TIDMPILR
RNS Number : 9005F
Pacific Industrial & Log REIT PLC
23 May 2017
PRELIMINARY RESULTS FOR THE PERIODED 31 MARCH 2017
Pacific Industrial & Logistics REIT plc
("Pacific Industrial & Logistics", the "Company" or the
"Group")
Pacific Industrial & Logistics delivers strong trading
results through its focus on regional UK distribution
Pacific Industrial & Logistics, a REIT focused on smaller
industrial and logistics properties, is pleased to announce its
preliminary results for the period ended 31 March 2017.
Period ended 31 March 2017
--------------------------- --------------
EPRA Earnings (GBPm) 1.1
--------------------------- --------------
EPRA Earnings per share
(p)* 7.8
--------------------------- --------------
Reported profit (GBPm) 4.9
--------------------------- --------------
Revaluation uplift on
investment properties
(GBPm) 3.9
--------------------------- --------------
EPRA NAV per share (p) 116.1
--------------------------- --------------
Total dividends per share
paid or announced in
respect of the period
(p) 6.0
--------------------------- --------------
Highlights
Portfolio
-- Acquisition of GBP39.5 million of industrial and logistics
property at a weighted average net initial yield of 7.9% (excluding
purchaser costs) - full deployment of equity raised since the
Company was admitted to trading on AIM
-- Portfolio valuation at 31 March 2017 of GBP43.4 million,
representing a 9.8% uplift on acquisition price (including
purchaser costs) compared to an annual capital return of 4.2% in
the IPD Industrial Index and (0.1)% in the IPD All Property Index
to 31 March 2017**
-- Portfolio valuation uplift driven by successful asset
management initiatives, including rental uplift across initial
portfolio of 8.6%
-- Portfolio weighted average unexpired lease term of 4.4 years
-- Strong pipeline of further investment opportunities with
similar characteristics to the Company's initial portfolio
NAV, gearing and total shareholder return
-- EPRA NAV per share up 16.1% to 116.1 pence per share from IPO
price of 100.0 pence per share (after absorbing 4.8 pence per share
IPO costs)
-- 42.4% loan-to-value and with a low blended interest cost for
the period ended 31 March 2017 of 3.3%
-- 22.6% total shareholder return over the period compared to
0.0% annual total shareholder return for FTSE EPRA/NAREIT Index to
31 March 2017
Earnings and dividend
-- EPRA earnings per share of 7.8 pence, reflecting the rapid
deployment of capital into highly income generative assets
-- Declaration of dividend of 3.0 pence per share, taking total
dividends paid or declared in respect of the period ended 31 March
2017 to 6.0 pence per share, reflecting an annualised yield of 6.2%
on the IPO price
-- Dividend covered 1.3x by EPRA earnings per share
Nigel Rich, Chairman of Pacific Industrial & Logistics,
commented:
"The performance of the Group during its first period of trading
has been very strong and gives us great confidence in the prospects
for this coming year and beyond as the Company looks to increase
its scale. I am pleased to announce that the Company is today
declaring a second dividend for the period of 3.0 pence per share,
reflecting the high level of income generation by the Group.
The Company has successfully deployed the equity capital raised
at IPO in April 2016, and the further equity raised in November
2016. We continue to target scale, income and an attractive total
return whilst adhering to the Company's investment policy of
acquiring smaller industrial and logistics properties across the
UK. Our focus is on assets which are located in supply constrained
areas, priced well below the cost of replacement and which
therefore represent a value add opportunity to shareholders.
The industrial and logistics real estate sector remains robust
against a backdrop of continued economic uncertainty. It is the
best performing commercial property sector in 2017 and it continues
to be underpinned by distribution and the changing habits of
consumers and retailers migrating online. As such, retailers
continue to invest in their fulfilment capability, as well as
supply networks. We are well positioned to continue to benefit from
strong structural demand/supply dynamics and to deliver sustainable
earnings and capital growth to our shareholders.
The Manager, whose recognised expertise across UK industrial and
logistics properties is underpinned by a customer-led approach to
securing acquisitions and attracting good quality tenants, is
presently seeing a number of high quality acquisition targets which
meet our investment criteria. We are therefore confident in the
Company's ability to continue to generate attractive, risk adjusted
returns through the cycle."
*Based on the weighted average number of shares in issue from
IPO. The Directors believe that a more appropriate starting point
for calculating the weighted average number of shares in issue is
from 13(th) April 2016, the date the Company was admitted to the
AIM Market of the London Stock Exchange, and when the Company began
trading, rather than the date of incorporation where there was one
Ordinary share in issue.
**IPD Quarterly Universe
For further information regarding Pacific Industrial &
Logistics REIT plc please call:
Pacific Industrial & Logistics
REIT Plc +44 (0) 207 591
Richard Moffitt 1600
Canaccord Genuity Limited
Nominated Adviser and Broker
Bruce Garrow
Charlie Foster +44 (0) 20 7523
Ben Griffiths 8000
Manager's Report
The period since IPO has seen us actively deploy the Company's
equity capital in the acquisition of 13 assets for a total purchase
price of GBP39.5 million. The assets acquired have proven to be
quality investments, with a good geographical spread, diverse
tenancies and present a variety of asset management opportunities
which have the potential to provide both income growth and capital
appreciation.
In uncertain economic times, investors are naturally drawn to
companies that can deliver asset-backed income. Since our IPO, we
have looked to construct a portfolio that offers secure income from
good quality tenants, with the prospect of an attractive total
return through our active asset management initiatives. The Group
raised further capital and expanded the shareholder base in
November 2016 when a combination of new and existing investors
subscribed for GBP11.1 million of equity capital. This capital was
quickly deployed to purchase two well-located regional logistics
properties and reduce the Group's loan-to-value from over 50% to
below 45%.
The Company's deployment of capital raised during the period,
into assets yielding on average 7.9% (excluding purchaser costs),
combined with a 3.3% average interest cost and income enhancing
asset management initiatives have enabled us to deliver EPRA
earnings per share of 7.8 pence.
At the period end, the properties in the portfolio had an
average size of 41,877 square feet, an affordable average rent of
GBP4.65 per square foot and a weighted average unexpired lease term
of 4.4 years. These properties are centred across the Midlands
'Golden Triangle'.
The Group's focus and investment policy is to invest in
well-located, fit-for-purpose (with low obsolescence risk) last
mile or regional logistics facilities in the UK which we are able
to source off-market and at attractive terms to the Group. This was
particularly important in the period after the EU referendum, when
we acquired two attractively priced investments located in
Chesterfield and Leeds.
