TIDMWNER
RNS Number : 1773D
Warner Estate Holdings PLC
27 November 2009
Warner Estate Holdings PLC
FOCUS ON ASSET MANAGEMENT TO IMPROVE SECURITY AND QUALITY OF INCOME
Warner Estate Holdings PLC ("Warner Estate" or "Group"), the property investment
and management company has today announced its preliminary results for the half
year ended 30 September 2009.
Financial Summary
* Revenue GBP15.6million (September 2008: GBP23.5million)
* Recurring profit before tax GBP0.8million (September 2008: GBP5.7million)(i)
* Realised pre-tax loss GBP3.4million (September 2008: GBP3.6million profit)(ii)
* Loss before income tax GBP27.6million (September 2008: GBP124.7million)
* Net asset value per share negative 43p (March 2009: 8p)
* Losses per share 49.9p (September 2008: 222.0p losses)
* Recurring post-tax earnings per share 1.5p (September 2008: 7.1p)(i)
Key Business Events
* Sales of property under management of GBP131.9million (4.9% below March 2009
values) completes disposal programme
* 28 day cash collection 97%
* Administrative costs savings of GBP1.4m on a like for like basis with the six
month period to September 2008(iii)
* City of London office refurbishment of 60 New Broad Street complete, 15% let
with a further 30% under offer
* Ashtenne Industrial Fund raised equity of GBP45million and extended its bank
facilities by four years
* Group refinancing discussions continue
* Robert Game appointed Property Director
* Group and share of joint venture results adjusted for fair value movements,
profits and losses on sale of investment properties, performance fees and other
one-off items
* Realised pre-tax profit includes share of joint venture pre-tax results and is
before fair value movements
* The Group's total administrative costs in the income statement are allocated to
property expenses, asset management expenses and administrative expenses.
Philip Warner, Chairman of Warner Estate commented
"As I reported in July, the Group's primary objective is to conclude our
refinancing negotiations, which are making satisfactory and constructive
progress. Thereafter, we shall seek to grow our asset management business, based
upon the existing platform of skilled staff managing GBP1.6billion of property.
In the meantime controlling costs and protecting income also remain priorities.
The improvement in sentiment in the property market borught about by increased
demand and some capital gowth is encouraging. Asset management experience will
be more important than ever and the Group is well placed to provide that
expertise".
Date: 27 November 2009
For further information contact:
+--------------------------------------+--------------------------------------+
| Warner Estate Holdings PLC | City Profile |
+--------------------------------------+--------------------------------------+
| Philip Warner, Chairman | Jonathan Gillen |
+--------------------------------------+--------------------------------------+
| Mark Keogh, Finance Director | Simon Courtenay |
+--------------------------------------+--------------------------------------+
| Robert Game, Property Director | Tel: 020 7448 3244 |
+--------------------------------------+--------------------------------------+
| Tel: 020 7907 5100 | warner@city-profile.com |
+--------------------------------------+--------------------------------------+
| Web: www.warnerestate.co.uk | |
+--------------------------------------+--------------------------------------+
CHAIRMAN'S STATEMENT
These results reflect both the additional asset sales made by the Group and the
further decline in property values which followed our 31 March year end.
Although the sales have reduced the Group's level of debt, they have also
reduced net income and profit. The decline adversely affected not only our
investment property but also those management fees based upon capital value. On
a more positive note, the outlook has improved markedly since we reported in
July with yields stabilising and in some instances improving substantially, a
trend which is continuing. We are making steady progress with our refinancing
discussions.
Results Overview
Recurring profit before tax for the period was GBP0.8million compared to
GBP5.7million for the equivalent period last year. However, due to reduced
property values, the Group made a pre tax loss of GBP27.6million (September
2008: GBP124.7million). Net asset value per share fell from 8p at 31 March 2009
to a negative 43p. I would like to reassure shareholders that although the Group
has net liabilities, due to unrealised revaluation movements, the Group will
continue to be able to meet its liabilities as and when they fall due for the
foreseeable future.
Group net debt has been reduced from GBP285million to GBP250million at 30
September 2009 as a result of completing our property disposal programme and
cash generated from operations. The net cash inflow for the period was
GBP35.8million.
Recurring operating profit for the period, before interest of GBP4.5million,
fell to GBP5.3million from GBP15.6million in the corresponding period last year.
This was mainly as a result of a reduction in net rental income, due to the
property disposals, of GBP3.9million and lost income of GBP1.7million from 60
New Broad Street in the City of London, held vacant for refurbishment and
referred to further in the Property Review below. The impact of falling property
values and disposals within the Ashtenne Industrial Fund and the Apia Regional
Office Fund has led to distributions being GBP3.4million lower as each fund is
retaining cash during the current environment. Asset management fees based on
capital value are GBP1.8million lower. Our share of recurring joint venture
losses increased by GBP1.1million, primarily due to interest and costs relating
to Agora Max. These have been offset by a reduction in administrative costs of
GBP1.4million against the first half of last year. The Group's total
administrative costs in the income statement are allocated to property expenses,
asset management expenses and administrative expenses. In addition the Group's
interest cost has fallen through repayment of debt and lower LIBOR.
At 30 September 2009 the Group reassessed the value of the provision in respect
of the leasehold liability portfolio, having regard for performance in the year
to date, current market conditions and variable downside occupational market
forecasts. As a result the provision on the balance sheet has been increased to
GBP7.1million. GBP5.2million has been expensed to the income statement of which
GBP4.8million has been treated as non-recurring. The movement in provision has
been separately disclosed on the face of the income statement and the
corresponding comparatives have been reclassified for the prior periods.
No interim dividend will be paid.
Property Review
Operating from a platform of seven regional business units, our commitment to
provide pan-sector specialist asset management services to existing and new
clients continues.
The increased pace of market improvement arrived just too late to impact on the
performance of the aggregate portfolio to 30 September 2009. During the six
month interim period the total return of standing investments, those held
throughout the period, of the GBP1.6billion we manage across all businesses
slowed to a negative 1.6% compared with the IPD Monthly Index benchmark increase
of 0.5%.
The capital value of these standing investments fell by 5.8%, a decline of
GBP102million, against the benchmark fall of 3.5%. However focused asset
management generated an income return of 4.4%, compared to the IPD of 4.2%, from
the annual rent roll of GBP144million under management. Estimated Rental Value
declined by only 2.0% to GBP181million, compared with the benchmark decline of
4.3%. Our net initial yield moved out 37bp to 8.6% compared to the IPD net
initial yield of 7.7% and our equivalent yield is 9.8%, against the IPD of 9.1%.
Our underlying void rate is 13.6% by ERV compared to the benchmark of 12.0%.
Since 30 September, we have experienced strong letting activity, which is
expected to take the portfolio void rate back below the benchmark. One of the
notable letting successes has been the entire fifth floor at the newly
refurbished 60 New Broad Street. A real estate fund manager has taken a new ten
year lease of this floor and we are confident that further lettings will follow
shortly. Further afield our shopping centre asset managers have delivered
results with full occupancy in two centres and commercialisation revenue ahead
of forecasts.
During the last six months there have been sales of property under management of
GBP131.9million (4.9% below the March 2009 values). We now have 468 properties
under management with an average lot size of GBP3.5million, compared to
GBP3.8million six months ago. The weighted average lease expiry across the
aggregate portfolio is 5.7 years, compared to 6.7 years at March 2009. However,
the standing investment weighted average remained the same at 6.7
years. Portfolio wide tenant retention rates are holding up well and rent
collection statistics have been maintained at or above 97% within 28 days of due
date.
Refinancing
As stated in the full year results in July, the Group is currently in
discussions with its three lenders, Royal Bank of Scotland, Bank of Scotland and
Barclays, to extend and amend its current banking facilities in the case of two
and to renew in the case of the third to ensure that the terms of these
facilities are appropriate for the Group's requirements. The third facility is
in effect being rolled on a periodic basis and the Directors are confident that
this will continue until renewal. Each lender has currently reserved its rights
to formally request the testing of certain financial covenants and the Directors
would not expect the covenants to be met if tested. The discussions are making
satisfactory and constructive progress.
The Directors have prepared trading and cash flow forecasts that project that
the total facilities requested are not exceeded in the foreseeable future.
