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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| F&c Commercial Property Trust Limited | LSE:FCPT | London | Ordinary Share | GG00B4ZPCJ00 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 121.20 | 121.40 | 121.60 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
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TIDMFCPT
To: RNS
Date: 17 April 2018
From: F&C Commercial Property Trust Limited (the "Company")
L.E.I. 213800A2B1H4ULF3K397
Results in Respect of the Year Ended 31 December 2017 (audited)
Highlights
* Share price total return of 3.9 per cent*
* Portfolio total return of 8.7 per cent*
* Dividend cover decreased to 83.1 per cent from 87.0 per cent*
* Yield on year-end share price of 4.4 per cent*. Maintained dividend at 6.0
pence per share for the 12th successive year
*see Alternative Performance Measures
Chairman's Statement
Introduction
UK commercial property experienced positive demand during 2017 as investors,
particularly from overseas but also UK institutions, continued to look to
invest in core assets with a secure income stream. Investment activity in 2017
moved up sharply from the previous year's levels as sentiment adjusted to the
changed circumstances following the referendum result and the economy continued
to advance more strongly than initially feared. Against this backdrop, progress
on the Brexit negotiations was slow and uneven and many uncertainties remain,
politically, economically, domestically and internationally. The market has
seen polarization, with industrials and distribution out-performing strongly,
while regional town centre retail has remained under pressure.
Performance for the Year
The net asset value ('NAV') total return for the year was 8.8* per cent and the
share price total return was 3.9* per cent. The total return from the portfolio
was 8.7* per cent, lagging the total return of 10.3 per cent from the MSCI
Investment Property Databank ('IPD') Quarterly Benchmark Index. The longer-term
performance of the portfolio remains strong with IPD rating it upper quartile
over three and five years and top quartile over ten years.
The share price at the year-end was 135.9p, representing a discount of 3.8* per
cent to the NAV per share of 141.2p.
The following table provides an analysis of the movement in the NAV per share
for the year:
Pence
NAV per share as at 31 December 2016 135.5
Unrealised increase in valuation of direct property 6.6
portfolio
Increase in valuation of interest rate swap 0.1
Other net revenue 5.0
Dividends paid (6.0)
NAV per share as at 31 December 2017 141.2
During 2017 the Company experienced capital growth of 4.2* per cent, compared
to the MSCI IPD index which recorded a capital return of 5.4 per cent. As with
2015 and 2016, the strongest returns were experienced in the logistics and
industrial sector.
The underperformance against the index can primarily be attributed to the
Company's underweight position in Industrials in the South East, which
accounted for 0.9 per cent of the relative underperformance. The Company's
holdings in the office sector lagged the index because of increased voids and
shortening unexpired lease terms. The Company has no exposure to shopping
centres which was the poorest performing segment.
In absolute terms, the most significant positive contributors to returns were:
* London, St Christopher's Place Estate - reflecting the completion of the
Wigmore Street development, new lettings and strong rental growth.
* London, Cassini House - successfully agreed new letting to the anchor
tenant for 15 years, incorporating the full refurbishment of the building.
* Daventry, Site E4, DIRFT - following the completion of a rent renewal on a
ten-year lease and the continued demand for prime logistics.
* Chorley, Units 6 & 8 Revolution Park- significant yield compression due to
the continued demand for logistics.
Negative contributions came from:
* Uxbridge, Stockley Park - reflecting the fact that the building has a
shortening lease expiry.
* Reading, Thames Valley One, Thames Valley Park - reflecting void space
following the exit of the tenant.
The Company purchased 1 Cathedral Square, Bristol in December 2017 for GBP33.5
million. Bristol as a location had been targeted given its positive balance of
supply and demand and outlook for rental growth. The purchase is also in
accordance with the Company strategy to invest in prime office assets, on
attractive yields, in town centres which score highly for connectivity and
quality of life and thereby provide sustainable occupational demand and a
skilled and young working population.
Borrowings
The Group's available borrowings comprise a GBP260 million term loan with Legal &
General Pensions Limited, maturing on 31 December 2024, and both a GBP50 million
term loan facility and an undrawn GBP50 million revolving credit facility with
Barclays, available until June 2021. The Group's net gearing, was 19.6 per cent
at the end of the year. The weighted average interest rate on the Group's total
current borrowings is 3.3 per cent.
Dividends and Dividend Cover
Twelve monthly interim dividends, each of 0.5p per share were paid during the
year, maintaining the annual dividend of 6.0p per share since 2006 and
providing a dividend yield of 4.4* per cent based on the year-end share price.
Barring unforeseen circumstances, the Board intends that dividends in 2018 will
continue to be paid monthly at the same rate.
The Company's level of dividend cover for the year (excluding capital gains on
properties) was 83.1* per cent. This was lower than the 87.0* per cent cover
achieved last year due to:
* a reduced level of rental income following the sale of the office building
in Great Pulteney Street in December 2016, on a very low yield, reducing
exposure to the West End of London office market. A significant portion of
the proceeds of this sale has now been reinvested at a higher yield in the
property in Bristol. The level of cover was also impacted by the voids at
Thames Valley One, Reading and Nevis/Ness House, Edinburgh.
* The cover was further reduced by an increase in the base management fee
negotiated at the start of the year, following the removal of the
performance fee. The base fee rate is higher than the effective rate of the
total fees earned in 2016, when the Manager did not maximise the
performance fee, but lower than the effective rate of fees earned in the
previous years.
* The level of tax payable in the current year increased as taxable losses
were fully utilised in two subsidiaries of the Group.
Board Composition
As recorded in last year's Annual Report, Paul Marcuse, formerly Head of Global
Real Estate for UBS Global Asset Management, was appointed to the Board as a
Non-Executive Director on 12 January 2017. Peter Niven, who had been a
Non-Executive Director of the Company since its launch in 2005, retired from
the Board at the Annual General Meeting on 31 May 2017 and was the last of the
Company's founding directors to retire in favour of fresh appointments.
At the end of October 2018, I will have served on the Board for nine years. In
accordance with good corporate governance I plan to retire at the Annual
General Meeting in 2019, once my successor as chairman has been chosen. The
Board is mindful of the recommendations of the Hampton-Alexander Review
"Improving gender balance in FTSE Leadership". In particular the review
recommends that a Board should have at least 33 per cent female representation
by 2020 and the Board will consider this during the recruitment process for the
next Non-Executive Director.
