<pre> RNS Number:9995D Westcity PLC 18 September 2007 WESTCITY PLC UNAUDITED RESULTS FOR THE HALF YEAR ENDED 30 June 2007 Chairman's statement The focus of the Company's activities during the period under review was on completion of pipeline transactions and the generation of additional potential transactions. The Company achieved a profit after tax of £214,000 (2006: £1,454,000 after including the release of £1,585,000 from provisions for onerous leases). Westcity's major asset is its investment in the Stonehage Westcity Property Fund ("Fund"). At 30 June 2007, the carrying value of the investment was £19.733 million after accounting for costs, exchange rate fluctuations and Westcity's share of the funds net asset value at 30 June 2007. In June 2007 the Company hedged this investment by locking in the e/£ rate for 1 year, thereby eliminating the impact of fluctuations due to currency movements. OPERATIONS In August 2006 the Fund raised a total of approximately e85 million, including approximately e29 million invested by the Company. The Fund is managed by Stonehage Westcity Management Company Limited of which Westcity plc owns 50%, the balance being owned by the Stonehage Group. During the period since the launch of the Fund Westcity, under its acquisition mandate, has enabled the Fund to invest e53.9 million. With a further e24 million currently in final due diligence and legal completion, these transactions represent approximately 90% of the Fund's available equity. In addition, a further number of pipeline transactions are actively being assessed by Westcity. In line with the Fund manager's objectives, the Fund's portfolio is becoming well balanced across a spread of investment and development assets over the commercial and residential segments in a number of diverse jurisdictions. Further information on the Company and the Fund can be found on the Company's new website at www.westcityplc.co.uk OUTLOOK There can be no certainty that the transactions already in process will complete. However, given the progress made to date, I continue to be hopeful that the Fund will be fully invested during the latter part of the year and that, going forward, the Company will benefit from this strong acquisition performance in 2007. Management is in the preparatory stages of structuring a second fund, which it intends will focus on mixed use residential development. Shareholders will be appraised of this new fund once further progress has been made. DIVIDEND No dividend will be paid on the ordinary shares in respect of the period under review (2006: NIL). Rex Wood-Ward Chairman 18 September 2007 For further information contact: Westcity plc Tel: 020 7424 6700 Rex Wood-Ward (Chairman) KBC Peel Hunt (Nominated adviser and broker): Tel 020 7418 8900 Nick Maslen Oliver Stratton CHIEF EXECUTIVE'S REVIEW The six months to June has been a period of intense, yet rewarding, activity during which we completed a number of transactions and further developed our transaction pipeline. Under an agreement with the Stonehage Westcity Property Fund, the Company is the exclusive property advisor to the Fund for an initial period of three years for which the Company will receive a fee on all properties acquired by the fund that are sourced by it. Stonehage Westcity Property Fund Fund Overview -Total equity raised (net of origination fees) e83.7 million -Completed transactions - total equity invested or committed e53.9 million -Transaction in final legal completion - equity value e24 million -Pipeline transactions in due diligence / legal process - equity value e25 million Completed transactions As at 30th June 2007, the Fund had completed seven investments or commitments totalling approximately e53.9 million of equity, with a gross asset value of approximately e170 million. Concordia Building, Hannover The Fund invested e4.4 million in a commercial property in Hannover, Germany, at an initial yield on purchase price of 7.1%. The property consists of approximately15,700 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 gross cost to the fund was e21.35m, of which 78% was funded by non-recourse senior debt. Berlin Residential Properties The Fund invested e5.1 million of equity capital into a specialist residential fund in Berlin, Germany. With approximately 30% share of the Berlin fund's equity base, the Fund is represented on the advisory board, and benefits from a significant reduction in management and ongoing fees. The Berlin fund has acquired 29 properties which comprise 750 residential units and 60 retail units with a gross value of e56 million at an average entry yield of 7.2%. To date the portfolio has been funded by equity and 70% of senior non-recourse debt. The Berlin fund is approximately 90% invested and has a strong deal pipeline. Russia As part of a portfolio the Russian real estate market offers superior opportunity for capital appreciation through rental uplift and yield compression compared to many European markets. The Fund has committed to invest e7.7 million (US$10 million) into the Rutley Russia Property Fund, which will