TIDMWICH
RNS Number : 0550H
Wichford plc
23 May 2011
Wichford P.L.C.
("Wichford" or the "Company")
Half-yearly Results
Wichford P.L.C., the property investment company, is pleased to
announce its half-yearly results for the six months ended 31 March
2011.
Highlights
Trading Operations Profit after tax GBP5.9m (March 2010:
GBP4.3m)
Total loss after tax GBP12.3m (March 2010: profit of
GBP18.0m)
Trading Operations earnings per share 0.56p (March 2010:
0.40p)
Total earnings per share a loss of 1.16p (March 2010: profit of
1.69p)
Declared interim dividend per share 0.32p (March 2010:
0.32p)
Total Portfolio at Market Values GBP565.7m (September 2010:
GBP573.5m)
Net Assets GBP54.9m (September 2010: GBP59.0m)
Net asset value per share 5.17p (September 2010: 5.56p)
EPRA net assets per share 7.26p (September 2010: 8.67p)
Other Highlights
Portfolio's Weighted Average Unexpired Lease Term 8.7 years
(September 2010: 9.1 years)
Indexation of rent roll 63% (September 2010: 63%)
Portfolio's occupancy rate 96% (September 2010: 96%)
Ongoing VBG2 facility negotiations
Philippe de Nicolay, Chairman of Wichford, commented today:
"It is pleasing to report the progress made so far this year in
a challenging environment. The results are encouraging with
improvements in both revenue and earnings per share from Trading
Operations compared to the same period last year. I look forward to
making a positive announcement about the proposed merger with
Redefine International plc shortly."
For further details, please contact,
Wichford P.L.C.
Philippe de Nicolay 00 33 1 40 74 42 79
Wichford Property Management
Ltd
Stephen Oakenfull 020 7811 0100
Philip Cooper 020 7355 7020
Citigate Dewe Rogerson 020 7638 9571
George Cazenove
Kate Lehane
Notes to editors
Wichford P.L.C. (UK Listed: WICH) is a property investment
company, with a portfolio focused on investment property occupied
principally by Central and State Government bodies. Over three
quarters of the portfolio comprises public sector rented properties
in the UK with the remainder in Germany and the Netherlands.
Chairman's Statement
It has been a challenging but productive period during which a
strategic review was completed and the terms of a potential merger
(the "Merger") with the Company's largest shareholder, Redefine
International plc ("Redefine") were announced on 23 March 2011.
Further details related to the Merger are contained below and in
the Business Review. Your Company has seen continued solid trading
performance in the first half of the year, albeit the current UK
Government fiscal policy and budgetary constraints pose challenges
to occupier and investor demand in regional office markets going
forward.
Financial & Operating Highlights
Trading Operations earnings per share of 0.56 pence reflect a
40.0% increase on the same period last year. Occupancy remained
broadly unchanged although increased vacancy is anticipated in the
second half of this financial year. Rental income was supported by
the acquisitions made in 2010 which offset the impact of the loss
of income at Lyon House, Harrow where redevelopment and planning
proposals have been progressed.
EPRA net asset value per share decreased 16.3% to 7.26 pence
(September 2010 8.67 pence), principally due to lower property
values. Headline net assets continue to reflect the significant
negative fair value of interest rate swaps and the consolidation of
the VBG negative net asset value position, further details of which
are provided in the Financial Review.
Capital values declined 2.3% reflecting limited demand for
regional offices, particularly those with shorter lease lengths and
concerns over re-letting. The current government regime requiring
centralised approval for all new lease commitments has slowed
decision making and is also anticipated to result in a general
decline of average lease lengths in the portfolio in the near
term.
The impact of the Government's Comprehensive Spending Review
("CSR") cannot yet be fully determined as cuts to departmental
budgets and public sector jobs are still to be fully implemented.
The occupational market remains challenging and competition amongst
landlords with vacant space is placing pressure on terms for new
leases. The Company does not have a significant exposure to lease
breaks in the short term, though some increase in the overall
vacancy level is anticipated as departments consolidate. We have
however completed a number of lease renewals and extensions and
remain confident that the Group's ability to provide cost effective
accommodation will secure future occupancy in a number of
cases.
Strategic Review & Potential Merger
Recognising the refinancing requirements that the Group has over
the short-term, the Board has completed a thorough strategic review
of the options available to the Company. These included, inter
alia:
-- an equity issuance to assist with the refinancing of the
Delta and Gamma facilities which mature in October 2012;
-- a CMBS restructuring facilitated through the servicer of the
Windermere CMBS conduits;
-- a liquidation strategy;
-- de-leveraging through asset sales;
-- a fundamental change in the management and structural
arrangements of Wichford, and
-- a merger with Redefine International plc coupled with a
future capital raising.
Although each of these strategies individually may have merit,
and some could be pursued post merger, the Board of Wichford
considers that the Merger would provide the strongest basis for
progression with a supportive and well-capitalised major
shareholder to facilitate the capital raising that may be
required.
It is anticipated that, subject to the satisfaction or waiver of
all pre-conditions and obtaining all required regulatory and
shareholder approvals or acceptances, the Merger could be announced
under Rule 2.5 of the Takeover Code during the second quarter of
2011 and, if approved, completed during the third quarter of
2011.
The Company remains in a takeover period as defined by the
Takeover Code and this report contains additional disclosure
requirements of the Takeover Panel. Further details of the Merger
are contained within the Business Review.
Dividend
The Directors have resolved to pay an interim dividend of 0.32
pence per share. This dividend is covered 1.75 times by current
Trading Operations earnings.
The dividend is in line with the terms of the Merger which
provide for an interim dividend of no less than 0.32 pence per
share for the six month period ended 31 March 2011 to all Wichford
shareholders on the shareholder register on the record date in
advance of the Merger completing.
Outlook
The Board believes firmly that the Merger is in the best
interests of the Company and therefore its shareholders and places
the Company in a stronger position to secure new capital and a
sustainable financing structure. This has been the key strategic
priority for 2010/2011 and the Company will be focussed on
satisfying the necessary conditions and obtaining approvals. It is
anticipated that the circular calling for an extraordinary general
meeting to approve the terms of the Merger will be circulated to
shareholders in the second quarter of 2011.
At the same time, we remain focussed on protecting occupancy and
rental income in a challenging occupier market and look to
reposition assets with better alternative uses. I look forward to
reporting on further progress.
Philippe de Nicolay
Chairman
Organisation
Wichford P.L.C. is an Isle of Man registered property investment
company. The principal activity of the Company and its subsidiaries
is the generation of rental income and capital growth through
investment in properties across the UK and Continental Europe which
are occupied mainly by Central and State Government bodies.
The Ordinary Shares of the Company were admitted to trading on
AIM in August 2004 and subsequently moved to the Main Market of the
London Stock Exchange in December 2007.
The Company's investment policy is approved by shareholders and
appears on the Company's website www.wichford.com
The following Shareholders have notified the Company that they
are interested in 3% or more of the Company's issued share
capital:
Number of Percentage
Name of Shareholder shares held held
-------------------------------------------- ------------- -----------
Redefine International plc 230,772,000 21.73%
-------------------------------------------- ------------- -----------
Entities in association with the REAL
Corporation Jersey and Southwood Holdings
Ltd 139,505,000 13.13%
-------------------------------------------- ------------- -----------
Rathbone Brothers Plc 58,974,869 5.55%
-------------------------------------------- ------------- -----------
AXA S.A. and its group of companies 58,033,363 5.46%
-------------------------------------------- ------------- -----------
Schroders Plc 48,863,184 4.60%
-------------------------------------------- ------------- -----------
Legal and General Investment Management
Ltd 43,213,204 4.06%
-------------------------------------------- ------------- -----------
The Board currently consists of the Chairman and five
non-executive directors all of whom are independent from the
management team of the Company's Investment Adviser, Wichford
Property Management Limited ("WPML").
The Group has no employees and the Directors manage the Group
through the use of external service providers.
WPML acts under an Investor Advisor's Agreement and manages the
Group on a day-to-day basis. It coordinates the other external
service providers.
The administration of the Isle of Man companies in the Group is
provided under a service contract with Simcocks Trust Limited.
Included in this contract is the provision of the Company Secretary
and associated services and advice.
The UK portfolio of properties is managed by WPML and the
Continental European properties are managed by local, professional
service providers.
The majority of the UK properties are owned through Isle of Man
registered companies. The remaining UK properties are owned through
companies registered in the BVI, Gibraltar, Jersey and the UK; all
of these companies were purchased in order to acquire the
underlying property owned by each.
The Halle property in Germany is owned by a German limited
partnership with the Group's ownership being held by Isle of Man
registered companies.
The VBG portfolio of properties in Germany is owned by German
limited partnerships which are owned by German and Luxembourg
companies.
The Hague property in the Netherlands is owned by a company
registered in the Netherlands.
Business Review
The Company has had a busy period with the completion of the
strategic review, negotiation of the terms of the Merger with
Redefine as well as a continued focus on managing near term lease
events and occupancy through re-letting, refurbishment and
redevelopment initiatives.
Earnings from Trading Operations continue to reflect sound
income and cash generation. This was supported by investments
completed in 2010, the management of operating costs and revenue
growth from indexed-linked lease reviews over the past year.
Results for the half year also contain a number of non-cash finance
charges as a result of movements in interest rate derivatives and
accruals for costs associated with the strategic review. Further
details are contained within the Financial Review.
EPRA net asset value per share declined to 7.26 pence (September
2010: 8.67 pence) as a result of a decline in valuation on a like
for like basis of the property portfolio of 2.3%. Lower capital
values reflect uncertainty over occupier and investor demand and a
near-term trend of declining lease lengths. The Company continues
to hold substantial cash reserves of GBP40.7 million as at 31 March
2011.
Strategic Priorities for 2010/2011
A number of priorities were set out at the time of the last
Annual Report. The table below shows the progress made in the first
six months of the financial year on these priorities.
2010/2011 Priorities Objectives Progress
Sustainable financing Develop refinancing Proposed Merger terms
structure strategy ahead of include a commitment
key October 2012 from the Company's
debt maturities largest shareholder to
support a capital
raising on a fully
pre-emptive basis to
reduce the gearing
ratio of the Enlarged
Company
Strategic Review Analyse key options Strategic review
and select optimal completed - potential
approach Merger with Redefine
announced on 23 March
2011
Protect future occupancy Detailed review of New lease completed at
and rental income individual properties Newington Causeway
against the UK following a commitment
Government's long term to substantially
occupational objectives enhance the Job
and regional office Centre's existing
markets Provide flexible office accommodation
rental agreements where through refurbishment
necessary Reduce vacancy of existing services
rates and irrecoverable On-going extension and
costs renewal of existing
leases at Bristol,
Crescent Centre
========================= ========================= ========================
Reposition assets Identify assets Acquisition of Harrow,
with better alternative for conversion or Equitable House to
uses redevelopment support the planning
application of the
existing Lyon Road
site
Progress Harrow Continued progress in
planning application securing a social
housing landlord for
the affordable element
of the Harrow scheme
------------------------- ------------------------- ------------------------
Sale of underperforming Sell assets with On-going detailed
assets limited re-letting review of portfolio
or redevelopment Surrender of Telford
potential lease post 31 March
2011 for GBP5.0
million.
Seek opportunities Marketing and exit
for an orderly exit strategy being
from Continental developed
Europe
Sale of smaller
non-core assets
Potential Merger of Wichford and Redefine
As previously announced the boards of Wichford and Redefine have
reached an in principle understanding regarding a potential
combination of the two companies. An overview of the proposed terms
and rationale for the Merger are described below. Shareholders are
directed to the rule 2.4 announcement available on the Wichford
website (http://www.wichford.com/) for further details.
Strategic Rationale
The Merger would create an enlarged, income-focused property
company (the "Enlarged Company") with a large, well diversified
investment property portfolio, listed on the main market of the
London Stock Exchange. The Enlarged Company would have an improved
capital structure, benefiting from Redefine's attractive long term
debt facilities, as well as a commitment from the Enlarged
Company's largest shareholder, Redefine Properties International
Limited ("Redefine Properties International"), which is listed on
the Johannesburg Stock Exchange ("JSE"), and its parent Redefine
Properties Limited ("Redefine Properties") to support a fully
pre-emptive capital raise in the future.
In particular, the Board of Wichford believes that the Merger
represents a clear and strong complementary fit, creating a company
in the mid-tier of the UK listed property sector with:
-- good growth prospects, an improved capital structure and
better access to capital;
-- complementary income focused portfolios, diversified by
geography, asset and tenant type;
-- an enlarged shareholder base which may enhance trading
liquidity for shares in the Enlarged Company; and
-- potential for reduced combined expenses as a result of the
elimination of certain public company costs.
Financial Terms & Ownership
Wichford is expected to make an all share offer for the entire
issued and to be issued share capital of Redefine at an exchange
ratio of 7.2 Wichford shares for every Redefine share. On
completion of the Merger and based on the existing number of
Redefine shares in issue at the time of announcement, existing
Redefine shareholders would hold approximately 79 per cent. of the
issued shares of the Enlarged Company. Existing Wichford
shareholders (other than Redefine as a shareholder in Wichford)
would hold approximately 21 per cent. of the issued shares of the
Enlarged Company.
Redefine Properties International would become the majority
shareholder in the Enlarged Company with a shareholding of
approximately 65 per cent. Redefine Properties International is
approximately 57 per cent. owned by Redefine Properties, which is
also listed on the JSE and currently has a market capitalisation of
R19.6 billion (approximately GBP1.7 billion).
Further information about Redefine is available on Redefine's
website at http://www.redefineinternational.je/.
Capital Commitment
It is expected that the Enlarged Company would, in due course,
seek to raise equity capital on a fully pre-emptive basis to reduce
the gearing ratio of the Enlarged Company and to assist, inter
alia, with the refinancing of Wichford's existing debt maturities
in October 2012. It is currently expected that the preferred route
for a Capital Raising would involve issuing new equity at a tight
discount, on a fully pre-emptive basis.
As part of the Merger it is expected that Redefine Properties
International, with the support of its parent company, Redefine
Properties, will agree to subscribe to at least its pro rata share
of any Capital Raising (as may be agreed by the Board of the
Enlarged Company and undertaken prior to 31 October 2012) of up to
GBP100 million of gross proceeds. Based on the undiluted issued
share capital on 22 March 2011, Redefine Properties International's
pro forma shareholding in the Enlarged Company would be
approximately 64 per cent.
Corporate Structure, Management Team and Board of Directors
The Enlarged Company would continue to be managed by Wichford
Property Management Limited. It is expected that, following the
completion of the Merger, the Board of the Enlarged Company would
conduct a review of the management and tax structure of the
Enlarged Company.
It is proposed that, immediately following the Merger, the Board
of the Enlarged Company will consist of nine directors
including:
-- four former Wichford non-executive directors, one of whom
will be the Chairman of the Enlarged Company;
-- two former Redefine independent non-executive directors;
-- one new non-executive director;
-- one non-executive director appointed by Redefine Properties
International; and
-- one executive director of Wichford Property Management
Limited, which is 76 per cent. owned by Redefine Properties.
Our Business
Wichford's predominantly Central and State Government tenants
provide the Company with a secure rental income stream and a
historically low vacancy rate. Many of the Company's UK tenants
provide "core" government functions with associated public
interfaces such as Job Centres, Courts and HMRC functions, many of
which have local occupation obligations. The Group's strategy to
incorporate inflation related rental increases into leases has
resulted in 63% of rental income being linked to either CPI, RPI or
in a small number of cases fixed increases.
Economic Overview
Private sector employment growth continues to offset public
sector job cuts so that general measures of unemployment have been
broadly flat. Further announcements on public sector cuts are
likely to place increasing pressure on local economies that are
highly dependent on public sector employment.
Inflation remains high although both headline and core rates
dropped back in March helping to maintain the current low interest
rate environment. Longer term interest rates remain attractive and
securing or extending existing facilities in the current interest
rate environment remains a priority.
Key Performance Indicators ("KPIs")
In order to drive cash flow growth and protect income security
Wichford uses the following KPIs to monitor performance:
30 September
KPI 31 March 2011 31 March 2010 2010
Occupancy 96% 99% 96%
WAULT 8.7 years 8.0 years 9.1 years
Indexation 63% 62% 63%
Indexation and occupancy remained broadly unchanged during the
period. Above average inflation continues to provide rental growth
on tenancies subject to either CPI or RPI escalation clauses (see
Asset Management). The average unexpired lease length in the
portfolio decreased due to the passage of time. Measures to extend
lease lengths have been delayed recently mainly due to the
government's current stance on new or extended lease commitments.
Notwithstanding this, asset management initiatives achieved the
completion of a new lease to Trillium at Newington Causeway,
retaining the existing Job Centre in occupation.
The UK Government's Comprehensive Spending Review
While it is still too early to gauge the full impact of the UK
Government's budgetary cuts there has been a noticeable change in
government tenants' approach to renewals and key lease events, with
central approval of business cases now being necessary. Despite
this, the Company continues to achieve new leases and lease
extensions, particularly for existing tenants where continued
occupation provides attractive rental terms and avoids considerable
relocation costs. However, the UK Government's focus on reducing
the public deficit together with excess supply of secondary office
space in a number of regional office markets presents a challenging
operational environment.
Adapting to Change
The Company has previously identified the need to meet the
challenges of the existing market by seeking opportunities to
convert certain properties to more profitable alternative uses, and
ensuring new investment is directed into assets that reflect the
current and future requirements of government and other
occupiers.
Portfolio
The portfolio remained broadly unchanged in the six months to
March 2011. The acquisition of the DSA test centre in Dundee was
completed following practical completion of the development works
in November 2010. The purchase of Equitable House, Harrow has
enabled the Company to take control of the entire site at Lyon
Road, Harrow which will support the proposed planning application.
The number of properties in the portfolio increased to 83
(September 2010: 81) following these two acquisitions.
Continental
Portfolio UK Core UK Active UK European
Statistics Properties Properties Portfolio Portfolio Total
=========== =======
Properties 51 26 77 6 83
================ =========== =========== =========== ============ =======
Area (sq ft
000's) 1,783 1,035 2,818 1,000 3,818
================ =========== =========== =========== ============ =======
Property values
(GBPm) 292.8 134.9 427.7 138.0 565.7
================ =========== =========== =========== ============ =======
% of total 51.8 23.8 75.6 24.4 100.0
================ =========== =========== =========== ============ =======
Net initial
yield (%) 7.11 8.42 7.52 7.88 7.60
================ =========== =========== =========== ============ =======
Annualised
rental income
(GBP000's) 22,018 12,005 34,023 11,445 45,468
================ =========== =========== =========== ============ =======
Average rent
per sq ft
(GBP) 12.35 11.59 12.07 11.45 11.91
================ =========== =========== =========== ============ =======
WAULT (years) 10.68 4.16 8.29 9.88 8.69
================ =========== =========== =========== ============ =======
Indexed-linked
and fixed
increases
(%) 74.2 21.6 50.4 100.0 62.8
================ =========== =========== =========== ============ =======
Note: Initial yields and rents for the Continental European
portfolio reflect gross rents before deductions for irrecoverable
costs.
Valuation
The overall portfolio value decreased 2.3% on a like-for-like
basis. The UK Portfolio reduction of 3.5% resulted from two
predominant factors; the anticipated impact of the Comprehensive
Spending Review on the regional office market and an increased
sensitivity to properties with shorter lease lengths.
Values in Continental Europe decreased by 0.7% in local currency
terms, however a stronger Euro during the period resulted in an
increase of 1.4% in Sterling terms. An indexed-linked rent review
triggered a 7.3% increase in passing rent at Berlin which, in turn,
supported a 2.4% valuation increase. Although yields remained
relatively constant, declining unexpired terms continue to
negatively impact the overall valuation.
Value as
at Movement
31 March Proportion From 30
2011 of Portfolio Sept 2010 Movement
Portfolio Valuations GBPm % GBPm %
UK Core Properties 290.3 51.3% (8.5) (2.8)%
====================== ========= ============= =========== =========
UK Active Properties 131.8 23.3% (6.7) (4.9)%
---------------------- --------- ------------- ----------- ---------
UK Portfolio 422.1 74.6% (15.2) (3.5)%
====================== ========= ============= =========== =========
Continental European
Portfolio 138.0 24.4% 1.9 1.4%
====================== ========= ============= =========== =========
Total properties
held throughout
the period 560.1 99.0% (13.3) (2.3)%
====================== ========= ============= =========== =========
Acquisitions 5.6 1.0% 0.5 9.0%
====================== ========= ============= =========== =========
Total Portfolio 565.7 100.0% 12.8 (2.2)%
====================== ========= ============= =========== =========
Notes:
1) The like-for-like analysis re-classifies properties in prior
periods as Core or Active dependent on their current
classification
2) The movement in new acquisitions reflects an increase in
value against the purchase price before certain transaction costs
from their date of acquisition
3) Like-for-like movements exclude the movement on capitalised
items on the consolidated statement of financial position
Measuring Performance
The UK and Continental European Portfolio's total return for all
benchmarked assets as measured by IPD was 0.1% and 5.5%
respectively. By comparison the IPD benchmark (UK monthly and
quarterly valued offices) produced a total return of 5.8% over the
same six month period to 31 March 2011. The stronger benchmark
performance relative to the UK Portfolio assets was largely
attributable to the City and West End office sectors of the
benchmark (to which Wichford has no exposure) which produced a
total return of 10.5% and 8.3% respectively for the same period.
The other sector components of the benchmark, Rest of South East
and Rest of UK, produced total returns of 2.4% and 0.8%
respectively.
Asset Management
Lettings & Lease Extensions
Vacancy remained broadly unchanged at 3.8% (September 2010:
3.7%) which includes 99,527 sq ft of space at Lyon House, Harrow
which is subject to a proposed planning application and not
available to let. Vacancy as at 31 March 2011 excluding Lyon House
stood at 1.2% (September 2010: 1.0%).
A new lease to Trillium was completed in December 2010 following
agreement to substantially refurbish the existing services at
London, Newington Causeway while maintaining the existing Job
Centre in occupation. The new 13 year lease with a break option in
2018 has a commencing rent of GBP315,000 p.a.
Rent Reviews
The following rent reviews were settled or are in the process of
being agreed:
-- Newcastle - fixed uplift in December 2010 from GBP110,381
p.a. to GBP113,140 p.a. reflecting an annual fixed 2.5% p.a.
increase
-- Grays - CPI rent review increase from GBP145,480 p.a. to
GBP155,842 p.a. representing a 7.1% uplift in passing rent
-- St Asaph - stepped rent provision increased passing rent from
GBP457,442 p.a. to GBP505,238 p.a. reflecting a 10.4% increase
-- Paisley - CPI rent review with anticipated increase from
GBP195,000 p.a. to GBP210,600 p.a. representing a 8.0% increase in
passing rent
-- Aberdeen, Lord Cullen House - open market rent review agreed
at an uplift of 6.6% from GBP478,250 p.a. to GBP510,000 p.a.
-- The Hague - annual Dutch CPI uplift from EUR2,153,050 p.a. to
EUR2,185,234 p.a. agreed representing a 1.5% increase
-- Berlin - German CPI uplift from EUR1,339,131 p.a. to
EUR1,437,531 p.a. reflecting a 7.3% increase
Expiry Profile
Wichford's near term expiry profile reflects a relatively small
exposure to lease break options and expiries over the next three
years. No more than 3.3% of the Company's total rent roll has a
break or expiry in any one year for the next three years.
-- The Group's UK Portfolio is predominately occupied by Central
Government bodies, many of which are core services and/or public
facing
-- The UK Portfolio has limited exposure to quangos and none
have been identified for closure
-- A significant portion of the UK Portfolio (% by UK rent roll)
falls under the Trillium PRIME and Mapeley contracts, neither of
which are directly subject to the 'moratorium' on new or extended
leases
Development Opportunities
The Company has made further progress on planning and
redevelopment proposals for the proposed residential-led mixed-use
scheme at Lyon Road, Harrow. The acquisition of Equitable House
will enable a comprehensive planning application across both sites.
Discussions to secure a Registered Social Landlord (RSL) for the
affordable housing element of the scheme are progressing in line
with management's expectations. A planning application is expected
to be submitted within this financial year.
Acquisitions
Two acquisitions were completed during the period. The DSA
driving test centre in Dundee was acquired through a pre-let
forwarding funding agreement with the developer. The property is
occupied by the DSA and let to the Secretary of State for
Communities and Local Government until November 2050 with break
dates in November 2025 and every five years thereafter. The
acquisition provides long-dated inflation-linked income returns
with five yearly rent reviews linked to RPI.
The recently approved change to the Company's Investment Policy
enabled the acquisition of the site adjacent to Lyon House, Harrow.
