7 November 2024
LEI: 213800P6ODJW2UFNDC37
Urban Logistics REIT
PLC
("Urban Logistics" or the
"Company")
RESULTS FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2024
Growing rental values
support future growth
Commenting on the
results, Richard Moffitt, Investment Adviser CEO, said:
"The first half of the financial year
has been a highly active period for Urban Logistics, which has not
only delivered a refinancing of one of its debt facilities, but
also demonstrated the Company's ability to make attractive
acquisitions in the current market place. The refinancing has
delivered a 47bps reduction in the margin the Company pays,
extended the maturity of the near term debt and provided additional
investment capital at attractive rates. Urban Logistics has
utilised this capacity to acquire assets with a significant
arbitrage between day one Net Initial Yield (NIY) and debt cost,
providing not only EPS enhancement but also increasing the
portfolio weighting to the Asset Management segment, which provides
the team with the opportunity to deliver a strong total return for
shareholders."
"Seeing attractive acquisition opportunities in the
current marketplace Urban Logistics has also initiated a selective
recycling programme and post period end has unconditionally
exchanged on the first of these planned disposals - a £7.7 million
property, at a NIY of 4.85%, representing an ungeared internal rate
of return (IRR) of over 12%. The capital released will be recycled
into higher yielding opportunities. Underpinning all of this is of
course active asset management, as we continue to let vacant units,
settle rent reviews and capture the reversion that exists in the
portfolio."
"Looking forward we see significant value potential
within the portfolio, which the Company will continue to realise
through the team's hands on approach to asset management as well as
the recycling of the value created in 'Core' Assets into higher
yielding assets as the Company drives for full dividend cover."
HIGHLIGHTS
Resilient
Financial Performance
·
Gross rental income of £30.6 million +3.0% (Sept 2023: £29.7
million)
·
Adjusted EPS1 of 3.57 pence +3.2% (Sept 2023: 3.46
pence)
·
IFRS profit of £10.2 million -39.6% (Sept 2023: £16.9 million)
·
Interim Dividend per share of 3.25 pence (Sept 2023: 3.25
pence)
·
EPRA net tangible assets2 ("NTA") of 158.05 pence per
share -1.4% since March 2024 (Mar 2024: 160.27 pence per share)
·
IFRS net assets of £748.4 million, -1.3% since March 2024 (Mar
2024: £758.6 million)
·
99.6% of H1 rents demanded were collected (Sept 2023: 99.1%)
·
Total Property Return of 2.4% for the period (Sept 2023: 2.3%)
Robust Balance
Sheet
· On
7 August 2024 refinanced a lending facility which was £86.5 million
drawn at the start of the period with an ongoing interest cost in
March 2024 of 5.0% with a £140 million term loan at an ongoing
interest cost of 4.5%, rising to 5.0% in August 2025
·
Earliest debt maturity August 2027 (Mar 2024: August 2025)
· All
debt 100% fixed or hedged through to term (Mar 2024: 96.9%)
·
Loan to value ("LTV") of 33.2%, remaining at the lower end of the
stated 30-40% range (Mar 2024: 29.3%)
·
£407.2 million of debt with a weighted average maturity of 5.1
years (Mar 2024: £353.8 million with a weighted average maturity of
5.4 years)
·
Undrawn and available facilities of £50.0 million (Mar 2024: £64.5
million)
·
Weighted average debt costs of 4.0% for the period (Mar 2024:
4.0%)
Portfolio with uplift
opportunities
·
Portfolio Estimated Rental Values (ERV) of £80.1 million providing
a 27% reversion to contracted rent of £63.3 million (Sept 2023: ERV
of £73.8 million providing a 23% reversion to contracted rent of
£60.0 million)
·
Portfolio like-for-like3 ERV up by 3.5% over the 6 month
period (6 months to Sept 2023 1.4%)
·
WAULT4 of 7.6 years (Sept 2023: 8.0 years), reflecting
some rebalancing of the portfolio towards Asset Management
· 21%
like-for-like rental increases across 13 lease events in the period
(Sept 2023: 10% LFL increase across 10 lease events)
·
EPRA vacancy rate of 8.1% (Sept 2023: 6.8%), with 3.5% of the
vacancy consisting of assets which were acquired with less than 12
months on the lease, and 2.3% consisting of assets under offer.
Strong ESG
credentials
· 60%
of the portfolio with an EPC of A-B (Sept 2023: 55%)
·
Scope 1 and 2 operational net zero, with portfolio wide scope three
target under development
Post Period
End
·
Vacant property in Dunstable acquired for £3.6 million and let
immediately, providing a 7.1% NIY, and bringing total acquisitions
to date to a £45.8 million aggregate purchase price at a NIY of
6.7%; a significant arbitrage to our cost of debt and therefore
providing EPS accretion in the second half of the year.
·
Unconditionally exchanged on the sale of a £7.7 million property in
Peterborough, at a NIY of 4.85%, 2.1% ahead of September 2024
valuation freeing up further capital for accretive acquisitions
Outlook: Strong
potential for income growth from leasing, supported by asset
recycling
· 51%
of the portfolio in 'Asset Management' category, with a 43%
reversion to contracted rent providing opportunity for fast rental
growth
· Fixed debt costs with no
refinancing events until August 2027 gives security of costs and
earnings potential
1. A full
reconciliation between IFRS profit and Adjusted earnings can be
found in note 8 of this interim set of Financial
Statements.
2. A
reconciliation of other financial information can be found in the
Supplementary Information.
3. Like for
Like (LFL) figures compare the values for properties held 31 March
2024 to the same properties on 30 September 2024, and ignores
properties acquired or disposed of in the period.
4. Weighted
Average Unexpired Lease Term
|
|
CHAIRMAN'S STATEMENT
OVERVIEW
The first half of the year has seen Urban Logistics
complete a refinancing and deploy capital to acquire attractive
assets which fall within our 'Active Asset Management'
categorisation. Post period end we have also complemented these
activities with the unconditional exchange of an asset in our "Core
Portfolio". These actions demonstrate how the Company is actively
working to create value for shareholders. Through refinancing the
debt we have strengthened the balance sheet and provided additional
firepower to acquire further assets. We have deployed some of that
capital into assets which not only yield more than the cost of
debt, and thereby enhance EPRA EPS, but also provide ample total
return opportunities which our Investment Adviser has proved adept
at capitalising upon.
We firmly believe that the best method for delivering
value for our shareholders is through the active management of the
portfolio, the delivery of earnings accretive acquisitions and the
demonstration of the portfolio value through sales where asset
management has been completed.
This will lead to a growth in earnings, allowing us to
fully cover and, in due course, grow our dividend, and support
valuation growth in our portfolio. It is these activities, combined
with our continued belief in the single let logistics sector and
strategy, that we believe will help reduce the discount at which
the shares currently trade at, and grow shareholder value.
DIVIDENDS
A first interim dividend of 3.25 pence per share will
be paid on 13 December 2024 to shareholders on the record on 22
November 2024. This is unchanged from the first interim dividend in
the prior year, and it is our current intention to maintain the
dividend for the second half of the financial year at 4.35 pence
per share, which is the same level as last year. We are confident
that as our vacancies are leased by tenants, earnings will grow to
cover the dividend at this level on an ongoing basis.
BOARD
As previously announced, on 1 July 2024, Cherine
Aboulzelof joined the Board, bringing significant additional real
estate expertise, and Bruce Anderson is, as of the date of this
report, stepping down as Chair of the Audit Committee, to be
replaced by Lynda Heywood. Bruce will remain an independent
director on the Board.
OUTLOOK
With the stabilisation of interest rates we are seeing
an increase in transactional activity in the market place,
providing us not only with opportunities to selectively sell Core
assets but also to acquire attractive assets and portfolios of
assets which meet our target acquisition criteria, thereby
increasing our portfolio weighting of assets in the Active Asset
Management category.
Our belief in the strong prospects for the sub sector
of the property market in which we operate continues to be
validated by growth in rental rates at our properties, driven by
the fundamental supply and demand mismatch for this type of
space.
Nigel Rich
CBE, Chairman
6 November 2024
INVESTMENT ADVISER'S REPORT
OVERVIEW
The Company's focus in the first half of this
financial year has been to execute on the plan set out to
shareholders at the start of the year to drive EPS growth on the
path to a fully covered dividend. The Company planned to do this
not only through leasing activity, but also through the use of
capital available from selective recycling to drive earnings, as
well as rebalancing the portfolio towards assets with strong
reversion and asset management potential. A good example of this is
the disposal, post period end, of a £7.7 million property in
Peterborough, at a NIY of 4.85%, which will free up further capital
for accretive acquisitions and drive earnings. Over the medium term
we would like to see the portfolio rebalanced to circa 35% Core
assets, with 65% in the Active Management and Development
categories.
The first half of the year has seen a number of key
milestones achieved: the Company has refinanced bank debt at
attractive rates and increased the size of the facility. The
capital released has been deployed into new assets, taking
advantage of a dislocated and quiet market in the summer to acquire
a number of properties which provide a day one arbitrage to the
debt costs, as well as a longer-term reversion and growth
opportunities. This can be seen in the day one yield of the recent
acquisitions, at 6.7% NIY with asset management taking them to
7.3%.
Underlying all of this has been our ongoing active
asset management - settling rent reviews, leasing vacant properties
and regearing leases, with 13 lease events completed in the
period.
DEBT AND BALANCE
SHEET
Urban Logistics has always chosen to run a very
conservative balance sheet, with net LTV at the lower end of the
stated 30-40% target range. The debt book is underpinned by long
term gilt linked lending, with more flexible bank lending on a
shorter maturity. The shorter term lending had a maturity date of
August 2025, so during the period the Company refinanced and
extended the debt through to a 2027 maturity, and at the same time
reduced the margin by 47 bps and increased the size of the facility
from £151m to £190m.
The new facility has an interest cost of 4.5% for the
first 12 months, rising to 5% thereafter, and features
sustainability links, in line with the Company's ESG targets.
ASSET ACQUISITION AND
RECYCLING
A low LTV of 29.3% at the start of the period provided
flexibility to acquire assets, and at the publication of the annual
report the Company signalled its intention to use that firepower to
acquire EPS accretive assets. As part of the bank debt refinancing,
the Company drew additional debt, raising LTV to 33.2%. During
August and September, 4 assets were acquired off market at a NIY of
6.6%, rising to 7.1% following execution of the near term asset
management plans.
|
|
Acquisition price
|
Rental
Income
|
NIY
|
Reversionary Yield
|
Years
to expiry
|
Years to first break/expiry
|
|
Crayford
|
£5.2m
|
£0.3m
|
6.2%
|
6.8%
|
9.3
|
9.3
|
|
Wolverhampton
|
£17.0m
|
£1.1m
|
6.3%
|
6.9%
|
8.6
|
3.6
|
|
Doncaster
|
£11.7m
|
£0.9m
|
7.5%
|
8.3
|
1.8
|
1.8
|
|
Peterlee
|
£8.3m
|
£0.6m
|
6.6%
|
7.4%
|
5.6
|
5.6
|
|
Total
|
£42.2m
|
£2.9m
|
6.7%
|
7.3%
|
5.9
|
4.0
|
Post period end, the Company acquired an additional
property, in Dunstable, for £3.6 million. The property was vacant,
however between exchange and completion the Company has let the
asset to a local occupier resulting in a 7.1% NIY. This brings the
total acquisitions in the financial year to date to £45.8 million,
at a NIY of 6.7%, a significant arbitrage to the cost of debt and
therefore providing EPS accretion in the second half of the
year.
In the second half of the year, as the market
strengthens, the Company intends to recycle low yielding assets
where the asset management has been largely completed to provide
capital to acquire higher yielding assets from which we can realise
value through active asset management.
This process has started post period end, and at the
date of this report the Company has exchanged on its first sale, an
asset at Peterborough, let to Anglian Water, for a sum of £7.7
million, at a NIY of 4.85%. This asset was developed by the Company
in 2020, at a total cost of £5.8 million, providing a 33% profit on
cost and an ungeared IRR of 12.3%. The site was part of the 'Core'
portfolio, where the asset management plan had been enacted, and
the sale allows the capital to be recycled into further
acquisitions, at strong initial yields, from which the asset
management team will be able to realise value.
THE MARKET
Real estate pricing across the UK and the
Company's sector has remained steady in the period, tracking
the 10 year gilt which showed little movement in the period. The
budget in October removed a level of uncertainty, but has resulted
in the 10 year gilt rising from 4.1% at period end to 4.5 at the
time of this report, reflecting the expectation of higher inflation
and a slower reduction in interest rates.
Investment market
and rental rates
Against this backdrop, the transactional market was
muted, with trading volumes across real estate their quietest since
2012. Even within this context however, the Industrial and
Logistics segment increased its share of the real estate market to
27%, the highest proportion ever recorded. This is driven by a
continued investor commitment to the wider structural thesis that
has driven the sector's performance over the last decade. Data for
the first half of 2024 from Savills shows that within UK
distribution, investment volumes reached £1.4bn, 41% up on the same
period in 2023, and a 47% increase on the pre-covid H1 average.
