31st Jul 2009 07:00
Warner Estate Holdings PLC
Warner Estate Holdings PLC ("Warner Estate" or "Group"), the asset management and property investment company has today announced its preliminary results for the year ended 31 March 2009.
Financial Summary
Operating profit before net gains / losses on investments £16.5million (2008: £20.6million)
Recurring operating profit £28.0million (2008: £30.0million)(i)
Realised pre-tax loss £61.6million (2008: £17.3million profit)(ii)
Loss before income tax £297.1million (2008: £123.5million)
Net asset value per share 8p (2008: 549p)
Adjusted net asset value per share 8p (2008: 557p)(iii)
Loss per share 528.3p (2008: 203.6p loss)
Realised post-tax loss per share 112.7p (2008: 35.6p earnings)(ii)
Recurring post-tax earnings per share 10.8p (2008: 22.6p)(i)
Key Business Events
Completion of development at Market Hall, Bolton (Agora joint venture) in September 2008
Life of Ashtenne Industrial Fund, together with asset management agreement, extended to 2016
Disposal of the Pallasades shopping centre, Birmingham to Birmingham City Council
Formal development agreement for town centre regeneration project exchanged with Aylesbury District Council
(iii) Adjusted for deferred tax on fair value gains and other items
Philip Warner, Chairman of Warner Estate commented
" This has been a particularly difficult year for the Group, possibly the worst in our history, with a banking crisis, economic recession and the general malaise in the real estate industry resulting in plummeting property values. It is the latter that has had most impact on the Group's net asset values and hence put pressure on our financing, although over the period, we have maintained a substantial level of income.
A refinancing programme is, however, underway and discussions with all three of our lenders are progressing well. An update will be provided as soon as possible.
Warner Estate manages almost £2 billion of property across the UK, a substantial platform upon which it is our intention to grow the asset management business, rather than focus on being direct owners of property, using our skills to generate income and cut costs."
Date: 31 July 2009
For further information contact:
|
Warner Estate Holdings PLC |
City Profile |
|
Philip Warner, Chairman |
William Attwell |
|
Mark Keogh, Finance Director |
Jonathan Gillen |
|
Robert Game, Property Director |
Tel: 020-7448-3244 |
|
Tel: 020-7907-5100 |
|
|
Web: www.warnerestate.co.uk |
The full annual accounts will be released and available on the company's website on 31 July 2009 and the auditors report whilst not being qualified contains an emphasis of matter in relation to the Going Concern basis of preparation of the accounts.
CHAIRMAN'S STATEMENT
This has been a particularly difficult year for the Group, possibly the worst in our 118 year history. The second half of our financial year saw the decline in property values accelerate rapidly, following the collapse of Lehman Brothers last September and the resultant considerable turmoil in financial markets. We were not immune and the speed and steepness of that decline were too great for us to restore our gearing to normal levels, despite making sales of £80million. As a result, the Group's gross asset value is only just above its level of debt. As explained in more detail below, constructive discussions continue with our lenders and we have a reasonable expectation of concluding our refinancing later this year.
On a more positive note, the balance sheet does not include the full worth of our asset management business and our focus on income generation and cost cutting has produced a good relative asset management performance.
Results Overview
Net asset value per share fell from 549p to 8p and adjusted net asset value from 557p to 8p. The Group had its asset management business externally valued at £35million in January of this year and only £11million of the value is represented on the balance sheet. The difference would add 43p to the net asset value per share. On balance sheet net debt has been reduced from £347million to £285million at 31st March 2009. Since the year end the completion of more sales has reduced net debt still further to £238million at 30th July. Interest, excluding debt reorganisation costs of £21million, was covered 1.3 times (2008: 1.6 times) by recurring operating profit. The average cost of debt fell from 5.84% to 3.44%.
Recurring operating profit fell by 7% to £28.0million (2008: £30.0million). This was mainly a consequence of falling property values impacting both on the ability of funds, in which the Group is invested, to distribute and on value based asset management fees. Offsetting these was a reduction in administrative costs of £2.6million for the year, an annualised £3.0million as referred to in our Interim Management Statement on 17th February, and we expect to make further savings in the current year. The addition of valuation movements produced an overall loss of £293.8million (2008: £113.5million).
The fall in property values was mitigated by good asset management. The outward movement in equivalent yields was 2.51%, beating the IPD benchmark of 2.62%, and rental values were steady compared with the benchmark decline of 4.9%. The void rate at 31st March 2009 was 11.8% compared to the benchmark's 11.7%. Recurring earnings per share, which exclude fair value movements, were 10.8p (2008: 22.6p)
The previous year's non recurring operating profit of £8million has turned to a loss of £52million, most of which is accounted for by losses on sales of properties, undertaken with a view to bringing down the overall level of debt.
Equity shareholders' funds fell to £4million from £305million, most of this fall being due to the net impact of the decline in the value of the Group's property assets held either directly or indirectly through joint ventures or investments in funds.
A more detailed analysis of the year will be found in the Reviews from the Property Director and the Finance Director that follow this statement.
It is with considerable regret that the Board cannot recommend payment of a dividend for this financial year. A Property Income Distribution (PID) for 2009 has been calculated as 4.29p in accordance with REIT requirements. However the amount paid by way of PID in September 2008 was in excess of that required by 6.25p and the Board has determined that it would be prudent to offset this year's requirement against that overpayment.
Refinancing
The Group is currently in discussions with its three lenders, Royal Bank of Scotland, Bank of Scotland and Barclays, to extend and amend its current banking facilities in the case of two and to renew in the case of the third to ensure that the terms of these facilities are appropriate for the Group's requirements. The third facility is in effect being rolled on a periodic basis and the Directors are confident that this will continue until renewal. In addition to the current facilities, the Group has asked its lenders for a working capital facility of between 1% and 2% of its total existing facilities. Each lender has currently reserved its rights to formally request the testing of certain financial covenants as discussions continue. The Directors would not expect the covenants to be met if tested.
The Directors have prepared trading and cash flow forecasts for a period of three years from the date of approval of these accounts which project that the total revised facilities requested are not exceeded over the duration of the forecasts. Acknowledging the uncertainties in the property market and in the economy as a whole, the Directors have stress tested the assumptions in their forecasts with respect to rental income and property costs, overheads, management fee income and related costs, and distributions from equity investments in funds. The Directors consider their forecasts to be reasonable, taking into account the above cash flow sensitivities that they have modelled, based on the information available to them at the time of approval of these financial statements.
In the event that additional funds are required in excess of the requested facilities as a result of the Group not substantially achieving its forecasts, the Directors would have to supplement, renew or replace the facility or facilities with those that are appropriate to the Group's revised requirements.
Until such time that the discussions with the banks are successfully concluded and new facilities are in place, the Board recognises that uncertainty over the ability of the Company and/or individual group companies to continue as a going concern must remain. However, after making enquiries and considering the matters noted above, the Directors have a reasonable belief that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For those reasons, they continue to adopt the going concern basis in preparing these financial statements, which do not include any adjustments that would result from the going concern basis of preparation being inappropriate.
The Directors will continue to provide updates regarding discussions with their lenders as and when there are material developments.
Strategy and Outlook
The Group's current situation merits further explanation. Building the asset management business does not require high levels of gearing. The Board's internal gearing limit for the Group was breached through falling values at a time when the Group had purchased a number of properties with a view to launching a further fund.
Although sales and falling values have reduced property under management, including that wholly owned, to £1.9billion (2008: £2.9billion), this is still a substantial platform upon which it is our intention to grow the asset management business, playing to our strengths of improving the quality and quantity of income from property. Clearly, investment on our own account will be constrained until values improve and our balance sheet is strengthened.
The decline in property values, which has impacted upon the Group in so many ways as described above, does now appear to be levelling out. There remains a risk to rental income from the effect of recession upon our tenants but to date that income has been ahead of our expectations and bad debts represented only 0.1% of last year's rental income. While the Group's primary objective is to conclude our refinancing negotiations, with that achieved, we shall seek to grow our asset management business and build on our underlying profitability.
People are key to that business. The last year has seen many changes including, regrettably, as a consequence of our reshaping of the business for the current environment, a reduction in staff numbers. In particular, Peter Collins, Finance Director, retired and Michael Stevens, Property Director, left to seek fresh challenges. On behalf of shareholders, I thank all staff, both those who have left and those who remain, for their contribution in these difficult times. I am confident that the current team will overcome the hurdles we face and rebuild the fortunes of the Group.
Philip Warner
Chairman
PROPERTY REVIEW
OVERVIEW
During this turmoil, our total return for assets under management recorded minus24.1% which in absolute terms is disappointing; albeit broadly in line with the industry benchmark of minus 25.1%. We remain committed to all three main sectors, retail, industrial and offices and we ensure vital contact with our customers and markets through seven regional offices staffed by specialists. As a consequence tenant retention rates are very good and rent collection statistics from the £157million per annum rent roll show an average quarterly payment rate of 97% within 28 days of due date. The average lot size of managed assets is £3.8million, giving some protection from the exaggerated capital declines suffered by high value assets where debt availability and therefore liquidity has been severely impacted.
Particular highlights last year were the extension of the Ashtenne Industrial Fund asset management contract to 2016, the completion of the 100,000 sq ft extension of Market Hall Shopping Centre in Bolton for Agora and the pre-letting of two stores to Waitrose in Weston super Mare and Aylesbury for the Wholly Owned portfolio.. Since year end we have completed the 56,000 sq ft refurbishment of 60 New Broad Street, a Grade A specification office building in the City of London and pre-let a substantial headquarters office building (45,000 sq ft) in Wimbledon, South West London for the Apia Regional Office Fund.
PERFORMANCE
WHOLLY OWNED INVESTMENTS
|
Value:
|
£267.5m
|
|
No of Assets:
|
55
|
|
Average Asset Value:
|
£4.9m
|
|
Rental Income:
|
£23.1m pa
|
|
Average Unexpired Lease Expiry
|
8.4 years
|
|
Void rate
|
7.6%
|
The Wholly Owned Portfolio achieved an income return of 6.8% (vs 6.6% benchmark), rental value decline of minus 1.5% (vs minus 4.9%) and initial yield of 7.8% (vs 7.7%), all better than industry average.
The Portfolio has undergone an extensive sales programme over the course of the year. During the year, disposals amounted to £119.5million, (including the St. John's Wood retail parade which completed on 3rd April 2009), and since then a further £22.0million has either completed or exchanged. The assets sold during the year, including St John's Wood, were at a gross deficit of £34.0million or 22% lower than their March 2008 valuation compared to the 12 month IPD Benchmark capital decline of minus 29.6%. The most significant sales were The Royals Shopping Centre, Southend for £30.7million during the year and St John's Wood High Street, London for £39.1million post year end.
The combined effect of this activity has been a reduction in the average lot size from £6.6million to £4.9million. The sales programme has had a minimal impact on the portfolio weighting towards London and the South East (now 86%, previously 87%), and the portfolio is now relatively more exposed to the Office sector and less so to Shopping Centres.
Like-for-like income has increased over the year by £0.6million and consequently the void rate has risen to 7.6% by ERV (compared to 3.6% as at March 2008), yet this remains below the IPD Benchmark of 11.7%.
The net initial yield on the portfolio (excluding buildings held empty for redevelopment) is 7.8%, whilst rental values have declined by 1.5% over the year. The value of the portfolio's standing investments fell by 25.1%, compared to the IPD Quarterly Universe Benchmark of minus 29.6%.
Case Studies:
Hale Leys Shopping Centre, Aylesbury
The Group has continued with its involvement in the potential 250,000 sq ft mixed use extension (subject to planning) to the existing centre. Two substantial anchor pre-lets have been conditionally secured, ahead of the formal planning process:
1.) Debenhams (exchanged contracts)
80,000 sq ft
25 year lease with rent reviews every 5 years to the higher of passing rent or open market rental value.
2). Waitrose (exchanged contracts)
31,000 sq ft
20 year lease, with rent reviews every 5 years on mixed sales
Herluin Way, Weston super Mare
Waitrose signed a new lease of a 34,218 sq ft former retail warehouse for 36 years with a break after 21 years at £20 per sq ft. The value of this property increased by 114% over the year which has subsequently been fully realised through a successful sale.
EQUITY SHARE PORTFOLIO
Our Equity Share Portfolio, which reflects our share of properties in seven businesses, comprises £656.3 million and generated a total return of minus 23.2% compared with the IPD Quarterly Index of minus 25.1%. The net initial yield moved out 215bps to 7.9% against the benchmark fall of 221bps over the same period.
Rental income increased on a like-for-like basis by 2.2% to £55.6 million pa. This portfolio's value fell on a like-for-like basis by 27.6% compared to the benchmark decline of 29.6%.
Estimated Rental Value declined by 0.7% to £66.4 million pa, ahead of the IPD Benchmark of minus 4.9%.
The void rate is 7.0% by floor space and 8.8% by ERV, compared with the IPD benchmark of 11.7%.
|
March 2009 |
||||||
|
Share of Capital Value |
Net Rental Income |
ERV |
Net Initial Yield |
Equivalent Yield |
Net Initial Yield Movement |
|
|
£m |
£m |
£m |
% |
% |
bps |
|
|
Wholly Owned* |
267.5 |
23.1 |
25.7 |
7.78% |
8.29% |
+212 |
|
Agora Shopping Centres JV |
83.3 |
6.5 |
9.5 |
7.40% |
9.39% |
+202 |
|
Agora Max Shopping Centres JV |
43.5 |
3.8 |
5.2 |
8.22% |
10.09% |
+276 |
|
Radial Distribution JV |
98.3 |
9.1 |
9.3 |
9.05% |
8.79% |
+240 |
|
Greater London Offices JV |
35.8 |
2.8 |
3.0 |
7.57% |
7.17% |
+231 |
|
Apia Regional Office Fund |
75.7 |
5.8 |
7.9 |
6.98% |
8.58% |
+101 |
|
Ashtenne Industrial Fund* |
52.2 |
4.5 |
5.7 |
8.74% |
10.13% |
+265 |
|
Total |
656.3 |
55.6 |
66.4 |
7.92% |
8.74% |
+215 |
* Properties purposely held vacant for redevelopment are excluded from initial yield calculation.
EQUITY SHARE SECTOR STATISTICS
|
Number of Properties |
Share of Capital Value |
Annual Rent Roll |
ERV |
Net Initial Yield |
Weighting |
|
|
£m |
£m |
£m |
% |
% |
||
|
Retail |
34 |
259.9 |
19.3 |
26.1 |
7.4% |
39.6% |
|
Office |
54 |
226.9 |
20.5 |
23.1 |
6.9% |
34.5% |
|
Distribution |
16 |
98.3 |
9.1 |
9.3 |
9.1% |
|
|
Industrial |
346 |
63.6 |
6.0 |
6.9 |
9.3% |
|
|
Distribution and Industrial |
362 |
161.9 |
15.1 |
16.2 |
9.2% |
24.7% |
|
Other Property |
43 |
7.6 |
0.7 |
1.0 |
n/a |
1.2% |
|
Total |
493 |
656.3 |
55.6 |
66.4 |
7.9% |
100.0% |
AGGREGATE PORTFOLIO
Our ungeared property total return in the Aggregate Portfolio, the £1.9bn we manage across all businesses, was minus 24.1% and compares against the IPD Quarterly Index of minus 25.1%, for the 12 months to March 2009.
During the year our standing investments (those held throughout the 12 months and excluding sale and purchases), fell in value by 28.4%, a decline of £741million, against the benchmark fall of 29.6%.
The net initial yield of our Aggregate Portfolio is 8.2%, 52bps higher than the IPD Benchmark of 7.7%. Our income fell by 2.1% (minus £3.3million) over the period, to £157.2million pa.
Across the Aggregate Portfolio our void rate is now 11.8%, this has increased by 44% on last year and compared to the 11.7% in the IPD Benchmark. Excluding the Ashtenne Industrial Fund void, which is deliberately held in the 10% to 14% range, our underlying void is 5.3% by floor space and 7.0% by ERV.
|
March 2009 |
||||||||
|
Number of Properties |
Share of Capital Value |
Net Rental Income |
ERV |
Net Initial Yield |
Equivalent Yield |
Net Initial Yield Movement |
||
|
£m |
£m |
£m |
% |
% |
bps |
|||
|
Wholly Owned* |
55 |
267.5 |
19.1 |
25.7 |
7.78% |
8.29% |
+212 |
|
|
Agora Shopping Centres JV |
8 |
166.6 |
13.0 |
19.0 |
7.40% |
9.39% |
+202 |
|
|
Agora Max Shopping Centres JV |
2 |
87.0 |
7.6 |
10.4 |
8.22% |
10.09% |
+276 |
|
|
Radial Distribution JV |
16 |
196.5 |
18.3 |
18.6 |
9.05% |
8.79% |
+240 |
|
|
Greater London Offices JV |
2 |
71.7 |
5.5 |
6.0 |
7.57% |
7.17% |
+231 |
|
|
Apia Regional Office Fund |
18 |
276.0 |
21.3 |
28.8 |
6.98% |
8.58% |
+101 |
|
|
Ashtenne Industrial Fund* |
392 |
800.9 |
68.4 |
88.0 |
8.74% |
10.13% |
+265 |
|
|
Total |
493 |
1,866.2 |
157.2 |
196.5 |
8.19% |
9.32% |
+228 |
|
* Properties purposely held vacant for redevelopment are excluded from initial yield calculation.
KEY STATISTICS
|
Total Under Management |
||
|
31 March 2009 |
31 March 2008 |
|
|
Capital Value |
£1,866.2m |
£2,941.5m |
|
Annualised Net Income |
£157.2 |
£180.7m |
|
Initial Yield |
8.19% |
5.91% |
|
Average Unexpired Lease Term |
6.70 years |
7.12 years |
|
Void Rate |
11.8% |
7.8% |
|
Number of Properties |
493 |
532 |
|
Average Lot Size |
£3.8m |
£5.5m |
OUTLOOK
Recent months have brought a significant increase in investor demand for prime highly- secure real estate assets leading to a market slowing in the pace of outward yield movement.
