RNS Number:2821H
Westbury Property Fund Limited
10 February 2003
The Westbury Property Fund Limited
Annual Report and Financial Statements
For the period from 10 January 2002 to 31 December 2002
The Westbury Property Fund Limited
Contents Page
Chairman's Statement 1
Investment Manager's Report 4
Directors' Profiles 10
Management and Administration 11
Report of the Directors 13
Independent Auditors' Report 15
Consolidated Statement of Operations 16
Consolidated Balance Sheet
17
Company Balance Sheet
18
Consolidated Statement of Changes in Equity 19
Consolidated Cash Flow Statement 20
Notes to the Financial Statements 21
Notice of Annual General Meeting
Proxy Form
The Westbury Property Fund Limited
Chairman's Statement
For the period from incorporation 10 January 2002 to 31 December 2002
This report covers the period from incorporation of the business on 10 January
2002 to 31 December 2002. The Income and Capital Shares of the Westbury
Property Fund were admitted to the Official List of the London Stock Exchange
and the Channel Islands Stock Exchange on 18 April 2002. The shares were issued
at 100p and all shareholders or their intermediaries were entitled to a
commission of 2p per share payable by the Company on Admission.
As at 31 December 2002 the mid market share price of the Income and Capital
Shares was 104.5p and 95.5p respectively.
Dividends
During the period and in accordance with the Prospectus, the Board has declared
and paid two dividends per Income Share amounting to 5p in total. This
comprises 2p for the period to 30 September 2002 and 3p for the period to 31
December 2002. These dividends were paid on 16 October 2002 and 30 December
2002 respectively. In the absence of any unforeseen circumstances, it is the
intention of the Board to declare and pay a dividend of 3p per income share in
respect of the period to 31 March 2003.
Thereafter, it is the intention of the Board to declare and pay quarterly
dividends of 2p per income share in line with their entitlement to receive a
fixed preferential dividend of 8% per annum over their life. The Income Shares
are due to be redeemed by the Company on 31 March 2010 at their issue price of
100p together with any arrears of dividend (if any).
In line with the statements made in the Prospectus, no dividends have been
declared in respect of the Capital Shares. The Board will review annually the
dividend policy on the Capital Shares but currently there is no intention to
declare any dividends on the Capital Shares until after the Income Shares have
been redeemed in 2010.
Net Asset Value
The Capital 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.
I am pleased to report that as at 31 December 2002 the audited net assets
attributable to the Capital Shares were #9,437,282 (96.14p per Capital Share).
During the year all launch expenses allocated to the Capital Shares were written
off in full and the net profit for the period of #67,774 is after the payment of
all costs relating to the running of the Company as well as interest paid and
dividends paid to the Income Shareholders. Included in the net profit is an
unrealised gain on the revaluation of investment properties of #821,209. All of
the Company's investment properties have been independently valued by Knight
Frank and these valuations are updated on a quarterly basis.
The difference between the audited net assets per Capital Share and the
published monthly net asset value per Capital Share is principally due to the
accounting treatment of the property acquisition costs. In the monthly net
asset value per share calculation and in accordance with the Prospectus,
property acquisition costs are capitalised but no uplift in value is shown until
acquisition costs per individual property have been fully absorbed by the
increase in that particular property's value. In the audited net asset value,
property acquisition costs per property which have yet to be covered by an
increase in the individual property's value are written off rather than
capitalised. Hence the audited figure for 31 December 2002 is some 4p lower
than the net asset value reported at the month end. A full reconciliation is
shown in Note 23 of these accounts.
1
The Westbury Property Fund Limited
Chairman's Statement (continued)
For the period from incorporation 10 January 2002 to 31 December 2002
Property Portfolio and Bank Borrowings
As at 31 December 2002 the Company's property portfolio was valued by Knight
Frank, the Company's independent valuer at #49.4m. The characteristics of the
portfolio are a weighted average lease length of just under 14 years, a rental
yield on cost (excluding acquisition expenses) of 7.5% and a strong
concentration of high quality tenants. Two recent pre-let developments agreed
by the Company will slightly improve these figures during the course of 2003.
The Company has fixed rate borrowings with Bradford and Bingley amounting to
#22m currently drawn down and fixed at an average all-in-cost of just under 6.3%
until 25 June 2009. Under the terms of the bank facility, the Company can
borrow a further #24m but the Board intends to ensure, for the foreseeable
future, that net debt will not exceed 65% of gross assets.
Further property investments amounting to some #10m will be targeted during 2003
assuming there are no disposals from the existing portfolio and available
opportunities can be purchased at sensible prices.
There are no "Venture Properties" in the portfolio. These are considered from
time to time, but during this accounting period no asset was considered suitable
for purchase. As the economic climate looks set to weaken further during 2003,
the Board believes that there may well be some interesting opportunities
arising.
Corporate Governance
During 2002, there has been a great deal of adverse press comment on the
performance of certain split capital investment trusts and following an
undertaking to the Treasury Select Committee on 14 November 2002, the FSA has
recently proposed tough new rules to increase the information and protection
available to investors in such companies.
