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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hibernia Reit P.l.c. | LSE:HBRN | London | Ordinary Share | IE00BGHQ1986 | ORD EUR0.10 (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 136.90 | 136.20 | 137.60 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMHBRN
RNS Number : 8056O
Hibernia REIT PLC
10 November 2016
INTERIM RESULTS
For the six-month period to 30 September 2016
10 November 2016
Hibernia REIT plc ("Hibernia", the "Company" or the "Group") today announces its interim results for the six months to 30 September 2016. Highlights for the period:
Steady financial performance in first half
-- EPRA NAV per share of 134.6 cent up 2.9% since 31 March 2016 -- EPRA earnings of EUR8.0m (Sep 2015: EUR5.2m, excluding one-off surrender premium)
-- Profit before tax of EUR32.4m (Sep 2015: EUR73.7m) including revaluation surplus and gains on disposals
-- Interim dividend declared of 0.75 cent per share, representing 50% of dividends paid in respect of prior year, in line with stated policy (Sep 2015: 0.7 cent per share)
Leasing activity adding substantially to contracted rent roll and income duration
-- Contracted rent roll now EUR46.2m, up 18.5% on 31 March 2016([1]) following major lettings to ComReg and MTT and the acquisition of Clanwilliam Court
-- "In-place" office portfolio income duration and security increased
o WAULT to earlier of break / expiry now 5.9 years, up 37% on 31 March 16
o 46% of rent now upward only or capped / collared at next rent review (Mar 16: 36%)
-- Increase in WAULTs driven by completed schemes with WAULT to earlier of break / expiry of 11.1 years and avg. rents of EUR49psf
-- Remaining "in-place"([2]) CBD offices have avg. rents of EUR35psf, reversionary potential of 27% and an avg. period to earlier of rent review or expiry of 2.1 years
Committed development schemes progressing well and on track for delivery over next 20 months
-- Three committed schemes (230,000 sq. ft.) scheduled for completion over next 20 months
o Windmill and Sir John Rogerson's Quay remain on track for late 2017 and mid-2018 completions
o Refurbishment of Two Dockland Central expected to complete in late 2017
-- Three schemes completed in period totalling 191,000 sq. ft. of new space
o Cumberland delivered profit on cost of more than 59% (71% including value of front site)
o One Dockland Central and SOBO Works both delivered profits on cost in excess of 30%
Longer term development pipeline bolstered
-- Acquired Blocks 1, 2 & 5 Clanwilliam Court, Dublin 2, giving (together with Marine House) 134,700 sq. ft. of offices with near term income and redevelopment potential once leases expire in 2020/21
o Planning granted for Phase 2 of redevelopment of Harcourt Square giving total permission for up to 276,500 sq. ft. of offices on the 1.9-acre site: Hibernia seeking vacant possession from OPW to commence redevelopment: court case expected to be heard in early 2017
Building management
-- Building management department formed to take control of the management of the Group's multi-let properties and maximise quality of service for tenants
-- Cumberland directly managed from Sept and all multi-let buildings expected to follow suit by mid-2017
Low gearing and funding in place to take advantage of opportunities
-- Net debt at 30 September 2016 of EUR110.5m, LTV of 10.7% (Mar 16: EUR52.9m, LTV 5.7%) -- Cash and undrawn facilities of EUR312m: EUR234m net of committed development spend
Kevin Nowlan, Chief Executive Officer of Hibernia, said:
"We have made good progress in the first half of the financial year, growing our contracted rent roll by 18% and increasing the average duration of our income by 37% through new lettings. The value of our portfolio now exceeds EUR1bn for the first time, a significant milestone to have passed in less than three years in existence.
"While it is still early days, we are optimistic regarding the Dublin office market's prospects to benefit from the UK's decision to leave the EU, although we recognise that the timing and terms remain unclear and there are risks to the wider Irish economy. We are also monitoring closely the impact of the recent property tax changes proposed in the Finance Bill: while these do not affect REITs directly, they may create uncertainty in the investment market in the near term as well as possible opportunities if some parties choose to exit the market.
"As the rate of growth of rents and capital values moderates, development activity and asset management will be increasingly important to delivering performance. With Hibernia owning a portfolio rich in opportunity with a number of committed developments due to complete in the next 20 months and significant firepower to take advantage of any opportunities that arise, we remain positive about our prospects."
Contacts:
Hibernia REIT plc +353 1 536 9100
Kevin Nowlan, Chief Executive Officer
Tom Edwards-Moss, Chief Financial Officer
Murray Consultants
Doug Keatinge: +353 86 037 4163, dkeatinge@murrayconsultants.ie
Jill Farrelly: +353 87738 6608, jfarrelly@murrayconsultants.ie
About Hibernia REIT plc
Hibernia REIT plc is an Irish Real Estate Investment Trust ("REIT") listed on the Irish and London Stock Exchanges. The principal activity of the Company is to acquire and hold investments in Irish property (primarily commercial property) with a view to maximising shareholder returns.
Disclaimer
This Announcement contains forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Group or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements speak only as at the date of this Announcement. The Group will not undertake any obligation to release publicly any revision or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise except as required by law or by any appropriate regulatory authority.
Market Review
General economy
GDP growth expectations for Ireland have moderated since the result of the UK referendum on EU membership but remain strong at 4.2% in 2016 and 3.5% in 2017 (source: Department of Finance) and compare favourably to GDP growth forecasts for the Euro area of 1.7% in 2016 and 1.5% in 2017 (source: the IMF). Growth expectations for Irish core domestic demand (a better view of underlying economic activity) have also moderated somewhat but 3.3% growth is forecast in 2016, 3.7% in 2017 and 4.0% in 2018 (source: Goodbody) underpinned by strong employment, tax revenues and consumption figures.
The level of interconnectedness between the Irish and UK economies may bring risks to Ireland in the near term both from any deterioration in UK economic growth and as a result of the sharp depreciation in sterling. However, in the longer term, we believe Ireland and in particular Dublin, with attractions in terms of language, flexible labour laws, a low corporate tax rate and business friendly regulatory environment is well-positioned to benefit from any business exits from the UK. Foreign direct investment flows from the US and elsewhere in Europe continue to be healthy: at this stage it is unclear what impact, if any, the results of the US elections will have.
Irish public sector finances are gradually improving and the Government expects the budget deficit to fall to 0.9% of GDP in 2016 and 0.4% in 2017 (source: Department of Finance). The debt/GDP ratio is likely to decline to 76% by the end of 2016 (source: Davy) and in 2017 the Government is expected to continue its progress towards a balanced budget position (source: Goodbody).
Irish property investment market
Irish total property returns continue to moderate and the IPD/MSCI Ireland index delivered a total return of 2.1% in Q3 2016 (1.0% capital return and 1.1% income return) down from 3.1% in Q2 2016, bringing year-on-year performance to 14.9% (compared to 23.5% in the year to 31 March 2016).
Investment volumes remain high with EUR3.2bn traded in the nine months to 30 September 2016 vs EUR4.6bn and EUR3.5bn in 2014 and 2015, respectively (source: CBRE) with strong demand for "core product" and institutional buyers continuing to be active in the nine months to 30 September 2016. Prime Dublin office yields were stable at 4.65% at 30 September 2016, according to CBRE.
The introduction of a 20% withholding tax for property ICAVs and QIAIFs which was announced by the Government in the Budget and Finance Bill in October, and is subject to possible further change when debated and voted on by the Dáil later in November 2016 may, together with the proposed tax changes to S110 companies, create uncertainty in the investment market. The proposed changes do not affect the Irish REITs directly but any impact on capital values as a result of the uncertainty or the changes themselves will likely be felt by all market participants including the REITs. In the event that certain investors exit the market as a result of these changes, Hibernia is well-placed to move quickly in acquiring any assets which enhance the current portfolio.
Office occupational market
The first nine months of 2016 have seen strong occupier demand in the Dublin office market, with 1.9m sq. ft. of space taken up (source: CBRE). With three large lettings totalling c. 0.4m sq. ft. expected to sign in Q4 2016, take-up figures for the year are likely to be comfortably ahead of the 20-year average of 1.8m sq. ft. and closer to the 2.4m and 2.7m sq. ft. achieved in 2014 and 2015 (source: CBRE).
As a result of strong take-up and muted delivery of new space (thus far), vacancy rates in Dublin have continued their downward trend and the overall rate was 7.6% at 30 September 2016. The CBD vacancy rate was 5.7%, with the CBD Grade A vacancy rate at 3.1% and in Dublin 2/4 (where 73% of Hibernia's office portfolio is located, including two key committed development schemes) the Grade A vacancy rate was 2.1% (source: CBRE). Prime Grade A Dublin office rents ticked up to EUR60psf in Q3 2016, having been stable at EUR57.50psf for two quarters (source: CBRE).
The Dublin occupational market continues to be characterised by well-established trends: the city centre is the preferred location, representing 70% of Dublin take up in the five years to December 2015 and 79% in the nine months ending September 2016 (source: CBRE). Similarly, lettings of over 50,000 sq. ft. remain relatively infrequent and c. 50% of take-up continues to comprise lettings of less than 20,000 sq. ft.. In the nine months to 30 September 2016, 46% of take-up was by Irish companies, 32% by US and 13% by UK (source: CBRE).
While we understand that there has been an increase in enquiries regarding regulatory approval to operate in Ireland from financial and professional services firms following the UK referendum, we have yet to see any meaningful "Brexit" enquiries in the office market. We believe there are a number of entities (some with and some without an existing presence in Dublin) carrying out scoping exercises to assess the viability of moving operations to Dublin but these appear to be at an early stage.
Office development pipeline
While a handful of refurbishment projects were delivered in Dublin in 2015, 2016 has marked the delivery of the first new office buildings to the Dublin market in over five years. In total, 1.1m sq. ft. of new office space is expected to be delivered during 2016 and 1.8m sq. ft. in 2017, 62% of which is already pre-let or reserved (source: Company). Currently we expect around 1.7m sq. ft. will be delivered in 2018 and 2.7m sq. ft. in 2019, meaning a total of 7.5m sq. ft. gross of new space will be delivered between 2015 and 2019 down from our estimate of 8.5m sq. ft. as at March 2016. 7.5m sq. ft. of gross additions to the stock represents c.6.5m sq. ft. of net new space (as a result of demolition to facilitate new development) and would represent an increase in the total stock figure of c.16% vs an increase in stock of 98% from 1993 - 2002 and 51% in 2003 - 2011 (source: Goodbody).
Availability of speculative development funding remains scarce which has resulted in the owners of key development sites in the CBD seeking pre-lets before commencing development. Key pre-lets in the year to date include Grant Thornton (107,000 sq. ft.) and Amazon (170,000 sq. ft.), both achieving rents in excess of EUR50.00psf and term to break in excess of 12 years.
Residential sector
While delivery of housing remains below the annual demand of c. 30,000 units (source: Goodbody), the sector is starting to show tentative signs of moving in the right direction: in the year to August 2016 national completions rose 16.8% y-o-y to c. 14,000 (but Dublin remained relatively stable at c. 3,700) (source: Department of Environment). Commencements are also rising: up 34% nationally and 7% in Dublin y-o-y to August 2016 (source: CSO). Additionally, mortgage data continues to improve (albeit from a low base) with the Banking & Payments Federation Ireland ("BPFI") reporting that approvals for the nine months to end September 2016 were 20% higher than the same period last year.
The Government's Action Plan for Housing and Homelessness and "help to buy" initiative for first time buyers announced in the October Budget are targeted at addressing the sub-par housing supply but the target of 25,000 units per annum (between 2017 - 2021) is unlikely to be reached in the near term unless commencements dramatically increase from current levels. As a consequence of the low levels of delivery, there is continued price growth: as at August 2016, property prices in Ireland rose 7.2% y-o-y and 4.5% y-o-y in Dublin (source: CSO) and Davy expect national house price inflation of 7% in 2016 and 2017, 6% in 2018 and 5% thereafter.
The relative lack of supply and Central Bank lending restrictions are resulting in continued residential rental growth with Dublin rents up 9.0% y-on-y in Q2 2016, reaching levels 3.9% higher than the previous peak in Q4 2007 (source: Residential Tenancies Board).
Business Review
Acquisitions and disposals
The acquisition of Blocks 1, 2 & 5 Clanwilliam Court, Dublin 2, for c. EUR51m (EUR544 per sq. ft.) was announced in June 2016 and completed in July. Blocks 1, 2 & 5 are three 1970s office buildings totalling 93,700 sq. ft. arranged over five to six floors above a double basement with 220 underground car parking spaces. The buildings occupy a prominent position on the corner of Mount Street Lower and Clanwilliam Place in Dublin's central business district, a short walk from Merrion Square and Grand Canal Dock railway station. Following the acquisition of Marine House in March 2016 for EUR26.5m (EUR640 per sq. ft.), Hibernia now owns four contiguous blocks (totalling over 134,000 sq. ft. of office accommodation and 300 car parking spaces) of the seven blocks that comprise Clanwilliam Court (six offices, one residential) with potential for substantial redevelopment in the longer term (see further details below).
Portfolio overview
As at 30 September 2016 the property portfolio consisted of 28 investment properties valued at EUR1,032m, which can be categorised as follows:
Hot Features
Premium
Value % of % uplift % uplift % uplift Equivalent Passing
as at portfolio since since since Yield rent
Sept Mar 16 Mar 16 acquisition on (EURm)
16 (all excl. incl. (all value
assets) new new assets) (%)
acquisitions acquisitions incl.
(1) (1) costs(1)
--------------------------- ----------- ---------- ------------- ------------- ------------ ----------- ------------
1. Dublin CBD
Offices
--------------------------- ----------- ---------- ------------- ------------- ------------ ----------- ------------
Traditional
Core (2) EUR420m 40.7% 3.4% 2.9% 25.3% 5.3%(4) EUR19.0m
--------------------------- ----------- ---------- ------------- ------------- ------------ ----------- ------------
IFSC EUR243m 23.6% 2.4% 2.4% 32.7% 5.1% EUR12.0m(6)
--------------------------- ----------- ---------- ------------- ------------- ------------ ----------- ------------
South Docks EUR173m(3) 16.7% 0.4% 0.4% 29.2% 5.3% EUR6.6m
--------------------------- ----------- ---------- ------------- ------------- ------------ ----------- ------------
Total Dublin
CBD Offices EUR836m 81.0% 2.4% 2.2% 28.2% 5.3%(4) EUR37.6m
--------------------------- ----------- ---------- ------------- ------------- ------------ ----------- ------------
2. Dublin CBD
Office
Development/Refurbishment
(2) EUR68m 6.6% 5.7% 5.7% 69.9% - -
--------------------------- ----------- ---------- ------------- ------------- ------------ ----------- ------------
3. Dublin Residential EUR115m 11.1% 1.4% 1.4% 22.1% 4.6% EUR5.4m
--------------------------- ----------- ---------- ------------- ------------- ------------ ----------- ------------
4. Industrial EUR13m 1.3% 6.0% 6.0% 26.6% 7.1% EUR0.5m
--------------------------- ----------- ---------- ------------- ------------- ------------ ----------- ------------
Total Investment
Properties EUR1,032m 100.0% 2.6% 2.4% 29.5% 5.2%(4)(5) EUR43.5m(6)
--------------------------- ----------- ---------- ------------- ------------- ------------ ----------- ------------
1. Includes capex in acquisition costs and assumes 100% of South Dock House held for rent.
2. 1 Cumberland Place now in Traditional Core but value of site at the front is in Dublin CBD Office Development/ Refurbishment
3. South Docks excludes the value of space occupied by Hibernia
4. Excludes Harcourt Square as this is valued by CBRE on a residual/ development appraisal basis
5. Excludes all Dublin CBD Office Development/Refurbishment 6. Includes FBD surrender income top-up
The "in-place" office element of our portfolio had the following statistics at 30 September 2016:
Contracted ERV (EURm/EURpsf) WAULT WAULT % of % of % of
rent (EURm/EURpsf) to to rent next rent
review break/expiry upwards rent open
(yrs)(1) (yrs) only(2) review market
cap at
& collar next
lease
event
-------------- ------------------- ------------------- ----------- -------------- --------- ---------- --------
Completed
office
developments EUR10.2m/EUR49psf EUR10.4m/EUR50psf 4.8yrs 11.1yrs 0% 83% 17%
-------------- ------------------- ------------------- ----------- -------------- --------- ---------- --------
Remaining
"in-place"
portfolio EUR30.0m/EUR35psf EUR37.9m/EUR45psf 2.1yrs 4.1yrs 34% 0% 66%
-------------- ------------------- ------------------- ----------- -------------- --------- ---------- --------
Whole
"in-place"
portfolio EUR40.2m/EUR38psf EUR48.3m/EUR46psf 2.8yrs 5.9yrs 25% 21% 54%
-------------- ------------------- ------------------- ----------- -------------- --------- ---------- --------
1) To earlier of review or expiry
2) Incl. small amount (<1%) of CPI linked
----------------------------------------------------------------------------------------------------------------------
We are working to extend unexpired lease terms and income security in the portfolio. The completion and letting of 1 Cumberland Place (formerly known as Cumberland House), One Dockland Central and SOBO Works, all of which are fully let and mostly on 20+ year leases with breaks in excess of 10 years, has significantly increased the WAULTs to break and expiry of the "in-place" office portfolio. We expect this trend to continue as we let up our three committed development schemes. The remaining "in-place" portfolio is reversionary with average contracted rents of EUR35psf compared to ERVs averaging EUR45psf and an average period to the earlier of rent review or expiry of 2.1 years giving potential for further uplifts to contracted rents.
