TIDMWNER
RNS Number : 0086T
Warner Estate Holdings PLC
30 November 2011
Warner Estate Holdings PLC
Warner Estate Holdings PLC ("Warner Estate" or "Group"), the
property investment and management company has today announced its
results for the half year ended 30 September 2011.
Performance Summary
-- Revenue GBP13.9million (September 2010: GBP14.9million)
-- Recurring operating profit before net movements on
investments GBP5.7million (September 2010: GBP6.3million)(i)
-- Loss before income tax GBP15.1million (September 2010: GBP1.0million loss)
-- Net liabilities per share 48p (March 2011: 20p net liabilities)
-- Loss per share 27.5p (September 2010: 1.8p loss)
-- Group net debt reduced to GBP224.0million (March 2011: GBP244.9million)
-- September quarter day cash collection remains at or above 98% within 28 days
-- Void rate reduced from 10.1% at 31 March 2011 to 7.9% at 30 September 2011
(i) Adjusted for net property expenses of GBP0.2million
(September 2010: adjusted for non-recurring management fee income
of GBP1.1million and net property expenses of GBP0.2million)
Key Business Events
-- 16 Upper Woburn Place, London sold in August 2011 for
GBP18.1million (book value GBP19.1million); Wingate Road, Luton and
St Mary's Road, Sheffield sold in April and May 2011 respectively
for GBP4.0million (book value GBP3.3million).
-- Bank facilties of GBP176m extended to 31 December 2012.
-- GBP0.6m upgrade of Bouverie Place, Folkestone, adding TK Maxx
to the exisiting retail offering of Asda, New Look, Peacocks, HMV
and Primark.
Philip Warner, Chairman of Warner Estate commented
"The outcome of discussions with our Lenders will determine our
future whilst operationally we continue to protect income and
control costs."
Date: 30 November 2011
For further information contact:
Warner Estate Holdings PLC City Profile
Philip Warner, Chairman Jonathan Gillen
Mark Keogh, Group Managing Director Simon Courtenay
Robert Game, Group Managing Tel: 020 7448 3244
Director, Property
Tel: 020 7907 5100 warner@city-profile.com
Web: www.warnerestate.co.uk
Chairman's Statement
Discussions with the Group's three Lenders, Royal Bank of
Scotland, Barclays and Lloyds Banking Group (the "Lenders"), to
strengthen the Group's balance sheet remain the Group's primary
focus. These discussions continue and more detail is given below.
As reported in the Annual Report & Accounts on 29 July 2011,
two of the Group's facilities have been extended to 31 December
2012, in line with the third facility, and there was a relaxation
of certain covenants. A condition of these extensions and covenant
relaxations was to market certain properties in order to reduce
total outstanding debt. Details of the Group's recent disposals are
set out in the Property Review below.
Net asset value per share has decreased during the six months
ended 30 September 2011 from a negative 20p to a negative 48p,
mainly due to losses on revaluation. Sales and reduced values also
depressed asset management income and operating profit, outweighing
an encouraging further reduction in the void rate. Further detail
is shown below.
Results Overview
Operating profit before net movements on investments for the six
months to 30 September 2011 has decreased to GBP5.5million
(September 2010: GBP7.2million) with recurring operating profit
before net movements on investments reducing to GBP5.7million
(September 2010: GBP6.3million) due to lower asset management fee
income. Recurring operating profit excludes one-off property costs
of GBP0.2million (September 2010: excludes one-off fees received on
the disposal of Radial Distribution of GBP1.1million offset by the
movement in other accruals of GBP0.4million). Overall the Group
made a post tax loss of GBP15.1million (September 2010:
GBP1.0million loss), mainly due to fair value adjustments on
investment properties and investments as well as realised losses on
the disposal of investment properties.
The net finance expense for the period has increased to
GBP9.2million (September 2010: GBP8.6million) as a result of a
stepped increase in margin on accrued "payment in kind" interest
and exit fees. The Group had hedged 61% of its gross debt as at 30
September 2011. The headline cost of debt (before exit fees) is
6.02% of which the cash cost is 3.26%. Group net debt has been
reduced to GBP224.0million as at 30 September 2011 (March 2011:
GBP244.9million) as a result of the disposal of certain investment
properties. The net cash outflow for the period was GBP1.0million
mainly due to repayment of debt. Two of the Group's three
facilities had LTV covenants during the six months to 30 September
2011. One covenant has been tested and is compliant. On 28 November
2011, a consent and amendment letter was signed with one of the
Group's lenders to remove the other LTV covenant and to agree to
market certain properties. The Board has considered the likely
future headroom under the remaining LTV and other financial
covenants and concluded that, based on best current estimates and
the Group's income and positive cash generation, the Group willl,
for the foreseeable future, have adequate headroom.
The Board regrets very much that it cannot recommend payment of
an interim dividend.
Refinancing Discussions and Going Concern
In anticipation of the maturity of the Group's facilities on 31
December 2012 and the likely inability of the Company to meet
repayment obligations at that date, the Group's discussions with
its Lenders to consider potential solutions continue. These
repayment obligations include the borrowings, exit fees and accrued
interest. GBP2.8million has been accrued in respect of exit fees
and GBP7.1million in respect of accrued interest as at 30 September
2011. There can be no certainty as to the terms of any agreement
with the Group's Lenders or whether any agreement will be reached.
