GCP STUDENT LIVING PLC
ANNUAL FINANCIAL REPORT FOR THE YEAR
ENDED 30 JUNE 2016
GCP Student Living plc, (the "Group" or the "Company"), which
was the first student accommodation real estate investment trust
("REIT") in the UK, today announces its results for the financial
year ended 30 June 2016.
The full annual report and financial statements can be accessed
via the Company's website at www.gcpuk.com/gcp-student-living-plc
or by contacting the Company Secretary by telephone on 01392
477500.
AT A GLANCE
|
2016 |
2015 |
2014 |
Revenue for the
year |
£22.5m |
£11.5m |
£9.1m |
Net operating
margin |
79% |
78% |
82% |
Rental growth |
4.5% |
3.6% |
3.3% |
Annualised shareholder
return since IPO |
13.9% |
18.1% |
11.5% |
Dividends per ordinary
share for the year |
5.66p |
5.60p |
5.47p |
EPRA NAV per ordinary
share |
136.93p |
125.51p |
102.64p |
Share price per
ordinary share |
130.75p |
129.25p |
107.75p |
Value of property
portfolio |
£424.8m |
£177.2m |
£151.6m |
Loan-to-value |
26.6% |
22.5% |
26.2% |
HIGHLIGHTS FOR THE YEAR
- The Company delivered a strong set of results generating total
revenue for the year of £22.5 million.
- The Company successfully raised £79 million through
two oversubscribed placings of ordinary shares.
- Annualised shareholder returns since IPO of 13.9%, in
excess of the Company’s target return of 8-10%.
- The Company’s properties continue to benefit from the
supply/demand imbalance for high-quality, modern student facilities
in London, with all properties
fully occupied and rental growth of 4.5% for the 2015/16 academic
year.
- Dividends of 5.66 pence per
ordinary share paid/declared in the period in line with
target.
- EPRA NAV (cum income) per ordinary share of 136.93 pence and EPRA NAV (ex-income) per
ordinary share of 135.50 pence
at 30 June 2016.
- Broad student mix with students from 106 countries studying at
72 HEIs.
- High-quality portfolio of six modern, high-specification
properties with c.2,000 beds located primarily in and around
London with a valuation
of £424.8 million at the year end.
- Loan-to-value at 30 June 2016 of 26.6%.
- During the year, the Company acquired four properties and
entered into a forward purchase agreement and a forward funding
agreement, in respect of two further properties.
Robert
Peto, Chairman, commented:
“I am pleased to report a year of continued growth, underpinned
by the acquisition of four high quality properties and strong
rental growth. The Company has grown its dividend to 5.66 pence per ordinary share in respect of the
year and delivered annualised total returns since IPO in 2013 of
13.9%, in excess of its annualised target of
8-10%.
The Company’s core focus on student residential accommodation
assets located in and around London, where 96% of the value of the
portfolio is located, coupled with conservative levels of
borrowings, provides shareholders with a property portfolio
offering defensive income characteristics which should offer
greater resilience to market uncertainty following the ‘Brexit’
vote, particularly relative to wider UK commercial property. The
two oversubscribed capital raises over the period are a reflection
of the strong ongoing support for the Company’s investment mandate
by new and existing investors alike.
The outlook for the Company remains positive in light of the
Investment Manager’s ability to secure the opportunity to acquire
additional assets in the Company’s core market. The Board further
looks forward to the Company’s migration to listing on the Official
List of the UK Listing Authority and to trading on the Premium
Segment of the London Stock Exchange’s Main Market which should
result in a broader investor base over the longer term.”
For more information:
Gravis Capital Partners
LLP
+44 020 7518 1490
Tom Ward
tom.ward@gcpuk.com
Nick
Barker nick.barker@gcpuk.com
Dion Di
Miceli
dion.dimiceli@gcpuk.com
Stifel Nicolaus Europe
Limited
+44 020 7710 7600
Neil
Winward
neil.winward@stifel.com
Mark
Young mark.young@stifel.com
Tom
Yeadon
tom.yeadon@stifel.com
Buchanan
+44 020 7466 5000
Charles
Ryland
charlesr@buchanan.uk.com
Vicky
Watkins
victoriaw@buchanan.uk.com
ABOUT US
GCP Student Living plc was the first real estate investment
trust in the UK focused on student residential assets. The Company
invests in modern, private student residential accommodation and
teaching facilities located primarily in and around
London.