This is expected to enhance the proposed planning application for
the Harrow redevelopment and secure potential marriage value
between the two sites. The site was acquired with vacant
possession, with the Company now controlling the entire site
subject to the proposed planning application.
Summary of 2010/2011 Acquisitions
Cost Net Initial
Property Tenant/Occupier GBPm Yield
Dundee, DSA DSA 2.11 6.72%
Harrow, Equitable House Vacant possession 3.05 n/a
Total Acquisitions 5.16
------------------------------------------------ ------ ------------
Capitalised Costs 0.78
------------------------------------------------ ------ ------------
Total Capital Expenditure 5.94
Continental European Portfolio
The Company has reviewed a number of options in relation to the
VBG1 and VBG2 portfolios as well as the overall Continental
European Portfolio. It is anticipated that these will be progressed
further once the Company is outside of a takeover period.
As highlighted in the last Annual Report, the Continental
European Portfolio continues to produce positive earnings for the
Group despite the negative net asset value position associated with
the VBG properties. The options available to the Company will be
reviewed in light of the assets' current and potential future
contribution to Group profits, opportunities to recycle capital
back into the UK market and the potential capital requirements
associated with refinancing the VBG and other European funding
facilities. The non-recourse nature of the Group's Continental
European investments provides the Company with a wide range of
options.
Risks & Opportunities
The Group is subject to a variety of risk factors arising from
the overall economic environment, supply and demand within the real
estate investment and capital markets, complex regulatory and
legislative environments, financial risks as well as the Group's
own properties, tenants and suppliers.
The principal risks to the Group are managed and controlled in
the following way:
Key Risks Management Actions in 2010/2011
Market risk The Group consistently The Group is involved
monitors economic, in on-going discussions
investment and capital with lending banks
market conditions and institutions
in connection with
pending maturities
======================= ========================= ==========================
Investment risk The Group manages the A revised Investment
investment process by Policy was adopted
thoroughly evaluating at the AGM in January
each acquisition 2011 which enabled
introduced to it by the the acquisition of
Investment Adviser or Harrow, Equitable
others House
======================= ========================= ==========================
Financial Risks
======================= ========================= ==========================
Interest rate risk Interest rate exposure As at 31 March 2011
is managed by having the majority of the
debt with fixed or Group's loans (except
capped interest rates for VBG1) were at
through the use of effective fixed rates
interest rate after taking account
derivatives of interest rate
swaps
The VBG1 facility
benefits from interest
rate caps at 2.50%
As of 15 April 2011,
the swap associated
with the VBG2 facility
matured, leaving
the facility on a
floating rate (currently
lower than the previous
fixed rate)
======================= ========================= ==========================
Financing requirements Bank borrowings are A standstill agreement
secured by fixed and is in place for the
floating charges over VBG2 facility while
the assets and income negotiations are
streams of the Company progressing with
and the Group. The the loan servicer
principal covenants
relating to these
borrowings are interest
cover ratios. The
majority of the Group's
facilities do not have
on-going loan to value
covenants
======================= ========================= ==========================
Exchange rate risk The Group is exposed to All foreign exchange
foreign exchange rate derivatives were
movements through its closed in 2010 -
investments in no further foreign
Continental Europe Debt exchange derivatives
funding for all have been taken out
Continental European
investments is taken out
in local currency to
match revenue streams
and financing costs and
minimise exposure to
foreign exchange rate
movements
======================= ========================= ==========================
Tax risk Independent and regular The review of the
tax advice is sought on Group structure is
property transactions as still continuing
well as the Group's with KPMG
overall structure
======================= ========================= ==========================
Regulatory risk The Group manages these A review of procedures
risks by appointing is being undertaken
managers, administrators in light of the guidance
and advisers, who are given on the UK's
familiar with regulatory Bribery Act 2010
requirements, to ensure
that the activities of
the Group are compliant
with all applicable
regulations
======================= ========================= ==========================
Further commentary on Financial Risk Management is contained in
note 16.
Looking Forward
The Company completed its strategic review and subsequently
announced, on 23 March 2011, the potential merger with Redefine.
The strategic review was a key priority for 2010/11 and the Board
of Wichford believes the Enlarged Company will create a
diversified, income-producing property portfolio that benefits from
a significant capital commitment from its largest shareholder.
The Enlarged Company will be in a stronger position to support
Wichford's strategic priorities and the Merger represents a clear
and strong complimentary fit, creating a company in the mid-tier of
the UK listed property sector (see Chairman's statement for more
detail on the Strategic Review).
Financial Review
The Group's financial results benefited from a stronger
investment market in the UK and strong underlying earnings from
Trading Operations. Total profits and earnings per share from
Trading Operations were up year on year.
Income Statement and Earnings Per Share
Basic earnings per share from Trading Operations were 0.56 pence
(March 2010: 0.40 pence; September 2010: 0.90 pence), up GBP1.6
million or 37.2% on the March 2010 results, showing resilient
underlying earnings strength.
A GBP16.7 million revaluation loss on investment properties
(March 2010: a gain of GBP14.2 million; September 2010: a gain of
GBP10.1 million) led to an overall loss of GBP12.3 million (March
2010: a profit of GBP18.0 million). Basic earnings per share for
the six months to 31 March 2011 was a loss of 1.16 pence per
share.
Revenue
Revenue for the period was GBP23.0 million, an increase from the
period to March 2010 of GBP1.1 million. There have been a number of
successful rent reviews within the last 12 months; those relating
to the current period are detailed in the Asset Management section
of the Business Review.
Administrative Expenses
Administrative expenses include the cost to the Group of
refurbishments required to attract new tenants to vacant space.
This has contributed to the slight increase in these costs since
March 2010. The Group is continuing to benefit from the actions
taken in the previous financial year to reduce costs in the areas
of audit services and offshore administration. Other costs have
increased and these are now being addressed; this includes the a
provision in regard to the strategic review and other non-recurring
items.
Administrative expenses included a release of the accrual of
GBP0.4 million (March 2010: nil: September 2010: GBP0.4 million)
for performance fees to the Investment Adviser which was made in
the previous financial year. This was deemed to be a share-based
payment scheme granted to the Investment Adviser which was
recognised as an expense, with the corresponding increase in
equity, over the period the Investment Adviser becomes entitled to
the awards. It is currently believed that no new shares will be
issued under this scheme, and as such these performance fee
accruals are no longer required.
Net Finance Costs
Finance costs under Trading Operations were down GBP0.8 million
from the same period last year resulting from lower interest
charges following the extension of the Zeta and VBG1 facilities at
lower prevailing interest rates as well as lower borrowing levels
following the periodic repayment of part of the Hague and VBG
loans.
Taxation
The tax charge consists of an expense of GBP0.3 million for
current taxation. This is mainly from the Non Resident Landlord
scheme operated by HMRC and for which the Group has an agreement to
the method to calculate this liability until the maturity of the
current UK facilities.
There is also a GBP0.8 million charge to profit and loss for
deferred tax resulting from the timing differences in how the Group
will recover its original investment in investment properties.
However, if the assets had been sold at the end of the reporting
period at 31 March 2011, the tax liability would have been GBP0.1
million.
Dividend
The Directors have declared an interim dividend of 0.32 pence
per share. The dividend cover ratio for the period based on
earnings from Trading Operations is 1.75 times.
Statement of Financial Position & Net Asset Value
The Group net assets were GBP54.9 million down from GBP59.0
million at 30 September 2010. The key factors behind this were
revaluation losses of GBP16.7 million, dividend payments of GBP3.5
million which were partly offset by a fall in the derivative
financial liabilities of GBP11.8 million.
Net asset value per share was 5.17 pence down from 5.56 pence at
30 September 2010.
Cashflow
As at 31 March the Group had GBP40.7 million (March 2010:
GBP60.5 million; September 2010: GBP41.7 million) of cash and
equivalents. Of this only GBP0.2 million was not available to the
Group after the payment of interest and loan repayments made in
April 2011.
The Group generated GBP9.5 million from its operating activities
and acquired two further properties, which together with
capitalised costs, totalled GBP5.9 million.
During the six months to 31 March 2011 the Group repaid a total
of GBP1.1 million in loans from the regular quarterly repayments
scheduled under the VBG and Hague facilities.
The final dividend for the year to September 2010 of GBP3.5
million, as approved by shareholders at the Annual General Meeting,
was paid in the period.
The overall result was that the Group's cash balances declined
by GBP1.0 million during the six months to 31 March 2011.
Financing and Capital
Securing a sustainable financing structure remains a strategic
priority for 2010/2011. The recent strategic review and resulting
proposed merger (which benefits from a substantial capital
commitment from the largest shareholder) are significant steps
forward in this process.
The Company has started discussions with a number of lending
institutions in advance of its October 2012 maturities. A leading
UK bank has been appointed as the Company's agent and will,
together with the Company, assess a wide range of options for new
funding including longer term fixed rate financing.
The current interest rate environment provides an opportunity to
secure longer-term rates at attractive levels. Early refinancing
options will be considered to provide security over the Company's
future interest costs and capital structure.
Negotiations around the VBG2 facility continue following the
maturity date in April 2011. The VBG2 borrowing entities have
signed a standstill agreement with the facility servicer in order
to continue negotiations around restructuring the facility. Both
parties are actively working towards a mutually beneficial solution
although there can be no certainty as to the outcome.
The Company has noted its intention to provide an orderly exit
from Europe and that the non-recourse nature of the Group's
Continental European assets, including the VBG portfolio, provides
a wide range of options at the Group's disposal.
The weighted average cost of debt as at 31 March 2011 (including
VBG1 taken at the relevant three month Euribor rate) is 5.02%
(September 2010: 5.00%).
Interest Interest
Cover Cover LTV
Facility Lender Maturity Debt Ratio Covenant LTV Covenant
GBPm % % % %
Windermere October
Delta XI CMBS 2012 114.6 138.5 125 91.4 n/a
========== ============ ========== ====== ========= ========= ====== =========
Windermere October
Gamma VIII CMBS 2012 199.7 151.8 115 92.9 n/a
========== ============ ========== ====== ========= ========= ====== =========
SNS
Property July
Hague Finance 2014 19.2 149.2 n/a(1) 94.1 n/a
========== ============ ========== ====== ========= ========= ====== =========
Windermere April
Halle XIV CMBS 2014 32.6 150.8 140 96.7 n/a
========== ============ ========== ====== ========= ========= ====== =========
Talisman January
VBG1 3 2012 58.3 282.0 120 122.7 n/a(2)
========== ============ ========== ====== ========= ========= ====== =========
Talisman April
VBG2 4 2011 46.7 176.0 115 128.3 n/a(3)
========== ============ ========== ====== ========= ========= ====== =========
Zeta Lloyds TSB May 2013 46.0 304.9 140 60.9 65%
========== ============ ========== ====== ========= ========= ====== =========
Total 517.1
==================================== ====== ========= ========= ====== =========
Notes:
1) ICR equivalent covenant waived following increased funding
charges
2) Previous LTV covenant of 85% waived for the extended maturity
period
3) Previous LTV covenant of 86% waived
Hedging
The Group uses interest rate swaps and interest rate caps to
limit its exposure to interest rate movements.
For facilities to which interest rate swaps are attached the
interest rates are fixed for the duration of the facility. This is
the case for all the Group's facilities except VBG1. For this
facility the Group has interest rate caps which limit the exposure
to upward movements while allowing the Group to take advantage of
falls in interest rates. These interest rate caps are not
designated as cash flow hedges and any changes in their fair value
will be taken to profit and loss rather than through other
comprehensive income.
The current interest rate swap for the Zeta facility is also not
designated a cash flow hedge and any changes in its fair value will
be taken to profit and loss rather than through other comprehensive
income. For the interest rate swaps cancelled in the previous
financial year the fair value previously taken to equity is being
transferred to profit and loss over their original remaining life
to maturity.
Exchange Rates
The average Euro to Sterling exchange rate for the six months to
31 March 2011 was 1.16316 (March 2010: 1.11613; September 2010:
1.15088).
The closing Euro to Sterling exchange rate at 31 March 2011 was
1.13730 (March 2010: 1.12040; September 2010: 1.16170).
GOING CONCERN
After considering the relevant factors, the Directors have a
reasonable expectation that the Company has adequate resources to
continue in operation for the foreseeable future. They have,
therefore, adopted the Going Concern basis in preparing these
financial statements. Details of the factors considered can be
found in Note 1 "Basis of Preparation" of the Financial
Statements.
Management Commentary
In December 2010 the International Accounting Standards Board
("IASB") issued an IFRS Practice Statement entitled "Management
Commentary" to provide a broad framework for a management
commentary that relates to financial statements prepared in
accordance with IFRSs, as Wichford does. The Practice Statement is
not an IFRS and companies applying IFRSs are not required to comply
with it.
In order to maintain its high standard of reporting the Company
has decided to comply with this Practice Statement and the
Organisation, Business Review and Financial Review form the
Company's Management Commentary.
Ten Largest Investments
1. Justizzentrum, Halle, Germany
Freehold courts and offices built in 1997 Current rent GBP2.9
and totalling 34,689 sq m million p.a.
Let to Land Sachsen-Anhalt until June 2020 German CPI indexation
Valuation: GBP33.7
million
-------------------------------------------------- -----------------------
2. Weiner Platz, Dresden, Germany
Freehold 2004 built office of 17,449 sq m Current rent GBP2.4
Let to VBG Verwaltungs-Berufsgenossenschaft million p.a.
until April 2024 German CPI indexation
Valuation: GBP31.3
million
-------------------------------------------------- -----------------------
3. Centenary Court, Bradford
Freehold 1990s built office of 9,743 sq m Current rent GBP2.0
Occupied by HMRC until April 2027 with a million p.a.
break in 2021 UK RPI indexation
Valuation: GBP27.8
million
4. Martin Luther Strasse, Stuttgart, Germany
Freehold 2005 built office of 12,455 sq m Current rent GBP2.1
Let to VBG Verwaltungs-Berufsgenossenschaft million p.a.
until January 2025 German CPI indexation
Valuation: GBP25.7
million
-------------------------------------------------- -----------------------
5. Haagse Veste1, The Hague, The Netherlands
Freehold 2008 built office of 12,878 sq m Initial rent of GBP1.9
Let to the Royal Dutch Government for use million p.a.
by the International Criminal Court for a Dutch CPI indexation
term of six years from July 2008 with a tenant's
option to extend for a further four years
Valuation: GBP20.3
million
-------------------------------------------------- -----------------------
6. Castle House, Leeds
Leasehold 1980s built office of 7,281 sq Current rent GBP1.2
m million p.a.
Let to Secretary of State for the Environment UK RPI indexation
until 2023
Valuation: GBP20.0
million
-------------------------------------------------- -----------------------
7. Markgraffenstrasse, Berlin, Germany
Freehold 2005 built office of 2,025 sq m Current rent GBP1.3
Let to VBG Verwaltungs-Berufsgenossenschaft million p.a.
until December 2022 German CPI indexation
Valuation: GBP16.3
million
-------------------------------------------------- -----------------------
8. Woodlands, Bedford
Freehold 1985 built office of 10,416 sq m Current rent GBP1.4
Majority occupied by Highways Agency until million p.a.
August 2020 Fixed uplift at rent
review
Valuation: GBP15.6
million
-------------------------------------------------- -----------------------
9. Crescent Centre, Bristol
Freehold 1970s built office of 8,180 sq m Current rent GBP1.2
million p.a.
Majority occupied by HMRC until 2023 with Valuation: GBP13.6
a break in 2021 million
-------------------------------------------------- -----------------------
10. Unicorn House, Bromley
Freehold 1980s built office of 5,365 sq m Current rent GBP1.2
million p.a.
Let to the Secretary of State for the Environment Valuation: GBP13.4
until 2010 and then to Trillium PRIME until million
March 2022 with a break in 2018
Statement of Directors Responsibilities in respect of the
half-yearly financial report
Each of the Directors confirms that to the best of each person's
knowledge and belief;
a) the condensed consolidated interim financial statements
comprising the condensed consolidated statement of comprehensive
income, the condensed consolidated statement of financial position,
the condensed consolidated statement of changes in equity, the
condensed consolidated statement of cash flows and related notes
have been prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU.
b) The interim management commentary includes a fair review of
the information required by:
i. DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the
year;
ii. DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
the period; and any changes in the related party transactions
described in the last annual report that could do so.
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 31 March 2011
Six months ended 31 March Six months ended 31
Notes 2011 March 2010
------------------ -----
Trading Other Trading Other
Operations* Items** Total Operations* Items** Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----- ----------- ------- ------ ----------- ------- ------
Revenue 4 23.0 - 23.0 21.9 - 21.9
(Deficit)/surplus
on revaluation of
investment
properties 10 - (16.7) (16.7) - 14.2 14.2
Administrative
expenses 5 (3.3) (0.4) (3.7) (3.2) (0.3) (3.5)
------------------ ----- ----------- ------- ------ ----------- ------- ------
OPERATING
PROFIT/(LOSS) 19.7 (17.1) 2.6 18.7 13.9 32.6
------------------ ----- ----------- ------- ------ ----------- ------- ------
Finance income 6 0.1 - 0.1 0.1 - 0.1
Finance costs 6 (13.6) (0.3) (13.9) (14.4) - (14.4)
------------------ ----- ----------- ------- ------ ----------- ------- ------
PROFIT/(LOSS)
BEFORE TAX 6.2 (17.4) (11.2) 4.4 13.9 18.3
------------------ ----- ----------- ------- ------ ----------- ------- ------
Income tax expense 7 (0.3) (0.8) (1.1) (0.1) (0.2) (0.3)
------------------ ----- ----------- ------- ------ ----------- ------- ------
PROFIT/(LOSS) FOR
THE PERIOD
ATTRIBUTABLE TO
OWNERS OF THE
COMPANY 5.9 (18.2) (12.3) 4.3 13.7 18.0
------------------ ----- ----------- ------- ------ ----------- ------- ------
OTHER
COMPREHENSIVE
INCOME
Gain/(loss) on
cash flow hedges - 12.0 12.0 - (1.0) (1.0)
Gain/(loss) on
foreign currency
translation - 0.1 0.1 - (4.1) (4.1)
----------- ------- ------ ----------- ------- ------
Other
comprehensive
income for the
year - 12.1 12.1 - (5.1) (5.1)
----------- ------- ------ ----------- ------- ------
Total
comprehensive
income for the
PERIOD
attributable to
owners of the
company 5.9 (6.1) (0.2) 4.3 8.6 12.9
----------- ------- ------ ----------- ------- ------
Earnings per share
from continuing
operations
Basic - pence 8 0.56 (1.72) (1.16) 0.40 1.29 1.69
Diluted - pence 8 0.56 (1.72) (1.16) 0.40 1.29 1.69
------------------ ----- ----------- ------- ------ ----------- ------- ------
Year ended 30 September
Notes 2010
---------------------------- -----
Trading Other
Operations* Items** Total
GBPm GBPm GBPm
---------------------------- ----- ------------ -------- ------
Revenue 4 44.3 - 44.3
Surplus on revaluation
of investment properties 10 - 10.1 10.1
(Loss) on disposal
of investment properties - (0.9) (0.9)
Administrative expenses 5 (6.9) (0.9) (7.8)
---------------------------- ----- ------------ -------- ------
OPERATING PROFIT 37.4 8.3 45.7
---------------------------- ----- ------------ -------- ------
Finance income 6 0.3 - 0.3
Finance costs 6 (27.9) (1.3) (29.2)
---------------------------- ----- ------------ -------- ------
PROFIT BEFORE TAX 9.8 7.0 16.8
---------------------------- ----- ------------ -------- ------
Income tax expense 7 (0.2) 0.4 0.2
---------------------------- ----- ------------ -------- ------
PROFIT FOR THE YEAR
ATTRIBUTABLE TO OWNERS
OF THE COMPANY 9.6 7.4 17.0
---------------------------- ----- ------------ -------- ------
OTHER COMPREHENSIVE
INCOME
Gain on cash flow
hedges - 1.5 1.5
(Loss) on foreign
currency translation - (0.6) (0.6)
------------ -------- ------
Other comprehensive
income for the year - 0.9 0.9
------------ -------- ------
Total comprehensive
income for the year
attributable to owners
of the company 9.6 8.3 17.9
------------ -------- ------
Earnings per share
from continuing operations
Basic - pence 8 0.90 0.70 1.60
Diluted - pence 8 0.89 0.69 1.58
---------------------------- ----- ------------ -------- ------
All activities are continuing.
* Trading Operations: This excludes the Other Items and reflects
the trading activities of the Group.
** Other Items: Includes the profits and losses on the sales of
investment properties and items of a non-trading
nature such as valuation adjustments arising from
the fair value of investment properties and
derivative financial instruments.
Condensed Consolidated Statement of Financial Position
As at 31 March 2011
31 March 31 March 30 September
2011 2010 2010
Notes GBPm GBPm GBPm
--------------------------------- ----- -------- --------- ------------
NON-CURRENT ASSETS
Investment properties 10 556.1 551.4 564.0
Trade and other receivables 11 12.1 12.1 11.9
--------------------------------- ----- -------- --------- ------------
568.2 563.5 575.9
--------------------------------- ----- -------- --------- ------------
CURRENT ASSETS
Trade and other receivables 11 5.6 12.6 9.6
Cash at bank 12 40.7 60.5 41.7
--------------------------------- ----- -------- --------- ------------
46.3 73.1 51.3
--------------------------------- ----- -------- --------- ------------
TOTAL ASSETS 614.5 636.6 627.2
--------------------------------- ----- -------- --------- ------------
CURRENT LIABILITIES
Trade and other payables 13 (15.6) (20.4) (15.8)
Borrowings 14 (105.1) (61.3) (47.0)
Derivative financial liabilities 15 (14.0) (19.1) (16.4)
--------------------------------- ----- -------- --------- ------------
(134.7) (100.8) (79.2)
--------------------------------- ----- -------- --------- ------------
NON-CURRENT LIABILITIES
Trade and other payables 13 (1.9) (2.2) (2.0)
Borrowings 14 (414.8) (460.2) (470.2)
Derivative financial liabilities 15 (6.3) (14.8) (15.7)
Deferred tax liabilities 7 (1.9) (1.6) (1.1)
--------------------------------- ----- -------- --------- ------------
(424.9) (478.8) (489.0)
--------------------------------- ----- -------- --------- ------------
TOTAL LIABILITIES (559.6) (579.6) (568.2)
--------------------------------- ----- -------- --------- ------------
NET ASSETS 54.9 57.0 59.0
--------------------------------- ----- -------- --------- ------------
EQUITY
Share capital 17/18 10.6 22.6 10.6
Share premium 161.4 161.4 161.4
Retained earnings (98.5) (93.6) (80.6)
Cash flow hedges reserve (21.0) (36.1) (32.9)
Currency translation reserve 2.4 2.7 0.5
--------------------------------- ----- -------- --------- ------------
TOTAL EQUITY ATTRIBUTABLE
TO THE ORDINARY EQUITY HOLDERS
OF THE PARENT COMPANY 54.9 57.0 59.0
--------------------------------- ----- -------- --------- ------------
NET ASSET VALUE
Basic - pence per share 9 5.17 5.37 5.56
Diluted - pence per share 9 5.17 5.37 5.50
--------------------------------- ----- -------- --------- ------------
Consolidated Statement of Changes in Equity
for the six months ended 31 March 2011
Cash flow Currency
Share Share Retained hedges translation
capital premium earnings reserve reserve Total
Six months
ended 31 March
2011 GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------- -------- --------- --------- ------------ ------
At 1 October 10.6 161.4 (80.6) (32.9) 0.5 59.0
-------------- -------- -------- --------- --------- ------------ ------
Transactions
with owners of
the Company
recognised in
equity
- Transfer to
distributable
reserves - - - - - -
- Dividends
paid - - (3.5) - - (3.5)
- Share based
payment
transaction - - (0.4) - - (0.4)
-------------- -------- -------- --------- --------- ------------ ------
Total
transactions
with owners
of the
Company
recognised in
equity - - (3.9) - - (3.9)
-------------- -------- -------- --------- --------- ------------ ------
Total
comprehensive
income
- (Loss) for
the period - - (12.3) - - (12.3)
Other
comprehensive
income
- Gain on cash
flow hedges - - - 12.0 - 12.0
- Gain on
foreign
currency
translation - - (1.7) (0.1) 1.9 0.1
-------------- -------- -------- --------- --------- ------------ ------
Total
comprehensive
income for
the period - - (14.0) 11.9 1.9 (0.2)
-------------- -------- -------- --------- --------- ------------ ------
At 31 March 10.6 161.4 (98.5) (21.0) 2.4 54.9
-------------- -------- -------- --------- --------- ------------ ------
Currency
Share Share Retained Cash flow translation
capital premium earnings reserve reserve Total
Six months
ended 31 March
2010 GBPm GBPm GBPm GBPm GBPm GBPm
--------------- -------- -------- --------- --------- ------------ -----
At 1 October 22.6 161.4 (107.0) (34.7) 5.1 47.4
--------------- -------- -------- --------- --------- ------------ -----
Transactions
with owners of
the Company
recognised in
equity
- Transfer to
distributable
reserves - - - - - -
- Dividends
paid - - (3.3) - - (3.3)
- Share based
payment
transaction - - - - - -
--------------- -------- -------- --------- --------- ------------ -----
Total
transactions
with owners of
the Company
recognised in
equity - - (3.3) - - (3.3)
--------------- -------- -------- --------- --------- ------------ -----
Total
comprehensive
income
- Profit for
the period - - 18.0 - - 18.0
Other
comprehensive
income
- (Loss) on
cash flow
hedges - - - (1.0) - (1.0)
- (Loss) on
foreign
currency
translation - - (1.3) (0.4) (2.4) (4.1)
--------------- -------- -------- --------- --------- ------------ -----
Total
comprehensive
income for the
period - - 16.7 (1.4) (2.4) 12.9
--------------- -------- -------- --------- --------- ------------ -----
At 31 March 22.6 161.4 (93.6) (36.1) 2.7 57.0
--------------- -------- -------- --------- --------- ------------ -----
Currency
Share Share Retained Cash flow translation
capital premium earnings reserve reserve Total
Year ended 30
September 2010 GBPm GBPm GBPm GBPm GBPm GBPm
--------------- -------- -------- --------- --------- ------------ -----
At 1 October 22.6 161.4 (107.0) (34.7) 5.1 47.4
--------------- -------- -------- --------- --------- ------------ -----
Transactions
with owners of
the Company
recognised in
equity
- Transfer to
distributable
reserves (12.0) - 12.0 - - -
- Dividends
paid - - (6.7) - - (6.7)
- Share based
payment
transaction - - 0.4 - - 0.4
--------------- -------- -------- --------- --------- ------------ -----
Total
transactions
with owners of
the Company
recognised in
equity (12.0) - 5.7 - - (6.3)
--------------- -------- -------- --------- --------- ------------ -----
Total
comprehensive
income
- Profit for
the year - - 17.0 - - 17.0
Other
comprehensive
income
- Gain on cash
flow hedges - - - 1.5 - 1.5
- (Loss) on
foreign
currency
translation - - 3.7 0.3 (4.6) (0.6)
--------------- -------- -------- --------- --------- ------------ -----
Total
comprehensive
income for the
year - - 20.7 1.8 (4.6) 17.9
--------------- -------- -------- --------- --------- ------------ -----
At 30 September 10.6 161.4 (80.6) (32.9) 0.5 59.0
--------------- -------- -------- --------- --------- ------------ -----
The cumulative foreign exchange difference included in the
Retained earnings reserve is a loss of GBP8.5 million (March 2010:
a loss of GBP11.8 million; September 2010: a loss of GBP6.8
million). In the cash flow hedges reserve the cumulative foreign
exchange difference is a loss of GBP0.2 million (March 2010: a loss
of GBP0.9 million; September 2010: a loss of GBP0.2 million).
