REG - AEW UK REIT PLC - Annual Financial Report <Origin Href="QuoteRef">AEWU.L</Origin> - Part 4
10/07/2017 07:05
- Part 4: For the preceding part double click ID:nRSJ5151Kc
information.
The value of the Company's interest in the Core Fund is stated at NAV of the Core Fund as at 30 April 2017 (30 April 2016:
single swinging price). The Directors, in consultation with the Company's professional advisers, have adopted the amended
estimation technique from 31 October 2016 in order to provide a better reflection of fair value of the Company's holding in
the Core Fund.
iii) Segmental information
In accordance with IFRS 8, the Company is organised into one main operating segment being investment in property and
property related investments in the UK.
2.3 Going concern
The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the
Company has the resources to continue in business for at least 12 months. Furthermore, the Directors are not aware of any
material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern.
Therefore, the financial statements have been prepared on the going concern basis.
2.4 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below.
a) Presentation currency
These financial statements are presented in Sterling, which is the functional and presentational currency of the Company.
The functional currency of the Company is principally determined by the primary economic environment in which it operates.
The Company did not enter into any transactions in foreign currencies during the year.
b) Revenue recognition
i) Rental income
Rental income receivable under operating leases is recognised on a straight-line basis over the term of the lease, except
for contingent rental income, which is recognised when it arises.
Incentives for lessees to enter into lease agreements are spread evenly over the lease term, even if the payments are not
made on such a basis. The lease term is the non-cancellable period of the lease together with any further term for which
the tenant has the option to continue the lease, where, at the inception of the lease, the directors are reasonably certain
that the tenant will exercise that option.
ii) Deferred income
Deferred income is rental income received in advance during the accounting period.
c) Dividend income
Dividend income is recognised in profit or loss on the date the entity's right to receive a dividend is established.
d) Financing income and expenses
Financing income comprises interest receivable on funds invested. Financing expenses comprise interest and other costs
incurred in connection with the borrowing of funds. All financing expenses are recognised in profit or loss in the period
in which they occur.
Interest income and interest payable are recognised in profit or loss as they accrue, using the effective interest method.
e) Investment property
Property is classified as investment property when it is held to earn rentals or for capital appreciation or both.
Investment property is measured initially at cost including transaction costs. Transaction costs include transfer taxes and
professional fees to bring the property to the condition necessary for it to be capable of operating. The carrying amount
also includes the cost of replacing part of an existing investment property at the time that cost is incurred if the
recognition criteria are met.
Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in the
fair values are included in profit or loss.
Investment properties are valued by the independent valuer on the basis of a full valuation with physical inspection at
least once a year. Any valuation of an Immovable by the independent valuer must be undertaken in accordance with the
current issue of RICS Valuation - Professional Standards (the 'Red Book').
The determination of the fair value of investment property requires the use of estimates such as future cash flows from
assets (such as lettings, tenants' profiles, future revenue streams, capital values of fixtures and fittings, plant and
machinery, any environmental matters and the overall repair and condition of the property) and discount rates applicable to
those assets.
For the purposes of these financial statements, the assessed fair value is:
· reduced by the carrying amount of any accrued income resulting from the spreading of lease incentives; and
· increased by the carrying amount of leasehold obligations.
Investment property is derecognised when it has been disposed of or permanently withdrawn from use and no future economic
benefit is expected after its disposal or withdrawal.
Gains or losses on the disposal of investment property are determined as the difference between net disposal proceeds and
the carrying value of the asset in the previous full period financial statements.
Any gains or losses on the retirement or disposal of investment property are recognised in the profit or loss in the year
of retirement or disposal.
f) Investments in collective investment schemes
Investments in collective investment schemes are stated at fair value with any resulting gain or loss recognised in profit
or loss.