Responsible Property Investment
The Board has taken further steps this year to develop our Responsible Property
Investment ('RPI') approach. Building upon the principles and procedures
established by our Property Manager's comprehensive RPI Strategy+, we have
developed a framework of specific targets and objectives for the Group. These
reflect the importance of a range of environmental, social and governance
('ESG') factors to the UK property market generally, and to the Group's
portfolio and investment strategy specifically.
Engaging with our shareholders was a crucial part of this process and we are
very grateful to those who took the time to meet with our advisor to discuss
their expectations, as well as those that responded to our survey on ESG
priorities. In total, shareholders representing over 50 per cent of the equity
in the Company provided valuable input to this process and I am confident that
they will see that we have responded positively and robustly to their
expectations and will continue to do so.
+ see bmorep.com/our-capabilities
Taxation
The UK government has announced that non-resident landlords will be taxable
under the UK corporation tax regime, rather than the UK income tax regime from
April 2020. This change could have a material impact on the Company's tax
affairs and we are in consultation with our tax advisors on this, in
particular, on whether the Company should apply for UK Real Estate Investment
Trust ('REIT') status.
Annual General Meeting
The Annual General Meeting will be held at 12.30pm on Wednesday 6 June 2018 at
The Fermain Valley Hotel, Fermain Lane, St. Peter Port, Guernsey.
Outlook
The property market out-performed initial expectations for 2017 but an
environment of higher interest rates and inflation, subdued economic growth,
political uncertainty and some keen pricing may begin to weigh more heavily on
investor sentiment this year. Performance is expected to be driven by income
return in the next few years and property as an asset class to remain
attractive to those seeking a secure income return and access to a large,
mature and relatively liquid property investment market. Investment opportunity
is likely to be seen as a result of the impact of technology, infrastructure
and demographic change on commercial property.
The Company has a well-positioned and resilient portfolio where the priority
continues to be to invest in and complete asset management initiatives within
the portfolio and to exploit any external opportunity to provide a dependable
and long-term rental income.
Chris Russell
Chairman
*see Alternative Performance Measures
Managers' Review
Property highlights over the Year
* 12 month total return of 8.7* per cent. The Company maintains
outperformance against the IPD Benchmark over a three, five and ten year
time horizon.
* The retail portfolio outperformed over the year driven by strong
performance for St Christopher's Place which delivered a 10.3* per cent
total return.
* Acquired One Cathedral Square, Bristol for GBP33.5 million.
Property Market Review for 2017
The market total return for the year, as measured by the MSCI Investment
Property Databank ('IPD') Quarterly Universe (the Benchmark) was 10.3 per cent,
which is a much stronger return than anticipated at the start of the year.
Total returns have been on an improving trend over the course of the year.
Investment activity has rebounded, driven largely by investment from overseas,
and the final quarter saw a return to net investment by UK institutional
investors. Although considerable uncertainty remains, sentiment appears to have
stabilised after the initial shock of the referendum vote in June 2016. Capital
growth resumed, rental growth held steady and yields compressed at the
all-property level.
Key Benchmark Metrics - All Property
2017 2016
% %
Total Returns 10.3 3.6
Income Return 4.6 4.7
Capital Return 5.4 (1.1)
Open Market Rental Value Growth 2.2 2.2
Initial Yield 4.7 4.9
Equivalent Yield 5.6 5.9
Source: MSCI Inc
The year saw an indecisive general election, political disunity, rising
inflation, Brexit uncertainty and the first rise in official interest rates in
a decade. Despite this, there appears to be ample equity, especially from
overseas, and fears of a Brexit related sell-off have not been realised. There
have been concerns about pricing levels in some parts of the market and a
search for yield from some buyers. In this environment, investors have
generally been cautious, selective and are favouring core assets and secure
income streams.
There has been a polarization in performance by segment. The year saw standard
industrial and distribution warehousing drive performance, and the composite
industrial benchmark delivered a 19.4 per cent total return and South East
Industrials 22.3 per cent. In contrast, the composite benchmark returns from
the retail and office sectors both underperformed the all property total
return, which just emphasises the strength of the industrial and logistics
sector. The alternatives sector is becoming evermore popular with investors,
and this diverse group registered an 11.9 per cent total return. Offices
delivered an 8.2 per cent total return, with City offices, helped by overseas
buying, out-performing at 9.1 per cent and the West End lagging at 7.5 per
cent. Regional offices showed an upturn towards the end of the year to deliver
9.0 per cent. The retail sector remained the weakest sub-market with a 6.9 per
cent total return. Shopping centres were out of favour, with capital values
falling and benchmark returns of only 3.2 per cent. As in previous years,
regional retail has struggled but Central London has out-performed and in 2017
delivered an 11.2 per cent benchmark return.
Polarization was also apparent with regard to yields. CBRE data showed stable
yields across much of the market in 2017 including high street shops,
supermarkets, prime shopping centres, retail warehouse parks, and some offices
but it moved yields inwards for City and regional offices and for prime
distribution, and made a major yield re-rating for standard industrial. In
contrast, yields for secondary shopping centres rose by 75 basis points. Rental
growth was very much focused on the industrials market and was negative for
regional retail.
2017 represented a year of recovery following the dislocation caused by the
Brexit vote. However, the performances at the all-property level disguise wide
differences by segment and different drivers behind this variance. The
perceived impact of Brexit, technological change, structural change, the role
of overseas money and the search for yield and long leases are just some of the
factors that affected the market in 2017 and are likely to persist into future
years.
Valuation and Portfolio
Total Portfolio Performance
2017 2016
No of properties 37 36
Valuation (GBP'000) 1,418,612 1,322,455
Average Lot Size (GBP'm) 38.3 36.7
Portfolio Benchmark
(%) (%)
Portfolio Capital Return* 4.2 5.4
Portfolio Income Return* 4.4 4.6
Portfolio Total Return* 8.7 10.3
Source: BMO REP Asset Management plc, MSCI Inc
The total return from the portfolio over the year was 8.7* per cent (75th
percentile) compared with the benchmark return of 10.3 per cent. The portfolio
has delivered a strong track record of outperformance over the longer term:
upper quartile over three and five years and top quartile over ten years.
Geographical Analysis (% of total property portfolio)
2017 2016
(%) (%)
South East 25.2 26.6
London - West End 34.3 33.9
Eastern 2.0 2.0
Midlands 12.5 12.4
Scotland 11.8 12.9
North West 10.6 10.8
Rest of London 1.4 1.4
South West 2.2 nil
Source: BMO REP Asset Management plc
Sector Analysis (% of total property portfolio)
2017 2016
(%) (%)
Offices 36.2 35.5
Retail 31.0 31.5
Retail Warehouses 13.1 14.0
Industrial 16.9 16.2
Other 2.8 2.8
Source: BMO REP Asset Management plc
Income analysis
The portfolio benefits from a highly secure income stream. The current void
rate excluding developments and refurbishments is 6.9 per cent which is in line
with the benchmark. The portfolio is graded by MSCI as upper quartile in terms
of safety of income. The vacancy presents an opportunity and progress is
currently being made in attracting new secure tenants to the portfolio.
