Full Year Results
22 May 2015
Quintain Estates & Development PLC
("Quintain" / "Company" / "Group")
Quintain Estates & Development PLC Full Year Results
Quintain, the London development and investment specialist, announces its results for year ended 31 March 2015.
Maxwell James, Chief Executive of Quintain, said: "We are pleased to report results showing that our Wembley Park development has come of age. Our actions to invest in placemaking at Wembley Park have helped to create an increasingly attractive residential location, benefiting from five acres of green space, a vibrant entertainment quarter and new high quality apartments which are in short supply in London. Together with continued strong market conditions, this has led to higher average selling prices for residential apartments and continued strong demand from purchasers.
"Our decision in 2012 to focus the business on the Capital and build a better balance between development and investment activities across the Group has started to be reflected in the improved financial performance we are reporting today.
"Looking forward, we remain confident about the outlook for Quintain, supported by London's continued strength as a global city, the low interest rate environment, sustained demand for new homes and Wembley Park's emergence as an increasingly vibrant destination to live, work and visit."
Good Full Year Results
· Net asset value up 7% to £639.4m
· Profit after tax: £37.9m (2014: £52.9m)
Residential sales: Strong buyer demand
· 90% of Emerald Gardens sold at 20 May 2015 at an average of £599 per square foot
· Four year pipeline defined for completion of 1,200 homes
Acceleration of residential development to create better risk-adjusted returns more quickly
· £32.2m of capital recycled through first residential JV with Keystone during the year
· Terms of these JVs have seeded new Professional Market Rental (PMR) portfolio
Residential Investment: New portfolio
· New Professional Market Rental business seeded with 261 homes
· Initial target to grow to 500 homes at Wembley Park within five years
New masterplan being progressed for 43 acres at Wembley Park
· Aspiration to increase quantity of residential development, create a substantial new public park, create an appropriate setting for the world-famous Stadium and a design that supports accelerated delivery of development
Commercial Investment: Substantial income growth from £366.0m portfolio
· Maturing Wembley Park investment assets delivering £9.3m net rental income (2014: £4.3m)
· Selectively expanded London Portfolio delivering £4.1m net rental income (2014: £0.1m)
Continued financial rigour positioning the Company for growth
· Substantial capacity to invest, with low gearing of 32% despite accelerating development
· Sustainable balance between investment and development that will support Quintain through future real estate cycles
ENDS - -
Enquiries
|
Quintain Cressida Curtis Harriet Pask
Tel: +44 (0)20 3219 2200 |
RLM Finsbury Jenny Davey Charlotte Whitley
Tel: +44 (0)20 7251 3801 |
BUSINESS REVIEW
Throughout 2014/15, the Quintain team focused on accelerating the pace of residential development at our major asset, Wembley Park, and creating new sources of income from investment assets that will support the business through future real estate cycles.
With a strong balance sheet now established, we are working towards a position whereby the business can be understood as three complementary activities: firstly, through careful acquisition and development, we are creating a high quality portfolio of investment assets that deliver strong and recurring cashflow whilst creating a sense of place and attracting footfall such as we have created at our largest asset, Wembley Park; secondly, we develop homes for sale that are enhanced by this placemaking, releasing the maximum inherent value in our sites and leading to meaningful development surpluses; and thirdly, we are in the final phase of establishing a new Professional Market Rental (PMR) business (also known as Private Rental Sector, or PRS) to cater for the significant and growing demand for good quality, well managed, rental accommodation in London.
The development of these three complementary activities is designed to unlock the value in regeneration assets while delivering robust returns through the real estate cycle.
Results
The increase in net asset value to £639.4m (2014: £595.4m) reflects a 13.8% growth within our development portfolio and the growing income profile of our investment assets at Wembley Park, which delivered a 4.7% increase in valuation. This growth contributed to a net asset value per share of 122p (2014: 115p) for the 2014/15 financial year.
We are pleased to report that our focus on driving growth in our Wembley Park investment assets and acquiring income-producing property for the London Portfolio has more than compensated for the income foregone through the disposals programme, which materially de-geared the balance sheet. Rental income from London Designer Outlet, which opened in October 2013, and improved arrangements at The SSE Arena were the principal drivers behind Wembley Park's materially increased net rent of £9.3m (2014: £4.3m), while acquisitions to the new London Portfolio increased its contribution to £4.1m (2014: £0.1m).
Finance
The re-financing of £260.0m of facilities during the year has equipped the Company with £375.0m of debt facilities (including the £115.0m corporate bond 2020 issued last year), with an average maturity of 4.2 years, at a headline margin for the bank facilities of 190 basis points.
In May 2014, we sold our 50% interest in the nationwide student accommodation joint venture, iQ, to our partner, Wellcome Trust, for £106.4m. This made a considerable contribution to the further reduction of our debt and enabled us to re-focus our balance sheet on the Capital, with capacity to invest.
As a result, and despite significant investment in accelerating development during the year, balance sheet gearing remained low at 32%: well below our stated ceiling of 50%, and net debt at 31 March 2015 was £200.8m (2014: £208.9m). The Group now has an appropriate financial structure to deliver value from residential development at Wembley Park, selective investment and development opportunities across London, and our new residential investment business.
Intelligent Use of Capital
While Quintain now benefits from a robust balance sheet and capacity to invest, we seek to increase the pace of delivery and value creation through the introduction of third party capital where appropriate. This may be through joint ventures, as in the case of Emerald Gardens and Alto, co-investment opportunities such as through WELPUT, or the disposal of development plots or mature assets where we can recycle capital to create better risk-adjusted returns. In many cases, we also act as development manager, enabling Quintain to generate additional income from an opportunity as it evolves.
1. COMMERCIAL INVESTMENT
Quintain takes land and assets in London and transforms them into either institutional-grade investment assets or properties for rent or sale. Underpinning these activities is our ability to create a strong sense of identity in our places and properties, giving them a fresh position that increases their economic sustainability and can act as a catalyst for the improvement in the property and, after, the surrounding area. Our integrated skill set is scalable, adept at operating with individual assets that deliver a single use-type through to large-scale, mixed-use re-development.
Through the combined activities of our London Portfolio, WELPUT and Wembley Park teams, we now have property interests across a number of London boroughs and continue to analyse opportunities where income characteristics are strong and there is potential for the repositioning of an asset or substantial improvements planned to its surrounding environment. Our core investment assets now constitute 44% of the portfolio, providing better balance to our development activities. During the year, we saw income growing substantially from both our London Portfolio and Wembley Park investments, more than replacing the income relinquished through the recent disposals programme.
a) London Portfolio
The London Portfolio encompasses our activities in the Capital beyond Wembley Park. The objective is to build and manage a portfolio of income producing assets that offer future development or asset management potential through the application of our existing spectrum of skills to balance our large-scale development programme at Wembley Park and whose income generation will support the business through future real estate cycles.
During the reporting period, the London Portfolio contributed £4.1m (2014: £0.1m) of net rent to the Group and was valued at 31 March 2015 at £93.1m (2014: £23.9m) following £66.1m of acquisitions.
In central London, we acquired Aldermary House, EC4, in May 2014 for £40.0m, to add to our interest in Kingsbourne House, WC2. Elsewhere, £26.1m has been invested in properties in Greater London with strong transport links and potential for site enhancement.
Members of Quintain's team were involved in the foundation of WELPUT with Schroders in 2001 and have acted as strategic property adviser since its inception. The £1.2bn-asset Fund focuses on buying quality buildings in institutional locations with opportunities for improvement. The occupier base is diverse: 34% of tenants are in the digital, creative and information services industry and business services and financial services each represent a fifth of passing office rent. Quintain is also an investor in WELPUT, owning units to the value of £12.0m (2014: £5.3m). This provides Quintain with excellent exposure to the buoyant central London commercial market through a vehicle with which we remain closely involved due to our role as strategic property adviser.
During the year, unit holders overwhelmingly supported the proposal to modernise the Fund, extending the investable area to capture the potential now offered in the City, City Fringe, Southbank and King's Cross and improve liquidity through greater diversity of unitholders, a larger overall fund and an annual redemption mechanism. Over £400.0m of transactions were completed during the period, disposing of mature WELPUT assets and reinvesting the cash proceeds into new opportunities to deliver ongoing performance. Our team also worked with the Investment Manager to raise £162.0m of equity from a new investor to settle redemptions. The WELPUT Trust return in the 12 months was 21.3%.
In East London, we continue to work with the Greater London Authority (GLA) regarding the potential development of our holding at West Silvertown and will update the market when plans have been agreed.
b) Wembley Park Investment Assets
Wembley Park is one of the largest redevelopments in London. Catalysed by the intention to build a new national Stadium at the turn of the Millennium, Quintain is creating a world-class residential, entertainment and sporting district in this internationally recognised, well-connected historic location.
During the first decade of development, Quintain transformed a dated exhibition complex into a unique, vibrant entertainment quarter, creating over 1,000 new jobs, five acres of green space, London's first outlet centre and bringing restaurants, coffee shops and a cinema to the location for the first time. In doing so, we also established a portfolio of institutional-grade investment assets that, through our introduction of specialist operators, are now delivering a growing income stream for Quintain. After the end of the reporting period, Matthew Slade was appointed to the new position of Managing Director of Wembley Park. Matthew joins Quintain from Westfield where he was part of the management team that opened Westfield Stratford City and Acting General Manager for the centre during the 2012 London Olympics.
The SSE Arena, Wembley
Anchoring the wider entertainment quarter, the renovated Wembley Arena has now been renamed "The SSE Arena, Wembley" to reflect a 10-year sponsorship deal that was agreed during 2014 with the energy provider. Our appointment, in September 2013, of AEG to operate the Arena started to bear fruit during the period with an increased focus on the quality of events being attracted to Wembley as well as their frequency. Quintain derives revenue from rent and a share of commercial income.
Hilton London Wembley Hotel
We opened the Hilton London Wembley hotel just before the 2012 London Olympics, for which the adjacent Arena and Stadium were official venues. This 361-room hotel, in which we sold a 50% interest in 2013, includes extensive banqueting and events facilities and, in addition to rising occupancy levels and room rates, the revenue from corporate events has increased substantially in this, its second full year of trading. Occupancy levels over the year averaged 78.5% (2014: 74.2%). The increase in average room rates led to overall revenues improving 12.2% compared with the previous year, demonstrating the maturing performance of the asset. Subsequent to the year end we accepted an offer for our 50% interest in the hotel from our joint venture partner for £40.0m. This transaction delivers a premium of £6.0m to March 2015 valuation. The disposal unlocks the value created through the asset's development and the proceeds will be recycled into the acceleration of the residential development programme where we see greater potential for future value creation.
London Designer Outlet
The opening of London's first outlet centre in October 2013 changed the character of Wembley Park and knitted-together the spectrum of leisure activities now available. The combination of retailers, restaurants, coffee shops and a nine-screen cinema has proved attractive, with 5.6m people visiting during the year.
The centre is now 95% let with 13 new brands, including Next, Kurt Geiger and Helly Hansen, opening during the financial year. Most leases comprise a base rent, a turnover-related component and a rent ratchet mechanism, which enables Quintain to benefit financially as the centre's turnover grows. At the year end, the gross contracted rent was £6.0m.
Wembley Theatre
On 3 March 2015, London Borough of Brent approved the planning application from Imagine Nation, an international entertainment company of which promoter Harvey Goldsmith is a non-executive director, to create a 1,300-seat theatre at Wembley Park.
The theatre will be constructed in North West Village, adjacent to our current residential development to the north of Wembley Park. The first show to be produced at the theatre will be the global theatrical premiere of Lionsgate's franchise, The Hunger Games™. The theatre is scheduled to open next year. Quintain will benefit from its opening through both the 10-year lease of land and a share of commercial income.
2. RESIDENTIAL DEVELOPMENT
To date, at Wembley Park we have delivered approximately 25% of the development opportunity within the consented masterplan, creating a portfolio of maturing assets at the heart of our wider landholdings. With this social and economic heart becoming established, during the year under review we re-focused our attention on accelerating residential development and expect to complete approximately 5,000 new homes over the next decade.
London Housing Market
The strength of London's housing market, particularly at sales prices below £1,000 per sq ft, is well documented. Strong population growth driven by London's attraction as a global financial and cultural centre continues to support demand: the Greater London Authority (GLA) estimates that supply falls short by an estimated 17,000 homes every year. Forecast population growth of 1.4 million people over the next 15 years will exacerbate the situation and Quintain has a meaningful role to play in delivering as many high quality homes as feasible, and doing so as quickly as possible.
Residential Sales
Located close to Wembley Park Underground station, North West Village is becoming a district of public squares and private gardens that will be home to 1,200 households.
The first 475 homes are under construction in Emerald Gardens, a development of seven buildings surrounding an acre of landscaped gardens. 284 of these homes are for private ownership and the first tranche went on sale in March 2014. By the end of the reporting period, 251 had been sold at an average price of £393,000: an average price of £597 per square foot. Emerald Gardens will be occupied in stages from spring next year through to October. To maximise our return on equity and manage our development risk exposure, in April 2014 we formed a 50:50 joint venture to develop Emerald Gardens with Keystone. This transaction enables Quintain to generate income from development management fees and unlocked £32.2m, which we reinvested in the development of further residential plots.
In February 2015, planning permission was secured for the adjacent development, named Alto. Comprising 362 apartments in total, construction of the development will begin this summer and complete during the second half of 2017. 70 of the 211 private apartments have been sold since the end of the reporting period at an average price of £422,500, reflecting a blended average of £656 per square foot.
Building on the success of our partnership at Emerald Gardens, we announced after the reporting period the creation of a second 50:50 joint venture with Keystone for the delivery of Alto. This will enhance our development management income stream and unlocked a further £27.0m to increase the pace of residential development.
Work is now underway on the design of combined plots NW07 and NW08, located to the east of Alto, across a public space called Elvin Square Gardens. This development will deliver approximately 400 further apartments and complete the North West Village at Wembley Park. It is anticipated that a planning application will be submitted this autumn, with the proposed construction schedule resulting in the first completions during 2018.
Combined, the development of these plots will deliver approximately 1,200 new homes at North West Village over the next four years.
3. RESIDENTIAL INVESTMENT
In April 2014, we announced our intention to establish a new Professional Market Rental business (a sector also known as Private Rental Sector, or "PRS"), wholly owned by Quintain and seeded with 141 apartments within Emerald Gardens. Today, we announce our medium-term intentions for this business, which we believe has the potential to be a robust source of future recurring income for Quintain that will help support the business through the real estate cycle.
A quarter of all homes in London are rented from private landlords, and this is expected to grow to over a third by 2019, equating to 1.2m households. With more affluent Londoners unable to purchase a home, a significant proportion of the growth in this market is from those earning between £40,000-100,000 per annum and paying between £350-600 per week (£1,500-2,500 per calendar month).
