Picton Property Inc. - Half Year Results
12/11/2024 07:00
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RNS Number : 7818L Picton Property Income Limited 12 November 2024
12 November 2024
PICTON PROPERTY INCOME LIMITED
('Picton', the 'Company' or the 'Group')
LEI: 213800RYE59K9CKR4497
Half Year Results
Picton announces its half year results for the period to 30 September 2024.
Commenting on the results, Michael Morris, Chief Executive of Picton, said:
"We are pleased with the progress we have made during the period delivering
EPRA earnings growth of nearly 12% compared to this time last year. Net assets
have increased and we continue to operate with a fully covered dividend.
We have improved occupancy and further invested into upgrading our portfolio.
With asset disposal proceeds we have also fully repaid floating rate debt,
with the remaining facilities now 100% fixed, with a seven-year maturity
profile.
We are progressing our portfolio repositioning strategy and are also
encouraged by our pipeline of asset management activity. Alongside our
investment into our portfolio this will drive occupancy, income and capital
growth."
Positive financial results, with return to profit and strong EPRA earnings
growth
• EPRA earnings of £11.2 million, or 2.1p per share, 11.6% higher than the
six-month period to September 2023
• £11.5 million profit with net rental income growth and lower financing costs
• Dividends paid of £10.1 million (1.85p per share) with dividend cover of 111%
supporting the 5.7% dividend increase, effective May 2024
• Net assets of £525 million, or 96p per share, an increase of 0.3% over the
six-month period to September 2024
• EPRA net disposal value of £548 million, or 101p per share
• NAV total return of 2.2% and shareholder total return of 17.4% over the
six-month period to September 2024
Property portfolio delivering capital, income and rental growth over the
six-month period
• Like-for-like portfolio valuation increase of 0.8% reflecting stabilising
property valuations
• Like-for-like increases in contracted rent of 1.0% and estimated rental value
('ERV') growth of 1.6%
• New lettings securing annual contracted rent of £1.6 million, 9% ahead of the
March 2024 ERV
• Lease renewals and regears securing a 14% uplift in annual contracted rent to
£3.7 million, 7% ahead of the March 2024 ERV
Continued reduction in office exposure to improve occupancy and support income
growth
• Portfolio weighted towards industrial sector 62%, office 27% and retail and
leisure 11%
• Office exposure reduces to 25% excluding two assets identified for alternative
use and held for sale
• Occupancy of 92%, increasing to 94% excluding two assets held for sale
• Progress on alternative use asset disposals: one disposal completed, one
completion expected before the end of the financial year and one asset being
marketed for sale
Upgraded portfolio to improve environmental performance and value
• £4.2 million invested into upgrading projects principally across 15 assets
• Net zero pathway progress, with two solar installations completed and nine
projects on-site to remove gas or install solar
• Continued focus on improving EPC ratings, with 81% now rated A-C (improved
from 80% in March 2024)
• External accreditation with improved GRESB score and maintained EPRA Gold
rating for both financial and sustainability reporting
Proactive management of debt
• Loan to value ratio of 25% (March 2024: 28%)
• Fully repaid floating rate debt using proceeds from Angel Gate disposal
• Undrawn £50 million revolving credit facility
• Total borrowings of £210 million, with 100% at fixed rates and a weighted
average interest rate of 3.7%
• Weighted average debt maturity of 7.2 years
• Reported net assets exclude positive debt fair value adjustment of £23
million, equivalent to 4p per share
Property portfolio and performance
30 Sept 2024 31 March 2024
Property valuation £721m £745m
Number of properties 48 49
Net initial yield 5.1% 5.2%
Reversionary yield 6.9% 7.0%
Occupancy 92% 91%
Occupancy (excl. assets held for sale) 94% 93%
Passing rent £42.8m £44.7m
Passing rent - LfL* £42.8m £43.7m
Contracted rent £47.9m £48.7m
Contracted rent - LfL* £47.9m £47.5m
ERV £56.4m £57.6m
ERV - LfL* £56.4m £55.5m
Property total return** 2.5% 1.6%
MSCI benchmark total return** 2.7% (1.0)%
* LfL denotes a like-for-like basis excluding the disposal in the period
** Six months to September 2024 and 12 months to March 2024
Financial overview
Balance sheet 30 Sept 2024 31 March 2024
Net asset value ('NAV') £525m £524m
EPRA net tangible assets ('NTA') per share 96p 96p
EPRA net disposal value ('NDV') per share 101p 101p
Borrowings £210m £228m
Loan to value ratio ('LTV') 25% 28%
Six months to Six months to
Income statement 30 Sept 2024 30 Sept 2023
EPRA earnings £11.2m £10.0m
Profit/(loss) after tax £11.5m £(1.4)m
Earnings/(loss) per share 2.1p (0.3)p
EPRA earnings per share 2.1p 1.8p
Company returns and performance
Six months to Six months to
30 Sept 2024 30 Sept 2023
Total NAV return 2.2% (0.2)%
Total shareholder return 17.4% 1.1%
Total dividend per share 1.85p 1.75p
Dividend cover 111% 105%
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE UK
MARKET ABUSE REGULATION
For further information:
Picton
Kathy Thompson, Company Secretary
020 7011 9988, kathy.thompson@picton.co.uk
Tavistock
James Verstringhe
020 7920 3150, james.verstringhe@tavistock.co.uk
(mailto:james.verstringhe@tavistock.co.uk)
About Picton
Established in 2005, Picton is listed on the main market of the London Stock
Exchange and is a constituent of a number of EPRA indices including the FTSE
EPRA Nareit Global Index.
Picton owns and actively manages a £721 million UK commercial property
portfolio, invested across 48 assets and with around 350 occupiers (as at 30
September 2024).
Through an occupier focused, opportunity led approach, Picton aims to be one
of the consistently best performing diversified UK REITs and has delivered
upper quartile outperformance and a consistently higher income return than the
MSCI Quarterly Property Index since launch.
With a portfolio strategically positioned to capture income and capital
growth, currently weighted towards the industrial sector, Picton's agile
business model provides flexibility to adapt to evolving market trends over
the long-term.
Picton has a responsible approach to business and is committed to being net
zero carbon by 2040.
For more information please visit: www.picton.co.uk
BUSINESS OVERVIEW
Against a backdrop of stabilising UK commercial property values, these results
show encouraging progress over the last six months, as demonstrated by
improved earnings, underpinned by our capital structure and the positive
valuation movement within our property portfolio.
Financial performance
We have delivered 11.6% growth in EPRA earnings, compared with this time last
year, which reflects our portfolio activity, including an asset disposal and
repayment of debt. Profit after tax was £11.5 million compared with a loss of
£1.4 million in the first half of last year. Further detail is provided in
the Financial Review.
