TIDMWNER
RNS Number : 8305N
Warner Estate Holdings PLC
18 June 2010
Warner Estate Holdings PLC
REBUILDING VALUE THROUGH ASSET MANAGEMENT
Warner Estate Holdings PLC ("Warner Estate" or "Group"), the property investment
and management company has today announced its preliminary results for the year
ended 31 March 2010.
Financial Summary
· Revenue GBP32.8million (2009: GBP42.5million)
· Recurring operating profit before net movements on investments
GBP11.3million (2009: GBP22.5million)(i)
· Loss before income tax GBP9.7million (2009: GBP297.1million)
· Net (liabilities)/asset value per share (7)p (2009: 8p)
· Loss per share 16.1p (2009: 528.3p loss)
Key Business Events
· Group refinancing completed with bank facilities in place until between
April 2012 and December 2012
· Completion of GBP131.9million disposal programme
· 97% rental income collected within 28 days of due date
· City of London office refurbishment of 60 New Broad Street complete, 53%
let with a further 15% under offer
· Ashtenne Industrial Fund raised equity of GBP45million and extended its
bank facilities to September 2013
· Apia Regional Office Fund extended its bank facilities to December 2012
(i) Adjusted for non-recurring property expenses of GBP4.5million and
non-recurring performance fee income of GBP1.1million.
Philip Warner, Chairman of Warner Estate commented
"With our refinancing negotiations concluded, we are able to focus on rebuilding
value and growing our GBP1.4billion asset management business. Maintaining
income will be paramount and fortunately that plays to the Group's asset
management expertise".
Date: 18 June 2010
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
This year has been dominated by refinancing discussions with the Group's three
lenders to extend, amend or renew its banking facilities. These were concluded
successfully towards the end of March 2010 and the resulting facilities provide
the Group with a stable platform upon which to rebuild value in our property
investments, funds and joint ventures and to expand our asset management
business.
It was also a year of two distinct halves. Property values have been improving
since July 2009 but not enough to reverse in full the decline in the Group's
property values earlier in that year. Although net asset value has fallen over
the year from 8p per share at 31 March 2009 to negative 7p, this masks the
considerable improvement from the negative 43p reported at the half year. The
market has risen further since our year end, which, together with 6p per share
from the sale in May of our Radial Distribution joint venture, referred to
below, brings the prospect of a return to positive value that much closer.
Results Overview
Revenue for the year was GBP32.8million, down from GBP42.5million last year,
reflecting lower rental income following completion of the GBP131.9million
wholly owned asset disposal programme at the beginning of the year, offset by an
increase in asset management revenue. Controlling costs has been a priority and
following the previous year's reduction in costs of GBP2.6million, a further
GBP0.9million was cut in the year to March 2010.
The net reduction in revenue flows through to operating profit, before net
movements on investments, of GBP7.9million (2009: GBP16.5million). As reported
last November, net rental income includes a one off provision against the
leasehold liability portfolio of GBP4.2million, one off legal costs of
GBP0.2million and GBP0.1million derecognition of goodwill following the disposal
of JS Real Estate. The net income from asset management activities includes
Ashtenne Industrial Fund performance fees of GBP1.1million relating to 2002 to
2005. Recurring operating profit, which excludes these one off items, was
GBP11.3million (2009: GBP22.5million, excluding one-off items totalling
GBP6.0million).
The operating loss of GBP1.2million includes net losses on investments of
GBP9.1million. This is made up of net gains of GBP14.6million in the six months
to March 2010 offset by net losses of GBP23.7million in the first six months of
the year, reflecting movements in the property market over the year. The Group
had net liabilities of GBP4.0million as at 31 March 2010, due to non-cash
unrealised revaluation movements. I would like to reassure shareholders that
although the Group has net liabilities, it will continue to be able to meet its
liabilities as and when they fall due for the foreseeable future.
The Group benefited from low interest rates with the average cost of debt at
3.1% (2009: 3.4%). Interest excluding finance related costs was covered 1.1
times by recurring operating profit (2009: 1.3 times).
The Board regrets very much that it cannot recommend payment of a dividend for
this financial year.
Property Review
Local expertise gained from our network of eight regional offices is of real
value in a difficult market for the Group's specialist asset management of 444
multi sector assets and 4,149 tenants located throughout the UK.
Income protection and generation are fundamental to performance as is the focus
on voids, an important performance indicator. Although at the year end the void
rate for the Group's wholly owned properties was 19.4% compared to the IPD
benchmark of 10.8%, there has been a substantial reduction since the year end.
In the City of London, 60 New Broad Street, the Group's largest void following
refurbishment of its six floors of office space in 2009, is now 53% let with 15%
under offer, leaving just two floors (17,370 sq ft) available to let. On the
retail side, the value fashion chain Primark has combined the last remaining
vacant retail unit with the former BHS unit to form a new 30,000 sq ft anchor
department store at the Group's Bouverie Place Shopping Centre, Folkestone's
prime retail destination. Two predominantly vacant office buildings, in Richmond
and the City of London, have been sold which when combined with other completed
lettings and with voids currently under offer, will bring down the void rate by
almost 50% from 19.4% to 10.7%.
Portfolio wide, tenant insolvency rates have remained low with bad debts
representing only 1.3% of last year's rental income. This would have matched
last year's 0.1% had it not been for the Focus DIY Creditors' Voluntary
Arrangement. Another important performance indicator, rent collection, shows a
commendable 97% collected within 28 days of due date.
+--------------+------------+---------+--------+-----------+---------+------------+--------+
| | Number |Capital | Net |Estimated | Net |Equivalent | Void |
| | of | Value |Rental | Rental |Initial | Yield | Rate |
| |Properties | |Income | Value | Yield | | |
+--------------+------------+---------+--------+-----------+---------+------------+--------+
| | | GBPm | GBPm | GBPm | % | % | % |
+--------------+------------+---------+--------+-----------+---------+------------+--------+
| Wholly | 47 | 213.1 | 12.8 | 20.3 | 6.0% | 7.9% | 19.4% |
| Owned | | | | | | | |
+--------------+------------+---------+--------+-----------+---------+------------+--------+
| Agora | 8 | 154.6 | 12.6 | 18.2 | 7.6% | 9.5% | 6.3% |
| Shopping | | | | | | | |
| Centres | | | | | | | |
| JV | | | | | | | |
+--------------+------------+---------+--------+-----------+---------+------------+--------+
| Agora | 2 | 88.2 | 7.9 | 10.5 | 8.4% | 9.2% | 8.8% |
| Max | | | | | | | |
| shopping | | | | | | | |
| Centres | | | | | | | |
| JV | | | | | | | |
+--------------+------------+---------+--------+-----------+---------+------------+--------+
| Radial | 16 | 206.7 | 15.9 | 18.1 | 7.3% | 8.0% | 8.4% |
| Distribution | | | | | | | |
| JV | | | | | | | |
+--------------+------------+---------+--------+-----------+---------+------------+--------+
| Greater | 2 | 72.0 | 5.8 | 5.4 | 7.6% | 6.7% | 3.3% |
| London | | | | | | | |
| Offices | | | | | | | |
| JV | | | | | | | |
+--------------+------------+---------+--------+-----------+---------+------------+--------+
| Apia | 16 | 227.7 | 15.1 | 24.3 | 6.0% | 8.6% | 16.2% |
| Regional | | | | | | | |
| Office | | | | | | | |
| Fund | | | | | | | |
+--------------+------------+---------+--------+-----------+---------+------------+--------+
| Ashtenne | 353 | 676.8 | 56.8 | 76.3 | 8.1% | 10.3% | 16.2% |
| Industrial | | | | | | | |
| Fund | | | | | | | |
+--------------+------------+---------+--------+-----------+---------+------------+--------+
| Total | 444 |1,639.1 | 126.9 | 173.1 | 7.4% | 9.1% | 13.7% |
+--------------+------------+---------+--------+-----------+---------+------------+--------+
The Group's interest in joint ventures and funds is shown in Note 35 to the
Financial Statements.
Following the year end, the Radial Distribution joint venture, included in the
above table, was sold. Although this has reduced assets under management to
GBP1.4billion, the Radial assets had performed well during the year and the
Group received GBP0.5million for its 50% share and GBP3.3million as
consideration for the termination of its asset management contract. Neither of
these figures is reflected in the balance sheet at 31 March 2010.
Refinancing
As noted above, discussions with the Group's three lenders have been concluded
successfully. They provide the Group with facilities appropriate for its
requirements until April 2012 in the case of two lenders and December 2012 in
the case of the third. Although the exit fees payable when these facilities
expire would not be fundable on current cash flow projections without a
considerable rise in property values, the Board has been and will continue
addressing this issue to ensure a solution is found prior to the facilities'
expiry dates. Further detail can be found in Note 22 to the Financial
Statements.
During the year, the Ashtenne Industrial Fund, in which the Group has a 6.5%
stake, raised equity of GBP45million and extended its banking facilities to
September 2013. The Apia Regional Office Fund, in which the Group holds a 27.4%
stake, extended its banking facilities to December 2012. The Group's asset
management contracts for these two funds are now in place to 2016 and 2015
respectively.
Board Changes
As announced on 24 May 2010, a number of changes to the Board are scheduled to
take effect on 1 July 2010. Now in my 60th year, I have consulted with the Board
on relinquishing my executive role and I shall become Non-executive Chairman.
Mark Keogh, currently Finance Director, is to become Group Managing Director and
Robert Game, currently Property Director, is to become Group Managing Director,
Property. During our recent refinancing they demonstrated considerable skill
and expertise and I am confident in their ability to lead the management of the
Group.
There are two Non-executive changes, also taking effect on 1 July. After nearly
20 years, Bill Broderick will step down as a Non-executive Director. His counsel
and expertise have been great assets to the Board and I thank him for his
contribution over the years. Keith Holman will be joining us. He brings
extensive corporate experience and a strong knowledge of property, having worked
with Raglan Properties on its recapitalisation and subsequent privatisation. His
corporate banking experience has included HSBC, Lazard Brothers, Barclays Asia
and East Asia Warburg and I look forward to his joining the Board's
deliberations.
Strategy and Outlook
With the refinancing negotiations concluded as referred to above, we are able to
focus on rebuilding value and growing our asset management business, based upon
the existing platform of skilled staff managing GBP1.4billion of property from
eight regional offices. Costs have been trimmed to reflect the conditions within
which we are operating and the Group is well placed to service both existing
mandates and those which we aim to win.
The market has had a good run since last summer but is now showing signs of
running out of steam. Although there appears to be a considerable weight of
money seeking a property home, the preference is for prime properties and
London. Elsewhere, the uncertain economic outlook, limited availability of debt
and a weak occupier market will restrain growth.
Maintaining income will be paramount and fortunately that plays to the Group's
asset management expertise. We rely on our staff to maximise that expertise and
I thank them for their contribution towards overcoming last year's hurdles. I am
confident that collectively we shall meet the challenges of the current year.
Philip Warner
Chairman
Consolidated Income Statement
For the year ended 31 March 2010
+----------------------------------+-------+--------+---------+
| | Notes | 2010 | 2009 |
+----------------------------------+-------+--------+---------+
| | | GBPm | GBPm |
+----------------------------------+-------+--------+---------+
| | | | |
+----------------------------------+-------+--------+---------+
| Revenue | | 32.8 | 42.5 |
+----------------------------------+-------+--------+---------+
| | | | |
+----------------------------------+-------+--------+---------+
| Rental and similar income | | 18.7 | 30.2 |
+----------------------------------+-------+--------+---------+
| Property management expenses | | (5.6) | (8.1) |
+----------------------------------+-------+--------+---------+
| Movement in provision for | | (4.2) | (1.9) |
| onerous contracts | | | |
+----------------------------------+-------+--------+---------+
| Service charge and similar | | 3.1 | 4.7 |
| income | | | |
+----------------------------------+-------+--------+---------+
| Service charge expense and | | (4.4) | (5.7) |
| similar charges | | | |
+----------------------------------+-------+--------+---------+
| Net rental income | 2 | 7.6 | 19.2 |
+----------------------------------+-------+--------+---------+
| Revenue from asset management | | 11.0 | 7.6 |
| activities | | | |
+----------------------------------+-------+--------+---------+
| Asset management expenses | | (9.2) | (9.1) |
+----------------------------------+-------+--------+---------+
| Net income/ (expenditure) from | 2 | 1.8 | (1.5) |
| asset management activities | | | |
+----------------------------------+-------+--------+---------+
| Other operating expenses | | (1.5) | (1.2) |
+----------------------------------+-------+--------+---------+
| Operating profit before net | 2 | 7.9 | 16.5 |
| movements on investments | | | |
+----------------------------------+-------+--------+---------+
| Net loss from fair value | 13/19 | (2.8) | (98.8) |
| adjustments on investment | | | |
| properties and impairment of net | | | |
| investment in finance leases | | | |
+----------------------------------+-------+--------+---------+
| Net loss from fair value | 16/17 | (6.2) | (60.4) |
| adjustment on investments | | | |
+----------------------------------+-------+--------+---------+
| Loss on sale of investment | 5 | (0.1) | (24.9) |
| properties | | | |
+----------------------------------+-------+--------+---------+
| Operating loss | | (1.2) | (167.6) |
+----------------------------------+-------+--------+---------+
| Finance income | 6 | 1.8 | 3.4 |
+----------------------------------+-------+--------+---------+
| Finance expense | 7 | (12.2) | (32.9) |
+----------------------------------+-------+--------+---------+
| Change in fair value of | 22 | 2.9 | (3.0) |
| derivative financial instruments | | | |
+----------------------------------+-------+--------+---------+
| Share of joint ventures' post | 15 | (1.0) | (97.0) |
| tax losses | | | |
+----------------------------------+-------+--------+---------+
| Loss before income tax | | (9.7) | (297.1) |
+----------------------------------+-------+--------+---------+
| Taxation - current | 8 | 0.8 | (1.0) |
+----------------------------------+-------+--------+---------+
| Taxation - deferred | 8 | - | 4.3 |
+----------------------------------+-------+--------+---------+
| Loss for the year | | (8.9) | (293.8) |
+----------------------------------+-------+--------+---------+
+----------------------------------+----+---------+----------+
| | | p | p |
+----------------------------------+----+---------+----------+
| Loss per share | 11 | (16.09) | (528.30) |
+----------------------------------+----+---------+----------+
| Fully diluted loss per share | 11 | (15.20) | (518.64) |
+----------------------------------+----+---------+----------+
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2010
+----------------------------------+---+-------+---------+
| | | 2010 | 2009 |
+----------------------------------+---+-------+---------+
| | | GBPm | GBPm |
+----------------------------------+---+-------+---------+
| Loss for the year | | (8.9) | (293.8) |
+----------------------------------+---+-------+---------+
| Other comprehensive income / | | | |
| (expense): | | | |
+----------------------------------+---+-------+---------+
| Actuarial losses on retirement | | (0.1) | (0.8) |
| benefit obligations | | | |
+----------------------------------+---+-------+---------+
| Deferred tax arising on | | - | 0.2 |
| retirement benefit obligations | | | |
+----------------------------------+---+-------+---------+
| Total comprehensive expense for | | (9.0) | (294.4) |
| the year | | | |
+----------------------------------+---+-------+---------+
Statement of Financial Position
+------------------------------+-------+---------+---------+---------+---------+
| | | Group | Company |
+------------------------------+-------+-------------------+-------------------+
| | Notes | 2010 | 2009 | 2010 | 2009 |
+------------------------------+-------+---------+---------+---------+---------+
| | | GBPm | GBPm | GBPm | GBPm |
+------------------------------+-------+---------+---------+---------+---------+
| ASSETS | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Non-current assets | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Goodwill | 12 | 11.2 | 11.3 | - | - |
+------------------------------+-------+---------+---------+---------+---------+
| Investment properties | 13 | 212.2 | 267.8 | - | - |
+------------------------------+-------+---------+---------+---------+---------+
| Plant and equipment | 14 | 0.2 | 0.4 | - | - |
+------------------------------+-------+---------+---------+---------+---------+
| Investments in joint | 15 | - | - | - | - |
| ventures | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Investments in funds | 16 | 41.3 | 47.5 | - | - |
+------------------------------+-------+---------+---------+---------+---------+
| Investments in listed and | 17 | 0.3 | 0.3 | 70.6 | 192.5 |
| unlisted shares | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Net investment in finance | 19 | 2.4 | 2.4 | - | - |
| leases | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Deferred income tax assets | 23 | 0.2 | 0.2 | - | - |
+------------------------------+-------+---------+---------+---------+---------+
| Derivative financial assets | 22 | - | - | - | - |
+------------------------------+-------+---------+---------+---------+---------+
| Trade and other receivables | 18 | 2.2 | 1.0 | - | - |
+------------------------------+-------+---------+---------+---------+---------+
| | | 270.0 | 330.9 | 70.6 | 192.5 |
+------------------------------+-------+---------+---------+---------+---------+
| Current assets | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Trade and other receivables | 18 | 6.5 | 9.7 | 68.5 | 55.1 |
+------------------------------+-------+---------+---------+---------+---------+
| Current income tax assets | | - | - | - | 0.3 |
+------------------------------+-------+---------+---------+---------+---------+
| Cash and cash equivalents | | 4.5 | 9.0 | 0.1 | 1.2 |
+------------------------------+-------+---------+---------+---------+---------+
| | | 11.0 | 18.7 | 68.6 | 56.6 |
+------------------------------+-------+---------+---------+---------+---------+
| Total assets | | 281.0 | 349.6 | 139.2 | 249.1 |
+------------------------------+-------+---------+---------+---------+---------+
| LIABILITIES | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Non-current liabilities | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Borrowings, including | 20/21 | (255.1) | (3.6) | - | - |
| finance leases | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Trade and other payables | 25 | (2.1) | (4.3) | (0.2) | (0.5) |
+------------------------------+-------+---------+---------+---------+---------+
| Derivative financial | 22 | (2.5) | (5.4) | - | - |
| liabilities | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Deferred income tax | 23 | - | - | - | - |
| liabilities | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Retirement benefit | 3 | (0.8) | (0.9) | - | - |
| obligations | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Provisions for other | 24 | (4.4) | (1.6) | - | - |
| liabilities and charges | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| | | (264.9) | (15.8) | (0.2) | (0.5) |
+------------------------------+-------+---------+---------+---------+---------+
| Current liabilities | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Borrowings, including | 20/21 | (0.9) | (293.9) | - | - |
| finance leases | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Trade and other payables | 25 | (15.8) | (31.7) | (143.0) | (244.4) |
+------------------------------+-------+---------+---------+---------+---------+
| Current income tax | | (0.3) | (0.1) | - | - |
| liabilities | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Provisions for other | 24 | (3.1) | (3.9) | - | - |
| liabilities and charges | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| | | (20.1) | (329.6) | (143.0) | (244.4) |
+------------------------------+-------+---------+---------+---------+---------+
| Total liabilities | | (285.0) | (345.4) | (143.2) | (244.9) |
+------------------------------+-------+---------+---------+---------+---------+
| Net (liabilities) / assets | | (4.0) | 4.2 | (4.0) | 4.2 |
+------------------------------+-------+---------+---------+---------+---------+
| | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| EQUITY | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Capital and reserves | | | | | |
| attributable to the | | | | | |
| Company's equity holders | | | | | |
+------------------------------+-------+---------+---------+---------+---------+
| Share capital | 26 | 2.8 | 2.8 | 2.8 | 2.8 |
+------------------------------+-------+---------+---------+---------+---------+
| Reserves | 27 | (5.8) | 2.5 | (5.8) | 2.5 |
+------------------------------+-------+---------+---------+---------+---------+
| Investment in own shares | 28 | (1.0) | (1.1) | (1.0) | (1.1) |
+------------------------------+-------+---------+---------+---------+---------+
| Total (deficit) / equity | | (4.0) | 4.2 | (4.0) | 4.2 |
+------------------------------+-------+---------+---------+---------+---------+
Consolidated Statement of Changes in Equity
For the year ended 31 March 2010
+--------------------------------+----+--------+----------+------+----------+----+--+---------+----------+
| | | Group | Company | |
+--------------------------------+----+--------------------------+----------------------------+----------+
| | 2010 | | | | |
| | GBPm | 2009 | 2010 | 2009 | |
| | | GBPm | GBPm | GBPm | |
+-------------------------------------+-------------------+-----------------+-------+---------+----------+
| Opening equity shareholders' funds | 4.2 | 305.2 | 4.2 | 404.8 | |
+-------------------------------------+-------------------+-----------------+-------+---------+----------+
| Total comprehensive expense | (9.0) | (294.4) | (9.0) | (394.0) | |
+-------------------------------------+--------+----------------------------+-------+---------+----------+
| | | | |
+-------------------------------------+-------------------+----------------------+-----------------------+
| Transactions with owners | | | |
+-------------------------------------+-------------------+----------------------+-----------------------+
| Disposal of investment in own | 0.1 | 0.1 | 0.1 | 0.1 | |
| shares | | | | | |
+-------------------------------------+-------------------+-----------------+-------+---------+----------+
| Cost of share based payments | (0.1) | (0.4) | (0.1) | (0.4) | |
+-------------------------------------+-------------------+-----------------+-------+---------+----------+
| Dividend paid in period | - | (6.3) | - | (6.3) | |
+-------------------------------------+-------------------+-----------------+-------+---------+----------+
| Warrants issued | 0.8 | - | 0.8 | - | |
+-------------------------------------+-------------------+-----------------+-------+---------+----------+
| Total transactions with owners | 0.8 | (6.6) | 0.8 | (6.6) | |
+-------------------------------------+-------------------+-----------------+-------+---------+----------+
| Closing (deficit) / surplus on | (4.0) | 4.2 | (4.0) | 4.2 | |
| equity shareholders' funds | | | | | |
+-------------------------------------+-------------------+-----------------+-------+---------+----------+
| | | | | | | | | | |
+--------------------------------+----+--------+----------+------+----------+----+--+---------+----------+
Cash Flow Statements
For the year ended 31 March 2010
+-----------------------------------+-------+---------+---------+-------+---------+
| | | Group | Company |
+-----------------------------------+-------+-------------------+-----------------+
| | Notes | 2010 | 2009 | 2010 | 2009 |
+-----------------------------------+-------+---------+---------+-------+---------+
| | | GBPm | GBPm | GBPm | GBPm |
+-----------------------------------+-------+---------+---------+-------+---------+
| Cash flows from operating | | | | | |
| activities | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Cash generated from operations | 30 | 7.7 | 12.6 | (1.8) | 144.2 |
+-----------------------------------+-------+---------+---------+-------+---------+
| Interest paid | | (11.1) | (19.2) | - | (0.2) |
+-----------------------------------+-------+---------+---------+-------+---------+
| Interest received | | 0.1 | 0.5 | - | - |
+-----------------------------------+-------+---------+---------+-------+---------+
| UK Corporation tax received / | | 1.0 | (0.1) | 0.4 | 0.5 |
| (paid) | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Net cash (outflow) / inflow from | | (2.3) | (6.2) | (1.4) | 144.5 |
| operating activities | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Cash flows from investing | | | | | |
| activities | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Purchase of investment properties | | (1.2) | (10.6) | - | - |
| and capital expenditure | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Sale of investment properties | | 14.5 | 87.5 | - | - |
+-----------------------------------+-------+---------+---------+-------+---------+
| Net cash acquired from disposal | | 36.9 | - | - | - |
| of shares in subsidiary companies | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Return of capital from listed | | - | 1.0 | - | - |
| shares | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Loans to joint ventures | | - | (7.0) | - | - |
+-----------------------------------+-------+---------+---------+-------+---------+
| Distributions received from funds | | 1.3 | 4.1 | - | - |
+-----------------------------------+-------+---------+---------+-------+---------+
| Dividends received from | | - | - | 0.3 | - |
| subsidiaries | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Net cash inflow from investing | | 51.5 | 75.0 | 0.3 | - |
| activities | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Cash flows from financing | | | | | |
| activities | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Dividends paid | | - | (6.3) | - | (6.3) |
+-----------------------------------+-------+---------+---------+-------+---------+
| Increase in bank loans | | 15.7 | - | - | - |
+-----------------------------------+-------+---------+---------+-------+---------+
| Repayment of bank loans | | (53.2) | (25.4) | - | - |
+-----------------------------------+-------+---------+---------+-------+---------+
| Finance fees paid(1) | | (16.2) | (1.9) | - | - |
+-----------------------------------+-------+---------+---------+-------+---------+
| Net cash outflow from financing | | (53.7) | (33.6) | - | (6.3) |
| activities | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Net (decrease) / increase in cash | | (4.5) | 35.2 | (1.1) | 138.2 |
| and cash equivalents* | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Cash and cash equivalents at | | (286.3) | (321.5) | 1.2 | (137.0) |
| beginning of year* | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
| Less: overdraft facility balances | | 295.3 | - | - | - |
+-----------------------------------+-------+---------+---------+-------+---------+
| Cash and cash equivalents at end | | 4.5 | (286.3) | 0.1 | 1.2 |
| of year* | | | | | |
+-----------------------------------+-------+---------+---------+-------+---------+
* 2009 comparatives include overdraft facility balances shown in borrowings. On
refinancing in 2010, these are classified as bank debt.
