Results for the year ended 31 March 2013
23 May 2013
Quintain Estates and Development PLC
("Quintain" / "Company" / "Group")
Results for the year ended 31 March 2013
Quintain, the London development and investment specialist, today announces its results for the year ended 31 March 2013.
Highlights
Greenwich Peninsula
· Established new joint venture, securing funding for the 14 million sq ft development
· Works for 500 homes at Peninsula Riverside underway, kick-starting the next phase of residential development
Wembley
· 500,000 sq ft of new development delivered including the Hilton Hotel, with London's first ever designer outlet on track to open later this year
· Original 5.3 million sq ft planning consent enhanced, increasing future value for shareholders
Corporate
· Creation of sustainable new income streams from development management fees at Greenwich Peninsula, the Grafton acquisition and expanded iQ portfolio.
· Strengthening of the balance sheet through £184 million of capital recycling
· On track to meet 2014 debt reduction target: now two thirds delivered
|
Financial Summary |
2013 |
2012 |
Movement |
|
Gross profit |
£25.6m |
£24.9m |
£0.7m |
|
Adjusted profit before tax |
£8.2m |
£5.8m |
£2.4m |
|
EPRA diluted earnings per share |
1.8p |
0.3p |
1.5p |
|
Group net debt |
£444m |
£535m |
£(91)m |
|
Basic Net Asset Value per share |
104p |
110p |
(6)p |
|
EPRA diluted Net Asset Value per share |
105p |
116p |
(11)p |
William Rucker, Chairman, said:
"Significant progress has been made with re-positioning Quintain this year. We have delivered well against our financial objectives of reducing Group debt and creating sustainable new income streams, whilst improving the speed and quality of delivery at both Wembley and Greenwich Peninsula. The actions taken over the last 12 months have set the business on the right track to deliver sustainable returns and growth for shareholders."
Max James, Chief Executive, said:
"The pace of change built quickly at Quintain during the financial year, starting with the transformational deal that introduced Knight Dragon as our partner for Greenwich Peninsula, swiftly followed by the completion of 500,000 sq ft of new space in time for the Olympics at Wembley. Debt was reduced after £184 million was recycled over the year, which concluded with ground being broken for the first 500 homes at the Peninsula.
"2013/14 will be another year of action as we open the doors at London's only designer outlet centre and seek detailed consent for the first homes at Wembley Park, while continuing to build financial strength. At a time of strong demand for new homes at price points that cater for London's young professionals, Quintain is well placed to maximise value from one of the largest consented residential land banks in London."
Meeting and conference call
A meeting for analysts and institutional investors will take place today at 11.00am at 8th floor, Tenter House, 45 Moorfields, London, EC2Y 9AE. The meeting can be accessed via a conference call dial in facility, using the following details:
Dial in number: +44 (0) 20 3059 8125
Password: Quintain
To ask a question: press * followed by 1 on the keypad
To remove your question: press * followed by 2 on the keypad
In addition, a live webcast of the presentation will be available on the Company's website at www.quintain.co.uk.
Contacts
Quintain Estates and Development PLC RLM Finsbury
Cressida Curtis Jenny Davey/Charlotte Whitley
Tel: +44 (0) 207 495 8968 Tel: +44 (0) 207 251 3801
Chief Executive Statement
Delivering on the Strategy
In November 2012, I set out my vision to re-position Quintain as a leading London property developer and investor.
The key objectives of the strategy are to:
· focus the Company's development activities on London;
· maximise and deliver the inherent value in Quintain's unique development assets at Wembley and Greenwich Peninsula;
· create and grow new and sustainable income streams; and
· reduce the Group's net debt to below £400 million by 31 March 14.
Good progress towards each of these goals has been made during the year.
At Greenwich Peninsula, the new joint venture is working well, increasing value and improving the quality and pace of development since it was established with shareholder support in July 2012.
At Wembley, the opening of the 361-room Hilton hotel and 660-bed Apt student building, and the continued progress at the London Designer Outlet, has brought us close to completing the first 1.5 million sq ft of development. Combined with Wembley Stadium and Wembley Arena, we are establishing Wembley as an exciting, multi-faceted leisure and retail destination, ready for the next phase of residential development starting in 2014.
New income streams have become established during the year following the acquisition of Grafton Advisors in February 2012 and on creation of the new joint venture at Greenwich Peninsula in July, both of which have increased the Group's profitability.
We have actively sought to reposition our portfolio and, principally through disposals, we have recycled £184 million of cash this year as we continue to strengthen our balance sheet. This programme has enabled the Group to reduce net debt whilst supporting continued investment in the London Designer Outlet.
Markets and Strategy
The principal opportunity within Quintain lies in our two large London development assets and our ability to create exciting places for people to visit and live.
Despite the challenges of the wider economic environment in the UK, London's economic growth and broader fundamentals remain strong. The Capital continues to attract global financial and cultural interest and population growth, and last summer's Olympics, in which we played a full part at both Wembley and Greenwich Peninsula, served to re-emphasise London's qualities. As such, there is sustained and growing demand for new residential accommodation in locations with a strong sense of place and good transport infrastructure. Despite an anticipated increase in London residential development in response to this demand, it is forecast that there will remain a shortfall of approximately 115,000 homes over the next five years. With large parts of north and south London already mature, attention is increasingly focused on the 'value corridors' to the west and east of the Capital.
Quintain is well placed to capitalise on these trends with outline consent already granted for 15,000 new homes across Wembley and Greenwich. Transport infrastructure is established at both schemes and each destination benefits from an iconic, globally-recognised entertainment venue that attracts millions of people a year. Our major developments are also well positioned to benefit further from the introduction of Government measures, announced in the March 2013 Budget, to support the development of rental properties and funding of mortgages for those seeking to buy a home.
Financial Results
As expected, our results for the 2012/13 year reflect the changes we are making to the business to reposition the portfolio and establish a robust platform for the next phase of the Company's development. We are already half way towards achieving the objectives of debt reduction and the creation of new income streams that were announced at our Interim Results in November. The progress being made will begin to manifest itself through improved financial strength with increasing profitability once the repositioning is complete.
Adjusted pre-tax profit for the year increased by £2.4 million to £8.2 million, while net asset value per share reduced by 5% to 104p (2012: 110p), principally as a consequence of the on-going re-adjustment in secondary asset valuations.
Operational Delivery
a) Greenwich Peninsula
The transformational new 40:60 joint venture for the 14 million sq ft Greenwich Peninsula development was established in July 2012. The transaction confirmed the significant potential of the Peninsula, securing an initial investment of £170 million and the commitment to a further £300 million of revolving finance provided by our JV partner, Knight Dragon, the private investment vehicle of Dr Henry Cheng Kar-Shun.
The new joint venture has added value to the scheme, securing a Committee resolution to approve the reduction and re-distribution of the affordable housing across the first 2,900 of the 10,000 homes for which we hold permission across the site. In line with our growing ambitions for the Peninsula, the team has now also re-designed the first phase of Peninsula Quays, where the premium residential product will be located, to create a more attractive and cohesive district, and the resulting plans were submitted for outline consent in March 2013.
b) Wembley
At Wembley, the operational highlight of the year was the simultaneous completion of the new 660-bed Apt student accommodation building and the opening of the Hilton Hotel, which is located next to the National Stadium. The 361-bedroom hotel brings the first high quality four star accommodation to the area and sets the benchmark for the new Wembley leisure experience that we are creating. With our focus on reducing net debt, a 50% interest in the hotel was sold in March, broadly in line with valuation, to Oaktree Capital Management, introducing another new investor to Wembley. This transaction enables Quintain to retain a share of the Hotel's growing income stream and participate in the capital growth of this asset as its trading profile matures, while freeing up capital to be deployed elsewhere.
Construction of the 350,000 sq ft London Designer Outlet is nearing completion and it will open later this year. The leasing programme continues to go well: 62% of units by base rent, equating to £4.7 million per annum, are now let or in solicitors' hands (May 2012: 49%) and contracts for a further 11% of base rent are at heads of terms or in advanced negotiations (May 2012: 12%). In addition to finalising our anchor tenants during the year, new fashion brands such as LK Bennett, Max Studio, Tog 24 and Superdry were signed, expanding the mix and attraction of the tenant list. The fit-out of the nine screen Cineworld cinema started in May.
c) Asset Management
Our asset management business continued to deliver a strong and stable recurring income stream for the Group. Following the acquisition of Grafton Advisors in February 2012, Quintain now benefits from an additional income stream within this business from central London asset and development management, which contributed £1.5 million for the financial year in management fee income.
iQ, our specialist student accommodation joint venture, has enjoyed another strong year: Quintain's share of its underlying profit increased from £1.8 million to £5.2 million as a result of a 5% year on year increase in average rents and the expansion of its portfolio to 5,183 beds through the opening of iQ Shoreditch. In addition, Quintain earned £2.4 million of fee income (2012: £3.0 million).
Our share of underlying profit in Quercus, of which we own an 11.2% interest, was maintained at £3.0 million in a year when asset values fell by 16% as the healthcare sector continued to experience challenging market conditions. The long term fundamentals of this sector remain strong, and the pace of recovery is likely to be correlated to public sector support. In addition, Quintain earned fee income of £1.9 million (2012: £2.3 million).
In addition to Grafton's principal focus as strategic property adviser to WELPUT, its expertise has been blended with the capabilities of the wider Quintain team to develop and project manage for third parties. In January, the team was appointed to refurbish and manage Devonshire House in London W1. This 179,000 sq ft commercial building was re-launched earlier this month following our refurbishment of 71,000 sq ft, 24,000 sq ft of which is already under offer. Quintain will now look to build on this model of leveraging the expanded skill set to win other such mandates in London.
Overall, Asset Management contributed £21.8 million of underlying income to the Group during the year (2012: £18.9 million).
Finance
Our financial strategy remains focused on reducing net debt and creating the platform upon which to increase underlying earnings.
In November, we announced an initial target of reducing net debt to below £400 million by the end of the 2013/14 financial year while continuing to invest in the delivery of the London Designer Outlet. Since 31 March 2012, through selected disposals we have reduced net debt by £91.4 million to £443.6 million at 31 March 2013 (2012: £535.0 million). We remain on schedule to deliver our sub-£400 million target by the end of March next year, which will ensure greater financial flexibility for the Group as it enters its subsequent phase of growth.
Since May 2012, £85 million of bank facilities have been extended, increasing to £423 million the facilities that will mature in 2016, and we have commenced preparations for the subsequent re-financing.
In this period of re-positioning, we expect to see a short term reduction in Group income while new income streams, including increasing development fees from Greenwich Peninsula, our 50% interest in the Hilton London Wembley Hotel and rent from the London Designer Outlet, progressively flow through from our London development portfolio.
Administrative costs have been reduced during the year by £0.9 million and we expect to see a similar reduction in the 2013/14 financial year whilst maintaining the right resources to deliver long-term value-creation.
Outlook
Quintain has two unique London development assets, a strong combination of development and investment skills and substantial exposure to the London residential market at a time of pressing demand for new homes in the Capital.
The work undertaken during the year has increased the Company's financial flexibility and improved the quality of delivery at both Wembley and Greenwich Peninsula. These represent major steps forward towards our objective of becoming a specialist in London development and investment. We therefore finish the year more robust, focused and with a singularity of purpose to deliver value for shareholders through the creation of great places in London.
Building on this solid progress, we expect 2013/14 to be a notable year for Quintain, as debt reduces to below £400 million, the Group's income profile continues to rebalance, the London Designer Outlet opens and residential development starts at both Greenwich and Wembley. The market remains challenging, but the actions we are taking will continue to reinforce our financial platform and improve the operational delivery of the Company.
Maxwell James
Chief Executive
23 May 2013
Business Review
London Development
The Market
Supply and demand in the London residential sector continues to underpin our ambition to deliver high quality public places and homes across two major developments in the Capital.
The strength of London as a global financial and cultural centre is driving net immigration and exacerbating the existing shortfall of suitable residential accommodation in the Capital. Savills estimates that approximately 50,000 homes need to be built every year to satisfy demand: twice the current build-out rate and 20,000 more than the Mayor of London's minimum supply target. On current demand projections, a supply gap of up to 115,000 London homes is forecast over the next five years.
The most pronounced undersupply is in the mid-range market, priced at sales values of £450-£700 psf and affordable to households earning between £50,000 and £100,000 per year. In the region of 150,000 households with this income profile are currently in private rented accommodation in London, and this figure is anticipated to increase in line with London's population growth.
After a period of limited funding, mortgage availability has started to improve, aided by Government initiatives such as the Funding for Lending and Build for Rent schemes. Again, many purchasers benefiting from this scheme fall in to the price brackets for Wembley and Greenwich Peninsula. The Council of Mortgage Lenders reports that its members expect this improvement in mortgage availability to persist throughout 2013/14, making it easier for people to buy homes.
Despite the strength of demand and associated political importance now placed on delivering new London homes, supply remains constrained. Bank funding for speculative development is limited, most immature schemes require significant investment in transport infrastructure before being able to deliver homes, the local planning system can be difficult to navigate for complex projects and the simple lack of undeveloped space in London restricts the number of schemes that can viably deliver a substantial quantity of homes. The result is that the pipeline to meet the demand for mid-market homes in London is fed by a small number of schemes at various stages of delivery.
Quintain's London Development Assets
Quintain has assembled and master-planned two of the largest, best connected and most recognisable schemes in the Capital. Combined, they benefit from outline planning consent for 15,000 homes and are advancing through the first phase of development. The schemes continue to enjoy significant support from their respective local authorities, the Royal Borough of Greenwich and London Borough of Brent, both of which have created a strong presence at the heart of the schemes.
Greenwich Peninsula
Substantial progress has been made on the Greenwich Peninsula scheme during the period under review: the funding to develop the entire project has been secured; a dedicated team established; a new experienced partner introduced; and, as a consequence, the potential value that the scheme can deliver has been enhanced.
A New Partner and Funding
The most significant change has been the replacement of our original joint venture partner with Knight Dragon, the investment vehicle of Dr Henry Cheng Kar-Shun. Our new partner brings extensive international development experience to the scheme, together with a £300 million revolving finance facility to support the development of the entire 10,000-home project.
Development Profits and Income Stream
Quintain's interest in the project is now 40%, with Knight Dragon owning 60%. We have also become development and project manager for the scheme, a role which is anticipated to deliver an income stream for the Group of circa £4 million per annum for an initial period of six years, once construction has achieved momentum. The new joint venture will therefore enable Quintain to benefit from both development profits and a substantial new income stream, which is directly in line with our strategy of rebalancing the Group's portfolio.
Improved Delivery
Following the creation of the new joint venture in July, we re-structured the Quintain team, introducing new focus and expertise with the appointment of Anthony Gill as Development Director for the project, managing a dedicated Greenwich team. The team reviewed the overall masterplan with our joint venture partner and identified ways in which the attractiveness of the scheme could be improved and the pace of delivery increased in the light of the funding now available.
