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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Urban Logistics Reit Plc | LSE:SHED | London | Ordinary Share | GB00BYV8MN78 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.20 | 0.18% | 111.80 | 111.60 | 112.20 | 112.80 | 110.60 | 111.20 | 999,800 | 16:35:11 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Investment Trust | 59.71M | -82.66M | -0.1751 | -6.40 | 528.61M |
From Apr 2019 to Apr 2024
TIDMSHED
RNS Number : 4028H
Urban Logistics REIT PLC
15 November 2018
Urban Logistics REIT plc
("Urban Logistics" or the "Company")
Interim results for the six months ended 30 September 2018
Strong underlying performance
Urban Logistics, (AIM: SHED) the specialist UK industrial and logistics REIT, issues its interim financial results for the half year ended 30 September 2018.
Highlights 30 Sep 18 30 Sep 17 ---------------------------- ---------- ---------- Income statement EPRA earnings (GBPm) 2.6 0.2 EPRA EPS (p) 3.1 0.5 Reported profit (GBPm) 9.3 3.1 Gross rental income (GBPm) 4.9 1.5 Interim dividends (p) 3.0 1.0 Balance sheet EPRA NAV per share (p) 129.21 116.12 Gross borrowings (GBPm) 64.4 18.4 LTV (%) 37.1 19.7
Investment activity
Hot Features
Premium
-- GBP20.4m of equity capital raised from new and existing investors
in April 2018, increasing market capitalisation to over GBP100m
-- GBP36.0m invested in off-market acquisition of six logistics assets
at 5.9% net initial yield in July and September 2018
-- On 5 April 2018, sold a site in Bedford for GBP3.2m, representing
an IRR of 56%
Midlands-focussed portfolio with sustainable income and growth
-- Portfolio valuation at 30 September 2018 of GBP173.8m, reflecting
an average net initial yield of 6.1% and representing an increase
of GBP21.7m, or 14.2%, when compared to purchase prices
-- Portfolio occupancy of 98.9% (93.3% at 31 March 2018) and WAULT
of 5.0 years
-- High-quality tenant base including: Culina, XPO, DHL, Alliance
Boots and RPC Group
Post period highlights
-- On 8 October 2018, sold a site in Leeds for GBP3.4m at 5.8% net
initial yield, representing profit on cost of 17.3%
-- On 7 November 2018, purchased a property in Bedford for a net
consideration of GBP12.0m. The property is currently vacant offering
asset management opportunities
Dividends
-- Interim dividend of 3.00 pence per share
Nigel Rich, Chairman, commented:
"We remain confident that our high quality, well located industrial and logistics assets will continue to deliver attractive total returns to shareholders.
"We will seek to acquire further assets in line with our strategy, which we will expect to fund mainly through equity raising and bank debt."
- Ends -
For further information contact:
Urban Logistics REIT plc Richard Moffitt +44 (0)20 7591 1600 Montfort - Financial PR and IR adviser Olly Scott +44 (0)78 1234 5205 Honoria Simpson +44 (0)20 3965 6960 N+1 Singer - Nominated Adviser and Broker James Maxwell / James Moat (Corporate Finance) Alan Geeves / James Waterlow / Sam Greatrex (Sales) +44 (0)20 7496 3000
About Urban Logistics REIT
Urban Logistics REIT plc is a property investment company, quoted on the AIM market of the London Stock Exchange, (AIM: SHED).
The Company has been established to invest in UK-based industrial and logistics properties with the objective of generating attractive dividends and capital returns for its shareholders. Its investment strategy focuses on strategically located smaller single let industrial and logistics properties servicing high-quality tenants. Investment returns will be generated by an experienced management team focusing on quality stock selection and active asset management.
A number of structural and commercial factors currently support the attractive opportunity in the last mile/regional industrial and logistics real estate sub-sectors targeted by the Company, including: strong occupier demand, (driven by the growth of e-commerce and investment by retailers in their associated supply chain) and a decline in the supply of smaller sized lettable space in industrial and logistics real estate across the UK.
Chairman's statement
Overview
The Company, which was renamed Urban Logistics REIT plc in April, continues to build a property portfolio that offers secure income from good quality, predominantly logistics, tenants, with the prospect of an attractive total return through asset management initiatives undertaken by the Manager.
In April we raised GBP20.4 million via a market placement which was used together with bank financing to acquire GBP36.0 million of logistics assets from LondonMetric. The acquisition was completed in September. This portfolio offers significant opportunities to improve returns through active asset management.
We now own a portfolio of 34 properties valued at GBP173.8 million. The Company's market capitalisation stands at just over GBP100 million.
The portfolio
At 30 September 2018, the portfolio was 98.9% occupied with a WAULT of 5 years. A number of lease events took place during the period which increased rents or lengthened tenure, and in some instances both. These actions all helped to improve the value of our properties. Contracted rent at 30 September 2018 increased to GBP10.7 million compared with GBP5.6 million last year. One property in Bedford was sold in April, at a capital profit of GBP1.2 million, representing an IRR of 55.8%.
Since the period end, the Group disposed of one property in Leeds for a total consideration of GBP3.4 million, representing a profit on cost of GBP0.5 million or 17.3%. On 7 November 2018, the Group exchanged contracts to acquire the freehold of a property located in Bedford for a net consideration of GBP12.0 million, after sale of some development land. The acquisition is being financed from the Group's cash resources, proceeds from the disposal of the property in Leeds post period-end, as well as debt finance from its club facility with Santander and Barclays.
Financial results
Turning to our results for the interim period ended 30 September 2018, rental income has increased to GBP4.9 million compared with GBP1.5 million at 30 September 2017. EPRA earnings are up from GBP0.2 million to GBP2.6 million, with EPRA earnings per share increasing from 0.50 pence to 3.13 pence. The increases reflect rents being received in the current period from properties purchased in the previous financial year and the Company's asset management initiatives.
Assets under management increased from GBP131.9 million to GBP173.8 million which reflects an increase of 6.6% in the value of existing assets plus the value of the new assets acquired.
The Loan to Value ("LTV") at 30 September 2018 was 37.1%, similar to 31 March 2018, and within our target range of 35-40%.
Dividend
The Company has declared a fourth interim dividend of 0.02 pence per Ordinary Share in respect of the financial year ended 31 March 2018 and a first interim dividend of 2.98 pence per Ordinary Share in respect of the financial year ended 31 March 2019. The total dividend of 3.00 pence per Ordinary Share will be paid as a property income distribution (PID) on 14 December 2018 to shareholders on the register at the close of business on 30 November 2018. The ex-dividend date will be 29 November 2018.
The Manager
Our Manager, Pacific Capital Partners Limited, led in respect of the property activities, by Richard Moffitt and Christopher Turner, has been very successful in finding properties which meet our objectives. To ensure the continuity of the relationship, in July the Independent Directors, including myself, agreed an extension of the management contract to April 2024. All other key terms of the agreement remain unchanged.
Outlook
Earnings in the second half of the year will benefit from the rents received on the LondonMetric portfolio. We remain confident that in the longer term our high quality, well located industrial and logistics assets will continue to deliver attractive total returns to shareholders.
We will also, through our Manager, seek to acquire further assets in line with our strategy, which we will expect to fund mainly through equity raising and bank debt.
