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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Aew Uk Reit Plc | LSE:AEWU | London | Ordinary Share | GB00BWD24154 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 88.00 | 87.50 | 88.00 | 90.60 | 87.50 | 90.60 | 222,411 | 16:35:26 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Investment Trust | 20.72M | -11.33M | -0.0715 | -12.24 | 138.62M |
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AEW UK REIT plc (AEWU)
AEW UK REIT plc: Annual Financial Report
24-Jun-2019 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
AEW UK REIT PLC
Announcement of Full Year Results for the year ended 31 March 2019
AEW UK REIT PLC (the 'Company') which holds a diversified portfolio of 35
commercial investment properties throughout the UK, is pleased to publish
its full year results for the year ended 31 March 2019.
Mark Burton, Chairman of AEW UK REIT,?commented:?"A key feature of the
financial year has been achieving the target income returns of 8.00 pence
per share ('pps') from the Company's established portfolio of assets. Such
returns demonstrate the success of both the Company's investment strategy
and the stock selection process of the Investment Manager when deploying the
proceeds of the most recent capital raise, as well as our active asset
management. The Board expects this level of return to continue, with further
value expected to be gained through asset management initiatives in the
short term. Additionally, we continue to see attractive opportunities across
our target sectors. The portfolio is defensively positioned for any Brexit
outcome, with no exposure to London offices and broad diversification by
sector and region. We look forward to raising additional capital to pursue
identified opportunities as and when market conditions allow."
Enquiries
AEW UK
Alex Short Alex.Short@eu.aew.com
Nicki Gladstone Nicki.Gladstone-ext@eu.aew.com
+44(0) 771 140 1021
Liberum Capital
Gillian Martin Gillian.Martin@liberum.com
+44 (0)20 3100 2217
TB Cardew
Ed Orlebar AEW@tbcardew.com
Lucas Bramwell +44(0) 7738 724 630
+44(0) 7939 694 437
Financial Highlights
· Net Asset Value ('NAV')* of GBP149.46 million and of 98.61 pps as at 31
March 2019 (31 March 2018: GBP146.03 million and 96.36 pps).
· Operating profit before fair value changes of GBP13.52 million for the
year (11 months ended 31 March 2018: GBP9.60 million).
· Unadjusted profit before tax ('PBT')* of GBP15.54 million and earnings of
10.26 pps for the year (11 months ended 31 March 2018: GBP9.82 million and
of 7.17 pps).
· EPRA Earnings Per Share ('EPRA EPS')* for the year of 8.07 pence (11
months ended 31 March 2018: 6.56 pence).
· Total dividends of 8.00 pps have been declared for the year (11 months
ended 31 March 2018: 7.33 pps, equating to an annualised dividend of 8.00
pps).
· Shareholder Total Return* for the year of 5.44% (11 months ended 31
March 2018: 3.65%).
· The price of the Company's Ordinary Shares on the Main Market of the
London Stock Exchange was 92.80 pps as at 31 March 2019 (31 March 2018:
95.60 pps).
· As at 31 March 2019, the Company had drawn GBP50.00 million (31 March
2018: GBP50.00 million) of a GBP60.00 million (31 March 2018: GBP60.00 million)
term credit facility with the Royal Bank of Scotland International Limited
('RBSi') and was geared to 25.30% of the Gross Asset Value ('GAV')* (31
March 2018: 26.00%) (see note 21 below for further details).
· The Company held cash balances totalling GBP2.13 million as at 31 March
2019 (31 March 2018: GBP4.71 million). Under the terms of its loan facility,
the Company can draw a further GBP2.31 million (31 March 2018: GBP1.11
million) to the maximum 35% loan to NAV at drawdown.
· On 1 March 2019, the Company published its Prospectus in relation to a
Share Issuance Programme of up to 250 million new Ordinary shares and up
to 250 million convertible redeemable preference shares ("C shares"). No
shares have been issued, to date, under the programme.
Property Highlights
· The Company acquired one property during the year for a purchase price
of GBP6.93 million, excluding acquisition costs (11 months ended 31 March
2018: 10 properties for GBP60.11 million). The Company made two full
disposals and two part disposals during the year for gross sales proceeds
of GBP6.80 million (11 month period ended 31 March 2018: one disposal for
gross sales proceeds of GBP11.05 million).
· As at 31 March 2019, the Company's property portfolio had a fair value
of GBP197.61 million across 35 properties (31 March 2018: GBP192.34 million
across 36 properties) and a historical cost of GBP196.86 million (31 March
2018: GBP196.64 million).
· The majority of assets that have been acquired are fully let and the
portfolio had an EPRA Vacancy Rate** of 2.99% as at 31 March 2019 (31
March 2018: 7.10%).
· Rental income generated in the year under review was GBP17.18 million (11
months ended 31 March 2018: GBP12.33 million). The number of tenants as at
31 March 2019 was 95 (31 March 2018: 104).
· EPRA Net Initial Yield ('NIY')** of 7.62% as at 31 March 2019 (31 March
2018: 7.73%).
· Weighted Average Unexpired Lease Term ('WAULT')* of 4.87 years to break
(31 March 2018: 5.08 years) and 6.10 years to expiry (31 March 2018: 6.16
years).
* See KPIs below for definition of alternative performance measures.
** See Glossary in the full Annual Report for definition of alternative
performance measures.
The current period being reported is for the 12 months from 1 April 2018 to
31 March 2019. The prior period ended 31 March 2018 was an 11-month period
from 1 May 2017 to 31 March 2018 and so cannot be used as a direct
comparator.
Chairman's Statement
Overview
I am pleased to present the audited annual results of the Company for the
year ended 31 March 2019. As at 31 March 2019, the Company had a diversified
portfolio of 35 commercial investment properties throughout the UK with a
value of GBP197.61 million. On a like-for-like* basis, the portfolio valuation
increased by 2.80% over the year.
A key feature of the financial year has been achieving the target income
returns of 8.00 pps from the Company's established portfolio of assets.
Dividends of 8.00 pps have been declared in relation to the year, equating
to a dividend yield of 8.62% based on the share price as at 31 March 2019.
Dividends were fully covered by EPRA EPS of 8.07 pps, reflecting the high
yielding nature of the portfolio. Over the year, the portfolio achieved
total returns of 10.5%, an outperformance of 4.7% relative to the Benchmark
(MSCI/AREF UK PFI Balanced Funds Quarterly Property Index) ('the Benmark').
This performance was driven by income returns of 8.1% and the portfolio also
achieved capital growth of 2.3%.
Such returns demonstrate the success of both the Company's investment
strategy and the stock selection process of the Investment Manager when
deploying the proceeds of the most recent capital raise, which occurred in
October 2017. From the date of the share issue and up to 31 March 2018, the
Company made seven acquisitions totalling GBP49.72 million, which fully
utilised the capital raised, as well as an additional GBP17.50 million of
debt. These acquisitions have played a major part in the Company achieving
EPRA EPS ahead of its dividend target for the current year, with the seven
assets having a combined NIY equating to 9.10% on the purchase price.
An active approach to asset management has also played a role in maximising
returns from the portfolio. The vacancy rate has fallen from 7.10% as at 31
March 2018 to 2.99% as at 31 March 2019, largely as a result of new lettings
in the office sector during the year. The most notable of these were the
letting of Orion House in Oxford at a contracted rent of GBP179,410 per annum
and the letting of Third Floor East, 255 Bath Street, Glasgow at a
contracted rent of GBP88,608 per annum. Lease renewals have also been
completed at 40 Queen Square, Bristol, increasing contracted rent on that
accommodation from GBP66,623 to GBP94,500 per annum and at Cedar House,
Gloucester, increasing contracted rent from GBP300,000 to GBP321,000 per annum
and securing a 10-year term.
Another contributor to the fall in the vacancy rate has been the Company's
divestment of largely vacant premises. The Company disposed of Floors 1-9,
Pearl House, Nottingham in April 2018, retaining the fully let ground floor
accommodation. 18-36, Chapel Walk, Sheffield was sold in August 2018 with
the fully let adjoining units, 11-15 Fargate being retained. These disposals
for combined gross proceeds of GBP4.55 million eliminated over a quarter of
the Company's vacant Estimated Rental Value ('ERV')* *as at 31 March 2018.
Further to these disposals, in December 2018, the Company divested
Stoneferry Retail Park, Hull, for gross proceeds of GBP1.80 million. The asset
had c.GBP165,000 of income due to expire in May 2019. Waggon Road, Mossley,
was sold at auction, completing in March 2019, for gross proceeds of
GBP450,000. This price was GBP100,000 ahead of the asset's most recent valuation
in December 2018.
The Company reinvested the proceeds from its disposals into an industrial
asset, Lockwood Court, Parkside Industrial Estate, Leeds, which was acquired
for GBP6.93 million, net of purchase costs, in February 2019.
The Company's share price was 92.80 pps as at 31 March 2019 (31 March 2018:
95.60 pps), representing a 5.89% discount to NAV. The share price has been
trading at a discount to NAV since June 2018. The fall in the share price
over the year was offset by total dividend payments of 8.00 pps, generating
a Shareholder Total Return of 5.44%, compared with a NAV Total Return of
10.64%. Since the year end, the share price has increased and as at 31 May
2019 was 96.00 pps, representing a 2.65% discount to NAV.
On 1 March 2019, the Company published its prospectus (the "Prospectus") in
relation to a share issuance programme (the "Share Issuance Programme") of
up to 250 million new Ordinary Shares and up to 250 million convertible
redeemable preference shares ("C Shares"). The Share Issuance Programme will
close on 28 February 2020 (or on any earlier date on which it is fully
subscribed). We continue to see attractive opportunities across our target
sectors and look forward to raising additional capital to pursue those
opportunities as and when market conditions allow.
Financial Results
Period from
Year ended 1 May 2017 to
31 March 2019 31 March 2018
Operating profit before fair value 13,524 9,601
changes (GBP'000)
Operating profit (GBP'000) 17,226 10,472
Profit after tax (GBP'000) 15,544 9,820
EPS (basic and diluted) (pence) 10.26 7.17
EPRA EPS (basic and diluted) 8.07 6.56
(pence)
Ongoing Charges (%) 1.40 1.24
NAV per share (pence) 98.61 96.36
EPRA NAV per share (pence) 98.51 96.34
Financing
There were no drawdowns or repayments of the loan facility during the year
and the Company's loan balance remained at GBP50.00 million as at 31 March
2019 (31 March 2018: GBP50.00 million), producing gearing of 25.30% of
property valuation (31 March 2018: 26.00%). The amount available under the
facility was GBP60.00 million as at 31 March 2019 (31 March 2018: GBP60.00
million).
On 22 October 2018, the Company extended the term of the facility by three
years up to 22 October 2023, to mitigate the financing risk associated with
Brexit. The margin remains unchanged, with the loan incurring interest at
three month LIBOR +1.4%, which equated to an all-in rate of 2.32% as at 31
March 2019 (31 March 2018: 2.11%). The Company is protected from a
significant rise in interest rates as it has interest rate caps (GBP26.51
million at 2.50% and GBP10.00 million at 2.00%) with a combined notional value
of GBP36.51 million (31 March 2018: GBP36.51 million), resulting in the loan
being 73.00% hedged (31 March 2018: 73.00%). These interest rate caps are
effective until 19 October 2020. The Company has entered into additional
interest rate caps on a notional value of GBP46.51 million at 2.00% covering
the extension period of the loan from 20 October 2020 to 19 October 2023.
Under the Prospectus the long-term gearing target remains 25.00% or less,
however, the Company can borrow up to 35.00% of GAV in advance of an
expected capital raise or asset disposal. Under the terms of the current
loan facility, borrowing is restricted to 35.00% of NAV at drawdown. The
Board and Investment Manager will continue to monitor the level of gearing
and may adjust the target gearing according to the Company's circumstances
and perceived risk levels.
Dividends
The Company has continued to deliver on its target of paying dividends of
8.00 pps per annum. During the year, the Company declared and paid four
quarterly dividends of 2.00 pence per Ordinary Share, in line with its
target.
On 26 April 2019, the Board declared an interim dividend of 2.00 pence per
Ordinary Share in respect of the period from 1 January 2019 to 31 March
2019. This interim dividend was paid on 31 May 2019 to shareholders on the
register as at 9 May 2019.
The Directors will declare dividends taking into account the current level
of the Company's earnings and the Directors' view on the outlook for
sustainable recurring earnings. As such, the level of dividends paid may
increase or decrease from the current annual dividend of 8.00 pps. Based on
the current profile of the portfolio, the Company expects to pay an
annualised dividend of 8.00 pps in respect of the year ending 31 March 2020,
subject to market conditions.
Outlook
The Board and the Investment Manager are pleased with the strong income
returns delivered to shareholders to date. Based on annualised dividend
payments of 8.00 pps, the Company delivered a dividend yield of 8.62% based
on the year-end share price of 92.80 pence.
The Company was fully invested at the start of the year and achieved returns
during the year which fully covered its dividend payments. The Board expects
this level of returns to continue, based on the projected income from the
portfolio which had an EPRA NIY of 7.62% and a Reversionary Yield of 7.75%
as at 31 March 2019.
Whilst the EPRA Vacancy Rate has been reduced significantly during the year
to 2.99% as at 31 March 2019, there is still further value to be gained
through asset management initiatives in the short term. The portfolio has a
WAULT of 4.9 years to break and 6.1 years to expiry and those lease events
arising in the near future will provide the opportunity to increase and
extend income streams from certain assets.
In the wider economic environment, it had been hoped that there would be
more political certainty by the end of this financial year, however with the
Brexit deadline being extended further to 31 October 2019, we expect
investors to remain cautious. We consider the portfolio to be defensively
positioned in any outcome, with no exposure to London offices - the sector
most likely to be impacted - and broad diversification by sector and region.
Looking forward, our focus remains on continuing to grow the Company with
share issues as part of the 12-month Share Issuance Programme, as set out in
the Company's Prospectus, subject to market conditions. Subject to future
fund raising, the Investment Manager will focus on finding further
acquisitions which will deliver an attractive return as part of a
well-diversified portfolio.
Annual General Meeting
The Company's Annual General Meeting ('AGM') will be held on Thursday, 12
September 2019 at 12 noon at The Cavendish Hotel, 81 Jermyn Street, St
James', London SW1Y 6JF. You will find enclosed with the Annual Report and
Notice of AGM a letter asking if you would prefer to receive future annual
and half-yearly reports and other communication from the Company in
electronic form rather than in printed form. Further details regarding this
are set out in the Notice of AGM.
Board Composition
James Hyslop will retire from the Board at the forthcoming AGM. The Board
would very much like to express its appreciation for his contribution to the
Company which has been greatly valued since the Company was formed.
Mark Burton
Chairman
21 June 2019
* See, Glossary in the full Annual Report for definition of alternative
performance measures.
** See KPIs below for definition of alternative performance measures.
Business Model and Strategy
Introduction
The Company is a real estate investment company listed on the premium
segment of the Official List of the FCA and traded on the London Stock
Exchange's Main Market. As part of its business model and strategy, the
Company has, and intends to maintain, UK REIT status. HM Revenue and Customs
has acknowledged that the Company has met, and intends to continue to meet,
the necessary qualifying conditions to conduct its affairs as a UK REIT.
Investment Objective
The investment objective of the Company is to deliver an attractive total
return to shareholders from investing predominantly in a portfolio of
smaller commercial properties in the United Kingdom.
