TIDMSHB
RNS Number : 7852O
Shaftesbury PLC
22 May 2018
SHAFTESBURY 2018 HALF YEAR RESULTS
Growth in income, earnings, dividend and NAV
Shaftesbury, the Real Estate Investment Trust and owner of a
14.9 acre property portfolio in the heart of London's West End,
today announces its results for the six months ended 31 March
2018.
Highlights
* The West End remains largely insulated from the
economic impact of national short- and longer-term
uncertainties and challenges.
* Trading and footfall remains good across our
locations.
* Further rental growth resulting from sustained
occupier demand across all uses. Vacancy remains low.
* Good letting progress with our three larger schemes
with 62% now let or under offer.
* Strong growth in contracted income drives further
growth in earnings.
* Profit after tax increased by 20.8% to GBP123.7m.
EPRA earnings(2) : GBP25.0m, +9.6%.
* Interim dividend increase: 5.1% to 8.3p per share.
Fully covered by EPRA earnings per share(2) .
* EPRA NAV(2) : GBP9.83. Growth of 3.3% over six months
driven by portfolio valuation growth(2,5) of 3.0%.
Growth over 12 months: EPRA NAV(2) +7.8%, portfolio
valuation(2,5) +8.0%.
* Portfolio investment: GBP132.3m including
acquisitions in Carnaby and Seven Dials (GBP117.4m)
and schemes across 153,000 sq. ft. (GBP14.9m)
* Equity issue raised GBP260.4m providing resources to
grow and invest in our portfolio whilst maintaining
appropriate debt levels for our long-term, accretive
investment strategy.
* Revolving credit facilities extended and refinanced.
Earliest maturity now 2022.
-------------------------------------------------------------------------
Brian Bickell, Chief Executive, commented:
"Our results for the half year ended 31 March 2018, which show
continuing growth in rental income, EPRA earnings, and NAV,
demonstrate the successful and innovative approach we bring to the
management of our portfolio, and the breadth of appeal and
resilience of London's West End.
The West End economy has been largely unaffected by business and
consumer uncertainty following the 2016 EU referendum and the
structural challenges facing national retail and restaurant chains.
Interest in our space is good and occupancy remains high with
occupiers recognising that the West End has a broad appeal to
domestic and international businesses and visitors, as well as its
large local working population, and a generally less
price-sensitive customer base.
We are confident that our exceptional portfolio, located in the
centre of one of the world's leading global cities, managed by an
experienced and enthusiastic team and supported by robust finances,
is well-placed to continue to deliver excellent long-term returns
for shareholders."
Growth in income, earnings, dividend and NAV
Six months ended
Statement of Comprehensive Income 31.3.2018 31.3.2017 Change
-------------------------------------- ------- ---------- --------- -------
Reported results
Net property income GBPm 46.2 43.8 +5.5%
Profit after tax GBPm 123.7 102.4 +20.8%
Basic earnings per share Pence 41.7 36.7 +13.6%
Interim dividend per share Pence 8.3 7.9 +5.1%
Total distribution for the financial
period GBPm 25.5 22.0 +15.9%
EPRA results(1,2)
Earnings GBPm 25.0 22.8 +9.6%
Earnings per share Pence 8.4 8.2 +2.4%
-------------------------------------- ------- ---------- --------- -------
-- Dividend fully covered by EPRA earnings per share(1,2) and
adjusted earnings per share(2,3) .
Balance Sheet 31.3.2018 30.9.2017 Change
------------------------------ ------ ---------- --------- -------
Reported
Net assets GBPm 3,006 2,647 +13.6%
Net asset value per share(2) GBP 9.78 9.49 +3.1%
EPRA(1,2)
Net assets GBPm 3,024 2,665 +13.5%
Net asset value per share GBP 9.83 9.52 +3.3%
------------------------------ ------ ---------- --------- -------
-- Net asset value return(2) for six months ended 31.3.2018:
4.1% (12 months to 31.3.2018: 9.0%).
Occupier demand remains healthy
-- Commercial lettings, lease renewals and rent reviews(4)
(rental value: GBP10.9 million) concluded at an average of 4.2%
above 30 September 2017 ERV and 7.6% above ERV at 31 March
2017.
-- Excluding larger schemes, EPRA vacancy(4) at 31 March 2018:
2.8% of ERV, of which 1.3% was under offer.
Good progress with larger schemes
-- 62% by ERV is now let or under offer at our three larger
schemes.
- Thomas Neal's Warehouse: terms agreed and expect to conclude
lease shortly.
- Central Cross: restaurant space all let or under offer; retail
space with an ERV of GBP0.2m under offer.
- 57 Broadwick Street: retail and restaurant space fully let.
Office and residential elements completed in April 2018. 57% of
office space now let.
Growth in portfolio value(2,7) , contracted rents and ERV
-- Portfolio valuation(2,7) : GBP3.86 billion. Like-for-like
growth(2) over the six months: +3.0% (12 months to 31.3.2018:
+8.0%).
-- Current annualised income(7) : GBP121.5 million (30.9.2017:
GBP114.1 million). Like-for-like growth over six months: +3.7% (12
months to 31.3.2018: +5.6%). 10-year CAGR(5) : 5.3%.
-- ERV(7) increased by GBP6.2 million to GBP150.7 million.
Like-for-like growth over six months: +1.4% (12 months to
31.3.2018: +3.0%). CAGR(5) over 10 years: 4.0%.
-- Portfolio reversionary potential(7) : GBP29.2 million, 24.0%
above current annualised income.
-- Equivalent yields:
- Wholly-owned portfolio: 3.41% (30.9.2017: 3.46%);
- Longmartin joint venture: 3.80% (30.9.2017: 3.80%).
Further investment in our portfolio
-- Acquisitions during the first half: GBP117.4 million,
including the freehold of 72 Broadwick Street, Carnaby and six
buildings in Neal Street, Seven Dials.
-- Acquisition of 35 and 36 Great Marlborough Street, Carnaby,
for GBP22.7 million (incl. costs) secured since 31 March 2018.
-- Forward-purchase of 90-104 Berwick Street, for GBP41 million
(incl. costs) now expected to complete in spring 2019, as a result
of delayed completion of the vendor's redevelopment scheme.
-- Redevelopment and refurbishment schemes(4) during the period
across 153,000 sq. ft. (8.4% of floor space). Capital
expenditure(4) : GBP14.9 million. Our share of capital expenditure
in the Longmartin joint venture: GBP1.2 million.
- Projects with an ERV of GBP5.0 million completed in the
period. New schemes (ERV: GBP2.7 million) commenced.
- Space extending to 93,300 sq. ft. (representing 4.8% of ERV)
being held for, or under, refurbishment at 31 March 2018.
- Continuing to identify further asset management initiatives
across the portfolio to increase rental potential and unlock
value.
-- Selective disposals of non-core assets: GBP12.9 million,
48.3% above book value at 30 September 2017.
Financing arrangements to support growth and development of the
business over the long term
-- Share placing in December 2017 at GBP9.52 per share raised
GBP260.4 million (net of expenses).
-- Revolving credit facilities extended and refinanced. Earliest
maturity now 2022.
-- Loan-to-value ratio(2,6,7) : 21.7% (30.9.2017: 26.7%).
-- Weighted average maturity of debt(2,7) : 10.7 years
(30.9.2017: 10.3 years).
-- Blended cost of debt(2,6,7) : 3.2% (30.9.2017: 3.3%).
Marginal cost on unutilised facilities: 1.5%.
21 May 2018
For further information:
Shaftesbury PLC 020 7333 8118 RMS Partners 020 3735 6551
Brian Bickell, Chief Executive Simon Courtenay
Chris Ward, Finance Director
MHP Communications 020 3128 8100
Oliver Hughes/Reg Hoare
Shaftesbury PLC LEI: 213800N7LHKFNTDKAT98
1. Calculated in accordance with EPRA Best Practice Recommendations.
2. An alternative performance measure ("APM"). The Group uses a
number of measures to assess and explain its performance, some of
which are considered to be APMs as they are not defined under IFRS.
See below.
3. After adding back the non-cash accounting charge for share options.
4. Wholly-owned portfolio.
5. Like-for-like.
6. Based on net debt.
7. Includes 50% of the Longmartin joint venture.
See Glossary of terms below.
This announcement includes inside information.
There will be a presentation to equity analysts at 9.30am on
Tuesday 22 May 2018, at The London Stock Exchange, 10 Paternoster
Square, London EC4M 7LS.
There is a live audio webcast of the analyst presentation which
you can access via the following link: https://bit.ly/2I6Oe5X or
from our website. A playback facility of this presentation will be
available on the Group's website www.shaftesbury.co.uk by the end
of the day. The presentation document is available on the Group's
website www.shaftesbury.co.uk
About Shaftesbury
Shaftesbury is a Real Estate Investment Trust, which invests
exclusively in the liveliest parts of London's West End. Our
objective is to deliver long-term growth in rental income, capital
values and shareholder returns.
Focussed on restaurants, leisure and retail, our exceptional
portfolio now extends to 14.9 acres, clustered mainly in Carnaby,
Seven Dials and Chinatown, with substantial ownerships in east and
west Covent Garden, Soho and Fitzrovia. In addition, we have a 50%
interest in the Longmartin joint venture with The Mercers' Company,
which has a long leasehold interest, extending to 1.9 acres, in St
Martin's Courtyard in Covent Garden.
Our proven management strategy is to create and foster
distinctive, attractive and prosperous locations. It is implemented
by an experienced management team with an innovative approach to
long-term, sustainable income and value creation, and a focus on
shareholder returns. We have a strong balance sheet and
conservative leverage.
Forward-looking statements
This document may contain certain 'forward-looking' statements.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances.
Actual outcomes and results may differ materially from any outcomes
or results expressed or implied by such forward-looking
statements.
Any forward-looking statements made by, or on behalf of,
Shaftesbury PLC speak only as of the date they are made and no
representation or warranty is given in relation to them, including
as to their completeness or accuracy or the basis on which they
were prepared. Shaftesbury PLC does not undertake to update
forward-looking statements to reflect any changes in its
expectations with regard thereto or any changes in events,
conditions or circumstances on which any such statement is
based.
Information contained in this document relating to Shaftesbury
PLC or its share price, or the yield on its shares, should not be
relied upon as an indicator of future performance.
Ends.
Half year results
Introduction
Our results for the half year ended 31 March 2018, which show
continuing growth in rental income, EPRA earnings, and NAV,
demonstrate the successful and innovative approach we bring to the
management of our exceptional portfolio, and the breadth of appeal
and resilience of London's West End as a destination for domestic
and international visitors and business.
Our income and earnings have continued to rise, reflected in an
increased interim dividend of 8.3 pence per share, up 5.1% on last
year. With a greater number of shares in issue, the total
distribution will be GBP25.5 million, 15.9% higher than last
year.
During the period, we have made considerable progress in
securing occupiers for our larger schemes in Chinatown, Carnaby and
Seven Dials, as well as concluding over GBP15 million of leasing
transactions across our portfolio. We have completed important
additions to our ownerships, totalling GBP117.4 million.
Our recent equity issue, which raised GBP260.4 million, was
well-supported by shareholders and has provided us with the
financial resources to continue to grow and invest in our
portfolio, whilst ensuring debt is maintained at a level the Board
considers appropriate for our long-term, accretive investment
strategy, and avoiding the risks associated with excessive
leverage. Also, we have refinanced and extended the maturities of
our revolving bank facilities, further improving the robustness of
our balance sheet.
Our focus
We focus on restaurants, leisure and retail. In the West End,
there is a long history of sustained demand for this space but a
number of structural factors limit its availability, which has
resulted in low vacancy and non-cyclical, long-term rental
growth.
Extending to 1.1 million sq. ft., our 283 restaurants, cafés and
pubs and 304 shops are mainly of medium or small size and provide
36% and 32% of our current annualised income, respectively.
Generally, we choose mid-market, innovative and accessible
concepts, rather than luxury or value-led shops and restaurants.
This variety of interesting dining, leisure and retail brands gives
our destinations a distinctive identity and provides visitors with
an experience unmatched by other areas.
Typically, the upper floors in our buildings comprise small
offices and rental apartments, which provide 18% and 14% of our
current annualised income, respectively. These bring working and
residential communities, providing regular customers for our
restaurants, cafés, pubs and shops.
Current trading environment
The combination of the unique features of London, the West End
and our portfolio have, in our long experience, provided a
considerable degree of insulation from the economic impact of
national short- and longer-term uncertainties and challenges.
Currently, unsettled sentiment since the EU referendum in June
2016 is continuing to adversely affect business and consumer
confidence. In addition, national retail and restaurant chains are
also having to address the structural implications of changing
spending patterns and developments in technology. Inevitably they
are cautious in their investment plans, with some permanently
scaling back their operations.
In contrast, the West End economy has been largely unaffected by
these current, widely-reported concerns. Whilst we have seen an
increase in the time taken to complete lettings, interest in our
space is good and occupancy remains high with occupiers recognising
that the West End has a broad appeal to domestic and international
businesses and visitors, as well as its large local working
population, and a generally less price-sensitive customer base.
Forecasts indicate continuing growth in inbound visitor numbers,
and the expected inauguration of the Elizabeth Line in December
will, in the years ahead, greatly improve accessibility to the West
End. Together, they are expected to bring a sustained increase in
the estimated 200 million visits the West End already receives
annually.
Our proven and ever-evolving strategy curates and fosters lively
and distinctive destinations, which draw visitors and spending in
huge and growing numbers. We create prosperous trading environments
for our 587 shops, restaurants, cafés and pubs, which, in turn,
supports our ability to deliver long-term rental growth. In our
locations, our restaurants, cafés, bars and shops are reporting
year-on-year sales growth and we continue to see healthy interest
for space from businesses keen to locate with us.
Leasing activity
Leasing activity levels have remained high during the six months
ended 31 March 2018. Across the wholly-owned portfolio, we have
concluded lettings, renewals and rent reviews with a rental value
of GBP15.3 million (31.3.2017: GBP13.9 million), equating to 11.4%
of ERV at 30 September 2017.
Commercial leasing transactions totalled GBP10.9 million
(31.3.2017: GBP9.3 million) and residential lettings and renewals
amounted to GBP4.4 million (31.3.2017: GBP4.6 million). Rents for
commercial uses were, on average, 4.2% above ERV at 30 September
2017 and 7.6% ahead of ERV twelve months ago.
At 31 March 2018, space with a rental value of GBP3.5 million
was under offer.
Six months
Six months ended 31.3.2018 ended 31.3.2017
----------------------------------------
GBPm GBPm
---------------------- ----- --------------------------------- ----------------
Commercial
Lettings and renewals 7.1 +2.5% vs 30.9.2017 ERV 3.9
+24.5% vs previous rent (5-year
Rent reviews 3.8 CAGR: +4.5%) 5.4
----- ----------------
10.9 +4.2% vs 30.9.2017 ERV 9.3
Residential
Lettings and renewals 4.4 -0.5% vs previous rent 4.6
----- ----------------
Total 15.3 13.9
---------------------- ----- --------------------------------- ----------------
Our share of leasing transactions in the Longmartin joint
venture was GBP0.4 million (31.3.2017: GBP3.0 million).
