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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Max Prop | LSE:MAX | London | Ordinary Share | JE00B3CX6J86 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 168.75 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Feb 2020 to Feb 2025
TIDMMAX
RNS Number : 2352U
Max Property Group PLC
29 November 2013
Results for the six months ended 30 September 2013
STRONG NAV PERFORMANCE THROUGH ASSET MANAGEMENT
Portfolio well positioned to deliver attractive returns
Max Property Group Plc ("Max" / the "Company" / the "Group") today announces its half year results for the six months to 30 September 2013.
Highlights
Hot Features
Premium
Six months to 12 months to
30 September 2013 31 March Change in six months since Change in
2013 31 March 2013 52 months since listing
--------------------------- ------------------- -------------- -------------------------- ------------------------
Net assets GBP318.7m GBP294.1m up 8.4% up 51%
EPRA NAV per share(1) 146.8p 136.5p up 7.5% up 53%
EPRA earnings per share(2) 2.4p 6.3p
--------------------------- ------------------- -------------- -------------------------- ------------------------
Financial highlights
-- EPRA NAV per share up 7.5% to 146.8p per share in the six months to 30 September 2013 and up 53% since listing in May 2009
-- EPRA earnings per share 2.4p (30 September 2012: 3.6p)
-- Property valuations up 3.8%(3)
-- Net loan to value ratio at 28.5% (30% including Hospitals joint venture)
-- Uncommitted cash of c. GBP50 million available
Portfolio highlights
-- Initial yield of 7.2% with a reversionary yield of 9.5%, including developments
-- 51% of vacant ERV is in ongoing London office refurbishments
-- 46% of assets by value in London, showing c. 7% capital growth in the six month period
-- 41% of assets by value in high yielding industrials seeing renewed investor interest
-- Industrious vacancy rate at a new low of 11.2% of ERV
-- 82 new lettings in the six months with net rent roll of GBP1.9 million (Max share GBP1.6 million)
-- ERVs up 2.2% with High Holborn Estate up 15.1%
-- 140,000 sq ft Commodity Quay to be completed at St Katharine Docks in Spring 2014
1 excluding fair values of financial instruments and deferred tax
2 excluding property revaluation movements, profits or losses on sale of properties, fair value movements on financial instruments and deferred tax
3 Max share of portfolios
Aubrey Adams, Chairman of Max Property Group Plc, comments:
"Max is well placed to take advantage of the improving property market, with just under half of its assets in London and a further 40% in high yielding industrial property.
"Our London offices comprise St Katharine Docks and the High Holborn Estate which are both valued at under GBP400psf, undergoing refurbishments and have vacancy rates of over 30%, presenting good prospects for growth on securing lettings with further potential upside from change of use to residential. Our well let London pubs continue to be attractive to private investors with two pubs sold in the period at a 4.9% initial yield and at 42% over cost. Our industrial holdings offer an attractive 10% initial yield and we have reported improved occupancy rates in every reporting period since purchase in 2009.
"In markets that still retain some vulnerability to economic pressures, our protection has been to maintain modest levels of leverage, substantial free cash flow and a disciplined acquisition approach, paying conservative prices for properties with asset management angles, underpinned by occupational demand. This has led to the creation of a balanced portfolio which we believe is well positioned to deliver attractive returns up to anticipated liquidation in 2016."
29 November 2013
ENQUIRIES:
Prestbury Investments Tel: 020 7647 7647 Mike Brown Nick Leslau Sandy Gumm FTI Consulting Tel: 020 7831 3113 Stephanie Highett Richard Sunderland Nina Legge Oriel Securities Tel: 020 7710 7600 Mark Young Nicholas How
Notes to Editors
Max Property Group Plc ("Max" or the "Company") is a Jersey resident real estate investment company. Its Board, chaired by Aubrey Adams, is exclusively advised by Prestbury Investments LLP, which is owned and managed by a team led by Nick Leslau and Mike Brown.
The Company's strategy is to exploit cyclical weakness in the UK real estate market through opportunistic investment and active management with a view to realising cash returns for shareholders over an investment cycle of approximately seven and a half years from its listing in May 2009.
Forward looking statements
This document includes forward looking statements which are subject to risks and uncertainties. You are cautioned that forward looking statements are not guarantees of future performance and that if risks and uncertainties materialise, or if the assumptions underlying any of these statements prove incorrect, the actual results of operations and financial condition of the Group may differ materially from those made in, or suggested by, the forward looking statements. Other than in accordance with its legal or regulatory obligations, the Company undertakes no obligation to review, update or confirm expectations or estimates or to release publicly any revisions to any forward looking statements to reflect events that occur or circumstances that arise after the date of this document.
Chairman's Statement
Dear Shareholder,
I am pleased to report Max Property Group Plc's results for the six months ended 30 September 2013.
Results and financial position
EPRA net assets per share rose by 7.5% to 146.8p during the half year to 30 September 2013, and have increased 53% since the Company listed in May 2009.
The growth in EPRA NAV in the six months and since listing is set out below:
Six months since 52 months
31 March 2013 since listing
(pence per share) (pence per share)
--------------------------------- ------------------ ------------------
Net rental income 6.4 46.2
Running costs (1.4) (11.4)
Net finance costs (2.9) (16.8)
Surpluses on property sales 0.4 11.7
Tax (0.2) (2.3)
--------------------------------- ------------------ ------------------
Realised profit 2.3 27.4
Share of Hospitals joint venture - 0.6
Property revaluation 8.0 22.7
Growth in EPRA NAV per share 10.3 50.7
--------------------------------- ------------------ ------------------
Our London portfolio makes up 46% of our assets and showed a 6.6% uplift during the reporting period. Both St Katharine Docks and the High Holborn Estate are valued at under GBP400psf, are currently undergoing refurbishments and have vacancy rates of over 30%, presenting good prospects for further growth on securing lettings combined with some change of use potential. Both properties are attracting healthy levels of tenant interest and in particular we have seen rental values rise by over 15% at the High Holborn Estate. Our well let London pubs continue to be attractive to private investors with two pubs sold in the six months under review at a 4.9% initial yield and disposal prices at an average of 42% over cost.
Our industrial portfolio represents a further 41% of our holdings and showed an uplift in valuation of 2.7%. We continue to make progress reducing industrial vacancy rates, now down to 11% of ERV, and the current initial yield of 10% compares favourably with the level of prices we are now seeing being bid by investors seeking to increase their exposure to this sector.
Most property companies exclude their developments when calculating their valuation yields and vacancy rates expressed as a proportion of the square footage or rental value of the portfolio. By contrast, we believe that a key attraction of our portfolio is that it generates an initial yield of 7.2% including vacant space currently under refurbishment, which would rise to 8.7% on letting up the empty space and capturing reversions at St Katharine Docks and the High Holborn Estate. Furthermore, this assumes no improvement in the vacancy rate in the rest of the portfolio whereas, to date, we have consistently improved the occupancy rate of our industrial and provincial office holdings. Our reversionary yield, the yield on value assuming full occupancy, stands at a conservative 9.5%.
Highly competitive bidding conditions have created a challenging environment in which to profitably reinvest the recycled GBP50 million cash we have generated from rental income and sales, with very few deals offering a similar level of profitability to our previous purchases. Despite this, negotiations continue on a number of fronts. In the meantime, Max has similar levels of net gearing to many of the leading UK REITs and the portfolio remains well positioned for future growth, as illustrated by this month's CBRE index showing industrial property and London and South East offices as the best performing sectors.
Outlook
It would appear that Quantitative Easing, having supported prices in so many financial markets around the world, has finally found some traction in the commercial property market outside London. The yield gap between London and the regions is as large as we can remember and, while interest rates remain exceptionally low, investors have a clear incentive to chase yield. Indeed, in light of this improved market sentiment, it may now seem odd that the provincial market is only just recovering from eighteen months of rising yields and falling capital values. However, that was when the prevailing lack of availability of bank finance made it difficult for investors to exploit the yield arbitrage, and occupational demand was in the doldrums with an economy flirting with recession. A welcome thawing of the debt markets combined with a much improved economic outlook has unleashed animal spirits and with it a torrent of investor demand - much of it from overseas - well in excess of the amount of stock currently available to buy. This squeeze is leading to deals often going through several rounds of bidding with the winner paying a premium. Investors trying to get ahead of the curve in an illiquid market see the logic of buying in bulk so demand for portfolios is strong, commanding prices greater than the sum of their parts. In any case, a portfolio premium is not something recognised by the valuation of individual assets in our balance sheet.
Whilst we have felt for some time that provincial yields had significant recovery potential, we do think that the recent benefit of a stronger economy will take longer to feed through into occupational markets. To this extent we may see a one-off upward adjustment in market pricing which will be followed by a pause while occupational markets catch up with events. In the case of our Industrious portfolio, however, where the majority of the leases have been renewed or voids let since the Lehmans crash, we would anticipate an earlier resumption of rental growth, representing a recovery in those rents set at a time of weakest occupational demand. In contrast, when we look at the broader market, there are still many secondary provincial office and retail properties let at rents set during the boom years which remain significantly above today's rental values. As these leases expire, income returns will decline with lease renewals at lower rentals or, worse, a vacancy. Owners may witness an experience akin to walking up the down escalator, their ultimate direction determined by whether the investment market propels them up faster than their cash flow takes them downwards. Some unfortunate investors will still end up travelling in the wrong direction despite the nascent investment-led recovery.