Acknowledging the uncertainties in the property market and in the economy as a
whole, the Directors have stress tested the assumptions in their forecasts with
respect to rental income and property costs, overheads, management fee income
and related costs and distributions from equity investments in funds. The
Directors consider their forecasts to be reasonable, taking into account the
above cash flow sensitivities that they have modelled, based on the information
available to them at the time of approval of these financial statements.
On 2 October 2009 the Ashtenne Industrial Fund successfully raised GBP45million
of new equity, in order to reduce its senior debt, and refinanced its existing
facilities for a further four years with Royal Bank of Scotland and Lloyds
Banking Group.
Strategy and Outlook
As I reported in July, the Group's primary objective is to conclude the
refinancing negotiations referred to above. Thereafter we shall seek to grow our
asset management business, based upon the existing platform of skilled staff
managing GBP1.6billion of property. In the meantime controlling costs and
protecting income also remain priorities.
The improvement in sentiment in the property market, brought about by increased
demand and some capital growth, is encouraging. This growth will be countered in
varying degrees, relative to individual properties, by any risk to rental
income. Asset management experience will be more important than ever and the
Group is well placed to provide that expertise.
Philip Warner
Chairman
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 September 2009
+-----------------------------------+-------+-----------+-----------+-----------+
| | Notes | Unaudited | Unaudited | Audited |
| | | 6 months | 6 months | Year |
| | | ended | ended | ended |
| | | 30 | 30 | 31 March |
| | | September | September | 2009 |
| | | 2009 | 2008 | |
+-----------------------------------+-------+-----------+-----------+-----------+
| | | | GBPm | GBPm |
+-----------------------------------+-------+-----------+-----------+-----------+
| Revenue | | 15.6 | 23.5 | 42.5 |
+-----------------------------------+-------+-----------+-----------+-----------+
| Rental and similar income | | 9.1 | 15.5 | 30.2 |
+-----------------------------------+-------+-----------+-----------+-----------+
| Property expenses | | (2.8) | (4.6) | (8.1) |
+-----------------------------------+-------+-----------+-----------+-----------+
| Movement in provision for onerous | 13 | (4.8) | (0.9) | (1.9) |
| contracts | | | | |
+-----------------------------------+-------+-----------+-----------+-----------+
| Service charge and similar income | | 1.7 | 2.3 | 4.7 |
+-----------------------------------+-------+-----------+-----------+-----------+
| Service charge expense and | | (2.2) | (2.9) | (5.7) |
| similar charges | | | | |
+-----------------------------------+-------+-----------+-----------+-----------+
| Net rental income | 2 | 1.0 | 9.4 | 19.2 |
+-----------------------------------+-------+-----------+-----------+-----------+
| Revenue from asset management | | 4.8 | 5.7 | 7.6 |
| activities | | | | |
+-----------------------------------+-------+-----------+-----------+-----------+
| Asset management expenses | | (4.6) | (4.6) | (9.1) |
+-----------------------------------+-------+-----------+-----------+-----------+
| Net income / (expense) from asset | 2 | 0.2 | 1.1 | (1.5) |
| management activities | | | | |
+-----------------------------------+-------+-----------+-----------+-----------+
| Administrative expenses | | (0.6) | (0.5) | (1.2) |
+-----------------------------------+-------+-----------+-----------+-----------+
| Operating profit before net gains | 2 | 0.6 | 10.0 | 16.5 |
| on investments | | | | |
+-----------------------------------+-------+-----------+-----------+-----------+
| Net loss from fair value | 8 | (15.8) | (49.7) | (98.8) |
| adjustments on investment | | | | |
| properties and impairment of net | | | | |
| investment in finance leases | | | | |
+-----------------------------------+-------+-----------+-----------+-----------+
| Net loss from fair value | 10/11 | (7.6) | (31.1) | (60.4) |
| adjustment on investments | | | | |
+-----------------------------------+-------+-----------+-----------+-----------+
| Loss on sale of investment | | (0.3) | (0.6) | (24.9) |
| properties | | | | |
+-----------------------------------+-------+-----------+-----------+-----------+
| Operating loss | | (23.1) | (71.4) | (167.6) |
+-----------------------------------+-------+-----------+-----------+-----------+
| Finance income | 3 | 1.3 | 4.5 | 3.4 |
+-----------------------------------+-------+-----------+-----------+-----------+
| Finance expense | 4 | (5.7) | (10.7) | (32.9) |
+-----------------------------------+-------+-----------+-----------+-----------+
| Change in fair value of | | 0.9 | (0.4) | (3.0) |
| derivative financial instruments | | | | |
+-----------------------------------+-------+-----------+-----------+-----------+
| Share of joint ventures' post tax | 9 | (1.0) | (46.7) | (97.0) |
| losses | | | | |
+-----------------------------------+-------+-----------+-----------+-----------+
| Loss before income tax | | (27.6) | (124.7) | (297.1) |
+-----------------------------------+-------+-----------+-----------+-----------+
| Taxation - current | 5 | - | (1.8) | (1.0) |
+-----------------------------------+-------+-----------+-----------+-----------+
| Taxation - deferred | 5 | - | 3.0 | 4.3 |
+-----------------------------------+-------+-----------+-----------+-----------+
| Loss for the period | | (27.6) | (123.5) | (293.8) |
+-----------------------------------+-------+-----------+-----------+-----------+
+-----------------------------------+-----+-----------+-----------+-----------+
| | | p | p | p |
+-----------------------------------+-----+-----------+-----------+-----------+
| Basic losses per share | 7 | (49.86) | (222.03) | (528.30) |
+-----------------------------------+-----+-----------+-----------+-----------+
| Fully diluted losses per share | 7 | (49.03) | (217.52) | (518.64) |
+-----------------------------------+-----+-----------+-----------+-----------+
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 September 2009
+----------------------------------------+-----------+------------+------------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | Year |
| | ended | ended | ended |
| | 30 | 30 | 31 March |
| | September | September | 2009 |
| | 2009 | 2008 | |
+----------------------------------------+-----------+------------+------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+-----------+------------+------------+
| Loss for the period attributable to | (27.6) | (123.5) | (293.8) |
| equity shareholders | | | |
+----------------------------------------+-----------+------------+------------+
| | | | |
+----------------------------------------+-----------+------------+------------+
| Other comprehensive income / (expense) | | | |
+----------------------------------------+-----------+------------+------------+
| Actuarial losses on retirement benefit | (0.2) | (0.1) | (0.8) |
| obligations | | | |
+----------------------------------------+-----------+------------+------------+
| Deferred tax arising on retirement | - | - | 0.2 |
| benefit obligations | | | |
+----------------------------------------+-----------+------------+------------+
| Net loss recognised in equity | (0.2) | (0.1) | (0.6) |
+----------------------------------------+-----------+------------+------------+
| | | | |
+----------------------------------------+-----------+------------+------------+
| Total comprehensive loss attributable | (27.8) | (123.6) | (294.4) |
| to equity shareholders | | | |
+----------------------------------------+-----------+------------+------------+
UNAUDITED CONSOLIDATED BALANCE SHEET
+----------------------------------+-------+-----------+------------+------------+
| | Notes | Unaudited | Unaudited | Audited |
| | | At | At | At |
| | | 30 | 30 | 31 March |
| | | September | September | 2009 |
| | | 2009 | 2008 | |
+----------------------------------+-------+-----------+------------+------------+
| | | GBPm | GBPm | GBPm |
+----------------------------------+-------+-----------+------------+------------+
| ASSETS | | | | |
+----------------------------------+-------+-----------+------------+------------+
| Non-current assets | | | | |
+----------------------------------+-------+-----------+------------+------------+
| Goodwill | | 11.2 | 11.3 | 11.3 |
+----------------------------------+-------+-----------+------------+------------+
| Investment properties | 8 | 199.6 | 403.7 | 267.8 |
+----------------------------------+-------+-----------+------------+------------+
| Plant and equipment | | 0.3 | 0.4 | 0.4 |
+----------------------------------+-------+-----------+------------+------------+
| Investments in joint ventures | 9 | - | 50.3 | - |
+----------------------------------+-------+-----------+------------+------------+
| Investments in funds | 10 | 39.8 | 76.5 | 47.5 |
+----------------------------------+-------+-----------+------------+------------+
| Investments in listed and | 11 | 0.4 | 1.1 | 0.3 |
| unlisted shares | | | | |
+----------------------------------+-------+-----------+------------+------------+
| Net investment in finance leases | | 2.4 | 3.8 | 2.4 |
+----------------------------------+-------+-----------+------------+------------+
| Deferred income tax assets | 12 | 0.2 | 1.3 | 0.2 |
+----------------------------------+-------+-----------+------------+------------+
| Derivative financial assets | | - | 1.3 | - |
+----------------------------------+-------+-----------+------------+------------+
| Trade and other receivables | | 1.6 | 1.4 | 1.0 |
+----------------------------------+-------+-----------+------------+------------+
| | | 255.5 | 551.1 | 330.9 |
+----------------------------------+-------+-----------+------------+------------+
| Current assets | | | | |
+----------------------------------+-------+-----------+------------+------------+
| Trade and other receivables | | 7.3 | 19.9 | 9.7 |
+----------------------------------+-------+-----------+------------+------------+
