TIDMSTP
RNS Number : 5601B
Stenprop Limited
11 June 2021
STENPROP LIMITED
(Registered in Guernsey with registration number 64865)
LSE share code: STP JSE share code: STP
ISIN: GG00BFWMR296
11 June 2021
FULL YEAR RESULTS TO 31 MARCH 2021
STRONG RESULTS DRIVEN BY CONTINUED OCCUPIER DEMAND AND EFFECTIVE
ASSET MANAGEMENT, AS MULTI-LET INDUSTRIAL ("MLI") TRANSITION NEARS
COMPLETION
Stenprop Limited ("Stenprop" or the "Company"), the UK multi-let
industrial property company, announces results for the full year to
31 March 2021.
Commenting on the results, Paul Arenson, CEO of Stenprop, said:
"This has been a year of strong results and continued
transformation for Stenprop. A combination of the efforts of our
asset management team, the strength of occupier demand for our
multi-let industrial space and the quality of our portfolio, led to
a 10.1% increase, on a like-for-like basis, in the valuation of our
MLI portfolio and underpinned like-for-like MLI rental growth of
5.6% for the year.
"We remain firmly on track to become a 100% UK MLI business by
the end of the current financial year, having reached 74% by the
year end, up from 58% at the start of the year. This has been
driven by a successful investment and divestment programme, with
disposal of our non MLI assets achieved at an average uplift of 15%
on their valuations at the beginning of the year. The capital from
these sales, along with our existing cash levels, will allow us to
acquire approximately GBP100 million of MLI assets over the coming
financial year.
"We will continue to invest in our proprietary industrials.co.uk
platform. It has been a key driver of performance, assisting us to
deliver a record-breaking year of leasing activity, whilst the
market intelligence it affords gave us the confidence to resume
investment activity ahead of plan. Having committed to our MLI
strategy over three years ago, we are starting to see the rewards
of our conviction and believe the strength of the team, coupled
with the favorable structural trends, position us to continue
delivering strong results for shareholders."
Asset management continues to underpin valuation and earnings
growth
-- Total Accounting Return doubled to 11.4% (31 March 2020: 5.7%)
-- Declared covered total dividend for the year of 6.75 pence per share (2020: 6.75 pence).
-- Adjusted earnings per share of 6.78p (31 March 2020: 6.88p),
mainly reflecting a bad debt expense of GBP3 million compared with
a bad debt expense last year of GBP0.5 million which was before
COVID-19.
-- 6.5% increase in EPRA Net Tangible Assets ('NTA') per share
to 147 pence (31 March 2020: 138 pence)
-- Portfolio valued at GBP582.3 million (2020: GBP532.6
million), reflecting a like-for-like valuation increase of 6.3%.
This was primarily driven by a 10.1% increase in the like-for-like
value of the MLI portfolio. 65% of this was as a result of rental
growth and 35% as a result of a yield change
Platform efficiency and occupier demand driving performance
-- Like-for-like rental growth across the MLI portfolio of 5.6%
for the year (2020: 5.6%), driven by average uplifts from previous
passing rents upon new lettings and renewals of 16.3%.
-- MLI portfolio vacancy has fallen to 6.3% on 31 March 2021
from 9.0% on 31 March 2020 because of high demand and limited
supply of MLI units in the market
-- ERV across the portfolio grew 6.2% to GBP6.16/sq ft (2020:
GBP5.80/sq ft), reflecting a 12.8% premium to the average passing
rent of GBP5.46 sq ft (2020: GBP5.27/sq ft)
-- Over 60% of leases contracted through Stenprop's short form digital 'Smart Leases'
-- Robust rent collection of 90%
-- Industrials.co.uk website users up 75% year on year
Multi-let industrial transition strategy nearing completion
-- Multi-let industrial assets comprise 74.3% of total portfolio
(2020: 58%) with Stenprop on target to reach 100% by 31 March
2022
-- 14 individual MLI estates, totalling over one million sq ft,
acquired during the year for GBP91.5 million in line with GBP90
million target
-- Disposed of GBP79.5 million of non-MLI assets in Germany,
achieved at an average premium of 15% to the 31 March 2020
valuations
FY2021 FY2020
Statement of comprehensive income
------ ------
Total dividend per share 6.75p 6.75p
------ ------
Diluted IFRS earnings per share 18.57p 5.44p
------ ------
Adjusted earnings per share(1) 6.78p 6.88p
------ ------
Diluted EPRA earnings per share 6.62p 6.65p
------ ------
FY2021 FY2020
Statement of financial position
--------- ----------
Portfolio valuation (including joint ventures) GBP582.3m GBP532.6m
--------- ----------
Like-for-Like portfolio valuation(2) increase in year +6.3% +2.8%
--------- ----------
Diluted IFRS NAV per share GBP1.48 GBP1.37
--------- ----------
EPRA NTA per share(3) GBP1.47 GBP1.38
--------- ----------
Loan-to-value (4) 28.1% 26.2%
--------- ----------
1. See note 14 to the financial statements for reconciliation to
IFRS earnings per share (and for all subsequent references in this
report to IFRS/EPRA earnings). Adjusted earnings per share was
previously named 'Diluted adjusted EPRA earnings per share'.
2. Adjusted for sales and acquisitions in year.
3. See note 15 to the financial statements for reconciliation to
IFRS NAV per share (and for all subsequent references in this
report to IFRS/EPRA NTA).
4. Loan-to-value (LTV) ratio is the ratio of total borrowings,
less unrestricted cash, to the Group's aggregate value of
properties.
A webcast will be held for investors and analysts this morning
at 9am and can be accessed here:
https://us02web.zoom.us/webinar/register/WN_tLnn7UQoQjWvgMe7DhyPLg
For further information:
Stenprop Limited
Paul Arenson (CEO) paul.arenson@stenprop.com
Julian Carey (Managing Director) julian.carey@stenprop.com
James Beaumont (CFO) james.beaumont@stenprop.com
Numis Securities Limited (Financial Adviser) +44 (0)20 7260
1000
Hugh Jonathan
Vicki Paine
FTI Consulting (PR Adviser) +44 (0)20 3727 1000
Richard Sunderland
Richard Gotla
Neel Bose
Stenprop@fticonsulting.com
Java Capital (JSE sponsor) +27 (0)11 722 3050
About Stenprop:
Stenprop is a UK REIT listed on the LSE and the JSE. The
objective of the Company is to deliver sustainable growing income
to its investors. Stenprop's investment policy is to invest in a
diversified portfolio of UK multi-let industrial (MLI) properties
with the strategic goal of becoming the leading MLI business in the
UK. For further information, go to www.stenprop.com .
Chief Executive's Statement
Our transition is mostly behind us and we have almost achieved
our goal of becoming a fully focused MLI REIT.
Strong asset class fundamentals
I am pleased to be able to report that we have ended the
financial year with our portfolio at over 74% UK multi-let
industrial ('MLI'). This is very satisfying, given that we began
the year at 58% MLI and were intent on holding cash, which stood at
approximately GBP70 million, as COVID-19 struck and the UK went
into an unprecedented first lockdown. A year later, the UK was in
its third lockdown, yet by this time, we had been investing in the
acquisition of additional MLI since summer 2020, fully confident to
push ahead with the completion of our transition into 100% MLI
based on the data of accelerated enquiries for space we were
receiving from our Industrials Hive operating platform. Our
customers have proven to be very resilient and our collection rates
are standing at over 90%, with MLI benefitting from an acceleration
of e-commerce penetration in the UK which is driving greater demand
for space from SME occupiers.
Our strategic decision taken in 2018 to become a focused UK MLI
business has been the right one. The MLI asset class continues to
enjoy strong demand, high levels of rent collection, significant
rental growth and low levels of vacancy. This has enabled Stenprop
to maintain its fully covered dividend of 6.75p for the financial
year, notwithstanding the impact of both COVID-19 on collections
and of holding large cash balances for the first few months of the
pandemic.
Our transition to 100% MLI is almost complete
We view our transition to a 100% UK MLI business as largely
complete. Our focus for the financial year to 31 March 2022 and
beyond is now firmly on continuing to improve the performance of
the Group's MLI portfolio.
All that is left for us to do to complete the transition is to
sell our remaining non-MLI assets (excluding our urban logistics
assets) valued at GBP127.2 million.
In terms of growth and replacing the income that we will lose
from these disposals, our intention is to acquire approximately
GBP100 million of MLI property in the financial year to 31 March
2022, using previous and anticipated proceeds from the sale of
non-MLI assets, together with approximately 40% leverage.
During the year, we acquired 14 individual MLI estates at an
aggregate cost of GBP91.5 million before costs. We sold our Bike
Max portfolio of retail warehouses and two of our three Berlin
daily needs centres, and notarised on the sale of the third. We
achieved an average of 15% uplift to the March 2020 valuations on
these sales.
Prudent financial management
In addition, we were able to take advantage of historically
cheap debt markets to refinance a portfolio of properties with a
GBP66.5 million loan, which we fixed for seven years, interest-only
at an all-in rate of 1.66% per annum. We also extended an existing
five-year tranche of debt by GBP23 million against recently
acquired MLI assets at an all-in rate of 1.8% per annum,
interest-only. We ended the financial year with an overall LTV of
28.1% when unrestricted cash is considered and having reduced the
average cost of debt while increasing the average term.
A specialised MLI operating platform
Furthermore, we made excellent progress in evolving our platform
strategy, both on the ground and by embracing technology, to
enhance efficiencies and enable us to manage significantly more
scale with marginal incremental cost. Our decision to continue
investing in our technology during COVID has proved to be the right
one. Our customer relationship management ('CRM') system went live
at the beginning of the 2021 financial year and has been a big
success in assisting us managing our digital marketing and leasing
process. A significant roll out of our unified finance and
operations system is now well under way and anticipated to go live
in the second quarter of the financial year to 31 March 2022. This
will complete the first phase of our Industrials Hive platform
development, allowing us to in-source several key processes and
control the customer experience throughout its lifecycle. The
Industrials Hive platform will provide Stenprop with the ability to
grow its business, expand its offering to customers and achieve
future economies of scale through the use of technology and
streamlined processes.
We believe our strategy to invest in and build a market-leading,
technology-enabled MLI operating platform will be a part of
fundamental changes to the way in which the UK MLI sector is likely
to be managed in the future. In much the same way as platforms have
transformed the risks, efficiencies, ratings, and valuations in
other sectors like self-storage, student accommodation and hotels,
we believe the MLI sector is ready for this. Our intention is to
continue with the investment into our platform during this year to
ensure that Stenprop is at the forefront of this process of
change.
Performance of the UK MLI sector
Notwithstanding COVID-19 and the three UK lockdowns, the
structural imbalance in supply and demand for UK MLI continued to
deliver inflation-beating rental growth throughout the year. The
fundamentals in the sector remained extremely positive and Stenprop
experienced underlying like-for-like rental growth of 5-6% for the
year.
We hold the view that this imbalance will continue for several
years, as it is still not economically feasible to build MLI units
in most locations at current rental levels and yields, and because
in and around many conurbations, supply is also being taken out of
the market in favour of other uses such as residential. Our MLI
portfolio is valued at approximately GBP71.20 per sq ft on
average.
We estimate that replacement build costs are at least GBP125 per
sq ft, which means rents must rise by a further 30-40% in most
regions before development of new MLI units becomes widely viable,
assuming suitable development land is available in and around
densely populated towns and cities.
On the demand side, we are seeing increasing numbers of new
types of businesses, enabled by the internet, needing MLI space.
These are businesses who have not previously occupied MLI space and
are now realising the value of affordable, flexible space close to
towns and cities. Whilst COVID-19 has caused immense disruption to
the economy, we can see that the response to it by business is
paving the way for greater demand for MLI units. The internet sales
and distribution channels for all businesses have taken another big
step forward as the population was forced into isolation and had no
choice but to embrace new technology, as well as supply and
distribution channels. Home working and the explosion of
communication technologies have fostered greater ability to work in
a decentralised way, further fuelling demand for MLI space.
Companies have reassessed their globalised 'just-in-time' supply
chains. It is becoming apparent to many businesses that it is not
viable to rely solely on geographically distant supply chains from
single undiversified sources. We sense an increasing desire from
companies to have greater control over supplies and easier access,
even if it means more cost. Similarly, retailers have expanded into
online trading through websites, and many restaurants have opted
for dark kitchens to facilitate the rapid increase in demand for
delivered meals. There has also been a significant increase in
demand from new businesses benefiting from COVID-19 seeking MLI
space, such as those that are part of the PPE supply chain and
those operating in entirely new industries like 3D printing. We
believe that this type of strategic switching of business models
will continue to drive the structural shift in demand for MLI
units.
Rent collections have been robust
We have provided regular trading updates on our rent collection
statistics and readers can find more about the financial impact of
COVID-19 on the business in our annual report, to be published in
due course. The diversity and granularity of our customer base,
both as to type of business and region, has contributed to a high
degree of resilience on the part of our portfolio during COVID-19.
Fortunately, most have been able to continue working throughout as
MLI units generally allow for socially distanced working, and most
businesses in MLI have some form of e-commerce component, either
being part of the distribution supply chain or as part of an online
sales channel. Legislative restrictions remain in place which
prevent landlords from enforcing against tenants who do not pay
their rent. These restrictions are likely to be relaxed later in
2021, and we are optimistic that once this happens we will be able
to recover additional historic rent arrears.
Total accounting return metric
With the Company now firmly focused on MLI, we are introducing a
new KPI metric of Total Accounting Return ('TAR') to benchmark and
measure the future performance of this portfolio. TAR comprises the
percentage EPRA NTA NAV per share increase in the financial year
plus the distributions per share for the financial year, as a
percentage of the opening EPRA NTA NAV per share at the beginning
of the financial year.
Based on the past and current performance of our MLI portfolio
and of the MLI asset class characteristics in general, we believe
the MLI portfolio should deliver a TAR of at least 10% for the
financial year to 31 March 2022 and for several years to come.
At least half of this (>5%) will come from valuation growth
within the portfolio, as higher rents are translated into higher
capital values. The balance (+/-5%) will come in the form of
distributions.
ESG
While our primary purpose as a business is to revolutionise MLI
in the UK for the benefit of all our stakeholders, we recognise the
critical role that environmental, social and governance ('ESG')
factors play in delivering operational and financial performance.
In this respect we also understand that monitoring and disclosing
the performance of our portfolio is fundamental to delivering value
to our shareholders and meeting their expectations around ESG. As
you will see in the annual report, during 2020, we developed an ESG
strategy and policy to help further embed sustainability within our
organisation whilst establishing our own internal ESG Steering
Group to track our progress and identify new opportunities to drive
further improvements. We look forward to updating shareholders as
our strategy evolves.
Conclusion
The fundamentals of the MLI asset class remain very positive in
the medium to long term. We believe MLI continues to be well
positioned to benefit from these fundamentals and to take a strong
leap forward as the COVID-19 crisis passes. Our transition to a
100% UK MLI business is now largely complete, and we are delighted
that over this four-year period we have delivered a Total
Accounting Return of 32.3%. Looking forward, we return our focus to
delivering sustainable and growing earnings and NAV, based upon MLI
fundamentals which we believe will consistently deliver a 10% per
annum total accounting return. We are also planning the transfer of
our LSE listing from the Specialist Fund Segment to the Premium
Segment of the Main Market, which we anticipate will take place
before the end of the current financial year.
We are also increasingly focused on the operational aspects of
managing this single-focused business and are confident that the
work we have done and the investment we have made into our
operating platform will soon start to show significant and
long-lasting earnings enhancing benefits. It has been built to
enable Stenprop to achieve the benefits of scaling the business
with marginal increments in cost.
We take this opportunity to thank all of our stakeholders and
our Board for their support. In particular, we wish to thank our
staff who have adapted really well to working from home and to
managing the relationships with our customers through these
challenging times.
Paul Arenson
Chief Executive Officer
10 June 2021
Property Report and Investment Update
MLI performance overview
Despite the global pandemic, the MLI market and our portfolio
performed well during the last year, allowing us to reduce our
vacancy rate materially over the period. Demand has risen
significantly because of the acceleration of consumer trends
towards online retail, and the sector has proven resilient
operationally through the lockdowns. Very limited supply of new MLI
space entering the market and low levels of vacancy have continued
to put rents under upward pressure, whilst lease incentives are
down to almost insignificant levels. Despite the growth, witnessed
rents remain very affordable especially for new entrants into the
market who are migrating into MLI from more expensive sectors (such
as retail and offices). Our efficient operating platform and Smart
Lease offer has enabled us to capitalise on the opportunity and
capture the demand generated through our Industrials brand, whilst
we have also consistently generated significant uplifts at lease
renewal from existing customers.
Portfolio Change
Vacancy has reduced from 9.0% to 6.3% during the year as demand
has outstripped supply across the UK. Income has grown as we added
over GBP90 million of new MLI estates to the portfolio and captured
additional rent at renewal and upon new letting.
Income
For the second consecutive year, like-for-like rents grew 5.6%
over the year as we captured significant rental uplifts upon new
lettings and at lease renewal.
Rents
ERVs grew 6.2% during the course of the year, resulting in an
increased gap between passing rent and ERV (12.5% vs 10.1% in the
previous year), leading to increased potential for rental uplifts
upon reletting or renewal. The increasing number of fixed rental
uplifts in the leases is also generating 5.2% of guaranteed rental
uplifts to come within the current lease terms vs 4.6% last
year.
Demand
We have witnessed a structural shift in MLI demand as a result
of Covid-19. Enquiries for MLI space, received into our Industrials
Hive platform, have increased 56% in the first quarter of 2021 vs
the last quarter of 2020.
Leasing Activity
Key statistic: GBP5.35 million of contractual rental income
signed over the period in 259 transactions.
We continue to capture significant uplifts in passing rent on
renewal and the signing of new lettings. The number of lettings
completed also remains high, as we let more units than we take
back, thus reducing vacancy.
UK urban logistics
We have extended the leases of three single-let urban logistic
assets over the course of this year. WAULT is now two years to
break and 4.1 years to lease expiry.
The transactions included:
-- A new 10-year lease to Menzies Distribution Limited at 1
Europa Drive in Sheffield. The lease included a tenant-only break
option after three and five years, and an upward only rent review
after the fifth year. The rent increased by 4% from the previous
passing level.
-- A new 10-year lease to Booker Limited at Unit 1,
Knightsbridge Park in Worcester. The lease included a tenant-only
break option and upward only rent review after the fifth year. The
rent increased by 12% from the previous passing level.
-- Whilst extending this lease, we took the opportunity to
regear a separate lease at Unit 35 Merthyr Tydfil Industrial Park
also let to Booker Limited. This lease expires in July 2021 and we
have signed a reversionary lease that extends the term for a
further 10 years with a tenant-only break option and upward only
rent review after the fifth year.
Guernsey - Trafalgar Court
Over the last year, two small leases were renewed for a total
annual rent of GBP33,000. We secured an uplift from the largest
tenant at its July 2020 rent review of GBP22,000 and settled an RPI
rent review on the lease to the second largest tenant, securing an
uplift in rent of GBP71,000 pa.
The office investment market in the Channel Islands remains
robust. There is strong demand, but transaction volumes have fallen
due to a lack of supply. This was compounded in the first half of
the financial year due to COVID-19, with total volumes of GBP185m
and GBP220m in 2018 and 2019 respectively, falling to only GBP61m
in 2020. There was no material shift in yields over this
period.
There has been some difficulty for investors from outside the
islands gaining access in the last year due to travel restrictions
and quarantine requirements. As these restrictions are lifted there
is likely to be an increase in transaction volumes. Having said
that, locally based high net-worth individuals and syndicates have
been the most active buyers in the market in the last three years
and can acquire assets of GBP50m+ with no recourse to debt.
Despite the prevalence of local investors there has been an
expanding pool of global investors attracted by long lease lengths,
strong covenants, and a proven discount to mainland UK investment
opportunities.
This asset is scheduled to be sold before March 2022, and
brokers were appointed to start marketing the property in April
2021. We anticipate strong demand given the asset's high quality,
solid occupational market, and positive investor sentiment.
Germany
Care Homes
There have been no material asset management events in the
previous financial year. Rent collection has been 100% and we
intend to complete the sale of these assets by March 2022.
Hermann Quartier
The food anchored, covered shopping centre was marketed for sale
at the beginning of 2020 through a formal process run by CBRE, and
we successfully notarised a sale contract in December 2020. The
sale will complete following the satisfaction of the last sale
condition.
The centre performed well over the year despite some of the
COVID-related government-imposed restrictions. Even when these
restrictions were in place during March to June 2020 and January to
March 2021, we maintained collection rates above 80%. We also
completed the lease regear to our anchor tenant who represents 17%
of the income from the centre. The new lease is for a 17-year term
post the completion of tenant enhancement works.
Switzerland
Lugano
The health club tenant has been closed for most of the year due
to COVID-19 restrictions and remains closed as of April 2021. Rent
payments have been intermittent with 37% of rent due, collected
over the year. We are planning to sell the asset in this financial
year and have active interest from potential investors.
Transactions overview
Acquisitions
In this financial year we completed 14 separate acquisitions for
a net value of GBP91.5 million in a range of large towns and cities
across the UK. These acquisitions added good quality estates to our
existing portfolio in markets with strong fundamentals and which
met our strict investment requirements. In an investment market
characterised by increased demand which is driving yield
compression the average yield at acquisition compared favourably
with those in previous years.
Of the 14 acquisitions, only two had formal closing dates, with
pricing on the remainder being agreed on a negotiated basis either
off-market or following a limited marketing campaign. The market
remains fragmented and hence the type of vendors remains diverse,
although during the financial year ending 31 March 2021, we
executed on a greater proportion of distressed institutional sales
than normal as a result of open-ended funds coming under redemption
pressure. There are a range of sale motivations from vendors
including moving to investments that require less management,
reaching the end of their business plans, pressure to raise
capital, and those reweighting their portfolio or changing their
asset profiles (size, location, quality etc).
Summary of Stenprop's three largest acquisitions
The largest acquisition during the period was Bowthorpe
Industrial Estate in Norwich, acquired from the Blackrock
Industrial Trust. The purchase price was GBP19.6 million,
representing a NIY of 6.4% and a capital value of GBP80 per sq ft.
This asset was formally launched in March 2020, at a quoting price
of GBP20.7 million and was subsequently withdrawn following the
onset of the COVID-19 pandemic. As we gained comfort from the
positive trends within our own portfolio relating to
rent-collection, rental growth, and occupational demand we made an
approach and negotiated the sale in July 2020. With an average unit
size of c3,200 sq ft the estate is well suited for us to release
maximum value through the use of our Smart Lease and serviced
industrial model.
We completed the acquisition of Mandale Business Park, Durham in
October 2020, for GBP11.2 million representing a NIY of 6.7% and a
capital value of GBP82 per sq ft from a developer who had completed
a back-to-frame refurbishment across all five terraces. This asset
was originally marketed in June 2019 but failed to sell. We tracked
the asset and made an approach and agreed a negotiated price. This
estate provides highly specified multi-let industrial accommodation
with an excellent letting history in a strong location just off the
A1 in Durham.
Newburn Riverside Industrial Park, Newcastle was acquired in
February 2021, for GBP10.9 million representing a NIY of 6.8% and a
capital value of GBP93 per sq ft from Aegon's (previously Kames)
retail fund. It was marketed as part of a package with some
adjacent office accommodation, and we made an approach on the
industrial element only. This is a modern, well specified estate in
a very strong strategic location adjacent to the A1 to the west of
Newcastle City Centre. The Newcastle industrial market has been
performing well over recent years, and we are pleased to increase
our weighting to this market as a result of this acquisition.
Summary of MLI acquisitions made over last 4 years
NIY (inclusive of guarantees) Rent (inclusive of guarantees)
Purchase Price GIA Cap Val assuming 6.5% costs at acquisition GBP per sq ft
-------------- --------------- --------- -------- ------------------------------- -------------------------------
FY17/18 GBP21,253,983 476,766 GBP44.58 6.72% GBP5.58
FY18/19 GBP103,519,650 1,683,966 GBP61.11 6.90% GBP4.75
FY19/20 GBP38,181,770 504,137 GBP75.74 6.85% GBP5.98
FY20/21 GBP91,535,000 1,089,037 GBP84.05 6.64% GBP6.21
-------------- --------------- --------- -------- ------------------------------- -------------------------------
Total/Average GBP254,490,403 3,753,906 GBP67.79 6.78% GBP5.43
-------------- --------------- --------- -------- ------------------------------- -------------------------------
Financial Review
We are pleased to be reporting strong results in a year that saw
much turbulence and uncertainty. Whilst we were not immune from the
effects of the pandemic, we have been encouraged by the fact that
the MLI asset class has been able to clearly demonstrate its
resilience and versatility. Regional e-commerce sales and
distribution channels are becoming ever more important, and MLI has
shown its appeal to an increasingly diverse range of businesses,
that have translated into increased tenant demand, growing rents
and increased occupancy.
