TIDMWTC
RNS Number : 6294X
Westcity PLC
18 August 2009
The following amendments have been made to the 'Final Results'
announcement
released on 18 August 2009 at 11.40 am under
RNS No 6181X.
The date in the heading has been changed from 2009 to 2008 and the date at the
end of the Chairman's Statement as been changed from 19 August 2009 to 18 August
2009.
All other details remain unchanged.
The full amended text is shown below.
Westcity plc
FINAL RESULTS FOR THE TWELVE MONTHS ENDED 31ST DECEMBER 2008
Westcity plc, ("Group" or the "Company") the real estate investment and
development company, announces its final results for the twelve months ended 31
December 2008.
CHAIRMAN'S STATEMENT
The year under review has been one of unparalleled turbulence and uncertainty
within the global financial system, materially impacting real estate markets and
reducing values in virtually every property sector and jurisdiction. The past
twelve months has proven to be a particularly testing time with most property
companies and funds experiencing sharp falls in capital values. These external
factors have clearly had a significant impact on the value of our investment in
the Stonehage Westcity Property Fund ("Fund") and, consequently, our results.
Westcity Plc's major asset is its investment of 34.3% in the Stonehage Westcity
Property Fund ("Fund") which is carried at fair value based upon the
proportionate share of the net asset value of the Fund.
The Group incurred a loss after tax for the year of GBP 8,170,000 (2007: loss
GBP1,604,000) principally due to the loss on the Group's investment in the Fund
of GBP4,512,000. This loss comprises a reduction in the net value of the Fund of
GBP9,187,000 offset by a foreign currency translation gain of GBP4,675,000.
In addition a foreign exchange hedging loss of GBP1,441,000 was incurred as a
result of a forward exchange contract used to hedge the Fund investment against
the Euro. As previously reported this hedging contract was settled and closed in
June 2008.
Excluding the Fund related losses and the hedging loss outlined above, the
Company recorded an operating loss of GBP2,217,000 as revenues failed to cover
the Company's operating expenses due to the reduced level of investment activity
by the Fund.
I would like to apologise for the delay in releasing these results. As
previously stated, this was due to a delay in the completion of audited results
of a German subsidiary of the Fund and its investment in the Rutley Russia
Property Fund. We expect to post the 2008 annual report to all shareholders on
Monday 24th August 2009 with trading of our shares to recommence on Tuesday 25th
August 2009. During a lengthy period of losses and uncertainty we have been
grateful for and sustained by the loyalty and support shown by our shareholders.
This is an opportunity for me to personally thank all shareholders for the
support and the patience they have demonstrated.
REVIEW OF OPERATIONS
The Fund's strategy was changed during the second half of the year under review
as the global financial crisis took hold. The Fund elected to liquidate
investments where opportunities presented themselves with a view to preserving
cash. In addition, as previously reported, the Fund aborted numerous
transactions during the year under review which has resulted in it having
approximately 70% of its equity held in cash at 31 December 2008. Since the year
end, the Fund has continued to liquidate additional investments where
appropriate.
As a consequence of the asset divestments and freeze on new investments by the
Fund, related revenues generated for our Group from fee and development
management income has fallen dramatically. Accordingly, the Group has adopted a
defensive approach and has taken steps to materially reduce overheads and
expenditure. The aggressive reduction in our cost base has continued, and
remains essential to our survival. The Group also continues to remain reliant on
the loan from Chapman International Investment LTD to fund working capital.
The Group, which owns 34.3% of the Fund, is property adviser to the Fund. An
update of the Fund's investments is set out as follows.
German Commercial Portfolio
During 2008 the commercial property market in Germany saw a significant decrease
in investment volume resulting from the increasing financial crisis and
consequential lack of investment financing. Investment focus shifted to top
properties with long-term, stable cash-flow in core locations. Re-pricing is
occurring, particularly in B and C class properties in peripheral locations.
Most portfolio deals in Germany were negotiated in the first half of 2008 and in
view of the combination of high financing costs and restrictive lending
policies, it is anticipated that portfolio transactions, in particular, will
become increasingly rare due to the crisis on the refinancing market. It is
generally expected that in 2009 investment deals that are concluded will be of
single, small-sized properties rather than portfolios.
Concordia Building, Hanover
The property consists of approximately 15,700 square metres over 9 floors and is
100% let to a large German insurance company on a lease which terminates in 2020
with annual CPI rent reviews.
The Fund acquired this property in 2006 for EUR20.7 million and a gross cost
(inclusive of all acquisition costs) of EUR21.2 million. The total cost was funded
by equity of EUR4.4 million and a loan facility from HSH Nordbank for EUR16.8
million at a rate of 5.38% per annum expiring 13 October 2011.
A valuation as at 31 December 2008 was undertaken by Knight Frank, valuing the
property at EUR20 million, thereby reducing the Fund's equity portion after debt
and interest rate swap provision to EUR2.7 million. At current gross rental income
of EUR1.5 million, this values the property on a gross yield of 7.5%. The mark to
market value of the interest rate swap is EUR0.6 million negative, which has been
charged to the Fund's profit and loss account and against the carrying value of
this asset.
If the property is not sold before the loan facility matures in 2011 it is
uncertain as to what financial conditions may exist at that time in the future
and whether additional equity may be required at the time of debt refinancing.
There can therefore be no certainty at this time as to a realisation of the
current valuation given the prevailing economic climate and continuing expansion
of capitalisation rates.
Mustang
The Fund acquired a portfolio of 10 commercial properties in tier 2 and tier 3
cities in a 50/50 partnership with the European Added Value Fund, which is
managed by AXA Investment Management, for EUR85 million in 2007, at an initial
gross yield on purchase price of 7.2%. The Fund's equity investment amounted to
approximately EUR14.1 million for its 50% share. In total, the portfolio consists
of approximately 60,000 square metres of primarily commercial space, including a
nominal element of retail, and is currently 86% let. Approximately 57% of the
currently let space relates to leases which expire within the next two years.
The investment was funded with equity and a senior debt facility provided by
Eurohypo of EUR51 million, at a loan to value of 60% and at a fixed rate of 5.37%
per annum, repayable in 2014. The Fund alone has taken out a further junior loan
of EUR5.3 million with the same lender. The mark to market value of the interest
rate swap is EUR0.4 million negative, which has been charged to the Fund's profit
and loss account and further reducing the carrying value of this asset.
At 31 December 2008 the portfolio was professionally valued by Knight Frank at
EUR70.9 million, reducing the Fund's share of equity to EUR3.65 million. The mark to
market value of the Fund's interest rate swap is EUR1.81 million negative, which
has been charged to the Fund's profit and loss account and carrying value of the
investment. Based on this current valuation the Fund's junior loan is in breach
of its loan-to-value covenant and as a consequence the Fund could be required to
inject further equity. In addition there is the risk that if vacancy rates
increase and leases are not renewed in the short term the senior loan will also
be in breach on a loan-to-value and an interest-coverage ratio basis. The equity
partners are currently in negotiations with the lender regarding the junior loan
covenant breach and the potential for senior loan covenant breaches.
As a result of these negative factors and outlook, the fund directors have
written the carrying value of this investment down to zero.
Frankfurt and Maintal
In March 2008 the Fund, in a 50/50 partnership with the European Added Value
Fund, completed the acquisition for EUR13.2 million of four commercial/industrial
properties comprising a total of 20,000 square metres in Frankfurt and Maintal
at an initial gross yield on purchase price of 8.6%. The Fund's share of equity
amounts to EUR2.1 million with total non-recourse debt from LandesBank Berlin of
EUR8.8 million with a fixed interest rate of 5.19%, repayable in December 2012.
At 31 December 2008 the portfolio was professionally valued by Knight Frank at
EUR12.6 million equating to a gross rental yield of 8.9% and the Fund's share of
equity to EUR2.1 million.
The current loan to value ratio is 70% based on the valuation at December 2008,
which is within the 76% covenant threshold.
German Residential Portfolio
Residential property values in Berlin have remained fairly stable compared to
other German and EU cities. Positive demographics and lack of new construction
should continue to underpin rentals in this market. However, the lack of
financing available to prospective purchasers has seen transactional volumes
slow dramatically so that capital values are coming under increased pressure.
Berlin Residential
The Fund invested EUR5.1 million of equity into a specialist Berlin residential
fund with approximately 28.09% share of the Berlin fund's equity base, the Fund
is represented on the Advisory Board. The Berlin fund has acquired 29 properties
which comprise 744 residential units and 62 retail units with a purchase cost of
EUR55.4 million and gross costs totalling approximately EUR63 million. The purchases
were funded by equity and EUR46.8 million of non-recourse senior debt at an
interest rate of 5.53% and repayable in October 2012.
The portfolio was valued in October 2008 by Jones Lang LaSalle at EUR57.14
million, compared to the carrying value in the Berlin fund's accounts at 31
December 2008 of EUR59.9 million. Based upon the EUR57.14 million valuation, the
Fund's share of the net equity of the Berlin fund amounted to EUR2.82 million at
December 2008.