The effect of a severely weakened economy continues to have a marked impact on all occupier markets. Generally rents will come under pressure as weak occupiers struggle and strong occupiers use market conditions to negotiate keener deals.
Hands on landlords will focus now, more than ever before, on retaining existing tenants and minimising asset leakage costs and Warner Estate is one such landlord.
Robert Game
Property Director
FINANCE REVIEW
Results for the year ended 31 March 2009
The tables below break out the key drivers of the results as set out in the Financial Statements. We have analysed the share of joint ventures' post tax results, shown as one line in the income statement, across each line item, where applicable, in the tables below. The share of joint ventures' net interest has been included in recurring operating profit rather than net interest below, in order to show the contribution from the joint ventures.
|
Year ended 31 March 2009 |
Year ended 31 March 2008 |
|||
|
£m |
£m |
|||
|
Recurring operating profit |
28.0 |
30.0 |
||
|
Performance fees |
(4.6) |
(0.9) |
||
|
Non recurring operating (loss) / profit |
(51.8) |
8.0 |
||
|
Operating (loss) / profit before financing costs |
(28.4) |
37.1 |
||
|
Net interest |
(20.9) |
(19.5) |
||
|
Debt reorganisation costs |
(12.3) |
(0.3) |
||
|
(33.2) |
(19.8) |
|||
|
Realised (loss) / profit before tax |
(61.6) |
17.3 |
||
|
Current tax (charge) / credit |
(1.2) |
2.7 |
||
|
Realised (loss) / profit after tax |
(62.8) |
20.0 |
||
|
Valuation movements (net of deferred tax) |
(231.0) |
(133.5) |
||
|
Loss for period |
(293.8) |
(113.5) |
Debt reorganisation costs relate to a £12million break cost on the cancellation of 3 swaps held with Barclays in November 2008. The remaining £0.3million was the cost paid on repayment of the fixed rate debt facility with Canada Life.
Recurring operating profit is down 7% on the prior year as analysed below:
|
Year ended 31 March 2009 |
Year ended 31 March 2008 |
|||
|
£m |
£m |
|||
|
Operating profit before net movements on investments |
16.5 |
20.6 |
||
|
Distribution from funds & return of capital from listed investments |
3.7 |
6.1 |
||
|
Share of JV profit / (loss) before fair value movement, capital profits & tax |
1.8 |
2.3 |
||
|
Performance fees - net provision |
4.6 |
0.9 |
||
|
Other non-recurring items |
1.4 |
0.1 |
||
|
Recurring operating profit |
28.0 |
30.0 |
The main reason behind the decrease in recurring operating profit is a reduction in distributions from the Group's investments in Apia and AIF. This is due to the prudent approach, especially by Apia, to retain cash to ensure adequate headroom is maintained against its financial debt covenants. Falling property values have also reduced the asset management fees received from both of these funds, however they have been partly offset by fees received for lettings, disposals and developments on AIF.
The Group's interest costs have increased on last year mainly as a result of a £1.3million provision made against interest receivable from the Greater London Offices joint venture. We have taken the approach of providing against the £3.6million capital amount along with the £1.3million associated interest accrued to 31 March 2009.
We have offset much of these additional costs by continuing the review of administrative costs which began last year. Total administrative costs which are partly allocated between property management expenses and asset management expenses have been reduced by £2.6million to £15.0million in the year to 31 March 2009. The review is still ongoing and we aim to reduce these costs further in the year to March 2010.
Recurring Profit
The net interest cost has increased, as shown in the table below, due to the £1.3million provision made against interest accrued on loan notes due from the Greater London Offices joint venture as described above.
|
Year ended 31 March 2009 |
Year ended 31 March 2008 |
|||
|
£m |
£m |
|||
|
Recurring operating profit |
28.0 |
30.0 |
||
|
Net interest |
(20.9) |
(19.5) |
||
|
Recurring profits before performance fees |
7.1 |
10.5 |
Performance Fees
In the year to March 2008 we provided £1.6million on the potential claw back of performance fees received from Apia. As the maximum Group exposure to this claw back is £2.5million we have now provided for the remaining £0.9million. We also believe it is prudent to provide for the full performance fees of £3.7million from Agora Max. Although we are negotiating a payment plan and are hopeful of recovering the full amount we are cognizant of the current market and the current financial position of Agora Max.
Non-recurring Operating Profit
|
Year ended 31 March 2009 |
Year ended 31 March 2008 |
|||
|
£m |
£m |
|||
|
(Loss) / profit on sale of Group investment properties and investments |
(24.9) |
8.2 |
||
|
Share of loss on sale of joint ventures' investment properties and investments |
(21.9) |
- |
||
|
Other net non-recurring costs |
(5.0) |
(0.2) |
||
|
(51.8) |
8.0 |
Other non-recurring costs of £5.0million include a provision of £3.6million against the loan notes from Greater London Offices as described above and a provision of £1.9million against the leasehold liability portfolio (2008: £1.2million).
Valuation Movements
|
Year ended 31 March 2009 |
Year ended 31 March 2008 |
|||
|
£m |
£m |
|||
|
Property |
||||
|
Wholly Owned |
(98.8) |
(50.7) |
||
|
Share of Joint Ventures (1) |
(43.5) |
(63.3) |
||
|
Investment in Funds |
(51.4) |
(21.2) |
||
|
82% |
(193.7) |
91% |
(135.2) |
|
|
Other Investments |
4% |
(9.0) |
3% |
(3.9) |
|
Swaps & Caps Marked to Market |
||||
|
Wholly Owned |
(3.0) |
(1.9) |
||
|
Share of Joint Ventures |
(29.8) |
(7.4) |
||
|
14% |
(32.8) |
6% |
(9.3) |
|
|
Total Valuation Movements |
100% |
(235.5) |
100% |
(148.4) |
|
Deferred Tax on Valuation Movements |
4.5 |
14.9 |
||
|
(231.0) |
(133.5) |
|||
|
(1.) The share of joint ventures; valuation losses is restricted by £75.4million due to the net liabilities of the joint ventures. |
||||
The movement in other investments relates to a reduction in the value of the Group's unlisted investment in Bride Hall Group Limited of £9.0million.
Taxation
During the year the Group broke derivative financial instruments which led to a charge of £12million to the income statement. This charge has resulted in the Group exceeding the interest cover ratio of 1.25 required under the REIT rules giving rise to a tax charge of
£0.8million. The Financial Act 2009 has amended the REIT rules retrospectively that may reduce this charge to £Nil. In addition as the asset management business is profitable we have provided for an estimated £0.1million tax charge on the profit in the current year, along with a prior year under provision of £0.1million, which altogether amounts to £1.0million.
As a REIT, both revenue and capital profits which arise within the REIT part of the Group are not taxable. The Group continues to account for deferred tax on listed and unlisted investments as these do not fall within the REIT regulations although any distribution income from the Funds is not subject to tax. Movements on the value of interest rate swaps are also subject to deferred tax.
Earnings per Share
Losses per share were 528.3p (2008: 203.6p losses) of which fair value movements on properties and investments were losses of 415.6p per share (2008: 239.2p losses). Realised losses per share, which exclude these fair value movements, were 112.7p (2008: 35.6p earnings) and recurring earnings per share, which also exclude fair value movements, were 10.8p (2008: 22.6p).
Dividends
Under the REIT rules, 90% of the profits of the property rental business (the REIT profits) for the year must be distributed by way of a dividend known as a Property Income Distribution ("PID"). This distribution of the dividend will be made net of 20% withholding tax unless shareholders have filled in the appropriate forms, allowing the dividend to be paid gross, details of which are on the Group's website.
We are seeking to allocate the dividend paid in September 2008 to the year ending 31 March 2009. The PID for 2009 has been calculated as 4.29p, which is covered by the overpayment of 6.25p in 2008.
Cashflow
|
March 2009 |
March 2008 |
||
|
£m |
£m |
||
|
Operating profit before net gains on investments |
16.5 |
20.6 |
|
|
Distributions received from funds |
4.1 |
6.0 |
|
|
Working capital movements |
(1.2) |
2.7 |
|
|
Adjusted cash generated from operations |
19.4 |
29.3 |
|
|
Net interest paid |
(18.7) |
(18.5) |
|
|
Corporation tax (paid) / received |
(0.1) |
0.4 |
|
|
Net disposals / (acquisitions ) |
76.9 |
(49.8) |
|
|
Loans to joint ventures |
(7.0) |
- |
|
|
Repayment of JSRE loan notes |
(2.7) |
(16.4) |
|
|
Net repayment of bank loans |
(25.4) |
(32.4) |
|
|
Net proceeds from issue of ordinary share capital |
- |
0.3 |
|
|
Dividends paid |
(6.3) |
(12.6) |
|
|
Other |
(0.9) |
(1.1) |
|
|
Net cash inflow / (outflow) |
35.2 |
(100.8) |
Balance Sheet
The movement in equity shareholders' funds is analysed in the table below. The movement in the year includes the Group's share of joint ventures.
|
|
£m
|
|
Pence per share
|
|
Equity shareholders’ funds at 31 March 2008
|
305.2
|
|
548.5
|
|
Change in number of shares in issue
|
|
|
2.7
|
|
|
|
|
551.2
|
|
Movement in the year to 31 March 2009
|
|
|
|
|
Realised loss before fair value losses
|
(61.6)
|
|
(111.2)
|
|
Net fair value losses
|
(235.5)
|
|
(425.3)
|
|
Taxation – current
|
(1.2)
|
|
(2.2)
|
|
Taxation – deferred
|
4.5
|
|
8.1
|
|
Loss for the year
|
(293.8)
|
|
(530.6)
|
|
|
|
|
|
|
Other equity movements
|
|
|
|
|
Dividends paid
|
(6.3)
|
|
(11.4)
|
|
Investment in own shares
|
0.1
|
|
0.2
|
|
Share based payments reserve
|
(0.4)
|
|
(0.7)
|
|
Actuarial losses on retirement benefit obligations
|
(0.6)
|
|
(1.1)
|
|
Equity shareholders’ funds at 31 March 2009
|
4.2
|
|
7.6
|
|
|
|
|
|
Of the £301.0million decline in equity shareholders funds, £231.0million arises from valuation movements (net of deferred tax) which have been detailed above and are almost entirely due to the net impact of the decline in the value of the Group's property assets held either directly or indirectly through joint ventures or investments in funds, along with £46.8million relating to losses on disposals of investment properties, both for the Group and share of joint ventures. These movements are partly offset by recurring profits after taxation of £5.9million before dividends.
Due to the fall in value of the Group's investments which are subject to deferred tax, there is no deferred tax liability at 31 March 2009. As shown in the table below, the equity shareholders' funds as at 31 March 2008 have been adjusted for the remaining deferred tax on fair value gains on the Group's investment in the Funds, Apia and AIF, along with our share of the fair value gains in the joint ventures, Agora Max and Greater London Offices, which have not been elected for REIT status. In addition, the fixed rate debt was repaid during the year; however we have adjusted the 2008 comparatives for the fair value on fixed rate debt which is not included on the balance sheet in the prior year.
|
31 March 2009 |
31 March 2008 |
||||
|
£m |
Pence per share |
£m |
Pence per share |
||
|
Equity shareholders' funds |
4.2 |
8 |
305.2 |
549 |
|
|
Add back deferred tax on fair value gains (including JVs) |
- |
- |
4.8 |
8 |
|
|
(Less) / add fair value adjustments on fixed rate debt, net of tax |
- |
- |
(0.1) |
- |
|
|
Adjusted equity shareholders' funds |
4.2 |
8 |
309.9 |
557 |
|
Borrowings
Total net borrowings for the Group as at 31 March 2009 were £285million (2008: £347million).
|
On balance sheet |
Share of joint ventures |
Share of funds |
Total |
||||
|
£m |
£m |
£m |
£m |
||||
|
Net short-term (cash) / debt |
284.8 |
(11.5) |
(7.4) |
265.9 |
|||
|
Net long term debt |
- |
347.8 |
80.5 |
428.3 |
|||
|
Total net debt at 31 March 2009 |
284.8 |
336.3 |
73.1 |
694.2 |
|||
|
Of which: |
|||||||
|
Total net recourse debt |
284.8 |
- |
- |
284.8 |
|||
|
Long-term non-recourse debt |
- |
336.3 |
73.1 |
409.4 |
|||
|
Total net debt at 31 March 2008 |
346.7 |
332.6 |
89.2 |
768.5 |
Gearing has risen substantially over the last 6 months due to the devaluation of the Group's assets as detailed above. Net debt has however been reduced over the year through retained profits and property disposal proceeds. Property disposals completed post year end have resulted in a net cash inflow of £52 million, which together with changes in working capital has been used to reduce the level of net debt to £238million at 30 July 2009.
All on balance sheet debt has been shown as short-term debt, however the Group is currently in negotiations to extend its debt facilities as described in the Chairman's Statement and note 1 to the financial statements under basis of preparation.
The Group's average cost of debt at 31 March 2009 was 3.44% (March 2008: 5.84%).
Hedging
Net Debt as at 31 March 2009
|
Group on Balance Sheet |
Share of Joint Ventures |
|||
|
£m |
£m |
|||
|
Floating rate debt |
284.8 |
336.3 |
||
|
284.8 |
336.3 |
|||
|
Percentage of floating rate loans at 31 March 2009 |
||||
|
Covered by swaps |
40% |
97% |
||
|
Covered by caps |
- |
4% |
||
|
40% |
101% |
|||
|
Percentage of floating rate loans at 31 March 2008 |
||||
|
Covered by swaps |
22% |
73% |
||
|
Covered by caps |
47% |
23% |
||
|
69% |
96% |
|||
Three callable swaps were put in place during the year, a £50million hedge at 3.08% effective from 28 November 2008 to 31 March 2010; a £20million hedge at 1.92% effective from 2 December 2008 to 31 March 2010; and a £25million hedge at 4.40% effective from 31 December 2008 to 30 September 2033. Three callable swaps amounting to £75million were cancelled during the year at a cost of £12million, and in addition the Group's £150million CAP at 6.25% was cancelled during the year.
The Group's share of the total £672.6million of net debt in the joint ventures is hedged by caps amounting to £27.0million and swaps of £655.5million.
Leasehold Liability Portfolio
The balance sheet includes £3.0million (£12.0million at acquisition) in respect of liabilities acquired with the portfolio of properties purchased in December 2005 from the Co-operative Insurance Society. At the acquisition date, there were 105 separate leasehold liabilities of which 36 are remaining with 11 of these sublet as at 31 March 2009. £0.6million has been expensed to the income statement which has been treated as a recurring cost and a further £0.2million of surrender premiums have been expensed and treated as non-recurring costs. The Group has reassessed the value of these liabilities at 31 March 2009 using an independent model that has been used since the purchase of this portfolio of liabilities to assess its value, as a result of which the provision was increased by a further £1.7million due to the current market conditions. Therefore the total impact on the income statement is a cost of £2.4million, of which £1.9million has been treated as non-recurring.
