TIDMWNER
RNS Number : 9206W
Warner Estate Holdings PLC
29 November 2010
Warner Estate Holdings PLC
ASSET MANAGEMENT EXPERIENCE IS KEY TO SUCCESS
warnerestate holdings PLC ("warner Estate" or "Group"), the
property investment andasset management company has today announced
its preliminary results for the halfyear ended 30 September
2010.
Financial Summary
-- Revenue GBP14.9million (September 2009: GBP15.6million)
-- Recurring operating profit before net movements on
investments GBP6.3million (September 2009: GBP5.6million)(i)
-- Loss before income tax GBP1.0million (September 2009:
GBP27.6million loss)
-- Net liabilities per share 9p (March 2010 : 7p net
liabilities)
-- Loss per share 1.8p (September 2009: 49.9p loss)
(i) Adjusted for non-recurring management fee income of
GBP1.1million and net property expenses of GBP0.2million
Key Business Events
-- Sovereign Gate, Richmond and 24-26 The Minories, London were
sold in April and June respectively, for a combined amount of
GBP10.8million which was in line with valuation.
-- Disposal of 50% equity interest in Radial Distribution
Limited for GBP0.5million and receipt of transaction based fees and
foregone management fees of GBP4.1million.(i)
-- September quarter day cash collection remains at or above 98%
within 28 days
-- Substantial reduction in voids across the Wholly Owned
portfolio to 10.3% (March 2010: 19.4%)
-- Only one floor (8,600 sq ft) remains unlet in the Group's
flagship City of London office refurbishment, 60 New Broad
Street.
(i) GBP1.1million one-off fees and GBP3.0million on termination
of asset management contract
Philip Warner, Chairman of Warner Estate commented
"The improvement in sentiment in the property market in the
early part of this year, brought about by increased demand and some
capital growth, appears to have waned as the UK economy waits to
assess the impact of the proposed Government austerity measures.
This uncertainty is exacerbated by the current turmoil in European
financial markets. With a mixed property portfolio, we can see both
upsides and downsides and asset management experience will be more
important than ever, an expertise which the Group is well placed to
provide."
Date: 29 November 2010
For further information contact:
Warner Estate Holdings PLC City Profile
Philip Warner, Chairman Jonathan Gillen
Mark Keogh, Group Managing Director Simon Courtenay
Robert Game, Group Managing Tel: 020 7448 3244
Director, Property
Tel: 020 7907 5100 warner@city-profile.com
Web: www.warnerestate.co.uk
CHAIRMAN'S STATEMENT
This is the Group's first set of results following the
refinancing of its wholly owned portfolio at the end of March 2010.
Although net asset value per share has decreased during the six
months ended 30 September 2010 from a negative 7p to a negative 9p,
this includes the 13p per share impairment of goodwill, explained
further below, more than offsetting the 4% increase in the value of
our portfolio and the gain from the sale in May of our Radial
Distribution joint venture. In addition to the valuation surplus,
progress has been made with an improvement in operating profit and
a substantial reduction in the void rate.
Results Overview
Operating profit before net movements on investments for the six
months to 30 September has increased to GBP7.2million from
GBP0.6million for the equivalent period last year. Recurring
operating profit before net movements on investments for the period
was GBP6.3million compared to GBP5.6million for the equivalent
period last year due to further reductions in operating costs.
Recurring operating profit excludes one-off fees received on the
disposal of Radial Distribution of GBP1.1million and the reduction
of the leasehold liability provision by GBP0.2million offset by the
movement in other accruals of GBP0.4million (September 2009:
excludes the provision against the leasehold liability portfolio of
GBP4.8million and other one-off costs of GBP0.2million). Improving
property values and the gain on disposal of the Group's interests
in Radial Distribution, offset by an impairment of goodwill,
resulted in a pre tax loss of GBP1.0million (September 2009:
GBP27.6million loss). The impairment of goodwill of GBP7.1million,
relating to the asset management business originally acquired by
Industrial Funds Limited as part of the acquisition of Ashtenne
Holdings arises from the Group reassessing a number of factors
including the maturity of the contract in 2016 and the potential
impact on management fees of uncertain capital values given that
the fees of this business are based on gross asset values. The
directors believe that this is an appropriate carrying value of
goodwill as at 30 September 2010.
The net finance expense for the period has increased to
GBP8.6million (September 2009: GBP4.4million) as a result of the
refinancing which includes an increase in margin, interest rate
hedging required by the lending banks and the amortisation of
related costs. The Group has hedged 52% of its gross debt as at 30
September 2010. The headline cost of net debt is 7.1% of which the
cash cost is 2.3%. Group net debt has been reduced to
GBP241.3million as at 30 September 2010 from GBP253.3million as at
31 March 2010 as a result of completing the disposal of two
non-income producing assets. The net cash inflow for the period was
GBP3.0million. The terms relating to the refinanced loan facilities
are set out on pages 59 to 67 of the Group's 2010 Annual Report and
Accounts. Of the Group's facilities, GBP163.5million matures in
April 2012 and the balance of GBP85million matures in December
2012. Two of the Group's three facilities have loan to value
('LTV') covenants of which one has been tested and is compliant and
the other is due to be tested in March 2011. It is difficult to
estimate the future values of property, and consequently LTV
ratios, particularly in light of the potential impact of current
European financial turmoil and the austerity measures being
introduced by the Government on the UK's economy and financial
markets. The Board has discussed with its advisors, at some length,
the likely future headroom under these LTV covenants and concluded
that, based on best current estimates, the Group will, for the
foreseeable future, have adequate headroom. The Group's positive
income and cash generation provide adequate headroom for other
financial covenants, in particular income cover ratios and debt
service cover ratios.