During 2008 the property management of the portfolio was changed, with positive
results in terms of costs and occupancy rates. However, despite the reduced
vacancy rate of 3.5% and average rental per square foot increasing by 6% since
acquisition, the portfolio is experiencing very difficult liquidity issues as a
result of the high acquisition costs and continuing Berlin fund management
costs. In order to address its liquidity, the Managers have actively been
seeking to sell some of the portfolio assets, without success. In addition, they
are currently in negotiation with a number of potential lenders to refinance the
portfolio. If neither initiative is successful it may become necessary for the
Berlin fund to seek additional equity from its investors.
As a result of these negative factors and outlook, the Fund Directors have
written the carrying value of this investment down to EUR1 million.
London Development Projects
There have recently been some tentative signs of a slowing in the pace of value
declines in some prime parts of the UK property markets but values, generally,
are still falling. Whilst the UK economy remains in recession this appears
likely to continue and there is very little momentum for value appreciation.
Competitive buying interest in UK property assets is only noticeable at the more
prime, well let end of the property spectrum. The speculative development market
remains substantially closed for anything other than full distressed sales and
"super prime" opportunities.
At the present time most developers and house builders are out of the market
with the risk/reward equation totally out of balance and funding almost
impossible to secure for anything other than the most securely pre-let of
buildings. As a consequence, development land values are continuing to fall.
Greenwich, London
The Fund entered into a joint venture with Capital & Counties in 2006 for a
mixed-use development in the centre of Greenwich, London. Planning permission
was achieved during the 2008 year for 129 residential units and 2,500 square
metres of prime retail space.
Greenwich is 50% owned by the Fund, which has invested a total of EUR11.2m for its
share. There are no borrowings against this investment.
As a result of the extremely negative outlook for the development sector and in
order to preserve its capital, the Fund agreed with its partner to divest of the
property and completed the sale of the property in May 2009 to the University of
Greenwich for EUR9.6 million (GBP8.5 million). The Fund's net share of the sale
proceeds was EUR4.6 million (GBP4.3 million), the gross value at which this
investment was carried in the books of the Fund at 31 December 2008.
Queens Wharf
The Group entered into a joint venture with Byrne Estates for a mixed-use
development at Queens Wharf, a riverside site immediately adjacent to the Grade
II listed Hammersmith Bridge, providing excellent views along the River Thames.
The acquisition was completed in March 2008.The GBP30 million purchase price was
funded by approximately 25% equity and 75% senior acquisition debt provided by
Kaupthing Singer & Friedland ("Kaupthing"). This non-recourse debt of GBP24.25
million is repayable in March 2010 and bears interest at 3-month LIBOR plus
1.90% per annum After acquisition costs and planning costs to date, the Fund's
invested equity amounted to EUR5.9million (GBP5.7 million).
The property was valued as at 31 December 2008 by Montagu Evans LLP on an
existing basis without planning consent at GBP7.5 million. After taking into
account the senior debt, the net equity value of this property is negative and
as such is carried in the Fund's books at zero value.
The senior debt lenders are currently in administration. As a result of the
current valuation of the property, the development market outlook and the
current status of Kaupthing, the administrators of the senior lender sold the
property to a third party in June 2009 in order to recover a portion of their
outstanding loan. The Fund, together with its partner, agreed to the sale in
return for their release from all obligations under that loan, thereby removing
substantial contingent liabilities attaching to the loan,
Other investments
Outside of the three main investment segments outlined above, the Fund's
portfolio includes the following investments:
Care Homes
The Fund committed an initial GBP5 million to be followed by a further GBP5
million to provide mezzanine funding to a well established UK company for the
acquisition of development land and the subsequent development of care homes
throughout the UK. The Fund, which has a deal by deal veto, is entitled to a
fixed return on its investments in addition to a 30% share in the profits. This
commitment expired in July 2009.
During the year the Fund realised a profit of EUR0.2 million (GBP0.15 million) on
its investment of EUR0.5 million (GBP0.39 million) in a development property which
was sold after planning consents were obtained
Currently the Fund has investments in two small properties which are awaiting
planning permission.
* Camberwell
The Fund has invested by way of mezzanine loan EUR.9 million (GBP0.97 million) in
this project, representing 80% of the equity required. The property was
purchased for GBP3.75m in 2007, funded by bank debt of GBP3.15 million, at an
interest rate of Base + 1.65% per annum repayable in September 2010.
Based on a recent desktop valuation by DTZ in May 2009, valuing the site with
planning at GBP3.85 million, it is believed that there is full recoverability of
the loan. This belief is further enhanced with the borrowing UK Company making
no provision or impairment in their accounts.
* Thringstone
The Fund has invested by way of mezzanine loan EUR0.5 million (GBP0.46 million) in
this project, representing 80% of the equity required. The property was
purchased for GBP0.9 million in 2008, funded by bank debt of GBP0.54 million, at
an interest rate of Base + 1.65% per annum, repayable in February 2010.
A recent informal desktop valuation by King Sturge in March 2009 valued the site
with planning at GBP1.25 million .At this value, there would be full
recoverability of the Mezzanine Loan.
Rutley Russia Property Fund
The Fund invested EUR7.7 million (including costs) in the Rutley Russia Property
Fund for a 9.59% interest in the fund. This fund, which completed one
acquisition, is in the process of being liquidated. The Fund received an initial
return of capital of $6.5 million (EUR5.1 million) in December 2008, so that the
balance of the Fund's investment stood at EUR1.2 million at 31 December 2008.
The Rutley Russia Property Fund currently has cash on hand and a single property
asset. The fund is being liquidated by Barclays Private Wealth. The value and
timing of any realisation of the property is unclear as there are title and
boundary disputes on the property. In addition, the tenant is currently in
arrears on rental payments. With regard to the cash, it is not clear to what
extent ongoing costs and litigation with the previous managers of the fund will
deplete the remaining cash.
Portland Fund
The Fund invested EUR5.0 million in the Portland Global Real Estate Securities
Fund in June 2007.As a result of the negative performance of this investment and
the turmoil in financial markets, the Fund gave the statutory notice in November
2008 to redeem its holding in order to preserve its remaining capital. The net
proceeds from the liquidation of this investment, amounting to EUR3.79 million
were received in January 2009., At December 2008 the carrying value of this
investment was reduced to EUR3.79 million representing a loss of 24%.
DIVIDEND
No dividend will be paid on the ordinary shares in respect of the period under
review (2007: NIL).
BOARD
As announced on 30th April 2009, Raymond Davies stepped down from the Board
after 9 years of service to the Company in various capacities. On behalf of the
Board, I'd like to thank him for his valuable contribution to Westcity's
development and wish him well for the future.
STRATEGY
Since the Fund's launch in mid-2006, the benefit of hindsight shows that the
Fund's investments were made at or near the top of the market. The significant
realised and unrealised losses on every investment were a consequence of the
unprecedented financial and economic crises that have evolved at alarming speed
since the third quarter of 2008. However, the Fund's manager, at the onset of
the credit crunch, changed the Fund's strategy and has preserved a significant
amount of cash through its active disinvestment from certain investments and
withdrawal from a number of contracted transactions.
While yields remain under pressure and transactional activity remains low in the
short term, maximising the value from the existing portfolio will require time.
We believe that once some level of confidence returns to world markets and
financing flows are restored to more normal levels, the next 3 to 5 years will
provide stronger exit opportunities for these investments. In the meantime the
Fund will continue to manage these assets with a focus on preserving value.
The Fund's strategy going forward will be to focus on UK real estate assets and
to take advantage of the turmoil in the real estate market, in particular
through opportunistic acquisitions and active asset management with a focus on
capital and liquidity to provide resilience in a harsh economic
environment.
As part of the strategic focus going forward, the Fund will look to make
investments in projects which are now beginning to emerge. Many quality assets
are becoming available at substantial discounts to intrinsic value as a result
of stress brought about by the events of the past twelve months. The Fund will
seek to use its cash to achieve significant potential income and capital returns
by investing in these opportunities, whether through acquisition of debt, equity
or injection of fresh equity. By identifying first class assets with low risk
and moderate levels of debt financing, we believe that the Fund will be able to
deliver enhanced returns over the next three to five years. The events that have
destroyed values have created opportunity for those with the liquidity to
benefit from this massive asset devaluation.
OUTLOOK
The UK and European economies and real estate markets continue to be extremely
demanding, with further downside pressure on values and rental income likely.
These conditions present a significant ongoing challenge to realising value from
the remainder of the Fund's portfolio on acceptable terms in the current
environment.
The Fund managers are continuing to actively manage the remaining portfolio and
we continue to take steps to reduce the cost base and improve rental income at
the property level. Whilst tenant retention remains a key priority, the Fund
aims to continue to make selective asset sales where appropriate and to take
advantage of new opportunities as they arise.
We believe that the property market will present attractive investment
opportunities in the short to medium term, arising from the credit crunch and
global downturn. The Fund's cash balances will provide the foundation on which
to rebuild its portfolio and recoup its losses.
The Group has also responded to the market turbulence by significantly reducing
its overhead and other variable costs. However the ongoing costs attached to
Westcity's AIM listing exceed Westcity's quarterly income from fund
activities. Against this background, the Board is spending significant time
evaluating different strategic alternatives for the Group with a particular
emphasis on the options available to maximise value for our shareholders and
will update shareholders as and when appropriate.
