18th May 2006 07:02
Wichford plc18 May 2006 18 May 2006 Wichford PLC Interim results Wichford PLC, the property investment company, today announces its interimresults for the six months to 31 March 2006. Highlights • Net assets of £192.6 million, increased from £167.5 million at the end of September 2005 • Net asset value up by over 13% to 195 pence per share during the six months • 13 properties acquired during the period for £127 million at an average blended yield of 6.7% • Wichford now owns 59 properties valued at £416.6 million with an annualised rental income of over £25 million • Interim dividend of 3 pence per share with final dividend expected to be not less than 6.5p per share Michael Sheehan, Chairman of Wichford, commented today: "The Group has made good progress during the six month period, despite a verycompetitive market environment. We continue to take a conservative view ofcapital growth and yield prospects and so have acquired fewer properties overthe period than previously anticipated and it seems likely that this trend willcontinue for the remainder of the current financial year. As provincial yieldshave converged with those in Central London and with currently little provincialrental growth, we will now start to include Central London as a potentiallocation for future acquisitions." Enquiries: Wichford PLCJamie Hambro Tel: 020 7747 5678Philip Cooper Tel 020 7495 7111 Citigate Dewe Rogerson Tel: 020 7638 9571Patrick Toyne-SewellGeorge Cazenove Chairman's statement The Group made good progress during the six month period, despite a verycompetitive market environment. Wichford acquired a further 13 properties for£127 million at an average blended yield of 6.7% and now owns a total of 59properties. The Group's properties were valued at £416.6 million at 31 March2006, and showed a surplus of £21.1 million compared to the valuation at 30September 2005. Fully diluted net assets were 195p per share - up 13.3% from 30September 2005. Earnings for the period were £3.1 million or 3.22p per share, an increase of 34%over the comparable period in the previous year. The Board has declared an interim dividend of 3p per share payable in June 2006.In the absence of unforeseen circumstances the Board expects to be able torecommend a final dividend of not less than 6.5p per share, making not less than9.5p per share for the full year. When the acquisition programme issubstantially complete, it is the Board's intention to balance the split ofdividends between the two halves of the year. The market for institutional property with prime covenants and relatively longleases to expiry continued to be very strong during the period. The Board andthe Property Adviser have continued to take a conservative view of capitalgrowth and yield prospects on proposed acquisitions. In consequence, the numberof properties acquired during the period was lower than anticipated and it seemslikely that this trend will continue for the remainder of the current financialyear. As a result, cash balances during the period, and the interest earnedthereon, were greater than expected at £44.9 million and £1.5 millionrespectively. The differential between yields on properties in the provinces when compared toyields prevailing in Central London has narrowed considerably since the Companywas first listed in August 2004. Moreover there is currently little rentalgrowth outside Central London. The Board has noted that the impact of the LyonsReview has been considerably less than expected, with far fewer Governmentemployees being relocated outside Central London than was predicted by thereview. In consequence, the Board now believes, that the Company should includeCentral London as a potential location for future acquisitions. The Board has examined the Real Estate Investment Trusts ("REIT") proposalsannounced in the Budget in March 2006. Based on the gross assets at the periodend and the 2% conversion charge, the cost of converting the Company into a REITwould be over £8 million. As yet, it is not clear that comparable benefits wouldaccrue to shareholders from conversion, although the Board will continue tomonitor the evolution of REITs. Since the period end, Gareth Evans has resigned as a Director of the Company dueto other commitments. The Board is extremely appreciative of his adviceregarding the Company's development and his colleagues wish him well in thefuture. Michael SheehanChairman17 May 2006 WICHFORD PLCCONSOLIDATED PROFIT & LOSS ACCOUNTFor the six months ended 31 March 2006 Six months to 31 28 June 2004 to 31 28 June 2004 to 30 March 2006 March 2005 September 2005 £'000 £'000 £'000 (unaudited) (unaudited) (restated) TURNOVER 10,824 7,952 17,753 Administrative expenses (2,789) (1,890) (3,490) OPERATING PROFIT 8,035 6,062 14,263 Interest receivable 1,493 372 969 Interest payable (6,394) (5,616) (10,483)Exceptional costs of financial - - (2,340)restructuring PROFIT ON ORDINARY ACTIVITIESBEFORE TAX 3,134 818 2,409Taxation (23) (22) (4) PROFIT ON ORDINARY ACTIVITIES AFTER TAX 3,111 796 2,405 EARNINGS PER SHARE: 3.20 2.40 5.21Basic - pence CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS & LOSSESFor the six ended 31 March 2006 Six months to 31 28 June 2004 to 28 June 2004 to 30 March 2006 31 March 2005 September 2005 £'000 £'000 £'000 (unaudited) (unaudited) (restated) Profit for the period 3,111 796 2,409 Unrealised surplus on revaluationof investment properties 21,088 6,245 9,243 TOTAL