Portfolio review
Lower floors - 68% of current income(1)
Restaurants, cafés Retail
and leisure
----------------------- ------------------------ -------
% of current income(1) 36% 32%
Number 283 304
Area (sq. ft.) 602,000 477,000
----------------------- ------------------------ -------
1. Wholly-owned portfolio
-- Restaurants, cafés and leisure
The exceptional variety of restaurants, cafés and leisure
choices in the West End are important to its economy, bringing
footfall and spending. With 283 restaurants, cafés and pubs, we are
the largest single provider of dining and leisure space in the West
End. Our ownerships include high-profile and busy destinations such
as Chinatown, Kingly Court, Neal's Yard and the Opera Quarter. The
majority of our restaurants offer casual all-day dining, with a
focus on experience and quality.
Despite a national slowdown in dining and leisure spending, we
continue to see healthy trading across our areas. Availability of
restaurant space in the West End is constrained by a restrictive
planning environment, and the reluctance of existing occupiers to
give up their valuable space other than for significant premiums.
Against this backdrop of limited supply, occupier demand is good,
with operators attracted by exceptional footfall, seven days a
week, and a relatively affluent customer base. Competition for
available space continues to be strong, and occupancy levels remain
high. At 31 March 2018, all our available-to-let restaurant, café
and leisure space (ERV: GBP1.3 million) was under offer.
The 79 restaurants, cafés and bars we own in Chinatown, close to
the West End's major entertainment venues, represent approximately
one-third, by floor space, of our total ownership of these valuable
uses. In this exceptionally busy location, notable for its long
hours of trading, our strategy is to improve the variety of the
dining offer, whilst maintaining its authentic Chinese and East
Asian character and affordability. We are taking opportunities, as
they arise, to secure vacant possession of buildings and improve
the layout of space on lower floors whilst introducing new uses on
upper floors. Demand for this refurbished space is strong and is
enabling us to introduce exciting, new concepts. The new
restaurants and cafés, and associated public realm works, at our
Central Cross scheme (see below) are important additions to
Chinatown's offer and appeal.
During the period, we completed leasing transactions in the
wholly-owned portfolio with a rental value of GBP5.2 million
(31.3.2017: GBP4.5 million).
Six months
Six months ended 31.3.2018 ended 31.3.2017
-------------------------------------
Rental value
Number GBPm % of use ERV % of use ERV
------- ------------- ------------- -----------------
Lettings and renewals 15 2.8 5.9% 2.4%
Rent reviews 15 2.4 5.0% 7.6%
------- ------------- ------------- -----------------
30 5.2 10.9% 10.0%
----------------------- ------- ------------- ------------- -----------------
There were no restaurant or café leasing transactions in the
Longmartin joint venture during the six months ended 31 March 2018
(31.3.2017: GBP0.9 million).
-- Retail
Our 304 shops, the majority of which are in Carnaby and Seven
Dials, make an important contribution to the West End as a leading
shopping destination.
With the wide range of shop sizes and rental levels across our
buildings and streets, we can provide space for a diverse range of
retail formats including start-ups, new brands and international
flagships, focussing on interesting, innovative and experiential
concepts. Also, we can offer retailers flexibility to expand,
relocate, or introduce new ideas and collaborations. Importantly,
in our high-footfall and spending locations, rental levels remain
affordable compared with nearby streets.
Despite continued headwinds and challenges across the retail
sector, our tenants continue to trade well. We remain innovative
and flexible in the terms we offer and are continuing to see good
interest for the smaller space we typically have to offer, both
from domestic and overseas retailers. During the period, we
completed leasing transactions with an ERV of GBP2.9 million
(31.3.2017: GBP2.9 million).
Six months
Six months ended 31.3.2018 ended 31.3.2017
-------------------------------------
Rental value
Number GBPm % of use ERV % of use ERV
------- ------------- ------------- -----------------
Lettings and renewals 18 2.4 5.1% 2.2%
Rent reviews 5 0.5 1.1% 4.1%
------- ------------- ------------- -----------------
23 2.9 6.2% 6.3%
----------------------- ------- ------------- ------------- -----------------
Our share of lettings and rent reviews in the Longmartin joint
venture was GBP50,000 (31.3.2017: GBP0.5 million).
Upper floors - 32% of current income(1)
Offices Residential
----------------------- -------- ------------
% of current income(1) 18% 14%
Number 578
Area (sq. ft.) 452,000 356,000
----------------------- -------- ------------
1. Wholly-owned portfolio
-- Offices
We are an important provider of small, flexible office space in
the core West End. At 31 March 2018, we owned 452,000 sq. ft. of
office space, a net increase of 49,000 sq. ft. since 30 September
2017, due to the purchase of 72 Broadwick Street, Carnaby (see
below), partly offset by further conversion of space to other uses.
With 238 tenants, the average letting across our portfolio is 1,650
sq. ft. at GBP56 per sq. ft. (30.9.2017: GBP55 per sq. ft.).
Average ERVs are GBP64 per sq. ft. (30.9.2017: GBP61 per sq.
ft.).
Occupier demand for our space remains good, particularly from
SME media, fashion, creative and tech businesses. Availability of
this type of space remains low across our locations and, whilst we
have seen a small increase in incentive levels, rental tones for
our modestly-priced space have increased marginally and occupancy
levels have been high.
During the period, wholly-owned office lettings, renewals and
rent reviews with a rental value of GBP2.8 million were completed
(31.3.2017: GBP1.9 million).
Six months
Six months ended 31.3.2018 ended 31.3.2017
-------------------------------------
Rental value
Number GBPm % of use ERV % of use ERV
------- ------------- ------------- -----------------
Lettings and renewals 20 1.9 6.6% 7.2%
Rent reviews 3 0.9 3.1% 0.4%
------- ------------- ------------- -----------------
23 2.8 9.7% 7.6%
----------------------- ------- ------------- ------------- -----------------
Our share of office lettings and rent reviews in the Longmartin
joint venture was GBP0.2 million (31.3.2017: GBP1.4 million).
-- Residential
Demand to rent our 578 mid-market apartments - mainly studios
and one or two bedroom flats - remains good.
Lettings and renewals with a rental value of GBP4.4 million were
completed in the period (31.3.2017: GBP4.6 million). Whilst rents
achieved were 0.5% below previous levels, reflecting a greater
availability of flats to rent in Central London, occupancy levels
have been as high as ever, delivering an important cash flow for
the business. Our rolling programme to upgrade apartments
continues.
Six months
Six months ended 31.3.2018 ended 31.3.2017
-------------------------------------
Rental value
Number GBPm % of use ERV % of use ERV
------- ------------- ------------- -----------------
Lettings and renewals 154 4.4 25.7% 28.2%
----------------------- ------- ------------- ------------- -----------------
Our share of residential letting activity in the Longmartin
joint venture was GBP0.2 million (31.3.2017: GBP0.2 million).
Vacancy
EPRA vacancy decreased by 0.4% to 5.6% of total ERV over the
first half of the year, following letting progress at our larger
schemes. Excluding these larger schemes, EPRA vacancy was 2.8%, of
which 1.3% was under offer.
EPRA vacancy(1) at 31 March 2018
% of total ERV
Restaurants,
cafés
and leisure Shops Offices Residential Total 31.3.18 30.9.17
GBPm GBPm GBPm GBPm GBPm % %
------------------- ------------ ----- ------- ----------- ----- ------- -------
Larger schemes(2)
Under offer 0.8 0.9 - - 1.7 1.2% 0.2%
Available-to-let - 2.2 - - 2.2 1.6% 3.3%
------------ ----- ------- ----------- ----- ------- -------
0.8 3.1 - - 3.9 2.8% 3.5%
------------ ----- ------- ----------- ----- ------- -------
Other vacancy
Under offer 0.5 1.0 0.2 0.1 1.8 1.3% 0.8%
Available-to-let - 1.1 1.0 0.1 2.2 1.5% 1.7%
------------ ----- ------- ----------- ----- ------- -------
0.5 2.1 1.2 0.2 4.0 2.8% 2.5%
------------ ----- ------- ----------- ----- ------- -------
Total
Under offer 1.3 1.9 0.2 0.1 3.5 2.5% 1.0%
Available-to-let - 3.3 1.0 0.1 4.4 3.1% 5.0%
------------ ----- ------- ----------- ----- ------- -------
1.3 5.2 1.2 0.2 7.9 5.6% 6.0%
------------ ----- ------- ----------- ----- ------- -------
Area ('000 sq.
ft.) 13 83 18 5 119
------------------- ------------ ----- ------- ----------- ----- ------- -------
1. Wholly-owned portfolio
2. Thomas Neal's Warehouse, Seven Dials and Central Cross, Chinatown - see also below.
Other vacancy
Excluding larger schemes, available-to-let vacancy comprised six
shops (ERV: GBP1.1 million), 16,100 sq. ft. of office space (ERV:
GBP1.0 million) and five apartments (ERV: GBP0.1 million). Space
under offer included three restaurants and cafés, six shops, 2,300
sq. ft. of offices and three apartments.
In the Longmartin joint venture, three shops and three
apartments were available to let. The ERV of our 50% share of this
space was GBP0.5 million.
Progress with our larger schemes
We have made further progress in letting our three larger
schemes. At 21 May 2018, the combined ERV of these schemes was
GBP7.1 million, of which 62% was let or under offer.
Larger schemes - letting status
Completed at Completed since
31.3.2018 31.3.2018 Total
GBPm % GBPm % GBPm %
------------------------------- ------- ----- --------- ------ ----- ----
Completed space - ERV
Thomas Neal's Warehouse 0.9 - 0.9
Central Cross 3.7 - 3.7
57 Broadwick St 1.0 1.5 2.5
------- --------- -----
5.6 1.5 7.1
------- --------- -----
ERV let or under offer
At 31 March 2018 3.4 61% - -% 3.4 48%
Since 31 March 2018 0.2 4% 0.8 53% 1.0 14%
------- ----- --------- ------ ----- ----
Total let or under offer at 21
May 2018 3.6 65% 0.8 53% 4.4 62%
------------------------------- ------- ----- --------- ------ ----- ----
-- Thomas Neal's Warehouse, Seven Dials
We have agreed terms with an international retailer over the
entire space and expect to conclude the lease shortly.
-- Central Cross, Chinatown
At 31 March 2018, all of the scheme's restaurant space (ERV:
GBP1.5 million) was let or under offer. The ERV of space under
offer was GBP0.8 million, of which lettings in respect of GBP0.4
million have subsequently completed.
We are marketing the retail units fronting Charing Cross Road,
which extend to 34,500 sq. ft.. At 31 March 2018, all of the space
was available to let. Subsequently, we have placed one unit, with
an ERV of GBP0.2 million, under offer and discussions continue in
respect of the remaining units.
-- 57 Broadwick Street, Carnaby
Construction of the retail and restaurant accommodation
completed in autumn 2017 and the space has been let.
The remainder of the scheme, comprising 15,500 sq. ft. of grade
A office accommodation and two new apartments (1,900 sq. ft.), was
completed in late April 2018. We have already let 9,000 sq. ft. of
the office space (GBP0.8m) and are seeing good interest in the
remaining space.
Portfolio investment
Space under refurbishment Capital expenditure Acquisitions
during the period
153,000 sq. ft. GBP14.9m GBP117.4m GBP22.7m
6 months ended Since 31.3.2018
31.3.2018
--------------------------- --------------------- ---------------- -----------------
Asset management activity
Capital expenditure in the wholly-owned portfolio during the
period totalled GBP14.9 million and included schemes extending to
153,000 sq. ft. (8.4% of wholly-owned floor space).
At 31 March 2018, vacant space held for, or under, refurbishment
extended to 93,300 sq. ft. and represented 4.8% of ERV, a decrease
of 1.8% over six months. During the period, schemes with an ERV of
GBP5.0 million completed, including the restaurant and retail
elements of our 57 Broadwick Street project. New schemes with an
ERV of GBP2.7 million commenced.
We have a number of other potential projects at various stages
from initial ideas, seeking planning consent, or awaiting vacant
possession, and continue to identify further opportunities to add
to this pipeline.
Vacant space(1) held for, or under, refurbishment at 31 March
2018
% of total
ERV
Restaurants,
cafés
and leisure Shops Offices Residential Total 31.3.18 30.9.17
GBPm GBPm GBPm GBPm GBPm % %
----------------- ------------- ------ -------- ------------ ------ -------- --------
57 Broadwick
St (see above) - - 1.4 0.1 1.5 1.1% 1.7%
Other schemes 1.5 1.2 1.6 0.9 5.2 3.7% 4.9%
------------- ------ -------- ------------ ------ -------- --------
Total 1.5 1.2 3.0 1.0 6.7 4.8% 6.6%
------------- ------ -------- ------------ ------ -------- --------
Area ('000 sq.
ft.) 14 20 39 20 93
----------------- ------------- ------ -------- ------------ ------ -------- --------
1. Wholly-owned portfolio
Other schemes
We had 39 other schemes underway at 31 March 2018, extending to
75,900 sq. ft. and representing 3.7% of ERV. These included 14,400
sq. ft. of restaurants and cafés (ERV: GBP1.5 million), 20,400 sq.
ft. of shops (ERV: GBP1.2 million), 23,600 sq. ft. of office space
(ERV: GBP1.6 million), and 30 apartments either being created or
up-graded (ERV: GBP0.9 million).
Longmartin
In the Longmartin joint venture, our share of capital
expenditure in the period was GBP1.2 million. At 31 March 2018, the
ERV of our 50% share of space held for refurbishment was GBP1.0
million. This included a mixed-use commercial scheme on the corner
of Long Acre and Upper St Martin's Lane, as well as space where we
have recently secured vacant possession ahead of a project to
increase the restaurant space in St Martin's Courtyard.
Public realm improvements
In our experience, investing in the public realm is an important
catalyst for long-term growth in footfall.
During the period, the scheme to improve the pedestrian
environment on the west section of Earlham Street completed.
Together with the recently-completed improvements to Cambridge
Circus, we are seeing increased footfall already, and expect this
to grow further once the Elizabeth Line opens.
Westminster City Council's public realm scheme in Chinatown,
which we are funding, will complete in the summer. The new
part-pedestrianised public square in Newport Place will provide a
focal point for visitors, and, subject to planning and licensing,
will provide the opportunity for al fresco dining for the first
time in Chinatown.
Acquisitions
The availability of assets to buy which meet our strict criteria
remains limited. However, we continue to identify acquisitions
which offer the potential for future rental growth, either
individually or through combination with our existing
ownerships.
During the six months ended 31 March 2018, we secured
acquisitions totalling GBP117.4 million and since then, we have
contracted a further purchase for GBP22.7 million (including
purchase costs).
72 Broadwick Street, Carnaby
In early December 2017, we acquired the freehold of 72 Broadwick
Street, situated at the eastern gateway to Carnaby, for GBP92.2
million.
