REG - Great Portland Ests. - Annual Results 2015 <Origin Href="QuoteRef">GPOR.L</Origin> - Part 2
15/07/2015 18:29
- Part 2: For the preceding part double click ID:nRST7134Na
Net rental income 3 66.0 69.7
Joint venture fee income 12 4.2 6.9
Rental and joint venture fee income 70.2 76.6
Property expenses 4 (7.7) (7.7)
Net rental and related income 62.5 68.9
Administration expenses 5 (20.1) (24.6)
Development management revenue 10.6 -
Development management costs (8.9) -
1.7 -
Trading property - cost of sales (4.8) (1.6)
Operating profit before surplus on property and results of joint ventures 39.3 42.7
Surplus from investment property 10 380.6 325.6
Share of results of joint ventures 12 84.7 105.6
Operating profit 504.6 473.9
Finance income 6 11.8 9.9
Finance costs 7 (9.0) (61.6)
Profit before tax 507.4 422.2
Tax 8 0.8 -
Profit for the year 508.2 422.2
Basic earnings per share 9 148.3p 123.4p
Diluted earnings per share 9 147.4p 122.5p
Diluted EPRA earnings per share 9 12.7p 11.0p
All results are derived from continuing operations in the United Kingdom.
Group statement of comprehensive income
For the year ended 31 March 2015
Notes 2015 2014
£m £m
Profit for the year 508.2 422.2
Items that will not be reclassified subsequently to profit and loss:
Actuarial deficit on defined benefit scheme 25 (3.1) (0.7)
Total comprehensive income and expense for the year 505.1 421.5
Group balance sheet
At 31 March 2015
Notes 2015 2014
£m £m
Non-current assets
Investment property 10 2,348.2 1,972.7
Investment in joint ventures 12 636.7 524.8
Other investment 13 - 18.3
Plant and equipment 14 0.2 0.3
2,985.1 2,516.1
Current assets
Trading property 11 115.9 93.3
Trade and other receivables 15 28.1 26.7
Deferred tax 8 0.8 -
Cash and cash equivalents 4.3 7.8
149.1 127.8
Total assets 3,134.2 2,643.9
Current liabilities
Trade and other payables 16 (73.1) (58.7)
(73.1) (58.7)
Non-current liabilities
Interest-bearing loans and borrowings 17 (638.5) (623.5)
Obligations under finance leases 19 (28.5) (29.1)
Pension liability 25 (3.2) (0.7)
(670.2) (653.3)
Total liabilities (743.3) (712.0)
Net assets 2,390.9 1,931.9
Equity
Share capital 20 43.0 43.0
Share premium account 352.0 352.0
Capital redemption reserve 16.4 16.4
Retained earnings 1,991.2 1,519.5
Investment in own shares 21 (11.7) 1.0
Total equity 2,390.9 1,931.9
Net assets per share 9 701p 564p
EPRA net assets per share 9 709p 569p
Approved by the Board on 20 May 2015 and signed on its behalf by
Toby Courtauld Nick Sanderson
Chief Executive Finance Director
Group statement of cash flows
For the year ended 31 March 2015
Notes 2015 2014
£m £m
Operating activities
Operating profit 504.6 473.9
Adjustments for non-cash items 22 (471.2) (433.9)
Deposits received on forward sale of residential units 22.3 -
Development of trading property (18.1) -
(Increase)/decrease in receivables (2.9) 2.2
Increase in payables 1.8 1.6
Cash generated from operations 36.5 43.8
Interest paid (28.4) (28.3)
Interest received - 1.5
Tax paid - -
Cash flows from operating activities 8.1 17.0
Investing activities
Distributions from joint ventures 8.2 153.3
Purchase and development of property (93.9) (170.7)
Purchase of fixed assets (0.2) -
Sale of properties 102.7 312.8
Investment in joint ventures (1.0) (61.9)
Exercise of put option on 100 Bishopsgate Partnership 15.8 -
Sale of joint ventures 15.8 15.8
Cash flows from investing activities 47.4 249.3
Financing activities
Issue of convertible bond - 146.7
Borrowings drawn/(repaid) 15.0 (224.0)
Purchase of derivatives (2.2) -
Funds to joint ventures (22.6) (153.8)
Purchase of own shares (19.1) (4.1)
Equity dividends paid (30.1) (29.6)
Cash flows from financing activities (59.0) (264.8)
Net increase in cash and cash equivalents (3.5) 1.5
Cash and cash equivalents at 1 April 7.8 6.3
Cash and cash equivalents at balance sheet date 4.3 7.8
Group statement of changes in equity
For the year ended 31 March 2015
Notes Share Share Capital Retained Investment Total
capital premium redemption earnings in own equity
£m £m reserve £m shares £m
£m £m
Total equity at 1 April 2014 43.0 352.0 16.4 1,519.5 1.0 1,931.9
Profit for the year - - - 508.2 - 508.2
Actuarial deficit on defined benefit scheme 25 - - - (3.1) - (3.1)
Employee Long-Term Incentive Plan and Share Matching Plan charge 21 - - - - 3.5 3.5
Purchase of own shares 21 - - - - (19.1) (19.1)
Dividends to shareholders 23 - - - (30.5) - (30.5)
Transfer to retained earnings - - - (2.9) 2.9 -
Total equity at 31 March 2015 43.0 352.0 16.4 1,991.2 (11.7) 2,390.9
Group statement of changes in equity
For the year ended 31 March 2014
Notes Share Share Capital Retained Investment Total
