<pre> RNS Number:2606J Westcity PLC 21 September 2006 WESTCITY PLC Interim Results For The Half Year Ended 30 June 2006 CHAIRMAN'S STATEMENT CHANGE OF NAME In accordance with the resolution passed at the extraordinary meeting of the company held on 27 July 2006 ("EGM"), the Company has changed its name from Emess plc to Westcity plc. FINANCIAL REVIEW After including the release of £1,585,000 from the onerous leases provision, the Company achieved a profit of £1,454,000 (2005: £182,000). Before this exceptional item, the Company incurred a loss of £131,000 for the six months to 30 June 2006 (2005:profit of £182,000) The only source of income for the six months was from net interest received on the Company's cash resources of £392,000 (2005 £401,000). In the financial statements for the year ending 31 December 2005 the Directors, having considered professional advice, made a provision of £5.5m for onerous lease obligations as a result of potential default by the assignee of a lease to which the Company was a guarantor. After protracted negotiations with various parties the Company outlaid £3.9m including costs in August 2006 to achieve a complete release from its obligations under the lease, thus mitigating any further loss under this lease. This resulted in the net release in the financial statements for the six months to 30 June 2006 of £1,585,000 of provisions for onerous leases to the profit and loss account. In addition, under the terms of the settlement, the Company is to receive an amount of £555,000 from the assignee in November 2006. This amount, as and when received, will be credited to the profit and loss account and will further reduce the net loss incurred under this lease. SHARE ISSUE AND CAPITAL REORGANISATION On the 27th of July 2006 shareholders approved a number of initiatives, which have now been implemented and are summarised below. - The raising by the Company of £7.3million after expenses by way of a placing of 30 million ordinary shares and a fully underwritten Open Offer of 56,916,300 ordinary shares at a price of 8.875p per ordinary share. The Open Offer was underwritten by Chapman International Holdings Limited, which took up 22,411,385 shares not taken up by qualifying shareholders. - The Company's share capital was then consolidated so that every 5 ordinary shares in issue was converted into 1 ordinary share of 5p each of which was immediately subdivided into 1 ordinary share of 1p and 1 deferred share of 4p. As a result, from the 27th July 2006 the Company has 74,299,301 ordinary shares in issue. - As set out in the circular to shareholders and approved at the EGM, the Company is in the process, subject to the sanction of the High Court, of cancelling all of the deferred shares, the Company's capital redemption reserve and share premium account. These cancellations will eliminate the deficit on the Company's profit and loss account so that any future profits of the Company should be available for distribution to shareholders. - The approval by Shareholders of the Company's new Share Option Scheme. As set out in the circular to shareholders, the company has subsequently granted a total of 4 million options to executive directors and management CHANGES IN THE BOARD Geoffrey Gahan retired from the Board after the conclusion of the Annual General Meeting on 27 July 2006. On behalf of the Board I would like to thank Geoff for his valuable service and contribution to the Company over the past four years. As announced on 28 July, Ira Rapp was appointed to the Board and has assumed the position as Chief Executive Officer. We look forward to the future under Ira's management and wish him every success in his new role. As announced on 19th September Sir Harry Solomon has been appointed to the Board as an independent non-executive director. I am confident that Sir Harry will add much value in the years ahead and on behalf of the Board and shareholders I welcome him to the Westcity Board. DIVIDEND No dividend will be paid on the ordinary shares in respect of the period under review (2005: NIL). OUTLOOK In accordance with shareholders' approval, the Company's business has changed to property and property-related investment, property development and property management. To this end, we have now completed the structural and organisational actions required to implement our strategy. The key features of these