Our ongoing transition to being 100% MLI was put on hold in the
first quarter of the financial year as we focused on maintaining a
healthy cash balance as the pandemic took hold. However, early
signs of a strong recovery in MLI from our Industrials Hive
platform meant we recommenced our acquisition programme in June and
we concluded the year having acquired 14 MLI estates, in separate
transactions, for a total purchase price of GBP91.5 million before
costs which was in line with our target for the period. Our MLI
portfolio now totals 5.6 million sq ft, and at the year-end made up
74.3% of our total investment property portfolio by market value.
We also had a successful year in terms of our planned disposals
with all our wholly owned German properties sold or notarised
during the year, at an average premium of 15% to the March 2020
valuations.
The board of directors (the 'Board') have declared a dividend of
3.375 pence per share for the six months ended 31 March 2021,
bringing the full year distribution to 6.75 pence per share (2020:
6.75 pence). The dividend is fully covered by adjusted earnings per
share of 6.78 pence (2020: 6.88 pence) and, as in the past, can be
taken as a cash payment or scrip share alternative.
Diluted IFRS earnings per share ('EPS') was 18.57 pence (2020:
5.44 pence), whilst the adjusted EPS amounted to 6.78 pence,
compared with 6.88 pence in the prior year. The significant
increase in IFRS profit was driven by a larger uplift in the fair
value of investment properties when compared with the prior year.
Earnings were impacted by the pandemic and, across all operating
segments, prudent assumptions were applied in respect of bad and
doubtful debts and tenant lease incentives, based on rent
collection rates experienced. These COVID-19 related provisions
have contributed to an increase in the Group bad debt expense of
approximately GBP2.5 million (0.87 pence per share) relative to the
prior year.
As at 31 March 2021, Stenprop's total property portfolio,
including share of joint ventures, was valued at GBP582.3 million
(2020: GBP532.6 million). On a like-for-like basis, excluding the
impact of acquisitions and disposals during the year, the portfolio
value increased 6.3%, after including a decrease of 0.8% relating
to currency movements. This has been driven by a like-for-like
valuation increase of our MLI portfolio of GBP31.0 million, or
10.1%. The valuation uplifts contributed to an overall EPRA NTA per
share of GBP1.47, an increase of 6.5% against the prior year (2020:
GBP1.38). The effects of MLI acquisition costs, disposal costs, the
impact of remaining non-MLI property valuation changes and
increased bad debt provisions partially offset the effect of the
MLI like-for-like valuation uplift on the NAV increase. Together
with the full year dividend of 6.75 pence per share, the increase
in NAV has helped deliver a very strong total accounting return for
the year of 11.4% (2020: 5.7%).
Stenprop reported a see-through LTV of 28.1% using net debt
(including unrestricted cash balances). We are also very pleased to
have concluded two major refinancings in the year, which reduced
our weighted average cost of debt to 1.93% from 2.62% and extended
our maturity profile to 3.9 years from 2.7 years. More detail on
this can be found later in this Report.
2021 2020
---------------------------------- ------ -----
Statement of comprehensive income
---------------------------------- ------ -----
Dividend per share 6.75p 6.75p
Diluted IFRS earnings per share 18.57p 5.44p
Adjusted earnings per share(1) 6.78p 6.88p
Diluted EPRA earnings per share 6.62p 6.65p
---------------------------------- ------ -----
(1) See note 14 for reconciliation to IFRS earnings per share.
Adjusted earnings per share was previously named 'Diluted adjusted
EPRA earnings per share'.
2021 2020
--------------------------------------------------- --------- ----------
Statement of financial position
--------------------------------------------------- --------- ----------
Portfolio valuation (including joint ventures) GBP582.3m GBP532.6m
Like-for-Like portfolio valuation increase in year +6.3% +2.8%
Diluted IFRS NAV per share GBP1.48 GBP1.37
EPRA NTA per share(2) GBP1.47 GBP1.38
--------------------------------------------------- --------- ----------
(2) See note 15 for reconciliation to IFRS NAV per share (and
for all future references in this report to IFRS/EPRA NTA). EPRA
NTA assumes that entities buy and sell assets, thereby
crystallising certain levels of unavoidable deferred tax
liabilities where assets are held for sale.
2021 2020
------------------------- ----- ------
Other
------------------------- ----- ------
MLI portfolio percentage 74.3% 58.0%
Total accounting return 11.4% 5.4%
Loan-to-value ratio 28.1% 26.2%
------------------------- ----- ------
FX rates in period
Average foreign exchange rates in the year: GBP1.00:EUR1.1202;
GBP1.00:CHF1.2057 (2020: GBP1.00:EUR1.1442; GBP1.00:CHF1.2544)
Year-end foreign exchange rates: GBP1.00:EUR1.1738;
GBP1.00:CHF1.2985 (2020: GBP1.00:EUR1.1249; GBP1.00:CHF1.1915)
Presentation of financial information
The consolidated financial statements are prepared in accordance
with IFRS. The Group's subsidiaries are consolidated at 100% and
its interests in joint ventures are consolidated using the equity
method of accounting. In addition to information contained in the
Group financial statements, alternative performance measures
('APMs'), being financial measures that are not specified under
IFRS, are also used by management to assess the Group's
performance.
Stenprop discloses APMs based on EPRA Best Practice
Recommendations, in line with our peers in the real estate sector.
These include earnings and NAV metrics that are referred to
throughout this report, and that can also be seen in the EPRA key
performance measures table in our Annual Report. EPRA disclosures
have included changes in the year with regard to net asset value
('NAV') metrics. Stenprop has adopted EPRA Net Tangible Assets
('NTA') as its reporting measure, replacing our previously reported
EPRA NAV. EPRA NTA assumes that entities buy and sell assets and is
aligned with IFRS NAV in that it includes deferred tax liabilities
with regard to properties classified as held for sale.
key statistics
18.57p
Diluted IFRS earnings per share
6.78p
Adjusted earnings per share
6.75p
Full year dividend per share
11.4%
Total accounting return
Earnings
For the year ended 31 March 2021, basic IFRS earnings
attributable to ordinary shareholders increased significantly to
GBP53.0 million (2020: GBP15.6 million), equating to a diluted IFRS
EPS of 18.57 pence (2020: 5.44 pence). The increase was driven by
the fair value gain on investment properties in the year of GBP36.3
million versus the prior year (2020: GBP4.9 million) and was led by
strong lettings and yield compression across our MLI portfolio.
Net rental income from continuing operations was GBP32.0 million
(2020: GBP33.0 million). The MLI portfolio contributed GBP21.4
million to the total at year-end; a 19.6% increase over the prior
year contribution of GBP17.9 million and representing 67% (2020:
54%) of total net rental income.
Net rental income is presented after provision for expected
credit losses. As a result of COVID-19, larger credit loss
provisions were booked, resulting in a bad debt expense for the
year, including discontinued operations, of GBP3.0 million (2020:
GBP0.5 million). The total aggregate provision for expected credit
losses stood at GBP3.6 million as at 31 March 2021 (31 March 2020:
GBP1.3 million). On a portfolio level, the expense for expected
credit losses reflected 7.4% of rents invoiced compared with 1.2%
in the prior year. Although not yet quantifiable in amount or
timing, as the effects of the pandemic start to diminish, we
anticipate that customers will be able to begin the process of
settling their arrears. The payment of this rent will result in the
unwind, over time, of a portion of the bad debt provision.
Operating expenses for the year were GBP10.5 million (2020:
GBP10.1 million). There are several moving parts to this balance
with the increase to prior year driven by staff remuneration costs,
which includes the impact of a higher staff count of 43 at the
year-end (2020: 28). The new hires include an expansion in our HR,
sales and marketing capabilities as well as new team members to
support our operational platform as we in-house property accounting
and continue to grow our MLI portfolio. These important hires will
allow Stenprop to own and manage the entire customer journey from
initial enquiry through to leasing, move-in and ultimately
move-out, helping to deliver our class leading customer service and
value proposition.
In accordance with reporting standards widely adopted across the
real estate industry in Europe, the directors feel it is
appropriate and useful, in addition to providing the IFRS disclosed
earnings, to also disclose EPRA earnings and adjusted earnings (in
previous reports referred to as 'diluted adjusted EPRA earnings').
As disclosed in note 14, this measure utilises EPRA's Best
Practices Recommendations, and applies further Company-specific
adjustments to earnings to exclude items considered not to be in
the ordinary course of business or other exceptional items, to
provide additional information on the Group's underlying
operational performance. Adjusted earnings attributable to
shareholders were GBP19.4 million (2020: GBP19.7 million), equating
to an adjusted EPS of 6.78 pence (2020: 6.88 pence). A
reconciliation of IFRS profit to EPRA earnings and adjusted
earnings for the year is shown in note 14 to the financial
statements.
In line with best practice, Stenprop also discloses EPRA cost
ratios. The EPRA cost ratio (including direct vacancy costs) stood
at 41.6% for the year ended 31 March 2021 (2020: 35.3%). The cost
ratio includes the effects of a higher bad debt expense for the
year of GBP3.0 million (2020: GBP0.5 million) as a result of
COVID-19. The expense for expected credit losses accounted for 7.4%
points of the EPRA cost ratio (2020: 1.2% points). We anticipate
that, as we continue to grow the MLI portfolio with the benefit of
our Industrials Hive operating platform, the marginal cost of each
additional MLI property will be significantly lower than for the
existing portfolio. Hence we expect our EPRA cost ratio to decrease
steadily going forward.
Dividends
On 9 June 2021, the Board declared a final dividend of 3.375
pence per share (2020: 3.375 pence), which, together with the
interim dividend of 3.375 pence per share (2020: 3.375 pence per
share) declared on 2 December 2020, results in a total dividend for
the year ended 31 March 2021 of 6.75 pence per share (2020: 6.75
pence per share). The total dividend for the year is fully covered
by earnings of 6.78 pence per share.
The dividend of 6.75 pence per share represents a dividend yield
of 4.4% on the share price at 8 June 2021 of GBP1.55, and a yield
of 4.6% on the diluted EPRA NTA per share at 31 March 2021 of
GBP1.47.
Subject to the receipt of regulatory approvals, the directors
intend to offer shareholders the option to receive all or part of
their dividend entitlement by way of a scrip issue of new Stenprop
ordinary shares, or in cash. A further announcement informing
shareholders of the salient dates and tax treatment of the dividend
will be released in due course.
Future distributions
Stenprop's business has proved resilient to the challenges
caused by the pandemic and we are pleased to have been able to
maintain a covered total dividend of 6.75p per share. In light of
our strong operating performance and robust rent collection rates,
it is the Board's intention to maintain the dividend at 6.75p for
the year ending 31 March 2022, our final transitional year. The key
factors that are likely to determine whether this dividend is
covered or not are the levels of the ongoing bad debt provision
required because of COVID-19 and the levels of cash drag as a
result of the sales of the last remaining non-MLI assets and the
time taken to deploy the net proceeds into additional MLI assets.
Once we complete the transition this coming year and COVID-19 is
largely behind us, we anticipate growing earnings and dividends
going forward as a 100% UK MLI business.
Net asset value
The IFRS basic and diluted net asset value per share at 31 March
2021 was GBP1.49 and GBP1.48 respectively (2020: basic GBP1.38;
diluted GBP1.37) (see note 15). The increase over the year has been
driven primarily by like-for-like valuation increases of our MLI
portfolio of GBP31.0 million, or 10.1%. At year-end, the 83 MLI
properties were valued at GBP432.9 million, representing 74.3% of
our total portfolio.
As is the case regarding the disclosure of EPRA earnings, the
directors feel that it is appropriate and useful, in addition to
IFRS NAV, to disclose EPRA NTA. The EPRA NTA per share at 31 March
2021 was GBP1.47 (2020: GBP1.38). A reconciliation of this against
IFRS NAV is shown in note 15 to the accounts. The EPRA NTA excludes
GBP1.8 million of intangible assets related to the development of
our MLI operating platform, called Industrials Hive. We anticipate
further expenditure of approximately GBP1.5 million on Industrials
Hive during the financial year ended 31 March 2022.
Portfolio valuation
Including the Group's share of joint ventures, Stenprop's
investment properties were valued at GBP582.3 million (31 March
2020: GBP532.6 million), of which GBP38.2 million were classified
as assets held for sale (31 March 2020: GBP109.1 million). Assets
held for sale consist of the remaining Berlin daily-needs retail
centre, known as Hermann, the sale of which was notarised in
December 2020 (and which is expected to complete within the next
few months), and the remaining asset in Switzerland (let to a
wellness centre/health club). On a like-for-like basis, excluding
the impact of additions and disposals in the year, the valuation of
the portfolio since 31 March 2020 increased by 6.3%, after taking
into account a decrease of 0.8% relating to currency movements.
Market value Area Net initial yield (weighted average) Voids by area
Combined portfolio (including share of joint ventures) 31 March 2021 (GBP'000) Portfolio by market value (%) Properties (number) (sq m) Annualised contracted gross rental income (GBP'000) (%) (%)
------------------------------------------------------- ------------------------- ----------------------------- ------------------- -------- --------------------------------------------------- ------------------------------------ -------------
Investment properties
Guernsey office 56,150 9.7 1 10,564 4,428 7.25 0.20
UK multi-let industrial 432,910 74.3 83 521,288 30,190 6.22 6.34
UK urban logistics 22,160 3.8 5 21,861 1,741 7.36 -
------------------------------------------------------- ------------------------- ----------------------------- ------------------- -------- --------------------------------------------------- ------------------------------------ -------------
Sub-total 511,220 87.8 89 553,713 36,359 6.39 5.98
Assets held for sale:
Germany 26,239 4.5 1 8,274 1,269 4.90 3.20
Switzerland 11,967 2.1 1 5,974 953 3.37 -
------------------------------------------------------- ------------------------- ----------------------------- ------------------- -------- --------------------------------------------------- ------------------------------------ -------------
Total - wholly owned 549,426 94.4 91 567,961 38,581 6.25 5.87
------------------------------------------------------- ------------------------- ----------------------------- ------------------- -------- --------------------------------------------------- ------------------------------------ -------------
Share of joint ventures 32,839 5.6 4 19,330 2,379 6.15 -
------------------------------------------------------- ------------------------- ----------------------------- ------------------- -------- --------------------------------------------------- ------------------------------------ -------------
Total 582,265 100 95 587,291 40,960 6.24 5.68
------------------------------------------------------- ------------------------- ----------------------------- ------------------- -------- --------------------------------------------------- ------------------------------------ -------------
key statistics
6.3%
Like-for-like portfolio valuation increase
GBP91.5m
MLI acquisitions
74.3%
MLI percentage of total portfolio
GBP582.3m
Total portfolio valuation
United Kingdom MLI portfolio
The UK MLI portfolio, totalling 83 industrial estates across
approximately 5.6 million sq ft of lettable space, was
independently valued at GBP432.9 million at 31 March 2021. This
reflected a like-for-like increase, after excluding acquisitions
during the year, of GBP31.0 million, or 10.1%, on the valuation at
31 March 2020. The increase was driven by the capitalisation of
strong lettings concluded in the year as well as a component of
yield compression as the asset class continued to demonstrate its
appeal. We calculate that income change is driving 65% of total
valuation growth with yield compression driving the remaining
35%.
United Kingdom urban logistics
The UK urban logistics portfolio was independently valued at
GBP22.2 million, an increase of GBP0.8 million, or 3.8%, on the
valuation at 31 March 2020. Urban logistics represents just under
4% of our total portfolio and we anticipate retaining these
industrial assets and rolling them into our UK MLI segment going
forward as they complement our wider MLI strategy.
Guernsey
The office building known as Trafalgar Court in Guernsey was
valued at year-end at GBP56.2 million (2020: GBP57.5 million). The
unexpired lease term at the property is 7.3 years and it is let to
a strong tenant, which has sub-let a significant portion of its
space. Subsequent to the year-end, the property has been marketed
for sale and we look forward to providing an update on this process
in due course.
Germany
The German portfolio (excluding the Care Homes joint venture)
now comprises a single Berlin daily needs retail centre, the sale
of which was notarised in December 2020. The property valuation
reflects the sales price of EUR30.8 million and associated sales
costs have been provided.
Switzerland
The final Swiss property, Lugano, was independently valued at
CHF15.5 million (March 2020: CHF17.0 million). The decrease of 8.6%
reflects the struggles faced by the health spa/leisure sector as a
result of COVID-19 and having to close down operations for long
periods. This asset was classified as held for sale in the
financial statements and represents 2.1% of our total
portfolio.
Joint ventures
The care homes portfolio in Germany, comprising four care homes,
was independently valued at EUR38.9 million, a 3.2% decrease
compared with the 31 March 2020 valuation of EUR40.2 million.
Debt
Total borrowings at 31 March 2021 were GBP214.5 million with the
LTV ratio being 28.1% when calculated on a see-through basis using
net debt (debt after taking into account unrestricted cash
balances). The Group considers it appropriate to maintain its level
of borrowings at no more than 40% of its gross asset value on a
see-through basis.
Group debt metrics 31 March 2021 31 March 2020
(including share of joint ventures) GBPm GBPm
--------------------------------------- ------------- -------------
Nominal value of debt (214.5) (217.3)
Unrestricted cash 50.7 77.9
--------------------------------------- ------------- -------------
Net debt (163.8) (139.4)
Market value of investment property 582.3 532.6
--------------------------------------- ------------- -------------
LTV (%) 28.1 26.2
Weighted average debt maturity (years) 3.9 2.7
Weighted average interest rate (%) 1.93 2.62
Loan facilities hedged/fixed (%) 76 77
--------------------------------------- ------------- -------------
Stenprop was able to benefit from favourable lending conditions
towards the end of 2020 and refinanced a significant component of
its MLI debt at attractive pricing levels. The two refinancings
completed in December 2020 and are detailed below:
-- A new seven-year, GBP66.5 million fixed rate senior debt
facility with ReAssure, a life and pensions company who have
experience of writing sizeable loans secured by UK industrials
assets. The new facility refinanced an existing GBP61.5 million
loan, which was due to expire in June 2022, and is secured against
a portfolio of 30 multi-let industrial assets located across the UK
with an LTV ratio of 38%. The new facility allows the Company to
significantly reduce its financing costs by around GBP0.9 million
per annum as a result of the new loan being fixed at an all-in
annual rate of 1.66% compared to 3.2% on the previous
arrangement.
-- The extension of an existing debt facility from GBP27 million
to GBP50 million, raising additional monies against recently
acquired MLI assets. The refinance saw the original swap of 1.27%
replaced with an interest rate cap at 50bps on 85% of the loan.
This brought the annual cost of debt on this loan to approximately
1.8% all-in, from its previous level of 3.1%, and is expected to
result in annual savings of approximately GBP0.3 million. The loan
matures in February 2024.
The weighted average debt maturity stood at 3.9 years at 31
March 2021 compared with 2.7 years at 31 March 2020. We have
deliberately kept our debt maturity short during the transition in
order to minimise loan break costs. When considered in isolation,
our MLI portfolio has a weighted average debt maturity of 4.9
years, with the next maturity occurring in February 2024. We will
continue to proactively manage our debt maturity profile as well as
reviewing and diversifying our lender base as we grow the UK MLI
portfolio.
The all-in contracted weighted average cost of debt was 1.93% at
year-end, compared with 2.62% at 31 March 2020, and reflects the
impact of the two refinancings completed in the year. At year-end,
we held unencumbered properties valued at GBP27.2 million. These
will be refinanced in due course to help fund our acquisition
programme.
The GBP30 million rolling credit facility provided by Investec
Bank Plc to bridge the potential funding gap between property
acquisitions and sales was extended on 21 May 2021 and matures at
the end of April 2022. The facility was not utilised during the
year and
was undrawn as at 31 March 2021. There are no non-utilisation
fees payable on the facility.
Stenprop has been in compliance with its lending covenants
throughout the year and significant headroom exists for both
interest cover and LTV loan covenants. Loan facilities subject to
LTV covenants allow for an average 33% reduction in values. Loan
facilities subject to debt service cover ratio covenants allow for
an average reduction in net rents of 73%.
The Group enters into hedging arrangements or fixed interest
rate facilities to mitigate the risks associated with movements in
interest rates in respect of at least 75% of its interest rate
exposure. The Group utilises derivative instruments solely for the
purposes of efficient portfolio management.
Liquidity and COVID-19
We began the year focused on maintaining liquidity in a period
of intense market uncertainty. With our regional network of
customer engagement managers, we were able to proactively liaise
with our customers to understand the immediate issues facing their
businesses. Following disruption caused by the first lockdown, we
were pleased to report robust rent collection levels at our Interim
results of 90% across the portfolio, with MLI rent collection
trending between 85-90%. The resilience of the MLI asset class was
proven again in the second half of the year when we continued to
experience strong demand for our units, growth in passing rents and
ERVs, and reduced vacancy. Supply remains restricted, with
acquisition cost still significantly below replacement cost and we
believe that the effects of COVID-19 have accelerated the demand
for the flexibility and affordability that MLI offers. At the end
of the year, and despite the severity of the third lockdown, we are
reporting rent collection across the Group of 92%, with MLI rent
collections still trending at approximately 90%.
We maintained appropriate cash balances as the pandemic took
hold but were able to deploy cash for acquisitions quickly as our
platform gave us early insight into the increasing demand for MLI
space. The first half of the year saw GBP40.0 million of
acquisitions with a further GBP51.5 million completed by 31 March
2021.
Following the completion of the two German sales prior to the
year-end, Stenprop held unrestricted cash balances of GBP51 million
at 31 March 2021. Holding cash at these levels for prolonged
periods has a detrimental impact on earnings in the form of cash
drag and we continue to appraise appropriate acquisition
opportunities that meet our disciplined investment criteria, and
aim to deploy cash as quickly as we can. Combined with the
continued, albeit reducing, impact of COVID-19, the timing of sales
and acquisitions remains one of the biggest challenges of the
coming year in terms of maximising earnings.
Conclusion
Our four-year plan to divest our non-MLI assets, build a quality
MLI portfolio, reduce leverage and develop a market-leading
platform on which to deliver strong returns is almost complete. The
most recent financial year has been challenging, but we end it
having delivered a strong set of financial results, both in terms
of robust earnings and a stronger balance sheet. Our MLI portfolio
has proven itself to be resilient and we are gratified that we have
performed well in a year that has created such instability across
both the economy and our personal lives. Our staff and business
have adapted brilliantly to remote working and we are capitalising
on efficiencies learned over the last 12 months.
As we start the process of delivering our final transitional
year, we look next to scaling our MLI business and leveraging off
our Industrials Hive operating platform to deliver growing earnings
and NAV. We are confident that a stabilised MLI portfolio managed
on our platform will deliver a total accounting return of at least
10% per annum, of which at least half will come from NAV increases
as a result of capitalising predicted rental growth. The balance
will come from earnings that are underpinned by the rental growth
that we are currently experiencing. We are also excited about the
opportunities that will be created by our technology enabled
operating platform in improving our own efficiencies and returns
and in opening up further market opportunities for Stenprop.