Lease Expiry Profile
At 31 December 2017 the weighted average lease length for the portfolio,
assuming all break options are exercised, was 7.3 years (2016: 7.1 years)
% of leases expiring (weighted by rental 2017 2016
value) (%) (%)
0 - 5 years 46.9 40.2
5 - 10 years 27.3 31.7
10 - 15 years 15.6 17.4
15 - 25 years 10.2 10.7
Source: BMO REP Asset Management plc
Covenant Strength (% of income by risk bands)
2017 2016
(%) (%)
Unscored and ineligible 5.0 1.2
Maximum 4.0 3.9
High 1.8 3.0
Medium to High 2.5 5.3
Low to Medium 4.8 6.1
Low 16.8 21.9
Negligible and Government 65.1 58.6
Source: IRIS Report, MSCI Inc
The largest occupiers, based as a percentage of contracted rent, as at 31
December 2017, are summarised as follows:
Income Concentration
Company name % of Total Income
GB Gas Holdings Limited 4.4
Virgin Atlantic Limited 4.1
Kimberly-Clark Limited 4.0
Apache North Sea Limited 3.9
Nexen Petroleum UK Limited 3.8
Mothercare UK Limited 3.5
JP Morgan Chase Bank 3.4
Asda Stores Limited 3.1
University of Winchester 2.9
DHL Supply Chain Limited 2.8
Total 35.9
Source: BMO REP Asset Management plc
The bad debt provision as at 31 December 2017 was low at GBP67,000, which is all
rent receivable that is greater than three months overdue and represents 0.1
per cent of the contracted rent. There is a wide diversity of occupiers within
the portfolio, which is set out below, and is compared with the Benchmark by
contracted rent, as at 31 December 2017. The portfolio does not have as high a
concentrated risk against retail trade and services occupiers and has a higher
exposure to financial services and manufacturing.
Income Concentration by Industry % Contracted Rent
Portfolio Benchmark
(%) (%)
Retail Trade 28.0 34.9
Financial Services 23.3 14.7
Manufacturing 19.6 7.5
Services 13.8 22.6
Transportation, Communications 4.1 6.2
Mining 3.8 0.5
Wholesale Trade 3.0 5.6
Public Administration 2.9 4.1
Other 1.5 3.9
Source: IRIS Report, MSCI Inc
Retail
Retail Portfolio Performance
2017 2016
No of properties ** 8 8
Valuation (GBP'000) 626,400 601,030
Portfolio Benchmark
(%) (%)
Retail Portfolio Capital Return* 3.6 1.7
Retail Portfolio Income Return* 4.1 5.1
Retail Portfolio Total Return* 7.8 6.9
Source: BMO REP Asset Management plc, MSCI Inc
** St Christopher's Place is regarded as 1 investment which comprises of 44
individual properties.
The total return on the retail portfolio was 7.8* per cent compared with the
benchmark total return of 6.9 per cent.
St Christopher's Place
St Christopher's Place Estate is the largest asset in the portfolio with a
year-end value in excess of GBP320 million. The Estate is a core holding for the
Company and comprises 44 individual properties across a range of uses including
traditional retail, restaurants, offices and a growing number of residential
units. The Estate performed strongly over the period with a total return of
10.3* per cent and a 7.3 per cent increase in its capital value as a result of
a number of asset management initiatives and rental growth across the retail,
restaurant and office sectors.
In the first half of the year the redevelopment of 71-77 Wigmore Street
completed on time and under budget and the entire redevelopment is now let at
rents exceeding appraisal targets. Restaurant operator Hoppers opened at number
77 in September; Danish Bakery Ole & Steen commenced trading at number 71 in
early 2018, whereas all residential units were let within three months of
opening. The project demonstrates the strength of occupational demand and
calibre of tenants attracted to this core Central London asset.
The re-positioning of the food and beverage offer on James Street has also
progressed over the year. Following the surrender of the La Tasca lease at
30-34 James Street we have exchanged terms for a new letting to a prestigious
London operator. The rent has also increased significantly from GBP211,000 per
annum to GBP360,000 per annum. Elsewhere at 42 and 44 James Street we achieved
the surrender of two leases and have been able to agree terms to a new concept
food operator for a newly configured and modern double frontage unit.
At 374 Oxford Street, the Company secured the renewal of two Body Shop leases
for their unit at a combined rent of GBP1,166,000 per annum, reflecting a
significant uplift of c. 75 per cent. The Estate continues to offer further
value enhancement opportunities over the short and medium term.
The Elizabeth Line (Crossrail 1) is due to open in December 2018, which has
prompted a public consultation on a proposed 'Transformation of Oxford Street'
which promotes the eventual pedestrianisation of Oxford Street. To support this
process, as well as to protect and improve the interests of the Company, we
remain actively engaged with key stakeholders including Transport for London,
Westminster City Council and the New West End Company. We continue to promote
opportunities for reduced through traffic on James Street and we aim for this
to form part of the overall strategy for environmental improvements to this
part of the West End.
Other In-Town Retail
At the Company's retail and leisure holding in Wimbledon, Blacks renewed their
lease for a term of 10 years at a higher rent, which will positively support
the current round of rent reviews and lease renewals. We are actively
consulting with Merton Council on future planning policy for Wimbledon Town
Centre, which is undergoing a major review and also continue to consult as
necessary on a potential Crossrail 2. Although final announcements on the
future of the project have been delayed, the potential impact of Crossrail 2
would present significant long-term opportunities for the asset. We will
continue to explore these projects over the coming year.
Retail Warehouses
There was positive income growth at the Company's "out of town retail"
holdings. At Newbury Retail Park Unit 14, the only vacant unit is now under
offer to two well-known occupiers who will complement the existing offer at the
park. The unit, which comprises 5,000 sq ft, is being split into two premises.
This provides more variety of unit size at the park and achieves overall rent
of c. GBP50,000 per annum higher than the existing rental value for the unit.
Planning consent has been received with enabling works already underway and
occupation expected this summer.