This further supports our conviction that the growth
case for this sector remains one of the strongest in the real
estate market. This investment case is built on the rising rental
rates driven by underlying demand for this asset class from
occupiers, which is forecast to continue to outstrip supply,
leading to rental rates growing faster than inflation. This can be
seen in Knight Frank's average rental growth forecast from Q2 2024
below:
|
Knight Frank:
Average Rental Growth forecast (%age) Q2 2024
|
|
|
2024
|
2025
|
2026
|
2027
|
2028
|
2024-28 CAGR
|
|
London
|
6.0
|
4.4
|
3.5
|
3.5
|
3.7
|
4.2
|
|
South East
|
4.4
|
3.3
|
2,7
|
2.9
|
3.1
|
3.3
|
|
South West
|
6.2
|
3.6
|
2.3
|
2.0
|
2.1
|
3.2
|
|
Eastern
|
4.8
|
3.5
|
2.9
|
3.0
|
3.3
|
3.5
|
|
East Midlands
|
4.3
|
3.2
|
2.3
|
2.3
|
2.4
|
2.9
|
|
West Midlands
|
5.3
|
3.5
|
2.6
|
2.6
|
2.7
|
3.3
|
|
North West
|
5.5
|
3.6
|
2.7
|
2.7
|
2.8
|
3.5
|
|
Yorks & Humber
|
4.6
|
2.9
|
2.1
|
2.2
|
2.3
|
2.8
|
|
North East
|
4.1
|
3.0
|
2.4
|
2.4
|
2.5
|
2.9
|
|
Scotland
|
4.2
|
2.6
|
1.9
|
2.0
|
2.2
|
2.6
|
|
Wales
|
4.0
|
2.6
|
2.0
|
2.2
|
2.4
|
2.6
|
|
UK
|
4.7
|
3.4
|
2.7
|
2.8
|
3.0
|
3.3
|
This forecast rental growth, and the increased
activity in the investment market has seen prime yields come in
slightly to 5.0%, according to Savills data.
Occupier Take up and
vacancy
2023 saw significant uncertainty around interest rates
and the broader economic picture. In that environment, occupiers as
far as they could, chose not to make long term leasing decisions.
The data from Savills shows that this has, to some extent
rebounded, with take up in H1 2024 recorded at 16.8m sq ft in UK
Logistics above 100k sq ft, 44% ahead of H1 2023, with 62% of that
take up in Q2, reflecting improving economic confidence.
The mix of occupiers remains diversified, with
manufacturing accounting for 28% of uptake, third party logistics
33%, with the remainder from a range of occupiers. Online retail
was subdued at just 5%, showing the breadth of demand from the
occupier market.
Despite this activity, additional supply coming onto
the market, often in the form of speculatively built larger box
sizes of 300-400,000 sq ft, is driving up headline vacancy rates to
6.95% (Savills). It is important to note however that there are
significant variances within that figure depending on geographic
location, asset size and building specification.
PORTFOLIO
VALUATION
As previously announced the Company has chosen to
rotate its valuers this year in the interests of good governance,
and CBRE have been replaced by JLL.
The external property valuation over the last 6 months
has been stable, with a like for like (LFL) property revaluation
increase of 0.2% and 4 acquisitions helping to increase total
portfolio value to £1.14 billion, from £1.10 billion at the year
end.
Looking more closely at the LFL valuation change the
Company saw a very strong increase in LFL Estimated Rental Values
(ERV) of 3.5% in just 6 months, while the yield was largely flat,
at 6.4% against 6.3% at 31 March 2024.
Breaking the valuation movement down, it is clear that
while the Core properties have increased in value, there has been a
small decline in the valuations of the Asset Management portion of
the portfolio. This is consistent with the higher than usual
vacancy and slower decision making in the occupational market
holding back the Asset Management portion of the portfolio.
|
|
As at 30 September
|
As at 31 March
|
|
|
2024
|
2024
|
|
Portfolio value1
|
£1,140m
|
£1,100m
|
|
Equivalent yield
|
6.4%
|
6.3%
|
|
WAULT (to expiry)
|
7.6 years
|
7.5 years
|
|
Area
|
10.1 million sq ft
|
9.7 million sq ft
|
|
Contracted rent
|
£63m
|
£62m
|
|
EPC ratings: A-B
|
60%
|
60%
|
1. As per JLL valuation,
September 2024, (CBRE valuation, March 2024)
The Company continues to focus on a portfolio balanced
across three key areas: 'Core' assets, with long term secure income
underpinning the dividend, 'Active Asset Management' opportunities
where we can apply our expertise to improve leases and buildings,
and a carefully selected limited pool of 'Development'
opportunities. The Company's aim over the short to medium term is
to rebalance the portfolio towards Asset Management
opportunities.
|
|
Core
|
Active Asset Management
|
Development
Land1
|
Total
|
|
Capital
Value
|
£549m
|
£584m
|
£7m
|
£1,140m
|
|
Percentage of
portfolio
|
48%
|
51%
|
1%
|
100%
|
|
Area
|
4.4m sq ft
|
5.7m sq ft
|
n/a
|
10.1m sq ft
|
|
Contracted
rent
|
£32.8m
|
£30.5m
|
n/a
|
£63.3m
|
|
ERV/Expected
rent
|
£36.6m
|
£43.5m
|
n/a
|
£80.1m
|
|
Reversion to
ERV
|
12%
|
43%
|
n/a
|
27%
|
|
WAULT
|
10.3 years
|
4.7 years
|
n/a
|
7.6 years
|
|
EPC A-B
|
80%
|
45%
|
n/a
|
60%
|
|
Equivalent
yield/yield on cost
|
6.13%
|
6.56%
|
n/a
|
6.35%
|
1. Made up of plots of stand
alone development land, with or without planning permission.
At 31 March 2024, the portfolio was split 51% in Core
assets and 48% in Active asset management. During the period the
Company has used acquisitions and one disposal to rebalance the
portfolio to 51% Active asset management and reduce the core
exposure to 48%. Over the medium term we would like to see this
percentage of the portfolio in Core Assets fall to circa 35%. The
rebalancing will be achieved by further capital recycling, and will
see opportunities for stronger rental growth, as evidenced by the
43% reversion to ERV in the Active Asset Management portion of the
portfolio.
Also contained within the portfolio are a number of
plots of development land, with or without planning permission, in
the "Development" category. While these provide opportunities for
outsized development returns, the Company has no current active
developments given the attractiveness of the market for acquiring
income producing assets and our desire to drive immediate rental
growth to support the Company's dividend cover goals.
ASSET
MANAGEMENT
Asset management is core to the business model and
allows the Company to add value to properties at any time in the
cycle, by extending leases, improving rental rates, improving
tenant covenants, driving ESG change or refurbishing buildings. In
the period the Company has completed 13 lease events, and weighted
average like for like rental uplift of 21%.
|
|
No. of
|
Additional
|
LFL rental
|
WAULT
|
|
|
deals
|
rent
|
Uplift
|
(to expiry)
|
|
New lettings
|
3
|
£1.1m
|
7%
|
10.0
|
|
Lease re-gears/assignments
|
4
|
£(0.1)m
|
-
|
4.9
|
|
Rent reviews
|
6
|
£0.2m
|
22%
|
-
|
|
Total
|
13
|
£1.2m
|
21%
|
7.0
|
In the coming months the Company has a low level of
lease expiry and revenue at risk, giving a strong foundation for
near term growth in rental rates. In addition, two of the vacant
assets, with an ERV of £1.8 million, representing 2.3% of the 8.1%
vacancy figure, have been put under offer, and leases are expected
to complete in the coming months.
Tenant
diversity and covenant strength are key to tenant selection, with
the largest tenant providing just 5% of contracted rent roll, and
the top ten tenants providing for 32%. The remaining 68% of
contracted rent is made up of 110 different tenants, and Dunn and
Bradstreet report that 80% of the Company's tenants are classified
as Low to Low-Moderate risk.
Despite this, the smaller end of the 3PL market has
been under pressure. This was caused by a market which expanded
rapidly during Covid, followed by an extended period of higher
interest rates, combined with more normalised package delivery
numbers (down from the elevated volumes seen during the
pandemic).
The Company has therefore seen four tenant
administrations in the period and post period end, most notably
Shift and Carlton Forest. These administrations have created
vacancies at seven generally smaller assets with contracted rent of
£1.1 million, representing 1.7% of the portfolio's contracted rent.
At the date of this report, 48% of this contracted rent, or £0.5m,
had either been relet or is under offer, at a new rent 10% above
the previous contracted rent. These administrations therefore allow
us to capture reversion significantly earlier than would otherwise
have been achievable.
The remaining assets have a 20% reversion between
previous contracted rent and ERV, again, allowing earlier capture
of rental uplift. While administrations are never welcome, and act
as a short term drag on earnings, the quality of the real estate is
the ultimate backstop in the case of tenant failures, and we
anticipate higher medium term earnings because of them.
The overall vacancy rate of 8.1% can be broken down as
below:
DEVELOPMENTS
Since IPO, developments have been a small but
important contributor to overall performance. In September 2023 the
Company took the decision to pull back from future developments for
the time being as we saw more risk than reward given land and
construction costs, and the subdued state of the leasing
market.
In due course we would expect the Company to return to
its development model: Forward funding developers with strong
balance sheets to protect investors from cost overruns, and taking
only leasing risk in geographies where there is a clear undersupply
of the type of property being developed.
ENVIRONMENTAL, SOCIAL
AND GOVERNANCE
We strive to ensure that the drivers of the Company's
ESG performance are deeply woven into the business model. All of
the Company's debt now has sustainability links, and we work
closely with tenants to understand their ESG risks and
opportunities.
The Company programme of installing solar on its
assets both reduces occupier costs and increases asset value. The
Company focus on EPC improvements allows it to stay ahead of MEES
regulations as well as make its assets more attractive to future
tenants and support corporate level targets around emissions.
Our guiding philosophy however is that it is better to
buy a poor performing building and improve it over time than to
shun poor performing buildings which offer significant
opportunities for value creation due to improvements in ESG
credentials. The Company's EPRA sBPR score remain gold, and our
MSCI ESG rating was an "A". We are working through GRESB scoring
changes in terms of standing assets, which has fallen from three
stars to two, despite improved performance, and we will continue to
work with GRESB to help them better reflect the Company's
underlying performance which has remained strong, with increased
data coverage, reduced CO2 emissions per sq ft of the portfolio,
improved EPCs and increased PV capacity.
|
EPC across the
portfolio
|
|
Sept 2024
|
March 2024
|
Sept 2023
|
|
A
|
|
14%
|
15%
|
14%
|
|
B
|
|
46%
|
45%
|
41%
|
|
C
|
|
31%
|
30%
|
32%
|
|
D
|
|
9%
|
10%
|
13%
|
|
E
|
|
0%
|
0%
|
0%
|
|
F
|
|
0%
|
0%
|
0%
|
|
Total
|
|
100%
|
100%
|
100%
|
Based on percentage
of the portfolio by floor area
In June the Company published its ESG targets and will
execute against them and report on progress in the coming months.
In September we also saw the Building Sector methodology published
by the SBTi; we look forward to submitting the Company's SBTi
aligned scope 3 reduction target in the coming months.
OUTLOOK
Urban Logistics is focused on controlling the
controllable: implementing the asset recycling programme, managing
debt, rebalancing the portfolio towards Asset Management
opportunities and above all else achieving the reversionary
potential in the existing portfolio. The portfolio under management
today is capable of delivering significantly higher rental income
in the short term through leasing up of vacant assets, while
ongoing rental growth in the Company's sector supports longer term
value enhancement. Costs, including interest costs, are largely
fixed, meaning this rental growth supports higher ongoing earnings,
and is at the core of the Company's drive for full dividend cover,
and in time, dividend growth.
THE INVESTMENT
ADVISER
6 November 2024
FINANCIAL
REVIEW
Financial
Review
IFRS
profit
|
|
30 Sep 2024
|
30 Sep 2023
|
31 Mar 2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Revenue
|
30,636
|
29,731
|
59,951
|
|
Property operating costs
|
(1,641)
|
(1,218)
|
(2,511)
|
|
Net rental
income
|
28,995
|
28,513
|
57,440
|
|
Other operating income
|
310
|
88
|
147
|
|
Administrative and other expenses
|
(4,312)
|
(4,487)
|
(9,191)
|
|
Net finance expense
|
(8,130)
|
(7,769)
|
(15,896)
|
|
Adjusted
earnings
|
16,863
|
16,345
|
32,500
|
|
Long-term incentive plan charge
|
-
|
(11)
|
(11)
|
|
Loss on early extinguishment of debt
|
(978)
|
-
|
-
|
|
Exceptional items
|
-
|
(391)
|
(1,125)
|
|
Changes in fair value of investment property
|
(3,369)
|
940
|
(5,810)
|
|
(Loss)/profit on disposal of investment property
|
(166)
|
56
|
55
|
|
Changes in fair value of interest rate
derivatives
|
(2,102)
|
(68)
|
(865)
|
|
Profit before
taxation
|
10,248
|
16,871
|
24,744
|
Net rental
income
Net rental income for the first half of the financial
year ending 31 March 2025 totalled £29.0 million (30 September
2023: £28.5 million), an increase of £0.5 million or 1.8% compared
to the prior period. Whilst there has been successful asset
management during the period, it has taken longer to lease voids
than anticipated. This, combined with a number of tenant
administrations, has increased the vacancy rate to 8.1% (30
September 2023: 6.8%) which has impacted revenue growth, and has
increase property operating costs by £1.4m, driven by increased
security costs at vacant sites.
Despite this, the gross to net rental income ratio
remains high at 95.2% (30 September 2023: 96.5%), illustrating the
strength of our core strategy.
Administrative
expenses
A reduced Net Asset Value (NAV), and the new advisory
fee structure that came into effect from 12 May 2024, has led to a
£0.2 million reduction in administrative expenses when compared to
the prior period; these include all operational costs of running
the business, and totalled £4.3 million for the first six months of
the financial year (30 September 2023: £4.5 million).