Our primary objective is to provide shareholders with attractive
total returns in the longer term through the potential for modest
capital appreciation and regular, sustainable, long-term dividends
with RPI inflation-linked income characteristics.
The Company invests in properties located primarily in and
around London where the Investment
Manager believes the Company is likely to benefit from supply and
demand imbalances and a growing number of international
students.
The Company is a closed-ended investment company incorporated in
England and Wales, and its shares trade on the SFS of the
Main Market of the London Stock Exchange.
INVESTMENT OBJECTIVES
The Company invests in UK student accommodation to meet the
following key objectives:
Dividend income
To provide shareholders with regular, sustainable, long-term
dividends, with RPI inflation-linked characteristics.
The Company has paid/declared a total of 5.66 pence per ordinary share as dividends in the
year, increasing the Company’s dividend on an annualised basis.
Capital appreciation
To provide modest capital appreciation over the long term.
The valuation of the Company’s property portfolio has increased
by 7.1% over the year driven by a combination of uplifts in
valuation on acquisition, increasing rental rates and yield
compression.
Portfolio quality
Focus on high-quality, modern, private student residential
accommodation and teaching facilities for students studying at
leading academic institutions primarily in and
around London.
At 30 June 2016, the Company’s
property portfolio comprised
six modern, high-specification student residential
accommodation buildings, of which 96% of the value is located in
and around London.
Key performance highlights
Dividends
paid/declared in the year |
5.66p |
Annualised dividend
growth |
1.1% |
Capital
appreciation |
7.1% |
Value of property
portfolio |
£424.8m |
Occupancy for 2015/16
academic year |
100% |
Rental growth |
4.5% |
CHAIRMAN’S STATEMENT
Introduction
On behalf of the Board, I am pleased to report a year of
continued growth, with the acquisition of four further high-quality
properties in addition to entering into a forward purchase
agreement and a forward funding agreement in respect of two
further properties.
The Company has paid dividends of 5.66
pence per ordinary share in respect of the year and in total
has delivered an annualised shareholder return since IPO of 13.9%,
in excess of its annualised target of 8-10%.
Portfolio
The Company has successfully grown its property portfolio to
c.2,000 studios and beds through the addition of c.1,000 studios
and beds over the year. Through positioning the portfolio in those
areas which the Investment Manager believes are well positioned to
benefit from significant demand/supply imbalances, it is pleasing
to note strong year-on-year rental growth from the portfolio of
4.5%.
The Company’s core focus on student residential accommodation
assets located in and around London, where 96% of the value of the property
portfolio is located, coupled with conservative levels of
borrowings, provides shareholders with a property portfolio with
defensive income characteristics which should offer greater
resilience to the market volatility following the ‘Brexit’ vote,
particularly relative to wider UK commercial property.
The external market valuation of the Company’s property
portfolio was £424.8 million at 30 June
2016. This represents a valuation uplift of
£58.9 million or 16.1% over the aggregate acquisition price
(excluding acquisition costs). The valuation increase has been
driven by a combination of uplift in valuation at acquisition,
rising rental rates and the high levels of investment demand for
student accommodation driving upward pressure on asset prices
impacting yields across the sector.
Acquisitions
During the year, the Company acquired four high-specification,
student accommodation assets – Scape Shoreditch, Scape Surrey, The
Pad 2 development at RHUL and Water Lane Apartments in Bristol. In addition, the Board was pleased to
have secured a rare opportunity to acquire a large scale,
forward-funded development at Apex House, Wembley, which will
enable the Company to acquire an asset, which is expected to be
operational for the 2017/18 academic year, at an attractive
valuation relative to acquiring existing operating assets. Once
complete, it is expected that Apex House will add a further c.580
modern studios and beds to the Company’s portfolio. Finally, the
Company also entered into a conditional forward purchase agreement
which will allow it to acquire Podium, which is in the same
locality as The Pad at RHUL and which is expected to provide a
further c.170 studios and beds once completed for the 2017/18
academic year.
