TIDMWNER
RNS Number : 4123K
Warner Estate Holdings PLC
30 July 2013
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 year ended 31 March 2013.
Performance Summary
-- Total revenue GBP16.6million (2012: GBP29.5million). Revenue
from continiung operations GBP8.2million (2012: GBP8.8million)
-- Total loss before income tax GBP37.4million (2012: GBP38.7million loss).
Key Business Events
-- Consensual appointment of joint fixed charge receivers in
Warner Estate Investments Limited and Warner Estate Development
(Folkestone) Limited to dispose of certain secured property assets
to maxmise the return to the lender.
-- Consensual appointment of independent directors and managers
in JSE Developments Limited to dispose of the remaining three
secured property assets on behalf of the lender.
-- Disposal of 50% equity interest in Agora Shopping Centres
Limited, completing the divestment programme of the Group's
property investment joint ventures.
Date: 29 July 2013
For further information contact:
Warner Estate Holdings PLC
Philip Warner, Chairman
Mark Keogh, Group Managing Director
Robert Game, Group Managing
Director, Property
Tel: 020 7907 5100
Web: www.warnerestate.co.uk
Chairman's Statement
The Group's primary focus continues to be negotiations with its
lenders, and other key stakeholders, regarding options to realise
value for the security still held by those lenders over the asset
management business and units in the Ashtenne Industrial Fund, thus
providing continuity of asset management services to the funds it
manages. The options being discussed would not realise enough value
to repay the outstanding debt in full. As reported over the last
year during these negotiations, the Group remains reliant on the
continuing support of its lenders, and other key stakeholders, and
the outcome of the negotiations will determine the Group's
future.
As previously announced the Board believes that there is little
or no value to existing shareholders whatever the outcome of these
negotiations.
Financing Negotiations and Going Concern
As announced on 20 June 2013, following the completion of a
consensual disposal programme with one of its lenders, the Group
has reached a mutually satisfactory agreement to release the
relevant borrowing Group subsidiary from all of its obligations to
that lender including its outstanding debt and interest of
GBP23.2m. This amount is currently included within the group
statement of financial position as at 31 March 2013.
The Group's remaining two facilities matured on 31 December 2012
and, as previously anticipated, the Group was unable to meet its
repayment obligations at that date. The lenders have reserved their
rights whilst negotiations continue but there can be no certainty
as to the final outcome.
As reported at the Half Year the Directors have relinquished
control of the Group's remaining property assets to either fixed
charge receivers or third party managers. The Directors have
concluded that the assets and liabilities of these subsidiaries
should be derecognised in accordance with IAS 27 and the results
for the period classified on the consolidated income statement as
discontinued operations.
Although the Group has net liabilities the Board is satisfied
that, following a review of appropriately stress tested cash flow
forecasts and subject to the satisfactory outcome of negotiations
with the lenders and other stakeholders, and the continued support
of these parties and certain other creditors, the Group will be
able to meet its liabilities as and when they fall due for the
foreseeable future. These cash flow forecasts are based on a number
of assumptions as set out in Note 1 to the financial statements. At
certain points over the coming months and beyond, the level of cash
held by the business will be low and headroom will be marginal.
Having taken all the above matters into account, together with
the key business risks and material uncertainties set out in Note 1
to the financial statements and the status of the ongoing
negotiations with the Group's lenders and other stakeholders, the
Directors have concluded that, whilst material uncertainties
regarding the Group's future exist, which may cast significant
doubt over the ability of the Group to continue as a going concern,
it remains appropriate to prepare the financial statements on a
going concern basis. Accordingly, the consolidated financial
statements do not include the adjustments that would result from a
failure to remain a going concern.
Results Overview
Asset management income continues to reduce due to the disposal
of assets under management and falling gross asset valuations.
Overall the Group made a post tax loss of GBP37.4million (March
2012: GBP38.7million loss) made up of GBP13.5million of losses
arising from the discontinued property investment business, a
GBP9.6million fall in the value of investments in the Ashtenne
Industrial Fund and the Apia Regional Office Fund, a GBP0.2milllion
fall in the value of unlisted investments, a GBP14.7million
decrease in the fair value of the financial guarantee contract,
further explained below, GBP0.3million relating to impairment of
goodwill, a GBP0.1million asset management operating loss and
GBP1.0 million of finance income relating to investments in
funds.
Group borrowings have been reduced to GBP50.2million (March
2012: GBP232.9million) as a result of the disposal of investment
properties and derecognising debt, although a financial guarantee
contract of GBP53.2million has been provided for as per note 26 to
the financial statements. The financial guarantee contract is the
fair value of those liabilities and assets of which the Directors
lost control on the appointment of fixed charge receivers on 17
August 2012 and of independent directors and managers on 19 March
2013. On 23 May 2013, following the year end, the Directors lost
control, through the appointment of independent directors, of the
subsidiary holding the Group's investment in the Apia Regional
Office Fund. This reduces, on the Group's Statement of Financial
Position, the value of investments in funds and decreases the
exposure under the financial guarantee contract by GBP13.4million.
The net cash outflow for the year was GBP8.4million primarily
arising from repayment of bank debt and interest paid in the
period.
There will be no payment of a dividend (March 2012: GBPNil).
Assets under Management
Assets under management have declined to GBP593million (March
2012: GBP1,033million).
As at 31 March 2013 Number Number of Capital Annualised Net
of Properties Units Value Rental Income
---------------------- --------------- ---------- ----------- ---------------
GBPmillion GBPmillion
Ashtenne Industrial
Fund 311 3,567 477.2 43.7
Apia Regional Office
Fund 10 164 67.1 5.2
Space Northwest 20 420 48.7 2.7
---------------------- --------------- ---------- ----------- ---------------
Total 341 4,151 593.0 51.6
---------------------- --------------- ---------- ----------- ---------------
Outlook
The Group's objective is to continue to review options to
realise value for its lenders and to provide continuity of asset
management services to the funds it manages. The viability of the
asset management business is dependent on the continuing support of
its lenders and other key stakeholders, the timing and quantum of
management fee income and the implementation of further cost
savings.
Philip Warner
Chairman
Consolidated Income Statement
For the year ended 31 March 2013
2013 2012
Notes GBPm GBPm
--------------------------------------- ------ ------- -------
Revenue - continuing operations 8.2 8.8
Revenue - discontinued operations 8.4 20.7
--------------------------------------- ------ ------- -------
Revenue - total 16.6 29.5
--------------------------------------- ------ ------- -------
Continuing operations GBPm GBPm
Rental and similar income 0.5 0.5
Property management expenses (0.5) (0.2)
--------------------------------------- ------ ------- -------
Net rental income 3 0.0 0.3
------- -------
Revenue from asset management
activities 7.7 8.3
Asset management expenses (7.2) (7.0)
--------------------------------------- ------ ------- -------
Net income from asset management
activities 0.5 1.3
------- -------
Other operating expenses (0.6) (0.6)
--------------------------------------- ------ ------- -------
Operating (loss) / profit
before net movements on investments 3 (0.1) 1.0
------- -------
Impairment of goodwill 13 (0.3) (2.0)
Net loss from fair value adjustment
on investments 17/18 (9.8) (4.2)
------- -------
Operating loss (10.2) (5.2)
------- -------
Finance income 7 1.0 1.1
Fair value decrease in financial
guarantee contract 26 (14.7) -
--------------------------------------- ------ ------- -------
Loss before income tax (23.9) (4.1)
------- -------
Taxation - current 9 - (0.1)
Loss for the period from continuing
operations (23.9) (4.2)
------- -------
Discontinued operations
Rental and similar income 6.9 16.8
Property management expenses (0.7) (5.1)
Service charge and similar
income 1.5 3.9
Service charge expense and
similar charges (2.0) (4.8)
------- -------
Net rental income 3 5.7 10.8
------- -------
Other operating expenses (0.5) (0.1)
Operating profit before net
movements on investments 3 5.2 10.7
------- -------
Net loss from fair value adjustments
on investment properties 14 (0.1) (21.0)
Loss on sale of investment
properties (11.5) (3.9)
Operating loss (6.4) (14.2)
------- -------
Finance expense 8 (7.6) (22.4)
Change in fair value of derivative
financial instruments 22 0.5 2.1
Loss for the period from discontinued
operations (13.5) (34.5)
------- -------
Total loss for the period
from continuing and discontinued
operations attributable to
owners of the parent (37.4) (38.7)
--------------------------------------- ------ ------- -------
P p
Loss per share - continuing
operations 12 (43.7) (7.7)
Loss per share - discontinued
operations 12 (24.7) (62.5)
--------------------------------------- ------ ------- -------
Loss per share - total 12 (68.4) (70.2)
--------------------------------------- ------ ------- -------
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2013
2013 2012
------------------------------------ ------- -------
GBPm GBPm
Loss for the period (37.4) (38.7)
Other comprehensive income
Actuarial gains / (losses) on
retirement benefit obligations 0.2 (0.2)
Deferred tax arising on retirement
benefit obligations (0.1) (0.1)
------- -------
Total other comprehensive income 0.1 (0.3)
Total comprehensive income for
the period attributable to owners
of the parent (37.3) (39.0)
------------------------------------ ------- -------
Statement of Financial Position
As at 31 March 2013
Group Company
------------------------------------- ------ ---------------------------- ------------------
Notes 2013 2012 2013 2012
------------------------------------- ------ ------------------ -------- -------- --------
GBPm GBPm GBPm GBPm
ASSETS
Non-current assets
Goodwill 13 0.5 0.8 - -
Investment properties 14 - 70.9 - -
Plant and equipment 15 - 0.1 - -
Investments in funds 17 24.2 33.8 - -
Investments in unlisted shares 18 0.1 0.3 - 40.6
Deferred income tax assets 4/23 - 0.1 - -
Trade and other receivables 19 - 3.6 - -
------------------------------------- ------ ------------------ -------- -------- --------
24.8 109.6 - 40.6
------------------------------------- ------ ------------------ -------- -------- --------
Current assets
Trade and other receivables 19 1.3 5.1 0.1 48.9
Cash and cash equivalents 20 1.2 9.8 - 0.2
------------------------------------- ------ ------------------ -------- -------- --------
2.5 14.9 0.1 49.1
------------------------------------- ------ ------------------ -------- -------- --------
Investment properties classified
as held for sale 14 - 90.8 - -
------------------------------------- ------ ------------------ -------- -------- --------
Assets of disposal group classified
as held for sale 2 0.8 - - -
------------------------------------- ------ ------------------ -------- -------- --------
Total assets 28.1 215.3 0.1 89.7
------------------------------------- ------ ------------------ -------- -------- --------
LIABILITIES
Non-current liabilities
Borrowings, including finance
leases 20 - (3.8) - -
Trade and other payables 24 - (1.5) - -
Derivative financial liabilities 22 - (0.5) - -
Retirement benefit obligations 4 (0.2) (0.6) - -
Provisions for other liabilities
and charges 25 (1.6) (2.4) (1.6) -
------------------------------------- ------ ------------------ -------- -------- --------
(1.8) (8.8) (1.6) -
------------------------------------- ------ ------------------ -------- -------- --------
Current liabilities
Borrowings, including finance
leases 20 - (229.1) - -
Trade and other payables 24 (2.5) (26.6) (118.9) (139.9)
Current income tax liabilities - (0.1) - -
Provisions for other liabilities
and charges 25 (1.6) (0.9) (1.6) -
Financial guarantee contract 26 (53.2) - (53.2) -
(57.3) (256.7) (173.7) (139.9)
------------------------------------- ------ ------------------ -------- -------- --------
Liabilities of disposal group
classified as held for sale 2 (56.5) - - -
------------------------------------- ------ ------------------ -------- -------- --------
Total liabilities (115.6) (265.5) (175.3) (139.9)
------------------------------------- ------ ------------------ -------- -------- --------
Net liabilities 3 (87.5) (50.2) (175.2) (50.2)
------------------------------------- ------ ------------------ -------- -------- --------
EQUITY
Capital and reserves attributable
to the owners of the Parent
Company
Share capital 27 2.8 2.8 2.8 2.8
Other reserves 28 (90.1) (52.4) (177.8) (52.4)
Investment in own shares 29 (0.2) (0.6) (0.2) (0.6)
------------------------------------- ------ ------------------ -------- -------- --------
Total deficit (87.5) (50.2) (175.2) (50.2)
------------------------------------- ------ ------------------ -------- -------- --------
Statement of Changes in Equity
For the year ended 31 March 2013
Share Investment
Share Share Based Revaluation Other Treasury Retained Warrant in own
Group Capital Premium Payments Reserve Reserve Shares Earnings reserve shares
(note (note (note (note (note (note (note (note (note
27) 28) 28) 28) 28) 28) 28) 28) 29) Total
--------------- --------- --------- --------- ------------- --------- --------- ---------- --------- ----------- -------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 31 March
2011 2.8 40.7 1.0 (188.7) 8.0 (1.5) 126.5 0.8 (0.8) (11.2)
Loss for the
period - - - - - - (38.7) - (38.7)
Other
comprehensive
expense - - - - - - (0.3) - - (0.3)
Movement on
revaluation - - - (66.7) - - 66.7 - - -
--------------- --------- --------- --------- ------------- --------- --------- ---------- --------- ----------- -------
Transactions
with owners:
Disposal of
investment
in own shares - - - - - - - 0.2 0.2
Cost of share
based
payments (0.5) 0.3 (0.2)
Transfer - - - - - 1.5 (1.5) - - -
--------------- --------- --------- --------- ------------- --------- --------- ---------- --------- ----------- -------
At 31 March
2012 2.8 40.7 0.5 (255.4) 8.0 - 153.0 0.8 (0.6) (50.2)
--------------- --------- --------- --------- ------------- --------- --------- ---------- --------- ----------- -------
Loss for the
period - - - - - - (37.4) - - (37.4)
Other
comprehensive
expense - - - - - - 0.1 - - 0.1
Movement on
revaluation - - - 186.9 - - (186.9) - - -
--------------- --------- --------- --------- ------------- --------- --------- ---------- --------- ----------- -------
Transactions
with owners:
Disposal of
investment
in own shares - - - - - - - - 0.4 0.4
Cost of share
based
payments - - (0.4) - - - - - - (0.4)
At 31 March
2013 2.8 40.7 0.1 (68.5) 8.0 - (71.2) 0.8 (0.2) (87.5)
--------------- --------- --------- --------- ------------- --------- --------- ---------- --------- ----------- -------
Statement of Changes in Equity
For the year ended 31 March 2013
Share Investment
Share Share Based Other Treasury Retained Warrants in own
