REG - Great Portland Ests. - Annual Results 2015 <Origin Href="QuoteRef">GPOR.L</Origin> - Part 3
15/07/2015 18:29
- Part 3: For the preceding part double click ID:nRST7134Nb
(1.5) (0.6)
Current liabilities (0.4) - (15.1) (5.2) (5.0) (2.6) (28.3) (14.1) (15.8)
Finance leases - - (10.4) (22.0) - - (32.4) (16.2) (16.2)
Net assets 164.5 0.3 232.4 62.6 201.7 195.1 856.6 428.3 350.8
Income statements
Net rental income 1.4 - 19.8 10.4 10.8 7.2 49.6 24.8 20.1
Property and administration costs (0.3) - (2.1) (1.7) (0.5) (0.5) (5.1) (2.5) (2.6)
Net finance costs (3.4) - (19.0) (6.9) (3.1) (1.2) (33.6) (16.8) (10.1)
Movement in fair value of derivatives - - (1.8) 0.1 - - (1.7) (0.9) 2.0
Share of profit from joint ventures (2.3) - (3.1) 1.9 7.2 5.5 9.2 4.6 9.4
Revaluation of investment property 20.9 - 97.9 9.7 24.9 7.0 160.4 80.2 93.5
Profit on sale of investment property - - (0.2) (0.1) - 0.1 (0.2) (0.1) 2.7
Share of results of joint ventures 18.6 - 94.6 11.5 32.1 12.6 169.4 84.7 105.6
In April 2015, the Group acquired Starwood Capital Group's 50% interest in The
Great Star Partnership for
£61.4 million. On completion, the Group redeemed all of the outstanding
non-recourse bank debt at that date being
£73.1 million. The transaction equates to a property price of £190.6 million,
in line with the March 2015 valuation.
In April 2015, The Great Wigmore Partnership, the 50:50 joint venture between
the Group and Aberdeen Asset Management, sold its interest in 95 Wigmore
Street, W1 and 35 James Street, W1 for a price of £222.4 million (our share:
£111.2 million) ahead of the March 2015 valuation of £191.0 million (our
share: £95.5 million). At 31 March 2015 these buildings were held for sale.
The non-recourse debt facilities of the joint ventures at 31 March 2015, are
set out below:
Joint venture debt facilities Nominal value Maturity Fixed/floating Interest rate
(100%)
£m
The Great Ropemaker Partnership 73.0 November 2018 Floating LIBOR +2.25%-2.70%
The Great Star Partnership 73.6 July 2015 Floating LIBOR +1.75%-1.90%
The Great Victoria Partnership 80.0 July 2022 Fixed 3.74%
Total 226.6
The Great Ropemaker Partnership has two interest rate swaps with a fixed rate
of 2.12% and a notional principal amount of £73.0 million. The interest rate
swaps expire coterminously with the bank loan in 2018. The Great Star
Partnership has an interest rate swap with a fixed interest rate of 1.00% and
a notional principal amount of £36.8 million and an interest rate cap at 4.00%
with a notional principal amount of £36.8 million. In April 2015, the Group
acquired Starwood Capital Group's 50% interest in GSP and the loan and
derivatives were repaid and cancelled respectively. At 31 March 2015, the
Great Victoria Partnership loan had a fair value of £80.9 million (2014: £75.3
million). All interest-bearing loans are in sterling. At 31 March 2015, the
joint ventures had £nil undrawn facilities (2014: £nil).