capital premium redemption earnings in own equity
£m £m reserve £m shares £m
£m £m
Total equity at 1 April 2013 43.0 352.0 16.4 1,130.0 (3.7) 1,537.7
Profit for the year - - - 422.2 - 422.2
Actuarial deficit on defined benefit scheme 25 - - - (0.7) - (0.7)
Employee Long-Term Incentive Plan and Share Matching Plan charge 21 - - - - 6.5 6.5
Purchase of own shares 21 - - - - (4.1) (4.1)
Dividends to shareholders 23 - - - (29.7) - (29.7)
Transfer to retained earnings - - - (2.3) 2.3 -
Total equity at 31 March 2014 43.0 352.0 16.4 1,519.5 1.0 1,931.9
Notes forming part of the Group financial statements
1 Accounting policies
Basis of preparation
The financial information contained in this announcement has been prepared on
the basis of the accounting policies set out in the statutory accounts for the
year ended 31 March 2015. Whilst the financial information included in this
announcement has been computed in accordance with International Financial
Reporting Standards (IFRS), as adopted by the European Union, this
announcement does not itself contain sufficient information to comply with
IFRS. The financial information does not constitute the Company's statutory
accounts for the years ended 31 March 2015 or 2014, but is derived from those
accounts. Those accounts give a true and fair view of the assets, liabilities,
financial position and profit and loss of the Company and the undertakings
included in the consolidation taken as a whole. Statutory accounts for 2014
have been delivered to the Registrar of Companies and those for 2015 will be
delivered following the Company's Annual General Meeting. The auditor's
reports on both the 2015 and 2014 accounts were unqualified; did not draw
attention to any matters by way of emphasis; and did not contain statements
under s498(2) or (3) of the Companies Act 2006 or preceding legislation.
The financial statements have been prepared on the historical cost basis,
except for the revaluation of properties, other investment, financial
instruments and pension liability.
Key accounting judgements
In the process of applying the Group's accounting policies, the directors are
required to make judgements, estimates and assumptions that may affect the
financial statements. The directors believe that the judgements made in the
preparation of the financial statements are reasonable. However, actual
outcomes may differ from those anticipated. Critical accounting judgements
include the adoption of the external portfolio valuation without adjustment,
the recognition of purchases and disposal of assets and the adoption of a
single reporting segment. The accounting policies for these areas of judgement
are set out in the accounting policies below.
New accounting standards
During the year ended 31 March 2015, the following accounting standards and
guidance were adopted by the Group:
· IFRS 10 Consolidated Financial Statements
· IFRS 11 Joint Arrangements
· IFRS 12 Disclosure of Interests in Other Entities
· IAS 27 (revised May 2011) Separate Financial Statements
· IAS 28 (revised May 2011) Investments in Associates and Joint Ventures
· Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities
· Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities
· Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial
Assets
· Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge
Accounting
The adoption of the Standards and Interpretations has not significantly
impacted these financial statements with the exception of IFRS 12 resulting in
more extensive disclosure in the consolidated financial statements.
At the date of approval of these financial statements, the following Standards
and Interpretations which have not been applied in these financial statements
were in issue but not yet effective (and in some cases had not yet been
adopted by the EU):
· IFRS 9 Financial Instruments (will impact both the measurement and
disclosure of financial instruments)
· IFRS 14 Regulatory Deferral Accounts
· IFRS 15 Revenue from Contracts with Customers
· IFRIC 21 Levies
· Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an
Investor and its Associate or
Joint Venture
· Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint
Operations
· Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of
Depreciation and Amortisation
· Amendments to IAS 19 Defined Benefit Plans: Employee Contributions
· Amendments to IAS 27 Equity Method in Separate Financial Statements
The directors do not expect that the adoption of the Standards and
Interpretations listed above will have a material impact on the financial
statements of the Group, except as set out above.