As reported in June, although the exit fees payable when these
facilities expire would not be covered on current cash flow
projections without a considerable rise in property values, the
Board continues to address this issue in order to ensure a solution
is found prior to the maturity of the facilities.
I would like to reassure shareholders that, although the Group
has net liabilities, mainly due to unrealised revaluation
movements, the Board is satisfied that, following a review of
appropriately stress tested cash flow projections, the Group will
continue to be able to meet its liabilities as and when they fall
due for the foreseeable future.
Discussions with each of the Group's joint venture lenders
continue; the Directors will provide further updates regarding
these discussions as and when appropriate.
I very much regret that no interim dividend will be paid.
Property Review
The market improvement experienced in the early part of this
period has flattened out. With a predominantly London and South
East portfolio, 88% by value, and limited exposure to government
tenants, 2% by contracted rent, the Group's wholly owned portfolio
performed well relative to benchmark, with a gain in value of 4%
compared with the IPD Monthly Index benchmark increase of 2.4%. The
net gain masks the divergence between increases in the values of
London and/or well let properties and falls in those of the more
secondary properties. The sale of two mainly vacant office
buildings contributed to a slight improvement in the average
unexpired lease term to 7.1 years, with 68% of contracted income
now secure until 2014.
From an earlier high of 24.9% in July 2009, the wholly owned
portfolio void rate has improved, falling from 13.4% at the end of
September 2010 to 10.3% by estimated rental value (ERV) today. A
focused approach to lettings, high tenant retention rates and low
failure levels has contributed to this void rate falling back close
to the equivalent IPD benchmark of 9.9%. Other notable highlights
included the eagerly anticipated opening of the new Primark store
in the Group's Bouverie Place Shopping Centre (Folkestone) in
September. In the run up to Christmas and beyond this is seen as a
key draw, not just to the Centre, but also to the town itself.
The Apia Regional Office Fund acquired seven regional office
assets from Scottish Widows Investment Partnership (SWIP), in
exchange for an equity holding in the fund and sold an asset to
SWIP for cash. Total assets under management, excluding the Radial
Distribution joint venture sold during the period, remained broadly
constant over the period at GBP1.4billion and the breakdown between
business units is shown in the table below. The capital value of
standing investments decreased by 0.2% against the benchmark
increase of 2.4% due to price fluctuations in regional office and
secondary shopping centre markets. However, active asset management
generated an income return of 3.8%, compared to the IPD benchmark's
3.5%, from the annual rent roll of GBP120million under
management.
Portfolio wide tenant retention rates are holding up well and
rent collection statistics have been maintained at or above 98%
within 28 days of due date.
As at 30 Net Estimated Net
September Number of Capital Rental Rental Initial Equivalent Void
2010 Properties Value Income Value Yield Yield Rate
GBPm GBPm GBPm % % %
Wholly
Owned 45 210.9 13.5 19.0 6.0 7.9 13.4
------------ ----------- -------- ------- ---------- -------- ----------- -----
Agora
Shopping
Centres
JV 8 151.1 12.7 16.9 7.6 9.5 7.9
Agora Max
Shopping
Centres
JV 2 87.8 8.2 10.5 8.8 9.3 1.5
Greater
London
Offices
JV 2 74.3 5.8 5.5 7.0 6.6 3.6
Apia
Regional
Office
Fund 21 222.6 15.9 24.4 6.3 8.6 26.3
Ashtenne
Industrial
Fund 368 668.2 55.9 75.7 8.5 10.1 16.6
Total 446 1,414.9 112.0 152.0 7.6 9.2 14.7
------------ ----------- -------- ------- ---------- -------- ----------- -----
Strategy and Outlook
As I reported in June, the Group's primary objective is to seek
to grow our asset management business, based upon the existing
platform of skilled staff managing GBP1.4 billion of property.
However, we also continue to explore options to strengthen the
Group's balance sheet. In the meantime protecting income and
controlling costs remain priorities.
The improvement in sentiment in the property market in the early
part of this year, brought about by increased demand and some
capital growth, appears to have waned as the UK economy waits to
assess the impact of the proposed Government austerity measures.
This uncertainty is exacerbated by the current turmoil in European
financial markets. The effect on property values and income of a
potential UK economic downturn is one of the key risks facing the
Group. The other principal risks and uncertainties affecting the
Group, and the mitigation in place to address them, are set out on
page 9 of the 2010 Annual Report and Accounts. With a mixed
property portfolio, we can see both upsides and downsides and asset
management experience will be more important than ever, an
expertise which the Group is well placed to provide.