Since the Company was formed in 2002, the Board has been keen to distance the
Company from the problems experienced by the split capital investment trust
sector. It is important therefore to highlight that the Company is actually
already compliant with the key proposals put forward by the FSA on 14 January
2003.
The Westbury Property Fund is not allowed to invest in other investment trusts,
it already publishes a monthly performance report and there are no employees of
the investment manager on the Board. The only independent director of the
Company who is also a professional adviser to both the Company and the
Investment Manager is Iain Stokes who is an employee of the Company's
Administrator, Guernsey International Fund Managers Limited. This appointment
will be reviewed by the Board once the FSA proposals on this point become clear,
expected to be during the course of 2003.
2
The Westbury Property Fund Limited
Chairman's Statement (continued)
For the period from incorporation 10 January 2002 to 31 December 2002
2003 Outlook
The general economic climate looks uncertain. It looks probable that there will
be some conflict with Iraq and the UK economy remains weak particularly in
certain sectors. Whilst the monthly total returns in the property sector
averaged 10.5% across the Investment Property Databank as a whole during 2002
the outlook for 2003 looks far less certain. The Company has a good spread of
investment properties throughout the UK and has benefited this year from having
no property in Central London and no office property along the Western corridor.
The Company has been deliberately overweight in out of town retail property
and with the current portfolio structure is able to be highly selective as
regards future acquisitions.
The Company is well placed and on target to meet its forecast returns but in
light of the current economic climate, covenant strength and lease length will
be the overriding focus during 2003.
The Company will continue to position itself to shareholders as a property
company which has a more favourable tax status compared to UK based, publicly
quoted property companies. This favourable tax status is enjoyed internally by
the Company, particularly as regards the treatment of capital gains and
externally by shareholders as regards the treatment of their returns. Unlike
most property companies, there are also provisions in the Company's Articles to
ensure that any share price discount to NAV can be minimised over the Company's
life.
The Investment Manager publishes a two-page monthly 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@westburyam.com.
Rodney Baker-Bates, Chairman
5 February 2003
3
The Westbury Property Fund Limited
Investment Manager's Report
For the period from incorporation 10 January 2002 to 31 December 2002
Performance
The Company has outperformed the Investment Property Databank's monthly
benchmark. This performance largely reflects the stronger rental growth realised
at rent reviews and beneficial re-lettings at some of the office and retail
warehouse properties.
The Property Portfolio
At the period end, the portfolio comprised 10 let standing investments in 9
locations acquired for a total cost of #45.5m. The Portfolio has 34 tenancies
and a total rent roll of #3.4m per annum producing a yield on cost (excluding
acquisition expenses) of 7.5% and a weighted average lease length of 13.85 years
unexpired.
The Company has also signed contracts and purchased the land on two pre-let
developments in Guilford and Worcester, which, on completion of construction
later this year, will increase the portfolio investment cost to #55m. The two
additional tenancies will increase the total rent roll to #4.2m per annum,
producing a yield on cost (excluding acquisition expenses) to 7.65% and improve
the weighted average lease length to 15.3 years unexpired.
The Directors have adopted the 31 December 2002 open-market valuation returned
by the Company's independent valuers Knight Frank. This confirms a total for
the individual property values (including the land cost at the Guilford
property) of #49.4m.
The total cost of these properties including acquisition costs amounted to
#48.6m which results in an unrealised gain of #821,209. During the period, the
Company also disposed of two properties realising a total gain after all costs
of #326,638.
On the basis of no disposals, the Company intends to target approximately #10m
of further investment during the course of 2003. There is no urgency to spend
this money, but there are an increasing number of opportunities arising and the
Company is well placed to make tactical purchases to enhance the overall
portfolio.
"Venture" opportunities are also considered from time to time, but as yet, we
have not found any property which suits our risk/return criteria. We see a
further weakening in the economy over the coming months and expect there may
well be opportunities arising as companies review their available funding
options and look at asset sales to realise capital.
The Property Market
During the last twelve months, there has been strong demand for good quality
well let property fuelled by the lower costs of borrowing. This has been
particularly apparent amongst the smaller lot sizes and has caused a hardening
of property investment yields in certain sectors (e.g. retail assets).
Notwithstanding this, the yield gap across the entire sector between rental
income and interest rates has been maintained and the asset class continues to
attract investors. The property sector has now out-performed the other main
asset classes for a sustained period and the present outlook is that, despite a
softening of the lettings market in London and parts of the South East,
attractive overall returns are set to continue for the forthcoming year.
Richard Burrell, Westbury Fund Management Limited
5 February 2003
4
The Westbury Property Fund Limited
Investment Manager's Report (continued)
For the period from incorporation 10 January 2002 to 31 December 2002
Property Holdings as at 31 December 2002
Set out below is the schedule of properties together with net annual rents
receivable. The individual valuations shown are the Prospectus values or
purchase price, but excluding the actual costs of acquisition.
