Preliminary Results

7th Dec 2009 07:00



Wichford P.L.C.

("Wichford" or the "Company")

FINAL RESULTS

Wichford P.L.C., the property investment company, announces its preliminary results for the year ended 30 September 2009.

Highlights

Trading Operations Profit after tax £9.1 million (2008: £10.3 million)

Total loss after tax £75.4 million (2008: (£130.4 million))

Trading Operations earnings per share 6.15 pence (2008: 6.98 pence*)

Total earnings per share (50.99) pence (2008: (88.23) pence*)

Recommended final dividend per share 0.31 pence (2008: 0.315 pence**) 

Total dividend for the year 0.61 pence** (2008: 0.725 pence**)

Total Portfolio at Market Values £526.9 million (2008: £597.9 million)

Net assets £47.4 million (2008: £118.0 million)

Net asset value per share 4.4 pence (2008: 11.1 pence***)

EPRA net assets per share 7.52 pence (2008: 10.99 pence****)

Comparative notes have been adjusted to reflect the rights issue of shares.

* See note 9 for details of the calculation of Earnings per share.

** See note 20 for details of the calculation of the dividends per share.

*** See note 10 for details of the calculation of Net Asset Value per share.

**** See note 22 for details of the calculation of EPRA net asset value per share

Other Highlights

Successful Rights Issue of £52.0 million net of expenses completed in September 2009

Completed the sale of four properties as first steps in increasing the WAULT to secure the extension of the Delta and Gamma facilities

Revised Investment Advisers Agreement generating annualised savings of approximately £0.5 million per annum

Nominations Committee established to identify and appoint additional real estate expertise to the Board

Evidence of yields stabilising and increased investment activity and liquidity in recent months

Philippe de Nicolay, Chairman of Wichford, commented today:

"This has been a difficult year for Wichford but since our interim results in March we have taken a number of steps that give me real confidence for the Company's prospects in 2010. We have strengthened the balance sheet through a successful rights issue; our income stream remains robust with a negligible vacancy rate across our portfolio and we are making good progress in our discussions around debt and in re-balancing the portfolio. This action has put Wichford in a strong position and ready to take advantage of market opportunities over the coming year."

Enquiries:

Wichford P.L.C.

Philippe de Nicolay 00 33 1 40 74 42 79

Wichford Property Management Ltd

Philip Cooper 020 7495 7111

Stephen Oakenfull 020 7811 0100

Citigate Dewe Rogerson 020 7638 9571

George Cazenove

Kate Lehane

Notes to editors

Wichford P.L.C. (UK Listed: WICH) is a property investment company, with a portfolio focused on investment property occupied exclusively by Central and State Government bodies. Approximately a quarter of the portfolio comprises public sector rented properties in France, Germany and the Netherlands.

Chairman's Statement

This has been a challenging year for Wichford as the global economy has continued to come under severe pressure. Property asset values have experienced unprecedented declines in value and this has had a substantial impact on the value of the Company's portfolio. As a result the Board agreed to undertake a Rights Issue to strengthen the balance sheet and to secure the medium term funding structure of the Company. The positive support shown for the Rights Issue, with 96.1% take-up from existing shareholders, highlights the underlying strength of the business, the resilient income stream and the continued support of our shareholders.

The value of the Company's portfolio declined by £80.7 million creating a loss for the year of £75.4 million (2008: loss of £130.4 million). During the first half of the year the reduction was £79.9 million with the balance of £0.8 million in the second half. The rate of decline slowed significantly in the second half of the financial year and there is increasing evidence that property values have now stabilised.

Profits from Trading Operations of £9.1 million (2008: £10.3 million) reflect the secure nature of our rental income stream and the cash generative nature of the underlying business. However, the Board is acutely aware of the need to minimise operating costs, and I am pleased to report real progress in this area, details of which are contained in the Business Review.

Portfolio

Property values have been negatively impacted across all sectors including our own. However, in the current economic environment, secure income generating assets are seeing increased investment activity and liquidity since the financial year end. The Company's continued low vacancy rate, which remains below 1%, reflects the benefit of having Central and State Government bodies as the Company's principal occupier.

Funding

The Rights Issue has provided the necessary capital to secure the medium term funding position of the Company by giving us the ability to invest and meet the extension criteria on our two major UK debt facilities. In the three months since the Rights Issue, a number of opportunities have been identified to increase the average lease length for the UK Portfolio - the key hurdle for extending these facilities. The Company has agreed heads of terms on four acquisitions that would improve the UK Portfolio weighted average unexpired lease term ("WAULT") materially. While these transactions have not yet exchanged, it shows that we are making substantial progress in meeting this critical hurdle and I look forward to reporting further progress in the near future.

The Company is in on going discussions with the facility servicer for the VBG1 facility which is due to mature in January 2010. All available options are being considered in order to extend or restructure this facility.

Board and Management

I am pleased to report the consolidation of Wichford Property Management Limited under the single ownership of Corovest Fund Managers (UK) Limited. I am confident the management team will continue to make progress with regards to the objectives set out at the time of the Rights Issue and work with the Board to return the Company to growth.

I would like to take this opportunity of thanking Hugh Ward who has resigned as a Director. Hugh has made a substantial contribution to the Company and has been instrumental in ensuring the success of the recent Rights Issue and leaves the Company in a substantially stronger position.

At the time of announcing the Rights Issue, the Company identified the need to enhance the existing real estate expertise on the Board. As part of this commitment, a search consultant has been appointed to advise the Nominations Committee on identifying a suitable candidate(s) for appointment to the Board. An announcement is expected to be made shortly.

Dividend

The Board has reviewed the Company's dividend policy to ensure dividends are based on sustainable earnings and cash-flows. The Directors have recommended a final dividend of 0.31 pence per share which amounts to £3.3 million and corresponds to the undertaking described in the rights issue circular of paying an annualised 8.0% yield on the Rights Issue theoretical ex-rights share price of 7.7 pence.

Outlook

The Group's cash position of £100.0 million provides stability and gives us the ability to make the acquisitions required to extend our key UK facilities and to react quickly to market opportunities that will provide longer term shareholder value. In the current low interest rate environment there is pressure to generate income returns from available cash resources, however, the Board is focussed on generating long-term shareholder value and this priority will drive acquisition decisions rather than short-term pressures to invest.

While securing extensions on our UK debt facilities will remain a priority in the coming months, we continue to review all opportunities to make further cost reductions, protect our high occupancy rate and drive income returns and value from the portfolio. 

Philippe de Nicolay

Chairman

BUSINESS REVIEW

Operating Review

Headline Results

Earnings from Trading Operations continued to be robust due to continued high occupancy rates. Notwithstanding this, the year has seen a significant decline in both property values and the fair value of interest rate swaps as a result of the widely reported general economic conditions. This is reflected in the decrease in the net asset value since September 2008.

The negative fair value of derivative financial liabilities (interest rate swaps) continues to have a marked impact on the IFRS net asset value per share of 4.4 pence. The EPRA net asset value per share of 7.52 pence excludes this non-cash item.

For the year to 30 September 2009 the pre-tax profit from Trading Operations was £9.1 million. This was down from the £10.3 million reported at 30 September 2008 by 12.6%, largely as a result of lower rental income following the sale of four properties, and higher interest costs from additional borrowings. 

Following the Rights Issue and the sale of four properties, the Group's cash position has increased to £100.0 million. This provides the Company with the financial flexibility to acquire long dated assets and meet the extension criteria of the Group's major UK debt facilities before October 2010, as well as the ability to react quickly to opportunities in the market.

Since the rights issue in August 2009 the market appears to have found its floor and indeed for longer dated income, market pricing is once again rising. In Europe the peak to trough fall was not as severe and it is possible that the bottom has not yet been reached, although investor sentiment and activity is showing signs of improvement.

The Company's strategy of concentrating on central and state Government occupiers, whether in the UK or Europe, means the Company benefits from a very strong rental income and no real risk of tenants defaulting. In addition, occupational inertia has continued and the Company has benefited from a very low vacancy rate.

Further details of the results are contained in the Financial Review

Rights Issue

In August the Company announced a fully underwritten 7 for 1 Rights Issue at 6 pence per share to raise approximately £52.0 million net of expenses. The covenant strength of the Company's largely Central and State Government occupiers has proved invaluable in protecting a stable rent roll and high occupancy, however unprecedented declines in property values required the Company's financial position to be strengthened as relative levels of indebtedness became unsustainable. The successful raising of new capital provides the financial resources to enable the Company to resolve the Group's upcoming debt maturities in October 2010 as well as the ability to respond to opportunities which will create future shareholder value. 

The Rights Issue has resulted in an increase in the number of Ordinary Shares in issue from 132,761,948 to 1,062,095,584. Historic figures and ratios in this report have been rebased for comparative purposes. Further details of changes to the capital structure are contained in the Financial Review.

Portfolio

Valuations

At 30 September 2009 there were 68 properties in the UK portfolio which were valued by external valuers at £371.6 million (2008: £446.6 million). When allowing for disposals in the year, the comparative value at 30 September 2008 of £427.8 million reflects a like for like decrease in property values of 13.1%. This compares to a decline of 26.2% on the IPD All Office Index over the same period. The investment market has seen increased activity and liquidity since September with the pricing of secure income generating investments becoming increasingly competitive.

The Continental European portfolio was independently valued at €169.5 million (2008: €190.3 million) reflecting a decline of 10.9% in local currency. The relative strength of the Euro resulted in an increase in value of 2.6% in Sterling terms to £155.3 million (2008: £151.3 million), however the corresponding increase in Euro denominated liabilities more than offset this gain. 

2009		Core	Active	UK Total	Continental Europe	GROUP
Net initial yield	%	7.50	9.53	8.09	7.02	7.79
WAULT	years	9.31	3.52	7.34	10.99	8.36
Indexed linked rents	%	66.0	15.0	48.2	100.0	62.8

2008		Core	Active	UK Total	Continental Europe	GROUP
Net initial yield	%	6.65	7.86	7.00	6.22	6.81
WAULT	years	10.16	3.77	8.03	12.59	9.21
Indexed linked rents	%	63.2	14.4	46.9	100.0	61.1

Asset Management

Eight indexed linked or fixed reviews have been initiated and agreed since October 2008 generating a weighted average uplift of 8.4% and resulting in increased rental income from these properties of £155,916 per annum. In addition an open market review has been settled at a 3.2% increase. 

At Waterside Leeds the 2010 break has been removed increasing the unexpired term to May 2015.

The year saw a further reduction in the vacant space with 9,696 sq ft being let at Redditch providing £86,294 p.a. and removing the vacant rates liability. A lease renewal has completed at Bristol leaving 5,520 sq ft of space vacant there. There is 6,112 sq ft of vacant space at Centre Court in Plymouth. Overall UK occupancy stands at over 99%. 

Retaining a high occupancy rate will continue to be a key factor in maintaining a stable rent roll. A lease renewal at Newington Causeway is under negotiation in advance of the December 2010 expiry and a number of options are being explored in advance of the lease expiry at Harrow in June 2010 including re-letting and redevelopment possibilities. 

Investment market

The past year has seen very weak demand and falling prices as well as low market liquidity. Consequently, despite low valuations and attractive yields, investment opportunities were limited. Availability of bank finance has continued to be a problem for the market.

Since the year end there has been an upturn in activity and pricing and the market is undoubtedly more liquid now than the period under review. The UK property funds are once again experiencing net investment inflows and yields have ceased rising as demand for income producing investments increases.

The Company is focused at present on extending the WAULT across its UK portfolio and is therefore competing for long dated income in a very competitive market.

Indexation levels remained broadly unchanged at 62.8% (2008: 61.1%). Increasing levels of indexation within the portfolio continues to be an important part of Wichford's strategy. 

Disposals

The company made four disposals in the year to 30th September 2009, three of which sold at or above valuation. The properties sold were in Worthing, Nottingham, Leeds and Neath.

These sales comprised mainly properties subject to short leases that would be detrimental to passing the WAULT tests (outlined in the Financial Review). Together the sales raised £15.2 million, which will be utilised to acquire properties with longer leases.

Acquisitions

There were no acquisitions during the year. However the Company has been active since the year end and is in negotiations on five new acquisitions, four of which have heads of terms agreed. These potential acquisitions have unexpired lease terms of between 15 and 35 years and would all have the effect of increasing the weighted average unexpired lease term of the UK Portfolio.

The market for secure long dated income is particularly competitive in the current economic environment, although the Group's cash position and lack of dependence on new debt finance has assisted in securing off market negotiating positions.

UK Core Portfolio

The Core Portfolio consists of properties with lease terms of more than seven years until expiry or a possible lease break date at the tenant's option. The Core Portfolio represents 71.1% by value of the UK portfolio.

Key facts (at 30 September 2009)
Properties	44
Total area (1,796,136 sq ft)	166,862 sq m
Gross asset value	£264.2 million
Annualised rental income	£21.0 million
Average rental yield by area (£11.70 per sq ft)	£125.96 per sq m
Net initial yield on valuation	7.50%
Average term of unexpired leases	9.31 years
Property rentals index-linked	66.0%

UK Active Portfolio

The Active Portfolio is made up of properties with lease terms of less than seven years to expiry or a possible lease break date at the tenant's option. Here, the focus is on individual properties where value can enhanced through active asset management, including lease renewals.

Key facts (at 30 September 2009)
Properties	24
Total area (860,620 sq ft)	78,971 sq m
Gross asset value	£107.4 million
Annualised rental income	£10.8 million
Average rental yield by area (£12.83 per sq ft)	£137.83 per sq m
Net initial yield on valuation	9.53%
Average term of unexpired leases	3.52 years
Property rentals index-linked	15.0%

Continental European Portfolio

By the end of the year, the Continental European Portfolio made up 29.5% of total assets by value. Covering France, Germany and The Netherlands, this portfolio comprises seven properties, all of them occupied by Central and State Government bodies. 

Key facts (at 30 September 2009)
Properties	7
Total area (1,024,551 sq ft)	95,181 sq m
Gross asset value	£155.3 million
Annualised rental income	£12.3 million
Average rental yield by area (£12.01 per sq ft)	£129.31 per sq m
Net initial yield on valuation	7.02%
Average term of unexpired leases	10.99 years
Property rentals index-linked	100%

WPML 

Following the Rights Issue, Corovest Fund Managers (UK) Limited has completed the acquisition of the remaining 50% of Wichford Property Management Limited ("WPML") from J O Hambro Capital Management Limited. This has simplified the ownership and operating structure of the Company's advisor and is an important step to ensure the effective management of the Group and alignment with shareholders' interests.

