Supermarket
Income REIT
plc
(the "Group" or the
"Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 DECEMBER 2023
RESILIENT FINANCIAL PERFORMANCE - STRONG
BALANCE SHEET PROVIDING OPPORTUNITY FOR FUTURE
GROWTH
The Board of Directors of Supermarket Income
REIT plc (LSE: SUPR), the real estate investment trust providing
secure, inflation-linked, long income from grocery property in the
UK, reports its interim results for the Group for the six months
ended 31 December 2023 (the "Period").
FINANCIAL HIGHLIGHTS
|
Six months to
31-Dec-23
|
Six months to
31-Dec-22
|
Change
in Year
|
Annualised passing rent1
|
£104.7m
|
£95.5m
|
+10%
|
Operating profit2
|
£45.0m
|
£38.0m
|
+18%
|
Adjusted Earnings1,3
|
£36.3m
|
£36.4m
|
-
|
Changes in fair value of investment
properties
|
(£57.9m)
|
(£248.1m)
|
n/a
|
Dividend per share declared
|
3.0 pence
|
3.0 pence
|
-
|
Adjusted EPS1,3
|
2.9 pence
|
2.9 pence
|
-
|
Dividend cover1,4
|
0.97x
|
0.98x
|
n/a
|
|
|
|
|
|
31-Dec-23
|
30-June-23
|
Change
in Period
|
IFRS net assets
|
£1,125m
|
£1,218m
|
-8%
|
EPRA NTA1
|
£1,094m
|
£1,156m
|
-5%
|
EPRA NTA per share1
|
88 pence
|
93 pence
|
-5%
|
Net Loan to value
|
33%
|
37%
|
n/a
|
Portfolio net initial
yield1
|
5.8%
|
5.6%
|
n/a
|
Resilient
financial performance
· 18% growth in
operating profit2 to £45.0
million, reflecting:
o
10% increase in annualised passing
rent to £104.7 million through acquisitions and contractual rental
uplifts
o Continuing 100% rent collection
o Lower EPRA cost
ratio 15.1% (six months to 31 December
2022: 16.7%)
o Sainsbury's
Reversion Portfolio ("SRP") JV earnings
replaced via higher yielding acquisitions
· Adjusted EPS
stable at 2.9 pence reflecting lower
leverage
· On track to
deliver full-year 2024 dividend target of
6.06p
·
Significant debt capacity for future
earnings growth, well positioned to capitalise on current
yields
Performance
underpinned by continued, structural growth in the grocery
sector
·
UK grocery market sales up
8%5 in the Period, forecast to
be £250 billion in 20246
· Record
£2.1 billion of investment activity in UK grocery
real estate in 20237
· Our largest
tenants Tesco & Sainsbury's gaining market
share8
o Combined
market share up by 2% to 44%
o 10%
growth in sales from large format
stores9
· Store sales
growth continues to outpace rental growth - increasing
affordability of rental values
Unique
portfolio of 55 mission critical supermarkets
· Future-proofed
portfolio of omnichannel stores
· 13
years weighted average unexpired lease term
("WAULT")
·
78% of rental income
inflation-linked
· Strong performing
tenant covenants with 77% of income from
Sainsbury's and Tesco
· 93% of
portfolio stores operate online fulfilment
via home delivery and/or click and collect, capturing current and
future growth in online sales
Supermarket
property valuations reflect broader property market
values
· Portfolio
independently valued at £1.68 billion,
inclusive of acquisitions of £36.4 million, reflecting Net initial
yield ("NIY") of 5.8% (30 June 2023: 5.6%)
· Like-for-like
valuation decline of 3.2% compares
favourably versus MSCI All Property Capital Index decline of
4.0%
· The impact
of higher yields has been partly mitigated
by a 3.6% average rental uplift on rent reviews during the
period
Strong balance sheet with 100% of drawn debt
hedged to fixed rate
· LTV
of 33% as at 31 December 2023 (30 June 2023:
37%)
· 100% of drawn
debt fixed or hedged at a
weighted average finance cost of 3.1% (30
June 2023: 3.1%)
o Interest rate
hedging extended by 12 months in September 2023
o Existing
in-the-money hedging restructured to extend
hedge term at zero upfront cost
· Fitch
Ratings Limited ("Fitch") reaffirmed the Company's Investment Grade
Credit Rating of BBB+
Accretive
acquisitions and active portfolio management
·
Purchased two supermarket properties
at a NIY of 6.5% for a total consideration of £36.4
million
· Given reduced
LTV, the Company has capacity available for
opportunistic acquisitions
· EV charging
installations now operational at five stores
· Rooftop
solar:
o Operational
across 20% of the portfolio
o New
solar installation at Tesco, Thetford
generated an EPC upgrade from C to B
Continued
progress on sustainability reporting
· Science Based
Targets initiative ("SBTi") net zero targets submitted
for validation
·
Adopted a charitable giving policy focused on
alleviating poverty and hunger as well as having a positive impact
on biodiversity at and near our sites
· Post Period
end, Atrato Group became an endorser of Spring - a new
PRI stewardship initiative for nature
Nick Hewson,
Chair of Supermarket Income REIT plc, commented:
"The UK grocery sector continues to demonstrate
strong resilience to the challenging macroeconomic environment. Our
tenants continue to grow, strengthening their financial and
operational performance by putting omnichannel supermarkets at the
heart of their operations.
We remain focused on our investment strategy of
acquiring and managing a high-quality portfolio of omnichannel
supermarkets, which are critical to our tenants, giving us exposure
to the largest and fastest growing segment of the grocery
market.
A record £2.1 billion was invested into UK
supermarket property in 2023, highlighting the strong appeal of the
asset class and the attractiveness of current asset values. UK
property valuations continue to be impacted by the uncertain
economic backdrop, however as interest rates normalise and with the
limited supply of omnichannel supermarkets, we remain highly
optimistic for the valuation outlook for the year.
Looking forward, the quality of our unique
supermarket portfolio and the increasing affordability of grocery
rents, together with our strong balance sheet means we are well
positioned to deliver long-term value for our
shareholders."
PRESENTATION
FOR ANALYSTS
The Company will be holding an in-person
presentation for analysts at 08.30am today at FTI Consulting's
offices, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. To
register to attend in-person, please contact FTI Consulting:
SupermarketIncomeREIT@fticonsulting.com. There will also be a
webcast available. To join the presentation via the webcast, please
register using the following link:
https://brrmedia.news/SUPR_HY24
The results presentation is available in the
Investor Centre section of the Group's website.
FOR FURTHER
INFORMATION
|
|
Atrato Capital
Limited
|
+44 (0)20 3790
8087
|
Steven Noble / Rob Abraham / Chris
McMahon
|
ir@atratocapital.com
|
Stifel
Nicolaus Europe
Limited
|
+44 (0)20 7710
7600
|
Mark Young / Matt Blawat / Rajpal
Padam
|
|
|
|
Goldman Sachs
International
Jimmy Bastock / Tom Hartley
|
+44 (0)20 7774 1000
|
|
|
FTI
Consulting
|
+44 (0)20 3727
1000
|
Dido Laurimore / Eve Kirmatzis / Andrew
Davis
|
SupermarketIncomeREIT@fticonsulting.com
|
NOTES TO
EDITORS:
Supermarket Income REIT plc (LSE: SUPR) is
a real estate investment trust dedicated to investing in grocery
properties which are an essential part of the UK's feed the nation
infrastructure. The Company focuses on grocery stores which are
omnichannel, fulfilling online and in-person sales. All the
Company's supermarkets are let to leading UK supermarket operators,
diversified by both tenant and geography.
The Company provides investors with attractive,
long-dated, secure, inflation-linked, growing income with the
potential for capital appreciation over the longer term.
The Company is listed on the premium segment of
the Official List of the UK Financial Conduct Authority and its
Ordinary Shares are traded on the Main Market of the London Stock
Exchange, having listed initially on the Specialist Fund Segment of
the Main Market on 21 July 2017.
Atrato Capital Limited is the Company's
Investment Adviser.
Further information is available on the
Company's website www.supermarketincomereit.com
LEI: 2138007FOINJKAM7L537
Stifel Nicolaus Europe Limited, which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting exclusively for Supermarket Income REIT plc and no one
else in connection with this announcement and will not be
responsible to anyone other than the Company for providing the
protections afforded to clients of Stifel Nicolaus Europe Limited
nor for providing advice in connection with the matters referred to
in this announcement.
Goldman Sachs International, which is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting exclusively for Supermarket Income REIT
plc and no one else in connection with this announcement and will
not be responsible to anyone other than the Company for providing
the protections afforded to clients of Goldman Sachs International
nor for providing advice in connection with the matters referred to
in this announcement.
CHAIR'S
STATEMENT
Dear
Shareholder,
The UK grocery sector continued to show strong
growth in 2023 against a persistently uncertain economic backdrop.
During the Period, Kantar reported an 8%10 increase in
UK grocery sales building on the strong growth seen in the previous
period. Tesco and Sainsbury's, the UK's largest grocery operators
by revenue, and our two largest tenants, have performed
particularly strongly, with both operators growing market share and
sales, which is fuelling cash flow growth and profit
margins.
In a tight market for new sites due to a lack
of prime locations, planning restrictions and elevated construction
costs, our large format stores provide the operators with the space
to grow sales volumes and thus sales densities, which will further
increase rental affordability and should feed through to higher
rental income at lease expiry.
The importance of mission-critical
supermarkets, the revenue hubs in this growing sector, together
with long inflation-linked full repairing and insuring ("FRI")
leases, has attracted a growing range of investors to this market.
In 2023 we saw a record £2.1 billion of investment volumes. In
addition, we continue to see our two biggest tenants, Tesco and
Sainsbury's buying in their stores with over £2.0 billion of
supermarkets purchased in the last five years, testament to the
value that they see in owning their top trading, omnichannel
stores.
Despite the strong grocery market backdrop,
supermarket property yields continued to widen in line with the
broader property market driven by the negative macro-economic
environment. As a result, the Portfolio valuation declined 3.2% on
a like-for-like basis, reflecting a Net Initial Yield of 5.8% as at
31 December 2023 (30 June 2023: 5.6%).
Given the uncertain economic and interest rate
outlook for much of 2023, the Company took the prudent decision to
use some of the proceeds from the sale of the Sainsbury's Reversion
Portfolio to pay down debt, reducing LTV to 33%. Despite this lower
leverage position, we have maintained the EPS level we achieved
before the sale of the SRP. The undrawn debt capacity means we are
ideally positioned to take advantage of some highly attractive
pricing, and earnings accretive acquisition opportunities in the
market.
The reduction in the 5 year interest swap rate
from 5.0% in June 2023 to 3.4% in December 2023 has reduced
borrowing costs, generating an attractive spread to current
supermarket investment yields. Combined with the strong, growing
operational market and improving lease reversion values, we remain
highly optimistic on the longer-term valuation outlook and remain
open to future earnings accretive investments.
The Company has continued to build on the
progress that it has already made on sustainability. Following the
publication of our first standalone sustainability report in
September, along with our TCFD compliant Annual Report, we have now
submitted our science-based emissions reduction targets to the
Science Based Target initiative ("SBTi") for validation. We have
also actively managed assets to deliver sustainability improvements
and have now deployed EV charging at five sites and are continuing
to support the roll out of solar PV with rooftop solar now
installed at 20% of our stores. This is improving the environmental
efficiency of our sites including our Tesco store in Thetford,
which energised in the Period. The PV system provides clean energy
directly to the store, helped to deliver an EPC upgrade from C to B
and was completed with zero capex cost to the Company.
OUTLOOK
Once again, the grocery market has delivered a
strong performance in a challenging, unpredictable economic
environment. Whilst we have seen a decline in valuations based on
transactions which completed late last year, constrained supply and
falling debt cost conditions combined with evidence of increased
competition for assets since the start of the year, suggest that we
may see a more positive environment for valuations going
forward.
With our current reduced leverage, we are now
ideally placed to add earnings accretive assets. Meanwhile, our
high-quality portfolio of mission-critical supermarkets continue to
deliver stable, long-term inflation-linked income. Combined with
our robust balance sheet, fixed borrowing costs and highly visible
cashflows, the Board is confident of the Company's ability to
provide secure income to our investors.
Nick
Hewson
Chair
12 March
2024
KEY
PERFORMANCE INDICATORS
Our objective is to provide secure,
inflation-linked, long income from grocery property in the UK. Set
out below are the key performance indicators we use to track our
progress.
KPI
|
Definition
|
Performance
|
1. Total Shareholder
Return
|
Shareholder return is one of the Group's
principal measures of performance.
Total Shareholder Return ("TSR") is measured by
reference to the growth in the Group's share price over a period,
plus dividends declared for that period.
|
23.2% for the six months ended 31 December
2023
(Six months ended
31 December 2022: -11.7%)
|
2.
WAULT
|
WAULT measures the average unexpired lease term
of the Property Portfolio, weighted by the Portfolio
valuations.
|
13 years WAULT as at 31 December 2023 (As at 30
June 2023: 14 years)
|
3. EPRA NTA per
share
|
The value of our assets (based on an
independent valuation) less the book value of our liabilities,
attributable to Shareholders and calculated in accordance with EPRA
guidelines. EPRA states three measures of NAV to be used; of which
the Group deem EPRA NTA as the most meaningful measure. See Note 22
for more information.
|
88 pence per share as at 31 December 2023 (As
at 30 June 2023: 93 pence per share)
|
4. Net Loan to
Value
|
The proportion of our Direct Portfolio gross
asset value that is funded by borrowings calculated as balance
sheet borrowings less cash balances divided by total investment
properties valuation.
|
33% as at 31 December 2023 (As at 30 June 2023:
37%)
|
5. Adjusted
EPS*
|
EPRA earnings adjusted for company specific
items to reflect the underlying profitability of the
business.
|
2.9 pence per share for the six months ended 31
December 2023 (Six months ended
31 December 2022: 2.9 pence per share)
|
Adjusted earnings is a performance measure used
by the Board to assess the Group's financial performance and
dividend payments. The metric adjusts EPRA earnings by deducting
one-off items such as debt restructuring costs and the adding back
finance income on derivatives held at fair value through profit and
loss. Adjusted Earnings is considered a better reflection of the
measure over which the Board assesses the Group's trading
performance and dividend cover. Finance income received from
derivatives held at fair value through profit and loss are added
back to EPRA earnings as this reflects the cash received from the
derivatives in the period and therefore gives a better reflection
of the Group's net finance costs. Debt restructuring costs relate
to the acceleration of unamortised arrangement fees following the
refinancing of the Group's debt facilities during the
Period.
Adjusted EPS reflects the adjusted earnings
defined above attributable to each shareholder.
The Group uses alternative performance measures
including the European Public Real Estate ("EPRA") Best Practice
Recommendations ("BPR") to supplement its IFRS measures as the
Board considers that these measures give users of the interim
financial statements the best understanding of the underlying
performance of the Group's property portfolio. The EPRA measures
are widely recognised and used by public real estate companies and
investors and seek to improve transparency, comparability and
relevance of published results in the sector.
Reconciliations between EPRA measures and the
IFRS financial statements can be found in Notes 10 and 22 to the
financial statements.
EPRA
PERFORMANCE INDICATORS
The table below shows additional performance
measures, calculated in accordance with the Best Practices
Recommendations of the European Public Real Estate Association
(EPRA). We provide these measures to aid comparison with other
European real estate businesses.
For a full reconciliation of all EPRA
performance indicators, please see the Notes to EPRA measures
within the supplementary section of the interim financial
statements.