The properties targeted by the Group display the following
appealing characteristics:
-- A strong tenant financial covenant and evidence of commitment
to remain in occupation (including fit-out, location and strategic
value within the tenant's business model)
-- Quality stock which may be mis-priced by the market and can
be purchased below replacement cost (leveraging the experience of
the Manager to drive stock selection)
-- Opportunity for rental growth and out-performance by way of
asset management, tenant mix and the re-gearing of leases
-- Key locations across the occupational industrial and
logistics market (e.g. proximity to major urban centres and
including the 'Golden Triangle', a preferred logistics region)
Once assets are acquired, the Company's Management then engages
in active asset management in order to leverage and enhance
returns. In particular, the Company's asset management activities
are focused on the following key areas:
-- Exploring the potential to restructure occupational leases,
for example, by removing tenant break clauses to extend lease terms
and by engaging with tenants before any rent reviews
-- Identifying opportunities which may result from a better
understanding of the occupational use of the property, the
suitability of the building in the context of the tenant's business
plan and assessing the tenant's capital expenditure (since this can
indicate commitment to the building)
-- Potentially funding key tenant fit-out or other capital
expenditure (including: mezzanine floors; racking; improvements in
heating, lighting, power upgrades; and energy efficiency
initiatives such as solar panel installation) which could deliver
more favourable lease terms
We have, in conjunction with the Company's tenants, already been
actively implementing our asset management techniques on the
portfolio assembled to date. Examples of such asset management
activities implemented during the year include:
(i) Completing a rent review and entering into a lease extension
with a tenant, increasing the annual rent psf. by 38%;
(ii) Introducing new lease terms on a leasehold property
allowing for the build out and use of the existing property as a
retail outlet and hence providing the potential for a significant
uplift in the rental income arising from the asset;
(iii) Entering into a new long lease following a full
refurbishment by a tenant, extending the lease term to 20
years;
(iv) Signing a new lease with a tenant in Bedford at a market
leading rent of GBP6.26 psf., increasing the annual rent by 56%;
and
(v) Acquiring a parcel of land to the rear of an existing unit
which, subject to planning permission, will allow for an additional
15,000 square foot of light industrial development to an existing
site.
The active asset management we have employed has already
delivered enhanced portfolio returns, with the initial portfolio's
overall rental income increasing by 8.6%. Further, these metrics
have positively impacted the valuation of the Group's portfolio,
which at the year-end was valued by the Group's independent valuers
at GBP43.4 million, compared to an aggregate acquisition price of
GBP39.5 million. The valuation uplift of GBP3.9m (9.8%) is over a
weighted average ownership period of 10 months and we believe there
is further significant upside for the portfolio.
We will continue acquiring attractive assets with the potential
for rental growth in light of the current market dynamic of
diminishing supply and increasing occupier demand. Our focus is on
maintaining and building existing tenant relationships to enhance
our reputation as a leader in the smaller lot size market.
Richard Moffitt, Christopher Turner
Manager
23 May 2017
Financial Overview
Consolidated Statement of Comprehensive Income
31 Mar
2017
Note GBP'000
-------------------------------------------------------------------------- ----- --------
Rental income 5 2,277
Cost of sales (25)
Gross income 2,252
Administrative and other expenses (499)
Long-term investment plan charge 11 (34)
-------------------------------------------------------------------------- ----- --------
Operating profit before changes in fair value of
investment properties and interest rate derivatives 1,719
Changes in fair value of investment property 13 3,881
-------------------------------------------------------------------------- ----- --------
Operating profit 6 5,600
Finance income 2
Finance expense 8 (600)
Changes in fair value of interest rate derivatives (115)
-------------------------------------------------------------------------- ----- --------
Profit before taxation 4,887
-------------------------------------------------------------------------- ----- --------
Tax credit/(charge) for the period 9 -
-------------------------------------------------------------------------- ----- --------
Profit and total comprehensive income (attributable to the shareholders) 4,887
-------------------------------------------------------------------------- ----- --------
Earnings per share - basic * 10 46.80p
Earnings per share - diluted * 10 46.40p
* Earnings per share ("EPS") is based on the profit attributable
to ordinary shareholders divided by the weighted average number of
ordinary shares outstanding during the period, in accordance with
IAS 33.
Consolidated Statement of Financial Position
31 Mar
2017
Note GBP'000
---------------------------------------------- ----- ---------
Non-current assets
Investment property 13 43,420
---------------------------------------------- ----- ---------
Total non-current assets 43,420
Current assets
Trade and other receivables 16 535
Cash and cash equivalents 17 1,680
---------------------------------------------- ----- ---------
Total current assets 2,215
---------------------------------------------- ----- ---------
Total assets 45,635
---------------------------------------------- ----- ---------
Current liabilities
Trade and other payables 18 (632)
Deferred rental income (676)
---------------------------------------------- ----- ---------
Total current liabilities (1,308)
Non-current liabilities
Long term rent deposits (645)
Interest rate derivatives 20 (115)
Bank borrowings 19 (18,196)
---------------------------------------------- ----- ---------
Total non-current liabilities (18,956)
---------------------------------------------- ----- ---------
Total liabilities (20,264)
---------------------------------------------- ----- ---------
Total net assets 25,371
---------------------------------------------- ----- ---------
Equity
Share capital 23 215
Share premium 24 20,454
Share warrant reserve 25 91
Other reserves 11 34
Retained earnings 27 4,577
---------------------------------------------- ----- ---------
Total equity 25,371
---------------------------------------------- ----- ---------
Net Asset Value per share basic ** 29 118.26p
Net Asset Value per share diluted ** 29 115.64p
**NAV at 31 March 2017 is 118.26p. Adjusted NAV is 118.80p
(adding back the fair-value movement of an interest rate swap).
Diluted NAV (adjusting for warrants in issue) is 115.64p and
Adjusted Diluted NAV is 116.11p which is EPRA NAV at period
end.
Company Statement of Financial Position
31 Mar
2017
Note GBP'000
----------------------------- ----- ------------------------
Non-current assets
Investment in subsidiaries 14 11,800
----------------------------- ----- ------------------------
Total non-current assets 11,800
Current assets
Trade and other receivables 16 11,314
Cash and cash equivalents 17 66
----------------------------- ----- ------------------------
Total current assets 11,380
----------------------------- ----- ------------------------
Total assets 23,180
----------------------------- ----- ------------------------
Current liabilities
Trade and other payables 18 (232)
----------------------------- ----- ------------------------
Total current liabilities (232)
Total liabilities (232)
----------------------------- ----- ------------------------
Total net assets 22,948
----------------------------- ----- ------------------------
Equity
Share capital 23 215
Share premium 24 20,454
Share warrant reserve 25 91
Other reserves 11 34
Retained earnings 27 2,154
----------------------------- ----- ------------------------
Total equity 22,948
----------------------------- ----- ------------------------
Consolidated Cash Flow Statement
31 Mar
2017
Note GBP'000
------------------------------------------------------------- ----- ----------------
Cash flows from operating activities
Profit for the period (attributable to equity shareholders) 4,887
Less: changes in fair value of investment property (3,881)
Add: changes in fair value of interest rate derivatives 115
Less: finance income (2)
Add: finance expense 600
Long-term investment plan 34
Increase in trade and other receivables (513)
Increase in trade and other payables 551
------------------------------------------------------------- ----- ----------------
Cash generated from operations 1,791
Net cash flow generated from operating activities 1,791
------------------------------------------------------------- ----- ----------------
Investing activities
Purchase of investment properties 13 (12,022)
Acquisition of a subsidiary, net of cash acquired 15 (26,135)
Net cash flow used in investing activities (38,157)
------------------------------------------------------------- ----- ----------------
Financing activities
Cost of share issue (693)
Proceeds from issue of ordinary share capital 21,453