Ira Rapp
Executive Chairman
18 August 2009
WESTCITY PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| | | 2008 | 2007 |
+---------------------------------------------+--------+------------+--------------+
| | Notes | GBP'000 | GBP'000 |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| REVENUE | | 694 | 1,132 |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| Other income | | | |
+---------------------------------------------+--------+------------+--------------+
| Finance revenue | 1 | 91 | 335 |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| Employee benefits expense | | (2,013) | (2,312) |
+---------------------------------------------+--------+------------+--------------+
| Depreciation and amortisation expense | 1,6 | (36) | (36) |
+---------------------------------------------+--------+------------+--------------+
| Other expenses | | (1,144) | (912) |
+---------------------------------------------+--------+------------+--------------+
| (Loss) / profit on investment held at fair | 1 | (4,512) | 1,570 |
| value through profit and loss | | | |
+---------------------------------------------+--------+------------+--------------+
| Finance costs | 1 | (27) | - |
+---------------------------------------------+--------+------------+--------------+
| Share of profits of equity accounted | 5 | 218 | 69 |
| investments | | | |
+---------------------------------------------+--------+------------+--------------+
| Loss on forward exchange contract | 1 | (1,441) | (1,550) |
+---------------------------------------------+--------+------------+--------------+
| Profit on Sale of Hixon Land | | - | 100 |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| (LOSS) BEFORE TAX | | (8,170) | (1,604) |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| Income Taxes | 3 | - | - |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| (LOSS) FOR THE YEAR ATTRIBUTABLE TO EQUITY | | (8,170) | (1,604) |
| HOLDERS OF THE PARENT | | | |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
| Basic (loss) per share | 4 | (11.00)p | (2.12)p |
+---------------------------------------------+--------+------------+--------------+
| Diluted (loss) per share | 4 | (11.00)p | (2.12)p |
+---------------------------------------------+--------+------------+--------------+
| | | | |
+---------------------------------------------+--------+------------+--------------+
WESTCITY PLC
Balance SheetS
AS AT 31 DECEMBER 2008
+---------------------------------+-------+----------+----------+
| | | Group | Group |
+---------------------------------+-------+----------+----------+
| | | 2008 | 2007 |
+---------------------------------+-------+----------+----------+
| |Notes | GBP'000 | GBP'000 |
+---------------------------------+-------+----------+----------+
| NON-CURRENT ASSETS | | | |
+---------------------------------+-------+----------+----------+
| Property, plant and equipment | 6 | 34 | 70 |
+---------------------------------+-------+----------+----------+
| Equity accounted investments | 5 | 191 | 123 |
+---------------------------------+-------+----------+----------+
| Other financial assets | 7 | 16,626 | 21,138 |
+---------------------------------+-------+----------+----------+
| | | 16,851 | 21,331 |
+---------------------------------+-------+----------+----------+
| | | | |
+---------------------------------+-------+----------+----------+
| CURRENT ASSETS | | | |
+---------------------------------+-------+----------+----------+
| Trade and other receivables | 9 | 342 | 413 |
+---------------------------------+-------+----------+----------+
| Prepayments | | 22 | 34 |
+---------------------------------+-------+----------+----------+
| Cash and cash equivalents | | 42 | 4,787 |
+---------------------------------+-------+----------+----------+
| | | 406 | 5,234 |
+---------------------------------+-------+----------+----------+
| | | | |
+---------------------------------+-------+----------+----------+
| TOTAL ASSETS | | 17,257 | 26,565 |
+---------------------------------+-------+----------+----------+
| | | | |
+---------------------------------+-------+----------+----------+
| CURRENT LIABILITIES | | | |
+---------------------------------+-------+----------+----------+
| Trade and other payables | 10 | 255 | 403 |
+---------------------------------+-------+----------+----------+
| Financial liability on forward | 1 | - | 1,550 |
| exchange contract | | | |
+---------------------------------+-------+----------+----------+
| Provisions | 11 | 323 | 55 |
+---------------------------------+-------+----------+----------+
| | | 578 | 2,008 |
+---------------------------------+-------+----------+----------+
| | | | |
+---------------------------------+-------+----------+----------+
| NON-CURRENT LIABILITIES | | | |
+---------------------------------+-------+----------+----------+
| Amounts owed to subsidiary | | - | - |
| undertakings | | | |
+---------------------------------+-------+----------+----------+
| Loans and borrowings | | 400 | - |
+---------------------------------+-------+----------+----------+
| Provisions | 11 | 167 | 405 |
+---------------------------------+-------+----------+----------+
| | | 567 | 405 |
+---------------------------------+-------+----------+----------+
| | | | |
+---------------------------------+-------+----------+----------+
| TOTAL LIABILITIES | | 1,145 | 2,413 |
+---------------------------------+-------+----------+----------+
| | | | |
+---------------------------------+-------+----------+----------+
| NET ASSETS | | 16,112 | 24,152 |
+---------------------------------+-------+----------+----------+
| | | | |
+---------------------------------+-------+----------+----------+
| CAPITAL AND RESERVES | | | |
+---------------------------------+-------+----------+----------+
| Issued share capital | 13 | 743 | 743 |
+---------------------------------+-------+----------+----------+
| Share based payments reserve | | 451 | 321 |
+---------------------------------+-------+----------+----------+
| Other capital reserves | | 25,571 | 25,589 |
+---------------------------------+-------+----------+----------+
| Retained earnings | | (10,653) | (2,501) |
+---------------------------------+-------+----------+----------+
| SHAREHOLDERS' EQUITY | | 16,112 | 24,152 |
+---------------------------------+-------+----------+----------+
WESTCITY PLC
Cash Flow Statements
FOR THE YEAR ENDED 31 DECEMBER 2008
+---------------------+--------+---------+---------+
| | | Group | Group |
+---------------------+--------+---------+---------+
| | | 2008 | 2007 |
+---------------------+--------+---------+---------+
| | Notes | GBP'000 | GBP'000 |
+---------------------+--------+---------+---------+
| | | | |
+---------------------+--------+---------+---------+
| Net | 15 | (4,809) | (2,190) |
| cash | | | |
| flows | | | |
| from | | | |
| operating | | | |
| activities | | | |
+---------------------+--------+---------+---------+
| | | | |
+---------------------+--------+---------+---------+
| Investing | | | |
| activities | | | |
+---------------------+--------+---------+---------+
| Interest | | 91 | 334 |
| received | | | |
+---------------------+--------+---------+---------+
| Purchase | | - | (88) |
| of | | | |
| property, | | | |
| plant and | | | |
| equipment | | | |
+---------------------+--------+---------+---------+
| Proceeds | | - | - |
| from the | | | |
| sale of | | | |
| investment | | | |
| property | | | |
+---------------------+--------+---------+---------+
| Payments | | - | - |
| to | | | |
| acquire | | | |
| equity | | | |
| accounted | | | |
| investments | | | |
+---------------------+--------+---------+---------+
| Payments | | - | - |
| to | | | |
| acquire | | | |
| other | | | |
| financial | | | |
| assets | | | |
+---------------------+--------+---------+---------+
| Net | | 91 | 246 |
| cash | | | |
| flows | | | |
| used | | | |
| in | | | |
| investing | | | |
| activities | | | |
+---------------------+--------+---------+---------+
| | | | |
+---------------------+--------+---------+---------+
| Financing | | | |
| activities | | | |
+---------------------+--------+---------+---------+
| Net | | - | - |
| proceeds | | | |
| from the | | | |
| issue of | | | |
| share | | | |
| capital | | | |
+---------------------+--------+---------+---------+
| Interest | | (27) | - |
| paid | | | |
+---------------------+--------+---------+---------+
| Repayment | | - | - |
| of | | | |
| borrowings | | | |
+---------------------+--------+---------+---------+
| Amounts | | - | - |
| received | | | |
| from | | | |
| subsidiaries | | | |
+---------------------+--------+---------+---------+
| Amounts | | - | 4,500 |
| repaid | | | |
| by | | | |
| related | | | |
| entities | | | |
+---------------------+--------+---------+---------+
| Net | | (27) | 4,500 |
| cash | | | |
| flows | | | |
| used | | | |
| in | | | |
| financing | | | |
| activities | | | |
+---------------------+--------+---------+---------+
| | | | |
+---------------------+--------+---------+---------+
| | | | |
+---------------------+--------+---------+---------+
| Net | | (4,745) | 2,556 |
| increase/(decrease) | | | |
| in cash and cash | | | |
| equivalents | | | |
+---------------------+--------+---------+---------+
| Cash | | 4,787 | 2,231 |
| and | | | |
| cash | | | |
| equivalents | | | |
| at 1 | | | |
| January | | | |
+---------------------+--------+---------+---------+
| Cash | | 42 | 4,787 |
| and | | | |
| cash | | | |
| equivalents | | | |
| at 31 | | | |
| December | | | |
+---------------------+--------+---------+---------+
| | | | |
+---------------------+--------+---------+---------+
| | | | |
+---------------------+--------+---------+---------+
| | | | |
+---------------------+--------+---------+---------+
WESTCITY PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2008
+----------------------+---------+----------+----------+------------+----------+----------+
| Group | Issued | Share | Share | Other |Retained | Total |
| |capital | premium | based | capital |earnings | equity |
| |GBP'000 | GBP'000 | payment | reserves | GBP'000 | GBP'000 |
| | | | reserve | GBP'000 | | |
| | | | GBP'000 | | | |