Total cost
ratio
Total cost ratio is used as a measure of the
Company's operational efficiency, it has increased slightly to
18.8% (30 September 2023: 18.5%). Further detail on cost ratios can
be found in EPRA supplementary information, note VI. This movement
has been largely driven by rising vacant property costs, as shown
by the cost ratio excluding vacant property costs falling to
14.9%.
|
|
30 Sep 2024
|
30 Sep 2023
|
31 Mar 2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Total costs including vacant property costs
|
18.8%
|
18.5%
|
18.9%
|
|
Total cost excluding vacant property costs
|
14.9%
|
16.0%
|
16.2%
|
Net finance
costs
Net finance costs for the period, excluding fair
value movement of our interest rate derivatives, totalled £8.1
million (30 September 2023: £7.8 million), an increase of £0.3
million compared to the prior period. The increased costs were
primarily driven by the higher gross debt position during the
period. At the period end gross debt was £407.2 million, compared
with £353.7 million at 30 September 2023.
The weighted average cost of debt for the period was
very marginally higher than the previous period at 3.99% (30
September 2023: 3.86%). This rise is driven by small changes in
levels of unhedged debt during the period. Interest cover has
remained stable at 3.2x (30 September 2023: 3.3x), while the
weighted average debt maturity is 5.1 years (30 September 2023: 6.0
years), with the earliest refinance now pushed back to August
2027.
IFRS profit and
adjusted earnings
IFRS profit after tax for the period was £10.2
million (30 September 2023: £16.9 million), representing a basic
and diluted earnings per share of 2.17 pence (30 September 2023:
3.57 pence), with the change largely driven by portfolio valuation
movements and changes in the fair value of interest rate
derivatives.
Adjusted earnings for the period were £16.9 million
representing an increase of £0.6 million when compared to the prior
period (30 September 2023: £16.3 million), resulting in an
improvement in adjusted earnings per share to 3.57 pence (30
September 2023: 3.46 pence).
The Directors consider adjusted earnings as a key
measure of the Company's underlying operating results, and
therefore exclude non-cash and exceptional items. A full
reconciliation between IFRS profit and Adjusted earnings can be
found in note 8 of the interim financial statements.
Dividend
In relation to the period to 30 September 2024, the
Company paid and declared the following interim dividends:
|
|
Amount
|
In respect of
|
|
|
|
pence
|
financial year
|
Paid/
|
|
Declared
|
per share
|
ended
|
to be paid
|
|
19 June 2024
|
4.35p
|
31 March 2024
|
19 July 2024
|
|
6 November 2024
|
3.25p
|
31 March 2025
|
13 December 2024
|
An interim dividend of 3.25 pence per share will be
paid on 13 December 2024 to shareholders on the register at the
close of business 22 November 2024, and the full amount is a
property income distribution ("PID").
IFRS net
assets
|
|
30 Sep 2024
|
30 Sep 2023
|
31 Mar 2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Investment property
|
1,140,033
|
1,103,609
|
1,099,547
|
|
Bank and other borrowings
|
(402,595)
|
(348,970)
|
(348,986)
|
|
Cash
|
29,260
|
30,853
|
30,274
|
|
Other net liabilities
|
(20,741)
|
(22,373)
|
(24,380)
|
|
EPRA net tangible
assets
|
745,957
|
763,119
|
756,455
|
|
Interest rate derivatives
|
2,389
|
2,966
|
2,169
|
|
Intangible assets
|
16
|
26
|
21
|
|
IFRS net
assets
|
748,362
|
766,111
|
758,645
|
At 30 September 2024, IFRS net assets attributable to
Ordinary Shareholders were £748.4 million (31 March 2024: £758.6
million), representing a basic and diluted net asset value per
share of 158.56 pence (31 March 2024: 160.74 pence).
The Company considers EPRA net tangible assets
("NTA") a key measure of overall performance. At 30 September 2024,
NTA was £746.0 million (31 March 2024: £756.5 million),
representing an EPRA NTA per share of 158.05 pence (31 March 2024:
160.27 pence), a decrease of 1.4%. The reduction in the EPRA NTA
primarily relates to the acquisition costs associated with the
purchase of new properties in the year.
The Total Accounting Return ("TAR") for the period,
which reflects change in EPRA NTA plus dividends paid in the
period, was 1.3% (30 September 2023: 2.2%). The average annualised
Total Accounting Return since IPO in 2016 has been 10.9%, including
dividends paid and declared.
Portfolio
valuation
The value of our portfolio at 30 September 2024,
which includes land for future development, was £1,140 million, an
increase £40.5 million, or 3.7%, over the six month period. This
was driven by the acquisition of four assets in the period with a
combined purchase price (excluding acquisition costs) of £42.2
million; the Company also disposed of one property with a net book
value of £3.8m. The like-for-like property valuation increase was
0.2%. In addition, the Company incurred capital expenditure of £1.0
million, which was largely comprised of refurbishments at vacant
assets.
The portfolio delivered a Total Property Return
("TPR") of 2.4% for the six-months to 30 September 2024 (30
September 2023: 2.3%).
Financing
At 30 September 2024, the Company had drawn debt
totalling £407.2 million (30 September 2023: £353.7 million).
On 7 August 2024, the Group completed the refinancing
of a £151.0 million loan facility. This resulted in the appointment
of ING Bank N.V. as a lender, alongside existing lenders Barclays
Bank plc and Santander Bank Plc. The new agreement provides a
£190.0 million loan facility over a three-year term, with the
option to extend for a further two years. Interest is charged at a
fixed margin of 1.75% plus SONIA. Interest rate swaps have been
entered into to fix SONIA at 2.73% until August 2025, and at 3.23%
thereafter until August 2027.
|
|
|
Loan
|
Drawn at
|
% Fixed /
|
|
|
Maturity
|
Commitment
|
30 Sep 2024
|
Hedged at
|
|
Lender
|
Date
|
(£m)
|
(£m)
|
30 Sep 2024
|
|
Barclays, Santander and ING (syndicate of 3
banks)
|
Aug 2027
|
190.0
|
140.0
|
100.0%
|
|
Aviva Investors (7-years)
|
Mar 2028
|
88.4
|
88.4
|
100.0%
|
|
Aviva Investors (10-years)
|
May 2032
|
178.8
|
178.8
|
100.0%
|
|
Total
|
|
457.2
|
407.2
|
100.0%
|
At 30 September 2024, the weighted average cost of
debt across all drawn facilities is 4.0% (30 September 2023: 4.1%),
of which 100.0% (30 September 2023: 96.9%) is either fixed or
hedged to term.
Cash and net
debt
The Company's cash balances decreased by £1.0 million
to £29.3 million at 30 September 2024, as illustrated in the table
below:
|
|
30 Sep 2024
|
30 Sep 2023
|
31 Mar 2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£m
|
£m
|
£m
|
|
Cash generated from operations
|
20.9
|
21.6
|
46.6
|
|
Cash (used in)/generated from investing
activities
|
(42.7)
|
5.2
|
3.3
|
|
Cash generated from/(used in) financing
activities
|
20.8
|
(26.1)
|
(49.8)
|
|
Net
(decrease)/increase in cash
|
(1.0)
|
0.7
|
0.1
|
|
Opening cash balance
|
30.3
|
30.2
|
30.2
|
|
Closing cash
balance
|
29.3
|
30.9
|
30.3
|
At 30 September 2024, the Company's cash balance was
£29.3 million, of which £1.4 million is earmarked for committed
capex and £6.1 million is restricted in the form of long-term
rental deposits. Over the six-month period, debt increased by £53.5
million to £407.2 million, representing a loan to value ("LTV") of
33.2% (30 September 2023: 29.3%).
PRINCIPAL RISKS AND UNCERTAINTIES
The Company's assets are made up of UK commercial
property. Its principal risks are therefore related to the
commercial property market in general and also to the particular
circumstances of the individual properties and the tenants within
the properties. Taking this into account, the Company's risk
appetite policies and procedures, alongside the appropriate
controls and financial reporting, are regularly reviewed and
updated to ensure they remain in line with regulation, corporate
governance and expected industry practice.
The Board has performed a robust assessment of the
principal strategic, ESG and operational risks facing the Company
as well as assessing identifiable emerging risks. The Board
formally reviews its risk matrix twice yearly but is made aware of
any risk exposure either as and when it happens or at the regular
Board meetings. The Audit Committee, which I chair, reviews the
matrix, and oversees the process of assigning operational
responsibility for risk mitigation processes to Board Committees or
the Investment Adviser.
Urban Logistics utilises a multi-layered defence in
terms of risk management. The first line of defence comprises the
management team at Logistics Asset Management LLP (the "Investment
Adviser"), who take ownership of the risk, manage and report
against the internal controls to mitigate it, and report to the
Board or Board Committees against the agreed risk matrix. The
second line of defence is built around oversight and challenge,
which is the responsibility of the Board and reported on by the
independent Directors who make up the Audit Committee.
In addition to these internal lines of defence, the
Board also takes comfort from compliance reports delivered by a
number of external professional advisers. These include our
external auditors RSM, who provide a report on their audit of the
Financial Statements and published accounts, our tax advisers BDO,
who provide a report on tax status and REIT compliance, our
external AIFM, G10, who report on regulatory compliance, our
external Company Secretary, Link Company Matters, who provide a
report on compliance with governance requirements and our
depository, Indos, who provide a report on cash compliance.
Risks are measured based on probability and potential
impact using a scoring matrix. I, as Chair of the Audit Committee
review the risk matrix to establish movements in risks, and to
identify new risks, before the Audit Committee and Board proposes
any changes. The output from the discussion draws out the risks
which the Committee and Board deem to be the principal risks facing
the Company, the number of which will change from period to period,
depending on the perceived severity of the risk. The commentary
below discusses the six key risks, and how the Board sees both the
potential impact of the risk, as well as actions being taken to
mitigate the risk.
Bruce Anderson ACMA FCIOBS
Chair of the Audit Committee
|
Rank
|
Risk
|
Impact
|
Mitigation
|
|
1
|
Subdued UK macroeconomic environment impacting
consumer confidence & tenant business plans, heightening
default risk.
|
Impact on financial performance
|
In individual tenant failure scenario, asset quality
and location mitigates risk as assets are able to be relet
quickly.
In the case of a sector specific downturn scenario the
Company has a diverse tenant base and is not over exposed to any
one tenant.
In a systemic failure scenario the Company maintains a
low LTV and high fixed debt proportion, allowing headroom in the
case of significant numbers of tenant failures".
|
|
2
|
Inability to raise new money to develop the
business.
|
Impact on ability to execute against pipeline and grow
the business
|
LTV levels are currently below the maximum allowed for
the REIT, giving headroom for further debt is needed or deemed
desirable.
We are able to stop all new development and new
acquisitions, but could continue asset management within the
existing portfolio to enable growth.
We regularly review alternate methods of growing the
business, included M&A and structures with private capital.
|
|
3
|
Increased costs as a result of vacant properties.
|
Impact on costs and reduced income
|
Where properties are acquired with vacant possession,
rent guarantees have been negotiated where possible.
Active marketing carried out on vacant sites by
experienced asset managers and agents.
|
|
4
|
Failure to attract and retain talent in the LLP,
including key personnel.
|
Impact on our ability to effectively manage the fund
without the services of key personnel who are contracted to the
advisor.
Impact on our Adviser's ability to grow the team in
line with the REIT.
|
New investment advisory contract has been awarded, and
Pacific Investments has been bought out of the adviser, meaning the
day to day management team have full ownership of the Adviser.
The Adviser has added additional staff in depth within
the Company.
Staff members are supported in the pursuit of
professional qualifications.
Regular informal feedback & annual reviews to
focus on long-term career goals.
Market aligned compensation and benefits packages.
Staff satisfaction surveys conducted periodically.
|
|
5
|
Cyber security attack.
|
Risk of loss of Company funds or data following an
attack.
|
The Adviser undergoes mandatory cyber security
training on an annual basis.
Phishing security tests are performed by Sereno IT.
Any employees failing these random tests are required to undertake
further training.
Firewall in place as a defence against cyber
attacks.
|
|
6
|
Risk of elevated interest rates affecting financial
performance and banking covenants
|
Impact on financial returns.
|
Mitigated by use of long term debt and hedging of
interest rates.
Interest cover is monitored by the Board on a
quarterly basis
|
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their
knowledge:
· that these condensed
interim financial statements have been prepared in accordance with
UK adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency sourcebook
of the United Kingdom's Financial Conduct Authority; and
· this Interim Report
includes a fair review of the information required by:
A) DTR 4.2.7R of the Disclosure
Guidance and Transparency Rules, being an indication of important
events that have occurred during the period under review and their
impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
B) DTR 4.2.8R of the Disclosure
Guidance and Transparency Rules, being related party transactions
that have taken place during the period ended 30 September 2024 and
that have materially affected the financial position or performance
of the Company during that period and any material changes in the
related party transactions described in the last Annual Report.
This Interim Report was approved by the Board of
Directors and the above responsibility statement was signed on its
behalf by:
Nigel Rich
Chairman
6 November 2024
INDEPENDENT REVIEW REPORT TO
URBAN LOGISTICS REIT PLC
Conclusion
We have been engaged by Urban Logistics REIT PLC
("the Company") to review the condensed set of financial statements
of the Company and its subsidiaries (the 'Group') in the interim
financial report for the six months ended 30 September 2024 which
comprises condensed consolidated statement of comprehensive income,
condensed consolidated statement of financial position, condensed
consolidated cash flow statement, condensed consolidated statement
of changes in equity and the notes to the interim financial
report. We have read the other information contained in the
interim financial report and considered whether it contains any
apparent material misstatements of fact or material inconsistencies
with the information in the condensed set of financial
statements.