The Board believes that in the absence of a significant rise in the
value of the Group's properties in the near term, it is likely that
any solution would deliver little, if any, value to existing
shareholders, other than the opportunity to participate in an
equity raise, were that solution to be pursued.
Although the Group has net liabilities, mainly due to unrealised
valuation movements, the Board is satisfied that, following a
review of appropriately stress tested cash flow projections, the
Group will continue to meet its liabilities as and when they fall
due until the borrowing facilities mature on 31 December 2012.
Having taken all the above matters into account together with
the key business risks and uncertainties set out in Note 1 to the
financial statements and the status of the ongoing discussions with
the Lenders in relation to potential solutions, the Directors have
concluded that, whilst material uncertainty exists which may cast
significant doubt over the ability of the Group to continue as a
going concern, it is appropriate to prepare the financial
statements on a going concern basis. Accordingly, the unaudited
interim condensed consolidated financial statements do not include
the adjustments that would result from a failure to remain a going
concern.
Property Review
The decline in total assets under management (see table below)
by GBP212.4 million since March 2011 has arisen through a
combination of sales of GBP96.7million and valuation movements of
GBP41.2million with the Group's regional shopping centre joint
ventures, Agora and Agora Max, suffering most from the recent loss
in investor confidence. In addition, as previously reported, a LPA
receiver was appointed to the assets owned by the Greater London
Offices joint venture, which reduced assets under management by
GBP74.5m.
The Group's wholly owned portfolio, which is 88% weighted
towards London and the South East, saw a decline in value of 2.6%
on a like for like basis. A positive highlight of this revaluation
was the gain attributable to the addition of TK Maxx to the already
strong retail offer of Asda, New Look, Peacocks, HMV and Primark at
the Group's shopping centre, Bouverie Place, Folkestone.
16 Upper Woburn Place, London was sold in August 2011 for
GBP18.1million (book value GBP19.1million); Wingate Road, Luton and
St Mary's Road, Sheffield were sold in April and May 2011
respectively for GBP4.0million (book value GBP3.3million).
With tenant retention rates holding up well, the wholly owned
portfolio void rate has improved to 7.9% by estimated rental value
as at 30 September 2011 (March 2011 : 10.1%).
As at 30 September Number Annualised Estimated
2011 of Capital Net Rental Rental Net Initial Equivalent
Properties Value Income Value Yield Yield Void Rate
GBPm GBPm GBPm % % %
Wholly Owned 42 183.6 14.0 15.8 7.0 7.5 7.9
--------------------- ------------ --------- ------------ ---------- ------------ ----------- ----------
Agora Shopping
Centres JV 8 137.6 12.1 16.9 8.2 9.8 10.6
Agora Max Shopping
Centres JV 2 73.9 7.3 9.9 9.2 10.3 6.8
Apia Regional
Office Fund 13 140.1 9.8 16.2 6.0 8.8 29.0
Ashtenne Industrial
Fund 356 643.4 51.9 73.0 7.9 10.1 17.5
Total 421 1,178.6 95.1 131.8 7.6 9.5 16.1
--------------------- ------------ --------- ------------ ---------- ------------ ----------- ----------
Outlook
The outcome of discussions with our Lenders will determine our
future whilst operationally we continue to protect income and
control costs.
Philip Warner
Chairman
UNAUDITED INTERIM CONSOLIDATED INCOME STATEMENT
For the six months ended 30 September 2011
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
Notes 2011 2010 2011
------------------------------------- ------- -------------- -------------- ----------
GBPm GBPm GBPm
Revenue 13.9 14.9 30.5
------------------------------------- ------- -------------- -------------- ----------
Rental and similar income 7.8 7.6 16.5
Property management expenses (1.7) (1.5) (3.0)
Movement in provision for
onerous contracts 14 - 0.2 -
Service charge and similar
income 2.0 1.7 3.8
Service charge expense and
similar charges (2.4) (2.4) (5.0)
-------------- -------------- ----------
Net rental income 2 5.7 5.6 12.3
-------------- -------------- ----------
Revenue from asset management
activities 4.1 5.6 10.2
Asset management expenses (3.5) (3.6) (7.9)
------------------------------------- ------- -------------- -------------- ----------
Net income from asset management
activities 2 0.6 2.0 2.3
-------------- -------------- ----------
Other operating expenses (0.8) (0.4) (1.2)
Operating profit before net
movements on investments 2 5.5 7.2 13.4
Net (loss) / profit from fair
value adjustments on investment
properties 9 (6.4) 7.2 6.9
Net loss from fair value adjustment
on investments 11/12 (1.9) (1.1) (3.3)
(Loss) / profit on sale of
investment properties (1.4) 0.1 0.2
Profit on sale of investment
in joint ventures - 0.5 0.5
Profit on termination of asset
management contract - 3.0 3.0
Impairment of goodwill 8 (0.4) (7.1) (8.4)
Operating (loss) / profit (4.6) 9.8 12.3
Finance income 3 0.5 0.5 1.7
Finance expense 4 (9.7) (9.1) (21.0)
Change in fair value of derivative
