To:
RNS
Date:
17 September 2019
From:
BMO Commercial Property Trust Limited (formerly F&C Commercial
Property Trust Limited)
LEI:
213800A2B1H4ULF3K397
(Classified Regulated Information,
under DTR 6 Annex 1 Section 1.2)
Interim Report for the Period ended
30 June 2019
Highlights
- Share price total return of -8.0 per cent for the six
months*
- -0.4 per cent net asset value total return*
- Maintained annualised dividend at 6.0
pence per share giving a yield of 5.4 per cent on the period
end share price*
* See Alternative Performance Measures
Chairman’s Statement
Performance for the period
The first six months of 2019 has seen continued uncertainty
surrounding commercial property markets in the UK, with the trading
environment for retailers and the potential impact of Brexit
causing particular concern. This has been challenging for the
listed real estate sector with many of the large cap companies
trading at significant discounts to their Net Asset Values
(‘NAV’s). Against this backdrop, the Company’s share price total
return to shareholders over the six-months to 30 June 2019 was -8.0 per cent. The share price
at the period-end was 111.8p, representing a discount of 18.0 per
cent to the NAV per share of 136.3p.
The NAV total return over the six months was -0.4 per cent. The
following table provides an analysis of the movement in the NAV per
share for the period:
|
Pence |
NAV per share as at 31 December
2018 |
139.8 |
Unrealised decrease in valuation of
direct property portfolio |
(2.9) |
Other net revenue |
2.4 |
Dividends paid |
(3.0) |
NAV per share as at 30 June
2019 |
136.3 |
The total return from the underlying portfolio was 0.5 per cent,
compared with a total return of 0.9 per cent from the MSCI
Quarterly Property Universe. The Income return from the portfolio
over the period was 2.1 per cent, offset by negative capital
returns of -1.7 per cent. Unsurprisingly the weakest sector in the
MSCI Quarterly Universe was retail with the strongest returns again
coming from industrials, driven by rental growth and further modest
yield compression.
One of our priorities has been the selective disposal of assets
which were felt to have limited future growth prospects and we were
delighted to complete the sales of Thames Valley Park 1, Thames
Valley Park 2 and Building A, Watchmoor Park, Camberley during the
period. We will look to recycle some of this capital into a number
of the advanced asset management opportunities the Manager is
currently working on and where we expect the outcomes will deliver
sustainable, long-term income and support future fund
performance.
Another current priority is to replace the income lost or at
risk at both Newbury Retail Park in Newbury and Sears Retail Park in Solihull. We have already completed a large
letting to Lidl at Newbury for a
25-year lease with a break option at year 20. Beyond this, there
are significant ongoing negotiations at both Parks and we hope to
report on these at a later date.
St. Christopher’s Place continues to enjoy strong occupier
demand although this popular West End estate has not been immune to
the current challenges facing the retail sector and we expect
rental growth may be muted here in the short-term.
Borrowings
The Group’s available borrowings comprise a £260 million term
loan with Legal & General Pensions Limited, maturing on
31 December 2024 and a £50 million
term loan facility and an undrawn £50 million revolving credit
facility, both with Barclays and available until June 2021. The Group’s net gearing was 20.4 per
cent at the end of the period and the weighted average interest
rate on total current borrowings is 3.3 per cent.
Dividends and Dividend Cover
Monthly interim dividends of 0.5p per share continued during the
period, maintaining the annual dividend of 6.0p per share paid
since 2006 and providing a dividend yield of 5.4 per cent based on
the period-end share price. Barring unforeseen circumstances, your
Board intends that dividends will continue to be paid monthly at
the same rate.
The Company’s level of dividend cover for the period was 81.7
per cent, slightly higher than the equivalent period last year
(79.2 per cent). There has been a small fall in rental income
compared with the same period last year due to the sale of the
property at Thames Valley Park 2 and to the loss of income at
Solihull and Newbury. This was more than compensated for by
a fall in the level of taxation payable and a reduction in
expenses, where a one-off surrender premium was paid in 2018.
REIT Conversion
Shareholders voted in favour of the REIT proposals at an
extraordinary general meeting held on 30 May
2019 and the Group entered the UK REIT regime on
3 June 2019. The adoption of REIT
status by the Group will alter the shareholders’ tax positions in
respect of the receipt of distributions under the REIT regime, as
the majority of the distributions from the Company will be property
income distributions. The first distribution that the Company will
make under the REIT regime will relate to profits earned from
June 2019. The amount and payment
date of such property income distribution will be announced in
October 2019.
Board Composition
Having served nine years on the Board, Chris Russell stepped down as Chairman of the
Company and retired from the Board at the annual general meeting on
30 May 2019. I became Chairman from
that date and Paul Marcuse took on the role of Senior Independent
Director. Chris joined the Board in 2009 and became Chairman in
2011. He excelled in this role and I would like to thank him for
his significant contribution and leadership over the years.
Following the approval of the REIT conversion proposals,
Peter Cornell and David Preston, both Guernsey directors, also stood down from the
Board with effect from 30 May 2019.
I’d like to thank them too, at the same time welcoming Linda Wilding. Linda is UK based and joined the
Board on 3 June 2019.
Following these changes, the Board now consists of five
Directors, three male and two female, four of whom are based in the
UK and one in Guernsey.
Outlook
The property market continues to deliver positive total return,
but the pace has slowed and investment activity has weakened. The
market is likely to encounter continued headwinds related to Brexit
and its political and economic ramifications. Slower economic
growth and political uncertainties internationally are also
affecting sentiment. However, post Brexit, if there is some easing
in fiscal policy and interest rates are kept low, as the market
expects, then this should provide some support for property,
particularly from investors seeking a higher-yielding alternative
to gilts.
Total returns are expected to be low single-digit and will be
driven by income, with well-specified and well-let assets in
established locations likely to out-perform.
Notwithstanding the short-term pressures in the retail sector,
the Company has a well-positioned and resilient portfolio with
exciting opportunities across many sectors to add value and deliver
sustainable long-term rental income. Our efforts continue to be
focused on delivering these over the months ahead.
Martin Moore
Chairman
Performance Summary
|
Half year ended 30
June 2019 |
|
|
Total Returns for the period
* |
|
|
|
Net asset value per share |
(0.4)% |
|
|
Ordinary Share price |
(8.0)% |
|
|
Portfolio |
0.5% |
|
|
MSCI UK Quarterly Property
Universe |
0.9% |
|
|
FTSE All-Share Index |
13.0% |
|
|
|
|
|
|
|
Half year ended 30
June 2019 |
Year ended 31 December
2018 |
% change |
Capital Values |
|
|
|
Total assets less current
liabilities (£’000) |
1,400,346 |
1,427,310 |
(1.9) |
Net asset value per share |
136.3p |
139.8p |
(2.5) |
Ordinary Share price |
111.8p |
124.6p |
(10.3) |
FTSE All-Share Index |
4,056.88 |
3,675.06 |
10.4 |
Discount to net asset value per
share* |
(18.0)% |
(10.9)% |
|
Net Gearing * |
20.4% |
21.2% |
|
|
|
|
|
|
Half year ended 30
June 2019 |
Half year ended 30
June 2018 |
|
Earnings and Dividends |
|
|
|
Earnings per Ordinary Share |
(0.4)p |
5.0p |
|
Dividends per Ordinary Share |
3.0p |
3.0p |
|
Annualised dividend yield * |
5.4% |
4.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sources: BMO Investment Business, MSCI Inc and Refinitiv
Eikon
* See Alternative Performance Measures |
Managers’ Review
Property highlights over the
period
- Six-month total return of 0.5 per cent versus the MSCI UK
Quarterly Property Universe (‘MSCI’) return of 0.9 per cent.