The "in-place" office portfolio occupancy level at 30 September 2016 was 94%, approximately the same as at 31 March 2016, as new lettings, in particular in the completed developments, were balanced by the acquisition of substantial vacant space in Blocks 1 & 2 Clanwilliam Court.
Developments and refurbishments
At 30 September 2016, the Group had committed schemes under way at three properties which will deliver 230,000 sq. ft. of high quality new office space in the next 20 months. A further three schemes completed in the period.
With the acquisition of Blocks 1, 2 & 5 Clanwilliam Court, the Group has further added to its longer term pipeline of developments: this now totals seven schemes if Clanwilliam Court is treated separately from the adjoining Marine House (up from six in March 2016), which, if undertaken would deliver an estimated 399,000 sq. ft. of high quality office space when fully completed.
Schemes completed
The refurbishment of One Dockland Central was successfully completed on budget in May 2016, delivering a profit on cost of over 30%. Approximately half of the 57,700 sq. ft. refurbished was pre-let to HubSpot in November 2015 and the remaining space was let to ComReg in July 2016.
SOBO Works (formerly known as the Observatory Live/Work units) was converted to c. 9,600 sq. ft. of office accommodation and 1,700 sq. ft. of retail with the works completing in April 2016. At completion the project had delivered a profit on cost in excess of 50%. All the space was pre-let to Iconic Offices, a serviced office provider, at a rent of EUR0.4m per annum and the tenant is now in occupation.
Cumberland Place was completed in September 2016 and generated a profit on cost of 59% at completion (71% including current value of front site). 96,000 sq. ft. was pre-let to Twitter, who took occupation at completion, and the remaining 33,000 sq. ft. was let to Mobile Travel Technologies ("MTT") in September on a lease which commenced in November.
Committed development and refurbishment schemes
The repositioning of Guild House / Two Dockland Central is due to commence shortly, with works expected to be completed in late 2017. These will be similar to the refurbishment successfully completed in the adjoining One Dockland Central earlier this year. All of the tenants will vacate when their leases expire in March 2017 (with the exception of BNY Mellon, who hold a long term lease and intend to remain in occupation): we are in discussions with some tenants regarding re-occupation after the works are completed, together with one third party (see further details below under Asset Management).
Construction work at Windmill Lane ("1WML") continues to make good progress: the office structure has now reached full height and the glazing is being installed. The building envelope is expected to be completed before Christmas and the project remains on schedule for completion in late 2017. The formal marketing campaign for 1WML and 1 Sir John Rogerson's Quay ("1SJRQ") commenced in the middle of this year and discussions are underway with a number of potential tenants regarding 1WML.
At 1SJRQ, the foundations are complete and work on the structure is expected to begin shortly. The scheme remains on track to complete in mid-2018.
Please see further details on the development schemes below:
Est.
total
cost
(incl.
NIA post Full land) Office
completion purchase Capex/Est. EUR ERV Expected
Sector (sq ft) price capex psf ERV(1) psf(1) PC Date Comments
============ ======== =========== ========= ============ ============= ========= =============== ========== ==========
Completed schemes in 6 months to 30 Sep 16
Delivered
profit on
One Completed cost in
Dockland in May excess of
Central Office 74k(2) EUR46m EUR10m(3) EUR736psf(4) EUR4.0m EUR50.40psf 2016 30%
============ ======== =========== ========= ============ ============= ========= =============== ========== ==========
Delivered
profit on
Completed cost in
SOBO in April excess of
Works Office 11k EUR2m EUR1.3m EUR275psf EUR0.4m EUR36.00psf 2016 50%
============ ======== =========== ========= ============ ============= ========= =============== ========== ==========
Delivered
1 Completed profit on
Cumberland in Sep cost of
Place Office 122k(5) EUR51m EUR29m EUR651psf(6) EUR6.9m EUR51.05psf(7) 2016 59%(8)
============ ======== =========== ========= ============ ============= ========= =============== ========== ==========
Total
completed 207k EUR99m EUR40.3m(9) EUR11.3m
====================== =========== ========= ============ ============= ========= =============== ========== ==========
Committed schemes
===============================================================================================================================
Two
Dockland
Central
(formerly
Guild
House) Office 73k(10) EUR46m EUR12m(11) EUR773psf(4) EUR4.0m EUR51.50psf Q3 2017
============ ======== =========== ========= ============ ============= ========= =============== ========== ==========
61k office
1 Windmill 3k retail
Lane 7 resi. EUR420psf EUR3.1m late
(12) Office units EUR4m EUR26m (7) (13) EUR48.60psf 2017
============ ======== =========== ========= ============ ============= ========= =============== ========== ==========
112k
office EUR634psf mid
1SJRQ Office (14) EUR18m EUR55m (7) EUR6.1m EUR51.50psf 2018
6k retail
===================== =========== ========= ============ ============= ========= =============== ========== ==========
246k
office
Total 9k retail
committed 7 units EUR68m EUR93m(15) EUR13.2m
====================== =========== ========= ============ ============= ========= =============== ========== ==========
1. Per CBRE valuation at 30 September 2016
2. 58k sq. ft. refurbished out of total area of 74k sq. ft.
3. EUR7.9m net of dilapidation charge received
4. Est. total cost psf is net of dilapidations
5. Excl. additional basement areas (7.5k sq. ft.) and potential new block (c.50k sq. ft.) but incl. new reception (1k sq. ft.)
6. No cost attributable to basement area 7. Office only 8. Including potential 50k sq. ft. front site profit on cost is 71% 9. EUR38.2m net of dilapidation received 10. 57k sq. ft. is committed refurbishment of entire EUR73k sq. ft. 11. EUR10.4m net of dilapidations received
12. Represents 50% interest; includes extensions to 4th & 5th floors (2.3k sq. ft.) planning granted in May 16
13. Commercial and residential 14. Excl. c.1k sq. ft. of basement office and amenity 15. EUR91.4m net of dilapidations received 16. NIA is Net internal area
Longer term development pipeline
Blocks 1, 2 & 5 Clanwilliam Court have been added to the longer term pipeline following their acquisition in July. All of the leases in the three blocks expire before the end of 2021 and there is potential for repositioning via refurbishment and / or expansion or full redevelopment either with or without the adjoining Marine House, where all leases expire at a similar time.
At Harcourt Square, we received planning permission for Phase 2 of the redevelopment in June 2016: combined with the planning permission already received for Phase 1, Hibernia now has full planning permission for a development of up to 276,500 sq. ft. of office and ancillary accommodation on the 1.9-acre site. The four leases to the Office of Public Works ("OPW") have either expired or are due to expire by the end of 2016, and we are seeking vacant possession for redevelopment. The OPW has applied to the Irish Circuit Court seeking statutory extension of the leases, which we will defend: the case is expected to be heard in early 2017.
In the Hanover Building, we expect to extend the lease of BNY Mellon (who had exercised a break option to vacate in December 2016) to March 2017 while we assess our options to improve the building. At Cumberland, we have received preliminary planning approval from Dublin City Council for a new office block of c.50,000 sq.ft. at the front of the site. And at Gateway we continue to work on plans for the 14-acre site's future redevelopment.
Please see further details on the development pipeline below:
Current
NIA NIA post Full
(sq. completion Purchase
Name Sector ft.) (sq. ft.) price Comments
============== ============ ========= ============ ========== ============================================================
Cumberland Office 0k c.50k EUR0m
Place (1) * Potential for new block on front of Cumberland Place
(front of up to c.50k sq. ft.
block)
* Decision to grant planning received from DCC
-------------- ------------ --------- ------------ ---------- ------------------------------------------------------------
One Office 22k >28k EUR20m
Earlsfort * Planning permission is in place for two extra floors
Terrace which would add c.6k sq. ft. to the NIA
* Potential for redevelopment as part of the wider
Earlsfort Centre scheme
-------------- ------------ --------- ------------ ---------- ------------------------------------------------------------
Hanover Office 44k 58k. EUR21m
Building office office * Potential to fully refurbish and extend the current
15k 12k. building by adding c.13k sq. ft.
retail gym/retail
(2)
* Planning applied
-------------- ------------ --------- ------------ ---------- ------------------------------------------------------------
Harcourt Office 117k 277k. EUR72m
Square on * Potential development of 277k sq. ft. of office spac
1.9 e
acres and ancillary space
* Full planning consent received
* Seeking vacant possession: court hearing expected
early 2017 on OPW seeking lease renewal
-------------- ------------ --------- ------------ ---------- ------------------------------------------------------------
Blocks Office 135k c.190k EUR80m
1, 2 * Longer term refurbishment/redevelopment opportunity
& 5
Clanwilliam
Court * Potential opportunity to add in the order of 40% to
and Marine existing NIA across all 4 blocks
House
-------------- ------------ --------- ------------ ---------- ------------------------------------------------------------
Gateway Logistics 178k c.115k EUR10m
/Office on office * Strategic transport location
14.1 (3)
acres
* Full or partial redevelopment potential subject to
planning
-------------- ------------ --------- ------------ ---------- ------------------------------------------------------------
718k
office
12k
Total 511k gym/retail EUR203m
Asset management
Since 31 March 2016 we have made further progress on lettings and rent reviews which together have added EUR5.2m to contracted rents.
Summary of letting activity in the period
-- Offices: Five new lettings of 91,000 sq. ft. and one rent review / lease extension generating EUR5.1m of incremental new annual rent. The weighted average periods to break and lease expiry for the new leases were 9 years and 20 years, respectively.
-- Residential: Letting activity generated incremental new net annual rent of EUR44,000 during the period (45 apartments). Average rents achieved for lettings of two-bed apartments since 31 March were EUR1,750 per month vs average contracted 2 bed rents for the portfolio of EUR1,700 per month.
Letting activity post period end
As set out below, we are in discussions with potential tenants in a number of buildings where we have vacant space.
Key asset management highlights
See also 'Developments and Refurbishments' section above for further details.
Building management
In July we announced the establishment of a building management department to take control of the management of Hibernia's multi-let buildings, develop closer relationships with tenants and improve the quality of service. Upon completion in September, Cumberland Place became the first building to come under the direct control of the department and five more buildings totalling 420,000 sq. ft. will come under direct management in January 2017. We expect all multi-let buildings to be under direct management by mid-2017. The department will be run to maximise the quality of service offered and once fully operational is expected to be cost neutral for Hibernia.
Central Quay, South Docks
We are in discussions with potential tenants regarding the vacant third floor (11,000 sq. ft.). Inspections are ongoing regarding the remaining 7,000 sq. ft. of available space on the ground floor in the building.
Blocks 1, 2 & 5 Clanwilliam Court, D2
The buildings, which adjoin Marine House, were acquired in July 2016 and total 93,700 sq. ft. of office accommodation and 220 car parking spaces (which combined with Marine House total 134,700 sq. ft. of offices and 301 car parking spaces). Blocks 1, 2 & 5 are 76% let to a range of occupiers, including the ESB, Bord Bia (the Irish Food Board) and Hines Real Estate Ireland, generating annual rent of EUR2.9m per annum (an average of EUR34psf), a net initial yield of 5.0%. We are in discussions with a potential tenant for 90% of the 22,700 sq. ft of vacant space.
Cumberland Place, D2
The redevelopment works completed in September 2016 and Twitter took occupation of the c. 96,000 sq. ft. it had pre-let. The remaining 33,000 sq. ft. and 10 parking spaces were let to Mobile Travel Technologies ("MTT") in September on a lease which commenced in November and has a five month rent free period. The contracted rent of the building is now c. EUR7m with weighted average unexpired lease terms of c. 12 years to break and 21 years to expiry.
Guild House / Two Dockland Central, IFSC
We decided to reposition the building to the same standard as that recently completed in One Dockland Central earlier in 2016. All tenants will vacate the building when their leases expire in Q1 2017 (excluding BNY Mellon who hold a long lease). We are in discussions with some of the existing tenants regarding re-occupation post completion and in addition are in active discussions with a third party regarding a pre-lease of part of the refurbished floor space.
One Dockland Central, IFSC
Of the 57,700 sq. ft. refurbished, 27,500 sq. ft. (two floors) was pre-let to Hubspot in November 2015 on a 20-year lease at a rent of EUR1.3m per annum (EUR45psf) after a six month rent free period from commencement: the lease commenced in February 2016. In July 2016 the remaining two floors were let to ComReg on a 20-year lease at a rent of EUR1.6m per annum (EUR50psf) after a four month rent free period. The average weighted average unexpired lease terms in the building are now 10 years to break and 17 years to expiry.
Other completed assets
The remaining completed properties in the portfolio are close to full occupation. The average period to rent review or lease expiry for the "in-place" office portfolio (not including recently completed developments) is 2.1 years: the team is assessing options to maximise returns from the up-coming lease events and continues to carefully monitor the letting markets and work closely with our tenants.
Sale of non-core assets
The sale of the non-core assets from the Dorville portfolio was almost complete at 30 September 2016 with only four assets remaining with a carrying value of EUR0.8m (31 March 2016: EUR3.9m): the net profit on disposals in the period since 31 March 2016 was EUR0.1m.