invest in commercial, industrial and retail standing properties and developments in St Petersberg, Moscow and larger regional Russian cities. The Rutley fund has a transaction pipeline of six deals worth approximately US$ 250 million. The Fund also has the right of first refusal as the preferred co-investment partner of up to e150 million in the Russian retail sector with our partners and has representation on the investment board of the Russia fund. Mustang Portfolio In partnership with the European Added Value Fund, which is managed by AXA Investment Management, the Stonehage Westcity Property Fund acquired a portfolio of 10 commercial properties in secondary/tertiary German towns and cities for e85 million, at an initial yield on purchase price of 7.2%. The Fund's equity investment amounted to approximately e13.6 million for its 50% share. The 10 properties comprise of approximately 60,000 square metres of primarily commercial space, including a nominal element of retail and the portfolio is 95% let. Greenwich The Fund has entered into a joint venture with Capital & Counties for a mixed-use development in the centre of Greenwich, London. Subject to planning approvals, the development will comprise 129 residential units and 2,500 square metres of prime retail space. The Fund's 50% share of the equity requirement is e10.6 million. The project has a gross development cost of e75 million. Westcity will undertake the management of the development, utilizing its core in-house development competencies. Combining the residential development skills of Westcity with the retail property skills of the Fund's JV partner this project should enhance the portfolio's overall returns. UK Care Homes The Fund has committed an initial e7.5 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, will be entitled to a fixed return on their investment, in addition to a 30% share in the profits. Demand for care beds in the United Kingdom has increased over recent years, with demand expected to significantly increase over the next few decades. At the same time, supply of care beds is falling, due to increased regulation and the subsequent closure of care homes. Initial deals include the purchase of a site in Cheltenham, with a projected Gross Development Value of e9.5m, and the exchange of contracts for the purchase of a freehold property in Camberwell, with a projected Gross Development Value of e21.8m. Total mezzanine funding for these two deals will amount to c.e1.25m. Portland Fund In June 2007 the Fund invested e5 million into the Portland Global Real Estate Securities Fund as part of its indirect property instrument portfolio allocation. The Portland Fund seeks superior absolute returns by investing in publicly traded real estate securities, primarily in Europe. The Fund, managed by Portland Capital LLP, is targeting net returns above 15%. Capitalising on the principal's expertise in investments, real estate private equity, debt and derivative markets, the Fund will have the opportunity to benefit from attractive returns in both positive and negative market environments by applying Portman's investment skills to the real estate market. Final due diligence and legal completion The Fund has three transactions in which final due diligence is currently in process. These transactions, with an aggregate invested equity capital requirement of approximately e24 million, include: -The acquisition of 4 properties comprising a total of 20,000 square metres in Frankfurt and Maintal at an initial yield on purchase price of 8.6%, which will be added to the Mustang Portfolio. -A joint venture partnership for a mixed use development over 235,000 square metres in an exclusive site in Kuala Lumpur, Malaysia. -The acquisition of a number of properties for a 12,500 square metre residential development in Kent. development opportunities will draw on Westcity plc development expertise, and should provide enhanced portfolio returns through strong profitability. Early Stage investment pipeline In addition to the opportunities described above, Westcity has a number of potential transactions currently undergoing appraisal in its pipeline, with a total equity requirement in excess of e25million. DEVELOPMENT ACTIVITIES Our development division has been responsible for the due diligence and appraisal of the Greenwich mixed-use development project for the Fund and Westcity Developers is the development manager for this scheme. Westcity has recently entered into an agreement with Capital & Counties Ltd to provide residential development consultancy services, including development management together with the right to co-invest in all residential mixed-use schemes within the M25 area of London. Having sourced and then produced the relevant plans and appraisals, Westcity will also be responsible for the development management of the mixed-use residential/retail site in Kent and will co-manage the Kuala Lumpur development in the event that the Fund invests in these two projects. During the past six months we have assessed many potential opportunities and completed equity