Financial results
Full occupancy, strong rental growth and valuation uplifts have
all contributed to a strong set of results for the year. The
Company’s property portfolio generated £22.5 million of rental
income over the year. The EPRA NAV per ordinary share increased by
9%, from 125.51 pence to 136.93
pence as at 30 June 2016. Total operating profit
(including valuation gains) was £39.3 million (£12.2 million
excluding valuation gains).
Dividends
The Company paid dividends in respect of the financial year
ended 30 June 2016 of 5.66 pence
per ordinary share. The dividends were paid as 5.31 pence per ordinary share as a REIT property
income distribution in respect of the Group’s tax exempt property
rental business and 0.35 pence per ordinary share as
an ordinary UK dividend.
The Board
Mrs Wood was appointed as Chair of the audit committee with
effect from 21 July 2015. Mr
Dunscombe was appointed as Senior Independent Director with effect
from 15 September 2015 and Chair of the newly formed
remuneration committee with effect from 28 July 2016.
Following the implementation of the Market Abuse Regulation
(“MAR”), which came into effect on 3 July
2016, the Board agreed to form a disclosure committee to
ensure the identification and disclosure of inside information and
the Company’s ongoing compliance with MAR. Further details
regarding the committee are provided in the corporate governance
statement in the full annual report.
Management
The Board welcomes Mr Di Miceli, who recently
joined the Company’s Investment Manager as a dedicated Head of
Investment Companies, further strengthening the management team at
the Company’s Investment Manager, Gravis Capital Partners LLP.
Financing
The Board was pleased with the level of ongoing support shown by
both new and existing investors in the Company through two
oversubscribed capital raisings during the period, raising gross
proceeds of c.£79 million. We thank you for your ongoing support
for the Company.
As detailed in the review of the financial year, during the
period, the Company successfully refinanced its senior debt
facility through a £130 million fixed rate loan with Pricoa
Mortgage Capital, at a rate of 3.07%. In order to facilitate the
drawdown of the facility, the Group was restructured. The Board
believes that the new borrowing facility provides fixed, long
dated, financing at an attractive pricing level which will reduce
the long-term weighted cost of capital for the Group and should
help to enhance shareholder value over the long term.
The Company remains conservatively positioned as regards its
borrowing levels, with a loan-to-value of 26.6% as at
30 June 2016.
Migration
As a sign of the Company’s continued growth, on 14 September 2016, the Company announced it had
satisfied the requirements for migration to a premium listing on
the Official List of the UK Listing Authority and accordingly, it
is expected that, with effect from 16
September 2016, its ordinary shares will be admitted to the
Official List and trading transferred from the SFS to the Premium
Segment of the Main Market of the London Stock Exchange. The Board
believes this will result in a broader investor base over the
longer term and better position the Company to meet the liquidity
requirements of a wider audience of investors. Migration will also
help the Company meet the requirements of the FTSE Group for
inclusion in the relevant FTSE indices in due course.
Outlook
The UK student accommodation investment market experienced a
record year in 2015. Approximately £5.7 billion was transacted over
the course of the year, which constituted over one-quarter of the
total privately-owned UK purpose-built student accommodation stock.
These assets were traded to a broad range of investors, many of
which the Directors believe are expected to hold their assets
long term.
Investment into the sector continued through the first half of
2016, with c.£1.5 billion transacted prior to the UK referendum to
leave the EU on 23 June 2016.
Whilst the long-term implications of the result of the UK
referendum remain unknown, it is the Investment Manager’s current
expectation that ‘Brexit’ will not have a material impact on the
performance of its existing portfolio. The portfolio is focused on
student accommodation assets in and around London which has the largest student
population of any city in the UK and positions the Company to
benefit from supply and demand imbalances. Accordingly, the
Investment Manager remains confident that investor interest in the
Company’s student accommodation portfolio will continue due to its
defensive income qualities as well as the prospect for continued
rental growth.
The number of new schemes due for development in London over the next three years is at an
historic low, with the implications of ‘Brexit’ unlikely to be
helpful for any further development projects in the short term.