The amount of the Currency translation reserve taken to the
profit or loss was nil (March 2010: nil; September 2010: a charge
of GBP0.8 million).
Condensed Consolidated Cash Flow Statement
for the six months ended 31 March 2011
Six months Six months
ended ended Year ended
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
------------------------------------ ---------- ---------- --------------
PROFIT/(LOSS) FOR THE PERIOD/YEAR (12.3) 18.0 17.0
------------------------------------ ---------- ---------- --------------
Adjust non-cash items:
- Decrease/(increase) in fair
value of investment properties 16.7 (14.2) (10.1)
- Loss on sale of investment
properties - - 0.9
- Share-based payment transaction (0.4) - 0.4
- Accrued rental income - (0.1) (0.2)
- Rent incentives 0.5 0.3 0.9
- Finance income (0.1) (0.1) (0.3)
- Finance costs 13.9 14.4 29.2
- Income tax expense 1.1 0.3 (0.2)
- Foreign exchange loss/(gain) 0.3 (1.6) 1.7
Working capital adjustments:
- Decrease/(increase) in trade
and other receivables 3.8 (2.0) (0.3)
- (Decrease) in trade and other
payables (0.3) (2.9) (8.8)
- Finance costs paid (13.1) (14.1) (27.3)
- Finance income received 0.1 0.1 0.3
- Finance lease paid (0.1) (0.1) (0.2)
- Taxation paid (0.6) (0.7) (0.8)
------------------------------------ ---------- ---------- --------------
CASH FLOWS FROM/(USED IN) OPERATING
ACTIVITIES 9.5 (2.7) 2.2
------------------------------------ ---------- ---------- --------------
INVESTING ACTIVITIES
Purchase of investment properties (5.9) (26.7) (58.2)
Uncompleted purchase of investment
properties - (3.7) -
Sale of investment properties - - 8.2
------------------------------------ ---------- ---------- --------------
CASH FLOW (USED IN) INVESTING
ACTIVITIES (5.9) (30.4) (50.0)
------------------------------------ ---------- ---------- --------------
FINANCING ACTIVITIES
(Decrease) in bank debt (1.1) (3.1) (3.8)
Equity dividends paid (3.5) (3.3) (6.7)
------------------------------------ ---------- ---------- --------------
CASH FLOWS (USED IN) FINANCING
ACTIVITIES (4.6) (6.4) (10.5)
------------------------------------ ---------- ---------- --------------
(DECREASE) IN CASH AND CASH
EQUIVALENTS (1.0) (39.5) (58.3)
------------------------------------ ---------- ---------- --------------
Cash and cash equivalents at
beginning of period/year 41.7 100.0 100.0
------------------------------------ ---------- ---------- --------------
CASH AND CASH EQUIVALENTS AT
PERIOD/YEAR END 40.7 60.5 41.7
------------------------------------ ---------- ---------- --------------
Notes to the Financial Statements
1. Basis of Preparation
The unaudited condensed consolidated half-yearly financial
statements of the Company for the six months ended 31 March 2011
comprises the Company and its subsidiaries (together referred to as
the "Group").
Due to the Company being in an offer period as announced on 15
November 2010 the Company is required to make additional
disclosures under Rule 29 of the Takeover Code. These disclosures
primarily relate to investment properties and taxation and have
been included in notes 10 and 7 respectively.
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets
and liabilities, income and expenses. Actual results may differ
materially from these estimates. In preparing these half-yearly
financial statements, the significant judgements made by management
in applying the Company's accounting policies and the key sources
of estimation uncertainty were the same as those that applied to
the Consolidated Financial Statements as at and for the year ended
30 September 2010.
The financial information included in the half-yearly financial
statements are unaudited and does not constitute statutory accounts
as defined in the Isle of Man Companies Acts 1931-2004 (as
amended).
The consolidated financial statements of the Group as at and for
the year ended 30 September 2010 are available upon request from
the Company's Registered Office at Top Floor, 14 Athol Street,
Douglas, Isle of Man IM1 1JA or at www.wichford.com.
Basis of Measurement
The financial statements are prepared on the historical cost
basis, except for investment property, derivative financial
instruments and share based payment transactions that are measured
at grant date fair value.
Functional Currency
The Group's presentation currency is pounds Sterling which
represents the functional currency of the Company and a number of
key subsidiaries. All financial information is presented in
millions of pounds sterling (GBPm), rounded to the nearest million
unless otherwise indicated.
Going Concern
These financial statements have been prepared on a going concern
basis as the Directors consider this the most appropriate
basis.
After considering the relevant factors, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operation for the period of their review being the 12
months to May 2012.
The principal issues the Directors considered in their enquiries
concerned loan maturities including the VBG2 facility which matured
in April 2011 together with the strategic review announced in
November 2010. The strategic review included an assessment of
strategic options, including addressing the longer term financing
position of the Company.
Following the period end a standstill agreement has been entered
into with the loan servicer for the VBG2 facility to allow the
on-going but non-concluded negotiations to continue. The Directors
note that this facility is ring-fenced with no recourse to the
other assets of the Group. They also note that the VBG1 facility
has already been successfully extended after negotiations with the
same loan servicer, although there can be no certainty that a
similar or any agreement is reached on the extension of the VBG2
facility.
The Directors have also taken into consideration that the Delta
and Gamma facilities have successfully been extended to October
2012, even though this is outside of their review period of 12
months to May 2012. It is not currently known whether a further
extension will be achieved. The strategic review addressed this
topic and the terms of the proposed merger with Redefine include a
commitment to a capital raising before the maturity of these
facilities in October 2012. The Directors believe that this,
combined with new loan facilities, will enable alternative funding
to become available before October 2012 to replace the Delta and
Gamma facilities.
Statement of Compliance
These condensed consolidated half-yearly financial statements
have been prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU. Both interim figures for the six
months ended 31 March 2011 and the comparative amounts for the six
months ended 31 March 2010 are unaudited but have been reviewed by
the Independent Auditors. The summary financial statements for the
year ended 30 September 2010, as presented in the interim financial
statements, represent an abbreviated version of the Group's full
accounts for that year, on which independent auditors issued an
unqualified audit report. The financial information presented
herein does not amount to statutory financial statements.
The condensed consolidated interim financial statements were
approved by the Board of Directors on 20 May 2011.
2. Significant Accounting Policies
The accounting policies applied by the Group in these condensed
interim financial statements are the same as those applied by the
Group in its audited financial statements as at and for the year
ended 30 September 2010.
The Directors have considered all IFRSs and interpretations as
adopted by the EU that have been issued, but which are not yet
effective and confirm that they do not believe that they will have
a significant impact on how the results of operations and financial
position of the Group are prepared and presented. The Directors
have also considered those IFRSs as adopted by the EU that became
effective during the period and confirm that there is no
significant impact on how the results of operations and financial
position of the Group has been prepared and presented.
Critical Judgements and Estimates
The preparation of financial statements in conformity with IFRS
requires the use of judgements and estimates that affect the
reported amounts of assets and liabilities at the reporting date
and the reported amounts of revenues and expenses during the year
reported. Although these estimates are based on the Directors' best
knowledge of the amount, event or actions, actual results may
differ from those estimates.
The principal areas where such judgements and estimates have
been made are:
Investment Property Valuation
The Group uses the valuation performed by its independent
valuers as a fair value of its investment properties. The valuation
is based upon assumptions including estimated rental values, future
rental income, anticipated maintenance costs, future development
costs and appropriate discount rates. The valuers also make
reference to market evidence of transaction prices for similar
properties.
Taxation
The Group is exposed to the risk of changes to tax legislation
in the various countries in which the Group operates. It is also
exposed to different interpretations of tax regulations between the
tax authorities and the Group.
Deferred Taxation
The Group considers that the value of the property portfolio is
likely to be realised by both the sale and the use over time.
The Group bases its deferred taxation provision on the
assumption that the residual value of the investment properties is
not less than the present value as provided by its external
valuers.
The Group makes an initial estimate of the length of time that
each property will be held in order to determine the initial
recognised exemption for both the in use and on sale elements for
each property. Periodically the Group will review the length of
time for which each property will continue to be held and this can
be significantly different from the residual of the time from the
initial estimate.
The resulting provision, being subject to assumptions on the
length of the time that each property will be held by the Group
which can change over time, can lead to significantly different
results for each property from one period to another.
The recoverability of any deferred tax asset is assessed and,
where it is thought unlikely that a recovery will be made, is not
included in the Group's provision.
Derivative Financial Instruments
The fair value of derivatives actively traded instruments is
determined by reference to bid prices at the close of business on
the reporting date. Where there is no active market, fair value is
determined using valuation techniques. These include using recent
arms-length market transactions, reference to the current market
value of another instrument which is substantially the same and
discounted cash flow analysis and pricing models.
Additionally, the Group tests the effectiveness of these
instruments half-yearly and the estimated ineffective portion is
recorded through profit or loss rather than taken to other
comprehensive income.
3. Operating Segments
The business activity of the Group is property investment in the
UK and Continental Europe which the Board considers to be the only
business segment as presented previously in the Annual Report.
However, the Board manages the Group by looking at the Continental
European operations separate from the rest of the Group and so
there are two reportable segments.
The following summary describes the operations in each of the
Group's reportable segments:
-- UK - Includes all UK properties together with all associated
legal entities.
-- Continental Europe - Includes all non-UK properties together
with all associated legal entities.
Continental Total Reportable Group
Six months ended 31 UK Europe segments Other Total
March 2011 GBPm GBPm GBPm GBPm GBPm
------------------------ ------ ----------- ---------------- ----- ------
External revenue 17.3 5.7 23.0 - 23.0
Inter-segment revenue - - - - -
Reportable segment
(loss) before income
tax (18.9) (2.2) (21.1) 9.9 (11.2)
Reportable segment
assets 454.1 143.1 597.2 17.3 614.5
Acquisition of
investment properties 5.9 - 5.9 - 5.9
------------------------ ------ ----------- ---------------- ----- ------
Continental Total Group
Six months ended 31 UK Europe Reportable Other Total
March 2010 GBPm GBPm segments GBPm GBPm GBPm
------------------------ ----- ----------- --------------- ----- ------
External revenue 15.9 5.9 21.8 0.1 21.9
Inter-segment revenue - - - - -
Reportable segment
profit/(loss) before
income tax 10.1 (1.8) 8.3 10.0 18.3
Reportable segment
assets 351.6 201.3 552.9 83.7 636.6
Acquisition of
investment properties 26.7 - 26.7 - 26.7
------------------------ ----- ----------- --------------- ----- ------
Continental Total Reportable Group
Year ended 30 September UK Europe segments Other Total
2010 GBPm GBPm GBPm GBPm GBPm
------------------------- ----- ----------- ---------------- ----- ------
External revenue 32.6 11.6 44.2 0.1 44.3
Inter-segment revenue - - - - -
Reportable segment
profit/(loss) before
income tax 4.3 (4.9) (0.6) 17.4 16.8
Reportable segment assets 441.1 166.7 607.8 19.4 627.2
Acquisition of investment
properties 58.2 - 58.2 - 58.2
(Loss) on disposals of
investment properties (0.8) (0.1) (0.9) - (0.9)
------------------------- ----- ----------- ---------------- ----- ------
Six months Six months Year
ended ended ended
31 March 31 March 30 September
Reconciliation of reportable 2011 2010 2010
segment profit or loss GBPm GBPm GBPm
------------------------------------- ---------- ---------- --------------
Total (loss)/profit for reportable
segments (21.1) 8.3 (0.6)
Other profit/(loss) - - -
---------- ---------- --------------
(21.1) 8.3 (0.6)
---------- ---------- --------------
Elimination of inter-segment
profits - - -
Unallocated amounts 9.9 10.0 17.4
---------- ---------- --------------
Condensed consolidated (loss)/profit
before income tax (11.2) 18.3 16.8
------------------------------------- ---------- ---------- --------------
Reportable segment assets and profit/(loss) for operating
segments are presented based on internal funding allocations. The
differences to the condensed consolidated statement of
comprehensive income and the condensed consolidated statement of
financial position are due to corporate activities.
In both reportable segments the principal customers are Central
and State Government departments.
4. Revenue
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
------------------------ ---------- ---------- --------------
Rental income 23.0 21.9 44.3
Finance income (note 6) 0.1 0.1 0.3
------------------------ ---------- ---------- --------------
23.1 22.0 44.6
------------------------ ---------- ---------- --------------
5. Administrative Expenses
The following items have been charged in arriving at operating
profit:
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
----------------------------------- ---------- ---------- --------------
Property Adviser's fees
- for advisory services 1.8 1.5 3.1
- for performance fees (0.4) - 0.4
Property Manager's fees 0.2 0.2 0.3
Independent Auditor's remuneration
- for audit 0.1 - 0.1
- for review of tax provision - - -
- for tax compliance work - - -
- for other tax advisory services - - 0.1
Legal fees 0.9 0.6 0.7
----------------------------------- ---------- ---------- --------------
The performance fee is payable by Wichford P.L.C. to Wichford
Property Management Limited ("WPML") and will be satisfied by the
issuance of new shares at the prevailing market price at the time
of payment, under which WPML will acquire Ordinary Shares in
Wichford P.L.C. at no cost.
The amount of any award is calculated as 20 per cent of the
amount by which the total return on the Ordinary Shares in Wichford
P.L.C. exceeds 12 per cent per annum for the first award under the
contract and 10 per cent per annum for subsequent awards. A
separate calculation of the amount of the annual award is made in
relation to each separate tranche of Ordinary Shares in Wichford
P.L.C. issued during the relevant three-year period.
The award of shares will only vest if the Company's return on
property over each three-year period from the beginning of the
relevant financial year to the end of the period two years later,
is in the top 40 percentile of the IPD All Office Index. The
Company has engaged IPD to make this comparison. The number of
shares to be issued is only known at the end of each three year
period as the cash equivalent earned under this scheme is only
ascertainable at that stage and is divided by the average share
price for the last 20 business days of the three year period.
The grant-date fair value of the award granted to the Investment
Adviser was estimated based on multiple scenarios. Expected
volatility and dividends are estimated by considering historic
average data.
The Company has reviewed the performance fee and it is currently
regarded as highly unlikely that the performance condition of the
Company's return on property being in the top 40 percentile of the
IPD All Office Index, as described above, will be met and so is
taking the opportunity to revise the accrual made to date to
reflect this circumstance. This has resulted in a credit to the
condensed consolidated statement of comprehensive income in the
amount of GBP0.4 million with the corresponding debit in
equity.
A summary of the items included in Other Items for
Administrative Expenses is shown below.
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
-------------------------------- ---------- ---------- --------------
Trading Operations
---------- ---------- --------------
Administrative expenses 3.3 3.2 6.9
---------- ---------- --------------
Other Items
Legal expenses of substitutions - 0.3 0.6
Service charges - - 0.3
Advisory services 0.4 - -
---------- ---------- --------------
Total Administrative Expenses
in Other Items 0.4 0.3 0.9
---------- ---------- --------------
Total Administrative Expenses 3.7 3.5 7.8
-------------------------------- ---------- ---------- --------------
6. Finance Income and Costs
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
------------------------------------ ---------- ---------- --------------
Finance Income
Interest receivable 0.1 0.1 0.3
Total Finance Income 0.1 0.1 0.3
------------------------------------ ---------- ---------- --------------
Finance costs
Interest expense 13.5 14.3 27.6
Finance lease interest 0.1 0.1 0.2
Discontinuation and ineffectiveness
on Cash Flow Hedges 1.2 0.2 1.3
Fair value movement on trading
derivatives (0.9) (0.2) 0.1
---------- ---------- --------------
Total Finance Costs 13.9 14.4 29.2
------------------------------------ ---------- ---------- --------------
7. Income Tax Expense
(a) Tax on Profit from Ordinary Activities
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
------------------------------------- ---------- ---------- -------------
(Loss)/profit before tax (11.2) 18.3 16.8
------------------------------------- ---------- ---------- -------------
Current income tax
Adjustments in respect of prior
years 0.1 - (0.1)
Income tax in respect of current
periods/years 0.2 0.1 0.3
---------- ---------- -------------
Total current income tax 0.3 0.1 0.2
------------------------------------- ---------- ---------- -------------
Deferred tax
Movement in deferred tax liability 0.8 0.2 (0.4)
---------- ---------- -------------
Income tax expense/(credit) reported
in the condensed consolidated
statement of comprehensive income 1.1 0.3 (0.2)
------------------------------------- ---------- ---------- -------------
During the year to 30 September 2010 the Company reached
agreement with HMRC over the previous tax periods and made payment
of all resultant tax. No penalties, except for interest on late
payment, were charged to the Group.
(b) Deferred Tax
Deferred tax included in the Condensed Consolidated Statement of
Financial Position is as follows:
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
------------------------------------ -------- -------- -------------
Deferred tax liability
Temporary differences on investment
property 1.9 1.6 1.1
Deferred tax liability 1.9 1.6 1.1
------------------------------------ -------- -------- -------------
Deferred tax included in the Condensed Consolidated Statement of
Comprehensive Income is as follows:
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
------------------------------------- ---------- ---------- --------------
Temporary differences on investment
properties 0.8 0.2 (0.4)
Deferred income tax expense/(credit) 0.8 0.2 (0.4)
------------------------------------- ---------- ---------- --------------
The deferred tax provision reflects the likely tax charge in
future periods based on the current expectation of how long each
property will be owned. The calculation of this provision is based
on separate calculations for recovering the initial investment
through its use and on sale. See note 7(d) for potential tax
liability on the disposal of assets.
No deferred tax asset has been recognised due to the uncertainty
of it being realised.
(c) Factors Affecting the Tax Charge in the Year
As the Group's properties are principally in the UK and owned by
companies registered in the Isle of Man the Company regards the
UK's income tax rate of 20% (March 2010: 20%; September 2010: 20%),
as payable under the UK's Non Resident Landlord Scheme, to be most
relevant tax rate for the reconciliation of the theoretical tax
charge on accounting profits to the tax charge for the year shown
through the profit or loss.
This reconciliation is shown below.
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
(Loss)/profit before tax (11.2) 18.3 16.8
---------- ---------- --------------
(Loss)/profit before tax multiplied
by standard rate of UK income
tax (20%) (2.2) 3.7 3.4
Effect of:
- income not subject to UK
income tax (2.0) (4.2) (3.2)
- exempt property revaluation
of investment properties 3.4 (2.8) (2.0)
- losses carried forward 0.1 3.4 0.6
- deferred tax provision 0.8 0.2 (0.4)
- adjustment in respect of
prior periods/years 0.1 - (0.1)
- expenses not deductible for
tax 0.9 - 1.5
---------- ---------- --------------
Total tax charge/(credit) for
the period/year 1.1 0.3 (0.2)
---------- ---------- --------------
(d) Potential Tax Liability on the Disposal of Assets
In accordance with Rule 29.3 of the Takeover Code, Shareholders
should note that the valuation reports from Savills Commercial
Limited and DTZ have not taken into account any liability for tax
which may arise on a disposal, whether actual or notional, of the
Company's assets. If the properties which are the subject of the
valuation reports were to be sold at the amounts of these valuation
reports the Board estimates that the potential tax liability that
would arise would be approximately GBP0.1 million.
8. Earnings Per Share
Basic earnings per share for the six months ended 31 March 2011
is based on the loss attributable to equity shareholders of GBP12.3
million (March 2010: profit of GBP18.0 million; September 2010:
profit of GBP17.0 million) and a weighted average number of
Ordinary Shares outstanding during the six months ended 31 March
2011 of 1,062,095,584 (March 2010: 1,062,095,584; September 2010:
1,062,095,584).
The potential number of shares that may be issued under the
performance fee arrangements with the Investment Adviser was nil at
31 March 2011 (March 2010: nil; September 2010: 12,214,183) as the
estimated value of the incentive scheme was GBP1.1 million for the
first three-year period, being the period from 1 October 2009 to 30
September 2012. There is no additional accrual for the second
three-year period, being the period from 1 October 2010 to 30
September 2013 after removing any double-counting of performance
for the same time periods.
No shares are expected to be issued under the performance fee
arrangements and so the basic and diluted earnings per share are
the same for the current period.
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
-------------------------------- ---------- ---------- --------------
Profit from Trading Operations 5.9 4.3 9.6
(Loss)/profit from Other Items (18.2) 13.7 7.4
---------- ---------- --------------
(Loss)/profit attributable
to equity shareholders (12.3) 18.0 17.0
Weighted average number of
Ordinary Shares (000s) 1,062,096 1,062,096 1,062,096
Effect of share-based payment
transactions (000's) - - 12,214
Diluted weighted average number
of Ordinary Shares (000's) 1,062,096 1,062,096 1,074,310
-------------------------------- ---------- ---------- --------------
Earnings per share - pence
Profit from Trading Operations
per share 0.56 0.40 0.90
(Loss)/profit from Other Items
per share (1.72) 1.29 0.70
---------- ---------- --------------
Basic earnings per share (1.16) 1.69 1.60
---------- ---------- --------------
Profit from Trading Operations
per share 0.56 0.40 0.89
(Loss)/profit from Other Items
per share (1.72) 1.29 0.69
---------- ---------- --------------
Diluted earnings per share (1.16) 1.69 1.58
-------------------------------- ---------- ---------- --------------
For EPRA basis total earnings per share figure refer to note
22.
9. Net Assets Per Share
Net assets per share is calculated by dividing the net assets at
31 March 2011 attributable to the equity holders of the parent of
GBP54.9 million (March 2010: GBP57.0 million; September 2010:
GBP59.0 million) by the number of Ordinary Shares as at 31 March
2011 of 1,062,095,584 (March 2010: 1,062,095,584; September 2010:
1,062,095,584).