Nigel Rich CBE, Chairman
Manager's Report
We continue to focus on the urban logistics sub-sector of the UK property market, concentrating on a part of the market that delivers essential products to UK businesses and consumers. Our portfolio houses companies who deal with everyday items such as pharmaceuticals, ambient and frozen food, building supplies and general merchandise but, importantly, not fashion goods.
We have been consistently saying from IPO that we are experiencing a structural change in how we all go about procuring goods, with e-commerce driving a requirement for more efficient supply chains at the same time as the consumer market grows. The market suggests that online retail in the UK might well represent over one-third of total retail sales by 2040, currently this is 18% per ONS, August 2018.
Omnichannel retail in particular drives high expectations among consumers, including strong differentiation, fast deliveries and easy returns, consequently forcing retailers and third-party logistics to improve their supply chains, especially for "last mile" deliveries.
It is not in the "super shed" market where the demand for space is greatest. The most significant "space race" going forward is set to be focused around urban locations. Radius Data Exchange shows that units of approximately 45,000 sq ft have been taken up with greater intensity recently; growing from 54% to 61% of overall letting activity this year.
Better supply chains will facilitate a decisive competitive advantage for retailers who possess or control them, with further benefits from moving to a vertically integrated model. To a large extent we believe large-scale operators have developed their supply chains and it is now the last mile(s) where the funding needs to be committed.
Traditional locations for logistics - alongside motorways and on urban boundaries - will not be enough to cover city demands for last mile deliveries and reverse logistics. Therefore, more logistics facilities will be needed close to city centres. We foresee an increasing growth of demand for logistics hubs or consolidation centres to service big cities across the UK.
Whilst there are a number of near-term risks, including continued Brexit uncertainty and retailer CVAs and administrations, we remain optimistic about the future of available space given occupier interest in long-term infrastructure investment in logistics real estate and wider real estate supply constraints.
The market
Investor interest remains strong in the logistics sub-sector of the UK real estate market, with investment yields coming in materially due to the record levels of take-up seen so far in 2018. This interest is driven by structural changes and e-commerce as well as modern technology, with the driver of this demand remaining the online retail sector which at 5.6 million sq ft represents 32% of overall take-up (to June 2018). Including third party logistics providers, take-up was 54% in aggregate and these two represent the strongest market shares. In 2017 this total was 41% (Source: CBRE Logistics Property Perspective H1 2018).
H1 2018 has seen more take-up than the whole of 2017 (17.42 million sq ft vs. 17.26 million sq ft) despite the backdrop of some weaker economic data filtering through on the retail side of the UK economy. There is approximately 19 month's second-hand supply across the UK with the south-west seeing minimal availability, which in turn is pushing tenants out across the Midlands in search of space. This record H1 for logistics sits against an average annual 10 year take-up figure of 19.9 million sq ft. The second half of 2018 remains promising with some large and interesting deals pushing annual take-up close or even above 2016's record level of 29.4 million sq ft.
Regionally, the East Midlands saw the strongest take-up in H1 2018, accounting for almost 40% of total take-up - this is where our portfolio of properties is centred. The shift is predominantly driven by improved infrastructure and availability of labour, which is at a lower cost relative to the UK as a whole.
New build space remains on trend for occupiers with "design and build" in particular driving take-up due to the increasingly complex requirements of occupiers. Speculative building is returning for the first time in almost a decade. There are currently 43 schemes under construction across the UK with most located towards the south-east; however, these tend to be larger lot sizes meaning those in our size bracket (less than 200,000 sq ft) are still under supplied.
We continue to remain persuaded by the attractions of this real estate sub-sector and suggest that logistics warehouses will continue to evolve to cater for rising end customer expectations. Whilst yields remain tight we expect to see rental growth pressures remain.
Through our access, track record and experience, we are well-placed to continue sourcing attractive new opportunities and have a strong pipeline of similar product to our current portfolio.
Financial commentary
The interim financial period to 30 September 2018 was a busy one for the Group with a focus on both asset management and investment activity.
The results demonstrate some significant achievements and how our strategy of adding scale whilst focusing on investment returns, continues to bear fruit. We expect the results to continue to improve as the Group scales and undertakes its asset management initiatives.
Investment activity
The Group acquired six assets during the period following the April 2018 capital raise, the entire portfolio comprising the properties in the table below as at 30 September 2018. These have proven to be quality logistics investments, with a good geographical spread and diverse tenancies. The new properties present a variety of asset management opportunities, which have the potential to drive both income growth and capital appreciation.
The average size of the properties in the portfolio at 30 September 2018 was 64,994 sq ft. The weighted average unexpired lease term at the same date was five years, at 31 March 2018 this was also five years
Tenant Location Acquired Cost Net Book Value Size
(GBP'000) (GBP'000) (sq ft)
------------------------- -------------- ---------- ----------- --------------- ----------
Jas Bowman & Sons Bedford Apr 16 2,675 3,900 39,306
The BSS Group Northampton Apr 16 750 910 13,633
ACO Technologies Bedford Apr 16 1,675 3,500 38,762
Blackburns Metals Bedford Apr 16 1,250 2,330 24,380
Ball and Young Bedford Apr 16 1,100 1,800 22,535
Ideal Industries Bedford Apr 16 2,850 3,875 42,392
Dymatec Dunstable Apr 16 600 1,260 10,051
Winit Corporation Bardon Apr 16 6,000 6,425 73,791
Void (1) Bedford Apr 16 1,393 1,937 21,139
Professional Fulfilment Bedford Apr 16 1,394 1,941 21,182
Arqadia Bedford Apr 16 2,813 3,912 42,691
Strata Products Chesterfield Jan 17 4,659 5,925 108,873
PUMA United Kingdom Leeds Mar 17 6,050 6,250 63,979
HID Corporation Ltd Haverhill Sep 17 4,090 5,150 37,355
Culina Logistics Ltd Haverhill Sep 17 14,150 17,070 194,965
XPO Transport Solutions Leigh Sep 17 3,340 3,760 39,720
XPO Transport Solutions Motherwell Sep 17 2,420 3,100 100,832
Void (2) Nuneaton Sep 17 6,710 6,700 130,508
XPO Supply Chain UK Hinckley Sep 17 3,280 3,280 62,082
XPO Transport Solutions Normanton Sep 17 6,110 6,330 94,102
J Sainsbury plc Hoddesdon Sep 17 3,950 4,940 45,018
Travis Perkins Hoddesdon Sep 17 1,480 1,600 10,935
Komori(3) Leeds Nov 17 1,559 1,857 22,300
Pharmacy2U(3) Leeds Nov 17 1,336 1,593 19,120
Panther Warehousing Northampton Dec 17 3,025 3,250 42,553
Manitowoc Crane Group Buckingham Dec 17 6,286 9,000 29,378
GoCompare.com Newport Dec 17 4,644 4,250 26,672
DHL Hebburn Dec 17 3,157 3,320 77,430
DHL Norwich Dec 17 2,176 2,250 31,410
OTC Direct Leigh Dec 17 7,154 7,740 103,268
DHL Runcorn Dec 17 8,083 8,050 122,478
DHL Alfreton Jul 18 8,900 9,230 136,383
DHL Leicester Jul 18 6,300 6,575 65,164
NNR Global Logistics Northampton Jul 18 4,300 4,410 65,554
Encon Northampton Sep 18 3,800 3,900 45,243
Cogne UK Ltd Sheffield Sep 18 3,450 3,520 54,682
Hillary's Blinds Nottingham Sep 18 9,250 9,000 129,915
Total 152,159 173,840 2,209,781
1. Void from 24 March 2017
2. Void from 28 September 2017 - rental guarantee in place until September 2019
3. Sold post period end
* Excluding purchase costs
Valuation and portfolio growth
CBRE independently valued the portfolio at 30 September 2018, in accordance with the RICS Valuation - Professional Standards. The portfolio's market value was GBP173.8 million, compared with the assets' combined purchase price of GBP152.2 million, excluding purchaser costs. This represents an increase of GBP21.7 million or 14.2%, when compared to the purchase prices. The valuation increase reflects our focus on asset management and buying well-located sites. It also highlights our success in sourcing off-market deals at attractive prices for the Group.