Mark Keogh
Finance Director
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2009
|
Notes |
2009 |
2008 |
|
|
£m |
£m |
||
|
Revenue |
42.5 |
46.1 |
|
|
Rental and similar income |
30.2 |
28.7 |
|
|
Property management expenses |
(10.0) |
(5.8) |
|
|
Service charge and similar income |
4.7 |
4.3 |
|
|
Service charge expense and similar charges |
(5.7) |
(5.1) |
|
|
Net rental income |
2 |
19.2 |
22.1 |
|
Revenue from asset management activities |
7.6 |
13.1 |
|
|
Asset management expenses |
(9.1) |
(12.6) |
|
|
Net income from asset management activities |
2 |
(1.5) |
0.5 |
|
Administrative expenses |
(1.2) |
(2.0) |
|
|
Operating profit before net gains on investments |
2 |
16.5 |
20.6 |
|
Net loss from fair value adjustments on investment properties and impairment of net investment in finance leases |
13/19 |
(98.8) |
(50.7) |
|
Net loss from fair value adjustment on investments |
16/17 |
(60.4) |
(25.2) |
|
(Loss) / profit on sale of investment properties |
5 |
(24.9) |
8.1 |
|
Profit on sale of finance lease assets |
- |
0.1 |
|
|
Operating loss |
(167.6) |
(47.1) |
|
|
Finance income |
6 |
3.4 |
7.5 |
|
Finance expense |
7 |
(32.9) |
(21.2) |
|
Change in fair value of derivative financial instruments |
22 |
(3.0) |
(1.9) |
|
Share of joint ventures' post tax (losses) / profits |
15 |
(97.0) |
(60.8) |
|
Loss before income tax |
(297.1) |
(123.5) |
|
|
Taxation - current |
8 |
(1.0) |
2.9 |
|
Taxation - deferred |
8 |
4.3 |
7.1 |
|
Loss for the year |
(293.8) |
(113.5) |
|
p |
p |
||
|
Loss per share |
11 |
(528.30) |
(203.61) |
|
Fully diluted loss per share |
11 |
(518.64) |
(200.99) |
BALANCE SHEETS
|
Group |
Company |
||||
|
Notes |
2009 |
2008 |
2009 |
2008 |
|
|
£m |
£m |
£m |
£m |
||
|
ASSETS |
|||||
|
Non-current assets |
|||||
|
Goodwill |
12 |
11.3 |
11.3 |
- |
- |
|
Investment properties |
13 |
267.8 |
458.6 |
- |
- |
|
Plant and equipment |
14 |
0.4 |
0.5 |
- |
- |
|
Investments in joint ventures |
15 |
- |
90.0 |
- |
- |
|
Investments in funds |
16 |
47.5 |
98.9 |
- |
- |
|
Investments in listed and unlisted shares |
17 |
0.3 |
9.8 |
192.5 |
370.7 |
|
Net investment in finance leases |
19 |
2.4 |
3.8 |
- |
- |
|
Deferred income tax assets |
23 |
0.2 |
1.9 |
- |
- |
|
Derivative financial assets |
22 |
- |
0.6 |
- |
- |
|
Trade and other receivables |
18 |
1.0 |
0.6 |
- |
- |
|
330.9 |
676.0 |
192.5 |
370.7 |
||
|
Current assets |
|||||
|
Trade and other receivables |
18 |
9.7 |
27.5 |
55.1 |
415.6 |
|
Current income tax assets |
- |
1.2 |
0.3 |
2.3 |
|
|
Cash and cash equivalents |
9.0 |
55.5 |
1.2 |
7.1 |
|
|
18.7 |
84.2 |
56.6 |
425.0 |
||
|
Total assets |
349.6 |
760.2 |
249.1 |
795.7 |
|
|
LIABILITIES |
|||||
|
Non-current liabilities |
|||||
|
Borrowings, including finance leases |
20/21 |
(3.6) |
(350.5) |
- |
(144.1) |
|
Trade and other payables |
25 |
(4.3) |
(9.9) |
(0.5) |
(0.6) |
|
Derivative financial liabilities |
22 |
(5.4) |
(2.2) |
- |
- |
|
Deferred income tax liabilities |
23 |
- |
(6.2) |
- |
- |
|
Retirement benefit obligations |
3 |
(0.9) |
(0.1) |
- |
- |
|
Provisions for other liabilities and charges |
24 |
(1.6) |
(1.4) |
- |
- |
|
(15.8) |
(370.3) |
(0.5) |
(144.7) |
||
|
Current liabilities |
|||||
|
Borrowings, including finance leases |
20/21 |
(293.9) |
(55.5) |
- |
- |
|
Trade and other payables |
25 |
(31.7) |
(26.0) |
(244.4) |
(246.2) |
|
Current income tax liabilities |
(0.1) |
- |
- |
- |
|
|
Provisions for other liabilities and charges |
24 |
(3.9) |
(3.2) |
- |
- |
|
(329.6) |
(84.7) |
(244.4) |
(246.2) |
||
|
Total liabilities |
(345.4) |
(455.0) |
(244.9) |
(390.9) |
|
|
Net assets |
4.2 |
305.2 |
4.2 |
404.8 |
|
|
EQUITY |
|||||
|
Capital and reserves attributable to the Company's equity holders |
|||||
|
Share capital |
26 |
2.8 |
2.8 |
2.8 |
2.8 |
|
Reserves |
27 |
2.5 |
303.6 |
2.5 |
403.2 |
|
Investment in own shares |
29 |
(1.1) |
(1.2) |
(1.1) |
(1.2) |
|
Total equity |
4.2 |
305.2 |
4.2 |
404.8 |
|
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the year ended 31 March 2009
|
Group |
Company |
||||
|
Notes |
2009 |
2008 |
2009 |
2008 |
|
|
£m |
£m |
£m |
£m |
||
|
(Loss) / profit for the year |
(293.8) |
(113.5) |
(394.0) |
199.0 |
|
|
Actuarial (losses) / profits on retirement benefit obligations recognised directly in equity |
3 |
(0.8) |
0.2 |
- |
- |
|
Deferred tax arising on retirement benefit obligations |
3 |
0.2 |
(0.1) |
- |
- |
|
Total recognised income and expense for the year attributable to equity shareholders |
(294.4) |
(113.4) |
(394.0) |
199.0 |
|
CASH FLOW STATEMENTS
For the year ended 31 March 2009
|
Group |
Company |
||||
|
Notes |
2009 |
2008 |
2009 |
2008 |
|
|
£m |
£m |
£m |
£m |
||
|
Cash flows from operating activities |
|||||
|
Cash generated from operations |
31 |
12.6 |
6.9 |
144.2 |
(3.4) |
|
Interest paid |
(19.2) |
(20.9) |
(0.2) |
(0.6) |
|
|
Interest received |
0.5 |
2.1 |
- |
1.1 |
|
|
UK Corporation tax (paid) / received |
(0.1) |
0.4 |
0.5 |
(0.7) |
|
|
Net cash outflow from operating activities |
(6.2) |
(11.5) |
144.5 |
(3.6) |
|
|
Cash flows from investing activities |
|||||
|
Purchase of investment properties and capital expenditure |
(10.6) |
(112.2) |
- |
- |
|
|
Sale of investment properties |
87.5 |
62.5 |
- |
- |
|
|
Purchase of plant and equipment |
- |
(0.1) |
- |
- |
|
|
Return of capital from listed shares |
1.0 |
- |
- |
- |
|
|
Loans to joint ventures |
(7.0) |
- |
- |
- |
|
|
Distributions received from funds |
4.1 |
6.0 |
- |
- |
|
|
Dividends received from joint ventures |
- |
0.8 |
- |
- |
|
|
Net cash inflow / ( outflow) from investing activities |
75.0 |
(43.0) |
- |
- |
|
|
Cash flows from financing activities |
|||||
|
Net proceeds from issue of ordinary share capital |
- |
0.3 |
- |
0.3 |
|
|
Purchase of own shares for AESOP scheme |
- |
(0.2) |
- |
(0.2) |
|
|
Disposal of own shares for share option scheme |
- |
0.1 |
- |
0.1 |
|
|
Purchase of treasury shares |
- |
(1.5) |
- |
(1.5) |
|
|
Dividends paid |
(6.3) |
(12.6) |
(6.3) |
(12.5) |
|
|
Increase in bank loans |
- |
8.8 |
- |
- |
|
|
Repayment of bank loans |
(25.4) |
(41.2) |
- |
- |
|
|
Finance fees paid |
(1.9) |
- |
- |
- |
|
|
Net cash (outflow) / inflow from financing activities |
(33.6) |
(46.3) |
(6.3) |
(13.8) |
|
|
Net increase / (decrease) in cash and cash equivalents* |
35.2 |
(100.8) |
138.2 |
(17.4) |
|
|
Cash and cash equivalents at beginning of year* |
(321.5) |
(220.7) |
(137.0) |
(119.6) |
|
|
Cash and cash equivalents at end of year* |
(286.3) |
(321.5) |
1.2 |
(137.0) |
|
* Includes overdraft facility balances shown in borrowings
Notes to the financial statements
1. accounting policies
Basis of preparation
The Financial Statements comprise the consolidated financial statements of Warner Estate Holdings PLC ("the Group") for the year ended 31 March 2009 and have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretation Committee ("IFRIC") interpretations endorsed by the European Union ("EU") and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS.
The basis of accounting and format of presentation is subject to change following any further interpretative guidance that may be issued by the International Accounting Standards Board ("IASB") and IFRIC from time to time.
The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain assets and liabilities, which are carried at fair value, and in accordance with those IFRS standards and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these accounts.
The parent company's financial statements have also been prepared in accordance with IFRS, as applied in accordance with the provisions of the Companies Act 1985. The Directors' have taken advantage of the exemption offered by Section 230 of the Companies Act not to present a separate income statement for the parent company.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Group's accounting policies. Although these estimates are based on management's best knowledge of the amount, events or actions, actual results ultimately may differ from those estimates.
These financial statements have been prepared on a going concern basis, which assumes the Group will continue to be able to meet its liabilities when they fall due, for the foreseeable future. The Directors have produced cash flow forecasts which indicate, subject to the uncertainties detailed below, that the Group can continue as a going concern. In preparing those forecasts, the Directors have taken into account the following key business risks and uncertainties:
the need for continued support from the Group's lenders. Discussions with the Group's three lenders, Royal Bank of Scotland, HBoS and Barclays (together the "Lenders") for the extension and amendment of current banking facilities on terms appropriate for the current and foreseeable operating environment. One facility that expired in May 2009 continues to be rolled forward on a periodic basis. The Directors have a reasonable expectation that negotiations with the Lenders will be satisfactorily concluded;
the Lenders have reserved their rights to test certain financial covenants. The Directors would not expect these financial covenants to be met if tested as at 31 July 2009. The Directors have a reasonable expectation that the Lenders will amend the existing agreements and the new facility in such a way that is appropriate for the current and foreseeable operating environment;
the agreement of the Lenders for an additional working capital facility of between 1% and 2% of the Group's total existing facilities;
the macro-economic and financial pressures facing the property sector and their impact on the Group's cash flow forecasts, revenue streams and related costs; and
the interpretation of the Finance Act 2009, in particular regarding the application of the REIT financing ratio.
Having taken into account these risks and uncertainties the Directors have concluded that, based on the cash flow forecast, whilst material uncertainty which may cast significant doubt over the ability of the Group and parent company to continue as a going concern exists, that it is still appropriate to prepare the financial statements on a going concern basis. Further details on the above risks and uncertainties and the options being pursued are included in the Chairman's Statement above.
Standards, interpretations and amendments to published standards that are not yet effective
The accounting policies are consistent with those applied in the year ended 31 March 2008, as amended to reflect the adoption of the new Standards, Amendments to Standards and Interpretations which are mandatory for the year ended 31 March 2009. In most cases, these new requirements are not relevant for the Group. This is the case for IFRIC12 'Service Concession Arrangements', IFRIC14 'IAS19 The limit on a defined benefit asset, minimum funding requirements and their interaction' and IFRIC13 'Customer loyalty programmes'.
The following new Standards, Amendments to Standards and Interpretations have been issued but are not effective for the year ended 31 March 2009, and have not been adopted early: IAS23 (amendment) 'Borrowing costs' (effective from 1 January 2009), IAS1 (revised) 'Presentation of financial statements' (effective from 1 January 2009), IFRS2 (amendment) 'Share-based payment' (effective from 1 January 2009), IAS32 (amendment) 'Financial instruments: Presentation' and IAS1 (amendment), 'Presentation of financial statements' - 'Puttable financial instruments and obligations arising on liquidation' (effective from 1 January 2009), IFRS1 (amendment) 'First time adoption of IFRS' and IAS27 'Consolidated and separate financial statements' (effective from 1 January 2009), IAS 39 (amendment) 'Financial instruments: Recognition and disclosure' and IFRS 7 (amendment) 'Financial instruments: Disclosures' (effective 1 July 2008), IFRS8 'Operating Segments' (effective from 1 January 2009), IFRS3 (revised) 'Business Combinations' (effective from 1 July 2009), IFRIC 12 'Service concessions' (effective 30 March 2009), IFRIC 15 'Agreements for the Construction of Real Estate' (effective from 1 January 2009) and IFRIC 16 'Hedges of a Net Investment in a Foreign Operation' (effective 1 October 2008). It is anticipated that the adoption of these new Standards and Interpretations in future periods will not have a material impact on the measurement of assets and liabilities included in the financial statements or the Group's income and expenses. The Annual Improvements project also amended various standards; however these have no material impact on the Group.
Consolidation
(a) Subsidiary undertakings
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights.
The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date control ceases. All inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated upon consolidation.
(b) Interests in joint ventures
Interests in jointly controlled entities are accounted for using the equity method. Unrealised gains and losses on transactions between the Group and its joint ventures are eliminated to the extent of the Group's interest in the joint ventures. The Group's share of profit of joint ventures represents the Group's share of the joint venture's profit after tax. Joint ventures with net liabilities are carried at nil value in the balance sheet where there is no commitment to fund the deficit and any distributions are included in the consolidated income statement for the year.
Segment reporting
The Group's primary reporting format is business activity, being property investment and asset management. As all operations are based in the UK, there is no secondary reporting format to present.
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments.
Plant and equipment
Plant and equipment is initially measured at cost. After initial recognition, the fixed assets are carried at cost less subsequent depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Plant and equipment is depreciated by equal annual instalments over their estimated useful lives of between three and ten years and are carried at historic cost less accumulated depreciation.
Where the carrying amount of a fixed asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Recoverable amount is the higher of fair value less costs to sell and value in use and is determined for an individual asset. After initial recognition, the item is carried at its cost less any accumulated depreciation and any accumulated impairment losses.
Goodwill
Business combinations are accounted for by applying the purchase method. The excess of the cost of the business combination over the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities, recognised in accordance with IFRS 3, Business Combinations, constitutes goodwill, and is recognised as an asset. After initial recognition, goodwill is measured at cost less any accumulated impairment losses, until disposal or termination of the previously acquired business (including planned disposal or termination where there are indications that the value of the goodwill has been permanently impaired), when the profit or loss on disposal or termination will be calculated after charging the book amount of any such goodwill through the income statement.
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. To the extent that the carrying amount exceeds the recoverable amount, which is the higher of net realisable value and value in use, the asset is written down to its recoverable amount. Any impairment is recognised in the income statement and is not subsequently reversed. Net realisable value is the estimated amount at which an asset can be disposed of, less any direct selling costs.
Value in use is the estimate of the discounted future cash flows generated from the asset's continued use, including those resulting from its ultimate disposal. For the purposes of assessing value in use, assets are grouped at the lowest levels for which there are separately identifiable cash flows.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
Investment property
(a) Initial recognition
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Group, is classified as investment property.
Investment property comprises freehold land, freehold buildings, land held under operating leases and buildings held under finance leases. When the Group begins to redevelop an existing investment property for continued future use as an investment property, the property remains an investment property and is accounted for as such.
Property that is being constructed or developed for future use as investment property, but which has not previously been classified as such, is classified as property under the course of development. This is recognised initially at cost and subsequently carried at cost less any impairment. Interest is capitalised (before tax relief) on the basis of the average rate of interest paid on the relevant debt outstanding until the date of practical completion. On completion the property is transferred to investment property and any difference between the fair value of the property at that date and its previous carrying amount shall be recognised in the income statement.
Land held under operating leases is classified and accounted for as investment property when the rest of the definition of investment property is met. In such cases, the operating lease is accounted for as if it were a finance lease.
Investment property is measured initially at its cost, including related transaction costs.
(b) Fair value
After initial recognition, investment property is carried at fair value. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specified asset. If this information is not available, the Group uses alternate valuation methods such as recent prices on less active markets or discounted cash flow projections. These valuations are performed in accordance with the guidance issued by the Royal Institution of Chartered Surveyors. These valuations are reviewed at each financial reporting period end by independent external valuers who hold recognised and relevant professional qualifications and have recent experience in the location and category of the investment property being valued. Investment property that is being redeveloped for continuing use as investment property, or for which the market has become less active, continues to be measured at fair value.
The fair value of investment property reflects, among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions.
The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property.
Some of those outflows are recognised as a liability, including finance lease liabilities in respect of land classified as investment property; others, including contingent rent payments, are not recognised in the financial statements.
(c) Subsequent expenditure
Subsequent expenditure is charged to the asset's carrying amount only when it is probable that future economic benefit associated with the item will flow to the Group and the cost of the item can be measured reliably. All repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred. Gross borrowing costs associated with direct expenditure on properties under development or undergoing major refurbishment are capitalised. With specific developments, the amount capitalised is the gross interest incurred on those borrowings less any investment income arising on their temporary investment. Interest is capitalised as from the commencement of the development work until the date of practical completion. The capitalisation of finance costs is suspended if there are prolonged periods when development activity is interrupted. Interest is also capitalised on the purchase cost of a site or property acquired specifically for redevelopment in the short term but only where activities necessary to prepare the asset for redevelopment are in progress.
(d) Changes in fair value and transfers
Changes in fair values are recorded in the income statement for investment properties.
If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its fair value at the date of reclassification becomes its cost for accounting purposes. Property that is being constructed or developed for future use as investment property is classified as properties under the course of development and stated at cost until construction or development is complete, at which time it is reclassified and subsequently accounted for as investment property.
When the Group begins to redevelop an existing investment property with a view to sale, the property is transferred to trading properties and held as a current asset. The property is re-measured to fair value as at the date of the transfer with any gain or loss being taken to profit or loss. The re-measured amount becomes the deemed cost at which the property is then carried in trading properties.
Cash and cash equivalents
Cash and cash equivalents comprises cash balances, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. Cash and cash equivalents are categorised as loans and receivables. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Bank overdrafts are disclosed in current and non-current liabilities.
Employee benefits
The Group accounts for pensions under IAS 19 'Employee Benefits'. In respect of defined benefit pension schemes, obligations are measured at discounted present value while scheme assets are measured at their fair value.
The operating and financing costs of such plans are recognised separately in the income statement. Service costs are spread systematically over the working lives of the employees concerned with the charge for the period included in operating costs in the income statement.
Financing costs are recognised in the periods in which they arise and are included in interest expense. Actuarial gains and losses arising from either experience differing from previous actuarial assumptions or changes to those assumptions are recognised immediately in the statement of recognised income and expense.
Contributions to defined contribution schemes are expensed as incurred.
Income taxes
The charge for current taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using rates that have been enacted or substantively enacted by the balance sheet date. Tax payable upon realisation of fair value gains recognised in prior periods is recorded as a current tax charge with a release of the associated deferred tax.
Deferred tax is provided using the balance sheet liability method in respect of temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in computation of taxable profit with the exception of deferred tax on fair value gains where the tax basis used is the accounts historic cost. Provision is made for temporary differences between the carrying value of assets and liabilities in the consolidated financial statements and the values used for tax purposes. Temporary differences are not provided for when they arise from initial recognition of assets and liabilities that do not affect accounting or taxable profit.
When distributions are controlled by the Group, and it is probable the temporary difference will not reverse in the foreseeable future, deferred tax which would arise on the distribution of profits realised in subsidiaries, associates and joint ventures is provided in the same period as the liability to pay the distribution is recognised in the financial statements.
Deferred tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. It is recognised in the income statement except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred tax assets and liabilities are offset only when they relate to taxes levied by the same authority, with a legal right to set off and when the Group intends to settle them on a net basis.
Compliance with the Real Estate Investment Trust ("REIT") taxation regime
On 1 April 2007 the Group converted to a group REIT. In order to achieve and retain group REIT status, several entrance tests had to be met and certain ongoing criteria must be maintained. The main criteria are as follows:
at the start of each accounting period, the assets of the tax exempt business must be at least 75% of the total value of the Group's assets;
at least 75% of the Group's total profits must arise from the tax exempt business; and
at least 90% of the profit of the property rental business must be distributed.