Philip Warner
Chairman
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 September 2010
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
Notes 2010 2009 2010
-------------------------- ------ -------------- -------------- ----------
GBPm GBPm
Revenue 14.9 15.6 32.8
-------------------------- ------ -------------- -------------- ----------
Rental and similar income 7.6 9.1 18.7
Property management
expenses (1.5) (2.8) (5.6)
Movement in provision for
onerous contracts 14 0.2 (4.8) (4.2)
Service charge and
similar income 1.7 1.7 3.1
Service charge expense
and similar charges (2.4) (2.2) (4.4)
-------------- -------------- ----------
Net rental income 2 5.6 1.0 7.6
-------------- -------------- ----------
Revenue from asset
management activities 5.6 4.8 11.0
Asset management expenses (3.6) (4.6) (9.2)
-------------------------- ------ -------------- -------------- ----------
Net income from asset
management activities 2 2.0 0.2 1.8
-------------- -------------- ----------
Other operating expenses (0.4) (0.6) (1.5)
Operating profit before
net movements on
investments 2 7.2 0.6 7.9
-------------- -------------- ----------
Net profit / (loss) from
fair value adjustments
on investment properties
and impairment of net
investment in finance
leases 9 7.2 (15.8) (2.8)
Net loss from fair value
adjustment on
investments 11/12 (1.1) (7.6) (6.2)
Profit / (loss) on sale
of investment
properties 0.1 (0.3) (0.1)
Profit on sale of
investment in joint
ventures 10 0.5 - -
Profit on termination of
asset management
contract 10 3.0 - -
Impairment of goodwill 8 (7.1) - -
Operating profit / (loss) 9.8 (23.1) (1.2)
-------------- -------------- ----------
Finance income 3 0.5 1.3 1.8
Finance expense 4 (9.1) (5.7) (12.2)
Change in fair value of
derivative financial
instruments (2.2) 0.9 2.9
Share of joint ventures'
post tax losses 10 - (1.0) (1.0)
-------------------------- ------ -------------- -------------- ----------
Loss before income tax (1.0) (27.6) (9.7)
-------------- -------------- ----------
Taxation - current 5 - - 0.8
Taxation - deferred 5 - - -
Loss for the period (1.0) (27.6) (8.9)
-------------------------- ------ -------------- -------------- ----------
p p p
Loss per share 7 (1.81) (49.86) (16.09)
------------------------------ ------- -------- --------
Fully diluted loss per share 7 (1.66) (49.03) (15.20)
------------------------------ ------- -------- --------
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 September 2010
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2010 2009 2010
---------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Loss for the period (1.0) (27.6) (8.9)
Other comprehensive expense
Actuarial losses on retirement
benefit obligations (0.1) (0.2) (0.1)
Deferred tax arising on
retirement benefit obligations - - -
Total comprehensive expense for
the period (1.1) (27.8) (9.0)
---------------------------------- -------------- -------------- ----------
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
Notes 2010 2009 2010
-------------------------- ------ -------------- -------------- ----------
GBPm GBPm GBPm
ASSETS
Non-current assets
Goodwill 8 4.1 11.2 11.2
Investment properties 9 209.4 199.6 212.2
Plant and equipment 0.2 0.3 0.2
Investments in joint
ventures 10 - - -
Investments in funds 11 40.2 39.8 41.3
Investments in unlisted
shares 12 0.3 0.4 0.3
Net investment in finance
leases 2.4 2.4 2.4
Deferred income tax
assets 13 0.2 0.2 0.2
Trade and other
receivables 3.1 1.6 2.2
-------------------------- ------ -------------- -------------- ----------
259.9 255.5 270.0
-------------------------- ------ -------------- -------------- ----------
Current assets
Trade and other
receivables 6.3 7.3 6.5
Cash and cash equivalents 16 7.5 7.0 4.5
-------------------------- ------ -------------- -------------- ----------
13.8 14.3 11.0
-------------------------- ------ -------------- -------------- ----------
Total assets 273.7 269.8 281.0
-------------------------- ------ -------------- -------------- ----------
LIABILITIES
Non-current liabilities
Borrowings, including
finance leases 16 (246.6) (3.2) (255.1)
Trade and other payables (0.9) (2.8) (2.1)
Derivative financial
liabilities (4.7) (4.5) (2.5)
Retirement benefit
obligations (0.9) (1.1) (0.8)
Provisions for other
liabilities and charges 14 (3.6) (5.8) (4.4)
-------------------------- ------ -------------- -------------- ----------
(256.7) (17.4) (264.9)
-------------------------- ------ -------------- -------------- ----------
Current liabilities
Borrowings, including
finance leases 16 (1.1) (257.0) (0.9)
Trade and other payables (18.0) (14.2) (15.8)
Current income tax
liabilities (0.1) (1.0) (0.3)
Provisions for other
liabilities and charges 14 (2.9) (3.8) (3.1)
(22.1) (276.0) (20.1)
-------------------------- ------ -------------- -------------- ----------
Total liabilities (278.8) (293.4) (285.0)
-------------------------- ------ -------------- -------------- ----------
Net liabilities (5.1) (23.6) (4.0)
-------------------------- ------ -------------- -------------- ----------
EQUITY
Capital and reserves
attributable to the
Company's equity holders
Share capital 2.8 2.8 2.8
Reserves (7.0) (25.4) (5.8)
