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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Londonmetric Property Plc | LSE:LMP | London | Ordinary Share | GB00B4WFW713 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.40 | 0.21% | 194.50 | 195.00 | 195.20 | 197.00 | 192.10 | 197.00 | 5,923,995 | 16:35:19 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Agents & Mgrs | 146.7M | -506.3M | -0.4648 | -4.19 | 2.12B |
From Apr 2019 to Apr 2024
TIDMLMP
RNS Number : 4830Q
LondonMetric Property PLC
30 November 2016
LONDONMETRIC PROPERTY PLC
("LondonMetric" or the "Group" or the "Company")
HALF YEAR RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER 2016
STRONG INCOME GROWTH DELIVERS OUTPERFORMANCE
LondonMetric today announces its half yearly results for the six months ended 30 September 2016.
Income Statement 30 Sept 2016 30 Sept 2015 ---------------------------- ------------ ------------- EPRA Earnings (GBPm) 25.3 23.4 EPRA EPS (p) 4.0 3.7 Reported (Loss)/ Profit (GBPm) (13.1) 64.3 Net rental income (GBPm)(1) 39.7 36.9 Dividend per share (p) 3.6 3.5 Balance Sheet 30 Sept 2016 31 March 2016 ---------------------------- ------------ ------------- EPRA NAV per share (p) 143.0 147.7 Net borrowing (GBPm)(1) 590.7 591.2 LTV (%)(1) 36 38 (1) Including share of Joint Ventures
EPRA earnings of GBP25.3 million or 4.0p per share, up 8%
-- Net rental income up 8% to GBP39.7 million
Dividend grown to 3.6p, up 3%
-- Second quarterly interim dividend declared today of 1.8p with scrip alternative -- Dividend cover increased to 112% with further progression expected in final quarter
EPRA NAV of 143.0p (FY 16: 147.7p)
-- Portfolio revaluation deficit(1) of GBP23.0 million, contributing to a reported loss of GBP13.1 million
-- Property total return of 1.5% compared to IPD of 0.2%, 130 bps outperformance -- Portfolio valued at GBP1,482 million, core portfolio valuation fall of 1.1%
Distribution weighting up to 58.5% of portfolio
-- GBP78.4 million of retail assets sold, reducing retail park weighting to 16.8%
-- GBP32.2 million of distribution investments acquired, with a further GBP47.2 million post period end
Income growth with structural support
-- GBP4.0 million of new income secured from completed developments -- GBP2.0 million of additional income from 11 lettings and 22 rent reviews -- 1.9% like-for-like income growth on core portfolio -- Rent reviews at 4.8% above previous passing and new lettings at 2.1% above ERV
Short cycle development activity
-- Post period end, terms agreed to let our 357,000 sq ft development in Warrington and 140,000 sq ft at our Stoke development. These two lettings represent GBP2.9 million additional rent
Portfolio metrics reflect income security, reliability and growth
-- Occupancy of 98.5% and WAULT of 12.6 years (12.0 years to first break) -- 22% of rental income subject to RPI uplifts and 29% subject to fixed uplifts
Finances strengthened and diversified by GBP130 million private debt placement
-- Net debt of GBP590.7 million (FY 16: GBP591.2 million) and undrawn facilities of GBP183.8 million
-- Debt maturity of 5.7 years (FY 16: 5.6 years) and average cost of debt at 3.3% (FY 16: 3.5%)
Andrew Jones, Chief Executive of LondonMetric, commented:
"At a time when the political and economic outlook remains uncertain, investors are increasingly looking for predictable income returns with the security of capital preservation. We continue to focus on compounding our long and strong income and value highly the repetitive, reliable and secure nature of our rents which gives us confidence to deliver dividend progression.
"Our income is structurally supported by our investment in the winning sectors and we continue to draw on our deep occupier relationships to make the correct investment decisions and create value. We have continued to sell down our mature retail parks and have further sharpened our focus on the distribution sector which offers higher growth opportunities. In particular, we have grown our 'last mile' distribution portfolio where we are capitalising on attractive demand/supply dynamics arising from consumer delivery demands for instant gratification."
For further information, please contact:
LondonMetric Property Plc: +44 (0)20 7484 9000
Andrew Jones (Chief Executive)
Martin McGann (Finance Director)
Gareth Price (Investor Relations)
FTI Consulting: +44 (0)20 3727 1000
Dido Laurimore /Tom Gough /Richard Gotla
Meeting and audio webcast
A meeting for investors and analysts will be held at 9.00 am today at FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. A conference call dial-in is available for the meeting: +44(0)20 7026 5967 (Participant Passcode: 2660679).
For the live webcast see: http://webcasting.brrmedia.co.uk/broadcast/583881117b884957387e782d
An on demand recording will be available from the same link after the meeting and will also be available from: http://www.londonmetric.com/investors/reports-and-presentations
Notes to editors
LondonMetric is a FTSE 250 REIT (ticker: LMP) that aims to deliver attractive returns for shareholders through a strategy of increasing income and improving capital values. It invests across the UK in retail led distribution, out of town and convenience retail properties with a total of 12 million sq ft under management, the majority of which is in distribution. It employs an occupier-led approach with a focus on strong and growing income, asset management initiatives and short cycle development. LondonMetric works closely with retailers, logistics providers and leisure operators to help meet their evolving real estate requirements.
Neither the content of LondonMetric's website nor any other website accessible by hyperlinks from LondonMetric's website are incorporated in, or form part of this announcement nor, unless previously published by means of a recognised information service, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of shares in LondonMetric.
Forward looking statements: This announcement may contain certain forward-looking statements with respect to LondonMetric's expectations and plans, strategy, management objectives, future developments and performance, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Certain statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Any forward-looking statements made by or on behalf of LondonMetric speak only as of the date they are made. LondonMetric does not undertake to update forward-looking statements to reflect any changes in LondonMetric's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Nothing in this announcement should be construed as a profit forecast. Past share price performance cannot be relied on as a guide to future performance.
CEO's overview
We have delivered a robust performance over the period and continue to generate long term shareholder value through our highly repetitive, predictable and growing income streams as well as good capital returns from our asset management activities and pre-let development programme. We expect income to be the major component of total property returns over the next few years, and so are focused on an investment strategy that will deliver repetitive income, income growth and capital appreciation. This is exactly what a REIT was designed to do and gives us the confidence to further progress the dividend in the future.
Given the lack of clarity that exists in the world, we will focus on the fundamentals - the winning sectors, reliable and consistent income returns and value add opportunities. We believe that modern logistics assets benefit from structural growth with highly defensive characteristics including low obsolescence risk, high occupancy and long leases.
Income growth with structural support
Our management actions over this and previous periods have ensured that we have maintained our sector leading portfolio metrics with 12.6 years average lease lengths, 98.5% occupancy and a 98.0% gross to net income ratio. These robust metrics are reflective of the quality of our tenant list, the high occupier appeal of our real estate and our strong occupier relationships.
Our core focus, therefore, is to continue to enhance the income security, reliability and growth prospects of the portfolio. We have grown EPRA earnings by 8.1% over the period as income has flowed from completed developments, asset management initiatives, as well as agreed rent reviews at 4.8% above previous passing rents. Over half of the portfolio benefits from contractual rental uplifts which will help to drive future rental growth.
We have also adopted the same approach to our financing where we have continued to lengthen and strengthen our debt facilities with new lenders and under more flexible arrangements.
Aligning the portfolio to changing consumer shopping patterns
Innovation and convenience continues to influence how we live and shop. Our portfolio of assets is further aligned to those sectors that are benefiting from a fast changing world. The early move into the distribution sector to capture the benefits from the rise in online and mobile shopping has seen our distribution portfolio grow to GBP867.0 million by the period end, representing nearly 60% of the total portfolio. Occupational demand for distribution space, both large and small, is strong. This is likely to remain the case for the foreseeable future as retailers improve their logistics infrastructure, leading to further falls in vacancy rates and positive rental growth.
We are continuing to take further advantage of this rapid growth in online retailing and have made further investments in last mile distribution depots.
Conversely, we have continued to reduce our investment within retail parks and the London residential sector, with GBP82.2 million of disposals in these sectors during the half year period. The early decision to down weight our retail park portfolio has seen our exposure to this sector fall from c.30% two years ago to a little over half of that today.
These sectoral choices have meant that we have materially outperformed the wider real estate market at both an income and capital return level.
Outlook
Whilst the political outlook remains uncertain and the economy faces a number of challenges, investors are increasingly looking for assets with the potential to generate stable, consistent returns whilst still offering capital preservation. The motivated selling that we witnessed for a few weeks in the immediate aftermath of the referendum vote has largely subsided and liquidity is generally returning to the property market, although not everywhere and not for everything. The impact of this market uncertainty across the sector should result in a polarisation of performances, with those assets let on long leases and benefiting from structural growth, the likely winners. Investors are being increasingly discerning in their stock selection and more accurately pricing the underlying real estate fundamentals of security, longevity and growth.
We will look to focus on our reliable income, strong free cash flow, robust balance sheet and disciplined capital allocation. We have set the portfolio up to thrive in these conditions and it has performed exactly as we had hoped and so we will continue to be drawn to the winning sectors, and use our strong customer relationships to ensure that we continue to make the right structural decisions and our real estate remains fit for purpose.
Investment activity
Our investment strategy of selling mature assets within the retail parks portfolio and reinvesting into our preferred distribution sector continues to be successfully implemented. Year to date we have sold GBP84.2 million of retail and leisure assets and made GBP79.4 million of distribution acquisitions.
Distribution
Our weighting towards the distribution sector continues to grow and, including assets under development, totalled GBP867.0 million as at 30 September 2016, representing 58.5% of the total portfolio. Our distribution investment portfolio is 100% let, has a WAULT of 12.7 years and 57.1% of rental income is subject to contractual rental uplifts; retailers account for 74% of our distribution rental income.
Large distribution warehouses let to good covenants with long leases continue to be in high demand from investors and we have remained very disciplined and resisted buying where covenant strength, location, lease lengths and expected rental growth do not meet our investment criteria. We have continued to build our larger distribution warehouse portfolio by investing in our development sites in Wakefield and Warrington. These two developments total over 880,000 sq ft and have an attractive combined yield on cost of 6.6%.
As part of our hub and spoke strategy, we continue to see good value in last mile distribution warehouses. These are increasingly critical to the distribution networks for retailers and third party logistics providers servicing their spoke operations to larger hubs. These assets are typically c.100,000 sq ft or less in size, are well located and facilitate next day and same day delivery to major cities and conurbations. Yields are up to 100bps higher than available on larger hub locations and, as demonstrated by rent reviews that we have settled this year, offer stronger rental growth prospects.
During the half year, we acquired GBP32.2 million of last mile warehouse investments at a NIY of 6.4%:
-- 112,000 sq ft development in Crawley for GBP20.1 million at an anticipated 6.3% yield on cost
-- 89,000 sq ft warehouse in Hemel Hempstead for GBP8.3m at a NIY of 6.4% let to ITAB for 8.5 years
-- 41,000 sq ft warehouse in Basildon for GBP3.8 million at a NIY of 6.5% let to Modular Heating Group for 4.0 years.
Post period end, nine further last mile investments were acquired for GBP47.2 million at a yield of 6.1%:
-- 382,000 sq ft portfolio across six locations for GBP26.0 million at a NIY of 6.5% and with a WAULT of 7.0 years
-- 74,000 sq ft warehouse in Stevenage for GBP7.3 million at a NIY of 6.3% let to Dixons Carphone with a WAULT of 8.7 years
-- 53,000 sq ft warehouse pre-let development in Crawley for GBP10.7 million at a yield on cost of 5.2% let to Barker & Stonehouse with a WAULT of 15.0 years
-- 30,000 sq ft warehouse in Bicester for GBP3.2 million at a NIY of 5.9% let to DPD with a WAULT of 9.5 years.
The portfolio of last mile assets currently totals GBP120.1 million across 1.2 million sq ft and 19 assets, with over 60% located in the South East.
In November 2016 we disposed of our Hut Group warehouse in Warrington which we funded the development of and completed over twelve months ago. The occupier had exercised its option to purchase the asset for GBP53.7 million and we generated a geared IRR of c.20% from the disposal.