Based on our review, nothing has come to our
attention that causes us to believe that the condensed set of
financial statements in the interim financial report for the six
months ended 30 September 2024 is not prepared, in all material
respects, in accordance with International Accounting Standard 34,
"Interim Financial Reporting" as contained in UK-adopted
International Accounting Standards, and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Basis for
Conclusion
We conducted our review in accordance with
International Standard on Review Engagements (UK) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" ('ISRE (UK) 2410') issued for use in the United
Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 2, the annual financial
statements of the Group are prepared in accordance with UK-adopted
International Accounting Standards. The condensed set of
financial statements included in this interim financial report has
been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting" as contained in UK-adopted
International Accounting Standards.
Conclusions Relating
to Going Concern
Based on our review procedures, which are less
extensive than those performed in an audit as described in the
Basis for Conclusion section of this report, nothing has come to
our attention to suggest that management have inappropriately
adopted the going concern basis of accounting or that management
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures
performed in accordance with ISRE (UK) 2410, however future events
or conditions may cause the Group and the Company to cease to
continue as a going concern.
Responsibilities of
Directors
The interim financial report is the responsibility
of, and has been approved by, the directors. The directors are
responsible for preparing the interim financial report in
accordance with International Accounting Standard 34, "Interim
Financial Reporting" as contained in UK-adopted International
Accounting Standards and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
In preparing the interim financial report, the
directors are responsible for assessing the Group's and the
Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's
Responsibilities for the Review of the Financial
Information
In reviewing the interim financial report, we are
responsible for expressing to the Company a conclusion on the
condensed set of financial statements in the interim financial
report. Our conclusion, including our Conclusions Relating to
Going Concern, are based on procedures that are less extensive than
audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our
report
This report is made solely to the Company in
accordance with International Standard on Review Engagements (UK)
2410 "Review of Interim Financial Information performed by the
Independent Auditor of the Entity". Our review work has been
undertaken so that we might state to the Company those matters we
are required to state to them in an independent review report and
for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
Company, for our review work, for this report, or for the
conclusions we have formed.
RSM UK Audit LLP
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
6 November 2024
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
|
|
|
Six months to
|
Six months to
|
Year ended
|
|
|
|
30 September
|
30 September
|
31 March
|
|
|
|
2024
|
2023
|
2024
|
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
Note
|
£'000
|
£'000
|
£'000
|
|
Revenue
|
5
|
30,636
|
29,731
|
59,951
|
|
Property operating expenses
|
|
(1,641)
|
(1,218)
|
(2,511)
|
|
Net rental
income
|
|
28,995
|
28,513
|
57,440
|
|
Administrative and other expenses
|
|
(4,312)
|
(4,487)
|
(9,191)
|
|
Other operating income
|
|
310
|
88
|
147
|
|
Long-term incentive plan charge
|
|
-
|
(11)
|
(11)
|
|
Operating profit
before changes in fair value of investment properties
|
|
24,993
|
24,103
|
48,385
|
|
Changes in fair value of investment property
|
6, 10
|
(3,369)
|
940
|
(5,810)
|
|
(Loss)/profit on disposal of investment property
|
|
(166)
|
56
|
55
|
|
Exceptional items
|
|
-
|
(391)
|
(1,125)
|
|
Operating
profit
|
|
21,458
|
24,708
|
41,505
|
|
Finance income
|
|
292
|
71
|
243
|
|
Finance expense
|
7
|
(8,422)
|
(7,840)
|
(16,139)
|
|
Loss on early extinguishment of debt
|
7
|
(978)
|
-
|
-
|
|
Changes in fair value of interest rate derivatives
|
|
(2,102)
|
(68)
|
(865)
|
|
Profit before
taxation
|
|
10,248
|
16,871
|
24,744
|
|
Tax charge for the
period
|
|
-
|
-
|
-
|
|
Profit and total
comprehensive income (attributable to the shareholders)
|
|
10,248
|
16,871
|
24,744
|
|
Earnings per share -
basic
|
8
|
2.17p
|
3.57p
|
5.24p
|
|
Earnings per share -
diluted
|
8
|
2.17p
|
3.57p
|
5.24p
|
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
|
|
|
30 September
|
30 September
|
31 March
|
|
|
|
2024
|
2023
|
2024
|
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
Note
|
£'000
|
£'000
|
£'000
|
|
Non-current
assets
|
|
|
|
|
|
Investment property
|
10
|
1,142,216
|
1,113,149
|
1,105,587
|
|
Intangible assets
|
|
16
|
26
|
21
|
|
Interest rate derivatives
|
12
|
562
|
876
|
1,436
|
|
Total non-current
assets
|
|
1,142,794
|
1,114,051
|
1,107,044
|
|
Current
assets
|
|
|
|
|
|
Assets held for sale
|
10
|
7,575
|
-
|
3,770
|
|
Trade and other receivables
|
|
7,946
|
8,956
|
6,121
|
|
Interest rate derivatives
|
12
|
1,827
|
2,090
|
733
|
|
Cash and cash equivalents
|
|
29,260
|
30,853
|
30,274
|
|
Total current
assets
|
|
46,608
|
41,899
|
40,898
|
|
Total
assets
|
|
1,189,402
|
1,155,950
|
1,147,942
|
|
Current
liabilities
|
|
|
|
|
|
Trade and other payables
|
|
(8,497)
|
(12,393)
|
(11,300)
|
|
Deferred rental income
|
|
(13,820)
|
(12,688)
|
(13,198)
|
|
Total current
liabilities
|
|
(22,317)
|
(25,081)
|
(24,498)
|
|
Non-current
liabilities
|
|
|
|
|
|
Long-term rental deposits
|
|
(6,109)
|
(5,989)
|
(6,049)
|
|
Lease liability
|
11
|
(10,019)
|
(9,799)
|
(9,764)
|
|
Bank borrowings
|
11
|
(402,595)
|
(348,970)
|
(348,986)
|
|
Total non-current
liabilities
|
|
(418,723)
|
(364,758)
|
(364,799)
|
|
Total
liabilities
|
|
(441,040)
|
(389,839)
|
(389,297)
|
|
Total net
assets
|
|
748,362
|
766,111
|
758,645
|
|
Equity
|
|
|
|
|
|
Share capital
|
14
|
4,720
|
4,720
|
4,720
|
|
Share premium
|
|
438,418
|
438,418
|
438,418
|
|
Capital reduction reserve
|
|
228,760
|
228,760
|
228,760
|
|
Retained earnings
|
|
76,464
|
94,213
|
86,747
|
|
Total
equity
|
|
748,362
|
766,111
|
758,645
|
|
Net asset value per
share - basic
|
16
|
158.56p
|
162.32p
|
160.74p
|
|
Net asset value per
share - diluted
|
16
|
158.56p
|
162.32p
|
160.74p
|
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
|
|
|
Six months to
|
Six months to
|
Year ended
|
|
|
|
30 September
|
30 September
|
31 March
|
|
|
|
2024
|
2023
|
2024
|
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
Note
|
£'000
|
£'000
|
£'000
|
|
Cash flows from
operating activities
|
|
|
|
|
|
Profit for the period (attributable to equity
shareholders)
|
|
10,248
|
16,871
|
24,744
|
|
Add: amortisation and depreciation
|
|
56
|
55
|
113
|
|
Add/(less): changes in fair value of investment
property
|
6, 10
|
3,369
|
(940)
|
5,810
|
|
Add: changes in fair value of interest rate
derivatives
|
|
2,102
|
68
|
865
|
|
Add/(less): loss/(profit) on disposal of investment
property
|
|
166
|
(56)
|
(55)
|
|
Add: finance expense
|
7
|
8,422
|
7,840
|
16,139
|
|
Add: loss on extinguishment of debt
|
|
978
|
-
|
-
|
|
Long-term investment plan charge
|
|
-
|
11
|
11
|
|
Movement in trade and other financial liabilities
|
|
(2,604)
|
(1,945)
|
(1,065)
|
|
Movement in trade and other financial assets
|
|
(1,842)
|
(263)
|
25
|
|
Cash generated from
operations
|
|
20,895
|
21,641
|
46,587
|
|
Net cash flow
generated from operating activities
|
|
20,895
|
21,641
|
46,587
|
|
Investing
activities
|
|
|
|
|
|
Purchase of investment properties
|
|
(45,088)
|
-
|
-
|
|
Capital expenditure on investment properties
|
10
|
(1,185)
|
(9,397)
|
(11,230)
|
|
Disposal of investment properties
|
|
3,604
|
14,556
|
14,555
|
|
Net cash flow (used
in)/generated from investing activities
|
|
(42,669)
|
5,159
|
3,325
|
|
Financing
activities
|
|
|
|
|
|
Bank borrowings drawn
|
11
|
53,500
|
57,250
|
69,203
|
|
Bank borrowings repaid
|
|
-
|
(54,500)
|
(66,453)
|
|
Loan arrangement fees paid
|
|
(1,926)
|
(1,179)
|
(1,843)
|
|
Interest paid
|
|
(8,422)
|
(7,056)
|
(14,537)
|
|
Sale of interest rate derivative
|
|
561
|
-
|
-
|
|
Purchase of interest rate derivatives
|
|
(2,285)
|
-
|
-
|
|
Finance lease payments
|
|
(137)
|
(90)
|
(297)
|
|
Dividends paid to equity holders
|
9
|
(20,531)
|
(20,531)
|
(35,870)
|
|
Net cash flow
generated from/(used in) financing activities
|
|
20,760
|
(26,106)
|
(49,797)
|
|
Net (decrease)/
increase in cash and cash equivalents for the period
|
|
(1,014)
|
694
|
115
|
|
Cash and cash
equivalents at start of period
|
|
30,274
|
30,159
|
30,159
|
|
Cash and cash
equivalents at end of period
|
|
29,260
|
30,853
|
30,274
|
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
|
|
|
|
Capital
|
|
|
|
|
|
Share
|
Share
|
reduction
|
Other
|
Retained
|
|
|
Six months ended 30
September
|
capital
|
premium
|
reserve
|
reserves
|
earnings
|
Total
|
|
2024
(unaudited)
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
1 April
2024
|
4,720
|
438,418
|
228,760
|
-
|
86,747
|
758,645
|
|
Profit for the period
|
-
|
-
|
-
|
-
|
10,248
|
10,248
|
|
Total comprehensive
income
|
-
|
-
|
-
|
-
|
10,248
|
10,248
|
|
Transactions with
shareholders in their capacity as owners
|
|
|
|
|
|
|
|
Dividends to shareholders
|
-
|
-
|
-
|
-
|
(20,531)
|
(20,531)
|
|
30 September
2024
|
4,720
|
438,418
|
228,760
|
-
|
76,464
|
748,362
|
|
Six months ended 30 September 2023 (unaudited)
|
|
|
|
|
|
|
|
1 April 2023
|
4,720
|
438,418
|
228,760
|
120
|
97,742
|
769,760
|
|
Profit for the period
|
-
|
-
|
-
|
-
|
16,871
|
16,871
|
|
Total comprehensive income
|
-
|
-
|
-
|
-
|
16,871
|
16,871
|
|
Transactions with shareholders in their capacity as
owners
|
|
|
|
|
|
|
|
Dividends to shareholders
|
-
|
-
|
-
|
-
|
(20,531)
|
(20,531)
|
|
Long-term incentive plan
|
-
|
-
|
-
|
11
|
-
|
11
|
|
Transfer between reserves
|
-
|
-
|
-
|
(131)
|
131
|
-
|
|
30 September 2023
|
4,720
|
438,418
|
228,760
|
-
|
94,213
|
766,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 March 2024 (audited)
|
|
|
|
|
|
|
|
1 April 2023
|
4,720
|
438,418
|
228,760
|
120
|
97,742
|
769,760
|
|
Profit for the year
|
-
|
-
|
-
|
-
|
24,744
|
24,744
|
|
Total comprehensive income
|
-
|
-
|
-
|
-
|
24,744
|
24,744
|
|
Transactions with shareholders in their capacity as
owners
|
|
|
|
|
|
|
|
Dividends to shareholders
|
-
|
-
|
-
|
-
|
(35,870)
|
(35,870)
|
|
Long-term incentive plan
|
-
|
-
|
-
|
11
|
-
|
11
|
|
Transfer between reserves
|
-
|
-
|
-
|
(131)
|
131
|
-
|
|
31 March 2024
|
4,720
|
438,418
|
228,760
|
-
|
86,747
|
758,645
|
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. CORPORATE
INFORMATION
Urban Logistics REIT PLC (the "Company") and its
subsidiaries (the "Group") carry on the business of property
lettings throughout the United Kingdom. The Company is a public
limited company incorporated and domiciled in England and Wales and
listed on the Main Market of the London Stock Exchange. The
registered office address is Central Square, 29 Wellington Street,
Leeds, United Kingdom, LS1 4DL.
These condensed interim financial statements were
approved for issue on 6 November 2024.
These condensed interim financial statements do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. Statutory accounts for the year ended 31
March 2024 were approved by the board of directors on 19 June 2024
and delivered to the Registrar of Companies. The report of the
auditors on those accounts were unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006. The interim financial
statements for the period to 30 September 2024 have been reviewed,
not audited.
2. BASIS OF
PREPARATION
This condensed interim financial report for the
half-year ended 30 September 2024 has been prepared in accordance
with the UK-adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim report does not include all of the notes
of the type normally included in an annual financial report.
Accordingly, this report is to be read in conjunction with the
annual report for the year ended 31 March 2024, which has been
prepared in accordance with UK-adopted International Accounting
Standards and the requirements of the Companies Act 2006.
The accounting policies adopted are consistent with
those of the previous financial year and corresponding interim
reporting period, except for the adoption of new and amended
standards as set out below.
The Group's financial information has been prepared
on a historical cost basis, except for investment property and
derivative interest rate swaps which have been measured
at fair value.
The functional currency of the Group is considered to
be pounds sterling as this is the currency of the primary
environment in which the Group operates.