Transactions during the year between the Group and its joint ventures, which
are related parties, are disclosed below:
2015 2014
£m £m
Movement on joint venture balances during the year 34.4 162.3
Balances receivable at the year end from joint ventures (208.4) (174.0)
Distributions 8.2 153.3
Fee income 4.2 6.9
Property sales from the Group to joint ventures - 202.0
The joint venture balances bear interest as follows: the GHS Limited
Partnership at 5.3% on balances at inception and 4.0% on any subsequent
balances, the Great Ropemaker Partnership at 6.0%, the Great Star Partnership
at 7.0% and the Great Wigmore Partnership at 4.0%. The investment properties
include £16.2 million (2014: £16.2 million) in respect of the present value of
future ground rents, net of these amounts the market value of our share of the
total joint venture properties is £749.1 million. The Group earns fee income
from its joint ventures for the provision of management services. All of the
above transactions are made on terms equivalent to those that prevail in arm's
length transactions.
At 31 March 2015, the Group had £nil contingent liabilities arising in its
joint ventures (2014: £nil). At 31 March 2015, the Group had capital
commitments in respect of its joint ventures of £43.7 million (2014: £40.5
million).
13 Other investment
Equity Loans Total
£m £m £m
At 1 April 2014 6.1 12.2 18.3
Disposals (6.1) (12.2) (18.3)
At 31 March 2015 - - -
The other investment represented a 12.5% interest in The 100 Bishopsgate
Partnership. The Group's 12.5% holding was subject of 'put and call' options,
with GPE able to 'put' its remaining investment, net of the associated loan
(see note 17), onto Brookfield Properties Corporation. The Group exercised the
put option in October 2014 at the agreed transfer price of £15.8 million, net
of an associated loan.
14 Plant and equipment
Leasehold Fixtures and Total
improvements fittings £m
£m £m
Cost or valuation
At 1 April 2013 and 31 March 2014 2.0 1.5 3.5
Costs capitalised 0.1 0.1 0.2
At 31 March 2015 2.1 1.6 3.7
Depreciation
At 1 April 2014 1.7 1.5 3.2
Charge for the year 0.2 0.1 0.3
At 31 March 2015 1.9 1.6 3.5
Carrying amount at 31 March 2014 0.3 - 0.3
Carrying amount at 31 March 2015 0.2 - 0.2
15 Trade and other receivables
2015 2014
£m £m
Trade receivables 2.4 3.6
Allowance for doubtful debts (0.1) (0.3)
2.3 3.3
Prepayments and accrued income 0.8 0.8
Work in progress on development management contracts 6.0 -
Other trade receivables 3.9 21.8
Derivatives 15.1 0.8
28.1 26.7
Work in progress on development management contracts is an amount due to the
Group in relation to a development property sold prior to its completion where
the Group has a contract with the buyer to construct the remainder of the
building on their behalf. During the year the Group received payments on
account of £4.6 million (2014: £nil). At 31 March 2015, the aggregate
cumulative cost incurred was £8.9 million (2014: £nil) and the cumulative
profits less losses recognised were £1.7 million (2014: £nil). There are no
material project retentions.
At 31 March 2015, other trade receivables included £nil in respect of deferred
sale proceeds (2014: £15.8 million).
At 31 March 2015, the derivatives were due in excess of one year (see note
18). Trade receivables consist of rent and service charge monies, which are
due on the quarter day with no credit period. Interest is charged on trade
receivables
in accordance with the terms of the tenant's lease. Trade receivables are
provided for based on estimated irrecoverable amounts determined by past
default experience and knowledge of the individual tenant's circumstance.
Debtors past due but not impaired were £0.9 million (2014: £1.6 million) of
which £0.3 million is over 30 days.