Proceeds from issue of preference shares 2,000
Redemption of preference shares and interest payment (2,076)
Bank borrowings drawn 20,475
Bank borrowings repaid (2,070)
Loan arrangement fees paid (287)
Interest paid (446)
Dividends paid to equity holders 12 (310)
------------------------------------------------------------- ----- ----------------
Net cash flow generated from financing activities 38,046
------------------------------------------------------------- ----- ----------------
Net increase in cash and cash equivalents for the period 1,680
------------------------------------------------------------- ----- ----------------
Cash and cash equivalents at start of period -
------------------------------------------------------------- ----- ----------------
Cash and cash equivalents at end of period 1,680
------------------------------------------------------------- ----- ----------------
Company Cash Flow Statement
31 Mar
2017
Note GBP'000
-------------------------------------- ----- ---------
Cash flows from operating activities
Profit for the period (attributable
to equity holders) 2,464
Add: finance expense 76
Long-term investment plan 34
Increase in amounts due from
Group undertakings (11,308)
Increase in trade and other
receivables (4)
Increase in trade and other
payables 230
-------------------------------------- ----- ---------
Cash used in operations (8,508)
-------------------------------------- ----- ---------
Net cash flow used in operating
activities (8,508)
-------------------------------------- ----- ---------
Investing activities
Acquisition of subsidiary, net
of cash acquired 14 (11,800)
-------------------------------------- ----- ---------
Net cash flow used in investing
activities (11,800)
-------------------------------------- ----- ---------
Financing activities
Proceeds from issue of ordinary
share capital 21,453
Proceeds from issue of preference
shares 2,000
Redemption of preference shares
and interest payment (2,076)
Cost of share issue (693)
Dividends paid to equity holders 12 (310)
-------------------------------------- ----- ---------
Net cash flow generated from
financing activities 20,374
-------------------------------------- ----- ---------
Net increase in cash and cash
equivalents for the period 66
-------------------------------------- ----- ---------
Cash and cash equivalents at
start of period -
-------------------------------------- ----- ---------
Cash and cash equivalents at
end of period 66
-------------------------------------- ----- ---------
Consolidated Statement of Changes in Equity
Share
Share Share warrant Other Retained
capital premium reserves reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- --------- --------- --------- --------
8 December 2015 - - - - - -
----------------------------- -------- -------- --------- --------- --------- --------
Profit for the period - - - - 4,887 4,887
----------------------------- -------- -------- --------- --------- --------- --------
Total comprehensive income - - - - 4,887 4,887
Dividends to shareholders - - - - (310) (310)
Long term incentive plan - - - 34 - 34
Issue of Ordinary Shares 215 20,454 91 - - 20,760
31 March 2017 215 20,454 91 34 4,577 25,371
----------------------------- -------- -------- --------- --------- --------- --------
Company Statement of Changes in Equity (for the Company, Pacific
Industrial & Logistics REIT plc, since incorporation on 8
December 2015)
Share
Share Share warrant Other Retained
capital premium reserves reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- --------- --------- --------- --------
8 December 2015 - - - - - -
----------------------------- -------- -------- --------- --------- --------- --------
Profit for the period - - - - 2,464 2,464
----------------------------- -------- -------- --------- --------- --------- --------
Total comprehensive income - - - - 2,464 2,464
Dividends to shareholders - - - - (310) (310)
Long term incentive plan - - - 34 - 34
Issue of Ordinary Shares 215 20,454 91 - - 20,760
31 March 2017 215 20,454 91 34 2,154 22,948
----------------------------- -------- -------- --------- --------- --------- --------
Notes to the Preliminary Results
Financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
Companies Act 2006 ("the Act").
The financial information set out in this announcement does not
comprise the Group's statutory accounts for the period ended 31
March 2017.
The statutory accounts for the period ended 31 March 2017 have
not yet been delivered to the Registrar of Companies, nor have the
auditors yet reported on them.
1. Corporate information
Pacific Industrial & Logistics REIT plc (the "Company") and
its subsidiaries (the "Group") carry on the business of property
lettings throughout the United Kingdom. The Company is a public
limited company incorporated and domiciled in England and Wales and
listed on the AIM Market of The London Stock Exchange. The
registered office address is 124 Sloane Street, London, SW1X
9BW.
2. Basis of preparation
The financial statements have been prepared in accordance with
IFRS as adopted by the European Union and, as regards the parent
company financial statements, applied in accordance with the
provisions of the Companies Act 2006.
The Group's financial information has been prepared on a
historical cost basis, except for investment property and
derivative interest rate caps which have been measured at fair
value.
The functional currency of the Group is considered to be pounds
sterling as this is the currency of the primary environment in
which the company operates.
The Company has not presented its own Statement of Comprehensive
Income, as permitted by Section 408 of the Companies Act 2006. The
Company made a profit of GBP2.46 million.
Going concern
The Directors have reviewed the current and projected financial
position of the Group, making reasonable assumptions about future
trading performance. As part of the review, the Group has
considered its cash balances, its debt maturity profile, including
undrawn facilities, and the long term nature of the tenant
leases.
On the basis of this review, and after making due enquiries, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they continue to adopt the
going concern basis is preparing the Annual Report and financial
statements.
Standards issued but not yet effective
The company has not yet applied the following new and revised
IFRSs that have been issued but are not yet effective:
IFRS 9: Financial instruments (effective 1 January 2018)
IFRS 15: Revenue from contracts with customers (effective 1
January 2018)
IFRS 16: Leases (effective 1 January 2019 not yet endorsed by
EU)
The Directors do not anticipate that the adoption of these
standards and interpretations will have a material impact on the
Group's financial statements in the period of initial application,
other than on presentation and disclosure.
3. Significant accounting judgements, estimates and
assumptions
The preparation of the financial statements in conformity with
the generally accepted accounting practices requires management to
make estimates and judgements that affect the reported amounts of
assets and liabilities as well as the disclosure of contingent
assets and liabilities at the statement of financial position date
and the reported amounts of revenue and expenses during the
reporting period.
Business combinations
The Group acquires subsidiaries that own real estate. At the
time of acquisition, the Group considers whether each acquisition
represents the acquisition of a business or the acquisition of an
asset. The Group accounts for an acquisition as a business
combination where an integrated set of activities is acquired in
addition to the property.
Where such acquisitions are not judged to be the acquisition of
a business, they are not treated as business combinations. Rather
the cost to acquire the corporate entity is allocated between
identifiable assets and liabilities of the entity based upon their
relative fair values at the acquisition date. Accordingly, no
goodwill or additional deferred tax arises.
Long-term incentive plan
In determining the fair value of the long-term incentive plan
and the related charge to the statement of comprehensive income,
the group makes assumptions about future events and market
conditions.
In particular, judgement must be formed as to the likely number
of shares that will vest, and the fair value of each award
granted.
The fair value is determined using a valuation model which is
dependent on a number of assumptions of the Group's future dividend
policy and the future volatility in the price of the Group's
shares. Such assumptions are based on publicly available
information and reflects market expectation. Different assumptions
about these factors to those made by the Group could materially
affect the reported value of long-term investment plan.
Details of the Group's long-term investment plan can be found in
note 11.
Fair value of investment property
The market value of investment property is determined by real
estate valuation experts, to be the estimated amount for which a
property should exchange on the date of the valuation in an arm's
length transaction. Each property has been valued on an individual
basis. The valuation experts use recognised valuation techniques
and the principles of IFRS 13.
The valuations have been prepared in accordance with RICS
Valuation - Professional Standards January 2014 (the "Red Book").