GOING
CONCERN
The Directors have reviewed the current and projected
financial position of the Group, making reasonable assumptions
about future trading performance. As part of the review, the Group
has considered its cash balances, its debt maturity profile,
including undrawn facilities, and the long-term nature of the
tenant leases.
The Group has undertaken risk assessments in respect
of the impact on key objectives and has appropriate response plans
such as stress testing, monitoring of tenant performance and
financial reviews. On the basis of this review, and after making
due enquiries, the Directors have a reasonable expectation
that the Company and the Group have adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the Interim Financial Statements.
3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS
The preparation of the Interim Financial Statements
in conformity with the generally accepted accounting practices
requires management to make estimates and judgements that affect
the reported amounts of assets and liabilities as well as the
disclosure of contingent assets and liabilities at the Statement of
Financial Position date and the reported amounts of revenue and
expenses during the reporting period.
FAIR
VALUE OF INVESTMENT PROPERTY AND PROPERTIES UNDER
CONSTRUCTION
The Group values its investment properties using a
yield capitalisation methodology. Principal assumptions and
management's underlying estimation of the fair value of those
relate to: capitalised occupancy levels; expected future growth in
rental income and operating costs; maintenance requirements;
capitalisation rate; and discount rates. There are
inter-relationships between the valuation inputs and they are
primarily determined by market conditions. The effect of an
increase in more than one input could be to magnify the impact on
the valuation. However, the impact on the valuation could be offset
by the inter-relationship of two inputs moving in opposite
directions, e.g. an increase in rent may be offset by a decrease in
occupancy, resulting in a minimal net impact on the valuation. A
more detailed explanation of the background, methodology and
judgements made by management that are adopted in the valuation of
the investment properties is set out in note 10 to the interim
Financial Statements.
The market value of an investment property is
determined by real estate valuation experts, to be the estimated
amount for which a property should exchange on the date of the
valuation in an arm's-length transaction. Each property has been
valued on an individual basis. The valuation experts use recognised
valuation techniques and the principles of IFRS 13.
The valuations have been prepared in accordance with
RICS Valuation - Global Standards January 2022 (the "Red Book").
Factors reflected include current market conditions, annual
rentals, lease lengths and location. The significant methods and
assumptions used by the valuers in estimating the fair value of
investment property, including sensitivities, are set out
in note 10.
4. PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies applied in the
preparation of these Financial Statements are consistent with
those applied within the Company's Annual Report and Financial
Statements for the year ended 31 March 2024.
BASIS OF
CONSOLIDATION
The Financial Statements consolidate the accounts of
the Company and all subsidiary undertakings drawn up to the same
year end.
INVESTMENT IN SUBSIDIARIES
Investments in subsidiaries are stated at cost less
any provision for permanent diminution in value. Realised
gains and losses are dealt with through the Statement of
Comprehensive Income. A review for impairment is carried out if
events or changes in circumstances indicate that the carrying
amount may not be recoverable, in which case an impairment
provision is recognised and charged to the Statement of
Comprehensive Income.
BORROWINGS
Borrowings are initially recognised at fair value,
net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds
(net of transaction costs) and the redemption amount is recognised
in profit and loss over the borrowings period using the effective
interest method.
Amendments to existing debt facilities will be
treated as a modification of existing debt or, where the changes in
debt terms are considered substantial, as an extinguishment of the
existing debt and issuance of new debt, in accordance with IFRS
9.
BORROWING
COSTS
Borrowing costs in relation to interest charges on
bank borrowings are expensed in the period to which they
relate. Fees incurred in relation to the arrangement of
bank borrowings are capitalised and expensed on a
straight-line basis over the term of the loan.
On extinguishment, any remaining arrangement fees
will be released to the statement of comprehensive income and
recognised as a loss on extinguishment of debt.
SEGMENTAL
REPORTING
IFRS 8 requires operating segments to be identified
on the basis of internal reports that are regularly reported to the
Board to allocate resources to the segments and to assess their
performance. The Directors consider there to be only one reportable
segment, being the investment in the United Kingdom into small
logistics warehouses.
INVESTMENT PROPERTIES
Investment properties comprises completed property
that is held to earn rentals or for capital appreciation, or both,
and development properties that are under development or available
for development.
Investment properties are initially recognised at
cost including transaction costs. Transaction costs include
transfer taxes and professional fees for legal services. Subsequent
to initial recognition, investment properties are carried at fair
value, as determined by real estate valuation experts. Gains or
losses arising from changes in fair value are recognised in the
Statement of Comprehensive Income in the period in which they
arise.
In accordance with IAS 40, investment property held
as a leasehold is stated gross of the recognised lease liability.
Leasehold properties are classified as investment properties and
included in the balance sheet at fair value. The obligation to the
lessor for the leasehold is included in the balance sheet at the
present value of minimum lease payments.
Investment properties cease to be recognised when
they have been disposed of. The difference between the disposal
proceeds and the carrying amount of the asset is recognised in the
Statement of Comprehensive Income. A disposal is recognised on
exchange if the sale contract is unconditional; if the sale
contract on exchange is conditional, the disposal is recognised on
legal completion. An investment property will be classified as held
for sale, in line with IFRS 5: Non-Current Assets Held for Sale and
Discontinued Operations, if its carrying value is expected to be
recovered through a sale transaction rather than through continuing
use.
An investment property will be classified in this way
when a sale is highly probable, management are committed to selling
the asset at the year-end date, the asset is available for
immediate sale in its current condition and the asset is expected
to be disposed of within twelve months after the date of the
Consolidated Statement of Financial Position.
FINANCIAL
INSTRUMENTS
Financial assets and financial liabilities are
recognised in the Statement of Financial Position when the
Group becomes a party to the contractual provisions of the
instrument.
FINANCIAL
ASSETS
Trade receivables are held in order to collect the
contractual cash flows and are initially measured at the
transaction price as defined in IFRS 15, as the contracts of the
Group do not contain significant financing components. Impairment
losses are recognised based on lifetime expected credit losses in
profit or loss.
Other receivables are held in order to collect the
contractual cash flows and accordingly are measured at initial
recognition at fair value, which ordinarily equates to cost, and
are subsequently measured at cost less impairment due to their
short-term nature.
FINANCIAL
LIABILITIES
Financial liabilities and equity instruments issued
by the Group are classified in accordance with the substance of the
contractual arrangements entered into and the definitions of a
financial liability and an equity instrument. An equity instrument
is any contract that evidences a residual interest in the assets of
the Group after deducting all of its liabilities. Equity
instruments issued by the Group are recorded at the proceeds
received, net of direct issue costs.
Trade and other payables are initially measured at
fair value and are subsequently measured at amortised cost
using the effective interest rate method.
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments, comprising of
interest rate swaps for hedging purposes, are initially recognised
at cost and are subsequently measured at fair value, being the
estimated amount that the Group would receive or pay to terminate
the agreement at the period end date, taking into account current
interest rate expectations and the current credit rating of the
Group and its counterparties.
The gain or loss at each fair value measurement date
is recognised in the Statement of Comprehensive Income. Premiums
payable under such arrangements are initially capitalised into the
Statement of Financial Position, subsequently they are remeasured
and held at their fair values.
Hedge accounting has not been applied in these
Interim Financial Statements.
LONG TERM
RENT DEPOSITS
Long-term rent deposits are held by the Group in
separate designated bank accounts where the use of the monies is
restricted and defined in the lease agreements, however the access
to these monies by the Group is not restricted. Rent deposits are
typically held for the term of the lease, and recognised as a
separate liability on the Statement of Financial Position. The rent
deposit is classified as non-current until there is less than
twelve months remaining on the lease, when the balance is then
recognised as a current liability.
REVENUE
RECOGNITION
Rental income and service charge income from
operating leases on properties owned by the Group is accounted for
on a straight-line basis over the term on the lease. Rental income
excludes service charges and other costs directly recoverable from
tenants.
Lease incentives are amortised on a straight-line
basis over the term of the lease.
EXCEPTIONAL ITEMS
The Group defines exceptional items to be those that
warrant, by virtue of their nature, size or frequency, separate
disclosure on the face of the income statement where, in the
opinion of the Directors, this enhances the understanding of the
Group's financial performance.
LEASES
At inception, the Group assesses whether a contract
is or contains a lease. This assessment involves the exercise of
judgement about whether the Group obtains substantially all the
economic benefits from the use of that asset, and whether the Group
has the right to direct the use of the asset.
The Group recognises a right-of-use ("ROU") asset and
a corresponding lease liability at the commencement date of the
lease. The ROU asset is initially measured based on the present
value of lease payments, plus initial direct costs and the cost of
obligations to refurbish the asset, less any incentives
received.
Lease payments include fixed payments. When the lease
contains an extension or purchase option that the Group considers
reasonably certain to be exercised, the cost of the option is
included in the lease payments.
Each lease payment is allocated between the liability
and finance cost. The lease payments are discounted using the
interest rate implicit in the lease if that rate can be readily
determined or, if not, the incremental borrowing rate is used which
is the weighted average cost of debt. The finance cost is charged
to profit or loss over the lease period so as to produce a constant
rate of interest on the remaining balance of the liability for each
period.
As the head leases meet the definition of investment
property, it is initially recognised in accordance with IFRS 16,
and then subsequently accounted for as if it was an investment
property in accordance with the Group's accounting policy.
ROU assets are included in investment properties and
the lease liability included in the Statement of Financial
Position.
TAXATION
Taxation on the profit or loss for the period that is
not exempt under UK REIT regulations comprises current and deferred
tax. Current tax is expected tax payable on any non-REIT taxable
income for the period, using tax rates enacted or substantively
enacted at the period end date, and any adjustment to tax payable
in respect of previous years.
DIVIDENDS
Dividends on equity shares are recognised when they
become legally payable. In the case of interim dividends, this is
when paid. In the case of final dividends, this is
when approved by the shareholders at the Annual
General Meeting.
CASH AND
CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank and
short-term deposits with banks and other financial institutions,
with an initial maturity of three months or less.
STANDARDS
IN ISSUE BUT NOT YET EFFECTIVE
In the current year, the following amendments have
been adopted which were effective for the periods commencing on or
after 1 January 2023:
· Amendments to
IAS 1: Non-current liabilities with covenants, and classification
of liabilities as current or non-current,
· Amendments to
IFRS 16 Lease liability in a sale and leaseback;
· Amendments to
IAS 7 and IFRS 7: Supplier Finance Arrangements;
As a result to the adoption of the amendments to IAS
1, the Group changes its accounting policy for the classification
of borrowings:
'Borrowings are classified as current liabilities
unless at the end of the reporting period, the Group has a right to
defer settlement of the liability for at least 12 months after the
reporting period.' This new policy did not result in a change in
the classification of the Group's borrowings. The Group did not
make any retrospective adjustments as a result of adopting the
amendments to IAS 1.
STANDARDS
AND INTERPRETATIONS IN ISSUE BUT NOT YET EFFECTIVE
At the date of authorisation of these Financial
Statements there were standards and amendments which were in issue
but not yet effective and which have not been applied.
The principal ones were:
• Amendments to IAS 21: Accounting where there is a
lack of exchangeability (effective 1 January 2025); and
• IFRS 18: Presentation and Disclosure in Financial
Statements (effective 1 January 2027 - subject to endorsement by
the UKEB).
The Directors do not expect the adoption of these
standards and amendments to have a material impact on the Financial
Statements.
5. REVENUE
The Group is involved in UK property ownership and
letting and is considered to operate in a single geographical and
business segment. The total revenue of the Group for the period was
derived from its principal activity, being that of property
lettings. No single tenant accounted for more than 10% of the
Group's gross rental income in either period.
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Rental income
|
30,318
|
29,292
|
59,263
|
|
Service charge income
|
191
|
197
|
347
|
|
Licence fee
|
127
|
242
|
341
|
|
Total
revenue
|
30,636
|
29,731
|
59,951
|
6. CHANGES IN FAIR VALUE OF INVESTMENT
PROPERTY
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Revaluation (deficit)/surplus
|
(3,369)
|
886
|
(5,841)
|
|
Movement in expected profit share
|
-
|
54
|
31
|
|
Total changes in fair
value of investment property
|
(3,369)
|
940
|
(5,810)
|
7. FINANCE EXPENSE
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Interest paid on bank borrowings
|
8,945
|
8,624
|
17,153
|
|
Swap interest received
|
(1,218)
|
(1,568)
|
(2,616)
|
|
Loan arrangement fee amortisation
|
540
|
625
|
1,328
|
|
Interest on lease liabilities
|
155
|
159
|
274
|
|
Total
|
8,422
|
7,840
|
16,139
|
Loss on early
extinguishment of debt
The refinancing of the £151.0 million loan facility
has been treated as an extinguishment in accordance with IFRS 9.
Costs associated with the original facility were net against the
borrowings on the balance sheet and amortised over the life of the
original facility. The £978k 'Loss on early extinguishment of debt'
recognised in the statement of comprehensive income is made up of
the costs left to be released and the loss on disposal of the
interest rate SWAP that happened as part of the extinguishment.