Investment Policy
In order to achieve its investment objective, the Company invests in
freehold and leasehold properties across the whole spectrum of the
commercial property sector (office properties, industrial/warehouse
properties, retail warehouses and high street retail) to achieve a balanced
portfolio with a diversified tenant base.
Within the scope of restrictions set out below (under the heading
'Investment Restrictions') the Company may invest up to 10.00% of its NAV
(at the time of investment) in the AEW UK Core Property Fund (the 'Core
Fund') and up to 10.00% of its NAV (measured at the commencement of the
project) in development opportunities, with the intention of holding any
completed development as an investment.
Investment Restrictions
The Company invests and manages its assets with the objective of spreading
risk through the following investment restrictions:
· the value of no single property, at the time of investment, will
represent more than 15.00% of GAV;
· the Company may commit up to a maximum of 10.00% of its NAV (measured at
the commencement of the project) to development activities;
· the value of properties, measured at the time of each investment, in any
one of the following sectors: office properties, retail warehouses, high
street retail and industrial/warehouse properties will not exceed 50.00%
of GAV. The 50.00% sector limit may be increased to 60.00% as part of the
Investment Manager's efficient portfolio management whereby the Investment
Manager determines it appropriate to pursue an attractive investment
opportunity which could cause the 50.00% sector limit to be exceeded on a
short-term basis pending a repositioning of the portfolio through a sale
of assets or other means;
· investment in unoccupied and non-income producing assets will, at the
time of investment, not exceed 20.00% of NAV;
· the Company may commit up to a maximum of 10.00% of the NAV (at the time
of investment) in the Core Fund. The Company disposed of its last
remaining units in the Core Fund in May 2017 and it is not the current
intention of the Directors to invest in the Core Fund;
· the Company will not invest in other closed-ended investment companies;
and
· if the Company invests in derivatives for the purposes of efficient
portfolio and cash management, the total notional value of the derivatives
at the time of investment will not exceed, in aggregate, 35.00% of GAV.
The Directors currently intend, at all times, to conduct the affairs of the
Company so as to enable the Group to qualify as a REIT for the purposes of
Part 12 of the Corporation Tax Act 2010 ('CTA') (and the regulations made
thereunder).
The Company will at all times invest and manage its assets in a way that is
consistent with its objective of spreading investment risk and in accordance
with its published investment policy and will not, at any time, conduct any
trading activity which is significant in the context of the business of the
Company as a whole.
In the event of a breach of the investment policy and investment
restrictions set out above, the Directors upon becoming aware of such breach
will consider whether the breach is material, and if it is, notification
will be made to a Regulatory Information Service.
Any material change to the investment policy or investment restrictions of
the Company may only be made with the prior approval of shareholders.
Our Strategy
The Company exploits what it believes to be the compelling relative value
opportunities currently offered by pricing inefficiencies in smaller
commercial properties let on shorter occupational leases. The Company
supplements this core strategy with asset management initiatives to upgrade
buildings and thereby improve the quality of income streams. In the current
market environment, the focus is to invest in properties which:
· typically have a value, on investment, of between GBP2.50 million and
GBP15.00 million;
· have initial net yields, on investment, of typically between 7.5-10%;
· achieve across the whole portfolio an average weighted lease term of
between three to six years remaining;
· achieve, across the whole portfolio, a diverse and broad spread of
tenants; and
· have potential for asset management initiatives to include refurbishment
and re-lettings.
The Company's strategy is focused on delivering enhanced returns from the
smaller end (up to GBP15.00 million) of the UK commercial property market. The
Company believes that there are currently pricing inefficiencies in smaller
commercial properties relative to the long-term pricing resulting in a
significant yield advantage, which the Company aims to exploit.
How we add value
An Experienced Team
The investment management team averages 20 years working together,
reflecting stability and continuity.
Value Investing
The Investment Manager's investment philosophy is based on the principle of
value investing. The Investment Manager looks to acquire assets with an
income profile coupled with underlying characteristics that underpin
long-term capital preservation. As value managers, the Investment Manager
looks for assets where today's pricing may not correspond to long-term
fundamentals.
Active Asset Management
The Investment Manager has an in-house team of dedicated asset managers with
a strong focus on active asset management to enhance income and add value to
commercial properties.
Strategy in Action
Acquiring a stable income stream in a location with strong rental growth
Lockwood Court, Leeds
· Acquired February 2019
· Location close to motorway network which is the focus of regional demand
and has seen declining availability
· A NIY of 7.7% and WAULT of 10 years to expiry
· Low passing rent of GBP3.21 per sq ft
Active asset management driving value
Eastpoint Business Park, Oxford
· Orion House let in August 2018 at a rent of GBP179,410 per annum
· 25-year term with five-yearly rent reviews linked to the Retail Price
Index
· 27.5% increase in valuation of the property (as provided by the valuers)
over the year
Extending existing income streams to maximise value
Mangham Road, Rotherham
· Lease renewal completed in October 2018 at the c.80,000 sq ft unit
· 10-year term at a rent of GBP275,000 per annum, representing an increase
of 20% in passing rent
· 30.4% increase in valuation of the property (as provided by the valuer)
over the year
Minimising risk through divestment opportunities
Stoneferry Retail Park, Hull
· Sold in December 2018 for gross proceeds of GBP1.80 million
· Over 70% of the passing income due to expire in May 2019
· Helped reduce exposure to the retail sector to 15.3% as at 31 March 2019
Key Performance Indicators
KPI AND DEFINITION RELEVANCE TO PERFORMANCE
STRATEGY
1. Net Initial The NIY is in line 7.63%
Yield with the Company's
target dividend
yield meaning that,
after costs, the at 31 March 2019
A representation to Company should have
the investor of the ability to meet
what their initial its target dividend
net yield would be through property (31 March 2018:
at a predetermined income. 7.74%)
purchase price
after taking
account of all
associated costs,
e.g. void costs and
rent-free periods.
2. True Equivalent A True Equivalent 7.94%
Yield Yield profile in
line with the
Company's target
dividend yield at 31 March 2019
The average shows that, after
weighted return a costs, the Company
property will should have the
produce according ability to meet its (31 March 2018:
to the present proposed dividend 8.20%)
income and ERV through property
assumptions, income.
assuming the income
is received
quarterly in
advance.
3. Reversionary A Reversionary 7.75%
Yield Yield profile that
is in line with an
Initial Yield
profile shows a at 31 March 2019
The expected return potentially
the property will sustainable income
provide once stream that can be
rack-rented. used to meet (31 March 2018:
dividends past the 8.03%)
expiry of a
property's current
leasing
arrangements.
4. WAULT to expiry The Investment 6.10 years
Manager believes
that current market
conditions present
The average lease an opportunity at 31 March 2019
term remaining to whereby assets with
expiry across the a shorter unexpired
portfolio, weighted lease term are
by contracted rent. often mispriced. It (31 March 2018: 6.16
is also the years)
Investment
Manager's view that
a shorter WAULT is
useful for active
asset management as
it allows the
Investment Manager
to engage in direct
negotiation with
tenants rather than
via rent review
mechanisms.
5. WAULT to break The Investment 4.87 years
Manager believes
that current market
conditions present
The average lease an opportunity at 31 March 2019
term remaining to whereby assets with
break, across the a shorter unexpired
portfolio weighted lease term are
by contracted rent. often mispriced. As (31 March 2018: 5.08
such, it is in line years)
with the Investment
Manager's strategy
to acquire
properties with a
WAULT that is
generally shorter
than the benchmark.
It is also the
Investment
Manager's view that
a shorter WAULT is
useful for active
asset management as
it allows the
Investment Manager
to engage in direct
negotiation with
tenants rather than
via rent review
mechanisms.
6. NAV Provides GBP149.46 million
stakeholders with
the most relevant
information on the
NAV is the value of fair value of the at 31 March 2019
an entity's assets assets and
minus the value of liabilities of the
its liabilities. Company.
(31 March 2018:
GBP146.03 million)
7. Leverage (Loan The Company 25.30%
to GAV) utilises borrowings
to enhance returns
over the medium
term. Borrowings at 31 March 2019
The proportion of will not exceed 35%
our property of GAV (measured at
portfolio that is drawdown) with a
funded by long-term target of (31 March 2018:
borrowings. 25% or less of GAV. 26.00%)
8. Vacant ERV The Company's aim 2.99%
is to minimise
vacancy of the
properties. A low
The space in the level of structural at 31 March 2019
property portfolio vacancy provides an
which is currently opportunity for the
unlet, as a Company to capture
percentage of the rental uplifts and (31 March 2018:
total ERV of the manage the mix of 7.10%)
portfolio. tenants within a
property.
9. Dividend The dividend 8.00 pps
reflects the
Company's ability
to deliver a
Dividends declared sustainable income for the year ended 31
in relation to the stream from its March 2019 (11 months
year. The Company portfolio. ended to 31 March
targets a dividend 2018: 7.33 pps,
of 8.00 pence per equating to an
Ordinary Share per annualised dividend
annum. of 8.00 pps)
10. Ongoing Charges The Ongoing Charges 1.40%
ratio provides a
measure of total
costs associated
The ratio of total with managing and for the year ended 31
administration and operating the March 2019 (11 months
operating costs Company, which ended 31 March 2018:
expressed as a includes the
percentage of management fees due
average NAV to the Investment
throughout the Manager. The 1.24%)
period. Investment Manager
presents this
measure to provide
investors with a
clear picture of
operational costs
involved in running
the Company.
11. Profit before The PBT is an GBP15.54 million
tax ('PBT') indication of the
Company's financial
performance for the
year in which its for the year ended 31
PBT is a strategy is March 2019 (11 months
profitability exercised. ended 31 March 2018:
measure which
considers the
Company's profit
before the payment GBP9.82 million)
of income tax.
12. Shareholder This reflects the 5.44%
Total Return return seen by
shareholders on
their shareholdings
through share price for the year ended 31
The percentage movements and March 2019 (11 months
change in the share dividends received. ended 31 March 2018:
price assuming
dividends are
reinvested to
purchase additional 3.65%)
Ordinary Shares.
13. EPRA EPS This reflects the 8.07 pps
Company's ability
to generate
earnings from the
Earnings from core portfolio which for the year ended 31
operational underpins March 2019 (11 months
activities. A key dividends. ended 31 March 2018:
measure of a
company's
underlying
operating results 6.56 pps)
from its property
rental business and
an indication of
the extent to which
current dividend
payments are
supported by
earnings. See note
8 of the Financial
Statements.
Investment Manager's Report
Market Outlook
UK Economic Outlook
The UK's economy strengthened in the first quarter of 2019, achieving growth
of 0.5%. This was due in part to stockpiling by UK manufacturers fearing the
impact of a no-deal Brexit. This was an improvement on the Q4 2018 results,
which had seen a sharp decline in growth to 0.2% due to Brexit uncertainty.
The extension of Article 50 to 31 October 2019, coupled with the arrival of
a new Prime Minister in July 2019, will now prolong this uncertainty and
could continue to hamper investment. Although investment has remained
subdued, private consumption growth has been steady, supported by strong
employment figures and real wage growth over the last two quarters.
The Bank of England ("BoE") raised its forecast for GDP growth in 2019 from
1.2% to 1.5% based on a higher level of global GDP growth than had been
expected at the start of the year. Despite this improved outlook from the
BoE, monetary policy will depend on a number of factors and it is expected
that any rises in interest rates will be slow and steady over the next few
years.
UK Real Estate Outlook
With Brexit dominating the economic outlook, this is taking its toll on the
macro-economic picture, including financial and property markets. Given the
market uncertainty, rental growth is expected to be fairly subdued during
the remainder of 2019. There could be a period of volatility in values ahead
as the uncertainty surrounding Brexit intensifies, although property is
still expected to deliver a stable income return.
Property appears fairly priced at the current low levels of interest rates,
which are expected to rise over time, but in small stages. The scope for
further yield compression appears to be limited and a general upward
pressure on property yields could occur, depending on the nature of the
Brexit transition.
Sector Outlook
Industrial
Standard industrials and distribution are expected to be a major driver of
the occupier market with the growth of e-commerce, although it is thought
that rental growth in 2019 will not be to the extent seen in 2018, as some
rents are reaching a ceiling. Annual transaction activity in the industrial
sector reached GBP7.8 billion in 2018, which is the second-highest figure on
record.
The industrial sector represents the largest proportion of our portfolio
with 48% of the valuation at 31 March 2019. We generally focus on assets
with low capital value in locations with good accessibility from the
national motorway network.
Our industrial assets achieved a total return of 16.2% for the year, the
highest sector return in the portfolio, outperforming the Benchmark by 1.1%.
Office
We expect office rents outside London to remain stable for the coming years
as development in most cities has already peaked. Some rental growth was
seen in regional markets in 2018 and rental rates are expected to remain
unchanged for the remainder of 2019.
Offices make up the second largest sector holding in the portfolio,
representing 22.0% of the portfolio valuation as at 31 March 2019. Our
office holding achieved the greatest performance relative to the Benchmark
for the year in terms of total return, outperforming the Benchmark Total
Return by 8.4%.
This performance was driven by strong capital growth of 8.6% for the year,
which was achieved through significant lettings and lease renewals, as noted
in the Asset Management section of the Investments Manger's Report.
Retail
Growth in household consumption slowed in 2018, despite seeing real wage
growth towards the end of the year, as consumers remained cautious with
regards to their spending decisions. As such, there is increasing concern
around the weakness in the retail market, which is expected to persist
during 2019, and headline rents are predicted to continue to fall across all
segments except Central London unit shops. In terms of investment, the total
number of retail deals in 2018 was at its lowest since 2012.
Retail represented the portfolio's smallest sector holding, with only 15.3%
of the valuation as at 31 March 2019, which somewhat mitigates the risk
associated with the sector at a portfolio level. Our assets performed poorly
in terms of capital return relative to the Benchmark, with a negative 15.4%
capital return. However, our income streams have remained largely intact,
despite the myriad of company voluntary arrangements ('CVA's) and company
failures in the retail market, and delivered income returns of 9.5% for the
year.
Alternatives
We think that the Alternatives sector will continue to grow in importance
and could begin to outperform other sectors in terms of total returns.
This is a sector in which we have significant expertise and continue to see
compelling opportunities. Our alternatives assets, which include leisure and
car parking, represent 15.2% of the valuation as at 31 March 2019 and
delivered the highest sector income return over the year of 9.3%.
Financial Results
Net rental income for the year was GBP15.72 million (11 months ended 31 March
2018: GBP11.22 million), contributing to an operating profit before fair value
changes and disposals of GBP13.52 million (11 months ended 31 March 2018:
GBP9.60 million).
The portfolio saw a gain of GBP4.18 million on revaluation of investment
property over the year (11 months ended 31 March 2018: GBP1.01 million). This
performance was largely driven by valuation gains in the portfolio's office
assets resulting from several new lettings and lease renewals during the
year. The Company's industrial assets also performed strongly, delivering
like-for-like valuation growth. There was a small like-for-like increase in
the valuation of the Company's alternative assets and only the Company's
retail assets suffered a decrease in valuation, which is in common with the
overall market performance of the sector.
The Company reported a loss on disposal of investment properties of GBP0.48
million (11 months ended 31 March 2018: GBP0.22 million), having made two part
disposals (Floors 1-9, Pearl House, Nottingham and 18-36, Chapel Walk,
Sheffield) and two full disposals (Stoneferry Retail Park, Hull and Waggon
Road, Mossley) during the year.
Administrative expenses, which include the Investment Manager's fee and
other costs attributable to the running of the Company, were GBP2.20 million
(11 months ended 31 March 2018: GBP1.62 million). Ongoing Charges for the
period were 1.40% (11 months ended 31 March 2018: 1.24%) and have increased
largely as a result of one-off costs during the year relating to the
publication of the Company's Prospectus.
