TIDMLXB
RNS Number : 0813H
LXB Retail Properties Plc
05 June 2017
For immediate release 5 JUNE 2017
LXB Retail Properties Plc
INTERIM RESULTS FOR THE PERIODED 31 MARCH 2017
LXB Retail Properties Plc, a Jersey resident closed-ended real
estate investment company focused on edge of town and out of town
retail assets, today announces interim results for the period ended
31 March 2017.
Highlights
31 March 30 September
2017 2016
-- Cash deposits: GBP15.07m GBP46.48m
-- NAV per share: 33.63p 56.70p
-- EPRA* NAV per share: 33.70p 56.70p
-- Loss per share: (5.07)p (8.89)p
-- November 2016: further cash considerations released in
relation to the forward funded investments at Banbury and Sutton,
completed a further disposal of land at Gloucester for GBP0.4m, and
completed the surrender of the agreement for lease with ASDA at
Willow Green Farm, Truro realising total cash proceeds of
GBP8.5m
-- November 2016: returned of surplus funds of GBP30.3m to Shareholders
-- January 2017: completed the disposal of Neats Court Retail
Park, Sheppey to Lightstone Neatscourt LLP generating cash proceeds
of GBP11.3m
-- February 2017: obtained planning consent (subject to referral
to the Secretary of State for Communities and Local Government) for
a revised and enhanced scheme at Rushden Lakes
-- March 2017: completed the sale of substantially all of the
Group's remaining land interests at Corton, Ayr to Manse LLP
generating cash proceeds of GBP3.4m
Post period end:
-- April 2017: completed two further lettings at London Road,
Biggleswade generating a cash receipt of GBP3.2m under the terms of
the sales agreement
-- May 2017: completed a further disposal of land at Gloucester for net proceeds of GBP0.45m
* excluding fair values of financial instruments and deferred
tax.
For further information please contact:
LXB Adviser LLP Tel: 020 7432 7900
Tim Walton, CEO Brendan O'Grady, FD
J.P. Morgan Cazenove (NOMAD) Tel: 020 7742 4000
Bronson Albery/Paul Hewlett
Buchanan Tel: 020 7466 5000
Charles Ryland/Victoria Hayns/Patrick Hanrahan
Forward looking statements
This document includes forward looking statements which are
subject to risks and uncertainties. You are cautioned that forward
looking statements are not guarantees of future performance and
that if risks and uncertainties materialise, or if assumptions
underlying any of these statements prove incorrect, the actual
results of operations and financial condition of the Group may
materially differ from those made in, or suggested by, forward
looking statements. Other than in accordance with its legal or
regulatory obligations, the Company undertakes no obligation to
review, update or confirm expectations or estimates or to release
publicly any revisions to any forward looking statements to reflect
events that occur or circumstances that arise after the date of
this document.
Chairman's Statement
Dear Shareholders,
I am pleased to present the Interim Report and Financial
Statements for the six months ended 31 March 2017.
The Financial Statements show a reduction in Net Asset Value
(NAV) per share of 5.07p after adjusting for a return of capital of
18p per share in October 2016, and I will come back to this below.
However, I am aware that the focus of Shareholders is on progress
towards returning the majority of the remaining value of the Group
to Shareholders in cash over a relatively short timescale.
My statement of 4 April 2016 set out the Board's thinking around
the final return of cash to Shareholders. The Board concluded,
after detailed consideration of the alternatives and legal advice,
that these proposals offered the fairest and most pragmatic outcome
for all Shareholders and I am pleased to say that they were
generally well received. This was reflected in the overwhelming
acceptance of the timetable extension which was agreed at the
Annual General Meeting held on 24 April 2017. Final proposals will
be put to Shareholders by 30 November 2017 and, as previously
announced, these proposals will include the transfer of assets to a
NewCo, which will be a UK resident AIM listed company, pursuant to
a scheme of arrangement sanctioned by the Jersey court. In
connection with the proposals, NewCo will publish a prospectus and
the Company will issue a scheme document setting out in full their
details and terms. The scheme will provide a break from the
existing Group, including in relation to Board composition, scale,
residence, business, listing and structure. I would reiterate that
the date referred to above is an absolute long stop and it is the
Board's intention to put final proposals to Shareholders as soon as
the key commercial transactions, namely going unconditional at
Rushden Lakes for Phases 2 and 3 and the sale of Stafford
Riverside, are in place.
Shareholders have understood the need for a continuing vehicle
to optimise value and your Board is committed to ensuring an
appropriate balance between the need for NewCo to have a viable
independent future, not least to attract and retain a Board and
Adviser team, and the desire of Shareholders to see as much of the
value of the Group returned in cash as soon as practicable. In that
regard I am pleased to report that terms have been agreed for the
Group to access development finance for the construction of the
cinema at Stafford. This borrowing will be carried forward into
NewCo leaving it with a sensible loan to asset value of some 20%.
This will mean that the likely value of NewCo at inception can be
reduced to approximately GBP25m, releasing further cash to
Shareholders.
Rushden Lakes
As we disclosed in the announcement dated 3 May 2017, planning
progress at Rushden has now been delayed by the General Election.
There is no reason to suggest that the planning permission
supported unanimously by the Planning Committee of East Northants
Council on 8 February 2017 will be called in for review by a new
Secretary of State, it is just that we will not know definitively
until after the election. This delay, followed by the statutory
Judicial Review period of 6 weeks, is likely to mean that we will
not be unconditional with The Crown Estate until the end of August
at the earliest.
All of the anchors have now taken access and the majority of the
other retailers will have taken access by the end of June following
practical completion of Phase 1. We continue to make progress on
lettings and on Phase 1 we are now 89% let and 4% is in solicitors'
hands. We are in active discussions with potential occupiers on all
the remaining seven units.
On Phase 2 we are now exchanged on a total of 66% of the floor
space with a further 28% in solicitors' hands. A further unit has
moved into solicitors' hands on Phase 3 taking the total space in
solicitors' hands to 64%. All of the remaining space is actively
under discussion.
Stafford Riverside and Leisure
On the retail scheme, two units are in solicitors' hands and
should exchange shortly and sale discussions have commenced with
interested parties. On the Leisure scheme, the build contract is
now in final form, albeit at a cost significantly in excess of our
estimates. The target date for handover to Odeon is in Q2 2018.
There are five further units to let to restaurant operators;
however, marketing will not commence until much closer to practical
completion of the cinema as the restaurants will be looking to the
cinema to anchor that end of the scheme.
Other investments
In terms of the Group's remaining assets, two further units have
been let at Biggleswade, realising a further GBP3.2m of cash for
the Group, and one unit remains to be let. At Sutton, we have now
let or are in legals on 54% of the retail space and terms have been
agreed in respect of another 40% of the space, and we have
commenced sale discussions. Virtually all of the Group's land
interests at Willow Green, Truro and at Ayr have now been sold and
a further sale at Gloucester has realised net proceeds of GBP0.45m,
leaving one plot of land to sell. At Greenwich Brocklebank the
scheme is due to reach practical completion on 7 August and this
will lead to the release of the final contractual sum of
approximately GBP1.3m. In addition, we have commenced discussions
with the insurance company which issued a performance bond in
respect of the previous Brocklebank contractor against which we are
entitled to make a claim for up to GBP1.2m.
Group cash
The Group holds GBP19.7m of cash following the Biggleswade
receipt, but is committed to spending GBP2.5m at Rushden Lakes in
advance of planning permission being finally received in order to
keep to a reasonable timetable for delivery and to ensure that the
contractor's team remain on site. We are continuing to fund the
build of the final phase of Sheppey, plus the surplus development
cost over bank borrowing at Stafford for the leisure scheme,
together with modest working capital at Higher Newham Truro. The
main constraint on return of cash to Shareholders remains the bond
that covers the development account at Rushden Lakes and the need
to put in place similar bond type arrangements, albeit more modest
in scale, for Phases 2 and 3.
We continue to make progress on the streamlining of the Group's
corporate structure to reduce the burden on NewCo. However, to put
the task in perspective, at present 68 legal entities remain in
existence.