Agreement was reached with our public sector partners regarding a more viable quantum and distribution of affordable housing across the entire site, with the total to be built in this phase reduced from 38% to 25% of the total consented, and initial delivery focused on Peninsula Riverside. The team subsequently secured detailed planning consent for the first three residential blocks in this Quarter. Enabling works are now underway and construction of these 506 homes will begin this summer.
To the north of the scheme, at Peninsula Quays, where the premium residential product will be developed, residents will experience a unique and unrivalled view across the Thames to Canary Wharf. The introduction of our new joint venture partner has enabled us to increase the ambition of the project. The first phase of this district will now accommodate 1,683 private homes and, following intensive review of the opportunity by the partners, the team has re-designed the masterplan to create a more cohesive, attractive waterside district that will maximise value for shareholders. An application for outline consent was submitted to the planning authority in March and a decision regarding the new design is expected later this summer.
Work during the 2013/14 financial year will focus on two areas: construction of the first homes in the newly-consented Peninsula Riverside plots and developing the new masterplan for Peninsula Quays, enabling the emerging districts to stand out as the first choice for the many people looking for a new home in London.
Wembley
The transformation of Wembley into a new London retail, leisure and residential district continued during the period with strong progress achieved on the development of Phase One. Completion of this phase, which will be marked by the opening of the London Designer Outlet at the end of 2013, will deliver a modern leisure destination in the Capital, building on the location's world-famous heritage and event venues that already attract around four million people every year.
Home buyers are attracted to locations with a strong sense of place, good transport connections and high quality amenities. Establishment of the new Wembley as a leisure destination boasting a nine screen cinema, 15 bars and restaurants and London's only designer outlet shopping centre with 85 shops, in addition to the Stadium and Arena, is designed to underpin the attractiveness of the 5,000 new homes that will be developed on subsequent phases.
Operational Delivery
As reported at the Interim Results in November 2012, the student accommodation scheme and 4-star Hilton London Wembley Hotel were opened during the summer. The student accommodation has brought animation to the scheme, with 600 students now based in the heart of the site next to Wembley Arena. The scheme is managed by a Quintain team on behalf of Keystone & Partners to whom we forward-sold the asset for £53 million.
The Hilton London Wembley Hotel, which opened prior to the London Olympics in July, offers 361 rooms, conferencing facilities, a gym, pool and SkyBar overlooking the adjacent Stadium.
Debt Reduction and Income
In line with the Group's focus on debt reduction and income generation, we took the decision to create a new 50:50 joint venture with Oaktree Capital to own the Hotel, releasing £30 million of capital whilst retaining exposure to an income stream from the Hotel that will grow as the asset and surrounding scheme mature. The exceptional quality of this Hotel and its convenient location at Wembley next to the London Designer Outlet helped Quintain achieve a price broadly in line with the September 2012 valuation.
Creating a Unique Leisure Destination
With the London Designer Outlet opening at the end of 2013, the launch team and strategy have been put in place.
Customers for the London Designer Outlet will come from four groups:
700,000 people live within 20 minutes' of the centre and will be particularly attracted by the cinema and 15 restaurants and bars that the facility offers alongside the opportunity to discover high quality brands at prices more than 30% below those on the high street. The objective is for the London Designer Outlet to become the primary leisure destination in the locality and to establish a regular visiting pattern from the substantial and affluent local community.
The second group to be targeted consists of those within 60 minutes' travel of the centre. This group covers over 10 million people many of whom live in London and have a clothing spend of circa £7 billion per annum. For almost six million people the London Designer Outlet will be their nearest outlet centre.
Four million people already visit Wembley every year to attend events at the Stadium and Arena. Research shows that 40% of these event goers would be likely to visit the LDO before or after an event to shop or eat, providing a regular influx of additional consumers to an area that is currently under-served.
Finally, 15 million tourists visit London annually. Wembley is a location that is globally recognised but currently provides little in the way of additional amenities to tourists who may otherwise tour the Stadium. The addition of desirable shopping at bargain prices, a hotel of exceptional quality and a range of restaurant options is anticipated to attract a proportion of London tourists to take the 12 minute train ride from central London to Wembley to enjoy the new experience.
Leasing of the London Designer Outlet has progressed well over the year with high quality covenants such as Marks and Spencer, Superdry, Guess and Clarks all taking space. These brands are magnets for shoppers who look for a guaranteed bargain and will underpin the footfall to the Centre. Contracts exchanged or in solicitors' hands now account for 62% of base rent (May 2012: 49%), or approximately £4.7 million per annum. Contracts for an additional 11% of base rent are in advanced negotiations (May 2012: 12%). Realm, which operates the largest portfolio of outlet centres in the UK, has been appointed to manage the London Designer Outlet. The core team has been assembled and is working with Quintain to ensure a faultless opening at the end of the year.
Designing an Attractive Residential Product
Development of plans for Phase Two, which is located between Brent Civic Centre and Wembley Park Tube Station, continued during the period. Brent Civic Centre is now complete and will open next month, accommodating 2,000 employees and attracting an estimated one million people to the site each year through the services it provides.
To the east of the Civic Centre we have begun work to landscape the area, creating an attractive green square on the main route to the Stadium. This links to the landscaping being put in place along the entire length of Olympic Way to create a predominantly pedestrianised route from the tube station, down through Phase One to the London Designer Outlet and out to Wembley Stadium Station.
Detailed plans are in development for the first residential plot to be brought forward, which will be located next to Brent Civic Centre's wedding garden. The final designs are expected to support more than 450 homes in seven buildings of varying sizes surrounding an acre of private green space.
In accordance with the Section 106 Agreement, 90% of the homes will be private, with the majority being one and two bed apartments. These will be comfortably within the price range of those home buyers the Government wishes to support with its recently announced mortgage initiatives, and at the price point favoured by the most undersupplied sector of the market.
The 2013/14 financial year will see the new Wembley come of age, with the opening of the London Designer Outlet cementing Phase One of the location as an exciting destination within London.
Asset Management
The Asset Management business represents an important element of the Group, contributing £21.8 million of income, from fees and co-investment, to Quintain during the period under review (2012: £18.9 million).
Within this business, we focus our skills on specialist segments of the property market where our management teams can add value. The majority of our income from this business derives from the student accommodation, long-term healthcare and Central London commercial markets, and the business also includes secondary regional assets from which we are seeking to exit.
Student Accommodation
iQ was established in 2006 as a 50:50 joint venture with Wellcome Trust. Since then, the vehicle has grown to become one of the seven largest purpose built student accommodation providers in the UK with a portfolio of 5,183 rooms across 13 buildings.
The sector continues to attract strong investment appetite in the UK where the number of people applying for a place at university has outstripped supply for well over a decade. Concurrently, the stock of student halls of residence operated directly by universities has deteriorated due to age and under-investment, with many selling their accommodation assets in order to focus resources on improving educational facilities. Students now pay higher fees for their education, and their expectations regarding accommodation also appear to be increasing, particularly in terms of the modernity of facilities and the level of technology and amenities that are available.
iQ has had a good year with lettings reaching 97%. Nine of the existing 12 schemes were fully let and two others exceeded leasing levels of 98%. We were particularly delighted with the performance of the new Shoreditch scheme: despite opening for the first time this academic year, 99% of its 673 rooms were let, demonstrating the on-going strength of the London student market, where 46% of iQ's portfolio (by value) is located.
In addition to the robust leasing figures, iQ increased its average rent by 5.1% year on year which, with the 15% increase in bedroom numbers and increased exposure in London, translated to a 37.5% increase in the gross rent roll to £33 million for the academic year.
Yields remain stable for direct let schemes at 6% for prime London stock and 6.5% to 7% in the regions. iQ's portfolio saw a 7% increase in value over the year, reflecting the expanded portfolio and increased exposure to London mentioned above, as well as the continued investor interest in the sector.
iQ contributed £2.4 million (2012: £3.0 million) to Quintain in fees and £5.2 million of underlying earnings during the year (2012: £1.8 million). Leasing figures for the 2013/14 academic year are progressing well, standing currently at 67% across the portfolio, in line with the same time last year, and an average of 2.7% ahead of 2012/13 rent levels.
Long-Term Healthcare
The Quercus Healthcare Fund was established in 1998 as a partnership between Quintain and Aviva. In addition to generating fees from asset management, Quintain holds an 11.2% interest in the Fund, earning a share of profits.
The demographics underpinning the sector remain strong, particularly the ageing profile of the UK's population, which is anticipated to see the number of people aged over 65 almost double from 10 million in 2012 to 19 million in 2050. Over the same period, the number of those aged over 80 years old - who require a greater quantity and more skilled care - is expected to rise from approximately 3 million to 8 million.
Reductions in public sector funding and more rigorous control over the quality of healthcare provision have put the long-term care sector under pressure during the period. However, we have seen a number of positive dealings as investors have continued to value the defensibility of the sector and the positive medium and long-term trends. This is particularly focused on those facilities that provide specialist care, such as support for those suffering from Alzheimer's disease or younger people with learning disabilities. 18.5% of the Quercus portfolio offers specialist care and an additional 8.6% is focused on supporting those with learning disabilities, meaning that 27% of the portfolio is already positioned within this most robust element of the sector.
There is also evidence of some operators' intention to expand and further investment by institutions where partnerships have been established with a local authority. Viewed in the context of the UK's muted economic prospects, these are indicators that the necessity for society to care for the elderly and those with special needs will continue to support the sector.
The Fund level total return over the year was (24.1)% reflecting a reduction in gross asset values as a result of the difficult economic environment and concerns over public sector funding. Despite this, Quercus contributed £1.9 million in fees (2012: £2.3 million) and £3.0 million in underlying profits (2012: £3.0 million) over the year.
Central London Commercial
Following the acquisition of Grafton Advisors in February 2012, Quintain now benefits from the on-going strength of the central London commercial property sector, in line with the Group's strategy of tightening its focus on London.
Quintain's Grafton team acts as property adviser to the WELPUT Fund, a highly successful vehicle established with Schroeder's in 2001. WELPUT owns 12 properties across central London and has a combined gross asset value of £902 million.
The dominance of London as a global financial and cultural city has supported commercial leasing prices and levels in central London during the period. The team has continued to fore-run demand through its acquisition and refurbishment programme, recognising the extension of corporate interest into areas adjoining the traditional focus of the Fund. Among its acquisitions were 3 St James' Square, which was purchased at an equivalent yield of 5.0%, and 143/157 Farringdon Road, which was purchased at an equivalent yield of 6.5%. In addition, the team completed the refurbishment of One Chapel Place, W1, and The Point, W2. Net fee income to Quintain during the period under review was £1.5 million (2012: £0.1 million).
Development Management
The expansion of Quintain's capabilities to include the central London team's expertise is increasing the ability of the Group to take on development and project management mandates in this location. The first such contract secured by the Group was the transformation of Devonshire House, W1. Following the completion in March of refurbishment work of 71,000 sq ft of this commercial building, 24,000 sq ft of the refurbished space within the building is already let at rents exceeding £105 per square foot.
In line with the focus on creating new income streams, it is the Group's intention to seek similar contracts where Quintain's development management and specialised London asset management skills can be employed.
Other Asset Management
Quintain's other asset management activities include its 98.5% interest in Sequel, its 28% interest in the Albemarle Retail Portfolio and its 50% interest in Quantum, a science park joint venture with Aviva.
Sequel comprises a portfolio of high yielding management-intensive assets situated throughout the UK. The 26 properties contributed £6.3 million of net rental income, at a yield of 10.3% in the year. The portfolio was valued at £55.3 million at 31 March 2013 (2012: £66.4 million) and had £38.8 million of secured debt with an interest cost for the year of £1.8 million. In line with the majority of secondary property in the UK, the portfolio has suffered from increased void rates and weakening capital values.
Quintain holds a stake in Albemarle Retail Properties LLP to which it has provided £10.7 million of funding. Albermarle comprises a portfolio of well secured high street retail units and food stores located in regionally dominant catchment towns and cities. Quintain receives a 10% annual paid coupon and a priority deferred annual 10% coupon over three years. Quintain has representation in ARP's management structure and is the single largest shareholder in the vehicle.
Quantum is a joint venture with Aviva which owns the Bristol and Bath Science Park and units at the Heriott Watt Science Park in Edinburgh. Occupancy of the first phase of the Bristol and Bath Science Park continues to grow and the joint venture makes a small, but positive, contribution to the Group.
Finance Review
As set out at the half year, Quintain's financial priority is to strengthen the financial position of the business to ensure the successful delivery of its strategy. This requires a focus on both reducing net debt and putting in place the platform upon which to increase underlying earnings.
The first objective therefore is to reduce net debt to below £400 million by the end of the 2013/14 financial year. Since 1 April 2012, through selected disposals, and whilst continuing to invest in the delivery of the London Designer Outlet at Wembley, we are pleased to report that net debt has reduced by £91.4 million to £443.6 million at 31 March 2013 (2012: £535.0 million) and we remain on schedule to deliver our debt reduction target by next March.
Our second financial objective is to improve our underlying earnings over the long term. During the year adjusted pre-tax profit (our measure of underlying earnings, which excludes disposals, valuation and mark to market adjustments) increased by £2.4 million to £8.2 million. This has been achieved by securing new income streams in the form of the opening of iQ Shoreditch, development management fees at Greenwich Peninsula and additional asset management fees from the central London team.
In addition to reducing net debt, bank facility extensions over £85 million have been secured providing additional financial flexibility over the medium term. Importantly for the future strength of Quintain's balance sheet, the Knight Dragon joint venture at Greenwich Peninsula secures the future funding for the development of the entire scheme. From this point forward the development will be cash-generative for the Company through the repayment, as the development progresses, of previous investment in infrastructure and land funding. In addition, we will also receive development profits in due course.
1. Results for the period
Adjusted profit before tax for the year increased by £2.4 million to £8.2 million reflecting a robust performance in the underlying business which saw gross profit increase by £0.6 million to £25.5 million. However, the Group reported a post-tax loss for the year of £40.9 million (2012: £35.5 million) due to a revaluation deficit of £34.0 million, a reduction in share of profit from joint ventures and associates of £7.6 million, due to revaluation movements in Quercus, and a £11.1 million loss on the disposal of non-current assets. The latter was principally due to the £10.7 million loss that arose on entering into the new joint venture arrangements at Greenwich Peninsula.
