23rd May 2007 07:00
Wichford plc23 May 2007 Interim results Further progress in an active 6 months Wichford PLC, the property investment company, is pleased to announce itsinterim results for the six months to 31 March 2007. Financial Highlights • Rental income for the period was £14.6 million (31 March 2006: £10.8 million) • Profit after taxation for the period was £4.5 million (31 March 2006: £3.1 million) • Interim dividend of 4p per share (31 March 2006: 3p per share) • Earnings per share were 3.42p (31 March 2006: 3.22p) on the weighted number of shares in issue at 31 March 2007 (4.66p when excluding the new shares issued through the institutional placing (which do not rank for any dividend for the period being reported)) Operational Highlights • Wichford raised £75 million through an institutional placing of new shares, which was approved by Shareholders at an Extraordinary General Meeting on 12 March 2007 • During the period seven properties were acquired for a total cost of £56.3 million and one property was sold. • Negotiations were concluded for three lease extensions and these properties have been transferred into the Core Portfolio. • Announced on 15 May 2007, the acquisition of a courthouse in Halle, Anhalt-Saxony, Germany for a total consideration of €57 million. The Company's first purchase in Continental Europe. Michael Sheehan, Chairman of Wichford, commented today: "I am delighted to be able to report another progressive six months for Wichfordas we continue to deliver on our stated strategy and acquisition plan. We haveconducted a highly successful placing and we are already purchasing newproperties in Continental Europe. I look forward to updating shareholders withnews of further acquisitions over the next few months. Furthermore, I amconfident that Wichford will make good progress during the rest of thisfinancial year." Enquiries: Wichford PLCJamie Hambro Tel: 020 7747 5678Philip Cooper Tel: 020 7495 7111 Citigate Dewe Rogerson Tel: 020 7638 9571George CazenoveHannah Seward Notes to Editors Wichford PLC (AIM:WICH) is a property investment company, with a portfoliofocused on UK investment property outside Central London occupied exclusively byUK Central Government bodies. Following the purchase of a justice centre inHalle, Germany (announced 15 May 2007), the Company now also has similar assetsin Continental Europe. The Company currently owns 71 properties with a gross asset value of circa £575million generating a rental income of circa £34 million per annum. The company'sportfolio of properties has unit values usually between £2 million and £25million. The Company's current core portfolio has a weighted average unexpiredlease term of circa 11 years. Chairman's Statement The six months ended 31 March 2007 has been a busy period for Wichford duringwhich the Company raised £75 million through an institutional placing of newshares. This was approved by Shareholders at an Extraordinary General Meeting on12 March 2007. Profits after taxation for the period were £4.5 million (31 March 2006: £3.1million) and earnings per share were 3.42p (31 March 2006: 3.22p) on theweighted number of shares in issue at 31 March 2007. When excluding the newshares issued through the institutional placing (which do not rank for anydividend for the period being reported) the earnings for the current period riseto 4.66p per share. The Board has declared an interim dividend of 4p per share (31 March 2006: 3pper share), payable on 12 June 2007 to those Shareholders on the register at theclose of business on 1st June 2007. The new shares issued as a result of theinstitutional placing referred to above will not be eligible for this dividendbut they will rank for any future dividends. Following the placing in March 2007, the Group has invested approximately £67million in properties in Continental Europe and in the UK. The Group announcedon 15 May 2007 the purchase of a property in Saxony-Anhalt, Germany for €57million. The lease on this property has indexed rent and it will bring theproportion of leases with indexation owned by the Company to 35%. The Group is at advanced stages of negotiations on further property acquisitionsin both France and Germany with a value of over £110 million and it is thereforeconfident that, despite the lengthier timescales involved in completingacquisitions in these territories, it is well placed to fulfil its strategy ofincreasing its weighting in Continental Europe. The Board believes a combinationof a positive arbitrage between rental yields and Euro interest rates, togetherwith the prospect of continuing rises in property values, makes investment inthose countries attractive. In the UK, with the rise in interest rates and the continuing compression ofproperty yields, the Group has focused on the Active or short lease section ofthe portfolio. The Group has acquired an additional seven UK properties duringthe six months ended 31 March 2007 for a total cost of £56.3 million and oneproperty was sold during the period. Negotiations were concluded for threelease extensions and these properties have been transferred into the CorePortfolio. There are signs that the strong rental market in London is starting to have apositive impact on rents elsewhere in the UK, although the evidence is stillpatchy. Yield compression, which has driven the UK market for the last decade,is clearly near to or at the end of its cycle. This had a noticeable effect onthe