RNS Number:8656I
Westbury Property Fund Limited
22 February 2005
The Westbury Property Fund Limited
Annual Report and Consolidated Financial Statements
For the year from 1 January 2004 to 31 December 2004
Chairman's Statement
For the year ended 31 December 2004
I have pleasure in presenting the Annual Report and Financial Statements for the
year ended 31 December 2004.
This has been another successful year for The Westbury Property Fund. There has
been strong performance from the underlying assets and the Company has been able
to raise additional equity, widening and expanding its shareholder base.
I am delighted to report the audited net asset value per share due to Ordinary
Shareholders is 105.25p as at 31 December 2004 having fully accounted for the
costs of the share placing and reorganisation completed in December 2004. This
compares with an equivalent value of 83.12p at 31 December 2003 and represents a
27% uplift year on year which is a strong result achieved across the entire
portfolio.
The Company issued a circular to shareholders on 19 November 2004 proposing a
reorganisation of share capital, placing and open offer. I am pleased to report
that at the EGM on 17 December 2004, all resolutions were passed and following
the compulsory conversion of the remaining Capital Shares in January 2005, the
number of Ordinary Shares in issue is now 51,734,569. The remaining 5,271,678
Income Shares will be subject to a mandatory redemption on 31 March 2010 at 100p
which can either be elected for in cash or new Ordinary Shares.
Dividends
During the year the Board has declared and paid four quarterly dividends per
Income Share amounting to 8p in total. This comprised 2p per quarter for the
year and is in line with the Income Shareholders' entitlement to receive a fixed
preferential dividend of 8% per annum over their life.
In line with the statements made in the recent circular to shareholders and
subject to any unforeseen circumstances, it is the Board's intention to declare
quarterly dividends on the Ordinary Shares from 31 March 2005 at the rate of
1.5p per quarter, amounting to 6p in total for the 12 months to 31 December
2005.
Net Asset Value
The Ordinary Shares are entitled to all of the assets of the Company after
satisfaction of all debt and other liabilities of the Company and the
entitlement of Income Shares.
During the year, the Company made a net profit of #7,563,311. This has been
retained for the benefit of the Ordinary Shareholders. It has been achieved
after the payment of all costs relating to the running of the Company, interest
paid on bank debt, all dividends paid to Income Shareholders, a provision for
the Investment Manager's performance fee accrued to date, and the costs of the
share reorganisation (save for the costs of the placing and open offer which
have been debited to share premium account).
The net asset value per share due to Ordinary Shareholders, as at 31 December
2004, amounted to 105.25p. Following the share reorganisation, placing and open
offer, the Company is intending to acquire circa #50m of property in 2005.
Assuming property acquisition costs, including a provision for Stamp Duty
Reserve Tax, the net asset value per Ordinary Share would fall to 100.2p. Such
adjustments, if applicable, will be made in our quarterly net asset values but
cannot be made, until expensed, in our year-end accounts under International
Financial Reporting Standards.
Bank Borrowings
As at 31 December 2004, the Company had fixed rate borrowings with Bradford &
Bingley amounting to #37.5m currently drawn down and fixed at an average
all-in-cost of 6.1% per annum until 25 June 2009. The Company has a further #6m
drawn down under its revolving facility which is at a floating rate. The Board
considers this to be a prudent interest rate policy as it will enable debt
breakage costs to be minimised in the event that any assets are disposed of
pending future reinvestment. On a blended basis, the Company's all in cost of
debt is approximately 6% per annum.
It remains the Company's firm policy not to expose itself to any material
interest rate risk.
Property Portfolio
As at 31 December 2004, the Company had a direct property portfolio of 13
properties with an aggregate valuation of #73.5m. The Company now has 43
tenancies in the balanced portfolio, a forecast total annualised rent roll in
2005 of circa #5m and a weighted average lease length of over 12 years.
The portfolio is well diversified by sector, region and tenant financial
covenant strength. As stated in the recent circular to shareholders it is the
intention of the Company to invest circa #50m during 2005 to be targeted
predominantly in the South East.
I am pleased to report that the Company currently has four properties in
solicitors' hands amounting to approximately #24m of capital value and that
three out of four of these properties are located in the South East.
Venture Property Investments
I am pleased to report that during the year under review the Company has made
two further equity investments in joint ventures with other experienced property
investors, along with one profitable disposal. Each of the four remaining joint
ventures is separately capitalised and all debt in each venture has been
structured on a non-recourse basis. The aggregate book value of the Company's
equity investment in the four ventures amounts to some #3.2m. The investments
comprise a mixed-use development scheme in the centre of Liverpool, a shopping
centre with refurbishment potential in Peterborough, a storage and facilities
handling business operating from a strategically located site in Runcorn and an
industrial property with medium term redevelopment prospects in Edmonton.
The investment horizon for these investments varies from two to five years and
if the forecast returns are achieved, there will be a significant uplift in the
net asset value due to Ordinary Shareholders. All venture investments are
currently valued at book cost and further investments will be made as
opportunities present themselves.
Property Investment Funds (PIFs)
There has been a great deal of press comment and interest in the Government's
announcement that it would consider the introduction of tax transparent property
investment funds. The Company's Investment Manager has submitted a consultation
paper to the Treasury and in common with the rest of the property industry, we
await a further statement by the Treasury. However it does not look likely that
primary legislation will be enacted during 2005 with 2006/2007 being more
likely.
Unlike all UK domiciled quoted property companies, the Company already enjoys
many of the benefits of tax transparency. There is no capital gains tax for
Guernsey companies; further, there is currently no tax payable on the Company's
rental income and all returns to shareholders are distributed gross.
Notwithstanding this, the Board will continue to monitor the progress of PIF
legislation and may consider a change of domicile, if PIFs are introduced and if
it is in shareholders' interests to convert the Company into a PIF.
Outlook
Total returns for property over the 12 months to December 2004 rose to their
highest level in 10 years, bolstered by favourable yield movement and an
improvement in rental growth for the fourth consecutive quarter.
The commercial property market remains strong and there is a considerable weight
of money targeted towards and entering the sector as institutional and personal
asset allocation continues in favour of commercial property over equities and
bonds. At the same time, the latest UK economic indicators suggest that
activity continues to remain robust, against a backdrop of global tightening of
fiscal policy and high energy prices. Evidence of a slowdown in the housing
market as well as weakening consumer confidence has emerged, which may have an
impact on future interest rate movements and ultimately commercial property
capital values.
We remain cautious as to the long term sustainability of rising capital values.
We do not believe that 2005 will repeat the performance of 2004, although we
believe the sector as a whole will continue to provide total returns in excess
of 7%.
