ANNUAL REPORT · director of Equitas Holdings Limited since 1996, where he chairs the audit...

ANNUAL REPORT for the period 28 June 2004 to

30 September 2005

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CONTENTS

DIRECTORS 01

CHAIRMAN’S STATEMENT 02

PROPERTY ADVISER’S REPORT 04

REPORT OF THE DIRECTORS 10

CORPORATE GOVERNANCE STATEMENT 13

INDEPENDENT AUDITOR’S REPORT 16

CONSOLIDATED PROFIT & LOSS ACCOUNT & CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES 17

CONSOLIDATED BALANCE SHEET 18

COMPANY BALANCE SHEET 19

CONSOLIDATED CASH FLOW STATEMENT 20

NOTES TO THE FINANCIAL STATEMENTS 21

NOTICE OF ANNUAL GENERAL MEETING 34

CORPORATE PROFILE 36

PROXY FORM Loose leaf

JEFFERSON HOUSE, LEEDS OSPREY HOUSE, REDDITCH

WOODFIELD HOUSE, TAUNTON

Cover image:ARMSTRONG ROAD,ACTON

GREAT WESTERN HOUSE, BIRKENHEAD

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01

DIRECTORS

1. MICHAEL SHEEHAN (75) – Non-Executive ChairmanMichael Sheehan has been a director of public companies since 1964. He is currently Chairman of Aer Lingus BeacheyLimited and Markev Investments Limited, a director of J S Insurance Limited (J. Sainsbury) and Scottish Power InsuranceLimited. His previous roles include acting as Chairman of Rea Brothers (Isle of Man) Limited, Chairman of FinsburyInternational Hedge Investment Company Limited, managing director of the Irish Bank of Commerce and managingdirector of Hill, Samuel & Co. (Ireland) Limited. He was the inaugural chairman of the Association of International Banksin Ireland. Member of the Audit Committee.

2. GARETH EVANS (45) – Non-Executive DirectorGareth Evans has 20 years of experience working in the global equity markets. Since August 2002, he has held theposition of managing director of Prospect Asset Management (Asia) Ltd (“Prospect”). Prior to joining Prospect, he heldsenior positions in sales, research and portfolio management for Indosuez WI Carr Securities, Bennett Capital, INGBarings (1994-1999) and Morgan Grenfell in London, Tokyo, Seoul and Geneva.

3. JAMES JOLL (69) – Non-Executive DirectorJames Joll has been Chairman of Pearson Group Pension Trustee Limited (“Pearson”) since 1988 and a non-executivedirector of Equitas Holdings Limited since 1996, where he chairs the audit committee. Previously he was finance directorof Pearson for 11 years and an executive director of NM Rothschild & Sons. His other positions included chairman ofAIB Asset Management Holdings Limited, Deputy Chairman of Jarvis Hotels plc and a non-executive director of TheEconomist Newspaper Limited. Chairman of the Audit Committee.

4. ITA MCARDLE (41) – Non-Executive DirectorIta McArdle qualified as a Manx Advocate in 1995 and became a partner of Simcocks Advocates Limited in 1996. Shepractices in corporate commercial law, financial services, trust, internet and intellectual property law for both privateand corporate clients. She sits on the boards of a number of collective investment schemes and also of privatecompanies in conjunction with clients. She is a director of NGT Insurance Company (Isle of Man) Limited and HolidayBreak Insurance Company Limited. She is a member of the Northern Irish Law Society, English Law Society, Manx LawSociety and the International Bar Association.

5. PHILLIPPE DE NICOLAY (50) – Non-Executive DirectorPhilippe de Nicolay is a General Partner of Rothschild et Cie Banque and was a Director of Rothschild AssetManagement London (1997-2000). He was a Director of Insight Investment Management (Global) (1997-2000) andchief operating officer of Rothschild Asset Management BV (1997-2000).

6. HUGH WARD (53) – Non-Executive DirectorHugh Ward has worked in the investment services industry since 1973 during which time he has held senior executivepositions with Schroders, Capital House and more recently INVESCO. During his time at INVESCO, he was CEO ofINVESCO Group’s UK and offshore business and was a member of the AMVESCAP Group executive board. He iscurrently a non-executive director of a number of companies within the financial services sector. Member of the AuditCommittee.

1. 2. 3. 4. 5. 6.

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02 ANNUAL REPORT 2005

CHAIRMAN’S STATEMENT

I am delighted to announce the maiden set of results for Wichford PLC for the period from incorporation on 28 June2004 to 30 September 2005. Profit after tax for the period was £2,405,000 and the net asset value per share rose from150p at the time of the flotation on AIM in August 2004 to 172p at the period end.

The portfolio owned by the Group has grown in the same period from approximately £119 million to £267 million. Theearnings per share (“eps”) for the period were 5.21p. When adjusted to exclude the £2.3 million costs incurred inconnection with the debt refinancing referred to below and based upon only the shares that qualify for the dividendnow being recommended, the eps were 13.43p.

As previously indicated, the Directors are recommending the payment of a dividend of 9p per qualifying share,amounting to approximately £3.5 million. The dividend, if approved by shareholders, will be paid on 6 February 2006 toShareholders holding qualifying shares on the register on 30 December 2005.

It has been a very busy and successful period. Wichford raised a further £97.5 million (net of expenses) through aninstitutional share placing in July and subsequently renegotiated its banking facilities on very favourable terms. Duringthe period, the Group acquired over £153 million of property and disposed of one property for a consideration of £17.1million, details of which are in the Property Adviser’s report on pages 4 to 9.

Wichford’s clear and focused strategy is to acquire properties let to UK Central Government outside of central London.At the period end, Wichford owned 46 such properties. It also intends to pursue a progressive dividend policy forShareholders and to improve the value of the portfolio by active management, particularly with the short leaseproperties.

Since 30 September last, we have announced the acquisition of a further 5 properties at a cost of £43.3 million. TheProperty Adviser is currently finalising several lease renewals and extensions, thereby improving the value of the propertyportfolio.

At the period end, Wichford had net borrowings of £94 million and a loan to value ratio of 35%. The terms of theCompany’s new banking facility with its principal bankers, Lehman Brothers, are both competitive and flexible, reflectingthe high quality of the property portfolio. The Board estimates that, at the current level of borrowings, the annualisedsavings from the refinancing exercise are in the order of £1 million. The Board’s policy is to minimise exposure tofluctuations in interest rates. When each drawing is made under the loan facility, the interest rate is fixed for the fullterm of the borrowing, thereby protecting the minimum yield throughout the lease period.

During the period under review and subsequently the property market has continued to strengthen with acorresponding reduction in yields. Nevertheless, Wichford has been able to selectively purchase properties that satisfythe Company’s stated criteria and as at 30 November 2005 the total portfolio amounted to £309.3 million.

During the current year, approximately 32% of the portfolio (by value) will be the subject of rent review. The financialimpact of any increase in rental income will not have any significant effect until the following year.

Independent research indicates that UK Central Government occupies approximately 8.6 million sq metres (93 million sqfeet) of property, of which the vast majority is located outside of central London. As at 30 November, Wichford ownedapproximately 156,000 sq metres (1.65 million sq feet), so there is a good opportunity to continue to increase the sizeof the portfolio and take advantage of the economies of scale that this will bring, including a potential furtherreduction in borrowing costs. The Company will continue to focus on properties with high alternative use values, andgood prospects for active management.

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03

The Board believes that Wichford is now one of the largest owners of a property portfolio focused solely on UK CentralGovernment tenants. This is a remarkable achievement for a Company that floated on AIM less than 18 months ago. Ithas also developed knowledge and a skill base which gives it a significant competitive advantage in this sector. TheBoard’s policy is to continue to grow the portfolio by selective acquisitions, with a view to benefiting from any furtheryield compression. If there is any downturn in the property market, Wichford’s high quality income and average leaselength will ensure the impact is lessened.

The Annual General Meeting of the Company will take place on 30 January 2006 at midday at the Registered Office ofthe Company: 14 Athol Street, Douglas, Isle of Man IM1 1JA. The Board and I look forward to meeting as manyShareholders as possible at the meeting and answering any questions. Notice of the Annual General Meeting is set outon pages 34 and 35 of this report.