8. EARNINGS PER SHARE
The calculation of the basic earnings per share
("EPS") was based on the profit attributable to Ordinary
Shareholders divided by the weighted average number of Ordinary
Shares outstanding during the period, in accordance with IAS
33.
|
|
Six months to
|
Six months to
|
Year ended
|
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Profit attributable
to Ordinary Shareholders
|
|
|
|
|
Total comprehensive income
|
10,248
|
16,871
|
24,744
|
|
Weighted average number of Ordinary Shares in
issue
|
471,975,411
|
471,975,411
|
471,975,411
|
|
Basic earnings per
share
|
2.17p
|
3.57p
|
5.24p
|
|
Number of diluted shares under option/warrant
|
-
|
-
|
-
|
|
Weighted average number of Ordinary Shares
|
|
|
|
|
for the purpose of dilutive earnings per share
|
471,975,411
|
471,975,411
|
471,975,411
|
|
Diluted earnings per
share
|
2.17p
|
3.57p
|
5.24p
|
|
Adjustments to
remove:
|
|
|
|
|
Changes in fair value of investment property
|
3,369
|
(940)
|
5,810
|
|
Changes in fair value of interest rate derivatives
|
2,102
|
68
|
865
|
|
Loss on extinguishment of debt
|
978
|
-
|
-
|
|
Loss/(profit) on disposal of investment property
|
166
|
(56)
|
(55)
|
|
EPRA earnings
|
16,863
|
15,943
|
31,364
|
|
EPRA earnings per
share
|
3.57p
|
3.38p
|
6.65p
|
|
Adjustments to add
back:
|
|
|
|
|
LTIP charge
|
-
|
11
|
11
|
|
Exceptional items
|
-
|
391
|
1,125
|
|
Adjusted earnings
|
16,863
|
16,345
|
32,500
|
|
Adjusted earnings per
share
|
3.57p
|
3.46p
|
6.89p
|
9. DIVIDENDS
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Ordinary dividends
paid
|
|
|
|
|
2023: Second interim dividend: 4.35p per share
|
-
|
20,531
|
20,531
|
|
2024: First interim dividend: 3.25p per share
|
-
|
-
|
15,339
|
|
2024: Second interim dividend: 4.35p per share
|
20,531
|
-
|
-
|
|
Total dividends paid
in the period
|
20,531
|
20,531
|
35,870
|
|
Total dividends paid
in the period
|
4.35p
|
4.35p
|
7.60p
|
10. INVESTMENT PROPERTIES
In accordance with IAS 40: Investment Property,
investment property is carried at its fair value as determined by
an external valuer. This valuation has been conducted by JLL and
has been prepared as at 30 September 2024, in accordance with
the RICS Valuation - Professional Standards UK January 2022 (the
"Red Book").
The valuations have been prepared in accordance with
those recommended by the International Valuation Standards
Committee and are consistent with the principles in IFRS.
|
|
|
|
|
|
|
|
|
Investment
|
Development
|
|
|
|
|
properties
|
properties
|
Total
|
|
|
|
£'000
|
£'000
|
£'000
|
|
At 1 April 2024
|
|
1,092,862
|
6,685
|
1,099,547
|
|
Property acquisitions
|
|
45,088
|
-
|
45,088
|
|
Capital expenditure
|
|
1,184
|
1
|
1,185
|
|
Property disposal
|
|
(3,770)
|
-
|
(3,770)
|
|
Movement in tenant lease incentives
|
|
1,352
|
-
|
1,352
|
|
Revaluation (deficit)/surplus
|
|
(3,578)
|
209
|
(3,369)
|
|
Investment property
valuation at 30 September 2024
|
1,133,138
|
6,895
|
1,140,033
|
|
Transfer of asset held for sale
|
|
(7,575)
|
-
|
(7,575)
|
|
Add: right-of-use asset
|
|
9,758
|
-
|
9,758
|
|
Carrying value at 30
September 2024
|
|
1,135,321
|
6,895
|
1,142,216
|
At 30 September 2024, the development properties
category represented land plots, there are no active
developments.
Assets
held for sale
|
|
|
30 September
|
30 September
|
31 March
|
|
|
|
2024
|
2023
|
2024
|
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
Assets held for sale
|
|
7,575
|
-
|
3,770
|
Assets held for sale represent one investment property
that was under offer at the period end. The asset has been
classified as held for sale due to meeting the criteria detailed in
the Group's accounting policy, which can be found under 'Investment
properties' within note 4. On 1 November 2024, the Company
unconditionally exchanged on the disposal of the asset. See note
17: Post balance sheet events.
Investment
property - level 3
The Group's investment property assets are classified
as level 3, as defined by IFRS 13, in the fair value hierarchy.
Level 3 inputs for the asset or liability that are derived from
formal valuation techniques include inputs for the asset or
liability that are not based on observable market data.
The valuation has been prepared on the basis of fair
value ("FV"), in accordance with IFRS 13, which is defined as:
"The price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date."
Fair value, for the purpose of financial reporting
under IFRS 13, is effectively the same as market value, which is
defined as:
"The estimated amount for which an asset or liability
should exchange on the valuation date between a willing buyer and a
willing seller in an arm's-length transaction, after proper
marketing and where the parties had acted knowledgeably, prudently
and without compulsion."
The table below analyses:
· the
fair value measurement at the end of the reporting year;
· a
description of the valuation techniques applied;
· the
inputs used in the fair value measurement, including the ranges of
rent charged to different units within the same building; and
· for
level 3 fair value measurements, quantitative information about
significant unobservable inputs used in the fair value
measurement.
Valuation
techniques
The yield capitalisation approach is used when valuing
the Group's commercial investment properties which uses market
rental values with a market capitalisation rate. The resulting
valuations are cross-checked against the net initial yields and the
fair market values based on recent market transactions.
For investment properties under development,
properties are valued using a residual values method approach. The
fair value is calculated by estimating the fair value of the
completed property using the yield capitalisation approach less
estimated costs to complete and a risk premium.
The tables below illustrate the impact of changes in
key unobservable inputs, in isolation, on the fair value of the
Group's portfolio:
|
30 September
2024:
|
|
ERV (pa)
|
|
Equivalent
yield
|
|
|
Fair Value
|
|
Min
|
Max
|
Average
|
|
Min
|
Max
|
Average
|
|
|
£'000
|
|
£
|
£
|
£
|
|
%
|
%
|
%
|
|
Completed investment
property
|
1,133,138
|
|
50,463
|
3,604,200
|
589,091
|
|
4.9%
|
9.7%
|
6.4%
|
|
Development property
|
6,895
|
|
n/a
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
|
Total
|
1,140,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ERV (pa)
|
|
Equivalent
yield
|
|
Asset size
|
Fair Value
|
|
Min
|
Max
|
Average
|
|
Min
|
Max
|
Average
|
|
(Sq
ft)
|
£'000
|
|
£
|
£
|
£
|
|
%
|
%
|
%
|
|
0 - 50,000
|
211,832
|
|
5.00
|
16.75
|
9.27
|
|
5.5%
|
9.7%
|
6.4%
|
|
50,001 - 100,000
|
308,095
|
|
4.00
|
25.00
|
8.70
|
|
4.9%
|
9.1%
|
6.2%
|
|
100,001 - 150,000
|
319,046
|
|
4.25
|
12.76
|
7.39
|
|
5.5%
|
9.7%
|
6.5%
|
|
150,001+
|
278,420
|
|
3.50
|
15.75
|
6.98
|
|
5.7%
|
7.6%
|
6.4%
|
|
Developments
|
6,895
|
|
n/a
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
|
Other
|
15,745
|
|
8.50
|
8.50
|
19.90
|
|
5.4%
|
6.0%
|
5.7%
|
|
Total
|
1,140,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ERV per sq
ft
|
|
Equivalent
yield
|
|
|
Fair Value
|
|
Min
|
Max
|
Average
|
|
Min
|
Max
|
Average
|
|
Region
|
£'000
|
|
£
|
£
|
£
|
|
%
|
%
|
%
|
|
Midlands
|
411,905
|
|
4.25
|
12.79
|
7.13
|
|
5.4%
|
8.3%
|
6.4%
|
|
South East
|
320,038
|
|
6.75
|
25.00
|
12.20
|
|
4.9%
|
8.0%
|
5.8%
|
|
South West
|
66,610
|
|
4.50
|
14.24
|
8.26
|
|
6.0%
|
8.2%
|
6.6%
|
|
North East
|
117,835
|
|
3.50
|
11.00
|
5.94
|
|
5.8%
|
7.4%
|
6.6%
|
|
North West
|
151,160
|
|
4.63
|
12.50
|
7.56
|
|
5.5%
|
8.5%
|
6.4%
|
|
Scotland
|
63,520
|
|
5.00
|
12.09
|
7.30
|
|
6.7%
|
9.7%
|
7.8%
|
|
Wales
|
2,070
|
|
8.25
|
8.25
|
8.25
|
|
6.7%
|
6.7%
|
6.7%
|
|
Developments
|
6,895
|
|
n/a
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
|
Total
|
1,140,033
|
|
|
|
|
|
|
|
|
Sensitivities
Significant increases/decreases in the ERV (per sq ft
per annum) and rental growth per annum in isolation would result in
a significantly higher/lower fair value measurement. Significant
increases/decreases in the long-term vacancy rate and discount rate
(and exit yield) in isolation would result in a significantly
higher/lower fair value measurement.
Generally, a change in the assumptions made for the
ERV (per sq ft per annum) is accompanied by:
· a
similar change in the rent growth per annum and discount rate (and
exit yield); and
· an
opposite change in the long-term vacancy rate.
|
|
|
Fair Value
at
|
|
|
Impact on
valuations
|
|
Impact on
valuations
|
|
Asset size
|
|
30 September
2024
|
ERV
|
|
+ 5% ERV
|
|
- 5% ERV
|
|
-25bps EY
|
|
+25bps EY
|
|
(Sq
ft)
|
|
£'000
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
0 - 50,000
|
|
211,832
|
14,882
|
|
10,592
|
|
(10,592)
|
|
8,360
|
|
(7,749)
|
|
50,001 - 100,000
|
|
308,095
|
21,242
|
|
15,405
|
|
(15,405)
|
|
12,400
|
|
(11,476)
|
|
100,001 - 150,000
|
|
319,046
|
23,233
|
|
15,952
|
|
(15,952)
|
|
12,131
|
|
(11,274)
|
|
150,001+
|
|
278,420
|
19,847
|
|
13,921
|
|
(13,921)
|
|
10,824
|
|
(10,043)
|
|
Developments
|
|
6,895
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
Other
|
|
15,745
|
913
|
|
787
|
|
(787)
|
|
760
|
|
(693)
|
|
Total
|
|
1,140,033
|
80,116
|
|
56,657
|
|
(56,657)
|
|
44,475
|
|
(41,235)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
at
|
|
|
Impact on
valuations
|
|
Impact on
valuations
|
|
|
|
30 September
2024
|
ERV
|
|
+ 5% ERV
|
|
- 5% ERV
|
|
-25bps EY
|
|
+25bps EY
|
|
Region
|
|
£'000
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
Midlands
|
|
411,905
|
29,630
|
|
20,595
|
|
(20,595)
|
|
15,863
|
|
(14,728)
|
|
South East
|
|
320,038
|
20,536
|
|
16,002
|
|
(16,002)
|
|
13,881
|
|
(12,773)
|
|
South West
|
|
66,610
|
4,832
|
|
3,331
|
|
(3,331)
|
|
2,543
|
|
(2,363)
|
|
North East
|
|
117,835
|
8,565
|
|
5,892
|
|
(5,892)
|
|
4,489
|
|
(4,171)
|
|
North West
|
|
151,160
|
10,754
|
|
7,558
|
|
(7,558)
|
|
5,888
|
|
(5,463)
|
|
Scotland
|
|
63,520
|
5,672
|
|
3,176
|
|
(3,176)
|
|
1,956
|
|
(1,842)
|
|
Wales
|
|
2,070
|
127
|
|
104
|
|
(104)
|
|
94
|
|
(86)
|
|
Developments
|
|
6,895
|
-
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
Total
|
|
1,140,033
|
80,116
|
|
56,657
|
|
(56,657)
|
|
44,715
|
|
(41,427)
|
|
31 March
2024:
|
|
|
ERV (pa)
|
|
Equivalent
yield
|
|
|
Fair Value
|
|
Min
|
Max
|
Average
|
|
Min
|
Max
|
Average
|
|
|
£'000
|
|
£
|
£
|
£
|
|
%
|
%
|
%
|
|
Completed investment
property
|
1,092,862
|
|
66,984
|
3,441,936
|
588,745
|
|
5.3%
|
12.5%
|
6.3%
|
|
Development property
|
6,685
|
|
30,000
|
30,000
|
30,000
|
|
4.0%
|
6.4%
|
5.2%
|
|
Total
|
1,099,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ERV (pa)
|
|
Equivalent
yield
|
|
Asset size
|
Fair Value
|
|
Min
|
Max
|
Average
|
|
Min
|
Max
|
Average
|
|
(Sq
ft)
|
£'000
|
|
£
|
£
|
£
|
|
%
|
%
|
%
|
|
0 - 50,000
|
214,380
|
|
4.99
|
15.32
|
8.64
|
|
5.5%
|
12.5%
|
6.0%
|
|
50,001 - 100,000
|
313,791
|
|
4.50
|
14.82
|
7.54
|
|
5.3%
|
9.2%
|
6.0%
|
|
100,001 - 150,000
|
277,095
|
|
0.88
|
10.92
|
5.93
|
|
5.5%
|
9.1%
|
6.5%
|
|
150,001+
|
252,126
|
|
3.38
|
23.27
|
8.18
|
|
5.5%
|
7.3%
|
6.0%
|
|
Developments
|
6,685
|
|
n/a
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
|
Other
|
35,470
|
|
7.61
|
15.92
|
10.08
|
|
5.5%
|
6.0%
|
5.7%
|
|
Total
|
1,099,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ERV per sq
ft
|
|
Equivalent
yield
|
|
|
Fair Value
|
|
Min
|
Max
|
Average
|
|
Min
|
Max
|
Average
|
|
Region
|
£'000
|
|
£
|
£
|
£
|
|
%
|
%
|
%
|
|
Midlands
|
400,015
|
|
5.25
|
23.27
|
8.08
|
|
5.5%
|
9.0%
|
6.1%
|
|
South East
|
319,086
|
|
6.00
|
15.34
|
10.51
|
|
5.3%
|
6.5%
|
5.6%
|
|
South West
|
66,445
|
|
4.50
|
15.92
|
7.39
|
|
5.5%
|
7.1%
|
6.1%
|
|
North East
|
114,323
|
|
0.88
|
11.00
|
3.98
|
|
5.5%
|
7.5%
|
6.3%
|
|
North West
|
127,930
|
|
4.99
|
11.83
|
7.31
|
|
5.5%
|
6.8%
|
6.1%
|
|
Scotland
|
63,208
|
|
5.25
|
11.51
|
6.86
|
|
6.5%
|
12.5%
|
7.8%
|
|
Wales
|
1,855
|
|
8.25
|
8.25
|
8.25
|
|
7.0%
|
7.0%
|
7.0%
|
|
Developments
|
6,685
|
|
n/a
|
n/a
|
n/a
|
|
4.0%
|
6.4%
|
5.2%
|
|
Total
|
1,099,547
|
|
|
|
|
|
|
|
|
Sensitivities
Significant increases/decreases in the ERV (per sq ft
per annum) and rental growth per annum in isolation would result in
a significantly higher/lower fair value measurement. Significant
increases/decreases in the long-term vacancy rate and discount rate
(and exit yield) in isolation would result in a significantly
higher/lower fair value measurement.