(1) Finance fees paid include derivative break costs.
Notes to the financial statements
1. Accounting Policies
Basis of preparation
The Financial Statements comprise the consolidated financial statements of
Warner Estate Holdings PLC ("the Group") for the year ended 31 March 2010 and
have been prepared in accordance with International Financial Reporting
Standards ("IFRS") and International Financial Reporting Interpretation
Committee ("IFRIC") interpretations endorsed by the European Union ("EU") and
with those parts of the Companies Act 2006 applicable to companies reporting
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 IFRIC from time to time.
The consolidated financial statements have been prepared under the historical
cost convention, as modified by the revaluation of certain assets and
liabilities, which are carried at fair value, and in accordance with those IFRS
standards and IFRIC interpretations issued and effective or issued and early
adopted as at the time of preparing these accounts.
The parent company's financial statements have also been prepared in accordance
with IFRS, as applied in accordance with the provisions of the Companies Act
2006. The Directors' have taken advantage of the exemption offered by Section
408 of the Companies Act not to present a separate consolidated statement of
comprehensive income for the parent company.
The preparation of financial statements in conformity with IFRS requires the use
of certain critical accounting estimates. It also requires management to
exercise judgement 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.
These financial statements have been prepared on a going concern basis, which
assumes the Group will continue to be able to meet its liabilities when they
fall due, for the foreseeable future.
Although the Group has net liabilities, this is due to non-cash unrealised
losses on investment property and investments in joint ventures and funds.
The current economic conditions continue to give rise to a number of
uncertainties with regards to future income and market valuation movements.
However, as a consequence of the recent refinancing of the Group's debt, the
Directors believe the Group is well placed to manage its business risks
satisfactorily. The Directors' continue to monitor working capital levels on a
regular basis.
Accordingly, after making enquiries, the Directors have a reasonable expectation
that the Group and the Company have adequate resources to continue in
operational existence for the foreseeable future. Therefore the Directors
continue to adopt the going concern basis in preparing the annual report and
accounts.
Standards, interpretations and amendments to published standards that effective
during the year
The following new Standards, Amendments to Standards and Interpretations have
been adopted for the year ended 31 March 2010.
· 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.
· IFRS 7 'Amendment to fair value disclosures'. This requires the
classification of financial hierarchy. The significance of the input determines
the classification of the instrument in the fair value hierarchy.
· IFRS 8 'Operating segments'. This replaces IAS 14, 'Segment reporting',
and aligns segment reporting with the requirements of the equivalent US standard
SFAS 131, 'Disclosures about segments of an enterprise and related information'.
· IAS 23 (revised) 'Borrowing costs' which requires the Group to capitalise
borrowing costs directly attributable to the acquisition, construction or
production of a qualifying asset as part of the cost of that asset.
· IAS 40 (amendment) 'Investment Property' where if the property is
redeveloped it remains under the scope of IAS 40. However property that is under
construction or development for future use as investment property is within the
scope of IAS 16 until it is complete. The amendment removes such property from
the scope of IAS 16 and includes it within the scope of IAS 40 resulting in
measurement at fair value (where the fair value model is applied) rather than at
cost as is currently the case under IAS 16.
Standards, interpretations and amendments to published standards that are not
yet effective
The accounting policies are consistent with those applied in the year ended 31
March 2009, as amended to reflect the adoption of the new Standards, Amendments
to Standards and Interpretations which are mandatory for the year ended 31 March
2010. In most cases, these new requirements are not relevant for the Group.
This is the case for IFRIC 13 'Customer loyalty programmes relating to IAS 18,
Revenue' and IFRIC 14 'IAS 19 The limit on a defined benefit asset, minimum
funding requirements and their interaction'.
The following new Standards, Amendments to Standards and Interpretations have
been issued but are not effective for the year ended 31 March 2010, and have not
been adopted early: IFRS 3 (revised) 'Business combinations' (effective from 1
July 2009), IAS 27 (revised) 'Consolidated and separate financial statements'
(effective from 1 July 2009), IFRIC 12 'Service concession arrangements'
(effective 30 March 2009), IFRIC 16 'Hedges of a Net Investment in a Foreign
Operation' (effective 1 July 2009) and IFRIC 17 'Distributions of non cash
assets to owners' (effective 1 July 2009). It is anticipated that the adoption
of these new Standards and Interpretations in future periods will not have a
material impact on the measurement of assets and liabilities included in the
financial statements or the Group's income and expenses. The Annual Improvements
project also amended various standards; however these have no material impact on
the Group.
Reclassification 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.
Consolidation
(a) Subsidiary undertakings
Subsidiaries are all entities over which the Group has the power to govern the
financial and operating policies generally accompanying a shareholding of more
than one half of the voting rights.
The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group
controls another entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are de-consolidated from the
date control ceases. All inter-company transactions, balances and unrealised
gains on transactions between Group companies are eliminated upon consolidation.
Uniform accounting policies have been adopted across the Group.
(b) Interests in joint ventures
Interests in jointly controlled entities are accounted for using the equity
method. Unrealised gains and losses on transactions between the Group and its
joint ventures are eliminated to the extent of the Group's interest in the joint
ventures. The Group's share of profit of joint ventures represents the Group's
share of the joint venture's profit after tax. Joint ventures with net
liabilities are carried at nil value in the statement of financial position
where there is no commitment to fund the deficit and any distributions are
included in the consolidated statement of income for the year.
Segment reporting
Segmental information is disclosed in the notes to the financial statements
reflecting management reporting of financial performance and position as used in
operational decision making.
Plant and equipment
Plant and equipment is initially measured at cost. After initial recognition,
the fixed assets are carried at cost less subsequent depreciation and
impairment. Cost includes expenditure that is directly attributable to the
acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that the future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. All other repairs and maintenance are
charged to the consolidated statement of income during the financial period in
which they are incurred.
Plant and equipment is depreciated by equal annual instalments over their
estimated useful lives and are carried at historic cost less accumulated
depreciation. The Group estimates a useful life of 3 years for computer
equipment and 8 years for other fixtures and fittings.
Where the carrying amount of a fixed asset is greater than its estimated
recoverable amount, it is written down immediately to its recoverable amount.
Recoverable amount is the higher of fair value less costs to sell and value in
use and is determined for an individual asset. After initial recognition, the
item is carried at its cost less any accumulated depreciation and any
accumulated impairment losses.
Goodwill
Business combinations are accounted for by applying the purchase method. The
excess of the cost of the business combination over the acquirer's interest in
the net fair value of the identifiable assets, liabilities and contingent
liabilities, recognised in accordance with IFRS 3, Business Combinations,
constitutes goodwill, and is recognised as an asset. After initial recognition,
goodwill is measured at cost less any accumulated impairment losses, until
disposal or termination of the previously acquired business (including planned
disposal or termination where there are indications that the value of the
goodwill has been permanently impaired), when the profit or loss on disposal or
termination will be calculated after charging the book amount of any such
goodwill through the consolidated statement of income.
Assets that have an indefinite useful life are not subject to amortisation and
are tested annually for impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. To the extent that the carrying
amount exceeds the recoverable amount, which is the higher of net realisable
value and value in use, the asset is written down to its recoverable amount. Any
impairment is recognisedin the consolidated statement of income and is not
subsequently reversed. Net realisable value is the estimated amount at which an
asset can be disposed of, less any direct selling costs.
Value in use is the estimate of the discounted future cash flows generated from
the asset's continued use, including those resulting from its ultimate disposal.
For the purposes of assessing value in use, assets are grouped at the lowest
levels for which there are separately identifiable cash flows.
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each statement of financial position date.
Investment property
(a) Initial recognition
Property that is held for long-term rental yields or for capital appreciation or
both, and that is not occupied by the Group, is classified as investment
property.
Investment property comprises freehold land, freehold buildings, land held under
operating leases and buildings held under finance leases. When the Group begins
to redevelop an existing investment property for continued future use as an
investment property, the property remains an investment property and is
accounted for as such.
Property that is being constructed or developed for future use as investment
property, but which has not previously been classified as such, is classified as
property under the course of development. This is recognised at fair value.
Interest is capitalised (before tax relief) on the basis of the average rate of
interest paid on the relevant debt outstanding until the date of practical
completion. On completion the property is transferred to investment property.
Land held under operating leases is classified and accounted for as investment
property when the rest of the definition of investment property is met. In such
cases, the operating lease is accounted for as if it were a finance lease.
Investment property is measured initially at its cost, including related
transaction costs.
(b) Fair value
After initial recognition, investment property is carried at fair value. Fair
value is based on active market prices, adjusted, if necessary, for any
difference in the nature, location or condition of the specified asset. The
Group uses external valuers to determine the fair values of investment
properties. These valuations are performed in accordance with the guidance
issued by the Royal Institution of Chartered Surveyors. These valuations are
reviewed at each financial reporting period end by independent external valuers
who hold recognised and relevant professional qualifications and have recent
experience in the location and category of the investment property being valued.
Investment property that is being redeveloped for continuing use as investment
property, or for which the market has become less active, continues to be
measured at fair value.
The fair value of investment property reflects, among other things, rental
income from current leases and assumptions about rental income from future
leases in the light of current market conditions.
The fair value also reflects, on a similar basis, any cash outflows that could
be expected in respect of the property.
Some of those outflows are recognised as a liability, including finance lease
liabilities in respect of land classified as investment property; others,
including contingent rent payments, are not recognised in the financial
statements, unless qualifies as a provision.
(c) Subsequent expenditure
Subsequent expenditure is charged to the asset's carrying amount only when it is
probable that future economic benefit associated with the item will flow to the
Group and the cost of the item can be measured reliably. All repairs and
maintenance costs are charged to the consolidated statement of income during the
financial period in which they are incurred. Gross borrowing costs associated
with direct expenditure on properties under development or undergoing major
refurbishment are capitalised. With specific developments, the amount
capitalised is the gross interest incurred on those borrowings less any
investment income arising on their temporary investment. Interest is
capitalised as from the commencement of the development work until the date of
practical completion. The capitalisation of finance costs is suspended if there
are prolonged periods when development activity is interrupted. Interest is also
capitalised on the purchase cost of a site or property acquired specifically for
redevelopment in the short term but only where activities necessary to prepare
the asset for redevelopment are in progress.
(d) Changes in fair value and transfers
Changes in fair values are recorded in the consolidated statement of income for
investment properties.
If an investment property becomes owner-occupied, it is reclassified as
property, plant and equipment, and its fair value at the date of
reclassification becomes its cost for accounting purposes. Property that is
being constructed or developed for future use as investment property is
classified as properties under the course of development and stated at cost
until construction or development is complete, at which time it is reclassified
and subsequently accounted for as investment property.
When the Group begins to redevelop an existing investment property with a view
to sale, the property is transferred to trading properties and held as a current
asset. The property is re-measured to fair value as at the date of the transfer
with any gain or loss being taken to profit or loss. The re-measured amount
becomes the deemed cost at which the property is then carried in trading
properties.
Cash and cash equivalents
Cash and cash equivalents comprises cash balances, deposits held at call with
banks and other short-term highly liquid investments with original maturities of
three months or less. Cash and cash equivalents are categorised as loans and
receivables. Bank overdrafts that are repayable on demand and form an integral
part of the Group's cash management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows. Bank overdrafts are
disclosed in current and non-current liabilities.
Employee benefits
The Group accounts for pensions under IAS 19 'Employee Benefits'. In respect of
the defined benefit pension scheme, obligations are measured at discounted
present value while scheme assets are measured at their fair value.
The operating and financing costs of this plan is recognised separately in the
consolidated statement of comprehensive income. Service costs are spread
systematically over the working lives of the employees concerned with the charge
for the period included in operating costs in the consolidated statement of
comprehensive income.
Financing costs are recognised in the periods in which they arise and are
included in interest expense. Actuarial gains and losses arising from either
experience differing from previous actuarial assumptions or changes to those
assumptions are recognised immediately in the consolidated statement of
comprehensive income.
Contributions to defined contribution schemes are expensed as incurred.
Income taxes
The investment property segment of the Group's business converted to a REIT as
stated below and is therefore exempt from tax. The asset management segment of
the business continues to be subject to tax.
The charge for current taxation is based on the results for the year as adjusted
for items which are non-assessable or disallowed. It is calculated using rates
that have been enacted or substantively enacted by the statement of financial
position date. Tax payable upon realisation of fair value gains recognised in
prior periods is recorded as a current tax charge with a release of the
associated deferred tax.
Deferred tax is provided using the statement of financial position liability
method in respect of temporary differences between the carrying amount of assets
and liabilities in the financial statements and the corresponding tax bases used
in computation of taxable profit with the exception of deferred tax on fair
value gains where the tax basis used is the accounts historic cost. Provision
is made for temporary differences between the carrying value of assets and
liabilities in the consolidated financial statements and the values used for tax
purposes. Temporary differences are not provided for when they arise from
initial recognition of assets and liabilities that do not affect accounting or
taxable profit.
When distributions are controlled by the Group, and it is probable the temporary
difference will not reverse in the foreseeable future, deferred tax which would
arise on the distribution of profits realised in subsidiaries, associates and
joint ventures is provided in the same period as the liability to pay the
distribution is recognised in the financial statements.
Deferred tax is determined using tax rates that have been enacted or
substantially enacted by the statement of financial position date and are
expected to apply when the related deferred tax asset is realised or the
deferred tax liability is settled. It is recognised in the consolidated
statement of income except when it relates to items credited or charged directly
to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be
utilised.
Deferred tax assets and liabilities are offset only when they relate to taxes
levied by the same authority, with a legal right to set off and when the Group
intends to settle them on a net basis.
Compliance with the Real Estate Investment Trust ("REIT") taxation regime
On 1 April 2007 the Group converted to a group REIT. In order to achieve and
retain group REIT status, several entrance tests had to be met and certain
ongoing criteria must be maintained. The main criteria are as follows:
· at the start of each accounting period, the assets of the tax exempt
business must be at least 75% of the total value of the Group's assets;
· at least 75% of the Group's total profits must arise from the tax exempt
business; and
· at least 90% of the profit of the property rental business must be
distributed.
The Directors intend that the Group should continue as a group REIT for the
foreseeable future, with the result that deferred tax is no longer recognised on
temporary differences relating to the property rental business.
Provisions
Provisions are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is more likely than not that an
outflow of resources will be required to settle the obligation, and the amount
has been reliably estimated.
(a) Onerous contracts
Provision is made in respect of costs incurred on vacant leasehold properties or
for leasehold properties sublet at a level which renders the properties
loss-making over the length of the lease, being the net cash outflow committed
to be incurred over the lives of the leases. Any increase or decrease in the
provision is taken to the consolidated statement of income each financial
period. The provision is assessed on a property by property basis taking
account of individual cash flows. Cash flows are discounted using the risk free
rate.
(b) Share-based payments
The cost of granting share options and other share based remuneration to
employees and directors is recognised through the consolidated statement of
income with reference to the fair value at the date of the grant. The Group has
used the Black-Scholes option valuation model and a stochastic model to
establish the relevant costs. The resulting values are amortised through the
consolidated statement of income over the vesting period of the options and
other grants. The charge is reversed if it appears probable that applicable
performance criteria will not be met.
Own shares held in connection with employee share plans or other share based
payment arrangements are treated as treasury shares and deducted from equity.
No profit or loss is recognised in the consolidated statement of income on their
sale, re-issue or cancellation.
(c) Dilapidations
Where the Group, as lessee, is contractually required to restore a leased
property to an agreed condition, prior to release by a lessor, provision is made
for such dilapidation costs as they are identified.
Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and is stated net of sales taxes and value added taxes. Revenue
includes 'Rental and similar income', 'Service charge and similar income' and
'Turnover from asset management activities'. Revenue is recognised as follows:
(a) Rental and similar income
Rental income from operating lease income is recognised on a straight-line basis
over the lease term.
When the Group provides incentives to its customers, the cost of incentives are
recognised over the lease term, on a straight-line basis, as a reduction of
rental income.
(b) Service charge and similar income
Service and management charge income is recognised on a gross basis in the
accounting period in which the services are rendered. Where the Group is acting
as an agent, the commission rather than gross income is recorded as revenue.
(c) Income from asset management activities
Management fees earned are calculated on an accruals basis. Asset management
income is recognised in the accounting period in which the services are
rendered.
Performance fees are recognised, in line with the asset management contracts, at
the end of the performance period to which they relate, based on the
outperformance of relevant benchmarks. The performance period is normally three
years. Where performance subsequently falls short of these benchmarks, fees are
repayable, up to the amount received for the previous two years. Where there is
a reasonable likelihood that part of a performance fee will be repaid the
estimated repayment will not be recognised until the outcome can be reliably
estimated.
Other income
(a) Income from investments
Dividend income from investments is recognised when the shareholders' rights to
receive payment have been established. Distribution income from funds is
recognised on an accruals basis.
(b) Income from property disposals
Profits or losses arising from the sale of trading and investment properties are
included in the consolidated statement of income of the Group where an exchange
of contracts has taken place under which any minor outstanding conditions not
affecting the transfer of risks and rewards are entirely within the control of
the Group. Profits or losses arising from the sale of trading and investment
properties are calculated by reference to their carrying value and are included
in operating profit.
(c) Other interest income
Other interest income is accrued on a time basis, by reference to the principal
outstanding and the effective interest rate.
Leases
(a) A Group company is the lessee
(i) Operating lease - leases in which substantially all risks and
rewards of ownership are retained by another party, the lessor, are classified
as operating leases. Payments, including prepayments, made under operating
leases (net of any incentives received from the lessor) are charged to the
consolidated statement of income on a straight-line basis over the period of the
lease.
(ii) Finance lease - leases of assets where the Group has
substantially all the risks and rewards of ownership are classified as finance
leases. Finance leases are capitalised at the lease commencement date at the
lower of the fair value of the leased property and the present value of the
minimum lease payments. The investment properties acquired under finance leases
are carried at their fair value.
The corresponding rental obligations, net of finance charges, are included in
current and non-current borrowings. The interest element of the finance cost is
charged to the consolidated statement of income over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the
liability for each period.
(b) A Group company is the lessor
(i) Operating lease - properties leased out under operating leases
are included in investment property in the statement of financial position.
(ii) Finance lease - when assets are leased out under a finance lease,
the present value of the lease payments is recognised as a receivable. The
difference between the gross receivable and the present value of the receivable
accrues as finance income. Lease income is recognised over the term of the lease
using the net investment method before tax, which reflects a constant periodic
rate of return.
Financial instruments and hedging activities
Derivatives
The Group uses derivatives to help manage its interest rate risk. In accordance
with its treasury policy, the Group does not hold or issue derivatives for
trading purposes.
Derivatives are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently remeasured at their fair value.
The method of recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so, the nature of the
item being hedged. None of the derivatives currently held are designated as
hedging instruments and accordingly any gain or loss is recognised in the
consolidated statement of income in the period in which it arises.
Hedge accounting
The Group's derivative financial instruments do not qualify for hedge accounting
and changes in the fair value of derivative financial instruments are recognised
in the consolidated statement of income as they arise.
Financial assets
The Group classifies its financial assets in the following categories: financial
assets at fair value through the consolidated statement of income, loans and
receivables, held-to-maturity investments and available-for-sale financial
assets. The classification depends on the purpose for which the investments were
acquired. Management determines the classification of its investments at initial
recognition and reviews this designation at each reporting date.
Purchases and sales of investments are recognised on the trade date; the date on
which the Group commits to purchase or sell the asset. Investments are initially
recognised at fair value plus transaction costs for all financial assets not
carried at fair value through profit or loss. Investments are derecognised when
the rights to receive cash flows from the investments have expired or have been
transferred and the Group has transferred substantially all risks and rewards of
ownership.