MICHAEL SHEEHAN Chairman16 December 2005

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PROPERTY ADVISER’S REPORT

Wichford Property Management Limited acts as Property Adviser to the Company.

As stated in the Chairman’s Statement, the Company has completed a very eventful initial period since admission to AIMin August 2004, by when the Group had acquired properties valued at approximately £119 million. At 30 September2005, the Company’s portfolio had grown to £267 million.

In July 2005, the Company took advantage of improved terms available to renegotiate its banking arrangements. Thishas given rise to one off costs of £2.3 million which reduced the results for the period to 30 September 2005, but thebenefit of the reduced margins on loans will flow through to the income statement in the current and future years.

THE PROPERTY PORTFOLIOSince admission to AIM, the Group purchased 29 properties for a total consideration of £153 million. The blended initialyield on these acquisitions was 7%. In addition, the Company disposed of Kings House, Reading to Mapeley, receivingnet proceeds of £16.9 million against a total acquisition cost of £15.1 million.

At 30 September 2005, as reported in the Chairman’s Statement, the investment portfolio was valued at £267 millionby Atisreal Limited, independent valuers. The Company divides its properties into two distinct categories: the CorePortfolio and the Active Portfolio. The properties within the Core Portfolio were valued at £206 million and those withinthe Active Portfolio at £61 million.

(i) The Core PortfolioThis is the main part of the Company’s assets and the principal income generator. The portfolio consists of propertieswhich have lease terms in excess of seven years and, as at 30 September 2005, amounted to approximately 77% of thetotal gross assets. During the period since flotation, the Company acquired 18 properties for the core portfolio giving aweighted average unexpired lease term of 11.4 years for this portfolio.

Unexpired Rent Per PurchaseAddress Occupational Tenant Lease Term Annum Price

Buccleuch Street, Dalkeith Secretary of State for February 2020 £110,000 £1,530,000the Environment

Oldham Road, Manchester Secretary of State for April 2019 £140,000 £2,205,000the Environment

Bradmarsh Business Park, The Environment Agency April 2013* £134,500 £1,900,000Rotherham

Delta 900, Swindon Ministry of Defence March 2014 £432,990 £5,650,000

Gregson House, St Helens Secretary of State for March 2018 £211,516 £3,000,000Transport

James House, York Secretary of State for the December 2015 £419,904 £5,700,000Environment

Jefferson House, Leeds Secretary of State for the March 2015 £540,000 £8,180,000Environment

Job Centre, Acton Department of Work and March 2018 £687,667 £9,750,000Pensions

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05


Kettlestring Lane, York Secretary of State and February 2015 £266,856 £3,560,000North Yorkshire Police Authority

Kings Court, Sheffield Secretary of State for the June 2016 £675,000 £10,450,000Environment

Ladywell House, Edinburgh Secretary of State for the January 2020 £675,000 £10,450,000Environment

Lindsay House, Dundee Secretary of State for the February 2013 £353,000 £5,000,000Environment

Dale Street, Liverpool Department of Work and March 2018 £255,500 £3,850,000Pensions

Rufus House, Carlisle Department of Work and March 2018 £180,000 £2,975,000Pensions

St Katherine’s House, Northampton First Secretary of State January 2013 £290,000 £3,885,000

Woodfield House & Riverside Secretary of State for the March 2016 £788,100 £12,260,000Chambers, Taunton Environment

1 Mere Way, Ruddington Secretary of State for the July 2017 £327,000 £4,600,000Environment

St Cross House, Southampton Secretary of State for the March 2014 £456,125 £7,400,000Environment

* Date shown is the date of the tenant’s option to exercise a break clause.

UNEXPIRED LEASE TERM

Less than 10 years

10 - 15 years

Over 15 years

77%

4%

19%

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PROPERTY ADVISER’S REPORTcontinued

(ii) The Active PortfolioThis portfolio consists of properties with leases of less than seven years to expiry, or a possible break date at the tenant’soption. The Active Portfolio focuses on individual properties which have strong potential for value enhancement throughactive management. These include rent reviews, lease renewals or leases where the tenant has a break clause whichmight be removed by negotiation. During the period, the Group acquired 11 properties within the Active Portfolio givinga weighted average unexpired lease term of 4.4 years for this portfolio.

The Group’s current policy is that this portfolio will normally comprise properties with a valuation not exceeding 20% oftotal gross assets, although at 30 September 2005 this was circa 23%. Properties will be included in this portfolio whenthe Property Adviser expects to see higher levels of activity and value creation, particularly through tenants renewingand extending their leases.


Archway Tower, Highgate Hill Secretary of State for the December 2009 £854,646 £9,750,000Environment

Derby Road, Grays Secretary of State for the September 2010* £145,480 £1,870,000Environment

Chailey House, Bedford Secretary of State for December 2006 £115,000 £1,400,000Transport

Cheviot House, Washington Secretary of State for the October 2008 £190,000 £2,420,000Environment

Heynesfield House, Birmingham Secretary of State for the December 2010* £156,250 £1,775,000Environment

Trinity House, Smethwick Secretary of State for the March 2012* £159,375 £1,888,775Environment

Osprey House, Redditch Secretary of State for Health May 2007* £423,935 £5,543,000

Portland House, Redcar First Secretary of State December 2010* £85,122 £1,150,000

Ward Jackson House, Hartlepool Secretary of State for the November 2011* £195,942 £2,800,000Environment

Unicorn House, Bromley Secretary of State for March 2010 £1,160,000 £13,675,000Works and Pensions

Brocol House, Wigan Secretary of State for June 2009 £270,000 £3,200,000Works and Pensions

* Date shown is the date of the tenant’s option to exercise a break clause.

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07

RENTAL LEVELSAt 30 September 2005, Wichford owned 46 properties throughout the UK which totalled 138,037 sq metres (1.5 millionsq feet). The average passing rent of the portfolio was £136.40 per sq metres (£12.70 per sq feet), a low base from whichto generate future rental growth.

The Group satisfactorily completed 2 rent reviews during the year and there are 3 reviews which remain outstanding.The number of reviews will increase in 2006, which will not have any significant financial impact until the year toSeptember 2007. The chart below shows the timing of reviews across the portfolio over the next 5 years. There are 9 properties in the portfolio with a pre-agreed fixed increase in rent at the next review. These increases are based oneither a 2.5%/3% increase per annum or the increase in the Retail Price Index since the last review.

RENT REVIEWS BY ANNUAL RENT

PROPERTY MANAGEMENTThere are a number of Government Departments occupying Wichford’s properties and the tables below show thebreakdown between them. One of the key benefits of owning a portfolio of buildings occupied by Central Governmentis the increased outsourcing of premises management to third parties. This policy has led to a better upkeep in thefabric of the buildings and a superior quality of building being occupied. Over half of these premises are managed byeither Land Securities Trillium or Mapeley. The remainder are still directly managed by the Government Departments.

OCCUPATIONAL TENANTS PROPERTY MANAGERS

%

1. Secretary of State for the Environment/1. Environment Agency 402. Department of Work and Pensions 183. Secretary of State for Work & Pensions 124. Police/Crown Prosecution/Immigration 95. Health Service 86. Inland Revenue 77. Child Support Agency 48. DVLA 2

%

1. Land Securities Trillium 492. Government Department 463. Mapeley 5

0%

10%

2005/6 2008/9

15%

20%

25%

30%

35%

40%

5%

2009/102006/7 2007/8

Fixed uplifts

RPI

Upward only

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PROPERTY ADVISER’S REPORTcontinued

DEBT FINANCINGThe Group employs high levels of debt finance. Initially, the Company structured its debt for each property on anindividual ring-fenced basis. During this early period, a holding company was created to allow lenders to crosscollateralise between those properties charged to each of them. The debt attracted a margin of between 1.4% on theshorter leases reducing to 1% on the longer. In accordance with the statement made at the time of the flotation inAugust 2004, a £90 million interest rate cap was entered into at 5.35% in anticipation of drawing down that amountof debt.