Investment in own shares (0.9) (1.0) (1.0)
-------------------------- ------ -------------- -------------- ----------
Total deficit (5.1) (23.6) (4.0)
-------------------------- ------ -------------- -------------- ----------
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2010
Share Investment
Share Share Based Revaluation Other Treasury Retained Warrant in own
Capital Premium Payments Reserve Reserve Shares Earnings reserve shares Total
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 30
September
2009
(unaudited) 2.8 40.7 1.5 (244.6) 8.0 (1.5) 170.5 - (1.0) (23.6)
Total
comprehensive
income for
the half
year - - - - - - 18.8 - 18.8
Movement
on realised
revaluation - - - 16.9 - - (16.9) - - -
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
Transactions
with owners:
Disposal
of investment
in own shares - - - - - - - - 0.1 0.1
Cost of share
based
payments - - - - - - - - (0.1) (0.1)
Warrants
issued - - - - - - - 0.8 - 0.8
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
At 31 March
2010 2.8 40.7 1.5 (227.7) 8.0 (1.5) 172.4 0.8 (1.0) (4.0)
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
Total
comprehensive
expense for
the half
year - - - - - - (1.1) - - (1.1)
Movement
on realised
revaluation - - - 39.8 - - (39.8) - - -
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
Transactions
with owners:
Disposal
of investment
in own shares - - - - - - - - 0.1 0.1
Cost of share
based
payments - - (0.4) - - - 0.3 - - (0.1)
Warrants
issued - - - - - - - - - -
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
At 30
September
2010
(unaudited) 2.8 40.7 1.1 (187.9) 8.0 (1.5) 131.8 0.8 (0.9) (5.1)
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 September 2010
Unaudited Unaudited Audited
30 September 30 September 31 March
Note 2010 2009 2010
--------------------------- ----- -------------- -------------- ----------
GBPm GBPm GBPm
Cash flows from operating
activities
Cash generated from
operations 15 2.3 1.3 7.7
Interest paid (3.2) (5.3) (11.1)
Interest received 0.1 - 0.1
UK Corporation tax (paid)
/ received (0.2) 0.9 1.0
--------------------------- ----- -------------- -------------- ----------
Net cash outflow from
operating activities (1.0) (3.1) (2.3)
--------------------------- ----- -------------- -------------- ----------
Cash flows from investing
activities
Purchase of investment
properties and related
capital expenditure (0.5) (0.3) (1.2)
Sale of investment
properties 10.6 13.4 14.5
Net cash received from
disposal of shares in
subsidiary companies - 36.9 36.9
Sale of investments in
joint ventures 0.5 - -
Termination of asset
management contract 3.0 - -
Distributions received
from funds - 0.9 1.3
--------------------------- ----- -------------- -------------- ----------
Net cash inflow from
investing activities 13.6 50.9 51.5
--------------------------- ----- -------------- -------------- ----------
Cash flows from financing
activities
Increase in bank loans 1.3 - 15.7
Repayment of bank loans (10.3) - (53.2)
Finance fees paid (0.6) (12.0) (16.2)
--------------------------- ----- -------------- -------------- ----------
Net cash outflow from
financing activities (9.6) (12.0) (53.7)
--------------------------- ----- -------------- -------------- ----------
Net increase / (decrease)
in cash and cash
equivalents* 3.0 35.8 (4.5)
Cash and cash equivalents
at beginning of period* 4.5 (286.3) (286.3)
Less: overdraft facility
balances - - 295.3
Cash and cash equivalents
at end of period* 16 7.5 (250.5) 4.5
--------------------------- ----- -------------- -------------- ----------
* 2009 comparatives include overdraft facility balances shown in
borrowings. On refinancing in 2010, these are classified as bank
debt.
UNAUDITED NOTES TO THE FINANCIAL STATEMENTS
1. basis of preparation & accounting policies
Basis of preparation
This condensed consolidated interim financial statements for the
six months ended 30 September 2010 has been prepared on a going
concern basis and in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS
34 'Interim financial reporting' as adopted by the European Union
("EU"), and on the basis of accounting policies set out in the
Group's Annual Report and Accounts for the year ended 31 March
2010.
The condensed consolidated interim financial statements do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. Statutory accounts for the year ended 31
March 2010 were approved by the Board of Directors on 18 June 2010
and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified and did not contain any
statement under section 498 of the Companies Act 2006. The
condensed consolidated interim financial information has been
reviewed, not audited.
The condensed consolidated interim financial statements should
be read in conjunction with the annual financial statements for the
year ended 31 March 2010, which have been prepared in accordance
with IFRSs as adopted by the EU.
There is no material seasonal impact on the Group's financial
performance.
These unaudited condensed interim consolidated financial
statements have been prepared on a going concern basis, which
assumes the Group will continue to be able to meet its liabilities
as and when they fall due, for the foreseeable future.