Company Capital Premium Payments Reserve Shares Earnings reserve shares Total
(note (note (note (note (note (note (note (note
27) 28) 28) 28) 28) 28) 28) 29)
--------------- --------- --------- --------- --------- ---------- ---------- ------------ ----------- --------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 31 March
2011 2.8 40.7 1.0 7.0 (1.5) (61.2) 0.8 (0.8) (11.2)
Loss for
the year
and other
comprehensive
expense - - - - - (39.0) - - (39.0)
Transactions
with owners:
Disposal
of investment
in own shares - - - - - - - 0.2 0.2
Cost of share
based
payments - - (0.5) - - 0.3 - - (0.2)
Transfer - - - - 1.5 (1.5) - - -
At 31 March
2012 2.8 40.7 0.5 7.0 - (101.4) 0.8 (0.6) (50.2)
--------------- --------- --------- --------- --------- ---------- ---------- ------------ ----------- --------
Loss for
the year
and other
comprehensive
expense - - - - - (125.0) - - (125.0)
Transactions
with owners:
Disposal
of investment
in own shares - - - - - - - 0.4 0.4
Cost of share
based
payments - - (0.4) - - - - - (0.4)
At 31 March
2013 2.8 40.7 0.1 7.0 - (226.4) 0.8 (0.2) (175.2)
--------------- --------- --------- --------- --------- ---------- ---------- ------------ ----------- --------
Cash Flow Statements
For the year ended 31 March 2013
Group Company
----------------------------------------- ----- ---------------- ----------------
Note 2013 2012 2013 2012
----------------------------------------- ----- ------- ------- -------- ------
GBPm GBPm GBPm GBPm
Cash flows from continuing operating
activities
Cash generated from operations 31 (0.4) - (0.2) 0.2
UK corporation tax paid (0.1) - - -
Net cash (outflow) / inflow from
continuing operating activities (0.5) - (0.2) 0.2
----------------------------------------- ----- ------- ------- -------- ------
Cash flows from discontinued operating
activities
Cash generated from operations 31 0.5 10.2 - -
Interest paid (4.5) (8.4) - -
----------------------------------------- ----- ------- ------- -------- ------
Net cash (outflow) / inflow from
discontinued operating activities (4.0) 1.8 - -
----------------------------------------- ----- ------- ------- -------- ------
Total net cash flows from operating
activities (4.5) 1.8 - -
----------------------------------------- ----- ------- ------- -------- ------
Cash flows from continuing investing
activities
Distributions received from funds 1.0 1.3 - -
----------------------------------------- ----- ------- ------- -------- ------
Net cash inflow from continuing
investing activities 1.0 1.3 - -
----------------------------------------- ----- ------- ------- -------- ------
Cash flows from discontinued investing
activities
Purchase of investment properties (0.4) - -
and related capital expenditure -
Net proceeds on sale of investment
properties 84.4 25.5 - -
----------------------------------------- ----- ------- ------- -------- ------
Net cash inflow from discontinued
investing activities 84.4 25.1 - -
----------------------------------------- ----- ------- ------- -------- ------
Total net cash flows from investing
activities 85.4 26.4 - -
----------------------------------------- ----- ------- ------- -------- ------
Cash flows from continuing financing
activities
Payment against financial guarantee - - -
contract (1.4)
Net cash outflow from continuing - - -
financing activities (1.4)
Cash flows from discontinued financing
activities
Repayment of bank loans (87.9) (22.7) - -
Finance fees paid - (2.9) - -
----------------------------------------- ----- ------- ------- -------- ------
Net cash outflow from discontinued
financing activities (87.9) (25.6) - -
----------------------------------------- ----- ------- ------- -------- ------
Total net cash flows from financing
activities (89.3) (25.6) - -
----------------------------------------- ----- ------- ------- -------- ------
Net (decrease) / increase in cash
and cash equivalents from continuing
operations (0.9) 1.3 (0.2) 0.2
Net (decrease) / increase in cash
and cash equivalents from discontinued
operations (7.5) 1.3 - -
----------------------------------------- ----- ------- ------- -------- ------
Total net (decrease) / increase
in cash and cash equivalents (8.4) 2.6 (0.2) 0.2
----------------------------------------- ----- ------- ------- -------- ------
Cash and cash equivalents at beginning
of period 9.8 7.2 0.2 -
Cash and cash equivalents at end
of period 1.4 9.8 - 0.2
----------------------------------------- ----- ------- ------- -------- ------
Notes to the financial statements
1. Accounting Policies
Basis of preparation
The Financial Statements comprise the consolidated financial
statements of Warner Estate Holdings PLC ("the Group") for the year
ended 31 March 2013 and have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and
International Financial Reporting Interpretation Committee
("IFRIC") interpretations endorsed by the European Union ("EU") and
with those parts of the Companies Act 2006 ("The Act") applicable
to companies reporting under IFRS. The basis of accounting and
format of presentation is subject to change following any further
interpretative guidance that may be issued by the International
Accounting Standards Board ("IASB") and IFRIC from time to
time.
The consolidated financial statements have been prepared under
the historical cost convention, as modified by the revaluation of
certain assets and liabilities, which are carried at fair value,
and in accordance with those IFRS standards and IFRIC
interpretations issued and effective as at the time of
preparation.
The parent company's financial statements have also been
prepared in accordance with IFRS, as applied in accordance with the
provisions of the Act. The Directors' have taken advantage of the
exemption offered by Section 408 of the Act not to present a
separate statement of comprehensive income for the parent
company.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise judgement in the process of
applying the Group's accounting policies. Although these estimates
are based on management's best knowledge of the amount, events or
actions, actual results ultimately may differ from those
estimates.
Going concern
The Group's primary focus continues to be negotiations with its
lenders, and other key stakeholders, regarding options to realise
value for the security still held by those lenders over the asset
management business and units in the Ashtenne Industrial Fund, thus
providing continuity of asset management services to the funds it
manages. The options being discussed would not realise enough value
to repay the outstanding debt in full. As reported over the last
year during these negotiations, the Group remains reliant on the
continuing support of its lenders, and other key stakeholders, and
the outcome of the negotiations will determine the Group's
future.
These financial statements have been prepared on a going concern
basis which assumes that a solution will be agreed with the Lenders
to resolve the Group's net liability position and the inability of
the Group to meet repayment obligations following the maturity of
the debt facilities on 31 December 2012. These conditions indicate
the existence of a material uncertainty related to events or
conditions which may cast significant doubt over the Group's and
Company's ability to continue as a going concern and therefore that
it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
As announced on 20 June 2013, following the completion of a
consensual disposal programme with one lender, the Group has
reached a mutually satisfactory agreement to release the relevant
borrowing Group subsidiary from all of its obligations to that
lender including its outstanding debt and interest of GBP23.2m.
This amount is currently included within the group statement of
financial position as at 31 March 2013.
The Board is satisfied, following a review of appropriately
stress tested cash flow forecasts that, subject to the satisfactory
outcome of negotiations with the remaining Lenders and the
continued support of the Lenders and certain other creditors, the
Group will be able to meet its liabilities as and when they fall
due for the foreseeable future. These cash flow forecasts, based on
a number of assumptions, project that the level of cash held by the
business will be low and headroom will be marginal, however, the
directors believe that the ongoing asset management business can
continue to trade into the foreseeable future.
Having taken into account these key assumptions, business risks
and uncertainties and the status of the ongoing negotiations with
the lenders and other key stakeholders, the Directors have
concluded that, whilst the above material uncertainties exist which
may cast significant doubt over the ability of the Group to
continue as a going concern, it remains appropriate to prepare the
financial statements on a going concern basis. Accordingly, the
financial statements do not include the adjustments that would
result from a failure to remain a going concern.
Standards, interpretations and amendments to published standards
that became effective during the year
The following standards and interpretations have become
mandatory for the Group during the current accounting period but
have not had a material impact on the Group:
-- IAS 1 (amendment) 'Financial statement presentation'
-- IAS 19 (amendment) 'Employee benefits'
-- IFRS 1 (amendment) 'First time adoption'
-- IFRS 7 (amendment) 'Financial instruments: Disclosures'
-- IFRS 13 'Fair value measurements'
-- IFRIC 20 'Stripping costs in the production phase of a
surface mine'
Standards, interpretations and amendments to published standards
that are not yet effective
The following accounting standards or interpretations are not
yet effective and are not expected to have a material impact on the
Group. None of
these accounting standards or interpretations has been early
adopted by the Group.
-- IAS 27 (revised) 'Separate financial statements'
-- IAS 28 (revised) 'Associates and joint ventures'
-- IAS 32 (amendment) 'First time adoption'
-- IFRS 9 'Financial instruments'
-- IFRS 10 'Consolidated financial statements'
-- IFRS 11 'Joint arrangements'
-- IFRS 12 'Disclosure of interests in other entities'
Consolidation
(a) Subsidiary undertakings
Subsidiaries are all entities over which the Group has the power
to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting
rights.
The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing
whether the Group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are de-consolidated from the date control ceases. All
inter-company transactions, balances and gains on transactions
between Group companies are eliminated upon consolidation. Uniform
accounting policies have been adopted across the Group.
On 17 August 2012, joint fixed charge receivers were appointed
over the assets of Warner Estate Investment Limited and Warner
Estate Development (Folkestone) Limited. The joint fixed charge
receivers are responsible for the financial and operating policies
of the companies, in order to realise value through the disposal of
the assets. This has resulted in a loss of control by the Group and
in accordance with IAS 27 'Consolidated and Separate Financial
Statements', the assets and liabilities have been derecognised from
the consolidated financial statements. The comprehensive income and
cash flows to 17 August 2012 have been presented in discontinued
operations, as required by IFRS 5 'Non-current Assets Held for Sale
and Discontinued Operations'.
On 19 March 2013 control of JSE Developments Limited was ceded
to one of the lenders, as an alternative to them exercising their
right to appoint a fixed charge receiver. The previous directors
resigned from the company and were replaced by appointees of the
lender with the objective of disposing of the remaining assets. In
accordance with IAS 27 'Consolidated and Separate Financial
Statements', the assets and liabilities have been derecognised from
the consolidated financial statements. The comprehensive income and
cash flows to 19 March 2013 have been presented in discontinued
operations, as required by IFRS 5 'Non-current Assets Held for Sale
and Discontinued Operations'.
In accordance with IFRS 5, the Group classifies subsidiaries
within a disposal group where they are held available for sale or
if the business assets and liabilities within the entities are
subject to a programme of divestment and cessation. A disposal
group is measured at the lower of its carrying amount at initial
recognition and its fair value less costs to sell.
(b) Interests in joint ventures
Interests in jointly controlled entities are accounted for using
the equity method. Unrealised gains and losses on transactions
between the Group and its joint ventures are eliminated to the
extent of the Group's interest in the joint ventures. The Group's
share of profit of joint ventures represents the Group's share of
the joint venture's profit after tax. Joint ventures with net
liabilities are carried at Nil value in the statement of financial
position where there is no commitment to fund the deficit.
Segment reporting
Segmental information is disclosed in the notes to the financial
statements reflecting management reporting of financial performance
and position as used in operational decision making. Operating
segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has
been identified as the board that makes strategic decisions.
Plant and equipment
Plant and equipment is initially measured at cost. After initial
recognition, it is carried at cost less subsequent depreciation and
impairment. Cost includes expenditure that is directly attributable
to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that the future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the
consolidated statement of income during the financial period in
which they are incurred.
Plant and equipment is depreciated by equal annual instalments
over their estimated useful lives and are carried at historic cost
less accumulated depreciation. The Group estimates a useful life of
3 years for computer equipment and 8 years for other fixtures and
fittings.
Where the carrying amount of an item of plant and equipment is
greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount. Recoverable amount is the
higher of fair value less costs to sell and value in use and is
determined for an individual asset. After initial recognition, the
item is carried at its cost less any accumulated depreciation and
any accumulated impairment losses.
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each statement of financial position
date.
Goodwill
Business combinations are accounted for by applying the purchase
method. The excess of the cost of the business combination over the
acquirer's interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities, recognised in
accordance with IFRS 3, Business Combinations, constitutes
goodwill, and is recognised as an asset. After initial recognition,
goodwill is measured at cost less any accumulated impairment
losses, until disposal or termination of the previously acquired
business (including planned disposal or termination where there are
indications that the value of the goodwill has been permanently
impaired), when the profit or loss on disposal or termination will
be calculated after charging the book amount of any such goodwill
through the consolidated income statement.
Assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment. Assets that
are subject to amortisation are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable. To the extent that the carrying
amount exceeds the recoverable amount, which is the higher of net
realisable value and value in use, the asset is written down to its
recoverable amount. Any impairment is recognisedin the consolidated
income statement and is not subsequently reversed. Net realisable
value is the estimated amount at which an asset can be disposed of,
less any direct selling costs.