James Beaumont
Chief Financial Officer
10 June 2021
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2021
31 March 31 March
2021 2020
Note GBP'000 GBP'000
-------------------------------------------------------------------- ---- -------- --------
Continued operations
Revenue 44,860 44,098
Expected credit losses (2,345) (541)
Property expenses (10,512) (10,508)
-------------------------------------------------------------------- ---- -------- --------
Net rental income 6 32,003 33,049
-------------------------------------------------------------------- ---- -------- --------
Management fee income 747 558
Operating costs 7 (10,516) (10,053)
-------------------------------------------------------------------- ---- -------- --------
Net operating income 22,234 23,554
-------------------------------------------------------------------- ---- -------- --------
Fair value gain on investment properties 36,287 4,938
Gain/(loss) on disposal of property 656 (2,779)
Income from joint ventures 18 61 2,115
Profit on disposal of subsidiaries 25 307 -
Net foreign exchange (loss)/gain (44) 3
-------------------------------------------------------------------- ---- -------- --------
Profit from operations 59,501 27,831
-------------------------------------------------------------------- ---- -------- --------
Net gain/(loss) from fair value of derivative financial instruments 1,940 (2,410)
Interest income 356 432
Finance costs 9 (5,857) (9,719)
-------------------------------------------------------------------- ---- -------- --------
Profit for the year before taxation 55,940 16,134
-------------------------------------------------------------------- ---- -------- --------
Tax (expense)/credit 10 (2,034) 1,222
-------------------------------------------------------------------- ---- -------- --------
Profit for the year from continuing operations 53,906 17,356
-------------------------------------------------------------------- ---- -------- --------
Discontinued operations
-------------------------------------------------------------------- ---- -------- --------
Loss for the year from discontinued operations 19 (891) (2,197)
-------------------------------------------------------------------- ---- -------- --------
Profit for the year 53,015 15,159
-------------------------------------------------------------------- ---- -------- --------
Profit attributable to:
Equity holders 53,045 15,565
Non-controlling interest derived from continuing operations (30) (406)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation reserve (3,663) 4,104
-------------------------------------------------------------------- ---- -------- --------
Total comprehensive income for the year 49,352 19,263
-------------------------------------------------------------------- ---- -------- --------
Total comprehensive income attributable to:
Equity holders 49,352 19,669
Non-controlling interest (30) (406)
-------------------------------------------------------------------- ---- -------- --------
Earnings per share Pence Pence
From continuing operations:
EPS 14 19.02 6.28
Diluted EPS 14 18.88 6.20
-------------------------------------------------------------------- ---- -------- --------
From continuing and discontinued operations:
EPS 14 18.71 5.50
Diluted EPS 14 18.57 5.44
-------------------------------------------------------------------- ---- -------- --------
Consolidated Statement of Financial Position
For the year ended 31 March 2021
31 March 31 March
2021 2020
Note GBP'000 GBP'000
------------------------------------------------------------------------ ---- -------- --------
ASSETS
Non-current assets
Investment properties 16 511,220 387,761
Investment in joint ventures 18 143 781
Investment in joint venture bond 18 14,119 15,336
Intangible assets 1,784 -
Derivative financial instruments 24 138 -
Other debtors 20 8,670 13,523
Right-of-use asset 314 491
------------------------------------------------------------------------ ---- -------- --------
Total non-current assets 536,388 417,866
------------------------------------------------------------------------ ---- -------- --------
Current assets
Cash and cash equivalents 21 53,781 84,453
Trade and other receivables 20 8,723 8,249
Other investments 1,000 -
Derivative financial instruments 24 2,024 -
Assets classified as held for sale 19 39,208 111,857
------------------------------------------------------------------------ ---- -------- --------
Total current assets 104,736 204,585
------------------------------------------------------------------------ ---- -------- --------
Total assets 641,124 622,451
------------------------------------------------------------------------ ---- -------- --------
LIABILITIES
Current liabilities
Bank loans 23 4,489 -
Taxes payable 1,706 7,241
Accounts payable and accruals 22 16,516 16,689
Provisions 19 - 3,179
Lease liability 316 302
Liabilities directly associated with assets classified as held for sale 19 15,166 47,310
------------------------------------------------------------------------ ---- -------- --------
Total current liabilities 38,193 74,721
------------------------------------------------------------------------ ---- -------- --------
Non-current liabilities
Bank loans 23 176,655 154,171
Derivative financial instruments 24 430 2,001
Lease liability 26 222
------------------------------------------------------------------------ ---- -------- --------
Total non-current liabilities 177,111 156,394
------------------------------------------------------------------------ ---- -------- --------
Total liabilities 215,304 231,115
------------------------------------------------------------------------ ---- -------- --------
Net assets 425,820 391,336
------------------------------------------------------------------------ ---- -------- --------
EQUITY
Capital and reserves
Share capital and share premium 12 322,776 322,993
Equity reserve (10,058) (14,360)
Retained earnings 91,647 57,490
Foreign currency translation reserve 21,455 25,118
------------------------------------------------------------------------ ---- -------- --------
Total equity attributable to equity shareholders 425,820 391,241
------------------------------------------------------------------------ ---- -------- --------
Non-controlling interest - 95
------------------------------------------------------------------------ ---- -------- --------
Total equity 425,820 391,336
------------------------------------------------------------------------ ---- -------- --------
GBP GBP
Net asset value per share 15 1.49 1.38
Diluted net asset value per share 15 1.48 1.37
------------------------------------------------------------------------ ---- -------- --------
The consolidated financial statements were approved by the board
of directors on 10 June 2020 and signed on its behalf by
James Beaumont
Chief Financial Officer
Consolidated Statement of Changes in Equity
For the year ended 31 March 2021
Share Foreign
capital and currency Attributable
share Equity Retained translation to equity Non-controlling Total
premium reserve earnings reserve shareholders interest equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ---- ----------- ----------- ----------- ----------- ------------ --------------- -----------
Balance at 1
April 2020 322,993 (14,360) 57,490 25,118 391,241 95 391,336
Profit for the
year - - 53,045 - 53,045 (95) 52,950
Other
comprehensive
income for the
year - - - (3,663) (3,663) - (3,663)
---------------- ---- ----------- ----------- ----------- ----------- ------------ --------------- -----------
Total
comprehensive
income for the
year - - 53,045 (3,663) 49,382 (95) 49,287
Equity-settled
share-based
payments 13 (217) 1,219 213 - 1,215 - 1,215
Repurchase of
own shares - (4,110) - - (4,110) - (4,110)
Ordinary
dividends 11 - 7,193 (19,101) - (11,908) - (11,908)
---------------- ---- ----------- ----------- ----------- ----------- ------------ --------------- -----------
Total
contributions
and
distribution
recognised
directly in
equity (217) 4,302 (18,888) - (14,803) - (14,803)
Balance at 31
March 2021 322,776 (10,058) 91,647 21,455 425,820 - 425,820
---------------- ---- ----------- ----------- ----------- ----------- ------------ --------------- -----------
Balance at 1
April 2019 322,993 (15,708) 60,952 21,014 389,251 2,969 392,220
Profit for the
year - - 15,565 - 15,565 (322) 15,243
Other
comprehensive
income for the
year - - - 4,104 4,104 - 4,104
---------------- ---- ----------- ----------- ----------- ----------- ------------ --------------- -----------
Total
comprehensive
income for the
year - - 15,565 4,104 19,669 (322) 19,347
Equity-settled
share-based
payments 13 - 1,079 - - 1,079 - 1,079
Repurchase of
own shares - (4,828) - - (4,828) - (4,828)
Other changes in
non-controlling
interest - - - - - (513) (513)
Ordinary
dividends 11 - 5,097 (19,027) - (13,930) (2,039) (15,969)
---------------- ---- ----------- ----------- ----------- ----------- ------------ --------------- -----------
Total
contributions
and
distribution
recognised
directly in
equity - 1,348 (19,027) - (17,679) (2,552) (20,231)
Balance at 31
March 2020 322,993 (14,360) 57,490 25,118 391,241 95 391,336
---------------- ---- ----------- ----------- ----------- ----------- ------------ --------------- -----------
Consolidated Statement of Cash Flows
For the year ended 31 March 2021
31 March 31 March
2021 2020
Note GBP'000 GBP'000
------------------------------------------------------------------------------ ---- -------- --------
Operating activities
Profit from continuing operations 59,501 27,831
Loss from discontinued operations 19 (737) (2,967)
------------------------------------------------------------------------------ ---- -------- --------
58,764 24,864
Depreciation 7 274 239
Increase in fair value of investment property 16 (35,109) (1,741)
(Gain)/loss on disposal of property (656) 2,779
Income from joint ventures (61) (2,115)
Management fee expenses (1) -
Share based payments 7 937 1,079
Dividends received from joint ventures - 56
Profit on disposal of subsidiaries (307) -
Exchange rate loss/(gain) 44 (3)
(Increase)/decrease in trade and other receivables (274) 632
(Decrease)/increase in trade and other payables (3,327) 2,702
------------------------------------------------------------------------------ ---- -------- --------
Cash generated by operations 20,284 28,492
Interest paid (4,749) (9,224)
Interest received 1,707 1,296
Net tax paid (96) (2,738)
------------------------------------------------------------------------------ ---- -------- --------
Net cash from operating activities 17,146 17,826
------------------------------------------------------------------------------ ---- -------- --------
Contributed by: Continuing operations 16,938 20,707
Discontinued operations 208 (2,881)
Investing activities
Purchase of investment property 16 (96,363) (40,829)
Capital expenditure - property 16 (1,617) (13,303)
Capital expenditure - ERP (1,377) -
Proceeds on disposal of investment property, net of selling costs 52,849 144,628
Tax paid on disposal of property (9,174) -
Receipt of loans advanced under the Share Purchase Plan 6,643 -
Other investment - Cash and short-maturity bonds on call (1,000) -
Repayment of third party loans 25 4,543 244
Disposal of subsidiary 25 7,738 -
Net cash disposed of in subsidiary 25 (348) -
------------------------------------------------------------------------------ ---- -------- --------
Net cash (used in)/from investing activities (38,106) 90,740
------------------------------------------------------------------------------ ---- -------- --------
Financing activities
New bank loans raised 23 89,558 24,668
Dividends paid (11,908) (13,930)
Withholding tax on dividends paid (62) 342
Repayment of borrowings 23 (77,926) (82,184)
Amortisation of loans 23 (123) (134)
Lease payments (281) (375)
Repurchase of shares (4,110) (4,828)
SWAP break fee (1,895) -
Proceeds from issues of employee share options 106 -
Financing fees paid (2,072) (1,062)
------------------------------------------------------------------------------ ---- -------- --------
Net cash used in financing activities (8,713) (77,503)
------------------------------------------------------------------------------ ---- -------- --------
Net (decrease)/increase in cash and cash equivalents (29,673) 31,063
Effect of foreign exchange losses (1,933) (4,695)
Cash and cash equivalents at beginning of the period 85,588 59,220
------------------------------------------------------------------------------ ---- -------- --------
Cash and cash equivalents at end of the period 53,982 85,588
------------------------------------------------------------------------------ ---- -------- --------
Contributed by: Continuing operations 21 53,781 84,453
Discontinued operations and assets held for sale 19 201 1,135
------------------------------------------------------------------------------ ---- -------- --------
Funds totalling GBP4.4 million were restricted at 31 March 2021
(2020: GBP8.2 million), see note 21.
Notes to the Consolidated Financial Statements
1 General Information
Stenprop Limited (the 'Company' and together with its
subsidiaries the 'Group') is registered in Guernsey (Registration
number 64865). The registered address of the Company is Kingsway
House, Havilland Street, St Peter Port, GY1 2QE, Guernsey. With
effect from 1 May 2018, the Company converted to a UK real estate
investment trust ('REIT').
2 Basis of preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRS's) as issued by the IASB, and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and
Financial Pronouncements as issued by Financial Reporting Standards
Council and the Companies Act, 71 of 2008 ('Companies Act')
applicable to companies reporting under IFRS and the JSE Listings
Requirements, the Disclosure and Transparency Rules of the UK's FCA
and applicable Guernsey law. The consolidated financial statements
have been prepared on the historical cost basis, except for the
revaluation of investment properties and financial instruments that
are measured at fair values at the end of each reporting period, as
explained in the accounting policies below. Historical cost is
generally based on the fair value of the consideration given in
exchange for goods and services. The principal accounting policies,
which are consistent with those applied in the previous annual
financial statements, except for the adoption of new and revised
standards (described below), are set out below. The consolidated
financial statements are presented in GBP (Pounds Sterling).
The financial information set out in these preliminary
summarised audited financial statements does not constitute the
Group's statutory accounts for the years ended 2021 and 2020 but is
derived from those accounts. The Company's auditors, BDO LLP, have
reported on those accounts and provided an unqualified opinion,
including key audit matters within their audit report. It did not
draw attention to any matters by way of emphasis without qualifying
their report and did not contain statements under The Companies
(Guernsey) Law, 2008. A copy is available upon written request from
the Company's registered office. The auditors' reports do not
necessarily report on all of the information contained in these
financial results. Shareholders are therefore advised that in order
to obtain a full understanding of the nature of the auditors'
engagement they should obtain a copy of the auditors' reports
together with the accompanying financial information from the
Company's registered office.
Going concern
At the date of signing these consolidated financial statements,
the Group has positive operating cash flows and positive net
assets. Management have carefully considered the impact of the
significant risks and uncertainties within the context of the
Group's viability and prospects, with specific emphasis placed on
the unprecedented challenges posed to the business and the Group's
occupiers as a result of the COVID-19 pandemic, and the potential
microeconomic impact of Brexit. Management subjected the Group's
cash flow forecast for the period to 30 September 2022 to
appropriate scenarios, including a specific COVID-19 related income
scenario in the base case, based on our rent collection experience
over the period of the pandemic. This income scenario was further
sensitised given the uncertainty of the pandemic. In addition, the
impact of the significant risks and uncertainties facing the
business, taking into account likely effectiveness of mitigating
actions that the Group would have at its disposal. The significant
risks and uncertainties identified as relevant to the forecast and
its ability to continue to meet its obligations as they fall due,
relate to the timing and quantum of acquisitions and disposals,
financing of acquisitions, debt maturity and compliance, rental
growth rates, void periods and REIT obligations.
The Group has significant cash resources at the start of the
look forward period which is a key factor in assessing the validity
of the going concern assumption for the Group.
Debt refinancing and sensitivities to loan covenants were
assessed in detail, as well as the Group's REIT obligations. It has
been assumed that debt facilities can be refinanced as required in
normal market lending conditions, consistent with what we are
currently experiencing with our lenders. Despite the disruption in
the economy caused by COVID-19, we do not expect the risk of
default to have increased and no breach cures have been assumed in
the forecast model. This is considered appropriate in light of the
strong relationships we maintain with our facility providers, as
evidenced by successful refinancings achieved during the period
and, at the time of publishing this report, the significant
headroom which exists for all interest cover ratios and, with the
exception of Lugano discussed separately below, for Loan to Value
ratio covenants.
Lugano: The Group owns a property known as Lugano in Switzerland
with a rehabilitation medical facility and health club tenant. The
property investment comprises 2% of the portfolio. The property is
subject to an LTV covenant only (no interest cover ratio covenant)
of 50%. At year end, the LTV based on an external valuation was
48.9%. Notwithstanding this, the bank supports the ongoing sale
process and the cash flow forecast illustrates that the Group would
have sufficient cash resources available to cure a covenant breach
if it crystallised and should the lender take a hard stance. It is
further worth noting that the loan is not cross-collateralised and
accordingly if the bank did act aggressively, the Group would
continue to operate with the remaining portfolio of assets if any
foreclosure event were to arise.
In light of this review, the significant liquid assets at year
end and the GBP27 million of unencumbered property at reporting
date, management are satisfied that the Group has access to
adequate resources to meet its obligations as they fall due and
will continue in operational existence for a period of at least
twelve months from the date of these financial statements. The
directors believe that it is therefore appropriate to prepare the
accounts on a going concern basis and no material uncertainty
exists in reaching this conclusion.
Note 27 to the consolidated financial statements includes the
Group's objectives, policies, and procedures for managing its
capital, market, credit, and liquidity risks.
Adoption of new and revised standards
In the current period no new or revised Standards and
Interpretations have been adopted. At the date of approval of these
consolidated financial statements, the Group has not applied the
following new standards that have been issued but are not yet
effective:
Classification of liabilities as current or
Amendments to IAS 1 non-current
Impact assessment of adopting new accounting standards
The directors have completed or are in the process of assessing
these standards and do not expect that the adoption of the
standards listed above will have a material impact on the financial
statements of the Group in future periods.
New standards in issue but not yet effective
Amendments to IAS 1 Classification of liabilities as current or
non-current. In January 2020, the IASB issued amendments to IAS 1,
which are intended to clarify the requirements that an entity
applies in determining whether a liability is classified as current
or non-current. The amendments are intended to be narrow scope in
nature and are meant to clarify the requirements in IAS 1 rather
than modify the underlying principles. The amendments include
clarifications relating to how events after the end of the
reporting period affect liability classification, what the rights
of an entity must be to classify a liability as non-current, how an
entity assesses compliance with conditions of a liability (e.g.,
bank covenants), and how conversion features in liabilities affect
their classification. The amendments are applied prospectively for
annual reporting periods beginning on or after 1 January 2023, with
early application permitted. However, they are yet to be endorsed
for application in the United Kingdom.
3 Significant accounting policies
Basis of consolidation
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Specifically, the results of the subsidiaries
acquired or disposed of during the period are included in the
consolidated statement of comprehensive income from the date the
Company gains control until the date when the Company ceases to
control the subsidiary.
Profit or loss and each component of other comprehensive income
are attributed to the owners of the Company and to the
non-controlling interests. Total comprehensive income of the
subsidiaries is attributed to the owners of the Company and to the
non-controlling interests, even if this results in the
non-controlling interests having a deficit balance.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used in
line with the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses,
and cash flows relating to transactions between the members of the
Group are eliminated on consolidation.
When the Group loses control of a subsidiary, the gain or loss
on disposal recognised in profit or loss is calculated as the
difference between (i) the aggregate of the fair value of the
consideration received and the fair value of any retained interest,
and (ii) the previous carrying amount of the assets (including
goodwill), less liabilities of the subsidiary and any
non-controlling interests.
All amounts previously recognised in other comprehensive income
in relation to that subsidiary are accounted for as if the Group
had directly disposed of the related assets or liabilities of the
subsidiary (i.e. reclassified to profit or loss or transferred to
another category of equity as specified/permitted by applicable
IFRS). The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair
value on initial recognition for subsequent accounting under IFRS 9
Financial Instruments or, when applicable, the costs on initial
recognition of an investment in an associate or jointly controlled
entity.
Joint ventures
The Group's investment properties are typically held in
property-specific separate legal entities, which may be legally
structured as joint ventures. In assessing whether a particular
legal entity is accounted for as a subsidiary or joint venture, the
Group considers all of the contractual terms of the arrangement,
including the extent to which the responsibilities and parameters
of the venture are determined in advance of the joint venture
agreement being agreed between the two parties. The Group will then
consider whether it has the power to govern the financial and
operating policies of the legal entity, to obtain benefits from its
activities, and the existence of any legal disputes or challenges
to this control in order to conclude on the classification of the
legal entity as a joint venture or subsidiary undertaking. In
applying this policy and as detailed in note 18, the Group's
investment in Elysion S.A. is classified as a joint venture because
the share of beneficial ownership and management of the portfolio
being conducted by the joint venture partner.
The consolidated financial statements account for interests in
joint ventures using the equity method of accounting per IFRS 11
Joint Arrangements.
Loans to joint ventures are separately presented from equity
interests in the Group's consolidated statement of financial
position. The Group eliminates upstream and downstream transactions
with its joint ventures, including interest and any other costs, to
the extent of the Group's interest in the relevant joint venture.
The classification and measurement of loans to joint ventures is
determined in accordance with the Group's accounting policies for
financial assets.
Business combinations and asset acquisitions
Business combinations are accounted for using the acquisition
method and any excess of the purchase consideration over the fair
value of the net assets acquired is initially recognised as
goodwill and subsequently reviewed for impairment. Any discount
received and/or acquisition costs are recognised in the
consolidated statement of comprehensive income.
The Group acquires subsidiaries that own real estate. At the
time of acquisition, the Group considers whether the acquisition
represents the acquisition of a business. The Group accounts for an
acquisition as a business combination where an integrated set of
activities is acquired in addition to the property. More
specifically, the following criteria are considered:
-- The number of items of land and buildings owned by the subsidiary;
-- The extent to which significant processes are acquired and in
particular the extent of ancillary services provided by the
subsidiary; and
-- Whether the subsidiary has allocated its own staff to manage
the property and/or to deploy any processes, including provision of
all relevant administration and information to the entity's
owners.
When the acquisition of subsidiaries does not represent a
business, it is accounted for as an acquisition of a group of
assets and liabilities.
There were no business combinations acquired during the 12
months to 31 March 2021 (2020: nil).
Revenue recognition
The Group earns returns from investments in direct property
assets and management fees. Revenue is recognised when it is
probable that the economic benefits associated with the transaction
will flow to the Group and the amount of revenue can be measured
reliably.
Rental income
Rental income and lease incentives are recognised in accordance
with IFRS 16 Leases. Rental income from investment property is
recognised as revenue on a straight-line basis over the lease term.
Lease incentives and costs associated with entering into tenant
leases are amortised over the lease term, or if the probability
that a break option will be exercised is considered high, over the
period to the first break option. Rent reviews are recognised when
such reviews have been agreed with tenants.
Rental income from operating leases is recognised on an accruals
basis. A rent adjustment based on open market estimated rental
value is recognised from the rent review date in relation to
unsettled rent reviews. Where a significant rent-free period is
included in a lease, the rental income forgone is allocated evenly
over the period from the date of lease commencement to the expiry
date of the lease.
Rental income from fixed and minimum guaranteed rent reviews is
recognised on a straight-line basis over the entire lease term.
Where such rental income is recognised ahead of the related cash
flow, an adjustment is made to ensure the carrying value of the
investment property, including the accrued rent, does not exceed
the external valuation. Initial significant direct costs incurred
in negotiating and arranging a new lease are amortised on a
straight-line basis over the period from the date of lease
commencement to the expiry date of the lease.
Where a lease incentive payment, or surrender premium is paid to
enhance the value of a property, it is amortised on a straight-line
basis over the period from the date of lease commencement to the
expiry date of the lease. Upon receipt of a surrender premium for
the early determination of a lease, the profit, net of
dilapidations and non-recoverable outgoings relating to the lease
concerned, is immediately reflected in income.
Lease modifications are a change in the scope of a lease, or the
consideration for a lease, that was not part of the original terms
and conditions of the lease (for example, adding or terminating the
right to use one or more underlying assets, or extending or
shortening the contractual lease term). Lease modifications are
accounted for under IFRS 16 Leases. Modifications to a lease is
recognised as a new lease from the effective date of the
modification, considering any prepaid or accrued lease payments
relating to the original lease as part of the lease payments for
the new lease.
Deferred income relates to rental income that has been collected
in advance of it being recognised as revenue.
Contingent rents, such as turnover rents, rent reviews and
indexation, are recorded as income in the periods in which they are
earned.
Tenant recharges
Service charge income, property fee income and joint venture and
associate management fees are recognised in accordance with IFRS 15
Revenue from contracts with customers, which prescribes the use of
a five-step model for the recognition of revenue. These income
streams are recognised as revenue in the period in which they are
earned.
Service charge income is recognised in the accounting period in
which the services are rendered, and the related property expenses
are recognised in the period in which they are incurred.
Other income
Other income mainly consists of maintenance contributions and
dilapidations settlements from our customers. This revenue stream
is accounted for under IFRS 15 Revenue from contracts with
customers. These income streams are recognised as revenue in the
period in which they are earned.
Management fee income
Management fees are recognised in the statement of comprehensive
income over time as performance obligations are satisfied.
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position are expressed in GBP Sterling, which is the functional
currency of the Company and the presentational currency for the
Group.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised at the
rates of exchange prevailing on the dates of the transactions. At
each statement of financial position date, monetary assets and
liabilities that are denominated in foreign currencies are
translated at the rates prevailing at that date. Non-monetary items
carried at fair value that are denominated in foreign currencies
are translated at the rates prevailing at the date when the fair
value was determined. Non-monetary items that are measured in terms
of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss for the
period in which they arise.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the reporting date.
Income and expense items are translated at the average exchange
rates for the period. Exchange differences arising are recognised
in other comprehensive income and accumulated in equity (attributed
to non-controlling interests as appropriate).
Borrowing costs
Interest costs are recognised in the consolidated statement of
comprehensive income using the effective interest rate method.
Borrowing costs directly attributable to arranging finance are
amortised over the facility term in the consolidated statement of
comprehensive income.
Current tax
Current tax payable is based on taxable profit for the year. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation
of taxable profit.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the Group
is able to control the reversal of the temporary difference and it
is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with such investments and
interests are only recognised to the extent that it is probable
that there will be sufficient taxable profits against which to
utilise the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply in the period in which the liability is
settled or the asset realised, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of the
reporting period. The measurement of deferred tax liabilities and
assets reflects the tax consequences that would follow from the
manner in which the Group expects, at the end of the reporting
period, to recover or settle the carrying amount of its assets and
liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Non-controlling interests
Non-controlling interests in the net assets (excluding goodwill)
of consolidated subsidiaries are identified separately from the
Group's equity therein. Non-controlling interests consist of the
amount of those interests at the date of the original business
combination and the non-controlling interests' share of the changes
in equity since the date of the combination. Total comprehensive
income is attributed to non-controlling interests even if this
results in the non-controlling interests having a deficit
balance.
Investment properties
Properties held to earn rental income and/or capital
appreciation are classified as investment properties. Investment
properties comprise both freehold and long leasehold land and
buildings.
Investment properties are recognised as assets when:
-- it is probable that the future economic benefits that are
associated with the investment property will flow to the Group;
-- there are no material conditions precedent which could prevent completion; and
-- the cost of the investment property can be measured reliably.
Investment properties are measured initially at cost, including
related transaction costs. After initial recognition, investment
properties are carried at fair value, determined by the directors
and/or based on independent external appraisals preformed by JLL,
twice a year.
