REG - Great Portland Ests. - Great Portland Estates Half Year Results 2016 <Origin Href="QuoteRef">GPOR.L</Origin> - Part 3
17/11/2016 07:17
- Part 3: For the preceding part double click ID:nRSQ3992Pb
25.5 $40.0 million 4.82% private placement notes 2022 25.5 25.4
Non-current liabilities at fair valueUnsecured
169.5 £150.0 million 1.00% convertible bonds 2018 159.2 189.3
600.2 756.7 706.2
The Group has a floating rate £450.0 million revolving credit facility. The
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 2020 which
may be extended by a maximum further year on our request and on each bank's
approval for its participation. In October 2016, the maturity of this facility
was extended by one year to 2021. At 30 September 2016, the Group had £282
million (2015: £362.0 million) of undrawn committed credit facilities.
15 Interest-bearing loans and borrowings (continued)
The Group's convertible bonds have a fixed coupon of 1.0% per annum and an
initial conversion price of £7.15 per share, representing a premium of 35%
above the volume weighted average price of the Company's shares from launch to
pricing. In accordance with IAS39, the Convertible Bonds have been designated
at fair value through profit and loss upon initial recognition, with any gains
or losses arising on subsequent re-measurement recognised in the income
statement.
At 30 September 2016, properties with a carrying value of £386.6 million
(2015: £397.7 million) were secured under the Group's debenture stock. The
following table details the notional principal amounts and remaining terms of
interest rate derivatives outstanding at 30 September:
Average contracted fixed interest rate Notional principal amount Fair value asset/(liability)
Cash flow hedges 30 September 2016 30 September 2015 30 September 2016 30 September 2015 30 September 2016 30 September 2015
% % £m £m £m £m
Interest rate floor
Between two and three years 1.80 1.80 159.7 159.7 1.5 2.5
1.80 1.80 159.7 159.7 1.5 2.5
The following table details the notional principal amounts and remaining terms
of exchange rate derivatives outstanding at 30 September:
Average exchange rate Foreign currency Notional principal amount Fair value asset/(liability)
Cash flow hedge - cross currency swaps 30 September 2016 30 September 2015 30 September 2016 30 September 2015 30 September 2016 30 September 2015 30 September 2016 30 September 2015
rate rate US$m US$m £m £m £m £m
Between two and five years 1.587 1.583 368.0 290.0 231.9 81.1 47.1 7.1
In excess of five years 1.566 1.591 40.0 118.0 25.5 176.3 4.1 2.4
1.585 1.585 408.0 408.0 257.4 257.4 51.2 9.5
The Group operates solely in the United Kingdom, and all of its operating
profits and net assets are sterling denominated. It entered into cross
currency swaps in order to ensure the US dollar liability streams generated
from the US dollar private placement notes were fully hedged into sterling for
the life of the transactions. Through entering into the cross currency swaps
the Group has created synthetic sterling fixed rate liabilities totalling
£257.4 million.
Fair value of financial liabilities/(assets)
31 March 31 March Fair value hierarchy 30 September 30 September 30 September 30 September
2016 2016 2016 2016 2015 2015
Book value Fair value Book value Fair value Book value Fair value
£m £m £m £m £m £m
Level 1
169.5 169.5 £150.0 million 1.00% convertible bond 2018 159.2 159.2 189.3 189.3
Level 2
(22.3) (22.3) Cross currency swaps (51.2) (51.2) (9.5) (9.5)
(2.0) (2.0) Interest rate floor (1.5) (1.5) (2.5) (2.5)
Other items not carried at fair value
144.0 172.3 £142.9 million 5.625% debenture stock 2029 143.9 182.0 144.0 165.2
286.7 333.9 Private placement notes 286.8 360.5 286.6 310.7
- - Bank loans and overdrafts 166.8 166.8 86.3 86.3
575.9 651.4 704.0 815.8 694.2 739.5
The fair values of the Group's listed convertible bonds have 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 period 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.
16 Share capital
Year to Year to Six months to Six months to Six months to Six months to
31 March 31 March 30 September 30 September 30 September 30 September
2016 2016 2016 2016 2015 2015
Number £m Number £m Number £m
Allotted, called up and fully paid
343,926,149 43.0 At the beginning of the period 343,926,149 43.0 343,926,149 43.0
343,926,149 43.0 At the end of the period 343,926,149 43.0 343,926,149 43.0
17 Investment in own shares
Year to Six months to Six months to
31 March 30 September 30 September
2016 2016 2015
£m £m £m
11.7 At the beginning of the period 9.1 11.7
(4.2) Employee Long-Term Incentive Plan and Share Matching Plan charge (1.3) (2.7)
8.1 Purchase of shares - -
(6.5) Transfer to retained earnings (4.3) (6.5)
9.1 At the end of the period 3.5 2.5
The investment in the Company's own shares is held at cost and comprises
1,804,412 shares (31 March 2016: 2,569,477 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 period 765,065 shares (2015: 1,435,074 shares) were awarded to
directors and senior employees in respect of the 2013 LTIP award. The fair
value of shares awarded and outstanding at 30 September 2016 was £6.3 million
(2015: £14.0 million).