The Group is well placed to build a successful Professional Market Rental business. In addition to our proven ability to design and build attractive apartments and our ownership of well-connected development land in London, we have an existing management platform with seven years' experience managing a portfolio of circa 150 rental properties at Wembley Park on behalf of private landlords. The existing team therefore has first-hand experience of the fundamentals of letting and managing rental properties in London, and specifically Wembley Park, the income that can be achieved, the profile of tenants, the features that attract a premium rent and the level of service that ensures tenants stay. Their success is evidenced by an average 12-month occupancy rate of 98% and average annual rental growth of 4% over six years.
In addition to the 141 apartments that will open next year at Emerald Gardens, we will open a further 120 apartments in Alto the following year and expect to add 100 more homes from the NW07/NW08 development during 2018. Concurrently, we are assessing the potential of other areas of Wembley Park for dedicated PMR development alongside the private homes and Affordable Housing already being delivered. Within five years, we expect to have created a robust business of between 500 and 1,000 homes designed, built and managed by Quintain and located across London in locations where we identify the right ingredients for success.
This business will offer a personal, flexible living experience, attractive to Londoners who seek high quality, convenience, service and sociability in their living space. Social spaces such as club rooms are included within the PMR buildings, providing more flexibility for residents who will also have access to a concierge and onsite team. High-speed broadband access will be included in the rent and residents will be able to book housekeeping, organise dry cleaning, reserve the social spaces and manage their account through a simple online application.
Quintain's experience, track record and existing assets are perfectly aligned to the requirements of a successful residential investment business, and we look forward to welcoming our first tenants next spring.
4. FURTHER DEVELOPMENT OPPORTUNITY
a) South West Lands: A revitalised southern approach to Wembley Park
The new masterplan for the South West Lands, which links the Entertainment Quarter with Wembley Stadium station, was submitted in December 2014. Discussions with the London Borough of Brent are ongoing, and we anticipate that the application will be considered by the Planning Committee by the end of the current half year.
b) Eastern Lands: Maximising the Opportunity
Having activated the entire Western half of the site, over the past 10 years, considerable work has been undertaken over the second half of the year to analyse how the full potential of the Eastern half can be realised.
By combining the 12.1 acres on the Green Car Park, which is included in the original 2004 masterplan consents, and the 12.4 acres of Wembley Retail Park we have the opportunity to create an exciting and cohesive new masterplan which links these two holdings. Working with London Borough of Brent, we have created a new design that brings these components together, enhancing the visibility of the iconic landmark that crowns Wembley Park from a substantial new central park, providing the Stadium with a magnificent setting and increasing the quantity of homes that could be delivered. To enable us to bring Wembley Retail Park into these redevelopment plans, we have negotiated vacancy surrender premiums from existing tenants totalling £5.0m, which will come through the 2014/15 and 2015/16 results. In addition, we have used this opportunity to explore revisions to other undeveloped areas of the site, resulting in a proposed masterplan for c. 43 acres, including the Eastern Lands.
In addition to improving the quality of the overall environment and creating a new sense of arrival to Wembley Park from the East, the proposed masterplan and concurrent re-design of undeveloped areas of the Western Lands would increase considerably the quantum of development, potentially delivering 30% more residential development than supported by the original 2004 masterplan. These additional homes will include a variety of tenure types, in line with our vision of creating a mixed and balanced community at Wembley Park.
We expect to submit the application for outline planning consent this autumn, which would lead to an initial planning decision before the end of the 2015/16 financial year. Subject to a successful outcome, all required regulatory discussions could be completed by the summer of 2016.
With development activity taking place across the Western half of the site and a transformational new design for the Eastern Lands under consideration, Wembley Park now has a cohesive masterplanning framework and more defined potential development programme with substantial momentum that can support the delivery of 6.3m sq ft of development over the next decade.
Finance Review
Quintain has two financial priorities: the creation of capital value from residential and commercial investment and development in London, and the creation of robust income streams from a stable financial platform. Good progress has been achieved on both fronts during the financial year.
For the year under review, adjusted pre-tax profit was ahead of last year at £6.2m (2014: £4.2m), produced from a materially de-geared balance sheet: the result of the disposals programme that completed in May 2014 and simplified and transformed our business. The Company now has the capacity to invest in its core assets to create shareholder value.
In August, the Company announced the re-financing of £260m of bilateral banking facilities to provide funding certainty for the next phase of Quintain's evolution. The Company has £375m of debt facilities (including the 2020 £115m corporate bond) with an average maturity of over four years.
During the year, we have begun to see the benefits of rental income at London Designer Outlet, increased revenue from The SSE Arena, Wembley and rent from our London Portfolio acquisitions, which include Kingsbourne House acquired in February 2014 and Aldermary House acquired in May 2014.
The table below summarises the financial headlines for the year.
|
|
31 March 2015 |
31 March 2014 |
|
|
£m |
£m |
|
Earnings |
|
|
|
Profit after tax |
37.9 |
52.9 |
|
Adjusted profit (before capital movements) before tax |
6.2 |
4.2 |
|
EPRA diluted EPS |
1.0p |
1.1p |
|
Net Asset Value per share |
|
|
|
Basic |
122p |
115p |
|
Diluted |
121p |
114p |
|
EPRA diluted |
122p |
114p |
|
Financing |
|
|
|
Net debt |
200.8 |
208.9 |
|
Gearing |
32% |
35% |
|
Look-through LTV(1) |
27% |
38% |
(1)Look through loan to value is defined as the ratio of total net debt (including our share of net debt in joint ventures and associates) to total property assets (including our share of property assets in joint ventures and associates).
1. Results for the year
The Group reported a statutory post-tax profit for the year of £37.9m (2014: £52.9m). Operating profit for the year was £41.4m, an increase of £28.9m, due principally to a valuation surplus of £41.2m this year, compared to a surplus of £22.4m last year.
|
Summary income statement |
31 March 2015 |
31 March 2014 |
|
|
£m |
£m |
|
Turnover |
57.7 |
32.6 |
|
Gross profit |
18.2 |
8.3 |
|
Surplus on revaluation |
41.2 |
22.4 |
|
(Loss)/profit on disposals |
(0.2) |
1.7 |
|
Share of loss from joint ventures and associates |
(0.8) |
(2.5) |
|
Net segmental profit |
58.4 |
29.9 |
|
Administrative expenses |
(17.0) |
(17.4) |
|
Operating profit |
41.4 |
12.5 |
|
Net finance costs |
(0.7) |
(7.8) |
|
Tax (charge)/credit for the year |
(2.6) |
6.3 |
|
(Loss)/profit on discontinued operations |
(0.2) |
41.9 |
|
Profit after tax |
37.9 |
52.9 |
2. Adjusted profit for the year
Adjusted profit before tax (our measure of underlying earnings, which excludes disposals, valuation and mark to market adjustments but includes discontinued operations) for the year increased by £2.0m from £4.2m to £6.2m as set out below.
|
Adjusted profit for the year (including discontinued operations) |
31 March 2015 |
31 March 2014 |
|
|
£m |
£m |
|
Net rental income(1) |
15.8 |
3.8 |
|
Net profit/(loss) from trading sales |
0.1 |
(0.3) |
|
Fees from asset and development management |
1.3 |
3.1 |
|
Other income |
1.8 |
2.5 |
|
Gross profit - continuing operations |
19.0 |
9.1 |
|
Gross profit - discontinued operations |
0.3 |
5.8 |
|
Administrative expenses |
(17.0) |
(17.4) |
|
Operating profit/(loss) |
2.3 |
(2.5) |
|
Share of profit from joint ventures and associates |
2.6 |
9.4 |
|
Net finance income/(expenses) |
1.3 |
(2.7) |
|
Adjusted profit before tax |
6.2 |
4.2 |
(1) Includes £3.0m (2014: £nil) net surrender premium income
Importantly, adjusted gross profit from continuing operations has already more than compensated for disposals in the prior year with net rental income increasing from £3.8m to £15.8m. Growth at Wembley Park from London Designer Outlet and The SSE Arena contributed £4.3m, net surrender premiums contributed £3.0m and the London Portfolio contributed £4.1m. Fees from asset and development management of £1.3m have decreased following the disposal of iQ and Greenwich joint ventures.
During the year, potential issues, including undisclosed conflicts of interest, were identified in the management of the Quercus Fund. Quintain instigated an investigation by its lawyers, Norton Rose Fulbright, including a review of historic procurement and disposal fees charged by Quintain and others to the Fund focussed on the period 2004 to 2011.
In May 2015, following completion of the investigation and with the support of the General Partner, a settlement without any admission of legal liability by Quintain, of £1.9m was agreed in favour of the Fund. The amount of £1.6m, net of VAT, has been provided in these accounts against Quercus income for 2014/15. The costs of the investigation, which are estimated at £1.2m, are separately included in general administrative costs.
The table below provides a reconciliation between adjusted and statutory profit.
|
Reconciliation of adjusted profit to statutory profit |
31 March 2015 |
31 March 2014 |
|
|
£m |
£m |
|
Pre-tax adjusted profit |
6.2 |
4.2 |
|
Amortisation of intangible asset |
(0.8) |
(0.8) |
|
Revaluation surplus/(deficit) |
|
|
|
Continuing operations |
41.2 |
22.4 |
|
Discontinued operations |
- |
4.7 |
|
Joint ventures and associates |
1.1 |
(4.9) |
|
(Loss)/profit on disposal |
|
|
|
Continuing operations |
(0.2) |
1.7 |
|
Discontinued operations |
(1.1) |
32.5 |
|
Joint ventures and associates |
(3.4) |
(1.5) |
|
Mark to market adjustments |
|
|
|
Continuing operations |
(2.0) |
(3.9) |
|
Discontinued operations |
- |
0.5 |
|
Tax (charge)/credit |
|
|
|
Continuing operations |
(2.6) |
6.3 |
|
Discontinued operations |
(0.3) |
(8.3) |
|
Joint ventures and associates |
(0.2) |
- |
|
Profit after tax |
37.9 |
52.9 |
3. Analysis of rental income
Quintain conducts a significant proportion of its business through joint ventures and associates. The table below sets out the combined net and gross rental income for continuing operations.
|
Rental income |
31 March 2015 |
31 March 2014 |
|
|
£m |
£m |
|
Group net rental income(1) |
15.8 |
3.8 |
|
Share of joint venture and associates net rental income |
5.8 |
6.4 |
|
Combined net rental income |
21.6 |
10.2 |
|
Gross rental income |
|
|
|
Direct owned |
21.3 |
10.3 |
|
Joint venture and associates properties |
12.7 |
13.0 |
(1) Includes £3.0 million (2014: £nil) net surrender premium income
The gross contractual annual rent and gross Estimated Rental Value (ERV) presented below are look forward measures.
|
Gross contracted and ERV rent |
£m |
|
Gross contracted annual rent |
|
|
Direct owned |
19.0 |
|
JV properties |
4.7 |
|
Gross ERV(1) |
|
|
Direct owned |
24.0 |
|
JV properties |
4.8 |
(1)Estimated Rental Value
4. Sales of investment and trading properties
During the year, £121.7m of capital was recycled through disposals to reduce debt and invest in opportunities that offer the potential for better risk-adjusted returns, such as the acceleration of our substantial residential development programme at Wembley Park.
On 14 April 2014, Quintain entered into a 50:50 joint venture with Keystone Developers S.A. for the development of Emerald Gardens at Wembley Park. The consideration under the agreement was £22.7m for the land with a further £9.5m for future associated infrastructure, a total of £32.2m. Of this total consideration, £5.0m of infrastructure is deferred until practical completion and Quintain invested £12.5m back into the joint venture and £5.6m as a deposit on the 141 PMR apartments that the joint venture is constructing for Quintain, giving net cash proceeds of £9.1m.
On 16 May 2014, Quintain completed the disposal of its 50% interest in iQ, to its joint venture partner Wellcome Trust, for gross consideration of £106.4m.
On 28 April 2015, Quintain entered into a second 50:50 joint venture with Keystone Developers S.A. for the development of Alto, the next residential plot at Wembley Park. The consideration under the agreement was £19.0m for the land with a further £8.0m for future associated infrastructure (£4.0m deferred until practical completion), a total of £27.0m. Two buildings comprising 362 homes will be built on the plot, 120 of them will be constructed for Quintain, for which the Company will pay the joint venture £36.8m. Of this amount, £7.3m will be paid this summer, with a further £3.7m in the autumn and the balance from existing Company resources on practical completion, expected in 2017. These homes will be retained by Quintain and professionally managed as high quality PMR accommodation to expand the Group's income. The consideration of £19.0m excludes the value of the land of the PMR homes.
5. Results of joint ventures and associates
The Group's share of loss from joint ventures and associates, on a statutory basis, decreased to £0.8m (2014: £2.5m) which excludes iQ as this is presented as discontinued operations. The net revaluation surplus was £1.1m (2014: £4.9m deficit).
Of the £1.1m net revaluation surplus, £3.3m relates to the increase in valuation of the Hilton hotel, which is held in joint venture with Oaktree, this has been partially offset by a £2.7m deficit related to certain weaker assets within the Quercus Healthcare Fund portfolio, the majority of which were sold in the second part of the year realising a loss of £3.4m.
6. Net finance expenses
Net finance expenses decreased from £7.8m to £0.7m. Bank and other interest payable was £13.5m, a decrease of £4.0m on the prior year. The average cost of debt increased to 5.2% (2014: 4.2%) due to the 6.5% coupon on the Bond issued in July 2013, which has a more material impact on the weighted average when overall net debt levels are relatively modest. The net finance expense has decreased as we have continued to capitalise interest of £13.0m (2014: £13.7m) due to the ongoing active development at Wembley Park.