(a) Financial assets at fair value through the consolidated statement
of income
This category has two sub-categories: financial assets held for trading, and
those designated at fair value through the consolidated statement of income at
inception. A financial asset is classified in the first category if acquired
principally for the purpose of selling in the short term or if so designated by
management. Derivatives are also classified as held for trading unless they are
designated as hedges. Assets in the second category are classified as current
assets if they are expected to be realised within 12 months of the statement of
financial position date.
Realised and unrealised gains and losses arising from changes in the fair value
of the 'financial assets at fair value through the consolidated statement of
income' category are included in the consolidated statement of income in the
period in which they arise.
The fair values of listed investments are based on current bid prices. If the
market for a financial asset is not active (and for unlisted securities), the
Group establishes fair value by using valuation techniques. These include the
use of recent arm's length transactions, reference to other instruments that are
substantially the same, discounted cash flow analysis and option pricing models
refined to reflect the issuer's specific circumstances. For unlisted investments
in shares, fair value is based on an average spread of price/earnings ratios
from comparable companies, discounted for non-marketability. Changing the
assumptions to other reasonably possible alternative assumptions would not
change the fair value significantly. For investments in funds, fair value is
measured as the unit price of the holding at the statement of financial position
date.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They arise when
the Group provides money, goods or services directly to a debtor with no
intention of trading the receivable. They are included in current assets, except
for maturities greater than 12 months after the statement of financial position
date. These are classified as non-current assets. Loans and receivables are
included in trade and other receivables in the statement of financial position.
The Group assesses at each statement of financial position date whether there is
objective evidence that a financial asset or a group of financial assets is
impaired.
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost, less provision for impairment. A provision for
impairment in trade receivables is established when there is objective evidence
that the Group will not be able to collect all amounts due according to the
original terms of receivables. The amount of the provision is the difference
between the asset's carrying amount and the present value of estimated future
cash flows, discounted at the effective interest rate. The changes to the
provision are recognised in the consolidated statement of income.
Investments in subsidiary undertakings
Investments in subsidiary undertakings are carried in the company's statement of
financial position at cost less any provision for impairment.
Impairment
The carrying amounts of the Group's and Company's financial assets (where
applicable) and non-financial assets, other than investment properties, are
reviewed at each reporting date to determine whether there is any indication of
impairment. If any such indication exists, the asset's recoverable amount is
estimated. An impairment loss is recognised in the consolidated statement of
income whenever the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount of an asset is the greater of its fair value less costs
to sell and its value in use. The value in use is determined as the net present
value of the future cash flows expected to be derived from the asset, discounted
using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset
An impairment loss is reversed if there has been a change in the estimates used
to determine the recoverable amount. An impairment loss is reversedonly to the
extent that the asset's carrying amount after the reversal does not exceed the
amount that would have been determined, net of applicable depreciation, if no
impairment loss had been recognised.
Borrowings
Borrowings are initially recognised at the fair value of consideration received,
net of transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of transaction costs)
and the redemption value is recognised in the consolidated statement of income
over the period of the borrowings using the effective interest method.
Transaction costs are capitalised on the statement of financial position and are
amortised over the life of the associated borrowing instrument through the
effective rate of interest.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12 months
after the statement of financial position date.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds. Incremental
costs directly attributable to the issue of new shares or options, or for the
acquisition of a business, are included in the cost of acquisition as part of
the purchase consideration.
Where any Group company purchases the Company's equity share capital (treasury
shares), the consideration paid, including any directly attributable incremental
costs, (net of tax) is deducted from equity attributable to the Company's equity
holders until the shares are cancelled, reissued or disposed of. Where such
shares are subsequently sold or reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related income tax
effects, are included in equity attributable to the Company's equity holders.
Warrants reserve
Warrants issued are classified as non-distributable reserves.
The Group issued warrants to two of its lenders in conjunction with the
refinancing entitling them to subscribe for ordinary shares in the Group. These
have been accounted for at fair value on the date of issue. As these warrants
are related to the refinancing, the have been capitalised as transaction costs
and amortised over the life of the associated borrowing as set out in the
borrowing accounting policy.
Critical accounting policies and judgements
The preparation of the Consolidated Financial Statements requires management to
make estimates and assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities, and disclosure of contingencies at the date of
the Consolidated Financial Statements. If in the future such estimates and
assumptions, which are based on management's best judgement at the date of the
Consolidated Financial Statements, deviate from the actual circumstances, the
original estimates and assumptions will be modified, as appropriate, in the
period in which the circumstances change. The following policies are considered
to be of greater complexity and / or particularly subject to the exercise of
judgement. These judgements involve assumptions or estimates in respect of
future events. Actual results may differ from estimates.
(a) Goodwill
As required by IAS 36, Impairment of Assets, the Group regularly monitors the
carrying value of its assets, including goodwill. Impairment reviews compare
the carrying values to the present value of future cash flows that are derived
from the relevant asset or cash-generating unit. These reviews therefore depend
on management estimates and judgements, in particular in relation to the
forecasting of future cash flows and the discount rate applied to the cash
flows.
(b) Post-employment benefits
Application of IAS 19, Employee Benefits, requires the exercise of judgement in
relation to setting the assumptions used by the actuaries in assessing the
financial position of each scheme. The Group determines the assumptions to be
adopted in discussion with its actuaries, and believe these assumptions to be in
line with IAS generally accepted practice.
(c) Provisions
The Group carries statement of financial position provisions in respect of
onerous contracts and dilapidations amongst other exposures. Judgement is
involved in assessing the exposure in these areas and hence in setting the level
of the required provisions.
(d) Estimate of fair value of investment properties
The best evidence of fair value is current prices in an active market for
similar lease and other contracts. In the absence of such information, the
Group, using third party independent experts, determines the amount within a
range of reasonable fair value estimates. In making its judgement, the Group
and its third party independent experts consider information from a variety of
sources including:
i) current prices in an active market for properties of a different
nature, condition or location (or subject to different lease or other
contracts), adjusted to reflect those differences;
ii) recent prices of similar properties in less active markets, with
adjustments to reflect any changes in economic conditions since the date of the
transactions that occurred at those prices; and
iii) discounted cash flow projections based on reliable estimates of future
cash flows, derived from the terms of any existing lease and other contracts,
and (where possible) from external evidence such as current market rents for
similar properties in the same location and condition, and using discount rates
that reflect current market assessments of the uncertainty in the amount and
timing of the cash flows.
(e) Principal assumptions for management's estimation of fair value of
investment properties
If information on current or recent prices of assumptions underlying the
discounted cash flow approach investment properties is not available, the fair
values of investment properties are determined using discounted cash flow
valuation techniques. The Group and its third party independent use assumptions
that are mainly based on market conditions existing at each balance sheet date.
The principal assumptions underlying management's estimation of fair value are
those related to: the receipt of contractual rentals; expected future market
rentals; void periods; maintenance requirements; and appropriate discount rates.
These valuations are regularly compared to actual market yield data and actual
transactions by the company and those reported by the market.
The expected future market rentals are determined on the basis of current market
rentals for similar properties in the same location and condition.
(f) Investments in unlisted shares
The valuation technique is disclosed in the financial assets accounting policy
note. These valuations depend on management estimates and judgements, in
particular in relation to the forecasting of future cash flows and the discount
rate applied to the cash flows.
(g) Derivative financial assets and liabilities
The IASB published amendments to IFRS 7 in March 2009. The amendment requires
enhancing existing disclosures about fair value measurements and liquidity risk.
The amendment requires disclosure of fair value measurements by level of a
three-level fair value measurement hierarchy. The adoption of the amendment
results in additional disclosures but does not have an impact on profit or
earnings per share.
2. Segmental Reporting
Business Segments
Operating segments are determined based on the internal reporting and
operational management of the Group. The Group is organised into two operating
divisions, Property Investment and Asset Management.
Property investment principally involves engaging in acquiring freehold or
leasehold properties, including shopping centres in the UK. Properties are held
for capital appreciation and the revenue relates to rental income and is
measured in a manner consistent with that in the consolidated income statement.
Asset management involves managing property assets and receiving a contractual
fee for the service.
The operating segments derive their revenue primarily from rental income and
management fees.
Unallocated and other activity costs which include the Group's holdings in joint
ventures and investments in funds are incurred centrally which are neither
directly nor reasonably attributable to the individual segments.
+----------------------------------+------------+------------+-------------+---------+
| | Property | Asset | Unallocated | Group |
| | Investment | Management | and other | Total |
| | | | activities | |
+----------------------------------+------------+------------+-------------+---------+
| | GBPm | GBPm | GBPm | GBPm |
+----------------------------------+------------+------------+-------------+---------+
| Year ended 31 March 2010 | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Rental and similar income | 18.7 | - | - | 18.7 |
+----------------------------------+------------+------------+-------------+---------+
| Property management expenses | (5.6) | - | - | (5.6) |
+----------------------------------+------------+------------+-------------+---------+
| Movement in provision for | (4.2) | - | - | (4.2) |
| onerous contracts | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Service charge and similar | 3.1 | - | - | 3.1 |
| income | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Service charge expense and | (4.4) | - | - | (4.4) |
| similar charges | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Net rental income | 7.6 | - | - | 7.6 |
+----------------------------------+------------+------------+-------------+---------+
| Revenue from asset management | | | | |
| activities | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Management fee income | - | 9.9 | - | 9.9 |
+----------------------------------+------------+------------+-------------+---------+
| Performance fee income | - | 1.1 | - | 1.1 |
+----------------------------------+------------+------------+-------------+---------+
| | - | 11.0 | - | 11.0 |
+----------------------------------+------------+------------+-------------+---------+
| Asset management expenses | - | (9.2) | - | (9.2) |
+----------------------------------+------------+------------+-------------+---------+
| Other operating expenses | (0.5) | (1.0) | - | (1.5) |
+----------------------------------+------------+------------+-------------+---------+
| Operating profit before net gain | 7.1 | 0.8 | - | 7.9 |
| on investments | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Net loss from fair value | (2.8) | - | - | (2.8) |
| adjustments on investment | | | | |
| properties and impairment of net | | | | |
| investment in finance leases | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Net loss from fair value | - | - | (6.2) | (6.2) |
| adjustments on investments | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Loss on sale of investment | (0.1) | - | - | (0.1) |
| properties | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Operating profit / ( loss) | 4.2 | 0.8 | (6.2) | (1.2) |
+----------------------------------+------------+------------+-------------+---------+
| Net interest expense | - | - | (7.5) | (7.5) |
+----------------------------------+------------+------------+-------------+---------+
| Share of joint ventures' post | - | - | (1.0) | (1.0) |
| tax losses | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Profit / (loss) before income | 4.2 | 0.8 | (14.7) | (9.7) |
| tax | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Taxation - current | 0.8 | - | - | 0.8 |
+----------------------------------+------------+------------+-------------+---------+
| Taxation - deferred | - | - | - | - |
+----------------------------------+------------+------------+-------------+---------+
| Profit / (loss) for the year | 5.0 | 0.8 | (14.7) | (8.9) |
+----------------------------------+------------+------------+-------------+---------+
| | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Total assets | 219.6 | 13.9 | 47.5 | 281.0 |
+----------------------------------+------------+------------+-------------+---------+
| Total liabilities excluding | (19.1) | (0.7) | (9.2) | (29.0) |
| borrowings and finance leases | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Borrowing, including finance | (256.0) | - | - | (256.0) |
| leases | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Net (liabilities) / assets | (55.5) | 13.2 | 38.3 | (4.0) |
+----------------------------------+------------+------------+-------------+---------+
| Other segment items: | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Capital expenditure | 1.2 | - | - | 1.2 |
+----------------------------------+------------+------------+-------------+---------+
| Depreciation | - | 0.2 | - | 0.2 |
+----------------------------------+------------+------------+-------------+---------+
+----------------------------------+------------+------------+-------------+---------+
| | Property | Asset | Unallocated | Group |
| | Investment | Management | and other | Total |
| | | | activities | |
+----------------------------------+------------+------------+-------------+---------+
| | GBPm | GBPm | GBPm | GBPm |
+----------------------------------+------------+------------+-------------+---------+
| Year ended 31 March 2009 | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Rental and similar income | 30.2 | - | - | 30.2 |
+----------------------------------+------------+------------+-------------+---------+
| Property management expenses | (8.1) | - | - | (8.1) |
+----------------------------------+------------+------------+-------------+---------+
| Movement in provision for | (1.9) | - | - | (1.9) |
| onerous contracts | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Service charge and similar | 4.7 | - | - | 4.7 |
| income | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Service charge expense and | (5.7) | - | - | (5.7) |
| similar charges | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Net rental income | 19.2 | - | - | 19.2 |
+----------------------------------+------------+------------+-------------+---------+
| Revenue from asset management | | | | |
| activities | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Management fee income | - | 12.2 | - | 12.2 |
+----------------------------------+------------+------------+-------------+---------+
| Performance fee income | - | - | - | - |
+----------------------------------+------------+------------+-------------+---------+
| Performance fee | - | (4.6) | - | (4.6) |
| provision | | | | |
+----------------------------------+------------+------------+-------------+---------+
| | - | 7.6 | - | 7.6 |
+----------------------------------+------------+------------+-------------+---------+
| Asset management expenses | - | (9.1) | - | (9.1) |
+----------------------------------+------------+------------+-------------+---------+
| Administrative expenses | (0.4) | (0.8) | - | (1.2) |
+----------------------------------+------------+------------+-------------+---------+
| Operating profit / (loss) before | 18.8 | (2.3) | - | 16.5 |
| net gain on investments | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Net loss from fair value | (98.8) | - | - | (98.8) |
| adjustments on investment | | | | |
| properties and impairment of net | | | | |
| investment in finance leases | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Net loss from fair value | - | - | (60.4) | (60.4) |
| adjustments on investments | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Loss on sale of investment | (24.9) | - | - | (24.9) |
| properties | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Operating loss | (104.9) | (2.3) | (60.4) | (167.6) |
+----------------------------------+------------+------------+-------------+---------+
| Net interest expense | - | - | (32.5) | (32.5) |
+----------------------------------+------------+------------+-------------+---------+
| Share of joint ventures' post | - | - | (97.0) | (97.0) |
| tax losses | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Loss before income tax | (104.9) | (2.3) | (189.9) | (297.1) |
+----------------------------------+------------+------------+-------------+---------+
| Taxation - current | (0.8) | (0.2) | - | (1.0) |
+----------------------------------+------------+------------+-------------+---------+
| Taxation - deferred | (0.6) | - | 4.9 | 4.3 |
+----------------------------------+------------+------------+-------------+---------+
| Loss for the year | (106.3) | (2.5) | (185.0) | (293.8) |
+----------------------------------+------------+------------+-------------+---------+
| | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Total assets | 276.6 | 13.9 | 59.1 | 349.6 |
+----------------------------------+------------+------------+-------------+---------+
| Total liabilities excluding | (33.3) | (2.7) | (11.9) | (47.9) |
| borrowings and finance leases | | | | |
+----------------------------------+------------+------------+-------------+---------+
| Borrowing, including finance | (3.6) | - | (293.9) | (297.5) |
| leases | | | | |
+----------------------------------+------------+------------+-------------+---------+
| 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.
(a) Rents receivable includes GBP0.3 million (2009: GBP0.5million
charge) which represents rent allocated to rent free periods.
(b) Service charge and similar income includes monies received from
tenants in respect of service charge costs the tenants bear on their properties.
Service charge costs not recovered ("void costs") are included within service
charge expense and similar charges of GBP1.3 million (2009: GBP1.0million).
(c) For the year to March 2008 GBP1.6million provided for potential
claw back of performance fees from Apia. In 2009 the claw back was confirmed at
GBP2.5million, a further GBP0.9million provided. Provision made for the full
performance fees of GBP3.7million from Agora Max.
Reportable segments' losses after tax are reconciled to total loss for the year
as follows:
+----------------------------------+---------+---------+---------+
| | | 2010 | 2009 |
+----------------------------------+---------+---------+---------+
| | | GBPm | GBPm |
+----------------------------------+---------+---------+---------+
| Segments profit / (loss) after | | 5.8 | (108.8) |
| tax for reportable segments | | | |
+----------------------------------+---------+---------+---------+
| Unallocated: | | | |
+----------------------------------+---------+---------+---------+
| Net loss from fair value | | (6.2) | (60.4) |
| adjustments on investments | | | |
+----------------------------------+---------+---------+---------+
| Finance income | | 1.8 | 3.4 |
+----------------------------------+---------+---------+---------+
| Finance expense | | (12.2) | (32.9) |
+----------------------------------+---------+---------+---------+
| Change in fair value of | | 2.9 | (3.0) |
| derivative financial instruments | | | |
+----------------------------------+---------+---------+---------+
| Share of joint ventures' post | | (1.0) | (97.0) |
| tax losses | | | |
+----------------------------------+---------+---------+---------+
| Taxation - deferred | | - | 4.9 |
+----------------------------------+---------+---------+---------+
| Total losses per consolidated | | (8.9) | (293.8) |
| statement of income | | | |
+----------------------------------+---------+---------+---------+
Reportable segments' assets are reconciled to total assets as follows:
+----------------------------------+---------+---------+---------+
| | | 2010 | 2009 |
+----------------------------------+---------+---------+---------+
| | | GBPm | GBPm |
+----------------------------------+---------+---------+---------+
| Segments assets for reportable | | 233.5 | 290.5 |
| segments | | | |
+----------------------------------+---------+---------+---------+
Unallocated:
+----------------------------------+---------+---------+---------+
| Investments in funds | | 41.3 | 47.5 |
+----------------------------------+---------+---------+---------+
| Investments in listed and | | 0.3 | 0.3 |
| unlisted shares | | | |
+----------------------------------+---------+---------+---------+
| Debtors | | 1.0 | 1.7 |
+----------------------------------+---------+---------+---------+
| Plant and equipment | | 0.2 | 0.4 |
+----------------------------------+---------+---------+---------+
| Current income tax assets | | - | - |
+----------------------------------+---------+---------+---------+
| Deferred income tax assets | | 0.2 | 0.2 |
+----------------------------------+---------+---------+---------+
| Cash and cash equivalents | | 4.5 | 9.0 |
+----------------------------------+---------+---------+---------+
| Total assets per statement of | | 281.0 | 349.6 |
| financial position | | | |
+----------------------------------+---------+---------+---------+
Reportable segments' liabilities are reconciled to total liabilities as follows:
+----------------------------------+---------+---------+---------+
| | | 2010 | 2009 |
+----------------------------------+---------+---------+---------+
| | | GBPm | GBPm |
+----------------------------------+---------+---------+---------+
| Segments liabilities for | | 275.8 | 39.6 |
| reportable segments | | | |
+----------------------------------+---------+---------+---------+
Unallocated:
+----------------------------------+---------+---------+---------+
| Bank loans and overdrafts | | - | 293.9 |
+----------------------------------+---------+---------+---------+
| Derivative financial liabilities | | 2.5 | 5.4 |
+----------------------------------+---------+---------+---------+
| Retirement benefit obligations | | 0.8 | 0.9 |
+----------------------------------+---------+---------+---------+
| Current income tax liabilities | | 0.3 | - |
+----------------------------------+---------+---------+---------+
| Trade and other payables | | 5.6 | 5.6 |
+----------------------------------+---------+---------+---------+
| Total liabilities per statement | | 285.0 | 345.4 |
| of financial position | | | |
+----------------------------------+---------+---------+---------+
The Group is domiciled in the United Kingdom where revenue is generated from
property assets and management fee income. All revenue derived from external
customers is listed above. All of the Group's non-current assets, current assets
and all liabilities are domiciled in the United Kingdom.
The parent company is a holding company and does not operate in any segments.
+----------------------------------+---------+---------+---------+
| | | 2010 | 2009 |
+----------------------------------+---------+---------+---------+
| | | GBPm | GBPm |
+----------------------------------+---------+---------+---------+
| Operating profit is stated after | | | |
| charging: | | | |
+----------------------------------+---------+---------+---------+
| Depreciation - owned assets | | 0.2 | 0.2 |
+----------------------------------+---------+---------+---------+
| Operating lease charges - | | 0.9 | 0.9 |
| occupied properties | | | |
+----------------------------------+---------+---------+---------+
During the year the following amounts were charged to the consolidated statement
of income in respect of auditors' remuneration:
+------------------------------------------+-------+------+
| | 2010 | 2009 |
+------------------------------------------+-------+------+
| | GBPm | GBPm |
+------------------------------------------+-------+------+
| Remuneration to the principal auditor in | | |
| respect of audit fees: | | |
+------------------------------------------+-------+------+
| Statutory audit of the company and | 0.2 | 0.1 |
| consolidated accounts | | |
+------------------------------------------+-------+------+
| Remuneration to the principal auditor in | | |
| respect of other services: | | |
+------------------------------------------+-------+------+
| Statutory audit of subsidiary accounts | 0.1 | 0.3 |
+------------------------------------------+-------+------+
| Non-audit services: Taxation | 0.1 | 0.1 |
+------------------------------------------+-------+------+
| | 0.4 | 0.5 |
+------------------------------------------+-------+------+
In addition GBP0.1million was charged by the Auditors for audit services to the
joint ventures (2009: GBP0.1million) and GBP0.1million for tax work (2009:
GBP0.1million).
3. Employees
+------------------------------------------+-------+------+
| | 2010 | 2009 |
+------------------------------------------+-------+------+
| | GBPm | GBPm |
+------------------------------------------+-------+------+
| Staff costs | | |
+------------------------------------------+-------+------+
| Wages and salaries | 6.1 | 8.4 |
+------------------------------------------+-------+------+
| Social security costs | 0.7 | 1.0 |
+------------------------------------------+-------+------+
| Other pension costs | 0.6 | 0.7 |
+------------------------------------------+-------+------+
| Other staff costs | 0.4 | 0.1 |
+------------------------------------------+-------+------+
| Share based payment costs | 0.1 | 0.4 |
+------------------------------------------+-------+------+
| | 7.9 | 10.6 |
+------------------------------------------+-------+------+
The amounts above are net of GBP0.9million (2009: GBP1.2million) relating to
staff costs recharged to certain joint ventures and funds.