NAV
As I stated earlier, the NAV for the period shows a decline of
5.07p per share after adjusting for the return of capital of 18p
per share. Whilst this is disappointing, it reflects the difficult
markets in which we are operating, both with regard to the occupier
market and in construction. In addition, we face the inevitable
problems of a run-off vehicle with a very public timetable. The
major components of this NAV reduction relate to increased
construction costs and the knock-on impact of delays in the opening
programme, as set out below:
Rushden
Cost overruns relating
to the scheme build and
highways GBP2.2m 1.31p
Increased tenant costs GBP1.4m 0.83p
Delayed opening GBP0.6m 0.36p
Stafford
Cost overruns relating
to the scheme build GBP1.4m 0.83p
Valuation movement GBP0.8m 0.48p
Sutton
Valuation movement GBP0.8m 0.48p
--------- ------
GBP7.2m 4.29p
============================== ======
Administrative costs
In addition, the lack of income highlights the administrative
costs of running the Group arising as a result of its structure and
contraction. The current structure, which is appropriate for a much
larger group, presents a significant burden in relation to the
asset base and which will only become more acute over time. These
ongoing costs, excluding the Investment Manager's fees, primarily
relate to the cost of the Jersey structure and the Board, and
amount to over GBP1m pa. These overheads are largely fixed. It is
therefore the Board's intention to resign as soon as the
restructuring and the transfer of assets to NewCo under the
proposals is complete. It is envisaged that NewCo will have a board
that is more appropriate to its scale and business going
forward.
Your Board and the Investment Manager are committed to
completing the proposals as quickly as possible. As and when
lettings are completed and/or sales made we will review the
possibility of returning further cash before any final proposals
are put to Shareholders, and we look forward to the confirmation of
the planning for Phases 2 and 3 at Rushden Lakes which will have a
material impact bearing in mind the current NAV.
Phil Wrigley
Chairman
5 June 2017
Report of the Investment Manager, LXB Adviser LLP
LXB Adviser LLP advises LXB Retail Properties Plc ("LXB" or "the
Group") and is pleased to report on the operations of the Group
during the six months ended 31 March 2017 and up to the date of
this report.
We continue to work towards realising the remaining value in the
portfolio, with the sale of Neats Court Retail Park, Sheppey and
substantially all of the Group's remaining land interests at
Corton, Ayr completing in the six months to 31 March 2017. In that
period, the Group also disposed of a plot of land at Gloucester and
concluded an agreement whereby ASDA surrendered its leasehold
interest at Willow Green Farm, Truro with another plot of land at
Gloucester being sold shortly after the balance sheet date.
We provide more information on the individual investments in the
Property details section of this report. However, in order to
protect Shareholders' interests, we do not comment on the status of
discussions on potential sales of individual investments. The Group
will, of course, report the outcome of those discussions, as and
when transactions conclude.
Property details
The Group's most significant investments are discussed in
greater detail below.
Biggleswade
Lettings to Cotswold Outdoor and Argos were secured in April
2017 and triggered a cash receipt of approximately GBP3.2m with the
potential for a further cash receipt when the final unit of
approximately 8,000 sq ft is also let. The exact amount of that
payment will depend on the terms achieved on the final letting. The
final unit is being marketed, with good interest from a mix of
complementary retailers, helped by the additional lettings and the
strong trading performance of those retailers already on the
park.
Gloucester
As announced in December 2016, one of the three residual plots
of land was sold in the six months ended 31 March 2017 and a
further parcel of land was sold shortly after the balance sheet
date for net proceeds of GBP0.45m. The Group's one remaining plot
comprises approximately 0.75 acres and has planning consent for
commercial, showroom or trade uses. This is expected to be sold in
the coming months.
Greenwich Brocklebank
Practical completion of the Group's Brocklebank investment,
which was sold under an Institutional Funding Agreement to The
Charities Property Fund in December 2015, was scheduled for October
2016. However, in August 2016 the main contractor, Cardy
Construction Limited, went into administration. The new contractor
started on site in October 2016 but the inevitable complexities of
taking over from another contractor means that practical completion
is now expected in August 2017.
Under the Institutional Funding Agreement, a further cash
receipt is due when the scheme reaches practical completion and all
of the leases have completed. As noted in the Chairman's Statement,
this receipt is currently anticipated to be approximately
GBP1.3m.
Rushden Lakes
This investment was sold to The Crown Estate for initial cash
proceeds of GBP65.2m in May 2016. The sale terms provided that The
Crown Estate would fund the development costs, with the Group
retaining responsibility for a number of project related matters as
well as for letting the remaining vacant space.
Rushden Lakes is planned in three phases. Although the highways
works caused several months' delay, Phase 1 is now largely complete
with only landscaping works outstanding. M&S, House of Fraser
and Primark are fitting out with a view to opening in August or
September when the highways works are expected to complete. 93% of
the scheme is now let or in solicitors' hands.
As discussed in the Chairman's Statement, the Group does not
anticipate making a meaningful start on Phase 2 until August
2017.
In terms of Phase 2 lettings, the variation to the Cineworld
pre-let to account for the changes in the revised planning
application completed in February 2017 and other lettings are
progressing well with 94% of this part of the scheme now let or in
solicitors' hands. On Phase 3, three pre-lets are in solicitors'
hands.
Sheppey
In January 2017, the Group completed the sale of the Neats Court
Retail Park investment to Lightstone Neatscourt LLP for
GBP11.34m.
Construction of Phase 3, which comprises 10,000 sq ft of A3
restaurant space, is progressing well, with completion expected in
early June 2017. Four units are already pre-let which equates to
72% by floor area. Discussions are ongoing with various retailers
to take the remaining space which is currently configured as two
units.
Stafford
Riverside retail is open, the retailers are trading well and the
Group is in solicitors' hands to let two further units which would
leave some 6,000 sq ft (approximately 6% of floor space) to let.
Initial sale discussions have commenced.
The Leisure scheme over the river from Riverside comprises six
restaurant units on the ground and first floor of the multi-storey
car park, together with an 18,000 sq ft Odeon cinema and adjacent
5,000 sq ft (ground floor) restaurant unit. The six restaurant
units in the multi-storey car park were completed as part of the
car park. A number of the restaurant units were pre-let and indeed
two tenants have now opened for trade; however, following delays in
starting the cinema construction, longstop dates in three of the
agreements for lease (which were linked to the cinema opening date)
expired, and the prospective operators decided not to extend. The
target date for opening the cinema is November 2018 and, once
construction works are further advanced, the intention is to start
marketing the space to operators who can plan opening to coincide
with the cinema opening.
As noted in the Chairman's Statement, the price of the build
contract, which is about to be signed, is more than was envisaged
and this has negatively impacted value in the period. Now that the
build contract is final, the RBS development facility to support
the construction of the cinema and the adjacent restaurant can be
finalised and practical completion is scheduled for May 2018.
Sutton
The Group's remaining interest in Sutton is the long leasehold
on the 27,000 sq ft ground floor retail units beneath the two
residential towers. Three units are pre-let (13,800 sq ft of
available space) and two of the tenants have taken access, with the
other due to take access in July. Discussions are ongoing about the
remaining space and an announcement is expected in this regard
shortly.
Truro Threemilestone
In December 2016 an agreement was concluded whereby ASDA
surrendered its leasehold interest in the foodstore at Willow Green
Farm, Truro.
The Group retains some residual land interests and assets in
relation to the planning permission achieved and is considering the
best way to realise value from those assets. In light of the
corporate strategy to crystallise assets and return capital to
Shareholders one of the land options was not renewed when it lapsed
in February 2017.
Living Villages - Truro, Higher Newham
It is anticipated that the land interests at Higher Newham Farm,
which have consent for a Living Villages type scheme, will be
transferred to NewCo as part of the scheme of arrangement referred
to in the Chairman's Statement.