Retail
All of our retail investment activities during the period related to disposals, which has helped to reduce our exposure to retail parks, inclusive of developments, to 16.8% of the portfolio with our long income JV assets representing 7.1%. We remain opportunistic in our retail investment activities and have continued to grow our convenience retail portfolio which now accounts for 5.4% of the portfolio.
Seven retail assets were sold in the period for GBP86.3 million (Group share: GBP78.4 million) at close to book value:
-- In Newry, our 165,000 sq ft Damolly Retail Park was sold for GBP30.7 million at a NIY of 7.4%. During ownership, new lettings were signed with Lidl, Pets at Home, Home Bargains and Costa
-- In Kings Lynn, the refurbished 74,000 sq ft Pierpoint Retail Park was sold for GBP24.0 million at a NIY of 5.8%. New lettings were signed with Next, B&M, DFS, Tapi, Poundland and Greggs, increasing the rental income by 47% and the WAULT from 4.3 years to 13.3 years
-- In Warrington, our 20,000 sq ft Fordton Retail Park was sold for GBP6.6 million at a NIY of 5.4%
-- Our MIPP Joint Venture sold three properties in Chatham, Bridgwater and Grimsby for GBP15.9 million (Group share: GBP8.0m) at a NIY of 5.7%
-- One Odeon Cinema was sold in Taunton for GBP9.1 million at a NIY of 5.5%. The sale reduces our cinema ownership to seven assets which account for GBP3.9 million of rental income p.a., 100% of which is RPI linked, and have a WAULT of 20.7 years.
Newry and Kings Lynn were significant retail park disposals for us and represented the opportunity to monetise two of our larger retail park investments following an intense period of asset management activity. We continue to sell down our retail portfolio and, post period end, we sold our retail unit in St Albans for GBP5.8 million at a NIY of 6.1%.
Post period end, our MIPP Joint Venture re-invested the proceeds from the three disposals made during the period into two single let warehouses:
-- a 71,000 sq ft warehouse in Hull for GBP9.4 million (Group Share: GBP4.7 million) at a NIY of 7.5%, let to B&Q with a WAULT of 12.0 years
-- a 40,000 sq ft warehouse in Dartford for GBP9.0 million (Group Share: GBP4.5 million) at a NIY of 6.2%, let to Wickes who had signed a new 20 year lease shortly prior to purchase
The MIPP Joint Venture continues to see opportunities in selective high quality assets that have smaller lot sizes and offer the potential to generate stable, consistent income returns whilst providing capital protection. Following discussions with our MIPP Joint Venture partner, we have agreed to extend the term of the Joint Venture by a further three years to 2023.
We continue to pursue convenience retail opportunities although this sector remains very competitively bid. Following completion of several convenience developments recently for Aldi and M&S, this modern right rented portfolio of convenience assets has grown to GBP80.0 million, representing 5.4% of the portfolio, with a WAULT of 18.3 years. The convenience portfolio offers an attractive hedge against inflation with 79% of our convenience income benefiting from some form of indexation.
Residential
At Moore House in Chelsea, our last remaining residential asset in which we have a 40% share, we continue to patiently sell down individual units. Purchaser interest has been strong over recent months and we sold eight units in the period. A further four units have been sold post period end and nine units are currently under offer. There are 70 units remaining which represents less than half of the original 149 units owned.
Asset management
During the period, our occupier transactions generated GBP2.0 million of rental income uplift, achieving a 4.1% uplift against ERV. EPRA like-for-like income growth on the investment portfolio was 1.1% and 1.9% for the core portfolio, which excludes our last remaining office. ERV growth in the period was 0.6% for the core portfolio.
A summary of occupier transactions undertaken in the period is set out below.
Hot Features
Premium
Area Net uplift WAULT
sq ft in income to expiry
'000 No. of transactions GBPm years
-------------------------- ------ ------------------- -----------
New lettings and re-gears 76 11 0.9 13.8
Rent reviews 3,082 22 1.1 -
-------------------------- ------ ------------------- ----------- ----------
Total 3,158 33 2.0 -
-------------------------- ------ ------------------- ----------- ----------
Lettings
11 lettings were undertaken generating a rental uplift of GBP0.9 million at an average of GBP17.80 per sq ft, 2.1% above ERV and with average lease lengths of 13.8 years. The main lettings in the period were at:
-- Kirkstall, where we signed lettings with Peacocks, Holland & Barrett, Shoezone and Specsavers in the period totalling 14,000 sq ft at our newly developed retail park in Leeds. The development is now 95% let
-- Ipswich, where Wickes signed a 15 year lease on 21,000 sq ft at our recently acquired development site
-- Tonbridge, where lettings were signed with Go-Outdoors, Jollyes and Costa on 21,000 sq ft. Including the 15 year lease signed with Home Bargains previously, the former B&Q unit is now substantially pre-let.
Post period end, we signed lettings which generated GBP0.4 million of additional income including at:
-- Launceston, where B&M has signed a 15 year lease on 17,000 sq ft. Including a further 13,000 sq ft lettings in discussions, the former B&Q unit is pre-let
-- Dartford, where Wickes has signed a 20 year lease on 40,000 sq ft at our newly acquired investment
-- Marlow, where Aptos has signed a 10 year lease on 9,000 sq ft of the third floor.
Post period end, we have also agreed terms to let our completed 357,000 sq ft distribution development in Warrington and 140,000 sq ft of our 270,000 sq ft distribution warehouse development in Stoke.
Rent reviews
During the period, we agreed 22 rent reviews, including fixed uplifts, across 3.1 million sq ft at 4.8% above previous passing and 4.3% above ERV. Post period end, we have settled a further seven rent reviews across 950,000 sq ft.
Our distribution assets are benefiting from strong rental growth and, year to date, we have settled eight logistics rent reviews at 5.0% above previous passing and 3.5% above ERV. Three of these reviews related to open market settlements on last mile and regional warehouses where, across 354,000 sq ft, the average uplift was 16.2% above previous passing. The remaining reviews were RPI or fixed uplifts, four of which were annual uplifts and the other a five yearly review.
On our retail and leisure assets, year to date, we have settled 21 rent reviews at 2.4% above previous passing and 6.7% above ERV. The majority of these reviews were RPI linked rent reviews although we did settle six open market reviews at 2.7% above previous passing.
Valuation
Despite the uncertainty seen during the period, the resilience and quality of our assets limited the revaluation impact. Our core portfolio valuation was 1.1% lower, benefiting from our distribution assets which held up strongly, falling by only 0.6%. The attractive fundamentals of the distribution sector led to robust investor demand during the period, and transactional evidence since suggests investor demand remains strong.
Our retail and leisure portfolio saw moderate softening, falling by 2.1%, albeit significantly outperforming the comparative IPD retail measure by 90 bps. Performance was polarised with larger retail parks falling 3.2% whilst our convenience, leisure and single let retail assets held up well, falling only 0.7%. The long lease lengths and attractive lot sizes of our retail portfolio gives us confidence in our valuations, as evidenced by our recent retail disposals where aggregate pricing was close to March 2016 book value.
Our last two non-core buildings at Moore House and Marlow saw more of an adverse valuation impact. Our office in Marlow was the worst performer, falling by 9.6%. We continue to let up the vacant third floor and closely monitor the South East office market to determine the best timing for disposal. Our residential building in Chelsea was also impacted and our residential valuations fell by 5.7%, although we continue to make good progress in selling the remaining units with 12 sold since 31 March 2016.
Overall, the valuation of the total portfolio was 1.5% lower. Against IPD all property, however, we significantly outperformed by 80 bps.
Short Cycle Developments
Following the completion of 1.9 million sq ft of developments in FY 16, we successfully completed 615,000 sq ft of further developments in the period representing GBP4.0 million of additional income.
Excluding developments completed post period end, committed and pipeline developments currently total 1.2 million sq ft. We continue to de-risk our pipeline developments and we are also in discussions with several occupiers on redevelopment, regear and extension opportunities across the existing distribution warehouse estate.
We were delighted to have received the 2016 Winners Award for "Deal of the Year over 250,000 sq ft" from the Industrial Agents Society (IAS) for our one million sq ft Primark development in Islip which completed last year.
Development Summary
Area Yield
sq ft Additional rent on cost Expected PC
Scheme Tenants '000 GBPm % date
-------------------- ------------------------------------ ------ --------------- -------- -----------
Completed in period
Wakefield Poundworld 527 2.5 6.3 Sept 16
Liverpool M&S, Aldi 29 0.5 5.9 July 16
Leicester Home Bargains, Smyths Toys 29 0.4 7.4 July 16
Leicester Aldi 19 0.3 5.7 Aug 16
Ferndown M&S 11 0.3 5.4 May 16
615 4.0 6.3
--------------------------------------------------------- ------ --------------- -------- -----------
Committed
Warrington(1) Terms agreed to let property 357 2.1 7.0 Nov 16
Kings Lynn(1, 3) Next, DFS, B&M, Tapi 64 1.0 11.3 Oct 16
Crawley Barker & Stonehouse 53 0.6 5.2 Mar 17
Tonbridge Home Bargains, Jollyes, Go-Outdoors 53 0.3 6.3 Q3 17
Ipswich(2) Wickes 31 0.6 7.3 Q3 17
Tonbridge(1) M&S, Halfords 18 0.4 10.1 Oct 16
Coventry Aldi 18 0.3 7.9 Feb 17
Loughborough Morrisons 12 0.5 5.1 Dec 16
606 5.8 7.2
--------------------------------------------------------- ------ --------------- -------- -----------
Pipeline
Bedford(2) In discussions 660 4.3 7.0 2017/18
Stoke(2) Terms agreed to let 140,000 sq ft 270 1.4 6.3 2017/18
Crawley(2) In discussions 112 1.3 6.3 Q4 17
Launceston(2) B&M and two tenants in legals 30 0.2 5.9 Q4 17
1,072 7.2 6.7
--------------------------------------------------------- ------ --------------- -------- -----------
(1) Completed post period end
(2) Based on anticipated rents
(3) Sold in the period
Distribution developments
Bedford
The site has planning for up to 700,000 sq ft. Discussions are ongoing with the council over final matters and the land is expected to be acquired in the second quarter of 2017. Occupier demand remains strong and we are in discussions to let over half the space.
Stoke
Planning consent for 270,000 sq ft was received earlier in the year and demolition work is expected to complete in December 2016. Terms have been agreed to let 140,000 sq ft of the proposed two unit scheme.
Crawley
Planning is expected by December 2016 for the development of 112,000 sq ft, where work is expected to commence during the first quarter of 2017 and complete in the fourth quarter.
Crawley
Construction of the 53,000 sq ft pre-let development is expected to complete in March 2017.
Retail developments
Tonbridge
The Halfords downsize was completed in October 2016 and M&S have now taken occupation. Planning consent to split and extend the former B&Q unit to 53,000 sq ft has been received and construction works are due to commence shortly with practical completion expected in the third quarter of 2017.
Ipswich
Revised planning consent for the 31,000 sq ft development on the former Tesco site has been received. Construction is expected to complete in Autumn 2017 and discussions are ongoing with potential occupiers for the remaining 10,000 sq ft.
Coventry
Development of the 18,000 sq ft Aldi store at the Airport Retail Park is expected to complete in February 2017. Planning has been received for a new Costa unit which is expected to be built by June 2017.
Loughborough
Extension works to the Morrisons store is expected to complete in December 2016.
Launceston
Planning has been submitted for the subdivision and refurbishment of the former B&Q unit and is expected to be approved at the start of 2017 with construction expected to complete by the end of 2017.
Financial review
The growth in secure and sustainable income across the portfolio in particular in our preferred distribution sector, has delivered earnings growth in the period and we have significantly strengthened and diversified our financing position.
EPRA earnings and other performance measures are presented as alternatives to IFRS equivalent measures as they highlight the Group's underlying recurring performance. In addition, management monitors the performance of the business on a proportionally consolidated basis, although the statutory results reflect the share of joint ventures using the equity accounting method. The commentary in this review is consistent with the proportionally consolidated approach.
EPRA earnings have increased by 8.1% to GBP25.3 million or 4.0p per share, compared with GBP23.4 million or 3.7p last half year. Our dividend for the period of 3.6p per share comprises two quarterly payments of 1.8p per share and was 112% covered by EPRA earnings.
The reported loss of GBP13.1 million reflects a revaluation deficit in the period of GBP23.0 million and an adverse movement in the fair value of derivatives and debt break costs of GBP13.1 million.