Accounting policies
Except as described below, the condensed consolidated interim
financial statements have been prepared on the basis of the
accounting policies, significant judgements, key assumptions and
estimates as set out in note 1 of the Group's Annual Report for the
year ended 31 March 2010.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
The following new or revised Accounting Standards or
interpretations are effective for the financial year beginning 1
April 2010 but do not have a material impact on the Group's interim
figures:
-- IFRS 1 (revised) 'First time adoption'
-- IFRS 3 (revised) 'Business combinations'
-- IAS 27 (revised), 'Consolidated and Separate Financial
Statements'
-- Amendment to IAS 39, 'Financial instruments: Recognition and
measurement', on Eligible hedged items
-- IFRIC 16 'Hedges of a Net Investment in a Foreign
Operation'
-- IFRIC 17 'Distribution of Non-cash Assets to Owners'
-- IFRIC 18, Transfer of assets from customers'
The following Accounting Standards or Interpretations are not
yet effective and have not been early adopted by the Group:
-- Annual improvements 2009
-- Amendment to IFRS 2, 'Share based payments - Group
cash-settled share-based payment transactions'
-- Amendments to IFRS 1 for additional exemptions
-- IFRIC 15, 'Arrangements for construction of real estates'
-- Amendments IAS 32 Financial instruments: Presentation on
classification of rights issues
2. segmental reporting
business segments
For management purposes the Group is organised into two
operating divisions, Property Investment and Asset Management:
Unallocated
Property and other
Investment Asset Management activities Total
---------------------- ------------ ----------------- ------------ -------
GBPm GBPm GBPm GBPm
Six months to 30
September 2010
(unaudited)
Rental and similar
income 7.6 - - 7.6
Property management
expenses (1.5) - - (1.5)
Movement in provision
for onerous
contracts 0.2 - - 0.2
Service charge and
similar income 1.7 - - 1.7
Service charge
expense and similar
charges (2.4) - - (2.4)
---------------------- ------------ ----------------- ------------ -------
Net rental income 5.6 - - 5.6
Revenue from asset
management
activities
------------ ----------------- ------------ -------
Management fee income - 5.6 - 5.6
Performance fee
income - - - -
------------ ----------------- ------------ -------
- 5.6 - 5.6
Asset management
expenses - (3.6) - (3.6)
Other operating
expenses (0.1) (0.3) - (0.4)
Operating profit
before net gain on
investments 5.5 1.7 - 7.2
Net profit from fair
value adjustments on
investment
properties 7.2 - - 7.2
Net loss from fair
value adjustments on
investments - - (1.1) (1.1)
Profit on sale of
investment
properties 0.1 - - 0.1
Profit on sale of
investments in joint
ventures - - 0.5 0.5
Profit on termination
of asset management
contract - 3.0 - 3.0
Impairment of
goodwill - (7.1) - (7.1)
---------------------- ------------ ----------------- ------------ -------
Operating profit /
(loss) 12.8 (2.4) (0.6) 9.8
Net interest expense - - (10.8) (10.8)
Share of joint
ventures' post tax
losses - - - -
---------------------- ------------ ----------------- ------------ -------
Profit / (loss)
before income tax 12.8 (2.4) (11.4) (1.0)
---------------------- ------------ ----------------- ------------ -------
Taxation - current - - - -
Taxation - deferred - - - -
---------------------- ------------ ----------------- ------------ -------
Profit / (loss) for
the period 12.8 (2.4) (11.4) (1.0)
---------------------- ------------ ----------------- ------------ -------
Total assets 217.3 6.3 50.1 273.7
Total liabilities excluding borrowings
and finance leases (21.5) 1.4 (11.0) (31.1)
Borrowing, including finance leases (3.3) - (244.4) (247.7)
---------------------------------------- ------- ---- -------- --------
Net assets / (liabilities) 192.5 7.7 (205.3) (5.1)
---------------------------------------- ------- ---- -------- --------
Other segment items:
Capital expenditure 0.5 - - 0.5
Depreciation - - - -
---------------------------------------- ------- ---- -------- --------
Unallocated
Property and other
Investment Asset Management activities Total
---------------------- ------------ ----------------- ------------ -------
GBPm GBPm GBPm GBPm
Six months to 30
September 2009
(unaudited)
Rental and similar
income 9.1 - - 9.1
Property management
expenses (2.8) - - (2.8)
Movement in provision
for onerous
contracts (4.8) - - (4.8)
Service charge and
similar income 1.7 - - 1.7
Service charge
expense and similar
charges (2.2) - - (2.2)
---------------------- ------------ ----------------- ------------ -------
Net rental income 1.0 - - 1.0
Revenue from asset
management
activities
------------ ----------------- ------------ -------
Management fee income - 4.8 - 4.8
Performance fee
income - - - -
------------ ----------------- ------------ -------
- 4.8 - 4.8
Asset management
expenses - (4.6) - (4.6)
Other operating
expenses (0.1) (0.5) - (0.6)
Operating profit /
(loss) before net
gain on investments 0.9 (0.3) - 0.6
Net loss from fair
value adjustments on
investment
properties (15.8) - - (15.8)
Net loss from fair
value adjustments on
investments - - (7.6) (7.6)
Loss on sale of
investment
properties (0.3) - - (0.3)