Measure
|
Definition
|
Performance
|
1. EPRA
EPS
|
A measure of EPS designed by EPRA to present
underlying earnings from core operating activities.
|
2.1 pence per share for the
six months ended 31 December 2023 (Six months ended 31 December
2022:
2.6 pence per share)
|
2. EPRA Net
Reinstatement Value (NRV) per share
|
An EPRA NAV per share metric which assumes that
entities never sell assets and aims to represent the value required
to rebuild the entity.
|
97 pence per share as at
31 December 2023 (As at
30 June 2023: 103 pence per share)
|
3. EPRA Net Tangible
Assets (NTA) per share
|
An EPRA NAV per share metric which assumes
entities buy and sell assets, thereby crystallising certain levels
of unavoidable deferred tax.
|
88 pence per share as at
31 December 2023 (As at
30 June 2023: 93 pence per share)
|
4. EPRA Net Disposal
Value (NDV) per share
|
An EPRA NAV per share metric which represents
the Shareholders' value under a disposal scenario, where deferred
tax, financial instruments and certain other adjustments are
calculated to the full extent of their liability, net of any
resulting tax.
|
90 pence per share as at
31 December 2023 (As at
30 June 2023: 98 pence
per share)
|
5. EPRA Net Initial
Yield (NIY) & EPRA "Topped-Up" Net Initial
Yield
|
Annualised rental income based on the cash
rents passing at the balance sheet date, less non-recoverable
property operating expenses, divided by the market value of the
property, increased with (estimated) purchasers' costs.
|
5.8% as at 31 December 2023 (As at 30 June
2023: 5.5%)
|
6. EPRA Vacancy
Rate
|
Estimated Market Rental Value (ERV) of vacant
space divided by ERV of the whole portfolio.
|
0.6% as at 31 December 2023 (As at 30 June
2023: 0.4%)
|
7. EPRA Cost Ratio
(Including direct vacancy costs)
|
Administrative & operating costs (including
costs of direct vacancy) divided by gross rental income.
|
15.1% for the six months ended 31 December
2023
(Six months ended
31 December 2022: 16.7%11)
|
8. EPRA Cost Ratio
(Excluding direct vacancy costs)
|
Administrative & operating costs (excluding
costs of direct vacancy) divided by gross rental income.
|
14.9% for the six months ended 31 December
2022
(Six months ended
31 December 2022: 16.5%)
|
9. EPRA
LTV
|
Net debt divided by total property portfolio
and other eligible assets.
|
34.6% for the six months ended 31 December 2023
(As at 30 June 2023: 35.2%)
|
10. EPRA
Like-for-like Rental Growth
|
Changes in net rental income for those
properties held for the duration of both the current and
comparative reporting period.
|
Rental increase of 2.5% for the six months to
31 December 2023 versus six months to 31 December 2022
|
11. EPRA
Capital Expenditure
|
Amounts spent for the purchase and development
of investment properties (including any capitalised transaction
costs).
|
£38.5 million for the six months ended 31
December 2023 (Six months ended
31 December 2022: £310.2 million)
|
INVESTMENT ADVISER'S REPORT
Atrato Capital Limited, the
Investment Adviser to the Group (the "Investment Adviser"), is
pleased to report on the operations of the Group for the
Period.
Overview
Continued strong growth of the grocery
sector
We observed UK grocery sales growth
of 8%12 in the Period. Annual sales in the UK grocery
market are currently forecast to reach £250 billion in
202413; an increase of £65 billion since the Company's
IPO in 2017. The sector's non-discretionary nature ensures that it
is highly resilient relative to the volatility of the economic
cycle and is strongly correlated to inflation. The recent peak of
UK price inflation has now seemingly passed and operators are
reporting volume growth both in-store and online.
In October 2023, Tesco reported
9.3%14 growth in grocery sales from its supermarket
estate and Sainsbury's reported similar growth of
10.8%15, outpacing the wider UK grocery market. Core to
the operator's growth are the omnichannel supermarkets that
provide in-store shopping, but also operate as
last mile, online grocery fulfilment centres for both home delivery
and click and collect. Omnichannel stores
provides the space, proximity to customers and flexibility to
service customer demand in the growing physical and online
markets. It is worth noting that
approximately 80% of Tesco's 1.1 million weekly online orders are
now fulfilled from omnichannel supermarkets and, similarly, the
increased focus on omnichannel stores has propelled Sainsbury's to
become the number one click and collect retailer in
the UK.
Focused investment strategy targeting top trading, mission
critical real estate
Our strategy is aligned with the
future model of UK grocery, capitalising on the long-term
structural trend toward growing omnichannel operations.
We have handpicked the UK's leading portfolio of
supermarket investment assets. We are the largest landlord of
omnichannel grocery stores in the UK, offering a combination of
attractive, secure and growing income with potential for long-term
capital growth. Our stores facilitate in-store shopping, home
delivery, click and collect, and increasingly, rapid ready to eat
food delivery. 93% of the Group's portfolio by value are
omnichannel stores, future proofing the portfolio and providing
exposure to the fastest growing grocery market channel since the
Company's IPO in 201716.
Omnichannel stores act as
significant online fulfilment hubs. A typical omnichannel store
will operate as many as 25 home delivery vans, with c.200 employees
dedicated to online fulfilment, accounting for up to 30% of store
turnover. These large sites, often exceeding 10 acres, have good
road transport links in densely populated areas and thus would be
very difficult to recreate today. The stores typically have long
trading histories, many having been supermarkets for more than 30
or 40 years, underlining the strength of the site as a grocery
location. The Company's strategy of targeting such stores ensures
that its tenants are committed to the location beyond the
contractual lease term and provides assurance of strong alternative
occupier demand in the highly competitive grocery market. The
scarcity of alternative locations combined with increased build
costs, up c.30% since 2022, are driving up supermarket replacement
values, making existing omnichannel supermarkets even more
valuable.
Income generated from strong tenant
covenants
The Company has continued to achieve
100% rent collection during the period, of which 77% is received
from its key tenants, Tesco and Sainsbury's, the UK's largest
retailers by revenue. The Company also benefits from its tenants'
capital investment programmes, which are focused on enhancing
existing stores, including those which are occupied leasehold, over
new store openings. The limited new store openings and capital
investment programmes mean that high sales growth is being achieved
like-for-like, enhancing existing store trading performance and
ensuring progressive ERV growth.
While the growth of the Discounters
has gained attention, it is worth noting that much of their sales
growth is achieved through new store openings and therefore at a
lower margin. Tesco and Sainsbury's have competed particularly well
with the Discounters, with Clubcard and Nectar customer loyalty
programmes proving highly effective in customer
retention.
2023 was a record year for supermarket real estate investment
volumes
The investment market for
supermarkets saw volumes of £2.1 billion in 202317,
highlighting the attractiveness of the asset class at current
yields. The volume of transactions demonstrated the significant
value of supermarket real estate to both the traditional
institutional investors and also to Tesco and Sainsbury's, as they
continue to buy back leasehold stores. This operator buyback
activity, given the knowledge of their own store estates, clearly
demonstrates the value of their store networks.
The liquidity of the supermarket
investment market means that valuers are able to base valuations on
real world transactional evidence. This stands in contrast to other
sectors of the real estate market where volumes were significantly
reduced in 2023, reflecting the wide gap that still remains between
buyer and seller price expectations in those sectors. The defensive
characteristics of supermarkets, combined with the capex certainty
provided by the Fully Repairing and Insuring lease structures are
proving attractive for investors.
Challenging economic environment impacting property
valuations
The high level of transactions in
the grocery investment market provided clear market pricing
guidance for the sector. For the majority of the year, supermarket
valuations remained broadly flat following the valuation decline
seen in Q4 of 2022. However, in December 2023, following an
improvement in 5 year swap rates and forward financing
expectations, some buyers opportunistically closed deals to
purchase assets from some vendors who were under pressure. These
transactions would have been priced earlier in the year when the
interest rate outlook was less favourable. This short burst of
transactions closing late in the year at wider yields resulted in a
3.2% like-for-like valuation decline of the Company's portfolio as
at 31 December 2023.
Since the start of 2024 we have seen
strong investor interest, including for those stores for which
demand was weaker in Q4 2023. This includes assets on short leases
or let to non-institutional grade tenants such as Asda, Morrisons
and Waitrose, providing confidence that we have seen a bottoming
out of valuations in the sector.
Whilst volatility remains, interest
rate expectations have moderated somewhat and the 5 year swap rate
has reduced from 5.0% in June to 3.4% in December, providing
accretive opportunities to deploy capital. We expect that more
constrained supply following very high transaction volumes in 2023
combined with falling interest rates will provide support for
capital growth going forwards.
As sector specialists, we are able
to identify value in often overlooked sub-sectors in a challenging
real estate market. The prospective all-in fixed cost of debt for
the Company is around 5.5% and we see accretive opportunities to
deploy, whilst maintaining focus on high quality assets.
Strong balance sheet, well positioned to take advantage of
opportunities in the market
The Company's balance sheet is in a
robust position. During 2023, the Board and Investment Adviser took
the prudent decision to maintain lower leverage given the
challenging macro environment, resulting in an LTV of 33% as at 31
December 2023 (30 June 2023: 37%). This conservative approach,
which saw the Company reduce debt and step back from the investment
market to conserve cash during a period of continued volatility,
now provides the Company with capacity for accretive deployment in
an increasingly attractive investment environment.
The Company's cost of debt remains
100% fixed until FY26, through the peak of the interest rate cycle
and we continue to see good access to refinancing liquidity from
both new and existing lenders. We added Sumitomo Mitsui Banking
Corporation to our group of relationship banks in the Period and we
continue to maintain strong relationships with all lenders. Fitch
ratings recently reaffirmed the Company's Investment Grade,
long-term Issuer Default Rating ("IDR") of 'BBB+' with a stable
outlook.
The Company has significant headroom
on its bank facility covenants and given the attractiveness of
current investment yields is currently assessing a number of
earnings accretive acquisition opportunities.
Acquisitions in the period relate to the conclusion of the
sale of the Sainsbury's Reversionary Portfolio to Sainsbury's
plc
During the Period, the Group
purchased two further supermarkets for £36.4
million18:
· July
2023: Two Sainsbury's superstores in
Derby, for £19.0 million18 and Gloucester, for £17.4
million18, at a blended NIY of 6.5%. The stores had a
10-year unexpired lease term, subject to 5-yearly, upwards only
open market rent reviews.
Valuation reflects transactions closing late Q4 which priced
in higher long-run cost environment
Cushman & Wakefield valued the
Portfolio as at 31 December 2023 in accordance with the RICS
Valuation Global Standards. The properties were valued individually
without any premium/discount applied to the Portfolio as a
whole.
The Portfolio value was £1,675
million, with this valuation reflecting a net initial yield of 5.8%
and a like-for-like valuation decline of 3.2% for the
Period.
The decline in valuation reflects
the outward shift in property yields applied by valuers as a result
of transactions which completed in late 2023, having priced in Q3
amidst expectations of higher long-run costs. The valuation decline
has been partially mitigated by our contractual inflation-linked
rental uplifts. The average increase in rent from rent reviews
performed during the six month period to 31 December 2023 was 5.1%
(or 3.6% on an annualised basis). 80% of the Company's leases
benefit from contractual rental uplifts, with 78% linked to
inflation and 2% with fixed uplifts.
The benchmark MSCI All Property
Capital Index during the same period was down 4.0%. Since the
Period end we have seen signs of increasing investor interest as
the forecast cost of debt begins to fall and with current
supermarket yields producing attractive returns.
Active asset management delivering additional value and
improving sustainability of sites
We continue to seek to deliver
additional value for shareholders through active management of our
larger sites which are not fully demised to the core supermarket
tenants and therefore benefit from greater landlord
control.
At Tesco, Chineham, McDonald's has
commenced fit out works of a unit with a new 25-year lease. In
addition to this, Pets Corner is upsizing into a new unit. At
Tesco, Bradley Stoke, works are currently being undertaken to
amalgamate two units, one of which was vacant at acquisition and
the other let on a concessionary basis, with B&M committing to
a new 10-year lease, rendering the site 100% let.
Opportunities to add complementary
discount grocery operators have progressed. At Tesco, Chineham, the
existing planning consent was successfully implemented and terms
are agreed with a complementary discount grocery retailer. Other
developments are being considered at Sainsbury's, Newcastle,
Morrisons, Workington and Tesco, Bradley Stoke and various
negotiations are ongoing with potential tenants for those
sites.
Progress has also been made on
sustainability initiatives at our sites. Electric Vehicle ("EV")
charging has been completed at five sites. 58 EV charging bays have
been installed at zero capex cost to the Company across:
· Morrisons, Workington
· Morrisons, Wisbech
· Tesco,
Bradley Stoke
· Tesco,
Chineham
· Tesco,
Beaumont Leys
We continue to assess the portfolio
for other EV charging installation opportunities with three
immediate targets already identified.
Works were completed at Tesco,
Thetford in partnership with Atrato Onsite Energy plc where Tesco
entered into a 20-year Power Purchase Agreement ("PPA") for a new
solar installation on the rooftop at the store. The EPC rating was
re-assessed post installation and improved from a C to a
B.
Delivering on
our sustainability strategy
The Company has continued to deliver on its
sustainability strategy and improve its ESG performance. The
Company is pleased to have now progressed from a Net Zero ambition
to submitting science-based emissions reduction targets to the SBTi
and embarking on their delivery. The Company's targets, currently
submitted to the SBTi for validation, include:
-
Net-Zero: A commitment to reach net
zero Greenhouse Gas ("GHG") emissions across the value chain by
FY2050
-
Near-term Target: A commitment
to reduce absolute Scope 1 and 2 GHG emissions by 42% by FY2030
from a FY2023 base year
-
Long-term Target: A commitment to
reduce absolute Scope 1, 2 and 3 GHG emissions by 90% by FY2050
from a FY2023 base year
The Annual Report and Accounts for
the year ended 30 June 2023 included the Company's Task Force on
Climate-Related Financial Disclosures ("TCFD") report, with
disclosures made across all 11 TCFD recommendations. Included
within this report was the Company's GHG Inventory disclosures,
across Scope 1, 2 and 3 emissions. As part of the Company's
commitment to further developing its mechanisms to identify, manage
and respond to climate-related risks, TCFD and climate risk
training was rolled out to the Investment Adviser and completed by
the full team in December 2023.
The Company's approach to sustainability is
underpinned by the Board's commitment to good stewardship and
creating long-term value for our stakeholders. The Company
continues to support the commitments of its Investment Adviser as a
signatory to both the United Nations Principles for Responsible
Investment ("UNPRI") and Net Zero Asset Managers Initiative
("NZAM"). The Investment Adviser received the results of its first
PRI Report submission in January 2024 and will be reporting on its
responsible investment activities again in the next PRI reporting
cycle. In January 2024, the Investment Adviser also became part of
the first cohort of endorsers of Spring - a PRI stewardship
initiative for nature.
The Company continues to monitor the evolution
of relevant ESG-related regulation, specifically the implementation
of the Financial Conduct Authority's UK Sustainability Disclosure
Requirements ("SDR") and the European Commission's review of the EU
Sustainable Finance Disclosure Regulations ("SFDR").
The Company's Board and the Investment Adviser
recognise the importance of transparent, decision-useful
sustainability reporting to improve our accountability to
stakeholders. The Company's next annual Sustainability Report will
be published alongside the Company's Full Year Results. The Company
remains committed to further development of its sustainability
strategy and priority ESG activities, as it continues to integrate
ESG best practice and contribute towards a net zero
future.