RECOGNISED GAINS RELATING TO THEPERIOD 24,199 7,041 11,652 All activities are continuing. WICHFORD PLCCONSOLIDATED BALANCE SHEETAs at 31 March 2006 31 March 2006 31 March 2005 30 September 2005 £'000 £'000 £'000 (unaudited) (unaudited) (restated) FIXED ASSETSTangible assets - Investment properties 418,719 211,000 267,085 CURRENT ASSETSDebtors 6,519 4,173 3,378Cash at bank 44,953 13,729 90,112 51,472 17,902 93,490 CREDITORS:Amounts falling due within one year (17,421) (10,189) (9,206)NET CURRENT ASSETS 34,051 7,713 84,284 TOTAL ASSETS LESS CURRENT LIABILITIES 452,770 218,713 351,369 CREDITORS:Amounts falling due after more than oneyear (260,137) (152,117) (180,399) NET ASSETS 192,633 66,596 170,970 CAPITAL AND RESERVESCalled up share capital 9,733 4,065 9,733Share Premium 148,883 55,203 148,857Revaluation Reserve 30,331 6,245 9,243Profit and Loss Account 3,686 1,083 3,137Equity Shareholders' Funds 192,633 66,596 170,970 NET ASSET VALUEBasic - pence per share 197.93 163.84 175.67After deducting dividends proposed and 194.93 163.84 172.10payable - pence per share WICHFORD PLCCONSOLIDATED CASH FLOW STATEMENTFor the six months ended 31 March 2006 Six months to 28 June 2004 to 28 June 2004 to 31 March 2006 31 March 2005 30 September 2005 £'000 £'000 £'000 (unaudited) (unaudited) (restated)NET CASH INFLOW FROM OPERATINGACTIVITIES 14,021 10,164 16,792 RETURN ON INVESTMENT AND SERVICING OFFINANCEInterest received 1,493 350 969Interest paid (6,394) (3,507) (8,577) NET OUTFLOW FROM RETURN ON INVESTMENTAND SERVICING OF FINANCE (4,901) (3,157) 7,608 CAPITAL EXPENDITUREPayments to acquire tangible fixedassets less receipts from sale of fixedassets (130,546) (91,738) (108,745) ACQUISITIONS AND DISPOSALSNet cash inflow on acquisitions - 1,049 4,179EQUITY DIVIDEND PAID (3,471) - - NET CASH OUTFLOW BEFORE FINANCING (124,897) (83,682) (103,740) FINANCINGOrdinary shares issued (net of expenses) - 29,223 125,960Increase in debt 79,738 68,188 67,892 NET CASH INFLOW FROM FINANCING 79,738 97,411 193,852 (DECREASE)/INCREASE IN CASH (45,159) 13,729 90,112 NOTES TO THE FINANCIAL STATEMENTS 1. Accounting Policies The principal accounting policies are summarised below. They have all beenapplied consistently throughout the period. Basis of accounting The financial information has been prepared under the historical costconvention, and in accordance with applicable Isle of Man law and United Kingdomaccounting standards. Basis of consolidation The Group's financial information consolidates that of the Company and itssubsidiary undertakings up to 31 March 2006. The results of a subsidiaryundertaking acquired during the period are included from the date ofacquisition. Profits or losses on intra-group transactions are eliminated infull. On acquisition of a subsidiary, all of the subsidiary's identifiableassets and liabilities which exist at the date of acquisition are recorded attheir fair values at that date. Under the relevant legislation, the Directors have decided not to publish aprofit and loss account for the Company only. Investment Properties Investment properties are initially recognised at cost, being the fair value ofconsideration given, including acquisition costs associated with the purchase ofthe investment property. All the Group's properties are held for long-term investment. After initialrecognition, investment properties are carried at open market value and areaccounted for in accordance with SSAP19, 'Accounting for Investment Properties'as follows: (i) investment properties are revalued semi-annually. Thesurplus or deficit on revaluation is transferred to the Revaluation Reserveunless a deficit below original cost, or its reversal, on an individualinvestment property is expected to be permanent, in which case it is recognisedin the profit and loss account for the period; and (ii) no depreciation is provided in respect of freehold/feuholdand long leasehold properties. The Directors believe that the policy of notproviding depreciation is necessary in order to give a true and fair view sincethe current value of investment properties and changes to that value, are ofprimary importance rather than a calculation of systematic depreciation.Depreciation is only one of many factors reflected in the semi-annual valuationand the amount which might otherwise have been included cannot be separatelyidentified or quantified. Property Disposals Profits or losses on disposal of a property are recognised upon the completionof a sale. Recognition of Income Rental income under operating leases is included in these financial statementson a receivable basis. Interest receivable on short term deposits is accounted for on an accrualsbasis. Insurance premiums recharged to tenants are not reflected in either income orexpense. Expenses Expenses are incurred by the Group in relation to the establishment,constitution, administration and business of the Group. Costs incurred in thepurchase of investment properties are capitalised as part of the cost ofinvestment. Costs relating to acquisitions in progress are retained in thebalance sheet and included in the cost of acquisition on completion. Costsincurred on aborted acquisitions are written off to the profit and loss account. Loan Issue Costs In accordance with FRS 26 'Financial Instruments: Measurements', loans areincluded initially in the Financial Statements at cost, being the fair value ofthe consideration received, net of issue costs relating to the