The Group uses the valuations prepared by its independent
valuers as the fair value of its investment properties. These
valuations are undertaken in accordance with the appropriate
sections of the current Practice Statements contained in the Royal
Institution of Chartered Surveyors Valuation - Professional
Standards ('Red Book'). This is an internationally accepted basis
of valuation. The valuations are based upon assumptions including
contractual and estimated rental values, future rental income,
anticipated maintenance costs, future development costs and
appropriate discount rates. The valuers also refer to market
evidence of transaction prices for similar properties. The
valuation techniques used are consistent with IFRS 13 Fair Value
Measurement.
The difference between the fair value of a property at the
reporting date and its carrying amount prior to remeasurement is
included in the consolidated statement of comprehensive income as a
valuation surplus or deficit in the fair value gain/(loss) on
investment properties account.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at
banks with an original maturity of three months or less. Cash
balances are recorded net of tenant deposits. Restricted cash
represents service charge monies held by managing agents as well as
rent held in bank accounts which are secured by lenders, for the
purposes of debt repayments.
Expenditure
Expenses are accounted for on an accrual basis. Property
expenses include the costs of professional fees on lettings and
other non-recoverable costs. Operating costs include all
professional fees incurred in operating the business in the best
interests of the shareholders.
Financial instruments
A financial instrument is a contract that gives rise to a
financial asset to one entity and a financial liability or equity
instrument to another. The classification of financial assets and
financial liabilities depends on the nature and purpose of the
instrument and is determined at the time of initial
recognition.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets at fair value
through profit or loss ('FVTPL')) are added to or deducted from the
fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at FVTPL are recognised
immediately in the statement of comprehensive income.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
Level 1 - Inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date.
Level 2 - Inputs other than quoted prices included within Level
1, that are observable for the asset or liability, either directly
or indirectly.
Level 3 - Inputs are unobservable inputs for the asset or
liability.
Financial assets
The Group classifies its financial assets as either at fair
value through profit and loss or amortised cost. The Group
classifies its financial assets based on both the Group's business
model for managing those financial assets and the contractual cash
flow characteristics of the financial assets.
The Group's financial assets classified at amortised cost are
non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They include current
assets with maturities or terms less than 12 months after the
reporting date, as well as financial assets with maturities greater
than 12 months after the reporting date, which are classified as
non-current assets. These assets meet the condition of being held
within a business model whose objective is to hold the financial
assets in order to collect contractual cash flows and the terms of
which give rise, on specified dates, to cash flows that are solely
payments of principal and interest.
Financial assets, including those relating to the purchase of
Stenprop shares (note 20), are measured at amortised cost using the
effective interest method, less any loss allowance for expected
credit losses (ECL) which are recognised in the statement of
comprehensive income. The amount of expected credit loss is updated
at each reporting date to reflect changes in credit risk since
initial recognition of the respective financial instrument.
The effective interest rate is the rate that exactly discounts
estimated future cash receipts excluding expected credit losses,
through the expected life of the financial instrument, or, where
appropriate, as shorter period, to the gross carrying amount of the
financial instrument on initial recognition.
In the case of short-term trade receivables and other debtors
the Group recognises lifetime ECL in accordance with the simplified
approach under IFRS 9 Financial Instruments. The expected credit
losses on these financial assets are estimated based on the Group's
historical credit loss experience, adjusted for factors that are
specific to the debtors, general economic conditions, and an
assessment of both the current and forecast direction of conditions
at the reporting date.
The carrying amount of the financial asset is reduced by the ECL
directly for all financial assets. When a trade receivable is
considered uncollectable, it is written off against the ECL
provision account. Changes in the ECL are recognised in the
statement of comprehensive income in the period.
The Group classifies its financial assets at fair value through
profit or loss where it has determined that the business model for
managing the financial assets and the related contractual cash flow
characteristics is not consistent with the policy for
classification at amortised cost or fair value through other
comprehensive income (OCI). The Group has determined the bond
investment in the Elysion S.A. joint venture meets the criteria
disclosed in note 4.
There are no financial assets measured at fair value through
OCI, which would be classified as such where they are held within a
business model whose objective is achieved by both collecting
contractual cash flows and selling the financial assets; and cash
flows relate solely to payments of principal and interest.
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset have expired or have been
transferred and the Group has transferred substantially all risk
and rewards of ownership of the asset to another entity.
Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual agreement.
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all its
liabilities. Ordinary shares are classed as equity. Equity
instruments issued by the Group are recorded at the proceeds
received, net of direct issue costs.
The Group's financial liabilities comprise interest-bearing
borrowings, loans and payables and trade payables. Financial
liabilities are recognised when the Group becomes party to the
contractual provisions of the instrument. Financial liabilities are
measured at amortised cost using the effective interest method.
Trade and other payables are valued at their nominal value as the
time value of money is immaterial for these current
liabilities.
The Group derecognises financial liabilities when the Group's
obligations are discharged, cancelled or they expire.
Interest rate swaps have been initially recognised at fair
value, and subsequently remeasured at fair value through profit and
loss in accordance with IFRS 9, Financial Instruments. They have
been entered into to hedge against the exposure to variable
interest rate loans as described in note 27. They have been valued
by an independent valuer in line with internationally accepted
practice.
A derivative with a positive fair value is recognised as a
financial asset whereas a derivative with a negative fair value is
recognised as a financial liability. A derivative is presented as a
non-current asset or non-current liability if the remaining
maturity of the instrument is more than 12 months, and it is not
expected to be realised or settled within 12 months. It is Group
policy not to hedge account. Other derivatives are presented as
current assets or current liabilities.
Intangible assets
Intangible assets comprise computer software developed for our
ERP operating platform which will allow Stenprop to grow its MLI
business. The expenditure capitalised includes the cost of platform
development, contractor costs, and service providers. At 31 March
2021, the ERP operating platform is still in development and as
such, amortisation will begin when the ERP platform is first
available for use. Accordingly, no amortisation or impairment has
been recognised in the reporting period ending 31 March 2021.
Non-current assets and disposal groups held for sale
A non-current asset or a disposal group (comprising assets and
liabilities) is classified as held for sale if their carrying
amount is expected to be recovered or settled principally through
sale rather than through continuing use. The asset or disposal
group must be available for immediate sale, have the appropriate
level of management commitment and the sale must be highly probable
within one year of the reporting date. Investment properties
included in the held for sale category continue to be measured in
accordance with the accounting policy for investment
properties.
Note, disclosures in these financial statements are recognised
net of assets classified as held for sale and discontinued
operations.
Segmental reporting
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and in respect
of which it may incur expenses. An operating segment's operating
results are reviewed regularly by the chief operating decision
makers (the executive directors) to inform decisions about
resources to be allocated to the segment and to assess its
performance. Segmental financial information is available as
disclosed in note 5.
Dividends
Dividends to the Group's ordinary shareholders are recognised
when they are declared. This is when they are approved by the
Board.
Stenprop offers shareholders the option to receive in respect of
all or a part of their Stenprop shareholding either a scrip
dividend by way of an issue of new Stenprop shares (of the same
class as existing shares) credited as fully paid up (the 'scrip
dividend'), or a cash dividend (the 'cash dividend'). The cash
dividend will be paid to shareholders unless shareholders elect to
receive the scrip dividend. Scrip dividends are paid out of
Stenprop's treasury share account.
Earnings per share
Earnings per share is calculated on the weighted average number
of shares in issue in respect of the current period and is based on
the profit attributable to the ordinary shareholders.
Net asset value per share
Net asset value per share is calculated on the number of shares
in issue (excluding treasury shares) at the end of the current
period and is based on the total equity attributable to equity
shareholders.
Share-based payments
Deferred Share Bonus Plan and Long-Term Incentive Plan
Share options are granted to key management. The cost of
equity-settled transactions is measured with reference to the fair
value at the date at which they were granted. The Company accounts
for the fair value of these options on a straight-line basis over
the vesting period in the statement of comprehensive income, with a
corresponding increase to the share-based payment reserve in
equity. The cost to the Company is based on the Company's best
estimate of the number of equity instruments that will ultimately
vest. Readers are referred to note 13: Share-based payments, where
share-based payments are disclosed further.
Share Purchase Plan
As part of the Group's previous remuneration policy, the Company
awarded shares to qualifying participants, funded through the
advance of loans to the participants. Loans advanced under the
share purchase plan are interest-bearing at a rate equal to the
average interest rate incurred by the Group from time to time.
Interest is payable six monthly in arrears. Loans are repayable
within 30 days of cessation of employment or loss of office (unless
the participant ceases employment in circumstances beyond his or
her control, in which case the loan is repayable within 12 months),
and must in all circumstances be repaid in ten years. All dividends
received by such employees (or his or her nominee), by virtue of
their shareholding, must first be utilised to discharge any
interest outstanding from the loan advanced on the Share Purchase
Plan.
The loans have full recourse to the participants and as such
fall outside of the scope of IFRS 2 and are accounted for as
financial instruments under IFRS 9. The participants must charge
their shares by way of security for the loan and are required to
waive all rights to compensation for any loss in relation to the
plan. No further awards will be made under the Share Purchase
Plan.
Repurchase of share capital (own shares)
Where share capital recognised as equity is repurchased, the
amount of the consideration paid, including directly attributable
costs, is recognised as a deduction from equity. Such shares may
either be held as own shares (treasury shares) or cancelled. Where
own shares are subsequently re-sold from treasury, the amount
received is recognised as an increase in equity.
4 Critical accounting judgements and key sources of estimation
uncertainty
The preparation of the consolidated financial statements in
accordance with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise
judgement in the process of applying the Group's accounting
policies. Although the estimates are based on management's best
knowledge of the amount, events or actions, actual results may
ultimately differ from those estimates. The key assumptions
concerning the future, and other key sources of estimation
uncertainty at the end of the reporting year, that have a risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are discussed
below.
Key sources of estimation uncertainty
Valuation of the property portfolio
The Group's investment properties are stated at estimated fair
value, determined by directors, based on an independent external
appraisal. The valuation of the Group's property portfolio is
inherently subjective due to several factors including the
individual nature of each property, its location, expectation of
future rentals and the discount yield applied to those cash flows.
As a result, the valuations placed on the property portfolio are
subject to a degree of uncertainty and are made based on
assumptions that may not prove to be accurate, particularly in
years of volatility or low transaction flow in the market. Due to
the current economic uncertainty in the market due to COVID-19 the
Switzerland valuers have issued their valuation report with a
material valuation uncertainty clause. They have advised there is
less certainty attached to their valuation in comparison to what
would normally be the case, but that does not mean the valuations
cannot be relied upon. For the avoidance of doubt, the UK and
Guernsey valuations do not have a material valuation uncertainty
clause attached the valuations and the German valuation is based on
a signed contract of sale. The estimated market value may differ
from the price at which the Group's assets could be sold at a
particular time, since actual selling prices are negotiated between
willing buyers and sellers. As a result, if the assumptions prove
to be different, actual results of operations and realisation of
net assets could differ from the estimates set forth in these
financial statements, and the difference could be significant.
Further details as well as the key sensitivity variables, can be
found in note 16.
The Group currently has two continental European investment
properties classified as assets held for sale. Due to the same
reasons mentioned above that the COVID-19 crisis has caused, the
valuation of the Swiss asset held for sale is subject to a degree
of valuation uncertainty and as such a key source of estimation
uncertainty. Further information on assets held for sale can be
found in note 19.
Critical judgements
Assets held for sale and discontinued operations
The directors have disclosed two (2020: nine) properties which
meet the criteria defined in IFRS 5: Non-current Assets Held for
Sale and Discontinued Operations. Stenprop is committed to the
disposal of these assets in line with its strategy to exit the
Swiss market, dispose of its German assets and acquire multi-let
industrial properties in the United Kingdom. The directors have
classified the Swiss property as a discontinued operation as this
is the only property that remains in the Swiss market. Stenprop is
committed to exit the Swiss market and as such have classified the
Swiss segment as a discontinued operation. The remaining property
classified as held for sale is located in Germany, but it is not
classified as a discontinued operation as Stenprop still has a
material interest in the German market due to its holdings in the
care homes joint venture, which is currently not held for sale. In
respect of the Swiss property at Lugano, the directors consider the
exceptions permitted by IFRS 5:9 to apply in respect to the
one-year requirement within which a sale should complete. During
the one-year period, circumstances arose that were previously
considered unlikely. The circumstances were that the sole tenant of
the property queried the validity of some of the conditions of the
lease, particularly the requirement to pay the running costs of the
building i.e. utilities. As a result, the property which was
previously classified as held for sale was not sold; however:
i. during the initial one-year period, the Group responded to
the change in circumstances by agreeing new lease terms with the
tenant, remedying the deficiencies of the existing lease, with
effect from 1 January 2020;
ii. the property was still being marketed at a price that was
reasonable, given the change in circumstances;
iii. the Swiss government had prevented the tenant from trading
during most of the year to 31 March 2021, due to COVID-19
restrictions;
iv. all other criteria in paragraphs 7 and 8 of IFRS 5 are met;
and
v. the directors believe that the sale will now complete within one year.
If the judgement was that the Swiss property had not continued
to be held for sale, this would have resulted in a restatement of
the comparative period and presentation of the Swiss operating
segment in continuing operations. This would not have had any
impact on net assets or total comprehensive income as the fair
value of the investment property has been determined by the
directors, based on an independent external appraisal.
Classification of investment in joint venture bond
Classification and measurement of financial assets under IFRS 9
are driven by the entity's business model for managing financial
assets and the contractual cash flow characteristics of those
financial assets. The directors have determined that the
contractual cash flow characteristics for bond investments into
Elysion S.A. ('JV') (a joint venture) are not solely payments of
principal and interest. The Group instead receives the return for
each underlying loan net of additional fees and expenses in the JV
and so it is not considered to be a basic lending arrangement under
the standard. Further details on the structure are included in note
18. As such, these bond investments are required to be measured at
fair value through profit or loss. In making this judgement, the
directors have considered the power the Group has to influence the
investment decisions of the JV housing the underlying loans, which
are managed at the discretion of the JV partner and were the Group
to hold the majority interest it has been determined that the
contractual cash flow characteristics for a basic lending
arrangement would have been met and therefore accounted for at
amortised cost.
5 Operating segments
The Group is focused on real estate investment in
well-developed, large economies with established real estate
markets. The investment portfolio is geographically distributed
across the United Kingdom, Germany, Guernsey and Switzerland, with
a further sub-division within the UK between multi-let industrial
and urban logistics. Each segment derives its revenue from the
rental of investment properties in the respective geographical
regions.
Relevant financial information is set out below:
i) Information about reportable segments
Discontinued
Continuing operations operations
--------------------------------------------------------------------- ------------
UK multi-let
For the year ended industrial UK urban logistics Guernsey Germany Group Switzerland Total
31 March 2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Net rental income 21,356 1,628 4,478 4,466 75 - 32,003
Net management fee
income - - - - 747 - 747
Fair value movement
on investment
properties 26,082 810 (1,310) 10,705 - - 36,287
Net (loss)/gain
from fair value of
financial
liabilities (209) - - 125 2,024 - 1,940
(Loss)/gain on
disposal of
property - (9) - 665 - - 656
Gain on disposal of
subsidiary - - - 307 - - 307
Income/(expense)
from joint
ventures - - - 62 (1) - 61
Net finance
(costs)/income (4,317) (181) (685) (354) 36 - (5,501)
Tax, legal and
professional fees (366) (38) (12) (494) (831) - (1,741)
Audit fees - - - (13) (265) - (278)
Administration fees (21) (5) (6) (34) (251) - (317)
Investment advisory
fees - - - (123) - - (123)
Non-executive
directors' costs - - - - (416) - (416)
Staff remuneration
costs - - - - (4,100) - (4,100)
Operating costs - (2) (10) (94) (3,435) - (3,541)
Net foreign
exchange
gain/(loss) - - - 20 (64) - (44)
Loss from
discontinued
operations (note
19) - - - - - (891) (891)
Tax
credit/(expense) - 81 - (2,164) 49 - (2,034)
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Total profit/(loss)
per reportable
segment 42,525 2,284 2,455 13,074 (6,432) (891) 53,015
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
As at 31 March 2021
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Investment
properties 432,910 22,160 56,150 - - - 511,220
Investment in joint
ventures - - - 14,261 1 - 14,262
Cash and cash
equivalents 12,050 447 1,174 20,235 19,875 - 53,781
Other 13,495 234 772 2,332 5,820 - 22,653
Assets classified
as held for sale - - - 26,592 - 12,616 39,208
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Total assets 458,455 22,841 58,096 63,420 25,696 12,616 641,124
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Borrowings - bank
loans 148,719 4,496 27,929 - - - 181,144
Other 11,404 536 2,062 1,330 3,662 - 18,994
Liabilities
directly
associated with
assets classified
as held for sale - - - 9,766 - 5,400 15,166
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Total liabilities 160,123 5,032 29,991 11,096 3,662 5,400 215,304
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Discontinued
Continuing operations operations
--------------------------------------------------------------------- ------------
UK multi-let
For the year ended industrial UK urban logistics Guernsey Germany Group Switzerland Total
31 March 2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Net rental income 17,932 2,032 4,311 8,708 66 - 33,049
Net management fee
income - - - - 558 - 558
Fair value movement
on investment
properties 3,828 (55) (340) 1,505 - - 4,938
Net (loss)/gain
from fair value of
financial
liabilities (1,573) - 152 34 (1,023) - (2,410)
Loss on disposal of
property - (114) - (2,665) - - (2,779)
Income from joint
ventures - - - 2,114 1 - 2,115
Net finance costs (3,759) (268) (1,196) (4,103) 39 - (9,287)
Tax, legal and
professional fees (204) 76 (10) (422) (952) - (1,512)
Audit fees - - - (2) (266) - (268)
Administration fees (166) (25) (6) (35) (200) - (432)
Investment advisory
fees - - - (253) - - (253)
Non-executive
directors' costs - - - - (233) - (233)
Staff remuneration
costs - - - - (4,576) - (4,576)
Operating costs (10) (22) (1) (78) (2,668) - (2,779)
Net foreign
exchange
(loss)/gain - - - (60) 63 - 3
Loss from
discontinued
operations (note
19) - - - - - (2,197) (2,197)
Tax
(expense)/credit (16) (11) (187) 1,327 109 - 1,222
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Total profit/(loss)
per reportable
segment 16,032 1,613 2,723 6,070 (9,082) (2,197) 15,159
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
As at 31 March 2020
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Investment
properties 308,951 21,350 57,460 - - - 387,761
Investment in joint
ventures - - - 16,116 1 - 16,117
Cash and cash
equivalents 13,585 2,556 522 11,815 55,975 - 84,453
Other 5,855 19 773 14,305 1,311 - 22,263
Assets classified
as held for sale - - - 96,605 - 15,252 111,857
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Total assets 328,391 23,925 58,755 138,841 57,287 15,252 622,451
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Borrowings - bank
loans 121,841 4,473 27,857 - - - 154,171
Other 12,946 581 2,220 9,600 4,287 - 29,634
Liabilities
directly
associated with
assets classified
as held for sale - - - 41,039 - 6,271 47,310
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
Total liabilities 134,787 5,054 30,077 50,639 4,287 6,271 231,115
------------------- ------------------- ------------------ -------- -------- -------- ------------ --------
6 Net rental income
31 March 31 March
2021 2020
GBP'000 GBP'000
------------------------ -------- --------
Rental income 37,097 37,456
Tenant recharges 6,349 5,836
Other income 1,414 806
------------------------ -------- --------
Revenue 44,860 44,098
Expected credit losses (2,345) (541)
Direct property costs (10,512) (10,508)
------------------------ -------- --------
Property expenses (12,857) (11,049)
Total net rental income 32,003 33,049
------------------------ -------- --------
7 Operating costs
31 March 31 March
2021 2020
GBP'000 GBP'000
-------------------------------------------- -------- --------
Tax, legal and professional fees 1,741 1,676
Audit fees 242 238
Interim review fees 36 30
Administration fees 317 432
Investment advisory fees 123 253
Non-executive directors' remuneration costs 416 233
Staff remuneration costs 4,100 3,509
Share-based payments 937 1,079
ERP project expenses 463 669
ERP impairment - 305
Depreciation 274 239
Corporate costs 623 700
IT costs 678 389
Other operating costs 566 301
-------------------------------------------- -------- --------
Total operating costs 10,516 10,053
-------------------------------------------- -------- --------
Share-based payments of GBP937,000 (2020: GBP1,079,000) relate
to the equity-settled incentive schemes operated by the Group. As
at 31 March 2021 the Group's equity reserve held GBP2.6 million
(2020: GBP2.7 million) in relation to the schemes after the
exercise of options at fair value of GBP748,000 (2020: GBP220,000)
during the period.
8 Employees' and directors' emoluments
The average number of the Group's employees was 33 during the
current financial year (2020: 25). At 31 March 2021 the Group
employed 43 people, up from 28 employees at 31 March 2020. The
aggregate remuneration paid to employees during the period,
including that to executive directors, was:
31 March 31 March
2021 2020
GBP'000 GBP'000
---------------------- -------- --------
Wages and salaries 3,510 2,949
Social security costs 449 419
Pension costs 141 141
Share-based payments 937 1,079
---------------------- -------- --------
Total employee costs 5,037 4,588
---------------------- -------- --------
As at 31 March 2021, the Group had nine directors (2020: eight).
The directors of the Group during the financial year and at the
date of this report were as follows:
Non-executive directors Appointed Change in appointment
------------------------ ----------- ---------------------
Paul Miller 14 Sep 2016
Warren Lawlor 5 Apr 2017 16 Sep 2020
Richard Grant (chairman) 1 May 2018
Philip Holland 1 May 2018
Patsy Watson 5 Jun 2019
Louisa Bell 4 Nov 2020
Richard Smith 4 Nov 2020
------------------------ ----------- ---------------------
Executive directors Appointed Change in appointment
------------------------ ----------- ---------------------
Paul Arenson (CEO) 2 Oct 2014
Julian Carey 1 May 2018
James Beaumont (CFO) 5 Jun 2019
------------------------ ----------- ---------------------
Emoluments paid to executive directors are disclosed in the
remuneration report in our Annual Report. Emoluments paid to
non-executive directors are summarised below:
31 March 31 March
2021 2020
Non-executive directors GBP'000 GBP'000
----------------------------------------------------------------- -------- --------
Richard Grant 58 58
Philip Holland 43 43
Patsy Watson 35 29
Paul Miller 40 40
Louisa Bell* 16 -
Richard Smith* 16 -
Warren Lawlor - paid to Ferryman Capital Partners (Pty) Limited* 18 40
----------------------------------------------------------------- -------- --------
Total 226 210
----------------------------------------------------------------- -------- --------
* Remuneration covers the period of directorship.
The above non-executive fees include all management, consulting,
technical or other fees paid for such services rendered, including
payments to management companies.
The Group's share-based payments comprise the Deferred Share
Bonus Plan ('STIP') and the Long-Term Incentive Plan ('LTIP') for
executive directors and senior management respectively, and various
share option schemes.
The Company measures the fair value of the equity-based share
options at grant date and accounts for the cost over the vesting
period in the statement of comprehensive income, with a
corresponding increase to the share-based payment reserve. The cost
is based on the quantity of shares that are likely to vest, taking
into account expected performance against the relevant performance
targets where applicable, and service periods. Share-based awards
and the respective vesting dates are further detailed in note
13.
On 9 June 2021, the board of directors, on the recommendation of
the remuneration committee, approved the following:
Bonuses in respect of the year ended 31 March 2021
------------------------------------------------------------------------------------------------
Deferred share LTIP for executive
Cash bonus bonus plan Number of share directors Number of share
Executive directors GBP'000 GBP'000 options (estimated) GBP'000 options (estimated)
-------------------- ----------- -------------------- ------------------- ------------------- -------------------
Paul Arenson 169 253 168,900 572 381,100
Julian Carey 162 243 162,300 549 366,100
James Beaumont 81 40 26,900 182 121,400
-------------------- ----------- -------------------- ------------------- ------------------- -------------------
Total 412 536 358,100 1,303 868,600
-------------------- ----------- -------------------- ------------------- ------------------- -------------------
On 10 June 2020, the board of directors, on the recommendation
of the remuneration committee, approved the following:
Bonuses in respect of the year ended 31 March 2020
------------------------------------------------------------------------------------------------
Deferred share LTIP for executive
Cash bonus bonus plan Number of share directors Number of share
Executive directors GBP'000 GBP'000 options GBP'000 options
-------------------- ----------- ------------------- ------------------- ------------------- --------------------
Paul Arenson 165 31 29,712 563 536,599
Julian Carey 158 30 28,558 541 515,631
James Beaumont*^ 36 9 9,768 90 102,932
-------------------- ----------- ------------------- ------------------- ------------------- --------------------
Total 359 70 66,038 1,194 1,155,162
-------------------- ----------- ------------------- ------------------- ------------------- --------------------
* Remuneration covers the period of directorship.