The Company is well placed and on target to meet its forecast returns but, in
light of the current mixed economic climate, covenant strength and lease length
will again remain the overriding strategic focus for 2005 as well as a shift in
geographical bias towards the South East for future acquisitions.
In the absence of unforeseen circumstances, the Company intends to be fully
invested by the end of 2005. Further share issuance will be considered if
opportunities present themselves as the Company has now developed a strong track
record and a good following from a wide and diverse spread of investors.
Shareholder Communication
In addition to the Annual and Interim Reports, the Investment Manager publishes
a Quarterly Performance Report on the activities of the Company. This is
distributed to shareholders by email. Any shareholder who does not currently
receive this document and wishes to do so should contact info@berringtonfm.com.
Rodney Baker-Bates
Chairman
21 February 2005
Investment Manager's Report
For the 12 months to 31 December 2004
Investment Objective and Policy
The Company's investment objective is to achieve income and capital growth
primarily from a diversified portfolio of commercial properties situated in the
UK. The Company's investment policy is to acquire good quality properties let
on long leases to strong tenants so as to provide an income yield at least
sufficient to pay the Income Share dividend and otherwise to provide good
prospects for growth in both rental income and capital value for the long term
benefit of the Ordinary Shareholders.
To achieve this, the Investment Manager engages the services of best in class
property fund managers, as well as experienced property company professionals,
in order to utilise these individual talents and experience into a highly
effective team serving the Company.
Performance
On an equivalent year on year basis, the net asset value has increased by 27%.
This increase has been achieved after taking account of the full costs of
running the Company, the costs relating to the share reorganisation and all
dividends paid to the Income Shareholders.
The Total Annual Return for the Fund for 2004 was 19.3% versus the IPD Monthly
Index of 19%.
Activity - Balanced Portfolio
As at 31 December 2004, the property portfolio was independently valued by
Knight Frank at #73.5m. These assets have a rent roll of close to #5m and a
running yield of circa 6.8%. As at 31 December 2004, the Company's balanced
property portfolio contained 13 properties diversified across all three
commercial sectors. The properties were let to 43 tenants and the portfolio as
a whole has a weighted average lease length of over 12 years.
During the year, we achieved favourable rent reviews on three of our properties
all ahead of previous valuation estimated rental values. These reviews were at
the retail warehouse in Hull, the industrial warehouse in Southampton and the
retail unit in Swindon.
The Company also completed three acquisitions including two forward funded
developments committed in 2002 and 2003 for the balanced portfolio. These
comprised a distribution unit in Worcester, a Health and Fitness Centre in
Guildford and an industrial estate in Liverpool.
The Health and Fitness Centre in Guildford was subsequently sold in December
2004 realising a strong profit. During the year, the Company also disposed of
one of its office properties in Sheffield.
Following the reorganisation of share capital, placing and open offer completed
at the end of last year, the Company now has circa #50m to invest. In the
financial model, we have assumed that this investment will be evenly spread
across the whole of 2005. I am pleased to report that as at 31 January 2005, we
have agreed terms to purchase approximately #24m spread across four properties,
three of which are located in the South East. Full details on each of these
properties will be published when contracts exchange.
We are on target to be fully invested by the end of 2005 and we will continue to
review further properties and other portfolios should interesting opportunities
arise. Should opportunities materialise and should it be in shareholders'
interests to do so, we may consider a further equity fund raising during the
course of 2005.
Activity - Venture Portfolio
A particular emphasis this year has been on the seeking out, negotiation and
completion of a variety of venture investments. We continue to review a
considerable number of such opportunities and are pleased to report that, during
the course of the year, we completed on two further acquisitions for an
aggregate consideration of #1.6m and sold one investment.
Venture property investments are an important component of the long term
performance of the Company's Ordinary Shares. The Company's venture investments
have been structured to provide strong returns within a relatively short time
horizon (typically two to five years) so as to complement the performance of the
balanced portfolio. These investments are more risky and the Company is limited
to investing not more than 10% of gross assets in such investments. In
addition, all of the venture investments are in special purpose companies or
limited liability partnerships where any debt secured by those entities is
completely non-recourse to The Westbury Property Fund.
The amount invested in ventures as at 31 December 2004 represented approximately
3% of the Company's gross assets and all investments are currently held at their
book cost.
Ropewalks One Limited Liability Partnership
In September 2003, the Company invested #0.5m in a limited liability partnership
in exchange for a circa 50% interest. It also provided #1.3m of temporary
funding which was repaid with interest on draw down of an agreed banking
facility with HBOS which is non-recourse to The Westbury Property Fund. The
investment consists of the acquisition and development of a mixed use scheme in
the centre of Liverpool with a 10,700 square foot medical centre, a suite of
private consulting rooms, six retail units and 55 predominantly two bedroom
apartments, most of which have already been pre-sold.
Construction work is in progress with completion scheduled for Autumn 2005. The
other joint venture partners in the scheme are Barlows PLC, London & Palatine
Estates Limited and a private investor group.
Lunar Partnership Limited
In September 2003, the Company invested #2m in exchange for a 12.5% equity
interest in a new private company formed to acquire 13 commercial properties for
an aggregate consideration of #95m. The investment was sold in September 2004
realising a net profit for the Company of #752,000, producing a profit on
initial investment of more than 30%.
Orton Shopping Centre Limited Liability Partnership
In October 2003, the Company invested #1.1m in a limited liability partnership
in exchange for a 33.3% interest. This limited partnership has acquired the
Orton Shopping Centre in Peterborough and has raised sufficient capital to fund
its refurbishment. A non-recourse debt facility has been provided by Anglo
Irish Bank. The existing centre extends to 125,200 square feet of retail space,
there are currently 112 flats and the entire site occupies approximately 12
acres. There is a significant opportunity to improve tenant mix (with
consequential enhancements to pedestrian flow and increased rental levels),
regenerate and provide additions to adjoining residential units (possibly in
conjunction with a partner) and improve the visual amenity of the Centre. The
other joint venture partners in the scheme include Barlows Holdings Limited,
London & Palatine Estates Limited and three other private investor groups.
Westlink Investment Syndicate LLP
In 2004, the Company invested #0.5m for a 50% stake in Westlink Investment
Syndicate LLP which in turn is the major shareholder in a North West based
storage and facilities handling business which operates from a large site with
road, rail, sea and inland waterway access. The Company is currently exploring
all of its options regarding the role that Westlink can play in the
redevelopment of the entire site.
WPL Estates Limited
In 2004, the Company invested #1.1m for a 50% stake in WPL Estates Limited which
acquired an industrial property in Edmonton. The property is fully let with
eight years remaining on the lease and ultimately may benefit from significant
redevelopment opportunity. The joint venture partner is Carillion PLC.