Value in use is the estimate of the discounted future cash flows
generated from the asset's continued use, including those resulting
from its ultimate disposal. For the purposes of assessing value in
use, assets are grouped into cash generating units which represent
the lowest levels for which there are separately identifiable cash
flows.
Investment properties
(a) Initial recognition
Property that is held for long-term rental yields or for capital
appreciation or both, and that is not occupied by the Group, is
classified as investment property.
Investment property comprises freehold land, freehold buildings,
land held under operating leases and buildings held under finance
leases. When the Group begins to redevelop an existing investment
property for continued future use as an investment property, the
property remains an investment property and is accounted for as
such.
Property that is being constructed or developed for future use
as investment property, but which has not previously been
classified as such, is classified as property under the course of
development. This is recognised at fair value. Interest is
capitalised (before tax relief) on the basis of the average rate of
interest paid on the relevant debt outstanding until the date of
practical completion. On completion the property is transferred to
investment property.
Land held under operating leases is classified and accounted for
as investment property when the rest of the definition of
investment property is met. In such cases, the operating lease is
accounted for as if it were a finance lease.
Investment property is measured initially at its cost, including
related transaction costs.
(b) Fair value
After initial recognition, investment property is carried at
fair value. Fair value is based on active market prices, adjusted,
if necessary, for any difference in the nature, location or
condition of the specified asset. These valuations are reviewed at
each financial reporting period end by the Directors. Investment
property that is being redeveloped for continuing use as investment
property, or for which the market has become less active, continues
to be measured at fair value.
The fair value of investment property reflects, among other
things, rental income from current leases and assumptions about
rental income from future leases in the light of current market
conditions.
The fair value also reflects, on a similar basis, any cash
outflows that could be expected in respect of the property.
Some of those outflows are recognised as a liability, including
finance lease liabilities in respect of land classified as
investment property; others, including contingent rent payments,
are not recognised in the financial statements, unless they qualify
as a provision.
(c) Subsequent expenditure
Subsequent expenditure is charged to the asset's carrying amount
only when it is directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating
in the manner intended by management and the cost of the item can
be measured reliably. All repairs and maintenance costs are charged
to the consolidated income statement during the financial period in
which they are incurred. Gross borrowing costs associated with
direct expenditure on properties under development or undergoing
major refurbishment are capitalised. With specific developments,
the amount capitalised is the gross interest incurred on those
borrowings less any investment income arising on their temporary
investment. Interest is capitalised as from the commencement of the
development work until the date of practical completion. The
capitalisation of finance costs is suspended if there are prolonged
periods when development activity is interrupted. Interest is also
capitalised on the purchase cost of a site or property acquired
specifically for redevelopment in the short term but only where
activities necessary to prepare the asset for redevelopment are in
progress.
(d) Changes in fair value and transfers
Changes in fair values are recorded in the consolidated income
statement for investment properties.
If an investment property becomes owner-occupied, it is
reclassified as property, plant and equipment, and its fair value
at the date of reclassification becomes its cost for accounting
purposes.
Investment properties classified as held for sale
Investment properties are classified as assets held for sale
when their carrying amount is to be recovered principally through a
sale transaction and a sale is considered highly probable. In
accordance with IFRS 5, assets already carried at fair value with
changes in fair value recognised in profit or loss are excluded
from the measurement requirements of the IFRS. Therefore, these
assets have been accounted for using the fair value model in IAS 40
as prescribed above.
Cash and cash equivalents
Cash and cash equivalents comprises cash balances, deposits held
at call with banks and other short-term highly liquid investments
with original maturities of three months or less. Cash and cash
equivalents are categorised as loans and receivables. Bank
overdrafts that are repayable on demand and form an integral part
of the Group's cash management are included as a component of cash
and cash equivalents for the purpose of the statement of cash
flows. Bank overdrafts are disclosed in current and non-current
liabilities.
Employee benefits
The Group accounts for pensions under IAS 19 'Employee
Benefits'. In respect of the defined benefit pension scheme,
obligations are measured at discounted present value while scheme
assets are measured at their fair value.
The operating and financing costs of this plan are recognised
separately in the consolidated statement of comprehensive income.
Service costs are spread systematically over the working lives of
the employees concerned with the charge for the period included in
operating costs in the consolidated statement of comprehensive
income.
Financing costs are recognised in the periods in which they
arise and are included in interest expense. Actuarial gains and
losses arising from either experience differing from previous
actuarial assumptions or changes to those assumptions are
recognised immediately in the consolidated statement of
comprehensive income.
Contributions to defined contribution schemes are expensed as
incurred.
Income taxes
The investment property segment of the Group's business is
subject to the Real Estate Investment Trust ("REIT") taxation
regime and is therefore exempt from tax. To retain group REIT
status, several tests have to be met and certain ongoing criteria
must be maintained. The main criteria are as follows:
-- at the start of each accounting period, the assets of the tax
exempt business must be at least 75% of the total value of the
Group's assets;
-- at least 75% of the Group's total profits must arise from the
tax exempt business; and
-- at least 90% of the profit of the property rental business
must be distributed.
The Directors intend that the Group should continue as a group
REIT for the foreseeable future, with the result that deferred tax
is no longer recognised on temporary differences relating to the
property rental business.
The asset management segment of the business continues to be
subject to tax.
The charge for current taxation is based on the results for the
year as adjusted for items which are non-assessable or disallowed.
It is calculated using rates that have been enacted or
substantively enacted by the statement of financial position date.
Tax payable upon realisation of fair value gains recognised in
prior periods is recorded as a current tax charge with a release of
the associated deferred tax.
Deferred tax is provided using the statement of financial
position liability method in respect of temporary differences
between the carrying amount of assets and liabilities in the
financial statements and the corresponding tax bases used in
computation of taxable profit with the exception of deferred tax on
fair value gains where the tax basis used is the historic cost.
Provision is made for temporary differences between the carrying
value of assets and liabilities in the consolidated financial
statements and the values used for tax purposes. Temporary
differences are not provided for when they arise from initial
recognition of assets and liabilities that do not affect accounting
or taxable profit.
When distributions are controlled by the Group, and it is
probable the temporary difference will not reverse in the
foreseeable future, deferred tax which would arise on the
distribution of profits realised in subsidiaries, associates and
joint ventures is not recognised.
Deferred tax is determined using tax rates that have been
enacted or substantially enacted by the statement of financial
position date and are expected to apply when the related deferred
tax asset is realised or the deferred tax liability is settled. It
is recognised in the consolidated income statement except when it
relates to items credited or charged directly to equity, in which
case the deferred tax is also dealt with in equity.
Deferred tax assets are recognised to the extent that it is
probable that future taxable profit will be available against which
the temporary differences can be utilised.
Deferred tax assets and liabilities are offset only when they
relate to taxes levied by the same authority, with a legal right to
set off and when the Group intends to settle them on a net
basis.
Financial guarantee contract
In accordance with IAS 39 'Financial Instruments: Recognition
and Measurement', a financial guarantee contract is defined as a
contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified
debtor fails to make payment when due in accordance with the
original or modified terms of a debt instrument. A financial
guarantee contract is initially recognised at fair value and
subsequently remeasured in accordance with IAS 37 ' Provisions,
Contingent Liabilities and Contingent Assets'.
Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is more
likely than not that an outflow of resources will be required to
settle the obligation, and the amount has been reliably
estimated.
(a) Onerous contracts
Provision is made in respect of costs incurred on vacant
leasehold properties or for leasehold properties sublet at a level
which renders the properties loss-making over the length of the
lease, being the net cash outflow committed to be incurred over the
lives of the leases. Any increase or decrease in the provision is
taken to the consolidated income statement for each financial
period. The provision is assessed on a property by property basis
taking account of individual cash flows. Cash flows are discounted
using the risk free rate.
(b) Dilapidations
Where the Group, as lessee, is contractually required to restore
a leased property to an agreed condition, prior to release by a
lessor, provision is made for such dilapidation costs as they are
identified.
Share-based payments
The cost of granting share options and other share based
remuneration to employees and directors is recognised through the
consolidated income statement with reference to the fair value at
the date of the grant. The Group has used the Black-Scholes option
valuation model and a stochastic model to establish the relevant
costs. The resulting values are amortised through the consolidated
income statement over the vesting period of the options and other
grants. The charge is reversed if it appears probable that
applicable performance criteria will not be met.
Own shares held in connection with employee share plans or other
share based payment arrangements are treated as treasury shares and
deducted from equity. No profit or loss is recognised in the
consolidated income statement on their sale, re-issue or
cancellation.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and is stated net of sales taxes and value
added taxes. Revenue includes 'Rental and similar income', 'Service
charge and similar income' and 'Revenue from asset management
activities'. Revenue is recognised as follows:
(a) Rental and similar income
Rental income from operating lease income is recognised on a
straight-line basis over the lease term.
When the Group provides incentives to its customers, the cost of
incentives are recognised over the lease term, on a straight-line
basis, as a reduction of rental income.
(b) Service charge and similar income
Service and management charge income is recognised on a gross
basis in the accounting period in which the services are rendered.
Where the Group is acting as an agent, the commission rather than
gross income is recorded as revenue.
(c) Revenue from asset management activities
Management fees earned are calculated on an accruals basis.
Asset management income is recognised in the accounting period in
which the services are rendered.
Performance fees are recognised, in line with the asset
management contracts, at the end of the performance period to which
they relate, based on the outperformance of relevant benchmarks.
The performance period is normally three years. Where performance
subsequently falls short of these benchmarks, fees are repayable,
up to the amount received for the previous two years. Where there
is a reasonable likelihood that part of a performance fee will be
repaid the estimated repayment will not be recognised until the
outcome can be reliably estimated.
Other income
(a) Income from investments
Dividend income from investments is recognised when the
shareholders' rights to receive payment have been established.
Distribution income from funds is recognised on an accruals
basis.
(b) Gains / losses from property disposals
Profits or losses arising from the sale of trading and
investment properties are included in the consolidated income
statement of the Group where an exchange of contracts has taken
place under which any minor outstanding conditions not affecting
the transfer of risks and rewards are entirely within the control
of the Group. Profits or losses arising from the sale of trading
and investment properties are calculated by reference to their
carrying value and are included in operating profit.
(c) Other interest income
Other interest income is accrued on a time basis, by reference
to the principal outstanding and the effective interest rate.
Leases
(a) A Group company is the lessee
(i) Operating lease - leases in which substantially all risks
and rewards of ownership are retained by another party, the lessor,
are classified as operating leases. Payments, including
prepayments, made under operating leases (net of any incentives
received from the lessor) are charged to the consolidated income
statement on a straight-line basis over the period of the
lease.
(ii) Finance lease - leases of assets where the Group has
substantially all the risks and rewards of ownership are classified
as finance leases. Finance leases are capitalised at the lease
commencement date at the lower of the fair value of the leased
property and the present value of the minimum lease payments. The
investment properties acquired under finance leases are carried at
their fair value.
The corresponding rental obligations, net of finance charges,
are included in current and non-current borrowings. The interest
element of the finance cost is charged to the consolidated income
statement over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability
for each period.
(b) A Group company is the lessor
(i) Operating lease - properties leased out under operating
leases are included in investment properties and investment
properties classified as held for sale in the consolidated
statement of financial position.
(ii) Finance lease - when assets are leased out under a finance
lease, the present value of the lease payments is recognised as a
receivable. The difference between the gross receivable and the
present value of the receivable accrues as finance income. Lease
income is recognised over the term of the lease using the net
investment method before tax, which reflects a constant periodic
rate of return.
Financial instruments and hedging activities
Derivatives
The Group may use derivatives to help manage its interest rate
risk. In accordance with its treasury policy, the Group does not
hold or issue derivatives for trading purposes.
Derivatives are initially recognised at fair value on the date a
derivative contract is entered into and are subsequently remeasured
at their fair value. The method of recognising the resulting gain
or loss depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being hedged.
None of the derivatives currently held are designated as hedging
instruments and accordingly any gain or loss is recognised in the
consolidated income statement in the period in which it arises.
Hedge accounting
The Group's derivative financial instruments do not qualify for
hedge accounting and changes in the fair value of derivative
financial instruments are recognised in the consolidated income
statement as they arise.
Financial assets
The Group classifies its financial assets in the following
categories: financial assets at fair value through the profit and
loss and loans and receivables. There are no held-to-maturity
investments and available-for-sale financial assets. The
classification depends on the purpose for which the investments
were acquired. Management determines the classification of its
investments at initial recognition and reviews this designation at
each reporting date.
Purchases and sales of investments are recognised on the trade
date; the date on which the Group commits to purchase or sell the
asset. Investments are initially recognised at fair value plus
transaction costs for all financial assets not carried at fair
value through profit or loss. Investments are derecognised when the
rights to receive cash flows from the investments have expired or
have been transferred and the Group has transferred substantially
all risks and rewards of ownership.
(a) Financial assets at fair value through the profit and loss
This category has two sub-categories: financial assets held for
trading, and those designated at fair value through the profit and
loss at inception. A financial asset is classified in the first
category if acquired principally for the purpose of selling in the
short term or if so designated by management. Derivatives are also
classified as held for trading unless they are designated as
hedges. Assets in the second category are classified as current
assets if they are expected to be realised within 12 months of the
statement of financial position date.
Realised and unrealised gains and losses arising from changes in
the fair value of the 'financial assets at fair value through the
profit and loss' category are included in the consolidated income
statement in the period in which they arise.
The fair values of listed investments are based on current bid
prices. If the market for a financial asset is not active (and for
unlisted securities), the Group establishes fair value by using
valuation techniques. These include the use of recent arm's length
transactions, reference to other instruments that are substantially
the same, discounted cash flow analysis and option pricing models
refined to reflect the issuer's specific circumstances. For
unlisted investments in shares, fair value is based on underlying
net assets. Changing the assumptions to other reasonably possible
alternative assumptions would not change the fair value
significantly. For investments in funds, fair value is measured as
the unit price of the holding at the statement of financial
position date.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They arise when the Group provides money, goods or services
directly to a debtor with no intention of trading the receivable.