Interest receivable includes £1.5m reflecting the interest earned on a loan to the Hilton joint venture. Interest expense includes a £1.9m impairment relating to the investment in the Ludgate Environmental Fund, which is held at fair value as determined by reference to its quoted share price. Of this amount £1.4m represents the recycling of the cumulative deficit in cost that has previously been taken to the Statement of Other Comprehensive Income and therefore has no impact on Net Asset Value (NAV).
|
Net finance expenses |
31 March 2015 £m |
31 March 2014 £m |
|
Bank and other interest payable |
13.5 |
17.5 |
|
Recycling of fair value of financial instruments |
- |
4.2 |
|
Recycling of revaluation loss of available for sale financial asset |
1.4 |
- |
|
Impairment of financial instrument |
0.5 |
2.5 |
|
Change in fair value of financial instruments |
0.2 |
- |
|
Gross interest cost |
15.6 |
24.2 |
|
Interest capitalised |
(13.0) |
(13.7) |
|
Interest receivable |
(1.9) |
(2.7) |
|
|
0.7 |
7.8 |
7. Valuation
As at 31 March 2015, the valuation of the Group's properties, including tenant incentives and our share of gross assets in joint ventures and associates, was £834.6m, an increase of £42.3m, net of capital expenditure since 31 March 2014. The increase has arisen principally on two assets, first, the development land at Wembley Park which has benefited from our placemaking activity and the strength of the London residential market and, secondly, The SSE Arena which has been enhanced by the new management arrangements put in place during the prior year. The valuation surplus has been offset in part by the Group's share of a deficit arising in Quercus in the first half of the year. With the sale of a large portfolio of the weaker assets in Quercus, the pressure on the remaining assets has eased and the fund reported a small valuation uplift in the second half of the year for the core portfolio.
|
|
|
31 March 2015 £m |
31 March 2014 £m |
% Movement(1) |
|
Wembley |
Investment assets |
272.9 |
254.2 |
4.6% |
|
Development land |
395.7 |
334.9 |
13.8% |
|
|
London Portfolio |
Investment assets, development land |
93.1 |
23.9 |
3.3% |
|
Quercus² |
Long-term healthcare |
43.5 |
57.8 |
(5.8)% |
|
Non-core |
Secondary property and science parks |
29.4 |
33.3 |
1.5% |
|
Continuing |
|
834.6 |
704.1 |
7.1% |
|
iQ |
Student accommodation |
- |
216.0 |
- |
|
Total |
|
834.6 |
920.1 |
7.1% |
(1) Like for like growth, excluding capitalised interest (movement is 5.3% including interest)
(2) Held as an associate investment with NAV of £28.6m
8. Taxation
The Income Statement shows atax charge of £2.6m (2014: credit of £6.3m) arising from a deferred tax charge relating to the valuation surplus, partially offset by recognising an ACT credit and previously unrecognised losses.
9. Investment assets
|
|
31 March 2014 |
Additions |
Disposals |
Reclassified |
Valuation |
Other |
31 March 2015 |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Investment properties |
570.0 |
94.5 |
(11.7) |
(20.6) |
41.2 |
13.0 |
686.4 |
|
Joint ventures |
80.3 |
15.4 |
- |
(34.3) |
3.6 |
(4.4) |
60.6 |
|
Associates |
1.7 |
- |
- |
34.3 |
(2.5) |
(3.0) |
30.5 |
|
Other non-current assets |
19.9 |
8.1 |
(2.9) |
4.6 |
0.9 |
(2.5) |
28.1 |
|
|
671.9 |
118.0 |
(14.6) |
(16.0) |
43.2 |
3.1 |
805.6 |
The increase in investment properties is due to the additions in the London Portfolio, ongoing capital expenditure at Wembley and valuation uplifts, offset by the reclassification of Alto as trading property. Joint venture investments decreased as a result of the reclassification of Quercus as an associate.
10. Net assets per share
|
|
31 March 2015 |
31 March 2014 |
|
IFRS net assets |
£639.4m |
£595.4m |
|
IFRS NAV per share |
122p |
115p |
|
EPRA net assets |
£647.1m |
£598.2m |
|
EPRA NAV per share(1) |
122p |
114p |
|
IFRS diluted net assets |
£640.8m |
£598.2m |
|
IFRS diluted NAV per share |
121p |
114p |
(1) The EPRA NAV per share excludes the fair value adjustments for debt and related derivatives and deferred taxation on revaluations and includes the unrealised revaluation surplus on trading properties and is calculated on a fully diluted basis
11. Contractual capital commitments
As at 31 March 2015, the Group's contractual capital commitments of £58.8m (31 March 2014: £19.0m) relate primarily to ongoing construction and infrastructure work at Wembley.
12. Cash flow
|
Summary cash flow statement |
31 March 2015 |
31 March 2014 |
|
|
£m |
£m |
|
Net cash flow from operating activities |
12.7 |
(21.2) |
|
Net cash flow from investing activities |
(2.1) |
259.0 |
|
Net cash flow from financing activities |
(26.5) |
(272.1) |
|
Net decrease in cash |
(15.9) |
(34.3) |
|
Net repayment of loans |
24.0 |
269.0 |
|
Reduction in net debt |
8.1 |
234.7 |
|
|
|
|
|
Capital recycled: |
|
|
|
Sale of iQ |
104.7 |
- |
|
Sale of GPRL |
- |
227.9 |
|
Sale of Sequel |
- |
52.4 |
|
Net cash from Emerald Gardens |
9.1 |
- |
|
Other property sales |
7.9 |
41.9 |
|
|
121.7 |
322.2 |
The net cash inflow from operating activities was £12.7m (2014: £21.2m outflow) of which £22.7m relates to the sale of land held in trading property to the Quintain Keystone joint venture regarding Emerald Gardens. Investment in the development and purchase of investment properties totaled £97.3m (2014: £69.0m) during the year.
13. Financing strategy and capital structure
Since 31 March 2014, the Company has held net debt at a broadly similar level from £208.9m to £200.8m, with cash generated from the iQ disposal recycled into the residential development programme and commercial acquisitions to the London Portfolio. This results in a gearing of 32%. We have enhanced our financial platform by extending our bilateral banking facilities from March 2016 to the last quarter of 2018 and into 2019. The key terms are broadly in line with the previous facilities with headline margins of 190 basis points. Together with the £115.0m Bond issued in 2013 and a rolling £20.0m overdraft facility, Quintain now has £375.2m of debt facilities with an average maturity of over four years. This presents the opportunity to allocate capital and deliver value at Wembley Park and selectively invest in opportunities elsewhere in London, the intention being to manage the balance sheet gearing between its current level and 50%, whilst ensuring that the actual level is appropriate to the nature and risk profile of the Group's assets at any point in the real estate cycle. Our financing structure needs to be flexible and cost-effective, taking account of the availability of debt and other sources of finance. This has been achieved through securing funding at the corporate level, giving us the scope to fund efficiently across all areas of the portfolio and providing us with liquidity and operational flexibility. During the reporting period, the first Quintain Keystone joint venture agreed a £70m facility with Lloyds Bank to support construction on the Emerald Gardens site. A similar facility will be sought for the new joint venture for the development of Alto.
The Group financial statements have been prepared on a going concern basis, which assumes that the Group will continue to meet its liabilities as they fall due. At 31 March 2015, the Group has prepared detailed cashflow forecasts which show that it has committed undrawn facilities to finance its committed capital expenditure and other outflows, which will enable it to continue in operational existence for the foreseeable future.
The Group's key financial covenants are an interest cover covenant and a gearing covenant as shown below. The Group's forecasts show that the Group is expected to continue to meet both financial covenants for the foreseeable future. Based on this analysis the directors consider it is appropriate to prepare the financial information on a going concern basis.
Debt summary
|
|
Covenant |
31 March 2015 |
31 March 2014 |
|
Cash |
|
£(7.2)m |
£(10.3)m |
|
Bank loans and overdrafts < 1 year |
|
£12.8m |
- |
|
Bank loans > 1 year |
|
£195.2m |
£219.2m |
|
Net debt |
|
£200.8m |
£208.9m |
|
Undrawn committed facilities |
|
£167.2m |
£245.5m |
|
Weighted average debt maturity (full facility) |
|
4.2 years |
3.1 years |
|
Weighted average interest rate |
|
5.2% |
4.2% |
|
Cost of bank debt |
|
3.2% |
3.9% |
|
% of debt fixed |
|
79.3% |
75.3% |
|
% of debt capped |
|
20.7% |
24.7% |
|
Interest cover(1) |
1.25x |
n/a(3) |
20.5x |
|
Gearing(2) |
110% |
32% |
35% |
(1)Interest cover, per our banking covenants, is defined as adjusted operating profit, including discontinued operations, before net finance expenses plus realised surpluses on disposals divided by adjusted net finance costs excluding finance lease interest.
(2)Gearing, per our banking covenants, is defined as the ratio of net borrowings of the Company and its wholly owned subsidiaries to equity shareholders' funds adjusted for intangible assets, deferred tax and cumulative mark to market movements.
(3)Net interest receivable, per banking covenant definitions.
|
|
Covenant |
Quercus |
Quintain Keystone |
|
Joint ventures and associates: |
|
|
|
|
Net debt (QED share) |
|
£19.3m |
£6.0m |
|
Weighted average debt maturity |
|
2.1 years |
2.0 years |
|
Weighted average interest rate |
|
4.8% |
4.0% |
|
% of debt fixed/capped interest rate |
|
78% |
- |
|
Interest cover |
1.5x/n/a |
2.9x |
n/a |
|
Loan to value |
60%/50% |
50% |
8% |
|
Loan to cost |
n/a/65% |
n/a |
27% |
14. EPRA Information
The basic net asset value per share at 31 March 2015 was 122p, up from 115p in 2014. The EPRA net asset value per share at 31 March 2015 was 122p, up from 114p in 2014.
|
Reconciliation to EPRA NAV per share |
31 March 2015 |
31 March 2014 |
|
IFRS net assets |
639.4 |
595.4 |
|
EPRA adjustments |
|
|
|
Dilutive effect of options |
1.4 |
2.8 |
|
Deferred tax arising on revaluation movements, capital allowances and derivatives |
|
|
|
Group |
2.3 |
1.2 |
|
Joint ventures |
1.3 |
(0.9) |
|
Associates |
(4.4) |
0.3 |
|
Revaluation of trading properties |
6.6 |
- |
|
Fair value adjustments on derivatives |
|
|
|
Group |
0.5 |
0.4 |
|
Joint ventures and associates |
- |
(1.0) |
|
EPRA net assets |
647.1 |
598.2 |
|
EPRA NAV per share |
122p |
114p |
The table below reconciles EPRA earnings per share to the reported IFRS fully diluted earnings per share.
|
EPRA earnings per share |
31 March 2015 |
31 March 2014 |
||||
|
|
Shares m |
£m |
Pence |
Shares m |
£m |
Pence |
|
IFRS fully diluted earnings per share - continuing operations |
|
38.1 |
7.2 |
|
11.0 |
2.1 |
|
IFRS fully diluted (loss)/earnings per share - discontinued operations |
|
(0.2) |
- |
|
41.9 |
8.1 |
|
IFRS fully diluted earnings per share |
527.5 |
37.9 |
7.2 |
520.0 |
52.9 |
10.2 |
|
Revaluation movements |
|
|
|
|
|
|
|
Group - continuing operations |
|
(41.2) |
(7.8) |
|
(22.4) |
(4.3) |
|
Joint ventures and associates - continuing operations |
|
(1.1) |
(0.2) |
|
4.9 |
0.9 |
|
Group - discontinued operations |
|
- |
- |
|
1.4 |
0.3 |
|
Joint ventures - discontinued operations |
|
- |
- |
|
(6.1) |
(1.2) |
|
Loss/(profit) on disposals |
|
|
|
|
|
|
|
Group - continuing operations |
|
0.2 |
- |
|
(1.7) |
(0.3) |
|
Joint ventures and associates - continuing operations |
|
3.4 |
0.6 |
|
1.5 |
0.3 |
|
Group - discontinued operations |
|
1.1 |
0.2 |
|
(32.5) |
(6.3) |
|
Deferred tax arising on revaluation, capital allowances and derivatives |
|
|
|
|
|
|
|
Group |
|
2.9 |
0.6 |
|
(1.9) |
(0.4) |
|
Joint ventures and associates |
|
0.2 |
- |
|
3.5 |
0.7 |
|
Fair value adjustments on financial instruments |
|
|
|
|
|
|
|
Group - continuing operations |
|
2.1 |
0.4 |
|
6.7 |
1.3 |
|
Joint ventures - discontinuing operations |
|
- |
- |
|
(0.5) |
(0.1) |
|
EPRA earnings per share fully diluted |
527.5 |
5.5 |
1.0 |
520.0 |
5.8 |
1.1 |
15. Financial Outlook
Quintain has a robust financial platform in place from which to deliver on our strategy of creating value from our portfolio of investment assets, our residential development programme and our new residential investment business. We can look forward to new rental income from the opening of our first homes within the PMR investment portfolio and the commencement of development profits, starting with the first completions at Emerald Gardens next spring.
Risk Management
In addition to general economic, security and regulatory risks that are part of the general commercial environment and faced by a wide range of companies, we consider there to be a number of financial and non-financial risks specific to our Company. In managing the business, the identification and monitoring of risk is crucial to enable the Group to deliver its strategic objectives.
How we manage risk
The Board has overall responsibility for managing risk and regularly reviews principal risks and uncertainties. The Board has established a Group Risk Committee ('GRC') which comprises the Chairman and the Executive Directors and meets bi-annually. The objective of the GRC is to align our risk management approach under a framework, designed to be fully integrated with, and help shape, Quintain's strategy. Our approach has applied a consistent and robust methodology across the business to identify, assess, manage, mitigate and report risk from the bottom up, establishing a clear ownership of risk management. Smaller, dedicated risk committees called Functional Risk Forums ('FRF') meet at least bi-annually to consider the keys risks aligned to their strategy and objectives.
A risk register is maintained for each FRF: Wembley Park, London Portfolio, WELPUT and Asset Management, Finance and Transactions, Operations and Non-core (Quercus, Regional). The most significant risks will be reported to the GRC. In addition to the 'bottom up' operational and financial risks assessed by the Functional Risk Forums, the Executive Directors assess the 'top down' Group-wide strategic risks facing the Group on a regular basis. This approach ensures that all risks are fully considered in determining the risk appetite and strategy of the business.
All risks are recorded in a risk register and assessed for impact (using financial and non-financial measures) and likelihood of occurrence on a gross (before controls), net (after controls) and target basis. The principal risks faced by the Group do not change significantly from year to year. However, changes to the external and internal environment will affect the Group's response to these risks.
|
Description and implication of risk |
Mitigation |
|
Strategic risk Inability to capitalise on market opportunities through difficulty in sourcing investment opportunities at attractive prices or poor investment decisions.