^ Market value LTIP
Directors' interests - beneficial direct and indirect holdings
in the Company
Number of
As at 31 March Direct number % of shares in Indirect number % of shares in share options % of shares in
2021: of shares issue of shares issue held issue
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Paul Arenson
(CEO) 472,215 0.16 % 15,311,788 (1) 5.12 % 2,562,856 0.86 %
Patsy Watson - - % 1,106,602 0.37 % 50,646 0.02 %
Julian Carey 3,344,740 1.12 % 32,543 0.01 % 1,738,875 0.58 %
James Beaumont 57,756 0.02 % - - % 380,847 0.13 %
Paul Miller 21,898 0.01 % - - % - - %
Richard Grant
(chairman) - - % 100,000 0.03 % - - %
Philip Holland 24,999 0.01 % - - % - - %
Louisa Bell - - % - - % - - %
Richard Smith - - % - - % - - %
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
(1) 5,392,536 shares are subject to security by way of a
shareholder loan (see note 13).
There were no further changes in the above directors' interests
from 31 March 2021 to the date of the signing of these
financial statements.
Number of
As at 31 March Direct number % of shares in Indirect number % of shares in share options % of shares in
2020: of shares issue of shares issue held issue
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Paul Arenson
(CEO) - - % 14,102,005(1) 4.72 % 2,307,327 0.77 %
Patsy Watson - - % 4,674,929(2) 1.56 % 1,691,482 0.57 %
Julian Carey 3,363,103 1.13 % 15,751 0.01 % 1,524,951 0.51 %
Warren Lawlor - - % 1,208,669 0.40 % 2,000,000 0.67 %
James Beaumont 50,320 0.02 % - - % 238,049 0.08 %
Paul Miller 21,898 0.01 % - - % - - %
Richard Grant
(chairman) - - % 100,000 0.03 % - - %
Philip Holland 24,999 0.01 % - - % - - %
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
(1) 5,392,536 shares are subject to security by way of a
shareholder loan (see note 13).
(2) 4,364,027 shares are subject to security by way of a
shareholder loan (see note 13).
9 Finance costs
31 March 31 March
2021 2020
GBP'000 GBP'000
--------------------------------- -------- --------
Interest on loans and borrowings 4,860 8,930
Amortisation of facility costs 997 789
--------------------------------- -------- --------
Net finance costs 5,857 9,719
--------------------------------- -------- --------
Included in the 31 March 2020 interest on loans and borrowings
amount of GBP8.9 million is GBP2.6 million of borrowing costs in
relation to the early repayment of the Bleichenhof bank loan upon
sale of the property.
10 Taxation
Real Estate Investment Trust regime (REIT regime)
The Company converted to UK REIT status on 1 May 2018. As a
member of the REIT regime, profits from its UK property rental
business are tax exempt. The REIT regime only applies to certain
property-related profits and has several criteria which have to be
met. The main criteria are:
-- the assets of the property rental business must be at least 75% of the Group's assets;
-- the profit from the tax-exempt property rental business must
exceed 75% of the Group's total profit; and
-- at least 90% of the Group's profit from the UK property
rental business must be paid as dividends.
The Company continues to meet these conditions and management
intends that Stenprop should continue as a REIT for the foreseeable
future.
(i) Tax recognised in statement of comprehensive income
31 March 31 March
2021 2020
GBP'000 GBP'000
--------------------------- -------- --------
Current tax - UK
On net income for the year - (93)
Current tax - Foreign
On net income for the year 3,532 5,967
--------------------------- -------- --------
Total current tax 3,532 5,874
--------------------------- -------- --------
Deferred tax (1,498) (7,096)
--------------------------- -------- --------
Total tax expense/(credit) 2,034 (1,222)
--------------------------- -------- --------
No tax was recognised on other comprehensive income during the
period (2020: nil). Tax rates applicable in the jurisdictions which
the Company operates in are:
-- Germany: 15.825%
-- United Kingdom: 19%
-- Switzerland: 20%.
(ii) Reconciliation of tax charge for the year
31 March 31 March
2021 2020
GBP'000 GBP'000
------------------------------------------------------------------------------------------ -------- --------
Profit before taxation on continuing operations 55,940 16,134
------------------------------------------------------------------------------------------ -------- --------
Expected tax charge on ordinary activities at the standard rate of taxation of 19% (2020:
19%) 10,629 3,065
------------------------------------------------------------------------------------------ -------- --------
Property revaluation gains not taxable (5,200) (938)
Fair value of derivative financial instrument (gains)/losses not taxable (369) 458
Gains on disposal of subsidiary not taxable (58) -
Income not taxable - (58)
Property rental business profits exempt from tax in the REIT Group (3,429) (1,977)
Expenditure not allowed for income tax purposes - 217
Effect of tax losses 822 -
Income from joint ventures - 402
Effect of tax rates in other jurisdictions (471) (611)
Foreign withholding tax provision charge/(release) 300 (1,880)
Tax provision release (190) -
Other - 30
------------------------------------------------------------------------------------------ -------- --------
Total income tax expense/(credit) 2,034 (1,222)
------------------------------------------------------------------------------------------ -------- --------
11 Dividends
For the year ended
31 March 2021
--------------------
Pence
per share GBP'000
----------------------------------------------------------------------------------- ----------- -------
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 March 2020 paid on 14 August 2020 3.375 9,550
Interim dividend for the year ended 31 March 2021 paid on 12 February 2021 3.375 9,551
----------------------------------------------------------------------------------- ----------- -------
Total dividends distributed 6.750 19,101
----------------------------------------------------------------------------------- ----------- -------
Scrip dividends issued during the period:
Final scrip dividend for the year ended 31 March 2020 issued on 14 August 2020 3.375 4,074
Interim scrip dividend for the year ended 31 March 2021 issued on 12 February 2021 3.375 3,119
----------------------------------------------------------------------------------- ----------- -------
Total scrip dividends issued 6.750 7,193
----------------------------------------------------------------------------------- ----------- -------
Dividends paid as reported in the consolidated statement of cash flows 11,908
----------------------------------------------------------------------------------- ----------- -------
For the year ended
31 March 2020
--------------------
Pence
per share GBP'000
----------------------------------------------------------------------------------- ----------- -------
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 March 2019 paid on 16 August 2019 3.375 9,478
Interim dividend for the year ended 31 March 2020 paid on 14 February 2020 3.375 9,549
----------------------------------------------------------------------------------- ----------- -------
Total dividends distributed 6.750 19,027
----------------------------------------------------------------------------------- ----------- -------
Scrip dividends issued during the period:
Final scrip dividend for the year ended 31 March 2019 issued on 16 August 2019 3.375 2,819
Interim scrip dividend for the year ended 31 March 2020 issued on 14 February 2020 3.375 2,278
----------------------------------------------------------------------------------- ----------- -------
Total scrip dividends issued 6.750 5,097
----------------------------------------------------------------------------------- ----------- -------
Dividends paid as reported in the consolidated statement of cash flows 13,930
----------------------------------------------------------------------------------- ----------- -------
The directors declared a final dividend on 9 June 2021, for the
year ended 31 March 2021, of 3.375 pence per share, which is
detailed in note 30.
12 Share capital
Authorised
1,000,000,000 ordinary shares with a par value of EUR0.000001258
each:
31 March 31 March
2021 2020
Issued share capital (no. shares) (no. shares)
-------------------------------------- ------------- -------------
Opening balance 298,775,175 298,775,175
-------------------------------------- ------------- -------------
Closing number of shares in issue 298,775,175 298,775,175
-------------------------------------- ------------- -------------
Authorised share capital GBP'000 GBP'000
-------------------------------------- ------------- -------------
Share capital 1 1
Share premium 322,775 322,992
-------------------------------------- ------------- -------------
Total share capital and share premium 322,776 322,993
-------------------------------------- ------------- -------------
There were no changes made to the number of authorised shares of
the Company during the period under review. Stenprop Limited has
one class of share. All shares rank equally and are fully paid.
The Company has 298,775,175 (2020: 298,775,175) ordinary shares
in issue at the reporting date, including treasury shares.
On 12 June 2020, the Company announced a final dividend of 3.375
pence per share in respect of the six months to 31 March 2020. On
13 August 2020, the Company announced a take-up of the scrip
dividend representing 1.10% of the issued share capital and
3,301,265 shares were subsequently issued from treasury shares on
14 August 2020.
On 4 December 2020, the Company announced an interim dividend of
3.375 pence per share in respect of the six months to
30 September 2020. On 11 February 2021, the Company announced a
take up of the scrip dividend representing 0.71% of the issued
share capital and 2,135,516 shares were subsequently issued from
treasury shares on 12 February 2021.
As at 31 March 2021, the Company held 12,866,950 treasury shares
(2020: 15,830,040). During the period, the shareholders were
offered the option to receive either a scrip dividend by way of an
issue of Stenprop treasury shares, or a cash dividend. The
Company's share price was trading at a discount relative to NAV, up
until mid-February 2021. Before mid-February, the directors bought
back 3,476,265 of the issued 5,436,781 scrip alternative through
share purchases to mitigate the dilutive effect that would
otherwise have occurred through the issuance of new ordinary
shares.
The equity reserve account within equity combines the activities
of the Company's treasury shares, including the issue of scrip
dividend shares (detailed in the below table) as well as the
equity-settled share-based payments that are credited to equity
(see note 13). At 31 March 2021, the carrying value of the
Company's treasury shares was GBP12,694,000 (2020: GBP17,017,000)
and the equity-settled share-based payments reserve reduced this
account by GBP2,636,000 (2020: GBP2,657,000)
Retained earnings is the cumulative net profit of the Group.
Retained earnings can either be paid out to shareholders as a
dividend or be reinvested in the Group as working capital.
31 March 31 March
2021 2020
Treasury shares (no. shares) (no. shares)
---------------------------------------------------------------------------------------- ------------- -------------
Opening balance 15,830,040 16,028,050
Issue of scrip dividend shares (5,436,781) (4,153,945)
Market buy-back of shares at an average price of GBP1.18 per share (31 March 2020:
GBP1.15) 3,476,265 4,153,945
Exercised shares from the Deferred Share Bonus Plan (797,797) (198,010)
Exercised shares from the Long Term Incentive Plan (204,777) -
---------------------------------------------------------------------------------------- ------------- -------------
Closing number of treasury shares 12,866,950 15,830,040
---------------------------------------------------------------------------------------- ------------- -------------
13 Share-based payments
The Group operates share incentive plans which are used to
attract and retain high-calibre employees to help grow the
business. All awards are considered by the remuneration committee
and are subject to board approval.
The Group recognised a total share-based expense of GBP937,000
in the year (2020: GBP1,079,000) in relation to the share option
schemes. As at 31 March 2021, the equity reserve held GBP2,636,000
in relation to share-based payment transactions (2020:
GBP2,657,000).
The incentive plans are discussed in more detail below.
Deferred Share Bonus Plan
The board may grant an award to an eligible employee following a
recommendation from the remuneration committee over such number of
shares that have an aggregate value equal to the deferred bonus.
Such share options vest in three equal tranches; the first tranche
vests on the date of grant with subsequent tranches vesting at the
first and second anniversaries of the relevant year end. Share
options may be exercised until the tenth anniversary of the grant
date, after which time they will lapse.
The fair value of this nil-cost option is determined using the
Black-Scholes model. The key inputs used in determining the award
granted on 12 June 2020 are shown below:
Share price at date of grant 116.50p
Expected option life in years 2
Value per option 116.50p
------------------------------ -------
Movement in options granted in terms of this plan are detailed
below:
Exercise dates
----------- -------- ------- ----------- ---------- ----------- ----------- ---------- -----------------------
Fair value
At Outstanding Exercisable at grant
Date of 1 April Dividend Exercised/ at 31 March at 31 March date in
grant 2020 Granted equivalents Other 2021 2021 GBP From To
----------- -------- ------- ----------- ---------- ----------- ----------- ---------- ---------- -----------
10 June 10 June 10 June
2015 427,820 - 16,947 (197,674) 247,093 247,093 GBP1.08 2015 2025
8 June
8 June 2016 273,649 - 11,315 (121,954) 163,010 163,010 GBP1.05 2016 8 June 2026
7 June
7 June 2017 13,720 - 602 - 14,322 14,322 GBP1.08 2017 7 June 2027
7 June
7 June 2018 311,836 - 14,381 (137,657) 188,560 188,560 GBP1.13 2018 7 June 2028
6 June
6 June 2019 500,843 - 30,685 (113,796) 417,732 417,732 GBP1.12 2019 6 June 2029
12 June 12 June 12 June
2020 - 93,229 34,214 (2,487) 124,956 62,803 GBP1.17 2020 2030
----------- -------- ------- ----------- ---------- ----------- ----------- ---------- ---------- -----------
At At
Weighted average exercise price of deferred share bonus plan share options 31 March 2021 31 March 2020
-------------------------------------------------------------------------- -------------- --------------
Exercisable GBP1.10 GBP1.10
Non-exercisable GBP1.17 GBP1.12
-------------------------------------------------------------------------- -------------- --------------
At At
Weighted average remaining contracted life of deferred share bonus plan share options 31 March 2021 31 March 2020
------------------------------------------------------------------------------------- -------------- --------------
Exercisable 6.7 Years 7.1 Years
Non-exercisable 9.2 Years 9.1 Years
------------------------------------------------------------------------------------- -------------- --------------
LTIP for senior management
Such share options vest in three equal tranches; the first
tranche vests on the first anniversary of year end, with subsequent
tranches vesting at the second and third anniversaries of the
relevant year ends. Share options may be exercised until the tenth
anniversary of the grant date, after which time they will lapse.
The fair value of this award is determined using the Black-Scholes
model. The key inputs used in determining the award granted on 12
June 2020 are shown below:
Share price at date of grant 116.50p
Exercise price at grant date 104.92p
Expected option life in years 10
Risk-free rate (0.03%)
Expected volatility 33.00%
Value per option 37.00p
------------------------------ -------
The volatility assumption is based on a statistical analysis of
daily share prices of comparator companies over the three years
prior to the 12 June 2020 grant date.
Exercise dates
----------- -------- ------- ----------- ---------- ----------- ----------- ---------- -----------------------
Fair value
At Outstanding Exercisable at grant
Date of 1 April Dividend Exercised/ at 31 March at 31 March date in
grant 2020 Granted equivalents Other 2021 2021 GBP From To
----------- -------- ------- ----------- ---------- ----------- ----------- ---------- ----------- ----------
24 January 31 March 24 January
2018 94,528 - 4,416 - 98,944 98,944 GBP0.47 2018 2028
31 March 7 June
7 June 2018 462,324 - 21,601 - 483,925 483,925 GBP0.27 2019 2028
31 March 6 June
6 June 2019 515,778 - 25,566 (105,239) 436,105 290,737 GBP0.26 2020 2029
12 June 31 March 12 June
2020 - 411,248 21,600 - 432,848 144,283 GBP0.37 2021 2030
----------- -------- ------- ----------- ---------- ----------- ----------- ---------- ----------- ----------
At At
Weighted average exercise price of LTIP for senior management share options 31 March 2021 31 March 2020
--------------------------------------------------------------------------- -------------- --------------
Exercisable GBP1.12 GBP1.13
Non-exercisable GBP1.12 GBP1.12
--------------------------------------------------------------------------- -------------- --------------
At At
Weighted average remaining contracted life of LTIP for senior management share options 31 March 2021 31 March 2020
-------------------------------------------------------------------------------------- -------------- --------------
Exercisable 7.7 Years 8.4 Years
Non-exercisable 8.9 Years 8.9 Years
-------------------------------------------------------------------------------------- -------------- --------------
LTIP for executive directors
Such share options vest on the third anniversary of grant date
subject to pre-determined vesting conditions being met. All options
not vesting on the vesting date will automatically lapse. All
vested options and shares received upon the exercise of vested
options are subject to a further two-year lock-in period during
which they cannot be sold. The fair value of these nil-cost options
is determined by external valuers using the Black-Scholes model and
the Monte Carlo model. The key inputs used in determining the award
granted on 12 June 2020 are shown below:
Share price 116.50p
Exercise price at grant date GBP0.00
Expected option life in years 3+2
Risk-free rate (0.03%)
Expected volatility 33.00%
Value per option - non-market awards 116.50p
Value per option - market awards 75.00p
------------------------------------- -------
The volatility assumption is based on a statistical analysis of
daily share prices of comparator companies over the three years
prior to the 12 June 2020 grant date.
Exercise dates
----------- --------- --------- ----------- ---------- ----------- ----------- ---------- --------------------
Fair value
At Outstanding Exercisable at grant
Date of 1 April Dividend Exercised/ at 31 March at 31 March date in
grant 2020 Granted equivalents Other 2021 2021 GBP From To
----------- --------- --------- ----------- ---------- ----------- ----------- ---------- ----------- -------
24 January 8 June 8 June
2018 467,720 - 14,436 (238,343) 243,813 - GBP0.68 2020* 2027
7 June 7 June
7 June 2018 1,073,863 - 50,175 - 1,124,038 - GBP0.52 2021* 2028
6 June 6 June
6 June 2019 1,021,654 - 50,643 - 1,072,297 - GBP0.52 2022* 2029
12 June 12 June 12 June
2020 - 1,052,230 55,267 - 1,107,497 - GBP0.75 2023* 2030
----------- --------- --------- ----------- ---------- ----------- ----------- ---------- ----------- -------
* Lock-in period of two years applies after vesting.
At At
Weighted average exercise price of LTIP for executive directors share options 31 March 2021 31 March 2020
----------------------------------------------------------------------------- -------------- --------------
Exercisable - -
Non-exercisable - -
----------------------------------------------------------------------------- -------------- --------------
Weighted average remaining contracted life of LTIP for executive directors share At At
options 31 March 2021 31 March 2020
-------------------------------------------------------------------------------------- -------------- --------------
Exercisable - -
Non-exercisable 8.1 Years 8.4 Years
-------------------------------------------------------------------------------------- -------------- --------------
Other share options
On 30 March 2017, the Company agreed to grant to Ferryman
Capital Partners Limited, a company in which Warren Lawlor, a
former non-executive director, has a one-third beneficial interest,
an option to subscribe for 2,000,000 Stenprop shares. The exercise
price was GBP1.32. The full cost of this option was recognised in
the year ended 31 March 2018. The option lapses on 31 March 2022.
The option only has a dilutive effect when the average market price
of ordinary shares exceeds the exercise price of the options.
The fair value of this award was determined using the
Black-Scholes model. The key inputs used in determining the award
granted on 30 March 2017 are shown below:
Share price GBP1.08
Exercise price at grant date GBP1.31
Expected option life in years 5
Risk-free rate 1.50%
Expected volatility 31.31%
Expected dividend yield 5.00%
Value per option GBP0.13
------------------------------ -------
The volatility assumption is based on a statistical analysis of
daily share prices of Stenprop over the two years prior to the 30
March 2017 grant date.
Exercise dates
-------------- --------- ------- --------- ------------ ---------- ---------------------- ---------------------
Fair value
At Outstanding at grant
1 April at 31 March date in Exercisable at 31
Date of grant 2020 Granted Exercised 2021 GBP March 2021 From To
-------------- --------- ------- --------- ------------ ---------- ---------------------- ------------- ------
7 June
30 March 2017 2,000,000 - - 2,000,000 2,000,000 GBP0.13 30 March 2022 2029
-------------- --------- ------- --------- ------------ ---------- ---------------------- ------------- ------
Share Purchase Plan
Loans advanced under the share purchase plan are
interest-bearing at a rate equal to the average interest rate
incurred by the Group from time to time. Interest is payable
six-monthly in arrears. Loans are repayable within 30 days of
cessation of employment or loss of office (unless the participant
ceases employment in circumstances beyond his or her control, in
which case the loan is repayable within 12 months), and must in all
circumstances be repaid in 10 years. All dividends received by such
employees (or his or her nominee) by virtue of their shareholding
must first be utilised to discharge any interest outstanding in
terms of the loan advanced in terms of the Share Purchase Plan. The
loans have full recourse to the participants who must charge their
shares by way of security for the loans.
The table below summarises the position at year end in terms of
loans advanced and the number of shares to which they relate. No
further awards will be made under the Share Purchase Plan.
31 March 31 March
2021 2020
---------------------------------------------------------------- ------------------- ----------- ----------
Brought forward at start of year (number of shares) 10,037,162 10,211,145
Share Purchase Plan shares issued in year (number of shares) - -
Share Purchase Plan shares redeemed (number of shares) (4,644,626) (173,983)
Carried forward at end of year (number of shares) 5,392,536 10,037,162
---------------------------------------------------------------- ------------------- ----------- ----------
Stock price at advancement (EUR) N/A N/A
Share Purchase Plan loans advanced (including accrued interest) (GBP'000) 6,540 12,265
---------------------------------------------------------------- ------------------- ----------- ----------
Other share purchase loan
On 30 March 2017, a EUR1.22 million loan was advanced from
Stenprop (Germany) Limited to Ferryman Capital Partners Limited, a
company in which Warren Lawlor, a former non-executive director,
has a one-third beneficial interest, to purchase 1,000,000 Stenprop
shares in the market. The loan advanced is interest-bearing at a
rate equal to the average interest rate incurred by the Group from
time to time. Interest is payable six-monthly in arrears. The loan
has full recourse to the borrower and the shares are charged as
security for the loans. The loan, including accrued interest, was
repaid in full in February 2021.
31 March 31 March
2021 2020
------------------------------------------- ------------------- --------- ---------
Brought forward at start of year (number of shares) 1,000,000 1,000,000
Shares issued in year (number of shares) - -
Shares redeemed (number of shares) (723,672) -
Carried forward at end of year (number of shares) 276,328 1,000,000
------------------------------------------- ------------------- --------- ---------
Loan advanced (including accrued interest) (GBP'000) - 1,056
------------------------------------------- ------------------- --------- ---------
14 Earnings per ordinary share
31 March 31 March
2021 2020
GBP'000 GBP'000
-------------------------------------------------------------------------------------------- ----------- -----------
Reconciliation of profit for the period to adjusted EPRA (1) earnings
Earnings per IFRS statement of comprehensive income attributable to shareholders 53,045 15,565
Adjustment to exclude loss from discontinued operations 891 2,197
-------------------------------------------------------------------------------------------- ----------- -----------
Earnings per IFRS statement of comprehensive income from continuing operations attributable
to shareholders 53,936 17,762
-------------------------------------------------------------------------------------------- ----------- -----------
Earnings per IFRS statement of comprehensive income attributable to shareholders 53,045 15,565
Adjustments to calculate EPRA earnings, exclude:
Gain on fair value of investment properties (35,109) (1,741)
(Gain)/loss on fair value of financial instruments, debt and associated close out costs (1,784) 2,410
Deferred tax in respect of EPRA adjustments (1,618) (6,843)
Impairment of intangibles - 305
(Gain)/loss on disposal of properties (639) 4,630
Tax expense on disposal of properties 3,470 5,187
Loss on disposal of subsidiaries 172 -
Adjustments above in respect of joint ventures:
Loss/(gain) on fair value of investment properties 1,466 (674)
Gain on fair value of financial instruments (41) -
Deferred tax in respect of EPRA adjustments (51) 194
-------------------------------------------------------------------------------------------- ----------- -----------
EPRA earnings attributable to shareholders 18,911 19,033
-------------------------------------------------------------------------------------------- ----------- -----------
Further adjustments to arrive at adjusted earnings:
Costs associated with ERP implementation 463 669
-------------------------------------------------------------------------------------------- ----------- -----------
Adjusted earnings attributable to shareholders (2) 19,374 19,702
-------------------------------------------------------------------------------------------- ----------- -----------
Weighted average number of shares in issue (excluding treasury shares) 283,549,160 282,777,020
Share-based payment award 2,167,213 3,522,208
-------------------------------------------------------------------------------------------- ----------- -----------
Diluted weighted average number of shares in issue 285,716,373 286,299,228
-------------------------------------------------------------------------------------------- ----------- -----------
Earnings per share from continuing operations Pence Pence
---------------------------------------------- ----- -----
IFRS EPS 19.02 6.28
Diluted IFRS EPS 18.88 6.20
---------------------------------------------- ----- -----
Earnings per share from continuing and discontinued operations Pence Pence
--------------------------------------------------------------- ----- -----
IFRS EPS 18.71 5.50
Diluted IFRS EPS 18.57 5.44
EPRA EPS 6.67 6.73
Diluted EPRA EPS 6.62 6.65
Adjusted EPS 6.78 6.88
--------------------------------------------------------------- ----- -----
(1) The European Public Real Estate Association (EPRA) issued
the Best Practices Recommendations policy in October 2019, which
provides guidelines for performance measures relevant to real
estate companies. Their recommended reporting standards are widely
applied across this market, aiming to bring consistency and
transparency to the sector. The EPRA earnings measure is intended
to show the level of recurring earnings from core operational
activities with the purpose of highlighting the Group's underlying
operating results from its property rental business and an
indication of the extent to which current dividend payments are
supported by earnings. The measure excludes unrealised changes in
the value of investment properties, gains or losses on the disposal
of properties and other items to provide additional information on
the Group's underlying operational performance. The measure is
considered to accurately capture the long-term strategy of the
Group, and is an indication of the sustainability of dividend
payments.