They are included in current assets, except for maturities greater
than 12 months after the statement of financial position date.
These are classified as non-current assets. Loans and receivables
are included in trade and other receivables in the statement of
financial position.
The Group assesses at each statement of financial position date
whether there is objective evidence that a financial asset or a
group of financial assets is impaired.
Trade and other receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost, less provision for
impairment. A provision for impairment in trade receivables is
established when there is objective evidence that the Group will
not be able to collect all amounts due according to the original
terms of receivables. The amount of the provision is the difference
between the asset's carrying amount and the present value of
estimated future cash flows, discounted at the effective interest
rate. The changes to the provision are recognised in the
consolidated income statement.
Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently measured at amortised cost using the effective
interest method.
Investments in subsidiary undertakings
Investments in subsidiary undertakings are carried in the
company's statement of financial position at cost less any
provision for impairment.
Impairment
The carrying amounts of the Group's and Company's financial
assets (where applicable) and non-financial assets, other than
investment properties and investment properties classified as held
for sale, are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication
exists, the asset's recoverable amount is estimated. An impairment
loss is recognised in the consolidated income statement whenever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount of an asset is the greater of its fair value
less costs to sell and its value in use. The value in use is
determined as the net present value of the future cash flows
expected to be derived from the asset, discounted using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset.
Non-financial assets other than goodwill, which have suffered an
impairment are reviewed for possible reversal of the impairment at
each reporting date. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversedonly to the extent that the
asset's carrying amount after the reversal does not exceed the
amount that would have been determined, net of applicable
depreciation, if no impairment loss had been recognised.
Borrowings
Borrowings are initially recognised at the fair value of
consideration received, net of transaction costs incurred.
Borrowings are subsequently stated at amortised cost; any
difference between the proceeds (net of transaction costs) and the
redemption value is recognised in the consolidated income statement
over the period of the borrowings using the effective interest
method.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the statement of financial
position date.
Exit fees are accrued and recognised in the consolidated income
statement over the period of borrowing based on the position at the
balance sheet date.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax,
from the proceeds
Where any Group company purchases the Company's equity share
capital (treasury shares), the consideration paid, including any
directly attributable incremental costs, (net of tax) is deducted
from equity attributable to the Company's equity holders until the
shares are cancelled, reissued or disposed of. Where such shares
are subsequently sold or reissued, any consideration received, net
of any directly attributable incremental transaction costs and the
related income tax effects, are included in equity attributable to
the Company's equity holders.
Warrants reserve
Warrants issued are classified as non-distributable
reserves.
The Group issued warrants to two of its lenders entitling them
to subscribe for ordinary shares in the Group. These have been
accounted for at fair value on the date of issue
Critical accounting estimates and judgements
The preparation of the Consolidated Financial Statements
requires management to make estimates and assumptions that affect
the reported amounts of revenues, expenses, assets and liabilities,
and disclosure of contingencies at the date of the Consolidated
Financial Statements. If in the future such estimates and
assumptions, which are based on management's best judgement at the
date of the Consolidated Financial Statements, deviate from the
actual circumstances, the original estimates and assumptions will
be modified, as appropriate, in the period in which the
circumstances change. The following policies are considered to be
of greater complexity and / or particularly subject to the exercise
of judgement. These judgements involve assumptions or estimates in
respect of future events. Actual results may differ from
estimates.
(a) Financial guarantee contract
The Group statement of financial position includes financial
guarantee contracts in respect of debt liabilities, offset by the
net value of assets and liabilities transferred to the lenders
control and cash payments made against the debt. Judgement is
involved in assessing the amounts to be realised from the disposal
of assets which mainly comprise land and buildings valued at
expected sales proceeds less costs of sale, and also assessing the
likely full costs of discharging all residual liabilities.
(b) Provisions
The Group statement of financial position includes provisions in
respect of onerous lease contracts, dilapidations and other
property exposures. Judgement is involved in assessing the level of
future rental income and costs arising from the relevant properties
and the performance and longevity of sub-lease arrangements.
(c) Estimate of fair value of investment properties and
investment properties classified as held for sale
The best evidence of fair value is current prices in an active
market for similar lease and other contracts. In the absence of
such information, the Group determines the amount within a range of
reasonable fair value estimates, considering information from a
variety of sources including:
i) current prices in an active market for properties of a
different nature, condition or location (or subject to different
lease or other contracts), adjusted to reflect those
differences;
ii) recent prices of similar properties in less active markets,
with adjustments to reflect any changes in economic conditions
since the date of the transactions that occurred at those prices;
and
iii) discounted cash flow projections based on reliable
estimates of future cash flows, derived from the terms of any
existing lease and other contracts, and (where possible) from
external evidence such as current market rents for similar
properties in the same location and condition, and using discount
rates that reflect current market assessments of the uncertainty in
the amount and timing of the cash flows.
If information on current or recent prices of assumptions
underlying the discounted cash flow approach investment properties
is not available, the fair values of investment properties are
determined using discounted cash flow valuation techniques. The
Group uses assumptions that are mainly based on market conditions
existing at each statement of financial position date.
The principal assumptions underlying management's estimation of
fair value are those related to: the receipt of contractual
rentals; expected future market rentals; void periods; maintenance
requirements; and appropriate discount rates. These valuations are
regularly compared to actual market yield data and actual
transactions by the company and those reported by the market.
The expected future market rentals are determined on the basis
of current market rentals for similar properties in the same
location and condition.
2. Discontinued operations
The Group's debt facilities matured on 31 December 2012 and, as
previously anticipated, the Group was unable to meet repayment
obligations at that date. The lenders have reserved their rights
whilst negotiations continue, but there can be no certainty as to
the final outcome.
From the Group's perspective, the ultimate aim of these
negotiations is to complete the disposal of the investment property
business and continue thereafter as an asset management business,
initially based on the asset management contracts for the Ashtenne
Industrial Fund and the Apia Regional Offices Fund.
The Group agreed with its lenders last year to market and
dispose of secured properties in order to repay some of the
outstanding debt. In accordance with IFRS 5 'Non-current Assets
Held for Sale and Discontinued Operations', the assets and
liabilities, comprehensive income and cash flows of the companies
which own these properties are presented as discontinued
operations.
On 17 August 2012, joint fixed charge receivers were appointed
over the assets of Warner Estate Investment Limited and Warner
Estate Development (Folkestone) Limited. The joint fixed charge
receivers are responsible for the financial and operating policies
of the companies, in order to realise value through the disposal of
the assets. This has resulted in a loss of control by the Group and
in accordance with IAS 27 'Consolidated and Separate Financial
Statements', the assets and liabilities have been derecognised from
the consolidated financial statements. The comprehensive income and
cash flows to 17 August 2012 have been presented in discontinued
operations. GBP48.7million was provided for as a financial
guarantee contract arising from the group cross guarantee and being
the estimated fair value of the residual amount of that lender's
loan at 17 August 2012, after deducting the other assets and
liabilities which have been derecognised, which is considered to be
an on going liability of the Group. An updated evaluation at 31
March 2013 has increased this liability by GBP14.7million.
On 19 March 2013 control of JSE Developments Limited was ceded
to one of the lenders, as an alternative to them exercising their
right to appoint a fixed charge receiver. The previous directors
resigned from the company and were replaced by appointees of the
lender with the objective of disposing of the remaining assets. In
accordance with IAS 27 'Consolidated and Separate Financial
Statements', the assets and liabilities have been derecognised from
the consolidated financial statements. The comprehensive income and
cash flows to 19 March 2013 have been presented in discontinued
operations and GBP8.8million of net assets have been offset against
the financial guarantee contract as described above. On 23 May
2013, after the year end, the same process has been applied to
Warner Estate, Limited as control of this company has been lost as
at that date.
A payment of GBP1.4million was made to the same lender in the
year, by another subsidiary company. This was also offset against
the financial guarantee contract, giving it a total estimated
liability of GBP53.2million, as at 31 March 2013.
The Group continues negotiations with the lenders in relation to
the remaining assets over which they have security. The associated
assets and liabilities, comprehensive income and cash flows of the
companies that own these properties are presented as discontinued
operations.
On 30 August 2012, at a meeting of the members of Principal
Leasehold Properties Limited, a group company with a number of
onerous leases assigned to it, resolutions were passed to wind up
the company voluntarily and to appoint joint liquidators for this
purpose. This has resulted in a loss of control by the Group and in
accordance with IAS 27 'Consolidated and Separate Financial
Statements', the assets and liabilities of this company have been
derecognised from the consolidated financial statements. The
comprehensive income and cash flows to 30 August 2012 have been
presented in discontinued operations. GBP3.2 million has been
provided for in continuing operations, being the estimate of the
liability of the onerous lease portfolio, which will remain a
liability of the parent company until settled or discharged.
The post tax loss of discontinued operations has been disclosed
in the consolidated income statement, with comparison against prior
periods.
The cash flows of discontinued operations have been presented in
the consolidated cash flow statement and note 31.
The following table presents the assets and liabilities of the
various disposal groups within Warner Estate Holdings PLC,
classified as assets and liabilities held for sale in the
consolidated statement of financial position.
31 March 2013
------------------------------------------ --------------
GBPm
Assets of disposal group classified
as held for sale
Investment properties classified as
held for sale 0.3
Trade and other receivables 0.3
Cash and cash equivalents 0.2
------------------------------------------ --------------
0.8
------------------------------------------ --------------
Liabilities of disposal group classified
as held for sale
Borrowings, including finance leases (50.2)
Trade and other payables (6.3)
(56.5)
------------------------------------------ --------------
Net liabilities classified as held
for sale (55.7)
------------------------------------------ --------------
The investment properties reported above have a cost of
GBP1.3million and are used as security against Group loans.
Following the year end, on 18 June 2013, one lender agreed to
release the relevant Group subsidiary, Lancaster Investments
Limited, from all of its obligations to that lender, including
outstanding debt and accrued interest of GBP23.2 million. The
release is conditional on the appointment of a liquidator to
Lancaster Investments Limited and will reduce the net liabilities
classified as held for sale reported above.
3. Segmental Reporting
Business Segments
Operating segments are determined based on the internal
reporting and operational management of the Group. The Group is
organised into Asset Management, Investment in Funds, Discontinued
Property Investment and Unallocated and Other Continuing
Activities.
Asset Management involves managing property assets and receiving
a contractual fee for the service. Investment in Funds represents
income distributions to the Group and fair value gains and losses
to the investments. Discontinued Property Investment principally
involved engaging in acquiring freehold or leasehold properties in
the UK. Unallocated and Other Continuing Activities includes
residual income and costs from ongoing property investment
activities and fair value adjustments to unlisted investments and
the financial guarantee contract , neither of which are directly
nor reasonably attributable to the individual segments.
Asset Management Investment Discontinued Unallocated
(continuing) in Funds Property and Other Total
(continuing) Investment Continuing
Activities
------------------- ----------------------- -------------- ---------------------- ------------ ------------------
GBPm GBPm GBPm GBPm GBPm
Year ended 31
March 2013
Rental and similar
income - - 6.9 0.5 7.4
Property
management
expenses - - (0.7) (0.5) (1.2)
Service charge and
similar
income - - 1.5 - 1.5
Service charge
expense and
similar charges - - (2.0) - (2.0)
------------------- ----------------------- -------------- ---------------------- ------------ ------------------
Net rental income - - 5.7 - 5.7
Asset management
fee income 7.7 - - - 7.7
Asset management
expenses (7.2) - - - (7.2)
Other operating
expenses (0.6) - (0.5) - (1.1)
------------------- ----------------------- -------------- ---------------------- ------------ ------------------
Operating profit
before movements
on investments (0.1) - 5.2 - 5.1
Net loss from fair
value adjustments
on investment
properties - - (0.1) - (0.1)
Net loss from fair
value adjustments
on investments - (9.6) - (0.2) (9.8)
Loss on sale of
investment
properties - - (11.5) - (11.5)
Impairment of
goodwill (0.3) - - (0.3)
------------------- ----------------------- -------------- ---------------------- ------------ ------------------
Operating loss (0.4) (9.6) (6.4) (0.2) (16.6)
Net interest
expense - 1.0 (7.1) - (6.1)
Fair value
increase in
financial
guarantee
contract - - - (14.7) (14.7)
------------------- ----------------------- -------------- ---------------------- ------------ ------------------
Loss before income
tax (0.4) (8.6) (13.5) (14.9) (37.4)
------------------- ----------------------- -------------- ---------------------- ------------ ------------------
Taxation - current - - - - -
Taxation - - - - - -
deferred
------------------- ----------------------- -------------- ---------------------- ------------ ------------------
Loss for the year (0.4) (8.6) (13.5) (14.9) (37.4)
------------------- ----------------------- -------------- ---------------------- ------------ ------------------
Total assets 1.5 24.4 0.8 1.4 28.1
Total liabilities
excluding
borrowings and
finance leases (0.9) - (6.3) (58.2) (65.4)
Borrowings,
including finance
leases - - (50.2) - (50.2)
------------------- ----------------------- -------------- ---------------------- ------------ ------------------
Net assets /
(liabilities) 0.6 24.4 (55.7) (56.8) (87.5)
------------------- ----------------------- -------------- ---------------------- ------------ ------------------
(a) Rents receivable includes GBPNil (2012: GBP1.0million) which
represents rent allocated to rent free periods.
(b) Service charge and similar income includes monies received
from tenants in respect of service charge costs the tenants bear on
their properties. Service charge costs not recovered ("void costs")
are included within service charge expense and similar charges of
GBP0.6million (2012: GBP0.9million).