The Directors intend that the Group should continue as a group REIT for the foreseeable future, with the result that deferred tax is no longer recognised on temporary differences relating to the property rental business.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated.
(a) Onerous contracts
Provision is made in respect of costs incurred on vacant leasehold properties or for leasehold properties sublet at a level which renders the properties loss-making over the length of the lease, being the net cash outflow committed to be incurred over the lives of the leases. Any increase or decrease in the provision is taken to the income statement each financial period. The provision is assessed on a property by property basis taking account of individual cash flows. Cash flows are discounted using the risk free rate.
(b) Share-based payments
The cost of granting share options and other share based remuneration to employees and directors is recognised through the income statement with reference to the fair value at the date of the grant. The Group has used the Black-Scholes option valuation model and a stochastic model to establish the relevant costs. The resulting values are amortised through the income statement over the vesting period of the options and other grants. The charge is reversed if it appears probable that applicable performance criteria will not be met.
Own shares held in connection with employee share plans or other share based payment arrangements are treated as treasury shares and deducted from equity. No profit or loss is recognised in the income statement on their sale, re-issue or cancellation.
(c) Dilapidations
Where the Group, as lessee, is contractually required to restore a leased property to an agreed condition, prior to release by a lessor, provision is made for such dilapidation costs as they are identified.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and is stated net of sales taxes and value added taxes. Revenue includes 'Rental and similar income', 'Service charge and similar income' and 'Turnover from asset management activities'. Revenue is recognised as follows:
(a) Rental and similar income
Rental income from operating lease income is recognised on a straight-line basis over the lease term.
When the Group provides incentives to its customers, the cost of incentives are recognised over the lease term, on a straight-line basis, as a reduction of rental income.
(b) Service charge and similar income
Service and management charge income is recognised on a gross basis in the accounting period in which the services are rendered. Where the Group is acting as an agent, the commission rather than gross income is recorded as revenue.
(c) Income from asset management activities
Management fees earned are calculated on an accruals basis. Asset management income is recognised in the accounting period in which the services are rendered.
Performance fees are recognised, in line with the asset management contracts, at the end of the performance period to which they relate, based on the outperformance of relevant benchmarks. The performance period is normally three years. Where performance subsequently falls short of these benchmarks, fees are repayable, up to the amount received for the previous two years. Where there is a reasonable likelihood that part of a performance fee will be repaid the estimated repayment will not be recognised until the outcome can be reliably estimated.
Other income
(a) Income from investments
Dividend income from investments is recognised when the shareholders' rights to receive payment have been established. Distribution income from funds is recognised on an accruals basis.
(b) Income from property disposals
Profits or losses arising from the sale of trading and investment properties are included in the income statement of the Group where an exchange of contracts has taken place under which any minor outstanding conditions not affecting the transfer of risks and rewards are entirely within the control of the Group. Profits or losses arising from the sale of trading and investment properties are calculated by reference to their carrying value and are included in operating profit.
(c) Other interest income
Other interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate.
Leases
(a) A Group company is the lessee
(i) Operating lease - leases in which substantially all risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.
(ii) Finance lease - leases of assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease commencement date at the lower of the fair value of the leased property and the present value of the minimum lease payments. The investment properties acquired under finance leases are carried at the fair value.
The corresponding rental obligations, net of finance charges, are included in current and non-current borrowings. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
(b) A Group company is the lessor
(i) Operating lease - properties leased out under operating leases are included in investment property in the balance sheet.
(ii) Finance lease - when assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable accrues as finance income. Lease income is recognised over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return.
Financial instruments and hedging activities
Derivatives
The Group uses derivatives to help manage its interest rate risk. In accordance with its treasury policy, the Group does not hold or issue derivatives for trading purposes.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. None of the derivatives currently held are designated as hedging instruments and accordingly any gain or loss is recognised in the income statement in the period in which it arises.
Hedge accounting
The Group's derivative financial instruments do not qualify for hedge accounting and changes in the fair value of derivative financial instruments are recognised in the income statement as they arise.
Financial assets
The Group classifies its financial assets in the following categories: financial assets at fair value through the income statement, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and reviews this designation at each reporting date.
Purchases and sales of investments are recognised on the trade date; the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
(a) Financial assets at fair value through the income statement
This category has two sub-categories: financial assets held for trading, and those designated at fair value through the income statement at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are expected to be realised within 12 months of the balance sheet date.
Realised and unrealised gains and losses arising from changes in the fair value of the 'financial assets at fair value through the income statement' category are included in the income statement in the period in which they arise.
The fair values of listed investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis and option pricing models refined to reflect the issuer's specific circumstances. For unlisted investments in shares, fair value is based on an average spread of price/earnings ratios from comparable companies, discounted for non-marketability. Changing the assumptions to other reasonably possible alternative assumptions would not change the fair value significantly. For investments in funds, fair value is measured as the unit price of the holding at the balance sheet date.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables are included in trade and other receivables in the balance sheet.
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment in trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The changes to the provision are recognised in the income statement.
Investments in subsidiary undertakings
Investments in subsidiary undertakings are carried in the company's balance sheet at cost less any provision for impairment.
Impairment The carrying amounts of the Group's and Company's financial assets (where applicable) and non-financial assets, other than investment properties, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised in the income statement whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of an asset is the greater of its fair value less costs to sell and its value in use. The value in use is determined as the net present value of the future cash flows expected to be derived from the asset, discounted using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount after the reversal does not exceed the amount that would have been determined, net of applicable depreciation, if no impairment loss had been recognised.
Borrowings
Borrowings are initially recognised at the fair value of consideration received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Transaction costs are capitalised on the balance sheet and are amortised over the life of the associated borrowing instrument through the effective rate of interest.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included in the cost of acquisition as part of the purchase consideration.
Where any Group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs, (net of tax) is deducted from equity attributable to the Company's equity holders until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, are included in equity attributable to the Company's equity holders.
Critical accounting policies and judgements
The preparation of the Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and disclosure of contingencies at the date of the Consolidated Financial Statements. If in the future such estimates and assumptions, which are based on management's best judgement at the date of the Consolidated Financial Statements, deviate from the actual circumstances, the original estimates and assumptions will be modified, as appropriate, in the period in which the circumstances change. The following policies are considered to be of greater complexity and / or particularly subject to the exercise of judgement.
(a) Goodwill
As required by IAS 36, Impairment of Assets, the Group regularly monitors the carrying value of its assets, including goodwill. Impairment reviews compare the carrying values to the present value of future cash flows that are derived from the relevant asset or cash-generating unit. These reviews therefore depend on management estimates and judgements, in particular in relation to the forecasting of future cash flows and the discount rate applied to the cash flows.
(b) Post-employment benefits
Application of IAS 19, Employee Benefits, requires the exercise of judgement in relation to setting the assumptions used by the actuaries in assessing the financial position of each scheme. The Group determines the assumptions to be adopted in discussion with its actuaries, and believe these assumptions to be in line with IAS generally accepted practice.
(c) Provisions
The Group carries balance sheet provisions in respect of onerous contracts and dilapidations amongst other exposures. Judgement is involved in assessing the exposure in these areas and hence in setting the level of the required provisions.
(d) Estimate of fair value of investment properties
The best evidence of fair value is current prices in an active market for similar lease and other contracts. In the absence of such information, the Group determines the amount within a range of reasonable fair value estimates. In making its judgement, the Group considers information from a variety of sources including:
i) current prices in an active market for properties of a different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect those differences;
ii) recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices; and
iii) discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of any existing lease and other contracts, and (where possible) from external evidence such as current market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.
(e) Principal assumptions for management's estimation of fair value of investment properties
If information on current or recent prices of assumptions underlying the discounted cash flow approach investment properties are not available, the fair values of investment properties are determined using discounted cash flow valuation techniques. The Group uses assumptions that are mainly based on market conditions existing at each balance sheet date.
The principal assumptions underlying management's estimation of fair value are those related to: the receipt of contractual rentals; expected future market rentals; void periods; maintenance requirements; and appropriate discount rates. These valuations are regularly compared to actual market yield data and actual transactions by the Group and those reported by the market.
The expected future market rentals are determined on the basis of current market rentals for similar properties in the same location and condition.
(f) Investments in unlisted shares
The valuation technique is disclosed in the financial assets accounting policy note. These valuations depend on management estimates and judgements, in particular in relation to the forecasting of future cash flows and the discount rate applied to the cash flows.
(g) Derivative financial assets and liabilities
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. The Group uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at each balance sheet date
2. Segmental Reporting
Business Segments
For management purposes the Group is organised into two operating divisions, Property Investment and Asset Management:
|
Property Investment |
Asset Management |
Unallocated and other activities |
Group Total |
|
|
£m |
£m |
£m |
£m |
|
|
Year ended 31 March 2009 |
||||
|
Rental and similar income |
30.2 |
- |
- |
30.2 |
|
Property management expenses |
(10.0) |
- |
- |
(10.0) |
|
Service charge and similar income |
4.7 |
- |
- |
4.7 |
|
Service charge expense and similar charges |
(5.7) |
- |
- |
(5.7) |
|
Net rental income |
19.2 |
- |
- |
19.2 |
|
Revenue from asset management activities |
||||
|
Management fee income |
- |
12.2 |
- |
12.2 |
|
Performance fee income |
- |
- |
- |
- |
|
Performance fee provision |
- |
(4.6) |
- |
(4.6) |
|
- |
7.6 |
- |
7.6 |
|
|
Asset management expenses |
- |
(9.1) |
- |
(9.1) |
|
Administrative expenses |
(0.4) |
(0.8) |
- |
(1.2) |
|
Operating profit / (loss) before net gain on investments |
18.8 |
(2.3) |
- |
16.5 |
|
Net loss from fair value adjustments on investment properties and impairment of net investment in finance leases |
(98.8) |
- |
- |
(98.8) |
|
Net loss from fair value adjustments on investments |
- |
- |
(60.4) |
(60.4) |
|
(Loss) / profit on sale of investment properties |
(24.9) |
- |
- |
(24.9) |
|
Operating loss |
(104.9) |
(2.3) |
(60.4) |
(167.6) |
|
Total assets |
276.6 |
13.9 |
59.1 |
349.6 |
|
Total liabilities excluding borrowings and finance leases |
(33.3) |
(2.7) |
(11.9) |
(47.9) |
|
Borrowing, including finance leases |
(3.6) |
- |
(293.9) |
(297.5) |
|
Net assets / (liabilities) |
239.7 |
11.2 |
(246.7) |
4.2 |
|
Other segment items: |
||||
|
Capital expenditure |
9.4 |
- |
- |
9.4 |
|
Depreciation |
- |
- |
0.2 |
0.2 |
|
Property Investment |
Asset Management |
Unallocated and other activities |
Group Total |
|
|
£m |
£m |
£m |
£m |
|
|
Year ended 31 March 2008 |
||||
|
Rental and similar income |
28.7 |
- |
- |
28.7 |
|
Property management expenses |
(5.8) |
- |
- |
(5.8) |
|
Service charge and similar income |
4.3 |
- |
- |
4.3 |
|
Service charge expense and similar charges |
(5.1) |
- |
- |
(5.1) |
|
Net rental income |
22.1 |
- |
- |
22.1 |
|
Revenue from asset management activities |
||||
|
Management fee income |
- |
14.0 |
- |
14.0 |
|
Performance fee income |
- |
0.7 |
- |
0.7 |
|
Performance fee provision |
- |
(1.6) |
- |
(1.6) |
|
- |
13.1 |
- |
13.1 |
|
|
Asset management expenses |
- |
(12.6) |
- |
(12.6) |
|
Administrative expenses |
(0.4) |
(1.6) |
- |
(2.0) |
|
Operating profit / (loss) before net gain on investments |
21.7 |
(1.1) |
- |
20.6 |
|
Net loss from fair value adjustments on investment properties |
(50.7) |
- |
- |
(50.7) |
|
Net loss from fair value adjustments on investments |
- |
- |
(25.2) |
(25.2) |
|
Profit on sale of investment properties |
8.1 |
- |
- |
8.1 |
|
Profit on sale of finance lease assets |
0.1 |
- |
- |
0.1 |
|
Operating loss |
(20.8) |
(1.1) |
(25.2) |
(47.1) |
|
Total assets |
477.7 |
18.6 |
263.2 |
759.5 |
|
Total liabilities excluding borrowings and finance leases |
(26.8) |
(0.2) |
(21.3) |
(48.3) |
|
Borrowing, including finance leases |
(3.8) |
- |
(402.2) |
(406.0) |
|
Net assets / (liabilities) |
447.1 |
18.4 |
(160.3) |
305.2 |
|
Other segment items: |
||||
|
Capital expenditure |
14.2 |
- |
- |
14.2 |
|
Depreciation |
- |
- |
0.2 |
0.2 |
All turnover and operating profit has arisen from continuing operations.
(a) Rents receivable includes £0.5 million (2008: £0.7million charge) which represents rent allocated to rent free periods.
(b) Service charge and similar income includes monies received from tenants in respect of service charge costs the tenants bear on their properties. Service charge costs not recovered ("void costs") are included within service charge expense and similar charges of £1.0 million (2008: £0.8million).
The parent company is a holding company and does not operate in any segments.
|
2009 |
2008 |
||
|
£m |
£m |
||
|
Operating profit is stated after charging: |
|||
|
Depreciation - owned assets |
0.2 |
0.2 |
|
|
Operating lease charges - properties |
0.9 |
0.6 |
During the year the following amounts were charged to the income statement in respect of auditors' remuneration:
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Remuneration to the principal auditor in respect of audit fees: |
||
|
Statutory audit of the company and consolidated accounts |
0.1 |
0.1 |
|
Remuneration to the principal auditor in respect of other services: |
||
|
Statutory audit of subsidiary accounts |
0.3 |
0.2 |
|
Non-audit services: Taxation |
0.1 |
0.3 |
|
0.5 |
0.6 |
In addition £0.1million was charged by the Auditors for audit services to the joint ventures (2008: £0.1million) and £0.1million for tax work (2008: £0.1million).
3. Employees
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Staff costs |
||
|
Wages and salaries |
8.9 |
11.4 |
|
Social security costs |
1.0 |
1.1 |
|
Other pension costs |
0.7 |
1.0 |
|
10.6 |
13.5 |
|
2009 |
2008 |
|
|
Number |
Number |
|
|
The average number of persons employed during the year was: |
||
|
Management and administrative |
168 |
172 |
|
Repairs and service |
34 |
46 |
|
202 |
218 |
The parent company had no employees during the year (2008: Nil).
retirement benefit obligations
The Group operates and contributes to pension schemes for certain Directors and employees and makes some discretionary allowances. The costs charged to the income statement for the year to 31 March 2009 in respect of these amounted to £0.7million (2008: £1.0million). Pension premiums paid in advance were £0.1million (2008: £0.1million).
The Group operates a funded defined benefit scheme in the UK, The Warner Estate Group Retirement Benefits Scheme. The costs charged to the income statement for the year to 31 March 2009 in respect of these amounted to £0.1million (2008: £0.1million). A full valuation was carried out at 1 April 2008. The values at 31 March 2009 were updates of the 1 April 2008 valuation carried out by a qualified independent actuary.
It has been agreed with the Trustees that the Group contributes 37.7% of pensionable salary plus £0.2million per annum.
The discount rate used to calculate the funding target is equal to the yield on fixed interest gilts of appropriate term at the valuation date plus 2% per annum for active and deferred members over the period to retirement. The inflation assumption is derived from the difference between the yield on fixed interest gilts and the yield on indexed-linked gilts at the valuation date.
Warner Estate Holdings PLC employs a building block approach in determining the long term rate of return on pension plan assets. Historical markets are studied and assets with higher volatility are assumed to generate higher returns consistent with widely accepted capital market principles. The assumed long-term rate of return on each asset class is set out within this note. The overall expected rate of return on assets is then derived by aggregating the expected return for each asset class over the actual asset allocation for the Scheme at the 31 March 2009.
Actuarial gains and losses are recognised through the Consolidated Statement of Recognised Income and Expense.
The following assumptions were made by the Company:
|
2009 |
2008 |
|
|
% per annum |
% per annum |
|
|
Discount rate |
6.5 |
6.9 |
|
Rate of increase in pensionable salaries |
3.6 |
4.2 |
|
Rate of increases to pensions in payment |
3.4 |
3.6 |
|
Price inflation |
3.6 |
3.7 |
Mortality assumptions are based on standard mortality tables which allow for future mortality improvements. The assumptions are that a member currently aged 60 will live on average for a further 26 years if they are male and for a further 29 years if they are female. For a member who retires in future at age 60 the assumptions are that they will live on average for a further 27 years after retirement if they are male and for a further 30 years after retirement if they are female.
The market value of the assets of the Scheme together with the expected rates of return at the beginning and end of the year were as follows:
|
Long-term rate of return expected at 31 March 2009 |
Value at 31 March 2009 |
Long-term rate of return expected at 31 March 2008 |
Value at 31 March 2008 |
|
|
% |
£m |
% |
£m |
|
|
Equities |
7.9 |
0.4 |
7.8 |
1.5 |
|
Fixed interest bonds |
6.5 |
4.6 |
6.9 |
3.8 |
|
Cash |
1.7 |
0.1 |
5.9 |
0.2 |
|
Total |
7.1 |
5.1 |
7.5 |
5.5 |
None of the scheme assets are property related.
Reconciliation of funded status to balance sheet
|
Value at 31 March 2009 |
Value at 31 March 2008 |
|
|
£m |
£m |
|
|
Fair value of Scheme assets |
5.1 |
5.5 |
|
Present value of non-insured defined benefit of obligations |
(1.4) |
(2.0) |
|
Liability in respect of insured pensioners |
(4.6) |
(3.6) |
|
Liability recognised on the balance sheet |
(0.9) |
(0.1) |
|
Related deferred tax asset |
0.2 |
- |
|
Net pension liability |
(0.7) |
(0.1) |
Changes to the present value of the defined benefit obligation
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Opening defined benefit obligation |
5.6 |
6.2 |
|
Current service cost |
- |
0.1 |
|
Interest cost |
0.4 |
0.3 |
|
Actuarial profits on Scheme liabilities* |
0.5 |
(0.7) |
|
Contributions by plan participants |
- |
- |
|
Net benefits paid out |
(0.5) |
(0.3) |
|
Closing defined benefit obligation |
6.0 |
5.6 |
*Includes changes to the actuarial assumptions.