In July this year, the Group refinanced and restructured its entire debt on more favourable terms. The Company incurred£2.3 million of early repayment penalties and other costs associated with this restructuring but benefited from the lowercost of money available at the time in the swap market. The cost of these changes has been included in these accounts,but the benefits, amounting to approximately £7 million, will emerge over the next seven years. The Group continues touse interest rate derivatives to manage interest rate exposure. Having sold its cap instrument, it has employed swapcontracts to fit the new Credit Facility Agreement.

The Group’s borrowings on 30 September 2005 were £184 million. Cash and short-term deposits were £90 million,giving net debt of £94 million. The cash balance was unusually high at the period end as the Company decided it wasprudent, given the historically low swap rates available and the pipeline of property acquisitions, to borrow £75 million.This drawdown occurred on 30 September 2005 and the Company immediately locked-in at a swap rate for the nextseven years. After taking account of cash, the loan to value ratio (“LTV”) was 35%. In terms of interest rate riskmanagement, the Group borrowings were fully hedged against swapped fixed agreements at a blended cost of 5.41%pa. There is provision for the margin to increase in line with LTV ratios. The margin cost can be further affected by theweighted average unexpired lease term of the whole portfolio.

POST BALANCE SHEET EVENTSTo assist in the financing of additional properties, and those where contracts have been either exchanged or in solicitors’hands as at 30 November 2005, a further £40 million of debt has been drawn down under existing arrangements since30 September 2005, thus increasing the outstanding loans to £224 million. On completion of these purchases, togetherwith the debt on the existing portfolio, the LTV ratio will increase to approximately 59%.

WICHFORD PROPERTY MANAGEMENT LIMITED16 December 2005

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LOCATION OF EXISTING PORTFOLIOas at 30 September 2005

09

CORE PORTFOLIO

ACTIVE PORTFOLIO

ABERDEEN X 2ACTONBEDFORDBIRKENHEADBIRMINGHAMBIRMINGHAM X 2BRADFORDBRIDGWATERBROMLEYCARDIFF X 2CARLISLECHESTERCHIPPENHAMDALKEITHDUNDEE X 2EDINBURGHGRAYSHARTLEPOOLISLINGTONLEEDSLIVERPOOL X 2MANCHESTERNORTHAMPTONNOTTINGHAMPETERBOROUGHREADINGREDCARREDDITCHROTHERHAMSHEFFIELD X 2SOUTHAMPTONSWANSEASWANSEA SWINDONTAUNTONWASHINGTONWIGANWOLVERHAMPTONYORK X 2

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REPORT OF THE DIRECTORS

The Directors present their report and the audited financial statements for the period 28 June 2004 to 30 September 2005.

RESULTS AND DIVIDENDSThe Group profit for the year after taxation amounted to £2,405,000. The Directors recommend the declaration of afinal dividend of 9.0p per eligible share and accordingly a resolution will be put to the Annual General Meeting on 30 January 2006 to declare a final dividend in respect of the period ended 30 September 2005 payable on 6 February2006 to those Shareholders on the register at the close of business on 30 December 2005. The Placing shares allottedduring the placing in July 2005, plus certain other shares allotted in the period, are not eligible for this dividend.

PRINCIPAL ACTIVITYThe principal activity of the Company and its subsidiaries is the generation of rental income and capital growth throughinvestment in properties across the UK, although outside of central London, which are occupied by UK CentralGovernment bodies.

REVIEW OF THE BUSINESS AND FUTURE ACTIVITIESThe Chairman’s Statement on pages 2 and 3, and the Property Adviser’s Report on pages 4 to 9 contain a review of thebusiness and an indication of future developments.

COMPANY’S OBJECTIVES, POLICIES AND STRATEGIES IN RESPECT OF FINANCIAL INSTRUMENTSThe Group’s treasury operations are co-ordinated and managed in accordance with policies and procedures approved bythe Board. They are designed to mitigate the financial risks faced by the Group, which primarily relate to funding andinterest rate exposure.

The Group’s financial instruments comprise bank borrowings, interest rate swaps, interest rate caps, and other itemssuch as trade debtors and creditors that arise directly from its operations.

Further details of financial instruments are given in note 15 to the financial statements. The Board reviews and agreespolicies for managing each of the above risks. These are summarised below:

(i) Interest Rate RiskThe Group finances its operations through called up share capital, retained profits and bank borrowings. TheGroup then uses interest rate derivatives to manage its exposure to interest rate fluctuations. At the year end allof the Group’s borrowings were at fixed rates after taking account of interest rate swaps (see note 15 of thefinancial statements).

(ii) BorrowingsThe bank borrowings are secured by fixed and floating charges over the assets and income streams of the Group.

(iii) GearingThe maximum gearing currently available to the Group permitted under the Articles of Association of theCompany is five times the aggregate of the share capital and all reserves.

At 30 September 2005, this was £837 million.

SHARE CAPITALAt an Extraordinary General Meeting held on 13 July 2005, resolutions were put to the Company’s Shareholders inorder to effect a Placing to raise £100 million (before expenses). These resolutions were passed and on 14 July 200555,555,556 new Ordinary shares were admitted to trading on AIM.

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11

These new Ordinary shares rank pari passu with the existing issued Ordinary shares, except they will not rank for thefinal dividend of 9.0p per share recommended by the Board to be paid on 6 February 2006, if approved by Shareholdersat the Annual General Meeting to be held on 30 January 2006. The shares will then rank in full for dividends and otherdistributions declared, paid or made in relation to any financial period of the Company ending after 30 September 2005in respect of the ordinary share capital of the Company.

Upon admission to AIM of the 55,555,556 new Ordinary shares, the Company had 97,326,660 Ordinary shares in issue.The issued share capital as at 30 September 2005 remains unchanged.

NOTIFIED SHAREHOLDINGSAs at the date of this report, the following interests in the Ordinary shares of the Company of 3% and over of theissued share capital had been notified to the Company:

% of Issued No. of shares Share Capital

Jupiter Asset Management 8,567,860 8.80J O Hambro Capital Management Group 8,039,025 8.26Rathbones 6,938,837 7.13Framlington Equity Income Fund 5,677,778 5.83Global Asset Management 3,600,000 3.70Bluecrest Capital Management LP 3,239,970 3.33GAM European Hedge Fund 2,925,000 3.00

DIRECTORSBiographical details for all of the Company’s Directors can be found on page 1.

According to Article 95 of the Articles of Association of the Company at each AGM one third of the Directors shallretire from office by rotation. Mr Evans, Mr Joll, Mr Ward, Mr de Nicolay and Ms McArdle were all appointed to theBoard on 28th June 2004 and Mr Sheehan was appointed on 16th July 2004. The Directors to retire by rotation at theforthcoming Annual General Meeting are Messrs Joll and Ward.

DIRECTORS’ INTERESTSThe interests of the Directors in the share capital of the Company (all of which are beneficial unless otherwise stated) asat 30 September 2005 are set out below:

Director Number of Shares

M Sheehan –G Evans 133,333 Ordinary shares

26,667 Ordinary RFD sharesJ Joll 33,333 Ordinary sharesI McArdle –P de Nicolay –H Ward 10,000 Ordinary shares

These interests remain unchanged as at the date of this report.

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REPORT OF THE DIRECTORScontinued

The Company is an Exempt Company under the Isle of Man Income Tax (Exempt Companies) Act 1984 meaning thatMr Sheehan and Ms McArdle, as Manx residents, are unable to have any beneficial interest in the issued share capital ofthe Company.

RFD shares are those allotted during the period which do not rank for any dividend payable for the period ended 30 September 2005.

ANNUAL GENERAL MEETINGThe Annual General Meeting of the Company will be held on 30 January 2006 at midday at the Registered Office ofthe Company: 14 Athol Street, Douglas, Isle of Man IM1 1JA.

The Ordinary business comprises receipt of the Directors’ Report and audited financial statements for the period ended30 September 2005; the declaration of a final dividend; the re-appointment of two directors; the re-appointment ofRSM Robson Rhodes as Auditor and authorisation of the Directors to determine the Auditor’s remuneration. Resolutions1 to 5 deal with these matters.