EPRA NAV is GBP894.2 million or 143.0p per share, a decrease of 3.0% in the period since March 2016.
Our financial position and liquidity has been strengthened by a new GBP130 million private debt placement which we entered into in September, diversifying our funding sources and providing capacity for further investment into our preferred logistics sector.
Our financing ratios have improved, with LTV and the average cost of debt both falling to 36% (FY 16: 38%) and 3.3% (FY 16: 3.5%) respectively, complemented by average loan maturity and undrawn debt facilities both increasing to 5.7 years (FY 16: 5.6 years) and GBP183.8 million (FY 16: GBP69.9 million) respectively.
Income statement
EPRA earnings for the Group and its share of joint ventures are detailed as follows:
Group JV 2016 Group JV 2015
For the six months to 30 September GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- ----- ----- ----- ----- ----- -----
Gross rental income 36.0 4.5 40.5 31.7 5.8 37.5
Property costs (0.6) (0.2) (0.8) (0.3) (0.3) (0.6)
----------------------------------- ----- ----- ----- ----- ----- -----
Net rental income 35.4 4.3 39.7 31.4 5.5 36.9
Management fees 0.9 (0.4) 0.5 1.1 (0.5) 0.6
Administrative costs (6.7) - (6.7) (6.6) (0.1) (6.7)
Net finance costs (7.1) (1.1) (8.2) (5.8) (1.6) (7.4)
EPRA earnings 22.5 2.8 25.3 20.1 3.3 23.4
----------------------------------- ----- ----- ----- ----- ----- -----
The table below reconciles the movement in EPRA earnings in the year:
GBPm p
--------------------- ----- -----
EPRA earnings 2015 23.4 3.7
Net rental income 2.8 0.4
Administrative costs (0.1) -
Net finance costs (0.8) (0.1)
--------------------- ----- -----
EPRA earnings 2016 25.3 4.0
--------------------- ----- -----
Net rental income
Net rental income increased 7.6% to GBP39.7 million. Movements in net rental income are reflected in the table below.
GBPm
------------------------- -----
Net rental income 2015 36.9
Like for like properties 0.5
Developments 4.4
Acquisitions 3.0
Disposals (4.9)
Property costs (0.2)
-------------------------- -----
Net rental income 2016 39.7
-------------------------- -----
The GBP3.0 million increase in rental income over the period was due to like for like growth and income from completed developments over the last 18 months, more than offsetting the impact of net sales.
Property costs have increased marginally by GBP0.2 million due to increased vacant unit costs associated with asset management and development activity. Our gross to net income ratio of 98% remains strong.
Administrative costs and EPRA cost ratio
Administrative costs net of management fees in the period were GBP6.2 million (2015: GBP6.1 million). Staff costs of GBP0.9 million (2015: GBP0.8 million) have been capitalised in respect of time spent on development activity.
The Group's cost base continues to be closely monitored and the EPRA cost ratio is used as a key measure of effective cost management. The full calculation is shown in Supplementary note iv.
2016 2015
For the six months to 30 September % %
----------------------------------------------- ---- ----
EPRA cost ratio including direct vacancy costs 17 18
EPRA cost ratio excluding direct vacancy costs 16 17
----------------------------------------------- ---- ----
Net finance costs
Net finance costs, excluding the costs associated with repaying debt and terminating hedging arrangements on sales and refinancing in the period were GBP8.2 million, an increase of GBP0.8 million over the previous period. This was due to increased bank interest costs associated with higher levels of debt, commitment fees on undrawn facilities and a reduction in the amount of interest capitalised on development projects, offset by an increase in interest receivable from forward funded developments. The movements are shown in note 4 to the accounts. Underlying debt increased by GBP20.9 million between September 2015 and September 2016.
Our interest rate exposure is hedged by a combination of fixed and forward starting interest rate swaps and caps. Independent advice is given by J C Rathbone Associates.
Share of joint ventures
EPRA earnings from joint venture investments were GBP2.8 million, a reduction of GBP0.5 million over the comparative period due to the impact of disposals as reflected in the table below.
2016 2015
For the six months to 30 September GBPm GBPm
------------------------------------ ----- -----
MIPP 1.6 2.0
Retail Warehouse 1.1 1.3
Residential 0.1 -
2.8 3.3
------------------------------------ ----- -----
In addition the Group received management fees of GBP0.9 million for acting as property advisor to each of its joint ventures. The Group's MIPP joint venture disposed of three retail assets in the period and its residential joint venture sold a further eight flats at Moore House, London.
IFRS reported profit
A full reconciliation between EPRA earnings and IFRS reported profit is given in note 7(a) to the accounts and is summarised in the table below.
Group JV 2016 Group JV 2015
For the six months to 30 September GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ------ ----- ------ ----- ----- -----
EPRA earnings 22.5 2.8 25.3 20.1 3.3 23.4
Revaluation of investment property (17.9) (5.1) (23.0) 47.0 0.2 47.2
Fair value of derivatives (9.4) (0.1) (9.5) (6.7) - (6.7)
Debt and hedging early close out costs (3.5) (0.1) (3.6) (0.1) (0.2) (0.3)
(Loss)/profit on disposal (1.6) (0.5) (2.1) 1.0 (0.1) 0.9
Other items(1) (0.2) - (0.2) (0.2) - (0.2)
--------------------------------------- ------ ----- ------ ----- ----- -----
IFRS reported (loss)/profit (10.1) (3.0) (13.1) 61.1 3.2 64.3
--------------------------------------- ------ ----- ------ ----- ----- -----
(1) Other items include amortisation of intangible assets
The Group's reported loss was GBP13.1 million compared with a profit of GBP64.3 million in the previous comparative period. The adverse movement was due primarily to the property revaluation deficit of GBP23.0 million compared with a surplus of GBP47.2 million in the previous period.
In addition, the reduction in interest rates post the EU referendum has further increased our exposure to out of the money swaps. In April 2016 we bought down GBP66.3 million of legacy out of the money interest rate swaps at a cost of GBP3.5 million as reflected in the table above as debt close out costs.
Balance sheet
EPRA net assets for the Group and its share of joint ventures are as follows:
30 September
Group JV 2016 Group JV 31 March 2016
As at GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- ------- ------ ------------ ------- ------ -------------
Investment property 1,324.7 157.7 1,482.4 1,346.2 174.7 1,520.9
Gross debt (591.2) (58.7) (649.9) (575.0) (62.9) (637.9)
Cash 48.9 10.3 59.2 42.6 4.1 46.7
Other net assets/(liabilities) 1.4 1.1 2.5 (11.7) 4.1 (7.6)
------------------------------- ------- ------ ------------ ------- ------ -------------
EPRA net assets 783.8 110.4 894.2 802.1 120.0 922.1
------------------------------- ------- ------ ------------ ------- ------ -------------
EPRA net assets have decreased GBP27.9 million or 3.0% since March 2016 to GBP894.2 million. The movement in the year is summarised below.
EPRA EPRA NAV
Net Assets per share
GBPm p
----------------------- ----------- ----------
At 1 April 2016 922.1 147.7
EPRA earnings 25.3 4.0
Ordinary dividend paid (23.4) (3.8)
Property revaluation (23.0) (3.7)
Other movements(1) (6.8) (1.2)
At 30 September 2016 894.2 143.0
----------------------- ----------- ----------
(1) Other movements include loss on sales (GBP2.1m), debt/hedging break costs (GBP3.6m), other movements (GBP1.1m)
Portfolio valuation
The Group's portfolio valuation including its share of joint venture properties at 30 September 2016 was GBP1,482.4 million, a reduction of GBP38.5 million over the six months. This was a result of net divestment of assets and the adverse valuation movement. The 1.5% decline in our property valuation demonstrates the resilience of our portfolio compared with the wider property market as measured by IPD. This is discussed in more detail in the Asset Management review.
30 September 2016 30 September 2016 31 March 31 March
GBPm % 2016 2016
As at GBPm %
--------------- ----------------- ----------------- -------- --------
Distribution 832.0 56.1 784.4 35.7
Retail 490.0 33.1 543.8 51.6
--------------- ----------------- ----------------- -------- --------
Core Portfolio 1,322.0 89.2 1,328.2 87.3
Offices 72.3 4.8 80.2 5.3
Residential 48.8 3.3 55.9 3.7
Development(1) 39.3 2.7 56.6 3.7
--------------- ----------------- ----------------- -------- --------
Property value 1,482.4 100.0 1,520.9 100.00
--------------- ----------------- ----------------- -------- --------
(1) Distribution GBP35.0 million; Retail GBP4.3 million (FY 16: Distribution GBP40.0 million; Retail GBP16.6 million)
Investment in distribution assets, including those under development, has increased to 58.5% of the portfolio from 54.2% last year as reflected in Supplementary note ix.
Investment in development assets at the period end has fallen as four forward funded developments at Ferndown, Liverpool, Leicester and Wakefield have completed and been reclassified as investment property. Total development expenditure was GBP38.0 million, of which GBP15.7 million was in respect of these assets. In addition the Group acquired land at Crawley for GBP7.6 million and completed its remaining forward funded development at Warrington incurring expenditure of GBP11.9 million in the period.
The movement in the investment portfolio is explained in the table below.
Portfolio value
GBPm
-------------------------------------------- ---------------
Valuation as at 1 April 2016 1,520.9
Acquisitions 12.9
Developments 38.0
Capital expenditure on completed properties 12.8
Disposals (80.0)
Revaluation (23.0)
Lease incentives 0.8
-------------------------------------------- ---------------
Valuation as at 30 September 2016 1,482.4
-------------------------------------------- ---------------
Further detail on the split between Group and joint venture movements can be found in Supplementary note vii.
Seven retail assets were disposed of in the period generating gross proceeds of GBP78.4 million for the Group. A further eight residential flats were sold for GBP3.8 million at share. The associated carrying value of investment property reduced by GBP80.0 million as a result of the disposals. Included within the trade and other receivables balance of GBP27.5 million on the Group balance sheet is GBP24.0 million due on completion of the sale of Pierpoint Retail Park in King's Lynn.
Last year, the occupier at our recently completed development in Warrington exercised its option to purchase the asset for GBP53.7 million. This disposal completed in November 2016 and has been reflected as a transaction in the second half of the year.
Financing
The proportionally consolidated key performance indicators used to monitor the Group's debt and liquidity position are shown in the table below.
30 September 2016 31 March 2016
As at GBPm GBPm
---------------------- ----------------- -------------
Gross debt 649.9 637.9
Cash 59.2 46.7
Net debt 590.7 591.2
Loan to value(1) 36% 38%
Cost of debt(2) 3.3% 3.5%
Undrawn facilities 183.8 69.9
Average debt maturity 5.7 years 5.6 years
---------------------- ----------------- -------------
1 At 30 September 2016, LTV includes GBP72.6 million of deferred consideration receivable on sales at King's Lynn (GBP18.9 million)(3) and Warrington (GBP53.7 million) and excludes the value of Warrington of GBP53.7 million.
2 Cost of debt is based on gross debt and including amortised costs but excluding commitment fees 3 Gross proceeds of GBP24.0 million less capital commitments of GBP5.1 million
The Group and joint venture split is shown in Supplementary note iii.
Net debt on a proportionately consolidated basis at 30 September 2016 was GBP590.7 million in line with March 2016.
In September 2016 the Group entered into a GBP130 million private placement at a blended coupon of 2.7% and a weighted average maturity of 8.3 years. The proceeds were used to repay the Group's existing unsecured debt, which remains available to draw in full. This improved the Group's debt maturity at the Half Year to 5.7 years (FY 16: 5.6 years) and substantially increased the Group's undrawn facilities by 163% to GBP183.8 million.
The other key financial ratios remain strong. Average debt cost has fallen to 3.3% (FY 16: 3.5%) and loan to value net of cash resources and deferred consideration on sales which completed post period end was 36% (FY 16: 38%).
The Group's share of joint venture gross debt has fallen by GBP4.2 million or 6.7% since last year as a result of sales of MIPP retail assets and residential flats at Moore House. The Moore House debt facility with RBS was extended by one year in August 2016.
At 30 September 2016, the Group had hedged 105% of its exposure to interest rate fluctuations by way of current and forward starting swaps and caps. This reduces to 82% as debt facilities are fully utilised.