---------------------- ------------ ----------------- ------------ -------
Operating loss (15.2) (0.3) (7.6) (23.1)
Net interest expense - - (3.5) (3.5)
Share of joint
ventures' post tax
losses - - (1.0) (1.0)
---------------------- ------------ ----------------- ------------ -------
Loss before income
tax (15.2) (0.3) (12.1) (27.6)
---------------------- ------------ ----------------- ------------ -------
Taxation - current - - - -
Taxation - deferred - - - -
---------------------- ------------ ----------------- ------------ -------
Loss for the period (15.2) (0.3) (12.1) (27.6)
---------------------- ------------ ----------------- ------------ -------
Total assets 206.4 13.3 50.1 269.8
Total liabilities excluding borrowings
and finance leases (20.5) (2.9) (9.8) (33.2)
Borrowing, including finance leases (3.3) - (256.9) (260.2)
---------------------------------------- ------- ------ -------- --------
Net assets / (liabilities) 182.6 10.4 (216.6) (23.6)
---------------------------------------- ------- ------ -------- --------
Other segment items:
Capital expenditure 0.3 - - 0.3
Depreciation - - 0.1 0.1
---------------------------------------- ------- ------ -------- --------
Unallocated
Property and other
Investment Asset Management activities Total
--------------------- ------------ ----------------- ------------ --------
GBPm GBPm GBPm GBPm
Year ended 31 March
2010 (audited)
Rental and similar
income 18.7 - - 18.7
Property management
expenses (5.6) - - (5.6)
Movement in
provision for
onerous contracts (4.2) - - (4.2)
Service charge and
similar income 3.1 - - 3.1
Service charge
expense and similar
charges (4.4) - - (4.4)
--------------------- ------------ ----------------- ------------ --------
Net rental income 7.6 - - 7.6
Turnover 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 on
investments 7.1 0.8 - 7.9
Net loss from fair
value adjustments
on investment
properties and
impairment of net
investment in
finance leases (2.8) - - (2.8)
Net loss from fair
value adjustments
on investments - - (6.2) (6.2)
Loss on sale of
investment
properties (0.1) - - (0.1)
Operating profit /
(loss) 4.2 0.8 (6.2) (1.2)
Net interest expense - - (7.5) (7.5)
Share of joint
ventures' post tax
losses - - (1.0) (1.0)
--------------------- ------------ ----------------- ------------ --------
Profit / (loss)
before income tax 4.2 0.8 (14.7) (9.7)
--------------------- ------------ ----------------- ------------ --------
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
borrowings and
finance leases (19.1) (0.7) (9.2) (29.0)
Borrowing, including
finance leases (256.0) - - (256.0)
--------------------- ------------ ----------------- ------------ --------
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
--------------------- ------------ ----------------- ------------ --------
All turnover and operating profit has arisen from continuing
operations.
3. finance income
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2010 2009 2010
---------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Income from investments
Distributions from funds 0.4 0.3 0.7
Interest receivable and similar
income:
-------------- -------------- ----------
From joint ventures - - (0.3)
Provision against interest
receivable from joint ventures - 1.0 1.3
-------------- -------------- ----------
- 1.0 1.0
Other interest 0.1 - 0.2
Other finance income
-------------- -------------- ----------
Expected return on
pension scheme
assets 0.2 0.2 0.3
Interest on pension scheme
liabilities (0.2) (0.2) (0.4)
-------------- -------------- ----------
- - (0.1)
---------------------------------- -------------- -------------- ----------
0.5 1.3 1.8
---------------------------------- -------------- -------------- ----------
4. finance expense
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2010 2009 2010
---------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Interest payable on bank loans
and overdrafts 7.6 4.4 10.1
Charges in respect of cost of
raising finance 1.3 1.2 1.9
---------------------------------- -------------- -------------- ----------
8.9 5.6 12.0
Interest payable under finance
leases 0.2 0.1 0.2
---------------------------------- -------------- -------------- ----------
9.1 5.7 12.2
---------------------------------- -------------- -------------- ----------
5. taxation
The taxation charge for the period has been estimated from the
expected taxable profits of the Group's non-REIT activities after
taking account of capital allowances available.
6. dividends
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2010 2009 2010
---------------------- -------------- ------------- ----------
GBPm GBPm GBPm
On Ordinary 5p shares
- - -
- - -
---------------------- -------------- ------------- ----------
7. earnings per share
Basic losses per share of 1.81p (six months to 30 September
2009: losses 49.86p; year to 31 March 2010: losses 16.09p) are
calculated on the loss for the period of GBP1.0million (six months
to 30 September 2009: loss GBP27.6million; year to 31 March 2010:
loss GBP8.9million) and the weighted average of 55,190,142 (six
months to 30 September 2009: 55,365 194; year to 31 March 2010:
55,332,560) shares in issue throughout the period.