The Special Business comprises the authorisation of the Directors to allot Ordinary Shares up to a maximum nominalamount of £3,244,189 during the period to expire on the date of the Annual General Meeting held in 2007. TheSpecial Business also comprises the authorisation of the Directors to make market purchases (within the meaning ofSection 13 of the Companies Act 1992 (Isle of Man)) of Ordinary shares provided that:

(a) the maximum number of Ordinary shares authorised to be acquired is 5% of the issued Ordinary shares at thedate of this report;

(b) the minimum price which may be paid for any such Ordinary share is 10p;

(c) the maximum price which may be paid for any such Ordinary share is the amount equivalent to 105% of thearithmetical average of the middle market quotations (as derived from the AIM appendix of the Daily Official Listof the London Stock Exchange plc) for the five business days immediately preceding the day on which theOrdinary share is purchased; and

(d) the authority shall expire on the date of the Annual General Meeting of the Company to be held in 2007.

The current authorities for the Directors to allot shares and to make market purchases expire on 31 December 2005.Resolutions 6 and 7 deal with these matters.

The last item of Special Business will renew the Directors’ authority to disapply pre-emption rights. The current authoritywill expire on 31 December 2005. Resolution 8 will deal with this matter.

The Notice of the Annual General Meeting and the resolutions to be put to the Meeting are included at the end of thisAnnual Report and financial statements on pages 34 and 35.

CREDITOR PAYMENT POLICYIt is the Group policy to settle suppliers’ accounts in accordance with their individual terms of business. As at 30 September 2005, the Company had £669,000 of trade creditors representing 17 creditor days.

By order of the BoardITA MCARDLE Company Secretary16 December 2005

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13

CORPORATE GOVERNANCE STATEMENT

The Company is committed to high standards of corporate governance and as such has voluntarily complied with TheCombined Code as appended to the Listing Rules of the Financial Services Authority (“Combined Code”) so far as ispracticable for a public company of its size and nature listed on AIM. The Company also follows the recommendationson corporate governance of the Quoted Companies Alliance as far as practicable. The Company has voluntarilycomplied with the Combined Code as described below:

COMPLIANCE WITH THE COMBINED CODE ON CORPORATE GOVERNANCE JULY 2003The Board considers that the Group has complied with the provisions of Section 1 of the Combined Code on CorporateGovernance July 2003 throughout the period from 28 June 2004 to 30 September 2005.

INTERNAL CONTROLThe Directors are responsible for overseeing the effectiveness of the internal control systems of the Group, which aredesigned to ensure that proper accounting records are maintained, that the financial information on which the businessdecisions are made and which are issued for publication is reliable, and that the assets of the Group are safeguarded.

The Combined Code also requires the Directors to review the effectiveness of the Group’s system of internal controls.The Directors, through the procedures outlined below, have kept procedures under review throughout the periodcovered by these financial statements and up to the date of approval of the Annual Report and Accounts. The Boardhas identified risk management controls in the key areas of business objectives, accounting, compliance, operations andsecretarial as areas for the extended review. This accords with the guidance in “Internal Control Guidance for Directorson the Combined Code’’ (the Turnbull Report).

The Board recognises its ultimate responsibility for the Group’s system of internal controls and for monitoring itseffectiveness and believes that an appropriate framework is in place to meet the requirements of the Combined Code.The Board has an ongoing process for identifying, evaluating and managing risks that the Group is exposed to. Thisprocess is conducted throughout the year and has been conducted up to the date of signing of this report. It has,however, to be understood that systems of internal control, however carefully designed, operated and supervised, canprovide only reasonable and not absolute assurance against material misstatement or loss.

The Group does not have its own internal audit function but places reliance on compliance and other control functionsof its service providers.

PROPERTY ADVISERDuring the period, Wichford Property Management Limited (“WPML”) acted as Property Adviser to the Group under aProperty Adviser’s Agreement and received from the Group an annual fee of 0.6% of the gross asset value of the Group(excluding cash) and 0.3% of the Group’s cash balances. The fee is payable quarterly in arrears. The agreementbetween the Group and WPML can be terminated by either party giving the other 12 months’ notice of termination.

WPML is also entitled to receive a performance fee calculated as 20% of the amount by which the total shareholderreturn (share price movement plus dividends) exceeds 10% for the immediately preceding financial year. This fee will besettled by the issue of further shares in Wichford PLC only if the annualised shareholder return in the succeeding twoyear period has exceeded 10% and the Company’s net asset value per share is greater than that pertaining at the timeof the Company’s original flotation.

The Board keeps under review the performance of WPML as Property Adviser to the Group. In the opinion of theDirectors the continuing appointment of WPML on the agreed terms is in the best interests of the shareholders as awhole. The Directors believe that WPML is well resourced to act as Property Adviser to the Group and well equipped toidentify attractive investment opportunities.

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CORPORATE GOVERNANCE STATEMENTcontinued

PROPERTY MANAGERDuring the period under review, Brown Cooper Marples Limited (“BCM”) provided investment advisory andmanagement services to the Group under the Property Manager’s Agreement. In consideration of BCM providing theseservices, it receives a fee equivalent to 1% plus VAT of the contract price or sale proceeds arising on the acquisition ordisposal of properties unless BCM did not introduce the property in question to the Group, in which case the feereduces to 0.5% plus VAT. It also receives an annual fee equivalent to 0.8% plus VAT of the annual occupational rentsreceived. The agreement between the Group and BCM can be terminated by either party giving the other 12 months’notice of termination.

SECRETARIAL AND ADMINISTRATION MANAGERDuring the year Simcocks Trust Limited (“STL”) acted as Secretary and Administrator of the Group in the Isle of Manreceiving fees based on time spent.

DIRECTORSThe Board currently comprises six Non-Executive Directors, all of whom are independent from the management team ofWPML. The Chairman is Non-Executive and independent from the management. All Directors with the exception ofMichael Sheehan were appointed on 28 June 2004. Michael Sheehan was appointed on 16 July 2004. The Directors’biographies are set out on page 1.

The Board is responsible for setting the overall Group strategy and investment policy, monitoring Group performanceand authorising all property acquisitions and disposals. To assist it in discharging these responsibilities, it receives regularfinancial and portfolio reports from WPML (the Property Adviser). It also receives updates on regulatory issues andcorporate governance rules and guidelines on a regular basis from STL (the Secretary and Administrator).

The Board meets quarterly and has adopted a schedule of matters reserved for its decision.

The table below lists the number of Board and Committee meetings attended by each Director. During the period therewere 5 Board Meetings, and 1 Audit Committee Meeting.

Board Meetings Audit CommitteeDirector Attended Meetings Attended

Michael Sheehan 4 1Gareth Evans 2 n/aJames Joll 5 1Ita McArdle 4 n/aPhillipe de Nicolay 4 n/aHugh Ward 4 1

The Board does not consider it necessary to establish a separate Remuneration Committee as it has no executivedirectors. The Board, as a whole, being non-executive, will constitute a Nominations Committee.

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15

ACCOUNTABILITY AND AUDITOn 4 August 2004 the Board established an Audit Committee, which currently comprises Michael Sheehan, James Joll(Chairman) and Hugh Ward. Given the size and nature of the Company, it is important that the Chairman of the Boardshould be a member of the Audit Committee. In practice, the Audit Committee does most of the work preparing theAnnual and Interim Reports and financial statements, much of which is prepared by the Chairman of the Board so itwould be impractical not to include him in the Audit Committee. The Audit Committee plays an important role in theappraisal and supervision of key aspects of the Group’s business including financial reporting and internal controls. TheGroup’s Audit Committee meets representatives of the Property Adviser who report as to the proper conduct ofbusiness in accordance with the regulatory environment in which both the Group and the Property Manager operate.The Group’s external auditor also attends the Committee at its request, at least once a year, and reports on its workprocedures, the quality of the Group’s accounting procedures and its findings in relation to the Group’s statutoryaccounts. The responsibilities of the Audit Committee include review of the internal financial controls, accountingpolicies, financial statements, the management contract, the auditor’s appointment and remuneration. The terms ofreference of the Audit Committee have been updated to reflect the recommendations of the Combined Code onCorporate Governance July 2003.