(2) As described in the EPRA Best Practice Recommendations
policy issued in October 2019, should companies wish to make other
adjustments to arrive at an underlying performance measure, they
should do that below 'EPRA earnings' and use a different name for
that measure. 'Adjusted EPS' is a measure that excludes items
considered not to be in the ordinary course of business or other
exceptional items that do not necessarily provide an accurate
picture of the Group's underlying operational performance.
As at 31 March 2021, the Company held 12,866,950 treasury shares
(2020: 15,830,040).
Costs associated with ERP implementation
Stenprop is implementing a new enterprise resource planning
(ERP) and customer engagement (CE) platform to help streamline and
grow the business. Significant non-recurring costs will be incurred
during the implementation phase before the systems go live.
The ERP implementation expense is related to a one-off project
and is anticipated to complete shortly. It has been adjusted for as
a 'company-specific adjustment'.
Headline earnings per share
The JSE listings conditions require the calculation of headline
earnings and disclosure of a detailed reconciliation of headline
earnings to the earnings numbers used in the calculation of basic
earnings per share in accordance with the requirements of IAS 33 -
Earnings per Share. Disclosure of headline earnings is not a
requirement of IFRS.
31 March 31 March
2021 2020
Reconciliation of profit for the period to headline earnings GBP'000 GBP'000
---------------------------------------------------------------------------- -------- --------
Earnings per statement of comprehensive income attributable to shareholders 53,045 15,565
---------------------------------------------------------------------------- -------- --------
Adjustments to calculate headline earnings, exclude:
Gain on fair value of investment properties (35,109) (1,741)
Deferred tax in respect of headline earnings adjustments (1,640) (6,848)
Impairment of intangibles - 305
(Gain)/loss on disposal of properties (639) 4,630
Tax expense on disposal of properties 3,470 5,187
Loss on disposal of subsidiaries 172 -
Adjustments above in respect of joint ventures:
Loss/ (gain) on fair value of investment properties 1,466 (729)
Deferred tax (57) 199
---------------------------------------------------------------------------- -------- --------
Headline earnings attributable to shareholders 20,708 16,568
---------------------------------------------------------------------------- -------- --------
Earnings per share pence pence
---------------------------------------------------------------------------- -------- --------
Headline EPS 7.30 5.86
Diluted headline EPS 7.25 5.79
---------------------------------------------------------------------------- -------- --------
15 Net asset value metrics per share - reconciliations and
bridge
In October 2019, EPRA published new best practice
recommendations for financial disclosures by public real estate
companies. Three new measures of net asset value were introduced
namely: EPRA net tangible assets (NTA), EPRA net reinvestment value
(NRV) and EPRA net disposal value (NDV). These recommendations are
effective for accounting periods starting on 1 January 2020 and
have been adopted by the Group.
Stenprop considers EPRA NTA to be the most relevant measure of
the three EPRA NAVs to report on and will act as the key net asset
value measure going forward. The EPRA NTA metric is aligned with
IFRS NAV in that it includes deferred tax liabilities with regard
to properties classified as held for sale. A reconciliation of the
three new EPRA NAV metrics from IFRS NAV is shown in the table
below. The previously reported EPRA NAV has also been included for
comparative purposes.
New
NAV EPRA NAV measures Previously reported measures
----------- ------------------------------------- ----------------------------
IFRS EPRA NRV EPRA NTA EPRA NDV EPRA NAV
As at 31 March 2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ----------- ----------- ----------- ----------------------------
Net assets attributable to
equity shareholders 425,820 425,820 425,820 425,820 425,820
Adjustments:
Derivative financial instruments - (1,732) (1,732) - (1,732)
Deferred tax in relation to fair
value of investment property
and financial instruments(1) - 1,712 - - 1,712
Adjustments above in respect of
joint ventures - 714 714 - 714
Intangible assets - - (1,784) - -
Purchaser's costs(2) - 37,798 - - -
-------------------------------- ----------- ----------- ----------- ----------- ----------------------------
Net assets used in per share
calculation 425,820 464,312 423,018 425,820 426,514
-------------------------------- ----------- ----------- ----------- ----------- ----------------------------
Number of shares in issue
(excluding treasury shares)(3) 285,908,225 285,908,225 285,908,225 285,908,225 285,908,225
Share-based payment award 2,167,213 2,167,213 2,167,213 2,167,213 2,167,213
-------------------------------- ----------- ----------- ----------- ----------- ----------------------------
Diluted number of shares in
issue 288,075,438 288,075,438 288,075,438 288,075,438 288,075,438
-------------------------------- ----------- ----------- ----------- ----------- ----------------------------
IFRS EPRA NRV EPRA NTA EPRA NDV EPRA NAV
Net asset value per share GBP GBP GBP GBP GBP
---------------------------------- ---- -------- -------- -------- --------
Net asset value per share 1.49 - - - -
Diluted net asset value per share 1.48 1.61 1.47 1.48 1.48
---------------------------------- ---- -------- -------- -------- --------
New
NAV EPRA NAV measures Previously reported measures
----------- ------------------------------------- ----------------------------
IFRS EPRA NRV EPRA NTA EPRA NDV EPRA NAV
As at 31 March 2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ----------- ----------- ----------- ----------------------------
Net assets attributable to
equity shareholders 391,241 391,241 391,241 391,241 391,241
Adjustments:
Derivative financial instruments - 2,001 2,001 - 2,001
Deferred tax in relation to fair
value of investment property
and financial instruments(1) - 3,782 - - 3,782
Adjustments above in respect of
joint ventures - 1,921 1,921 - 1,921
Purchasers' costs(2) - 34,961 - - -
-------------------------------- ----------- ----------- ----------- ----------- ----------------------------
Net assets used in per share
calculation 391,241 433,906 395,163 391,241 398,945
-------------------------------- ----------- ----------- ----------- ----------- ----------------------------
Number of shares in issue
(excluding treasury shares)(3) 282,945,135 282,945,135 282,945,135 282,945,135 282,945,135
Share-based payment award 3,522,208 3,522,208 3,522,208 3,522,208 3,522,208
-------------------------------- ----------- ----------- ----------- ----------- ----------------------------
Diluted number of shares in
issue 286,467,343 286,467,343 286,467,343 286,467,343 286,467,343
-------------------------------- ----------- ----------- ----------- ----------- ----------------------------
NAV New measures Previously reported measures
---- ---------------------------- ----------------------------
IFRS EPRA NRV EPRA NTA EPRA NDV EPRA NAV
Net assets per share GBP GBP GBP GBP GBP
---------------------------------- ---- -------- -------- -------- ----------------------------
Net asset value per share 1.38 - - - -
Diluted net asset value per share 1.37 1.51 1.38 1.37 1.39
---------------------------------- ---- -------- -------- -------- ----------------------------
(1) The Group's deferred tax in relation to the fair value of
investment properties and financial instruments relates solely to
those properties in the German portfolio included in assets held
for sale which comprise 4.5% of the portfolio with a fair value of
GBP26.2 million (2020: GBP94.8 million (17.8%)). No deferred tax
was excluded from EPRA NTA as the deferred tax will be crystallised
on sale of these properties in the short term.
(2) EPRA NTA and EPRA NDV reflect IFRS values which are net of
purchaser's costs. Any purchaser's costs deducted from the market
value, are added back when calculating EPRA NRV.
(3) As at 31 March 2021, the Company held 12,866,950 treasury
shares (2020: 15,830,040).
16 Investment property
The fair value of the consolidated investment properties at 31
March 2021 was GBP511.2 million (2020: GBP387.8 million). This
excludes an amount of GBP12.0 million (2020: GBP14.3 million) for
the last remaining Swiss property (2020: one Swiss property) and
GBP26.2 million (2020: GBP94.8 million) for the last remaining
German property (2020: eight) which has been classified as held for
sale. Apart from the one remaining German property, the carrying
amount of the investment properties are stated at estimated fair
value, determined by directors, based on an independent external
appraisal. The sole remaining German property is based on a signed
contract for the disposal of the property. The registered
independent appraisers have an appropriate recognised professional
qualification and recent experience in the location and category of
the property being valued ('valuers').
The fair value of each of the properties for the period ended 31
March 2021, was assessed by the valuers in accordance with the
Royal Institution of Chartered Surveyors ('RICS') standards and
IFRS 13. Valuers are qualified for purposes of providing valuations
in accordance with the 'Appraisal and Valuation Manual' published
by RICS.
The valuation of the Group's property portfolio is inherently
subjective due to several factors including the individual nature
of each property, its location, expectation of future rentals and
the discount yield applied to those cash flows. As a result, the
valuations placed on the property portfolio are subject to a degree
of uncertainty and are made based on assumptions that may not prove
to be accurate, particularly in years of volatility or low
transaction flow in the market. Due to the current economic
uncertainty in the market due to COVID-19 the Switzerland valuers
have issued their valuation report with a material valuation
uncertainty clause. They have advised there is less certainty
attached to their valuation in comparison to what would normally be
the case, but that does not mean the valuations cannot be relied
upon. For the avoidance of doubt, the UK and Guernsey valuations do
not have a material valuation uncertainty clause attached the
valuations and the German valuation is based on a signed contract
of sale. The estimated market value may differ from the price at
which the Group's assets
could be sold at a particular time, since actual selling prices
are negotiated between willing buyers and sellers. As a result, if
the assumptions prove to be different, actual results of operations
and realisation of net assets could differ from the estimates set
forth in these financial statements, and the difference could be
significant.
The valuations performed by the independent valuers are reviewed
internally by senior management. This includes discussions of the
assumptions used by the external valuers, as well as a review of
the resulting valuations.
Discussions of the valuations process and results are held
between the senior management and the external valuers on a
biannual basis. The audit and risk committee reviews the valuation
results and, provided the committee is satisfied with the results,
recommends them to the board for approval.
The valuation techniques used are consistent with IFRS 13 and
use significant 'unobservable' inputs. Investment properties are
all at level 3 in the fair value hierarchy and valuations represent
the highest and best use of the properties. There have been no
changes in valuation techniques since the prior year and no
transfers between the fair value hierarchy levels in the current or
prior year.
There are interrelationships between all these unobservable
inputs as they are determined by market conditions. An increase in
more than one unobservable input would magnify the impact on the
valuation. The impact on the valuation would be mitigated by the
interrelationship of two unobservable inputs moving in opposite
directions e.g. an increase in rent may be offset by an increase in
yield, resulting in no net impact on the valuation. Expected
vacancy rates may impact the yield with higher vacancy rates
resulting in higher yield. All revenue is derived from the
underlying tenancies given on the investment properties.
With the exception of five (2020: two) recently acquired MLI
properties, all investment properties are mortgaged, details of
which can be seen in note 23. As at the date of signing this
report, there are no restrictions on the realisability of any of
the underlying investment properties, nor on the remittance of
income and disposal proceeds.
The key unobservable inputs used in the valuation of the Group's
investment properties at 31 March 2021 are detailed in the table
below:
Market Annualised Net initial
value Portfolio contracted yield Voids Market
31 March by market gross rental (Weighted by rent range
Combined portfolio (including share of jointly 2021 value Properties Area income* average) area per month
controlled entities) (GBP'000) (%) (number) (sq m) (GBP'000) (%) (%) (GBP/sq m)
----------------------------------------------- ---------- ---------- ---------- ------- ------------- ----------- ----- -----------
Investment properties
Guernsey 56,150 9.7% 1 10,564 4,428 7.25% 0.20% 34.9
UK multi-let industrial 432,910 74.3% 83^ 521,288 30,190 6.22% 6.34% 3.0-9.7
UK urban logistics 22,160 3.8% 5 21,861 1,741 7.36% -% 3.0-21.4
----------------------------------------------- ---------- ---------- ---------- ------- ------------- ----------- ----- -----------
Subtotal 511,220 87.8% 89 553,713 36,359 6.39% 5.98% -
Assets held for sale
Germany 26,239 4.5% 1 8,274 1,269 4.90% 3.20% 13.0
Switzerland 11,967 2.1% 1 5,974 953 3.37% -% 13.3
----------------------------------------------- ---------- ---------- ---------- ------- ------------- ----------- ----- -----------
Total - wholly owned 549,426 94.4% 91 567,961 38,581 6.25% 5.87% -
----------------------------------------------- ---------- ---------- ---------- ------- ------------- ----------- ----- -----------
Share of joint ventures 32,839 5.6% 4 19,330 2,379 6.15% -% 7.3-13.2
----------------------------------------------- ---------- ---------- ---------- ------- ------------- ----------- ----- -----------
Total 582,265 100.0% 95 587,291 40,960 6.24% 5.68% -
----------------------------------------------- ---------- ---------- ---------- ------- ------------- ----------- ----- -----------
* Annualised contracted gross rental income excludes rent free
periods and fixed uplifts. At 31 March 2021, annualised current
passing rent for the Group totalled GBP39,520,000.
^ The Group completed 14 individual estate acquisitions in the
financial year ended 31 March 2021. One of the estates, known as
'The Levels' was an acquisition of a long lease hold interest in an
estate in which the Group was already the freeholder. For internal
management purposes this estate has been absorbed into the existing
freehold estate reducing the number of newly acquired estates
internally to 13.
Subsequent to 31 March 2021, the Guernsey property met the
conditions for it to be classified as an asset held for sale.
Further information regarding this sale can be found in note
19.
Market Annualised Net initial
value Portfolio contracted yield Voids Market
31 March by market gross rental (Weighted by rent range
Combined portfolio (including share of jointly 2020 value Properties Area income* average) area per month
controlled entities) (GBP'000) (%) (number) (sq m) (GBP'000) (%) (%) (GBP/sq m)
----------------------------------------------- ---------- ---------- ---------- ------- ------------- ----------- ----- -----------
Investment properties
Guernsey 57,460 10.8% 1 10,564 4,335 7.05% 0.05% 34.2
UK multi-let industrial 308,951 58.0% 70 420,483 22,701 6.47% 8.90% 2.6-8.6
UK urban logistics 21,350 4.0% 5 21,835 1,709 7.56% -% 3.0-21.4
----------------------------------------------- ---------- ---------- ---------- ------- ------------- ----------- ----- -----------
Subtotal 387,761 72.8% 76 452,882 28,745 6.62% 8.27% -
Assets held for sale
Germany 94,799 17.8% 8 52,122 5,736 5.10% 0.82% 4.9-12.7
Switzerland 14,277 2.7% 1 5,974 1,038 5.81% -% 14.5
----------------------------------------------- ---------- ---------- ---------- ------- ------------- ----------- ----- -----------
Total - wholly owned 496,837 93.3% 85 510,978 35,519 5.19% 7.41% -
----------------------------------------------- ---------- ---------- ---------- ------- ------------- ----------- ----- -----------
Share of joint ventures 35,737 6.7% 4 19,330 2,429 5.94% -% 7.6-13.5
----------------------------------------------- ---------- ---------- ---------- ------- ------------- ----------- ----- -----------
Total 532,574 100.0% 89 530,308 37,948 6.28% 7.14% -
----------------------------------------------- ---------- ---------- ---------- ------- ------------- ----------- ----- -----------
* Annualised contracted gross rental income excludes rent free
periods and fixed uplifts. At 31 March 2020, annualised current
passing rent for the Group totalled GBP36,029,000.
31 March 2021 31 March 2020
------------------------------------------------ ------------------------------------------------
Investment Assets held for Total - wholly Investment Assets held for Total - wholly
property sale owned property sale owned
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------------- --------------- -------------- --------------- --------------- --------------
Opening balance 387,761 109,076 496,837 562,815 16,160 578,975
Acquisitions 96,363 - 96,363 41,160 - 41,160
Capitalised
expenditure 1,514 103 1,617 6,456 6,847 13,303
Transfers to
assets held for
sale - - - (230,467) 230,467 -
Disposals - (76,220) (76,220) (3,650) (142,661) (146,311)
Net fair value
gain on
investment
properties 25,582 9,527 35,109 4,937 (6,678) (1,741)
Foreign exchange
movement in
foreign
operations - (4,280) (4,280) 6,510 4,941 11,451
---------------- --------------- --------------- -------------- --------------- --------------- --------------
Closing balance 511,220 38,206 549,426 387,761 109,076 496,837
---------------- --------------- --------------- -------------- --------------- --------------- --------------
Included in the disposals amount of GBP76.2 million, is GBP23.0
million from the disposal of the Century B.V. and Century 2 B.V.
entities detailed in note 25. To reconcile this net position of
GBP53.2 million to the consolidated statement of cash flows figure
of GBP52.8 million included in proceeds on disposal of investment
property, net of selling costs, the GBP2.1 million retention on the
sale proceeds of the Victoria retail centre in Germany needs to be
added back (see note 20), reduced by selling costs of GBP2.1
million and GBP0.4 million of current year disposal costs from
Bleichenhof in Germany (see note 19).
Future revenue streams comprise contracted rent and estimated
rental value ('ERV') after the contract period. In calculating ERV,
the potential impact of future lease incentives to be granted to
secure new contracts is taken into consideration. An
increase/decrease in ERV will increase/decrease valuations. The
table below sets out the indicative fair value impact when applying
the sensitivity of the unobservable inputs (Level 3) valuations to
a 10% change in ERV.
Impact on valuations Impact on valuations
----------------------------------- ------------- ---------------------- ------------- ----------------------
Fair value at Fair value at
31 March 31 March
2021 +10% ERV -10% ERV 2020 +10% ERV -10% ERV
Investment property GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ------------- ---------- ---------- ------------- ---------- ----------
Guernsey 56,150 4,991 (3,916) 57,460 5,161 (3,769)
UK multi-let industrial 432,910 1,980 (2,065) 308,951 19,977 (31,119)
UK urban logistics 22,160 2,120 (2,116) 21,350 2,074 (2,033)
Germany 26,239 n/a n/a 94,799 4,259 (4,240)
Switzerland 11,967 470 (469) 14,277 470 (461)
Joint ventures 32,839 1,400 (853) 35,737 1,617 (1,672)
----------------------------------- ------------- ---------- ---------- ------------- ---------- ----------
Group property portfolio valuation 582,265 10,961 (9,419) 532,574 33,558 (42,294)
----------------------------------- ------------- ---------- ---------- ------------- ---------- ----------
Net initial yield ('NIY') is the contracted rent on investment
properties at the statement of financial position date, expressed
as a percentage of the investment property valuation, plus
purchaser's costs. An increase/decrease in NIY will
decrease/increase valuations. The table below sets out the
indicative fair value impact when applying the sensitivity of the
unobservable inputs (Level 3) valuations to a 50 basis point change
in yield.
Impact on valuations Impact on valuations
----------------------------------- ------------- ---------------------- ------------- ----------------------
Fair value at Fair value at
31 March 31 March
2021 +50 bps -50 bps 2020 +50 bps -50 bps
Investment property GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ------------- ---------- ---------- ------------- ---------- ----------
Guernsey 56,150 (3,568) 4,086 57,460 (3,805) 4,385
UK multi-let industrial 432,910 (32,196) 37,822 308,951 (21,677) 25,216
UK urban logistics 22,160 (1,409) 1,614 21,350 (1,334) 1,525
Germany 26,239 n/a n/a 94,799 (9,636) 12,455
Switzerland 11,967 (708) 802 14,277 (906) 1,041
Joint ventures 32,839 (2,598) 3,037 35,737 (2,836) 3,351
----------------------------------- ------------- ---------- ---------- ------------- ---------- ----------
Group property portfolio valuation 582,265 (40,479) 47,361 532,574 (40,194) 47,973
----------------------------------- ------------- ---------- ---------- ------------- ---------- ----------
17 Group companies
Details of the Group's subsidiaries as at 31 March 2021 are as
follows:
% equity owned by
------------------------------------------- ---------------------------- -------------------- ---------------------
Name Principal place of business Principal activity Company Subsidiary
------------------------------------------- ---------------------------- -------------------- -------- -----------
BVI incorporated entities with registered
address:
Craigmuir Chambers, P.O. Box 71, Road Town,
Tortola, VG1110, British Virgin Islands
Davemount Properties Limited England Property Investment 100.0 %
Ruby Red Holdings Limited Guernsey Management 100.0 %
SP Corporate Services Limited Guernsey Management 100.0 %
SP Nominees Limited Guernsey Management 100.0 %
Stenprop Management Holdings Limited Guernsey Holding Company 100.0 %
Stenprop Hermann Limited Guernsey Property Investment 100.0 %
Stenprop Victoria Limited Guernsey Property Investment 100.0 %
Stenprop Industrials 1 Limited Guernsey Holding Company 100.0 %
Stenprop Industrials 4 Limited Guernsey Property Investment 100.0 %
Stenprop Industrials 5 Limited Guernsey Dormant 100.0 %
Stenprop (UK) Limited England Holding Company 100.0 %
------------------------------------------- ---------------------------- -------------------- -------- -----------
Curacao incorporated entities with
registered address:
Wilhelminalaan 13, Curaçao
Anarosa Holdings N.V. England Holding Company 94.9 %
C.S. Property Holding N.V. England Holding Company 94.9 %
Lakewood International N.V. England Holding Company 89.0 %
T.B. Property Holdings N.V. England Holding Company 100.0 %
------------------------------------------- ---------------------------- -------------------- -------- -----------
England incorporated entities with
registered address:
180 Great Portland Street, London, W1W 5QZ
C2 Capital Limited England Management 100.0 %
Stenprop Management Limited England Management 100.0 %
Industrials Management Limited England Dormant 100.0 %
------------------------------------------- ---------------------------- -------------------- -------- -----------
Germany incorporated entity with registered
address:
Dornbusch 4, 20095 Hamburg, Germany
KG Bleichenhof Grundtuscksverwaaltung GmbH
& Co. KG Germany Property Investment 100.0 %
------------------------------------------- ---------------------------- -------------------- -------- -----------
Guernsey incorporated entities with registered address:
Kingsway House; Havilland Street; St Peter
Port; Guernsey GY1 2QE
Bernina Property Holdings Limited England Holding Company 100.0 %
GGP1 Limited England Property Investment 100.0 %
Kantone Holdings Limited Guernsey Property Investment 100.0 %
LPE Limited Guernsey Property Investment 100.0 %
Stenprop Advisers Limited Guernsey Management 10.0 % 90.0 %
Stenprop Arsenal Limited Guernsey Dormant 100.0 %
Stenprop Industrials Holdings Limited England Holding Company 100.0 %
Stenprop Industrials 6 Limited England Property Investment 100.0 %
Stenprop Industrials 7 Limited England Dormant 100.0 %
Stenprop Industrials 8 Limited England Dormant 100.0 %
Stenprop Trafalgar Limited Guernsey Holding Company 100.0 %
Stenprop (Germany) Limited England Holding Company 100.0 %
Stenprop (Guernsey) Limited Guernsey Dormant 100.0 %
Stenprop (Swiss) Limited Guernsey Holding Company 100.0 %
------------------------------------------- ---------------------------- -------------------- -------- -----------
Isle of Man incorporated entities with registered address:
First Names House, Victoria Road, Douglas,
Isle of Man IM2 4DF
Gemstone Properties Limited Guernsey Holding Company 100.0 %
Stenham Beryl Limited Guernsey Property Investment 100.0 %
Stenham Crystal Limited Guernsey Property Investment 100.0 %
Stenham Jasper Limited Guernsey Property Investment 100.0 %
------------------------------------------- ---------------------------- -------------------- -------- -----------
Netherlands incorporated entities with registered address:
Fascinatio Boulevard 764, 2909 VA Capelle
aan den IJssel, Netherlands
Isabel Properties BV Netherlands Property Investment 94.9 %
Mindel Properties BV Netherlands Holding Company 94.5 %
------------------------------------------- ---------------------------- -------------------- -------- -----------
United States incorporated entities with registered address:
1209 Orange Street, Wilmington, Delaware
19801, USA
Industrials UK GP LLC England Holding Company 100.0 %
Industrials UK LP England Property Investment 100.0 %
------------------------------------------- ---------------------------- -------------------- -------- -----------
Details of the Group's investments in joint ventures are
disclosed in note 18.