Inappropriate asset concentration and mix may give risk to reduced liquidity and performance.
|
The Group carries out a regular review of its portfolio and mitigation includes acquisitions, disposals, development and joint venture partnering.
|
|
Development The Group is exposed to risks associated with development projects. For example: · Delays could occur for regulatory or funding reasons. · Obtaining planning consents. · Counterparty risk (contractors may become bankrupt or insolvent, or development partners may fail to meet their obligations). · Control of construction phasing and costs are vital to prevent overspend or delay once on site, which has a direct impact on successfully delivering project plans to meet valuation forecasts. · Inability to find suitable JV partners.
|
This risk has inherently increased during the year due to the increased activity at Wembley Park. Quintain's project management team is key to managing development risk by: · Transferring risk to contractors where possible. · Active engagement with local authorities to ensure development proposals are in accordance with local policies and statutes. · Ongoing monitoring of development progress against budget and schedule. · SupplierPortal was introduced during the year. This is a database to which our suppliers are asked to submit their policies in respect of environment, health and safety, labour, anti-bribery and corruption and IT security. Upon a successful transition through SupplierPortal, each supplier is awarded the status of 'preferred supplier', renewable on an annual basis. · Monitoring the level of committed future capital expenditure on the Group's development programme relative to the level of debt. · Well established relationships with financially strong joint venture partners. |
|
Reputation Quintain's reputation with stakeholders is important in the continued effective operation of the business. Support from the public sector is essential in continuing to achieve detailed planning consents. Upcoming political events may delay and/or impact investment decisions.
|
The GRC regularly review key risks in each business area. The Board reviews all key projects focussing on the reputational and commercial risks to the Group.
|
|
Relationships with joint venture partners and other professional organisations are critical to delivery of the business strategy. The negative impact of, for example, a regulatory breach, significant loss in asset value, poorly conceived design and planning or a significant health and safety breach could result in an adverse long term impact on the Company's creditability with investors and other key stakeholders.
|
The Group has dedicated Health and Safety personnel. All of our principal construction designers and contractors are vetted according to the core criteria for competence laid down by the Construction Design and Management (CDM) regulations. There is no change in the risk status year-on-year. |
|
Operational risk Inability to deliver robust income growth where income streams are concentrated in either mature assets or assets which are not our core specialism and are reliant on external management and market factors.
|
Experienced and skilled asset managers have been engaged to run the operating assets. Detailed financial information is prepared and profit forecasts are updated and reviewed at least quarterly which include detailed monitoring of letting voids and weighted average unexpired lease terms. |
|
Following the Home Office's recent increase in the international terrorism threat level to severe, the Group has heightened exposure to external events that threaten or disrupt London's status as a premier destination, in particular Wembley Park.
|
Such events are often beyond our control and are an inherent risk in being focussed on London. However, the Group has various security measures in place at Wembley Park and works closely with local authorities to maximise the safety of visitors. |
|
Property valuations Property valuations are inherently subjective and uncertain and may result in excessive volatility in the income statement. |
With respect to the development assets, valuers support their stand back valuation with other metrics including value per acre, value per net developable square foot and discounted cashflow. There is no change in the risk status year-on-year. |
|
Personnel The need to retain and develop our staff and ensure that we recruit high calibre people is essential to the delivery of the business strategy. |
Succession and resource planning is regularly reviewed by the Executive Management and Board as appropriate. Remuneration and benefits are considered competitive, strongly linked to performance and are regularly benchmarked with Quintain's peers. A Group-wide bi-annual performance appraisal process focuses on continual personal development and training needs. This process is being enhanced for re-launch later in 2015. The response to the annual employee survey allows management to understand and address employees' issues. Regular formal staff meetings and informal events enable staff to talk to senior management, and weekly news updates on business developments and successes allow all employees to understand key activities around the Group. There is no change in the risk status year-on-year. |
|
Market The Group's business is dependent on the macro-economic and property market conditions in London. Deterioration in residential and commercial property markets could lead to a decline in the value of the Group's property portfolio, tenant default and a reduction in income from these properties. Development land, which makes up 47% of the Group's gross assets, is subject to greater volatility in valuations compared to income producing assets. |
Each property portfolio is led by an experienced asset management team who is knowledgeable and experienced in mitigating the impact of occupier failures, lease breaks and expiries.
There is no change in the risk status year-on-year. |
|
Financial Changes in the availability of financing and/or costs of borrowing may adversely impact Quintain's ability to ensure sufficient liquidity is available to deliver the business plan.
|
This risk has reduced in the year as we have enhanced our financial platform by extending our bilateral banking facilities through extending the bank facilities from March 2016 to the last quarter of 2018 and into 2019. Quintain has strong relationships with the key banks.
The Company prepares detailed cash flow forecasts which show that it has committed undrawn facilities to finance its committed capital expenditure and other outflows, which will enable it to execute its business plan.
Quintain is in the process of enhancing forecasting skill by the introduction of a new planning tool as the Group's financial modelling tool that can forecast and test different business scenarios (including prospective transactions), analysing the impact on liquidity and headroom. |
|
Increased interest rates will result in reduced profitability.
|
Hedging policies are in place to reduce interest rate risk and the Bond is at a fixed rate.
|
|
Inappropriate capital structure. |
Further capital for the continued build out of Wembley Park will come from existing debt facilities or asset sales, supported by a clear marketing strategy; and joint venture partnerships, which management continues actively to seek. |
Responsibility Statement
The Statement of Directors' Responsibilities below has been made in connection with the Company's Annual Report for the year ended 31 March 2015.
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the applicable set of accounting standards give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole; and
· the Chairman's Statement, Chief Executive's Review, Finance and Business Reviews and Risk Management section in the strategic report include 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.
On behalf of the Board
William Rucker Maxwell James
Chairman Chief Executive
21 May 2015 21 May 2015
Forward looking statements
This announcement is for information purposes only and contains certain forward-looking statements which, by their nature, involve risk and uncertainty because they relate to or depend upon future events and circumstances.
There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by these forward looking statements, including a number of factors outside Quintain's control. All forward-looking statements are based upon information known to Quintain on the date of this announcement and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Quintain gives no undertaking to update forward-looking statements whether as a result of new information, future events or otherwise. Information contained in this announcement relating to the Company should not be relied upon as an indicator of future performance.
Quintain Estates and Development plc
Consolidated Income Statement
For the year ended 31 March 2015
|
|
Notes |
2015 |
2014 |
|
|
|
£m |
£m |
Revenue |
2.3 |
57.7 |
32.6 |
|
Cost of sales |
2.3 |
(39.5) |
(24.3) |
|
Gross profit |
|
18.2 |
8.3 |
|
Administrative expenses |
2.4 |
(17.0) |
(17.4) |
|
Operating profit/(loss) before recognition of results from joint ventures and associates, non-current asset sales and revaluation |
|
1.2 |
(9.1) |
|
Share of profit/(loss) from joint ventures |
3.4 |
1.9 |
(2.7) |
|
Share of (loss)/profit from associates |
3.4 |
(2.7) |
0.2 |
|
Operating profit/(loss) before non-current asset sales and revaluation |
|
0.4 |
(11.6) |
|
(Loss)/profit from sale of non-current assets |
|
(0.2) |
1.7 |
|
Surplus on revaluation of investment properties |
2.5 |
41.2 |
22.4 |
|
Operating profit |
|
41.4 |
12.5 |
|
Finance income |
2.6 |
1.9 |
2.7 |
|
Finance expenses |
2.6 |
(2.6) |
(10.5) |
|
Profit before tax |
|
40.7 |
4.7 |
|
Tax (charge)/credit for the year |
|
(2.6) |
6.3 |
|
Profit from continuing operations |
|
38.1 |
11.0 |
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
Gross profit |
|
0.3 |
5.8 |
|
Share of profit from joint ventures |
|
0.9 |
8.6 |
|
(Loss)/profit from sale of non-current assets |
|
(1.1) |
32.5 |
|
Deficit on revaluation of investment properties |
|
- |
(1.4) |
|
Operating profit |
|
0.1 |
45.5 |
|
Finance income |
|
- |
2.4 |
|
Finance expenses |
|
- |
(1.2) |
|
Profit before tax |
|
0.1 |
46.7 |
|
Tax charge for the year |
|
(0.3) |
(4.8) |
|
(Loss)/profit from discontinued operations |
4.1 |
(0.2) |
41.9 |
|
|
|
|
|
|
Profit for the financial year |
|
37.9 |
52.9 |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Equity shareholders |
|
37.9 |
52.9 |
|
Non-controlling interest |
|
- |
- |
|
|
|
37.9 |
52.9 |
|
|
|
|
|
|
Earnings per share (pence): |
2.7 |
|
|
|
Basic |
|
7.2 |
10.2 |
|
Diluted |
|
7.2 |
10.2 |
|
Earnings per share - continuing operations (pence): |
|
|
|
|
Basic |
|
7.2 |
2.1 |
|
Diluted |
|
7.2 |
2.1 |
Consolidated Statement of Other Comprehensive Income
For the year ended 31 March 2015
|
|
Notes |
2015 |
2014 |
|
|
|
£m |
£m |
|
|
|
|
|
|
Profit for the financial year |
|
37.9 |
52.9 |
|
Surplus/(deficit) on revaluation of other non-current investments |
5.1 |
1.4 |
(0.1) |
|
Fair value adjustment on cash flow hedges |
|
0.1 |
6.8 |
|
Recycling of revaluation loss of available for sale financial asset |
2.6 |
1.4 |
- |
|
Share of other comprehensive income in joint ventures and associates, net of tax |
3.4 |
(0.2) |
0.3 |
|
Tax on other comprehensive income |
|
(0.3) |
(4.6) |
|
Other comprehensive income for the financial year - continuing operations |
|
2.4 |
2.4 |
|
Share of other comprehensive income in discontinued operations |
|
- |
0.9 |
|
Total comprehensive income for the year |
|
40.3 |
56.2 |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Equity shareholders |
|
40.3 |
56.2 |
|
Non-controlling interest |
|
- |
- |
|
|
|
40.3 |
56.2 |
All other comprehensive income may be reclassified as profit and loss in the future.
Consolidated Balance Sheet
As at 31 March 2015
|
|
Notes |
2015 |
2014 |
|
|
|
£m |
£m |
Non-current assets |
|
|
|
|
Investment properties |
3.1 |
686.4 |
570.0 |
|
Owner-occupied properties, plant and equipment |
|
8.6 |
2.0 |
|
Intangible assets |
|
5.2 |
6.0 |
|
Investment in joint ventures |
3.4 |
60.6 |
80.3 |
|
Investment in associates |
3.4 |
30.5 |
1.7 |
|
Non-current receivables |
5.1 |
14.3 |
11.0 |
|
Deferred tax asset |
|
- |
0.9 |
|
Total non-current assets |
|
805.6 |
671.9 |
Current assets |
|
|
|
|
Trading properties |
3.3 |
23.4 |
28.5 |
|
Trade and other receivables |
5.2 |
42.9 |
42.3 |
|
Cash and cash equivalents |
|
7.2 |
10.3 |
|
Assets held for sale |
4.1 |
- |
106.2 |
|
Total current assets |
|
73.5 |
187.3 |
Total assets |
|
879.1 |
859.2 |
Current liabilities |
|
|
|
|
Bank loans and other borrowings |
6.1 |
(12.8) |
- |
|
Trade and other payables |
5.4 |
(26.2) |
(27.9) |
|
Current tax liability |
|
(1.4) |
(1.3) |
|
Total current liabilities |
|
(40.4) |
(29.2) |
Non-current liabilities |
|
|
|
|
Bank loans and other borrowings |
6.1 |
(192.5) |
(216.7) |
|
Obligations under finance leases |
|
(1.3) |
(10.7) |
|
Other payables |
5.3 |
(3.2) |
(7.2) |
|
Deferred tax liability |
|
(2.3) |
- |
|
Total non-current liabilities |
|
(199.3) |
(234.6) |
Total liabilities |
|
(239.7) |
(263.8) |
Net assets |
|
639.4 |
595.4 |
Equity |
|
|
|
|
Share capital |
6.2 |
131.5 |
130.2 |
|
Share premium |
|
138.9 |
137.3 |
|
Other capital reserves |
|
109.5 |
107.0 |
|
Cashflow hedge reserve |
|
(0.6) |
(0.5) |
|
Retained earnings |
|
267.9 |
229.2 |
|
Own shares reserve |
|
(7.8) |
(7.8) |
Equity shareholders' funds |
|
639.4 |
595.4 |
Non-controlling interest |
|
- |
- |
Total equity |
|
639.4 |
595.4 |
|
|
|
|
|
Net asset value per share (pence): |
2.7 |
|
|
|
Basic |
|
122 |
115 |
|
Diluted |
|
121 |
114 |
Approved by the Board of Directors on 21 May 2015 and signed on its behalf by:
WILLIAM RUCKER MAXWELL JAMES
Director Director
Consolidated Statement of Changes in Equity
For the year ended 31 March 2015
|
|
Share capital |
Share premium |
Other capital reserves |
Cashflow hedge reserve |
Retained earnings |
Own shares reserve |
Equity shareholders' funds |
Non-controlling interest |
Total equity |
|
|
|||||||||
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Balance 1 April 2014 |
130.2 |
137.3 |
107.0 |
(0.5) |
229.2 |
(7.8) |
595.4 |
- |
595.4 |
|
Profit for the year |
- |
- |
- |
- |
37.9 |
- |
37.9 |
- |
37.9 |
|
Other comprehensive income/(loss) for the year, net of tax |
- |
- |
2.5 |
(0.1) |
- |
- |
2.4 |
- |
2.4 |
|
Total comprehensive income/(loss) for the year |
- |
- |
2.5 |
(0.1) |
37.9 |
- |
40.3 |
- |
40.3 |
|
Costs relating to share-based payment schemes |
- |
- |
- |
- |
0.8 |
- |
0.8 |
- |
0.8 |
|
Issue of share capital |
1.3 |
1.6 |
- |
- |
- |
- |
2.9 |
- |
2.9 |
|
Balance as at 31 March 2015 |
131.5 |
138.9 |
109.5 |
(0.6) |
267.9 |
(7.8) |
639.4 |
- |
639.4 |
Consolidated Statement of Changes in Equity
For the year ended 31 March 2014
|
|
Share capital
|
Share premium |
Other capital reserves |
Cashflow hedge reserve |
Retained earnings |
Own shares reserve |
Equity shareholders' funds |
Non-controlling interest |
Total equity |
|
|
|||||||||
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Balance 1 April 2013 |
130.2 |
137.3 |
107.1 |
(11.2) |
182.5 |
(7.8) |
538.1 |
0.3 |
538.4 |
|
Profit for the year |
- |
- |
- |
- |
52.9 |
- |
52.9 |
- |
52.9 |
|
Other comprehensive (loss)/income for the year, net of tax |
- |
- |
(0.1) |
3.4 |
- |
- |
3.3 |
- |
3.3 |
|
Total comprehensive (loss)/income for the year |
- |
- |
(0.1) |
3.4 |
52.9 |
- |
56.2 |
- |
56.2 |
|
Costs relating to share-based payment schemes |
- |
- |
- |
- |
1.1 |
- |
1.1 |
- |
1.1 |
|
Disposal of a subsidiary with a non-controlling interest |
- |
- |
- |
- |
- |
- |
- |
(0.3) |
(0.3) |
|
Transfer between reserves |
- |
- |
- |
7.3 |
(7.3) |
- |
- |
- |
- |
|
Balance as at 31 March 2014 |
130.2 |
137.3 |
107.0 |
(0.5) |
229.2 |
(7.8) |
595.4 |
- |
595.4 |
Consolidated Cashflow Statement
For the year ended 31 March 2015
|
|
|
2015 |
2014 |
|
|
|
£m |
£m |
Operating activities |
|
|
|
|
Profit for the financial year |
|
37.9 |
52.9 |
|
Adjustments for: |
|
|
|
|
Depreciation of plant and equipment |
|
0.8 |
0.1 |
|
Amortisation of intangible assets |
|
0.8 |
0.8 |
|
Costs relating to share-based payment schemes |
|
1.0 |
0.6 |
|
Net finance expenses |
|
0.7 |
6.6 |
|
Loss/(profit) on sale of non-current assets |
|
1.3 |
(34.2) |
|
Surplus on revaluation of investment properties |
|
(41.2) |
(21.0) |
|
Share of profit from joint ventures |
|
(2.8) |
(5.9) |
|
Share of loss/(profit) from associates |
|
2.7 |
(0.2) |
|
Tax charge/(credit) |
|
2.9 |
(1.5) |
|
|
|
4.1 |
(1.8) |
|
Increase in trade and other receivables |
|
(3.4) |
(15.3) |
|
Increase in trade and other payables |
|
1.4 |
5.9 |
|
Proceeds from trading properties |
|
21.1 |
5.1 |
|
Cash generated from operations |
|
23.2 |
(6.1) |
|
Interest paid |
|
(11.0) |
(16.0) |
|
Interest received |
|
0.5 |
1.2 |
|
Tax paid |
|
- |
(0.3) |
|
Net cashflow from operating activities |
|
12.7 |
(21.2) |
|
Investing activities |
|
|
|
|
Proceeds from sale of investment properties |
|
4.8 |
75.3 |
|
Purchase and development of investment properties |
|
(97.3) |
(69.0) |
|
Purchase of owner-occupied properties, plant and equipment |
|
(2.7) |
(1.8) |
|
Purchase of other non-current investments |
|
(5.4) |
(5.8) |
|
Proceeds from sale of other non-current investments |
|
3.1 |
3.2 |
|
Proceeds from sale of joint ventures |
|
104.7 |
243.7 |
|
Capital and loan payments advanced to joint ventures |
|
(15.5) |
- |
|
Capital and loan repayments received from joint ventures |
|
2.5 |
5.2 |
|
Distributions received from joint ventures |
|
3.7 |
8.2 |
|
Net cashflow from investing activities |
|
(2.1) |
259.0 |
|
Financing activities |
|
|
|
|
Proceeds from new borrowings |
|
- |
115.0 |
|
Repayment of borrowings |
|
(24.0) |
(384.0) |
|
Payment of loan issue costs |
|
(2.1) |
(2.3) |
|
Payment of finance lease liabilities |
|
(0.4) |
(0.8) |
|
Net cashflow from financing activities |
|
(26.5) |
(272.1) |
|
Net decrease in cash and cash equivalents |
|
(15.9) |
(34.3) |
|
Cash and cash equivalents at start of year |
|
10.3 |
44.6 |
|
Cash and cash equivalents at end of year |
|
(5.6) |
10.3 |
|
|
|
|
|
|
Cash is represented by: |
|
|
|
|
Cash and cash equivalents |
|
7.2 |
10.3 |
|
Bank overdraft |
|
(12.8) |
- |
|
|
|
(5.6) |
10.3 |
Notes to the accounts
For the year ended 31 March 2015
Section 1: Preparation of financial statements
1.1 Basis of preparation
The Board approved the Group financial statements on 21 May 2015. These have been prepared in accordance with International Financial Reporting Standards and Interpretations issued by the International Financial Reporting Interpretations Committee as adopted by the European Union ('IFRS') and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements are presented in Sterling and have been prepared on a historical cost basis except that investment properties, other non-current investments and certain financial instruments have been stated at fair value.