The Company incurred finance costs of GBP1.68 million (11 months ended 31
March 2018: GBP0.65 million). This increase compared with the prior period
comes as a result of having a higher balance of the loan drawn over the
course of the year. The Company also entered into additional interest rate
caps on a notional value of GBP46.51 million during the year, becoming
effective in October 2020, which saw a fair value loss of GBP0.37 million.
The total profit before tax for the year of GBP15.54 million (11 months ended
31 March 2018: GBP9.82 million) equates to a basic EPS of 10.26 pence (11
months ended 31 March 2018: 7.17 pence).
EPRA EPS for the year was 8.07 pps which, based on dividends paid of 8.00
pps, reflects a dividend cover of 101% (11 months ended 31 March 2018: EPRA
Earnings of 6.56 pps, dividends paid of 7.33 pps and dividend cover of
89.50%
The Company's NAV as at 31 March 2019 was GBP149.46 million or 98.61 pps (31
March 2018: GBP146.03 million or 96.36 pps). This is an increase of 2.25 pps
or 2.33%, with the underlying movement in NAV set out in the table below:
Pence per share GBP million
NAV as at 1 April 2018 96.36 146.03
Change in fair value of investment 2.76 4.18
property
Change in fair value of (0.26) (0.39)
derivatives
Loss on disposal of investment (0.32) (0.48)
property
Income earned for the period 11.33 17.18
Expenses and net finance costs for (3.24) (4.94)
the period
Dividends paid (8.00) (12.12)
NAV as at 31 March 2019 98.61 149.46
Financing
As at 31 March 2019, the Company had utilised GBP50.00 million (31 March 2018:
GBP50.00 million) of an available GBP60.00 million (31 March 2018: GBP60.00
million) credit facility with RBSi, resulting in gearing of 25.30% loan to
property valuation. In October 2018, the Company extended the term of the
loan facility by three years to October 2023 to mitigate the financing risk
associated with Brexit. The loan incurs interest at three-month LIBOR + 1.4%
(2018: LIBOR + 1.4%).
To mitigate the interest rate risk that arises from entering into a variable
rate linked loan, as at 31 March 2019, the Company held interest rate caps
with a combined notional value of GBP36.51 million, at strike rates of 2.5% on
GBP26.51 million and 2.0% on GBP10.00 million (31 March 2018: 2.5% on GBP26.51
million and 2.0% on GBP10 million), meaning that the loan is 73% hedged (31
March 2018: 73%). In October 2018, the Company entered into interest rate
caps on a national value of GBP46.51 million, effective from 20 October 2020
to 19 October 2023, capping the interest rate at 2.0% per annum; meaning
that the current loan drawn down of GBP50.00 million will become 93% hedged.
Share Issuance Programme
On 1 March 2019, the Company published its Prospectus in relation to a Share
Issuance Programme of up to 250 million new Ordinary shares and up to 250
million C shares. No shares have been issued, to date, under the programme.
Portfolio Activity
The Company's objective is to build a diversified portfolio of commercial
properties throughout the UK. New acquisitions are selected to provide a
sustainable income return and the potential for growth, whilst also limiting
downside risk. The majority of the Company's assets are fully let and as at
31 March 2019, the Company had a vacancy rate of 2.99% (31 March 2018:
7.10%). The following significant investment transactions were made during
the year:
- In February 2019, the Company acquired Lockwood Court, Parkside Industrial
Estate, Leeds, for a gross purchase price of GBP6.93 million. The 187,626 sq
ft industrial warehouse is fully let to LWS Yorkshire Limited, a logistics
and storage provider for Harrogate Spring Water, on a 10-year lease from
October 2018. The lease provides a low passing rent of GBP3.21 per sq ft
which, together with tight supply, forms a strong base for future potential
rental growth. Located two miles south of Leeds City Centre and close to J25
of the M62 and J40 of the M1, Parkside Industrial Estate is a
well-established industrial and commercial area with a history of attracting
regional and national occupiers.
- On 14 March 2019, the Company completed the sale of its industrial asset
at Waggon Road, Mossley. The asset was sold at auction for GBP450,000, ahead
of its most recent valuation GBP350,000.
- In December 2018, the Company completed the sale of Stoneferry Retail
Park, Hull, for gross proceeds of GBP1.80 million, reducing the Company's
exposure to the retail sector.
- On 6 August 2018, the Company completed the sale of 18-36 Chapel Walk,
Sheffield, for gross proceeds of GBP0.90 million. The units sold were 47.10%
vacant by floor area. The Company has retained the fully let adjacent units,
11-15 Fargate, totalling 5,495 sq ft.
- On 5 April 2018, the Company completed the sale of its office
accommodation at Pearl House, Nottingham, for gross proceeds of GBP3.65
million. The sale comprised the first to ninth floors, a ground floor
reception and car parking spaces, providing a total area of 41,262 sq ft.
The Company retained the ground floor accommodation in the busy city centre
location, totalling 28,432 sq ft, let to national retail operators including
Costa Coffee, Poundland and Lakeland.
Acquisition during the year
Lockwood Court, Leeds
Purchase Price (GBPm): 6.93
Sector: Industrial
Area (sq ft): 187,626
NIY at acquisition (%): 7.7
WAULT to break as at 31 March 2019 (years): 9.5
Occupancy by ERV (%): 100
Constructed: 1970s
Property Portfolio
Summary by Sector as at 31 March 2019
Gross
Passi
ng
Renta
l
Incom
e
(GBPm)
Area Occupancy WAULT
by ERV to
break
Number Valuation ('000
of sq (%)
Proper ft) (years)
ties
(GBPm) ERV
(GBPm)
Sector
Industrial 20 94.1 2,335 99.4 4.9 7.3 8.3
Offices 6 43.2 287 88.9 3.7 3.2 4.2
Alternatives 3 30.0 165 100.0 6.1 2.8 2.3
Standard 5 23.6 169 99.9 3.6 2.7 2.1
Retail
Retail 1 6.7 51 100.0 5.0 0.6 0.6
Warehouse
Portfolio 35 197.6 3,007 97.0 4.9 16.6 17.5
Summary by Geographical Area as at 31 March 2019
Gross
Passi
ng
Renta
l
Incom
e
(GBPm)
Area Occupancy WAULT
by ERV to
break
Geographical Number Valuation ('000 ERV
Area of sq (%) (GBPm)
Proper ft) (years)
ties
(GBPm)
Yorkshire 8 35.2 1,028 98.5 3.6 2.8 3.4
and
Humberside
South East 5 29.8 195 97.0 4.1 2.5 2.5
Eastern 5 22.9 345 100.0 3.8 1.7 2.0
South West 3 22.7 125 100.0 3.8 1.7 1.7
West 4 17.9 397 100.0 3.7 1.7 1.8
Midlands
East 2 17.9 81 100.0 3.0 1.9 1.4
Midlands
North West 4 15.8 302 98.8 4.2 1.4 1.3
Wales 2 14.8 376 100.0 10.0 1.2 1.3
Greater 1 12.0 72 100.0 12.6 1.0 0.9
London
Scotland 1 8.6 86 65.8 2.3 0.7 1.2
Portfolio 35 197.6 3,007 97.0 4.9 16.6 17.5
Please refer to Appendix 5 'Properties by Market Value', accessible through
the link at the end of this announcement.
Property Sector Region Market Value
Range (GBPm)
Top ten:
1. 2 Geddington Other (Car East Midlands 10.0 - 15.0
Road, Corby parking)
2. 40 Queen Square, Offices South West 10.0 - 15.0
Bristol
3. London East Other (Leisure) Greater London 10.0 - 15.0
Leisure Park,
Dagenham
4. Eastpoint Offices South East 10.0 - 15.0
Business Park,
Oxford
5. Gresford Industrial Wales 7.5 - 10.0
Industrial
Estate, Wrexham
6. 225 Bath Street, Offices Scotland 7.5 - 10.0
Glasgow
7. Lockwood Court, Industrial Yorkshire and 5.0 - 7.5
Leeds Humberside
8. Above Bar Standard Retail South East 5.0 - 7.5
Street,
Southampton
9. Langthwaite Industrial Yorkshire and 5.0 - 7.5
Grange Humberside
Industrial
Estate, South
Kirkby
10. Barnstaple Retail South West 5.0 - 7.5
Retail Park Warehouse
The Company's top 10 properties listed above comprise 47.7% of the total
value of the portfolio.
Property Sector Region Market
Value
Range (GBPm)
11. Storeys Bar Industrial Eastern 5.0 - 7.5
Road,
Peterborough
12. Sarus Court Industrial North West 5.0 - 7.5
Industrial
Estate, Runcorn
13. Apollo Business Industrial Eastern 5.0 - 7.5
Park, Basildon
14. Commercial Road, Standard South East 5.0 - 7.5
Portsmouth Retail
15. Euroway Trading Industrial Yorkshire and 5.0 - 7.5
Estate, Bradford Humberside
16. Oak Park, Industrial West Midlands 5.0 - 7.5
Droitwich
17. Odeon Cinema, Other Eastern 5.0 - 7.5
Southend (Leisure)
18. Brockhurst Industrial West Midlands 5.0 - 7.5
Crescent,
Walsall
19. Pearl Assurance Standard East Midlands 5.0 - 7.5
House, Retail
Nottingham
20. Sandford House, Offices West Midlands < 5.0
Solihull
21. Excel 95, Industrial Wales < 5.0
Deeside
22. Diamond Business Industrial Yorkshire and < 5.0
Park, Wakefield Humberside
23. Bank Hey Street, Standard North West < 5.0
Blackpool Retail
24. Walkers Lane, Industrial North West < 5.0
St. Helens
25. Brightside Lane, Industrial Yorkshire and <5.0
Sheffield Humberside
26. Cedar House, Offices South West < 5.0
Gloucester
27. Wella Warehouse, Industrial South East < 5.0
Basingstoke
28. Magham Road, Industrial Yorkshire and < 5.0
Rotherham Humberside
29. Pipps Hill Industrial Eastern < 5.0
Industrial
Estate, Basildon
30. Eagle Road, Industrial West Midlands < 5.0
Redditch
31. Vantage Point, Offices Eastern < 5.0
Hemel Hempstead
32. Clarke Road, Industrial South East < 5.0
Milton Keynes
33. Knowles Lane, Industrial Yorkshire and < 5.0
Bradford Humberside
34. Fargate, Standard Yorkshire and < 5.0
Sheffield Retail Humberside
35. Moorside Road, Industrial North West < 5.0
Salford
Top 10 Tenants
% of
Portfolio
Passing Total
Rental Passing
Income Rental
Tenant Sector Property (GBP'000) Income
1. GEFCO UK Logistics 2 Geddington 1,320 7.9
Limited Road, Corby
2. Plastipak UK Manufacturing Gresford 883 5.3
Limited Industrial
Estate,
Wrexham
3. The Secretary Government Sandford 832 5.0
of State House,
Solihull and
Cedar House,
body Gloucester
4. Ardagh Glass Manufacturing Langthwaite 676 4.0
Limited Grange
Industrial
Estate, South
Kirkby
5. Mecca Bingo Leisure London East 625 3.7
Limited Leisure Park,
Dagenham
6. Egbert H Manufacturing Oak Park, 620 3.7
Taylor & Droitwich
Company
Limited
7. Odeon Cinemas Leisure Odeon Cinema, 535 3.2
Southend
8. Sports Direct Retail Barnstaple 525 3.1
Retail Park
and Bank Hey
Street,
Blackpool
9. Wyndeham Manufacturing Storeys Bar 525 3.1
Peterborough Road,
Peterborough
Limited
10. Advanced Logistics Euroway 428 2.6
Supply Chain Trading
(BFD) Limited Estate,
Bradford
The Company's top 10 tenants, listed above, represent 41.6% of the total
passing rental income of the portfolio.
Asset Management
We undertake asset management to achieve rental growth, let vacant space and
enhance value through initiatives such as refurbishments. During the year,
key asset management initiatives included:
- Orion House, Oxford - In August 2018, the Company completed the letting of
Orion House, Oxford, to Genesis Cancer Care UK Limited. The lease is for a
term of 25 years, at a rent of GBP179,410 per annum. There are five-yearly,
upward-only rent reviews linked to the Retail Price Index ("RPI") measure of
inflation and the tenant benefits from a 12-month rent free period, followed
by six years at half rent. The valuation of the property increased by 27.8%
over the year, thanks largely to this transaction.
- 225 Bath Street, Glasgow - In July 2018, the Company completed the letting
of Third Floor East, 225 Bath Street, Glasgow, to International
Correspondence Schools Limited. The lease is for a term of five years, with
a tenant break option at the end of the third year, at a rent of GBP88,608 per
annum. The tenant benefits from a 10-month rent free period.
- Cedar House, Gloucester - In June 2018, the Company completed a lease
renewal to the Secretary of State for Communities and Local Government at
its Cedar House office building in Gloucester. The property was acquired in
December 2017 with the expectation of achieving a new three-year lease at
the passing rent of GBP300,000 per annum and this was significantly exceeded
with a 10-year lease at a rent of GBP321,000 per annum. No rent free incentive
was offered to the tenant.
- 40 Queen Square, Bristol - In June 2018, the Company completed a
reversionary lease renewal at 40 Queen Square, Bristol, with tenant Ramboll
Whitbybird Ltd. A 10-year lease commenced in November 2018 and the tenant
has the option to break at the end of the fifth year. The letting at a rent
of GBP94,500 per annum proved a new high rental tone for unrefurbished space
within the building at GBP23.00 per sq ft, as compared to a passing rent of
GBP16.84 per sq ft.
- Diamond Business Park, Wakefield - During June 2018, a new letting was
completed at Diamond Business Park, Wakefield which was acquired by the
Company in February 2018. Unit 7, totalling c. 13,700 sq ft, was let to Wow
Interiors Yorkshire Ltd for a six year term with tenant break options in
years two and four. Stepped rental increases have been agreed so that, if
the tenant remains in occupation for the full term, the average rent
received equates to GBP3.30 per sq ft as compared to an ERV of GBP3.00 per sq
ft.
- Sarus Court, Runcorn - In April 2018, the Company documented two rent
reviews with CJ Services, its largest tenant at Sarus Court, Runcorn. The
rent reviews at Units 1 and 2 date back to January 2017 and result in a
combined rate of GBP5.25 per sq ft net effective. This supports a headline
rent of c.GBP5.75 per sq ft which was GBP0.25 per sq ft ahead of the property's
ERV at the time of the letting.
- Commercial Road, Portsmouth - the Company has completed a 10-year lease
renewal with Greggs plc at its retail property located on Commercial Road,
Portsmouth. The new rent of GBP20,500 per annum exceeded the unit's ERV at the
time of letting by 11%. Greggs have been in occupation of the unit for 10
years and have the option to break the lease after five years.
Alternative Investment Fund Manager ('AIFM')
AEW UK Investment Management LLP is authorised and regulated by the FCA as a
full-scope AIFM and provides its services to the Company.
The Company has appointed Langham Hall UK Depositary LLP ('Langham Hall') to
act as the depositary to the Company, responsible for cash monitoring, asset
verification and oversight of the Company.
Information Disclosures under the AIFM Directive
Under the AIFM Directive, the Company is required to make disclosures in
relation to its leverage under the prescribed methodology of the Directive.