A revised Investment Advisory Agreement has been concluded between WPML and the Company which will be effective from the 1st of October 2009. As part of the drive to reduce operating costs, the advisory fee has been reduced from an annual fee 0.6% of gross property values and 0.3% of cash balances to a flat annual fee of 0.5% of both gross property values and cash. This change will result in an approximate £0.5 million per annum cost reduction which secures a large proportion of the £0.75 million overhead reduction targeted at the time of the Rights Issue.

Details of the revised Investment Advisory Agreement are contained in the Remuneration Report. 

Priorities 

Weighted Average Unexpired Lease Term ("WAULT")

Foremost is the extension of the Delta and Gamma debt facilities before October 2010. The option to extend both of these facilities is dependent on the Company achieving a weighted average unexpired lease term of 7.5 years from October 2012. This threshold will need to be achieved before the current maturity date of October 2010. 

Increasing the average lease lengths of properties secured against these facilities is in part being targeted through the management of lease extensions and break removals. However, this in itself is expected to form a relatively small part of the overall solution. By far the largest component will come from the acquisition of long dated leases.

The Company has agreed heads of terms on four acquisitions for the sum of approximately £27.1 million. Subject to successful completion of these transactions and approval from the facility servicer, these transactions, based on their unexpired lease terms and management's forecasts, would be sufficient to meet the WAULT hurdle of the Delta facility or alternatively increase the Gamma facility WAULT above 7 years from October 2012.

The market for long-dated secure rental income is competitive and the ability to secure the most capital efficient solution is important. The Company has however made considerable progress in a relatively short space of time and is confident these challenges will be met. 

Further details on the Gamma and Delta facilities are contained in the Financial Review.

VBG1

Discussions continue with the loan servicer for the VBG1 facility which matures in January 2010. Since the pre-close trading statement on the 30th of September 2009, the servicer has requested a valuation of the VBG1 portfolio. However the results of the valuations are not yet known and the loan continues to perform. All available options to resolve an extension or restructuring of the loan are under review.

Costs

The Company has committed to an aggressive reduction of overhead costs and has already made progress in securing a substantial portion of the £0.75 million targeted reduction.

The revised Investment Advisors Agreement with WPML will generate savings of approximately £0.5 million p.a. effective from the October 2009. In addition, a programme of re-tendering and re-negotiating existing service contracts is well underway with savings expected to accrue from the second quarter of the next financial year. The Directors are confident that these measures, together with rigorous management of costs generally, will reflect improved operating margins going forward.

FINANCIAL REVIEW

Overview 

On a Trading Operations level the Group achieved a profit of £9.1 million (2008: £10.3 million profit).

The loss of £75.4 million (2008:£ 130.4 million loss) is largely as a result of a deficit on investment property revaluations of £80.7 million (2008: £140.8 million deficit). 

The Net Asset Value of the Group of £47.4 million is stated after the effects of unrealised items, comprising the revaluation of investment properties and a £34 million fall in the fair value of interest rate swaps.

Revenue

Revenue, totalled £44.8 million for the year to September 2009 with £32.4 million (2008: £33.0 million) derived from UK properties and £12.4 million (2008: £9.0 million) from the Rest of Europe. The fall in the UK revenue is primarily due to the disposal of four properties during the year. The increase in the Rest of Europe's revenue is as a result of the change in exchange rates, coupled with modest increases in rentals.

Administrative Expenses

These totalled £8.3 million (2008: £7.4 million). Administrative expenses relating to Trading Operations remained at £6.7 million. Euro denominated expenses were affected by a 13% decline in the Sterling versus Euro exchange rate. This together with the Hague property which was held for the full year as opposed to only four months in the preceding year, resulted in an increase in costs in Continental Europe. Excluding the effects of these items the administrative expenses on Trading Operations decreased in comparison to the prior year.

The Other Items charge of £1.6 million results from a restructuring of the VBG portfolio and costs incurred on advice obtained with regards to the Windermere interest rate swaps. These expenses are of a non recurring nature and are therefore classified as part of Other Items.

Finance Cost

The total finance cost for the year to September 2009 was £29.1 million (2008: £25.8 million). The increase from the preceding year results from £15 million of additional loans drawn under the Zeta facility, the recognition of an ineffective interest rate swap (movements in which now feature in the Consolidated Income Statement rather than the Consolidated Statement of Recognised Income and Expenses as before) and the result of including a full year of the Hague facility as opposed to four months in the prior year.

Resolution of previously reported issues on interest rate swaps associated with the Windermere facilities has not had a material impact on the finance cost for the year.

Dividends

An interim dividend of 3 pence per share was paid on 28 September 2009 to those on the register on 14 August 2009; this was not payable on the new shares issued as a result of the Rights Issue.

The interim dividend of 3 pence per share was paid on 132,761,948 Ordinary Shares of 10 pence nominal value. This dividend amounted to £4.0 million.

The final dividend for the year being reported will be payable on all Ordinary Shares. The Board is recommending a final dividend of 0.31 pence per Ordinary Share to be paid on 1,062,095,584 Ordinary Shares of 1 penny nominal value. This will amount to £3.3 million. Going forward, it is the Board's intention to pay broadly equal semi-annual dividends.

No dividend is payable on the Deferred Shares.

Investment Property

The Group disposed of four properties with a value of £15.3 million in the year to September 2009. The Company, in addition, made a provision of £1.8 million relating to the deferred considerations on the VBG and Halle acquisitions.

Due to the general decline in property values during the year ended September 2009 the Group incurred a deficit on the revaluation of its investment properties of £80.7 million (2008: £141.3 million deficit). During the first half of the year the reduction was £79.9 million with the balance of £0.8 million in the second half. Further details of the Group's portfolio are included in the Business review.

The carrying values of investment properties can be found in note 11 to the accounts.

Financing and Capital

Continued declines in property values have increased the loan to value ratios under all the Group's facilities. Despite the lack of LTV covenants on the Delta, Gamma, Hague and Halle facilities which represents 69.7% of the Group's debt, the Board was concerned to reduce the Group's gearing to a more manageable level. The success of the Rights Issue has placed the Company in a substantially stronger position to address the maturity of the Delta and Gamma facilities through selective investment and provide greater flexibility in dealing with the options available to the Company in response the to maturity of the VBG1 facility in January 2010.

The Group increased borrowings under the Zeta (Lloyds TSB) facility in March 2009 by £15.0 million. The facility was originally granted with a £58.5 million maximum drawn down, of which £46 million has been drawn to date. The Company has agreed that no further draw downs will be made. The LTV of 60.8% as at 30 September 2009 includes £5.3 million of cash collateral following the sale of Leeds, Jefferson House. It is intended that the cash will be used to fund the acquisition of a substitute property to be secured against the facility. 

Credit markets remained difficult throughout the year however some improvement in both the availability and pricing of bank debt is encouraging. The ability to refinance existing facilities and negotiate new facilities will depend on both the quality and level of assets within the Group. Our strategy of investing predominantly in Central and State Government occupied property will be important in securing a stable long term capital structure.

The Group's weighted average cost of debt is 5.34%. 

The following table provides a summary of the Group's debt and associated performance ratios at 30 September 2009.

Facility	Lender	Debt (£m)	Actual ICR (%)	Minimum ICR (%)	Actual LTV (%)	Maximum LTV (%)
Delta	Windermere XI CMBS Ltd	114.6	132.1 *	125.0	109.9	n/a
Gamma	Windermere VIII CMBS Ltd	199.7	149.5 *	115.0	99.9	n/a
Hague	SNS Property Finance	20.2	96.8 *	100.0	88.7	n/a
Halle	Windermere XIV CMBS Ltd	34.0	172.0	140.0	93.4	n/a
VBG1	Talisman 3	63.6	131.3	120.0	125.0	85.0
VBG2	Talisman 4	50.8	128.0	115.0	128.8	86.0
Zeta	Lloyds TSB Plc	46.0	263.0	140.0	60.8	65.0
		528.9

* Actual figures for the Delta and Gamma ICR are lower than normal due to the sales that have been made reducing the rental income to cover the interest. Once the substitution properties have been acquired these ratios will increase.

** Actual figure for the Hague facility includes notional management costs and notional amortisation. ICR based on actual cash flows remain above 100%. However the lender has granted a waiver until October 2010 on this test as they imposed the additional costs.

The facilities' maturity dates are shown in the table below.

Facility	Lender	Maturity
Delta	Windermere XI CMBS Ltd	October 2010	Extendable to October 2012 if WAULT will be 7.5 years at that time
Gamma	Windermere VIII CMBS Ltd	October 2010	Extendable to October 2012 if WAULT will be 7.5 years at that time
Hague	SNS Property Finance	July 2014
Halle	Windermere XIV CMBS Ltd	April 2014
VBG1	Talisman 3	January 2010
VBG2	Talisman 4	April 2011
Zeta	Lloyds TSB Plc	May 2011	Extendable for two years with agreement of lender

VBG1 and VBG2

Both the VBG1 and VBG2 facilities have LTV ratios in excess of LTV covenants. The facility servicer had previously not called for any valuations, however the near term maturity date on VBG1 has now led to a call for a valuation. At the time of this report the results of the valuation are not yet known and as such there were no covenant breaches called under these facilities and no requirement to classify them as current liabilities. No valuation has been called on VBG2. The VBG1 facility has, however, been treated as current in these financial statements as there are now less than 12 months to loan maturity.

The Company is in ongoing discussions with the facility servicer with regards to the pending VBG1 maturity. All available options are being considered in order to extend or restructure the loan. 

Gamma and Delta

In order to extend the maturity of these facilities to October 2012, the weighted average unexpired lease term (WAULT) for each facility must be greater than or equal to 7.5 years from October 2012; the calculation to carried out at least one month in advance of the October 2010 maturity date. 

The Delta and Gamma WAULTS were 8.42 years and 6.68 years as at 30 September 2009. 

As described in the Business Review, the Company has agreed heads of terms on four acquisitions for the sum of approximately £27.1million. Subject to successful completion of these transactions and approval from the facility servicer, these transactions, based on their unexpired lease terms and management's forecasts, would be sufficient to meet the WAULT hurdle of the Delta facility or alternatively increase the Gamma facility WAULT above 7 years from October 2012.

The Company considers it will be able to achieve these facility extensions which will provide medium term security for the Groups financing structure.

Hague 

In March 2009 the lender (SNS Property Finance) imposed a liquidity surcharge of 0.5% p.a. and, in November 2009, increased the margin from 1.20% to 1.80% p.a. citing general credit market conditions and increased funding costs. The lender believes both charges are permissible under the general terms of the loan agreement. A waiver has been obtained for a breach of interest cover covenants as a result of the increased margin and/or liquidity surcharge. 

The liquidity surcharge is temporary is nature and subject to SNS' interbank funding costs.

The facility contains a cross-default provision that enables SNS Property Finance to demand repayment of the facility if there is an event of default under any other Group facility. SNS Property Finance's recourse is limited to the Hague property and its rental income. Notwithstanding the terms of this cross default provision, in the event that such a default occurred under any of the other Group facilities, the Company has been advised that it would be difficult for SNS Property Finance to demand repayment of the Hague facility pursuant to this cross default provision in the absence of either a payment default under the Hague facility or Den Haag's actual or threatened insolvency.

Lehman Brothers

In the Annual Report for last year we reported on the situation with regard to the demise of Lehman Brothers and its effect on the Group. The facilities impacted by this are the Delta, Gamma and Halle facilities. These securitised loans have continued to perform.

The principal issue for the Company was the interest rate swaps that the securitised vehicles lending to the Group had with Lehman Brothers Special Finance, Inc. ("LBSF") and from which the Group benefited. From the interest payment date in October 2008 it is understood that LBSF failed to honour its commitments however the Group had been charged interest according to the expected schedule without disruption and has thus not suffered additional costs.

The trustees of the securitisation vehicles appointed advisers to resolve the predicament and new hedging instruments have been put in place for the Delta, Gamma and Halle facilities such that the Group is now charged a fixed interest for the remainder of the term of the facilities. The revised fixed interest rate produces a slightly lower interest payment profile when taken to the end of the extension periods for the Delta and Gamma facilities and the same for the Halle facility. 

Further details on loans and hedging can be found in notes 15 and 16 of the accounts.

Share Capital 

The Rights Issue in September 2009 raised £52.0 million net of expenses. This is reflected in the increase in Share Capital of £9.3 million and Share Premium of £42.7 million.

The Share Premium account was reduced during the year as the Court in the Isle of Man agreed to a transfer of £50.0 million to distributable reserves as approved by Shareholders at the Annual General Meeting held in January 2009.

Further details can be found in notes 18 and 19 to the accounts.

Hedging 

The Group continues to use borrowings with a fixed interest rate and interest rate swaps as hedges against interest rate movements. The position with regard to those associated with the Windermere facilities has been clarified during the year with the previous Lehman entity being replaced as counter-party by another bank on almost the same overall cost to the Group.

The Delta, Gamma and Halle facilities are charged interest at a fixed rate resulting from the interest rate swaps between the lender and a third party counter-party referred to above. However, as the respective borrowing subsidiaries have given indemnities to the lenders in respect to these interest rate swaps the Group regards these facilities as floating rate ones with associated interest rate swaps. 

 The Company has identified one interest rate swap that is ineffective as measured under IAS 39 requirements and so has passed the change in fair value since the last time it was found to be effective (31 March 2009) through the Income Statement. It has also recycled a proportion of the previous fair value taken to reserves on a straight-line basis such that the total amount previous taken to reserves will be recycled through the Income Statement over the remaining life of this particular interest rate swap. This amounts to £0.2 million shown as a finance cost in the Other Items in the Income Statement.

The overall fair value of the interest rate swaps reduced by £38.8 million from September 2008 to September 2009 with the principal reason being the very significant fall in both LIBOR and EURIBOR rates over that period, which are the variable rate bases of the Group's facilities, resulting from the decline in the general economic climate.

Further details can be found in note 16 to the accounts.

Taxation

The Company is aware that a number of tax periods are still regarded as open by the various tax authorities and as a result has made a provision for the current and past periods based on the best estimate of what could be payable. 

Further details can be found in note 8 of the accounts.

Exchange rates

The average Euro to Sterling exchange rate for the year to 30 September was 1.14662 (2008: 1.31738).

The closing Euro to Sterling exchange rate as 30 September 2009 was 1.09120 (2008: 1.25820).

Managing Risk

For a review of the principal risks and uncertainties facing the Company.

GOING CONCERN

After considering the relevant factors, the Directors have a reasonable expectation that the Company has adequate resources to continue in operation for the foreseeable future. They have, therefore, adopted the going concern basis in preparing these financial statements.

The principal issues the Directors considered in their enquiries concerned the maturity of the VBG1 facility in January 2010 and the required increase in the WAULT on each of the Delta and Gamma facilities so that the extension of these facilities will be granted to October 2012 from October 2010. 