+----------------------+---------+----------+----------+------------+----------+----------+
| | | | | | | |
+----------------------+---------+----------+----------+------------+----------+----------+
| 1 January 2007 | 743 | - | 131 | 25,488 | (796) | 25,566 |
+----------------------+---------+----------+----------+------------+----------+----------+
| Loss for the year | - | - | - | - | (1,604) | (1,604) |
+----------------------+---------+----------+----------+------------+----------+----------+
| Total income and | - | - | - | - | (1,604) | (1,604) |
| expense for the year | | | | | | |
+----------------------+---------+----------+----------+------------+----------+----------+
| Share based payment | - | - | 190 | - | - | 190 |
+----------------------+---------+----------+----------+------------+----------+----------+
| Adjustment relating | - | - | - | 101 | (101) | - |
| to previous capital | | | | | | |
| reduction | | | | | | |
+----------------------+---------+----------+----------+------------+----------+----------+
| | | | | | | |
+----------------------+---------+----------+----------+------------+----------+----------+
| At 31 December 2007 | 743 | - | 321 | 25,589 | (2,501) | 24,152 |
| / 1 January 2008 | | | | | | |
+----------------------+---------+----------+----------+------------+----------+----------+
| Loss for the year | - | - | - | - | (8,170) | (8,170) |
+----------------------+---------+----------+----------+------------+----------+----------+
| Total income and | - | - | - | - | (8,170) | (8,170) |
| expense for the year | | | | | | |
+----------------------+---------+----------+----------+------------+----------+----------+
| Share based payment | - | - | 130 | - | - | 130 |
+----------------------+---------+----------+----------+------------+----------+----------+
| Increase in | - | - | - | (18) | 18 | - |
| provision | | | | | | |
+----------------------+---------+----------+----------+------------+----------+----------+
| At 31 December 2008 | 743 | - | 451 | 25,571 | (10,653) | 16,112 |
+----------------------+---------+----------+----------+------------+----------+----------+
| | | | | | | |
+----------------------+---------+----------+----------+------------+----------+----------+
| | | | | | | |
+----------------------+---------+----------+----------+------------+----------+----------+
WESTCITY PLC
NOTES TO the FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2008
+---------------------------------------------------------+-----------+-------------+
| 1. OTHER REVENUE AND EXPENSES | 2008 | 2007 |
+---------------------------------------------------------+-----------+-------------+
| | GBP'000 | GBP'000 |
+---------------------------------------------------------+-----------+-------------+
| | | |
+---------------------------------------------------------+-----------+-------------+
| | | |
+---------------------------------------------------------+-----------+-------------+
| FINANCE COSTS | | |
+---------------------------------------------------------+-----------+-------------+
| Other interest paid | (27) | - |
+---------------------------------------------------------+-----------+-------------+
| | | |
+---------------------------------------------------------+-----------+-------------+
| FINANCE REVENUE | | |
+---------------------------------------------------------+-----------+-------------+
| Bank interest receivable | 91 | 335 |
+---------------------------------------------------------+-----------+-------------+
| | | |
+---------------------------------------------------------+-----------+-------------+
+---------------------------------------------------------+-----------+-------------+
| DEPRECIATION | | |
+---------------------------------------------------------+-----------+-------------+
| Depreciation | (36) | (36) |
+---------------------------------------------------------+-----------+-------------+
| | | |
+---------------------------------------------------------+-----------+-------------+
| PROFIT/(LOSS) ON | | |
| INVESTMENT HELD AT FAIR | | |
| VALUE | | |
+---------------------------------------------------------+-----------+-------------+
| Issue Costs | - | - |
+---------------------------------------------------------+-----------+-------------+
| (Decrease)/Increase in | (9,187) | (240) |
| value of investment from | | |
| the movement in NAV | | |
+---------------------------------------------------------+-----------+-------------+
| Profit/(loss) on foreign | 4,675 | 1,810 |
| exchange | | |
+---------------------------------------------------------+-----------+-------------+
| | (4,512) | 1,570 |
+---------------------------------------------------------+-----------+-------------+
| | | |
+---------------------------------------------------------+-----------+-------------+
| Loss on forward exchange | (1,441) | (1,550) |
| contract | | |
+---------------------------------------------------------+-----------+-------------+
| | | |
+---------------------------------------------------------+-----------+-------------+
| SHARE BASED PAYMENTS | | |
| EXPENSE | | |
+---------------------------------------------------------+-----------+-------------+
| Share based payments | 130 | 190 |
| expense | | |
+---------------------------------------------------------+-----------+-------------+
| | | |
+---------------------------------------------------------+-----------+-------------+
| | | |
+---------------------------------------------------------+-----------+-------------+
| | | |
+---------------------------------------------------------+-----------+-------------+
| AUDITOR'S REMUNERATION | | |
+---------------------------------------------------------+-----------+-------------+
| Fees payable to the | 35 | 28 |
| company's auditor for the | | |
| audit of the company's | | |
| annual accounts | | |
+---------------------------------------------------------+-----------+-------------+
| Fees payable to the | | |
| company's auditor for | | |
| other services provided | | |
| to the company and its | | |
| subsidiaries: | | |
+---------------------------------------------------------+-----------+-------------+
| - Tax services | 20 | - |
+---------------------------------------------------------+-----------+-------------+
| - Other services | 3 | 6 |
+---------------------------------------------------------+-----------+-------------+
| | | |
+---------------------------------------------------------+-----------+-------------+
| | 58 | 34 |
+---------------------------------------------------------+-----------+-------------+
| | | |
+---------------------------------------------------------+-----------+-------------+
2.SEGMENT INFORMATIOn
The Group income derives principally from its operations in the UK and Channel
Islands being that property related investment, development and management.
The directors consider there is no segmental information to be provided on the
basis that the Group is based and operated from the UK with an investment in the
Channel Islands.
3.INCOME TAX
+---------------------------------------+---------+--------+---------+----------+
| | Year ended | Year ended |
| | 31/12/08 | 31/12/07 |
+---------------------------------------+------------------+--------------------+
| | GBP000 | % | GBP000 | % |
+---------------------------------------+---------+--------+---------+----------+
| Loss before tax | (8,170) | | (1,604) | |
+---------------------------------------+---------+--------+---------+----------+
| | | | | |
+---------------------------------------+---------+--------+---------+----------+
| Tax on the domestic income tax rate | (2,328) | (28.5) | (481) | (30) |
| of 28.5% (2007:30%) | | | | |
+---------------------------------------+---------+--------+---------+----------+
| Tax effect of income not taxable | - | - | (474) | (29) |
+---------------------------------------+---------+--------+---------+----------+
| Tax effect of expenses that are not | 44 | 0.5 | 62 | 4 |
| deductible in determining taxable | | | | |
| profit | | | | |
+---------------------------------------+---------+--------+---------+----------+
| Tax effect of losses not recognised | - | - | 889 | 55 |
+---------------------------------------+---------+--------+---------+----------+
| Revaluation of Fund | 1,286 | 16 | - | - |
+---------------------------------------+---------+--------+---------+----------+
| Increase in tax losses carried | 591 | 7 | - | - |
| forward | | | | |
+---------------------------------------+---------+--------+---------+----------+
| Capital allowances in excess of | 9 | - | 10 | 1 |
| depreciation | | | | |
+---------------------------------------+---------+--------+---------+----------+
| Tax effect of income from equity | - | - | (11) | (1) |
| accounted investments | | | | |
+---------------------------------------+---------+--------+---------+----------+
| Other timing differences | (13) | - | 5 | - |
+---------------------------------------+---------+--------+---------+----------+
| Losses eliminated on cessation of | 411 | 5 | - | - |
| company activity | | | | |
+---------------------------------------+---------+--------+---------+----------+
| Effect of different tax rates of | - | - | - | - |
| subsidiaries operating in other | | | | |
| jurisdictions | | | | |
+---------------------------------------+---------+--------+---------+----------+
| Tax expense and effective tax rate | - | - | - | - |
| for the year | | | | |
+---------------------------------------+---------+--------+---------+----------+
The deferred tax asset for the Group of GBP 1,500,000 (2007: GBP1,350,000) has
not been recognised.
In addition, the Company has surplus ACT carried forward of GBP3.7m (2007:
GBP3.7m) and UK Capital Tax losses of GBP75m (2007: GBP44m) which can be used
against any future capital gains
4.(LOSS)/EARNINGS PER ORDINARY SHARE
Basic loss per ordinary share has been calculated on the Group's loss
attributable to shareholders of GBP8,170,000 (2007: loss of GBP1,604,000) and on
the weighted average number of ordinary shares in issue during the year which
was 74,299,301 (2007: 74,299,301).
There are no potentially dilutive or anti-dilutive share options in the year.