| Cash and cash equivalents | | 7.0 | 15.8 | 9.0 |
+----------------------------------+-------+-----------+------------+------------+
| | | 14.3 | 35.7 | 18.7 |
+----------------------------------+-------+-----------+------------+------------+
| Total assets | | 269.8 | 586.8 | 349.6 |
+----------------------------------+-------+-----------+------------+------------+
| LIABILITIES | | | | |
+----------------------------------+-------+-----------+------------+------------+
| Non-current liabilities | | | | |
+----------------------------------+-------+-----------+------------+------------+
| Borrowings, including finance | | (3.2) | (367.7) | (3.6) |
| leases | | | | |
+----------------------------------+-------+-----------+------------+------------+
| Trade and other payables | | (2.8) | (7.7) | (4.3) |
+----------------------------------+-------+-----------+------------+------------+
| Derivative financial liabilities | | (4.5) | (3.3) | (5.4) |
+----------------------------------+-------+-----------+------------+------------+
| Deferred income tax liabilities | 12 | - | (2.6) | - |
+----------------------------------+-------+-----------+------------+------------+
| Retirement benefit obligations | | (1.1) | (0.2) | (0.9) |
+----------------------------------+-------+-----------+------------+------------+
| Provisions for other liabilities | 13 | (5.8) | (1.3) | (1.6) |
| and charges | | | | |
+----------------------------------+-------+-----------+------------+------------+
| | | (17.4) | (382.8) | (15.8) |
+----------------------------------+-------+-----------+------------+------------+
| Current liabilities | | | | |
+----------------------------------+-------+-----------+------------+------------+
| Borrowings, including finance | | (257.0) | (0.5) | (293.9) |
| leases | | | | |
+----------------------------------+-------+-----------+------------+------------+
| Trade and other payables | | (14.2) | (23.6) | (31.7) |
+----------------------------------+-------+-----------+------------+------------+
| Current income tax liabilities | | (1.0) | (0.6) | (0.1) |
+----------------------------------+-------+-----------+------------+------------+
| Provisions for other liabilities | 13 | (3.8) | (3.9) | (3.9) |
| and charges | | | | |
+----------------------------------+-------+-----------+------------+------------+
| | | (276.0) | (28.6) | (329.6) |
+----------------------------------+-------+-----------+------------+------------+
| Total liabilities | | (293.4) | (411.4) | (345.4) |
+----------------------------------+-------+-----------+------------+------------+
| Net (liabilities) / assets | | (23.6) | 175.4 | 4.2 |
+----------------------------------+-------+-----------+------------+------------+
| EQUITY | | | | |
+----------------------------------+-------+-----------+------------+------------+
| Capital and reserves | | | | |
| attributable to the Company's | | | | |
| equity holders | | | | |
+----------------------------------+-------+-----------+------------+------------+
| Share capital | 14 | 2.8 | 2.8 | 2.8 |
+----------------------------------+-------+-----------+------------+------------+
| Reserves | 14 | (25.4) | 173.8 | 2.5 |
+----------------------------------+-------+-----------+------------+------------+
| Investment in own shares | 14 | (1.0) | (1.2) | (1.1) |
+----------------------------------+-------+-----------+------------+------------+
| Total (deficit) / surplus on | | (23.6) | 175.4 | 4.2 |
| equity shareholders' funds | | | | |
+----------------------------------+-------+-----------+------------+------------+
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2009
+----------------------------------------+-----------+-----+------------+------------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | Year |
| | ended | ended | ended |
| | 30 September | 30 | 31 March |
| | 2009 | September | 2009 |
| | | 2008 | |
+----------------------------------------+-----------------+------------+------------+
| | | GBPm | GBPm |
+----------------------------------------+-----------------+------------+------------+
| Opening equity shareholders' funds | 4.2 | 305.2 | 305.2 |
+----------------------------------------+-----------------+------------+------------+
| | | | |
+----------------------------------------+-----------+------------------+------------+
| Loss for the period attributable to | (27.6) | (123.5) | (293.8) |
| equity shareholders | | | |
+----------------------------------------+-----------+------------------+------------+
| Other comprehensive income / | | | |
| (expense): | | | |
+----------------------------------------+-----------+------------------+------------+
| Actuarial losses on retirement benefit | (0.2) | (0.1) | (0.8) |
| obligations | | | |
+----------------------------------------+-----------+------------------+------------+
| Deferred tax arising on retirement | - | - | 0.2 |
| benefit obligations | | | |
+----------------------------------------+-----------+------------------+------------+
| Total comprehensive expense | (27.8) | (123.6) | (294.4) |
+----------------------------------------+-----------+------------------+------------+
| Transactions with owners | | | |
+----------------------------------------+-----------------+------------+------------+
| Acquisition of investment in own | - | - | - |
| shares | | | |
+----------------------------------------+-----------------+------------+------------+
| Disposal of investment in own shares | - | - | 0.1 |
+----------------------------------------+-----------------+------------+------------+
| Cost of share based payments | - | 0.1 | (0.4) |
+----------------------------------------+-----------------+------------+------------+
| Dividend paid in period | - | (6.3) | (6.3) |
+----------------------------------------+-----------------+------------+------------+
| Total transactions with owners | - | (6.2) | (6.6) |
+----------------------------------------+-----------------+------------+------------+
| Closing (deficit) / surplus on equity | (23.6) | 175.4 | 4.2 |
| shareholders' funds | | | |
+----------------------------------------+-----------+-----+------------+------------+
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 September 2009
+-------------------------------------+----------+-----------+-----------+---------+
| | Notes | Unaudited | Unaudited | Audited |
| | | 30 | 30 | 31 |
| | | September | September | March |
| | | 2009 | 2008 | 2009 |
+-------------------------------------+----------+-----------+-----------+---------+
| | | GBPm | GBPm | GBPm |
+-------------------------------------+----------+-----------+-----------+---------+
| Cash flows from operating | | | | |
| activities | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Cash inflows from operations | 15 | 1.3 | 4.4 | 12.6 |
+-------------------------------------+----------+-----------+-----------+---------+
| Interest paid | | (5.3) | (10.7) | (19.2) |
+-------------------------------------+----------+-----------+-----------+---------+
| Interest received | | - | 0.4 | 0.5 |
+-------------------------------------+----------+-----------+-----------+---------+
| UK Corporation tax received / | | 0.9 | - | (0.1) |
| (paid) | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Net cash outflow from operating | | (3.1) | (5.9) | (6.2) |
| activities | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Cash flows from investing | | | | |
| activities | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Purchase of investment properties | | (0.3) | (5.5) | (10.6) |
| and related capital expenditure | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Sale of investment properties | | 13.4 | 19.6 | 87.5 |
+-------------------------------------+----------+-----------+-----------+---------+
| Net cash acquired from disposal of | | 36.9 | - | - |
| shares in subsidiary companies | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Return of capital from listed | | - | - | 1.0 |
| shares | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Loans to joint ventures | | - | (7.0) | (7.0) |
+-------------------------------------+----------+-----------+-----------+---------+
| Distributions received from funds | | 0.9 | 3.3 | 4.1 |
+-------------------------------------+----------+-----------+-----------+---------+
| Net cash inflow from investing | | 50.9 | 10.4 | 75.0 |
| activities | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Cash flows from financing | | | | |
| activities | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Disposal of own shares for share | | - | 0.1 | - |
| option scheme | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Dividends paid | | - | (6.3) | (6.3) |
+-------------------------------------+----------+-----------+-----------+---------+
| Repayment of bank loans | | - | (0.4) | (25.4) |
+-------------------------------------+----------+-----------+-----------+---------+
| Finance fees paid | | (12.0) | - | (1.9) |
+-------------------------------------+----------+-----------+-----------+---------+
| Net cash outflow from financing | | (12.0) | (6.6) | (33.6) |
| activities | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Net increase / (decrease) in cash | | 35.8 | (2.1) | 35.2 |
| and cash equivalents | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Cash and cash equivalents at | | (286.3) | (321.5) | (321.5) |
| beginning of period | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
| Cash and cash equivalents at end of | 16 | (250.5) | (323.6) | (286.3) |
| period | | | | |
+-------------------------------------+----------+-----------+-----------+---------+
UNAUDITED NOTES TO THE FINANCIAL STATEMENTS
1.basis of preparation & accounting policies
Basis of preparation
This condensed consolidated interim financial statements for the six months
ended 30 September 2009 has been prepared on a going concern basis and in
accordance with the Disclosure and Transparency Rules of the Financial Services
Authority and with IAS 34 'Interim financial reporting' as adopted by the
European Union ("EU"), and on the basis of accounting policies set out in the
Group's Annual Report and Accounts for the year ended 31 March 2009.
