19th Dec 2005 07:00
Wichford plc19 December 2005 19 December 2005 WICHFORD PLC Maiden preliminary results Portfolio now worth £267 million; NAV up 15% Wichford PLC ("Wichford" or the "Company"), the property investment company,today announces its preliminary results for the period from incorporation on 28June 2004 to 30 September 2005. Highlights • Net assets increased to £167 million • Net asset value has risen 15% to 172p since flotation in August 2004 • 29 properties purchased or contracted during the period for £153 million • Wichford now owns 46 properties valued at approximately £267 million • Profit before tax for the period was £2.4 million • The Board is recommending the payment of a dividend of 9p per qualifying share Michael Sheehan, Chairman of Wichford, commented today: "It has been a very busy and successful period for the Company. The Company nowowns 46 properties and we believe Wichford is now one of the largest owners of aproperty portfolio focused solely on UK Central Government tenants, which is aremarkable achievement for a company which floated on AIM less than 18 monthsago. Our strategy remains clear and focused and we will continue to grow theportfolio by selective acquisitions with a view to benefiting from any yieldcompression." Enquiries: WichfordJamie Hambro Tel: 0207 747 5678Philip Cooper Tel: 0207 495 7111Richard Britten-Long Tel: 0207 333 0044 Citigate Dewe Rogerson Tel: 020 7638 9571Patrick Toyne-SewellGeorge Cazenove Chairman's Statement I am delighted to announce the maiden set of results for Wichford PLC for theperiod from incorporation on 28 June 2004 to 30 September 2005. Profit after taxfor the period was £2,405,000 and the net asset value per share rose from 150pat the time of the flotation on AIM in August 2004 to 172p at the period end. The portfolio owned by the Group has grown in the same period from approximately£119 million to £267 million. The earnings per share (eps) for the period were5.21p. When adjusted to exclude the £2.3 million costs incurred in connectionwith the debt refinancing referred to below and based upon only the shares thatqualify for the dividend now being recommended, the eps were 13.43p. Aspreviously indicated, the Directors are recommending the payment of a dividendof 9p per qualifying share, amounting to approximately £3.5 million. Thedividend, if approved by Shareholders, will be paid on 6 February 2006 toShareholders holding qualifying shares on the register on 30 December 2005. It has been a very busy and successful period. Wichford raised a further £97.5million (net of expenses) through an institutional share placing in July andsubsequently renegotiated its banking facilities on very favourable terms.During the period the Group acquired over £153 million of property and disposedof 1 property for a consideration of £17.1 million. Wichford's clear and focused strategy is to acquire properties let to UK CentralGovernment outside of central London. At the period end, Wichford owned 46 suchproperties. It also intends to pursue a progressive dividend policy forShareholders and to improve the value of the portfolio by active management,particularly with the short lease properties. Since 30 September last, we have announced the acquisition of a further 5properties at a cost of £43.3 million. The Property Adviser is currentlyfinalising several lease renewals and extensions, thereby improving the value ofthe property portfolio. At the period end, Wichford had net borrowings of £94 million and a loan tovalue ratio of 35%. The terms of the Company's new banking facility with itsprincipal bankers, Lehman Brothers, are both competitive and flexible,reflecting the high quality of the property portfolio. The Board estimatesthat, at the current level of borrowing, the annualised savings from therefinancing exercise are in the order of £1 million. The Board's policy is tominimise exposure to fluctuations in interest rates. When each drawing is madeunder the loan facility, the interest rate is fixed for the full term of theborrowing, thereby protecting the minimum yield throughout the lease term. During the period under review and subsequently the property market hascontinued to strengthen with a corresponding reduction in yields. Nevertheless,Wichford has been able to selectively purchase properties that satisfy theCompany's stated criteria and as at 30 November 2005 the total portfolioamounted to £309.3 million. During the current year, approximately 32% of the portfolio (by value) will bethe subject of rent review. The financial impact of any increase in rentalincome will not have any significant effect until the following year. Independent research indicates that UK Central Government occupies approximately8.6 million sq metres (93 million sq ft.) of property, of which the vastmajority is located outside of central London. As at 30 November, Wichford ownedapproximately 156,000 sq. metres (1.65 million sq. ft.), so there is a goodopportunity to continue to increase the size of the portfolio and take advantageof the economies of scale that this will bring, including a potential furtherreduction in borrowing costs. The Company will continue to focus on propertieswith high alternative use values, and good prospects for active management. The Board believes that Wichford is now one of the largest owners of a propertyportfolio focused solely on UK Central Government tenants. This is a remarkableachievement for a Company that floated on AIM less than 18 months ago. It hasalso developed