5. EQUITY ACCOUNTED INVESTMENTS
Investments in joint venture arrangements are accounted for in the consolidated
financial statements using the equity method of accounting and are carried at
cost by the parent entity. Information relating to the joint ventures is set out
below.
(a) Carrying amounts
+----------------------+-------------------+--------+----------+----------+---------+
| Name | Principal | Ownership | Consolidated |
| | Activity | interest | entity carrying |
| | | | amount |
+----------------------+-------------------+-------------------+--------------------+
| | | 2008 | 2007 | 2008 | 2007 |
| | | % | % | GBP'000 | GBP'000 |
+----------------------+-------------------+--------+----------+----------+---------+
| Stonehage Westcity | Fund management | 50 | 50 | 191 | 123 |
| Management Company | | | | | |
| Ltd | | | | | |
+----------------------+-------------------+--------+----------+----------+---------+
| | | | | 191 | 123 |
+----------------------+-------------------+--------+----------+----------+---------+
Stonehage Westcity Management Company Ltd is incorporated in the Channel
Islands
(b) Movements in carrying amounts
+---------------------------------------------------+--------------+--------------+
| | Consolidated | Consolidated |
| | 2008 | 2007 |
| | GBP'000 | GBP'000 |
+---------------------------------------------------+--------------+--------------+
| Carrying amounts at the beginning of the | 123 | 89 |
| financial year | | |
+---------------------------------------------------+--------------+--------------+
| Share of profits after tax | 218 | 69 |
+---------------------------------------------------+--------------+--------------+
| Dividend paid | (150) | (35) |
+---------------------------------------------------+--------------+--------------+
| Carrying amounts at the end of the financial year | 191 | 123 |
+---------------------------------------------------+--------------+--------------+
(c) Share of joint venture profits
+---------------------------------------------------+-------------+------------+
| Profit before tax | | 247 |
+---------------------------------------------------+-------------+------------+
| Tax expense | | (29) |
+---------------------------------------------------+-------------+------------+
| Profit after tax | | 218 |
+---------------------------------------------------+-------------+------------+
(d) Summarised financial information of joint ventures
+-------------------------------+-----------+-------------+------------+------------+
| | Group's share of : |
+-------------------------------+---------------------------------------------------+
| 2008 | Assets |Liabilities | Revenues | Profits |
+-------------------------------+-----------+-------------+------------+------------+
| Stonehage Westcity Management | 742 | (360) | 932 | 218 |
| Company Ltd | | | | |
+-------------------------------+-----------+-------------+------------+------------+
| | | | | |
+-------------------------------+-----------+-------------+------------+------------+
(e) Share of joint ventures' capital commitments
The joint venture had
no capital commitments as at 31 December 2008
(f) Contingent liabilities of the joint ventures
The joint venture had no
contingent liabilities as at 31 December 2008
+----------------------------------------------------------+------------+----------+
| 6. PROPERTY, PLANT AND EQUIPMENT | |
+----------------------------------------------------------+-----------------------+
| | Motor vehicles & |
| | office equipment |
+----------------------------------------------------------+-----------------------+
| Group | GBP'000 |
+-----------------------------------------------------------------------+----------+
| | |
+-----------------------------------------------------------------------+----------+
| Cost | |
+-----------------------------------------------------------------------+----------+
| At 1 January 2007 | 79 |
+-----------------------------------------------------------------------+----------+
| Additions | 88 |
+-----------------------------------------------------------------------+----------+
| Disposals | (24) |
+-----------------------------------------------------------------------+----------+
| At 31 December 2007 | 143 |
+-----------------------------------------------------------------------+----------+
| Additions | - |
+-----------------------------------------------------------------------+----------+
| Disposals | - |
+-----------------------------------------------------------------------+----------+
| At 31 December 2008 | 143 |
+-----------------------------------------------------------------------+----------+
| | |
+-----------------------------------------------------------------------+----------+
| | |
+-----------------------------------------------------------------------+----------+
| Accumulated depreciation | |
+-----------------------------------------------------------------------+----------+
| At 1 January 2007 | 48 |
+-----------------------------------------------------------------------+----------+
| Charge for the period | 36 |
+-----------------------------------------------------------------------+----------+
| Disposals | (11) |
+-----------------------------------------------------------------------+----------+
| At 31 December 2007 | 73 |
+-----------------------------------------------------------------------+----------+
| Charge for the period | 36 |
+-----------------------------------------------------------------------+----------+
| Disposals | - |
+-----------------------------------------------------------------------+----------+
| At 31 December 2008 | 109 |
+-----------------------------------------------------------------------+----------+
| | |
+-----------------------------------------------------------------------+----------+
| | |
+-----------------------------------------------------------------------+----------+
| | |
+-----------------------------------------------------------------------+----------+
| Net book value | |
+-----------------------------------------------------------------------+----------+
| At 31 December 2008 | 34 |
+-----------------------------------------------------------------------+----------+
| | |
+-----------------------------------------------------------------------+----------+
| At 31 December 2007 | 70 |
+-----------------------------------------------------------------------+----------+
| | |
+----------------------------------------------------------+------------+----------+
7. OTHER FINANCIAL ASSETS
+--------------------------------+------------+---------+
| | Group |
+--------------------------------+----------------------+
| | 2008 | 2007 |
+--------------------------------+------------+---------+
| | GBP'000 | GBP'000 |
+--------------------------------+------------+---------+
| NON CURRENT | | |
+--------------------------------+------------+---------+
| Investments held at fair value | 16,626 | 21,138 |
| through profit and loss | | |
+--------------------------------+------------+---------+
| Investment in group entities | - | - |
| (Note 10) | | |
+--------------------------------+------------+---------+
| | 16,626 | 21,138 |
+--------------------------------+------------+---------+
Financial assets held at fair value through profit and loss represent the
investment into the Stonehage Westcity Property Fund. The movement in the Fund
during the period can be summarised as follows:
+--------------------------------+---------+
| Group | GBP'000 |
+--------------------------------+---------+
| | |
+--------------------------------+---------+
| At 1 January 2007 | 19,568 |
+--------------------------------+---------+
| Profit on fund investment | 1,570 |
| (note 2) | |
+--------------------------------+---------+
| At 31 December 2007 | 21,138 |
+--------------------------------+---------+
| Loss on fund investment (note | (4,512) |
| 2) | |
+--------------------------------+---------+
| At 31 December 2008 | 16,626 |
+--------------------------------+---------+
The company has secured a two year loan facility from Chapman International LTD
and has granted a charge over 5 million units in the Fund as security for the
loan.
+------------------------------------------------------------------+---------------+
| 8. INVESTMENT IN GROUP ENTITIES | |
+------------------------------------------------------------------+---------------+
| | Total |
+------------------------------------------------------------------+---------------+
| Investments in subsidiaries | GBP000 |
+------------------------------------------------------------------+---------------+
| Cost | |
+------------------------------------------------------------------+---------------+
+------------------------------------------------------------------+---------------+
| At 1 January 2007 | 140,900 |
+------------------------------------------------------------------+---------------+
| Disposals | - |
+------------------------------------------------------------------+---------------+
| At 31 December 2007 / 1 January | 140,900 |
| 2008 | |
+------------------------------------------------------------------+---------------+
| Additions | - |
+------------------------------------------------------------------+---------------+
| At 31 December 2008 | 140,900 |
+------------------------------------------------------------------+---------------+
+------------------------------------------------------------------+---------------+
| Provisions | |
| | |
+------------------------------------------------------------------+---------------+
| At 1 January 2007 | 117,345 |
+------------------------------------------------------------------+---------------+
| Movement | - |
+------------------------------------------------------------------+---------------+
| At 31 December 2007 / 1 January | 117,345 |
| 2008 | |
+------------------------------------------------------------------+---------------+
| At 31 December 2008 | 117,345 |
+------------------------------------------------------------------+---------------+
| | |
+------------------------------------------------------------------+---------------+
| Cost less provisions for impairment | |
| in value | |
+------------------------------------------------------------------+---------------+
| At 31 December 2008 | 23,555 |
+------------------------------------------------------------------+---------------+
| | |
+------------------------------------------------------------------+---------------+
| At 31 December 2007 | 23,555 |
+------------------------------------------------------------------+---------------+
| | |
+------------------------------------------------------------------+---------------+
+----------------------------------------------+---------------+-----------+----------------+
| Details of the principal subsidiary | | | |
| undertakings | | | |
+----------------------------------------------+---------------+-----------+----------------+
| are as follows: | Country of | % owned | Activity |
| |incorporation | at year | |
| |and residence | end | |
+----------------------------------------------+---------------+-----------+----------------+
| | | | |
+----------------------------------------------+---------------+-----------+----------------+
| Westcity Developers Limited | United | 100 | Development |
| | Kingdom | | Management |
| | | | (from 1 |
| | | | January 2007) |
+----------------------------------------------+---------------+-----------+----------------+
| Weasel | United | 100 | Non-Trading |
| Investments | Kingdom | | |
| Limited | | | |
+----------------------------------------------+---------------+-----------+----------------+
| Westcity | United | 100 | Dormant |
| Development | Kingdom | | |
| Investments | | | |
| Limited | | | |
+----------------------------------------------+---------------+-----------+----------------+
| Westcity Property | United | 100 | Dormant |
| Developers | Kingdom | | |
| Limited | | | |
+----------------------------------------------+---------------+-----------+----------------+
| Westcity Property | United | 100 | Dormant |
| Investments | Kingdom | | |
| Limited | | | |
+----------------------------------------------+---------------+-----------+----------------+
| Westcity Property | United | 100 | Dormant |
| Development | Kingdom | | |
| Limited | | | |
+----------------------------------------------+---------------+-----------+----------------+
There are an additional 9 subsidiary undertakings, all of which were and
continue to be dormant.