The Group already owned an ungeared long leasehold interest over
13,900 sq. ft. of retail and a café space in the lower floors of
the building. Acquiring the freehold gives the Group control over
this important 0.5-acre site, which, in its current configuration,
also provides 54,100 sq. ft. of office accommodation, eleven
apartments extending to 11,200 sq. ft. and a large basement car
park.
Subject to planning and licensing consents, we are looking to
create valuable new retail and restaurant space in the lower floors
of the building, once the office tenant's lease expires in
September 2018. In addition, we will reconfigure and refurbish the
remaining office space, and up-grade the residential accommodation.
We estimate the scheme will take around two years at a cost of
around GBP20 million.
Neal Street, Seven Dials
In late December 2017, we acquired six shops on Neal Street,
Seven Dials, for GBP24.4 million. Adjacent to existing holdings,
these buildings increase our ownership of frontages on the northern
section of Neal Street to around 70%.
Situated close to the Tottenham Court Road Crossrail hub, we
expect the northern end of Neal Street to see material footfall
growth once the Elizabeth Line service starts in December 2018.
Current rental tones on this part of the street are significantly
lower than at the southern end. However, with the benefit of
growing footfall and our careful curation, we expect this
differential in rents will narrow significantly over the medium
term.
Great Marlborough Street, Carnaby
Since 31 March 2018, we have exchanged contracts to acquire the
freehold of 35 and 36 Great Marlborough Street, for GBP22.7 million
(including costs). Located at the busy northern gateway to Carnaby,
the buildings comprise two shops (3,000 sq. ft.) and 4,250 sq. ft.
of office accommodation on the upper floors.
We are discussing plans with Westminster City Council to improve
the streetscape in the vicinity materially. Together with our wider
estate management strategy, this will bring sustained growth in
medium term rental prospects.
90-104 Berwick Street, Soho (forward purchase)
The forward-purchase of this long leasehold interest in 90-104
Berwick Street, for GBP41 million (including acquisition costs), is
now expected to complete in spring 2019, as a result of delayed
completion of the vendor's redevelopment scheme.
Located at the southern end of Berwick Street, the development
will provide 12,500 sq. ft. of retail, a 5,500 sq. ft. supermarket,
a 2,000 sq. ft. restaurant and a 110 bedroom hotel. Both the hotel
and supermarket have been pre-let, representing two thirds of the
expected income from the property. Following this acquisition, we
will own c. 50% of Berwick Street's frontages.
Portfolio valuation
Portfolio valuation(1) Valuation growth(1,2) ERV growth(1,2)
GBP3.86bn 3.0% 8.0% 1.4% 3.0%
6 months 12 months 6 months 12 months
------------------------ --------------- --------------- ------------- --------------
1. Including our 50% share of the Longmartin joint venture. See
presentation of financial information below.
2. Like-for-like. See Glossary for definition.
Like-for-like valuation increase: 3.0%
At 31 March 2018, the valuation of our portfolio, including our
50% share of the Longmartin joint venture, was GBP3.86 billion.
Like-for-like valuation growth over the period was 3.0%, bringing
cumulative growth over the year to 31 March 2018 to 8.0%.
The increase over the first half was driven by:
-- strong investor demand for quality, well-located assets with
the prospect of high occupancy, growth in rents and cash flows, yet
limited exposure to obsolescence;
-- continued improvements we make to accommodation and rental
potential in the portfolio through asset management activity. These
incremental benefits often have a compound effect across nearby
holdings; and
-- sustained occupier demand in our carefully-curated locations
exceeding the supply of available space, helping to deliver further
growth in contracted rents and rental values.
Annualised
current
Topped-up
Valuation initial Equivalent
Fair value % of income ERV Growth(1) yield yield
GBPm portfolio GBPm GBPm % % %
--------------------------- ----------- ----------- ----------- ------ ---------- --------- ----------
Carnaby 1,396 36% 45.3 56.2 +3.2% 3.02% 3.56%
Covent Garden 997 26% 29.7 36.9 +3.5% 2.73% 3.25%
Chinatown 818 21% 24.6 30.9 +2.7% 2.72% 3.35%
Soho 281 7% 8.9 10.8 +4.5% 2.81% 3.41%
Fitzrovia 146 4% 4.7 5.6 +3.8% 2.88% 3.26%
----------- ----------- ----------- ------ ---------- --------- ----------
Wholly-owned portfolio(4) 3,638 94% 113.2 140.4 +3.3% 2.87% 3.41%
Longmartin joint
venture(2) 225 6% 8.3 10.3 -1.9% 3.13% 3.80%
----------- ----------- ----------- ------ ----------
Total portfolio(3,4) 3,863 100% 121.5 150.7 +3.0%
--------------------------- ----------- ----------- ----------- ------ ---------- --------- ----------
1. Like-for-like. See Glossary for definition.
2. Our 50% share.
3. Including our 50% share of the Longmartin joint venture. See
presentation of financial information below.
4. Portfolio excluding non-core asset acquired as part of a portfolio.
Continued strong investment demand and limited supply
With economic and political uncertainty, institutional and
private investor demand for the best quality assets in the best
locations remains strong. The equivalent yield attributed by our
valuers to our wholly-owned portfolio was 3.41% (30.9.2017:
3.46%).
Our portfolio, in the heart of the West End, has a history of
delivering sustainable rental growth and sector outperformance over
the long term. It is therefore unsurprising that existing owners of
the types of buildings we seek to acquire remain reluctant to sell
in this exceptionally prosperous and resilient area, severely
limiting the supply of assets to buy. Together with the strength of
investor demand, this means that when assets become available,
competition is intense. Having patiently assembled our ownerships
over nearly 32 years, it would be virtually impossible, now, to
replicate a portfolio such as ours.
The valuation of the geared long leasehold interest held by the
Longmartin joint venture showed a reduction of 1.9% over the six
months to 31 March 2018. The equivalent yield was unchanged at
3.80%. However, we saw a small reduction in retail ERVs on Long
Acre, reflecting a lack of recent letting evidence and a potential
increase in availability of large shops in this "high street"
location, where rental tones have increased significantly over
recent years. Additionally, the valuation takes into account the
short-term impact of securing vacant possession of space ahead of a
planned restaurant scheme in St Martin's Courtyard.
Potential for greater value
Cushman & Wakefield, independent valuer of our wholly-owned
portfolio, has continued to note that:
-- our portfolio is unusual in its substantial number of
predominantly restaurant, leisure and retail properties in
adjacent, or adjoining, locations in London's West End; and
-- there is a long record of strong occupier demand for these
uses in this location and, as a result, high occupancy levels,
which underpins the long-term prospects for rental growth.
Consequently, they have reiterated to the Board that some
prospective purchasers may recognise the rare and compelling
opportunity to acquire, in a single transaction, substantial parts
of the portfolio, or the portfolio in its entirety. Such parties
may consider a combination of some, or all, parts of the portfolio
to have a greater value than currently reflected in the valuation
included in these interim results, which has been prepared in
accordance with RICS guidelines.
Continuing capture of the reversionary potential
With the benefits of our leasing activity and active asset
management strategy, we have continued our long record of
converting our portfolio's potential reversion into contracted
income and cash flow, whilst further increasing rental values.
Annualised current income has increased, on a like-for-like basis,
by 3.7% and 5.6% over 6 months and 12 months, respectively.
Rental growth(1,2) Annualised Reversionary
current income(1,2) ERV(1,2) potential
GBPm GBPm GBPm
------------------------- --------------------- ----------- -------------
At 30 September 2017 114.1 144.5 30.4
Acquisitions 3.5 4.6 1.1
Disposals (0.3) (0.4) (0.1)
Like-for-like growth(3) 4.2 2.0 (2.2)
--------------------- ----------- -------------
At 31 March 2018 121.5 150.7 29.2
--------------------- ----------- -------------
Like-for-like growth(3)
- 6 months 3.7% 1.4%
- 12 months 5.6% 3.0%
------------------------- --------------------- ----------- -------------
1. Including our 50% share of the Longmartin joint venture. See
presentation of financial information below.
2. Portfolio excluding a non-core asset acquired as part of a portfolio.
3. See Glossary for definition.
Total ERV, which is based on current established rental tones,
was assessed by our valuers at GBP150.7 million, 24.0% higher than
annualised current income. Like-for-like ERV growth over 6 months
was 1.4%, bringing the total for the past 12 months to 3.0%.
Components of the reversionary potential(1)
Wholly-owned Longmartin Total
GBPm GBPm GBPm How it will be realised
-------------------------- ------------- ----------- ------ ---------------------------------
Contracted income 2.5 - 2.5 Expiry of rent-free periods
EPRA vacancy 7.9 0.5 8.4 Letting of space
Space held for, Completion and letting of
or under, refurbishment 6.7 1.0 7.7 schemes
Through the normal cycle
of rent reviews, lease renewals
and lettings. This is typically
converted to income over
Under-rented leases 10.1 0.5 10.6 a 3 - 5 year period.
-------------------------- ------------- ----------- ------ ---------------------------------
27.2 2.0 29.2
-------------------------- ------------- ----------- ------ ---------------------------------
1. Including our 50% share of the Longmartin joint venture. See
presentation of financial information below.
Financial results
Reported results
+3.1%(1) +5.5%(2) +20.8%(2) +13.6%(2) +5.1%(2)
GBP9.78 GBP46.2m GBP123.7m 41.7p 8.3p
NAV(3) Net property Profit after Basic EPS Interim dividend
income tax
---------------- --------------- --------------- ----------- --------------------
EPRA(3) results
+3.3%(1) +9.6%(2) +2.4%(2)
GBP9.83 +4.1% GBP25.0m 8.4p
EPRA NAV NAV return(4) EPRA earnings EPRA EPS
---------------- --------------- --------------- ----------- --------------------
1. vs. 30.9.2017
2. vs. 6 months ended 31.3.2017
3. An alternative performance measure ("APM"). See below.
4. 6 month period ended 31.3.2018
Presentation of financial information
Our property portfolio is a combination of properties which are
wholly owned by the Group and a 50% share of property held in joint
venture.
The financial statements, prepared under IFRS, includes the
Group's interest in its joint venture as one-line items in the
Income Statement and Balance Sheet. The analysis below is based on
the IFRS financial statements.
Internally, management consider the valuation of properties and
our debt position on a proportionally consolidated basis, including
our 50% share of the joint venture. Consequently, the analysis of
the valuation above and the finance review below are presented on
this proportionally consolidated basis.
We consider that this presentation better explains to
stakeholders the Group's activities and financial position.
Measures presented on a proportional consolidation basis are
alternative performance measures as they are not defined under
IFRS. Further details are set out below.
Income statement
Six months ended Year ended
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
Net property income 46.2 43.8 88.3
Administrative expenses (6.8) (6.8) (14.1)
Valuation gains and profits on disposal 101.8 61.9 231.7
---------- --------- ----------
Operating profit 141.2 98.9 305.9
Net finance costs (15.9) (16.1) (32.7)
Interest rate swaps fair value movements - 16.1 22.0
Share of Longmartin post-tax results (1.6) 3.5 6.4
---------- --------- ----------
Profit before tax 123.7 102.4 301.6
Tax - - -
---------- --------- ----------
Reported earnings for the period 123.7 102.4 301.6
---------- --------- ----------
Basic earnings per share 41.7p 36.7p 108.1p
----------------------------------------- ---------- --------- ----------
Reported earnings
Profit after tax for the six months was GBP123.7 million
(31.3.2017: GBP102.4 million) and basic earnings per share was
41.7p (31.3.2017: 36.7p). The increase in profit after tax was
largely due to:
-- the revaluation surplus and disposal profits in the
wholly-owned portfolio, which contributed GBP101.8 million
(31.3.2017: GBP61.9 million); and
-- increased net property income, which contributed GBP46.2
million (31.3.2017: GBP43.8 million).
This was partly offset by a post-tax loss in the joint venture,
our share of which reduced earnings by GBP1.6 million in the
current period, compared with a profit during the comparable period
last year of GBP3.5 million.
Additionally, earnings were boosted in the comparative period
last year by a gain on the fair value of interest rate swaps of
GBP16.1 million. These swaps were cancelled in September 2017.
EPRA earnings(1)
As is usual practice in our sector, we produce alternative
measures for certain indicators, including earnings, making
adjustments set out by EPRA in its Best Practice Recommendations.
EPRA earnings are a measure of the level of underlying operating
results and an indication of the extent to which current dividend
payments are supported by recurring earnings. In our case, EPRA
earnings exclude valuation movements in respect of our properties,
profits on disposal of investment properties, and deferred tax
arising in our Longmartin joint venture. In 2017, it also excluded
valuation movements in respect of interest rate swaps, which were
terminated in September 2017. EPRA earnings are reconciled
below.
Six months ended Year ended
EPRA earnings(1) 31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
---------------------------------------------- ---------- --------- ----------
IFRS profit after tax 123.7 102.4 301.6
Adjusted for:
- Change in value of investment properties (97.6) (61.6) (230.6)
- Profit on disposal of investment properties (4.2) (0.3) (1.1)
- Change in fair value of financial
instruments - (16.1) (22.0)
Adjustments in respect of the Longmartin
joint venture:
- Change in value of investment properties 4.1 (1.5) (2.6)
- Deferred tax (1.0) (0.1) (0.1)
---------- --------- ----------
EPRA earnings 25.0 22.8 45.2
---------- --------- ----------
EPRA EPS(1) 8.4p 8.2p 16.2p
---------------------------------------------- ---------- --------- ----------
1. An alternative performance measure ("APM"). See below.
EPRA earnings increased by 9.6% to GBP25.0 million (31.3.2017:
GBP22.8 million) and EPRA EPS amounted to 8.4p, 2.4% above the
first half last year (31.3.2017: 8.2p). The smaller relative
increase in EPRA EPS, compared with that for EPRA earnings,
reflects the additional shares in issue following the equity
placing in December. We expect to deliver further earnings as the
placing proceeds are fully deployed.
The increase in EPRA earnings was principally driven by growth
in net property income and lower net finance costs, partly offset
by lower net property income in the Longmartin joint venture due to
reconfiguration scheme vacancy.
EPRA earnings(1) GBPm
--------------------------- -----
Six months ended 31.3.2017 22.8
Net property income 2.4
Net finance costs 0.2
Longmartin (0.4)
-----
Six months ended 31.3.2018 25.0
--------------------------- -----
1. An alternative performance measure ("APM"). See below.
Net property income
Rents receivable have increased by 9.2% to GBP55.6 million
(31.3.2017: GBP50.9 million). Like-for-like growth, excluding the
impact of acquisitions and disposals, was 6.8%, which reflects the
continued conversion of our portfolio's reversionary potential into
contracted income. Turnover-related rental top-ups made a useful
contribution, totalling GBP0.6 million in the period (31.3.2017:
GBP0.5 million). Acquisitions accounted for GBP1.4 million of the
increase, whilst disposals reduced rents receivable compared with
the same period last year by GBP0.2 million.
Irrecoverable property charges were GBP9.4 million (31.3.2017:
GBP7.1 million). The increase in property operating costs
reflects:
-- Higher levels of management and refurbishment activity across
the portfolio, and associated costs which we expense rather than
capitalise, in accordance with our accounting policies.