During the period, we increased our dividend by 6%, and we have sustained a
healthy level of cover at 111%.
Positive portfolio valuation
Our property portfolio rose in value by 0.8% on a like-for-like basis, driven
primarily by gains in the industrial and retail warehouse assets.
The portfolio is currently weighted 62% to the industrial, warehouse and
logistics sector. We continue to reduce office exposure, with the disposal of
assets that have been repositioned for alternative use. Our retail exposure,
which is predominantly in retail warehouse assets, remains unchanged over the
period.
Improving income and occupancy through asset repositioning
We are seeing the positive impact of our portfolio repositioning activity that
we started last year.
Our office exposure has reduced to 27% and will further reduce to 25% with the
planned disposals of Longcross, Cardiff and Charlotte Terrace, London, having
secured planning for alternative use options.
In part, by virtue of the need to be able to provide vacant possession for the
above, headline occupancy only increased from 91% to 92%. However, excluding
these assets, occupancy increases to 94%.
Of our total vacancy, 32% is in assets classified for alternative use and held
for sale, 43% is in offices,15% is in industrial and the remaining 10% is in
the retail and leisure sector of the portfolio.
Capital structure
We have a strong balance sheet and a highly attractive debt position. All our
drawn debt is fixed with a weighted maturity of more than seven years. Our
current loan to value ratio is a conservative 25% and we have a £50 million
undrawn facility.
During the period, we repaid all our higher rate floating debt with the
proceeds from the Angel Gate sale, which has reduced finance costs.
The value of our debt structure is reflected in our EPRA net disposal value
('NDV') being £23 million higher than our reported net assets.
Governance
We welcomed to the Board a new Chief Financial Officer, Saira Johnston, on 1
April 2024 and a new Non-Executive Director and Remuneration Committee Chair,
Helen Beck, on 1 August 2024, succeeding Andrew Dewhirst and Maria Bentley
respectively.
We also recently announced that our Chair, Lena Wilson, will step down from
the Board at the end of January 2025. Mark Batten, our Senior Independent
Director, is acting as interim Chair of the Nomination Committee and leading
the process to find a suitable replacement, which we expect to announce in
early 2025.
Sustainability progress
We have made good progress improving the environmental credentials of our
portfolio through our refurbishments and are working to set interim targets to
meet our 2040 net zero commitments, collaborating with our occupiers and
suppliers to gain alignment.
Our approach has always been to reinvest in the portfolio to improve its
quality and maintain and grow both income and value over the medium and
long-term. Increasingly, these projects include more energy efficiency and
on-site renewable measures where practical, thus reducing our reliance on
carbon-intensive fuels such as gas. As part of upgrading our assets prior to
leasing, we have completed two solar renewable energy projects on industrial
units with a total capacity of 0.05 MWp.
During the period, our EPC ratings improved from 80% to 81% A-C, by ERV.
We are pleased to have improved our GRESB score, which increased to 81 points
(2023: 77 points). In addition, we have maintained our EPRA Gold award for our
2024 Annual Report and our sustainability reporting.
Listed market
We were pleased to see a recovery in our share price which has reacted
positively to our progress, up 14% over the six months to September 2024, but
there is still more to be done particularly recognising share price movements
post period end.
Like many listed real estate companies, our shares still trade at a discount
to NAV, but we are not complacent. We recognise the need to further grow
earnings and are focused on capturing the portfolio's reversionary potential
that will enable this. We recognise the evolving landscape in both the listed
and unlisted real estate markets, but firmly believe the REIT structure
remains one of the best ways to access this asset class.
The team is aligned with the interests of shareholders through the company's
employee share based incentive plans and during the period the employee
benefit trust has acquired 2,100,000 shares to hedge against future
commitments.
Our long-term upper quartile outperformance against the MSCI UK Quarterly
Property Index demonstrates the value of our income focused, total return
approach. Diversification enables us to pivot the portfolio as market
conditions evolve over time.
Outlook
We have now seen a change of Government and two reductions in the base rate.
UK commercial property capital values have started to react positively with
the MSCI UK Quarterly Property Index showing recent increases in some
sub-markets. Moving forward, we expect to see signs of a more stable macro
environment and, following the repricing of the retail and office sectors, we
expect medium-term returns across all sectors to be more convergent, with
stock selection and asset management becoming increasingly important.
With the repricing in the commercial property market since 2022, in many
instances values are below the cost of construction. We have been encouraged
by the recent investment opportunities being marketed and have been
undertaking due diligence on assets, primarily in the retail and industrial
sectors.
There has undoubtedly been some business uncertainty around the change of
Government and the Autumn Budget. Despite this, occupational markets remain
resilient, with rents moving forward, especially for better quality
accommodation.
We are encouraged by the prospect of improving occupancy within the portfolio
as we reduce office exposure, with identified assets expected to be sold
before the end of the financial year. Not only will this reduce void costs,
but it will also enable us to reinvest proceeds on an earnings-accretive
basis.
There are three key drivers to income and earnings growth: enhancing occupancy
thereby increasing income and reducing void hold costs, capturing rental
reversion, particularly in the industrial sector, and scaling the business to
be able to improve operational efficiencies.
The team remains focused on unlocking potential in our portfolio and capturing
upside from new opportunities.
MARKET OVERVIEW
Economic backdrop
During the last six months, the UK economic backdrop has been impacted by the
early election and the change in Government. Falling inflation allowed the
Bank of England to begin its base rate cutting cycle in August, with the first
25 basis point reduction since March 2020. This was followed by a second 25
basis point reduction in November, which brought the base rate down to 4.75%.
Recent events, including the Labour Government's Autumn Budget and the
election result in the US, have caused volatility in the equity and bond
markets. The ten-year UK Government bond yield has edged above 4.5% and the
five-year SONIA swap rate is now approximately 4.0%, up from a September low
of approximately 3.5%.
Annual CPI inflation fell to 1.7% in September 2024, down from 2.2% in August
and below the Bank of England's 2% target for the first time since April 2021.
Inflation is expected to remain close to target in 2025, allowing interest
rates to fall further.
UK Gross Domestic Product is estimated to have grown by 0.5% in the quarter to
June 2024. According to more recent data from the Office of National
Statistics ('ONS'), monthly GDP was flat in July and grew 0.2% in August. The
UK Composite PMI shows that business confidence remains reasonably robust
despite a drop in October, indicative of further economic growth. Consumer
data was quite volatile over the period. Retail sales volumes were affected by
adverse weather conditions in early summer but did see consistent growth
between July and September. Consumer confidence as measured by GfK, had been
improving, but dropped sharply in September in anticipation of the Autumn
Budget and the potential impacts on personal finances. Household debt is still
rising, as lower fixed-rate mortgages come to the end of their term, but the
household savings ratio has been increasing for the last two years, indicating
that households are adopting a somewhat precautionary view.
