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Wisdomtree New Economy Real Estate Ucits Etf - Usd | BIT:WNER | Italy | Exchange Traded Fund |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
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0.00 | 0.00% | 19.374 | 19.27 | 19.554 | 0 | 16:31:02 |
RNS Number:7220S Warner Estate Holdings PLC 02 December 2003 ACTIVE WARNER CONTINUES TO GROW PROPERTY FUNDS UNDER MANAGEMENT Warner Estate Holdings PLC ("Warner Estate"), the property investment company has today announced its interim results for the six months to 30 September 2003. * #842m property under management - annualised rent roll of #62m * Formation of #110m Regional Office Fund * Formation of #113m Distribution Warehouse Fund * Increase in triple net NAV(a) of 6% to 439p (March 2003: 414p) * Increase in adjusted NAV(b)of 4.6% to 459p (March 2003: 439p) * Disposal of shareholding in Merivale Moore * Interim dividend raised by 6.5% to 8.25p (2002: 7.75p) * Continues 32 years of unbroken dividend growth (a) adjusted for deferred tax and fair value of debt (b) excludes the effects of deferred tax arising from the adoption of FRS 19 Philip Warner, Executive Chairman of Warner Estate commented, " We have made good progress with our strategy of moving into property fund management with major financial partners. During the first half of the year, we have established two further funds, a #110 million Regional Office Fund and a #113 million Distribution Warehouse Fund. These join the #273 million Agora Northwest Shopping Centre Fund as part of a total of #842 million of property under management, of which #496 million is in the funds. " All the funds offer significant opportunities to deliver improved rental income and capital growth. We have assembled an experienced property team which is working hard to realise this potential. " Looking to the future, we have created an excellent platform from which we can expand our fund business. Warner Estate is in good shape and I am confident of continuing progress." -ends- Date: 2 December 2003 For further information contact: Warner Estate Holdings PLC City Profile Group Philip Warner, Chairman Simon Courtenay Richard Moore, Property Director 020-7448-3244 Peter Collins, Finance Director 020-7907-5100 Web: www.warnerestate.co.uk CHAIRMAN'S STATEMENT Warner Estate has continued to make good progress with its strategic move into jointly owned property investment funds. Two further funds were established during the first six months of the year, a #110 million Regional Office Fund and a #113 million Distribution Warehouse Fund. These join the #273 million Agora Northwest Shopping Centre Fund as part of a total of #842 million of property under management, of which #496 million is in the funds. The total annualised rent roll managed by the Group is now #61.7 million per annum. RESULTS All the specific sub sectors in which the Group operates have contributed to the improvement in the Group's adjusted net assets. These increased during the half-year by 4.6% to 459p per share (March 2003: 439p). A full property revaluation accounted for 14.5p of the increase of which 8.8p was as a result of Stamp Duty exemption in respect of "disadvantaged area status" introduced in the last budget, with most of the balance coming from profits. Our principal chosen measure of success is the improvement in triple net asset value, which adjusts for deferred tax and the fair value of debt. This rose by 6.0% to 439p per share (March 2003: 414p). This proportionately larger increase was due in part to the increase in interest rates on longer term money from 4% to 4.65% reducing the fair value of debt, together with the fixing of certain of the funds' debt at rates of between 4.1% and 4.3%. We have, however, knowingly accepted a temporary reduction in recurring revenue profits, the measure of core maintainable income, which is the result of our planned strategic move to create a major additional income stream from asset management. Recurring profits, which are after deducting profits arising from property trading and fixed asset disposals, were #6.4 million (September 2002: #6.7 million) and were ahead of the Group's own budget. This reduction was exaggerated by the disposal of the Group's shareholding in its former associate Merivale Moore in August of this year and the resultant loss of dividend income. Revenue pre-tax profits were #6.4 million (September 2002: #7.2 million) and total pre tax profits were #6.8 million (September 2002: #7.9 million). The overall tax charge at 20% compared to an 18% charge in the six months to September 2002 is the reason why the decline in earnings per share is slightly greater than that in pre-tax profits with adjusted revenue earnings per share at 10.07p and recurring revenue earnings 10.00p per share (September 2002: 11.74p and 11.09p respectively). Total adjusted earnings per share were 10.72p (September 2002: 12.85p). The Board has increased the interim dividend per share by 6.5% to 8.25p against 7.75p last year. The increase, which is covered 1.2 times by recurring revenue earnings (September 2002: 1.4 times), reflects the Board's confidence in ongoing profitability. The dividend will be paid on 27 February 2004 to shareholders on the register at close of business on 6 February 2004. PROPERTY The last six months have continued a particularly busy period with the establishment of the Regional Office Fund in July and the formation of the Distribution Fund out of a #166 million industrial purchase in August to range alongside the Agora Northwest Shopping Centre Fund. The impact of these is shown in the following table: Share of Total under Directly held Funds (Joint Associate