During the period, the Audit Committee reviewed the effectiveness and independence of the Group’s external auditorsand the outcome of the review was satisfactory. The Audit Committee has put in place a policy on non-audit services.Services that are compliance in nature or that are closely related to the audit are pre-approved. All other services shallbe considered on a case by case basis by the Audit Committee.

REMUNERATIONThe Board as a whole agree Directors’ remuneration and will periodically review the level of Directors’ fees relative to othercomparable companies and in light of the Directors’ responsibilities. The current fees are £15,000 per annum for all of theDirectors save Messrs. Sheehan and Joll. Mr Sheehan receives £25,000 per annum, as Chairman of the Board. Mr Jollreceives £20,000 per annum as Chairman of the Audit Committee. Each of the Directors has entered into an engagementletter dated 29 July 2004 with the Company which records the terms of their appointment as a Non-Executive Director.

CONTACT WITH SHAREHOLDERSThe Company maintains communication with institutional shareholders through meetings with the Property Adviser andthe Property Manager. The Board supports the principle that the Annual General Meeting be used to communicate withprivate shareholders and encourages them to attend and participate.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS Company law requires the directors to prepare financial statements for each financial year which give a true and fairview of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period. Inpreparing those financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable accounting standards have been followed, subject to any material departures disclosedand explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at anytime the financial position of the Company and enable them to ensure that the financial statements comply with theCompanies Acts 1931 to 1993 (Isle of Man). They are also responsible for safeguarding the assets of the Company andhence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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AUDITOR’S INDEPENDENT AUDIT REPORT TO WICHFORD PLC

INTRODUCTIONWe have audited the financial statements of Wichford Plc for the period ended 30 September 2005 set out on pages17 to 33.

This report is made solely to the Company’s Shareholders, as a body, in accordance with Section 15 of the Isle of ManCompanies Act 1982. Our audit work has been undertaken so that we might state to the Company’s shareholdersthose matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’sshareholders as a body, for our audit work, for this report, or for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The Directors’ responsibilities for preparing the Annual Report and the financial statements in accordance withapplicable law and United Kingdom Accounting Standards are set out in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements andUnited Kingdom Auditing Standards.

We report to you our opinion as to whether the financial statements give a true and fair view and have been properlyprepared in accordance with the Companies Acts 1931 to 1993 as amended by the Companies, etc. (Amendment) Act2003. We also report to you if, in our opinion, the Company has not kept proper books of accounts, if we have notreceived all the information and explanations we require for our audit, or if information specified by law regardingDirectors’ remuneration and transactions with the Company and other members of the Group is not disclosed.

We read other information contained in the Annual Report and consider whether it is consistent with the auditedfinancial statements. The other information comprises the Report of the Directors, the Chairman’s Statement, theProperty Adviser’s Report and the Corporate Governance Statement. We consider the implications for our report if webecome aware of any apparent misstatements or material inconsistencies with the financial statements. Ourresponsibilities do not extend to any other information.

BASIS OF AUDIT OPINION We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board.An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financialstatements. It also includes an assessment of the significant estimates and judgements made by the Directors in thepreparation of the financial statements, and of whether the accounting policies are appropriate to the Company’scircumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considerednecessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements arefree from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we alsoevaluated the overall adequacy of the presentation of information in the financial statements.

OPINION In our opinion the financial statements give a true and fair view of the state of affairs of the Company and the Groupas at 30 September 2005 and of the Group’s loss for the period then ended and have been properly prepared inaccordance with the Companies Acts 1931 to 1993.

RSM ROBSON RHODESChartered AccountantsDouglas, Isle of Man16 December 2005

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17

CONSOLIDATED PROFIT & LOSS ACCOUNTfor the period 28 June 2004 to 30 September 2005

CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESfor the period 28 June 2004 to 30 September 2005

Notes £’000

TURNOVER 2 17,753ADMINISTRATIVE EXPENSES (3,490)

OPERATING PROFIT 4 14,263

Interest receivable 5 969Interest payable 5 (10,483)Exceptional costs of financial restructuring 6 (2,340)

PROFIT ON ORDINARY ACTIVITIES BEFORE TAX 2,409Taxation 7 (4)

PROFIT ON ORDINARY ACTIVITIES AFTER TAX 2,405Dividend 8 (3,471)

RETAINED LOSS FOR THE PERIOD (1,066)

EARNINGS PER SHARE:Basic – pence 9 5.21Basic before exceptional costs – pence 9 10.28

£’000

Retained loss attributable to members of the Parent Company (1,066)Unrealised surplus on revaluation of properties 9,243

TOTAL GAINS AND LOSSES RELATING TO THE PERIOD 8,177

All activities are continuing.

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Notes £’000

FIXED ASSETSTangible assets – investment properties 10 267,085

CURRENT ASSETSDebtors 12 3,378Cash at bank 90,112

93,490CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 13 (12,677)

NET CURRENT ASSETS/(LIABILITIES) 80,813

TOTAL ASSETS LESS CURRENT LIABILITIES 347,898

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 14Term loan (180,399)

NET ASSETS 167,499

CAPITAL AND RESERVESCalled up share capital 16 9,733Share premium account 17 148,857Revaluation reserve 18 9,243Profit & loss account 19 (334)

EQUITY SHAREHOLDERS’ FUNDS 167,499

NET ASSET VALUEBasic – pence 21 172.10

CONSOLIDATED BALANCE SHEETas at 30 September 2005

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19

COMPANY BALANCE SHEETas at 30 September 2005

Notes £’000

FIXED ASSETSInvestments 11 –

CURRENT ASSETSDebtors 12 169,009Cash at bank 3,843

172,852

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 13 (9,391)

NET CURRENT ASSETS/(LIABILITIES) 163,461

TOTAL ASSETS LESS CURRENT LIABILITIES 163,461

NET ASSETS 163,461

CAPITAL AND RESERVESCalled up share capital 16 9,733Share premium account 17 148,857Profit & loss account 19 4,871

EQUITY SHAREHOLDERS’ FUNDS 163,461

These financial statements were approved by the Board of Directors on 16 December 2005 and signed on its behalf by:

MICHAEL SHEEHAN Chairman ITA MCARDLE Director

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CONSOLIDATED CASH FLOW STATEMENTfor the period 28 June 2004 to 30 September 2005

Notes £’000

NET CASH INFLOW FROM OPERATING ACTIVITIES 22 16,792

RETURN ON INVESTMENT AND SERVICING OF FINANCEInterest received 969 Interest paid (8,577)

NET CASH OUTFLOW FROM RETURN ON INVESTMENT AND SERVICING OF FINANCE (7,608)

CAPITAL EXPENDITUREPayments to acquire tangible fixed assets (125,882)Receipts on sale of fixed assets 17,137

NET CASH OUTFLOW FOR CAPITAL EXPENDITURE (108,745)

ACQUISITIONS AND DISPOSALSNet cash inflow on acquisitions (4,179)

NET CASH OUTFLOW BEFORE FINANCING (103,740)

FINANCINGOrdinary shares issued (net of expenses) 125,960 Increase in debt 67,892

NET CASH INFLOW FROM FINANCING 193,852

INCREASE IN CASH 90,112

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21

NOTES TO THE FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

The principal accounting policies are summarised below. They have all been applied consistently throughout the period.

BASIS OF ACCOUNTINGThe financial information has been prepared under historical cost convention, and in accordance with applicable Isle ofMan law and United Kingdom accounting standards.

BASIS OF CONSOLIDATIONThe Group’s financial information consolidates that of the Company and its subsidiary undertakings up to 30 September2005. The results of a subsidiary undertaking acquired during the period are included from the date of acquisition.Profits or losses on intra-group transactions are eliminated in full. On acquisition of a subsidiary, all of the subsidiary’sidentifiable assets and liabilities which exist at the date of acquisition are recorded at their fair values at that date.

Under the relevant legislation, the Directors have decided not to publish a profit and loss account for the Company only.

INVESTMENT PROPERTIESInvestment properties are initially recognised at cost, being the fair value of consideration given, including acquisitioncosts associated with the purchase of the investment property.