By comparison, the outlook for London offices seems unremittingly positive. Investor interest, already strong, has broadened with UK institutions back competing for assets. Vacancy rates are low and unlikely to be troubled by the development pipeline any time soon. Occupier confidence has strengthened and the more favoured West End locations are seeing rents edging back towards their all-time highs. The burgeoning TMT sector continues its migration east to find more affordable accommodation and, in so doing, is making formerly less fashionable areas more desirable. Against this background, it is no accident that the highest vacancy rates in our portfolio (at over 30%) are in our refurbishments in the High Holborn Estate and St Katharine Docks as we seek to catch the wave of rising rents in improving locations.
With such a positive prognosis our main worry about Central London is that there seems so little to worry about. Real estate markets this benign tend not to last and with yields close to historic lows eventually investors will either start to discount less exciting growth rates ahead or find more attractively priced assets elsewhere, and yields will start to edge up. However, as we are not nearly at that point yet, owners of London property should continue to enjoy their time in the sun.
Given the experience of the last five years it would be foolhardy to discount completely the risks posed at one extreme by yet another derailing of the economy and at the other by the end of QE and strongly rising interest rates. Our protection has been to maintain modest levels of leverage, substantial free cash flow and a disciplined acquisition approach, paying conservative prices for properties with asset management angles, underpinned by occupational demand. This has led to the creation of a balanced portfolio which we believe is well positioned to deliver attractive returns up to anticipated liquidation in 2016.
Aubrey Adams
Chairman
29 November 2013
Report from the Property Advisor
Prestbury Investments LLP exclusively advises Max Property Group Plc and is pleased to report on the operations of the Group for the six months ended 30 September 2013.
The portfolio
The portfolio combines exciting added value opportunities in London with a high yielding predominantly industrial portfolio spread throughout the UK, with small lot sizes and a broad spread of tenants.
Portfolio valuation movements (Max share)
Fair value Fair value Fair value ERV change
change over change over change over over six
six months six months cost months
% GBPm % %
-------------------- ------------ ------------ ------------ ----------
St Katharine Docks 3.8% 4.4 8.6% 3.9%
High Holborn Estate 13.2% 6.4 13.1% 15.1%
London Pubs 6.6% 2.7 26.5% -
Industrious 2.7% 5.1 8.2% 0.8%
Provincial Offices 1.9% 0.8 43.8% 1.2%
Hospitals (0.4)% (0.1) 4.4% 2.7%
Nightclubs (24.2)% (1.8) (31.0)% (17.8)%
3.8% 17.5 11.9% 2.2%
-------------------- ------------ ------------ ------------ ----------
Portfolio valuation yields at 30 September 2013 (Max share)
Weighted
average
Net initial Equivalent Reversionary Capital unexpired
yield yield yield value psf lease term
-------------------- ----------- ---------- ------------ ---------- -----------
St Katharine Docks 4.9% 6.5% 8.9% GBP388 5.4 years
High Holborn Estate 2.7% 6.4% 8.4% GBP375 0.8 years
London Pubs 5.4% 7.0% 5.4% GBP386 32.4 years
Industrious 10.0% 10.4% 10.9% GBP32 3.6 years
Provincial Offices 9.5% 10.1% 12.5% GBP71 3.3 years
Hospitals 7.6% 7.6% 8.0% n/a 21.4 years
Nightclubs 2.5% 12.5% 14.7% GBP26 12.9 years
7.2% 8.4% 9.5% 6.4 years
-------------------- ----------- ---------- ------------ ---------- -----------
Portfolio breakdown at 30 September 2013 (Max share)
EPRA Vacancy rate
Gross value Proportion vacancy including
GBP000 of portfolio rate* developments
----------------------- ----------- ------------- -------- -------------
St Katharine Docks 119,568 25% 4.4% 31.9%
High Holborn Estate 54,935 12% 15.4% 30.9%
----------------------- ----------- ------------- -------- -------------
Central London offices 174,503 37% 7.6% 31.7%
London Pubs 43,595 9% 0.0% 0.0%
Industrious 193,670 41% 11.2% 11.2%
Provincial Offices 42,800 9% 24.9% 24.9%
Hospitals 14,729 3% 0.0% 0.0%
Nightclubs 5,745 1% 82.5% 82.5%
Cash n/a n/a n/a n/a
475,042 100% 12.6% 19.8%
----------------------- ----------- ------------- -------- -------------
* excluding assets not available for letting
Industrious (41% of gross assets, 33% of EPRA NAV)
A portfolio of multi-let industrial estates bought out of receivership in October 2009 for GBP244.0 million (GBP31 psf capital value).
Activity
-- Vacancy rate by ERV reduced to 11.2% at September 2013 from 12.2% in March 2013
-- Vacancy rate by floor area reduced to 12.0% at the date of this report, from 13.2% in April 2013 and 20.7% at acquisition
-- Vacancy rate has fallen in every reporting period since acquisition with more than 1,000 lettings and lease renewals over 4.7 million sq ft
-- 91% of the space vacant on acquisition has since been let or sold -- Of the 721,000 sq ft currently vacant, 90,000 sq ft (12%) is under offer -- 107,000 sq ft is thought to be coming vacant up to March 2014
-- Six sales in the period totalling GBP2.8 million at an average 6.4% initial yield and GBP0.8 million (44%) profit over purchase price (14% over book value)
-- Total sales since acquisition of GBP95.3 million at an average 7.6% initial yield and GBP21.9 million (31%) profit over purchase price
Current portfolio
-- 70 properties -- 831 tenancies -- 6.0 million sq ft -- Average unit size: 5,800 sq ft -- 46% by value in the South East of England -- Highly liquid: 77% of properties by number are lot sizes of GBP3 million or below -- Weighted average unexpired lease term: 3.6 years -- GBP20.7 million rent roll -- Average contracted rent: GBP3.96 psf
The portfolio predominantly comprises smaller units that appeal to a wide variety of users. It also benefits from a range of exit options, from individual units to a whole portfolio sale. Martlesham Heath Business Park, Ipswich (504,000 sq ft) makes up over 10% of the portfolio by value and no other property makes up more than 7%.
30 September Capital Area
2013 valuation Percentage value sq ft Number Number
Region GBP000 of total psf GBP 000 of properties of units
------------ ---------------- ----------- --------- ------- --------------- ----------
South East 89,440 46% GBP54 1,668 20 416
Northern
regions 67,300 35% GBP25 2,657 27 419
Midlands 27,110 14% GBP23 1,162 16 139
South West 5,155 3% GBP37 141 3 27
Scotland 4,665 2% GBP12 398 4 31
193,670 100% GBP32 6,026 70 1,032
------------ ---------------- ----------- --------- ------- --------------- ----------
St Katharine Docks (25% of gross assets, 22% of EPRA NAV)
St Katharine Docks was acquired in a 60% joint venture in August 2011 for GBP164.5 million (GBP330 psf capital value). Situated on the Thames adjacent to Tower Bridge and the Tower of London, it enjoys unparalleled views and includes Central London's only marina. The investment comprised 450,000 sq ft of offices, predominantly in three buildings, with 50,000 sq ft of waterside restaurants, bars and shops plus the ten acre, 160 berth marina. The strategy is to create a premium office destination by repositioning the estate, attracting footloose central London occupiers to a beautiful location.
International House
70,000 sq ft of offices have been refurbished, 90% of which have been let at rents typically in the high GBP30s psf against a historic rental level of GBP30 psf. The reception area and common parts have been comprehensively refurbished and new restaurant and retail units have also been created, let to Côte and Tesco.
Commodity Quay
A GBP21 million comprehensive refurbishment of Commodity Quay is well advanced to create 140,000 sq ft of offices and ancillary space, with completion planned for Spring 2014. There has already been a healthy level of interest in the offices and a 6,000 sq ft restaurant has been pre-let to Tom's Kitchen.
Current estate
-- 515,000 sq ft, of which 140,000 is under development
-- Weighted average unexpired lease term: 5.4 years
-- GBP9.4 million rent roll
-- Average contracted rent: GBP31.43 psf
-- EPRA vacancy rate: 4.4%
-- Vacancy rate including Commodity Quay (undergoing refurbishment): 31.9% of ERV
Area Area (sq ft) EPRA vacancy Vacancy
(sq ft) in refurbishment rate rate
----------------------- --------- ------------------ ------------- --------
International House 215,000 - 5.0% 5.0%
Commodity Quay 140,000 140,000 n/a 100.0%
Devon House 90,000 - 0.0% 0.0%
Ivory House and other 70,000 - 8.4% 8.4%
----------------------- --------- ------------------ ------------- --------
515,000 140,000 4.4% 31.9%
----------------------- --------- ------------------ ------------- --------
High Holborn Estate (12% of gross assets, 18% of EPRA NAV)
A freehold island site of just under one acre in London WC1 with frontages to High Holborn and Bedford Row, acquired in November 2012 for GBP47.7 million (c. GBP320 psf capital value).
On acquisition, nine buildings provided nearly 150,000 sq ft of unrefurbished space let to 50 tenants at low rental levels averaging just GBP15 psf on short term leases. The low rental levels reflected the tenants' lack of security of tenure resulting from the former landlord's development break clauses.