Total management Ventures) #m #m #m #m #m Investment property 333.8 111.6 20.1 465.5 556.9 Trading property 46.1 2.3 5.2 53.6 46.1 At 31 March 2003 379.9 113.9 25.3 519.1 603.0 Investment property: Externally valued 257.6 115.5 - 373.1 488.6 Directors' valuation 69.4 132.6 - 202.0 334.6 Investment property 327.0 248.1 - 575.1 823.2 Trading property 18.9 - - 18.9 18.9 At 30 September 2003 345.9 248.1 - 594.0 842.1 Movement in the six months: Revaluation 6.4 1.0 - 7.4 8.4 Disposals to joint ventures: Investment property (83.0) 54.8 - (28.2) 26.6 Trading property (26.6) - - (26.6) (26.6) Other additions/(disposals) 69.2 78.4 (25.3) 122.3 230.7 Total (34.0) 134.2 (25.3) 74.9 239.1 The breakdown by sector at 30 September 2003 was as follows: No. of Value Annual Rent Net initial Weighting Properties #m Roll #m yield Retail Retail Warehouses 7 25.6 2.0 High Street 11 30.4 2.0 Retail sub total 18 56.0 4.0 6.80% 17% Offices Regional 28 134.8 11.1 M25 and Outer London 9 27.3 2.3 Offices sub total 37 162.1 13.4 7.90% 50% Distribution and Industrial Distribution 9 32.9 2.5 Industrial 20 76.0 6.1 Distribution & Industrial 29 108.9 8.6 7.58% 33% sub total Total 84 327.0 26.0 7.60% 100% Trading 11 18.9 1.1 Total directly held 95 345.9 27.1 Funds (50% owned) Shopping Centres 7 273.3 18.3 Trade Centres 1 0.3 - Regional Offices 6 109.6 8.2 Distribution 8 113.0 8.1 Total under management 117 842.1 61.7 PROPERTY FUNDS Agora Northwest Shopping Centre Fund, owned 50/50 with Bank of Scotland Following its formation in March of this year, the fund was expanded with the purchase of the Pyramids Shopping Centre, Birkenhead for #42 million in July. The development programmes at Ellesmere Port, Sale and Liverpool are well advanced. Ellesmere Port is expected to complete in early 2004 with JJB Sports already fitting out and the majority of the other units being handed over this month. At Sale, all the let units were opened for trading in August of this year and the one remaining unit will be completed on target in April 2004. Finally, at Liverpool Vivienne Westwood have opened for trading and Cricket are due to complete shop-fitting in time for Christmas. At the other shopping centres, we have a capital investment programme of approximately #50 million, which will add 380,000 sq. ft. of new floor area, and construction, subject to relevant permissions is planned to start on a phased basis between March 2004 and January 2006. I am also pleased to report that the Agora Shopping Centre Fund has been ranked by IPD for the half year to 30 September 2003 in the top 2 percentile, being fourth out of 141 funds in its benchmark. Regional Office Fund (Skipper Offices Limited) owned 50/50 with The Royal Bank of Scotland This #110 million fund was formed in July from five properties held for resale in the Group's accounts at 31 March 2003 together with the office complex at Kingston which was held as a trading property. These properties were sold to the fund at their cost at 31 March. The fund has a capital investment programme of approximately #8.4 million, with phased starts between June 2004 and June 2006, in respect of the properties in Leeds, Kingston and Solihull, of which only Solihull requires planning permission. Distribution Warehouse Fund (Fairway Industrial Limited) owned 50/50 with Bank of Scotland At the end of August the Group and Bank of Scotland purchased #113 million of distribution warehouses, part of a larger purchase from Morley. These eight properties, which are all located at key distribution hubs, have a rent roll of #8.2 million and a very strong covenant profile. Site coverage is relatively low and there are opportunities for active management which will now be assessed further. The balance of the purchase from Morley of #53 million has been taken on to the balance sheet bringing the Group's weighting in industrial properties in its core portfolio to 33%. An interim valuation of the properties held in the Agora Shopping Centre Fund, with the exception of Preston and Birkenhead which were purchased in March and June of this year, was carried out by DTZ at 30 September 2003 which produced a revaluation uplift of which the Group's share, net of cost, was #1 million. The Agora Shopping Centre Fund was established in early March 2003 and included in the accounts at 31 March 2003 at a Directors' valuation of #111.5 million (the Group's share). This value was the purchase price of the shopping centres plus the full costs of setting up the fund. In accordance with the Group's accounting policy the properties in the Regional Office Fund and Distribution Warehouse Fund were included at Directors' valuation using the same basis as used for Agora in March 2003. The funds have an annualised rent roll of #34.6 million and an average lease length of 10 years. There are 447 tenancies and 315 tenants with #23 million of rents being to government and large corporates and 5 tenants (19 tenancies) accounting for just under 29% of the rent roll including 10% in respect of government agencies and 8% in respect of Tesco. In terms of the geographic and business risk, whilst the very nature of these funds includes an element of risk because of their focus, the nature and spread of the tenancies reduce this risk to a very low level. WHOLLY-OWNED CORE PORTFOLIO Cushman & Wakefield Healey & Baker carried out an interim valuation of the investment portfolio as at 30 September 2003, which, together with a Directors' valuation, produced a figure of #327 million and an average lot size of #3.9 million (March 2003 : #334 million and #4.1 million). The valuation produced an uplift of #6.4 million, net of capital expenditure, of which #2.2 million was in respect of