Investments are derecognised when they have been disposed of or the rights to receive cash flow from the investments have
expired or the Company has transferred substantially all risks and rewards of ownership.
g) Investments in subsidiaries
AEW UK REIT 2015 Limited is the subsidiary of the Company. The subsidiary was dormant during the reporting period. The
investment in the subsidiary is stated at cost less impairment and shown in note 17.
As permitted by Section 405 of the Companies Act 2006, the subsidiary is not consolidated as its inclusion is not material
for the purposes of giving a true and fair view.
h) Investment property and investments held for sale
Investment property and investments are classified as held for sale when it is highly probable that the carrying amount
will be recovered principally through a sale transaction.
Investment property and investments classified as held for sale are included within current assets within the Statement of
Financial Position and measured at the lower of their carrying amount and fair value less costs to sell. Any gains or
losses between the fair value and the carrying value in the year are recognised in the Statement of Comprehensive Income
under change in fair value.
i) Derivative financial instruments
Derivative financial instruments, comprising interest rate caps for hedging purposes, are initially recognised at fair
value and are subsequently measured at fair value, being the estimated amount that the Company would receive or pay to
terminate the agreement at the period end date, taking into account current interest rate expectations and the current
credit rating of the Company and its counterparties. Premiums payable under such arrangements are initially capitalised
into the Statement of Financial Position.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available
to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs
significant to the fair value measurement as a whole. Changes in fair value of interest rate derivatives are recognised
within finance expenses in profit or loss in the period in which they occur.
j) Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and short-term deposits with an
original maturity of three months or less.
k) Receivables and prepayments
Rent and other receivables are recognised at their original invoiced value. Where the time value of money is material,
receivables are discounted and then held at amortised cost. Provision is made when there is objective evidence that the
Company will not be able to recover balances in full.
l) Capital prepayments
Capital prepayments are made for the purpose of acquiring future property assets, and held as receivables within the
Statement of Financial Position. When the asset is acquired, the prepayments are capitalised as a cost of purchase. Where a
purchase is not successful, these costs are expensed within profit or loss as abortive costs in the period.
m) Other payables and accrued expenses
Other payables and accrued expenses are initially recognised at fair value and subsequently held at amortised cost.
n) Rent deposits
Rent deposits represents cash received from tenants at inception of a lease and are consequently transferred to the rent
agent to hold on behalf of the Company. These balances are held as creditors in the Statement of Financial Position.
o) Interest bearing loans and borrowings
All loans and borrowings are initially recognised at fair value less directly attributable transaction costs. After initial
recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest
method. Borrowing costs are amortised over the lifetime of the facilities through profit or loss.
p) Impairment of financial assets
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether
there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss
event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the
estimated future cash flows of that asset that can be estimated reliably.
q) Provisions
A provision is recognised in the Statement of Financial Position when the Company has a present legal or constructive
obligation as a result of a past event, that can be reliably measured and is probable that an outflow of economic benefits
will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects risks specific to the liability.
r) Dividend payable to shareholders
Equity dividends are recognised when they become legally payable.
s) Share issue costs
The costs of issuing or reacquiring equity instruments (other than in a business combination) are accounted for as a
deduction from equity.
t) Finance leases
Finance leases are capitalised at the lease commencement, at the lower of fair value of the property and present value of
the minimum lease payments, and held as a liability within the Statement of Financial Position.
u) Taxes
Corporation tax is recognised in profit or loss except to the extent that it relates to items recognised directly in
equity, in which case it is recognised in equity.
As a REIT, the Company is exempt from corporation tax on the profits and gains from its investments, provided it continues
to meet certain conditions as per REIT regulations.
Taxation on the profit or loss for the period not exempt under UK REIT regulations comprises current and deferred tax.
Current tax is expected tax payable on any non-REIT taxable income for the period, using tax rates applicable in the
period.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The amount of deferred tax that is provided is based on the
expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantially enacted at the period end date.
v) European Public Real Estate Association
The Company has adopted European Public Real Estate Association ('EPRA') best practice recommendations, which it expects to
broaden the range of potential institutional investors able to invest in the Company's Ordinary Shares. For the year ended
30 April 2017, audited EPS and NAV calculations under EPRA's methodology are included in note 8 and further unaudited
measures are included below.