Leverage
The AIFM Directive prescribes two methods for evaluating leverage, namely
the 'Gross Method' and the 'Commitment Method'. The Company's maximum and
actual leverage levels are as per below:
31 March 2019 31 March 2018
Leverage Gross Method Commitment Gross Method Commitment
Exposure Method
Method
Maximum 140% 140% 140% 140%
Limit
Actual 132% 134% 131% 134%
In accordance with the AIFM Directive, leverage is expressed as a percentage
of the Company's exposure to its NAV and adjusted in line with the
prescribed 'Gross' and 'Commitment' methods. The Gross method is
representative of the sum of the Company's positions after deducting cash
balances and without taking into account any hedging and netting
arrangements. The Commitment method is representative of the sum of the
Company's positions without deducting cash balances and taking into account
any hedging and netting arrangements. For the purposes of evaluating the
methods above, the Company's positions primarily reflect its current
borrowings and NAV.
Remuneration
The AIFM has adopted a Remuneration Policy which accords with the principles
established by the AIFMD Directive.
AIFMD Remuneration Code Staff includes the members of the AIFM's Management
Committee, those performing control functions, department heads, risk takers
and other members of staff that exert material influence on the AIFM's risk
profile or the AIFs it manages.
Staff are remunerated in accordance with the key principles of the AIFM's
remuneration policy, which include: (1) promoting sound risk management; (2)
supporting sustainable business plans; (3) remuneration being linked to
non-financial criteria for control function staff; (4) incentiving staff
performance over longer periods of time; (5) awarding guaranteed variable
remuneration only in exceptional circumstances; and (6) having an
appropriate balance between fixed and variable remuneration.
As required under section 'Fund 3.3.5.R(5)' of the Investment Fund
Sourcebook, the following information is provided in respect of remuneration
paid by the AIFM to its staff. The information provided below is provided
for the year from 1 January 2018 to 31 December 2018, which is in line with
the most recent financial reporting period of the AIFM, and relates to the
total remuneration of the entire staff of the AIFM.
Year ended
31 December 2018
Total remuneration paid to employees during
financial year:
a) remuneration, including, where relevant, any GBP2,665,423
carried interest paid by the AIFM
b) the number of beneficiaries 24
The aggregate amount of remuneration, broken
down by:
a) senior management GBP809,561
b) other staff GBP1,855,862
Fixed Variable Total
remuneration remuneration remuneration
Senior management GBP759,561 GBP50,000 GBP809,561
Other staff GBP1,419,441 GBP436,421 GBP1,855,862
Total GBP2,179,002 GBP486,421 GBP2,665,423
AEW UK Investment Management LLP
21 June 2019
Principal Risks and Uncertainties
The Company's assets consist primarily of UK commercial property. Its
principal risks are therefore related to the commercial property market in
general, but also to the particular circumstances of the individual
properties and the tenants within the properties.
The Board has overall responsibility for reviewing the effectiveness of the
system of risk management and internal control which is operated by the
Investment Manager. The Company's ongoing risk management process is
designed to identify, evaluate and mitigate the significant risks the
Company faces.
Twice each year, the Board undertakes a risk review with the assistance of
the Audit Committee, to assess the adequacy and effectiveness of the
Investment Manager and other service providers' risk management and internal
control processes.
The Board has carried out a robust assessment of the principal risks facing
the Company, including those that would threaten its business model, future
performance, solvency or liquidity.
An analysis of the principal risks and uncertainties is set out below. This
does not purport to be exhaustive as some risks are not yet known and some
risks are currently not deemed material but could turn out to be material in
the future.
Principal risks and How risk is managed Risk assessment
their potential
impact
REAL ESTATE RISKS
1. Property market
Any property market The Company has investment Probability:
recession or future restrictions in place to Moderate
deterioration in the invest and manage its
property market assets with the objective
could, inter alia, of spreading and
(i) cause the mitigating risk. Impact:
Company to realise Moderate to
its investments at High
lower valuations;
and (ii) delay the
timings of the
Company's Movement:
realisations. These Increase
risks could have a
material adverse
effect on the
ability of the
Company to achieve
its investment
objective.
2. Property
valuation
The Company uses an Probability:
Property and independent external Moderate
property-related valuer (Knight Frank LLP)
assets are to value the properties at
inherently difficult fair value in accordance
to value due to the with accepted RICS Impact: Low to
individual nature of appraisal and valuation Moderate
each property. standards.
Movement: No
change
There may be an
adverse effect on
the Company's
profitability, the
NAV and the price of
Ordinary Shares in
cases where
properties are sold
whose valuations
have previously been
materially
overstated.
3. Tenant default
Failure by tenants Comprehensive due Probability:
to fulfil their diligence is undertaken on Moderate
rental obligations all new tenants. Tenant
could affect the covenant checks are
income that the carried out on all new
properties earn and tenants where a default Impact: Low to
the ability of the would have a significant Moderate
Company to pay impact.
dividends to its
shareholders.
Movement:
Increase
Asset management team
conducts ongoing
monitoring and liaison
with tenants to manage
potential bad debt risk.
4. Asset management
initiatives
Costs incurred on asset Probability:
Asset management management initiatives are Low
initiatives, such as closely monitored against
refurbishment works, budgets and reviewed in
may prove to be more regular presentations to
extensive, expensive the Investment Management Impact: Low
and take longer than Committee of the
anticipated. Cost Investment Manager.
overruns may have a
material adverse Movement: No
effect on the change
Company's
profitability, the
NAV and the share
price.
5. Due diligence
Due diligence may The Company's due Probability:
not identify all the diligence relies on work Low
risks and (such as legal reports on
liabilities in title, property
respect of an valuations, environmental
acquisition and building surveys) Impact:
(including any outsourced to third Moderate
environmental, parties who have expertise
structural or in their areas. Such third
operational defects) parties have professional
that may lead to a indemnity cover in place. Movement: No
material adverse change
affect on the
Company's
profitability, the
NAV and the price of
the Company's
Ordinary Shares.
6. Fall in rental
rates
The Company builds a Probability:
Rental rates may be diversified property and Low to Moderate
adversely affected tenant base with
by general UK subsequent monitoring of
economic conditions concentration to
and other factors individual occupiers (top Impact:
that depress rental 10 tenants) and sectors Moderate
rates, including (geographical and sector
local factors exposure).
relating to
particular Movement:
properties/locations Increase
(such as increased
competition).
The Investment Manager
holds quarterly meetings
with its Investment
Strategy Committee and
regularly meets the Board
Any fall in the of Directors to assess
rental rates for the whether any changes in the
Company's properties market present risks that
may have a material should be addressed in the
adverse affect on Company's strategy.
the Company's
profitability, the
NAV, the price of
the Ordinary Shares
and the Company's
ability to meet
interest and capital
repayments on any
debt facilities.
FINANCIAL RISKS
7. Breach of
borrowing covenants
The Company monitors the Probability:
The Company has use of borrowings on an Low to Moderate
entered into a term ongoing basis through
credit facility. weekly cash flow
forecasting and quarterly
risk monitoring to monitor Impact: High
financial covenants.
Movement:
Increase
Material adverse
changes in
valuations and net
income may lead to
breaches in the LTV
and interest cover
ratio covenants.
8. Interest rate
rises
The Company uses interest Probability:
The Company's caps on a significant High
borrowings through a notional value of the loan
term credit facility to mitigate the adverse
are subject to impact of possible
interest rate risk interest rate rises. Impact: Low
through changing
LIBOR rates. Any
increases in LIBOR
rates may have an Movement: No
adverse effect on change
the Company's
ability to pay
dividends. The Investment Manager and
Board of Directors monitor
the level of hedging and
interest rate movements to
ensure that the risk is
managed appropriately.
9. Availability and
cost of debt
The Company maintains a Probability:
The term credit good relationship with the Low
facility expires in bank providing the term
October 2020. In the credit facility.
event that RBSi does
not renew the Impact: High
facility, the
Company may need to
sell assets to repay
the outstanding Movement: No
loan. Any increase change
in the financing The Company monitors the
costs of the projected usage and
facility on renewal covenants of the credit
would adversely facility on a quarterly
impact on the basis.
Company's
profitability.
CORPORATE RISKS
10. Use of service
providers
The performance of service Probability:
The Company has no providers in conjunction Low to Moderate
employees and is with their service level
reliant upon the agreements is monitored
performance of third via regular calls and
party service face-to-face meetings and Impact:
providers. the use of key performance Moderate
indicators, where
relevant.
Movement: No
change
Failure by any
service provider to
carry out its
obligations to the
Company in
accordance with the
terms of its
appointment could
have a materially
detrimental impact
on the operation of
the Company.
11. Dependence on
the Investment
Manager
The Investment Manager has Probability:
endeavoured to ensure that Low to moderate
The Investment the principal members of
Manager is its management team are
responsible for suitably incentivised.
providing investment Impact:
management services Moderate
to the Company.
Movement:
Decrease
The future ability
of the Company to
successfully pursue
its investment
objective and
investment policy
may, among other
things, depend on
the ability of the
Investment Manager
to retain its
existing staff
and/or to recruit
individuals of
similar experience
and calibre.
12. Ability to meet
objectives
The Company has an Probability:
The Company may not investment policy to Moderate
meet its investment achieve a balanced
objective to deliver portfolio with a
an attractive total diversified asset and
return to tenant base. The Company Impact: High
shareholders from also has investment
investing restrictions in place to
predominantly in a limit exposure to
portfolio of smaller potential Movement:
commercial Increase
properties in the
United Kingdom.
risk factors. These
factors mitigate the risk
of fluctuations in
returns.
Poor relative total
return performance
may lead to an
adverse reputational
impact that affects
the Company's
ability to raise new
capital.
TAXATION RISKS
13. Company REIT
status
The Company monitors REIT Probability:
The Company has a UK compliance through the Low
REIT status that Investment Manager on
provides a acquisitions; the
tax-efficient Administrator on asset and
corporate structure. distribution levels; the Impact: High
Registrar and Broker on
shareholdings and the use
of third-party tax
advisers to monitor REIT Movement: No
compliance requirements. change
If the Company fails
to remain a REIT for
UK tax purposes, its
profits and gains
will be subject to
UK corporation tax.
Any change to the
tax status or UK tax
legislation could
impact on the
Company's ability to
achieve its
investment
objectives and
provide attractive
returns to
shareholders.
14. POLITICAL/ECONOMIC RISKS
Political and The Board considers the Probability:
macroeconomic events impact of political and Moderate to
present risks to the macroeconomic events when High
real estate and reviewing strategy.
financial markets
that affect the
Company and the Impact:
business of its Moderate to
tenants. The level High
of uncertainty that
such events bring
has been highlighted
in recent times, Movement:
most pertinently Increase
following the EU
referendum vote
(Brexit) in June
2016.
Approval
The Strategic Report has been approved and signed on behalf of the Board by:
Mark Burton
Chairman
21 June 2019
Extract from the Directors Report
Directors
Mark Burton, non-executive Chairman
James Hyslop, non-executive non-independent Director
Bimaljit ("Bim") Sandhu, non-executive Director
Katrina Hart, non-executive Director
Going Concern
The Company has considered its cash flows, financial position, liquidity
position and borrowing facilities. The Company's cash balance as at 31 March
2019 was GBP2.13 million. The Company can draw a further GBP2.31 million (31
March 2018: GBP1.11 million) of its debt facility up to the maximum 35% loan
to NAV at drawdown.
As at 31 March 2019, the Company had sufficient headroom against its
borrowing covenants. The Company has the ability to utilise up to 35% of NAV
measured at drawdown under the current borrowing facility limits with a
Company loan to NAV of 33.5% as at 31 March 2019.
The Company benefits from a secure, diversified income stream from leases
which are not overly reliant on any one tenant or sector.
As a result, the Directors believe that the Company is well placed to manage
its financing and other business risks. There are currently no material
uncertainties in relation to the Company's ability to continue for a period
of at least 12 months from the date of approval of these financial
statements. The Board is, therefore, of the opinion that the going concern
basis adopted in the preparation of the Annual Report is appropriate.
Viability Statement
In accordance with the principle 21 of the AIC Code, the Directors have
assessed the prospects of the Company over a period longer than the 12
months required by the 'Going Concern' provisions. The Board has considered
the nature of the Company's assets, liabilities and associated cash flows,
and has determined that five years, up to 31 March 2024, is the maximum
timescale over which the performance of the Company can be forecast with a
material degree of accuracy and so is an appropriate period over which to
consider the Company's viability.
Considerations in support of the Company's viability over this five-year
period include:
· The current unexpired term under the Company's debt facilities stands at
4.56 years;
· The Company's property portfolio has a WAULT of 6.10 years to expiry,
representing a secure income stream for the period under consideration;
· The Company's portfolio reflects a diversified strategy that has
invested across a broad spectrum of real estate sectors returning a
diversified income stream, which should spread the risk of any default;
and
· Most leases contain a five-year rent review pattern and, therefore, five
years allow for the forecasts to include the reversion arising from those
reviews. The five-year review considers the Company's cash flows, dividend
cover, REIT compliance and other key financial ratios over the period.
In assessing the Company's viability, the Board has carried out a thorough
review of the Company's business model, including future performance,
liquidity, dividend cover and banking covenant tests for a five-year period.
The business model is subject to annual sensitivity analysis, which involves
flexing a number of key assumptions underlying the forecasts both
individually and in aggregate for normal and stressed conditions. The five
year review also considers whether financing facilities will be renewed as
required.
The following scenarios were tested, both individually and combined, in an
effort to represent a severe but plausible scenario, which might reasonably
be expected to arise as a result of a 'No Deal' Brexit outcome, amongst
other factors:
· An increase in financing costs;
· Default of the three highest risk tenants within the Company's top 20
tenants (as rated by Coface); and
· A fall in portfolio valuation.
Based on the results of this analysis, the Directors have a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the five-year period of their
assessment.
Subsidiary Company
Details of the Company's subsidiary, AEW UK REIT 2015 Limited, can be found
in Note 17 to the Financial Statements.
Management Arrangements
AEW UK Investment Management LLP is the Company's Investment Manager and has
been appointed as the AIFM. Under the terms of the Investment Management
Agreement, the Investment Manager is responsible for the day-to-day
discretionary management of the Company's investments subject to the
investment objective and policy of the Company and the overall supervision
of the Directors. The Investment Manager is entitled to receive a quarterly
management fee in respect of its services calculated at the rate of
one-quarter of 0.9% of the prevailing NAV (excluding uninvested proceeds
from fundraisings). There is no performance fee. Any investment by the
Company into the Core Fund is not subject to management fees or performance
fees otherwise charged to investors in the Core Fund by the Investment
Manager. The Investment Management Agreement may be terminated by the
Company or the Investment Manager giving 12 months' notice.
Financial Risk Management
The financial risk management objectives and policies can be found in Note
20 to the Financial Statements.
Social, Community and Employee Responsibility
The Company has no direct social, community or employee responsibilities. It
has no employees and, accordingly, no requirement to separately report in
this area as the management of the portfolio has been delegated to the
Investment Manager and other service providers.
The Investment Manager is an equal opportunities employer who respects and
seeks to empower each individual and the diverse cultures, perspectives,
skills and experiences within its workforce.
The Company is not within the scope of the Modern Slavery Act 2015 because
it has not exceeded the turnover threshold and therefore, no further
disclosure is required in this regard.
Environmental Policy
The Investment Manager acquires and manages properties on behalf of the
Company. It is recognised that these activities have both direct and
indirect environmental impacts. The Investment Manager has a Sustainable and
Responsible Investment ('SRI') policy. This can be found on the Investment
Manager's website www.aewuk.co.uk [1].