PORTFOLIO LISTINGS AS AT 31 DECEMBER 2002
Address Use Tenure Current Net Prospectus value
Annual Rent or net purchase
Receivable cost
14-20 Watergate Street, Town Freehold #330,000 #4,775,000
Chester centre
retail
Carr Office Village, 3/6 Multi-let Freehold #317,114 #3,415,000
White Rose Way, offices
Doncaster
Admiral Retail Park, Retail Freehold #907,825 #11,950,000
Lottbridge Drove, warehouse
Eastbourne park
B&Q Warehouse, Retail Freehold #614,000 #10,100,000
Stoneferry Road, warehouse
Kingston upon Hull park
Cygnet House, Meadowhall Multi-let Freehold #85,400 #900,000
Road, Sheffield offices
Hallamshire Court, Multi-let Freehold #209,547 #2,460,000
Summerfield Street, offices*
Sheffield
Meadowcourt III, Multi-let Freehold #215,235 #3,035,000
Meadowhall Road, offices
Sheffield
34 Regent Street, Town Freehold #103,000 #1,374,000
Swindon centre
retail
66/68 High Street, Town Freehold #133,200 #1,795,000
Staines centre
retail
Comau Estil Unit, 10 Industrial/ Freehold #192,000 #1,920,000
Midland Road, Luton Warehouse
Health & Fitness Club, Other Freehold #1,500,000*
Queen Elizabeth
Barracks, Guilford
ASSETS TO BE DISPOSED OF (SUBJECT TO CONTRACT)
Wickes 999 Year Lease Retail Freehold #273,950 #3,750 000
at Admiral Retail Park, warehouse
Lottbridge Drove, unit
Eastbourne
TOTAL #3,381,271 #46,973,000
* Initial purchase consideration. Additional cost of #2.3m to be paid during 2003 taking the final
purchase consideration to #3.78m. When completed, rental income will be #306,000 per annum.
LATEST PORTFOLIO VALUATION 31 DECEMBER 2002 #49,426,650
5
The Westbury Property Fund Limited
Directors' Profiles
For the period from incorporation 10 January 2002 to 31 December 2002
Rodney Baker-Bates - Chairman
Rodney Baker-Bates (Chairman) was Chief Executive of Prudential Financial
Services between 1998 and September 2001. Between 1993 and 1998 he was a member
of the board of the BBC responsible for Finance and Information Technology.
Between 1984 and 1992 he held various positions at Midland Bank PLC. Mr
Baker-Bates is also a consultant to the board of C. Hoare & Co., a director of
Bedlam Asset Management PLC; Zenith Entertainment; and Lloyds Register of
Shipping, a former member of the Council and Audit Committee of the Royal
Pension Fund for Nurses and a member of Terra Consilia, the advisory board to
Terra Firma Capital Partners.
Tim Chesney
Tim Chesney has been a director of Compass Group for 18 years. The Compass Group
Limited is an international trading organisation with a number of subsidiaries
trading in a diverse range of products, with its core business being tyre
wholesaling of exclusive brands in the UK and Europe, tyre trading
internationally, and the manufacture and retail of fireplaces in the UK and the
USA. Compass Group has its head office in Guernsey with a number of other
offices around the world and has a number of joint ventures in China.
Peter Dickson
Peter Dickson is a chartered surveyor and a non-executive director of several
companies including Pochin's PLC, a property contracting and development company
and Mercury Inns Group Limited. He is also Director of two private property
investment companies and is Chairman of Yates Group Pension Trustees Limited.
Between 1980 and 2001 he worked for Yates Group PLC; he was Chief Executive
Officer between 1992 and 1998, leading the flotation of the company on the
London Stock Exchange in 1994 and was Chairman between 1998 and 2001.
William Kay
William Kay is Managing Director of Minerva Financial Services Limited, a
Jersey-based trust company. Between 1975 and 2001 he worked for the Barclays
Group holding a number of senior executive positions including that of Managing
Director of Barclays Private Bank & Trust Limited in the Channel Islands between
1994 and 2000.
Iain Stokes
Iain Stokes is a senior manager of Guernsey International Fund Managers Limited.
He is a chartered certified accountant and spent ten years in practice with BDO
Binder and in industry prior to joining GIFM seven years ago. He has
responsibility for the operational management of a number of GIFM's private
equity clients and holds a range of board appointments of fund management and
fund investment companies incorporated in Guernsey and other jurisdictions.