Financial results and position
As at 30 September 31 March Movement
2016 2016
--------------------- ------------- ------------- ---------
IFRS NAV - cent
per share 134.8 131.6 + 2.4%
---------------------- ------------- ------------- ---------
EPRA NAV - cent
per share 134.6 130.8 + 2.9%
Net debt EUR110.5m EUR52.9m + 108.9%
---------------------- ------------- ------------- ---------
Group LTV 10.7% 5.7% + 87.8%
---------------------- ------------- ------------- ---------
Six months ended 30 September 30 September
2016 2015
Profit before
tax for the period EUR32.4m EUR73.7m 56.1%
---------------------- ------------- ------------- ---------
EPRA earnings EUR8.0m EUR5.2m* 53.8%
---------------------- ------------- ------------- ---------
Basic EPS 4.7 cent 11.0 cent 57.3%
---------------------- ------------- ------------- ---------
Diluted EPS 4.7 cent 10.9 cent 56.9%
---------------------- ------------- ------------- ---------
Interim dividend/ EUR5.1m EUR4.8m
DPS / 0.75 cent / 0.70 cent
---------------------- ------------- ------------- ---------
* Excluding one-off EUR4.9m surrender premium received
The key drivers of EPRA NAV per share, which increased 3.8 cent from 31 March 2016 were:
- 3.5 cent per share from the revaluation of the property portfolio, including 1.9 cent per share in relation to development properties
- 1.2 cent per share from EPRA earnings for the period - Payment of the final dividend, which decreased NAV by 0.8 cent per share - Other movements decreased NAV by 0.1 cent per share
EPRA earnings for the period were EUR8.0m, up 53.8% compared to the same period last year, excluding the EUR4.9m one-off gain relating to the surrender premium received from FBD in the prior year. The key driver of the increase was the 35.5% increase in rental income (excluding the surrender premium) due to new lettings and further acquisitions made in the past 12 months. There were no one-off gains during the period (30 September 2015: EUR4.9m).
Operating expenses (excluding performance related payments) were EUR5.6m in line with the same period last year (30 September 2015: EUR5.6m)
Net profit for the period was EUR32.3m, a decrease of 56.2% over the same period last year (53.1% decrease excluding the surrender premium in the prior year) due to lower revaluation gains on investment properties as growth in capital values in the market have moderated and after a less active six-month period for the Group.
Financing and hedging
As at 30 September 2016, the Group's net debt was EUR110.5m, a loan to value ratio (LTV) of 10.7%, having increased from a net debt position of EUR52.9m (LTV of 5.7%) at 31 March 2016 due to capital expenditure on acquisitions and developments.
The Group has two facilities in place, a EUR400m revolving credit facility ("RCF") which matures in November 2020, and a non-recourse, three-year debt facility with Deutsche Bank of EUR44.2m (Hibernia's share EUR22.1m). If both facilities were fully drawn at 30 September 2016 this would have resulted in an LTV of 31.8%. Given the nature of our portfolio and the development exposure within it, we expect the through-cycle gearing to be in the range of 20-30% LTV.
The Group has a policy of fixing or hedging the interest rate risk on the majority of its drawn debt. Currently it has interest rate caps and swaptions with 1% strike rates in place covering EUR100m of the RCF. The interest rate exposure of the Windmill Lane facility has been hedged using an interest rate cap with a 1% strike rate.
Approval as Alternative Investment Fund Manager ("AIFM")
The Company received authorisation from the Central Bank of Ireland (the "Central Bank") as an internally managed Alternative Investment Fund ("AIF") in July 2016. Following the internalisation of WK Nowlan REIT Management Limited (the "Investment Manager") in November 2015, the Investment Manager remained authorised as the Alternative Investment Fund Manager ("AIFM") to Hibernia pending authorisation by the Central Bank of Hibernia as an internally managed AIF. Concurrent with the authorisation of Hibernia, and as requested by Hibernia, the Central Bank withdrew the authorisation of the Investment Manager.
Dividend
The Board has declared an interim dividend of 0.75 cent per share (2015: 0.7 cent), which represents 50% of the total dividends paid in respect of the prior financial year, consistent with its policy of paying an interim dividend totaling 30-50% of the total regular dividends paid in respect of the prior year. All of this interim dividend will be a Property Income Distribution ("PID") in respect of the Group's tax exempt property business.
The dividend will be paid on 26 January 2017 to shareholders on the share register as at 6 January 2017.
Hibernia introduced a Dividend Reinvestment Plan ("DRIP") in 2015: this allows shareholders to instruct Capita, the Company's registrar, to reinvest dividend payments by the purchase of shares in the Company. The terms and conditions of the DRIP and information on how to apply are available on the Group's website.
Selected portfolio information
1. Top 10 "in place" office occupiers by contracted rent and % of contracted in place office rent roll
Contracted
Top 10 Tenants Rent EUR.m % Sector
--- --------------------------- ------------- ------ --------------------
Office of Public
1 Works 5.5 13.6 Government
Twitter International
2 Company 5.1 12.6 TMT
Bank of New York Banking and Capital
3 Mellon 3.0 7.4 Markets
Banking and Capital
4 Bank of Ireland 2.8 7.1 Markets
Banking and Capital
5 DEPFA Bank plc 2.0 5.1 Markets
6 Mobile Travel Technologies 1.9 4.8 TMT
7 ComReg 1.6 4.0 Government
Electricity Supply
8 Board 1.5 3.7 Government
9 HubSpot 1.3 3.2 TMT
10 Riot Games 1.2 3.0 TMT
--- --------------------------- ------------- ------ --------------------
Top ten total 25.9 64.5
Rest of portfolio 14.3 35.5
--- --------------------------- ------------- ------ --------------------
Total contracted
rent 40.2 100.0
--- --------------------------- ------------- ------ -------------------- 2. "In place" office contracted rent by business sector Sector EUR 'm % TMT 12.1 30.2 Banking & Capital Markets 10.8 26.8 Government 9.2 22.8 Professional Services 4.3 10.7 Other 2.5 6.3 Insurance & Reinsurance 1.3 3.2 Total 40.2 100.0 ------------------- ------- ------
3. Portfolio by location
Value
EUR'm
Location (1) %
--------------------- ------- ------
Traditional Core(2) 420 40.7
IFSC 243 23.6
South Docks 173 16.7
Other(3) 196 19.0
--------------------- ------- ------
Total 1,032 100.0
--------------------- ------- ------
(1) 50% of 1WML included
(2) Cumberland Phase 1 (i.e. completed refurbishment) included in Traditional Core
(3) CBD Office Development/Refurbishment, Residential, Industrial. Note that Cumberland Phase 2 (i.e. potential additional 50k sq. ft. front site) is
included in CBD Office Development/Refurbishment
Principal Risks and Uncertainties
There are a number of potential risks and uncertainties which could have a material impact on the Group's performance and could cause actual results to differ materially from expected and historical results for the remaining six months of the financial year. A description of these risks and the steps which the Group has taken to manage these risks is set out below.
Risk Potential Strategic Description Mitigation Change Comment
impact goal of exposure from
impact 31
March
16
---------------- ---------- ------------------ ----------------- ------------------ ---------- -----------------
Weakening High Performance The value The Group Increased In light of
economy below of the has set the UK
target investment risk appetite referendum
levels portfolio limits, to leave the
through may decline which are European Union
lower and rental the level ("Brexit") and
capital income may of risk the subsequent
or income reduce as that the weaker outlook
returns a consequence Board considers for the global
or both. of lowered acceptable economy, the
levels of in achieving IMF recently
economic the Group's downgraded
activity strategic Ireland's
in Dublin objectives 2016 economic
and/or Ireland. in the current growth forecasts
economic by 0.1% to 4.9%
environment. and its 2017
Close monitoring forecast by
of economic 0.4% to 3.2%.
lead indicators While these
and access downgrades in
to market forecast
knowledge demonstrate
through that the Irish
the Group's economy is not
contacts immune from
and advisers exogenous risks,
help to the growth
ensure it prospects
has the nevertheless
best possible illustrate the
knowledge relative
of the current strength
macro-economic of the Irish
environment economy against
to allow its peers as
it to anticipate it maintains
and react its status as
to potential "the fastest
issues. growing economy
in Europe ".
Domestic demand
is expected
to be the
foundation
of growth over
the next two
years as the
ESRI noted in
its latest
Quarterly
Economic
Commentary
that
"consumption
and investment
are set to be
the main drivers
of growth in
2016 and 2017"
which is also
supported by
improvements
in the labour
market.
---------------- ---------- ------------------ ----------------- ------------------ ---------- -----------------
As an "open" The Group Increased By completing
economy Ireland monitors and fully
depends heavily the potential letting
on international impacts 3 development
trade and continuously. projects in
Foreign Direct The Group the 6 months
Investment. has low to September
Together with leverage 2016, the Group
its relatively and its has achieved
small size, principal a WAULT to
this means debt facility, review/expiry
any a EUR400m of 4.8 years
deterioration revolving and WAULT to
in credit facility, break/expiry
macro-economic is in place of 11.1 years.
conditions until November Across these
may impact 2020. The projects 83%
rapidly and Group continues of the leases
significantly. to proactively in these
In particular, pursue pre-lets completed
the recent of its committed developments
EU referendum development offer the
result in projects, downside
the UK has all of which protection of
created are expected a cap and collar
uncertainty to complete with the
while the in the next remaining
terms on which two years. 17% of the
the UK leaves In addition, leases
the EU the Group marked to market
("Brexit") is working at the next
are negotiated. to extend lease event.
This may lead unexpired For the
to a reduction lease terms portfolio
in business in its "in-place" as a whole,
and consumer property 46% of leases
confidence, portfolio. are either
a deferral upward
of some only or capped
investment and collared
decisions which provides
and consequently protection
a reduction against
in growth adverse market
rates in the moves.
UK, Ireland
and elsewhere.
While it is
possible that
the Dublin
property market
benefits from
increased
tenant demand
and rents
as a result
of Brexit,
it is not
certain over
what timescale
any such
benefits
will arise
or whether
they will
outweigh any
negative impact
on the market
as a result
of any slowdown
in economic
activity.
---------------- ---------- ------------------ ----------------- ------------------ ---------- -----------------
Under High Value Underperformance The Group Stable The Dublin
performance of investment by Dublin regularly property
of Dublin property property market reviews market is
property may decrease compared to its strategy currently
market thus other Irish and asset performing well,
reducing property allocation although there
NAV. sectors: to determine is some evidence
Potential to date all if it remains of a moderation
reduction the Group's appropriate. of the rental
of rental investments Particular growth rate,
income have been emphasis and Dublin
through within Dublin. is placed remains
lower on monitoring a key
rents its development contributor
or defaulting projects to the Irish
tenants. which will economy.
come on-stream
within the
next two
to three
years.
---------------- ---------- ------------------ ----------------- ------------------ ---------- -----------------
Poor High Target Inability Experienced Decreased One Cumberland
management returns to properly Director Place completed
of development impacted manage of Development in the period
projects through developments. joined in ahead of
lower Any May 2016 schedule
than refurbishment to oversee and is fully
expected or redevelopment all development let. The other
profits project may projects. major committed
on developments. suffer delays, The Group development
may not be has a Development projects
completed Committee underway,
or may fail which closely Windmill Lane
to achieve monitors and Sir John
expected Group projects, Rogerson's Quay,
results. the development are progressing
Budgets may supply pipeline well and remain
overrun. in Dublin on schedule.
and the
rental market.
This, coupled
with significant
in-house
experience
in managing
large scale
projects,
reduces
these risks.
---------------- ---------- ------------------ ----------------- ------------------ ---------- -----------------
Lack Medium Investment Competition Market knowledge Stable The rise in
of suitable returns may reduce and contacts Dublin property
Investment that the access improve prices has
opportunities are below to attractive the Group's reduced
the Group's investment ability the pool of
target opportunities. to uncover assets which
rate opportunities meet the Group's
of return. and acquire returns
investments. criteria,
although with
our focus on
value add
projects
there remains
a good level
of opportunity.
---------------- ---------- ------------------ ----------------- ------------------ ---------- -----------------
Concentration Risk appetites Stable The Group has
of investment are set built a balanced
in single and monitored portfolio since
assets, tenants, for concentration commencement
locations risk factors. of operations.
or sectors As at 30
may increase September
risk. 2016 the largest
single asset
represented
13% of the
portfolio
by value.
---------------- ---------- ------------------ ----------------- ------------------ ---------- -----------------
Overlooking The Group Decreased The volume of
or mis-pricing has an transactions
risks at point experienced being undertaken
of investment. management by the Group
team which has reduced
carries now that the
out extensive core portfolio
due diligence has been
ahead of assembled.
purchase. Due diligence
Board approval involves a
is part diverse
of the investment range of
decision parties,
which provides internal and
another external, and
layer of helps to
scrutiny. mitigate
risks around
acquisitions.
---------------- ---------- ------------------ ----------------- ------------------ ---------- -----------------
Risk Potential Strategic Description Mitigation Change Comment
impact goal impact of exposure from
31 March
16
---------------- ---------- ------------------ ------------------ ----------------- ---------- -----------------
Lack Medium Inappropriate Leverage New facilities Stable At 30 September
of adequate capital exposes are approved Group
financing structure the Group at Board indebtedness
may lead to risks level and remains low
to the associated under the with a loan
Group with borrowing investment to value ratio
being such as policy debt of 10.7% (31
unable covenant is limited March 2016:
to meet breaches. to a 40% 5.7%). No
goals loan to value breaches
through ratio at have occurred
covenant incurrence. in the period.
breaches Hedging The Group
or high instruments continues
interest have been to be vigilant
costs used to cap in monitoring
impacting the Group's covenants and
returns. interest hedging
rate exposure requirements.
and the Group
intends to
hedge the
majority
of its interest
rate exposure
on its drawn
debt. Active
and regular
monitoring
of covenant
breaches
is undertaken.
Leverage
levels are
set at Board
level and
monitored
closely.
Alternative
sources of
financing
are also
continually
assessed.
---------------- ---------- ------------------ ------------------ ----------------- ---------- -----------------
Target No access The Group Stable At 30 September
returns to financing actively the Group had
impacted, limits manages its cash and undrawn
new investment potential finance facilities
limited for further requirements totalling
through investment and continues EUR312m, or
lack of growth to monitor EUR234m net
available or means availability of committed
funds. the Group to ensure capital
misses it is well expenditure.
out on placed to The Group
opportunities. take advantage continues
of market to monitor
investment capital
opportunities requirements
as they arise. to ensure that
future
requirements
are anticipated
and met within
the limits of
its leverage
targets.
---------------- ---------- ------------------ ------------------ ----------------- ---------- -----------------
Poor Medium Failure Poor management The Group Stable The Group
asset to achieve of voids, has a dedicated continues
management maximum breaks asset management to monitor
returns and renewals team which building
from investment can lead has been standards and
property. to loss expanded has implemented
of tenants in the period. and plans to
and/or The Group implement
leases has also refurbishments
agreed formed a of older stock
at lower separate on lease
than Estimated building expirations
Rental management or breaks. Where
Value subsidiary possible,
("ERV"). which will buildings
Poor building manage all are being
management the Group's rebranded
can impact multi-let and improved
tenant buildings, to produce a
satisfaction giving the high standard
and longevity Group direct common to all
leading day-to-day Hibernia
to loss interaction buildings.
of income. with its
tenants.
This will
ensure the
best service
to retain
tenants and
help maximise
rental levels.
---------------- ---------- ------------------ ------------------ ----------------- ---------- -----------------
Inability Medium Properties Non-compliance The Group Decreased Work is on-going
to meet may not with legislation has established to improve the
sustainability comply at local a Sustainability sustainability
standards with legislation or EU Committee credentials
or meet level to identify of the Group's
tenant and a and address portfolio. Where
expectations failure issues in possible,
leading to meet sustainability measures
to an investor and corporate are being
increased expectations social implemented
cost base, with respect responsibility. in order to
limiting to sustainability A first allow better
the interest standards. assessment monitoring of
of tenants Failure of managed energy usage.
and investors, to keep properties As the Group
and creating pace with was carried takes over the
early peers out in the management of
obsolescence in complying financial further
and potential with best year ended buildings,
loss of practice 31 March sustainability
asset could 2016. is a key focus
value. lead to for improving
loss of the Group's
value. stock.