Like-for-like across the interim financial period, property values increased by 6.6%, supporting our growth conviction.
Current Portfolio Analysis
The Group has invested in 34 assets, currently comprising 35 tenants as at 30 September 2018. Examples of asset management initiatives during the year:
1. OTC Direct, Leigh
Annual passing rent - GBP510,000, Size (sq ft) - 103,268
Rent per sq ft - GBP4.94, Tenure - Freehold
This unit comprises a large distribution warehouse with an adjoining office building, both of which have been recently fully refurbished. The site includes a 52.5m yard with 360-degree circulation and is close to Manchester City Centre with excellent links to the M6, M60, M61 and M62 motorways.
During the period, we introduced OTC Direct as a new tenant on a 10-year lease with a five-year break and upwards-only rent review, increasing the book value of the site by GBP0.7 million or 10% on a like-for-like basis from 31 March 2018.
2. Price's Candles, Bedford
Annual passing rent - GBP265,000, Size (sq ft) - 44,195
Rent per sq ft - GBP6.00, Tenure - Freehold
This is a well configured warehouse with two bays and a trade counter. It is located in an established commercial location, with good access and circulation.
The property was sold on 6 April 2018 for GBP3.2 million, representing a capital profit of approximately GBP1.2 million and, taken with the income returns to the Group, reflects an IRR on equity invested of 55.8%.
3. Komori / Pharmacy2u, Leeds
Annual passing rent - GBP215,925, Size (sq ft) - 41,420
Rent per sq ft - GBP5.21 (blended), Tenure - Freehold
This is a well configured warehouse in an established strategic location, with good access and circulation. The site was acquired in November 2017.
The property consists of two units which in total represent 41,420 sq ft of logistics space.
As well as securing rental increases, the lease terms on both units were extended by five years in September 2018.
The site was subsequently sold post period end, for a 17% profit on cost, as no further asset management initiatives were available and an attractive price was offered by the purchaser.
4. Strata Products, Chesterfield
Annual passing rent - GBP432,204, Size (sq ft) - 108,873
Rent per sq ft - GBP3.97, Tenure - Freehold
This is a recently refurbished, temperature-controlled warehouse with low site cover in an established location, with good access to main arterial routes and full circulation.
The site was let during the period to Strata Products for five years and supports the tenant's national distribution operation.
Financial results
EPRA earnings for the period were GBP2.6 million, or 3.13 pence per share. There were two principal drivers of this positive performance. The first was a full run rate for most properties across the portfolio, excluding those recently acquired, and their strong rental income. The second was the successful asset management undertaken during the period which was in line with our investment policy and undertaken across a number of sites, with further initiatives available to the Manager.
Administrative and other expenses, which include the Manager's fee and other costs of running the Group, were GBP0.8 million. The EPRA cost ratio, excluding vacancy costs, was 17.9% for the period - with the vacancy rate low at 1.1% at period end.
The Company has seen strong NAV growth over the period, up 5.5% from 122.49 pence at 31 March 2018 to 129.21 pence per share at 30 September 2018. Now the Company is fully invested we expect earnings and capital growth to continue on a positive trajectory.
Financing and hedging
As at 30 September 2018, the Group had a senior debt facility with Santander and Barclays totalling GBP64.4 million which is 70% hedged. This facility has a term of five years and reflects a LTV of 37.1%. In the medium term the Group's target LTV is 35-40%. Net financing costs were GBP0.9 million for the interim period.
Investment activity
Acquisitions and disposals across the interim period include:
Acquisition
During the period two portfolios of assets were acquired from LondonMetric. A total of six logistics assets were purchased for GBP36.0 million in July and September 2018. The acquisition was sourced off-market at a net initial yield of 5.9%. The portfolio's logistics occupiers include DHL Supply Chain, NNR, Encon and Hillary's Blinds. The assets are close to established regional transport hubs in urban or last-mile locations where there is strong occupier demand.
Post period end, on 7 November 2018, the Group exchanged contracts to acquire the freehold of a property located in Bedford for a total consideration of GBP17.0 million. As part of the acquisition, the Group is simultaneously selling a plot of development land for GBP5.0 million to a local developer. The acquisition is being financed from the Group's cash resources, proceeds from the disposal of the property in Leeds post period end, as well as debt finance from its club facility with Santander and Barclays.
Disposal
The Company completed the sale of a site located at Hudson Road, Bedford. The sale completed on 5 April 2018 for GBP3.2 million, representing a capital profit of approximately GBP1.2 million on the Company's equity investment of GBP0.9 million in April 2016. Taken together with the income returns generated during the Company's ownership this sale price represents an IRR on equity invested of 55.8%.
As noted above, post period end, on 8 October 2018, a site was sold in Leeds for GBP3.4 million. This represented a 17% profit on cost. The sale followed agreement of outstanding rent reviews and lease extensions.
Outlook
The Board and the Manager believe that the industrial & logistics sector of the property market continues to show strength. The sector's superior returns over recent months, allied to projected rental growth prospects, have proven highly attractive to both existing and new entrants.
Key geographic regions across the UK are seeing improvements year-on-year in leasing activity. With 4 million sq ft of industrial space (Source: Gerald Eve Q2 2018) under offer we are optimistic that the market may well exceed 2016's record take-up. Whilst there may be further localised yield compression, over the medium-term returns will be supported by income and rental growth.
Our focus will be to continue acquiring attractive assets and implementing asset management initiatives with a focus on rental growth in light of the current market dynamic of diminishing supply and increasing occupier demand, positioning us well to continue to achieve our target returns for investors.
Richard Moffitt
Independent Review Report to Urban Logistics REIT plc
1. Introduction
We have been engaged by Urban Logistics REIT plc (the "Company") to review the condensed set of financial statements in the interim report for the six months ended 30 September 2018 which comprise the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Cash Flow Statement and the Condensed Consolidated Statement of Changes in Equity and related explanatory notes.
We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information in the condensed set of financial statements.
2. Directors' responsibility
The interim report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim report in accordance with AIM Rule 18.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. It is the responsibility of the Directors to ensure that the condensed set of financial statements included in this interim report have been prepared on a basis consistent with that which will be adopted in the Group's annual financial statements.
3. Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim report based on our review.
4. 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 enquiries, 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.
5. 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 interim report for the six months ended 30 September 2018 is not prepared, in all material respects, in accordance with the requirements of the AIM rules.
6. Use of our report
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the AIM Rule 18. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this 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 the conclusions we have reached.