Revaluation deficit and loss on sale of investment
properties
As described in note 9 to the Interim Report, the investment
properties held by the Group at 31 March 2017 were valued by the
Group's external property valuers, JLL. In their opinion the fair
value of these investment properties at that date was GBP59.7m,
resulting in a revaluation deficit for the period of GBP3.4m. The
components of this deficit, which are largely down to cost
increases at Stafford and reduced rent assumptions on vacant space
at Sutton, are set out in more detail in the Chairman's
Statement.
The Group has also recognised a loss on sale of investment
properties of GBP4.4m in the period. Again, the broad make-up of
this reduction in NAV is summarised in the Chairman's Statement,
but is mostly a result of the highways delays and increased tenant
costs at Rushden.
Accounting treatment of forward funded construction
activities
Under the terms of the sale of a number of the Group's
investments, the buyer funds the development with the Group
overseeing the works. The Group recharges the costs associated with
the relevant forward funding agreement plus a 1% fee on the main
contractor's costs. As explained previously, following consultation
with the Group's auditors, the appropriate accounting treatment for
these arrangements is to include the amounts receivable from the
buyer (in respect of each reporting period) in gross revenue and to
include the costs incurred by the Group (in respect of each
reporting period) in direct costs. The relevant amounts for the
period are disclosed in note 4 to the Interim Report.
Basis of preparation
Following Shareholder approval on 29 February 2016, the
Directors are proceeding with the plans for an orderly realisation
of the Group's remaining investments, with the majority of the
value to be returned to Shareholders in cash in the foreseeable
future. As a result, the Directors have concluded that it continues
to be appropriate not to adopt a going concern basis of preparation
in these interim financial statements. Readers of the accounts
should be aware that, as was the case at 30 September 2016, the
Group's investment properties are classified in the Group Balance
Sheet as current assets "held for sale" rather than non-current
assets. No other material adjustments arose as a result of ceasing
to apply the going concern basis in either the current period or
the prior year.
Cash position and expenditure
During the six months to 31 March 2017, GBP8.6m of cash was
deployed in the purchase of and capital expenditure on investment
properties.
At the balance sheet date the Group had GBP15.1m of cash.
Tim Walton
On behalf of LXB Adviser LLP
5 June 2017
Auditor's independent review report
to LXB Retail Properties Plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements included within this Interim Report for the
six months ended 31 March 2017 which comprises the Group Income
Statement, the Group Statement of Changes in Equity, the Group
Balance Sheet, the Group Cash Flow Statement and the related
notes.
We have read the other information contained in the Interim
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The Interim Report, including the financial information
contained therein, is the responsibility of and has been approved
by the Directors. The Directors are responsible for preparing the
Interim Report in accordance with the rules of the London Stock
Exchange for companies trading securities on the AIM and the rules
for companies trading securities on the Channel Islands Securities
Exchange. These rules require that the Interim Report be presented
and prepared in a form consistent with that which will be adopted
in the Company's annual accounts having regard to the accounting
standards applicable to such annual accounts.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The
condensed set of financial statements included in this Interim
Report has been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting" as adopted by
the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the Interim Report
based on our review.
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange for companies trading securities
on the AIM and the rules for companies trading securities on the
Channel Islands Securities Exchange and for no other purpose. No
person is entitled to rely on this report unless such a person is
entitled to rely on 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.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) 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.
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 Interim Report for the six months ended 31 March 2017 is not
prepared, in all material respects, in accordance with
International Accounting Standard 34, as adopted by the European
Union, the rules of the London Stock Exchange for companies trading
securities on the AIM and the rules for companies trading
securities on the Channel Islands Securities Exchange.
Emphasis of Matter
Without modifying our conclusion, we draw your attention to note
2 in the condensed set of financial statements. It is the
Directors' intention to bring the Group's activities to a close
through either a voluntary liquidation or other reconstruction or
reorganisation following the return of surplus cash to
Shareholders. Accordingly, the condensed set of financial
statements have not been prepared on a going concern basis.
BDO LLP
Chartered Accountants
London
United Kingdom
5 June 2017
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Group income statement
for the period ended 31 March 2017
Unaudited Unaudited Audited
six months six months year to
to to 30 September
31 March 31 March 2016
2017 2016
================================= ===== ============= ============= ==============
Note GBP GBP GBP
================================= ===== ============= ============= ==============
Gross revenue 4 37,055,626 22,049,045 85,240,791
Direct costs 4 (36,218,224) (21,026,429) (82,072,537)
Net revenue and gross
profit 837,402 1,022,616 3,168,254
Administrative expenses:
--------------------------------- ----- ------------- ------------- --------------
Corporate administrative
expenses (3,008,766) (5,287,136) (8,225,838)
Cost of property activities - - (73,081)
--------------------------------- ----- ------------- ------------- --------------
Total administrative
expenses (3,008,766) (5,287,136) (8,298,919)
Other property-related
transactions: 5
--------------------------------- ----- ------------- ------------- --------------
Amounts receivable in
respect of the
cancellation of certain
contractual
arrangements 4,834,117 - 23,919,222
Impairment arising as
a result of the
cancellation of certain
contractual
arrangements (2,770,730) - (24,934,262)
--------------------------------- ----- ------------- ------------- --------------
Net surplus/(deficit)
in respect of the cancellation
of certain contractual
arrangements 2,063,387 - (1,015,040)
Investment property
revaluation deficit 10 (3,405,499) (835,877) (6,816,643)
(Loss)/profit on sale
of investment properties (4,363,654) 2,971,275 (703,005)
Other income 10,461 152,466 183,368
--------------------------------- ----- ------------- ------------- --------------
Operating loss (7,866,669) (1,976,656) (13,481,985)
Finance income 6 10,637 16,591 56,492
Finance costs 6 (536,712) (769,912) (1,719,202)
Loss before tax (8,392,744) (2,729,977) (15,144,695)
--------------------------------- ----- ------------- ------------- --------------
Taxation charge 7 (137,559) (125,391) (187,215)
--------------------------------- ----- ------------- ------------- --------------
Loss for the period (8,530,303) (2,855,368) (15,331,910)
--------------------------------- ----- ------------- ------------- --------------
Pence Pence Pence
Loss per share per share per share per share
=================== ============= =========== =========== ===========
Basic and diluted 8 (5.07) (1.62) (8.89)
=================== ============= =========== =========== ===========
As described in note 2, the Group is in the process of
performing an orderly realisation of its investments.
There were no items of other comprehensive income in the current
period or prior year and therefore the loss for the period also
reflects the Group's total comprehensive loss for the period.