The condensed consolidated interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 March 2009 were approved by the Board
of Directors on 31 July 2009 and delivered to the Registrar of Companies. The
report of the auditors on those accounts was unqualified, contained an emphasis
of matter paragraph but did not contain any statement under section 498 of the
Companies Act 2006. The condensed consolidated interim financial information has
been reviewed, not audited.
The condensed consolidated interim financial statements should be read in
conjunction with the annual financial statements for the year ended 31 March
2009, which have been prepared in accordance with IFRSs as adopted by the EU.
There is no material seasonal impact on the Group's financial performance.
These unaudited condensed interim consolidated financial statements have been
prepared on a going concern basis, which assumes the Group will continue to be
able to meet its liabilities as and when they fall due, for the foreseeable
future. The Directors have produced cash flow forecasts which indicate that the
Group can continue as a going concern. In preparing those forecasts, the
Directors have taken into account the following key business risks and
uncertainties:
* the need for continued support from the Group's lenders. Discussions with the
Group's three lenders, Royal Bank of Scotland, BoS and Barclays (together the
"Lenders") for the extension and amendment of current banking facilities on
terms appropriate for the current and foreseeable operating environment. One
facility that expired in May 2009 continues to be rolled forward on a periodic
basis. The Directors have a reasonable expectation that negotiations with the
Lenders will be satisfactorily concluded;
* the Lenders have reserved their rights to test certain financial covenants. The
Directors would not expect these financial covenants to be met if tested as at
27 November 2009. The Directors have a reasonable expectation that the Lenders
will amend the existing agreements and the new facility in such a way that is
appropriate for the current and foreseeable operating environment; and
* the macro-economic and financial pressures facing the property sector and their
impact on the Group's cash flow forecasts, revenue streams and related costs.
Having taken into account these risks and uncertainties the Directors have
concluded that, based on the cash flow forecast, whilst material uncertainty
exists which may cast significant doubt over the ability of the Group to
continue as a going concern, it is appropriate to prepare the financial
statements on a going concern basis. Further details on the above risks and
uncertainties and the options being pursued are included in the Chairman's
Statement on pages 2 to3. Accordingly, the unaudited interim consolidated
financial statements do not include the adjustments that would result from a
failure to remain a going concern.
Accounting policies
Except as described below, the condensed consolidated interim financial
statements has been prepared on the basis of the accounting policies,
significant judgements, key assumptions and estimates as set out in note 1 of
the Group's Annual Report for the year ended 31 March 2009.
- Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings.
- The following amendment is mandatory for the first time for the financial year
beginning 1 April 2009:
- IAS 1 (revised) 'Presentation of financial statements'. The revised standard
requires 'non-owner changes in equity' to be presented separately from 'owner
changes in equity'. All 'non-owner changes in equity' are required to be shown
in a performance statement.
- Entities can choose whether to present one performance statement (the
statement of total comprehensive income) or two statements (the income statement
and the statement of comprehensive income). The Group has elected to present two
statements: income statement and a statement of comprehensive income. The
interim financial statements have been prepared under the revised presentation
requirements.
The following new or revised Accounting Standards or interpretations are
effective for the financial year beginning 1 April 2009 but do not have a
material impact on the Group's interim figures:
- IAS 40 (revised) 'Investment Property'
- IFRS 1 'First time Adoption of IFRS' and IAS 27 'Consolidated and Separate
Financial Statements'
- IFRS 2 'Share-based Payment'
- IAS 39 'Financial Instruments: Recognition and Measurement'
- IAS 16 'Property, Plant and Equipment'
- IAS 23 (revised) 'Borrowing Costs'
- IFRS 3 (revised) 'Business Combinations'
- IFRS 7 'Financial Instruments: Disclosures'
- IAS 27 (revised), 'Consolidated and Separate Financial Statements'
- IAS 32 (amendment) 'Financial Instruments: Presentation', and IAS 1
- IFRS 8 'Operating Segments'
- IFRIC 13 'Customer Loyalty Programmes'
- IFRIC 15 'Agreements for the Construction of Real Estate'
- IFRIC 16 'Hedges of a Net Investment in a Foreign Operation'
The following Accounting Standards or Interpretations are not yet effective and
have not been early adopted by the Group:
- IFRS 9 'Financial Instruments'
- IFRIC 9 'Reassessment of Embedded Derivatives' and IAS 39, 'Financial
Instruments: Recognition and Measurement - Embedded
Derivatives (Amendments)'.
- IFRIC 17 'Distribution of Non-cash Assets to Owners'
- IFRIC 18 'Transfers of Assets from Customers'
Restatement of prior year comparatives
The Group has made a presentational change to the income statement. This change,
which has been applied retrospectively, relates to the movement in provision for
onerous contracts. This movement is now reported as a separate line item on the
face of the income statement instead of being included in 'property expenses'.
The change allows readers to make a more accurate assessment of the sustainable
earnings capacity of the Group and ensures the comparative information is
consistent with the current period."