All the Group’s properties are held for long-term investment. After initial recognition, investment properties are carried atopen market value and are accounted for in accordance with SSAP19, ‘Accounting for Investment Properties’, as follows:

(i) investment properties are revalued semi-annually. The surplus or deficit on revaluation is transferred to theRevaluation Reserve unless a deficit below original cost, or its reversal, on an individual investment property isexpected to be permanent, in which case it is recognised in the profit and loss account for the period; and

(ii) no depreciation is provided in respect of freehold/feuhold and long leasehold properties. The Directors believe thatthe policy of not providing depreciation is necessary in order to give a true and fair view since the current value ofinvestment properties and changes to that value, are of primary importance rather than a calculation of systematicdepreciation. Depreciation is only one of many factors reflected in the semi-annual valuation and the amount whichmight otherwise have been included cannot be separately identified or quantified.

PROPERTY DISPOSALSProfits or losses on disposal of a property are recognised upon the completion of a sale.

RECOGNITION OF INCOMERental income under operating leases is included in these financial statements on a receivable basis.

Interest receivable on short term deposits is accounted for on an accruals basis.

Insurance premiums recharged to tenants are not reflected in either income or expense.

EXPENSESExpenses are incurred by the Group in relation to the establishment, constitution, administration and business of theGroup. Costs incurred in the purchase of investment properties are capitalised as part of the cost of investment. Costsrelating to acquisitions in progress are retained in the balance sheet and included in the cost of acquisition oncompletion. Costs incurred on aborted acquisitions are written off to the profit and loss account.

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NOTES TO THE FINANCIAL STATEMENTScontinued

1. ACCOUNTING POLICIES continued

LOAN ISSUE COSTSIn accordance with FRS 4 ‘Capital Instruments’, loans are stated in the balance sheet net of any issue costs. Those costsare spread over the life of the loan on an effective yield basis.

DERIVATIVE INSTRUMENTSThe Group uses interest rate derivatives to hedge interest rate exposures on the Group’s borrowings.

The Group’s criteria for adopting hedge accounting for interest rate swaps are:

(i) the derivative instrument must be related to a liability at inception; and

(ii) it must reduce the interest rate risk on the related liability by converting a variable rate to a fixed rate.

The Group’s criteria for adopting hedge accounting for interest rate caps are:

(i) the derivative must be related to expected interest rate exposures based on current and anticipated borrowingcapabilities; and

(ii) it must reduce interest rate risk on such future borrowings as to limit the exposure to increases in interest rates.

Interest differentials are recognised by accruing the net interest payable. The cost of interest rate hedges is recorded inthe balance sheet against the associated borrowing and is taken to the profit and loss account over the life of thehedging relationship. If the hedge is terminated early, the gain/loss is recognised on a basis which matches the timingand accounting treatment of the hedged item.

TAXATIONCurrent tax, including UK corporation tax, UK income tax and foreign tax, is provided at amounts expected to be paidor recovered using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheetdate where transactions or events have occurred at that date that will result in an obligation to pay more, or a right topay less or receive more, tax, with the following exceptions:

• Provision is made for tax on gains from the revaluation (and similar fair value adjustments) of fixed assets, or gainson disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balancesheet date, there is a binding agreement to dispose of the assets concerned. However, no provision is made where,on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain willbe rolled over into replacement assets and charged to tax only where the replacement assets are sold.

• Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not thatthere will be suitable taxable profits from which the underlying timing differences can be deducted.

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23

1. ACCOUNTING POLICIES continued

Where required deferred tax is provided, without discounting, under the liability method at the tax rates that areexpected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted orsubstantively enacted at the balance sheet date.

2. TURNOVER£’000

Rental income from pre flotation properties 9,829Rental income from other properties acquired during the period 6,139Profit on sale of properties 1,785

Total 17,753

3. DIRECTORS EMOLUMENTS

Directors emoluments paid in the period were £131,250.

4. OPERATING PROFIT IS STATED AFTER CHARGING:£’000

Property Adviser’s Fees– advisory fees 1,504– accrued performance fees 731

Property Manager’s Fees 105Auditor’s remuneration

– for audit services 94– for taxation services 133

Legal Fees 339

In addition to the fees shown above as Auditor’s remuneration, RSM Robson Rhodes also charged £280,000 for duediligence and advisory services. These fees have been either capitalised as part of the cost of acquiring properties orcharged to the Share Premium account as an expense of raising additional share capital. The total fees payable to theAuditor in the period were £507,000.

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5. NET INTEREST PAYABLE£’000

Interest receivable 969Interest payable (10,483)

Net interest payable (9,514)

The interest payable is analysed as:

£’000

Bank term loan interest (9,493)Bank swap interest (41)Non-utilisation fees (44)Early repayment fees (27)Amortisation of loan agreement fees (859)Other (19)

(10,483)

6. EXCEPTIONAL COST OF FINANCIAL RESTRUCTURING

During the period being reported the Group entered into a number of borrowing arrangements that were beneficial tothe Group at the time. However, due to the rapid expansion of the business, the Group managed to negotiate morefavourable terms both from a cost and length of facility perspective.

This financial restructuring exercise has had a cost in the present period of £2,340,000.

7. TAXATION£’000

Revenue profit for the period subject to UK Corporation tax 14Revenue profit for the period not subject to UK Corporation tax 2,395

Profit before taxation 2,409

UK Corporation tax on revenue profit for the period 4Overseas taxation –

Tax on current year revenue profit 4

UK Corporation tax is provided at 30% of revenue profit for the period on UK taxable activities of £14,000.

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25

8. DIVIDENDS£’000

Final proposed dividend – 9 pence per share 3,471

The proposed dividend is payable on 38,565,741 shares in issue.

The balance of 58,760,919 shares in issue was issued with no rights to any dividend for the period ending 30 September 2005. All shares in issue at 30 September 2005 will rank for all dividends declared for periods endingafter this date.

9. EARNINGS PER SHAREBefore Exceptional Exceptional

Refinancing RefinancingCosts Costs Total

Profit for the period (£’000) 4,745 (2,340) 2,405

Weighted average number of shares in issue in period (000’s) 46,144 46,144

Basic – Earnings per share (pence) 10.28 5.21

The Adjusted Earnings Per Share is calculated after excluding those shares that do not rank for a dividend for the periodended 30 September 2005.

Before Exceptional ExceptionalRefinancing Refinancing

Costs Costs Total

Profit for the period (£’000) 4,745 (2,340) 2,405

Weighted average number of shares in issue in period ranking for dividend (000’s) 35,330 35,330

Adjusted – Earnings per share (pence) 13.43 6.81

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10. TANGIBLE FIXED ASSETS – INVESTMENT PROPERTIES

GroupFreehold/ Freehold and Long

Feuhold Long Leasehold Leasehold Total£’000 £’000 £’000 £’000

Opening balance – – – –

Additions 195,609 25,683 51,902 273,194Disposals (15,352) – – (15,352)

Revaluation in period 5,863 737 2,643 9,243

As at 30 September 2005 186,120 26,420 54,545 267,085

The historical cost to the Group of its investment properties as at 30 September 2005 was £257,842,000.

All the Group’s investment properties were externally valued as at 30 September 2005 on the basis of open marketvalue by professionally qualified valuers in accordance with the Appraisal and Valuation Standards of the RoyalInstitution of Chartered Surveyors. The Group’s valuer is Atisreal Limited.

11. INVESTMENTS

CompanyShares Loans Total

(£’000) £’000

Opening balance – – –Additions – 136,508 136,508

As at 30 September 2005 – 136,508 136,508

The loans to subsidiary undertakings shown above are included in debtors on the Company’s balance sheet; an analysisof which is shown in Note 12.