knowledge and a skill base which gives it a significantcompetitive advantage in this sector. The Board's policy is to continue to growthe portfolio by selective acquisitions, with a view to benefiting from anyfurther yield compression. If there is any downturn in the property market,Wichford's high quality income and average lease length will ensure the impactis lessened. The Annual General Meeting of the Company will take place on 30 January 2006 atmidday at the Registered Office of the Company: 14 Athol Street, Douglas, Isleof Man IM1 1JA. The Board and I look forward to meeting as many shareholders aspossible at the meeting and answering any questions. MICHAEL SHEEHANChairman16 December 2005 CONSOLIDATED PROFIT & LOSS ACCOUNTFor the period 28 June 2005 to 30 September 2005 £'000 Turnover 17,753Administrative expenses (3,490) Operating profit 14,263 Interest receivable 969Interest payable (10,483)Exceptional costs of financial restructuring (2,340) Profit on ordinary activities before tax 2,409Taxation (4) Profit on ordinary activities after tax 2,405Dividend (3,471) Loss retained for the period (1,066) Earnings per share (pence) - Basic 5.21 - Basic before exceptional costs 10.28 CONSOLIDATED BALANCE SHEETas at 30 September 2005 £'000 Fixed assets Tangible assets - investment properties 267,085 Current assets Debtors 3,378 Cash at bank 90,112 93,490 Creditors - amounts falling due within one year: (12,677) Net current assets/ (liabilities) 80,813 Total assets less current liabilities 347,898 Creditors - amounts falling due after more than one year: Term loan (180,399) Net assets 167,499 Capital & Reserves Called up share capital 9,733 Share premium account 148,857 Revaluation reserve 9,243 Profit & loss account (334) Equity shareholders' funds 167,499 Net asset value (pence)Basic 172.10 COMPANY BALANCE SHEETas at 30 September 2005 £'000 Fixed assets Investments - Current assets Debtors 169,009 Cash at bank 3,843 172,852 Creditors - amounts falling due within one year: (9,391) Net current assets/ (liabilities) 163,461 Total assets less current liabilities 163,461 Net assets 163,461 Capital & Reserves Called up share capital 9,733 Share premium account 148,857 Profit & loss account 4,871 Equity shareholders' funds 163,461 CONSOLIDATED CASH FLOW STATEMENTFor the period 28 June 2004 to 30 September 2005 £'000 Net cash inflow from operating activities 16,792 Return on investment and servicing of finance Interest received 969 Interest paid (8,577) Net cash outflow from return on investment and servicing of finance (7,608) Capital expenditure Payments to acquire tangible fixed assets (125,882)Receipts on sale of fixed assets 17,137Net cash outflow for capital expenditure (108,745) Acquisitions and disposals Net cash inflow on acquisitions (4,179) Net cash outflow before financing (103,740) Financing Ordinary shares issued (net of expenses) 125,960 Increase in debt 67,892 Net cash inflow from financing 193,852 Increase in cash 90,112 Notes: The above results for the period 28 June 2004 to 30 September 2005 are audited: 1. TURNOVER £'000 Rental income from pre floatation properties 9,829Rental income from other properties acquired during the period 6,139Profit on sale of properties 1,785 Total 17,753 2. NET INTEREST PAYABLE £'000 Interest receivable 969Interest payable (10,483) Net interest payable (9,514) The interest payable is analysed as: Bank term loan interest (9,493)Bank swap interest (41)Non-utilisation fees (44)Early repayment fees 33Amortisation of loan arrangement fees (919)Other (19) (10,483) 3. EXCEPTIONAL COST OF FINANCIAL RESTRUCTURING During the period being reported, the Group entered into a number of borrowing arrangements that were beneficial to the Group at the time. However, due to the rapid expansion of the business, the Group managed to negotiate more favourable terms both from a cost and length of facility perspective. This financial restructuring exercise has had a cost in the present period of £2,340,000. 4. DIVIDENDS £'000Final proposed dividend - 9 pence per share 3,471 The proposed dividend is payable on 38,565,741 shares in issue. The balance of 58,760,919 shares in issue was issued with no rights to any dividend for the periodending 30 September 2005. All shares in issue at 30 September 2005 will rank for all dividendsdeclared for periods ending after this date. 5. EARNINGS PER SHARE Before exceptional Exceptional refinancing costs refinancing costs Total Profit for the period (£'000) 4,745 (2,340) 2,405 Weighted average number of shares in issue in period (000's) 46,144 46,144 Basic - Earnings per share (pence) 10.28 5.21 The Adjusted Earnings per Share is calculated after excluding those shares that do not rank for a dividendfor the period ended 30 September 2005. Before exceptional Exceptional refinancing costs refinancing costs Total Profit for the period (£'000) 4,145 (2,340) 2,405 Weighted average number of shares in issue in period ranking for dividend (000's) 35,330 35,330 Adjusted - Earnings per Share (pence) 13.43 6.81 6. TANGIBLE FIXED ASSETS - INVESTMENT PROPERTIES Group Freehold and Freehold/Feuhold Long Leasehold Long Leasehold Opening balance - - - Additions 195,609 25,683 51,902Disposals (15,352) - - Revaluation in period 5,863 737 2,643 As at 30 September 2005 186,120 26,420 54,545 Of the additions shown above £161,924,000 related to acquisitions of corporatevehicles owning properties. The historical cost to the Group of its investment properties as at 30 September2005 was £257,842,000. All the Group's investment properties were externally valued as at 30 September2005 on the basis of open market value by professionally qualified valuers inaccordance with the Appraisal and Valuation Standards of the Royal Institutionof Chartered Surveyors. 