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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hansteen Holdings Plc | LSE:HSTN | London | Ordinary Share | GB00B0PPFY88 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 116.20 | 116.20 | 116.40 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMHSTN
RNS Number : 4904Y
Hansteen Holdings plc
22 August 2018
22 August 2018
Hansteen Holdings PLC
("Hansteen" or the "Group" or the "Company")
HALF YEAR RESULTS
Hansteen (LSE: HSTN), the investor in urban multi-let industrial property, announces its half year results for the six months ended 30 June 2018.
Financial highlights from continuing operations
-- IFRS profit increased to GBP29.2 million (H1 2017: GBP13.3 million) -- Normalised Income Profit (NIP) of GBP13.6 million (H1 2017: GBP15.5 million[1]) -- Normalised Total Profit (NTP) of GBP20.2 million (H1 2017: GBP16.8 million1) -- EPRA NAV per share of 100p after returning 35p of capital (31 December 2017: 131p1) -- IFRS NAV per share of 106p after returning 35p of capital (31 December 2017: 135p)
-- October interim dividend increased by 4.3% to 2.4p per share (November 2017: 2.3p per share)
Operational highlights
-- Property valuation increase of 3.7% or GBP24.1 million -- 362 new UK leases / renewals at 4.6% ahead of ERV at 31 December 2017
-- IMPT portfolio sold for GBP116 million generating a profit of GBP6.1 million over 31 December 2017 valuation
-- Saltley Business Park compulsorily purchased (CPO)
-- GBP9.9 million of other sales generating profits of GBP0.3 million over 31 December 2017 valuation
-- GBP144.5 million (35p per share) of capital returned to shareholders in May 2018
Post balance sheet events
-- Contracts exchanged to acquire 34 assets for GBP57.3 million (including costs) reflecting a net initial yield of 9.15%.
Melvyn Egglenton, Chairman, commented: "This has been a busy and successful period for Hansteen. We have sold the IMPT portfolio, received a down payment for the CPO of Saltley Business Park and returned GBP144.5 million of capital to shareholders. Meanwhile, the portfolio continued to perform strongly enjoying substantial valuation growth over the six-month period.
This pace has continued into July and August with the exchange of contracts to acquire 34 assets for GBP57.3 million (including costs) with a rent roll of GBP5.25 million per annum, reflecting a net initial yield of 9.15%"
Ian Watson and Morgan Jones, Joint Chief Executives, added: "The backdrop to our business remains positive. Occupational demand is solid with very limited supply in all our regions. Rents and capital values are growing but at a time when there is no new meaningful supply on the horizon.
The investment case for urban multi-let industrials is stronger than ever and increasingly well understood. As a result, we continue to see new capital looking to invest. A stabilised and diversified portfolio like ours with a robust and growing rent roll provides ongoing solid and attractive returns. However, we remain committed to our buy, work and sell business model and expect to continue to realise investments over the next couple of years. As we have shown with the recent acquisition, if we identify opportunities that fit our model we will keenly pursue them but our expectation is that we will be net sellers for the foreseeable future."
For more information:
Hot Features
Premium
Ian Watson/Morgan Jones Jeremy Carey/Kirsty Allan
Hansteen Holdings PLC Tavistock
Tel: 0207 408 7000 Tel: 0207 920 3150
Email: jeremy.carey@tavistock.co.uk
Chairman's interim statement
The first six months of 2018 continued to be a busy and successful period for Hansteen. We have sold the IMPT portfolio, received a down payment for the compulsory purchase order (CPO) of Saltley Business Park and returned GBP144.5 million of capital to our shareholders. Meanwhile, the portfolio continued to perform strongly enjoying substantial valuation growth over the six-month period.
This pace has continued into July and August with the exchange of contracts to acquire 34 assets for GBP57.3 million (including costs) with a rent roll of GBP5.25 million per annum, reflecting a net initial yield of 9.15%. The acquisition was made by the vehicle that owned Saltley and therefore we expect to recover the acquisition costs in due course under the re-investment provisions of the CPO.
Results
Hansteen's IFRS profit for the six months to 30 June 2018 increased to GBP29.2 million (H1 2017: GBP13.3 million) and includes a like-for-like property revaluation uplift of GBP24.1 million or 3.7%. This revaluation was generated from a smaller portfolio following the 21 asset sales in the second half of 2017, the sale of IMPT and the Saltley CPO in 2018. Despite the reduced rent roll following these disposals, the business produced Normalised Income Profit (NIP) of GBP13.6 million (H1 2017: GBP15.5 million) and Normalised Total Profit of GBP20.2 million (H1 2017: GBP16.8 million). NIP excludes profits or losses from the sale of properties and valuation movements and therefore reflects the net rental income received from the portfolio after the deduction of costs and debt interest. NTP comprises NIP plus profits or losses from the sale of properties and realised profits from one-off items.
These normalised profit measures (NIP and NTP) reflect the underlying realised profits from the business before considering property and other revaluation movements. The table below sets out the calculation and results for NIP and NTP with a breakdown between 'Continuing Operations', being predominantly the UK portfolio and 'Discontinued Operations', being the German and Dutch portfolio, which was sold in June 2017.
Continuing Discontinued Total Continuing Discontinued Total
Operations Operations Operations Operations
H1 2018 H1 2018 H1 2018 H1 2017 H1 2017 H1 2017
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- ------------ ------------- --------- ------------ ------------- ---------
Property rental
income 26.2 - 26.2 28.8 36.2 65.0
Direct operating
expenses (1.9) 0.1 (1.8) (1.5) (3.0) (4.5)
Administrative
expenses (6.8) (0.2) (7.0) (6.9) (3.1) (10.0)
Net interest payable (3.9) - (3.8) (4.9) (6.7) (11.6)
---------------------- ------------ ------------- --------- ------------ ------------- ---------
Normalised Income
Profit (NIP) 13.6 (0.1) 13.5 15.5 23.4 38.9
Profit on sale
of properties 6.4 - 6.4 0.8 48.0 48.8
Other operating
income 0.2 - 0.2 0.5 0.2 0.7
---------------------- ------------ ------------- --------- ------------ ------------- ---------
Normalised Total
Profit (NTP) 20.2 (0.1) 20.1 16.8 71.6 88.4
---------------------- ------------ ------------- --------- ------------ ------------- ---------
Basic IFRS EPS was 7.1p (H1 2017: 1.7p) and adjusted EPS was 3.2p (H1 2017: 2.0p). Adjusted EPS is based on EPRA EPS adjusted for the fair value of the Founder LTIP charge. EPRA EPS and adjusted EPS are reconciled to basic IFRS EPS in note 11 to the condensed financial statements.
The Board regards EPRA NAV per share plus dividends and other returns to shareholders as the best measure of value growth. The Group's EPRA NAV per share at 30 June 2018 was 100p after paying a dividend of 3.8p and returning 35p per share to shareholders. The EPRA NAV per share at 31 December 2017, before the 35p capital return was 131p. The calculation of the EPRA NAV per share at 30 June 2018 takes account of the Founder LTIP, details of which are set out later in the Statement.
The Group uses a number of alternative performance measures which are not defined within IFRS. The Board use these measures in order to assess the underlying realised profits from the business and as such these measures should be considered alongside the IFRS measures. A reconciliation of NIP and NTP to the IFRS profit before tax is contained in note 9 to the condensed financial statements. Basic NAV per share is reconciled to EPRA NAV per share in note 10 to the condensed financial statements.
Dividend
The Board has increased the interim dividend by 4.3% to 2.4p per share (November 2017: 2.3p per share) reflecting the strong realised profit performance. The dividend payment of 2.4p per share will include a 2.4p Property Income Distribution (PID) and will be paid on 26 October 2018. The associated record date is 28 September 2018 and the ex-dividend date is 27 September 2018.
Industrial Multi Property Trust PLC (IMPT)
On 27 March 2018, Hansteen completed the sale of the IMPT portfolio for GBP116 million. After acquiring the portfolio in the first half of 2017, our UK asset management team was able to increase the occupancy, rent roll and ERV and, as a result, the portfolio was valued at GBP109.7 million at 31 December 2017. The sale has generated a profit over the 31 December 2017 valuation of GBP6.1 million after fees and expenses.