financial instruments (1.3) (2.2) (0.1)
Share of joint ventures' post 10 - - -
tax losses
------------------------------------- ------- -------------- -------------- ----------
Loss before income tax (15.1) (1.0) (7.1)
-------------- -------------- ----------
Taxation - current 5 - - (0.1)
Taxation - deferred 5 - - -
Loss for the period (15.1) (1.0) (7.2)
------------------------------------- ------- -------------- -------------- ----------
p p p
Loss per share 7 (27.52) (1.81) (12.93)
------------------------------ -------- ------- --------
Fully diluted loss per share 7 (26.11) (1.66) (11.96)
------------------------------ -------- ------- --------
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
For the six months ended 30 September 2011
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2011 2010 2011
------------------------------------ -------------- -------------- ----------
GBPm GBPm GBPm
Loss for the period (15.1) (1.0) (7.2)
Other comprehensive expense
Actuarial losses on retirement
benefit obligations (0.2) (0.1) -
Deferred tax arising on retirement
benefit obligations - - -
Total comprehensive expense for
the period (15.3) (1.1) (7.2)
------------------------------------ -------------- -------------- ----------
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
Notes 2011 2010 2011
----------------------------------- ------ -------------- -------------- ----------
GBPm GBPm GBPm
ASSETS
Non-current assets
Goodwill 8 2.4 4.1 2.8
Investment properties 9 183.8 209.4 212.2
Plant and equipment 0.1 0.2 0.1
Investments in joint ventures 10 - - -
Investments in funds 11 36.1 40.2 38.0
Investments in unlisted shares 12 0.3 0.3 0.3
Net investment in finance - 2.4 -
leases
Deferred income tax assets 13 0.2 0.2 0.2
Trade and other receivables 3.8 3.1 3.0
----------------------------------- ------ -------------- -------------- ----------
226.7 259.9 256.6
----------------------------------- ------ -------------- -------------- ----------
Current assets
Trade and other receivables 5.6 6.3 6.1
Cash and cash equivalents 16 6.2 7.5 7.2
----------------------------------- ------ -------------- -------------- ----------
11.8 13.8 13.3
----------------------------------- ------ -------------- -------------- ----------
Total assets 238.5 273.7 269.9
----------------------------------- ------ -------------- -------------- ----------
LIABILITIES
Non-current liabilities
Borrowings, including finance
leases 16 (231.7) (246.6) (252.4)
Trade and other payables (11.1) (0.9) (7.1)
Derivative financial liabilities (3.9) (4.7) (2.6)
Retirement benefit obligations (0.7) (0.9) (0.6)
Provisions for other liabilities
and charges 14 (2.7) (3.6) (3.2)
----------------------------------- ------ -------------- -------------- ----------
(250.1) (256.7) (265.9)
----------------------------------- ------ -------------- -------------- ----------
Current liabilities
Borrowings, including finance
leases 16 (1.0) (1.1) (1.0)
Trade and other payables (12.3) (18.0) (12.3)
Current income tax liabilities - (0.1) -
Provisions for other liabilities
and charges 14 (1.5) (2.9) (1.9)
(14.8) (22.1) (15.2)
----------------------------------- ------ -------------- -------------- ----------
Total liabilities (264.9) (278.8) (281.1)
----------------------------------- ------ -------------- -------------- ----------
Net liabilities (26.4) (5.1) (11.2)
----------------------------------- ------ -------------- -------------- ----------
EQUITY
Capital and reserves attributable
to the owners of the Parent
Company
Share capital 2.8 2.8 2.8
Other reserves (28.5) (7.0) (13.2)
Investment in own shares (0.7) (0.9) (0.8)
----------------------------------- ------ -------------- -------------- ----------
Total deficit (26.4) (5.1) (11.2)
----------------------------------- ------ -------------- -------------- ----------
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
For the six months ended 30 September 2011
Share Investment
Share Share Based Revaluation Other Treasury Retained Warrant in own
Capital Premium Payments Reserve Reserve Shares Earnings reserve shares Total
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 30
September
2010
(unaudited) 2.8 40.7 1.1 (187.9) 8.0 (1.5) 131.8 0.8 (0.9) (5.1)
Loss for the
period - - - - - - (6.0) - (6.0)
Other
comprehensive
expense - - - - - - (0.1) - (0.1)
Movement on
realised
revaluation - - - (0.8) - - 0.8 - - -
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
Transactions
with owners:
Disposal of
investment
in own shares - - - - - - - - 0.1 0.1
Cost of share
based
payments - - (0.1) - - - - - - (0.1)
At 31 March
2011
(audited) 2.8 40.7 1.0 (188.7) 8.0 (1.5) 126.5 0.8 (0.8) (11.2)
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
Loss for the
period - - - - - - (15.1) - - (15.1)
Other
comprehensive
expense - - - - - - (0.2) - - (0.2)
Movement on
realised
revaluation - - - (4.2) - - 4.2 - - -
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
Transactions
with owners:
Disposal of
investment
in own shares - - - - - - - - 0.1 0.1
Transfer - - - - - 1.5 (1.5) - - -
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
At 30
September
2011
(unaudited) 2.8 40.7 1.0 (192.9) 8.0 - 113.9 0.8 (0.7) (26.4)