3. Revenue
Year ended30 April 2017£'000 Period1 April 2015 to30 April 2016£'000
Gross rental income received 12,147 6,153
Surrender premium received - 1,000
Dilapidation income received 301 19
Other property income 55 13
Total rental and other income 12,503 7,185
Dividend income:
Property income distribution* 552 629
Dividend distribution 24 24
576 653
Total Revenue 13,079 7,838
* Property income distribution ('PID') arises on the investment in the Core Fund which holds property directly.
Rent receivable under the terms of the leases, is adjusted, for the effect of any incentives agreed.
4. Expenses
Year ended30 April 2017£'000 Period1 April 2015 to30 April 2016£'000
Property operating expenses 1,434 300
Investment management fee 1,034 653
Auditor remuneration 88 95
Operating costs 646 403
Total 3,202 1,451
Year ended 30 April 2017 Period 1 April 2015 to 30 April 2016
Audit
Statutory audit of Annual Report and Accounts £66,000 £65,000
Statutory audit of initial accounts for the period ended 31 October 2015 - £20,000
£66,000 £85,000
Non-audit
Review of Interim Report £22,000 £10,000*
Services provided as Reporting Accountant at IPO - £40,000
Renewal of Company's Prospectus £20,500 -
£42,500 £50,000
Total fees paid to KPMG LLP £108,500 £135,000
Percentage of total fees attributed to non-audit services 39% 37%
* The lower fee for review of the Company's Interim Report for the period ended 31 October 2015 was agreed in consideration
of the work already completed in the statutory audit of the initial accounts for that same period.
The Company has no employees.
5. Directors' remuneration
Year ended30 April 2017£'000 Period1 April 2015 to30 April 2016£'000
Directors' fees 68 69
Tax and social security 3 3
Total remuneration 71 72
A summary of the Directors' remuneration is set out in the Directors' Remuneration Report in the full Annual Report and
Accounts.
The Company had no employees in either period.
6. Finance expense
Year ended30 April 2017£'000 Period1 April 2015 to30 April 2016£'000
Interest payable on loan borrowings 483 110
Amortisation of loan arrangement fee 78 40
Agency fee payable on loan borrowings 21 11
Commitment fees payable on loan borrowings 60 51
642 212
Change in fair value of interest rate derivatives 117 14
Total 759 226
7. Taxation
Year ended30 April 2017£'000 Period 1 April 2015 to 30 April 2016 £'000
Total tax charge - -
Reconciliation of tax charge for the year / period
Profit before tax 6,099 4,636
Theoretical tax at UK corporation tax standard rate of 19.92% (2016: 20%)1 1,215 927
Adjusted for:
Exempt REIT income (1,798) (1,119)
UK dividend that are not taxable (5) (99)
Non deductible investment losses 588 291
Total tax charge - -
1Standard rate of corporation tax 20% to 31 March 2017, 19% from 1 April 2017. The corporation tax rate is to reduce to 17%
with effect from 1 April 2020.
Factors that may affect future tax charges
At 30 April 2017 the Company has unrelieved management expenses of £6,826 (30 April 2016: £4,182). It is unlikely that the
Company will generate sufficient taxable income in the future to use these expenses to reduce future tax charges and
therefore no deferred tax asset has been recognised.
Due to the Company's status as a REIT and the intention to continue meeting the conditions required to obtain approval as a
REIT in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the
revaluation or disposal of investments.