2015 2014
£m £m
Movements in allowance of doubtful debts
Balance at the beginning of the year (0.3) (0.5)
Amounts provided for during the year - -
Amounts written off as uncollectable 0.2 0.2
(0.1) (0.3)
16 Trade and other payables
2015 2014
£m £m
Rents received in advance 16.7 16.0
Deposits received on forward sale of residential units (see note 11) 22.3 -
Non-trade payables and accrued expenses 34.1 42.7
73.1 58.7
17 Interest-bearing loans and borrowings
2015 2014
£m £m
Non-current liabilities at amortised cost
Secured
£142.9 million 55⁄8% debenture stock 2029 144.0 144.1
Other loan - 2.6
Unsecured
Revolving credit facilities - bank loans 25.0 11.0
£30.0 million 5.09% private placement notes 2018 29.9 29.9
$130.0 million 4.81% private placement notes 2018 80.9 80.8
$78.0 million 5.37% private placement notes 2021 48.5 48.4
$160.0 million 4.20% private placement notes 2019 101.8 101.7
$40.0 million 4.82% private placement notes 2022 25.4 25.4
Non-current liabilities at fair value
Unsecured
£150.0 million 1.00% convertible bonds 2018 183.0 161.3
Derivatives - 18.3
638.5 623.5
In October 2014, the Group issued a new floating rate £450.0 million revolving
credit facility and cancelled two existing facilities of £350.0 million and
£150.0 million each. The new £450.0 million facility is unsecured, attracts a
floating rate based on a ratchet of between 105-165 basis points above LIBOR,
based on gearing, and expires in 2019 which may be extended by a maximum
further two years on our request, and on each bank's approval for its
participation. At 31 March 2015, the Group had £423.0 million (2014: £488.0
million) of undrawn committed credit facilities.
The other loan related to the Group's funding requirements in respect of its
12.5% interest in The 100 Bishopsgate Partnership (note 13). Brookfield
Properties Corporation met the Group's funding obligations in respect of the
100 Bishopsgate Partnership until October 2014 when the facility expired and
was repaid.
18 Financial instruments
Categories of financial instrument Carrying Income/ Gain/(loss) Carrying Income/ Gain/(loss)
amount (expense) to equity amount (expense) to equity
2015 2015 2015 2014 2014 2014
£m £m £m £m £m £m
Interest rate swap - - - - 0.1 -
Cross currency swaps - - - (18.3) (18.0) -
Non-current liabilities at fair value - - - (18.3) (17.9) -
Other investment - equity element - - - 6.1 - -
Interest rate floor 3.3 3.3 - 0.8 - -
Cross currency swaps 11.8 29.6 - - (3.3) -
Non-current assets held at fair value 15.1 32.9 - 6.9 (3.3) -
Trade receivables 12.2 - - 25.1 1.3 -
Other investment - loan element - - - 12.2 - -
Cash and cash equivalents 4.3 - - 7.8 - -
Loans and receivables 16.5 - - 45.1 1.3 -
Trade and other payables (42.9) - - (24.6) - -
Interest-bearing loans and borrowings (638.5) (40.5) - (605.2) (38.6) -
Finance leases (28.5) (1.4) - (29.1) (1.8) -
Liabilities at amortised cost (709.9) (41.9) - (658.9) (40.4) -
Total financial instruments (678.3) (9.0) - (625.2) (60.3) -
Financial risk management objectives
Credit risk
Credit risk refers to the risk that a counter-party will default on its
contractual obligations resulting in financial loss
to the Group.
The Group has a policy of only dealing with creditworthy tenants and obtaining
sufficient rental cash deposits or third-party guarantees as a means of
mitigating financial loss from defaults.
The concentration of credit risk is limited due to the large and diverse
tenant base. Accordingly, the directors believe that there is no further
credit provision required in excess of the allowance for doubtful debts. The
carrying amount of financial assets recorded in the financial statements,
which is net of impairment losses, represents the Group's maximum exposure to
credit risk without taking account of the value of rent deposits obtained.
Details of the Group's receivables are summarised in note 15 of the financial
statements.
The Group's cash deposits are placed with a diversified range of banks and
strict counter-party limits ensure the Group's exposure to bank failure is
minimised.
Capital risk
The Group manages its capital to ensure that entities in the Group will be
able to continue as going concerns and as such it aims to maintain an
appropriate mix of debt and equity financing. The current capital structure of
the Group consists of a mix of equity and debt. Equity comprises issued share
capital, reserves and retained earnings as disclosed in the Group statement of
changes in equity. Debt comprises long-term debenture stock, private placement
notes, convertible bonds and drawings against committed revolving credit
facilities from banks.