--------------- -------- -------- --------- ------------ -------- --------- --------- -------- ----------- -------
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 September 2011
Unaudited Unaudited Audited
30 September 30 September 31 March
Note 2011 2010 2011
-------------------------------------- ----- -------------- -------------- ----------
GBPm GBPm GBPm
Cash flows from operating activities
Cash generated from operations 15 4.1 2.3 5.0
Interest paid (4.4) (3.2) (7.6)
Interest received - 0.1 0.2
UK Corporation tax paid - (0.2) (0.4)
-------------------------------------- ----- -------------- -------------- ----------
Net cash outflow from operating
activities (0.3) (1.0) (2.8)
-------------------------------------- ----- -------------- -------------- ----------
Cash flows from investing activities
Purchase of investment properties
and related capital expenditure (0.4) (0.5) (0.4)
Sale of investment properties 21.0 10.6 10.7
Sale of investments in joint
ventures - 0.5 0.5
Termination of asset management
contract - 3.0 3.0
Distributions received from
funds 0.7 - 1.1
-------------------------------------- ----- -------------- -------------- ----------
Net cash inflow from investing
activities 21.3 13.6 14.9
-------------------------------------- ----- -------------- -------------- ----------
Cash flows from financing activities
Increase in bank loans - 1.3 2.0
Repayment of bank loans (21.9) (10.3) (10.8)
Finance fees paid (0.1) (0.6) (0.6)
-------------------------------------- ----- -------------- -------------- ----------
Net cash outflow from financing
activities (22.0) (9.6) (9.4)
-------------------------------------- ----- -------------- -------------- ----------
Net (decrease) / increase in
cash and cash equivalents (1.0) 3.0 2.7
Cash and cash equivalents at
beginning of period 7.2 4.5 4.5
Cash and cash equivalents at
end of period 16 6.2 7.5 7.2
-------------------------------------- ----- -------------- -------------- ----------
UNAUDITED NOTES TO THE FINANCIAL STATEMENTS
1. basis of preparation & accounting policies
Basis of preparation
These condensed consolidated interim financial statements for
the six months ended 30 September 2011 have been prepared on a
going concern basis and in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS
34 'Interim financial reporting' as adopted by the European Union
("EU"), and on the basis of accounting policies set out in the
Group's Annual Report and Accounts for the year ended 31 March
2011.
The condensed consolidated interim financial statements do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. Statutory accounts for the year ended 31
March 2011 were approved by the Board of Directors on 29 July 2011
and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified and did not contain any
statement under section 498 of the Companies Act 2006. The
condensed consolidated interim financial information has been
reviewed, not audited.
The condensed consolidated interim financial statements should
be read in conjunction with the annual financial statements for the
year ended 31 March 2011, which have been prepared in accordance
with IFRSs as adopted by the EU.
There is no material seasonal impact on the Group's financial
performance.
These unaudited condensed interim consolidated financial
statements have been prepared on a going concern basis. In doing
so, the Directors have produced cash flow forecasts which indicate
that the Group will continue to be able to meet its liabilities as
and when they fall due until the facilities mature on 31 December
2012, at which time the borrowings, exit fees and accrued interest
become payable. The Directors have taken into account the following
key business risks and uncertainties in preparing their going
concern assessment:
-- the need for continued support from the Group's three
lenders, Royal Bank of Scotland, Lloyds Banking Group and Barclays
(together the "Lenders") to finance the Group's operations;
-- the ability of the Group to remain in compliance with the
existing loan covenants on a prospective basis; and
-- the macro-economic and financial pressures facing the
property sector and their possible impact on the Group's cash flow
forecasts, property valuations, revenue streams and related
costs.
In anticipation of the maturity of the Group's facilities on 31
December 2012 and the likely inability of the Company to meet
repayment obligations at that date, the Group's discussions with
its Lenders continue. There can be no certainty as to the terms of
any agreement and whether any agreement will be reached.
Having taken into account these key business risks and
uncertainties and the ongoing discussions with the Lenders in
relation to potential solutions, the Directors have concluded that,
whilst material uncertainty exists which may cast significant doubt
over the ability of the Group to continue as a going concern, it is
appropriate to prepare the financial statements on a going concern
basis. Accordingly, the unaudited condensed interim consolidated
financial statements do not include the adjustments that would
result from a failure to remain a going concern.