disadvantaged area status. The apportionment of this uplift is illustrated below: Investment Property Valuation Uplift Valuation Stamp Total Share of JV Total #m #m #m #m #m Retail 1.7 0.4 2.1 1.0 3.1 Regional Offices (0.2) 1.0 0.8 - 0.8 Greater London Offices (0.2) 0.2 0.0 - 0.0 Industrial 2.9 0.6 3.5 - 3.5 Total 4.2 2.2 6.4 1.0 7.4 The above figure of #6.4 million represents percentage increases of 3.9 for retail, 0.6 for offices, 6.6 for industrial and 2.5 overall. The core portfolio has an annualised rent roll for both trading and investment properties of #27.1 million (September 2002 : #36.2 million), the reduction being due to the disposals of three shopping centres into the Agora Shopping Centre Fund in March and of six regional offices into the Regional Office Fund in July. There are 365 tenancies and 273 tenants with #15 million of rents being from low or medium risk covenants. In terms of exposure to any individual tenant, there are four tenants with a total of 16 tenancies which account for just under 19% of the rent roll and which are all rated at Standard and Poors ' A' or better. Geographic and business risks are not significant. The average lease length on these properties has fallen slightly to 11.5 years in the period and the level of voids has risen from just under 3% at 31 March to 6%. This increase is mainly due to the level of voids contained within the recent industrial purchase from Morley referred to above. The trading property portfolio was substantially reduced during the period with the disposal of the Kingston property to the Regional Office Fund. Two other properties were sold for a small profit. The directors estimate that the value of the trading stock is worth a further #0.9million above its book cost. FINANCE The results for the six months have seen the first significant income from management fees for asset management. As a result, we have decided that the management fees we receive from funds should be included in turnover rather than in administrative expenses as hitherto. In addition, the profits from the funds are included within recurring profits. Consequently, the prior period analysis of turnover and expenses has been restated to show the comparable effect. These accounts include a full analysis of the impact of the funds on the profit and loss account and balance sheet, as shown in note 9 and summarised as follows: 6 months to: 30.9.03 31.3.03 30.9.02 #m #m #m Operating Profit 5.0 2.0 0.5 Net interest payable (4.8) (1.9) (0.4) Profit before tax 0.2 0.1 0.1 Interest received on loans to funds 1.0 0.7 0.3 Management fees 0.6 0.3 0.1 Total contribution 1.8 1.1 0.5 The other major impact on the profit and loss account concerns the sale of the Group's 25.9% shareholding in Merivale Moore PLC which was disposed of at the end of August at its value in the accounts at 31 March 2003 with the result that there was no contribution from the Associate in this period. In the results for the previous two half-years, the contribution was as follows: 6 months to: 30.9.03 31.3.03 30.9.02 #m #m #m Operating Profit - 0.8 0.7 Capital profit - 0.2 0.2 Net interest payable - (0.5) (0.5) Profit before tax - 0.5 0.4 of which recurring profit - 0.1 0.2 CASH FLOW The net inflow in the period of #54.9 million arose mainly as a result of receipts of #110 million from disposals to the Regional Office Fund and of #8.9 million from the sale of the Group's shareholding in Merivale Moore offset by investments in joint ventures of #44.6 million and property purchases of #56.6 million which were financed by an additional #36.3 million of long term debt. There has been a further #14.3 million outflow relating to property acquisitions since the period end. BALANCE SHEET Shareholders' funds as adjusted to exclude the #4.3 million reduction for deferred tax, rose to #234 million up from #223 million at 31 March and triple net asset value rose to #224 million from #211 million. The main contributors to this increase in adjusted shareholders' funds were #7.4 million from the revaluation of both Group's properties and the Group's share of the funds' properties, a #1.8 million increase in the value of the Group's investments and retained profits of #1.3 million. DEBT There have been considerable movements in debt on the Group's balance sheet and the Group's share of debt in the funds. These are mainly due to the sale of properties to the Regional Office Fund off-set by the #53 million purchase of industrial property on to the Group's balance sheet together with increases in the Group's share in the funds' debt due to the purchase by the Agora Fund of the shopping centre in Birkenhead and the establishment of the Regional Office and Distribution funds. The following table shows the split of this debt compared to the position at 31 March 2003: On balance sheet Share of funds Total #m #m #m Net short term debt 2.7 (3.4) (0.7) Long term debt with recourse 114.7 - 114.7 Total net recourse debt 117.4 (3.4) 114.0 Long term non-recourse debt 56.8 236.8 293.6 Total debt at 30 September 2003 174.2 233.4 407.6 Gearing (on adjusted shareholders' funds) 75% 174% Recourse gearing 50% 49% Total debt at 31 March 2003 192.8 106.5 299.3 Gearing (on adjusted shareholders' funds 86% 134% Recourse gearing 61% 60% Our increase in adjusted net asset value and overall reduction in net debt have seen gearing on adjusted shareholders' funds fall from 86% to 75% with a corresponding decrease in recourse gearing. In terms of the interest rate exposure on this debt, the position with regard to the Group's debt is that #63 million is fixed and the balance is covered by swaps or caps, although because of the rates at which these derivatives impact, the Group