The Group operates solely in the United Kingdom, and its operating profits and
net assets are sterling denominated. As a result the Group's policy is to have
no unhedged assets or liabilities denominated in foreign currencies. The
currency risk on overseas transactions is fully hedged through foreign
currency derivatives to create a synthetic sterling exposure.
Liquidity risk
The Group operates a framework for the management of the Group's short-,
medium- and long-term funding requirements. Cash flow and funding needs are
regularly monitored to ensure sufficient undrawn facilities are in place. The
Group's funding sources are diversified across a range of bank and bond
markets and strict counter-party limits are operated on deposits.
The Group meets its day-to-day working capital requirements through the
utilisation of its revolving credit facilities. The availability of these
facilities depends on the Group complying with a number of key financial
covenants; these covenants and the Group's compliance with them are set out in
the table below:
Key covenants Covenant March 2015 actuals
Group
Net debt/net equity <1.25x 0.25x
Inner borrowing (unencumbered asset value/unsecured borrowings) >1.66x 3.89x
Interest cover >1.35x 10.72x
The Group has undrawn credit facilities of £423.0 million and has substantial
headroom above all of its key covenants. As a result the directors consider
the Group to have adequate liquidity to be able to fund the ongoing operations
of
the business.
The following tables detail the Group's remaining contractual maturity on its
financial instruments and have been drawn up based on the undiscounted cash
flows of financial liabilities based on the earliest date on which the Group
is required to pay and conditions existing at the balance sheet date:
At 31 March 2015 Carrying Contractual Less than One to Two to More than
amount cash flows one year two years five years five years
£m £m £m £m £m £m
Non-derivative financial liabilities
£142.9 million 55⁄8% debenture stock 2029 144.0 254.0 8.0 8.0 24.1 213.9
Revolving credit facilities - bank loans 25.0 29.7 0.5 0.5 28.7 -
Private placement notes 286.5 345.9 13.0 13.1 239.9 79.9
£150.0 million 1.00% convertible bonds 2018 183.0 155.1 1.5 1.5 152.1 -
Derivative financial instruments
Cross currency swaps (note 15) (11.8) 2.1 0.5 0.5 0.9 0.2
Interest rate floor (note 15) (3.3) (4.0) (1.3) (1.8) (0.9) -
623.4 782.8 22.2 21.8 444.8 294.0
At 31 March 2014 Carrying Contractual Less than One to Two to More than
amount cash flows one year two years five years five years
£m £m £m £m £m £m
Non-derivative financial liabilities
£142.9 million 55⁄8% debenture stock 2029 144.1 262.0 8.0 8.0 24.1 221.9
Other loan 2.6 2.6 2.6 - - -
Revolving credit facilities - bank loans 11.0 13.4 0.3 13.1 - -
Private placement notes 286.2 359.1 13.0 13.2 146.5 186.4
£150.0 million 1.00% convertible bonds 2018 161.3 156.6 1.5 1.5 153.6 -
Derivative financial instruments
Cross currency swaps 18.3 2.4 0.5 0.4 1.1 0.4
Interest rate floor (note 15) (0.8) (1.5) (1.5) - - -
622.7 794.6 24.4 36.2 325.3 408.7
Market risk
Interest rate risk arises from the Group's use of interest-bearing financial
instruments. It is the risk that future cash flows arising from a financial
instrument will fluctuate due to changes in interest rates. It is the Group's
policy to reduce interest rate risk in respect of the cash flows arising from
its debt finance either through the use of fixed rate debt or through the use
of interest rate derivatives such as swaps, caps and floors. It is the Group's
usual policy to maintain the proportion of floating interest rate exposure to
between 20%-40% of forecast total debt. However, this target is flexible, and
may not be adhered to at all times depending on, for example, the Group's view
of future interest rate movements.