1.2 Going concern
The Group financial statements have been prepared on a going concern basis, which assumes that the Group will continue to meet its liabilities as they fall due. At 31 March 2015, the Group has prepared detailed cash flow forecasts which show that it has committed undrawn facilities to finance its committed capital expenditure and other outflows, which will enable it to continue in operational existence for the foreseeable future.
1.3 Significant judgements, estimates and assumptions
The preparation of financial statements under IFRS requires the Board to make judgements, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets and liabilities as at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements that are not readily apparent from other sources. However, the actual results may differ from these estimates. The key areas where management has made significant judgements are around estimates regarding the valuation of properties on the balance sheet and in joint ventures and associates. Other areas of estimation and uncertainty are included within the accounting policies, the more significant being the recoverability of receivables and the continued capitalisation of interest. These judgements and estimates are discussed in more detail in the relevant notes to these financial statements.
Other areas of judgement, risk and uncertainty which are relevant to an understanding of these results and the Group's financial position are referred to in the Finance Review.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised.
1.4 Basis of consolidation
The Group's financial statements consolidate those of the Company and its subsidiaries, together referred to as the Group, and equity account for the Group's interest in joint ventures and associates.
Subsidiaries are those entities controlled by the Group. Control exists when the Group has power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The assessment of control is performed on a continuous basis. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date it ceases.
The acquisition or disposal of shares in subsidiaries and interests in joint ventures where properties constitute the only or main asset are accounted for as property transactions unless the fair values attributed to other assets and liabilities within the entity differ from their carrying values.
Notes to the accounts
continued
Section 2: Performance for the year
2.1 Underlying results for the year
Underlying results for the year are provided to enable readers of the accounts to differentiate between items of an underlying operating nature and those relating to capital or revaluations.
|
|
|
2015 |
|
2014 |
||||
|
|
Adjusted |
Removal of discontinued operations |
Capital1 |
Total |
Adjusted |
Removal of discontinued operations |
Capital1 |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Revenue |
58.1 |
(0.4) |
- |
57.7 |
39.8 |
(7.2) |
- |
32.6 |
|
Cost of sales |
(38.8) |
0.1 |
(0.8) |
(39.5) |
(24.9) |
1.4 |
(0.8) |
(24.3) |
|
Gross profit/(loss) |
19.3 |
(0.3) |
(0.8) |
18.2 |
14.9 |
(5.8) |
(0.8) |
8.3 |
|
Administrative expenses |
(17.0) |
- |
- |
(17.0) |
(17.4) |
- |
- |
(17.4) |
|
Operating profit/(loss) before recognition of results from joint ventures and associates, non-current asset sales and revaluation |
2.3 |
(0.3) |
(0.8) |
1.2 |
(2.5) |
(5.8) |
(0.8) |
(9.1) |
|
Share of profit/(loss) from joint ventures |
0.8 |
(0.9) |
2.0 |
1.9 |
9.4 |
(8.6) |
(3.5) |
(2.7) |
|
Share of profit/(loss) from associates |
1.8 |
- |
(4.5) |
(2.7) |
- |
- |
0.2 |
0.2 |
|
(Loss)/profit from sale of non-current assets |
- |
1.1 |
(1.3) |
(0.2) |
- |
(32.5) |
34.2 |
1.7 |
|
Surplus/(deficit) on revaluation of investment properties |
- |
- |
41.2 |
41.2 |
- |
1.4 |
21.0 |
22.4 |
|
Operating profit |
4.9 |
(0.1) |
36.6 |
41.4 |
6.9 |
(45.5) |
51.1 |
12.5 |
|
Finance income |
1.9 |
- |
- |
1.9 |
5.1 |
(2.4) |
- |
2.7 |
|
Finance costs |
(0.6) |
- |
(2.0) |
(2.6) |
(7.8) |
1.2 |
(3.9) |
(10.5) |
|
Net finance income/(expenses) |
1.3 |
- |
(2.0) |
(0.7) |
(2.7) |
(1.2) |
(3.9) |
(7.8) |
|
Profit before tax |
6.2 |
(0.1) |
34.6 |
40.7 |
4.2 |
(46.7) |
47.2 |
4.7 |
(1) For these purposes revaluation movements, trading property provisions, disposals, mark to market adjustments and amortisation of intangibles are included within capital items.
Notes to the accounts
continued
Section 2: Performance for the year continued
2.2 Segmental information
The Group has four reportable segments, being Wembley (comprising investment and development assets at Wembley Park), London Portfolio (comprising investment assets in London and the WELPUT asset management services), Quercus (asset management of and share of results due to investment in the Quercus Healthcare Fund) and Non-core (comprising other property investments and the Quantum joint venture). The factors used to determine the Group's reportable segments relate to the way in which the business is aligned and the manner in which results and assets are reported to the Board (as the Board is considered to be the chief operating decision maker) and therefore the basis that resource allocations are made.
The measure of segment results is considered to be adjusted operating profit before administrative expenses. The Board reviews administrative expenses, finance income and expenses and tax at Group level and does not allocate these costs to segments. The Group's segment asset and liability disclosures reflect the Board's primary focus on property, joint venture, associate and investment assets at the segment level with all other assets being reviewed at the Group level. Liabilities are only reviewed at the Group level and not allocated to segments.
All of the Group's revenues are derived from external customers. There are no inter-segmental revenues.
All activities are based in the United Kingdom and Channel Islands.
Notes to the accounts continued
Section 2: Performance for the year continued
2.2. Segmental information continued
The segmental information of the Group's results for the year ended 31 March 2015 was as follows:
|
|
Wembley |
London Portfolio |
Quercus |
Non-core |
Total from continuing operations |
Discontinued operations |
Total |
|
|
iQ |
||||||
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Revenue |
45.5 |
7.9 |
1.5 |
2.8 |
57.7 |
0.4 |
58.1 |
|
Cost of sales |
(32.3) |
(3.0) |
(2.5) |
(1.7) |
(39.5) |
(0.1) |
(39.6) |
|
Gross profit/(loss) |
13.2 |
4.9 |
(1.0) |
1.1 |
18.2 |
0.3 |
18.5 |
|
Share of profit from joint ventures |
1.0 |
- |
- |
0.9 |
1.9 |
0.9 |
2.8 |
|
Share of (loss)/profit from associates |
- |
- |
(2.9) |
0.2 |
(2.7) |
- |
(2.7) |
|
Profit/(loss) from sale of non-current assets |
0.6 |
- |
- |
(0.8) |
(0.2) |
(1.1) |
(1.3) |
|
Surplus/(deficit) on revaluation of investment properties |
38.3 |
3.0 |
- |
(0.1) |
41.2 |
- |
41.2 |
|
Operating profit/(loss) before administrative expenses |
53.1 |
7.9 |
(3.9) |
1.3 |
58.4 |
0.1 |
58.5 |
|
|
|
|
|
|
|
|
|
|
Adjusted |
12.2 |
5.7 |
0.9 |
1.9 |
20.7 |
1.2 |
21.9 |
|
Capital(1) |
40.9 |
2.2 |
(4.8) |
(0.6) |
37.7 |
(1.1) |
36.6 |
|
Operating profit/(loss) before administrative expenses |
53.1 |
7.9 |
(3.9) |
1.3 |
58.4 |
0.1 |
58.5 |
(1) For these purposes revaluation movements, trading property provisions, disposals, mark to market adjustments and amortisation of intangibles are included within capital items.
Notes to the accounts continued
Section 2: Performance for the year continued
2.2 Segmental information continued
The segmental information of the Group's results for the year ended 31 March 2014 was as follows:
|
|
Wembley |
London Portfolio |
Quercus |
Non-core |
Total from continuing operations |
Discontinued operations |
Total |
||
|
|
iQ |
Greenwich |
Sequel |
||||||
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Revenue |
15.2 |
7.6 |
2.0 |
7.8 |
32.6 |
2.1 |
1.6 |
3.5 |
39.8 |
|
Cost of sales |
(10.3) |
(6.2) |
(1.2) |
(6.6) |
(24.3) |
(0.9) |
- |
(0.5) |
(25.7) |
|
Gross profit |
4.9 |
1.4 |
0.8 |
1.2 |
8.3 |
1.2 |
1.6 |
3.0 |
14.1 |
|
Share of (loss)/profit from joint ventures |
(0.2) |
- |
(4.2) |
1.7 |
(2.7) |
13.5 |
(4.9) |
- |
5.9 |
|
Share of profit from associates |
- |
- |
- |
0.2 |
0.2 |
- |
- |
- |
0.2 |
|
Profit/(loss) from sale of non-current assets |
2.5 |
- |
- |
(0.8) |
1.7 |
- |
32.3 |
0.2 |
34.2 |
|
Surplus/(deficit) on revaluation of investment properties |
22.5 |
0.2 |
- |
(0.3) |
22.4 |
- |
- |
(1.4) |
21.0 |
|
Operating profit/(loss) before administrative expenses |
29.7 |
1.6 |
(3.4) |
2.0 |
29.9 |
14.7 |
29.0 |
1.8 |
75.4 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted |
4.8 |
2.2 |
3.3 |
2.7 |
13.0 |
8.1 |
0.2 |
3.0 |
24.3 |
|
Capital(1) |
24.9 |
(0.6) |
(6.7) |
(0.7) |
16.9 |
6.6 |
28.8 |
(1.2) |
51.1 |
|
Operating profit/(loss) before administrative expenses |
29.7 |
1.6 |
(3.4) |
2.0 |
29.9 |
14.7 |
29.0 |
1.8 |
75.4 |
(1) For these purposes revaluation movements, trading property provisions, disposals, mark to market adjustments and amortisation of intangibles are included within capital items.
