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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Picton Property Income Limited | AQSE:PCTN.GB | Aquis Stock Exchange | Ordinary Share | GB00B0LCW208 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 64.30 | 57.70 | 70.90 | 64.30 | 64.30 | 64.30 | 0.00 | 06:56:52 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
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TIDMPCTN
15 November 2016
PICTON PROPERTY INCOME LIMITED
HALF YEAR RESULTS
("Picton" or the "Company")
Picton (LSE: PCTN) announces its half year results for the six month period to
30 September 2016.
Strong income focus, with positive NAV growth and dividend increase
* Net Assets increased to GBP424 million, from GBP417 million at 31 March 2016
* Total profit of GBP15.7 million
* 8% increase in EPRA earnings to GBP10.7 million (September 2015: GBP9.9
million)
* 1.7% increase in EPRA NAV per share to 78.5 pence
* Dividend cover of 179% (September 2015: 112%), or 120% prior to one-off
exceptional income of GBP5.3 million
* 3% increase in annual dividend announced today, to 3.4 pence per share
IPD outperformance and portfolio repositioning
* Portfolio total return of 3.9%, outperforming the MSCI IPD Quarterly
Benchmark which delivered 0.2%
* GBP45 million of central London office disposals (including GBP17.25 million
following period end)
* Industrial sector exposure increased to 38.9%, office sector exposure
reduced to 34.2% and central London office exposure to 13.4% following
period end
* 22 lettings completed during the period securing rent of GBP1.5 million per
annum and completed three Agreements for Lease securing a further GBP0.3
million per annum
* 17 lease renewals and re-gears retaining rent of GBP0.9 million per annum
Improved financial position and debt reduction
* Reduction in debt outstanding from GBP249.5 million to GBP234.2 million (GBP205.2
million post period end following repayment of zero dividend preference
shares)
* Net gearing reduced to 31.6% from 34.4% (29.6% following period end)
* Established new GBP27.0 million revolving credit facility, taking total
committed but undrawn facilities available to GBP53.0 million
Six months to Six months to
30 September 30 September Year ended
2016 2015 31 March 2016
Net assets GBP423.9m GBP393.1m GBP417.1m
Property assets* GBP621.1m GBP606.3m GBP646.0m
Profit after tax GBP15.7m GBP31.9m GBP64.8m
EPRA net asset value per 78.5p 72.8p 77.2p
share
Earnings per share 2.9p 5.9p 12.0p
EPRA earnings per share 2.0p 1.8p 3.7p
Total dividend per share 1.7p 1.7p 3.3p
Dividend cover 179% 112% 112%
Total return 3.8% 8.7% 17.9%
Total shareholder return 5.7% (1.5)% 1.9%
* net of lease incentives, see Note 9.
Picton Chairman, Nicholas Thompson, commented:
"While the wider property market has been affected by volatility and some
uncertainty following the EU referendum result, we have worked hard to achieve
a number of objectives aimed at strengthening Picton's position and overall
performance. The reduction in the level of debt and corresponding increase in
earnings will further enhance the Company's financial position, as such we have
decided it is appropriate to announce an increase in the Company's dividend."
Michael Morris, Chief Executive of Picton Capital, commented:
"We have grown our income and NAV over the period, primarily a result of our
portfolio allocation, asset management and our recent disposal strategy. Our
disposals have enabled us to repay our ZDPs and simplify our corporate
structure post period end. Similarly we have put in place new debt facilities
which have increased our available firepower to make attractive opportunistic
acquisitions and further enhance earnings. It is also pleasing to note that we
have now established a long term track record of outperformance against IPD,
over a one, three, five and ten year time horizon."
This announcement contains inside information.
For further information:
Tavistock
Jeremy Carey/James Verstringhe, 020 7920 3150,
james.verstringhe@tavistock.co.uk
Picton Capital Limited
Michael Morris, 020 7011 9980, michael.morris@picton.co.uk
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Katie Le Page, 01481 745 001, team_picton@ntrs.com
Note to Editors
Picton Property Income Limited is an income focused, property investment
company listed on the London Stock Exchange. Picton can invest both directly
and indirectly in commercial property across the United Kingdom.
With Net Assets of GBP423.9 million at 30 September 2016, the Company's objective
is to provide shareholders with an attractive level of income, together with
the potential for capital growth by investing in the principal commercial
property sectors.
www.picton.co.uk
Chairman's Statement
I am pleased to report further progress at Picton during the six months to 30
September 2016. Whilst the result of the EU referendum and its potential
consequences has dominated the headlines, we have been busy delivering on a
number of key objectives which have strengthened our position in this more
uncertain economic environment.
Our closed-ended corporate structure has meant that we have avoided the issues
with redemptions that faced many open-ended UK property funds following the
referendum, allowing us to focus on delivering value and income accretive
transactions across a range of initiatives, both at the corporate level and
within the portfolio.
Along with most real estate equities there was volatility in our share price in
the immediate aftermath of the referendum. However, I am pleased to advise that
we have seen positive share price performance over the six months to 30
September 2016, which has resulted in a total shareholder return of
5.7%. Furthermore, our share price rating relative to Net Asset Value has
improved since we reported our annual results in June.
Our total profit for the period was lower than for the corresponding period 12
months ago and is a reflection of considerably lower capital growth within the
UK commercial property market, but still a positive result.
Performance
The Company's 3.8% total return is almost entirely driven by its net income
over the period. EPRA earnings per share increased by 8% to 2.0 pence, from 1.8
pence a year ago. This excludes the exceptional income of GBP5.3 million relating
to a dispute in respect of the Strathmore Hotel, Luton, which is included in
the total income profit of GBP16.0 million for the period. Dividend cover, again
excluding this exceptional income, was 120% for the period, an increase from
112% reported in the 30 September 2015 results.
We have again outperformed the MSCI IPD index over the period, helped by our
high industrial, warehouse and logistics exposure. In addition, our investment
activity over the period has further enhanced performance and highlighted that
we are still able to achieve sales ahead of valuation, even in this more
uncertain environment. Picton now has a long term track record of
outperformance against MSCI IPD over one, three, five and ten years.
Capital Structure
We have commented previously about our desire to manage debt effectively
through the property cycle, and at the start of the year the Board concluded
that it would be appropriate to reduce borrowings in the short to medium term,
rather than refinance our 7.25% zero dividend preference shares, which reached
maturity in October. I am pleased to confirm that following the repayment of
the ZDPs we have reduced our net gearing from 34.4% as at 31 March, to 29.6%
currently, on a proforma basis.