+------------------------------------------+--------+--------+
| | 2010 | 2009 |
+------------------------------------------+--------+--------+
| | Number | Number |
+------------------------------------------+--------+--------+
| The average number of persons employed | | |
| during the year was: | | |
+------------------------------------------+--------+--------+
| Directors | 3 | 3 |
+------------------------------------------+--------+--------+
| Management and administrative | 135 | 165 |
+------------------------------------------+--------+--------+
| Repairs and service | 29 | 34 |
+------------------------------------------+--------+--------+
| | 167 | 202 |
+------------------------------------------+--------+--------+
The parent company had no employees during the year (2009: Nil).
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
consolidated statement of income for the year to 31 March 2010 in respect of
these amounted to GBP0.3 million (2009: GBP0.7million). Pension premiums paid
in advance were GBPnil (2009: GBP0.1million).
The Group operates a funded defined benefit scheme in the UK, The Warner Estate
Group Retirement Benefits Scheme. The costs charged to the consolidated
statement of income for the year to 31 March 2010 in respect of these amounted
to GBP0.3million (2009: GBP0.1million). A full valuation was carried out at 1
April 2009. The values at 31 March 2010 were updates of the 1 April 2009
valuation carried out by a qualified independent actuary.
It has been agreed with the Trustees that the Group contributes 37.7% of
pensionable salary plus GBP0.2million per annum.
The discount rate used to calculate the funding target is equal to the yield on
fixed interest gilts of appropriate term at the valuation date plus 2% per annum
for active and deferred members over the period to retirement. The inflation
assumption is derived from the difference between the yield on fixed interest
gilts and the yield on indexed-linked gilts at the valuation date.
Warner Estate Holdings PLC employs a building block approach in determining the
long term rate of return on pension plan assets. Historical markets are studied
and assets with higher volatility are assumed to generate higher returns
consistent with widely accepted capital market principles. The assumed long-term
rate of return on each asset class is set out within this note. The overall
expected rate of return on assets is then derived by aggregating the expected
return for each asset class over the actual asset allocation for the Scheme at
the 31 March 2010.
Actuarial gains and losses are recognisedthrough the Consolidated Statement of
Changes in Equity.
The following assumptions were made by the Group:
+--------------------------------------------------+-------+---------+
| | 2010 | 2009 |
+--------------------------------------------------+-------+---------+
| | % per | % per |
| | annum | annum |
+--------------------------------------------------+-------+---------+
| Discount rate | 5.55 | 6.50 |
+--------------------------------------------------+-------+---------+
| Rate of increase in pensionable salaries | 3.95 | 3.60 |
+--------------------------------------------------+-------+---------+
| Rate of increases to pensions in payment | 3.65 | 3.40 |
+--------------------------------------------------+-------+---------+
| Price inflation | 3.95 | 3.60 |
+--------------------------------------------------+-------+---------+
Mortality assumptions are based on standard mortality tables which allow for
future mortality improvements. The assumptions are that a member currently aged
60 will live on average for a further 29 years if they are male and for a
further 30 years if they are female. For a member who retires in future at age
60 the assumptions are that they will live on average for a further 31 years
after retirement if they are male and for a further 32 years after retirement if
they are female.
The market value of the assets of the Scheme together with the expected rates of
return at the beginning and end of the year were as follows:
+---------------------------------+-----------+-------+-----------+---------+
| | Long-term | Value | Long-term | Value |
| | rate of | at 31 | rate of | at |
| | return | March | return | 31 |
| | expected | 2010 | expected | March |
| | at 31 | | at 31 | 2009 |
| | March | | March | |
| | 2010 | | 2009 | |
+---------------------------------+-----------+-------+-----------+---------+
| | % | GBPm | % | GBPm |
+---------------------------------+-----------+-------+-----------+---------+
| Equities | 8.40 | 0.70 | 7.90 | 0.40 |
+---------------------------------+-----------+-------+-----------+---------+
| Fixed interest bonds | 5.55 | 0.10 | 6.50 | 0.10 |
+---------------------------------+-----------+-------+-----------+---------+
| Insured assets | 5.55 | 5.00 | 6.50 | 4.50 |
+---------------------------------+-----------+-------+-----------+---------+
| Cash | 0.65 | 0.10 | 1.70 | 0.10 |
+---------------------------------+-----------+-------+-----------+---------+
| Total | 7.30 | 5.90 | 7.10 | 5.10 |
+---------------------------------+-----------+-------+-----------+---------+
None of the scheme assets are property related.
Reconciliation of Funded Status to Statement of Financial Position
+---------------------------------+--------+--------+
| | Value | Value |
| | at | at |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+---------------------------------+--------+--------+
| | GBPm | GBPm |
+---------------------------------+--------+--------+
| Fair value of Scheme assets | 5.9 | 5.1 |
+---------------------------------+--------+--------+
| Present value of non-insured | (1.7) | (1.4) |
| defined benefit of obligations | | |
+---------------------------------+--------+--------+
| Liability in respect of insured | (5.0) | (4.6) |
| pensioners | | |
+---------------------------------+--------+--------+
| Liability recognised in the | (0.8) | (0.9) |
| statement of financial position | | |
+---------------------------------+--------+--------+
| Related deferred tax asset | 0.2 | 0.2 |
+---------------------------------+--------+--------+
| Net pension liability | (0.6) | (0.7) |
+---------------------------------+--------+--------+
Changes to the Present Value of the Defined Benefit Obligation
+----------------------------------------------------+--------+-------+
| | 2010 | 2009 |
+----------------------------------------------------+--------+-------+
| | GBPm | GBPm |
+----------------------------------------------------+--------+-------+
| Opening defined benefit obligation | 6.0 | 5.6 |
+----------------------------------------------------+--------+-------+
| Current service cost | - | - |
+----------------------------------------------------+--------+-------+
| Interest cost | 0.4 | 0.4 |
+----------------------------------------------------+--------+-------+
| Actuarial profits on Scheme liabilities* | 0.7 | 0.5 |
+----------------------------------------------------+--------+-------+
| Contributions by plan participants | - | - |
+----------------------------------------------------+--------+-------+
| Net benefits paid out | (0.4) | (0.5) |
+----------------------------------------------------+--------+-------+
| Closing defined benefit obligation | 6.7 | 6.0 |
+----------------------------------------------------+--------+-------+
*Includes changes to the actuarial assumptions.
Changes to the Fair Value of Scheme Assets
+----------------------------------------------------+--------+-------+
| | 2010 | 2009 |
+----------------------------------------------------+--------+-------+
| | GBPm | GBPm |
+----------------------------------------------------+--------+-------+
| Opening fair value of Scheme assets | 5.1 | 5.5 |
+----------------------------------------------------+--------+-------+
| Expected return on assets | 0.4 | 0.4 |
+----------------------------------------------------+--------+-------+
| Actuarial gains / (losses) on Scheme assets | 0.6 | (0.3) |
+----------------------------------------------------+--------+-------+
| Contributions by the employer | 0.2 | 0.1 |
+----------------------------------------------------+--------+-------+
| Contributions by plan participants | - | - |
+----------------------------------------------------+--------+-------+
| Net benefits paid out | (0.4) | (0.6) |
+----------------------------------------------------+--------+-------+
| Closing fair value of Scheme assets | 5.9 | 5.1 |
+----------------------------------------------------+--------+-------+
Actual Return on Scheme Assets
+----------------------------------------------------+--------+-------+
| | 2010 | 2009 |
+----------------------------------------------------+--------+-------+
| | GBPm | GBPm |
+----------------------------------------------------+--------+-------+
| Expected return on Scheme assets | 0.4 | 0.4 |
+----------------------------------------------------+--------+-------+
| Actuarial gains / (losses) on Scheme assets | 0.6 | (0.3) |
+----------------------------------------------------+--------+-------+
| Actual return on Scheme assets | 1.0 | 0.1 |
+----------------------------------------------------+--------+-------+
Analysis of Consolidated Statement of Comprehensive Income Charge
+----------------------------------------------------+--------+-------+
| | 2010 | 2009 |
+----------------------------------------------------+--------+-------+
| | GBPm | GBPm |
+----------------------------------------------------+--------+-------+
| Current service cost | - | - |
+----------------------------------------------------+--------+-------+
| Interest cost | 0.4 | 0.3 |
+----------------------------------------------------+--------+-------+
| Expected return on scheme assets | (0.3) | (0.4) |
+----------------------------------------------------+--------+-------+
| Expense / (Income) recognised in consolidated | 0.1 | (0.1) |
| statement of comprehensive income | | |
+----------------------------------------------------+--------+-------+
Current service cost is recognised within property management and asset
management expenses. Interest cost and expected return on plan assets are
recognised in finance income.
Analysis of Amounts Recognised in Consolidated Statement of Comprehensive Income
+----------------------------------------------------+--------+-------+
| | 2010 | 2009 |
+----------------------------------------------------+--------+-------+
| | GBPm | GBPm |
+----------------------------------------------------+--------+-------+
| Total actuarial losses | (0.1) | (0.8) |
+----------------------------------------------------+--------+-------+
| Related deferred tax | - | 0.2 |
+----------------------------------------------------+--------+-------+
| Total loss in consolidated statement of | (0.1) | (0.6) |
| comprehensive income | | |
+----------------------------------------------------+--------+-------+
| | | |
+----------------------------------------------------+--------+-------+
| Cumulative amount of losses recognised in | (1.2) | (1.1) |
| consolidated statement of comprehensive income | | |
+----------------------------------------------------+--------+-------+
History of Asset Values, Defined Benefit Obligation, Surplus / (Deficit) in
Scheme and Experience Gains and Losses
+-----------------------+-------+-------+--------+--------+---------+
| | 2010 | 2009 | 2008 | 2007 | 2006 |
+-----------------------+-------+-------+--------+--------+---------+
| | GBPm | GBPm | GBPm | GBPm | GBPm |
+-----------------------+-------+-------+--------+--------+---------+
| Fair value of Scheme | 5.9 | 5.1 | 5.5 | 5.8 | 5.8 |
| assets | | | | | |
+-----------------------+-------+-------+--------+--------+---------+
| Defined benefit | (6.7) | (6.0) | (5.6) | (6.2) | (6.3) |
| obligation | | | | | |
+-----------------------+-------+-------+--------+--------+---------+
| Deficit in Scheme | (0.8) | (0.9) | (0.1) | (0.4) | (0.5) |
+-----------------------+-------+-------+--------+--------+---------+
| Experience gains / | 0.6 | (0.3) | (0.5) | (0.1) | 0.7 |
| (losses) on Scheme | | | | | |
| assets | | | | | |
+-----------------------+-------+-------+--------+--------+---------+
| Experience gains / | 0.1 | (0.2) | 0.1 | 0.1 | 0.1 |
| (losses) on Scheme | | | | | |
| liabilities | | | | | |
+-----------------------+-------+-------+--------+--------+---------+
The estimated amounts of contributions expected to be paid to the Scheme during
the year to March 2011 are GBP0.3million.
4. Directors' Remuneration
A summary of Directors' remuneration, including disclosures required by the
Companies Act 2006 and those specified by the Financial Services Authority, is
contained in the Report and Accounts which will be published in due course
5. Loss on Sale of Investment Properties
+------------------------------------+-------+--------+
| | 2010 | 2009 |
+------------------------------------+-------+--------+
| | GBPm | GBPm |
+------------------------------------+-------+--------+
| | | |
+------------------------------------+-------+--------+
| Net deficit over book value and | (0.1) | (24.9) |
| fair value gains | | |
+------------------------------------+-------+--------+
This includes disposal costs in relation to the disposal of assets and
liabilities in JS Real Estate Limited. Further disclosure is made in note 34.
6. Finance Income
+------------------------------------+-------+-------+
| | 2010 | 2009 |
+------------------------------------+-------+-------+
| | GBPm | GBPm |
+------------------------------------+-------+-------+
| Income from investments | | |
+------------------------------------+-------+-------+
| Distributions from funds (see note | 0.7 | 3.2 |
| 16) | | |
+------------------------------------+-------+-------+
| Return of capital from listed | - | 0.5 |
| investments | | |
+------------------------------------+-------+-------+
| | | |
+------------------------------------+-------+-------+
| Interest receivable and similar | | |
| income: | | |
+------------------------------------+-------+-------+
| From joint ventures | (0.3) | 0.5 |
+------------------------------------+-------+-------+
| Provision against interest | 1.3 | (1.3) |
| receivable from joint ventures | | |
+------------------------------------+-------+-------+
| | 1.0 | (0.8) |
+------------------------------------+-------+-------+
| Other interest | 0.2 | 0.4 |
+------------------------------------+-------+-------+
| Other finance income | | |
+------------------------------------+-------+-------+
| Expected return on pension | 0.3 | 0.4 |
| scheme assets | | |
+------------------------------------+-------+-------+
| Interest on pension scheme | (0.4) | (0.3) |
| liabilities | | |
+------------------------------------+-------+-------+
| | (0.1) | 0.1 |
+------------------------------------+-------+-------+
| | 1.8 | 3.4 |
+------------------------------------+-------+-------+
Dividends from listed investments, unlisted investments and distributions from
funds represent income from financial assets at fair value through the
consolidated statement of income.
In 2009 a provision was made against interest receivable on loan notes from
Greater London Offices Limited. This provision was reversed in 2010 as the
interest was repaid in full.
Other interest represents income from financial assets categorised as loans and
receivables.
7. Finance Expense
+------------------------------------+------+------+
| | 2010 | 2009 |
+------------------------------------+------+------+
| | GBPm | GBPm |
+------------------------------------+------+------+
| Interest payable on loans and | 10.1 | 17.3 |
| overdrafts | | |
+------------------------------------+------+------+
| Charges in respect of cost of | 1.9 | 15.4 |
| raising finance | | |
+------------------------------------+------+------+
| | 12.0 | 32.7 |
+------------------------------------+------+------+
| Less: Interest capitalised | - | - |
+------------------------------------+------+------+
| | 12.0 | 32.7 |
+------------------------------------+------+------+
| Interest payable under finance | 0.2 | 0.2 |
| leases | | |
+------------------------------------+------+------+
| | 12.2 | 32.9 |
+------------------------------------+------+------+
Interest payable on loans and overdrafts and charges in respect of raising
finance represent expenses on financial liabilities at amortised cost.
8. Taxation
+------------------------------+-----------------+--------+
| | 2010 | 2009 |
+------------------------------+-----------------+--------+
| | GBPm | GBPm |
+------------------------------+-----------------+--------+
| Current tax | | |
+------------------------------+-----------------+--------+
| UK corporation tax: | | |
+------------------------------+-----------------+--------+
| Current at 28% (2009: | - | 0.9 |
| 28%) | | |
+------------------------------+-----------------+--------+
| (Over) / under provision | (0.8) | 0.1 |
| in respect of prior year's | | |
| tax charge | | |
+------------------------------+-----------------+--------+
| | (0.8) | 1.0 |
+------------------------------+-----------------+--------+
| Deferred taxation | - | (4.3) |
+------------------------------+-----------------+--------+
| | (0.8) | (3.3) |
+------------------------------+-----------------+--------+
+----------------------------------------+-------+----------+---------+
| The tax on the group's loss before | 2010 | | 2009 |
| income tax differs from the | | | |
| theoretical amount that would arise | | | |
| using the weighted average tax rate | | | |
| applicable to profits or losses of the | | | |
| consolidated entities as follows: | | | |
+----------------------------------------+-------+----------+---------+
| | GBPm | | GBPm |
+----------------------------------------+-------+----------+---------+
| (Loss) / profit on ordinary activities | (9.7) | | (297.1) |
| before taxation | | | |
+----------------------------------------+-------+----------+---------+
| Tax @ 28% (2009: 28%) | (2.7) | | (83.2) |
+----------------------------------------+-------+----------+---------+
| Effect of REIT exemption | | | |
+----------------------------------------+-------+----------+---------+
| Net operating losses / | 0.4 | | (1.2) |
| (profits) after net finance costs | | | |
+----------------------------------------+-------+----------+---------+
| Realised profit on disposal of | - | | 6.8 |
| investment properties | | | |
+----------------------------------------+-------+----------+---------+
| Fair value losses on | 0.8 | | 27.7 |
| investment properties | | | |
+----------------------------------------+-------+----------+---------+
| Tax (release) / charge on | (0.8) | | 0.8 |
| finance cost ratio | | | |
+----------------------------------------+-------+----------+---------+
| | 0.4 | | 34.1 |
+----------------------------------------+-------+----------+---------+
| Share of joint ventures' post tax | 0.3 | | 27.2 |
| losses | | | |
+----------------------------------------+-------+----------+---------+
| Losses carried forward, no deferred | 0.2 | | 4.8 |
| tax asset provided | | | |
+----------------------------------------+-------+----------+---------+
| Non-taxable (expenditure) / income | (0.7) | | 0.6 |
+----------------------------------------+-------+----------+---------+
| Disallowable expenses | 0.8 | | (0.2) |
+----------------------------------------+-------+----------+---------+
| Fair value (gains) / losses of | (0.8) | | 1.4 |
| derivative financial instruments | | | |
+----------------------------------------+-------+----------+---------+
| Fair value losses on investments | 1.7 | | 11.9 |
+----------------------------------------+-------+----------+---------+
| Underprovision in respect of prior | - | | 0.1 |
| years | | | |
+----------------------------------------+-------+----------+---------+
| | | | |
+----------------------------------------+-------+----------+---------+
| | (0.8) | | (3.3) |
+----------------------------------------+-------+----------+---------+
9. Loss of Warner Estate Holdings PLC
The Company has taken advantage of the exemption provided by Section 408 of the
Companies Act 2006 from presenting its own statement of income. Loss
attributable to members includes GBP9.0million (2009: GBP394.0million loss)
which has been dealt with in the accounts of the Company.
10. Dividends
+----------------------------------------+-------+-------+
| Group and Company | 2010 | 2009 |
+----------------------------------------+-------+-------+
| | GBPm | GBPm |
+----------------------------------------+-------+-------+
| On Ordinary 5p shares | | |
+----------------------------------------+-------+-------+
| Final 11.25p at 31 March 2008 paid 19 | - | 6.3 |
| September 2008 | | |
+----------------------------------------+-------+-------+
| | - | 6.3 |
+----------------------------------------+-------+-------+
No final dividend is proposed by the Board.
11. Earnings Per Share
Losses per share of 16.09p (2009: 528.30p) are calculated on the losses for the
year of GBP8.9million (2009: GBP293.8million) and the weighted average of
55,332,560 (2009: 55,592,011) shares in issue throughout the year.
Diluted losses per share of 15.20p (2009: 518.64p) are calculated on the loss
for the year as above divided by the weighted average number of shares in issue,
being 58,534,466 (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:
+------------------------------------------+------------+------------+
| | 2010 | 2009 |
+------------------------------------------+------------+------------+
| | | |
+------------------------------------------+------------+------------+
| Earnings per share: weighted average | 55,332,560 | 55,592,011 |
| number of shares | | |
+------------------------------------------+------------+------------+
| Weighted average ordinary shares to be | 770,027 | 1,035,884 |
| issued under employee incentive | | |
| arrangements | | |
+------------------------------------------+------------+------------+
| Weighted average warrants for ordinary | 2,431,879 | - |
| shares to be issued | | |
+------------------------------------------+------------+------------+
| Diluted earnings per share: weighted | 58,534,466 | 56,627,895 |
| average number of shares | | |
+------------------------------------------+------------+------------+
12. Goodwill
+----------------------------------------+-------+
| | GBPm |
+----------------------------------------+-------+
| Group | |
+----------------------------------------+-------+
| Cost | |
+----------------------------------------+-------+
| At 31 March 2009 | 11.3 |
+----------------------------------------+-------+
| Additions | - |
+----------------------------------------+-------+
| At 31 March 2010 | 11.3 |
+----------------------------------------+-------+
| Derecognition | (0.1) |
+----------------------------------------+-------+
| At 31 March 2010 | 11.2 |
+----------------------------------------+-------+
| Net book value at 31 March 2010 | 11.2 |
+----------------------------------------+-------+
| Net book value at 31 March 2009 | 11.3 |
+----------------------------------------+-------+
Goodwill is not amortised but is subject to an annual impairment test. Goodwill
of GBP11.2million is allocated to the cash generating unit ("CGU") defined as
the asset management business owned by Industrial Funds Limited. The
derecognition of GBP0.1million relates to the goodwill allocated to the CGU
defined as the property investment business owned by JS Real Estate Limited. The
amount of GBP0.1million has been included in property management expenses in the
consolidated statement of income. The review was carried out on the disposal of
the business. The recoverable amount of the asset management business has been
used to assess whether the goodwill is impaired. The recoverable amount has been
valued on the basis of multiplying the funds under management by an applicable
percentage. The percentage applied is derived from research into comparable
companies and transactions. Management do not believe that a reasonably possible
change in the percentage applied would cause need for impairment.
13. Investment Properties
+------------------------------+----------+-----------+------------+
| | Freehold | Leasehold | Total |
| | | with over | Investment |
| | | 50 years | Properties |
| | | unexpired | |
+------------------------------+----------+-----------+------------+
| | GBPm | GBPm | GBPm |
+------------------------------+----------+-----------+------------+
| Group | | | |
+------------------------------+----------+-----------+------------+
| At 31 March 2009 | 204.2 | 63.6 | 267.8 |
+------------------------------+----------+-----------+------------+
| Capital expenditure | 0.3 | 0.9 | 1.2 |
+------------------------------+----------+-----------+------------+
| Disposals | (54.0) | - | (54.0) |
+------------------------------+----------+-----------+------------+
| Reclassification | (10.5) | 10.5 | - |
+------------------------------+----------+-----------+------------+
| Net losses from fair value | (0.8) | (2.0) | (2.8) |
| adjustments on investment | | | |
| property | | | |
+------------------------------+----------+-----------+------------+
| At 31 March 2010 | 139.2 | 73.0 | 212.2 |
+------------------------------+----------+-----------+------------+
Disposals during the year include the disposal of JS Real Estate Limited with a
book value of GBP39million (see note 34).
The Group's investment portfolio was valued externally principally by Cushman &
Wakefield Healey & Baker and CB Richard Ellis on an open market basis in
accordance with the recommended guidelines of the Royal Institution of Chartered
Surveyors as at 31 March 2010.