Basis of consolidation
The Group financial statements consolidate the financial statements of the
Company and all its subsidiary undertakings for the year ended 31 March 2015.
Subsidiary undertakings are those entities controlled by the Group. Control is
assumed when the Group directs the financial and operating policies of an
entity to benefit from its activities.
Rental income
This comprises rental income and premiums on lease surrenders on investment
properties for the year, exclusive of service charges receivable.
Tenant leases
The directors have considered the potential transfer of risks and rewards of
ownership in accordance with IAS 17 - Leases for all properties leased to
tenants and in their judgement have determined that all such leases are
operating leases.
Lease incentives
Lease incentives including rent-free periods and payments to tenants, are
allocated to the income statement on a straight-line basis over the lease term
or on another systematic basis, if applicable. The value of resulting accrued
rental income is included within the respective property.
Other property expenses
Irrecoverable running costs directly attributable to specific properties within
the Group's portfolio are charged to the income statement as other property
expenses. Costs incurred in the improvement of the portfolio which, in the
opinion
of the directors, are not of a capital nature are written off to the income
statement as incurred.
Administration expenses
Costs not directly attributable to individual properties are treated as
administration expenses.
Share-based payment
The cost of granting share-based payments to employees and directors is
recognised within administration expenses in the income statement. The Group
has used the Stochastic model to value the grants which is dependent upon
factors including the share price, expected volatility and vesting period and
the resulting fair value is amortised through the income statement over the
vesting period. The charge is reversed if it is likely that any non-market
based criteria will not be met.
Investment property
Investment properties and investment properties under development are
professionally valued on a fair value basis by qualified external valuers and
the directors must ensure that they are satisfied that the valuation of the
Group's properties is appropriate for inclusion in the accounts without
adjustment.
The valuations of investment properties and investment properties under
development have been prepared in accordance with the RICS Valuation -
Professional Standards (2012) (the Red Book).
For investment property, this approach involves applying market-derived
capitalisation yields to current and market-derived future income streams with
appropriate adjustments for income voids arising from vacancies or rent-free
periods. These capitalisation yields and future income streams are derived
from comparable property and leasing transactions and are considered to be the
key inputs in the valuation. Other factors that are taken into account in the
valuations include the tenure of the property, tenancy details, planning,
building and environmental factors that might affect the property.
In the case of investment property under development, the approach applied is
the 'residual method' of valuation, which is the investment method of
valuation as described above with a deduction for the costs necessary to
complete the development, together with an allowance for the remaining risk.
Sales and purchases of investment properties are recognised when the risks and
rewards of ownership transfer.
Trading property
Trading property is being developed for sale or being held for sale after
development is complete, and is carried at the lower of cost and net
realisable value. Cost includes direct expenditure and capitalised interest.
Cost of sales, including costs associated with off-plan residential sales, are
expensed to the income statement as incurred.
Other investments
Other investments are carried at fair value through profit and loss, with the
loan element carried at cost less any recognised impairment loss.
Depreciation
No depreciation is provided in respect of freehold investment properties and
leasehold investment properties. Depreciation is provided on plant and
equipment, at rates calculated to write off the cost, less estimated residual
value, based on prices prevailing at the balance sheet date of each asset
evenly over its expected useful life, as follows:
Fixtures and fittings - over three to five years.
Leasehold improvements - over the term of the lease.
Joint ventures
Joint ventures are accounted for under the equity method where, in the
directors' judgement, the Group has joint control of the entity. The Group's
level of control in its joint ventures is driven both by the individual
agreements which set out how control is shared by the partners and how that
control is exercised in practice. The Group balance sheet contains the Group's
share of the net assets of its joint ventures. Balances with partners owed to
or from the Group by joint ventures are included within investments. The
Group's share of joint venture profits and losses are included in the Group
income statement in a single line. All of the Group's joint ventures adopt the
accounting policies of the Group for inclusion in the Group financial
statements.
Deferred tax
Deferred tax is provided in full on temporary differences between the tax base
of an asset or liability and its carrying amount in the balance sheet.
Deferred tax is determined using tax rates that have been enacted or
substantively enacted by the balance sheet date. Deferred tax assets are
recognised when it is probable that taxable profits will be available against
which the deferred tax asset can be utilised.