Outlook
The Company is in a strong position having reorganised its share capital and
raised new equity. We are well on track to achieve our investment targets for
allocating the new money. The simplified share structure and continued interest
in the sector should strengthen the Company's attraction to investors.
The UK property market performed very strongly during 2004 and whilst some
commentators believe that it has reached its peak we are still seeing a number
of signs that further rises could take place. The occupier market is looking
stronger compared to this time last year and the weight of money being allocated
to property by pension funds and institutional investors is showing no signs of
abating. That being said, we remain cautious but opportunistic and whilst we
may dispose of individual assets on a tactical basis, we remain committed to
expanding the Company's asset base overall.
Richard Burrell
Berrington Fund Management Limited
21 February 2005
Report of the Directors
The Directors of The Westbury Property Fund Limited ("the Company") and its
subsidiaries (together "the Group") are pleased to submit the Audited
Consolidated Financial Statements of the Group for the year from 1 January 2004
to 31 December 2004.
Investment Policy
The primary investment objective of the Group is to achieve income and capital
growth primarily from a diversified portfolio of commercial properties situated
in the United Kingdom. The Company also invests up to 10% of its gross assets
in property related venture investments.
Listing
The Capital and Income Shares of the Company were admitted to the Official List
of The London Stock Exchange on 18 April 2002 and to the Official List of The
Channel Islands Stock Exchange on 18 April 2002. On 20 December 2004 the
Company's Ordinary Shares were admitted to the Official List of The London Stock
Exchange and The Channel Islands Stock Exchange.
Share Issue and Conversion
Following a share placing and open offer, 21,296,399 Ordinary Shares were issued
on 20 December 2004. In addition 15,576,462 Income Shares were converted into
16,744,699 Ordinary Shares and 8,927,207 Capital Shares were converted into
12,453,454 Ordinary Shares also on that date. Subsequent to the year end, on 7
January 2005, the remaining 888,939 issued Capital Shares were compulsorily
converted into a further 1,240,072 Ordinary Shares.
Results
The results for the year are shown in the Consolidated Statement of Operations
on page 18.
Dividend
During the year the Company has declared and paid the following interim
dividends to its Income Shareholders:
Dividend Number Date Declared Rate
First interim 31 March 2004 2.0p
Second interim 30 June 2004 2.0p
Third interim 30 September 2004 2.0p
On 31 December 2004 the Directors declared a final dividend of 2.0p.
Directors' and Other Interests
The following Directors including persons connected with them held the following
number of shares at 31 December 2004:
Name Number of Ordinary % of Issued Number of Income % of Issued Income
Shares Ordinary Shares Shares Shares
R. Baker-Bates 279,000 0.51 - -
P. Dickson 280,372 0.52 - -
W. Kay 43,110 0.08 - -
T. Chesney 10,000 0.02 - -
None of the Directors had a service contract with the Company during the year.
As at 31 December 2004, Berrington Fund Management Limited was interested in
837,000 Ordinary Shares.
Corporate Governance
As a Guernsey incorporated company, the Company is not required to comply with
the Code of Best Practice published by the Committee on the Financial Aspects of
Corporate Governance (the "Combined Code"). However, the Directors place a high
degree of importance on ensuring that high standards of Corporate Governance are
maintained.
Going Concern
The Directors believe it is appropriate to adopt the going concern basis in
preparing the financial statements as, after due consideration, the Directors
consider that the Group has adequate resources to continue in operational
existence for the foreseeable future.
Substantial Shareholdings
At 27 January 2005, Directors were aware that the following shareholders owned
3% or more of the issued Ordinary Shares of the Company.
Number of Ordinary Shares % of Ordinary Shares
Barlows Holdings Limited 2,790,000 5.39
BNY (OCS) Nominees Limited 6,860,554 13.26
CAM Nominees Limited 2,707,875 5.23
HSBC Global Custody Nominee (UK) Limited 3,746,597 7.24
Rathbone Nominees Limited 2,592,398 5.01
Rensburg Client Nominees Limited 1,628,523 3.15
State Street Nominees Limited 5,115,000 9.96
Vidacos Nominees Limited 4,150,000 8.02
Directors' Responsibilities
The Directors are responsible for preparing financial statements for each
financial period which give a true and fair view of the state of affairs of the
Group and of the profit or loss of the Group for that period and are in
accordance with applicable laws. In preparing those financial statements the
Directors are required to:-
* select suitable accounting policies and apply them consistently;
* make judgements and estimates that are reasonable and prudent; and
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Group and to enable them to ensure that the financial statements comply with the
Companies (Guernsey) Law, 1994. They are also responsible for safeguarding the
assets of the Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for ensuring that the Report of the Directors and
other information included in the Annual Report is prepared in accordance with
applicable company law. They are also responsible for ensuring that the Annual
Report includes information required by the Listing Rules of the Financial
Services Authority.
Status for Taxation
The Income Tax Authority in Guernsey has granted the Company exemption from
Guernsey income tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance
1989 and the income of the Company may be distributed or accumulated without
deduction of Guernsey income tax. Exemption under the above mentioned Ordinance
entails payment by the Company of an Annual Fee of #600.
The property subsidiaries are subject to United Kingdom tax on income arising on
investment properties, after deduction of their debt financing costs and
allowable expenses.
Auditors
Ernst & Young LLP have indicated their willingness to continue in office.
Tim Chesney, Director
Iain Stokes, Director
21 February 2005
Independent Auditors' Report to the Members of
The Westbury Property Fund Limited
We have audited the Group's financial statements for the year ended 31 December
2004 which comprise the Consolidated Statement of Operations, Consolidated
Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in
Equity, Consolidated Cash Flow Statement and the related notes 1 to 25. These
financial statements have been prepared on the basis of the accounting policies
set out therein.
This report is made solely to the Company's members, as a body, in accordance
with Section 64 of the Companies (Guernsey) Law, 1994. Our audit work has been
undertaken so that we might state to the Company's members those matters we are
required to state to them in an auditors' report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective Responsibilities of Directors and Auditors
The Directors are responsible for preparing the financial statements in
accordance with Guernsey law as described in the Statement of Directors'
Responsibilities.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements, United Kingdom Auditing Standards
and the Listing Rules of the Financial Services Authority.
We report to you our opinion as to whether the financial statements, which have
been prepared in accordance with International Financial Reporting Standards,
give a true and fair view and are properly prepared in accordance with the
Companies (Guernsey) Law, 1994. We also report to you if, in our opinion, the
Directors' Report is not consistent with the financial statements, if the
Company has not kept proper accounting records, if we have not received all the
information and explanations we require for our audit or if information
specified by the Listing Rules regarding Directors' transactions with the Group
is not disclosed.