At Sears Retail Park in Solihull, the completion of a long outstanding 2012
rent review saw additional income received of GBP18,400 per annum. Having secured
planning consent, the project team is in detailed discussions with Argos and
Boots to allow works to start on the upgrade to the shop fronts of units 3 and
4, which is part of the ongoing retail park refurbishment program.
Unfortunately, 2017 saw furniture retailer Multiyork enter administration. The
retailer accounted for c. 4.4 per cent of income at the park and ceased trading
in January 2018. Marketing of the space has commenced and owing to the local
dominance of the park this presents the Company a number of opportunities to
secure stronger long-term income for the asset.
Offices
Offices Portfolio Performance
2017 2016
No of properties 17 16
Valuation (GBP'000) 513,562 469,375
Portfolio Benchmark
(%) (%)
Offices Portfolio Capital Return* 1.6 4.2
Offices Portfolio Income Return* 4.2 3.9
Offices Portfolio Total Return* 5.9 8.2
Source: BMO REP Asset Management plc, MSCI Inc
The total return for the office portfolio was 5.9* per cent compared to the
benchmark total return of 8.2 per cent. The Company's relative underperformance
is driven by the higher than average level of vacancy in the South East out of
town assets, notably TVP One at Thames Valley Park in Reading and Building B at
Watchmoor Park in Camberley, as well as the former HSBC office in Edinburgh
Park.
Owing to a challenging office occupational market, planning consent for
residential use was sought and successfully achieved for one building at
Watchmoor Park, although this was unsuccessful at Thames Valley Park where we
are now exploring other options. The strategy at Watchmoor Park is to exit at
least one of the buildings via a sale to a residential developer. At Edinburgh
Park, we are now in advanced legal negotiations for a lease of the entire
building to a major multi-national corporate and we aim to complete the lease
in H1 2018. Enabling works for the proposed refurbishment are already
progressing.
Our London assets let well during the year. New leases were contracted for five
floors within Cassini House, St James' Street SW1, at rents of GBP50 to GBP107 per
sq ft. At 2-4 King Street the refurbishment works are now compete with two
further floors letting up at rents of GBP90 to GBP99 per sq ft, with the final
vacant floor under offer. 82 King Street in Manchester is fully let with the
latest letting achieving GBP35 per sq ft and reflecting the growth of prime rents
for strong regional centres across the UK.
The City occupational market for small suites remains challenging. At 7 Birchin
Lane, EC3, two new lettings were secured on the ground and first floor (c.
5,200 sq ft) with one regear on the fifth floor (c. 2,500 sq ft) at rents
ranging from GBP54 to GBP61 per sq ft. The property is now over 70 per cent
occupied with one further suite under offer. The recent lettings success at the
property has been influenced by the strategy to offer more flexible lease terms
to tenants to compete with co-working providers.
Office Purchase
In December the Company completed the purchase of 1 Cathedral Square, Bristol,
a four-storey Grade-A office at a purchase price of GBP33.5m (reflecting a net
initial yield of 5.00 per cent). The property is let to two strong covenants in
Dyson Technology Limited and the University of Bristol. Bristol has been a
targeted location for the Company given the prospects for rental growth driven
by strong occupational demand and a lack of supply of prime accommodation. The
purchase is in accordance with the Company strategy to acquire prime office
assets in city and town centres which attract a skilled, professional and young
working population which should support long-term tenant demand and prove to be
resilient to structural change.
Industrial & Logistics
Industrial & Logistics Portfolio Performance
2017 2016
No of properties 11 11
Valuation (GBP'000) 239,350 214,450
Portfolio Benchmark
(%) (%)
Industrial & Logistics Portfolio Capital Return 11.6 13.9
*
Industrial & Logistics Portfolio Income Return* 5.6 4.9
Industrial & Logistics Portfolio Total Return* 17.7 19.4
Source: BMO REP Asset Management plc, MSCI Inc
The total return for the industrial and logistics portfolio delivered 17.7* per
cent versus the benchmark total return of 19.4 per cent, representing another
strong year for the sector. If 2016 was characterised by the notable
performance of "Big Box's'", where the majority of the portfolio's assets in
this sector are held, 2017 saw the broader industrial market deliver high
capital growth with significant yield compression for secondary and tertiary
assets, especially
for those located in the South East. As noted elsewhere the lower than
benchmark weighting to South East industrials contributed to underperformance
of both the sector and portfolio. However, the rest of UK Industrial
outperformed its segment and the portfolio has achieved prolonged
outperformance in this sector over the longer term.
In terms of asset activity, at Plot E4 DIRFT in Daventry we completed the lease
renewal to Mothercare in February. The new agreement saw a c. 20 per cent
increase in valuation of the asset from GBP28.25 million to GBP33.9 million. At the
DHL logistics facility in Liverpool we achieved a 20 per cent increase in rent
at the review in March, supporting our positive long-term view of the logistics
market in the North West Region.
There was much activity at our multi-let trading estate, Cowdray Trade Park in
Colchester. The rental tone has increased recently to between GBP6.25 to GBP7.00
per sq ft, which was captured in a number of rent reviews and lease renewals
including Rexel UK Limited extending for a further five years. There is also a
1.45 acre site incorporating a former dilapidated unit, where we will shortly
be submitting a planning application for a number of trade counter units
ranging from 3,715 to 20,000 sq ft with a target to commence works later in
2018.
The weight of investor demand has seen pricing of opportunities in both the
Industrial and Logistics markets look a little over-heated for many assets but
we continue to monitor the market closely and will look to invest further into
opportunities offering fair value and long-term growth prospects.
Industrial Sale
The Company exchanged contracts to sell Ozalid Works in Colchester to Persimmon
Homes Limited subject to a satisfactory planning consent being received. The
property comprises a site and dilapidated light industrial units that are
currently being vacated. A revised planning application was submitted in
January 2018 with a target decision date of spring 2018. The sale has been
divided into two separate plots and if a revised satisfactory planning consent
is achieved the sale will be phased over twelve months.
The Alternative Property Sector
The student accommodation block, let in its entirety to the University of
Winchester on a long lease, remains the Company's only exposure to this sector.
The property produced a total return of 8.9* per cent last year in addition to
consecutive years of strong performance. This lease is subject to annual RPI
increases and the annual rent is now GBP1,809,382 per annum.
Outlook
After another year of absolute high total returns for the UK commercial
property market, we expect 2018 to produce more muted but stable returns
broadly in line with the long-term average. The yield compression experienced
in the industrial markets that has driven recent performance is likely to abate
and we believe most commercial sectors have reached a pricing apex.
Uncertainty from the Brexit negotiations will continue and this should soften
rental growth in some markets. Interest rates increased over the year from
historic lows and following a period of strong inflation and economic growth we
expect further increases over 2018.