Interest rate swaps
Interest rate swaps enable the Group to exchange its floating rate interest
payments on its bank debt for fixed rate payments on a notional value. Such
contracts allow the Group to mitigate the risk of changing interest rates on
the cash flow exposures on its variable rate bank loans by locking in a fixed
rate on a proportion of its debt.
Interest rate floors
Under the terms of an interest rate floor, one party (the 'seller') makes a
payment to the other party (the 'buyer') if an underlying interest rate is
below a specified rate. The Group has bought an interest rate floor, which,
when combined with its fixed rate private placement notes raised in 2011,
gives rise to the same economic effect as purchasing an interest rate cap in
respect of floating rate debt.
Put option
A put option is a contract between two parties to exchange an asset at a
specified price by a set date. The Group had
a 12.5% holding in The 100 Bishopsgate Partnership and had a put option to
enable it to sell its net investment to Brookfield Properties Corporation for
£15.8 million. The Group exercised this option in October 2014.
Cross currency swaps
Cross currency swaps enable the Group to exchange receipts or payments
denominated in currencies other than sterling for receipts or payments
denominated in sterling. Such contracts allow the Group to eliminate foreign
exchange risk arising from fluctuating exchange rates between sterling and
other currencies.
The following table details the notional principal amounts and remaining terms
of interest rate derivatives outstanding
at 31 March:
Average contracted Notional principal Fair value
fixed interest rate amount (asset)/liability
2015 2014% 2015 2014£m 2015 2014£m
% £m £m
Cash flow hedges
Interest rate floor
Less than one year - 2.53 - 159.7 - (0.8)
Between two and five years 1.80 - 159.7 - (3.3) -
1.80 2.53 159.7 159.7 (3.3) (0.8)
The following table details the notional principal amounts and remaining terms
of exchange rate derivatives outstanding at 31 March:
Average exchange rate Foreign currency Notional principal Fair value
amount (asset)/liability
2015 2014rate 2015 2014US$m 2015 2014£m 2015 2014£m
rate US$m £m £m
Cash flow hedges
Cross currency swaps
Between two and five years 1.583 1.603 290.0 130.0 183.2 81.1 (9.4) 3.7
In excess of five years 1.591 1.577 118.0 278.0 74.2 176.3 (2.4) 14.6
1.585 1.585 408.0 408.0 257.4 257.4 (11.8) 18.3
As at 31 March 2015, the aggregate amount of unrealised losses in respect of
cash flow hedges was £nil (2014: £nil).
Interest rate sensitivity
The sensitivity analysis below has been determined based on the exposure to
interest rates for both non-derivative and derivative financial instruments at
the balance sheet date and represents management's assessment of possible
changes in interest rates. For the floating rate liabilities the analysis is
prepared assuming the amount of the liability at 31 March 2015 was outstanding
for the whole year:
Impact on profit Impact on equity
2015 2014 2015 2014
£m £m £m £m
Increase of 100 basis points 0.8 1.2 0.8 1.2
Increase of 50 basis points 0.5 0.7 0.5 0.7
Decrease of 25 basis points (0.3) (0.4) (0.3) (0.4)
Decrease of 50 basis points (0.6) (0.9) (0.6) (0.9)
Foreign exchange sensitivity
The sensitivity analysis below has been determined based on the exposure to
foreign exchange rates for derivative financial instruments at the balance
sheet date and represents management's assessment of changes to the fair value