-- Additional expenditure to enhance general security
arrangements across our high-profile locations.
-- Growing our promotional and social media activities, which
are an essential aspect of our strategy to drive footfall to our
areas.
Net property income was GBP46.2 million, up 5.5% on the same
period last year (31.3.2017: GBP43.8 million).
Administrative expenses
Administrative expenses totalled GBP6.8 million (31.3.2017:
GBP6.8 million) and included a non-cash accounting charge for
equity-settled remuneration of GBP0.4 million (31.3.2017: GBP0.7
million).
Valuation surplus and disposal profits
Our wholly-owned portfolio's revaluation surplus was GBP97.6
million (31.3.2017: GBP61.6 million), following like-for-like
valuation growth of 3.3%, principally driven by a like-for-like
increase in ERV of 1.5%, and yield compression of 5 basis points.
See also above.
During the six months ended 31 March 2018, we sold two non-core
properties which comprised two shops, 1,875 sq. ft. of office space
and three apartments. Sold at 48.3% over book value at 30 September
2017, the disposals generated net proceeds, after sale costs, of
GBP12.9 million and a surplus of GBP4.2 million.
Net finance costs
Net finance costs decreased by GBP0.2 million to GBP15.9 million
(31.3.2017: GBP16.1 million). This reflects the benefits of reduced
borrowing costs following the refinancing reported last year, and
interest income following the equity placing. This was partly
offset by an accelerated write-off of previously unamortised loan
issue costs, totalling GBP0.3 million, following refinancing
activity in February 2018 (see below).
Share of Longmartin post-tax results
Following a small reduction in the valuation of Longmartin's
investment property (see above), the joint venture delivered a loss
after tax for the period, our 50% share of which was GBP1.6 million
(31.3.2017: profit of GBP3.5 million).
Our share of the revaluation deficit was GBP4.1 million,
compared with a surplus in the same period last year of GBP1.5
million. Excluding this revaluation loss and our share of the
related deferred tax credit totalling GBP1.0 million (31.3.2017:
GBP0.1 million), our share of EPRA earnings from the Longmartin
joint venture decreased by GBP0.4 million to GBP1.5 million
(31.3.2017: GBP1.9 million), largely due to scheme-related vacancy
during the period.
Tax
As a REIT, the Group's activities are largely exempt from
corporation tax and, as a result, there is no tax charge in the
period (31.3.2017: GBPNil).
Interim dividend
The Board has declared an interim dividend of 8.3p per share, an
increase of 5.1% on last year's interim dividend of 7.9p. The total
distribution will be GBP25.5 million, 15.9% higher than last year
(31.3.2017: GBP22.0 million), reflecting the increased number of
shares now in issue. The interim dividend, to be paid on 6 July
2018, will be paid as a PID.
As a REIT, we are required to distribute a minimum of 90% of net
rental income, calculated by reference to tax rather than
accounting rules, as a PID. Notwithstanding this, our dividend
policy is to maintain steady growth in dividends, reflecting the
long-term trend in our income and EPRA earnings, adjusted to add
back the non-cash accounting charge for equity-settled
remuneration. To the extent that dividends for a year exceed the
amount available to distribute as a PID, we pay the balance as
ordinary dividends.
The dividend is covered 1.01 times by EPRA earnings and 1.03
times by adjusted earnings, after adding back the non-cash
accounting charge in the period for equity-settled remuneration of
GBP0.4 million.
The Board monitors the Group's ability to pay dividends out of
available resources and distributable reserves.
Balance Sheet
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
------------------------------------- ---------- ---------- ----------
Investment properties 3,628.5 3,216.4 3,407.3
Investment in joint venture 144.9 147.1 148.0
Net debt (779.1) (831.1) (914.2)
Fair value of financial instruments - (63.9) -
Other net assets 12.0 0.4 5.8
---------- ---------- ----------
Net assets 3,006.3 2,468.9 2,646.9
---------- ---------- ----------
Net asset value per share(1) GBP9.78 GBP8.85 GBP9.49
------------------------------------- ---------- ---------- ----------
1. An alternative performance measure ("APM"). See below.
Net assets
Net assets increased by GBP359.4 million, predominantly due to
the equity placing in December, which added GBP260.4 million, and
profit after tax of GBP123.7 million, partly offset by the final
dividend for 2017 which totalled GBP25.1 million.
EPRA NAV(1)
EPRA NAV is a sector-recognised benchmark, which makes
adjustments to reported NAV to provide a measure of the fair value
of net assets on a long-term basis. Assets and liabilities which
are not expected to crystallise in normal circumstances are
excluded. In our case, the calculation excludes deferred tax
related to property valuation surpluses in the Longmartin joint
venture and, in the six months ended 31 March 2017, the fair value
of interest rate swaps. Having terminated these interest rate swaps
in September 2017, there is no adjustment to EPRA NAV in respect of
these at 30 September 2017 nor 31 March 2018.
EPRA NAV(1) 31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
-------------------------------------------- ---------- ---------- ----------
IFRS net assets 3,006.3 2,468.9 2,646.9
Effect of exercise of options 0.5 0.5 0.5
---------- ---------- ----------
Diluted net assets 3,006.8 2,469.4 2,647.4
Adjusted for:
- 63.9 -
* Fair value of financial instruments
Adjustments in respect of the Longmartin
joint venture:
* Deferred tax 16.9 17.9 17.9
---------- ---------- ----------
EPRA NAV 3,023.7 2,551.2 2,665.3
---------- ---------- ----------
EPRA NAV per share GBP9.83 GBP9.12 GBP9.52
EPRA NAV growth(2) 3.3% 2.7% 7.2%
Net asset value return(1,2) 4.1% 3.6% 8.9%
-------------------------------------------- ---------- ---------- ----------
1. An alternative performance measure ("APM"). See below.
2. 31.3.2018 and 31.3.2017: growth/return over six months;
30.9.2017: growth/return over twelve months
EPRA NAV per share increased by 31p (3.3%) to GBP9.83 over the
period (30.9.2017: GBP9.52), bringing growth over twelve months to
7.8%. During the six months ended 31 March 2018, the revaluation
surplus in the wholly-owned portfolio added 32p. EPRA earnings of
8.4p per share were offset by the final dividend for 2017 (8.1p per
share). Disposal profits contributed 1p and our share of the
revaluation deficit in the Longmartin joint venture reduced NAV per
share by 1p.
EPRA NAV(1) Pence per share
------------------------------------------- ---------------
September 2017 952
EPRA earnings 8
Dividends (8)
Portfolio revaluation and disposal profits 32
Share placing/rounding (1)
---------------
March 2018 983
------------------------------------------- ---------------
1. An alternative performance measure ("APM"). See below.
Cash flows and net debt
Net debt decreased by GBP135.1 million to GBP779.1 million over
the period (30.9.2017: GBP914.2 million). The major cash flows
were:
-- net proceeds from the equity raise of GBP260.4 million.
-- net capital investment in our portfolio of GBP121.1 million.
-- operating cash inflow totalling GBP23.0 million.
-- dividends paid amounting to GBP25.1 million.
Finance review
21.7% 2.5x 3.2% 10.7 years
Loan-to-value(1,3,4) Interest cover(1,4) Blended cost of Weighted average debt
debt(1,2,4) maturity(1)
---------------------- --------------------- ----------------- -----------------------
1. Including our 50% share of Longmartin debt. See presentation of financial information above.
2. Including non-utilisation fees on undrawn bank facilities.
3. Based on net debt.
4. An alternative performance measure ("APM"). See below.
Share issue
On 6 December 2017, we strengthened our equity base, issuing
27,855,508 million new ordinary shares, representing approximately
9.98% of our issued share capital at the time. The shares were
issued at GBP9.52 per share, equivalent to EPRA NAV at 30 September
2017. Net proceeds, after issue costs, of GBP260.4 million funded
the acquisition of 72 Broadwick Street, Carnaby, with the balance
available for:
-- the acquisition of a long-leasehold interest in 90-104
Berwick Street, Soho for GBP41 million;
-- anticipated capital expenditure at 72 Broadwick Street,
Carnaby, currently estimated at GBP20 million; and
-- further acquisitions and value-enhancing schemes.
By 31 March 2018, approximately 79% of the net proceeds had been
spent or earmarked for acquisitions and schemes.
The equity issue has increased the resources available for
further investment in our portfolio. Once fully deployed, we shall
raise additional new debt facilities to support our long-term
investment strategy, whilst maintaining a balance between equity
and debt which the Board considers appropriate for this
business.
Related party disclosures relevant to the share issue are set
out in note 15 to the attached condensed financial statements.
Refinancing bank facilities
In February 2018, we completed the refinancing of our revolving
bank facilities with arrangements as follows:
-- GBP125m facility extended from 2020 to 2022.
-- new GBP100m facility maturing in 2023 replacing a GBP150m
facility which was due to mature later this year.
Following this, our weighted average debt maturity has increased
to 10.7 years, with no contractual maturities until 2022.
Debt maturity profile
Year of maturity Facility type Total facility
GBPm
------------------ ----------------------------- ---------------
2022 Bank 125
2023 Bank 100
Term loan (Longmartin joint
2026 venture) 60(1)
2027 Bonds 290
2029 Term loan 135
2030 Term loan 130
2031 Bonds 285
2035 Term loan 120
------------------ ----------------------------- ---------------
1. Shaftesbury Group's 50% share. This loan is without recourse to Shaftesbury.
At 31 March 2018, our cash and committed undrawn facilities
totalled GBP405.7 million (30.9.2017: GBP320.6 million). The
blended cost of debt was 3.2%, 10 basis points lower than at 30
September 2017.
Net debt summary
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
----------------------------------------------------- ---------- ---------- ----------
Debt excluding Longmartin JV
* Fixed/hedged debt 959.8 794.8 959.8
- 46.6 -
* Drawn unhedged bank debt
---------- ---------- ----------
Wholly-owned 959.8 841.4 959.8
Longmartin non-recourse debt (50% share) 60.0 60.0 60.0
---------- ---------- ----------
Total debt(1,5) 1,019.8 901.4 1,019.8
Cash and cash equivalents
* Wholly-owned (180.7) (10.3) (45.6)
* Longmartin (50% share) (1.7) (2.2) (0.6)
---------- ---------- ----------
Net debt (including our 50% share of Longmartin)(5) 837.4 888.9 973.6
Less: our share of Longmartin net debt (58.3) (57.8) (59.4)
---------- ---------- ----------
Reported net debt 779.1 831.1 914.2
----------------------------------------------------- ---------- ---------- ----------
Debt metrics(1)
Undrawn floating rate facilities (GBPm) 225.0 178.4 275.0
Loan-to-value(4,5) 21.7% 25.7% 26.7%
Gearing(3,4,5) 27.7% 34.8% 36.5%
Interest cover(5) 2.5x 2.3x 2.3x
% debt fixed 100% 95% 100%
Blended cost of debt(2,5) 3.2% 3.7% 3.3%
Marginal cost of undrawn floating rate
facilities 1.5% 1.3% 1.2%
Weighted average maturity (years) 10.7 10.3 10.3
----------------------------------------------------- ---------- ---------- ----------
1. Including our 50% share of Longmartin debt. See presentation of financial information above.
2. Including non-utilisation fees on undrawn bank facilities.
3. Based on EPRA net assets.
4. Based on net debt.
5. An alternative performance measure ("APM"). See below.
Brian Bickell Chris Ward
Chief Executive Finance Director
21 May 2018
Alternative Performance Measures (APMs)
The Group has applied the European Securities and Markets
Authority (ESMA) guidelines on alternative performance measures in
these interim results. An APM is a financial measure of historical
or future financial performance, position or cash flows of the
Group which is not a measure defined or specified in IFRS.
Set out below is a summary of APMs used in these interim
results. EPRA performance measures are a set of standard
disclosures for the property industry, as defined by EPRA in its
Best Practices Recommendations.
APM Nearest IFRS measure Explanation and reconciliation
------------------------ ------------------------------ -------------------------------
EPRA earnings and Profit and total comprehensive Note 18 and Financial results
earnings per share income for the year (above)
Basic earnings per share
------------------------ ------------------------------ -------------------------------
Adjusted earnings Basic earnings per share Financial results (above)
per share
------------------------ ------------------------------ -------------------------------
Net asset value per Net assets attributable Note 18
share to shareholders
------------------------ ------------------------------ -------------------------------
Diluted net asset Net assets attributable Note 18
value per share to shareholders
------------------------ ------------------------------ -------------------------------
EPRA net assets and Net assets Note 18 and Financial results
NAV (above)
------------------------ ------------------------------ -------------------------------
Net asset value return N/A Note 18 and Financial results
(above)
------------------------ ------------------------------ -------------------------------
Total portfolio Investment properties Portfolio valuation (above)
------------------------ ------------------------------ -------------------------------
Valuation growth Net surplus on revaluation Portfolio valuation (above)
of investment properties and Financial results (above)
------------------------ ------------------------------ -------------------------------
Portfolio net investment N/A Glossary
------------------------ ------------------------------ -------------------------------
Total debt Borrowings Note 18 and Financial results
(above)
------------------------ ------------------------------ -------------------------------
Net debt Borrowings less cash Note 18 and Financial results
and cash equivalents (above)
------------------------ ------------------------------ -------------------------------
Loan-to-value N/A Note 18 and Financial results
(above)
------------------------ ------------------------------ -------------------------------
Gearing N/A Note 18 and Financial results
(above)
------------------------ ------------------------------ -------------------------------
Blended cost of debt N/A Note 18 and Financial results
(above)
------------------------ ------------------------------ -------------------------------
Interest cover N/A Note 18 and Financial results
(above)
------------------------ ------------------------------ -------------------------------
Where this report uses like-for-like comparisons, these are
defined within the Glossary.
Portfolio analysis
Wholly-
Covent owned Total
At 31 March 2018 Note Carnaby Garden Chinatown Soho Fitzrovia portfolio Longmartin(1) portfolio
----- -------- -------- ---------- ------- ---------- ---------- -------------- ----------
Fair value
Portfolio (GBPm) 1,14 1,396.1 997.3 817.5 281.1 146.3 3,638.3 224.7 3,863.0
-------------- ----------- ----- -------- -------- ---------- ------- ---------- ---------- -------------- ----------
% of total
fair value 36% 26% 21% 7% 4% 94% 6% 100%
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- -------------- ----------
Current income
(GBPm) 2,14 45.3 29.7 24.6 8.9 4.7 113.2 8.3 121.5
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- -------------- ----------
ERV (GBPm) 3,14 56.2 36.9 30.9 10.8 5.6 140.4 10.3 150.7
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- -------------- ----------
Restaurants,
cafés
and leisure Number 59 90 79 31 24 283 9
-------------- ----------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
Area - sq.
ft. 111,000 176,000 206,000 59,000 50,000 602,000 39,000
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
% of current
income 4 18% 38% 62% 40% 53% 36% 14%
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
% of ERV 4 16% 34% 60% 38% 53% 34% 13%
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
Average unexpired
lease length
- years 5 10 8 11 9 7 9 14
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
Shops Number 97 101 61 36 9 304 22
-------------- ----------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
Area - sq.
ft. 180,000 147,000 92,000 44,000 14,000 477,000 73,000
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
% of current
income 4 44% 29% 21% 25% 13% 32% 35%
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
% of ERV 4 43% 33% 24% 29% 13% 34% 40%
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
Average unexpired
lease length
- years 5 4 3 4 4 5 4 3
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
Area - sq.