Asset Management Investment Discontinued Unallocated
(continuing) in Funds Property and Other Total
(continuing) Investment Continuing
Activities
--------------- ----------------------- ------------- ---------------------- ------------------------ ------------------
GBPm GBPm GBPm GBPm GBPm
Year ended 31
March 2012
Rental and
similar
income - - 16.8 0.5 17.3
Property
management
expenses - - (5.1) (0.2) (5.3)
Service charge
and similar
income - - 3.9 - 3.9
Service charge
expense and
similar
charges - - (4.8) - (4.8)
--------------- ----------------------- ------------- ---------------------- ------------------------ ------------------
Net rental
income - - 10.8 0.3 11.1
Asset
management
fee income 8.3 - - - 8.3
Asset
management
expenses (7.0) - - - (7.0)
Other
operating
expenses (0.6) - (0.1) - (0.7)
--------------- ----------------------- ------------- ---------------------- ------------------------ ------------------
Operating
profit before
movements
on
investments 0.7 - 10.7 0.3 11.7
Net loss from
fair value
adjustments
on investment
properties - - (21.0) - (21.0)
Net loss from
fair value
adjustments
on
investments - (4.2) - - (4.2)
Loss on sale
of investment
properties - - (3.9) - (3.9)
Impairment of
goodwill (2.0) - - - (2.0)
--------------- ----------------------- ------------- ---------------------- ------------------------ ------------------
Operating loss (1.3) (4.2) (14.2) 0.3 (19.4)
Net interest
expense - 1.0 (20.3) 0.1 (19.2)
--------------- ----------------------- ------------- ---------------------- ------------------------ ------------------
Loss before
income tax (1.3) (3.2) (34.5) 0.4 (38.6)
--------------- ----------------------- ------------- ---------------------- ------------------------ ------------------
Taxation -
current (0.1) - - - (0.1)
Taxation - - - - - -
deferred
--------------- ----------------------- ------------- ---------------------- ------------------------ ------------------
Loss for the
year (1.4) (3.2) (34.5) 0.4 (38.7)
--------------- ----------------------- ------------- ---------------------- ------------------------ ------------------
Total assets 2.2 33.9 167.8 11.4 215.3
Total
liabilities
excluding
borrowings
and finance
leases (0.9) - (27.4) (4.1) (32.4)
Borrowing,
including
finance
leases - (0.2) (232.9) - (233.1)
--------------- ----------------------- ------------- ---------------------- ------------------------ ------------------
Net assets /
(liabilities) 1.3 33.7 (92.5) 7.3 (50.2)
--------------- ----------------------- ------------- ---------------------- ------------------------ ------------------
Other segment
items:
Capital
expenditure - - 0.4 - 0.4
--------------- ----------------------- ------------- ---------------------- ------------------------ ------------------
4. Employees
2013 2012
GBPm GBPm
----------------------- ----- -----
Staff costs
Wages and salaries 3.6 4.5
Social security costs 0.4 0.3
Other pension costs 0.3 0.5
Other staff costs 0.3 0.2
4.6 5.5
----------------------- ----- -----
The amounts above are net of GBP0.8million (2012: GBP0.9million)
relating to staff costs recharged to certain joint ventures and
funds.
2013 2012
Number Number
---------------------------------------- ------- -------
The average number of persons employed
during the year was:
Directors 2 2
Management and administrative 93 104
Repairs and service 17 24
---------------------------------------- ------- -------
112 130
---------------------------------------- ------- -------
Retirement Benefit Obligations
The Group operates and contributes to pension schemes for
certain Directors and employees and makes some discretionary
allowances. The costs charged to the consolidated income statement
for the year to 31 March 2013 in respect of these amounted to
GBP0.3million (2012: GBP0.5million). Pension premiums paid in
advance were GBPNil (2012: GBPNil).
The Group has a closed funded defined benefit scheme in the UK,
The Warner Estate Group Retirement Benefits Scheme. There is one
member and one deferred member and the costs charged to the
consolidated income statement for the year to 31 March 2013 in
respect of these amounted to GBPNil (2012: GBPNil). A full
valuation was carried out at 31 March 2013 by a qualified
independent actuary.
It has been agreed with the Trustees in March 2013, that the
Group will cease contributions (2012: GBP0.2million).
The discount rate used to calculate the funding target is equal
to the yield on fixed interest gilts of appropriate term at the
valuation date plus 2% per annum for active and deferred members
over the period to retirement. The inflation assumption is derived
from the difference between the yield on fixed interest gilts and
the yield on indexed-linked gilts at the valuation date.
Warner Estate Holdings PLC employs a building block approach in
determining the long term rate of return on pension plan assets.
Historical markets are studied and assets with higher volatility
are assumed to generate higher returns consistent with widely
accepted capital market principles. The assumed long-term rate of
return on each asset class is set out within this note. The overall
expected rate of return on assets is then derived by aggregating
the expected return for each asset class over the actual asset
allocation for the Scheme as at 31 March 2013.
Actuarial gains and losses are recognisedthrough the
consolidated statement of comprehensive income.
The following assumptions were made by the Group:
2013 2012
% per % per annum
annum
------------------------------------------ ------- ------------
Discount rate 4.40 4.75
Rate of increase in pensionable salaries 3.60 3.55
Rate of increases to pensions in payment 3.40 3.35
Price inflation 3.60 3.55
Mortality assumptions are based on standard mortality tables
which allow for future mortality improvements. The assumptions are
that a member currently aged 60 will live on average for a further
29 years if they are male and for a further 30 years if they are
female. For a member who retires in future at age 60 the
assumptions are that they will live on average for a further 31
years after retirement if they are male and for a further 32 years
after retirement if they are female.
The market value of the assets of the Scheme together with the
expected rates of return at the beginning and end of the year were
as follows:
Long-term Value Long-term Value
rate of at 31 rate of at 31
return March return March
expected 2013 expected 2012
at 31 at 31
March March
2013 2012
% GBPm % GBPm
--------------------------------- ---------- ------- ---------- -------
Equities 6.80 0.8 7.30 0.8
Fixed interest government bonds 2.80 0.1 3.10 -
Fixed interest corporate bonds 4.10 0.1 3.90 0.1
Insured assets 4.40 5.8 4.75 5.5
Cash 0.90 0.1 1.70 0.1
--------------------------------- ---------- ------- ---------- -------
Total 5.80 6.9 6.20 6.5
--------------------------------- ---------- ------- ---------- -------
None of the Scheme assets are property related.
Reconciliation of Funded Status to Statement of Financial
Position
Value at Value at
31 March 31 March
2013 2012
GBPm GBPm
--------------------------------------- ---------- ----------
Fair value of Scheme assets 6.9 6.5
Present value of non-insured defined
benefit of obligations (1.3) (1.6)
Liability in respect of insured
pensioners (5.8) (5.5)
--------------------------------------- ---------- ----------
Liability recognised in the statement
of financial position (0.2) (0.6)
Related deferred tax asset - 0.1
--------------------------------------- ---------- ----------
Net pension liability (0.2) (0.5)
--------------------------------------- ---------- ----------
Changes to the Present Value of the Defined Benefit
Obligation
2013 2012
GBPm GBPm
----------------------------------------- ------ ------
Opening defined benefit obligation 7.1 6.6
Interest cost 0.3 0.4
Actuarial losses on Scheme liabilities* 0.3 0.5
Net benefits paid out (0.6) (0.4)
----------------------------------------- ------ ------
Closing defined benefit obligation 7.1 7.1
----------------------------------------- ------ ------
*Includes changes to the actuarial assumptions.
Changes to the Fair Value of Scheme Assets
2013 2012
GBPm GBPm
------------------------------------- ------ ------
Opening fair value of Scheme assets 6.5 6.0
Expected return on assets 0.3 0.4
Actuarial gains on Scheme assets 0.5 0.2
Contributions by the employer 0.2 0.3
Net benefits paid out (0.6) (0.4)
------------------------------------- ------ ------
Closing fair value of Scheme assets 6.9 6.5
------------------------------------- ------ ------
Actual Return on Scheme Assets
2013 2012
GBPm GBPm
---------------------------------- ----- -----
Expected return on Scheme assets 0.3 0.4
Actuarial gains on Scheme assets 0.5 0.2
---------------------------------- ----- -----
Actual return on Scheme assets 0.8 0.6
---------------------------------- ----- -----
Analysis of Consolidated Income Statement Charge
2013 2012
GBPm GBPm
---------------------------------------------------- ------- ------
Current service cost - -
Interest cost 0.3 0.4
Expected return on Scheme assets (0.3) (0.4)
---------------------------------------------------- ------- ------
Amount recognised in consolidated income statement - -
---------------------------------------------------- ------- ------
Current service cost is recognised within property management
and asset management expenses. Interest cost and expected return on
Scheme assets are recognised in finance income.
Analysis of Amounts Recognised in Consolidated Statement of
Comprehensive Income
2013 2012
GBPm GBPm
-------------------------------------------------------- ------ ------
Total actuarial gains / (losses) 0.2 (0.2)
Related deferred tax (0.1) (0.1)
-------------------------------------------------------- ------ ------
Total gain / (loss) in consolidated statement of
comprehensive income 0.1 (0.3)
-------------------------------------------------------- ------ ------
Cumulative amount of losses recognised in consolidated
statement of comprehensive income (1.4) (1.5)
-------------------------------------------------------- ------ ------
History of Asset Values, Defined Benefit Obligation, Deficit in
Scheme and Experience Gains and Losses
2013 2012 2011 2010 2009
GBPm GBPm GBPm GBPm GBPm
----------------------------- ------ ------ ------ ------ ------
Fair value of Scheme
assets 6.9 6.5 6.0 5.9 5.1
Defined benefit obligation (7.1) (7.1) (6.6) (6.7) (6.0)
Deficit in Scheme (0.2) (0.6) (0.6) (0.8) (0.9)
Experience gains / (losses)
on Scheme assets 0.5 0.3 (0.1) 0.6 (0.3)
Experience gains / (losses)
on Scheme liabilities 0.1 - (0.1) 0.1 (0.2)
----------------------------- ------ ------ ------ ------ ------
The estimated amounts of contributions expected to be paid to
the Scheme during the year to March 2014 are GBPNil (2012:
GBP0.2million).
5. Directors' Remuneration
A summary of Directors' remuneration, including disclosures
required by the Companies Act 2006 and those specified by the
Financial Conduct Authority, is contained in the Directors'
Remuneration Report on pages 12 to 17.
6. Auditors' Remuneration
During the year the following amounts were charged to the
consolidated statement of income in respect of auditors'
remuneration:
2013 2012
GBPm GBPm
------------------------------------------------- ----- -----
Remuneration to the principal auditor
in respect of audit fees:
Statutory audit of the company and consolidated
accounts 0.1 0.2
Remuneration to the principal auditor
in respect of other services:
Statutory audit of subsidiary accounts - 0.2
Non-audit services: Taxation - 0.1
------------------------------------------------- ----- -----
0.1 0.5
------------------------------------------------- ----- -----
The 2012 figures relate to fees charged by the previous
auditors.
7. Finance Income
2013 2012
GBPm GBPm
------------------------------------------ ------ ------
Income from investments
Distributions from funds (see note
17) 1.0 1.0
Other - 0.1
Other finance income
------ ------
Expected return on pension scheme
assets 0.3 0.4
Interest on pension scheme liabilities (0.3) (0.4)
------ ------
- -
------------------------------------------ ------ ------
1.0 1.1
------------------------------------------ ------ ------
Dividends from listed investments, unlisted investments and
distributions from funds represent income from financial assets at
fair value through profit and loss.
8. Finance expense for discontinued operations
2013 2012
--------------------------------------- ----- -----
GBPm GBPm
Interest payable on bank loans
and overdrafts 7.1 14.7
Accrued exit fees - 1.2
Termination of derivative financial
instruments - 2.9
Charges in respect of cost of raising
finance 0.4 2.8
--------------------------------------- ----- -----
7.5 21.6
Other interest payable - 0.5
--------------------------------------- ----- -----
7.5 22.1
Interest payable under finance
leases 0.1 0.3
--------------------------------------- ----- -----
7.6 22.4
--------------------------------------- ----- -----
Interest payable on loans and overdrafts, accrued exit fees and
charges in respect of raising finance represent expenses on
financial liabilities at amortised cost.
9. Taxation
2013 2012
GBPm GBPm
------------------------------- ------ -----
Current tax
UK corporation tax:
Current at 24% (2012: 26%) - -
Underprovision in respect
of prior year's tax charge - 0.1
------------------------------- ------ -----
- 0.1
Deferred taxation (note 23) - -
- 0.1
-------------------------------------- -----
The tax on the group's loss before
income tax differs from the theoretical
amount that would arise using the weighted
average tax rate applicable to profits
or losses of the consolidated entities
as follows: 2013 2012
GBPm GBPm
--------------------------------------------------- ------- -------
Loss on ordinary activities before
income tax (37.4) (38.6)
------- -------
Tax at 24% (2012: 26%) (9.0) (10.0)
Effect of REIT exemption
------- -------
Net operating losses after net finance
costs 0.5 2.5
Realised loss on disposal of investment
properties 2.8 1.0
Fair value losses on investment properties - 5.5
3.3 9.0
Losses carried forward, no deferred
tax asset provided 1.1 0.2
Gains not subject to tax (1.3) (0.3)
Impairment of goodwill not subject
to tax 0.1 0.5
Fair value gains on derivative financial
instruments (0.1) (0.5)
Fair value losses on investments 2.3 1.1
Fair value losses on financial guarantee 3.6 -
contract
Underprovision in respect of prior
years - 0.1
- 0.1
--------------------------------------------------- ------- -------
The standard rate of Corporation Tax in the UK changed from 26%
to 24% with effect from 1 April 2012. Accordingly, the company's
profits for this accounting period are taxed at an effective rate
of 24%.