Accounting policies
Except as described below, the condensed consolidated interim
financial statements have been prepared on the basis of the
accounting policies, methods of computation, significant
judgements, key assumptions, estimates and presentation as set out
in note 1 of the Group's Annual Report for the year ended 31 March
2011.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
The following new or revised Accounting Standards or
interpretations are effective for the financial year beginning 1
April 2011 but do not have a material impact on the Group's interim
figures:
-- IFRIC 19, 'Extinguishing financial liabilities with equity
instruments' (effective 1 July 2010)
-- Amendment to IFRS 1, First time adoption on financial
instrument disclosures (effective 1 July 2010)
The following Accounting Standards or Interpretations are not
yet effective and have not been early adopted by the Group:
-- IAS 24 (revised) 'Related party disclosures' (effective 1
January 2011) -- Annual improvements 2010 (effective 1 January
2011) -- Amendment to IFRIC 14, 'Pre-payments of a Minimum Funding
Requirement' (effective 1 January 2011)
-- IFRS 9 'Financial Instruments' (effective 1 January 2013)
2. segmental reporting
business segments
For management purposes the Group is organised into two
operating divisions, Property Investment and Asset Management:
Property Asset Management Unallocated
Investment and other Total
activities
---------------------------------------- ------------ ----------------- ------------ -------
GBPm GBPm GBPm GBPm
Six months to 30 September 2011
(unaudited)
Rental and similar income 7.8 - - 7.8
Property management expenses (1.7) - - (1.7)
Service charge and similar income 2.0 - - 2.0
Service charge expense and similar
charges (2.4) - - (2.4)
---------------------------------------- ------------ ----------------- ------------ -------
Net rental income 5.7 - - 5.7
Revenue from asset management
activities
------------ ----------------- ------------ -------
Management fee income - 4.1 - 4.1
Performance fee income - - - -
------------ ----------------- ------------ -------
- 4.1 - 4.1
Asset management expenses - (3.5) - (3.5)
Other operating expenses (0.1) (0.7) - (0.8)
Operating profit / (loss) before
net gain on investments 5.6 (0.1) - 5.5
Net loss from fair value adjustments
on investment properties (6.4) - - (6.4)
Net loss from fair value adjustments
on investments - - (1.9) (1.9)
Loss on sale of investment properties (1.4) - - (1.4)
Impairment of goodwill - (0.4) - (0.4)
---------------------------------------- ------------ ----------------- ------------ -------
Operating loss (2.2) (0.5) (1.9) (4.6)
Net interest expense and change
in fair value of derivative financial
instruments - - (10.5) (10.5)
Share of joint ventures' post - - - -
tax losses
---------------------------------------- ------------ ----------------- ------------ -------
Loss before income tax (2.2) (0.5) (12.4) (15.1)
---------------------------------------- ------------ ----------------- ------------ -------
Taxation - current - - - -
Taxation - deferred - - - -
---------------------------------------- ------------ ----------------- ------------ -------
Loss for the period (2.2) (0.5) (12.4) (15.1)
---------------------------------------- ------------ ----------------- ------------ -------
Total assets 189.9 3.9 44.7 238.5
Total liabilities excluding borrowings
and finance leases (23.7) (1.2) (7.3) (32.2)
Borrowing, including finance leases (4.3) - (228.4) (232.7)
---------------------------------------- ------- ------ -------- --------
Net assets / (liabilities) 161.9 2.7 (191.0) (26.4)
---------------------------------------- ------- ------ -------- --------
Other segment items:
Capital expenditure 0.4 - - 0.4
Depreciation - - - -
---------------------------------------- ------- ------ -------- --------
Property Asset Management Unallocated
Investment and other Total
activities
----------------------------------------- ------------ ----------------- ------------ -------
GBPm GBPm GBPm GBPm
Six months to 30 September 2010
(unaudited)
Rental and similar income 7.6 - - 7.6
Property management expenses (1.5) - - (1.5)
Movement in provision for onerous
contracts 0.2 - - 0.2
Service charge and similar income 1.7 - - 1.7
Service charge expense and similar
charges (2.4) - - (2.4)
----------------------------------------- ------------ ----------------- ------------ -------
Net rental income 5.6 - - 5.6
Revenue from asset management
activities
------------ ----------------- ------------ -------
Management fee income - 5.6 - 5.6
Performance fee income - - - -
------------ ----------------- ------------ -------
- 5.6 - 5.6
Asset management expenses - (3.6) - (3.6)
Other operating expenses (0.1) (0.3) - (0.4)
Operating profit before net gain
on investments 5.5 1.7 - 7.2
Net profit from fair value adjustments
on investment properties 7.2 - - 7.2
Net loss from fair value adjustments
on investments - - (1.1) (1.1)
Profit on sale of investment properties 0.1 - - 0.1
Profit on sale of investments
in joint ventures - - 0.5 0.5
Profit on termination of asset
management contract - 3.0 - 3.0
Impairment of goodwill - (7.1) - (7.1)
----------------------------------------- ------------ ----------------- ------------ -------
Operating profit / (loss) 12.8 (2.4) (0.6) 9.8
Net interest expense and change
in fair value of derivative financial
instruments - - (10.8) (10.8)
Share of joint ventures' post - - - -
tax losses
----------------------------------------- ------------ ----------------- ------------ -------
Profit / (loss) before income
tax 12.8 (2.4) (11.4) (1.0)
----------------------------------------- ------------ ----------------- ------------ -------
Taxation - current - - - -
Taxation - deferred - - - -
----------------------------------------- ------------ ----------------- ------------ -------
Profit / (loss) for the period 12.8 (2.4) (11.4) (1.0)
----------------------------------------- ------------ ----------------- ------------ -------