The labour market continues to ease, having seen a cooling in labour demand
and wage growth. Job vacancies have been on a downward trend since peaking in
May 2022. Although wage growth has reduced, it is still positive with the
annual growth in wages to August 2024 adjusted for inflation being 1.9% for
regular pay. The unemployment rate reduced to 4.0% for the three months to
August 2024.
Improved economic stability combined with lower interest rates is expected to
provide a more favourable and predictable environment for investors. This is
caveated with potential ramifications from the conflicts in the Middle East,
Eastern Europe and the changing political landscape in the United States in
particular.
UK property market
The MSCI UK Quarterly Property Index showed a total return for All Property
for the six months to September 2024 of 2.7%, with an income return of 2.4%
and capital growth of 0.3%. This compares with capital growth of -2.9% for the
six months to March 2024. Capital values and yields have begun to stabilise,
with the All Property net initial yield recorded at 4.9% in September 2024,
compared to 5.1% in March 2024. According to MSCI, investment volumes for the
six months to September 2024 were £22.5bn, 14% higher than the same period
last year.
Positive rental growth was recorded in 92% of core market segments for the six
months to September 2024. All Property rental growth was 1.9% for the period,
compared with 1.8% for the six months to March 2024. Although capital invested
to achieve rental growth is not reflected in this data, occupier market
fundamentals remain favourable.
Occupancy at an All Property level decreased slightly over the six months,
with the MSCI UK Quarterly Property Index recording an occupancy rate of 91%
for September 2024, down from 92% in March 2024.
The market performance for the six months to September 2024 for All Property
and the three main sectors is shown below.
Six months to 30 September 2024 All Property Industrial Office Retail
Total Return 2.7% 3.8% 0.0% 4.1%
Income Return 2.4% 2.2% 2.1% 2.9%
Capital Growth 0.3% 1.6% -2.0% 1.2%
Number of segments with positive capital growth 11 5 0 6
Number of segments with negative capital growth 13 0 7 6
ERV Growth 1.9% 2.9% 1.6% 1.0%
Number of segments with positive ERV growth 22 5 7 10
Number of segments with negative ERV growth 2 0 0 2
PORTFOLIO REVIEW
Performance
Our portfolio comprises 48 assets, with around 350 occupiers, and was valued
at £721 million as at 30 September 2024 with a net initial yield of 5.1% and
a reversionary yield of 6.9%. The average lot size of the portfolio is £15
million.
Over the six months, the portfolio has delivered a total return of 2.5%
compared to the MSCI UK Quarterly Property Index which delivered 2.7%. We
continue to outperform MSCI over twelve months, with long-term upper quartile
outperformance since launch in 2005. A breakdown of the portfolio and
valuation movements is as follows:
Sector Portfolio Sept 24 Like-for-like
weightings valuation change
Industrial 62.0% £447.3m 1.7%
South East 44.1%
Rest of UK 17.9%
Office 26.9% £193.9m -1.0%
London City and West End 7.5%
South East 7.6%
Rest of UK 8.8%
Alternative use assets 3.0%
Retail and Leisure 11.1% £80.1m 0.4%
Retail warehouse 7.1%
High Street - Rest of UK 2.3%
Leisure 1.7%
Total 100% £721.3m 0.8%
Angel Gate, London was sold during the period, reducing our office exposure
from 30% to 27%. This exposure will reduce further to 25% assuming the
disposals of Longcross, Cardiff and Charlotte Terrace, London, which are
classified as alternative use assets.
Overall, the like-for-like valuation increased by 0.8% over the period, which
reflects a stabilisation in property values and investment into upgrading
assets, which is further detailed below. The industrial assets saw a 1.7%
valuation increase over the half year, and the retail and leisure assets
increased by 0.4%, while the office assets had a negative valuation movement
of 1.0%. Investment into the office assets limited some of the declines seen
in the wider market, as space was upgraded, improving rental values. The full
impact of these projects will only be seen once the works are completed and
space re-leased.
The portfolio's estimated rental value is £56.4 million per annum, a
like-for-like increase of 1.6%, with all three sectors showing positive ERV
growth as follows:
- Industrial: 1.1%
- Office: 2.3%
- Retail and Leisure: 2.0%
The contracted annual rent of the portfolio as at 30 September 2024 was £47.9
million. The reversionary potential comprises £4.8 million of void income, of
which 32% will be crystalised through asset disposals, and £3.7 million of
reversionary income, which will be captured by resetting rents to market
level.
In the industrial sector we are seeing demand at our multi-let industrial
estates and continue to capture rental growth through new lettings, renewals
and rent reviews. Our five distribution warehouses remain fully leased and
during the period we extended the lease of our second largest occupier in
Grantham by 13 years, which led to a significant valuation uplift.
We are delivering rental growth in the office portfolio, which reflects our
ongoing programme to decarbonise and upgrade our assets to meet occupier
requirements. Where appropriate, we have pivoted to higher value alternative
use strategies as described further below.
The retail portfolio remains well occupied. Two units were vacated at the end
of the period and on one, we have already secured planning consent for a
change of use to leisure with terms agreed for re-letting.
Proactive asset management
There has been positive asset management activity, delivering income growth
and proving rental value growth across the portfolio, including:
- 12 lettings or agreements to lease, 9% ahead of the March ERV and
securing new contracted annual rent of £1.6 million which includes:
- six office transactions
- five industrial transactions
- one retail transaction
- 16 lease renewals or regears, 7% ahead of the March ERV, securing a
14% uplift in contracted annual rent of £0.5 million which includes:
- two office transactions
- ten industrial transactions
- four retail transactions
- Six rent reviews, 9% ahead of March ERV, securing a 26%, or
£0.3 million, uplift in passing rent
- Two lease variations to remove occupier break options, securing
contracted annual rent of £0.3 million
- Two lease surrenders in order to facilitate alternative use
strategies and one agreement to surrender
On a like-for-like basis contracted rent increased over the period by 1% to
£47.9 million per annum.
Occupancy
Occupancy increased during the period from 91% to 92% with a total void ERV of
£4.8 million. During the period we made progress on key repositioning
strategies which are outlined below.
- Angel Gate, London - following the successful strategy to secure
residential conversion rights for the largest void property in the portfolio,
we completed its sale for £29.6 million, reflecting a 5% premium to the
preceding valuation.