Changes to the fair value of Scheme assets
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Opening fair value of Scheme assets |
5.5 |
5.8 |
|
Expected return on assets |
0.4 |
0.4 |
|
Actuarial losses on Scheme assets |
(0.3) |
(0.5) |
|
Contributions by the employer |
0.1 |
0.1 |
|
Contributions by plan participants |
- |
- |
|
Net benefits paid out |
(0.6) |
(0.3) |
|
Closing fair value of Scheme assets |
5.1 |
5.5 |
Actual return on Scheme assets
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Expected return on Scheme assets |
0.4 |
0.3 |
|
Actuarial losses on Scheme assets |
(0.3) |
(0.5) |
|
Actual return on Scheme assets |
0.1 |
(0.2) |
Analysis of income statement charge
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Current service cost |
- |
0.1 |
|
Interest cost |
0.3 |
0.3 |
|
Expected return on plan assets |
(0.4) |
(0.3) |
|
(Income) / expense recognised in income statement |
(0.1) |
0.1 |
Current service cost is recognised within property management and asset management expenses. Interest cost and expected return on plan assets are recognised in finance income.
Analysis of amounts recognised in statement of recognised income and expense
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Total actuarial (losses)/gains |
(0.8) |
0.2 |
|
Related deferred tax |
0.2 |
(0.1) |
|
Total loss in statement of recognised income and expense |
(0.6) |
0.1 |
|
Cumulative amount of losses recognised in statement of recognised income and expense |
(0.6) |
(0.1) |
History of asset values, defined benefit obligation, surplus / (deficit) in Scheme and experience gains and losses
|
2009 |
2008 |
2007 |
2006 |
2005 |
|
|
£m |
£m |
£m |
£m |
£m |
|
|
Fair value of Scheme assets |
5.1 |
5.5 |
5.8 |
5.8 |
5.1 |
|
Defined benefit obligation |
(6.0) |
(5.6) |
(6.2) |
(6.3) |
(5.4) |
|
Deficit in Scheme |
(0.9) |
(0.1) |
(0.4) |
(0.5) |
(0.3) |
|
Experience (losses) /gains on Scheme assets |
(0.3) |
(0.5) |
(0.1) |
0.7 |
0.1 |
|
Experience (losses)/gains on Scheme liabilities |
(0.2) |
0.1 |
0.1 |
0.1 |
- |
The estimated amounts of contributions expected to be paid to the Scheme during the year to March 2009 are £0.1million.
4. Directors' remuneration
A summary of Directors' remuneration, including disclosures required by the Companies Act 1985 and those specified by the Financial Services Authority, is contained in the Report and Accounts which will be published in due course.
5. Profit / (Loss) on sale of investment properties
|
2009 |
2008 |
|
|
£m |
£m |
|
|
(Deficit) / surplus over book value and fair value gains |
(24.9) |
8.1 |
6. Finance income
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Income from investments |
||
|
Distributions from funds (see note 16) |
3.2 |
6.1 |
|
Return of capital from listed investments |
0.5 |
- |
|
Interest receivable and similar income: |
||
|
From joint ventures |
0.5 |
0.6 |
|
Provision against interest receivable from joint ventures |
(1.3) |
- |
|
(0.8) |
0.6 |
|
|
Other interest |
0.4 |
0.7 |
|
Other finance income |
||
|
Expected return on pension scheme assets |
0.4 |
0.4 |
|
Interest on pension scheme liabilities |
(0.3) |
(0.3) |
|
0.1 |
0.1 |
|
|
3.4 |
7.5 |
Dividends from listed investments, unlisted investments and distributions from funds represent income from financial assets at fair value through the income statement.
Other interest represents income from financial assets categorised as loans and receivables.
7. Finance expense
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Interest payable on loans and overdrafts |
17.3 |
21.3 |
|
Charges in respect of cost of raising finance |
15.4 |
0.8 |
|
32.7 |
22.1 |
|
|
Less: Interest capitalised |
- |
(1.2) |
|
32.7 |
20.9 |
|
|
Interest payable under finance leases |
0.2 |
0.3 |
|
32.9 |
21.2 |
Interest payable on loans and overdrafts and charges in respect of raising finance represent expenses on financial liabilities at amortised cost.
8. taxation
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Current tax |
||
|
UK corporation tax: |
||
|
Current at 28 % (2008: 30%) |
0.9 |
(2.1) |
|
Under/(over) provision in respect of prior year's tax charge |
0.1 |
(0.8) |
|
1.0 |
(2.9) |
|
|
Deferred taxation |
(4.3) |
(7.1) |
|
(3.3) |
(10.0) |
|
The tax on the group's loss before income tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits or losses of the consolidated entities as follows: |
2009 |
2008 |
|
|
£m |
£m |
||
|
(Loss) / profit on ordinary activities before taxation |
(297.1) |
(123.5) |
|
|
Tax @ 28% (2008: 30%) |
(83.2) |
(37.1) |
|
|
Effect of REIT exemption / conversion |
|||
|
Net operating profits |
(1.2) |
(4.4) |
|
|
Realised profit on disposal of investment properties |
6.8 |
(2.4) |
|
|
Fair value losses on investment properties |
27.7 |
15.2 |
|
|
Tax on finance cost ratio |
0.8 |
15.2 |
|
|
34.1 |
8.4 |
||
|
Share of joint ventures' post tax losses / (profits) |
27.2 |
18.2 |
|
|
Losses carried forward, no deferred tax asset provided |
4.8 |
- |
|
|
Gains not subject to tax |
0.6 |
- |
|
|
Disallowable expenses |
(0.2) |
0.2 |
|
|
Net tax on fair value losses of derivative financial instruments |
1.4 |
- |
|
|
Net tax on fair value losses of assets |
11.9 |
- |
|
|
Under / (over)provision in respect of prior years |
0.1 |
(0.8) |
|
|
Effect on deferred tax following change in corporation tax rate |
- |
1.1 |
|
|
(3.3) |
(10.0) |
9. Profit of Warner Estate Holdings PLC
The Company has taken advantage of the exemption provided by Section 230 of the Companies Act 1985 from presenting its own income statement. Loss attributable to members includes £394.0million (2008: £199.0million profit) which has been dealt with in the accounts of the Company.
10. Dividends
|
Group and Company |
2009 |
2008 |
|
£m |
£m |
|
|
On Ordinary 5p shares |
||
|
Final 11.25p at 31 March 2008 paid 19 September 2008 (Final at 31 March 2007: 11.0p) |
6.3 |
6.2 |
|
Interim nil p at 30 September 2008 (Interim at 30 September 2007: 11.25p) |
- |
6.3 |
|
6.3 |
12.5 |
No final dividend is proposed by the Board.
11. Earnings per share
Losses per share of 528.30p (2008: 203.61p) are calculated on the losses for the year of £293.8million (2008: £113.5million) and the weighted average of 55,592,011 (2008: 55,759,748) shares in issue throughout the year.
Diluted losses per share of 518.64p (2008: 200.99p) are calculated on the loss for the year as above divided by the weighted average number of shares in issue, being 56,627,895 (2008: 56,485,386) after the dilutive impact of share options granted.
A reconciliation of the weighted average number of shares used to calculate earnings per share and to that used to calculate diluted earnings per share is shown below:
|
2009 |
2008 |
|
|
Earnings per share: weighted average number of shares |
55,592,011 |
55,759,748 |
|
Weighted average ordinary shares to be issued under employee incentive arrangements |
1,035,884 |
725,638 |
|
Diluted earnings per share: weighted average number of shares |
56,627,895 |
56,485,386 |
12. Goodwill
|
£m |
|
|
Group |
|
|
Cost |
|
|
At 31 March 2008 |
11.3 |
|
Additions |
- |
|
At 31 March 2009 |
11.3 |
|
Impairments |
- |
|
At 31 March 2008 and 31 March 2009 |
11.3 |
|
Net book value at 31 March 2009 |
11.3 |
|
Net book value at 31 March 2008 |
11.3 |
Goodwill is not amortised but is subject to an annual impairment test. Goodwill of £11.2million is allocated to the cash generating unit ("CGU") defined as the asset management business owned by Industrial Funds Limited. Goodwill of £0.1million is allocated to the CGU defined as the property investment business owned by JS Real Estate Plc. The recoverable amount of each of the CGUs has been calculated based on the value-in-use calculations. These calculations use cash flow projections based on financial projections approved by management covering a five year period.
13. Investment properties and properties under the course of development
|
Freehold |
Leasehold with over 50 years unexpired |
Total Investment Properties |
|
|
£m |
£m |
£m |
|
|
Group |
|||
|
At 31 March 2008 |
359.4 |
99.2 |
458.6 |
|
Capital expenditure |
4.2 |
5.3 |
9.5 |
|
Disposals |
(92.4) |
(10.5) |
(102.9) |
|
Net losses from fair value adjustments on investment property |
(67.0) |
(30.4) |
(97.4) |
|
At 31 March 2009 |
204.2 |
63.6 |
267.8 |
The Group's investment portfolio was valued externally principally by Cushman & Wakefield Healey & Baker on an open market basis in accordance with the recommended guidelines of the Royal Institution of Chartered Surveyors as at 31 March 2009.
Investment properties were valued as follows:
|
£m |
|
|
Cushman & Wakefield Healey & Baker |
207.3 |
|
CB Richard Ellis |
60.2 |
|
267.5 |
A reconciliation of investment property valuations to the balance sheet carrying value of property is shown below:
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Investment property at market value as determined by external valuers and Directors' valuation |
267.5 |
458.3 |
|
Add minimum payment under head leases separately included as a creditor in the balance sheet |
3.7 |
3.7 |
|
Less accrued lease incentives separately accrued as a debtor in the balance sheet |
(1.1) |
(0.7) |
|
Less properties treated as finance lease assets |
(2.3) |
(2.7) |
|
Balance sheet carrying value of investment property |
267.8 |
458.6 |
All repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred. Therefore, no costs in respect of repairs and maintenance are included within the above figures (2008: £Nil)
On an historical cost basis the investment properties which have been included above at valuation would have been shown at cost as £369.6million (2008: £455.5million).
Investment properties valued at £267.5million are used as security for Group loans.
14. Plant And Equipment
|
£m |
|
|
Group |
|
|
Cost |
|
|
At 31 March 2008 |
1.5 |
|
Additions |
- |
|
Disposals |
- |
|
At 31 March 2009 |
1.5 |
|
Depreciation |
|
|
At 31 March 2008 |
1.0 |
|
Charge for year |
0.1 |
|
Disposals |
- |
|
At 31 March 2009 |
1.1 |
|
Net book value at 31 March 2009 |
0.4 |
|
Net book value at 31 March 2008 |
0.5 |
Plant and equipment include plant, machinery, fixtures, fittings, motor vehicles and equipment.
15. Investments in joint ventures
|
Group |
£m |
|
Share of joint ventures |
|
|
At 31 March 2008 |
90.0 |
|
Share of post-tax losses for the year |
(93.4) |
|
Provision against loan receivable |
(3.6) |
|
(97.0) |
|
|
Net equity movements |
7.0 |
|
At 31 March 2009 |
- |
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Unlisted shares at cost |
94.7 |
87.7 |
|
Group's share of post acquisition retained losses and reserves |
(94.7) |
(1.3) |
|
- |
86.4 |
|
|
Amounts owed by joint ventures |
- |
3.6 |
|
- |
90.0 |
|
Included in share of joint ventures' gross assets and liabilities are: |
||||||
|
Agora Shopping Centres (a) |
Radial Distribution Limited (b) |
Agora Max Limited (c) |
Greater London Offices Limited (d) |
Others (e) |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
|
Year to 31 March 2009 |
||||||
|
Group share of results |
||||||
|
Revenue |
12.0 |
8.8 |
12.1 |
3.8 |
- |
36.7 |
|
Operating profit before net gains on investments |
5.5 |
8.2 |
7.0 |
2.6 |
- |
23.3 |
|
Net loss from fair value adjustments on investment properties |
(46.3) |
(31.1) |
(28.3) |
(13.2) |
- |
(118.9) |
|
Loss on sale of investment properties |
- |
- |
(21.9) |
- |
- |
(21.9) |
|
Operating loss |
(40.8) |
(22.9) |
(43.2) |
(10.6) |
- |
(117.5) |
|
Net finance expense |
(4.8) |
(6.7) |
(7.5) |
(2.5) |
- |
(21.5) |
|
Change in fair value of derivative financial instruments |
(11.7) |
(4.2) |
(9.7) |
(4.2) |
- |
(29.8) |
|
Loss before income tax |
(57.3) |
(33.8) |
(60.4) |
(17.3) |
- |
(168.8) |
|
Taxation - current |
- |
(0.2) |
- |
- |
- |
(0.2) |
|
Taxation - deferred |
(0.6) |
0.1 |
1.1 |
(0.4) |
- |
0.2 |
|
Adjustments due to net liabilities |
20.5 |
14.6 |
30.9 |
9.4 |
- |
75.4 |
|
Loss for the year |
(37.4) |
(19.3) |
(28.4) |
(8.3) |
- |
(93.4) |
|
Amounts receivable by Group |
||||||
|
Asset management fees |
0.7 |
0.2 |
1.3 |
0.3 |
- |
2.5 |
|
Interest receivable |
- |
- |
- |
0.5 |
- |
0.5 |
|
Group share of |
||||||
|
Non-current assets |
||||||
|
Investment properties |
86.9 |
92.9 |
43.1 |
35.1 |
- |
258.0 |
|
Finance lease assets |
- |
2.9 |
- |
- |
- |
2.9 |
|
Derivative financial assets |
- |
- |
- |
- |
- |
- |
|
Deferred income tax assets |
- |
- |
- |
- |
- |
- |
|
Other non-current assets |
1.8 |
0.8 |
0.7 |
1.3 |
- |
4.6 |
|
88.7 |
96.6 |
43.8 |
36.4 |
- |
265.5 |
|
|
Current assets |
||||||
|
Finance lease assets |
- |
0.3 |
- |
- |
- |
0.3 |
|
Other current assets |
2.8 |
5.3 |
46.5 |
0.9 |
0.2 |
55.7 |
|
2.8 |
5.6 |
46.5 |
0.9 |
0.2 |
56.0 |
|
|
Total assets |
91.5 |
102.2 |
90.3 |
37.3 |
0.2 |
321.5 |
|
Non-current liabilities |
||||||
|
Derivative financial liabilities |
(12.9) |
(4.0) |
(6.1) |
(4.7) |
- |
(27.7) |
|
Deferred income tax liabilities |
- |
- |
- |
- |
- |
- |
|
Borrowings, including finance leases |
(94.1) |
(108.4) |
(110.4) |
(39.5) |
- |
(352.4) |
|
Other non-current liabilities |
(0.5) |
(0.5) |
- |
- |
- |
(1.0) |
|
(107.5) |
(112.9) |
(116.5) |
(44.2) |
- |
(381.1) |
|
|
Current liabilities |
||||||
|
Borrowings, including finance leases |
- |
- |
- |
- |
- |
- |
|
Other current liabilities |
(4.5) |
(3.9) |
(4.7) |
(2.5) |
(0.2) |
(15.8) |
|
(4.5) |
(3.9) |
(4.7) |
(2.5) |
(0.2) |
(15.8) |
|
|
Total liabilities |
(112.0) |
(116.8) |
(121.2) |
(46.7) |
(0.2) |
(396.9) |
|
(20.5) |
(14.6) |
(30.9) |
(9.4) |
- |
(75.4) |
|
|
Adjustment due to net liabilities |
20.5 |
14.6 |
30.9 |
9.4 |
- |
75.4 |
|
Share of net assets |
- |
- |
- |
- |
- |
- |
|
Included in share of joint ventures' gross assets and liabilities are: |
||||||
|
Agora Shopping Centres (a) |
Radial Distribution Limited (b) |
Agora Max Limited (c) |
Greater London Offices Limited (d) |
Others (e) |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
|
Year to 31 March 2008 |
||||||
|
Group share of results |
||||||
|
Revenue |
8.9 |
8.6 |
11.7 |
3.3 |
- |
32.5 |
|
Operating profit before net gains on investments |
5.4 |
8.1 |
7.9 |
2.4 |
0.5 |
24.3 |
|
Net loss from fair value adjustments on investment properties |
(13.1) |
(22.0) |
(26.3) |
(1.9) |
- |
(63.3) |
|
Operating (loss) / profit |
(7.7) |
(13.9) |
(18.4) |
0.5 |
0.5 |
(39.0) |
|
Net finance expense |
(4.5) |
(7.0) |
(8.1) |
(2.4) |
- |
(22.0) |
|
Change in fair value of derivative financial instruments |
(2.3) |
(1.0) |
(2.9) |
(1.2) |
- |
(7.4) |
|
(Loss) / profit before income tax |
(14.5) |
(21.9) |
(29.4) |
(3.1) |
0.5 |
(68.4) |
|
Taxation - current |
(0.5) |
0.1 |
0.3 |
- |
(0.1) |
(0.2) |
|
Taxation - deferred |
1.0 |
0.3 |
5.8 |
0.7 |
- |
7.8 |
|
(Loss) / profit for the year |
(14.0) |
(21.5) |
(23.3) |
(2.4) |
0.4 |
(60.8) |
|
Amounts receivable by Group |
||||||
|
Asset management fees |
0.4 |
0.4 |
1.0 |
0.4 |
- |
2.2 |
|
Interest receivable |
- |
- |
- |
0.6 |
- |
0.6 |
|
Group share of |
||||||
|
Non-current assets |
||||||
|
Investment properties |
124.9 |
123.5 |
153.1 |
48.1 |
- |
449.6 |
|
Finance lease assets |
- |
3.2 |
- |
- |
- |
3.2 |
|
Derivative financial assets |
- |
0.2 |
3.6 |
- |
- |
3.8 |
|
Deferred income tax assets |
0.6 |
- |
- |
0.4 |
- |
1.0 |
|
Other non-current assets |
1.3 |
- |
- |
- |
- |
1.3 |
|
126.8 |
126.9 |
156.7 |
48.5 |
- |
458.9 |
|
|
Current assets |
||||||
|
Finance lease assets |
- |
0.3 |
- |
- |
- |
0.3 |
|
Other current assets |
1.9 |
3.8 |
4.2 |
1.8 |
0.3 |
12.0 |
|
1.9 |
4.1 |
4.2 |
1.8 |
0.3 |
12.3 |
|
|
Total assets |
128.7 |
131.0 |
160.9 |
50.3 |
0.3 |
471.2 |
|
Non-current liabilities |
||||||
|
Derivative financial liabilities |
(1.2) |
- |
- |
(0.5) |
- |
(1.7) |
|
Deferred income tax liabilities |
- |
(0.1) |
(1.1) |
- |
- |
(1.2) |
|
Borrowings, including finance leases |
(86.0) |
(107.9) |
(132.1) |
(39.5) |
- |
(365.5) |
|
Other non-current liabilities |
(0.7) |
(0.9) |
- |
- |
- |
(1.6) |
|
(87.9) |
(108.9) |
(133.2) |
(40.0) |
- |
(370.0) |
|
|
Current liabilities |
||||||
|
Borrowings, including finance leases |
- |
- |
- |
- |
- |
- |
|
Other current liabilities |
(3.4) |
(2.8) |
(6.3) |
(2.0) |
(0.3) |
(14.8) |
|
(3.4) |
(2.8) |
(6.3) |
(2.0) |
(0.3) |
(14.8) |
|
|
Total liabilities |
(91.3) |
(111.7) |
(139.5) |
(42.0) |
(0.3) |
(384.8) |
|
Share of net assets |
37.4 |
19.3 |
21.4 |
8.3 |
- |
86.4 |
Agora Shopping Centres was set up on 5 March 2003 and subsequently acquired the Pyramids, Birkenhead on 25 June 2003 and The Grange, Birkenhead on 30 September 2004. On 7 March 2006, The Pyramids, Birkenhead and The Grange, Birkenhead were disposed of into the Agora Max joint venture group.