8. Earnings per share and NAV per share
Period
Year ended 1 April 2015 to
30 April 2017 30 April 2016
Earnings per share:
Total comprehensive income (£'000) 6,099 4,636
Weighted average number of shares 121,084,416 96,022,424
Earnings per share (basic and diluted) (pence) 5.04 4.83
EPRA earnings per share:
Total comprehensive income (£'000) 6,099 4,636
Adjustment to total comprehensive income:
Unrealised loss from change in fair value of investment property (£'000) 3,159 1,935
Realised gain on disposal of investment property (£'000) (731) -
Loss/(gain) from change in fair value of investment (£'000) 407 (482)
Realised loss on disposal of investments (£'000) 113 -
Change in fair value of interest rate derivatives (£'000) 117 (14)
Total EPRA Earnings (£'000) 9,164 6,075
EPRA earnings per share (basic and diluted) (pence) 7.57 6.33
NAV per share:
Net assets (£'000) 118,674 116,375
Ordinary Shares 123,647,250 117,510,000
NAV per share (pence) 95.98 99.03
EPRA NAV per share:
Net assets (£'000) 118,674 116,375
Adjustments to net assets:
Other financial assets held at fair value (£'000) (31) (77)
EPRA NAV (£'000) 118,643 116,298
EPRA NAV per share (pence) 95.95 98.97
Earning per share (EPS) amounts are calculated by dividing profit for the period attributable to ordinary equity holders of
the Company by the weighted average number of Ordinary Shares in issue during the period. As at 30 April 2017, EPRA NNNAV
was equal to IFRS NAV and as such a reconciliation between the two measures has not been performed.
9. Dividends paid
For the year ended 30 April 2017
£'000
Fourth interim dividend paid in respect of the period 1 February
2016 to 30 April 2016 at 2p per Ordinary Share 2,350
First interim dividend paid in respect of the period 1 May 2016 to 31
July 2016 at 2p per Ordinary Share 2,350
Second interim dividend paid in respect of the period 1 August
2016 to 31 October 2016 at 2p per Ordinary Share 2,473
Third interim dividend paid in respect of the period ended 1
November 2016 to 31 January 2017 at 2p per Ordinary Share 2,473
Total dividends paid during the year 9,646
Fourth interim dividend declared for the period 1 February 2017 to
30 April 2017 at 2p per Ordinary Share* 2,473
Fourth interim dividend declared for the period 1 February 2016 to
30 April 2016 at 2p per Ordinary Share (2,350)
Total dividends in respect of the year 9,769
Paid as
Property income distributions at 6.95p per Ordinary Share 8,471
Ordinary dividends at 1.05p per Ordinary Share 1,298
Total 9.769
For the period 1 April 2015 to 30 April 2016
£'000
First interim dividend paid in respect of the period ended 31 October 2015 at 1.5p per Ordinary Share 1,507
Second interim dividend paid in respect of the period 1 November 2015 to 14 December 2015 at 0.75p per Ordinary Share 754
Third interim dividend paid in respect of the period 15 December 2015 to 31 January 2016 at 1.25p per Ordinary Share 1,469
Total dividends paid during the period 3,730
Fourth interim dividend declared for the period 1 February 2016 to
30 April 2016 at 2p per Ordinary Share 2,350
Total dividends in respect of the period 6,080
Paid as
Property income distributions at 5.5p per Ordinary Share 6,080
Total 6,080
*The fourth interim dividend declared is not included in the accounts as a liability as at 30 April 2017.
10. Investments
10.a) Investment property
30 April 2017
Investment propertyfreehold Investment Property leasehold Total 30 April2016Total
£'000 £'000 £'000 £'000
UK Investment property
As at beginning of the year/period 92,390 21,950 114,340 -
Purchases in the year/period 27,481 665 28,146 114,408
Disposals in the year/period (1,950) - (1,950) -
Revaluation of investment property (2,076) (640) (2,716) (68)
Valuation provided by Knight Frank 115,845 21,975 137,820 114,340
Adjustment to fair value for rent free debtor (2,230) (1,082)
Adjustment to fair value for rent guarantee debtor (80) (785)
Adjustment for finance lease obligations 60 1,914
Total Investment property 135,570 114,387
Change in fair value of investment property
Loss from change in fair value (2,716) (68)
Adjustment for movement in the year/period:
in fair value for rent free debtor (1,148) (1,082)
in fair value for rent guarantee debtor 705 (785)
(3,159) (1,935)
Gains on sale of the investment property
Proceeds from disposals of investment property during the year/period 2,681 -
Cost of disposal (1,950) -
Gains on disposal of investment property 731 -
Valuation of investment property
Valuation of investment property is performed by Knight Frank LLP, an accredited external valuer with recognised and
relevant professional qualifications and recent experience of the location and category of the investment property being
valued.