of the Group's cross currency swaps as a result of possible changes in foreign
exchange rates:
Impact on profit Impact on equity
2015 2014 2015 2014
£m £m £m £m
Increase of 20% in the exchange spot rate (52.8) (47.2) (52.8) (47.2)
Increase of 10% in the exchange spot rate (28.8) (25.7) (28.8) (25.7)
Decrease of 10% in the exchange spot rate 35.2 31.4 35.2 31.4
Decrease of 20% in the exchange spot rate 79.3 70.8 79.3 70.8
Fair value of interest-bearing loans and borrowings
Book value Fair value Book value Fair value
2015 2015 2014 2014
£m £m £m £m
Level 1
£150.0 million 1.00% convertible bonds 2018 183.0 183.0 161.3 161.3
Level 2
Cross currency swaps (11.8) (11.8) 18.3 18.3
Interest rate floor (3.3) (3.3) (0.8) (0.8)
Other items not carried at fair value
£142.9 million 55⁄8% debenture stock 2029 144.0 179.1 144.1 158.0
Private placement notes 286.5 313.4 286.2 308.3
Other loan - - 2.6 2.6
Revolving credit facilities - bank loans 25.0 25.0 11.0 11.0
623.4 685.4 622.7 658.7
The fair value of the Group's listed convertible bonds has been estimated on
the basis of quoted market prices, representing Level 1 fair value
measurements as defined by IFRS 13 Fair Value Measurement. The fair value of
the Group's outstanding interest rate floor has been estimated by calculating
the present value of future cash flows, using appropriate market discount
rates, representing Level 2 fair value measurements as defined by IFRS 13. The
fair value
of the Group's cross currency swaps has been estimated on the basis of the
prevailing rates at the year end, representing Level 2 fair value measurements
as defined by IFRS 13. None of the Group's financial derivatives are
designated as financial hedges.
The fair values of the Group's cash and cash equivalents and trade payables
and receivables are not materially different from those at which they are
carried in the financial statements.
19 Finance leases
Finance lease obligations in respect of the Group's leasehold properties are
payable as follows:
Minimum Interest Principal Minimum Interest Principal
lease 2015 2015 lease 2014 2014
payments £m £m payments £m £m
2015 2014
£m £m
Less than one year 1.4 (1.4) - 1.5 (1.5) -
Between two and five years 5.8 (5.8) - 5.9 (5.9) -
More than five years 238.5 (210.0) 28.5 242.4 (213.3) 29.1
245.7 (217.2) 28.5 249.8 (220.7) 29.1
20 Share capital
2015 2015 2014 2014
Number £m Number £m
Allotted, called up and fully paid ordinary shares
of 12.5 pence
At 1 April and 31 March 343,926,149 43.0 343,926,149 43.0
At 31 March 2015, the Company's authorised share capital was 600,000,000
shares.
21 Investment in own shares
2015 2014
£m £m
At 1 April (1.0) 3.7
Employee Long-Term Incentive Plan and Share Matching Plan charge (3.5) (6.5)
Purchase of shares 19.1 4.1
Transfer to retained earnings (2.9) (2.3)
At 31 March 11.7 (1.0)
The investment in the Company's own shares is held at cost and comprises
2,854,551 shares (2014: 1,663,230 shares) held by the Great Portland Estates
plc LTIP Employee Share Trust which will vest for certain senior employees of
the Group if performance conditions are met. During the year, 1,385,643 shares
(2014: 1,975,805 shares) were awarded to directors and senior employees in
respect of the 2011 LTIP and SMP award and a further 2,576,964 shares (2014:
700,000 shares) were acquired by the Trust at an average cost of £7.43 per
share (2014: £5.79 per share). The fair value of shares awarded and
outstanding at 31 March 2015 was £5.2 million (2014: £11.8 million).