Key risks and uncertainties
Managing risk
The strategic priorities for the business continue to be the delivery of sustainable, progressive earnings and long term capital growth. Issues which might prevent the attainment of these goals are identified and action is taken to reduce or remove the likelihood of such issues having a material adverse impact. The Company's appetite for risk is low where it prejudices the achievement of its strategic priorities.
The process for identifying, assessing and mitigating the principal risks of the business are set out in the Managing Risk section on pages 36 to 43 of the 2016 Annual Report. The Board is satisfied that the systems for identifying, managing and mitigating risk are sound. The Board considers the Group's risk management at each meeting. Significant changes to the risks being faced by the business since publication of the 2016 Annual Report are highlighted below.
The principal uncertainties and risks facing the Group are summarised as follows:
Corporate risks
Corporate strategy
The Company's strategy may be inappropriate for the current stage of the property cycle and the economic climate and as a result it may not be able to take advantage of opportunities and effectively manage threats or ensure that it has the right people, resources and systems in place.
Economic and political outlook
Risks from external factors may lead to a downturn in the economy or specific industry sector turbulence resulting in poorer than expected performance.
Following the result of the referendum vote in June and the US election in November the Board considers political and economic uncertainty to have increased.
Human resources
There may be an inability to attract, motivate and retain high calibre skilled staff which could jeopardise the delivery of the Company's strategy.
Systems, processes and financial management
Controls for safeguarding assets and supporting strategy may not be robust.
Regulatory and tax framework
Non-compliance with legal or regulatory obligations including planning, environmental, health and safety and tax could result in increased costs, impact the letting prospects of an asset, damage corporate reputation and investor demand in the Company.
Property and transactional risks
Investment risk
The Company may be unable to source investment opportunities at attractive prices and recycle capital into value enhancing and earnings accretive investments.
Development risk
Excessive capital could be allocated to activities which carry development risk. Developments may fail to deliver expected returns due to inconsistent timing with the economic cycle, adverse letting conditions, increased costs, planning or construction delays.
Valuation risk
Property values may not be realised which would impact the Group's NAV and put pressure on loan covenants. This risk is inherent to the property industry.
Increased political and economic uncertainty following the EU referendum outcome and US election result has increased this risk. The Company's resilient portfolio metrics have protected it to date from the larger valuation declines experienced by some of its industry peers. There is a continuing intention to reduce the Group's exposure to non core and retail park assets.
Transaction and tenant risk
Property purchases may be inconsistent with strategy. Inadequate due diligence may be undertaken. Tenant default and failure to let vacant units could reduce earnings and dividend cover and if material put pressure on loan covenants.
Financing risks
Capital and finance risk
The Company may have insufficient funds and credit available to it to enable it to fund investment opportunities and implement strategy.
The GBP130 million private debt placement completed in September provides additional funding capacity for the Company.
Group income statement
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 September 30 September 31 March
2016 2015 2016
Note GBP000 GBP000 GBP000
------------------------------------ ---- ------------- ------------- ---------
Gross rental income 36,033 31,731 67,948
Property operating expenses (617) (313) (830)
------------------------------------ ---- ------------- ------------- ---------
Net rental income 3 35,416 31,418 67,118
Property advisory fee income 900 1,105 2,191
------------------------------------ ---- ------------- ------------- ---------
Net income 36,316 32,523 69,309
Administrative costs (6,735) (6,629) (13,636)
Amortisation of intangible asset (147) (161) (315)
------------------------------------ ---- ------------- ------------- ---------
Total administrative costs (6,882) (6,790) (13,951)
(Loss)/profit on revaluation
of investment properties 8 (17,896) 47,009 51,063
(Loss)/profit on sale of investment
properties (1,558) 953 2,359
Share of (loss)/profit of joint
ventures 9 (3,004) 3,256 4,528
------------------------------------ ---- ------------- ------------- ---------
Operating profit 6,976 76,951 113,308
Finance income 1,386 988 2,182
Finance costs 4 (21,441) (13,598) (32,748)
(Loss)/profit before tax (13,079) 64,341 82,742
Taxation 5 (15) (4) (18)
------------------------------------ ---- ------------- ------------- ---------
(Loss)/profit for the period
and total comprehensive income (13,094) 64,337 82,724
------------------------------------ ---- ------------- ------------- ---------
Earnings per share
Basic and diluted 7 (2.1)p 10.3p 13.3p
------------------------------------ ---- ------------- ------------- ---------
EPRA 7 4.0p 3.7p 7.8p
------------------------------------ ---- ------------- ------------- ---------
All amounts relate to continuing activities
Group balance sheet
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
Note GBP000 GBP000 GBP000
--------------------------------- ---- ------------- -------------- ---------
Non current assets
Investment properties 8 1,324,755 1,261,773 1,346,110
Investment in equity accounted
joint ventures 9 110,418 134,766 119,666
Intangible asset 36 336 182
Other tangible assets 340 440 392
1,435,549 1,397,315 1,466,350
Current assets
Trade and other receivables 10 27,532 64,529 16,049
Cash and cash equivalents 11 48,914 21,860 42,621
--------------------------------- ---- ------------- -------------- ---------
76,446 86,389 58,670
--------------------------------- ---- ------------- -------------- ---------
Total assets 1,511,995 1,483,704 1,525,020
--------------------------------- ---- ------------- -------------- ---------
Current liabilities
Trade and other payables 12 33,530 24,904 35,343
Non current liabilities
Borrowings 13 584,627 544,178 567,910
Derivative financial instruments 13 32,989 13,568 23,570
--------------------------------- ---- ------------- -------------- ---------
617,616 557,746 591,480
--------------------------------- ---- ------------- -------------- ---------
Total liabilities 651,146 582,650 626,823
--------------------------------- ---- ------------- -------------- ---------
Net assets 860,849 901,054 898,197
--------------------------------- ---- ------------- -------------- ---------
Equity
Called up share capital 14 62,804 62,804 62,804
Capital redemption reserve 15 9,636 9,636 9,636
Other reserve 15 224,445 223,137 222,936
Retained earnings 15 563,964 605,477 602,821
--------------------------------- ---- ------------- -------------- ---------
Equity shareholders' funds 860,849 901,054 898,197
--------------------------------- ---- ------------- -------------- ---------
Net asset value per share 7 137.6p 144.4p 143.9p
EPRA net asset value per share 7 143.0p 146.6p 147.7p
--------------------------------- ---- ------------- -------------- ---------
Group statement of changes in equity
Six months ended 30 September 2016 (Unaudited)
Capital
Share redemption Other Retained
capital reserve reserve earnings Total
Note GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ---- -------- ----------- -------- --------- --------
At 1 April 2016 62,804 9,636 222,936 602,821 898,197
Loss for the period
and total comprehensive
income - - - (13,094) (13,094)
Purchase of shares
held in trust - - (2,124) - (2,124)
Vesting of shares held
in trust - - 3,633 (3,590) 43
Share-based awards - - - 1,231 1,231
Dividends paid 6 - - - (23,404) (23,404)
------------------------- ---- -------- ----------- -------- --------- --------
At 30 September 2016 62,804 9,636 224,445 563,964 860,849
------------------------- ---- -------- ----------- -------- --------- --------
Year ended 31 March 2016 (Audited)
Capital
Share redemption Other Retained
capital reserve reserve earnings Total
Note GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ---- -------- ----------- -------- --------- --------
At 1 April 2015 62,804 9,636 223,061 574,650 870,151
Profit for the year
and total comprehensive
income - - - 82,724 82,724
Purchase of shares
held in trust - - (419) - (419)
Vesting of shares held
in trust - - 294 12 306
Share-based awards - - - 1,606 1,606
Dividends paid 6 - - - (56,171) (56,171)
At 31 March 2016 62,804 9,636 222,936 602,821 898,197
------------------------- ---- -------- ----------- -------- --------- --------
Six months ended 30 September 2015 (Unaudited)
Capital
Share redemption Other Retained
capital reserve reserve earnings Total
Note GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ---- -------- ----------- -------- --------- --------
At 1 April 2015 62,804 9,636 223,061 574,650 870,151
Profit for the period
and total comprehensive
income - - - 64,337 64,337
Purchase of shares
held in trust - - (218) - (218)
Vesting of shares held
in trust - - 294 12 306
Share-based awards - - - 803 803
Dividends paid 6 - - - (34,325) (34,325)
------------------------- ---- -------- ----------- -------- --------- --------
At 30 September 2015 62,804 9,636 223,137 605,477 901,054
------------------------- ---- -------- ----------- -------- --------- --------
Group cash flow statement
Unaudited Audited
Six months to Unaudited Year to
30 September Six months to 31 March
2016 30 September 2015 2016
GBP000 GBP000 GBP000
------------------------------------------------------------- -------------- ------------------ ---------
Cash flows from operating activities
(Loss)/profit before tax (13,079) 64,341 82,742
Adjustments for non-cash items:
Loss/(profit) on revaluation of investment properties 17,896 (47,009) (51,063)
Loss/(profit) on sale of investment properties 1,558 (953) (2,359)
Share of post-tax loss/(profit) of joint ventures 3,004 (3,256) (4,528)
Movement in lease incentives 417 (3,131) (5,173)
Share-based payment amortisation 1,231 803 1,606
Amortisation of intangible asset 147 161 315
Net finance costs 20,055 12,610 30,566
------------------------------------------------------------- -------------- ------------------ ---------
Cash flows from operations before changes in working capital 31,229 23,566 52,106
Change in trade and other receivables 1,365 65 2,360
Change in trade and other payables 1,013 (5,876) (165)
------------------------------------------------------------- -------------- ------------------ ---------
Cash flows from operations 33,607 17,755 54,301
Interest received 40 988 50
Interest paid (8,783) (5,397) (16,516)
Tax paid (3) (4) (8)
Financial arrangement fees and break costs (4,476) (5,269) (6,960)
Cash flows from operating activities 20,385 8,073 30,867
------------------------------------------------------------- -------------- ------------------ ---------
Investing activities
Purchase of investment properties (50,891) (79,499) (179,000)
Purchase of other tangible assets - (55) (60)
Capital expenditure on investment properties (14,358) (36,228) (43,584)
Lease incentives paid (1,506) (20,866) (26,006)
Sale of investment properties 55,723 30,224 123,353
Investments in joint ventures (200) (7) (10)
Distributions from joint ventures 6,444 16,863 33,238
------------------------------------------------------------- -------------- ------------------ ---------
Cash flow from investing activities (4,788) (89,568) (92,069)
------------------------------------------------------------- -------------- ------------------ ---------
Financing activities
Dividends paid (23,404) (33,021) (56,171)
Purchase of shares held in trust (2,124) (218) (419)
Vesting of shares held in trust 43 306 306
New borrowings 146,181 373,276 478,275
Repayment of loan facilities (130,000) (287,556) (368,736)
------------------------------------------------------------- -------------- ------------------ ---------
Cash flows from financing activities (9,304) 52,787 53,255
------------------------------------------------------------- -------------- ------------------ ---------
Net increase/(decrease) in cash and cash equivalents 6,293 (28,708) (7,947)
Opening cash and cash equivalents 42,621 50,568 50,568
------------------------------------------------------------- -------------- ------------------ ---------
Closing cash and cash equivalents 48,914 21,860 42,621
------------------------------------------------------------- -------------- ------------------ ---------
Notes to the financial statements
1. Basis of preparation and general information
Basis of preparation
The condensed consolidated financial information included in this half yearly report has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 "Interim Financial Reporting", as adopted by the European Union. The current period information presented in this document is reviewed but unaudited and does not constitute statutory accounts within the meaning of S434 of the Companies Act 2006.
The financial information for the year to 31 March 2016 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that period has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report, and did not contain statements under section 498(2) or (3) of the Companies Act 2006.
The accounting policies adopted are consistent with those as reported in the Group's annual financial statements for the year to 31 March 2016 and in accordance with those the Group expects to be applicable at 31 March 2017.
Amendments to existing standards including IFRS 10, IFRS 11, IFRS 12, IAS 1, IAS 16, IAS 27, IAS28 and IAS 38 (amendments) and Annual Improvements to IFRSs: 2012 - 2014 which came into effect during 2016 have not had a significant impact on the accounting policies, method of computation or presentation of the condensed financial statements.
These condensed financial statements were approved by the Board of Directors on 29 November 2016.
Going concern
The Group's business activities, together with the factors affecting its performance, position and future development are set out in the CEO's Overview, Investment Activity and Asset Management reports. The finances of the Group, its liquidity position and borrowing facilities are set out in the Financial Review.