The repayment of the ZDPs formed part of a wider plan to simplify our corporate
structure and it has the added advantage of removing us from the Association of
Investment Companies' 'split capital trust' classification.
Not only have we strengthened our balance sheet, but we have enhanced our
operational flexibility with the introduction of a further revolving credit
facility. We currently have GBP53 million of undrawn debt facilities available to
invest in attractive opportunities that are value and/or earnings accretive.
Property Portfolio
Our primary focus over the period has been to reduce Picton's central London
office exposure and this has been achieved with the sales of Boundary House,
London EC3, which completed in August, and of 1 Chancery Lane, London WC2,
which was concluded following the period end. Both of these properties were
sold ahead of valuation and followed a significant period of capital
appreciation since they were acquired. There has also been considerable leasing
and active management activity which is further detailed within the Investment
Manager's Report.
We recently took back two floors at 50 Farringdon Road, London EC1 which has,
as expected, had a short-term impact on the portfolio's occupancy, currently
running at 93%. Given the quality of this asset we are confident about its
leasing prospects.
Income and Dividend Increase
The income profit for the period was GBP16.0 million, or GBP10.7 million excluding
the exceptional income, an increase of 8% over the equivalent figure for
September 2015. Dividend cover has remained strong, as noted above. This
increase in net income is evidence of the economies of scale Picton has been
able to achieve through growth and we expect a further improvement in net
income following the repayment of the ZDPs, after the end of the period.
As a result of this activity, together with the future reduction in finance
costs, the Board believes that it is appropriate to increase the Company's
dividend. I am therefore pleased to confirm that the annual dividend will be
increased by 3%, equivalent to 3.4 pence per annum. The first increased
quarterly dividend of 0.85 pence per share is expected to be paid in February
2017.
This increase, following the 10% increase made in May 2015, demonstrates the
success of our objective to grow net income.
Shareholder Engagement and Governance
We believe it is appropriate to start to consider recruiting an additional
member to the Picton board, particularly as we start to think about succession
planning in the medium term and we expect to have concluded this appointment
during 2017.
We are proposing, subject to approval from shareholders at the forthcoming
annual general meeting, to introduce a new long-term incentive plan for our
investment management team, which will increase their alignment with
shareholders. In summary, the plan will be based on three year periods, with
three performance metrics measured over each period. These metrics will be
total shareholder return, total property return and EPRA earnings per share
growth, measured against either robust long-term relative or absolute targets.
Awards will be made in shares and will only vest if minimum threshold levels
are met, increasing to a maximum for exceptional performance against all three
metrics. The initial performance period for which awards will be made will be
the three years ending 31 March 2019. We have consulted with major shareholders
before finalising this plan and further details are included in the notice of
the annual general meeting, which has already been sent to shareholders.
We would ask Shareholders to support all resolutions presented at the annual
general meeting later this month.
We expect to hear very shortly the details of the government's proposals
regarding the Base Erosion and Profit Shifting (BEPS) project, particularly any
restrictions on the tax deductibility of interest expense. This is an area
which may have an impact on many real estate companies including Picton and we
are continuing to monitor the position, so we can react accordingly.
Outlook
As I stated in June, we are naturally more cautious in our outlook and in
particular the disruption that might occur as a result of the UK's pending
departure from the European Union and the impact of the recent US election. We
are, however, equally of the view that opportunities are likely to arise as a
result of these uncertainties. Asset backed investments which offer an
attractive income profile, such as commercial property, will continue to be
sought after in a low return environment. The pricing adjustment over the
summer period has to some extent made commercial property more attractive and
we are confident that we will be able to take advantage of these conditions and
build on the progress not only of the last six months, but of recent years.
Nicholas Thompson
Chairman
14 November 2016
Investment manager's report
Review of half year to September 2016
The primary focus over the period has been around the strategic disposals,
enabling us to manage the Group's debt position. Both the sales of Boundary
House EC3 and 1 Chancery Lane WC2 have allowed us to crystallise value
following the significant asset management carried out and facilitate debt
repayments within the Group. Our net gearing has continued to reduce, now
standing at less than 30% following the repayment of the ZDPs after the period
end, compared to over 50% three years ago. In addition we have entered into a
new revolving credit facility during the period which provides further
operational flexibility, and the ability to consider attractive opportunistic
acquisitions.
The portfolio valuation increased by 0.6% during the period, against a market
backdrop of falling values. Our outperformance was due to our low retail
exposure, active management and leasing activity. This has balanced the
negative valuation movements within the portfolio, primarily reflecting either
more conservative leasing assumptions, weaker yields or a changed leasing
position.
Although the occupational market has been more muted since the referendum, we
are still seeing good demand across the country, evidenced by the volume of
lettings completed. Like-for-like ERV growth in the portfolio has been positive
in all sectors and we continue to transact in line with or ahead of ERV in the
majority of cases.
Occupancy has reduced to 93%, primarily due to the two floors at 50 Farringdon
Road EC1 which came back in August and are currently being marketed. The
majority of the void is in the office portfolio (Farringdon Road and Angel
Gate, London EC1 making up 46% of the total void) and the industrial sector
where we have six units to let, four of which are under offer.
During the period, we concluded 22 lettings, adding GBP1.5 million per annum
after incentives, which was on average 9% ahead of the March 2016 ERV. In
addition 17 leases were renewed securing GBP0.9 million per annum, which is on
average 6% ahead of the March 2016 ERV. GBP0.12 million per annum in additional
income was secured from three rent reviews, the combined settlements being 12%
ahead of the March 2016 ERV and 12% ahead of the preceding passing rent. In the
six months to September the Picton portfolio returned 3.9%, outperforming the
MSCI IPD Quarterly benchmark which delivered 0.2%. Capital growth for the
portfolio was 0.2%, compared to the Benchmark which delivered -2.1%. The income
return over the period was 3.7% compared with 2.3% for the Benchmark.
Industrial was the best performing sector, followed by offices (driven by
central London) and retail.
Annual contractual income fell from GBP40.4 million in March 2016 to GBP39.4
million in September 2016, with this fall entirely due to the sale of Boundary
House in August 2016. Rental values grew by 1.5% on a like-for-like basis and
stood at GBP46.4 million as at 30 September 2016.
The average lot size at the end of September 2016 was 5% higher than twelve
months ago at GBP11.1 million but was 2% lower than six months ago, which also
reflects the sale of Boundary House.