The valuation of the Company's investment property at fair value is determined by the external valuer on the basis of fair
value in accordance with the internationally accepted RICS Valuation - Professional Standards (incorporating the
International Valuation Standards).
The determination of the fair value of investment property requires the use of estimates, such as future cash flows from
assets (based on lettings, tenants' profiles, future revenue streams, capital values of fixtures and fittings, plant and
machinery, any environmental matters and the overall repair and condition of the property) and discount rates applicable to
those flows.
10.b) Investment
Year ended30 April 2017Total Period1 April 2015 to 30 April 2016Total
£'000 £'000
Investment in AEW UK Core Property Fund
As at the beginning of the year/period 10,109 -
Purchases in the year/period - 9,627
Disposals in the year/period (2,108) -
(Loss)/gain from change in fair value (407) 482
Total Investment in AEW UK Core Property Fund 7,594 10,109
Loss on disposal of the investment in AEW UK Core Property Fund
Proceeds from disposals of investments during the year/period 1,995 -
Cost of disposal (2,108) -
Loss on disposal of investments (113) -
As at 30 April 2017, the investment in the Core Fund was held for sale and is measured above in accordance with IFRS 5, Non
Current Assets Held for Sale and Discontinued Operations and reflected within Current Assets in the Statement of Financial
Position. The remaining investment was disposed of on 9 May 2017 as described in note 24.
Valuation of investment
Investments in collective investment schemes are stated at fair value with any resulting gain or loss recognised in profit
or loss. Fair value is assessed by the Directors based on the best available information.
The value of investment in the Core Fund as at 30 April 2017 is based on the latest NAV (30 April 2016: single swinging
price) of the Core Fund as the Directors consider this to be a more accurate approximation of fair value.
10.c) Fair value measurement hierarchy
The following table provides the fair value measurement hierarchy for investments:
30 April 2017
Significant Significant
Quoted prices in observable unobservable
active markets inputs inputs
(Level 1) (Level 2) (Level 3) Total
£'000 £'000 £'000 £'000
Assets measured at fair value
Investment property - - 135,570 135,570
Investment in AEW UK Core Property Fund - - 7,594 7,594
- - 143,164 143,164
30 April 2016
Significant Significant
Quoted prices in observable unobservable
active markets inputs inputs
(Level 1) (Level 2) (Level 3) Total
£'000 £'000 £'000 £'000
Assets measured at fair value
Investment property - - 114,387 114,387
Investment in AEW UK Core Property Fund - - 10,109 10,109
- - 124,496 124,496
Explanation of the fair value hierarchy:
Level 1 - Quoted prices for an identical instrument in active markets;
Level 2 - Prices of recent transactions for identical instruments and valuation techniques using observable market data;
and
Level 3 - Valuation techniques using non-observable data.
Sensitivity analysis to significant changes in unobservable inputs within Level 3 of the hierarchy
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value
hierarchy of the portfolio of investment property and investments are:
1) Estimated Rental Value ('ERV')
2) Equivalent yield
Increases/(decreases) in the ERV (per sq ft per annum) in isolation would result in a higher/(lower) fair value
measurement. Increases/(decreases) in the discount rate/yield (and exit or yield) in isolation would result in a
lower/(higher) fair value measurement.