The potential number of shares that may be issued under the
performance fee arrangements with the Investment Adviser was nil at
31 March 2011 (March 2010: nil; September 2010: 12,214,183) as the
estimated value of the incentive scheme was GBP1.1 million for the
first three-year period, being the period from 1 October 2009 to 30
September 2012. There was no additional accrual for the second
three-year period, being the period from 1 October 2010 to 30
September 2013 after removing any double-counting of performance
for the same time periods.
No shares are expected to be issued under the performance fee
arrangements and so the basic and diluted net assets per share are
the same for the current period.
31 March 31 March 30 September
2011 2010 2010
--------------------------------- --------- --------- -------------
Net assets attributable to
equity holders of the parent
(GBPm) 54.9 57.0 59.0
Number of Ordinary Shares (000s) 1,062,096 1,062,096 1,062,096
Effect of share-based payment
transactions (000's) - - 12,214
Diluted number of Ordinary
Shares (000's) 1,062,096 1,062,096 1,074,310
Net assets per share (pence)
Basic net assets per share 5.17 5.37 5.56
Diluted net assets per share 5.17 5.37 5.50
--------------------------------- --------- --------- -------------
For EPRA basis net asset value figures refer to note 22.
10. Investment Properties
Freehold
Freehold/ and long
Feuhold leasehold Long leasehold Total
Six months ended 31 March
2011 GBPm GBPm GBPm GBPm
----------------------------- --------- ---------- -------------- ------
At 1 October 444.4 19.1 100.5 564.0
Foreign exchange differences 2.9 - - 2.9
Purchases during the
period 5.9 - - 5.9
Disposals during the
period - - - -
Valuation losses (12.0) (1.1) (3.6) (16.7)
At 31 March 441.2 18.0 96.9 556.1
----------------------------- --------- ---------- -------------- ------
Freehold
Freehold/ and long
Feuhold leasehold Long leasehold Total
Six months ended 31 March
2010 GBPm GBPm GBPm GBPm
----------------------------- --------- ---------- -------------- -----
At 1 October 414.1 18.6 83.4 516.1
Foreign exchange differences (5.6) - - (5.6)
Purchases during the
period 26.7 - - 26.7
Disposals during the
period - - - -
Valuation gains 11.0 0.3 2.9 14.2
At 31 March 446.2 18.9 86.3 551.4
----------------------------- --------- ---------- -------------- -----
Freehold
Freehold/ and long
Feuhold leasehold Long leasehold Total
Year ended 30 September
2010 GBPm GBPm GBPm GBPm
----------------------------- --------- ---------- -------------- ------
At 1 October 414.1 18.6 83.4 516.1
Foreign exchange differences (8.8) - - (8.8)
Purchases during the
year 43.1 - 15.1 58.2
Disposals during the
year (11.6) - - (11.6)
Valuation gains 7.6 0.5 2.0 10.1
At 30 September 444.4 19.1 100.5 564.0
----------------------------- --------- ---------- -------------- ------
At 31 March 2011 the Group owned 83 properties throughout the
UK, Germany and the Netherlands.
The Group has made a provision for the purchase of the remaining
shares in connection with its investments in Germany. This amounted
to GBP1.8 million.
All the Group's investment properties were externally valued as
at 31 March 2011, 31 March 2010 and 30 September 2010 on the basis
of open market value by professionally qualified valuers in
accordance with the Appraisal and Valuation Standards of the Royal
Institution of Chartered Surveyors. The Group's valuers are Savills
Commercial Limited in the UK and DTZ for Continental Europe.
The value of each of the properties has been assessed in
accordance with the relevant parts of the Red Book. In particular,
the Market Value has been assessed in accordance with PS 3.2. Under
these provisions, the term "Market Value" means "the estimated
amount for which a property should exchange on the date of
valuation between a willing buyer and a willing seller in an
arms-length transaction after proper marketing wherein the parties
have each acted knowledgeably, prudently and without
compulsion".
In undertaking the valuations on the basis of Market Value, the
valuers have applied the interpretative commentary which has been
settled by the International Valuation Standards Committee and
which is included in PS 3.2. The RICS considers that the
application of the Market Value definition provides the same result
as Open Market Value, a basis of value supported by previous
editions of the Red Book.
The valuation does not include any adjustments to reflect any
liability to taxation that may arise on disposal, nor for any costs
associated with disposals incurred by the owner. No allowance has
been made to reflect any liability to repay any government or other
grants, or taxation allowance that may arise on disposals.
Deductions have been made to reflect purchasers' acquisition costs.
These have been applied according to value on a sliding scale,
representative of the typical costs that would be incurred in the
market.
The valuers have used the following key assumptions:
-- The Market Value of investment properties has been primarily
derived using comparable market transactions on arm's-length terms
and an assessment of market sentiment. The aggregate of the net
annual rents receivable from the properties and, where relevant,
associated costs, have been valued at average yields ranging from
4.0% to 20.7%, which reflect the risks inherent in the net cash
flows. Valuations reflect, where appropriate, the type of tenants
actually in occupation or likely to be in occupation after letting
of vacant accommodation and the market's perception of their
creditworthiness and the remaining useful life of the property.
-- Given the significant fall in rents for some offices over the
past year, an increased number of properties in the portfolio are
considered to be over-rented. To account for this, the element of
over-rent has been valued at a higher yield than the element of
core income to take account of the fact that the tenants are paying
in excess of market yields.
In accordance with Rule 29.3 of the Takeover Code, shareholders
should note that the Valuation Reports from DTZ and Savills have
not taken into account any liability for tax which may arise on a
disposal, whether actual or notional, of the properties. If the
properties which are the subject of the Valuation Reports set out
in Appendix 1 were to be sold at the amount of the valuations
stated in Appendix 1, the Board of Wichford estimates that the
potential tax liability that would arise would be approximately
GBP0.1 million. Further, and as required by the Takeover Code, the
Board considers, following consultation with the valuers, that the
valuation of the properties in total at the date of this statement
is not materially different to that used in these financial
statements.
A reconciliation of investment property valuations to the
consolidated statement of financial position carrying value of
investment property is shown below:
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
------------------------------------- -------- -------- -------------
Investment property at Market
Value as determined by external
valuers 565.7 562.5 573.5
Adjustments for items presented
separately on the Consolidated
Statement of Financial Position:
- Add minimum payment under
head leases separately included
as a payable 3.6 2.0 3.6
- Less accrued incentives separately
included as a receivable (11.5) (11.5) (11.4)
- Less accrued rental income
separately included as a receivable (1.9) (1.8) (1.9)
- Add accrued rental income
separately included as a payable 0.2 0.2 0.2
-------- -------- -------------
Condensed consolidated Statement
of Financial Position carrying
value of investment property 556.1 551.4 564.0
------------------------------------- -------- -------- -------------
11. Trade And Other Receivables
31 March 2011 Current Non-Current Total
GBPm GBPm GBPm
Trade receivables 1.9 - 1.9
VAT recoverable 0.2 - 0.2
Accrued rental incentives 1.1 10.4 11.5
Accrued rental income 0.2 1.7 1.9
Other receivables and prepayments 0.9 - 0.9
Service charge 1.3 - 1.3
------- ----------- -----
5.6 12.1 17.7
---------------------------------- ------- ----------- -----
31 March 2010 Current Non-Current Total
GBPm GBPm GBPm
Trade receivables 3.0 - 3.0
VAT recoverable 0.3 - 0.3
Accrued rental incentives 1.0 10.5 11.5
Accrued rental income 0.2 1.6 1.8
Other receivables and prepayments 7.3 - 7.3
Service charge 0.8 - 0.8
------- ----------- -----
12.6 12.1 24.7
---------------------------------- ------- ----------- -----
30 September 2010 Current Non-Current Total
GBPm GBPm GBPm
Trade receivables 3.1 - 3.1
VAT recoverable 0.2 - 0.2
Accrued rental incentives 1.1 10.3 11.4
Accrued rental income 0.3 1.6 1.9
Other receivables and prepayments 4.3 - 4.3
Service charge 0.6 - 0.6
------- ----------- -----
9.6 11.9 21.5
---------------------------------- ------- ----------- -----
As at 31 March 2011 nil trade receivables were impaired (March
2010: nil; September 2010: nil). As at 31 March 2011, GBP0.1
million trade receivables were over 120 days but not impaired
(March 2010: nil; September 2010: GBP0.6 million).
12. Cash At Bank
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
-------- -------- -------------
Cash and cash equivalents 31.8 49.4 34.6
Restricted cash 8.9 10.3 7.1
-------------------------- -------- -------- -------------
Cash at bank 40.7 59.7 41.7
-------------------------- -------- -------- -------------
At 31 March 2011 there was GBP8.9 million (March 2010: GBP11.1
million; September 2010: GBP7.1 million) of the cash at bank to
which the Group could not get instant access. The principal reason
for this is that rents received are primarily held in locked bank
accounts as interest and other related expenses are paid from these
monies on the interest payment dates. Of the total amount GBP6.4
million (March 2010: GBP6.5 million; September 2010: GBP6.3
million) was released to pay interest and related expenses within
the following 25 days with the surplus being released from
Restricted Cash. A total GBP0.2 million (March 2010: GBP4.6
million: September 2010: GBP0.8 million) was retained in Restricted
Cash.
Cash at bank earns interest at floating rates based on daily
bank deposit rates. Short-term deposits are made for varying
periods dependent on the immediate cash requirements of the
Group.
13. Trade And Other Payables
31 March 2011 Current Non-Current Total
GBPm GBPm GBPm
---------------------------- ------- ----------- -----
Rent received in advance 4.3 - 4.3
VAT payable 1.5 - 1.5
Other payables and accruals 8.5 1.7 10.2
Accrued rental income - 0.2 0.2
Service charge 1.3 - 1.3
------- ----------- -----
15.6 1.9 17.5
---------------------------- ------- ----------- -----
31 March 2010 Current Non-Current Total
GBPm GBPm GBPm
---------------------------- ------- ----------- -----
Rent receivable in advance 5.5 - 5.5
VAT payable 1.4 - 1.4
Other payables and accruals 12.7 2.0 14.7
Accrued rental income - 0.2 0.2
Service charge 0.8 - 0.8
------- ----------- -----
20.4 2.2 22.6
---------------------------- ------- ----------- -----
30 September 2010 Current Non-Current Total
GBPm GBPm GBPm
---------------------------- ------- ----------- -----
Rent received in advance 4.8 - 4.8
VAT payable 1.1 - 1.1
Other payables and accruals 9.1 1.9 11.0
Accrued rental income 0.1 0.1 0.2
Service charge 0.7 - 0.7
------- ----------- -----
15.8 2.0 17.8
---------------------------- ------- ----------- -----
14. Borrowings
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
----------------------------- -------- -------- -------------
Current
Bank loans 105.1 61.3 47.0
----------------------------- -------- -------- -------------
Non-current
Bank loans 412.0 460.2 467.9
Less: deferred finance costs (0.8) (2.0) (1.3)
Finance leases 3.6 2.0 3.6
414.8 460.2 470.2
----------------------------- -------- -------- -------------
The current bank loans are the VBG1 and VBG2 facilities plus the
amount to be repaid in the next 12 months under The Hague
facility.
a) Bank Loans
At 31 March 2011, the bank borrowings of GBP517.1 million (March
2010: GBP521.5 million; September 2010: GBP514.9 million) are
secured by fixed and floating charges over the assets and income
streams of the Group. It comprised of seven separate borrowing
facilities each secured on a number of discrete assets with no
common assets.
These facilities are summarised as below:
31 March 31 March 30 September
Interest 2011 2010 2010
Facility Lender Rate* GBPm GBPm GBPm
--------- ---------------- -------- -------- -------- -------------
Windermere XI
Delta CMBS 5.69% 114.6 114.6 114.6
Windermere VIII
Gamma CMBS 5.52% 199.7 199.7 199.7
SNS Property
Hague Finance 7.19% 19.2 19.6 18.9
Windermere XIV
Halle CMBS 5.05% 32.6 33.1 31.9
VBG1 Talisman 3 2.10% 58.3 60.3 57.7
VBG2 Talisman 4 5.03% 46.7 48.2 46.1
Zeta Lloyds TSB 3.88% 46.0 46.0 46.0
-------- -------- -------------
517.1 521.5 514.9
-------- -------- -------------
*Note: inclusive of swaps fixed rate (excluding VBG1).
The Gamma and Delta facilities are non-reducing and had
repayment dates in October 2010. Both have been put into
securitisation conduits by the lender. The Company has successfully
completed an extension of these facilities which now have repayment
dates in October 2012 with all other terms and conditions remaining
the same.
The Hague facility, which was entered into by the Group in July
2008, was non-reducing and has a final repayment date in July 2014.
Subsequent to the 30 September 2009 the Group agreed that for the
period from November 2009 to October 2010 this facility will become
a reducing loan whereby 0.25% of the initial outstanding balance
will be repaid over that period in equal quarterly amounts. This
was agreed together with a liquidity surcharge and increased margin
imposed by the lender. These changes were reviewed in October 2010
and the revised conditions were extended until October 2011. As a
result of the imposition of the liquidity surcharge and increased
margin, the interest cover test may fail and the lender granted a
waiver of this test until October 2010 which, as part of the review
in October 2010, has since been extended until October 2011.
This facility contains a cross-default provision that enables
SNS Property Finance to demand repayment of the facility if there
is an event of default under any other Group facility. SNS Property
Finance's recourse is limited to the Hague property and its rental
income. Notwithstanding the terms of this cross-default provision,
in the event that such a default occurred under any of the other
Group facilities, the Company has been advised that it would be
difficult for SNS Property Finance to demand repayment of the Hague
facility pursuant to this cross-default provision in the absence of
either a payment default under the Hague facility or Wichford Den
Haag BV's actual or threatened insolvency.
The Halle facility is non-reducing and has a repayment date in
April 2014. The facility was already in place when the Group
acquired the property on which it is secured in September 2007 and
it was revised in October 2007 to increase the amount borrowed from
EUR31.9 million to EUR37.1 million. This facility was originally
entered into in February 2007.
The VBG facilities are reducing dependent upon expected rent
rises with final repayment dates in January 2010 for VBG1 (extended
during the previous year to January 2012) and April 2011 for VBG2.
However, on acquisition of the properties, part of the purchase
price was paid into escrow accounts such that all expected
reductions of these bank loans to the original maturity dates would
be funded by the escrow accounts. These facilities have been put
into securitisation conduits by the lender. The Group took on
responsibility for these facilities on the acquisition of the
properties on which they are secured, in June 2007.
Following the final repayment date for the VBG1 facility the
Company has negotiated a two-year extension to this facility where
the terms and conditions were mainly the same. However, the
interest rate swaps associated with this facility matured on the
repayment date in January 2010 and the Company has taken out
interest rate caps which protect against future increases in
interest rates and allow money to be released to the Group on each
interest payment date. The on-going LTV covenant has also been
waived.
The VBG2 facility matured in April 2011 and the loan servicer
called for a valuation of the two properties over which security
was granted. The result of this was that the LTV covenant was not
being met and the loan servicer has granted a waiver of this
covenant while the longer term future of this facility is
discussed. The Company has arranged a standstill agreement under
the terms of which the lender will not call for repayment whilst
terms for an extension of the loans are negotiated. It is the
Company's view that a similar extension to that achieved on the
VBG1 facility can be agreed although there can be no certainty that
a similar or any agreement is reached on the extension of the VBG2
facility.
The Zeta facility, which was entered into by the Group in May
2008, is non-reducing and had a repayment date in May 2011. The
Company has successfully negotiated terms in 2010 for a two-year
extension allowed under the original facility agreement. This
facility now has a final repayment date in May 2013 on the same
terms and conditions.
The opportunity was taken to replace the existing swaps on the
Zeta facility with a composite one extending out to the final
repayment date in May 2013.
The Delta, Gamma and Halle facilities provide for the payment of
interest at a fixed rate. However, the respective borrowing
subsidiaries have given indemnities to the lenders in respect of
interest rate swaps entered into to create those fixed rates. As
such these facilities have been treated as floating rate facilities
with interest rate swaps. All of the facilities, except the VBG1
facility, are regarded as subject to the interest rate swaps of
either ones with a Group entity as counter-party or where the
facility agreement requires such instruments to be in place and
have been taken out by the lender as detailed in note 15. The
derivatives for the Delta, Gamma and Halle facilities do not have a
Group company as counter-party but the Company recognises that it
benefits from them and recognise them separately. On these
facilities the Group is charged a fixed interest rate equal to the
strike rate for these derivatives.
The exception to this interest rate swap regime is the VBG1
facility which now has interest rate caps associated with it. These
derivatives are described in note 15.
b) Finance Leases
Obligations under finance leases at the reporting dates are
analysed as follows:
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
Gross finance lease liabilities
repayable:
In one year or less 0.2 0.1 0.2
In more than one year, but not
more than five years 0.8 0.5 0.8
In more than five years 15.5 9.6 15.4
-------- -------- -------------
16.5 10.2 16.4
Less: finance charges allocated
to future periods (12.9) (8.2) (12.8)
-------- -------- -------------
Present value of minimum lease
payments 3.6 2.0 3.6
-------------------------------- -------- -------- -------------
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
Present value of finance lease
liabilities repayable:
In one year or less - - -
In more than one year, but not
more than five years 0.2 0.1 0.2
In more than five years 3.4 1.9 3.4
-------- -------- -------------
Present value of minimum lease
payments 3.6 2.0 3.6
------------------------------- -------- -------- -------------
The present values of minimum lease payments have been
calculated by using the market cost of external borrowings
available to the Group at the inception of the lease.
15. Derivative Financial Instruments
The Group enters into interest rate swaps and interest rate cap
agreements. The purpose is to manage the interest rate risks
arising from the Group's operations and its sources of finance.
The interest rate swaps employed by the Group to convert the
Group's borrowings to fixed interest rate debt fall into two
categories, as explained in a) i) and ii) below.
The interest rate caps employed by the Group limit the exposure
to upward movements in interest rates. These are detailed in b)
below.
It is the Group's policy that no economic trading in derivatives
shall be undertaken.
a) Interest rate swap agreements
In accordance with the terms of the borrowing arrangements, the
Group has entered into interest swap agreements.
The interest rate swaps are used to manage the interest rate
profile of financial liabilities. The Group has employed interest
rate swaps to eliminate future exposure to interest rate
fluctuations as well as being charged fixed rate interest on those
facilities described as having lender level interest rate swaps as
described below.
The total amount of notional value of these interest rate swaps,
both those at lender level and borrower level, at 31 March 2011 was
GBP458.8 million (March 2010: GBP461.2 million; September 2010:
GBP457.2 million) and the blended fixed rate achieved by these
interest rate swaps was 4.49% (March 2010: 4.44%; September 2010:
4.35%).
These interest rate swaps can be segregated into two types:
Lender level and Borrower level. These are detailed below.
i) Lender level interest rate swap agreements
Lender level interest rate swaps agreements are those from which
the Group benefits but which do not have any Group entity as
counter-party, instead the lender is the counter-party with the
commercial banking entity providing the interest rate swap. These
arise where the loan agreements call for interest rate swaps to be
taken out to allow a fixed interest charge to be made to the
Group's borrowing subsidiaries and these borrowers have given
indemnities to the lenders in respect to these interest rate
swaps.
The interest rate swaps for the Delta, Gamma and Halle
facilities, from which the Group benefits by both eliminating any
interest rate fluctuations in the market over the course of the
facilities and also from any benefit (or cost) of closing these
instruments out, are lender level interest rate swaps. The swaps
are between the CMBS vehicles (the lenders) and commercial banking
counter-parties.
The Company recognises these embedded derivatives separately as,
while the Group is charged interest at a fixed rate on these
facilities, the terms of the facilities mean the Group ultimately
receives their benefit or pays their burdens.
As a result of the use of interest rate swaps, the fixed rate
profile of the Group's lender level interest rate swaps was:
31 March 31 March 30 September
2011 2010 2010
Effective Maturity Swap
Facility Date Date Rate GBPm GBPm GBPm
--------- ----------- ----------- ----- -------- -------- -------------
Delta 21/07/2006 15/10/2012 4.95% 114.6 114.6 114.6
Gamma 23/05/2005 20/10/2012 4.77% 199.7 199.7 199.7
Halle 19/02/2007 22/04/2014 4.19% 32.6 33.1 31.9
--------- ----------- ----------- ----- -------- -------- -------------
Total 346.9 347.4 346.2
----------------------------------- ----- -------- -------- -------------
The fair values of the interest rate swaps at 31 March was:
31 March 31 March 30 September
2011 2010 2010
Facility GBPm GBPm GBPm
--------- -------- -------- -------------
Delta (6.1) (9.5) (9.1)
Gamma (10.1) (15.6) (15.1)
Halle (1.6) (2.9) (3.0)
Total (17.8) (28.0) (27.2)
--------- -------- -------- -------------
ii) Borrower level interest rate swap agreements
Borrower level interest rate swap agreements are those that have
a Group company as the counter-party to the commercial bank
providing the interest rate swap.
The Group has taken out such interest rate swaps in respect of
its Hague, VBG1, VBG2 and Zeta facilities.
As a result of the use of interest rate swaps, the fixed rate
profile of the Group was:
31 March 31 March 30 September
2011 2010 2010
Effective Maturity Swap
Facility Date Date Rate GBPm GBPm GBPm
--------- ----------- ----------- ----- -------- -------- -------------
Hague 01/08/2008 01/08/2014 4.89% 19.2 19.6 18.9
VBG2 27/04/2007 15/04/2011 3.93% 46.7 48.2 46.1
Zeta 08/05/2008 09/05/2011 5.30% - 17.0 -
Zeta 21/07/2008 09/05/2011 5.79% - 9.0 -
Zeta 24/07/2009 09/05/2011 2.15% - 20.0 -
Zeta 20/07/2010 09/05/2013 2.73% 46.0 - 46.0
Total 111.9 113.8 111.0
----------------------------------- ----- -------- -------- -------------
The fair value of these interest rate swaps at 31 March was:
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
Hague (1.5) (2.5) (2.4)
VBG2 (0.1) (1.6) (0.7)
Zeta (0.9) (1.8) (1.8)
------ -------- -------- -------------
Total (2.5) (5.9) (4.9)
------ -------- -------- -------------
b) Interest rate caps agreements
The Group entered into two interest rate caps in July 2010 in
order to take advantage of the low interest rates in the market
while at the same time protecting the Group against any significant
increases in these interest rates. The interest rate caps were
taken out for the VBG1 facility. The interest rate swaps in respect
of the VBG1 facility matured in January 2010.
As a result of the use of interest rate caps, the fixed maximum
rate profile of the Group was:
30
31 March 31 March September
2011 2010 2010
Effective Maturity
Facility Date Date Cap Rate GBPm GBPm GBPm
--------- ----------- ----------- -------- -------- -------- -----------
VBG1 15/07/2010 15/01/2012 2.5% 58.3 - 57.7
Total 58.3 - 57.7
----------------------------------- -------- -------- -------- -----------
The fair value of these interest rate caps at 31 March was:
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
VBG1 - - -
----- --------- --------- -------------
- - -
--------- --------------- -------------
These interest rate caps have not been designated as cash flow
hedges and all changes in fair value will be taken through the
profit or loss.
c) Summary of fair value of interest rate swaps and interest
rate caps
Below is a summary of the interest rate derivatives detailed
above.
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
Fair value of lender level interest
rate swaps (17.8) (28.0) (27.2)
Fair value of borrower level
interest rate swaps (2.5) (5.9) (4.9)
Fair value of interest rate
swaps (20.3) (33.9) (32.1)
------------------------------------- -------- -------- -------------
Fair value of interest rate
caps - - -
Fair value of the Group's derivative
arrangements (20.3) (33.9) (32.1)
------------------------------------- -------- -------- -------------
d) Forward exchange agreements
The Group entered into short-term foreign exchange sale and
purchase contracts for the purpose of mitigating the Group's
exposure to foreign exchange rate movements on its investments in
foreign property acquisitions.
At both 31 March 2011 and 30 September 2010 the Group had no
outstanding foreign exchange agreements.
e) Hedge accounting
The loss of GBP21.0 million on the fair value of the interest
rate swaps (March 2010: loss of GBP36.1 million; September 2010:
loss of GBP32.9 million) in the period to 31 March 2011 is reported
in other comprehensive income as the Group has applied cash flow
hedge accounting to their swap agreements. The cash flow hedges
have been assessed, with the exception of the Zeta interest rate
swaps as explained below, as being highly effective.