With regard to the VBG1 facility the Directors are currently confident that this facility will not be required to be repaid at that time following ongoing but non-concluded negotiations with the loan servicer. The Directors note that this facility is ring-fenced with no recourse to the other assets pledged to other Group facilities.

There has been good progress on both identifying and negotiating the purchase of suitable properties that will increase the WAULT on each of the Delta and Gamma facilities. The Company is working with its advisers and the facility servicer to bring these acquisitions to completion as soon as possible.

In September 2009 the Company raised £52.0 million net of expenses by way of a Rights Issue. The principal reasons for this was to provide the liquidity to enable the issue on the maturity of the VBG1 facility and to extend the WAULT on the Delta and Gamma facilities to be achieved so that the medium term funding of the Group is stabilised. The Directors believe that this gives the Group sufficient resources to satisfactorily deal with these issues. 

STATEMENT OF DIRECTORS RESPONSIBILITIES

Isle of Man company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that year. In preparing these financial statements, the Directors have:

 

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and to enable them to ensure that the financial statements comply with the Isle of Man Companies Acts 1931 to 2004 (as amended). They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the current Directors confirms that, to the best of their knowledge:

CORPORATE GOVERNANCE STATEMENT

COMBINED CODE

The Board supports the principles of good governance as set out in the Combined Code on Corporate Governance issued by the Financial Reporting Council in June 2008 ("the Combined Code"). The Board considers that it has complied with all of the main provisions of the Combined Code, save as identified and explained below.

THE BOARD

The Board currently comprises the Chairman and six Non-Executive Directors, all of whom are independent from the management team of the Company's Investment Adviser. The Board is chaired by Philippe de Nicolay, who was appointed as Chairman on 8 November 2007. Philippe de Nicolay, Ita McArdle and Hugh Ward were originally appointed as Directors of the Company on 28 June 2004. David Harrel was appointed on 11 July 2007; Mark Taylor and Richard Melhuish were appointed on 8 November 2007 and Wolf Cesman was appointed on 22 May 2008. 

Mr Cesman is a director of Redefine Income Fund Limited which together with other associated companies of the Corovest Group currently has a shareholding in Wichford P.L.C. of 21.98%.

Corovest Fund Managers (UK) Limited, a UK based property fund management company, holds a 100% interest in the Company's Investment Adviser, Wichford Property Management Limited ("WPML").

The Board appointed Ita McArdle to be the Senior Independent Director. As recommended by the Combined Code, Ita McArdle is available to Shareholders where contact with the Chairman regarding a Company matter is inappropriate.

The Board is responsible for setting the overall Group strategy and investment policy, monitoring Group performance and authorising all property acquisitions and disposals. To assist it in discharging these responsibilities, it receives regular financial and operational reports from WPML ("the Investment Adviser"). It also receives updates on regulatory issues and corporate governance rules and guidelines on a regular basis from Simcocks Trust Limited ("the Administrator").

The Board meets at least four times per year and has adopted a schedule of matters reserved for its decision.

The table below lists the number of Board and Committee meetings attended by each Director. During the year ended 30 September 2009, there were in total 14 Board Meetings and three Audit Committee Meetings as well as many meetings of Committees of the Board to deal with interim decisions between Board meetings.

	Board Meetings	Audit Committee
Director	Attended	Meetings Attended
P E J F de Nicolay	14	n/a
I M McArdle	11	n/a
H R Ward	10	3
D T D Harrel	11	n/a
R M Melhuish	14	3
R M Taylor	11	3
W E Cesman	11	n/a

The Board does not consider it necessary to establish a separate Remuneration Committee as it has no Executive Directors. The Board has appointed Philippe de Nicolay and David Harrel to constitute the Nomination Committee.

The Chairman and other members of the Board recommend that the Directors retiring be re-elected at the forthcoming Annual General Meeting. All Directors are subject to an annual performance evaluation, which is an ongoing exercise. As part of this evaluation, the Chairman confirms that the retiring Directors continue to demonstrate commitment to their role and responsibly fulfil their functions.

THE AUDIT COMMITTEE

Mark Taylor chairs the Audit Committee ("the Committee"), which also comprises Hugh Ward and Richard Melhuish. The Board is satisfied that Mark Taylor has recent and relevant financial experience for the purposes of paragraph C.3.1 of the Combined Code. Following the year end Hugh Ward resigned as a Director and is, therefore, no longer a member of the Audit Committee.

The Committee met three times during the year. 

The principal duties of the Committee are to review the half-yearly and annual financial statements before their submission to the Board and to consider any matters raised by the Company's Independent Auditor. The Committee also reviews the independence and objectivity of the Independent Auditor, accounting policies, internal controls, the contract with the Property Adviser and the appointment and remuneration of the Auditor.

 

The Committee plays an important role in the appraisal and supervision of key aspects of the Group's business including financial reporting and internal controls. The Committee meets representatives of the Investment Adviser who report as to the proper conduct of business in accordance with the regulatory environment in which both the Group and the Investment Adviser operate. The Group's external Independent Auditor also attends the Committee meetings at its request, at least once a year, and reports on its work procedures, the quality of the Group's accounting procedures and its findings in relation to the Group's statutory accounts.

During the period, the Committee reviewed the effectiveness and independence of the Group's Independent Auditor and the outcome of the review was satisfactory. The Committee has in place a policy on non-audit services. Services that are of a compliance nature or that are closely related to the audit are pre-approved. All other services shall be considered on a case-by-case basis by the Committee.

THE NOMINATIONS COMMITTEE

Philippe de Nicolay, David Harrel and Richard Melhuish comprise the Nominations Committee which is currently considering the composition of the Board and seeking suitable candidates to strengthen its property expertise in the near term.

This committee will consider nominations put forward and will formulate a recommendation on each candidate. Where the committee make a positive recommendation the candidate will then be considered by the whole Board.

REMUNERATION

Details of Directors' Remuneration can be found in the Directors' Remuneration Report.

PROPERTY ADVISER

During the period, WPML acted as Property Adviser to the Group under a Property Adviser's Agreement and received from the Group an annual fee of 0.6% of the gross asset value of the Group (excluding cash) and 0.3% of the Group's cash balances. The fee was payable quarterly in arrears. Under a revised Property Adviser's Agreement dated 19 December 2007, the agreement between the Company and WPML could be terminated by either party giving the other not less than three years' written notice.

WPML was also entitled to receive a performance fee calculated as 20% of the amount by which the total shareholder return (share price movement plus dividends) exceeded 10% for the immediately preceding financial year. This fee was to be settled by the issue of further shares in the Company only if the annualised shareholder return in the succeeding two year period had exceeded 10% and the Company's net asset value per share is greater than that pertaining at the time of the Company's original flotation. The number of new shares to be issued for this performance fee would only be known at the end of the three year period once the monetary value of the performance fee has finally been determined and also the closing price of each share is known.

The Board keeps under review the performance of WPML as Property Adviser to the Group. In the opinion of the Directors the continuing appointment of WPML is in the best interests of the Shareholders as a whole. However the Company has negotiated a new contract with WPML on better terms as described below. This new contract will include the services currently provided by BCM as Property Manager. 

PROPERTY MANAGER

During the period under review, BCM, as the Property Manager, provided investment advisory and management services to the Group under the Property Manager's Agreement. In consideration of BCM providing these services, it received a fee equivalent to 1% plus VAT of the contract price or sale proceeds arising on the acquisition or disposal of properties plus expenses. However, if BCM was not the introducer of the property in question, the fee reduced to 0.5% plus VAT. It also received an annual fee equivalent to 0.8% plus VAT of the annual occupational rents received. The agreement between the Group and BCM could be terminated by either party giving the other 12 months' notice of termination.

NEW CONTRACT WITH WPML

The Company has entered into a new contract with WPML which is conditional on:

(i) the receipt of any consents the company or WPML requires for the new contract to be effective (including without limitation, in relation to the termination of the existing Property Manager's Agreement and the variation to the Property Adviser's Agreement); and

(ii) the termination of the existing Property Manager's Agreement.

 Under the new contract the services currently provided to the Company by BCM pursuant to the Property Manager's Agreement shall instead be provided by WPML (such services to be subcontracted to BCM in respect of sales and acquisitions and to others for property management) and the Property Manager's Agreement shall be terminated. In return for the provision of the services, the Company will pay to WPML an asset management fee of 0.5%. (reduced from 0.6%. on the Group's assets excluding cash and 0.3%. on the Group's cash) on the aggregate gross value of the Group's assets (including cash) and a commission of 0.75%. (reduced from 1%. under the Property Manager's Agreement) in respect of sales and acquisitions, or 1%. (reduced from 1%. plus agents costs and fees) where BCM acts in a joint agency capacity or incurs sub-agent costs and fees. Wichford shall also pay to WPML an incentive fee calculated on a 3 year rolling basis and payable in Wichford shares. The first 3 year period incentive fee shall be equal to 20%. of the total shareholder returns in excess of 12%. per annum and the incentive fee for all subsequent 3 year periods shall be equal to 20%. of the total shareholder returns in excess of 10%. per annum. Payment of the incentive fee is subject to the total return on Wichford's property portfolio placing it equal to or higher than the top 40 percentile ranking when compared to the universe of property funds measured by IPD in its index for the total return on UK IPD All Office Index for the relevant period in question. The maximum award in any year shall be capped at 5%. of Wichford's shares in issue from time to time provided that the aggregate award is limited to a maximum of 10%. of the total shares of Wichford in issue over any 10 year period. Where the payment of part or all of the incentive fee would result in WPML, when taken together with any party that WPML is considered to be acting in concert with, holding more than 29.9%. of the issued shares in Wichford, then that part of the incentive fee which would result in WPML and any concert party holding more than 29.9%. of the issued shares in Wichford shall, unless otherwise agreed, be satisfied in cash. Either party will be able to terminate the new property adviser's agreement upon one year's notice in writing, such notice not to be served before the day after the expiration of the third anniversary of the new contract. 

The Directors believe that these new arrangement are of greater benefit to the Company by making the organisation more efficient and incentivising WPML to perform for the benefit of the Group.

In addition, the Directors believe that WPML is well resourced to act as Investment Adviser to the Group and well equipped to identify appropriate investment opportunities.

SHAREHOLDER RELATIONS

The Group issues the half-yearly and annual financial statements to each of its shareholders. In addition, all regulatory announcements can be found on the "Regulatory News" page within the Investors section on the Company's website, www.wichford.com.

The Property Adviser and the Property Manager have regular meetings with institutional shareholders. The Board supports the principle that the Annual General Meeting be used to communicate with private shareholders and encourages them to attend and participate.

INDEPENDENT PROFESSIONAL ADVICE

There is an agreed procedure for the Directors, in the furtherance of their duties, to take independent professional advice at the Company's expense, having first notified the Chairman.

INTERNAL CONTROL

The Board recognises its ultimate responsibility for the Group's system of internal control. It has established procedures for identifying, evaluating and managing risks that the Group is exposed to and has identified risk management controls in the key areas of business objectives, accounting, compliance, operations and secretarial as areas for the extended review. These procedures have operated throughout the year and up to the date of approval of the Annual Report and audited financial statements. It has, however, to be understood that systems of internal control, however carefully designed, operated and supervised, can provide only reasonable and not absolute assurance against material misstatement or loss.

The Group does not have its own internal audit function but places reliance on compliance and other control functions of its service providers. The Board has considered this practice during the year and has reaffirmed its judgment that an internal audit function is not necessary.

NON-COMPLIANCE WITH THE COMBINED CODE

Throughout the year ended 30 September 2009, the Company has complied with the Combined Code 2008, with the following exceptions:

A.2 - This provision is not fully compiled with as it calls for a balance of executive and non-executive directors and the Company only has non-executive directors. However the Directors have a broad range of experience and are deemed to be independent from the management team of the Company's Investment Adviser.

A.7.2 - This provision is complied with save that all of the Directors are appointed for a term which expires when either the Director is (i) not re-appointed following retirement in accordance with the Articles of Association; (ii) removed or vacates office; (iii) resigns or does not offer himself for re-election, or (iv) terminates his appointment on three months' notice.

B.2.1 - This provision of having a Remuneration Committee is not complied with as there are no executive directors of the Company, The Board as a whole determines the Directors' remuneration.

D.1.2 - This provision is not strictly complied with as the management team of WPML and BCM have regular contact with major institutional Shareholders. All comments received from such Shareholders are fed back to the Board both from WPML and the Company's brokers. When practicable, all Directors attend the Annual General Meeting, with the Chairman and the Senior Independent Director in particular, being available to communicate with Shareholders.

Previously the Board as a whole, being entirely Non-Executive, constituted a Nomination Committee. However the Board has now appointed Philippe de Nicolay, David Harrel and Richard Melhuish to constitute the Nomination Committee.

DIRECTORS' REMUNERATION REPORT

As the Board consists entirely of Non-Executive Directors, the Board as a whole act as a Remuneration Committee. The Board periodically review the level of Directors' fees relative to other comparable companies and in light of the responsibility of each Director. 

The table below shows the annual fees payable and the actual fees paid to each of the Directors during the year:

Director	Role	Annual Fees Payable £	Actual Fees Paid £
P E J F de Nicolay	Non-Executive Director and Chairman	40,000	40,000
I M McArdle	Non-Executive Director and Senior Independent Director	20,000	20,000
H R Ward	Non-Executive Director and  member of the Audit Committee	22,000	22,000
D T D Harrel	Non-Executive Director	20,000	20,000
R M Melhuish	Non-Executive Director and  member of the Audit Committee	20,000	20,000
R M Taylor	Non-Executive Director and Chairman of Audit Committee	30,000	30,000
W E Cesman	Non-Executive Director	20,000	20,000

Each Director has entered into an engagement letter on their appointment with the Company which records the terms of their appointment as a Non-Executive Director. 

This Report was approved by the Board on 4 December 2009 and signed on its behalf by the Chairman.