investments and/or commitments worth e45 million. Our objective during the remainder of the year will be to complete those transactions in final due diligence, which would bring the fund to a 90% invested position. Furthermore, given the strong remaining pipeline, there is a strong possibility that the Fund will be fully invested by year-end. Ira Rapp Chief Executive Officer 18 September 2007 CONDENSED CONSOLIDATED INCOME STATEMENT UNAUDITED RESULTS FOR THE HALF YEAR ENDED 30 June 2007 Unaudited Unaudited Audited results for the results for the results for 6 months to 6 months to the year ended 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 REVENUE 816 - 568 Finance revenue 179 392 676 Employee benefits expense (1,015) (246) (936) Depreciation and amortisation expense (17) (6) (18) Other expenses (337) (271) (725) Release of provision for onerous leases - 1,585 2,141 Change in value of investments 166 - (432) Share of profits of equity accounted investments 15 - 76 Finance costs - - (125) Profits from hedging instruments 407 - - PROFIT BEFORE TAX 214 1,454 1,225 Income tax credit - - 92 PROFIT FOR THE PERIOD ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 214 1,454 1,317 Basic earnings per share 0.29p 2.55p 2.05p Diluted earnings per share 0.27p 2.55p 2.04p CONDENSED CONSOLIDATED Balance Sheet AS AT 30 June 2007 Unaudited Unaudited Audited 30 June 30 June 31 December 2007 2006 2006 Notes £'000 £'000 £'000 NON-CURRENT ASSETS Property, plant and equipment 79 27 31 Equity accounted investments 69 - 89 Other financial assets 24,234 4,500 24,068 24,382 4,527 24,188 CURRENT ASSETS Trade and other receivables 1,148 43 119 Prepayments 77 - 56 Cash and cash equivalents 1,048 18,612 2,231 2,273 18,655 2,406 TOTAL ASSETS 26,655 23,182 26,594 CURRENT LIABILITIES Trade and other payables 289 4,567 514 Provisions 6 55 - 55 344 4,567 569 NON-CURRENT LIABILITIES Provisions 6 430 462 459 430 462 459 TOTAL LIABILITIES 774 5,029 1,028 NET ASSETS 25,881 18,153 25,566 SHAREHOLDERS' EQUITY Called up share capital 7 743 2,846 743 Share premium account - 16,841 - Share based payments reserve 8 232 38 131 Other capital reserves 8 25,589 3,976 25,488 Retained earnings 8 (683) (5,548) (796) 25,881 18,153 25,566 condensed CONSOLIDATED Cash Flow Statement FOR THE half YEAR ENDED 30 June 2007 Unaudited Unaudited Audited 6 months to 6 months to year to 30 June 30 June 31 December 2007 2006 2006 Notes £'000 £'000 £'000 Net cash flows from operating activities 9 (1,297) (644) (4767) Investing activities Interest received 179 518 676 Purchase of property, plant and equipment (65) - (16) Proceeds from the sale of investment - 295 450 property Payments to acquire equity accounted - - (13) investments Payments to acquire other financial - - (20,000) assets Net cash flows used in investing activities 114 813 (18,903) Financing activities Net proceeds from the issue of share - - 7,457 capital Interest paid - (126) (125) Repayment of borrowings - (5,904) (5,904) Net cash flows used in financing activities - (6,030) 1,428 Net increase/(decrease) in cash and (1,183) (5,861) (22,242) cash equivalents Cash and cash equivalents at 1 January 2,231 24,473 24,473 Cash and cash equivalents at 30 June/ 1,048 18,612 2,231 31 December CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 30 June 2007 Issued Share Share based Other Retained Total Capital premium payment reserve capital earnings Equity reserves £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 743 - 131 25,488 (796) 25,566 2007 Total income and - - - - 214 214 expense for the period Other - - - - - - movements Share based - - 101 - - 101 payment ------- -------- -------- ------- -------- -------- At 30 June 743 - 232 25,488 (582) 25,881 2007 ======= ======== ======== ======= ======== ======== Issued Share Share based Other Retained Total Capital premium payment reserve capital earnings Equity reserves £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2,846 16,841 38 3,976 (7,002) 16,699 2006 Total income and - - - - 1,454 1,454 expense for the period Share - - - - - - based ------- -------- -------- ------- -------- -------- payment At 30 June 2,846 16,841 38 3,976 (5,548) 18,153 2006 ======= ======== ======== ======= ======== ======== Issued Share Share based Other Retained Total Capital premium payment reserve capital earnings Equity reserves £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2,846 16,841 38 3,976 (7,002) 16,699 2006 Total income and - - - - 1,317 1,317 expense for the year Issue of share capital (net 869 6,588 - - - 7,457 of issue costs) Capital reduction (2,972) (23,429) - 21,512 4,889 - Share based - - 93 - - 93 payment ------- -------- -------- ------- -------- -------- At 31 December 743 - 131 25,488 (796) 25,566 2006 ======= ======== ======== ======= ======== ======== NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2007 1. BASIS OF PREPARATION The condensed financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards and in accordance with International Accounting Standards (IAS) 34 Interim Financial Reporting and have not been audited for the period under review. 