Total assets 217.3 6.3 50.1 273.7
Total liabilities excluding borrowings
and finance leases (21.5) 1.4 (11.0) (31.1)
Borrowing, including finance leases (3.3) - (244.4) (247.7)
---------------------------------------- ------- ---- -------- --------
Net assets / (liabilities) 192.5 7.7 (205.3) (5.1)
---------------------------------------- ------- ---- -------- --------
Other segment items:
Capital expenditure 0.5 - - 0.5
Depreciation - - - -
---------------------------------------- ------- ---- -------- --------
Property Asset Management Unallocated
Investment and other Total
activities
----------------------------------------- ------------ ----------------- ------------ --------
GBPm GBPm GBPm GBPm
Year ended 31 March 2011 (audited)
Rental and similar income 16.5 - - 16.5
Property management expenses (3.0) - - (3.0)
Movement in provision for onerous - - - -
contracts
Service charge and similar income 3.8 - - 3.8
Service charge expense and similar
charges (5.0) - - (5.0)
----------------------------------------- ------------ ----------------- ------------ --------
Net rental income 12.3 - - 12.3
Revenue from asset management
activities
------------ ----------------- ------------ --------
Management fee income - 10.2 - 10.2
Performance fee income - - - -
------------ ----------------- ------------ --------
- 10.2 - 10.2
Asset management expenses - (7.9) - (7.9)
Other operating expenses (0.2) (1.0) - (1.2)
Operating profit before net gain
on investments 12.1 1.3 - 13.4
Net profit from fair value adjustments
on investment properties 6.9 - - 6.9
Net loss from fair value adjustments
on investments - - (3.3) (3.3)
Profit on sale of investment properties 0.2 - - 0.2
Profit on sale of investments
in joint ventures - - 0.5 0.5
Profit on termination of asset
management contract - 3.0 - 3.0
Impairment of goodwill - (8.4) - (8.4)
----------------------------------------- ------------ ----------------- ------------ --------
Operating profit / (loss) 19.2 (4.1) (2.8) 12.3
Net interest expense and change
in fair value of derivative financial
instruments - - (19.4) (19.4)
Share of joint ventures' post - - - -
tax losses
----------------------------------------- ------------ ----------------- ------------ --------
Profit / (loss) before income
tax 19.2 (4.1) (22.2) (7.1)
----------------------------------------- ------------ ----------------- ------------ --------
Taxation - current - - (0.1) (0.1)
Taxation - deferred - - - -
----------------------------------------- ------------ ----------------- ------------ --------
Profit / (loss) for the period 19.2 (4.1) (22.3) (7.2)
----------------------------------------- ------------ ----------------- ------------ --------
Total assets 217.9 5.0 47.0 269.9
Total liabilities excluding borrowings
and finance leases (19.2) (1.1) (7.4) (27.7)
Borrowing, including finance leases (4.3) - (249.1) (253.4)
----------------------------------------- ------------ ----------------- ------------ --------
Net (liabilities) / assets 194.4 3.9 (209.5) (11.2)
----------------------------------------- ------------ ----------------- ------------ --------
Other segment items:
Capital expenditure 0.4 - - 0.4
Depreciation - 0.1 - 0.1
----------------------------------------- ------------ ----------------- ------------ --------
All turnover and operating profit has arisen from continuing
operations.
3. finance income
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2011 2010 2011
--------------------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Income from investments
Distributions from funds 0.4 0.4 1.5
Other 0.1 - -
Other interest - 0.1 0.2
Other finance income
-------------- -------------- ----------
Expected return on pension scheme
assets 0.2 0.2 0.4
Interest on pension scheme liabilities (0.2) (0.2) (0.4)
-------------- -------------- ----------
- - -
--------------------------------------------- -------------- -------------- ----------
0.5 0.5 1.7
--------------------------------------------- -------------- -------------- ----------
4. finance expense
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2011 2010 2011
--------------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Interest payable on bank loans
and overdrafts 7.7 7.4 14.8
Accrued exit fees 0.1 - 2.7
Charges in respect of cost of raising
finance 1.3 1.3 2.7
--------------------------------------- -------------- -------------- ----------
9.1 8.7 20.2
Other interest payable 0.4 0.2 0.4
--------------------------------------- -------------- -------------- ----------
9.5 8.9 20.6
Interest payable under finance
leases 0.2 0.2 0.4
--------------------------------------- -------------- -------------- ----------
9.7 9.1 21.0
--------------------------------------- -------------- -------------- ----------
5. taxation
The taxation charge for the period has been estimated from the
expected taxable profits of the Group's non-REIT activities after
taking account of capital allowances available.
6. dividends
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2011 2010 2011
---------------------- -------------- -------------- ----------
GBPm GBPm GBPm
On Ordinary 5p shares
- - -
- - -
---------------------- -------------- -------------- ----------
7. earnings per share
Basic losses per share of 27.52p (six months to 30 September
2010: losses 1.81p; year to 31 March 2011: losses 12.93p) are
calculated on the loss for the period of GBP15.1million (six months
to 30 September 2010: loss GBP1.0million; year to 31 March 2011:
loss GBP7.2million) and the weighted average of 55,054,373 (six
months to 30 September 2010: 55,190,142; year to 31 March 2011:
55,146,172) shares in issue throughout the period.
Diluted losses per share of 26.11p (six months to 30 September
2010: losses 1.66p; year to 31 March 2011: losses 11.96p) are based
on the loss for the period as above divided by the weighted average
number of shares in issue, being 58,016,904 (six months to 30
September 2010: 59,755,173; year to 31 March 2011: 59,534,067)
after the dilutive impact of share options granted.