Post Period end, the Company adopted a
charitable giving policy focused on the themes of alleviating
poverty and hunger, feeding the nation, and having a positive
impact on biodiversity at and near our sites. The Investment
Adviser has also formalised a volunteering programme and its
employees have given their time to support these themes. The
Company will report on progress with the implementation of the
charitable giving policy and volunteering impact within its next
annual Sustainability Report.
Financial
results
Net rental
income
In the Period, the portfolio generated net
rental income of £52.6 million (six months to 31 December 2022:
£45.9 million), representing an increase of £6.7 million or 14.5%
compared to the prior period.
On a like-for-like basis, EPRA net rental
income increased by 2.5%. During the Period we successfully
completed 13 rent reviews generating £1.7 million of additional
rental income, representing an increase of 5.1% (or 3.6% on an
annualised basis).
The second half of the year will benefit both
from a full period of rental income from properties acquired in the
Period and contractual uplifts across 27% of the portfolio subject
to a review in the six months to 30 June 2024.
Direct property expenditure increased
marginally to £0.4 million (six months to 31 December 2022: £0.3
million), however our gross to net margin continues to be among the
highest in the sector at 99.3% (six months to 31 December 2022:
99.4%), reflecting the strength of our core single-let strategy and
further highlighting the covenant quality of our tenant
base.
Rent collection rates were 100% for the six
months to 31 December 2023 (six months to 31 December 2022: 100%),
as our focus on top trading stores and covenant quality provided
exceptional income security.
Administrative
and other expenses and EPRA cost ratio
Administrative and other expenses, which
include all operational costs of running the business, remained
broadly flat period-on-period at £7.6 million (six months to 31
December 2022: £7.9 million). We continue to monitor the
operational efficiency of the Group through its EPRA cost ratio,
which is among the lowest in the sector, and improved by 160bps to
15.1%.
|
6 months to
31 December
|
6 months
to
31
December
|
|
2023
|
2022
|
EPRA cost ratio including direct vacancy
costs
|
15.1%
|
16.7%
|
EPRA cost ratio excluding direct vacancy
costs
|
14.9%
|
16.5%
|
Net finance
costs
During the Period, the Group received £135.1
million following the divestment of its interest in the Sainsbury's
Reversion Portfolio Joint Venture. Part of the proceeds were
utilised to pay down debt, reducing drawn debt by £84.4 million to
£587.8 million at the period end. At the same time, the Group
extended the term of its hedging by 12 months, fixing the weighted
average cost of debt on drawn balances at 3.1%.
Net finance costs reduced by £1.5 million
primarily due to one-off loan restructuring costs recognised in the
prior period.
Adjusted
earnings
The Directors consider Adjusted earnings a key
measure of the Company's underlying operating results, and
therefore excludes one-off items which are non-recurring in nature
and includes finance income on derivatives held at fair value
through profit on loss. Adjusted earnings for the six months to 31
December 2023 were £36.3 million (six months to 31 December 2022:
£36.4 million). On a per share basis, adjusted earnings remained
flat in the Period at 2.9 pence (six months to 31 December 2022:
2.9 pence) per share.
A full reconciliation between IFRS and Adjusted
earnings can be found in note 10 of the Financial
Statements.
Dividend
In August 2023, the Company paid a fourth
interim dividend in respect of the period from 1 April 2023 to 30
June 2023 of 1.50 pence per share, taking total dividends paid and
declared in respect of the financial year ended 30 June 2023 to
6.00 pence per share.
In November 2023, the Company paid a first
interim dividend in respect of the period from 1 July 2023 to 30
September 2023 of 1.515 pence per share and in January 2024
approved a second interim dividend of 1.515 pence per share for the
three months ended 31 December 2023.
The Company is continuing to target a dividend
of 6.06 pence per share in respect of the year ended 30 June
2024.
EPRA net
tangible assets and IFRS net asset
|
Unaudited
|
Unaudited
|
Audited
|
|
31 Dec 2023
|
31 Dec
2022
|
30 Jun
2023
|
|
£'000
|
£'000
|
£'000
|
Investment property
|
1,667,910
|
1,625,100
|
1,685,690
|
Investment in joint ventures
|
-
|
197,821
|
-
|
Bank and other borrowings
|
(583,893)
|
(685,442)
|
(667,465)
|
Cash
|
37,068
|
35,380
|
37,481
|
Other net assets/(liabilities)
|
(27,191)
|
(25,915)
|
100,828
|
EPRA net
tangible assets
|
1,093,894
|
1,146,944
|
1,156,534
|
Fair value of interest rate
derivatives
|
27,364
|
47,389
|
57,583
|
Fair value adjustment for financial assets held
at amortised cost
|
3,631
|
3,423
|
3,609
|
IFRS net
assets
|
1,124,889
|
1,197,756
|
1,217,726
|
EPRA net tangible assets ("EPRA NTA") is
considered to be the most relevant measure for the Group, and
includes both income and capital returns, but excludes fair value
of interest rate derivatives and revaluation to fair value of
investment properties held at amortised cost.
At 31 December 2023, EPRA NTA was £1,094
million (30 June 2023: £1,157 million), representing an EPRA NTA
per share of 88 pence, a decrease of 5.4% since 30 June 2023
primarily due to the portfolio revaluation deficit of £57.9 million
or 5 pence per share.
Portfolio
Valuation
The value of the portfolio at 31 December 2023,
including the fair value of investment properties held at amortised
cost, was £1,675 million (30 June 2023: £1,693 million). During the
period, the Group invested £38.4 million in two omnichannel
supermarkets (including transaction costs) and incurred capital
expenditure of £0.1 million. On a like-for-like basis, the
portfolio recognised a revaluation deficit of £54.4 million, or
3.2%, as a result of 20bps outward yield shift.
Cash Flow and
Net Debt
Cash flows from operating activities before
changes in working capital increased by £6.9 million to £43.6
million, primarily due to increased rental income received from
rent reviews and property acquisitions.
During the Period, the Group received £135.1
million following the divestment of its interest in the Sainsbury's
Reversion Portfolio Joint Venture. Part of the proceeds were used
to acquire two omnichannel supermarkets with a combined acquisition
cost of £38.4 million (including transaction costs), providing
earnings growth in line with the Group's strategy.
Net debt decreased by £83.2 million over the
six-months to 31 December 2023, to £546.8 million, and represents a
loan to value of 33% (30 June 2023: 37%). The Group continues to
maintain a conservative leverage policy, with a medium-term target
LTV of 30-40%.
Financing
|
Unaudited
|
Unaudited
|
Audited
|
|
31 Dec 2023
|
31 Dec
2022
|
30 Jun
2023
|
Undrawn facilities
|
£177m
|
£172m
|
£190m
|
Loan to value
|
33%
|
40%
|
37%
|
Net debt / EBITDA ratio (period end)
|
6.1x
|
8.6x
|
8.0x
|
Weighted average cost of debt
|
3.1%
|
2.6%
|
2.9%
|
Interest cover
|
5.8x
|
3.6x
|
4.1x
|
Average debt maturity1
|
4.1 years
|
4.0 years
|
3.7 years
|
% of drawn debt which is fixed/hedged
|
100%
|
100%
|
100%
|
1. Includes
extension options at lenders' discretion
During the Period, the Group completed a
comprehensive debt refinancing exercise, completing a new £67
million unsecured facility with Sumitomo Mitsui Banking
Corporation, at the same time reducing its HSBC facility from £150
million to £50 million and cancelling its Barclays/RBC facility of
£77.5 million. This refinancing has allowed the Group to increase
its weighted average debt maturity to 4.1 years (30 June 2023: 3.7
years).
At 31 December 2023, the Group has gross
borrowings of £588 million diversified across eight lenders,
including £374 million of unsecured borrowings and £214 million of
secured borrowings. In addition, the Group has available undrawn
facilities of £177 million (which includes a £75 million credit
approved accordion) and plenty of headroom under banking covenants,
providing the capacity to execute opportunistic transactions as
they arise.
The Group has £97 million of debt maturing in
the next twelve months, all of which is covered by undrawn
facilities. The Group maintains good long-term relationships with
all lenders and is currently in discussions regarding the
refinancing requirement and expects to conclude the transaction on
or around the current financial year end.
The Group's interest rate risk is mitigated
through a combination of fixed debt and derivative interest rate
swaps and caps. During the Period, the Group utilised the value of
its existing in-the-money interest rate hedges to extend the term
of its hedging arrangements by 12 months at no additional cost to
the Company. As a result of these transactions, 100% of the Group's
drawn debt is now either fixed or hedged for 2.7 years at a
weighted average cost of 3.1%.
The Group continues to monitor its banking
covenants and maintains significant headroom on its LTV and ICR
covenants. As at 31 December 2023, property values would need to
fall by around 42% before breaching the gearing covenant.
Similarly, net rental income would need to fall by 56% before
breaching the interest cover covenant.
Fitch Ratings, as part of its annual review,
reaffirmed the Group's BBB+ rating with a stable
outlook.
Atrato Capital
Limited
Investment
Adviser
12 March
2024
RINCIPAL RISKS
AND UNCERTAINTIES
The Audit and Risk Committee, which assists the
Board with its responsibilities for managing risk, regularly
considers changes to the principal risk and uncertainties for the
Group. The risk management process including the identification,
consideration and assessment of those emerging risks which may
impact the Group, remain as described in the 2023 Annual
Report.
In the Period, the probability of Property
Risk, 'our ability to source assets may be affected by competition
for investment properties in the supermarket sector', was increased
from low to moderate and the Macroeconomic Risk, 'impact of the war
in Ukraine' was expanded to include the impact of all geopolitical
conflicts.
The principal risks and uncertainties faced by
the Company in the Period have otherwise not changed from what is
detailed on pages 52 to 58 of the 2023 Annual Report and no further
changes are expected in the remaining six-months of the financial
year ending 30 June 2024. A summary of those principal risks and
uncertainties is provided below:
Property
risk
· The lower-than-expected performance of the Portfolio could
reduce property valuations and/or revenue, thereby affecting our
ability to pay dividends or lead to a breach of our banking
covenants
· Our
ability to source assets may be affected by competition for
investment properties in the supermarket sector
· The
default of one or more of our lessees would reduce revenue and may
affect our ability to pay dividends
· The
default of one of the supermarket operators would create an excess
supply of supermarket real estate, thereby putting pressure on ERVs
leading to a breach in our banking covenants
Financial
risk
· Our
use of floating rate debt will expose the business to underlying
interest rate movements as interest rates continue to
rise
·
A lack of debt funding at
appropriate rates may restrict our ability to grow
· We must be able to operate within our banking
covenants
Corporate
risk
· There
can be no guarantee that we will achieve our investment
objectives
· We are
reliant on the continuance of the Investment Adviser
Taxation
risk
· We
operate as a UK REIT and have a tax-efficient corporate structure,
with advantageous consequences for UK shareholders. Any changes to
our tax status or in UK legislation could affect our ability to
achieve our investment objectives and provide favourable returns to
shareholders
Climate
risk
· The
assets within the Group's portfolio that are less energy efficient
may be exposed to downward pressure on valuation or increased
pressure to invest in the improvement of individual
assets
·
Changes in regulatory policy
could lead to our assets becoming unlettable
·
Volatile changes in the weather
systems may deem the Group's properties no longer viable to
tenants
Cyber
risks
· The
rise in attempted cyber crime and more recently cyber risks arising
from recent geopolitical tensions has increased the risk for a
listed company
Market price
risk
· Shareholders may not be able to realise their shares at a
price above or the same as they paid for the shares or at
all
Macroeconomic
risks
· Inflationary pressures on the valuation of the
portfolio
· Impact
of geopolitical conflict
ALTERNATIVE
INVESTMENT FUND MANAGER (the "AIFM")
The AIFM was appointed with effect from 15 June
2017 as the Company's alternative investment fund manager under the
terms of a Management Agreement between the Company and the AIFM,
in accordance with the Alternative Investment Fund Manager's
Directive and the Alternative Investment Fund Managers Regulations
2013. The AIFM is licensed and regulated by the Guernsey Financial
Services Commission.
The AIFM is responsible for the day-to-day
management of the Company's investments, subject to the investment
objective and investment policy and the overall supervision of the
Directors. The AIFM is also required to comply with on-going
capital, reporting and transparency obligations and a range of
organisational requirements and conduct of business rules. The AIFM
must also, as the AIFM for the Company, adopt a range of policies
and procedures addressing areas such as risk management, liquidity
management, conflicts of interest, valuations, compliance, internal
audit and remuneration.
DIRECTORS'
RESPONSIBILITY STATEMENT
The Directors confirm that, to the best of
their knowledge, this condensed set of consolidated financial
statements has been prepared in accordance with IAS 34 as adopted
by the United Kingdom and that the operating and financial review
included herein provides a fair review of the information required
by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency Rules
of the United Kingdom's Financial Conduct Authority,
namely:
· an indication
of important events that have occurred during the Period and their
impact on the condensed financial statements and a description of
the principal risks and uncertainties for the remaining months of
the Group's financial year; and
· disclosures of
any material related party transactions in the Period. These are
included in note 21.
full list of Directors of the Company can be
found at the end of this interim report. Shareholder information is
as disclosed on the Supermarket Income REIT plc website.
For and on behalf of the Board
Nick
Hewson
Chair
12 March
2024
INDEPENDENT
REVIEW REPORT TO SUPERMARKET INCOME REIT PLC
Conclusion
Based on our review, nothing has
come to our attention that causes us to believe that the condensed
set of financial statements in the half-yearly financial report for
the six months ended 31 December 2023 is not prepared, in all
material respects, in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct
Authority.
We have been engaged by the Company
to review the condensed set of financial statements in the
half-yearly financial report for the six months ended 31 December
2023 which comprises the Condensed Consolidated Statement of
Comprehensive Income, the Condensed Consolidated Statement of
Financial Position, the Condensed Consolidated Statement of Changes
in Equity, the Condensed Consolidated Cash Flow Statement and the
related notes.
Basis for conclusion
We conducted our review in
accordance with International Standard on Review Engagements (UK)
2410, "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual
financial statements of the group are prepared in accordance with
UK adopted international accounting standards. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting.
Conclusions relating to going concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors
have inappropriately adopted the going concern basis of accounting
or that the directors have identified material uncertainties
relating to going concern that are not appropriately
disclosed.
This conclusion is based on the
review procedures performed in accordance with ISRE (UK) 2410,
however future events or conditions may cause the group to cease to
continue as a going concern.
Responsibilities of
directors
The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
In preparing the half-yearly financial report,
the directors are responsible for assessing the Company's ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's
responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are
responsible for expressing to the Company a conclusion on the
condensed set of financial statement in the half-yearly financial
report. Our conclusion, including our Conclusions Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use
of our report
Our report has been prepared in
accordance with the terms of our engagement to assist the Company
in meeting the requirements of the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority and
for no other purpose. No person is entitled to rely on this
report unless such a person is a person entitled to rely upon this
report by virtue of and for the purpose of our terms of engagement
or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability.
BDO
LLP
Chartered Accountants
London, UK
12 March 2024
BDO LLP is a limited liability
partnership registered in England and Wales (with registered number
OC305127).