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Summary income statement |
31 March 2013 |
31 March 2012 |
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Urban Regen- eration |
Asset Manag-ement |
Total
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Urban Regen-eration |
Asset Manag-ement |
Total
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Gross profit |
13.2 |
12.3 |
25.5 |
11.0 |
13.9 |
24.9 |
|
Deficit on revaluation |
(19.4) |
(14.6) |
(34.0) |
(25.9) |
(14.6) |
(40.5) |
|
(Loss)/profit on disposals |
(13.2) |
2.1 |
(11.1) |
(4.2) |
0.3 |
(3.9) |
|
Share of (loss)/profit from joint ventures and associates |
(5.6) |
6.5 |
0.9 |
(0.3) |
8.8 |
8.5 |
|
Net segmental (loss)/profit |
(25.0) |
6.3 |
(18.7) |
(19.4) |
8.4 |
(11.0) |
|
Administrative expenses |
|
|
(21.1) |
|
|
(22.0) |
|
Net finance costs |
|
|
(10.6) |
|
|
(10.5) |
|
Loss before tax |
|
|
(50.4) |
|
|
(43.5) |
|
Of which: Adjusted profit |
12.7 |
21.8 |
8.2 |
13.3 |
18.9 |
5.8 |
|
Capital losses |
(37.7) |
(15.5) |
(58.6) |
(32.7) |
(10.5) |
(49.3) |
The table below reconciles EPRA earnings per share to the reported IFRS fully diluted loss per share of 7.9p (2012 6.8p).
|
EPRA earnings per share |
31 March 2013 |
31 March 2012 |
||||
|
|
shares m |
£m |
pence |
shares m |
£m |
pence |
|
IFRS fully diluted earnings per share |
518.4 |
(40.9) |
(7.9) |
518.3 |
(35.5) |
(6.8) |
|
Revaluation movements |
|
|
|
|
|
|
|
Group |
|
34.0 |
6.6 |
|
40.5 |
7.8 |
|
Joint ventures |
|
4.5 |
0.9 |
|
(7.8) |
(1.5) |
|
Loss on disposals |
|
11.1 |
2.1 |
|
3.9 |
0.8 |
|
Deferred tax arising on revaluation movements, capital allowances and derivatives |
|
|
|
|
|
|
|
Group |
|
(11.4) |
(2.2) |
|
(14.6) |
(2.8) |
|
Joint ventures |
|
0.3 |
0.1 |
|
3.8 |
0.7 |
|
Fair value adjustments on derivatives |
|
|
|
|
|
|
|
Group |
|
10.3 |
1.9 |
|
11.1 |
2.1 |
|
Joint ventures |
|
1.5 |
0.3 |
|
- |
- |
|
EPRA earnings per share fully diluted |
518.4 |
9.4 |
1.8 |
518.3 |
1.4 |
0.3 |
2. Operating profit before non-current asset sales and revaluations
Before non-current asset sales and revaluations, operating profit has increased from £2.9 million to £4.4 million, compared to last year. Within this movement, gross profit has improved by £0.6 million, from £24.9 million last year to £25.5 million, and administrative expenses fell by £0.9 million to £21.1 million.
|
Operating profit |
31 March 2013 |
31 March 2012 |
||||
|
|
Urban Regen- eration |
Asset Manag-ement |
Total
|
Urban Regen-eration |
Asset Manag-ement |
Total
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Net rental income |
5.8 |
6.5 |
12.3 |
7.0 |
7.4 |
14.4 |
|
Trading sales |
(0.3) |
- |
(0.3) |
(0.1) |
- |
(0.1) |
|
Fees from asset and development management |
1.5 |
6.1 |
7.6 |
- |
5.8 |
5.8 |
|
Income from hotel operations |
0.9 |
- |
0.9 |
4.8 |
- |
4.8 |
|
Other income |
5.3 |
0.5 |
5.8 |
2.2 |
0.7 |
2.9 |
|
Amortisation of intangible asset |
- |
(0.8) |
(0.8) |
- |
- |
- |
|
Trading property provisions |
- |
- |
- |
(2.9) |
- |
(2.9) |
|
Gross profit |
13.2 |
12.3 |
25.5 |
11.0 |
13.9 |
24.9 |
|
Administrative expenses |
|
|
(21.1) |
|
|
(22.0) |
|
Operating profit |
|
|
4.4 |
|
|
2.9 |
Net rental income has fallen from £14.4 million to £12.3 million due to disposals and refurbishment and void costs in certain properties.
Quintain conducts a significant proportion of its business through joint ventures. The table below sets out the combined net rental income and demonstrates that the fall in net rental income from owned operations is more than offset by the increase in net rental income from joint ventures.
|
Net rental income |
31 March 2013 |
31 March 2012 |
||||
|
|
Urban Regen-eration |
Asset Manag-ement |
Total
|
Urban Regen-eration |
Asset Manag-ement |
Total
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Group net rental income |
5.8 |
6.5 |
12.3 |
7.0 |
7.4 |
14.4 |
|
Share of JV net rental income |
0.3 |
16.6 |
16.9 |
0.4 |
13.4 |
13.8 |
|
Combined net rental income |
6.1 |
23.1 |
29.2 |
7.4 |
20.8 |
28.2 |
The Plaza Hotel at Wembley contributed £4.8 million in the prior year but was sold in July 2012 and hence the contribution in the current period was reduced. This was more than offset by increased commercialisation income at Wembley, enhanced by the London 2012 Olympic Games.
Total fees from asset and development management have increased from £5.8 million to £7.6 million. This includes the first development management fees from the new Greenwich joint venture (£1.5 million) and the first asset and development management fees from the Central London team acquired through Grafton Advisors, strategic property adviser to WELPUT, at the end of last year (£1.5 million). Asset management fees in the prior year included a one-off refinancing fee of £1.0 million from iQ. The amortisation of intangible asset relates to the acquisition of Grafton Advisors.
The sale of the Plaza Hotel at Wembley resulted in a £2.3 million net reduction in administrative expenses. This was offset by £1.8 million of costs in respect of the new Greenwich and Grafton teams and a further £1.3 million reorganisation costs. In spite of these additional costs, overall administrative expenses decreased by £0.9 million, reflecting our focus on driving efficiency throughout the Group and we continue to seek ways in which overheads can be streamlined whilst maintaining sufficient resources to deliver the strategy.
3. Sales of non-current assets
A progressive disposal programme is underway to release capital to assist in funding the development of Wembley and to reduce overall Group net debt. Sales of non-current assets realised £177.3 million (net of costs) of which £130.0 million was received in cash in the year, with the balance deferred, giving rise to a pre-tax loss of £11.1 million. The principal disposals include:
|
Net cash from sales of non-current assets: |
£m |
|
Wembley Student |
51.5 |
|
Wembley Plaza |
12.0 |
|
Wembley Hilton |
24.9 |
|
Greenwich - new joint venture arrangements |
22.5 |
|
Greenwich Retail |
4.9 |
|
Guernsey |
6.9 |
|
Other disposals |
7.3 |
|
|
130.0 |
In the first quarter we disposed of the Plaza Hotel and completed on the sale of the Wembley student accommodation building to Keystone & Partners Real Estate SA. On 29 March 2013, we sold 50% of our interest in the Hilton London Wembley Hotel to Oaktree Capital Management L.P. ("Oaktree") for gross proceeds of £30.1 million, which was broadly in line with the valuation as at 30 September 2012. Under the terms of the transaction Oaktree will receive a preferred cash return, with Quintain receiving an increasing share of the income stream once the preferred return is paid. While income will accrue in the 2013/14 financial year on loans provided to the joint venture, the cash returns will commence during the 2014/15 financial year.
Of the £47.3 million deferred proceeds, £3.7 million relates to the Hilton transaction and was received shortly after the year end and £42.1 million relates to the £50 million deferred consideration on the new Greenwich joint venture arrangements which has been discounted for accounting purposes.
The largest contributor to the pre-tax loss on disposal of non-current assets was the new joint venture arrangements at Greenwich which had a significant impact on the Group balance sheet as the Group reduced its investment in the site to 40%, as illustrated below:
|
Impact of the new Greenwich joint venture Net assets disposed: |
|
£m |
|
Reduction in investment property |
|
(167.8) |
|
Increase in investment in joint ventures |
|
93.3 |
|
Increase in other net assets |
|
1.1 |
|
|
|
(73.4) |
|
|
|
|
|
Net proceeds: |
|
|
|
Cash and cash equivalents |
|
22.2 |
|
Deferred receivable |
|
42.1 |
|
|
|
64.3 |
|
Movement in net assets |
|
(9.1) |
|
|
|
|
|
Loss from sale of non-current assets |
|
(10.7) |
|
Tax credit on transaction |
|
1.6 |
|
|
|
(9.1) |
4. Results of joint ventures
The Group's share of profit from joint ventures decreased to £0.8 million (2012: £8.6 million). The underlying profit, however, increased by £3.8 million to £8.2 million. This included £5.2 million from iQ (2012: £1.8 million) and £3.0 million from Quercus (2012: £3.0 million). The net revaluation deficit was £4.5 million (2012: £7.8 million surplus), reflecting the market driven revaluation of the Quercus portfolio. This was partially offset by strong capital growth in iQ, which saw the opening of iQ Shoreditch in the period and rental growth across the portfolio. As a result of the completion of Shoreditch, iQ now has a fully refinanced portfolio, repaying Quintain £55.6 million in the first half of the year, from which £25.0 million was utilised in completing the associated build contract.
5. Net finance expenses
Net finance expenses increased from £10.5 million to £10.6 million. Bank interest payable was £18.1 million, a reduction of £0.8 million on the comparable period last year, with the average cost of debt steady at 3.2% (2012: 3.1%). The net charge attributable to hedging adjustments on financial instruments decreased from £11.1 million to £10.3 million. Interest receivable fell from £6.2 million to £5.5 million following the repayment of a loan to a joint venture.
|
Net finance expenses |
31 March 2013 £m |
31 March 2012 £m |
|
Bank and other interest payable |
18.9 |
19.7 |
|
Recycling of fair value of financial instruments |
9.4 |
9.1 |
|
Change in fair value of financial instruments |
0.9 |
2.0 |
|
Gross interest cost |
29.2 |
30.8 |
|
Interest capitalised |
(13.1) |
(14.1) |
|
Interest receivable |
(5.5) |
(6.2) |
|
|
10.6 |
10.5 |
6. Valuation
The valuation of the Group's properties as at 31 March 2013, including our share of gross assets in joint ventures and associates, was £1,060.2 million, a decrease of 3.5%, or £38.5 million on a like for like basis, net of capital expenditure, since 31 March 2012. This reflects the market for secondary property (which currently includes long-term healthcare assets) and a modest reduction in the value of development land at Wembley in the first half of the year, since when its value has in fact marginally increased. With the Greenwich development land now held in a new trading joint venture it is classified as inventory and not subject to annual valuations.
|
|
|
31 March 2013 £m |
Movement since 31 March 2012 £m |
% movement |
|
Wembley |
Investment assets |
199.6 |
(11.3) |
(5.4) |
|
Development land |
294.5 |
(6.0) |
(2.0) |
|
|
Greenwich |
Investment assets |
18.6 |
(3.5) |
(15.7) |
|
Development land |
154.4 |
- |
- |
|
|
iQ |
Student accommodation |
208.7 |
13.6 |
7.0 |
|
Quercus |
Long-term healthcare |
71.7 |
(14.2) |
(16.5) |
|
Sequel |
Secondary property |
55.3 |
(11.0) |
(16.6) |
|
Regional Schemes |
Land, residential |
29.5 |
(3.3) |
(10.1) |
|
Other Asset Management |
Secondary property |
22.4 |
(3.6) |
(13.8) |
|
Quantum |
Science parks |
5.5 |
0.8 |
17.8 |
|
|
|
1,060.2 |
(38.5) |
(3.5) |
7. Taxation
The Income Statement shows a tax credit for the year of £9.5 million (2012: £8.0 million). This mainly arose as a result of the valuation deficit.
8. Investment assets
|
|
31 March 2012
£m |
New Greenwich JV £m |
Other movements
£m |
31 March 2013
£m |
|
Investment properties |
825.9 |
(167.8) |
(95.6) |
562.5 |
|
Joint ventures |
273.6 |
93.3 |
(10.1) |
356.8 |
|
Other non-current assets |
24.7 |
42.1 |
(2.4) |
64.4 |
|
|
1,124.2 |
(32.4) |
(108.1) |
983.7 |
The decrease in investment properties is primarily due to the Greenwich joint venture transaction and the disposals of the Plaza Hotel, student accommodation and a 50% interest in the London Wembley Hilton Hotel, offset by ongoing capital expenditure at Wembley, particularly on the London Designer Outlet.
Joint venture investments increased as a result of the Greenwich transaction, the new Hilton joint venture and the growth of iQ. This was offset by the repayment of a loan to iQ on completion refinancing of iQ Shoreditch and valuation falls in the Quercus portfolio.
The increase in non-current assets reflects the £42.1 million discounted value of the £50 million deferred consideration that arose from the new joint venture arrangements at Greenwich.
9. Net assets per share
|
|
31 March 2013 |
31 March 2012 |
|
IFRS net assets (excluding non-controlling interest) |
£538.1m |
£571.7m |
|
IFRS NAV per share |
104p |
110p |
|
EPRA net assets |
£542.5m |
£599.6m |
|
EPRA NAV per share1 |
105p |
116p |
1 The EPRA NAV per share excludes the fair value adjustments for debt and related derivatives and deferred taxation on
revaluations and is calculated on a fully diluted basis
The basic net asset value per share at 31 March 2013 was 104p, down from 110p in 2012 due mainly to the valuation deficit in the year. The EPRA net asset value per share at 31 March 2013 was 105p, down from 116p in 2012.
|
Reconciliation to EPRA NAV per share |
31 March 2013 |
31 March 2012 |
|
IFRS net assets |
538.1 |
571.7 |
|
EPRA adjustments |
|
|
|
Dilutive effect of options |
- |
0.1 |
|
Deferred tax arising on revaluation movements, capital allowances and derivatives |
|
|
|
Group |
5.1 |
13.8 |
|
Joint ventures |
(4.6) |
(4.8) |
|
Associates |
0.5 |
0.5 |
|
Fair value adjustments on derivatives |
|
|
|
Group |
3.0 |
17.6 |
|
Joint ventures |
0.4 |
0.7 |
|
EPRA net assets |
542.5 |
599.6 |
|
EPRA NAV per share |
105p |
116p |
10. Contractual capital commitments
As at 31 March 2013, the Group's contractual capital commitments of £57.7 million (31 March 2012: £25.0 million) related almost entirely to ongoing construction and infrastructure work at Wembley. Capital commitments within joint ventures were reduced to just £2.0 million from £25.7 million at March with completion of iQ Shoreditch in the period.
11. Cashflow
The net cash outflow from operating activities was £1.3 million (2012: £21.9 million), which included a net inflow from trading stock of £4.2 million (2012: £1.5 million outflow). Net operating income distributed by joint ventures contributed £4.4 million (2012: £3.5 million). Adjusted operating cashflow (as defined in the Company's Key Performance Measures) was £1.1 million outflow (2012: £3.9 million outflow) or £3.1 million inflow including the trading sales (2012: £5.4 million outflow on a comparable basis last time).
The disposal programme, together with the refinancing of iQ Shoreditch, which allowed the Group's loan to iQ to be repaid, generated net cash proceeds of £171.7 million (2012: £51.1 million). Investment continued on the development pipeline, most notably the completion of student accommodation and the Hilton Hotel at Wembley and construction activity on the London Designer Outlet. £63.9 million (2012: £95.5 million) was invested in the period together with £13.1 million (2012: £45.3 million) through joint ventures.
The net cash generated from disposals allowed £54.3 million of borrowings to be repaid during the year with net debt reducing from £535.0 million at March to £443.6 million at the year end.