Saltley Compulsory Purchase Order (CPO)
On 13 March 2018, the Secretary of State for Transport acquired Saltley Business Park, Birmingham by way of a CPO under the High Speed Rail (London - West Midlands) Act 2017, to enable construction of the first phase of the HS2 route. As part of the CPO process, High Speed Two (HS2) Limited, acting on behalf of the Secretary of State, made a down payment of GBP36.96 million and a mutual valuation process is under way which is designed to establish the property's market value.
Return of capital
The sale of the IMPT portfolio and the Saltley Business Park CPO generated net cash proceeds in excess of GBP150 million. Owing to the high level of demand for industrial property investments, opportunities to reinvest these substantial cash deposits in properties that fitted the Hansteen business model were limited. As the cash deposits would have earned virtually no interest and, therefore, materially dilute the returns from the business, the Board considered that returning the capital to the shareholders by means of a reduction and return of capital was in the best interest of all shareholders. The Company's share premium and capital redemption reserve were reduced by GBP144.5 million and each shareholder received 35p per share in cash on or around the 11 May 2018.
Since the Company's IPO, Hansteen has raised GBP717.9 million, including convertible bonds, and has made distributions of income and capital which along with the net asset value of the remaining business amounts to cGBP1.5 billion. (GBP717.9 million raised, GBP339.2 million of dividends paid, cGBP722.4 million of capital returns, and a retained NAV of GBP439 million.)
Property portfolio
The built portfolio has a yield of 7.4% on the passing rent and 7.9% on the contracted rent. Including the 469 acres of undeveloped land, the total portfolio has a yield on the passing rent of 6.8% and a yield on the contracted rent of 7.3%. The summary analysis of the total portfolio, at 30 June 2018, is set out below:
Number Acres Built Vacant Passing Contracted Value Yield Yield
of properties of land area area rent rent (GBPm) on passing on contracted
(m sq (GBPm) (GBPm) rent rent
ft)
UK 257 - 13.2 9.0% 43.3 46.5 589.9 7.3% 7.9%
-------------- -------- ------ ------ ------- ---------- ------- ----------- --------------
Belgium &
France 8 - 0.7 11.9% 2.3 2.3 28.4 8.1% 8.1%
------------ -------------- -------- ------ ------ ------- ---------- ------- ----------- --------------
Total built
portfolio 265 - 13.9 9.2% 45.6 48.8 618.3 7.4% 7.9%
============ ============== ======== ====== ====== ======= ========== ======= =========== ==============
UK Land - 469 - - - - 51.9 - -
============ ============== ======== ====== ====== ======= ========== ======= =========== ==============
Occupational demand has continued to outstrip supply in 2018. This, combined with very limited new development is driving rental growth across the UK. In the first six months of the year our team has secured 362 new lettings or renewals at rent levels which are 4.6% higher than the ERV at 31 December 2017. Like-for-like net occupancy (measured by taking the vacant area at the start of the period, adding vacancy on purchases and then comparing that with the vacancy at the end of the period) has improved marginally. This statistic follows a similar pattern to previous years where leases ending at 31 December create a marginally negative effect during the early months of the year which we expect to reverse during the latter part of the year.
Property valuation, disposals and acquisitions
The like-for-like value of the total portfolio (after disposals) has increased by GBP24.1 million or 3.7% since 31 December 2017. The UK portfolio increased by GBP24.4 million or 4.0% and the value of the Belgium and France portfolio decreased by GBP0.3 million of 1%. Despite the overall valuation increase, the built portfolio retains a high yield of 7.4% (passing rent divided by value).
In addition to the disposal of the IMPT portfolio and the Saltley CPO, a further seven properties were sold for GBP9.9 million generating profits of GBP0.3 million above the 31 December 2017 valuation.
On 6 August 2018, we announced that contracts had been exchanged for the acquisition of a portfolio of 34 assets located throughout the UK with a focus on the North West for GBP57.3 million (including costs), adding 1.4 million sq ft of space to the portfolio. The passing rent is GBP5.25 million per annum generated from more than 200 tenants providing a diverse and secure income stream. We believe that the portfolio contains a number of asset management opportunities which will create value in both the short and longer term. The purchase of 31 of these assets completed on 16 August 2018 for GBP50.4 million and the purchase of the remaining three assets for GBP6.9 million is expected in September 2018.
As a result of press speculation regarding a potential sale of a portfolio of industrial assets by Hansteen to Warehouse REIT plc, both companies have issued statements which have confirmed that we are in discussions regarding a property sale but that there is no certainty that a transaction will be concluded and a further announcement will be made as and when appropriate.
Gearing
At 30 June 2018, net debt was GBP225.2 million (31 December 2017: GBP225.4 million) and net debt to value was 33.6% (31 December 2017: 27.6%). The table below sets out the calculation of net debt and the net debt to value ratio:
30 June 31 Dec
2018 2017
GBPm GBPm
----------------------------------------- ------------------- ------------------
Obligations under finance leases 2.3 2.5
Borrowings 263.8 297.1
Capitalised bank loan fees (2.4) (3.0)
Cash and cash equivalents (38.5) (71.2)
----------------------------------------- ------------------- ------------------
Net debt 225.2 225.4
Carrying value of investment and trading
properties 670.2 818.1
Net debt to value ratio 33.6% 27.6%
----------------------------------------- ------------------- ------------------
As at 30 June 2018, the Group had total bank facilities of GBP333.8 million (31 December 2017: GBP334.1 million), of which GBP263.8 million were drawn (31 December 2017: GBP297.1 million). Borrowings are in the same currency as the assets against which they are secured. Cash resources were GBP38.5 million (31 December 2017: GBP71.2 million). The weighted average debt maturity, at 30 June 2018, was 3.1 years and the weighted average maturity of hedging was 3.1 years.
Analysis of the Group's bank loan facilities at 30 June 2018 is set out below:
Lender Facility Amount Unexpired All-in-interest Loan to Interest
undrawn term rate value cover
millions millions years covenant covenant
----------------------- --------------------- --------------------- --------------------- --------------------------- -------------------- --------------------
BNP Paribas
Fortis GBP3.8 - 5.1 1.5% - -
Royal Bank
of
Scotland GBP330.0 GBP70.0 3.1 2.9% 55% 200%
----------------------- --------------------- --------------------- --------------------- --------------------------- -------------------- --------------------
Total
facilities GBP333.8 GBP70.0 3.1 2.9%
----------------------- --------------------- --------------------- --------------------- --------------------------- -------------------- --------------------
In addition to the bank loan facilities, the Group has a GBP2.3 million finance lease in place to fund a property in Belgium. As at 30 June 2018, the lease had an unexpired term of 4.5 years and an interest rate implicit in the lease of 2.8%.
In total at 30 June 2018, the Group had borrowings including obligations under finance leases, of GBP266.1 million (31 December 2017: GBP299.6 million) of which GBP150.0 million was swapped at an average rate of 0.53% and GBP50.0 million was capped at an average rate of 0.75%. The average all-in borrowing rate for the Group, at 30 June 2018, was 2.9% (31 December 2017: 2.7%).
Founder Long Term Incentive Plan ("Founder LTIP")
The Founder LTIP was established at the time of the Company's IPO in November 2005. Under the scheme, if the growth in the Group's EPRA NAV per share plus dividends (and other returns to shareholders) exceeds compound growth of more than 10% per annum over a fixed three-year period, the joint Chief Executives will each receive an award of shares with a value of 12.5% of the outperformance multiplied by the number of shares in issue at the end of the performance period. The current performance period runs from 1 January 2016 to 31 December 2018 and as previously reported, after consultation with shareholders and the directors, this will be the final performance period for which Founder LTIP shares can be awarded.
The returns so far are ahead of the target levels. There is a further six months remaining and therefore the potential awards can only be estimated at this stage and are dependent on the performance in the final six months.
The calculation of performance in the current period has been adjusted to take account of the tender offer of November 2017 and as explained in the return of capital circular and in the Remuneration Committee report contained in the 2017 Annual Report and Accounts, the Founder LTIP calculation will be measured over two periods, being pre and post the return of capital date of 14 November 2017.
EPRA NAV per share includes the impact of dilutive shares and dilution is required only to the extent that the results to date have exceeded the full target to 31 December 2018. Under this methodology the accrual to 30 June 2018 is 13.1 million shares to each of the Joint Chief Executives. As the full three-year hurdle has been met by 30 June 2018, the value of the awards will increase by 25% of all additional returns made in the second half of 2018.