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
For the six month period ended 31 December
2023
Profit or
loss
|
Notes
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Gross rental income
|
4
|
52,924
|
46,162
|
95,823
|
Service charge income
|
4
|
3,309
|
2,884
|
5,939
|
Service charge expense
|
5
|
(3,672)
|
(3,153)
|
(6,518)
|
Net Rental
Income
|
|
52,561
|
45,893
|
95,244
|
Administrative and other expenses
|
6
|
(7,608)
|
(7,894)
|
(15,429)
|
Operating
profit before changes in fair value of investment properties and
share of income and profit on disposal from joint
venture
|
|
44,953
|
37,999
|
79,815
|
Changes in fair value of investment properties
and associated rent guarantees
|
12
|
(57,940)
|
(248,064)
|
(256,066)
|
Share of income from joint venture
|
|
-
|
18,851
|
23,232
|
Profit on disposal of joint venture
|
|
-
|
-
|
19,940
|
Operating
(loss)
|
|
(12,987)
|
(191,214)
|
(133,079)
|
|
|
|
|
|
Finance income
|
8
|
10,967
|
3,209
|
14,626
|
Finance expense
|
8
|
(19,928)
|
(13,655)
|
(39,315)
|
Changes in fair value on interest rate
derivatives
|
|
(32,272)
|
(950)
|
10,024
|
Profit on disposal of interest rate
derivatives
|
19
|
-
|
-
|
2,878
|
(Loss) before
taxation
|
|
(54,220)
|
(202,610)
|
(144,866)
|
|
|
|
|
|
Tax charge for the period
|
9
|
-
|
-
|
-
|
(Loss) for the
period
|
|
(54,220)
|
(202,610)
|
(144,866)
|
|
|
|
|
|
Items to be classified to profit or loss
in subsequent periods
|
|
|
|
|
|
|
|
|
|
Changes in the fair value of interest rate
derivatives
|
19
|
(1,043)
|
1,780
|
1,068
|
|
|
|
|
|
Total
comprehensive (expense)/income for the period
|
|
(55,263)
|
(200,830)
|
(143,798)
|
Total
comprehensive (expense)/income for the period attributable to
ordinary shareholders
|
|
(55,263)
|
(200,830)
|
(143,798)
|
|
|
|
|
|
Earnings per
share - basic and diluted (pence)
|
10
|
(4.4p)
|
(16.3p)
|
(11.7p)
|
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
As at 31 December 2023
|
Notes
|
Unaudited
31 December 2023
£'000
|
Audited
30 June 2023
£'000
|
Unaudited
31 December
2022
£'000
|
Non-current
assets
|
|
|
|
|
Property, plant and equipment
|
|
-
|
-
|
129
|
Investment properties
|
12
|
1,667,910
|
1,685,690
|
1,625,100
|
Investment in joint ventures
|
|
-
|
-
|
197,821
|
Other financial assets
|
13
|
10,921
|
10,819
|
10,723
|
Interest rate derivatives
|
16
|
13,670
|
37,198
|
31,862
|
Total
non-current assets
|
|
1,692,501
|
1,733,707
|
1,865,635
|
|
|
|
|
|
Current
assets
|
|
|
|
|
Interest rate derivatives
|
16
|
13,694
|
20,384
|
15,528
|
Trade and other receivables
|
14
|
8,901
|
142,155
|
7,502
|
Cash and cash equivalents
|
|
37,068
|
37,481
|
35,380
|
Total current
assets
|
|
59,663
|
200,020
|
58,410
|
Total
assets
|
|
1,752,164
|
1,933,727
|
1,924,045
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
Bank borrowings
|
17
|
487,527
|
605,609
|
626,119
|
Total
non-current liabilities
|
|
487,527
|
605,609
|
626,119
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Bank borrowings due within one year
|
17
|
96,366
|
61,856
|
59,323
|
Deferred rental income
|
|
22,352
|
21,557
|
21,171
|
Trade and other payables
|
15
|
21,030
|
26,979
|
19,676
|
Total current
liabilities
|
|
139,748
|
110,392
|
100,170
|
Total
liabilities
|
|
627,275
|
716,001
|
726,289
|
Total net
assets
|
|
1,124,889
|
1,217,726
|
1,197,756
|
|
|
|
|
|
Equity
|
|
|
|
|
Share capital
|
18
|
12,462
|
12,462
|
12,426
|
Share premium reserve
|
18
|
500,386
|
500,386
|
497,316
|
Capital reduction reserve
|
18
|
666,957
|
704,531
|
741,821
|
Retained earnings
|
|
(57,177)
|
(2,957)
|
(60,701)
|
Cash flow hedge reserve
|
19
|
2,261
|
3,304
|
6,894
|
Total
equity
|
|
1,124,889
|
1,217,726
|
1,197,756
|
|
|
|
|
|
Net asset
value per share - basic and diluted
|
22
|
90p
|
98p
|
96p
|
EPRA net
tangible asset per share - basic
and
diluted
|
22
|
88p
|
93p
|
92p
|
These unaudited condensed consolidated
financial statements were approved and authorised for issue by the
Board of Directors on 12 March 2024 and were signed on its behalf
by: Nick Hewson, Chairman.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
For the six month period ended 31 December 2023
(unaudited)
|
Share capital
£'000
|
Share premium reserve
£'000
|
Cash flow hedge reserve
£'000
|
Capital reduction reserve
£'000
|
Retained
earnings/Accumulated (Deficit)
£'000
|
Total
£'000
|
As at 1 July
2023
|
12,462
|
500,386
|
3,304
|
704,531
|
(2,957)
|
1,217,726
|
Comprehensive
loss for
the
period
|
|
|
|
|
|
|
Loss for the period
|
-
|
-
|
-
|
-
|
(54,220)
|
(54,220)
|
Recycled comprehensive loss to profit and
loss
|
-
|
-
|
(432)
|
-
|
-
|
(432)
|
Other comprehensive loss
|
-
|
-
|
(611)
|
-
|
-
|
(611)
|
Total
comprehensive loss
for the
period
|
-
|
-
|
(1,043)
|
-
|
(54,220)
|
(55,263)
|
|
|
|
|
|
|
|
Transactions
with owners
|
|
|
|
|
|
|
Interim dividends paid
|
-
|
-
|
-
|
(37,574)
|
-
|
(37,574)
|
As at 31
December 2023
|
12,462
|
500,386
|
2,261
|
666,957
|
(57,177)
|
1,124,889
|
For the year from 1 July 2022 to 30 June 2023
(audited)
|
Share capital
£'000
|
Share premium reserve
£'000
|
Cash flow hedge reserve
£'000
|
Capital reduction reserve
£'000
|
Retained
earnings/Accumulated (Deficit)
£'000
|
Total
£'000
|
As at 1 July
2022
|
12,399
|
494,174
|
5,114
|
778,859
|
141,909
|
1,432,455
|
Comprehensive
loss for
the
period
|
|
|
|
|
|
|
Cash flow hedge reserve to profit for the year
on disposal of interest rate derivatives
|
|
|
(2,878)
|
|
|
(2,878)
|
Loss for the year
|
-
|
-
|
-
|
-
|
(144,866)
|
(144,866)
|
Other comprehensive income
|
-
|
-
|
1,068
|
-
|
-
|
1,068
|
Total
comprehensive loss for
the
period
|
-
|
-
|
(1,810)
|
-
|
(144,866)
|
(146,676)
|
|
|
|
|
|
|
|
Transactions
with owners
|
|
|
|
|
|
|
Ordinary shares issued at a
premium during the year
|
63
|
6,301
|
-
|
-
|
-
|
6,364
|
Share issue costs
|
-
|
(89)
|
-
|
-
|
-
|
(89)
|
Interim dividends paid
|
-
|
-
|
-
|
(74,328)
|
-
|
(74,328)
|
As at 30 June
2023
|
12,462
|
500,386
|
3,304
|
704,531
|
(2,957)
|
1,217,726
|
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
For the six month period ended 31 December 2022
(unaudited)
|
Share capital
£'000
|
Share premium reserve
£'000
|
Cash flow hedge reserve
£'000
|
Capital reduction reserve
£'000
|
Retained
Earnings/Accumulated (Deficit)
£'000
|
Total
£'000
|
As at 1 July
2022
|
12,399
|
494,174
|
5,114
|
778,859
|
141,909
|
1,432,455
|
Comprehensive
loss for
the
period
|
|
|
|
|
|
|
Loss for the period
|
-
|
-
|
-
|
-
|
(202,610)
|
(202,610)
|
Other comprehensive income
|
-
|
-
|
1,780
|
-
|
-
|
1,780
|
Total
comprehensive loss
for the
period
|
-
|
-
|
1,780
|
-
|
(202,610)
|
(200,830)
|
|
|
|
|
|
|
|
Transactions
with owners
|
|
|
|
|
|
|
Ordinary shares issued at a premium during the
period
|
27
|
3,185
|
-
|
-
|
-
|
3,212
|
Share issue costs
|
-
|
(43)
|
-
|
-
|
-
|
(43)
|
Interim dividends paid
|
-
|
-
|
-
|
(37,038)
|
-
|
(37,038)
|
As at 31
December 2022
|
12,426
|
497,316
|
6,894
|
741,821
|
(60,701)
|
1,197,756
|
CONDENSED CONSOLIDATED CASH FLOW
STATEMENT
For the six month period ending 31 December
2023
|
Notes
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Operating
activities
|
|
|
|
|
(Loss) attributable to ordinary
shareholders
|
|
(54,220)
|
(202,610)
|
(144,866)
|
Adjustments
for:
|
|
|
|
|
Changes in fair value of interest rate
derivatives measured at fair value through profit and
loss
|
|
32,272
|
950
|
(10,024)
|
Changes in fair value of Investment properties
and associated rent guarantees
|
12
|
57,940
|
248,064
|
256,066
|
Movement in rent smoothing and lease incentive
adjustments
|
4
|
(1,315)
|
(1,256)
|
(2,763)
|
Amortisation of leasing fees
|
|
4
|
-
|
-
|
Finance income
|
8
|
(10,967)
|
(3,209)
|
(14,626)
|
Finance expense
|
8
|
19,928
|
13,655
|
39,281
|
Share of income from Joint ventures
|
|
-
|
(18,851)
|
(23,232)
|
Profit on disposal of interest rate
derivative
|
|
-
|
-
|
(2,878)
|
Profit on disposal of Joint Venture
|
|
-
|
-
|
(19,941)
|
Cash flows
from operating activities before changes in working
capital
|
|
43,642
|
36,743
|
77,017
|
Increase in trade and other
receivables
|
|
(1,363)
|
(3,962)
|
(548)
|
Decrease in rent guarantee
receivables
|
|
-
|
198
|
191
|
Increase in deferred rental income
|
|
793
|
4,811
|
5,198
|
(Decrease)/Increase in trade and other
payables
|
|
(1,015)
|
7,567
|
2,461
|
Net cash flows
from operating activities
|
|
42,057
|
45,357
|
84,319
|
Investing
activities
|
|
|
|
|
Disposal of Property, Plant &
Equipment
|
|
-
|
-
|
222
|
Acquisition of investment properties
|
12
|
(36,350)
|
(299,130)
|
(362,630)
|
Capitalised acquisition costs
|
|
(2,151)
|
(11,103)
|
(14,681)
|
Decrease in other financial assets
|
|
-
|
93
|
-
|
Receipts from other financial assets
|
|
145
|
-
|
290
|
Bank interest received
|
|
42
|
-
|
-
|
Investment in Joint venture
|
|
-
|
(1,830)
|
(189,528)
|
Proceeds from disposal of Joint
Venture
|
|
135,107
|
-
|
292,636
|
Net cash flows
from/(used in) investing activities
|
|
96,793
|
(311,970)
|
(273,691)
|
Financing
activities
|
|
|
|
|
Costs of share issues
|
|
-
|
(43)
|
(89)
|
Bank borrowings drawn
|
|
70,000
|
664,064
|
912,114
|
Bank borrowings repaid
|
|
(154,386)
|
(325,717)
|
(598,486)
|
Loan arrangement fees paid
|
|
(846)
|
(3,740)
|
(5,010)
|
Bank interest paid
|
|
(17,270)
|
(8,646)
|
(22,408)
|
Settlement of interest rate
derivatives
|
|
9,801
|
1,436
|
8,646
|
Settlement of Joint Venture carried
Interest
|
|
(7,500)
|
-
|
(8,066)
|
Sale of interest rate derivatives
|
|
38,481
|
-
|
2,878
|
Purchase of interest rate derivative
|
|
(41,578)
|
(41,445)
|
(44,255)
|
Bank commitment fees paid
|
|
(669)
|
(1,291)
|
(1,708)
|
Dividends paid to equity holders
|
|
(35,296)
|
(33,825)
|
(67,963)
|
Net cash flows
(used in)/from financing activities
|
|
(139,263)
|
250,793
|
175,653
|
Net movement
in cash and cash equivalents for the period
|
|
(413)
|
(15,820)
|
(13,719)
|
Cash and cash
equivalents at the beginning of the period
|
|
37,481
|
51,200
|
51,200
|
Cash and cash
equivalents at the end of
the period
|
|
37,068
|
35,380
|
37,481
|
1. Basis of
preparation
General information
Supermarket Income REIT plc is a company
registered in England & Wales with its registered office at 1 King William Street, London, United
Kingdom, EC4N 7AF. The principal activity of the
Company and its subsidiaries (the "Group") is to provide its
shareholders with an attractive level of income together with the
potential for capital growth by investing in a diversified
portfolio of supermarket real estate assets in the UK.
The financial information set out in this
report covers the six months to 31 December 2023, with
comparative numbers amounts shown for the
year to 30 June 2023 and the six months to 31 December 2022. These
condensed financial statements are unaudited and the
financial information for the year ended 2022 contained herein does
not constitute statutory accounts for as defined in section 434 of
the Companies Act 2006. The statutory accounts for the year ended
30 June 2023 have been delivered to the Registrar of Companies. The
independent auditors' report on those accounts was unqualified, did
not draw attention to any matters by way of emphasis, and did not
contain a statement under sections 498(2) or 498(3) of the
Companies Act 2006.
At 31 December 2023 the Group comprised of the
Company and its wholly-owned subsidiaries. All subsidiaries are
incorporated in the England & Wales and Jersey.
The condensed consolidated financial statements
have been prepared in accordance with IAS 34 'Interim Financial
Reporting' as adopted by the United Kingdom. The accounting
policies adopted in this report are consistent with
those applied in the Group's audited financial
statements for the year ended 30 June 2023. The accounting
policies applied in the preparation of this financial
information are expected to be consistently applied in the
financial statements for the year to 30 June 2024.
Accounting convention and currency
The condensed consolidated financial statements
("the financial statements") have been prepared on a historical
cost basis, except that investment properties, rental guarantees
and interest rate derivatives are measured at fair
value.
The financial statements are presented in
Pounds Sterling and all values are rounded to the nearest thousand
(£'000), except where otherwise indicated. Pounds Sterling is the
functional currency of the Group and the presentation currency of
the Group.
The Directors are of the opinion that the Group
is currently engaged in a single segment business, being investment
in United Kingdom in supermarket property assets.
Going concern
In light of the current macroeconomic backdrop,
the Directors have placed a particular focus on the appropriateness
of adopting the going concern basis in preparing the Group's
interim results for the six months ended 31 December 2023. In
assessing the going concern basis of accounting the Directors have
had regard to the guidance issued by the Financial Reporting
Council.
Liquidity
At 31 December 2023, the Group generated net
cash flow from operating activities of £42.1 million and had cash
and undrawn committed facilities totalling £138.8 million with no
capital commitments or contingent liabilities.
The Directors are of the belief that the Group
continues to be well funded during the going concern period with no
concerns over its liquidity.