Group statement of changes in equity
for the period ended 31 March 2017
Stated Retained
Period ended 31 March capital earnings Total
2017 (unaudited)
====================================================== === ============= ============= ===============
GBP GBP GBP
====================================================== === ============= ============= ===============
At 1 October 2016 (audited) 71,766,495 23,698,642 95,465,137
Loss for the period - (8,530,303) (8,530,303)
Transactions with owners:
The Third Return of Cash
(see note 17):
* Redemption of "B" shares inclusive of costs (19,877,139) - (19,877,139)
* Dividends - (10,437,898) (10,437,898)
At 31 March 2017 (unaudited) 51,889,356 4,730,441 56,619,797
----------------------------------------------------------- ------------- ------------- -------------
Stated Retained
Period ended 31 March capital earnings Total
2016 (unaudited)
====================================================== === ============= ============= ===============
GBP GBP GBP
====================================================== === ============= ============= ===============
At 1 October 2015 (audited) 132,288,457 57,355,270 189,643,727
Loss for the period - (2,855,368) (2,855,368)
Transactions with owners:
Own shares purchased
for cancellation
inclusive of costs (see
note 17) (14,760,502) - (14,760,502)
At 31 March 2016 (unaudited) 117,527,955 54,499,902 172,027,857
----------------------------------------------------------- ------------- ------------- -------------
Group balance sheet
at 31 March 2017
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 September
2017 2016 2016
=========================== ===== ============= ============= ==============
Note GBP GBP GBP
=========================== ===== ============= ============= ==============
Non-current assets
Investment properties 10 - 202,123,800 -
Derivative financial
assets 16 - 4,003 -
=========================== ===== ============= ============= ==============
- 202,127,803 -
=========================== ===== ============= ============= ==============
Current assets
Business and other
receivables 11 23,710,436 38,250,017 44,910,099
Cash and cash equivalents 12 15,074,593 11,156,542 46,481,520
=========================== ===== ============= ============= ==============
38,785,029 49,406,559 91,391,619
--------------------------- ----- ------------- ------------- --------------
Investment properties
- held for sale 10 58,991,080 - 73,170,186
--------------------------- ----- ------------- ------------- --------------
97,776,109 49,406,559 164,561,805
--------------------------- ----- ------------- ------------- --------------
Total assets 97,776,109 251,534,362 164,561,805
=========================== ===== ============= ============= ==============
Current liabilities
Business and other
payables 13 (15,239,085) (14,666,813) (38,847,185)
Borrowings 14 (25,722,372) (42,059,903) (30,098,071)
Income tax creditor (83,492) (101,715) (151,412)
(41,044,949) (56,828,431) (69,096,668)
Deferred taxation
associated with
investment properties (111,363) - -
- held for sale
--------------------------- ----- ------------- ------------- --------------
(41,156,312) (56,828,431) (69,096,668)
--------------------------- ----- ------------- ------------- --------------
Non-current liabilities
--------------------------- ----- ------------- ------------- --------------
Borrowings 15 - (22,678,074) -
- (22,678,074) -
=========================== ===== ============= ============= ==============
Total liabilities (41,156,312) (79,506,505) (69,096,668)
=========================== ===== ============= ============= ==============
Net assets 56,619,797 172,027,857 95,465,137
=========================== ===== ============= ============= ==============
Equity
Stated capital 17 51,889,356 117,527,955 71,766,495
Retained earnings 4,730,441 54,499,902 23,698,642
=========================== ===== ============= ============= ==============
Total equity 56,619,797 172,027,857 95,465,137
--------------------------- ----- ------------- ------------- --------------
Pence Pence Pence
Net asset value per share per share per share
per share
=================== === =========== =========== ===========
Basic and diluted 18 33.63 102.18 56.70
=================== === =========== =========== ===========
Adjusted (EPRA) 18 33.70 102.18 56.70
=================== === =========== =========== ===========
Group cash flow statement
for the period ended 31 March 2017
Unaudited Unaudited Audited
six months to six months year to
31 March to 30 September
2017 31 March 2016
2016
============================================ ============= ================
GBP GBP GBP
============================== ============= ============= ==============
Cash flows from operating
activities
Loss before tax (8,392,744) (2,729,977) (15,144,695)
Adjustments for non-cash
items:
Investment property
revaluation deficit 3,405,499 835,877 6,816,643
Amortisation of lease
incentives 220,060 - 187,132
Impairment arising on
the cancellation of
certain contractual
arrangements 2,770,730 - 24,934,262
Loss/(profit) on sale
of investment properties 4,363,654 (2,971,275) 703,005
Net finance costs 526,075 753,321 1,662,710
============================== ============= ============= ==============
Cash flows from operating
activities
before changes in working
capital 2,893,274 (4,112,054) 19,159,057
Change in business and
other receivables 13,730,472 2,826,940 (12,182,318)
Change in business and
other payables (22,647,738) (5,685,474) 20,515,144
Taxation paid (94,116) (23,888) (36,015)
============================== ============= ============= ==============
Cash flows from operating
activities (6,118,108) (6,994,476) 27,455,868
============================== ============= ============= ==============
Investing activities:
Interest received 10,637 16,591 56,492
Purchase of and capital
expenditure on
investment properties (8,624,533) (18,723,399) (42,036,267)
Proceeds on disposal
of investment
properties 18,496,158 35,484,390 160,080,227
Cash flows from investing
activities 9,882,262 16,777,582 118,100,452
============================== ============= ============= ==============
Financing activities:
Own shares purchased
for cancellation - (14,716,350) (14,716,350)
Costs associated with
own shares purchased - (44,152) (44,155)
Redemption of "B" shares (19,865,169) - (45,660,107)
Costs associated with
redeemed "B" shares (11,970) - (101,350)
Dividends paid (10,437,898) - (18,324,718)
Bank borrowings drawn 513,000 11,214,993 20,771,555
Bank borrowings repaid (5,000,000) - (44,865,683)
Finance costs paid (369,044) (114,469) (1,167,406)
=============================== ============= ============= ==============
Cash flows from financing
activities (35,171,081) (3,659,978) (104,108,214)
=============================== ============= ============= ==============
Net (decrease)/increase
in cash and cash
equivalents (31,406,927) 6,123,128 41,448,106
Cash and cash equivalents
at the
beginning of the period 46,481,520 5,033,414 5,033,414
------------------------------ ------------- ------------- --------------
Cash and cash equivalents
at the end of
the period 15,074,593 11,156,542 46,481,520
============================== ============= ============= ==============
Notes to the interim report
1. General information about the Group
LXB Retail Properties Plc was listed on the AIM and CISE markets
on 23 October 2009. It is a closed-ended real estate investment
company that was incorporated in Jersey on 27 August 2009.
This Interim Report includes the results and net assets of the
Company and its subsidiaries, together referred to as the Group, on
a consolidated basis.
Further general information about the Company and the Group can
be found on its website:
www.lxbretailproperties.com.
2. Basis of preparation
The financial information contained in this report has been
prepared in accordance with IAS 34, "Interim Financial Reporting",
as adopted by the European Union.
As described more fully in the Chairman's Statement, following
the Shareholders' approval on 29 February 2016, the Directors are
continuing to enact the plans for an orderly realisation of the
Group's investments, with the bulk of the remaining value to be
returned to Shareholders as soon as is practicable and a small
number of assets transferred to a continuing vehicle. Consequently
the Directors have concluded that it continues to be appropriate
not to adopt a going concern basis of preparation in these interim
accounts. No material adjustments have arisen in this period or
arose in the prior year, as a result of ceasing to apply the going
concern basis, other than the reclassification of investment
properties from non-current assets to held for sale.
The condensed set of financial statements for the half year are
unaudited and do not constitute statutory accounts for the purposes
of the Companies (Jersey) Law 1991. They should be read in
conjunction with the Group's statutory financial statements for the
year ended 30 September 2016, which were prepared under
International Financial Reporting Standards adopted for use in the
European Union and upon which an unqualified auditors' report was
given.
The accounting policies adopted in this report are consistent
with those applied in the Group's Annual Report and financial
statements for the year ended 30 September 2016 (the 2016 Annual
Report) and are expected to be consistently applied in the year
ending 30 September 2017.
The 2016 Annual Report is available from the "Investor
relations" page of the Company's website,
www.lxbretailproperties.com, or by writing to the Company Secretary
at Intertrust Fund Services, 44 Esplanade, St Helier, Jersey, JE4
9WG.
The Group's financial performance is not subject to material
seasonal fluctuations.
3. Segmental information
During the current period and prior periods, the Group operated
in and was managed as one business segment, being property
investment, with all investment properties located in the United
Kingdom.
4. Gross revenue and direct costs
Unaudited Unaudited Audited
six months six months year to
to to 30 September
Gross revenue: 31 March 31 March 2016
2017 2016
====================== ============= ============= ===============
GBP GBP GBP
====================== ============= ============= ===============
Gross rental income 806,916 1,416,260 3,410,759
Revenue derived from
Forward Funding
Agreements 36,248,710 20,632,785 81,830,032
----------------------- ------------- ------------- ---------------
37,055,626 22,049,045 85,240,791
---------------------- ------------- ------------- ---------------
Unaudited Unaudited Audited
six months six months year to
to to 30 September
Direct costs: 31 March 31 March 2016
2017 2016
======================= ============= ============= ===============
GBP GBP GBP
======================= ============= ============= ===============
Property outgoings 135,785 514,671 707,634
Costs associated with
Forward Funding
Agreements 36,082,439 20,511,758 81,364,903
------------------------ ------------- ------------- ---------------
36,218,224 21,026,429 82,072,537
----------------------- ------------- ------------- ---------------
The Group's revenue and costs in connection with Forward Funding
Agreements relate to:
-- Sutton foodstore
-- London Road Retail Park in Biggleswade
-- the retail scheme at Brocklebank Road in Greenwich
-- the Gateway Retail Park in Banbury
-- the Sainsbury's/M&S development in Greenwich
-- the Rushden Lakes Retail Park in Rushden, Northamptonshire
5. Other property related transactions
During the period and in the prior year, the Group accepted
settlement payments in return for the cancellation of contractual
arrangements relating to certain of its assets held for investment.