Consolidated income statement (unaudited)

for the year ended 30 September 2009

	Notes	Year ended 30 September 2009			Year ended 30 September 2008
		Trading  Operations* £m	Other Items** £m	Total £m	Trading  Operations* £m	Other Items** £m	Total £m
Revenue	4	44.8	-	44.8	42.0	-	42.0
Deficit on revaluation of investment properties	11	-	(80.7)	(80.7)	-	(140.8)	(140.8)
(Loss)/Profit on disposal of investment properties		-	(0.5)	(0.5)	-	0.8	0.8
Administrative expenses	5	(6.7)	(1.6)	(8.3)	(6.7)	(0.7)	(7.4)
OPERATING PROFIT/(LOSS)	5	38.1	(82.8)	(44.7)	35.3	(140.7)	(105.4)
Finance income	7	0.3	-	0.3	1.2	-	1.2
Finance cost	7	(28.9)	(0.2)	(29.1)	(25.8)	-	(25.8)
PROFIT/(LOSS) BEFORE TAX		9.5	(83.0)	(73.5)	10.7	(140.7)	(130.0)
Income tax expense	8	(0.4)	(1.5)	(1.9)	(0.4)	-	(0.4)
PROFIT/(LOSS) FOR THE YEAR	19	9.1	(84.5)	(75.4)	10.3	(140.7)	(130.4)
Earnings per share from continuing operations
Basic/Diluted - pence  (2008 restated)	9	6.15	(57.14)	(50.99)	6.98	(95.21)	(88.23)

Consolidated statement of recognised income and expense (unaudited)

for the year ended 30 September 2009

	Notes	Year ended 30 September 2009			Year ended 30 September 2008
		Trading  Operations* £m	Other Items** £m	Total £m	Trading  Operations* £m	Other Items** £m	Total £m
Income and expense recognised  directly in equity
(Loss)/gains on cash flow hedges	19	-	(34.3)	(34.3)	-	(13.8)	(13.8)
Gain on foreign currency translation	19	-	3.3	3.3	-	1.2	1.2
NET INCOME RECOGNISED IN EQUITY		-	(31.0)	(31.0)	-	(12.6)	(12.6)
PROFIT/(LOSS) FOR THE YEAR	19	9.1	(84.5)	(75.4)	10.3	(140.7)	(130.4)
TOTAL RECOGNISED INCOME AND EXPENSE FOR THE YEAR	19	9.1	(115.5)	(106.4)	10.3	(153.3)	(143.0)

All activities are continuing.

*	Trading Operations:	This excludes the Other Items and reflects the trading activities of the Group.
**	Other Items:	Includes the profits and losses on the sales of investment properties and items of a non-trading nature such as valuation adjustments arising from the fair value of investment properties and derivative financial instruments.

Consolidated balance sheet (unaudited)

As at 30 September 2009

	Notes	30 September 2009 £m	30 September 2008 £m
NON-CURRENT ASSETS
Investment properties	11	516.1	587.0
Derivative financial assets	16	-	1.3
		516.1	588.3
CURRENT ASSETS
Trade and other receivables	12	19.0	31.3
Cash and cash equivalents	13	100.0	15.1
		119.0	46.4
TOTAL ASSETS		635.1	634.7
CURRENT LIABILITIES
Trade and other payables	14	(26.6)	(25.5)
Borrowings	15	(63.6)	-
Derivative financial liabilities	16	(32.5)	-
		(122.7)	(25.5)
NON-CURRENT LIABILITIES
Borrowings	15	(463.5)	(490.5)
Deferred tax liabilities	8	(1.5)	(0.7)
		(465.0)	(491.2)
TOTAL LIABILITIES		(587.7)	(516.7)
NET ASSETS		47.4	118.0
EQUITY
Share capital	18	22.6	13.3
Share premium	19	161.4	168.7
Retained earnings	19	(107.0)	(65.2)
Cash flow hedges reserve	19	(34.7)	(0.6)
Currency translation reserve	19	5.1	1.8
TOTAL EQUITY ATTRIBUTABLE TO THE ORDINARY  EQUITY HOLDERS OF THE PARENT COMPANY		47.4	118.0
NET ASSET VALUE
Basic/Diluted - pence per share (2008 restated)	10	4.4	11.1

Consolidated cash flow statement (unaudited)

for the year ended 30 September 2009

		Year ended 30 September 2009 £m	Year ended 30 September 2008 £m
OPERATING PROFIT FOR THE YEAR		(44.7)	(105.4)
Adjust non-cash items:
- Decrease in fair value of investment properties		80.7	140.8
- Loss/(Profit) on sale of investment properties		0.5	(0.8)
- Performance fee adjustment		-	-
- Accrued rental income		(0.4)	(0.3)
- Rent incentives		1.1	(11.8)
- Foreign exchange loss		(7.2)	(5.7)
Working capital adjustments:
- Decrease in trade and other receivables		10.9	0.1
- Increase/Decrease) in trade and other payables		0.5	(0.6)
- Finance costs paid		(29.1)	(26.0)
- Finance costs received		0.3	1.3
- Finance lease interest		(0.1)	(0.2)
- Taxation		(0.1)	-
CASH FLOWS FROM OPERATING ACTIVITIES		12.4	(8.6)
INVESTING ACTIVITIES
Purchase of investment properties		-	(42.4)
Sale of investment properties		15.2	11.0
CASH FLOW USED IN INVESTING ACTIVITIES		15.2	(31.4)
FINANCING ACTIVITIES
Ordinary Shares issued (net of expenses)		52.0	-
Increase in bank debt		13.5	48.5
Equity dividends paid		(8.2)	(13.7)
CASH FLOWS FROM FINANCING ACTIVITIES		57.3	34.8
INCREASE IN CASH AND CASH EQUIVALENTS		84.9	(5.2)
Cash and cash equivalents at beginning of period		15.1	20.3
CASH AND CASH EQUIVALENTS AT YEAR END		100.0	15.1

Notes to the financial statements

1. Basis of preparation 

The financial information in this report is abridged and does not constitute the Group's full Financial Statements for the years ended 30 September 2009 and 30 September 2008, and has been prepared under International Financial Reporting Standards (IFRS).

Full Financial Statements for the year ended 30 September 2008, which were prepared under IFRS, received an unqualified auditors' report and did not contain a statement under Section 15 (4)(b) or (6) of the Isle of Man Companies Act 1982, have been filed in the Isle of Man Registrar of Companies.

Financial Statements for the year ended 30 September 2009 will be presented to the Members at the forthcoming Annual General Meeting.

These accounting policies have been consistently applied to all the periods presented.

The financial statements are prepared on the historical cost basis, except for investment property and derivative financial instruments that are measured at fair value. The financial statements are presented in millions of pounds sterling (£m) except where otherwise indicated. 

These financial statements have been prepared on a going concern basis as the Directors consider this the most appropriate basis. A summary of the Directors consideration in this regard can be found in the Going Concern section above. 

2. Significant accounting policies

A summary of the principal accounting policies is set out below and the most significant ones are italicised:

Basis of consolidation

The financial statements comprise the historical financial information of Wichford P.L.C. and its subsidiaries ("the Group") for the period ended 30 September 2009. Wichford P.L.C. is a public listed company incorporated in the Isle of Man. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred from the Group. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights; currently exercisable or convertible potential voting rights; or by way of contractual agreement.

The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All intra-group transactions are eliminated as part of the consolidation process and there is no impairment in the carrying value of these transactions. 

Revenue

Revenue recognised in the income statement represents property rental income and interest income, net of VAT and other sales-related taxes, as follows:

Rental income receivable under operating leases

Rental income receivable under operating leases is recognised on a straight-line basis over the term of the lease, except for contingent rental income which is recognised when it arises.

Incentives for lessees to enter into lease agreements are spread evenly over the non-cancellable period of the lease, even if the payments are not made on such a basis.

Premiums received to terminate leases are recognised in the income statement when they arise.

The lease term is the non-cancellable period of the lease together with any further term for which the tenant has the option to continue the lease, where, at the inception of the lease, the Directors are reasonably certain that the tenant will not exercise that option.

Service charges

Where the Group invoices service charges, these amounts are not recognised as income as the risks in relation to the provision of these goods and services are primarily borne by the Group's customers. Any servicing expenses suffered by the Group are included within direct costs.

Interest income

Interest income is recognised as it accrues using the effective interest rate basis.

Insurance premiums

Insurance premiums recharged to tenants are not reflected in either income or expense.

Property acquisitions

Where properties are acquired through the acquisition of corporate interests the Directors have regard to the substance of the assets and activities of the acquired entity in determining whether the acquisition represents the acquisition of a business.

Where such acquisitions are not judged to be an acquisition of a business the transactions are accounted for as if the Group had acquired the underlying property directly. Accordingly, no goodwill arises, rather the cost of the corporate entity is allocated between the identifiable assets and liabilities of the entity based on their relative fair values at the acquisition date.

Otherwise corporate acquisitions are accounted for as business combinations.

Business combinations and goodwill

Business combinations are accounted for under IFRS 3 using the purchase method of accounting.  The cost of acquisition is the consideration given in exchange for the identifiable net assets. This consideration includes any cash paid plus the fair value at the date of exchange of assets given, liabilities incurred or assumed and equity instruments issued by the Group. The cost of acquisition also includes directly attributable costs.

The acquired net assets are initially recognised at fair value. Where the Group does not acquire 100% ownership of the acquired company, a minority interest is recorded as the minority's proportion of the fair value of the acquired net assets. Any adjustment to the fair values is recognised within twelve months of the acquisition date.

Goodwill on acquisitions comprises the excess of the fair value of the consideration plus any associated costs for investments in subsidiaries over the fair value of the identifiable net assets acquired. Any goodwill and fair value adjustments are recorded as assets and liabilities of the acquired company for the purposes of consolidation and are recorded in the local currency of that company. The costs of integrating and reorganising acquired businesses are charged to the post-acquisition income statement.

Goodwill is carried at cost less accumulated impairment losses.

The Group's goodwill is reviewed at each balance sheet date on an annual basis, or more frequently if there is an indication that the goodwill is impaired, to determine whether events or changes in circumstances exist that indicate that their carrying amount may not be recoverable. If such an indication exists, the asset's recoverable amount is estimated. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. An impairment loss is recognised in the income statement for the amount by which the asset's carrying amount exceeds its recoverable amount.

Investment property

Property held to earn rent or for capital appreciation, or both, is classified as investment property and recognised initially at cost, including directly attributable transaction costs.

Property held under leases for the same purpose is also classified as investment property, accounted for as held under a finance lease and initially recognised at the sum of any premium paid on acquisition and the present value of any further minimum lease payments. The corresponding liability to the superior leaseholder is included in the balance sheet as a finance lease obligation.

Thereafter investment property is measured at fair value, which reflects market conditions at the balance sheet date. For the purposes of the historical financial information, the assessed fair value is:

• reduced by the carrying amount of any accrued income resulting from the spreading of lease incentives and/or minimum lease payments; and

• increased by the carrying amount of any liability to the superior leaseholder included in the balance sheet as a finance lease obligation.

The annual valuations of investment property are based upon estimates and subjective judgements that may vary from the actual values and sales prices that may be realised by the Group upon ultimate disposal. The critical assumptions made relating to valuations have been disclosed in note 11 to the financial statements.

Gains or losses arising from changes in the fair value of investment property are included in the income statement in the year in which they arise. Profits or losses on the disposal of investment property are recognised at contract completion for the disposal.

Disposals of investment properties are recognised on completion and the profit or loss on disposal is calculated as the difference between the sale proceeds and the latest carrying value of the property after adding attributable costs of the disposal.

Non-current assets held for sale

Investment property is transferred to non-current assets held for sale when it is expected that the carrying amount will be recovered principally through sale rather than from continuing use due to advanced sale discussions. On re-classification, investment property continues to be measured at fair value.

Finance leases

Finance leases are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and the reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the income statement as they arise.

Cash and short-term deposits

Cash and short-term deposits in the balance sheet comprise cash at bank, short-term deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

For the purpose of presenting the "Consolidated cash flow statement", cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.

Trade and other receivables

Trade and other receivables are recognised at their fair value on initial recognition and subsequently at amortised cost. A provision for impairment of trade receivables is established where there is objective evidence that the Group will not be able to collect all amounts due according to original terms of the receivables concerned; this is the amortised cost. Balances are written off when the probability of recovery is assessed as being remote.

Trade and other payables

Trade and other payables are recognised at fair value and subsequently measured at amortised cost.

Loans and borrowings

Loans and borrowings are initially recognised at fair value less directly attributable transaction costs.

After initial recognition, interest and non-interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.

Borrowing costs are recognised in the income statement using the effective interest rate method.

Gains and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised in finance income and finance expense respectively.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and recognition of new liability, and the difference in the respective carrying amounts is recognised in the income statement.

Derivative financial instruments

The Group uses derivative financial instruments, such as interest rate swaps, to hedge its risks associated with interest rate fluctuations. The Group does not hold or issue derivatives for trading purposes. Such derivative financial instruments are initially recognised at fair value on the date at which a derivative contract is entered into and are subsequently remeasured at fair value at each reporting date.

For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are taken directly to the income statement for the year. For derivatives that qualify for hedge accounting, the effective portions of the gains or losses arising from changes in fair value are recognised in equity as net unrealised gains or losses, while any ineffective portion is recognised immediately in profit or loss.

For the purpose of hedge accounting, interest rate swaps are designated as cash flow hedges where they hedge exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a forecast transaction.

Hedge accounting is discontinued when the hedging instrument expires, is sold, terminated, exercised or no longer qualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecast transaction occurs. At the time of the forecast transaction, the net cumulative gain or loss recognised in equity is transferred to the income statement for the year.

Fair values of financial instruments

The fair value of quoted instruments is determined by reference to bid prices at the close of business on the balance sheet date. Where there is no active market, fair value is determined using valuation techniques. These include using recent arms-length market transactions; reference to the current market value of another instrument which is substantially the same; discounted cash flow analysis and pricing models.

Share-based payments

A performance fee is payable as part of the contract with the Property Adviser, and this is to be satisfied by the issuance of new shares in the parent company. This performance fee is related to the total return to Shareholders, based on the share price and dividends paid. The resulting performance fee for a particular performance period 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 income statement over the vesting period in accordance with IFRS 2 Share-based payment. Until the issuance of any shares under this contract, and in accordance with IFRS 2 guidance, the charge to the income statement is added back to distributable reserves, as it does not result in cash leaving the Group.

On the issuance of any shares under this contract, the full market value of the shares issued will be charged to the parent company's distributable reserves.

Current taxation

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by the balance sheet date.

Deferred taxation

Deferred income tax is provided using the liability method on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes with the following exceptions:

• where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;

• in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and

• deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which deductible temporary differences, carried forward tax credits or tax losses can be utilised.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted, or substantively enacted, at the balance sheet date.

In determining the expected manner of realisation of an asset, the Directors consider that the Group will recover the residual value of an asset through sale and the depreciable amount through use. Whilst investment property is measured at fair value, it is intrinsically depreciable. Consequently deferred tax relating to that portion of the carrying amount of the investment property that would be considered depreciable under IAS 16 is measured on an "in use", not an "on sale" basis. The element of the total carrying amount of the investment property represented by the land is considered non-depreciable and the Directors estimate the depreciable amount and residual value of the building element on a case-by-case basis.