Diluted losses per share of 1.66p (six months to 30 September
2009: losses 49.03p; year to 31 March 2010: losses 15.20p) are
based on the loss for the period as above divided by the weighted
average number of shares in issue, being 59,755,173 (six months to
30 September 2009: 56 289,379; year to 31 March 2010: 58,534,466)
after the dilutive impact of share options granted.
A reconciliation of the weighted average number of shares used
to calculate earnings per share and to that used to calculate
diluted earnings per share is shown below:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2010 2009 2009
--------------------------------- -------------- -------------- -----------
Earnings per share: weighted
average number of shares 55,190,142 55,365,194 55,332,560
Weighted average ordinary shares
to be issued under employee
incentive arrangements 2,293,753 924,195 770,027
Weighted average warrants for
ordinary shares to be issued 2,271,278 - 2,431,879
Diluted earnings per share:
weighted average number of
shares 59,755,173 56,289,389 58,534,466
--------------------------------- -------------- -------------- -----------
8. Goodwill
GBPm
------------------------------------------- ------
Cost
At 31 March 2010 (audited) 11.2
Additions -
------------------------------------------- ------
At 30 September 2010 11.2
------------------------------------------- ------
Impairment
At 31 March 2010 (audited) -
Charge for period (7.1)
------------------------------------------- ------
At 30 September 2010 -
------------------------------------------- ------
Net book value at 30 September 2010 4.1
------------------------------------------- ------
Net book value at 31 March 2010 (audited) -
------------------------------------------- ------
Goodwill is not amortised but is subject to an annual impairment
test. Goodwill of GBP4.1million is allocated to the cash generating
unit ("CGU") defined as the asset management business originally
acquired by Industrial Funds Limited. The recoverable amount of the
asset management business has been used to assess whether the
goodwill is impaired. The recoverable amount of the CGUs has been
calculated based on the value-in-use calculations. These
calculations use cash flow projections based on financial
projections approved by management covering the period to the
termination of the asset management contract.
The impairment arises from the Group reassessing a number of
factors including the maturity of the contract in 2016 and the
potential impact on management fees of uncertain capital values
given that the fees of this business are based on gross asset
values.
9. investment properties
Leasehold
with over
50 years Total Investment
Freehold unexpired Properties
----------------------------------- --------- ----------- -----------------
GBPm GBPm GBPm
At 1 April 2010 (audited) 139.2 73.0 212.2
Capital expenditure 0.1 0.4 0.5
Disposals (10.5) - (10.5)
Net gain from fair value
adjustments on investment
property 4.1 3.1 7.2
At 30 September 2010 (unaudited) 132.9 76.5 209.4
----------------------------------- --------- ----------- -----------------
10. joint ventures
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
2010 2009 2010
---------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Share of joint ventures
At 1 April - - -
-------------- -------------- ----------
Share of loss for the period - (4.6) (4.6)
Provision against loan receivable - 3.6 3.6
-------------- -------------- ----------
- (1.0) (1.0)
Net equity movements - 1.0 1.0
At 30 September / 31 March - - -
---------------------------------- -------------- -------------- ----------
Unlisted shares at cost 73.4 99.3 99.3
Group's share of post acquisition
retained losses and reserves (73.4) (99.3) (99.3)
---------------------------------- -------------- -------------- ----------
- - -
---------------------------------- -------------- -------------- ----------
On 17 May 2010, the Group sold its investment in Radial
Distribution Limited which had a book value of GBPnil. The net
proceeds were GBP0.5million. The Group's share of results has been
included to the disposal date. On this date, the Group's associated
asset management agreement was terminated and the Group received
consideration of GBP3.0million.
There are no outstanding loan balances between the Group and its
joint ventures.
11. investments in funds
GBPm
As at 31 March 2010 (audited) 41.3
Net loss from fair value adjustments (1.1)
At 30 September 2010 (unaudited) 40.2
--------------------------------------- ------
AIF 15.8
Apia 24.4
At 30 September 2010 (unaudited) 40.2
-------------------------------------- -------
12. investments in unlisted shares
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
2010 2009 2010
---------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Unlisted investments 0.3 0.4 0.3
---------------------- -------------- -------------- ----------
0.3 0.4 0.3
---------------------- -------------- -------------- ----------
13. deferred taxation
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
2010 2009 2010
---------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Deferred taxation assets
Deferred taxation arising from:
Retirement benefit obligations 0.2 0.2 0.2
0.2 0.2 0.2
---------------------------------- -------------- -------------- ----------
Deferred taxation liabilities
Deferred taxation arising from:
Unrealised derivative financial - - -
instruments valuations
Unrealised property and - - -
investment valuations
---------------------------------- -------------- -------------- ----------
- - -
---------------------------------- -------------- -------------- ----------
14. provisions for other liabilities and charges
Performance
Onerous contracts fees Total
---------------------------- ------------------ ------------ ------
GBPm GBPm GBPm
At 31 March 2010 (audited) 5.8 1.7 7.5
Credit to consolidated
income statement (0.2) - (0.2)
Utilised during the
period (0.8) - (0.8)
At 30 September 2010
(unaudited) 4.8 1.7 6.5
---------------------------- ------------------ ------------ ------
Provisions have been analysed between current and non-current as
follows:
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
2010 2009 2010
------------- -------------- -------------- ----------
GBPm GBPm GBPm
Non-current 3.6 5.8 4.4
Current 2.9 3.8 3.1
6.5 9.6 7.5
------------- -------------- -------------- ----------
The onerous lease provision is made in relation to onerous
contracts on leasehold properties which are vacant or sublet at a
level which renders the properties loss-making over the remaining
life of the lease. The provision represents the Directors' estimate
of the net cash flows on the properties.