still has some exposure to upward movements in interest rates. With respect to the share of the funds' debt, #140 million is swapped at rates of between 4.1% and 4.3% for the life of the funds. The remaining #93 million is currently not fixed. Interest is covered 1.7 times by recurring revenue profits compared to 1.8 times in the six months to 30 September 2002. As at 30 September the Group had undrawn borrowing facilities of #43 million. RETURN ON CAPITAL The period concerned has benefited from two factors, outside management's control, which have contributed significantly to the total annualised post-tax return of 15.9%. These are the one-off impact of disadvantaged area status and the sharp upward movement in rates for five year money. If these were excluded, the annualised total return would still be a respectable 7.3%. INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS") As with all quoted companies in the United Kingdom, we shall be required to adopt IFRS for accounting periods ending on or after 31 December 2005. We will continue to apply UK Accounting Standards up to and including our year ending 31 March 2005, but will adopt IFRS for the year to 31 March 2006. The International Accounting Standards Board has not yet finalised the accounting standards that must be adopted from 2005. If these new standards are substantially in line with the exposure drafts that are currently being discussed, they are likely to have a significant impact on our financial statements. We will provide more information about the impact of the changes on our accounts as the transition approaches. PROSPECTS The property investment market continues to experience strong demand and some rental markets are beginning to reflect improving sentiment in the wider economy. Current equities performance is ahead of property but it is to be hoped that the losses of the recent past will encourage increasing asset allocation towards property. As we establish a track record in property asset management, Warner Estate is well placed to take advantage of growing interest in indirect vehicles. The period under review saw the formation of two further property funds and we shall be seeking to expand these. We are confident that our chosen sectors of Northwest shopping centres, regional offices and distribution warehouses are well placed for growth. The asset management skills of our professional team will provide added value for shareholders in addition to that resulting from any improvement in the market. I am confident of continuing progress. GENERAL Finally, a copy of the Interim Results Presentation for the six months to September 2003 may be viewed on the Company's website at www.warnerestate.co.uk. Philip Warner Chairman 2 December 2003 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended 30 September 2003 Notes Unaudited 6 Unaudited 6 Audited months months year ended ended ended 31.3.2003 30.9.2003 30.9.2002 restated restated #'000 #'000 #'000 TURNOVER: GROUP AND SHARE OF JOINT 37,235 29,314 53,113 VENTURES AND ASSOCIATE less: Share of joint ventures and associate (8,776) (6,291) (7,589) GROUP TURNOVER 2 28,459 23,023 45,524 Cost of sales and other property outgoings (16,570) (7,416) (14,554) GROSS PROFIT 2 11,889 15,607 30,970 Administrative expenses (1,150) (1,076) (2,241) GROUP OPERATING PROFIT 2 10,739 14,531 28,729 Share of operating profit in: Joint ventures 2 4,988 438 2,392 Associate 2 - 660 1,424 4,988 1,098 3,816 TOTAL OPERATING PROFIT 15,727 15,629 32,545 Profit on sale of fixed assets 4 329 607 1,552 Income from fixed asset investments 334 635 814 PROFIT ON ORDINARY ACTIVITIES BEFORE 16,390 16,871 34,911 INTEREST Net interest payable and similar charges 5 (9,638) (9,016) (18,354) PROFIT ON ORDINARY ACTIVITIES BEFORE 6,752 7,855 16,557 TAXATION Taxation on profit on ordinary activities 6 (1,349) (1,306) (2,728) PROFIT ON ORDINARY ACTIVITIES AFTER 5,403 6,549 13,829 TAXATION Minority interests (5) - - 5,398 6,549 13,829 Dividends (4,128) (3,950) (8,115) RETAINED PROFIT 1,270 2,599 5,714 p p P EARNINGS PER SHARE 7 Revenue 10.04 11.87 24.33 Capital 0.65 1.11 3.08 10.69 12.98 27.41 p P FULLY DILUTED EARNINGS PER SHARE 7 Revenue 10.04 11.87 24.32 Capital 0.65 1.11 3.07 10.69 12.98 27.39 P P ADJUSTED EARNINGS PER SHARE 7 Revenue 10.07 11.74 23.32 Capital 0.65 1.11 3.08 10.72 12.85 26.40 CONSOLIDATED BALANCE SHEET Notes Unaudited Unaudited Audited At At At 31.3.2003 30.9.2003 30.9.2002 #'000 #'000 #'000 FIXED ASSETS Tangible fixed assets Investment properties 8 327,036 404,600 333,821 Other tangible assets 469 494 504 327,505 405,094 334,325 Joint ventures 9 Share of gross assets 258,973 57,261 121,466 Share of gross liabilities (251,061) (56,960) (115,847) Loan accounts 62,712 18,830 19,354 70,624 19,131 24,973 Investments 10 13,808 23,480 21,007 411,937 447,705 380,305 CURRENT ASSETS Property stock 18,916 49,451 46,044 Debtors 21,011 8,362 11,301 Investments - 317 - Cash at bank and in hand 9,026 11,859 16,638 48,953 69,989 73,983 CURRENT LIABILITIES Creditors: amounts falling due within one year (56,042) (159,637) (95,043) NET CURRENT LIABILITIES (7,089) (89,648) (21,060) TOTAL ASSETS LESS CURRENT LIABILITIES 404,848 358,057 359,245 Creditors: amounts falling due after more than (170,564) (136,726) (135,475) one year Provision for liabilities and charges Deferred taxation 11 (4,367) (4,858) (4,364) Net assets excluding pension liability 229,917 216,473 219,406 Pension liability 3 (180) (171) (235) NET ASSETS 229, 737 216,302 219,171 CAPITAL AND RESERVES Called up share capital 13 2,549 2,548 2,548 Other reserves 13 215,281 204,840 205,812 Profit and loss account 13 11,802 8,914 10,811 EQUITY SHAREHOLDERS' FUNDS 13 229,632 216,302 219,171 