Pension benefits
The Group contributes to a defined benefit pension plan which is funded with
assets held separately from those of the Group. The full value of the net
assets or liabilities of the pension fund is brought on to the balance sheet
at each balance sheet date. Actuarial gains and losses are taken to reserves;
all other movements are taken to the income statement.
Capitalisation of interest
Interest associated with direct expenditure on investment and trading
properties under development is capitalised. Direct expenditure includes the
purchase cost of a site if it has been purchased with the specific intention
to redevelop, but does not include the original book cost of a site where no
intention existed. Interest is capitalised from the start of the development
work until the date of practical completion. The rate used is the Group's
weighted average cost of borrowings or, if appropriate, the rate on specific
associated borrowings.
Financial instruments
i Derivatives The Group uses derivative financial instruments to hedge its
exposure to foreign currency fluctuations and interest rate risks. The Group's
derivatives are measured at fair value in the balance sheet. To the extent
that a derivative is a designated hedge and provides an effective cash flow
hedge against the Group's underlying exposure, the movements in the fair value
of the hedge are taken to equity. To the extent that the derivative is not a
designated hedge or does not effectively hedge the underlying exposure, the
movement in the fair value of the hedge is taken to the income statement.
ii Borrowings The Group's borrowings in the form of its debentures, private
placement notes and bank loans are recognised initially at fair value, after
taking account of any discount or premium on issue and attributable
transaction costs. Subsequently, borrowings are held at amortised cost, with
any discounts, premiums and attributable costs charged to the income statement
using the effective interest rate method.
iii Convertible bond The Group's convertible bond can be settled in shares,
cash or a combination of both at the Group's discretion. The bonds have been
designated at fair value through profit and loss upon initial recognition,
with any gains or losses arising subsequently due to re-measurement being
recognised in the income statement.
iv Cash and cash equivalents Cash and cash equivalents comprise cash in hand,
demand deposits and other short-term highly liquid investments that are
readily convertible into a known amount of cash and are subject to
insignificant risk of changes in value.
v Trade receivables and payables Trade receivables and payables are initially
measured at fair value, and are subsequently measured at amortised cost using
the effective interest rate method.
Head leases
The present value of future ground rents is added to the carrying value of a
leasehold investment property and to long-term liabilities. On payment of a
ground rent, virtually all of the cost is charged to the income statement,
principally as interest payable, and the balance reduces the liability; an
equal reduction to the asset's valuation is charged to the income statement.
Segmental analysis
All of the Group's revenue is generated from investment properties located in
central London. The properties are managed as a single portfolio by an asset
management team whose responsibilities are not segregated by location or type,
but are managed on an asset-by-asset basis. The majority of the Group's assets
are mixed use, therefore the office, retail and any residential space is
managed together. Within the property portfolio, the Group has a number of
properties under development. The directors view the Group's development
activities as an integral part of the life-cycle of each of its assets rather
than a separate business or division. The nature of developing property means
that whilst a property is under development it generates no revenue and has no
operating results. Once a development has completed, it returns to the
investment property portfolio, or if it is a trading property, it is sold. The
directors have considered the nature of the business, how the business is
managed and how they review performance and, in their judgement, the Group has
only one reportable segment. The components of the valuation, as provided by
CBRE, are set out in note 10.
Development management agreements
The Group sold a development property prior to its completion and has a
development management agreement with the buyer to construct the remainder of
the building on their behalf. Where the outcome of this development management
agreement can be estimated reliably, revenue and costs are recognised by
reference to the stage of completion of the contract at the balance sheet
date. This is normally measured as the proportion that contract costs incurred
for work performed bear to the estimated total contract costs. Variations in
work, claims and incentive payments are included to the extent that they have
been agreed with the counter-party.
Where the outcome of the development management agreement cannot be estimated
reliably, contract revenue is recognised to the extent of costs incurred where
it is probable they will be recoverable. Costs are recognised as expenses in
the period in which they are incurred. When it is probable that total costs
will exceed total revenue, the expected loss is recognised as an expense
immediately.
2 Total revenue
2015 2014
£m £m
Gross rental income 58.6 60.5
Spreading of tenant lease incentives 7.6 9.2
Service charge income 7.8 8.6
Joint venture fee income 4.2 6.9
Development management revenue 10.6 -
88.8 85.2
3 Net rental income
2015 2014
£m £m
Gross rental income 58.6 60.5
Spreading of tenant lease incentives 7.6 9.2
Ground rents (0.2) -
66.0 69.7
4 Property expenses
2015 2014
£m £m
Service charge income (7.8) (8.6)
Service charge expenses 9.7 10.6
Other property expenses 5.8 5.7
7.7 7.7
5 Administration expenses
2015 2014
£m £m
Employee costs 16.5 21.1
Other head office costs 3.6 3.5
20.1 24.6
Included within employee costs is an accounting charge for the LTIP and SMP
schemes of £3.5 million
(2014: £6.5 million).