The cancellation of these contractual arrangements had a direct and
immediate detrimental effect on the value of the assets to which
the contracts related, and as a result, an impairment charge has
been applied to these assets. As these transactions are considered
to be relevant to an understanding of the performance of the Group,
and as the resulting impairment does not necessarily relate to
investment property assets, the income and the resulting impairment
have been shown separately to other fair value movements of
investment properties described in note 10.
6. Finance income and costs
Unaudited Unaudited Audited
six months six months year to
to to 30 September
Recognised in the income 31 March 31 March 2016
statement: 2017 2016
============================== ============ ============ ==============
GBP GBP GBP
============================== ============ ============ ==============
Finance income:
Interest on cash deposits 10,637 16,591 56,492
Total finance income
in the income statement 10,637 16,591 56,492
Finance costs:
Bank interest (396,750) (366,842) (896,369)
Decrease in fair value
of derivative financial
instruments - (223,797) (227,800)
Amortisation of capitalised
finance costs (111,238) (138,822) (526,364)
Other finance costs (28,724) (40,451) (68,669)
=============================== ============ ============ ==============
Total finance costs
in the income statement (536,712) (769,912) (1,719,202)
------------------------------- ------------ ------------ --------------
Net finance costs recognised
in the income
statement (526,075) (753,321) (1,662,710)
=============================== ============ ============ ==============
The average interest rate incurred by the Group on its bank
borrowings for the period ended 31 March 2017, including the
lender's margin but excluding amortisation of capitalised finance
costs was 2.59% (31 March 2016: 2.63%; 30 September 2016:
2.86%).
Further information about the derivative financial instruments,
including details of their valuation at each balance sheet date is
included in note 16.
7. Taxation
Unaudited Unaudited Audited
six months six months year to
to to 30 September
31 March 31 March 2016
2017 2016
========================== ============ ============ ==============
GBP GBP GBP
========================== ============ ============ ==============
The tax charge for
the period recognised
in the income statement
comprises:
Current tax on results
for the period 26,196 125,391 187,215
Deferred tax in the 111,363 - -
period
137,559 125,391 187,215
-------------------------- ------------ ------------ --------------
The tax assessed for the period varies from the standard rate of
income tax in the UK of 20%. The differences are explained
below:
Unaudited Unaudited Audited
six months six months year to
to to 30 September
31 March 31 March 2016
2017 2016
============================ ============ ============ ==============
GBP GBP GBP
============================ ============ ============ ==============
Loss before tax (8,392,744) (2,729,977) (15,144,695)
----------------------------- ------------ ------------ --------------
Loss before tax at
the standard rate
of income
tax in the UK of
20% (1,678,549) (545,995) (3,028,939)
Items not subject
to UK income tax:
Income (7,207,822) (4,127,242) (16,492,779)
Expenses 7,805,255 5,152,841 17,918,069
Reclassified and other
changes in
fair value of derivatives - 44,759 -
Investment property
revaluation deficit 659,434 167,175 1,363,328
(Surplus)/deficit
on other
property related
transactions (412,677) - 203,008
Capital deficit/(surplus)
on disposal of
investment properties 872,731 (594,255) 140,601
Net financing costs 96,743 1,564 36,365
Other items 193 13,891 -
Other amounts:
Capital allowances
claimed (98,092) (35,000) (70,000)
Deferred tax recognised
on investment
property revaluation
surpluses in earlier
periods 95,558 - -
Losses carried forward 4,785 47,653 117,562
----------------------------- ------------ ------------ --------------
Tax charge for the
period recognised
---------------------------- ------------ ------------ --------------
in the income statement 137,559 125,391 187,215
============================= ============ ============ ==============
The Group has revenue related losses of GBP4,264,811 (31 March
2016: GBP3,891,350; 30 September 2016: GBP4,240,888) available to
carry forward to utilise against applicable future revenue profits,
for which no deferred tax asset is currently recognised.
Tax status of the Company and its subsidiaries
All group undertakings are either tax resident in Jersey or are
tax transparent entities owned by Jersey resident entities. Jersey
has a corporate tax rate of zero, so the Company and its
subsidiaries have no liability to taxation on their income or gains
in Jersey. The Company is not subject to UK Corporation tax on any
dividend or interest income it receives.
The Group's investment properties are located in the United
Kingdom and therefore the net rental income earned less deductible
items is subject to UK income tax, currently at a rate applicable
to the relevant group undertakings of 20%.
A deferred tax liability of GBP111,363, calculated at 19%, has
been recognised in respect of future taxable profits on investment
properties in development arising on their revaluations up to the
balance sheet date.
8. Loss per share
Loss per share is calculated on 168,350,374 (31 March 2016:
weighted average of 176,593,707; 30 September 2016: weighted
average of 172,472,041) ordinary shares in issue for the period and
is based on losses attributable to Shareholders for the period of
GBP8,530,303 (31 March 2016: GBP2,855,368; 30 September 2016:
GBP15,331,910).
There are no share options or other equity instruments in issue
and therefore no adjustments need to be made for dilutive or
potentially dilutive equity arrangements.
The European Public Real Estate Association ("EPRA") issues
guidelines aimed at providing a measure of earnings per share
designed to present underlying earnings from core operating
activities only. The adjusted EPRA earnings per share figure is
calculated as follows:
Unaudited Unaudited Audited
six months six months year to
to to 30 September
31 March 2017 31 March 2016 2016
======================== ===================== ============================= ======================
Pence Pence Pence
GBP per GBP per GBP per
share share share
======================== ============ ======= ================== ========= ============= =======
Basic loss (8,530,303) (5.07) (2,855,368) (1.62) (15,331,910) (8.89)
------------------------ ------------ ------- ------------------ --------- ------------- -------
Property revaluation
------------------------ ------------ ------- ------------------ --------- ------------- -------
and disposal
adjustments:
Investment
property
revaluation
movements 3,405,499 2.02 835,877 0.47 6,816,643 3.95
Loss/(profit)
on sale of
investment
properties 4,363,654 2.59 (2,971,275) (1.68) 703,005 0.41
Net (surplus)/deficit
in
respect of
cancellation
of
certain contractual
arrangements (2,063,387) (1.22) - - 1,015,040 0.59
Market value
adjustments:
of interest
rate derivatives,
net of tax - - 223,797 0.13 227,800 0.12
EPRA loss (2,824,537) (1.68) (4,766,969) (2.70) (6,569,422) (3.82)
======================== ============ ======= ================== ========= ============= =======
9. Dividends
Unaudited Unaudited Audited
six months six months year to
to to 30 September
31 March 2017 31 March 2016 2016
=================== ==================== ============================= ====================
Pence Pence Pence
GBP per GBP per GBP per
share share share
=================== =========== ======= ============= ============== =========== =======
Interim dividends
paid 10,437,898 18.0 - - 18,324,718 38.0
------------------- ----------- ------- ------------- -------------- ----------- -------
Current period:
An interim dividend of 18p per ordinary share was declared on 22
September 2016 and paid on 3 November 2016. The dividend was
payable on each of the 57,988,322 shares in issue for which a
corresponding "B" share was not issued (see note 17).
The holders of the remaining 110,362,052 ordinary shares in
issue received 18p per share (a total of GBP19,865,169) on the
redemption of these "B" shares in November 2016 (see note 17).
Prior year:
An interim dividend of 38p per ordinary share was declared on 31
May 2016 and paid on 9 June 2016. The dividend was payable on each
of the 48,222,942 ordinary shares in issue for which a
corresponding "B" share was not issued (see note 17).
The holders of the remaining 120,127,432 ordinary shares in
issue received 38p per share (a total of GBP45,648,424) on the
redemption of these "B" shares in June 2016 (see note 17).