The environment and outlook in retail has deteriorated recently with a number
of Company Voluntary Arrangements ('CVA's) and restructurings being announced.
This will not only put pressure on rental growth from this sector but also on
maintaining current income.
In terms of property pricing, the margin above government bonds (the adopted
proxy for the risk-free rate of investment) has been far above the long-term
average for a sustained period. Therefore, current pricing is reasonably well
placed to absorb further increases in interest rates but any continued yield
compression is unlikely.
We will seek new acquisitions on a selective basis and we will continue to
favour quality industrial and logistics, town centre offices in targeted
locations and the alternative sector. We will continue to focus on asset
management initiatives apparent in the portfolio and to reducing the exposure
to voids. Despite forecasting more modest performance in the short term, UK
commercial property continues to offer investors attractive long-term income
returns and the Company's portfolio is well positioned whilst we navigate this
period of political uncertainty.
Richard Kirby
Fund Manager
BMO REP Asset Management plc
*see Alternative Performance Measures
F&C Commercial Property Trust Limited
Consolidated Statement of Comprehensive Income (audited)
Year ended Year ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Revenue
Rental income 64,775 64,628
--------- ---------
Total revenue 64,775 64,628
Gains on investment properties
Unrealised gains on revaluation of investment 52,854 9,507
properties
(Losses)/gains on sale of investment properties (5) 215
realised
---------- ----------
Total income 117,624 74,350
---------- ----------
Expenditure
Investment management fee (7,692) (6,406)
Other expenses (5,659) (5,056)
---------- ----------
Total expenditure (13,351) (11,462)
----------- -----------
Operating profit before finance costs and 104,273 62,888
taxation
----------- -----------
Net finance costs
Interest receivable 72 69
Finance costs (10,932) (11,269)
Loss on redemption of interest rate swap - (1,283)
----------- -----------
(10,860) (12,483)
----------- -----------
Profit before taxation 93,413 50,405
Taxation (703) (251)
---------- ----------
Profit for the year 92,710 50,154
---------- ----------
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss
Net change in fair value of swap reclassified to
profit and loss - 1,546
Movement in fair value of effective interest 457 (717)
rate swaps
---------- ----------
Total comprehensive income for the year, net of 93,167 50,983
tax
---------- ----------
Basic and diluted earnings per share 11.6p 6.3p
All of the profit and total comprehensive income for the year is attributable
to the owners of the Group.
All items in the above statement derive from continuing operations.
F&C Commercial Property Trust Limited
Consolidated Balance Sheet (audited)
As at As at
31 December 31 December
2017 2016
GBP'000 GBP'000
Non-current assets
Investment properties 1,398,894 1,306,002
Trade and other receivables 20,734 17,827
------------ ------------
1,419,628 1,323,829
------------ ------------
Current assets
Trade and other receivables 3,288 3,093
Cash and cash equivalents 35,156 85,021
------------ ------------
38,444 88,114
------------ ------------
Total assets 1,458,072 1,411,943
------------ ------------
Current liabilities
Trade and other payables (18,936) (18,631)
Taxation payable (739) (240)
------------ ------------
(19,675) (18,871)
Non-current liabilities
Trade and other payables (1,812) (1,565)
Interest-bearing loans (307,675) (307,345)
Interest rate swaps (260) (717)
------------ ------------
(309,747) (309,627)
------------ ------------
Total liabilities (329,422) (328,498)
------------ ------------
Net assets 1,128,650 1,083,445
------------ ------------
Represented by:
Share capital 7,994 7,994
Share premium - 127,612
Reverse acquisition reserve - 831
Special reserve 589,593 461,150
Capital reserve - investments sold 7,063 7,068
Capital reserve - investments held 408,440 355,586
Hedging reserve (260) (717)
Revenue reserve 115,820 123,921
------------ ------------
Equity shareholders' funds 1,128,650 1,083,445
------------ ------------
Net asset value per share 141.2p 135.5p
F&C Commercial Property Trust Limited
Consolidated Statement of Changes in Equity
for the year ended 31 December 2017 (audited)
Capital Capital
Reverse Reserve - Reserve -
Share Share Acquisition Special Investments Investments Hedging Revenue
Capital Premium GBP Reserve Reserve Sold Held Reserve Reserve Total
GBP'000 '000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2017 7,994 127,612 831 461,150 7,068 355,586 (717) 123,921 1,083,445
Total
comprehensive
income for the
year
Transfer to
Special - (127,612) (831) 128,443 - - - - -
Reserve
Profit for the - - - - - - - 92,710 92,710
year
Movement in fair
value of interest - - - - - - 457 - 457
rate swaps
Transfer in
respect of
unrealised gains - - - - - 52,854 - (52,854) -
on investment
properties
Loss on sale of
investment - - - - (5) - - 5 -
properties
realised
Total
comprehensive - (127,612) (831) 128,443 (5) 52,854 457 39,861 93,167
income for the
year
Transactions with
owners of the
Company recognised
directly in equity
Dividends paid - - - - - - - (47,962) (47,962)
At 31 December 7,994 - - 589,593 7,063 408,440 (260) 115,820 1,128,650
2017
Consolidated Statement of Changes in Equity
for the year ended 31 December 2016 (audited)
Capital Capital
Reverse Reserve - Reserve -
Share Share Acquisition Special Investments Investments Hedging Revenue
Capital Premium Reserve Reserve Sold Held Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2016 7,994 127,612 831 474,529 (21,408) 374,340 (1,546) 118,072 1,080,424
Total comprehensive
income for the year
Profit for the year - - - - - - - 50,154 50,154
Movement in fair
value of interest - - - - - - 829 - 829
rate swaps
Transfer in respect
of unrealised gains
on investment - - - - - 9,507 - (9,507) -
properties
Gains on sale of
investment - - - - 215 - - (215) -
properties realised
Transfer of prior
years' revaluation
to realised reserve - - - - 28,261 (28,261) - - -
Transfer from
special reserve - - - (13,379) - - - 13,379 -
Total comprehensive
income for the year - - - (13,379) 28,476 (18,754) 829 53,811 50,983
Transactions with
owners of the
Company recognised
directly in equity
Dividends paid - - - - - - - (47,962) (47,962)
At 31 December 2016 7,994 127,612 831 461,150 7,068 355,586 (717) 123,921 1,083,445
F&C Commercial Property Trust Limited
Consolidated Statement of Cash Flows (audited)
Year ended Year ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Cash flows from operating activities
Profit for the year before taxation 93,413 50,405
Adjustments for:
Finance costs 10,932 11,269
Interest receivable (72) (69)
Unrealised gains on revaluation of investment (52,854) (9,507)
properties
Losses/(Gains) on sale of investment 5 (215)
properties realised
Loss on redemption of interest rate swap - 1,283
Increase in operating trade and other (3,204) (888)
receivables
Increase/(Decrease) in operating trade and 200 (5,746)
other payables
----------- -----------
48,420 46,532
----------- -----------
Interest received 72 69
Interest and bank fees paid (10,559) (10,778)
Tax paid (203) (71)
----------- -----------
(10,690) (10,780)
----------- -----------
Net cash inflow from operating activities 37,730 35,752
----------- -----------
Cash flows from investing activities
Purchase of investment properties (32,802) -
Sale of investment properties - 54,291
Capital expenditure (6,831) (10,510)
----------- -----------
Net cash (outflow)/inflow from investing activities (39,633) 43,781
----------- -----------
Cash flows from financing activities
Dividends paid (47,962) (47,962)
Draw down of Barclays Loan, net of costs - 49,489
Repayment of Barclays Loan - (50,000)
Revolving credit facility arrangement costs - (511)
Swap breakage costs - (1,283)
Draw down of Barclays Loan revolving credit 35,000 -
facility (35,000) -
Repayment of Barclays Loan revolving credit
facility
----------- -----------
Net cash outflow from financing activities (47,962) (50,267)
----------- -----------
Net (decrease)/increase in cash and cash (49,865) 29,266
equivalents
Opening cash and cash equivalents 85,021 55,755
----------- -----------
Closing cash and cash equivalents 35,156 85,021
----------- -----------
F&C Commercial Property Trust Limited
Principal Risks and Future Prospects
Each year the Board carries out a comprehensive, robust assessment of the
principal risks and uncertainties that could threaten the Company's success.