- Completed the sales of Thames Valley Park 1 & 2 and
Watchmoor Park Building A, as part of the strategic office sales
programme.
- Signed new lease agreements to Lidl and Hobbycraft at Newbury
Retail Park and made good progress in attracting new retailers to
both Newbury and Solihull retail parks.
- Completed the lease to Shore Capital who took the 4th and 5th
floors at Cassini House, London
SW1.
Property Market Review
The market total return for the six months to 30 June 2019, as measured by the MSCI UK
Quarterly Property Universe (‘MSCI’) was 0.9 per cent. Returns,
although positive, are moderating, with capital values falling by
1.3 per cent and income returns of 2.2 per cent. Rental growth was
-0.2 per cent at the all-property level, although the fall was
largely attributable to problems in the retail market, where rents
fell by 1.9 per cent.
Performance was led by a 3.4 per cent total return for
industrials. Alternatives (such as hotels and student
accommodation) delivered 2.6 per cent, with offices returning 2.1
per cent and retail the weakest sector at -2.4 per cent.
Key Benchmark Metrics –
All Property |
|
Jan-June
2019
% |
Jan-June
2018
% |
Total Returns |
0.9 |
3.7 |
Income Return |
2.2 |
2.2 |
Capital Return |
(1.3) |
1.5 |
Open Market Rental Value Growth |
(0.2) |
0.5 |
Initial Yield |
4.6 |
4.5 |
Equivalent Yield |
5.5 |
5.5 |
Source: MSCI Inc
The UK economy saw modest growth over the period. Monetary
policy and interest rates were unchanged although gilt yields
continued to fall, finishing the period below 1.0 per cent.
Investor sentiment was affected by growing political uncertainty
involving the lack of agreement in Brexit negotiations, which looks
set to continue as we enter the autumn. The weakening in global
growth prospects and the advance of protectionism globally are also
areas of concern. This uncertainty has caused a sharp drop in
investment activity across all sectors. Net investment from
overseas buyers was still positive, demonstrating the continued
attraction of UK commercial real estate. Local authorities were
also net purchasers of property, whilst institutions were marginal
net sellers during the period, as were listed and unlisted property
companies.
CBRE market data showed yields moving higher across most parts
of the retail market, with office and industrial yields broadly
stable. There was some yield compression in the alternatives space,
notably for student accommodation, and for properties secured on
long leases with inflation linked uplifts, where investor appetite
remains strong. The all-property initial yield moved higher during
the period, leading to some widening in the yield gap between
property and ten-year gilts. Property, measured on this basis,
looks fairly priced in relation to the average margin over the
longer-term.
The occupational market has been less affected, but not immune,
to the political and economic climate. Offices saw 0.5 per cent
rental growth and industrials 1.4 per cent in the six-month period.
Occupier most affected appear to be large multi-national corporates
with pan-European presence who are generally waiting until after
Brexit before making any long-term strategic decisions.
The structural problems and challenges in the retail sector have
continued. Although central London
shops delivered a positive total return, performance has slipped
compared with the same period a year ago. Most other parts of the
retail market recorded a negative total return, with shopping
centres and retail warehousing being particularly weak. The central
London office market has remained
resilient despite Brexit uncertainty, with higher than average
occupancy rates and continued rental growth. Overall, property
performance was driven by the strength in the industrials market
with both distribution warehousing and standard industrials
outperforming the all-property average.
Valuation and Portfolio
Total Portfolio
Performance |
|
30 June
2019 |
Year ended
31 December
2018 |
No of properties |
36 |
38 |
Valuation (£’000) |
1,383,125 |
1,430,190 |
Average Lot Size (£’m) |
38.4 |
37.6 |
|
Six months to 30 June 2019 |
Portfolio
(%) |
MSCI
(%) |
Portfolio Capital Return* |
(1.7) |
(1.3) |
Portfolio Income Return* |
2.1 |
2.2 |
Portfolio Total Return* |
0.5 |
0.9 |
Source: BMO REP Asset Management plc, MSCI Inc
* See Alternative Performance Measures
The total return from the portfolio over the period was 0.5 per
cent compared with the MSCI return of 0.9 per cent. The Company’s
underperformance at portfolio level over the period has been driven
by valuation movements of the two large retail warehouse parks,
with the valuation of Newbury
falling by 10.2 per cent and Solihull falling by 2.2 per cent. Despite the
challenges faced in the sector the portfolio’s retail total return
outperformed MSCI which was helped by the fact that the Company
doesn’t hold any shopping centres which was the weakest performing
retail sub-sector.
The office portfolio also outperformed MSCI with a 2.3 per cent
total return versus 2.1 per cent, although industrials were lower
at 1.3 per cent versus 3.4 per cent, predominantly owing to a
relatively quiet period of asset management.
Geographical Analysis (% of total property portfolio) |
|
30 June 2019
(%) |
South East |
21.6 |
London – West End |
36.0 |
Eastern |
2.2 |
Midlands |
11.9 |
Scotland |
12.6 |
North West |
11.8 |
Rest of London |
1.5 |
South West |
2.4 |
Source: BMO REP Asset Management
plc
Sector
Analysis (% of total property portfolio) |
|
30 June 2019
(%) |
Offices |
39.5 |
Retail |
22.4 |
Retail Warehouses |
10.6 |
Industrial |
18.2 |
Alternative |
9.3 |
Source: BMO REP Asset Management
plc
Income Analysis
The portfolio continues to benefit from a resilient and secure
income stream. We have reduced the void rate to 5.0 per cent
(31 December 2018: 8.5 per cent)
through a combination of asset management initiatives, such as the
letting of two floors at Cassini House, London and the sale of non-core assets which
were largely vacant. Other opportunities are in hand to reduce the
void level further.