Foreign currency translation

Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the income statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on a monetary item that forms part of a reporting entity's net investment in a foreign operation shall be recognised in profit or loss in the separate financial statements of the reporting entity or the individual financial statements as appropriate. In the financial statements that include the foreign operations and the reporting entity (the Group accounts), such exchange differences shall be recognised initially in a separate component of equity and recognised in profit or loss on disposal of the foreign operation.

The assets and liabilities of foreign operations are translated into sterling at the rate of exchange ruling at the balance sheet date. Income and expenses of foreign operations are translated at weighted average exchange rates for the accounting period. The resulting exchange differences are taken directly to a separate component of equity.

Operating profit

Operating profit is profit stated after profit/loss on disposal of investment properties and the revaluation of the property portfolio but before finance income and costs.

Exceptional items

The Group presents as exceptional items on the face of the income statement, those material items of income and expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow Shareholders to understand better the elements of financial performance in the year, so as to facilitate comparison with prior periods and to assess better trends in financial performance.

Equity

Equity comprises the following:

• "Share Capital" represents the nominal value of equity shares.

• "Share Premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of share issues.

• "Retained earnings" represents retained profits.

• "Cash flow hedges reserve" represents changes in the carrying amount of cash flow hedges.

• "Currency translation reserve" represents the differences arising from translation of investments in overseas subsidiaries.

New standards and interpretations not applied

The International Accounting Standards Board ("IASB") and International Financial Reporting Interpretations Committee ("IFRIC") have issued the following standards and interpretations with effective dates after the date of these financial statements that have not yet been adopted by the Group.

The application of the above Standards and Interpretations is not expected to have a material impact on the Group's results.

The adoption of IAS 1 Presentation of Financial Statements (Revised 2007) will change the format of the Group's primary statements.

Critical judgements and estimates

The preparation of financial statements in conformity with IFRS requires the use of judgements and estimates that affect the reported amounts of assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the period reported. Although these estimates are based on the Directors' best knowledge of the amount, event or actions, actual results may differ from those estimates.

The principal areas where such judgements and estimates have been made are:

Investment property valuation

The Group uses the valuation performed by its independent valuers as a fair value of its investment properties. The valuation is based upon assumptions including estimated rental values, future rental income, anticipated maintenance costs, future development costs and appropriate discount rates. The valuers also make reference to market evidence of transaction prices for similar properties.

Deferred taxation

The Group considers that the value of the property portfolio is likely to be realised by both the sale and the use over time. 

The Group bases its deferred taxation provision on the assumption that the residual value of the investment properties is not less than the present value as provided by its external valuers.

The Group makes an initial estimate of the length of time that each property will be held in order to determine the initial recognised exemption for both the in use and on sale elements for each property. Periodically the Group will review the length of time for which each property will continue to be held and this can be significantly different from the residual of the time from the initial estimate.

The resulting provision, being subject to assumptions on the length of the time that each property will be held by the Group which can change over time, can lead to significantly different results for each property from one period to another.

The recoverability of any deferred tax asset is assessed and, where it is thought unlikely that a recovery will be made, is not included in the Group's provision.

Derivative financial instruments

The Group uses the valuation provided by its bankers as the fair value of its cash flow hedges. The valuation is based upon assumption including market prices and estimated cash-flows. The Group tests the effectiveness of these instruments half-yearly and the estimated ineffective portion is passed through the Income Statement rather than taken to reserves.

3. Segment information

The primary reporting segment of the Group is the entire business. The business activity of the Group is property investment in the UK and Continental Europe which the Board considers to be the only business segment. Therefore information provided elsewhere in the historical financial information relates to that segment.

Secondary reporting format - Geographic segments

The following table presents revenue, expenditure and certain asset information regarding the Group's geographical segments:

Year ended 30 September 2009	UK £m	Rest of Europe £m	Total £m
Segment revenue	32.4	12.4	44.8
Carrying amount of Segment assets
Segment assets	433.8	201.3	635.1
Segment capital expenditure
Acquisition of investment properties	-	-	-
Disposals of investment properties	(0.5)	-	(0.5)

Year ended 30 September 2008	UK £m	Rest of Europe £m	Total £m
Segment revenue	33.0	9.0	42.0
Carrying amount of Segment assets
Segment assets	441.4	193.3	634.7
Segment capital expenditure
Acquisition of investment properties	15.2	28.3	43.5
Disposals of investment properties	0.8	-	0.8

4.  Revenue

	Year ended 30 September 2009 £m	Year ended 30 September 2008 £m
Rental income	44.8	42.0
	44.8	42.0
Finance income (note 7)	0.3	1.3
	45.1	43.3

5. Operating profit

The following items have been charged in arriving at operating profit:

	Year ended 30 September 2009 £m	Year ended 30 September 2008 £m
Property Advisor's fees
- for advisory services	3.5	3.9
- for accrued performance fees	-	-
Property Manager's fees	0.2	0.1
Independent Auditor's remuneration
- for audit	0.2	0.2
- for review of tax provision	0.1	-
- for tax compliance work	-	0.2
- for other advisory services	-	0.1
Legal fees	1.3	1.4

In addition to the fees shown above as the Independent Auditor's remuneration, the Independent Auditor also charged £0.2 million (2008: nil) for advisory services. These fees have been charged to the Share Premium account as an expense of raising additional share capital. The total fees payable to the auditor in the year were £0.5 million (2008: £0.5 million).

The performance fee is payable by Wichford P.L.C. to Wichford Property Management Limited (WPML) and takes the form of an accrued cash profit-sharing scheme satisfied by the issuance of new shares at the prevailing market price at the time of payment, under which WPML will acquire Ordinary Shares in Wichford P.L.C. at no cost.

The amount of the annual award has been calculated as 20% of the amount by which the total return on the Ordinary Shares in Wichford P.L.C. exceeds 10% for the preceding financial year. A separate calculation of the amount of the annual award is made in relation to each separate tranche of Ordinary Shares in Wichford P.L.C. issued during the relevant financial year. 

The award of shares will only vest if the annualised return over the three-year period from the beginning of the relevant financial year to the end of the period two years later, is not less than 10% per annum and will only be issued if Wichford P.L.C.'s net asset per share value is greater than, or equal to, its net asset per share value as at 5 August 2004. The number of shares to be issued is only known at the end of each three year period as the cash equivalent earned under this scheme is divided by the average share price for the last 20 business days of the three year period.

Wichford P.L.C. estimates the accrual for the performance fee for each half-yearly and year-end financial report.

The amounts accrued in the past two years and the resultant charges to the consolidated income statement are nil and nil respectively.

Details of a new contract with WPML and its fee arrangements for future periods are in the Corporate Governance Report. The terms of which alter the calculations both for the fees for advisory services and for the performance fee.

Included in the administrative expenses for the years ended 30 September 2009 are the costs of advice on the Windermere interest rate swaps and other matters of £0.6 million and the cost of restructuring investments in Germany of £1.0 million. These items are included in the Other Items column in the Consolidated Income Statement.

Included in the administrative expenses in the consolidated income statement for the year ended 30 September 2008 of £7.4 million are the costs of the move from AIM to the Main Market of the London Stock Exchange plc, which amounted to £0.7 million and are shown in the Other Items column.

A summary of the items included in Other Items for Administrative Expenses is shown below.

	Year ended 30 September 2009 £m	Year ended 30 September 2008 £m
TRADING OPERATIONS
Administrative expenses of a normal nature	6.7	6.7
Total Administrative Expenses in Trading Operations	6.7	6.7
OTHER ITEMS
Windermere swaps and associated advice	0.6	-
Restructuring costs of German investments	1.0	-
Move from AIM to Main Market	-	0.7
Total Administrative Expenses in Other Items	1.6	0.7
TOTAL ADMINISTRATIVE EXPENSES	8.3	7.4

6. Directors' emoluments

There were no employees other than the Directors of the parent company. Directors' emoluments paid in the year were £172,000 (2008: £152,470) and all relate to fees; there being no other benefits or payments.

7. Finance revenue and costs

	Year ended 30 September 2009 £m	Year ended 30 September 2008 £m
Finance revenue
Interest receivable	0.3	1.2
Fair value adjustment of interest rate swap	-	-
Total finance revenue	0.3	1.2
Finance costs
Bank interest	26.3	25.1
Amortisation of loan agreement fees	1.3	0.5
Finance lease interest	1.3	0.2
Fair value adjustment of interest rate swap	0.2	-
Other	-	-
Total finance expense	29.1	25.8

8. Income tax

(a) Tax on profit from ordinary activities

	Year ended	Year ended
	30 September 2009 £m	30 September 2008 £m
Profit for the period not subject to UK income tax	(73.4)	(123.4)
Profit before tax	(73.4)	(123.4)
Current income tax
Adjustments in respect of previous periods	0.8	-
Income tax in respect of current year	0.3	-
Total current income tax	1.1	-
Deferred tax
Origination and reversal of temporary differences	0.8	0.4
Income tax expense reported in the income statement	1.9	0.4

The Company has made a provision for tax on profits of its UK properties owned mainly through non UK resident companies of £0.3 million for the year to 30 September 2009 and £0.8 million for prior periods. This provision results from the recognition that these periods are still subject to agreement with HMRC.

(b) Deferred tax

Deferred tax included in the balance sheet is as follows: 

	30 September 2009 £m	30 September 2008 £m
Deferred tax liability
Lease accounting temporary differences	1.5	0.7
Deferred tax liability	1.5	0.7

The deferred tax included in the income statement is as follows:

	Year ended 30 September 2009 £m	Year ended 30 September 2008 £m
Lease accounting temporary differences	0.8	0.4
Deferred income tax expense	0.8	0.4

The deferred tax provision reflects the likely tax charge in future periods based on the current expectation of how long each property will be owned. The calculation of this provision is based on separate calculations for recovering the initial investment through its use and on sale.

(c) Reconciliation of tax charge on accounting profits to tax charge for the year

As the Group's properties are principally in the UK and owned by companies registered in the Isle of Man the Company regards the UK's income tax rate of 20% (2008: 22%), as payable under the UK's Non Resident Landlord Scheme, to be most relevant tax rate for the reconciliation of the theoretical tax charge on accounting profits to the tax charge for the year shown in the Consolidated Income Statement.

This reconciliation is shown below.

	Year ended 30 September 2009 £m	Year ended 30 September 2008 £m
Loss before tax	(73.5)	(130.0)
Loss before tax multiplied by standard rate of UK income tax (20%) (2008: 22%)	(14.7)	(28.6)
Effect of:
- income not subject to UK income tax	(5.1)	(4.3)
- exempt property revaluation of investment properties	16.1	30.9
-set off against losses brought forward	-	(0.1)
- losses carried forward	3.9	2.0
- deferred tax provision	0.8	0.4
- adjustment in respect of prior years	0.9	0.1
Total tax charge for the year	1.9	0.4

9. Earnings per share 

Basic earnings per share for the year ended 30 September 2009 is based on the loss attributable to equity shareholders of £75.4 million (2008: loss of £130.4 million) and a weighted average number of Ordinary Shares outstanding during the year ended 30 September 2009 of 147,791,602 (2008: 132,726,728). Details of the additional shares issued during the year are contained in note 18.

Diluted earnings per share are the same as basic earnings per share.

The table below shows the figures on a comparable basis and shows the figures for 30 September 2008 on the same basis as that used for the figures for 30 September 2009. Therefore the weighted number of shares for both years is the same.

	Year ended 30 September 2009 £m	Year ended 30 September 2008 £m
Profit from Trading Operations	9.1	10.3
Loss from Other Items	(84.5)	(140.7)
Loss attributable to equity shareholders	(75.4)	(130.4)
Weighted average number of Ordinary Shares (000s)	147,792	147,792
Earnings per share - pence
Profit from Trading Operations per share	6.15	6.98
Loss from Other Items per share	(57.14)	(95.21)
Basic loss per share	(50.99)	(88.23)

The table below shows the figures reported at 30 September 2008 as the comparative to the current year figures.

	Year ended 30 September 2009 £m	Year ended 30 September 2008 £m
Profit from Trading Operations	9.1	10.3
Loss from Other Items	(84.5)	(140.7)
Loss attributable to equity shareholders	(75.4)	(130.4)
Weighted average number of Ordinary Shares (000s)	147,792	132,727
Earnings per share - pence
Profit from Trading Operations per share	6.15	7.77
Loss from Other Items per share	(57.14)	(106.00)
Basic loss per share	(50.99)	(98.23)

For EPRA basis total earnings per share figure refer to note 22.

10. Net assets per share

Net assets per share is calculated by dividing the net assets at 30 September 2009 attributable to the equity holders of the parent of £47.4 million (2008: £118.4 million) by the number of Ordinary Shares as at 30 September 2009 of 1,062,095,584 (2008: 132,761,948). Details of the additional shares issued during the year are contained in note 18.

The table below shows the figures on a comparable basis and shows the figures for 30 September 2008 on the same basis as that used for the figures for 30 September 2009. Therefore the number of Ordinary Shares used in both years is the same.

	30 September 2009	30 September 2008
Net assets attributable to equity holders of the parent (£m)	47.4	118.0
Number of Ordinary Shares (000s)	1,062,096	1,062,096
Net assets per share (pence)	4.4	11.1

The table below shows the figures reported at 30 September 2008 as the comparative to the current year figures.

	30 September 2009	30 September 2008
Net assets attributable to equity holders of the parent (£m)	47.4	118.0
Number of Ordinary Shares (000s)	1,062,096	132,762
Net assets per share (pence)	4.4	88.9

For EPRA basis net asset value figures refer to note 22.

11. Investment properties

		Freehold
	Freehold/	and long	Long
	Feuhold	leasehold	leasehold	Total
2009	£m	£m	£m	£m
At 30 September 2008	468.5	22.4	96.1	587.0
Foreign exchange differences	23.3	-	-	23.3
Purchases during the year	1.8	-	-	1.8
Disposals during the year	(13.4)	-	(1.9)	(15.3)
Valuation losses	(66.1)	(3.8)	(10.8)	(80.7)
Transferred from assets held for sale	-	-	-	-
Reclassifications	-	-	-	-
At 30 September 2009	414.1	18.6	83.4	516.1

		Freehold
	Freehold/	and long	Long
	Feuhold	leasehold	leasehold	Total
2008	£m	£m	£m	£m
At 30 September 2007	515.0	37.1	111.5	663.6
Foreign exchange differences	20.5	-	-	20.5
Purchases during the year	43.5	-	-	43.5
Disposals during the year	-	-	(10.2)	(10.2)
Valuation losses	(113.6)	(5.0)	(22.7)	(141.3)
Transferred to assets held for sale	-	-	10.9	10.9
Reclassifications	3.1	(9.7)	6.6	-
At 30 September 2008	468.5	22.4	96.1	587.0

At 30 September 2009 the Group owned 75 properties throughout the UK, France, Germany and the Netherlands.