Offices ft. 299,000 84,000 25,000 34,000 10,000 452,000 102,000
-------------- ----------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
% of current
income 4 31% 12% 4% 15% 8% 18% 36%
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
% of ERV 4 35% 15% 4% 17% 7% 20% 34%
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
Average unexpired
lease length
- years 5 3 3 3 2 2 3 5
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
Residential Number 109 214 136 68 51 578 75
-------------- ----------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
Area - sq.
ft. 67,000 133,000 94,000 37,000 25,000 356,000 55,000
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
% of current
passing rent 4 7% 21% 13% 20% 26% 14% 15%
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
% of ERV 4 6% 18% 12% 16% 27% 12% 13%
-------------------------- ----- -------- -------- ---------- ------- ---------- ---------- --------------
1. Shaftesbury Group's 50% share
Basis of valuation
Wholly-
At 31 March Covent owned
2018 Note Carnaby Garden Chinatown Soho Fitzrovia portfolio Longmartin
Overall
initial
yield 7 2.89% 2.64% 2.66% 2.77% 2.70% 2.75% 3.10%
----- -------------- -------------- -------------- -------------- -------------- ---------- -------------
Topped-up
initial
yield 8 3.02% 2.73% 2.72% 2.81% 2.88% 2.87% 3.13%
----- -------------- -------------- -------------- -------------- -------------- ---------- -------------
Overall
equivalent
yield 9 3.56% 3.25% 3.35% 3.41% 3.26% 3.41% 3.80%
----- -------------- -------------- -------------- -------------- -------------- ---------- -------------
Tone of
restaurant
equivalent
yields 10 3.40%-3.80% 3.35%-3.90% 3.40%-3.75% 3.40%-3.75% 3.25%-3.75% 3.75%-4.00%
----- -------------- -------------- -------------- -------------- -------------- ---------- -------------
Tone of
restaurant
ERVs - GBP
per sq. GBP270-GBP415
ft. 10 GBP120-GBP153 GBP55-GBP178 (ITZA) GBP110-GBP135 GBP93-GBP120 GBP90-GBP138
----- -------------- -------------- -------------- -------------- -------------- ---------- -------------
Tone of
retail
equivalent
yields 10 3.30%-3.85% 3.00%-3.90% 3.40%-4.25% 3.40%-4.25% 3.30%-4.35% 3.40%-4.15%
----- -------------- -------------- -------------- -------------- -------------- ---------- -------------
Tone of
retail ERVs
- ITZA GBP
per sq.
ft. 10 GBP125-GBP535 GBP110-GBP710 GBP150-GBP355 GBP170-GBP305 GBP100-GBP215 GBP94-GBP675
----- -------------- -------------- -------------- -------------- -------------- ---------- -------------
Tone of
office
equivalent
yields 10 3.75%-4.50% 4.00%-4.25% 4.25% 4.25%-4.50% 4.00%-4.35% 4.00%-4.50%
----- -------------- -------------- -------------- -------------- -------------- ---------- -------------
Tone of
office ERVs
- GBP per
sq. ft. 10 GBP58-GBP88 GBP53-GBP75 GBP43-GBP65 GBP53-GBP73 GBP48-GBP60 GBP63-GBP78
----- -------------- -------------- -------------- -------------- -------------- ---------- -------------
Average
residential
ERVs - GBP
per sq.
ft. per
annum 10 GBP50 GBP49 GBP42 GBP48 GBP57 GBP48
----- -------------- -------------- -------------- -------------- -------------- ---------- -------------
Notes
1. The fair values at 31 March 2018 (the "valuation date") shown
in respect of the individual villages are, in each case, the
aggregate of the fair values of several different property
interests located within close proximity which, for the purpose of
this analysis, are combined to create each village. The different
interests within each village were not valued as a single lot.
2. Current income includes total annualised actual and
'estimated income' reserved by leases. No rent is attributed to
leases which were subject to rent-free periods at the valuation
date. Current income does not reflect any ground rents, head rents
nor rent charges and estimated irrecoverable outgoings at the
valuation date. 'Estimated income' refers to gross estimated rental
values in respect of rent reviews outstanding at the valuation date
and, where appropriate, ERV in respect of lease renewals
outstanding at the valuation date where the fair value reflects
terms for a renewed lease.
3. ERV is the respective valuers' opinion of the rental value of
the properties, or parts thereof, reflecting the terms of the
relevant leases or, if appropriate, the fact that certain of the
properties, or parts thereof, have been valued on the basis of
vacant possession and the assumed grant of a new lease. Where
appropriate, ERV assumes completion of developments which are
reflected in the valuations. ERV does not reflect any ground rents,
head rents nor rent charges and estimated irrecoverable
outgoings.
4. The percentage of current income and the percentage of ERV in
each of the use sectors are expressed as a percentage of total
income and total ERV for each village.
5. Average unexpired lease length has been calculated by
weighting the leases in terms of current rent reserved under the
relevant leases and, where relevant, by reference to tenants'
options to determine leases in advance of expiry through effluxion
of time.
6. Where mixed uses occur within single leases, for the purpose
of this analysis, the majority use by rental value has been
adopted.
7. The initial yield is the net initial income at the valuation
date expressed as a percentage of the gross valuation. Yields
reflect net income after deduction of any ground rents, head rents
and rent charges and estimated irrecoverable outgoings at the
valuation date.
8. The topped-up initial yield, ignoring contractual rent free
periods, has been calculated as if the contracted rent is payable
from the valuation date and as if any future stepped rental uplifts
under leases had occurred.
9. Equivalent yield is the internal rate of return, being the
discount rate which needs to be applied to the expected flow of
income so that the total amount of income so discounted at this
rate equals the capital outlay at values current as of the
valuation date. The equivalent yield shown for each village has
been calculated by merging together the cash flows and fair values
of each of the different interests within each village and
represents the average equivalent yield attributable to each
village from this approach.
10. The tone of rental values and yields is the range of rental
values or yields attributed to the majority of the properties.
11. All commercial floor areas are net lettable. All residential
floor areas are gross internal.
12. For presentation purposes some percentages have been rounded to the nearest integer.
13. The analysis includes accommodation which is awaiting, or
undergoing, refurbishment or development and is not available for
occupation at the date of valuation.
14. The analysis excludes a non-core asset, acquired as part of a portfolio.
Principal Risks and Uncertainties
The principal strategic risks and uncertainties are those which
might prevent the Group from achieving its goal of long-term
sustainable growth in rental income. The risks and uncertainties
facing the Group for the remaining six months of the financial year
are summarised below. These risks and uncertainties are consistent
with those set out on pages 61 to 63 in the Annual Report for the
year ended 30 September 2017. Details of how we manage risk are set
out on pages 59 to 60 of the Annual Report.
Geographic concentration risk
Risk of a sustained fall in visitor numbers and/or spending
Risk Potential impact Mitigation
----------------------------------- -------------------------------------------------- ------------------------------------------------------------
Events which discourage
visitors to the West * Reduced visitor numbers, spending and occup * Inherent risk given the geographic concentration of
End e.g. ier demand our investments in a high profile location
* Acts or threats of terrorism
* Reduced rental income and/or capital values * Insurance cover maintained for terrorism and
* Health concerns (e.g. pandem associated loss-of-rent
ics)
* Potential increased vacancy and declining
profitability * Close liaison with statutory authorities to maximise
safety of visitors
* Damage to property
* Detailed emergency response plans
----------------------------------- -------------------------------------------------- ------------------------------------------------------------
Competing destinations
lead to long-term decline * Reduced visitor numbers and occupier demand * Ensure our villages maintain a distinct identity
in footfall in our villages
* Reduced rental income and/or capital values * Management strategies to create prosperous
destinations within which tenants can operate
* Potential increased vacancy and declining
profitability * Seek out new concepts, brands and ideas to keep our
villages vibrant and appealing
* Consistent strategy on tenant mix which evolves over
time
* Marketing and promotion of our villages
* KPI to deliver sustainable rental growth
* Regular Board monitoring of performance and prospects
----------------------------------- -------------------------------------------------- ------------------------------------------------------------
Regulatory risk
Risk Potential impact Mitigation
-------------- --------------------------------------------- ------------------------------------------------------------
All our
properties * Limit our ability to optimise revenues * Ensure our properties are operated in compliance with
are local regulations
in the
boroughs of * Reduced profitability
Westminster * Make representations on proposed policy changes, to
and Camden. ensure our views and experience are considered
Changes to * Reduced capital values
national
or local * Mix of uses in our portfolio means we are not reliant
policies, on income from one particular use
particularly
planning and
licensing,
could have a
significant
impact on
our ability
to maximise
the
long-term
potential of
our assets
-------------- --------------------------------------------- ------------------------------------------------------------
Economic risk
Risk Potential impact Mitigation
---------------------- ------------------------------ --------------------------------------------------------------
Economic uncertainty
and lower confidence * Pressure on rents * Focus on assets, locations and uses which have
could reduce consumer historically proved to be economically resilient
spending. Together
with * Declining profitability
upward cost * Tourism and retail/leisure spending in the West End
pressures, are less reliant on the wider-UK economy
this could reduce * Reduced capital values
tenant
profitability and * Promoting our areas
occupier
demand
* Diverse tenant base with limited exposure to any one
tenant
* Tenant deposits held against unpaid rent obligations
at 31 March 2018: GBP19.2m
---------------------- ------------------------------ --------------------------------------------------------------
Decline in the UK
real * Reduced capital values * Focus on assets, locations and uses:
estate market due to
macro-economic
factors * Decrease in NAV, ampli * where there is a structural imbalance between
e.g. global political fied by gearing availability of space and demand; and
landscape, currency
expectations, bond
yields, * Loan covenant defaults * which have historically proved to be economically
interest rate resilient and have demonstrated much lower valuation
expectations, volatility than the wider market
availability and cost
of finance, relative
attractiveness of * Regular review of investment market conditions
property including bi-annual external valuations
compared with other
asset classes
* Conservative levels of leverage, with the majority at
fixed rates
* Spread of sources of finance and debt maturities
* Quarterly forecasts including covenant headroom
review
* Pool of uncharged assets available to top up security
held by lenders
---------------------- ------------------------------ --------------------------------------------------------------
Unaudited Group Statement of Comprehensive Income
For the six months ended 31 March 2018
Six months Six months Year
ended ended ended
31.3.2018 31.3.2017 30.9.2017
Notes GBPm GBPm GBPm
----------------------------------------- ------- ---------- ---------- ----------
Revenue 2 60.9 54.9 111.5
Property charges 3 (14.7) (11.1) (23.2)
---------- ---------- ----------
Net property income 46.2 43.8 88.3
Administrative expenses (6.8) (6.8) (14.1)
---------- ---------- ----------
Operating profit before investment
property disposals and valuation
movements 39.4 37.0 74.2
Profit on disposal of investment
properties 4 4.2 0.3 1.1
Net surplus on revaluation of investment
properties 7 97.6 61.6 230.6
---------- ---------- ----------
Operating profit 141.2 98.9 305.9
Finance income 0.3 - 0.1
Finance costs 5 (16.2) (16.1) (32.8)
Change in fair value of derivative
financial instruments 14 - 16.1 22.0
Share of post-tax (loss)/profit from
joint venture 9 (1.6) 3.5 6.4
---------- ---------- ----------
Profit before tax 123.7 102.4 301.6
Tax charge for the period 6 - - -
---------- ---------- ----------
Profit and total comprehensive income
for the period 123.7 102.4 301.6
---------- ---------- ----------
Earnings per share: 18
Basic 41.7p 36.7p 108.1p
Diluted 41.6p 36.6p 107.9p
EPRA 8.4p 8.2p 16.2p
----------------------------------------- ------- ---------- ---------- ----------
Please see above for an explanation of the EPRA measures used in
these financial statements.