- Longcross, Cardiff - we received a resolution to grant planning
consent for 706 beds across 488 units for this asset, which accounts for 18%
of the total portfolio void, having previously exchanged contracts to sell the
asset to a student accommodation developer. Completion of the disposal will
follow receipt of a satisfactory section 106 agreement, which is being
finalised. This has delivered a 17% valuation uplift in the half year.
- Charlotte Terrace, London - the property, which accounts for 14% of
the total portfolio void, is being marketed for disposal after we received
planning consent for change of use of part to residential.
Assuming the above initiatives are concluded, occupancy increases to 94%,
which compares to the MSCI UK Quarterly Property Index occupancy rate of 91%
as at 30 September 2024.
Our industrial portfolio is 98% leased and we only have seven vacant units, of
which two are under offer. The office portfolio occupancy is 83% but rises to
89% assuming the planned disposals referred to above are concluded. Retail and
leisure occupancy was 93% at the half year end.
Our top five voids, excluding the assets held for sale, equates to 39% of the
total vacancy as follows:
- Colchester Business Park, Essex - Office - 14% of the portfolio
void. This is a single office building that we are refurbishing to a high
specification, which includes decarbonising the property and improving
occupier amenities.
- Metro, Salford Quays, Manchester - Office - 9% of the portfolio
void. We have a single refurbished floor available to lease at the building,
which benefits from excellent public transport links.
- Tower Wharf, Bristol - Office - 6% of the portfolio void. We are
converting a single large suite into two smaller fully-fitted suites in order
to meet greater occupier demand.
- Madleaze Trading Estate, Gloucester - Industrial - 5% of the
portfolio void. We have three units available, all of which have been
refurbished and are generating good occupier interest.
- Gloucester Retail Park, Gloucester - Retail - 5% of the portfolio
void. Following a lease expiry at the end of the period we have one vacant
unit. This is already under offer to a leisure operator, and planning consent
has recently been secured for the change of use.
Investing to upgrade our portfolio
We invested £4.2 million into the portfolio during the period, with the focus
on decarbonising office assets, refurbishing and upgrading space prior to
re-leasing and carrying out upgrade works as part of active management
transactions.
Key projects in the period in the office sector include works at offices in
Pembroke Court, Chatham, and Atlas House, Marlow. We are now on-site at Tower
Wharf, Bristol to facilitate a letting to an existing occupier who is
increasing their floorspace by 146%, and to also create two smaller
fully-fitted suites. We are also on-site at Colchester Business Park, Essex,
to create a high quality, fully decarbonised headquarters office building.
In the industrial sector at River Way, Harlow, and Madleaze Trading Estate,
Gloucester, we are improving the units and EPC ratings, which enabled us to
secure two lease renewals at a combined 39% premium to the previous passing
rents. At Easter Court, Warrington we have refurbished a unit, which was
pre-let prior to completion of the works.
We expect our office exposure to reduce further and we continue to consider
each asset on its merits with regard to alternative uses or upgrading for
existing use. We will continue to exercise discipline over capital
expenditure, investing only where we can improve an asset and where
occupational demand is strong. We are in discussions with a number of existing
office occupiers to align building upgrade works to renewing or regearing
leases at higher rents, which would allow us to underwrite the expenditure.
Top ten assets
The top ten assets as at 30 September 2024, ranked by capital value, represent
55% of the total portfolio valuation as shown below:
Sector Approx. Appraised
area (sq ft)
value
1 Parkbury Industrial Estate, Radlett, Herts. Industrial 340,900 >£100m
2 River Way Industrial Estate, Harlow, Essex Industrial 454,800 £50m-£75m
3 Stanford Building, Long Acre, London WC2 Office 20,100 £30m-£50m
4 Datapoint, Cody Road, London E16 Industrial 55,100 £30m-£50m
5 Shipton Way, Rushden, Northants. Industrial 312,900 £20m-£30m
6 Lyon Business Park, London IG11 Industrial 99,400 £20m-£30m
7 Sundon Business Park, Dencora Way, Luton Industrial 127,800 £20m-£30m
8 50 Farringdon Road, London EC1 Office 31,300 £20m-£30m
9 Trent Road, Grantham Industrial 336,100 £20m-£30m
10 Tower Wharf, Cheese Lane, Bristol Office 70,600 £20m-£30m
A full portfolio listing is available on the Company's website:
www.picton.co.uk
Top ten occupiers
The top ten occupiers, based as a percentage of annualised contracted rental
income, after lease incentives, as at 30 September 2024, are summarised below:
Occupier %
1 Whistl UK Limited 3.4
2 The Random House Group Limited 3.4
3 Public Sector 3.4
4 B&Q Plc 2.6
5 Snorkel Europe Limited 2.5
6 XMA Limited 2.0
7 Portal Chatham LLP 2.0
8 Orlight Limited 1.7
9 DHL Supply Chain Limited 1.6
10 Blanco UK Limited 1.6
24.2
FINANCIAL REVIEW
Income statement
The trading performance for the six months to 30 September 2024 has been
positive with a profit of £11.5 million, or 2.1p per share (30 September
2023: £1.4 million loss).
We have increased EPRA earnings by 11.6% to £11.2 million, compared with EPRA
earnings for the six months to 30 September 2023 of £10.0 million,
maintaining a healthy level of dividend cover over the period of 111% and
supporting the 6% dividend increase, effective May 2024.
The EPRA earnings growth was supported by our capital structure and the
repositioning of the office assets in the portfolio, in particular:
- Net property income - increased by £0.2 million compared with the six
months to 30 September 2023. Excluding assets held for sale, net property
income increased by £0.7 million or 3.6%. Previous leasing activity at
industrial assets in Harlow, Barking and Warrington underpinned the rental
income growth.
- Net finance costs - reduced by £1.0 million due to the repayment of
the revolving credit facility in April 2024 and increased interest income as a
result of interest earned on the residual sale proceeds and the higher
interest rate environment.
Administrative expenses for the period were broadly in line with the six
months to 30 September 2023 and lower on an annualised basis, reflecting the
one-off costs in the prior year.
Balance sheet
The net asset value was stable during the period and as at 30 September 2024
was £524.8 million (31 March 2024: £524.5 million). The valuation of the
investment portfolio increased by £5.7 million to £721.3 million, equivalent
to 0.8% on a like-for-like basis (i.e. excluding Angel Gate, London which was
sold in the period), or 0.2% including the capital expenditure incurred in the
period.