Employee costs, including those of directors, comprise the following:
2015 2014
£m £m
Wages and salaries 15.1 19.6
Social security costs 2.9 3.5
Other pension costs 1.4 1.2
19.4 24.3
Less: recovered through service charges (1.0) (0.8)
Less: capitalised into development projects (1.9) (2.4)
16.5 21.1
The Executive Directors are considered to be key management for the purposes
of IAS 24 'Related Party Transactions'. The Group's key management, its
pension plan and joint ventures are the Group's only related parties.
Employee information
The average number of employees of the Group, including directors, was:
2015 2014
Number Number
Head office and property management 96 91
Auditor's remuneration
2015 2014
£000's £000's
Audit of the Company's annual accounts 99 92
Audit of subsidiaries 83 81
182 173
Audit-related assurance services, including the interim review 61 74
Total audit and audit-related services 243 247
Services related to taxation (advisory) 9 109
Other non-audit services 118 8
370 364
6 Finance income
2015 2014
£m £m
Interest on balances with joint venture partners 11.8 8.5
Interest on deferred receipts in respect of 100 Bishopsgate Partnership sale - 1.4
11.8 9.9
7 Finance costs
2015 2014
£m £m
Interest on revolving credit facilities 4.3 7.4
Interest on private placement notes 12.5 11.5
Interest on debenture stock 8.0 8.0
Interest on convertible bond 1.5 0.8
Issue costs of convertible bond - 3.3
Interest on obligations under finance leases 1.4 1.8
Break costs on refinanced revolving credit facilities 1.4 -
Other interest - 0.1
Gross finance costs 29.1 32.9
Less: capitalised interest at an average rate of 4.1% (2014: 3.9%) (11.4) (6.4)
17.7 26.5
Fair value movement on convertible bond 21.7 11.3
Fair value movement on derivatives (30.4) 23.8
9.0 61.6
8 Tax
2015 2014
£m £m
Current tax
UK corporation tax - -
Tax over provided in previous years - -
Total current tax - -
Deferred tax (0.8) -
Tax credit for the year (0.8) -
The difference between the standard rate of tax and the effective rate of tax
arises from the items set out below:
2015 2014
£m £m
Profit before tax 507.4 422.2
Tax charge on profit at standard rate of 21% (2014: 23%) 106.6 97.1
REIT tax-exempt rental profits and gains (13.1) (16.9)
Non-taxable revaluation surplus (93.7) (90.0)
Other (0.6) 9.8
Tax credit for the year (0.8) -
During the year, £nil (2014: £nil) of deferred tax was credited directly to
equity. The Group's net deferred tax at
31 March 2015 was £0.8 million (2014: £nil), based on a 20% tax rate. This
consists of a deferred tax liability of
£8.5 million (2014: £nil) and a deferred tax asset of £9.3 million (2014:
£nil).
Movement in deferred tax
At 1 April 2014 Recognised in the income statement At 31 March 2015
£m £m £m
Revaluation surpluses - (8.5) (8.5)
Revenue losses recognised in respect of revaluation surpluses - 8.5 8.5
Revenue losses recognised in respect of trading property - cost of sales - 0.8 0.8
Net deferred tax asset - 0.8 0.8
In accordance with IAS 12 - Income Taxes, deferred tax liabilities have been
recognised in respect of revaluation surpluses relating to properties which do
not benefit from the Group's REIT status.
A deferred tax asset of £5.5 million (2014: £10.1 million) mainly relating to
contingent share awards, the pension liability and the convertible bond, was
not recognised because it is uncertain whether future taxable profits will
arise against which this asset can be utilised.
As a REIT, the Group is largely exempt from corporation tax in respect of its
rental profits and chargeable gains relating to its property rental business.
The Group is otherwise subject to corporation tax. In particular, the Group's
REIT exemption does not extend to either profits arising from the sale of
investment properties which have undergone a major redevelopment within the
preceding three years or profits arising from trading properties (including
the sale of the residential units at Rathbone Square, W1).
In order to ensure that the Group is able to both retain its status as a REIT
and to avoid financial charges being imposed, a number of tests (including a
minimum distribution test) must be met by both Great Portland Estates plc and
by the Group as a whole on an ongoing basis. These conditions are detailed in
the Corporation Tax Act 2010.