12. Financing strategy and capital structure
Our financing strategy in the medium term is to manage a level of debt appropriate to the nature and risk profile of the Group's assets. Our financing structure needs to be flexible and cost-effective, taking account of the availability of debt. This has been achieved through securing funding at the corporate level, giving us the scope to fund efficiently all areas of the portfolio which otherwise would be more challenging as well as providing us with liquidity and operational flexibility.
Our initial target is to reduce net debt levels permanently to below £400 million by March 2014. In order to give us operational flexibility and the ability to fund the current development pipeline, we have also been actively re-phasing short term maturities in addition to extending debt out to March 2016.
Since we announced our results last May, we have extended maturities on £85 million of debt, comprising a £20 million facility extended from 2014 to 2016, a £35 million facility extended from March 2013 to September 2014 and the removal of £30 million of scheduled facility amortisation. We now have £423 million of facilities out to 2016. The extension agreed on one of our facilities requires further amortisation of £25 million in June 2013. The £423 million of facilities extended to 2016 takes account of this amortisation. The facilities could be subject to further amortisation on the exercise of elections, at the Company's request, to adjust for losses for interest cover purposes.
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 2013 the Group has prepared detailed cashflow forecasts which show that it has committed undrawn facilities and includes assumptions around the disposal of certain assets 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, which requires the Group's adjusted operating profit plus realised revaluation surpluses on disposal over 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 defined in the banking covenants. The Group has a gearing ratio of 76% at March 2013 and an interest cover ratio of 8.5 times at 31 March 2013 on the basis of the covenant definitions. 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 believe it is appropriate to prepare the financial statements on a going concern basis.
At 31 March 2013, Quintain's interest rate was 65.1% hedged (2012: 60.5%) with swaps with the remainder covered by caps. The fair value adjustment on these interest rate hedging instruments was a debit of £0.1 million (2012: £6.4 million). Of the movement in the period £0.9 million was debited in the Income Statement, being the element relating to ineffective hedges and £0.8 million credited to other comprehensive income.
Debt summary
|
|
Covenant |
31 March 2013 |
31 March 2012 |
|
Cash |
|
(44.6) |
(7.5) |
|
Bank loans < 1 year |
|
71.0 |
76.1 |
|
Bank loans > 1 year |
|
417.2 |
466.4 |
|
Net debt |
|
£443.6m |
£535.0m |
|
Weighted average debt maturity |
|
2.6 years |
3.2 years |
|
Weighted average interest rate |
|
3.2% |
3.1% |
|
% of debt fixed |
|
65.1% |
60.5% |
|
% of debt capped |
|
34.9% |
39.5% |
|
Interest cover1 |
1.25x |
8.5x |
2.9x |
|
Gearing2 |
110% |
76% |
87% |
|
Undrawn committed facilities |
|
£69.5m |
£71.5m |
|
Cash balance |
|
£44.6m |
£7.5m |
1Interest cover, per our banking covenants, is defined as adjusted operating profit before net finance expenses plus realised surpluses on disposals divided by adjusted net finance costs excluding finance lease interest.
2Gearing, 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.
|
|
Quercus |
iQ2 |
Sequel1 |
|
Joint ventures: |
|
|
|
|
Net debt (QED share) |
£35.3m |
£104.6m |
£34.5m |
|
Weighted average debt maturity |
3.2 years |
4.0 years |
1.6 years |
|
Weighted average interest rate |
4.5% |
3.7% |
4.7% |
|
% of debt fixed/capped interest rate |
59% |
100% |
46% |
|
Interest cover |
3.0x |
1.9x/2.6x |
3.2x |
|
Interest covenant |
1.5x |
1.25x/1.4x |
1.75x |
|
Loan to value |
52% |
58%/54% |
71% |
|
Loan to value covenant |
60% |
75%/68% |
75% |
1Included in the Group debt analysis.
²iQ covenant limits and calculations differ between lenders.
13. Financial Outlook
Quintain's financial strength has improved over the period and we will continue to focus on bolstering this solid platform to enable the business to deliver returns for shareholders in the years ahead. Our priorities in the next financial year will be the permanent reduction of debt to below £400 million, which we intend to achieve by 31 March 2014, and the creation of further new income streams from both the Urban Regeneration and Asset Management businesses.
Over the next 12 months, as the re-balancing of the portfolio is completed, which involves the disposal of assets, we expect to see a short term reduction in Group income, while new income streams from our London development portfolio, including increased development fees from Greenwich Peninsula, our 50% interest in the Hilton London Wembley hotel and rent from the London Designer Outlet, progressively come on stream.
Richard Stearn
Finance Director
23 May 2013
Risk Management
In addition to general economic, security and regulatory risks faced by a wide range of companies that are part of the general commercial environment, we consider there to be a number of specific risks that are faced by our Company.
How we manage risk
In managing the business, the identification and monitoring of risk is crucial to enable the Group to deliver its strategy. The Board has established a Risk Committee which comprises the Chairman and Executive Directors and meets quarterly. A risk register is maintained and divided into four areas: Urban Regeneration; Asset Management; Tax and Finance; and Operations. Those responsible for the risks in each area are required to present to the Risk Committee at one of the quarterly meetings. Risks are scored and ranked based on the likelihood of occurrence and potential impact on the Company. The minutes of those meetings are distributed to the Audit Committee and more formally the Audit Committee is asked to review the risk register and consider the adequacy of controls at least annually. Internal Audit, which is outsourced to PwC, also reviews the risk register and considers this in planning their audit programme. Set out below is management's view of the current specific principal business risks and actions taken in mitigation.
|
Description and implication of risk |
Mitigation |
|
Liquidity Quintain's corporate debt facilities expire between 2013 and 2016. 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.
|
Further capital for the continued build out of its major urban regeneration schemes will come from asset sales, supported by a clear marketing strategy; and joint venture partnerships, which management continues actively to seek; supported by the on-going re-financing of the Group's banking facilities.
Management monitors this risk by using a financial modelling tool that can analyse and test the different business forecasting scenarios (including prospective transactions) and incorporate impact on liquidity and headroom. |
|
Banking covenants The corporate bilateral facilities have two key financial covenants (gearing and interest cover), therefore the sustainability of income streams remains a key focus. The gearing ratio, as defined by the banking covenants, of 76% compares with a covenant of 110%. Interest cover, as defined by the banking covenants, for the year was 8.5 times against a covenant of 1.25 times.
|
Internal guidelines, which have been endorsed by the Board, operate at tighter levels of control than the external covenants and incorporate the impact of positioning in the cycle. The corporate debt remains substantially hedged to assist in cost certainty. We seek to generate sustainable income streams, with the potential for growth, from investment assets on our regeneration sites, through co-investments in the asset management businesses and through fee income from development, project and asset management activities.
|
|
Development The Group is exposed to risks associated with development projects, for example, delays could occur for regulatory or funding reasons, counterparty risk that contractors may become bankrupt or insolvent or development partners who may fail to meet their obligations. Control of timing and construction 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. |
§ Transferring risk to contractors where possible; § On-going monitoring of development progress against budget and schedule; § Monitoring the level of committed future capital expenditure on the Group's development programme relative to the level of debt; § Overseeing standardisation across Quintain's projects to increase predictability and provide economies of scale, and § Monitoring counterparty risk to ensure that through step-in rights, retentions and deposits, we have protected our position as far as possible from financial loss. The covenant of key counterparties is considered on an on-going basis. |
|
Property valuations Property valuations are inherently subjective and uncertain and may provide excessive volatility in the income statement; particularly in current markets where transaction volumes are at relatively low levels and, in relation to our major urban regeneration projects, are unique. |
With respect to the urban regeneration assets, valuers support their stand back valuation with other metrics including value per acre, value per net developable square foot and discounted cashflow. |
|
Market The Group's business is dependent on the general economic and property market conditions in the United Kingdom, particularly London. Deterioration in residential and commercial property markets could lead to declines in the value of the Group's property portfolio, tenant default and a reduction in income from these properties. Land, which makes up approximately 42% of the Group's gross assets, tends to experience greater volatility in valuations than income producing assets. |
Each property portfolio or fund is led by an experienced asset management team that is knowledgeable and experienced in mitigating the impact of occupier failures, lease breaks and expiries.
|
|
Reputation Quintain's reputation with many 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. Relationships with joint venture partners and other professional organisations are critical in delivery of the business strategy. The negative impact of, for example, a regulatory breech, significant loss in asset value, poorly conceived design and planning or a poor health and safety record could result in an adverse long term impact on the Company's creditability with investors and other key stakeholders. |
The Risk and Audit Committees regularly review key risks in each business area. The Board receives reports from the Audit Committee and reviews all key projects focussing on the reputational and commercial risks to the Group. |
|
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.
|
Remuneration and benefits are considered competitive, strongly linked to performance and are regularly benchmarked with Quintain's peers. Bi-annual performance appraisal process focuses on continual personal development. The response to the annual employee survey allows us to understand and address employees' issues. We continue with our regular formal staff meetings and monthly informal events at which staff can communicate with senior management, as well as weekly news updates on business successes, allowing all employees to understand key activities around the Group and receive recognition of their contribution.
|
|
Sustainability At a corporate level, future obligations to report on our greenhouse gas emissions and to participate in the CRC EES require that systems are in place to collect data from our assets. Poor performance and an emissions profile that fails to improve over time could result in financial loss and reputational damage, whilst a failure to future proof the assets we manage may result in reduced investor and occupier interest.
|
A data management system has been selected to enable the analysis of the performance data we collect across our assets. Ways in which this data can be used to inform investment decisions and support behavioural change are being investigated. The feasibility of mitigation measures are considered across all development. Measures include passive design to help counter the effects of overheating, the use of sustainable methods to improve drainage and reduce flood risk, and design for reduced energy and water use to reduce demand for resources. |
Quintain Estates and Development plc
Consolidated Income Statement
For the year ended 31 March 2013
|
|
Notes |
2013 |
2012 |
|
|
|
£m |
£m |
|
Revenue |
2.3 |
52.1 |
45.4 |
|
Cost of sales |
2.3 |
(26.6) |
(20.5) |
|
Gross profit |
|
25.5 |
24.9 |
|
Administrative expenses |
2.4 |
(21.1) |
(22.0) |
|
Operating profit before recognition of results from non-current asset sales and revaluation |
|
4.4 |
2.9 |
|
Loss from sale of non-current assets |
|
(11.1) |
(3.9) |
|
Deficit on revaluation of investment properties |
3.1 |
(34.0) |
(40.5) |
|
Share of profit from joint ventures (including revaluation) |
3.4 |
0.8 |
8.6 |
|
Share of profit/(loss) from associates |
|
0.1 |
(0.1) |
|
Operating loss |
|
(39.8) |
(33.0) |
|
Finance income |
2.6 |
5.5 |
6.2 |
|
Finance costs |
2.6 |
(16.1) |
(16.7) |
|
Loss before tax |
|
(50.4) |
(43.5) |
|
Tax credit for the year |
2.7 |
9.5 |
8.0 |
|
Loss for the year |
|
(40.9) |
(35.5) |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Equity shareholders |
|
(40.9) |
(35.5) |
|
Non-controlling interest |
|
- |
- |
|
|
|
(40.9) |
(35.5) |
|
Earnings per share (pence): |
|
|
|
|
Basic and diluted |
2.8 |
(7.9) |
(6.8) |
Consolidated Statement of Other Comprehensive Income
For the year ended 31 March 2013
|
|
Notes |
2013 |
2012 |
|
|
|
£m |
£m |
|
|
|
|
|
|
Loss for the financial year |
|
(40.9) |
(35.5) |
|
Foreign currency translation differences |
|
- |
(0.4) |
|
Deficit on revaluation of other non-current investments |
5.1 |
(0.4) |
(0.2) |
|
Fair value adjustment on cashflow hedges |
|
10.2 |
4.7 |
|
Share of other comprehensive income in joint ventures, net of tax |
3.4 |
0.2 |
3.2 |
|
Tax on other comprehensive income |
2.7 |
(2.4) |
1.2 |
|
Other comprehensive income for the financial year |
|
7.6 |
8.5 |
|
|
|
|
|
|
Total comprehensive loss for the year |
|
(33.3) |
(27.0) |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Equity shareholders |
|
(33.3) |