Of these nine buildings, High Holborn House represents over half of the value of the estate. A comprehensive refurbishment of the reception areas and common parts will be completed by Christmas 2013 at a cost of GBP1.7 million. Five office suites totalling 14,000 sq ft have been refurbished with the level of lettings rising throughout the period from high GBP20s psf to mid/high GBP30s psf. A pre-letting of 8,500 sq ft is in solicitors' hands and further suites will be taken back and refurbished during 2014.
At Caroline House, vacant possession of all the offices has been secured and a comprehensive refurbishment, including recladding the High Holborn facade, is due to commence shortly at a cost of GBP2.2 million. We expect to quote rents in the mid/high GBP40s psf.
The smaller buildings fronting Bedford Row and Hand Court, totalling 31,000 sq ft, have potential for change of use to residential. The retail units fronting High Holborn (11,000 sq ft) are being consolidated into larger units that enjoy stronger demand from higher quality operators.
Area
(sq ft) Asset plan
---------------------------------- --------- ----------------------------
High Holborn House 87,000 Rolling refurbishment
Caroline House 19,000 Comprehensive refurbishment
Brownlow House 10,000 Rolling refurbishment
---------------------------------- --------- ----------------------------
Properties fronting High Holborn 116,000
Six properties fronting Bedford 31,000 Potential change
Row and Hand Court of use to residential
147,000
---------------------------------- --------- ----------------------------
The current rent roll is GBP1.6 million and the EPRA vacancy rate is 15.4%. Including space under development, the vacancy rate is 30.9%.
London Pubs (9% of gross assets, 9% of EPRA NAV)
29 freehold pubs with a total floor area of 150,000 sq ft, situated in high value residential areas in London, were acquired in January 2011 for GBP44.4 million (GBP300 psf capital value). The pubs were located in Marylebone, Notting Hill, Chelsea, Clerkenwell, Spitalfields, Southwark, Camden, Highgate, Islington, Barnes, Sheen, Chiswick, Battersea, Wandsworth, Clapham, Balham, Tooting and Fulham.
At acquisition, the initial yield on the portfolio was 6.7%, which has subsequently risen to 7.2% on cost due to increases in the rent roll and will rise further to at least 7.4% following the next rent review in January 2014. The independently assessed vacant possession value of the portfolio at the time of acquisition, subject to existing use as pubs, was approximately the same as the purchase price, and many of the properties are considered by the management team to have a higher alternative value for residential use in the event that they should fall vacant and planning consent for change of use secured.
During the period, two pubs in Islington and Whitechapel were sold at a combined price of GBP5.3 million, representing an initial yield of 4.9% and a profit of 42% over cost. In March 2013, a Notting Hill pub was contracted for sale for GBP1.5 million at an initial yield of 4.4% and a profit of 37% over cost, with completion after the balance sheet date. Including pubs sold in prior periods, total profits on sale to date amount to GBP3.1 million, which is 31% over cost. Following these sales, the average lot size is now GBP1.8 million at the most recent valuation.
The pubs are let on 35 year full repairing and insuring leases commencing in January 2011 to Enterprise Inns Plc at market rents well covered by trading profits. We consider Enterprise Inns to be a sufficiently strong covenant to cover the rent, with their share price having more than doubled in the past twelve months. Rents initially totalled GBP3.0 million per annum (GBP2.3 million for the portfolio still owned), with minimum 3% per annum and maximum 4% per annum RPI-linked uplifts occurring annually for the first five years and every five years thereafter. After the disposals mentioned above, the passing rent is now GBP2.5 million per annum.
Provincial Offices (9% of gross assets, 4% of EPRA NAV)
A portfolio of predominantly late 1980s air-conditioned offices purchased in February 2010 for GBP39.0 million (GBP50 psf capital value) from a property fund seeking liquidity to meet redemptions.
Activity
-- Vacancy rate by area 25%, compared to 48% at acquisition and 26% in April 2013
-- GBP32.0 million raised in May 2012 on a non-recourse financing of five properties with 18% vacancy rate
-- Two properties sold since acquisition for GBP6.7 million at 43% over purchase price
-- Remaining uncharged assets are valued at GBP11.3 million (GBP52 psf) and have a 38% vacancy rate. 95% of that vacant space is refurbished
Current portfolio
-- Nine properties (eight freeholds, one 102 year peppercorn leasehold) -- 63% by value in the South East, 30% in Manchester, 7% in Bristol -- 639,000 sq ft -- Average lot size GBP5.0 million -- GBP4.3 million rent roll -- Average contracted rent GBP10.59 psf
Nightclubs Portfolio (1% of gross assets, 2% of EPRA NAV)
The Nightclubs portfolio was acquired in October 2010 for GBP9.8 million. At the time of acquisition, three of the 14 clubs were vacant and the initial yield on acquisition was 14.9%. Three properties were sold between 2010 and 2012 and net income since acquisition, including those sale proceeds, is GBP5.4 million which represents 55% of the original purchase price.
Nine of the nightclubs were let to Atmosphere Bars and Clubs Limited. However, in May 2013 the tenant went into administration and all but one of their units, which was sublet to other occupiers, have now been closed. This led to a GBP1.8 million (24%) writedown in the value of the portfolio to GBP5.7 million. Freehold offers have since been received in respect of six of the nightclubs.
Hospitals Portfolio (3% of gross assets, 1% of EPRA NAV)
Four freehold private hospitals in Blackburn, Liverpool, Ayr and Stirling were acquired in a joint venture with Lloyds Banking Group in May 2010. Max invested a nominal sum in the joint venture to acquire a 45% interest and Lloyds injected the assets with associated debt funding.
The joint venture paid GBP31.6 million for the portfolio, fully debt financed on a non-recourse basis by Lloyds. Each hospital is let on full repairing and insuring terms to BMI Healthcare Limited, guaranteed by General Healthcare Group Limited, for a term of 25 years from May 2010 with a tenant option to renew for a further ten years. The initial rent was GBP2.3 million per annum with annual, upwards only uncapped RPI-linked rent reviews throughout the term. During the period, the third rent review has resulted in a rental uplift of 3% and the rent is now GBP2.65 million per annum.
In May 2013 Lloyds disposed of its interest in the debt to a joint venture between Texas Pacific Group and Goldman Sachs. Since the balance sheet date it has also disposed of its equity in the Hospitals joint venture to the same purchaser.
Financial review
Balance sheet
Movements in net asset value
The increase in EPRA net asset value over the six months ended 30 September 2013 and since listing comprises:
NAV growth in six months NAV growth in 52 months
since 31 March 2013 since listing
----------------------------------------- -------------------------- -------------------------
Pence Pence
GBPm per share GBPm per share
----------------------------------------- --------- --------------- --------- --------------
Net rental income 15.1 6.8 111.2 50.6
Rent smoothing adjustments* (1.0) (0.4) (9.7) (4.4)
----------------------------------------- --------- --------------- --------- --------------
Net rent excluding future rental uplifts 14.1 6.4 101.5 46.2
Running costs (3.0) (1.4) (24.8) (11.4)
Net finance costs (6.4) (2.9) (37.0) (16.8)
Surpluses on property sales 1.0 0.4 25.9 11.7
Tax (0.6) (0.2) (5.1) (2.3)
----------------------------------------- --------- --------------- --------- --------------
Realised profits 5.1 2.3 60.5 27.4
Share of Hospitals joint venture - - 1.0 0.6
Property revaluation 17.5 8.0 50.0 22.7
EPRA NAV uplift 22.6 10.3 111.5 50.7
----------------------------------------- --------- --------------- --------- --------------
* Accounting standards require lease incentives and fixed or guaranteed rental uplifts to be spread evenly over the term of a lease. The amounts described above as "rent smoothing adjustments" represent the effect of spreading uplifts and incentives, and relate principally to the leases on the London Pubs portfolio where there are 3% per annum minimum uplifts throughout the 35 year lease term.
EPRA triple net asset value
EPRA triple net asset value is the EPRA net asset value after making adjustments to include debt and hedging instruments at their fair values, and after deducting any inherent tax liabilities not provided for in the financial statements.
The Group's EPRA triple net asset value is shown below:
30 September 2013 31 March 2013
Pence Pence
GBPm per share GBPm per share
------------------------------------------------------- ------ ----------- ----- ----------
EPRA NAV 322.9 146.8 300.3 136.5
Fair value of hedging instruments, net of deferred tax (4.2) (1.9) (6.2) (2.8)
Fair value of fixed rate debt (0.1) (0.1) (0.6) (0.3)
EPRA triple net asset value 318.6 144.8 293.5 133.4
------------------------------------------------------- ------ ----------- ----- ----------
Gearing
The Group's operations are financed by a combination of cash resources and non-recourse debt finance. Non-recourse debt means that the assets at risk in the event that any debt facility were to default are limited to those within a specific ring-fenced structure. Max's debt facilities are not cross-collateralised.