At 30 September 2016, the portfolio comprised 57 assets valued at GBP630.5
million, reflecting a net initial yield, based on contracted net income, of
5.7%. The ERV of the portfolio was GBP46.4 million, with a net reversionary yield
of 6.9%.
The sector and geographic weightings at 30 September 2016 are set out below, as
well as the proforma sector weightings following two asset disposals in
October.
Sector Value % Annual Occupancy No. of
(GBPm) Income (%) Assets
(GBPm)
Industrial 238.6 37.8 14.5 94.3 17
Office 226.7 36.0 13.8 86.9 20
Retail and Leisure 165.2 26.2 11.1 99.4 20
Total Portfolio 630.5 100.0 39.4 92.6 57
Sector Weightings 30 Sept 2016 Proforma
% %
Standard Retail 5.4 5.6
South East
Standard Retail Rest 8.0 8.1
of UK
Shopping centres - -
Retail 13.4 13.7
Retail warehouse 10.4 10.7
Retail warehouse 10.4 10.7
City 6.8 4.2
Mid-town and West - -
End
Rest of South East 20.7 21.2
Office Rest of UK 8.5 8.8
Office 36.0 34.2
South Eastern 24.8 25.5
Industrial Rest of 13.0 13.4
UK
Industrial 37.8 38.9
Others 2.4 2.5
Total 100.0 100.0
Annual income above, represents the contracted rent passing at the balance
sheet date and therefore excludes leases in rent free periods. At 30 September
2016, GBP2.0 million of annual income was in rent free periods.
As at 30 September 2016, the weighted average lease length to first
termination, based on headline annual rent, was 5.7 years.
Our lease expiry profile to earliest termination is relatively balanced, having
taken steps to smooth it in previous years. Income at risk in any one year
ranges from 9.0% of total income in the first year to a maximum of 16.7% in the
fourth year. Between the fifth and tenth years the income at risk represents
23.3% of total income. From the tenth year onwards the income at risk falls to
14.1%.
Lease Expiry Profile
0-1 year 1-2 years 2-3 years 3-4 years 4-5 years 5-10 years 10 years +
9.0% 12.9% 12.4% 16.7% 11.6% 23.3% 14.1%
Economic backdrop
Post referendum, investment markets have been pricing in uncertainty. The
consensus view is that UK growth is expected to slow in the coming quarters,
however this is highly dependant on political decisions surrounding the result
of the referendum, economic indicators such as inflation and employment levels
and external global market factors. The result of the recent US presidential
election is likely to heighten this period of uncertainty, although at this
stage it is too early to assess any potential impact on the UK economy. There
has already been, since the result, some upward yield movement in bond markets.
UK Economy
The referendum result has had an impact on UK financial and economic markets.
If uncertainty drags out for longer than anticipated by markets, then there is
a possibility of a deeper slowdown in the economy. However as it stands, the
fundamentals driving the economy are strong and recent figures on economic
activity are encouraging. The Office of National Statistics estimated quarterly
GDP growth for the third quarter of 2016 to be 0.5%, bringing estimates for GDP
growth for the six months to September 2016 to 1.2%.
The unemployment rate during the period June to August 2016 was 4.9%, its
lowest rate since July to September 2005, and also lower than the period
January to March 2016, when it stood at 5.1%.There were 23 million people
working full time in the same period, unchanged from the period January to
March 2016. Average weekly earnings based on total pay in the three months to
August compared to the period January to March 2016 rose by 1.3%.
Figures from the Office of National Statistics show that CPI inflation rose by
0.9% in the six months to September 2016 compared to a nil rise in the six
months to March 2016. The current inflation target from the Monetary Policy
Committee remains at 2.0%.
Ten year gilt yields currently look low by past comparison, at the end of
September 2016 they stood at 0.7% compared to 1.5% at the end of March 2016.
The Bank of England cut base rates from 0.5% to 0.25% in August 2016.
UK Property Market
Investment volumes were generally much lower in the run up to the referendum.
Subsequently, selling pressure, primarily caused by redemptions in the
open-ended funds, had an impact on market sentiment and contributed to falling
capital values over the period.
The MSCI IPD Monthly Index shows a total return for All Property in the six
months to September 2016 of -1.0%. Returns comprised -3.7% capital growth
and 2.7% income return. Total returns for the industrial sector in the 6 months
to September were 1.2%, which was the only sector to deliver positive returns
in the period. Offices were the worst performing sector, falling by -2.5%,
followed by retail at -1.4%.
The MSCI IPD Monthly Index shows that initial yields have moved from 4.9% in
March 2016 to 5.2% in September 2016.
The result of the referendum impacted capital growth performance in June, July,
August and September. Capital growth in the six months to September 2016 fell
by -3.7% as opposed to the six months to March 2016 where capital growth was
1.5%. Rental growth recorded positive growth of 0.7% in the six months to
September, albeit this was slower compared to 1.9% in the six months to March
2016.
The new IPD Financial Vacancy Rate calculation now includes geared and stepped
leases and excludes assets with development. The MSCI IPD Index recorded an
occupancy rate of 92.6% in September 2016, relatively unchanged from March 2016
which recorded 93.0%. The highest occupancy in September 2016 was recorded for
retail at 95.6% (March 2016: 95.8%) followed by industrial at 93.8% (March
2016: 93.3%) and offices at 88.2% (March 2016: 89.2%).
According to Property Data, investment volumes in the six months to September
2016 fell by a third compared to the previous six months. Total investment fell
from GBP32 billion in the six months to March 2016 to GBP22 billion in the six
months to September 2016.
Official figures from the Bank of England showed total outstanding debt to
commercial property at the end of August stood at GBP150.6 billion. At the end of
August 2016, net new lending to property was GBP-0.3 billion compared to GBP1.5
billion in March 2016. This is consistent with the weak investment activity
seen post referendum. The total stock of property as a percentage of
outstanding debt fell to its lowest level since 2002.
Outlook
Occupational demand was particularly strong in the period up to the referendum
vote but since then there has been signs of it slowing slightly. We remain
confident that we provide space that meets occupiers' needs and have completed
GBP0.9 million per annum of lettings since 23 June with a further GBP1 million per
annum under offer.
We have taken a more conservative view on the central London office market and
disposed of two assets, one of which was post period end reducing our weighting
to 13.4% as at 14 October. We have retained 50 Farringdon Road, which is our
largest void and ideally placed next to Farringdon station which will be a
Crossrail hub in 2018. We also hold Angel Gate in Islington, which has been
repositioned and is highly reversionary. Both buildings have longer term
development potential.