10
The Westbury Property Fund Limited
Management and Administration
Directors: Rodney Baker-Bates (appointed 10 January 2002)
Tim Chesney (appointed 10 January 2002)
Peter Dickson (appointed 10 January 2002)
William Kay (appointed 10 January 2002)
Iain Stokes (appointed 10 January 2002)
Investment Committee: R Burrell
M. Ellis
P. Gadsden
D. Owen
A. Bird
Registered Office: Trafalgar Court,
Les Banques,
St. Peter Port,
Guernsey,
Channel Islands,
GY1 3QL
Investment Manager: Westbury Fund Management Limited,
Trafalgar Court,
Les Banques,
St. Peter Port,
Guernsey,
Channel Islands,
GY1 3QL
Investment Advisers to Gatehouse Investment Management Limited,
the Investment Manager: The Gatehouse,
16 Arlington Street,
St James's,
London,
SW1A 1RD
Barlows Asset Management Limited,
Chepstow House,
Dee Hills Park,
Chester,
CH3 5AR
Administrator, Secretary Guernsey International Fund Managers Limited,
and Channel Islands Trafalgar Court,
Sponsor: Les Banques,
St. Peter Port,
Guernsey,
Channel Islands,
GY1 3QL
11
The Westbury Property Fund Limited
Management and Administration
Auditors: Ernst & Young LLP,
14 New Street,
St. Peter Port,
Guernsey,
Channel Islands,
GY1 4AF
Independent Property Knight Frank, Chartered Surveyors,
Valuer: 20 Hanover Square,
London,
W1S 1HZ
Principal Bankers: Bradford & Bingley plc.,
PO Box 88,
Croft Road,
Crossflatts, Bingley,
West Yorkshire,
BD16 2UA
Legal Advisers: DWF,
(In England) Castle Street,
Liverpool,
L2 4XE
The City Law Partnership,
99 Charterhouse Street,
London,
EC1M 6NQ
Legal Advisers: Carey Langlois,
(In Guernsey) 7 New Street,
St Peter Port,
Guernsey,
Channel Islands,
GY1 4BZ
Stockbroker: Teather and Greenwood Limited,
Beaufort House,
15 St. Botolph Street,
London,
EC3A 7QR
12
The Westbury Property Fund Limited
Report of the Directors
The Directors of The Westbury Property Fund Limited ("the Company") and its
subsidiary ("the Group") are pleased to submit the Audited Financial Statements
of the Group for the period from 10 January 2002 to 31 December 2002.
Incorporation
The Company was incorporated on 10 January 2002 under the laws of Guernsey and
commenced trading on 23 April 2002.
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 has been incorporated with two classes of
Share Capital, Income Shares and Capital Shares.
Listing
The 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.
Results
The results for the period are shown in the Consolidated Statement of Operations
on page 16.
Dividend
During the period the Company has declared and paid the following interim
dividends to its Income Shareholders:
Dividend Number Pay Date Rate
First interim 16 October 2002 2.0p
Second interim 30 December 2002 3.0p
Directors' and Other Interests
The following Directors including persons connected with them held the following
number of shares at 31 December 2002:
Name No. of Capital % of Issued No. of Income % of Issued
Shares Capital Shares Shares Income Shares
P. Dickson 16,667 0.17 33,333 0.16
W. Kay 18,000 0.18 - -
R. Baker-Bates 100,000 1.02 - -
Except for Iain Stokes, who is Director of the Manager and those stated above,
no Director holding office at 31 December 2002 or his associates had any
beneficial interest in the Company's Shares, nor had any such interest between
the end of the period and the date of this Report. None of the Directors had a
service contract with the Company during the period.
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.
13
The Westbury Property Fund Limited
Report of the Directors (continued)
Substantial Shareholdings
At the period end Directors were aware that the following shareholders owned 3%
or more of the issued Capital shares of the Company.
Number of Capital % of Capital
Shares Shares
BNY (OCS) Nominees Limited 4,000,000 40.75
Barlows Holdings Limited 2,000,000 20.37
HSBC Bank International Limited 585,200 5.96
Credit Suisse First Boston (Europe) Limited 500,000 5.09
Directors Responsibilities
The Directors are responsible for preparing Accounts for each financial period
which give a true and fair view of the state of affairs of the Group and of the
profit and loss of the Group for that period and are in accordance with
applicable laws. In preparing those accounts 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 Accounts 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 Accounts 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 subsidiary will be subject to United Kingdom tax on income arising
on investment properties, after deduction of its debt financing costs and
allowable expenses.
Auditors
Ernst & Young LLP have indicated their willingness to continue in office.
Rodney Baker-Bates
Peter Dickson
5 February 2003
14
Independent Auditors' Report to the Members of
The Westbury Property Fund Limited
We have audited the group's financial statements for the period ended 31
December 2002 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
23. 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' responsibilities for preparing the Annual Report and the
financial statements in accordance with Guernsey Law and applicable accounting
standards are set out 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 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 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
judgements 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 2002 and of the profit of the group
for the period then ended and have been properly prepared in accordance with the
Companies (Guernsey) Law, 1994 and International Accounting Standards.
Ernst & Young LLP
Guernsey, Channel Islands
5 February 2003
15
The Westbury Property Fund Limited
Consolidated Statement of Operations
For the period from 10 January 2002 to 31 December 2002
10/01/2002
to
31/12/2002
Notes #
Income 2
Rent receivable 2,172,872
Bank interest 66,871
Total Income 2,239,743
Expenses 2
Interest payable and similar
charges, including dividends
on income shares 5 2,082,509
Investment Manager's fees 3 (i) 632,125
Legal and professional fees 284,204
Property management expenses 115,397
Administration fee 3 (ii) 71,000
Directors' fees 4 47,388
General expenses 41,087
Bank charges 25,606
Audit fee 20,500
Total Expenses 3,319,816
Net loss before investment result (1,080,073)
Realised gain on sale of investment properties 326,638
Unrealised gain on revaluation of investment properties 821,209
Net profit for the period 67,774
Basic and diluted profit
per Capital Share 7 0.69p
All items in the above statement are derived from continuing operations. The
accompanying notes on pages 21 to 29 are an intergral part of the financial
statements.