The consequences for its business model, liquidity, future prospects and
viability form an integral part of this assessment.
The Board applies the principles detailed in the internal control guidance
issued by the Financial Reporting Council, and has established an ongoing
process designed to meet the particular needs of the Company in managing the
risks and uncertainties to which it is exposed.
Principal risks and uncertainties faced by the Company are described below and
in note 2, which provides detailed explanations of the risks associated with
the Company's financial instruments.
* Market - the Company's assets comprise direct investments in UK
commercial property and it is therefore exposed to movements and changes in
that market.
* Investment and strategic - poor investment decisions and incorrect
strategy, including sector and geographic allocations, use of gearing,
inadequate asset management activity and tenant defaults could lead to poor
returns for shareholders.
* Regulatory - breach of regulatory rules could lead to suspension of
the Company's London Stock Exchange listing, financial penalties or a qualified
audit report.
* Environmental - inadequate attendance to environmental factors by the
Managers, including those of a regulatory and market nature and particularly
those relating to energy performance, health and safety, flood risk and
environmental liabilities, leading to the reputational damage of the Company,
reduced liquidity in the portfolio, and/or negative asset value impacts.
* Tax structuring and compliance - changes that cause the management and
control of the Company to be exercised in the United Kingdom could lead to the
Company becoming liable to United Kingdom taxation on income and capital gains.
Changes to tax legislation could have an adverse financial impact.
* Operational - failure of the Managers' accounting systems or
disruption to its business, or that of other third party service providers,
could lead to an inability to provide accurate reporting and monitoring,
leading to a loss of shareholders' confidence.
* Financial - inadequate controls by the Managers or other third party
service providers could lead to misappropriation of assets. Inappropriate
accounting policies or failure to comply with accounting standards could lead
to a qualified audit report, misreporting or breaches of regulations. Breaching
Guernsey solvency test requirements or loan covenants could lead to a loss of
shareholders' confidence and financial loss for shareholders.
The Board seeks to mitigate and manage these risks through continual review,
policy-setting and enforcement of contractual obligations. It also regularly
monitors the investment environment and the management of the Company's
property portfolio. The Managers seek to mitigate these risks through active
asset management initiatives and carrying out due diligence work on potential
tenants before entering into any new lease agreements. All of the properties in
the portfolio are insured.
The principal risks encountered during the year, how they are mitigated and
actions taken to address these are set out in the table below.
Principal Risk Mitigation Actions taken in the year
Valuers have difficulty in Professional external Valuing properties was
valuing the property assets valuers are appointed to challenging in the
due to lack of market value the portfolio on a aftermath of the Brexit
evidence or market quarterly basis. There is vote in June 2016. There
uncertainty. Error in the regular liaison with the has been more transactional
calculation/ application of valuers regarding all based market evidence this
the Company Net Asset Value elements of the portfolio. year which the valuers have
('NAV') leads to a material There is attendance by one used to assist them in
misstatement. or more Directors at the producing the quarterly
valuation meetings and the valuations. There was
Auditors attend the year end attendance by one or more
valuation meeting. Directors at the valuation
Risk reduced in the year meetings throughout the
under review year.
Unfavourable markets, poor The underlying investment The Board review the
stock selection, strategy, performance, Manager's performance at
inappropriate asset gearing and income forecasts quarterly Board Meetings
allocation and are reviewed with the against key performance
under-performance against Investment Manager at each indicators and is satisfied
benchmark and/or peer Board Meeting. The Company's that the Manager's
group. portfolio is well long-term performance is in
This risk may be diversified and of a high line with expectations.
exacerbated by gearing quality. Gearing is kept at
levels. modest levels.
Risk unchanged throughout
the year under review
Non-resident landlords will Adoption of UK REIT status The changes in taxation
be taxable under the UK is under consideration. were formalised in the UK
corporation tax regime from Under current tax Chancellor's Budget in
April 2020. This change legislation, the principal November 2017 and the
could have a material tax advantage for the Company's professional
impact on the Company's tax Company in doing this is advisors have been engaged
affairs. Additionally, new that the Group's net rental to advise on these
capital gains tax rules are income derived from its regulatory changes and look
set to be implemented in property rental business at the feasibility of the
April 2019 which will also would be exempt from UK Company adopting UK REIT
impact the Company moving taxation. The same treatment status.
forward. would apply to capital gains
arising on the disposal of
relevant rental properties.
Risk increased in the year
under review
The retail market has The Manager provides regular The portfolio has been
witnessed a number of information on the expected lightly impacted to date
company voluntary level of rental income that and the Manager has
arrangements, profit will be generated from the business plans in place to
warning announcements and underlying properties. The asset manage any tenant
administrations in recent Portfolio is well default.
months. There is an diversified by geography and
increased risk of tenant sector and the exposure to
defaults in this sector individual tenants is
which could put the level monitored and managed to
of dividend cover at risk. ensure there is no over
exposure.