The administrative expenses of GBP22.1 million (H1 2017: GBP14.8 million) includes a charge of GBP15.3 million (H1 2017: GBP7.9 million) related to the potential Founder LTIP awards and associated National Insurance contributions. Only the effect of the associated National Insurance contributions on the Founder LTIP awards affects the NAV because, in accordance with IFRS, the charge for the potential Founder LTIP awards excluding the associated National Insurance contribution is credited back through equity. This GBP15.3 million charge related to the potential Founder LTIP awards and associated National Insurance contributions is not reversed when calculating EPRA EPS which has led to a loss of 0.5p per share at 30 June 2018. However, the charge is reversed when calculating Adjusted EPS of 3.2p per share at 30 June 2018.
Outlook
We continue to enjoy a beneficial backdrop to our business. Occupational demand is solid with very limited supply in all our regions. Rents and capital values are growing but not yet at a stage where any new meaningful supply is even on the horizon.
The investment case for urban multi-let industrials is stronger than ever and increasingly well understood. As a result, we continue to see new capital looking to invest. A stabilised and diversified portfolio like ours with a robust and growing rent roll provides solid and attractive returns. However, we remain committed to our buy, work and sell business model and expect to continue to realise investments over the next couple of years. As we have shown with the recent acquisition, if we identify opportunities that fit our model we will keenly pursue them, but our expectation is that we will be net sellers for the foreseeable future.
Melvyn Egglenton
Chairman
21 August 2018
Principal risks and uncertainties
Risk management is an important part of the Group's system of internal controls. Senior management and the Board regularly consider the significant risks which it believes are facing the Group, identify and monitor appropriate controls and, if necessary, instigate action to improve those controls. There will always be some risk when undertaking property investments but the control process is aimed at mitigating and minimising these risks where possible.
The key risks identified by the Board for the remaining six months of the year, the steps taken to mitigate them and additional commentary is as follows:
Principal Cause Impact Probability Risk Management
Risk
------------------------- -------------------------- ------------------ ------------------ ---------------------------
Over reliance High dependence High Medium The Board believes such
on key on Joint risk
executives. Chief Executives. is to some extent
mitigated
through the appointment
and
support of high calibre
employees
and professional advisors.
All such appointments are
approved
by a member of the Board
and
performance is monitored
regularly.
Significant Recession High Low Whilst there is
tenant and reduced always a risk
failure. profitability. that recession
or new
legislation
may affect
specific
industry
types, the
Board is
satisfied
that Hansteen's
exposure is
mitigated by
operating with
an extremely
diverse tenant
base without
reliance on any
particular
tenants or
industries.
Vacancy rates,
arrears and
bad debts are
monitored on
a regional
basis with
trends
investigated to
determine any
systematic
problems with a
portfolio or
type of tenant.
Lack of Banks under High Medium The Board
availability internal acknowledge
of capital. pressure that
to improve there may be
liquidity. occasions when
banks are under
Banks internal
considering pressures
unutilised which may
loans too conflict with
expensive. existing
financing
arrangements
and
it may prove
more difficult
to secure the
more
challenging
properties.
Detailed due
diligence
is carried out
prior to the
purchase of
each property.
Regular
meetings are
held with
a portfolio of
banks to keep
them fully
appraised of
commercial
opportunities
and alert to
any potential
issues early
on. Hansteen
also considers
alternative
sources of
finance
to develop its
strategy and
reduce
exposure.
Information Failure to High Medium The Board
and cyber protect believes this
security information risk
breaches and to be mitigated
resulting information to some extent
in data systems from by the Group
leakage, unauthorised outsourcing
financial access, much
loss, misuse, of its
reputational disruption, day-to-day
damage or modification processing
business or to reputable
disruption. destruction. third party
organisations.
Due diligence
designed to
assess
the integrity
of third party
processes and
systems is
undertaken
by management
as part of the
tendering and
appointment
process
and is
maintained on
an on-going
basis.
Internally, the
Group
has developed
policies and
procedures
designed to
mitigate
information and
cyber security
risk as far as
possible, these
include: the
secure
encryption
of all payroll
and personal
data, rigorous
use of
passwords
and firewall
defences,
externally
facilitated
staff training
programmes,
bulletins to
raise
risk awareness
and encourage
good practice,
development
of secure
mobile working
policies,
incident
response and
disaster
recovery
procedures and
the
establishment
of anti-malware
defences.
Poor return Over paying High Low Supply and
on investment for an demand is
and acquisition. reviewed
deterioration continuously
in operating Prices driven through direct
results. up by information
increased from Hansteen's
competition. network of
managing agents
Reduced number and managers.
of investment Experienced
opportunities. members
of management
review each
acquisition
and due
diligence is
carried
out by external
parties. The
Board is
required to
approve
all
acquisitions
and disposals
over a
prescribed
amount.
Banking Financial Medium Medium The Board
counterparty difficulties believes such
disruption. at risks
Lack of institutions are reduced by
liquidity. holding adherence to
significant a Cash and
deposits. Liquidity
Management
Policy that
sets out how
funds
can be
invested. Cash
balances
and borrowings
are maintained
with a
portfolio of
considered
counterparties.
The Group
Treasurer
reviews the
cash balances
on
a daily basis,
and where
possible,
surplus cash is
put on interest
bearing
deposit.
Responsibility statement
We confirm to the best of our knowledge:
(a) The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';
(b) The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
(c) The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
On behalf of the Board
Ian Watson Morgan Jones
Joint Chief Executive Joint Chief Executive
21 August 2018
Copies of this announcement are available on the Company's website at www.hansteen.co.uk and can be requested from the Company's registered office at 1st Floor Pegasus House, 37-43 Sackville Street, London, W1S 3DL
Consolidated income statement
for the six months ended 30 June 2018
Six months Six months
ended ended
30 June 30 June
2018 2017
GBPm GBPm
Note Unaudited Unaudited
------------------------------------------------- ------ ---------- ----------
Continuing operations
------------------------------------------------- ------ ---------- ----------
Gross revenue(1) 5 28.5 31.0
Revenue 5 26.2 28.8
Cost of sales (1.9) (1.6)
------------------------------------------------- ------ ---------- ----------
Gross profit 24.3 27.2
Other operating income 0.2 0.5
Administrative expenses (22.1) (14.8)
Gains on investment properties 30.5 14.5
Operating profit 32.9 27.4
Finance income 7 0.8 4.8
Finance costs 7 (4.4) (19.6)
Profit before tax 29.3 12.6
Tax (charge)/credit 8 (0.1) 0.7
------------------------------------------------- ------ ---------- ----------
Profit for the period from continuing operations 29.2 13.3
(Loss)/profit for the period from discontinued
operations net of tax 12 (0.1) 135.1
------------------------------------------------- ------ ---------- ----------
Profit for the period 29.1 148.4
------------------------------------------------- ------ ---------- ----------
Attributable to:
Equity holders of the parent 29.1 148.1
Non-controlling interest - 0.3
------------------------------------------------- ------ ---------- ----------
Profit for the period 29.1 148.4
------------------------------------------------- ------ ---------- ----------
Earnings per share
Basic
Continuing operations 11 7.1p 1.7p
Discontinued operations 11 0.0p 18.1p
------------------------------------------------- ------ ---------- ----------
7.1p 19.8p
Diluted
Continuing operations 11 6.7p 1.7p
Discontinued operations 11 0.0p 18.0p
------------------------------------------------- ------ ---------- ----------
6.7p 19.7p
------------------------------------------------- ------ ---------- ----------
Consolidated statement of comprehensive income
for the six months ended 30 June 2018
Six months Six months
ended ended
30 June 30 June
2018 2017
GBPm GBPm
Unaudited Unaudited
---------------------------------------------------------- ---------- ----------
Profit for the period 29.1 148.4
Other comprehensive expense:
Exchange gains arising on translation of foreign
operations - 14.5
Exchange differences recycled to the income statement
on disposal of discontinued operations - (71.6)
Total other comprehensive expense for the period - (57.1)
---------------------------------------------------------- ---------- ----------
Total comprehensive income for the period 29.1 91.3
---------------------------------------------------------- ---------- ----------
Total comprehensive income attributable to:
Equity holders of the parent 29.1 91.0
Non-controlling interest - 0.3
---------------------------------------------------------- ---------- ----------
29.1 91.3
---------------------------------------------------------- ---------- ----------
All components of other comprehensive income and expense will be recycled through the income statement.