16
The Westbury Property Fund Limited
Consolidated Balance Sheet
For the period from 10 January 2002 to 31 December 2002
31/12/2002
Notes #
Non-current Assets
Investment properties 9 49,426,650
Current Assets
Cash and cash equivalents 2,033,744
Debtors 11 361,853
2,395,597
Total Assets 51,822,247
Current Liabilities
Creditors 12 599,926
Non-current Liabilities
Long term loan 13 21,770,514
Income shares 14 20,014,525
Total Liabilities 42,384,965
Net Assets 9,437,282
Represented by:
Capital and Reserves
Share capital 15 981,615
Share premium 16 8,387,893
Reserves 17 67,774
Issued capital and reserves 9,437,282
Net Asset Value per Capital Share 18 96.14p
The financial statements on pages 16 to 29 were approved at a meeting of the
Board of Directors held on 5 February 2003 and signed on its behalf by:
Rodney Baker-Bates )
) Directors
Peter Dickson )
The accompanying notes on pages 21 to 29 form an integral part of the financial
statements
17
The Westbury Property Fund Limited
Company Balance Sheet
As at 31 December 2002
31/12/2002
Notes #
Non-current Assets
Investment in subsidiary company 8 10,000,002
Loan to subsidiary company 10 39,997,981
49,997,983
Current Assets
Cash and cash equivalents 711,237
711,237
Total Assets 50,709,220
Current Liabilities
Creditors 12 192,400
Non-current Liabilities
Long term loan 13 21,770,514
Income shares 14 20,014,525
Total Liabilities 41,977,439
Net Assets 8,731,781
Represented by:
Capital and Reserves
Share capital 15 981,615
Share premium 16 8,387,893
Reserves 17 (637,727)
Issued capital and reserves 8,731,781
The financial statements on pages 16 to 29 were approved at a meeting of the
Board of Directors held on 5 February 2003 and signed on its behalf by:
Rodney Baker-Bates )
) Directors
Peter Dickson )
The accompanying notes on pages 21 to 29 form an integral part of the financial
statements
18
The Westbury Property Fund Limited
Consolidated Statement of Changes in Equity
For the period from 10 January 2002 to 31 December 2002
10/01/2002
to
31/12/2002
#
Equity at 10 January 2002 -
Net profit for the period 67,774
Issue of Capital Shares, net of issue costs 9,369,508
Equity at 31 December 2002 9,437,282
The accompanying notes on pages 21 to 29 form an integral part of the financial
statements
19
The Westbury Property Fund Limited
Consolidated Cash Flow Statement
For the period from 10 January 2002 to 31 December 2002
10/01/2002
to
31/12/2002
Note #
Operating activities
Rent received 2,163,555
Bank interest received 66,871
Expenses paid (1,125,461)
Interest paid and similar charges,
including dividends on income shares (1,916,248)
Net cash outflow from operating
activities 19 (811,283)
Investing Activities
Purchase of investment properties (52,457,553)
Sales of investment properties 4,229,528
Net cash outflow from investing activities (48,228,025)
Financing Activities
Issue of Capital Shares 9,816,146
Issue costs paid on issuance of Capital Shares (429,032)
Issue of Income Shares 20,848,140
Issue costs paid on issuance of Income Shares (911,202)
Draw down of long term loan 22,000,000
Issue costs paid on long term loan (251,000)
Net cash inflow from financing activities 51,073,052
Increase in cash and cash equivalents 2,033,744
Cash and cash equivalents at 10 January 2002 -
Cash and cash equivalents at 31 December 2002 2,033,744
The accompanying notes on pages 21 to 29 form an integral part of the financial
statements
20
The Westbury Property Fund Limited
Notes to the Financial Statements
For the period from 10 January 2002 to 31 December 2002
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.
2. PRINCIPAL ACCOUNTING POLICIES
Basis of Preparation
The accounts of the Group have been prepared in conformity with International
Accounting Standards ("IAS") and reflect the following policies:
Convention
The accounts 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 undertaking, Westbury
Properties Limited, drawn up to 31 December 2002.
Segmental Reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business, being investment business.
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
Expenses are accounted for on an accruals basis. Under the terms of the
Investment Management Agreement, The Westbury Property Fund Limited has agreed
to pay all Administration fees, Audit fees and Directors fees on behalf of
Westbury Properties Limited.
Issue Costs
The placing expenses incurred amounted to #1,646,234 of which #251,000 related
to bank loan issue costs. The remainder has been 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 have been 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.
Taxation
The Company and its Guernsey registered subsidiary 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 taxation arising outside Guernsey
and 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.
The Property subsidiary is subject to United Kingdom income tax on income
arising on the investment properties, after deduction of its debt financing
costs and allowable expenses and is able to claim capital allowances such that
there is no UK tax charge.
21
The Westbury Property Fund Limited
Notes to the Financial Statements (continued)
For the period from 10 January 2002 to 31 December 2002
2. PRINCIPAL ACCOUNTING POLICIES (continued)
Investment in subsidiary company
The investment in subsidiary company is included in the Company Balance Sheet at
cost.
Investment properties
Investment properties are initially recognised at cost, being the fair value of
consideration given, including transaction costs associated with the investment
property.
After initial recognition, freehold investment 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.