The Investment Manager believes environmentally responsible fund management
means being active. As part of this process, the Investment Manager submits
disclosures to GRESB, the Global Real Estate Sustainability Benchmark. GRESB
is an industry driven organisation committed to assessing the sustainability
of real estate portfolios (public, private and direct) around the globe. The
Investment Manager is in the process of submitting the Company's GRESB
assessment for the year from 1 April 2018 to 31 March 2019 and will receive
the results of this assessment in September 2019 when it will be made
available on the Company's website.
As an investment company, the Company's own direct environmental impact is
minimal and greenhouse gas ('GHG') emissions are therefore negligible.
Information on the GHG emissions in relation to the Company's property
portfolio are disclosed in the Directors' Report above.
Share Capital
Share Issues
At the AGM held on 12 September 2018, the Company was granted the authority
to allot Ordinary Shares up to an aggregate nominal amount of GBP151,558 on a
non pre-emptive basis. No Ordinary Shares have been allotted under this
authority and the authority will expire at the conclusion of the 2019 AGM.
At a general meeting held on 12 September 2018, the Company was granted
authority to allot up to (i) 250 million Ordinary Shares of GBP0.01 each in
the capital of the Company and/or (ii) 250 million convertible redeemable
preference shares ('C' shares) of GBP0.01 each in the capital of the Company
pursuant to a potential Share Issuance Programme. The Company published its
Prospectus in relation to the Share Issuance Programme on 1 March 2019. No
Ordinary Shares have been allotted under this authority which will expire,
at the earlier of the close of the Share Issuance Programme and 30 June
2020.
As at 31 March 2019, the Company had 151,558,251 Ordinary Shares in issue
Purchase of Own Shares
At the Company's AGM on 12 September 2018, the Company was granted authority
to purchase up to 14.99% of the Company's Ordinary Shares in issue. No
shares have been bought back under this authority during the year, which
expires at the conclusion of the Company's 2019 AGM. A resolution to renew
the Company's authority to purchase (either for cancellation or for placing
into Treasury) up to 22,718,581 Ordinary Shares (being 14.99% of the issued
Ordinary Share capital as at the date of this report), will be put to
shareholders at the 2019 AGM. Any purchase will be made in the market and
prices will be in accordance with the terms laid out in the Notice of AGM
(enclosed separately and available on the Company's website). The authority
will be used where the Directors consider it to be in the best interests of
shareholders.
Income Entitlement
The profits of the Company (including accumulated revenue reserves)
available for distribution and resolved to be distributed shall be
distributed in proportion to the amount paid upper share by way of interim
and, where applicable special or final dividends among the holders of
Ordinary Shares.
Capital Entitlement
After meeting the liabilities of the Company on a winding-up, the surplus
assets shall be paid to the holders of different classes of members and
distributed among such holders rateably according to the amounts paid up or
credited as paid up on their shares.
Voting Entitlement
Each Ordinary shareholder is entitled to one vote on a show of hands and, on
a poll, to one vote for every Ordinary Share held. The Notice of AGM and
Form of Proxy stipulate the deadlines for the valid exercise of voting
rights and, other than with regard to Directors not being permitted to vote
their Ordinary Shares on matters in which they have an interest, there are
no restrictions on the voting rights of Ordinary Shares.
There are no restrictions concerning the transfer of securities in the
Company or on voting rights; no special rights with regard to control
attached to securities; no agreements between holders of securities
regarding restrictions on the transfer of securities or voting rights known
to the Company; and no agreements which the Company is party to that might
affect its control following a successful takeover bid.
Requirements of the Listing Rules
Listing Rule 9.8.4 requires the Company to include specified information in
a single identifiable section of the annual report or a cross reference
table indicating where the information is set out. The Directors confirm
that there are no disclosures required in relation to Listing Rule 9.8.4.
Related Party Transactions
Related party transactions during the year ended 31 March 2019 can be found
in Note 22 to the Financial Statements.
Post Year-End Events
Post balance sheet events can be found in Note 24 to the Financial
Statements.
The Directors' Report has been approved by the Board of Directors and signed
on its behalf by:
Mark Burton
Chairman
21 June 2019
Statement of Directors' Responsibilities in respect of the Annual Report and
Financial Statements
The Directors are responsible for preparing the Annual Report and Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law, they are required to prepare the financial
statements in accordance with International Financial Reporting Standards as
adopted by the European Union (IFRS as adopted by the EU) and applicable
law.
Under company law, the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state
of affairs of the Company and of its profit or loss for that period. In
preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable, relevant and
reliable;
· state whether they have been prepared in accordance with IFRS as adopted
by the EU;
· assess the Company's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern; and
· use the going concern basis of accounting unless they either intend to
liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate accounting records that
are sufficient to show and explain the Company's transactions and disclose
with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that its financial statements comply with the
Companies Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error, and
have general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Company and to prevent and detect fraud
and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration
Report and Corporate Governance Statement that comply with that law and
those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge:
· the Financial Statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit of the Company; and
· the Strategic Report includes a fair review of the development and
performance of the business and the position of the Company, together with
a description of the principal risks and uncertainties that it faces.
We consider the Annual Report and the Financial Statements, taken as a
whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's position and performance,
business model and strategy.
On behalf of the Board
Mark Burton
Chairman
21 June 2019
Non-statutory Accounts
The financial information set out below does not constitute the Company's
statutory accounts for the year ended 31 March 2019 but is derived from
those accounts. Statutory accounts for the year ended 31 March 2019 will be
delivered to the Registrar of Companies in due course. The Independent
Auditor has reported on those accounts; its report was (i) unqualified, (ii)
did not include a reference to any matters to which the Independent Auditor
drew attention by way of emphasis without qualifying its report and (iii)
did not contain a statement under Section 498 (2) or (3) of the Companies
Act 2006. The text of the Independent Auditor's Report can be found in the
Company's full Annual Report and Financial Statements on the Company's
website.
Financial Statements
Statement of Comprehensive Income
for the year ended 31 March 2019
Notes Year ended For the period
31 March 1 May 2017 to
2019 31 March 2018
GBP'000 GBP'000
Income
Rental and other income 3 17,183 12,330
Property operating expenses 4 (1,462) (1,106)
Net rental and other income 15,721 11,224
Other operating expenses 4 (2,075) (1,539)
Directors' remuneration 5 (122) (84)
Operating profit before fair 13,524 9,601
value changes
Change in fair value of 10 4,184 1,014
investment properties
Realised loss on disposal of 10 (482) (216)
investment properties
Realised gains on disposal of - 73
investments
Operating profit 17,226 10,472
Finance expense 6 (1,682) (652)
Profit before tax 15,544 9,820
Taxation 7 - -
Profit after tax 15,544 9,820
Other comprehensive income - -
Total comprehensive income for 15,544 9,820
the year
Earnings per share (pps) (basic 8 10.26 7.17
and diluted)
The notes below form an integral part of these financial statements.
Statement of Changes in Equity
for the year ended 31 March 2019
For the year Notes Share Share Capital Total capital
ended capital
premium reserve and reserves
31 March 2019 GBP'000 and
account attributable
retained to
GBP'000
earnings owners of the
GBP'000 Company
GBP'000
Balance at 1 1,515 49,768 94,751 146,034
April 2018
Total - - 15,544 15,544
comprehensive
income
Share issue 19 - 2 - 2
costs
Dividends 9 - - (12,124) (12,124)
paid
Balance at 31 1,515 49,770 98,171 149,456
March 2019
For the Notes Share Share Capital Total capital
period 1 May capital
2017 to 31
March 2018
premium reserve and reserves
GBP'000 and
account attributable
retained to
GBP'000
earnings owners of the
GBP'000 Company
GBP'000
Balance at 1 1,236 22,514 94,924 118,674
May 2017
Total - - 9,820 9,820
comprehensive
income
Ordinary 18/19 279 27,771 - 28,050
Shares issued
Share issue 19 - (517) - (517)
costs
Dividends 9 - - (9,993) (9,993)
paid
Balance at 31 1,515 49,768 94,751 146,034
March 2018
The notes below form an integral part of these financial statements.
Statement of Financial Position
as at 31 March 2019
Notes 31 March 2019 31 March 2018
GBP'000 GBP'000
Assets
Non-Current Assets
Investment property 10 196,129 187,751
196,129 187,751
Current Assets
Investment property held for 10 - 3,650
sale
Receivables and prepayments 11 4,469 2,938
Other financial assets held at 12 162 26
fair value
Cash and cash equivalents 2,131 4,711
6,762 11,325
Total Assets 202,891 199,076
Non-Current Liabilities
Interest bearing loans and 13 (49,476) (49,643)
borrowings
Finance lease obligations 15 (636) (573)
(50,112) (50,216)
Current Liabilities
Payables and accrued expenses 14 (3,275) (2,779)
Finance lease obligations 15 (48) (47)
(3,323) (2,826)
Total Liabilities (53,435) (53,042)
Net Assets 149,456 146,034
Equity
Share capital 18 1,515 1,515
Share premium account 19 49,770 49,768
Capital reserve and retained 98,171 94,751
earnings
Total capital and reserves 149,456 146,034
attributable to equity holders
of the Company
Net Asset Value per share 8 98.61 pps 96.36 pps
(pps)
The financial statements were approved by the Board on 21 June 2019 and
signed on its behalf by:
Mark Burton
Chairman
AEW UK REIT plc (Company number: 09522515)
The notes below form an integral part of these financial statements.
Statement of Cash Flows
for the year ended 31 March 2019
Year ended For the period
31 March 2019 1 May 2017 to
GBP'000 31 March 2018
GBP'000
Cash flows from operating
activities
Profit before tax 15,544 9,820
Adjustment for non-cash items:
Finance expense 1,682 652
Gain from change in fair value of (4,184) (1,014)
investment property
Realised loss on disposal of 482 216
investment properties
Realised gain on disposal of - (73)
investments
Increase in other receivables and (1,318) (701)
prepayments
Increase/(decrease) in other 587 (409)
payables and accrued expenses
Net cash flow generated from 12,793 8,491
operating activities
Cash flows from investing
activities
Purchase of investment properties (7,945) (63,896)
Disposal of investment properties 6,629 10,856
Disposal of investments - 7,667
Net cash used in investing (1,316) (45,373)
activities
Cash flows from financing
activities
Proceeds from issue of ordinary - 28,050
share capital
Share issue costs (32) (483)
Loan draw down - 20,990
Arrangement loan facility fee paid (294) (166)
Premiums for interest rate caps (531) (19)
Finance costs (1,076) (439)
Dividends paid (12,124) (9,993)
Net cash (used in)/ generated from (14,057) 37,940
financing activities
Net (decrease)/increase in cash and (2,580) 1,058
cash equivalents
Cash and cash equivalents at start 4,711 3,653
of the year/period
Cash and cash equivalents at end of 2,131 4,711
the year/period
Notes to the Financial Statements
for the year ended 31 March 2019
1. Corporate information
AEW UK REIT plc (the 'Company') is a closed ended Real Estate Investment
Trust ('REIT') incorporated on 1 April 2015 and domiciled in the UK. The
registered office of the Company is 6th Floor, 65 Gresham Street, London,
EC2V 7NQ.
The Company's Ordinary Shares were listed on the Official List of the FCA
and admitted to trading on the Main Market of the London Stock Exchange on
12 May 2015.
The nature of the Company's operations and its principal activities are set
out in the Strategic Report above.
2. Accounting policies
2.1 Basis of preparation
These financial statements are prepared and approved by the Directors in
accordance with IFRS and interpretations issued by the International
Accounting Standards Board ('IASB') as adopted by the European Union ('EU
IFRS').
The current period is for a period of 12 months from 1 April 2018 to 31
March 2019. The comparative
period is for a period of 11 months from 1 May 2017 to 31 March 2018.
These financial statements have been prepared under the historical cost
convention, except for
investment property and interest rate derivatives that have been measured at
fair value.
The financial statements are presented in Sterling and all values are
rounded to the nearest thousand
pounds (GBP'000), except when otherwise indicated.
The Company is exempt by virtue of Section 402 of the Companies Act 2006
from the requirement to
prepare group financial statements. These financial statements present
information solely about the
Company as an individual undertaking.
New standards, amendments and interpretations
The following new standards and amendments to existing standards have been
published and approved by the EU. The Company has applied the following
standards from 1 April 2018, with the year ended 31 March 2019 being the
first year end reported under the standards:
· IFRS 9 Financial Instruments (effective for annual periods beginning on
or after 1 January 2018). The IFRS 9 requirements represent a change from
the existing requirements in IAS 39 in respect of financial assets. The
standard contains two primary measurement categories for financial assets:
amortised cost and fair value. A financial asset is measured at amortised
cost if it is held within a business model whose objective is to hold
assets in order to collect contractual cash flows, and the asset's
contractual terms give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal outstanding.
All other financial assets are measured at fair value. The standard
eliminates the existing IAS 39 categories of held-to-maturity,
available-for-sale and loans and receivables.
Interest rate derivatives
IFRS 9 requires that all derivative financial instruments are recognised at
fair value in the statement of financial position. Changes in fair value are
recognised in profit or loss unless the contract is designated in an
effective hedging relationship.
Trade and other receivables
Under IFRS 9 there is no change to the classification and measurement of
trade and other receivables, however there is a requirement to carry out an
ongoing assessment of expected credit losses using a general approach. The
Company has made an assessment of expected credit losses at each period end,
using the simplified approach where a lifetime expected loss allowance is
always recognised over the expected life of the financial instrument. Any
adjustment is recognised in profit or loss as an impairment gain or loss.
Following the adoption of IFRS 9, there is no material impact on the Company
financial statements.
· IFRS 15 Revenue from contracts with customers. IFRS 15 establishes a new
framework for revenue recognition and replaces all existing standards and
interpretations. IFRS 15 does not apply to lease contracts within the
scope of IAS 17 Leases or, from its date of application, IFRS 16 Leases.
This standard does not have a material impact on the Company's financial
statements as presented for the current year as the majority of the
Company's revenue consists of rental income from the Company's investment
properties, which is outside the scope of IFRS 15.
· IFRS 7 Financial Instruments: Disclosures - amendments regarding
additional hedge accounting disclosures (applies when IFRS 9 is applied).
The changes did not have a material impact on the financial statements of
the Company as hedge accounting is not applied.
The following new standards and amendments to existing standards have been
published and approved by the EU, and are mandatory for the Company's
accounting periods beginning after 1 April 2019 or later periods.
· IFRS 16 Leases. In January 2016, the IASB published the final version of
IFRS 16 Leases. IFRS 16 specifies how an IFRS reporter will recognise,
measure, present and disclose leasing arrangements. The Company has
decided against early adoption of IFRS 16 Leases.
The Company does not expect the adoption of new accounting standards issued
but not yet effective to have a significant impact on its financial
statements. The right of use finance lease asset relating to head leases
will be required to be measured at the present value of future cash flows,
however, the difference from the IAS 17 carrying value is expected to be
insignificant in the context of the Company's financial statements.
2.2 Significant accounting judgements and estimates
The preparation of financial statements in accordance with EU IFRS requires
the Directors of the Company to make judgements, estimates and assumptions
that affect the reported amounts recognised in the financial statements.
However, uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of the
asset or liability in the future.
There are not considered to be any judgements which have a significant
effect on the amounts recognised in the financial statements.
i) Valuation of investment property
The Company's investment property is held at fair value as determined by the
independent valuer on
the basis of fair value in accordance with the internationally accepted RICS
Appraisal and Valuation Standards.