Investment properties were valued as follows:
+------------------------------------------------+-------+
| | GBPm |
+------------------------------------------------+-------+
| Cushman & Wakefield | 152.0 |
+------------------------------------------------+-------+
| CB Richard Ellis | 61.1 |
+------------------------------------------------+-------+
| | 213.1 |
+------------------------------------------------+-------+
A reconciliation of investment property valuations to the statement of financial
position carrying value of property is shown below:
+------------------------------------------------+-------+-------+
| | 2010 | 2009 |
+------------------------------------------------+-------+-------+
| | GBPm | GBPm |
+------------------------------------------------+-------+-------+
| Investment property at market value as | 213.1 | 267.5 |
| determined by external valuers | | |
+------------------------------------------------+-------+-------+
| Add minimum payment under head leases | 3.3 | 3.7 |
| separately included as a creditor in the | | |
| statement of financial position | | |
+------------------------------------------------+-------+-------+
| Less accrued lease incentives separately | (1.9) | (1.1) |
| accrued as a debtor in the statement of | | |
| financial position | | |
+------------------------------------------------+-------+-------+
| Less properties treated as finance lease | (2.3) | (2.3) |
| assets | | |
+------------------------------------------------+-------+-------+
| Statement of financial position carrying value | 212.2 | 267.8 |
| of investment property | | |
+------------------------------------------------+-------+-------+
All repairs and maintenance costs are charged to the consolidated statement of
income during the financial period in which they are incurred. Therefore, no
costs in respect of repairs and maintenance are included within the above
figures (2009: GBPnil)
On an historical cost basis the investment properties which have been included
above at valuation would have been shown at cost as GBP309.2million (2009:
GBP369.9million).
Investment properties valued at GBP213.1million are used as security for Group
loans.
14. Plant and Equipment
+------------------------------------------------+-------+------+
| | 2010 | 2009 |
+------------------------------------------------+-------+------+
| | GBPm | GBPm |
+------------------------------------------------+-------+------+
| Group | | |
+------------------------------------------------+-------+------+
| Cost | | |
+------------------------------------------------+-------+------+
| Opening balance at 1 April | 1.5 | 1.5 |
+------------------------------------------------+-------+------+
| Additions | - | - |
+------------------------------------------------+-------+------+
| Disposals | (1.0) | - |
+------------------------------------------------+-------+------+
| Closing balance at 31 March | 0.5 | 1.5 |
+------------------------------------------------+-------+------+
| | | |
+------------------------------------------------+-------+------+
| Depreciation | | |
+------------------------------------------------+-------+------+
| Opening balance at 1 April | 1.1 | 1.0 |
+------------------------------------------------+-------+------+
| Charge for year | 0.2 | 0.1 |
+------------------------------------------------+-------+------+
| Disposals | (1.0) | - |
+------------------------------------------------+-------+------+
| Closing balance at 31 March | 0.3 | 1.1 |
+------------------------------------------------+-------+------+
| Net book value at 31 March | 0.2 | 0.4 |
+------------------------------------------------+-------+------+
Plant and equipment include plant, machinery, fixtures, fittings, motor vehicles
and equipment.
15. Investments in Joint Ventures
+-----------------------------------+-------+
| Group | GBPm |
+-----------------------------------+-------+
| Share of joint ventures | |
+-----------------------------------+-------+
| At 31 March 2009 | - |
+-----------------------------------+-------+
| Share of post-tax losses for the | (4.6) |
| year | |
+-----------------------------------+-------+
| Provision against loan receivable | 3.6 |
+-----------------------------------+-------+
| | (1.0) |
+-----------------------------------+-------+
| Net equity movements | 1.0 |
+-----------------------------------+-------+
| At 31 March 2010 | - |
+-----------------------------------+-------+
+-----------------------------------+--------+--------+
| | 2010 | 2009 |
+-----------------------------------+--------+--------+
| Group share | GBPm | GBPm |
+-----------------------------------+--------+--------+
| Unlisted shares at cost | 99.3 | 94.7 |
+-----------------------------------+--------+--------+
| Group's share of post acquisition | (99.3) | (94.7) |
| retained losses and reserves | | |
+-----------------------------------+--------+--------+
| | - | - |
+-----------------------------------+--------+--------+
| Amounts owed by joint ventures | - | - |
+-----------------------------------+--------+--------+
| | - | - |
+-----------------------------------+--------+--------+
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Included in share of joint | |
| ventures' gross assets and | |
| liabilities are: | |
+-------------------------------------+-----------------------------------------------------+
| | Agora | Radial | Agora | Greater | Others | Total |
| | Shopping | Distribution | | London | | |
| | Centres | Limited | Max | Offices | | |
| | | | Limited | Limited | | |
| | (a) | (b) | | (d) | (e) | |
| | | | (c) | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Year to 31 March 2010 | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Group share of results | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Revenue | 7.8 | 8.5 | 4.6 | 2.9 | - | 23.8 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Operating profit before | 5.6 | 7.9 | 3.4 | 2.5 | - | 19.4 |
| net gains on investments | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Net (loss) / profit from | (6.4) | 5.1 | 0.4 | 0.2 | - | (0.7) |
| fair value adjustments | | | | | | |
| on investment properties | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Loss on sale of | - | - | - | - | - | - |
| investment properties | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Operating (loss) / | (0.8) | 13.0 | 3.8 | 2.7 | - | 18.7 |
| profit | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Net finance expense | (6.2) | (6.0) | (7.0) | (1.9) | - | (21.1) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Change in fair value of | 3.2 | 1.8 | 2.9 | 0.7 | - | 8.6 |
| derivative financial | | | | | | |
| instruments | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| (Loss) / profit before | (3.8) | 8.8 | (0.3) | 1.5 | - | 6.2 |
| income tax | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Taxation - current | - | - | - | - | - | - |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Taxation - deferred | - | - | - | - | - | - |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Adjustments due to | 3.8 | (8.8) | 0.3 | (6.1) | - | (10.8) |
| net liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Loss for the year | - | - | - | (4.6) | - | (4.6) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Amounts receivable by | | | | | | |
| Group | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Asset management fees | 0.9 | 0.6 | 0.4 | 0.3 | 0.1 | 2.3 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Interest receivable | - | - | - | 0.4 | - | 0.4 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Group share of | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Non-current assets | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Investment properties | 80.9 | 97.9 | 43.6 | 35.3 | - | 257.7 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Finance lease assets | - | 2.9 | - | - | - | 2.9 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Derivative financial | - | - | - | - | - | - |
| assets | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Deferred income tax | - | - | - | - | - | - |
| assets | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Other non-current assets | - | - | - | - | - | - |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| | 80.9 | 100.8 | 43.6 | 35.3 | - | 260.6 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Current assets | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Finance lease assets | - | 0.3 | - | - | - | 0.3 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Other current assets | 4.3 | 8.1 | 3.5 | 2.3 | 0.2 | 18.4 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| | 4.3 | 8.4 | 3.5 | 2.3 | 0.2 | 18.7 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Total assets | 85.2 | 109.2 | 47.1 | 37.6 | 0.2 | 279.3 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Non-current liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Derivative financial | (9.6) | (2.3) | (3.3) | (4.0) | - | (19.2) |
| liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Deferred income tax | - | - | - | - | - | - |
| liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Borrowings, including | (4.5) | (108.5) | (69.2) | (35.7) | - | (217.9) |
| finance leases | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Other non-current | (0.2) | (0.2) | - | - | - | (0.4) |
| liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| | (14.3) | (111.0) | (72.5) | (39.7) | - | (237.5) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Current liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Borrowings, including | (91.3) | - | - | - | - | (91.3) |
| finance leases | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Other current | (3.9) | (4.1) | (5.7) | (1.3) | (0.2) | (15.2) |
| liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| | (95.2) | (4.1) | (5.7) | (1.3) | (0.2) | (106.5) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Total liabilities | (109.5) | (115.1) | (78.2) | (41.0) | (0.2) | (344.0) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| | (24.3) | (5.9) | (31.1) | (3.4) | - | (64.7) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Adjustment due to net | 24.3 | 5.9 | 31.1 | 3.4 | - | 64.7 |
| liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Share of net assets | - | - | - | - | - | - |
+--------------------------+----------+--------------+---------+---------+--------+---------+
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Included in share of joint | |
| ventures' gross assets and | |
| liabilities are: | |
+-------------------------------------+-----------------------------------------------------+
| | Agora | Radial | Agora | Greater | Others | Total |
| | Shopping | Distribution | | London | | |
| | Centres | Limited | Max | Offices | | |
| | | | Limited | Limited | | |
| | (a) | (b) | | (d) | (e) | |
| | | | (c) | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Year to 31 March 2009 | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Group share of results | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Revenue | 12.0 | 8.8 | 12.1 | 3.8 | - | 36.7 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Operating profit before | 5.5 | 8.2 | 7.0 | 2.6 | - | 23.3 |
| net gains on investments | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Net loss from fair value | (46.3) | (31.1) | (28.3) | (13.2) | - | (118.9) |
| adjustments on | | | | | | |
| investment properties | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Loss on sale of | - | - | (21.9) | - | - | (21.9) |
| investment properties | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Operating loss | (40.8) | (22.9) | (43.2) | (10.6) | - | (117.5) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Net finance expense | (4.8) | (6.7) | (7.5) | (2.5) | - | (21.5) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Change in fair value of | (11.7) | (4.2) | (9.7) | (4.2) | - | (29.8) |
| derivative financial | | | | | | |
| instruments | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Loss before income tax | (57.3) | (33.8) | (60.4) | (17.3) | - | (168.8) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Taxation - current | - | (0.2) | - | - | - | (0.2) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Taxation - deferred | (0.6) | 0.1 | 1.1 | (0.4) | - | 0.2 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Adjustments due to | 20.5 | 14.6 | 30.9 | 9.4 | - | 75.4 |
| net liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Loss for the year | (37.4) | (19.3) | (28.4) | (8.3) | - | (93.4) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Amounts receivable by | | | | | | |
| Group | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Asset management fees | 0.7 | 0.2 | 1.3 | 0.3 | - | 2.5 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Interest receivable | - | - | - | 0.5 | - | 0.5 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Group share of | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Non-current assets | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Investment properties | 86.9 | 92.9 | 43.1 | 35.1 | - | 258.0 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Finance lease assets | - | 2.9 | - | - | - | 2.9 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Derivative financial | - | - | - | - | - | - |
| assets | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Deferred income tax | - | - | - | - | - | - |
| assets | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Other non-current assets | 1.8 | 0.8 | 0.7 | 1.3 | - | 4.6 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| | 88.7 | 96.6 | 43.8 | 36.4 | - | 265.5 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Current assets | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Finance lease assets | - | 0.3 | - | - | - | 0.3 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Other current assets | 2.8 | 5.3 | 46.5 | 0.9 | 0.2 | 55.7 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| | 2.8 | 5.6 | 46.5 | 0.9 | 0.2 | 56.0 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Total assets | 91.5 | 102.2 | 90.3 | 37.3 | 0.2 | 321.5 |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Non-current liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Derivative financial | (12.9) | (4.0) | (6.1) | (4.7) | - | (27.7) |
| liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Deferred income tax | - | - | - | - | - | - |
| liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Borrowings, including | (94.1) | (108.4) | (110.4) | (39.5) | - | (352.4) |
| finance leases | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Other non-current | (0.5) | (0.5) | - | - | - | (1.0) |
| liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| | (107.5) | (112.9) | (116.5) | (44.2) | - | (381.1) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Current liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Borrowings, including | - | - | - | - | - | - |
| finance leases | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Other current | (4.5) | (3.9) | (4.7) | (2.5) | (0.2) | (15.8) |
| liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| | (4.5) | (3.9) | (4.7) | (2.5) | (0.2) | (15.8) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Total liabilities | (112.0) | (116.8) | (121.2) | (46.7) | (0.2) | (396.9) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| | (20.5) | (14.6) | (30.9) | (9.4) | - | (75.4) |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Adjustment due to net | 20.5 | 14.6 | 30.9 | 9.4 | - | 75.4 |
| liabilities | | | | | | |
+--------------------------+----------+--------------+---------+---------+--------+---------+
| Share of net assets | - | - | - | - | - | - |
+--------------------------+----------+--------------+---------+---------+--------+---------+
(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) Fairway Industrial Limited was set up on 29 August 2003 and changed its
name to Radial Distribution Limited on 14 October 2004. The investment was
disposed of on 17 May 2010.
(c) 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.
The Pallasades, Birmingham was disposed of on 31 March 2009.
(d) Greater London Offices Limited was set up on 28 September 2006 and
subsequently acquired Old Broad Street and Central House, London. On 20 August
2009, GBP3.6million loan notes issued to the Group by Greater London Offices
Limited were repaid in full and the proceeds used to subscribe to additional
equity.
(e) Net assets relate to investments in smaller joint ventures acquired through
Ashtenne.
Joint venture investment properties are valued by DTZ Debenham Tie Leung, CB
Richard Ellis and King Sturge.
All joint ventures are incorporated in the United Kingdom (refer to note 35 for
further information).
16. Investments in Funds
+----------------------------------+-------+
| Group | |
+----------------------------------+-------+
| | GBPm |
+----------------------------------+-------+
| As at 1 April 2009 | 47.5 |
+----------------------------------+-------+
| Net loss from fair value | (6.2) |
| adjustments | |
+----------------------------------+-------+
| At 31 March 2010 | 41.3 |
+----------------------------------+-------+
+-------------------------------+-------+--------+--------+--------+
| Fund Information: | | | | |
+-------------------------------+-------+--------+--------+--------+
| | AIF | Apia | Others | Total |
| | (a) | (b) | (c) | |
+-------------------------------+-------+--------+--------+--------+
| | GBPm | GBPm | GBPm | GBPm |
+-------------------------------+-------+--------+--------+--------+
| Year to 31 March 2010 | | | | |
+-------------------------------+-------+--------+--------+--------+
| | | | | |
+-------------------------------+-------+--------+--------+--------+
| Distributions receivable | 0.3 | 0.4 | - | 0.7 |
+-------------------------------+-------+--------+--------+--------+
| | | | | |
+-------------------------------+-------+--------+--------+--------+
| Net assets at 31 March 2010 | 240.0 | 93.1 | - | |
+-------------------------------+-------+--------+--------+--------+
| Percentage share at 31 March | 6.52% | 27.43% | - | |
| 2010 | | | | |
+-------------------------------+-------+--------+--------+--------+
| Group share of net assets | 15.7 | 25.6 | - | 41.3 |
+-------------------------------+-------+--------+--------+--------+
+-------------------------------+-------+--------+--------+--------+
| Fund Information: | | | | |
+-------------------------------+-------+--------+--------+--------+
| | AIF | Apia | Others | Total |
| | (a) | (b) | (c) | |
+-------------------------------+-------+--------+--------+--------+
| | GBPm | GBPm | GBPm | GBPm |
+-------------------------------+-------+--------+--------+--------+
| Year to 31 March 2009 | | | | |
+-------------------------------+-------+--------+--------+--------+
| | | | | |
+-------------------------------+-------+--------+--------+--------+
| Distributions receivable | 1.8 | 1.4 | - | 3.2 |
+-------------------------------+-------+--------+--------+--------+
| | | | | |
+-------------------------------+-------+--------+--------+--------+
| Net assets at 31 March 2009 | 261.1 | 111.1 | - | |
+-------------------------------+-------+--------+--------+--------+
| Percentage share at 31 March | 6.52% | 27.43% | - | |
| 2009 | | | | |
+-------------------------------+-------+--------+--------+--------+
| Group share of net assets | 17.0 | 30.5 | - | 47.5 |
+-------------------------------+-------+--------+--------+--------+
(a) The Group invested GBP12million in the Ashtenne Industrial Fund in August
2005 and a GBP23.1million 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
GBP44.1million. A further GBP10.0million was invested in December 2005, of
which GBP0.9million was disposed of in March 2006, and GBP0.4million in May
2006. It is treated as an investment rather than an associate as the Group does
not have the power to exert significant control as a Trustee which is
independent of the Group is responsible for the strategic decisions of the unit
trust.
(c) This relates to minority interest holdings in Agora Max Unit Trust, Agora
Max Birkenhead Unit Trust and The Pallasades Birmingham Unit Trust.
Units held in AIF valued at GBP9.0million and the units in Apia valued at
GBP25.6 million are used as security for Group loans.
17. Investments in Listed and Unlisted Shares
+----------------------------------+------+------+------+-------+
| | Group | Company |
+----------------------------------+-------------+--------------+
| |
+---------------------------------------------------------------+
| | 2010 | 2009 | 2010 | 2009 |
+----------------------------------+------+------+------+-------+
| | GBPm | GBPm | GBPm | GBPm |
+----------------------------------+------+------+------+-------+
| Subsidiary undertakings (a) | - | - | 70.6 | 192.5 |
+----------------------------------+------+------+------+-------+
| Unlisted investments (b) | 0.3 | 0.3 | - | - |
+----------------------------------+------+------+------+-------+
| | 0.3 | 0.3 | 70.6 | 192.5 |
+----------------------------------+------+------+------+-------+
(a) Subsidiary Undertakings
+-------------+------------------+
| | Shares in |
| | subsidiary |
| | undertakings |
+-------------+------------------+
| | GBPm |
+-------------+------------------+
| Cost | |
+-------------+------------------+
| At 31 | 192.5 |
| March 2009 | |
+-------------+------------------+
| Additions | 0.2 |
+-------------+------------------+
| Disposals | (107.1) |
+-------------+------------------+
| Impairments | (15.0) |
+-------------+------------------+
| At 31 | 70.6 |
| March | |
| 2010 | |
+-------------+------------------+
Investments are reviewed at least annually for impairment. Where there exists an
indication of impairment an assessment of the recoverable amount is performed.
The recoverable amount is based on the higher of the investments continued value
in use or its fair value less cost to sell. The impairment charge taken above
arose due to the carrying value of the asset exceeding its recoverable amount.
This was determined based on the assets' fair value less cost to sell. Fair
value is derived from the subsidiaries' net asset value at the statement of
financial position date. Please refer to note 35 for further information on
subsidiary undertakings.
(b) Unlisted Investments
+------------------------------------+--------+---------+
| | Group | Company |
+------------------------------------+--------+---------+
| | GBPm | GBPm |
+------------------------------------+--------+---------+
| At 31 March 2009 | 0.3 | - |
+------------------------------------+--------+---------+
| Net movements | - | - |
+------------------------------------+--------+---------+
| At 31 March 2010 | 0.3 | - |
+------------------------------------+--------+---------+
18. Trade and Other Receivables
+-------------------+------+------+------+------+
| | Group | Company |
+-------------------+-------------+-------------+
| | | | | |
+-------------------+------+------+------+------+
| | 2010 | 2009 | 2010 | 2009 |
+-------------------+------+------+------+------+
| | GBPm | GBPm | GBPm | GBPm |
+-------------------+------+------+------+------+
| Amounts falling | | | | |
| due within one | | | | |
| year: | | | | |
+-------------------+------+------+------+------+
| Trade receivables | 2.3 | 2.8 | - | - |
+-------------------+------+------+------+------+
| Amounts owed by | - | - | 67.5 | 54.8 |
| Group | | | | |
| undertakings | | | | |
+-------------------+------+------+------+------+
| Other debtors | 1.4 | 3.9 | - | 0.1 |
+-------------------+------+------+------+------+
| Prepayments and | 2.8 | 3.0 | 1.0 | 0.2 |
| accrued income | | | | |
+-------------------+------+------+------+------+
| | 6.5 | 9.7 | 68.5 | 55.1 |
+-------------------+------+------+------+------+
| Amounts falling | | | | |
| due after more | | | | |
| than one year: | | | | |
+-------------------+------+------+------+------+
| Other debtors | 2.2 | 1.0 | - | - |
+-------------------+------+------+------+------+
| | | | | |
+-------------------+------+------+------+------+
| Total trade and | 8.7 | 10.7 | 68.5 | 55.1 |
| other receivables | | | | |
+-------------------+------+------+------+------+
Other debtors include rent deposits from tenants of GBP0.4million used as
collateral. In the event of tenant default, these rent deposits can be offset
against any outstanding debts.
Amounts owed by Group undertakings are unsecured and have no fixed date of
repayment. They are interest free except for interest recharges for REIT
compliance purposes; to ensure the interest charge is in the correct group
entity.
Amounts owed byGroup undertakings are reviewed at least annually for impairment.
Where there exists an indication of impairment an assessment of the recoverable
amount is performed. The recoverable amount is based on the fair value which is
derived from the Group undertakings' net asset value and their ability to repay
their debts. A write back of impairment of GBP3.1million (2009: 234.8million)
has been taken to the Company's consolidated statement of income during the year
against amounts owed by Group undertakings.
19. Net Investment in Finance Leases
+------------+------------+----------+------------+------------+----------+------------+
| Group | | |
+------------+------------------------------------+------------------------------------+
| | 2010 | 2009 |
+------------+------------------------------------+------------------------------------+
| | Gross | Unearned | Net | Gross | Unearned | Net |
| | investment | finance | investment | investment | finance | investment |
| | in finance | income | in finance | in finance | income | in finance |
| | lease | | lease | lease | | lease |
+------------+------------+----------+------------+------------+----------+------------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+------------+------------+----------+------------+------------+----------+------------+
| Within | 0.2 | (0.2) | - | 0.2 | (0.2) | - |
| one | | | | | | |
| year | | | | | | |
+------------+------------+----------+------------+------------+----------+------------+
| Between | 0.8 | (0.8) | - | 0.8 | (0.8) | - |
| two | | | | | | |
| and | | | | | | |
| five | | | | | | |
| years | | | | | | |
+------------+------------+----------+------------+------------+----------+------------+
| Later | 13.9 | (10.1) | 3.8 | 14.1 | (10.3) | 3.8 |
| than | | | | | | |
| five | | | | | | |
| years | | | | | | |
+------------+------------+----------+------------+------------+----------+------------+
| Impairment | - | - | (1.4) | - | - | (1.4) |
+------------+------------+----------+------------+------------+----------+------------+
| Total | 14.9 | (11.1) | 2.4 | 15.1 | (11.3) | 2.4 |
+------------+------------+----------+------------+------------+----------+------------+
The Group has leased out an investment property under a finance lease of 61
years in duration. This is accounted for as a finance lease receivable rather
than an investment property and is equal to the total of the discounted future
lease payments and the discounted unguaranteed residual value of the property.
The unguaranteed residual value of the remaining buildings comprising the
investment property is GBP2.4 million (2009: GBP2.4million). The carrying
value of the Group's finance lease receivables has been impaired to approximate
to the fair value due to the reduction in the fair value during the prior year.
The fair value is determined by reference to the open market value of the
investment property which has been leased out. The asset is part of the property
investment segment.