Planning approvals, and the new development tax on student
accommodation, continue to make it difficult to bring on-stream new
developments in and around London.
In this context, the Board is encouraged by the Company’s
ability to secure the opportunity to acquire Apex House, a
forward-funded development asset in London, and the Podium asset adjacent to RHUL.
The Company’s right of first offer arrangements with Scape is
anticipated to provide further attractive pipeline assets in
future. The Investment Manager continues to conduct due diligence
on a number of assets, which including Apex House and Podium, offer
an attractive pipeline of c.1,800 studios and beds in locations
which the Investment Manager believes will benefit from attractive
and sustainable rental growth underpinned by supportive
supply/demand characteristics.
Demand by overseas students for private sector student
accommodation in and around London
is likely to remain resilient relative to the rest of the UK,
given the international perception of London as a cosmopolitan, multicultural,
global centre of learning. Depreciation in the value of the
Pound Sterling may further enhance the relative attractions of a
UK-based degree for overseas students.
The Group’s portfolio remains well positioned to provide
shareholders with regular, sustainable, long-term dividends through
the defensive qualities of the rental income generated by its
assets.
The Directors and Investment Manager have sought to position the
portfolio, and gearing levels, in a conservative manner to offer
shareholders some protection against volatile markets. To this
effect, the Company decided not to proceed with the acquisition of
a 530-bed asset located in a city centre location in close
proximity to a globally recognised UK university, outside of
London, in respect of which it had
been in advanced negotiations and which would have required
additional borrowings to acquire. The Company remains modestly
geared at a loan-to-value of 26.6%.
Robert Peto
Chairman
15 September 2016
STRATEGIC REPORT
The strategic report has been prepared in accordance with
section 414A of the Companies Act 2006 (the “Act”). Its purpose is
to inform members of the Company and help them assess how the
Directors have performed their legal duty under section 172 of the
Act to promote the success of the Company and the Group.
STRATEGIC OVERVIEW
The Company’s investment objective is to provide shareholders
with attractive total returns in the longer term through the
potential for modest capital appreciation and regular, sustainable,
long-term dividends with RPI inflation-linked income
characteristics.
Investment policy
The Company intends to meet its investment objective through
owning, leasing and licensing student residential accommodation and
teaching facilities to a diversified portfolio of direct let
tenants and HEIs. The Company will mostly invest in modern, private
student residential accommodation and teaching facilities located
primarily in and around London
where the Investment Manager believes the Company is likely to
benefit from supply and demand imbalances for student residential
accommodation. The Company may also invest in development and
forward-funded projects which are consistent with the objective of
providing shareholders with regular, sustainable dividends and have
received planning permission for student accommodation, subject to
the Board being satisfied as to the reputation, track record and
financial strength of the relevant developer and building
contractor.
Rental income will predominantly derive from a mix of
contractual arrangements including direct leases and/or licences to
students (direct let agreements), leases and/or licences to
students guaranteed by HEIs and/or leases and/or licences directly
to HEIs. The Company may enter into soft nominations agreements
(pari passu marketing arrangements with HEIs to place their
students in private accommodation) or hard nominations agreements
(longer-term marketing arrangements with HEIs of between two and 30
years in duration). Where the Company invests in properties which
contain commercial or retail space, it may derive further income
through leases of such space. Where the Company invests in
development and forward-funded projects, development costs will
typically be paid in stages through construction, with a bullet
payment at completion.
The Company intends to focus primarily on accommodation and
teaching facilities for students studying at Russell Group
universities and other leading academic institutions, regional
universities with satellite teaching facilities in and around
London and at
specialist colleges.
The Company may invest directly or through holdings in special
purpose vehicles and its assets may be held through limited
partnerships, trusts or other vehicles with third party
co-investors.
Borrowing and gearing policy
The Company may seek to use gearing to enhance returns over the
long term. The level of gearing will be governed by careful
consideration of the cost of borrowing and the Company may seek to
use hedging or otherwise seek to mitigate the risk of interest rate
increases. Gearing, represented by borrowings as a percentage of
gross assets, will not exceed 55% at the time of investment. It is
the Directors’ current intention to target gearing of less than 30%
of gross assets in the long term and to comply with the REIT
condition relating to the ratio between the Group’s property
profits and property finance costs. Details of the Company’s
borrowings are given in note 19.