The Group's share of gross and net debt (excluding the joint venture) is as follows:
St Katharine Docks
Industrious (60%) Provincial Offices* London Pubs Unsecured assets Total
GBPm GBPm GBPm GBPm GBPm GBPm
Gross debt (90.9) (52.0) (31.4) (19.8) (194.1)
Secured cash 4.8 7.7 1.5 0.8 14.8
Free cash 4.4 1.2 0.1 3.8 38.0 47.5
--------------------- ----------- ------------------ ------------------- ----------- ---------------- --------
Net debt (81.7) (43.1) (29.8) (15.2) 38.0 (131.8)
--------------------- ----------- ------------------ ------------------- ----------- ---------------- --------
Property value at 30
September 2013 191.9 119.6 32.9 45.1 72.3 461.8
--------------------- ----------- ------------------ ------------------- ----------- ---------------- --------
Gross LTV 47.4% 43.5% 95.4% 43.9% 42.0%
Net LTV 42.6% 36.0% 90.6% 33.7% 28.5%
--------------------- ----------- ------------------ ------------------- ----------- ---------------- --------
* excluding 16.7% non-controlling interest in Milton Keynes asset
The Hospitals portfolio is held in a joint venture where Max has a 45% economic interest. The non-recourse debt is held within the joint venture company where Max's capital at risk is limited to its equity in that joint venture, which at 30 September 2013 was GBP1.1 million. Max's share of the Hospitals joint venture gross debt is GBP12.8 million, net debt GBP12.4 million and property value GBP14.7 million. The Group's net LTV including the Hospitals joint venture is 30.3%.
The Group's gearing ratio (net debt to equity) at 30 September 2013 is 41.4% excluding the Hospitals joint venture and 45.2% including the joint venture. The Group has unsecured cash and property assets amounting to GBP110.3 million at their 30 September 2013 valuations.
All facilities remain within the relevant covenants and, subject to continuing to remain so, are on interest only terms with a weighted average term to expiry at 30 September 2013 of 2.9 years. Debt maturities range between January and September 2016.
Cash flow
The movements in cash over the six months to 30 September 2013 and in the period since listing may be summarised as:
Cash flows in six months since 31
March 2013 Cash flows in 52 months since listing
GBPm GBPm
--------------------------------------- -------------------------------------- -------------------------------------
Cash from operations 9.6 112.0
Property acquisitions net of debt
raised (0.2) (238.6)
Net cash from investment property sales 4.2 40.7
Net interest payable (6.4) (33.3)
Capital expenditure (9.0) (26.5)
Benefit of Provincial Offices escrow
account - 5.5
Purchase of interest rate cap - (2.6)
Net funds raised on listing - 211.4
--------------------------------------- -------------------------------------- -------------------------------------
Cash flow in the period (1.8) 68.6
Cash at the start of the period 70.4 -
--------------------------------------- -------------------------------------- -------------------------------------
Cash at 30 September 2013 68.6 68.6
--------------------------------------- -------------------------------------- -------------------------------------
Group Max share
Comprising: GBPm GBPm
--------------------------------------- -------------------------------------- -------------------------------------
Free cash 48.5 47.5
Cash secured under lending facilities 20.1 14.8
--------------------------------------- -------------------------------------- -------------------------------------
68.6 62.3
--------------------------------------- -------------------------------------- -------------------------------------
The most significant capital project is the refurbishment of Commodity Quay at St Katharine Docks, where the 140,000 sq ft building has been stripped out and is undergoing a major internal refurbishment and reglazing. The works are expected to complete in Spring 2014. GBP6.7 million (Max share GBP4.0 million) was spent in the six months ended 30 September 2013 and Max's share of the remaining anticipated capital expenditure for the project from the balance sheet date to completion is GBP6.0 million.
Capital expenditure totalling c. GBP5.0 million is planned for the High Holborn Estate on a two to three year rolling refurbishment programme, improving common parts and refurbishing office space, of which GBP0.9 million was spent in the reporting period.
Capital expenditure requirements in the rest of the portfolio are relatively modest and expected to remain broadly in line with levels of past expenditure. Excluding the major projects noted above, routine capital expenditure has averaged around GBP2.9 million per annum over the last three and a half years.
Income statement
Movements in property valuations shown in the income statement are described in the portfolio section of this report. The other key elements of the income statement are described below.
Net income from property activities
Max's share of net rental surpluses and surpluses on sales have, in the period from listing to 30 September 2013, contributed 57.9p of the net 50.7p per share growth in that period, covering all running costs, interest and tax by approximately twice.
Net income in
six months since Net income in 52 months since listing
31 March 2013
Pence Pence
GBPm per share GBPm per share
------------------------------------------------- ---------- ---------- ------------------ ---------------------
Gross rent 18.5 8.4 142.8 64.9
Direct property costs (3.4) (1.6) (31.6) (14.3)
------------------------------------------------- ---------- ---------- ------------------ ---------------------
Rental surplus 15.1 6.8 111.2 50.6
------------------------------------------------- ---------- ---------- ------------------ ---------------------
Proceeds from sale of trading properties - - 28.8 13.1
Cost of trading properties sold - - (22.8) (10.4)
------------------------------------------------- ---------- ---------- ------------------ ---------------------
Profit on sale of trading properties - - 6.0 2.7
------------------------------------------------- ---------- ---------- ------------------ ---------------------
Proceeds from sale of investment properties 8.3 3.8 86.1 39.1
Cost of investment properties sold (7.3) (3.4) (66.2) (30.1)
------------------------------------------------- ---------- ---------- ------------------ ---------------------
Profit on sale of investment properties 1.0 0.4 19.9 9.0
Property surplus reported in the income statement 16.1 7.2 137.1 62.3
Rent smoothing adjustments classified within
revaluation movements (1.0) (0.4) (9.7) (4.4)
Realised property surpluses attributable to
shareholders 15.1 6.8 127.4 57.9
------------------------------------------------- ---------- ---------- ------------------ ---------------------
Provisions for rent, service charge and other billed amounts considered irrecoverable from tenants amounted to GBP0.1 million in the period compared to GBP0.2 million in the year to 31 March 2013 and GBP0.1 million in the six months to 30 September 2012. Rental bad debts were 0.2% of the rent billed compared to 0.4% in the year to 31 March 2013 and 0.2% in the six months to 30 September 2012.
The Group's largest rent from a single tenant is payable by Enterprise Inns Plc with GBP2.5 million passing rent per annum, c. 6.5% of the Group's total passing rent as at 30 September 2013. We consider Enterprise Inns to be a sufficiently strong covenant to service its lease liabilities comfortably, which relate to a profitable part of their portfolio in desirable locations, but it is worth noting that the acquisition cost of the London Pubs portfolio was substantially underpinned by its vacant possession value.
All other tenants each account for less than 5% of total passing rent, and all but ten of those also represent less than 1% of total passing rent. This, together with the fact that the portfolio comprises over 1,000 tenants, provides a low concentration of tenant risk, as borne out by a relatively low and consistent default rate through tough economic times.
Net financing costs
The Group's net financing cost of GBP6.8 million (Max share GBP6.0 million) for the period principally comprises GBP6.3 million of cash interest payable on the four non-recourse secured loan facilities (financing the Industrious, London Pubs, Provincial Offices and St Katharine Docks portfolios), of which Max's share is GBP5.4 million, and GBP0.6 million of amortised finance fees.
The Provincial Offices facility is fixed rate debt. On the remaining floating rate facilities, interest rate risk is managed through a combination of interest rate caps and swaps, with at least 99% of the amount of notional principal hedged in each of the debt facilities for the term of the relevant loan.
The average interest rates paid and potential maximum rates payable during the six months to 30 September 2013 for each on balance sheet facility were as follows:
Average rate Maximum rate
Hedging method paid payable
------------------- --------------- ------------ ------------
Industrious Swap/cap 5.4% 6.4%
St Katharine Docks Swap 4.6% 4.6%
Provincial Offices Fixed rate 9.0% 9.0%
London Pubs Cap 2.9% 5.9%
Average 5.4% 6.0%
------------------------------------ ------------ ------------
The risk of interest rate movements on the Hospitals portfolio has been managed by interest rate swaps which fixed the total cost of the debt at 5.5% per annum. At the end of October 2013, the swaps were terminated at zero cost and replaced with a cap which will keep the maximum potential interest rate exposure at the same level but will enable the joint venture to benefit from a reduced interest cost to the extent that rates remain at their current low levels. This interest cost is reported through the share of profits of joint venture line in the income statement.
The weighted average term to maturity of the Group's debt as at 30 September 2013 is 2.9 years, with the first debt maturity being the London Pubs facility in January 2016 and the last being the Provincial Offices facility in September 2016.
Tax
UK income tax is payable at 20% of net rental surpluses after deduction of costs (principally financing costs and costs of holding vacant property) and capital allowances. No tax is payable in Jersey on the interest or dividend income of Jersey incorporated and tax resident companies nor on investment property capital gains. The tax charge for the period represents an effective underlying tax rate of 8% on profits excluding property revaluations, derivative revaluations and joint venture contribution.
Mike Brown
Chief Executive
Prestbury Investments LLP
29 November 2013
Condensed Group Income Statement
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
Note GBP000 GBP000 GBP000
Gross rental income 20,874 22,498 45,093
Property outgoings (4,143) (4,431) (8,977)
------------------------------------ ----- ----------------- ----------------- ----------
Gross profit 16,731 18,067 36,116
Administrative expenses:
------------------------------------ ----- ----------------- ----------------- ----------
General administrative expenses (3,220) (3,099) (6,170)
Corporate costs (347) (386) (757)
------------------------------------ ----- ----------------- ----------------- ----------
Total administrative expenses (3,567) (3,485) (6,927)
Investment property revaluation 19,345 (6,489) (6,356)
Profit on sale of investment
properties 957 77 947
Other income 56 54 108
------------------------------------ ----- ----------------- ----------------- ----------
Operating profit 33,522 8,224 23,888
Share of profit / (loss)
of joint venture 9 42 154 (443)
Net finance costs 4 (6,779) (6,960) (14,009)
Profit before tax 26,785 1,418 9,436
Tax (charge) / credit 5 (655) 287 (67)
Profit for the period 26,130 1,705 9,369
------------------------------------ ----- ----------------- ----------------- ----------
Profit for the period attributable
to:
Owners of the parent 23,189 1,803 8,269
Non-controlling interests 6 2,941 (98) 1,100
------------------------------------ ----- ----------------- ----------------- ----------
26,130 1,705 9,369
------------------------------------ ----- ----------------- ----------------- ----------
Pence per Pence per Pence per
Earnings per share share share share
------------------------------------ ----- ----------------- ----------------- ----------
Basic and diluted 7 10.5p 0.8p 3.8p
------------------------------------ ----- ----------------- ----------------- ----------
All amounts relate to continuing activities.