9 Performance measures and EPRA metrics
Adjusted earnings and net assets per share are calculated in accordance with
the new Best Practice Recommendations issued by the European Public Real
Estate Association (EPRA).
Weighted average number of ordinary shares
2015 2014
Number of Number of
shares shares
Issued ordinary share capital at 1 April 343,926,149 343,926,149
Investment in own shares (1,178,160) (1,883,427)
Weighted average number of ordinary shares - Basic 342,747,989 342,042,722
Basic and diluted earnings per share
Profit Number Earnings Profit Number Earnings
after tax of shares per share after tax of shares per share
2015 2015 2015 2014 2014 2014
£m million pence £m million pence
Basic 508.2 342.7 148.3 422.2 342.0 123.4
Dilutive effect of LTIP shares - 2.0 (0.9) - 2.6 (0.9)
Diluted 508.2 344.7 147.4 422.2 344.6 122.5
Basic and diluted EPRA earnings per share
Profit Number Earnings Profit Number Earnings
after tax of shares per share after tax of shares per share
2015 2015 2015 2014 2014 2014
£m million pence £m million pence
Basic 508.2 342.7 148.3 422.2 342.0 123.4
Surplus from investment property (note 10) (380.6) - (111.0) (325.6) - (95.2)
Surplus from joint venture investment property (note 12) (80.1) - (23.4) (96.2) - (28.1)
Movement in fair value of derivatives (note 7) (30.4) - (8.9) 23.8 - 6.9
Movement in fair value of convertible bond (note 7) 21.7 - 6.3 11.3 - 3.3
Issue costs of convertible bond (note 7) - - - 3.3 - 1.0
Movement in fair value of derivatives in joint ventures (note 12) 0.9 - 0.3 (2.0) - (0.6)
Trading property - cost of sales 4.8 - 1.4 1.6 - 0.5
Break costs on refinanced revolving credit facilities (note 7) 1.4 - 0.4 - - -
Deferred taxation (note 8) (0.8) - (0.2) - - -
Basic EPRA earnings 45.1 342.7 13.2 38.4 342.0 11.2
Dilutive effect of LTIP shares - 2.0 (0.1) - 2.6 (0.1)
Dilutive effect of convertible bond 1.5 21.0 (0.4) 0.8 11.6 (0.1)
Diluted EPRA earnings 46.6 365.7 12.7 39.2 356.2 11.0
EPRA net assets per share
Net assets Number Net assets Net assets Number Net assets
2015 of shares per share 2015 2014 of shares per share
£m 2015 pence £m 2014 2014
million million pence
Basic 2,390.9 341.0 701 1,931.9 342.3 564
Dilutive effect of LTIP shares - 2.0 (4) - 2.6 (4)
Diluted 2,390.9 343.0 697 1,931.9 344.9 560
Surplus on revaluation of trading property (note 11) 21.5 - 6 - - -
Fair value of financial liabilities (note 18) (62.0) - (18) (36.0) - (11)
Fair value of financial liabilities in joint ventures (note 12) (0.5) - - 2.4 - 1
EPRA triple net assets 2,349.9 343.0 685 1,898.3 344.9 550
Fair value of financial liabilities (note 18) 62.0 - 18 36.0 - 11
Fair value of financial liabilities in joint ventures (note 12) 0.5 - - (2.4) - (1)
Fair value of convertible bond (note 18) 33.0 - 10 11.3 - 4
Fair value of derivatives (note 18) (15.1) - (4) 17.5 - 5
Fair value of derivatives in joint ventures (note 12) 1.5 - - 0.6 - -
Deferred tax (note 8) (0.8) - - - - -
EPRA net assets 2,431.0 343.0 709 1,961.3 344.9 569
The Group has £150.0 million of convertible bonds in issue with an initial
conversion price of £7.15 per share. The dilutive effect of the contingently
issuable shares within the convertible bond is required to be recognised in
accordance with IAS 33 - Earnings per Share. For the year ended 31 March 2015,
there was no dilutive impact on the calculation of earnings per share or net
assets per share as a result of the convertible bond. In accordance with the
EPRA Best Practice Recommendations, we have presented EPRA earnings per share
on a basic and diluted basis.