Notes to the accounts continued
Section 2: Performance for the yearcontinued
2.2 Segmental information continued
The segmental information of the Group's Balance Sheet as at 31 March 2015 was as follows:
|
|
Wembley |
London Portfolio |
Quercus |
Non-core |
Unallocated |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Non-current assets |
|
|
|
|
|
|
|
Investment properties |
578.3 |
92.8 |
- |
15.3 |
- |
686.4 |
|
Owner-occupied properties, plant and equipment |
4.0 |
- |
- |
- |
4.6 |
8.6 |
|
Intangible assets |
- |
5.2 |
- |
- |
- |
5.2 |
|
Investment in joint ventures |
41.6 |
- |
- |
19.0 |
- |
60.6 |
|
Investment in associates |
- |
- |
28.6 |
1.9 |
- |
30.5 |
|
Non-current receivables |
- |
12.8 |
- |
1.5 |
- |
14.3 |
|
Total non-current assets |
623.9 |
110.8 |
28.6 |
37.7 |
4.6 |
805.6 |
|
Current assets |
|
|
|
|
|
|
|
Trading properties |
17.8 |
- |
- |
5.6 |
- |
23.4 |
|
Other current assets |
30.5 |
2.3 |
1.0 |
9.2 |
7.1 |
50.1 |
|
Total current assets |
48.3 |
2.3 |
1.0 |
14.8 |
7.1 |
73.5 |
|
Total assets |
672.2 |
113.1 |
29.6 |
52.5 |
11.7 |
879.1 |
|
Total current liabilities |
|
|
|
|
(40.4) |
(40.4) |
|
Total non-current liabilities |
|
|
|
|
(199.3) |
(199.3) |
|
Total liabilities |
|
|
|
|
(239.7) |
(239.7) |
|
Net assets/(liabilities) |
672.2 |
113.1 |
29.6 |
52.5 |
(228.0) |
639.4 |
|
Acquisitions |
|
|
|
|
|
|
|
Capital expenditure |
11.9 |
- |
- |
- |
2.7 |
14.6 |
|
Acquisition of investment properties |
11.1 |
66.1 |
- |
5.4 |
- |
82.6 |
|
Acquisition of non-current receivables |
- |
5.3 |
- |
- |
- |
5.3 |
|
|
23.0 |
71.4 |
- |
5.4 |
2.7 |
102.5 |
Notes to the accounts continued
Section 2: Performance for the year continued
2.2 Segmental information continued
The segmental information of the Group's Balance Sheet as at 31 March 2014 was as follows:
|
|
Wembley |
London Portfolio |
Quercus |
Non-core |
Unallocated |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Non-current assets |
|
|
|
|
|
|
|
Investment properties |
526.4 |
23.9 |
- |
19.7 |
- |
570.0 |
|
Owner-occupied properties, plant and equipment |
1.7 |
- |
- |
- |
0.3 |
2.0 |
|
Intangible assets |
- |
6.0 |
- |
- |
- |
6.0 |
|
Investment in joint ventures |
27.7 |
- |
34.3 |
18.3 |
- |
80.3 |
|
Investment in associates |
- |
- |
- |
1.7 |
- |
1.7 |
|
Non-current receivables |
3.0 |
5.3 |
- |
2.7 |
- |
11.0 |
|
Deferred tax asset |
- |
- |
- |
- |
0.9 |
0.9 |
|
Total non-current assets |
558.8 |
35.2 |
34.3 |
42.4 |
1.2 |
671.9 |
|
Current assets |
|
|
|
|
|
|
|
Trading properties |
23.0 |
- |
- |
5.5 |
- |
28.5 |
|
Other current assets |
27.7 |
3.4 |
0.5 |
11.4 |
9.6 |
52.6 |
|
Assets held for sale |
- |
- |
- |
- |
106.2 |
106.2 |
|
Total current assets |
50.7 |
3.4 |
0.5 |
16.9 |
115.8 |
187.3 |
|
Total assets |
609.5 |
38.6 |
34.8 |
59.3 |
117.0 |
859.2 |
|
Total current liabilities |
- |
- |
- |
- |
(29.2) |
(29.2) |
|
Total non-current liabilities |
- |
- |
- |
- |
(234.6) |
(234.6) |
|
Total liabilities |
- |
- |
- |
- |
(263.8) |
(263.8) |
|
Net assets/(liabilities) |
609.5 |
38.6 |
34.8 |
59.3 |
(146.8) |
595.4 |
|
Acquisitions |
|
|
|
|
|
|
|
Capital expenditure |
53.7 |
- |
|
0.2 |
0.4 |
54.3 |
|
Acquisition of investment properties |
- |
14.5 |
- |
- |
- |
14.5 |
|
Acquisition of non-current receivables |
- |
5.8 |
- |
- |
- |
5.8 |
|
|
53.7 |
20.3 |
- |
0.2 |
0.4 |
74.6 |
Notes to the accounts
continued
Section 2: Performance for the year continued
2.3 Revenue, cost of sales and gross profit
|
|
2015 |
2014
|
||||
|
|
Revenue
£m |
Cost of sales £m |
Gross profit/ (loss) £m |
Revenue
£m |
Cost of sales £m |
Gross profit/ (loss) £m |
|
Rental income |
21.3 |
(5.5) |
15.8 |
10.3 |
(6.5) |
3.8 |
|
Income from sale of trading properties |
22.9 |
(22.8) |
0.1 |
5.1 |
(5.4) |
(0.3) |
|
Fees from asset and development management |
5.5 |
(4.2) |
1.3 |
9.6 |
(6.5) |
3.1 |
|
Intangible asset amortisation |
- |
(0.8) |
(0.8) |
- |
(0.8) |
(0.8) |
|
Other income |
8.0 |
(6.2) |
1.8 |
7.6 |
(5.1) |
2.5 |
|
|
57.7 |
(39.5) |
18.2 |
32.6 |
(24.3) |
8.3 |
Rental income includes £3.0m (2014: £nil) net surrender premium income from Wembley.
Fees from asset and development management include a debit in cost of sales of £1.6m (2014: £nil), net of VAT, in respect of potential issues in the management of the Quercus Fund as described in the Finance Review. Related legal costs of £1.2m (2014: £nil) are separately included in administrative expenses.
|
Net rental income |
2015 |
2014 |
|
|
Total |
Total |
|
|
£m |
£m |
|
Group net rental income |
15.8 |
3.8 |
|
Share of joint venture and associates net rental income |
5.8 |
6.4 |
|
Combined net rental income |
21.6 |
10.2 |
2.4 Administrative expenses
The analysis of the Group's administrative expenses was as follows:
|
|
|
2015 |
2014 |
|
|
|
£m |
£m |
|
Directors' remuneration |
|
3.8 |
3.0 |
|
Staff costs |
|
5.5 |
7.3 |
|
Total staff costs |
|
9.3 |
10.3 |
|
Legal and other professional fees |
|
2.9 |
2.3 |
|
Office costs |
|
2.5 |
2.1 |
|
Depreciation of property, plant and equipment |
|
0.5 |
0.1 |
|
Operating lease payments |
|
0.7 |
0.8 |
|
General expenses |
|
0.6 |
0.7 |
|
Onerous lease provision |
|
0.5 |
1.1 |
|
|
|
17.0 |
17.4 |
Future minimum lease payments payable by the Group under non-cancellable operating leases, excluding the onerous lease, are £8.2m (2014: £8.7m) payable evenly over the next nine years.
Notes to the accounts
continued
Section 2: Performance for the year continued
2.5 Property revaluation movements
The revaluation movements on the Group's investment properties whether held directly or through joint ventures and the associates were as follows:
|
|
2015 |
2014 |
|
|
£m |
£m |
|
Surplus on revaluation of directly held investment properties |
41.2 |
22.4 |
|
Surplus/(deficit) on revaluation of investment properties in joint ventures |
3.6 |
(5.1) |
|
(Deficit)/surplus on revaluation of investment properties in associates |
(2.5) |
0.2 |
|
|
42.3 |
17.5 |
There are no revaluation surpluses or deficits in discontinued operations in the year (2014: £1.4m deficit of directly held investment properties and a surplus of £6.1m in joint ventures).
2.6 Net finance expenses
|
|
|
2015 |
2014 |
|
|
|
£m |
£m |
|
Recognised in Income Statement: |
|
|
|
|
Interest expense on bank debt and associated swaps |
|
13.1 |
16.8 |
|
Interest on obligations under finance leases |
|
0.4 |
0.7 |
|
Impairment of financial assets |
|
0.5 |
2.5 |
|
Recycling of revaluation loss of available for sale financial asset |
|
1.4 |
- |
|
Change in fair value of ineffective caps |
|
0.2 |
- |
|
Recycling of fair value adjustment on effective swaps |
|
- |
4.2 |
|
|
|
15.6 |
24.2 |
|
Interest capitalised |
|
(13.0) |
(13.7) |
|
Finance expenses |
|
2.6 |
10.5 |
|
Finance income: interest income on loans and receivables |
|
(1.9) |
(2.7) |
|
|
|
0.7 |
7.8 |
|
|
|
|
|
|
Recognised in Other Comprehensive Income: |
|
|
|
|
Net (surplus)/deficit in fair value of quoted investments |
|
(1.4) |
0.1 |
|
Effective portion of changes in fair value of cashflow hedges |
|
(0.1) |
(2.6) |
|
Recycling of revaluation loss of available for sale financial asset |
|
(1.4) |
- |
|
Recycling of fair value adjustment on effective swaps |
|
- |
(4.2) |
|
|
|
(2.9) |
(6.7) |
The interest capitalised relates to investment properties in the course of construction. The average rate of interest used for capitalisation was 6.4% (2014: 5.9%).
Notes to the accounts
continued
Section 2: Performance for the yearcontinued
2.7 Earnings per share and net asset value per share
i) Earnings per share
|
|
2015 |
2014 |
||||
|
|
Earnings
£m |
Number of shares m |
Earnings per share pence |
Earnings
£m |
Number of shares m |
Earnings per share pence |
|
Issued shares |
|
525.4 |
|
|
521.3 |
|
|
Less: ESOP shares |
|
(2.2) |
|
|
(2.2) |
|
|
Basic - continuing operations |
38.1 |
523.2 |
7.2 |
11.0 |
519.1 |
2.1 |
|
Basic - discontinued operations |
(0.2) |
523.2 |
- |
41.9 |
519.1 |
8.1 |
|
Basic |
37.9 |
523.2 |
7.2 |
52.9 |
519.1 |
10.2 |
|
Adjustment: |
|
|
|
|
|
|
|
Employee share-based payment schemes |
- |
4.3 |
|
- |
0.9 |
|
|
Diluted |
37.9 |
527.5 |
7.2 |
52.9 |
520.0 |
10.2 |
|
Revaluation movements - continuing operations |
(42.3) |
- |
|
(17.5) |
- |
|
|
Revaluation movements - discontinued operations |
- |
- |
|
(4.7) |
- |
|
|
Losses/(gains) on disposals - continuing operations |
3.6 |
- |
|
(0.2) |
- |
|
|
Losses/(gains) on disposals - discontinued operations |
1.1 |
- |
|
(32.5) |
- |
|
|
Fair value adjustments on financial instruments - continuing operations |
2.1 |
- |
|
6.7 |
- |
|
|
Fair value adjustments on financial instruments - discontinued operations |
- |
- |
|
(0.5) |
- |
|
|
Deferred tax |
3.1 |
- |
|
1.6 |
- |
|
|
EPRA |
5.5 |
527.5 |
1.0 |
5.8 |
520.0 |
1.1 |
ii) Net asset value per share
|
|
2015 |
2014 |
||||
|
|
Equity shareholders' funds £m |
Number of shares m |
Net asset value per share pence |
Equity shareholders' funds £m |
Number of shares m |
Net asset value per share pence |
|
Net assets |
639.4 |
526.1 |
|
595.4 |
521.5 |
|
|
Less: ESOP shares |
- |
(2.2) |
|
- |
(2.2) |
|
|
Basic |
639.4 |
523.9 |
122 |
595.4 |
519.3 |
115 |
|
Adjustment: |
|
|
|
|
|
|
|
Employee share-based payment schemes |
1.4 |
4.4 |
|
2.8 |
6.9 |
|
|
Diluted |
640.8 |
528.3 |
121 |
598.2 |
526.2 |
114 |
|
Fair value of derivatives |
0.5 |
- |
|
(0.6) |
- |
|
|
Deferred tax |
(0.8) |
- |
|
0.6 |
- |
|
|
Revaluation of trading properties |
6.6 |
- |
|
- |
- |
|
|
EPRA |
647.1 |
528.3 |
122 |
598.2 |
526.2 |
114 |
Although not required under IFRS, net asset value per share is considered a key performance indicator in the sector in which the Group operates. Contingent share entitlements have been excluded from the calculation in ii) where the conditions had not been met at the Balance Sheet date.
Notes to the accounts
continued
Section 3: Property assets, joint ventures and associates
3.1 Investment properties
|
|
|
Freehold |
Long leasehold |
Short leasehold |
Total
|
|
|
|
£m |
£m |
£m |
£m |
|
Balance 31 March 2013 |
|
521.8 |
35.9 |
4.8 |
562.5 |
|
Additions - capital expenditure |
|
40.3 |
14.8 |
- |
55.1 |
|
Additions - new property |
|
- |
- |
14.5 |
14.5 |
|
Interest capitalised |
|
13.7 |
- |
- |
13.7 |
|
Disposals |
|
(50.9) |
(19.1) |
(4.1) |
(74.1) |
|
Transfer to trading property |
|
(22.7) |
- |
- |
(22.7) |
|
Revaluation surplus - continuing operations |
|
18.5 |
3.9 |
- |
22.4 |
|
Revaluation (deficit)/surplus - discontinued operations |
|
(1.7) |
0.9 |
(0.6) |
(1.4) |
|
Balance 31 March 2014 |
|
519.0 |
36.4 |
14.6 |
570.0 |
|
Additions - capital expenditure |
|
2.1 |
9.8 |
- |
11.9 |
|
Additions - new property |
|
42.0 |
40.6 |
- |
82.6 |
|
Interest capitalised |
|
13.0 |
- |
- |
13.0 |
|
Disposals |
|
(2.1) |
(9.6) |
- |
(11.7) |
|
Transfer to trading property |
|
(16.0) |
- |
- |
(16.0) |
|
Transfer to property plant & equipment |
|
- |
(4.6) |
- |
(4.6) |
|
Revaluation surplus - continuing operations |
|
30.4 |
10.2 |
0.6 |
41.2 |
|
Balance 31 March 2015 |
|
588.4 |
82.8 |
15.2 |
686.4 |
The historical cost of the Group's investment properties as at 31 March 2015 was £682.9m (2014: £584.6m), which included capitalised interest of £100.4m (2014: £88.1m).
The average rate used for interest capitalisation is shown in note 2.6.
Investment properties are required to be analysed by level depending on the valuation method adopted, in accordance with IFRS 13 Fair Value Measurement:
Level 1: valuation based on quoted market prices traded in active markets
Level 2: valuation based on inputs other than quoted prices included within Level 1 that maximise the use of observable data either directly or from market prices or indirectly derived from market prices.
Level 3: where one or more inputs to valuation are not based on observable market data.
All investment property held by the Group is classified as Level 3 and there have been no transfers between levels of the fair value hierarchy during the year.
The key assumptions made in the valuation of the Group's development land at Wembley are:
- future development costs including construction cost inflation;
- future residential sales values including residential sales growth rates;
- the implementation strategy for the relevant plots;
- the timing and conditions of planning consent; and
- the discount rate applied.
Notes to the accounts
continued
Section 3: Property assets, joint ventures and associatescontinued
3.1 Investment properties continued
The following table shows the valuation technique in measuring the fair value of development land at Wembley, as well as the significant unobservable inputs used.
|
Valuation technique |
Significant unobservable inputs |
Inter-relationship between key unobservable inputs and fair value measurement |
|
The fair value is derived from the estimated future rental income and residential sales (in line with the valuer's growth forecasts) from which are deducted future costs comprising base construction, infrastructure and future planning obligations. The net difference is then discounted at an annual rate. This is then cross checked against relevant land sale transactions on a per acre basis, residential land sales rates per sq. ft and land value as a percentage of Gross Development Value ('GDV'). |
Value of Wembley development land £351.1m (2014: £312.2m)
Expected average private residential sales price inflation 3.9% (2014: 5.0%).