On 20 July 2010 the three Zeta interest rate swaps were replaced
with one interest rate swap that took advantage of the low interest
rates at the time for the extended period of the Zeta borrowing
facility and therefore hedge accounting using the original three
swaps has been discontinued prospectively. The fair value of these
old derivatives has been recognised through profit or loss from
that date and the cumulative balance in the cash flow hedge reserve
is reclassified from other comprehensive income to profit or loss
based on the original terms of the swaps as the original expected
transaction is still expected to occur.
The undiscounted cash flows of the hedged items shown in cash
flow hedge accounting are expected to occur in the following
periods:
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
------------------------------- -------- -------- -------------
In one year or less 14.0 19.1 16.4
In more than one year, but not
more than two years 6.1 12.4 13.7
In more than two years, but
not more than three years 0.8 5.1 2.9
In more than three years, but
not more than four years 0.1 0.7 0.8
In more than four years, but
not more than five years - 0.1 -
In more than five years - - -
-------- -------- -------------
21.0 37.4 33.8
------------------------------- -------- -------- -------------
It is expected that the cash flows will affect the profit or
loss in the period of occurrence.
16. Financial Risk Management Objectives And Policies
The Group's principal financial instruments, other than
derivatives (note 15), comprise bank loans, finance lease
liabilities and cash. The main purpose of these financial
instruments is to finance the Group's operations. The Group has
various other financial assets and liabilities such as trade
receivables and trade payables that arise directly from its
operations.
The main risks arising from the Group's financial instruments
are interest rate risk, exchange rate risk, credit risk and
liquidity risk. The Board of Directors reviews and agrees policies
for managing each of these risks that are summarised below.
The financial risks and the ways in which the Group manages them
are listed as follows:
(a) Interest rate risk
The Group finances its operations through equity, retained
profits and bank borrowings. The Delta, Gamma and Halle facilities
are charged fixed interest rates created by the lender level
interest rate swap arrangements detailed in note 15 above with all
other of the Group's bank borrowings being charged at variable
interest rates.
The Group's exposure to the risk of changes in market interest
rates relates primarily to the Group's long-term debt obligations
with floating interest rates. The Group uses interest rate
derivatives to mitigate its exposure to interest rate fluctuations.
At the year end, as a result of the use of interest rate swaps, the
majority of the Group's borrowings were at fixed interest
rates.
The table below shows the Group's interest rate profile at 31
March.
31 March 31 March 30 September
2011 2010 2010
Weighted average interest
rate 4.99% 4.85% 5.00%
Weighted average period 2.2 years 2.7 years 2.9 years
-------------------------- --------- --------- -------------
The Group's profit before tax therefore has limited exposure to
interest rate fluctuations until the repayment dates of the loans
for which the interest rate swaps have been arranged.
(b) Exchange rate risk
The Group is exposed to foreign currency risk on assets,
liabilities and earnings that are denominated in a currency other
than pounds Sterling.
As the Group owns properties in Continental Europe, there is
risk of movements in EUR/GBP exchange rates. The Group minimises
the exposure to foreign currency exchange rate movements by
matching, as much as possible, the investment properties and
associated loans in the same currency.
The table below shows the carrying amounts of the Group's Euro
denominated assets and liabilities in Euro.
31 March 31 March 30 September
2011 2010 2010
EURm EURm EURm
Assets 168.8 208.2 165.3
Liabilities (233.2) (279.4) (263.4)
------------- -------- -------- -------------
Net exposure (64.4) (71.2) (98.1)
------------- -------- -------- -------------
The following table demonstrates the sensitivity to a reasonably
possible change in the EUR/GBP exchange rate, with all variables
held constant, of the Group's equity (due to changes in the value
of investment properties and associated loans).
Increase/decrease
in EUR/GBP exchange Effect on equity
rate GBPm
-------------- -------------------- ----------------
31 March 2011 +5% 2.7
-5% (2.7)
-------------- -------------------- ----------------
31 March 2010 +5% 4.7
-5% (4.7)
-------------- -------------------- ----------------
30 September
2010 +5% 4.0
-5% (4.0)
-------------- -------------------- ----------------
The EUR/GBP exchange rate as at 31 March 2011 was 1.13730 (March
2010: 1.12040; September 2010: 1.16170). The average rate for the
period was 1.16316 (March 2010: 1.11613; September 2010:
1.15088).
(c) Credit risk
The Group trades only with recognised, creditworthy third
parties such as State and Central Government departments. It is the
Group's policy that all tenants who wish to trade on credit terms
are subject to credit verification procedures. In addition, the
Group further manages the credit risks by employing specialist
property managers to monitor the properties. The result is that
GBP0.1 million of trade and other receivables were over 120 days at
30 September 2010 (March 2010: nil: September 2010: GBP0.6
million).
With respect to credit risk arising from the other financial
assets of the Group, which comprise cash and cash equivalents and
certain derivative instruments, the Group's exposure to credit risk
arises from default of the counterparty, with a maximum exposure
equal to the carrying amount of these instruments. The majority of
counterparties of financial assets are investment grade or
above.
The maximum exposure to credit risk at year end was:
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
---------------------------- -------- -------- -------------
Cash at bank 40.7 49.4 41.7
Trade and other receivables 2.8 10.3 7.4
---------------------------- -------- -------- -------------
Total 43.5 59.7 49.1
---------------------------- -------- -------- -------------
(d) Liquidity risk
The Group monitors its risk to a shortage of funds through the
use of both short-term and long-term cash flow forecasts. The
Group's objective is to maintain a balance between continuity of
funding and flexibility through the use of bank overdrafts and bank
loans.
The tables below represent the maturity profile of contracted
undiscounted cash flows of financial liabilities based on the
earliest date on which the Group can be required to pay. The tables
include both interest and principal flows. Where the interest
payable is not fixed, the amount disclosed has been determined by
reference to the interest rate yield curves at the reporting date.
Where payment obligations are in foreign currencies, the spot
exchange rate ruling at the reporting date is used.
Derivative
Finance lease financial Trade and
Bank Loans liabilities liabilities other payables
At 31 March 2011 GBPm GBPm GBPm GBPm
----------------- ---------- ---------------- ------------ ---------------
In one year or
less 117.9 0.2 14.0 15.6
In more than one
year, but not
more than two
years 323.7 0.2 6.1 1.9
In more than two
years, but not
more than three
years 48.7 0.2 0.8 -
In more than
three years, but
not more than
four years 51.8 0.2 0.1 -
In more than four
years, but not
more than five
years - 0.2 - -
In more than five
years - 15.5 - -
---------- ---------------- ------------ ---------------
Total contractual
cash flows 542.1 16.5 21.0 17.5
---------- ---------------- ------------ ---------------
Carrying amount 517.1 3.6 20.3 17.5
----------------- ---------- ---------------- ------------ ---------------
Derivative
Finance lease financial Trade and
Bank Loans liabilities liabilities other payables
At 31 March 2010 GBPm GBPm GBPm GBPm
----------------- ---------- ---------------- ------------ ---------------
In one year or
less 69.9 0.1 19.1 20.4
In more than one
year, but not
more than two
years 103.7 0.1 12.4 0.2
In more than two
years, but not
more than three
years 321.8 0.1 5.1 2.0
In more than
three years, but
not more than
four years 2.3 0.1 0.7 -
In more than four
years, but not
more than five
years 52.7 0.2 0.1 -
In more than five
years - 9.6 - -
---------- ---------------- ------------ ---------------
Total contractual
cash flows 550.4 10.2 37.4 22.6
---------- ---------------- ------------ ---------------
Carrying amount 521.5 2.0 33.9 22.6
----------------- ---------- ---------------- ------------ ---------------
Derivative
Finance lease financial Trade and
Bank Loans liabilities liabilities other payables
At 30 September
2010 GBPm GBPm GBPm GBPm
----------------- ---------- ---------------- ------------ ---------------
In one year or
less 56.4 0.2 16.4 15.8
In more than one
year, but not
more than two
years 66.9 0.2 13.7 0.1
In more than two
years, but not
more than three
years 363.2 0.2 2.9 1.9
In more than
three years, but
not more than
four years 51.6 0.2 0.8 -
In more than four
years, but not
more than five
years - 0.2 - -
In more than five
years - 15.4 - -
---------- ---------------- ------------ ---------------
Total contractual
cash flows 538.1 16.4 33.8 17.8
---------- ---------------- ------------ ---------------
Carrying amount 514.9 3.6 32.1 17.8
----------------- ---------- ---------------- ------------ ---------------
(e) Fair value
The Group's accounting policy on fair value measurements of
financial instruments is discussed in note 2. The Group measures
fair values using the following fair value hierarchy that reflects
the significance of the inputs used in making the measurements.
-- Level 1: Quoted market price (unadjusted) in an active market
for an identical instrument.
-- Level 2: Valuation techniques based on observable inputs.
-- Level 3: Valuation techniques using significant unobservable
inputs.
Fair values of financial assets and financial liabilities that
are traded in active markets are based on quoted market prices or
dealer price quotations. For all other financial instruments the
Group determines fair values using valuation techniques.
Valuation techniques include net present value and discounted
cash flow models, comparison to similar instruments for which
market observable prices exist. Assumptions and inputs used in
valuation techniques include risk-free and benchmark interest
rates, credit spreads and other premia used in estimating discount
rates, foreign currency exchange rates and expected price
volatilities and correlations. The objective of valuation
techniques is to arrive at a fair value determination that reflects
the price of the financial instrument at the reporting date that
would have been determined by market participants acting at arm's
length.
The Group uses widely recognised valuation models for
determining the fair value of common and more simple financial
instruments such as interest rate swaps that use only observable
market data and require little management judgement and estimation.
Observable prices and model inputs are usually available in the
market for simple over the counter derivatives, e.g. interest rate
swaps. Availability of observable market prices and model inputs
reduces the need for management judgement and estimation and also
reduces the uncertainty associated with determination of fair
values. Availability of observable market prices and inputs varies
depending on the products and markets and is prone to changes based
on specific events and general conditions in the financial
markets.
The following is a summary of the classifications of the
financial liabilities at fair value as at 31 March:
Total Fair
31 March 2011 Level 1 Level 2 Level 3 Value
GBPm GBPm GBPm GBPm
Interest rate swaps - 20.3 - 20.3
Interest rate caps - - - -
------- ------- ------- ----------
- 20.3 - 20.3
------- ------- ------- ----------
Total Fair
31 March 2010 Level 1 Level 2 Level 3 Value
GBPm GBPm GBPm GBPm
Interest rate swaps - 33.9 - 33.9
Interest rate caps - - - -
------- ------- ------- ----------
- 33.9 - 33.9
------- ------- ------- ----------
Total Fair
30 September 2010 Level 1 Level 2 Level 3 Value
GBPm GBPm GBPm GBPm
Interest rate swaps - 32.1 - 32.1
Interest rate caps - - - -
------- ------- ------- ----------
- 32.1 - 32.1
------- ------- ------- ----------
No financial instruments were transferred between levels during
the periods.
No instruments have been categorised as Level 3.
(f) Capital Management
The Company's Articles of Association set out the borrowing
powers of the Company. This defines a maximum amount that could be
borrowed to be ten times the issued share capital of the Company
and the capital and revenue reserves of the Company. This gives a
maximum borrowing power at 31 March 2011 of GBP2,623 million (March
2010: GBP3,590 million; September 2010: GBP2,549 million). The
Company expects to remain within this maximum for the foreseeable
future.
The Company looks to maintain a progressive dividend policy
supported by earnings from Trading Operations. The interim dividend
for the period of 0.32 pence per share equates to GBP3.4
million.
17. Authorised And Issued Share Capital
At the Annual General Meeting in January 2010 the Shareholders
voted to cancel the Deferred Shares and the High Court in the Isle
of Man approved the cancellation in April 2010 and the shares were
duly cancelled.
Following this, and in accordance with the resolutions passed as
the Annual General Meeting in January 2010 an additional
3,583,857,532 Ordinary Shares were created to bring the total
number of authorised Ordinary Shares to 5,000,000,000 and an
authorised share capital of GBP50.0 million.
31 March 31 March 30 September
2011 2010 2010
---------------------------- ------------- ------------- --------------
AUTHORISED
Ordinary Shares of 1 penny
each
- number 5,000,000,000 3,805,142,468 5,000,000,000
- GBPm 50.0 38.0 50.0
Deferred Shares of 9 pence
each
- number - 132,761,948 -
- GBPm - 12.0 -
ISSUED, CALLED UP AND FULLY
PAID
Ordinary Shares of 1 penny
each
- number 1,062,095,584 1,062,095,584 1,062,095,584
- GBPm 10.6 10.6 10.6
Deferred Shares of 9 pence
each
- number - 132,761,948 -
- GBPm - 12.0 -
---------------------------- ------------- ------------- --------------
Holders of the Ordinary Shares are entitled to receive dividends
and other distributions and to attend and vote at any general
meeting.
31 March 31 March 30 September
Number 2011 2010 2010
----------------------------- ------------- ------------- --------------
Ordinary Shares of 1 penny
each
- ranking for dividends
for the current period/year 1,062,095,584 1,062,095,584 1,062,095,584
1,062,095,584 1,062,095,584 1,062,095,584
----------------------------- ------------- ------------- --------------
31 March 31 March 30 September
GBPm 2011 2010 2010
----------------------------- -------- -------- -------------
Ordinary Shares of 1 penny
each
- ranking for dividends
for the current period/year 10.6 10.6 10.6
10.6 10.6 10.6
----------------------------- -------- -------- -------------
18. Equity
In April 2010 the Company received approval from the High Court
in the Isle of Man to its request to cancel the Deferred shares of
GBP12.0 million issued by the Company in September 2009. The
Deferred shares were duly cancelled and their nominal value
transferred to distributable reserves.
19. Operating Leases
The Group leases out all of its investment properties under
operating leases.
The future aggregate minimum rentals receivable under
non-cancellable operating leases are as follows:
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
-------------------------- -------- -------- -------------
Not later than one year 45.3 44.6 44.6
Later than one year and
not more than five years 178.7 174.7 176.8
Later than five years 249.4 171.7 244.6
-------- -------- -------------
473.4 391.0 466.0
-------------------------- -------- -------- -------------
There were no contingent rents recognised as income in the
period (March 2010: nil; September 2010: nil).
The Group leases its properties primarily to Central and State
Government bodies typically on long-term occupational leases which
provide for regular reviews of rent on an effective upwards only
basis.
20. Dividends
31 March 31 March 30 September
2011 2010 2010
Ordinary dividends paid GBPm GBPm GBPm
------------------------------- -------- -------- -------------
Final dividend for 2009 -
0.31 pence per Ordinary Share - 3.3 3.3
Interim dividend for 2010
- 0.32 pence per Ordinary
Share - - 3.4
Final dividend for 2010 -
0.33 pence per Ordinary Share 3.5 - -
-------- -------- -------------
3.5 3.3 6.7
------------------------------- -------- -------- -------------
The final dividend for 2010, which was paid in the period, was
approved by the Shareholders at the Annual General Meeting on 27
January 2011 and was paid on 1 March 2011 to Shareholders on the
register at the close of business on 4 February 2011.
The Directors have resolved to pay an interim dividend for the
period of 0.32 pence per Ordinary share of 1 penny nominal value
(amounting to GBP3.4 million). This interim dividend will be paid
on 29 June 2011 to all those Shareholders on the register as the
close of business on 3 June 2011.
21. Capital Commitments
As at 31 March 2011, the Group had capital commitments of
approximately GBP0.8 million (March 2010: GBP3.7 million; September
2010: GBP1.9 million) for the refurbishment of investment
properties to enhance the prospects of letting vacant space.
22. Performance Measures
The European Public Real Estate Association (EPRA) issued Best
Practices Policy Recommendations in November 2006 which gives
guidelines for performance measures. These include earnings per
share and net asset value definitions which are different from
those under IFRS. The Company considers that these measures are
more appropriate for comparisons over time.
These definitions are used in the tables below.
Earnings per Share
31 March 31 March 30 September
2011 2010 2010
(Loss)/profit attributable to
equity shareholders - condensed
consolidated statement of comprehensive
income (GBPm) (12.3) 18.0 17.0
Adjustments
- Deficit/(surplus) on revaluation
of investment properties (GBPm) 16.7 (14.2) (10.1)
- Loss on sale of investment
properties (GBPm) - - 0.9
- Effect of derivatives (GBPm) 0.3 - 1.4
- Deferred tax (GBPm) 0.8 0.2 (0.4)
--------- --------- -------------
EPRA basis earnings (GBPm) 5.5 4.0 8.8
--------- --------- -------------
Weighted average number of Ordinary
Shares (000's) 1,062,096 1,062,096 1,062,096
EPRA basis Earnings Per Share
(pence) 0.50 0.38 0.83
Net Asset Value
31 March 31 March 30 September
2011 2010 2010
Net assets attributable to equity
holders of the parent - condensed
consolidated statement of financial
position (GBPm) 54.9 57.0 59.0
Adjustments
- Fair value of derivatives (GBPm) 20.3 33.9 32.1
- Deferred tax (GBPm) 1.9 1.6 1.1
--------- --------- -------------
EPRA basis net assets (GBPm) 77.1 92.5 92.2
--------- --------- -------------
Number of Ordinary Shares (000's) 1,062,096 1,062,096 1,062,096
EPRA basis Net assets per share
(pence) 7.26 8.71 8.67
23. Related Party Transactions
WPML, the Investment Adviser, is a wholly owned subsidiary of
Redefine Investment Managers (UK) limited and at 31 March 2011, in
association with directly linked entities, Redefine International
plc held 21.73% of the issued Ordinary shares of the Company. Mr
Cesman, as a director of some of these associated entities to
Redefine International plc, served as a Director of the Company for
the previous financial year ended 30 September 2010. During that
year he retired as a director of the Redefine companies and on 8
November 2010 Mr Cesman retired as a Director of the Company.
The Investment Adviser's fees, performance fee and property
manager's fee as outlined in note 5 was payable to WPML as are
agent's fees for acquisitions and disposals as well as fees for
arranging lease extensions. These, together with Director's
remuneration amount to the whole of the related party
transactions.
The performance fee shown below is the reversal of an accrual
made in the previous financial year and is a non-cash item and has
not resulted in WPML paying any monies to the Group.
All of the transactions with WPML are summarised below:
Six months Six months
ended ended Year ended
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
------------------------------------ ---------- ---------- --------------
Property Adviser's fees
- for advisory services 1.8 1.5 3.1
- for performance fees (0.4) - 0.4
Property Manager's fees 0.2 - 0.3
Agent's fees for acquisitions
and disposals 0.1 - 0.5
Fees for arranging lease extensions - - -
Dividends paid to Redefine
plc 0.8 0.6 1.4
Director's fees - - -
Total for related parties 2.5 2.1 5.7
------------------------------------ ---------- ---------- --------------
NM Rothschild & Sons Limited was engaged by the Company to
perform a strategic review to assist the Directors in considering
the options for the future of the Group. Philippe de Nicolay is
Chairman of the Supervisory Board of Rothschild & Cie Geston in
France which is part of the overall Rothschild organisation. While
Philippe de Nicolay does not influence the work of NM Rothschild
& Sons Limited he did introduce that company to the Company. He
did not participate in the resolution by the Board to appoint NM
Rothschild & Sons Limited as financial advisor to the
Company.
Six months Six months
ended ended Year ended
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
--------------------------- ---------- ---------- --------------
Advisory services 0.3 - -
Dividends paid to Philippe
de Nicolay - - -
Director's fees - - -
Total for related parties 0.3 - -
--------------------------- ---------- ---------- --------------
24. Events After The Reporting Period End
The Directors have decided to pay an interim dividend for the
period being reported of 0.32 pence per Ordinary share of 1 penny
nominal value (amounting to GBP3.4 million). This interim dividend
will be paid on 22 June 2011 to all those Shareholders on the
register at the close of business on 27 May 2011.
Subsequent to the 31 March 2011 the lease on the Telford
property has been surrendered for GBP5.0 million.
Following the announcement made on 23 March 2011 of the proposed
merger with Redefine, it is anticipated that the circular calling
for an extraordinary general meeting to approve the terms of the
Merger will be circulated to shareholders in the second quarter of
2011.
Appendix 1 - Valuation Certificates
4 May 2011
The Directors
Wichford P.L.C.
Top Floor
14 Athol Street
Douglas
Isle of Man
IM1 1JA
Dear Sirs
WICHFORD P.L.C. - UK PROPERTY PORTFOLIO
VALUATION AS AT 31 MARCH 2011
INSTRUCTIONS
In accordance with our Valuers Agreement dated 28 October 2010,
and our Valuation General Procedures and Conditions attached, we
have undertaken a valuation of the above portfolio. We understand
that our Report and Valuation are required to enable you to prepare
your half-yearly results for inclusion in the Company's half-yearly
financial report and pursuant to your obligations under Rule 29 of
the City Code of Takeovers and Mergers, in connection with which
this valuation certificate will be published in the Company's
preliminary results. We confirm that we are not aware of any
conflict of interest that may prevent us from providing you with a
market value of the properties in the portfolio.
We also confirm, as per your instructions, that Savills will
offer Professional Indemnity Insurance in the sum of GBP15 million
on a per claim basis for this instruction.
DATE OF VALUATION
Our opinions of Market Value are as at 31 March 2011. Property
values may change over a relatively short period of time and, as
such, our valuations may not be valid on any date other than the
stated valuation date.
TERMS OF REFERENCE
We understand the portfolio comprises 77 properties held for
investment purposes, the majority of which are let to either the UK
Government or Trillium (Prime) Property GP Ltd, and located
throughout the UK. 55 are held freehold/heritable, 4 are held on a
part freehold and part long leasehold basis and 18 are long
leasehold (over 50 years). All the properties are identified on the
attached schedules.
Your advisor, Wichford Property Management Limited ("WPML"), has
provided us with files which include floor areas, which we
understand were calculated in accordance with the current RICS Code
of Measuring Practice and upon which we have relied.
We have been provided with, and have relied on, summary tenancy
schedules prepared by your managing agents Eddisons, Watson Day and
Envoy Property Management. In addition to this, we have received
updates from your advisers WPML.
All of the properties have been internally inspected during
April 2011.
As agreed, although we have reflected our knowledge of market
trends in the locality, except where you have advised us to the
contrary, we have assumed that there have been no material changes
to any of the properties or their surroundings that could have a
material effect on the value of Wichford P.L.C.'s interest.
With the exception of the above, the terms of reference are in
accordance with the attached Valuation General Procedures and
Conditions and our Standard Terms of Conditions of Business for
Valuations, also enclosed.
STATUS OF VALUER
We would confirm we have acted as External Valuers in
undertaking this valuation.
This valuation has been co-ordinated by Richard Booth MRICS
under the supervision of William Newsom FRICS. We confirm that they
have the knowledge, skills and understanding to undertake this
valuation competently.
We are required by RICS regulations to disclose the
following:
-- William Newsom has supervised the valuation of this portfolio
since September 2010, and Savills Commercial Limited has been
undertaking the instruction since this time. We have agreed that
the authorised signatory on this valuation will be rotated at least
every seven years.
-- This firm has no other current or recent fee earning
relationship with Wichford P.L.C. apart from valuation
services.
-- In the financial year ending 31 December 2010, the total fees
earned from Wichford P.L.C. and connected parties, was less than 5%
of Savills Commercial Limited turnover.
VALUATION
1.1 Basis
This report has been prepared in accordance with Royal
Institution of Chartered Surveyors' ("RICS") Valuation Standards,
6th edition (the "RICS Red Book") and in accordance with Rule 29 of
the City Code on Takeovers and Mergers
Our valuations have been prepared on the basis of Market Value,
the definition of which is set out at Practice Statement 3.2, and
which is defined as follows:
"The estimated amount for which a property should exchange on
the date of valuation between a willing buyer and a willing seller
in an arm's length transaction after proper marketing wherein the
parties had each acted knowledgeably, prudently and without
compulsion."
Our valuation has been arrived at predominantly by reference to
market evidence for comparable property.
We have made no allowance for any Capital Gains Tax or other
taxation liability that might arise upon a sale of the properties,
nor have we allowed for any adjustment to any of the properties'
income streams to take into account any tax liabilities that may
arise.
Our valuation is exclusive of VAT (if applicable).
Excluded from our valuation is any additional value attributable
to goodwill, or to fixtures and fittings which are only of value in
situ to the present occupiers.
No allowance has been made for rights, obligations or
liabilities arising in relation to fixed plant and machinery and it
has been assumed that all fixed plant and machinery and the
installation thereof complies with the relevant EEC
legislation.