Longcross, Cardiff and Charlotte Terrace, London are classified as investment
properties held for sale at the CBRE appraised valuation (£20.6 million). In
respect of Cardiff, this is in line with expected proceeds on completion and
reflects an uplift of 17% during the period, with completion expected to take
place before the end of the financial year. Charlotte Terrace is currently
being marketed for sale.
As at 30 September 2024 we held £28.2 million of cash, an increase of £8.5
million during the period. The net proceeds from the Angel Gate, London
disposal (£29.0 million) have primarily been used to repay the revolving
credit facility (£17.1 million), fund capital expenditure (£4.2 million) and
purchase shares on behalf of the Employee Benefit Trust to hedge amounts
outstanding under employee share schemes (£1.5 million). The remaining
proceeds and future disposal proceeds will be reinvested into the existing
portfolio and new opportunities to support value and earnings growth.
Total borrowings have reduced during the period following the repayment of the
revolving credit facility. This has resulted in the loan to value ratio
reducing from 28% to 25%. The weighted average maturity of our borrowings is
now 7.2 years and 100% of the drawn debt is fixed at a weighted average
interest rate of 3.7%.
The long-term loan facilities with Canada Life and Aviva are in place until
2031 and 2032 respectively. Our £50 million revolving credit facility remains
committed and undrawn with a maturity in May 2025. We continue to operate with
considerable headroom on our financial loan covenants and uncharged assets
provide £70 million of additional flexibility. We intend to put in place a
new revolving credit facility to maintain flexibility for capital and
investment opportunities.
EPRA net tangible assets at 30 September 2024 were 96p per share, in line with
the IFRS net asset value. However, the EPRA net disposal value, which included
a £23 million fair value adjustment to our borrowings, was higher at 101p per
share.
DIRECTORS' RESPONSIBILITIES
STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES
The Company's assets comprise direct investments in UK commercial property.
Its principal risks are therefore related to the commercial property market in
general and its investment properties. Other risks faced by the Company
include economic, investment and strategic, regulatory, management and
control, operational, financial and climate related risks.
These risks, and the way in which they are managed, are described in more
detail under the heading 'Managing Risk' within the Strategic Report in the
Company's Annual Report for the year ended 31 March 2024. The Company's
principal risks and uncertainties have not changed materially since the date
of that report.
STATEMENT OF GOING CONCERN
The Directors have assessed whether the going concern basis remains
appropriate for the preparation of the financial statements for the period
ended 30 September 2024. In making their assessment the Directors have
considered the principal and emerging risks relating to the Group and
scenarios impacting the portfolio and the potential consequences on financial
performance, asset values, investing and financing activities. The Directors
have also considered the maturity of the revolving credit facility in May 2025
and, whilst currently undrawn as at 30 September 2024, have commenced steps to
refinance this. More details regarding the Group's business activities,
together with the factors affecting performance, investment activities and
future developments are set out in the Portfolio Review.
Further information on the financial position of the Group, including its
liquidity position and debt facilities, is set out in the Financial Review and
in the condensed consolidated financial statements.
Under all of these scenarios the Group has sufficient cash resources to
continue its operations, and remain within its loan covenants, for a period of
at least 12 months from the date of these financial statements.
Based on their assessment and knowledge of the portfolio and market, the
Directors have therefore continued to adopt the going concern basis in
preparing the financial statements.
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE INTERIM REPORT
We confirm that to the best of our knowledge:
a. the condensed set of consolidated financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting';
b. the Business Overview and Portfolio Review (together constituting the
Interim Management Report) together with the Statement of Principal Risks and
Uncertainties above include a fair review of the information required by the
Disclosure Guidance and Transparency Rules ('DTR') 4.2.7R, being an indication
of the important events that have occurred during the first six months of the
financial year, a description of principal risks and uncertainties for the
remaining six months of the year, and their impact on the condensed set of
consolidated financial statements; and
c. the Business Overview together with the condensed set of consolidated
financial statements include a fair review of the information required by DTR
4.2.8R, being related party transactions that have taken place in the first
six months of the current financial year and that have materially affected the
financial position or performance of the Company during that period, and any
changes in the related party transactions described in the last Annual Report
that could do so.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website, and for
the preparation and dissemination of financial statements. Legislation in
Guernsey governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
By Order of the Board
Saira Johnston
Director
11 November 2024
INDEPENDENT REVIEW REPORT TO PICTON PROPERTY INCOME LIMITED
CONCLUSION
We have been engaged by Picton Property Income Limited (the 'Company') to
review the condensed set of consolidated financial statements in the
half-yearly financial report for the six months ended 30 September 2024 of the
Company and its subsidiaries (together, the 'Group'), which comprises the
condensed consolidated balance sheet, the condensed consolidated statements of
comprehensive income, changes in equity and cash flows and the related
explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of consolidated financial statements in the
half-yearly financial report for the six months ended 30 September 2024 is not
prepared, in all material respects, in accordance with IAS 34 Interim
Financial Reporting and the Disclosure Guidance and Transparency Rules ('the
DTR') of the UK's Financial Conduct Authority ('the UK FCA').
SCOPE OF REVIEW
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ('ISRE (UK) 2410') issued by the Financial
Reporting Council for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. We read the other information contained in the half-yearly
financial report and consider whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
consolidated financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
CONCLUSIONS RELATING TO GOING CONCERN
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Scope of review section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However future events or conditions may cause the Group and
the Company to cease to continue as a going concern, and the above conclusions
are not a guarantee that the Group and the Company will continue in operation.
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
interim financial report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual consolidated financial statements of
the Group are prepared in accordance with International Financial Reporting
Standards. The directors are responsible for preparing the condensed set
of consolidated financial statements included in the half-yearly financial
report in accordance with IAS 34 Interim Financial Reporting.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Group and the Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless they either intend to liquidate
the Group or the Company or to cease operations, or have no realistic
alternative but to do so.
OUR RESPONSIBILITY
Our responsibility is to express to the Company a conclusion on the condensed
set of consolidated financial statements in the half-yearly financial report
based on our review. Our conclusion, including our conclusions relating to
going concern, are based on procedures that are less extensive than audit
procedures, as described in the scope of review paragraph of this report.
THE PURPOSE OF OUR REVIEW WORK AND TO WHOM WE OWE OUR RESPONSIBILITIES
This report is made solely to the Company in accordance with the terms of our
engagement letter to assist the Company in meeting the requirements of the DTR
of the UK FCA. Our review has been undertaken so that we might state to the
Company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company for our review work,
for this report, or for the conclusions we have reached.