Lease
Expiry Profile |
At 30 June
2019 the weighted average lease length for the portfolio, assuming
all break options are exercised, was 6.8 years |
% of leases expiring
(weighted by rental value) |
30 June 2019
(%) |
31 December 2018
(%) |
0 – 5 years |
45.8 |
44.4 |
5 – 10 years |
33.5 |
30.2 |
10 – 15 years |
14.9 |
17.1 |
15 – 25 years |
5.8 |
8.3 |
Source: BMO REP Asset Management
plc
Covenant
Strength (% of income by risk bands) |
|
30 June 2019
(%) |
Unscored and
ineligible |
6.0 |
Maximum |
9.9 |
High |
1.7 |
Medium to High |
3.1 |
Low to Medium |
2.0 |
Low |
18.2 |
Negligible and
Government |
59.1 |
Source: IRIS Report, MSCI Inc
Retail
It has been a busy period for the Company with a number of
significant retail leases either completed or in negotiation. The
challenges faced by UK retailers have been well documented and the
Company experienced a concentrated period of defaults or Company
Voluntary Arrangements (CVAs) on its two large retail parks
(Newbury and Solihull) during the middle part of 2018.
Newbury
We have recently completed an important letting on the retail
park to Lidl, who signed an agreement for a 25-year lease with CPI
linked reviews (break at year 20) at a rent equating to £23.00 per
square foot to occupy the majority of the former Homebase unit.
Landlord works have commenced, and Lidl are expected to open for
trade in early 2020. This follows the letting to Hobbycraft at Unit
8A (£215,578 per annum for 10 years) replacing Poundworld, who went
into administration last year. We are also close to exchanging an
agreement with another large retailer to occupy part of the former
Mothercare store. These lettings demonstrate the resilience of the
park and its attractiveness to retailers and shoppers alike. There
remain two small units to let at the park and we hope to put these
under offer shortly.
Solihull
We are now under offer to a major UK retailer to occupy the
former Homebase store and hope to exchange a conditional agreement
for lease shortly. The store was vacated in February 2019 and will require significant
capital-investment in return for a long lease commitment. The new
store will be transformational for the park and, like Newbury, demonstrates that quality assets can
still attract desirable retailers for whom physical real estate
remains a key part of their long-term sales strategy.
St Christopher’s Place
We believe that the long-term future of physical retail lies in
experience led “destination” retailing, be that food and beverage
(F&B) or traditional retailing. This is core to the strategy
for St Christopher’s Place, which is the principal F&B
destination for the area around the Bond Street/Oxford Street
interchange.
Our asset management strategy for the mixed-use estate continues
to deliver income growth through refurbishment, selective
re-lettings, and the enhancement of the F&B offer on James
Street. The residential element of the estate remains well occupied
and progress has been made in letting recently refurbished office
space, most notably to Leica Camera Ltd at 6-8 James Street on a
10-year lease.
We have recently exchanged a lease to steak restaurant Flat Iron
at 42-44 James Street, starting at £240,000 per annum on a 15-year
lease. This follows the lettings to Harry’s Bar, Patty & Bun
and Bone Daddies which have proved popular since opening.
The estate remains a continuing source of asset management
opportunity to protect and enhance income.
There are five initiatives in progress or recently completed,
with a further six that could be pursued over the next 12-24
months; a number of these requiring planning permission and
redevelopment. We are carefully managing the timing of projects to
ensure they are delivered to market at the optimum time to capture
the most attractive lease terms possible. We are supportive of the
ongoing works being considered by the New West End Company to
enhance the pedestrian experience on and surrounding Oxford Street
and are optimistic about the benefits following the opening of the
Bond Street Elizabeth Line station (Crossrail), currently scheduled
for late 2020 / early 2021.
Office
There has been progress and success with the strategic sales
program to dispose of non-income producing assets with challenging
re-letting prospects. The largest of these, Thames Valley
Park One and Thames Valley Park Two, exchanged in December 2018 and completed in January 2019 at a combined sale price of £24.5
million. This sale alone removed 103,900 sq. ft. of vacant office
space from the portfolio, which would have required around £8
million of reinvestment to undertake refurbishment. We prefer to
focus capital expenditure on opportunities that provide greater
prospects of success for the Company. In April, Building A,
Watchmoor Park, Camberley, sold for a net price of £3.94 million
following the sale of Building B last year.
In March, two more floors at the recently refurbished Cassini
House, London SW1 were let. Shore
Capital took the 4th and 5th floors at a
headline rent of £105 per sq. ft. for 10 years (with a tenant break
option at the end of year 5). The letting was in line with the
valuers estimated rental value (ERV) and has had an accretive
impact on valuation. There is a strong level of occupier interest
in the remaining un-let floor and this will complete the leasing
program for the asset.
We have signed two new tenants at Building C, Watchmoor Park in
Camberley in advance of Novartis vacating the building in 2020. The
new rents achieved are at a headline of £22.50 per sq. ft.,
reflecting a significant uplift from the current passing rent of
£14.00 per sq. ft. At Edinburgh Park, Diageo have now taken
possession of their new Scottish headquarters at Ness & Nevis
House following a significant £6.5m refurbishment by the Company.
Diageo are currently fitting out their offices and aim to start
operating from the building in November
2019 on a 16-year lease (break at year 10) at a rent of
£21.00 per square foot. Over the summer, we have also let two
further floors at 7 Birchin Lane, EC3, where all office
accommodation is now fully occupied at the time of writing. The
5-yearly rent reviews of all properties at Prime Four in
Aberdeen have completed at 3 per
cent per annum compounded.
Industrial & logistics
The Company’s industrial portfolio is characterised by secure
single-let logistics assets. Owing to the stable nature of the
income, no major lease events occurred over the period.
Last year we acquired Hurricane 47, Estuary Business Park,
Liverpool (a 47,500 sq. ft.
logistics unit) for £3.995 million and are in advance discussions
with a number of potential occupiers at rents that exceed the
original underwrite. The purchase also included an adjoining
3.6-acre site for £1.080 million with the Company entering into an
agreement to fund a second warehouse for an additional sum of
£3.382 million. Works are likely to start on this in the second
half of 2019 with completion in 2020.
The industrial market continues to see solid rental growth for
existing quality assets and this was demonstrated by the recent
rent review to Syncreon at 6A Hams Hall, which we settled at £6.25
per sq. ft. reflecting a notable uplift from the previous passing
rent of £5.57 per sq. ft.
In July 2019, we successfully
completed the sale of phase 1 of the former Ozalid Works site in
Colchester to Persimmon Homes
which had been conditional upon them securing a revised planning
consent and agreeing the ‘Section 106’ obligations. The sale of
phase 2 will now complete in July
2020, exactly 12 months after the sale of phase 1, which is
an excellent result for the Company, allowing us to dispose of an
obsolete light-industrial park for above valuation. We can now
focus our resources on the neighbouring Cowdray Centre Trade Park,
where we have recently submitted a planning application to
construct a new terrace of trade units.
Alternative property sector
Following the re-classification of sector weightings at the end
of 2018 (as highlighted in the 2018 Annual Report) the Company’s
weighting to alternatives is c. 9 per cent. The Company’s exposure
relates to the purpose-built student accommodation block in
Winchester, the residential properties within St Christopher’s
Place, and the leisure units at Wimbledon Broadway, which comprise
an Odeon Cinema and Nuffield Health gym. The student accommodation
block continues to perform well, driven by the annual RPI-linked
rent reviews.