Although our occupancy has dipped to 93% primarily due to the space at
Farringdon Road, we remain in line with the MSCI IPD occupancy benchmark. Space
at 50 Farringdon Road, two units at River Way in Harlow and one unit at Lyon
Business Park in Barking make up 63% of the total void. The industrial units in
Harlow and Barking are under offer and we are confident of the letting
prospects at 50 Farringdon Road. Based on current vacancies, it is pleasing to
note that over 90% of the void, weighted by ERV, has been vacant for less than
three months.
Activity within the portfolio remains encouraging across all sectors which has
enabled us to maintain values over the period and to outperform the MSCI IPD
Quarterly Benchmark over one, three, five and ten years.
Investment markets now appear to be stabilising and a number of open ended
funds are now free from redemption restrictions, which is a positive sign,
further reinforced by the fund flow numbers recently produced by the Investment
Association. Our own recent disposals, which were ahead of valuation, also
support this.
The heterogeneous nature of the commercial property market means that there
will always be opportunities to exploit mispricing, especially in more volatile
markets. As we have demonstrated, our patient, structured approach to
investment and active management continues to deliver outperformance. We
believe our portfolio strategy, focus on income, overweight position to the
better performing industrial sector and our strong occupier focus is entirely
appropriate for current market conditions.
Picton Capital Limited
14 November 2016
Investment Manager's Report
Top ten assets
The largest assets in the portfolio as at 30 September 2016, ranked by capital
value, represent 47% of the total portfolio valuation and are detailed below:
Sector Tenure Approximate
Area (sq ft)
Parkbury Industrial Estate, Radlett Industrial Freehold 336,700
River Way Industrial Estate, Harlow Industrial Freehold 455,000
Angel Gate Office Village, City Road, London EC1 Office Freehold 64,500
Stanford House, Long Acre, London WC2 Retail Freehold 19,700
50 Farringdon Road, London EC1 Office Leasehold 32,000
Belkin Unit, Shipton Way, Rushden Industrial Leasehold 312,850
30 & 50 Pembroke Court, Chatham Office Leasehold 86,300
B&Q, Queens Road, Sheffield Retail Freehold 103,000
Warehouse
Phase II, Parc Tawe Retail Park, Swansea Retail Leasehold 116,700
Warehouse
Metro Building, Manchester Office Freehold 71,000
A full portfolio listing is available on the Company's website,
www.picton.co.uk.
Top ten occupiers
The top ten occupiers, based as a percentage of annualised contracted rental
income, after lease incentives, as at 30 September 2016, are summarised below:
Occupier %
1 Belkin Limited 4.0
2 DHL Supply Chain Limited 3.5
3 B&Q Plc 2.9
4 Snorkel Europe Limited 2.6
5 The Random House Group Limited 2.4
6 Cadence Design Systems Limited 2.3
7 Portal Chatham LLP 2.1
8 Edward Stanford Limited 1.9
9 XMA Limited 1.6
10 Ricoh UK Limited 1.5
Total 24.8
Industrial portfolio
Portfolio key metrics
30 September 30 September 31 March
2016 2015 2016
Value GBP238.6 GBP227.5 GBP236.6
million million million
Internal Area 2,730,000 sq 2,738,000 sq 2,745,200 sq
ft ft ft
Annual Rental Income GBP14.5 GBP14.5 GBP14.4
million million million
Estimated Rental Value GBP16.7 GBP16.1 GBP16.8
million million million
Occupancy 94.3% 95.4% 94.2%
Number of Assets 17 18 18
The industrial portfolio has performed well during the period, with 0.8%
valuation growth. Occupancy has increased slightly to 94.3% and activity
remains robust. The distribution portfolio remains fully leased and we have
only six vacant multi-let units out of 125, four of which are under offer.
Whilst there have been no noteworthy acquisitions or disposals during the
period, a small piece of land was acquired in Oldham as part of a larger
transaction for GBP80,000, where we secured a change of use from industrial to
leisure which accounts for the reduction in the number of assets held within
the sector. This allowed us to secure The Gym Group on a 15 year lease at a
rent of GBP0.15 million per annum, 50% ahead of its ERV as a industrial unit,
leading to a net valuation uplift of GBP0.22 million or 18% over the period.
At one of our larger multi-let estates, River Way in Harlow, four units came
back in the summer totalling 140,000 sq ft. We pre-let two of the units via
Agreements to Lease for a combined rent of GBP0.4 million per annum, with the
lease commencement dates being the day after the current leases expired. The
new occupiers took the units in existing condition and we have secured
dilapidations of GBP0.1 million from the outgoing occupier. We completed a lease
to BOC on our largest industrial void, a 55,000 sq ft unit, post period end on
a straight ten year lease at a rent of GBP0.35 million per annum. We have one
further vacant unit on the estate which is under offer, subject to planning.
In Washington at our 250,000 sq ft distribution unit, we secured an uplift of GBP
0.11 million at the June 2016 rent review, 12% above ERV, increasing the
passing rent to GBP1.12 million per annum. This unit is let until 2031.
Both the vacant multi-let units at The Business Centre in Wokingham were let,
at a combined rent of GBP68,000 per annum, 8% ahead of ERV. We modernised the
exterior of one of the units and we will be looking to roll the scheme out to
the rest of the estate with occupier buy-in. On the same estate, we renewed a
lease of a smaller unit for a term of five years (subject to break) at GBP30,000
per annum, 16% ahead of ERV.
All of the smaller units at Lyon Business Park, Barking have been let securing
GBP71,800 per annum, in line with ERV. We have also completed, post period end,
an Agreement to Lease on unit O, our second largest industrial void, securing a
minimum of five years at a rent of GBP0.25 million per annum, 17% ahead of ERV
with a nominal rent free period. Following completion of the lease in December,
the estate will be fully let.
Further activity took place at the following properties:
* In Cardiff, where we own a industrial unit adjacent to our office holding,
we secured a 20% uplift at review securing GBP27,000 per annum which was also
20% ahead of ERV.
* At Datapoint in East London we removed a 2018 break clause in an occupier's
lease, securing GBP50,000 per annum (subject to review) to expiry in 2023 in
return for a small rent free period.
We have seen valuation growth and stable ERVs over the period and expect this
sector to continue to perform well due to the good occupational demand and low
vacancy levels.