Expected average private residential build cost inflation 4.3% (2014: 4.0%).
Private residential sales value; £620 to £698 (2014: £535 to £635) per sq. ft NIA.
Private residential direct build cost; £250 to £355 (2014: £240 to £340) per sq. ft NIA.
Future site-wide costs £141.7m (2014: £162.0m)
Risk adjusted discount rate of 14.0% (2014: 15.0%). |
The estimated fair value would increase if there was:
Expected average private residential sales price inflation was higher
Expected average private residential build cost inflation was lower
Private residential sales value was higher
Private residential direct build costs was lower
Future site-wide costs are reduced
Risk adjusted discount rate was lower |
The key assumptions made in the valuation of the Group's investment properties are:
- the amount and timing of future income streams;
- anticipated maintenance costs and other landlord's liabilities; and
- an appropriate yield.
The following table shows the valuation technique in measuring the fair value of the Wembley investment assets, as well as the significant unobservable inputs used.
|
Valuation technique |
Significant unobservable inputs |
Inter-relationship between key unobservable inputs and fair value measurement |
|
The valuations reflect the tenancy data supplied by the Group along with associated revenue costs and capital expenditure. The fair value of the commercial investment portfolio has been derived from capitalising the future estimated net income receipts at capitalisation rates reflected by recent arm's length sales transactions.
|
Value of Wembley investment assets £227.2m (2014: £214.2m)
Gross ERV: £19.1m (2014: £19.6m)
Net Initial Yield: 4.8% (0.0% - 13.9%) (2014: 4.4% (0.0% - 9.4%))
Reversionary Yield: 7.4% (3.5% - 13.9%) (2014: 8.0% (5.5% - 13.3%))
Equivalent Yield: 6.9% (5.0% - 14.0%) (2014: 7.5% (5.5% - 11.6%)) |
The estimated fair value would increase if there was:
An increase in the Gross ERV
A decrease in the Net Initial Yield
A decrease in the Reversionary Yield
A decrease in the Equivalent Yield |
The relationship between the unobservable inputs and their impact on the fair value measurement is not certain. Changes to the tenancies and/or income profile of an investment asset may also impact the fair value outside one or more of the above inter-relationships according to individual circumstances.
All of the Group's properties were externally valued as at 31 March 2015 on the basis of Market Value by external, professionally qualified valuers in accordance with the Royal Institution of Chartered Surveyors ('RICS') Valuation Professional Standards. Such valuations are carried out every six months. The Group's land and property holdings at Wembley, Silvertown and Redhill have been valued by Savills Advisory Services Ltd. Other properties have been valued by Cushman & Wakefield, Jones Lang LaSalle Limited, Lambert Hampton Smith and Christie + Co.
Notes to the accounts
continued
Section 3: Property assets, joint ventures and associatescontinued
3.1 Investment properties continued
A reconciliation of the valuations carried out by the external valuers to the carrying values shown in the Balance Sheet was as follows:
|
|
2015 |
2014 |
|
|
£m |
£m |
|
Per valuers' reports |
|
|
|
Savills Advisory Services Limited |
679.6 |
636.9 |
|
Other valuers |
98.3 |
25.3 |
|
|
777.9 |
662.2 |
|
Adjustment for properties held in joint ventures and associates and as trading |
(76.3) |
(90.6) |
|
Investment properties at market value |
701.6 |
571.6 |
|
Adjustment in respect of rent-free periods and other tenant incentives |
(14.7) |
(12.3) |
|
Adjustment in respect of acquisition Stamp Duty |
(1.8) |
- |
|
Adjustment in respect of minimum payment under head leases separately included as a liability in the Balance Sheet |
1.3 |
10.7 |
|
As shown in the Balance Sheet |
686.4 |
570.0 |
3.2 Capital commitments
As at 31 March 2015, the Group had capital commitments of £53.8m (2014: £19.0m) in relation to development properties, including £37.1m (2014: £nil) payable to Quintain Keystone for the purchase of Emerald Garden PMR.
The Group's share of capital commitments in relation to its joint ventures was £31.5m (2014: £0.1m).
3.3 Trading properties
As at 31 March 2015, properties held for resale had a carrying value of £23.4m (2014: £28.5m), which includes capitalised interest of £0.7m (2014: £2.3m).
During the year, property of £16.0m (2014: £22.7m) was transferred from investment properties to trading property and the Group sold trading properties with carrying values of £22.8m (2014: £5.2m).
On 28 April 2015, post year end, the Group entered into a 50:50 joint venture with Keystone Developers S.A. for development of Alto, the next residential plot at Wembley Park. The consideration under the agreement is £19.0m for the land with a further £8.0m for future associated infrastructure, a total of £27.0m.
Notes to the accounts
continued
Section 3: Property assets, joint ventures and associates continued
3.4 Investments in joint ventures and associates
Investments in joint ventures and associates
a) The Group's interest in its joint ventures was as follows:
|
|
% of ownership |
Country of incorporation |
Joint venture partners |
|
Quintain Keystone Holdco Limited ('Quintain Keystone') (acquired on 14 April 2014) |
50.00 |
United Kingdom |
Keystone Developers |
|
Quantum Unit Trust ('Quantum') |
50.00 |
Channel Islands |
Aviva |
|
Crest Nicholson BioRegional Quintain LLP ('OneBrighton') |
50.00 |
United Kingdom |
Crest Nicholson |
|
HHW (Investment) LP ('Hilton') |
50.00 |
United Kingdom |
Oaktree |
The Group's interest in its associates was as follows:
|
|
% of ownership |
Country of incorporation |
Other members |
|
Quercus Healthcare Property Unit Trust ('Quercus') |
11.22 |
Channel Islands
|
Aviva |
|
Albemarle Retail Properties LLP ('Albemarle') |
28.65 |
United Kingdom |
Various |
|
Aqua Trust ('Aqua') |
50.00 |
United Kingdom |
Aviva |
b) The movement in investment in joint ventures was as follows:
|
|
2015 |
2014 |
|
|
£m |
£m |
|
Opening balance |
80.3 |
356.8 |
|
Additions |
15.4 |
- |
|
Amounts repaid |
(2.5) |
(2.6) |
|
Amounts repaid by discontinued operation |
- |
(2.7) |
|
Disposals |
- |
(168.7) |
|
Reclassified as an associate |
(34.3) |
- |
|
Reclassified as held for sale |
- |
(106.2) |
|
Distributions |
(0.2) |
(6.3) |
|
Provisions released |
- |
2.9 |
|
Share of profit/(loss), net of tax |
1.9 |
(2.7) |
|
Share of profit discontinued operation, net of tax |
- |
8.6 |
|
Share of other comprehensive income, net of tax |
- |
0.3 |
|
Share of other comprehensive income discontinued operations, net of tax |
- |
0.9 |
|
Closing balance |
60.6 |
80.3 |
On 14 April 2014, the Group entered into Quintain Keystone, a 50:50 joint venture with Keystone Developers S.A. for the development of Emerald Gardens, a residential plot at Wembley Park. The consideration under the agreement was £22.7m for the land with a further £9.5m for future associated infrastructure, a total of £32.2m. During the year the Group granted a £15.0m shareholder loan to Quintain Keystone, at the year end the amount outstanding stood at £12.5m.
Subsequent to the year end, the Group sold its 50% interest in the Hilton to our joint venture partner, Oaktree, for £40.0m.
Notes to the accounts
continued
Section 3: Property assets, joint ventures and associates continued
3.4 Investments in joint ventures and associatescontinued
The movements in investment in associates were as follows:
|
|
|
|
2015 |
2014 |
|
|
|
|
£m |
£m |
|
Opening balance |
|
|
1.7 |
1.5 |
|
Reclassified from joint ventures |
|
|
34.3 |
- |
|
Share of (loss)/profit, net of tax |
|
|
(2.7) |
0.2 |
|
Share of other comprehensive income, net of tax |
|
|
(0.2) |
- |
|
Distributions |
|
|
(2.6) |
- |
|
Closing balance |
|
|
30.5 |
1.7 |
During the year Quercus Healthcare Property Unit Trust ("Quercus") was reclassified as an associate following a dilution in voting rights held by the Group. The Group's share of the net assets of Quercus is unchanged at 11.22%.
c) The summarised results of its joint venture operations was as follows:
Summarised income statements for the year ended 31 March 2015
|
|
Quintain Keystone |
Quantum
|
Hilton |
Group share of individually material joint ventures |
Group share of other joint ventures |
Group share of continuing joint ventures |
|
|
100% |
100% |
100% |
50% |
|
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Rental income |
- |
1.8 |
15.8 |
8.8 |
- |
8.8 |
|
Income from sale of trading properties |
- |
- |
- |
- |
0.4 |
0.4 |
|
Revenue |
- |
1.8 |
15.8 |
8.8 |
0.4 |
9.2 |
|
Cost of sales |
(1.9) |
(1.2) |
(6.5) |
(4.8) |
(0.4) |
(5.2) |
|
Gross (loss)/profit |
(1.9) |
0.6 |
9.3 |
4.0 |
- |
4.0 |
|
Administrative expenses |
(0.1) |
- |
(6.3) |
(3.2) |
- |
(3.2) |
|
Operating (loss)/profit |
(2.0) |
0.6 |
3.0 |
0.8 |
- |
0.8 |
|
Surplus on revaluation of investment properties |
- |
0.6 |
6.6 |
3.6 |
- |
3.6 |
|
(Loss)/profit before net finance expenses and tax |
(2.0) |
1.2 |
9.6 |
4.4 |
- |
4.4 |
|
Finance income |
- |
1.0 |
- |
0.5 |
- |
0.5 |
|
Finance costs |
- |
- |
(3.0) |
(1.5) |
- |
(1.5) |
|
(Loss)/profit before tax |
(2.0) |
2.2 |
6.6 |
3.4 |
- |
3.4 |
|
Tax |
- |
(0.3) |
(2.7) |
(1.5) |
- |
(1.5) |
|
(Loss)/profit after tax and total comprehensive income |
(2.0) |
1.9 |
3.9 |
1.9 |
- |
1.9 |
Interest costs of £0.8m in Quintain Keystone have been capitalised in accordance with the accounting policy described in note 2.6.
Notes to the accounts
continued
Section 3: Property assets, joint ventures and associates continued
3.4 Investments in joint ventures and associatescontinued
The summarised income statement for Quercus for the year ended 31 March 2015 was as follows. The other associates' results are not presented as they are immaterial and contributed a net profit after tax of £0.2m (2014: £0.2m).
|
|
|
Quercus |
Group share |
|
|
|
100% |
11.22% |
|
|
|
£m |
£m |
|
Rental income |
|
34.8 |
3.9 |
|
Income from sale of trading properties |
|
5.3 |
0.6 |
|
Revenue |
|
40.1 |
4.5 |
|
Cost of sales |
|
(5.2) |
(0.6) |
|
Gross profit |
|
34.9 |
3.9 |
|
Administrative expenses |
|
(6.6) |
(0.7) |
|
Operating profit |
|
28.3 |
3.2 |
|
Loss on disposal of investment properties |
|
(30.3) |
(3.4) |
|
Deficit on revaluation of investment properties |
|
(24.1) |
(2.7) |
|
Finance costs |
|
(11.9) |
(1.3) |
|
Loss before tax |
|
(38.0) |
(4.2) |
|
Tax |
|
11.6 |
1.3 |
|
Loss after tax |
|
(26.4) |
(2.9) |
|
|
|
|
|
|
Share of other comprehensive income: |
|
|
|
|
Effective portion of changes in fair value of cashflow hedges, net of tax |
|
(1.5) |
(0.2) |
|
Total comprehensive income |
|
(27.9) |
(3.1) |
Notes to the accounts
continued
Section 3: Property assets, joint ventures and associatescontinued
3.4 Investments in joint ventures and associates continued
Summarised balance sheets as at 31 March 2015
|
|
Quintain Keystone |
Quantum
|
Hilton |
Group share of individually material joint ventures |
Group share of other joint ventures |
Group share of continuing joint ventures |
|
|
100% |
100% |
100% |
50% |
50% |
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Non-current assets: |
|
|
|
|
|
|
|
Investment properties |
- |
13.1 |
62.3 |
37.7 |
0.1 |
37.8 |
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
1.3 |
2.8 |
2.2 |
3.1 |
- |
3.1 |
|
Trading properties |
53.5 |
- |
- |
26.8 |
- |
26.8 |
|
Other assets |
1.1 |
23.0 |
2.5 |
13.3 |
0.1 |
13.4 |
|
Total assets |
55.9 |
38.9 |
67.0 |
80.9 |
0.2 |
81.1 |
|
Current liabilities: |
|
|
|
|
|
|
|
Trade and other payables |
(19.7) |
(1.0) |
(5.3) |
(13.0) |
- |
(13.0) |
|
Non-current liabilities: |
|
|
|
|
|
|
|
Deferred tax liability |
- |
(0.2) |
(2.4) |
(1.3) |
- |
(1.3) |
|
Non-current financial liabilities |
(37.3) |
- |
(42.2) |
(39.8) |
- |
(39.8) |
|
Net (liabilities)/assets |
(1.1) |
37.7 |
17.1 |
26.8 |
0.2 |
27.0 |
|
|
|
|
|
|
|
|
|
Represented by: |
|
|
|
|
|
|
|
Net (liabilities)/assets |
(1.1) |
37.7 |
17.1 |
26.8 |
0.2 |
27.0 |
|
Loans to JVs |
25.0 |
- |
42.2 |
33.6 |
- |
33.6 |
|
Total investment |
23.9 |
37.7 |
59.3 |
60.4 |
0.2 |
60.6 |
The summarised balance sheet for Quercus was as follows. The other associates' results are not presented as they are immaterial and contributed Group share of net assets of £1.9m (2014: £1.7m).