---------------- ---------- ------------------ ------------------ ----------------- ---------- -----------------
Risk Potential Strategic Description Mitigation Change Comment
impact goal impact of exposure from
31 March
16
----------- ---------- -------------- -------------------- --------------------- ---------- --------------------
Loss Medium Achievement The Group The Group Stable The Group
of people of strategic fails to has a team has implemented
goals attract, of directly competitive
impacted motivate employed remuneration
through and retain staff following plans, clear
loss of sufficient the internalisation employee
expertise skilled of the Investment objectives
or key people to Manager and development
personnel. achieve and a remuneration plans, and
targets. system that regular employee
Poor management is linked engagement
of people closely to proactively
may impact to individual identify
on performance. and Group and address
performance. potential
The Group issues, succession
has introduced planning
a long-term and talent
incentive management.
plan (funded
through
the existing
performance
fee arrangements)
as part
of performance
remuneration
in order
to help
better align
employees'
interest
with shareholders'
and encourage
retention.
----------- ---------- -------------- -------------------- --------------------- ---------- --------------------
Tax High Achievement The Group's Effective Stable This is completed
of strategic REIT status monitoring on a regular
goals may be revoked of REIT basis and
impacted if it fails requirements is the subject
through to satisfy compliance of review
inability all the at a senior by our retained
to continue relevant level. tax advisers,
as a REIT tax and KPMG.
and a legislative
greater requirements,
tax burden. which would
have adverse
consequences
for its
investors.
----------- ---------- -------------- -------------------- --------------------- ---------- --------------------
Changes The Group High Before
proposed has a policy implementation,
by the Minister of a low the Finance
of Finance LTV of between Bill will
in the recent 20-30% on need to be
Finance a through approved
Bill will, cycle basis. by the Dáil
if implemented, The Group (Irish Parliament),
lead to also monitors which could
certain the Dublin lead to further
short-term property changes
capital market closely:
gains and with over
rental income EUR200m
distributed of available
by certain funding
ICAVs and to deploy,
QIAIFs holding it is well-placed
Irish property to take
being subject advantage
to withholding of any investment
tax at a opportunities
rate of that arise.
20% and
also to
certain
S110 companies
suffering
restrictions
on interest
deductions
for certain
profit
participating
notes resulting
in increased
profits
being subject
to tax at
25%. While
this has
no direct
impact on
the Group,
it may lead
to a reduction
in the level
of investment
demand for
Irish and
Dublin property
assets and
/ or could
lead to
certain
existing
investors
seeking
to dispose
of their
existing
Irish property
assets,
all of which
may impact
on capital
values
----------- ---------- -------------- -------------------- --------------------- ---------- --------------------
Risk Potential Strategic Description Mitigation Change Comment
impact goal impact of exposure from
31 March
16
----------- ---------- ----------------- ------------------ ------------------- ---------- ---------------------
Regulatory Low Achievement Legislative The management Stable Our strategy
of strategic and regulatory team and in managing
goals requirements the Board this risk
impacted may not spend substantial together
through be complied time, and with a relatively
inability with resulting retain external unchanged
to comply in sanctions experts regulatory
with regulatory being imposed. as necessary, environment
standards to ensure has meant
compliance the risk
with current has remained
and possible relatively
future regulatory stable over
requirements. the last
year.
----------- ---------- ----------------- ------------------ ------------------- ---------- ---------------------
Changes All pending Increased The Group
pending and implemented is responsible
in general legislative for the direct
data protection changes holding and
regulation both at management
and EU privacy local and of tenant
laws may EU level data which
have an are reviewed includes
impact on internally data subject
the business and with to data protection
both in the help and privacy
monetary of advisors laws. In
and reputational and any designing
costs necessary systems and
risk management procedures
processes around this
are implemented activity
the Group
is working
to ensure
that all
systems in
place take
account of
best practice
in data and
privacy protection.
Uncertainty
as to legislative
provisions
means this
is an area
of continuing
monitoring
for the Group.
----------- ---------- ----------------- ------------------ ------------------- ---------- ---------------------
Health and All staff Stable The Group
safety incidents who visit continues
to both work sites to maintain
staff and and buildings high standards
tenants have completed of health
causing the "safe and safety.
loss of pass" course.
worktime In addition,
and increased the Group
costs has a staff
handbook
giving guidance
on health
and safety
matter.
----------- ---------- ----------------- ------------------ ------------------- ---------- ---------------------
Directors' Responsibilities Statement
Each of the Directors, whose names appear on page 66 of this report confirm to the best of their knowledge that the interim condensed consolidated financial statements in the Half Yearly Financial Report have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as adopted by the European Union ("EU") and the interim management report([3]) herein contains a fair review of the information required by Disclosure and Transparency Rules of the Central Bank of Ireland, namely:
- Regulation 8(2) of the Transparency Directive (Directive 2004/109/EC) Regulations 2007, being an indication of important events that have occurred during the period from 1 April 2016 to 30 September 2016 and their impact on the half yearly financial report, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
- Regulation 8(3) of the Transparency Directive (Directive 2004/109/EC) Regulations 2007, being related party transactions that have taken place during the period from 1 April 2016 to 30 September 2016 and that have materially affected the financial position or performance during the period.
Signed on behalf of the Board
Kevin Nowlan Thomas Edwards-Moss
Chief Executive Officer Chief Financial Officer
9 November 2016
INDEPENT REVIEW REPORT TO HIBERNIA REIT PLC
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 30 September 2016, which comprises the group condensed consolidated statement of comprehensive income, the group condensed consolidated statement of financial position, the group condensed consolidated statement of cash flows, the group condensed consolidated statement of changes in equity and the related notes. 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 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. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review 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 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 Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.
As disclosed in the Basis of preparation, 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 the 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 Ireland and the United Kingdom. A review of interim financial information consists of making inquiries, 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.
INDEPENT REVIEW REPORT TO HIBERNIA REIT PLC
(Continued)
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 30 September 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union, the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.
Deloitte
Chartered Accountants and Statutory Audit Firm
Dublin
Date: 9 November 2016
Group Condensed Consolidated Statement of Comprehensive Income
For the six-month period 1 April 2016 to 30 September 2016
Six months
Six months ended 30
ended 30 September September
2016 Unaudited 2015 Unaudited
Notes EUR'000 EUR'000
Revenue 6 18,306 18,405
Direct property costs (1,620 ) (968 )
-------------------- ----------------
Net Property income 16,686 17,437
Revaluation of investment
properties 14 24,342 63,618
Other income 7 379 887
-------------------- ----------------
Total income after revaluation
gains and losses 41,407 81,942
-------------------- ----------------
Expense
Investment manager
fee - base - (3,373 )
Performance related
payments 9 (659 ) (1,500 )
Operating expenses 8 (5,620 ) (2,233 )
-------------------- ----------------
Total operating expenses (6,279 ) (7,106 )
-------------------- ----------------
Operating profit 35,128 74,836
-------------------- ----------------
Finance income 10 6 112
Finance expense 10 (2,725 ) (1,205 )
-------------------- ----------------
Profit before tax 32,409 73,743
Income tax 11 (113 ) -
-------------------- ----------------
Profit for the financial
period 32,296 73,743
-------------------- ----------------
Earnings per share
Basic earnings per
share (cent) 12 4.7 11.0
-------------------- ----------------
Diluted earnings
per share (cent) 12 4.7 10.9
-------------------- ----------------
The notes on pages 29 to 65 form an integral part of these group condensed consolidated financial statements.
Group Condensed Consolidated statement of comprehensive income
For the six-month period 1 April 2016 to 30 September 2016
Six months Six months
ended 30 ended 30
September September
2016 2015
Unaudited Unaudited
Notes EUR'000 EUR'000
Profit for the financial
period 32,296 73,743
----------- -----------
Other comprehensive income,
net of income tax
Items that will not be
reclassified subsequently
to profit or loss:
Gain on revaluation of 13
owner occupied property - -
----------- -----------
Items that may be reclassified
subsequently to profit
or loss
Net fair value movement
on hedging instruments
entered into for cash
flow hedges 20b (69 ) -
----------- -----------
Total other comprehensive
income (69 ) -
----------- -----------
Total comprehensive income
for the period attributable
to owners of the Company 32,227 73,743
----------- -----------
The notes on pages 29 to 65 form an integral part of these group condensed consolidated financial statements.
Group Condensed Consolidated Statement of Financial Position
As at 30 September 2016
30 September 31 March
2016 Unaudited 2016 Audited
Notes EUR'000 EUR'000
Assets
Non-current assets
Property, plant and
equipment 13 4,574 2,946
Investment Property 14 1,031,863 927,656
Other financial assets 16 261 365
Trade and other receivables 17 5,033 11,666
---------------- ---------------
Total non-current assets 1,041,731 942,633
---------------- ---------------
Current assets
Trade and other receivables 17 13,122 18,880
Cash and cash equivalents 16,909 23,187
---------------- ---------------
30,031 42,067
Non-current assets
classified as held
for sale 18 843 3,921
---------------- ---------------
Total current assets 30,874 45,988
---------------- ---------------
Total assets 1,072,605 988,621
---------------- ---------------
Equity and liabilities
Capital and reserves
Issued capital and
share premium 19 677,867 672,398
Other reserves 20 1,257 6,136
Retained earnings 21 244,833 218,040
---------------- ---------------
Total equity 923,957 896,574
---------------- ---------------
Non-current liabilities
Financial liabilities 22 125,127 72,724
Total non-current liabilities 125,127 72,724
---------------- ---------------
Current liabilities
Trade and other payables 23 23,521 19,323
---------------- ---------------
Total current liabilities 23,521 19,323
---------------- ---------------
Total equity and liabilities 1,072,605 988,621
---------------- ---------------
IFRS NAV per share
(cents) 24 134.8 131.6
---------------- ---------------
Diluted IFRS NAV per
share 24 134.6 130.7
---------------- ---------------
EPRA NAV per share 24 134.6 130.8
---------------- ---------------
The notes on pages 29 to 65 form an integral part of these group condensed consolidated financial statements.
Group Condensed Consolidated Statement of Changes in Equity
For the period from 1 April 2015 to 30 September 2016
Share Share Retained Other
Notes Capital Premium earnings reserves Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 April
2015 67,032 590,955 89,375 5,772 753,134
Total comprehensive income
for the period ended 30
September 2015
Profit for the
period - - 73,743 - 73,743
Total other comprehensive
income - - - - -
--------- --------- ---------- ---------- --------
67,032 590,955 163,118 5,772 826,877
Transactions with owners of the
Company, recognised directly in
equity
Dividends - - (3,352) - (3,352)
Performance related
payments reserve - - - 1,500 1,500
--------- --------- ---------- ---------- --------
Balance at 30
September 2015 67,032 590,955 159,766 7,272 825,025
--------- --------- ---------- ---------- --------
Total comprehensive income
for the period ended 31
March 2016
Profit for the
period - - 63,054 - 63,054
Total other comprehensive
income - - - 211 211
--------- --------- ---------- ---------- --------
67,032 590,955 222,820 7,483 888,290
Transactions with owners of the
Company, recognised directly in
equity
Dividends - - (4,769) - (4,769)
Issue of ordinary
shares for cash - - - - -
Share issue costs - - (11) - (11)
Performance related
payments reserve - - - (1,500) (1,500)
Share based payments 1,093 13,318 - 153 14,564
--------- --------- ---------- ---------- --------
Balance at 31
March 2016 68,125 604,273 218,040 6,136 896,574
--------- --------- ---------- ---------- --------
Total comprehensive income
for the period ended 30
September 2016
Profit for the
period - - 32,296 659 32,955
Total other comprehensive
income - - - (69) (69)
--------- --------- ---------- ---------- --------
68,125 604,273 250,336 6,726 929,460
Transactions with owners of the
Company, recognised directly in
equity
Dividends - - (5,484) - (5,484)
Share issue costs - - (19) - (19)
Share based payments 420 5,049 - (5,469) -
--------- --------- ---------- ---------- --------
Balance at 30
September 2016
unaudited 68,545 609,322 244,833 1,257 923,957
--------- --------- ---------- ---------- --------
The notes on pages 29 to 65 form an integral part of these group condensed consolidated financial statements.
Group Condensed Consolidated Statement of Cash flows
For the six-month period 1 April 2016 to 30 September 2016
Notes Six months Six months
ended ended
30 September 30 September
2016 Unaudited 2015 Unaudited
Cash flows from operating activities EUR'000 EUR'000
Profit/(loss) for the financial
period 32,296 73,743
Adjusted non cash movements:
Revaluation of investment properties (24,342) (63,618)
Other gains and losses (86) (887)
Performance related payments 659 1,500
Deferred remuneration amortised 2,222 -
Depreciation 77 -
Rental income (payable)/paid in
advance 4,986 645
Finance (income)/expense 2,719 1,093
Income tax 113 -
---------------- ----------------
Operating cash flow before movements
in working capital 18,644 12,476
Decrease/(Increase) in trade and
other receivables 3,453 (3,483)
Increase in trade and other payables 1,830 5,352
---------------- ----------------
Net cash flow from operating activities 23,927 14,345
---------------- ----------------
Cash flows from investing activities
Purchase of fixed assets (12) -
Cash paid for investment property 25 (83,555) (44,650)
Proceeds from the sale of non-current
assets classified as held for sale 9,135 6,850
Net proceeds from loans - 3,520
Income tax paid (1) -
Finance income and expense (2,173) (1,008)
---------------- ----------------
Net cash flow absorbed by investing
activities (76,606) (35,288)
---------------- ----------------
Cash flow from financing activities
Dividends paid 21 (5,484) (3,352)
Borrowings drawn 51,904 -
Share issue costs (19) -
---------------- ----------------
Net cash inflow from financing
activities 46,401 (3,352)
---------------- ----------------
Net (decrease)/increase in cash and
cash equivalents (6,278) (24,295)
---------------- ----------------
Cash and cash equivalents at start
of financial period 23,187 139,048
(Decrease)/increase in cash and
cash equivalents (6,278) (24,295)
---------------- ----------------
Net cash and cash equivalents at
end of financial period 16,909 114,753
---------------- ----------------
The notes on pages 29 to 65 form an integral part of these group condensed consolidated financial statements.
Notes Forming Part of the Half Yearly Financial Report
1. General information
Hibernia REIT plc, the "Company", together with its subsidiaries and associated undertakings as detailed in Note 27 (the "Group"), is engaged in property investment (primarily commercial) in the Irish (primarily Dublin) market with a view to maximising its shareholders' returns.
The Company is a public limited company and is incorporated and domiciled in Ireland. The address of the Company's registered office is South Dock House, Hanover Quay, Dublin, D02 XW94, Ireland. The Company was incorporated on 13 August 2013 and registered as a public limited company on 8 November 2013. The registered number of the Company is 531267.
The Ordinary Shares of the Company are listed on the primary listing segment of the Official List of the Irish Stock Exchange (the "Irish Official List") and the premium listing segment of the Official List of the UK Listing Authority (the "UK Official List" and, together with the Irish Official List, the "Official Lists") and are traded on the regulated markets for listed securities of the Irish Stock Exchange and the London Stock Exchange plc (the "London Stock Exchange").
2. Basis of preparation a. Statement of compliance
The annual financial statements of Hibernia REIT plc have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, which comprise standards and interpretations approved by the International Accounting Standards Board (IASB). IFRS as adopted by the EU differ in certain respects from IFRS as issued by the IASB. This interim financial report has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as adopted by the EU.
The interim figures for the six months ended 30 September 2016 are unaudited but have been reviewed by the independent auditor whose report is set out on pages 22 to 23 of this report. The summary financial statements for the year ended 31 March 2016 that are presented in the condensed consolidated interim financial statements represent an abbreviated version of the full accounts for that year on which the independent auditor, Deloitte, issued an unqualified audit report and which are not annexed to these interim financial statements. The half yearly financial statements herein are non-statutory financial statements for the purposes of the Companies Act 2014 and in compliance with Section 340(4) of that Act.
b. Functional and presentation currency
These condensed consolidated financial statements are presented in Euro, which is the Company's functional currency and the Group's presentation currency.
c. Basis of accounting
The condensed consolidated financial statements have been prepared on a going concern basis, in accordance with IFRS and the IFRS Interpretations Committee (IFRIC) interpretations as adopted by the European Union and the Companies Act 2014. The Group financial statements therefore comply with Article 4 of the EU IAS Regulation.