Office portfolio
Portfolio key metrics
30 September 30 September 31 March
2016 2015 2016
Value GBP226.7 GBP217.0 GBP252.1
million million million
Internal Area 951,400 sq 929,400 sq 999,400 sq
ft ft ft
Annual Rental Income GBP13.8 GBP14.1 GBP14.8
million million million
Estimated Rental Value GBP18.4 GBP17.5 GBP19.9
million million million
Occupancy 86.9% 92.4% 95.8%
Number of Assets 20 20 21
Activity within the office portfolio was dominated by our central London office
disposals, with Boundary House, London EC3 sold in August, as detailed below.
Following the end of the period 1 Chancery Lane, London WC2 was sold for GBP17.25
million, further reducing our central London office exposure. We have seen
positive occupational demand in the regional office sector and continue to
secure rents in line or indeed ahead of ERV.
Following significant asset management, the sale of Boundary House, London EC3
completed on 30 August 2016 for GBP27.8 million, 1% ahead of the March 2016
valuation and 13% ahead of the September 2015 valuation. Prior to the sale, we
surrendered a lease expiring in 2017 where the occupier was paying GBP38,000 per
annum. The occupier paid a surrender premium of GBP75,000 and left their fit out
in place. The suite was re-let in the same month, without any works being
carried out, on a five year term at a rent of GBP78,750 per annum, 32% ahead of
ERV and setting a new rental tone in the building of GBP50 per sq ft. We let
another suite on a five year lease (subject to break) at a rent of GBP80,000 per
annum, 25% ahead of ERV. In addition and in a separate transaction the Company,
prior to the sale, secured a payment of GBP0.67 million from a nearby owner in
respect of a Rights of Light claim.
At the end of August we had two floors returned to us at 50 Farringdon Road,
London EC1 and, based on current advice, we expect to let the space some 60%
ahead of the rent paid by the outgoing tenant. This space accounts for 40% of
the total void.
8/9 Angel Gate, which was substantially refurbished over the summer, was let on
a ten year lease (subject to break) at a rent of GBP0.15 million per annum, in
line with ERV. In other transactions at this property, we renewed two leases
increasing the combined rent by 33% to GBP0.12 million per annum in line with ERV
and surrendered two leases where the occupiers were paying GBP24 per sq ft. These
units will be refurbished and re-let for approaching GBP50 per sq ft.
At Trident House in St. Albans we completed two lettings on the refurbished 1st
floor, securing a combined rent of GBP0.21 million per annum, 15% ahead of ERV
and setting a new tone for the property at GBP34.50 per sq ft. We believe this to
be the highest rent achieved in the St. Albans office market.
One of our occupiers took a new five year lease of a floor at 180 West George
Street in Glasgow, at a rent of GBP0.16 million per annum, 12% ahead of ERV and
setting a new rental tone for the property at GBP26 per sq ft. We expected this
occupier to vacate on lease expiry when we purchased the property last year and
are pleased to have retain them. We have two floors coming back at the end of
the year, which we anticipated on purchase, these floors and the common areas
would be comprehensively refurbished to offer some of the best office space in
the central Glasgow market in 2017.
Further activity took place at the following properties:
* At Queens House, Glasgow five leases were renewed securing a combined GBP0.10
million (14% ahead of ERV)
* In Longcross Court, Cardiff a suite was let for GBP45,000 per annum (5% ahead
of ERV)
* At Colchester Business Park two suites were let for a combined GBP38,000 per
annum (4% ahead of ERV) and a further two occupiers renewed securing GBP
152,800 per annum (in line with ERV)
50 Farringdon Road is our largest void, now ready for immediate occupation,
followed by two small office buildings, totalling 30,000 sq ft, in Bracknell.
Retail and leisure portfolio
Portfolio key metrics
30 September 30 September 31 March
2016 2015 2016
Value GBP165.2 GBP170.4 GBP165.9
million million million
Internal Area 849,100 sq 835,300 sq 830,700 sq
ft ft ft
Annual Rental Income GBP11.1 GBP11.7 GBP11.2
million million million
Estimated Rental Value GBP11.3 GBP10.9 GBP10.9
million million million
Occupancy 99.4% 99.6% 99.4%
Number of Assets 20 20 19
Our retail portfolio remains almost fully let, with only four small shops
available to lease with a combined ERV of GBP68,000 per annum. No acquisitions or
disposals were made during the period, however, the property at Manchester
Road, Oldham has now been reclassified from industrial to leisure following
completion of a lease to The Gym Limited, referred to earlier.
The principal transaction was the GBP5.25 million settlement in relation to a
dispute at the Strathmore Hotel, Luton. The existing valuation and leasing
arrangement at this asset remained unchanged and as such has had a significant
impact on performance.
At Gloucester Retail Park we proactively surrendered Carpetright's lease in
order to secure Pure Gym who took a ten year lease at a rent of GBP0.14 million
per annum, 32% ahead of ERV. This transaction was conditional on obtaining
planning consent and various Landlord works which were concluded during the
quarter. In a separate transaction, we are pleased to confirm we have now
received planning for a pod unit in the car park which, once developed, will be
let to a Starbuck's franchisee on a ten year lease at GBP60,000 per annum. An
Agreement for Lease is in place.
Further activity took place at the following properties:
* At the Crown & Mitre complex, Carlisle, two leases were renewed securing a
combined GBP42,000 per annum (8% ahead of ERV)
* At Kings Heath, Birmingham we let a unit for GBP39,500 per annum (22% ahead
of ERV)
* In Longcross Court, Cardiff a retail unit (which was surrendered in March
for a surrender premium of GBP25,000 where the former occupier was paying GBP
18,900 per annum) was let without refurbishment for GBP27,300 per annum (82%
ahead of ERV)
Directors' responsibilities
Statement of principal risks and uncertainties
The Company's assets comprise direct investments in UK commercial property. Its
principal risks are therefore related to the commercial property market in
general and its investment properties. Other risks faced by the Company include
economic, investment and strategic, regulatory, management and control,
operational, and financial risks.
These risks, and the way in which they are managed, are described in more
detail under the heading 'Risk Management' within the Strategic Report in the
Company's Annual Report for the year ended 31 March 2016. The Company's
principal risks and uncertainties have not changed materially since the date of
that report.
Statement of going concern
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future.
Therefore, they continue to adopt the going concern basis in preparing the
financial statements.