Condensed Group Statement of Comprehensive Income
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
Note GBP000 GBP000 GBP000
Profit for the period 26,130 1,705 9,369
Other comprehensive income
- items that may be reclassified
subsequently to profit or
loss
Fair value adjustment of
interest rate derivatives
in effective hedges 13 2,376 (435) (119)
Amortisation of interest
rate derivatives, transferred
to income statement (84) (152) (284)
Tax effect of interest rate
derivative fair value adjustment 5 (453) 116 79
Share of fair value adjustment
of interest rate derivatives
in effective hedges in joint
venture, net of deferred
tax 9 60 55 159
----------------------------------- ----- ----------------- ----------------- ----------
Other comprehensive income
/ (loss) 1,899 (416) (483)
----------------------------------- ----- ----------------- ----------------- ----------
Total comprehensive income
for the period, net of tax 28,029 1,289 9,204
----------------------------------- ----- ----------------- ----------------- ----------
Total comprehensive income
for the period, net of tax,
attributable to:
Owners of the parent 24,609 1,631 8,172
Non-controlling interests 3,420 (342) 1,032
----------------------------------- ----- ----------------- ----------------- ----------
28,029 1,289 9,204
----------------------------------- ----- ----------------- ----------------- ----------
Condensed Group Statement of Changes in Equity
Period ended Equity attributable
30 September 2013 (unaudited) Stated Hedging Retained to owners Non-controlling
capital reserve earnings of the parent interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- --------- --------- ---------- -------------------- ---------------- --------
At 31 March 2013 (audited) 211,367 (4,849) 87,573 294,091 46,163 340,254
Profit for the period - - 23,189 23,189 2,941 26,130
Fair value adjustment
of interest rate derivatives - 1,881 - 1,881 411 2,292
Tax effect of interest
rate derivative fair
value adjustment - (521) - (521) 68 (453)
Share of fair value adjustment
of interest rate derivatives
in joint venture, net
of deferred tax - 60 - 60 - 60
-------------------------------- --------- --------- ---------- -------------------- ---------------- --------
Total comprehensive income
for the period, net of
tax - 1,420 23,189 24,609 3,420 28,029
At 30 September 2013
(unaudited) 211,367 (3,429) 110,762 318,700 49,583 368,283
-------------------------------- --------- --------- ---------- -------------------- ---------------- --------
Period ended Equity attributable
30 September 2012 (unaudited) Stated Hedging Retained to owners Non-controlling
capital reserve earnings of the parent interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- --------- --------- ---------- -------------------- ---------------- --------
At 31 March 2012 (audited) 211,367 (4,752) 79,304 285,919 39,346 325,265
Profit for the period - - 1,803 1,803 (98) 1,705
Fair value adjustment
of interest rate derivatives - (260) - (260) (327) (587)
Tax effect of interest
rate derivative fair
value adjustment - 33 - 33 83 116
Share of fair value adjustment
of interest rate derivatives
in joint venture, net
of deferred tax - 55 - 55 - 55
-------------------------------- --------- --------- ---------- -------------------- ---------------- --------
Total comprehensive income
for the period, net of
tax - (172) 1,803 1,631 (342) 1,289
Equity contribution from
non-controlling interests - - - - 600 600
-------------------------------- --------- --------- ---------- -------------------- ---------------- --------
At 30 September 2012
(unaudited) 211,367 (4,924) 81,107 287,550 39,604 327,154
-------------------------------- --------- --------- ---------- -------------------- ---------------- --------
Condensed Group Balance Sheet
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
Note GBP000 GBP000 GBP000
Non-current assets:
Investment properties 8 532,809 462,082 509,864
Investment in joint venture 9 1,073 1,464 971
Interest rate derivatives
at fair value 13 1,033 1,276 1,425
Deferred tax asset 5 1,029 1,601 1,546
535,944 466,423 513,806
------------------------------- ----- -------------- -------------- ----------
Current assets:
Trading properties - 864 -
Trade and other receivables 10 19,053 13,119 17,512
Cash and cash equivalents 11 68,550 113,791 70,386
87,603 127,774 87,898
------------------------------- ----- -------------- -------------- ----------
Total assets 623,547 594,197 601,704
------------------------------- ----- -------------- -------------- ----------
Current liabilities:
Trade and other payables 12 (20,097) (19,508) (20,705)
Tax payable (839) (62) (280)
Interest rate derivatives
at fair value 13 (2,284) (3,058) (2,384)
(23,220) (22,628) (23,369)
------------------------------- ----- -------------- -------------- ----------
Non-current liabilities:
Borrowings 13 (225,865) (236,045) (229,000)
Interest rate derivatives
at fair value 13 (3,874) (6,197) (6,764)
Obligations under finance
leases 13 (1,616) (1,652) (1,652)
Deferred tax liability 5 (689) (521) (665)
(232,044) (244,415) (238,081)
------------------------------- ----- -------------- -------------- ----------
Total liabilities (255,264) (267,043) (261,450)
------------------------------- ----- -------------- -------------- ----------
Net assets 368,283 327,154 340,254
------------------------------- ----- -------------- -------------- ----------
Equity attributable to owners
of the parent:
Stated capital 211,367 211,367 211,367
Hedging reserve (3,429) (4,924) (4,849)
Retained earnings 110,762 81,107 87,573
318,700 287,550 294,091
Non-controlling interests 6 49,583 39,604 46,163
Total equity 368,283 327,154 340,254
------------------------------- ----- -------------- -------------- ----------
Pence per Pence per Pence per
share share share
------------------------------- ----- -------------- -------------- ----------
Basic and diluted NAV per
share 14 144.9p 130.7p 133.7p
EPRA NAV per share 14 146.8p 134.1p 136.5p
------------------------------- ----- -------------- -------------- ----------
Condensed Group Cash Flow Statement
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
Cash flows from operating activities:
Profit before tax 26,785 1,418 9,436
Adjustments for non-cash items
Investment property revaluation (19,345) 6,489 6,356
Profit on sale of investment
properties (957) (77) (947)
Share of (profit) / loss of
joint venture (42) (154) 443
Net finance costs 6,779 6,960 14,009
Cash flows from operations before
changes in working capital 13,220 14,636 29,297
Change in trade and other receivables (1,847) (3,711) (6,035)
Change in trade and other payables (2,080) (512) (233)
Tax recovered / (paid) 297 (618) (898)
Cash flows from operations 9,590 9,795 22,131
Investing activities:
Investment property acquisitions - (478) (47,488)
Capital expenditure on investment
properties (9,027) (6,079) (11,165)
Recoveries from escrow account - 41 41
Proceeds from sale of investment
properties 7,953 3,084 8,251
Interest received 88 136 215
Cash flows from investing activities (986) (3,296) (50,146)
Financing activities:
Loans drawn down - 32,000 32,000
Loan arrangement fees paid (154) (1,362) (2,540)
Loans repaid (3,751) (884) (7,102)
Interest paid (6,506) (5,693) (12,373)
Purchase of interest rate cap (29) - -
Distribution to non-controlling
interests - - (15)
Capital contribution from non-controlling
interests - 600 5,800
Cash flows from financing activities (10,440) 24,661 15,770
Net (decrease) / increase in
cash and cash equivalents (1,836) 31,160 (12,245)
Cash and cash equivalents at
start of period 70,386 82,631 82,631
------------------------------------------- ----------------- ----------------- ----------
Cash and cash equivalents at
end of period 68,550 113,791 70,386
------------------------------------------- ----------------- ----------------- ----------
Notes to the Interim Report
1. General information about the Group
Max Property Group Plc was listed on AIM and CISX on 27 May 2009. It is a closed-ended real estate investment company incorporated in Jersey on 17 April 2009.
The financial information set out in this report covers the six month period to 30 September 2013, with comparative amounts relating to the six month period to 30 September 2012 and the year to 31 March 2013.
This financial report includes the results and net assets of the Company and its subsidiaries, together referred to as the Group, along with the Group's interest in the results and net assets of its joint venture.
Further general information about the Company and the Group can be found on its website: www.maxpropertygroup.com.
2. Basis of preparation
The financial information contained in this report has been prepared in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union, and on a going concern basis.
The condensed financial statements for the interim period are unaudited and do not constitute statutory accounts for the purposes of the Companies (Jersey) Law 1991. They should be read in conjunction with the Group's statutory accounts for the year ended 31 March 2013, which are prepared under IFRS and upon which an unqualified auditors' report was given.
Except as noted below, the accounting policies adopted in this report are consistent with those included in the financial statements of the Group for the year ended 31 March 2013 and are expected to be consistently applied in the year ending 31 March 2014. The annual report is available from the Investor Centre page of the Company's website, www.maxpropertygroup.com, or by writing to the Company Secretary.