18 Investment in joint ventures
Details of the Group's joint ventures at the end of the
reporting period are as follows:
Name Place of incorporation Principal activity % equity owned by subsidiary
---------------------------------------- ----------------------- -------------------- -----------------------------
Luxembourg incorporated entities with
registered address:
231, Val des Bons Malades, L-2121
Luxembourg
Elysion S.A. Luxembourg Holding company 50.0 %
Elysion Braunschweig S.a.r.l Luxembourg Property company 50.0 %
Elysion Dessau S.a.r.l Luxembourg Property company 50.0 %
Elysion Kappeln S.a.r.l Luxembourg Property company 50.0 %
Elysion Winzlar S.a.r.l Luxembourg Property company 50.0 %
---------------------------------------- ----------------------- -------------------- -----------------------------
Republic of Ireland incorporated entity
with registered address:
18f Main Street, Dundrum, Dublin 14
Ardale Industrials Limited Republic of Ireland Management company 50.0 %
---------------------------------------- ----------------------- -------------------- -----------------------------
Summarised consolidated financial information in respect of the
Group's joint ventures is set out below. Where applicable, these
represent the consolidated results of the respective holding
companies.
Total
Elysion 31 March
S.A. Other 2021
GBP'000 GBP'000 GBP'000
--------------------------------------------------------------- -------- -------- ---------
Assets
Investment property 33,164 - 33,164
Fixed assets 31 - 31
Cash and cash equivalents 82 1 83
Current assets 9 - 9
--------------------------------------------------------------- -------- -------- ---------
Total assets 33,286 1 33,287
--------------------------------------------------------------- -------- -------- ---------
Liabilities
Bank loans (16,947) - (16,947)
Bond (14,119) - (14,119)
Deferred tax (1,326) - (1,326)
Financial liability (488) - (488)
Current liabilities (122) - (122)
--------------------------------------------------------------- -------- -------- ---------
Total liabilities (33,002) - (33,002)
--------------------------------------------------------------- -------- -------- ---------
Net assets of joint ventures 284 1 285
--------------------------------------------------------------- -------- -------- ---------
Group's investment in joint venture bond 14,119 - 14,119
--------------------------------------------------------------- -------- -------- ---------
Group's share of joint ventures' net assets 142 1 143
--------------------------------------------------------------- -------- -------- ---------
Loss and total comprehensive income from continuing operations
Revenue 2,518 - 2,518
Finance costs (1,821) - (1,821)
Net fair value loss (1,821) - (1,821)
Tax expense (159) - (159)
--------------------------------------------------------------- -------- -------- ---------
Loss and total comprehensive income (1,283) - (1,283)
--------------------------------------------------------------- -------- -------- ---------
Group income from joint ventures represented by:
Share of joint venture loss (642) - (642)
Interest income on joint venture bond 1,481 - 1,481
Net loss on joint venture bond (778) - (778)
--------------------------------------------------------------- -------- -------- ---------
Income from joint ventures 61 - 61
--------------------------------------------------------------- -------- -------- ---------
Total
Elysion 31 March
S.A. Other 2020
GBP'000 GBP'000 GBP'000
----------------------------------------------------------------- -------- -------- ---------
Assets
Investment property 35,737 - 35,737
Fixed assets 227 - 227
Cash and cash equivalents 543 10 553
Current assets 42 2 44
----------------------------------------------------------------- -------- -------- ---------
Total assets 36,549 12 36,561
----------------------------------------------------------------- -------- -------- ---------
Liabilities
Bank loans (18,364) - (18,364)
Bond (14,557) - (14,557)
Deferred tax (1,330) - (1,330)
Financial liability (591) - (591)
Current liabilities (148) (9) (157)
----------------------------------------------------------------- -------- -------- ---------
Total liabilities (34,990) (9) (34,999)
----------------------------------------------------------------- -------- -------- ---------
Net assets of joint ventures 1,559 3 1,562
----------------------------------------------------------------- -------- -------- ---------
Group's investment in joint venture bond 15,336 - 15,336
----------------------------------------------------------------- -------- -------- ---------
Group's share of joint ventures' net assets 780 1 781
----------------------------------------------------------------- -------- -------- ---------
Revenue 2,472 15 2,487
Finance costs (2,193) (12) (2,205)
Net fair value gains 674 - 674
Tax expense (231) (2) (233)
----------------------------------------------------------------- -------- -------- ---------
Profit and total comprehensive income from continuing operations 722 1 723
----------------------------------------------------------------- -------- -------- ---------
Group income from joint ventures represented by:
Share of joint venture profits 361 1 362
Interest income on joint venture bond 1,393 - 1,393
Net gain on joint venture bond 360 - 360
----------------------------------------------------------------- -------- -------- ---------
Income from joint ventures 2,114 1 2,115
----------------------------------------------------------------- -------- -------- ---------
Elysion S.A.
Stenprop owns 100% of the shares and shareholder loans in
Bernina Property Holdings Limited ('Bernina'), the results and
financial position of which is included within these consolidated
financial statements. Bernina in turn owns 50% of the issued share
capital and 100% of the bonds of Elysion S.A., a company
incorporated in Luxembourg which is the beneficial owner of the
Care Home portfolio. The remaining 50% of Elysion S.A. is owned by
a joint venture partner who manages the portfolio.
The acquired bonds have attracted, and continue to attract, a
10% compounded interest rate since inception in 2007 and have
limited recourse to compartment assets within Elysion S.A., with
the proceeds made available to subsidiaries in the joint venture
for real estate investment in Care Homes. All costs and expenses
incurred by the Elysion S.A. compartment are deducted or withheld
from any payment of principal or interest. The fair value has been
determined based on the net assets of the compartment which would
be available to settle the outstanding bond and which is
intrinsically linked to the fair value of the investment property.
Further details on the estimates and assumptions used in
determining the fair value of investment property can be found in
note 16.
Reconciliation of the above summarised financial information to
the carrying amount of the interest recognised in the consolidated
financial statements:
Investment in joint ventures
------------------------------------------------ -------- --------------------------------
Bond
Elysion Elysion
S.A. S.A. Other Total
31 March 2021 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------ -------- ---------- --------- ---------
Opening balance 15,336 780 1 781
Income/(loss) from joint ventures 1,481 (642) - (642)
Loss on fair value movement (780) - - -
Investment receipts (1,290) - - -
Foreign exchange movement in foreign operations (628) 4 - 4
------------------------------------------------ -------- ---------- --------- ---------
Closing balance 14,119 142 1 143
------------------------------------------------ -------- ---------- --------- ---------
Investment in joint ventures
------------------------------------------------ -------- --------------------------------
Bond
Elysion Elysion
S.A. S.A. Other Total
31 March 2020 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------ -------- ---------- --------- ---------
Opening balance 14,077 409 56 465
Income from joint ventures 1,765 349 1 350
Investment receipts (975) - (56) (56)
Foreign exchange movement in foreign operations 469 22 - 22
------------------------------------------------ -------- ---------- --------- ---------
Closing balance 15,336 780 1 781
------------------------------------------------ -------- ---------- --------- ---------
19 Assets held for sale and discontinued operations
Management considers the remaining Swiss property (2020: one)
and the remaining German property (2020: eight) meet the conditions
relating to assets held for sale, as per IFRS 5: Non-current Assets
Held for Sale and Discontinued Operations. The properties are
expected to be disposed of during the next 12 months. The fair
value of Swiss property has been determined by a third-party
valuer, JLL.
The remaining German property classified as held for sale was
notarised for sale in December 2020 and is expected to complete
shortly and the fair value has accordingly been determined by the
directors based on the sale price. Associated selling costs have
been provided.
All non-current assets, and the Swiss disposal group, classified
as held for sale are disclosed at their fair value.
Subsequent to 31 March 2021, the Guernsey office building, known
as Trafalgar Court, met the conditions for it to be classified as
an asset held for sale, as per IFRS 5: Non-current Assets Held for
Sale and Discontinued Operations. As there is only one property
currently held in the Guernsey segment, this will result in the
Guernsey segment being recognised in future financial statements as
a discontinued operation.
The fair value of these properties, and their comparative values
are disclosed in the table below along with associated assets and
liabilities:
31 March 31 March
2021 2020
GBP'000 GBP'000
------------------------------------------------------------------------ -------- --------
Investment properties (note 16) 38,206 109,076
Cash and cash equivalents 201 1,135
Trade and other receivables 801 1,646
------------------------------------------------------------------------ -------- --------
Assets classified as held for sale 39,208 111,857
------------------------------------------------------------------------ -------- --------
Bank loans (note 23) 13,883 43,177
Derivative financial instruments - 134
Deferred tax (note 26) 1,190 3,782
Tax credit (603) (611)
Accounts payable and accruals 696 828
------------------------------------------------------------------------ -------- --------
Liabilities directly associated with assets classified as held for sale 15,166 47,310
------------------------------------------------------------------------ -------- --------
The Swiss property is the only asset recognised as a
discontinued operation as the Swiss segment is a disposal group. In
the prior year, the entire Swiss segment (one property) was
recognised as a discontinued operation in accordance with IFRS
5.32. The results of the discontinued operation were as
follows:
31 March 31 March
2021 2020
GBP'000 GBP'000
----------------------------------------------- -------- --------
Rental income 1,098 764
Property expenses (703) (329)
----------------------------------------------- -------- --------
Net rental income 395 435
----------------------------------------------- -------- --------
Operating costs (114) (214)
----------------------------------------------- -------- --------
Net operating income 281 221
----------------------------------------------- -------- --------
Fair value loss on investment properties (1,178) (3,188)
Profit on disposal of subsidiaries 160 -
----------------------------------------------- -------- --------
Loss from operations (737) (2,967)
----------------------------------------------- -------- --------
Profit on disposal of property - 648
Interest receivable - -
Finance costs (71) (70)
Net foreign exchange loss (1) (6)
----------------------------------------------- -------- --------
Loss for the year before taxation (809) (2,395)
----------------------------------------------- -------- --------
Current tax (82) 198
Deferred tax - -
----------------------------------------------- -------- --------
Loss for the year from discontinued operations (891) (2,197)
----------------------------------------------- -------- --------
Disposals
On 30 September 2020, the Group disposed of its property,
Neucölln Carrée retail park, in Berlin, Germany, held in Isabel
Properties B.V. for EUR27.0 million.
On 31 March 2021, the Group disposed of its property,
Victoria-Center retail park, in Berlin, Germany, held in Stenprop
Victoria Limited for EUR37.45 million.
On 31 March 2021, the Group disposed of five properties located
in Frankfurt, Kassel, Ludwigsburg, Marburg and Sindelfingen,
Germany, held in Century B.V. and Century 2 B.V. at a valuation of
EUR27.0 million. The properties were disposed of as subsidiaries
and are further discussed in note 25.
Prior year disposals
On 21 June 2019, the Group disposed of its Hemel Hempstead
property in Davemount Properties Limited for GBP1.9 million.
On 19 August 2019, the Group disposed of its Walsall property in
Davemount Properties Limited for GBP1.7 million.
On 13 December 2019, the Group disposed of its Grimsby property
in Davemount Properties Limited for GBP1.0 million.
On 28 February 2020, the group disposed of its largest single
asset, known as Bleichenhof, in Hamburg. The property was sold for
EUR160.15 million. One of the conditions attached to the disposal
was completing the redevelopment works that were ongoing at the
time of the sale. In the prior year statement of financial
position, a provision for GBP3.2 million was included for these
redevelopment costs.
On 19 July 2018, the Group disposed of seven properties in
Switzerland. As part of the agreements entered into for the sale of
these Swiss properties, all of which were sold to the same buyer,
Stenprop provided a guarantee for obligations and liabilities of
each of the selling entities. The maximum amount of the guarantee
is CHF6.0 million, which lasts until all obligations under the sale
agreements have been fulfilled, with a backstop date of 31 July
2028. As at the date of signing these accounts, there had not been
any claim under the guarantee.
20 Trade and other receivables
31 March 31 March
2021 2020
Non-current receivables GBP'000 GBP'000
------------------------------ -------- --------
Other debtors 8,670 13,523
------------------------------ -------- --------
Total non-current receivables 8,670 13,523
------------------------------ -------- --------
Non-current other debtors includes GBP6.51 million (2020:
GBP12.27 million) of loans advanced under the Share Purchase Plan
(see note 13: Share-based payments). During the current financial
year, a GBP1.0 million loan (2020: GBP1.0 million) used to purchase
1,000,000 Stenprop shares in the market by Ferryman Capital
Partners Limited, a company in which Warren Lawlor, previously a
non-executive director, has a one-third beneficial interest, was
repaid in full. Two of the three remaining loans advanced under the
Share Purchase Plan were also repaid in full before the reporting
date. Only one loan advanced under the Share Purchase Plan remains
outstanding at 31 March 2021.
The remaining loan has been assessed for an expected credit loss
under IFRS 9. The analysis shows that due to the full recourse
nature of the loan, secured against the shares issued and
underlying assets of the borrower, loss given default is currently
estimated at nil. There has been no perceived significant increase
in credit risk and we have not recognised an 12 month expected
credit loss on this loan. Refer to note 28 (i) to understand how
the Group manages credit risk.
Non-current other debtors also includes GBP2.13 million (2020:
nil) from part of the proceeds from the sale of the Victoria retail
centre in Germany. A retention of EUR2.5 million from the purchase
price is held in an escrow account in respect of claims against,
and for certain liabilities of the seller under the disposal
agreement for a period of up to 13 months from the completion date
of 31 March 2021.
31 March 31 March
2021 2020
Current receivables GBP'000 GBP'000
--------------------------------------- -------- --------
Accounts receivable 6,009 3,793
Loss allowance on accounts receivables (2,311) (541)
--------------------------------------- -------- --------
Net receivables 3,698 3,252
Lease incentives 1,769 2,183
Loss allowance on lease incentives (261) -
--------------------------------------- -------- --------
Net lease incentives 1,508 2,183
Other receivables 2,406 1,415
Prepayments 1,111 1,399
--------------------------------------- -------- --------
Total current receivables 8,723 8,249
--------------------------------------- -------- --------
Other receivables includes VAT receivable.
31 March 2021 31 March 2020
-------------------------------------- --------------------------------------
Accounts Loss Net Accounts Loss Net
Receivables Allowance Receivables Receivables Allowance Receivables
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------------ ---------- ------------ ------------ ---------- ------------
Not yet due - - - 572 - 572
1-30 days overdue 1,361 (37) 1,324 1,999 - 1,999
31-60 days overdue 1,784 (109) 1,675 296 - 296
61-90 days overdue 247 (99) 148 109 (60) 49
91-120 days overdue 340 (323) 17 227 (147) 79
More than 120 days overdue 2,277 (1,743) 534 590 (333) 257
--------------------------- ------------ ---------- ------------ ------------ ---------- ------------
Closing balance 6,009 (2,311) 3,698 3,793 (541) 3,252
--------------------------- ------------ ---------- ------------ ------------ ---------- ------------
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables. To measure expected credit losses
on a collective basis, trade receivables are grouped based on
shared credit risk characteristics and the days overdue.
The expected loss rates on accounts receivables and lease
incentives are based on the Group's historical credit losses
experienced over the current period. The historical loss rates are
then adjusted for current and forward-looking information on
macroeconomic factors affecting the Group's customers.
Book value approximates fair value.
21 Cash and cash equivalents
31 March 31 March
2021 2020
GBP'000 GBP'000
-------------------------------- -------- --------
Cash at bank 53,781 84,453
-------------------------------- -------- --------
Total cash and cash equivalents 53,781 84,453
-------------------------------- -------- --------
Restricted cash
At the reporting date funds totalling GBP4.4 million (2020:
GBP8.2 million) were restricted. This comprises service charge
monies held by managing agents amounting to GBP4.1 million (2020:
GBP1.5 million) and GBP0.3 million (2020: GBP0.8 million) relating
to rent held in bank accounts which are secured by the lenders, for
the purposes of debt repayments. In the prior year, Bleichenhof
redevelopment costs of GBP3.5 million were included in restricted
cash (2021: nil). Furthermore, restricted cash of GBP2.4 million
relating to tenant deposits was included in the 2020 cash balance
(2021: nil).
As the Group is in compliance with all the terms and conditions
of its loans as at the date of signing these financial statements,
there are no further restrictions, and any surplus will flow to the
Group.
22 Accounts payable and accruals
31 March 31 March
2021 2020
GBP'000 GBP'000
------------------------------------- -------- --------
Trade payable 2,149 292
Accruals 4,200 2,216
Rental income received in advance 6,811 6,261
Other payables 3,356 5,598
Tenant deposits - 2,322
------------------------------------- -------- --------
Total accounts payables and accruals 16,516 16,689
------------------------------------- -------- --------
Tenant deposits held by the Group at 31 March 2021, total GBP2.8
million (2020: GBP2.3 million). They are held in separate
restricted bank accounts and at 31 March 2021, have been netted off
the corresponding cash balance and are therefore shown as nil
(2020: GBP2.3 million).
Accounts payable and accruals balances are recognised at
amortised cost and approximates their fair value.
23 Borrowings
31 March 2021 31 March 2020
---------------------------------------------- -----------------------------------------------
Assets held for Total - wholly Assets held for Total - wholly
Borrowings sale owned Borrowings sale owned
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ---------- ------------------ -------------- ---------- ------------------- --------------
Opening balance 154,171 43,177 197,348 245,090 6,106 251,196
New loans 89,558 - 89,558 24,668 - 24,668
Repayment of
borrowings (61,484) (16,442) (77,926) (2,675) (79,509) (82,184)
Bank loans
associated with
the disposal of
subsidiaries - (10,734) (10,734) - - -
Transfer of
borrowings to
assets held for
sale - - - (112,579) 112,579 -
Amortisation of
loans - (123) (123) - (134) (134)
Capitalised
borrowing costs (1,965) (12) (1,977) (919) - (919)
Amortisation of
transaction fees 864 84 948 586 37 623
Foreign exchange
movement in
foreign operations - (2,067) (2,067) - 4,098 4,098
------------------- ---------- ------------------ -------------- ---------- ------------------- --------------
Total borrowings 181,144 13,883 195,027 154,171 43,177 197,348
------------------- ---------- ------------------ -------------- ---------- ------------------- --------------
Of the movement in borrowings in the year ending 31 March 2021,
GBP89.56 million (2020: GBP24.67 million) relates to cash received
from new bank loans raised and GBP77.9 million (2020: GBP82.18
million) relates to repayments of bank loans. GBP16.44 million
(2020: GBP79.51 million) of bank loan repayments are included in
the adjustment for liabilities directly associated with assets held
for sale and GBP10.73 million (2020: nil) was included in bank
loans associated with the disposal of subsidiaries.
31 March 31 March
2021 2020
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Amount due for settlement within 12 months 4,489 -
Amount due for settlement between one to three years 77,032 93,468
Amount due for settlement between three to five years 34,375 60,703
Amount due for settlement after five years 65,248 -
------------------------------------------------------ -------- --------
Total borrowings 181,144 154,171
------------------------------------------------------ -------- --------
Non-current liabilities
Bank loans 176,655 154,171
------------------------------------------------------ -------- --------
Total non-current loans and borrowings 176,655 154,171
------------------------------------------------------ -------- --------
Current liabilities
Bank loans 4,489 -
------------------------------------------------------ -------- --------
Total current loans and borrowings 4,489 -
------------------------------------------------------ -------- --------
Total loans and borrowings 181,144 154,171
------------------------------------------------------ -------- --------
The facilities amounting to GBP197.7 million are secured by
legal charges over the properties to which they correspond with a
market value of GBP522.2 million. There is no
cross-collateralisation of the facilities. The terms and conditions
of outstanding loans are as follows:
Nominal value Carrying value*
--------------- ---- ---------- --------------- -------- -------------- ------------------ ------------------
Loan 31 March 31 March 31 March 31 March
interest Maturity 2021 2020 2021 2020
Entity Note Amortising rate Currency date GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---- ---------- --------------- -------- -------------- -------- -------- -------- --------
Continuing
operations
Guernsey
LPE Limited No LIBOR + 2.00 % GBP 30/09/2022 28,000 28,000 27,929 27,857
United Kingdom
- MLI
Industrials UK
LP No 1.66 % fixed GBP 3/12/2027 66,500 - 65,248 -
Industrials UK
LP No LIBOR + 2.25 % GBP 2/06/2022 - 61,484 - 61,259
Stenprop
Industrials 4
Limited No LIBOR + 2.00 % GBP 14/11/2025 34,879 34,879 34,375 34,255
Stenprop
Industrials 6 LIBOR +
Limited No 1.75 % GBP 1/02/2024 49,898 - 49,104 -
Stenprop
Industrials 6 LIBOR +
Limited No 2.00 % GBP 1/02/2024 - 26,840 - 26,448
Stenprop
Industrials
Holdings
Limited 1 Yes N/A GBP - - (8) (120)
United Kingdom - Urban logistics
LIBOR +
GGP1 Limited No 2.25 % GBP 26/05/2021 4,500 4,500 4,496 4,472
--------------- ---- ---------- --------------- -------- -------------- -------- -------- -------- --------
Total borrowings attributable to continuing operations 183,777 155,703 181,144 154,171
Switzerland - Discontinued operation
Kantone 3-month
Holdings LIBOR + rolling
Limited Yes 1.15 % CHF facility 5,853 6,513 5,853 6,513
Germany - Assets held for sale
Euribor + 1.55
Century BV No % EUR 31/12/2022 - 7,369 - 7,319
Euribor +
Century 2 BV No 1.55 % EUR 31/12/2022 - 3,832 - 3,804
Isabel Euribor +
Properties BV No 2.32 % EUR 30/12/2021 - 8,001 - 8,001
Stenprop Euribor +
Hermann Ltd No 1.13 % EUR 30/06/2021 8,033 8,383 8,030 8,383
Stenprop Euribor +
Victoria Ltd No 1.28 % EUR 31/08/2020 - 9,157 - 9,157
--------------- ---- ---------- --------------- -------- -------------- -------- -------- -------- --------
Total borrowings attributable to discontinued operations and assets
classified as held for
sale (note 19) 13,886 43,255 13,883 43,177
Total
borrowings 197,663 198,958 195,027 197,348
--------------- ---- ---------- --------------- -------- -------------- -------- -------- -------- --------
* The difference between the nominal and the carrying value
represents unamortised facility costs.
(1) Net carrying value of the amortised facility costs on the
Investec Bank Plc revolving credit facility.
Loans are subject to loan-to-value ratios (note 27) and interest
coverage ratios. All loans are assessed quarterly for their
covenant compliance and forecast headroom. No loan was in breach of
its borrowing covenants during the period or period end.
31 March 2021 31 March 2020
---------------------------------- ----------------------------------
Continuing operations Weighted covenant Weighted actual Weighted covenant Weighted actual
---------------------- ----------------- --------------- ----------------- ---------------
Loan to value 57.5 % 38.8 % 62.2 % 41.8 %
Interest cover 2.3 9.5 1.9 5.5
---------------------- ----------------- --------------- ----------------- ---------------
31 March 2021 31 March 2020
---------------------------------- ----------------------------------
Discontinued operations Weighted covenant Weighted actual Weighted covenant Weighted actual
------------------------ ----------------- --------------- ----------------- ---------------
Loan to value 50.0 % 48.9 % 50.0 % 45.6 %
Interest cover n/a n/a n/a n/a
------------------------ ----------------- --------------- ----------------- ---------------
24 Derivative financial instruments
In accordance with the terms of the borrowing arrangements and
Group policy, the Group has entered into interest rate swap
agreements which are entered into by the borrowing entities to
convert the borrowings from floating to fixed interest rates and
are used to manage the interest rate profile of financial
liabilities and eliminate future exposure to interest rate
fluctuations. It is the Group's policy that no economic trading in
derivatives is undertaken by the Group. The Group uses forward
foreign exchange contracts to mitigate exchange rate exposure
arising from forecast sales in euros (EUR). The Group's policy is
to hedge 100% of net foreign exchange exposure when a disposal
contract has been signed. In the current year, the Group recognised
a total net gain in fair value of financial instruments from
continuing and discontinuing operations of GBP1,940,000 (2020: loss
GBP2,410,000) and nil (2020: nil) respectively.
On 31 March 2021, the entities Century BV and Century 2 BV were
disposed of by way of a share sale and the loan in Isabel
Properties BV was repaid on the sale of the property in this
entity. Therefore, the maturity dates and swap rate percentages are
no longer applicable.
The following table sets out the interest rate swap agreements
at 31 March 2021 and 31 March 2020.