Fairway Industrial Limited was set up on 29 August 2003 and changed its name to Radial Distribution Limited on 14 October 2004.
Agora Max Limited was set up on 16 September 2005 and subsequently acquired The Pallasades, Birmingham on 25 October 2005. The Pyramids and The Grange, both in Birkenhead, were acquired from Agora Shopping Centres on 7 March 2006. The Pallasades, Birmingham was disposed of on 31 March 2009.
Greater London Offices Limited was set up on 28 September 2006 and subsequently acquired Old Broad Street and Central House, London.
Net assets relate to investments in smaller joint ventures acquired through Ashtenne.
Joint venture investment properties are valued by DTZ Debenham Tie Leung and CB Richard Ellis.
All joint ventures are incorporated in the United Kingdom.
|
Amounts owed by joint ventures comprise: |
||
|
2009 |
2008 |
|
|
Group |
£m |
£m |
|
Greater London Offices Limited |
- |
3.6 |
|
- |
3.6 |
|
During the year the transactions on the loan accounts between the Group and the joint ventures were as follows:
|
Repaid |
Loaned |
Provided against |
Total |
|
|
£m |
£m |
£m |
£m |
|
|
Agora Max Limited |
(7.0) |
7.0 |
- |
- |
|
Greater London Offices Limited |
- |
- |
(3.6) |
(3.6) |
|
(7.0) |
7.0 |
(3.6) |
(3.6) |
16. Investments in funds
|
Group |
|
|
£m |
|
|
As at 1 April 2008 |
98.9 |
|
Net loss from fair value adjustments |
(51.4) |
|
At 31 March 2009 |
47.5 |
|
Fund Information: |
||||
|
AIF (a) |
Apia (b) |
Others (c) |
Total |
|
|
£m |
£m |
£m |
£m |
|
|
Year to 31 March 2009 |
||||
|
Distributions receivable |
1.8 |
1.4 |
- |
3.2 |
|
Net assets at 31 March 2009 |
261.1 |
111.1 |
- |
|
|
Percentage share at 31 March 2009 |
6.52% |
27.43% |
- |
|
|
Group share of net assets |
17.0 |
30.5 |
- |
47.5 |
|
Fund Information: |
||||
|
AIF (a) |
Apia (b) |
Others (c) |
Total |
|
|
£m |
£m |
£m |
£m |
|
|
Year to 31 March 2008 |
||||
|
Distributions receivable |
2.1 |
4.0 |
- |
6.1 |
|
Net assets at 31 March 2008 |
577.8 |
221.2 |
- |
|
|
Percentage share at 31 March 2008 |
6.52% |
27.43% |
- |
|
|
Group share of net assets |
37.7 |
60.7 |
0.5 |
98.9 |
The Group invested £12million in the Ashtenne Industrial Fund in August 2005 and a £23.1million investment was acquired on the purchase of the remaining 50% of Industrial Funds Limited.
Apia was set-up on 7 June 2005 and the Group invested an initial £44.1million. A further £10.0million was invested in December 2005, of which £0.9million was disposed of in March 2006, and £0.4million in May 2006. It is treated as an investment rather than an associate as the Group does not have the power to exert significant control as a Trustee which is independent of the Group is responsible for the strategic decisions of the unit trust.
This relates to minority interest holdings in Agora Max Unit Trust, Agora Max Birkenhead Unit Trust and The Pallasades Birmingham Unit Trust.
Units held in AIF valued at £9.8million and the units in Apia valued at £30.5 million are used as security for Group loans.
17. investments in listed and unlisted shares
|
Group |
Company |
|||
|
2009 |
2008 |
2009 |
2008 |
|
|
£m |
£m |
£m |
£m |
|
|
Subsidiary undertakings (a) |
- |
- |
192.5 |
361.7 |
|
Listed investments (b) |
- |
0.5 |
- |
- |
|
Unlisted investments |
0.3 |
9.3 |
- |
9.0 |
|
0.3 |
9.8 |
192.5 |
370.7 |
|
(a) Subsidiary Undertakings
|
Shares in subsidiary undertakings |
Loans to subsidiary undertakings |
Company total |
|
|
£m |
£m |
£m |
|
|
Cost |
|||
|
At 31 March 2008 |
310.1 |
51.6 |
361.7 |
|
Additions |
39.7 |
- |
39.7 |
|
Impairments |
(157.3) |
- |
(157.3) |
|
Repaid |
- |
(51.6) |
(51.6) |
|
At 31 March 2009 |
192.5 |
- |
192.5 |
Investments are reviewed at least annually for impairment. Where there exists an indication of impairment an assessment of the recoverable amount is performed. The recoverable amount is based on the higher of the investments continued value in use or its fair value less cost to sell. The impairment charge taken above arose due to the carrying value of the asset exceeding its recoverable amount. This was determined based on the assets' fair value less cost to sell. Fair value is derived from the subsidiaries' net asset value at the balance sheet date.
(b) Listed Investments
|
Group |
Company |
|
|
£m |
£m |
|
|
Listed on the London Stock Exchange |
||
|
At 31 March 2008 |
0.5 |
- |
|
Return of capital |
(0.5) |
- |
|
At 31 March 2009 |
- |
- |
|
Group |
Company |
|
|
£m |
£m |
|
|
Historic cost of listed investments |
||
|
At 31 March 2009 |
- |
- |
|
At 31 March 2008 |
3.9 |
- |
(c) Unlisted Investments
|
Group |
Company |
|
|
£m |
£m |
|
|
At 31 March 2008 |
9.3 |
9.0 |
|
Net movements |
(9.0) |
(9.0) |
|
At 31 March 2009 |
0.3 |
- |
18. Trade and Other Receivables
|
Group |
Company |
|||
|
2009 |
2008 |
2009 |
2008 |
|
|
£m |
£m |
£m |
£m |
|
|
Amounts falling due within one year: |
||||
|
Trade receivables |
2.8 |
7.4 |
- |
- |
|
Amounts owed by Group undertakings |
- |
- |
54.8 |
414.8 |
|
Other debtors |
3.9 |
13.8 |
0.1 |
0.8 |
|
Prepayments and accrued income |
3.0 |
6.3 |
0.2 |
- |
|
9.7 |
27.5 |
55.1 |
415.6 |
|
|
Amounts falling due after more than one year: |
||||
|
Other debtors |
1.0 |
0.6 |
- |
- |
|
Total trade and other receivables |
10.7 |
28.1 |
55.1 |
415.6 |
Amounts owed by Group undertakings are unsecured and have no fixed date of repayment. They are interest free except for interest recharges for REIT compliance purposes; to ensure the interest charge is in the correct group entity.
Amounts owed by Group undertakings are reviewed at least annually for impairment. Where there exists an indication of impairment an assessment of the recoverable amount is performed. The recoverable amount is based on the fair value which is derived from the Group undertakings' net asset value and their ability to repay their debts. An impairment of £234.8million has been taken to the Company's income statement during the year against amounts owed by Group undertakings.
19. Net investment in finance leases
|
Group |
||||||
|
2009 |
2008 |
|||||
|
Gross investment in finance lease |
Unearned finance income |
Net investment in finance lease |
Gross investment in finance lease |
Unearned finance income |
Net investment in finance lease |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
|
Within one year |
0.2 |
(0.2) |
- |
0.2 |
(0.2) |
- |
|
Between two and five years |
0.8 |
(0.8) |
- |
0.8 |
(0.8) |
- |
|
Later than five years |
14.1 |
(10.3) |
3.8 |
14.3 |
(10.5) |
3.8 |
|
Impairment |
- |
- |
(1.4) |
- |
- |
- |
|
Total |
15.1 |
(11.3) |
2.4 |
15.3 |
(11.5) |
3.8 |
The Group has leased out an investment property under a finance lease of 62 years in duration. This is accounted for as a finance lease receivable rather than an investment property and is equal to the total of the discounted future lease payments and the discounted unguaranteed residual value of the property. The unguaranteed residual value of the remaining buildings comprising the investment property is £2.4 million (2008: £2.4million). The carrying value of the Group's finance lease receivables has been impaired to approximate to the fair value due to the reduction in the fair value during the year. The fair value is determined by reference to the open market value of the investment property which has been leased out. The asset is part of the property investment segment.
20. Borrowings, Including Finance Leases
|
Group |
Company |
|||
|
2009 |
2008 |
2009 |
2008 |
|
|
£m |
£m |
£m |
£m |
|
|
Amounts falling due after more than one year: |
||||
|
Bank overdrafts |
- |
322.0 |
- |
144.1 |
|
Bank loans |
- |
24.8 |
- |
- |
|
Finance lease obligations (see note 21) |
3.6 |
3.7 |
- |
- |
|
3.6 |
350.5 |
- |
144.1 |
|
|
Amounts falling due within one year: |
||||
|
Bank overdrafts |
293.8 |
55.0 |
- |
- |
|
Bank loans |
- |
0.4 |
- |
- |
|
Finance lease obligations (see note 21) |
0.1 |
0.1 |
- |
- |
|
293.9 |
55.5 |
- |
- |
|
|
Total borrowings, including finance leases |
297.5 |
406.0 |
- |
144.1 |
|
Cash and cash equivalents |
(9.0) |
(55.5) |
(1.2) |
(7.1) |
|
Net borrowings |
288.5 |
350.5 |
(1.2) |
137.0 |
Bank loans and overdrafts are secured on certain properties valued at £267.5million as detailed in note 13 and by floating charges on unit holdings in the Apia Regional Office Fund and the Ashtenne Industrial Fund, valued at £30.5million and £9.8million respectively, as set out in note 16.
|
Bank loans and overdrafts |
2009 |
2008 |
|
£m |
£m |
|
|
Group |
||
|
Within one year or on demand |
295.3 |
55.4 |
|
Between one and two years |
- |
0.5 |
|
Between two and five years |
- |
347.2 |
|
295.3 |
403.1 |
|
|
Future finance costs |
(1.5) |
(0.9) |
|
293.8 |
402.2 |
|
|
Company |
||
|
Within one year on demand |
- |
- |
|
Between two and five years |
- |
144.1 |
|
- |
144.1 |
|
Of the borrowings at 31 March 2009 none were non-recourse loans (2008: £25.2million).
As stated in note 22, the Group's operations are predominantly in the UK and therefore bank borrowings are denominated in Sterling. The Group's average cost of debt at the year end was 3.5% (2008: 5.84%). The proportions of debt held on fixed or floating rate debt, together with the hedging in place at 31 March 2009, are set out in the Net Debt section of the Finance Review. A comparison of the fair values to carrying values of financial assets and liabilities is also set out in note 22.
21. Finance Lease Obligations
|
Group |
||||||
|
2009 |
2008 |
|||||
|
Minimum lease payments under finance leases |
Future finance charges on finance leases |
Present value of minimum finance lease obligations |
Minimum lease payments under finance leases |
Future finance charges on finance leases |
Present value of minimum finance lease obligations |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
|
Within one year |
0.3 |
(0.2) |
0.1 |
0.3 |
(0.2) |
0.1 |
|
Between two and five years |
1.3 |
(1.0) |
0.3 |
1.3 |
(1.0) |
0.3 |
|
Later than five years |
14.7 |
(11.4) |
3.3 |
15.1 |
(11.7) |
3.4 |
|
Total |
16.3 |
(12.6) |
3.7 |
16.7 |
(12.9) |
3.8 |
The fair value of the Group's finance lease obligations approximate to the carrying value.
Finance lease obligations are in respect of leased investment properties.
Finance lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.
22. Financial Risk Management
Treasury policy
The Group enters into derivative transactions such as interest rate swaps and caps in order to manage the financial risks arising from the Group's activities. The main financial risks arising from the Group's financing structure are liquidity risk and interest rate risk. The policies for managing each of these risks and the principal effects of these policies on the results for the year are set out below. These are further described in the Directors' Report in the Report and Accounts which will be published in due course.
Liquidity risk
The Group's policy is to ensure that there are always sufficient working capital facilities available to meet the requirements of the business. The Group's credit facilities are all due to expire within the next 12 months, however the Group is in negotiations over extending these facilities as described in further detail in the Chairman's Statement and Note 1 Basis of Preparation above.
Capital expenditure to be incurred by the Group is funded through the revolving credit facilities. In the joint ventures, capital expenditure is funded through dedicated capital expenditure facilities. This policy ensures that adequate funds are always available to meet any capital expenditure commitments as and when they fall due.
The tables below set out the maturity analysis of the Group's financial liabilities based on undiscounted contractual obligations.
|
Group
|
|
|
||||
|
2009
|
Less than 1 year
|
1 to 2 years
|
2 to 5 years
|
Over 5 years
|
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
|
Bank loans and overdrafts
|
295.3
|
-
|
-
|
-
|
|
295.3
|
|
Trade and other payables (1)
|
28.3
|
2.8
|
1.4
|
-
|
|
32.5
|
|
Finance lease liabilities
|
0.3
|
0.3
|
1.0
|
14.7
|
|
16.3
|
|
Current income tax liabilities
|
0.1
|
-
|
-
|
-
|
|
0.1
|
|
Other provisions(2)
|
3.9
|
1.0
|
0.6
|
0.3
|
|
5.8
|
|
|
327.9
|
4.1
|
3.0
|
15.0
|
|
350.0
|
|
|
|
|
|
|
|
|
|
Interest on bank loans and overdrafts
|
6.6
|
-
|
-
|
-
|
|
6.6
|
|
Cash outflows from gross settled derivatives
|
2.2
|
0.8
|
2.5
|
16.2
|
|
21.7
|
|
|
336.7
|
4.9
|
5.5
|
31.2
|
|
378.3
|
|
(1) Excludes deferred income of £3.5million
|
||||||
|
(2) Includes future finance charges of £0.3million
|
||||||
|
Group |
||||||
|
2008 |
Less than 1 year |
1 to 2 years |
2 to 5 years |
Over 5 years |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
||
|
Bank loans and overdrafts |
55.4 |
0.5 |
347.2 |
- |
403.1 |
|
|
Trade and other payables |
26.0 |
3.3 |
6.6 |
- |
35.9 |
|
|
Finance lease liabilities |
0.3 |
0.3 |
1.0 |
15.1 |
16.7 |
|
|
81.7 |
4.1 |
354.8 |
15.1 |
455.7 |
||
|
Interest on bank loans and overdrafts |
20.9 |
20.9 |
21.5 |
- |
63.3 |
|
|
Cash inflows from gross settled derivatives |
(0.7) |
(0.8) |
(1.3) |
- |
(2.8) |
|
|
101.9 |
24.2 |
375.0 |
15.1 |
516.2 |
||
|
Company |
||||||
|
2009 |
Less than 1 year |
1 to 2 years |
2 to 5 years |
Over 5 years |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
||
|
Bank loans and overdrafts |
- |
- |
- |
- |
- |
|
|
Trade and other payables |
244.4 |
0.3 |
0.2 |
- |
244.9 |
|
|
244.4 |
0.3 |
0.2 |
- |
244.9 |
||
|
Interest on bank loans and overdrafts |
- |
- |
- |
- |
- |
|
|
Cash inflows from gross settled derivatives |
- |
- |
- |
- |
- |
|
|
244.4 |
0.3 |
0.2 |
- |
244.9 |
||
|
Company |
||||||
|
2008 |
Less than 1 year |
1 to 2 years |
2 to 5 years |
Over 5 years |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
||
|
Bank loans and overdrafts |
- |
- |
144.1 |
- |
144.1 |
|
|
Trade and other payables |
246.2 |
0.2 |
0.4 |
- |
246.8 |
|
|
246.2 |
0.2 |
144.5 |
- |
390.9 |
||
|
Interest on bank loans and overdrafts |
- |
- |
- |
- |
- |
|
|
Cash inflows from gross settled derivatives |
- |
- |
- |
- |
- |
|
|
246.2 |
0.2 |
144.5 |
- |
390.9 |
||
The contractual obligation for interest payments on the bank loans and overdrafts for the 2008 comparatives belong to a fellow group company, and therefore no interest on bank loans or overdrafts is shown in the company's maturity analysis.