2. segmental reporting
business segments
For management purposes the Group is organised into two operating divisions,
Property Investment and Asset Management:
+----------------------------------------+------------+------------+-------------+----------+
| | Property | Asset | Unallocated | Total |
| | Investment | Management | and other | |
| | | | activities | |
+----------------------------------------+------------+------------+-------------+----------+
| | GBPm | GBPm | GBPm | GBPm |
+----------------------------------------+------------+------------+-------------+----------+
| Six months to 30 September 2009 | | | | |
| (unaudited) | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Rental and similar income | 9.1 | - | - | 9.1 |
+----------------------------------------+------------+------------+-------------+----------+
| Property management expenses | (3.6) | - | - | (3.6) |
+----------------------------------------+------------+------------+-------------+----------+
| Movement in provision | (4.0) | - | - | (4.0) |
+----------------------------------------+------------+------------+-------------+----------+
| Service charge and similar income | 1.7 | - | - | 1.7 |
+----------------------------------------+------------+------------+-------------+----------+
| Service charge expense and similar | (2.2) | - | - | (2.2) |
| charges | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Net rental income | 1.0 | - | - | 1.0 |
+----------------------------------------+------------+------------+-------------+----------+
| Revenue from asset management | | | | |
| activities | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Management fee income | - | 4.8 | - | 4.8 |
+----------------------------------------+------------+------------+-------------+----------+
| Performance fee provision | - | - | - | - |
+----------------------------------------+------------+------------+-------------+----------+
| | - | 4.8 | - | 4.8 |
+----------------------------------------+------------+------------+-------------+----------+
| Asset management expenses | - | (4.6) | - | (4.6) |
+----------------------------------------+------------+------------+-------------+----------+
| Administrative expenses | (0.1) | (0.5) | - | (0.6) |
+----------------------------------------+------------+------------+-------------+----------+
| Operating profit / (loss) before net | 0.9 | (0.3) | - | 0.6 |
| gain on investments | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Net loss from fair value adjustments | (15.8) | - | - | (15.8) |
| on investment properties | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Net loss from fair value adjustments | - | - | (7.6) | (7.6) |
| on investments | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Loss on sale of investment properties | (0.3) | - | - | (0.3) |
+----------------------------------------+------------+------------+-------------+----------+
| Operating loss | (15.2) | (0.3) | (7.6) | (23.1) |
+----------------------------------------+------------+------------+-------------+----------+
| Net interest expense | - | - | (3.5) | (3.5) |
+----------------------------------------+------------+------------+-------------+----------+
| Share of joint ventures post tax | - | - | (1.0) | (1.0) |
| losses | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Loss before income tax | (15.2) | (0.3) | (12.1) | (27.6) |
+----------------------------------------+------------+------------+-------------+----------+
+----------------------------------------+------------+------------+------------+----------+
| Total assets | 206.4 | 13.3 | 50.1 | 269.8 |
+----------------------------------------+------------+------------+------------+----------+
| Total liabilities excluding borrowings | (20.5) | (2.9) | (9.8) | (33.2) |
| and finance leases | | | | |
+----------------------------------------+------------+------------+------------+----------+
| Borrowing, including finance leases | (3.3) | - | (256.9) | (260.2) |
+----------------------------------------+------------+------------+------------+----------+
| Net assets / (liabilities) | 182.6 | 10.4 | (216.6) | (23.6) |
+----------------------------------------+------------+------------+------------+----------+
| | | | | |
+----------------------------------------+------------+------------+------------+----------+
| Other segment items: | | | | |
+----------------------------------------+------------+------------+------------+----------+
| Capital expenditure | 0.3 | - | - | 0.3 |
+----------------------------------------+------------+------------+------------+----------+
| Depreciation | - | - | 0.1 | 0.1 |
+----------------------------------------+------------+------------+------------+----------+
+----------------------------------------+------------+------------+-------------+----------+
| | Property | Asset | Unallocated | Total |
| | Investment | Management | and other | |
| | | | activities | |
+----------------------------------------+------------+------------+-------------+----------+
| | GBPm | GBPm | GBPm | GBPm |
+----------------------------------------+------------+------------+-------------+----------+
| Six months to 30 September 2008 | | | | |
| (unaudited) | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Rental and similar income | 15.5 | - | - | 15.5 |
+----------------------------------------+------------+------------+-------------+----------+
| Property management expenses | (5.5) | - | - | (5.5) |
+----------------------------------------+------------+------------+-------------+----------+
| Service charge and similar income | 2.3 | - | - | 2.3 |
+----------------------------------------+------------+------------+-------------+----------+
| Service charge expense and similar | (2.9) | - | - | (2.9) |
| charges | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Net rental income | 9.4 | - | - | 9.4 |
+----------------------------------------+------------+------------+-------------+----------+
| Revenue from asset management | | | | |
| activities | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Management fee income | - | 6.6 | - | 6.6 |
+----------------------------------------+------------+------------+-------------+----------+
| Performance fee income | - | (0.9) | - | (0.9) |
+----------------------------------------+------------+------------+-------------+----------+
| | - | 5.7 | - | 5.7 |
+----------------------------------------+------------+------------+-------------+----------+
| Asset management expenses | - | (4.6) | - | (4.6) |
+----------------------------------------+------------+------------+-------------+----------+
| Administrative expenses | (0.2) | (0.3) | - | (0.5) |
+----------------------------------------+------------+------------+-------------+----------+
| Operating profit before net gain on | 9.2 | 0.8 | - | 10.0 |
| investments | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Net loss from fair value adjustments | (49.7) | - | - | (49.7) |
| on investment properties | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Net loss from fair value adjustments | - | - | (31.1) | (31.1) |
| on investments | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Loss on sale of investment properties | (0.6) | - | - | (0.6) |
+----------------------------------------+------------+------------+-------------+----------+
| Operating (loss) / profit | (41.1) | 0.8 | (31.1) | (71.4) |
+----------------------------------------+------------+------------+-------------+----------+
| Net interest expense | - | - | (6.6) | (6.6) |
+----------------------------------------+------------+------------+-------------+----------+
| Share of joint ventures post tax | - | - | (46.7) | (46.7) |
| losses | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| (Loss) / profit before income tax | (41.1) | 0.8 | (84.4) | (124.7) |
+----------------------------------------+------------+------------+-------------+----------+
+----------------------------------------+------------+------------+------------+----------+
| Total assets | 417.0 | 19.4 | 150.4 | 586.8 |
+----------------------------------------+------------+------------+------------+----------+
| Total liabilities excluding borrowings | (26.9) | (0.4) | (15.9) | (43.2) |
| and finance leases | | | | |
+----------------------------------------+------------+------------+------------+----------+
| Borrowing, including finance leases | (3.7) | - | (364.5) | (368.2) |
+----------------------------------------+------------+------------+------------+----------+
| Net assets / (liabilities) | 386.4 | 19.0 | (230.0) | 175.4 |
+----------------------------------------+------------+------------+------------+----------+
| | | | | |
+----------------------------------------+------------+------------+------------+----------+
| Other segment items: | | | | |
+----------------------------------------+------------+------------+------------+----------+
| Capital expenditure | 5.8 | - | - | 5.8 |
+----------------------------------------+------------+------------+------------+----------+
| Depreciation | - | - | 0.1 | 0.1 |
+----------------------------------------+------------+------------+------------+----------+
+----------------------------------------+------------+------------+-------------+----------+
| | Property | Asset | Unallocated | Total |
| | Investment | Management | and other | |
| | | | activities | |
+----------------------------------------+------------+------------+-------------+----------+
| | GBPm | GBPm | GBPm | GBPm |
+----------------------------------------+------------+------------+-------------+----------+
| Year ended 31 March 2009 (audited) | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Rental and similar income | 30.2 | - | - | 30.2 |
+----------------------------------------+------------+------------+-------------+----------+
| Property management expenses | (10.0) | - | - | (10.0) |
+----------------------------------------+------------+------------+-------------+----------+
| Service charge and similar income | 4.7 | - | - | 4.7 |
+----------------------------------------+------------+------------+-------------+----------+
| Service charge expense and similar | (5.7) | - | - | (5.7) |
| charges | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Net rental income | 19.2 | - | - | 19.2 |
+----------------------------------------+------------+------------+-------------+----------+
| Turnover from asset management | | | | |
| activities | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Management fee income | - | 12.2 | - | 12.2 |
+----------------------------------------+------------+------------+-------------+----------+
| Performance fee income | - | - | - | - |
+----------------------------------------+------------+------------+-------------+----------+
| Performance fee provision | - | (4.6) | - | (4.6) |
+----------------------------------------+------------+------------+-------------+----------+
| | - | 7.6 | - | 7.6 |
+----------------------------------------+------------+------------+-------------+----------+
| Asset management expenses | - | (9.1) | - | (9.1) |
+----------------------------------------+------------+------------+-------------+----------+
| Administrative expenses | (0.4) | (0.8) | - | (1.2) |
+----------------------------------------+------------+------------+-------------+----------+
| Operating profit / (loss) before net | 18.8 | (2.3) | - | 16.5 |
| gain on investments | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Net loss from fair value adjustments | (98.8) | - | - | (98.8) |
| on investment properties and | | | | |
| impairment of net investment in | | | | |
| finance leases | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Net loss from fair value adjustments | - | - | (60.4) | (60.4) |
| on investments | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Loss on sale of investment properties | (24.9) | - | - | (24.9) |
+----------------------------------------+------------+------------+-------------+----------+
| Operating loss | (104.9) | (2.3) | (60.4) | (167.6) |
+----------------------------------------+------------+------------+-------------+----------+
| Net interest expense | - | - | (32.5) | (32.5) |
+----------------------------------------+------------+------------+-------------+----------+
| Share of joint ventures post tax | - | - | (97.0) | (97.0) |
| losses | | | | |
+----------------------------------------+------------+------------+-------------+----------+
| Loss before income tax | (104.9) | (2.3) | (189.9) | (297.1) |
+----------------------------------------+------------+------------+-------------+----------+
+----------------------------------------+------------+------------+------------+----------+
| Total assets | 276.6 | 13.9 | 59.1 | 349.6 |
+----------------------------------------+------------+------------+------------+----------+
| Total liabilities excluding borrowings | (33.3) | (2.7) | (11.9) | (47.9) |
| and finance leases | | | | |
+----------------------------------------+------------+------------+------------+----------+
| Borrowing, including finance leases | (3.6) | - | (293.9) | (297.5) |
+----------------------------------------+------------+------------+------------+----------+
| Net assets / (liabilities) | 239.7 | 11.2 | (246.7) | 4.2 |
+----------------------------------------+------------+------------+------------+----------+
| | | | | |
+----------------------------------------+------------+------------+------------+----------+
| Other segment items: | | | | |
+----------------------------------------+------------+------------+------------+----------+
| Capital expenditure | 9.4 | - | - | 9.4 |
+----------------------------------------+------------+------------+------------+----------+
| Depreciation | - | - | 0.2 | 0.2 |
+----------------------------------------+------------+------------+------------+----------+
All turnover and operating profit has arisen from continuing operations.