Factors reflected include current market conditions, annual
rentals, lease lengths and location. The significant methods and
assumptions used by the valuers in estimating the fair value of
investment property are set out in note 13.
4. Principal accounting policies
The principal accounting policies applied in the preparation of
these interim financial statements are set out below. These
policies, which are also applicable to the financial statements of
the Company, have been consistently applied to all the years
presented.
Basis of consolidation
The financial statements consolidate the accounts of the Company
and all subsidiary undertakings drawn up to the same period
end.
Business combinations
The acquisition of subsidiaries is accounted for using the
acquisition method. The cost of the acquisition is measured at the
aggregate of the fair values of assets given, liabilities incurred
or assumed, and equity instruments issued by the Group in exchange
for control of the acquiree. At the Group level, acquisition costs
are recognised in the Statement of Comprehensive income as
incurred.
The acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3
are recognised at their fair value at the acquisition date.
Subsidiaries are entities which the Group has the power to
govern the financial and operating policies generally accompanying
a shareholding of more than 50% of the voting rights. The existence
and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether
the Group controls another entity.
Subsidiary entities are consolidated from the date on which
control is transferred to the Group and are deconsolidated from the
date on which control ceases. In respect of subsidiaries,
inter-company transactions and unrealised gains on intra-group
transactions are eliminated on consolidation.
The financial information of the subsidiaries is prepared for
the same reporting periods as the parent company, using consistent
accounting policies.
Investment in subsidiaries
Investments in subsidiaries are stated at cost less any
provision for permanent diminution in value. Realised gains and
losses are dealt with through the statement of income and retained
earnings. A review for impairment is carried out if events or
changes in circumstances indicate that the carrying amount may not
be recoverable, in which case an impairment provision is recognised
and charged to the Statement of Comprehensive Income.
Borrowing costs
Borrowing costs in relation to interest charges on bank
borrowings are expensed in the period to which they relate. Fees
incurred in relation to the arrangement of bank borrowings are
capitalised and expensed on a straight line basis over the term of
the loan.
Segmental reporting
IFRS 8 requires operating segments to be identified on the basis
of internal reports that are regularly reported to the chief
operating decision maker to allocate resources to the segments and
to assess their performance. Following the strategic review, the
directors consider there to be only one reportable segment, being
the investment in the United Kingdom of medium size industrial
warehouses.
Investment properties
Investment properties comprises completed property that is held
to earn rentals or for capital appreciation or both.
Investment properties are initially recognised at cost including
transactions costs. Transaction costs include transfer taxes and
professional fees for legal services. Subsequent to initial
recognition investment properties are carried at fair value, as
determined by real estate valuation experts. Gains or losses
arising from change in fair value is recognised in the statement of
comprehensive income in the period in which they arise.
On disposal of an investment property, the difference between
the disposal proceeds and the carrying amount is recognised in the
statement of comprehensive income.
Financial instruments
Financial assets and financial liabilities are recognised in the
Statement of Financial Position when the Group becomes a party to
the contractual provisions of the instrument.
Financial assets
Trade and other receivables are initially recognised at fair
value and subsequently measured at amortised cost, using the
effective interest rate method.
A provision is established for irrecoverable amounts when there
is objective evidence that amounts due under the original payment
terms will not be collected. The amount of any provision is
recognised in the statement of comprehensive income.
Cash and cash equivalents are recognised initially at fair value
and subsequently measured at amortised cost. Cash and cash
equivalents comprise cash in hand, deposits held with banks and
other short-term, highly liquid investments with original
maturities of three months or less.
Financial liabilities
Financial liabilities, equity instruments and warrant
instruments issued by the Group are classified in accordance with
the substance of the contractual arrangements entered into and the
definitions of a financial liability and an equity instrument. An
equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments issued by the Group are recorded at
the proceeds received, net of direct issue costs.
Trade and other payables are initially measured at fair value,
and are subsequently measured at amortised cost using the effective
interest rate method.
Derivative financial instruments
Derivative financial instruments, comprising interest rate caps
and swaps for hedging purposes, are initially recognised at cost
and are subsequently measured at fair value being the estimated
amount that the Group would receive or pay to terminate the
agreement at the period end date, taking into account current
interest rate expectations and the current credit rating of the
Group and its counterparties. The gain or loss at each fair value
measurement date is recognised in the statement of comprehensive
income. Premiums payable under such arrangements are initially
capitalised into the statement of financial position, subsequently
they are remeasured and held at their fair values.
Hedge accounting has not been applied in these financial
statements.
Revenue recognition
Revenue is recognised to the extent that it is probable that
economic benefits will flow to the Company and the revenue can be
reliably measured. Revenue is measured at the fair value of the
consideration received, excluding discounts, rebates, VAT and other
sales taxes or duties.
Rental income from operating leases on properties owned by the
Company is accounted for on a straight-line basis over the term on
the lease. Rental income excludes service charges and other costs
directly recoverable from tenants.
Lease incentives are amortised on a straight-line basis over the
term of the lease.
Leases
Leases where substantially all of the risks and rewards of
ownership are transferred to the lessee are classified as finance
leases. All others are deemed operating leases. Under operating
leases, properties leased to tenants are accounts for as investment
properties.
Long-term incentive plan
There is a Long Term Incentive Plan ("LTIP") in place whereby
Pacific Industrial LLP, an affiliate of Pacific Capital Partners
Limited (the "Manager") has subscribed for A Ordinary shares issued
in Pacific Industrial & Logistics Limited. Under the terms of
the LTIP, the Company is obliged to acquire the A Ordinary share
and B Ordinary shares in Pacific Industrial & Logistics
Limited, in return for services provided by Pacific Industrial LLP,
subject to certain conditions.
The fair value of the long-term incentive plan is calculated at
the grant date using the Monte Carlo Model. The resulting cost is
charged to the Statement of Comprehensive Income over the vesting
period. The value of the charge is adjusted to reflect expected and
actual levels of vesting.
Preference shares
Preference shares issued by the Company are classified in
accordance with the contractual arrangements entered into. Issued
preference shares that pay a fixed dividend or have a mandatory
redemption feature at a future date are recognised within
liabilities.
Taxation
Taxation on the profit or loss for the period not exempt under
UK REIT regulations comprises current and deferred tax. Current tax
is expected tax payable on any non-REIT taxable income for the
period, using tax rates enacted or substantively enacted at the
period end date, and any adjustment to tax payable in respect of
previous years.
Dividends
Dividends on equity shares are recognised when they become
legally payable. In the case of interim dividends, this is when
paid. In the case of final dividends, this is when approved by the
shareholders at the Annual General Meeting.
5. Revenue
The Group is involved in UK property ownership and letting and
is considered to operate in a single geographical and business
segment. The total revenue of the Group for the year was derived
from its principal activity, being that of property lettings.
6. Operating profit
Operating profit is stated after charging:
31 March
2017
GBP'000
---------------------------------------------------------------- -------------------------
Directors' remuneration (note 7) 41
Auditor's fees
- Fees payable for the audit of the Company's annual accounts 11
- Fees payable for the audit of the Company's subsidiaries 19
- Fees payable for audit related services 12
- Fees payable for non-audit related services 7
----------------------------------------------------------------- -------------------------
Total Auditor's fees 49
Long-term investment plan charge (note 11) 34
----------------------------------------------------------------- -------------------------
The Auditor also received GBP67,785 in respect of providing
reporting accountant and tax services in connection with the
initial listing of the Company. These fees have been treated as
share issue expenses and offset against share premium.