18 Adjustment for non-cash movements in the cash flow statement
Year to Six months to Six months to
31 March 30 September 30 September
2016 2016 2015
£m £m £m
(422.2) Deficit/(surplus) from investment property 90.3 (301.2)
4.2 Employee Long-Term Incentive and Share Matching Plan charge 1.3 2.7
(3.0) Spreading of tenant lease incentives (1.0) (2.6)
(4.0) Profit on development management contracts - (2.3)
(66.8) Share of results from joint ventures 37.9 (57.1)
- Other items - (0.2)
(491.8) Adjustments for non-cash items 128.5 (360.7)
19 Dividends
The declared interim dividend of 3.7 pence per share (2015: 3.6 pence per
share) was approved by the Board on 17 November 2016 and is payable on 3
January 2017 to shareholders on the register on 25 November 2016. The dividend
is not recognised as a liability in the half year results. The final dividend
from the year ended 31 March 2016 of £19.1 million was paid on 11 July 2016
and is included within the Group Statement of Changes in Equity.
20 Operating leases
Future aggregate minimum rentals receivable under non-cancellable operating
leases are:
31 March 30 September 30 September
2016 2016 2015
£m £m £m
The Group as a lessor
70.2 Less than one year 74.3 74.3
189.8 Between one and five years 195.9 209.6
149.9 More than five years 142.3 267.1
409.9 412.5 551.0
The Group leases its investment properties under operating leases. The
weighted average length of lease at 30 September 2016 was 4.9 years (2015: 6.5
years). All investment properties except those under development generated
rental income and no contingent rents were recognised in the period (2015:
£nil).
21 Reserves
The following describes the nature and purpose of each reserve within equity:
Share capital
The nominal value of the Company's issued share capital, comprising 12.5 pence
ordinary shares.
Share premium
Amount subscribed for share capital in excess of nominal value less directly
attributable issue costs.
Capital redemption reserve
Amount equivalent to the nominal value of the Company's own shares acquired as
a result of share buy-back programmes.
Retained earnings
Cumulative net gains and losses recognised in the Group income statement
together with other items such as dividends.
Investment in own shares
Amount paid to acquire the Company's own shares for its Employee Long-Term
Incentive Plan and Share Matching Plan less accounting charges.
Directors' responsibility statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting';
(b) the half-yearly report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
(c) the half-yearly report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related party transactions and changes
therein).
By the order of the Board
Toby Courtauld Nick Sanderson
Chief Executive17 November 2016 Finance Director17 November 2016
Independent review report to Great Portland Estates plc
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2016 which comprises the condensed group income statement, the
condensed group statement of comprehensive income, the condensed group balance
sheet, the condensed group statement of cash flows, the condensed group
statement of changes in equity and related notes 1 to 21. We have read the
other information contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity"
issued by the Auditing Practices Board. Our work has been undertaken so that
we might state to the company those matters we are required to state to it in
an independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our review work, for this report, or for the conclusions
we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority. As
disclosed in note 1, the annual financial statements of the group are prepared
in accordance with IFRSs as adopted by the European Union. The condensed set
of financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34, "Interim
Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2016 is not prepared,
in all material respects, in accordance with International Accounting Standard
34 as adopted by the European Union and the Disclosure and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, UK
17 November 2016
Directors and shareholders' information
Directors
Martin SciclunaChairman, Non-Executive Nick HamptonNon-Executive Director
Toby Courtauld Chief Executive Elizabeth HoldenNon-Executive Director
Nick SandersonFinance Director Charles PhilippsNon-Executive Director
Neil ThompsonExecutive Director Jonathan ShortNon-Executive Director
Shareholders' information
Financial calendar 2016
Ex-dividend date for interim dividend 24 November
Registration qualifying date for interim dividend 25 November
2017
Interim dividend payable 3 January
Announcement of full year results 24 May*
Circulation of Annual Report and Accounts 2017 3 June*
Annual General Meeting 6 July*
Final dividend payable 10 July*
*Provisional.
Shareholder enquiries Dividend payments
All enquiries relating to holdings of shares, bonds or debentures in Great Portland Estates, including notification of change of address, queries regarding dividend/interest payments or the loss of a certificate, should be addressed to the Company's As a REIT, dividend payments must be split between PIDs and
Registrars: Capita Registrars non-PIDs. Information in respect of the tax consequences for shareholders of receiving dividends can be found on the Company's website at www.gpe.co.uk/investors/shareholder-information/reits Share dealing service
34 Beckenham Road An online and telephone dealing service is available for UK shareholders through Capita Deal. For further information on this service, or to buy and sell shares, please contact:Online dealing - www.capitadeal.comTelephone dealing - 0371 664 0445 (Calls are charged at the standard geographical rate and will vary by provider; lines
Beckenham are open 8.00am - 4.30pm Monday to Friday).
Kent
BR3 4TU
Tel: 0871 664 0300 E-mail: ssd@capitaregistrars.com(Calls cost 12 pence per minute plus network extras; lines are open 9.00am - 5.30pm Monday to Friday.) If you are calling from overseas, please dial +44 371 664 0300. Website
The Company has a corporate website which holds, amongst other information, a copy of our latest annual report and accounts, a list of properties held by the Group and press announcements released over the last twelve months. The site can be found on
www.gpe.co.uk Company SecretaryDesna Martin Registered office:33 Cavendish Square
London W1G 0PW
Tel: 020 7647 3000
Fax: 020 7016 5500
Registered Number: 596137
Glossary
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
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
monthly and quarterly 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 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 debt
The book value of the Group's bank and loan facilities, private placement
notes and debenture loans plus the nominal value of the convertible bond less
cash and cash equivalents.
Net gearing
Total borrowings less short-term deposits and cash as a percentage of adjusted
equity shareholders' funds.
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.
Return on shareholders' equity
The growth in the EPRA diluted net assets per share plus dividends per share
for the period expressed as a percentage of the EPRA net assets per share at
the beginning of the period.
Glossary (continued)
Reversionary or under-rented
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 as calculated by IPD.
TMT
Technology, Media and Telecoms sector
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
The company news service from the London Stock ExchangeRecent 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