20. Borrowings, Including Finance Leases
+-------------------+-------+-------+-------+-------+
| | Group | Company |
+-------------------+---------------+---------------+
| | 2010 | 2009 | 2010 | 2009 |
+-------------------+-------+-------+-------+-------+
| | GBPm | GBPm | GBPm | GBPm |
+-------------------+-------+-------+-------+-------+
| Amounts falling | | | | |
| due after more | | | | |
| than one year: | | | | |
+-------------------+-------+-------+-------+-------+
| Bank loans | 251.9 | - | - | - |
+-------------------+-------+-------+-------+-------+
| Finance lease | 3.2 | 3.6 | - | - |
| obligations (see | | | | |
| note 21) | | | | |
+-------------------+-------+-------+-------+-------+
| | 255.1 | 3.6 | - | - |
+-------------------+-------+-------+-------+-------+
| Amounts falling | | | | |
| due within one | | | | |
| year: | | | | |
+-------------------+-------+-------+-------+-------+
| Bank overdrafts | - | 293.8 | - | - |
+-------------------+-------+-------+-------+-------+
| Bank loans | 0.8 | - | - | - |
+-------------------+-------+-------+-------+-------+
| Finance lease | 0.1 | 0.1 | - | - |
| obligations (see | | | | |
| note 21) | | | | |
+-------------------+-------+-------+-------+-------+
| | 0.9 | 293.9 | - | - |
+-------------------+-------+-------+-------+-------+
| | | | | |
+-------------------+-------+-------+-------+-------+
| Total borrowings, | 256.0 | 297.5 | - | - |
| including finance | | | | |
| leases | | | | |
+-------------------+-------+-------+-------+-------+
| Cash and cash | (4.5) | (9.0) | (0.1) | (1.2) |
| equivalents | | | | |
+-------------------+-------+-------+-------+-------+
| Net borrowings | 251.5 | 288.5 | (0.1) | (1.2) |
+-------------------+-------+-------+-------+-------+
Bank loans and overdrafts are secured on certain properties valued at
GBP213.1million as detailed in note 13 and by floating charges on unit holdings
in the Apia Regional Office Fund and the Ashtenne Industrial Fund, valued at
GBP25.6million and GBP9.0million respectively, as set out in note 16.
+----------------+-------+-------+
| | |
+----------------+---------------+
| Bank loans and | 2010 | 2009 |
| overdrafts | | |
+----------------+-------+-------+
| | GBPm | GBPm |
+----------------+-------+-------+
| Group | | |
+----------------+-------+-------+
| Within one | 0.8 | 295.3 |
| year or on | | |
| demand | | |
+----------------+-------+-------+
| Between one | 1.0 | - |
| and two years | | |
+----------------+-------+-------+
| Between two | 256.0 | - |
| and five years | | |
+----------------+-------+-------+
| | 257.8 | 295.3 |
+----------------+-------+-------+
| Future finance | (5.1) | (1.5) |
| costs | | |
+----------------+-------+-------+
| | 252.7 | 293.8 |
+----------------+-------+-------+
| | | |
+----------------+-------+-------+
| Company | | |
+----------------+-------+-------+
| Within one | - | - |
| year on demand | | |
+----------------+-------+-------+
| Between two | - | - |
| and five years | | |
+----------------+-------+-------+
| | - | - |
+----------------+-------+-------+
As stated in note 22, the Group's operations are predominantly in the UK and
therefore bank borrowings are denominated in Sterling. The Group's average cost
of debt at the year end was 3.05% (2009: 3.44%). The proportions of debt held
on fixed or floating rate debt, together with the hedging in place at 31 March
2010, are set out in note 22. A comparison of the fair values to carrying
values of financial assets and liabilities is also set out in note 22.
21. Finance Lease Obligations
+---------+----------+---------+-------------+----------+---------+-------------+
| Group | | |
+---------+----------------------------------+----------------------------------+
| | 2010 | 2009 |
+---------+----------------------------------+----------------------------------+
| | Minimum | Future | Present | Minimum | Future | Present |
| | lease | finance | value | lease | finance | value |
| | payments | charges | of | payments | charges | of |
| | under | on | minimum | under | on | minimum |
| | finance | finance | finance | finance | finance | finance |
| | leases | leases | lease | leases | leases | lease |
| | | | obligations | | | obligations |
+---------+----------+---------+-------------+----------+---------+-------------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------+----------+---------+-------------+----------+---------+-------------+
| Within | 0.3 | (0.2) | 0.1 | 0.3 | (0.2) | 0.1 |
| one | | | | | | |
| year | | | | | | |
+---------+----------+---------+-------------+----------+---------+-------------+
| Between | 1.2 | (0.9) | 0.3 | 1.3 | (1.0) | 0.3 |
| two | | | | | | |
| and | | | | | | |
| five | | | | | | |
| years | | | | | | |
+---------+----------+---------+-------------+----------+---------+-------------+
| Later | 10.4 | (7.5) | 2.9 | 14.7 | (11.4) | 3.3 |
| than | | | | | | |
| five | | | | | | |
| years | | | | | | |
+---------+----------+---------+-------------+----------+---------+-------------+
| Total | 11.9 | (8.6) | 3.3 | 16.3 | (12.6) | 3.7 |
+---------+----------+---------+-------------+----------+---------+-------------+
The fair value of the Group's finance lease obligations approximate to the
carrying value.
Finance lease obligations are in respect of leased investment properties.
Finance lease liabilities are effectively secured as the rights to the leased
asset revert to the lessor in the event of default.
22. Financial Risk Management
On 26 March 2010 the Group entered into new debt facilities with two lenders and
extended and amended its existing facility with a third lender.
In respect of one facility the Group will pay an exit fee equal to 5.0% of the
outstanding loan on the maturity date. In respect of another facility the Group
will pay an exit fee at maturity that approximates to 20% of the excess of the
value of properties secured against the facility over the debt at that time. The
Group is obliged to amortise one of the facilities at GBP0.3million per quarter.
One facility has no loan to value ('LTV') covenant. Another facility has no LTV
covenant for 12 months following which it will have an LTV covenant of 117.5%.
The third facility has an initial LTV covenant of 113%. The LTV covenants on the
two latter facilities will reduce over the term of the respective facilities.
One facility has two interest cover covenants set at 125%, based on rental
income, and 175%, based on total income. Another facility has an initial
facility debt service cover ratio covenant of 135% and an initial Group debt
service cover ratio covenant of 108%; each of the two debt service cover ratio
covenants will vary over time.
Until the new finance arrangements were entered into, the lenders had reserved
their rights to test certain financial covenants. The Directors would not have
expected these financial covenants to be met if tested.
Treasury Policy
The Group enters into derivative transactions such as interest rate swaps and
caps in order to manage the financial risks arising from the Group's activities.
The main financial risks arising from the Group's financing structure are
liquidity risk and interest rate risk. The policies for managing each of these
risks and the principal effects of these policies on the results for the year
are set out below.
Liquidity Risk
The Group's policy is to ensure that there are always sufficient working capital
facilities available to meet the requirements of the business, through efficient
treasury and cash management and strict credit control. The Group's earliest
scheduled debt maturity is April 2012.
Capital expenditure to be incurred by the Group is funded on a case by case
basis.
The tables below set out the maturity analysis of the Group's financial
liabilities based on undiscounted contractual obligations.
+---------------+---------+--------+-------+-------+--------+
| Group | | |
+---------------+--------------------------+----------------+
| 2010 | Less | 1 to 2 | 2 to | Over | Total |
| | than 1 | years | 5 | 5 | |
| | year | | years | years | |
+---------------+---------+--------+-------+-------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------------+---------+--------+-------+-------+--------+
| Bank loans | 0.7 | 1.0 | 256.1 | - | 257.8 |
| and | | | | | |
| overdrafts | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Trade and | 12.2 | 1.4 | 0.7 | - | 14.3 |
| other | | | | | |
| payables(1) | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Finance lease | 0.3 | 0.3 | 0.9 | 10.4 | 11.9 |
| liabilities | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Current | 0.3 | - | - | - | 0.3 |
| income tax | | | | | |
| liabilities | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Other | 3.2 | 1.2 | 2.6 | 1.1 | 8.1 |
| provisions(2) | | | | | |
+---------------+---------+--------+-------+-------+--------+
| | 16.7 | 3.9 | 260.3 | 11.5 | 292.4 |
+---------------+---------+--------+-------+-------+--------+
| | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Interest on | 5.7 | 5.8 | 16.6 | - | 28.1 |
| bank loans | | | | | |
| and | | | | | |
| overdrafts | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Cash outflows | 1.5 | 1.6 | 3.3 | - | 6.4 |
| from gross | | | | | |
| settled | | | | | |
| derivatives | | | | | |
+---------------+---------+--------+-------+-------+--------+
| | 23.9 | 11.3 | 280.2 | 11.5 | 326.9 |
+---------------+---------+--------+-------+-------+--------+
| (1) Excludes deferred income of GBP3.6million |
+-----------------------------------------------------------+
| (2) Includes future finance charges of GBP0.6million |
+---------------+---------+--------+-------+-------+--------+
The table does not include the exit fees on the debt facilities described above.
The contractual amount required to pay at maturity to the holder of the
obligation cannot be estimated as they are based on a date in the future.
+---------------+---------+--------+-------+-------+--------+
| Group | | |
+---------------+--------------------------+----------------+
| 2009 | Less | 1 to 2 | 2 to | Over | Total |
| | than 1 | years | 5 | 5 | |
| | year | | years | years | |
+---------------+---------+--------+-------+-------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------------+---------+--------+-------+-------+--------+
| Bank loans | 295.3 | - | - | - | 295.3 |
| and | | | | | |
| overdrafts | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Trade and | 28.3 | 2.8 | 1.4 | - | 32.5 |
| other | | | | | |
| payables(1) | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Finance lease | 0.3 | 0.3 | 1.0 | 14.7 | 16.3 |
| liabilities | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Current | 0.1 | - | - | - | 0.1 |
| income tax | | | | | |
| liabilities | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Other | 3.9 | 1.0 | 0.6 | 0.3 | 5.8 |
| provisions(2) | | | | | |
+---------------+---------+--------+-------+-------+--------+
| | 327.9 | 4.1 | 3.0 | 15.0 | 350.0 |
+---------------+---------+--------+-------+-------+--------+
| | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Interest on | 6.6 | - | - | - | 6.6 |
| bank loans | | | | | |
| and | | | | | |
| overdrafts | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Cash outflows | 2.2 | 0.8 | 2.5 | 16.2 | 21.7 |
| from gross | | | | | |
| settled | | | | | |
| derivatives | | | | | |
+---------------+---------+--------+-------+-------+--------+
| | 336.7 | 4.9 | 5.5 | 31.2 | 378.3 |
+---------------+---------+--------+-------+-------+--------+
| (1) Excludes deferred income of GBP3.5million |
+-----------------------------------------------------------+
| (2) Includes future finance charges of GBP0.3million |
+-----------------------------------------------------------+
| | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Company | | |
+---------------+--------------------------+----------------+
| 2010 | Less | 1 to 2 | 2 to | Over | Total |
| | than 1 | years | 5 | 5 | |
| | year | | years | years | |
+---------------+---------+--------+-------+-------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------------+---------+--------+-------+-------+--------+
| Bank loans | - | - | - | - | - |
| and | | | | | |
| overdrafts | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Trade and | 143.5 | 0.2 | - | - | 143.7 |
| other | | | | | |
| payables | | | | | |
+---------------+---------+--------+-------+-------+--------+
| | 143.5 | 0.2 | - | - | 143.7 |
+---------------+---------+--------+-------+-------+--------+
| | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Interest on | - | - | - | - | - |
| bank loans | | | | | |
| and | | | | | |
| overdrafts | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Cash inflows | - | - | - | - | - |
| from gross | | | | | |
| settled | | | | | |
| derivatives | | | | | |
+---------------+---------+--------+-------+-------+--------+
| | 143.5 | 0.2 | - | - | 143.7 |
+---------------+---------+--------+-------+-------+--------+
+---------------+---------+--------+-------+-------+--------+
| Company | | |
+---------------+--------------------------+----------------+
| 2009 | Less | 1 to 2 | 2 to | Over | Total |
| | than 1 | years | 5 | 5 | |
| | year | | years | years | |
+---------------+---------+--------+-------+-------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------------+---------+--------+-------+-------+--------+
| Bank loans | - | - | - | - | - |
| and | | | | | |
| overdrafts | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Trade and | 244.4 | 0.3 | 0.2 | - | 244.9 |
| other | | | | | |
| payables | | | | | |
+---------------+---------+--------+-------+-------+--------+
| | 244.4 | 0.3 | 0.2 | - | 244.9 |
+---------------+---------+--------+-------+-------+--------+
| | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Interest on | - | - | - | - | - |
| bank loans | | | | | |
| and | | | | | |
| overdrafts | | | | | |
+---------------+---------+--------+-------+-------+--------+
| Cash inflows | - | - | - | - | - |
| from gross | | | | | |
| settled | | | | | |
| derivatives | | | | | |
+---------------+---------+--------+-------+-------+--------+
| | 244.4 | 0.3 | 0.2 | - | 244.9 |
+---------------+---------+--------+-------+-------+--------+
Interest Rate Risk
The Group is exposed to market price risk through interest rate movements. The
Group's policy is to manage the risk arising from changes in interest rates by
hedging a proportion of the floating rate debt to provide certainty as to how
much the interest cost will be, such that in the long term any fluctuations in
interest rates will have little or no impact on reported profits. The Group
monitors the level of floating debt on a regular basis together with interest
rate expectations in order to form a view as to when it may be appropriate to
enter into further hedging. The Group is, however, exposed to market price risk
in respect of the fair value of its fixed rate financial instruments. During the
year the Group cancelled a GBP25million swap and 3 swaps of GBP20million,
GBP50million and GBP19million expired. On completion of the Group's refinancing
it has taken out 2 swaps of GBP25million each effective from 31 March 2010. Two
further swaps started on 28 May 2010. In addition the Group has taken out a
GBP40million swaption exercisable on 12 April 2011 and a GBP25million swaption
exercisable on 31 March 2012.
The amount of debt fixed through swaps effective as at 31 March 2010, equates to
19% (2009: 39%) of Group debt, and the remainder is floating. The floating debt
is linked to LIBOR.
The Group is exposed to fair value interest rate risk on its derivative
financial instruments and cash flow interest rate risk on floating rate bank
loans and revolving credit facilities. The forecast cash and borrowings profile
of the Group is monitored regularly to assess the mix of fixed and floating rate
debt and the Group uses interest rate derivatives where appropriate to reduce
its exposure to changes in interest rates and the economic environment.
At 31 March 2010, the Group's floating rate debt was GBP257.8million (2009:
GBP295.3million). Of this, GBP50million (2009: GBP114.4million) has been hedged
with derivative instruments. The total amount of GBP50million (2009:
GBP114.4million) is hedged by swaps and callable swaps.
The derivative instruments are used to hedge the variability of cash flows from
debt instruments. The fair values of derivatives are determined by discounting
the future cash flows using the mid point of the relevant yields curves
prevailing on the reporting dates. The derivatives are held for hedging
purposes and provide protection against the effects of the rising short term
interest rates. None of the total hedging in place at 31 March 2010, (2009:
GBP95.0million) may be called at the Bank's discretion within the next five
years.
The Group has elected not to designate the hedge contracts as being effective
hedges for accounting purposes and therefore changes in the fair value of the
hedge contracts are taken to the consolidated statement of income.
Interest Rate Sensitivity
The table below shows the Group's sensitivity to movements in interest rates.
The Group has considered the movements in interest rates over the last two years
and has concluded that a 0.5% increase or decrease is a reasonable benchmark.
+-------------+----------+----------+----------+-----------+-----------+---------+
| | |
+-------------+------------------------------------------------------------------+
| 2010 | | | Group | | | Company |
| | | Interest | Callable | Residual | Total | Total |
| | | Rate | Swaps | Debt | | |
| | | Swaps | | | | |
+-------------+----------+----------+----------+-----------+-----------+---------+
| | Net | GBP50.0m | - | GBP207.8m | GBP257.8m | - |
| | debt | | | | | |
+-------------+----------+----------+----------+-----------+-----------+---------+
| | Average | 3.24% | - | 4.82% | 4.51% | - |
| | Rate | | | | | |
+-------------+----------+----------+----------+-----------+-----------+---------+
| | | | | | | |
+-------------+----------+----------+----------+-----------+-----------+---------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm |
+-------------+----------+----------+----------+-----------+-----------+---------+
| | Fair | (2.5) | - | - | (2.5) | - |
| | Value | | | | | |
+-------------+----------+----------+----------+-----------+-----------+---------+
| Sensitivity | Rise | 0.8 | - | - | 0.8 | - |
| | of | | | | | |
| | 50bps | | | | | |
+-------------+----------+----------+----------+-----------+-----------+---------+
| | Fall | (0.8) | - | - | (0.8) | - |
| | of | | | | | |
| | 50bps | | | | | |
+-------------+----------+----------+----------+-----------+-----------+---------+
| | | | | | | |
+-------------+----------+----------+----------+-----------+-----------+---------+
| | Interest | - | - | (1.0) | (1.0) | - |
| | Rate | | | | | |
+-------------+----------+----------+----------+-----------+-----------+---------+
| Sensitivity | Rise | - | - | 1.0 | 1.0 | - |
| | of | | | | | |
| | 50bps | | | | | |
+-------------+----------+----------+----------+-----------+-----------+---------+
| | Fall | - | - | - | - | - |
| | of | | | | | |
| | 50bps | | | | | |
+-------------+----------+----------+----------+-----------+-----------+---------+
+-------------+----------+----------+----------+------+----------+-------+--+------+--+
| 2009 | | | Group | | | Company | |
| | | Interest | Callable | Residual Debt | Total | Total | |
| | | Rate | Swaps | | | | |
| | | Swaps | | | | | |
+-------------+----------+----------+----------+-----------------+-------+---------+--+
| | Net | GBP19.4 | GBP95.0 | GBP180.9 | GBP295.3 | - |
| | debt | | | | | |
+-------------+----------+----------+----------+-----------------+----------+---------+
| | Average | 5.97% | 3.18% | 2.33% | 3.44% | - |
| | Rate | | | | | |
+-------------+----------+----------+----------+-----------------+----------+---------+
| | | | | | | |
+-------------+----------+----------+----------+-----------------+----------+---------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm |
+-------------+----------+----------+----------+-----------------+----------+---------+
| | Fair | (0.2) | (5.2) | - | (5.4) | - |
| | Value | | | | | |
+-------------+----------+----------+----------+-----------------+----------+---------+
| Sensitivity | Rise | - | 1.8 | - | 1.8 | - |
| | of | | | | | |
| | 50bps | | | | | |
+-------------+----------+----------+----------+-----------------+----------+---------+
| | Fall | - | (1.8) | - | (1.8) | - |
| | of | | | | | |
| | 50bps | | | | | |
+-------------+----------+----------+----------+-----------------+----------+---------+
| | | | | | | |
+-------------+----------+----------+----------+------+---------------------+---------+
| | Interest | | | | | |
| | Rate | | | | | |
+-------------+----------+----------+----------+------+---------------------+---------+
| Sensitivity | Rise | - | - | (0.9) | (0.9) | - |
| | of | | | | | |
| | 50bps | | | | | |
+-------------+----------+----------+----------+-----------------+----------+---------+
| | Fall | - | - | 0.9 | 0.9 | - |
| | of | | | | | |
| | 50bps | | | | | |
+-------------+----------+----------+----------+-----------------+----------+---------+
| | | | | | | | | | |
+-------------+----------+----------+----------+------+----------+-------+--+------+--+
The total sensitivity to interest rate increases and decreases is the total
impact on both the consolidated statement of income and consolidated changes in
equity. This is based on debt balances and prevailing interest rates at the year
end.
At 31 March 2010 the fair value of the Group's derivative instruments resulted
in a GBP2.5million net liability (2009: GBP5.4million net liability). Had the
LIBOR been 0.5% higher, the fair value would have been reduced by GBP0.8million
(2009: GBP1.8million). Had LIBOR been 0.5% lower, the fair value would have
been increased by GBP0.8 million (2009: GBP1.8million).
In 2009 the Group repaid fixed rate liabilities of GBP25.2million at a rate of
5.52%.
At 31 March 2010, the residual floating rate debt amounted to GBP207.8million
(2009: GBP180.9million). If short term interest rates had been 0.5% higher the
annualised cost to the Group would have been GBP1.0million higher (2009:
GBP0.9million). Had short term rates been 0.5% lower the Group would have
benefited by the same amount.
Foreign Currency Risk
The Group has no material foreign currency exposure as the Group's operations
are predominantly in the UK and therefore virtually all revenue and costs are
denominated in Sterling.
Credit Risk
The Group has no significant concentration of credit risk as exposure is spread
over a large number of counterparties.
The credit risk in liquid funds and derivative financial instruments is limited
due to the counterparties being banks with high credit ratings assigned by
international credit rating agencies. As at the statement of financial position
date, the carrying value of loans, cash and the fair values of swaps and caps
approximates to this credit risk exposure.
The maximum amount the Group is exposed to on investments in funds and unlisted
investments is the carrying values in the statement of financial position.
Investments in funds are with reputable counterparties. Financial information
is issued by all investments on a regular basis which is reviewed by management.
The Group is exposed to credit risk in respect of its trade receivables.
Potential customers are evaluated for creditworthiness and, where necessary,
collateral is secured in the form of rent deposits. There is no concentration
of credit risk within the lease portfolio to either business sector or
individual company as the Group has a well spread and diverse customer base.
At 31 March 2010, trade and other receivables consisting of rents and asset
management fees receivable, of GBP3.7million (2009: GBP7.6million) were past
due but not impaired. These relate to customers for whom there is no recent
history or indication of default. The amounts presented in the statement of
financial position are net of allowances for doubtful receivables.
The ageing analysis of these trade receivables is as follows:
+----------------------------------+------+------+
| Group | 2010 | 2009 |
+----------------------------------+------+------+
| | GBPm | GBPm |
+----------------------------------+------+------+
| Up to three months | 3.6 | 6.4 |
+----------------------------------+------+------+
| Three to six months | 0.1 | 1.2 |
+----------------------------------+------+------+
| | 3.7 | 7.6 |
+----------------------------------+------+------+
The credit risk relating to cash, deposits and derivative financial instruments
is actively managed by Group Treasury.