Statement of directors' responsibilities in respect of the interim report
We confirm that to the best of our knowledge:
a. the condensed set of consolidated financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting';
b. the Chairman's Statement and Investment Manager's Report (together
constituting the Interim Management Report) together with the Statement of
Principal Risks and Uncertainties above include a fair review of the
information required by the Disclosure and Transparency Rules ('DTR') 4.2.7R,
being an indication of important events that have occurred during the first six
months of the financial year, a description of principal risks and
uncertainties for the remaining six months of the year, and their impact on the
condensed set of consolidated financial statements; and
c. the Chairman's Statement together with the condensed set of consolidated
financial statements include a fair review of the information required by DTR
4.2.8R, being related party transactions that have taken place in the first six
months of the current financial year and that have materially affected the
financial position or performance of the Company during that period, and any
changes in the related party transactions described in the last Annual Report
that could do so.
The maintenance and integrity of the Picton Property Income Limited website is
the responsibility of the Directors; the work carried out by the auditor does
not involve consideration of these matters and, accordingly, the auditor
accepts no responsibility for any changes that may have occurred to the
financial statements or audit report since they were initially presented on the
website.
By Order of the Board
Robert Sinclair
Director
14 November 2016
Independent review report to Picton Property Income Limited (the "Company")
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the Half Year Report for the six months ended 30 September 2016
which comprises the Condensed Consolidated Statement of Comprehensive Income,
the Condensed Consolidated Statement of Changes in Equity, the Condensed
Consolidated Balance Sheet, the Condensed Consolidated Statement of Cash Flows
and the related explanatory notes. We have read the other information contained
in the Half Year 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 the terms of our
engagement to assist the Company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority
("the UK FCA"). Our review has been undertaken so that we might state to the
Company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company for our review work, for
this report, or for the conclusions we have reached.
Directors' responsibilities
The Half Year Report is the responsibility of, and has been approved by, the
Directors. The Directors are responsible for preparing the Half Year Report in
accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the Company are
prepared in accordance with IFRS. The condensed set of financial statements
included in this Half Year Report has been prepared in accordance with IAS 34
'Interim Financial Reporting'.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the Half Year 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 UK. 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 Year Report
for the six months ended 30 September 2016 is not prepared, in all material
respects, in accordance with IAS 34 and the DTR of the UK FCA.
Neale D Jehan
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants
Guernsey
14 November 2016
Condensed consolidated statement of comprehensive income
For the half year ended 30 September 2016
Note Income Capital 6 months 6 months Year
GBP000 GBP000 ended ended ended
30 30 31 March
September September 2016
2016 2015 audited
unaudited unaudited Total
Total Total GBP000
GBP000 GBP000
Income
Revenue from properties 3 29,894 - 29,894 22,610 45,923
Property expenses 4 (5,324) - (5,324) (4,523) (10,001)
Net property income 24,570 - 24,570 18,087 35,922
Expenses
Management expenses (1,610) - (1,610) (1,417) (2,901)
Other operating expenses (681) - (681) (828) (1,510)
Total operating expenses (2,291) - (2,291) (2,245) (4,411)
Operating profit before movement 22,279 - 22,279 15,842 31,511
on investments
Gains and (losses) on investments
Profit/(loss) on disposal of 9 - (570) (570) 505 799
investment properties
Investment property valuation 9 - 266 266 21,493 44,171
movements
Total gains/(losses) on - (304) (304) 21,998 44,970
investments
Operating profit 22,279 (304) 21,975 37,840 76,481
Financing
Interest receivable 35 - 35 109 144
Interest payable (6,018) - (6,018) (5,794) (11,561)
Total finance costs (5,983) - (5,983) (5,685) (11,417)
Profit/(loss) before tax 16,296 (304) 15,992 32,155 65,064
Tax (334) - (334) (216) (216)
Total comprehensive income/(loss) 15,962 (304) 15,658 31,939 64,848
Earnings per share
Basic and diluted 7 3.0p (0.1)p 2.9p 5.9p 12.0p
The total column of this statement represents the Group's Condensed
Consolidated Statement of Comprehensive Income. The supplementary income return
and capital return columns are both prepared under guidance published by the
Association of Investment Companies. All items in the above statement derive
from continuing operations.
All income is attributable to the equity holders of the Company. There are no
minority interests. Notes 1 to 15 form part of these condensed consolidated
financial statements.
Condensed consolidated statement of changes in equity
For the half year ended 30 September 2016
Note Share Retained Total
Capital Earnings GBP000
GBP000 GBP000
Balance as at 31 March 2015 157,313 212,657 369,970
Issue costs of shares 136 - 136
Profit for the period - 31,939 31,939
Dividends paid 6 - (8,911) (8,911)
Balance as at 30 September 2015 157,449 235,685 393,134
Profit for the period - 32,909 32,909
Dividends paid 6 - (8,911) (8,911)
Balance as at 31 March 2016 157,449 259,683 417,132
Profit for the period - 15,658 15,658
Dividends paid 6 - (8,911) (8,911)
Balance as at 30 September 2016 157,449 266,430 423,879
Notes 1 to 15 form part of these condensed consolidated financial statements.
Condensed consolidated balance sheet
As at 30 September 2016
Note 30 30 31 March
September September 2016
2016 2015 audited
unaudited unaudited GBP000
GBP000 GBP000
Non-current assets
Investment properties 9 621,149 606,302 646,018
Tangible assets 34 77 57
Accounts receivable 3,470 3,558 3,331
Total non-current assets 624,653 609,937 649,406
Current assets
Accounts receivable 21,208 15,513 14,649
Cash and cash equivalents 35,302 20,341 22,759
Total current assets 56,510 35,854 37,408
Total assets 681,163 645,791 686,814
Current liabilities
Accounts payable and accruals (21,246) (17,550) (18,321)
Loans and borrowings 10 (30,115) (1,034) (29,091)
Obligations under finance leases (109) (105) (109)
Total current liabilities (51,470) (18,689) (47,521)
Non-current liabilities
Loans and borrowings 10 (204,098) (232,245) (220,444)
Obligations under finance leases (1,716) (1,723) (1,717)
Total non-current liabilities (205,814) (233,968) (222,161)
Total liabilities (257,284) (252,657) (269,682)
Net assets 423,879 393,134 417,132
Equity
Share capital 11 157,449 157,449 157,449
Retained earnings 266,430 235,685 259,683
Total equity 423,879 393,134 417,132
Net asset value per share 13 78p 73p 77p
These condensed consolidated financial statements were approved by the Board of
Directors on 14 November 2016 and signed on its behalf by:
Robert Sinclair
Director
Notes 1 to 15 form part of these condensed consolidated financial statements.
