Final Results

16 March 2015

Real Estate Investors plc

(“REI” or the “Company” or the “Group”)

 

Preliminary announcement of results

For the year ended 31 December 2014

 

Record Revenue, Profits and Dividends

 

 

Highlights

·    Record revenue up 19%, profits up 21% and dividends up 50%

·    Progressive and growing dividend policy in place with the intention to move to quarterly dividend payments from 2016

·    Scalable platform with ability to manage larger portfolio of assets

·    £20 million capital raise in March 2014 successfully deployed on criteria compliant properties – acquisitions totalling £29.4 million (2013: £2.3 million)

·    Rigorous focus on asset management delivering added value across the portfolio and driving rental growth

·    Gross Property Assets of £104.4 million (2013: £76.2 million) up 37%

·    Conversion to a Real Estate Investment Trust* (REIT) on 1 January 2015

·    Very strong and growing regional economy 

 

Paul Bassi, CEO of Real Estate Investors Plc, commented:

“Record profits, gross property assets and dividend payments reveal an excellent year of progress that provides the basis for continued growth and delivery of a progressive dividend policy.

 

Acquisition opportunities remain healthy and will continue to grow our portfolio. We will also make selected sales where we consider we have maximised our management and will capitalise upon our status as a Real Estate Investment Trust.

 

We anticipate further rental growth and improved occupancy levels, benefitting from a growing regional economy that is clearly emerging as a major economic powerhouse in the UK.”

 

Enquiries:

Real Estate Investors PLC Paul Bassi	+44 (0)121 212 3446
Smith & Williamson Corporate Finance Limited Azhic Basirov	+44 (0)20 7131 4000
Liberum Tom Fyson / Jamie Richards	+44 (0)20 3100 2000
Gable Communications limited John Bick	+44 (0)20 7193 7463 +44 (0)7872 061007 rei@gablecommunications.com

 

Financial Highlights

·    Revenue of £8.0 million (2013: £6.7 million) up 19%

·    Profit before tax of £6.0 million (2013: £5.0 million) up 21%

·    EPRA** EPS of (0.3p) (2013: 0.4p)

·    Total dividend per share up 50% to 1.5p, final dividend per share of 0.75p

·    EPRA NAV per share 61.3p (2013: 59.1p) up 4%

·    Gross Property Assets of £104.4 million (2013: £76.2 million) up 37%

·    Net Loan to Value of 35.2% (2013: 47.3%) gross debt £43.0 million (2013: £44.6 million)

·    Funds from £20.0 million equity fundraise successfully deployed

·    Cash £6.3 million (2013: £8.5 million) weighted average debt maturity 6.3 years (2013: 7.0 years)

 

	31 December 2014	31 December 2013	Change
Gross Property Assets	£104.4 million	£76.2 million	+37%
Investment Property Assets	£102.0 million	£70.6 million	+44%
EPRA NAV per share	61.3p	59.1p	+4%
EPRA NNNAV per share	57.9p	58.6p	-1%
Net Assets	£64.6 million	£41.9 million	+54%
Loan to Value	41.2%	58.6%	+3%
Loan to Value (net of cash)	35.2%	47.3%	+26%

 

Operational Highlights

·    Contracted rental income of £7.7 million (2013: £5.8 million) up 33%

·    Overall occupancy: 84.6% and WAULT*** 4.4 years (to break) (2013: 83.6% and 3.7 years)

·    Acquisitions totalling £29.5 million (2013: £2.6 million)

·    Property disposal proceeds totalling £7.0 million (2013: £7.0 million)

·    Total ownership of 799,112 sq ft (2013: 650,000 sq ft) up 23%

·    175 tenants (2013: 150 tenants) up 16.67%

·    Prime Birmingham City centre ownership 159,792 sq ft (2013: 143,408 sq ft), representing 31.4% of our portfolio by value (2013: 37.2%)

 

* REIT = Real Estate Investment Trusts are listed property investment companies or groups not liable to corporation tax on their rental income or capital gains from their qualifying activities

** EPRA = European Public Real Estate Association

***WAULT = Weighted Average Unexpired Lease Term

 

CHAIRMAN’S AND CHIEF EXECUTIVE’S STATEMENT

 

Overview

 

The Birmingham and West Midlands economy is on the cusp of emerging as a significant economic powerhouse, with a diversified economy led by professional and financial services, creative industries, tourism, education and high end manufacturing.