1.2 Market Value
We are of the opinion that the aggregate Market Value of the
properties in the portfolio, as at 31 March 2011, is:
Properties held for investment:
Freehold GBP304,070,000
Freehold and long leasehold GBP18,650,000
Long Leasehold (over GBP92,715,000
50 years)
Property held for development GBP12,250,000
TOTAL GBP427,685,000
(Four Hundred and Twenty Seven Million Six Hundred and Eighty
Five Thousand Pounds)
The total valuation figure reported is the aggregate total of
the individual properties and not necessarily a figure that could
be achieved if the portfolio were to be sold as a single
holding.
The largest property by value in the portfolio is Centenary
Court, Bradford which represents 6.50% of the total.
1.3 EFFECT OF GOVERNMENT POLICIES
We would point out that the Government's policy of cutting
public spending will have a significant impact on a number of
Government Departments (particularly those that 'spend' rather than
'collect' revenue), and this will undoubtedly affect their
occupational requirements. Whilst the full impact of these cuts is
some way off, it is likely that investors will be more concerned
regarding those leases where expiries or breaks occur within the
next five years. We have reflected our perception of market
sentiment towards those matters at the date of valuation, but that
sentiment may change depending on the impact of the cuts.
1.4 LEASE LENGTH/OVER-RENTING
The majority of the properties in the portfolio are let at rents
which are in excess of the current market levels. This is likely to
have a negative impact on the capital value of those properties
with a shorter term certain as the reversion to market level
approaches.
1.5 CONFIDENTIALITY
We acknowledge and consent that Wichford P.L.C. may disclose
this report and valuation to any regulatory, governmental or
supervisory body, to its affiliates, professional advisers,
auditors, rating agencies and partners, to potential syndicate
members, and where required by the rules of any stock exchange on
which the shares or other securities of the relevant recipient are
listed, in particular for compliance with Rule 29 of the City Code
on Takeovers and Mergers.
In accordance with the recommendations of the RICS, we would
state that this report is provided solely for the purpose stated
above. It is confidential to and for the use only of the parties to
whom it is addressed, and no responsibility is accepted to any
third party for the whole or any part of its contents. Any such
parties reply upon this report at their own risk.
Neither the whole nor any part of this report or any reference
to it may be included now, or at any time in the future, in any
published document, circular or statement, nor published, referred
to or used in any way without our written approval of the form and
context in which it may appear.
Yours faithfully
William A C Newsom FRICS Andrew Skinner MRICS
Director- UK Head of Valuation Director - Valuation
RICS Registered Valuer RICS Registered Valuer
For and on behalf of Savills Commercial Limited
SCHEDULE A: FREEHOLD/HERITABLE PROPERTY IN THE UK HELD FOR
INVESTMENT
Approx Market
Value
Address Description Age Tenancies 31 March
2011
Lord Purpose built, three and 1978/ Entire let on a GBP6,030,000
Cullen four-storey office 1996 full repairing
House, building totalling 32,788 and insuring
Fraser sq ft (3,046 sq m). Built lease to The
Place, in three phases: Phase 1 First Secretary
Aberdeen completed 1978, of State, for a
AB25 refurbished in 1993; term of 25 years
3TP Phase 2 completed late from 2 February
1978, refurbished in 1996 at a current
1993; Phase 3 completed rent of
in 1996. Open plan GBP478,250 per
offices, solid floors, annum. The rent
suspended tile ceilings, is reviewed five
gas central heating. 72 yearly, on an
car parking spaces. upward only
basis.
Unit The property comprises a 1973 Entire let to GBP2,365,000
19 purpose built showroom Aberdeen City
West and warehouse of steel Council for a
Tullos portal frame term of 125 years
Industrial construction. It is from 25 February
Estate, arranged over 2 floors 2009 expiring 24
Wellington and totals 44,649 sq ft February 2134
Road, (4,148 sq m) of without any break
Aberdeen accommodation. option. The
AB12 current rent is
3LQ GBP100,000 per
annum with 5
yearly upwards
only reviews.
DSA The property comprises a 2009 Entire let on a GBP3,575,000
Gibfield driving test centre full repairing
Park totalling 1,852sq ft (172 and insuring
Avenue sq m). Built in 2009, the lease to The
Atherton property is a single Secretary of
M46 OSU storey framed building State for
including gas fired Communities and
central heating, Local Government
suspended ceilings and an for 40 years from
air handling system. 27 January 2009,
car parking spaces and an subject to a
external tarmacadamed tenant only break
test area (extending to option in January
2.25 acres) are 2034. The annual
provided. rent is
GBP180,000 per
annum
Cooper A 1990s, self contained 1992 Entire let to GBP3,400,000
House, office building arranged Secretary of
59 Peel over ground and three State for
Street, upper floors extending to Environment at a
Barnsley 21,699 sq ft (2,016 sq rent of
S70 2RL m). Internally, the GBP260,223 per
accommodation features annum. Tenant
raised floors, suspended break at 31 March
ceilings with Category II 2018. The rent is
lighting and reviewed five
air-conditioning. yearly, upwards
only, in line
with CPI.
The The property comprises 1985 The main building GBP15,650,000
Woodlands, a four storey modern is let to The
Manton Lane, office building with First Secretary
Bedford, additional stand alone of State for a
MK41 7LW single storey annexe, period of 15
both of which provide years from 12
open plan accommodation. August 2005,
subject to a
tenant only break
option in August
2015, at a rent
of GBP981,555 per
annum. The fourth
level of the main
building is
leased back from
The Secretary of
State to the
freeholder for a
period of 15
years less one
day from 12
August 2005 at a
peppercorn rent,
and is
subsequently
underlet to R.K.
Harrison for a
period expiring 7
August 2020,
subject to a
tenant only break
option in
September 2012,
at a rent of
GBP323,290 per
annum. The Annexe
is let to Amey LG
Limited on a ten
year lease from
26 November 2005
expiring 31 March
2016, with a
tenant's option
to break at 31
March 2011. The
total current
income derived
from the property
is GBP1,433,178
per annum.
Chailey A mid Victorian Part Entire let to The GBP1,950,000
House, 30 building on two floors mid First Secretary
Cardington with an early 1970s Victorian, of State on full
Road, three storey extension. part repairing and
Bedford, The property provides 1972 insuring terms
MK42 0EX approximately 16,640 sq for 20 years from
ft (1,546 sq m) of 22 December 2005,
office accommodation subject to a
and has 53 car parking tenant's only
spaces. Internally, the break option on 2
specification comprises April 2021, at a
suspended ceilings and current rent of
carpeted floors. GBP125,000 per
Heating is by means of annum. The rent
wall mounted hot water is to be reviewed
radiators supplied from five yearly to
two gas fired boilers. the market rent,
on an upwards or
downwards basis.
Theatre Purpose built two 1995 Entire let to The GBP760,000
House, storey office building First Secretary
Kingsway, totalling 6,970 sq ft of State on full
Billingham (648 sq m). The repairing and
TS23 specification includes insuring terms
2NA gas central heating and for 25 years from
suspended ceilings. 24 February 1995,
Parking on site for 18 subject to a
cars. tenant only break
option in March
2018. The current
rent is GBP64,260
per annum and is
reviewed five
yearly.
Great Purpose built office 1993 Entire let on a GBP9,655,000
Western building on basement, full repairing
House, ground and three upper and insuring
Woodside, floors totalling 83,445 lease to The
Birkenhead sq ft (7,752 sq m). Secretary of
CH41 Air-conditioned, raised State for the
6DA floors. 195 car parking Environment, for
spaces a term of 25
years from 1
April 1993 at a
current rent of
GBP780,641 per
annum. Tenant
only break option
at 31 March 2018.
The rent is
reviewed five
yearly, upwards
only, in line
with CPI.
2308, The property comprises 1990s The ground and GBP2,250,000
Coventry a 1990s, three/part first floor are
Road, four storey "T" shaped let on two
Sheldon, office building separate leases
Birmingham extending to a net to The Secretary
B26 3JZ internal floor area of of State for
28,987 sq ft (2,693 sq Transport Local
m). There is decked car Government and
parking to the rear the Regions on
with 120 marked spaces full repairing
and a further 46 and insuring
external spaces. terms expiring 26
April 2011, at a
combined rent of
GBP287,385 per
annum. The second
and third floors
are let on two
separate leases
to Severn Trent
Water Services
plc on full
repairing and
insuring terms
expiring 26 April
2011, at a
combined rent of
GBP205,835 per
annum. The total
current rent is
GBP493,220 per
annum.
Centenary Purpose built 1990s Entire building GBP27,800,000
Court, five-storey office is let to The
1 St. building in two First Secretary
Blaise separate blocks of State on two
Way, extending to 104,875 sq full repairing
Bradford ft (9,743 sq m) (area and insuring
BD1 4DB stated in lease). The leases until 3
accommodation is open April 2027 at a
plan with gas-fired current rent of
central heating, raised GBP1,750,000 per
floors and suspended annum, with five
ceilings. There are 100 yearly reviews to
on site car parking RPI. The
spaces. outstanding rent
review has been
agreed at
GBP2,010,360 pa.
There is a
tenant's break
option on each
lease on 2 April
2021.
Phoenix Detached office 1950s Entire let on a GBP4,750,000
House, building on basement full repairing
Rushton and four upper floors, and insuring
Avenue, totalling 43,291 sq ft lease to First
Thornbury, (4,021 sq m) (area Secretary of
Bradford stated in lease for State, for a term
BD3 7BH review purposes). of 15 years from
Refurbished in 2002. 31 October 2002
Specification includes at a current rent
raised floors and a of GBP452,201 per
Building Management annum. The rent
System. 25 car parking is reviewed five
spaces with separate yearly, upwards
car park for only.
approximately 31 cars.
Hanover Purpose built, L-shaped 1978 Entire let on a GBP2,350,000
House, office building on full repairing
Northgate ground, first and and insuring
Street, second floors, totaling lease to Trillium
Bridgwater, 20,923 sq ft (1,943 sq (Prime) Property
TA6 3HG m). The accommodation GP Ltd until 31
is centrally heated, March 2018. The
with suspended ceilings current rent is
and Category II GBP185,173 per
lighting to ground and annum. The rent
first floors. 31 car is reviewed
parking spaces are upwards only on
provided. 29 September 2014
in line with RPI
from the date of
a Deed of
Variation.
Crescent The property comprises 1970s The property is GBP13,600,000
Centre, an office building multi let to 5
Temple arranged in five tenants on 18
Back, blocks. It extends to leases. The
Bristol 88,503 sq ft (8,222 sq majority of the
BS1 6EZ m). The specification income is derived
includes refurbished from The
common parts, air Secretary of
conditioning, perimeter State for
trunking and Category Communities and
II lighting. Local Government
until 2023,
subject to a
tenant only break
option in 2021.
The remainder of
the income is let
to various
covenants until
2012. Two suites
are vacant. The
total income is
GBP1,163,639 per
annum.
Unicorn An office building, c.1983 Entire let to GBP13,350,000
House, built during the early Trillium (Prime)
28 Elmfield 1980s, arranged over Property GP Ltd
Road, basement, ground and by way of a
Bromley six upper floors. The reversionary
BR1 1NX property provides lease, to 31
approximately 57,751 sq March 2022 with a
ft (5,365 sq m) of tenant's only
accommodation and has option to break
59 car parking spaces. on 31 March 2018.
The specification The rent is
includes raised floors, GBP1,200,000 per
suspended ceilings with annum. There will
recessed Category II be rent reviews
lighting and an air on 25 March 2015
handling system. and 2020 in line
with the RPI CHAW
Index. London
Electricity Board
has a lease for
an electricity
transformer on
site, for a term
of 60 years from
29 June 1982 at a
peppercorn rent,
if demanded
Ty Cambrian 1970s office building 1970s Entire let on GBP5,260,000
House, on basement, ground and and a full repairing
29 Newport six upper floors. 2002 and insuring
Road, Extension to rear lease to The
Cardiff comprising part ground First Secretary
CF24 floor office of State for
0TP accommodation and a term of 16
under-croft car years from 12
parking, with four and August 2002 at
five upper levels. a current rent
Total area 34,458 sq ft of GBP417,358.50
(3,201 sq m). The per annum. The
accommodation is rent is reviewed
centrally heated with five yearly,
partial air upwards only.
conditioning, solid
concrete floors, and
suspended ceilings. Ten
car parking spaces are
provided.
Wren The property comprises 1990s Entire let on a GBP2,150,000
House, a self-contained office full repairing
Hedgerows building arranged over and insuring
Business ground, first and lease to The
Park, second floors extending First Secretary
Colchester to a net internal area of State for a
Road, of 13,857 sq ft (1,287 term of 15 years
Chelmsford, sq m), along with from March 2003
CM2 5FP ancillary car parking. subject to a
It was constructed in tenant's break
the early 1990s and option on 3 March
includes 58 car parking 2013. The passing
spaces. rent is
GBP250,000 per
annum, which is
subject to five
yearly upward
only rent
reviews.
Chantry Purpose built office 1970s Entire let on a GBP4,665,000
House, building on ground and full repairing
55 / three upper floors and insuring
59 City totalling 34,645 sq ft lease to The
Road (3,218 sq m). The Secretary of
and Crewe specification includes State for the
Street, solid floors, perimeter Environment, for
Chester trunking and suspended a term of 25
CH1 3AQ ceilings. 24 car years from 29
parking spaces are September 1978,
provided. with a
reversionary
lease to Trillium
(Prime) Property
GP Limited until
31 March 2018.
The current rent
passing is
GBP331,110 per
annum.
Cyppa Purpose built office 1990s Entire let on a GBP2,400,000
Court, building on basement, full repairing
Avenue ground and two upper and insuring
La Fleche, floors, totalling lease to The
Chippenham, 12,557 sq ft (1,166 sq First Secretary
SN15 m). The accommodation of State for the
3LH is centrally heated, Environment, for
including raised a term of 25
floors. 36 car parking years from 25
spaces, including 19 in March 1994 at a
the basement, are current rent of
provided. GBP190,541 per
annum. There is a
break at 31 March
2018. The rent is
reviewed five
yearly, upwards
only in line with
CPI. The next
review is due in
March 2014.
St. Anne A purpose built office 1970s Floors 4 - 12 GBP11,500,000
House, building on ground and are let to The
20/26 twelve upper floors Home Office for
Wellesley totalling 73,234 sq ft, a 15 year term
Road, (6,804 sq m) providing expiring on 28
Croydon open plan, rectangular April 2017 with
CR9 2UL floor plates of approx. five yearly rent
6,000 sq ft (557 sq m). reviews and a
The reception, common tenant's option
parts and fourth to to break on 29
12(th) floors have air April 2012. The
conditioning and current rent
suspended ceilings. is GBP850,000
There are 63 car per annum.
parking spaces (24 in The ground to
basement and 39 in a third floors
rear surface car are currently
park). vacant.
7/15 A purpose built office 1980s Entire let to The GBP1,385,000
Buccleuch building on ground and First Secretary of
Street, two upper floors. The State for a term of
Dalkeith property interconnects at 25 years on a full
EH22 ground floor level with repairing and
1HB 15 Buccleuch Street (not insuring lease
owned). The accommodation expiring on 31
extends to 7,119 sq ft March 2023 subject
(661 sq m) and has raised to a tenant option
floors, gas central to break at 31
heating and a passenger March 2018. The
lift. There are 8 car current rent is
parking spaces on site. GBP117,402 per
annum and is
subject to five
yearly reviews, the
next being on 28
February 2015, in
line with CPI.
Driving The property comprises 2010 Entire let to The GBP2,575,000
Standards a driving test centre Secretary of State
Agency, of 1,118 sq ft (104 Communities and
Kilspindie sq m), together with Local Government
Road, a tarmacadamed test for a term of 40
Dundee, area and ancillary car years expiring
DD2 3QH parking. 25November 2050.
There is a tenant
break on 26
December 2025 and 5
yearly thereafter.
The current rent is
GBP150,000 per
annum and is
reviewed in line
with RPI.
Lindsay A purpose built office 1978 Entire let on GBP4,885,000
House, building on ground and a full repairing
18/30 two upper floors and and insuring
Ward extending to 39,224 sq ft lease to The
Road, (3,644 sq m). The Secretary of
Dundee accommodation benefits State for Works
DD1 1QB from central heating and and Pensions
two passenger lifts. for a term of
There are 27 car parking 45 years expiring
spaces on site. on 14 May 2023
with a tenant's
break clause
in May 2018.
The current rent
is GBP370,564
per annum and
is reviewable
every fifth year
of the term,
in line with
CPI.
Sidlaw Two storey office 2000 Entire let on a GBP8,770,000
House, building totalling 59,224 full repairing and
4 Explorer sq ft (5,502 sq m) insuring lease to
Road, purpose built as a call The First Secretary
Dundee centre. The specification of State for a term
DD2 1DX includes raised floors, of 16 years from 29
suspended ceilings and June 2001 at a rent
air conditioning. 450 car of GBP788,273 per
parking spaces are annum and
provided. thereafter is
reviewed five
yearly, upwards
only.
Ladywell Four interlinked purpose 1960s Entire let on GBP8,250,000
House, built office buildings a full repairing
Ladywell ranging from two to five and insuring
Road, floors and extending to a lease to The
Edinburgh total of 50,935 sq ft First Secretary
EH12 (4,732 sq m). The for a term of
7TB accommodation has been 24 years from
refurbished and benefits 24 January 1996
from raised floors, gas at a current
central heating and rent of GBP675,000
passenger lifts to all per annum, with
floors. There are 106 car five yearly rent
parking spaces on site. reviews. The
reviews are on
an upwards or
downwards basis.
1a The property is a Grade A 1845 Entire let on a GBP5,250,000
Parliament listed building arranged full repairing and
Square, over basement, ground, insuring lease to
Edinburgh first and second floors. The City of
EH1 1RF Refurbished in 2009, it Edinburgh Council
provides 9,404 sq ft (874 until January 2022
sq m) of court and office at a rent of
accommodation, the GBP325,590 per
specification of which annum. The rent is
includes gas fired subject to five
central heating, LG7 yearly rent reviews
lighting and comfort linked to the
cooling. increase in the
RPI, subject to a
collar of 3% and a
cap of 7%.
Unit The property comprises 2010 Entire let on a GBP4,110,000
1, Astra a single storey office full repairing and
Park, building of 1,572 sq insuring lease to
Courteney ft (146 sq m) and a The Secretary of
Road, tarmacadamed motorcycle State for
Gillingham manoeuvring area. Communities and
ME8 0RY Local Government
until January 2050,
subject to a tenant
only break option
in March 2025. The
passing rent is
GBP250,000 per
annum and is
subject to five
yearly rent reviews
based on the open
market rent or the
increase in the
RPI.
2 Derby A purpose built office 1995 Entire let on GBP1,965,000
Street, building a full repairing
Grays on ground and two upper and insuring
RM16 floors and extending lease to Trillium
8QQ to 11,967 sq ft (1,112 (Prime) Property
sq m). The accommodation GP Ltd at a rent
benefits from raised of GBP155,842
floors, gas central per annum. Tenant
heating and a passenger break at 31 March
lift. There are 34 car 2018. The rent
parking spaces on site. is reviewable
every fifth year
of the term,
in line with
CPI.
Ward Three storey office 1995 Entire let on a GBP2,380,000
Jackson building, built in 1995, full repairing and
House, providing 20,828 sq ft insuring lease to
Raby (1,934 sq m) of The Secretary of
Road, accommodation along with State For
Hartlepool 46 car parking spaces. Communities and
TS24 The specification Local Government
8AA includes raised floors, for a term of 25
suspended ceilings with years from 13
recessed Category II November 1996 on
lighting and is centrally full repairing and
heated via a gas-fired insuring terms at a
boiler serving current rent of
wall-mounted radiators. GBP201,500 per
annum. There is a
tenant's break
option on 31 March
2018. The rent is
to be reviewed five
yearly, upwards
only. The November
2011review has been
settled in advance
at nil increase
St. Clare The property provides 1960s Entire let on GBP8,760,000
House, office accommodation on a full repairing
Princes ground, podium, mezzanine and insuring
Street, and 11 upper floors, lease to The
Ipswich totalling 82,524 sq ft First Secretary
IP1 1PH (7,667 sq m). The of State on a
building is served by two full repairing
escalators within the lease expiring
entrance and three main on 31 July 2023
passenger lifts. 31 car subject to five
parking spaces are yearly upward
located on site. only reviews.
Internally, the There is a tenant
specification provides only break clause
suspended ceilings and on 2 April 2021.
carpeted floors. Toilet The current rent
facilities are located at is GBP695,000
each floor level. per annum.
21/22 The property is arranged 1970s Entire let on GBP7,280,000
Park on basement, ground and a full repairing
Place three upper floors, and insuring
and 71/77 providing 39,169 sq ft lease to The
Park (3,639 sq m) of office Secretary of
Street accommodation. The State for the
Leeds specification includes Environment for
LS1 4UR gas central heating, a 18 years term
perimeter trunking and from 1 April
suspended ceilings. 2000 at a rent
of GBP635,719
per annum reviewed
at every fifth
year of the term
Waterside The property comprises 1800s Let on a full GBP5,850,000
House, three former mill repairing and
Waterside buildings converted in insuring lease to
Court, 2000 to provide office The Secretary of
Kirkstall accommodation. Two of the State For The
Road, buildings, Waterside East Environment for 15
Leeds and Waterside West, have years from 19 May
LS4 2QB been joined with a glazed 2000, at a rent of
reception area. The GBP525,000 per
third, Waterside II, is annum. The interest
detached. The whole includes an
property provides 35,996 advertising
sq ft (3,344 sq m) of net hoarding which
internal space together generates GBP2,000
with 126 car parking per annum.
spaces.
Prudential Six-storey office 1885 The ground floor GBP3,750,000
Buildings, building built in 1885, retail unit is let
36 Dale with a tower added in to Abdul Suliman on
Street, 1904. The ground and a full repairing
Liverpool first floors comprise and insuring lease
L2 5UZ Tribunal Rooms, with for a term of
ancillary offices to the fifteen years from
remainder of the upper 15 December 2003 at
floors and storage to the a rent of GBP13,000
basement level. Also per annum with open
provided at ground floor market reviews
and fronting Dale Street every fifth year of
is a separate, the term. The
self-contained retail offices are let on
unit which is occupied as a full repairing
a nailbar. In total, the and insuring lease
property extends to to The First
24,851 sq ft (2,308 sq Secretary of State,
m). for a term
commencing on 11
October 2002 and
expiring on 31
March 2018. The
initial rent
reserved is
GBP274,366 per
annum. The rent is
subject to fixed
rent reviews at
five yearly
intervals to 2.5%
compounded
annually. The total
rent derived from
the property is
GBP287,366 per
annum.
63/67 The property comprises an 1980s Let to Trillium GBP4,250,000
Newington early 1980s, (Prime) Property
Causeway, self-contained office GP Ltd for a
London building arranged over term commencing
SE1 6LS basement, ground and on 21 December
three upper floors with 2010 and expiring
landscaping and ancillary on 24 December
car parking. The building 2023, subject
provides 23,799 sq ft to a tenant's
(2,211 sq m) of break option
accommodation and 7 car in 2018. The
parking spaces. rent is reviewed
in December 2015
to the higher
of the Market
Rent or GBP336,000
per annum. The
current rent
is GBP315,000
per annum. The
basement and
third floor are
vacant
Armstrong Detached purpose built 2003 Entire let on a GBP8,650,000
Road, office building on three full repairing and
Acton, floors totalling 40,792 insuring lease to
London sq ft (3,790 sq m). Trillium (Prime)
W3 7JL Predominately open plan Property GP Limited
offices with raised from 25 December
floors, Category II 2003 expiring 31
lighting in a part curved March 2019 (with a
suspended ceiling and tenant's break
recessed spotlights. Gas option in March
fired central heating and 2018). The property
natural ventilation is sub-let to the
system. 71 car parking Department of
spaces are provided. Social Security
until March 2018.
The current rent is
GBP687,667 per
annum.
St. A purpose built 'L' 1971 Entire let on GBP3,125,000
Katherine's shaped office building a full repairing
House, 21-27 on ground, mezzanine and insuring
St. and five upper floors lease to The
Katherine's and extending to a total First Secretary
Street, of 29,094 sq ft (2,703 of State for
Northampton sq m). The accommodation a term of ten
NN1 2LG benefits from gas fired years from 5
central heating and June 2003 at
two passenger lifts. a current rent
There are 20 car parking of GBP290,000
spaces on site. per annum.