3.finance income
+----------------------------------------------+-----------+-----------+---------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | Year |
| | ended | ended | ended |
| | 30 | 30 | 31 |
| | September | September | March |
| | 2009 | 2008 | 2009 |
+----------------------------------------------+-----------+-----------+---------+
| | GBPm | GBPm | GBPm |
+----------------------------------------------+-----------+-----------+---------+
| Income from investments | | | |
+----------------------------------------------+-----------+-----------+---------+
| Distributions from funds | 0.3 | 3.7 | 3.2 |
+----------------------------------------------+-----------+-----------+---------+
| Return of capital from listed | - | - | 0.5 |
| investments | | | |
+----------------------------------------------+-----------+-----------+---------+
| | 0.3 | 3.7 | 3.7 |
+----------------------------------------------+-----------+-----------+---------+
| Interest receivable and similar | | | |
| income: | | | |
+----------------------------------------------+-----------+-----------+---------+
| From joint ventures | - | 0.4 | 0.5 |
+----------------------------------------------+-----------+-----------+---------+
| Provision against interest receivable | 1.0 | - | (1.3) |
| from joint ventures | | | |
+----------------------------------------------+-----------+-----------+---------+
| | 1.0 | 0.4 | (0.8) |
+----------------------------------------------+-----------+-----------+---------+
| Other interest | - | 0.4 | 0.4 |
+----------------------------------------------+-----------+-----------+---------+
| Other finance income | | | |
+----------------------------------------------+-----------+-----------+---------+
| Expected | 0.2 | 0.2 | 0.4 |
| return | | | |
| on | | | |
| pension | | | |
| scheme | | | |
| assets | | | |
+----------------------------------------------+-----------+-----------+---------+
| Interest on pension scheme liabilities | (0.2) | (0.2) | (0.3) |
+----------------------------------------------+-----------+-----------+---------+
| | - | - | 0.1 |
+----------------------------------------------+-----------+-----------+---------+
| | 1.3 | 4.5 | 3.4 |
+----------------------------------------------+-----------+-----------+---------+
4.finance expense
+----------------------------------------+-----------+-----------+---------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | Year |
| | ended | ended | ended |
| | 30 | 30 | 31 |
| | September | September | March |
| | 2009 | 2008 | 2009 |
+----------------------------------------+-----------+-----------+---------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+-----------+-----------+---------+
| Interest payable on loans and | 4.4 | 10.2 | 17.3 |
| overdrafts | | | |
+----------------------------------------+-----------+-----------+---------+
| Charges in respect of cost of raising | 1.2 | 0.4 | 15.4 |
| finance | | | |
+----------------------------------------+-----------+-----------+---------+
| | 5.6 | 10.6 | 32.7 |
+----------------------------------------+-----------+-----------+---------+
| Interest payable under finance leases | 0.1 | 0.1 | 0.2 |
+----------------------------------------+-----------+-----------+---------+
| | 5.7 | 10.7 | 32.9 |
+----------------------------------------+-----------+-----------+---------+
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.dividends
+----------------------------------------+------------+-----------+---------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | Year |
| | ended | ended | ended |
| | 30 | 30 | 31 |
| | September | September | March |
| | 2009 | 2008 | 2009 |
+----------------------------------------+------------+-----------+---------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+------------+-----------+---------+
| On Ordinary 5p shares | | | |
+----------------------------------------+------------+-----------+---------+
| Final 11.25p at 31 March 2008 paid 19 | - | 6.3 | 6.3 |
| September 2008 | | | |
+----------------------------------------+------------+-----------+---------+
| | - | 6.3 | 6.3 |
+----------------------------------------+------------+-----------+---------+
7. earnings per share
Basic losses per share of 49.86p (six months to 30 September 2008: losses
222.03p; year to 31 March 2009: losses 528.30p) are calculated on the loss for
the period of GBP27.6million (six months to 30 September 2008: loss
GBP123.5million; year to 31 March 2009: loss GBP293.8million) and the weighted
average of 55,365,194 (six months to 30 September 2008: 55,633,832; year to 31
March 2009: 55,592,011) shares in issue throughout the period.
Diluted losses per share of 49.03p (six months to 30 September 2008: losses
217.52p; year to 31 March 2009: losses 518.64p) are based on the loss for the
period as above divided by the weighted average number of shares in issue, being
56,289,389 (six months to 30 September 2008: 56,786,473; year to 31 March 2009:
56,627,895) after the dilutive impact of share options granted.
A reconciliation of the weighted average number of shares used to calculate
earnings per share and to that used to calculate diluted earnings per share is
shown below:
+-----------------------------------------+------------+------------+------------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | Year |
| | ended | ended | ended |
| | 30 | 30 | 31 |
| | September | September | March |
| | 2009 | 2008 | 2009 |
+-----------------------------------------+------------+------------+------------+
| | | | |
+-----------------------------------------+------------+------------+------------+
| Earnings per share: weighted average | 55,365,194 | 55,633,832 | 55,592,011 |
| number of shares | | | |
+-----------------------------------------+------------+------------+------------+
| Weighted average ordinary shares to be | 924,195 | 1,152,641 | 1,035,884 |
| issued under employee incentive | | | |
| arrangements | | | |
+-----------------------------------------+------------+------------+------------+
| Diluted earnings per share: weighted | 56,289,389 | 56,786,473 | 56,627,895 |
| average number of shares | | | |
+-----------------------------------------+------------+------------+------------+
8. investment properties
+----------------------------------------+-----------+------------+------------+
| | Freehold | Leasehold | Total |
| | | with over | Investment |
| | | 50 years | Properties |
| | | unexpired | |
+----------------------------------------+-----------+------------+------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+-----------+------------+------------+
| | | | |
+----------------------------------------+-----------+------------+------------+
| At 1 April 2009 (audited) | 204.2 | 63.6 | 267.8 |
+----------------------------------------+-----------+------------+------------+
| Adjustment | (10.5) | 10.5 | - |
+----------------------------------------+-----------+------------+------------+
| Capital expenditure | 0.2 | 0.1 | 0.3 |
+----------------------------------------+-----------+------------+------------+
| Disposals | (52.7) | - | (52.7) |
+----------------------------------------+-----------+------------+------------+
| Net loss from fair value adjustments | (9.0) | (6.8) | (15.8) |
| on investment property | | | |
+----------------------------------------+-----------+------------+------------+
| At 30 September 2009 (unaudited) | 132.2 | 67.4 | 199.6 |
+----------------------------------------+-----------+------------+------------+
9. joint ventures
+----------------------------------------+-----------+------------+------------+
| | Unaudited | Unaudited | Audited |
| | At | At | At |
| | 30 | 30 | 31 March |
| | September | September | 2009 |
| | 2009 | 2008 | |
+----------------------------------------+-----------+------------+------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+-----------+------------+------------+
| Share of joint ventures | | | |
+----------------------------------------+-----------+------------+------------+
| At 1 April | - | 90.0 | 90.0 |
+----------------------------------------+-----------+------------+------------+
| Share of loss for the period | (4.6) | (46.7) | (93.4) |
+----------------------------------------+-----------+------------+------------+
| Provision against loan receivable | 3.6 | - | (3.6) |
+----------------------------------------+-----------+------------+------------+
| | (1.0) | (46.7) | (97.0) |
+----------------------------------------+-----------+------------+------------+
| Net equity movements | 1.0 | 7.0 | 7.0 |
+----------------------------------------+-----------+------------+------------+
| At 30 September / 31 March | - | 50.3 | - |
+----------------------------------------+-----------+------------+------------+
| Unlisted shares at cost | 99.3 | 87.7 | 94.7 |
+----------------------------------------+-----------+------------+------------+
| Group's share of post acquisition | (99.3) | (48.0) | (94.7) |
| retained losses and reserves | | | |
+----------------------------------------+-----------+------------+------------+
| | - | 39.7 | - |
+----------------------------------------+-----------+------------+------------+
| Amounts owed by joint ventures | - | 10.6 | - |
+----------------------------------------+-----------+------------+------------+
| | - | 50.3 | - |
+----------------------------------------+-----------+------------+------------+
+----------------------------------------+-----------+------------+------------+
| Amounts owed by joint ventures | Unaudited | Unaudited | Audited |
| comprise: | At | At | At |
| | 30 | 30 | 31 March |
| | September | September | 2009 |
| | 2009 | 2008 | |
+----------------------------------------+-----------+------------+------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+-----------+------------+------------+
| Agora Max Limited | - | 7.0 | - |
+----------------------------------------+-----------+------------+------------+
| Greater London Offices Limited | - | 3.6 | - |
+----------------------------------------+-----------+------------+------------+
| | - | 10.6 | - |
+----------------------------------------+-----------+------------+------------+
At 31 March 2009, GBP3.6m due from Greater London Offices Limited was provided
for in full. The loan was repaid during the period and the proceeds used to
subscribe to further equity in Greater London Offices Limited.