Consolidated balance sheet
As at 30 June 2018
30 June 31 December
2018 2017
GBPm GBPm
Note Unaudited Audited
---------------------------------- ------ ---------- -----------
Non-current assets
Property, plant and equipment 0.1 0.2
Investment property 14 644.4 694.2
Derivative financial instruments 2.9 2.2
---------------------------------- ------ ---------- -----------
647.4 696.6
Current assets
Investment property held for sale 14 15.8 113.9
Trading properties 10.0 10.0
Trade and other receivables 35.2 18.3
Cash and cash equivalents 38.5 71.2
99.5 213.4
---------------------------------- ------ ---------- -----------
Total assets 746.9 910.0
---------------------------------- ------ ---------- -----------
Current liabilities
Trade and other payables (31.0) (30.4)
Current tax liabilities (8.0) (20.5)
Borrowings 15 (0.3) (0.3)
Obligations under finance leases (0.2) (0.2)
(39.5) (51.4)
Non-current liabilities
Borrowings 15 (261.1) (293.8)
Obligations under finance leases (2.1) (2.3)
Provisions (0.8) (0.8)
Deferred tax liabilities (4.0) (4.2)
---------------------------------- ------ ---------- -----------
(268.0) (301.1)
---------------------------------- ------ ---------- -----------
Total liabilities (307.5) (352.5)
---------------------------------- ------ ---------- -----------
Net assets 439.4 557.5
---------------------------------- ------ ---------- -----------
Equity
Share capital 16 41.3 41.3
Share premium account 11.0 114.5
Other reserves (0.1) (0.1)
Capital redemption reserve - 41.3
Translation reserve 4.8 4.8
Retained earnings 382.4 355.7
---------------------------------- ------ ---------- -----------
Equity shareholders' funds 439.4 557.5
Non-controlling interest - -
---------------------------------- ------ ---------- -----------
Total equity 439.4 557.5
---------------------------------- ------ ---------- -----------
Net asset value per share
IFRS net asset value per share 11 106p 135p
Diluted net asset value per share 11 99p 130p
EPRA net asset value per share 11 100p 131p
---------------------------------- ---- ----
Consolidated statement of changes in equity
for the six months ended 30 June 2018
Unaudited Capital Shares
Share Share Translation Other redemption to be Retained Non-controlling
capital premium reserve reserves reserve issued earnings Total interest Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------- ------- ----------- --------- ---------- -------- -------- ------- --------------- -------
Balance at 1
January
2017 74.6 114.5 61.8 (1.9) - - 674.6 923.6 0.6 924.2
Shares issued - - - (0.3) - - - (0.3) - (0.3)
Shares to be
issued - - - - - 99.5 (0.1) 99.4 - 99.4
Dividends - - - - - - (27.5) (27.5) (0.4) (27.9)
Share-based
payments - - - - - - 7.3 7.3 - 7.3
Own shares
acquired - - - (0.8) - - - (0.8) - (0.8)
Non-controlling
interests
acquired - - - - - - - - 1.8 1.8
Profit for the
period - - - - - - 148.1 148.1 0.3 148.4
Other
comprehensive
expense for the
period - - (57.1) - - - - (57.1) - (57.1)
Balance at 30 June
2017 74.6 114.5 4.7 (3.0) - 99.5 802.4 1,092.7 2.3 1,095.0
Shares
issued/settlement
of convertible
bond 8.0 - - - (99.5) 91.5 - - -
Cancellation of
shares under
tender
offer (41.3) - - - 41.3 - (583.1) (583.1) - (583.1)
Non-controlling
interests
disposed - - - - - - - - (1.9) (1.9)
Capital repaid - - - - - - - - (0.2) (0.2)
Dividends - - - - - - (19.0) (19.0) (0.1) (19.1)
Share-based
payments - - - - - - 10.7 10.7 - 10.7
Share options
exercised - - - 2.8 - - (2.8) - - -
Own shares
acquired - - - 0.1 - - - 0.1 - 0.1
Profit for the
period - - - - - - 56.0 56.0 (0.1) 55.9
Other
comprehensive
income for the
period - - 0.1 - - - - 0.1 - 0.1
Balance at 31
December
2017 41.3 114.5 4.8 (0.1) 41.3 - 355.7 557.5 - 557.5
Return of capital - (103.5) - - (41.3) - 0.1 (144.7) - (144.7)
Dividends - - - - - - (15.7) (15.7) - (15.7)
Share-based
payments - - - - - - 14.1 14.1 - 14.1
Share options
exercised - - - 0.9 - - (0.9) - - -
Own shares
acquired - - - (0.9) - - - (0.9) - (0.9)
Profit for the
period - - - - - - 29.1 29.1 - 29.1
Balance at 30 June
2018 41.3 11.0 4.8 (0.1) - - 382.4 439.4 - 439.4
------------------ ------- ------- ----------- --------- ---------- -------- -------- ------- --------------- -------
Consolidated cash flow statement
for the six months ended 30 June 2018
Six months Six months
ended ended
30 June 30 June
2018 2017
GBPm GBPm
Note Unaudited Unaudited
----------------------------------------------------- ------ ---------- ----------
Net cash inflow from operating activities 17 2.3 11.7
Investing activities
Interest received 0.1 0.1
Additions to investment properties (2.0) (30.2)
Proceeds from sale of investment properties 162.3 20.7
Investment in subsidiary - (27.3)
Proceeds from sale of subsidiaries - 662.4
Net cash generated by investing activities 160.4 625.7
----------------------------------------------------- ------ ---------- ----------
Financing activities
Dividends paid (15.7) (27.9)
Repayments of obligations under finance leases (0.1) (0.1)
New bank loans raised (net of expenses) 74.0 36.4
Bank loans repaid (net of expenses) (107.3) (3.8)
Own shares acquired (0.9) (0.8)
Return of capital (144.7) -
Additions to derivative financial instruments - 0.2
Settlement of derivative financial instruments - (3.5)
----------------------------------------------------- ------ ---------- ----------
Net cash (used in)/generated by financing activities (194.7) 0.5
----------------------------------------------------- ------ ---------- ----------
Net (decrease)/increase in cash and cash equivalents (32.0) 637.9
Cash and cash equivalents at beginning of period 71.2 82.5
Effect of foreign exchange rate changes (0.7) 6.5
----------------------------------------------------- ------ ---------- ----------
Cash and cash equivalents at end of period 38.5 726.9
----------------------------------------------------- ------ ---------- ----------
Notes to the condensed set of financial statements for the six months ended 30 June 2018
1. General information
Hansteen Holdings PLC is a company which is incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is 1st Floor, Pegasus House, 37-43 Sackville Street, London, W1S 3DL.
The Group's principal activities are those of a property group investing mainly in industrial properties in Continental Europe and the United Kingdom.
The financial information contained in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the year ended 31 December 2017 was derived from the statutory accounts for the year ended 31 December 2017, a copy of which has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis of matter and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, the condensed financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published annual financial statements for the period ended 31 December 2017 apart from a number of new standards and amendments to IFRSs that became effective for the financial year beginning on 1 January 2018. These new standards and amendments are listed below:
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
IFRS 2 (amendments) Classification and Measurement of
Share-based Payment Transactions
IAS 40 (amendments) Transfers of Investment Property
Annual improvement s to IFRS Amendments to IFRS 1 First-time
2014-2016 Cycle Adoption of IFRS and IFRS 28 Investments
in Associates and Joint Ventures
IFRS 10 and IAS 28 (amendments) Sale or Contribution of Assets between
and Investor and its Associate or
Joint Venture
IFRIC 22 Foreign Currency Transactions and
Advance Consideration
IFRIC 23 Uncertainty over Income Tax Treatments
The adoption of these new standards and amendments to IFRSs did not materially impact the condensed set of financial statements for the six months ended 30 June 2018 and no retrospective adjustments were made to the prior year figures. However, with the introduction of IFRS 15, Revenue from Contracts with Customers, additional prior year disclosures have now been included. Further details on this standard are detailed below.
The Group's performance is not subject to seasonal fluctuations.
2. Basis of preparation
The annual financial statements of Hansteen Holdings PLC are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.
The following significant accounting policy has been applied from 1 January 2018 to reflect the new standards and amendments. There have been no other changes to the significant accounting policies set out in the latest financial statements of the Group in preparing the condensed set of financial statements.