7. FINANCING AND OTHER FINANCIAL INSTRUMENTS The Group's principal financial instruments, other than interest rate swaps,comprise bank loans and cash. The main purpose of these financial instruments isto finance the Group's operations. The Group has various other financialinstruments such as trade The Group has entered into interest rate swap agreements in accordance with theterms of the loan agreement with its provider of finance. The purpose is tomanage the interest rate risks arising from the Group's sources of finance. Interest rate risk profile of financial assets and liabilities £000's Floating rate financial liabilities -Fixed rate financial liabilities 184,286 184,286 Fixed rate financial liabilities weighted average interest rate 5.41%Weighted average period for which rate is fixed in years 7 The amounts shown in the tables above take into account the interest rate swapsused to manage the interest rate profile of financial liabilities. The Group hasemployed interest rate swaps to eliminate future exposure to interest ratefluctuations. Its fixed rate profile was: Nominal Value Effective date Maturity date Swap rate £000's 30/09/2005 20/10/2012 4.57% 70,606 15/07/2004 21/10/2008 4.70% 30,000 15/07/2005 01/11/2011 4.90% 6,926 19/03/2004 20/01/2009 4.93% 5,355 30/01/2004 20/01/2009 4.97% 8,138 15/07/2005 01/11/2011 5.07% 30,110 28/04/2004 20/01/2009 5.21% 3,866 01/12/2003 20/01/2009 5.22% 9,147 01/07/2004 20/01/2009 5.43% 3,903 24/06/2004 20/01/2009 5.49% 9,075 29/07/2004 20/01/2009 5.57% 7,160 Total 184,286 - In addition to the fixed rates shown above a margin, currently of 0.55% perannum, is charged. The Group also has entered into an additional interest rate swap contract thatcommences after the period end as follows: Effective date Maturity date Swap rate £000's 01/11/2011 15/10/2012 4.90% 113,680 Maturity of financial liabilities The Group's profile of debt maturity was as follows: £000's Up to one yearBetween one and two yearsBetween two and five yearsOver five years 184,286 184,286 - Fair values of financial assets and financial liabilitiesSet out below is a comparison of book values and fair values of all the Group's financial assets and financial liabilities: Book value Fair value £'000 £'999Primary financial instruments Long term borrowings (184,286) (184,286) Cash 90,112 90,112 Derivative financial instruments held to manage the interest rate profile: Interest rate swaps - (3,213) Market values have been used to determine the fair value of the interest rate swaps. 8. SHARE CAPITAL Company AuthorisedOrdinary Shares of 10p each - number 130,000,000 - £ 13,000,000 Issued, called up and fully paidOrdinary Shares of 10p each - number 97,326,660 - £ 9,732,666 The Company made share placings of Ordinary Shares on 30 March 2005 and 13 July 2005 whereby the shares issued atthat time do not rank for any dividend related to the current financial year but will be pari passu with theprevious Ordinary Shares for dividends for the financial periods beginning on or after 1 October 2005. Ordinary Shares of 10p Each Number £ - ranking for dividends for the current period 38,565,741 3,856,574- not ranking for dividends for the current period 58,760,919 5,876,092 Total ranking for dividends in subsequent financial years 97,326,660 9,732,666 Details of Ordinary Shares issued: Description Date Number £Founders' shares 28/06/2004 2 -Acquisition of The Wichford Property Limited Partnership 16/07/2004 16,000,003 1,600,000Settlement of loan to The Wichford Property Limited 30/07/2004 936,586 93,659PartnershipProperty Adviser's Performance Fee for 2003/04 05/08/2004 524,283 52,428Upon flotation 16/08/2004 20,000,000 2,000,000Purchase of investment properties 12/11/2004 809,877 80,988Purchase of investment properties 22/12/2004 90,909 9,091Purchase of investment properties 28/01/2005 204,081 20,408Purchase of investment properties 22/03/2005 52,438 5,244Institutional placing and purchase of investment 30/03/2005 2,027,780 202,778propertiesPurchase of investment properties 06/04/2005 1,125,145 112,514Institutional placing 14/07/2005 55,555,556 5,555,556 97,326,660 9,732,666 - - 9. NET CASH INFLOW FROM OPERATING ACTIVITIES £'000Operating Profit 14,263Performance Fee adjustment 732Decrease in Debtors 776Increase in Creditors 2,806Profit on sale (1,785) 16,792 10. POST BALANCE SHEET DATE EVENTS In anticipation of future property purchases, since the 30 September the grouphas increased its long term loans by £40 million, under the same facility asexisted at 30 September 2005. This interest rate risk on this increasedborrowing has been hedged by taking out an interest rate swap at 4.78% p.a. TheGroup has thus maintained its position of fixing the interest rate on allborrowings. The Group has also completed the purchases of the 2 properties on whichcontracts had been exchanged prior to 30 September 2005 and a further 3properties through the acquisition of a number of corporate entities. 11. PRELIMINARY STATEMENT OF ANNUAL RESULTS This Preliminary Statement is not the Company's statutory accounts. Thestatutory accounts for the period ended 30 September 2005 have not yet beenapproved, audited or filed. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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