In the current financial year the Group has adopted the amendments to IAS 1 "Presentation of Items of Other Comprehensive Income" and IFRS 13 "Fair Value Measurement". The amendments to IAS 1 require items of other comprehensive income to be grouped by those items that will be reclassified subsequently to profit or loss and those that will be never be reclassified, as well as their associated income tax. IFRS 13 impacts the disclosure and measurement of financial instruments held at fair value, as set out in note 13.
The Group's financial performance is not subject to material seasonal fluctuations.
3. Operating segments
During the current and prior periods, the Group operated in and was managed as one business segment, being property investment. All revenue arises from property investment and trading, with all properties located in the United Kingdom. No single tenant represented more than 10% of the Group's revenues during the current or any prior periods.
4. Finance income and costs
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
----------------------------------------- ----------------- ----------------- ----------
Recognised in the income statement:
Finance income
Interest on cash deposits 87 136 215
----------------------------------------- ----------------- ----------------- ----------
Finance costs
Interest on secured debt (6,253) (5,965) (12,269)
Amortisation of loan issue costs (628) (503) (1,096)
Other finance costs (170) (287) (493)
Fair value adjustment of interest
rate derivatives in ineffective
hedges (note 13) 193 (404) (464)
Amount recycled from the hedging
reserve 84 152 284
Finance lease interest (92) (89) (186)
----------------------------------------- ----------------- ----------------- ----------
Total finance costs (6,866) (7,096) (14,224)
----------------------------------------- ----------------- ----------------- ----------
Net finance costs recognised in
the income statement (6,779) (6,960) (14,009)
----------------------------------------- ----------------- ----------------- ----------
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
----------------------------------------- ----------------- ----------------- ----------
Recognised in other comprehensive
income:
Fair value adjustment of interest
rate derivatives in effective
hedges 2,376 (435) (119)
Amount recycled to the income
statement (84) (152) (284)
----------------------------------------- ----------------- ----------------- ----------
Net finance income / (costs) recognised
in other comprehensive income 2,292 (587) (403)
----------------------------------------- ----------------- ----------------- ----------
Further information about the hedging instruments, including details of their valuation at the balance sheet date, is included in note 13.
The weighted average interest rate payable by the Group on its secured loans for the period ended 30 September 2013, including all lenders' margins but excluding amortised finance costs, was 5.4% (30 September 2012: 5.2%; 31 March 2013: 5.3%). The maximum rate payable in the period, had market rates exceeded the various fixed and capped rates protected by hedging transactions, would have been 6.0% (30 September 2012: 5.9%; 31 March 2013: 6.0%).
5. Taxation
The tax charge / (credit) for the period recognised in the income statement was as follows:
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
------------------------------------- ----------------- ----------------- ----------
Current tax: current year 567 415 987
Current tax: adjustments in respect
of prior years - (840) (1,220)
Deferred tax 88 138 300
------------------------------------- ----------------- ----------------- ----------
655 (287) 67
------------------------------------- ----------------- ----------------- ----------
The tax assessed for the period varies from the standard rate of income tax in the UK of 20%. The differences are explained below:
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
--------------------------------------- ----------------- ----------------- ----------
Profit before tax 26,785 1,418 9,436
--------------------------------------- ----------------- ----------------- ----------
Profit before tax at the standard
rate of income tax in the UK of
20% 5,357 284 1,887
Adjustments in respect of prior
years - (840) (1,220)
Adjusted for the effects of:
Revaluations not subject to tax (3,869) 1,298 1,271
Income and property disposal profits
not subject to tax (1,248) (1,408) (2,730)
Share of results of joint venture
shown after tax (8) (31) 89
Expenses not deductible for tax 186 403 610
Tax losses not yet utilised 234 6 160
Other 3 1 -
--------------------------------------- ----------------- ----------------- ----------
655 (287) 67
--------------------------------------- ----------------- ----------------- ----------
The movement on the deferred tax asset was as follows:
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
------------------------------------- ----------------- ----------------- ----------
At the start of the period 1,546 1,453 1,453
Tax on interest rate derivative
fair value adjustment, (charged)
/ credited to the income statement (64) 32 14
Tax on interest rate derivative
fair value adjustment, (charged)
/ credited to other comprehensive
income (453) 116 79
------------------------------------- ----------------- ----------------- ----------
At the end of the period 1,029 1,601 1,546
------------------------------------- ----------------- ----------------- ----------
The movement on the deferred tax liability was as follows:
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
----------------------------------- ----------------- ----------------- ----------
At the start of the period 665 351 351
Tax on recognition of fixed and
minimum guaranteed rent reviews,
charged to the income statement 24 170 314
At the end of the period 689 521 665
----------------------------------- ----------------- ----------------- ----------
Tax status of the Company and its subsidiaries
Any Group undertakings earning income are either tax resident in Jersey or are tax transparent entities owned by Jersey resident entities. Jersey has a corporate income tax rate of zero, so the Company and its subsidiaries are not subject to tax in Jersey on their income or gains. The Company is not subject to UK Corporation tax on any dividend or interest income it receives.
The Group's real estate assets are located in the United Kingdom and the net rental income earned, less deductible costs including interest, is subject to UK income tax currently at a rate applicable to Group undertakings of 20%. The joint venture investment is held in two UK companies which were subject to UK Corporation tax on profits at 23% for the period ended 30 September 2013 (30 September 2012 and 31 March 2013: 24%).
6. Non-controlling interests
The non-controlling interests represent a 16.7% investment by a third party in three properties in Milton Keynes within the Provincial Offices portfolio and a 40% investment by another third party in St Katharine Docks.
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
--------------------------------------- ----------------- ----------------- ----------
At the start of the period 46,163 39,346 39,346
Capital invested by third party
in St Katharine Docks - 600 5,800
Share of profit / (loss) for the
period 2,941 (98) 1,100
Share of other comprehensive income
for the period 479 (244) (68)
Distributions paid to non-controlling
interests - - (15)
--------------------------------------- ----------------- ----------------- ----------
At the end of the period 49,583 39,604 46,163
--------------------------------------- ----------------- ----------------- ----------
7. Earnings per share
Earnings per share is calculated as profits attributable to ordinary shareholders of the Company for each period divided by 220,000,002 ordinary shares in issue throughout each relevant period during which profits were earned. There are no share options or other equity instruments in issue and therefore no adjustments to be made for dilutive or potentially dilutive equity arrangements.
The European Public Real Estate Association ("EPRA") publishes guidelines for calculating adjusted earnings designed to represent core operational activities. The adjusted EPRA earnings per share calculation is as follows, with all figures shown net of any non-controlling interests:
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
Pence Pence Pence
per share per per
GBP000 GBP000 share GBP000 share
----------------------------------- --------- ----------- --------- -------- ------- -------
Basic earnings attributable
to shareholders 23,189 10.5 1,803 0.8 8,269 3.8
Adjusted for:
Investment property revaluation (16,582) (7.5) 6,308 2.9 7,085 3.2
Profit on sale of investment
properties (957) (0.4) (77) - (947) (0.5)
Fair value adjustment of interest
rate derivatives, net of tax (439) (0.2) (131) (0.1) (464) (0.2)
Fair value adjustment of interest
rate derivatives within joint
venture, net of tax (11) - 3 - (11) -
EPRA earnings 5,200 2.4 7,906 3.6 13,932 6.3
----------------------------------- --------- ----------- --------- -------- ------- -------
8. Investment properties
Long Short
Freehold leasehold leasehold Total
GBP000 GBP000 GBP000 GBP000
------------------------------------------ --------- ---------- ---------- --------
Audited:
Carrying value as at 31 March
2012 386,729 76,268 1,128 464,125
Acquisition of the High Holborn
Estate 47,724 - - 47,724
Transfer from trading property 864 - - 864
SDLT recovery on Provincial Offices
portfolio (200) (36) - (236)
Capital expenditure net of dilapidations
receipts 11,113 (78) 57 11,092
Recoveries from escrow account (41) - - (41)
Disposals (6,424) (884) - (7,308)
Revaluation movement (3,316) (2,891) (149) (6,356)
------------------------------------------ --------- ---------- ---------- --------
Carrying value as at 31 March
2013 436,449 72,379 1,036 509,864
Unaudited:
Purchase of freehold of existing
leasehold property 1,090 (1,090) - -
Change in valuation of head leases - (36) - (36)
Capital expenditure net of dilapidations
receipts 10,755 (115) - 10,640
Disposals (7,004) - - (7,004)
Revaluation movement 18,579 781 (15) 19,345
Carrying value as at 30 September
2013 459,869 71,919 1,021 532,809
------------------------------------------ --------- ---------- ---------- --------
The following table reconciles the carrying values of the investment properties to their fair values:
Long Short
Freehold leasehold leasehold Total
GBP000 GBP000 GBP000 GBP000
Audited:
Carrying value as at 31 March
2013 436,449 72,379 1,036 509,864
Headlease liabilities (note 13) - (1,634) (18) (1,652)
Rent free periods and fixed or
guaranteed rent reviews (note
10) 7,162 1,169 76 8,407
Capitalised letting fees 934 266 6 1,206
---------------------------------------- --------- ---------- ---------- --------
Portfolio valuation as at 31 March
2013 444,545 72,180 1,100 517,825
---------------------------------------- --------- ---------- ---------- --------
Unaudited:
Carrying value as at 30 September
2013 459,869 71,919 1,021 532,809
Headlease liabilities (note 13) - (1,598) (18) (1,616)
Rent free periods and fixed or
guaranteed rent reviews (note
10) 8,128 1,344 34 9,506
Capitalised letting fees 1,073 310 3 1,386
---------------------------------------- --------- ---------- ---------- --------
Portfolio valuation as at 30 September
2013 469,070 71,975 1,040 542,085
---------------------------------------- --------- ---------- ---------- --------
Revaluation movements comprise:
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
----------------------------------- ----------------- ----------------- ----------
Property revaluation 20,624 (4,286) (1,974)
Movement in rent free periods,
fixed or guaranteed rent reviews
and capitalised letting fees (1,279) (2,203) (4,382)
----------------------------------- ----------------- ----------------- ----------
Investment property revaluation
in the income statement 19,345 (6,489) (6,356)
Investment property revaluation
attributable to non-controlling
interests (2,763) 181 (729)
----------------------------------- ----------------- ----------------- ----------
Investment property revaluation
attributable to owners of the
parent 16,582 (6,308) (7,085)
----------------------------------- ----------------- ----------------- ----------
The properties were independently valued as at 30 September 2013 by CBRE Limited, Commercial Real Estate Advisors, in their capacity as external valuers. The valuation was prepared on a fixed fee basis, independent of the property value, and in accordance with RICS Valuation - Professional Standards (2012) on the basis of fair value, supported by reference to market evidence of transaction prices for similar properties. Fair value represents the estimated amount that should be received for selling an investment property in an orderly transaction between market participants at the valuation date.