10. investments in funds
+----------------------------------------+------+----------------------------------+
| | GBPm |
+-----------------------------------------------+----------------------------------+
| As at 31 March 2009 (audited) | 47.5 |
+-----------------------------------------------+----------------------------------+
| Net loss from fair value adjustments | (7.7) |
+-----------------------------------------------+----------------------------------+
| At 30 September 2009 (unaudited) | 39.8 |
+-----------------------------------------------+----------------------------------+
| | |
+----------------------------------------+-----------------------------------------+
| AIF | 15.3 |
+----------------------------------------+-----------------------------------------+
| Apia | 24.5 |
+----------------------------------------+-----------------------------------------+
| Other | - |
+----------------------------------------+-----------------------------------------+
| At 30 September 2009 (unaudited) | 39.8 |
+----------------------------------------+------+----------------------------------+
11.investments in listed and unlisted shares
+----------------------------------------+-----------+------------+------------+
| | Unaudited | Unaudited | Audited |
| | At | At | At |
| | 30 | 30 | 31 March |
| | September | September | 2009 |
| | 2009 | 2008 | |
+----------------------------------------+-----------+------------+------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+-----------+------------+------------+
| Listed investments | - | 0.8 | - |
+----------------------------------------+-----------+------------+------------+
| Unlisted investments | 0.4 | 0.3 | 0.3 |
+----------------------------------------+-----------+------------+------------+
| | 0.4 | 1.1 | 0.3 |
+----------------------------------------+-----------+------------+------------+
12. deferred taxation
+----------------------------------------+-----------+------------+------------+
| | Unaudited | Unaudited | Audited |
| | At | At | At |
| | 30 | 30 | 31 March |
| | September | September | 2009 |
| | 2009 | 2008 | |
+----------------------------------------+-----------+------------+------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+-----------+------------+------------+
| Deferred taxation assets | | | |
+----------------------------------------+-----------+------------+------------+
| Deferred taxation arising from: | | | |
+----------------------------------------+-----------+------------+------------+
| Unrealised derivative financial | - | 0.9 | - |
| instruments valuations | | | |
+----------------------------------------+-----------+------------+------------+
| Retirement benefit obligations | 0.2 | - | 0.2 |
+----------------------------------------+-----------+------------+------------+
| Share based payments | - | 0.1 | - |
+----------------------------------------+-----------+------------+------------+
| Unrealised property and investment | - | 0.3 | - |
| valuations | | | |
+----------------------------------------+-----------+------------+------------+
| | 0.2 | 1.3 | 0.2 |
+----------------------------------------+-----------+------------+------------+
| Deferred taxation liabilities | | | |
+----------------------------------------+-----------+------------+------------+
| Deferred taxation arising from: | | | |
+----------------------------------------+-----------+------------+------------+
| Unrealised derivative financial | - | (0.2) | - |
| instruments valuations | | | |
+----------------------------------------+-----------+------------+------------+
| Unrealised property and investment | - | (2.4) | - |
| valuations | | | |
+----------------------------------------+-----------+------------+------------+
| | - | (2.6) | - |
+----------------------------------------+-----------+------------+------------+
13. provisions for other liabilities and charges
+-------------------------+----------+--------------+-------------+-----------+
| | | Onerous | Performance | Total |
| | | contracts | fees | |
+-------------------------+----------+--------------+-------------+-----------+
| | | GBPm | GBPm | GBPm |
+-------------------------+----------+--------------+-------------+-----------+
| At 31 March 2009 | | 3.0 | 2.5 | 5.5 |
| (audited) | | | | |
+-------------------------+----------+--------------+-------------+-----------+
| Charge to consolidated | | 0.4 | - | 0.4 |
| income statement | | | | |
+-------------------------+----------+--------------+-------------+-----------+
| Movement in provision | | 4.8 | - | 4.8 |
+-------------------------+----------+--------------+-------------+-----------+
| Utilised during the | | (1.1) | - | (1.1) |
| period | | | | |
+-------------------------+----------+--------------+-------------+-----------+
| At 30 September 2009 | | 7.1 | 2.5 | 9.6 |
| (unaudited) | | | | |
+-------------------------+----------+--------------+-------------+-----------+
Provisions have been analysed between current and non-current as follows:
+----------------------------------------+-----------+------------+------------+
| | Unaudited | Unaudited | Audited |
| | At | At | At |
| | 30 | 30 | 31 March |
| | September | September | 2009 |
| | 2009 | 2008 | |
+----------------------------------------+-----------+------------+------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+-----------+------------+------------+
| Non-current | 5.8 | 1.3 | 1.6 |
+----------------------------------------+-----------+------------+------------+
| Current | 3.8 | 3.9 | 3.9 |
+----------------------------------------+-----------+------------+------------+
| | 9.6 | 5.2 | 5.5 |
+----------------------------------------+-----------+------------+------------+
The onerous lease provision is made in relation to onerous contracts on
leasehold 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.
The Directors considers it appropriate to make a further provision of
GBP4.8million in relation to the onerous contracts having regard for performance
over the period, current market conditions and variable downside occupational
market forecasts. A further GBP0.4million has been charged to the income
statement and classified as property costs.