Loan to subsidiary company
The unsecured subordinated loans that have been granted to Westbury Properties
Limited at various times during the accounting period, have been accounted for
as an originated loan under IAS. This loan is accounted for on an amortised
cost basis with intercompany interest being recognised under the effective
interest rate method. This loan is reviewed regularly for impairment.
Cash and cash equivalents
Cash on hand and in banks is carried at cost. Cash and cash equivalents are
defined as cash on 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 Statement of Cash Flows,
cash and cash equivalents consist of cash on hand and deposits in banks.
Loans and borrowings
All 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 as per IAS 32. The corresponding dividends on
these shares are charged as interest expense in the Consolidated Statement of
Operations over the term of these shares.
3. MATERIAL AGREEMENTS
(i) Under the terms of an appointment made by the Board on 11 January 2002,
Westbury Fund Management Limited ("WFML") was appointed with effect from 11
January 2002 as Investment Manager, and 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, WFML is entitled to receive a
performance fee of 15% of any return above an 8% per annum (compound) hurdle as
stated in the Prospectus.
The Investment Management Agreement may be terminated with not less than 12
months' notice, such notice to be given on or after the second anniversary of
the Company's admission to the London Stock Exchange.
(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 Island Sponsor. GIFM is paid by reference
to the number of hours spent on work for the Company at its standard hourly
charging rates in force from time to time, in addition to an annual fixed fee of
between #50,000 and #75,000 payable quarterly in arrears.
22
The Westbury Property Fund Limited
Notes to the Financial Statements (continued)
For the period from 10 January 2002 to 31 December 2002
4. DIRECTORS' FEES
10/01/2002
to
31/12/2002
During the period each of the Directors was entitled to
the following fees:
#
R. Baker-Bates (Chairman) 14,055
T. Chesney 10,541
P. Dickson 10,541
W. Kay 10,541
I. K. Stokes 1,710
47,388
5. INTEREST PAYABLE AND SIMILAR CHARGES 10/01/2002
to
31/12/2002
Long term loan: #
Interest payable 846,358
Non-utilisation fee 57,249
Amortisation of loan issue costs 21,514
Income Shares:
Dividends payable (Note 6) 1,042,407
Amortisation of issue costs 114,981
2,082,509
6. DIVIDENDS PAYABLE ON INCOME SHARES 10/01/2002
to
No. of IncomeRate 31/12/2002
Shares Pence #
First interim dividend paid
16 October 2002 20,848,140 2.00 416,963
Second interim dividend paid
30 December 2002 20,848,140 3.00 625,444
Dividends payable (Note 5) 1,042,407
7. BASIC AND DILUTED PROFIT PER CAPITAL SHARE
The basic and diluted profit per Capital Share is based on the net profit for
the period of #67,774 since commencement of operations on 23 April 2002 and on
9,816,146 Capital Shares, being the weighted average number of Capital Shares in
issue throughout the period since 23 April 2002.
8. INVESTMENT IN SUBSIDIARY COMPANY
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, which is incorporated and registered in Guernsey.
10,000,002 ordinary shares were purchased for a total of #10,000,002. Westbury
Properties Limited owns the whole of the issued ordinary share capital of the
following United Kingdom registered companies:
- Westbury (Yorkshire) Limited
- Westbury (Hull) Limited
- Westbury (Eastbourne) Limited
- Westbury (Eastbourne) Ventures Limited*
* Westbury (Eastbourne) Ventures Limited is wholly owned by Westbury
(Eastbourne) Limited.
23
The Westbury Property Fund Limited
Notes to the Financial Statements (continued)
For the period from 10 January 2002 to 31 December 2002
9. INVESTMENT PROPERTIES
Investment properties are stated at fair value, which has been determined based
on valuations performed by Knight Frank as at 31 December 2002, on the basis of
open market value, supported by market evidence, in accordance with
International Valuation Standards.
31/12/2002
Consolidated #
At 10 January 2002 -
Additions at cost 52,491,831
Disposals (3,886,390)
Unrealised gain from revaluation of investment properties 821,209
At 31 December 2002 49,426,650
At the time of 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, which extends to 31 December 2003, was entered into which allows the
Group to sell one of the units at Admiral Retail Park to Barlows Holdings
Limited for a consideration of #3.75m. Under this agreement Barlows Holdings
Limited will also benefit from a 25% share of the profit arising on any sale of
the whole of the retail park, this profit share has been deducted in arriving at
the valuation above. The Put Option Agreement has not yet been exercised as it
is the Board's view that, until the Group is fully invested, the interests of
shareholders are best served by retaining the income from the unit which amounts
to #273,950 per annum.
In all other respects, the Group has complied with sections 21.27 (f) to 21.27
(i) of the FSA Listing Rules.
10. LOAN TO SUBSIDIARY COMPANY
During the period, unsecured subordinated loans of #39,997,981 were issued to
Westbury Properties Limited by the Company in support of property acquisitions.
The loans are repayable 8 years after the date of the agreement and interest is
charged at LIBOR plus a margin of 4%.