22 Adjustment for non-cash movements in the cash flow statement
2015 2014
£m £m
Surplus from investment property (380.6) (325.6)
Employee Long-Term Incentive Plan and Share Matching Plan charge 3.5 6.5
Spreading of tenant lease incentives (7.6) (9.2)
Profit on development management contracts (1.7) -
Share of results of joint ventures (84.7) (105.6)
Other non-cash items (0.1) -
Adjustments for non-cash items (471.2) (433.9)
23 Dividends
2015 2014
£m £m
Ordinary dividends paid
Interim dividend for the year ended 31 March 2015 of 3.5 pence per share 12.0 -
Final dividend for the year ended 31 March 2014 of 5.4 pence per share 18.5 -
Interim dividend for the year ended 31 March 2014 of 3.4 pence per share - 11.6
Final dividend for the year ended 31 March 2013 of 5.3 pence per share - 18.1
30.5 29.7
A final dividend of 5.5 pence per share was approved by the Board on 20 May
2015 and will be paid on 13 July 2015 to shareholders on the register on 29
May 2015. The dividend is not recognised as a liability at 31 March 2015. The
2014 final dividend and the 2015 interim dividend were paid in the year and
are included within the Group statement of changes in equity.
24 Operating leases
Future aggregate minimum rentals receivable under non-cancellable operating
leases are:
2015 2014
£m £m
The Group as a lessor
Less than one year 61.7 52.9
Between two and five years 175.9 174.7
More than five years 240.7 259.1
478.3 486.7
The Group leases its investment properties under operating leases. The
weighted average length of lease at 31 March 2015 was 6.9 years (2014: 7.0
years). All investment properties, except those under development, generated
rental income and no contingent rents were recognised in the year (2014:
£nil).
25 Employee benefits
The Group contributes to a defined benefit final salary pension plan ('the
Plan'), the assets of which are held by trustees separately from the assets of
the Group. The Plan has been closed to new entrants since April 2002. The most
recent actuarial valuation of the Plan was conducted at 1 April 2015 by a
qualified independent actuary using the projected unit method. The Plan was
valued using the following main assumptions:
2015 2014
% %
Discount rate 3.40 4.60
Expected rate of salary increases 4.00 4.40
RPI inflation 3.00 3.40
Future pension increases 5.00 5.00
The amount recognised in the balance sheet in respect of the Plan is as
follows:
2015 2014
£m £m
Present value of unfunded obligations (31.7) (24.4)
Fair value of the Plan assets 28.5 23.7
Pension liability (3.2) (0.7)
Amounts recognised as administration expenses in the income statement are as
follows:
2015 2014
£m £m
Current service cost (0.3) (0.3)
Net interest cost - -
(0.3) (0.3)
Actuarial deficit recognised immediately in the Group statement of changes in equity (3.1) (0.7)
Cumulative actuarial (deficit)/gain recognised in the Group statement of changes in equity (2.4) 0.7
Changes in the present value of the pension obligation are as follows:
2015 2014
£m £m
Defined benefit obligation at 1 April 24.4 23.1
Service cost 0.3 0.3
Interest cost 1.1 1.1
Effect of changes in demographic assumptions - 0.6
Effect of changes in financial assumptions 6.2 (0.1)
Effect of experience adjustments 0.3 -
Benefits paid (0.6) (0.6)
Present value of defined benefit obligation at 31 March 31.7 24.4
Changes to the fair value of the Plan assets are as follows:
2015 2014
£m £m
Fair value of the Plan assets at 1 April 23.7 22.8
Expected return on the Plan assets 1.1 1.1
Actuarial gain/(loss) 3.4 (0.2)
Contributions 0.9 0.5
Benefits paid (0.6) (0.5)
Fair value of the Plan assets at 31 March 28.5 23.7
Net liability (3.2) (0.7)
The fair value of the Plan assets at the balance sheet date is analysed as
follows:
2015 2014
£m £m
Equities 11.4 9.9
Bonds 17.1 13.8
28.5 23.7
Life expectancy assumptions at age 65:
2015 2014
Years Years
Retiring today age 65 24 24
Retiring in 25 years (age 40 today) 26 26
The Group expects to contribute £1.0 million to the Plan in the year ended 31
March 2016.
Responsibility statement
The statement of Directors' responsibilities below has been prepared in
connection with the Company's full Annual Report for the year ended 31 March
2015. Certain parts of the Annual Report have not been included in the
announcement as set out in note 1 of the financial information. We confirm
that to the best of our knowledge:
· the financial statements, prepared in accordance with the relevant financial
reporting framework, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole;
· the strategic report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face; and
· the annual report and financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Company's performance, business model and
strategy.