Unaudited Group Balance Sheet
As at 31 March 2018
31.3.2018 31.3.2017 30.9.2017
Notes GBPm GBPm GBPm
--------------------------------- ----- --------- --------- ---------
Non-current assets
Investment properties 7 3,628.5 3,216.4 3,407.3
Accrued income 8 9.9 9.5 9.5
Investment in joint venture 9 144.9 147.1 148.0
Property, plant and equipment 1.3 1.3 1.2
Other receivables 11 3.7 3.7 3.7
3,788.3 3,378.0 3,569.7
Current assets
Trade and other receivables 10 24.1 16.8 22.0
Cash and cash equivalents 11 180.7 10.3 45.6
--------- --------- ---------
Total assets 3,993.1 3,405.1 3,637.3
--------- --------- ---------
Current liabilities
Trade and other payables 12 38.8 40.3 41.6
Non-current liabilities
Borrowings 13 948.0 832.0 948.8
Derivative financial instruments 14 - 63.9 -
--------- --------- ---------
Total liabilities 986.8 936.2 990.4
--------- --------- ---------
Net assets 3,006.3 2,468.9 2,646.9
--------- --------- ---------
Equity
Share capital 15 76.8 69.8 69.8
Share premium 378.4 124.8 124.9
Share-based payments reserve 0.8 2.3 3.0
Retained earnings 2,550.3 2,272.0 2,449.2
--------- --------- ---------
Total equity 3,006.3 2,468.9 2,646.9
--------- --------- ---------
Net asset value per share: 18
Basic GBP9.78 GBP8.85 GBP9.49
Diluted GBP9.77 GBP8.83 GBP9.46
EPRA GBP9.83 GBP9.12 GBP9.52
--------------------------------- ----- --------- --------- ---------
Unaudited Group Cash Flow Statement
For the six months ended 31 March 2018
Six months Six months Year
ended ended ended
31.3.2018 31.3.2017 30.9.2017
Notes GBPm GBPm GBPm
------------------------------------------ ----- ---------- ---------- ----------
Cash flows from operating activities
Cash generated from operating activities 17 38.6 37.6 76.7
Interest received 0.3 - 0.1
Interest paid (15.9) (16.0) (32.8)
---------- ---------- ----------
Net cash generated from operating
activities 23.0 21.6 44.0
---------- ---------- ----------
Cash flows from investing activities
Investment property acquisitions (117.4) (28.3) (40.1)
Investment property disposals 12.9 5.2 13.4
Capital expenditure on investment
properties (16.6) (21.2) (41.5)
Purchase of property, plant and equipment (0.3) (0.1) (0.1)
Dividends received from joint venture 1.5 2.8 4.8
Increase in loans to joint venture (1.5) - -
Net cash used in investing activities (121.4) (41.6) (63.5)
---------- ---------- ----------
Cash flows from financing activities
Proceeds from exercise of share options - - 0.1
Proceeds from share placing 15 265.2 - -
Share placing costs 15 (4.8) - -
Proceeds from borrowings 72.0 88.9 146.5
Repayment of borrowings (72.0) (208.0) (437.2)
Proceeds from issue of mortgage bonds - 203.2 493.2
Repayment of debenture stock - (10.4) (10.4)
Loan issue costs (1.8) (3.6) (6.1)
Termination of derivative financial
instruments - (34.1) (92.1)
Equity dividends paid 16 (25.1) (21.3) (44.5)
---------- ---------- ----------
Net cash from financing activities 233.5 14.7 49.5
---------- ---------- ----------
Net change in cash and cash equivalents 135.1 (5.3) 30.0
Cash and cash equivalents at the
beginning of the period 11 45.6 15.6 15.6
---------- ---------- ----------
Cash and cash equivalents at the
end of the period 11 180.7 10.3 45.6
------------------------------------------ ----- ---------- ---------- ----------
Statement of Changes in Equity
For the six months ended 31 March 2018
Share-based
Share Share payments Retained Total
capital premium reserve earnings equity
Notes GBPm GBPm GBPm GBPm GBPm
------------------------------- ----- -------- -------- ----------- --------- -------
At 1 October 2017 69.8 124.9 3.0 2,449.2 2,646.9
Profit and total comprehensive
income for the period - - - 123.7 123.7
Transactions with owners:
Dividends paid 16 - - - (25.1) (25.1)
Share placing 15 6.9 253.5 - - 260.4
Exercise of share options 0.1 - - (0.1) -
Fair value of share-based
payments - - 0.4 - 0.4
Release on exercise of share
options - - (2.6) 2.6 -
-------- -------- ----------- --------- -------
At 31 March 2018 76.8 378.4 0.8 2,550.3 3,006.3
-------- -------- ----------- --------- -------
At 1 October 2016 69.7 124.8 3.6 2,189.0 2,387.1
Profit and total comprehensive
income for the period - - - 102.4 102.4
Transactions with owners:
Dividends paid 16 - - - (21.3) (21.3)
Exercise of share options 0.1 - - (0.1) -
Fair value of share-based
payments - - 0.7 - 0.7
Release on exercise of share
options - - (2.0) 2.0 -
-------- -------- ----------- --------- -------
At 31 March 2017 69.8 124.8 2.3 2,272.0 2,468.9
-------- -------- ----------- --------- -------
At 1 October 2016 69.7 124.8 3.6 2,189.0 2,387.1
Profit and total comprehensive
income for the year - - - 301.6 301.6
Transactions with owners:
Dividends paid 16 - - - (43.3) (43.3)
Exercise of share options 0.1 0.1 - (0.1) 0.1
Fair value of share-based
payments - - 1.4 - 1.4
Release on exercise of share
options - - (2.0) 2.0 -
-------- -------- ----------- --------- -------
At 30 September 2017 69.8 124.9 3.0 2,449.2 2,646.9
------------------------------- ----- -------- -------- ----------- --------- -------
Notes to the half year results
For the six months ended 31 March 2018
1. Accounting policies
Basis of preparation
The Group's condensed consolidated half year financial
statements have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and with IAS
34, Interim Financial Reporting, as adopted by the European Union.
They should be read in conjunction with the annual financial
statements for the year ended 30 September 2017, which have been
prepared in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRS), IFRS
Interpretations Committee interpretations and those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
The financial information in these condensed consolidated half
year financial statements do not comprise statutory accounts within
the meaning of section 434 of the Companies Act 2006. The financial
information presented for the year ended 30 September 2017 is
derived from the statutory accounts for that year. Statutory
accounts for the year ended 30 September 2017 were approved by the
Board on 27 November 2017 and delivered to the Registrar of
Companies. The report of the auditor on those accounts was
unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under section 498 (2) or (3) of the
Companies Act 2006.
The condensed consolidated half year financial statements have
been reviewed, not audited.
Going concern
The directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for at
least 12 months from the date these financial statements were
approved. Therefore, they continue to adopt the going concern basis
in preparing the condensed consolidated half year financial
statements.
Critical judgements, assumptions and estimates
The preparation of these financial statements requires the Board
to make judgements, assumptions and estimates that affect amounts
reported in the Statement of Comprehensive Income and Balance
Sheet. The directors consider the valuation of investment property
to be a critical judgement because of the level of complexity,
judgement or estimation involved and its impact on the financial
statements. This is consistent with the financial statements for
the previous year end. Full disclosure of the critical judgements,
assumptions and estimates is included in the 2017 financial
statements.
Changes in accounting policies
The accounting policies adopted and methods of computation used
are consistent with those of the previous financial year.
New accounting standards and interpretations
a) The following amendment to an existing Standard was relevant
to the Group and mandatory for the first time for the financial
year beginning 1 October 2017:
Standard or Interpretation Effective from
-------------------------------------------------------- --------------
Amendments to IAS 7 Statement of cash flows - disclosure 1 January 2017
initiative
-------------------------------------------------------- --------------
No material changes to accounting policies arose as a result of
this amendment.
b) The following new Standards and amendments to existing
Standards are relevant to the Group, are not yet effective in the
year ending 30 September 2018 and are not expected to have a
significant impact on the Group's financial statements:
Standard or Interpretation Effective from
-------------------------------------------------- --------------
Annual Improvements 2014-2016 1 January 2018
Amendments to IFRS 2 Classification of share-based 1 January 2018
payment transactions
IFRS 15 Revenue from contracts with customers 1 January 2018
IFRS 9 Financial instruments 1 January 2018
IFRS 16 Leases 1 January 2019
-------------------------------------------------- --------------
IFRS 9 - Financial Instruments
This standard deals with, amongst other things, the
classification and measurement of financial instruments. Having
carried out an assessment of the standard, the Group believes the
main impact will be the measurement and presentation of trade
receivables in the Group financial statements, and balances due
from subsidiaries in the Company financial statements. Having
considered expected credit losses and sources of forward-looking
data, we do not currently expect any impact will be material.
IFRS 15 - Revenue from contracts with customers
This standard is based on the principle that revenue is
recognised when control passes to a customer. In our case, the
standard is most applicable to the recognition point for service
charge income and disposals of investment properties. As the
standard excludes rental income, which falls within the scope of
IFRS 16 - Leases, it is not expected that IFRS 15 will have a
significant impact on the Group's financial statements. There may
be changes to presentation and disclosure.
IFRS 16 - Leases
For operating leases in excess of one year, this standard
requires lessees to recognise a right-of-use asset and a related
lease liability representing the obligation to make lease payments.
The right-of-use asset is assessed for impairment annually and is
amortised on a straight-line basis. The lease liability is
amortised using the effective interest method. Lessor accounting is
substantially unchanged from current accounting. Therefore, since
the Group is primarily a lessor, this standard does not
significantly impact the Group's financial statements. However, for
the Company, it will result in the recognition of a right-to-use
asset and corresponding lease liability, which we estimate at
approximately GBP3 million, in the year when the standard becomes
effective.
c) There are no other Standards or Interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
Segmental information
IFRS 8 requires operating segments to be reported in a manner
consistent with the internal financial reporting reviewed by the
chief operating decision maker. The chief operating decision maker
of the Group is the Board. The Board is responsible for reviewing
the Group's internal reporting in order to assess performance.
The information reviewed by the Board is prepared on a basis
consistent with these financial statements. That is, the
information is provided at a Group level and includes both the IFRS
reported results and EPRA measures (see above for an explanation on
the EPRA measures used in these financial statements).
The Group's properties are all located in London's West End, and
are all of a similar type. The properties are typically mixed-use
buildings with restaurants, leisure and retail on the lower floors
and small offices and apartments on the upper floors. As the
properties share similar economic characteristics we consider them
to be one operating segment. As such, no further financial
information is presented.
2. Revenue
Six months Six months Year
ended ended ended
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
------------------------------ ---------- ---------- ----------
Rents receivable 55.6 50.9 103.4
Recoverable property expenses 5.3 4.0 8.1
---------- ---------- ----------
60.9 54.9 111.5
------------------------------ ---------- ---------- ----------
Rents receivable includes a credit of GBP0.6 million from
accrued income in respect of lease incentives (31.3.2017: charge of
GBP0.3 million; 30.9.2017: charge of GBP0.5 million).
3. Property charges
Six months Six months Year
ended ended ended
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
---------------------------------------- ---------- ---------- ----------
Property operating costs 4.5 3.1 7.1
Fees payable to managing agents 1.4 1.2 2.4
Letting, rent review, and lease renewal
costs 1.7 1.8 3.4
Village promotion costs 1.8 1.0 2.2
---------- ---------- ----------
Property outgoings 9.4 7.1 15.1
Recoverable property expenses 5.3 4.0 8.1
---------- ---------- ----------
14.7 11.1 23.2
---------------------------------------- ---------- ---------- ----------
4. Profit on disposal of investment properties
Six months Six months Year
ended ended ended
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
--------------------------- ---------- ---------- ----------
Net sale proceeds 12.9 5.2 13.4
Book value at date of sale (8.7) (4.9) (12.3)
---------- ---------- ----------
4.2 0.3 1.1
--------------------------- ---------- ---------- ----------
5. Finance costs
Six months Six months Year
ended ended ended
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
------------------------------------------ ---------- ---------- ----------
Debenture stock interest and amortisation - 0.1 0.1
Mortgage bond interest 6.9 3.4 7.4
Bank and other interest 8.3 12.0 23.8
Loan issue cost amortisation 1.0 0.6 1.5
---------- ---------- ----------
16.2 16.1 32.8
------------------------------------------ ---------- ---------- ----------
6. Tax charge for the period
The Group's wholly-owned business is subject to taxation as a
REIT. Under the REIT regime, income from its rental business
(calculated by reference to tax rather than accounting rules) and
chargeable gains from the sale of its investment properties are
exempt from corporation tax.
7. Investment properties
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
-------------------------------------------- --------- --------- ---------
At beginning of period 3,407.3 3,111.6 3,111.6
Acquisitions 117.4 28.1 37.1
Disposals (8.7) (4.9) (12.3)
Refurbishment and other capital expenditure 14.9 20.0 40.3
Net surplus on revaluation of investment
properties 97.6 61.6 230.6
--------- --------- ---------
Book value at end of period 3,628.5 3,216.4 3,407.3
-------------------------------------------- --------- --------- ---------
Fair value at end of period:
Core properties valued by Cushman
& Wakefield 3,638.3 3,225.7 3,416.5
Non-core properties valued by Cushman
& Wakefield 2.4 2.4 2.4
Less: unamortised lease incentives
(note 8) (12.2) (11.7) (11.6)
--------- --------- ---------
Book value at end of period 3,628.5 3,216.4 3,407.3
-------------------------------------------- --------- --------- ---------
The investment properties valuation comprises:
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
--------------------- --------- --------- ---------
Freehold properties 3,415.6 2,956.6 3,133.0
Leasehold properties 225.1 271.5 285.9
--------- --------- ---------
3,640.7 3,228.1 3,418.9
--------------------- --------- --------- ---------
Investment properties were valued at 31 March 2018 by qualified
professional valuers, being members of the Royal Institution of
Chartered Surveyors (RICS), working for Cushman & Wakefield,
Chartered Surveyors, acting in the capacity of external
valuers.
All properties were valued on the basis of fair value and
highest and best use, in accordance with the RICS Valuation -
Global Standards, which incorporate, the International Valuation
Standards, and the RICS UK Valuation Standards edition current at
the valuation date and IFRS 13. When considering a property's
highest and best use, the valuer considers its actual and potential
uses which are physically, legally and financially viable. Where
the highest and best use differs from the existing use, the valuer
considers the use a market participant would have in mind when
formulating the price it would bid and reflects the cost and
likelihood of achieving that use.
The fair value of the Group's investment properties has
primarily been determined using a market approach, which provides
an indication of value by comparing the subject asset with similar
assets for which price information is available. The external
valuer uses information provided by the Group, such as tenancy
information and capital expenditure expectations. In deriving fair
value, the valuer also makes a series of assumptions, using
professional judgement and market observations. These assumptions
include equivalent yields and rental values (ERVs) applicable to
the properties. Equivalent yields are based on current market
prices, depending on, inter alia, the location and use of the
properties. ERVs are calculated using a number of factors which
include current rental income, market comparatives and occupancy
levels. Whilst there is market evidence for these inputs, and
recent transaction prices for similar properties, there is still a
significant element of estimation and judgement. As a result of
adjustments made to market observable data, these
significant inputs are deemed unobservable.
Since the key inputs to the valuation are unobservable, the
Group considers all its investment properties fall within Level 3
of the fair value hierarchy in IFRS 13. The Group's policy is to
recognise transfers between hierarchy levels as at the date of the
event or change in circumstances that caused the transfer. There
have been no transfers during the period (31.3.2017: none;
30.9.2017: none).
The key assumptions made by the valuers are set out in the Basis
of Valuation above.
The major inputs to the external valuation are reviewed by the
senior management team. In addition, the valuer meets with external
auditors and the Audit Committee.
At 31 March 2018, the Group had capital commitments of GBP52.9
million (31.3.2017: GBP25.0 million; 30.9.2017: GBP13.6 million),
relating to the forward purchase of an investment property and
future capital expenditure for the enhancement of the Group's
investment properties. Since 31 March 2018, the Group exchanged
contracts to acquire a property for GBP22.7 million. See note 20
for further details.
The Group's portfolio activity is discussed above.
Sensitivity analysis
As noted in the critical judgements, assumptions and estimates
section on page 118 in the 2017 Annual Report, the valuation of the
Group's property portfolio is inherently subjective. As a result,
the valuations the Group places on its property portfolio are
subject to a degree of uncertainty and are made on the basis of
assumptions which may not prove to be accurate, particularly in
periods of volatility or low transaction flow in the commercial
property market.
The key unobservable inputs are inter-dependent. All other
factors being equal, a higher equivalent yield would lead to a
decrease in the valuation of a property, and an increase in the ERV
would increase the capital value, and vice versa.
8. Accrued income
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
----------------------------------- --------- --------- ---------
Accrued income in respect of lease
incentives 12.2 11.7 11.6
Less: included in trade and other
receivables (note 10) (2.3) (2.2) (2.1)
--------- --------- ---------
9.9 9.5 9.5
----------------------------------- --------- --------- ---------
Accrued income in respect of lease incentives is allocated
between amounts to be charged against rental income within one year
of the Balance Sheet date and amounts which will be charged against
rental income in subsequent years.