Gross revenue
IFRS 15, Revenue from Contracts with Customers, is based on the principle that revenue is recognised when control passes to a customer. The majority of the Group's income is from tenant leases and is outside the scope of the new standard. However, certain non-rental income streams, such as service charge income, trading property sales, and external management fees, are within the scope of the standard. In total the Group's 'Gross revenue' includes rental income and non-rental income streams. 'Gross Revenue' includes service charge income which is excluded from Revenue in the consolidated income statement. There has been no financial impact of the new standard to the Group; however, the 'Gross revenue' line has been included within the consolidated income statement. Comparative figures have been included accordingly.
For management purposes, Revenue remains the primary income measure as shown in notes 6 and 10. Revenue from services is recognised at the fair value of the consideration received or receivable and represents amounts receivable for services rendered in the accounting period.
The interim report was approved by the Board on 21 August 2018.
The principal exchange rates used to translate foreign currency denominated amounts are:
Balance sheet: GBP1 = EUR1.1308 (31 December 2017: GBP1 = EUR1.1270)
Income statement: GBP1 = EUR1.1369 (30 June 2017: GBP1 = EUR1.1626)
3. Going concern
The Group's principal risks and uncertainties are detailed above. The Directors believe that the Group is well placed to manage its business risks successfully despite the potential impact of the current uncertain economic outlook on the Group's operating cash flows and the possibility of tenancy failures and increased vacancies. After consideration of the Group's forecast cash flows and covenant compliance, including evaluation of the impact of potential reductions in property valuations, rental income and increases in interest rates, the Directors have a reasonable expectation that the Group will continue to have adequate resources to continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis in preparing these condensed financial statements.
Information on the Group's performance and its risk management is included in the Interim Statement, including sections on the finance, hedging and outlook of the Group. The Group's debt maturity profile and principal covenants are disclosed in note 15 to these condensed financial statements.
4. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed. There have been no other material transactions with related parties in the first six months of 2018 and there have been no material changes in the related party transactions described in the Annual Report and Accounts for the year ended 31 December 2017.
5. Revenue
Six months Six months
ended ended
30 June 30 June
2018 2017
Continuing Operations GBPm GBPm
---------------------------------- ---------- ----------
Investment property rental income 26.2 28.8
---------------------------------- ---------- ----------
Revenue 26.2 28.8
Service charge income 2.3 2.2
---------------------------------- ---------- ----------
Gross revenue(1) 28.5 31.0
---------------------------------- ---------- ----------
6. Operating segments
The following is an analysis of the Group's revenue and results by reportable segment:
Six months ended 30 Six months ended 30
June 2018 June 2017
Gross Gross
revenue(1) Revenue Result revenue(1) Revenue Result
Continuing Operations GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- ------------ --------- -------- ----------- --------- --------
Belgium 0.5 0.5 0.4 0.5 0.5 0.5
France 0.6 0.6 0.6 0.9 0.9 0.8
UK 27.4 25.1 23.3 29.6 27.4 25.9
-------------------------------------- ----------- --------- -------- ----------- --------- --------
28.5 26.2 24.3 31.0 28.8 27.2
Other operating income 0.2 0.5
Administrative expenses (22.1) (14.8)
Changes in fair values of investment
properties by segment:
Belgium (0.1) (1.0)
France (0.2) (0.5)
UK 24.4 15.1
-------------------------------------- ----------- --------- -------- ----------- --------- --------
Total changes in fair values
of investment properties 24.1 13.6
Profit on disposal of investment
properties 6.4 0.9
-------------------------------------- ----------- --------- -------- ----------- --------- --------
Total gains on investment properties 30.5 14.5
Operating profit 32.9 27.4
Net finance costs (3.6) (14.8)
-------------------------------------- ----------- --------- -------- ----------- --------- --------
Profit before tax 29.3 12.6
-------------------------------------- ----------- --------- -------- ----------- --------- --------
Administrative expenses and net finance costs are managed as central costs and are not allocated to segments.
The following is an analysis of the Group's assets by reportable segment:
Additions
Investment Trading Total Other Total to investment Non-current
properties(2) properties properties assets assets properties assets
30 June 2018 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- --------------- ------------ ------------ -------- -------- -------------- -----------
Belgium 14.3 - 14.3 1.0 15.3 - 14.3
France 14.1 - 14.1 3.8 17.9 0.2 14.1
UK 631.8 10.0 641.8 48.4 690.2 1.8 616.0
--------------- --------------- ------------ ------------ -------- -------- -------------- -----------
660.2 10.0 670.2 53.2 723.4 2.0 644.4
Unallocated
assets 23.5 3.0
--------------- --------------- ------------ ------------ -------- -------- -------------- -----------
746.9 647.4
--------------- --------------- ------------ ------------ -------- -------- -------------- -----------
Additions
Investment Trading Total Other Total to investment Non-current
31 December properties(2) properties properties assets assets properties assets
2017 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- --------------- ------------ ------------ -------- -------- -------------- -----------
Belgium 14.5 - 14.5 1.8 16.3 - 14.5
France 17.2 - 17.2 0.6 17.8 0.1 17.2
UK 776.4 10.0 786.4 33.7 820.1 95.8 662.6
-------------- --------------- ------------ ------------ -------- -------- -------------- -----------
808.1 10.0 818.1 36.1 854.2 95.9 694.3
Unallocated
assets 55.8 2.3
-------------- --------------- ------------ ------------ -------- -------- -------------- -----------
910.0 696.6
-------------- --------------- ------------ ------------ -------- -------- -------------- -----------
7. Net finance costs
Six months Six months
ended ended
30 June 30 June
2018 2017
Continuing Operations GBPm GBPm
------------------------------------------------- ---------- ----------
Interest receivable on bank deposits - -
Other interest receivable 0.1 0.5
------------------------------------------------- ---------- ----------
Interest income 0.1 0.5
Interest payable on borrowings (4.0) (5.4)
------------------------------------------------- ---------- ----------
Net interest expense (3.9) (4.9)
Change in fair value of interest rate swaps and
caps 0.7 0.5
Change in fair value of convertible bond - (12.1)
Fees incurred on conversion of convertible bonds - (0.4)
Interest incurred on the convertible bond - (1.7)
Foreign exchange gains (0.4) 3.8
------------------------------------------------- ---------- ----------
Net finance costs (3.6) (14.8)
------------------------------------------------- ---------- ----------
Finance income 0.8 4.8
Finance costs (4.4) (19.6)
------------------------------------------------- ---------- ----------
Net finance costs (3.6) (14.8)
------------------------------------------------- ---------- ----------
8. Tax
Six months Six months
ended ended
30 June 30 June
2018 2017
Continuing Operations GBPm GBPm
---------------------------------- ---------- ----------
UK current tax credit - (0.7)
Foreign current tax charge 0.3 0.1
---------------------------------- ---------- ----------
Total current tax charge/(credit) 0.3 (0.6)
Deferred tax credit (0.2) (0.1)
---------------------------------- ---------- ----------
Tax charge/(credit) 0.1 (0.7)
---------------------------------- ---------- ----------
The Group elected to be a UK REIT in 2009 following admission to the Official List. The UK REIT rules exempt the profits of the Group's property rental business from UK corporation tax. Gains on UK properties are also exempt from tax provided they are not held for trading. The Group's UK activities are otherwise subject to UK corporation tax. To remain a UK REIT there are a number of conditions to be met in respect of the principal company of the Group, the Group's qualifying activity and its balance of business which are set out in the UK REIT legislation in the Corporation Tax Act 2010.
9. Dividends
Six months Six months
ended ended
30 June 30 June
2018 2017
GBPm GBPm
------------------------------------------------------ ---------- ----------
Amounts recognised as distributions to equity holders
in the period:
Second interim dividend 3.8p (2017: 3.7p) per share 15.7 27.5
15.7 27.5
------------------------------------------------------ ---------- ----------
As a REIT, the Company is required to pay Property Income Distributions ('PIDs') equal to at least 90% of the Group's exempted net income after deduction of withholding tax at the basic rate (currently 20%). GBP15.2 million of the cash dividend paid in the period ended 30 June 2018 is attributable to PIDs (2017: GBP15.6 million).
10. Normalised income profit and normalised total profit
The Group uses a number of Alternative Performance Measures ("APMs") which are not defined or specified within IFRS. The Directors use these measures in order to assess the underlying operational performance of the Group and allow greater comparability between periods but do not consider them to be a substitute for, or superior to, IFRS measures. Key APMs used are Normalised Income Profit ("NIP"), Normalised Total Profit ("NTP"), measures defined by EPRA and adjusted EPS[2].