rate of increase of the net asset value of the Company at 31 March 2007,with the value of properties held by the Group increasing by 0.3p per share overthe six month period. The shares issued as part of the placing were priced at 212p per share, adiscount of just under 5 per cent to the prevailing net asset value per share.Coupled with the payment of the final dividend for the year ended 30 September2006 of 6.5p per share, this resulted in the net asset value reducing from220.04p at 30 September 2006 to 216.12p at 31 March 2007. It is with regret that I have to announce the decision of James Joll to retireand that, accordingly, he steps down from the Board with effect from today.James has served as a Director and Chairman of the Audit Committee since theCompany was first listed on AIM nearly three years ago, and he has made avaluable contribution to its development as a public company. The Board iscurrently recruiting a replacement and expects to announce an appointment in duecourse; in the interim, Hugh Ward has agreed to be Acting Chairman of the AuditCommittee. The Group is well placed to take advantage of acquisition opportunities,particularly in Continental Europe, and the Board remains confident that theCompany will continue to deliver growth in earnings and dividends. Michael SheehanChairman22 May 2007 WICHFORD PLCCONSOLIDATED PROFIT & LOSS ACCOUNTFor the six months ended 31 March 2007 Six months ended 31 Six months ended 31 Year ended 30 September March 2007 March 2006 2006 £'000 £'000 £'000 (unaudited) (unaudited) (audited) TURNOVER 14,587 10,824 24,163 PROFIT ON SALE OF INVESTMENT PROPERTIES 1,137 - 2,567ADMINISTRATIVE EXPENSES (3,328) (2,789) (4,964) OPERATING PROFIT 12,396 8,035 21,766Interest receivable 775 1,493 2,216Interest payable (8,636) (6,394) (14,000) PROFIT ON ORDINARY ACTIVITIES BEFORETAXATION 4,535 3,134 9,982Taxation 4 (23) (73) PROFIT ON ORDINARY ACTIVITIES AFTERTAXATION 4,539 3,111 9,909 EARNINGS PER SHARE: Basic - pence 3.42 3.20 10.18 Adjusted for shares not ranking fordividends for the period - pence 4.66 3.20 10.18 CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS & LOSSESFor the six months ended 31 March 2007 Six months ended 31 Six months ended 31 Year ended 30 September March 2007 March 2006 2006 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Profit on ordinary activities aftertaxation 4,539 3,111 9,909 Unrealised surplus on revaluationof investment properties 288 21,088 38,775 TOTAL RECOGNISED GAINS RELATING TO THEPERIOD 4,827 24,199 48,684 All activities are continuing. WICHFORD PLCCONSOLIDATED BALANCE SHEETAs at 31 March 2007 31 March 2007 31 March 2006 30 September 2006 £'000 £'000 £'000 (unaudited) (unaudited) (audited) FIXED ASSETS Tangible assets - Investment properties 507,640 418,719 457,865 CURRENT ASSETS Debtors 17,681 6,519 12,300 Cash at bank 88,225 44,953 17,312 105,906 51,472 29,612 CREDITORS: Amounts falling due within one year (16,631) (17,421) (13,055) NET CURRENT ASSETS 89,275 34,051 16,557TOTAL ASSETS LESS CURRENT LIABILITIES 596,915 452,770 474,422 CREDITORS: Amounts falling due after more than oneyear (310,111) (260,137) (260,263) NET ASSETS 286,804 192,633 214,159 CAPITAL AND RESERVESCalled up share capital 13,270 9,733 9,733Share Premium 218,670 148,883 148,882Revaluation Reserve 48,306 30,331 48,018Profit and Loss Account 6,558 3,686 7,526 EQUITY SHAREHOLDERS' FUNDS 286,804 192,633 214,159 NET ASSET VALUE Basic - pence per share 216.12 197,93 220.04After deducting dividends proposed andpayable - pence per share 213.19 194.93 213.54 WICHFORD PLCCONSOLIDATED CASH FLOW STATEMENTFor the six months ended 31 March 2007 Six months ended Six months ended Year ended 31 March 2007 31 March 2006 30 September 2006 £'000 £'000 £'000 (unaudited) (unaudited) (audited) NET CASH INFLOW FROM OPERATING ACTIVITIES 10,272 14,021 15,010 RETURN ON INVESTMENT AND SERVICING OFFINANCE Interest received 775 1,493 2,216Interest paid (8,283) (6,394) (13,318) NET CASH OUTFLOW FROM RETURN ONINVESTMENT AND SERVICING OF FINANCE (7,508) (4,901) (11,102) TAXATION RECEIVED/(PAID) 4 - (73) CAPITAL EXPENDITURE Payments to acquire tangible fixed assets (54,987) (130,546) (164,105)Receipts from sale of investment properties 6,637 - 14,667 NET CASH OUTFLOW FOR CAPITAL EXPENDITURE (48,350) (130,546) (149,438) EQUITY DIVIDEND PAID (6,326) (3,471) (6,404) NET CASH OUTFLOW BEFORE FINANCING (51,908) (124,897) (152,007) FINANCING Share issue expense adjustments - - 25 Ordinary shares issued (net of expenses) 73,325 - - Increase in debt 49,496 79,738 79,182 NET CASH INFLOW FROM FINANCING 122,821 79,738 79,207 INCREASE/(DECREASE) IN CASH 70,913 (45,159) (72,800) 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 2007. 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. As permitted by Section 3 of the Companies Act 1982 (Isle of Man), the Companyhas not presented its income statement. 