(27.0) |
|
Non-controlling interest |
|
- |
- |
|
|
|
(33.3) |
(27.0) |
Consolidated Balance Sheet
As at 31 March 2013
|
|
Notes |
2013 |
2012 |
|
|
|
£m |
£m |
|
Non-current assets |
|
|
|
|
Investment properties |
3.1 |
562.5 |
825.9 |
|
Owner-occupied properties, plant and equipment |
|
0.2 |
0.8 |
|
Intangible assets |
|
6.7 |
7.5 |
|
Investment in joint ventures |
3.4 |
356.8 |
273.6 |
|
Investment in associates |
|
1.5 |
1.5 |
|
Non-current receivables |
5.1 |
54.1 |
14.9 |
|
Deferred tax asset |
2.7 |
1.9 |
- |
|
Total non-current assets |
|
983.7 |
1,124.2 |
|
Current assets |
|
|
|
|
Trading properties |
3.3 |
10.2 |
21.3 |
|
Trade and other receivables |
5.2 |
33.1 |
23.1 |
|
Cash and cash equivalents |
|
44.6 |
7.5 |
|
Total current assets |
|
87.9 |
51.9 |
|
Total assets |
|
1,071.6 |
1,176.1 |
|
Current liabilities |
|
|
|
|
Bank loans and other borrowings |
6.1 |
(71.0) |
(76.1) |
|
Trade and other payables |
|
(28.8) |
(42.0) |
|
Current tax liability |
|
(1.4) |
(1.4) |
|
Total current liabilities |
|
(101.2) |
(119.5) |
|
Non-current liabilities |
|
|
|
|
Bank loans and other borrowings |
6.1 |
(415.2) |
(464.2) |
|
Deferred tax liability |
2.7 |
- |
(4.8) |
|
Obligations under finance leases |
|
(11.1) |
(11.1) |
|
Other payables |
|
(5.7) |
(4.5) |
|
Total non-current liabilities |
|
(432.0) |
(484.6) |
|
Total liabilities |
|
(533.2) |
(604.1) |
|
Net assets |
|
538.4 |
572.0 |
|
Equity |
|
|
|
|
Share capital |
6.2 |
130.2 |
130.2 |
|
Share premium |
|
137.3 |
137.3 |
|
Other capital reserves |
|
107.1 |
107.5 |
|
Cashflow hedge reserve |
|
(11.2) |
(19.2) |
|
Retained earnings |
|
182.5 |
224.6 |
|
Own shares reserve |
|
(7.8) |
(8.7) |
|
Equity shareholders' funds |
|
538.1 |
571.7 |
|
Non-controlling interest |
|
0.3 |
0.3 |
|
Total equity |
|
538.4 |
572.0 |
|
|
|
|
|
|
Net asset value per share (pence): |
2.8 |
|
|
|
Basic |
|
104 |
110 |
|
Diluted |
|
104 |
110 |
Approved by the Board of Directors on 22 May 2013 and signed on its behalf by:
WILLIAM RUCKER RICHARD STEARN
Director Director
Consolidated Statement of Changes in Equity
For the year ended 31 March 2013
|
|
Issued 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 2012 |
130.2 |
137.3 |
107.5 |
(19.2) |
224.6 |
(8.7) |
571.7 |
0.3 |
572.0 |
|
Loss for the year |
- |
- |
- |
- |
(40.9) |
- |
(40.9) |
- |
(40.9) |
|
Other comprehensive (loss)/income for the year, net of tax |
- |
- |
(0.4) |
8.0 |
- |
- |
7.6 |
- |
7.6 |
|
Total comprehensive (loss)/income for the year |
- |
- |
(0.4) |
8.0 |
(40.9) |
- |
(33.3) |
- |
(33.3) |
|
Shares awarded to employees under share-based payment schemes |
- |
- |
- |
- |
(0.9) |
0.9 |
- |
- |
- |
|
Costs relating to share-based payment schemes |
- |
- |
- |
- |
(0.3) |
- |
(0.3) |
- |
(0.3) |
|
Balance as at 31 March 2013 |
130.2 |
137.3 |
107.1 |
(11.2) |
182.5 |
(7.8) |
538.1 |
0.3 |
538.4 |
Consolidated Statement of Changes in Equity
For the year ended 31 March 2012
|
|
Issued 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 2011 |
130.2 |
137.3 |
108.1 |
(28.3) |
260.6 |
(9.6) |
598.3 |
0.3 |
598.6 |
|
Loss for the year |
- |
- |
- |
- |
(35.5) |
- |
(35.5) |
- |
(35.5) |
|
Other comprehensive (loss)/income for the year, net of tax |
- |
- |
(0.6) |
9.1 |
- |
- |
8.5 |
- |
8.5 |
|
Total comprehensive (loss)/income for the year |
- |
- |
(0.6) |
9.1 |
(35.5) |
- |
(27.0) |
- |
(27.0) |
|
Shares awarded to employees under share-based payment schemes |
- |
- |
- |
- |
(0.9) |
0.9 |
- |
- |
- |
|
Costs relating to share-based payment schemes |
- |
- |
- |
- |
0.4 |
- |
0.4 |
- |
0.4 |
|
Balance as at 31 March 2012 |
130.2 |
137.3 |
107.5 |
(19.2) |
224.6 |
(8.7) |
571.7 |
0.3 |
572.0 |
Consolidated Cashflow Statement
For the year ended 31 March 2013
|
|
|
2013 |
2012 |
|
|
|
£m |
£m |
|
Operating activities |
|
|
|
|
Loss for the financial period |
|
(40.9) |
(35.5) |
|
Adjustments for: |
|
|
|
|
Depreciation of plant and equipment |
|
- |
0.6 |
|
Amortisation of intangible assets |
|
0.8 |
- |
|
Costs relating to share-based payment schemes |
|
(0.3) |
0.4 |
|
Net finance expenses |
|
10.6 |
10.5 |
|
Loss on sale of non-current assets |
|
11.1 |
3.9 |
|
Deficit on revaluation of investment properties |
|
34.0 |
40.5 |
|
Share of profit from joint ventures |
|
(0.8) |
(8.6) |
|
Share of (profit)/loss from associates |
|
(0.1) |
0.1 |
|
Provision in book value of trading properties |
|
- |
2.9 |
|
Foreign exchange gains |
|
- |
(0.4) |
|
Tax on continuing operations |
|
(9.5) |
(8.0) |
|
|
|
4.9 |
6.4 |
|
Decrease/(increase) in trade and other receivables |
|
6.9 |
(1.8) |
|
(Decrease)/increase in trade and other payables |
|
(4.5) |
4.0 |
|
Decrease/(increase) in trading properties |
|
4.2 |
(1.5) |
|
Cash generated from operations |
|
11.5 |
7.1 |
|
Interest paid |
|
(16.2) |
(30.7) |
|
Interest received |
|
3.5 |
1.6 |
|
Tax (paid)/recovered |
|
(0.1) |
0.1 |
|
Net cashflow from operating activities |
|
(1.3) |
(21.9) |
|
Investing activities |
|
|
|
|
Proceeds from sale of investment properties |
|
130.0 |
49.6 |
|
Purchase and development of investment properties |
|
(63.9) |
(95.5) |
|
Purchase of owner-occupied properties, plant and equipment |
|
(0.2) |
(0.1) |
|
Refund of capital from other non-current investments |
|
- |
0.5 |
|
Purchase of subsidiary net of cash acquired |
|
(4.1) |
(5.5) |
|
Capital and loan payments advanced to joint ventures |
|
(13.1) |
(45.3) |
|
Capital and loan repayments received from joint ventures |
|
41.7 |
1.5 |
|
Distributions received from joint ventures |
|
4.4 |
3.5 |
|
Net cashflow from investing activities |
|
94.8 |
(91.3) |
|
Financing activities |
|
|
|
|
Proceeds from new borrowings |
|
- |
110.5 |
|
Repayment of borrowings |
|
(54.3) |
(7.9) |
|
Payment of loan issue costs |
|
(1.3) |
(0.9) |
|
Payment of finance lease liabilities |
|
(0.8) |
(0.8) |
|
Net cashflow from financing activities |
|
(56.4) |
100.9 |
|
Net increase/(decrease) in cash and cash equivalents |
|
37.1 |
(12.3) |
|
Cash and cash equivalents at start of year |
|
7.5 |
19.8 |
|
Cash and cash equivalents at end of year |
|
44.6 |
7.5 |
Section 1: Preparation of financial statements
1.1 Basis of preparation
The Board approved the Group financial statements on 22 May 2013. 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.
The principal accounting policies applied in the consolidated financial statements are set out in each note to the financial statements. These policies have been consistently applied to all the years presented.
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 2013, the Group has prepared detailed cashflow forecasts which show that it has committed undrawn facilities and include assumptions around the disposal of certain assets to finance its committed capital expenditure and other outflows, which will enable it to continue in operational existence for the foreseeable future. Further information regarding the Group's business activities, together with the factors likely to affect its future development, performance and position is set out in the Operating and Financial Review.
The Group's key financial covenants are an interest cover covenant, which requires the Group's adjusted operating profit before net finance expenses plus realised profits on disposals over adjusted net finance expenses excluding finance lease interest to be greater than 1.25x, 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 defined in the banking covenants. The Group has a gearing ratio of 76% at 31 March 2013 and an interest cover ratio of 8.5 times at 31 March 2013, both as defined by its banking facilities. The Group's forecasts show that the Group is expected to continue to meet both financial covenants for the foreseeable future.
Based on the above the directors believe it is appropriate to prepare the financial statements on a going concern basis.
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 areas where management has made significant judgements are around classification of the company's 40% interest in GPRL as a joint venture, the reclassification of the land transferred into the joint venture as inventory and estimates regarding the valuation of properties on the balance sheet and in joint ventures. 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 Operating and Financial 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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
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. 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.
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.
|
|
2013 Adjusted |
2013 Capital(1) |
2013 Total |
2012 Adjusted |
2012 Capital1 |
2012 Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Revenue |
52.1 |
- |
52.1 |
45.4 |
- |
45.4 |
|
Cost of sales |
(25.8) |
(0.8) |
(26.6) |
(17.6) |
(2.9) |
(20.5) |
|
Gross profit/(loss) |
26.3 |
(0.8) |
25.5 |
27.8 |
(2.9) |
24.9 |
|
Administrative expenses |
(21.1) |
- |
(21.1) |
(22.0) |
- |
(22.0) |
|
Operating profit/(loss) before recognition of results from non-current asset sales and revaluation |
5.2 |
(0.8) |
4.4 |
5.8 |
(2.9) |
2.9 |
|
Loss from the sale of non-current assets |
- |
(11.1) |
(11.1) |
- |
(3.9) |
(3.9) |
|
Deficit on revaluation of investment properties |
- |
(34.0) |
(34.0) |
- |
(40.5) |
(40.5) |
|
Share of profit/(loss) from joint ventures |
8.2 |
(7.4) |
0.8 |
4.4 |
4.2 |
8.6 |
|
Share of profit/(loss) from associates |
- |
0.1 |
0.1 |
- |
(0.1) |
(0.1) |
|
Operating profit/(loss) |
13.4 |
(53.2) |
(39.8) |
10.2 |
(43.2) |
(33.0) |
|
Finance income |
5.5 |
- |
5.5 |
6.2 |
- |
6.2 |
|
Finance costs |
(10.7) |
(5.4) |
(16.1) |
(10.6) |
(6.1) |
(16.7) |
|
Net finance expenses |
(5.2) |
(5.4) |
(10.6) |
(4.4) |
(6.1) |
(10.5) |
|
Profit/(loss) before tax |
8.2 |
(58.6) |
(50.4) |
5.8 |
(49.3) |
(43.5) |
(1)For these purposes revaluation movements, trading property provisions, disposals, mark to market adjustments and amortisation of intangibles are included within capital items.
2.2 Segmental information
The Group has seven reportable segments being Wembley, Greenwich, Other Urban Regeneration ("UR"), Quercus, iQ, Sequel and Other Quintain Asset Management ("QAM"). The first three of these relate to the Group's Urban Regeneration activities and the remaining four to the Group's Asset Management activities. The latter includes asset management fees and investment returns from properties held for rental income either directly by the Group, including Sequel (the Group's secondary property portfolio), or in specialist property joint ventures, including Quercus (healthcare) and iQ (student accommodation).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 result is considered to be the IFRS measure of adjusted operating profit before administrative expenses. The Board reviews administrative expenses, finance 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 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 activities are based in the United Kingdom and Channel Islands.
Further discussion of the Group's results for the year and the segmental balance sheets is contained in the Operating and Financial Review.
The segmental information of the Group's results for the year ended 31 March 2013 was as follows:
|
|
Wembley |
Greenwich |
Other UR |
Total UR |
Quercus |
iQ |
Sequel |
Other QAM |
Total QAM |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Revenue |
26.3 |
2.1 |
3.6 |
32.0 |
2.5 |
2.4 |
8.2 |
7.0 |
20.1 |
52.1 |
|
Cost of sales |
(15.8) |
(0.1) |
(2.9) |
(18.8) |
(0.6) |
- |
(1.9) |
(5.3) |
(7.8) |
(26.6) |
|
Gross profit |
10.5 |
2.0 |
0.7 |
13.2 |
1.9 |
2.4 |
6.3 |
1.7 |
12.3 |
25.5 |
|
(Loss)/profit from the sale of non-current assets |
(2.8) |
(10.4) |
- |
(13.2) |
- |
- |
- |
2.1 |
2.1 |
(11.1) |
|
Deficit on revaluation of investment properties |
(16.0) |
(0.1) |
(3.3) |
(19.4) |
- |
- |
(11.0) |
(3.6) |
(14.6) |
(34.0) |
|
Share of (loss)/profit from joint ventures |
(0.2) |
(5.4) |
- |
(5.6) |
(8.8) |
14.3 |
- |
0.9 |
6.4 |
0.8 |
|
Share of profit from associates |
- |
- |
- |
- |
- |
- |
- |
0.1 |
0.1 |
0.1 |
|
Operating (loss)/profit before administrative expenses |
(8.5) |
(13.9) |
(2.6) |
(25.0) |
(6.9) |
16.7 |
(4.7) |
1.2 |
6.3 |
(18.7) |
|
Administrative expenses |
(21.1) |
|||||||||
|
Net finance expenses |
(10.6) |
|||||||||
|
Loss before tax |
(50.4) |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted |
11.3 |
0.7 |
0.7 |
12.7 |
4.9 |
7.6 |
6.3 |
3.0 |
21.8 |
34.5 |
|
Capital(1) |
(19.8) |
(14.6) |
(3.3) |
(37.7) |
(11.8) |
9.1 |
(11.0) |
(1.8) |
(15.5) |
(53.2) |
|
Operating (loss)/profit before administrative expenses |
(8.5) |
(13.9) |
(2.6) |
(25.0) |
(6.9) |
16.7 |
(4.7) |
1.2 |
6.3 |
(18.7) |
(1) For these purposes revaluation movements, trading property provisions,disposals, mark to market adjustments and amortisation of intangibles are included within capital items.
The segmental information of the Group's results for the year ended 31 March 2012 was as follows:
|
|
Wembley |
Greenwich |
Other UR |
Total UR |
Quercus |
iQ |
Sequel |
Other QAM |
Total QAM |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Revenue |
23.0 |
0.2 |
1.8 |
25.0 |
3.6 |
3.0 |
8.5 |
5.3 |
20.4 |
45.4 |
|
Cost of sales |
(10.0) |
(0.1) |
(3.9) |
(14.0) |
(1.3) |
- |
(2.2) |
(3.0) |
(6.5) |
(20.5) |
|
Gross profit/(loss) |
13.0 |
0.1 |
(2.1) |
11.0 |
2.3 |
3.0 |
6.3 |
2.3 |
13.9 |
24.9 |
|
(Loss)/profit from the sale of non-current assets |
(0.8) |
- |
(3.4) |
(4.2) |
- |
- |
0.6 |
(0.3) |
0.3 |
(3.9) |
|
(Deficit)/surplus on revaluation of investment properties |
(29.5) |
6.5 |
(2.9) |
(25.9) |
- |
- |
(10.9) |
(3.7) |
(14.6) |
(40.5) |
|
Share of profit/(loss) from joint Ventures |
0.3 |
(0.7) |
0.1 |
(0.3) |
0.6 |
8.3 |
- |
- |
8.9 |
8.6 |
|
Share of loss from associates |
- |
- |
- |
- |
- |
- |
- |
(0.1) |
(0.1) |
(0.1) |
|
Operating profit/(loss) before administrative expenses |
(17.0) |
5.9 |
(8.3) |
(19.4) |
2.9 |
11.3 |
(4.0) |
(1.8) |
8.4 |
(11.0) |
|
Administrative expenses |
(22.0) |
|||||||||
|
Net finance expenses |
(10.5) |
|||||||||
|
Loss before tax |
(43.5) |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted |
13.3 |
(0.8) |
0.8 |
13.3 |
5.3 |
4.8 |
6.3 |
2.5 |
18.9 |
32.2 |
|
Capital(1) |
(30.3) |
6.7 |
(9.1) |
(32.7) |
(2.4) |
6.5 |
(10.3) |
(4.3) |
(10.5) |
(43.2) |
|
Operating (loss)/profit before administrative expenses |
(17.0) |
5.9 |
(8.3) |
(19.4) |
2.9 |
11.3 |
(4.0) |
(1.8) |
8.4 |
(11.0) |
(1) For these purposes revaluation movements, trading property provisions,disposals and mark to market adjustments are included within capital items.