NIP and NTP are adjusted measures intended to show the underlying earnings of the Group before fair value movements and other non-recurring or otherwise non-cash items. Fair value movements include those in relation to investment property, financial assets and financial liabilities. Non-recurring or otherwise non-cash items include foreign exchange gains or losses and the Founder LTIP charge. A reconciliation of NIP and NTP to the Profit for the year prepared in accordance with IFRS is set out below. A reconciliation of EPRA measures and adjusted EPS is included within note 11.
Six months ended Six months ended
30 June 2018 30 June 2017
--------------------------------------- --------------------------------- ---------------------------------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ----------- ------------ ------ ----------- ------------ ------
Investment property rental
income 26.2 - 26.2 28.8 36.2 65.0
Direct operating expenses (1.9) 0.1 (1.8) (1.5) (3.0) (4.5)
Administrative expenses excluding
LTIP charge[3] (6.8) (0.2) (7.0) (6.9) (3.1) (10.0)
Net interest expense(3) (3.9) - (3.9) (4.9) (6.7) (11.6)
--------------------------------------- ----------- ------------ ------ ----------- ------------ ------
Normalised Income Profit 13.6 (0.1) 13.5 15.5 23.4 38.9
Profit on sale of investment
properties 6.4 - 6.4 0.9 0.1 1.0
Loss on sale of trading properties - - - (0.1) - (0.1)
Total profit on sale of properties 6.4 - 6.4 0.8 0.1 0.9
Profit on disposal of discontinued
operations - - - - 47.9 47.9
Net other operating income 0.2 - 0.2 0.5 0.2 0.7
--------------------------------------- ----------- ------------ ------ ----------- ------------ ------
Normalised Total Profit 20.2 (0.1) 20.1 16.8 71.6 88.4
LTIP charge(2) (15.3) - (15.3) (7.9) - (7.9)
Fair value gains on investment
properties 24.1 - 24.1 13.6 - 13.6
Change in fair value of interest
rate derivatives 0.7 - 0.7 0.5 0.7 1.2
Change in fair value of convertible
bond - - - (12.1) - (12.1)
Fees incurred on conversion
of convertible bonds - - - (0.4) - (0.4)
Interest incurred on the convertible
bond[4] - - - (1.7) - (1.7)
Foreign exchange (losses)/gains (0.4) - (0.4) 3.8 - 3.8
Exchange differences recycled
on disposal of discontinued
operations - - - - 71.6 71.6
Profit before tax 29.3 (0.1) 29.2 12.6 143.9 156.5
Tax (0.1) - (0.1) 0.7 (8.8) (8.1)
--------------------------------------- ----------- ------------ ------ ----------- ------------ ------
Profit for the period 29.2 (0.1) 29.1 13.3 135.1 148.4
--------------------------------------- ----------- ------------ ------ ----------- ------------ ------
11. Earnings per share and net asset value per share
The European Public Real Estate Association ("EPRA") has issued recommended bases for the calculation of certain earnings per share ("EPS") information. Diluted EPRA EPS is reconciled to the IFRS measure in the following table.
As noted in note 10 the Group uses a number of APMs which are not defined within IFRS. Normalised Income Profit and Normalised Total Profit have been defined in note 10 and adjusted EPS is defined below.
30 June 2018 30 June 2017
Shares Per share Shares Per share
Continuing Operations GBPm m pence GBPm m pence
------------------------------------ ------ ------ --------- ------ ------- ---------
Normalised Income Profit (see
note 10) 13.6 412.9 3.3 15.5 746.2 2.1
Normalised Total Profit (see
note 10) 20.2 412.9 4.9 16.8 746.2 2.2
Basic EPS 29.2 412.9 7.1 13.0 746.2 1.7
Adjustments:
Dilutive shares relating to
the profit share scheme 3.4 3.0
Dilutive shares relating to
the Founder LTIP 20.5 -
------------------------------------ ------ ------ --------- ------ ------- ---------
Diluted EPS 29.2 436.8 6.7 13.0 749.2 1.7
Basic EPS
Adjustments: 29.2 412.9 7.1 13.0 746.2 1.7
Revaluation gains on investment
properties (24.1) (13.6)
Profit on the sale of investment
properties (6.4) (0.9)
Loss/(profit) on sale of trading
properties - 0.1
Change in fair value of derivatives (0.7) (0.5)
Change in fair value of convertible
bond - 9.2
Fees incurred on conversion
of convertible bonds - 0.4
Deferred tax on the above items - (0.3)
EPRA EPS (2.0) 412.9 (0.5) 7.4 746.2 1.0
Adjustments:
Dilutive shares relating to
the profit share scheme 3.4 3.0
Dilutive shares relating to
the Founder LTIP 20.5 -
Diluted EPRA EPS[5] (2.0) 436.8 (0.5) 7.4 749.2 1.0
------------------------------------ ------ ------ --------- ------ ------- ---------
Founder LTIP Charge 15.3 (20.5) 7.9 -
------------------------------------ ------ ------ --------- ------ ------- ---------
Adjusted EPS 13.3 416.3 3.2 15.3 749.2 2.0
------------------------------------ ------ ------ --------- ------ ------- ---------
30 June 2018 30 June 2017
Shares Per share Shares Per share
Discontinued Operations GBPm m pence GBPm m pence
------------------------------------ ----- ------ --------- ------- ------- ---------
Normalised Income Profit (see
note 10) (0.1) 412.9 0.0 23.4 746.2 3.1
Normalised Total Profit (see
note 10) (0.1) 412.9 0.0 71.6 746.2 9.6
Basic EPS (0.1) 412.9 0.0 135.1 746.2 18.1
Adjustments:
Dilutive shares relating to
the profit share scheme 3.4 3.0
Dilutive shares relating to
the Founder LTIP 20.5 -
------------------------------------ ----- ------ --------- ------- ------- ---------
Diluted EPS (0.1) 436.8 0.0 135.1 749.2 18.0
Basic EPS
Adjustments: (0.1) 412.9 0.0 135.1 746.2 18.1
Revaluation gains on investment - -
properties
Profit on the sale of investment
properties - (0.1)
Profit after tax on disposal
of discontinued operations - (113.2)
Change in fair value of derivatives - (0.7)
Deferred tax on the above items - (10.4)
EPRA EPS (0.1) 412.9 0.0 10.7 746.2 1.4
Adjustments:
Dilutive shares relating to
the profit share scheme 3.4 3.0
Dilutive shares relating to
the Founder LTIP 20.5 -
Diluted EPRA EPS[6] (0.1) 436.8 0.0 10.7 749.2 1.4
------------------------------------ ----- ------ --------- ------- ------- ---------
Founder LTIP Charge (20.5) - -
------------------------------------ ----- ------ --------- ------- ------- ---------
Adjusted EPS (0.1) 416.3 0.0 10.7 749.2 1.4
------------------------------------ ----- ------ --------- ------- ------- ---------
The calculations for net asset value ("NAV") per share are shown in the table below:
30 June 2018 31 December 2017
Shares Per share Shares Per share
GBPm m Pence GBPm m pence
----------------------------- ----- ------ --------- ----- ------ ---------
Basic NAV 439.4 412.8 106 557.5 412.8 135
Unexercised share options[7] 29.6 - 15.5
Diluted NAV 439.4 442.4 99 557.5 428.3 130
Fair value of interest rate
derivatives (2.9) (2.2)
Deferred tax 3.8 4.1
----------------------------- ----- ------ --------- ----- ------ ---------
EPRA NAV 440.3 442.4 100 559.4 428.3 131
----------------------------- ----- ------ --------- ----- ------ ---------
12. Discontinued operations
On 20 March 2017, the Group entered into a sale agreement to dispose of the German and Dutch portfolios. The disposal was completed on 16 June 2017 on which date control of the disposal group was passed to the acquirer In accordance with the sales and purchase agreement there was a true-up of the purchase price. This process was completed by the end of October 2017 and has affected the numbers disclosed relating to the discontinued operations reported in the interim financial statements as at 30 June 2017 and 2018.