10. Loss of Warner Estate Holdings PLC
The Company has taken advantage of the exemption provided by
Section 408 of the Companies Act 2006 from presenting its own
income statement. Loss attributable to members includes GBP125.0
million (2012: GBP39.0 million loss) which has been dealt with in
the accounts of the Company.
11. Dividends
Group and Company 2013 2012
GBPm GBPm
---------------------- ----- -----
On Ordinary 5p shares - -
- -
---------------------- ----- -----
No final dividend is proposed by the Board.
12. Earnings Per Share
Basic losses per share on continuing operations of 43.7p (2012:
7.7p) are calculated on the loss for the period from continuing
operations of GBP23.9million (2012: GBP4.2million) and the weighted
average of 54,692,155 (2012: 55,180,538) shares in issue throughout
the period.
Basic losses per share on discontinued operations of 24.7p
(2012: 62.5p) are calculated on the loss for the period from
discontinued operations of GBP13.5million (2012: GBP34.5million)
and the weighted average of 54,692,155 (2012: 55,180,538) shares in
issue throughout the period.
Total basic losses per share of 68.4p (2012: losses 70.2p) are
calculated on the loss for the period of GBP37.4million (2012: loss
GBP38.7million) and the weighted average of 54,692,155 (2012:
55,180,538) shares in issue throughout the period.
Dilution by employee incentive shares and share warrants would
decrease the loss per share, so only the basic loss per share has
been reported.
13. Goodwill
2013 2012
----------------------------- ------- -------
GBPm GBPm
----------------------------- ------- -------
Group
Cost
Closing balance at 31 March 11.2 11.2
----------------------------- ------- -------
Impairment
Opening balance at 1 April (10.4) (8.4)
Charge for the year (0.3) (2.0)
----------------------------- ------- -------
Closing balance at 31 March (10.7) (10.4)
----------------------------- ------- -------
Net book value at 31 March 0.5 0.8
----------------------------- ------- -------
Goodwill is not amortised but is subject to an half yearly
impairment test. Goodwill of GBP0.5million is derived from the cash
generating unit ("CGU") defined as the asset management business of
Ashtenne Asset Management 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 10 % 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.
14. Investment Properties
Freehold Leasehold Total Investment
with over Properties
50 years
unexpired
---------------------------------------- --------- ----------- -----------------
GBPm GBPm GBPm
At 1 April 2012 94.7 67.0 161.7
Disposals (44.5) (53.1) (97.6)
Assets derecognised on appointment
of joint fixed charge receivers (note
2) (44.9) (9.4) (54.3)
Assets derecognised on appointment
of independent directors (note 2) (4.9) (4.5) (9.4)
Assets transferred to disposal group
(note 2) (0.3) - (0.3)
Net loss from fair value adjustments
on investment property (0.1) - (0.1)
At 31 March 2013 - - -
---------------------------------------- --------- ----------- -----------------
Investment properties have been analysed between non-current and
held for sale as follows:
31 March 31 March
2013 2012
-------------------------------- ---------- ---------
GBPm GBPm
Non-current - 70.9
Investment properties held for
sale - 90.8
- 161.7
------------------------------------------- ---------
All repairs and maintenance costs are charged to the
consolidated income statement during the financial period in which
they are incurred. Therefore, no costs in respect of repairs and
maintenance are included within the above figures (2012:
GBPNil).
On an historical cost basis the investment properties which have
been included above at valuation would have been shown at cost as
GBPNil (2012: GBP251.7million).
Investment properties valued at GBPNil (2012: GBP162.1million)
are used as security for Group loans.
The remaining property asset under the charge of this lender was
disposed of on 8 May 2013, which means that the Group has disposed
of all property assets under its control.
15. Plant and Equipment
2013 2012
GBPm GBPm
----------------------------- ----- -----
Group
Cost
Opening balance at 1 April 0.5 0.5
Closing balance at 31 March 0.5 0.5
----------------------------- ----- -----
Accumulated depreciation
Opening balance at 1 April 0.4 0.4
Charge for year 0.1 -
Closing balance at 31 March 0.5 0.4
----------------------------- ----- -----
Net book value at 31 March - 0.1
----------------------------- ----- -----
Plant and equipment include fixtures, fittings and
equipment.
16. Investments in Joint Ventures
Investments in joint ventures have been fully written down in
prior years and there have been no movements in the current or
comparative year.
The Group disposed of its 50% equity interest in Agora Shopping
Centres Limited in the year. Agora Max Limited and Greater London
Office Limited are dormant, did not hold any property assets in the
year or provide any income to the group.
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 Agora Greater Total
Shopping Max London
Centres Limited Offices
Limited Limited
GBPm GBPm GBPm GBPm
----------------------------- ---------- --------- --------- ------
Amounts receivable by Group
Year ended 31 March 2013
Asset management fees 0.7 - - 0.7
----------------------------- ---------- --------- --------- ------
Year ended 31 March 2012
Asset management fees 0.7 0.7 0.1 1.5
----------------------------- ---------- --------- --------- ------
17. Investments in Funds
Group 2013 2012
GBPm GBPm
-------------------------------------- ------ ------
As at 1 April 33.8 38.0
Net loss from fair value adjustments (9.6) (4.2)
-------------------------------------- ------ ------
At 31 March 24.2 33.8
-------------------------------------- ------ ------
Fund Information:
------------------------------ ------ ------- ------
AIF Apia Total
(a) (b)
GBPm GBPm GBPm
------------------------------ ------ ------- ------
Year to 31 March 2013
Distributions receivable - 1.0 1.0
------------------------------ ------ ------- ------
Net assets at 31 March 2013 204.7 62.3
Percentage share at 31 March
2013 5.28% 21.57%
Group share of net assets 10.8 13.4 24.2
Fund Information:
------------------------------ ------ ------- ------
AIF Apia Total
(a) (b)
GBPm GBPm GBPm
------------------------------ ------ ------- ------
Year to 31 March 2012
Distributions receivable 0.4 0.6 1.0
------------------------------ ------ ------- ------
Net assets at 31 March 2012 220.0 90.6
Percentage share at 31 March
2012 6.52% 21.57%
Group share of net assets 14.3 19.5 33.8
(a) The Group invested GBP12million in the Ashtenne Industrial
Fund in August 2005 and a GBP23.1million investment was acquired on
the purchase of the remaining 50% of Industrial Funds Limited.
(b) Apia was set-up on 7 June 2005 and the Group invested an initial GBP44.1million. A further GBP10.0million was invested in December 2005, of which GBP0.9million was disposed of in March 2006, and GBP0.4million in May 2006. It is treated as an investment rather than an associate as the Group does not have the power to exert significant control, as a Trustee, which is independent of the Group, is responsible for the strategic decisions of the unit trust.
One lender has a combination of a charge and a negative pledge
over the units held in AIF, which are valued at GBP10.8million
(2012: GBP14.3million).
Another lender has a charge over the units in Apia, which are
valued at GBP13.4million (2012: GBP19.5million) and held in Warner
Estate, Limited. Following the year end, on 23 May 2013, third
party directors were appointed to this company. In accordance with
IAS 27 'Consolidated and Separate Financial Statements', the assets
and liabilities will be derecognised from the consolidated
financial statements and the net assets will be offset against the
financial guarantee contract, in the Annual Report and Accounts for
2014.
18. Investments in Unlisted Shares
Group Company
2013 2012 2013 2012
GBPm GBPm GBPm GBPm
----------------------------- ----- ----- ----- -----
Subsidiary undertakings (a) - - - 40.6
Unlisted investments (b) 0.1 0.3 - -
----------------------------- ----- ----- ----- -----
0.1 0.3 - 40.6
----------------------------- ----- ----- ----- -----
(a) Shares in Subsidiary Undertakings (company only)
2013 2012
GBPm GBPm
------------- ------- -------
Cost
At 1 April 40.6 62.4
Additions 56.9 -
Impairments (97.5) (21.8)
At 31 March - 40.6
------------- ------- -------
Investments are reviewed at least annually for impairment. Where
there exists an indication of impairment an assessment of the
recoverable amount is performed. The recoverable amount is based on
the higher of the investments continued value in use or its fair
value less cost to sell. The impairment charge taken above arose
due to the carrying value of the asset exceeding its recoverable
amount. This was determined based on the assets' fair value less
cost to sell. Fair value is derived from the subsidiaries' net
asset value at the statement of financial position date. Please
refer to note 34 for further information on subsidiary
undertakings.
(b) Unlisted Investments
Group Company
2013 2012 2013 2012
GBPm GBPm GBPm GBPm
----------------------- ------ ----- ----- -----
At 1 April 0.3 0.3 - -
Fair value adjustment (0.2) - - -
----------------------- ------ ----- ----- -----
At 31 March 0.1 0.3 - -
----------------------- ------ ----- ----- -----
19. Trade and Other Receivables
Group Company
------------------------- ------------ ------------
2013 2012 2013 2012
GBPm GBPm GBPm GBPm
------------------------- ----- ----- ----- -----
Current assets:
Trade receivables 0.7 0.9 - -
Amounts owed by Group
undertakings - - - 48.8
Other receivables - 1.5 - -
Prepayments and accrued
income 0.6 2.7 0.1 0.1
------------------------- ----- ----- ----- -----
1.3 5.1 0.1 48.9
------------------------- ----- ----- ----- -----
Non-current assets:
Other receivables - 3.6 - -
------------------------- ----- ----- ----- -----
Total trade and other
receivables 1.3 8.7 0.1 48.9
------------------------- ----- ----- ----- -----
Other receivables include rent deposits from tenants of GBPNil
(2012: GBP0.3million) used as collateral. In the event of tenant
default, these rent deposits can be offset against any outstanding
debts.
Amounts owed by Group undertakings are unsecured and have no
fixed date of repayment. They are interest free except for interest
recharges for REIT compliance purposes; to ensure the interest
charge is in the correct group entity.
Amounts owed byGroup undertakings are reviewed at least annually
for impairment. Where there exists an indication of impairment an
assessment of the recoverable amount is performed. The recoverable
amount is based on the fair value which is derived from the Group
undertakings' net asset value and their ability to repay their
debts. An impairment of GBP97.5million (2012: GBP18.6million) has
been taken to the Company's income statement during the year
against amounts owed by Group undertakings.
20. Borrowings, Including Finance Leases
Group Company
----------------------------------- ---------------------------- --------------------
31 March 31 March 31 March 31 March
2013 2012 2013 2012
----------------------------------- ----------------- --------- --------- ---------
GBPm GBPm GBPm GBPm
Amounts falling due after more
than one year:
Finance lease obligations - 3.8 - -
- 3.8 - -
----------------------------------- ----------------- --------- --------- ---------
Amounts falling due within one
year:
Bank loans - continuing operations - 229.4 - -
Future finance costs - continuing - (0.3) - -
operations
----------------------------------- ----------------- --------- --------- ---------
- 229.1 - -
----------------------------------- ----------------- --------- --------- ---------
Bank loans
------------------------------------- -----------
GBPm
At 31 March 2012 229.1
Bank loan derecognised on 17 August
2012 (note 2) (94.0)
Repayment of bank loans (87.9)
Payment in kind interest rolled
into principal 2.7
Amortisation of future finance
costs 0.3
Liability transferred to disposal
group (note 2) (50.2)
At 31 March 2013 -
------------------------------------- -----------
21. Finance Lease Obligations
Group
2013 2012
Minimum Future Present Minimum Future Present
lease payments finance value of lease payments finance value
under finance charges minimum under finance charges of minimum
leases on finance finance leases on finance finance
leases lease obligations leases lease
obligations
GBPm GBPm GBPm GBPm GBPm GBPm
------------- ----------------- ------------- -------------------- ---------------- ------------ -------------
Within one
year - - - 0.3 (0.3) -
Between
two
and five
years - - - 1.0 (1.0) -
Later than
five years - - - 25.5 (21.7) 3.8
Total - - - 26.8 (23.0) 3.8
------------- ----------------- ------------- -------------------- ---------------- ------------ -------------
The fair value of the Group's finance lease obligations
approximate to the carrying value.
Finance lease obligations are in respect of leasehold investment
properties.
Finance lease liabilities are effectively secured as the rights
to the leased asset revert to the lessor in the event of
default.
22. Financial Risk Management
The three loan facilities within the Group matured on 31
December 2012 and the lenders have issued letters reserving their
rights.
Treasury Policy
The Group enters into derivative transactions such as interest
rate swaps and caps in order to manage the financial risks arising
from the Group's activities. The main financial risks arising from
the Group's financing structure are liquidity risk and interest
rate risk. The policies for managing each of these risks and the
principal effects of these policies on the results for the year are
set out below.
Liquidity Risk
The Group's policy is to ensure that there are always sufficient
working capital facilities available to meet the requirements of
the business, through efficient treasury and cash management and
strict credit control.
Under the debt facility documents, the lenders each have sole
signatory rights to the rent accounts for each borrower. The
lenders are obliged to ensure that any balances in the rent
accounts are available for the borrower to settle on going
operational liabilities as and when they fall due once any interest
and debt amortisation liabilities have been settled.
The tables below set out the maturity analysis of the Group's
financial liabilities based on undiscounted contractual
obligations.