7. Directors' remuneration
31 March
2017
GBP'000
------------------------------- ---------
Directors' fees 38
Employer's National Insurance 3
-------------------------------- ---------
41
------------------------------- ---------
A summary of the Directors' emoluments, including the
disclosures required by the Companies Act 2006, is set out in the
Directors' Report.
Two directors are also set to benefit from the Long-term
incentive plan (LTIP). For further information refer to related
party transactions in note 28.
8. Finance expense
31 March
2017
GBP'000
--------------------------------------------------- -----------------------
Interest on bank borrowings 446
Amortisation of loan arrangement fees 78
Interest on preference shares 76
---------------------------------------------------- -----------------------
600
--------------------------------------------------- -----------------------
Changes in fair value of interest rate derivative 115
---------------------------------------------------- -----------------------
115
--------------------------------------------------- -----------------------
9. Taxation
As a REIT, the Group is exempt from corporation tax on the
profits and gains from its property investment business, provided
it continues to meet certain conditions as per REIT regulations.
For the period ending 31 March 2017, the Group did not have any
non-qualifying profits and accordingly there is no tax charge in
the period. Any non-qualifying profits and gains however will
continue to be subject to corporation tax.
10. Earnings per share
The calculation of the basic earnings per share (EPS) was based
on the profit attributable to ordinary shareholders divided by the
weighted average number of ordinary shares outstanding during the
period, in accordance with IAS 33.
31 March
2017
GBP'000
------------------------------------------------------------------------------------------- -----------
Profit attributable to Ordinary Shareholders
Total comprehensive income (GBP'000) 4,887
-------------------------------------------------------------------------------------------- -----------
Weighted average number of Ordinary Shares in issue 10,441,474
Basic earnings per share (pence) 46.80p
-------------------------------------------------------------------------------------------- -----------
Number of diluted shares under option/warrant 90,510
Weighted average number of Ordinary Shares for the purpose of dilutive earnings per share 10,531,984
-------------------------------------------------------------------------------------------- -----------
Diluted earnings per share (pence) 46.40p
-------------------------------------------------------------------------------------------- -----------
The ordinary number of shares is based on the time weighted
average number of shares throughout the period since IPO.
At 31 March 2017, the Company had 3,017,000 warrant shares in
issue. Each warrant holder has the right to subscribe for new
Ordinary shares on the basis of one new Ordinary share for each
warrant held at a strike price of 97.00 pence per Ordinary share.
The dilutive nature of the share is 3.00 pence per share.
During the period from 8 December 2015 to 12 April 2016, the
Company had 1 Ordinary share in issue and was dormant. The Company
has calculated earnings per share in accordance with IAS 33,
however, in the opinion of the Directors this does not reflect
accurately the true earnings per share over the period.
The Directors believe that a more appropriate starting point for
calculating the weighted average number of shares in issue would be
13 April 2016, the date the Company was admitted to AIM Market of
the London Stock Exchange and when the Company began trading.
31 March
2017
GBP'000
------------------------------------------------------------------------------------------- -----------
Profit attributable to Ordinary Shareholders
Total comprehensive income (GBP'000) 4,887
-------------------------------------------------------------------------------------------- -----------
Weighted average number of Ordinary Shares in issue from 13 April 2016 14,238,374
Basic earnings per share (pence) 34.32p
-------------------------------------------------------------------------------------------- -----------
Number of diluted shares under option/warrant 90,510
Weighted average number of Ordinary Shares for the purpose of dilutive earnings per share
from 13 April 2016 14,328,884
-------------------------------------------------------------------------------------------- -----------
Diluted earnings per share (pence) 34.10p
-------------------------------------------------------------------------------------------- -----------
The Adjusted Earnings Per Share ("Adjusted EPS"), is a
performance measure used by the Board to assess the Group's
operational performance. The adjustment removes non-cash items
credited or charged to the Consolidated Statement of Comprehensive
Income and uses a weighted average number of shares from the date
of IPO, 13 April 2016, through to 31 March 2017.
31 March
2017
GBP'000
------------------------------------------------------------------------------------------- -----------
Profit attributable to Ordinary Shareholders
Total comprehensive income (GBP'000) 4,887
Adjustments to include:
Changes in fair value of investment property (3,881)
Changes in fair value of interest rate derivatives 115
-------------------------------------------------------------------------------------------- -----------
Adjusted total comprehensive income (GBP'000) 1,121
-------------------------------------------------------------------------------------------- -----------
Weighted average number of Ordinary Shares in issue from 13 April 2016 14,238,374
Adjusted basic earnings per share (pence) 7.87p
-------------------------------------------------------------------------------------------- -----------
Number of diluted shares under option/warrant 90,510
Weighted average number of Ordinary Shares for the purpose of dilutive earnings per share
from 13 April 2016 14,328,884
-------------------------------------------------------------------------------------------- -----------
Adjusted diluted earnings per share (pence) 7.82p
-------------------------------------------------------------------------------------------- -----------
11. Long-term incentive plan (LTIP)
The Company has a Long-Term Incentive Plan (LTIP), accounted for
as an equity settled share based payment. At 31 March 2017 Pacific
Industrial LLP, an affiliate of Pacific Investments Limited, has
subscribed for 1,000 A Ordinary Shares of GBP0.01 each 1,000 B
Ordinary Shares of GBP0.01 each issued in Pacific Industrial &
Logistics Limited, a subsidiary of the Company, as detailed.
Fair Value at Grant Charge for the Period
Date options granted Class of Share Number GBP'000 GBP'000
---------------------- ---------------- -------------------- ----------------------- ------------------------
April 2016 A Ordinary 1,000 76 25
April 2016 B Ordinary 1,000 43 9
----------------------- --------------- -------------------- ----------------------- ------------------------
119 34
--------------------------------------- -------------------- ----------------------- ------------------------
1. The Company is obliged to acquire the A Ordinary Shares and B
Ordinary Shares on the third and fifth anniversary of Admission
respectively (or on a change of control of the Company) in return
for Ordinary Shares (at the prevailing market value) or, at the
election of the Company for cash.
2. On the third anniversary of Admission the holders of the A
Ordinary Shares shall receive, in aggregate the greater of: (i)
GBP10 multiplied by the number of A Ordinary Shares in issue; and
(II) 20 per cent. of the increase in market value of an Ordinary
Share (adjusted to take dividends and other distributions into
account) above the Issue Price increased by an 8 per cent.
compounding hurdle from Admission multiplied by the number of
Ordinary Shares in issue.
3. On the fifth anniversary of the IPO, the Company will acquire
the B Ordinary Shares from Pacific Industrial LLP. The price that
the Company will acquire these B Ordinary Shares will be an amount
equal to 20 per cent. of the increase in the price of an Ordinary
Share since the higher of: (i) the IPO above an 8 per cent.
compounding hurdle from Admission; and (ii) the third anniversary
of Admission (again adjusted to take dividends and other
distributions into account), above an 8 per cent. compounding
hurdle from the third anniversary multiplied by the number of
Ordinary shares then in issue.