Minority interest 15 105 - - SHAREHOLDERS' FUNDS 229,737 216,302 219,171 p p P Net assets per share 451 425 430 FRS 19 reversal 8 9 9 Adjusted net assets per share 459 434 439 STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES Unaudited 6 Unaudited 6 Audited year months ended months ended ended 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 Profit on ordinary activities after taxation and minority 5,398 6,549 13,829 interest Unrealised surplus on revaluation of properties 6,421 2,456 2,993 Unrealised surplus/(deficit) on revaluation of investments 2,709 484 (1,404) Unrealised surplus on disposal of assets into joint venture - - 1,190 Actuarial gain/(loss) on pension scheme assets 72 (207) (317) Deferred tax arising on pension scheme assets (23) 59 85 TOTAL RECOGNISED GAINS RELATING TO THE PERIOD 14,577 9,341 16,376 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Unaudited 6 Unaudited 6 Audited year months ended months ended ended 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 Profit on ordinary activities after taxation and minority 5,398 6,549 13,829 interest Dividends (4,128) (3,950) (8,115) 1,270 2,599 5,714 New share capital issued 12 28 27 Other recognised gains and losses 9,179 2,792 2,547 Net increase in shareholders' funds 10,461 5,419 8,288 Opening equity shareholders' funds 219,171 210,883 210,883 CLOSING EQUITY SHAREHOLDERS' FUNDS 229,632 216,302 219,171 CONSOLIDATED CASH FLOW STATEMENT Unaudited 6 Unaudited 6 Audited year months ended months ended ended 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 Net cash inflow from operating activities 37,075 17,062 34,691 Dividends received from joint ventures and associate 4,039 126 358 Returns on investments and servicing of finance (5,519) (7,500) (15,160) Taxation (1,188) (194) (1,770) Capital expenditure and financial investments 27,916 (17,173) 53,873 Acquisitions and disposals (39,596) 2,002 (3,361) Equity dividends paid (4,165) (7,568) (11,480) Management of liquid resources - (8) 44 Net cash inflow/(outflow) before financing 18,562 (13,253) 57,195 Financing 36,371 (508) (2,081) INCREASE/(DECREASE) IN CASH 54,933 (13,761) 55,114 RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW Unaudited At Unaudited At Audited At 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 Operating profit 10,739 14,531 28,729 Depreciation of tangible fixed assets 58 76 133 Decrease in stocks 27,128 3,923 7,330 Increase in debtors (8,922) (2,964) (2,096) Increase in creditors 8,072 1,496 595 Net cash inflow from operating activities 37,075 17,062 34,691 NOTES TO THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES The interim accounts have been prepared on the basis of accounting policies set out in the published accounts of the Group for the year ended 31 March 2003. 2. TURNOVER AND OPERATING PROFIT The Directors believe that the Group operates in only one segment, namely property. The following analysis is provided for information only: Property Property Group Total Share of Share of Total Investment Trading Joint Associate Ventures (a) #'000 #'000 #'000 #'000 #'000 #'000 6 months to 30 September 2003 Turnover: Rents receivable 13,228 893 14,121 5,500 - 19,621 Management fees (b) 564 - 564 - - 564 Property trading - 13,774 13,774 3,276 - 17,050 Total turnover 13,792 14,667 28,459 8,776 - 37,235 Cost of sales and property (2,503) (14,067) (16,570) (3,758) - (20,328) outgoings Gross profit 11,289 600 11,889 5,018 - 16,907 Administrative expenses (1,080) (70) (1,150) (30) - (1,180) Operating profit 10,209 530 10,739 4,988 - 15,727 6 months to 30 September 2002 restated Turnover: Rents receivable 17,111 1,656 18,767 373 1,844 20,984 Management fees (b) 92 - 92 - - 92 Property trading - 4,164 4,164 2,048 2,026 8,238 Total turnover 17,203 5,820 23,023 2,421 3,870 29,314 Cost of sales and property (3,116) (4,252) (7,368) (1,868) (2,960) (12,196) outgoings Writedown cost of trading stock - (48) (48) - - (48) Gross profit 14,087 1,520 15,607 553 910 17,070 Administrative expenses (918) (158) (1,076) (115) (250) (1,441) Operating profit 13,169 1,362 14,531 438 660 15,629 Property Property Group Total Share of Share of Total Investment Trading Joint Associate Ventures (a) #'000 #'000 #'000 #'000 #'000 #'000 Year to 31 March 2003 restated Turnover: Rents receivable 33,230 3,767 36,997 2,690 1,942 41,629 Management fees (b) 426 - 426 - - 426 Property trading - 8,101 8,101 2,954 3 11,058 Total turnover 33,656 11,868 45,524 5,644 1,945 53,113 Cost of sales and property (5,747) (8,470) (14,217) (2,977) (313) (17,507) outgoings Writedown cost of trading - (337) (337) - - (337) stock Gross profit 27,909 3,061 30,970 2,667 1,632 35,269 Administrative expenses (2,002) (239) (2,241) (275) (208) (2,724) Operating profit 25,907 2,822 28,729 2,392 1,424 32,545 (a) The investment in the associate was sold in August 2003. (b) Management fees receivable are now material and are included in turnover. The comparatives have been restated since in previous periods management fees receivable were set off against property outgoings or administration costs as appropriate. 