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
25 Moorgate
London
EC2R 6AY
14 November 2018
Condensed Consolidated Statement of Comprehensive Income
Six months to Six months to Year ended
30 Sep 18 30 Sep 17 31 Mar 18
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ ----- -------------- -------------- -----------
Rental income 4,853 1,530 5,564
Property operating expenses (431) (72) (561)
Gross income 4,422 1,458 5,003
Administrative and other expenses (840) (377) (1,074)
Other income - - 133
Long-term incentive plan charge 8 (59) (597) (657)
------------------------------------------------------------------ ----- -------------- -------------- -----------
Operating profit before changes in fair value of investment
properties and interest rate derivatives 3,523 484 3,405
-
Changes in fair value of investment property 10 6,658 2,829 7,194
(Loss)/profit on disposal of investment property (64) - 57
------------------------------------------------------------------ ----- -------------- -------------- -----------
Operating profit 10,117 3,313 10,656
Finance income 25 3 4
Finance expense 6 (923) (321) (929)
Changes in fair value of interest rate derivatives 12 63 61 134
------------------------------------------------------------------ ----- -------------- -------------- -----------
Profit before taxation 9,282 3,056 9,865
------------------------------------------------------------------ ----- -------------- -------------- -----------
Tax credit/(charge) for the period - - -
------------------------------------------------------------------ ----- -------------- -------------- -----------
Profit and total comprehensive income (attributable to the
shareholders) 9,282 3,056 9,865
------------------------------------------------------------------ ----- -------------- -------------- -----------
Earnings per share - basic 7 11.14p 9.28p 19.54p
Earnings per share - diluted 7 11.08p 9.25p 19.51p
EPRA earnings per share - diluted 7 3.13p 0.50p 4.91p
Condensed Consolidated Statement of Financial Position
30 Sep 18 30 Sep 17 31 Mar 18
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
------------------------------- ----- ------------ ------------ -----------
Non-current assets
Investment property 10 173,840 93,445 131,850
Intangible assets 25 - -
Interest rate derivatives 12 82 - 19
------------------------------- ----- ------------ ------------ -----------
Total non-current assets 173,947 93,445 131,869
Current assets
Trade and other receivables 1,284 1,561 585
Cash and cash equivalents 4,756 6,541 3,280
------------------------------- ----- ------------ ------------ -----------
Total current assets 6,040 8,102 3,865
------------------------------- ----- ------------ ------------ -----------
Total assets 179,987 101,547 135,734
------------------------------- ----- ------------ ------------ -----------
Current liabilities
Trade and other payables (1,457) (2,272) (1,490)
Deferred rental income (2,288) (584) (1,694)
------------------------------- ----- ------------ ------------ -----------
Total current liabilities (3,745) (2,856) (3,184)
Non-current liabilities
Long-term rental deposits (949) (784) (672)
Interest rate derivatives - (54) -
Bank borrowings 11 (63,321) (18,247) (47,672)
------------------------------- ----- ------------ ------------ -----------
Total non-current liabilities (64,270) (19,085) (48,344)
------------------------------- ----- ------------ ------------ -----------
Total liabilities (68,015) (21,941) (51,528)
------------------------------- ----- ------------ ------------ -----------
Total net assets 111,972 79,606 84,206
------------------------------- ----- ------------ ------------ -----------
Equity
Share capital 13 861 681 681
Share premium 14 92,283 71,832 71,832
Share warrant reserve 62 89 89
Other reserves 134 15 75
Retained earnings 18,632 6,989 11,529
------------------------------- ----- ------------ -----------
Total equity 111,972 79,606 84,206
------------------------------- ----- ------------ ------------ -----------
NAV per share basic 16 130.08p 116.87p 123.62p
NAV per share diluted 16 129.30p 116.04p 122.51p
EPRA NAV - diluted 16 129.21p 116.12p 122.49p
Condensed Consolidated Cash Flow Statement
Six months to Six months to Year ended
30 Sep 18 30 Sep 17 31 Mar 18
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
---------------------------------------------------------------- ----- -------------- -------------- -----------
Cash flows from operating activities
Profit for the period (attributable to shareholders) 9,282 3,056 9,865
Less: changes in fair value of investment property (6,658) (2,829) (7,194)
(Less)/add: changes in fair value of interest rate derivatives (63) (61) (134)
Add/(less): (loss)/profit on disposal of investment property 64 - (57)
Less: finance income (25) (3) (4)
Add: finance expense 923 321 929
Long-term investment plan 59 597 657
Increase in trade and other receivables (699) (1,025) (45)
Increase in trade and other payables 844 1,531 1,443
---------------------------------------------------------------- ----- -------------- -------------- -----------
Cash generated from operations 3,727 1,587 5,460
Net cash flow generated from operating activities 3,727 1,587 5,460
---------------------------------------------------------------- ----- -------------- -------------- -----------
Investing activities
Purchase of investment properties 10 (38,502) (5,879) (12,236)
Disposal of investment properties 3,101 - 5,542
Purchase of intangible assets (26) - -
Acquisition of a subsidiary, net of cash acquired - (41,160) (74,031)
Net cash flow used in investing activities (35,427) (47,039) (80,725)
---------------------------------------------------------------- ----- -------------- -------------- -----------
Financing activities
Proceeds from issue of Ordinary Share capital 21,268 53,053 53,053
Cost of share issue (664) (1,826) (1,826)
Bank borrowings drawn 17,200 - 32,582
Bank borrowings repaid (1,361) - (2,394)
Loan arrangement fees paid (351) - (860)
Interest paid (762) (270) (781)
Interest received 25 - 4
Dividends paid to equity holders (2,179) (644) (2,913) ---------------------------------------------------------------- ----- -------------- -------------- ----------- Net cash flow generated from financing activities 33,176 50,313 76,865 ---------------------------------------------------------------- ----- -------------- -------------- ----------- Net increase in cash and cash equivalents for the period 1,476 4,861 1,600 ---------------------------------------------------------------- ----- -------------- -------------- ----------- Cash and cash equivalents at start of period 3,280 1,680 1,680 ---------------------------------------------------------------- ----- -------------- -------------- ----------- Cash and cash equivalents at end of period 4,756 6,541 3,280 ---------------------------------------------------------------- ----- -------------- -------------- -----------
Condensed Consolidated Statement of Changes in Equity
Share Share Share warrant Other Retained
capital premium reserves reserves earnings Total
Six months ended 30 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
September 2018 (unaudited)
--------------------------------------------- -------- -------- -------------- --------- --------- --------
1 April 2018 681 71,832 89 75 11,529 84,206
--------------------------------------------- -------- -------- -------------- --------- --------- --------
Profit for the period - - - - 9,282 9,282
--------------------------------------------- -------- -------- -------------- --------- --------- --------
Total comprehensive
income - - - - 9,282 9,282
Dividends to shareholders - - - - (2,179) (2,179)
Long-term incentive
plan - - - 59 - 59
Issue of Ordinary Shares 171 19,565 - - - 19,736
Exercise of warrant
shares 9 886 (27) - - 868
30 September 2018 861 92,283 62 134 18,632 111,972
--------------------------------------------- -------- -------- -------------- --------- --------- --------
Six months ended 30
September 2017 (unaudited)
1 April 2017 215 20,454 91 34 4,577 25,371
--------------------------------------------- -------- -------- -------------- --------- --------- --------
Profit for the period - - - - 3,056 3,056
--------------------------------------------- -------- -------- -------------- --------- --------- --------
Total comprehensive
income - - - - 3,056 3,056
Dividends to shareholders - - - - (644) (644)
Long-term incentive
plan - - - 597 - 597
Crystallisation of
long-term incentive
plan 5 611 - (616) - -
Issue of Ordinary Shares 461 50,767 (2) - - 51,226
30 September 2017 681 71,832 89 15 6,989 79,606
--------------------------------------------- -------- -------- -------------- --------- --------- --------
Year ended 31 March 2018 (audited)
1 April 2017 215 20,454 91 34 4,577 25,371
--------------------------------------------- -------- -------- -------------- --------- --------- --------
Profit for the period - - - - 9,865 9,865
--------------------------------------------- -------- -------- -------------- --------- --------- --------
Total comprehensive income - - - - 9,865 9,865
Dividends to shareholders - - - - (2,913) (2,913)
Long-term incentive plan - - - 657 - 657
Crystallisation of long-term incentive plan 5 611 - (616) - -
Issue of Ordinary Shares 461 50,767 - - - 51,228
Exercise of warrant shares - - (2) - - (2)
--------------------------------------------- -------- -------- -------------- --------- --------- --------
31 March 2018 681 71,832 89 75 11,529 84,206
Notes to the Interim Financial Statements
1. Corporate information
Urban Logistics REIT plc, previously Pacific Industrial & Logistics REIT plc, (the "Company") and its subsidiaries (the "Group") carry on the business of property lettings throughout the United Kingdom. The Company is a public limited company incorporated and domiciled in England and Wales and listed on the AIM Market of the London Stock Exchange. The registered office address is 124 Sloane Street, London, SW1X 9BW.