10. Investment properties
As described in note 2, the Group's investment properties were
'held for sale' at 31 March 2017 and 30 September 2016.
GBP
=================================== =============
Carrying value as at 30 September
2016 (audited) 73,170,186
Additions 3,497,437
Disposals (14,050,984)
Revaluation deficit (see below) (3,625,559)
===================================== =============
Carrying value as at 31 March
2017 (unaudited) 58,991,080
------------------------------------- -------------
The revaluation deficit shown above includes GBP220,060 (31
March 2016: GBPnil; 30 September 2016: GBP187,132) of amortisation
in respect of capitalised lease incentives that have been released
to rental income in the year.
A reconciliation is provided below:
GBP
------------------------- ------------
Investment properties
revaluation deficit (3,625,559)
Amounts attributable
to the amortisation of
lease
incentives released
to rental income 220,060
--------------------------- ------------
Revaluation deficit in
the income statement (3,405,499)
--------------------------- ------------
Movements in the prior year were as follows:
GBP
------------------------- --------------
Carrying value as at
30 September 2015 208,370,000
Additions 41,544,248
Disposals (144,806,025)
Impairments in relation
to the cancellation
of
certain contractual
arrangements (24,934,262)
Revaluation deficit
(see below) (7,003,775)
---------------------------- --------------
Carrying value as at
30 September 2016 73,170,186
---------------------------- --------------
The revaluation deficit shown above includes GBP187,132 of
amortisation in respect of capitalised lease incentives that have
been released to rental income in the year.
A reconciliation is provided below:
GBP
------------------------- ------------
Investment properties
revaluation deficit (7,003,775)
Amounts attributable
to the amortisation of
lease
incentives released
to rental income 187,132
--------------------------- ------------
Revaluation deficit in
the income statement (6,816,643)
--------------------------- ------------
At 31 March 2017, the Group's investment properties were valued
by JLL, Chartered Surveyors, on a fixed fee basis, in their
capacity as independent external valuers. The aggregate fair value
of these properties at 31 March 2017 is GBP59,738,000 (31 March
2016: GBP202,608,000; 30 September 2016: GBP71,403,000). The fair
value includes amounts in respect of rents recognised in advance
and lease incentives given to tenants that are included within
business and other receivables at the balance sheet date.
The following tables reconcile the carrying value of investment
properties to their fair values at the above balance sheet
dates:
GBP
--------------------------------- ------------
Carrying value as at 31
March 2017 58,991,080
----------------------------------- ------------
Adjustment for rents recognised
in advance and lease
--------------------------------- ------------
incentives given to tenants 746,920
----------------------------------- ------------
Total property portfolio
valuation at 31 March 2017 59,738,000
----------------------------------- ------------
GBP
--------------------------------- ------------
Carrying value as at 30
September 2016 73,170,186
----------------------------------- ------------
Adjustment for rents recognised
in advance and lease
--------------------------------- ------------
incentives given to tenants 1,394,601
----------------------------------- ------------
Adjustment for accrued costs
to complete (3,161,787)
----------------------------------- ------------
Total property portfolio
valuation at 30 September
2016 71,403,000
----------------------------------- ------------
The external valuers' valuation was undertaken in accordance
with the Royal Institution of Chartered Surveyors' Valuation
Standards Professional Standards (January 2014) on the basis of
fair value. Fair value is defined in IFRS 13 as the price that
would be received to sell an asset, or paid to transfer a
liability, in an orderly transaction between market participants at
the measurement date.
The Board determines the Group's valuation policies and
procedures and is responsible for appointing the Group's
independent external valuer. The Audit Committee considers the
valuation process as part of its overall responsibilities.
The fair value of completed investment properties is determined
using the 'investment method' whereby capitalisation yields derived
from market transactions involving comparable investment properties
are applied to the estimated net current and future cash flows
expected to be generated by the investment property, which the
valuer calculates using comparable market information, to obtain a
market rent. The fair value of an investment property undergoing
development is derived using the 'residual method' whereby the
costs required to complete the development, including a notional
cost of finance and an estimated risk factor or 'profit on cost',
are deducted from the net development value arrived at under the
'investment method'.
As part of each half-yearly valuation exercise, the valuations
performed by the external valuers are reviewed by appropriately
qualified members of the Investment Manager's team. This includes
discussion of the assumptions used and judgements made by the
external valuers as well as detailed consideration of the resulting
valuations. Discussion of the valuation process and results then
takes place at a meeting between the external valuers and the
auditors at which the key assumptions and estimates are reviewed
together with consideration of the valuers' reasons for significant
valuation movements on individual properties.
The key unobservable inputs used in the valuation of the Group's
investment properties at 31 March 2017 are as follows:
ERV per square Equivalent
foot (GBP) yield (%)
-------------------------
Investment Fair Valuation Weighted Weighted
property value method Min Max average Min Max average
type
------------- ----------- ----------- ------ ------ --------- ------ ------ ---------
Completed 50,600,000 Investment 16.2 52.5 24.8 5.5 6.3 5.7
Development 7,288,000 Residual 10.0 30.0 20.8 5.5 7.0 6.1
Other* 1,850,000
------------- -----------
Total 59,738,000
------------- -----------
*Comprises land assets that are held at their estimated open
market value.
The key unobservable inputs used in the valuation of the Group's
investment properties at 30 September 2016 were as follows:
ERV per square Equivalent
foot (GBP) yield (%)
-------------------------
Investment Fair Valuation Weighted Weighted
property value method Min Max average Min Max average
type
------------- ----------- ----------- ------ ------ --------- ------ ------ ---------
Completed 50,350,000 Investment 10.0 40.0 20.4 5.5 7.0 5.9
Development 16,353,000 Residual 10.0 30.1 22.2 5.5 7.0 6.0
Other* 4,700,000
------------- -----------
Total 71,403,000
*Comprises land assets that are held at their estimated open
market value.
All other factors remaining constant, an increase in rental
income would increase a valuation whilst increases in nominal
equivalent yield and discount rate would result in a fall in value
and vice versa. However, there are interrelationships between
unobservable inputs as they are determined by market conditions.
Corresponding movements in more than one unobservable input may
have a complementary effect on a valuation whereas unobservable
inputs moving in opposite directions may compensate each other. For
example, where market rents and nominal equivalent yields increase
simultaneously, the overall impact on a valuation may be
minimal.
For investment properties undergoing development, a reduction in
the cost and time to complete a scheme will have a positive impact
on value, assuming all other factors remain constant. Conversely,
if the anticipated cost or time to complete a scheme increased then
this would negatively impact value, assuming all other factors
remain constant.
All of the Group's investment properties are considered to be
'Level 3' in the fair value hierarchy described by IFRS 13. There
have been no transfers of property between hierarchical levels in
the year.
The historic cost of the Group's investment properties as at 31
March 2017 was GBP64,473,583 (31 March 2016: GBP163,745,071; 30
September 2016: GBP89,525,931).
11. Business and other receivables
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 September
2017 2016 2016
============================ =========== =========== ==============
GBP GBP GBP
============================ =========== =========== ==============
Business receivables 367,680 1,584,500 17,719,776
Property sales receivables 8,617,192 21,664,886 13,315,713
Rents recognised
in advance 746,920 484,198 1,394,601
Amounts receivable
under Forward
Funding Agreements 8,991,612 6,282,929 6,342,683
Prepayments and
accrued income 185,454 2,981,285 2,954,371
Other receivables 4,801,578 5,252,219 3,182,955
============================= =========== =========== ==============
23,710,436 38,250,017 44,910,099
============================ =========== =========== ==============
Property sales receivables comprised amounts receivable in
respect of investment property sales that had unconditionally
exchanged prior to the relevant balance sheet date.
Amounts receivable under Forward Funding Agreements relate to
the income referred to in note 4.
All of the above amounts are either receivable within one year
or will be released to the income statement within one year except
for GBP706,386 (31 March 2016: GBP442,936; 30 September 2016:
GBP1,226,188) of lease incentives, included above within business
receivables, which are due to be released to the income statement
in more than one year.