12. Dividends
31 March
2017
GBP'000
------------------------------------------------------------------ ---------------------
Equity dividends on ordinary shares
- Interim dividend for the period ended 31 September 2016: 3.0p 310
310
------------------------------------------------------------------ ---------------------
The Directors propose that the Company pays a second interim
dividend relating to the period ended 31 March 2017 of 3.0 pence
per ordinary share. This dividend has not been included in these
financial statements. The second interim dividend was approved on
22 May 2017 and is due to be paid on or around 28 July 2017 to
shareholders on the register at the close of business on 2 June
2017.
13. Investment properties
In accordance with IAS 40 "Investment Property", investment
property is carried at its fair value as determined by an external
valuer. This valuation has been conducted by CBRE and has been
prepared as at 31 March 2017, in accordance with the RICS valuation
- Professional Standards January 2014 (the "Red Book").
The valuations have been prepared in accordance with those
recommended by the International Valuation Standards Committee and
are consistent with the principles in IFRS 13.
Investment Investment
properties properties
freehold leasehold Total
GBP'000 GBP'000 GBP'000
------------------------------------- ------------------------- ------------------------- -------------------------
As at 1 April 2016 - - -
Property additions through business
combinations 25,312 2,205 27,517
Property additions through
acquisitions 12,022 - 12,022
Change in fair value during the
period 3,706 175 3,881
------------------------------------- ------------------------- ------------------------- -------------------------
As at 31 March 2017 41,040 2,380 43,420
------------------------------------- ------------------------- ------------------------- -------------------------
Total rental income for the period recognised in the Statement
of Comprehensive income amounted to GBP2,277,101.
Further information relating to property valuation techniques
have been disclosed in note 21.
14. Investments
Investments are analysed as follows:
Group Company
2016 2016
GBP'000 GBP'000
-------------------------------------------- ----------------------- ------------------
At 8 December 2015 - -
Increase in investments via share purchase - 11,800
At 31 March 2017 - 11,800
--------------------------------------------- ----------------------- ------------------
Details of the Group's subsidiary undertakings as at 31 March
2017, all of which are included in the consolidated financial
statements, are given below.
Company Name Country Principal Effective
of Incorporation Activity Group Interest
--------------------------- ------------------- ----------------- ----------------
Pacific Industrial England
& Logistics Limited and Wales Holding Company 99.98%
Pacific Industrial
& Logistics Acquisitions England
(1) Limited and Wales Holding Company 99.98%
England Property
Alanchoice Limited and Wales Letting 99.98%
--------------------------- ------------------- ----------------- ----------------
The registered office address of all the entities listed above
is 124 Sloane Street, London, SW1X 9BW.
15. Business combinations
On 14 April 2016, the Group obtained sole control of Alanchoice
Limited, a property letting company incorporated in England and
Wales, through the acquisition of the entire issued share capital
in the company. The acquisition increased the Group's owned
property portfolio by GBP27.5m (including purchaser costs of
GBP0.5m), comprising 11 assets.
The table below sets out the provisional fair values to the
Group in respect of this acquisition.
Book Value Fair Value Adjustments Total
GBP'000 GBP'000 GBP'000
---------------------------------------- --------------------- ------------------------- -----------------------
Investment properties 27,000 517 27,517
Cash 1,382 - 1,382
Other receivables 247 (225) 22
Other liabilities (1,660) 256 (1,404)
-----------------------------------------
Total 26,969 548 27,517
----------------------------------------- --------------------- ------------------------- -----------------------
Net cash outflow arising on
acquisition:
Total consideration 27,517
Cash and cash equivalents acquired (1,382)
----------------------------------------- --------------------- ------------------------- -----------------------
Cash consideration net of cash acquired 26,135
----------------------------------------- --------------------- ------------------------- -----------------------
For the period from 14 April 2016 to 31 March 2017, Alanchoice
Limited contributed GBP2,277,101 of turnover and GBP5,924,353
profit for the period to the Group.
16. Trade and other receivables
Group Company
31 March 31 March
2017 2017
GBP'000 GBP'000
------------------------------------- ------------------------- -------------------------
Trade receivables 492 -
Other receivables 6 -
Amounts due from group undertakings - 11,308
Prepayments and accrued income 37 6
535 11,314
------------------------------------- ------------------------- -------------------------
Trade receivables are due within 30 days of the date at which
the invoice is generated and are not interest bearing in nature.
All trade receivables relate to amounts that are less than 30 days
overdue as at the period end date. Due to their short maturities,
the fair value of trade and other receivables approximates their
fair value.
17. Cash and cash equivalents
Group Company
31 March 31 March
2017 2017
GBP'000 GBP'000
--------------------------- -------------------- -----------------------
Cash and cash equivalents 1,680 66
1,680 66
--------------------------- -------------------- -----------------------
Group cash and cash equivalents include GBP0.67 million of
restricted cash in the form of rental deposits held on behalf of
tenants.
18. Trade and other payables
Group Company
31 March 31 March
2017 2017
GBP'000 GBP'000
----------------------------------- ------------------------- -------------------------
Falling due in less than one year
Trade and other payables 284 95
Social security and other taxes 87 22
Accruals 235 10
Other creditors - 105
Rent deposits 26 -
632 232
----------------------------------- ------------------------- -------------------------
The Group has financial risk management policies in place to
ensure that all payables are paid within the credit timeframe. Due
to their short maturities, the fair value of trade and other
payables approximates their fair value.
19. Bank borrowings
Any associated fees in arranging the bank borrowings that are
unamortised as at the period end are offset against amounts drawn
on the facilities as shown in the following table:
31 March
2017
GBP'000
---------------------------------------------------------------------------- ---------
Falling due in more than one year
Bank borrowings drawn: due in more than one year 18,405
Less: unamortised costs (209)
----------------------------------------------------------------------------- ---------
Total bank borrowings per the Consolidated Statement of Financial Position 18,196
----------------------------------------------------------------------------- ---------
On 13 April 2016, the Group and Santander UK plc entered into a
facility agreement pursuant to which Santander UK plc has agreed to
provide the Group with a loan facility of GBP50 million for a term
of three years.
Bank borrowings are secured by charges over investment
properties held by certain asset holding subsidiaries, providing
the lender with a maximum loan to value of 60% on those properties
specifically charged to it and the interest cover will be at least
235%. Under the terms of the loan, the Group pays interest of 2.1%
above three-month LIBOR pa on the drawn debt. At 31 March 2017,
GBP18.4 million was drawn to fund business and property
acquisitions.
20. Interest rate derivatives
The Group has used interest rate swaps to mitigate exposure to
interest rate risk. The total fair value of these contracts are
recorded in the statement of financial position. The interest rate
derivatives are marked to market by the relevant counterparty banks
on a quarterly basis in accordance with IAS 39. Any movement in the
fair value of the interest rate derivatives are taken to finance
costs in the statement of comprehensive income.
31 March
2017
GBP'000
--------------------------------------------------------- ----------
Non-current liabilities: derivative interest rate swaps (115)
---------------------------------------------------------- ----------
21. Financial risk management
Financial instruments - Group
The Group's financial instruments comprise financial assets and
liabilities that arise directly from its operations; cash and cash
equivalents, trade and other receivables, trade and other payables,
interest rate derivative and bank borrowings. The main purpose of
these financial instruments is to provide finance for the
acquisition and development of the Group's investment property
portfolio.