Outlook
Investment volumes have fallen by almost 50 per cent in the
first half of 2019 compared to the same period last year, following
the uncertainty that crept in at the end of 2018. The second half
of 2019 looks set to be dominated by the potential economic and
political ramifications surrounding Brexit as well as the
nervousness around retail assets. Retail values have fallen
steadily over the past three quarters, and we expect this to
continue throughout 2019 and 2020 as rents are rebased, yields find
their new longer-term discounts and occupier woes continue for
many. The rise of the CVA has had a lasting effect on the risk
adjusted returns required from retail assets and unless the
Insolvency Act revises how CVA’s can be applied this is unlikely to
change. Therefore, the importance of quality core assets cannot be
underestimated.
Despite the drop off in activity, values in all sectors except
for retail have held up relatively well, particularly at the prime
end of the market. Yields for secondary and tertiary assets have
moved out marginally after the highly bullish market of early
2018.
There may be a ‘bounce’ in investment and letting activity
following Brexit, but values are likely to remain high compared to
long-term levels and we consider it unlikely for pricing to
increase significantly. Lending remains constrained the expected
pressure on commercial property yields from future increases in
interest rates is likely to curtail any medium-term capital
growth.
UK commercial real estate is expected to produce positive
returns, but the performance will remain muted in the short to
medium term compared to long-term values and retail will be a
notable drag. Despite this, UK commercial property will likely
continue to offer an attractive level of income and the
opportunities offered by demographic and technological change will
increase in significance as the economy adapts to the post-Brexit
world.
The Company continues to look at quality assets in the
industrial, alternative and regional office sectors and remains
focused on long-term value creation but will remain highly
selective until we see better value in the market. The current
uncertain economic and political climate serves to reinforce the
Manager’s strategy of investing resource and capital into the
existing assets; to protect, enhance and sustain income for the
longer term. We have enjoyed recent successes with many more
opportunities to pursue over the coming months.
Richard Kirby and Matthew Howard
Fund Managers
BMO REP Asset Management plc
Responsible Property Investment
Highlights for the period to 30 June
2019
The Company has continued to advance the implementation of its
Responsible Property Investment (‘RPI’) Strategy over the period
with material progress being made in a number of key areas.
- Achieved an overall score of 68 in the 2019 GRESB (Global Real
Estate Sustainability Benchmark) survey, the 21-point improvement
representing a 44.7% increase over the previous year’s count and
enabling the Company to obtain two green star status.
- Compared with the six-month period to 30
June 2018, the Company has realised:
- a 0.4% reduction in like-for-like energy consumption
- a 14.7% reduction in absolute energy consumption
- a 5.7% like-for-like reduction in carbon emissions
- a 20% absolute reduction in carbon emissions
- a 6kWhe/m2 reduction in energy intensity
- a 1% reduction in like-for-like water consumption
- an 11% reduction in absolute water consumption
- a 0.04m3/m2 reduction in water intensity
- Launched a major exercise to assess the exposure of the
portfolio to physical climate risks through scenario-based
analysis.
- The Company attained an A rating in the GRESB Public Disclosure
assessment representing the highest level of transparency for
disclosure of ESG related information.
- Following submission to the minimum tier of the CDP climate
change module in 2018, the Company submitted to the full tier in
2019 and expects to receive a rating by the end of this calendar
year.
A considerable degree of reduction in absolute energy
consumption and associated carbon emissions has been realised
through the disposal of several property assets. In contrast, the
reduction in like-for-like energy consumption has been tempered by
increased demand driven by key property refurbishments undertaken
by the Company, as well as increased demands on landlord central
services from occupiers scaling up operations following occupation.
Against a 2016 baseline the reduction in like-for-like energy
intensity currently equates to 14%. The Company’s Property Manager
continues its efforts to identify and implement further energy
efficiency opportunities across its directly managed properties.
Water consumption reduction and the collection and finessing of
waste data remain on target.
The distribution of Energy Performance Certificate (EPC) ratings
remains broadly unchanged across the portfolio taking certificate
expiry and renewal into account. The number of ‘C’ rated demises
has fallen due to property sales. Using the desktop flood risk
assessments undertaken in 2018, the overall flood risk profile of
the portfolio has marginally improved on account of property
disposals.
The Company continues to monitor its tenant mix as part of its
commitment to minimising leasing exposure to organisations
connected to the production, storage, distribution or use of
Controversial Weapons*. At the period ending 30 June 2019 zero per cent of rental income was
attributable to organisations that appear on the exclusion lists
managed by BMO Global Asset Management.
* Including cluster munitions, anti-personnel mines and
biochemical weapons as covered by the 1972 Biological and Toxic
Weapons Convention, the 1997 Chemical Weapons Convention, the 1999
Anti-Personnel Mine Ban Convention, and the 2008 Convention on
Cluster Munitions
BMO Commercial
Property Trust Limited
Condensed
Consolidated Statement of Comprehensive Income (unaudited)
for the six months to 30 June
2019
Notes |
Six months |
Six months |
Year to |
|
|
to 30 June |
to 30 June |
31
December |
|
|
2019 |
2018 |
2018* |
|
|
£‘000 |
£‘000 |
£‘000 |
Revenue |
|
|
|
|
Rental income |
|
31,938 |
32,638 |
64,903 |
Other income |
|
- |
- |
1,483 |
Total revenue |
|
31,938 |
32,638 |
66,386 |
|
|
|
|
|
Gains / (losses) on investments
properties |
|
|
|
|
Unrealised (losses)/gains on
revaluation of investment properties |
5 |
(22,593) |
20,971 |
(6,171) |
(Loss)/gain on sale of investment
properties realised |
5 |
(316) |
- |
2,613 |
Total
income |
|
9,029 |
53,609 |
62,828 |
|
|
|
|
|
Expenditure |
|
|
|
|
Investment management fee |
|
(3,716) |
(3,876) |
(7,823) |
Other expenses |
3 |
(3,214) |
(3,461) |
(6,191) |
Total expenditure |
|
(6,930) |
(7,337) |
(14,014) |
|
|
|
|
|
Operating profit before finance
costs and taxation |
|
2,099 |
46,272 |
48,814 |
|
|
|
|
|
Net finance costs |
|
|
|
|
Interest receivable |
|
1 |
6 |
6 |
Finance costs |
|
(5,445) |
(5,450) |
(10,912) |
|
|
(5,444) |
(5,444) |
(10,906) |
|
|
|
|
|
(Loss) / profit
before taxation |
|
(3,345) |
40,828 |
37,908 |
Taxation |
|
17 |
(871) |
(1,510) |
(Loss) / profit for the
period |
|
(3,328) |
39,957 |
36,398 |
|
|
|
|
|
Other comprehensive
income |
|
|
|
|
Items that are or
may be reclassified subsequently to profit
or loss |
|
|
|
|
Movement in fair value of effective
interest rate swap |
|
(350) |
315 |
362 |
Total comprehensive
income for the period |
|
(3,678) |
40,272 |
36,760 |
|
|
|
|
|
Basic and diluted earnings per
share |
4 |
(0.4)p |
5.0p |
4.6p |
All of the profit and total comprehensive income for the period
is attributable to the owners of the Group.