+------------------------------------------+-----------+----------+
| 9. TRADE AND OTHER | | |
| RECEIVABLES | | |
+------------------------------------------+-----------+----------+
| | 2008 | 2007 |
+------------------------------------------+-----------+----------+
| | Group | Group |
+------------------------------------------+-----------+----------+
| | GBP'000 | GBP'000 |
+------------------------------------------+-----------+----------+
| Amounts | | |
| receivable | | |
| in less | | |
| than one | | |
| year: | | |
+------------------------------------------+-----------+----------+
| Other | 342 | 413 |
| receivables | | |
+------------------------------------------+-----------+----------+
| | 342 | 413 |
+------------------------------------------+-----------+----------+
| | | |
+------------------------------------------+-----------+----------+
| Amounts | | |
| receivable | | |
| in more | | |
| than one | | |
| year: | | |
+------------------------------------------+-----------+----------+
| Amounts | - | - |
| due | | |
| from | | |
| Group | | |
| Companies | | |
+------------------------------------------+-----------+----------+
| | - | - |
+------------------------------------------+-----------+----------+
| | | |
+------------------------------------------+-----------+----------+
| | 342 | 413 |
+------------------------------------------+-----------+----------+
+----------------------------------------+-----------+----------+
| 10. TRADE AND OTHER | | |
| PAYABLES | | |
+----------------------------------------+-----------+----------+
| | 2008 | 2007 |
+----------------------------------------+-----------+----------+
| | Group | Group |
+----------------------------------------+-----------+----------+
| | GBP'000 | GBP'000 |
+----------------------------------------+-----------+----------+
| Amounts | | |
| due in | | |
| less | | |
| than | | |
| one | | |
| year: | | |
+----------------------------------------+-----------+----------+
| Other | 42 | 164 |
| taxes | | |
| and | | |
| social | | |
| security | | |
| costs | | |
+----------------------------------------+-----------+----------+
| Trade | 33 | 63 |
| payables | | |
+----------------------------------------+-----------+----------+
| Other | 105 | 93 |
| payables | | |
+----------------------------------------+-----------+----------+
| Accruals | 75 | 83 |
| and | | |
| deferred | | |
| income | | |
+----------------------------------------+-----------+----------+
| | 255 | 403 |
+----------------------------------------+-----------+----------+
| | | |
+----------------------------------------+-----------+----------+
| Amounts | | |
| due in | | |
| more | | |
| than | | |
| one | | |
| year: | | |
+----------------------------------------+-----------+----------+
| Amounts | - | - |
| due to | | |
| Group | | |
| Companies | | |
+----------------------------------------+-----------+----------+
| | - | - |
+----------------------------------------+-----------+----------+
| | | |
+----------------------------------------+-----------+----------+
| | 255 | 403 |
+----------------------------------------+-----------+----------+
11. PROVISIONS
+-----------------------------------------+-----------+----------+----------+
| | Group | Group | Group |
| | pension | onerous | Total |
| | scheme | property | |
| | deficit | leases | |
+-----------------------------------------+-----------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 |
+-----------------------------------------+-----------+----------+----------+
| | | | |
+-----------------------------------------+-----------+----------+----------+
| Provision | 250 | 210 | 460 |
| at 1 | | | |
| January | | | |
| 2008 | | | |
+-----------------------------------------+-----------+----------+----------+
| Provision | - | (68) | (68) |
| utilised | | | |
+-----------------------------------------+-----------+----------+----------+
| Provision | 18 | 80 | 98 |
| Increased | | | |
+-----------------------------------------+-----------+----------+----------+
| Provision | 268 | 222 | 490 |
| at 31 | | | |
| December | | | |
| 2008 | | | |
+-----------------------------------------+-----------+----------+----------+
| | | | |
+-----------------------------------------+-----------+----------+----------+
| Current | 268 | 55 | 323 |
+-----------------------------------------+-----------+----------+----------+
| Non-current | - | 167 | 167 |
+-----------------------------------------+-----------+----------+----------+
| | 268 | 222 | 490 |
+-----------------------------------------+-----------+----------+----------+
Provision is made in these financial statements for all material liabilities
including any legal claims which are expected to materialise and lease
liabilities which had materialised on premises formerly occupied by a Group
company.
The Directors have considered the adequacy of provisions for product liability,
property lease liabilities which have materialised, trade disputes and
environmental issues relating to disposed businesses and consider that adequate
provision has been made, or sufficient funds held in escrow, to meet any
contingent costs.
The Group pension scheme deficit will be repaid by November 2009 at which time
the scheme will effectively cease.
The provision for the Group onerous property leases is still a current
obligation and will be valid until the lease is re-assigned.
12. FINANCIAL RISK MANAGEMENT
The group's operations expose it to a number of financial risks. The Group has
exposure to the following risks from its use of financial instruments:
* Interest rate risk
* Credit risk
* Foreign currency risk
* Market risk
* Liquidity risk
This note presents information about the Group's exposure to each of the above
risks, the Group's objectives, policies and processes for measuring and managing
risk, and the Group's management of capital. Further quantitative disclosures
are included throughout these financial statements.
The Board of Directors have overall responsibility for the establishment and
supervision of the Group's risk management framework. The Board is responsible
for developing and monitoring the Group's risk management policies.
A risk management programme has been established to protect the group against
the potential adverse effects of these financial risks, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in
market conditions and the Group's activities.
To assist the companies cash outflow, the Company has secured a two-year loan
facility from Chapman International Investment LTD, the company's largest
shareholder. The Company has granted Chapman a charge over five million units in
the Fund as security for the loan (carrying amount 2008: EUR2,950,000). The loan
is for a two year period from June 2008. No repayments are required until the
end of the loan. This facility will only be drawn down to the extent that the
Directors consider that the Company's remaining cash resources for working
capital are insufficient. In the eventuality that the loan is not repaid the
security will be exercised. The loan bears interest at Libor 3 month sterling
deposit rate + 2.5% which is payable monthly in arrears.
Fair value of financial instruments:
+------------------------------------+----------+----------+----------+----------+
| | 2008 | 2007 |
+------------------------------------+---------------------+---------------------+
| Financial assets | Carrying | Fair | Carrying | Fair |
| | value | Value | value | Value |
+------------------------------------+----------+----------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------------------+----------+----------+----------+----------+
| | | | | |
+------------------------------------+----------+----------+----------+----------+
| Cash and cash equivalents | 42 | 42 | 4,787 | 4,787 |
+------------------------------------+----------+----------+----------+----------+
| | | | | |
+------------------------------------+----------+----------+----------+----------+
| Financial Liabilities | | | | |
+------------------------------------+----------+----------+----------+----------+
| Forward exchange contract | - | - | 1,550 | 1,550 |
+------------------------------------+----------+----------+----------+----------+
| | | | | |
+------------------------------------+----------+----------+----------+----------+
It is the directors' opinion that the carrying value of the Financial Assets and
Financial Liabilities approximates their fair value.
Interest Rate Risk
Interest rate risk is the risk that the value of a financial instrument or cash
flows associated with the instrument will fluctuate due to changes in market
interest rates. Interest rate risk arises from the interest bearing liability
that we use. Our interest rate risk primarily arises from borrowings issued at
floating interest rates which exposes the group to cashflow interest rate risk.
The group is exposed to interest rate risk as a result of its loan from Chapman
International Investment LTD. At 31 December 2008 the group had debt of
GBP400,000. Based on the year end debt levels, a 1% change in interest rates
would decrease or increase the group's annual loss before tax by GBP893.
+------------------------------------+----------+----------+----------+----------+
| | 2008 | 2007 |
+------------------------------------+---------------------+---------------------+
| Financial liability | Carrying | Average | Carrying | Average |
| | value | Interest | value | Interest |
| | | Rate | | Rate |
+------------------------------------+----------+----------+----------+----------+
| | GBP'000 | % | GBP'000 | % |
+------------------------------------+----------+----------+----------+----------+
| | | | | |
+------------------------------------+----------+----------+----------+----------+
| Other loans | 400 | 7.6% | - | - |
+------------------------------------+----------+----------+----------+----------+
| | | | | |
+------------------------------------+----------+----------+----------+----------+
Credit Risk
The group's principal financial assets are cash balances and deposits. To
reduce the risk of counterparty default the group deposits its surplus funds in
approved high quality banks. Credit risk is limited due to the group's close
working relationship with the Fund.