11. DEBTORS 31/12/2002
#
Consolidated
Property purchase deposit 166,200
VAT recoverable 154,333
Other debtors 32,003
Rent receivable 9,317
361,853
24
The Westbury Property Fund Limited
Notes to the Financial Statements (continued)
For the period from 10 January 2002 to 31 December 2002
12. CREDITORS 31/12/2002
#
Consolidated
Other taxation 230,000
Amounts payable in respect of investment properties purchased 117,500
Investment Manager's fees 66,774
Issue costs payable 55,000
Other creditors 40,306
Non-utilisation fee 25,972
Property management expenses 22,580
Administration fee 20,000
Audit fee 18,000
Loan interest payable 3,794
599,926
Company
Investment Manager's fees 66,774
Issue costs payable 55,000
Non-utilisation fee 25,972
Administration fee 20,000
Audit fee 18,000
Loan interest payable 3,794
Other creditors 2,860
192,400
13. LONG TERM LOAN Fixed interest
rate 31/12/2002
Consolidated and Company % #
Long term loan at 10 January 2002 - -
Amount drawn down on 25 June 2002 6.35 17,000,000
Amount drawn down on 30 July 2002 6.31 3,000,000
Amount drawn down on 20 December 2002 5.77 2,000,000
Total loan drawn down at 31 December 2002 22,000,000
Allocation of loan issue costs (251,000)
Amortisation of loan issue costs 21,514
21,770,514
The Company has a loan facility agreement with Bradford & Bingley totalling
#46,000,000. As at 31 December 2002, the Company had drawn down #22,000,000
under this agreement leaving an undrawn balance of #24,000,000. This loan is
due for repayment on 31 December 2010 and has fixed interest rates as stated
above until 25 June 2009.
The directors estimate that the fair value of the loan at 31 December 2002 is
#22,608,473 which is based on a discounted cash flow projection using interest
rates prevailing at the balance sheet date.
25
The Westbury Property Fund Limited
Notes to the Financial Statements (continued)
For the period from 10 January 2002 to 31 December 2002
13. LONG TERM LOAN (continued)
During the period, 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 8 years of more.
* No single property shall exceed #25 million.
The Company has been in compliance with the financial covenants throughout the
period.
14. INCOME SHARES
31/12/2002
#
Consolidated and Company
As at 10 January 2002 -
20,848,140 shares issued at 100p each 20,848,140
Allocation of issue costs (948,596)
Amortisation of issue costs 114,981
20,014,525
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 2002 was #22,099,028 based on
a market offer price of 106p per share.
15. SHARE CAPITAL
Consolidated and Company
Authorised #
50,000,000 Capital Shares of 10p each 5,000,000
Number of Share
Shares Capital
Capital shares of 10p each issued and #
fully paid
Balance issued during the period and
at 31 December 2002 9,816,146 981,615
The Capital Shares will be 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 Shareholders. Capital Shareholders (but not Income
Shareholders) will have the right at the Annual General Meeting in 2009 to vote
on the continuation of the Company and, if that vote is passed, at intervals of
five years thereafter. If the continuation vote is not passed, a special
resolution for the Company to be wound up will be proposed by 31 March 2010.
In accordance with International Accounting Standards, the Income Shares are
treated as a liability as described under accounting policies in note 2.
26
The Westbury Property Fund Limited
Notes to the Financial Statements (continued)
For the period from 10 January 2002 to 31 December 2002
16. SHARE PREMIUM 31/12/2002
#
Share premium at 10 January 2002 -
Proceeds on Capital Shares issued 8,834,531
Allocation of issue costs (446,638)
Share premium at 31 December 2002 8,387,893
17. RESERVES Profit and
Loss reserve
#
Consolidated
Reserves at 10 January 2002 -
Net profit for the period 67,774
Reserves at 31 December 2002 67,774
Company
Reserves at 10 January 2002 -
Net loss for the period (637,727)
Reserves at 31 December 2002 (637,727)
18. NET ASSET VALUE PER CAPITAL SHARE
The net asset value per Capital Share is based on the net assets attributable to
the Capital Shareholders of #9,437,282 and on 9,816,146 Capital Shares in issue
at the balance sheet date.
19. NOTE TO THE CONSOLIDATED CASH FLOW STATEMENT
10/01/2002
Reconciliation of net loss before investment result to to
net cash outflow from operating activities: 31/12/2002
#
Net loss before investment result (1,080,073)
Adjustment for non-cash items
Amortisation of income share issue costs 114,981
Amortisation of loan issue costs 21,514
(Increase) in debtors (41,320)
Increase in creditors 173,615
Net cash outflow from operating activities (811,283)
27
The Westbury Property Fund Limited
Notes to the Financial Statements (continued)
For the period from 10 January 2002 to 31 December 2002
20. FINANCIAL INSTRUMENTS AND INVESTMENT PROPERTIES
The main risks arising from the Group's financial instruments and investment
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
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 may be subject to receiving and/or paying fixed and floating interest.
Floating rate financial assets comprise the cash balances which bear interest at
rates based on bank base rates. Fixed rate financial liabilities comprise bank
debt and Income Shares issued by the Company.