The condensed consolidated financial statements have been prepared on the historical cost basis, except for the revaluation of investment properties, owner occupied buildings and financial instruments that are measured at fair value at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
d. Assessment of going concern
The half yearly financial report has been prepared on a going concern basis. The Directors have performed an assessment of going concern for a minimum period of 12 months from the date of this statement and are satisfied that the Group is appropriately capitalised. The Group has a positive cash balance as at 30 September 2016 of EUR17m (31 March 2016: EUR23m), is generating positive operating cash--flows and, as discussed in Note 22, has in place a revolving credit facility with an undrawn balance of EUR274m at 30 September 2016 (31 March 2016: EUR325m). The Group has assessed its liquidity position and there are no reasons to expect that the Group will not be able to meet its liabilities as they fall due for the foreseeable future.
e. Basis of consolidation
The financial statements incorporate the condensed consolidated financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is assessed based on the Company's:
- power over the investee; - exposure to variable return from its involvement with the investee; and - ability to use its powers to affect returns.
When the Company has less than a majority of the voting rights of an investee, it considers that it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.
The results of subsidiaries and joint arrangements acquired or disposed of during the financial year are included from the effective date of acquisition or to the effective date of disposal. The accounting policies of all consolidated entities are consistent with the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
f. Use of judgements and estimates
In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
The preparation of the financial statements may require Management to exercise judgement in applying the Group's accounting policies. The following are the significant judgements:
Valuation of investment properties
The Group's investment properties are held at fair value and were valued at 30 September 2016 by the external valuer, CBRE Limited, a firm employing qualified valuers in accordance with the Royal Institution of Chartered Surveyors Valuation - Standards (January 2015) (the "Red Book"). Further information on the valuations and the sensitivities is given in Note 14.
The Board conducts a detailed review of each property valuation to ensure that appropriate assumptions have been applied. Property valuations are complex and involve data which is not publically available and a degree of judgement. The valuation is based upon the key assumptions of estimated rental values and market based yields. The approach to developments and refurbishments is on a residual basis and factors such as the assumed timescale, the assumed future development cost and an appropriate finance and/or discount rate are used to determine the property value together with market evidence and recent comparable properties where appropriate. In determining fair value, the valuers make reference to market evidence and recent transaction prices for similar properties.
The Directors must be satisfied that the valuation of the Group's properties is appropriate for inclusion in the accounts. The fair value of the Group's properties is based on the valuation provided by CBRE. This valuation is based on future cashflows from rental income both for the current lease period and future estimated rental values.
Significant judgements and key estimates arising in relation to the Group's investment properties:
- Block 3 Wyckham Point: This property is held for long-term property rental and was developed on this basis. The units comprising this property were completed on a phased basis by the Group in mid-2015. VAT was payable both on the acquisition and on the construction costs which were treated as unrecoverable and recognised as part of the costs of the project. If this property is sold within five years of completion, i.e. before mid-2020, the Group would have to charge VAT on the sale but would be entitled to a recovery of the VAT paid on construction and acquisition costs on an apportioned basis. As this property is not intended to be sold within the five-year period, in the opinion of the Directors no amendment to the valuer's valuation in respect of this is necessary.
- Where properties have been significantly developed or redeveloped by the Group, if the asset was to be sold within three years of completion, the Group would be liable to tax on profits arising on the disposal under S.705G Taxes Consolidation Act 1997. No provision is currently being made for potential deferred tax on revaluations on these properties that have been significantly developed, since in the judgement of the Directors, these assets are held for longer term rental income and capital appreciation and therefore they will not be sold within the three-year period.
- All investment properties are valued in accordance with their current use, which is also the highest and best use, with the exception of Harcourt Square where, in accordance with IFRS 13:27, the valuation takes into account its potential as a development property which reflects the asset in its highest and best use. It is the Directors' intention to pursue the redevelopment of this property.
- In accordance with the Group's policy on lease incentives, the valuation provided by CBRE is adjusted by the fair value of the rental income accruals ensuing from the recognition of these incentives. The total reduction in the external valuer's investment property valuation in respect of these adjustments was EUR3.2m (31 March 2016: EUR2.6m).
Performance related payments
The Directors have considered the provision of amounts payable for performance related payments for the period. Apart from EUR0.7m which has been provided in relation to top-up fees and amounts relating to joint venture management fees earned, there is no provision made in these financial statements for the period ended 30 September 2016.
No further issues were considered or adjustments required for the period ended 30 September 2016.
3. Application of new and revised International Accounting Standards (IFRS)
The Group has not adopted any new or amended accounting pronouncements which have impacted on the half yearly report.
Adoption of new standards
The Directors do not expect that the adoption of the new and revised IFRSs that have been issued but are not yet effective will have a material impact on the financial statements of the Group in future periods. Two new standards will have some impact, the adoption of IFRS 9 will impact both the measurement and disclosures of financial instruments and the adoption IFRS 15 may have an impact on revenue recognition and related disclosures. The impact of these has not been fully assessed as yet and it is therefore not practical to discuss the potential impacts in detail at this time.
4. Significant accounting policies
These condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Group's Annual Report in respect of the year ended 31 March 2016. The accounting policies and methods of computation employed in the preparation of the condensed consolidated financial statements are consistent with those employed in the preparation of the most recent annual consolidated financial statements in respect of the year ended 31 March 2016.
5. Operating segments
The Group is organised into six business segments, against which the Group reports its segmental information, being "Office assets", "Industrial assets", "Residential assets", "Development assets", "Other Assets" (non-core assets) and "Central assets and costs". All of the Group's operations are in the Republic of Ireland. Operating segments are reported in a manner consistent with the reporting to the Board of Directors of the Company which is the chief decision maker of the Group.
Central assets include cash and cash equivalents, tax refundable and administration expenses paid in advance. In addition, cash received in advance in relation to rental receipts on properties and rental income accrued have been allocated from receivables and cash and cash equivalents to the appropriate segment.
The Group's key measure of underlying performance of a segment is total income after revaluation gains and losses which comprises revenue (rental and interest income), property outgoings, revaluation of investment properties and other gains and losses. Total income after revaluation gains and losses includes rental income which is used as the basis to report key measures such as EPRA Net Initial Yield ("NIY") and EPRA "Topped--Up" NIY, which measure the cash passing rent returns on market value of investment properties before and after an adjustment for the expiration of rent free period or other lease incentives, respectively.
Group Consolidated Segment Analysis
For the period 1 April 2016 to 30 September 2016
Unaudited
Office Industrial Residential Office Other Central Group
Assets Assets Assets Development Assets assets Consolidated
Assets and Position
costs
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Rental income 14,724 262 3,261 12 47 - 18,306
Interest income - - - - - - -
--------------------- -------------------- -------------------- ------------------------- ----------------- ---------------------- -------------
Revenue 14,724 262 3,261 12 47 - 18,306
Property (854 (37 (665 (30 (34 (1,620
outgoings ) ) ) ) ) - )
Total Property (18
Income 13,870 225 2,596 ) 13 - 16,686
Revaluation
of investment
properties 9,957 750 1,383 12,252 - - 24,342
Other income . - - 293 86 - 379
Total Income 23,827 975 3,979 12,527 99 - 41,407
--------------------- -------------------- -------------------- ------------------------- ----------------- ---------------------- -------------
Performance
related (659 (659
payments ) )
Operating (5,620 (5,620
expenses - - - - - ) )
Total operating (6,279 (6,279
expenses - - - - - ) )
--------------------- -------------------- -------------------- ------------------------- ----------------- ---------------------- -------------
Operating
profit/(loss) 23,827 975 3,979 12,527 99 (6,279) 35,128
Net finance (2,719 (2,719
cost - - - - - ) )
--------------------- -------------------- -------------------- ------------------------- ----------------- ---------------------- -------------
Profit before (8,998
tax 23,827 975 3,979 12,527 99 ) 32,409
(113 (113
Income tax - - - - - ) )
--------------------- -------------------- -------------------- ------------------------- ----------------- ---------------------- -------------
Profit for the (9,111
financial year 23,827 975 3,979 12,527 99 ) 32,296
===================== ==================== ==================== ========================= ================= ====================== =============
Total Segment
Assets 841,961 13,148 115,355 67,900 980 33,261 1,072,605
===================== ==================== ==================== ========================= ================= ====================== =============
Investment
Property 835,915 13,148 114,900 67,900 - - 1,031,863
===================== ==================== ==================== ========================= ================= ====================== =============
Group Consolidated Segment Analysis
For the period 1 April 2015 to 30 September 2015
Unaudited
Office Central Group
Office Industrial Residential Development Other assets Consolidated
Assets Assets Assets Assets Assets and costs Position
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Rental income 16,416 262 1,607 120 - - 18,405
Interest
income - - - - - - -
------------------ --------------------- ---------------------- ------------------------ ---------------------- ------------------ ---------------------
Revenue 16,416 262 1,607 120 - - 18,405
Property
outgoings (283) (31) (385) (194) - (75) (968)
Total Property
Income 16,133 231 1,222 (74) - (75) 17,437
Revaluation
of investment
properties 32,270 325 4,471 26,552 - - 63,618
Other income - - - 176 711 - 887
Total Income 48,403 556 5,693 26,654 711 (75) 81,942
------------------ --------------------- ---------------------- ------------------------ ---------------------- ------------------ ---------------------
Investment
manager fee
- base - - - - - (3,373) (3,373)
Performance
fee - - - - - (1,500) (1,500)
Operating
expenses - - - - - (2,233) (2,233)
------------------ --------------------- ---------------------- ------------------------ ---------------------- ------------------ ---------------------
Total
operating
expenses - - - - - (7,106) (7,106)
------------------ --------------------- ---------------------- ------------------------ ---------------------- ------------------ ---------------------
Operating
profit/(loss) 48,403 556 5,693 26,654 711 (7,181) 74,836
Net finance
cost (613) - - - - (480) (1,093)
------------------ --------------------- ---------------------- ------------------------ ---------------------- ------------------ ---------------------
.
Profit/(loss)
before tax 47,790 556 5,693 26,654 711 (7,661) 73,743
================== ===================== ====================== ======================== ====================== ================== =====================
Total Segment
Assets 516,720 10,730 110,092 115,160 14,072 116,036 882,810
================== ===================== ====================== ======================== ====================== ================== =====================
Investment
Property 509,467 10,730 109,700 109,250 - - 739,147
================== ===================== ====================== ======================== ====================== ================== =====================
6. Revenue
Rental income arises from the Group's investment property. Rental income in the period includes EUR0.9m in relation to the spreading of lease incentives (30 September 2015: EUR1.1m).
Six months Six months
ended 30 September ended 30 September
2016 Unaudited 2015 Unaudited
EUR'000 EUR'000
Rental income 18,306 13,505
Surrender premia - 4,900
-------------------- --------------------
Revenue 18,306 18,405
-------------------- --------------------
7. Other income
Six months Six months
ended 30 ended 30
September September
2016 Unaudited 2015 Unaudited
EUR'000 EUR'000
Gain on sale of investment property - 176
Gains on sales of non-current
assets classified as held for
sale 86 711
Other fees and income 293 -
--------------- ---------------
Other income 379 887
--------------- ---------------
Other fees and income relates mainly to the fees earned in relation to the management of the Windmill Lane joint arrangement.
8. Operating expenses
Six months Six months
ended 30 September ended 30
2016 Unaudited September
2015 Unaudited
EUR'000 EUR'000
Non-executive directors'
fees 150 150
Personnel expenses 1,025 -
Professional valuers'
fees 162 194
Deferred remuneration 2,222 -
Depositary fees 158 146
Registrar fees 18 28
Depreciation 77 -
Other Administration
expenses 1,808 1,715
-------------------- ----------------
5,620 2,233
-------------------- ----------------
In November 2015, the Investment Manager, WK Nowlan REIT Management Limited was acquired by the Company otherwise referred to as "internalisation". Deferred remuneration relates to fees paid, during this internalisation, to vendors who continue to provide services to the Company. It is therefore recognised in line with the provision of those services (see Note 5 of the Annual report 2016).
9. Share based payments
As at 30 September 2016 the Group had the following share based payment arrangements:
a. Performance related payments
As part of the arrangements for the internalisation of the Investment Manager in 2015, it was agreed that future performance fees and other payments due under the terms of the Investment Management Agreement ("IMA"), would be made in shares of the Company until the expiration of the agreement in November 2018. The calculation of these amounts is determined based on the Net Asset Value of the Group at the financial year end and references a share price of the average closing price on the Irish Stock Exchange for the preceding 20 business days. The amount of this award is fixed on determination of the NAV and is calculated under a formula set out in the Share Purchase Agreement ("SPA") which was approved by the Company's shareholders in October 2015. Once the NAV is determined, the amount of the award is fixed and the Directors have determined that the grant date for the share based payment is the date on which the calculation is fixed, i.e. 31 March each year, as at this date. The Directors have estimated the amount of fees that may be payable under this arrangement for the six months to 30 September 2016 in preparing these condensed consolidated financial statements at EUR0.7m (30 September 2015: EURnil).
Shares issued relating to performance related payments to vendors that remain obligated to perform future services for the Group are subject to lock-up provisions meaning they are restricted from being sold upon receipt, with one third of the shares being "unlocked" on each anniversary of issue date. All shares are beneficially owned by the recipients and all voting rights and rights to dividends accrue to them. The Directors considered the likelihood of the clawback provision being triggered on these shares, the difficulty in measuring this provision, and the likelihood that any discount to be applied would be material. They concluded that it was inappropriate to modify the fair value of the shares issued to reflect these restrictions and the shares issued would be valued without any discount to reflect these restrictions.
b. Employee long term incentive plan
Awards will be granted to employees of the Group under a remuneration plan which includes both cash elements and elements of long term incentive payments, which are share based (the "Performance Related Remuneration Scheme" or "PRR"). Until the expiry of the performance related payments referenced in part a) above in November 2018, the PRR will be funded entirely by deductions of up to 15% from any Performance Fees included in this payment. Shares awarded under the PRR are in the form of a contingent grant of Company shares which will issue at the time of vesting which occurs on the third anniversary of the start of the year to which they relate. The number of shares is calculated based on the average closing price for the 20 business days preceding the end of the relevant period. These shares are recorded at fair value on the contingent grant date, i.e. the 31 March of the year to which they are earned. The charge recognised in the condensed consolidated income statement for the period ended 30 September 2016 and 30 September 2015 is EURnil.
Shares are forfeited should the person leave the Group prior to the vesting date unless subject to "good leaver" provisions. Any shares forfeited are transferable to the vendors. Therefore, there is no impact on fair value measurement in respect of these shares.
Share based payments made and provided during the period:
Six months ended 30 September 2016 (unaudited)
Shares issued during the period:
4,200,590 Ordinary Shares of EUR0.10 were issued during the period in settlement of performance related fees at a fair value of EUR1.302 on 31 March 2016, the grant date, giving a total recorded of EUR5.5m in settlement of fees due.
Share based payments outstanding as at 30 September
2016
EUR'000 Estimated
# of shares
to be issued
Price '000
Balance of 2016 performance
related payments - Employee
portion 456 1.302 350
Performance related
payments provided in
period 659 1.370 * 481
-------- --------------
Balance payable at period
end 1,115 831
-------- --------------
* based on closing price at 30 September
2016, grant date will be 31 March
2017.