Interest rate risk
The Group is exposed to market price risk through interest rate movements. As demonstrated in the section on Hedging in the Finance Review, the Group's policy is to substantially eliminate the risk arising from changes in interest rates by hedging the floating rate debt to provide certainty as to how much the interest cost will be, such that in the long term any fluctuations in interest rates will have little or no impact on reported profits. The Group is, however, exposed to market price risk in respect of the fair value of its fixed rate financial instruments. During the year the Group cancelled a £150million CAP and 3 swaps of £25million each. New hedging will be put in place when the Group has completed its refinancing.
The amount of debt fixed through swaps effective as at 31 March 2009, equates to 39% (2008:70%) of Group debt, and the remainder is floating. The floating debt is linked to LIBOR.
The Group is exposed to fair value interest rate risk on its derivative financial instruments and cash flow interest rate risk on floating rate bank loans and revolving credit facilities. The forecast cash and borrowings profile of the Group is monitored regularly to assess the mix of fixed and floating rate debt and the Group uses interest rate derivatives where appropriate to reduce its exposure to changes in interest rates and the economic environment.
At 31 March 2009, the Group's floating rate debt was £295.3million (2008: £ 324.7million net of cash balances available for offset as detailed below). Of this, £114.4million (2008: £220.1million) has been hedged with derivative instruments. The total amount of £114.4million (2008: £70.1million) is hedged by swaps and callable swaps. A cap at 6.25% was cancelled during the year (2008: £150.0million).
The derivative instruments are used to hedge the variability of cash flows from debt instruments. The fair values of derivatives are determined by discounting the future cash flows using the mid point of the relevant yields curves prevailing on the reporting dates. The derivatives are held for hedging purposes and provide protection against the effects of the rising short term interest rates. However, it is recognised that of the total hedging in place at 31 March 2009, £95.0million (2008: £50.0million) may be called at the Bank's discretion within the next five years.
The Group has elected not to designate the hedge contracts as being effective hedges for accounting purposes and therefore changes in the fair value of the hedge contracts are taken to the income statement.
Interest rate sensitivity
The table below shows the Group's sensitivity to movements in interest rates. The Group has considered the movements in interest rates over the last two years and has concluded that a 0.5% increase or decrease is a reasonable benchmark.
|
Group |
Company |
|||||||
|
2009 |
Interest Rate Swaps |
Callable Swaps |
Interest Rate Caps |
Fixed Rate Debt |
Residual Debt |
Total |
Total |
|
|
Net debt |
£19.4 |
£95.0 |
- |
- |
£180.9 |
£295.3 |
- |
|
|
Average Rate |
5.97% |
3.18% |
- |
- |
2.33% |
3.44% |
- |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
||
|
Fair Value |
(0.2) |
(5.2) |
- |
- |
- |
(5.4) |
- |
|
|
Sensitivity |
Rise of 50bps |
- |
1.8 |
- |
- |
- |
1.8 |
- |
|
Fall of 50bps |
- |
(1.8) |
- |
- |
- |
(1.8) |
- |
|
|
Interest Rate |
||||||||
|
Sensitivity |
Rise of 50bps |
- |
- |
- |
- |
(0.9) |
(0.9) |
- |
|
Fall of 50bps |
- |
- |
- |
- |
0.9 |
0.9 |
- |
|
|
Group |
Company |
|||||||||
|
2008 |
Interest Rate Swaps |
Callable Swaps |
Interest Rate Caps |
Fixed Rate Debt |
Residual Debt |
Total |
Total |
|||
|
Net debt |
£20.1m |
£50.0m |
£150.0m |
£25.2m |
£104.6m |
£349.9m |
£137.0m |
|||
|
Average Rate |
5.96% |
4.25% |
6.25% |
5.52% |
6.12% |
5.84% |
6.12% |
|||
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
||||
|
Fair Value |
(0.2) |
(2.0) |
0.6 |
- |
- |
(1.6) |
- |
|||
|
Sensitivity |
Rise of 50bps |
0.1 |
2.4 |
0.5 |
- |
- |
3.0 |
- |
||
|
Fall of 50bps |
(0.1) |
(3.3) |
(0.2) |
- |
- |
(3.6) |
- |
|||
|
Interest Rate |
||||||||||
|
Sensitivity |
Rise of 50bps |
0.1 |
- |
0.8 |
- |
0.5 |
1.4 |
0.7 |
||
|
Fall of 50bps |
(0.1) |
- |
(0.8) |
- |
(0.5) |
(1.4) |
(0.7) |
|||
The total sensitivity to interest rate increases and decreases is the total impact on both the income statement and equity. This is based on debt balances and prevailing interest rates at the year end.
The residual debt is net of cash balances of nil (2008: £52.3million) for the Group and nil (2008: £7.1million) for the company as cash is no longer offset under the Group's borrowing arrangements.
At 31 March 2009 the fair value of the Group's derivative instruments resulted in a £5.4million net liability (2008: £1.6million net liability). Had the interest rates been 0.5% higher, the fair value would have been reduced by £1.8million (2008: £3.0million). Had the interest rates been 0.5% lower, the fair value would have been increased by £1.8million (2008: £3.6million).
During the year the Group repaid fixed rate liabilities of £25.2million (2008: £25.2million) at a rate of 5.52%. (2008: 5.52%). At 31 March 2008 the fair value adjustment (which is not booked) of the fixed rate liabilities was a negative £0.2million, giving a fair value of £25.4million.
At 31 March 2009, the residual floating rate debt amounted to £180.9million (2008: £104.6million). If short term interest rates had been 0.5% higher the annualised cost to the Group would have been £0.9million higher (2008: £0.5million). Had short term rates been 0.5% lower the Group would have benefited by the same amount.
Foreign currency risk
The Group has no material foreign currency exposure as the Group's operations are predominantly in the UK and therefore virtually all revenue and costs are denominated in Sterling.
Credit Risk
The Group has no significant concentration of credit risk as exposure is spread over a large number of counterparties.
The credit risk in liquid funds and derivative financial instruments is limited due to the counterparties being banks with high credit ratings assigned by international credit rating agencies. As at the balance sheet date the book value of loans £295million and the fair values of swaps and caps approximates to this credit risk exposure.
The maximum amount the Group is exposed to on investments in funds, listed and unlisted investments is the carrying values in the balance sheet. Investments in funds are with reputable counterparties. Financial information is issued by all investments on a regular basis which is reviewed by management.
The Group is exposed to credit risk in respect of its trade receivables. Potential customers are evaluated for creditworthiness and, where necessary, collateral is secured in the form of rent deposits. There is no concentration of credit risk within the lease portfolio to either business sector or individual company as the Group has a well spread and diverse customer base.
At 31 March 2009, trade and other receivables consisting of rents and asset management fees receivable, of £7.6million (2008: £7.4million) were past due but not impaired. These relate to customers for whom there is no recent history or indication of default. The amounts presented in the balance sheet are net of allowances for doubtful receivables.
The ageing analysis of these trade receivables is as follows:
|
Group |
2009 |
2008 |
|
£m |
£m |
|
|
Up to three months |
6.4 |
6.5 |
|
Three to six months |
1.2 |
0.9 |
|
7.6 |
7.4 |
Capital Risk Management
The current capital structure of the Group is considered appropriate and consists of a mix of equity and net debt. Equity comprises issued capital, reserves and retained earnings as disclosed in Notes 26 and 27. Debt primarily comprises long-term committed revolving credit facilities from banks as disclosed in Note 20.
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern in order to optimise return to shareholders, and it aims to maintain a prudent mix between debt and equity financing. The Group is not subject to any externally imposed capital requirements. There have been no changes in the capital structure since the prior period.
Derivative Financial Instruments
Gains and Losses on Derivatives held to Manage Debt
The Group uses interest rate derivatives to manage its interest rate profile. Changes in the fair value of these derivatives are recognised in the income statement. An analysis of these derivatives and gains / (losses) thereon is as follows:
|
Group |
|||
|
Derivative financial assets |
Derivative financial liabilities |
Total |
|
|
£m |
£m |
£m |
|
|
Fair value at 31 March 2008 |
(0.6) |
2.2 |
1.6 |
|
Change in fair value of derivative financial instruments during the year |
(0.2) |
3.2 |
3.0 |
|
Fair value of derivative financial instruments cancelled of during the year |
0.8 |
- |
0.8 |
|
Fair value at 31 March 2009 |
- |
5.4 |
5.4 |
|
Financial Instruments - Categories |
Group |
|||
|
2009 |
2008 |
|||
|
Carrying value |
Fair value |
Carrying value |
Fair value |
|
|
£m |
£m |
£m |
£m |
|
|
Financial assets |
||||
|
Fair value through income statement - held for trading |
||||
|
Derivative financial assets |
- |
- |
0.6 |
0.6 |
|
Fair value through income statement - designated on inception |
||||
|
Investments in funds |
47.5 |
47.5 |
98.9 |
98.9 |
|
Investments in listed and unlisted shares |
0.3 |
0.3 |
9.8 |
9.8 |
|
Net investment in finance leases |
2.4 |
2.4 |
3.8 |
3.8 |
|
Loans and receivables |
||||
|
Trade and other receivables (1) |
8.9 |
8.9 |
27.1 |
27.1 |
|
Cash and cash equivalents |
9.0 |
9.0 |
55.5 |
55.5 |
|
Financial liabilities |
||||
|
Fair value through income statement - held for trading |
||||
|
Derivative financial liabilities |
(5.4) |
(5.4) |
(2.2) |
(2.2) |
|
Amortised cost |
||||
|
Borrowings(2) |
(295.3) |
(295.3) |
(403.1) |
(403.3) |
|
Trade and other payables (3) |
(32.5) |
(32.5) |
(30.6) |
(30.6) |
|
Finance lease obligations |
(3.7) |
(3.7) |
(3.8) |
(3.8) |
|
(1) Excludes prepayments of £1.8million (2008: £1.0million) |
||||
|
(2) Fair value adjustment of £0.2million in 2008 relates to fixed rate debt which was repaid in 2009 |
||||
|
(3)Excludes deferred income of £3.5million (2008: £5.3million) |
||||
|
Company |
||||
|
2009 |
2008 |
|||
|
Carrying value |
Fair value |
Carrying value |
Fair value |
|
|
£m |
£m |
£m |
£m |
|
|
Financial assets |
||||
|
Loans and receivables |
||||
|
Trade and other receivables(1) |
54.9 |
54.9 |
415.6 |
415.6 |
|
Cash and cash equivalents |
1.2 |
1.2 |
7.1 |
7.1 |
|
Financial liabilities |
||||
|
Amortised cost |
||||
|
Borrowings |
- |
- |
(144.1) |
(144.1) |
|
Trade and other payables |
244.9 |
244.9 |
(246.8) |
(246.8) |
|
(1)Excludes prepayments of £0.2million (2008: nil) |
||||
23. Deferred Income Tax
|
Group |
Company |
|||
|
2009 |
2008 |
2009 |
2008 |
|
|
£m |
£m |
£m |
£m |
|
|
Deferred taxation assets |
||||
|
Deferred taxation arising from unrealised derivative financial instruments valuations |
- |
0.6 |
- |
- |
|
Deferred taxation arising from retirement benefit obligations |
0.2 |
- |
- |
- |
|
Deferred taxation arising from share based payments |
- |
0.3 |
- |
- |
|
Unrealised property and investment valuations |
- |
1.0 |
- |
- |
|
0.2 |
1.9 |
- |
- |
|
|
Deferred taxation liabilities |
||||
|
Deferred taxation arising from the temporary differences noted below: |
||||
|
Unrealised property and investment valuations |
- |
(6.2) |
- |
- |
|
- |
(6.2) |
- |
- |
|
The movement in deferred tax assets and liabilities during the year is as follows:
|
Group |
Company |
||||||
|
Unrealised fair value gains |
Derivative financial instruments |
Retirement benefit obligations |
Share Based Payments |
Total |
Share Based Payments |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
Deferred tax assets at 31 March 2008 |
1.0 |
0.6 |
- |
0.3 |
1.9 |
- |
- |
|
Prior year adjustment |
- |
- |
- |
- |
- |
- |
- |
|
1.0 |
0.6 |
- |
0.3 |
1.9 |
- |
- |
|
|
Charged to income statement |
(1.0) |
(0.6) |
- |
(0.3) |
(1.9) |
- |
- |
|
Charged to reserves |
- |
- |
0.2 |
- |
0.2 |
- |
- |
|
Total impact |
(1.0) |
(0.6) |
0.2 |
(0.3) |
(1.7) |
- |
- |
|
Deferred tax assets at 31 March 2009 |
- |
- |
0.2 |
- |
0.2 |
- |
- |
|
Unrealised fair value gains |
Group Total |
|
|
£m |
£m |
|
|
Deferred tax liabilities at 31 March 2008 |
(6.2) |
(6.2) |
|
Credited to income statement |
6.2 |
6.2 |
|
Total impact |
6.2 |
6.2 |
|
Deferred tax liabilities at 31 March 2009 |
- |
- |
24. Other Provisions
|
Onerous contracts |
Performance fees |
Total |
|
|
£m |
£m |
£m |
|
|
Group |
|||
|
At 31 March 2008 |
3.0 |
1.6 |
4.6 |
|
Charged to consolidated income statement: |
2.4 |
0.9 |
3.3 |
|
Utilised during the year |
(2.4) |
- |
(2.4) |
|
At 31 March 2009 |
3.0 |
2.5 |
5.5 |
Provisions have been analysed between current and non-current as follows:
|
Group |
||
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Non-current |
1.6 |
1.4 |
|
Current |
3.9 |
3.2 |
|
5.5 |
4.6 |
|
The onerous lease provision is made in relation to onerous leases on properties which are vacant or sublet at a level which renders the properties loss-making over the remaining life of the lease. The remaining lease lengths range between 1 and 11 years.
The provision represents the net cash flows on the properties as calculated by DTZ Debenham Tie Leung.
|
The key assumptions used are: |
|
|
Rental growth rate |
1.00% per annum |
|
Inflation rate |
0.00% per annum |
|
Discount rate |
3.51% |
25. Trade And Other Payables
|
Group |
Company |
|||
|
2009 |
2008 |
2009 |
2008 |
|
|
£m |
£m |
£m |
£m |
|
|
Amounts falling due within one year: |
||||
|
Trade payables |
1.0 |
1.2 |
0.1 |
- |
|
Amounts owed to Group undertakings |
- |
- |
242.6 |
240.5 |
|
Other taxation and social security |
1.1 |
2.0 |
- |
1.1 |
|
Other payables |
8.4 |
11.9 |
1.4 |
4.2 |
|
Accruals and deferred income |
21.2 |
10.9 |
0.3 |
0.4 |
|
31.7 |
26.0 |
244.4 |
246.2 |
|
|
Amounts falling due after more than one year: |
||||
|
Other payables |
4.3 |
9.9 |
0.5 |
0.6 |
|
Total trade and other payables |
36.0 |
35.9 |
244.9 |
246.8 |
Amounts owed to Group undertakings are unsecured and have no fixed date of repayment. They are interest free except for interest recharges for REIT compliance purposes; to ensure the interest charge is in the correct group entity.
26. Share capital
|
2009 |
2008 |
|
|
Group and Company |
£m |
£m |
|
Authorised |
||
|
60,000,000 Ordinary shares of 5p |
3.0 |
3.0 |
|
Allotted, called up and fully paid |
||
|
Ordinary shares of 5p |
||
|
At 1 April |
2.8 |
2.8 |
|
Allotted through exercise of shares (2009: nil shares, 2008: 62,655 shares) |
- |
- |
|
At 31 March (2009: 56,170,865 shares, 2008: 56,170,865 shares) |
2.8 |
2.8 |
Warner Estate Holdings PLC 1995 Share Option Scheme
At 31 March 2009 there were share options to subscribe for Ordinary shares under the Warner Estate Holdings 1995 Share Option Scheme as follows:
|
At 303.5p per share exercisable between 16 August 2004 and 15 August 2011 |
77,515 shares |
|
At 319p per share exercisable between 17 July 2005 and 16 July 2012 |
88,403 shares |
|
At 367.5p per share exercisable between 27 June 2006 and 26 June 2013 |
141,357 shares |
|
At 495p per share exercisable between 8 July 2007 and 7 July 2014 |
150,521 shares |
|
457,796 shares |
|
2009 |
2008 |
||||
|
Number |
Average exercise price |
Number |
Average exercise price |
||
|
p |
p |
||||
|
At 1 April |
515,636 |
387.9 |
606,529 |
399.2 |
|
|
Options granted |
- |
- |
- |
- |
|
|
Options exercised |
- |
- |
(27,855) |
391.3 |
|
|
Options expired/lapsed |
(57,840) |
377.5 |
(63,038) |
495.0 |
|
|
Options forfeited |
- |
- |
- |
- |
|
|
At 31 March |
457,796 |
389.2 |
515,636 |
387.9 |
|
All 457,796 of the options outstanding at 31 March 2009 (2008: 515,636) were exercisable.