The principal subsidiaries, whose results are included in these financial statements are:

% Equity Owned byPrincipal Subsidiary Principal Activity Company Subsidiary

INCORPORATED IN GREAT BRITAINWichford Property General Partner Ltd General Partner* 100Wichford Ladywell Ltd Property Investment 100Wichford Carlisle Ltd Property Investment 100

INCORPORATED IN JERSEYWichford Southhampton Ltd Property Investment 100

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27


INCORPORATED IN THE ISLE OF MANWichford Property (LP) Ltd Limited Partner** 100Wichford Alpha Limited Holding Company 100Wichford Nottingham Ltd Property Investment 100Wichford York Ltd Property Investment 100Wichford Sheffield Ltd Property Investment 100Wichford Liverpool Ltd Property Investment 100Wichford St Helens Ltd Property Investment 100Wichford Swindon Ltd Property Investment 100Wichford Glidewell Ltd Property Investment 100Wichford Beta Ltd Holding Company 100Wichford Bromley Ltd Property Investment 100Wichford Washington Ltd Property Investment 100Wichford Wigan Ltd Property Investment 100Wichford Southampton Ltd Property Investment 100Wichford Redcar Ltd Property Investment 100Wichford Hartlepool Ltd Property Investment 100Wichford Bedford Ltd Property Investment 100Wichford Manchester Ltd Property Investment 100Wichford Northampton Ltd Property Investment 100Wichford Archway Ltd Property Investment 100Wichford Gamma Ltd Holding Company 100Wichford Aberdeen (Atholl House) Ltd Property Investment 100Wichford Llandarcy Park Ltd Property Investment 100Wichford Swansea Ltd Property Investment 100Wichford Dundee Ltd Property Investment 100Wichford Aberdeen (Cullen House) Ltd Property Investment 100Wichford Birkenhead Ltd Property Investment 100Wichford Birmingham Ltd Property Investment 100Wichford Bradford Ltd Property Investment 100Wichford Bridgewater Ltd Property Investment 100Wichford Chester Ltd Property Investment 100Wichford Chippenham Ltd Property Investment 100Wichford Newport Road Ltd Property Investment 100Wichford Peterborough Ltd Property Investment 100Wichford Riverside Exchange Ltd Property Investment 100Wichford St Mellons Ltd Property Investment 100Wichford Wolverhampton Ltd Property Investment 100Wichford Acton Ltd Property Investment 100Wichford Grays Ltd Property Investment 100Wichford Leeds Ltd Property Investment 100Wichford Salford Quays Ltd Property Investment 100Wichford Lindsay Ltd Property Investment 100Wichford Sparkhill Ltd Property Investment 100

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11. INVESTMENTS continued




Wichford Smethwick Ltd Property Investment 100Wichford St Asaph Ltd Property Investment 100Wichford Redditch Ltd Property Investment 100Wichford Dalkeith Ltd Property Investment 100Wichford Taunton Ltd Property Investment 100

* Wichford Property General Partner Ltd is the General Partner for The Wichford Property Limited Partnership.** Wichford Property (LP) Ltd is the Limited Partner for The Wichford Property Limited Partnership.

12. DEBTORS

Group Company£’000 £’000

Trade debtors 3,212 793VAT recoverable 9 9Prepayments 157 2,211Amounts due from subsidiary undertakings – 165,996

As at 30 September 2005 3,378 169,009

13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR


Rents received in advance 4,979 –VAT payable 586 –Other creditors and accruals 3,641 669Proposed dividend 3,471 3,471Amounts due to subsidiary undertakings – 5,251

As at 30 September 2005 12,677 9,391

14. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Group£’000

Bank loans 184,286Deferred finance costs (3,887)

As at 30 September 2005 180,399

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11. INVESTMENTS continued

29

15. FINANCING AND OTHER FINANCIAL INSTRUMENTS

The Group’s principal financial instruments, other than interest rate swaps, comprise bank loans and cash. The mainpurpose of these financial instruments is to finance the Group’s operations. The Group has various other financialinstruments such as trade debtors and trade creditors that arise directly from its operations.

The Group has entered into interest rate swap agreements in accordance with the terms of the loan agreement with itsprovider of finance. The purpose is to manage the interest rate risks arising from the Group’s sources of finance.

INTEREST RATE RISK PROFILE OF FINANCIAL ASSETS AND LIABILITIES£’000

Floating rate financial liabilities –Fixed rate financial liabilities 184,286

184,286

Fixed rate financial liabilities weighted average interest rate 5.41%Weighted average period for which rate is fixed in years 7

The amount shown in the tables above take into account the interest rate swaps used to manage the interest rateprofile of financial liabilities. The Group has employed interest rate swaps to eliminate future exposure to interest ratefluctuations. Its fixed rate profile was:

Nominal ValueEffective Date Maturity Date Swap Rate £’000

30/09/2005 20/10/2012 4.57% 70,60615/07/2004 21/10/2008 4.70% 30,00015/07/2005 01/11/2011 4.90% 6,92619/03/2004 20/01/2009 4.93% 5,35530/01/2004 20/01/2009 4.97% 8,13815/07/2005 01/11/2011 5.07% 30,11028/04/2004 20/01/2009 5.21% 3,86601/12/2003 20/01/2009 5.22% 9,14701/07/2004 20/01/2009 5.43% 3,90324/06/2004 20/01/2009 5.49% 9,07529/07/2004 20/01/2009 5.57% 7,160

Total 184,286

The Group also has entered into an additional interest rate swap contract that commenced after the period end asfollows:

Effective Date Maturity Date Swap Rate £’000

01/11/2011 15/10/2012 4.90% 113,680

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15. FINANCING AND OTHER FINANCIAL INSTRUMENTS continued

MATURITY OF FINANCIAL LIABILITIESThe Group’s profile of debt maturity was as follows:

£’000

Up to one year –Between one and two years –Between two and five years –Over five years 184,286

184,286

FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIESSet out below is a comparison of book values and fair values of all the Group’s financial assets and financial liabilities:

Book Value Fair Value£’000 £’000

Primary financial instruments– Long term borrowings (184,286) (184,286)– Cash 90,112 90,112

Derivative financial instruments held to manage the interest rate profile:

– Interest rate swaps – (3,213)

Market values have been used to determine the fair value of the interest rate swaps.

16. SHARE CAPITAL

Company

AUTHORISEDOrdinary Shares of 10p each – number 130,000,000

– £ 13,000,000

ISSUED, CALLED UP AND FULLY PAIDOrdinary Shares of 10p each – number 97,326,660Ordinary Shares of 10p each – £ 9,732,666

The Company made share placings of Ordinary Shares on 30 March 2005 and 13 July 2005 whereby the shares issuedat that time do not rank for any dividend related to the current financial year but will be pari passu with the previousOrdinary Shares for dividends for the financial periods beginning on or after 1 October 2005.

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31

16. SHARE CAPITAL continued

ORDINARY SHARES OF 10P EACHNumber £

– ranking for dividends for the current period 38,565,741 3,856,574– not ranking for dividends for the current period 58,760,919 5,876,092

Total ranking for dividends in subsequent financial years 97,326,660 9,732,666

DETAILS OF SHARES ISSUEDDate Number £

Founders’ shares 28/06/2004 2 –Acquisition of The Wichford Property Limited Partnership 16/07/2004 16,000,003 1,600,000Settlement of loan to The Wichford Property Limited Partnership 30/07/2004 936,586 93,659Property Adviser’s Performance Fee for 2003/04 05/08/2004 524,283 52,428Upon flotation 16/08/2004 20,000,000 2,000,000Purchase of investment properties 12/11/2004 809,877 80,988Purchase of investment properties 22/12/2004 90,909 9,091Purchase of investment properties 28/01/2005 204,081 20,408Purchase of investment properties 22/03/2005 52,438 5,244Institutional placing and purchase of investment properties 30/03/2005 2,027,780 202,778Purchase of investment properties 06/04/2005 1,125,145 112,514Institutional placing 14/07/2005 55,555,556 5,555,556

97,326,660 9,732,666

17. SHARE PREMIUM ACCOUNT

Company£’000

Opening balance –Premium on shares issued in period (net of expenses) 148,857


18. REVALUATION RESERVE

Group£’000

Opening balance –Revaluation of properties during the period 9,243


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19. PROFIT AND LOSS ACCOUNT


Opening balance – –Retained (loss)/profit for the period (1,066) 4,139Credit relating to Performance Fee of Property Adviser 732 732

As at 30 September 2005 (334) 4,871

20. RECONCILIATION OF SHAREHOLDERS’ FUNDS


Opening Shareholders’ funds – –Increase in revaluation reserve 9,243 –Profit for the period 2,405 7,610Dividend proposed (3,471) (3,471)Credit relating to Performance Fee of Property Adviser 732 732Gross proceeds from issue of Ordinary Shares 163,632 163,632Share issue costs (5,042) (5,042)

As at 30 September 2005 167,499 163,461

21. NET ASSET VALUE PER SHARE

Net AssetNet Number of Value

Assets Shares per Share£’000 000 pence

Basic 167,499 97,327 172.10

22. NET CASH INFLOW FROM OPERATING ACTIVITIES

£’000

Operating Profit 14,263Performance Fee adjustment 732Decrease in debtors 776Increase in creditors 2,806Profit on sale (1,785)

16,792


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33

23. ACQUISITIONS IN PERIOD

The Group acquired all of the limited partnership interests of The Wichford Property Limited Partnership and the totalshare capital of 4 companies during the period.