We read the other information contained in the Annual Report and consider
whether it is consistent with the audited financial statements. This other
information comprises the Chairman's Statement, Investment Manager's Report,
Directors' Profiles, Management and Administration and Report of the Directors.
We consider the implications for our Report if we become aware of any apparent
misstatements or material inconsistencies with the financial statements. Our
responsibilities do not extend to any other information.
Basis of Audit Opinion
We conducted our audit in accordance with United Kingdom Auditing Standards
issued by the Auditing Practices Board. An audit includes examination, on a
test basis, of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and
judgments made by the Directors in the preparation of the financial statements,
and of whether the accounting policies are appropriate to the Group's
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state
of affairs of the Group as at 31 December 2004 and of its results for the year
then ended and have been properly prepared in accordance with the Companies
(Guernsey) Law, 1994.
Ernst & Young LLP
Guernsey, Channel Islands
21 February 2005
Consolidated Statement of Operations
For the year from 1 January 2004 to 31 December 2004
1/01/2004 1/01/2003
to to
31/12/2004 31/12/2003
Notes # #
Income
Rent receivable 5,183,813 4,247,937
Bank and other interest 242,245 49,811
Total Income 5,426,058 4,297,748
Expenses
Interest payable and similar charges, including
dividends on Income Shares 5 4,364,636 3,981,812
Investment Manager's fees 3 (i) 1,368,618 922,381
Legal and professional fees 232,325 261,571
Share reorganisation expenses 413,086 -
Property management expenses 160,838 177,180
Administration fee 3 (ii) 91,366 96,250
Directors' fees 4 68,542 66,375
General expenses 168,610 151,969
Bank charges 23,423 23,104
Audit and tax fees 56,471 22,835
Total Expenses 6,947,915 5,703,477
Net loss before investment result (1,521,857) (1,405,729)
Realised gain/(loss) on sale of properties 768,107 (75,964)
Realised gain on sale of investment 752,357 -
Movement in unrealised gain on revaluation of properties 7,564,704 3,477,827
Net profit for the year 7,563,311 1,996,134
UK taxation 7 - (50,486)
Profit transferred to reserves 7,563,311 1,945,648
Basic and diluted profit per equivalent Ordinary Share 8 54.04p 14.21p
All items in the above statement are derived from continuing operations. The
accompanying notes form an integral part of the financial statements.
Consolidated Balance Sheet
as at 31 December 2004
31/12/2004 31/12/2003
Notes # #
Non-current Assets
Property 10 73,485,000 64,479,348
Investments 11 3,240,954 4,939,001
76,725,954 69,418,349
Current Assets
Cash and cash equivalents 13 27,354,108 3,261,222
Debtors 14 1,504,789 625,628
28,858,897 3,886,850
Total Assets 105,584,851 73,305,199
Current Liabilities
Creditors 15 2,689,233 993,535
Non-current Liabilities
Long term loan 16 43,327,942 40,799,228
Income Shares 17 5,119,036 20,129,506
48,446,978 60,928,734
Total Liabilities 51,136,211 61,922,269
Net Assets 54,448,640 11,382,930
Represented by:
Capital and Reserves
Share capital 18 5,138,349 981,615
Share premium 19 39,733,558 8,387,893
Reserves 20 9,576,733 2,013,422
Issued capital and reserves 54,448,640 11,382,930
Net Asset Value per equivalent Ordinary Share 21 105.25p 83.12p
The financial statements were approved at a meeting of the Board of Directors
held on 21 February 2005 and signed on its behalf by:
Tim Chesney, Director
Iain Stokes, Director
The accompanying notes form an integral part of the financial statements.
Company Balance Sheet
as at 31 December 2004
31/12/2004 31/12/2003
Notes # #
Non-current Assets
Investment in subsidiary companies 9 14,000,001 10,000,002
Investments 11 - 2,000,000
Loans to subsidiary companies 12 57,126,463 56,537,661
71,126,464 68,537,663
Current Assets
Cash and cash equivalents 20,520,882 20,496
Other debtors 10,699 -
20,531,581 20,496
Total Assets 91,658,045 68,558,159
Current Liabilities
Creditors 15 1,087,031 170,471
Non-current Liabilities
Long term loan 16 43,327,942 40,799,228
Income Shares 17 5,119,036 20,129,506
48,446,978 60,928,734
Total Liabilities 49,534,009 61,099,205
Net Assets 42,124,036 7,458,954
Represented by:
Capital and Reserves
Share capital 18 5,138,349 981,615
Share premium 19 39,733,558 8,387,893
Reserves 20 (2,747,871) (1,910,554)
Issued capital and reserves 42,124,036 7,458,954
The financial statements were approved at a meeting of the Board of Directors
held on 21 February 2005 and signed on its behalf by:
Tim Chesney, Director
Iain Stokes, Director
The accompanying notes form an integral part of the financial statements.
Consolidated Statement of Changes in Equity
For the year from 1 January 2004 to 31 December 2004
1/01/2004 1/01/2003
to to
31/12/2004 31/12/2003
# #
Equity at 1 January 11,382,930 9,437,282
Profit transferred to reserves 7,563,311 1,945,648
Issue of Ordinary Shares, net of issue costs 20,376,948 -
Conversion of Income Shares into Ordinary Shares 15,125,451 -
Equity at 31 December 54,448,640 11,382,930
The accompanying notes form an integral part of the financial statements.
Consolidated Cash Flow Statement
For the year from 1 January 2004 to 31 December 2004
1/01/2004 1/01/2003
to to
31/12/2004 31/12/2003
Notes # #
Operating Activities
Rent received 4,722,186 4,372,393
Bank interest received 242,245 49,811
Expenses paid (1,609,823) (1,806,179)
Interest paid and similar charges, including dividends on Income (3,849,254) (3,841,911)
Shares
Net cash outflow from operating activities 22 (494,646) (1,225,886)
Investing Activities
Purchase of investments (1,640,937) (4,939,001)
Proceeds from sale of investments 2,752,357 -
Repayment of temporary loan from investment 1,338,983 -
Purchase of properties (6,237,112) (15,226,671)
Sales of properties 5,497,293 3,674,036
Net cash inflow/(outflow) from investing activities 1,710,584 (16,491,636)
Financing Activities
Issue of Ordinary Shares 21,296,399 -
Issue costs paid on issuance of Capital Shares - (17,606)
Issue costs paid on issuance of Ordinary Shares (919,451) -
Issue costs paid on issuance of Income Shares - (37,394)
Draw down of long term loan 2,500,000 19,000,000
Net cash inflow from financing activities 22,876,948 18,945,000
Increase in cash and cash equivalents 24,092,886 1,227,478
Cash and cash equivalents at 1 January 3,261,222 2,033,744
Cash and cash equivalents at 31 December 27,354,108 3,261,222
The accompanying notes form an integral part of the financial statements.