Refinancing
events
At the date of signing the financial
statements, the Deka facility (£96.6 million) falls due for
repayment during the going concern period (August 2024). It is
intended that the facility will be refinanced prior to maturity, or
if required, it will be paid down in full utilising the Group's
available undrawn committed facilities of over £100 million. All
lenders have been supportive during the year and have expressed
commitment to the long-term relationship they wish to build with
the Company.
1. Basis of preparation
(continued)
Covenants
The Group's debt facilities include covenants in
respect of LTV and interest cover, both projected and historic. All
debt facilities, except for the unsecured facilities, are
ring-fenced with each specific lender.
The Directors have evaluated a number of
scenarios as part of the Group's going concern assessment and
considered the impact of these scenarios on the Group's continued
compliance with secured debt covenants. The key assumptions that
have been sensitised within these scenarios are falls in rental
income and increases in administrative cost inflation.
As at the date of issuance of this consolidated
financial information 100% of contractual rent for the period has
been collected. The Group benefits from a secure income stream from
its property assets that are let to tenants with excellent covenant
strength under long leases that are subject to upward only rent
reviews.
The list of scenarios is below and are all on
top of the base case model which includes prudent assumptions on
valuations and cost inflation. No sensitivity for movements in
interest rates have been modelled as the Group is fully hedged
during the going concern assessment period.
Scenario
|
Rental
Income
|
Costs
|
Base case scenario (Scenario 1)
|
100% contractual rent received when due and rent
reviews based on forward looking inflation curve, capped at the
contractual rate of the individual leases.
|
Investment Adviser fee based on terms of the
signed agreement (percentage of NAV as per note 21), other costs
grown by inflation.
|
Scenario 2
|
Rental income to fall by 20%
|
Costs expected to remain the same as the base
case, with an allowance for vacancy costs.
|
Scenario 3
|
Rental Income expected to remain the same as the
base case.
|
10% increases on base case costs to all
administrative expenses
|
The Group continues to maintain covenant
compliance for its LTV and ICR thresholds throughout the going
concern assessment period under each of the scenarios modelled. One
of the secured facilities in the Group has a debt yield covenant,
which is calculated as the passing rent divided by the loan balance
for the properties secured against the lender. The debt yield
covenant only would be breached for this facility if rental income
is reduced by 11% during the going concern assessment period. The
Board considers this scenario highly unlikely given the underlying
covenant strength of the tenants. Furthermore, there are remedies
available to the Group which include reducing a portion of the
outstanding debt from available undrawn facilities or providing
additional security over properties that are currently
unencumbered.
The lowest amount of ICR headroom experienced
in the worst-case stress scenarios was 38%. Based on the latest
bank commissioned valuations, property values would have to fall by
21% before LTV covenants are breached, and 8% against the 31
December 2023 Group valuations. Similarly, the strictest interest
cover covenant within each of the ring-fenced banking groups is
225%, where the portfolio as a whole is forecast to have an average
interest cover ratio of 529% during the going concern
period.
Having reviewed and considered three modelled
scenarios, the Directors consider that the Group has adequate
resources in place for at least 12 months from the date of these
results and have therefore adopted the going concern basis of
accounting in preparing the interim financial
statements.
2. Significant accounting
judgements, estimates and assumptions
There have been no new or material revisions to
the nature and amount of judgements and estimates reported in the
Annual Report 2023, other than changes to certain assumptions
applied in the valuation of properties. Details of the key
assumptions applied at 31 December 2023 are set out in note
12.
3. Summary of material
accounting policies
The principal accounting policies adopted in
this report are consistent with those applied in the Group's
audited financial statements for the year ended 30 June 2023 and
are expected to be consistently applied during the year ending 30
June 2024.
3.1. New standards issued and
effective
There were a number of new standards and
amendments to existing standards which are required for the Group's
accounting period beginning on 1 July 2023.
The following amendments are effective for the
period beginning 1 July 2023:
- IFRS 17 Insurance Contracts;
- Disclosure of Accounting Policies (Amendments to IAS 1
Presentation of Financial Statements and IFRS Practice Statement
2);
- Definition of Accounting Estimates (Amendments to IAS 8
Accounting policies, Changes in Accounting Estimates and
Errors);
- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12 Income Taxes);
and
- International Tax Reform - Pillar Two Model Rules (Amendment
to IAS 12 Income Taxes)
There was no material effect from the adoption
of the above-mentioned amendments to IFRS effective in the period.
They have no significant impact to the Group as they are either not
relevant to the Group's activities or require accounting which is
already consistent with the Group's current accounting
policies.
3.2. New standards issued but not yet
effective
Amendments to IAS 1 on Classification of
liabilities as Current or Non-Current are effective for the
financial years commencing on or after 1 January 2024 and are to be
applied retrospectively. It is not expected that the amendments
will have an impact on the presentation and classification of
liabilities in the Group Statement of Financial Position based on
rights that are in existence at the end of the reporting
period.
A number of new standards and amendments to
standards and interpretations have been issued but are not yet
effective for the current accounting period. None of these are
expected to have a material impact on the consolidated financial
statements of the Group.
4. Gross rental income
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Rental income - freehold property
|
28,488
|
26,198
|
53,119
|
Rental income - long leasehold
property
|
23,993
|
19,964
|
42,669
|
Surrender premiums
|
443
|
-
|
35
|
Gross rental
income
|
52,924
|
46,162
|
95,823
|
Property insurance recoverable
|
306
|
300
|
585
|
Service charge recoverable
|
3,003
|
2,584
|
5,354
|
Total property
insurance and service
charge income
|
3,309
|
2,884
|
5,939
|
|
|
|
|
Total property
income
|
56,233
|
49,046
|
101,762
|
Included within rental income is a £1,099,000
(six months to 31 December 2022: £1,256,000; year to 30 June 2023:
£2,512,000) rent smoothing adjustment that arises as a result of
IFRS 16 'Leases' requiring that rental income in respect of leases
with rents increasing by a fixed percentage be accounted for on
straight-line basis over the lease term. During the year this
resulted in an increase in rental income and an offsetting entry
being recognised in profit or loss as an adjustment to the
investment property revaluation.
Also included in rental income is a £216,000
(six months to 31 December 2022: £205,000; year to 30 June 2023
£499,000) adjustment for lease incentives. Tenant lease incentives
are recognised on a straight line basis over the lease term as an
adjustment to rental income. During the year this resulted in an
increase in rental income and an offsetting entry being recognised
in profit or loss as an adjustment to the investment property
revaluation.
On an annualised basis, rental income comprises
£50,460,000 relating to the Group's largest tenant and £30,681,000
relating to the Group's second largest tenant. There were no
further tenants representing more than 10% of annualised gross
rental income during either year.
5. Service charge
expense
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Property insurance expenses
|
354
|
419
|
715
|
Service charge expenses
|
3,318
|
2,734
|
5,803
|
Total property
insurance and service
charge expenses
|
3,672
|
3,153
|
6,518
|
6. Administrative and other
expenses
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Investment Adviser fees (note 23)
|
4,829
|
5,355
|
10,292
|
Directors' remuneration (note 7)
|
222
|
175
|
364
|
Corporate administration fees
|
500
|
557
|
1,108
|
Legal and professional fees
|
817
|
803
|
1,626
|
Other administrative expenses
|
1,240
|
1,004
|
2,039
|
Total
administrative and other expenses
|
7,608
|
7,894
|
15,429
|
7. Directors'
remuneration
The Group has no employees. The Directors, who
are the key management personnel of the Group, are appointed under
letters of appointment for services. Directors' remuneration, all
of which represents fees for services provided, was as
follows:
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Directors' fees
|
199
|
157
|
330
|
Employer's National Insurance
Contribution
|
23
|
19
|
34
|
Total
Directors' remuneration1
|
222
|
176
|
364
|
1 Directors' individual
fee levels are unchanged in the period. In March 2023 the Board
increased from five to six non-executive Directors, with an
associated increase in Total Directors' remuneration.
8. Finance Income and
expense
Finance income
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Interest received on bank deposits
|
42
|
4
|
53
|
Income from financial assets held at amortised
cost
|
247
|
241
|
483
|
Finance income on unwinding of discounted
receivable
|
202
|
-
|
2,376
|
Finance income on settlement of interest rate
derivatives
|
10,476
|
2,964
|
11,714
|
Total finance
income
|
10,967
|
3,209
|
14,626
|
Finance
expense
Interest payable on bank borrowings and hedging
arrangements
|
17,731
|
10,492
|
29,707
|
Commitment fees payable on bank
borrowings
|
536
|
875
|
1,571
|
Amortisation of loan arrangement
fees*
|
1,661
|
2,288
|
8,037
|
Total finance
expense
|
19,928
|
13,655
|
39,315
|
*This includes a non-recurring
exceptional charge of £281,000 (six months to 31 December 2022:
£1.52m, year to 30 June 2023: £1.52m), relating to the acceleration
of unamortised arrangement fees in respect of the modification of
loan facilities under IFRS 9.
The above finance expense includes the following
in respect of liabilities not classified as fair value through
profit or loss:
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Total interest expense on financial liabilities
held at amortised cost
|
19,392
|
12,780
|
37,744
|
Fee expense not part of effective interest rate
for financial liabilities held at amortised cost
|
536
|
875
|
1,571
|
Total finance
expense
|
19,928
|
13,655
|
39,315
|
9. Taxation
a) Tax charge
in profit or loss
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Corporation
tax
|
-
|
-
|
-
|
b) Total tax
expense
|
|
|
|
Tax (credited)
in profit and loss as per the above
|
-
|
-
|
-
|
Share of tax (credit)/expense of equity
accounted joint ventures
|
-
|
(435)
|
(400)
|
Total tax
(credit)/expense
|
-
|
(435)
|
(400)
|
The Company and its subsidiaries
operate as a UK Group REIT. Subject to continuing compliance with
certain rules, the UK REIT rules exempt the profits of the Group's
property rental business from UK corporation tax. To operate as a
UK Group REIT a number of conditions had to be satisfied in respect
of the Company, the Group's qualifying activity and the Group's
balance of business. Since 21 December 2017 the Group has met all
such applicable conditions.
The reconciliation of the profit before tax
multiplied by the standard rate of corporation tax for the period
of 25% (30 June 2023: 20.4% 31 December 2022: 19%) to the total tax
(credited) is as follows:
c)
Reconciliation of the tax (credited) for the
period
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
(Loss)/ Profit
on ordinary activities before taxation
|
(54,220)
|
(202,610)
|
(144,866)
|
Theoretical tax at UK standard corporation tax
rate Effects of:
|
(13,555)
|
(38,496)
|
(29,553)
|
Investment property revaluation not subject
to taxation
|
14,485
|
(47,132)
|
49,680
|
Financial instruments revaluation not
taxable
|
8,068
|
181
|
-
|
Disposal of interest rate derivative
|
-
|
|
(587)
|
Residual business losses
|
1,721
|
|
4,428
|
Other non-taxable items
|
-
|
|
(8,807)
|
REIT exempt income
|
(10,719)
|
85,447
|
(15,161)
|
Share of tax expense of equity accounted
joint ventures
|
-
|
(435)
|
(400)
|
Total tax
(credit)/expense for the period
|
-
|
(435)
|
(400)
|
10. Earnings per share
Earnings per share ("EPS") amounts
are calculated by dividing the profit or loss for the period
attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares in issue during the
period. As there are no dilutive instruments outstanding, basic and
diluted earnings per share are identical.
The European Public Real Estate
Association ("EPRA") publishes guidelines for calculating adjusted
earnings on a comparable basis. EPRA EPS is a measure of EPS
designed by EPRA to enable entities to present underlying earnings
from core operating activities, which excludes fair value movements
on investment properties.
The Company has also included an
additional earnings measure called "Adjusted Earnings" and
"Adjusted EPS". Adjusted earnings is a performance
measure used by the Board to assess the Group's financial
performance and dividend payments. The metric adjusts EPRA earnings
by deducting one-off items such as debt restructuring costs
and adding back finance income on derivatives held at fair
value through profit and loss. Adjusted Earnings is considered a
better reflection of the measure over which the Board assesses the
Group's trading performance and dividend cover.
Finance income received from derivatives held
at fair value through profit and loss are added back to EPRA
earnings as this reflects the cash received from the derivatives in
the period and therefore gives a better reflection of the Group's
net finance costs.
Debt restructuring costs relate to the
acceleration of unamortised arrangement fees following the
restructuring of the Group's debt facilities during the
period.
The reconciliation of IFRS Earnings, EPRA
Earnings and Adjusted Earnings is shown below:
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Net (loss)
attributable to ordinary shareholders
|
(54,220)
|
(202,610)
|
(144,866)
|
EPRA
adjustments:
|
|
|
|
Changes in
fair value of investment properties and rent
guarantees
|
57,940
|
248,064
|
256,066
|
Changes in
interest rate derivatives measured at fair value through profit and
loss
|
32,272
|
950
|
(10,024)
|
Profit on
disposal of interest rate derivatives
|
-
|
-
|
(2,878)
|
Group share
of changes in fair value of joint venture
investment properties
|
-
|
(11,485)
|
(11,486)
|
(Gain) on
disposal of investments in joint venture
|
-
|
-
|
(19,940)
|
Finance
income received on interest rate derivatives held at fair value
through profit and loss
|
(10,167)
|
(2,085)
|
(9,671)
|
EPRA
earnings
|
25,825
|
32,834
|
57,201
|
Adjustments
for:
|
|
|
|
Finance
income received on interest rate derivatives held at fair value
through profit and loss
|
10,167
|
2,085
|
9,671
|
One-off
restructuring costs in relation to the acceleration of unamortised
arrangement fees
|
281
|
1,518
|
1,518
|
Joint Venture
acquisition loan arrangement fee
|
-
|
-
|
4,009
|
Adjusted
Earnings
|
36,273
|
36,437
|
72,399
|
|
Number1
|
Number1
|
Number1
|
Weighted average number of ordinary
shares
|
1,246,239,185
|
1,241,446,763
|
1,242,574,505
|
1 Based on the weighted
average number of ordinary shares in issue
10. Earnings per share
(continued)
|
Unaudited
Six months to
31 December 2023
Pence per share
|
Unaudited
Six months to
31 December 2022
Pence per share
|
Audited
Year to
30 June 2023
Pence per share
|
Basic and
Diluted EPS
|
(4.4)
|
(16.3)
|
(11.7)
|
EPRA
adjustments:
|
|
|
|
Changes in
fair value of investment properties and rent
guarantees
|
4.7
|
20.0
|
20.6
|
Changes in
fair value of interest rate derivatives measured at fair value
through profit and loss
|
2.6
|
-
|
(0.8)
|
Profit on
disposal of interest rate derivatives
|
-
|
-
|
(0.2)
|
Group share
of changes in fair value of joint venture investment
properties
|
-
|
(0.9)
|
(0.9)
|
Group share
of gain on disposal of joint venture investment
properties
|
-
|
-
|
(1.6)
|
Finance
income received on interest rate derivatives held at fair value
through profit and loss
|
(0.8)
|
(0.2)
|
(0.8)
|
EPRA
EPS
|
2.1
|
2.6
|
4.6
|
Adjustments
for:
|
|
|
|
Finance
income received on interest rate derivatives held at fair value
through profit and loss
|
0.8
|
0.2
|
0.8
|
One-off
restructuring costs in relation to the acceleration of unamortised
arrangement fees
|
-
|
0.1
|
0.1
|
Joint Venture acquisition loan arrangement
fee
|
-
|
-
|
0.3
|
Adjusted
EPS
|
2.9
|
2.9
|
5.8
|
11. Dividends
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Amounts
recognised as a distribution to ordinary Shareholders in the
period:
|
|
|
|
Dividends
|
37,574
|
37,038
|
74,328
|
On 6 July 2023, the Board declared a fourth
interim dividend for the year ending 30 June 2023 of 1.5 pence per
share, which was paid on 4 August 2023 to shareholders on the
register on 14 July 2023.