 

As anticipated, this investor demand in the region has continued throughout 2014 and we believe we will see no slowing down over 2015, other than a ‘pause’ around the election in May 2015.  Investments in the UK regions reached £21.1 billion, up 41% on 2013.  Commercial property investment in the West Midlands soared in 2014 to £2.3bn, up 44% on 2013.

 

Investment demand in the West Midlands is varied, and includes international buyers from China, Singapore, the Middle East and the USA, as well as the traditional UK based institutional funds, insurance companies, public and private property companies.  Investors are attracted by the relatively high yields in comparison to London and the South East, the strong economic recovery of the region and the prospect of rising rental values.  Traditional UK property companies and private individuals are relatively inactive, as these buyers are often reliant upon bank lending and focus on secondary assets.  Bank lending is becoming normalised and this will trigger these purchases and stimulate the secondary investment market and reveal yield compression in these markets.

 

REI has benefitted from rising values, and anticipates further growth from improving occupier demand and rising rental values, in particular from our prime Birmingham City centre ownership, which represents 31% of our portfolio.  Our year end valuations have revealed a general uplift in values, however management believe that these continue to ‘lag’ the market and actual sales values would provide further uplifts as demonstrated by the sales we have made during 2014.  Our investments outside the City centre, in quality secondary locations, are predicted to see yield compression in 2015 and 2016, providing REI with further potential growth.

 

Our portfolio has grown significantly over the year, up 37% in value, and we anticipate further growth through the acquisition of criteria compliant properties and improving the capital values and income from our existing portfolio.  REI’s reputation as an established property investor, with a proven track record, along with the management’s privileged and in depth knowledge and network, continues to provide acquisition opportunities that are criteria compliant and secure capital growth and income enhancing opportunities for the Company.

 

The long debated and anticipated volume sales of distressed assets has not really materialised. Whilst REI were able to capture some of these opportunities, it appears that the banking industry has quietly sold much of their non-core or distressed lending books and properties to specialist UK funds and US private equity houses, with substantial discounts.  Our market insight indicates that a volume of stock is being brought to the market for sale by these vendors, and the UK funds who have re-focussed their criteria, now look to hold assets with longer leases and individual valuations in excess of £10 million.  These disposals and change of strategy provide criteria property ideal for our asset management objectives.

 

Results

 

The execution of our focussed regional strategy, supported by management’s unique network and proven track record, has allowed us to report an excellent set of financial results for the year ended 31 December 2014.  Record profits before tax of £6.0 million (2013: £5.0 million) are up 21%.  Record gross assets of £104.4 million are up by 37%. Contracted rental income of £7.7m (2013: £5.8 million) is up 33%. Total dividend payments of 1.5p per share in respect of the 2014 financial year is up 50%.  We are pleased with the performance and believe we are well positioned to grow REI further, and drive higher rental income, profits and dividends for our shareholders.  If we extract the negative cost of our ‘hedge/interest rate swap’ of £1.4 million, which is a non cash item, pre tax profits would be £7.5 million for 2014. 

 

Our decision to convert into a Real Estate Investment Trust in January 2015 is in line with the management’s strategy to deliver a progressive dividend, coupled with achieving capital growth through active asset management.

 

The acquisition pipeline remains healthy, as does the potential to make opportunistic, tax free sales, due to our REIT status, but only where we consider we have achieved maximum asset management.

 

Dividend

 

The Board has already committed to a progressive dividend policy, and our status as a REIT will allow us to undertake dividend payments within an attractive tax status.  Our interim dividend of 0.75p in respect of H1 2014 was declared in September and our final dividend of 0.75p provides a total dividend of 1.5p for 2014, an increase of 50%. The Board has also declared its intention to pay dividends quarterly, in order to distribute income generated by the Company to shareholders on a more timely basis. It is anticipated that the first such quarterly dividend would be paid in 2016.   