2.3 Segmental information
In accordance with IFRS 8, the Company is organised into one main operating
segment being investment in property in the UK.
2.4 Going concern
The Directors have made an assessment of the Company's ability to continue
as a going concern and are satisfied that the Company has the resources to
continue in business for at least 12 months from the date of approval of
these financial statements. Furthermore, the Directors are not aware of any
material uncertainties that may cast significant doubt upon the Company's
ability to continue as a going concern. Therefore, the financial statements
have been prepared on the going concern basis.
2.5 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these
financial statements are set out below.
a) Presentation currency
These financial statements are presented in Sterling, which is the
functional and presentational currency of the Company. The functional
currency of the Company is principally determined by the primary economic
environment in which it operates. The Company did not enter into any
transactions in foreign currencies during the year.
b) Revenue recognition
i) Rental income
Rental income receivable under operating leases is recognised on a
straight-line basis over the term of the lease, except for contingent rental
income, which is recognised when it arises.
Incentives for lessees to enter into lease agreements are spread evenly over
the lease term, even if the payments are not made on such a basis. The lease
term is the non-cancellable period of the lease together with any further
term for which the tenant has the option to continue the lease, where, at
the inception of the lease, the Directors are reasonably certain that the
tenant will exercise that option.
ii) Deferred income
Deferred income is rental income received in advance during the accounting
period.
c) Dividend income
Dividend income is recognised in profit or loss on the date the entity's
right to receive a dividend is established.
d) Financing income and expenses
Financing income comprises interest receivable on funds invested. Financing
expenses comprise interest and other costs incurred in connection with the
borrowing of funds. Interest income and interest payable are recognised in
profit or loss as they accrue, using the effective interest method.
e) Investment property
Property is classified as investment property when it is held to earn
rentals or for capital appreciation or both. Investment property is measured
initially at cost including transaction costs. Transaction costs include
transfer taxes and professional fees to bring the property to the condition
necessary for it to be capable of operating. The carrying amount also
includes the cost of replacing part of an existing investment property at
the time that cost is incurred if the recognition criteria are met.
Subsequent to initial recognition, investment property is stated at fair
value. Gains or losses arising from changes in the fair values are included
in profit or loss.
Investment properties are valued by the independent valuer on the basis of a
full valuation with physical inspection at least once a year. Any valuation
of an immovable by the independent valuer must be undertaken in accordance
with the current issue of RICS Valuation - Professional Standards (the 'Red
Book').
The determination of the fair value of investment property requires the use
of estimates such as future cash flows from assets (such as lettings,
tenants' profiles, future revenue streams, capital values of fixtures and
fittings, plant and machinery, any environmental matters and the overall
repair and condition of the property) and discount rates applicable to those
cash flows.
For the purposes of these financial statements, the assessed fair value is:
· reduced by the carrying amount of any accrued income resulting from the
spreading of lease incentives; and
· increased by the carrying amount of leasehold obligations.
Investment property is derecognised when it has been disposed of or
permanently withdrawn from use and no future economic benefit is expected
after its disposal or withdrawal.
The profit on disposal is determined as the difference between the net sales
proceeds and the carrying amount of the asset at the commencement of the
accounting period plus capital expenditure in the period.
Any gains or losses on the retirement or disposal of investment property are
recognised in the profit or loss in the year of retirement or disposal.
f) Investments in subsidiaries
AEW UK REIT 2015 Limited is the subsidiary of the Company. The subsidiary
was dormant during the reporting period. The investment in the subsidiary is
stated at cost less impairment and shown in note 17.
As permitted by Section 405 of the Companies Act 2006, the subsidiary is not
consolidated as its inclusion is not material for the purposes of giving a
true and fair view.
g) Investment property held for sale
Investment property is classified as held for sale when it is being actively
marketed at year end and it is highly probable that the carrying amount will
be recovered principally through a sale transaction within 12 months.
Investment property classified as held for sale is included within current
assets within the Statement of Financial Position and measured at fair
value.
h) Derivative financial instruments
Derivative financial instruments, comprising interest rate caps for hedging
purposes, are initially recognised at fair value and are subsequently
measured at fair value, being the estimated amount that the Company would
receive or pay to terminate the agreement at the period end date, taking
into account current interest rate expectations and the current credit
rating of the Company and its counterparties. Premiums payable under such
arrangements are initially capitalised into the Statement of Financial
Position.
The Company uses valuation techniques that are appropriate in the
circumstances and for which sufficient data is available to measure fair
value, maximising the use of relevant observable inputs and minimising the
use of unobservable inputs significant to the fair value measurement as a
whole. Changes in fair value of interest rate derivatives are recognised
within finance expenses in profit or loss in the period in which they occur.
i) Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial Position comprise
cash at bank and short-term deposits with an original maturity of three
months or less.
j) Receivables
Rent and other receivables are initially recognised at fair value and
subsequently at amortised cost. Impairment provisions are recognised based
upon an expected credit loss model. The Company has made an assessment of
expected credit losses at each period end, using the simplified approach
where a lifetime expected loss allowance is always recognised over the
expected life of the financial instrument. Any adjustment is recognised in
profit or loss as an impairment gain or loss.
k) Capital prepayments
Capital prepayments are made for the purpose of acquiring future property
assets and held as receivables within the Statement of Financial Position.
When the asset is acquired, the prepayments are capitalised as a cost of
purchase. Where a purchase is not successful, these costs are expensed
within profit or loss as abortive costs in the period.
l) Other payables and accrued expenses
Other payables and accrued expenses are initially recognised at fair value
and subsequently held at amortised cost.
m) Rent deposits
Rent deposits represent cash received from tenants at inception of a lease
and are subsequently transferred to the rent agent to hold on behalf of the
Company.
n) Interest bearing loans and borrowings
All loans and borrowings are initially recognised at fair value less
directly attributable transaction costs. After initial recognition, interest
bearing loans and borrowings are subsequently measured at amortised cost
using the effective interest method. Borrowing costs are amortised over the
lifetime of the facilities through profit or loss.
When the lifetime of a floating rate facility is extended, and this is
considered to be a non-substantial modification, the effective interest rate
is revised to reflect changes in market rates of interest.
o) Provisions
A provision is recognised in the Statement of Financial Position when the
Company has a present legal or constructive obligation as a result of a past
event, that can be reliably measured and is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate
that reflects risks specific to the liability.
p) Dividend payable to shareholders
Equity dividends are recognised when they become legally payable.
q) Share issue costs
The costs of issuing or reacquiring equity instruments (other than in a
business combination) are accounted for as a deduction from equity.
r) Finance leases
Finance leases are capitalised at the lease commencement, at present value
of the minimum lease payments, and held as a liability within the Statement
of Financial Position.
s) Taxes
Corporation tax is recognised in profit or loss except to the extent that it
relates to items recognized directly in equity, in which case, it is
recognised in equity.
As a REIT, the Company is exempt from corporation tax on the profits and
gains from its investments, provided it continues to meet certain conditions
as per REIT regulations.
Taxation on the profit or loss for the period not exempt under UK REIT
regulations comprises current and deferred tax. Current tax is expected tax
payable on any non-REIT taxable income for the period, using tax rates
applicable in the period.
Deferred tax is provided on temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. The amount of deferred tax that is
provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or
substantially enacted at the period end date.
t) European Public Real Estate Association
The Company has adopted European Public Real Estate Association ('EPRA')
best practice recommendations, which it expects to broaden the range of
potential institutional investors able to invest in the Company's Ordinary
Shares. For the year to 31 March 2019, audited EPS and NAV calculations
under EPRA's methodology are included in note 8 and further unaudited
measures are included below.
3) Revenue
Year ended For the period
31 March 2019 1 May 2017 to
GBP'000 31 March 2018
GBP'000
Gross rental income received 17,179 12,330
Other property income 4 -
Total revenue 17,183 12,330
Rent receivable under the terms of the leases is adjusted for the effect of
any incentives agreed.
4) Expenses
Year ended For the period
31 March 2019 1 May 2017 to
GBP'000 31 March 2018
GBP'000
Property operating expenses 1,462 1,106
Other operating expenses
Investment management fee 1,302 989
Auditor remuneration 98 88
Costs associated with the drafting 181 -
of a Prospectus*
Other operating costs 494 462
Total other operating expenses 2,075 1,539
Total operating expenses 3,537 2,645
* During the year, costs were incurred in order to update the Prospectus of
the Company. As no shares were issued in the year, these costs have been
expensed in the year.
Year ended For the period
31 March 2019 1 May 2017 to
GBP'000 31 March 2018
Audit
Statutory audit of Annual Report 79 65
and Financial Statements
Over accrual 2018 (4) -
75 65
Non-audit
Review of Interim Report 23 23
Renewal of Company's Prospectus - 30
2017*
Renewal of Company's Prospectus 31 -
2019*
54 53
Total fees paid to KPMG LLP 129 118
Percentage of total fees attributed 42% 45%
to non-audit services
* Charged to share premium account in 11 months ended 31 March 2018. Charged
to Statement of Comprehensive Income in year ended 31 March 2019.
5) Directors' remuneration
Year ended For the period
31 March 2019 1 May 2017 to
GBP'000 31 March 2018
GBP'000
Directors' fees 114 80
Tax and social security 8 4
Total remuneration 122 84
A summary of the Directors' remuneration is set out in the Directors'
Remuneration Report in the full Annual Report and Financial Statements. The
Company had no employees in either period.
6) Finance expenses
Year ended For the period
31 March 2019 1 May 2017 to
GBP'000 31 March 2018
GBP'000
Interest payable on loan borrowings 1,103 540
Amortisation of loan arrangement 127 79
fee
Agency fee payable on loan 3 (11)
borrowings
Commitment fees payable on loan 54 20
borrowings
1,287 628
Charge in fair value of interest 395 24
rate derivatives
Total 1,682 652
7) Taxation
Year ended For the period
31 March 2019 1 May 2017 to
GBP'000 31 March 2018
GBP'000
Total tax comprises
Analysis of tax charge in the
year/period
Profit before tax 15,544 9,820
Theoretical tax at UK corporation 2,953 1,866
tax standard rate of 19% (2018:
19.00%)1
Adjusted for:
Exempt REIT income (2,249) (1,700)
Non taxable investment profit (704) (166)
Total tax charge - -
1Standard rate of corporation tax was 19% to 31 March 2019. The corporation
tax rate is to reduce to 17% with effect from 1 April 2020.
Factors that may affect future tax charges
At 31 March 2019, the Company had unrelieved management expenses of GBP8,405
(31 March 2018: GBP8,056). It is unlikely that the Company will generate
sufficient taxable income in the future to use these expenses to reduce
future tax charges and therefore no deferred tax asset has been recognised.
Due to the Company's status as a REIT and the intention to continue meeting
the conditions required to obtain approval as a REIT in the foreseeable
future, the Company has not provided deferred tax on any capital gains and
losses arising on the revaluation or disposal of investments.
8) Earnings per share and NAV per share
Year ended For the period
31 March 2019 1 May 2017 to
31 March 2018
Earnings per share:
Total comprehensive income (GBP'000) 15,544 9,820
Weighted average number of shares 151,558,251 136,894,561
Earnings per share (basic and 10.26 7.17
diluted) (pence)
EPRA earnings per share:
Total comprehensive income (GBP'000) 15,544 9,820
Adjustment to total comprehensive
income:
Change in fair value of investment (4,184) (1,014)
properties (GBP'000)
Realised loss on disposal of 482 216
investment properties (GBP'000)
Realised gain on disposal of - (73)
investments (GBP'000)
Change in fair value of interest 395 24
rate derivatives (GBP'000)
Total EPRA Earnings (GBP'000) 12,237 8,973
EPRA earnings per share (basic and 8.07 6.56
diluted) (pence)
NAV per share:
Net assets (GBP'000) 149,456 146,034
Ordinary Shares 151,558,251 151,558,251
NAV per share (pence) 98.61 96.36
EPRA NAV per share:
Net assets (GBP'000) 149,456 146,034
Adjustments to net assets:
Other financial assets held at fair (162) (26)
value (GBP'000)
EPRA NAV (GBP'000) 149,294 146,008
EPRA NAV per share (pence) 98.51 96.34
Earnings per share (EPS) amounts are calculated by dividing profit for the
period attributable to ordinary equity holders of the Company by the
weighted average number of Ordinary Shares in issue during the period. As at
31 March 2019, EPRA NNNAV was equal to IFRS NAV and, as such, a
reconciliation between the two measures has not been presented.
9) Dividends paid
Year ended For the period
31 March 2019 1 May 2017 to
GBP'000 31 March 2018
GBP'000
Fourth interim dividend paid in 3,031 -
respect of the period 1 January
2018 to 31 March 2018 at 2.00p per
Ordinary Share
First interim dividend paid in 3,031 -
respect of the period 1 April 2018
to 30 June 2018 at 2.00p per
Ordinary Share
Second interim dividend paid in 3,031 -
respect of the period 1 July 2018
to 30 September 2018 at 2.00p per
Ordinary Share
Third interim dividend paid in 3,031 -
respect of the period 1 October
2018 to 31 December 2018 at 2.00p
per Ordinary Share
Fourth interim dividend paid in - 2,473
respect of the period 1 February
2017 to 30 April 2017 at 2.00p per
Ordinary Share
First interim dividend paid in - 2,473
respect of the period 1 May 2017 to
31 July 2017 at 2.00p per Ordinary
Share
Second interim dividend paid in - 3,031
respect of the period 1 August 2017
to 31 October 2017 at 2.00p per
Ordinary Share
Third interim dividend paid in - 2,016
respect of the period 1 November
2017 to 31 December 2017 at 1.33p
per Ordinary Share
Total dividends paid during the 12,124 9,993
year/period
Fourth interim dividend declared in 3,031 -
respect of the period 1 January
2019 to 31 March 2019 at 2.00p per
Ordinary Share*
Fourth interim dividend declared in (3,031) -
respect of the period 1 January
2018 to 31 March 2018 at 2.00p per
Ordinary Share
Fourth interim dividend declared in - 3,031
respect of the period 1 January
2018 to 31 March 2018 at 2.00p per
Ordinary Share**
Fourth interim dividend declared in - (2,473)
respect of the period 1 February
2017 to 30 April 2017 at 2.00p per
Ordinary Share
Total dividends in respect of the 12,124 10,551
year/period
* The fourth interim dividend declared is not included in the accounts as a
liability as at year ended 31 March 2019.
** The fourth interim dividend declared is not included in the accounts as a
liability as at period ended 31 March 2018.
10) Investments
10.a) Investment property
31 March 2019
Investment Investment Total 31 March
property property GBP'000 2018
freehold leasehold Total
GBP'000 GBP'000 GBP'000
UK investment property
As at beginning of the 155,517 36,825 192,342 137,820
year/period
Purchases in the 7,590 - 7,590 64,186
year/period
Disposals in the (7,053) - (7,053) (11,050)
year/period
Revaluation of 3,026 1,700 4,726 1,386
investment properties
Valuation provided by 159,080 38,525 197,605 192,342
Knight Frank
Adjustment to fair value (2,160) (1,561)
for lease incentive
debtor
Adjustment for finance 684 620
lease obligations*
Total investment 196,129 191,401
property
Classified as:
Investment properties 196,129 187,751
Investment properties - 3,650
held for sale
196,129 191,401
Loss on disposal of the
investment property
Net proceeds from 6,629 10,856
disposals of investment
property during the
year/period
Carrying value at date (7,053) (11,050)
of sale
Lease incentives (58) (22)
amortised in current
year/period
Loss realised on (482) (216)
disposal of investment
property
Change in fair value of
investment property
Change in fair value 4,726 1,386
before adjustments for
lease incentives
Adjustment for movement
in the year/period:
in value of lease (542) (452)
incentive debtor
in value of rent - 80
guarantee debtor
4,184 1,014
* Adjustment in respect of minimum payment under head leases separately
included as a liability within the Statement of Financial Position
Valuation of investment property
Valuation of investment property is performed by Knight Frank LLP, an
accredited external valuer with recognised and relevant professional
qualifications and recent experience of the location and category of the
investment property being valued.