+--------------+--------+-------+
| Counterparty | Credit | Group |
| | rating | 2010 |
+--------------+--------+-------+
| | | GBPm |
+--------------+--------+-------+
| Bank #1 | AA | 1.0 |
+--------------+--------+-------+
| Bank #2 | AA | 1.1 |
| Bank #3 | A+ | 2.4 |
+--------------+--------+-------+
| | | 4.5 |
+--------------+--------+-------+
Capital Risk Management
The current capital structure of the Group is considered appropriate and
consists of a mix of equity and net debt. Equity comprises issued capital,
reserves and retained earnings as disclosed in notes 26 and 27. Debt primarily
comprises long-term bank loans and overdrafts from banks as disclosed in Note
20.
The Group manages its capital to ensure that entities in the Group will be able
to continue as a going concern in order to optimise return to shareholders, and
it aims to maintain a prudent mix between debt and equity financing. The Group
is not subject to any externally imposed capital requirements. There have been
no changes in the capital structure since the prior period.
Derivative Financial Instruments
Gains and Losses on Derivatives held to Manage Debt
The Group uses interest rate derivatives to manage its interest rate profile.
Changes in the fair value of these derivatives are recognised in the
consolidated statement of income. An analysis of these derivatives and gains /
(losses) thereon is as follows:
+------------------------------------+------------+-------------+--------+
| Group | | | |
+------------------------------------+------------+-------------+--------+
| | Derivative | Derivative | Total |
| | financial | financial | |
| | assets | liabilities | |
+------------------------------------+------------+-------------+--------+
| | GBPm | GBPm | GBPm |
+------------------------------------+------------+-------------+--------+
| Fair value at 31 March 2009 | - | 5.4 | 5.4 |
+------------------------------------+------------+-------------+--------+
| Change in fair value of derivative | - | 2.5 | 2.5 |
| financial instruments taken out | | | |
| during the year | | | |
+------------------------------------+------------+-------------+--------+
| Fair value of derivative financial | - | (5.4) | (5.4) |
| instruments cancelled/expired | | | |
| during the year | | | |
+------------------------------------+------------+-------------+--------+
| Fair value at 31 March 2010 | - | 2.5 | 2.5 |
+------------------------------------+------------+-------------+--------+
+------------------------------+------+------+---+---+-----+----------+-+---------+
| Financial Instruments - Categories | Group |
+-------------------------------------+-------------------------------------------+
| | 2010 | 2009 |
| | | |
+-------------------------------------+--------------------+----------------------+
| | Carrying | Fair | Carrying | Fair |
| | value | value | value | value |
+-------------------------------------+----------+---------+----------+-----------+
| | GBPm | GBPm | GBPm | GBPm |
+-------------------------------------+----------+---------+----------+-----------+
| Financial assets | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Fair value through profit or loss | | | | |
| - held for trading | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Derivative | - | - | - | - |
| financial assets | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Fair value through profit or loss - | | | | |
| designated on inception | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Investments in | 41.3 | 41.3 | 47.5 | 47.5 |
| funds | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Investments in | 0.3 | 0.3 | 0.3 | 0.3 |
| listed and unlisted shares | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Net investment in finance leases | 2.4 | 2.4 | 2.4 | 2.4 |
+-------------------------------------+----------+---------+----------+-----------+
| Loans and receivables | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Trade and other | 7.5 | 7.5 | 8.9 | 8.9 |
| receivables(1) | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Cash and cash | 4.5 | 4.5 | 9.0 | 9.0 |
| equivalents | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Financial liabilities | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Fair value through profit or loss | | | | |
| - held for trading | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Derivative | (2.5) | (2.5) | (5.4) | (5.4) |
| financial liabilities | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Amortised cost | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Borrowings | (257.8) | (257.8) | (295.3) | (295.3) |
+-------------------------------------+----------+---------+----------+-----------+
| Trade and other | (14.3) | (14.3) | (32.5) | (32.5) |
| payables(2) | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Finance lease obligations | (3.3) | (3.3) | (3.7) | (3.7) |
+-------------------------------------+----------+---------+----------+-----------+
| (1) Excludes prepayments of GBP1.2million (2009: GBP1.8million) |
+---------------------------------------------------------------------------------+
| (2) Excludes deferred income of GBP3.6million (2009: GBP3.5million) |
+---------------------------------------------------------------------------------+
| | | | | | | |
+------------------------------+------+------+-------+-----+------------+---------+
| | | | | | | |
+------------------------------+------+------+-------+-----+------------+---------+
| | Company |
+-------------------------------------+-------------------------------------------+
| | 2010 | 2009 |
| | | |
+-------------------------------------+--------------------+----------------------+
| | Carrying | Fair | Carrying | Fair |
| | value | value | value | value |
+-------------------------------------+----------+---------+----------+-----------+
| | GBPm | GBPm | GBPm | GBPm |
+-------------------------------------+----------+---------+----------+-----------+
| Financial assets | | | | |
| | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Loans and receivables | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Trade and other | 67.5 | 67.5 | 54.9 | 54.9 |
| receivables(1) | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Cash and cash | 0.1 | 0.1 | 1.2 | 1.2 |
| equivalents | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Financial liabilities | | | | |
| | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Amortised cost | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| Borrowings | - | - | - | - |
+-------------------------------------+----------+---------+----------+-----------+
| Trade and other | 143.2 | 143.2 | 244.9 | 244.9 |
| payables | | | | |
+-------------------------------------+----------+---------+----------+-----------+
| (1) Excludes prepayments of GBP1.0million (2009: GBP0.2million) |
+---------------------------------------------------------------------------------+
| | | | | | | | | |
+------------------------------+------+------+---+---+-----+----------+-+---------+
The table below presents the Group's assets and liabilities recognised at fair
value.
+------------------------------------------+-------+-------+-------+-------+
| | Level | Level | Level | Total |
| | 1 | 2 | 3 | |
+------------------------------------------+-------+-------+-------+-------+
| | GBPm | GBPm | GBPm | GBPm |
+------------------------------------------+-------+-------+-------+-------+
| Investments | | | | |
+------------------------------------------+-------+-------+-------+-------+
| Investments in funds | - | - | 41.3 | 41.3 |
+------------------------------------------+-------+-------+-------+-------+
| Investments in unlisted shares | - | - | 0.3 | 0.3 |
+------------------------------------------+-------+-------+-------+-------+
| Total assets | - | - | 41.6 | 41.6 |
+------------------------------------------+-------+-------+-------+-------+
| Derivative financial liabilities | | | | |
+------------------------------------------+-------+-------+-------+-------+
| Fair value through profit or loss | - | (2.5) | - | (2.5) |
+------------------------------------------+-------+-------+-------+-------+
| Total liabilities | - | (2.5) | - | (2.5) |
+------------------------------------------+-------+-------+-------+-------+
Fair value hierarchy
Level 1: valuation based on quoted market prices traded in active markets.
Level 2: valuation techniques are used, maximising the use of observable market
data, either directly from market prices or derived from market prices.
Level 3: where one or more inputs to valuation are not based on observable
market data. Valuations at this level are more subjective and therefore more
closely managed, including sensitivity analysis of inputs to valuation models.
Such testing has not indicated that any material difference would arise due to a
change in input variables.
The table below presents a reconciliation of level 3 fair value measurements for
the year:
+-----------------------------------------+-------------+-------------+-------+
| | Investments | Investments | |
| | in funds | in unlisted | Total |
| | | shares | |
+-----------------------------------------+-------------+-------------+-------+
| | GBPm | GBPm | GBPm |
+-----------------------------------------+-------------+-------------+-------+
| At 1 April 2009 | 47.5 | 0.3 | 47.8 |
+-----------------------------------------+-------------+-------------+-------+
| Unrealised losses(1) | (6.2) | - | (6.2) |
+-----------------------------------------+-------------+-------------+-------+
| At 31 March 2010 | 41.3 | 0.3 | 41.6 |
+-----------------------------------------+-------------+-------------+-------+
(1) Unrealised losses of GBP6.2million are included in net loss from fair value
adjustment on investments in the consolidated statement of income.
23. Deferred Income Tax
+------------------------------------------+------+------+------+------+
| | Group | Company |
+------------------------------------------+-------------+-------------+
| | | | | |
+------------------------------------------+------+------+------+------+
| | 2010 | 2009 | 2010 | 2009 |
+------------------------------------------+------+------+------+------+
| | GBPm | GBPm | GBPm | GBPm |
+------------------------------------------+------+------+------+------+
| Deferred taxation assets | | | | |
+------------------------------------------+------+------+------+------+
| Deferred taxation arising from | - | - | - | - |
| unrealised derivative financial | | | | |
| instruments valuations | | | | |
+------------------------------------------+------+------+------+------+
| Deferred taxation arising from | 0.2 | 0.2 | - | - |
| retirement benefit obligations | | | | |
+------------------------------------------+------+------+------+------+
| Deferred taxation arising from share | - | - | - | - |
| based payments | | | | |
+------------------------------------------+------+------+------+------+
| Unrealised property and investment | - | - | - | - |
| valuations | | | | |
+------------------------------------------+------+------+------+------+
| | 0.2 | 0.2 | | - |
+------------------------------------------+------+------+------+------+
| Deferred taxation liabilities | | | | |
+------------------------------------------+------+------+------+------+
| Deferred taxation arising from the | | | | |
| temporary differences noted below: | | | | |
+------------------------------------------+------+------+------+------+
| Unrealised property and investment | - | - | - | - |
| valuations | | | | |
+------------------------------------------+------+------+------+------+
| | - | - | - | - |
+------------------------------------------+------+------+------+------+
The movement in deferred tax assets and liabilities during the year is as
follows:
+---------------------+------------+-------------+-------------+----------+-------+----------+-------+
| | | Group | Company |
+---------------------+------------+----------------------------------------------+------------------+
| | Unrealised | Derivative | Retirement | Share | | Share | |
| | fair value | financial | benefit | Based | | Based | |
| | gains | instruments | obligations | Payments | Total | Payments | Total |
+---------------------+------------+-------------+-------------+----------+-------+----------+-------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------------------+------------+-------------+-------------+----------+-------+----------+-------+
| Deferred tax assets | - | - | 0.2 | - | 0.2 | - | - |
| at 31 March 2009 | | | | | | | |
+---------------------+------------+-------------+-------------+----------+-------+----------+-------+
| Charged to | - | - | - | - | - | - | - |
| consolidated | | | | | | | |
| statement of | | | | | | | |
| comprehensive | | | | | | | |
| income | | | | | | | |
+---------------------+------------+-------------+-------------+----------+-------+----------+-------+
| Charged to reserves | - | - | - | - | - | - | - |
+---------------------+------------+-------------+-------------+----------+-------+----------+-------+
| Total impact | - | - | - | - | - | - | - |
+---------------------+------------+-------------+-------------+----------+-------+----------+-------+
| Deferred tax assets | - | - | 0.2 | - | 0.2 | - | - |
| at 31 March 2010 | | | | | | | |
+---------------------+------------+-------------+-------------+----------+-------+----------+-------+
+------------------------------+------------+-------+
| | Unrealised | Group |
| | fair value | Total |
| | gains | |
+------------------------------+------------+-------+
| | GBPm | GBPm |
+------------------------------+------------+-------+
| Deferred tax liabilities at | - | - |
| 31 March 2009 | | |
+------------------------------+------------+-------+
| Credited to consolidated | - | - |
| statement of comprehensive | | |
| income | | |
+------------------------------+------------+-------+
| Total impact | - | - |
+------------------------------+------------+-------+
| Deferred tax liabilities at | - | - |
| 31 March 2010 | | |
+------------------------------+------------+-------+
24. Other Provisions
+------------------------------+-----------+-------------+-------+
| | Onerous | Performance | Total |
| | contracts | fees | |
+------------------------------+-----------+-------------+-------+
| | GBPm | GBPm | GBPm |
+------------------------------+-----------+-------------+-------+
| Group | | | |
+------------------------------+-----------+-------------+-------+
| At 31 March 2009 | 3.0 | 2.5 | 5.5 |
+------------------------------+-----------+-------------+-------+
| Charged to consolidated | 4.2 | - | 4.2 |
| statement of comprehensive | | | |
| income: | | | |
+------------------------------+-----------+-------------+-------+
| Utilised during the year | (1.4) | (0.8) | (2.2) |
+------------------------------+-----------+-------------+-------+
| At 31 March 2010 | 5.8 | 1.7 | 7.5 |
+------------------------------+-----------+-------------+-------+
Provisions have been analysed between current and non-current as follows:
+----------------------------------+------+------+
| | Group |
+----------------------------------+-------------+
| | 2010 | 2009 |
+----------------------------------+------+------+
| | GBPm | GBPm |
+----------------------------------+------+------+
| Non-current | 4.4 | 1.6 |
+----------------------------------+------+------+
| Current | 3.1 | 3.9 |
+----------------------------------+------+------+
| | 7.5 | 5.5 |
+----------------------------------+------+------+
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 remaining lease lengths range between
1 and 11 years.
The provision represents the net cash flows on the properties as calculated by
DTZ Debenham Tie Leung.
+---------------+-----------+
| The key | |
| assumptions | |
| used are: | |
+---------------+-----------+
| Rental growth | 1.00% per |
| rate | annum |
+---------------+-----------+
| Inflation | 0.00% per |
| rate | annum |
+---------------+-----------+
| Discount rate | 3.06% |
+---------------+-----------+
The performance fee provision is repayable on demand. GBP0.8million was repaid
during the year; the remaining balance is expected to be repaid within the next
12 months.
25. Trade And Other Payables
+------------------------+------+------+-------+-------+
| | Group | Company |
+------------------------+-------------+---------------+
| | 2010 | 2009 | 2010 | 2009 |
| | | | | |
+------------------------+------+------+-------+-------+
| | GBPm | GBPm | GBPm | GBPm |
+------------------------+------+------+-------+-------+
| Amounts falling due | | | | |
| within one year: | | | | |
+------------------------+------+------+-------+-------+
| Trade payables | 0.9 | 1.0 | 0.1 | 0.1 |
+------------------------+------+------+-------+-------+
| Amounts owed to Group | - | - | 141.5 | 242.6 |
| undertakings | | | | |
+------------------------+------+------+-------+-------+
| Other taxation and | 1.7 | 1.1 | - | - |
| social security | | | | |
+------------------------+------+------+-------+-------+
| Other payables | 6.0 | 8.4 | 0.9 | 1.4 |
+------------------------+------+------+-------+-------+
| Accruals and deferred | 7.2 | 21.2 | 0.5 | 0.3 |
| income | | | | |
+------------------------+------+------+-------+-------+
| | 15.8 | 31.7 | 143.0 | 244.4 |
+------------------------+------+------+-------+-------+
| Amounts falling due | | | | |
| after more than one | | | | |
| year: | | | | |
+------------------------+------+------+-------+-------+
| Other payables | 2.1 | 4.3 | 0.2 | 0.5 |
+------------------------+------+------+-------+-------+
| Total trade and other | 17.9 | 36.0 | 143.2 | 244.9 |
| payables | | | | |
+------------------------+------+------+-------+-------+
Amounts owed to Group undertakings are unsecured and have no fixed date of
repayment. They are interest free except for interest recharges for REIT
compliance purposes; to ensure the interest charge is in the correct group
entity.
26. Share Capital
+-----------------------------------------+------+------+
| | 2010 | 2009 |
+-----------------------------------------+------+------+
| Group and Company | GBPm | GBPm |
+-----------------------------------------+------+------+
| Authorised | | |
+-----------------------------------------+------+------+
| 80,000,000 Ordinary shares of 5p | 4.0 | 4.0 |
+-----------------------------------------+------+------+
| Allotted, called up and fully paid | | |
+-----------------------------------------+------+------+
| Ordinary shares of 5p | | |
+-----------------------------------------+------+------+
| At 1 April and 31 March (56,170,865 | 2.8 | 2.8 |
| shares) | | |
+-----------------------------------------+------+------+
Warner Estate Holdings PLC 1995 Share Option Scheme
At 31 March 2010 there were share options to subscribe for Ordinary shares under
the Warner Estate Holdings Plc 1995 Share Option Scheme as follows:
+----------------------------------------+----------+
| At 303.5p per share exercisable | 77,515 |
| between 16 August 2004 and 15 August | shares |
| 2011 | |
+----------------------------------------+----------+
| At 319p per share exercisable between | 88,403 |
| 17 July 2005 and 16 July 2012 | shares |
+----------------------------------------+----------+
| At 367.5p per share exercisable | 141,357 |
| between 27 June 2006 and 26 June 2013 | shares |
+----------------------------------------+----------+
| At 495p per share exercisable between | 150,521 |
| 8 July 2007 and 7 July 2014 | shares |
+----------------------------------------+----------+
| | 457,796 |
| | shares |
+----------------------------------------+----------+
+------------------------+---------+----------+-+----------+----------+
| | 2010 | | 2009 |
+------------------------+--------------------+-+---------------------+
| | Number | Average | | Number | Average |
| | | exercise | | | exercise |
| | | price | | | price |
+------------------------+---------+----------+-+----------+----------+
| | | p | | | p |
+------------------------+---------+----------+-+----------+----------+
| At 1 April | 457,796 | 389.2 | | 515,636 | 387.9 |
+------------------------+---------+----------+-+----------+----------+
| Options expired/lapsed | - | - | | (57,840) | 377.5 |
+------------------------+---------+----------+-+----------+----------+
| | | | | | |
+------------------------+---------+----------+-+----------+----------+
| At 31 March | 457,796 | 389.2 | | 457,796 | 389.2 |
+------------------------+---------+----------+-+----------+----------+
All of the options outstanding at 31 March 2010 (2009: 457,796) were
exercisable.
Warner Estate Holdings PLC Performance Share Plan
At 31 March 2010 there were share options to subscribe for Ordinary shares at
nil cost under the Warner Estate Holdings Plc Performance Share Plan as follows:
+----------------------------------------+----------+
| Exercisable between 31 July 2010 and | 201,754 |
| 30 January 2011 | shares |
+----------------------------------------+----------+
| Exercisable between 14 July 2011 and | 568,273 |
| 13 January 2012 | shares |
+----------------------------------------+----------+
| | 770,027 |
| | shares |
+----------------------------------------+----------+
+------------------------+-----------+----------+-+-----------+----------+
| | 2010 | | 2009 |
+------------------------+----------------------+-+----------------------+
| | Number | Average | | Number | Average |
| | | exercise | | | exercise |
| | | price | | | price |
+------------------------+-----------+----------+-+-----------+----------+
| | | p | | | p |
+------------------------+-----------+----------+-+-----------+----------+
| At 1 April | 1,035,884 | - | | 582,006 | - |
+------------------------+-----------+----------+-+-----------+----------+
| Options granted | - | - | | 704,413 | - |
+------------------------+-----------+----------+-+-----------+----------+
| Options exercised | (5,248) | - | | (18,934) | - |
+------------------------+-----------+----------+-+-----------+----------+
| Options expired/lapsed | (138,732) | - | | (123,742) | - |
+------------------------+-----------+----------+-+-----------+----------+
| Options forfeited | (121,877) | - | | (107,859) | - |
+------------------------+-----------+----------+-+-----------+----------+
| | | | | | |
+------------------------+-----------+----------+-+-----------+----------+
| At 31 March | 770,027 | - | | 1,035,884 | - |
+------------------------+-----------+----------+-+-----------+----------+
None of the options outstanding at 31 March 2010 were exercisable (2009:
8,146).
The average share price during the year was 37.3p (2009: 118.0p).
The key assumptions used in valuing the fair value of share based payments are
as follows (also see directors' remuneration report):
+---------------+----------------------------------------------------------+
| Exercise | GBPnil |
| price | |
+---------------+----------------------------------------------------------+
| Share | Price at date of grant |
| price | |
+---------------+----------------------------------------------------------+
| Expected | 3 years |
| term | |
+---------------+----------------------------------------------------------+
| Expected | 25% for awards granted on 30 July 2007, 22% for awards |
| volatility(1) | granted on 21 February 2007, 38.5% for awards granted on |
| | 14 July 2008, 19% for all other awards |
+---------------+----------------------------------------------------------+
| Expected | Dividends paid in the 12 months prior to grant |
| dividend | calculated as a percentage of the share price on the |
| yield | date of grant |
+---------------+----------------------------------------------------------+
| Risk free | Not applicable as exercise price is GBPnil |
| interest | |
| rate | |
+---------------+----------------------------------------------------------+
| Model used | Black-Scholes |
+---------------+----------------------------------------------------------+
(1) Volatility is calculated by looking at the historical share price movements
prior to the date of grant over a period of time commensurate with the expected
term for each award (i.e. 3 years). The formula calculates the ratio of each
day's price to the preceding value, which gives a "dimensionless" figure. The
final step is to calculate the standard deviation of the logs of these ratios
and to annualise this figure.