 

Dividend Timetable 

Ex-dividend date:	26 March 2015
Record date:	27 March 2015
Dividend payment date:	24 April 2015

 

Regional Review

 

We are a regional investor with a focus on Birmingham and the West Midlands.  We believe our region is on the cusp of its re-emergence as an economic and commercial centre.  This regeneration will undoubtedly impact positively on our business in the immediate and longer term.  The economy is robust and growth is driven by the creative industries, education, tourism, retail and high end manufacturing.  Listed below are some of the key facts that support and demonstrate a vibrant and growing regional economy.

 

·    Property investment in the region reached an 8 year high during the year, with West Midlands commercial property investment soaring in 2014 to £2.3 billion, up 44% on 2013

·    Q4 2014 office market lettings see six year high with annual lettings reaching 713,460 sq ft – the highest total since 2008

·    Birmingham named number one property investment hot spot in the UK and the sixth-best in Europe

·    HS2 creates 1,500 new jobs in Birmingham to manage the £50 billion project

·    West Midlands is the only place in the UK with an export surplus with China

·    House sales in the West Midlands have hit a 4 year high (RICS)

·    Birmingham has been named as one of the top 10 cities in the world by travel handbook company Rough Guide

·    West Midlands unemployment fell to its lowest since the recession began

·    West Midlands exported more than London for the first time and the highest in the UK

·    Jaguar Land Rover achieved record breaking sales for 2014

·    Birmingham Airport has recorded its busiest year in its 75 year history

·    34,000 employed in Birmingham in the digital media sector

·    Bullring shopping centre draws in more than 40 million customers per annum

·    500 medical technology companies, more than any other UK region with 10,000 manufacturing SMEs in the West Midlands

·    Greater Birmingham is the largest regional financial and professional services hub in the UK

·    24 major universities and further education institutions located in the region

·    International trade in the West Midlands also registered the largest jump – at 16% to £28.28 billion

·    Birmingham ranked best City in the UK for quality of life

 

Property Portfolio Review

 

The portfolio has grown to £104.4 million, up by 37% over the previous 12 months.  Yet, even as the market has improved, we have secured properties that match our acquisition criteria by capitalising on our cash resources and management’s ability to act swiftly and access opportunities from a privileged network.  This unique access to secure attractive opportunities, that provide strong yields and capital growth, will continue for the foreseeable future and we anticipate assets being made available to us from strategic reviews by UK and USA specialist funds holding previously distressed portfolios.

 

Our portfolio is diversified by type of occupier and location, spread across the region with properties in Birmingham City centre, Edgbaston, Coventry, Bromsgrove, Walsall, West Bromwich, Kings Heath and Derby.  We have no material exposure to any single tenant or building and our acquisition criteria remain stringent.

 

Our Acquisition Criteria

 

·    Birmingham – West Midlands – Midlands

·    Sector – shops / offices / residential / land

·    Status – vacant or part vacant – fully let

·    Active asset management via:

o Letting risk

o Lease Renewal/Rent Reviews etc

o Change of use

o Refurbishment

·    Lot Size – £500,000 – £20 million

·    Yield Targets – 8-20%

·    Assets that cannot support traditional debt

·    Speedy exchange and completion to secure an attractive price

·    Represents value and opportunity

 

	£m	%	Sq Ft	Passing Rent £	ERV £	Yield %	Equivalent Yield %	Occupancy %
Birmingham City Centre	32.7	31.4	159,792	1,951,036	2,709,886	5.63	7.16	70.13
Other Midlands	60.0	57.4	532,635	4,999,430	5,900,895	7.88	8.34	90.00
Total Core	92.7	88.8	692,427	6,950,466	8,680,911	7.08	7.92	85.44
Non Core Portfolio	11.7	11.2	106,685	715,213	1,001,016	5.79	9.55	78.85
Total Portfolio	104.4	100.0	799,112	7,665,679	9,611,797	6.93	8.08	84.56

 

 

 

We now have a total of 799,112 sq ft, with 175 tenants.  Our prime City centre ownership is 159,792 sq ft, representing 31.4% of our portfolio by value.  Overall occupancy is at 84.6%, with a WAULT of 4.4 years to break. 