The Directors have reviewed the current and projected financial position of the Group, making reasonable assumptions about future trading performance. As part of the review the Directors have considered the Group's cash balances, debt requirements and the maturity profile of its undrawn facilities. On the basis of this review, and after making due enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Half Year Report.
2. Segmental information
Property value
Unaudited Unaudited Audited
Share of 30 September 30 September 31 March
100% owned JV 2016 2015 2016
GBP000 GBP000 GBP000 GBP000 GBP000
------------- ---------- -------- ------------- ------------- ---------
Distribution 825,960 6,054 832,014 674,958 784,408
Retail 385,570 104,397 489,967 548,622 543,798
Offices 72,300 - 72,300 77,400 80,200
Residential 1,645 47,200 48,845 61,731 55,895
Development 39,280 - 39,280 108,650 56,550
1,324,755 157,651 1,482,406 1,471,361 1,520,851
------------- ---------- -------- ------------- ------------- ---------
Gross rental income
Unaudited Unaudited
Six months Six months Audited
to to Year to
Share of 30 September 30 September 31 March
100% owned JV 2016 2015 2016
GBP000 GBP000 GBP000 GBP000 GBP000
------------- ---------- -------- ------------- ------------- ---------
Distribution 21,498 206 21,704 16,828 37,835
Retail 12,447 3,772 16,219 17,683 35,178
Offices 2,018 - 2,018 2,045 4,471
Residential 38 528 566 781 1,468
Development 32 - 32 193 80
36,033 4,506 40,539 37,530 79,032
------------- ---------- -------- ------------- ------------- ---------
Net rental income
Unaudited Unaudited
Six months Six months Audited
to to Year to
Share of 30 September 30 September 31 March
100% owned JV 2016 2015 2016
GBP000 GBP000 GBP000 GBP000 GBP000
------------- ---------- -------- ------------- ------------- ---------
Distribution 21,442 205 21,647 16,803 37,688
Retail 12,004 3,738 15,742 17,366 34,469
Offices 1,910 - 1,910 2,034 4,434
Residential 28 342 370 549 1,014
Development 32 - 32 188 82
35,416 4,285 39,701 36,940 77,687
------------- ---------- -------- ------------- ------------- ---------
An operating segment is a distinguishable component of the Group that engages in business activities, earns revenue and incurs expenses, whose results are reviewed by the Group's chief operating decision makers and for which discrete financial information is available. Gross rental income represents the Group's revenues from its tenants and the net rental income is the principal profit measure used to determine the performance of each sector. Total assets are not monitored by segment. However, property assets are reviewed on an on-going basis. The Group operates entirely in the United Kingdom and no geographical split is provided in information reported to the Board.
3. Net income
Unaudited
Unaudited Six months Audited
Six months to to Year to
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
---------------------------- -------------- ------------- ---------
Gross rental income 36,033 31,731 67,948
Property operating expenses (617) (313) (830)
---------------------------- -------------- ------------- ---------
35,416 31,418 67,118
---------------------------- -------------- ------------- ---------
For the six months to 30 September 2016 14% of the Group's gross rental income was receivable from one tenant. For the comparative period to 30 September 2015 11% of the Group's gross rental income was receivable from one tenant and for the year to 31 March 2016 22% of the Group's gross rental income was receivable from two tenants.
4. Finance costs
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
------------------------------------------- ------------- ------------- ---------
Interest payable on bank loans and related
derivatives 8,245 7,195 15,641
Debt and hedging early close out costs 3,514 70 77
Amortisation of loan issue costs 681 681 1,404
Commitment fees and other finance costs 817 721 1,595
------------------------------------------- ------------- ------------- ---------
Total borrowing costs 13,257 8,667 18,717
Less amounts capitalised on developments (1,235) (1,767) (2,669)
------------------------------------------- ------------- ------------- ---------
Net borrowing costs 12,022 6,900 16,048
Fair value loss on derivative financial
instruments 9,419 6,698 16,700
------------------------------------------- ------------- ------------- ---------
21,441 13,598 32,748
------------------------------------------- ------------- ------------- ---------
5. Taxation
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
----------------------------- ------------- ------------- ---------
The tax charge comprises:
Current tax
Current tax charge on profit 15 4 18
----------------------------- ------------- ------------- ---------
As the Group is a UK-REIT there is no provision for deferred tax arising on the revaluation of properties or other temporary differences.
6. Dividends
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
-------------------------------------------- ------------- ------------- ---------
Ordinary dividends paid
2015 Final dividend: 3.5p per share - 21,843 21,843
2015 Special dividend: 2.0p per share - 12,482 12,482
2016 Interim dividend: 3.5p per share - - 21,846
2016 Second Interim dividend: 3.75p per
share 23,404 - -
23,404 34,325 56,171
-------------------------------------------- ------------- ------------- ---------
Quarterly dividend paid in October 2017
2017 First quarterly Interim dividend: 1.8p
per share 11,257
-------------------------------------------- ------------- ------------- ---------
Quarterly dividend proposed
-------------------------------------------- ------------- ------------- ---------
2017 Second quarterly Interim dividend:
1.8p per share 11,257
-------------------------------------------- ------------- ------------- ---------
The Company paid a first quarterly interim dividend in respect of the current financial year of 1.8p per share, wholly as a Property Income Distribution (PID), on 7 October 2016.
The second quarterly interim dividend for 2017 of 1.8p per share was approved by the Board on 29 November 2016 and will be paid on 11 January 2017, wholly as a PID, to ordinary shareholders on the register at the close of business on 9 December 2016.
A scrip dividend alternative was available to shareholders for the first quarterly dividend and is intended for the second quarterly payment.
Neither dividend has been included as a liability in these accounts. Both dividends will be recognised as an appropriation of retained earnings in the six months to 31 March 2017.
7. Earnings and net assets per share
Adjusted earnings and net assets per share are calculated in accordance with the Best Practice Recommendations of The European Public Real Estate Association (EPRA). The EPRA earnings measure highlights the underlying recurring performance of the property rental business.
The earnings per share calculation uses the weighted average number of ordinary shares during the period and excludes the average number of shares held by the Employee Benefit Trust for the period.
The net asset per share calculation uses the number of shares in issue at the period end and excludes the actual number of shares held by the Employee Benefit Trust at the period end.
a) EPRA Earnings
EPRA earnings for the Group and its share of joint ventures are detailed as follows:
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 September 30 September 31 March
Group JV 2016 2015 2016
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- ------- ------- ------------- ------------- ---------
Gross rental income 36,033 4,506 40,539 37,530 79,032
Property costs (617) (221) (838) (590) (1,345)
--------------------- ------- ------- ------------- ------------- ---------
Net income 35,416 4,285 39,701 36,940 77,687
Management fees 900 (368) 532 635 1,326
Administrative costs (6,735) (32) (6,767) (6,723) (13,808)
Net finance costs(1) (7,122) (1,076) (8,198) (7,465) (16,736)
Other (15) - (15) (4) (18)
EPRA earnings 22,444 2,809 25,253 23,383 48,451
--------------------- ------- ------- ------------- ------------- ---------
(1) Group net finance costs reflect net borrowing costs of GBP12,022,000 (note 4) less early close out costs of GBP3,514,000 (note 4) and finance income of GBP1,386,000.
The reconciliation of EPRA earnings to IFRS reported (loss)/profit can be summarised as follows:
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 September 30 September 31 March
Group JV 2016 2015 2016
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- -------- ------- ------------- ------------- ---------
EPRA earnings 22,444 2,809 25,253 23,383 48,451
Revaluation of investment property (17,896) (5,140) (23,036) 47,184 49,787
Fair value loss on derivatives (9,419) (67) (9,486) (6,721) (16,832)
Debt/hedging early close out
costs (3,514) (111) (3,625) (249) (488)
(Loss)/profit on disposal (1,558) (495) (2,053) 901 2,121
Amortisation of intangible
assets (147) - (147) (161) (315)
IFRS reported (loss)/profit (10,090) (3,004) (13,094) 64,337 82,724
----------------------------------- -------- ------- ------------- ------------- ---------
b) Earnings per ordinary share
Unaudited
Six months Unaudited Audited
to Six months Year to
30 September to 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
------------------------------------ ------------- ---------------- ---------
Basic and diluted (losses)/earnings (13,094) 64,337 82,724
EPRA adjustments(1) 38,347 (40,954) (34,273)
------------------------------------ ------------- ---------------- ---------
EPRA earnings 25,253 23,383 48,451
------------------------------------ ------------- ---------------- ---------
(1) Adjustments shown in table reconciling EPRA profit with IFRS reported (loss)/profit
Unaudited
Six months Unaudited Audited
to Six months Year to
30 September to 30 September 31 March
2016 2015 2016
------------------------------------------ ------------- ---------------- ---------
Number of shares (in thousands)
Ordinary share capital 628,044 628,044 628,044
Average number of shares held in employee
trust (4,044) (3,878) (3,885)
Weighted average number of ordinary
shares 624,000 624,166 624,159
------------------------------------------ ------------- ---------------- ---------
Basic and diluted earnings per share (2.1)p 10.3p 13.3p
EPRA earnings per share 4.0p 3.7p 7.8p
c) Net assets per share
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
------------------------------------------ ------------- ------------- ---------
Equity shareholders' funds 860,849 901,054 898,197
Fair value of derivatives 32,989 13,568 23,570
Fair value of joint ventures' derivatives 404 230 338
EPRA net asset value 894,242 914,852 922,105
------------------------------------------ ------------- ------------- ---------
Unaudited
Six months Unaudited Audited
to Six months Year to
30 September to 30 September 31 March
2016 2015 2016
---------------------------------------- ------------- ---------------- ---------
Number of shares (in thousands)
Ordinary share capital 628,044 628,044 628,044
Number of shares held in employee trust (2,628) (3,860) (3,945)
---------------------------------------- ------------- ---------------- ---------
Number of ordinary shares 625,416 624,184 624,099
---------------------------------------- ------------- ---------------- ---------
Basic net asset value per share 137.6p 144.4p 143.9p
EPRA net asset value per share 143.0p 146.6p 147.7p
8. Investment properties
Unaudited Audited
30 September 31 March
Completed Under development 2016 Completed Under development 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- --------- ----------------- ------------- --------- ----------------- ---------
Opening balance 1,289,560 56,550 1,346,110 1,033,045 131,095 1,164,140
Acquisitions 12,910 33,296 46,206 109,546 70,290 179,836
Capital expenditure 12,854 4,703 17,557 13,720 34,665 48,385
Disposals (68,311) - (68,311) (128,493) - (128,493)
Property transfers 58,169 (58,169) - 204,823 (204,823) -
Revaluation movement (20,731) 2,835 (17,896) 41,991 9,072 51,063
Tenant incentives 1,024 65 1,089 14,928 16,251 31,179
--------------------- --------- ----------------- ------------- --------- ----------------- ---------
1,285,475 39,280 1,324,755 1,289,560 56,550 1,346,110
--------------------- --------- ----------------- ------------- --------- ----------------- ---------
Investment properties are held at fair value as at 30 September 2016 based on external valuations performed by professionally qualified valuers CBRE Limited ("CBRE") and Savills Advisory Services Limited ("Savills"). The valuation of property held for sale at 30 September 2016 was GBP59.5 million (30 September 2015: GBP7.5 million, 31 March 2016: GBP62.8 million).
The valuations have been prepared in accordance with the RICS Valuation - Professional Standards 2014 on the basis of fair value. Fair value represents 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. There has been no change in the valuation technique in the year. The total fees earned by CBRE and Savills from the Company represent less than 5% of their total UK revenues. CBRE and Savills have continuously been the signatory of valuations for the Company since October 2007 and September 2010 respectively.
Long-term leasehold values included within investment properties amount to GBP93.5 million (30 September 2015: GBP68.3 million, 31 March 2016: GBP93.9 million). All other properties are freehold.
Included within the investment property valuation is GBP53.6 million (30 September 2015: GBP45.3 million, 31 March 2016: GBP52.5 million) in respect of lease incentives and rent free periods.
The historical cost of all of the Group's investment properties at 30 September 2016 was GBP1,119.4 million (30 September 2015: GBP1,047.0 million, 31 March 2016: GBP1,127.9 million).