Generally, a change in the assumptions made for the
ERV (per sq ft per annum) is accompanied by:
· a
similar change in the rent growth per annum and discount rate (and
exit yield); and
· an
opposite change in the long-term vacancy rate.
|
|
|
Fair Value
at
|
|
|
Impact on
valuations
|
|
Impact on
valuations
|
|
Asset size
|
|
31 March
2024
|
ERV
|
|
+ 5% ERV
|
|
- 5% ERV
|
|
-25bps EY
|
|
+25bps EY
|
|
(Sq
ft)
|
|
£'000
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
0 - 50,000
|
|
214,380
|
13,847
|
|
10,719
|
|
(10,719)
|
|
9,235
|
|
(8,502)
|
|
50,001 - 100,000
|
|
313,791
|
20,359
|
|
15,690
|
|
(15,690)
|
|
13,455
|
|
(12,392)
|
|
100,001 - 150,000
|
|
277,095
|
19,920
|
|
13,855
|
|
(13,855)
|
|
10,678
|
|
(9,914)
|
|
150,001+
|
|
252,126
|
17,458
|
|
12,606
|
|
(12,606)
|
|
10,102
|
|
(9,353)
|
|
Developments
|
|
6,685
|
30
|
|
334
|
|
(334)
|
|
9,797
|
|
(2,492)
|
|
Other
|
|
35,470
|
3,157
|
|
1,774
|
|
(1,774)
|
|
1,096
|
|
(1,032)
|
|
Total
|
|
1,099,547
|
74,771
|
|
54,978
|
|
(54,978)
|
|
54,363
|
|
(43,685)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
at
|
|
|
Impact on
valuations
|
|
Impact on
valuations
|
|
|
|
31 March
2024
|
ERV
|
|
+ 5% ERV
|
|
- 5% ERV
|
|
-25bps EY
|
|
+25bps EY
|
|
Region
|
|
£'000
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
Midlands
|
|
400,015
|
27,793
|
|
20,001
|
|
(20,001)
|
|
15,971
|
|
(14,790)
|
|
South East
|
|
319,086
|
20,226
|
|
15,954
|
|
(15,954)
|
|
14,018
|
|
(12,886)
|
|
South West
|
|
66,445
|
4,438
|
|
3,322
|
|
(3,322)
|
|
2,764
|
|
(2,552)
|
|
North East
|
|
114,323
|
7,797
|
|
5,716
|
|
(5,716)
|
|
4,653
|
|
(4,303)
|
|
North West
|
|
127,930
|
8,738
|
|
6,397
|
|
(6,397)
|
|
5,199
|
|
(4,809)
|
|
Scotland
|
|
63,208
|
5,622
|
|
3,160
|
|
(3,160)
|
|
1,954
|
|
(1,840)
|
|
Wales
|
|
1,855
|
127
|
|
93
|
|
(93)
|
|
75
|
|
(70)
|
|
Developments
|
|
6,685
|
30
|
|
334
|
|
(334)
|
|
9,797
|
|
(2,492)
|
|
Total
|
|
1,099,547
|
74,771
|
|
54,977
|
|
(54,977)
|
|
54,431
|
|
(43,742)
|
11. BANK BORROWINGS AND RECONCILIATION OF
LIABILITIES TO CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings are initially recognised at fair value,
net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds
(net of transaction costs) and the redemption amount is recognised
in profit or loss over the period of the borrowings using the
effective interest method.
|
|
Bank
|
Lease
|
|
|
|
borrowings
|
Liability
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
|
Balance at 1 April 2024
|
353,714
|
10,043
|
363,757
|
|
Bank borrowings drawn in period
|
53,500
|
-
|
53,500
|
|
Rental payments
|
-
|
(137)
|
(137)
|
|
Non-cash movements:
|
|
|
|
|
Interest on lease liability
|
-
|
113
|
113
|
|
Total
|
407,214
|
10,019
|
417,233
|
|
Less: unamortised loan arrangement fees
|
(4,619)
|
-
|
(4,619)
|
|
|
402,595
|
10,019
|
412,614
|
On 7 August 2024, the Group completed the refinancing
of a £151.0 million loan facility. This resulted in the appointment
of ING Bank N.V. as a lender, alongside existing lenders Barclays
Bank plc and Santander Bank Plc. The new agreement provides a
£190.0 million loan facility over a three-year term, with the
option to extend for a further two years. Interest is charged at a
fixed margin of 1.75% plus SONIA. This facility includes, inter
alia, margin rate improvement available on achieving environmental
targets across the assets charged.
The bank borrowings from all facilities are secured
over the investment properties owned by the Group.
12. INTEREST RATE DERIVATIVES
The Group has used interest rate swaps to mitigate
exposure to interest rate risk. The total fair value of these
contracts is recorded in the Statement of Financial Position.
The interest rate derivatives are marked to market by the relevant
counterparty banks on a quarterly basis in accordance with IFRS 9.
Any movements in the fair value of the interest rate derivatives
are taken to finance expense in the Statement of Comprehensive
Income.
|
|
Six months to
|
Six months to
|
Year ended
|
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Interest rate swaps:
|
|
|
|
|
At beginning of period
|
2,169
|
3,034
|
3,034
|
|
Acquisition of interest rate derivative
|
2,285
|
-
|
-
|
|
Disposal of interest rate derivative
|
(561)
|
-
|
-
|
|
Reclassification of interest rate derivative
premium
|
598
|
-
|
-
|
|
Change in fair value in the period
|
(2,102)
|
(68)
|
(865)
|
|
Total
|
2,389
|
2,966
|
2,169
|
|
|
|
|
|
|
Current derivative interest rate swaps
|
1,827
|
2,090
|
733
|
|
Non-current derivative interest rate swaps
|
562
|
876
|
1,436
|
|
Total
|
2,389
|
2,966
|
2,169
|
13. FINANCIAL RISK MANAGEMENT
Financial
instruments - Group
The Group's financial instruments comprise financial
assets and liabilities that arise directly from its operations:
cash and cash equivalents, trade and other receivables, trade and
other payables, lease liabilities and accruals, interest rate
derivatives and bank borrowings. The main purpose of these
financial instruments is to provide finance for the acquisition and
development of the Group's investment property portfolio.
|
|
Book value
|
Fair value
|
Book value
|
Fair value
|
|
|
30 September
|
30 September
|
31 March
|
31 March
|
|
|
2024
|
2024
|
2024
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Financial
assets
|
|
|
|
|
|
Trade and other receivables
|
4,109
|
4,109
|
3,239
|
3,239
|
|
Cash and short-term deposits
|
29,260
|
29,260
|
30,274
|
30,274
|
|
Interest rate derivatives
|
2,389
|
2,389
|
2,169
|
2,169
|
|
Financial
liabilities
|
|
|
|
|
|
Trade and other payables
|
(8,497)
|
(8,497)
|
(9,180)
|
(9,180)
|
|
Bank loans
|
(407,214)
|
(382,718)
|
(353,714)
|
(339,123)
|
|
Lease liabilities
|
(10,030)
|
(10,030)
|
(10,043)
|
(10,043)
|
|
Rent deposits
|
(6,109)
|
(6,109)
|
(6,049)
|
(6,049)
|
The fair value of the non-current borrowings are based
on discounted cash flows using a current borrowing rate. They are
classified as level 3 fair values.
14.
SHARE CAPITAL
|
|
30 September
|
30 September
|
|
|
2024
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
|
|
Number
|
£'000
|
|
Issued and fully paid
up at 1p each
|
|
|
|
At beginning of period
|
471,975,411
|
4,720
|
|
At 30 September
2024
|
471,975,411
|
4,720
|
|
|
30 September
|
30 September
|
|
|
2023
|
2023
|
|
|
(unaudited)
|
(unaudited)
|
|
|
Number
|
£'000
|
|
Issued and fully paid
up at 1p each
|
|
|
|
At beginning of period
|
471,975,411
|
4,720
|
|
At 30 September
2023
|
471,975,411
|
4,720
|
|
|
31 March
|
31 March
|
|
|
2024
|
2024
|
|
|
(audited)
|
(audited)
|
|
|
Number
|
£'000
|
|
Issued and fully paid
up at 1p each
|
|
|
|
At beginning of period
|
471,975,411
|
4,720
|
|
At 31 March
2024
|
471,975,411
|
4,720
|
15. RELATED PARTY TRANSACTIONS
During the interim period, the amount paid for
services provided by Logistics Asset Management LLP (the current
Investment Adviser) or PCP2 Limited (the former AIFM) totalled
£3,197,454 (30 September 2023: £3,408,445).
M1 AGENCY
LLP
During the interim period, the Group incurred fees
totalling £380,469 (30 September 2023: £266,554) from M1 Agency
LLP, a partnership in which Richard Moffitt is a member. These fees
were incurred in relation to the acquisitions & lettings of
investment properties. £99,600 was due to M1 Agency LLP at 30
September 2024.
For the transactions listed above, Richard Moffitt's
benefit is derived from the profit allocation he receives from M1
Agency LLP as a member and not from the transaction.
The Board, with the assistance of the AIFM and the
Investment Adviser (excluding Richard Moffitt), reviews the fee
payable to M1 Agency LLP, and ensures the fees are in line
with market rates and on standard commercial property terms.
16. NET ASSET VALUE PER SHARE
Basic NAV per share is calculated by dividing net
assets in the Condensed Consolidated Statement of Financial
Position attributable to Ordinary Shareholders by the number of
Ordinary Shares at the end of the period.
Net assets have been calculated as follows:
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
Net assets per Condensed Consolidated Statement of
Financial Position (£'000)
|
748,362
|
766,111
|
758,645
|
|
Adjustments for:
|
|
|
|
|
Fair value of interest rate derivatives (£'000)
|
(2,389)
|
(2,966)
|
(2,169)
|
|
Intangible assets (£'000)
|
(16)
|
(26)
|
(21)
|
|
EPRA net tangible
assets (£'000)
|
745,957
|
763,119
|
756,455
|
|
Ordinary Shares in issue at period end (basic and
diluted)
|
471,975,411
|
471,975,411
|
471,975,411
|
|
IFRS NAV per share
(basic and diluted)
|
158.56p
|
162.32p
|
160.74p
|
|
EPRA NTA per
share
|
158.05p
|
161.69p
|
160.27p
|
17. POST
BALANCE SHEET EVENTS
On 16 October 2024, the Company acquired a 19,317 sq
ft property in Dunstable for consideration of £3.6 million, at a
7.11% NIY.
On 1 November 2024, the Company unconditionally
exchanged on the disposal of an asset in Peterborough for £7.7
million, representing an NIY of 4.85%.