Steven Stormonth
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants
Guernsey
11 November 2024
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2024
Note 6 months 6 months ended Year ended
ended 30 September 31 March
30 September 2023 2024
2024 unaudited audited
unaudited Total Total
Total £000 £000
£000
Income
Revenue from properties 3 26,883 26,742 54,690
Property expenses 4 (8,467) (8,569) (16,799)
Net property income 18,416 18,173 37,891
Expenses
Administrative expenses (3,469) (3,412) (7,219)
Total operating expenses (3,469) (3,412) (7,219)
Operating profit before movement on investments 14,947 14,761 30,672
Investments
Revaluation of owner-occupied property 88 160 223
Loss on disposal of investment property 9 (33) - -
Investment property valuation movements 9 253 (11,606) (26,757)
Total profit/(loss) on investments 308 (11,446) (26,534)
Operating profit 15,255 3,315 4,138
Financing
Interest income 594 32 604
Interest expense (4,338) (4,755) (9,531)
Total finance costs (3,744) (4,723) (8,927)
Profit/(loss) before tax 11,511 (1,408) (4,789)
Tax - - -
Profit/(loss) after tax 11,511 (1,408) (4,789)
Total comprehensive profit/(loss) for the period/year 11,511 (1,408) (4,789)
Earnings per share
Basic 7 2.1p (0.3)p (0.9)p
Diluted 7 2.1p (0.3)p (0.9)p
All of the profit and total comprehensive income for the period is
attributable to the equity holders of the Company. There are no minority
interests. Notes 1 to 15 form part of these condensed consolidated financial
statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2024
Note Share Retained Other Revaluation reserve Total
capital
earnings
£000
reserves £000 £000
£000
£000
Balance as at 31 March 2023 164,400 384,406 (1,182) - 547,624
Loss for the period - (1,408) - - (1,408)
Dividends paid 6 - (9,541) - - (9,541)
Share-based awards - - 379 - 379
Balance as at 30 September 2023 164,400 373,457 (803) - 537,054
Loss for the period - (3,381) - - (3,381)
Dividends paid 6 - (9,548) - - (9,548)
Share-based awards - - 350 - 350
Balance as at 31 March 2024 164,400 360,528 (453) - 524,475
Profit for the period - 11,511 - - 11,511
Dividends paid 6 - (10,089) - - (10,089)
Share-based awards - - 400 - 400
Purchase of shares held in trust - - (1,519) - (1,519)
Balance as at 30 September 2024 164,400 361,950 (1,572) - 524,778
Notes 1 to 15 form part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 30 SEPTEMBER 2024
Note 30 September 2024 30 September 31 March
unaudited 2023 2024
£000 unaudited audited
£000 £000
Non-current assets
Investment properties 9 679,004 736,619 688,310
Property, plant and equipment 3,519 3,506 3,499
Total non-current assets 682,523 740,125 691,809
Current assets
Investment properties held for sale 9 20,497 - 35,733
Accounts receivable 25,226 26,065 26,601
Cash and cash equivalents 28,223 17,205 19,773
Total current assets 73,946 43,270 82,107
Total assets 756,469 783,395 773,916
Current liabilities
Accounts payable and accruals (19,865) (18,444) (20,622)
Loans and borrowings 10 (1,279) (1,161) (1,194)
Obligations under leases (115) (114) (114)
Total current liabilities (21,259) (19,719) (21,930)
Non-current liabilities
Loans and borrowings 10 (207,867) (224,045) (224,940)
Obligations under leases (2,565) (2,577) (2,571)
Total non-current liabilities (210,432) (226,622) (227,511)
Total liabilities (231,691) (246,341) (249,441)
Net assets 524,778 537,054 524,475
Equity
Share capital 11 164,400 164,400 164,400
Retained earnings 361,950 373,457 360,528
Other reserves (1,572) (803) (453)
Revaluation reserve - - -
Total equity 524,778 537,054 524,475
Net asset value per share 13 96p 99p 96p
These condensed consolidated financial statements were approved by the Board
of Directors on 11 November 2024 and signed on its behalf by:
Saira Johnston
Director
Notes 1 to 15 form part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2024
Note 6 months ended 6 months ended Year ended
30 September 2024 30 September 31 March
unaudited 2023 2024
£000 unaudited audited
£000 £000
Operating activities
Operating profit 15,255 3,315 4,138
Adjustments for non-cash items 12 160 11,897 27,406
Interest received 1,006 32 102
Interest paid (4,432) (4,499) (9,085)
Decrease/(increase) in accounts receivables 963 (3,316) (3,350)
(Decrease)/increase in accounts payable and accruals (516) (1,137) 996
Cash inflows from operating activities 12,436 6,292 20,207
Investing activities
Disposal of investment properties 9 28,967 - -
Capital expenditure on investment properties 9 (4,205) (1,883) (4,458)
Purchase of property, plant and equipment - (3) (4)
Cash inflows/(outflows) from investing activities 24,762 (1,886) (4,462)
Financing activities
Borrowings repaid (17,140) (710) (1,433)
Borrowings drawn - 3,000 4,500
Purchase of shares held in trust (1,519) - -
Dividends paid 6 (10,089) (9,541) (19,089)
Cash outflows from financing activities (28,748) (7,251) (16,022)
Net increase/(decrease) in cash and cash equivalents 8,450 (2,845) (277)
Cash and cash equivalents at beginning of period/year 19,773 20,050 20,050
Cash and cash equivalents at end of period/year 28,223 17,205 19,773
Notes 1 to 15 form part of these condensed consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2024
1. GENERAL INFORMATION
Picton Property Income Limited (the 'Company' and together with its
subsidiaries the 'Group') was established in Guernsey on 15 September 2005 and
entered the UK REIT regime on 1 October 2018.
The financial statements are prepared for the period from 1 April to 30
September 2024, with unaudited comparatives for the period from 1 April to 30
September 2023. Comparatives are also provided from the audited financial
statements for the year ended 31 March 2024.
2. MATERIAL ACCOUNTING POLICIES
These financial statements have been prepared in accordance with IAS 34
'Interim Financial Reporting'. They do not include all of the information
required for full annual financial statements and should be read in
conjunction with the financial statements of the Group as at and for the year
ended 31 March 2024.
The accounting policies applied by the Group in these financial statements are
the same as those applied by the Group in its financial statements as at and
for the year ended 31 March 2024.
The annual financial statements of the Group are prepared in accordance with
International Financial Reporting Standards ('IFRS') as issued by the IASB.
The Group's annual financial statements for the year ended 31 March 2024 refer
to new Standards and Interpretations none of which has a material impact on
these financial statements. There have been no significant changes to
management judgements and estimates as disclosed in the last annual report and
financial statements for the year ended 31 March 2024.