Risk increased in the year
under review
Viability Assessment and Statement
The Board conducted this review over a five year time horizon, a period thought
to be appropriate for a Company investing in commercial property with a
long-term investment outlook; with primary borrowings secured for a further
seven years and a property portfolio with an average unexpired lease length of
7.3 years. The assessment has been undertaken, taking into account the
principal risks and uncertainties faced by the Group which could threaten its
objective, strategy, future performance, liquidity and solvency.
The major risks identified as relevant to the viability assessment were those
relating to a downturn in the UK commercial property market and its resultant
effect on the valuation of the investment property portfolio, the level of
rental income being received and the effect that this would have on cash
resources and financial covenants. The Board took into account the illiquid
nature of the Company's property portfolio, the existence of the long-term
borrowing facility, the effects of any significant future falls in investment
property values and property income receipts on the ability to repay and
re-negotiate borrowings, maintain dividend payments and retain investors. These
matters were assessed over a period to March 2023, and the Directors will
continue to assess viability over five year rolling periods, taking account of
foreseeable severe but plausible scenarios.
In the ordinary course of business, the Board reviews a detailed financial
model on a quarterly basis, incorporating market consensus forecast returns,
projected out to the maturity of its principal loan of GBP260 million which is
due to mature in 2024 and coincides with the next continuation vote. This model
uses prudent assumptions and factors in any potential capital commitments. For
the purpose of assessing the viability of the Group, the model has been
adjusted to look at the next five years and is stress tested with projected
returns comparable to the commercial property market crash experienced between
2007 and 2009. The model projects a worst case scenario of an equivalent fall
in capital and income values over the next two years, followed by three years
of zero growth. The model demonstrated that even under these extreme
circumstances the Company remains viable.
Based on their assessment, and in the context of the Group's business model,
strategy and operational arrangements set out above, the Directors have a
reasonable expectation that the Group will be able to continue in operation and
meet its liabilities as they fall due over the five year period to March 2023.
F&C Commercial Property Trust Limited
Going Concern
In assessing the going concern basis of accounting the Directors have had
regard to the guidance issued by the Financial Reporting Council. They have
reviewed detailed cash flow, income and expense projections in order to assess
the Company's ability to pay its operational expenses, bank interest and
dividends. The Directors have examined significant areas of possible financial
risk including cash and cash requirements and the debt covenants, in particular
those relating to loan to value and interest cover. They have not identified
any material uncertainties which cast significant doubt on the ability to
continue as a going concern for a period of not less than 12 months from the
date of the approval of the financial statements. The Board believes it is
appropriate to adopt the going concern basis in preparing the financial
statements.
Statement of Directors' Responsibilities in Respect of the Annual Report and
Accounts
In accordance with Chapter 4 of the Disclosure and Transparency Rules, we
confirm that to the best of our knowledge:
* The financial statements contained within the Annual Report and Accounts
for the year ended 31 December 2017, of which this statement of results is
an extract, have been prepared in accordance with applicable International
Financial Reporting Standards as adopted by the EU, on a going concern
basis, and give a true and fair view of the assets, liabilities, fiancial
position and profit or loss of the Group and the undertakings included in
the consolidation taken as a whole and comply with The Companies (Guernsey)
Law, 2008 (as amended) ; and
* The Chairman's Statement and Managers' Review include a fair review of the
development and performance of the business and the position of the Group
and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that
they face; and
* The consolidated financial statements include details of related party
transactions; and
In the opinion of the Directors:
* The Annual Report and financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.
On behalf of the Board
Chris Russell
Director
F&C Commercial Property Trust Limited
Notes to the audited Consolidated Financial Statements
for the year ended 31 December 2017
1. The Board has declared a twelfth, and last, interim dividend for the
year of 0.50p per share to be paid on 30 April 2018 to shareholders on the
register on 13 April 2018.
It is the Directors' intention that the Company will continue to pay dividends
monthly.
2. Financial Instruments and investment properties
The Company's investment objective is to provide ordinary shareholders with an
attractive level of income together with the potential for capital and income
growth from investing in a diversified UK commercial property portfolio.
Consistent with that objective, the Group holds UK commercial property
investments. In addition, the Group's financial instruments during the year
comprised interest-bearing bank loans, cash and receivables and payables that
arise directly from its operations. The Group does not have exposure to any
derivative instruments other than the interest rate swap entered into to hedge
the interest paid on the Barclays interest-bearing bank loan.
The Group is exposed to various types of risk that are associated with
financial instruments. The most important types are credit risk, liquidity
risk, interest rate risk and market price risk. There is no foreign currency
risk as all assets and liabilities of the Group are maintained in pounds
sterling.
The Board reviews and agrees policies for managing the Group's risk exposure.
These policies are summarised below and have remained unchanged for the year
under review. These disclosures include, where appropriate, consideration of
the Group's investment properties which, whilst not constituting financial
instruments as defined by IFRS, are considered by the Board to be integral to
the Group's overall risk exposure.
Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Group.
In the event of default by an occupational tenant, the Group will suffer a
rental shortfall and incur additional costs, including legal expenses, in
maintaining, insuring and re-letting the property. The Board receives regular
reports on concentrations of risk and any tenants in arrears. The Managers
monitor such reports in order to anticipate, and minimise the impact of,
defaults by occupational tenants.
All of the Group's cash is placed with financial institutions with a long-term
credit rating of A or better. Bankruptcy or insolvency of such financial
institutions may cause the Group's ability to access cash placed on deposit to
be delayed or limited. Should the credit quality or the financial position of
the banks currently employed significantly deteriorate, cash holdings would be
moved to another bank.
Liquidity risk
Liquidity risk is the risk that the Group will encounter in realising assets or
otherwise raising funds to meet financial commitments. The Group's investments
comprise UK commercial property. Property and property-related assets in which
the Group invests are not traded in an organised public market and may be
illiquid. As a result, the Group may not be able to liquidate quickly its
investments in these properties at an amount close to their fair value in order
to meet its liquidity requirements.
The Group's liquidity risk is managed on an ongoing basis by the Managers and
monitored on a quarterly basis by the Board. In order to mitigate liquidity
risk, the Group aims to have sufficient cash balances (including the expected
proceeds of any property sales) to meet its obligations for a period of at
least twelve months.