 

New tenants to our portfolio during 2014 include: HSBC, West Bromwich Building Society, Lunn Poly, First Secretary of State, Royal College of Surgeons, WH Smith, WH Ireland, Thomas Cook, Thomson Travel, Sharps Bedrooms, Boots UK Limited, Marks and Spencer Simply Foods Limited, NHS Property Services, Loungers, BHS, Wallis, Waterstones, Punch Taverns and Burtons.

 

The portfolio remains stable and secure, has significant opportunity to continue to add value through further lettings and rental growth, and will benefit from yield compression.  This combination should provide further upward valuations.  Where we see valuations have been maximised, we will make sales and capture the gain, with no tax liability due to our REIT status.

 

The occupier market has trailed the investment market, but has seen steady growth during 2014, however, we have noted that Q1 of 2015 has seen the number of viewings and discussions relating to new lettings significantly improve.

 

Sales

 

For a number of years we have operated in a ‘buyers’ market, and believe we have capitalised on the prevailing market conditions.  The weight of money available for property investment and the hunger for income, coupled with the drive away from London and the South East, and the re-emergence of the regions, in particular the West Midlands, has seen strong demand for income producing investment property and residential land.    We have received continuous approaches from agents and buyers for individual and collective elements of our portfolio, and where we see exceptional sales value, we will make sales.

 

Against this much improved backdrop, we have sold property in Birmingham City centre, Edgbaston and land in Smethwick and Bilston, proceeds totalling £7.0 million.  These sales have all been achieved above our book values.

 

Despite the loss of income as a result of these sales and their value to the gross portfolio, we have still achieved record gross assets of £104.4 million and a significantly improved contracted rental income of £7.7 million, up 33%.

 

Acquisitions

 

During the year we invested a total of £29.4 million in new acquisitions including Warwick (£7.3 million), Walsall (£7.7 million), Bromsgrove (£0.5 million), Leicester (£1.8 million), Birmingham City centre (totalling £3.6 million) and Leamington Spa (£2.3 million).  All these assets are criteria compliant and provide capital and income enhancing opportunities.  Since our acquisition, some lease renewals, rent reviews and new lettings have been completed and we have seen a contribution from upward valuations to our overall profitability, however, there remains more ‘value’ to be secured.

 

Whilst most of our acquisitions have been either fully let or part income producing, we acquired 33 Bennetts Hill, fully vacant, for £1.6 million.  This listed building has since been granted a restaurant planning consent, secured a letting to Loungers Limited on a new 25 year lease at a rental of £135,000 p.a., and we have let the office space above which has provided a total rental income of £180,000 p.a.. Even after an approximate capital spend of £200,000 the property has provided REI with an excellent return.  We continue to target vacant property, particularly listed, with the view to adding value through planning, refurbishment and letting.

 

The acquisition pipeline for 2015 is excellent with over £100 million of opportunities identified.  We are benefitting from our market reputation and management’s unique insight into the property market and we are confident that we will add criteria compliant acquisitions to our portfolio throughout 2015. 

 

Since the year end we acquired 36 Great Charles Street, a 24,516 sq ft office building which is part let, producing £214,709 with an ERV of £360,000 for the sum of £1.85 million in February 2015.  This building is located in the heart of the new City centre Masterplan and nearby to the Paradise development.

 

The opportunities that are available are essentially ex-institutionally owned assets that, in their present form due to lease lengths, voids and lot size, are not compliant with an institutional investor, or sales from distressed portfolios acquired by US or UK specialist funds during the property crash, that are now being broken up for sale.  Where these opportunities are criteria compliant and management believe we can add value, we will act to secure these and continue to grow our portfolio.

 

Finance & Banking

 

At 31 December 2014 the Group’s gross debt was £43.0 million (2013: £44.1 million) with cash and cash equivalents of £6.3 million (2013: £8.5 million). The weighted average debt maturity was 6.3 years (2013: 7.0 years) with a weighted average cost of debt of 6.0% (2013 6.2%) at year end – 94% fixed or hedged (2013: 94%).