The Directors have assessed whether the going concern basis remains
appropriate for the preparation of the financial statements. They have
reviewed the Group's principal and emerging risks, existing loan facilities,
access to funding and liquidity position and then considered different adverse
scenarios impacting the portfolio and the potential consequences on financial
performance, asset values, dividend policy, capital projects and loan
covenants. Under all these scenarios the Group has sufficient resources to
continue its operations, and remain within its loan covenants, for a period of
at least 12 months from the date of these financial statements. Based on their
assessment and knowledge of the portfolio and market, the Directors have
therefore continued to adopt the going concern basis in preparing the
financial statements.
3. REVENUE FROM PROPERTIES
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2024
2024 2023
£000
£000 £000
Rents receivable (adjusted for lease incentives) 21,910 21,626 43,910
Surrender premiums - 54 102
Dilapidation receipts - 211 952
Other income 127 122 124
22,037 22,013 45,088
Service charge income 4,846 4,729 9,602
26,883 26,742 54,690
Rents receivable includes lease incentives recognised of £0.3 million (30
September 2023: £(0.1) million, 31 March 2024: £nil million).
4. PROPERTY EXPENSES
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2024
2024 2023
£000
£000 £000
Property operating costs 1,387 1,521 3,075
Property void costs 2,234 2,319 4,122
3,621 3,840 7,197
Recoverable service charge costs 4,846 4,729 9,602
8,467 8,569 16,799
5. OPERATING SEGMENTS
The Board is charged with setting the Group's business model and strategy. The
key measure of performance used by the Board to assess the Group's performance
is the total return on the Group's net asset value. As the total return on the
Group's net asset value is calculated based on the net asset value per share
calculated under IFRS as shown at the foot of the Balance Sheet, assuming
dividends are reinvested, the key performance measure is that prepared under
IFRS. Therefore, no reconciliation is required between the measure of profit
or loss used by the Board and that contained in the financial statements.
The Board has considered the requirements of IFRS 8 'Operating Segments'. The
Board is of the opinion that the Group, through its subsidiary undertakings,
operates in one reportable industry segment, namely real estate investment,
and across one primary geographical area, namely the United Kingdom, and
therefore no segmental reporting is required. The portfolio consists of 48
commercial properties, which are in the industrial, office, retail and leisure
sectors.
6. DIVIDENDS
Declared and paid: 6 months ended 6 months ended Year ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Interim dividend for the period ended 31 March 2023: 0.875 pence - 4,771 4,771
Interim dividend for the period ended 30 June 2023: 0.875 pence - 4,770 4,770
Interim dividend for the period ended 30 September 2023: 0.875 pence - - 4,771
Interim dividend for the period ended 31 December 2023: 0.875 pence - - 4,777
Interim dividend for the period ended 31 March 2024: 0.925 pence 5,050 - -
Interim dividend for the period ended 30 June 2024: 0.925 pence 5,039 - -
10,089 9,541 19,089
The interim dividend of 0.925 pence per ordinary share in respect of the
period ended 30 September 2024 has not been recognised as a liability as it
was declared after the period end. A dividend of £5,038,000 will be paid on
29 November 2024.
7. EARNINGS PER SHARE
Basic and diluted earnings per share is calculated by dividing the net
profit/(loss) for the period attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares in issue during the
period, excluding the average number of shares held by the Employee Benefit
Trust. The diluted number of shares also reflects the contingent shares to be
issued under the Long-term Incentive Plan.
The following reflects the profit/(loss) and share data used in the basic and
diluted earnings per share calculation:
6 months ended 6 months ended Year ended
30 September 2024 30 September 31 March
2024
2023
Net profit/(loss) attributable to ordinary shareholders of the Company from 11,511 (1,408) (4,789)
continuing operations (£000)
Weighted average number of ordinary shares for basic earnings per share 545,472,873 545,218,892 545,437,264
Weighted average number of ordinary shares for diluted earnings per share 544,645,651 546,629,089 547,092,154
8. FAIR VALUE MEASUREMENTS
The fair value measurement for the financial assets and financial liabilities
are categorised into different levels in the fair value hierarchy based on the
inputs to valuation techniques used. The different levels have been defined as
follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities that the Group can access at the measurement date.
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly. The fair
value of the Group's secured loan facilities, as disclosed in note 10, are
included in Level 2.
Level 3: unobservable inputs for the asset or liability. The fair value of the
Group's investment properties is included in Level 3.
The Group recognises transfers between levels of the fair value hierarchy as
of the end of the reporting period during which the transfer has occurred.
There were no transfers between levels for the period ended 30 September 2024.
The fair value of all other financial assets and liabilities is not materially
different from their carrying value in the financial statements.
The Group's financial risk management objectives and policies are consistent
with those disclosed in the consolidated financial statements for the year
ended 31 March 2024.
9. INVESTMENT PROPERTIES
6 months 6 months Year ended
ended ended 31 March
30 September 2024 30 September 2024
£000 2023 £000
£000
Fair value at start of period/year 724,043 746,342 746,342
Capital expenditure on investment properties 4,205 1,883 4,458
Disposals (28,967) - -
Realised loss on disposal (33) - -
Unrealised movement on investment properties 253 (11,606) (26,757)
Fair value at the end of the period/year 699,501 736,619 724,043
Historic cost at the end of the period/year 667,757 683,001 685,576
The fair value of investment properties reconciles to the appraised value as
follows:
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Current
Appraised value of properties held for sale 20,550 - 35,900
Lease incentives shown as debtors in respect of properties held for sale (53) - (167)
20,497 - 35,733
Non-current
Appraised value 700,770 757,050 708,740
Valuation of assets held under head leases 2,062 2,095 2,046
Lease incentives held as debtors (20,390) (19,158) (19,085)
Owner-occupied property (3,438) (3,368) (3,391)
679,004 736,619 688,310
Fair value at the end of the period/year 699,501 736,619 724,043
As at 30 September 2024, two assets were held for sale; contracts have been
exchanged to sell Longcross, Cardiff and Charlotte Terrace, London is being
marketed for sale. As at 31 March 2024, Angel Gate, London EC1 and Longcross,
Cardiff were assets classified as held for sale.
All of the Group's properties are Level 3 in the fair value hierarchy as they
involve the use of significant inputs and there were no transfers between
levels during the period. Level 3 inputs used in valuing the properties are
those which are unobservable, as opposed to Level 1 (inputs from quoted
prices) and Level 2 (observable inputs either directly, i.e. as prices, or
indirectly, i.e. derived from prices).
The investment properties were valued by CBRE Limited, Chartered Surveyors, as
at 30 September 2024 on the basis of fair value in accordance with the RICS
Valuation - Global Standards (incorporating the International Valuation
Standards) and the UK national supplement (the Red Book) current as at the
valuation date.