No business receivables were overdue or impaired at the end of
any of the above periods.
12. Cash and cash equivalents
Included within the Group's cash and cash equivalents balance as
at 31 March 2017 is GBP81,798 (31 March 2016: GBP1,471,918; 30
September 2016: GBP554,934) in bank accounts held as security by
the providers of the Group's secured bank debt and hedging
facilities.
13. Business and other payables
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 September
2017 2016 2016
===================== =========== =========== ==============
GBP GBP GBP
===================== =========== =========== ==============
Business payables 5,826,488 2,850,735 23,019,718
Amounts payable
under Forward
Funding Agreements 5,380,838 - 1,270,531
Other creditors 711,150 4,033,261 5,173,997
Accruals and other
amounts payable 3,320,609 7,782,817 9,382,939
====================== =========== =========== ==============
15,239,085 14,666,813 38,847,185
===================== =========== =========== ==============
All of the above amounts are due within one year and none incur
interest.
14. Borrowings: amounts repayable within one year
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 September
2017 2016 2016
======================== =========== =========== ==============
GBP GBP GBP
======================== =========== =========== ==============
Bank loans (secured):
Investment facilities - 5,000,000 5,000,000
Development facilities 25,722,372 37,059,903 25,098,071
------------------------- ----------- ----------- --------------
25,722,372 42,059,903 30,098,071
------------------------ ----------- ----------- --------------
Investment facility:
In March 2017, the development facility that was entered into in
December 2014 (see below) expired. Construction of the investment
property on which the facility was secured completed in the prior
year. On 13 April 2017, the loan was converted into an investment
facility and extended until 5 June 2018.
On 30 March 2015, a group entity entered into an agreement with
Barclays Bank Plc for a one year GBP5,000,000 debt facility which
was extended to 31 March 2017 during the prior year. The loan was
secured against an investment property held within a ring-fenced
sub-group, beyond which the loan is non-recourse. In January 2017,
the investment property to which the loan was secured was sold and
the loan was repaid on the same date.
Development facilities in prior years:
In November 2014 and December 2014, two group entities entered
into agreements with the Royal Bank of Scotland Plc for development
finance facilities. The loans shown at the previous balance sheet
dates above (net of unamortised loan issue costs) were drawn in
tranches as the developments progressed. The property to which the
facility entered into in November 2014 related was sold in
September 2016 and that loan was repaid on the same date. The
facility entered into in December 2014 expired in March 2017 and
was converted into the investment facility described above. The
amount is secured against an investment property held within a
ring-fenced sub-group beyond which the loan is non-recourse.
There were no defaults or other breaches of financial covenants
under the terms of any of the loan agreements referred to above
during the current or prior periods, or in the period since the
balance sheet date.
15. Borrowings: amounts repayable in more than one year
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 September
2017 2015 2016
======================= =========== ============ ===============
GBP GBP GBP
======================= =========== ============ ===============
Bank loans (secured):
Investment facility - 22,678,074 -
----------------------- ----------- ------------ ---------------
Investment facility:
In September 2015 a group entity entered into an agreement with
Royal Bank of Scotland Plc for a three year debt facility. A loan
amounting to GBP23,000,000 (shown above net of unamortised loan
issue costs) was drawn in September 2015 and was secured against an
investment property held within a ring-fenced sub-group beyond
which the loan is non-recourse. The investment property against
which the loan was secured was sold in September 2016 and the loan
was repaid on the same date.
There were no defaults or other breaches of financial covenants
under the terms of the loan agreement referred to above during the
prior period.
16. Derivative financial assets
The Group enters into hedging arrangements to provide protection
against interest rate fluctuations in respect of its bank
borrowings.
On 15 May 2015, in anticipation of future hedging needs, the
Group entered into a cash-settled swaption with the Royal Bank of
Scotland Plc. The instrument referenced a theoretical derivative
effective for three years from 30 September 2016 on a notional
amount of GBP50m at a fixed rate of 1.64%. Under the terms of the
cash-settled swaption contract, if at the effective date the
equivalent market swap rate had been in excess of the effective
rate, the Group would have received a cash payment of the
difference. However, at the effective date the equivalent market
swap rate was below the effective rate and so nothing was payable
by either party. The premium paid was GBP647,500 and the fair value
at the balance sheet date was GBPnil (31 March 2016: GBP4,003; 30
September 2016: GBPnil). No actual derivative instrument was
entered into on 30 September 2016.
17. Stated capital
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 September
2017 2016 2016
============================================================= ============= ============= ==============
Number Number Number
============================================================= ============= ============= ==============
Authorised
Ordinary shares of no Unlimited Unlimited
par value - number Unlimited
============================================================= ============= ============= ==============
Issued and fully paid
Ordinary shares of no
par value - number 168,350,374 168,350,374 168,350,374
============================================================= ============= ============= ==============
Summary of movements GBP GBP
in stated capital GBP
============================================================= ============= ============= ==============
Ordinary shares of no
par value
* total paid on issues to date 266,359,124 266,359,124 266,359,124
* purchased for cancellation:
------------------------------------------------------------- ------------- ------------- --------------
* in prior years (99,309,458) (84,593,108) (84,593,108)
------------------------------------------------------------- ------------- ------------- --------------
* during the period - (14,716,350) (14,716,350)
------------------------------------------------------------- ------------- ------------- --------------
* reclassification of the attributed retained earnings
------------------------------------------------------------- ------------- ------------- --------------
element of share buybacks
undertaken in prior
------------------------------------------------------------- ------------- ------------- --------------
years 10,951,754 10,951,754 10,951,754
------------------------------------------------------------- ------------- ------------- --------------
Redeemable "B" shares
of no par value (see
below)
------------------------------------------------------------- ------------- ------------- --------------
- -
* total paid on issue in the current year -
------------------------------------------------------------- ------------- ------------- --------------
* redemption for cancellation in
------------------------------------------------------------- ------------- ------------- --------------
the current year (19,865,169) - (45,660,107)
------------------------------------------------------------- ------------- ------------- --------------
* redemption for cancellation in
------------------------------------------------------------- ------------- ------------- --------------
prior years (96,832,807) (51,172,700) (51,172,700)
------------------------------------------------------------- ------------- ------------- --------------
Total issue and purchase
costs deducted to date (9,414,088) (9,300,765) (9,402,118)
------------------------------------------------------------- ------------- ------------- --------------
Stated capital per
the balance sheet 51,889,356 117,527,955 71,766,495
============================================================= ============= ============= ==============
Transactions with Shareholders in the prior year - ordinary
shares:
In December 2015 and January 2016, the Company purchased a total
of 15,280,000 of its own shares for cancellation for cash at an
average price of 96.3p per share, including costs.
Transactions with Shareholders in the current year - "B" shares
and dividends:
In November 2016, a return of cash of 18p per ordinary share was
made to Shareholders (the Third Return of Cash). The total Third
Return of Cash of GBP30.3m comprised the following two
elements:
-- GBP19.9m paid to Shareholders holding 110,362,052 of the
Company's ordinary shares. This was paid through the redemption of
an identical amount of redeemable "B" shares which had been
allotted and issued to the holders of these shares at nil pence per
share earlier in October 2016 as one of the options available to
Shareholders under the mechanism of the Third Return of Cash.
-- An interim dividend amounting in total to GBP10.4m (see note
9). This was paid to Shareholders holding the remaining 57,988,322
of the Company's ordinary shares in issue at that date who elected
to receive the Third Return of Cash by way of a cash dividend. The
cash dividend was debited to retained earnings.
Issue and purchase costs of GBP11,970 in respect of the
redeemable "B" shares were incurred in relation to the Third Return
of Cash.
Transactions with Shareholders in prior years - "B" shares and
dividends:
In June 2016, a return of cash of 38p per ordinary share was
made to Shareholders (the Second Return of Cash). The total Second
Return of Cash of GBP64m comprised the following two elements:
-- GBP45.7m paid to Shareholders holding 120,127,432 of the
Company's ordinary shares. This was paid through the redemption of
an identical amount of redeemable "B" shares which had been
allotted and issued to the holders of these shares at nil pence per
share earlier in June as one of the options available to
Shareholders under the mechanism of the Second Return of Cash.