Capital commitments have been entered into amounting to GBP46.2 million (30 September 2015: GBP93.2 million, 31 March 2016: GBP85.5 million) which have not been provided for in the financial statements.
Internal staff costs of the development team of GBP0.9 million (30 September 2015: GBP0.8 million, 31 March 2016: GBP1.5 million) have been capitalised in the period, being directly attributable to the development projects in progress.
9. Investment in joint ventures
At 30 September 2016 the following principal property interests, being jointly-controlled entities, have been equity accounted for in these financial statements:
Country of Incorporation
or Registration Property Sector Group Share
----------------------------------- ------------------------- ---------------- -----------
Metric Income Plus Partnership England and Wales Retail 50.0%
LMP Retail Warehouse JV PUT Guernsey Retail 30.5%
LSP London Residential Investments Guernsey Residential 40.0%
----------------------------------- ------------------------- ---------------- -----------
The principal activity of all joint venture interests is property investment in the UK in the sectors noted in the table above, which complements the Group's operations and contributes to the achievement of its strategy.
The Metric Income Plus Partnership ("MIPP"), in which the Company has a 50% interest, disposed of three properties in the period for gross proceeds of GBP15.9 million (Group share: GBP8.0 million).
The Group also disposed of eight residential flats for GBP9.5 million (Group share: GBP3.8 million) through its 40% interest in LSP London Residential Investments in the period.
At 30 September 2016, the freehold and leasehold investment properties were externally valued by Royal Institution of Chartered Surveyors (RICS) Registered Valuers of CBRE Limited and Savills Advisory Services Limited.
The valuation of property held for sale by joint ventures at 30 September 2016 was GBP7.7 million (Group share: GBP3.1 million) (30 September 2015: GBP24.5 million (Group share: GBP7.5 million), 31 March 2016: GBP17.4 million (Group share: GBP8.7 million)). The movement in the carrying value of joint venture interests in the period is summarised as follows:
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
------------------------------------- ------------- ------------- ---------
Opening balance 119,666 148,366 148,366
Additions at cost 200 7 10
Share of (loss)/profit in the period (3,004) 3,256 4,528
Disposals (3,583) (2,088) (14,110)
Profit distributions received (2,861) (14,775) (19,128)
------------------------------------- ------------- ------------- ---------
Closing balance 110,418 134,766 119,666
------------------------------------- ------------- ------------- ---------
All Group interests are equity accounted for in these financial statements. The Group's share of the profit after tax and net assets of its associates and joint ventures is as follows:
LMP LSP
Metric Retail London Unaudited Unaudited
Income Plus Warehouse Residential 30 September 30 September
Partnership JV PUT Investments 2016 2016
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------------- ---------- ------------ ------------- -------------
Summarised income statement 100% 100% 100% 100% Group share
Gross rental income 4,936 4,950 1,320 11,206 4,506
Property costs (61) (13) (465) (539) (221)
---------------------------------------- -------- ---------- ------------ ------------- -------------
Net rental income 4,875 4,937 855 10,667 4,285
---------------------------------------- -------- ---------- ------------ ------------- -------------
Administrative costs (17) (24) (42) (83) (32)
Management fees (385) (192) (292) (869) (368)
Revaluation (2,198) (3,305) (7,582) (13,085) (5,140)
Finance income 24 2 1 27 13
Finance cost (1,487) (1,157) (262) (2,906) (1,200)
Movement in derivatives (97) (85) 19 (163) (67)
Loss on disposal (115) - (1,094) (1,209) (495)
Profit/(loss) after tax 600 176 (8,397) (7,621) (3,004)
---------------------------------------- -------- ---------- ------------ ------------- -------------
EPRA adjustments
Revaluation 2,198 3,305 7,582 13,085 5,140
Movement in derivatives 97 85 (19) 163 67
Loss on disposal 115 - 1,094 1,209 495
Debt and hedging early close out costs 203 - 25 228 111
---------------------------------------- -------- ---------- ------------ ------------- -------------
EPRA earnings 3,213 3,566 285 7,064 2,809
---------------------------------------- -------- ---------- ------------ ------------- -------------
Summarised balance sheet
Investment properties 147,470 120,380 118,000 385,850 157,651
Other current assets 51 2 7,107 7,160 2,868
Cash 18,627 609 2,046 21,282 10,316
Current liabilities (2,876) (1,048) (521) (4,445) (1,967)
Bank debt (71,775) (60,328) (11,029) (143,132) (58,699)
Unamortised finance costs 747 858 44 1,649 653
Derivative financial instruments (810) 1 - (809) (404)
---------------------------------------- -------- ---------- ------------ ------------- -------------
Net assets 91,434 60,474 115,647 267,555 110,418
---------------------------------------- -------- ---------- ------------ ------------- -------------
Group share 50% 30.5% 40%
---------------------------------------- -------- ---------- ------------ ------------- -------------
Group share of net assets 45,717 18,445 46,256 110,418
---------------------------------------- -------- ---------- ------------ ------------- -------------
LMP LSP LSP
Metric Retail London Green Park LSP Unaudited Unaudited
Income Plus Warehouse Residential Distribution Green Park 30 September 30 September
Partnership JV PUT Investments Holdings Trust 2015 2015
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ------------ ---------- ------------ ------------- ----------- ------------- -------------
Summarised
income
statement 100% 100% 100% 100% 100% 100% Group share
Gross rental
income 6,217 5,812 1,869 343 - 14,241 5,800
Property costs (77) - (572) (20) - (669) (278)
---------------- ------------ ---------- ------------ ------------- ----------- ------------- -------------
Net rental
income 6,140 5,812 1,297 323 - 13,572 5,522
---------------- ------------ ---------- ------------ ------------- ----------- ------------- -------------
Administrative
costs (52) (42) (61) (23) (63) (241) (94)
Management fees (491) (225) (275) (92) - (1,083) (470)
Revaluation (279) 1,725 (529) - - 917 175
Finance income 31 2 1 - - 34 5
Finance cost (1,790) (1,381) (909) (277) - (4,357) (1,807)
Movement in
derivatives (121) (139) 66 105 - (89) (23)
(Loss)/profit on
disposal (145) - (329) (188) 771 109 (52)
Tax - - - (5) - (5) -
---------------- ------------ ---------- ------------ ------------- ----------- ------------- -------------
Profit/(loss)
after tax 3,293 5,752 (739) (157) 708 8,857 3,256
---------------- ------------ ---------- ------------ ------------- ----------- ------------- -------------
EPRA adjustments
Revaluation 279 (1,725) 529 - - (917) (175)
Movement in
derivatives 121 139 (66) (105) - 89 23
Loss/(profit) on
disposal 145 - 329 188 (771) (109) 52
Debt and hedging
early close out
costs 144 - 96 138 - 378 179
---------------- ------------ ---------- ------------ ------------- ----------- ------------- -------------
EPRA earnings 3,982 4,166 149 64 (63) 8,298 3,335
---------------- ------------ ---------- ------------ ------------- ----------- ------------- -------------
LMP LSP LSP
Metric Retail London Green Park LSP Audited Audited
Income Plus Warehouse Residential Distribution Green Park 31 March 31 March
Partnership JV PUT Investments Holdings Trust 2016 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ------------ ---------- ------------ ------------- ----------- ------------- -------------
Summarised
balance sheet 100% 100% 100% 100% 100% 100% Group share
Investment
properties 165,335 123,685 135,875 - - 424,895 174,741
Other current
assets 12,912 75 349 - - 13,336 6,620
Cash 3,198 3,285 3,596 20 - 10,099 4,049
Current
liabilities (3,588) (3,971) (860) - - (8,419) (3,349)
Bank debt (77,075) (60,328) (14,933) - - (152,336) (62,911)
Unamortised
finance costs 1,068 1,011 29 - - 2,108 854
Derivative
financial
instruments (713) 86 (19) - - (646) (338)
---------------- ------------ ---------- ------------ ------------- ----------- ------------- -------------
Net assets 101,137 63,843 124,037 20 - 289,037 119,666
---------------- ------------ ---------- ------------ ------------- ----------- ------------- -------------
Group share 50% 30.5% 40% 50% -
---------------- ------------ ---------- ------------ ------------- ----------- ------------- -------------
Group share of
net assets 50,569 19,472 49,615 10 - 119,666
---------------- ------------ ---------- ------------ ------------- ----------- ------------- -------------
10. Trade and other receivables
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
--------------------------------------- ------------- ------------- ---------
Trade receivables 246 2,602 1,771
Amounts receivable from property sales 24,199 57,640 11,402
Prepayments and accrued income 3,023 2,409 2,744
Other receivables 64 1,878 132
--------------------------------------- ------------- ------------- ---------
27,532 64,529 16,049
--------------------------------------- ------------- ------------- ---------
All amounts fall due for payment in less than one year.
Trade receivables comprise rental income which is due on contractual payment dates with no credit period.
At 30 September 2016 there were trade receivables of GBP16,000 which were overdue and considered at risk (30 September 2015: GBP311,000, 31 March 2016: GBPnil). A full provision has been made against these receivables.
11. Cash and cash equivalents
Cash and cash equivalents include GBP6.2 million (30 September 2015: GBP6.1 million, 31 March 2016: GBP4.9 million) retained in rent and restricted accounts which are not readily available to the Group for day to day commercial purposes.
12. Trade and other payables
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
----------------------------------------- ------------- ------------- ---------
Trade payables 3,763 1,793 4,780
Amounts payable on property acquisitions
and disposals 6,677 2,667 9,595
Rent received in advance 14,285 11,487 12,160
Accrued interest 1,359 2,803 1,897
Other payables 1,976 1,861 525
Other accruals 5,470 4,293 6,386
33,530 24,904 35,343
----------------------------------------- ------------- ------------- ---------
The Group has financial risk management policies in place to ensure that all payables are paid within the credit time frame.
13. Borrowings
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
-------------------------- ------------- ------------- ---------
Secured Bank loans 196,170 551,170 179,989
Unsecured Bank loans 395,000 - 395,000
Unamortised finance costs (6,543) (6,992) (7,079)
584,627 544,178 567,910
-------------------------- ------------- ------------- ---------
On 21 September 2016 the Group entered into a GBP130 million private placement at a blended fixed coupon of 2.7% and a weighted average maturity of 8.3 years. The proceeds were used to repay debt drawn under the existing unsecured credit facility, which remains available to draw.
Certain bank loans at 30 September 2016 are secured by fixed charges over Group investment properties with a carrying value of GBP384.7 million.
The following table shows the contractual maturity profile of the Group's bank loans on an undiscounted cashflow basis and assuming settlement on the earliest repayment date.
Less than One to Two to More than
one year two years five years five years Total
As at 30 September 2016 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- --------- ---------- ----------- ----------- -------
Bank loans 14,445 14,445 305,159 338,508 672,557
Derivative financial instruments 5,254 5,451 21,568 3,061 35,334
--------------------------------- --------- ---------- ----------- ----------- -------
19,699 19,896 326,727 341,569 707,891
--------------------------------- --------- ---------- ----------- ----------- -------
Less than One to Two to More than
one year two years five years five years Total
As at 31 March 2016 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- --------- ---------- ----------- ----------- -------
Bank loans 14,358 14,358 43,112 578,087 649,915
Derivative financial instruments 5,750 6,279 18,389 5,767 36,185
--------------------------------- --------- ---------- ----------- ----------- -------
20,108 20,637 61,501 583,854 686,100
--------------------------------- --------- ---------- ----------- ----------- -------
The Group is exposed to interest rate risk from the use of debt financing at a variable rate. It is Group policy that a reasonable portion of external borrowings are at a fixed interest rate in order to manage this risk. The Group uses interest rate swaps and caps to manage its interest rate exposure and hedge future interest rate risk for the term of the bank loan.