Notes to the Financial Statements
For the year from 1 January 2004 to 31 December 2004
1. Operations
The Westbury Property Fund Limited is a closed-ended investment Company
incorporated in Guernsey whose investment objective is to achieve income and
capital growth primarily from a diversified portfolio of commercial properties
situated in the United Kingdom. The Group also invests up to 10% of its gross
assets in property related venture investments. The Group has no employees.
2. Principal Accounting Policies
Basis of Preparation
The financial statements of the Group have been prepared in conformity with
International Financial Reporting Standards ("IFRS") issued by the International
Accounting Standards Board, interpretations issued by the International
Financial Reporting Interpretations Committee and applicable legal and
regulatory requirements of Guernsey Law, and reflect the following policies:
Convention
The financial statements have been prepared on a going concern basis under the
Historical Cost Convention except for the measurement at fair value of
investment properties.
Basis of Consolidation
The Group financial statements consolidate the financial statements of The
Westbury Property Fund Limited and its subsidiary undertakings, Westbury
Properties Limited, Westbury (Yorkshire) Limited, Westbury (Hull) Limited, WPL
Ventures Limited and WPL Investments Limited, drawn up to 31 December 2004.
Segmental Reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business, being investment business. The Group invests in commercial
properties situated in the United Kingdom.
Income
Interest receivable is included in the financial statements on an accruals
basis. Rental income is included in the financial statements on an accruals
basis and is shown gross of any UK income tax.
Expenses
All expenses are accounted for on an accruals basis.
Issue Costs
The original placing expenses incurred amounted to #1,646,234 of which #251,000
related to bank loan issue costs. The remainder was allocated on a pro-rata
basis to the Capital and Income Shares, as follows:
Capital Shares #446,638
Income Shares #948,596
Bank Loan #251,000
The placing expenses allocated to the Capital Shares were written off in full
against the share premium account.
The placing expenses allocated to the Income Shares and Bank Loan are being
amortised through the Consolidated Statement of Operations over the term of
these instruments.
The placing expenses incurred in December 2004 in relation to the Ordinary
Shares amounted to #919,451 and have been written off in full against the share
premium account.
Associated share reorganisation costs amounting to #413,086 have been expensed
in the Consolidated Statement of Operations in the year.
The proportion of the unamortised original placing expenses allocated to those
Income Shares which were converted into Ordinary Shares in December 2004,
amounting to #451,011, has been written off against the Income Share account in
the balance sheet.
Investment in Subsidiary Companies
The investments in subsidiary companies are included in the Company Balance
Sheet at cost.
Property - Freehold
Freehold properties are initially recognised at cost, being the fair value of
consideration given, including transaction costs associated with the property.
After initial recognition, freehold properties are measured at fair value, with
unrealised gains and losses recognised in the Consolidated Statement of
Operations. Fair value is based upon the open market valuations of the
properties as provided by Knight Frank, a firm of independent chartered
surveyors, as at the balance sheet date.
Property - Long Leasehold
IAS 40 (2003) has been early adopted. As a result, long leasehold properties
have been accounted for as freehold properties and, after initial recognition at
cost, are measured at fair value (on the same basis as freehold properties
above).
Investments
Investments are initially recognised at cost, being the fair value of the
consideration given. After initial recognition, investment in joint ventures are
carried at the Group's share in the net asset value of the joint venture.
Loans to Subsidiary Companies
The unsecured subordinated loans that have been granted to Westbury Properties
Limited and the other subsidiaries at various times during the accounting
period, have been accounted for as an originated loan under IFRS. These loans
are accounted for on an amortised cost basis with intercompany interest being
recognised under the effective interest rate method. These loans are reviewed
regularly for impairment.
Cash and Cash Equivalents
Cash on hand and deposits in banks are carried at cost. Cash and cash
equivalents are defined as cash in hand, demand deposits, and highly liquid
investments readily convertible to known amounts of cash and subject to
insignificant risk of changes in value. For the purposes of the Consolidated
Cash Flow Statement, cash and cash equivalents consist of cash in hand and
deposits in banks.
Bank Loans and Borrowings
All bank loans and borrowings are initially recognised at cost, being the fair
value of the consideration received, less issue costs where applicable. After
initial recognition, all interest-bearing loans and borrowings are subsequently
measured at amortised cost. Amortised cost is calculated by taking into account
any discount or premium on settlement.
Income Shares
Income Shares, which exhibit characteristics of liabilities, are recognised as
liabilities in the Balance Sheet in accordance with IAS 32. Income Shares are
initially recognised at cost, being the fair value of the consideration
received, less issue costs. After initial recognition, Income Shares are
subsequently measured at amortised cost. The corresponding dividends on these
shares are charged as interest expense in the Consolidated Statement of
Operations over the term of these shares and are accrued for from the date they
are declared.
3. Material Agreements
(i) Under the terms of an appointment made by the Board on 11 January 2002,
Westbury Fund Management Limited was appointed as Investment Manager to the
Company. The Investment Management Agreement was novated to Berrington Fund
Management Limited ("BFML") on 30 September 2003. With effect from 11 January
2002 the Investment Manager is paid a fee of 0.1% of Gross Assets (including the
total amount available under the loan facility) per calendar month payable
monthly in arrears. In addition, BFML is entitled to receive a performance fee
of 15% of any return above an 8% per annum (compound) hurdle as stated in the
Prospectus. Provision is made in the financial statements for the amount of
performance fee accrued to date based on the year end net asset value of the
Group. The Investment Manager's fees for 2004 include accrued performance fees
amounting to #444,671. The Investment Management Agreement is terminable by the
Company on 36 months' notice, save in circumstances where the Group's
performance, as measured annually by reference to the Investment Property
Databank ("IPD"), is consistently materially below the IPD Monthly Benchmark. In
such circumstances the agreement can be terminated by the Company, at the
discretion of the Board, on six months' notice.
The Investment Manager has sub-delegated the management of the investment
properties to Insight Investment Management Limited and Barlows Asset Management
Limited.
(ii) Under the terms of an Administration Agreement dated 11 January 2002,
the Company appointed Guernsey International Fund Managers Limited ("GIFM") as
Administrator, Secretary and Channel Islands Stock Exchange Sponsor. This
agreement was terminated with effect from 1 May 2004.
The Company entered into an Administration Agreement dated 28 April 2004 with
Mourant Guernsey Limited ("Mourant") under which Mourant agreed to provide
services to the Company as Administrator and Secretary to the Company. For the
period from 1 May 2004 to 30 November 2004, Mourant was paid on a fixed fee
basis of #75,000 per annum. From 1 December 2004, Mourant is entitled to an
annual fee calculated as to 0.09% on the first #100m of Gross Assets and 0.07%
of Gross Assets on the next #50m, subject to an annual minimum of #75,000 per
annum and such fees being invoiced monthly in arrears.