Warner Estate Holdings PLC Performance Share Plan
At 31 March 2009 there were share options to subscribe for Ordinary shares at nil cost under the Warner Estate Holdings Performance Share Plan as follows:
|
Exercisable between 4 October 2008 and 3 April 2009 |
4,554 shares |
|
Exercisable between 19 January 2009 and 18 July 2010 |
3,592 shares |
|
Exercisable between 26 June 2009 and 25 December 2010 |
143,309 shares |
|
Exercisable between 1 August 2009 and 31 January 2010 |
4,703 shares |
|
Exercisable between 21 February 2010 and 20 August 2011 |
4,589 shares |
|
Exercisable between 31 July 2010 and 30 January 2011 |
230,156 shares |
|
Exercisable between 14 July and 13 January 2012 |
644,981 shares |
|
1,035,884 shares |
|
2009 |
2008 |
||||
|
Number |
Average exercise price |
Number |
Average exercise price |
||
|
p |
p |
||||
|
At 1 April |
582,006 |
- |
364,756 |
- |
|
|
Options granted |
704,413 |
- |
269,385 |
- |
|
|
Options exercised |
(18,934) |
- |
- |
- |
|
|
Options expired/lapsed |
(123,742) |
- |
- |
- |
|
|
Options forfeited |
(107,859) |
- |
(52,135) |
- |
|
|
At 31 March |
1,035,884 |
- |
582,006 |
- |
|
8,146 of the options outstanding at 31 March 2009 were exercisable (2008: Nil).
The average share price during the year was 118.0p (2008: 537.7p).
The key assumptions used in valuing the fair value of share based payments are as follows:
|
Exercise price |
£nil |
|
Share price |
Price at date of grant |
|
Expected term |
3 years |
|
Expected volatility(1) |
25% for awards granted on 30 July 2007, 22% for awards granted on 21 February 2007, 38.5% for awards granted on 14 July 2008, 19% for all other awards |
|
Expected dividend yield |
Dividends paid in the 12 months prior to grant calculated as a percentage of the share price on the date of grant |
|
Risk free interest rate |
Not applicable as exercise price is £nil |
|
Model used |
Black-Scholes |
(1) Volatility is calculated by looking at the historical share price movements prior to the date of grant over a period of time commensurate with the expected term for each award (i.e. 3 years). The formula calculates the ratio of each day's price to the preceding value, which gives a "dimensionless" figure. The final step is to calculate the standard deviation of the logs of these ratios and to annualise this figure.
27. Other Reserves
|
Share Premium |
Share Based Payments |
Revaluation Reserve |
Other Reserve |
Treasury Shares |
*Retained Earnings |
Total |
||
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
||
|
Group |
||||||||
|
At 31 March 2008 |
40.7 |
2.5 |
(7.9) |
8.0 |
(1.5) |
261.8 |
303.6 |
|
|
Retained loss for the year |
- |
- |
- |
- |
- |
(293.8) |
(293.8) |
|
|
Realised on disposal of investment properties |
- |
- |
(5.3) |
- |
- |
5.3 |
- |
|
|
Realised on disposal of joint ventures' investment properties |
- |
- |
10.7 |
- |
- |
(10.7) |
- |
|
|
Realised on disposal of investment |
- |
- |
3.5 |
- |
- |
(3.5) |
- |
|
|
Net loss from fair value adjustment on investment properties |
- |
- |
(98.8) |
- |
- |
98.8 |
- |
|
|
Share of joint ventures' net loss from fair value adjustment on investment properties |
- |
- |
(43.5) |
- |
- |
43.5 |
- |
|
|
Net loss from fair value adjustment on unlisted investments |
- |
- |
(60.4) |
- |
- |
60.4 |
- |
|
|
Change in fair value of derivative financial instruments |
- |
- |
(3.0) |
- |
- |
3.0 |
- |
|
|
Change in fair value of joint ventures' derivative financial instruments |
- |
- |
(29.8) |
- |
- |
29.8 |
- |
|
|
Dividends paid |
- |
- |
- |
- |
- |
(6.3) |
(6.3) |
|
|
Actuarial gains on pension scheme assets |
- |
- |
- |
- |
- |
(0.8) |
(0.8) |
|
|
Deferred tax movement on pension assets |
- |
- |
- |
- |
- |
0.2 |
0.2 |
|
|
Cost of share based payments |
- |
(0.7) |
- |
- |
- |
0.3 |
(0.4) |
|
|
At 31 March 2009 |
40.7 |
1.8 |
(234.5) |
8.0 |
(1.5) |
188.0 |
2.5 |
|
|
\* The closing balance on retained earnings reserve includes £0.7million liability (2008: £0.1million) stated after a deferred tax asset of £0.2million (2008: £nil) in respect of the Group's defined benefit pension scheme as set out in note 3 to the accounts. |
||||||||
The total expenses written back for share based payments for the Group was £0.6million (2008: £0.8million expense).
|
Non-distributable Reserves |
Distributable Reserves |
|||||||
|
Share Premium |
Share Based Payments |
Revaluation Reserve |
Other Reserve |
Treasury Shares |
Retained Earnings |
Total |
||
|
Company |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
At 31 March 2008 |
40.7 |
2.5 |
(4.9) |
7.0 |
(1.5) |
359.4 |
403.2 |
|
|
Retained loss for the year |
- |
- |
- |
- |
- |
(394.0) |
(394.0) |
|
|
Transfer |
- |
- |
4.9 |
- |
- |
(4.9) |
- |
|
|
Dividends paid |
- |
- |
- |
- |
- |
(6.3) |
(6.3) |
|
|
Cost of share based payments |
- |
(0.7) |
- |
- |
- |
0.3 |
(0.4) |
|
|
At 31 March 2009 |
40.7 |
1.8 |
- |
7.0 |
(1.5) |
(45.5) |
2.5 |
|
28. Consolidated Statement of Changes in Equity
For the year ended 31 March 2009
|
Group |
Company |
||||
|
Notes |
2009 |
2008 |
2009 |
2008 |
|
|
£m |
£m |
£m |
£m |
||
|
Opening equity shareholders' funds |
305.2 |
432.7 |
404.8 |
219.1 |
|
|
Shares issued |
26 |
- |
- |
- |
- |
|
Share premium on shares issued |
27 |
- |
0.3 |
- |
0.3 |
|
Acquisition of own shares |
27 |
- |
(0.5) |
- |
(0.5) |
|
Disposal of own shares |
29 |
0.1 |
0.1 |
0.1 |
0.1 |
|
Cost of share based payments |
27 |
(0.4) |
0.8 |
(0.4) |
0.8 |
|
Deferred tax arising on share based payments |
23 |
- |
(0.8) |
- |
- |
|
Acquisition of treasury shares |
27 |
- |
(1.5) |
- |
(1.5) |
|
304.9 |
431.1 |
404.5 |
218.3 |
||
|
Total recognised income and expense for the year |
(294.4) |
(113.4) |
(394.0) |
199.0 |
|
|
Dividend paid in year |
10 |
(6.3) |
(12.5) |
(6.3) |
(12.5) |
|
Closing equity shareholders' funds |
4.2 |
305.2 |
4.2 |
404.8 |
|
29. Investment in Own Shares
|
Group and Company |
||
|
Number |
Cost |
|
|
'000 |
£m |
|
|
At 31 March 2008 |
276.1 |
1.2 |
|
Additions |
336.5 |
- |
|
Disposals |
(64.4) |
(0.1) |
|
At 31 March 2009 |
548.2 |
1.1 |
Additions relate to the Inland Revenue Approved All-Employee Share Ownership Plan.
Included in investment in own shares are shares relating to the Inland Revenue Approved All-Employee Share Ownership Plan, as follows:
|
2009 |
2008 |
|||||
|
Number |
Cost |
Market value |
Number |
Cost |
Market value |
|
|
'000 |
£m |
£m |
'000 |
£m |
£m |
|
|
Partnership shares purchased by employees held in Trust |
207.6 |
- |
- |
41.0 |
- |
0.1 |
|
Matching and Free shares not yet vested |
304.4 |
1.0 |
0.1 |
180.0 |
1.0 |
0.6 |
|
512.0 |
1.0 |
0.1 |
221.0 |
1.0 |
0.7 |
|
The vesting of Matching and Free shares is conditional on meeting the conditions of the scheme which are summarised in the Report and Accounts which will be published in due course.
30. Directors' Interests and Related Party Transactions
Transactions between the company and subsidiaries, which are related parties, have been eliminated on consolidation for the Group.
Compensation of key management personnel is disclosed in the Report and Accounts which will be published in due course.
Transactions between the parent company and its subsidiaries are shown below:
|
2009 |
2008 |
||
|
Subsidiary |
Nature of transaction |
£m |
£m |
|
Cardiff and Provincial Properties Limited |
Dividend |
- |
- |
|
Clay Estates Limited |
Dividend |
- |
- |
|
Clay Group Limited |
Dividend |
- |
40.4 |
|
Lancaster Holdings Limited |
Dividend |
10.9 |
- |
|
Lancaster Investments Limited |
Dividend |
- |
- |
|
Lotkeep Limited |
Dividend |
3.4 |
- |
|
Warner Estate (Folkestone) Limited |
Dividend |
- |
0.7 |
|
Warner Estate (Jersey) Limited |
Dividend |
- |
85.0 |
|
Warner Estate, Limited |
Dividend |
- |
- |
|
Warner Investments Limited |
Dividend |
- |
27.4 |
Balances outstanding between the parent company and its subsidiaries are shown below:
|
Amounts owed by subsidiaries |
Amounts owed to subsidiaries |
|||
|
2009 |
2008 |
2009 |
2008 |
|
|
Subsidiary |
£m |
£m |
£m |
£m |
|
Ashtenne Holdings Limited |
- |
- |
(0.1) |
- |
|
Cardiff and Provincial Properties Limited |
- |
- |
(11.9) |
(9.7) |
|
Clay Estates Limited |
- |
(79.6) |
(79.6) |
|
|
Clay Group Limited |
- |
- |
(5.1) |
(5.1) |
|
Industrial Funds Limited |
- |
7.6 |
(3.2) |
- |
|
JS Real Estate Limited |
- |
- |
(64.6) |
(13.5) |
|
Lancaster Holdings Limited |
- |
- |
- |
(90.9) |
|
Lancaster Investments Limited |
- |
26.2 |
- |
- |
|
Lotkeep Limited |
- |
- |
- |
(3.2) |
|
Middleton (Jersey) One Limited |
- |
- |
(0.5) |
- |
|
Principal Leasehold Properties Limited |
- |
- |
- |
(12.2) |
|
Skipper Offices Limited |
- |
- |
(0.7) |
(0.7) |
|
Vere Street Investments Limited |
- |
4.3 |
(3.0) |
- |
|
Warner Estate (AIF) Limited |
- |
- |
(1.6) |
(1.3) |
|
Warner Estate (GLO) Limited |
- |
9.5 |
- |
- |
|
Warner Estate Asset Management Limited |
- |
- |
(0.3) |
(3.6) |
|
Warner Estate Development (Folkestone) Limited |
20.5 |
2.0 |
- |
- |
|
Warner Estate Investments Limited |
- |
133.3 |
(52.5) |
- |
|
Warner Estate (Jersey) Limited |
0.7 |
- |
- |
(0.5) |
|
Warner Estate (Joint Ventures) Limited |
- |
140.9 |
- |
- |
|
Warner Estate, Limited |
33.6 |
31.6 |
- |
- |
|
Warner Estate Management Limited |
- |
2.9 |
(2.8) |
- |
|
Warner Estate Property Limited |
- |
56.5 |
- |
- |
|
Warner Estate Property Management Limited |
- |
- |
(16.7) |
(20.2) |
|
54.8 |
414.8 |
(242.6) |
240.5 |
|
No fees were paid in respect of contracts, which provided services in the ordinary course of business to the Group, and in which Directors have or had interests.
During the year there were loan transactions between the Group and joint ventures, as set out in note 15. Interest payable on these loans and management charges, payable by the joint ventures, are also set out in note 15.
31. Reconciliation of operating profit to net cash flow
|
Group |
Company |
|||
|
2009 |
2008 |
2009 |
2008 |
|
|
£m |
£m |
£m |
£m |
|
|
Operating profit / (loss) before net gains on investments |
16.5 |
20.6 |
0.4 |
(3.2) |
|
Depreciation of plant and equipment |
0.1 |
0.2 |
- |
- |
|
Decrease in trade and other receivables |
5.5 |
9.0 |
139.1 |
28.5 |
|
(Decrease) / increase in trade and other payables |
(9.5) |
(22.9) |
4.7 |
(28.7) |
|
Cash generated from operations |
12.6 |
6.9 |
144.2 |
(3.4) |
32. Contingent Liabilities
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Contingent liabilities in respect of guarantees given by the Company in respect of borrowings of its subsidiaries as follows: |
||
|
Bank overdrafts |
215.0 |
231.8 |
|
215.0 |
231.8 |
These liabilities have not been recognised on the balance sheet. The Company has given letters of support to various subsidiary undertakings.
33. Operating Lease Commitments
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Group |
||
|
Annual commitments in respect of operating leases on properties are as follows: |
||
|
Within one year |
0.2 |
0.2 |
|
Expiring between two and five years |
0.6 |
0.6 |
|
Expiring after five years |
1.3 |
1.3 |
|
2.1 |
2.1 |
34. Operating Leases Granted
The Group earns rental income by leasing its investment properties to tenants under operating leases.
At the balance sheet date, the Group had contracted with tenants to receive the following future minimum lease payments:
|
2009 |
2008 |
|
|
£m |
£m |
|
|
Group |
||
|
Within one year |
15.8 |
28.6 |
|
Expiring between two and five years |
48.6 |
75.2 |
|
Expiring after five years |
61.8 |
127.8 |
|
126.2 |
231.6 |
35. Fixed Asset investments
|
Issued Share Capital |
Percentage Held |
||
|
Principal Subsidiary Companies |
£ |
||
|
Holding and Services |
|||
|
*Apia Asset Management Limited |
£1 Ordinary Shares |
1 |
100 |
|
*Ashtenne Asset Management Limited |
10p Ordinary Shares |
100 |
100 |
|
*Ashtenne Holdings Limited |
20p Ordinary Shares |
7,220,942 |
100 |
|
Industrial Funds Limited |
£1 A Ordinary Shares |
250,000 |
100 |
|
£1 B Ordinary Shares |
250,000 |
100 |
|
|
*Radial Distribution Asset Management Limited |
£1 Ordinary Shares |
1 |
100 |
|
Warner Estate Management Limited |
£1 Ordinary Shares |
2 |
100 |
|
*Warner Active Management No 2 Limited |
£1 Ordinary Shares |
1 |
100 |
|
*Warner Active Management No 4 Limited |
£1 Ordinary Shares |
1 |
100 |
|
*Warner Advisors (Jersey) Limited (Jersey) |
£1 Ordinary Shares |
1 |
100 |
|
Warner Estate Asset Management Limited |
10p Ordinary Shares |
1,636,000 |
100 |
|
Warner Estate Property Management Limited |
10p Ordinary Shares |
3,987,000 |
100 |
|
*Warner Estate (AM:PM) Limited |
£1 Ordinary Shares |
1 |
100 |
|
Property Investment |
|||
|
JS Real Estate Limited |
25p Ordinary Shares |
16,283,350 |
100 |
|
Lancaster Holdings Limited |
£1 Ordinary Shares |
100 |
100 |
|
£1 Deferred Shares |
100 |
100 |
|
|
Lancaster Investments Limited |
£1 Shares |
1,000 |
100 |
|
Warner Estate Development (Folkestone) Limited |
£1 Ordinary Shares |
1 |
100 |
|
Warner Estate Investments Limited |
£1 Ordinary Shares |
1 |
100 |
|
Warner Estate Property Limited |
£1 Ordinary Shares |
40,000,000 |
100 |
|
Other Investment |
|||
|
Cardiff and Provincial Properties Limited |
25p Ordinary Shares |
162,000 |
100 |
|
Warner Estate, Limited |
£1 Ordinary Shares |
1 |
100 |
|
*Warner Estate (AIF) Limited (Jersey) |
£1 Ordinary Shares |
1 |
100 |
|
£1 Redeemable Preference Shares |
12,000,000 |
100 |
|
|
*Warner Estate (GLO) Limited (Jersey) |
£1 Ordinary Shares |
1 |
100 |
|
Warner Estate Joint Ventures Limited |
£1 Ordinary Shares |
1 |
100 |
|
Joint Ventures |
|||||
|
Property Investment |
|||||
|
*Agora Shopping Centres Limited |
£1 A Ordinary Shares |
7,323,013 |
100 |
||
|
£1 B Ordinary Shares |
7,323,013 |
- |
|||
|
*Agora Max Limited |
£1 A Ordinary Shares |
32,538,535 |
100 |
||
|
£1 B Ordinary Shares |
32,538,535 |
- |
|||
|
*Apia Regional Office Fund (General Partner) Limited |
£1 A Ordinary Shares |
25,000 |
- |
||
|
£1 B Ordinary Shares |
25,000 |
100 |
|||
|
*Greater London Offices Limited |
£1 A Ordinary Shares |
500,000 |
100 |
||
|
£1 B Ordinary Shares |
500,000 |
- |
|||
|
*Radial Distribution Limited |
£1 A Ordinary Shares |
8,345,419 |
100 |
||
|
£1 B Ordinary Shares |
8,345,419 |
- |
|||
|
Principal Other Investments |
|||||
|
Investment in Shares |
|||||
|
*Ashtenne Industrial (General Partner) Limited |
£1 A Ordinary Shares |
120 |
- |
||
|
£1 B Ordinary Shares |
60 |
100 |
|||
|
Investment in Funds |
|||||
|
*Apia Regional Office Fund Unit Trust (Jersey) |
£1 Units |
190,532,109 |
27.43 |
||
|
*Ashtenne Industrial Fund Unit Trust (Jersey) |
£1 Units |
358,695,267 |
6.52 |
||
|
* Held through a subsidiary company |
|||||
|
All companies are incorporated in the UK and registered in England unless otherwise indicated. |
|||||
The companies listed above are those subsidiary undertakings whose results or financial position, in the opinion of the Directors, principally affected the figures in the Group's financial statements. The Company has taken advantage of s231(5) and (6) Companies Act 1985 in not listing all its subsidiary and joint venture undertakings. All of the subsidiaries have been consolidated in the Group financial statements.
Related Shares:
Wt Wner Usd