15. reconciliation of operating profit to net cash flow
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
2010 2009 2010
---------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Operating profit before net gains
on investments 7.2 0.6 7.9
Depreciation of plant and
equipment - 0.1 0.2
De-recognition of goodwill - 0.1 0.1
(Increase) / decrease in trade
and other receivables (0.3) 1.0 1.1
Decrease in trade and other
payables (4.6) (0.5) (1.6)
---------------------------------- -------------- -------------- ----------
Cash inflows from operations 2.3 1.3 7.7
---------------------------------- -------------- -------------- ----------
16. borrowings, cash and cash equivalents
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
2010 2009 2010
---------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Amounts falling due after more
than one year:
Bank loans 247.7 - 257.0
Future finance costs (4.3) - (5.1)
---------------------------------- -------------- -------------- ----------
243.4 - 251.9
Finance lease obligations 3.2 3.2 3.2
246.6 3.2 255.1
---------------------------------- -------------- -------------- ----------
Amounts falling due within one
year:
Bank overdrafts - 257.5 -
Bank loans 1.0 - 0.8
Future finance costs - (0.6) -
---------------------------------- -------------- -------------- ----------
1.0 256.9 0.8
Finance lease obligations 0.1 0.1 0.1
---------------------------------- -------------- -------------- ----------
1.1 257.0 0.9
---------------------------------- -------------- -------------- ----------
Total borrowings, including
finance leases 247.7 260.2 256.0
Cash and cash equivalents at end
of period 7.5 7.0 4.5
---------------------------------- -------------- -------------- ----------
17. related party transactions
In accordance with IAS 27 "Consolidated and Separate Financial
Statements," transactions between the company and subsidiaries,
which are related parties, have been eliminated on consolidation
and are not disclosed in this note.
Details of transactions and balances between the Group and joint
ventures are set out in note 10.
Remuneration of key management personnel:
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 September 30 September 31 March
2010 2009 2009
------------------------------ -------------- -------------- ------------
GBPm GBPm GBPm
Short-term employee benefits 0.3 0.5 0.8
Post-employee benefits - 0.1 0.1
Share based payments - - -
0.3 0.6 1.2
------------------------------ -------------- -------------- ------------
Directors' statement of responsibilities
The Directors confirm that to the best of their knowledge, these
condensed consolidated interim financial statements has been
prepared in accordance with IAS 34 as adopted by the European
Union, and gives a true and fair view of the assets, liabilities,
financial position and loss of the Group, and that the Half Yearly
Report herein includes a fair review of the information as required
by 4.2.7R and 4.2.8R of the Disclosure and Transparency Rules.
The Directors of Warner Estate Holdings PLC are as stated in the
Group's Annual Report for the year ended 31 March 2010, with the
addition of Mr. K A Holman who was appointed Non-Executive Director
on 1 July 2010 replacing Mr. W R Broderick.
The Chairman's Statement on pages 2 to 3 refers to important
events which have taken place in the period.
The principal risks and uncertainties facing the business are as
set out on page 9 of the Annual Report and Accounts.
Any material related party transactions which have taken place
in the period are set out in note 17.
By the order of the Board
D J Lanchester
Secretary
29 November 2010
Independent review report to Warner Estate Holdings PLC
Introduction
We have been engaged by the company to review the condensed
consolidated interim financial statements in the Half Year Report
and Accounts for the six months ended 30 September 2010, which
comprises the Unaudited Consolidated Income Statement, the
Unaudited Consolidated Statement of Comprehensive Income, the
Unaudited Consolidated Statement of Financial Position, the
Unaudited Consolidated Statement of Changes in Equity, the
Unaudited Consolidated Cash Flow Statement and related notes. We
have read the other information contained in the Half Year Report
and Accounts and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed consolidated interim financial statements.
Directors' responsibilities
The Half Year Report and Accounts is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the Half Year Report and Accounts in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed consolidated interim financial
statements in the Half Year Report and Accounts have been prepared
in accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed consolidated interim financial statements in the Half
Year Report and Accounts based on our review. This report,
including the conclusion, has been prepared for and only for the
company for the purpose of the Disclosure and Transparency Rules of
the Financial Services Authority and for no other purpose. We do
not, in producing this report, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated interim
financial statements in the Half Year Report and Accounts for the
six months ended 30 September 2010 are not prepared, in all
material respects, in accordance with International Accounting
Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Services
Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
29 November 2010
London
Notes:
(a) The maintenance and integrity of the Warner Estate Holdings
PLC website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for
any changes that may have occurred to the financial statements
since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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