The valuation of the Company's investment property at fair value is
determined by the external valuer on the basis of market value in accordance
with the internationally accepted RICS Valuation - Professional Standards
(incorporating the International Valuation Standards).
The determination of the fair value of investment property requires the use
of estimates, such as future cash flows from assets (based on lettings,
tenants' profiles, future revenue streams, capital values of fixtures and
fittings, plant and machinery, any environmental matters and the overall
repair and condition of the property) and discount rates applicable to those
flows.
Valuation of investment property
10.b) Investment
Year ended For the period
31 March 2019 1 May 2017 to
GBP'000 31 March 2018
GBP'000
Investment in AEW UK Core Property
Fund
As at beginning of the year/period - 7,594
Disposals in the year/period - (7,594)
Total investment in AEW UK Core - -
Property Fund
Profit on disposal of the
investment in AEW UK Core Property
Fund
Proceeds from disposals of - 7,667
investments during the year/period
Cost of disposal - (7,594)
Profit on disposal of investment - 73
Valuation of investment
Investments in collective investment schemes were stated at NAV with any
resulting gain or loss recognised in profit or loss. Fair value is assessed
by the Directors based on the best available information.
As at 31 March 2019, the Company had no investment in the AEW UK Core
Property Fund (31 March 2018: Nil).
10.c) Fair value measurement hierarchy
The following table provides the fair value measurement hierarchy for
investments:
31 March 2019
Significant Significant
Quoted observable unobservable
prices
in
inputs inputs
active
markets
(Level 2) (Level 3) Total
(Level
1) GBP'000 GBP'000 GBP'000
GBP'000
Assets
measured at
fair value
Investment - - 196,129 196,12
property 9
- - 196,129 196,12
9
31 March 2018
Significant Significant
Quoted observable unobservable
prices
in
inputs inputs
active
markets
(Level 2) (Level 3) Total
(Level
1) GBP'000 GBP'000 GBP'000
GBP'000
Assets
measured at
fair value
Investment - - 191,401 191,40
property 1
191,401 191,40
1
Explanation of the fair value hierarchy:
Level 1 - Quoted prices for an identical instrument in active markets;
Level 2 - Prices of recent transactions for identical instruments and
valuation techniques using observable market data; and
Level 3 - Valuation techniques using non-observable data.
There have been no transfers between Level 1 and Level 2 during either
period, nor have there been any transfers in or out of Level 3.
Sensitivity analysis to significant changes in unobservable inputs within
Level 3 of the hierarchy
The significant unobservable inputs used in the fair value measurement
categorised within Level 3 of the fair value hierarchy of the entity's
portfolio of investment property are:
1) ERV
2) Equivalent yield
Increases/(decreases) in the ERV (per sq ft per annum) in isolation would
result in a higher/(lower) fair value measurement. Increases/(decreases) in
the discount rate/yield in isolation would result in a lower/(higher) fair
value measurement.
The significant unobservable input used in the fair value measurement
categorised within Level 3 of the fair value hierarchy of the portfolio
investment property are as follows:
Class Fair Valuation Significant Range
Value
Technique Unobservable
GBP'000 Inputs
31 March 2019
Investment 197,605 Income ERV GBP1.00 -
property* capitalisatio GBP127.00
n
Equivalent
yield 5.87% -
10.25%
31 March 2018
Investment 192,342 Income ERV GBP1.00 -
property* capitalisatio GBP145.00
n
Equivalent
yield 3.14% -
10.72%
*Valuation per Knight Frank LLP.
Where possible, sensitivity of the fair values of Level 3 assets are tested
to changes in unobservable inputs against reasonable alternatives.
Gains and losses recorded in profit or loss for recurring fair value
measurements categorised within Level 3 of the fair value hierarchy are
attributable to changes in unrealised gains or losses relating to investment
property held at the end of the reporting period.
With regards to investment property, gains and losses for recurring fair
value measurements categorised within Level 3 of the fair value hierarchy,
prior to adjustment for rent free debtor and rent guarantee debtor where
applicable, are recorded in profit and loss.
The carrying amount of the assets and liabilities, detailed within the
Statement of Financial Position, is considered to be the same as their fair
value.
31 March
2019
Change in ERV Change in equivalent
yield
Sensitivity GBP'000 GBP'000 GBP'000 GBP'000
analysis
+5% -5% +5% -5%
Resulting 205,803 189,720 187,352 208,707
fair value
of
investment
property
31 March
2018
Change in ERV Change in equivalent yield
Sensitivity GBP'000 GBP'000 GBP'000 GBP'000
analysis
+5% -5% +5% -5%
Resulting 203,903 188,297 185,985 206,943
fair value
of
investment
property
11) Receivables and prepayments
31 March 2019 31 March 2018
GBP'000 GBP'000
Receivables
Rent debtor 1,438 1,074
Allowance for expected credit losses (39) -
Rent agent float account 92 81
Other receivables 420 179
1,911 1,334
Lease incentive debtor 2,160 1,561
4,071 2,895
Prepayments
Property related prepayments 4 13
Listing fees - 16
Other prepayments 394 14
398 43
Total 4,469 2,938
The aged debtor analysis of receivables is as follows:
31 March 2019 31 March 2018
GBP'000 GBP'000
Less than three months 1,911 1,334
Between three and six months - -
Between six and twelve months - -
Total 1,911 1,334
12) Interest rate derivatives
31 March 2019 31 March 2018
GBP'000 GBP'000
At the beginning of the year/period 26 31
Interest rate cap premium paid 531 19
Changes in fair value of interest (395) (24)
rate derivatives
At the end of the year/period 162 26
The Company is protected from a significant rise in interest rates as it has
interest rate caps with a combined notional value of GBP36.51 million (31
March 2018: GBP36.51 million), resulting in the loan being 73% hedged (31
March 2018: 73%). These interest rate caps are effective until 19 October
2020. The Company has entered into additional interest rate caps on a
notional value of GBP46.51 million at 2.00% covering the extension period of
the loan from 20 October 2020 to 19 October 2023.
Fair value hierarchy
The following table provides the fair value measurement hierarchy for
interest rate derivatives:
Quoted prices Significant Significant Total
in
observable unobservable GBP'000
active markets input
inputs
(Level 1) (Level 2)
(Level 3)
GBP'000 GBP'000
Valuation GBP'000
31 March 2019 - 162 - 162
31 March 2018 - 26 - 26
The fair value of these contracts are recorded in the Statement of Financial
Position as at the year end.
There have been no transfers between level 1 and level 2 during the period,
nor have there been any transfers between level 2 and level 3 during the
year.
The carrying amount of all assets and liabilities, detailed within the
Statement of Financial Position, is
considered to be the same as their fair value.
13) Interest bearing loans and borrowings
Bank borrowings
31 March 2019 31 March
2018
GBP'000
GBP'000
At the beginning of the year/period 50,000 29,010
Bank borrowings drawn in the - 20,990
year/period
Interest bearing loans and borrowings 50,000 50,000
Unamortised loan arrangement fees 524 357
At the end of the year/period 49,476 49,643
Repayable between 2 and 5 years 50,000 50,000
Undrawn facility at the year/period 10,000 10,000
end
Total facility 60,000 60,000
The Company has a GBP60.00 million (31 March 2018: GBP60.00 million) credit
facility with RBSi of which GBP50.00 million (31 March 2018: GBP50.00 million)
has been utilised as at 31 March 2019.
Under the terms of the Prospectus, the Company has a target gearing of 25%
Loan to GAV, but can borrow up to 35% Loan to GAV in advance of a capital
raise or asset disposal. As at 31 March 2019, the Company's gearing was
25.30% Loan to GAV (31 March 2018: 26.00%).
Under the terms of the loan facility, the Company can draw up to 35% Loan to
NAV at drawdown. As at 31 March 2019, the Company could draw a further GBP2.31
million up to the maximum 35% (31 March 2018: GBP1.11 million).
Borrowing costs associated with the credit facility are shown as finance
costs in note 6 to these financial statements.
On 22 October 2018, the Company extended the term of the facility by three
years up to 22 October 2023, to mitigate the financing risk associated with
Brexit. The margin remains unchanged, with the loan incurring interest at
three month LIBOR +1.4%, which equated to an all-in rate of 2.32% as at 31
March 2019 (31 March 2018: 2.11%).
Reconciliation to cash flows from financing activities
Bank borrowings
31 March 2019 31 March 2018
GBP'000 GBP'000
Balance at the beginning of the 49,643 28,740
year/period
Changes from financing cash flows
Loan drawdown - 20,990
Loan arrangement fees (294) (166)
Total changes from financing cash (294) 20,824
flows
Other changes
Amortisation of loan arrangement 127 79
fees
Total other changes 127 79
Balance at the end of the 49,476 49,643
year/period
14) Payables and accrued expenses
31 March 2019 31 March 2018
GBP'000 GBP'000
Deferred income 1,137 993
Accruals 1,189 831
Other creditors 949 955
Total 3,275 2,779
15) Finance lease obligations
Finance leases are capitalised at the lease's commencement at the lower of
the fair value of the property and the present value of the minimum lease
payments. The present value of the corresponding rental obligations are
included as liabilities.
The following table analyses the minimum lease payments under
non-cancellable finance leases:
31 March 2019 31 March 2018
GBP'000 GBP'000
Within one year 48 47
After one year but not more than 160 152
five years
More than five years 476 421
636 573
Total 684 620
16. Guarantees and commitments
As at 31 March 2019, there were capital commitments of GBP210,588 relating to
works in Apollo Business Park, Basildon (31 March 2018: GBPnil).
Operating lease commitments - as lessor
The Company has entered into commercial property leases on its investment
property portfolio. These non-cancellable leases have a remaining term of
between zero and 24 years.
Future minimum rentals receivable under non-cancellable operating leases as
at 31 March 2019 are as follows:
31 March 2019 31 March 2018
GBP'000 GBP'000
Within one year 16,387 16,932
After one year but not more than 41,304 47,858
five years
More than five years 29,513 37,574
Total 87,204 102,364
During the year ended 31 March 2019 there were contingent rents totalling
GBP67,591 (11 month period to 31 March 2018: GBP149,192) recognised as income.
17. Investment in subsidiary
The Company has a wholly-owned subsidiary, AEW UK REIT 2015 Limited:
Name and Country of Principal Ordinary Shares
company number registration activity held
and
incorporation
AEW UK REIT England and Dormant 100%
2015 Limited Wales
(Company number
09524699)
AEW UK REIT 2015 Limited is a subsidiary of the Company incorporated in the
UK on 2 April 2015. At 31 March 2019, the Company held one share, being 100%
of the issued share capital. AEW UK REIT 2015 Limited is dormant and the
cost of the subsidiary is GBP0.01 (31 March 2018: GBP0.01). The registered
office of AEW UK REIT 2015 Limited is 6th Floor, 65 Gresham Street, London,
EC2V 7NQ.
18. Issued share capital
31 March 2019 31 March 2018
GBP'000 Number of GBP'000 Number of
Ordinary Ordinary
Shares Shares
Ordinary
Shares
(nominal
value
GBP0.01 per
share)
authorised
, issued
and fully
paid
At the 1,515 151,558,251 1,236 123,647,250
beginning
of the
year/perio
d
Issued on - - 279 27,911,001
admission
to trading
on the
London
Stock
Exchange
on 24
October
2017
At the end 1,515 151,558,251 1,515 151,558,251
of the
year/perio
d
On 24 October 2017, the Company issued 27,911,001 Ordinary Shares at a price
of 100.5 pps, pursuant to the Initial Placing, Initial Offer for
Subscription and Intermediaries Offer of the Share Issuance Programme, as
described in the prospectus published by the Company on 28 September 2017.
19. Share premium account
31 March 31 March
2019 2018
GBP'000 GBP'000
The share premium relates to amounts
subscribed for share capital in excess of
nominal value:
Balance at the beginning of the year/period 49,768 22,514
Issued on admission to trading on the London - 27,771
Stock Exchange on
24 October 2017
Share issue cost (paid and accrued) 2 (517)
Balance at the end of the period/year 49,770 49,768
20. Financial risk management objectives and policies
20.1 Financial assets and liabilities
The Company's principal financial assets and liabilities are those derived
from its operations: receivables and prepayments, cash and cash equivalents
and payables and accrued expenses. The Company's other principal financial
liabilities are interest bearing loans and borrowings, the main purpose of
which is to finance the acquisition and development of the Company's
property portfolio.
Set out below is a comparison by class of the carrying amounts and fair
value of the Company's financial instruments that are carried in the
financial statements.
31 March 2019 31 March 2018
Book Value Fair Value Fair Value Fair Value
GBP'000 GBP'000 GBP'000 GBP'000
Financial
assets
Receivables1 1,911 1,911 1,334 1,334
Cash and cash 2,131 2,131 4,711 4,711
equivalents
Other 162 162 26 26
financial
assets held at
fair value
Financial
liabilities
Interest 49,476 50,000 49,643 50,000
bearing loans
and borrowings
Payables and 1,923 1,923 1,638 1,638
accrued
expenses2
Financial 684 684 620 620
lease
obligations
1 Excludes lease incentive debtor & prepayments
2 Excludes tax, VAT liabilities and deferred income
Interest rate derivatives are the only financial instruments classified as
fair value through profit and loss. All other financial assets and financial
liabilities are measured at amortised cost. All financial instruments were
designated in their current categories upon initial recognition.
Fair value measurement hierarchy has not been applied to those classes of
asset and liability stated above which are not measured at fair value in the
financial statements. The difference between the fair value and book value
of these items is not considered to be material.
20.2 Financing management
The Company's activities expose it to a variety of financial risks: market
risk, real estate risk, credit risk and liquidity risk.
The Company's objective in managing risk is the creation and protection of
shareholder value. Risk is inherent in the Company's activities but it is
managed through a process of ongoing identification, measurement and
monitoring, subject to risk limits and other controls.
The principal risks facing the Company in the management of its portfolio
are as follows:
Market price risk
Market price risk is the risk that future values of investments in direct
property and related property investments will fluctuate due to changes in
market prices. To manage market price risk, the Company diversifies its
portfolio geographically in the United Kingdom and across property sectors.
The disciplined approach to the purchase, sale and asset management ensures
that the value is maintained to its maximum potential. Prior to any property
acquisition or sale, detailed research is undertaken to assess expected
future cash flow. The Investment Management Committee of the Investment
Manager meets twice monthly and reserves the ultimate decision with regards
to investment purchases or sales. In order to monitor property valuation
fluctuations, the Investment Manager meets with the independent external
valuer on a regular basis. The valuer provides a property portfolio
valuation quarterly, so any movements in the value can be accounted for in a
timely manner and reflected in the NAV every quarter.
Real estate risk
The Company is exposed to the following risks specific to its investment
property:
Property investments are illiquid assets and can be difficult to sell,
especially if local market conditions are poor. Illiquidity may also result
from the absence of an established market for investments, as well as legal
or contractual restrictions on resale of such investments. In addition,
property valuation is inherently subjective due to the individual
characteristics of each property, and thus, coupled with illiquidity in the
markets, makes the valuation in the investment property difficult and
inexact.