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 31st December 2006 is extracted from the audited financial statements for that year on which the auditors gave an unqualified report and which did not give a statement under Section 237 (2) or 237 (3) of the Companies Act 1985. A copy of these 2006 financial statements has been filed with the Registrar of Companies. The Group prepares its consolidated financial statements in accordance with IFRS, and the statements have been prepared using the accounting policies set out in the Group's 2006 statutory accounts. 2. SIGNIFICANT ACCOUNTING POLICIES The condensed financial statements have been prepared on a historical cost basis or fair value basis as appropriate. The same accounting policies, presentation and methods of computation are followed in these condensed financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 December 2006. 3. SEGMENT INFORMATIOn The Group operates from one geographical segment being the UK and Channel Islands. The Group has one business segment being that of property related investment, development and management in respect of properties and opportunities within the UK and Europe. 4. DIVIDENDS No dividends were paid or declared in the period (June 2006: Nil, December 2006: Nil). 5. EARNINGS PER ORDINARY SHARE Basic earnings per ordinary share has been calculated on the Group's profit attributable to shareholders of £214,000 (June 2006: £1,454,000, December 2006: £1,317,000) and on the weighted average number of ordinary shares in issue during the period which was 74,299,301 (June 2006: 56,916,300, December 2006: 64,393,594). Diluted earnings per ordinary share has been calculated on the Group's profit attributable to shareholders of £214,000 (June 2006: £145,400, December 2006: £1,317,000) and on the diluted weighted average ordinary shares in issue during the period which was 78,925,497 (June 2006: 64,551,689, December 2006: 64,551,689). The number of ordinary shares used to calculate June 2006 earnings per share have been adjusted as if the reorganisation that took place on 27 July 2006 had already taken place as of 1 January 2006, to present the results on a comparable basis. Details of this reorganisation can be found in the Group's financial statements for the year ended 31 December 2006. 6. PROVISIONS Pension Scheme Onerous Total deficit property leases £'000 £'000 £'000 Provision at 1 January 2007 250 264 514 Provision utilised - (29) (29) Provision at 30 June 2007 250 235 485 Current - 55 55 Non-current 250 180 430 250 235 485 Provisions for liabilities Provision is made in these financial statements for all material liabilities including any legal claims which are expected to materialise and a lease liability which has 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. 7. SHARE CAPITAL There were no changes to the issued share capital of the Company during the period. 8. RESERVES Group Share based Other capital Retained payments reserves earnings reserve £ £ £ At 1 January 2007 131 25,488 (796) Share based payment 101 - - Other movements - - - Retained profit for the period - - 214 --------- ---------- -------- At 30 June 2007 232 25,488 (582) ========= ========== ======== Nature and purpose of other reserves Share based payments reserve The share based payments reserve is used to recognise the fair value of options expensed but not exercised. Other capital reserves The other capital reserves arose following the cancellation of amounts included in the capital redemption reserve and share premium account. The other capital reserves are not to be treated as representing realised profits of the Company and will be treated as an undistributable reserve for the purposes of section 264 of the Companies Act 1985, as it may apply to the Company, for so long as any debts of or claims against the Company as at 11 October 2006 shall remain outstanding. 9. NET CASH OUTFLOW FROM OPERATING ACTIVITIES Unaudited Unaudited Audited 6 months to 30 6 months Year to 31 June December 2007 to 30 June 2006 2006 £'000 £'000 £'000 Operating Profit before tax 214 1,454 1,225 Provision for onerous leases - (1,585) - Depreciation 17 6 18 Share based payments expense 101 - 93 Share of profits of equity accounted investment (15) - (76) Dividend from equity accounted investment 35 - - (Increase)/decrease in the fair value of investments (166) - 32 Finance income (179) (392) (676) Finance expense - - 125 Costs of acquiring other financial assets - - 400 (Increase)/decrease in receivables (1,029) 48 (69) (Increase)/decrease in prepayments (21) - (15) (Decrease)/increase in payables (225) (136) (369) Increase/(decrease) in provisions (29) (39) (5,455) (1,297) (644) (4,767) 10. GROUP FINANCIAL COMMITMENTS The group had no commitments under non-cancellable operating leases at the period end. 11. 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 2 to 7 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 £352,000 per annum. 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 ZGGMLRNMGNZM small e before a number denotes euros</pre>