The Company also entered into a Sponsorship Agreement dated 4 May 2004 with
Mourant Capital Markets Services Limited ("MCMS") under which MCMS agreed to
provide services to the Company in relation to the Company's listing on The
Channel Islands Stock Exchange.
4. Directors' Fees 1/01/2004 1/01/2003
to to
31/12/2004 31/12/2003
During the year each of the Directors was entitled to the following # #
fees:
R. Baker-Bates (Chairman) 20,000 20,000
T. Chesney 15,000 15,000
P. Dickson 15,000 15,000
W. Kay 15,000 15,000
I. Stokes 3,542 1,375
68,542 66,375
5. Interest Payable and Similar Charges 1/01/2004 1/01/2003
to to
31/12/2004 31/12/2003
# #
Long term loan:
Interest payable 2,574,692 1,906,373
Non-utilisation and related fees 23,632 55,411
Amortisation of loan issue costs 28,714 28,714
Income Shares:
Dividends payable (Note 6) 1,622,617 1,876,333
Amortisation of issue costs 114,981 114,981
4,364,636 3,981,812
6. Dividends Paid and Payable on Income Shares 1/01/2004 1/01/2003
to to
No. of 31/12/2004 31/12/2003
Income Rate # Rate #
Shares pence pence
First interim dividend paid 31 March 2004 20,848,140 2.00 416,963 3.00 625,444
Second interim dividend paid 30 June 2004 20,848,140 2.00 416,963 2.00 416,963
Third interim dividend paid 30 September 2004 20,848,140 2.00 416,963 2.00 416,963
Fourth interim dividend payable 31 December 20,848,140 2.00 371,728 2.00 416,963
2004
Dividends paid and payable (Note 5) 8.00 1,622,617 9.00 1,876,333
The fourth interim dividend declared on 31 December 2004 was calculated on a
time apportioned basis in respect of those Income Shares which were converted
into Ordinary Shares in December 2004.
7. Taxation
The Company and its Guernsey registered subsidiary, Westbury Properties Limited,
have obtained exempt company status in Guernsey under the terms of the Income
Tax (Exempt Bodies) (Guernsey) Ordinance 1989 so that they are exempt from
Guernsey taxation on income arising outside Guernsey and on bank interest
receivable in Guernsey. Each Company is, therefore, only liable to a fixed fee
of #600 per annum. The Directors intend to conduct the Group's affairs such
that it continues to remain eligible for exemption.
Westbury Properties Limited is subject to United Kingdom income tax on income
arising on the investment properties, after deduction of its debt financing
costs, allowable expenses and capital allowances.
Prior to the sale of Westbury (Eastbourne) Ventures Limited on 23 December 2003
(see Note 9 below), UK income taxation was incurred at 30% on the rental income
received by that Company.
8. Basic and Diluted Profit per Ordinary Share
The basic and diluted profit per Ordinary Share is based on the net profit for
the year of #7,563,311 and on 13,996,352 equivalent Ordinary Shares, being the
weighted average number of equivalent Ordinary Shares in issue during the year.
The basic and diluted profit per Ordinary Share for 2003 is based on the net
profit for the year of #1,945,648 and on 13,693,524 equivalent Ordinary Shares,
being the weighted average number of equivalent Ordinary Shares in issue during
2003.
9. Investment in Subsidiary Companies
The Company owns the whole of the issued Ordinary Share capital of Westbury
Properties Limited, specially formed to act as the property investment holding
company for the Group, and WPL Ventures Limited, an investment holding company,
both of which are incorporated and registered in Guernsey. Westbury Properties
Limited owns the whole of the issued Ordinary Share capital of WPL Investments
Limited, incorporated and registered in Guernsey, and of the following United
Kingdom registered companies:
- Westbury (Yorkshire) Limited (dormant)
- Westbury (Hull) Limited (dormant)
Westbury Properties Limited sold its interest in Westbury (Eastbourne) Limited
and Westbury (Eastbourne) Ventures Limited* on 23 December 2003.
* Westbury (Eastbourne) Ventures Limited is wholly owned by Westbury
(Eastbourne) Limited.
10. Property
Properties are stated at fair value, which has been determined based on
valuations performed by Knight Frank as at 31 December 2004, on the basis of
open market value, supported by market evidence, in accordance with
International Valuation Standards.
31/12/2004 31/12/2003
Consolidated # #
At 1 January 64,479,348 49,426,650
Additions at cost 6,170,134 15,324,871
Disposals (4,729,186) (3,750,000)
Movement in unrealised gain from revaluation of properties 7,564,704 3,477,827
At 31 December 73,485,000 64,479,348
At the time of original Admission to The London Stock Exchange, one asset,
Admiral Retail Park, Eastbourne, represented more than 15% of the gross assets
of the Group. In order to comply with section 21.27 (e) of the FSA Listing
Rules, a Put Option Agreement was entered into, and subsequently in 2003, was
exercised under which the Group sold one of the units at Admiral Retail Park to
Barlows Holdings Limited for a consideration of #3.75m. Under this agreement
Barlows Holdings Limited also benefits from a 25% share of the profit arising on
any sale of the whole of the retail park (including the unit owned by them).
During the year ended 31 December 2004 , the Group has complied with Sections
21.27 (f) to 21.27 (i) of the FSA Listing Rules.
11. Investments
31/12/2004 31/12/2003
Consolidated # #
Joint Ventures:
Ropewalks One LLP (i) 500,000 500,000
Orton Shopping Centre LLP (ii) 1,100,017 1,100,017
WPL Estates Limited (iii) 450,000 -
Westlink Investment Syndicate LLP (iv) 499,981 -
2,549,998 1,600,017
Loans receivable:
Ropewalks One LLP (i) - 1,338,984
WPL Estates Limited (iii) 690,956 -
Investment:
Lunar Partnership Limited (v) - 2,000,000
3,240,954 4,939,001
Company Investment
Lunar Partnership Limited (v) - 2,000,000
(i) The Group benefits from 50% of the profit from the partnership after the
promoters' performance related profit share.
(ii) The Group benefits from 33% of the profit from the partnership after the
promoters' performance related profit share.
(iii) The Group holds 450,000 Ordinary Shares comprising 50% of the share
capital of WPL Estates Limited.
(iv) The Group benefits from 50% of the profit from the partnership.
(v) The Company disposed of its interest in Lunar Partnership Limited in the
year.