The results of the discontinued operations, which have been included in the consolidated income statement, were as follows:
Six months Six months
ended ended
30 June 30 June
2018 2017
GBPm GBPm
Unaudited Unaudited
------------------------------------------------ ----------- -----------
Revenue - 36.2
Cost of sales 0.1 (3.0)
------------------------------------------------ ----------- -----------
Gross profit 0.1 33.2
Other operating income - 0.2
Administrative expenses (0.2) (3.1)
Gains on investment properties - 0.1
------------------------------------------------ ----------- -----------
Operating (loss)/profit (0.1) 30.4
Finance income - 0.8
Finance costs - (6.8)
------------------------------------------------ ----------- -----------
(Loss)/profit before tax (0.1) 24.4
Tax - (2.5)
------------------------------------------------ ----------- -----------
(Loss)/profit after tax (0.1) 21.9
------------------------------------------------ ----------- -----------
Profit on disposal of discontinued operations - 119.5
Tax attributable to profit on disposal - (6.3)
------------------------------------------------ ----------- -----------
Profit after tax on disposal of discontinued
operations - 113.2
------------------------------------------------ ----------- -----------
(Loss)/profit for the period from discontinued
operations (0.1) 135.1
------------------------------------------------ ----------- -----------
13. Disposal of investment in subsidiary
As referred to in note 12, on 16 June 2017 the group disposed of its interests in the German and Dutch portfolio. The net assets of the disposal group at the date of disposal were as follows:
2017
GBPm
----------------------------------------------------- --------
Investment property 1,067.7
Trade and other receivables 17.3
Cash and cash equivalents 8.2
Trade and other payables (20.7)
Current tax liabilities (3.0)
Borrowings (414.4)
Deferred tax liability (33.2)
------------------------------------------------------ --------
621.9
Profit on disposal of discontinued operations 121.4
------------------------------------------------------ --------
Net assets disposed 621.9
Cash proceeds net of transaction costs 671.1
------------------------------------------------------ --------
49.2
Release of translation reserve 72.2
------------------------------------------------------ --------
Profit on disposal of discontinued operations 121.4
------------------------------------------------------ --------
Net cash inflow arising on disposal:
Consideration received in cash and cash equivalents 671.1
Less: cash and cash equivalents disposed of (8.2)
------------------------------------------------------ --------
662.9
----------------------------------------------------- --------
There were no disposals of subsidiaries completed in the six months ended 30 June 2018. The consideration for the sale of the entities in 2017 was settled in cash. The impact of discontinued operations on the Group's results in the current and prior periods and the profit on disposal of discontinued operations are disclosed in note 12.
14. Investment property
30 June 2018 31 December 2017
Continuing Continuing Discontinued
operations operations operations
GBPm GBPm GBPm
---------------------------------------- ------------- ------------ -------------
Investment property at start of period 694.2 698.5 1,019.0
Additions - property purchases - 91.2 13.0
- capital expenditure 2.0 4.7 15.4
Lease incentives 0.2 1.4 (0.1)
Letting costs 0.1 0.1 0.2
Revaluations 24.1 62.0 -
Disposals (60.3) (50.9) (1,067.7)
Transfer to investment property held
for sale (15.8) (113.9) -
Exchange adjustment (0.1) 1.1 20.2
644.4 694.2 -
---------------------------------------- ------------- ------------ -------------
Investment property held for sale 30 June 2018 31 December 2017
Continuing Continuing Discontinued
operations operations operations
GBPm GBPm GBPm
---------------------------------------- ------------- ------------ -------------
Investment property at start of period 113.9 3.0 7.4
Disposals (113.9) (3.0) (7.4)
Transfer from investment property 15.8 113.9 -
15.8 113.9 -
---------------------------------------- ------------- ------------ -------------
In accordance with IFRS 13, the Group's investment property has been assigned a valuation level in the fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). In general, the Group's investment property as at 30 June 2018 is categorised as Level 3.
Investment properties are valued using a capitalisation methodology applying a yield to current and estimated rental income. Yields and rental values are considered to be unobservable inputs and details of the ranges used in each region are as follows:
Information about fair value measurements using unobservable inputs (Level 3)
Fair value at Rent per sq m Yield
30 June 2018 Min Max Min Max
GBPm GBP GBP % %
----------------------- ----------------- ---------------- ----------------- ---------------- --------------------
Belgium 14.3 29.2 109.2 4.5 9.8
France 14.1 30.6 30.6 8.4 8.3
UK -
Industrial
properties 616.7 7.0 150.2 0.9 15.6
UK - Offices 15.1 34.6 625.7 4.5 17.6
------------------------ ----------------- ---------------- ----------------- ---------------- --------------------
Total 660.2
------------------------ ----------------- ---------------- ----------------- ---------------- --------------------
Fair value at Rent per sq m Yield
31 December 2017 Min Max Min Max
GBPm GBP GBP % %
----------------------- ----------------- ---------------- ----------------- ---------------- --------------------
Belgium 14.5 25.7 108.2 3.0 9.7
France 17.2 29.5 29.5 8.3 8.3
UK -
Industrial
properties 760.0 10.8 178 2.5 15.6
UK - Offices 16.4 23.1 625.7 3.0 17.6
------------------------ ----------------- ---------------- ----------------- ---------------- --------------------
Total 808.1
------------------------ ----------------- ---------------- ----------------- ---------------- --------------------
All other factors being equal there is a positive relationship between estimated rental values and property values such that an increase in estimated rental values would increase the valuation of a property. The relationship between Reversionary yields and property values is negative such that an increase in Reversionary yields would decrease a property valuation. There are interrelationships between these inputs as they are determined by market conditions such that the valuation movement in any one period depends on the balance between them.
15. Borrowings
30 June 31 December
2018 2017
GBPm GBPm
------------------------------------------ -------- ------------
Amortised cost
Bank loans 263.8 297.1
Unamortised borrowing costs (2.4) (3.0)
------------------------------------------ -------- ------------
261.4 294.1
Maturity
The bank loans are repayable as follows:
Within one year or on demand 0.6 0.6
Between one and two years 0.7 0.7
Between three and five years 261.4 294.9
Over five years 1.1 0.9
------------------------------------------ -------- ------------
263.8 297.1
------------------------------------------ -------- ------------
Covenants
Facility Drawn Expiry Loan to value Interest
cover
------------------ ---------------- ---------- ------------- --------
GBP330.0 million GBP260.0 million July 2021 55% 200%
EUR4.3 million EUR4.3 million March 2025 - -
------------------ ---------------- ---------- ------------- --------
Interest charged on the GBP330 million facility is based on a floating interest rate. At 30 June 2018 the GBP330 million facility is secured through charges against the issued share capital of the relevant entities which own properties totalling GBP655.6 million (31 December 2017: GBP638.7 million). At 30 June 2018 the Euro facilities detailed above are secured by charges on property with an aggregate carrying value of GBP13.4 million (31 December 2017: GBP13.6 million).
In July 2013, Hansteen (Jersey) Securities Limited issued EUR100 million of convertible bonds with a coupon of 4.0% expiring in July 2018.
On 26 June 2017 the Company decided to exercise its right and invited the bondholders, on or before 29 June 2017, to either offer to sell their bonds to the Company for a cash settlement and/or to exercise their rights to convert their bonds to ordinary shares in in the Company in accordance with the terms and conditions of the Bonds on 29 June 2017.
All bondholders accepted the invitation to sell or convert their bonds. 159 bonds of EUR100,000 each elected to settle in cash and 841 bonds of EUR100,000 each elected to convert to shares in the Company. The cash was settled on 5 July 2017 and was represented by a liability of GBP23.9 million at 30 June 2017. The shares to be issued of GBP99.5 million was separately disclosed in the Company's reserves at 30 June 2017.
In addition, Bondholders, whether electing to sell or convert, were paid an amount in cash of EUR1,889.50 per EUR100,000 Bond by the Company equating to the accrued or notional interest accrued on the bonds for the 171 days up to but excluding the settlement date of 5 July 2017.
30 June 2018 31 December 2017
% GBPm % GBPm
----------------------------------- ----- ------- ------ ----------
Interest rate and currency profile
Euro 1.4 3.8 1.5 4.1
Sterling 2.4 260.0 2.1 293.0
----------------------------------- ----- ------- ------ ----------
2.2 263.8 2.1 297.1
----------------------------------- ----- ------- ------ ----------
The above table details the interest rates charged on the outstanding loans as at 30 June 2018.