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. The surplus or deficit on revaluation is transferred to the Revaluation Reserve unless a deficit below original cost, or its reversal, on an individual investment property is expected to be permanent, in which case it is recognised in the profit and loss account for the period; and (ii) no depreciation is provided in respect of freehold/feuhold and long leasehold properties. The Directors believe that the policy of not providing depreciation is necessary in order to give a true and fair view since the current value of investment properties, and changes to that value, are of primary importance rather than a calculation of systematic depreciation. Depreciation is only one of many factors reflected in the semi-annual valuation and the amount which might otherwise have been included cannot be separately identified 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 on 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 4 'Capital Instruments', loans are included initially inthe Financial Statements at cost, being the fair value of the considerationreceived, net of issue costs relating to the borrowing. After initialrecognition, the loans are measured at amortised cost using the effectiveinterest method. The amortised cost is calculated by taking into account anyissue 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 by converting a variable rate to a fixed rate. The Group's criteria for adopting hedge accounting for interest rate caps are: (i) the derivative must be related to expected interest rate exposures based on current and anticipated borrowing capabilities; and (ii) it must reduce interest rate risk on such future borrowings as to limit the 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 similar fair value adjustments) of fixed assets, or gains on disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheet date, there is a binding agreement to dispose of the assets concerned. However, no provision is made where, on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only where the replacement assets are sold. • Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable 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. Share based Payments As part of the contract with the Property Adviser, a performance fee is payableand this is to be satisfied by the issuance of new shares in the Company. Thisperformance fee is related to the total return to Shareholders, based on theshare price and dividends paid. The resulting performance fee for a particularperiod will be settled by the issuance of shares to the Property Adviser,subject to certain vesting conditions, at the end of the subsequent two years. The performance fee is charged to the profit and loss account over the vestingperiod in accordance with UITF 17 and FRS 20. Until the issuance of any sharesunder this contract, and in accordance with guidance issued by the Institute ofChartered Accountants in England and Wales, the charge to profit and lossaccount is added back to distributable reserves, as it does not result in cashleaving the Company. On the issuance of any shares under this contract, the full market value of theshares issued will be charged to the Company's distributable reserves. 2. Turnover Six months ended Six months ended Year ended 31 March 2007 31 March 2006 30 September 2006 £'000 £'000 £'000 Rental income 14,556 10,780 24,104Other income 31 44 59TOTAL 14,587 10,824 24,163 3. Administrative Expenses Six months ended Six months ended Year ended 31 March 2007 31 March 2006 30 September 2006 £'000 £'000 £'000 Property Adviser's Fees - advisory fees (1,565) (1,128) (2,535) - accrued performance fees (819) (909) (884)Property Manager's Fee's (82) (63) (142)Other administrative expenses (862) (689) (1,403)TOTAL (3,328) (2,789) (4,964) 4. Tangible Fixed Assets - investment Properties 31 March 2007 31 March 2006 30 September 2006 £'000 £'000 £'000As at 1 October 455,760 267,085 267,085Additions 57,092 128,441 162,000Disposals (5,500) - (12,100)Revaluation in period 288 21,088 38,775 Investment properties 507,640 416,614 455,760 Payment on account for asset incourse of construction - 2,079 2,105As at 31 March 507,640 418,719 457,865 5. Share Capital 31 March 2007 31 March 2006 30 September 2006 Company Authorised Ordinary Shares of 10p each - number 180,000,000 130,000,000 130,000,000Ordinary Shares of 10p each - £ 18,000,000 13,000,000 13,000,000 Issued, Called Up and Fully Paid Ordinary Shares of 10p each - number 132,703,055 97,325,697 97,325,697Ordinary Shares of 10p each - £ 13,270,305 9,732,570 9,732,570 On 12 March 2007, the Company made a placing of 35,377,358 Ordinary shares at a price of 212 pence pershare. The shares issued do no rank for any dividend related to the financial period ended 31 March2007, but rank pari passu with the remaining Ordinary shares for the financial periods beginning on orafter 1 April 2007. In order to facilitate this share placing, the Company, at an Extraordinary General Meeting on 12 March2007, increased its authorised share capital to 180,000,000 Ordinary shares of 10 pence per share, anincrease if 50,000,000 Ordinary shares. 6. Revaluation Reserve 31 March 2007 31 March 2006 30 September 2006 £'000 £'000 £'000 As at 1 October 48,018 9,243 9,243Revaluation of properties duringthe period 288 21,088 38,775 As at 31 March 48,306 30,331 48,018 7. Profit and Loss Account 31 March 2007 31 March 2006 30 September 2006 £'000 £'000 £'000 As at 1 October 7,526 3,137 3,137Profit for the period 4,539 3,111 9,909Credit relating to performance feeof property adviser 819 909 884Dividends paid (6,326) (3,471) (6,404) At 31 March 6,558 3,686 7,526 This interim statement is not the Company's statutory accounts. The statutoryaccounts for the period ended 30 September 2006 have been audited, approved andreceived an audit report which was unqualified. 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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