Details of the fair value of the Group's derivative financial instruments that were in place at 30 September 2016 are provided below:
Average rate Notional amount Fair value
----------------------------- ----------------------------- -----------------------------
Audited Audited Audited
Unaudited 31 March Unaudited 31 March Unaudited 31 March
30 September 2016 2016 30 September 2016 2016 30 September 2016 2016
Interest rate caps - expiry % % GBP000 GBP000 GBP000 GBP000
---------------------------- ------------------ --------- ------------------ --------- ------------------ ---------
Less than one year 3.0 2.4 10,000 77,500 - -
One to two years 2.0 2.0 116,313 16,313 - 4
Two to five years 3.0 2.1 10,000 110,000 - 128
More than five years 2.0 2.0 18,150 18,150 65 234
---------------------------- ------------------ --------- ------------------ --------- ------------------ ---------
2.1 2.2 154,463 221,963 65 366
---------------------------- ------------------ --------- ------------------ --------- ------------------ ---------
Average rate Notional amount Fair value
----------------------------- ----------------------------- -----------------------------
Audited Audited Audited
Unaudited 31 March Unaudited 31 March Unaudited 31 March
30 September 2016 2016 30 September 2016 2016 30 September 2016 2016
Interest rate swaps - expiry % % GBP000 GBP000 GBP000 GBP000
----------------------------- ------------------ --------- ------------------ --------- ------------------ ---------
Less than one year 0.0 3.3 - 10,500 - (12)
One to two years 0.6 3.2 50,000 16,313 (288) (624)
Two to five years 2.0 2.9 10,000 60,000 (451) (3,185)
More than five years 2.0 1.9 497,290 467,290 (32,315) (20,115)
----------------------------- ------------------ --------- ------------------ --------- ------------------ ---------
1.8 2.1 557,290 554,103 (33,054) (23,936)
----------------------------- ------------------ --------- ------------------ --------- ------------------ ---------
Total fair value (32,989) (23,570)
----------------------------- ------------------ --------- ------------------ --------- ------------------ ---------
All derivative financial instruments are non-current interest rate derivatives and are carried at fair value following a valuation as at 30 September 2016 by J C Rathbone Associates Limited.
The market values of hedging products change with interest rate fluctuations, but the exposure of the Group to movements in interest rates is protected by way of the hedging products listed above. In accordance with accounting standards, fair value is estimated by calculating the present value of future cash flows, using appropriate market discount rates. For all derivative financial instruments this equates to a Level 2 fair value measurement as defined by IFRS 13 Fair Value Measurement. The valuation therefore does not reflect the cost or gain to the Group of cancelling its interest rate protection at the balance sheet date, which is generally a marginally higher cost (or smaller gain) than a market valuation.
The Group has complied throughout the year comfortably with the financial covenants contained in its debt funding arrangements.
14. Share capital
Unaudited Unaudited Audited Audited
30 September 30 September 31 March 31 March
2016 2016 2016 2016
Number GBP000 Number GBP000
---------------------------- ------------- ------------- ----------- ---------
Issued, called up and fully
paid
Ordinary shares of 10p each 628,043,905 62,804 628,043,905 62,804
---------------------------- ------------- ------------- ----------- ---------
In June 2016 the Company granted options over 2,711,575 ordinary shares under its Long Term Incentive Plan and Deferred Bonus Plan and 414,727 ordinary shares in the Deferred Bonus Plan vested. In August 2016, 2,305,973 ordinary shares in the Company that were granted to certain Directors and employees under the Company's Long Term Incentive Plan in 2013 also vested.
15. Reserves
The following describes the nature and purpose of each reserve within equity:
Share capital The nominal value of shares issued.
------------------ -------------------------------------------------------
Capital redemption Amounts transferred from share capital on redemption
reserve of issued ordinary shares.
------------------ -------------------------------------------------------
Other reserve A reserve relating to the application of merger
relief in the acquisition of LondonMetric Management
Limited and Metric Property Investments Plc
by the Company, the cost of the Company's shares
held in treasury and the cost of shares held
in trust to provide for the Company's future
obligations under share award schemes.
------------------ -------------------------------------------------------
The cumulative profits and losses after the
Retained earnings payment of dividends.
------------------ -------------------------------------------------------
16. Related party transactions and balances
Management fees and dividends receivable from the Group's joint venture arrangements in which it has an equity interest were as follows:
Management fees Dividends
-------------- -------------------------------------- ------------------------------
Unaudited Unaudited
Unaudited Unaudited Six months to Six months to
Six months to Six months to 30 September 30 September
30 September 2016 30 September 2015 2016 2015
Group interest GBP000 GBP000 GBP000 GBP000
LSP Green Park Property
Trust 31.4% - - - 223
LPS Green Park Distribution
Holdings 50.0% - 92 10 11,210
LSP London Residential
Investments 40.0% 243 229 - -
Metric Income Plus
Partnership 50.0% 465 558 1,768 2,074
LMP Retail Warehouse JV PUT 30.5% 192 226 1,083 1,268
---------------------------- -------------- ------------------ ------------------ -------------- --------------
900 1,105 2,861 14,775
---------------------------- -------------- ------------------ ------------------ -------------- --------------
Transactions between the Company and its subsidiaries which are related parties have been eliminated on consolidation.
There has been no significant movement in the beneficial interests of the Directors and their families who were in office during the period or at the date of this report.
17. Post balance sheet events
On 13 October 2016 the Group acquired a distribution warehouse in Stevenage for GBP7.3 million.
On 14 November 2016 the Group completed the acquisition of Unit 1 Bicester Distribution Park for GBP3.2 million.
On 16 November 2016 the Group completed the disposal of Alban Park in St Albans for GBP5.8 million to Dunelm Estates Limited.
On 16 November 2016 the Group's MIPP joint venture acquired a B&Q unit in Hull for GBP9.4 million (Group share: GBP4.7 million).
On 17 November 2016 the Group acquired a portfolio of six properties for GBP26.0 million.
On 21 November 2016 the Group's MIPP joint venture acquired a Wickes unit in Dartford for GBP9.0 million (Group share: GBP4.5 million).
On 22 November 2016 the Group acquired a pre-let development in Crawley for GBP10.7 million.
On 23 November 2016 the Group completed the disposal of its distribution warehouse in Warrington let to The HUT Group for GBP53.7 million.
Directors' responsibility statement
The Directors are responsible for preparing the condensed set of financial statements, in accordance with applicable law and regulations. The Directors confirm that, to the best of their knowledge:
-- This condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting", as adopted by the European Union, and
-- This condensed set of financial statements includes a fair review of the information required by Sections DTR 4.2.7R and DTR 4.2.8R of the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
By order of the Board
Andrew Jones
Chief Executive
Martin McGann
Finance Director
29 November 2016
Independent review report to LondonMetric Property 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 income statement, the Group balance sheet, the Group statement of changes in equity, the Group cash flow statement and related notes 1 to 17. 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 it 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 Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making 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.
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 and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
DELOITTE LLP
Chartered Accountants and Statutory Auditor
29 November 2016
Supplementary information
i EPRA Summary table
30 September 30 September 31 March
2016 2015 2016
------------------------------------------- ------------ ------------ --------
EPRA earnings per share 4.0p 3.7p 7.8p
EPRA net asset value per share 143.0p 146.6p 147.7p
EPRA triple net asset value per share 137.6p 144.4p 143.9p
EPRA vacancy rate 1.5% 0.1% 0.7%
EPRA cost ratio (including vacant property
costs) 17% 18% 17%
EPRA cost ratio (excluding vacant property
costs) 16% 17% 17%
EPRA net initial yield 4.8% 4.4% 4.9%
EPRA "topped up" net initial yield 5.4% 5.5% 5.4%
------------------------------------------- ------------ ------------ --------
ii EPRA proportionally consolidated income statement
For the six months Group JV 2016 Group JV 2015 to 30 September GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 -------------------- ------- ------- --------- ------- ------- -------- Gross rental income 36,033 4,506 40,539 31,731 5,799 37,530 Property costs (617) (221) (838) (313) (277) (590) -------------------- ------- ------- --------- ------- ------- -------- Net income 35,416 4,285 39,701 31,418 5,522 36,940 Management fees 900 (368) 532 1,105 (470) 635 Administrative costs (6,735) (32) (6,767) (6,629) (94) (6,723) Net finance costs (7,122) (1,076) (8,198) (5,842) (1,623) (7,465) Other (15) - (15) (4) - (4) ==================== ======= ======= ========= ======= ======= ======== EPRA earnings 22,444 2,809 25,253 20,048 3,335 23,383 ==================== ======= ======= ========= ======= ======= ========
iii EPRA proportionally consolidated balance sheet
30 September 31 March
Group JV 2016 Group JV 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------- --------- -------- -------------- --------- -------- ---------
Investment property 1,324,755 157,651 1,482,406 1,346,110 174,741 1,520,851
Gross debt (591,170) (58,699) (649,869) (574,989) (62,911) (637,900)
Cash 48,914 10,316 59,230 42,621 4,049 46,670
Other 1,325 1,150 2,475 (11,641) 4,125 (7,516)
-------------------- --------- -------- -------------- --------- -------- ---------
EPRA net assets 783,824 110,418 894,242 802,101 120,004 922,105
-------------------- --------- -------- -------------- --------- -------- ---------
Loan to value 37% 31% 36% 38% 34% 38%
Cost of debt 3.3% 3.4% 3.3% 3.5% 3.6% 3.5%
Undrawn facilities 178,750 5,000 183,750 64,931 5,000 69,931
-------------------- --------- -------- -------------- --------- -------- ---------
iv EPRA cost ratio
2016 2015
For the six months to 30 September GBP000 GBP000
---------------------------------------------------------- ------- -------
Property operating expenses 617 313
Administration expenses 6,735 6,629
Share of joint venture property operating, administration
expenses and management fees 621 841
Less:
Joint venture property management fee income (900) (1,105)
Ground rents (64) (24)
---------------------------------------------------------- ------- -------
Total costs including vacant property costs (A) 7,009 6,654
Group vacant property costs (395) (132)
Share of joint venture vacant property costs (114) (142)
---------------------------------------------------------- ------- -------
Total costs excluding vacant property costs (B) 6,500 6,380
Gross rental income 36,033 31,731
Share of joint venture gross rental income 4,506 5,799
---------------------------------------------------------- ------- -------
40,539 37,530
Less: Ground rents (64) (24)
---------------------------------------------------------- ------- -------
Total gross rental income (C) 40,475 37,506
Total EPRA cost ratio (including vacant property
costs) (A)/(C) 17% 18%
Total EPRA cost ratio (excluding vacant property
costs) (B)/(C) 16% 17%
---------------------------------------------------------- ------- -------
v EPRA net initial yield and "topped up" net initial yield
30 September 31 March
2016 2016
GBP000 GBP000
--------------------------------------------------- ------------ ---------
Investment property - wholly-owned 1,324,755 1,346,110
Investment property - share of joint ventures 157,651 174,741
Less development properties (39,280) (56,550)
Less residential properties (48,845) (55,895)
--------------------------------------------------- ------------ ---------
Completed property portfolio 1,394,281 1,408,406
Allowance for:
Estimated purchasers' costs 94,811 95,772
Estimated costs to complete 40,783 43,967
--------------------------------------------------- ------------ ---------
EPRA property portfolio valuation (A) 1,529,875 1,548,145
--------------------------------------------------- ------------ ---------
Annualised contracted rental income 65,840 71,945
Share of joint ventures 8,500 8,064
Less development properties (487) (3,972)
Less residential properties (686) (856)
--------------------------------------------------- ------------ ---------
Annualised net rents (B) 73,167 75,181
Contractual rental increased for rent free periods 7,620 5,334
Contractual rental increases for fixed uplifts 2,444 3,641
--------------------------------------------------- ------------ ---------
"Topped up" net annualised rent (C) 83,231 84,156
--------------------------------------------------- ------------ ---------
EPRA net initial yield (B/A) 4.8% 4.9%
--------------------------------------------------- ------------ ---------
EPRA "topped up" net initial yield (C/A) 5.4% 5.4%