 

Net loan to value was 35.2% (2013: 47.3%) and net interest cover based on adjusted earnings before interest and tax as a ratio of finance costs was 4.0:1 (2013: 2.1:1). Both loan to value and interest cover fall comfortably within the banking covenants.

 

The Group’s £22.7 million facility with Lloyds Banking Group is due for renewal in October 2015. Whilst the process of agreeing terms for the renewal of these facilities, which would be subject to credit approval, documentation and due diligence, has not commenced, at the present time the bank has confirmed the intention to roll facilities at a similar level for a period of three to five years from the expiry of the current facilities.

 

Margins, fees and loan to value terms are becoming more competitive and relaxed.  REI has continued to receive excellent support from our principal bankers throughout the last few years, namely Lloyds Banking Group, Aviva, Handelsbanken and Nationwide.

 

In February 2015 REI secured a new facility of £9.0 million with Santander – the term is for 5 years at a margin of 2.25% over LIBOR, secured against some of our unencumbered and income producing properties.  Borrowing costs are only incurred when we actually drawdown, and we anticipate fully investing this money in Q2 of 2015.

 

Outlook & Summary

 

We have enjoyed an excellent year of progress, and remain well positioned to continue with our growth strategy and our commitment to a progressive dividend policy.  We anticipate a number of new acquisitions that will continue to grow our property portfolio.  We will make sales when we feel that we have maximised value, knowing that any sales made will no longer be subject to taxation due to our REIT status.

 

The successful £20 million fundraise in March 2014 was well supported by existing and new investors and has provided the capital to grow the portfolio, enabling management to capitalise on market opportunities.  REI has built a secure portfolio which provides income and capital growth, backed by quality real estate in a robust Birmingham and Midlands economy.

 

The Company feels strongly that Birmingham and the West Midlands is on the verge of re-emerging as a major global city and re-establishing the region as a major economic and commercial centre in the UK.

 

REI, operating as a Real Estate Investment Trust, will benefit from the assembled property portfolio, new acquisitions and a vibrant and robust regional economy.

 

Finally, we would like to thank our tenants, staff and board members for their continued support, without whom, none of the success we have enjoyed and our excellent future prospects would be possible.

 

 

 

John Crabtree                                                      Paul Bassi

Chairman                                                             Chief Executive

13 March 2015                                                      13 March 2015

Real Estate Investors plc

Consolidated statement of comprehensive income

For the year ended 31 December 2014

 

 

	Note	2014	2013
		£000	£000
Revenue		8,016	6,717
Cost of sales		(2,452)	(2,086)
Gross profit	2	5,564	4,631
Administrative expenses		(2,542)	(1,675)
Surplus on sale of investment property		277	459
Net surplus on valuation of investment properties		6,767	2,096
Profit from operations		10,066	5,511
Finance income		60	21
Finance costs		(2,672)	(2,638)
(Loss)/profit on financial liabilities at fair value through profit and loss		(1,445)	2,062
Profit on ordinary activities before taxation		6,009	4,956
Income tax charge		(1,960)	(1,355)
Net profit after taxation and total comprehensive income		4,049	3,601
Total and continuing earnings per ordinary share
Basic	3	4.05p	5.04p
Diluted	3	4.05p	5.04p

 

The results of the Group for the period related entirely to continuing operations.

 

 

Real Estate Investors plc

Consolidated statement of changes in equity

For the year ended 31 December 2014

 

 

	Share capital	Share premium account	Capital redemption reserve	Other reserves	Retained earnings	Total
	£000	£000	£000	£000	£000	£000
At 1 January 2013	7,142	61	45	121	31,622	38,991
Dividends	–	–	–	–	(714)	(714)
Transactions with owners	–	–	–	–	(714)	(714)
Transfer to retained earnings	–	–	–	(121)	121	–
Profit for the year and total comprehensive income	–	–	–	–	3,601	3,601
At 31 December 2013	7,142	61	45	–	34,630	41,878
Issue of new shares	4,000	–	–	–	–	4,000
Premium on issue of new shares	–	16,000	–	–	–	16,000
Expenses of share issue	–	(528)	–	–	–	(528)
Dividends	–	–	–	–	(836)	(836)
Transactions with owners	4,000	15,472	–	–	(836)	18,636
Profit for the year and total comprehensive income	–	–	–	–	4,049	4,049
At 31 December 2014	11,142	15,533	45	–	37,843	64,563