Use of derivatives
The Company may invest through derivatives for efficient
portfolio management. In particular, the Company may engage in
interest rate hedging or otherwise seek to mitigate the risk of
interest rate increases as part of the Company’s efficient
portfolio management.
Investment restrictions
The Company invests and manages its assets with the objective of
spreading risk through the following restrictions:
- the Company will derive its rental income from a portfolio of
not less than 500 studios;
- the value of any newly acquired single property will be limited
to 25% of gross assets, calculated as at the time of
investment;
- the Company mostly invests in modern, purpose built, private
student residential accommodation and teaching facilities located
primarily in and around London.
Accordingly, no less than 75% of the Group’s property
portfolio will comprise assets which are located in and around
London, calculated as at the time
of investment;
- at least 90% by value of the properties directly or indirectly
owned by the Company shall be in the form of freehold or long
leasehold (over 60 years remaining at the time of acquisition)
properties or the equivalent;
- the Company will not (i) invest more than 20% of its gross
assets in undeveloped land; and (ii) commit more than 15% of its
gross assets to forward-funded projects in respect of such
undeveloped land, such commitment to be determined on the basis of
the net construction funding requirements (and associated advisory
costs) of such projects at the time of commitment up to their
completion, in both cases as measured at the time
of investment;
- the Company will not invest in completed assets which are not
income generative at, or shortly following, the time of
acquisition; and
- the Company will not invest in closed-ended investment
companies.
The Directors currently intend, at all times, to conduct the
affairs of the Company so as to enable it to qualify as the
principal company of a REIT for the purposes of Part 12 of the CTA
(and the regulations made thereunder).
In the event of a breach of the investment guidelines and
restrictions set out above, the Investment Manager shall inform the
Directors upon becoming aware of the same and, if the Directors
consider the breach to be material, notification will be made to a
Regulatory Information Service.
No material change will be made to the investment policy without
the approval of shareholders by ordinary resolution.
Business and status of the Company
The Company is registered as a public limited company and is an
investment company within the terms of section 833 of the Act. The
Company is a REIT for the purposes of Part 12 of the CTA.
Notification has been submitted to, and acknowledged by, HMRC for
the Company to enter the UK REIT regime. The Company will be
treated as a REIT so long as it continues to meet the REIT
conditions in relation to any accounting period.
The Company was incorporated on 26 February 2013. The
Company’s shares trade on the SFS.
The Company’s performance, along with the important events that
have occurred during the period under review, the key factors
influencing the financial statements and the principal risks and
uncertainties for the financial period are set out in the
Chairman’s statement above and on the following pages.
UK STUDENT ACCOMMODATION MARKET
Overview
The UK has some of the highest ranking universities in the
world, with three in the top 10 and seven in the top 50 in
2015/161. The UK higher education sector is a c.£60
billion contributor to the UK’s economy.
Students have become increasingly globally mobile with,
according to the OECD, over 4.5 million students studying abroad in
2014, up from 2 million in 2000. This figure is forecast to
reach 8 million by 2025. China,
India, the Republic of Korea,
Germany and Saudi Arabia are the top five countries with
students going abroad, with c.500,000 Chinese students going abroad
in 2014, an increase of 11% over 2013.
The world’s population is increasingly becoming more educated.
Many of the world’s largest established economies now have nearly
half of their 25 to 34 year-olds with tertiary education. A stark
contrast to that of the population of 55 to 64 year-olds, where the
proportion is much lower2.
The student body has also changed over the period, becoming
younger and with a higher proportion of full-time students, as the
decline in the number of part-time and mature students has
continued. Full-time students now make up 74% of the student body,
up from 62% at the start of the decade, and under-25s now make up
three-quarters of all undergraduates and a third of
postgraduates3.
As well as changes in the age of students and their mode of
study, the student body has become more cosmopolitan over the
decade. In 2004/05, 4% of students came from the EU and 9% from
outside the EU. By 2014/15, the numbers had increased to 5%
and 14% respectively4.