Group - Continuing
2013 Less than 1 to 2 2 to 5 Over 5 Total
1 year years years years
GBPm GBPm GBPm GBPm GBPm
--------------------- ---------- ------- ------- ------- ------
Trade and other
payables 2.5 - - - 2.5
Financial guarantee
contract 53.2 - - - 53.2
--------------------- ---------- ------- ------- ------- ------
55.7 - - - 55.7
--------------------- ---------- ------- ------- ------- ------
Group - Discontinued
2013 Less than 1 to 2 2 to 5 Over 5 Total
1 year years years years
GBPm GBPm GBPm GBPm GBPm
---------------------- ---------- ------- ------- ------- ------
Trade and other
payables(1) 6.3 - - - 6.3
Bank loans and
overdrafts 50.2 - - - 50.2
---------------------- ---------- ------- ------- ------- ------
56.5 - - - 56.5
---------------------- ---------- ------- ------- ------- ------
Group
2012 Less than 1 to 2 2 to 5 Over 5 Total
1 year years years years
GBPm GBPm GBPm GBPm GBPm
------------------------ ----------- ------- ------- ------- ------
Bank loans and
overdrafts 229.4 - - - 229.4
Trade and other
payables(1) 21.7 - 1.5 - 23.2
Finance lease
liabilities 0.3 0.3 0.7 25.5 26.8
251.4 0.3 2.2 25.5 279.4
Interest on bank
loans and overdrafts 12.7 - - - 12.7
Cash outflows
from gross settled
derivatives 0.5 - - - 0.5
------------------------ ----------- ------- ------- ------- ------
264.6 0.3 2.2 25.5 292.6
------------------------ ----------- ------- ------- ------- ------
(1) Excludes deferred income of GBP3.1million and other
taxation and social security of GBP0.8m
Company - Continuing
2013 Less than 1 to 2 2 to 5 Over 5 Total
1 year years years years
GBPm GBPm GBPm GBPm GBPm
---------------------- ---------- ------- ------- ------- ------
Trade and other
payables 118.9 - - - 118.9
Financial guarantee
contract 53.2 - - - 53.2
---------------------- ---------- ------- ------- ------- ------
172.1 - - - 172.1
---------------------- ---------- ------- ------- ------- ------
Company
2012 Less than 1 to 2 2 to 5 Over 5 Total
1 year years years years
GBPm GBPm GBPm GBPm GBPm
----------------- ---------- ------- ------- ------- ------
Trade and other
payables 139.9 - - - 139.9
----------------- ---------- ------- ------- ------- ------
Interest Rate Risk
The Group is minimally exposed to interest rate risk as it has
agreed to dispose of all secured property assets in order to repay
debt and any accrued interest and exit fees. Fluctuations in the
underlying LIBOR rate on the floating rate loans therefore becomes
less relevant to the Group as the revenue stream from rental income
is being disposed of consensually with the lenders. The Group was
exposed to market price risk in respect of the fair value of its
fixed rate financial instruments, but the last swap of GBP40million
expired on 12 April 2013.
Credit Risk
The Group has no significant concentration of credit risk as
exposure is spread over a large number of counterparties.
The credit risk in liquid funds and derivative financial
instruments is limited due to the counterparties being banks with
high credit ratings assigned by international credit rating
agencies. As at the statement of financial position date, the
carrying value of loans, cash and the fair values of swaps and caps
approximates to this credit risk exposure.
The Group is exposed to credit risk in respect of its trade
receivables, primarily asset management fees. Theses fees arise
from contracts with reputable counterparties.
At 31 March 2013, trade and other receivables consisting of
rents and asset management fees receivable, of GBP0.7 million
(2012: GBP0.9million) were past due but not impaired. These relate
to customers for whom there is no recent history or indication of
default. The amounts presented in the statement of financial
position are net of allowances for doubtful receivables of
GBP0.1million (2012: GBP0.3million).
The ageing analysis of these trade receivables is as
follows:
Group 2013 2012
--------------------- ----- -----
GBPm GBPm
Up to three months 0.5 0.6
Three to six months 0.2 0.3
--------------------- ----- -----
0.7 0.9
--------------------- ----- -----
The credit risk relating to cash, deposits and derivative
financial instruments is actively managed by Group Treasury.
Counterparty Credit Group - Group -
rating continuing discontinued
2013 2013
-------------- --------- ------------ --------------
GBPm GBPm
Bank #1 A 1.2 -
Bank #2 A - 0.2
1.2 0.2
------------------------ ------------ --------------
Capital Management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern. The Group's
three facilities matured on 31 December 2012 and, as previously
anticipated, the Group was unable to meet its repayment obligations
at that date. At 31 March 2013 the debt has either been classified
in discontinued operations as shown in note 2 & 20 to the
financial statements, or forms part of the financial guarantee
contract as shown in note 26 to the financial statements. As
announced on 20 June 2013, following the completion of a consensual
disposal programme with one of its lenders, the Group has reached a
mutually satisfactory agreement to release the relevant borrowing
Group subsidiary from all of its obligations to that lender. The
Group remains reliant on the continuing support of the remaining
two lenders.
Derivative Financial Instruments
Gains and Losses on Derivatives held to Manage Debt
The Group may use interest rate derivatives to manage its
interest rate profile. Changes in the fair value of these
derivatives are recognised in the consolidated statement of income.
An analysis of these derivatives and gains / (losses) thereon is as
follows:
Group
Derivative Derivative Total
financial financial
assets liabilities
GBPm GBPm GBPm
------------------------------------ ------------ ------------- ------
Fair value at 31 March 2012 - 0.5 0.5
Change in fair value of derivative
financial instruments - (0.5) (0.5)
Fair value at 31 March 2013 - - -
------------------------------------ ------------ ------------- ------
Financial Instruments - Categories Group
2013 2012
--------------------------------------------------- ------------------ -------------------
Carrying Fair Carrying Fair
value value value value
GBPm GBPm GBPm GBPm
--------------------------------------------------- --------- ------- --------- --------
Financial assets - continuing
Fair value through profit or loss
- designated on inception
Investments in funds 24.2 24.2 33.8 33.8
Investments in listed and unlisted
shares 0.1 0.1 0.3 0.3
Loans and receivables
Trade and other receivables(1) 0.7 0.7 7.4 7.4
Cash and cash equivalents 1.2 1.2 9.8 9.8
Financial liabilities - continuing
Fair value through profit or loss
- held for trading
Derivative financial liabilities - - (0.5) (0.5)
Amortised cost
Borrowings - - (229.4) (229.4)
Trade and other payables(2) (2.4) (2.4) (25.0) (25.0)
Finance lease obligations - - (3.8) (3.8)
(1) Excludes prepayments of GBP0.6million (2012: GBP1.3million)
(2) Excludes deferred income of GBP0.1million (2012: GBP3.1million)
Company
2013 2012
----------------------------------------------- ------------------ ------------------
Carrying Fair Carrying Fair
value value value value
GBPm GBPm GBPm GBPm
----------------------------------------------- --------- ------- --------- -------
Financial assets
Loans and receivables
Trade and other receivables(1) 0.1 0.1 48.8 48.8
Cash and cash equivalents - - 0.2 0.2
Financial liabilities
Amortised cost
Trade and other payables 175.3 175.3 139.9 139.9
(1) Excludes prepayments of GBPNil (2012: GBP0.1million)
The table below presents the Group's assets and liabilities
recognised at fair value.
2013 Level Level Level Total
1 2 3
GBPm GBPm GBPm GBPm
------------------------------------ ------- ------- ------ ------
Investments
Investments in funds - - 24.2 24.2
Investments in unlisted shares - - 0.1 0.1
Total assets - - 24.3 24.3
------------------------------------ ------- ------- ------ ------
Derivative financial liabilities
Fair value through profit or loss - - - -
------------------------------------ ------- ------- ------ ------
Total liabilities - - - -
------------------------------------ ------- ------- ------ ------
2012 Level Level Level Total
1 2 3
GBPm GBPm GBPm GBPm
------------------------------------ ------- ------ ------ ------
Investments
Investments in funds - - 33.8 33.8
Investments in unlisted shares - - 0.3 0.3
Total assets - - 34.1 34.1
------------------------------------ ------- ------ ------ ------
Derivative financial liabilities
Fair value through profit or loss - (0.5) - (0.5)
------------------------------------ ------- ------ ------ ------
Total liabilities - (0.5) - (0.5)
------------------------------------ ------- ------ ------ ------
Fair value hierarchy
Level 1: valuation based on quoted market prices traded in
active markets.
Level 2: valuation techniques are used, maximising the use of
observable market data, either directly from market prices or
derived from market prices.
Level 3: where one or more inputs to valuation are not based on
observable market data. Valuations at this level are more
subjective and therefore more closely managed, including
sensitivity analysis of inputs to valuation models. Such testing
has not indicated that any material difference would arise due to a
change in input variables.
The table below presents a reconciliation of level 3 fair value
measurements for the year:
Investments Investments
in funds in unlisted Total
shares
GBPm GBPm GBPm
---------------------- ------------ ------------- --------
At 1 April 2012 33.8 0.3 34.1
Unrealised losses(1) (9.6) (0.2) (9.8)
At 31 March 2013 24.2 0.1 24.3
---------------------- ------------ ------------- --------
(1) Unrealised losses of GBP9.8million are included in net loss
from fair value adjustment on investments in the consolidated
income statement.
The fair value of the investment in funds is calculated using
the underlying Net Asset Value ("NAV") of the relevant fund. If the
NAV was to increase or decrease by 5% the impact on the financial
statements would be GBP1.2million.
23. Deferred Income Tax
Group
2013 2012
GBPm GBPm
------------------------------------------------ ------ -----
Deferred taxation assets
Deferred taxation arising from retirement
benefit obligations (note 4) - 0.1
- 0.1
------------------------------------------------------- -----
Deferred taxation liabilities
Deferred taxation arising from the temporary
differences noted below:
Unrealised property and investment valuations - -
------------------------------------------------ ------ -----
- -
------------------------------------------------------- -----
The movement in deferred tax assets and liabilities during the
year is as follows:
Group
----------------------------- -----------------------
Retirement
benefit
obligations Total
GBPm GBPm
----------------------------- ------------- --------
Deferred tax assets
at 31 March 2012 0.1 0.1
-------------
Charged to consolidated
statement of comprehensive
income (0.1) (0.1)
Charged to reserves - -
------------- --------
Total impact (0.1) (0.1)
----------------------------- ------------- --------
Deferred tax assets - -
at 31 March 2013
----------------------------- ------------- --------
24. Trade And Other Payables
Group Company
--------------------------- ------------ --------------
2013 2012 2013 2012
GBPm GBPm GBPm GBPm
Current liabilities:
Trade payables 0.2 0.6 - -
Amounts owed to Group
undertakings - - 118.6 139.7
Other taxation and social
security 0.4 1.8 - -
Other payables - 2.1 - 0.1
Accrued PIK interest - 14.3 - -
& exit fees
Accruals and deferred
income 1.9 7.8 0.3 0.1
2.5 26.6 118.9 139.9
--------------------------- ----- ----- ------ ------
Non-current liabilities:
Other payables - 1.5 - -
Accrued PIK interest - - - -
& exit fees
--------------------------- ----- ----- ------ ------
- 1.5 - -
--------------------------- ----- ----- ------ ------
Total trade and other
payables 2.5 28.1 118.9 139.9
--------------------------- ----- ----- ------ ------
Amounts owed to Group undertakings are unsecured and have no
fixed date of repayment. They are interest free except for interest
recharges for REIT compliance purposes; to ensure the interest
charge is in the correct group entity.
25. Provisions for Other Liabilities and Charges
Group Onerous Property Performance Total
contracts provision fees
2013 GBPm GBPm GBPm GBPm
-------------------------- ----------- ----------- ------------ ------
At 31 March 2012 3.2 - 0.1 3.3
Utilised during the year - - (0.1) (0.1)
Transfer (3.2) 3.2 - -
-------------------------- ----------- ----------- ------------ ------
At 31 March 2013 - 3.2 - 3.2
-------------------------- ----------- ----------- ------------ ------
Group Onerous Property Performance Total
contracts provision fees
2012 GBPm GBPm GBPm GBPm
-------------------------- ----------- ----------- ------------ ------
At 31 March 2011 4.3 - 0.8 5.1
Utilised during the year (1.1) - (0.7) (1.8)
At 31 March 2012 3.2 - 0.1 3.3
-------------------------- ----------- ----------- ------------ ------
Provisions have been analysed between current and non-current as
follows:
Group Company
------------- ------------ ------------
2013 2012 2013 2012
GBPm GBPm GBPm GBPm
Non-current 1.6 2.4 1.6 -
Current 1.6 0.9 1.6 -
------------- ----- ----- ----- -----
3.2 3.3 3.2 -
------------- ----- ----- ----- -----
On 30 August 2012, at a meeting of the members of Principal
Leasehold Properties Limited, a group company with a number of
onerous leases on properties which are vacant or sublet at a loss,
resolutions were passed to wind up the company voluntarily and to
appoint joint liquidators for this purpose. This has resulted in a
loss of control by the Group and in accordance with IAS 27
'Consolidated and Separate Financial Statements', the assets and
liabilities of this company have been derecognised from the
consolidated financial statements. The onerous contracts provision
is now recognised as a property provision, being the estimate of
the liability of the onerous lease portfolio, which will remain a
liability of the parent company until settled or discharged. This
was calculated by DTZ Debenham Tie Leung on 31 March 2012, being
the net cash flows on the properties over the remaining lease
lengths of 1 and 6 years and remains the Directors' best estimate
of the possible exposure.