2. Basis of preparation
The interim financial information in this report has been prepared using accounting policies consistent with IFRS as adopted by the European Union. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) on the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the Directors expect to be adopted by the European Union and applicable as at 31 March 2019. The Group has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing the interim financial information.
The Group's financial information has been prepared on a historical cost basis, except for investment property and derivative interest rate caps which have been measured at fair value.
The functional currency of the Group is considered to be pounds sterling as this is the currency of the primary environment in which the Group operates.
Non-statutory financial statements
Financial information contained in this document does not constitute statutory accounts for the year ended 31 March 2018 within the meaning of Section 434 of the Companies Act 2006. The statutory accounts for the year ending 31 March 2018 have been delivered to the Registrar of Companies. The audit report was unqualified and did not contain a statement under Section 498 of the Companies Act 2006 nor did it include references to any matters to which the auditor drew attention by way of emphasis.
Going concern
The Directors have reviewed the current and projected financial position of the Group, making reasonable assumptions about future trading performance. As part of the review, the Group has considered its cash balances, its debt maturity profile, including undrawn facilities, and the long-term nature of the tenant leases.
On the basis of this review, and after making due enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and financial statements.
Standards in issue and effective from 1 April 2018
IFRS 9: Financial Instruments
IFRS 9 introduces a new expected credit losses model, replacing the previous incurred loss impairment model. At 30 September 2018, the Group's financial assets, as defined by IFRS 9, consisted primarily of trade and other receivables and interest rate derivatives. There has been no impact on the Group's accounting for financial assets, with trade and other receivables being measured at amortised cost and interest rate derivatives as fair value through profit or loss. Financial liabilities will also continue to be measured at amortised cost.
IFRS 15: Revenue from contracts with customers
The standard does not apply to revenue derived from leases, which at 30 September 2018 accounted for 100% of revenue generated by the Group.
Standards issued but not yet effective:
The Group has not yet applied the following new and revised IFRSs that have been issued but are not yet effective:
-- IFRS 16 "Leases" will be effective for the year ending March 2020 onwards.
The Directors do not anticipate that the adoption of this standard and subsequent interpretation will have a material impact on the Group's financial statements in the period of initial application, other than on presentation and disclosure.
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements in conformity with the generally accepted accounting practices requires management to make estimates and judgements that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the statement of financial position date and the reported amounts of revenue and expenses during the reporting period.
Business combinations
The Group has acquired companies that own real estate. At the time of acquisition, the Group considers whether each acquisition represents the acquisition of a business or the acquisition of an asset. The Group accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition to the property.
Where such acquisitions are not judged to be the acquisition of a business, they are not treated as business combinations. Rather the cost to acquire the corporate entity is allocated between identifiable assets and liabilities of the entity based upon their relative fair values at the acquisition date. Accordingly, no goodwill or additional deferred tax arises.
Long-term incentive plan
In determining the fair value of the long-term incentive plan and the related charge to the Statement of Comprehensive Income, the Group makes assumptions about future events and market conditions. In particular, judgement must be formed as to the likely number of shares that will vest, and the fair value of each award granted.
The fair value is determined using a valuation model which is dependent on a number of assumptions of the Group's future dividend policy and the future volatility in the price of the Group's shares. Such assumptions are based on publicly available information and reflects market expectation. Different assumptions about these factors to those made by the Group could materially affect the reported value of the long-term investment plan.
Fair value of investment property
The fair value of investment property is market value as determined on a half-yearly basis, to be the estimated amount for which a property should exchange on the date of the valuation in an arm's length transaction. Each property has been valued on an individual basis. The valuers use recognised valuation techniques and the principles of IFRS 13. The valuations have been prepared in accordance with RICS Valuation - Professional Standards UK January 2014 (revised April 2015) (the "Red Book"). Factors reflected include current market conditions, annual rentals, lease lengths and location. The significant methods and assumptions used by the valuers in estimating the fair value of investment property are set out in note 10.
4. Principal accounting policies
The principal accounting policies applied in the preparation of these interim financial statements are set out below. These policies, which are also applicable to the financial statements of the Company, have been consistently applied to all the years presented.
Basis of consolidation
The financial statements consolidate the accounts of the Company and all subsidiary undertakings drawn up to the same year end.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. At the Group level, acquisition costs are recognised in the Statement of Comprehensive income as incurred.
The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date.
Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than 50% of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiary entities are consolidated from the date on which control is transferred to the Group and are deconsolidated from the date on which control ceases. In respect of subsidiaries, inter-Company transactions and unrealised gains on intra-Group transactions are eliminated on consolidation.
The financial information of the subsidiaries is prepared for the same reporting periods as the parent company, using consistent accounting policies.
Investment in subsidiaries
Investments in subsidiaries are stated at cost less any provision for permanent diminution in value. Realised gains and losses are dealt with through the Statement of Comprehensive Income. A review for impairment is carried out if events or changes in circumstances indicate that the carrying amount may not be recoverable, in which case an impairment provision is recognised and charged to the Statement of Comprehensive Income.
Borrowing costs
Borrowing costs in relation to interest charges on bank borrowings are expensed in the period to which they relate. Fees incurred in relation to the arrangement of bank borrowings are capitalised and expensed on a straight-line basis over the term of the loan.
Segmental reporting
IFRS 8 requires operating segments to be identified on the basis of internal reports that are regularly reported to the chief operating decision maker to allocate resources to the segments and to assess their performance. Following the strategic review, the Directors consider there to be only one reportable segment, being the investment in the United Kingdom of medium size industrial warehouses.