9. Investment in joint venture
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
---------------------------- --------- --------- ---------
At 1 October 148.0 146.4 146.4
Share of (losses)/profits (1.6) 3.5 6.4
Dividends received (1.5) (2.8) (4.8)
--------- --------- ---------
Book value at end of period 144.9 147.1 148.0
---------------------------- --------- --------- ---------
The summarised Statement of Comprehensive Income and Balance
Sheet used for consolidation purposes are presented below:
Six months Six months Year
ended ended ended
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
-------------------------------------- ---------- ---------- ----------
Statement of Comprehensive Income
-------------------------------------- ---------- ---------- ----------
Rents receivable 8.3 9.2 17.7
Recoverable property expenses 0.8 0.8 1.5
-------------------------------------- ---------- ---------- ----------
Revenue from properties 9.1 10.0 19.2
-------------------------------------- ---------- ---------- ----------
Property outgoings (1.0) (1.0) (1.7)
Recoverable property expenses (0.8) (0.8) (1.5)
-------------------------------------- ---------- ---------- ----------
Property charges (1.8) (1.8) (3.2)
---------- ---------- ----------
Net property income 7.3 8.2 16.0
Administrative expenses (0.2) (0.1) (0.2)
---------- ---------- ----------
Operating profit before investment
property valuation movements 7.1 8.1 15.8
Net (deficit)/surplus on revaluation
of investment properties (8.1) 3.0 5.3
---------- ---------- ----------
Operating (loss)/profit (1.0) 11.1 21.1
Finance costs (3.4) (3.4) (6.8)
---------- ---------- ----------
(Loss)/profit before tax (4.4) 7.7 14.3
-------------------------------------- ---------- ---------- ----------
Current tax (0.8) (0.9) (1.7)
Deferred tax 2.0 0.2 0.2
-------------------------------------- ---------- ---------- ----------
Tax credit/(charge) for the period 1.2 (0.7) (1.5)
---------- ---------- ----------
(Loss)/profit and total comprehensive
income for the period (3.2) 7.0 12.8
---------- ---------- ----------
(Loss)/profit attributable to the
Group (1.6) 3.5 6.4
-------------------------------------- ---------- ---------- ----------
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
------------------------------------- --------- --------- ---------
Balance Sheet
Non-current assets
Investment properties at book value 456.9 458.2 462.6
Accrued income 2.7 3.7 3.1
Other receivables 1.3 1.3 1.3
--------- --------- ---------
460.9 463.2 467.0
Cash and cash equivalents 3.3 4.4 1.2
Current assets 2.8 2.6 3.9
--------- --------- ---------
Total assets 467.0 470.2 472.1
--------- --------- ---------
Current liabilities 13.1 9.9 10.1
Non-current liabilities
Secured term loan 120.0 120.0 120.0
Other non-current liabilities 44.2 46.1 46.1
--------- --------- ---------
Total liabilities 177.3 176.0 176.2
--------- --------- ---------
Net assets 289.7 294.2 295.9
--------- --------- ---------
Net assets attributable to the Group 144.9 147.1 148.0
------------------------------------- --------- --------- ---------
Knight Frank LLP, acting in the capacity of external valuers,
value the investment properties owned by the joint venture.
10. Trade and other receivables
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
----------------------------------- --------- --------- ---------
Amounts due from tenants 11.9 9.6 12.0
Provision for doubtful debts (0.7) (0.4) (0.5)
--------- --------- ---------
11.2 9.2 11.5
Accrued income in respect of lease
incentives (note 8) 2.3 2.2 2.1
Amount due from joint venture 2.4 0.9 0.9
Prepayments 8.1 4.2 7.1
Other receivables 0.1 0.3 0.4
--------- --------- ---------
24.1 16.8 22.0
----------------------------------- --------- --------- ---------
At 31 March 2018, cash deposits totalling GBP19.2 million
(31.3.2017: GBP18.1 million; 30.9.2017: GBP18.5 million) were held
against tenants' rent payment obligations. The deposits are held in
bank accounts administered by the Group's managing agents and are
not included within the Group Balance Sheet.
11. Cash and cash equivalents
Cash and cash equivalents at 31 March 2018 were GBP180.7 million
(31.3.2017: GBP10.3 million; 30.9.2017: GBP45.6 million).
Non-current other receivables include GBP3.7 million at 31 March
2018 (31.3.2017: GBP3.7 million; 30.9.2017: GBP3.7 million) which
relate to cash held on deposit as security for certain secured term
loans, and where there are certain conditions restricting their
use.
12. Trade and other payables
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
--------------------------------------- --------- --------- ---------
Rents and service charges invoiced
in advance 24.3 22.1 22.8
Amounts due in respect of property
acquisitions - 0.5 -
Trade payables and accruals in respect
of capital expenditure 2.3 4.0 4.0
Other taxation and social security 5.3 4.3 5.2
Other payables and accruals 6.9 9.4 9.6
--------- --------- ---------
38.8 40.3 41.6
--------------------------------------- --------- --------- ---------
13. Borrowings
Nominal Unamortised
value issue costs 31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm GBPm GBPm
------------------------ ------- ------------ --------- --------- ---------
Mortgage bonds 575.0 (5.6) 569.4 281.5 569.2
Secured bank facilities - (2.0) (2.0) 170.2 (0.8)
Secured term loans 384.8 (4.2) 380.6 380.3 380.4
------- ------------ --------- --------- ---------
Total borrowings 959.8 (11.8) 948.0 832.0 948.8
------------------------ ------- ------------ --------- --------- ---------
At 31 March 2018, there were no drawings against the Group's
secured bank facilities (31.3.2017: GBP171.6 million; 30.9.2017:
none). The Group is still able to benefit from these committed
revolving credit facilities, and as such, unamortised issue costs
of GBP2.0 million continue to be carried in the Balance Sheet.
Net debt reconciliation
Cash flows
----------------------------
1.10.2017 Inflows Outflows Non-cash 31.3.2018
GBPm GBPm GBPm items GBPm
------------------------- --------- ------- -------- -------- ---------
Non-current borrowings
Mortgage bonds 575.0 - - - 575.0
Secured bank facilities - 72.0 (72.0) - -
Secured term loans 384.8 - - - 384.8
Loan issue costs (11.0) - (1.8) 1.0 (11.8)
--------- ------- -------- -------- ---------
948.8 72.0 (73.8) 1.0 948.0
Loan issue costs(1) 11.0 - 1.8 (1.0) 11.8
Cash & cash equivalents
(note 11) (45.6) (390.5) 255.4 - (180.7)
Net debt at 31 March
2018 914.2 (318.5) 183.4 - 779.1
--------- ------- -------- -------- ---------
Net debt at 31 March
2017 752.1 (45.6) 124.6 - 831.1
Net debt at 30 September
2017 752.1 (95.1) 257.2 - 914.2
------------------------- --------- ------- -------- -------- ---------
1. Loan issue costs are eliminated in the calculation of net debt.
The cash flows relating to secured bank facilities were drawings
under revolving credit facilities and their subsequent repayments.
The Group's borrowings are secured by fixed charges over certain
investment properties held by subsidiaries, with a carrying value
of GBP3,119.8 million (31.3.2017: GBP2,700.9 million; 30.9.2017:
GBP3,015.4 million), and by floating charges over the assets of the
Company and/or certain subsidiaries.
Availability and maturity of borrowings
Facilities
--------------------------------- -------------------------
Committed Drawn Undrawn
GBPm GBPm GBPm
--------------------------------- --------- ----- -------
Repayable within 5 years 225.0 - 225.0
Repayable between 5 and 10 years 290.0 290.0 -
Repayable after 10 years 669.8 669.8 -
--------- ----- -------
At 31 March 2018 1,184.8 959.8 225.0
--------- ----- -------
At 31 March 2017 1,019.8 841.4 178.4
--------- ----- -------
At 30 September 2017 1,234.8 959.8 275.0
--------------------------------- --------- ----- -------
Interest rate profile of interest bearing borrowings
31.3.2018 31.3.2017 30.9.2017
----------------------------------- --------------- --------------- ---------------
Debt Interest Debt Interest Debt Interest
GBPm rate GBPm rate GBPm rate
----------------------------------- ----- -------- ----- -------- ----- --------
Floating rate borrowings
LIBOR-linked facilities (including
margin) - - 46.6 1.49% - -
Hedged borrowings
Interest rate swaps (including
margin) - - 125.0 6.02% - -
----- -------- ----- -------- ----- --------
Total bank borrowings - - 171.6 4.79% - -
----- ----- -----
Fixed rate borrowings
Secured term loans 384.8 3.85% 384.8 3.85% 384.8 3.85%
Mortgage bonds 2027 290.0 2.35% - - 290.0 2.35%
Mortgage bonds 2031 285.0 2.49% 285.0 2.49% 285.0 2.49%
Weighted average cost of
drawn borrowings 2.99% 3.58% 2.99%
----------------------------------- ----- -------- ----- -------- ----- --------
The Group also incurs non-utilisation fees on undrawn
facilities. At 31 March 2018, the weighted average charge on the
undrawn facilities of GBP225.0 million (31.3.2017: GBP178.4
million; 30.9.2017: GBP275.0 million) was 0.66% (31.3.2017: 0.70%;
30.9.2017: 0.69%).
Details of the Group's current financial position and
refinancing activity during the period are discussed above.
14. Financial instruments
Fair value of derivative financial instruments
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
------------------------------------ --------- --------- ---------
Interest rate swaps
At beginning of period - (114.1) (114.1)
Swap contracts terminated - 34.1 92.1
Fair value movement credited to the
Statement of Comprehensive Income - 16.1 22.0
--------- --------- ---------
At end of period - (63.9) -
------------------------------------ --------- --------- ---------
Other financial instruments
The Group's mortgage bonds and secured term loans are held at
amortised cost in the Balance Sheet. The fair value of these
financial instruments is in excess of book value. This excess,
which is not recognised in the reported results for the period, is
GBP14.2 million (31.3.2017: GBP37.4 million; 30.9.2017: GBP16.2
million). The fair values have been calculated based on a
discounted cash flow model using the relevant reference gilt and
appropriate market spread. The valuation technique falls within
Level 2 of the fair value hierarchy in IFRS 13.
The Group has no obligation to repay its mortgage bonds or
secured term loans in advance of their maturities between 2027 and
2035.
The fair values of the Group's cash and cash equivalents, and
those financial instruments included within trade and other
receivables, interest bearing borrowings, (excluding the mortgage
bonds and the secured term loans), and trade and other payables are
not materially different from the values at which they are carried
in the financial statements.
15. Share capital
During the period, 27,855,508 ordinary 25p shares were issued at
GBP9.52 per share, raising GBP265.2 million. Transaction costs in
connection with the issue, which amounted to GBP4.8 million, have
been charged against share premium in accordance with the Companies
Act 2006.
In respect of the equity issue, Invesco Asset Management Limited
and Orosi (UK) Limited were related parties of Shaftesbury PLC for
the purposes of the Listing Rules and participated in the equity
placing in respect of 1,050,000 and 6,864,368 placing shares
respectively, for a total consideration of approximately GBP9.996
million and GBP65.349 million respectively. These transactions were
disclosed via the Regulatory News Service on 6 December 2017, in
accordance with LR11.1.10R, and Shaftesbury PLC received written
confirmation from its sponsor that the terms of the transactions
were fair and reasonable as far as Shaftesbury PLC's shareholders
were concerned.
Also during the period, 402,426 ordinary 25p shares were issued
in connection with the exercise of nil cost options granted under
the 2006 LTIP.
16. Dividends paid
Six months Six months Year
ended ended ended
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
-------------------------------------------- ---------- ---------- ----------
Final dividend for:
Year ended 30 September 2017 at 8.1p
per share 25.1 - -
Year ended 30 September 2016 at 7.55p
per share - 21.3 21.3
Interim dividend for:
Year ended 30 September 2017 at 7.9p
per share - - 22.0
Dividends for the period 25.1 21.3 43.3
Timing difference on payment of withholding
tax - - 1.2
---------- ---------- ----------
Dividends cash paid 25.1 21.3 44.5
-------------------------------------------- ---------- ---------- ----------
An interim dividend of 8.3p per share in respect of the six
months ended 31 March 2018 was declared by the Board on 21 May
2018. The interim dividend will be paid as a PID on 6 July 2018 to
shareholders on the register at 15 June 2018. The dividend will be
accounted for as an appropriation of revenue reserves in the year
ending 30 September 2018.
17. Cash flows from operating activities
Six months Six months Year
ended ended ended
31.3.2018 31.3.2017 30.9.2017
Operating activities GBPm GBPm GBPm
-------------------------------------------- ---------- ---------- ----------
Profit before tax 123.7 102.4 301.6
Adjusted for:
Lease incentives recognised (note
2) (0.6) 0.3 0.5
Charge for share-based remuneration 0.4 0.7 1.4
Depreciation 0.2 0.2 0.3
Investment property valuation movements
(note 7) (97.6) (61.6) (230.6)
Profit on disposal of investment properties
(note 4) (4.2) (0.3) (1.1)
Net finance costs 15.9 - 10.7
Share of loss/(profit) from joint
venture (note 9) 1.6 (3.5) (6.4)
---------- ---------- ----------
Cash flows from operations before
changes in working capital 39.4 38.2 76.4
Changes in working capital:
Change in trade and other receivables (0.4) 2.5 (0.5)
Change in trade and other payables (0.4) (3.1) 0.8
---------- ---------- ----------
Cash generated from operating activities 38.6 37.6 76.7
-------------------------------------------- ---------- ---------- ----------
18. Performance measures
Basic and diluted earnings per share
31.3.2018 31.3.2017 30.9.2017
----------------------- ---------------------- ---------------------- ----------------------
Profit Earnings Profit Earnings Profit Earnings
after tax per share after tax per share after tax per share
GBPm pence GBPm pence GBPm pence
----------------------- ---------- ---------- ---------- ---------- ---------- ----------
Basic 123.7 41.7 102.4 36.7 301.6 108.1
Dilutive effect of
share options - (0.1) - (0.1) - (0.2)
---------- ---------- ---------- ---------- ---------- ----------
Diluted 123.7 41.6 102.4 36.6 301.6 107.9
---------- ---------- ---------- ---------- ---------- ----------
Number of shares for
Basic and EPRA EPS
(million) 296.9 278.8 278.9
Number of shares for
Diluted EPS (million) 297.2 279.5 279.6
----------------------- ---------- ---------- ---------- ---------- ---------- ----------
EPRA earnings per share
The calculations below are in accordance with the EPRA Best
Practice Recommendations.
31.3.2018 31.3.2017 30.9.2017
------------------------------- -------------------- -------------------- ---------------------
Profit Profit Profit
after Earnings after Earnings after Earnings
tax per share tax per share tax per share
GBPm pence GBPm pence GBPm pence
------------------------------- -------- ---------- -------- ---------- --------- ----------
Basic 123.7 41.7 102.4 36.7 301.6 108.1
EPRA adjustments:
Investment property
valuation surplus (note
7) (97.6) (32.9) (61.6) (22.1) (230.6) (82.7)
Profit on disposal
of investment properties
(note 4) (4.2) (1.4) (0.3) (0.1) (1.1) (0.4)
Movement in fair value
of derivatives - - (16.1) (5.8) (22.0) (7.9)
Adjustments in respect
of the joint venture:
Investment property
valuation deficit/(surplus) 4.1 1.4 (1.5) (0.5) (2.6) (0.9)
Deferred tax (1.0) (0.4) (0.1) - (0.1) -
-------- ---------- -------- ---------- --------- ----------
EPRA earnings 25.0 8.4 22.8 8.2 45.2 16.2
------------------------------- -------- ---------- -------- ---------- --------- ----------
Net asset value per share
The calculations below are in accordance with the EPRA Best
Practice Recommendations.