------------------------------------------------- --------------
Year ended 31 March 2016 (audited)
Shares issued during the period:
Under the terms of the internalisation of the investment manager share purchase agreement, a part of the payment was made in shares of the Company. The issue price of EUR1.17605 per share was determined by reference to the average share price for twenty days prior to 1 April 2015. 10.9m shares were issued on 10 November 2015 when the price was EUR1.318. The fair value of these shares is set out below.
Shares issued in the transactions comprising "Internalisation" of the Investment Manager
Price
Contracted at issue
price date EUR
EUR # SHARES (FV)
------------------- ----------------- -------------------
1.17605 1.31800
Total shares issued 12,858,727 10,933,826 14,410,782
----------------------- ------------------- ----------------- -------------------
Share based payments outstanding as at 31
March 2016
EUR'000 Estimated
# of
shares
to
be
issued
Price* '000
Due under performance
related payments - vendors 5,469 1.302 4,200
Due under performance
related payments - Employee
portion 456 1.302 350
-------- ----------
Balance at period end 5,925 4,550
-------- ----------
*Grant date 31 March 2016
------------------------------- -------- ------- ----------
10. Finance income and expense
The effective interest expense on borrowings arises as a result of the recognition of interest expense, commitment fees, arrangement fees and the amortisation of the time value of hedging costs on the Group's revolving credit facility and on the debt facility relating to the Windmill Lane joint operation.
Six months Six months
ended 30 September ended 30 September
2016 Unaudited 2015 Unaudited
EUR'000 EUR'000
Interest income on cash
and cash equivalents 6 112
Effective interest expense
on borrowings (2,725 ) (592 )
Finance expense on payable
due for investment property - (613 )
-------------------- --------------------
Net finance expense (2,719 ) (1,093 )
-------------------- --------------------
Interest costs capitalised in the period ended 30 September 2016 were EUR0.1m (30 September 2015: EURnil) in relation to the Windmill Lane joint operation. The capitalisation rate used is the effective interest rate on the cost of borrowing applied to the portion of investment that is financed.
11. Income tax
Six months Six months
ended 30 September ended 30
2016 Unaudited September
2015 Unaudited
EUR'000 EUR'000
Income tax expense for 113 -
financial period
-------------------- ----------------
The net income tax expense during the period arises in respect of income and gains from the Group's residual business, the sale of non-core assets and other income.
Reconciliation of income tax expense for financial period
Six months Six months
ended 30 September ended 30 September
2016 Unaudited 2015 Unaudited
EUR'000 EUR'000
Profit before tax 32,296 73,743
Tax charge on profit
at standard rate of 12.5% 4,037 9,218
Non-taxable revaluation
surplus (3,043) (7,952)
REIT tax-exempt rental
profit (910) (1,266)
Other (Additional tax 29 -
rate on residual income)
-------------------- --------------------
Income tax expense for 113 -
the financial period
-------------------- --------------------
Hibernia REIT plc has elected for Real Estate Investment Trust ("REIT") status under section 705E Tax Consolidation Act 1997. As a result, the Group does not pay Irish corporation tax on the profits and gains from its qualifying rental business in Ireland provided it meets certain conditions. With certain exceptions, corporation tax is still payable in the normal way in respect of income and gains from a Group's Residual Business, that is, its non-property rental business.
The Directors confirm that the Group has remained in compliance with the Irish REIT rules and regulations up to and including the date of this report.
12. Earnings per share
There are no convertible instruments, options, warrants or ordinary shares that are issued upon the satisfaction of specified conditions as at the period ended 30 September 2016. However, the Company has established a reserve of EUR1.1m against the issue of ordinary shares (Note 9).
The calculations are as follows:
Weighted average number Six months Six
of shares ended 30 months
September ended
2016 Unaudited 30 September
2015
Unaudited
'000 '000
Issued share capital at
beginning of period 681,251 670,317
Shares issued during the 4,201 -
period
------------------------------- --------------
Shares in issue at period
end 685,452 670,317
------------------------------- --------------
Weighted average number
of shares 683,351 670,317
Estimated additional shares
due for issue for long term
incentive plan/ performance
fee 831 5,814
------------------------------- --------------
Diluted number of shares 684,182 676,131
------------------------------- --------------
Basic and diluted earnings Six months Six
per share ended 30 months
September ended
2016 Unaudited 30 September
2015
Unaudited
EUR'000 EUR'000
Profit/(loss) for the period
attributable to the owners
of the Company 32,296 73,743
------------------------------- --------------
'000 '000
Weighted average number of
ordinary shares (basic) 683,351 670,317
Weighted average number of
ordinary shares (diluted) 684,182 676,131
Basic earnings per share
(cents) 4.7 11.00
------------------------------- --------------
Diluted earnings per share
(cents) 4.7 10.91
------------------------------- --------------
13. Property, plant and equipment
At 30 September 2016 - Unaudited
Land Office Leasehold Total
and and improvements
buildings computer and fixtures
equipment and fittings
EUR'000 EUR'000 EUR'000 EUR'000
Carrying value at 1 April
2016 2,703 32 211 2,946
Additions:
Transferred from investment
property at fair value
(see below) 1,651 - - 1,651
Acquisitions - 22 32 54
(26 (77
Depreciation ) (8 ) (43 ) )
Revaluations included - - - -
in other comprehensive
income
----------- ----------- -------------- ---------
Carrying value at 30
September 2016 4,328 46 200 4,574
----------- ----------- -------------- ---------
At 31 March 2016 - Audited
Land Office Leasehold Total
and and computer improvements
buildings equipment and fixtures
and fittings
EUR'000 EUR'000 EUR'000 EUR'000
Carrying value at 1 - - - -
April 2015
Additions:
Transferred from investment
property at fair value
(see below) 2,400 - - 2,400
Acquired on acquisition
of investment manager - 37 205 242
Acquisitions - 8 38 46
(20 (65
Depreciation ) (13 ) (32 ) )
Revaluations included
in other comprehensive
income 323 - - 323
----------- -------------- -------------- ---------
Carrying value at 31
March 2016 2,703 32 211 2,946
----------- -------------- -------------- ---------
On 17 July 2015 the Group commenced occupation of part of the South Dock House property. During the period ended 30 September 2016, the Group took further space in this property for its own use. The total percentage of South Dock House now recognised as owner occupied property is 53.5% based on floor area. The fair value of this is recognised in property, plant and equipment from this date. Revaluations of this property are now recognised in other comprehensive income in accordance with the Group's accounting policy on property, plant and equipment (Note 20a).
14. Investment Property
Office Industrial Residential Office Total
Assets Assets Assets Development
Assets
Fair value category Level Level Level Level Level
3 3 3 3 3
Group Group Group Group Group
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Carrying Value at
31 March 2015 475,877 10,319 66,500 88,600 641,296
Additions:
Property Purchases 106,107 - 30,129 - 136,236
Development and Refurbishment
Expenditure 7,488 111 9,784 19,960 37,343
Revaluations included
in income statement 59,970 1,968 6,787 56,331 125,056
Disposals:
Transferred to property,
plant and equipment
as owner occupied (2,400 (2,400
(Note 13) ) - - - )
(9,875 (9,875
Property sale - - - ) )
--------- ----------- ------------ ------------- ----------
Carrying Value at
31 March 2016 647,042 12,398 113,200 155,016 927,656
--------- ----------- ------------ ------------- ----------
Additions:
Property Purchases 52,376 - 24 - 52,400
Development and Refurbishment
Expenditure 1,541 - 293 27,282 29,116
Revaluations included
in income statement 9,957 750 1,383 12,252 24,342
Disposals:
Transferred to property,
plant and equipment
as owner occupied (1,651 (1,651
(Note 13) ) - - - )
Properties transferred (126,650
between segments* 126,650 - - ) -
--------- ----------- ------------ ------------- ----------
Carrying Value at 30
September 2016 (unaudited) 835,915 13,148 114,900 67,900 1,031,863
--------- ----------- ------------ ------------- ----------
(*The movement between segments represents the completed portion of Cumberland Place which is recognised as an office asset from 30 September 2016.)
The valuations used in order to determine fair value for the investment properties in the consolidated financial statements are determined by CBRE, the Group's independent valuers, and are in accordance with the provisions of IFRS 13. CBRE has agreed to the use of their valuations for this purpose. Some of the inputs to the valuations are defined as "unobservable" by IFRS 13. As discussed in Note 2. (g) of the Annual Report, property valuations are inherently subjective as they are made on the basis of assumptions made by the valuer. For these reasons, and consistent with EPRA's guidance, the Group has classified the valuations of its property portfolio as Level 3 as defined by IFRS 13. Valuations are completed on the Group's investment property on at least a half yearly basis and, in accordance with RICs Valuation professional standards, takes account of the properties' highest and best use. Where the highest and best use is not the current use, the valuation will account for the costs and likelihood of achieving this use in arriving at a valuation estimate for that property. In the period to 30 September 2016, for all properties save one, Harcourt Square, the highest and best use is the current use. For Harcourt Square the highest and best use is as a development property and the valuation has taken account of this use.
The method that is applied for fair value measurements categorised within Level 3 of the fair value hierarchy is the yield methodology using market rental values capitalised with a market capitalisation rate or yield or other applicable valuation technique. Using this approach for the Group's investment properties, values of investment properties are arrived at by discounting forecasted net cashflows at market derived capitalisation rates. This approach includes future estimated costs associated with refurbishment or development, together with the impact of rental incentives allowed to tenants. Therefore, for example, development properties are assessed using a residual method in which the completed development property is valued using income and yield assumptions and deductions are made for the estimated costs to completion, including finance costs and developers profit, to arrive at the current valuation estimate. In effect this values the development as a proportion of the completed property.
The following table illustrates the methods applied to each segment:
Description Fair value Narrative Whether or
of investment of the investment description not there
property asset property of the techniques was a change
class EUR 'm at used in the technique
the period during the
end period
------------------ ------------------ ----------------------------------------------------------- -----------------
Office assets 836 No change
* All except for Harcourt Square: Yield methodology however
using market rental values capitalised with a market Cumberland
capitalisation rate Place, which
was an office
development
* Harcourt Square: Residual Method asset at the
financial
year end is
now part of
this segment
as it has
completed.
------------------ ------------------ ----------------------------------------------------------- -----------------
Industrial 13 Yield methodology No change
assets using market
rental values
capitalised
with a market
capitalisation
rate
------------------ ------------------ ----------------------------------------------------------- -----------------
Residential 115 Yield methodology No change
assets using market
rental values
capitalised
with a market
capitalisation
rate
------------------ ------------------ ----------------------------------------------------------- -----------------
Office
development 68 Residual Method No change
assets
------------------ ------------------ ----------------------------------------------------------- -----------------
In valuing the Group's investment properties, the Directors have applied a reduction of EUR3.2m (31 March 2016: EUR2.6m) to the Valuers' valuations to include the impact of the accounting policy on the recognition of rental incentives allowed to tenants. This deduction is a measure of the impact on the property valuation of the difference between cash and accounting approaches to the recognition of rental income.
There were no transfers between levels during the period. Approximately EUR36,458 interest was capitalised in relation to the Windmill joint operation (30 September 2015: EURnil).
Reconciliation of the independent valuers' valuation report amount to the carrying value of investment property in the Consolidated Statement of Financial Position:
30 September 31 March
2016 Unaudited 2016 Audited
EUR'000 EUR'000
Valuation per Valuers'
certificate 1,066,635 953,830
50% Windmill joint arrangement (20,875
(Note 15) (27,200 ) )
Owner occupied property
(South Dock House) (4,376 ) (2,703 )
Income smoothing adjustment (3,196 ) (2,596 )
---------------- ---------------
Investment property
balance at period end 1,031,863 927,656
---------------- ---------------
Information about fair value measurements using unobservable inputs (Level 3).
The valuation techniques used in determining the fair value for each of the categories of assets is market value as defined by VPS4 of the Red Book 2015, being the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion, and is in accordance with IFRS 13. Included in the inputs for the valuations above are future development costs where applicable. These development costs are generally determined by tender at the outset of the project and neither unobservable nor subject to material change.
As outlined above, the main inputs in using a market based capitalisation approach are the ERV and equivalent yields. ERVs, apart from in multi-family residential properties as discussed below, are not generally directly observable and therefore classified as Level 3. Yields depend on the valuers assessment of market capitalisation rates and are therefore Level 3 inputs.
The table below summarises the key unobservable inputs used in the valuation of the Group's investment properties at 30 September 2016 which are estimated rental value and equivalent yields. There are interrelationships between these inputs as they are both determined by market conditions, and the valuation result in any one period depends on the balance between them. The Group's residential properties are multi- family units and therefore ERVs are based on current market rents observed for units rented within the property. Although the estimated rental value is therefore not strictly unobservable, it is included in the below table for comparative purposes. These tables include the development property owned through the Windmill joint operation as its classification as a joint operation means that it is accounted for in the same manner as the Group's fully owned investment properties and is therefore included in the investment property totals on the Group's condensed consolidated statement of financial position.
Key unobservable inputs used in the valuation of the Group's investment properties
30 September
2016 (unaudited)
Estimated
rental value
Market EUR per sq. Equivalent
Value ft. Yield %
EUR '000 Low High Low High
---------- ------------ ------------- ------ ------
Office 835,915 EUR25.00psf EUR55.00psf 4.90% 6.57%
Residential EUR18,000 EUR 26,400
* 114,900 pa pa 4.40% 4.60%
EUR53.00 EUR48.00
Development 67,900 psf psf 5.40% 5.75%
EUR3.75 EUR5.75
Industrial 13,148 psf psf 7.07% 7.07%
* Average ERV per
2 bed apartment
31 March
2016 (audited)
Estimated
rental value
Market EUR per sq. Equivalent
Value ft. Yield %
EUR '000 Low High Low High
---------- ------------ ------------- ------ ------
EUR23.55 EUR55.00
Office 647,042 psf psf 4.87% 6.24%
Residential EUR18,000 EUR 26,400
* 113,200 pa pa 4.40% 4.60%
EUR47.00 EUR55.00
Development 155,016 psf psf 5.25% 5.50%
EUR3.75 EUR5.75
Industrial 12,398 psf psf 7.36% 7.36%
* Average ERV per
2 bed apartment
The sensitivities below illustrate the impact of movements in key unobservable inputs on the fair value of investment properties.
30 September
2016 (unaudited)
Impact on market
value of a 5% Impact on market
change in the value of a 25
estimated rental bp change in the
Sensitivities value equivalent yield
Increase Decrease Increase Decrease
EUR 'm EUR'm EUR 'm EUR'm
------------------- --------- --------- --------- ---------
Office 39.8 (39.7) (44.8) 49.3
Residential 5.8 (5.8) (6.0) 6.7
Development 9.2 (9.2) (6.1) 9.2
Industrial 0.5 (0.5) (0.4) 0.4
Market value
- Group 55.3 (55.2) (57.3) 65.6
31 March 2016
(audited)
Impact on market
value of a 5% Impact on market
change in the value of a 25
estimated rental bp change in the
Sensitivities value equivalent yield
Increase Decrease Increase Decrease
EUR 'm EUR'm EUR 'm EUR'm
------------------- --------- --------- --------- ---------
Office 29.7 (29.5) (34.9) 38.4
Residential 6.6 (6.6) (5.9) 6.6
Development 14.2 (14.2) (12.9) 14.2
Industrial 0.5 (0.5) (0.4) 0.4
Market value
- Group 50.8 (54.1) (54.1) 59.6
15. Joint arrangement
The Group enters into joint arrangements in order to manage its development risk exposures.