EPRA cost ratio (including share of joint ventures)
2015 2014
£m £m
Administration expenses 20.1 24.6
Property expenses 7.7 7.7
Joint venture management fees (4.2) (6.9)
Joint venture property and administration costs 2.5 2.6
EPRA costs (including direct vacancy costs) (A) 26.1 28.0
Direct vacancy costs (3.2) (2.3)
Joint venture direct vacancy costs (0.8) (1.0)
EPRA costs (excluding direct vacancy costs) (B) 22.1 24.7
Net rental income 66.0 69.7
Joint venture net rental income 24.8 20.1
Gross rental income (C) 90.8 89.8
Portfolio at fair value including joint ventures (D) 3,206.2 2,678.1
Cost ratio (including direct vacancy costs) (A/C) 28.7% 31.2%
Cost ratio (excluding direct vacancy costs) (B/C) 24.3% 27.5%
Cost ratio (by portfolio value) (A/D) 0.8% 1.0%
10 Investment property
Investment property
Freehold Leasehold Total
£m £m £m
Book value at 1 April 2013 1,104.1 747.4 1,851.5
Acquisitions 93.7 - 93.7
Costs capitalised 8.5 12.4 20.9
Disposals (248.4) (57.0) (305.4)
Transfer to investment property under development (136.7) (28.0) (164.7)
Net valuation surplus on investment property 128.9 92.6 221.5
Book value at 31 March 2014 950.1 767.4 1,717.5
Acquisitions - 25.4 25.4
Costs capitalised 5.7 8.3 14.0
Disposals (8.0) - (8.0)
Transfer to investment property under development (74.9) (84.4) (159.3)
Transfer from investment property under development - 92.4 92.4
Net valuation surplus on investment property 154.4 99.6 254.0
Book value at 31 March 2015 1,027.3 908.7 1,936.0
Investment property under development
Freehold Leasehold Total
£m £m £m
Book value at 1 April 2013 - 48.0 48.0
Costs capitalised 26.4 17.6 44.0
Interest capitalised 3.6 2.8 6.4
Transfer from investment property 136.7 28.0 164.7
Net revaluation surplus on investment property under development 40.8 44.6 85.4
Transfer to trading property (93.3) - (93.3)
Book value at 31 March 2014 114.2 141.0 255.2
Costs capitalised 28.4 22.7 51.1
Interest capitalised 5.4 2.3 7.7
Disposals - (80.6) (80.6)
Transfer from investment property 74.9 84.4 159.3
Transfer to investment property - (92.4) (92.4)
Net revaluation surplus on investment property under development 53.6 58.3 111.9
Book value at 31 March 2015 276.5 135.7 412.2
Total investment property 1,303.8 1,044.4 2,348.2
The book value of investment property includes £28.5 million (2014: £29.1
million) in respect of the present value of future ground rents, the market
value of the portfolio (excluding these amounts) is £2,319.7 million. The
market value
of the Group's total property portfolio, including trading properties, was
£2,457.1 million (2014: £2,036.9 million).
At 31 March 2015, properties with a carrying value of £356.6 million (2014:
£311.9 million) were secured under the first mortgage debenture stock (see
note 17).
The cumulative interest capitalised in investment property was £17.4 million
(2014: £8.4 million).
Surplus from investment property
2015 2014
£m £m
Net valuation surplus on investment property 365.9 306.9
Profit on sale of investment properties 14.7 18.7
380.6 325.6
The Group's investment properties, including those held in joint venture (note
12), were valued on the basis of Fair Value by CBRE Limited (CBRE), external
valuers, as at 31 March 2015 in accordance with the RICS Valuation -
Professional Standards (January 2014) (the Red Book) and have been primarily
derived using comparable recent market transactions on arm's length terms.
The total fees, including the fee for this assignment, earned by CBRE (or
other companies forming part of the same group of companies within the UK)
from the Group is less than 5.0% of total UK revenues.
The principal signatories of the CBRE valuation reports have continuously been
the signatories of valuations for the same addressee and valuation purpose as
this report since 2012. CBRE has continuously been carrying out valuation
instructions for the Group for in excess of 20 years. CBRE has carried out
valuation, agency and professional services
on behalf of the Group for in excess of 20 years.
Real estate valuations are complex and derived using comparable market
transactions which are not publicly available and involve an element of
judgement. Therefore, in line with EPRA guidance, we have classified the
valuation of the property portfolio as Level 3 as defined by IFRS 13. There
were no transfers between levels during the year. Inputs to the valuation,
including capitalisation yields (typically the true equivalent yield) and
rental values, are defined as 'unobservable' as defined by IFRS 13.