The companies acquired were Bayleaf Properties Ltd (now renamed Wichford Taunton Ltd), Rufus House Ltd (renamedWichford Carlisle Ltd), Southglo Ltd (renamed Wichford Southampton Ltd) and West Register (Ladywell) Ltd (renamedWichford Ladywell Limited).

Book Value Fair Value Fair Valueat Acquisition Adjustments Acquired

£’000 £’000 £’000

Investment properties 149,831 (63) 149,768Debtors 4,154 – 4,154Cash 3,277 – 3,277Creditors falling due within one year (19,154) – (19,154)Long term creditors (105,833) – (105,833)Deferred taxation (16) – (16)

Net assets acquired 32,259 (63) 32,196

CONSIDERATION FOR FAIR VALUE ACQUIRED£’000

Shares 25,850Cash 6,346

32,196

24. CAPITAL COMMITMENTS

As at the 30 September 2005 the Group had commitments of £7,479,000 in relation to properties for which purchasecontracts had been exchanged but the purchases had not been completed. These purchases were subsequentlycompleted prior to the date of this report.

The Company had no other capital commitments at 30 September 2005.

25. POST BALANCE SHEET DATE EVENTS

In anticipation of future property purchases since the 30 September the Group has increased its borrowings by £40million, under the same facility as existed at the 30 September 2005. The interest rate risk on the increased borrowinghas been hedged by taking out an interest rate swap at 4.78% p.a. The Group has thus maintained its position of fixingthe interest rate on all borrowings.

The Group has also completed the purchases of the 2 properties on which contracts had been exchanged prior to 30 September 2005 and a further 3 properties through the acquisition of a number of corporate entities.

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NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at 14 Athol Street, Douglas,Isle of Man IM1 1JA on Monday 30th January 2006 at midday for the following purposes:-

ORDINARY BUSINESSResolution 1: To receive the financial statements for the period 28 June 2004 to 30 September 2005 together

with reports of the Directors and Auditor therein;

Resolution 2: To declare a final dividend of 9.0p per share;

Resolution 3: To re-elect Mr J Joll as a Director;

Resolution 4: To re-elect Mr H Ward as a Director;

Resolution 5: To re-appoint RSM Robson Rhodes as Auditors and to authorise the Directors to determine theAuditors’ remuneration.

SPECIAL BUSINESSResolution 6: To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“THAT the Directors of the Company be hereby generally and unconditionally authorised pursuantto the Articles of Association of the Company from time to time to allot ordinary shares of 10p eachin the Company (“Ordinary Shares”) up to a maximum aggregate nominal value of £3,244,189 forthe period expiring on the date of the Company’s Annual General Meeting to be held in 2007(unless and to the extent previously revoked, varied or renewed by the Company in generalmeeting).”

Resolution 7: To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“THAT the Directors of the Company be authorised to make market purchases (within the meaningof Section 13 of the Companies Act 1992 (Isle of Man)) of Ordinary Shares provided that:

(a) the maximum number of Ordinary Shares authorised to be acquired is 5 per cent. of the issuedOrdinary Shares at the date of the Director’s Report;

(b) the minimum price which may be paid for any such Ordinary Share is 10p;

(c) the maximum price which may be paid for any such Ordinary Share is the amount equivalent to105 per cent. of the arithmetical average of the middle market quotations (as derived from theAIM appendix of the Daily Official List of the London Stock Exchange plc) for the five businessdays immediately preceding the day on which the Ordinary Share is purchased; and

(d) the authority shall expire on the date of the Annual General Meeting of the Company to be heldin 2007.

NOTICE OF ANNUAL GENERAL MEETING

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Resolution 8: To consider and, if thought fit, pass the following resolution as a special resolution:

“THAT the Directors be hereby authorised and empowered, to allot Ordinary Shares as if the pre-emption provisions in Article 10 of the Articles of Association did not apply to any such allotment,such power (unless and to the extent previously revoked, varied or renewed by the Company ingeneral meeting) to expire on the date of the Company’s Annual General Meeting to be held in2007 and be limited to:

(a) the allotment of Ordinary Shares for cash to Shareholders where the shares attributable to theinterest of such Shareholders are offered in proportion (as nearly as may be practicable) to therespective numbers of Ordinary Shares held by them, but subject to such exclusions or otherarrangements as the Directors may deem necessary or expedient to deal with any fractionalentitlements or any legal or practical problems under the laws of, or the requirements of anyregulatory body or any recognised stock exchange in, any country or territory; or

(b) the allotment (other than pursuant to 3(a) above) of Ordinary Shares up to a maximumaggregate nominal value of £486,628.

Registered Office: BY ORDER OF THE BOARDTop Floor14 Athol StreetDouglasIsle of Man IM1 1JA

Dated this 16th day of December 2005 ITA MCARDLE Company Secretary

NOTES

1. A member entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and, on a

poll, vote instead of him/her. A proxy need not be a member of the Company.

2. Forms of proxy are provided and to be valid must be lodged at the offices of the Company’s Registrars, Capita Corporate

Registrars Plc, PO Box 7117, Response Paid, Dublin 2, Ireland, not less than 48 hours before the time appointed for the

holding of the meeting.

3. Completing and returning a form of proxy will not prevent a member of the Company from attending and voting in person

at the Annual General Meeting should he or she so wish.

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CORPORATE PROFILE

CHEVIOT HOUSE, WASHINGTON LORD CULLEN HOUSE, ABERDEEN

DELTA 900, SWINDONGREGSON HOUSE, ST HELENS

DIRECTORSM Sheehan (Non- Executive Chairman)GHJ Evans (Non-Executive)JAB Joll (Non-Executive)I McArdle (Non-Executive Director and

Company Secretary)P de Nicolay (Non-Executive)HR Ward (Non-Executive)

PROPERTY ADVISERWichford Property Management LimitedGround FloorRyder Court14 Ryder StreetLondon SW1Y 6QB

PROPERTY MANAGERBrown Cooper Marples Limited20 Upper Grosvenor StreetLondon W1K 7PB

REGISTRARSCapita Corporate Registrars PlcPO Box 7117Dublin 2Ireland

NOMINATED ADVISER ANDBROKERSEvolution Securities100 Wood StreetLondon EC2V 7AN

ISLE OF MAN ADMINISTRATORSimcocks Trust LimitedTop Floor14 Athol StreetDouglasIsle of Man IM1 1JA

ISLE OF MAN SOLICITORSSimcocks AdvocatesRidgeway HouseRidgeway StreetDouglasIsle of Man M99 1PY

UK SOLICITORSSJ Berwin222 Gray’s Inn RoadLondon WC1X 8XF

AUDITORSRSM Robson RhodesPO Box 30719-21 Circular RoadDouglasIsle of Man IM99 2BE

BANKERSLehman Brothers25 Bank Street30th FloorLondon E14 5LE

The Royal Bank of Scotland International

Isle of Man BranchPO Box 151Royal Bank House2 Victoria StreetDouglasIsle of Man IM99 1NJ

Bank of Scotland38 Threadneedle StreetLondon EC2P 2HL

REGISTERED OFFICETop Floor14 Athol StreetDouglasIsle of Man IM1 1JA

Registered in Isle of Man No. 111198C

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ANNUAL REPORT · director of Equitas Holdings Limited since 1996, where he chairs the audit...

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