--------------------------------------------------- ------------ ---------
vi EPRA vacancy rate
30 September 31 March
2016 2016
GBP000 GBP000
----------------------------------------------------- ------------ --------
Annualised estimated rental value of vacant premises 1,253 604
Portfolio estimated rental value(1) 82,761 82,720
----------------------------------------------------- ------------ --------
EPRA vacancy rate 1.5% 0.7%
----------------------------------------------------- ------------ --------
(1) Excludes residential and development properties
vii EPRA capital expenditure analysis
30 September 31 March
Group JV 2016 Group JV 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
==================== ========= ======== ============ ========= ======== =========
Opening valuation 1,346,110 174,741 1,520,851 1,164,140 236,245 1,400,385
Acquisitions 12,910 1 12,911 109,546 3,477 113,023
Developments 37,999 - 37,999 104,955 - 104,955
Capital expenditure 12,854 38 12,892 13,720 761 14,481
Disposals (68,311) (11,686) (79,997) (128,493) (64,749) (193,242)
Revaluation (17,896) (5,140) (23,036) 51,063 (1,276) 49,787
Lease incentives 1,089 (303) 786 31,179 283 31,462
==================== ========= ======== ============ ========= ======== =========
Closing valuation 1,324,755 157,651 1,482,406 1,346,110 174,741 1,520,851
==================== ========= ======== ============ ========= ======== =========
viii Total accounting return
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
---------------------------------------- ------------ ------------ --------
EPRA net asset value
- at end of year 894,242 914,852 922,105
- at start of year 922,105 877,226 877,226
---------------------------------------- ------------ ------------ --------
(Decrease)/increase (27,863) 37,626 44,879
Dividend paid 23,404 34,325 56,171
---------------------------------------- ------------ ------------ --------
(Decrease)/increase including dividend (4,459) 71,951 101,050
---------------------------------------- ------------ ------------ --------
Total accounting return (0.5)% 8.2% 11.5%
---------------------------------------- ------------ ------------ --------
ix Portfolio split and valuation
31 March
30 September
2016 2016
GBPm % GBPm %
----------------------------------- ------- ------------ ------- --------
Distribution 832.0 56.1 784.4 51.6
Retail 429.3 29.0 474.8 31.2
Leisure 60.7 4.1 69.0 4.5
Office 72.3 4.8 80.2 5.3
=================================== ======= ============ ======= ========
Investment Portfolio 1,394.3 94.0 1,408.4 92.6
=================================== ======= ============ ======= ========
Development - distribution 35.0 2.4 40.0 2.6
Development - retail 4.3 0.3 16.6 1.1
Residential 48.8 3.3 55.9 3.7
=================================== ======= ============ ======= ========
1,482.4 100.0 1,520.9 100.0
=================================== ======= ============ ======= ========
Retail (Group and JV split)
Wholly-owned - Retail Parks 244.9 16.5 293.9 19.3
Wholly-owned - Convenience retail 80.0 5.4 66.6 4.4
Metric Income Plus Partnership 73.7 5.0 82.7 5.4
LMP Retail Warehouse JV Property
Unit Trust 30.7 2.1 31.6 2.1
=================================== ======= ============ ======= ========
429.3 29.0 474.8 31.2
----------------------------------- ------- ------------ ------- --------
x Investment portfolio yields
30 September 31 March
EPRA 2016 EPRA 2016
topped up Equivalent topped Equivalent
EPRA NIY NIY yield EPRA NIY up NIY yield
% % % % % %
--------------------- ---------- ---------- ------------ ---------- ------- ---------------
Distribution 4.7 5.2 5.5 4.7 5.2 5.4
Retail 4.7 5.8 5.8 4.8 5.8 5.8
Leisure 6.1 6.1 7.1 6.0 6.0 7.0
Office 5.5 5.5 7.2 5.3 5.6 6.6
--------------------- ---------- ---------- ------------ ---------- ------- ---------------
Investment portfolio 4.8 5.4 5.8 4.9 5.4 5.7
===================== ========== ========== ============ ========== ======= ===============
xi Investment portfolio - Key statistics
WAULT Average
WAULT to first rent
Area to expiry break Occupancy GBP per
As at 30 September 2016 '000 sq ft years years % sq ft
=============================== =========== ========== ========= =========== =========
Distribution 8,462 12.7 12.1 100.0 5.60
Retail 2,196 12.1 11.2 98.1 17.20
Leisure 261 20.7 20.7 100.0 15.10
Office 231 7.7 7.7 85.9 21.50
------------------------------- ----------- ---------- --------- ----------- ---------
Investment portfolio 11,150 12.6 12.0 98.5 8.00
------------------------------- ----------- ---------- --------- ----------- ---------
Distribution development(1) 739
Retail development 61
------------------------------- -----------
Total investment & development
portfolio 11,950
------------------------------- -----------
(1) Excludes conditional development site at Bedford
xii Total property returns (%)
All All All
property property property
------------ ------------ ---------
30 September 30 September 31 March
2016 2015 2016
% % %
--------------- --- ------------ ------------ ---------
Capital return (1.3) 4.0 4.9
Income return 2.8 2.6 5.3
-------------------- ------------ ------------ ---------
Total return 1.5 6.7 10.5
-------------------- ------------ ------------ ---------
xiii Contracted rental income
30 September 30 September 31 March
2016 2015 2016
GBPm GBPm GBPm
--------------------------- ------------ ------------ --------
Distribution 46.6 36.0 42.3
Retail 28.0 31.0 31.3
Leisure 3.9 5.0 4.4
Office 4.4 4.9 4.9
=========================== ============ ============ ========
Investment portfolio 82.9 76.9 82.9
=========================== ============ ============ ========
Development - distribution 0.1 6.3 2.5
Development - retail 0.4 2.5 0.8
Residential 0.7 1.0 0.9
--------------------------- ------------ ------------ --------
Total portfolio 84.1 86.7 87.1
--------------------------- ------------ ------------ --------
xiv Rent subject to expiry
Within Within Within Within Over
5 years 10 years 15 years 20 years 20 years
As at 30 September 2016 % % % % %
------------------------------- ----------------- ---------------- --------- --------- ---------------
Distribution 6.2 38.9 70.5 88.4 100.0
Retail 11.1 37.2 81.4 90.3 100.0
Leisure - - 11.4 11.4 100.0
Office 31.7 100.0 100.0 100.0 100.0
------------------------------- ----------------- ---------------- --------- --------- ---------------
Total investment & development
portfolio 8.9 39.7 72.9 86.0 100.0
------------------------------- ----------------- ---------------- --------- --------- ---------------
xv Contracted rent subject to RPI or fixed uplifts for investment portfolio (%)
30 September 31 March
2016 2016
GBPm % GBPm %
------------- ---- ------------ ---- --------
Distribution 26.7 57.1 26.0 57.9
Retail 8.7 30.6 8.9 27.7
Leisure 3.9 100.0 4.4 100.0
Office 3.0 68.3 3.0 60.9
============= ==== ============ ==== ========
42.3 50.7 42.3 49.0
------------- ---- ------------ ---- --------
xvi Top ten assets (by value(1) )
WAULT
Area Contracted WAULT to first
'000 sq Rent Occupancy to expiry break
As at 30 September 2016 ft GBPm % years years
----------------------------- -------- ---------- ----------- ---------- ---------
Primark, Islip 1,062 5.4 100 24.0 24.0
Primark, Thrapston 783 4.0 100 16.0 16.0
Dixons Carphone, Newark 726 4.3 100 16.8 16.8
Marlow International, Marlow 231 4.4 86 7.7 7.7
Argos, Bedford 658 3.8 100 6.2 6.2
Eddie Stobart, Dagenham 410 3.1 100 14.8 14.8
HUT, Warrington 690 3.8 100 14.1 14.1
Royal Mail, Daventry 273 2.5 100 6.9 6.9
Marks & Spencer, Sheffield 626 2.6 100 7.2 4.8
Kirkstall Bridge Shopping
Park, Leeds 120 2.4 95 11.9 9.5
----------------------------- -------- ---------- ----------- ---------- --------- (1) Excluding residential asset
xvii Top ten occupiers
Contracted Contracted
rental income Market capitalisation rental income
As at 30 September 2016 GBPm GBPbn %
----------------------- -------------- --------------------- --------------
Primark(1) 9.4 20.1 11.3
Dixons Carphone 5.8 3.9 6.9
M&S 5.3 5.4 6.4
Argos(1) 4.1 5.2 4.9
The Hut Group 3.8 Private 4.5
Odeon(1) 3.5 2.8 4.2
DFS 3.5 0.5 4.2
Royal Mail 3.3 4.7 4.0
Eddie Stobart 3.1 Private 3.7
Allergan 3.0 60.4 3.6
----------------------- -------------- --------------------- --------------
Top 10 44.8 53.7
----------------------- -------------- --------------------- --------------
Other commercial income 38.6 46.3
----------------------- -------------- --------------------- --------------
Total commercial 83.4 100.0
----------------------- -------------- --------------------- --------------
Residential 0.7
----------------------- -------------- --------------------- --------------
Total Group 84.1
----------------------- -------------- --------------------- --------------
(1) Market capitalisation of parent company
Definitions
Capital Return EPRA Vacancy Occupancy Rate
The valuation movement The Estimated Rental The ERV of the let units
on the property portfolio Value (ERV) of immediately as a percentage of the
adjusted for capital available vacant space total ERV of the investment
expenditure and expressed divided by total annualised portfolio
as a percentage of the income of the investment Omni Channel Retailing
capital employed over portfolio The evolution of multi
the period Equivalent Yield channel retailing providing
Contracted Rent The weighted average a seamless shopping
The annualised rent income return expressed experience for the consumer
adjusting for the inclusion as a percentage of the through all available
of rent free periods market value of the shopping channels, ie
Cost of debt property, after inclusion physical, internet,
Weighted average interest of estimated purchaser's mobile, social media,
rate payable costs telephone, catalogue
Debt maturity Estimated Rental Value etc
Weighted average period (ERV) Passing Rent
to expiry of drawn debt The external valuers' The gross rent payable
EPRA Cost Ratio opinion of the open by tenants under operating
Total operating costs market rent which, on leases, less any ground
as a percentage of gross the date of valuation, rent payable under head
rental income could reasonably be leases
EPRA Earnings per Share expected to be obtained Property Income Distribution
(EPS) on a new letting or (PID)
Recurring earnings from rent review of a property Dividends from profits
core operational activities European Public Real of the Group's tax-exempt
divided by the average Estate Association (EPRA) property business under
number of shares in The European Public the REIT regulations.
issue over the period Real Estate Association The PID dividend is
EPRA Like for Like Income (EPRA) is the industry paid after deducting
Growth body for European Real withholding tax at the
The movement in rental Estate Investment Trusts(REITs) basic rate
income on properties Group Real Estate Investment
owned throughout the LondonMetric Property Trust (REIT)
current and previous Plc and its subsidiaries A listed property company
periods under review. IFRS which qualifies for
The movement includes The International Financial and has elected into
revenue recognition Reporting Standards a tax regime which is
and lease accounting issued by the International exempt from corporation
adjustments but excludes Accounting Standards tax on profits from
properties held for Board and adopted by property rental income
development and residential the European Union and UK capital gains
EPRA NAV per Share Income Return on the sale of investment
Balance sheet net assets Net rental income expressed properties
excluding fair value as a percentage of capital Total Accounting Return
of derivatives, divided employed over the period (TAR)
by the number of shares Investment Portfolio The movement in EPRA
in issue at the balance The Group's property NAV plus the dividend
sheet date portfolio excluding paid during the period
EPRA NNNAV per Share development, land holdings expressed as a percentage
EPRA NAV per share adjusted and residential properties of the EPRA NAV at the
to include the fair Investment Property beginning of the period
value of financial instruments, Databank (IPD) Investment Total Property Return
debt and deferred taxes Property Databank (IPD) (TPR)
at the balance sheet is a wholly owned subsidiary Unlevered weighted capital
date of MSCI producing an and income return of
EPRA net initial yield independent benchmark the property portfolio
Annualised rental income of property returns as calculated by IPD
based on cash rents and the Group's portfolio Total Shareholder Return
passing at the balance returns (TSR)
sheet date, less non Loan to Value (LTV) The movement in the
recoverable property Net debt expressed as ordinary share price
operating expenses, a percentage of the as quoted on the London
expressed as a percentage total property portfolio Stock Exchange plus
of the market value value at the period dividends per share
of the property, after end assuming that dividends
inclusion of estimated Net Rental Income are re-invested at the
purchaser's costs The rental income receivable time of being paid
EPRA topped up net initial after deduction for Weighted Average Interest
yield ground rents and other Rate
EPRA net initial yield net property outgoings The total loan interest
adjusted for expiration including void costs and derivative costs
of rent free periods and net service charge per annum (including
or other lease incentives expenses the amortisation of
such as discounted rent finance costs) divided
periods and stepped by the total debt in
rents issue at the period
end
Weighted Average Unexpired
Lease Term (WAULT)
Average unexpired lease
term across the investment
portfolio weighted by
net rental income
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGGRWGUPQPUB
(END) Dow Jones Newswires
November 30, 2016 02:00 ET (07:00 GMT)
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