Key inputs to the valuation
ERV True equivalent yield
Average Range Average Range
£ per sq ft £ per sq ft % %
North of Oxford Street Office 67 33 - 82 4.4 4.1 - 5.9
Retail 60 16 - 181 4.1 3.7 - 5.4
Rest of West End Office 73 55 - 94 4.6 3.5 - 5.9
Retail 110 15 - 231 4.3 3.6 - 5.0
City, Midtown and Southwark Office 44 41 - 48 4.9 4.7 - 6.2
Retail 26 25 - 32 5.1 4.7 - 5.4
Capital value
Average Range
£ per sq ft £ per sq ft
Residential 1,691 165 - 2,523 n/a n/a
Everything else being equal, there is a positive relationship between rental
values and the property valuation, such that an increase in rental values will
increase the valuation of a property and vice versa. However, the relationship
between capitalisation yields and the property valuation is negative;
therefore an increase in capitalisation yields will reduce the valuation of a
property and vice versa. There are interrelationships between these inputs as
they are determined by market conditions and the valuation movement in any one
period depends on the balance between them. If these inputs move in opposite
directions (i.e. rental values increase and yields decrease) valuation
movements can be amplified whereas if they move in the same direction they may
offset reducing the overall net valuation movement.
At 31 March 2015, the Group had capital commitments of £324.6 million (2014:
£54.4 million).
EPRA capital expenditure
2015 2014
£m £m
Group
Acquisitions 25.4 93.7
Developments (including trading properties) 70.0 44.0
Investment property 14.0 20.9
Interest capitalised (including trading properties) 11.4 6.4
Joint ventures (at share)
Acquisitions (excluding those from the GPE Group) 13.9 -
Developments - 31.6
Investment property 10.0 4.2
Interest capitalised - 3.5
144.7 204.3
11 Trading property
Total
£m
At 1 April 2014 93.3
Costs capitalised 18.9
Interest capitalised 3.7
At 31 March 2015 115.9
The Group is developing a large mixed use scheme at Rathbone Square, W1. Part
of the approved scheme consists of residential units which the Group holds for
sale. As a result, the residential element of the scheme is classified as
trading property. The fair value of the trading property was £137.4 million,
representing an uplift of £21.5 million during the year.
12 Investment in joint ventures
The Group has the following investments in joint ventures:
Equity Balances 2015 2014
£m with Total Total
partners £m £m
£m
At 1 April 350.8 174.0 524.8 348.3
Movement on joint venture balances - 34.4 34.4 162.3
Additions 1.0 - 1.0 61.9
Share of profit of joint ventures 4.6 - 4.6 9.4
Share of revaluation surplus of joint ventures 80.2 - 80.2 93.5
Share of profit on disposal of joint venture properties (0.1) - (0.1) 2.7
Share of results of joint ventures 84.7 - 84.7 105.6
Distributions (8.2) - (8.2) (153.3)
At 31 March 428.3 208.4 636.7 524.8
The investments in joint ventures comprise the following:
Country of incorporation 2015 2014
ownership ownership
The GHS Limited Partnership Jersey 50% 50%
The Great Capital Partnership United Kingdom 50% 50%
The Great Ropemaker Partnership United Kingdom 50% 50%
The Great Star Partnership United Kingdom 50% 50%
The Great Victoria Partnerships United Kingdom 50% 50%
The Great Wigmore Partnership United Kingdom 50% 50%
All of the Group's joint ventures operate solely in the United Kingdom.
The Group's share in the assets and liabilities, revenues and expenses for the
joint ventures is set out below:
The GHS The Great The Great The Great The Great The Great 2015 2015 2014
Limited Capital Ropemaker Star Victoria Wigmore Total At share £m At share £m
Partnership Partnership Partnership Partnership Partnerships Partnership £m
£m £m £m £m £m £m
Balance sheets
Investment property 230.5 - 593.2 212.6 270.6 223.7 1,530.6 765.3 657.4
Current assets 0.3 0.1 - 0.7 0.5 - 1.6 0.8 1.0
Cash 1.1 0.2 13.5 7.4 4.2 3.8 30.2 15.1 12.4
Balances from Partners (67.0) - (273.5) (57.4) 10.9 (29.8) (416.8) (208.4) (174.0)
Bank loans - - (72.4) (73.5) (79.5) - (225.4) (112.7) (113.4)
Derivatives - - (2.9) - - - (2.9)
- More to follow, for following part double click ID:nRST7134NcRecent news on Great Portland Estates
See all newsREG - Great Portland Ests. - Holding(s) in Company
AnnouncementREG - Great Portland Ests. - Director/PDMR Shareholding
AnnouncementREG - Great Portland Ests. - Holding(s) in Company
AnnouncementREG - Great Portland Ests. - Director/PDMR Shareholding
AnnouncementREG - Great Portland Ests. - Delivering our growth strategy
Announcement