14. capital and reserves
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| | | Reserves | | |
+------------------------+---------+------------------------------------------------------------------+------------+--------+
| | Share | Share | Share | Revaluation | Other | Treasury | Retained | Investment | Total |
| | Capital | Premium | Based | Reserve | Reserve | Shares | Earnings | in own | |
| | | | Payments | | | | | shares | |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| At 31 March 2009 | 2.8 | 40.7 | 1.8 | (234.5) | 8.0 | (1.5) | 188.0 | (1.1) | 4.2 |
| (audited) | | | | | | | | | |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| Retained loss for the | - | - | - | - | - | - | (27.6) | - | (27.6) |
| period | | | | | | | | | |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| Realised on disposal | - | - | - | 14.0 | - | - | (14.0) | - | - |
| of investment | | | | | | | | | |
| properties | | | | | | | | | |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| Net loss from fair | - | - | - | (15.8) | - | - | 15.8 | - | - |
| value adjustment on | | | | | | | | | |
| investment properties | | | | | | | | | |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| Share of joint | - | - | - | (6.8) | - | - | 6.8 | - | - |
| ventures' net loss | | | | | | | | | |
| from fair value | | | | | | | | | |
| adjustment on | | | | | | | | | |
| investment properties | | | | | | | | | |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| Net loss from fair | - | - | - | (7.6) | - | - | 7.6 | - | - |
| value adjustment on | | | | | | | | | |
| unlisted investments | | | | | | | | | |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| Change in fair value | - | - | - | 0.9 | - | - | (0.9) | - | - |
| of derivative | | | | | | | | | |
| financial instruments | | | | | | | | | |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| Share of change in | - | - | - | 5.2 | - | - | (5.2) | - | - |
| fair value of joint | | | | | | | | | |
| ventures' derivative | | | | | | | | | |
| financial instruments | | | | | | | | | |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| Dividends paid | - | - | - | - | - | - | - | - | - |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| Actuarial losses on | - | - | - | - | - | - | (0.2) | - | (0.2) |
| retirement benefit | | | | | | | | | |
| obligations | | | | | | | | | |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| Cost of share based | - | - | (0.3) | - | - | - | 0.2 | 0.1 | - |
| payments | | | | | | | | | |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
| At 30 September 2009 | 2.8 | 40.7 | 1.5 | (244.6) | 8.0 | (1.5) | 170.5 | (1.0) | (23.6) |
| (unaudited) | | | | | | | | | |
+------------------------+---------+---------+----------+-------------+---------+----------+----------+------------+--------+
15. reconciliation of operating profit to net cash flow
+----------------------------------------+---------------+---------------+---------------+
| | Unaudited | Unaudited | Audited |
| | At | At | At |
| | 30 September | 30 September | 31 March |
| | 2009 | 2008 | 2009 |
+----------------------------------------+---------------+---------------+---------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+---------------+---------------+---------------+
| | | | |
+----------------------------------------+---------------+---------------+---------------+
| Operating profit before net gains on | 0.6 | 10.0 | 16.5 |
| investments | | | |
+----------------------------------------+---------------+---------------+---------------+
| Depreciation of plant and equipment | 0.1 | 0.1 | 0.1 |
+----------------------------------------+---------------+---------------+---------------+
| Impairment of goodwill | 0.1 | - | - |
+----------------------------------------+---------------+---------------+---------------+
| Decrease / (increase) in trade and | 1.0 | (1.8) | 5.5 |
| other receivables | | | |
+----------------------------------------+---------------+---------------+---------------+
| Decrease in trade and other payables | (0.5) | (3.9) | (9.5) |
+----------------------------------------+---------------+---------------+---------------+
| Cash inflows from operations | 1.3 | 4.4 | 12.6 |
+----------------------------------------+---------------+---------------+---------------+
16. cash and cash equivalents
+----------------------------------------+---------------+---------------+---------------+
| | Unaudited | Unaudited | Audited |
| | At | At | At |
| | 30 September | 30 September | 31 March |
| | 2009 | 2008 | 2009 |
+----------------------------------------+---------------+---------------+---------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+---------------+---------------+---------------+
| Amounts falling due after more than | | | |
| one year: | | | |
+----------------------------------------+---------------+---------------+---------------+
| Bank overdrafts | - | 339.4 | - |
+----------------------------------------+---------------+---------------+---------------+
| Bank loans | - | 24.6 | - |
+----------------------------------------+---------------+---------------+---------------+
| Finance lease obligations | 3.2 | 3.7 | 3.6 |
+----------------------------------------+---------------+---------------+---------------+
| | 3.2 | 367.7 | 3.6 |
+----------------------------------------+---------------+---------------+---------------+
| Amounts falling due within one year: | | | |
+----------------------------------------+---------------+---------------+---------------+
| Bank overdrafts | 257.5 | - | 295.3 |
+----------------------------------------+---------------+---------------+---------------+
| Future finance costs | (0.6) | - | (1.5) |
+----------------------------------------+---------------+---------------+---------------+
| | 256.9 | - | 293.8 |
+----------------------------------------+---------------+---------------+---------------+
| Bank loans | - | 0.4 | - |
+----------------------------------------+---------------+---------------+---------------+
| Finance lease obligations | 0.1 | 0.1 | 0.1 |
+----------------------------------------+---------------+---------------+---------------+
| | 257.0 | 0.5 | 293.9 |
+----------------------------------------+---------------+---------------+---------------+
| Total borrowings, excluding future | 257.5 | 339.4 | 295.3 |
| finance costs, bank loans and finance | | | |
| leases | | | |
+----------------------------------------+---------------+---------------+---------------+
| Cash and cash equivalents | (7.0) | (15.8) | (9.0) |
+----------------------------------------+---------------+---------------+---------------+
| Cash and cash equivalents at end of | 250.5 | 323.6 | 286.3 |
| period | | | |
+----------------------------------------+---------------+---------------+---------------+
17.related party transactions
In accordance with IAS 27 "Consolidated and Separate Financial Statements,"
transactions between the company and subsidiaries, which are related parties,
have been eliminated on consolidation and are not disclosed in this note.
Details of transactions and balances between the Group and joint ventures are
set out in note 9.
Remuneration of key management personnel:
+----------------------------------------+----------------+---------------+---------------+
| | Unaudited | Unaudited | Audited |
| | Six months | Six months | Year ended |
| | ended | ended | 31 March |
| | 30 September | 30 September | 2009 |
| | 2009 | 2008 | |
+----------------------------------------+----------------+---------------+---------------+
| | GBPm | GBPm | GBPm |
+----------------------------------------+----------------+---------------+---------------+
| | | | |
+----------------------------------------+----------------+---------------+---------------+
| Short-term employee benefits | 0.5 | 0.5 | 1.0 |
+----------------------------------------+----------------+---------------+---------------+
| Post-employee benefits | 0.1 | 0.1 | 0.2 |
+----------------------------------------+----------------+---------------+---------------+
| Share based payments | - | 0.1 | - |
+----------------------------------------+----------------+---------------+---------------+
| | 0.6 | 0.7 | 1.2 |
+----------------------------------------+----------------+---------------+---------------+
Directors' statement of responsibilities
The Directors confirm that this condensed set of financial statements has been
prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by
the European Union, and gives a true and fair view of the assets, liabilities,
financial position and loss of the Group, and that the Half Yearly Report herein
includes a fair review of the information as required by 4.2.7 and 4.2.8 of the
Disclosure and Transparency Rules.
The Directors of Warner Estate Holdings PLC are as stated in the Group's Annual
Report for the year ended 31 March 2009, with the addition of Mr. R. Game who
was appointed Property Director on 1 July 2009 replacing Mr. M Stevens.
The Chairman's Statement on pages 2 to 3 refers to important events which have
taken place in the period.
The principal risks and uncertainties facing the business are as set out in note
1 under basis of preparation and on page 20 of the Annual Report and Accounts.
By the order of the Board
D J Lanchester
Secretary
27 November 2009
Independent review report to Warner Estate Holdings PLC
Introduction
We have been engaged by the company to review the condensed consolidated interim
financial statements in the Half Year Report and Accounts for the six months
ended 30 September 2009, which comprises the Consolidated Income Statement, the
Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet,
the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow
Statement and related notes. We have read the other information contained in the
Half Year Report and Accounts and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
consolidated interim financial statements.
Directors' responsibilities
The Half Year Report and Accounts is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the Half
Year Report and Accounts in accordance with the Disclosure and Transparency
Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed consolidated interim financial statements in the Half Year Report and
Accounts have been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
consolidated interim financial statements in the Half Year Report and Accounts
based on our review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of the Disclosure and Transparency
Rules of the Financial Services Authority and for no other purpose. We do not,
in producing this report, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed consolidated interim financial statements in the Half Year
Report and Accounts for the six months ended 30 September 2009 are not prepared,
in all material respects, in accordance with International Accounting Standard
34 as adopted by the European Union and the Disclosure and Transparency Rules of
the United Kingdom's Financial Services Authority.
Emphasis of matter
In arriving at our review conclusion on the condensed consolidated interim
financial statements, which is unqualified, we have considered the adequacy of
the disclosures made in Note 1 to the financial statements concerning the
Group's and Company's ability to continue as a going concern. These disclosures
indicate that there is a material uncertainty regarding the progress of
negotiations of the existing and expired debt arrangements with the Group's
Lenders. These conditions, along with other matters disclosed in Note 1,
indicate the existence of a material uncertainty which may cast significant
doubt over the Group's and Company's ability to continue as a going concern. The
condensed consolidated interim financial statements do not include the
adjustments that would result if the Group and Company was unable to continue as
a going concern.
PricewaterhouseCoopers LLP
Chartered Accountants
27 November 2009
London
Notes:
(a) The maintenance and integrity of the Warner Estate Holdings PLC website
is the responsibility of the directors; the work carried out by the auditors
does not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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