Windmill Lane Partnership
Nature of activity: Development of the Windmill Lane site
Principal place of business: South Dock House, Hanover Quay, Dublin D02 XW94
Registered
address/
Country Group Company Nature
Name of Incorporation relationship Directors Secretary of business
------------------ ------------------ -------------- ------------------ ----------- -------------
South Dock 50% held
House, through Richard
Windmill Hanover Hibernia Ball, Kevin Castlewood
Lane Development Quay, Dublin REIT Holding Nowlan, Corporate
Company D02 XW94, Company Sarah Broughton, Services Property
Limited Ireland Limited Thomas Tolley Limited development
------------------ ------------------ -------------- ------------------ ----------- -------------
During the previous financial year affiliates of Starwood Capital Group LP exercised their written call option to buy back into the development of the Windmill Lane site as a 50:50 joint arrangement partner at the original purchase price, leading to the formation of the Windmill Lane Partnership ("WLP").
The transaction, is recognised in the consolidated financial statements as a joint operation and as such the Group recognises its share of assets and liabilities held jointly as well as its share of revenues and expenses according to the IFRS applicable to the items being recognised. The Group is entitled to a proportionate share of any rental income that may be received and bears a proportionate share of the joint operations costs.
16. Other financial assets
30 September 31 March
2016 Unaudited 2016 Audited
EUR'000 EUR'000
Derivatives at fair
value 109 213
Loans carried at amortised cost 152 152
---------------- ---------------
Balance at end of
period - current
261 365
---------------- ---------------
Derivatives at fair value are the Group's hedging instruments on its borrowings. The Group has hedged up to EUR100m of its revolving credit facility by a combination of caps and a swaption to limit the EURIBOR interest rate element of interest payable to 1%. A similar arrangement is in place on the Windmill debt facility. The derivatives covering the revolving credit facility have a nominal value of EUR100m in total. The Windmill Lane cap has a maximum nominal value of EUR44.7m based on a schedule of estimated drawings, 50% of which is relating to the Group's share of refinancing.
Loans and receivables at the period end consists of one loan on which the Group holds a property as collateral. The Directors consider that no impairment charge is necessary.
17. Trade and other receivables
30 September 2016 Unaudited 31 March 2016 Audited
EUR'000 EUR'000
Non-current
Deferred remuneration (1) 5,033 7,124
Property income receivables - 4,542
Balance at end of period - non current 5,033 11,666
Current
Investment property prepaid - 326
Due from sale of non-current assets classified as held for
sale - 5,955
Deferred remuneration (1) 4,312 4,444
Receivable from loan redemptions 137 137
Property income receivables 6,947 2,807
Prepayments 1,057 1,253
Tenant fit-out recoverable 276 2,861
Income tax refund due 393 427
VAT refundable - 670
Balance at end of period - current 13,122 18,880
Balance at end of period - total 18,155 30,546
1: This consists of the balance of the payment to vendors who are service providers remaining to be amortised which related to the internalisation transaction (see Note 5 of the Annual Report 2016).
There are no amounts past due. The Directors consider that the carrying value of trade and other receivables approximates to their fair value. Approximately EUR2.2m (31 March 2016: EUR4.4m) is included in property income receivables and receivable relating to agreed payments under a lease surrender. The balance of trade and other receivables has no concentration of credit risk as it comprises mainly prepayments and tax refunds due.
18. Non-current assets classified as held for sale
30 September 2016 Unaudited 31 March 2016 Audited
EUR'000 EUR'000
Balance at beginning
of financial year 3,921 18,499
Sold during the financial
year (3,078 ) (14,578 )
Balance at end of financial
year 843 3,921
Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. The Directors have assessed the fair value of these assets by reviewing the sales prices achieved on similar assets and the expected sales price as determined by the selling agent in preparing their disposal plans. Assets sold to date have achieved at least their acquisition price on an individual basis and the Directors have therefore concluded that the fair value of these assets is at least their carrying value.
19. Issued capital and share premium
30 September 2016 Unaudited 31 March 2016 Audited
Share Capital Share Premium Total Share Capital Share Premium Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at beginning of
period 68,125 604,273 672,398 67,032 590,955 657,987
Shares issued during the
period 420 5,049 5,469 1,093 13,318 14,411
Balance at end of period 68,545 609,322 677,867 68,125 604,273 672,398
4,200,590 Ordinary Shares of EUR0.10 were issued during the period in settlement of performance related fees at a fair value of EUR1.302 on 31 March 2016, the grant date, giving a total recorded of EUR5.5m in settlement of fees due.
All of these shares were issued on 16 August 2016 and the associated costs were EUR19k.
Authorised share capital 30 September 2016 Unaudited 31 March 2016 Audited
No of shares '000 No of shares '000
Authorised 1,000,000 1,000,000
Allotted, called up and fully paid 685,452 681,251
In issue at period end 685,452 681,251
Under the terms of the agreement under which the Group internalised the Investment Manager, the vendors are entitled to certain deferred contingent payments which are, for the most part, equivalent to the performance fees which would have been payable under the Investment Management Agreement. These amounted to EUR0.7m at the period end (31 March 2016: EUR5.9m) and are all payable in shares (Note 9). A further 481k shares are expected to be issued in relation to these payments.
20. Other reserves (net of income tax)
30 September 2016 Unaudited 31 March 2016 Audited
EUR'000 EUR'000
Owner occupied property revaluation reserve 323 323
Cash flow hedging (181 ) (112 )
Other reserves 1,115 5,925
Balance at end of financial year 1,257 6,136
a. Owner occupied property revaluation reserve
30 September 2016 31 March 2016
Unaudited Audited
EUR'000 EUR'000
Balance at beginning of financial year 323 -
Increase arising on revaluation of owner occupied property - 323
Balance at end of financial year 323 323
In September 2016 the Group took possession of a further piece of South Dock House and now occupies 53.5% of the area. This owner occupied property has been derecognised as an investment property and recognised as owner occupied property. Subsequent remeasurement to fair value of this area is made through other comprehensive income or loss. On disposal, that portion of the properties revaluation reserve relating to the premises sold is transferred directly to retained earnings.
b. Cash flow hedging reserve
30 September 2016 31 March 2016
Unaudited Audited
EUR'000 EUR'000
Balance at beginning of financial year (112) -
(Loss) arising on fair value of hedging instruments entered into for cash flow
hedges (69) (112)
Balance at end of financial year (181 ) (112)
The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognised and accumulated under the heading of cash flow hedging reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss consistent with the Group's accounting policy.
No income tax arises on this item.
Cumulative gains or losses arising on changes in fair value of hedging instruments that have been tested as ineffective and reclassified from equity into profit or loss during the financial year are included in the following line items:
Six months ended 30 September 2016 Financial year ended 31 March 2015
Unaudited Audited
EUR'000 EUR'000
Finance loss 8 17
c. Other reserves
30 September 2016 31 March 2016
Unaudited Audited
EUR'000 EUR'000
Balance at beginning of financial year 5,925 5,772
Performance related payments provided (Note 9) 659 5,925
Settlement of prior year performance related payment (5,469 ) (5,772)
Balance at end of financial year 1,115 5,925
Other reserves comprise represented amounts reserved for the issue of shares in respect of performance related payments.
21. Retained earnings and dividends on equity instruments
30 September 2016 Unaudited 31 March 2016 Audited
EUR'000 EUR'000
Balance at beginning of the period 218,040 89,375
Profit for the period 32,296 136,797
Share issuance costs (19 ) (11 )
Dividends paid (5,484 ) (8,121 )
Balance at end of the period 244,833 218,040
In August 2016, a dividend of 0.8 cent per share (total dividend EUR5.5m) was paid to the holders of fully paid ordinary shares.
The Directors have declared an interim dividend of 0.75 cent per share to be paid to shareholders in January 2017 and which represents 50% of the dividends paid in respect of the prior financial year. The total estimated dividend to be paid is EUR5.1m.
The Directors confirm that the Company complies with the dividend payment conditions contained in the Irish REIT legislation.
22. Financial liabilities
30 September 2016 Unaudited 31 March 2016 Audited
EUR'000 EUR'000
Bank finance drawn 127,433 75,529
Arrangement fees and other costs (3,076 ) (3,718 )
Amortised interest 770 913
Balance at end of period 125,127 72,724
The maturity of borrowings is as follows:
Less than 1 year (514 ) (119 )
Between 2 and 5 years 125,641 72,843
Over 5 years - -
Total 125,127 72,724
In November 2015, the Group entered into a five year EUR400m revolving credit facility ("RCF") with Bank of Ireland, Barclays Bank Ireland PLC and Ulster Bank Ireland Limited, secured against a corporate level debenture.
First--ranking security for the Revolving Credit Facility is given by way of floating charges granted by the Company and its subsidiary, Hibernia REIT Finance Limited, over all of the Group's assets and also by way of a fixed charge granted by the Company over the shares in each of its subsidiaries as may from time to time exist. The amount presented in the financial statements is net of initial arrangement fees and associated costs.
In December 2015 the Group entered into a EUR46.7m non-recourse debt facility with Deutsche Bank AG, London Branch secured on the Windmill Lane joint operation. The facility has a three-year term, with an option to extend for a further year, and is used to fund the development works at 1 Windmill Lane. In early 2016, at the request of the joint operation partners, the facility was downsized to EUR44.2m. The Group's exposure to this facility is 50%.
Interest and fees relating to the Windmill facility are capitalised into development costs. All costs related to financing arrangements are included in the effective interest rate calculation and are amortised over the expected maturity of borrowings.
The Directors confirm that all covenants have been complied with and are kept under review.
All borrowings are denominated in Euro. All borrowings are subject to 6 months or less interest rate changes and contractual re-pricing rates. In addition, the Group has entered into derivative instruments so that EURIBOR exposure is capped at 1% in accordance with the Group's hedging policy. (see Note 16)
23. Trade and other payables
30 September 2016 Unaudited 31 March 2016 Audited
EUR'000 EUR'000
Current
Accrued investment property
costs 6,765 9,130
Payable for property, 42 -
plant and equipment
Payable for non-current assets classified as held for sale 16 -
Rent deposits and early
payments 10,134 5,551
Trade and other payables 4,189 4,323
Payable in relation to 841 -
tenant fit-outs
VAT payable 1,118 -
PAYE/PRSI payable 121 103
Tax payable 295 216
Balance at end of period
- current 23,521 19,323
Trade and other payables are interest free and have settlement dates within one year. The Directors consider that the carrying value of the remainder of trade and other payables approximates to their fair value.
24. IFRS and EPRA Net Asset Value per share
30 September 2016 Unaudited 31 March 2016 Audited
EUR'000 EUR'000
IFRS net assets at end of period 923,957 896,574
Ordinary shares in issue 685,452 681,251
IFRS NAV per share (cents) 134.8 131.6
Ordinary shares in issue 685,452 681,251
Estimated additional shares for performance related payments 831 4,550
Diluted number of shares 686,283 685,801
Diluted IFRS NAV per share (cents) 134.6 130.7
30 September 2016 Unaudited 31 March 2016 Audited
EUR'000 EUR'000
IFRS net assets at end of financial year 923,957 896,574
Net mark to market on financial assets 69 129
Revaluation of non-current assets classified as held for sale - 457
EPRA NAV 924,026 897,160
EPRA NAV per share (cents) 134.6 130.8
The Company has established a reserve of EUR1.1m (31 March 2016: EUR5.9m) against the issue of 0.8m ordinary shares relating to shares due to issue under share based payment schemes (Note 9)
25. Cash flow statement
Cash paid for investment property:
Six months ended 30 September 2016 Six months ended 30 September 2015
Unaudited Unaudited
Note EUR'000 EUR'000
Property Purchases 14 52,400 31,808
Development and Refurbishment
Expenditure 14 29,116 12,155
Change in accrued investment
property costs 23 2,365 687
Change in prepayment
for investment property 17 (326 ) -
----------------------------------- ------------------------------------
Cash paid for investment
property 83,555 44,650
----------------------------------- ------------------------------------
26. Financial instruments and risk management
a. Financial risk management objectives and policy
The Group has to take calculated risks in order to realise strategic goals and this exposes the Group to a variety of financial risks. These include, but are not limited to, market risk (including interest and price risk), liquidity risks and credit risk. These financial risks are managed in an overall risk framework by the Board, in particular by the CFO, and monitored and reported on by the Risk and Compliance Officer. The Group monitors market conditions with a view to minimising the volatility of the funding costs of the Group. The Group uses derivative financial instruments such as interest rate caps and swaptions to manage the financial risks associated with the underlying business activities of the Group.
b. Financial assets and financial liabilities
The following table shows the Group's financial assets and liabilities and the methods used to calculate fair value.
Asset/ Liability Carrying value Level Method Assumptions
Cash and cash equivalents Amortised cost 1 Cash Value The fair value of cash and
cash equivalents held at
amortised cost have been
calculated by
discounting the expected cash
flows at prevailing interest
rates.
Loan and receivables Amortised cost 3 Assessed in relation to Valuation of collateral is
collateral value subjective based on agents'
guide sales prices and market
observation
of similar property sales were
available
Trade and other receivables Amortised cost 2 Cash value Most of these are receivables
in relation to the sale of
properties, prepayments or
income
tax refunds and therefore
there is no objective
information of any loss and
they are expected
to be recoverable in the short
term. No discounting is
therefore applied
Financial liabilities Amortised cost 2 Discounted cashflow The fair value of financial
liabilities held at amortised
cost have been calculated by
discounting
the expected cash flows at
prevailing interest rates.
Derivative financial Fair value 2 Calculated price The fair value of derivative
instruments financial instruments is
calculated using pricing based
on observable
inputs from financial markets
Trade and other payables Amortised cost 2 Cash value These are all accruals and
will settle in the short term
based on their cash value and
therefore
no discounting is applied
The carrying value of non-interest bearing financial assets and financial liabilities and cash and cash equivalents approximates their fair values, largely due to their short-term maturities.
c. Fair value hierarchy
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: valuation techniques for which the lowest level of inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: valuation techniques for which the lowest level of inputs that have a significant effect on the recorded fair value are not based on observable market data
The following tables present the classification of financial assets and liabilities within the fair value hierarchy and the changes in fair values measurements at Level 3 estimated for the purposes of making the above disclosure.
As at 30 September 2016 (Unaudited)
Level Loans and receivables At Fair value At amortised cost Carrying value Fair value
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Trade and other
receivables 2 18,155 - - 18,155 18,155
Loans 3 152 - - 152 152
Derivatives at fair value 2 - 109 - 109 109
Cash and cash equivalents 1 16,909 - - 16,909 16,909
Financial liabilities 2 - - (125,127 ) (125,127 ) (125,127 )
Trade and other payables 2 - - (23,521 ) (23,521 ) (23,521 )
35,216 109 (148,648 ) (113,323 ) (113,323 )
As at 31 March 2016 (Audited)
Level Loans and receivables At Fair value At amortised cost Carrying value Fair value
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Trade and other
receivables 2 30,546 - - 30,546 30,546
Loans 3 152 - - 152 152
Derivatives at fair value 2 - 213 - 213 213
Cash and cash equivalents 1 23,187 - - 23,187 23,187
Financial liabilities 2 - - (72,724 ) (72,724 ) (72,724 )
Trade and other payables 2 - - (19,323 ) (19,323 ) (19,323 )
53,885 213 (92,047 ) (37,949 ) (37,949 )
Movements of level 3 fair values for items carried in the statement of financial position.
30 September 2016 Unaudited 31 March 2016 Audited
EUR'000 EUR'000
Balance at beginning of financial year 927,808 631,248
Transfers into level 3
Transfers out of level 3 (1,651 ) (2,400 )
Purchases, sales, issues and settlement
Purchases 81,516 173,579
Sales - (9,875 )
Written call option - 5,100
Fair value movement 24,342 130,156
Balance at end of financial year 1,032,015 927,808
This reconciliation includes investment property which is described further in Note 14 to these consolidated financial statements.