All items in the above statement derive from continuing
operations.
* These figures are audited.
BMO Commercial
Property Trust Limited
Condensed
Consolidated Balance Sheet (unaudited)
as at 30 June 2019
|
Notes |
30 June
2019
£’000 |
30 June
2018
£’000 |
31 Dec
2018*
£’000 |
Non-current assets |
|
|
|
|
Investment properties |
5 |
1,361,685 |
1,429,277 |
1,384,856 |
Trade and other receivables |
|
20,204 |
19,394 |
19,344 |
Interest rate swap |
|
- |
55 |
102 |
|
|
1,381,889 |
1,448,726 |
1,404,302 |
|
|
|
|
|
Current assets |
|
|
|
|
Investment properties held for
sale |
|
- |
- |
23,562 |
Trade and other receivables |
|
5,979 |
5,067 |
6,630 |
Cash and cash equivalents |
|
29,954 |
19,933 |
10,127 |
|
|
35,933 |
25,000 |
40,319 |
|
|
|
|
|
Total assets |
|
1,417,822 |
1,473,726 |
1,444,621 |
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
(17,389) |
(17,608) |
(16,282) |
Taxation payable |
|
(87) |
(1,384) |
(1,029) |
|
|
(17,476) |
(18,992) |
(17,311) |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Trade and other payables |
|
(2,118) |
(1,947) |
(1,847) |
Interest-bearing loans |
|
(308,191) |
(307,846) |
(308,015) |
Interest rate swap |
|
(248) |
- |
- |
|
|
(310,557) |
(309,793) |
(309,862) |
|
|
|
|
|
Total liabilities |
|
(328,033) |
(328,785) |
(327,173) |
|
|
|
|
|
Net assets |
|
1,089,789 |
1,144,941 |
1,117,448 |
|
|
|
|
|
|
|
|
|
|
Represented by: |
|
|
|
|
Share capital |
6 |
7,994 |
7,994 |
7,994 |
Special reserves |
|
589,593 |
589,593 |
589,593 |
Capital reserves |
|
389,036 |
436,474 |
411,945 |
Hedging reserve |
|
(248) |
55 |
102 |
Revenue reserve |
|
103,414 |
110,825 |
107,814 |
|
|
|
|
|
Equity shareholders’
funds |
|
1,089,789 |
1,144,941 |
1,117,448 |
|
|
|
|
|
|
|
|
|
|
Net asset value per
share |
7 |
136.3p |
143.2p |
139.8p |
* These figures are audited.
BMO Commercial
Property Trust Limited
Condensed
Consolidated Statement of Changes in Equity (unaudited)
for the six months to 30 June
2019
|
|
Share
Capital
£’000 |
Special
Reserves
£’000 |
Capital
Reserves
£’000 |
Hedging Reserve
£’000 |
Revenue
Reserve
£’000 |
Total
£’000 |
|
Notes |
|
|
|
|
|
|
At 1 January 2019 |
|
7,994 |
589,593 |
411,945 |
102 |
107,814 |
1,117,448 |
Total comprehensive income for the period |
|
|
|
|
|
|
|
Loss for the
period |
|
- |
- |
- |
- |
(3,328) |
(3,328) |
Movement in fair value
of interest rate swap |
|
- |
- |
- |
(350) |
- |
(350) |
Transfer in respect
of unrealised losses on investment properties |
5 |
- |
- |
(22,593) |
- |
22,593 |
- |
Loss on sale of
investment properties realised |
5 |
- |
- |
(316) |
- |
316 |
- |
Total comprehensive
income for the period |
|
- |
- |
(22,909) |
(350) |
19,581 |
(3,678) |
Transactions with
owners of the Company recognised directly in equity |
|
|
|
|
|
|
|
Dividends paid |
2 |
- |
- |
- |
- |
(23,981) |
(23,981) |
|
|
|
|
|
|
|
|
At 30 June 2019 |
|
7,994 |
589,593 |
389,036 |
(248) |
103,414 |
1,089,789 |
BMO Commercial
Property Trust Limited
Condensed
Consolidated Statement of Changes in Equity (unaudited)
for the six months
to 30 June 2018
|
|
Share
Capital
£’000 |
Special
Reserves
£’000 |
Capital
Reserves
£’000 |
Hedging Reserve
£’000 |
Revenue
Reserve
£’000 |
Total
£’000 |
|
Notes |
|
|
|
|
|
|
At 1 January 2018 |
|
7,994 |
589,593 |
415,503 |
(260) |
115,820 |
1,128,650 |
Total comprehensive income for the period |
|
|
|
|
|
|
|
Profit for the
period |
|
- |
- |
- |
- |
39,957 |
39,957 |
Movement in fair value
of interest rate swap |
|
- |
- |
- |
315 |
- |
315 |
Transfer in respect
of unrealised gains on investment properties |
5 |
- |
- |
20,971 |
- |
(20,971) |
- |
Total comprehensive
income for the period |
|
- |
- |
20,971 |
315 |
18,986 |
40,272 |
Transactions with
owners of the Company recognised directly in equity |
|
|
|
|
|
|
|
Dividends paid |
2 |
- |
- |
- |
- |
(23,981) |
(23,981) |
|
|
|
|
|
|
|
|
At 30 June 2018 |
|
7,994 |
589,593 |
436,474 |
55 |
110,825 |
1,144,941 |
BMO Commercial
Property Trust Limited
Condensed
Consolidated Statement of Changes in Equity
for the year to 31 December 2018*
|
|
Share
Capital
£’000 |
Special
Reserves
£’000 |
Capital
Reserves
£’000 |
Hedging Reserve
£’000 |
Revenue
Reserve
£’000 |
Total
£’000 |
|
Notes |
|
|
|
|
|
|
At 1 January 2018 |
|
7,994 |
589,593 |
415,503 |
(260) |
115,820 |
1,128,650 |
Total comprehensive income for the year |
|
|
|
|
|
|
|
Profit for the
year |
|
- |
- |
- |
- |
36,398 |
36,398 |
Movement in fair value
of interest rate swaps |
|
- |
- |
- |
362 |
- |
362 |
Transfer in respect
of unrealised losses on investment properties |
5 |
- |
- |
(6,171) |
- |
6,171 |
- |
Gains on sale of
investment properties realised |
5 |
- |
- |
2,613 |
- |
(2,613) |
- |
Total comprehensive
income for the year |
|
- |
- |
(3,558) |
362 |
39,956 |
36,760 |
Transactions with
owners of the Company recognised directly in equity |
|
|
|
|
|
|
|
Dividends paid |
2 |
- |
- |
- |
- |
(47,962) |
(47,962) |
|
|
|
|
|
|
|
|
At 31 December 2018 |
|
7,994 |
589,593 |
411,945 |
102 |
107,814 |
1,117,448 |
* These figures are audited.