On 5 October 2023 the Board declared a first
interim dividend for the year ending 30 June 2024 of 1.515 pence
per share, which was paid on 16 November 2023 to shareholders on
the register on 13 October 2023. The withholding tax element
of the dividend of £2.3 million was settled in January
2024.
On 4 January 2024, the Board
declared a second interim dividend for the year ending 30 June 2024
of 1.515 pence per share, which was paid on 14 February 2024 to
shareholders on the register on 12 January 2024. This has not been
included as a liability as at 31 December 2023.
12. Investment Properties
In accordance with IAS 40 'Investment
Property', the Group's investment properties have been
independently valued at fair value by Cushman & Wakefield, an
accredited independent valuer with a recognised and relevant
professional qualification and with recent experience in the
locations and categories of the investment properties being valued.
The valuations have been prepared in accordance with the RICS
Valuation - Global Standards (the 'Red Book') and incorporate the
recommendations of the International Valuation Standards Committee
which are consistent with the principles set out in IFRS
13.
The independent valuer in forming its opinion
on valuation makes a series of assumptions. All the valuations of
the Group's investment property at 31 December 2023 are classified
as 'level 3' in the fair value hierarchy defined in IFRS 13. The
valuations are ultimately the responsibility of the Directors.
Accordingly, the critical assumptions used in establishing the
independent valuation are reviewed by the Board.
|
Freehold
£'000
|
Long Leasehold £'000
|
Total
£'000
|
At 1 July 2023
|
899,440
|
786,250
|
1,685,690
|
Property additions
|
36,350
|
-
|
36,350
|
Capitalised costs
|
2,108
|
38
|
2,146
|
Revaluation movement
|
(29,688)
|
(26,588)
|
(56,276)
|
Valuation at
31 December 2023
|
908,210
|
759,700
|
1,667,910
|
|
|
|
|
At 1 July 2022
|
903,850
|
657,740
|
1,561,590
|
Property additions
|
131,600
|
231,030
|
362,630
|
Capitalised acquisition costs
|
4,132
|
10,549
|
14,681
|
Revaluation movement
|
(140,142)
|
(113,069)
|
(253,211)
|
Valuation at
30 June 2023
|
899,440
|
786,250
|
1,685,690
|
|
|
|
|
At 1 July 2022
|
903,850
|
657,740
|
1,561,590
|
Property additions
|
106,400
|
192,730
|
299,130
|
Capitalised acquisition costs
|
2,799
|
8,304
|
11,103
|
Revaluation movement
|
(139,199)
|
(107,524)
|
(246,723)
|
Valuation at
31 December 2022
|
873,850
|
751,250
|
1,625,100
|
Reconciliation
of Investment Property to Independent Property
Valuation
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Investment Property at fair value per Group
Statement of Financial Position
|
1,667,910
|
1,625,100
|
1,685,690
|
Market Value of Property classified as Financial
Assets held at amortised cost (Note 16)
|
7,290
|
7,300
|
7,210
|
Total
Independent Property Valuation
|
1,675,200
|
1,632,400
|
1,692,900
|
Of the seventeen properties held
under long leaseholds, the years unexpired on the headleases are as
follows: four properties with between 115 and 155 years, and
thirteen properties with between 967 and 987 years. The Group has
no material liabilities in respect of these headleases.
12. Investment Properties
(continued)
Included within the carrying values of
investment properties at 31 December 2023 is £9,822,000 (six months
to 31 December 2022:
£7,468,000, year to 30 June
2023: £8,724,000) in respect
of the smoothing of fixed contractual rent uplifts as described in
note 4. The difference between rents on a straight-line basis and
rents receivable is included within the carrying value of the
investment properties but does not increase that carrying value
over fair value.
Included within the carrying values of
investment properties at 31 December 2023 is £816,000 (six months
to 31 December 2022:
£nil, year to 30 June 2023:
£251,000) in respect of the lease
incentives with tenants in the form of rent free debtors as
described in note 4.
The effect of these adjustments on
the revaluation movement for the period is as follows:
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Revaluation movement per above
|
(56,276)
|
(246,723)
|
(253,211)
|
Rent smoothing adjustment (note 4)
|
(1,099)
|
(1,256)
|
(2,512)
|
Lease Incentive adjustment
|
(565)
|
-
|
-
|
Movements in associated rent
guarantees
|
-
|
(85)
|
(343)
|
Change in fair
value recognised in profit or loss
|
(57,940)
|
(248,064)
|
(256,066)
|
Valuation techniques and key unobservable
inputs
Valuation techniques used to derive fair
values
The valuations have been prepared on
the basis of market value which is defined in the RICS Valuation
Standards as 'the estimated amount for which an asset or liability
should exchange on the date of the valuation between a willing
buyer and a willing seller in an arm's length transaction after
proper marketing wherein the parties had each acted knowledgeably,
prudently and without compulsion'. Market value as defined in the
RICS Valuation Standards is the equivalent of fair value under
IFRS.
Unobservable inputs
Significant unobservable inputs include: the
estimated rental value ("ERV") based on market conditions
prevailing at the valuation date and the equivalent yield (defined
as the weighted average of the net initial yield and reversionary
yield). Other unobservable inputs include but are not limited to
the future rental growth - the estimated average increase in rent
based on both market estimations and contractual situations and the
physical condition of the individual properties determined by
inspection.
A decrease in ERV would decrease fair value. A
decrease in the equivalent yield would increase the fair
value.
Sensitivity of measurement of significant
unobservable inputs
The determination of the valuation of the
Group's investment property portfolio is open to judgements and is
inherently subjective by nature.
12. Investment Properties
(continued)
Sensitivity analysis - impact of changes in net
initial yields and rental values
|
Unaudited
Six months to
31 December 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
Audited
Year to
30 June 2023
£'000
|
Range of Net Initial Yields
|
4.6% -
8.1%
|
4.7% -
7.3%
|
4.7% - 7.4%
|
Range of Rental values (passing rents or ERV as
relevant) of Group's Investment Properties
|
£0.3m -
£5.2m
|
£0.3m -
£5.1m
|
£0.3m - £5.1m
|
Weighted average of Net Initial
Yields
|
5.8%
|
5.5%
|
5.6%
|
Weighted average of Rental values (passing rents
or ERV as relevant) of Group's Investment Properties
|
£2.9m
|
£2.8m
|
£2.8m
|
The table below analyses the sensitivity on the
fair value of investment properties for changes in rental values
and net initial yields:
|
+2%
Rental value £m
|
-2%
Rental value £m
|
+0.5% Net Initial Yield
£m
|
-0.5% Net Initial Yield
£m
|
Increase/(decrease) in the fair value of
investment properties as at 31 December 2023
|
33.4
|
(33.4)
|
(132.7)
|
158.2
|
Increase/(decrease) in the fair value of
investment properties as at 31 December 2022*
|
16.3
|
(16.3)
|
(137.0)
|
165.1
|
Increase/(decrease) in the fair value of
investment properties as at 30 June 2023
|
33.7
|
(33.7)
|
(139.9)
|
168.1
|
*31 December
2022 figures were calculated on +/- 1% rental
value.
13. Financial assets held at amortised
cost
|
Unaudited
31 December 2023
£'000
|
Audited
30 June 2023
£'000
|
Unaudited
31 December 2022
£'000
|
At start of period
|
10,819
|
10,626
|
10,626
|
Interest income recognised in profit and
loss
|
247
|
483
|
241
|
Lease payments received during the
period
|
(145)
|
(290)
|
(144)
|
At end of
period
|
10,921
|
10,819
|
10,723
|
On 8 June 2022, the Group acquired an Asda
store in Carcroft, via a sale and leaseback transaction for £10.6
million, this has been recognised in the Statement of Financial
Position as a Financial asset in accordance with IFRS 9. The
financial asset is measured using the amortised cost model, which
recognises the rental payments as financial income and reductions
of the asset value based on the implicit interest rate in the
lease. As at 31 December 2023 the market value of the property was
estimated at £7.3 million.
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 similar credit risk
and ageing. The expected loss rates are based on the Group's
historical credit losses experienced over the period from
incorporation to 31 December 2023. The historical loss rates are
then adjusted for current and forward-looking information on
macroeconomic factors affecting the Group's customers. Both the
expected credit loss provision and the incurred loss provision in
the current year is immaterial. No reasonable possible changes in
the assumptions underpinning the expected credit loss provision
would give rise to a material expected credit loss.
14. Trade and other receivables
|
Unaudited
31 December 2023
£'000
|
Audited
30 June 2023
£'000
|
Unaudited
31 December 2022
£'000
|
Trade and other receivables
|
6,116
|
4,723
|
6,384
|
Prepayments
|
1,310
|
850
|
1,118
|
Receivable from joint venture
disposal
|
1,475
|
136,582
|
-
|
Total trade
and other receivables
|
8,901
|
142,155
|
7,502
|
The receivable from joint venture disposal is
from March 2023 when the Group sold its interests in its Joint
Venture to Sainsbury's for gross proceeds of £430.8
million, which was structured in three
separate tranches:
· The first tranche of £279.3 million was paid in cash on 17
March 2023
· The second tranche of £116.9 million was paid in cash on 10
July 2023
· The third tranche of £34.7 million was conditional on the sale
of the remaining five stores in the portfolio.
In March 2023 the Group purchased two of the
five stores for a gross purchase price of £25.2 million and
received total proceeds from Sainsbury's of £15.0
million.
During the period, the Group purchased two of
the remaining three stores in the portfolio for a gross purchase
price of £36.4 million and received proceeds from Sainsbury's of
£18.2 million. It is expected that the one remaining store will be
sold at vacant possession value of which the Group's portion is
currently £1.5 million.
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 similar credit risk and ageing. The expected loss
rates are based on the Group's historical credit losses experienced
over the period from incorporation to 31 December 2023. The
historical loss rates are then adjusted for current and
forward-looking information on macroeconomic factors affecting the
Group's tenants. Both the expected credit loss provision and the
incurred loss provision in the current and prior year are
immaterial. No reasonable possible changes in the assumptions
underpinning the expected credit loss provision would give rise to
a material expected credit loss.
15. Trade and other payables
|
Unaudited
31 December 2023
£'000
|
Audited
30 June 2023
£'000
|
Unaudited
31 December 2022
£'000
|
Corporate accruals
|
16,668
|
22,469
|
15,211
|
VAT payable
|
4,362
|
4,510
|
4,465
|
Total trade
and other payables
|
21,030
|
26,979
|
19,676
|
16. Interest rate derivatives
|
Unaudited
31 December 2023
£'000
|
Audited
30 June 2023
£'000
|
Unaudited
31 December 2022
£'000
|
Non-current asset: Interest rate
swaps
|
10,369
|
35,601
|
29,572
|
Non-current asset: Interest rate cap
|
3,301
|
1,597
|
2,290
|
Current asset: Interest rate swaps
|
13,150
|
16,800
|
12,699
|
Current asset: Interest rate cap
|
544
|
3,584
|
2,829
|
Total
|
27,364
|
57,582
|
47,390
|
The interest rate cap and interest
rate swap is remeasured to fair value by the counterparty bank on a
quarterly basis.
16. Interest rate derivatives
(continued)
The fair value
at the end of the period comprises:
|
Unaudited
31 December 2023
|
Audited
30 June 2023
|
Unaudited
31 December 2022
|
At start of the period
|
57,583
|
5,114
|
5,114
|
Interest rate derivative premium paid on
inception
|
43,708
|
44,255
|
41,445
|
Disposal of interest rate
derivatives
|
(40,612)
|
(2,878)
|
-
|
Changes in fair value of interest rate
derivative
in the year (P&L)
|
(22,105)
|
19,695
|
3,795
|
Changes in fair value of interest rate
derivative in the year (OCI)
|
(734)
|
3,111
|
-
|
(Credit) to the income statement
(P&L)
|
(10,167)
|
(9,671)
|
-
|
(Credit) to the income statement
(OCI)
|
(309)
|
(2,043)
|
(2,964)
|
As at the end
of the period
|
27,364
|
57,583
|
47,390
|
To partially mitigate the interest rate risk
that arises as a result of entering into the floating rate debt
facilities referred to in note 19, the Group has entered into
derivative interest rate swaps and caps.
A summary of these derivatives as at 31
December 2023 is shown in the table below:
Issuer
|
Derivative
Type
|
Notional
amount £m
|
Premium
Paid £m
|
Mark to
Market 31 December 2023 £m
|
Average
Strike Rate
|
Effective
Date
|
|
Maturity
Date
|
BLB
|
Interest Rate
Swap
|
£37.3
|
£1.2
|
£1.0
|
2.64%
|
Mar-23
|
|
Mar-26
|
BLB
|
Interest Rate
Swap
|
£22.2
|
£0.7
|
£0.6
|
2.64%
|
Mar-23
|
|
Mar-26
|
BLB
|
Interest Rate
Swap
|
£27.4
|
£0.9
|
£0.7
|
2.64%
|
Mar-23
|
|
Mar-26
|
Wells Fargo
|
Interest Rate
Swap
|
£30.0
|
£2.2
|
£1.3
|
1.23%
|
Sep-23
|
|
Jul-25
|
SMBC
|
Interest Rate
Swap
|
£50.0
|
£3.4
|
£2.2
|
1.23%
|
Sep-23
|
|
Jul-25
|
SMBC
|
Interest Rate
Swap
|
£67.0
|
£6.2
|
£3.6
|
1.53%
|
Sep-23
|
|
Sep-26
|
Barclays
|
Interest Rate
Cap
|
£96.6
|
£2.9
|
£2.0
|
1.40%
|
Aug-24
|
|
Jul-25
|
Wells Fargo
|
Interest Rate
Swap
|
£204.3
|
£21.4
|
£11.4
|
1.78%
|
Sep-23
|
|
Jul-27
|
Wells Fargo
|
Interest Rate
Swap
|
£50.0
|
£4.5
|
£2.7
|
1.50%
|
Sep-23
|
|
Jul-26
|
SMBC
|
Interest Rate
Cap
|
£96.6
|
£1.4
|
£0.8
|
1.40%
|
Jul-25
|
|
Jan-26
|
SMBC
|
Interest Rate
Cap
|
£30.0
|
£0.4
|
£0.3
|
1.40%
|
Jul-25
|
|
Jan-26
|
SMBC
|
Interest Rate
Cap
|
£50.0
|
£0.8
|
£0.5
|
1.40%
|
Jul-25
|
|
Jan-26
|
SMBC
|
Interest Rate
Cap
|
£3.0
|
£0.4
|
£0.3
|
1.00%
|
Nov-23
|
|
Jun-27
|
Total
|
|
£764.4
|
£46.4
|
£27.4
|
-
|
-
|
|
-
|
100% of the Group's outstanding debt as at 31
December 2023 was hedged through the use of fixed rate debt or
financial instruments as at 31 December 2023 (30 June 2023: 100%).
It is the Group's target to hedge at least 50% of the Group's total
debt at any time using fixed rate loans or interest rate
derivatives.
16. Interest rate derivatives
(continued)
During the period, the Group extended the
maturity of the interest rate derivatives by 12 months. The
weighted average interest rate following the derivative changes is
3.1% inclusive of the margin. The Group also entered into forward
starting caps effective in August 2024 and July 2025 and
terminating in July 2025 and January 2026 with a strike rate of
1.4% versus SONIA.