The historic cost of the Group's investment properties as at 30 September 2013 was GBP485.8 million (30 September 2012: GBP432.7 million; 31 March 2013: GBP480.3 million).
9. Investment in joint venture
The investment in joint venture represents the Group's 45% economic interest (50% voting interest) in MPG Hospital Holdings Limited, a company incorporated in England & Wales and operating in the United Kingdom. The movement in the investment in joint venture in the period was as follows:
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
------------------------------------- ----------------- ----------------- ----------
At the start of the period 971 1,255 1,255
Share of profit / (loss) for the
period recognised in the income
statement 42 154 (443)
Share of other comprehensive income 60 55 159
------------------------------------- ----------------- ----------------- ----------
1,073 1,464 971
------------------------------------- ----------------- ----------------- ----------
The properties in the joint venture were independently valued as at 30 September 2013 at GBP32.7 million (30 September 2012: GBP34.7 million; 31 March 2013: GBP32.9 million) by CBRE Limited, Commercial Real Estate Advisors, in their capacity as external valuers. The valuation was prepared on a fixed fee basis, independent of the property value, and in accordance with RICS Valuation - Professional Standards (2012) on the basis of fair value, supported by reference to market evidence of transaction prices for similar properties.
The Group has no capital commitments or contingent liabilities in relation to the joint venture, and the joint venture itself has no capital commitments or contingent liabilities.
10. Trade and other receivables
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
--------------------------------------- -------------- -------------- ----------
Trade receivables net of provisions 2,809 3,462 3,328
Investment property disposal proceeds
receivable 1,763 - 1,763
VAT receivable 499 972 408
Tax recoverable - - 305
Interest receivable - 1 1
Rent free periods and fixed or
guaranteed rent reviews - investment
properties 9,506 6,254 8,407
Rent free periods and fixed or
guaranteed rent reviews - trading
properties - 151 -
Capitalised letting fees 1,386 1,115 1,206
Prepayments and accrued income 962 977 1,713
Other receivables 2,128 187 381
--------------------------------------- -------------- -------------- ----------
19,053 13,119 17,512
--------------------------------------- -------------- -------------- ----------
GBP1.2 million (30 September 2012: GBP0.7 million; 31 March 2013: GBP0.8 million) of rent free periods and fixed or guaranteed rent reviews are due within one year, with the remainder due in more than one year. GBP0.3 million (30 September 2012 and 31 March 2013: GBP0.3 million) of capitalised letting fees are due within one year, with the remainder due in more than one year. The investment property disposal proceeds were received on schedule in November 2013.
11. Cash and cash equivalents
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
----------------------------------- -------------- -------------- ----------
Cash and cash equivalents 48,500 97,603 43,201
Cash and cash equivalents secured
under lending facilities 20,050 16,188 27,186
68,550 113,791 70,386
----------------------------------- -------------- -------------- ----------
GBP6.3 million (30 September 2012: GBP5.6 million; 31 March 2013: GBP9.0 million) of the Group's cash and cash equivalents balance is attributable to non-controlling interests.
12. Trade and other payables
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
--------------------------------- -------------- -------------- ----------
Trade payables 3,455 1,999 3,575
Rent received in advance 9,485 8,821 9,029
Other taxes and social security 1,382 1,217 1,917
Other amounts payable 610 3,506 1,926
Accruals and deferred income 5,165 3,965 4,258
--------------------------------- -------------- -------------- ----------
20,097 19,508 20,705
--------------------------------- -------------- -------------- ----------
All amounts above are due within one year and none incur interest.
13. Financial assets and liabilities
Non-current financial liabilities
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
----------------------------------- -------------- -------------- ----------
Secured loans 229,353 239,422 233,104
Unamortised finance costs (3,488) (3,377) (4,104)
----------------------------------- -------------- -------------- ----------
225,865 236,045 229,000
Obligations under finance leases
(note 8) 1,616 1,652 1,652
Interest rate derivatives at fair
value 3,874 6,197 6,764
----------------------------------- -------------- -------------- ----------
231,355 243,894 237,416
----------------------------------- -------------- -------------- ----------
The fixed rate loan had a book value of GBP32.0 million (30 September 2012 and 31 March 2013: GBP32.0 million) and a fair value of GBP32.1 million (30 September 2012: GBP32.5 million; 31 March 2013: GBP32.6 million). Otherwise there was no difference between the book value and fair value of the non-current financial liabilities shown above.
The Group's principal borrowing arrangements are as follows:
Facility Industrious St Katharine Provincial London Pubs
Docks Offices
Lender Wells Fargo Wells Fargo Longbow Investment Wells Fargo
Bank International/ Bank International No.2 Sàrl Bank International
Abbey National
Treasury
Services Plc
Recourse beyond
ring-fenced sub-group None None None None
Loan drawn May/June
October 2009 August 2011 2012 January 2011
Initial drawdown GBP127.7m GBP86.7m GBP32.0m GBP25.5m
Balance at 30 September
2013 GBP90.9m GBP86.7m GBP32.0m GBP19.8m
Fair value of secured
properties at 30
September 2013 GBP191.9m GBP199.3m GBP33.6m GBP45.1m
Gross LTV ratio
at 30 September
2013 47.4% 43.5% 95.4% 43.9%
Net LTV ratio at
30 September 2013 42.6% 36.0% 90.6% 33.7%
Current repayment Interest
terms Interest only Interest only only Interest only
Repayment date September
August 2016 August 2016 2016 January 2016
------------------------ -------------------- ------------------- ------------------ -------------------
The terms of the loans may, in the event of a covenant default, restrict the ability of certain subsidiaries to transfer funds outside the relevant security group. There have been no defaults or other breaches of financial covenants under any of the loans during the current or prior periods, or in the period since the balance sheet date.
The Group had no undrawn, committed borrowing facilities at 30 September 2013 or at the end of any prior period.
Derivative financial instruments
The following derivative financial instruments were in place as at 30 September 2013:
Notional amount Fair value
Unaudited Unaudited Audited Unaudited Unaudited Audited
30 September 30 September 31 March 30 September 30 September 31 March
Expiry 2013 2012 2013 2013 2012 2013
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------- -------- -------------- -------------- ---------- -------------- -------------- ----------
August
2.6% swap 2016 63,755 - 63,755 (2,935) - (4,259)
August
3% cap 2016 32,843 - 32,843 97 - 43
4% amortising August
swap 2014 - 64,242 - - (3,998) -
August
4% cap 2014 56,750 56,750 56,750 - 2 -
2.3% amortising August
swap 2016 86,000 86,000 86,000 (3,223) (5,257) (4,889)
2.3% receivers August
swaption 2016 86,000 86,000 86,000 914 1,249 1,376
March
3.5% cap 2015 19,183 25,500 25,500 2 6 2
3.5% cap
from April Jan
2015 2016 19,183 - - 15 - -
3.5% cap
held for
future March
transactions 2015 80,817 74,500 74,500 5 19 4
-------------------- -------- -------------- -------------- ---------- -------------- -------------- ----------
(5,125) (7,979) (7,723)
----------------------------- -------------- -------------- ---------- -------------- -------------- ----------
The profile of the notional swapped and cap amounts have been estimated to match the expected loan profiles reasonably closely. Since the loan profiles cannot be predicted with certainty the swap and cap profiles are monitored regularly and adjusted as necessary.