26. financial guarantee contract
Financial
guarantee
contract
---------------------------------------------- -----------
GBPm
At 31 March 2012 -
Bank loan derecognised on 17 August
2012 (note 2) 94.0
Other assets and liabilities of derecognised
companies on 17 August 2012 (note 2) (45.3)
Other assets and liabilities of derecognised
companies on 19 March 2013 (note 2) (8.8)
Payment from continuing business against
financial guarantee contract (1.4)
Fair value adjustment to financial guarantee
contract at 31 March 2013 14.7
At 31 March 2013 53.2
---------------------------------------------- -----------
In accordance with IAS 39 'Financial Instruments: Recognition
and Measurement', a provision for a financial guarantee contract
was made in the period. This is an estimate of the fair value of
the residual debt in Warner Estate Investments Limited, owed to the
lender, after:
-- deducting the property value and other net assets as at 17
August 2012, of Warner Estate Investment Limited and Warner Estate
Development (Folkestone) Limited, following the appointment of
fixed charge receivers over the property assets of these companies
as described in note 2;
-- deducting the property value and other net assets as at 19
March 2013, of JSE Developments Limited, following the resignation
of the Group directors and appointment of third party directors as
described in note 2;
-- adjusting the fair value of the financial guarantee contract
in line with the information known about the remaining value of the
debt and property assets;
-- deducting a payment of GBP1.4million, made by Radial
Distribution Asset Management Limited, in order to reduce the
underlying bank debt.
The gross debt obligation has been determined at 31 March 2013
based on information supplied by the lender and includes the
directors' best estimate of all accrued interest and other charges
outstanding. This amount has been offset by the estimated
realisation proceeds of the remaining property assets which are all
in the process of being disposed of at the year end. It is assumed
that the net value of the residual assets and liabilities in the
entities that have been transferred to the control of the lender
are immaterial.
Following the year end, on 23 May 2013, third party directors
were appointed to Warner Estate, Limited. This company owns an
investment in Apia which was valued at GBP13.4million at 31 March
2013, and this, along with the other net assets of the company,
will reduce the financial guarantee contract further.
27. Share Capital
2013 2012
------------------------------------- ----- -----
Group and Company GBPm GBPm
Authorised
80,000,000 Ordinary shares of 5p 4.0 4.0
------------------------------------- ----- -----
Issued and fully paid
Ordinary shares of 5p
At 1 April and 31 March (56,170,865
shares) 2.8 2.8
------------------------------------- ----- -----
Warner Estate Holdings PLC 1995 Share Option Scheme
At 31 March 2013 there were share options to subscribe for
Ordinary shares under the Warner Estate Holdings Plc 1995 Share
Option Scheme as follows:
At 367.5p per share exercisable between 59,866 shares
27 June 2006 and 26 June 2013
At 495p per share exercisable between 56,873 shares
8 July 2007 and 7 July 2014
---------------------------------------- --------------
116,739
shares
---------------------------------------- --------------
2013 2012
Number Average Number Average
exercise exercise
price price
p p
At 1 April 221,392 403.5 287,291 380.6
Options expired/lapsed (104,653) 374.4 (65,899) 303.5
At 31 March 116,739 429.6 221,392 403.5
---------- ---------- --------- ----------
All of the options outstanding at 31 March 2013 (2012: 221,392)
were exercisable.
Warner Estate Holdings PLC Performance Share Plan
At 31 March 2013 there were share options to subscribe for
Ordinary shares at Nil cost under the Warner Estate Holdings Plc
Performance Share Plan as follows:
Exercisable between 4 August 2013 and 1,410,000
4 February 2014 shares
----------
2013 2012
Number Average Number Average
exercise exercise
price price
p p
At 1 April 1,545,000 - 2,239,078 -
Options expired/lapsed - - (498,692) -
Options forfeited (135,000) - (195,386) -
At 31 March 1,410,000 - 1,545,000 -
---------- ---------- ---------- ----------
None of the options outstanding at 31 March 2013 were
exercisable (2012: Nil).
The average share price during the year was 1.9p (2012:
6.4p).
28. Other Reserves
Share Share Warrants Revaluation Other Retained
Premium Based Reserve(1) Reserve(2) Reserve(3) Earnings(4) Total
Payments
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Group
At 31 March 2012 40.7 0.5 0.8 (255.4) 8.0 153.0 (52.4)
Retained loss for
the year - - - - - (37.4) (37.4)
Realised on disposal
of investment properties - - - 104.3 - (104.3) -
Net loss from fair
value adjustment on
investment properties - - - (0.1) - 0.1 -
Net loss from fair
value adjustment on
unlisted investments - - - (9.8) - 9.8 -
Change in fair value
of derivative financial
instruments - - - 0.5 - (0.5) -
Actuarial losses on
pension scheme assets - - - - - 0.2 0.2
Deferred tax on pension
scheme assets - - - - - (0.1) (0.1)
Cost of share based
payments - (0.4) - - - - (0.4)
Transfer - - - 92.0 - (92.0) -
At 31 March 2013 40.7 0.1 0.8 (68.5) 8.0 (71.2) (90.1)
--------------------------- --------- ---------- ------------ ------------ ------------ ------------- --------
(1) 2,808,713 share warrants were issued on 26 March 2010 and have
been accounted for at fair value on that date.
(2) The revaluation reserve consists of unrealised fair value movements
on investment properties, investments and derivative financial instruments.
(3) Other reserves consist of a capital redemption reserve and a
merger reserve.
(4) The closing balance of the retained earnings reserve includes
GBP0.2million liability (2012: GBP0.5million) stated after a deferred
tax asset of GBPNil (2012: GBP0.1million) in respect of the Group's
defined benefit pension scheme as set out in note 4 to the accounts.
Non-distributable Reserves Distributable Reserves
------------------------------------ ---------------------------------
Share Share Warrants Other Retained
Premium Based Reserve Reserve Earnings Total
Payments
Company GBPm GBPm GBPm GBPm GBPm GBPm
At 31 March 2012 40.7 0.5 0.8 7.0 (101.4) (52.4)
Retained loss for
the year - - - - (125.0) (125.0)
Cost of share based
payments - (0.4) - - - (0.4)
--------------------- ---------- ----------- ----------- ---------- ----------- --------
At 31 March 2013 40.7 0.1 0.8 7.0 (226.4) (177.8)
--------------------- ---------- ----------- ----------- ---------- ----------- --------
29. Investment in Own Shares
Group and Company 2013 2012
------------------- ---------------- ----------------
Number Cost Number Cost
'000 GBPm '000 GBPm
At 31 March 2012 1,295.5 0.6 938.2 0.8
Additions 331.1 - 763.9 -
Disposals (651.9) (0.4) (406.6) (0.2)
------------------- -------- ------ -------- ------
At 31 March 2013 974.7 0.2 1,295.5 0.6
------------------- -------- ------ -------- ------
Additions relate to the Inland Revenue Approved All-Employee
Share Ownership Plan.
Included in investment in own shares are shares relating to the
Inland Revenue Approved All-Employee Share Ownership Plan, as
follows:
2013 2012
Number Cost Market Number Cost Market
value value
'000 GBPm GBPm '000 GBPm GBPm
------------------------------ ------- ----- ------- -------- ----- -------
Partnership shares purchased
by employees held in Trust 452.2 - - 587.7 - -
Matching and Free shares not
yet vested 503.0 0.1 - 688.3 0.5 -
------------------------------ ------- ----- ------- -------- ----- -------
955.2 0.1 - 1,276.0 0.5 -
------------------------------ ------- ----- ------- -------- ----- -------
The vesting of Matching and Free shares is conditional on
meeting the conditions of the scheme which are summarised in the
Directors' Remuneration Report on pages 12 to 17.
30. Directors' Interests and Related Party Transactions
Transactions between the Company and subsidiaries, which are
related parties, have been eliminated on consolidation for the
Group.
Compensation of key management personnel is disclosed in the
Directors' Remuneration Report on pages 12 to 17.
There were no transactions between the parent company and its
subsidiaries in the current or prior year.
Balances outstanding between the parent company and its
subsidiaries are shown below:
Amounts owed Amounts owed
by subsidiaries to subsidiaries
2013 2012 2013 2012
Subsidiary GBPm GBPm GBPm GBPm
---------------------------- ---------- -------- --------- --------
Cardiff and Provincial
Properties Limited - - (12.1) (12.1)
Clay Estates Limited - - (79.6) (79.6)
Industrial Funds Limited - - (4.8) (3.9)
Lancaster Holdings Limited - 0.3 - -
Radial Distribution - - (4.0) -
Asset Management Limited
Warner Estate Asset
Management Limited - - - (2.0)
Warner Estate Development - 24.0 - -
(Folkestone) Limited
Warner Estate Investments
Limited - - - (23.1)
Warner Estate (Jersey) - 5.0 - -
Limited
Warner Estate, Limited - 19.5 - -
Warner Estate Management
Limited - - (2.3) (3.0)
Warner Estate Property
Management Limited - - (15.8) (16.0)
- 48.8 (118.6) (139.7)
--------------------------------------- -------- --------- --------
No fees were paid in respect of contracts, which provided
services in the ordinary course of business to the Group, and in
which Directors have or had interests.
Management charges payable by the joint ventures are set out in
note 16.
31. Reconciliation of Operating Profit / (Loss) to Net Cash Flow
The following table presents the reconciliation of operating
profit to net cash flow for continuing operations.
Group Company
----------------------------------------- -------------- ----------------
2013 2012 2013 2012
----------------------------------------- ------ ------ ------- -------
GBPm GBPm GBPm GBPm
Operating (loss) / profit before
net movements on investments (0.1) 1.0 (84.4) (18.3)
Depreciation of plant and equipment 0.1 - - -
Decrease in retirement benefit
obligations (0.2) (0.2) - -
Decrease in trade and other receivables 1.7 - 48.8 17.9
(Decrease) / increase in trade
and other payables (1.9) (0.8) 35.4 0.6
----------------------------------------- ------ ------ ------- -------
Cash (outflows) / inflows from
operations (0.4) - (0.2) 0.2
----------------------------------------- ------ ------ ------- -------
The following table presents the reconciliation of operating
profit to net cash flow for discontinued operations.
Group Company
----------------------------------------- -------------- ------------
2013 2012 2013 2012
----------------------------------------- ------ ------ ----- -----
GBPm GBPm GBPm GBPm
Operating profit before net movements
on investments 5.2 10.7 - -
Decrease in trade and other receivables 3.8 0.2 - -
Decrease in trade and other payables (8.5) (0.7) - -
----------------------------------------- ------ ------ ----- -----
Cash inflows from operations 0.5 10.2 - -
----------------------------------------- ------ ------ ----- -----
32. Operating Lease Commitments
2013 2012
GBPm GBPm
-------------------------------------------- ----- -----
Group
Total future annual minimum lease payments
under non-cancellable operating leases
are as follows:
Within one year - 0.9
Expiring between two and five years 0.2 0.6
Expiring after five years - 0.1
-------------------------------------------- ----- -----
0.2 1.6
-------------------------------------------- ----- -----
33. Operating Leases Granted
The Group earns rental income by leasing its investment
properties to tenants under operating leases.
At the statement of financial position date, the Group had
contracted with tenants to receive the following future minimum
lease payments:
2013 2012
GBPm GBPm
------------------------------------- ------ ------
Group
Within one year - 14.3
Expiring between two and five years - 45.8
Expiring after five years - 45.8
------------------------------------- ------ ------
- 105.9
-------------------------------------------- ------
34. Fixed Asset Investments
Issued Percentage
Share Capital Held
Principal Subsidiary Companies GBP %
Holding and Services
*Apia Asset Management Limited: GBP1 Ordinary Shares 1 100
*Ashtenne Asset Management Limited: 10p Ordinary Shares 100 100
*Ashtenne Investments Limited: GBP1 Ordinary Shares 100 100
Warner Estate Management Limited: GBP1 Ordinary Shares 2 100
*Warner Active Management No
2 Limited: GBP1 Ordinary Shares 1 100
Warner Estate Asset Management
Limited: 10p Ordinary Shares 54,449,000 100
Warner Estate Property Management
Limited: 10p Ordinary Shares 3,987,000 100
*Warner Estate (AM:PM) Limited: GBP1 Ordinary Shares 1 100
Property Investment
Lancaster Investments Limited: GBP1 Shares 1,000 100
*++Warner Estate Development
(Folkestone) Limited: GBP1 Ordinary Shares 1 100
*++Warner Estate Investments
Limited: GBP1 Ordinary Shares 1 100
Warner Estate Property Limited: GBP1 Ordinary Shares 40,000,000 100
Other Investment
Cardiff and Provincial Properties
Limited: 25p Ordinary Shares 162,000 100
Warner Estate, Limited: GBP1 Ordinary Shares 1 100
*Warner Estate (AIF) Limited
(Jersey): GBP1 Ordinary Shares 1 100
GBP1 Redeemable
Preference Shares 12,000,000 100
Warner Estate Joint Ventures
Limited: GBP1 Ordinary Shares 1 100
Principal Joint Ventures
Property Investment
*Apia Regional Office Fund (General GBP1 A Ordinary
Partner) Limited: Shares 25,000 -
GBP1 B Ordinary
Shares 25,000 100
Principal Other Investments
Investment in Shares
*Ashtenne Industrial (General GBP1 A Ordinary
Partner) Limited: Shares 120 -
GBP1 B Ordinary
Shares 60 100
Investment in Funds
*Apia Regional Office Fund Unit
Trust (Jersey): GBP1 Units 242,366,433 21.57
*Ashtenne Industrial Fund Unit
Trust (Jersey): GBP1 Units 443,527,900 5.28
* Held through a subsidiary company.
++ The share capital of these companies is wholly owned but the
Group has lost control due the appointment of fixed charge
receivers over the property assets.
All companies are incorporated in the UK and registered in
England unless otherwise indicated.
The companies listed above are those subsidiary undertakings
whose results or financial position, in the opinion of the
Directors principally affected the figures in the Group's financial
statements. The Company has taken advantage of s410(2) and (3)
Companies Act 2006 in not listing all its subsidiary and joint
venture undertakings. All of the subsidiaries have been
consolidated in the Group financial statements.
Full listings of all the subsidiaries are available from the
Company Secretary at the registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEUFAUFDSESW
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