Book Value Fair Value
31 March 31 March
2017 2017
GBP'000 GBP'000
------------------------------ --------------------- ---------------------
Financial assets
Trade and other receivables 496 496
Cash and short-term deposits 1,680 1,680
-------------------------------- --------------------- ---------------------
Financial liabilities
Trade and other payables (1,130) (1,130)
Bank borrowings (18,196) (18,196)
Interest rate derivatives (115) (115)
-------------------------------- --------------------- ---------------------
Credit risk
Credit risk is the risk of financial loss to the Group if a
client or counterparty fails to meet it contractual
obligations.
The Group's credit risk is primarily attributable to its trade
receivables. The Group has implemented policies that require
appropriate credit checks on potential tenants before lease
agreements are signed. The amount of exposure to any individual
counterparty is subject to a limit, which is reassessed annually by
the board.
Outstanding trade receivables are regularly monitored. The
maximum exposure to credit risk at the reporting date is the
carrying value of each class of financial asset.
Interest rate risk
The Group has both interest bearing assets and interest bearing
liabilities. Interest bearing assets comprise only cash and cash
equivalents which earn interest at a variable rate. The Group's
debt strategy is to minimise the effect of a significant rise in
underlying interest rates by utilising interest rate swaps.
The directors will revisit the appropriateness of this policy
should the Group's operations change in size or nature.
Details of the terms of the Group's borrowings are disclosed in
note 19.
Market risk
Market risk is the risk that the fair values of financial
instruments will fluctuate due to changes in market prices. The
financial instruments held by the Group that are affected by market
risk are principally the Group's cash balances along with an
interest rate cap entered into to mitigate interest rate risk.
Liquidity risk
The Group actively maintains a medium-term debt finance that is
designed to ensure it has sufficient available funds for operations
and committed investments. The Group monitors its levels of working
capital to ensure that it can meet its debt repayments as they fall
due.
The following table shows the contractual maturities of the
Group's financial liabilities, all of which are measured at
amortised cost:
More
6 months 6-12 1-2 2-5 than
or less months years years 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- -------- -------- -------- -------- --------
31 March 2017
Bank borrowings 217 243 481 18,520 - 19,461
Trade and other payables 631 - - 646 - 1,277
-------------------------- --------- -------- -------- -------- -------- --------
848 243 481 19,166 - 20,738
-------------------------- --------- -------- -------- -------- -------- --------
Included within the contracted payments is GBP1.06 million of
bank interest payable up to the point of maturity across the
facility.
Financial instruments - Company
The Company's financial instruments comprise amounts due from
group undertakings, cash and cash equivalents and trade and other
payables.
Book Value Fair Value
31 March 31 March
2017 2017
GBP'000 GBP'000
------------------------------ ----------------------- -----------------------
Financial assets
Investments in subsidiaries 11,800 11,800
Trade and other receivables 11,314 11,314
Cash and short-term deposits 66 66
-------------------------------- ----------------------- -----------------------
Financial liabilities
Trade and other payables (232) (232)
-------------------------------- ----------------------- -----------------------
Fair value hierarchy
The company uses the following hierarchy for determining the
fair value of financial instruments:
Level 1: quoted (unadjusted) prices in active markets for
identical assets and liabilities.
Level 2: inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly or
indirectly.
Level 3: inputs for the asset or liability that are derived from
formal valuation techniques that include inputs for the asset or
liability that are not based on observable market data.
Investment property - level 3
The Group's investment property assets are classified as level
3, as defined by IFRS 13, in the fair value hierarchy. Level 3
inputs for the asset or liability that are derived from formal
valuation techniques that include inputs for the asset or liability
that are not based on observable market data.
The valuation has been prepared on the basis of Fair Value (FV),
in accordance with IFRS 13, which is defined as:
"The price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date."
Fair value, for the purpose of financial reporting under IFRS
13, is effectively the same as Market Value, which is defined
as:
"The estimated amount for which an asset or liability should
exchange on the valuation date between a willing buyer and a
willing seller in an arm's length transaction, after property
marketing and where the parties had acted knowledgeably, prudently
and without compulsion."
Various assumptions were made in the determination of the Market
Value, namely; tenure, letting, taxation, town planning and the
condition and repair of the properties and sites.
A 5% increase in Estimated Rental Value ("ERV") would increase
the property portfolio valuation by GBP2.19m and a 5% decrease
would decrease the property portfolio valuation by GBP2.16m.
Similarly, a decrease in Net Initial Yield ("NIY") by 0.25% would
increase the property portfolio valuation by GBP1.72m and an
increase of 0.25% would decrease the property portfolio valuation
by GBP1.60m.
22. Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and continues to qualify for UK
REIT status.
The Group defines capital as being share capital plus reserves.
The Board of Directors monitors the level of capital as compared to
the Group's debt facility and adjusts the ratio of debt to capital
as is determined to be necessary, by issuing new shares, reducing
or increasing debt, paying dividends and returning capital to
shareholders.
The Directors intend that the Group will maintain a conservative
level of aggregate borrowings with a medium-term target of 45% of
the Group's gross assets.
23. Share capital
31 March 31 March
2017 2017
Number GBP'000
--------------------------------------------- ------------------------- -------------------------
Issued and fully paid up at 1p each 21,452,210 215
---------------------------------------------- ------------------------- -------------------------
At beginning of period - -
Issued and fully paid - 8 December 2015 1 -
Redeemed at par value - 13 April 2016 (IPO) (1) -
Issued and fully paid - 13 April 2016 (IPO) 10,317,910 103
Issued and fully paid - 28 November 2016 11,124,300 111
Issued and fully paid - 1 February 2017 10,000 1
At 31 March 2017 21,452,210 215
---------------------------------------------- ------------------------- -------------------------
On 13 April 2016, Pacific Industrial & Logistics REIT plc
raised GBP10.3 million through its IPO and the Ordinary Shares
issued were admitted to the AIM Market of The London Stock Exchange
at an issue price of 100 pence per share.
On 28 November, Pacific Industrial & Logistics raised a
further GBP11.1 million through the issue of 11,124,300 Ordinary
shares at an issue price of 100 pence per share.
On 1 February 2017, 10,000 warrant shares were redeemed for an
issue price of 97 pence per share.
24. Share premium
Share premium relates to amounts subscribed for share capital in
excess of nominal value less any associated issue costs that have
been capitalised.
31 March
2017
GBP'000
----------------------------------------------- -------------------------
Balance at the beginning of the period -
Share premium on the issue of ordinary shares 21,147
Share issue costs (693)
------------------------------------------------ -------------------------
20,454
----------------------------------------------- -------------------------
25. Share warrant reserve
31 March 31 March
2017 2017
Number GBP'000
------------------------------ ----------- ---------
At beginning of period - -
Issued - 13 April 2016 (IPO) 3,027,000 92
Redeemed - 1 February 2017 (10,000) (1)
At 31 March 2017 3,017,000 91
------------------------------- ----------- ---------
At 31 March 2017, there were 3,017,000 warrant shares in issue.
Each warrant holder has the right to subscribe for new Ordinary
shares on the basis of one new Ordinary share for each warrant held
at a strike price of 97 pence per Ordinary share.
26. Operating leases
The Group as lessor
Future aggregate minimum rentals receivable under
non-cancellable operating leases are:
< 1 year 2 - 5 years > 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- ------------ ---------- ---------
31 March 2017 2,632 3,654 2,440 8,726
--------------- --------- ------------ ---------- ---------
27. Retained earnings
Retained earnings relates to all other net gains and losses and
transactions with owners (e.g. dividends) not recognised
elsewhere.