Approved by the Board on 20 May 2015 and signed on its behalf by
Toby Courtauld Nick Sanderson
Chief Executive Finance Director
Glossary
Building Research Establishment Environmental Assessment Methodology (BREEAM)
Building Research Establishment method of assessing, rating and certifying the
sustainability of buildings.
Core West End
Areas of London with W1 and SW1 postcodes.
Earnings Per Share (EPS)
Profit after tax divided by the weighted average number of ordinary shares in
issue.
EPRA adjustments
Standard calculation methods for adjusted EPS and NAV as set out by the
European Public Real Estate Association (EPRA) in their Best Practice and
Policy Recommendations.
Estimated Rental Value (ERV)
The market rental value of lettable space as estimated by the Company's
valuers at each balance sheet date.
Fair value - Investment property
The amount as estimated by the Company's valuers for which a property should
exchange on the date of valuation between a willing buyer and a willing seller
in an arm's-length transaction after proper marketing wherein the parties had
each acted knowledgeably, prudently and without compulsion. In line with
market practice, values are stated net of purchasers' costs.
IPD
The Investment Property Databank Limited (IPD) is a company that produces an
independent benchmark of property returns.
IPD central London
An index, compiled by IPD, of the central and inner London properties in their
March annual valued universes.
Like-for-like portfolio
Properties that have been held for the whole of the period of account.
Loan To Value (LTV)
Total bank loans, private placement notes, convertible bonds at nominal value
and debenture stock, net of cash (including our share of joint ventures
balances), expressed as a percentage of the market value of the property
portfolio (including our share of joint ventures).
Net assets per share or Net Asset Value (NAV)
Equity shareholders' funds divided by the number of ordinary shares at the
balance sheet date.
Net gearing
Total Group borrowings (including the convertible bonds at nominal value) less
short-term deposits and cash as a percentage of equity shareholders' funds,
calculated in accordance with our bank covenants.
Net initial yield
Annual net rents on investment properties as a percentage of the investment
property valuation having added notional purchaser's costs.
Non-PIDs
Dividends from profits of the Group's taxable residual business.
PMI
Purchasing Managers Index.
Portfolio Internal Rate of Return (IRR)
The rate of return that if used as a discount rate and applied to the
projected cash flows from the portfolio would result in a net present value of
zero.
Property Income Distributions (PIDs)
Dividends from profits of the Group's tax-exempt property rental business.
REIT
UK Real Estate Investment Trust.
Rent roll
The annual contracted rental income.
Reversionary
The percentage by which ERV exceeds rents passing, together with the estimated
rental value of vacant space.
Reversionary yield
The anticipated yield, which the initial yield will rise to once the rent
reaches the ERV.
Total Property Return (TPR)
Capital growth in the portfolio plus net rental income derived from holding
these properties plus profit on sale of disposals expressed as a percentage
return on the period's opening value.
Total Shareholder Return (TSR)
The growth in the ordinary share price as quoted on the London Stock Exchange
plus dividends per share received for the period expressed as a percentage of
the share price at the beginning of the period.
Triple Net Asset Value (NNNAV)
NAV adjusted to include the fair value of the Group's financial liabilities on
a diluted basis.
True equivalent yield
The constant capitalisation rate which, if applied to all cash flows from an
investment property, including current rent, reversions to current market rent
and such items as voids and expenditures, equates to the market value having
taken into account notional purchaser's costs. Assumes rent is received
quarterly in advance.
Vacancy rate
The element of a property which is unoccupied but available for letting,
expressed as the ERV of the vacant space divided by the ERV of the total
portfolio.
Weighted Average Unexpired Lease Term (WAULT)
The Weighted Average Unexpired Lease Term expressed in years.
This information is provided by RNS
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