-- An interim dividend amounting in total to GBP18.3m (see note
9). This was paid to Shareholders holding the remaining 48,222,942
of the Company's ordinary shares in issue at that date who elected
to receive the Second Return of Cash by way of a cash dividend. The
cash dividend was debited to retained earnings.
Issue and purchase costs of GBP101,350 in respect of the
redeemable "B" shares were incurred in relation to the Second
Return of Cash.
In June 2015, a return of cash of 45p per ordinary share was
made to Shareholders (the First Return of Cash). The total First
Return of Cash of GBP82.6m comprised the following two
elements:
-- GBP51.2m paid to Shareholders holding 113,717,111 of the
Company's ordinary shares at that date. This was paid through the
redemption of an identical amount of redeemable "B" shares which
had been allotted and issued to the holders of these shares at nil
pence per share earlier in June as one of the options available to
Shareholders under the mechanism of the First Return of Cash.
-- An interim dividend amounting in total to GBP31.5m. This was
paid to Shareholders holding the remaining 69,913,263 of the
Company's ordinary shares in issue at that date who elected to
receive the Return of Cash by way of a cash dividend. The cash
dividend was debited to retained earnings.
Issue and purchase costs of GBP145,056 in respect of the
redeemable "B" shares were incurred in relation to the First Return
of Cash.
18. Net asset value per share
Net asset value per share is calculated as the net assets of the
Group attributable to Shareholders at each balance sheet date,
divided by the number of shares in issue at that date (see note
17).
There are no share options or other equity instruments in issue
and therefore no adjustments need to be made for dilutive or
potentially dilutive equity arrangements.
The European Public Real Estate Association ("EPRA") has issued
guidelines aimed at providing a measure of net asset value ("NAV")
on the basis of long term fair values. The EPRA measure excludes
items that are considered to have no impact in the long term, such
as the fair value of derivative financial instruments and deferred
tax balances.
The Group's EPRA NAV is calculated as follows:
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 September
2017 2016 2016
================ ==================== ===================== ====================
Pence Pence Pence
GBP per GBP per GBP per
share share share
================ =========== ======= ============ ======= =========== =======
Basic NAV 56,619,797 33.63 172,027,857 102.18 95,465,137 56.70
Adjustments:
Fair value
of derivative
financial
instruments - - (4,003) (0.00) - -
Deferred
tax balances 111,363 0.07 - - - -
EPRA NAV 56,731,160 33.70 172,023,854 102.18 95,465,137 56.70
================ =========== ======= ============ ======= =========== =======
19. Related party transactions and balances
Interests in shares
The interests of the Directors and their families in the share
capital of the Company are as follows:
Ordinary shares
======================================
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 September
2017 2016 2016
=============== ========== ========== ==============
Number Number Number
=============== ========== ========== ==============
Phil Wrigley 447,748 447,748 447,748
Steve Webb 319,046 243,385 319,046
Danny Kitchen 622,927 467,927 622,927
Alastair
Irvine 6,195,306 3,777,569 6,195,306
=============== ========== ========== ==============
The interests disclosed above include both direct and indirect
interests in shares. The Return of Cash to Shareholders in the
period resulted in the Directors receiving an aggregate amount of
GBP1,365,305 (Period to 31 March 2016: GBPnil; year ended 30
September 2016: GBP1,875,919) on the same terms as the other
Shareholders of the Company.
The group headed by LXB(3) Partners LLP, which includes LXB
Adviser LLP and its wholly owned subsidiaries, is a related party
of the Company. LXB Adviser LLP is the Investment Manager to the
Group. At 31 March 2017, the members of LXB(3) Partners LLP (and
their spouses) held an aggregate total of 17,247,977 (31 March
2016: 13,341,440; 30 September 2016: 19,645,344) shares in the
Company. The Return of Cash to Shareholders in the year resulted in
the members of LXB(3) Partners LLP (and their spouses) receiving an
aggregate amount of GBP3,536,162 on the same terms as the other
Shareholders of the Company.
There have been no changes to any of the above shareholdings
between 31 March 2017 and the date of this report.
Fees
Directors' fees payable during the period to 31 March 2017 were
GBP152,500 (period to 31 March 2016: GBP152,500; year ended 30
September 2016: GBP305,000). As at 31 March 2017, GBP76,250 (31
March 2016: GBP76,250; 30 September 2016: GBP76,250) of fees
remained outstanding and are included within business and other
payables (note 13).
Management fees during the period to 31 March 2017 of
GBP2,000,000 (period to 31 March 2016: GBP2,384,290; year ended 30
September 2016: GBP4,684,290) were payable to the group headed by
LXB(3) Partners LLP. No amounts were outstanding at the respective
balance sheet dates.
LXB Adviser LLP is permitted, under the terms of the Investment
Advisory Agreement, to recharge certain costs and expenses incurred
in the discharge of its duties. During the period to 31 March 2017,
it has recharged costs totalling GBP57,228 (period to 31 March
2016: GBP89,949; year ended 30 September 2016: GBP109,815) to the
Group.
Incentives - carried interest arrangements with LXB(3) Partners
LLP
At a future date, when a cumulative hurdle amount has been
returned to Shareholders, the carried incentive arrangements with
LXB(3) Partners LLP are activated. The carried interest
arrangements with LXB(3) Partners LLP were varied in the prior
year.
The cumulative hurdle amount is calculated by reference to the
net proceeds base amount, which is defined as the NAV of the Group
at 1 January 2016, being GBP177.1m, and a 12% per annum preferred
return thereon (as adjusted for any ordinary shares cancelled as a
consequence of any share buyback programmes undertaken since that
date). Previously, the net proceeds base amount was defined as the
net funds raised from the issue of all ordinary shares (as adjusted
for the ordinary shares cancelled as a consequence of any share
buyback programmes undertaken) and a 12% per annum preferred return
thereon.
Cash returns over and above the cumulative hurdle amount are
shared between Shareholders (50%) and LXB(3) Partners LLP (50%)
until amounts returned to Shareholders are 80% of the total amount
returned. Returns above this level are shared between Shareholders
(80%) and LXB(3) Partners LLP (20%).
As at 31 March 2017, the net proceeds base amount, to which the
12% per annum preferred return is applied, is GBP168.4m (31 March
2016: GBP168.4m; 30 September 2016: GBP168.4m).
The cumulative hurdle amount as at 31 March 2017 is GBP94.2m (31
March 2016: GBP175.0m; 30 September 2016: GBP119.0m).
As the net assets of the Group are less than the cumulative
hurdle amount as at 31 March 2017, no provision for future
incentive payments has been recognised.
20. Post balance sheet events
As described in note 14, on 13 April 2017 the Group converted
its GBP25.7m development loan facility entered into with the Royal
Bank of Scotland Plc into an investment facility and extended the
term of the loan until 5 June 2018.
On 16 May 2017, the Group completed the disposal of a further
part of its investment property land assets at Gloucester to the
Spirit Pub Company for net proceeds of GBP0.45m.
Glossary
AIM A sub-market of the London Stock
Exchange.
CISE The Channel Islands Securities Exchange.
EPRA European Public Real Estate Association.
EPRA EPS An adjusted measure of earnings per
share designed by EPRA to present
underlying earnings from core operating
activities only.
EPRA NAV An adjusted measure of net asset
value designed by EPRA to present
net asset value excluding the effects
of changes in value of financial
instruments held for long term benefit
and the deferred tax effects of those
changes.
EPS Earnings per share, calculated as
earnings after tax divided by the
weighted average number of shares
in issue in the period or year.
Investment LXB Adviser LLP.
Manager
Investment The agreement between LXBRP GP Limited,
Advisory the General Partner of LXB Retail
Agreement Properties Fund LP, and LXB Adviser
LLP under which LXB Adviser LLP provides
investment advice to the Group.
LIBOR The London Interbank Offered Rate,
being the interest rate charged by
one bank to another for lending money.
NAV Net asset value.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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