The significant unobservable input used in the fair value measurement categorised within Level 3 of the fair value
hierarchy of the Company's investment is:
1) NAV
The Company has updated its accounting policy with regard to the value of investments in the Core Fund to now be based on
NAV which is considered to be the best approximation of fair value by the Directors.
Increases/(decreases) in the NAV would result in a higher/(lower) fair value measurement.
The significant unobservable inputs used in the fair value measurement, categorised within Level 3 of the fair value
hierarchy of the portfolio of investment property and investments are:
Fair Value Valuation Significant
Class £,000 Technique Unobservable Inputs Range
30 April 2017
Investment property 137,820 Income capitalisation ERV £2.00 - £160.00
Equivalent yield 6.94% - 10.27%
Investments 7,594 NAV NAV £1.1942
30 April 2016
Investment property 114,340 Income capitalisation ERV £2.00 - £160.00
Equivalent yield 6.70% - 11.90%
Investments 10,109 Market capitalisation Single swinging price £1.2581
The single swinging price on investments is equal to the last announced unit price for collective investment schemes as at
the Statement of Financial Position date.
Where possible, sensitivity of the fair values of Level 3 assets are tested to changes in unobservable inputs against
reasonable alternatives.
Gains and losses recorded in profit or loss for recurring fair value measurements categorised within Level 3 of the fair
value hierarchy are attributable to changes in unrealised gains or losses relating to investment property and investments
held at the end of the reporting period.
With regards to both investment property and investments, gains and losses for recurring fair value measurements
categorised within Level 3 of the fair value hierarchy, prior to adjustment for rent free debtor and rent guarantee debtor
where applicable, are recorded in profit and loss.
The carrying amount of the assets and liabilities, detailed within the Statement of Financial Position, is considered to be
the same as their fair value.
30 April 2017
Change inNAV Change inERV Change inequivalent yield
£'000 £'000 £'000 £'000 £'000 £'000
Sensitivity analysis +5% -5% +5% -5% +5% -5%
Resulting fair value of investment property - - 143,606 131,979 129,906 145,906
Resulting fair value of investments 7,974 7,214 - - - -
30 April 2016
Change in single swinging price Change inERV Change inequivalent yield
£'000 £'000 £'000 £'000 £'000 £'000
Sensitivity analysis +5% -5% +5% -5% +5% -5%
Resulting fair value of investment property - - 119,303 109,166 107,815 121,126
Resulting fair value of investments 10,615 9,604 - - - -
11. Receivables and prepayments
30 April 2017 30 April 2016
£'000 £'000
Receivables
Rent debtor 461 622
Dividend receivable 110 193
Other income debtors 192 -
Rent agent float account 57 92
Other receivables 213 29
1,033 936
Rent free debtor 2,230 1,082
Rent guarantee debtor 80 785
3,343 2,803
Prepayments
Property related prepayments 10 130
Capital prepayments 1 19
Depositary services 8 8
Listing fees 8 2
Other prepayments 12 -
39 159
Total 3,382 2,962
The aged debtor analysis of receivables which are past due is as follows:
30 April 2017 30 April 2016
£'000 £'000
Less than three months due 910 573
Between three and six months due 1 331
Between six and twelve months due 122 32
Total 1,033 936
12. Interest rate derivatives
30 April 2017 30 April 2016
£'000 £'000
At the beginning of the year/period 77 -
Interest rate cap premium paid 71 91
Changes in fair value of interest rate derivatives (117) (14)
At the end of the year/period 31 77
To mitigate the interest rate risk that arises as a result of entering into variable rate linked loans, the Company entered
into an interest rate cap with the combined notional value of £26.51 million (2016: £14.25 million) and a strike rate of
2.5% (2016: 2.5%) for the relevant period in line with the life of the loan.
The total premium payable in the year towards securing the interest rate caps was £71,304 (2016: £91,000).