 

 

Real Estate Investors plc

Consolidated statement of financial position

At 31 December 2014

 

 

	Note	2014	2013
		£000	£000
Assets
Non current
Intangible assets		171	171
Investment properties	4	102,017	70,601
Property, plant and equipment		6	7
Deferred tax		940	2,900
		103,134	73,679
Current
Inventories		2,366	5,601
Trade and other receivables		3,745	4,745
Cash and cash equivalents		6,274	8,482
		12,385	18,828
Total assets		115,519	92,507
Liabilities
Current
Bank loans and overdraft		(24,054)	(25,006)
Provision for current taxation		(18)	(18)
Trade and other payables		(3,245)	(2,716)
		(27,317)	(27,740)
Non current
Bank loans		(18,942)	(19,637)
Liabilities at fair value through profit and loss		(4,697)	(3,252)
		(23,639)	(22,889)
Total liabilities		(50,956)	(50,629)
Net assets		64,563	41,878
Equity
Share capital		11,142	7,142
Share premium account		15,533	61
Capital redemption reserve		45	45
Retained earnings		37,843	34,630
Total equity		64,563	41,878
Net assets per share	3	57.9p	58.6p

 

 

Real Estate Investors plc

Consolidated statement of cash flows

For the year ended 31 December 2014

 

 

		2014	2013
		£000	£000
Cash flows from operating activities
Profit after taxation		4,049	3,601
Adjustments for:
Depreciation		8	11
Net surplus on valuation of investment property		(6,767)	(2,096)
Surplus on sale of investment property		(277)	(459)
Finance income		(60)	(21)
Finance costs		2,672	2,638
Loss/(profit) on financial liabilities at fair value through profit and loss		1,445	(2,062)
Income tax charge		1,960	1,355
Decrease in inventories		3,235	1,334
Decrease/(increase) in trade and other receivables		500	(1,324)
Increase/(decrease) in trade and other payables		529	(222)
		7,294	2,755
Interest paid		(2,672)	(2,638)
Net cash from operating activities		4,622	117
Cash flows from investing activities
Purchase of investment properties		(29,532)	(2,552)
Purchase of property, plant and equipment		(7)	–
Proceeds from sale of investment property		5,660	5,500
Interest received		60	21
		(23,819)	2,969
Cash flows from financing activities
Proceeds from issue of share capital net of expenses		19,472	–
Equity dividends paid		(836)	(714)
Proceeds from new bank loans		514	4,200
Payment of bank loans		(459)	(479)
		18,691	3,007
Net (decrease)/increase in cash and cash equivalents		(506)	6,093
Cash, cash equivalents and bank overdrafts at beginning of period		6,780	687
Cash, cash equivalents and bank overdrafts at end of period		6,274	6,780

 

NOTES:

Cash and cash equivalents consist of cash in hand, bank overdrafts and balances with banks only.

 

 

Real Estate Investors plc

Notes to the preliminary announcement

For the year ended 31 December 2014

 

1.  Basis of preparation

The consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of properties and financial instruments held at fair value through the profit and loss account, and in accordance with International Financial Reporting Standards (IFRS) adopted by the European Union.

It should be noted that accounting estimates and assumptions are used in preparation of the financial statements.  Although these estimates are based on management’s best knowledge and judgement of current events and actions, actual results may differ from those estimates.  The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are set out in the Group’s annual report and financial statements.

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 December each year.  Material intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated on consolidation.  Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

 

The principal accounting policies are detailed in the Group’s annual report and financial statements.

 

Going concern

 

After making relevant enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. These enquiries considered the following:

 

·    the significant cash balances the Group holds and the low levels of historical and projected operating cashflows

·    any property purchases will only be completed if cash resources or loans are available to complete those purchases

·    the Group’s bankers have indicated their continuing support for the Group. The Group’s £22.7 million facility with Lloyds Banking Group is due for renewal in October 2015. Whilst the process of agreeing terms for the renewal of these facilities, which would be subject to credit approval, documentation and due diligence, has not commenced at the present time the bank have confirmed their intention to roll the facilities at a similar level for a period of three to five years from the expiry of the facilities.

