property and investment valuations (27,461) (23,414) (27,348)
(29,274) (26,864) (29,563)
17. PROVISIONS FOR OTHER LIABILITIES AND CHARGES
Share-based Onerous Total
payments contracts
#000 #000 #000
Group
At 31 March 2006 503 12,000 12,503
Charged to consolidated income statement: 171 - 171
Utilised during the period - (3,845) (3,845)
At 30 September 2006 674 8,155 8,829
Provisions have been analysed between current and non-current as follows:
At 30 At 30 At 31
September September March
2006 2005
2006
#000 #000 #000
Non-current 8,829 185 12,503
Current - - -
8,829 185 12,503
The provision for share-based payments represents the cost of granting share
options and other share-based remuneration to employees and Directors. The
charge is reversed if it appears probable that applicable performance criteria
will not be met.
The onerous lease provision is made in relation to onerous leases on properties
which are vacant or sublet at a level which renders the properties loss-making
over the remaining life of the lease. The provision represents the Directors'
estimate of the net cash flows on the properties.
18. FINANCIAL INSTRUMENTS
Financial Liabilities
The interest rate profile of the Group's financial liabilities at 30 September
2006, after taking account of interest rate instruments taken out by the Group
was:
At 30 At 30 At 31 March
September September
2006 2005 2006
#000 #000 #000
Floating financial rate liabilities - - -
Capped rate financial liabilities 12,731 95,766 13,669
Fixed rate financial liabilities 194,153 108,840 194,968
206,884 204,606 208,637
The above balances are net of cash balances of #15,657,000 (half year to 30
September 2005: #87,746,000; year to 31 March 2006: #76,018,000) which can be
offset under the Group's borrowing arrangements.
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:
At 30 At 30 At 31 March
September September
2006 2005 2006
% % %
Weighted average interest rate
Group 5.90 7.35 7.37
Joint Ventures 5.81 5.70 5.66
Weighted average period for which interest rate is fixed Years Years Years
Group 6.60 4.96 7.08
Joint Ventures 5.87 3.13 2.75
Maturity of financial liabilities At 30 At 30 At 31
September September March
2006 2005 2006
#000 #000 #000
Group
Within one year or on demand 417 22,700 1,893
Between one and two years 14,214 12,798 13,768
Between two and five years 185,410 210,824 222,438
In five years or more 22,500 46,030 46,556
222,541 292,352 284,655
Borrowing facilities
The Group has various borrowing facilities that were not fully utilised at the
period end and for which the conditions for utilising those facilities were met.
At 30 At 30 At 31 March
September September
2006 2005 2006
#000 #000 #000
Expiring in one year or less:
Total facilities - 120,000 -
Unutilised - 50,327 -
Expiring between two and five years:
Total facilities 123,388 - 137,741
Unutilised 19,120 - 43,691
Fair values of financial assets and liabilities
The table below sets out by category the changes to the balance sheet values on
fixed rate debt that would occur if fair values were applied.
At 30 At 30 At 31 March
September September
2006 2005 2006
Fair value Fair value Fair value
adjustment adjustment adjustment
#000 #000 #000
Group
Primary financial instruments
Liabilities
Long term debt (over one year) (6,052) (9,299) (7,286)
Assets
Long term loan notes (over one year) (935) (428) (535)
Fixed rate loan - 15 -
Joint Ventures
Primary financial instruments
Long term loan notes 935 428 535
Fixed rate loan - (7) -
Increase in fair value (6,052) (9,291) (7,286)
The effect on net assets per share of the total fair value adjustment
(#6,052,000 less tax #1,816,000) would be a decrease of 8.0 pence (half year to
30 September 2005: 12.3p; year to 31 March 2006: 9.6 pence)
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 bid price.
Interest rate swaps have generally been valued at the usually relative current
active market rate for such swaps.
19. CAPITAL AND RESERVES
Reserves
Share Non-distributable Distributable Investment Total
Capital reserves reserves in own
shares
#000 #000 #000 #000 #000
At 31 March 2006 2,675 139,386 209,451 (926) 350,586
Retained profit for the - - 39,004 - 39,004
period
Realised on disposal of - (10,867) 10,867 - -
investment properties
Realised on disposal of - (54) 54 - -
investments
Realised on disposal of - (779) 779 - -
joint ventures' investment
properties
Net gain from fair value - 8,169 (8,169) - -
adjustment on investment
properties
Share of joint ventures' net - 16,886 (16,886) - -
gain from fair value
adjustment on investment
properties
Share of associates' net - 19 (19) - -
gain from fair value
adjustment on investment
properties
Net gain from fair value - 1,073 (1,073) - -
adjustment on listed
investments
Net gain from fair value - 12,157 (12,157) - -
adjustment on unlisted
investments
Change in fair value of - 710 (710) - -
derivative financial
instruments
Change in fair value of - 1,398 (1,398) - -
joint ventures' derivative
financial instruments
Acquisition of investments - - - (341) (341)
in own shares
Disposal of investment in - - - 359 359
own shares
Dividends paid - - (5,342) - (5,342)
Actuarial losses on pensions - - (109) - (109)
scheme assets
Deferred tax movement on - - 23 - 23
pension assets
At 30 September 2006 2,675 168,098 214,315 (908) 384,180
20. RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW
At 30 At 30 At 31 March
September September
2006 2005 2006
#000 #000 #000
Operating profit before net gains on investments 9,411 8,728 25,884
Depreciation of plant and equipment 72 62 139
Profit on sale of plant and equipment - - 1
Decrease in inventories 1,120 2,872 19,292
(Increase) / decrease in trade and other receivables (1,163) (308) 2,682
Decrease in trade and other payables (15,680) (6,947) (23,295)
Cash (outflows) /inflows from operations (6,240) 4,407 24,703
21. CONTINGENT ASSETS
Six months Six months Year ended
ended 30 ended 30 31 March
September September
2006 2005 2006
#000 #000 #000
Potential performance fees arising under joint venture
agreements
Agora Shopping Centres 8,800 - 5,000
Radial Distribution 1,800 - 1,000
10,600 - 6,000
These assets have not been recognised on the balance sheet.
22. MINORITY INTEREST
This represents investments held by The F15 Partnership in Balmcrest Estates
Limited.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DVLFLQFBEFBV
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