3. PENSION COMMITMENTS The Group operates and contributes to pension schemes for certain Directors and employees and makes some discretionary allowances. The costs charged to the profit and loss account for the six months to 30 September 2003 in respect of these amounted to #98,000 (half year to 30.9.02: #81,000; year to 31.3.03: #190,000). Pension premiums paid in advance were #46,000 (half year to 30.9.02: #44,000; year to 31.3.03: #47,000). The Group operated a defined benefit scheme in the UK, The Warner Estate Group Retirement Benefits Scheme. A full valuation was carried out at 1 October 2003. The values at and updated to 30 September 2002, and 31 March 2003 were updates of the 1 October 2001 valuation carried out by a qualified independent actuary. It has been agreed with the Trustees that the Group contributions for the next four years will be at 28.4% of pensionable salaries, subject to review by the Scheme Actuary. The value of the assets and liabilities of the Scheme were as follows: Value at Value at Value at 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 Total market value of assets 4,742 4,427 4,587 Present value of scheme liabilities (4,999) (4,672) (4,922) Deficit (257) (245) (335) Related deferred tax asset 77 74 100 Net pension liability (180) (171) (235) Analysis of amount charged to operating profit Unaudited 6 Unaudited 6 Audited year months ended months ended ended 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 Current service cost 16 18 35 The impact of the adoption of FRS 17: Retirement Benefits is as follows: Unaudited 6 Unaudited 6 Audited year months ended months ended ended 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 Decrease in shareholders' funds (180) (171) (235) Decrease in administrative expenses 12 15 30 Other finance (cost)/income (6) (2) 3 Increase in profit on ordinary activities before taxation 6 13 33 4. PROFIT ON SALE OF FIXED ASSETS Unaudited 6 Unaudited 6 Audited months months year ended ended ended 31.3.2003 30.9.2003 30.9.2002 #'000 #'000 #'000 Surplus/(deficit) over book value Investment properties 340 412 1,187 Share of joint ventures (11) - - Share of associate - 195 365 329 607 1,552 5. NET INTEREST PAYABLE AND SIMILAR CHARGES Unaudited 6 Unaudited 6 Audited months months year ended ended ended 31.3.2003 30.9.2003 30.9.2002 #'000 #'000 #'000 Interest payable on bank loans and overdrafts, mortgages and other loans repayable within five years not by instalments 1,787 4,192 6,419 repayable wholly or partly in more than five years 4,116 3,553 9,612 5,903 7,745 16,031 Charges in respect of cost of raising finance 254 742 575 6,157 8,487 16,606 Less capitalised interest - (11) (53) 6,157 8,476 16,553 Interest receivable and similar income : From joint ventures (1,007) (326) (1,052) Other interest (293) (5) (400) 4,857 8,145 15,101 Other finance cost/(income) Expected return on pension scheme assets (145) (136) (271) Interest on pension scheme liabilities 151 138 268 6 2 (3) 4,863 8,147 15,098 Share of joint ventures' net interest 4,775 375 2,258 Share of associate's net interest - 494 998 9,638 9,016 18,354 6. TAXATION The taxation charge for the period has been estimated from the expected taxable profits of the Group after taking account of capital allowances available. 7. EARNINGS PER SHARE Earnings per share of 10.69p (half year to 30 September 2002: 12.98p; year to 31 March 2003: 27.41p) are calculated on the profit on ordinary activities after taxation and minority interests of #5,398,000 (half year to 30 September 2002 : #6,549,000; year to 31 March 2003: #13,829,000) and the weighted average of 50,475,295 (half year to 30 September 2002: 50,459,517; year to 31 March 2003: 50,457,216) shares in issue throughout the period. Profit on ordinary activities after taxation and minority interests includes capital profits on the sale of investments net of tax of #329,000 (half year to 30 September 2002: #559,000; year to 31 March 2003: #1,552,000). Diluted earnings per share are based on the profit available for distribution as above divided by the weighted average number of shares in issue, being 50,475,295 (half year to 30 September 2002: 50,484,365; year to 31 March 2003: 50,483,730) after the dilutive impact of share options granted. Adjusted earnings per share are calculated on the same weighted average number of shares as for the basic earnings per share, but exclude from revenue profits the deferred taxation credit of #10,000 (half year to 30 September 2002: #68,000; year to 31 March 2003: #509,000) arising on the adoption of FRS 19. This deferred tax has been excluded as the Group's experience is that it is very unusual for capital and industrial building allowances to be claimed back on the disposal of a property. 8. INVESTMENT PROPERTIES Freehold Freehold Leasehold with Total assets held over 50 years for resale unexpired #'000 #'000 #'000 #'000 At 31 March 2003 208,280 81,030 44,511 333,821 Additions 69,050 1,654 215 70,919 Disposals (1,441) (82,684) - (84,125) 275,889 - 44,726 320,615 Surplus on revaluation 5,931 - 490 6,421 At 30 September 2003 281,820 - 45,216 327,036 Properties purchased within twelve months of the balance sheet date are included at Directors' valuation. The remainder of the Group's investment portfolio was valued by Cushman & Wakefield Healey & Baker on an open market basis in accordance with the recommended guidelines of the Royal Institution of Chartered Surveyors as at 30 September 2003 Investment properties were valued as follows: #'000 Cushman & Wakefield Healey & Baker 257,565 Directors' valuation 69,471 327,036 9. JOINT VENTURES Unaudited At Unaudited At Audited At 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 Share of joint ventures Opening balance 24,973 4,074 4,074 Share of profit for the period 154 61 87 Surplus/(deficit) on revaluation of investments 940 36 (4) Net equity movements 1,199 (2,002) 3,330 Net loan movements 43,358 16,962 17,486 Closing balance 70,624 19,131 24,973 Unlisted shares at cost less amounts written off 6,763 249 5,525 Group's share of post acquisition retained profits and reserves 1,149 52 94 7,912 301 5,619 Amounts owed by joint ventures 62,712 18,830 19,354 70,624 19,131 24,973 Included in share of joint ventures' gross assets and liabilities are: To 30th September 2003 Agora Skipper Fairway