actions are summarised below. - Ira Rapp became a full time employee and Chief Executive Officer of the Company from 28th July. - Michael Tannenbaum became a full time employee and Chief Financial Officer of the Company from 1st August. - The Company established, and now owns 50% of the share capital of, Stonehage Westcity Management Company Limited, the manager of the Stonehage Westcity Property Fund. - The Company invested £20 million in the Stonehage Westcity Property Fund. - The completion of an agreement with Stonehage Westcity Management Company Limited and the Stonehage Westcity Property Fund whereby, for an initial period of three years, the Company is the exclusive property advisor to the fund. The Company will receive a fee on all properties acquired by the fund that are sourced by it. The Stonehage Westcity Property Fund has raised a total of approximately e83 million, including approximately e29 million (£20 million) invested by the Company. The Stonehage Group was successful in raising substantially more than the amount that was originally targeted. This increased equity base, together with bank or debt financing, will provide the fund with an asset base of up to approximately e400 million once fully invested. The Company is now actively engaged in seeking investment opportunities for the fund and the Board will make further announcements in this regard as and when appropriate. Whilst it is anticipated that some early successes in identifying and completing suitable acquisitions for the fund will be made in the remaining quarter of the year, it is not expected that the full benefits of fees flowing from acquisitions will accrue to the company during the remainder of the current financial year. Rex Wood-Ward Chairman 21 September 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNT 2006 2005 2005 Unaudited Unaudited results Audited results results for for for six months six months to the year ended to 30 June 2006 30 June 2005 31 December 2005 £000 £000 £000 Profit on sale of investment - 318 318 Staff costs (246) (245) (499) Depreciation (6) (4) (9) Other operating charges: Exceptional (increase)/decrease in provision for onerous lease (note 8) 1,585 - (4,812 Exceptional impairment loss on investment property - - (650) Other (271) (288) (776) Operating profit/(loss) 1,062 (219) (6,428) Interest receivable less payable 392 401 791 Profit/(Loss) on ordinary activities Before Taxation 1,454 182 (5,637) Tax - - - Attributable profit/(loss) 1,454 182 (5,637) Earnings/(Loss) per ordinary share (see note 2) 0.5p 0.1p (2.0p) GROUP BALANCE SHEETS Unaudited Group Unaudited Group Audited Group Note 30 June 2006 30 June 2005 31 Dec 2005 £000 £000 £000 Fixed Assets Tangible assets 27 14 33 Investment property 3 - 6,200 4,950 Long term loan 3 4,500 - - 4,527 6,214 4,983 Current Assets Debtors 43 55 91 Cash at bank and in hand 18,612 24,538 24,473 18,655 24,593 24,564 Creditors: due within one year (4,567) (639) (1,678) Net current assets 14,088 23,954 22,886 Total assets less current liabilities 18,615 30,168 27,869 Creditors: due after one year Bank loans - (5,866) (5,825) Provisions for liabilities and charges (462) (1,184) (5,345) 18,153 23,118 16,699 Capital and reserves Called up share capital 2,846 2,846 2,846 Share premium account 4 16,841 16,841 16,841 Revaluation reserve 4 - 600 - Other capital reserves 4 3,976 3,976 3,976 Distributable reserves 4 (5,510) (1,145) (6,964) Shareholders' funds 5 18,153 23,118 16,699 CASH FLOW Unaudited Unaudited Audited 6 months 6 months Year to Note 30 June 2006 30 June 2005 31 Dec 2005 £000 £000 £000 Net cash outflow from operating activities 6 (644) (116) (512) Returns on investments and servicing of finance Interest received 518 588 1,157 Interest paid (126) (187) (366) Net cash inflow from returns on investments and servicing of finance 392 401 791 Capital expenditure Purchase of tangible fixed assets (24) Sale of tangible fixed assets - - 6 Net cash inflow from capital expenditure - - (18) Acquisitions and disposals Sale of Victoria Heights Corporation 295 - - Net cash inflow from disposals 295 - - Net cash flow before management of liquid resources 43 285 261 Management of liquid resources Cash withdrawn from/(placed on) short term deposit 5,867 (346) (94) Financing 3 (5,904) (38) (79) Net decrease in loans Net cash outflow from financing (5,904) (38) (79) Increase/(Decrease) in