BMO Commercial
Property Trust Limited
Condensed
Consolidated Statement of Cash Flows (unaudited)
for the six months to 30 June
2019
Notes |
Six months
to 30 June 2019 |
Six months to 30
June 2018 |
Year to
31 December
2018* |
|
|
£’000 |
£’000 |
£’000 |
Cash flows from
operating activities |
|
|
|
|
(Loss)/profit for the
period before taxation |
|
(3,345) |
40,828 |
37,908 |
Adjustments for: |
|
|
|
|
Finance costs |
|
5,445 |
5,450 |
10,912 |
Interest receivable |
|
(1) |
(6) |
(6) |
Unrealised losses/(gains) on
revaluation of investment properties |
5 |
22,593 |
(20,971) |
6,171 |
Losses/(gains) on sale of
investment properties realised |
|
316 |
- |
(2,613) |
Increase in operating trade
and other receivables |
|
(260) |
(490) |
(2,054) |
Decrease/(increase) in
operating trade and other payables |
|
1,393 |
(872) |
(2,317) |
Cash generated from
operations |
|
26,141 |
23,939 |
48,001 |
|
|
|
|
|
Interest received |
|
1 |
6 |
6 |
Interest and bank fees paid |
|
(5,320) |
(5,303) |
(10,551) |
Taxation paid |
|
(918) |
(227) |
(1,220) |
|
|
(6,237) |
(5,524) |
(11,765) |
|
|
|
|
|
Net cash inflow from
operating activities |
|
19,904 |
18,415 |
36,236 |
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
Sale of investment
properties |
5 |
28,440 |
- |
5,100 |
Purchase of investment
properties |
5 |
- |
(5,777) |
(5,754) |
Capital expenditure of investment
properties |
5 |
(4,536) |
(3,880) |
(12,649) |
Net cash inflow/(outflow) from
investing activities |
|
23,904 |
(9,657) |
(13,303) |
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
Dividends paid |
2 |
(23,981) |
(23,981) |
(47,962) |
Net cash outflow
from financing activities |
|
(23,981) |
(23,981) |
(47,962) |
|
|
|
|
|
Net increase/(decrease) in cash
and cash equivalents |
|
19,827 |
(15,223) |
(25,029) |
Opening cash and cash
equivalents |
|
10,127 |
35,156 |
35,156 |
Closing cash and cash
equivalents |
|
29,954 |
19,933 |
10,127 |
* These figures are audited
BMO Commercial
Property Trust Limited
Notes to the
Consolidated Financial Statements
for the six months to 30 June
2019
1. General information
and basis of preparation
The condensed consolidated financial statements have been
prepared in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom Financial Conduct
Authority and IAS 34 ‘Interim Financial Reporting’. The condensed
consolidated financial statements do not include all of the
information required for a complete set of IFRS financial
statements and should be read in conjunction with the consolidated
financial statements of the Group for the year ended 31 December 2018, which were prepared under full
IFRS as adopted by the European Union requirements. The accounting
policies used in the preparation of the condensed consolidated
financial statements are consistent with those of the consolidated
financial statements of the Group for the year ended 31 December 2018. The Group’s entry to UK REIT
Regime was effective from 3 June
2019. The Group’s rental profits arising from both income
and capital gains are exempt from UK corporation tax from that
date, subject to the Group’s continuing compliance with the UK REIT
rules. These condensed interim financial statements have been
reviewed, not audited.
After making enquiries, and bearing in mind the nature of the
Company’s business and assets, the Directors consider that the
Company has adequate resources to continue in operational existence
for the next twelve months. In assessing the going concern basis of
accounting the Directors have had regard to the guidance issued by
the Financial Reporting Council. They have considered the current
cash position of the Group, forecast rental income and other
forecast cash flows. The Group has agreements relating to its
borrowing facilities with which it has complied during the period.
Based on the information the Directors believe that the Group has
the ability to meet its financial obligations as they fall due for
the foreseeable future, which is considered to be for a period of
at least twelve months from the date of approval of the accounts.
For this reason they continue to adopt the going concern basis in
preparing the accounts.
These condensed interim financial statements were approved for
issue on 16 September 2019.
2.
Dividends
|
|
Six months to 30
June 2019 |
Six months to 30
June 2018 |
Year to 31 December
2018 |
|
|
£’000 |
£’000 |
£’000 |
|
In respect of the previous
period: |
|
|
|
|
Ninth interim (0.5p per share) |
3,997 |
3,997 |
3,997 |
|
Tenth interim (0.5p per share) |
3,997 |
3,997 |
3,997 |
|
Eleventh interim (0.5p per
share) |
3,996 |
3,996 |
3,996 |
|
Twelfth interim (0.5p per
share) |
3,997 |
3,997 |
3,997 |
|
|
|
|
|
|
In respect of the
period
under review: |
|
|
|
|
First interim (0.5p per
share) |
3,997 |
3,997 |
3,997 |
|
Second interim (0.5p per share) |
3,997 |
3,997 |
3,997 |
|
Third interim (0.5p per
share) |
- |
- |
3,996 |
|
Fourth interim (0.5p per
share) |
- |
- |
3,997 |
|
Fifth interim (0.5p per
share) |
- |
- |
3,997 |
|
Sixth interim (0.5p per
share) |
- |
- |
3,997 |
|
Seventh interim (0.5p per
share) |
- |
- |
3,997 |
|
Eighth interim (0.5p per
share) |
- |
- |
3,997 |
|
|
23,981 |
23,981 |
47,962 |
A third interim dividend for the year to 31 December 2019, of 0.5
pence per share totalling £3,997,000 was paid on
31 July 2019. A fourth interim
dividend of 0.5 pence per share was
paid on 30 August 2019 to
shareholders on the register on 9 August
2019. A fifth interim dividend of 0.5
pence per share will be paid on 30
September 2019 to shareholders on the register on
13 September 2019. Although these
payments relate to the period ended 30 June
2019, under IFRS they will be accounted for in the period
during which they are declared.
Barring unforeseen circumstances, it is the Directors’ intention
that the Company will continue to pay dividends monthly.
3. Other
expenses
|
|
Six months to 30
June 2019 |
Six months to 30
June 2018 |
Year to 31
December
2018 |
|
|
£’000 |
£’000 |
£’000 |
|
Direct operating expenses of rental
property |
2,114 |
2,069 |
4,017 |
|
Surrender premium |
- |
613 |
613 |
|
Valuation and other professional
fees |
243 |
207 |
399 |
|
Professional fees for REIT
conversion |
314 |
- |
- |
|
Directors’ fees |
166 |
145 |
302 |
|
Administration fee |
76 |
74 |
151 |
|
Depositary fee |
80 |
86 |
172 |
|
Other |
221 |
267 |
537 |
|
|
3,214 |
3,461 |
6,191 |
The basis of payment for the Directors’ and investment
management fees are detailed within the consolidated financial
statements of the Group for the year ended 31 December 2018.