|
|
|
Quercus |
Group share |
|
|
|
100% |
11.22% |
|
|
|
£m |
£m |
|
Investment properties |
|
387.7 |
43.5 |
|
Deferred tax asset |
|
41.9 |
4.7 |
|
Cash and cash equivalents |
|
21.1 |
2.4 |
|
Other assets |
|
9.2 |
1.0 |
|
Bank loans and other borrowings (current) |
|
(53.5) |
(6.0) |
|
Trade and other payables |
|
(14.3) |
(1.6) |
|
Bank loans and other borrowings (non-current) |
|
(137.2) |
(15.4) |
|
Net assets |
|
254.9 |
28.6 |
Notes to the accounts
continued
Section 3: Property assets, joint ventures and associates continued
3.4 Investments in joint ventures and associates continued
Summarised income statements for the year ended 31 March 2014
|
|
Quercus
|
Quantum
|
Hilton |
Group share of individually material joint ventures |
Group share of other joint ventures |
Group share of continuing joint ventures |
|
|
100% |
100% |
100% |
|
|
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Rental income |
45.4 |
1.4 |
14.2 |
12.9 |
0.1 |
13.0 |
|
Income from sale of trading properties |
2.7 |
- |
- |
0.3 |
4.0 |
4.3 |
|
Other income |
- |
2.2 |
- |
1.1 |
- |
1.1 |
|
Revenue |
48.1 |
3.6 |
14.2 |
14.3 |
4.1 |
18.4 |
|
Cost of sales |
(5.3) |
(1.4) |
(6.0) |
(4.3) |
(4.3) |
(8.6) |
|
Gross profit |
42.8 |
2.2 |
8.2 |
10.0 |
(0.2) |
9.8 |
|
Administrative expenses |
(6.4) |
- |
(5.2) |
(3.3) |
- |
(3.3) |
|
Operating profit/(loss) |
36.4 |
2.2 |
3.0 |
6.7 |
(0.2) |
6.5 |
|
Loss from sale of non-current assets |
(13.4) |
- |
- |
(1.5) |
- |
(1.5) |
|
(Deficit)/surplus on revaluation of investment properties |
(46.2) |
0.2 |
- |
(5.1) |
- |
(5.1) |
|
(Loss)/profit before net finance expenses and tax |
(23.2) |
2.4 |
3.0 |
0.1 |
(0.2) |
(0.1) |
|
Finance income |
- |
1.0 |
- |
0.5 |
- |
0.5 |
|
Finance costs |
(14.2) |
- |
(3.0) |
(3.1) |
- |
(3.1) |
|
(Loss)/profit before tax |
(37.4) |
3.4 |
- |
(2.5) |
(0.2) |
(2.7) |
|
Tax credit/(charge) |
- |
0.2 |
(0.2) |
- |
- |
- |
|
(Loss)/profit after tax |
(37.4) |
3.6 |
(0.2) |
(2.5) |
(0.2) |
(2.7) |
|
|
|
|
|
|
|
|
|
Share of other comprehensive income: |
|
|
|
|
|
|
|
Effective portion of changes in fair value of cashflow hedges, net of tax |
2.8 |
- |
- |
0.3 |
- |
0.3 |
|
Total comprehensive income |
(34.6) |
3.6 |
(0.2) |
(2.2) |
(0.2) |
(2.4) |
Notes to the accounts
continued
Section 3: Property assets, joint ventures and associates continued
3.4 Investments in joint ventures and associatescontinued
Summarised balance sheets as at 31 March 2014
|
|
Quercus
|
Quantum
|
Hilton |
Group share of individually material joint ventures |
Group share of other joint ventures |
Group share of continuing joint ventures |
|
|
100% |
100% |
100% |
|
|
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Non-current assets: |
|
|
|
|
|
|
|
Investment properties |
509.8 |
11.6 |
55.6 |
90.8 |
- |
90.8 |
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
29.1 |
7.0 |
1.3 |
7.5 |
- |
7.5 |
|
Trading properties |
5.4 |
- |
- |
0.6 |
0.1 |
0.7 |
|
Deferred tax asset |
30.3 |
- |
0.4 |
3.6 |
- |
3.6 |
|
Other assets |
19.0 |
19.4 |
0.7 |
12.1 |
0.3 |
12.4 |
|
Total assets |
593.6 |
38.0 |
58.0 |
114.6 |
0.4 |
115.0 |
|
Current liabilities: |
|
|
|
|
|
|
|
Trade and other payables |
(14.3) |
(2.2) |
(2.6) |
(4.0) |
- |
(4.0) |
|
Current financial liabilities |
(19.6) |
- |
- |
(2.2) |
- |
(2.2) |
|
Non-current liabilities: |
|
|
|
|
|
|
|
Non-current financial liabilities |
(254.0) |
- |
(42.2) |
(49.6) |
- |
(49.6) |
|
Net assets |
305.7 |
35.8 |
13.2 |
58.8 |
0.4 |
59.2 |
|
|
|
|
|
|
|
|
|
Represented by: |
|
|
|
|
|
|
|
Net assets |
305.7 |
35.8 |
13.2 |
58.8 |
0.4 |
59.2 |
|
Loans to JVs |
- |
- |
42.2 |
21.1 |
- |
21.1 |
|
Total investment |
305.7 |
35.8 |
55.4 |
79.9 |
0.4 |
80.3 |
Notes to the accounts
continued
Section 4: Acquisitions and disposals
4.1 Discontinued operations
During the year the Group sold its 50% interest in iQ to its joint venture partner, Wellcome Trust. The sale completed on 16 May 2014 and consideration consisted of £106.4m in cash, which reflected the Group's share of the net asset value of iQ as at 31 March 2014. The Group's investment in iQ was classified as an asset held for sale at 31 March 2014.
William Rucker is also the Chief Executive of Lazard & Co., Holding Limited ('Lazard'). Lazard were engaged to provide advisory support with respect to the disposal of iQ. Fees to Lazard of £1.3m were incurred in the year.
During the prior year the Group sold its interest in Greenwich, primarily being its 40% interest in GPRL sold to its joint venture partner, Knight Dragon Limited and its Sequel property portfolio.
The results for the discontinued operations are shown in note 2.2.
|
|
|
2015 £m |
2014 £m |
|
Cash flows (used in)/from discontinued operations |
|
|
|
|
Net cash from operating activities |
|
0.3 |
9.0 |
|
Net cash from investing activities |
|
104.7 |
311.4 |
|
Net cash used in financing activities |
|
- |
(38.5) |
|
Effect on cash flows |
|
105.0 |
281.9 |
|
|
|
2015 pence |
2014 pence |
|
Earnings per share - discontinued operations (pence): |
|
|
|
|
Basic and diluted |
|
- |
8.1 |
Notes to the accounts
continued
Section 5: Other assets and liabilities
5.1 Non-current receivables
The movement in other non-current receivables was as follows:
|
|
|
|
2015 |
|
|
2014 |
|
|
Loans at amortised cost |
Investments at fair value |
Total |
Loans at amortised cost |
Investments at fair value |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Opening balance |
2.9 |
8.1 |
11.0 |
48.6 |
5.5 |
54.1 |
|
Additions |
- |
5.3 |
5.3 |
- |
5.8 |
5.8 |
|
Repayment |
- |
- |
- |
(1.2) |
- |
(1.2) |
|
Reclassified as current receivable |
- |
- |
- |
- |
(3.1) |
(3.1) |
|
Impairment |
- |
(0.5) |
(0.5) |
(1.3) |
- |
(1.3) |
|
Disposals |
(2.9) |
- |
(2.9) |
(43.2) |
- |
(43.2) |
|
Revaluation surplus/(deficit) |
- |
1.4 |
1.4 |
- |
(0.1) |
(0.1) |
|
Closing balance |
- |
14.3 |
14.3 |
2.9 |
8.1 |
11.0 |
On 17 January 2014, Quintain acquired 8,269 units in the West of London Property Unit Trust ('WELPUT') for £5.0m which are held as 'Investments at fair value'. On 8 December 2014, Quintain acquired 2,733 more units in WELPUT for £1.9m. On 30 March 2015 Quintain acquired a further 4,707 units for £3.4m. As at 31 March 2015 the Group's investment in WELPUT was valued at £12.0m (2014: £5.3m).
5.2 Current trade and other receivables
|
|
|
2015 £m |
2014 £m |
|
Trade receivables |
|
7.0 |
6.5 |
|
Amounts due from related parties |
|
4.5 |
3.5 |
|
Other receivables |
|
9.4 |
7.9 |
|
Trade and other receivables |
|
20.9 |
17.9 |
|
Prepayments and accrued income |
|
13.8 |
12.9 |
|
Loans at amortised cost |
|
8.2 |
8.2 |
|
Investments at fair value |
|
- |
3.1 |
|
Interest rate caps at fair value |
|
- |
0.2 |
|
|
|
42.9 |
42.3 |
The Group granted unsecured loans totaling £10.7m to Albemarle Retail Properties LLP which carry a coupon of 10% per annum. In the prior year an impairment provision of £2.5m was provided against these loans. The Board has assessed the recoverability of these loans at the balance sheet date and has concluded this remains appropriate. On 12 May 2015, post year end, the Group increased its interest in Albemarle Retail Properties LLP to 55.13% making it a subsidiary undertaking. The significant assets and liabilities acquired were investment properties valued at £25.6m, bank debt of £14.3m and a mezzanine loan fair valued at £10.5m of which the Group holds £8.2m. Albemarle Retail Properties LLP generated profit before interest of £1.4m in the year ended 31 March 2015.
Notes to the accounts
continued
Section 5: Other assets and liabilities continued
5.3 Other payables (non-current)
|
|
2015 £m |
2014 £m |
|
Unsecured loan notes |
1.4 |
4.2 |
|
Interest rate swaps at fair value |
0.1 |
0.2 |
|
Other creditors |
1.7 |
2.8 |
|
|
3.2 |
7.2 |
The Company acquired Grafton Advisers (2006) LLP in February 2012 and, in addition to the cash consideration, the Grafton management team was issued with Unsecured Loan Notes ('loan notes') which are redeemable to the extent that certain fees, including performance fees arising from WELPUT, are earned over five years, with the maximum amount receivable by the Grafton management team being £5.0m. The loan notes carry 2% coupon and the holders have the right to apply to proceeds in subscribing for Quintain ordinary shares at a price of 55 pence per share. During the current year, loan notes of £2.8m were settled in accordance with this agreement and subsequently redeemed for shares. Nigel Kempner, an Executive Director, is entitled to 53.34% of the loan notes.
5.4 Current trade and other payables
|
|
2015 £m |
2014 £m |
|
Trade payables |
3.7 |
3.3 |
|
Other payables |
0.4 |
1.2 |
|
Accruals and deferred income |
21.7 |
23.0 |
|
Interest rate swaps at fair value |
0.4 |
0.4 |
|
|
26.2 |
27.9 |
Notes to the accounts
continued
Section 6: Funding
6.1 Bank loans and other borrowings
|
|
|
2015 £m |
2014 £m |
|
Current liabilities: |
|
|
|
|
Overdraft |
|
12.8 |
- |
|
Non-current liabilities: |
|
|
|
|
Bank loans |
|
77.5 |
101.7 |
|
Bond |
|
115.0 |
115.0 |
|
|
|
192.5 |
216.7 |
|
|
|
205.3 |
216.7 |
|
|
|
|
|
|
Represented by: |
|
|
|
|
Bank loans (including the Bond) |
|
208.0 |
219.2 |
|
Unamortised borrowing costs |
|
(2.7) |
(2.5) |
|
|
|
205.3 |
216.7 |
The loans are secured by floating charges over assets owned by subsidiary undertakings. During the year our bilateral banking facilities were extended from March 2016 to the last quarter of 2018 and into 2019. The key terms are broadly in line with the previous facilities with headline margins of 190 basis points.
The maturity profile of the Group's debt was as follows:
|
|
2015 |
2014 |
2015 |
2014 |
||
|
|
|
|
Drawn debt |
Drawn debt |
Undrawn facilities |
Undrawn facilities |
|
|
|
|
£m |
£m |
£m |
£m |
|
Within one year |
|
|
12.8 |
- |
7.2 |
- |
|
From one to two years |
|
|
- |
- |
- |
5.0 |
|
From two to five years |
|
|
80.2 |
102.6 |
160.0 |
240.5 |
|
After five years |
|
|
115.0 |
116.6 |
- |
- |
|
|
|
|
208.0 |
219.2 |
167.2 |
245.5 |
The interest rate profile of the Group's debt before interest rate swap arrangements at the Balance Sheet date was as follows:
|
Percent |
|
2015 £m |
2014 £m |
|
2.0 - 3.0 |
|
92.8 |
97.6 |
|
3.0 - 4.0 |
|
0.2 |
6.6 |
|
4.0 - 5.0 |
|
- |
- |
|
5.0 - 6.0 |
|
- |
- |
|
6.0 - 7.0 |
|
115.0 |
115.0 |
|
|
|
208.0 |
219.2 |
Notes to the accounts
continued
Section 6: Funding continued
6.1 Bank loans and other borrowings continued
After taking account of interest rate swap arrangements, the risk profile of the Group's borrowings was as follows:
|
|
2015 |
|
2014 |
||||
|
|
Fixed |
Capped |
Total debt |
|
Fixed |
Capped |
Total debt |
|
|
£m |
£m |
£m |
|
£m |
£m |
£m |
|
Sterling |
165.0 |
43.0 |
208.0 |
|
165.0 |
54.2 |
219.2 |
The weighted average interest rate and the weighted average period of the Group's fixed rate debt were as follows:
|
|
2015 % |
2014 % |
2015 years |
2014 years |
|
Sterling |
5.60 |
5.63 |
4 |
5 |
The Group's key financial covenants are an interest cover covenant (bank debt only), which requires the Group's adjusted operating profit plus realised revaluation surpluses on disposal divided by adjusted net finance expenses excluding finance lease interest to be greater than 1.25 times, and a gearing covenant, which requires the net borrowings of the Company and its wholly-owned subsidiaries to be less than 110% of its equity. As at 31 March 2015, the Group has a gearing ratio of 32% (2014: 35%) and the interest cover ratio is not applicable at the year end date as there is net interest receivable per the banking covenant definition (2014: 20.5 times).
The maturity profile of the Group's share of debt held within its joint ventures and associates was as follows:
|
|
|
2015 |
2015 |
2014 |
|
|
|
Quintain Keystone |
Quercus |
Quercus |
|
|
|
£m |
£m |
£m |
|
Less than one year |
|
- |
6.0 |
2.2 |
|
From one to two years |
|
- |
- |
8.8 |
|
From two to five years |
|
6.6 |
15.4 |
20.2 |
|
|
|
6.6 |
21.4 |
31.2 |
The debt relating to the Quintain Keystone joint venture is secured over the residential development.
6.2 Share capital
|
|
|
Number of shares m |
Nominal value £m |
|
Allotted, called up and fully paid: |
|
|
|
|
In issue as at 31 March 2014 |
|
521.5 |
130.2 |
|
Issue of shares under shared-based payment schemes and loan note redemption |
|
4.6 |
1.3 |
|
In issue as at 31 March 2015 |
|
526.1 |
131.5 |
Financial statements
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2015 or 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered to the registrar of companies, and those for 2015 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis of matter without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
This information is provided by RNS
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