12. Loans to Subsidiary Companies
During the year, unsecured subordinated loans of #55,246,301 (2003 -
#54,659,599) were issued to Westbury Properties Limited and #1,880,162 (2003 -
#1,878,062) to WPL Ventures Limited by the Company in support of property
acquisitions. Interest charged, included within the loan balances, amounts to
#4,689,559 on the Westbury Properties Limited loan and #Nil on the WPL Ventures
Limited loan. The loans are repayable in 2010 and interest is charged on the
Westbury Properties Limited loan at the fixed rate for that period plus a margin
of 3% (2003 - 3%).
13. Cash and Cash Equivalents
Cash balances include #Nil (2003 - #2,750,000) held to the bank's order pending
additional security being mortgaged to the bank.
14. Debtors
31/12/2004 31/12/2003
Consolidated # #
VAT recoverable - 325,628
Other debtors 11,451 -
Rent receivable 1,493,338 300,000
1,504,789 625,628
15. Creditors 31/12/2004 31/12/2003
# #
Consolidated
Other taxation 95,222 230,000
Amounts payable in respect of investment properties purchased 50,522 49,500
Investment Manager's fees including performance fee reserve 444,671 77,515
VAT 204,048 -
Other creditors 324,697 76,533
Dividend 371,728 -
Property management expenses 6,992 26,848
Administration fee 9,503 83,000
Audit and taxation fee 35,000 35,000
Rents received in advance 1,146,850 415,139
2,689,233 993,535
Company
Investment Manager's fees including performance fee reserve 444,671 77,515
Administration fee 9,503 60,000
Audit fee 20,000 20,000
Dividend 371,728 -
Other creditors 241,129 12,956
1,087,031 170,471
16. Long Term Loan
31/12/2004 31/12/2003
Consolidated and Company # #
Long term loan at 1 January 41,000,000 22,000,000
Amount drawn down in year 2,500,000 19,000,000
Total loan drawn down at 31 December 43,500,000 41,000,000
Allocation of loan issue costs (251,000) (251,000)
Amortisation of loan issue costs - 2002 21,514 21,514
Amortisation of loan issue costs - 2003 28,714 28,714
Amortisation of loan issue costs - 2004 28,714 -
43,327,942 40,799,228
The Company has a loan facility agreement with Bradford & Bingley PLC totalling
#46,000,000. As at 31 December 2004, the Company had drawn down #43,500,000
(2003 - #41,000,000) under this agreement leaving an undrawn balance of
#2,500,000. This loan is due for repayment on 31 December 2010. Of the loan,
#37,500,000 (2003 - #35,000,000) is fixed at interest rates averaging 6.1% until
25 June 2009.
International Financial Reporting Standards (IAS 32) require the disclosure of
the fair value of the loan at 31 December 2004. No fair value has been disclosed
because it is not practicable within constraints of timeliness or cost to obtain
an appropriate risk rate from the market that would apply to the loan and the
particular circumstances surrounding it.
During the year, the Company's bank borrowings were subject to the following
financial covenants:
* Loan to value ratio - the aggregate outstanding loan to current valuation of
investment properties should not exceed the following percentages:-
Up to 2nd Anniversary 80%
From 2nd to 4th Anniversary 75%
From 4th to 6th Anniversary 70%
From 6th Anniversary to final repayment 65%
* Quarterly rental cover - net rental income shall be at least 140% of loan
interest payable.
* Period of occupational leases - at least 45% of net rental income shall arise
from occupational leases with unexpired terms of eight years or more.
* No single property shall exceed #25 million.
The Company has been in compliance with the financial covenants throughout the
year.
17. Income Shares
31/12/2004 31/12/2003
Consolidated and Company # #
As at 1 January 20,129,506 20,014,525
15,576,462 shares converted to Ordinary Shares (15,576,462) -
Allocation of unamortised issue costs to converted shares 451,011 -
Amortisation of issue costs 114,981 114,981
As at 31 December 5,119,036 20,129,506
In accordance with International Financial Reporting Standards, the Income
Shares are treated as a liability as described under accounting policies in note
2.
The Income Shares are entitled to a fixed preferential dividend of 8% per annum
over the life of the Income Shares and are due to be redeemed by the Company on
31 March 2010 at their issue price together with arrears of dividend (if any).
The fair value of the Income Shares at 31 December 2004 was #5,587,978 (2003 -
#21,265,102) based on a market offer price of 106p (2003 - 102p) per share.
18. Share Capital
Authorised share capital - Capital Shares #
Authorised at 1 January - 50,000,000 shares of 10p each 5,000,000
Reduction during the year (4,911,106)
Authorised at 31 December - 888,941 shares of 10p each 88,894
Authorised share capital - Ordinary Shares
Authorised at 1 January - nil -
Authorised during the year 21,883,938
Authorised at 31 December - 218,839,381 shares of 10p each 21,883,938
Authorised share capital - Deferred Shares
Authorised at 1 January - nil -
Authorised during the year 1
Authorised at 31 December - 1,000 shares of 0.1p each 1
Number of Share
Shares Capital
Capital Shares of 10p each issued and fully paid #
Balance at 1 January 9,816,146 981,615
Converted to Ordinary Shares in the year (8,927,207) (892,721)
Balance at 31 December 888,939 88,894
Number of Share
Shares Capital
Ordinary Shares of 10p each issued and fully paid #
Issued during the year 21,296,399 2,129,640
Issued on the conversion of Capital Shares to Ordinary Shares in 12,453,454 1,245,345
the year
Issued on the conversion of Income Shares to Ordinary Shares in the 16,744,699 1,674,470
year
50,494,552 5,049,455
Total share capital 5,138,349
The balance of Capital Shares were compulsorily converted into Ordinary Shares
in January 2005 giving rise to a total of 51,734,569 Ordinary Shares in issue.
Voting Rights
Ordinary Shareholders are entitled to vote at all general meetings.
The Deferred Shares have no voting rights.
Dividends
After the payment of the fixed cumulative preference dividend of the Income
Shares, the Ordinary Shareholders are entitled to the balance of revenue made
available for distribution by the Company.
The Deferred Shares carry no entitlement to dividends or other distributions out
of the profits of the Company.
Capital Entitlement
The Ordinary Shareholders are entitled to all capital once the Income
Shareholders have been paid their entitlement of #1 of capital per Income Share.
The Deferred Shareholders are entitled to the repayment of the amounts paid up
on the Deferred Shares after payment in respect of each Ordinary Share and #1m.