Reconciliation of movement in net debt in the period
30 June 31 December
2018 2017
GBPm GBPm
------------------------------------------------ ------------------- -----------
Net debt at 1 January 225.4 710.1
Cash flow
Net decrease in cash and cash equivalents 32.0 15.2
New bank loans raised and acquired (net of
expenses) 74.0 181.2
Bank loans repaid (net of expenses) (107.3) (692.2)
Repayments of obligations under finance leases (0.1) (0.2)
Other
Foreign exchange movements recognised in equity - 5.8
Foreign exchange movements recognised in the
income statement 0.7 (0.4)
Amortisation of bank loan fees 0.5 5.9
------------------------------------------------- ------------------- -----------
Net debt at end of period 225.2 225.4
------------------------------------------------- ------------------- -----------
Net debt to equity ratio 30 June 31 December
2018 2017
GBPm GBPm
---------------------------------------------------- ------------------- -----------
Obligations under finance leases 2.3 2.5
Borrowings 261.4 294.1
Cash and cash equivalents (38.5) (71.2)
----------------------------------------------------- ------------------- -----------
Net debt 225.2 225.4
Equity attributable to equity holders of the
parent 439.4 557.5
----------------------------------------------------- ------------------- -----------
Net debt to equity ratio 51.3% 40.4%
Carrying value of investment and trading properties 670.2 818.1
Net debt to value ratio 33.6% 27.6%
----------------------------------------------------- ------------------- -----------
16. Share capital
30 June 2018 31 December 2017
Number (m) GBPm Number (m) GBPm
------------------------------- ---------- ---- ---------- ------
Issued and fully paid ordinary
shares of 10p each
At start of the period 413.1 41.3 745.8 74.6
Issue of equity shares - - 80.2 8.0
Cancellation of shares under
tender offer - - (412.9) (41.3)
At end of period 413.1 41.3 413.1 41.3
------------------------------- ---------- ---- ---------- ------
The share capital comprises one class of ordinary shares carrying no right to fixed income. There are no specific restrictions on the size of a shareholding or the transfer of shares, except for UK REIT restrictions.
The 35p per share return of capital in May 2018 was settled by utilising GBP41.3 million held in the capital redemption reserve and by reducing the share premium by GBP103.5 million.
The issue of 80.2 million equity shares in 2017 relates to the conversion of the convertible bonds on 10 July 2017. The cancellation of 412.9 million shares under tender offer was completed on 8 November 2017 following the publication of a circular and a successful tender offer. The shares were purchased at the tender offer price of 140 pence per ordinary share, representing a par value of GBP41.3 million and a total gross cost of GBP583.1 million (GBP578.1 million return to shareholders and GBP5.0 million associated costs). The GBP41.3 million has been transferred to the capital redemption reserve as required by the Companies Act.
During the period, the Company acquired some of its own shares in order to settle obligations under the Performance Share Plan arrangement. A summary is presented below:
Number (m) GBPm
-------------------- ---------- -----
At 1 January 2018 0.1 0.1
Acquired
4 April 2018 0.7 0.9
Issued to employees
13 April 2018 (0.4) (0.5)
16 April 2018 (0.3) (0.4)
At 30 June 2018 0.1 0.1
-------------------- ---------- -----
17. Net cash inflow from operating activities
Six months Six months
ended ended
30 June 30 June
2018 2017
GBPm GBPm
------------------------------------------------------------- ---------- ----------
Profit for the period 29.1 148.4
Adjustments for:
Share-based payments 14.1 7.3
Depreciation of property, plant and equipment - 0.1
Profit on disposal of discontinued operations - (119.5)
Gains on investment properties - continuing operations (30.5) (14.5)
Gains on investment properties - discontinued operations - (0.1)
Net finance costs - continuing operations 3.6 14.8
Net finance costs - discontinued operations - 6.0
Tax - continuing operations 0.1 (0.7)
Tax - discontinued operations - 8.8
Operating cash inflows before movements in working
capital 16.4 50.6
(Decrease)/increase in receivables (0.2) 2.7
Increase/(decrease) in payables 1.0 (28.3)
------------------------------------------------------------- ---------- ----------
Cash generated by operations 17.2 25.0
Income taxes paid (12.8) (3.4)
Interest paid (2.1) (9.9)
------------------------------------------------------------- ---------- ----------
Net cash inflow from operating activities 2.3 11.7
------------------------------------------------------------- ---------- ----------
18. Financial instruments fair value disclosures
The table below sets out the categorisation of the financial instruments held by the Group at 30 June 2018. Where the financial instruments are held at fair value the valuation level indicates the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Valuations categorised as level 2 are obtained from third parties. The fair value of the derivative interests rate swap contracts are estimated by discounting expected future cash flows using market interest rates and yield curves over the remaining term of the instruments. If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety.
30 June 31 December
2018 2017
---------------------
Valuation GBPm GBPm
level
------------------------------------------- --------------------- ------------------- -----------------------
Financial assets
Designated as held for trading
Interest rate caps 2 0.5 0.5
Interest rate swaps 2 2.4 1.7
------------------------------------------- --------------------- ------------------- -----------------------
Financial liabilities
Designated as held for trading
Interest rate caps 2 - -
Interest rate swaps 2 - -
------------------------------------------- --------------------- ------------------- -----------------------
The Directors consider that the carrying value amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements are approximately equal to their fair values.
19. Events after the balance sheet date
On 6 August 2018 the Group exchanged contracts for the acquisition of a portfolio of 34 assets for GBP57.3 million (including costs). The purchase of 31 of these assets completed on 16 August 2018 for GBP50.4 million and the purchase of the remaining three assets for GBP6.9 million is expected in September 2018.
INDEPENT REVIEW REPORT TO HANSTEEN HOLDINGS PLC
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 which comprises the consolidated income statement, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and related notes 1 to 19. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London, United Kingdom
21 August 2018
[1] Important Explanatory Notes about Alternative Performance Measures used in this Report:
The Group uses a number of Alternative Performance Measures ("APMs") which are not defined or specified within IFRS. The Directors use these measures in order to assess the underlying operational performance of the Group and allow greater comparability between periods but do not consider them to be a substitute for or superior to IFRS measures. Key APMs used are Normalised Income Profit ("NIP"), Normalised Total Profit ("NTP"), measures defined by EPRA and adjusted EPS.
NIP and NTP are adjusted measures intended to show the underlying earnings of the Group before fair value movements and other non-recurring or otherwise non-cash items. Fair value movements include those in relation to investment property, financial assets and financial liabilities. Non-recurring or otherwise non-cash items include foreign exchange gains or losses and the Founder LTIP charge. A reconciliation of NIP and NTP to the Profit for the period prepared in accordance with IFRS is set out in note 10. A reconciliation of EPRA measures and adjusted EPS is included within note 11. A calculation of net debt and the net debt to value ratio is shown in the Chairman's interim statement.
1 The new financial statement line "Gross revenue" has been included as a result of implementing the new accounting standard IFRS 15, Revenue from Contracts with Customers. This does not form part of the casting of the consolidated income statement. Comparative figures have been included accordingly.
1 The new note to the financial statements has been included as a result of implementing the new accounting standard IFRS 15, Revenue from Contracts with Customers. This note reconciles Gross revenue to Revenue as disclosed on the consolidated income statement. Comparative figures have been included accordingly.
1 This note to the financial statements has been updated as a result of implementing the new accounting standard IFRS 15, Revenue from Contracts with Customers. The note now also details Gross revenue by segment. Comparative figures have been included accordingly.
(2) Includes investment properties held for sale.
[2] Diluted EPRA EPS has been adjusted to exclude the impact of the Founder LTIP charge on the earnings per share in the current year. The prior year measures have also been restated to make the comparatives useful.
[3] Continuing administrative expenses of GBP6.8 million (30 June 2017: GBP6.9 million) plus the LTIP charge of GBP15.3 million (30 June 2017: GBP7.9 million) reconcile to the administrative expenses of GBP22.1 million (30 June 2017: GBP14.8 million) reported in the consolidated income statement.
[4] Net interest expense in NIP, as set out in note 7, excludes the interest on the convertible bond as this expense is not recurring.
[5] Diluted EPRA EPS has been adjusted to exclude the impact of the Founder LTIP charge on the earnings per share in the current year. The prior year measures have also been restated to make the comparatives useful.
[6] Diluted EPRA EPS has been adjusted to exclude the impact of the Founder LTIP charge on the earnings per share in the current year. The prior year measures have also been restated to make the comparatives useful.
[7] The 29.6 million shares (2017: 15.5 million shares) contains 26.1 million shares (2017: 13.0 million shares) in relation to the Founder LTIP awards and 3.5 million shares (2017: 2.5 million) in relation to the Performance Share Plan awards.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR LLFERTAILFIT
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