Investment properties
Investment properties comprises completed property that is held to earn rentals or for capital appreciation or both.
Investment properties are initially recognised at cost including transactions costs. Transaction costs include transfer taxes and professional fees for legal services. Subsequent to initial recognition investment properties are carried at fair value, as determined by real estate valuation experts. Gains or losses arising from change in fair value is recognised in the Statement of Comprehensive Income in the period in which they arise.
On disposal of an investment property, the difference between the disposal proceeds and the carrying amount is recognised in the Statement of Comprehensive Income.
Financial instruments
Financial assets and financial liabilities are recognised in the Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.
Financial assets
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost, using the effective interest rate method.
A provision is established for irrecoverable amounts when there is objective evidence that amounts due under the original payment terms will not be collected. The amount of any provision is recognised in the Statement of Comprehensive Income.
Cash and cash equivalents are recognised initially at fair value and subsequently measured at amortised cost. Cash and cash equivalents comprise cash in hand, deposits held with banks and other short-term, highly liquid investments with original maturities of three months or less.
Financial liabilities
Financial liabilities, equity instruments and warrant instruments issued by the Group are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost using the effective interest rate method.
Derivative financial instruments
Derivative financial instruments, comprising interest rate caps and swaps for hedging purposes, are initially recognised at cost and are subsequently measured at fair value being the estimated amount that the Group would receive or pay to terminate the agreement at the period end date, taking into account current interest rate expectations and the current credit rating of the Group and its counterparties. The gain or loss at each fair value measurement date is recognised in the Statement of Comprehensive Income. Premiums payable under such arrangements are initially capitalised into the statement of financial position, subsequently they are remeasured and held at their fair values.
Hedge accounting has not been applied in these financial statements.
Revenue recognition
Revenue is recognised to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other sales taxes or duties.
Rental income from operating leases on properties owned by the Company is accounted for on a straight-line basis over the term on the lease. Rental income excludes service charges and other costs directly recoverable from tenants.
Lease incentives are amortised on a straight-line basis over the term of the lease.
Leases
Leases where substantially all of the risks and rewards of ownership are transferred to the lessee are classified as finance leases. All others are deemed operating leases. Property interests held under operating leases which meet the definition of investment properties are carried, as such, at fair value with the related lease treated as a finance lease.
Long-term incentive plan
There is a long-term incentive plan ("LTIP") in place whereby Pacific Industrial LLP, an affiliate of Pacific Capital Partners Limited (the "Manager") has subscribed for B Ordinary Shares and C Ordinary Shares issued in Pacific Industrial & Logistics Limited, a subsidiary of Urban Logistics REIT plc (the "Company"). Under the terms of the LTIP, the Company is obliged to acquire the B Ordinary Shares and C Ordinary Shares in Pacific Industrial & Logistics Limited, in return for services provided by Pacific Industrial LLP, subject to certain conditions.
The fair value of the LTIP is calculated at the grant date using the Monte Carlo Model. The resulting cost is charged to the Statement of Comprehensive Income over the vesting period. The value of the charge is adjusted to reflect expected and actual levels of vesting.
Taxation
Taxation on the profit or loss for the period not exempt under UK REIT regulations comprises current and deferred tax. Current tax is expected tax payable on any non-REIT taxable income for the period, using tax rates enacted or substantively enacted at the period end date, and any adjustment to tax payable in respect of previous years.
Dividends
Dividends on equity shares are recognised when they become legally payable. In the case of interim dividends, this is when paid. In the case of final dividends, this is when approved by the shareholders at the Annual General Meeting.
5. Revenue
The Group is involved in UK property ownership and letting and is considered to operate in a single geographical and business segment. The total revenue of the Group for the year was derived from its principal activity, being that of property lettings.
For the interim period to 30 September 2018, no single tenant accounted for more than 10% of the Group's gross rental income.
6. Finance expense
Six months to Six months to Year ended
30 Sep 18 30 Sep 17 31 Mar 18
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------------------------------- -------------- -------------- -----------
Interest on bank borrowings 762 270 781
Amortisation of loan arrangement fees 161 51 148
--------------------------------------- -------------- -------------- -----------
923 321 929
--------------------------------------- -------------- -------------- -----------
7. Earnings per share
The calculation of the basic earnings per share ("EPS") was based on the profit attributable to Ordinary Shareholders divided by the weighted average number of Ordinary Shares outstanding during the period, in accordance with IAS 33.
Six months Six months Year ended
to to
30 Sep 18 30 Sep 17 31 Mar
18
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
----------------------------------------- ------------ ------------ -----------
Profit attributable to Ordinary
Shareholders
Total profit (GBP'000) 9,282 3,056 9,865
----------------------------------------- ------------ ------------ -----------
Weighted average number of Ordinary
Shares in issue 83,328,855 32,929,276 50,473,801
Basic earnings per share (pence) 11.14p 9.28p 19.54p
----------------------------------------- ------------ ------------ -----------
Number of diluted shares under
option/warrant 439,140 88,860 88,860
Weighted average number of Ordinary
Shares for the purpose of dilutive
earnings per share 83,767,995 33,018,136 50,562,661
----------------------------------------- ------------ ------------ -----------
Diluted earnings per share (pence) 11.08p 9.25p 19.51p
----------------------------------------- ------------ ------------ -----------
Adjustments to remove:
Changes in fair value of investment
property (GBP'000) (6,658) (2,829) (7,194)
Changes in fair value of interest
rate derivatives (GBP'000) (63) (61) (134)
Loss/(profit) on disposal of investment
properties 64 - (57)
----------------------------------------- ------------ ------------ -----------
EPRA earnings (GBP'000) 2,625 166 2,480
EPRA diluted earnings per share 3.13p 0.50p 4.91p
----------------------------------------- ------------ ------------ -----------
Adjustments to add back:
LTIP crystallisation - 616 616
----------------------------------------- ------------ ------------ -----------
Adjusted earnings (GBP'000) 2,625 782 3,096
Adjusted earnings per share 3.13p 2.37p 6.12p
----------------------------------------- ------------ ------------ -----------
At 30 September 2018, the Company has 2,067,036 warrant shares in issue. Each warrant holder has the right to subscribe for new Ordinary Shares on the basis of one new Ordinary Share for each warrant held at a strike price of 97.0 pence per Ordinary Share.
8. Long-term incentive plan
The Company has a LTIP, accounted for as an equity settled share-based payment. At 30 September 2018, Pacific Industrial LLP, an affiliate of Pacific Capital Partners Limited, has subscribed for 1,000 B Ordinary Shares of GBP0.01 each and 1,000 C Ordinary Shares of GBP0.01 each issued in Pacific Industrial & Logistics Limited, a subsidiary of the Company.
Fair value at grant Charge for the period
Date options granted Class of share GBP'000 GBP'000
---------------------- ---------------- -------------------- ----------------------
April 2016 B Ordinary 307 49
August 2017 C Ordinary 131 10
59
--------------------------------------- -------------------- ----------------------
The LTIP has an EPRA NAV element and a share price element and will be assessed on: i) 30 September 2020 (the "First Calculation Date") and ii) 30 September2023 (the "Second Calculation Date"). The EPRA NAV element will be 10 per cent. of the excess of the EPRA NAV per Ordinary Share return, including dividends, over an annualised 9 per cent. hurdle, multiplied by the number of Ordinary Shares in issue at the relevant calculation date. The share price element will be 10 per cent. of the excess of the share price return, including dividends, over an annualised 9 per cent. hurdle, multiplied by the number of Ordinary Shares in issue at the relevant calculation date.