31 March
2017
GBP'000
--------------------------------------------------------------- ---------
Balance at the beginning of the period -
Retained profit for the period 4,887
First interim dividend for the period ended 30 September 2016 (310)
Balance at end of period 4,577
----------------------------------------------------------------- ---------
28. Related party transactions
The terms and conditions of the Investment Management Agreement
are described in the Management Engagement Committee Report. During
the period, the amount paid for services provided by Pacific
Capital Partners Limited (the "Manager") totalled GBP0.13 million.
The total amount outstanding at the period end relating to the
Investment Management Agreement was GBP0.08 million.
Long-term incentive plan
Under the terms of the Company's long-term incentive plan, at 31
March 2017 Pacific Industrial LLP, an affiliate of Pacific
Investments Limited has subscribed for shares in Pacific Industrial
& Logistics Limited. Further details have been provided in note
11.
Acquisition of investment properties
During the period, the Group incurred fees totalling GBP106,640
from M1 Agency LLP, a partnership in which Richard Moffitt is a
designated member, in relation to the acquisition of two investment
properties. The fees were charged in line with standard commercial
property terms.
For both transactions listed above, Richard Moffitt's benefit is
derived from the profit allocation he receives from M1 Agency LLP
as a member and not from the transaction, which has been approved
by the board.
Transactions with subsidiaries
The subscription of shares in Pacific Industrial & Logistics
Limited by Pacific Industrial LLP (the Manager) has diluted the
Company's effective ownership in all subsidiary undertakings to
99.98%. We are required to disclose all inter-company transactions
that took place during the period for all subsidiary undertakings
of the Company that are not 100% owned.
Transactions between the Company and its subsidiaries are in the
normal course of business. Such transactions are eliminated on
consolidation.
During the period fees of GBP380,160 were charged to Pacific
Industrial & Logistics Acquisitions (1) Limited, a subsidiary
undertaking incorporated in England and Wales, from Pacific
Industrial & Logistics REIT plc. At 31 March 2017, GBPnil was
due from Pacific Industrial & Logistics Acquisitions (1)
Limited.
During the period, Pacific Industrial & Logistics REIT plc
carried out transactions with Pacific Industrial & Logistics
Limited, a subsidiary undertaking incorporated in England and
Wales. The total amount of these transactions was a net loan
increase of GBP11,307,591. At 31 March 2017, Pacific Industrial
& Logistics REIT plc was due GBP11,307,591 from Pacific
Industrial & Logistics Limited.
During the period, Pacific Industrial & Logistics Limited
carried out transactions with Pacific Industrial & Logistics
Acquisitions (1) Limited, a subsidiary undertaking incorporated in
England and Wales. The total amount of these transactions was a net
loan increase of GBP11,280,685. At 31 March 2017, Pacific
Industrial & Logistics Limited was due GBP11,280,685 from
Pacific Industrial & Logistics Acquisitions (1) Limited.
During the period, fees of GBP403,999 were charged to Alanchoice
Limited, a subsidiary undertaking incorporated in England and
Wales, from Pacific Industrial & Logistics Acquisitions (1)
Limited. At 31 March 2017, GBPnil was due from Alanchoice
Limited.
During the period, Pacific Industrial & Logistics
Acquisitions (1) Limited carried out transactions with Alanchoice
Limited, a subsidiary undertaking incorporated in England and
Wales. The total amount of these transactions was a net loan
increase of GBP30,230,412. At 31 March 2017, Pacific Industrial
& Logistics Acquisitions (1) Limited was due GBP30,230,412 from
Alanchoice Limited.
During the period, Pacific Industrial & Logistics REIT plc
received a dividend of GBP2,650,00 from Pacific Industrial &
Logistics Limited.
During the period, Pacific Industrial & Logistics Limited
received a dividend of GBP2,700,000 from Pacific Industrial &
Logistics Acquisitions (1) Limited.
During the period, Pacific Industrial & Logistics
Acquisitions (1) Limited received a dividend of GBP3,000,000 from
Alanchoice Limited.
29. Net asset value per share (NAV)
Basic NAV per share is calculated by dividing net assets in the
Consolidated Statement of Financial Position attributable to
Ordinary shareholders by the number of Ordinary shares outstanding
at the end of the period.
Net Asset Values have been calculated as follows:
Basic NAV: 31 March
2017
GBP'000
Net assets per Consolidated Statement of Financial Position (GBP'000) 25,371
------------------------------------------------------------------------ -------------------
Ordinary shares:
Number of Ordinary Shares in issue at 31 March 2017 21,452,210
------------------------------------------------------------------------ -------------------
Basic Net Asset Value per share (pence) 118.26p
------------------------------------------------------------------------ -------------------
At 31 March 2017, there were 3,017,000 warrant shares in issue.
Each warrant holder has the right to subscribe for new Ordinary
shares on the basis of one new Ordinary share for each warrant held
at a strike price of 97 pence per Ordinary share.
Basic diluted NAV: 31 March
2017
GBP'000
Net assets per Consolidated Statement of Financial Position (GBP'000) 25,371
Add: cash received from issued share warrants (GBP'000) 2,926
---------------------------------------------------------------------------------------------- -----------
Diluted Net Asset Value (GBP'000) 28,297
---------------------------------------------------------------------------------------------- -----------
Ordinary shares:
Number of Ordinary Shares for the purpose of dilutive Net Asset Value per share at 31 March
2017 24,469,210
---------------------------------------------------------------------------------------------- -----------
Diluted Net Asset Value per share (pence) 115.64p
---------------------------------------------------------------------------------------------- -----------
The EPRA NAV is seen by the Directors as a fairer reflection of
the Group's financial position. This is calculated by adding back
the derivative interest rate swap to the net assets as at 31 March
2017 per the Consolidated Statement of Financial Position, in
accordance with EPRA guidelines.
Net asset values have been calculated as follows:
EPRA basic NAV 31 March
2017
GBP'000
Net assets per Consolidated Statement of Financial Position (GBP'000) 25,371
Add back: derivative interest rate swaps (GBP'000) 115
------------------------------------------------------------------------ ---------------------
EPRA Net Asset Value (GBP'000) 25,486
------------------------------------------------------------------------ ---------------------
Ordinary shares:
Number of Ordinary Shares in issue at 31 March 2017 21,452,210
------------------------------------------------------------------------ ---------------------
EPRA basic Net Asset Value per share (pence) 118.80p
------------------------------------------------------------------------ ---------------------
EPRA diluted NAV 31 March
2017
GBP'000
EPRA net assets per Consolidated Statement of Financial Position (GBP'000) 25,486
Add: cash received from issued share warrants (GBP'000) 2,926
---------------------------------------------------------------------------------------------- --------------------
EPRA diluted Net Asset Value (GBP'000) 28,412
---------------------------------------------------------------------------------------------- --------------------
Ordinary shares:
Number of Ordinary Shares for the purpose of dilutive Net Asset Value per share at 31 March
2017 24,469,210
---------------------------------------------------------------------------------------------- --------------------
EPRA diluted Net Asset Value per share (pence) 116.11p
---------------------------------------------------------------------------------------------- --------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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