4. Earnings per
share
The Group’s basic and diluted earnings per Ordinary Share are
based on the loss for the period of £3,328,000 (period to
30 June 2018: profit £39,957,000;
31 December 2018: profit £36,398,000)
and on 799,366,108 (period to 30 June
2018: 799,366,108; 31 December
2018: 799,366,108) Ordinary Shares, being the weighted
average number of shares in issue during the period. Earnings for
the six months to 30 June 2019 should
not be taken as guide to the results for the year to 31 December 2019.
5. Investment
properties
|
Six months to 30
June 2019 |
Six months to 30
June 2018 |
Year to 31 December
2018 |
Non-current assets – Investment
properties |
£’000 |
£’000 |
£’000 |
Freehold and leasehold
properties |
|
|
|
Opening fair value |
1,384,856 |
1,398,894 |
1,398,894 |
Sales – proceeds |
(3,940) |
- |
(5,100) |
- loss
on sale |
(4,705) |
- |
(5,355) |
Capital expenditure |
4,616 |
3,880 |
12,649 |
Purchase of investment
properties |
- |
5,532 |
5,533 |
Unrealised losses realised during
the period |
3,451 |
- |
7,968 |
Unrealised gains on investment
properties |
7,254 |
31,353 |
37,468 |
Unrealised losses on investment
properties |
(29,847) |
(10,382) |
(43,639) |
Transfer to asset classified as held
for sale |
- |
- |
(23,562) |
Closing fair value |
1,361,685 |
1,429,277 |
1,384,856 |
Historic cost at the end of the
period |
947,145 |
999,866 |
951,155 |
|
|
|
|
Current assets – Investment
properties held for sale |
|
|
|
Freehold properties |
|
|
|
Opening fair value |
23,562 |
- |
- |
Sales – proceeds |
(24,500) |
- |
- |
- loss
on sale |
(22,507) |
- |
- |
Unrealised losses realised during
the period |
23,445 |
- |
- |
Closing fair value |
- |
- |
23,562 |
Historic cost at the end of the
period |
- |
- |
47,026 |
|
|
|
|
|
Six months to 30
June 2019 |
Six months to 30
June 2018 |
Year to 31 December
2018 |
|
£’000 |
£’000 |
£’000 |
Losses on sale |
(27,212) |
- |
(5,355) |
Unrealised losses realised during
the period |
26,896 |
- |
7,968 |
(Losses) / gains on sales of
investment properties realised |
(316) |
- |
2,613 |
The fair value of investment properties reconciled to the
appraised value as follows:
|
Six months to 30
June 2019 |
Six months to 30
June 2018 |
Year to 31 December
2018 |
|
£’000 |
£’000 |
£’000 |
Appraised value prepared by CBRE
excluding asset classified as held for sale |
1,383,125 |
1,450,035 |
1,405,790 |
Lease incentives held as
debtors |
(21,440) |
(20,758) |
(20,934) |
Closing fair value |
1,361,685 |
1,429,277 |
1,384,856 |
The assets classified as held for sale reconciled to the
appraised value as follows:
|
Six months to 30
June 2019 |
Six months to 30
June 2018 |
Year to 31 December
2018 |
|
£’000 |
£’000 |
£’000 |
Appraised value prepared by CBRE of
asset classified as held for sale |
- |
- |
24,400 |
Lease incentives held as
debtors |
- |
- |
(538) |
Selling costs of assets held for
sale |
- |
- |
(300) |
Closing fair value |
- |
- |
23,562 |
There were no properties held for sale at 30 June 2019 (2018: 2 properties).
All the Group’s investment properties were valued as at
30 June 2019 by RICS Registered
Valuers working for CBRE Limited (‘CBRE’), commercial real estate
advisors, acting in the capacity of a valuation adviser to the
AIFM. All such valuers are Chartered Surveyors, being members of
the Royal Institution of Chartered Surveyors (‘RICS’).
CBRE completed the valuation of the Group’s investment
properties at 30 June 2019 on a fair
value basis and in accordance with The RICS Valuation – Global
Standards 2017.
There were no significant changes to the valuation process,
assumptions and techniques used during the period, further details
on which were included in note 9 of the consolidated financial
statements of the Group for the year ended 31 December 2018.
As at 30 June 2019, all of the
Group’s properties are Level 3 in the fair value hierarchy as it
involves the use of significant unobservable inputs and there were
no transfers between levels during the period. Level 3 inputs used
in valuing the properties are those which are unobservable, as
opposed to Level 1 (inputs from quoted prices) and Level 2
(observable inputs either directly i.e. as priced, or indirectly,
i.e. derived from prices).
6. Share
capital
|
|
|
£’000 |
Allocated, called-up and fully
paid |
|
|
|
799,366,108 Ordinary Shares of 1p
each in issue at 30 June 2019 |
|
|
7,994 |
Under the Company’s Articles of Incorporation, the Company may
issue an unlimited number of Ordinary Shares. The Company issued
nil Ordinary Shares during the period (2018: nil) raising net
proceeds of £nil (2018: £nil).
The Company did not repurchase any Ordinary Shares during the
period.
7. Net asset value
per share
The Group’s net asset value per Ordinary Share of 136.3p
(30 June 2018: 143.2p; 31 December 2018: 139.8p) is based on equity
shareholders’ funds of £1,089,789,000 (30
June 2018: £1,144,941,000; 31
December 2018: £1,117,448,000) and on 799,366,108
(30 June 2018: 799,366,108;
31 December 2018: 799,366,108)
Ordinary Shares, being the number of shares in issue at the period
end.
8. Related party
transactions
The Directors of the Company received fees for their services
and dividends from their shareholdings in the Company. No fees
remained payable at the period end.
9. Capital
commitments
The Group had capital commitments totalling £2,400,000 as at
30 June 2019 (30 June 2018: £10,300,000; 31 December 2018: £3,600,000). These commitments
related mainly to contracted development works at the Group’s
properties at Cassini House, London SW1 and Nevis/Ness Houses, Edinburgh.
10. List of
Subsidiaries
The Group results consolidate the results of the following
companies:
-
FCPT Holdings Limited (the parent company of F&C Commercial
Property Holdings Limited and Winchester Burma Limited)
-
F&C Commercial Property Holdings Limited (a company which
invests in properties)
-
SCP Estate Holdings Limited (the parent company of SCP Estate
Limited and Prime Four Limited)
-
SCP Estate Limited (a company which invests in properties)
-
Prime Four Limited (a company which invests in properties)
-
Winchester Burma Limited (a company which invests in
properties)
-
Leonardo Crawley Limited (a company which invests in
properties)
All of the above named companies are registered in Guernsey.
The Group’s ultimate parent company is BMO Commercial Property
Trust Limited.
11. Subsequent events
On 30 July 2019, the Group
completed the sale of phase 1 of the former Ozalid Works site in
Colchester to Persimmon Homes for
a price of £6.2 million.