The segmental information of the Group's Balance Sheet as at 31 March 2013 was as follows:
|
|
Wembley
|
Greenwich |
Other UR |
Total UR |
Quercus |
iQ |
Sequel |
Other QAM |
Total QAM |
Unallocated |
Total
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Investment properties |
461.2 |
5.7 |
19.4 |
486.3 |
- |
- |
55.3 |
20.9 |
76.2 |
- |
562.5 |
|
Owner-occupied properties, plant and equipment |
- |
- |
- |
- |
- |
- |
- |
- |
- |
0.2 |
0.2 |
|
Intangible assets |
- |
- |
- |
- |
- |
- |
- |
6.7 |
6.7 |
- |
6.7 |
|
Investment in joint ventures |
27.8 |
171.9 |
2.1 |
201.8 |
38.8 |
100.2 |
- |
16.0 |
155.0 |
- |
356.8 |
|
Investment in associates |
- |
- |
- |
- |
- |
- |
- |
1.5 |
1.5 |
- |
1.5 |
|
Non-current receivables |
7.2 |
43.3 |
3.6 |
54.1 |
- |
- |
- |
- |
- |
- |
54.1 |
|
Deferred tax asset |
- |
- |
- |
- |
- |
- |
- |
- |
- |
1.9 |
1.9 |
|
Total non-current assets |
496.2 |
220.9 |
25.1 |
742.2 |
38.8 |
100.2 |
55.3 |
45.1 |
239.4 |
2.1 |
983.7 |
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Trading properties |
0.5 |
- |
9.7 |
10.2 |
- |
- |
- |
- |
- |
- |
10.2 |
|
Other current assets |
3.1 |
- |
- |
3.1 |
- |
- |
- |
10.7 |
10.7 |
63.9 |
77.7 |
|
Total current assets |
3.6 |
- |
9.7 |
13.3 |
- |
- |
- |
10.7 |
10.7 |
63.9 |
87.9 |
|
Total assets |
499.8 |
220.9 |
34.8 |
755.5 |
38.8 |
100.2 |
55.3 |
55.8 |
250.1 |
66.0 |
1,071.6 |
|
Total current liabilities |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(101.2) |
(101.2) |
|
Total non-current liabilities |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(432.0) |
(432.0) |
|
Total liabilities |
|
|
|
|
|
|
|
|
|
(533.2) |
(533.2) |
|
Net assets/(liabilities) |
499.8 |
220.9 |
34.8 |
755.5 |
38.8 |
100.2 |
55.3 |
55.8 |
250.1 |
(467.2) |
538.4 |
|
Capital expenditure |
53.1 |
10.3 |
1.9 |
65.3 |
- |
- |
- |
- |
- |
- |
65.3 |
The segmental information of the Group's Balance Sheet as at 31 March 2012 was as follows:
|
|
Wembley
|
Greenwich |
Other UR |
Total UR |
Quercus |
iQ |
Sequel |
Other QAM |
Total QAM |
Unallocated |
Total
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Investment properties |
536.5 |
167.8 |
20.6 |
724.9 |
- |
- |
66.4 |
34.6 |
101.0 |
- |
825.9 |
|
Owner-occupied properties, plant and equipment |
- |
- |
- |
- |
- |
- |
- |
- |
- |
0.8 |
0.8 |
|
Intangible assets |
- |
- |
- |
- |
- |
- |
- |
7.5 |
7.5 |
- |
7.5 |
|
Investment in joint ventures |
2.3 |
89.1 |
0.6 |
92.0 |
50.1 |
116.4 |
- |
15.1 |
181.6 |
- |
273.6 |
|
Investment in associates |
- |
- |
- |
- |
- |
- |
- |
1.5 |
1.5 |
- |
1.5 |
|
Non-current receivables |
- |
- |
4.2 |
4.2 |
- |
- |
- |
10.7 |
10.7 |
- |
14.9 |
|
Total non-current assets |
538.8 |
256.9 |
25.4 |
821.1 |
50.1 |
116.4 |
66.4 |
69.4 |
302.3 |
0.8 |
1,124.2 |
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Trading properties |
9.0 |
- |
12.3 |
21.3 |
- |
- |
- |
- |
- |
- |
21.3 |
|
Other current assets |
- |
- |
- |
- |
- |
- |
- |
- |
- |
30.6 |
30.6 |
|
Total current assets |
9.0 |
- |
12.3 |
21.3 |
- |
- |
- |
- |
- |
30.6 |
51.9 |
|
Total assets |
547.8 |
256.9 |
37.7 |
842.4 |
50.1 |
116.4 |
66.4 |
69.4 |
302.3 |
31.4 |
1,176.1 |
|
Total current liabilities |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(119.5) |
(119.5) |
|
Total non-current liabilities |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(484.6) |
(484.6) |
|
Total liabilities |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(604.1) |
(604.1) |
|
Net assets/(liabilities) |
547.8 |
256.9 |
37.7 |
842.4 |
50.1 |
116.4 |
66.4 |
69.4 |
302.3 |
(572.7) |
572.0 |
|
Capital expenditure |
81.1 |
2.4 |
1.0 |
84.5 |
- |
- |
- |
17.5 |
17.5 |
- |
102.0 |
2.3 Revenue, cost of sales and gross profit
|
|
2013 |
2012 |
||||
|
|
Revenue
£m |
Cost of sales £m |
Gross profit £m |
Revenue
£m |
Cost of sales £m |
Gross profit £m |
|
Rental income |
19.5 |
(7.2) |
12.3 |
20.1 |
(5.7) |
14.4 |
|
Income from sale of trading properties |
11.0 |
(11.3) |
(0.3) |
2.3 |
(2.4) |
(0.1) |
|
Fees from asset and development management |
9.0 |
(1.4) |
7.6 |
7.3 |
(1.5) |
5.8 |
|
Income from hotel operations |
2.4 |
(1.5) |
0.9 |
8.5 |
(3.7) |
4.8 |
|
Intangible asset amortisation |
- |
(0.8) |
(0.8) |
- |
- |
- |
|
Other income |
10.2 |
(4.4) |
5.8 |
7.2 |
(4.3) |
2.9 |
|
|
52.1 |
(26.6) |
25.5 |
45.4 |
(17.6) |
27.8 |
|
Provision in book value of trading properties |
- |
- |
- |
- |
(2.9) |
(2.9) |
|
|
52.1 |
(26.6) |
25.5 |
45.4 |
(20.5) |
24.9 |
|
Net rental income |
31 March 2013 |
31 March 2012 |
||||
|
|
Urban Regen-eration |
Asset Manag-ement |
Total
|
Urban Regen-eration |
Asset Manag-ement |
Total
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Group net rental income |
5.8 |
6.5 |
12.3 |
7.0 |
7.4 |
14.4 |
|
Share of JV net rental income |
0.3 |
16.6 |
16.9 |
0.4 |
13.3 |
13.7 |
|
Combined net rental income |
6.1 |
23.1 |
29.2 |
7.4 |
20.7 |
28.1 |
2.4 Administrative expenses
The analysis of the Group's administrative expenses was as follows:
|
|
|
2013 |
2012 |
|
|
|
£m |
£m |
|
Directors' remuneration |
|
2.8 |
2.6 |
|
Staff costs |
|
11.3 |
12.0 |
|
Total staff costs |
|
14.1 |
14.6 |
|
Legal and other professional fees |
|
2.2 |
2.2 |
|
Office costs |
|
3.2 |
3.5 |
|
Depreciation of tangible fixed assets |
|
- |
0.5 |
|
Operating lease payments |
|
0.8 |
1.1 |
|
General expenses |
|
0.8 |
0.1 |
|
|
|
21.1 |
22.0 |
Future minimum lease payments payable by the Group under non-cancellable operating leases were £3.0m (2012: £3.0m) payable evenly over the next four years.
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:
|
|
2013 |
2012 |
|
|
£m |
£m |
|
Deficit on revaluation of directly held investment properties |
(34.0) |
(40.5) |
|
(Deficit)/surplus on revaluation of investment properties in joint ventures |
(4.5) |
7.8 |
|
Surplus/(deficit) on revaluation of investment properties in associates |
- |
(0.2) |
|
|
(38.5) |
(32.9) |
2.6 Net finance expenses
|
|
|
2013 |
2012 |
|
|
|
£m |
£m |
|
Recognised in Income Statement: |
|
|
|
|
Interest expense on bank debt and associated swaps |
|
18.1 |
18.9 |
|
Interest on obligations under finance leases |
|
0.8 |
0.8 |
|
Change in fair value of ineffective caps |
|
0.9 |
2.0 |
|
Recycling of fair value adjustment on effective swaps |
|
9.4 |
9.1 |
|
|
|
29.2 |
30.8 |
|
Interest capitalised |
|
(13.1) |
(14.1) |
|
Finance expenses |
|
16.1 |
16.7 |
|
Finance income: interest income on loans and receivables |
|
(5.5) |
(6.2) |
|
|
|
10.6 |
10.5 |
|
|
|
|
|
|
Recognised in Other Comprehensive Income: |
|
|
|
|
Net change in fair value of quoted investments |
|
0.4 |
0.2 |
|
Effective portion of changes in fair value of cashflow hedges |
|
(0.8) |
4.4 |
|
Recycling of fair value adjustment on effective swaps |
|
(9.4) |
(9.1) |
|
|
|
(9.8) |
(4.5) |
The interest capitalised relates to investment properties in the course of construction. The average rate of interest used for capitalisation was 5.4% (2012: 5.3%).
2.7 Taxation
i) Tax credit for the year
|
|
|
2013 |
2012 |
|
|
|
£m |
£m |
|
UK current tax at 24% (2012: 26%) |
|
- |
- |
|
Overseas tax |
|
- |
0.1 |
|
Total current tax charge |
|
- |
0.1 |
|
|
|
|
|
|
Deferred tax: |
|
|
|
|
On investment properties |
|
(11.2) |
(13.5) |
|
On derivative financial instruments |
|
(0.2) |
(0.5) |
|
On other temporary differences |
|
1.8 |
6.3 |
|
Effect of tax rate change |
|
0.1 |
(0.4) |
|
Total deferred tax credit |
|
(9.5) |
(8.1) |
|
Tax credit |
|
(9.5) |
(8.0) |
ii) Tax credit reconciliation
|
|
|
2013 |
2012 |
|
|
|
£m |
£m |
|
Loss before tax |
|
(50.4) |
(43.5) |
|
Tax applied at UK corporation tax rate of 24% (2012: 26%) |
|
(12.1) |
(11.3) |
|
Current year tax losses not recognised |
|
1.9 |
2.4 |
|
Non-deductible expenses and non-taxable items |
|
0.8 |
0.1 |
|
Adjustment to prior years deferred tax |
|
- |
4.3 |
|
Tax charge taken to share of income from joint ventures and associates |
|
(0.2) |
(3.7) |
|
Impact of future UK corporation tax rate change |
|
0.1 |
0.2 |
|
Tax credit |
|
(9.5) |
(8.0) |
iii) Tax recognised in other comprehensive income
|
|
|
2013 |
2012 |
|
|
|
£m |
£m |
|
Deferred tax expense/(credit) recognised in other comprehensive income |
|
2.4 |
(1.2) |
iv) Deferred tax movements
|
|
1 April 2012
|
Recognised in Income Statement
|
Effect of tax rate change |
Recognised on acquisition of subsidiary |
Recognised in other comprehensive income |
31 March 2013
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Capital gains less capital losses |
11.2 |
(11.2) |
- |
0.4 |
- |
0.4 |
|
Capital allowances |
9.6 |
0.2 |
(0.4) |
- |
- |
9.4 |
|
Derivative financial instruments |
(7.1) |
(0.2) |
0.2 |
- |
2.4 |
(4.7) |
|
Other temporary differences |
2.4 |
(0.2) |
(0.1) |
- |
- |
2.1 |
|
Revenue tax losses |
(11.3) |
1.8 |
0.4 |
- |
- |
(9.1) |
|
Deferred tax liability/(asset) |
4.8 |
(9.6) |
0.1 |
0.4 |
2.4 |
(1.9) |
|
|
1 April 2011
|
Recognised in Income Statement
|
Effect of tax rate change |
Recognised on acquisition of subsidiary |
Recognised in other comprehensive income |
31 March 2012
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Capital gains less capital losses |
25.6 |
(13.5) |
(0.9) |
- |
- |
11.2 |
|
Capital allowances |
9.8 |
0.7 |
(0.9) |
- |
- |
9.6 |
|
Derivative financial instruments |
(5.9) |
(0.5) |
0.5 |
- |
(1.2) |
(7.1) |
|
Other temporary differences |
0.5 |
- |
- |
1.9 |
- |
2.4 |
|
Revenue tax losses |
(17.8) |
5.6 |
0.9 |
- |
- |
(11.3) |
|
Deferred tax liability/(asset) |
12.2 |
(7.7) |
(0.4) |
1.9 |
(1.2) |
4.8 |
In December 2012, the Government announced that the corporation tax rate would reduce further to 21% with effect from April 2014. On 3 July 2012, the Finance Bill 2012 substantively enacted the reduction to 23% on 1 April 2013. The Group has therefore re-measured the deferred tax assets and liabilities as at 31 March 2013 using the enacted rate of 23%. Other than the enacted change to 23%, the effects of the announced changes are not reflected in the financial statements for the year ended 31 March 2013 as they have not yet been enacted and the impact has not yet been estimated.
The impact of the rate reduction was to reduce deferred tax assets by £0.1m. This has been recognised within the Income Statement. Management has not quantified the full impact of the further rate changes.
Deferred tax assets estimated at £13.9m (2012: £13.0m) have not been recognised due to a higher degree of uncertainty over both the amount and timing of the utilisation of the underlying tax losses and deductions, which amounted to £60.2m (2012: £52.0m). In addition there is Advance Corporation Tax which has a cash value of £7.1m (2012: £7.1m). Under current tax legislation, there is no expiry date associated with the unprovided deferred tax assets.
v) Total tax credit
The tax credit recognised in these financial statements was as follows:
|
|
2013 |
2012 |
|
|
£m |
£m |
|
Tax credit on loss as above |
(9.5) |
(8.0) |
|
Tax charge on share of profit in joint ventures (note 3.4c) |
0.3 |
3.8 |
|
Tax credit on share of profit in associates |
- |
(0.1) |
|
Tax charge/(credit) on income and expenses recognised in other comprehensive income |
2.4 |
(1.2) |
|
|
(6.8) |
(5.5) |
2.8 Earnings per share and net asset value per share
i) Earnings per share
|
|
|
|
2013 |
|
|
|
2012 |
|
|
Loss after tax |
Weighted average number of shares |
Earnings per share |
|
Loss after tax |
Weighted average number of shares |
Earnings per share |
|
|
£m |
m |
pence |
|
£m |
m |
pence |
|
Basic and diluted |
(40.9) |
518.4 |
(7.9) |
|
(35.5) |
518.3 |
(6.8) |
ii) Net asset value per share
|
|
|
|
2013 |
|
|
|
2012 |
|
|
Equity shareholders' funds |
Number of shares |
Net asset value per share |
|
Equity shareholders' funds |
Number of shares |
Net asset value per share |
|
|
£m |
m |
pence |
|
£m |
m |
pence |
|
As per accounts |
538.1 |
521.0 |
|
|
571.7 |
520.9 |
|
|
Less: Treasury shares |
- |
(2.2) |
|
|
- |
(2.5) |
|
|
Basic |
538.1 |
518.8 |
104 |
|
571.7 |
518.4 |
110 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Employee share-based payment schemes |
- |
0.1 |
|
|
0.1 |
0.5 |
|
|
Diluted |
538.1 |
518.9 |
104 |
|
571.8 |
518.9 |
110 |
Although not required under IFRS, net asset value per share is considered a key performance indicator in the sector in which the Group operates.