27. Other Reserves
+------+--------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| | | | | | | | | |
| | Share | Share | Warrants(1) | Revaluation | Other(2) | Treasury | Retained(3) | |
| | Premium | Based | Reserve | Reserve | Reserve | Shares | Earnings | Total |
| | | Payments | | | | | | |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| Group | | | | | | | | |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| At 31 March 2009 | 40.7 | 1.8 | - | (234.5) | 8.0 | (1.5) | 188.0 | 2.5 |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| Retained loss for | - | - | - | - | - | - | (8.9) | (8.9) |
| the year | | | | | | | | |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| Realised on | - | - | - | 15.9 | - | - | (15.9) | - |
| disposal of | | | | | | | | |
| investment | | | | | | | | |
| properties | | | | | | | | |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| Net loss from fair | - | - | - | (2.8) | - | - | 2.8 | - |
| value adjustment on | | | | | | | | |
| investment | | | | | | | | |
| properties | | | | | | | | |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| Share of joint | - | - | - | (11.6) | - | - | 11.6 | - |
| ventures' net loss | | | | | | | | |
| from fair value | | | | | | | | |
| adjustment on | | | | | | | | |
| investment | | | | | | | | |
| properties | | | | | | | | |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| Net gain from fair | - | - | - | (6.2) | - | - | 6.2 | - |
| value adjustment on | | | | | | | | |
| unlisted | | | | | | | | |
| investments | | | | | | | | |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| Change in fair | - | - | - | 2.9 | - | - | (2.9) | - |
| value of derivative | | | | | | | | |
| financial | | | | | | | | |
| instruments | | | | | | | | |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| Change in fair | - | - | - | 8.6 | - | - | (8.6) | - |
| value of joint | | | | | | | | |
| ventures' | | | | | | | | |
| derivative | | | | | | | | |
| financial | | | | | | | | |
| instruments | | | | | | | | |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| Actuarial losses on | - | - | - | - | - | - | (0.1) | (0.1) |
| pension scheme | | | | | | | | |
| assets | | | | | | | | |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| Cost of share based | - | (0.3) | - | - | - | - | 0.2 | (0.1) |
| payments | | | | | | | | |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| Warrants issued | - | - | 0.8 | - | - | - | - | 0.8 |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| At 31 March 2010 | 40.7 | 1.5 | 0.8 | (227.7) | 8.0 | (1.5) | 172.4 | (5.8) |
+---------------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
| (1) 2,808,713 share warrants were issued on 26 March 2010 and have been accounted for |
| at fair value on that date. |
| (2) Other reserves consist of a capital redemption reserve and a merger reserve. |
| (3) The closing balance on retained earnings reserve includes GBP0.6million liability |
| (2009: GBP0.7million) stated after a deferred tax asset of GBP0.2million (2009: |
| GBP0.2million) in respect of the Group's defined benefit pension scheme as set out in |
| note 3 to the accounts. |
+------------------------------------------------------------------------------------------------------------------------+
| | |
+------+-----------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | |
+------+--------------+---------+----------+-------------+-------------+----------+----------+-------------+-------------+
+---------------------+---------+----------+----------+----------+---------+----------+----------+-------+
| | Non-distributable | | Distributable | |
| | Reserves | | Reserves | |
+---------------------+-------------------------------+----------+-------------------------------+-------+
| | | | | | | | | |
| | Share | Share | Warrants | | Other | Treasury | Retained | |
| | Premium | Based | Reserve | | Reserve | Shares | Earnings | Total |
| | | Payments | | | | | | |
+---------------------+---------+----------+----------+----------+---------+----------+----------+-------+
| Company | GBPm | GBPm | GBPm | | GBPm | GBPm | GBPm | GBPm |
+---------------------+---------+----------+----------+----------+---------+----------+----------+-------+
| At 31 March 2009 | 40.7 | 1.8 | - | | 7.0 | (1.5) | (45.5) | 2.5 |
+---------------------+---------+----------+----------+----------+---------+----------+----------+-------+
| Retained loss for | - | - | - | | - | - | (9.0) | (9.0) |
| the year | | | | | | | | |
+---------------------+---------+----------+----------+----------+---------+----------+----------+-------+
| Transfer | - | - | - | | - | - | - | - |
+---------------------+---------+----------+----------+----------+---------+----------+----------+-------+
| Dividends paid | - | - | - | | - | - | - | - |
+---------------------+---------+----------+----------+----------+---------+----------+----------+-------+
| Cost of share based | - | (0.3) | - | | - | - | 0.2 | (0.1) |
| payments | | | | | | | | |
+---------------------+---------+----------+----------+----------+---------+----------+----------+-------+
| Warrants issued | - | - | 0.8 | | - | - | - | 0.8 |
+---------------------+---------+----------+----------+----------+---------+----------+----------+-------+
| At 31 March 2010 | 40.7 | 1.5 | 0.8 | | 7.0 | (1.5) | (54.3) | (5.8) |
+---------------------+---------+----------+----------+----------+---------+----------+----------+-------+
28. Investment in Own Shares
+----------------------+---------+-------+
| Group and Company | |
+----------------------+-----------------+
| | Number | Cost |
+----------------------+---------+-------+
| | '000 | GBPm |
+----------------------+---------+-------+
| At 31 March 2009 | 548.2 | 1.1 |
+----------------------+---------+-------+
| Additions | 338.2 | - |
+----------------------+---------+-------+
| Disposals | (141.6) | (0.1) |
+----------------------+---------+-------+
| At 31 March 2010 | 744.8 | 1.0 |
+----------------------+---------+-------+
Additions relate to the Inland Revenue Approved All-Employee Share Ownership
Plan.
Included in investment in own shares are shares relating to the Inland Revenue
Approved All-Employee Share Ownership Plan, as follows:
+------------------------------+--------+------+--------+--------+------+--------+
| | 2010 | 2009 |
+------------------------------+------------------------+------------------------+
| | Number | Cost | Market | Number | Cost | Market |
| | | | value | | | value |
+------------------------------+--------+------+--------+--------+------+--------+
| | '000 | GBPm | GBPm | '000 | GBPm | GBPm |
+------------------------------+--------+------+--------+--------+------+--------+
| Partnership shares purchased | 322.9 | - | 0.1 | 207.6 | - | - |
| by employees held in Trust | | | | | | |
+------------------------------+--------+------+--------+--------+------+--------+
| Matching and Free shares not | 393.5 | 0.8 | 0.1 | 304.4 | 1.0 | 0.1 |
| yet vested | | | | | | |
+------------------------------+--------+------+--------+--------+------+--------+
| | 716.4 | 0.8 | 0.2 | 512.0 | 1.0 | 0.1 |
+------------------------------+--------+------+--------+--------+------+--------+
The vesting of Matching and Free shares is conditional on meeting the conditions
of the scheme which are summarised in the Report and Accounts which will be
published in due course.
29. Directors' Interests and Related Party Transactions
Transactions between the company and subsidiaries, which are related parties,
have been eliminated on consolidation for the Group.
Compensation of key management personnel is disclosed in the Report and Accounts
which will be published in due course.
Transactions between the parent company and its subsidiaries are shown below:
+---------------------+-------------+------+-------+
| | | 2010 | 2009 |
+---------------------+-------------+------+-------+
| Subsidiary | Nature | GBPm | GBPm |
| | of | | |
| | transaction | | |
+---------------------+-------------+------+-------+
| JS Real Estate | Dividend | 45.5 | - |
| Limited | | | |
+---------------------+-------------+------+-------+
| Vere Street | Dividend | 3.0 | - |
| Investments Limited | | | |
+---------------------+-------------+------+-------+
| Lancaster Holdings | Dividend | - | 10.9 |
| Limited | | | |
+---------------------+-------------+------+-------+
| Lotkeep Limited | Dividend | - | 3.4 |
+---------------------+-------------+------+-------+
Balances outstanding between the parent company and its subsidiaries are shown
below:
+------------------------+-------+-------+---------+---------+
| | Amounts owed | Amounts |
| | by | owed to |
| | subsidiaries | subsidiaries |
+------------------------+---------------+-------------------+
| | | | | |
+------------------------+-------+-------+---------+---------+
| | 2010 | 2009 | 2010 | 2009 |
+------------------------+-------+-------+---------+---------+
| Subsidiary | GBPm | GBPm | GBPm | GBPm |
+------------------------+-------+-------+---------+---------+
| Ashtenne Holdings | - | - | (0.1) | (0.1) |
| Limited | | | | |
+------------------------+-------+-------+---------+---------+
| Cardiff and Provincial | - | - | (12.1) | (11.9) |
| Properties Limited | | | | |
+------------------------+-------+-------+---------+---------+
| Clay Estates Limited | - | - | (79.6) | (79.6) |
+------------------------+-------+-------+---------+---------+
| Clay Group Limited | - | - | - | (5.1) |
+------------------------+-------+-------+---------+---------+
| Industrial Funds | - | - | (4.6) | (3.2) |
| Limited | | | | |
+------------------------+-------+-------+---------+---------+
| JS Real Estate Limited | - | - | - | (64.6) |
+------------------------+-------+-------+---------+---------+
| Lancaster Holdings | - | - | (0.1) | - |
| Limited | | | | |
+------------------------+-------+-------+---------+---------+
| Middleton (Jersey) One | - | - | - | (0.5) |
| Limited | | | | |
+------------------------+-------+-------+---------+---------+
| Skipper Offices | - | - | - | (0.7) |
| Limited | | | | |
+------------------------+-------+-------+---------+---------+
| Vere Street | - | - | - | (3.0) |
| Investments Limited | | | | |
+------------------------+-------+-------+---------+---------+
| Warner Estate (AIF) | - | - | (2.1) | (1.6) |
| Limited | | | | |
+------------------------+-------+-------+---------+---------+
| Warner Estate Asset | - | - | (2.9) | (0.3) |
| Management Limited | | | | |
+------------------------+-------+-------+---------+---------+
| Warner Estate | 21.8 | 20.5 | - | - |
| Development | | | | |
| (Folkestone) Limited | | | | |
+------------------------+-------+-------+---------+---------+
| Warner Estate | - | - | (15.2) | (52.5) |
| Investments Limited | | | | |
+------------------------+-------+-------+---------+---------+
| Warner Estate (Jersey) | 13.6 | 0.7 | - | - |
| Limited | | | | |
+------------------------+-------+-------+---------+---------+
| Warner Estate, Limited | 23.1 | 33.6 | - | - |
+------------------------+-------+-------+---------+---------+
| Warner Estate | 9.0 | - | - | (2.8) |
| Management Limited | | | | |
+------------------------+-------+-------+---------+---------+
| Warner Estate Property | - | - | (24.8) | (16.7) |
| Management Limited | | | | |
+------------------------+-------+-------+---------+---------+
| | 67.5 | 54.8 | (141.5) | (242.6) |
+------------------------+-------+-------+---------+---------+
No fees were paid in respect of contracts, which provided services in the
ordinary course of business to the Group, and in which Directors have or had
interests.
During the year there were loan transactions between the Group and joint
ventures, as set out in note 15. Interest payable on these loans and
management charges, payable by the joint ventures, are also set out in note 15.
30. Reconciliation of Operating Profit to Net Cash Flow
+----------------------------------+-------+-------+-------+-------+
| | Group | Company |
+----------------------------------+---------------+---------------+
| | 2010 | 2009 | 2010 | 2009 |
| | | | | |
+----------------------------------+-------+-------+-------+-------+
| | GBPm | GBPm | GBPm | GBPm |
+----------------------------------+-------+-------+-------+-------+
| | | | | |
+----------------------------------+-------+-------+-------+-------+
| Operating profit before net | 7.9 | 16.5 | 0.5 | 0.4 |
| gains on investments | | | | |
+----------------------------------+-------+-------+-------+-------+
| Depreciation of plant and | 0.2 | 0.1 | - | - |
| equipment | | | | |
+----------------------------------+-------+-------+-------+-------+
| De-recognition of goodwill | 0.1 | - | - | - |
+----------------------------------+-------+-------+-------+-------+
| Decrease / (increase) in trade | 1.1 | 5.5 | (4.9) | 139.1 |
| and other receivables | | | | |
+----------------------------------+-------+-------+-------+-------+
| (Decrease) / increase trade and | (1.6) | (9.5) | 2.6 | 4.7 |
| other payables | | | | |
+----------------------------------+-------+-------+-------+-------+
| Cash generated from operations | 7.7 | 12.6 | (1.8) | 144.2 |
+----------------------------------+-------+-------+-------+-------+
31. Contingent Liabilities
+----------------------------------+-------+-------+
| | 2010 | 2009 |
+----------------------------------+-------+-------+
| | GBPm | GBPm |
+----------------------------------+-------+-------+
| Contingent liabilities in | | |
| respect of guarantees given by | | |
| the Company in respect of | | |
| borrowings of its subsidiaries | | |
| as follows: | | |
+----------------------------------+-------+-------+
| Bank overdrafts | 176.3 | 215.0 |
+----------------------------------+-------+-------+
| | 176.3 | 215.0 |
+----------------------------------+-------+-------+
These liabilities have not been recognised on the statement of financial
position. The Company has given letters of support to various subsidiary
undertakings.
32. Operating Lease Commitments
+----------------------------------------+------+--------+
| | 2010 | 2009 |
+----------------------------------------+------+--------+
| | GBPm | GBPm |
+----------------------------------------+------+--------+
| Group | | |
+----------------------------------------+------+--------+
| Total future minimum lease payments | | |
| under non-cancellable operating leases | | |
| are as follows: | | |
+----------------------------------------+------+--------+
| Within one year | 0.2 | 0.2 |
+----------------------------------------+------+--------+
| Expiring between two and five years | 0.6 | 0.6 |
+----------------------------------------+------+--------+
| Expiring after five years | 1.2 | 1.3 |
+----------------------------------------+------+--------+
| | 2.0 | 2.1 |
+----------------------------------------+------+--------+
33. Operating Leases Granted
The Group earns rental income by leasing its investment properties to tenants
under operating leases.
At the statement of financial position date, the Group had contracted with
tenants to receive the following future minimum lease payments:
+----------------------------------------+-------+--------+
| | 2010 | 2009 |
+----------------------------------------+-------+--------+
| | GBPm | GBPm |
+----------------------------------------+-------+--------+
| Group | | |
+----------------------------------------+-------+--------+
| | | |
+----------------------------------------+-------+--------+
| Within one year | 13.9 | 15.8 |
+----------------------------------------+-------+--------+
| Expiring between two and five years | 48.0 | 48.6 |
+----------------------------------------+-------+--------+
| Expiring after five years | 57.3 | 61.8 |
+----------------------------------------+-------+--------+
| | 119.2 | 126.2 |
+----------------------------------------+-------+--------+
34. Disposals
The entire share capital of JS Real Estate Limited was disposed of on 2 April
2010. JS Real Estate Limited was principally involved in property investment.
Disposal of JS Real Estate Limited
+--------------------------------+---------+-------------+---------+
| | | Fair | |
| | Book | value | Fair |
| | value | adjustments | value |
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+---------+-------------+---------+
| | | | |
+--------------------------------+---------+-------------+---------+
| Net assets / (liabilities) | | | |
| disposed of | | | |
+--------------------------------+---------+-------------+---------+
| | | | |
+--------------------------------+---------+-------------+---------+
| Investment property | 38,970 | - | 38,970 |
+--------------------------------+---------+-------------+---------+
| Trade and other receivables | 356 | - | 356 |
+--------------------------------+---------+-------------+---------+
| Cash and cash equivalents | 186 | - | 186 |
+--------------------------------+---------+-------------+---------+
| Trade and other payables | (2,361) | - | (2,361) |
+--------------------------------+---------+-------------+---------+
| Current income tax liabilities | (47) | - | (47) |
+--------------------------------+---------+-------------+---------+
| | | | |
+--------------------------------+---------+-------------+---------+
| | 37,104 | - | 37,104 |
+--------------------------------+---------+-------------+---------+
| | | | |
+--------------------------------+---------+-------------+---------+
| | | | |
+--------------------------------+---------+-------------+---------+
| Consideration | 37,104 | - | 37,104 |
+--------------------------------+---------+-------------+---------+
| | | | |
+--------------------------------+---------+-------------+---------+
| Satisfied by | | | |
+--------------------------------+---------+-------------+---------+
| | | | |
+--------------------------------+---------+-------------+---------+
| Cash consideration | 37,104 | - | 37,104 |
+--------------------------------+---------+-------------+---------+
| Cash consideration | 37,104 | - | 37,104 |
+--------------------------------+---------+-------------+---------+
JS Real Estate Limited contributed GBPnil to revenue and GBPnil to the Group's
profit before taxation for the period between 1 April 2009 and the date of
disposal.
35. Fixed Asset Investments
+-------------------------------+------------------+------------+------------+
| | | Issued | Percentage |
| | | Share | Held |
| | | Capital | |
+-------------------------------+------------------+------------+------------+
| | | | |
+-------------------------------+------------------+------------+------------+
| Principal Subsidiary | | GBP | |
| Companies | | | |
+-------------------------------+------------------+------------+------------+
| Holding and Services | | | |
+-------------------------------+------------------+------------+------------+
| *Apia Asset Management | GBP1 Ordinary | 1 | 100 |
| Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| *Ashtenne Asset Management | 10p Ordinary | 100 | 100 |
| Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| *Ashtenne Holdings Limited: | 20p Ordinary | 7,220,942 | 100 |
| | Shares | | |
+-------------------------------+------------------+------------+------------+
| Industrial Funds Limited: | GBP1 A Ordinary | 250,000 | 100 |
| | Shares | | |
+-------------------------------+------------------+------------+------------+
| | GBP1 B Ordinary | 250,000 | 100 |
| | Shares | | |
+-------------------------------+------------------+------------+------------+
| *Radial Distribution Asset | GBP1 Ordinary | 1 | 100 |
| Management Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| Warner Estate Management | GBP1 Ordinary | 2 | 100 |
| Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| *Warner Active Management No | GBP1 Ordinary | 1 | 100 |
| 2 Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| *Warner Active Management No | GBP1 Ordinary | 1 | 100 |
| 4 Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| *Warner Advisors (Jersey) | GBP1 Ordinary | 1 | 100 |
| Limited (Jersey): | Shares | | |
+-------------------------------+------------------+------------+------------+
| Warner Estate Asset | 10p Ordinary | 1,636,000 | 100 |
| Management Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| Warner Estate Property | 10p Ordinary | 3,987,000 | 100 |
| Management Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| *Warner Estate (AM:PM) | GBP1 Ordinary | 1 | 100 |
| Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| | | | |
+-------------------------------+------------------+------------+------------+
| Property Investment | | | |
+-------------------------------+------------------+------------+------------+
| Lancaster Holdings Limited: | GBP1 Ordinary | 100 | 100 |
| | Shares | | |
+-------------------------------+------------------+------------+------------+
| | GBP1 Deferred | 100 | 100 |
| | Shares | | |
+-------------------------------+------------------+------------+------------+
| Lancaster Investments | GBP1 Shares | 1,000 | 100 |
| Limited: | | | |
+-------------------------------+------------------+------------+------------+
| Warner Estate Development | GBP1 Ordinary | 1 | 100 |
| (Folkestone) Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| Warner Estate Investments | GBP1 Ordinary | 1 | 100 |
| Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| Warner Estate Property | GBP1 Ordinary | 40,000,000 | 100 |
| Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| | | | |
+-------------------------------+------------------+------------+------------+
| Other Investment | | | |
+-------------------------------+------------------+------------+------------+
| Cardiff and Provincial | 25p Ordinary | 162,000 | 100 |
| Properties Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
| Warner Estate, Limited: | GBP1 Ordinary | 1 | 100 |
| | Shares | | |
+-------------------------------+------------------+------------+------------+
| *Warner Estate (AIF) Limited | GBP1 Ordinary | 1 | 100 |
| (Jersey): | Shares | | |
+-------------------------------+------------------+------------+------------+
| | GBP1 Redeemable | 12,000,000 | 100 |
| | Preference | | |
| | Shares | | |
+-------------------------------+------------------+------------+------------+
| *Warner Estate (GLO) Limited | GBP1 Ordinary | 1 | 100 |
| (Jersey): | Shares | | |
+-------------------------------+------------------+------------+------------+
| Warner Estate Joint Ventures | GBP1 Ordinary | 1 | 100 |
| Limited: | Shares | | |
+-------------------------------+------------------+------------+------------+
+-------------------------+----------------------+-------------+-------+--+
| Joint Ventures | | | |
+-------------------------+----------------------+-------------+----------+
| Property Investment | | | |
+-------------------------+----------------------+-------------+----------+
| *Agora Shopping Centres | GBP1 A Ordinary | 7,323,013 | 100 |
| Limited: | Shares | | |
+-------------------------+----------------------+-------------+----------+
| | GBP1 B Ordinary | 7,323,013 | - |
| | Shares | | |
+-------------------------+----------------------+-------------+----------+
| *Agora Max Limited: | GBP1 A Ordinary | 32,538,535 | 100 |
| | Shares | | |
+-------------------------+----------------------+-------------+----------+
| | GBP1 B Ordinary | 32,538,535 | - |
| | Shares | | |
+-------------------------+----------------------+-------------+----------+
| *Apia Regional Office | GBP1 A Ordinary | 25,000 | - |
| Fund (General Partner) | Shares | | |
| Limited: | | | |
+-------------------------+----------------------+-------------+----------+
| | GBP1 B Ordinary | 25,000 | 100 |
| | Shares | | |
+-------------------------+----------------------+-------------+----------+
| *Greater London Offices | GBP1 A Ordinary | 5,091,332 | 100 |
| Limited: | Shares | | |
+-------------------------+----------------------+-------------+----------+
| | GBP1 B Ordinary | 5,091,332 | - |
| | Shares | | |
+-------------------------+----------------------+-------------+----------+
| *Radial Distribution | GBP1 A Ordinary | 8,345,419 | 100 |
| Limited: | Shares | | |
+-------------------------+----------------------+-------------+----------+
| | GBP1 B Ordinary | 8,345,419 | - |
| | Shares | | |
+-------------------------+----------------------+-------------+----------+
| | | | |
+-------------------------+----------------------+-------------+----------+
| Principal Other | | | |
| Investments | | | |
+-------------------------+----------------------+-------------+----------+
| Investment in Shares | | | |
+-------------------------+----------------------+-------------+----------+
| *Ashtenne Industrial | GBP1 A Ordinary | 120 | - |
| (General Partner) | Shares | | |
| Limited: | | | |
+-------------------------+----------------------+-------------+----------+
| | GBP1 B Ordinary | 60 | 100 |
| | Shares | | |
+-------------------------+----------------------+-------------+----------+
| | | | |
+-------------------------+----------------------+-------------+----------+
| Investment in Funds | | | |
+-------------------------+----------------------+-------------+----------+
| *Apia Regional Office | GBP1 Units | 190,532,109 | 27.43 |
| Fund Unit Trust | | | |
| (Jersey): | | | |
+-------------------------+----------------------+-------------+----------+
| *Ashtenne Industrial | GBP1 Units | 358,695,267 | 6.52 |
| Fund Unit Trust | | | |
| (Jersey): | | | |
+-------------------------+----------------------+-------------+----------+
| | | | |
+-------------------------+----------------------+-------------+----------+
| * Held through a | | | |
| subsidiary company | | | |
+-------------------------+----------------------+-------------+----------+
| All companies are incorporated in the UK and registered in | |
| England unless otherwise indicated. | |
+----------------------------------------------------------------------+--+
| | | | | |
+-------------------------+----------------------+-------------+-------+--+
The companies listed above are those subsidiary undertakings whose results or
financial position, in the opinion of the Directors principally affected the
figures in the Group's financial statements. The Company has taken advantage of
s410(2) and (3) Companies Act 2006 in not listing all its subsidiary and joint
venture undertakings. All of the subsidiaries have been consolidated in the
Group financial statements.
Full listings of all the subsidiaries are available from the Company Secretary
at the registered office.
36. Post Balance Sheet Events
On 14 May 2010, the Group disposed of its 50% share in Radial Distribution
Limited for consideration amounting to GBP0.5million. The Group received
consideration amounting to GBP3.3million for the termination of the related
asset management contract.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFFFMWFSSEFM
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