The US is the most popular market for international students,
with the UK in second place, though significantly stronger on a per
capita basis. One of the UK’s advantages is its average cost of
living and tuition, which is generally lower than in both the US
and Australia5.
Investment market
2015 saw record levels of investment activity in the UK
student accommodation market with over £5.7 billion traded.
The year was marked by a number of large portfolios being traded,
which combined, totalled over £3.4 billion in six portfolios.
The portfolios were acquired by a number of new entrants to the
market including sovereign wealth funds, US multi-family specialist
investors, institutional funds and some opportunity and private
equity funds.
In addition to the portfolios, a number of individual asset
transactions took place with purchasers including UK institutional
investors, international investors and listed companies. Three
individual assets in London each
traded for in excess of £100 million.
2016 has continued in a similar vein with c.£2 billion traded to
date and a further c.£1.5 billion forecast to trade by the end of
the year.
HEI acceptance rates
The 2015/16 academic cycle broke last year’s record, with the
intake of undergraduates entering UK higher education totalling
c.532,000.
On 2 September 2016, UCAS
published daily clearing analysis with students placed at that date
which showed UK students were up 1%, EU students were up 8% and
non-EU students were down 1% giving an overall increase of 1%
across the student population for the 2016/17 academic year.
Student accommodation – the importance
of design and quality
Purpose-built student accommodation has evolved as a product
over the past 15 years. Over this period, and in particular,
following the introduction of tuition fees, students have
become consumers in their own right and are making their investment
decisions for their higher education not just based on course
price, but also on a mix of quality of the academia and the quality
and location of accommodation.
Increasingly, students are demanding high-quality living space
with clever design, quality materials, TV areas, communal
kitchens and social areas in the buildings which provide
opportunities for social groups to form and bond centred around
work spaces and play space. Likewise, they are demanding services
that create wider social interaction such as talks, events,
workshops and tie-ins with local businesses and educational
establishments.
This is particularly the case for international students who
tend to demand a higher standard of accommodation than
domestic students and who have a requirement for greater social
interaction.
Student accommodation – supply/demand
imbalance
There is a fundamental supply/demand imbalance in the UK student
accommodation sector which is responsible for the stability and the
strong rental and capital returns produced in this financial
year.
The UK has seen a rising tide of student numbers since the early
1990s, with the student population more than doubling over this
period. Domestic student applications have increased despite an
ageing population and international student numbers continue to
grow at a disproportionate rate, as evidenced by the increase in
international student application rates for the 2016/17 academic
year.
There is a structural shortfall of purpose-built student
accommodation in most of the UK. The supply of private student
accommodation has failed to keep pace with the increasing demand
owing to the following:
- the residential property market has recovered over the past few
years, increasing land values as well as increasing the pressure on
the private residential sector to house tenants other than students
who are willing to pay higher rent levels;
- the private rented sector has become subject to greater local
authority and government legislation for houses in multiple
occupancy; and
- universities are not developing new accommodation as they
are becoming more focused on their core competency of investing
in education.
The London market
London has more world-class
universities than any other city in the world. International
students are attracted to London
for a number of reasons, including the reputation of London’s
universities, the quality of education and London’s status as a
social and cultural centre.
The Company is primarily focused on the London student accommodation market because
this is where the supply/demand imbalance is at its greatest.
London has a number of important
demand dynamics that separate it from the wider UK student housing
market:
- London has the largest number
of students of any city in the UK, with over 400,000 students being
educated at HEIs in the capital;
- London has the largest number
of international students of any city in the world with c.109,000
students in 2014/15 from over 190 countries;
- London is home to some of the
leading HEIs in the world which attract a significant number of
international students;
- London is one of the most
popular cities in the world to visit with an estimated 18.6 million
international visitors in 2015; and
- London universities are only
able to supply accommodation to c.30% of first year and
international students.
On the supply side, the main constraints are as follows:
- availability of well-located sites is at its lowest and
land prices have experienced significant inflation driven by
residential development; and
- the introduction of the community infrastructure levy in some
boroughs has eliminated the commercial viability of many student
schemes.
