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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Invista Euro. | LSE:IERE | London | Ordinary Share | LU0273211432 | ORD EUR0.10 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.30 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
Finance expenses include the effect of unrealised foreign currency gains and losses on monetary assets and liabilities arising in the period plus the effect of the realised foreign currency gains and losses on cash transactions completed during the period.
3.22 Operating expenses
All expenses are accounted for on an accruals basis. The Group's investment management and administration fees and all other expenses are charged to the consolidated income statement.
3.23 Earnings per share
The Group presents basic and diluted earnings per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise warrants.
3.24 Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. All operating segments' operating results are reviewed regularly to make decisions about resources to be allocated to the segment and to assess their performance (see note 29).
3.25 Subsequent events
Subsequent events are disclosed in the notes to the consolidated financial statements when significant.
3.26 Contingencies
Contingent liabilities are not recognised in the consolidated financial statements, unless there is a probable chance of an outflow for which a provision is made. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.
A contingent asset is not recognised in the consolidated financial statement but disclosed when an inflow of economic benefits is probable.
4. Significant accounting estimates and judgements
The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the consolidated financial statements is included in:
Investment property
Fair value is based on the open market valuations of the properties as provided by an independent expert, Savills (UK) Limited, in accordance with the guidance issued by the Royal Institution of Chartered Surveyors (the "RICS"). Market valuations are carried out on a quarterly basis. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The determination of the fair value of investment property requires the use of estimates such as future cash flows from assets (such as lettings, tenants' profiles, future revenue streams, capital values of fixtures and fittings, plant and machinery, any environmental matters and the overall repair and condition of the property) and discount rates applicable to those assets. In addition, development risks (such as construction and letting risks) are also taken into
consideration when determining the fair value of investment properties under construction. These estimates are based on local market conditions existing at the reporting date. The experts also used their market knowledge and professional judgement and did not rely solely on historical transactional comparables. Valuations typically reflect all the market and operational risks as described in note 28.1. It should be noted that the valuation of property and property related assets is inherently subjective due to the nature of each property and the characteristics of local, regional and national real estate markets which change over time.
The current economic climate and volatility in the global capital markets creates additional uncertainty and there can therefore be no assurance valuations of the Group's assets will reflect actual sale prices even where such sales occur shortly after the valuation date.
Current and deferred taxes
The Group is subject to income and capital gain taxes in numerous jurisdictions. Significant judgement is required in determining the total provision for income and deferred taxes. The Group recognises liabilities for anticipated taxes based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income and deferred tax provision in the period in which the determination is made (refer to note 25).
Derivative financial instruments
An interest rate swap/cap can be viewed as a series of cash flows occurring at known future dates. The value of the swap is the present value of these cash flows. To calculate the present value of each cash flow, both the future cash flows and an appropriate discount factor for each period on which a cash flow occurs are estimated. Future cash flows are calculated from a forward interest rate curve constructed using market prices for similar interest rate instruments independently sourced from mid-market broker quotes for the relevant market. The discount factor is the factor by which the future cash flow must be adjusted to obtain the present value. Discount factors are derived from an assessment of interest rates in the future and are calculated using forward rates such as EURIBOR. Interest rates used for calculating discount factors are independently sourced from mid-market broker quotes for the relevant market at the valuation date.
The fair value of the Group's derivatives is the estimated amount that the Group would receive or pay to terminate the derivatives at the balance sheet date. The Group estimates the fair value of derivatives by reference to current market conditions compared to the terms of the derivatives agreement using the result of an external appraiser. Refer to note 28 for the related balances.
Classification of preference shares
Judgement is required to determine whether preference shares should be classified as financial liability or equity. Based on the terms and conditions of the preference shares issued in December 2009 the Group has determined that the preference shares have the characteristics of a financial liability rather than equity. This was primarily based on the fact that the preference shares are denominated in sterling whereas the functional currency used by the Group is the euro. In addition, the preference shares have a right to receive a dividend and are redeemable.
5. Capital Management
The primary objectives of the Group's capital management is to ensure that it remains within its quantitative banking covenants and maintains a strong credit rating. No changes were made in the objectives, policies or processes during the years ending 30 September 2014 and 30 September 2013. The Group monitors capital primarily using a Loan to Value ratio (LTV), which is calculated as the amount of outstanding debt divided by the valuation of the investment property portfolio. The Group's policy is to keep the average LTV ratio of the Group lower than the LTV requirements in the banking covenants.
The banking covenants require the Group to have a LTV ratio of 85% up to and including the occurrence of the Step-Down Event, 80% after the occurrence of the Step-Down Event. Under the terms of the new facility, once the total amount of the unpaid principal balance has been reduced to EUR135 million and as long as the LTV is below 70%, the ("Step-Down Event"), the margin will be reduced from 770bp to 470bp over three month EURIBOR. The LTV covenant, which is set initially at 85%, falls to 80% following the Step-Down Event. Under the terms of the new debt, a cash sweep will be applied to the Company's income prior to the Step-Down Event.
During the year the Group did not breach any of its loan covenants, nor did it default on any other of its obligations under its loan agreement.
For the financial year ended 30 September 2014, the LTV ratio disclosed to the lender was 77.18%, (2013: 68.18% for Bank of Scotland ("BOS").
Rental income
The Group leases out its investment properties under operating leases. The future minimum lease receipts under non-cancellable leases are as follows:
30 Sep 14 30 Sep 13 EUR000 EUR000 Less than one year 22,469 33,740 Between one and five years 81,940 110,141 More than five years 33,354 47,065 ---------------------------- ---------- ---------- Total rental income 137,763 190,946 ---------------------------- ---------- ----------
For the year ended 30 September 2014, EUR26.6 million was recognised as rental income in the consolidated income statement (2013: EUR27.6 million).
6. Property operating expenses
1 Year Invista Euro. Chart |
1 Month Invista Euro. Chart |
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