Others Total Shopping Offices Industrial (d) Centres Limited Limited (a) (b) (c) Group share of results Turnover 4,335 804 361 3,276 8,776 Operating profit 3,675 667 342 304 4,988 Capital losses - - - (11) (11) Net interest payable and similar (3,730) (657) (314) (74) (4,775) charges (Loss)/profit on ordinary (55) 10 28 219 202 activities before taxation Taxation on profits on ordinary (3) (9) (9) (27) (48) activities (Loss)/profit on ordinary (58) 1 19 192 154 activities after taxation Asset management fees 422 80 36 - 538 Interest receivable 357 473 108 69 1,007 Group share of: Investment properties 136,656 54,807 56,521 154 248,138 Other current assets 5,209 3,935 1,316 375 10,835 Gross assets 141,865 58,742 57,837 529 258,973 Current liabilities Loans (126,135) (54,829) (55,799) - (236,763) Other liabilities (8,228) (3,800) (1,969) (301) (14,298) Gross liabilities (134,363) (58,629) (57,768) (301) (251,061) Share of net assets 7,502 113 69 228 7,912 Effective Group share 50% 50% 50% 50% Potential recourse to the Group Nil Nil Nil Nil To 30th September 2002 restated Agora Skipper Fairway Others Total Shopping Offices Industrial (d) Centres Limited Limited (c) (a) (b) Group share of results Turnover - - - 2,421 2,421 Operating profit - - - 436 436 Net interest payable and similar - - - (375) (375) charges Profit on ordinary activities - - - 61 61 before taxation Taxation on profits on ordinary - - - - - activities Profit on ordinary activities after - - - 61 61 taxation Asset management fees - - - 131 131 Interest receivable - - - 326 326 Group share of: Investment properties - - - 53,121 53,121 Trading properties - - - 2,666 2,666 Other current assets - - - 1,474 1,474 Gross assets - - - 57,261 57,261 Current liabilities Loans - - - (52,744) (52,744) Other liabilities - - - (4,216) (4,216) Gross liabilities - - - (56,960) (56,960) Share of net assets - - - 301 301 Effective Group share 50% 50% 50% 50% Potential recourse to the Group Nil Nil Nil Nil To 31st March 2003 restated Agora Skipper Fairway Others Total Shopping Offices Industrial (d) Centres Limited Limited (c) (a) (b) Group share of results Turnover 576 - - 5,068 5,644 Operating profit 487 - - 1,905 2,392 Net interest payable and similar (442) - - (1,816) (2,258) charges Profit on ordinary activities 45 - - 89 134 before taxation Taxation on profits on ordinary (24) - - (23) (47) activities Profit on ordinary activities after 21 - - 66 87 taxation Asset management fees 73 - - 344 417 Interest receivable 49 - - 1,003 1,052 Group share of: Investment properties 111,304 - - 226 111,530 Trading properties - - - 2,336 2,336 Other current assets 6,498 - - 1,102 7,600 Gross assets 117,802 - - 3,664 121,466 Current liabilities Loans (106,467) - - (3,341) (109,808) Other liabilities (5,790) - - (249) (6,039) Gross liabilities (112,257) - - (3,590) (115,847) Share of net assets 5,545 - - 74 5,619 Effective Group share 50% 50% 50% 50% Potential recourse to the Group Nil Nil Nil Nil (a) Agora Shopping Centres was set up on 5 March 2003 and subsequently acquired the Pyramids in Birkenhead on 25 June 2003. (b) Skipper Offices Limited was set up on 23 July 2003. (c) Fairway Industrial Limited was set up on 29 August 2003. (d) The profit or loss that arose from the Bolton and Middleton shopping centre joint ventures prior to the setting up of the Agora Shopping Centres joint venture was included in "other" and accounted for #293,000 of operating profit and #290,000 of net interest payable in the six months to 30 September 2002 and #1,151,000 of operating profit and #1,571,000 of net interest payable in the year to 31 March 2003. Amounts owed by joint ventures comprise: Unaudited At Unaudited At Audited At 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 (a) Agora Shopping Centres 20,212 - 16,949 Skipper Offices Limited 28,600 - - Fairway Industrial Limited 13,900 - - Others - 18,830 2,405 62,712 18,830 19,354 (a) Included in "other" at 30 September 2002 were loans in respect of the Bolton and Middleton Shopping centres of #16,700,000. 10. FIXED ASSET INVESTMENTS Unaudited At Unaudited At Audited At 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 Investment in associate (a) - 10,222 8,856 Listed investments 12,363 11,701 10,594 Own shares held 1,445 1,557 1,557 13,808 23,480 21,007 (a) The investment in the associate was disposed of in August 2003 for #8,856,000. 11. DEFERRED TAXATION Unaudited Unaudited Audited At At At 31.3.2003 30.9.2003 30.9.2002 #'000 #'000 #'000 Deferred taxation arising from the timing differences noted below: Short term timing difference 49 (7) 36 Capital and industrial buildings allowances claimed on 4,318 4,865 4,328 investment properties 4,367 4,858 4,364 The movement in the capital and industrial building allowances claimed on investment properties in the six months to 30 September 2003 represent #619,000 of allowances claimed reduced by #629,000 on disposal of properties. The potential amount of deferred taxation, for which no 2,906 3,005 1,409 provision has been made and which would arise if the assets held as long term investments were sold at the values at which they appear in the balance sheet, has been calculated as follows: 12. FINANCIAL INSTRUMENTS Financial Liabilities The interest rate profile of the Group's financial liabilities at 30 September 2003, after taking account of interest rate instruments taken out by the Group was: Unaudited At Unaudited At Audited At 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 Floating rate financial liabilities - 56,506 - Fixed rate financial liabilities 184,203 218,922 210,033 Total 184,203 275,428 210,033 The benchmark rate for determining interest payments for the floating rate