Condensed consolidated statement of cash flows
For the half year ended 30 September 2016
Note 6 months 6 months Year
ended ended ended
30 30 31 March
September September 2016
2016 2015 audited
unaudited unaudited GBP000
GBP000 GBP000
Operating activities
Operating profit 21,975 37,840 76,481
Adjustments for non-cash items 12 327 (21,973) (44,925)
Interest received 35 109 144
Interest paid (4,702) (4,502) (8,980)
Tax paid (91) (133) (426)
Increase in receivables (7,087) (1,494) (712)
Increase in payables 2,710 1,254 2,439
Cash inflows from operating activities 13,167 11,101 24,021
Investing activities
Acquisition of investment properties 9 - (54,611) (73,084)
Capital expenditure on investment properties 9 (2,507) (2,924) (4,403)
Disposal of investment properties 27,602 6,157 9,365
Purchase of tangible assets - (1) (1)
Cash inflows/(outflows) from investing activities 25,095 (51,379) (68,123)
Financing activities
Borrowings repaid (16,323) (500) (1,011)
Borrowings drawn - - 15,800
Financing costs (485) (198) (198)
Issue costs of ordinary shares - 136 -
Dividends paid 6 (8,911) (8,911) (17,822)
Cash outflows from financing activities (25,719) (9,473) (3,231)
Net increase/(decrease) in cash and cash 12,543 (49,751) (47,333)
equivalents
Cash and cash equivalents at beginning of period/ 22,759 70,092 70,092
year
Cash and cash equivalents at end of period/year 35,302 20,341 22,759
Notes 1 to 15 form part of these condensed consolidated financial statements.
Notes to the condensed consolidated financial statements
For the half year ended 30 September 2016
1. General information
Picton Property Income Limited (the "Company" and together with its
subsidiaries the "Group") was registered on 15 September 2005 as a closed ended
Guernsey investment company.
The financial statements are prepared for the period from 1 April to 30
September 2016, with unaudited comparatives for the period from 1 April to 30
September 2015. Comparatives are also provided from the audited financial
statements for the year ended 31 March 2016.
The financial information for the year ended 31 March 2016 is derived from the
financial statements delivered to the UK Listing Authority and does not
constitute statutory accounts.
2. Significant accounting policies
These financial statements have been prepared in accordance with IAS 34
'Interim Financial Reporting'. They do not include all of the information
required for full annual financial statements, and should be read in
conjunction with the financial statements of the Company as at and for the year
ended 31 March 2016.
The accounting policies applied by the Company in these financial statements
are the same as those applied by the Company in its financial statements as at
and for the year ended 31 March 2016.
The annual financial statements of the Company are prepared in accordance with
International Financial Reporting Standards ('IFRS') as adopted by the IASB.
There have been no significant changes to management judgement and estimates.
3. Revenue from properties
6 months 6 months Year
ended ended ended
30 30 31 March
September September 2016
2016 2015 GBP000
GBP000 GBP000
Rents receivable (adjusted for lease incentives) 20,730 19,224 39,663
Surrender premiums 213 102 339
Dilapidation receipts 155 13 108
Other income 6,005 647 660
Service charge income 2,791 2,624 5,153
29,894 22,610 45,923
Rents receivable includes lease incentives recognised of GBP0.9 million (30
September 2015: GBP0.7 million, 31 March 2016: GBP1.2 million).
4. Property expenses
6 months 6 months Year
ended ended ended
30 30 31 March
September September 2016
2016 2015 GBP000
GBP000 GBP000
Property operating expenses 1,468 1,201 3,308
Property void costs 1,065 698 1,540
Recoverable service charge costs 2,791 2,624 5,153
5,324 4,523 10,001
5. Operating segments
The Board is charged with setting the Company's investment policy and strategy
in accordance with the Company's investment restrictions and overall
objectives. The key measure of performance used by the Board to assess the
Group's performance is the total return on the Group's net asset value. As the
total return on the Group's net asset value is calculated based on the net
asset value per share calculated under IFRS as shown at the foot of the Balance
Sheet, assuming dividends are reinvested, the key performance measure is that
prepared under IFRS. Therefore no reconciliation is required between the
measure of profit or loss used by the Board and that contained in the financial
statements.
The Board has considered the requirements of IFRS 8 'Operating Segments'. The
Board is of the opinion that the Group, through its subsidiary undertakings,
operates in one reportable industry segment, namely real estate investment, and
across one primary geographical area, namely the United Kingdom and therefore
no segmental reporting is required. The portfolio consists of 57 commercial
properties, which are in the industrial, office, retail, retail warehouse, and
leisure sectors.
6. Dividends
Declared and paid: 6 months 6 months Year
ended ended ended
30 30 31 March
September September 2016
2016 2015 GBP000
GBP000 GBP000
Interim dividend for the period ended 31 March 2015: 0.825 - 4,455 4,455
pence
Interim dividend for the period ended 30 June 2015: 0.825 - 4,456 4,455
pence
Interim dividend for the period ended 30 September 2015: - - 4,456
0.825 pence
Interim dividend for the period ended 31 December 2015: - - 4,456
0.825 pence
Interim dividend for the period ended 31 March 2016: 0.825 4,455 - -
pence
Interim dividend for the period ended 30 June 2016: 0.825 4,456 - -
pence
8,911 8,911 17,822
The interim dividend of 0.825 pence per ordinary share in respect of the period
ended 30 September 2016 has not been recognised as a liability as it was
declared after the period end. A dividend of GBP4,455,000 will be paid on 30
November 2016.
7. Earnings per share
Basic earnings per share is calculated by dividing the net profit for the
period attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares in issue during the period. The following
reflects the profit and share data used in the basic and diluted profit per
share calculation:
6 months 6 months Year ended
ended ended 31 March
30 30 2016
September September
2016 2015
Net profit attributable to ordinary shareholders of the 15,658 31,939 64,848
Company from continuing operations (GBP000)
Weighted average number of ordinary shares for basic and 540,053,660 540,053,660 540,053,660
diluted profit/(loss) per share
8. Fair value measurements
The fair value measurement for the financial assets and financial liabilities
are categorised into different levels in the fair value hierarchy based on the
inputs to valuation techniques used. The different levels have been defined as
follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities that the Group can access at the measurement date. The fair value
of the zero dividend preference shares issued by the Group is included in Level
1.
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly. The fair
value of the Group's secured loan facilities, as disclosed in note 10, are
included in Level 2.
Level 3: unobservable inputs for the asset or liability. The fair value of the
Group's investment properties is included in Level 3.