21. COMMITMENTS
On 23 December 2002 the Company's subsidiary entered into a conditional contract
to acquire land and a 93,000 sq ft warehouse unit being developed in Worcester
in 2003 at a cost of around #5.8m. The contract is conditional on a lease being
signed between the developer and a tenant at an initial annual rent of circa
#477,000.
On 27 December 2002 the Company's subsidiary acquired land in Guildford for
#1.5m and is committed to acquiring a 25,500 sq ft Health & Fitness club being
developed on the land and pre-let to Esporta Health & Fitness Limited at an
initial rent of circa #306,000. The costs which will be incurred in 2003 amount
to circa #2.3m.
22. RELATED PARTY
Included in property management expenses is an amount of #66,000 payable to
Barlows Holdings Limited, a major shareholder in the Company, in accordance with
their property management agreement with the Company's subsidiary.
28
The Westbury Property Fund Limited
Notes to the Financial Statements (continued)
For the period from 10 January 2002 to 31 December 2002
23. RECONCILIATION OF MONTHLY NET ASSET VALUE AS PUBLISHED
TO NET ASSET VALUE PER ACCOUNTS
31/12/2002 NAV per
#000s Capital Share
pence
Net Asset Value reported to London Stock Exchange 9,828 100.12
Write down to valuation for accounts purposes (see below) (490) (4.99)
Net loss for the period before investment result and
dividends to income shareholders (38) (0.39)
Amortisation of income share and loan issue costs 137 1.40
Net Asset Value per accounts 9,437 96.14
In accordance with standard accounting practice, investment properties have been
included at their open market value in the accounts. In the monthly net asset
value calculation as reported to the London Stock Exchange and in accordance
with the Prospectus, no deficit or uplift in value is shown until acquisition
costs of individual properties have been fully absorbed by the increase in each
property's value as discussed in the Chairman's Statement.
29
NOTICE IS HEREBY GIVEN THAT THE FIRST ANNUAL GENERAL MEETING OF THE SHAREHOLDERS
OF THE WESTBURY PROPERTY FUND LIMITED (THE "COMPANY") WILL BE HELD AT TRAFALGAR
COURT, LES BANQUES, ST PETER PORT, GUERNSEY ON 28 MARCH 2003
A G E N D A
1. Chairman
To elect a Chairman of the Meeting.
2. Annual Report and Audited Financial Statements
To approve and adopt the Annual Report and Financial Statements of
the Company for the period ended 31 December 2002.
3. Auditors
To re-appoint Ernst & Young LLP as Auditors to the Company and to
authorise the Directors to determine the Auditors' remuneration.
4. Directors' Remuneration
To authorise and agree the remuneration of the Directors.
5. Any Other Business
By Order of the Board
For and on behalf of
GUERNSEY INTERNATIONAL
FUND MANAGERS LIMITED
Secretary
A Member entitled to attend and vote is entitled to appoint one or more proxies
to attend and vote in his stead. A proxy need not also be a Member.
THE WESTBURY PROPERTY FUND LIMITED
FORM OF PROXY
I/We,
being a Member of The Westbury Property Fund Limited hereby
appoint .....................................................................
of...........................................................................
or failing him, the Chairman of the Meeting as our proxy to attend and to vote
on our behalf and if necessary demand a poll at the First Annual General Meeting
of the Company to be held at Trafalgar Court, Les Banques, St. Peter Port,
Guernsey, Channel Islands on 28 March 2003 at 11a.m. and at any adjournment
thereof.
Please indicate with an 'X' in the appropriate box how you wish your vote to be
cast in respect of the Resolution. If you do not insert an 'X' in the
appropriate box your Proxy will vote or abstain at his discretion.
Resolution For Against
1. To approve and adopt the Annual Report and Financial Statements of the
Company for the period ended 31 December 2002.
2. To re-appoint Ernst & Young LLP as Auditors of the Company until the next
Ordinary General Meeting.
3. To authorise the Directors to determine the Auditors' remuneration.
4. To authorise and agree the remuneration of Directors.
................................................
Authorised Signatory
Date....................................2003
Notes
1. A member entitled to attend and vote is entitled to appoint one or more
proxies to attend and vote instead of him. A proxy need not be a member.
2. The instrument appointing a proxy shall be in writing under the hand of the
appointor or of his attorney duly authorised in writing or, if the
appointor is a corporation, either under seal or under the hand of an
officer or attorney duly authorised.
3. If it is desired to appoint some other person or persons as proxy or
proxies the name(s) of the Proxy or Proxies desired must be inserted in the
space provided and the alteration should be initialed.
4. Any corporation which is a Member of the Company may by resolution of its
Directors or other governing body, authorise such person as it thinks fit
to act as its representative at any meeting of the Company or of any
class of Members of the Company, and the person so authorised shall be
entitled to exercise the same powers (other than a power to appoint a
proxy) as that corporation could exercise if it were an individual Member
of the Company.
5. The instrument appointing a proxy and the power of attorney or other
authority (if any) under which it is signed or a notarially certified copy
of that power or authority shall be deposited at the Office not less than
48 hours before the time for holding the meeting or adjourned meeting at
which the person named in the instrument proposes to vote or, in the case
of a poll, not less than 24 hours before the time appointed for the taking
of the poll, and in default the instrument of proxy shall not be treated
as valid.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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