At the First Calculation Date, the share price element and the EPRA NAV element hurdle will be calculated by reference to the Placing Price of 115.0 pence.
At the Second Calculation Date, if a payment has been made at the First Calculation Date under either element, the hurdle for that element at the Second Calculation Date will be re-set to be based on the prevailing EPRA NAV per Ordinary Share/share price as at the First Calculation Date (as applicable). If no payment is made under an element at the First Calculation Date, then the hurdle for that element will continue to be calculated by reference to the Placing Price of 115.0 pence.
The LTIP will be paid in shares or, at the Board's discretion, in cash.
9. Dividends
Six months Six months Year ended
to to
30 Sep 18 30 Sep 17 31 Mar 18
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ------------ -----------
Ordinary dividends paid
2017 Second interim dividend: 3.00p
per share - 644 644
2017 Third interim dividend: 0.23p
per share - - 157
2018 Interim dividend: 1.00p per
share - - 681
2018 Special interim dividend:
2.10p per share - - 1,431
2018 Third interim dividend: 3.20p 2,179 - -
per share
Total dividends paid 2,179 644 2,913
------------------------------------- ------------ ------------ -----------
The Company has declared a fourth interim dividend of 0.02 pence per Ordinary Share in respect of the financial year ended 31 March 2018 and a first interim dividend of 2.98 pence per Ordinary Share in respect of the financial year ended 31 March 2019. The total dividend of 3.00 pence per Ordinary Share will be paid on 14 December 2018.
10. Investment properties
In accordance with IAS 40 "Investment Property", investment property is carried at its fair value as determined by an external valuer. This valuation has been conducted by CBRE and has been prepared as at 31 March 2018, in accordance with the RICS valuation - Professional Standards UK January 2017 (revised April 2015) (the "Red Book").
The valuations have been prepared in accordance with those recommended by the International Valuation Standards Committee and are consistent with the principles in IFRS 13.
Investment Investment
properties properties
freehold leasehold Total
GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- ----------- --------
As at 1 April 2018 106,100 25,750 131,850
Property additions through acquisitions 34,441 4,061 38,502
Disposals in year - (3,170) (3,170)
Change in fair value during the
period 5,529 1,129 6,658
----------------------------------------- ----------- ----------- --------
As at 30 September 2018 146,070 27,770 173,840
----------------------------------------- ----------- ----------- --------
Total rental income for the interim period recognised in the Condensed Consolidated Statement of Comprehensive Income amounted to GBP4.9 million (H1 Sep 17: GBP1.5 million).
11. Bank borrowings and reconciliation of liabilities to cash flows from financing activities
Bank borrowings
GBP'000
-------------------------------------------------- ----------------
Balance at 1 April 2018 47,672
Bank borrowings drawn in the year 17,200
Bank borrowings repaid in the year (1,361)
Loan arrangement fees paid (351)
Non-cash movements:
Amortisation of loan arrangement fees 161
--------------------------------------------------- ----------------
Total bank borrowings per the Consolidated Group
Statement of Financial Position 63,321
--------------------------------------------------- ----------------
Being:
Drawn debt 64,432
Unamortised loan arrangement fees (1,111)
--------------------------------------------------- ----------------
Total 63,321
--------------------------------------------------- ----------------
On 7 September 2018, the Group, Santander UK plc and Barclays Bank plc entered into a facility agreement pursuant to which Santander UK plc and Barclays Bank plc have agreed to provide the Group with a loan facility of GBP64.4 million for a term of five years.
12. Interest rate derivatives
The Group has used interest rate swaps to mitigate exposure to interest rate risk. The total fair value of these contracts are recorded in the statement of financial position. The interest rate derivatives are marked to market by the relevant counterparty banks on a quarterly basis in accordance with IFRS 9. Any movement in the fair value of the interest rate derivatives are taken to finance costs in the Statement of Comprehensive Income.
Six months Six months Year ended
to to
30 Sep 18 30 Sep 17 31 Mar 18
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------ ------------ ------------ -----------
Non-current assets/(liabilities):
derivative interest rate swaps:
At beginning of period 19 (115) (115)
Change in fair value in the period 63 61 134
------------------------------------ ------------ ------------ -----------
82 (54) 19
------------------------------------ ------------ ------------ -----------
13. Share capital
30 Sep 18 30 Sep 18
(unaudited) (unaudited)
Number GBP'000
-------------------------------------- ------------ ------------
Issued and fully paid up at 1p
each 86,080,818 861
-------------------------------------- ------------ ------------
At beginning of period 68,114,724 681
Issued and fully paid - 26 April
2018 17,071,130 171
Issued and fully paid - 1 May 2018 521,964 5
Issued and fully paid - 12 September
2018 373,000 4
At 30 September 2018 86,080,818 861
-------------------------------------- ------------ ------------
On 26 April 2018, the Company raised GBP20.4 million through the issue of 17,071,130 Ordinary Shares at an issue price of 119.50 pence per share.
On 1 May 2018, 521,964 warrant shares were redeemed for an issue price of 97.0 pence per share.
On 12 September 2018, 373,000 warrant shares were redeemed for an issue price of 97.0 pence per share.
At 30 September 2018, there were 2,067,036 warrant shares in issue. Each warrant holder has the right to subscribe for Ordinary Shares on the basis of one new Ordinary Share for each warrant held at a strike price of 97.00 pence per Ordinary Share.
14. Share premium
Share premium relates to amounts subscribed for share capital in excess of nominal value less any associated issue costs that have been capitalised.
Six months Six months Year ended
to to
30 Sep 18 30 Sep 17 31 Mar 18
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------ ------------ -----------
Balance brought forward 71,832 20,454 20,454
Share premium on the issue of Ordinary
Shares 21,115 52,593 52,593
Crystallisation of LTIP - Ordinary
A shares - 611 611
Share issue costs (664) (1,826) (1,826)
---------------------------------------- ------------ ------------ -----------
92,283 71,832 71,832
---------------------------------------- ------------ ------------ -----------
15. Related party transactions
The terms and conditions of the Investment Management Agreement are described in the Management Engagement Committee Report. During the interim period, the amount paid for services provided by Pacific Capital Partners Limited (the "Manager") totalled GBP0.50 million.
Long-term incentive plan
Under the terms of the Company's long-term incentive plan, at 30 September 2018 Pacific Industrial LLP, an affiliate of Pacific Capital Partners Limited, has subscribed for shares in Pacific Industrial & Logistics Limited, a subsidiary of Urban Logistics REIT plc. Further details have been provided in note 8.
Acquisition of investment properties
During the interim period, the Group incurred fees totalling GBP408,240 from M1 Agency LLP, a partnership in Richard Moffitt is a member. These fees were incurred in the acquisition of investment properties, sale of one investment property and one re-letting.
For the transactions listed above, Richard Moffitt's benefit is derived from the profit allocation he receives from M1 Agency LLP as a member and not from the transaction.