19. Share Premium
31/12/2004 31/12/2003
# #
Share premium at 1 January 8,387,893 8,387,893
Proceeds on Ordinary Shares issued 19,166,759 -
Arising on conversion of Income Shares 13,450,982 -
Utilised on conversion of Capital Shares (352,625) -
Share issue expenses (919,451) -
Share premium at 31 December 39,733,558 8,387,893
20. Reserves Profit and Loss Reserves
31/12/2004 31/12/2003
# #
Consolidated
Reserves at 1 January 2,013,422 67,774
Profit transferred to reserves 7,563,311 1,945,648
Reserves at 31 December 9,576,733 2,013,422
Company
Reserves at 1 January (1,910,554) (637,727)
Net loss for the year (837,317) (1,272,827)
Reserves at 31 December (2,747,871) (1,910,554)
21. Net Asset Value per Ordinary Share
The net asset value per Ordinary Share is based on the net assets attributable
to the Ordinary Shareholders of #54,448,640 (2003 - #11,382,930) and on
51,734,569 (2003 - 9,816,146) Ordinary (2003 - Capital) Shares in issue at the
balance sheet date including the converted equivalent of the residual Capital
Shares converted in January 2005.
22. Note to the Consolidated Cash Flow Statement
1/01/2004 1/01/2003
to to
31/12/2004 31/12/2003
# #
Reconciliation of net loss before investment result to net cash outflow from operating activities:
Net loss before investment result (1,521,857) (1,405,729)
UK taxation charge - (50,486)
Adjustment for non-cash items
Amortisation of Income Share issue costs 114,981 114,981
Amortisation of loan issue costs 28,715 28,714
(Increase) in debtors (879,161) (429,975)
Increase in creditors 1,762,676 516,609
Net cash outflow from operating activities (494,646) (1,225,886)
23. Financial Instruments and Properties
The Group holds cash and liquid resources as well as having debtors and
creditors that arise directly from its operations. The Group has not entered
into any derivative transactions during the year under review.
The main risks arising from the Group's financial instruments and properties are
market price risk, credit risk, liquidity risk and interest rate risk. The
Board regularly reviews and agrees policies for managing each of these risks and
these are summarised below.
Market Price Risk
The Group's exposure to market price risk is comprised mainly of movements in
the value of the Group's investment in property. Property and property related
assets are inherently difficult to value due to the individual nature of each
property. As a result, valuations are subject to uncertainty. There is no
assurance that the estimates resulting from the valuation process will reflect
the actual sales price even where a sale occurs shortly after the valuation
date.
Rental income and the market value for properties are generally affected by
overall conditions in the local economy, such as growth in gross domestic
product, employment trends, inflation and changes in interest rates. Changes in
gross domestic product may also impact employment levels, which in turn may
impact the demand for premises. Furthermore, movements in interest rates may
also affect the cost of financing for real estate companies.
Both rental income and property values may also be affected by other factors
specific to the real estate market, such as competition from other property
owners, the perceptions of prospective tenants of the attractiveness,
convenience and safety of properties, the inability to collect rents because of
the bankruptcy or the insolvency of tenants or otherwise, the periodic need to
renovate, repair and release space and the costs thereof, the costs of
maintenance and insurance, and increased operating costs.
The Directors monitor market value by having independent valuations carried out
quarterly by Knight Frank.
Credit Risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Group. In the
event of a default by an occupational tenant, the Group will suffer a rental
income shortfall and incur additional costs, including legal expenses, in
maintaining, insuring and re-letting the property.
Liquidity Risk
Liquidity risk is the risk that the Group will encounter in realising assets or
otherwise raising funds to meet financial commitments. Investments in property
are relatively illiquid, however, the Group has tried to mitigate this risk by
investing in desirable properties in prime locations.
Interest Rate Risk
The Group's exposure to market risk for changes in interest rates relates
primarily to the Group's long-term debt obligations. The Group's policy is to
manage its interest cost using fixed rate debt.
The interest rate profile of the Group at 31 December 2004 is as follows:
Total Variable Assets on Weighted
rate which no average
interest is interest rate
received
per annum
# # # %
Financial assets
Properties 73,485,000 - 73,485,000 -
Investments 3,240,954 - 3,240,954 -
Non-current assets 76,725,954 - 76,725,954 -
Cash and cash equivalents 27,354,108 27,354,108 - 3.5
Debtors 1,504,789 - 1,504,789 -
Total assets as per Balance Sheet 105,584,851 27,354,108 78,230,743
Total Variable Fixed Liabilities on Weighted Weighted
rate rate which no average average
interest is interest until
paid rate maturity
per annum
# # # # % Years
Financial liabilities
Bank loans 43,327,942 6,000,000 37,327,942 - 6.11 6
Income Shares 5,119,036 - 5,119,036 - 8.00 6
Creditors 2,689,233 - - 2,689,233 - -
Total liabilities as
per
Balance Sheet 51,136,211 6,000,000 42,446,978 2,689,233
The interest rate profile of the Group at 31 December 2003 was as follows:
Total Variable Assets on Weighted
Rate which no average
interest is interest rate
received per annum
# # # %
Financial assets
Properties 64,479,348 - 64,479,348 -
Investments 4,939,001 - 4,939,001 -
Non-current assets 69,418,349 - 69,418,349 -
Cash and cash equivalents 3,261,222 3,261,222 - 3.5
Debtors 625,628 - 625,628 -
Total assets as per Balance Sheet 73,305,199 3,261,222 70,043,977
Total Variable Fixed Liabilities on Weighted Weighted
Rate Rate which no average average
interest is interest rate until
paid per annum maturity
# # # # % Years
Financial liabilities
Bank loans 40,799,228 6,000,000 34,799,228 - 5.95 7
Income Shares 20,129,506 - 20,129,506 - 8.00 7
Creditors 993,535 - - 993,535 - -
Total liabilities as
per
Balance Sheet 61,922,269 6,000,000 54,928,734 993,535
24. Commitments
At the year end, the Group had a commitment to invest a further #1,000,000 in
the Westlink Investment Syndicate LLP.
25. Related Party
Included in property management expenses is an amount of #123,526 (2003 -
#83,300) payable to Barlows Holdings Limited, a major shareholder in the
Company, in accordance with their property management agreement with the
Company's subsidiary.
The Company was charged administration fees of #53,250 (2003 - #Nil) by Mourant
Guernsey Limited, #9,503 of which was outstanding at the balance sheet date.
Iain Stokes, who is a Director of the Company, is also a Director of Mourant
Guernsey Limited.
During the year, Iain Stokes exchanged contracts on the purchase of a property,
at full market price, from Ropewalks One LLP. The purchase is due to complete in
October 2005. At the year end Iain Stokes had paid a 10% deposit of #16,800.
The Company was charged investment managers fees totalling #1,368,618 (2003 -
#922,381) by Berrington Fund Management Limited, #444,671 of which was
outstanding at the balance sheet date. At the year end Berrington Fund
Management Limited held 488,250 Ordinary Shares in the Company and had
contracted to purchase a further 348,750 shares.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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