While the Group has not purchased any additional properties during the year to 30 September 2009 it has made provision for the future cash-flow of exercising options to purchase the remaining shares in connection with its investments in Germany. This amounts to £1.8 million.

All the Group's investment properties were externally valued as at 30 September 2009 and 30 September 2008 on the basis of open market value by professionally qualified valuers in accordance with the Appraisal and Valuation Standards of the Royal Institution of Chartered Surveyors. The Group's valuer is BNP Paribas Real Estate Advisory and Property Management UK Limited in the UK and DTZ Eurexi for Continental Europe.

The value of each of the properties has been assessed in accordance with the relevant parts of the Red Book. In particular, the Market Value has been assessed in accordance with PS 3.2. Under these provisions, the term "Market Value" means "the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties have each acted knowledgeably, prudently and without compulsion". 

In undertaking the valuations on the basis of Market Value, the valuers have applied the interpretative commentary which has been settled by the International Valuation Standards Committee and which is included in PS 3.2. The RICS considers that the application of the Market Value definition provides the same result as Open Market Value, a basis of value supported by previous editions of the Red Book.

The valuation does not include any adjustments to reflect any liability to taxation that may arise on disposal, nor for any costs associated with disposals incurred by the owner. No allowance has been made to reflect any liability to repay any government or other grants, or taxation allowance that may arise on disposals. Deductions have been made to reflect purchasers' acquisition costs. These have been applied according to value on a sliding scale, representative of the typical costs that would be incurred in the market.

A reconciliation of investment and development property valuations to the balance sheet carrying value of property is shown below:

	30 September	30 September
	2009	2008
	£m	£m
Investment property at Market Value as determined by external valuers	526.9	597.9
Add minimum payment under head leases separately included as a payable in the balance sheet	2.0	2.0
Less accrued incentives separately included as a receivable in the balance sheet	(11.4)	(11.8)
Less accrued rental income separately included as a receivable in the balance sheet	(1.6)	(1.2)
Add accrued rental income separately included as a payable in the balance sheet	0.2	0.1
Balance sheet carrying value of investment property	516.1	587.0

12. Trade and other receivables

	30 September	30 September
	2009	2008
	£m	£m
Trade receivables	0.9	6.9
VAT recoverable	0.3	5.5
Accrued rental incentives	11.4	11.8
Accrued rental income	1.6	0.5
Other prepayments	4.0	5.3
Service charge	0.8	1.3
	19.0	31.3

Trade receivables are non-interest bearing and generally have a 14-day term. Due to their short maturities, the fair value of trade and other receivables approximates to their book value. 

As at 30 September 2009 nil trade receivables were impaired (2008: nil). As at 30 September 2009, nil trade receivables were overdue but not impaired (2008: nil).

13. Cash and cash equivalents

	30 September	30 September
	2009	2008
	£m	£m
Cash at bank	100.0	15.1

Of the £100.0 million of cash at bank there was £53.5 million receipts from the Rights Issue completed on 25 September 2009. At 30 September 2009 there were still expenses of this Rights Issue of £1.5 million that were not paid; these have now all been paid.

At 30 September 2009 there was £17.8 million (2008: nil) of the cash at bank to be used to purchase properties as substitutes into the Delta, Gamma and Zeta facilities. If the completion of such purchases does not occur within the facilities specified time periods then these monies will be used to repay part of these loans and any associated break costs of the appropriate derivatives.

Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods dependent on the immediate cash requirements of the Group. The book value of cash and cash equivalents approximates their fair value.

14. Trade and other payables

	30 September	30 September
	2009	2008
	£m	£m
Rents received in advance	7.4	9.7
VAT payable	1.9	1.1
Other payables and accruals	16.5	13.4
Accrued rental income	-	-
Service charge	0.8	1.3
	26.6	25.5

Trade and other payables are non-interest bearing and it is the Group's policy to pay within the stated terms which typically vary from 30-45 days. Due to their short maturities, the fair value of trade payables approximates to their book value. 

15. Borrowings

	30 September	30 September
	2009	2008
	£m	£m
current
Bank loans	63.6	-
Non-current
Bank loans	465.3	492.8
Less: deferred finance costs	(3.8)	(4.3)
Finance leases	2.0	2.0
Less: finance lease classified as held for sale	-	-
	463.5	490.5

a) Bank Loans

At 30 September 2009, the bank borrowings of £528.9 million (2008: £492.8 million) are secured by fixed and floating charges over the assets and income streams of the Group. It comprised of seven separate borrowing facilities each secured on a number of discrete assets with no common assets. 

These facilities are summarised as below:

		30 September	30 September
		2009	2008
Facility	Lender	£m	£m
Delta	Windermere XI CMBS Ltd	114.6	114.6
Gamma	Windermere VIII CMBS Ltd	199.7	199.7
Hague	SNS Property Finance	20.2	17.5
Halle	Windermere XIV CMBS Ltd	34.0	29.5
VBG1	Talisman 3	63.6	55.9
VBG2	Talisman 4	50.8	44.6
Zeta	Lloyds TSB	46.0	31.0
		528.9	492.8

The Gamma and Delta facilities are non-reducing and have repayment dates in October 2010 with extended repayment dates in October 2012 subject to the fulfilment of a test over the WAULT of the secured assets in October 2010; both have been put into securitisation conduits by the lender. The Gamma facility was originally entered into by the Group in March 2005 and in early 2006 the lender approached the Company to split the facility into two and so the Delta facility was created in July 2006.

The Hague facility, which was entered into by the Group in July 2008, was non-reducing and has a final repayment date in July 2014. Subsequent to the 30 September 2009 the Group has agreed that for the period from November 2009 to October 2010 this facility will become a reducing loan whereby 0.25% of the initial outstanding balance will be repaid over that period in equal quarterly amounts. This was agreed to together with a liquidity surcharge and lower increased margin than the lender required. These changes will be reviewed at October 2010. As a result of the imposition of the liquidity surcharge and increased margin the interest cover test would be failed and so the lender has granted a waiver of this test until October 2010.

The Halle facility is non-reducing and has a repayment date in April 2014. The facility was already in place when the Group acquired the property on which it is secured in September 2007 and it was re-stated in October 2007 to increase the amount borrowed from €31.9 million to €37.1 million. This facility was originally entered into in February 2007.

The VBG facilities are reducing dependent upon expected rent rises with final repayment dates in January 2010 for VBG1 and April 2011 for VBG2. However, on acquisition, part of the purchase price was paid into escrow accounts such that all expected reductions of these bank loans would be funded by the escrow accounts. These facilities have been put into securitisation conduits by the lender. The Group took on responsibility for these facilities on the acquisition of the properties on which they are secured, in June 2007. The original date that these facilities were entered into by entities that are now part of the Group was December 2005 for VBG1 and April 2006 for VBG2.

The Zeta facility, which was entered into be the Group in May 2008, is non-reducing and has a final repayment date in May 2011.

The Delta, Gamma and Halle facilities provide for the payment of interest at a fixed rate. However the respective borrowing subsidiaries have given indemnities to the lenders in respect of interest rate swaps entered into to create those fixed rates. As such these facilities have been treated as floating rate facilities with interest rate swaps. As such all of the facilities are regarded as subject to the interest rate swaps of either ones with a group entity as a counter-party or where the facility agreement requires such instruments to be in place and have been taken out by the lender as detailed in note 16. The derivatives for the Delta, Gamma and Halle facilities do not have a Group company as counter-party but the Company recognises that it benefits from them and so has decided to recognise them separately. On these facilities the Group is charged a fixed interest rate equal to the strike rate for these derivatives. 

As the derivatives associated with the Delta, Gamma and Halle facilities are recognised separately by the Company and therefore treated as floating rate facilities, the book value of borrowings is not different to their fair value. The interest rates of these derivatives are given in note 16.

b) Finance Leases

Obligations under finance leases at the balance sheet dates are analysed as follows:

	30 September	30 September
	2009	2008
	£m	£m
Gross finance lease liabilities repayable:
In one year or less	0.1	0.1
In more than one year, but not more than five years	0.5	0.5
In more than five years	9.6	18.3
	10.2	18.9
Less: finance charges allocated to future periods	(8.2)	(16.9)
Present value of minimum lease payments	2.0	2.0

	30 September	30 September
	2009	2008
	£m	£m
Present value of finance lease liabilities repayable:
In one year or less	-	-
In more than one year, but not more than five years	0.1	0.1
In more than five years	1.9	1.9
Present value of minimum lease payments	2.0	2.0

The present values of minimum lease payments have been calculated by using the market cost of external borrowings available to the Group at the inception of the lease. The Directors consider that the carrying amount of these finance lease obligations approximate their fair value.

16. Derivative financial instruments

The Group enters into interest rate swaps and forward currency contracts. The purpose is to manage the interest rate and currency risks arising from the Group's operations and its sources of finance.

The interest rate swaps employed by the Group to convert the Group's borrowings to fixed interest ones fall into two categories, as explained in a) i) and ii) below.

It is the Group's policy that no trading in derivatives shall be undertaken.

a) Interest rate swap agreements

In accordance with the terms of the borrowing arrangements, the Group has entered into interest swap agreements.

The interest rate swaps are used to manage the interest rate profile of financial liabilities. The Group has employed interest rate swaps to eliminate future exposure to interest rate fluctuations as well as being charged fixed rate interest on those facilities described as having lender level interest rate swaps as described below. 

The total amount of notional value of these interest rate swaps, both those at lender level and borrower level, at 30 September 2009 was £529.4 million (2008: £487.8 million) and the blended fixed rate achieved by these interest rate swaps was 4.25% (2008: 4.58%).

These interest rate swaps can be segregated into two types: Lender level and Borrower level. These are detailed below.

i) Lender level interest rate swap agreements

Lender level interest rate swaps agreements are those from which the Group benefits but which do not have any Group entity as a counter-party, instead the lender is the counter-party with the commercial banking entity providing the interest rate swap. These arise where the loan agreements call for interest rate swaps to be taken out to allow a fixed interest charge to be made to the borrowing subsidiaries and these borrowers have given indemnities to the lenders in respect to these interest rate swaps.

The interest rate swaps for the Delta, Gamma and Halle facilities, from which the Group benefits by both eliminating any interest rate fluctuations in the market over the course of the facilities and also from any benefit (or cost) of closing these instruments out, are lender level interest rate swaps. They are between the CMBS vehicles (the lenders) and commercial banking counter-parties.

The Company recognises these derivatives separately as, while the Group is charged interest at a fixed rate on these facilities, the terms of the facilities mean the Group receives their benefit or pays their burdens.

The original interest rate swaps for these facilities were entered into by the Group and novated to or were taken out with a Lehman Brothers company. From the novation to the Lehmans Brothers company a fixed rate interest became payable, equivalent to that under the swaps, but the facility agreements also meant that any gains or losses on closing these instruments were for the Group to bear. Since, by this means the Group has the economic interest in the original swaps, it has recognised them in its accounts.

At the 30 September 2008 the status of the Lehman Brothers company, that was the counter-party to the CMBS vehicles, ability to fulfil its obligations under these interest rate swaps was uncertain the Company decided to assign a zero fair value to them. The fair value of these interest rate swaps was £5.0 million at 30 September 2008.

The Group continued to receive the benefit of these interest rate swaps as the agent for the securitisation vehicles continued to charge interest according to the profiles of these interest rate swaps while the trustees to the securitisation vehicles considered how best to replace them.

During the year the trustees arranged for original interest rate swaps to be cancelled and new interest rate swaps to be taken out as replacement for the Delta, Gamma and Halle facilities. This was achieved at no additional cost to the Group and the Group now have a constant fixed interest rate profile to the extended maturity date of these facilities of October 2012 for the Delta and Gamma facilities and April 2014 for the Halle facility. The cash-flow over the life of these new interest rate swaps is not materially different to the cash-flow of the original swaps. 

The fair values of the interest rate swaps for these three facilities are:

				30 September	30 September
				2009	2008
Facility	Effective Date	Maturity Date	Swap Rate	£m	£m
Delta	15/01/2009	15/10/2012	4.95%	(8.4)	1.1
Gamma	15/01/2009	20/10/2012	4.77%	(13.7)	3.3
Halle	15/04/2009	22/04/2014	4.19%	(2.6)	0.6
Total				(24.7)	5.0

At 30 September 2008, due to the uncertainty over these swaps, the Company decided to assign a zero fair value to them rather than the £5.0 million shown in the table above.

ii) Borrower level interest rate swap agreements

Borrower level interest rate swap agreements are those that have a Group company as the counter-party to the commercial bank providing the interest rate swap.

The Group has taken out such interest rate swaps in respect of its Hague, VBG1, VBG2 and Zeta facilities.

As a result of the use of interest rate swaps, the fixed rate profile of the Group was:

				30 September	30 September
				2009	2008
Facility	Effective Date	Maturity Date	Swap Rate	£m	£m
Hague	01/08/2008	01/08/2014	4.88%	20.2	17.5
VBG1	29/06/2007	15/01/2010	3.15%	42.9	37.7
VBG1	29/06/2007	15/01/2010	3.22%	20.9	18.3
VBG2	29/06/2007	15/04/2011	3.93%	51.1	44.6
Zeta	08/05/2008	09/05/2011	5.30%	17.0	17.0
Zeta	21/07/2008	09/05/2011	5.79%	9.0	9.0
Zeta	24/07/2009	09/05/2011	2.15%	20.0	-
Total				181.1	144.1

The fair value of these interest rate swaps at 30 September was:

	30 September	30 September
	2009	2008
	£m	£m
Hague	(2.4)	(0.3)
VBG1	(0.8)	1.2
VBG2	(2.4)	0.6
Zeta	(2.2)	(0.2)
	(7.8)	1.3

iii) Summary of fair value of interest rate swaps

Below is a summary of the interest rate swaps detailed above.

	30 September	30 September
	2009	2008
	£m	£m
Fair value of lender level interest rate swaps	(24.7)	5.0
Fair value of borrower level interest rate swaps	(7.8)	1.3
Fair value of the Group's derivative arrangements	(32.5)	6.3

At 30 September 2008, due to the uncertainty over these swaps, the Company decided to assign a zero fair value to lender level interest rate swaps rather than the £5.0 million shown in the table above.

Hedge accounting

The swap agreements are designated a cash flow hedges against interest rate fluctuations. The loss of £34.1 million on the fair value of the interest rate swaps (2008: loss of £13.5 million) in the 12 months to 30 September 2009 is reported in the reserves as the Group has applied hedge accounting to their swap agreements. The cash flow hedges have been assessed, with one exception, as highly effective. 