The trade and other receivables age analysis is evaluated on a regular basis for
potential doubtful debts. It is management's opinion that no further provision
for doubtful debts is required.
An analysis of trade and other receivables:
+-------------+-------------+-------------+-------------+-------------+-------------+
| 2008 | Carrying | Neither | Past due but not impaired |
| | amount | impaired | |
| | | nor past | |
| | | due | |
+-------------+-------------+-------------+-----------------------------------------+
| | | | 61-90 days |91-120 days | More than |
| | | | | | 121 days |
+-------------+-------------+-------------+-------------+-------------+-------------+
| Trade | 174 | 174 | - | - | - |
| and | | | | | |
| other | | | | | |
| receivables | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+
+-------------+-------------+-------------+-------------+-------------+-------------+
| 2007 | Carrying | Neither | Past due but not impaired |
| | amount | impaired | |
| | | nor past | |
| | | due | |
+-------------+-------------+-------------+-----------------------------------------+
| | | | 61-90 days |91-120 days | More than |
| | | | | | 121 days |
+-------------+-------------+-------------+-------------+-------------+-------------+
| Trade | 287 | 287 | - | - | - |
| and | | | | | |
| other | | | | | |
| receivables | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+
The group allows an average receivables payment period of 60 days after invoice
date. It is the group's policy to assess receivables for recoverability on an
individual basis and to make provision where it is considered necessary.
Trade receivables that are neither impaired nor past due are made up of 1
debtors' balances (2007: 7). The largest individual debtor corresponds to 100%
of the total balance (2007: 80%). Historically these debtors have always paid
balances when due, unless this is disputed. No debtors' balances have been
renegotiated during the year or in the prior year.
Foreign Currency Risk
Foreign currency risk refers to the risk that the value of a financial
commitment or recognised asset or liability will fluctuate due to changes in
foreign currency rates. The group is exposed to foreign currency risk as a
result of its investment into the Stonehage Westcity Property Fund.
The group made use of forward exchange contracts to manage the risk relating to
future transactions, in accordance with its risk management policy. As at 9th
June 2008 the forward exchange contract was settled at a loss of GBP2,991,000,
the balance of which, GBP1,441,000 (2007: GBP1,550,000) was paid in the current
year. No amounts were recognised directly in equity during the period or the
prior period as the relationship between the forward exchange contracts and the
item being hedged does not meet certain conditions in order to qualify as a
hedging relationship. Fluctuations in the fair values of forward exchange
contracts are recognised directly in profit or loss.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange
rates, interest rates and equity prices will affect the Group's income or the
value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable
parameters, while optimising the return on risk.
The year under review has been one of unparalleled turbulence with severe
volatilities within the real estate and financial markets which has led to a
re-evaluation of property as an asset class. The past twelve months have proved
to be a particularly testing time with most property companies and funds
experiencing a sharp fall in capital values.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial
obligations as they fall due. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient liquidity to
meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group's
reputation. The financial obligation in the Group is principally restricted to
trade and other payables and the loan from Chapman International Investment LTD.
Contractual maturity analysis for financial liabilities:
+----------------------+--------------+----------+-----------+-----------+-------+-------+
| Financial | Due or due | Due | Due | Due | Due | Total |
| liabilities 2008 | in less than | between | between 3 | between 1 | after | |
| | 1 month | 1 to 3 | months to | to 5 | 5 | |
| | | months | 1 year | years | years | |
+----------------------+--------------+----------+-----------+-----------+-------+-------+
| | | | | | | |
+----------------------+--------------+----------+-----------+-----------+-------+-------+
| Trade and other | 180 | -- | 5 | 70 | - | 255 |
| payables | | | | | | |
| | | | | | | |
+----------------------+--------------+----------+-----------+-----------+-------+-------+
| Non-current | - | -- | - | 400 | - | 400 |
| borrowings | | | | | | |
+----------------------+--------------+----------+-----------+-----------+-------+-------+
| | 180 | - | 5 | 470 | - | 655 |
+----------------------+--------------+----------+-----------+-----------+-------+-------+
| | | | | | | |
+----------------------+--------------+----------+-----------+-----------+-------+-------+
| Financial | | | | | | |
| liabilities 2007 | | | | | | |
+----------------------+--------------+----------+-----------+-----------+-------+-------+
| Trade and other | 228 | - | 89 | 86 | - | 403 |
| payables | | | | | | |
| | | | | | | |
+----------------------+--------------+----------+-----------+-----------+-------+-------+
| Non-current | - | - | - | - | - | - |
| borrowings | | | | | | |
+----------------------+--------------+----------+-----------+-----------+-------+-------+
| Financial liability | - | - | 1,550 | - | - | 1,550 |
| on forward exchange | | | | | | |
| contract | | | | | | |
+----------------------+--------------+----------+-----------+-----------+-------+-------+
| | 228 | - | 1,639 | 86 | - | 1,953 |
+----------------------+--------------+----------+-----------+-----------+-------+-------+
| | | | | | | |
+----------------------+--------------+----------+-----------+-----------+-------+-------+
Capital risk management
The group defines its equity as share capital, special reserves and retained
earnings. The group's objectives when maintaining capital are to safeguard the
entities ability to continue as a going concern.
The definition of the components of equity is given in Note 1.
13. SHARE CAPITAL
+----------------------------------------+-------------+-------------+-----------+----------+
| | 2008 | 2007 | 2008 | 2007 |
+----------------------------------------+-------------+-------------+-----------+----------+
| | No. | No. | GBP'000 | GBP'000 |
+----------------------------------------+-------------+-------------+-----------+----------+
| Authorised | | | | |
+----------------------------------------+-------------+-------------+-----------+----------+
| Ordinary | 141,793,724 | 141,793,724 | 1,418 | 1,418 |
| shares | | | | |
| of 1p | | | | |
| each | | | | |
+----------------------------------------+-------------+-------------+-----------+----------+
| | | | | |
+----------------------------------------+-------------+-------------+-----------+----------+
| | | | | |
+----------------------------------------+-------------+-------------+-----------+----------+
| Issued | | | | |
| and | | | | |
| fully | | | | |
| paid | | | | |
+----------------------------------------+-------------+-------------+-----------+----------+
| Ordinary | 74,299,301 | 74,299,301 | 743 | 743 |
| shares | | | | |
| of 1p | | | | |
| each | | | | |
+----------------------------------------+-------------+-------------+-----------+----------+
| | | | | |
+----------------------------------------+-------------+-------------+-----------+----------+
14. STATEMENT OF RECOGNISED INCOME AND EXPENSE
+--------------------------------+------------+------------+
| | 2008 | 2007 |
+--------------------------------+------------+------------+
| | Group | Group |
+--------------------------------+------------+------------+
| | GBP'000 | GBP'000 |
+--------------------------------+------------+------------+
| | | |
+--------------------------------+------------+------------+
| Loss for the year | (8,170) | (1,604) |
+--------------------------------+------------+------------+
| Total recognised loss for the | (8,170) | (1,604) |
| year attributable to equity | | |
| holders | | |
+--------------------------------+------------+------------+
| | | |
+--------------------------------+------------+------------+
+--------------------------------------------------+---------+---------+
| | | |
+--------------------------------------------------+---------+---------+
| 15. NET CASH OUTFLOW FROM OPERATING | Group | Group |
| ACTIVITIES | | |
+--------------------------------------------------+---------+---------+
| | 2008 | 2007 |
+--------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+--------------------------------------------------+---------+---------+
| | | |
+--------------------------------------------------+---------+---------+
| Operating | (8,170) | (1,604) |
| Profit/(Loss) | | |
+--------------------------------------------------+---------+---------+
| Loss on sale of | - | 13 |
| property, plant and | | |
| equipment | | |
+--------------------------------------------------+---------+---------+
| Depreciation | 36 | 37 |
+--------------------------------------------------+---------+---------+
| Share based | 130 | 190 |
| payments expense | | |
+--------------------------------------------------+---------+---------+
| Share of profits of | (68) | (34) |
| equity accounted | | |
| investment | | |
+--------------------------------------------------+---------+---------+
| (Increase)/decrease | 4,512 | (1,570) |
| in the fair value | | |
| of investments | | |
+--------------------------------------------------+---------+---------+
| Finance income | (91) | (335) |
+--------------------------------------------------+---------+---------+
| Finance expense | 27 | - |
+--------------------------------------------------+---------+---------+
| (Increase)/decrease | 71 | (296) |
| in receivables | | |
+--------------------------------------------------+---------+---------+
| (Increase)/decrease | 12 | 22 |
| in prepayments | | |
+--------------------------------------------------+---------+---------+
| (Decrease)/increase | (1,297) | 1,440 |
| in payables | | |
+--------------------------------------------------+---------+---------+
| (Decrease)/increase | 29 | (53) |
| in provisions | | |
+--------------------------------------------------+---------+---------+
| Management Charge | - | - |
+--------------------------------------------------+---------+---------+
| Employee Benefits | - | - |
| Expense | | |
+--------------------------------------------------+---------+---------+
| | | |
+--------------------------------------------------+---------+---------+
| | (4,809) | (2,190) |
+--------------------------------------------------+---------+---------+
16. GROUP FINANCIAL COMMITMENTS
The group had contracted capital commitments of GBPnil at the end of the current
year (2007: GBPnil).