The Group recognises transfers between levels of the fair value hierarchy as of
the end of the reporting period during which the transfer has occurred. There
were no transfers between levels for the period ended 30 September 2016.
The fair value of all other financial assets and liabilities is not materially
different from their carrying value in the financial statements.
The Group's financial risk management objectives and policies are consistent
with those disclosed in the consolidated financial statements for the year
ended 31 March 2016.
9. Investment properties
6 months 6 months Year
ended ended ended
30 30 31 March
September September 2016
2016 2015 GBP000
GBP000 GBP000
Fair value at start of period/year 646,018 532,926 532,926
Acquisitions - 54,611 73,084
Capital expenditure on investment properties 2,507 2,924 4,403
Disposals (27,072) (6,157) (9,365)
Realised gains on disposal - 505 799
Realised losses on disposal (570) - -
Unrealised gains on investment properties 7,336 25,450 51,125
Unrealised losses on investment properties (7,070) (3,957) (6,954)
Fair value at the end of the period/year 621,149 606,302 646,018
Historic cost at the end of the period/year 670,047 668,297 685,499
The fair value of investment properties reconciles to the appraised value as
follows:
30 30 31 March
September September 2016
2016 2015 GBP000
GBP000 GBP000
Appraised value 630,460 614,940 654,605
Valuation of assets held under finance leases 1,701 1,219 1,731
Lease incentives held as debtors (11,012) (9,857) (10,318)
Fair value at the end of the period/year 621,149 606,302 646,018
As at 30 September 2016, all of the Group's properties are Level 3 in the fair
value hierarchy as it involves the use of significant inputs and there were no
transfers between levels during the period. Level 3 inputs used in valuing the
properties are those which are unobservable, as opposed to Level 1 (inputs from
quoted prices) and Level 2 (observable inputs either directly, i.e. as prices,
or indirectly, i.e. derived from prices).
The investment properties were valued by CBRE Limited, Chartered Surveyors, as
at 30 September 2016 on the basis of fair value in accordance with the RICS
Valuation - Professional Standards (2014). There were no significant changes to
the inputs into the valuation process (ERV, net initial yield, reversionary
yield and true equivalent yield), or assumptions and techniques used during the
period, further details on which were included in note 14 of the consolidated
financial statements of the Group for the year ended 31 March 2016.
The Group's borrowings (note 10) are secured by a first ranking fixed charge
over the majority of investment properties held.
10. Loans and borrowings
Maturity 30 30 31 March
September September 2016
2016 2015 GBP000
GBP000 GBP000
Current
Aviva facility - 1,080 1,034 1,057
Zero dividend preference shares 15 October 29,035 - 28,034
2016
30,115 1,034 29,091
Non-current
Santander revolving credit facility 25 March - - 15,800
2018
Canada Life facility 20 July 33,718 33,718 33,718
2022
Canada Life facility 24 July 80,000 80,000 80,000
2027
Aviva facility 24 July 90,380 91,460 90,926
2032
Zero dividend preference shares 15 October - 27,067 -
2016
204,098 232,245 220,444
234,213 233,279 249,535
In 2012, the Group entered into loan facilities with Canada Life Limited and
Aviva Commercial Finance Limited for GBP113.7 million and GBP95.3 million
respectively. The facility with Canada Life has a term of 15 years, with GBP33.7
million repayable on the tenth anniversary of drawdown. The Aviva facility has
a term of 20 years with approximately one third repayable over the life of the
loan in accordance with a scheduled amortisation profile.
The fair value of the secured loan facilities at 30 September 2016, estimated
as the present value of future cash flows discounted at the market rate of
interest at that date, was GBP235.3 million (30 September 2015: GBP221.6 million,
31 March 2016: GBP243.1 million). The fair value of the secured loan facilities
is classified as Level 2 under the hierarchy of fair value measurements.
The Group has 22,000,000 zero dividend preference shares (ZDPs) in issue. These
accrue additional capital at a rate of 7.25% per annum, resulting in a final
capital entitlement at maturity of 132.3 pence per share. The fair value of the
ZDPs at 30 September 2016, based on the quoted market price at that date, was GBP
28.8 million (30 September 2015: GBP28.0 million, 31 March 2016: GBP28.2 million).
The fair value of the ZDPs is classified as Level 1 under the hierarchy of fair
value measurements. The ZDPs were repaid in full on 14 October 2016 for GBP29.1
million.
The weighted average interest rate on the Group's borrowings as at 30 September
2016 was 4.59% (30 September 2015: 4.57%, 31 March 2016: 4.43%).
11. Share capital
The Company has 540,053,660 ordinary shares in issue of no par value (30
September 2015: 540,053,660, 31 March 2016: 540,053,660).
The balance on the Company's share premium account as at 30 September 2016 was
GBP157,449,000 (30 September 2015: GBP157,449,000, 31 March 2016: GBP157,449,000).
12. Adjustment for non-cash movements in the cash flow statement
6 months 6 months Year
ended ended ended
30 30 31 March
September September 2016
2016 2015 GBP000
GBP000 GBP000
(Profit)/loss on disposal of investment properties 570 (505) (799)
Investment property valuation movements (266) (21,493) (44,171)
Depreciation of tangible assets 23 25 45
327 (21,973) (44,925)
13. Net asset value
The net asset value per ordinary share is based on net assets at the period end
and 540,053,660 (30 September 2015: 540,053,660, 31 March 2016: 540,053,660)
ordinary shares, being the number of ordinary shares in issue at the period
end.
At 30 September 2016, the Company had a net asset value per ordinary share of GBP
0.78 (30 September 2015: GBP0.73, 31 March 2016: GBP0.77).
14. Related party transactions
The total fees earned during the period by the five Directors of the Company
were GBP103,000 (30 September 2015: GBP121,000, 31 March 2016: GBP223,500). As at 30
September 2016 the Group owed GBPnil to the Directors (30 September 2015 and 31
March 2016: GBPnil).
Picton Property Income Limited has no controlling parties.
15. Events after the balance sheet date
A dividend of GBP4,455,000 (0.825 pence per share) was approved by the Board on
24 October 2016 and is payable on 30 November 2016.
The Group has completed the disposal of two properties since 30 September 2016
for proceeds of GBP17.7 million.
The zero dividend preference shares were repaid in full on 14 October 2016 for
GBP29.1 million and Picton ZDP Limited was delisted from the London Stock
Exchange on 17 October 2016.
END
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November 15, 2016 02:00 ET (07:00 GMT)
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