borrowing. Afterinitial recognition, the loans are measured at amortised cost using theeffective interest method. The amortised cost is calculated by taking intoaccount any issue costs, and any discount or premium on settlement. Derivative Instruments The Group uses interest rate derivatives to hedge interest rate exposures on theGroup's borrowings. The Group's criteria for adopting hedge accounting for interest rate swaps are: (i) the derivative instrument must be related to a liability at inception;and (ii) it must reduce the interest rate risk on the related liability byconverting a variable rate to a fixed rate. The Group's criteria for adopting hedge accounting for interest rate caps are: (ii) the derivative must be related to expected interest rate exposures basedon current and anticipated borrowing capabilities; and (ii) it must reduce interest rate risk on such future borrowings as to limitthe exposure to increases in interest rates. Interest differentials are recognised by accruing the net interest payable. Thecost of interest rate hedges is recorded in the balance sheet against theassociated borrowing and is taken to the profit and loss account over the lifeof the hedging relationship. If the hedge is terminated early, the gain/loss isrecognised on a basis which matches the timing and accounting treatment of thehedged item. Taxation Current tax, including UK corporation tax, UK income tax and foreign tax, isprovided at amounts expected to be paid or recovered using the tax rates andlaws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents have occurred at that date that will result in an obligation to pay more,or a right to pay less or receive more, tax, with the following exceptions: • Provision is made for tax on gains from the revaluation (and similarfair value adjustments) of fixed assets, or gains on disposal of fixed assetsthat have been rolled over into replacement assets, only to the extent that, atthe balance sheet date, there is a binding agreement to dispose of the assetsconcerned. However, no provision is made where, on the basis of all availableevidence at the balance sheet date, it is more likely than not that the taxablegain will be rolled over into replacement assets and charged to tax only wherethe replacement assets are sold. • Deferred tax assets are recognised only to the extent that theDirectors consider that it is more likely than not that there will be suitabletaxable profits from which the underlying timing differences can be deducted. Where required deferred tax is provided, without discounting, under theliability method at the tax rates that are expected to apply in the periods inwhich timing differences reverse, based on tax rates and laws enacted orsubstantively enacted at the balance sheet date. 2. Turnover Six months to 28 June 2004 to 28 June 2004 to 31 March 2006 31 March 2005 30 September 2005 £'000 £'000 £'000 Rental income 10,780 7,952 15,968Other income 44 - -Profit on sale of properties - - 1,785TOTAL 10,824 7,952 17,753 3. Administrative Expenses Six months to 28 June 2004 to 28 June 2004 to 31 March 2006 31 March 2005 30 September 2005 £'000 £'000 £'000 Property Adviser's Fees - advisory fees (1,128) (701) (1,504) - accrued performance fees (909) (287) (731)Property Manager's Fee's (63) (70) (105)Other administrative expenses (689) (832) (1,150)TOTAL (2,789) (1,890) (3,490) 4. Net Interest Payable Six months to 28 June 2004 to 28 June 2004 to 31 March 2006 31 March 2005 30 September 2005 £'000 £'000 £'000 Interest receivable 1,493 372 969Interest payable (6,394) (5,616) (10,483)NET INTEREST PAYABLE (4,901) (5,244) 9,514 5. Share Capital 31 March 2006 31 March 2005 30 September 2005 £'000 £'000 £'000 Company Authorised Ordinary Shares of 10p each 130,000,000 100,000,000 130,000,000- numberOrdinary Shares of 10p each 13,000,000 10,000,000 13,000,000- £ Issued, Called Up and Fully Paid Ordinary Shares of 10p each 97,325,697 40,645,959 97,326,660- numberOrdinary Shares of 10p each 9,732,570 4,064,596 9,732,666- £ 6. Reserves 31 March 2006 31 March 2005 30 September 2005 £'000 £'000 £'000 Group Revaluation ReserveOpening Balance 9,243 - - Revaluation of properties during the 21,088 6,245 9,243period As at 31 March 30,331 6,245 9,243 Profit and Loss Account 31 March 2006 31 March 2005 30 September 2005 £'000 £'000 £'000 Opening balance (as previously (334) - (334)stated)Add final dividend proposed for 2005 3,471 - 3,471Opening balance (restated) 3,137 - 3,137Profit on ordinary activities after 3,111 796 -taxCredit relating to performance fee ofProperty Adviser 909 287 -Deduct final dividend paid for 2005 (3,471) - -As at 31 March 3,686 1,083 This interim statement is not the Company's statutory accounts. The statutoryaccounts for the period ended 30 September 2005 have been audited, approved andreceived an audit report which was unqualified. The statutory accounts for the period ended 30 September 2005 have been restatedto reflect changes in UK GAAP since the publication of those accounts, the solechange being to exclude the final dividend which was not a liability untilapproved by Shareholders at the Annual General Meeting held on 30 January 2006and has subsequently been paid. Copies of the Interim Report will be available from the Registered Office at TopFloor, 14 Athol Street, Douglas, Isle of Man IM1 1JA. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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