financial liabilities was LIBOR/base rate depending upon the facility. The weighted average interest rate on the fixed rate debt and the average maturity of that debt was as follows: Unaudited At Unaudited At Audited At 30.9.2003 30.9.2002 31.3.2003 % % % Weighted average interest rate Group 7.99 7.94 7.97 Joint Ventures 5.52 - 5.63 Weighted average period for which interest rate is fixed Years Years Years Group 6.43 6.91 6.45 Joint Ventures 4.62 - 5.01 Maturity of financial liabilities Unaudited At Unaudited At Audited At 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 Within one year or on demand 12,717 138,033 73,937 Between one and two years 17,344 1,394 1,444 Between two and five years 27,757 4,182 6,632 In five years or more 126,385 131,819 128,020 184,203 275,428 210,033 Borrowing facilities The Group has various borrowing facilities that were not fully utilised at the period end in which the conditions for utilising those facilities were met. Unaudited At Unaudited At Audited At 30.9.2003 30.9.2002 31.3.2003 #'000 #'000 #'000 Expiring in one year or less: Total facilities 50,865 155,000 147,100 Unutilised 42,817 18,361 74,573 Fair values of financial assets and liabilities The table below sets out by category the changes to the balance sheet values that would occur if "fair values" applied. Unaudited At Unaudited At Audited At 30.9.2003 30.9.2002 31.3.2003 Fair value Fair value Fair value adjustment adjustment adjustment #'000 #'000 #'000 Group Primary financial instruments Liabilities Long term debt (over one year) (10,625) (13,651) (13,469) Assets Long term loan notes (over one year) (426) - (141) Derivative instruments held to manage debt Interest rate swaps (2,337) (2,844) (3,089) Interest rate caps (186) 8 (293) Joint Ventures Primary financial instruments Long term debt (over one year) 426 - 141 Derivative instruments held to manage debt Interest rate swaps 2,333 - (581) (10,815) (16,487) (17,432) The effect on net assets per share of the total fair value adjustment (#10,815,000 less tax #3,245,000) would be a decrease of 14.9 pence (31 March 2003: 23.9 pence) The calculation of the fair values has been arrived at as follows: Debt has been calculated by discounting cash flows at prevailing rates of interest. The equity assets have been valued at the quoted share price based upon the strategic nature of the holdings compensating for any discount. Interest rate swaps have been valued at the market rate for such swaps. 13. CAPITAL AND RESERVES Other Reserves Group Share Share Revaluation Other Profit Total Capital premium reserve reserves and loss account account #'000 #'000 #'000 #'000 #'000 #'000 Company and subsidiaries 2,548 5,548 10,519 186,537 9,655 214,807 Joint ventures - - 67 - 27 94 Associate - - 2,334 807 1,129 4,270 At 31 March 2003 2,548 5,548 12,920 187,344 10,811 219,171 Issue of share capital 1 11 - - - 12 Other reserve movements - - 8,816 642 (279) 9,179 Disposal of associate - - (2,334) 2,334 - - Retained profit for period - - - - 1,270 1,270 At 30 September 2003 2,549 5,559 19,402 190,320 11,802 229,632 Company and subsidiaries 2,549 5,559 18,395 190,331 11,610 228,444 Joint ventures - - 1,007 (11) 192 1,188 Associate - - - - - - At 30 September 2003 2,549 5,559 19,402 190,320 11,802 229,632 14 ANALYSIS OF NET DEBT MOVEMENTS Audited At Reclassi-fication Cash flow Non-cash Unaudited 31.3.2003 items At 31.9.2003 #'000 #'000 #'000 #'000 #'000 Cash at bank and in hand 16,638 - (7,612) - 9,026 Bank overdrafts/short term (72,543) - 62,545 - (9,998) borrowings - 54,933 - Debt due within one year: Mortgage and other loans (794) - (794) Bank loan (600) (325) (1,000) - (1,925) (325) (1,000) - Debt due after one year: Mortgage and other loans (80,259) 397 (29) (79,891) Bank loan (55,216) 325 (35,757) (25) (90,673) - (36,360) (54) Net Debt (192,774) - 18,573 (54) (174,255) 15. MINORITY INTEREST Minority interests represent the share of net assets attributable to the interests of shareholders in a subsidiary which was not wholly owned by the Company or its subsidiaries. 16 FINANCIAL STATEMENTS The consolidated profit and loss account and the consolidated balance sheet are unaudited and do not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The statutory accounts for the year to 31 March 2003, from which the comparatives have been extracted, received an unqualified auditors' report and have been delivered to the Registrar of Companies. Copies of the interim report are available from the Company Secretary, Warner Estate Holdings PLC, Nations House, 103 Wigmore Street, London W1U 1AE. SIGNIFICANT EVENTS DURING 6 MONTH PERIOD TO 30 SEPTEMBER 2003 DATE Purchase of Pyramids Shopping Centre, Birkenhead by Agora Fund for #41.75m June 2003 The #109m Regional Office Fund formed through a joint venture with The Royal July 2003 Bank of Scotland Sale of six office properties into the Regional Offices Fund for #109m The #113m Distribution Fund formed through a joint venture with Bank of August 2003 Scotland with the purchase of eight large distribution warehouses The #19m Industrial Fund formed through a joint venture with Barclays Bank August 2003 with the purchase of three industrial estates A further four distribution warehouses and three industrial estates purchased August 2003 for #34m for the Core portfolio Sale of shares in Merivale Moore plc for net proceeds of #8.9m August 2003 Purchase of office property in Manchester for #14.8m September 2003 SIGNIFICANT EVENTS POST 30 SEPTEMBER 2003 There have been no significant events post 30 September 2003 This information is provided by RNS The company news service from the London Stock Exchange END IR VFLFBXLBLFBV
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