Apart from allocations which have vested but not been released, entitlements under the Executive Directors' Performance Share Plan have been excluded from the calculation in ii) above as the commitments relate to contingently issuable shares where the conditions had not been met at the balance sheet date.
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 2011 |
|
761.9 |
38.2 |
5.5 |
805.6 |
|
Additions |
|
100.8 |
1.2 |
- |
102.0 |
|
Interest capitalised |
|
14.1 |
- |
- |
14.1 |
|
Disposals |
|
(49.3) |
(6.0) |
- |
(55.3) |
|
Revaluation (deficit) surplus |
|
(41.1) |
0.8 |
(0.2) |
(40.5) |
|
Balance 31 March 2012 |
|
786.4 |
34.2 |
5.3 |
825.9 |
|
Additions |
|
54.8 |
10.5 |
- |
65.3 |
|
Interest capitalised |
|
13.2 |
- |
- |
13.2 |
|
Disposals |
|
(302.6) |
(5.3) |
- |
(307.9) |
|
Revaluation deficit |
|
(30.0) |
(3.5) |
(0.5) |
(34.0) |
|
Balance 31 March 2013 |
|
521.8 |
35.9 |
4.8 |
562.5 |
Of the additions shown above, £55.0m (2012: £102.0m) related to construction on development sites and improvements to existing properties and £10.3m (2012: £nil) related to the purchase of property from a joint venture.
The historical cost of the Group's investment properties as at 31 March 2013 was £660.9m (2012: £758.4m), which included capitalised interest of £77.0m (2012: £87.5m).
The average rate used for interest capitalisation is shown in note 2.6.
All of the Group's properties were externally valued as at 31 March 2013 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.
In performing the valuations, the valuers have regard to significant land sale transactions and market characteristics assumptions.
The Group's land and property holdings at Wembley, Greenwich, Silvertown and Redhill have been valued by Savills Advisory Services Ltd. Other properties in the United Kingdom have been valued by Jones Lang LaSalle Limited and Christie + Co. The Group's property interests in the Channel Islands have been valued by Guy Gothard & Co.
A reconciliation of the valuations carried out by the external valuers to the carrying values shown in the Balance Sheet was as follows:
|
|
2013 |
2012 |
|
|
£m |
£m |
|
Per valuers' reports |
|
|
|
Savills Advisory Services Limited |
582.0 |
783.9 |
|
Jones Lang LaSalle Limited |
59.0 |
75.1 |
|
Other valuers |
5.8 |
13.9 |
|
|
646.8 |
872.9 |
|
Adjustment for properties held in joint ventures and associates and as trading |
(93.8) |
(119.9) |
|
Directors' valuation |
- |
63.1 |
|
Investment properties at market value |
553.0 |
816.1 |
|
Adjustment in respect of rent-free periods and other tenant incentives |
(1.6) |
(1.4) |
|
Adjustment in respect of minimum payment under head leases separately included as a liability in the Balance Sheet |
11.1 |
11.2 |
|
As shown in the Balance Sheet |
562.5 |
825.9 |
As at 31 March 2012, the properties subject to directors' valuation were where conditional contracts for sale had been exchanged and completion was scheduled for the first half of 2012/13.
3.2 Capital commitments
As at 31 March 2013, the Group had capital commitments of £57.7m (2012: £25.0m) in relation to its own development properties.
The Group's share of capital commitments in relation to its joint ventures was £2.0m (2012: £25.7m).
3.3 Trading properties
As at 31 March 2013, properties held for resale had a carrying value of £10.2m (2012: £21.3m), which include capitalised interest of £0.9m (2012: £1.2m). In the year to 31 March 2012 a provision of £2.9 million was made against the carrying value of trading property. No further provisions were made in the year to 31 March 2013.
During the year, the Group sold trading properties with carrying values of £11.0m (2012: £2.3m).
3.4 Investments in joint ventures
Investments in joint ventures
a) The Group's interest in its joint ventures was as follows:
|
|
% of ownership |
Country of incorporation |
Joint venture partners |
|
Quercus Healthcare Property Unit Trust (Quercus)(1)
|
11.22 |
Channel Islands
|
Aviva |
|
Greenwich Peninsula Regeneration Limited (GPRL) |
40.00 |
United Kingdom |
Knight Dragon |
|
|
|
|
|
|
Greenwich Peninsula N0204 Block B Unit Trust (N0204) |
50.00 |
Channel Islands |
Lend Lease (Europe)
|
|
iQ Unit Trust (iQ) |
49.98 |
Channel Islands |
Wellcome Trust
|
|
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 Capital Management LP |
|
Quintessential Homes (Wembley) LLP (Quintessential)(2) |
63.02 |
United Kingdom |
Geninvest Family Housing Development Company |
(1) Quercus is accounted for as a joint venture as the Group has a 50% share of the general partner which controls the operation of the Unit Trust.
(2) Quintessential is accounted for as a joint venture as the Group does not exercise control over substantive issues.
b) The movement in investment in joint ventures was as follows:
|
|
2013 |
2012 |
|
|
£m |
£m |
|
Opening balance |
273.6 |
217.0 |
|
Additions |
133.4 |
- |
|
Amounts advanced |
10.3 |
49.6 |
|
Amounts repaid |
(39.2) |
(1.6) |
|
Disposals |
(15.5) |
- |
|
Distributions |
(6.8) |
(3.2) |
|
Share of profit, net of tax |
0.8 |
8.6 |
|
Share of other comprehensive income, net of tax |
0.2 |
3.2 |
|
Closing balance |
356.8 |
273.6 |
The additions for the year included £104.6m relating to Greenwich Peninsula Regeneration Limited (GPRL) (see note 4.1) and £28.8m relating to HHW (Investment) LP which was created on 29 March 2013 when we sold 50% of a leasehold interest in the Hilton London Wembley Hotel to Oaktree Capital Management LP.
c) The Group's share of the results of its joint venture operations was as follows:
Summarised income statements for the year ended 31 March 2013
|
|
Greenwich (1)
|
iQ
|
Quercus
|
Quantum
|
Hilton |
Other joint ventures |
Group share in joint ventures |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Rental income |
0.5 |
14.8 |
6.3 |
0.6 |
- |
0.3 |
22.5 |
|
Income from sale of trading properties |
7.2 |
- |
- |
- |
- |
2.6 |
9.8 |
|
Revenue |
7.7 |
14.8 |
6.3 |
0.6 |
- |
2.9 |
32.3 |
|
Cost of sales |
(7.1) |
(3.8) |
(0.8) |
(0.6) |
- |
(2.1) |
(14.4) |
|
Gross profit |
0.6 |
11.0 |
5.5 |
- |
- |
0.8 |
17.9 |
|
Administrative expenses |
(1.3) |
(1.5) |
(0.8) |
- |
- |
- |
(3.6) |
|
Operating (loss)/profit |
(0.7) |
9.5 |
4.7 |
- |
- |
0.8 |
14.3 |
|
Loss from sale of non-current assets |
- |
- |
(0.7) |
- |
- |
- |
(0.7) |
|
(Deficit)/surplus on revaluation of investment properties |
(3.4) |
13.6 |
(14.2) |
0.8 |
(1.3) |
- |
(4.5) |
|
(Loss)/profit before net finance expenses and tax |
(4.1) |
23.1 |
(10.2) |
0.8 |
(1.3) |
0.8 |
9.1 |
|
Finance income |
0.1 |
- |
- |
0.5 |
- |
- |
0.6 |
|
Finance costs |
(1.1) |
(5.8) |
(1.7) |
- |
- |
- |
(8.6) |
|
(Loss)/profit before tax |
(5.1) |
17.3 |
(11.9) |
1.3 |
(1.3) |
0.8 |
1.1 |
|
Tax |
(0.3) |
(3.0) |
3.1 |
(0.4) |
0.3 |
- |
(0.3) |
|
(Loss)/profit after tax |
(5.4) |
14.3 |
(8.8) |
0.9 |
(1.0) |
0.8 |
0.8 |
|
|
|
|
|
|
|
|
|
|
Share of other comprehensive income: |
|
|
|
|
|
|
|
|
Effective portion of changes in fair value of cashflow hedges, net of tax |
- |
(0.6) |
0.4 |
- |
- |
- |
(0.2) |
|
Recycling of mark-to-market adjustments |
- |
0.4 |
- |
- |
- |
- |
0.4 |
|
|
- |
(0.2) |
0.4 |
- |
- |
- |
0.2 |
(1) GPRL, N0204 and Greenwich Retail (until July 2012)
Summarised balance sheets as at 31 March 2013
|
|
Greenwich (1)
|
iQ
|
Quercus
|
Quantum
|
Hilton |
Other joint ventures |
Group share in joint ventures |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Investment properties |
13.0 |
208.7 |
70.8 |
5.5 |
27.8 |
- |
325.8 |
|
Trading properties |
154.5 |
- |
0.9 |
- |
- |
4.8 |
160.2 |
|
Deferred tax asset |
3.3 |
- |
3.4 |
- |
0.3 |
- |
7.0 |
|
Other assets |
11.2 |
11.6 |
3.4 |
12.6 |
0.6 |
1.2 |
40.6 |
|
Total assets |
182.0 |
220.3 |
78.5 |
18.1 |
28.7 |
6.0 |
533.6 |
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade and other payables |
(10.1) |
(6.0) |
(3.0) |
(2.0) |
(0.9) |
(3.9) |
(25.9) |
|
Bank loans and other borrowings |
- |
- |
(5.6) |
- |
- |
- |
(5.6) |
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Bank loans and other borrowings |
(83.8) |
(111.2) |
(30.9) |
- |
- |
- |
(225.9) |
|
Other liabilities |
- |
(2.9) |
(0.2) |
(0.1) |
- |
- |
(3.2) |
|
Net assets |
88.1 |
100.2 |
38.8 |
16.0 |
27.8 |
2.1 |
273.0 |
|
|
|
|
|
|
|
|
|
|
Represented by: |
|
|
|
|
|
|
|
|
Group share of net assets |
88.1 |
100.2 |
38.8 |
16.0 |
27.8 |
2.1 |
273.0 |
|
Loans to JVs |
83.8 |
- |
- |
- |
- |
- |
83.8 |
|
Total investment |
171.9 |
100.2 |
38.8 |
16.0 |
27.8 |
2.1 |
356.8 |
(1) GPRL and N0204
Summarised income statements for the year ended 31 March 2012
|
|
Greenwich(1)
|
iQ
|
Quercus
|
Quantum
|
Other joint ventures |
Group share in joint ventures |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Rental income |
4.6 |
11.3 |
6.4 |
0.3 |
0.3 |
22.9 |
|
Income from sale of trading properties |
- |
- |
- |
- |
1.9 |
1.9 |
|
Revenue |
4.6 |
11.3 |
6.4 |
0.3 |
2.2 |
24.8 |
|
Cost of sales |
(4.5) |
(3.2) |
(0.9) |
(0.5) |
(1.8) |
(10.9) |
|
Gross profit/(loss) |
0.1 |
8.1 |
5.5 |
(0.2) |
0.4 |
13.9 |
|
Administrative expenses |
(0.1) |
(1.3) |
(1.0) |
- |
- |
(2.4) |
|
Operating profit/(loss) |
- |
6.8 |
4.5 |
(0.2) |
0.4 |
11.5 |
|
Surplus/(deficit) on revaluation of investment properties |
0.3 |
10.4 |
(2.7) |
(0.2) |
- |
7.8 |
|
Profit/(loss) before net finance expenses and tax |
0.3 |
17.2 |
1.8 |
(0.4) |
0.4 |
19.3 |
|
Finance income |
- |
0.3 |
- |
0.4 |
- |
0.7 |
|
Finance costs |
(0.8) |
(5.3) |
(1.5) |
- |
- |
(7.6) |
|
(Loss)/profit before tax |
(0.5) |
12.2 |
0.3 |
- |
0.4 |
12.4 |
|
Tax |
(0.2) |
(3.9) |
0.3 |
- |
- |
(3.8) |
|
(Loss)/profit after tax |
(0.7) |
8.3 |
0.6 |
- |
0.4 |
8.6 |
|
|
|
|
|
|
|
|
|
Share of other comprehensive income: |
|
|
|
|
|
|
|
Effective portion of changes in fair value of cashflow hedges, net of tax |
- |
1.3 |
0.7 |
- |
- |
2.0 |
|
Recycling of mark-to-market adjustments |
- |
1.2 |
- |
- |
- |
1.2 |
|
|
- |
2.5 |
0.7 |
- |
- |
3.2 |
(1) GPRL, N0204 and Greenwich Retail
Summarised balance sheets as at 31 March 2012
|
|
Greenwich (1)
|
iQ
|
Quercus
|
Quantum
|
Other joint ventures |
Group share in joint ventures |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Investment properties |
20.8 |
168.5 |
86.8 |
5.1 |
- |
281.2 |
|
Investment in joint ventures |
1.2 |
- |
- |
- |
- |
1.2 |
|
Trading properties |
63.0 |
- |
0.9 |
- |
6.6 |
70.5 |
|
Deferred tax asset |
3.4 |
0.8 |
0.3 |
0.3 |
- |
4.8 |
|
Other assets |
6.3 |
10.4 |
3.8 |
12.3 |
1.0 |
33.8 |
|
Total assets |
94.7 |
179.7 |
91.8 |
17.7 |
7.6 |
391.5 |
|
Current liabilities: |
|
|
|
|
|
|
|
Trade and other payables |
(5.6) |
(5.6) |
(3.4) |
(2.6) |
(4.7) |
(21.9) |
|
Non-current liabilities: |
|
|
|
|
|
|
|
Bank loans and other borrowings |
(97.6) |
(95.6) |
(38.3) |
- |
- |
(231.5) |
|
Net assets |
(8.5) |
78.5 |
50.1 |
15.1 |
2.9 |
138.1 |
|
|
|
|
|
|
|
|
|
Represented by: |
|
|
|
|
|
|
|
Group share of net assets |
(8.5) |
78.5 |
50.1 |
15.1 |
2.9 |
138.1 |
|
Loans to JV's |
97.6 |
37.9 |
- |
- |
- |
135.5 |
|
Total investment |
89.1 |
116.4 |
50.1 |
15.1 |
2.9 |
273.6 |
(1) GPRL, N0204 and Greenwich Retail
d) The summarised financial statements of the Group's principal joint venture operations were as follows:
|
|
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
|
|
GPRL |
GPRL |
Other Greenwich |
Other Greenwich |
Quercus |
Quercus |
Hilton |
Hilton |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
Income statements |
|
|
|
|
|
|
|
|
|
Revenue |
18.0 |
7.9 |
1.0 |
1.4 |
56.2 |
57.0 |
- |
- |
|
Expenses and revaluation |
(21.0) |
(8.2) |
(9.1) |
(2.1) |
(162.2) |
(54.3) |
(2.6) |
- |
|
(Loss)/profit before tax |
(3.0) |
(0.3) |
(8.1) |
(0.7) |
(106.0) |
2.7 |
(2.6) |
- |
|
|