In accordance with the Group's treasury risk
policy, the Group applies cash flow hedge accounting in partially
hedging the interest rate risks arising on its Wells Fargo variable
rate linked facility. Since the changes to the interest rate
derivatives in the period the Group no longer applies hedge
accounting to the newly acquired swaps including the derivative
linked to the Wells Fargo variable facility. Changes in the fair
values of derivatives that were designated as cash flow hedges and
were effective, were recognised directly in the cash flow hedge
reserve and included in other comprehensive income. On
derecognition of hedge accounting, the cash flow hedge reserve is
recycled to the profit and loss over the remaining term of the
Wells Fargo facility.
The derivatives have been valued in
accordance with IFRS 13 by reference to interbank bid market rates
as at the close of business on the last working day prior to each
balance sheet date. The fair values are calculated using the
present values of future cash flows, based on market forecasts of
interest rates and adjusted for the credit risk of the
counterparties. The amounts and timing of future cash flows are
projected on the basis of the contractual terms.
All interest rate derivatives are classified as
level 2 in the fair value hierarchy as defined under IFRS 13 and
there were no transfers to or from other levels of the fair value
hierarchy during the year.
17. Bank
borrowings
Amounts
falling due within one year:
|
Unaudited
31 December 2023
£'000
|
Audited
30 June 2023
£'000
|
Unaudited
31 December 2022
£'000
|
Secured debt
|
96,560
|
-
|
59,408
|
Unsecured debt
|
-
|
62,090
|
-
|
Less: Unamortised finance costs
|
(194)
|
(234)
|
(85)
|
|
96,366
|
61,856
|
59,323
|
Amounts
falling due after more than one year:
|
|
|
|
Secured debt
|
116,903
|
291,551
|
250,555
|
Unsecured debt
|
374,299
|
318,508
|
380,597
|
Less: Unamortised finance costs
|
(3,675)
|
(4,450)
|
(5,033)
|
|
487,527
|
605,609
|
626,119
|
Bank borrowing
per consolidated statement of financial position
|
583,893
|
667,465
|
685,442
|
17. Bank
borrowings (continued)
A summary of the Group's borrowing facilities as
at 31 December 2023 are shown below:
Lender
|
Facility
|
Expiry
|
Expiry19
|
Credit
Margin
|
Variable/
hedged
|
Loan
commitment
£m
|
Amount drawn
31 December 2023
£m
|
HSBC
|
Revolving credit facility
|
Sep 2026
|
Sep 2028
|
1.7%
|
SONIA
|
£50.0
|
-
|
Deka
|
Term Loan
|
Aug 2024
|
Aug 2026
|
1.35%
|
0.54%
|
£47.6
|
£47.6
|
Deka
|
Term Loan
|
Aug 2024
|
Aug 2026
|
1.35%
|
0.70%
|
£29.0
|
£29.0
|
Deka
|
Term Loan
|
Aug 2024
|
Aug 2026
|
1.40%
|
0.32%
|
£20.0
|
£20.0
|
BLB
|
Term Loan
|
Mar 2026
|
Mar 2026
|
1.65%
|
SWAP - 2.64%
|
£86.9
|
£86.9
|
Wells Fargo
|
Revolving credit facility
|
Jul 2025
|
Jul 2027
|
2.00%
|
SWAP - 1.23%
|
£30.0
|
£30.0
|
Wells Fargo
|
Revolving credit facility
|
Jul 2025
|
Jul 2027
|
2.00%
|
SONIA
|
£9.0
|
-
|
Syndicate
|
Revolving credit facility
|
Jul 2027
|
Jul 2029
|
1.50%
|
SWAP - 1.78%
|
£250.0
|
£207.3
|
Syndicate
|
Term Loan
|
Jul 2025
|
Jul 2026
|
1.50%
|
SWAP - 1.23%
|
£50.0
|
£50.0
|
Syndicate
|
Term Loan
|
Jul 2026
|
Jul 2027
|
1.50%
|
SWAP - 1.50%
|
£50.0
|
£50.0
|
SMBC
|
Term Loan
|
Sep 2026
|
Sept 2028
|
1.40%
|
SWAP - 1.53%
|
£67.0
|
£67.0
|
Total
|
|
|
|
|
|
£689.5
|
£587.8
|
The Group has been in compliance with all of
the financial covenants across the Group's bank facilities as
applicable throughout the periods covered by these financial
statements.
Any associated fees in arranging the bank
borrowings that are unamortised as at the end of the period are
offset against amounts drawn under the facilities as shown in the
table above. The debt is secured by charges over the Group's
investment properties and by charges over the shares of certain
group companies, not including the Company itself. There have been
no defaults of breaches of any loan covenants during the current or
any prior period.
The Group's borrowings carried at amortised
cost are considered to be approximate to their fair
value.
18. Share capital
Six months to 31
December 2023 (unaudited)
|
Ordinary shares
of 1 pence
Number
|
Share
capital
£'000
|
Share
premium
reserve
£'000
|
Capital
reduction
reserve
£'000
|
Total
£'000
|
As at 1 July
2023
|
1,246,239,185
|
12,462
|
500,386
|
704,531
|
1,217,379
|
Dividends paid in the period
|
-
|
-
|
-
|
(37,574)
|
(37,574)
|
As at 31
December 2023
|
1,246,239,185
|
12,462
|
500,386
|
666,957
|
1,179,805
|
|
|
|
|
|
|
Year to 30
June 2023 (audited)
|
|
|
|
|
|
As at 1 July
2022
|
1,239,868,420
|
12,399
|
494,174
|
778,859
|
1,285,432
|
Scrip dividends issued and fully paid- 22
August 2022
|
1,898,161
|
19
|
2,316
|
-
|
2,335
|
Scrip dividends issued and fully
paid
- 16 November 2022
|
866,474
|
9
|
869
|
-
|
878
|
Scrip dividends issued and fully
paid
- 23 February 2023
|
729,198
|
7
|
721
|
-
|
728
|
Scrip dividends issued and fully
paid
- 26 May 2023
|
2,876,932
|
28
|
2,395
|
-
|
2,423
|
Share issue costs
|
-
|
-
|
(89)
|
-
|
(89)
|
Dividend paid in the period
|
|
|
|
(74,328)
|
(74,328)
|
As at 30 June
2023
|
1,246,239,185
|
12,462
|
500,386
|
704,531
|
1,217,379
|
|
|
|
|
|
|
Six months to
31 December 2022 (unaudited)
|
|
|
|
|
|
As at 1 July
2022
|
1,239,868,420
|
12,399
|
494,174
|
778,859
|
1,285,432
|
Scrip dividends issued and fully
paid
- 22 August 2022
|
1,898,161
|
19
|
2,316
|
-
|
2,335
|
Ordinary shares issued and fully
paid
- 22 November 2022
|
866,474
|
8
|
869
|
-
|
877
|
Share issue costs
|
|
-
|
(43)
|
-
|
(43)
|
Dividends paid in the period
|
-
|
-
|
-
|
(37,038)
|
(37,038)
|
As at 31
December 2022
|
1,242,633,055
|
12,426
|
497,316
|
741,821
|
1,251,563
|
Ordinary shareholders are entitled to all
dividends declared by the Company and to all of the Company's
assets after repayment of its borrowings and ordinary creditors.
Ordinary shareholders have the right to vote at meetings of the
Company. All ordinary shares carry equal voting rights. The
aggregate ordinary shares in issue at 31 December 2023 total was
1.246 billion.
19. Cash flow hedge reserve
|
Unaudited
Six months to
31 December 2023
£'000
|
Audited
Year to
30 June 2023
£'000
|
Unaudited
Six months to
31 December 2022
£'000
|
At start of
the period
|
3,304
|
5,114
|
5,114
|
Recycled comprehensive loss to profit and
loss
|
(432)
|
-
|
-
|
Cash flow hedge reserve taken to profit or loss
for
the period on disposal of interest rate
derivatives
|
-
|
(2,878))
|
-
|
Fair value movement of interest rate
derivatives in effective hedges
|
(611)
|
1,068
|
1,780
|
At the end of
the period
|
2,261
|
3,304
|
6,894
|
During the period, a previously hedge accounted
derivative in relation to the Wells Fargo facility was terminated.
The residual balance of the derivative is recycled to the income
statement over the remaining period of the Wells Fargo
loan.
20. Capital commitments
The Group had no capital commitments
outstanding as at 31 December 2023 (30 June 2023: none; 31 December
2022: none).
21. Transactions with related
parties
Details of the related parties to the Group in
the period and the transactions with these related parties were as
follows:
a.
Directors
Directors' fees
Nick Hewson, Chairman of the Board of Directors
of the Company, is paid fees of £75,000 per annum, with the other
Directors each being paid fees of £52,500 per annum. Jon Austen is
paid an additional £9,000 per annum for his role as chair of the
Company's Audit Committee, Vince Prior is paid an additional £4,000
per annum for his role as chair of the Company's Nominations
Committee and £5,000 for his role as Senior Independent Director.
Cathryn Vanderspar is paid an additional £5,000 for her role as
Chair of the Remuneration Committee. Frances Davies is paid an
additional £5,000 for her role as Chair of the ESG Committee. Sapna
Shah is paid an additional £5,000 for her role as Chair of
Management Engagement Committee.
Directors' interests
Details of the direct and indirect interests
of the Directors and their close families in the ordinary shares of
one pence each in the Company at 31 December 2023 were as
follows:
· Nick
Hewson: 1,263,309 shares (0.1% of issued share capital)
· Jon
Austen: 305,339 shares (0.02% of issued share capital)
· Vince
Prior: 213,432 shares (0.02% of issued share capital)
· Cathryn
Vanderspar: 125,802 shares (0.01% of issued share
capital)
· Frances
Davies: 36,774 (0.00% of issued share capital)
· Sapna
Shah: 28,951 (0.00% of issued share capital)
b. Investment
Adviser
Investment advisory and accounting
fees
The investment adviser to the Group, Atrato
Capital Limited, is entitled to certain advisory fees under the
terms of the Investment Advisory Agreement (the "Agreement") dated
14 July 2021.
21.
Transactions with related parties (continued)
The entitlement of the Investment Adviser to
advisory fees is by way of what are termed 'Monthly Management
Fees' and 'Semi-Annual Management Fees' both of which are
calculated by reference to the net asset value of the Group at
particular dates, as adjusted for the financial impact of certain
investment events and after deducting any un-invested proceeds from
share issues up to the date of the calculation of the relevant fee
(these adjusted amounts are referred to as 'Adjusted Net Asset
Value' for the purpose of calculation of the fees in accordance
with the Agreement).
Until the Adjusted Net Value of the Group
exceeds £1,500 million, the entitlements to advisory fees can be
summarised as follows:
· Monthly
Management Fee payable monthly in arrears: 1/12th of 0.7125% per
calendar month of Adjusted Net Asset Value up to or equal to £500
million, 1/12th of 0.5625% per calendar month of Adjusted Net Asset
Value above £500 million and up to or equal to £1,000 million and
1/12th of 0.4875% per calendar month of Adjusted Net Asset Value
above £1,000 million and up to or equal to £1,500
million.
·
Semi-Annual Management Fee payable semi-annually
in arrears: 0.11875% of Adjusted Net Asset Value up to or equal to
£500 million, 0.09375% of Adjusted Net Asset Value above £500
million and up to or equal to £1,000 million and 0.08125% of
Adjusted Net Asset Value above £1,000 million and up to or equal to
£1,500 million.
For the period 31 December 2023 the total
advisory fees payable to the Investment Adviser were £4,829,236
(six months to December 2022: £5,355,138; year to 30 June 2023:
£10,292,302) of which £1,859,105 (30 June 2023: £1,845,144; 31
December 2022: £1,970,754) is included in trade and other payables
in the consolidated statement of financial position.
The Investment Adviser is also entitled to an
annual accounting and administration service fee equal to:
£54,107; plus (i) £4,386 for any indirect
subsidiary of the Company and (ii) £1,702 for each direct
subsidiary of the Company.
For the period to 31 December 2023
the total accounting and administration service fee payable to the
Investment Adviser was £160,124 (six months to 31
December 2022: £149,548, year to 30 June 2023: £297,475) of which
£80,353 (six months to December 2022: £78,322; year to 30 June
2023: £83,614) is included in trade and other payables in the
consolidated statement of financial position.
Introducer Services
Atrato Partners, an affiliate of the Investment
Adviser, is entitled to fees in relation to the successful
introduction of prospective investors in
connection with subscriptions for ordinary share capital in the
Company. The entitlement of the Investment Adviser to
introducer fees is by fees and/or commission which can be
summarised as follows:
· Commission basis: one per cent of
total subscription in respect of ordinary shares subscribed for by
any prospective investor introduced by Atrato Partners.
For the period to 31 December 2023 the total
introducer fees payable to the affiliate of the Investment Adviser
were £Nil (six months to 31 December 2022: £Nil; year to 30 June
2023: £Nil)
Interest in shares of the Company
Details of the direct and indirect interests of
persons discharged with managerial responsibility of the Investment
Adviser and their close families in the ordinary shares of one
pence each in the Company at 31 December 2023 were as
follows:
· Ben
Green: 1,939,534 shares (0.15% of issued
share capital)
· Steve
Windsor: 1,698,928 shares (0.14% of issued
share capital)
· Steven
Noble: 232,255 shares (0.02% of issued
share capital)
· Natalie
Markham: 62,679 (0.01% of issued share
capital)
22. Net asset value per share
NAV per share is calculated by dividing the
Group's net assets as shown in the consolidated statement of
financial position, by the number of ordinary shares outstanding at
the end of the year. As there are no dilutive instruments
outstanding, basic and diluted NAV per share are
identical.
The Group uses EPRA Net Tangible Assets ("EPRA
NTA") as the most meaningful measure of long-term performance and
the measure which is being adopted by the majority of UK REITs,
establishing it as the industry standard benchmark. It excludes
items that are considered to have no impact in the long term, such
as the fair value of derivatives.
The EPRA NTA per share calculation are as
follows:
|
Unaudited
31 December 2023
£'000
|
Unaudited
31 December 2022
£'000
|
Audited
30 June 2023
£'000
|
Net assets per the consolidated statement of
financial position
|
1,124,889
|
1,197,756
|
1,217,726
|
Fair value adjustment for financial assets at
amortised cost
|
(3,631)
|
(3,423)
|
(3,609)
|
Fair value of interest rate
derivatives
|
(27,364)
|
(47,389)
|
(57,583)
|
EPRA
NTA
|
1,093,894
|
1,146,944
|
1,156,534
|
|
|
|
|
Ordinary shares in issue
|
1,246,239,185
|
1,242,633,055
|
1,246,239,185
|
NAV per share - Basic and diluted
(pence)
|
90p
|
96p
|
98p
|
EPRA NTA per share (pence)
|
88p
|
92p
|
93p
|
23. Subsequent events
On 4 January 2024, the Board declared a second
interim dividend for the year ending 30 June 2024 of 1.515 pence
per share, which was paid on 14 February 2024 to shareholders on
the register on 12 January 2024. This has not been included as a
liability as at 31 December 2023.
Notes to EPRA
and other Key Performance Indicators
This appendix
does not form part of the notes to the condensed set of
consolidated financial statements.