The Board, with the assistance of the Manager, and excluding Richard Moffitt, review and approve each fee payable to M1 Agency LLP, and ensure the fees are in line with market rates and on standard commercial property terms.
16. Net asset value per share
Basic NAV per share is calculated by dividing net assets in the Consolidated Statement of Financial Position attributable to Ordinary Shareholders by the number of Ordinary shares at the end of the period.
Net assets have been calculated as follows:
30 Sep 18 30 Sep 17 31 Mar 18
(unaudited) (unaudited) (audited)
Net assets per Condensed Statement
of Financial Position (GBP'000) 111,972 79,606 84,206
-------------------------------------------------- ------------ ------------ -----------
Add:
Cash received from issued share
warrants (GBP'000) 2,005 2,873 2,873
-------------------------------------------------- ------------ ------------ -----------
Diluted NAV (GBP'000) 113,977 82,479 87,079
-------------------------------------------------- ------------ ------------ -----------
Adjustment for:
Fair value of interest rate derivatives(GBP'000) (82) 54 (19)
-------------------------------------------------- ------------ ------------ ----------- EPRA NAV (GBP'000) - basic 111,890 79,660 84,187 EPRA NAV (GBP'000) - diluted 113,895 82,533 87,060 -------------------------------------------------- ------------ ------------ ----------- Ordinary shares: Number of Ordinary Shares in issue at period end 86,080,818 68,114,724 68,114,724 Number of Ordinary Shares for the purposes of dilutive Net Asset Value per share at period end 88,147,854 71,076,724 71,076,724 -------------------------------------------------- ------------ ------------ ----------- Basic NAV 130.08p 116.87p 123.62p EPRA NAV - basic 129.98p 116.95p 123.60p -------------------------------------------------- ------------ ------------ ----------- Diluted NAV 129.30p 116.04p 122.51p EPRA NAV - diluted 129.21p 116.12p 122.49p -------------------------------------------------- ------------ ------------ -----------
17. Post balance sheet events
On 8 October 2018, the Group completed on the sale of logistics assets at Victoria Road, Seacroft, Leeds for a consideration of GBP3.4 million. This represented a 17.3% profit on purchase price (excluding acquisition costs).
On 7 November 2018, the Group exchanged contracts to acquire the freehold of a site located in Bedford for net consideration of GBP12.0 million. The acquisition is being financed from the Company's cash resources, proceeds from the disposal of the site in Leeds post period end, as well as debt finance from its club facility with Santander and Barclays.
Supplementary Information
i. EPRA performance measures summary
Six months Six months Year ended
to to
30 Sep 18 30 Sep 17 31 Mar 18
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ------------ -----------
EPRA EPS (diluted) 3.13p 0.50p 4.91p
EPRA NAV per share (diluted) 129.21p 116.12p 122.49p
EPRA triple NAV per share (diluted) 129.30p 116.04p 122.51p
-------------------------------------- ------------ ------------ -----------
EPRA net initial yield 6.1% 6.7% 5.9%
EPRA "topped up" net initial
yield 6.5% 7.0% 6.1%
EPRA vacancy rate 1.1% 1.9% 6.7%
EPRA cost ratio (including vacant
property costs) 26.2% 28.6% 29.0%
EPRA cost ratio (excluding vacant
property costs) 17.9% 26.4% 20.1%
-------------------------------------- ------------ ------------ -----------
ii. Income statement
Six months Six months Year ended
to to
30 Sep 18 30 Sep 17 31 Mar 18
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
-------------------------- ------------ ------------ -----------
Gross rental income 4,853 1,530 5,564
Property operating costs (431) (72) (561)
--------------------------- ------------ ------------ -----------
Net rental income 4,422 1,458 5,003
Administrative expenses (840) (377) (1,074)
Other income - - 133
Long-term incentive plan
charge (59) (597) (657)
--------------------------- ------------ ------------ -----------
Operating profit before
interest and tax 3,523 484 3,405
Net finance costs (898) (318) (925)
--------------------------- ------------ ------------ -----------
Profit before tax 2,625 166 2,480
Tax on EPRA earnings - - -
-------------------------- ------------ ------------ -----------
EPRA earnings 2,625 166 2,480
--------------------------- ------------ ------------ -----------
iii. Balance sheet
Six months Six months Year ended
to to
30 Sep 18 30 Sep 17 31 Mar
18
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------ -----------
Investment property 173,840 93,445 131,850
Other net assets/(liabilities) 1,371 4,462 9
Net borrowings (63,321) (18,247) (47,672)
--------------------------------- ------------ ------------ -----------
EPRA net assets 111,890 79,660 84,187
--------------------------------- ------------ ------------ -----------
iv. EPRA net initial yield and 'topped up' net initial yield
Six months Six months Year ended
to to
30 Sep 18 30 Sep 17 31 Mar
18
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ------------ -----------
Investment property - wholly owned 173,840 93,445 131,850
------------------------------------- ------------ ------------ -----------
Completed property portfolio 173,840 93,445 131,850
Add:
Allowance for estimated purchasers'
costs 11,482 6,109 8,646
EPRA property portfolio valuation
(A) 185,322 99,554 140,496
------------------------------------- ------------ ------------ -----------
Annualised passing rent 11,520 6,915 8,960
Less irrecoverable property costs (247) (277) (714)
------------------------------------- ------------ ------------ -----------
Annualised net rents (B) 11,273 6,638 8,246
------------------------------------- ------------ ------------ -----------
Contractual rental increased for
rent free period 708 373 380
"Topped up" annualised net rent
(C) 11,981 7,011 8,626
------------------------------------- ------------ ------------ -----------
EPRA net initial yield (B/A) 6.1% 6.7% 5.9%
------------------------------------- ------------ ------------ -----------
EPRA "topped up" net initial yield
(C/A) 6.5% 7.0% 6.1%
------------------------------------- ------------ ------------ -----------
v. EPRA vacancy rate
Six months Six months Year ended
to to
30 Sep 18 30 Sep 17 31 Mar
18
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ -----------
Annualised potential rental value
of vacant properties 132 132 649
Annualised potential rental value
for the completed property portfolio 12,200 7,065 9,665
EPRA vacancy rate 1.1% 1.9% 6.7%
--------------------------------------- ------------ ------------ -----------
vi. EPRA cost ratio
Six months Six months Year ended
to to
30 Sep 18 30 Sep 17 31 Mar
18
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ -----------
Costs
Property operating expenses 431 72 561
Administrative expenses 840 377 1,074
Less:
Ground rents (1) (15) (34)
Total costs including vacant property
costs (A) 1,270 434 1,601
--------------------------------------- ------------ ------------ -----------
Group vacant property costs (403) (34) (492)
Total costs excluding vacant property
costs (B) 867 400 1,109
--------------------------------------- ------------ ------------ -----------
Gross rental income 4,853 1,530 5,564
Less:
Ground rents (1) (15) (34)
Total gross rental income (C) 4,852 1,515 5,530
--------------------------------------- ------------ ------------ -----------
Total EPRA cost ration (including
vacant property costs) (A/C) 26.2% 28.6% 29.0%
Total EPRA cost ration (excluding
vacant property costs) (B/C) 17.9% 26.4% 20.1%
--------------------------------------- ------------ ------------ -----------
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 BIBDBGBBBGIS
(END) Dow Jones Newswires
November 15, 2018 02:00 ET (07:00 GMT)
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