|
|
|
|
|
|
|
|
|
Balance Sheets |
|
|
|
|
|
|
|
|
|
Non-current assets |
- |
2.7 |
26.0 |
48.8 |
631.0 |
776.3 |
55.5 |
- |
|
Current assets |
412.4 |
137.2 |
7.9 |
3.4 |
69.0 |
41.8 |
1.9 |
- |
|
Total assets |
412.4 |
139.9 |
33.9 |
52.2 |
700.0 |
818.1 |
57.4 |
- |
|
Current liabilities |
(24.8) |
(10.8) |
(0.3) |
(0.4) |
(76.3) |
(29.8) |
(1.8) |
- |
|
Non-current liabilities |
(129.1) |
(128.9) |
(64.2) |
(68.9) |
(277.9) |
(341.5) |
- |
- |
|
Net external assets |
258.5 |
0.2 |
(30.6) |
(17.1) |
345.8 |
446.8 |
55.6 |
- |
|
|
|
|
|
|
|
|
|
|
|
Percentage share held by the Group at the year end |
40.00% |
49.30% |
50.00% |
50.00% |
11.22% |
11.22% |
50.00% |
- |
|
|
|
|
|
|
|
|
|
|
|
Group share of net assets |
103.4 |
0.1 |
(15.3) |
(8.6) |
38.8 |
50.1 |
27.8 |
- |
d) The summarised financial statement of the Group's principal joint venture operations were as follows:
|
|
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
|
|
iQ |
iQ |
Quantum |
Quantum |
Quintessential |
Quintessential |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Income statements |
|
|
|
|
|
|
|
Revenue |
29.6 |
22.6 |
1.2 |
0.6 |
4.6 |
3.3 |
|
Expenses and revaluation |
5.1 |
1.8 |
1.5 |
(0.6) |
(3.3) |
(2.8) |
|
Profit before tax |
34.7 |
24.4 |
2.7 |
- |
1.3 |
0.5 |
|
|
|
|
|
|
|
|
|
Balance Sheets |
|
|
|
|
|
|
|
Non-current assets |
417.5 |
338.6 |
11.0 |
10.9 |
- |
- |
|
Current assets |
23.1 |
20.8 |
25.0 |
24.4 |
8.0 |
10.8 |
|
Total assets |
440.6 |
359.4 |
36.0 |
35.3 |
8.0 |
10.8 |
|
Current liabilities |
(11.9) |
(11.2) |
(4.0) |
(5.2) |
(5.8) |
(7.0) |
|
Non-current liabilities |
(228.2) |
(191.2) |
- |
- |
- |
- |
|
Net external assets |
200.5 |
157.0 |
32.0 |
30.1 |
2.2 |
3.8 |
|
|
|
|
|
|
|
|
|
Percentage share held by the Group at the year end |
49.98% |
49.98% |
50.00% |
50.00% |
63.02% |
63.02% |
|
|
|
|
|
|
|
|
|
Group share of net external assets |
100.2 |
78.5 |
16.0 |
15.1 |
1.4 |
2.4 |
During the year, the Group received the following fees in respect of services provided to its joint ventures:
|
|
|
2013 £m |
2012 £m |
|
Quercus Healthcare Property Unit Trust |
|
2.5 |
3.7 |
|
iQ Unit Trust |
|
2.4 |
3.0 |
|
Greenwich Peninsula Regeneration Limited |
|
1.5 |
- |
|
Quintessential Homes (Wembley) LLP |
|
0.1 |
0.1 |
|
Quantum Unit Trust |
|
- |
0.3 |
|
|
|
6.5 |
7.1 |
During the year, the Group received the following interest on its loan notes to its joint ventures:
|
|
|
2013 £m |
2012 £m |
|
Greenwich Peninsula Regeneration Limited |
|
1.5 |
1.8 |
|
Greenwich Peninsula Retail LLP |
|
- |
0.1 |
|
iQ Unit Trust |
|
0.6 |
1.9 |
|
Greenwich N0204 |
|
0.8 |
0.8 |
|
|
|
2.9 |
4.6 |
Section 4: Acquisitions and disposals
4.1 Disposals
On 27 July 2012, following approval from its shareholders, the Group completed its restructuring and net disposal of its development land interests in Greenwich. The net impact was a £93.3m increase in part of its investment in Greenwich Peninsula Regeneration Limited (GPRL) with a reduced ownership from 50% to 40%. Significant elements of the transaction were:
- Disposal of Quintain Meridian Limited, a 100% subsidiary of Quintain which owns the Peninsula Quays
land, to GPRL.
- Acquisition from Lend Lease of its 50% share of the share capital and loan notes of GPRL and
consequential disposal of 60% to Knight Dragon.
As the elements of the transaction were inter-conditional on each other the entire arrangement has been accounted for as one transaction consisting of the sale of investment property to the joint venture and the reduction of the group's interest in that joint venture from 50% to 40%.
The net consideration received from the transaction, after costs of £6.9m, was £22.2m with a further £50m payable in fixed installments over the next six years. In accordance with IAS39, the deferred consideration has been recognised at fair value, calculated at £42.1m.
The impact of the transaction was as follows:
|
|
|
|
|
£m |
|
Net assets disposed: |
|
|
|
|
|
Reduction in investment property |
|
|
|
(167.8) |
|
Increase in investment in joint ventures |
|
|
|
93.3 |
|
Increase in other net assets |
|
|
|
1.1 |
|
|
|
|
|
(73.4) |
|
|
|
|
|
|
|
Net proceeds |
|
|
|
|
|
Cash and cash equivalents |
|
|
|
22.2 |
|
Deferred receivable |
|
|
|
42.1 |
|
|
|
|
|
64.3 |
|
Movement in net assets |
|
|
|
(9.1) |
|
|
|
|
|
|
|
Loss from sale of non-current assets |
|
|
|
(10.7) |
|
Tax credit on transaction |
|
|
|
1.6 |
|
|
|
|
|
(9.1) |
Section 5: Other assets and liabilities
5.1 Non-current receivables
The movement in other non-current receivables was as follows:
|
|
2013 |
2013 |
2013 |
2012 |
2012 |
2012 |
|
|
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 |
12.0 |
2.9 |
14.9 |
10.7 |
3.6 |
14.3 |
|
Additions |
46.1 |
6.1 |
52.2 |
1.3 |
- |
1.3 |
|
Unwinding of discount |
1.2 |
- |
1.2 |
- |
- |
- |
|
Reclassified as current receivable |
(10.7) |
(3.1) |
(13.8) |
- |
- |
- |
|
Return of capital |
- |
- |
- |
- |
(0.5) |
(0.5) |
|
Revaluation loss(1) |
- |
(0.4) |
(0.4) |
- |
(0.2) |
(0.2) |
|
Closing balance |
48.6 |
5.5 |
54.1 |
12.0 |
2.9 |
14.9 |
(1) The revaluation loss relates to a quoted investment. Although the share price has declined, this is considered to be a temporary diminution in value as the value is expected to be recovered.
On 27 July 2012, Quintain disposed of some of the Group's interest in Greenwich (see note 4.1), net consideration of £50m is payable in fixed installments over the next six years. In accordance with IAS 39 the loan has been recognised at fair value of £42.1 and the discount will unwind over the next six years.
On 5 February 2013, Quintain acquired 6.0m units in the TM Hearthstone UK Residential Property Fund in exchange for 27 residential units in Quadrant Court valued at £6.1m. Units in the fund are redeemable quarterly over a minimum of two years.
During the year ended 31 March 2011, the Group granted two unsecured loans totalling £10.7m to an associate, Albemarle Retail Properties LLP, which carry a coupon of 10% per annum and the principal of which will be repaid together with an additional rolled-up coupon of 10% out of the proceeds from the sale of the associate's properties. The receivables are now shown as a current receivable in the Balance Sheet at amortised cost. During the year the Group received interest of £1.1m (2012: £1.1m).
5.2 Current trade and other receivables
|
|
|
2013 £m |
2012 £m |
|
Trade receivables |
|
4.7 |
8.6 |
|
Amounts due from related parties |
|
3.9 |
3.5 |
|
Other receivables |
|
7.8 |
6.0 |
|
Trade and other receivables |
|
16.4 |
18.1 |
|
Prepayments and accrued income |
|
2.7 |
3.9 |
|
Loans at amortised cost (see note 5.1) |
|
10.7 |
- |
|
Investments at fair value (see note 5.1) |
|
3.1 |
- |
|
Interest rate caps at fair value |
|
0.2 |
1.1 |
|
|
|
33.1 |
23.1 |
The ageing of trade and other receivables was as follows:
|
|
2013 |
2013 |
2013 |
2012 |
2012 |
2012 |
|
|
Gross |
Impairment |
Net |
Gross |
Impairment |
Net |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Not past due |
12.8 |
- |
12.8 |
14.8 |
- |
14.8 |
|
Past due less than one month |
2.5 |
- |
2.5 |
2.5 |
- |
2.5 |
|
Past due one to three months |
0.9 |
- |
0.9 |
0.5 |
(0.1) |
0.4 |
|
Past due three to six months |
0.3 |
(0.1) |
0.2 |
0.3 |
- |
0.3 |
|
Past due over six months |
0.4 |
(0.4) |
- |
0.3 |
(0.2) |
0.1 |
|
|
16.9 |
(0.5) |
16.4 |
18.4 |
(0.3) |
18.1 |
The following amounts due from related parties are included in trade and other receivables:
|
|
|
2013 £m |
2012 £m |
|
Quercus Healthcare Property Unit Trust |
|
1.5 |
1.3 |
|
iQ Unit Trust |
|
0.7 |
1.4 |
|
Greenwich Peninsula Regeneration Limited |
|
0.9 |
0.4 |
|
Quantum Unit Trust |
|
0.5 |
0.4 |
|
HHW (Investment) LP |
|
0.3 |
- |
|
|
|
3.9 |
3.5 |
Amounts due from related parties are unsecured.
Section 6: Funding
6.1 Bank loans and other borrowings
|
|
|
2013 £m |
2012 £m |
|
Current liabilities: |
|
|
|
|
Bank loans |
|
71.0 |
76.1 |
|
Non-current liabilities: |
|
|
|
|
Bank loans |
|
415.2 |
464.2 |
|
|
|
486.2 |
540.3 |
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
Bank loans |
|
417.2 |
466.4 |
|
Amortised borrowing costs |
|
(2.0) |
(2.2) |
|
|
|
415.2 |
464.2 |
The loans are secured by floating charges over assets owned by subsidiary undertakings. In the case of Sequel these are fixed and floating.
The maturity profile of the Group's debt was as follows:
|
|
2013 |
2012 |
2013 |
2012 |
||
|
|
|
|
Total debt |
Total debt |
Undrawn facilities |
Undrawn facilities |
|
|
|
|
£m |
£m |
£m |
£m |
|
Within one year |
|
|
71.0 |
76.1 |
- |
- |
|
From one to two years |
|
|
62.1 |
51.0 |
- |
30.0 |
|
From two to five years |
|
|
353.4 |
413.7 |
69.5 |
46.5 |
|
After five years |
|
|
1.7 |
1.7 |
- |
- |
|
|
|
|
488.2 |
542.5 |
69.5 |
76.5 |
The Group has negotiated extensions to the maturity of £85m of its loan facilities to March 2016. The Board has judged this to be a continuation of the previous arrangement as the revised terms of the debt are not considered substantially different to the original terms.
The interest rate profile of the Group's debt before interest rate swap arrangements at the balance sheet date was as follows:
|
Percent |
|
2013 £m |
2012 £m |
|
1.0 - 2.0 |
|
34.3 |
74.4 |
|
2.0 - 3.0 |
|
363.4 |
425.8 |
|
3.0 - 4.0 |
|
37.5 |
12.6 |
|
4.0 - 5.0 |
|
35.0 |
1.7 |
|
5.0 - 6.0 |
|
18.0 |
28.0 |
|
|
|
488.2 |
542.5 |
After taking account of interest rate swap arrangements, the risk profile of the Group's borrowings was as follows:
|
|
2013 |
|
2012 |
||||
|
|
Fixed |
Capped |
Total debt |
|
Fixed |
Capped |
Total debt |
|
|
£m |
£m |
£m |
|
£m |
£m |
£m |
|
Sterling |
318.0 |
170.2 |
488.2 |
|
328.0 |
214.5 |
542.5 |
The weighted average interest rate and the weighted average period of the Group's fixed rate debt were as follows:
|
|
2013 % |
2012 % |
2013 years |
2012 years |
|
Sterling |
3.85 |
3.59 |
1 |
2 |
The maturity profile of the Group's share of debt held within its joint ventures was as follows:
|
|
|
2013 £m |
2012 £m |
|
Less than one year |
|
5.6 |
- |
|
From one to two years |
|
5.6 |
32.4 |
|
From two to five years |
|
151.2 |
82.5 |
|
|
|
162.4 |
114.9 |
6.2 Share capital
|
|
|
Number of shares m |
Nominal value £m |
|
Allotted, called up and fully paid: |
|
|
|
|
In issue as at 31 March 2011 |
|
520.7 |
130.2 |
|
Issue of shares under share-based payment schemes at 25p per share |
|
0.2 |
- |
|
In issue as at 31 March 2012 |
|
520.9 |
130.2 |
|
Issue of shares under share-based payment schemes at 25p per share |
|
0.1 |
- |
|
In issue as at 31 March 2013 |
|
521.0 |
130.2 |
As at 31 March 2013, share capital included 2.2m (2012: 2.5m) shares held by ESOP Trusts. These shares had a nominal value of £0.6m (2012: £0.6m). The movement in the year in the number and weighted average exercise price of outstanding options was as follows:
|
|
|
2013 |
|
2012 |
|
|
Number of shares |
Weighted average exercise price |
Number of shares |
Weighted average exercise price |
|
|
m |
pence |
m |
pence |
|
In issue as at 1 April |
7.4 |
24.0 |
3.6 |
14.2 |
|
Issue of new options |
- |
- |
6.2 |
26.0 |
|
Options exercised |
(0.1) |
25.0 |
(0.2) |
24.0 |
|
Distribution under share-based payment scheme (deferred bonus) |
(0.3) |
- |
(0.3) |
- |
|
Options lapsed |
(4.4) |
38.0 |
(1.9) |
11.0 |
|
In issue as at 31 March |
2.6 |
25.0 |
7.4 |
24.0 |
The weighted average share price at the date of exercise for share options exercised during the year was 52p (2012: 49p). The options outstanding as at 31 March 2013 had an average remaining contingent life of 4.4 years (2012: 3.7 years).
This information is provided by RNS
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