A reconciliation of the weighted average number of shares used
to calculate earnings per share and to that used to calculate
diluted earnings per share is shown below:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2011 2010 2011
---------------------------------------- -------------- -------------- -----------
Earnings per share: weighted average
number of shares 55,054,373 55,190,142 55,146,172
Weighted average ordinary shares
to be issued under employee incentive
arrangements 1,680,000 2,293,753 2,239,078
Weighted average warrants for ordinary
shares to be issued 1,282,531 2,271,278 2,148,817
Diluted earnings per share: weighted
average number of shares 58,016,904 59,755,173 59,534,067
---------------------------------------- -------------- -------------- -----------
8. Goodwill
GBPm
------------------------------------------- ------
Cost
At 31 March 2011 (audited) 11.2
Additions -
------------------------------------------- ------
At 30 September 2011 11.2
------------------------------------------- ------
Impairment
At 31 March 2011 (audited) (8.4)
Charge for period (0.4)
------------------------------------------- ------
At 30 September 2011 (8.8)
------------------------------------------- ------
Net book value at 30 September 2011 2.4
------------------------------------------- ------
Net book value at 31 March 2011 (audited) 2.8
------------------------------------------- ------
Goodwill is not amortised but is subject to an half yearly
impairment test. Goodwill of GBP2.4million is allocated to the cash
generating unit ("CGU") defined as the asset management business
owned by Industrial Funds Limited. The recoverable amount of the
asset management business has been used to assess whether the
goodwill is impaired. The recoverable amount of the CGUs has been
calculated based on the value-in-use calculations. These
calculations use cash flow projections based on financial
projections approved by management covering the period to the
termination of the asset management contract. Year 1 is based on
the budget as approved by management. This is determined by past
experience and management's expectations of the current market
conditions. Cash flows beyond year 1 are based on the assumption of
nil growth in management fee income and no increase or decrease in
associated administrative costs. A discount rate of 3.88% (March
2011: 3.09%) has been used to calculate the recoverable amount. The
impairment arises from the Group reassessing a number of factors
including the maturity of the contract in 2016 and the potential
impact on management fees of uncertain capital values given that
the fees of this business are based on gross asset values.
9. investment properties
Freehold Leasehold Total Investment
with over Properties
50 years
unexpired
-------------------------------------- --------- ----------- -----------------
GBPm GBPm GBPm
At 1 April 2011 (audited) 133.9 78.3 212.2
Capital expenditure 0.4 - 0.4
Disposals (22.4) - (22.4)
Net loss from fair value adjustments
on investment property (3.5) (2.9) (6.4)
At 30 September 2011 (unaudited) 108.4 75.4 183.8
-------------------------------------- --------- ----------- -----------------
10. joint ventures
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
2011 2010 2011
----------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Share of joint ventures
At 1 April - - -
Share of post-tax profit / (loss)
for the period / year - - -
Net equity movements - - -
At 30 September / 31 March - - -
----------------------------------- -------------- -------------- ----------
Unlisted shares at cost 73.4 73.4 73.4
Group's share of post acquisition
retained losses and reserves (73.4) (73.4) (73.4)
----------------------------------- -------------- -------------- ----------
- - -
----------------------------------- -------------- -------------- ----------
There are no outstanding loan balances between the Group and its
joint ventures.
11. investments in funds
GBPm
As at 31 March 2011 (audited) 38.0
Net loss from fair value adjustments (1.9)
At 30 September 2011 (unaudited) 36.1
--------------------------------------- --------------------------
AIF 14.8
Apia 21.3
At 30 September 2011 (unaudited) 36.1
-------------------------------------- ---------------------------
12. investments in unlisted shares
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
2011 2010 2011
---------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Unlisted investments 0.3 0.3 0.3
---------------------- -------------- -------------- ----------
13. deferred taxation
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
2011 2010 2011
------------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Deferred taxation assets
Deferred taxation arising from:
Retirement benefit obligations 0.2 0.2 0.2
------------------------------------- -------------- -------------- ----------
Deferred taxation liabilities
Deferred taxation arising from:
Unrealised derivative financial
instruments valuations - - -
Unrealised property and investment -
valuations - -
------------------------------------- -------------- -------------- ----------
- - -
------------------------------------- -------------- -------------- ----------
14. provisions for other liabilities and charges
Onerous contracts Performance Total
fees
---------------------------- ------------------ ------------ ------
GBPm GBPm GBPm
At 31 March 2011 (audited) 4.3 0.8 5.1
Utilised during the
period (0.6) (0.3) (0.9)
At 30 September 2011
(unaudited) 3.7 0.5 4.2
---------------------------- ------------------ ------------ ------
Provisions have been analysed between current and non-current as
follows:
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
2011 2010 2011
------------- -------------- -------------- ----------
GBPm GBPm GBPm
Non-current 2.7 3.6 3.2
Current 1.5 2.9 1.9
4.2 6.5 5.1
------------- -------------- -------------- ----------
The onerous lease provision is made in relation to onerous
contracts on leasehold properties which are vacant or sublet at a
level which renders the properties loss-making over the remaining
life of the lease. The provision represents the Directors' estimate
of the net cash flows on the properties.
The performance fee provision is repayable on demand,
GBP0.3million was repaid during the year; the remaining balance is
expected to be repaid within the next 12 months.