Interest rate risk
Some of the Group's financial instruments are interest bearing. They are a mix
of both fixed and variable rate instruments with differing maturities. As a
consequence, the Group is exposed to interest rate risk due to fluctuations in
the prevailing market rate.
The Group's exposure to interest rate risk relates primarily to its long-term
debt obligations. Interest rate risk on long-term debt obligations is managed
by fixing the interest rate on such borrowings, either directly or through
interest rate swaps for the same notional value and duration. Long-term debt
obligations and the interest rate risk they confer to the Group is considered
by the Board on a quarterly basis. Long term debt obligations consist of a GBP260
million L&G loan on which the rate has been fixed at 3.32 per cent until the
maturity date of 31 December 2024. The Group also has a GBP50 million
interest-bearing bank loan with Barclays on which the rate has been fixed
through an interest rate swap at 2.522 per cent per annum until the maturity
date of 21 June 2021. The Group has agreed an additional revolving credit
facility of GBP50 million with Barclays over the same period, which has not been
drawn down as at 31 December 2017. The revolving credit facility pays an
undrawn commitment fee of 0.60 per cent per annum.
When the Group retains cash balances, they are ordinarily held on
interest-bearing deposit accounts. The benchmark which determines the interest
income received on interest bearing cash balances is the bank base rate of the
Bank of England which was 0.50 per cent as at 31 December 2017 (2016: 0.25 per
cent). The Company's policy is to hold cash in variable rate or short-term
fixed rate bank accounts and not usually in fixed rate securities with a term
greater than three months.
Market price risk
The Group's strategy for the management of market price risk is driven by the
investment policy. The management of market price risk is part of the
investment management process and is typical of commercial property investment.
The portfolio is managed with an awareness of the effects of adverse valuation
movements through detailed and continuing analysis, with an objective of
maximising overall returns to shareholders. Investments in property and
property-related assets are inherently difficult to value due to the individual
nature of each property. As a result, valuations are subject to substantial
uncertainty. There is no assurance that the estimates resulting from the
valuation process will reflect the actual sales price even where such sales
occur shortly after the valuation date. Such risk is minimised through the
appointment of external property valuers.
3. There were 799,366,108 Ordinary Shares in issue at 31 December 2017
(2016: 799,366,108).
At 31 December 2017, the Company did not hold any Ordinary Shares in treasury
(2016: nil).
4. The basic and diluted earnings per Ordinary Share are based on the
profit for the year of GBP92,710,000 (2016: GBP50,154,000) and on 799,366,108
(2016: 799,366,108) Ordinary Shares, being the weighted average number of
shares in issue during the year.
5. The Company owns 100 per cent of the issued ordinary share capital
of FCPT Holdings Limited, a company registered in Guernsey. The principal
activity of FCPT Holdings Limited is to act as a holding company and it owns
100 per cent of the ordinary share capital of F&C Commercial Property Holdings
Limited, a company registered in Guernsey whose principal business is that of
an investment and property company, and 100 per cent of the ordinary share
capital of Winchester Burma Limited, a company registered in Guernsey whose
principal business is that of an investment and property company.
The Company owns 100 per cent of the issued ordinary share capital of SCP
Estate Holdings Limited, a company registered in Guernsey. The principal
activity of SCP Estate Holdings Limited is to act as a holding company and it
owns 100 per cent of the ordinary share capital of SCP Estate Limited, a
company registered in Guernsey whose principal business is that of an
investment and property company, and 100 per cent of the ordinary share capital
of Prime Four Limited, a company registered in Guernsey whose principal
business is that of an investment and property company.
The Company owns 100 per cent of the issued ordinary share capital of Leonardo
Crawley Limited, a company registered in Guernsey whose principal business is
that of an investment and property company.
The results of the above entities are consolidated within the Group financial
statements.
6. The Group had capital commitments totalling GBP6,800,000 as at 31
December 2017 (2016: GBP4,271,000). These commitments related mainly to
contracted development work at the Group's property at Cassini House, London
SW1.
7. These are not full statutory accounts. The full audited accounts for
the year to 31 December 2017 will be sent to shareholders and will be available
for inspection at Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1
3QL, the registered office of the Company, and from the Company's website:
fccpt.co.uk
Alternative Performance Measures
The Company uses the following Alternative Performance Measures ('APMs'). APMs
do not have a standard meaning prescribed by GAAP and therefore may not be
comparable to similar measures presented by other entities.
Discount or Premium - the share price of an Investment Company is derived from
buyers and sellers trading their shares on the stock market. If the share price
is lower than the NAV per share, the shares are trading at a discount. This
usually indicates that there are more sellers than buyers. Shares trading at a
price above the NAV per share, are said to be at a premium.
Dividend Cover - The percentage by which Profits for the period (less Gains/
losses on investment properties and loss on redemption on interest rate swaps)
cover the dividend paid.
A reconciliation of dividend cover is shown below:
2017 2016
GBP'000 GBP'000
Profit for the 92,710 50,154
period
Add back: Unrealised gains on revaluation
of investment properties (52,854) (9,507)
Losses/(gains) on sales of
investment properties realised 5 (215)
Loss on redemption of interest - 1,283
rate swap
Profit before investment gains and losses 39,861 41,715
Dividends 47,962 47,962
Dividend Cover percentage 83.1 87.0
Dividend Yield - The annualised dividend divided by the share price at the year
end.
Net Gearing - Borrowings less cash divided by total assets (less current
liabilities and cash).
Portfolio (Property) Capital Return - The change in property value during the
period after taking account of property purchases and sales and capital
expenditure, calculated on a quarterly time-weighted basis.
Portfolio (Property) Income Return - The income derived from a property during
the period as a percentage of the property value, taking account of direct
property expenditure, calculated on a quarterly time-weighted basis.
Portfolio (Property) Total Return - Combining the Portfolio Capital Return and
Portfolio Income Return over the period, calculated on a quarterly
time-weighted basis.
Total Return - The return to shareholders calculated on a per share basis by
adding dividends paid in the period to the increase or decrease in the Share
Price or NAV. The dividends are assumed to have been reinvested in the form of
Ordinary Shares or Net Assets, respectively, on the date on which they were
quoted ex-dividend.
All enquiries to:
The Company Secretary
Northern Trust International Fund Administration (Guernsey) Limited
Trafalgar Court
Les Banques
St. Peter Port
Guernsey GY1 3QL
Tel: 01481 745436
Fax: 01481 745186
Richard Kirby
BMO REP Asset Management plc
Tel: 0207 016 3577
Graeme Caton
Winterflood Securities Limited
Tel: 0203 100 0268
END
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April 17, 2018 02:00 ET (06:00 GMT)
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