Tweedale A purpose built, 1992 Entire let to The GBP2,845,000
House, self-contained, "L" Secretary of State
75 Union shaped, three-storey for Communities and
Street, office building, which we Local Government on
Oldham understand was a full repairing
OL1 1LH constructed in 1992. The and insuring lease
whole property extends to until March 2023
20,622 sq ft (1,915 sq m) subject to a tenant
and includes parking for only break option
12 cars. March 2018. The
current passing
rent is GBP205,000
per annum and is
reviewable every
five years in line
with CPI. The May
2010 rent review is
outstanding and has
been agreed at
GBP216,912 per
annum.
47/51 Purpose built office 1995 Entire let to GBP2,540,000
High building on basement, The Secretary
Street, ground and two upper of State for
Paisley floors extending to the Environment
PA1 2AN 13,922 sq ft (1,293 on full repairing
sq m). The accommodation and insuring
has gas central heating, terms with a
suspended ceilings and tenant break
a lift. There are 11 at 31 March 2018.
car parking spaces in The current rent
the basement. is GBP195,000
per annum and
is subject to
five yearly upward
only rent reviews
in line with
CPI. The September
2010 rent review
is currently
outstanding.
64 Exeter The property comprises a c.2000 The majority is let GBP12,260,000
Street detached eight-storey to Trillium (PRIME)
and 63/65 building of steel frame Property GP Limited
Bretonside, construction. The on a full repairing
Plymouth building comprises 61,357 and insuring basis
PL4 0AJ sq ft (5,700 sq m) of until May 2021,
office accommodation. subject to a tenant
There is undercroft car break option in
parking for 30 cars. March 2018, at a
rent of GBP854,788
per annum. The
lease is subject to
five yearly upward
only rent reviews
in line with CPI,
the next being due
on 18 May 2011. One
office suite is let
to Hagthorn Parry
until January 2017
at GBP61,405 per
annum. The total
income derived from
the property is
GBP916,193 per
annum.
West The property comprises 1980s The majority of GBP3,760,000
Point two interlinking West Point is let
and Centre buildings; Centre Point, to The Secretary of
Court, a two storey building State until March
Ebrington fronting Exeter Street, 2024, subject to a
Street, and West Point, a four tenant only break
Plymouth storey building fronting option in April
PL4 9RF Ebrington Street. The 2021, at GBP136,500
accommodation totals per annum.
27,815 sq ft (2,584 sq Principle Leasehold
m). occupies part of
Centre Court by way
of two leases
expiring in March
2016 at a combined
rent of GBP132,500
per annum. The
ground floor of
Centre Court is let
to the Primary Care
Trust until
February 2016,
subject to a tenant
only break option
in February 2013 at
a rent of GBP69,732
per annum. The
total rent derived
from the property
is, GBP338,732 per
annum.
Foliot Two purpose built office 1680s Part let to The GBP2,450,000
House buildings extending Secretary of State
and Units to a total floor area on full repairing
3/4/5, of 19,516 sq ft (1,813 and insuring terms
Brooklands sq m). The accommodation for 25 years
Office has central heating expiring September
Campus, and suspended ceilings. 2015 at a current
Budshead There are 72 on site rent of GBP165,000
Road, car parking spaces. per annum. The
Plymouth remainder let to
PL6 5XR Lloyds TSB Bank Plc
on full repairing
and insuring terms
for 25 years
expiring 20
December 2014 at a
current rent of
GBP79,500 per
annum. The total
income derived from
the property is
GBP244,500 per
annum.
Portland Two storey office 1995 Entire let on GBP1,000,000
House, building providing a full repairing
West approximately 9,509 sq ft and insuring
Dyke (883 sq m) of lease to The
Road, accommodation together First Secretary
Redcar with 16 car parking of State on full
TS10 spaces. Internally, the repairing and
1DH specification includes insuring terms
raised floors, suspended for 25 years
ceilings with recessed from 11 December
Category II lighting and 1995 at a current
is centrally heated via a rent of GBP85,122
gas-fired boiler serving per annum. The
wall- mounted radiators. rent is reviewed
five yearly,
upwards only.
The tenant has
a break option
in March 2018.
Transpennine An industrial and office 2006 Entire let on a GBP13,300,000
200, building, which extends full repairing and
Pilsworth to 98,735 sq ft (9,173 sq insuring lease to
Road, m) and occupies an The Secretary of
Heywood, extensive site of State for
Rochdale approximately 5.33 acres Communities and
OL10 providing 171 parking Local Government
2TA spaces. for a term of 15
years, subject to a
tenant's break
option in 2016,
with five yearly
upward only rent
reviews subject to
minimum levels. The
initial rent is
GBP1,120,266 per
annum, comprising a
base rent of
GBP703,638 together
with a supplemental
rent of GBP416,628
reflecting an
enhanced
specification. The
supplemental rent
will not continue
after the end of
year ten. The rent
is increased in
year five to a
minimum of
GBP1,305,872 per
annum.
Bradmarsh A purpose built office c.1998 Entire let on GBP1,455,000
Business and call centre on ground a full repairing
Park, and first floor extending and insuring
Bow Bridge to 14,420 sq ft (1,340 sq lease to The
Close, m). The accommodation Environment Agency
Rotherham benefits from raised for a term of
S60 1BW floors, gas central 25 years from
heating and a passenger 29 April 1998.
lift. There are 83 car The tenant has
parking spaces on site. a break option
on 29 April 2013.
The current rent
is GBP138,750
per annum.
Kings Self-contained office 1991 Entire let on GBP10,000,000
Court, building on basement, a full repairing
80 Hanover ground and three upper and insuring
Way, floors totalling 54,219 lease to The
Sheffield sq ft (5,037 sq m). First Secretary
S3 7UF The property features of State until
raised floors, suspended 2023 subject
ceilings with recessed to a tenant only
strip lights and comfort break option
cooling. 46 car parking in March 2018
spaces are provided at GBP725,000
in the basement. per annum. The
rent is reviewed
five yearly,
upwards only,
in line with
CPI.
Trinity A rectangular shaped, 1996 Entire let on a GBP1,940,000
House, purpose built office full repairing and
High building constructed insuring lease to
Street, in the mid 1990s on The Secretary of
Smethwick ground and first floors State For The
B66 3AD and extending to 12,394 Environment for a
sq ft (1,152 sq m) net. term from 27 March
The offices have gas 1997, expiring 31
fired central heating March 2023, subject
and a passenger lift. to a break at 31
There are 26 car spaces March 2018. The
on site. current rent is
GBP159,375 per
annum with the next
review occurring in
2017 in line with
CPI.
Approx
Address Description Age Tenancies
St. Cross A purpose built office 1974 Entire let to The GBP5,875,000
House, building on ground to Secretary of State
18 Bernard sixth floors extending to for the Environment
Street, 42,983 sq ft (3,993 sq m). for a term from
Southampton The offices benefit from 12 September 1974
SO14 3PJ gas central heating and expiring 31 March
two passenger lifts. There 2023, at a rent
are 27 car parking spaces of GBP464,675 per
on site. annum and is reviewable
every fifth year
of the term, in
line with CPI. The
lease has a break
at 31 March 2018.
DSA, Kier The property comprises 2010 Entire let on a GBP6,350,000
Park, Cowley a single storey office full repairing and
Mill Road, building of 1,245 sq insuring lease to
Uxbridge ft (116 sq m) together The Secretary of
UB8 2XW with a tarmacadamed State for Communities
external yard used for and Local Government
motorcycle testing. until April 2050,
subject to a tenant
only break option
in April 2030. The
rent is GBP335,000
per annum which
is subject to five
yearly upward only
rent reviews based
on the increase
in the RPI.
The Grange, The property comprises 1980s Entire let on a GBP2,200,000
501 Uxbridge a two storey office full repairing and
Road, Uxbridge building extending to insuring lease to
UB4 8HL 11,478 sq ft (1,066 The Secretary of
sq m). State for Environment,
Transport and the
Regions until March
2018 at GBP180,000
per annum. Rent
reviews are five
yearly and are based
on the open market
rental value of
the building.
Exchange The property comprises 1960s Entire let on a GBP9,780,000
House, a five storey office full repairing and
60 Exchange building extending to insuring lease to
Road, Watford 62,926 sq ft (5,846 Trillium (Prime)
WD18 0LL sq m). Property GP Limited
until 2023, subject
to a tenant only
break option in
March 2018, at GBP854,000
per annum. The next
rent review is due
in September 2014
and is linked to
the increase in
the CPI.
Westwey A purpose built office 1971 Entire let on a GBP2,500,000
House building on ground to full repairing and
Westwey third floors and extending insuring lease to
Road to 28,856 sq ft (2,681 sq The Secretary of
Weymouth m). In 2009 the third State for Communities
DT4 8TE floor was refurbished and and Local Government
extended by the tenant for a term of 99
increasing the floor area years less 3 days
to 33,721 sq ft (3,133 sq expiring on 3 May
m). The property is fitted 2070 at a current
out with suspended floors, rent of GBP110,000
under floor trunking, per annum.
suspended ceilings and air
conditioning. There are
120 car parking spaces.
Molineux The property comprises a 1980s Entire let on a GBP4,120,000
House, 1980s, three and four full repairing and
Temple storey, "L" shaped office insuring lease to
Street building which is Trillium (Prime)
Wolverhampton interconnected at one end Property GP Ltd
WV2 4AN with Temple House. It expiring 31 March
extends to a net internal 2018 and incorporating
floor area of an RPI linked rent
approximately 32,437 sq ft review in 2014.
(3,014 sq m) and there is The current passing
car parking to the rear rent is GBP315,874
with 44 marked spaces. per annum.
Temple The property comprises 1990s Entire let on a full GBP4,050,000
House, a three storey office repairing and insuring
Temple building extending to lease to The Secretary of
Street, 27,455 sq ft (2,551 State form the Environment
Wolverhampton sq m). until March 2018. The rent
WV2 4AU is GBP306,883 per annum
and is subject to five
yearly upward only rent
reviews based on the
increase in the RPI.
Athena The property comprises a 2005 The property let GBP2,950,000
House, self-contained, two storey by way of three
Kettlestring office building with leases to The First
Lane, Clifton offices on the ground and Secretary of State
Moor, York first floors and storage (ground and second
YO30 4XF to the second floor within floors) and North
the roof space. External Yorkshire Police
tarmacadamed car parking Authority (first
is provided for 57 cars. floor), each for
In total, the property a term of 15 years
extends to approximately from 4 February
23,192 sq ft (1,174 sq m) 2005 on full repairing
of net internal floor and insuring terms,
area. The specification with five yearly
includes raised floors, upwards and downwards
suspended ceilings rent reviews (ground
incorporating LG3 and first floors
lighting, and air only).
conditioning. Heating is The initial rents
provided by a gas fired will be:
panel radiator system. Ground - GBP130,221
per annum,
First - GBP136,634
per annum,
Second - GBP1.00
per annum (fixed
for the term).
There is a tenant's
break option
on 4 February 2015
in each lease.
SUB TOTAL GBP304,070,000
==========================
Wichford P.L.C.
c/o Wichford Property Management
Limited
11 Haymarket
London SW1Y 4BP
United Kingdom
For the attention of The Directors:
Dear Sirs,
Client: Wichford P.L.C. (the "Company")
Property: Wichford Continental European Portfolio - five
properties located in Germany and one property located in Holland
(the "Portfolio")
Valuation Date: 31 March 2011
1. Terms of reference
1.1 Our Appointment
This Valuation Certificate is prepared in accordance with our
re-appointment by Wichford Property Management Limited (WPML) and
the Valuation Procedures and Assumptions enclosed within our
Engagement Letter dated 24 September 2010.
Special Note
This Valuation Certificate is to be read in conjunction with our
previous reports following and including our initial valuations as
at 30(th) September 2008.
1.2 Purpose of Valuation
We understand that our Report and Valuation are required for
your account purposes and for inclusion in the Company's
Half-yearly Financial Report.
We further understand that our Report and Valuation are required
pursuant to your obligations under Rule 29 of the City Code on
Takeovers and Mergers, in connection with which this Valuation
Certificate will be published in the Company's preliminary
results.
1.3 The Properties
The Portfolio comprises six office buildings located in Germany
and Holland. More specifically, the properties are located in
Berlin, Dresden, Cologne, Stuttgart, Halle (Germany), and The Hague
(Holland).
These buildings include a collective total of approximately
70,000 sq m of mainly office space. The majority are single
tenanted and located in secondary business districts.
1.4 Compliance with Valuation Standards
We confirm that the valuation has been prepared in accordance
with the appropriate sections of the Practice Statements ("PS")
contained within the RICS Valuation Standards, 6th Edition (the
"Red Book"), in accordance with local market practice and in
accordance with Rule 29 of the City Code on Takeovers and
Mergers.
1.5 Status of Valuer and Conflicts of Interest
These valuations have been prepared under the supervision of
David Poole, MRICS.
We are required by RICS regulations to disclose the
following:
-- David Poole has supervised the valuation and coordination of
the properties within the portfolio since September 2008. We agree
that the authorised signatory on this valuation will be rotated
every seven years.
-- DTZ Eurexi, DTZ Zadelhoff (Holland) and DTZ Zadelhoff Tie
Leung GmbH (Germany) have had no other current or recent fee
earning relationship with the Company apart from the valuation
service.
We confirm that we do not consider that any conflict of interest
arises with our duty to provide you with objective and independent
valuations. We confirm that we do not have any material interest in
the Company, its subsidiaries or any of the Properties. We further
confirm that we have no material interest in the property and that
we have undertaken this valuation in the capacity of External
Valuers. We would draw your attention to our Terms and
Conditions.
1.6 Fee Income from the Fund
DTZ Eurexi, DTZ Zadelhoff and DTZ Zadelhoff Tie Leung GmbH are
wholly owned subsidiaries of DTZ Holdings plc (the "Group"). In the
Group's financial year to 30(th) April 2010, the proportion of
total fees payable by the Company to the total fee income of the
Group was less than 5%.
1.7 Inspections
The properties located in Germany and Holland were each
inspected internally and externally during September 2008 by local
DTZ valuers. The property located in Berlin was re-inspected during
September 2009, the properties located in The Hague, Halle and
Gladbach were re-inspected during February 2010 and the properties
located in Stuttgart and Dresden were re-inspected during March
2010. The local DTZ valuers are satisfied that this provided a
representative view of the properties.
For the purpose of this valuation, we have made the assumption
that there have been no material changes to any of the properties
or their surroundings that could have a material effect on value
since the most recent inspections.
1.8 Basis of Valuation
Our opinion of the Market Value of the properties has been
primarily derived using comparable recent market transactions on
arm's length terms.
Following your instructions, we have undertaken our valuation on
the following basis:-
a. Market Value
We have set out the definitions of the above bases of valuation
in Appendix B.
Our valuations are subject to our standard Valuation Terms,
Conditions and Assumptions, which are included in Appendix C. Where
appropriate you have confirmed that our Assumptions are correct so
far as you are aware through your counter-signature of our
Appointment Letter. In the event that any of our Assumptions prove
to be incorrect then our valuations should be reviewed.
1.9 Market Value
The value of the property has been assessed in accordance with
the relevant parts of the current RICS Valuation Standards, and
according to local market practice. In particular, we have assessed
Market Value in accordance with PS 3.2. Under these provisions, the
term "Market Value" means:
"The estimated amount for which a property should exchange on
the date of valuation between a willing buyer and a willing seller
in an arm's-length transaction after proper marketing wherein the
parties had each acted knowledgeably, prudently and without
compulsion".
In undertaking our valuations on the basis of Market Value we
have applied the conceptual framework which has been settled by the
International Valuation Standards Committee and which is included
in PS 3.2. The RICS considers that the application of the Market
Value definition provides the same result as Open Market Value, a
basis of value supported by previous editions of the Red Book.
1.10 Report Format
In accordance with your requirements and our Appointment Letter,
our Report takes the form of a certificate and schedule which
should be read in conjunction with our previous Reports and
Valuations (See Section 1.1 of this Report).
1.11 Assumptions
An Assumption is stated in the Glossary to the Red Book to be a
"supposition taken to be true" ("Assumption"). Assumptions are
facts, conditions or situations affecting the subject of, or
approach to, a valuation that, by agreement, need not be verified
by a valuer as part of the valuation process. In undertaking our
valuations, we have made a number of Assumptions and have relied on
certain sources of information. Where appropriate, you have
confirmed that our Assumptions are correct so far as you are aware.
In the event that any of these Assumptions prove to be incorrect,
our valuations should be reviewed. The Assumptions we have made for
the purposes of our valuations are referred to below:-
Title
We have not had access to the title deeds of any of the
properties. We have made an Assumption that the Fund is in
possession of a good and marketable freehold title in each case
with the exception of the property located in Frankfurt which has
been valued on a leasehold basis. We have assumed that the
properties are free from rights of way or easements, restrictive
covenants, disputes or onerous or unusual outgoings. We have also
assumed that the properties are free from mortgages, charges or
other encumbrances.
Condition of structure and services, deleterious materials,
plant and machinery and goodwill
Due regard has been paid to the apparent state of repair and
condition of each of the properties, but condition surveys have not
been undertaken, nor have woodwork or other parts of the structures
which are covered, unexposed or inaccessible, been inspected.
Therefore, we are unable to report that the properties are
structurally sound or free from any defects. We have made an
Assumption that the properties are free from any rot, infestation,
adverse toxic chemical treatments, and structural or design defects
other than such as may have been mentioned in the body of our
Valuation Report and the Appendices.
We have not arranged for investigations to be made to determine
whether high alumina cement concrete, calcium chloride additive or
any other deleterious materials have been used in the construction
or any alterations, and therefore we cannot confirm that the
properties are free from risk in this regard. For the purposes of
these valuations, we have made an Assumption that any such
investigation would not reveal the presence of such materials in
any adverse condition.
No mining, geological or other investigations have been
undertaken to certify that the sites are free from any defect as to
foundations. We have made an Assumption that the load bearing
qualities of the sites of the properties are sufficient to support
the buildings constructed or to be constructed thereon. We have
also made an Assumption that there are no abnormal ground
conditions, nor archaeological remains present, which might
adversely affect the present or future occupation, development or
value of any of the properties.
No tests have been carried out as to electrical, electronic,
heating, plant and machinery, equipment or any other services nor
have the drains been tested. However, we have made an Assumption
that all services are functioning satisfactorily.
No allowance has been made in these valuations for any items of
plant or machinery not forming part of the service installations of
the buildings. We have specifically excluded all items of plant,
machinery and equipment installed wholly or primarily in connection
with the occupants' businesses. We have also excluded furniture and
furnishings, fixtures, fittings, vehicles, stock and loose tools.
Further, no account has been taken in our valuations of any
goodwill that may arise from the present occupation of any of the
properties.
It is a condition of DTZ Eurexi and any related company, or any
qualified employee, providing advice and opinions as to value, that
the client and/or third parties (whether notified to us or not)
accept that the Valuation Report in no way relates to, or gives
warranties as to, the condition of the structure, foundations, soil
and services.
Environmental matters
We have been instructed not to make any investigations in
relation to the presence or potential presence of contamination in
land or buildings, and to make an Assumption that if investigations
were made to an appropriate extent then nothing would be discovered
sufficient to affect value. We have not carried out any
investigation into past uses, either of the properties or any
adjacent land to establish whether there is any potential for
contamination from such uses or sites, and have therefore made an
Assumption that none exists.
In practice, purchasers in the property market do require
knowledge about contamination. A prudent purchaser of these
properties may require appropriate investigations to be made to
assess any risk before completing a transaction. Should it be
established that contamination does exist, this might reduce the
values now reported.
We have no basis upon which to assess the reasonableness of this
Assumption. If it were to prove invalid then the value would fall
by an unspecified amount.
Sustainable development is currently a highly publicised subject
(pressure from public opinion, changing regulations and a greater
general awareness of market players) which could have an effect on
future values. In our valuations, we are unable to predict the
future changes in perception by market players on this subject, nor
the impact of any changes to public regulation.
Areas
You have provided us with the floor areas of the properties that
are relevant to our valuation. As instructed, we have relied on
these areas and have not checked them on site. We have made an
Assumption that the floor areas supplied to us have been calculated
in accordance with local market practice.
Planning Information and Statutory Requirements
We have not made enquiries as to the local planning information
for the purpose of this analysis; we have assumed that the
properties are not subject to any planning related issues that may
have an effect on our analysis. We would draw your attention to
Appendix C.
Site
We have not made enquiries as to the cadastral references and
site area of the subject properties.
Leasing
We have read all the leases and related documents provided to us
by you. We have made an Assumption that copies of all relevant
documents have been sent to us and that they are complete and up to
date.
We have not undertaken investigations into the financial
strength of the tenants. Unless we have become aware by general
knowledge, or we have been specifically advised to the contrary we
have made an Assumption that the tenants are financially in a
position to meet their obligations. Unless otherwise advised we
have also made an Assumption that there are no material arrears of
rent or service charges, breaches of covenants, current or
anticipated tenant disputes.
However, our valuations reflect the type of tenants currently in
occupation or responsible for meeting lease commitments, or likely
to be in occupation, and the market's general perception of their
creditworthiness.
We have also made an Assumption that wherever rent reviews or
lease renewals are pending or impending, with anticipated
reversionary increases, all notices have been served validly within
the appropriate time limits.
Portfolios and Lotting
No reduction or allowance has been made in analysis to reflect
possible effect of flooding the market were the portfolio, or a
substantial number of properties within it, to be placed on the
market at the same time.
Taxation and Costs
We have not made any adjustments to reflect any liability to
taxation that may arise on disposals, nor for any costs associated
with disposals incurred by the owner. No allowance has been made to
reflect any liability to repay any government or other grants,
taxation allowance or lottery funding that may arise on
disposals.
We have made deductions to reflect purchaser's acquisition
costs, where appropriate for local market practice.
1.12 Information Received
Property information including updated tenancy schedules and
Capex information has been provided under separate cover by the
local Wichford asset managers to the local DTZ valuers in each
country. Where there have been new leases signed since our previous
valuation update, we have been provided with these leases.
We have been provided with all information requested and have
relied upon this information for the purpose of this valuation
update.
Information not provided
We have made an Assumption that the information the Client and
its professional advisers have supplied to us in respect of the
properties is both full and correct.
It follows that we have made an Assumption that details of all
matters likely to affect value within your collective knowledge
such as prospective lettings, rent reviews, outstanding
requirements under legislation and planning decisions have been
made available to us and that the information is up to date.
Our use of Information provided by the client
Our intervention consists of taking into consideration the
relevant and useful documents or information for our valuation. We
have not carried out a full examination or an audit of all
documents provided.
2. Valuation
2.1 Market Value
We are of the opinion that the Market Value of the freehold
interest in the properties within the portfolio as at 31 March
2011, subject to the Terms, Conditions, Assumptions and Comments in
this Report and the Appendices is:-
Market Value as at 31 March 2011
-------------------------------------------------------------------------
Asset
Number Address Market Value
-------- ------------------------------------------------ -------------
EUR excl.
-------- ------------------------------------------------ -------------
Markgrafenstra<BETA>e 17/18, 10969
1 Berlin, Germany 18,550,000
-------- ------------------------------------------------ -------------
2 Wiener Platz 6, 1069 Dresden, Germany 35,570,000
-------- ------------------------------------------------ -------------
Kolner Stra<BETA>e 20, 51429 Bergisch-Gladbach,
3 (Cologne), Germany 12,170,000
-------- ------------------------------------------------ -------------
Martin-Luther-Stra<BETA>e 79, 71695
4 Ludwigsburg, (Stuttgart), Germany 29,200,000
-------- ------------------------------------------------ -------------
Thueringer Stra<BETA>e/Merseburger
5 Stra<BETA>e, 6112 Halle (Saale), Germany 38,370,000
-------- ------------------------------------------------ -------------
"Haagse Veste 1" Satumusstraat 9, 2516
6 AD The Hague, Holland 23,100,000
-------- ------------------------------------------------ -------------
Cumulative Total 156,960,000
---------------------------------------------------------- -------------
Market values are reported net of purchaser's costs as dictated
by local market practice. The following approximate rates are paid
by the purchaser in addition to the net purchase price of a real
estate asset:
-- Berlin: 6.0%
-- Dresden: 5.0%
-- Cologne: 5.0%
-- Stuttgart: 5.0%
-- Halle: 5.0%
-- The Hague: 6.1%
We are of the opinion that a current valuation would not be
materially different from that reported above, however we have not
undertaken any further analysis in this respect. However, property
values may change significantly over a relatively short period.
Consequently, our valuation may not be valid on any date other than
the stated valuation date.
2.2 General Conditions
This report and valuation has been prepared on the basis that
there has been full disclosure of all relevant information and
facts which may affect the valuation.