1. EPRA Earnings and Adjusted
Earnings per Share
EPRA EPS is a measure of EPS
designed by EPRA to present underlying earnings from core operating
activities. Adjusted earnings is EPRA earnings adjusted for company
specific items to reflect the underlying profitability of the
business.
|
As at
31 December 2023
£'000
|
As at
31 December 2022
£'000
|
As at
30 June 2023
£'000
|
(Loss)
attributable to ordinary Shareholders
|
(55,263)
|
(200,830)
|
(143,798)
|
Adjustments
to remove:
|
|
|
|
Changes in fair value of interest rate
derivatives (OCI)
|
1,043
|
(1,780)
|
(1,068)
|
Changes in fair value of interest rate
derivatives measured at FVTPL
|
32,272
|
950
|
(10,024)
|
Changes in fair value of investment properties
and associated rent guarantees
|
57,940
|
248,064
|
256,066
|
Group share of changes in fair value of joint
venture investment properties
|
-
|
(11,485)
|
(11,486)
|
Finance income received on interest rate
derivatives held at fair value through profit and loss
|
(10,167)
|
(2,085)
|
(9,671)
|
Profit on disposal of interest rate
derivatives
|
-
|
-
|
(2,878)
|
Profit on disposal of groups interest in joint
venture
|
-
|
-
|
(19,940)
|
EPRA
Earnings
|
25,825
|
32,834
|
57,201
|
EPRA
EPS
|
2.1p
|
2.6p
|
4.6p
|
Finance income received on interest rate
derivatives held at fair value through profit and loss
|
10,167
|
2,085
|
9,671
|
Joint Venture acquisition loan arrangement
fee
|
-
|
-
|
4,009
|
One-off restructuring costs in relation to the
acceleration of unamortised arrangement fees
|
281
|
1,518
|
1,518
|
Adjusted
Earnings
|
36,273
|
36,437
|
72,399
|
Weighted
average number of ordinary shares₁
|
1,246,239,185
|
1,241,446,763
|
1,242,574,505
|
Adjusted
EPS
|
2.9p
|
2.9p
|
5.8p
|
1 Based on the weighted
average number of ordinary shares in issue for the six months to 31
December 2023.
Notes to EPRA
and other Key Performance Indicators continued
2. EPRA NTA per
share
EPRA NTA is considered to be the most relevant
measure for the Group and is now the primary measure of net assets,
replacing the previously reported EPRA Net Asset Value metric. For
the current period EPRA NTA is calculated as net assets per the
consolidated statement of financial position excluding the fair
value of interest rate derivatives and financial assets held at
amortised cost.
31 December
2023
|
EPRA NTA
£'000
|
EPRA NRV
£'000
|
EPRA NDV
£'000
|
IFRS NAV attributable to ordinary
shareholders
|
1,124,889
|
1,124,889
|
1,124,889
|
Fair value of interest rate
derivatives
|
(27,364)
|
(27,364)
|
-
|
Fair value of financial assets held at
amortised cost
|
(3,631)
|
(3,631)
|
(3,631)
|
Purchasers' costs
|
-
|
113,418
|
-
|
Fair value of debt
|
-
|
-
|
1,538
|
EPRA
metric
|
1,093,894
|
1,207,312
|
1,122,796
|
EPRA metric
per share
|
88p
|
97p
|
90p
|
|
|
|
|
30 June
2023
|
|
|
|
IFRS NAV
attributable to ordinary shareholders
|
1,217,726
|
1,217,726
|
1,217,726
|
Fair value of interest rate
derivatives
|
(57,583)
|
(57,583)
|
-
|
Fair value of financial assets held at
amortised cost
|
(3,609)
|
(3,609)
|
(3,609)
|
Purchasers' costs
|
-
|
122,990
|
-
|
Fair value of debt
|
-
|
-
|
4,876
|
EPRA
metric
|
1,156,534
|
1,279,524
|
1,218,993
|
EPRA metric
per share
|
93p
|
103p
|
98p
|
31 December
2022
|
EPRA NTA
£'000
|
EPRA NRV
£'000
|
EPRA NDV
£'000
|
IFRS NAV attributable to ordinary
shareholders
|
1,197,756
|
1,197,756
|
1,197,756
|
Fair value of interest rate
derivatives
|
(47,389)
|
(47,389)
|
-
|
Fair value of financial assets held at
amortised cost
|
(3,423)
|
(3,423)
|
(3,423)
|
Purchasers' costs
|
-
|
119,102
|
-
|
Fair value of debt
|
-
|
-
|
5,768
|
EPRA
metric
|
1,146,944
|
1,266,046
|
1,200,101
|
EPRA metric
per share
|
92p
|
102p
|
97p
|
Notes to EPRA
and other Key Performance Indicators continued
3. EPRA Net Initial Yield
(NIY) and EPRA "topped up" NIY
Annualised rental income based on
the cash rents passing at the balance sheet date, less
non-recoverable property operating expenses, divided by the market
value of the property, increased with (estimated) purchasers'
costs.
|
As at
31 December 2023
£'000
|
As at
31 December 2022
£'000
|
As at
30 June 2023
£'000
|
Investment Property - wholly owned (note
12)
|
1,667,910
|
1,625,100
|
1,685,690
|
Investment Property - share of joint
ventures
|
-
|
281,533
|
-
|
Completed
Property Portfolio
|
1,667,910
|
1,906,633
|
1,685,690
|
Allowance for estimated purchasers'
costs
|
113,418
|
139,111
|
122,990
|
Grossed up
completed property portfolio valuation (B)
|
1,781,328
|
2,045,744
|
1,808,680
|
Annualised passing rental income - wholly
owned
|
104,201
|
95,157
|
99,910
|
Annualised passing rental income - share of
joint venture
|
-
|
13,695
|
-
|
Annualised non-recoverable property
outgoings
|
(897)
|
(952)
|
(1,117)
|
Annualised net
rents (A)
|
103,304
|
107,900
|
98,793
|
Rent expiration of rent-free periods and fixed
uplifts
|
233
|
82
|
447
|
Topped up
annualised net rents (C)
|
103,537
|
107,982
|
99,240
|
EPRA NIY
(A/B)
|
5.80%
|
5.27%
|
5.46%
|
EPRA "topped
up" NIY (C/B)
|
5.81%
|
5.28%
|
5.49%
|
All
rent free periods expire within the year to 31 December
2024
4. EPRA Vacancy
Rate
|
As at
31 December 2023
£'000
|
As at
31 December 2022
£'000
|
As at
30 June 2023
£'000
|
Estimated rental value of vacant
space
|
648
|
451
|
439
|
Estimated rental value of the whole
portfolio
|
105,371
|
95,239
|
100,797
|
EPRA Vacancy
Rate
|
0.6%
|
0.5%
|
0.4%
|
The
EPRA vacancy rate is calculated as the ERV of the unrented,
lettable space as a proportion of the total rental value of the
direct Investment Property portfolio. This is expected to continue
to be a highly immaterial percentage as the majority of the
portfolio is let to the largest supermarket operators in the
UK.
Notes to EPRA
and other Key Performance Indicators continued
5. EPRA Cost Ratio
Administrative & operating
costs (both including and excluding costs of direct vacancy)
divided by gross rental income.
|
As at
31 December 2023
£'000
|
As at
31 December 2022
£'000
|
As at
30 June 2023
£'000
|
Administration
expenses per IFRS
|
7,608
|
7,894
|
15,429
|
|
|
|
|
Service charge income
|
(3,309)
|
(2,884)
|
(5,939)
|
Service charge costs
|
3,672
|
3,153
|
6,518
|
Net Service
charge costs
|
363
|
269
|
579
|
Share of joint venture expenses
|
-
|
903
|
938
|
Total costs
(including direct vacant property
costs)
(A)
|
7,971
|
9,066
|
16,946
|
Vacant property costs
|
(85)
|
(125)
|
(328)
|
Total costs
(excluding direct vacant property
costs)
(B)
|
7,886
|
8,941
|
16,618
|
|
|
|
|
Gross rental
income per IFRS
|
52,924
|
46,162
|
95,823
|
Less: service charge components of gross rental
income
|
-
|
-
|
-
|
Add: Share of Gross rental income from Joint
Ventures
|
-
|
8,108
|
13,529
|
Gross rental
income (C)
|
52,924
|
54,270
|
109,352
|
|
|
|
|
EPRA Cost
ratio (including direct vacant property costs)
(A/C)
|
15.06%
|
16.71%
|
15.50%
|
EPRA Cost
ratio (excluding vacant property
costs)
(B/C)
|
14.90%
|
16.48%
|
15.20%
|
1.
Property operating expenses are
net of costs capitalised in accordance with IFRS of £0.1 million
(2022: £nil). Capitalised costs relate to development expenditure
on the property portfolio.
Notes to EPRA
and other Key Performance Indicators continued
6. EPRA LTV
Net debt divided by total property
portfolio and other eligible assets.
|
As at
31 December 2023
£'000
|
As at
31 December 2022
£'000
|
As at
30 June 2023
£'000
|
Group Net
Debt
|
|
|
|
Borrowings from financial
institutions
|
583,893
|
685,442
|
667,465
|
Net payables
|
34,481
|
33,345
|
-
|
Less: Cash and cash equivalents
|
(37,068)
|
(35,380)
|
(37,481)
|
Group Net Debt
Total (A)
|
581,306
|
683,407
|
629,984
|
Group Property
Value
|
|
|
|
Investment properties at fair value
|
1,667,910
|
1,625,100
|
1,685,690
|
Intangibles
|
-
|
-
|
-
|
Net receivables
|
-
|
-
|
93,620
|
Financial assets
|
10,921
|
10,723
|
10,819
|
Total Group
Property Value (B)
|
1,678,831
|
1,635,823
|
1,790,129
|
Group LTV
(A-B)
|
34.63%
|
41.78%
|
35.19%
|
|
|
|
|
Share of Joint
Ventures Debt
|
|
|
|
Bond loans
|
-
|
85,420
|
-
|
Net payables
|
-
|
6,302
|
-
|
JV Net Debt
Total (A)
|
-
|
91,722
|
-
|
Group Property Value
|
-
|
-
|
|
Owner-occupied property
|
-
|
-
|
-
|
Investment properties at fair value
|
-
|
291,070
|
-
|
Total JV
Property Value (B)
|
-
|
291,070
|
-
|
JV LTV
(A-B)
|
0.00%
|
31.51%
|
0.00%
|
|
|
|
|
Combined Net Debt (A)
|
581,306
|
775,129
|
629,984
|
Combined Property Value (B)
|
1,678,831
|
1,926,893
|
1,790,129
|
Combined LTV
(A-B)
|
34.63%
|
40.23%
|
35.19%
|
7. EPRA Like-for-Like Rental
Growth
Changes in net rental income for
those properties held for the duration of both the current and
comparative reporting period.
Sector
|
Six months to
31 December 2023
£'000
|
Six months to
31 December 2022
£'000
|
Like-for-Like rental growth
%
|
UK
|
40,786
|
39,793
|
2.5%
|
The like-for-like rental growth is based on changes in net
rental income for those properties which have been held for the
duration of both the current and comparative reporting. This
represents a portfolio valuation, as assessed by the valuer of £1.3
bn (31 December 2022: £1.4 bn).
Notes to EPRA and other Key Performance
Indicators continued
8. EPRA Property Related
Capital Expenditure
Amounts spent for the purchase and
development of investment properties (including any capitalised
transaction costs).
|
As at
31 December 2023
£'000
|
As at
31 December 2022
£'000
|
As at
30 June 2023
£'000
|
Group
|
|
|
|
Acquisitions
|
38,391
|
310,223
|
377,311
|
Development
|
110
|
-
|
-
|
Investment properties
|
-
|
-
|
-
|
Group Total
CapEx
|
38,501
|
310,223
|
377,311
|
Joint
Venture
|
|
|
|
Acquisitions
|
-
|
-
|
-
|
Development
|
-
|
-
|
-
|
Investment properties
|
-
|
-
|
-
|
Joint Venture
Total CapEx
|
-
|
-
|
-
|
|
|
|
|
Total
CapEx
|
38,501
|
310,223
|
377,311
|
Acquisitions relate to purchase of investment properties in
the year and includes capitalised acquisition costs. Development
relates to capitalised costs in relation to development expenditure
on the property portfolio.
9. Total Shareholder
Return
Total Shareholder Return ("TSR") is
measured by reference to the growth in the Group's share price over
a period, plus dividends declared for that period.
Total
Shareholder Return
|
Six months to
31 December 2023
Pence per share
|
Six months to
31 December 2022
Pence per share
|
Year to
30 June 2023
Pence per share
|
Share price at start of the period /
year
|
73.00
|
119.5
|
119.50
|
Share price at the end of the period /
year
|
86.90
|
102.5
|
73.00
|
(Decrease)/Increase in share price
|
13.90
|
(17.0)
|
(46.50)
|
Dividends declared for the year
|
3.03
|
3.0
|
6.00
|
(Decrease)/Increase in share price plus
dividends
|
16.93
|
(14.0)
|
(40.50)
|
Share price at
start of period
|
73.00
|
119.5
|
119.50
|
Total
Shareholder Return
|
23%
|
(12%)
|
(34%)
|
10. Net loan to value ratio
The proportion of our gross asset value that is
funded by borrowings calculated as statement of financial position
borrowings less cash balances divided by total investment
properties valuation.
Net loan to
value
|
As at
31 December 2023
£'000
|
As at
31 December 2022
£'000
|
As at
30 June 2023
£'000
|
Bank borrowings
|
583,893
|
685,442
|
667,465
|
Less cash and cash equivalents
|
(37,068)
|
(35,380)
|
(37,481)
|
Net borrowings
|
546,825
|
650,062
|
629,984
|
Investment properties
valuation
|
1,667,910
|
1,625,100
|
1,685,690
|
Net loan to
value ratio
|
33%
|
40%
|
37%
|
11. Annualised passing rent
Annualised passing rent is the annualised cash
rental income being received as at the stated date.
COMPANY INFORMATION
Directors
|
Nick
Hewson (Non-Executive Chairman)
|
|
Vince
Prior (Chair of Nomination Committee & Senior Independent
Director)
Jon Austen
(Chair of Audit Committee)
Cathryn
Vanderspar (Chair of Remuneration Committee)
Frances
Davies (Chair of ESG Committee)
Sapna Shah
(Chair of Management Engagement Committee)
|
Company
Secretary
|
Hanway
Advisory Limited
1 King
William Street
London
EC4N
7AF
|
Registrar
|
Link Asset
Services
The
Registry
34
Beckenham Road
Beckenham
Kent
BR3
4TU
|
AIFM
|
JTC Global
AIFM Solutions Limited
Ground
Floor
Dorey
Court
Admiral
Park
St Peter
Port
Guernsey
Channel
Islands
GY21
2HT
|
Investment
Adviser
|
Atrato
Capital Limited
36 Queen
Street
London
EC4R
1BN
|
Financial Adviser and Joint
Corporate Broker
|
Stifel
Nicolaus Europe Limited
150
Cheapside
London
EC2V
6ET
|
Joint Corporate
Broker
|
Goldman
Sachs International
Plumtree
Court
25 Shoe
Lane
London
EC4A
4AU
|
Auditors
|
BDO
LLP
55 Baker
Street
London
W1U
7EU
|
Property
Valuers
|
Cushman
& Wakefield
125 Old
Broad Street
London
EC2N
1AR
|
Financial PR
Advisers
|
FTI
200
Aldersgate Street
London
EC1A
4HD
|
Website
|
www.supermarketincomereit.com
|
Registered
Office
|
1 King
William Street
London
EC4N
7AF
|
Stock exchange
ticker
ISIN
|
SUPR
GB00BF345X11
|
This
report will be available on the Company's website.
END