 

For these reasons, the directors continue to adopt the going concern basis in preparing the annual financial statements.

 

2.  Gross profit

	2014	2013
	£000	£000
Revenue             –     Rental income	5,392	5,313
-     Surrender premiums	754	374
-     Sale of assets held as inventory	1,870	1,030
	8,016	6,717
Cost of sales       –     Direct costs	(951)	(735)
-     Cost of property	(1,411)	(1,051)
-     Loss on valuation of assets held as inventory	(90)	(300)
	(2,452)	(2,086)
	5,564	4,631

 

 

3.  Earnings per share

 

The calculation of earnings per share is based on the result for the year after tax and on the weighted average number of shares in issue during the year.

 

Reconciliations of the earnings and the weighted average numbers of shares used in the calculations are set out below.

 

	2014			2013
	Earnings	Average number of shares	Earnings per Share	Earnings	Average number of shares	Earnings per share
	£’000			£’000
Basis and diluted earnings per share	4,049	100,023,337	4.05p	3,601	71,420,598	5.04p

 

 

Basic and diluted earnings per share are the same because the effect of the LTIP options in issue is anti-dilutive.

 

 

 

EPRA EPS per share

 

	2014			2013
	Earnings	Shares	Earnings per share p	Earnings	Shares	Earnings per share p
	£’000	No		£’000
Basic earnings per share	4,049	100,023,337	4.05	3,601	71,420,598	5.04
Net surplus on valuation of investment properties	(6,767)			(2,096)
Profits on disposal of investment properties	(277)			(459)
Tax on profits on disposals	55			92
Fair value of inventory properties	90			300
Change in fair value of derivatives	1,445			(2,061)
Deferred tax	1,047			887
EPRA (Loss)/earnings per share	(358)	100,023,337	(0.36)	264	71,420,598	0.37

 

 

 

EPRA NAV per share

 

	2014			2013
	Net Assets	Shares	Net asset value per share	Net Assets	Shares	Net asset value per share
	£’000	No	p	£’000	No	p
Basic	64,563	111,420,598	57.9	41,878	71,420,598	58.6
Dilutive impact of share options and warrants	–	–		–	–
Diluted	64,563	111,420,598	57.9	41,878	71,420,598	58.6
Adjustment to fair value of derivatives	4,697	–		3,252	–
Deferred tax	(940)	–		(2,900)	–
EPRA NAV	68,320	111,420,598	61.3	42,230	71,420,598	59.1
Adjustment to fair value of derivatives	(4,697)	–		(3,252)	–
Deferred tax	940	–		2,900	–
EPRA NNNAV	64,563	111,420,598	57.9	41,878	71,420,598	58.6

 

 

4.  Investment properties

Investment properties are those held to earn rentals and for capital appreciation.

 

The carrying amount of investment properties for the periods presented in the consolidated financial statements as at 31 December 2014 is reconciled as follows:

 

		£’000
Carrying amount at 1 January 2013		71,491
Additions – acquisition of new properties		2,294
Additions – subsequent expenditure		258
Disposals		(5,538)
Revaluation		2,096
Carrying amount at 31 December 2013		70,601
Additions – acquisition of new properties		29,438
Additions – subsequent expenditure		94
Disposals		(4,883)
Revaluation		6,767
Carrying amount at 31 December 2014		102,017

 

 

5.  Publication

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  The consolidated statement of financial position at 31 December 2014 and the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows and the associated notes for the year then ended have been extracted from the Group’s financial statements upon which the auditor’s opinion is unqualified and does not include any statement under section 498 of the Companies Act 2006.  The statutory accounts for the year ended 31 December 2014 will be delivered to the Registrar of Companies following the Group’s Annual General Meeting.

 

 

6.  Copies of the announcement

 

Copies of this announcement are available for collection from the Company’s offices at Cathedral Place, 3^rd Floor, 42-44 Waterloo Street, Birmingham, B2 5QB.