31.3.2018 31.3.2017 30.9.2017
Net assets Net assets Net assets
--------------------------- --------------- --------------- ---------------
Net Per Net Per Net Per
assets share assets share assets share
GBPm GBP GBPm GBP GBPm GBP
--------------------------- ------- ------ ------- ------ ------- ------
Basic 3,006.3 9.78 2,468.9 8.85 2,646.9 9.49
Dilutive effect of share
options 0.5 0.5 0.5
------- ------ ------- ------ ------- ------
Diluted 3,006.8 9.77 2,469.4 8.83 2,647.4 9.46
Fair value of derivatives - - 63.9 0.23 - -
Deferred tax(1) 16.9 0.06 17.9 0.06 17.9 0.06
------- ------ ------- ------ ------- ------
EPRA NAV 3,023.7 9.83 2,551.2 9.12 2,665.3 9.52
Fair value of derivatives - - (63.9) (0.23) - -
Deferred tax(1) (16.9) (0.06) (17.9) (0.06) (17.9) (0.06)
Excess of fair value over
carrying value of debt:
Secured term loans(2) (41.3) (0.13) (49.0) (0.18) (40.0) (0.14)
Mortgage bonds 19.3 0.06 2.3 0.01 15.5 0.05
EPRA NNNAV 2,984.8 9.70 2,422.7 8.66 2,622.9 9.37
------- ------ ------- ------ ------- ------
Number of shares (million) 307.3 279.0 279.0
Number of diluted shares
(million) 307.7 279.8 279.8
--------------------------- ------- ------ ------- ------ ------- ------
1. Includes our 50% share of deferred tax in the Longmartin joint venture.
2. Includes the wholly-owned Group's secured term loans and our
50% share of secured term loans in the Longmartin joint
venture.
The calculations of diluted net asset value per share show the
potentially dilutive effect of share options outstanding at the
Balance Sheet date and include the increase in shareholders' equity
which would arise on the exercise of those options.
Net asset value return
31.3.2018 31.3.2017 30.9.2017
Pence Pence Pence
------------------------------------ --------- --------- -----------
EPRA NAV at beginning of period (A) 952.00 888.00 888.00
EPRA NAV at end of period 983.00 912.00 952.00
--------- --------- ---------
Increase during the period 31.00 24.00 64.00
Dividends paid during the period 8.1 7.55 15.45
--------- --------- ---------
NAV return (B) 39.1 31.55 79.45
--------- --------- ---------
NAV return % (B/A) 4.1% 3.6% 8.9%
------------------------------------- --------- --------- ---------
Financing ratios
31.3.2018 31.3.2017
----------------------------------- -------------------------------- --------------------------------
Share Share
Wholly-owned of joint Wholly-owned of joint
business venture Total business venture Total
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- ------------ --------- ------- ------------ --------- -------
Loan-to-value and gearing
Nominal value of debt 959.8 60.0 1,019.8 841.4 60.0 901.4
Cash and cash equivalents (180.7) (1.7) (182.4) (10.3) (2.2) (12.5)
------------ --------- ------- ------------ --------- -------
Net debt (A) 779.1 58.3 837.4 831.1 57.8 888.9
------------ --------- ------- ------------ --------- -------
Fair value of investment
properties (B) 3,640.7 224.7 3,865.4 3,228.1 225.9 3,454.0
Loan-to-value (A/B) 21.4% 25.9% 21.7% 25.7% 25.6% 25.7%
EPRA net assets (C) 3,023.7 2,551.2
Gearing (A/C) 27.7% 34.8%
Interest cover
Operating profit before investment
property disposals & valuation
movements (A) 39.4 3.6 43.0 37.0 4.1 41.1
Finance costs 16.2 1.4 17.6 16.1 1.4 17.5
Finance income (0.3) - (0.3) - - -
------------ --------- ------- ------------ --------- -------
Net finance costs (B) 15.9 1.4 17.3 16.1 1.4 17.5
------------ --------- ------- ------------ --------- -------
Interest cover (A/B) 2.5x 2.6x 2.5x 2.3x 2.9x 2.3x
Cost of debt
Blended cost of drawn borrowings 3.0% 4.4% 3.1% 3.6% 4.4% 3.6%
Commitment fees on undrawn
bank facilities 0.7% - 0.7% 0.7% - 0.7%
Blended cost of debt (including
commitment fees on undrawn
facilities) 3.2% 4.4% 3.2% 3.7% 4.4% 3.7%
----------------------------------- ------------ --------- ------- ------------ --------- -------
Financing ratios
30.9.2017
------------------------------------------------ --------------------------------
Share
Wholly-owned of joint
business venture Total
GBPm GBPm GBPm
------------------------------------------------ ------------ --------- -------
Loan-to-value and gearing
Nominal value of debt 959.8 60.0 1,019.8
Cash and cash equivalents (45.6) (0.6) (46.2)
------------ --------- -------
Net debt (A) 914.2 59.4 973.6
------------ --------- -------
Fair value of investment properties (B) 3,418.9 227.8 3,646.7
Loan-to-value (A/B) 26.7% 26.1% 26.7%
EPRA net assets (C) 2,665.3
Gearing (A/C) 36.5%
Interest cover
Operating profit before investment property
disposals & valuation movements (A) 74.2 7.9 82.1
Finance costs 32.8 2.7 35.5
Finance income (0.1) - (0.1)
------------ --------- -------
Net finance costs (B) 32.7 2.7 35.4
------------ --------- -------
Interest cover (A/B) 2.3x 2.9x 2.3x
Cost of debt
Blended cost of drawn borrowings 3.0% 4.4% 3.1%
Commitment fees on undrawn bank facilities 0.7% - 0.7%
Blended cost of debt (including commitment fees
on undrawn facilities) 3.2% 4.4% 3.3%
------------------------------------------------ ------------ --------- -------
See also above for explanations of why we use these performance
measures.
19. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Transactions and balances between the Company and its joint
venture, which have not been eliminated on consolidation are
summarised below:
31.3.2018 31.3.2017 30.9.2017
GBPm GBPm GBPm
------------------------------------- --------- --------- ---------
Transactions with the joint venture:
Administrative fees receivable 0.1 0.1 0.1
Dividends receivable 1.5 2.8 4.8
Balance with the joint venture:
Amount due from joint venture 2.4 0.9 0.9
------------------------------------- --------- --------- ---------
20. Post balance sheet event
On 30 April 2018 the Group exchanged contracts to acquire a
building in Carnaby for GBP22.7 million (including costs). Further
details are set out above.
Responsibility Statement
The directors confirm that the condensed consolidated half year
financial statements have been prepared in accordance with IAS 34
'Interim Financial Reporting' as adopted by the European Union and
that the half year management report includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R, namely:
-- important events that have occurred during the first six
months and their impact on the condensed set of half year financial
statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related party transactions in the first six months
and a fair review of any material changes in the related party
transactions described in the last Annual Report.
The maintenance and integrity of the Shaftesbury website is the
responsibility of the directors. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislations in other jurisdictions.
The directors of Shaftesbury PLC are listed in its Annual Report
for the year ended 30 September 2017.
A list of current directors is maintained on the Shaftesbury PLC
website: www.shaftesbury.co.uk.
On behalf of the Board
Brian Bickell
Chief Executive
Chris Ward
Finance Director
21 May 2018
Independent Review Report to Shaftesbury PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 March 2018 which comprises the Unaudited Group
Statement of Comprehensive Income, the Unaudited Group Balance
Sheet, the Unaudited Group Cash Flow Statement, the Unaudited Group
Statement of Changes in Equity and the related notes to the
financial statements 1 to 20. We have read the other information
contained in the half yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
(UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
March 2018 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
21 May 2018
Shareholder Information
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex, BN99 6DA
Telephone 0371 384 2294 (International +44 121 415 7047). Lines
open 8.30am to 5.30pm, Monday to Friday.
Shareholder accounts may be accessed online through
www.shareview.co.uk. This gives secure access to account
information instructions. There is also a Shareview dealing service
which is a simple and convenient way to buy or sell shares in the
Group.
Effect of REIT status on payment of dividends
As a REIT, we do not pay UK corporation tax in respect of rental
profits and chargeable gains relating to our property rental
business. However, we are required to distribute at least 90% of
the qualifying income (broadly calculated using the UK tax rules)
as a PID.
Certain categories of shareholder may be able to receive the PID
element of their dividends gross, without deduction of withholding
tax. Categories which may claim this exemption include: UK
companies, charities, local authorities, UK pension schemes and
managers of PEPs, ISAs and Child Trust Funds.
Further information and the forms for completion to apply for
PIDs to be paid gross are available on the Group's website or from
the registrar.
Where the Group pays an ordinary dividend this will be treated
in the same way as dividends from non-REIT companies.
The 2018 interim dividend is being paid entirely as a PID.
Corporate Timetable
Financial Calendar
Annual Results November 2018
Annual General Meeting February 2019
Dividends and Bond interest
Proposed 2018 interim dividend:
Ex-dividend 14 June 2018
Record date 15 June 2018
Payment date 6 July 2018
Bond interest 30 September/31 March
Glossary of terms
Annualised current income
Total annualised actual and 'estimated income' reserved by
leases at a valuation date. No rent is attributed to leases which
were subject to rent-free periods at that date. It does not reflect
any ground rents, head rents nor rent charges and estimated
irrecoverable outgoings at the valuation date. 'Estimated income'
refers to gross ERVs in respect of rent reviews outstanding at the
valuation date and, where appropriate, ERV in respect of lease
renewals outstanding at the valuation date where the fair value
reflects terms for a renewed lease. Like-for-like growth in
annualised current income is the change during a period, adjusted
to remove the impact of acquisitions and disposals, expressed as a
percentage of annualised current income at the start of the
period.
Alternative Performance Measure (APM)
A financial measure of historical or future financial
performance, position or cash flows of the Group which is not a
measure defined or specified in IFRS.
Best Practices Recommendations (BPR)
Standards set out by EPRA to provide comparable reporting
between investment property companies.
Blended cost of debt
Weighted average cost of drawn borrowings, plus non-utilisation
fees on undrawn borrowings.
Compound Annual Growth Rate (CAGR)
The year-on-year growth rate of an investment over a specified
period of time.
Diluted net asset value per share
Net asset value per share taking into account the dilutive
effect of potential vesting of share options.
EPRA
European Public Real Estate Association.
EPRA adjustments
Standard adjustments to calculate EPRA measures, in accordance
with its BPR.
EPRA cost ratio
Total costs as a percentage of gross rental income.
EPRA earnings
The level of recurring income arising from core operational
activities. It excludes all items which are not relevant to the
underlying and recurring portfolio performance.
EPRA EPS
EPRA earnings divided by the weighted average number of shares
in issue during a reporting period.
EPRA net assets
Net assets adjusted for items that are not expected to
crystallise in normal circumstances, such as the fair value of
derivative financial instruments and deferred tax on property
valuation surpluses. It includes additional equity if all vested
share options were exercised.
EPRA NAV
EPRA net assets per share, including the potentially dilutive
effect of outstanding options granted over ordinary shares.
EPRA triple net assets
EPRA net assets amended to include the fair value of financial
instruments and debt.
EPRA NNNAV
EPRA NAV amended to include the fair value of financial
instruments and debt.
EPRA vacancy
The rental value of vacant property available expressed as a
percentage of ERV of the total portfolio.
Equivalent yield
Equivalent yield is the internal rate of return from an
investment property, based on the gross outlays for the purchase of
a property (including purchase costs), reflecting reversions to
current market rent, and such items as voids and non-recoverable
expenditure but disregarding potential changes in market rents.
European Public Real Estate Association (EPRA)
EPRA develops policies for standards of reporting disclosure,
ethics and industry practices.
Estimated rental value (ERV)
ERV is the market rental value of properties owned by the Group,
estimated by the Group's valuers.
Like-for-like ERV growth is the change in ERV during a period,
adjusted to remove the impact of acquisitions and disposals,
expressed as a percentage of ERV at the start of the period.
Fair value
The amount at which an asset or liability could be exchanged
between two knowledgeable, willing and unconnected parties in an
arm's length transaction at the valuation date.
Gearing
Nominal value of Group borrowings expressed as a percentage of
EPRA net assets.
Interest cover
Operating profit before investment property disposals and
valuation movements, divided by finance costs net of finance
income.
Like-for-like growth in rents receivable
The increase in rents receivable during an accounting period,
adjusted to remove the impact of acquisitions, disposals and
changes as a result of larger refurbishment schemes, expressed as a
percentage of rents receivable in the corresponding previous
accounting period.
Listing Rules
A set of regulations applicable to any company listed on a
United Kingdom Stock Exchange.
Loan-to-value (LTV)
Nominal value of borrowings expressed as a percentage of the
fair value of property assets.
Long Term Incentive Plan (LTIP)
An arrangement under which an employee is awarded options in the
Company at nil cost, subject to a period of continued employment
and the attainment of NAV and TSR targets over a three-year vesting
period.
Net asset value (NAV)
Equity shareholders' funds divided by the number of ordinary
shares at the balance sheet date.
Net asset value return
The change in EPRA NAV per ordinary share plus dividends paid
per ordinary share during the period of calculation, expressed as a
percentage of the EPRA NAV per share at the beginning of the
period.
Net initial yield
Net initial income at the date of valuation expressed as a
percentage of the gross valuation. Yields reflect net income after
deduction of any ground rents, head rents, rent charges and
estimated irrecoverable outgoings.
Net investment
Acquisitions and capital expenditure less disposals in a
period.
Portfolio reversionary potential
The amount by which the ERV exceeds current income, measured at
a valuation date.
Property Income Distribution (PID)
A PID is a distribution by a REIT to its shareholders paid out
of qualifying profits. A REIT is required to distribute at least
90% of its qualifying profits as a PID to its shareholders.
Real Estate Investment Trust (REIT)
A REIT is a tax designation for an entity or group investing in
real estate that reduces or eliminates corporation tax on rental
profits and chargeable gains relating to the rental business,
providing certain criteria obligations set out in tax legislation
are met.
Regulatory News Service (RNS)
RNS is both a regulatory and financial communications channel
which allows companies to issue announcements to fulfil their
regulatory disclosure obligations.
Topped-up net initial yield
Net initial yield adjusted to assume rent-free periods or other
unexpired lease incentives, such as discounted rent periods and
stepped rents, have expired.
Total Shareholder Return (TSR)
The change in the market price of an ordinary share plus
dividends reinvested expressed as a percentage of the share price
at the beginning of the period.
Valuation growth
The valuation movement and realised surpluses or deficits
arising from the Group's investment property portfolio expressed as
a percentage return on the valuation at the beginning of the period
adjusted, on a time weighted basis, for acquisitions, disposals and
capital expenditure. When measured on a like-for-like basis, the
calculation excludes those properties acquired or sold during the
period.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR ABMFTMBBTBTP
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