The future minimum lease payments under non-cancellable operating leases are as
follows:
+------------------------------------+-----------+-----------+-----------+----------+
| | 2008 | 2008 | 2007 | 2007 |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------------------+-----------+-----------+-----------+----------+
| Group | Land & | Other | Land & | Other |
| | Buildings | | Buildings | |
+------------------------------------+-----------+-----------+-----------+----------+
| Operating leases which expire: | | | | |
+------------------------------------+-----------+-----------+-----------+----------+
| Not later than one year | 75 | - | 151 | - |
+------------------------------------+-----------+-----------+-----------+----------+
| Between two & five years inclusive | - | - | 75 | - |
+------------------------------------+-----------+-----------+-----------+----------+
| Later than five years | - | - | - | - |
+------------------------------------+-----------+-----------+-----------+----------+
| | | | | |
+------------------------------------+-----------+-----------+-----------+----------+
| | 75 | - | 226 | - |
+------------------------------------+-----------+-----------+-----------+----------+
17. CONTINGENT LIABILITIES
Indemnities and warranties
The Group continues to have contingent liabilities in connection with
indemnities and warranties given to the purchasers of its former businesses. As
no claims have been made under these indemnities and warranties, the Directors
are unable to quantify these potential liabilities.
Property lease liabilities
The Group continues to have contingent liabilities in connection with the
property leases of its former businesses, for which it is exposed to lease
obligations in the event of an assignee's default. The remaining lengths of
these leases range from 3 to 5 years. Whilst all assignees continue to meet
their obligations under these leases, the current total rent obligations (which
may be subject to periodic reviews), before allowing for any mitigating
activities, for all such leases are approximately GBP1,504,000. GBP325,000 of
this is due within one year.
No provision has been made in respect of these contingent matters.
18. RELATED PARTY TRANSACTIONS
Trading transactions
During the year group companies entered into the following transactions with
related parties who are not members of the Group.
+----------------------------------------------+----+------------+------------+
| | | 2008 | 2007 |
| | | GBP'000 | GBP'000 |
+----------------------------------------------+----+------------+------------+
| Key management personnel: | | | |
+----------------------------------------------+----+------------+------------+
| Rent paid to Floral Holdings Limited, a | | 147 | 137 |
| company in which Michael Rapp is a Director | | | |
+----------------------------------------------+----+------------+------------+
| Advisory & Consulting Fee paid by Capital & | | 480 | 160 |
| Counties Ltd, whose holding company is | | | |
| Liberty International a company in which | | | |
| Michael Rapp is a Non-executive Director | | | |
+----------------------------------------------+----+------------+------------+
| Relocation costs paid on behalf of Mr Rex | | 7 | - |
| Wood-Ward following his resignation as | | | |
| Chairman as per his employment contract. | | | |
+----------------------------------------------+----+------------+------------+
| | | | |
+----------------------------------------------+----+------------+------------+
| Subsidiaries: | | | |
+----------------------------------------------+----+------------+------------+
| Annual directors, agents & compliance fees | | 9 | - |
| paid on behalf of Weasel Investments Ltd for | | | |
| 2007 & 2008 | | | |
+----------------------------------------------+----+------------+------------+
| | | | |
+----------------------------------------------+----+------------+------------+
| Other related parties: | | | |
+----------------------------------------------+----+------------+------------+
| Loan balance of a two year facility of GBP2 | | 400 | - |
| million has been taken out with Chapman | | | |
| International LTD, the company's largest | | | |
| shareholder. | | | |
+----------------------------------------------+----+------------+------------+
| Trailer Fee due from the Stonehage Westcity | | 35 | 16 |
| Property Fund in which the company has an | | | |
| investment. | | | |
+----------------------------------------------+----+------------+------------+
| Admin Fee due from Stonehage Westcity | | 17 | 10 |
| Property Fund in which the company has an | | | |
| investment. | | | |
+----------------------------------------------+----+------------+------------+
| Acquisition Fees due from the Stonehage | | - | 286 |
| Westcity Property Fund in which the company | | | |
| has an investment. | | | |
+----------------------------------------------+----+------------+------------+
Key Management comprise of senior employees, details of which are included in
Note 3
19. SHARE BASED PAYMENT PLANS
The expense recognised for employee services received during the year is shown
in the following table :
+--------------------------------------------------------+------------+-----------+
| | Year ended | Year |
| | 31/12/08 | ended |
| | | 31/12/07 |
+--------------------------------------------------------+------------+-----------+
| | GBP000 | GBP000 |
+--------------------------------------------------------+------------+-----------+
| Expense arising from equity settled share-based | 130 | 190 |
| payment transactions | | |
+--------------------------------------------------------+------------+-----------+
| Total expense arising from share-based payment | 130 | 190 |
| transactions | | |
+--------------------------------------------------------+------------+-----------+
| | | |
+--------------------------------------------------------+------------+-----------+
The share-based payment plans are described below
The 1995 Scheme
Under the 1995 Approved Scheme, options are subject to performance conditions
linked to the growth in earnings per share over a total period of three
consecutive financial years being such to place the company within the
comparable top quartile of FTSE 100 companies ranked by reference to growth in
earnings per share over the same period. Options under this scheme were issued
to one director and one employee.
The Equity Partnership Plan
Options issued under the Westcity Equity Partnership Plan are subject to
performance conditions linked to average total shareholder return exceeding a
specified market index of average shareholder return over a specified period.
Options under this scheme have only been issued to one director, Mr Wood-Ward.
These shares were issued in April 2009.
The 2006 Scheme
All other options issued under the 2006 Approved Scheme are subject to
performance conditions linked to the "Base EPS" (EPS for the financial year
ending 31 December 2006). The condition is that the EPS for the Assessment
Period must not be less than the amount found by compounding the Base EPS
annually at the rate of 12.5%. If the Base EPS are less than 1.0 pence, the
condition is that the EPS for the Assessment Period must not be less than 1.265
pence (for options exercisable no earlier than two years from the Date of Grant)
or 1.425 pence (if the Option is exercisable no earlier than three years from
the Date of Grant). This scheme covers directors and employees of Westcity plc.
Movements in the year
The following table illustrates the number and weighted average exercise prices
of, and movements in, share options during the year
+-------------------------------------+-------------+----------+-----------+-----------+
| | 2008 | 2008 | 2007 | 2007 |
| | No | Price | No | Price |
+-------------------------------------+-------------+----------+-----------+-----------+
| Outstanding at 1 January | 4,656,190 | 44.29p | 4,266,190 | 44.32p |
+-------------------------------------+-------------+----------+-----------+-----------+
| Granted during the year | 2,628,987 | 22.00p | 390,000 | 43.93p |
+-------------------------------------+-------------+----------+-----------+-----------+
| Forfeited during the year | - | - | - | - |
+-------------------------------------+-------------+----------+-----------+-----------+
| Exercised during the year | - | - | - | - |
+-------------------------------------+-------------+----------+-----------+-----------+
| Expired during the year | (1,239,896) | 26.55p | - | - |
+-------------------------------------+-------------+----------+-----------+-----------+
| Outstanding at 31 December | 6,045,281 | 36.36p | 4,656,190 | 44.29p |
+-------------------------------------+-------------+----------+-----------+-----------+
| | | | | |
+-------------------------------------+-------------+----------+-----------+-----------+
| Exercisable at 31 December | 2,146,190 | 41.35p | - | - |
+-------------------------------------+-------------+----------+-----------+-----------+
The weighted average remaining contractual life for the share options
outstanding as at 31 December 2008 is 6.97 years (2007 9.316)
The weighted average fair value of options granted during the year was GBP0.1750
(2007: GBP0.2061 - No shares granted).
The range of exercise prices for options outstanding at the year end was
GBP0.2200 - GBP0.4625 (2007 GBP0.3275 - GBP0.4625)
The following table lists the inputs to the models used for the share based
payment plans
+--------------------------------------+------------+-------------+-----------+
| | 1995 | Equity | 2006 |
| | Scheme | Partnership | Scheme |
| | | Plan | |
+--------------------------------------+------------+-------------+-----------+
| Expected volatility (%) | 50% | 20% | 20% |
+--------------------------------------+------------+-------------+-----------+
| Risk-free interest rate (%) | 10% | 5% | 5% |
+--------------------------------------+------------+-------------+-----------+
| Expected life of option (years) | 4 | 4 | 5 |
+--------------------------------------+------------+-------------+-----------+
| Weighted average exercise price | 0.425 | 0.425 | 0.4625 |
| (GBP) | | | |
+--------------------------------------+------------+-------------+-----------+
| | | | |
+--------------------------------------+------------+-------------+-----------+
| Valuation model used | Black | Black | Black |
| | Scholes | Scholes | Scholes |
+--------------------------------------+------------+-------------+-----------+
The fair value of the options have been calculated using Black-Scholes option
pricing model. The Company's calculations are based on a single option valuation
approach. The expected volatility is based on historical volatility of the share
price during the period after eliminating any abnormal price fluctuations.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAFPPFLNNEFE
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