Movements in the valuation of derivative financial instruments in the period were as follows:
Unaudited Unaudited Audited
six months six months year to
to 30 September to 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
--------------------------------- ----------------- ----------------- ----------
At the start of the period (7,723) (7,140) (7,140)
Charged to the income statement
(note 4) 193 (404) (464)
Charged directly to the hedging
reserve 2,376 (435) (119)
Premium paid on acquisition of 29 - -
interest rate cap
At the end of the period (5,125) (7,979) (7,723)
--------------------------------- ----------------- ----------------- ----------
Derivative financial instruments are categorised as follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
------------------------ -------------- -------------- ----------
Financial assets
within one year - - -
in more than one year 1,033 1,276 1,425
Financial liabilities
within one year (2,284) (3,058) (2,384)
in more than one year (3,874) (6,197) (6,764)
(5,125) (7,979) (7,723)
------------------------ -------------- -------------- ----------
The derivative contracts and the fixed rate loan have been valued by reference to interbank bid market rates as at the close of business on 28 September 2013 by JC Rathbone Associates Limited, and include the full LIBOR basis spread. All derivative financial instruments are classified as "level 2" as defined in IFRS 13 as their fair value measurements are those derived from inputs other than quoted prices in active markets for identical assets and liabilities, but that are observable either directly or indirectly.
The fair values of hedging instruments change constantly with interest rate fluctuations, but the exposure of the Group to movements in interest rates is protected by way of the hedging products listed above. These valuations do not necessarily reflect the cost or gain to the Group of cancelling its interest rate protection, which is generally a marginally higher cost or smaller gain than a market valuation.
14. Net asset value per share
Net asset value per share is calculated as the net assets of the Group attributable to shareholders at each balance sheet date, divided by the number of shares in issue at that date.
There are no share options or other equity instruments in issue and therefore no adjustments to be made for dilutive or potentially dilutive equity arrangements.
The European Public Real Estate Association ("EPRA") has issued guidelines aimed at providing a measure of net asset value ("NAV") on the basis of long term fair values. The EPRA measure excludes items that are considered to have no impact in the long term, such as the fair value of derivative instruments and deferred tax balances. The Group's EPRA NAV is calculated as follows, with all figures shown net of any non-controlling interests:
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
Pence Pence Pence
per share per per
GBP000 GBP000 share GBP000 share
------------------------------------- -------- ----------- -------- ------- -------- -------
Basic NAV 318,700 144.9 287,550 130.7 294,091 133.7
Adjustments:
Fair value of financial instruments 4,987 2.3 7,686 3.5 7,366 3.4
Deferred tax (845) (0.4) (1,280) (0.6) (1,265) (0.6)
Fair value of financial instruments
in joint venture, net of deferred
tax 20 - 199 0.1 90 -
Fair value of trading property
in excess of book value - - 916 0.4 - -
EPRA NAV 322,862 146.8 295,120 134.1 300,282 136.5
------------------------------------- -------- ----------- -------- ------- -------- -------
15. Related party transactions and balances
Interests in shares
The direct and indirect interests of the Directors and their families in the share capital of the Company are as follows:
Unaudited Unaudited Unaudited
30 September 30 September 31 March
2013 2012 2013
--------------- -------------- -------------- -----------
Aubrey Adams 100,000 100,000 100,000
Mike Brown 5,000,000 5,000,000 5,000,000
Freddie Cohen 20,000 20,000 20,000
Keith Hamill 40,000 40,000 40,000
Nick Leslau 20,000,000 20,000,000 20,000,000
Alex Ohlsson 150,000 150,000 150,000
John Stephen 40,000 40,000 40,000
David Waters 25,000 25,000 25,000
--------------- -------------- -------------- -----------
Directors' fees
Directors' fees of GBP0.1 million (period to 30 September 2012: GBP0.1 million; year to 31 March 2013: GBP0.2 million) were payable for the period ended 30 September 2013. As at 30 September 2013, GBP19,000 (30 September 2012 and 31 March 2013: GBP19,000) of these fees remained outstanding and are included within other amounts payable (note 12).
Management fees payable
Nick Leslau and Mike Brown hold partnership interests in, and are Chairman and Chief Executive respectively of, Prestbury Investments LLP, which is Property Advisor to the Group under the terms of the Investment Advisory Agreement entered into on 21 May 2009. Under the terms of that agreement, management fees of GBP2.6 million (period to 30 September 2012: GBP2.5 million; year to 31 March 2013: GBP5.1 million) were payable to Prestbury in respect of the period, of which GBPnil (30 September 2012 and 31 March 2013: GBPnil) was outstanding as at the balance sheet date. GBP0.1 million (period to 30 September 2012 and year to 31 March 2013: GBP0.1 million) of this fee has been reduced by the Property Advisor in recognition of the fact that it directly receives a management fee from the Hospitals joint venture described in note 9, in relation to the services provided which are sub-contracted by the Company. This amount is included in other income in the income statement.
In the course of its duties as Property Advisor and in accordance with the terms of the Investment Advisory Agreement, Prestbury is entitled to recover the costs and expenses properly incurred in connection with its duties. During the period, Prestbury has recharged at cost GBP13,000 (period to 30 September 2012: GBP12,000; year to 31 March 2013: GBP31,000) to the Group in this respect, of which GBPnil (30 September 2012 and 31 March 2013: GBPnil) remained outstanding as at the balance sheet date.
Incentive payments
Under the terms of the carried interest arrangements between the Company, Prestbury (Scotland) Limited Partnership ("Prestbury Scotland", a partnership in which Nick Leslau and Mike Brown have 49% and 25% interests respectively), and OZ UK Real Estate Securities Limited ("Och-Ziff"), once the GBP211.4 million of net funds raised on listing have been returned to shareholders, then cash returns over and above that amount may ultimately be shared as to 80% to shareholders and 20% to Prestbury Scotland and Och-Ziff, subject to shareholders having first received an amount in excess of a 'hurdle', being the net proceeds of share issues in cash plus an 11% per annum preferred return.
The carried interest payments are payable only on cash realisations other than where either the Investment Advisory Agreement has been terminated (where the net asset value of the Group is used in the calculation as if that amount had been returned to shareholders in cash) or there has been a takeover of the Company (in which case the offer price is used in the calculation).
No carried interest payment has yet become payable. Taking account of the fact that no fee has yet been earned, together with the uncertainties arising from the length of the period over which the incentive fee will be determined, the challenging future returns required and current market index projections of general property value growth over the medium term, the Directors have concluded that it would not be appropriate to make a provision for the incentive fee at this stage. The Board keeps this position under review and, in accordance with the requirements of the relevant accounting standard, IAS 37, will provide for a liability for incentive payments if it is considered more likely than not that payments will be made.
Once the investors in the St Katharine Docks joint venture have received cash returns equal to their participations in St Katharine Docks (currently totalling GBP103.1 million) plus an 11% per annum preferred return, any cash returns over and above that amount will be shared 84% to the Group and 16% to the non-controlling interests. Taking into account the uncertainty over the ultimate net disposal value of the joint venture's assets, no account has yet been taken of potential incentive fees arising from this arrangement.
16. Commitments and contingent liabilities
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
GBP000 GBP000 GBP000
--------------------------------------- -------------- -------------- ----------
Capital commitments - Max share 10,280 1,099 11,316
Capital commitments - non-controlling
interests' share 5,108 588 7,309
15,388 1,687 18,625
--------------------------------------- -------------- -------------- ----------
Capital commitments are in respect of refurbishment works on investment properties.
17. Events after the balance sheet date
On 4 October 2013, the sale of two industrial units in Romford completed for cash consideration of GBP0.4 million. GBP0.1m of the proceeds were subsequently used in part repayment of the loan secured on the Industrious portfolio. On 6 November 2013, the sale of the Portobello Star pub completed for cash consideration of GBP1.5 million. GBP0.6 million of the proceeds were used in part repayment of the loan secured on the London Pubs portfolio. In each case, unconditional contracts for sale had been exchanged prior to the balance sheet date. The profit on sale for Romford was included in the results for the period ended 30 September 2013 while the profit on sale for the pub was included in the results for the year ended 31 March 2013. The sale proceeds are included on the balance sheet in trade and other receivables, less any deposits paid by the purchasers which are included in cash and cash equivalents.
Glossary
AIM The Alternative Investment Market of the
London Stock Exchange
CISX The Daily Official List of the Channel Islands
Stock Exchange
EPRA European Public Real Estate Association
EPRA EPS A measure of earnings per share designed
by EPRA to present underlying earnings from
core operating activities
EPRA NAV A measure of net asset value designed by
EPRA to present net asset value excluding
the effects of fluctuations in value in
instruments that are held for long term
benefit, net of deferred tax
EPRA Vacancy Rate ERV of vacant space divided by ERV of the
whole portfolio, excluding in each case
any property under development
EPS Earnings per share, calculated as the earnings
for the period after tax attributable to
members of the parent Company (that is,
excluding any non-controlling interests)
divided by the weighted average number of
shares in issue in the period
Equivalent Yield The constant capitalisation rate which,
if applied to all cash flows from an investment
property, equates to the fair value
ERV Estimated rental value: the open market
rental value expected to be achievable at
the date of valuation
Gross LTV LTV calculated on the gross loan amount
Initial Yield Annualised net rents on investment properties
as a percentage of the investment property
valuation
Investment Advisory Agreement The agreement made between the Company,
Prestbury Investments LLP and Gallium Fund
Solutions Limited under which Prestbury
provides certain services to the Group
LTV The outstanding amount of a loan as a percentage
of property value
NAV Net asset value
Net LTV LTV calculated on the gross loan amount
less cash balances
Property Advisor Prestbury Investments LLP
or Prestbury
psf Per square foot
Reversionary Yield The anticipated yield to which the Initial
Yield will rise once the rent reaches the
ERV
sq ft Square feet
This information is provided by RNS
The company news service from the London Stock Exchange
END
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