No assurances can be given that the valuations of properties will be
reflected in the actual sale prices even where such sales occur shortly
after the relevant valuation date.
There can be no certainty regarding the future performance of any of the
properties acquired for the Company. The value of any property can go down
as well as up. Property and property-related assets are inherently
subjective as regards value due to the individual nature of each property.
As a result, valuations are subject to uncertainty.
Real property investments are subject to varying degrees of risk. The yields
available from investments in real estate depend on the amount of income
generated and expenses incurred from such investments.
There are additional risks in vacant, part vacant, redevelopment and
refurbishment situations although these are not prospective investments for
the Company.
Credit risk
Credit risk is the risk that the counterparty (to a financial instrument) or
tenant (of a property) will cause a financial loss to the Company by failing
to meet a commitment it has entered into with the Company.
It is the Company's policy to enter into financial instruments with
reputable counterparties. All cash deposits are placed with an approved
counterparty, The Royal Bank of Scotland International Limited.
In respect of property investments, in the event of a default by a tenant,
the Company will suffer a rental shortfall and additional costs concerning
re-letting the property. The Investment Manager monitors tenant arrears in
order to anticipate and minimise the impact of defaults by occupational
tenants.
The table below shows the Company's exposure to credit risk:
As at As at
31 Match 2019 31 March 2018
GBP'000 GBP'000
Debtors (excluding incentives and 1,911 1,334
prepayments)
Cash and cash equivalents 2,131 4,711
Total 4,042 6,045
Liquidity risk
Liquidity risk arises from the Company's management of working capital, the
finance charges and principal repayments on its borrowings. It is the risk
that the Company will encounter difficulty in meeting its financial
obligations as they fall due, as the majority of the Company's assets are
investment properties and therefore not readily realisable. The Company's
objective is to ensure it has sufficient available funds for its operations
and to fund its capital expenditure. This is achieved by continuous
monitoring of forecast and actual cash flows by management.
The table below summarises the maturity profile of the Company's financial
liabilities based on contractual undiscounted payments:
31 March 2019 On < 3 3-12 1-5 > 5 Total
demand months months years years GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing loans - 290 877 54,145 - 55,312
and borrowings
Payables and accrued - 1,923 - - - 1,923
expenses
Finance lease - - 51 205 4,307 4,563
obligation
- 2,213 928 54,350 4,307 61,798
31 March 2018 On <3 3-12 1-5 > 5 Total
demand months months years years GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing loans - 228 678 51,422 - 52,328
and borrowings
Payables and accrued - 1,638 - - - 1,638
expenses
Finance lease - - 51 205 3,128 3,384
obligation
- 1,866 729 51,627 3,128 57,350
21. Capital management
The primary objectives of the Company's capital management are to ensure
that it continues to qualify for UK REIT status and complies with its
banking covenants.
To enhance returns over the medium term, the Company utilises borrowings on
a limited recourse basis for each investment or all or part of the total
portfolio. The Company's policy is to target a borrowing level of 25% loan
to GAV and can borrow up to a maximum of 35% loan to GAV in advance of a
capital raise or asset disposal. It is currently anticipated that the level
of total borrowings will typically be at the level of 25% of GAV (measured
at drawdown).
Alongside the Company's borrowing policy, the Directors intend, at all
times, to conduct the affairs of the Company so as to enable the Company to
qualify as a REIT for the purposes of Part 12 of the CTA 2010 (and the
regulations made thereunder). The REIT status compliance requirements
include: 90% distribution test, interest cover ratio, 75% assets test and
the substantial shareholder rule, all of which the Company remained
compliant with in this reporting year.
The monitoring of the Company's level of borrowing is performed primarily
using a Loan to GAV ratio, which is calculated as the amount of outstanding
debt divided by the total valuation of investment property. The Company Loan
to GAV ratio at the year end was 25.30% (31 March 2018: 26.00%).
Breaches in meeting the financial covenants would permit the bank to
immediately call loans and borrowings. During the year under review, the
Company did not breach any of its loan covenants, nor did it default on any
other of its obligations under its loan agreements.
22. Transactions with related parties
As defined by IAS 24 Related Parties Disclosures, parties are considered to
be related if one party has the ability to control the other party or
exercise significant influence over the other party in making financial or
operational decisions.
For the year ended 31 March 2019, the Directors of the Company are
considered to be the key management personnel. Details of amounts paid to
Directors for their services can be found within note 5, Directors'
remuneration.
AEW UK Investment Management LLP is the Company's Investment Manager and has
been appointed as AIFM. Under the terms of the Investment Management
Agreement, the Investment Manager is responsible for the day-to-day
discretionary management of the Company's investments subject to the
investment objective and investment policy of the Company and the overall
supervision of the Directors.
The Investment Manager is entitled to receive a quarterly management fee in
respect of its services calculated at the rate of one-quarter of 0.9% of the
prevailing NAV (excluding uninvested proceeds from fundraisings).
During the year, the Company incurred GBP1,302,153 (31 March 2018: GBP988,612)
in respect of investment management fees and expenses, of which GBP328,323 (31
March 2018: GBP469,239) was outstanding as at 31 March 2019.
23. Segmental information
Management has considered the requirements of IFRS 8 'operating segments'.
The source of the Company's diversified revenue is from the ownership of
investment properties across the UK. Financial information on a portfolio
basis is provided to senior management of the Investment Manager and the
Directors, which collectively comprise the chief operating decision maker.
The properties are managed on a portfolio basis and the chief operating
decision maker assesses performance and makes resource allocation decisions
at the portfolio level (being the total investment property portfolio held
by the company). Therefore, the Company is considered to be engaged in a
single segment of business, being property investment and in one
geographical area, United Kingdom.
24. Events after reporting date
Dividend
On 26 April 2019, the Board declared its fourth interim dividend of 2.00
pps, in respect of the period from 1 January 2019 to 31 March 2019. This was
paid on 31 May 2019, to shareholders on the register as at 10 May 2019. The
ex-dividend date was 9 May 2019.
EPRA Unaudited Performance Measures
Detailed below is a summary table showing the EPRA performance measures of
the Company
All EPRA performance measures have been calculated in line with EPRA Best
Practices Recommendations Guidelines which can be found at www.epra.com [2].
MEASURE AND DEFINITION PURPOSE PERFORMANCE
1. EPRA Earnings
Earnings from A key measure of GBP12.24 million/8.07
operational activities. a company's pps
underlying
operating results
and an indication
of the extent to EPRA earnings for
which current year to
dividend payments
are supported by
earnings.
31 March 2019 (11
month period to 31
March 2018: GBP8.97
million/6.56 pps)
2. EPRA NAV
Net asset value adjusted Makes adjustments GBP149.29 million/98.51
to include properties to IFRS NAV to pps
and other investment provide
interests at fair value stakeholders with
and to exclude certain the most relevant
items not expected to information on EPRA NAV as at 31
crystallise in a the fair value of March
long-term investment the assets and
property business. liabilities
within a true
real estate 2019 (31 March 2018:
investment
company with a
long-term
investment GBP146.01 million/96.34
strategy. pps)
3. EPRA NNNAV
EPRA NAV adjusted to Makes adjustments GBP149.46 million/98.61
include the fair values to EPRA NAV to pps
of: provide
stakeholders with
the most relevant
information on EPRA NNNAV as at 31
(i) financial the current fair March
instruments; value of all the
assets and
liabilities
within a real 2019 (31 March 2018:
(ii) debt; and estate company.
GBP146.03 million/96.36
(iii) deferred taxes. pps)
4.1 EPRA NIY
Annualised rental income A comparable 7.62%
based on the cash rents measure for
passing at the balance portfolio
sheet date, less valuations. This
non-recoverable property measure should EPRA NIY as at 31
operating expenses, make it easier March 2019 (31 March
divided by the market for investors to 2018: 7.73%)
value of the property, judge themselves,
increased with how the valuation
(estimated) purchasers' of portfolio X
costs. compares with
portfolio Y.
4.2 EPRA 'Topped-Up' NIY
This measure A comparable 8.58%
incorporates an measure for
adjustment to the EPRA portfolio
NIY in respect of the valuations. This
expiration of rent-free measure should EPRA 'Topped-Up' NIY
periods (or other make it easier
unexpired lease for investors to
incentives such as judge themselves,
discounted rent periods how the valuation as at 31 March 2019
and step rents). of portfolio X (31 March
compares with
portfolio Y.
2018: 8.52%)
5. EPRA Vacancy
ERV of vacant space A 'pure' (%) 2.99%
divided by ERV of the measure of
whole portfolio. investment
property space
that is vacant, EPRA ERV as at 31
based on ERV. March 2019 (31 March
2018: 7.10%)
6. EPRA Cost Ratio
Administrative and A key measure to 21.04%
operating costs enable meaningful
(including and excluding measurement of
costs of direct vacancy) the changes in a
divided by gross rental company's EPRA Cost Ratio
income. operating costs. (including direct
vacancy costs) as at
31 March 2019 (31
March 2018: 21.89%)
15.81%
EPRA Cost Ratio
(excluding direct
vacancy costs) as at
31 March 2019 (31
March 2018: 14.89%)
Calculation of EPRA Net Initial Yield and 'topped-up' Net Initial Yield
Year ended For the period
31 March 1 May 2017 to
2019 31 March 2018
GBP'000 GBP'000
Investment property - wholly-owned 197,605 192,342
Allowance for estimated purchasers' 13,437 13,079
costs
Grossed-up completed property 211,042 205,421
portfolio valuation
Annualised cash passing rental income 16,725 17,046
Property outgoings (651) (1,174)
Annualised net rents 16,074 15,872
Rent from expiry of rent-free periods 2,023 1,626
and fixed uplifts
'Topped-up' net annualised rent 18,097 17,498
EPRA NIY 7.62% 7.73%
EPRA 'topped-up' NIY 8.58% 8.52%
EPRA NIY basis of calculation
EPRA NIY is calculated as the annualised net rent, divided by the gross
value of the completed property portfolio.
The valuation of grossed-up completed property portfolio is determined by
the Company's external valuers as at 31 March 2019, plus an allowance for
estimated purchaser's costs. Estimated purchaser's costs are determined by
the relevant stamp duty liability, plus an estimate by our valuers of agent
and legal fees on notional acquisition. The net rent deduction allowed for
property outgoings is based on the Company's valuers' assumptions on future
recurring non-recoverable revenue expenditure.
In calculating the EPRA 'topped-up' NIY, the annualised net rent is
increased by the total contracted rent from expiry of rent-free periods and
future contracted rental uplifts.
Calculation of EPRA Vacancy Rate
Year ended For the period
31 March 2019 1 May 2017 to
GBP'000 31 March 2018
GBP'000
Annualised potential rental value 522 1,254
of vacant premises
Annualised potential rental value 17,484 17,677
for the complete property portfolio
EPRA Vacancy Rate 2.99% 7.10%
Calculation of EPRA Cost Ratios
Year ended For the period
31 March 2019 1 May 2017 to
GBP'000 31 March 2018
GBP'000
Administrative/operating expense 3,660 2,729
per IFRS income statement
Less: ground rent costs (58) (38)
EPRA costs (including direct 3,602 2,691
vacancy costs)
Direct vacancy costs (see Glossary (895) (861)
in full Annual Report for further
details)
EPRA costs (excluding direct 2,707 1,830
vacancy costs)
Gross rental income less ground 17,121 12,292
rent costs
EPRA Cost Ratio (including direct 21.04% 21.89%
vacancy costs)
EPRA Cost Ratio (excluding direct 15.81% 14.89%
vacancy costs)
Company Information
Share Register Enquiries
The register for the Ordinary Shares is maintained by Computershare Investor
Services PLC. In the event of queries regarding your holding, please contact
the Registrar on +44 (0)370 707 1341 or email:
web.queries@computershare.co.uk.
Changes of name and/or address must be notified in writing to the Registrar,
at the address shown below. You can check your shareholding and find
practical help on transferring shares or updating your details at
www.investorcentre.co.uk. Shareholders eligible to receive dividend payments
gross of tax may also download declaration forms from that website.
Share Information
Ordinary GBP0.01 Shares 151,558,251
SEDOL Number BWD2415
ISIN Number GB00BWD24154
Ticker/TIDM AEWU
Share Prices
The Company's Ordinary Shares are traded on the premium segment of the Main
Market of the London Stock Exchange.
Frequency of NAV publication:
The Company's NAV is released to the London Stock Exchange on a quarterly
basis and is published on the Company's website.
Annual and Half-Yearly Reports
Copies of the Annual and Half-Yearly Reports are available from the
Company's website.
Financial Calendar
12 September 2019 Annual General Meeting
30 September 2019 Half-year end
November/December 2019 Announcement of half-yearly results
31 March 2020 Year end
June 2020 Announcement of annual results
Dividends
The following table summarises the amounts distributed to equity
shareholders in respect of the period:
GBP
Interim dividend for the period 1 April 2018 to 30 3,031,165
June 2018
(payment made on 31 August 2018)
Interim dividend for the period 1 July 2018 to 30 3,031,165
September 2018 (payment made on 30 November 2018)
Interim dividend for the period 1 October 2018 to 31 3,031,165
December 2018
(payment made on 28 February 2019)
Interim dividend for the period 1 January 2019 to 31 3,031,165
March 2019
(payment made on 31 May 2019)
Total 12,124,660
Directors
Mark Burton* (Non-executive Chairman)
Katrina Hart* (Non-executive Director)
James Hyslop (Non-executive Director)
Bimaljit ("Bim") Sandhu* (Non-executive Director)
* independent of the Investment Manager
Registered Office
6th Floor
65 Gresham Street
London
EC2V 7NQ
Investment Manager and AIFM
AEW UK Investment Management LLP
33 Jermyn Street
London
SW1Y 6DN
Tel: 020 7016 4880
Website: www.aewuk.co.uk
Property Manager
MJ Mapp
180 Great Portland Street
London
W1W 5QZ
Corporate Broker
Liberum
Ropemaker Place
25 Ropemaker Street
London
EC2Y 9LY
Legal Adviser
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
Depositary
Langham Hall UK LLP
8th Floor
1 Fleet Place
London
EC4M 7RA
Administrator
Link Alternative Fund Administrators Limited
Beaufort House
51 New North Road
Exeter
EX4 4EP
Company Secretary
Link Company Matters Limited
6th Floor
65 Gresham Street
London
EC2V 7NQ
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Auditor
KPMG LLP
15 Canada Square
Canary Wharf
London
E14 5GL
Valuer
Knight Frank LLP
55 Baker Street
London
W1U 8AN
Copies of the Annual Report and Financial Statements and the Notice of AGM
Printed copies of the Annual Report and Notice of the 2019 Annual General
Meeting will be sent to shareholders shortly and will be available on the
Company's website.
National Storage Mechanism
A copy of the Annual Report and Financial Statements will be submitted
shortly to the National Storage Mechanism ('NSM') and will be available for
inspection at www.morningstar.co.uk/uk/NSM.
Annual General Meeting
The AGM will be held on 12 September 2019 at 12 noon at The Cavendish Hotel,
81 Jermyn Street, St. James', London SW1Y 6JF.
END
ISIN: GB00BWD24154
Category Code: ACS
TIDM: AEWU
LEI Code: 21380073LDXHV2LP5K50
OAM Categories: 1.1. Annual financial and audit reports
Sequence No.: 11011
EQS News ID: 828939
End of Announcement EQS News Service
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