The contents of this Valuation Certificate and Appendices are
confidential to the party to whom they are addressed for the
specific purposes set out herein. Consequently, and in accordance
with current practice, no responsibility is accepted to any other
party in respect of the whole or any part of their contents. Before
this Valuation Report, or any part thereof, is reproduced or
referred to, in any document, circular or statement, and before its
contents, or any part thereof, are disclosed orally or otherwise to
a third party, the valuer's written approval as to the form and
context of such publication or disclosure must first be obtained.
Such consent shall always be given where disclosure is required,
pursuant to the Company's regulatory or legal obligations. For the
avoidance of doubt such approval is required whether or not DTZ is
referred to by name and whether or not the contents of our report
are combined with others. In the case of dispute, any legal issues
arising from this instruction should be referred to the local
Courts for resolution.
For the avoidance of doubt, we hereby consent to the publication
of the valuation certificate in the Company's preliminary report
for the purpose of complying with Rule 29 of the City Code on
Takeovers and Mergers. We accept that the Company's preliminary
report will include references to this valuation report in the form
and context in which it appears. We accept responsibility for the
report and declare that we have taken all reasonable care to ensure
that the information contained in this report is, to the best of
our knowledge, in accordance with the facts and contains no
omission likely to affect its impact.
Yours sincerely,
David Poole MRICS
Director
For and on behalf of
DTZ Eurexi
3. Appendices
Appendix A
Valuation
Market Market
Brief Property Value Purchaser's Value
Address Location Comments Description Area Inclusive Costs exclusive
-------------------------- ----------------------- -------------------------- ---------------- ----------- ------------ -----------
Square Square
metres feet EUR % EUR
-------------------------- ----------------------- -------------------------- ------ -------- ----------- ------------ -----------
Located in a commercial
area in Kreuzberg, a
sub-district of Berlin It comprises eight floors
and in close proximity and a basement. It is
to the sub-district of made of a concrete
Mitte. The structure, has a flat
surroundings are roof and seems to be
characterised by generally in good
office buildings such condition. The
as the underground car park is
Axel-Springer-Verlag also used by the tenants
building and the GSW of the building at
buildings. The neighbouring
property can be Markgrafenstra(Beta)e 19
accessed from and, in the future, will
Markgrafenstra(Beta)e. be used by the tenants of
Markgrafenstra<BETA>e There is a green area the Markgrafenstra(Beta)e
17/18, 10969 at the rear of the 16building (yet to be
Berlin, Germany site. built). 7,173 77,207 19,656,016 6.0% 18,550,000
-------------------------- ----------------------- -------------------------- ------ -------- ----------- ------------ -----------
Located in
a commercial
area within
the sub-district
of Altstadt
in Dresden.
It is situated
near the main
train station. It includes
The surroundings six floors
are characterised and two basement
by office and levels. It
retail buildings comprises a
as well as reinforced
multi-storey concrete structure,
residential has a flat
buildings. roof and is
Adjacent to generally in
the property good condition.
in the south-east Some of the
is an undeveloped vacant office
plot of land and retail
Wiener Platz which is intended spaces are
6, 1069 Dresden, for a shopping currently in
Germany centre development. shell condition. 17,449 187,818 37,343,707 5.0% 35,570,000
-------------------------- ----------------------- -------------------------- ------ -------- ----------- ------------ -----------
It is located
within the
outer region
of Cologne, It is an office
approximately building that
10 km east comprises an
of central older section
Cologne. The built in 1987
property is and a newer
located in extension built
the southern in 2001. It
part of Bergisch includes an
Gladbach called underground
Bensberg, in car park and
Kolner Stra<BETA>e a mixed use is made of
20, 51429 area. The property a reinforced
Bergisch-Gladbach, is accessed concrete structure
(Cologne), from Kolner with a flat
Germany Stra(Beta)e. roof. 8,240 88,696 12,773,139 5.0% 12,170,000
-------------------------- ----------------------- -------------------------- ------ -------- ----------- ------------ -----------
Ludwigsburg is located
in the federal state
of Baden-Wurttemberg
and 15km north of It consists of four
Stuttgart. The storeys and a basement
property is located in and has a net floor area
a commercial area of of 12,455 sq m, which
Ludwigsburg, The includes three staircases
surrounding area is and elevators. There are
Martin-Luther-Stra<BETA>e characterised by 69 parking spaces located
79, 71696 office buildings, an in the basement. It is
Ludwigsburg, industrial area of accessible from
(Stuttgart), Caro-Kaffee and retail Martin-Luther-Stra(Beta)e
Germany areas. and Brenzstra(Beta)e. 12,454 134,059 30,663,811 5.0% 29,200,000
-------------------------- ----------------------- -------------------------- ------ -------- ----------- ------------ -----------
It was built
in 1997 and
comprises a
complex of
office buildings
and parking
areas with
a total of
The city of 442 parking
Halle benefits spaces. The
from good transport office space
communications is let to a
and is situated single tenant
close to the and was purpose-built
A9 and A14 for the Ministry
motorways. of Justice.
The subject The sale agreement
property is for the parking
located in area has not
Thueringer the south-east been executed
Stra<BETA>e/Merseburger of the city until now.
Stra<BETA>e, centre in a The building
6112 Halle mixed-used is in good
(Saale), Germany area. condition. 34,689 373,389 40,285,652 5.0% 38,370,000
-------------------------- ----------------------- -------------------------- ------ -------- ----------- ------------ -----------
It is 1 is
part of a high
density office
It is located sector consisting
in the "Binckhorst" of the Haagse
office and Veste 1 to
business district 4, The Haagse
which is the Arc and the
largest urban KPN Maanplein
office and offices. It
business area comprises approximately
of The Hague 12 878 sq m
and includes of offices,
companies in a restaurant
the transport, and storage
wholesale, space, as well
construction as approximately
and trade sectors. 153 parking
The property spaces. The
"Haagse Veste is located building height
1" in close proximity varies from
Satumusstraat to the A12 6 to 8 upper
9, 2516 AD motorway, however floors. There
The Hague, it is not visible are two underground
Holland from the motorway. parking levels. 12,878 138,618 24,453,817 6.1% 23,100,000
-------------------------- ----------------------- -------------------------- ------ -------- ----------- ------------ -----------
92,883 999,787 165,176,142 - 156,960,000
--------------------------------------------------- -------------------------- ------ -------- ----------- ------------ -----------
Appendix B
Definitions of the Bases of Valuation
Definitions of the Bases of Valuation
Market value
Market Value as defined in Practice Statement 3.2 of the RICS
Appraisal and Valuation Standards ("the Red Book") and applying the
conceptual framework which has been settled by the International
Valuation Standards Committee (IVSC). Under PS 3.2, the term
"Market Value" means "The estimated amount for which a property
should exchange on the date of valuation between a willing buyer
and a willing seller in an arm's-length transaction after proper
marketing wherein the parties had each acted knowledgeably,
prudently and without compulsion."
The conceptual framework settled by the IVSC is included in PS
3.2 and is reproduced below:-
"3.2 The term property is used because the focus of these
Standards is the valuation of property. Because these Standards
encompass financial reporting, the term Asset may be substituted
for general application of the definition. Each element of the
definition has its own conceptual framework.
3.2.1 'The estimated amount ...' Refers to a price expressed in
terms of money (normally in the local currency) payable for the
property in an arm's-length market transaction. Market Value is
measured as the most probable price reasonably obtainable in the
market at the date of valuation in keeping with the Market Value
definition. It is the best price reasonably obtainable by the
seller and the most advantageous price reasonably obtainable by the
buyer. This estimate specifically excludes an estimated price
inflated or deflated by special terms or circumstances such as
atypical financing, sale and leaseback arrangements, special
considerations or concessions granted by anyone associated with the
sale, or any element of Special Value.
3.2.2 '... a property should exchange ...' Refers to the fact
that the value of an asset is an estimated amount rather than a
predetermined or actual sale price. It is the price at which the
market expects a transaction that meets all other elements of the
Market Value definition should be completed on the date of
valuation.
3.2.3 '... on the date of valuation ...' Requires that the
estimated Market Value is time-specific as of a given date. As
markets and market conditions may change, the estimated value may
be incorrect or inappropriate at another time. The valuation amount
will reflect the actual market state and circumstances as of the
effective valuation date, not as of either a past or future date.
The definition also assumes simultaneous exchange and completion of
the contract for sale without any variation in price that might
otherwise be made.
3.2.4 '... between a willing buyer ...' Refers to one who is
motivated, but not compelled to buy. This buyer is neither
over-eager nor determined to buy at any price. This buyer is also
one who purchases in accordance with the realities of the current
market and with current market expectations, rather than on an
imaginary or hypothetical market which cannot be demonstrated or
anticipated to exist. The assumed buyer would not pay a higher
price than the market requires. The present property owner is
included among those who constitute 'the market'. A valuer must not
make unrealistic assumptions about market conditions or assume a
level of Market Value above that which is reasonably
obtainable.
3.2.5 '... a willing seller ...' Is neither an over-eager nor a
forced seller prepared to sell at any price, nor one prepared to
hold out for a price not considered reasonable in the current
market. The willing seller is motivated to sell the property at
market terms for the best price attainable in the (open) market
after proper marketing, whatever that price may be. The factual
circumstances of the actual property owner are not a part of this
consideration because the 'willing seller' is a hypothetical
owner.
3.2.6 '... in an arm's-length transaction ...' Is one between
parties who do not have a particular or special relationship (for
example, parent and subsidiary companies or landlord and tenant)
which may make the price level uncharacteristic of the market or
inflated because of an element of Special Value, (defined in IVSC
Standard 2, para. 3.11). The Market Value transaction is presumed
to be between unrelated parties each acting independently.
3.2.7 '... after proper marketing ...' Means that the property
would be exposed to the market in the most appropriate manner to
effect its disposal at the best price reasonably obtainable in
accordance with the Market Value definition. The length of exposure
time may vary with market conditions, but must be sufficient to
allow the property to be brought to the attention of an adequate
number of potential purchasers. The exposure period occurs prior to
the valuation date.
3.2.8 '... wherein the parties had each acted knowledgeably,
prudently ...' Presumes that both the willing buyer and the willing
seller are reasonably informed about the nature and characteristics
of the property, its actual and potential uses and the state of the
market as of the date of valuation. Each is further presumed to act
for self-interest with that knowledge and prudently to seek the
best price for their respective positions in the transaction.
Prudence is assessed by referring to the state of the market at the
date of valuation, not with benefit of hindsight at some later
date. It is not necessarily imprudent for a seller to sell property
in a market with falling prices at a price which is lower than
previous market levels. In such cases, as is true for other
purchase and sale situations in markets with changing prices, the
prudent buyer or seller will act in accordance with the best market
information available at the time.
3.2.9 '... and without compulsion' Establishes that each party
is motivated to undertake the transaction, but neither is forced or
unduly coerced to complete it.
3.3 Market Value is understood as the value of a property
estimated without regard to costs of sale or purchase and without
offset of any associated taxes."
Appendix C
Valuation Terms, Conditions and Assumptions
Valuation Terms, Conditions and Assumptions
Valuation conditions and Assumptions
These are the conditions and Assumptions upon which our
valuations and reports are normally prepared and form an integral
part of our appointment together with our related Appointment
Letter and Valuation Terms of Business. Unless otherwise referred
to in this Valuation Report these conditions and Assumptions apply
to the valuation(s) that are the subject of this Valuation Report.
We have made certain Assumptions in relation to facts, conditions
or situations affecting the subject of, or approach to, our
valuations that we have not verified as part of the valuation
process but rather, as referred to in the Glossary to the RICS
Valuation Standards (Red Book), have treated as "a supposition
taken to be true". In the event that any of these Assumptions prove
to be incorrect then our valuation(s) will need to be reviewed.
1.1 Basis/Bases of Valuation
The property(ies) has/have been valued on the basis/bases set
out in Section 1.10 of this Valuation Report and defined in
Appendix C.
1.2 Title
We have not have access to the title deeds of the property.
Unless specifically advised to the contrary by you or your legal
adviser, we have made the Assumption that titles are good and
marketable and are free from rights of way or easements,
restrictive covenants, disputes or onerous or unusual outgoings. We
have also made the Assumption that the property(ies) is/are free
from mortgages, charges or other encumbrances.
Where a Certificate of Title has been made available, we have
reflected its contents in our valuation(s). Save as disclosed
either in any such Certificate of Title or as referred to in our
Valuation Report, we have made the Assumption that there is good
and marketable title and that the property is free from rights of
way or easements, restrictive covenants, disputes or onerous or
unusual outgoings. We have also made the Assumption that the
property(ies) is/are free from mortgages, charges or other
encumbrances.
Where a Valuation Report contains site plans these are based on
extracts of the Ordnance Survey or other maps showing, for
identification purposes only, our understanding of the extent of
title based on site inspections or copy title plans supplied to us.
If verification of the accuracy of these plans is required the
matter must be referred by you to your solicitors.
1.3 Condition of structure and services, deleterious
materials
It is a condition of DTZ or any related company, or any
qualified employee, providing advice and opinions as to value, that
the client and/or third parties (whether notified to us or not)
accept that the Valuation Report in no way relates to, or gives
warranties as to, the condition of the structure, foundations, soil
and services.
Our valuation(s) has/have taken account of the general condition
of the property as observed from the valuation inspection. Where a
separate condition or structural survey has been undertaken and
made available to us, we have reflected the contents of the survey
report in our valuation(s), and we may have discussed the report
with the originating surveyor.
Due regard has been paid to the apparent state of repair and
condition of the property, but a condition survey has not been
undertaken, nor has woodwork or other parts of the structure which
are covered, unexposed or inaccessible, been inspected. Therefore,
we are unable to report that the property is structurally sound or
is free from any defects. We have made an Assumption that the
property is free from any rot, infestation, adverse toxic chemical
treatments, and structural or design defects other than such as may
be mentioned in our Valuation Report.
Unless access is readily available, we will not be able to gain
access to the roof or roof voids and we shall thus make the
Assumption that inspection of those parts will not reveal defects
of which we are not aware, would have an adverse effect on the
value or the saleability of the property.
We have not arranged for investigations to be made to determine
whether high alumina cement concrete, calcium chloride additive or
any other deleterious material have been used in the construction
or any alterations in respect of the property, and therefore we
cannot confirm that the property is free from risk in this regard.
For the purposes of our valuation(s), we have made an Assumption
that any such investigation would not reveal the presence of such
materials in any adverse condition.
We have not carried out an asbestos inspection and have not
acted as an asbestos inspector in completing the valuation
inspection of properties. We have not made an enquiry of the duty
holder, of an existence of an Asbestos Register or of any plan for
the management of asbestos to be made. Where relevant, we have made
an Assumption that there is an Effective Management Plan in place,
which does not require any immediate expenditure, or pose a
significant risk to health, or breach any local health and safety
regulations. We advise that such enquiries be undertaken by a
lawyer.
No mining, geological or other investigations have been
undertaken to certify that the site is free from any defect as to
foundations. We have made an Assumption that the load bearing
qualities of the site of the property are sufficient to support the
buildings constructed, or to be constructed thereon. We have also
made an Assumption that there are no services on, or crossing the
site in a position which would inhibit development or make it
unduly expensive and that there are no abnormal ground conditions,
nor archaeological remains present, which might adversely affect
the present or future occupation, development or value of the
property.
No tests have been carried out as to electrical, electronic,
heating, plant and machinery equipment or any other services nor
have the drains been tested. However, we have made an Assumption
that all services, including gas, water, electricity and sewerage
are provided and are functioning satisfactorily.
In the case of a new property, the construction of which has not
been commenced or completed, or of a property built within the last
ten years, we shall make the Assumption that the construction will
be/has been satisfactorily completed and that it is/will be subject
to the 10 year construction guarantee (garantie decennale de la
construction).
1.4 Plant and Machinery
No allowance has been made for any items of plant or machinery
not forming part of the service installations of the building. We
have specifically excluded all items of plant, machinery and
equipment installed wholly or primarily in connection with any of
the occupants' businesses. We have also excluded furniture and
furnishings, fixtures, fittings, vehicles, stock and loose
tools.
1.5 Goodwill
No account has been taken in our valuation(s) of any business
goodwill that may arise from the present occupation of the
property.
1.6 Floor areas and inspections
Unless referred to otherwise in our Valuation Report, we have
physically inspected the property and have either carried out a
measured survey or have calculated floor areas from plans provided
by the Applicant or their agents, supported by check measurements
on site where necessary.
Where we were not instructed to measure and calculate the floor
areas, we have applied floor areas provided by the Applicant or
their agents. We have made an Assumption that these areas have been
measured and calculated in accordance with current market
practice.
1.7 Environmental matters
We have made the enquiries referred to in Section 2 of this
Valuation Report regarding environmental matters including
contamination and flooding, and we have had regard to any
environmental reports referred to in Section 2 of this Valuation
Report. However, we have not undertaken a formal environmental
assessment.
Where our enquiries have lead us to believe that the property is
unaffected by contamination, flooding or other environmental
problems, then, unless you have instructed us otherwise, our
valuation is based on an Assumption that no contamination or other
adverse environmental matters exist in relation to the property
sufficient to affect value.
1.8 Statutory requirements and planning
We have made verbal or written enquiries, or an inspection of
the website, of the relevant planning authorities as referred to in
Section 2 of this Valuation Report as to the possibility of highway
proposals, comprehensive development schemes and other ancillary
planning matters that could affect property values. We have also
sought to ascertain whether any outstanding planning applications
exist which may affect the property, and whether it is listed or
included in a Conservation Area. We have also attempted to verify
the existing permitted use of the property, and endeavoured to have
sight of any copies of planning permissions. The results of these
enquiries are in Section 2 of this Valuation Report.
Save as disclosed in a Certificate of Title or unless otherwise
advised, and unless otherwise referred to in this Valuation Report
we have made the Assumption that the building has been constructed
in full compliance with valid town planning and building
regulations approvals and that where necessary has the benefit of
current Fire Risk Assessments compliant. Similarly, we have also
made the Assumption that the property is not subject to any
outstanding statutory notices as to its construction, use or
occupation and that the existing use(s) of the property is/are duly
authorised or established and that no adverse planning conditions
or restrictions apply.
We have made the Assumption that the property complies with all
relevant statutory requirements.
Please note the fact that employees of town planning departments
now always give information on the basis that it should not be
relied upon and that formal searches should be made if more certain
information is required. We assume that, if you should need to rely
upon the information given about town planning matters, your
solicitors would be instructed to institute such formal
searches.
In instances where we have valued a property with the benefit of
a recently granted planning consent or on the Special Assumption
that planning consent is granted, we have made an assumption that
it will not be challenged under Judicial Review. Such a challenge
can be brought by anyone (even those with only a tenuous connection
with the property, or the area in which it is located) within a
period of three months of the granting of a planning consent.
If a planning consent is subject to Judicial Review, we must be
informed and asked to reconsider our opinion of value. Advice would
be required from your lawyer and a town planner, to obtain their
opinion of the potential outcomes of such a Judicial Review, which
we will reflect in our reconsideration of value.
1.9 Leasing
We have read all the leases and related documents provided to
us, subject to the provisions of this paragraph. We have made an
Assumption that copies of all relevant documents have been sent to
us and that they are complete and up to date.
We have not undertaken investigations into the financial
strength of any tenant(s). Unless we have become aware by general
knowledge, or we have been specifically advised to the contrary, we
have made an Assumption that:
1. where a property is occupied under leases then the tenants
are financially in a position to meet their obligations, and
2. there are no material arrears of rent or service charges,
breaches of covenant, current or anticipated tenant disputes.
However, our valuation(s) reflect the market's general
perception of the credit worthiness of the type of tenant(s)
actually in occupation or responsible for meeting lease
commitments, or likely to be in occupation.
We have also made an Assumption that wherever rent reviews or
lease renewals are pending or impending, with anticipated
reversionary increases, all notices have been served validly within
the appropriate time limits.
1.10 Legal issues
Legal issues, and in particular the interpretation of matters
relating to title and leases, may have a significant bearing on the
value of an interest in property. No responsibility or liability
will be accepted for the true interpretation of the legal position
of our client or other parties. Where we express an opinion upon
legal issues affecting the valuation, then such opinion should be
subject to verification by the client with a suitable qualified
lawyer. In these circumstances, we accept no responsibility or
liability for the true interpretation of the legal position of the
client or other parties in respect of the valuation of the property
and our Valuation Report will include a statement to this
effect.
1.11 Information
We have made the Assumption that the information provided by
you, the Applicant and your respective professional advisers in
respect of the property we have valued is both full and correct. We
have made the Assumption that details of all matters relevant to
value within your and their collective knowledge, such as
prospective lettings, rent reviews, outstanding requirements under
legislation and planning decisions, have been made available to us,
and that such information is up to date.
1.12 Estimated reinstatement cost assessment
We have considered the extent and nature of the building and an
estimated reinstatement cost assessment has been undertaken as part
of our normal valuation exercise. We have not carried out a formal
reinstatement cost assessment through our Building Consultancy
Division. Our assessment should be treated as a guide only and
should not be relied upon. It should be used for comparative
purposes only against the borrower's proposed reinstatement cover.
Should any discrepancies arise, a formal reinstatement cost
assessment should be commissioned.
The figures set out in our Valuation Report are our assessment
of the cost of reconstructing the property at the date of
valuation. They include an allowance for demolition, removal of
debris, temporary shoring, statutory and professional fees which
are likely to be incurred on reconstruction, but exclude any
allowance for VAT. If you are unable to recover VAT, or can recover
part only, you should advise your insurers and increase the Base
Sum Insured appropriately. The figures make no allowance for loss
of rent during the rebuilding period, nor for inflation, nor the
cost of dealing with any contamination which may be present and
have to be dealt with prior to reconstruction. The assessment does
not provide advice in respect of terrorist damage cover and you
should consult with your insurers in respect of this.
We have assumed that the reinstated building and its use would
be similar to that existing, and the replacement building would be
to the original design, in modern materials, using modern
techniques to modern standards.
1.13 Deduction of notional purchaser's costs
The Market Value which we have attributed to the property is the
figure we consider would appear in a contract for sale, subject to
the appropriate assumptions for this Basis of Value. Where
appropriate, we have made an allowance in respect of stamp duty and
purchaser's costs as defined by AFREXIM.
1.14 Taxation
No adjustment has been made to reflect any liability to taxation
that may arise on disposal, nor for any costs associated with
disposal incurred by the owner. Furthermore, no allowance has been
made to reflect any liability to repay any government or other
grants, taxation allowance or lottery funding that may arise on
disposal.
Our valuation figure for each property is that receivable by the
willing seller excluding VAT, if applicable.
1.15 Properties in the course of development or requiring
refurbishment
Unless otherwise referred to in the Valuation Report, we have
relied upon information relating to construction and associated
costs in respect of both the work completed and the work necessary
for completion, together with a completion date, as advised by the
owner of the property or their professional advisers.
Unless otherwise referred to in the Valuation Report, our
valuation of the completed building has been based on an Assumption
that all works of construction have been satisfactorily carried out
in accordance with the building contract and specifications,
current British Standards and any relevant codes of practice. We
have also made an Assumption that a duty of care and all
appropriate warranties will be available from the professional team
and contractors, which will be assignable to third parties.
1.16 Valuation computer print-outs
Where we have provided copies of computer print outs produced by
Argus Valuation - Capitalisation or other valuation tools, you
should note the following in order to understand the
valuations:
Valuation summary print out
Gross rent
The current gross rent represents the total income receivable
from the property at the date of valuation. In the case where a
rent review is outstanding at the date of valuation and a
reversionary increase in anticipated, the gross rent includes the
reversionary increase as if it were payable at the date of
valuation, unless otherwise stated in the contents of the
Report.
Similarly, if a lease has expired but for the purpose of the
valuation it is assumed that the tenant will renew the lease at
current rental value, the gross rent includes the rental value of
that particular lease.
Net rent
The current net rent represents the current gross rent less any
or all of the following:
a. Ground rent
b. Irrecoverable revenue outgoings
c. Loss of income due to a permanent void allowance.
Running yields
The running yield at any given point in time represents the
return generated by the net rent as a percentage of the gross value
before deduction of purchaser's costs. Where we have made capital
deductions or additions to reflect matters such as the cost of
works or letting fees, or premium receipts, yields are calculated
against a sum equal to the net value plus purchaser's costs and any
such capital deductions or minus any such capital receipts.
Rounding
The initial, running and equivalent yields are calculated
against capital values prior to rounding. The variation in yields
calculated before rounding compared with those calculated after
rounding is not material.
Tenancy details print out
Gross income
The actual contracted gross income received at the date of
valuation is shown on the tenancy schedule. This sum ignores
potential increases further to outstanding reviews and lease
renewals.
Rounded rent
The rounded rent for each tenancy is reflected in the valuation
calculation.
This information is provided by RNS
The company news service from the London Stock Exchange
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