Fair Value hierarchy
The following table provides the fair value measurement hierarchy for interest rate derivatives:
Significant
Quoted prices in Significant unobservable
active markets observable input inputs
(Level 1) (Level 2) (Level 3) Total
Valuation date £'000 £'000 £'000 £'000
30 April 2017 - 31 - 31
30 April 2016 - 77 - 77
The fair value of these contracts are recorded in the Statement of Financial Position as at the year end.
There have been no transfers between level 1 and level 2 during the year, nor have there been any transfers between level 2
and level 3 during the year.
The carrying amount of the assets and liabilities, detailed within the Statement of Financial Position, is considered to be
the same as their fair value.
13. Interest bearing loans and borrowings
Bank borrowings
30 April2017 30 April2016
£'000 £'000
At the beginning of the year/period 14,250 -
Bank borrowings drawn in the year/period 14,760 14,250
Interest bearing loans and borrowings 29,010 14,250
Less: loan issue costs incurred (388) (40)
Plus: amortised loan issue costs 118 40
As at 30 April 28,740 14,250
Repayable between two and five years 29,010 14,250
Bank borrowings available but undrawn in the year/period 10,990 25,750
Total facility available 40,000 40,000
The Company entered into a £40 million credit facility with The Royal Bank of Scotland International Limited on 20 October
2015, of which £10.99 million remained undrawn as at the year end (2016: £40 million credit facility, £25.75 million
undrawn and term to maturity of 4.47 years).
Borrowing costs associated with the credit facility are shown as finance expenses in note 6 to these financial statements.
The term to maturity as at the year end is 3.47 years.
Since the end of the reporting period, the amount of the credit facility available has been reduced to £32.5 million.
The Company has used this facility to continue to invest in properties once the net IPO proceeds had been fully invested.
The facility can be used up to 30% loan to Net Asset Value measured at drawdown.
14. Payables and accrued expenses
30 April 2017 30 April 2016
£'000 £'000
Deferred income 1,513 1,675
Accruals 534 1,008
Other creditors 709 276
Total 2,756 2,959
15. Finance lease obligations
Finance leases are capitalised at the lease's commencement at the lower of the fair value of the property and the present
value of the minimum lease payments. The present value of the corresponding rental obligations are included as
liabilities.
The following table analyses the minimum lease payments under non-cancellable finance leases:
30 April 2017 30 April 2016
£'000 £'000
Not later than one year 5 123
Later than one year but not later than five years 15 372
Later than five years 40 1,419
55 1,791
Total 60 1,914
16. Guarantees and commitments
As at 30 April 2017, there were capital commitments of £48,628 relating to alteration and refurbishment works at the
property 225 Bath Street, Glasgow.
Operating lease commitments - as lessor
The Company has entered into commercial property leases on its investment property portfolio. These non-cancellable leases
have a remaining term of between zero and 23 years.
Future minimum rentals receivable under non-cancellable operating leases as at 30 April 2017 are as follows:
30 April 2017 30 April 2016
£'000 £'000
Within one year 11,878 9,902
After one year but not more than five years 37,936 31,651
More than five years 27,640 23,401
Total 77,454 64,954
During the year ended 30 April 2017 there were contingent rents totalling £169,724 (30 April 2016: £nil) recognised as
income.
17. Investment in subsidiary
The Company has a wholly owned subsidiary, AEW UK REIT 2015 Limited:
Name and company Country of registration
number and incorporation Principal activity Ordinary Shares held
AEW UK REIT 2015 Limited (Company number 09524699) England and Wales Dormant 100%
AEW UK REIT 2015 Limited is a subsidiary of the Company incorporated in the UK on 2 April 2015. At 30 April 2017, the
Company held one share being 100% of the issued share capital. AEW UK REIT 2015 Limited is wholly owned by the Company and
is dormant. The cost of the subsidiary is £0.01 (30 April 2016: £0.01). The registered office of AEW UK REIT 2015 Limited
is 40 Dukes Place, London, EC3A 7NH.
18. Issued Share Capital
30 April 2017 30 April 2016
Number of Number of
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