cash 6 (99) 88 NOTES TO THE FINANCIAL STATEMENTS 1. The financial information contained in this document does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2005 is extracted from the audited financial statements for that year on which the auditors gave an unqualified report and which did not contain a statement under Section 237(2) or 237(3) of the Companies Act 1985. A copy of those financial statements has been filed with the Registrar of Companies. The Company is listed on the AIM market of the London Stock Exchange. As an AIM company, the Company is not required to adopt International Financial and Reporting Standards (IFRS) until 1 January 2007 and IFRS have not been adopted for these financial statements. 2. Earnings/(loss) per share Basic and fully diluted earnings/ (loss) per share has been calculated on the Group's profit/ (loss) attributable to shareholders of £1,454,000 (2005: £182,000) and on the weighted average number of shares in issue during the six month period which was 284,581,499 (2005 : 284,581,499). 3. Long Term loan On 12 May 2006 the Company completed the sale of its wholly owned subsidiary Victoria Heights Corporation Limited (which owns the Hixon property formerly occupied by a Group Subsidiary) for £4,950,000. £450,000 of the purchase consideration was received in cash at completion and the deferred balance of £4,500,000 represented by a loan carrying interest at 1% p.a. over base rate, from the Company to Victoria Heights Corporation Limited secured by a first charge over the Hixon property. The loan is repayable no later than 12 May 2011. As part of the transaction and immediately prior to completion of the sale, Victoria Heights Corporation Limited redeemed a long-term loan of £5.9 million secured on the property. 4. Group Reserves Share Capital Profit & Premium Revaluation Redemption Special Loss Total Account Reserve Reserve Reserve Account Reserves £000's £000's £000's £000's £000's £000's At 1 January 2006 16,841 - 3,784 192 (6,964) 13,853 Profit for the period - - - - 1,454 1,454 At 30 June 2006 16,841 - 3,784 192 (5,510) 15,307 5. Reconciliation of movements in shareholders' funds £000's At 1 January 2006 16,699 Profit for the period 1,454 At 30 June 2006 18,153 6. Net Cash Outflow from operating activities Unaudited Unaudited Audited 6 months 6 months Year to 30 June 2006 30 June 2005 31 Dec 2005 £000 £000 £000 Operating profit/(loss) 1,062 (219) (6,428) Provision for onerous leases (1,585) 4,812 Revaluation deficit on property - - 650 Profit on sale of fixed assets - (6) Depreciation 6 4 9 Decrease in debtors 48 66 30 Decrease in trade investments - 1,000 1,000 (Decrease) in creditors (136) (882) (467) (Decrease) in provisions for liabilities and charges (39) (85) (112) (644) (116) (512) 7. Analysis of net funds: 1 January Cash flow 30 June 2006 2006 £000 £000 £000 Net cash: Cash at bank and in hand 24,473 (5,861) 18,612 Less deposits treated as liquid resources (24,272) 5,867 18,405 201 6 207 Liquid resources: Deposits 24,272 (5,867) 18,405 Debt: Loans (5,904) 5,904 - Net funds 18,569 43 18,612 8. Provisions for liabilities and Contingent liabilities Provisions for liabilities Group Group Pension Onerous Group Scheme deficit property leases Total £'000 £'000 £'000 Provision at 1 January 2006 250 5,095 5,345 Provision utilised - (3,298) (3,298) Decrease in provision -profit and loss account - (1,585) (1,585) Provision at 30 June 2006 250 212 462 Provisions anticipated to fall due within 12 months of £3,275,000 are included in other creditors due in one year. Provision is made in these financial statements for all material liabilities including any legal claims which are expected to materialise and onerous lease liabilities on premises formerly occupied by Group companies. 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. 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 other 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 8 years. Whilst all assignees continue to meet their obligations under these leases, the current annual rent obligations (which may be subject to periodic reviews), before allowing for any mitigating activities, for all such leases are approximately £400,000. No provision has been made in respect of these contingent matters. This information is provided by RNS The company news service from the London Stock Exchange END IR KGGZLNGDGVZM</pre>