Notional value Fair Value Notional value Fair value
31 March 31 March 31 March 31 March
Maturity Swap 2021 2021 2020 2020
Entity Effective date date rate % GBP'000 GBP'000 GBP'000 GBP'000
----------------- ---------------- ----------- -------- --------------- ----------- --------------- -----------
Continuing
operations
UK - MLI
Industrials UK LP n/a n/a n/a - - 60,375 (768)
Stenprop
Industrials 4
Limited 07/02/2020 14/11/2024 0.8856 % 24,000 (430) 24,000 (492)
Stenprop
Industrials 6
Limited 22/12/2020 01/02/2024 0.5000 % 42,413 138 22,814 (741)
Liabilities
directly
associated with
assets classified
as held for sale
Germany
Century BV n/a n/a n/a - - 7,234 -
Century 2 BV n/a n/a n/a - - 3,967 -
Isabel Properties
BV n/a n/a n/a - - 8,001 -
----------------- ---------------- ----------- -------- --------------- ----------- --------------- -----------
Total swaps 66,413 (292) 126,391 (2,001)
------------------------------------------------ -------- --------------- ----------- --------------- -----------
Stenprop Ltd
EUR forward contracts - 2,024 - -
------------------------------------------------ -------- --------------- ----------- --------------- -----------
Total forwards 2,024
------------------------------------------------ -------- --------------- ----------- --------------- -----------
Assets maturing within
12 months - 2,024 - -
Liabilities
maturing within
12 months - - - -
Assets maturing after
12 months - 138 - -
Liabilities maturing after
12 months - (430) - (2,001)
------------------------------------------------ -------- --------------- ----------- --------------- -----------
Derivative financial instruments - on the
Statement of Financial Position - 1,732 - (2,001)
------------------------------------------------ -------- --------------- ----------- --------------- -----------
Swaps included in
investment in
joint ventures
Elysion
Braunschweig
S.à r.l. 29/03/2018 29/12/2023 0.5200 % 4,984 (122) 4,883 (150)
Elysion Dessau
S.à r.l. 29/03/2018 29/12/2023 0.5200 % 4,932 (121) 4,831 (143)
Elysion Kappeln
S.à r.l. 31/12/2018 29/12/2023 0.6325 % 5,341 (150) 5,379 (181)
Elysion Winzlar
S.à r.l. 31/12/2018 29/12/2023 0.6325 % 3,418 (96) 3,442 (116)
----------------- ---------------- ----------- -------- --------------- ----------- --------------- -----------
Derivative financial instruments - joint
ventures 18,675 (489) 18,535 (590)
------------------------------------------------ -------- --------------- ----------- --------------- -----------
25 Disposal of subsidiaries
31 March 31 March
2021 2020
GBP'000 GBP'000
--------------------------------------------------------- -------- --------
Carrying value of net assets at disposal date
Investment property 23,001 -
Trade and other receivables 640 -
Cash and cash equivalents 348 -
Borrowings (10,729) -
Trade and other payables (1,477) -
Group loans converted to third party loans on disposal (4,543) -
--------------------------------------------------------- -------- --------
Net assets disposed 7,240 -
--------------------------------------------------------- -------- --------
Net disposal proceeds 7,738 -
Foreign exchange movement in foreign operations (191) -
Profit on disposal of subsidiaries (307) -
--------------------------------------------------------- -------- --------
Net assets disposed 7,240 -
--------------------------------------------------------- -------- --------
Continuing operations - Profit on disposal of subsidiary (307) -
--------------------------------------------------------- -------- --------
Profit on disposal of subsidiaries (307) -
--------------------------------------------------------- -------- --------
Current year disposals
On 31 March 2021, the Group disposed of its 94.90% shareholding
in Century B.V. and Century 2 B.V. for a net consideration of
GBP12.28 million. Century B.V. owned three properties located in
Frankfurt, Ludwigsburg and Marburg and Century 2 B.V. owned two
properties located in Kassel and Sindelfingen, Germany. The impact
of these disposals on the Group is shown above. Upon completion of
the sale the Group loan of GBP4.5 million was repaid to
Stenprop.
26 Deferred tax
The following is the movement in deferred tax assets and
liabilities recognised by the Group during the current and prior
reporting periods. All of the Group's deferred tax is attributable
to liabilities directly associated with assets classified as held
for sale.
31 March 31 March
2021 2020
Liabilities directly associated with assets classified as held for sale GBP'000 GBP'000
------------------------------------------------------------------------ -------- --------
Deferred tax liability opening balance 3,782 10,416
Deferred tax recognised on investment properties (2,638) (9,533)
Deferred tax recognised on revaluation of financial liabilities 22 5
Deferred tax on tax losses 121 4,123
Withholding tax on disposal of property - (1,691)
Other movements 25 359
Exchange movements (122) 103
------------------------------------------------------------------------ -------- --------
Movement in deferred tax (2,592) (6,634)
Deferred tax liability closing balance 1,190 3,782
------------------------------------------------------------------------ -------- --------
On 31 March 2021, significant cash reserves, included within the
cash and cash equivalents balance (see note 21) and therefore part
of continuing operations, were deposited in European bank accounts
upon the completion of an asset disposal (see note 19) and two
subsidiary disposals (see note 25). This cash will be transferred
back to the UK to enable further MLI asset acquisitions. The Group
does not expect withholding tax to be paid on transfer of these
funds and has not recognised a deferred tax liability.
27 Financial risk management
The Group is exposed to a variety of financial risks including
capital risk management, credit risk, liquidity risk and market
risk. The overall risk management strategy seeks to minimise the
potential adverse effects on the Group's financial performance.
Certain risk exposures are hedged via the use of financial
derivatives.
This note presents information about the Group's exposure to
each of the above risks, the Group's objectives, policies and
processes for measuring and managing these risks, and the Group's
management of capital. Further quantitative disclosures are
included throughout these audited financial statements where
relevant. The Group's board has overall responsibility for the
establishment and oversight of the Group's risk management
framework.
The audit and risk committee participates in management's
process of formulating and implementing the risk management plan
and it reports on the plan adopted by management to the board.
The objective of risk management is to identify, assess, manage
and monitor the risks to which the business is exposed, including,
but not limited to, information technology risk. The board is
responsible for ensuring the adoption of appropriate risk
management policies by management. The Group's risk management
policies are established to identify and analyse the risks faced by
the Group, to set appropriate risk limits and controls and to
monitor risks and adherence to limits. Risk management policies are
reviewed regularly to reflect changes in market conditions and the
Group's activities. The board will also ensure that there are
processes in place between itself and management enabling complete,
timely, relevant, accurate and accessible risk disclosure to
shareholders.
To enable the audit and risk committee to meet its
responsibilities, terms of reference were adopted by the board.
These include appropriate standards, the implementation of systems
of internal control and an effective risk-based internal audit
which comprises policies, procedures, systems and information to
assist in:
-- safeguarding assets and reducing the risk of loss, error, fraud and other irregularities;
-- ensuring the accuracy and completeness of accounting records and reporting;
-- preparing timely, reliable financial statements and
information in compliance with relevant legislation and generally
accepted accounting policies and practices; and
-- increasing the probability of anticipating unpredictable risk.
The committee oversees how management monitors compliance with
the Group's risk management policies and procedures and reviews the
adequacy of the risk management framework in relation to risks
faced by the Group.
Capital risk management
The capital structure of the Group consists of debt, which
includes the borrowings disclosed in note 23, cash and cash
equivalents and equity attributable to ordinary shareholders of the
Company, comprising issued capital, reserves and retained earnings
as disclosed in the statement of changes in equity. Stenprop's
weighted average loan-to-value ('LTV') ratio at 31 March 2021 was
28.1% (2020: 26.2%), including joint ventures and the Group is not
subject to any external capital requirements. The Group strategy is
to maintain a debt-to-equity ratio and LTV ratio to ensure that
property performance is translated into an enhanced return for
shareholders while at the same time ensuring that it will be able
to continue as a going concern through changing market conditions.
The directors are of the opinion that an LTV of no more than 40% in
respect of secured external borrowings is an appropriate target for
the Group, given the current market conditions. Debt covenants are
disclosed further in note 23.
The financial statements of the Group have been prepared on a
going concern basis. At the date of signing these accounts, the
Group has positive operating cash flow forecasts and positive net
assets. Management have reviewed the Group's cash flow forecasts
for the 18 months to 30 September 2022 and, considering this review
and the current financial position, they are satisfied that the
Company and the Group have access to adequate resources to meet
their obligations and continue in operational existence for the
foreseeable future, and specifically the 12 months subsequent to
the signing of these financial statements. Further details are set
out in note 2 to the financial statements.
Credit risk
The Group's principal financial assets are cash and cash
equivalents as well as trade and other receivables. The credit risk
arising from deposits with banks is managed through a policy of
utilising only independently rated banks with acceptable credit
ratings.
The credit quality of cash and cash equivalents can be assessed
by reference to external credit ratings of the counterparty where
the account or deposit is placed. The credit rating summary below
represents the five European financial institutions that hold more
than GBP1 million (or GBP equivalent) of the Group's cash at 31
March 2021. Together these banks hold 99% (2020: 96%) of the
Group's total cash at bank.
31 March 31 March 31 March 31 March
2021 2021 2020 2020
S&P Global Ratings Fitch Ratings S&P Global Ratings Fitch Ratings
-------------------------------------------- ------------------- -------------- ------------------- --------------
Barclays Bank UK Plc BBB A- BBB A-
Black Rock AA- N/A N/A N/A
The Bank of N. T. Butterfield & Son Limited A- Withdrawn BBB+ Withdrawn
Deutsche Bank AG BBB+ N/A N/A N/A
Hamburg Commercial Bank AG BBB N/A BBB N/A
Lloyds Bank plc BBB+ A+ BBB+ A+
Royal Bank of Scotland Group plc (NatWest
Group) BBB A BBB A
Royal Bank of Scotland International
Limited(1) BBB A N/A N/A
Santander UK plc A N/A N/A N/A
-------------------------------------------- ------------------- -------------- ------------------- --------------
(1) The financial institution is a private company. The credit
rating of its parent company has been disclosed.
The directors are satisfied as to the creditworthiness of the
banks where the remaining cash is held.
The majority of tenant leases are long-term contracts with rents
payable quarterly in advance. Rent deposits and personal or
corporate guarantees are held in respect of some leases. Taking
these factors into account, the risk to the Group of individual
tenant default and the credit risk of trade receivables are
considered low. The concentration of credit risk is limited due to
the large and diverse occupier base. Accordingly, the directors
believe that there is no further expected credit loss required in
excess of that provided. Trade receivables are presented after
deducting a loss allowance provision, as set out in note 20.
At the time of acquisition of a property, and from time to time
thereafter, the Group reviews the quality of the contracted tenants
to ensure that the tenants meet acceptable covenants. Trade
receivables are presented in the statement of financial position
net of allowances for doubtful receivables. An allowance for
impairment is made where there is an indefinable loss event, which
based on previous experience, may give risk to a non-recovery of a
receivable.
Non-current other debtors are long term loans secured against
shares issued by the Group to the related parties referenced in
note 20. In order to manage credit risk, the contractual terms
include full recourse to assets of the borrower which are monitored
alongside the aggregate value of the shares. Furthermore, in
respect of the Share Purchase Plan, the terms allow recovery of
amounts due through a deduction from salary or other amounts paid
to the beneficiary.
The carrying amount of financial assets represents the maximum
credit exposure at the reporting date.
At 31 March 2021, trade and other receivables and cash and cash
equivalents amounts to GBP66.9 million (2020: GBP92.3 million) as
shown in the statement of financial position. Further details on
what makes up this balance can be found in note 20.
Liquidity risk
Prudent liquidity risk management requires maintaining
sufficient cash resources, appropriate and adequate funding, via
lines of credit, as well as managing the ability of tenants to
settle their lease obligations. Through the forecasting and
budgeting of cash requirements, the Group ensures that adequate
committed resources are available.
By its nature, the market for investment property is not
immediately liquid. Therefore, the Group's ability to vary its
portfolio in a timely fashion and to receive a fair price in
response to changes in economic and other conditions may be
limited. Furthermore, where the Group acquires investment
properties for which there is not a readily available market, the
Group's ability to deal in any such investment or obtain reliable
information about the value of such investment or risks to which
such property investment is exposed may be limited. The Group's
short-term liquidity risk is secured by the existence of cash
balances, through the fact that rental income exceeds the Group's
cost structures and through ensuring that facilities are managed
within debt covenants.
The following table details the contractual maturity date of the
Group's financial liabilities. The table has been compiled based on
the undiscounted contractual maturities of the financial
liabilities, including interest that will accrue to those
liabilities, except where the Group is entitled and intends to
repay the liability before its maturity. The discount column
represents the possible future cash flows included in the maturity
analysis, such as future interest or potential payments that have
not been included in the carrying amount of the financial
liability. The table also includes a reconciliation to the carrying
value in the statement of financial position.
One to One to
Less than one three Three to twelve five Over five
month months months years years Discount Total
Group operations GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------------- -------- --------------- -------- --------- -------- --------
Interest-bearing loans - 4,489 - 111,407 65,248 - 181,144
Loan interest 109 1,680 2,625 11,501 2,781 (17,808) 888
Financial liabilities - - - 430 - - 430
Other payables - 1,226 3,391 - - - 4,617
Accruals - - 4,200 - - - 4,200
Lease obligations 2 74 242 24 - - 342
----------------------- ------------- -------- --------------- -------- --------- -------- --------
As at 31 March 2021 111 7,469 10,458 123,362 68,029 (17,808) 191,621
----------------------- ------------- -------- --------------- -------- --------- -------- --------
One to One to
Less than one three Three to twelve five Over five
month months months years years Discount Total
Group operations GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------------- -------- --------------- -------- --------- -------- --------
Interest-bearing loans - - (120) 93,588 60,703 - 154,171
Loan interest 373 1,427 3,484 7,176 - (11,821) 639
Financial liabilities - - - 2,001 - - 2,001
Other payables - 824 4,906 2,116 - - 7,846
Accruals - - 1,869 - - - 1,869
Provisions - - 3,179 - - - 3,179
Lease obligations 1 49 252 222 - - 524
----------------------- ------------- -------- --------------- -------- --------- -------- --------
As at 31 March 2020 374 2,300 13,570 105,103 60,703 (11,821) 170,229
----------------------- ------------- -------- --------------- -------- --------- -------- --------
Market risk
Market risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: foreign
currency risk, interest rate risk and price risk (see fair value
hierarchy section). The objective of market risk management is to
manage and control market risk exposures within acceptable
parameters, while optimising returns to shareholders.
Investment in property is subject to varying degrees of risk.
The main factors which affect the value of the investment in
property include:
-- changes in the general economic climate;
-- local conditions in respective markets, such as oversupply,
or a reduction in demand, for commercial space in a specific
area;
-- competition from other available properties; and
-- government regulations, including planning, environmental and tax laws.
While a large number of these factors are outside the control of
the management, market and property-specific factors relevant to
maintain a sustainable income stream within the Group's yield
parameters are considered as part of the initial due diligence.
Properties and tenant leases are actively managed.
Fair value hierarchy
The table below analyses the Group's financial instruments
carried at fair value, by valuation method. The fair value
measurement for the Group's financial assets and financial
liabilities are categorised into different levels in the fair value
hierarchy. The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Group can access at the
measurement date.
Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
Designated at fair value
------------------------------
Total financial instruments
recognised at fair value Level 1 Level 2 Level 3
31 March 2021 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------------------------- -------- --------- ---------
Assets
Investment in joint venture bond 14,119 - - 14,119
Derivative financial instruments 2,162 - 2,162 -
--------------------------------- --------------------------- -------- --------- ---------
Total assets 16,281 - 2,162 14,119
--------------------------------- --------------------------- -------- --------- ---------
Liabilities
Derivative financial instruments 430 - 430 -
--------------------------------- --------------------------- -------- --------- ---------
Total liabilities 430 - 430 -
--------------------------------- --------------------------- -------- --------- ---------
Designated at fair value
------------------------------
Total financial instruments
recognised at fair value Level 1 Level 2 Level 3
31 March 2020 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------------------------- -------- --------- ---------
Assets
Investment in joint venture bond 14,557 - - 14,557
--------------------------------- --------------------------- -------- --------- ---------
Total assets 14,557 - - 14,557
--------------------------------- --------------------------- -------- --------- ---------
Liabilities
Derivative financial instruments 2,001 - 2,001 -
--------------------------------- --------------------------- -------- --------- ---------
Total liabilities 2,001 - 2,001 -
--------------------------------- --------------------------- -------- --------- ---------
Details of changes in valuation techniques
There have been no significant changes in valuation techniques
during the period under review. Derivative financial instruments
are measured using the midpoint of the yield curve prevailing on
the reporting date. The valuations do not include accrued interest
from the previous settlement date to the reporting date. The fair
value represents the net present value of the difference between
the contracted rate and the valuation rate when applied to the
projected balances for the period from the reporting date to the
contracted expiry dates.
Significant transfers between Level 1, Level 2 and Level 3
There have been no significant transfers between Level 1, Level
2 and Level 3 during the period under review.
Unobservable inputs
Unobservable inputs for investment properties classified as
Level 3 are disclosed in note 16.
The unobservable inputs used to determine the value of the bonds
in the Elysion S.A. joint venture are based on the unadjusted net
assets of the joint venture structure and are subject to the
assumptions applied to the valuation methodology of the underlying
investment property.
Fair value of financial instruments
The following table summarises the Group's financial assets and
liabilities into categories required by IFRS 7 Financial
Instruments: Disclosures.
Total carrying amount
Held at fair value through profit or 31 March
loss Held at amortised cost 2021
GBP'000 GBP'000 GBP'000
--------------------------------- ------------------------------------ ---------------------- ---------------------
Financial assets
Cash and cash equivalents - 53,781 53,781
Derivative financial instruments 2,162 - 2,162
Trade and other receivables - 8,723 8,723
Investment in joint venture bond 14,119 - 14,119
Other investments - 1,000 1,000
Other debtors - 8,670 8,670
--------------------------------- ------------------------------------ ---------------------- ---------------------
Total financial assets 16,281 72,174 88,455
--------------------------------- ------------------------------------ ---------------------- ---------------------
Financial liabilities
Bank loans - 181,144 181,144
Derivative financial instruments 430 - 430
Accounts payable and accruals - 16,516 16,516
--------------------------------- ------------------------------------ ---------------------- ---------------------
Total financial liabilities 430 197,660 198,090
--------------------------------- ------------------------------------ ---------------------- ---------------------
Total carrying amount
Held at fair value through profit or 31 March
loss Held at amortised cost 2020
GBP'000 GBP'000 GBP'000
--------------------------------- ------------------------------------ ---------------------- ---------------------
Financial assets
Cash and cash equivalents - 84,453 84,453
Trade and other receivables - 8,249 8,249
Investment in joint venture bond 15,336 - 15,336
Other debtors - 13,523 13,523
--------------------------------- ------------------------------------ ---------------------- ---------------------
Total financial assets 15,336 106,225 121,561
--------------------------------- ------------------------------------ ---------------------- ---------------------
Financial liabilities
Bank loans - 154,171 154,171
Derivative financial instruments 2,001 - 2,001
Accounts payable and accruals - 16,689 16,689
Provisions - 3,179 3,179
--------------------------------- ------------------------------------ ---------------------- ---------------------
Total financial liabilities 2,001 174,039 176,040
--------------------------------- ------------------------------------ ---------------------- ---------------------
Foreign currency risk
The Group's presentation currency is Sterling. Foreign currency
risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in foreign
currency or exchange rates. At the reporting date, the following
table summarises the Group's exposure to foreign currency risk in
respect of assets and liabilities held in EUR (Germany) and CHF
(Switzerland).
31 March 31 March
2021 2020
Assets GBP'000 GBP'000
------------ -------- --------
CHF 12,616 15,252
EUR 63,419 138,840
Liabilities
CHF 5,400 6,271
EUR 11,096 50,638
------------ -------- --------
Foreign currency sensitivity analysis
The sensitivity analysis measures the impact on the Group's
exposure in Sterling (based on a change in the reporting date spot
rate) and the impact on the Group's Sterling profitability, given a
simultaneous change in the foreign currencies to which the Group is
exposed at the reporting date.
A 10% strengthening in the Sterling exchange rate against the
following currencies at year end would have decreased equity and
profits by the amounts shown below. The 10% threshold was selected
as a reasonable, worst-case scenario and is considered a prudent
threshold. This analysis assumes that all other variables remain
constant. For a 10% weakening of Sterling, there would be an equal
but opposite impact on the profit and equity and the balance would
be positive.
Profit
Equity or loss
Impact of Sterling strengthening by 10% GBP'000 GBP'000
---------------------------------------- -------- --------
CHF (722) 93
EUR (5,232) (1,320)
---------------------------------------- -------- --------
Total (5,954) (1,227)
---------------------------------------- -------- --------
The exchange rates against GBP during the reporting periods
were:
Average
Average rate for rate for
year to As at year to As at
31 March 31 March 31 March 31 March
2021 2021 2020 2020
---- ---------------- ---------- --------- ----------
CHF 0.8294 0.7701 0.7972 0.8393
EUR 0.8927 0.8519 0.8740 0.8890
---- ---------------- ---------- --------- ----------
Interest rate risk
The Group's interest rate risk is associated with cash and cash
equivalents, on the one hand, and interest-bearing borrowings, on
the other. If the interest is variable, it presents the Group with
a cash flow interest rate risk. Interest rate risk is the risk that
the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. As stated in
note 24 borrowings from credit institutions are protected against
movements in interest rates. The Group uses interest rate swaps to
manage its interest rate exposure and to establish more certainty
over cash flows. As a result, the Group has not disclosed
additional sensitivity analysis to changes in interest rates.
28 Related party transactions
Parties are considered related if one party has control, joint
control or significant influence over the other party in making
financial and operating decisions. Transactions with related
parties are made on terms equivalent to those that prevail in an
arm's-length transaction.
Directors' remuneration and interests in the ordinary shares of
the Company are set out in note 8, 'Employees' and directors'
emoluments'.
Loans provided to a director to purchase Stenprop shares under
the Share Purchase Plan can be found in note 20.
Transactions and balances with joint venture parties can be
found in note 18.
There are no other related party transactions that occurred
during the year.
Ultimate controlling party
The directors do not consider there to be an ultimate
controlling party.
29 Minimum lease payments
The Group earns rental income by leasing its investment
properties to tenants under non-cancellable operating leases.
At the reporting date the Group had contracted with tenants the
following future minimum lease payments on its investment
properties:
31 March 31 March
2021 2020
GBP'000 GBP'000
--------------------------- -------- --------
Continuing operations
Within one year 31,534 30,607
Between one and two years 21,653 25,095
Between two and five years 32,717 40,944
After five years 16,414 39,119
--------------------------- -------- --------
Total 102,318 135,765
--------------------------- -------- --------
Discontinuing operations
Within one year 953 1,038
Between one and two years 953 1,038
Between two and five years 2,858 3,115
After five years 10,964 12,986
--------------------------- -------- --------
Total 15,728 18,177
--------------------------- -------- --------
At the reporting date the Group had the following future minimum
lease payments as a lessee:
31 March 31 March
2021 2020
GBP'000 GBP'000
--------------------------- -------- --------
Continuing operations
Within one year 324 326
Between one and two years 20 232
Between two and five years 6 14
After five years - -
--------------------------- -------- --------
Total 350 572
--------------------------- -------- --------
At 31 March 2021, Stenprop had no (2020: nil) lessee leases in
its discontinued operations.
30 Events after the reporting period
(i) Declaration of dividend
On 9 June 2021, the Board declared a final dividend of 3.375
pence per share. The final dividend will be payable in cash or as a
scrip dividend. An announcement containing details of the dividend,
the timetable and the scrip dividend terms is anticipated to be
made on 2 July 2021. It is expected that shares will commence
trading ex-dividend on 21 July 2021 on the JSE and on 22 July 2021
on the LSE. The record date for the dividend is expected to be 23
July 2021, the last day for shareholders to submit an election to
receive the scrip dividend is expected to be 30 July 2021, and the
dividend payment date is expected to be 13 August 2021.
(ii) Share incentive awards
On 9 June 2021, the board, on the recommendation of the
remuneration committee, approved share-based awards in relation to
the Long Term Incentive Plan and the Deferred Share Bonus Plan.
Details of awards made to executive directors can be seen in note
8.
(iii) COVID-19 developments
The UK, German and Swiss governments have all recently announced
measures to ease COVID-19 restrictions. Each country is at a
different stage of economic recovery and as such the Group
continues to monitor government policy changes on a daily basis.
Our asset managers engage directly with our customers to understand
the cash flow implications on their business and ability for them
to pay their rent.
(IV) Adjusting events
Stenprop has identified no adjusting events at the date of
signing these consolidated financial statements.
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END
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