12. Forward looking
statements
Certain statements in this report are forward looking
statements. By their nature, forward looking statements involve a
number of risks, uncertainties or assumptions that could cause
actual results or events to differ materially from those expressed
or implied by those statements. Forward looking statements
regarding past trends or activities should not be taken as
representation that such trends or activities will continue in the
future. Accordingly, undue reliance should not be placed on forward
looking statements.
Statement of Principal Risks and
Uncertainties
The Company’s assets comprise mainly of direct investments in UK
commercial property. Its principal risks are therefore related to
the commercial property market in general. Other risks faced by the
Company include market, geopolitical, investment and strategic,
regulatory, environmental, taxation, management and control,
operational, and financial risks. The Company is also exposed to
risks in relation to its financial instruments. These risks, and
the way in which they are managed, are described in more detail
under the heading ‘Principal Risks and Risk Management’ within the
Business Model and Strategy in the Company’s Annual Report for the
year ended 31 December 2018. The
Company’s principal risks and uncertainties have not changed
materially since the date of that report and are not expected to
change materially for the remainder of the Company’s financial
year.
Statement of Directors’
Responsibilities in Respect of the Interim Report
We confirm that to the best of our knowledge:
•
the condensed set of consolidated financial statements has been
prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as
adopted by the European Union;
•
the Chairman’s Statement and Managers’ Review (together
constituting the Interim Management Report) together with the
Statement of Principal Risks and Uncertainties above include a fair
review of the information required by the Disclosure and
Transparency Rules (‘DTR’) 4.2.7R, being an indication of important
events that have occurred during the first six months of the
financial year and their impact on the condensed set of
consolidated financial statements; and
•
the Chairman’s Statement together with the condensed set of
consolidated financial statements include a fair review of the
information required by DTR 4.2.8R, being related party
transactions that have taken place in the first six months of the
current financial year and that have materially affected the
financial position or performance of the Company during that
period, and any changes in the related party transactions described
in the last Annual Report that could do so.
On behalf of the Board
Martin Moore
Director
BMO Commercial
Property Trust Limited
Independent Review Report
to BMO Commercial Property Trust Limited
Our conclusion
We have reviewed the accompanying condensed consolidated interim
financial information of BMO Commercial Property Trust Limited (the
“Company”) and its subsidiaries (together the “Group”) as of
30 June 2019. Based on our review,
nothing has come to our attention that causes us to believe that
the accompanying condensed consolidated interim financial
information is not prepared, in all material respects, in
accordance with International Accounting Standard 34, ‘Interim
Financial Reporting’, as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom’s Financial Conduct Authority.
What we have reviewed
The accompanying condensed consolidated interim financial
information comprise:
•
the condensed consolidated balance sheet as of 30 June 2019;
•
the condensed consolidated statement of comprehensive income for
the six-month period then ended;
•
the condensed consolidated statement of changes in equity for the
six-month period then ended;
•
the condensed consolidated statement of cash flows for the
six-month period then ended; and
•
the notes, comprising a summary of significant accounting policies
and other explanatory information.
The condensed consolidated interim financial information has
been prepared in accordance with International Accounting Standard
34, ‘Interim Financial Reporting’, as adopted by the European Union
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom’s Financial Conduct Authority.
Our responsibilities and those of the
Directors
The Directors are responsible for the preparation and
presentation of this condensed consolidated interim financial
information in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom’s Financial
Conduct Authority.
Our responsibility is to express a conclusion on this condensed
consolidated interim financial information based on our review.
This report, including the conclusion, has been prepared for and
only for the Company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom’s Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of interim financial
information performed by the independent auditor of the entity'
issued by the International Auditing and Assurance Standards Board.
A review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing 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.
We have read the other information contained in the Interim
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Guernsey, Channel Islands
Alternative Performance Measures
The Company uses the following
Alternative Performance Measures (‘APMs’). APMs do not have a
standard meaning prescribed by GAAP and therefore may not be
comparable to similar measures presented by other entities. Further
details of the APMs methodology are available in the Company’s
Annual Report for the year ended 31 December
2018.
Discount or Premium – the share price
of an Investment Company is derived from buyers and sellers trading
their shares on the stock market. If the share price is lower than
the NAV per share, the shares are trading at a discount. This
usually indicates that there are more sellers than buyers. Shares
trading at a price above the NAV per share, are said to be at a
premium.
Dividend Cover – The percentage by
which Profits for the year (less gains/losses on investment
properties) cover the dividend paid.
A reconciliation of dividend cover is
shown below:
|
|
|
30 June
2019 |
30 June
2018 |
|
|
|
|
£’000 |
£’000 |
|
|
|
|
|
|
|
(Loss)/profit for the
period |
|
(3,328) |
39,957 |
|
Add back: |
Unrealised losses /
(gains) on revaluation of investment properties |
22,593 |
(20,971) |
(20,971) |
|
Losses on sales of
investment properties realised |
316 |
- |
- |
Profit before investment
gains and losses |
(a) |
19,581 |
18,986 |
18,986 |
Dividends |
|
(b) |
23,981 |
23,981 |
|
Dividend Cover
percentage (c = a/b) |
(c) |
81.7 |
79.2 |
79.2 |
|
|
|
|
|
|
Dividend Yield – The annualised
dividend divided by the share price at the period-end. An analysis
of dividends is contained in note 2 to the accounts.
Net Gearing – Borrowings less cash
dividend by total assets (less current liabilities and cash).
Portfolio (Property) Capital Return –
The change in property value during the period after taking account
of property purchase and sales and capital expenditure, calculated
on a quarterly time-weighted basis.
Portfolio (Property) Income Return –
The income derived from a property during the period as a
percentage of the property value, taking account of direct property
expenditure, calculated on a quarterly time-weighted basis.
Portfolio (Property) Total Return –
Combining the Portfolio Capital Return and Portfolio Income Return
over the period, calculated on a quarterly time-weighted basis.
Total Return – The theoretical return
to shareholders calculated on a per share basis by adding dividends
paid in the period to the increase or decrease in the Share Price
or NAV. The dividends are assumed to have been reinvested in the
form of Ordinary Shares or Net Assets, respectively, on the date on
which they were quoted ex-dividend.
All enquiries to:
The Company Secretary
Northern Trust International Fund Administration Services
(Guernsey)
Limited
Trafalgar Court
Les Banques
St. Peter Port
Guernsey GY1
3QL
Tel: 01481 745324
Fax: 01481 745051
Richard Kirby
BMO REP Asset Management plc
Tel: 0207 499 2244
Graeme Caton
Winterflood Securities Limited
Tel: 0203 100 0268
The full interim report for the period
to 30 June 2019 will be sent to
shareholders and will be available for inspection at Trafalgar
Court, Les Banques, St Peter Port, Guernsey GY1 3QL, the registered office of the
Company, and from the Company’s website:
www.bmocommercialproperty.com