The Directors review and approve the valuations as part of their review of the financial statements. The Group's policy is to recognise transfers into and out of the fair value hierarchy levels as of the date of the event or change in circumstance that caused the transfer.
d. Risk management
The Group has identified exposure to the following risks:
Market risk
Credit risk
Liquidity risk
The policies for managing each of these and the principal effects of these policies on the results for the financial year are summarised below:
i. Market risk
Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk reflects interest rate risk, currency risk and other price risks. The Group has no financial assets or liabilities denominated in foreign currencies. The Group's financial assets currently principally comprise mainly short term bank deposits and trade receivables. Financial liabilities comprise short term payables and bank borrowings. Therefore, the primary market risk is interest rate risk. Bank borrowing interest rates are based on short term variable interest rates and the Group has hedged against increasing rates by entering into interest rate caps to restrict EURIBOR interest costs to 1%.
Exposure to interest rates is limited to the exposure of its earnings from uninvested funds and borrowings. There were no uninvested funds from the Company's capital raises at the period end (31 March 2016: EURnil). Gross borrowings were EUR127.4m (31 March 2016: EUR75.6m). While Interest rates remain at historic lows, the hedging strategy means there is minimal impact on earnings of EURIBOR rate increases over 1%. The Groups drawings under its facilities were based on a EURIBOR rate of zero and therefore the impact of a rise in EURIBOR to 1% for a full year would be approximately EUR1.3m (31 March 2016: EUR0.8m).
ii. Credit risk
Credit risk is the risk of loss of principal or loss of a financial reward stemming from a counterparty's failure to repay a loan or otherwise meet a contractual obligation. Credit risk is therefore, for the Group and Company, the risk that the counterparties underlying its assets default.
The Group's main financial asset is cash and cash equivalents. Cash and cash equivalents are held with major Irish and European institutions. The Board has established a cash management policy for these funds which it monitors regularly. This policy includes ratings restrictions, BB or better, and related investment thresholds, EUR25-50m with individual institutions dependent on rating, to avoid concentration risks with any one counterparty. The Company has also engaged the services of a Depository to ensure the security of the cash assets. The rating of the financial institutions holding cash balances at the period end was BBB- or better.
Concentration of risk in receivables: Approximately EUR2.2m is due from a previous tenant for surrender premia. The balance of trade and other receivables has no concentration of credit risk as it comprises mainly prepayments and tax refunds due.
The maximum amount of credit exposure is therefore:
30 September 2016 Unaudited 31 March 2016 Audited
EUR'000 EUR'000
Financial assets 261 365
Trade and other receivables 18,155 30,546
Cash and cash equivalents 16,909 23,187
Balance at end of period 35,325 54,098
iii. Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group ensures that it has sufficient available funds to meet obligations as they fall due.
Net current assets at the financial year end were:
30 September 2016 Unaudited 31 March 2016 Audited
EUR'000 EUR'000
Net current assets at the period end 7,353 26,665
The following tables show total liabilities due as compared with funds available. No account is taken of trade and other receivables due, rent income due under operating leases, or other cash in-flows. Only trade payables relating to cash expenditure are included, the balances relate either to non-cash items or deferred income.
30 September 2016 Unaudited 31 March 2016 Audited
EUR'000 EUR'000
Trade and other payables 23,521 19,323
Financial liabilities 125,127 72,724
Total liabilities due 148,648 92,047
Funds available:
Cash and cash equivalents 16,909 23,187
Revolving credit facility undrawn 274,000 325,000
Total funds available 290,909 348,187
Net funds available 142,261 256,140
Listed below are the contractual maturities of the Group's financial liabilities
Group At 30 September 2016 - Carrying amount Contractual cash 6 months or less 6-12 months 1-2 years 2-5 years Unaudited flows Non derivatives Borrowings 125,127 138,412 1,326 1,326 2,652 133,108 Trade payables 5,722 5,722 5,722 - - - Payable for investment property 6,765 6,765 6,765 - - - Total 137,614 150,899 13,813 1,326 2,652 133,108 Group At 31 March 2016 - Carrying amount Contractual cash 6 months or less 6-12 months 1-2 years 2-5 years Audited flows Non derivatives Borrowings 76,155 82,619 626 782 1,563 79,648 Trade payables 4,642 4,642 4,426 216 - - Payable for investment property 9,130 9,130 9,130 - - - Total 89,927 96,391 14,182 998 1,563 79,648 e. Capital management
The Group manages capital in order to ensure its continuance as a going concern.
As the Group grows it is planned to finance up to 40% of the market value of the Group's assets out of borrowings in order to enhance the return on equity for its shareholders. This percentage may increase to 50% under the REIT regime and so the Group may modify this leverage from time to time taking into account current prevailing economic and market conditions. Any alteration in this leverage ratio would be an amendment to the investment policy and therefore require a shareholder vote. This leverage ratio will be monitored in the regular financial reporting and prior to entering into any borrowing arrangements in order to ensure this policy is maintained.
Capital comprises share capital, reserves and retained earnings as disclosed in the Consolidated and Company Statement of Changes in Equity. At 30 September 2016 the capital of the Company was EUR924m (31 March 2016: EUR897m).
As the Company is now self-managed and authorised under the Alternative Investment Fund regulations. It is therefore required to maintain 25% of its fixed overheads as capital, currently approximately EUR3m. The Company has complied with the capital requirement throughout the period.
Under the Irish REIT regime, the Group must distribute at least 85% of its property income by way of a Property Income Distribution ("PID"). Therefore, capital available for business growth will not be augmented by dividend policy. To grow the business, the Group must therefore consider the need to seek further capital in the market given both the inability to grow reserves and the restriction on its borrowings as a source of increasing its portfolio size as discussed above.
The Company's share capital is publicly traded on the London and Irish stock exchanges. In order to ensure the proper management of the share register, the Group employs the services of a share registrar, Capita Registrars (Ireland) Limited t/a Capita Asset Services.
27. Investment in subsidiary undertakings
The Company has the following interests in ordinary shares in the following subsidiary undertakings at 30 September 2016. These subsidiaries are fully owned and consolidated within the Group.
Registered Shareholding/
address/ Number
Country of shares Company Nature
Name of Incorporation held Directors Secretary of business
----------------------- ------------------ -------------- ----------------- ------------------ ------------------
South Dock House,
Dockland Central Hanover Quay, Richard Ball, Castlewood
Limited (previously Dublin D02 XW94, Kevin Nowlan, Corporate Services Property
Lamourette Limited) Ireland 100%/2 Frank O'Neill Limited management
Richard Ball,
South Dock House, Kevin Nowlan,
Hanover Quay, Frank O'Neill, Castlewood
Hibernia REIT Finance Dublin D02 XW94, Thomas Corporate Services Financing
Limited Ireland 100%/ 10 Edwards-Moss Limited activities
South Dock House,
Hanover Quay, Richard Ball, Castlewood
Hibernia REIT Holding Dublin D02 XW94, Kevin Nowlan, Corporate Services Holding property
Company Limited Ireland 100%/ 1 Frank O'Neill Limited interests
South Dock House,
Hibernia REIT Building Hanover Quay, Frank O'Neill, Castlewood
Management Services Dublin D02 XW94, Kevin Nowlan, Corporate Services Property
Limited Ireland 100%/ 1 Richard Ball Limited management
South Dock House,
Hanover Quay, Richard Ball, Castlewood
Mayor House Basement Dublin D02 XW94, Kevin Nowlan, Corporate Services Property
Management Limited Ireland 100%/2 Frank O'Neill Limited management
Frank Kenny,
Frank O'Neill,
Kevin Nowlan,
South Dock William
House, Nowlan,
Hanover Kevin Murphy, Castlewood Development
WK Nowlan Quay, Dublin Richard Corporate and management
REIT Management D02 XW94, Ball, Thomas Services of real
Limited Ireland 100%/300,000 Edwards-Moss Limited estate
----------------------- ------------------ -------------- ----------------- ------------------ ------------------
South Dock
House,
Hanover Kevin Nowlan, Castlewood
Quay, Dublin William Corporate
Nowlan Property D02 XW94, Nowlan, Services Holding
Limited Ireland 100%/100 Frank O'Neill Limited company
----------------------- ------------------ -------------- ----------------- ------------------ ------------------
Wyckham
Point (Block South Dock Richard
3) Owners House, Ball, Kevin
Management Hanover Nowlan, Castlewood
Company Quay, Dublin Thomas Corporate
Limited D02 XW94, Edwards-Moss, Services Property
by Guarantee Ireland N/A Frank O'Neill Limited management
----------------------- ------------------ -------------- ----------------- ------------------ ------------------
The Group has no interests in unconsolidated subsidiaries.
28. Related Parties
a. Subsidiaries
All transactions between the Company and its subsidiaries are eliminated on consolidation.
b. Performance related payments
The Group completed the internalisation of its management team on 5 November 2015. Under the Irish and UK Listing Rules, the transaction was classified as a related party transaction.
Amounts payable to related parties under this transaction during the period from 1 April 2016 to 30 September 2016 were (at fair value and including shares and cash): Kevin Nowlan EUR247k, William Nowlan EUR124k, Frank Kenny EUR165k, Frank O'Neill EUR49k.
Performance related payments and top-ups due for financial year ended 31 March 2016: Kevin Nowlan EUR2.0m, William Nowlan EUR1.0m, Frank Kenny EUR1.4m, Frank O'Neill EUR0.4m which were paid in August 2016.
c. Other related party transactions
WK Nowlan Property Limited is considered a related party as William Nowlan is Chairman and Kevin Nowlan and William Nowlan are both shareholders.
During the period WK Nowlan Property Limited was engaged on an arm's length basis to carry out, project management, agency, due diligence and property management services across the Group's property portfolio. The fees earned by WK Nowlan Property Limited for these services were benchmarked on normal commercial terms and totalled EUR0.4m for the period to 30 September 2016 (30 September 2015: EUR0.6m). An amount of EUR0.1m was owed to WK Nowlan Property Limited at the period end.
In March 2016 the Group acquired Marine House and as a result became the landlord of WK Nowlan Property Limited who, in 2013, had agreed lease terms with the previous owner on normal commercial terms. The Group received rent of EUR70k from WK Nowlan Property Limited during the period. The Group also recharged a miscellaneous amount relating to insurance to WK Nowlan Property Limited during the period and this was owed at the period end.
William Nowlan is Chairman of WK Nowlan Property Limited. William Nowlan, Kevin Nowlan and Frank O'Neill are shareholders in WK Nowlan Property Limited. As part of his consultancy agreement with the Company, William Nowlan was entitled to EUR50k in consulting fees for the financial year ended 31 March 2016 and this was paid in the current period. An amount of EUR25k is due for these consultancy services at the period end. William Nowlan also receives a fee of EUR50k per annum in relation to his role as a non-executive director of the Company.
As part of his consultancy agreement with the company, Frank Kenny is entitled to EUR200k in fees for the financial year ended 31 March 2017 (31 March 2016: EUR200k). EUR133k was paid to Frank Kenny during the period relating to the prior financial year. EUR100k was outstanding at the period end. Frank Kenny was also reimbursed EUR15k in expenses in the period.
Thomas Edwards-Moss rents an apartment from the Group at market rent and paid EUR9k in rent during the financial period (31 March 2016: EUR17k).
d. Key management personnel
In addition to the executive and non-executive Directors, the following are the key management personnel of the Group:
Richard Ball Chief Investment Officer Mark Pollard Director of Development Sean O'Dwyer Risk and Compliance Officer Frank O'Neill Chief Operations Officer
The remuneration of the non - executive directors during the period was as follows:
Period ended 30 September 2016 Period ended 30 September 2015
Unaudited Unaudited
EUR'000 EUR'000
Short term benefits 150 125
Post-employment benefits - -
Other long-term benefits - -
Share-based payments - -
Termination payments - -
------------------------------
Total for the financial
year 150 125
------------------------------
The remuneration of the executive directors and the key management personnel during the period was as follows:
Period ended
30 September
2016 Period ended 30 September 2015
Unaudited Unaudited
EUR'000 EUR'000
Short term benefits 589 -
Post-employment benefits 79 -
Other long-term benefits 5 -
Share-based payments - -
Termination payments - -
Total for the financial year 673 -
The remuneration of directors and key management is determined by the remuneration committee having regard to the performance of individuals and market trends.
29. Supplementary information (unaudited)
Calculation of EPRA earnings:
Six months ended 30 September 2016 Six months ended 30 September 2015
EUR '000 EUR '000
IFRS Profit/(loss) for the financial
period after taxation 32,296 73,743
Exclude:
Changes in fair value of investment
properties (24,342 ) (63,618 )
Profits or losses on the disposal of
investment properties, development
properties held for
investment and other interests - -
Profit or loss on disposals of non-core
assets (86 ) (711 )
Loan income from asset disposals (net) - -
Income tax expense for period 113 -
Fair value of derivatives 8 -
Acquisition costs - 659
7,989 10,073
Weighted average number of shares
Basic 683,351 670,317
Potential shares to be issued re
contingent payments 831 5,814
Diluted number of shares 684,182 676,131
EPRA Earnings per share - (cent) 1.2 1.5
Adjusted EPRA earnings:
Six months ended 30 September 2016 Six months ended 30 September 2015
EPRA earnings as calculated above 7,989 10,073
Deferred remuneration amortised 2,222 -
Performance related charges 659 1,500
Underlying earnings excluding effects of
management charges 10,870 11,573
Once off income - surrender premiums - (4,900)
Underlying earnings excluding effects of
management charges and once off income 10,870 6,673
Weighted average number of shares 684,182 676,131
Adjusted earnings per share - (cent) 1.6 1.0
30. Events after the reporting period
1. The Directors have declared an interim dividend of 0.75 cent per share or EUR5.1m to be paid on 26 January 2017 to all shareholders on the share register as at 6 January 2017.
2. On 26 October 2016 the Company held an Extraordinary General Meeting which approved amendments to the relative performance fee calculation methodology.
Other than these items, there were no significant events after the reporting date.
Directors and Other Information
Directors Daniel Kitchen (Chairman)
Colm Barrington (Senior Independent Director)
Stewart Harrington
William Nowlan
Terence O'Rourke
Kevin Nowlan (Chief Executive Officer)
Thomas Edwards-Moss (Chief Financial Officer)
Secretary Castlewood Corporate Services Limited
(Trading as Chartered Corporate Services)
Fourth Floor
76 Lower Baggot Street
Dublin 2
Ireland
Registered Office South Dock House
Hanover Quay
Dublin D02 XW94
Ireland
Company Number 531267 Independent Auditor Deloitte
Chartered Accountants and Statutory Audit Firm
Hardwicke House
Hatch Street
Dublin 2
Ireland
Tax Adviser KPMG
1 Stokes Place
St. Stephen's Green
Dublin 2
Ireland
Independent Valuer CBRE Dublin
3rd Floor, Connaught House
1 Burlington Road
Dublin 4
Ireland
Principal Banker Bank of Ireland
50-55 Baggot Street Lower
Dublin 2
Ireland
Depositary BNP Paribas Securities Services
Trinity Point 10-1
Leinster Street South
Dublin 2
Ireland
Registrar Capita Registrars (Ireland) Limited t/a Capita Asset Services
2 Grand Canal Square
Dublin 2
Ireland
Principal Legal Adviser A&L Goodbody
25/28 North Wall Quay
IFSC
Dublin 1
Ireland
Corporate Brokers Goodbody Stockbrokers
Ballsbridge Park
Ballsbridge
Dublin 4
Ireland
Credit Suisse International
One Cabot Square
London E14 4QJ
United Kingdom
[1] Included pre-let refurbishments, residential income net
[2] Excludes refurbishment and development projects
[3] Comprising the Business Review and Principal Risks and Uncertainties
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR AKCDDBBDBDDK
(END) Dow Jones Newswires
November 10, 2016 02:01 ET (07:01 GMT)
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