On 6 November 2024, the Company declared an interim
dividend for the six months to 30 September 2024 of 3.25 pence per
Ordinary Share. The dividend will be paid as a property income
distribution on 13 December 2024 to shareholders on the register on
22 November 2024.
SUPPLEMENTARY INFORMATION
I. EPRA PERFORMANCE
MEASURES SUMMARY
|
|
Six months to
|
Six months to
|
Year ended
|
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
EPRA EPS (diluted)
|
3.57p
|
3.38p
|
6.65p
|
|
EPRA net tangible asset value
|
158.05p
|
161.69p
|
160.27p
|
|
EPRA net reinstatement value
|
174.24p
|
177.36p
|
175.89p
|
|
EPRA net disposal value
|
158.56p
|
162.32p
|
160.74p
|
|
EPRA net initial yield
|
5.1%
|
4.9%
|
5.0%
|
|
EPRA "topped up" net initial yield
|
5.2%
|
5.0%
|
5.1%
|
|
EPRA vacancy rate
|
8.1%
|
6.8%
|
5.8%
|
|
EPRA cost ratio (including vacant property costs)
|
18.8%
|
18.5%
|
18.9%
|
|
EPRA cost ratio (excluding vacant property costs)
|
14.9%
|
16.0%
|
16.2%
|
|
EPRA LTV
|
34.1%
|
30.3%
|
30.4%
|
II. INCOME
STATEMENT
|
|
Six months to
|
Six months to
|
Year ended
|
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Gross rental income
|
30,636
|
29,731
|
59,951
|
|
Property operating costs
|
(1,641)
|
(1,218)
|
(2,511)
|
|
Net rental
income
|
28,995
|
28,513
|
57,440
|
|
Administrative expenses
|
(4,312)
|
(4,487)
|
(9,191)
|
|
Other operating income
|
310
|
88
|
147
|
|
Long-term incentive plan charge
|
-
|
(11)
|
(11)
|
|
Operating profit
before interest and tax
|
24,993
|
24,103
|
48,385
|
|
Finance income
|
292
|
71
|
243
|
|
Finance expense
|
(8,422)
|
(7,840)
|
(16,139)
|
|
Exceptional items
|
-
|
(391)
|
(1,125)
|
|
Adjusted earnings
before tax
|
16,863
|
15,943
|
31,364
|
|
Tax on EPRA earnings
|
-
|
-
|
-
|
|
EPRA
earnings
|
16,863
|
15,943
|
31,364
|
|
Weighted average number of Ordinary Shares
|
471,975,411
|
471,975,411
|
471,975,411
|
|
EPRA earnings per
share
|
3.57p
|
3.38p
|
6.65p
|
III. BALANCE
SHEET
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Investment properties
|
1,142,216
|
1,113,149
|
1,105,587
|
|
Other net assets
|
8,741
|
1,932
|
2,044
|
|
Net borrowings
|
(402,595)
|
(348,970)
|
(348,986)
|
|
Total shareholders'
equity
|
748,362
|
766,111
|
758,645
|
|
Adjustments to calculate EPRA NTA:
|
|
|
|
|
Fair value of interest rate derivatives
|
(2,389)
|
(2,966)
|
(2,169)
|
|
Intangible assets
|
(16)
|
(26)
|
(21)
|
|
EPRA net tangible
assets
|
745,957
|
763,119
|
756,455
|
|
Ordinary Shares in issue at year end (basic and
diluted)
|
471,975,411
|
471,975,411
|
471,975,411
|
|
EPRA NTA per
share
|
158.05p
|
161.69p
|
160.27p
|
The Group considers EPRA NTA to be the most relevant
measure for its operating activities, it is therefore the Group's
primary measure of net asset value. A reconciliation of the three
net asset value measurements is provided in the table below.
|
|
EPRA NTA
|
EPRA NRV
|
EPRA NDV
|
|
30 September
2024
|
£'000
|
£'000
|
£'000
|
|
IFRS equity attributable to shareholders
|
748,362
|
748,362
|
748,362
|
|
Fair value of interest rate derivatives
|
(2,389)
|
(2,389)
|
-
|
|
Intangible assets
|
(16)
|
-
|
-
|
|
Real estate transfer tax
|
-
|
76,382
|
-
|
|
EPRA net asset
value
|
745,957
|
822,355
|
748,362
|
|
Diluted shares (number)
|
471,975,411
|
471,975,411
|
471,975,411
|
|
EPRA net asset value
per share
|
158.05p
|
174.24p
|
158.56p
|
|
|
|
|
|
|
|
EPRA NTA
|
EPRA NRV
|
EPRA NDV
|
|
30 September 2023
|
£'000
|
£'000
|
£'000
|
|
IFRS equity attributable to shareholders
|
766,111
|
766,111
|
766,111
|
|
Fair value of interest rate derivatives
|
(2,966)
|
(2,966)
|
-
|
|
Intangible assets
|
(26)
|
-
|
-
|
|
Real estate transfer tax
|
-
|
73,942
|
-
|
|
EPRA net asset
value
|
763,119
|
837,087
|
766,111
|
|
Diluted shares (number)
|
471,975,411
|
471,975,411
|
471,975,411
|
|
EPRA net asset value
per share
|
161.69p
|
177.36p
|
162.32p
|
|
|
|
|
|
|
|
EPRA NTA
|
EPRA NRV
|
EPRA NDV
|
|
31 March 2024
|
£'000
|
£'000
|
£'000
|
|
IFRS equity attributable to shareholders
|
758,645
|
758,645
|
758,645
|
|
Fair value of interest rate derivatives
|
(2,169)
|
(2,169)
|
-
|
|
Intangible assets
|
(21)
|
-
|
-
|
|
Real estate transfer tax
|
-
|
73,670
|
-
|
|
EPRA net asset
value
|
756,455
|
830,146
|
758,645
|
|
Diluted shares (number)
|
471,975,411
|
471,975,411
|
471,975,411
|
|
EPRA net asset value
per share
|
160.27p
|
175.89p
|
160.74p
|
IV. EPRA NET INITIAL
YIELD AND "TOPPED UP" NET INITIAL YIELD
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Total properties per
Financial Statements
|
1,142,216
|
1,113,149
|
1,105,587
|
|
Add assets held for sale
|
7,575
|
-
|
-
|
|
Less head lease right-of-use asset
|
(9,758)
|
(9,540)
|
(9,810)
|
|
Less development properties
|
(6,895)
|
(6,796)
|
(6,685)
|
|
Completed property
portfolio
|
1,133,138
|
1,096,813
|
1,089,092
|
|
Add notional purchasers' costs
|
75,920
|
73,486
|
72,969
|
|
Gross up completed
property portfolio valuation (A)
|
1,209,058
|
1,170,299
|
1,162,061
|
|
Annualised passing rent
|
62,996
|
58,767
|
60,574
|
|
Less irrecoverable property outgoings
|
(1,349)
|
(1,760)
|
(2,023)
|
|
Annualised net rents
(B)
|
61,647
|
57,007
|
58,551
|
|
Contractual rental increases for rent-free period
|
659
|
1,366
|
744
|
|
"Topped up"
annualised net rent (C)
|
62,306
|
58,372
|
59,295
|
|
EPRA net initial
yield (B/A)
|
5.1%
|
4.9%
|
5.0%
|
|
EPRA "topped up" net
initial yield (C/A)
|
5.2%
|
5.0%
|
5.1%
|
V. EPRA VACANCY
RATE
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Annualised potential rental value of vacant
properties
|
6,476
|
5,013
|
4,364
|
|
Annualised potential rental value for the completed
property portfolio
|
80,116
|
73,782
|
74,770
|
|
EPRA vacancy
rate
|
8.1%
|
6.8%
|
5.8%
|
VI. TOTAL COST
RATIO/EPRA COST RATIO
|
|
Six months to
|
Six months to
|
Year ended
|
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
Total cost ratio
|
£'000
|
£'000
|
£'000
|
|
Costs
|
|
|
|
|
Property operating expenses1
|
1,641
|
1,218
|
2,511
|
|
Administrative expenses
|
4,312
|
4,487
|
9,191
|
|
Less: service charge income
|
(191)
|
(197)
|
(347)
|
|
Less: ground rents
|
(51)
|
(50)
|
(104)
|
|
Total costs including
vacant property costs (A)
|
5,711
|
5,458
|
11,251
|
|
Group vacant property costs
|
(1,195)
|
(748)
|
(1,623)
|
|
Total costs excluding
vacant property costs (B)
|
4,516
|
4,710
|
9,628
|
|
Gross rental
income
|
|
|
|
|
Gross rental income
|
30,636
|
29,731
|
59,951
|
|
Less: ground rents paid
|
(51)
|
(50)
|
(104)
|
|
Less: service charge income
|
(191)
|
(197)
|
(347)
|
|
Total gross rental
income (C)
|
30,394
|
29,484
|
59,500
|
|
Total cost including
vacant property costs (A/C)
|
18.8%
|
18.5%
|
18.9%
|
|
Total cost excluding
vacant property costs (B/C)
|
14.9%
|
16.0%
|
16.2%
|
|
EPRA cost
ratio
|
|
|
|
|
Total costs
(A)
|
5,711
|
5,458
|
11,251
|
|
EPRA total costs
including vacant property costs (D)
|
5,711
|
5,458
|
11,251
|
|
Vacant property costs
|
(1,195)
|
(748)
|
(1,623)
|
|
EPRA total costs
excluding vacant property costs (E)
|
4,516
|
4,710
|
9,628
|
|
EPRA cost ratio
(including vacant property costs (D/C)
|
18.8%
|
18.5%
|
18.9%
|
|
EPRA cost ratio
(excluding vacant property costs (E/C)
|
14.9%
|
16.0%
|
16.2%
|
1. Property operating expenses
are cost of sales. These typically include utilities, business
rates, letting fees and other direct costs.
VII. EPRA
LTV
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Gross drawn debt
|
407,214
|
353,714
|
353,714
|
|
Net payables
|
13,733
|
14,663
|
13,713
|
|
Cash and cash equivalents
|
(29,260)
|
(30,853)
|
(30,274)
|
|
Net debt
(A)
|
391,687
|
337,524
|
337,153
|
|
Investment property (excluding ROU asset)
|
1,140,034
|
1,103,609
|
1,099,547
|
|
Head lease ROU asset
|
9,758
|
9,540
|
9,810
|
|
Intangible assets
|
16
|
26
|
21
|
|
Total property value
(B)
|
1,149,808
|
1,113,175
|
1,109,378
|
|
EPRA LTV
(A/B)
|
34.1%
|
30.3%
|
30.4%
|
VIII. EPRA capital
expenditure analysis
|
|
Six months to
|
Six months to
|
Year ended
|
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Acquisitions
|
45,088
|
-
|
-
|
|
Development
|
-
|
4,317
|
4,359
|
|
Capital expenditure
|
|
|
|
|
- no incremental
lettable space
|
1,185
|
5,080
|
6,871
|
|
Total
|
46,273
|
9,397
|
11,230
|
IX. EPRA
like-for-like net rental income
|
|
Six months to
|
Six months to
|
|
|
|
30 September
|
30 September
|
|
|
|
2024
|
2023
|
|
|
|
(unaudited)
|
(unaudited)
|
|
|
|
£'000
|
£'000
|
Change
|
|
Like-for-like net rental income
|
28,390
|
27,584
|
2.9%
|
|
Other
|
108
|
541
|
|
|
Like-for-like net
rental income (and other)
|
28,498
|
28,125
|
1.3%
|
|
Development lettings
|
289
|
83
|
|
|
Like-for-like net
rental income plus developments
|
28,787
|
28,208
|
2.0%
|
|
Properties acquired
|
202
|
-
|
|
|
Properties sold
|
6
|
305
|
|
|
Net rental
income
|
28,995
|
28,513
|
1.7%
|
X. Total accounting
return
|
|
30 September
|
30 September
|
31 March
|
|
|
2024
|
2023
|
2024
|
|
|
(unaudited)
|
(unaudited)
|
(audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Opening EPRA NTA
|
160.27p
|
162.44p
|
162.44p
|
|
Closing EPRA NTA
|
158.05p
|
161.69p
|
160.27p
|
|
Change in EPRA
NTA
|
(2.22)p
|
(0.75p)
|
(2.17)p
|
|
Dividends paid
|
4.35p
|
4.35p
|
7.60p
|
|
Total growth in EPRA
NTA plus dividends
|
2.13p
|
3.60p
|
5.43p
|
|
Total
return
|
1.3%
|
2.2%
|
3.3%
|
GLOSSARY OF TERMS
ENERGY PERFORMANCE
CERTIFICATE ("EPC")
A measure of the energy efficiency of a property on a
scale of A (most efficient) to G (least efficient) and is a legal
requirement for a building to be sold, let or constructed. Once
obtained, an EPC is valid for ten years.
EPRA COST
RATIO
Administrative and operative costs (including and
excluding costs of direct vacancy) divided by gross rental
income.
EPRA EARNINGS PER
SHARE ("EPS")
Earnings from continuing operational activities
divided by weighted average number of shares in issue during the
year.
EPRA LIKE-FOR-LIKE
RENTAL GROWTH
Compares the growth of the net rental income of the
portfolio that has been consistently in operation, and not under
development, during the two full preceding periods that are
described.
EPRA NET DISPOSAL
VALUE ("NDV")
Represents the shareholders' value under a disposal
scenario, where deferred tax, financial instruments and certain
other adjustments are calculated to the full extent of the
liability, net of any resulting tax.
EPRA NET INITIAL
YIELD
Annualised rental income based on the cash rent
passing at the balance sheet date, less non-recoverable
property operating expenses, divided by the market value of the
property. Increased with (estimated) purchasers' costs.
EPRA NET
REINSTATEMENT VALUE ("NRV")
Assumes that entities never sell assets and aims to
represent the value required to rebuild the entity.
EPRA NET TANGIBLE
ASSETS ("NTA")
Assumes that entities buy and sell assets, thereby
crystallising certain levels of unavoidable deferred tax.
EPRA "TOPPED-UP" NET
INITIAL YIELD
EPRA net initial yield adjusted for expiration of
rent-free periods or other unexpired lease incentives such as
discounted rent periods and step rents.
EPRA VACANCY
RATE
Estimate market rental value ("ERV") of vacant space
divided by ERV of the whole portfolio.
EUROPEAN PUBLIC REAL
ESTATE ASSOCIATION ("EPRA")
The European Public Real Estate Association ("EPRA")
is the industry body for European Real Estate Investment
Trusts ("REITs").
LOAN TO VALUE
("LTV")
The Group's net debt expressed as a percentage of the
investment portfolio.
NET INITIAL
YIELD
Annual rents on investment properties as a percentage
of the investment property portfolio valuation having added
notional purchasers' costs.
OCCUPANCY
RATE
The ERV of the let units as a percentage of the total
ERV of the investment property portfolio.
PROPERTY INCOME
DISTRIBUTION ("PID")
Dividends from the Group's tax-exempt property
business.
TOTAL ACCOUNTING
RETURN ("TAR")
Represents the movement in EPRA NTA per share plus
dividends paid during the period expressed as a percentage of EPRA
NTA per share at the beginning of the period.
TOTAL PROPERTY RETURN
("TPR")
Capital growth in the portfolio, plus net rental
income and gain or loss on property disposals expressed as a
percentage return on the period's opening value.
WEIGHTED AVERAGE
UNEXPIRED LEASE TERM ("WAULT")
The average lease term remaining to expiry across the
portfolio weighted by contracted rental income.
COMPANY INFORMATION