For the agreement that has been deemed ineffective, the fair value of this derivative has been recognised through the income statement. The fair value of this swap in the income statement is £0.2 million. This fair value of interest rate swap charge is reported within the finance costs in the income statement which is detailed in note 7.

b) Forward Exchange Agreements

The Group has entered into short-term foreign exchange sale and purchase contracts for the purpose of mitigating the Group's exposure to foreign exchange rate movements on its equity investment in foreign property acquisitions. The Group chooses not to designate these contracts as hedging instruments.

Due to the short-term nature of these contracts, the fair value approximates to their cost.

17. Financial risk management objectives and policies

The Group's principal financial instruments, other than derivatives (note 16), comprise bank loans, finance lease liabilities and cash. The main purpose of these financial instruments is to finance the Group's operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables that arise directly from its operations. 

The main risks arising from the Group's financial instruments are interest rate risk, exchange rate risk, credit risk and liquidity risk. In addition the Group has a tax exposure risk. The Board of Directors reviews and agrees policies for managing each of these risks that are summarised below.

The financial risks and the ways in which the Group manages them are listed as follows:

(a) Interest rate risk

The Group finances its operations through equity, retained profits and bank borrowings. The Delta, Gamma and Halle facilities are charged fixed interest rates created by the lender level interest rate swap arrangements detailed in note 16 above with all other of the Group's bank borrowings being charged at variable interest rates. 

The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's long-term debt obligations with floating interest rates. The Group uses interest rate derivatives to fully mitigate its exposure to interest rate fluctuations. At the year end, as a result of the use of interest rate swaps, the majority of the Group's borrowings were at fixed interest rates.

	30 September		30 September
	2009	2008
Fixed rate bank borrowings weighted average interest rate	5.07%	5.44%
Weighted average period for which rate is fixed in years	3 years	4 years

The Group's profit before tax therefore has no exposure to interest rate fluctuations until the repayment dates of the loans for which the interest rate swaps have been arranged. If the Delta and Gamma loans are not extended beyond October 2010 to October 2012 then the Group has an interest rate exposure on the interest rate swaps for these facilities for that two-year period.

(b) Exchange rate risk

As the Group acquires properties in Continental Europe, there is now the additional risk of movements in €/£ exchange rates - the Group minimises the exposure to foreign currency exchange rate movements by matching, as much as possible, the investment properties and associated loans in the same currency.

The following table demonstrates the sensitivity to a reasonably possible change in the €/£ exchange rate, with all variables held constant, of the Group's profit before tax (due to changes in value of revenue and interest streams) and the Group's equity (due to changes in the value of investment properties and associated loans). 

		Effect on
		profit	Effect on
	Increase/decrease	before tax	equity
	in €/£ exchange rate	£m	£m
2009	+5%	(3.9)	(2.3)
	-5%	3.9	2.3
2008	+5%	(2.1)	(2.4)
	-5%	2.1	2.4

The €/£ exchange rate as at 30 September 2009 was 1.09120 (2008: 1.25820). The average rate for the year was 1.14662 (2008: 1.31738).

(c) Credit risk

The Group trades only with recognised, creditworthy third parties. It is the Group's policy that all tenants who wish to trade on credit terms are subject to credit verification procedures. In addition, the Group further manages the credit risks by employing specialist property managers to monitor the properties. The result is that the Group's exposure to bad debt is not significant. The maximum exposure is the carrying amount as disclosed in Note 12.

With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents and certain derivative instruments, the Group's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

(d) Liquidity risk

The Group monitors its risk to a shortage of funds through the use of both short-term and long-term cash flow forecasts. The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans.

The table below summarise the maturity profile of the Group's borrowings at 30 September 2009 based on contractual undiscounted cash-flows.

		Finance
		lease
	Bank loans	liabilities
At 30 September 2009	£m	£m
In one year or less	63.6	0.1
In more than one year, but not more than two years	96.8	0.1
In more than two years, but not more than three years	-	0.1
In more than three years, but not more than four years	314.3	0.1
In more than four years, but not more than five years	54.2	0.1
In more than five years	-	9.7
	528.9	10.2

		Finance
		lease
	Bank loans	liabilities
At 30 September 2008	£m	£m
In one year or less	1.6	0.1
In more than one year, but not more than two years	56.1	0.1
In more than two years, but not more than three years	73.8	0.1
In more than three years, but not more than four years	-	0.1
In more than four years, but not more than five years	314.3	0.1
In more than five years	47.0	18.4
	492.8	18.9

The above tables assume that the Delta and Gamma facilities run to their extended repayment dates in October 2012 rather than their repayment dates in October 2010.

(e) Tax risk

The Group is exposed to the risk of changes to tax legislation in the various countries in which the Group operates. It is also exposed to different interpretations of tax regulations between the tax authorities and the Group. This can lead to discussions with the relevant tax authorities going back some time and may result in tax being paid that was in excess of the Group's estimate.

To the extent possible the Group will endeavour to reach a long-term agreement on the parameters used to calculate the tax charge with the tax authorities in order to minimise this exposure.

(f) Capital Management

The Company's Articles of Association set out the borrowing powers of the Company. This defines a maximum amount that could be borrowed to be five times the issued share capital of the Company and the capital and revenue reserves of the Company. This gives a maximum borrowing power at 30 September 2009 of £700 million (2008: £660 million). The Company expects to remain within this maximum for the foreseeable future. The Company's borrowings at 30 September 2009 were £33.5 million.

In addition, the Group is principally managed by reference to the loan to value ratios and expects to maintain this ratio between 60% and a maximum of 85%.

As a mechanism for managing the exposure to foreign currency exchange rate movements, the Group expects to borrow additional funds in the functional currency relevant to the acquisition it funds.

In September 2009 the Company raised £52.0 million net of expenses by way of a Rights Issue. The principal reasons for this was to provide the liquidity to enable the issue on the maturity of the VBG1 facility and to extend the WAULT on the Delta and Gamma facilities to be achieved so that the medium term funding of the Group is stabilised.

18. Authorised and issued share capital

On 28 August 2009 Shareholders approved, and the Company implemented, a share re-organisation whereby each Ordinary Share of 10 pence was split into one Ordinary Share of 1 penny and one Deferred Share of 9 pence.

The Shareholders, at the same meeting, approved an increase in the Authorised Share Capital of the Company to £26,110,000 by the creation of additional Ordinary Shares.

These steps were taken to allow a rights issue to be made that was also approved at the General Meeting on 28 August 2009 and resulted in the issuance of 929,333,636 new Ordinary Shares on 25 September 2009. These new Ordinary Shares did not rank for the interim dividend paid on 28 September 2009 of 3 pence per share.

	30 September	30 September
	2009	2008
AUTHORISED
Ordinary Shares of 10 pence each
- number	-	180,000,000
- £m	-	18.0
Ordinary Shares of 1 penny each
- number	1,416,142,468	-
- £m	14.2	-
Deferred Shares of 9 pence each
- number	132,761,948	-
- £m	11.9	-
ISSUED, CALLED UP AND FULLY PAID
Ordinary Shares of 10 pence each
- number	-	132,761,948
- £m	-	13.3
Ordinary Shares of 1 penny each
- number	1,062,095,584	-
- £m	10.6	-
Deferred Shares of 9 pence each
- number	132,761,948	-
- £m	12.0	-

Holders of the Ordinary Shares are entitled to receive dividends and other distributions and to attend and vote at any general meeting.

The Company made a Rights Issue of Ordinary Shares on 25 September 2009 whereby the shares issued at that time did not rank for any interim dividend related to the financial period ended 31 March 2009 but are pari passu with the remaining Ordinary Shares for dividends for the financial periods beginning on or after 1 April 2009.

The holders of the Deferred Shares are not entitled to receive dividends or other distributions nor to receive notice of or attend or vote at any general meeting of the Company. Further the holders of Deferred Shares are not entitled on a return of capital (whether in a winding-up or otherwise) to the repayment of the amount paid up on the Deferred Shares until after payment of the capital paid up on the new Ordinary Shares issued under the Rights Issue together with payment of £1.0 million on each of such new Ordinary Share. The Deferred Shares are not capable of transfer at any time other than with the consent of the Directors of the Company.

	30 September	30 September
Number	2009	2008
Ordinary Shares of 10 pence each
- ranking for dividends for the current year	-	132,761,948
- not ranking for interim dividend for the previous year	-	-
Ordinary Shares of 1 penny each
- ranking for dividends for the current year	132,761,948	-
- not ranking for interim dividend for the previous year	929,333,636	-
	1,062,095,584	132,761,948

	30 September	30 September
£m	2009	2008
Ordinary Shares of 10 pence each
- ranking for dividends for the current year	-	13.3
- not ranking for interim dividend for the current period	-	-
Ordinary Shares of 1 penny each
- ranking for dividends for the current year	1.3	-
- not ranking for interim dividend for the current period	9.3	-
	10.6	13.3

19. Equity

				Cash flow	Currency
	Share	Share	Retained	hedges	translation
	capital	premium	earnings	reserve	reserve	Total
2009	£m	£m	£m	£m	£m	£m
At 30 September 2008	13.3	168.7	(65.2)	(0.6)	1.8	118.0
Foreign exchange differences	-	-	(8.2)	0.2	-	(8.0)
Shares issued	9.3	46.5	-	-	-	55.8
Share issue costs	-	(3.8)	-	-	-	(3.8)
Transfer to distributable reserves	-	(50.0)	50.0	-	-	-
Total recognised income for the period	-	-	(75.4)	(34.3)	3.3	(106.4)
Dividends paid	-	-	(8.2)	-	-	(8.2)
At 30 September 2009	22.6	161.4	(107.0)	(34.7)	5.1	47.4

				Cash flow	Currency
	Share	Share	Retained	hedges	translation
	capital	premium	earnings	reserve	reserve	Total
2008	£m	£m	£m	£m	£m	£m
At 30 September 2007	13.3	168.7	81.2	12.9	0.6	276.7
Foreign exchange differences	-	-	(2.3)	0.3	-	(2.0)
Shares issued	-	-	-	-	-	-
Share issue costs	-	-	-	-	-	-
Transfer to distributable reserves	-	-	-	-	-	-
Total recognised income for the year	-	-	(130.4)	(13.8)	1.2	(143.0)
Dividends paid	-	-	(13.7)	-	-	(13.7)
At 30 September 2008	13.3	168.7	(65.2)	(0.6)	1.8	118.0

In March 2009 the Company received approval from the High Court in the Isle of Man to its request to transfer £50.0 million from Share Premium to distributable reserves.

In September 2009 the Company, prior to the Rights Issue, converted its Ordinary Shares of 10 pence per share into Ordinary Shares of 1 penny per share and Deferred Shares of 9 pence per share before issuing 929,333,626 new Ordinary Shares of 1 penny each. This resulted in an increase of equity of £52.0 million, net of expenses.

20. Dividends

	30 September	30 September
	2009	2008
Ordinary dividends paid	£m	£m
Final dividend for 2007 - 6.2 pence per Ordinary Share of 10 pence	-	8.2
Interim dividend for 2008 - 4.1 pence per Ordinary Share of 10 pence	-	5.5
Final dividend for 2008 - 3.15 pence per Ordinary Share of 10 pence	4.2	-
Interim dividend for 2009 - 3 pence per Ordinary Share of 10 pence	4.0	-
	8.2	13.7

The Directors are proposing a final dividend for the year of 0.31 pence per Ordinary share of 1 penny nominal value (amounting to £3.3 million). Shareholders will be asked to approve this dividend at the forthcoming Annual General Meeting and, if approved, the dividend will be paid on 1 March 2010 to all those Shareholders on the register as the close of business on 5 February 2010.

A final dividend for 2008 of 3.15 pence per Ordinary share of 10 pence nominal value (amounting to £4.2 million), this is equivalent to 0.315 pence per Ordinary share of 1 penny nominal value as the Ordinary Shares were converted to prior to the Rights Issue, was approved by the Shareholders at the Annual General Meeting and was paid on 20 February 2009 to all those Shareholders on the register at the close of business on 30 January 2009.

21. Capital commitments

As at 30 September 2009, the Group had no capital commitments (2008: nil).

22. Performance measures

The European Public Real Estate Association (EPRA) issued Best Practices Policy Recommendations in November 2006 which gives guidelines for performance measures. These include earnings per share and net asset value definitions which are different from those under IFRS. The Company considers that these measures are more appropriate for comparisons over time.

These definitions are used in the tables below.

EARNINGS PER SHARE

The table below shows the figures on a comparable basis and shows the figures for 30 September 2008 on the same basis as that used for the figures for 30 September 2009. Therefore the weighted number of shares for both years is the same.

	30 September	30 September
	2009	2008
Loss attributable to equity shareholders - income statement (£m)	(75.4)	(130.4)
Adjustments
- Deficit on revaluation of investment properties (£m)	80.7	140.8
- Loss/(profit) on sale of investment properties (£m)	0.5	(0.8)
- Fair value of derivatives (£m)	0.2	-
EPRA basis earnings (£m)	6.0	9.6
Weighted average number of Ordinary Shares (000's)	147,791	147,791
EPRA basis Earnings Per Share (pence)	4.06	6.49

The table below shows the figures reported at 30 September 2008 as the comparative to the current year figures.

	30 September	30 September
	2009	2008
Loss attributable to equity shareholders - income statement (£m)	(75.4)	(130.4)
Adjustments
- Deficit on revaluation of investment properties (£m)	80.7	140.8
- Loss/(profit) on sale of investment properties (£m)	0.5	(0.8)
- Fair value of derivatives (£m)	0.2	-
EPRA basis earnings (£m)	6.0	9.6
Weighted average number of Ordinary Shares (000's)	147,791	132,727
EPRA basis Earnings Per Share (pence)	4.06	7.23

NET ASSET VALUE

The table below shows the figures on a comparable basis and shows the figures for 30 September 2008 on the same basis as that used for the figures for 30 September 2009. Therefore the number of Ordinary Shares used in both years is the same.

	30 September	30 September
	2009	2008
Net assets attributable to equity holders of the parent - balance sheet (£m)	47.4	118.0
Adjustments
- Fair value of derivatives (£m)	32.5	(1.3)
EPRA basis net assets (£m)	79.9	116.7
Number of Ordinary Shares (000's)	1,062,096	1,062,096
EPRA basis Net assets per share (pence)	7.52	10.99

The table below shows the figures reported at 30 September 2008 as the comparative to the current year figures.

	30 September	30 September
	2009	2008
Net assets attributable to equity holders of the parent - balance sheet (£m)	47.4	118.0
Adjustments
- Fair value of derivatives (£m)	32.5	(1.3)
EPRA basis net assets (£m)	79.9	116.7
Number of Ordinary Shares (000's)	1,062,096	132,762
EPRA basis Net assets per share (pence)	7.52	87.9

23. Related Party transactions

During the year to 30 September 2009 Corovest acquired effective control of the WPML, the Property Adviser, and at 30 September 2009 in association with directly linked entities Corovest held 21.98% of the issued Ordinary shares of the Company. Mr Cesman, as a director of some of these associated entities to Corovest, served as a Director of the Company.