The fair value of the Group's investment properties has been determined using
an income capitalisation technique, whereby contracted and market rental
values are capitalised with a market capitalisation rate. The resulting
valuations are cross-checked against the equivalent yields and the fair market
values per square foot derived from comparable market transactions on an arm's
length basis.
Information on the significant unobservable inputs per sector of investment
properties is disclosed as follows:
30 September 2024 31 March 2024
Office Industrial Retail and Leisure Office Industrial Retail and Leisure
Appraised value (£000) 193,925 447,250 80,145 224,885 439,945 79,810
Area (sq ft, 000s) 808 3,249 695 874 3,240 692
Range of unobservable inputs:
Gross ERV (sq ft per annum)
- range £10.51 to £90.99 £3.79 to £3.35 to £6.00 to £87.81 £3.79 to £3.35 to
£29.85 £21.53 £27.95 £21.53
- weighted average £40.47 £13.56 £11.83 £38.26 £13.37 £11.63
Net initial yield
- range -8.94% to 11.81% 3.07% to 7.75% 5.26% to 57.27% -4.85% to 10.73% 2.30% to 7.75% 6.80% to 42.40%
- weighted average 5.82% 4.39% 8.39% 5.22% 4.63% 9.17%
Reversionary yield
- range 5.06% to 15.99% 4.90% to 8.05% 7.00% to 17.18% 5.09% to 15.01% 4.82% to 8.05% 7.00% to 12.72%
- weighted average 9.31% 5.88% 8.33% 8.81% 5.86% 8.20%
True equivalent yield
- range 5.12% to 11.15% 4.75% to 8.01% 7.07% to 12.50% 4.85% to 10.83% 4.75% to 8.00% 7.25% to 12.25%
- weighted average 8.06% 5.67% 8.16% 7.75% 5.66% 8.29%
An increase/decrease in ERV will increase/decrease valuations, while an
increase/decrease in yield will decrease/increase valuations.
The Group's borrowings (note 10) are secured by a first ranking fixed charge
over the majority of investment properties held.
10. LOANS AND BORROWINGS
Maturity 30 September 2024 30 September 31 March
£000 2023 2024
£000 £000
Current
Aviva facility - 1,530 1,465 1,497
Capitalised finance costs - (251) (304) (303)
1,279 1,161 1,194
Non-current
Canada Life facility 24 July 2031 129,045 129,045 129,045
Aviva facility 24 July 2032 79,818 81,347 80,591
NatWest revolving credit facility 26 May 2025 - 14,900 16,400
Capitalised finance costs - (996) (1,247) (1,096)
207,867 224,045 224,940
Total loans and borrowings 209,146 225,206 226,134
The Group has a loan with Canada Life Limited for £129.0 million which
matures in July 2031. Interest is fixed at 3.25% over the life of the loan.
Additionally, the Group has a loan facility agreement with Aviva Commercial
Finance Limited for £95.3 million, which was fully drawn on 24 July 2012. The
loan matures in July 2032, with approximately one-third repayable over the
life of the loan in accordance with a scheduled amortisation profile. Interest
on the loan is fixed at 4.38% over the life of the loan.
The Group also has a £50 million revolving credit facility ('RCF') with
National Westminster Bank Plc which matures in May 2025 and is currently
undrawn. The RCF interest is 150 basis points over SONIA on drawn balances and
has an undrawn commitment fee of 60 basis points.
The fair value of the secured loan facilities at 30 September 2024, estimated
as the present value of future cash flows discounted at the market rate of
interest at that date, was £187.4 million (30 September 2023: £193.2
million, 31 March 2024: £202.8 million). The fair value of the secured loan
facilities is classified as Level 2 under the hierarchy of fair value
measurements.
The weighted average interest rate on the Group's borrowings as at 30
September 2024 was 3.7% (30 September 2023: 3.9%, 31 March 2024: 3.9%).
11. SHARE CAPITAL AND OTHER RESERVES
The Company has 547,605,596 ordinary shares in issue of no par value (30
September 2023: 547,605,596, 31 March 2024: 547,605,596).
The balance on the Company's share premium account as at 30 September 2024 was
£164,400,000 (30 September 2023: £164,400,000, 31 March 2024:
£164,400,000).
30 September 2024 30 September 31 March
2024
2023
Ordinary share capital 547,605,596 547,605,596 547,605,596
Number of shares held in Employee Benefit Trust (2,942,959) (2,380,998) (1,642,440)
Number of ordinary shares 544,662,637 545,224,598 545,963,156
The fair value of share awards made under the Long-term Incentive Plan and the
Deferred Bonus Plan is recognised in other reserves.
Subject to the solvency test contained in the Companies (Guernsey) Law, 2008
being satisfied, ordinary shareholders are entitled to all dividends declared
by the Company and to all of the Company's assets after repayment of its
borrowings and ordinary creditors. The Trustee of the Company's Employee
Benefit Trust has waived its right to receive dividends on the 2,942,959
shares it holds but continues to hold the right to vote. Ordinary shareholders
have the right to vote at meetings of the Company. All ordinary shares carry
equal voting rights. The Employee Benefit Trust acquired 2,100,000 shares in
the period (30 September 2023: nil shares, 31 March 2024: nil shares) and
799,481 share awards were exercised in the period (30 September 2023: 7,696
shares, 31 March 2024: 746,254 shares).
12. ADJUSTMENT FOR NON-CASH MOVEMENTS IN THE CASH FLOW STATEMENT
6 months ended 6 months Year ended
ended
30 September 2024
31 March
30 September
2024
£000
2023 £000
£000
Movement in investment property valuation (253) 11,606 26,757
Loss on disposal of investment property 33 - -
Revaluation of owner-occupied property (88) (160) (223)
Share-based provisions 400 379 729
Depreciation of tangible assets 68 72 143
160 11,897 27,406
13. NET ASSET VALUE
The net asset value per share calculation uses the number of shares in issue
at the period end and excludes the actual number of shares held by the
Employee Benefit Trust at the period end; see note 11.
At 30 September 2024, the Company had a net asset value per ordinary share of
£0.96 (30 September 2023: £0.99, 31 March 2024: £0.96).
14. RELATED PARTY TRANSACTIONS
There have been no changes in the related party transactions described in the
last annual report that could have a material effect on the financial position
or performance of the Group in the first six months of the current financial
year.
The Company has no controlling parties.
15. EVENTS AFTER THE BALANCE SHEET DATE
A dividend of £5,038,000 (0.925 pence per share) was approved by the Board on
28 October 2024 and is payable on 29 November 2024.
END
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