15. reconciliation of operating profit to net cash flow
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
2011 2010 2011
----------------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Operating profit before net gains
on investments 5.5 7.2 13.4
Depreciation of plant and equipment - - 0.1
Decrease in retirement benefit
obligations (0.1) - (0.2)
Increase in trade and other receivables (0.5) (0.3) -
Decrease in trade and other payables (0.8) (4.6) (8.3)
----------------------------------------- -------------- -------------- ----------
Cash inflows from operations 4.1 2.3 5.0
----------------------------------------- -------------- -------------- ----------
16. borrowings, cash and cash equivalents
Unaudited Unaudited Audited
At At At
30 September 30 September 31 March
2011 2010 2011
------------------------------------- -------------- -------------- ----------
GBPm GBPm GBPm
Amounts falling due after more
than one year:
Bank loans 229.2 247.7 251.1
Future finance costs (1.8) (4.3) (3.0)
------------------------------------- -------------- -------------- ----------
227.4 243.4 248.1
Finance lease obligations 4.3 3.2 4.3
231.7 246.6 252.4
------------------------------------- -------------- -------------- ----------
Amounts falling due within one
year:
Bank loans 1.0 1.0 1.0
1.0 1.0 1.0
Finance lease obligations - 0.1 -
------------------------------------- -------------- -------------- ----------
1.0 1.1 1.0
------------------------------------- -------------- -------------- ----------
Total borrowings, including finance
leases 232.7 247.7 253.4
Cash and cash equivalents at end
of period 6.2 7.5 7.2
------------------------------------- -------------- -------------- ----------
During the period GBP22.8million of bank loans were repaid and
GBP0.9m borrowed.
17. related party transactions
In accordance with IAS 27 "Consolidated and Separate Financial
Statements," transactions between the company and subsidiaries,
which are related parties, have been eliminated on consolidation
and are not disclosed in this note.
Remuneration of key management personnel:
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 March
30 September 30 September 2011
2011 2010
------------------------------ -------------- -------------- ------------
GBPm GBPm GBPm
Short-term employee benefits 0.4 0.3 0.9
Post-employee benefits - - 0.1
Share based payments - - -
0.4 0.3 1.0
------------------------------ -------------- -------------- ------------
Details of transactions between the Group and joint ventures are
as set out below.
There are no outstanding loan balances between the Group and its
joint ventures.
Agora Radial Agora Greater Total
Shopping Distribution Max London
Centres Limited Limited Offices
Limited Limited
GBPm GBPm GBPm GBPm GBPm
------------------------------ ---------- -------------- --------- --------- ------
Amounts receivable by Group
Unaudited 6 months ended
30 September 2011
Asset management fees 0.4 - 0.1 0.1 0.6
Unaudited 6 months ended
30 September 2010
Asset management fees 0.3 1.3 0.2 0.1 2.3
Audited year ended 31 March
2011
Asset management fees 0.7 1.3 0.5 0.3 2.8
18. post balance sheet events
On 28 November 2011, a consent and amendment letter was signed
with one of the Group's lenders to remove the LTV covenant and
market certain properties.
Directors' statement of responsibilities
The Directors confirm that this consolidated interim financial
information has been prepared in accordance with IAS 34 as adopted
by the European Union, and that the Half Yearly Report herein
includes a fair review of the information as required by 4.2.7R and
4.2.8R of the Disclosure and Transparency Rules, namely:
-- An indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- Material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The Directors of Warner Estate Holdings PLC are as stated in the
Group's Annual Report for the year ended 31 March 2011.
The Chairman's Statement on pages 2 to 3 refers to important
events which have taken place in the period.
The principal risks and uncertainties facing the business are as
set out on page 9 of the Annual Report and Accounts.
Any material related party transactions which have taken place
in the period are set out in note 17.
By the order of the Board
D J Lanchester
Secretary
30 November 2011
Independent review report to Warner Estate Holdings PLC
Introduction
We have been engaged by the company to review the condensed Half
Year Report and Accounts for the six months ended 30 September
2011, which comprises the Unaudited Consolidated Income Statement,
the Unaudited Consolidated Statement of Comprehensive Income, the
Unaudited Consolidated Statement of Financial Position, the
Unaudited Consolidated Statement of Changes in Equity, the
Unaudited Consolidated Cash Flow Statement and related notes. We
have read the other information contained in the Half Year Report
and Accounts and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed consolidated interim financial statements.
Directors' responsibilities
The Half Year Report and Accounts is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the Half Year Report and Accounts in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed consolidated interim financial
statements included in this Half Year Report and Accounts have been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting", as adopted by the European
Union.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed consolidated interim financial statements in the Half
Year Report and Accounts based on our review. This report,
including the conclusion, has been prepared for and only for the
company for the purpose of the Disclosure and Transparency Rules of
the Financial Services Authority and for no other purpose. We do
not, in producing this report, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated interim
financial statements in the Half Year Report and Accounts for the
six months ended 30 September 2011 are not prepared, in all
material respects, in accordance with International Accounting
Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Services
Authority.
Emphasis of matter - going concern
In forming our conclusion on the condensed consolidated interim
financial statements, which is not modified, we have considered the
disclosures made in Note 1 to the condensed consolidated interim
financial statements concerning the Group's ability to continue as
a going concern.
These disclosures indicate that there is a material uncertainty
as to whether an agreement can be reached with the Group's three
lenders in relation to the maturity of the borrowing facilities on
31 December 2012, and the related exit fees and accrued interest
due at that date. These conditions, along with other matters
disclosed in Note 1, indicate the existence of a material
uncertainty which may cast significant doubt over the Group's
ability to continue as a going concern. The condensed consolidated
interim financial statements do not include the adjustments that
would result if the Group was unable to continue as a going
concern.
PricewaterhouseCoopers LLP
Chartered Accountants
30 November 2011
London
Notes:
(a) The maintenance and integrity of the Warner Estate Holdings
PLC website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for
any changes that may have occurred to the financial statements
since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGGQPGUPGGMB
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