The Property Adviser's fees and any performance fee as outlined in note 5 was payable to WPML and this, together with Mr Cesman's remuneration for being a Director of the Company amount to the whole of the related party transactions. These are summarised below:

	Year ended 30 September 2009 £m	Year ended 30 September 2008 £m
Property Advisor's fees
- for advisory services	3.5	3.9
- for accrued performance fees	-	-
Director's fees	-	-
Total for related parties	3.5	3.9

24. Events after the balance sheet date

The Directors are proposing a final dividend for the year of 0.31 pence per Ordinary share of 1 penny nominal value (amounting to £3.3 million). Shareholders will be asked to approve this dividend at the forthcoming Annual General Meeting and, if approved, the dividend will be paid on 1 March 2010 to all those Shareholders on the register as the close of business on 5 February 2010.

List of properties

Town	Address	Value Band	Area (sq m)	Tenant/occupier
UNITED KINGDOM
Aberdeen	Atholl House, Guild Street, Aberdeen, AB11 6AR	B	5,110	First Secretary of State
Aberdeen	Lord Cullen House, Fraser Place, Aberdeen, AB25 3TP	B	3,046	Health and Safety Executive
Acton	Armstrong Road, London, W3 7JL	B	3,790	Secretary of State for Environment
Barnsley	Cooper House, 59 Peel Street, Barnsley, S70 2RL	A	2,016	Secretary of State for Environment
Basildon	Great Oaks House, Great Oaks, Basildon, SS14 1JE	B	5,077	Secretary of State for Environment
Bedford	Woodlands, Manton Industrial Estate, Manton Lane, Bedford, Bedfordshire, MK41 7LW	C	10,398	Highways Agency
Bedford	Chailey House, 30 Cardington Road, Bedford, Bedfordshire, MK42 0EX	A	1,546	Secretary of State for Transport, Local Government and the Regions
Billingham	Theatre Buildings, Kingsway, Billingham, TS23 2NA	A	648	Secretary of State for Environment
Birkenhead	Great Western House, Chester Street, Woodside, Birkenhead, CH41 6DA	B	7,752	Secretary of State for Environment
Birmingham	Aqueous 2, Aqueous Business Village, Birmingham, B6 5RQ	B	3,408	Secretary of State for Health
Birmingham	2308 Coventry Road, Sheldon, Birmingham, B26 3JZ	A	2,693	Secretary of State for Transport, Local Government and the Regions
Bridgwater	Hanover House, Northgate Street, Bridgwater, Somerset, TA6 3HG	A	1,944	Secretary of State for Environment
Bradford	Centenary Court, St Blaise Way, Bradford, BD1 4DB	D	9,769	Secretary of State for Environment
Bradford	Phoenix House, Rushton Avenue, Thornbury, Bradford, BD3 7BH	B	3,637	First Secretary of State
Bristol	31-49 Newfoundland Street & 1 Newfoundland Court, Bristol, BS2 9AP	A	2,947	Secretary of State for Health
Bromley	Unicorn House, 28 Elmfield Road, Bromley, BR1 1NX	C	5,365	Secretary of State for Environment
Cardiff	Rivers House, Fortran Way, St Mellons, Cardiff, CF3 0EY	A	2,010	Environment Agency
Cardiff	Ty Cambrian House, 29 Newport Road, Cardiff, CF24 0TP	A	3,201	Environment Agency
Carlisle	Rufus House, Castle Street, Carlisle, CA3 8RX	A	2,545	Secretary of State for Environment
Chatham	The Observatory, Brunel, Chatham Maritime, Kent, ME4 4NT	A	1,993	Secretary of State for Transport, Local Government and the Regions
Chelmsford	Wren House, Hedgerows Business Park, Chelmsford, Essex, CM2 5FP	A	1,287	First Secretary of State
Chester	Chantry House, 55, 57 and 59 City Road and 28 Crewe Street, Chester, CH1 3AQ	A	3,219	Secretary of State for Environment
Chippenham	Cyppa Court, Avenue La Fleche, Chippenham, Wiltshire, SN15 3ER	A	1,167	Secretary of State for Environment
Croydon	St Anne House, 20-26 Wellesley Road,  Croydon	C	6,808	Secretary of State for Transport, Local Government and the Regions
Dalkeith	7/15 Buccleuch Street, Dalkeith, EH22 1HB	A	661	First Secretary of State
Dundee	Lindsay House, 18/30 Ward Road, Dundee, DD1 1QB	A	3,672	Secretary of State for Environment
Dundee	Sidlaw House, 4 Explorer Road, Dundee, DD2 1DX	B	5,502	Secretary of State for Transport, Local Government and the Regions
Edgbaston	2 Duchess Place, Edgbaston, B16 8NS	B	4,309	Secretary of State for Transport, Local Government and the Regions
Edinburgh	Ladywell House, Ladywell Road, Edinburgh, EH12 7TB	B	4,728	Secretary of State for Environment
Grays	2 Derby Street, Grays, RM16 8QQ	A	1,112	Secretary of State for Environment
Harrow	Lyon House, Lyon Road, Harrow, HA1 2DG	B	9,246	Secretary of State for Environment
Hartlepool	Ward Jackson House, Raby Road, Hartlepool, TS24 8AA	A	1,935	Secretary of State for Environment
Ipswich	St Clare House, Princes Street, Ipswich, IP1 1PH	B	7,667	Secretary of State for Environment
Leeds	Castle House, Lisbon Street, Leeds, LS1 4LX	C	7,271	Secretary of State for Environment
Leeds	Waterside Court, Kirkstall Road, Leeds, LS4 2DD	B	3,344	Secretary of State for Environment
Liverpool	Prudential Buildings, 36 Dale Street, Liverpool, L2 5UZ	A	2,309	Her Majesty's Court Services
Manchester	1009 Oldham Road, Newton Heath, Manchester, M40 2EP	A	1,433	Secretary of State for Environment
Newcastle Upon Tyne	Centralofts, 1 Waterloo Square, Newcastle Upon Tyne, NE1 4DR	A	521	Secretary of State for Communities and Local Government
Northampton	St Katherine's House, 50 Gold Street, Northampton, NN1 2LG	A	2,703	Secretary of State for Environment
Norwich	1 Theatre Street, Norwich, NR2 1RG	A	816	Department for Works and Pensions
Oldham	Tweedale House, 75 Union Street, Oldham, OL1 1LH	A	1,916	Environment Agency
Paisley	47/51 High Street, Paisley, PA1 2AN	A	1,293	Secretary of State for Environment
Peterborough	Clifton House Broadway & 126/128 Park Road, Peterborough, PE1 1QZ	B	5,503	Secretary of State for Environment
Plymouth	Bretonside, Exeter Street, Plymouth	C	5,700	Secretary of State for Environment
Plymouth	Brooklands Office Campus, Plymouth, PL6 5XR	A	1,813	Secretary of State for Environment
Plymouth	West Street and Centre Point, Plymouth	A	2,590	Secretary of State
Redcar	Portland House, West Dyke Road, Redcar, TS10 1DH	A	883	Secretary of State for Environment
Redditch	Osprey House, Albert Street, Redditch, B97 4DE	A	2,759	Secretary of State for Health
Rochdale	Pilsworth Road, Heywood, Rochdale	C	9,173	Secretary of State
Rotherham	Bradmarsh Business Park, Bow Bridge Close, Rotherham, S60 1BY	A	1,340	Environment Agency
St Asaph	Netcom House, St Asaph, LL17 0JG	B	2,381	North Wales Police Authority
St Helens	Gregson House, 2 Central Street, St Helens, WA10 1UF	A	2,828	Secretary of State for Environment
Salford Quays	Units 1 & 2 Dallas Court, South Langworthy Road, Salford Quays, M50 2GF	A	1,536	Secretary of State for Environment
Sheffield	Kings Court, Hanover Way, Sheffield, S3 7UF	B	5,037	Secretary of State for Environment
Smethwick	Trinity House, High Street, Smethwick, B66 3AD	A	1,151	Secretary of State for Environment
Southampton	St Cross House, 18 Bernard Street, Southampton, SO14 3PJ	B	3,993	Secretary of State for Environment
Southwark	63/67 Newington Causeway, London, SE1 6LS	A	2,211	Secretary of State for Environment
Sparkhill	Heynesfield House, Stoney Lane, Sparkhill, B12 8AF	A	1,088	Secretary of State for Environment
Swansea	Unit 5, Sandringham Park, Swansea Vale, Swansea, SA7 0AA	A	2,795	Secretary of State for Transport, Local Government and the Regions
Swindon	Delta 900, Delta Business Park, Great Western Way, Swindon, SN5 7XQ	A	2,833	Secretary of State for Environment
Telford	Sapphire House, Stafford Park 10, Telford, TF3 3AB	B	8,327	Secretary of State for Environment
Uxbridge	The Grange, Uxbridge County Court, Uxbridge, UB4 8HL	A	1,066	First Secretary of State
Washington	Cheviot House, Washington, NE37 1HE	A	2,750	First Secretary of State
Watford	Exchange House, 60 Exchange Road, Watford, WD18 0GG	B	5,846	Secretary of State for Environment
Wigan	Brocol House, King Street, Wigan, WN1 1EA	A	4,127	Secretary of State for Environment
Wolverhampton	Temple House, Temple Street, Wolverhampton, WV2 4AU	A	2,551	Secretary of State for Environment
Wolverhampton	Molineux House, Temple Street, Wolverhampton, West Midlands, WV2 4AN	A	3,013	Secretary of State for Environment
York	Kettlestring Lane, Clifton Moor, York, YO30 4XF	A	2,155	First Secretary of State
CONTINENTAL EUROPE
Berlin	Margrafenstrasse 17/18, 10969 Berlin, Germany	C	7,173	VBG
Cologne	Kolner Strasse 20, 51429 Berisch-Gladbach, Cologne, Germany	C	8,240	VBG
Dresden	Wiener Platz, 01069 Dresden, Germany	D	17,449	VBG
Halle an der Saale	Thuringer Strasse, Halle an der Saale, Germany	D	34,689	State of Saxony-Anhalt
Saint Cloud	Le Riverside, 22-23 Quai Carnot, Saint Cloud 92210, France	B	2,297	ACE
Stuttgart	Martin-Luther-Strasse 79, 71636 Ludwigsburg, Stuttgart	D	12,455	VBG
The Hague	Haagse Veste 1, The Hague, Netherlands	D	12,878	Royal Dutch Government

Value bands

A £0-5 million

B £5-10 million

C £10-20 million

D >£20 million

Five year review

				30 September 2009	30 September 2008	30 September 2007	30 September 2006	30 September 2005*
Financial
Revenue			£m	44.8	42.0	33.1	24.2	16.0
Profit Before Tax
	Trading Operations		£m	9.4	10.7	11.6	8.0	(5.3)
	Total		£m	(73.5)	(130.0)	(9.6)	53.0	4.8
Earnings per share
		Current basis **
		- Trading Operations	Pence	6.09	6.98	7.67	5.33	(3.62)
		- Total	Pence	(50.99)	(95.21)	(6.64)	35.7	3.25
		As reported ***
		- Trading Operations	Pence	6.1	7.8	9.7	8.1	(11.6)
		- Total	Pence	(51.0)	(98.2)	(8.4)	54.2	10.4
Net Assets			£m	47.4	118.0	276.7	211.4	164.1
Gearing			Percentage	767	403	146	117	58
Net Assets per Share
		Current basis **	Pence	4.4	11.1	26.0	19.9	15.0
		As reported ***	Pence	4.4	88.9	208.5	217.2	168.6
UK Portfolio
Number of properties				68	72	72	61	46
Total area			Square metres	245,833	246,307	244,776	208,734	138,037
Annualised total rent			£m	32.0	33.0	32.5	27.3	17.6
Valuation			£m	371.6	446.6	526.3	455.8	267.1
Average Rent			£ per sq metre	129.77	135.39	132.80	130.80	136.40
Occupancy			Percentage	99	99	98	99	99
Continental European Portfolio
Number of properties				7	7	6	-	-
Total area			Square metres	95,181	95,181	77,314	-	-
Annualised total rent			£m	12.3	9.8	7.8	-	-
Valuation			£m	155.3	151.3	147.1	-	-
Average Rent			£ per sq metre	129.31	102.96	100.73	-	-
Occupancy			Percentage	100	100	100	-	-
* This is a 15 month period.
** The Current basis figures are calculated on the average and closing number of ordinary shares in issue for the financial year ending 30 September 2009.
*** The As reported figures are those as published in prior periods.

Glossary of terms

Active Portfolio	Portfolio of UK properties which have lease terms of less than seven years to expiry or a possible lease break date at the tenant's option
BCM	Brown Cooper Marples Limited
CMBS	Commercial Mortgage-Backed Securitisation
Combined Code	The Combined Code on Corproate Governance issued by the Financial Reporting Council in June 2006
Continental Europe Portfolio	Portfolio of properties in Europe but not in the UK
Corovest	Corovest Fund Managers (UK) Limited
Core Portfolio	Portfolio of UK properties which have lease terms in excess of seven years to expiry or a possible lease break date at the tenant's option
Gearing	The Group's net debt as a percentage of net assets
ICR	Interest Cover Ratio
Index linked	Where a government publishd index is used as the mechanism to determine increases in rent from the tenant. An example of such an index is the United Kingdom Consumer Price Index.
IPD	Investment Property Databank, an independent orgainsiation that issues real estate performance indices
JOHCM	JO Hambro Capital Management Limited
LTV	Loan to Value
Main Market	Main Market of the London Stock Exchange plc
Management Company	WPML
Net Initial Yield	The percentage of the current annual rents to the valuation of the properties after including a potential purchaser's estimated acquisiiton costs
Other Items	Includes the profits and losses on the sales of investment properties and items of a non-trading, non-cash nature such as valuation adjustments arising from the fair valuing of investment properties and derivative financial statements.
Property Adviser	WPML
Property Manager	BCM
Trading Operations	This excludes the Other Items and reflects the trading activities of the Group
WAULT	Weighted Average Unexpired Lease Term. This is the average of all remaining period of the leases to tenants for properties within the relevant taken to the next break date or end of lease whichever is the sooner; the outstnading lengths of these leases are weighted on the annual rent of each lease.
WPML	Wichford Property Management Limited, wholly owned by Corovest

ENDFR UNSBRKARURAA

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Related Shares:

RDI.L