The acute supply/demand imbalance is more pronounced in
London than in any other major UK
city. In 2015, there were over 250,000 domestic first year
undergraduates, international students and postgraduates studying
in the capital with only c.70,000 purpose-built student
accommodation beds in halls of residence available in aggregate
from both the university and private sectors, indicating a
structural supply shortfall of c.178,000 beds. It is this shortfall
that underpins the strong performance of the asset class in
the capital.
1. Times Higher Education World University Rankings 2015/16.
2. OECD Education at a Glance 2014. A1-3.
3. HESA student record.
4. OECD Education at a Glance 2014. A1-3.
5. Savills: Spotlight, World Student Housing 2015/16.
REVIEW OF THE FINANCIAL YEAR
Financial results
The Company achieved average rental growth of 4.5% across the
portfolio for the 2015/16 academic year, producing a strong
set of results, with total rental income for the year ended
30 June 2016 of £22.5 million generated from the
Company’s enlarged property portfolio following the acquisition of
Scape Shoreditch, Scape Surrey, The Pad 2 and Water Lane
Apartments.
Total gains on investment properties through revaluation of the
Company’s investment portfolio were £27.2 million as at
30 June 2016, positively impacting
operating profit and generating EPS of 15.5
pence. The adjusted EPS for the period was 5.30 pence (excluding one-off finance costs
relating to the C share issue in 2015 and fair value
gains on investment properties).
Total administration expenses of £5.7 million comprise fund
running costs, including the Investment Manager’s fee, Asset and
Facilities Managers’ fees and other service provider costs in
the period.
Ongoing finance charges of £3.4 million in the period comprise
loan and swap interest associated with the Company’s financing
arrangements.
Exceptional finance costs of £7.6 million relate to the C
share issue together with costs associated with the cancellation
and refinance of loan facilities. In accordance with IFRS, the C
shares were accounted for as debt instruments. The costs of the C
share issue and property valuation gains for the period the
C shares were in issue are amortised through finance costs.
The amortisation charge is fully offset by a corresponding increase
in equity upon conversion, which has positively impacted the net
assets of the Company.
The Company generated total profit before tax for the period of
£28.3 million.
Financial performance
Income statement
|
For the
year ended
30 June 2016
£’000 |
For the
year ended
30 June 2015
£’000 |
Rental income |
22,482 |
11,505 |
Operating expense |
(4,600) |
(2,529) |
Gross profit (net
operating income) |
17,882 |
8,976 |
Net operating
margin |
79% |
78% |
Administration
expenses |
(5,712) |
(2,001) |
Gains on investment
properties |
27,156 |
25,660 |
Operating
profit |
39,326 |
32,635 |
Finance income |
75 |
43 |
Finance costs –
ongoing |
(3,441) |
(1,293) |
Finance costs –
other |
(7,635) |
— |
Profit before tax
for the year |
28,325 |
31,299 |
Dividends
In order to maintain its REIT status, the Company is
required to meet a minimum distribution test for each accounting
period for which it is a REIT.
This test requires the Company to distribute at least 90% of the
income profits of the property rental business for each accounting
period, as adjusted for tax purposes. In respect of the financial
year ended 30 June 2016, the Company paid dividends of
5.66 pence per ordinary share.
The dividends were paid as 5.31
pence per ordinary share as a REIT property income
distribution in respect of the Group’s tax exempt property rental
business and 0.35 pence per ordinary share as an ordinary UK
dividend. The Company fulfilled all of its obligations under the UK
REIT regime and is in full compliance with the REIT requirements at
30 June 2016 and as at the date
of this report.
Dividend cover
The Company seeks to maintain a high level of dividend cover.
Dividends of £10.6 million (5.66
pence per ordinary share) were paid during the year. The
dividends were 94% covered by adjusted EPS of 5.30 pence per share, which is adjusted to
exclude exceptional items principally those arising in connection
with the oversubscribed issue of C shares during the period, which
include charges arising due to the accounting treatment of C shares
as debt instruments and the issue costs, which were met by
subscribers for the C shares rather than the Company.
Capital raises
The Company completed two oversubscribed equity capital raises
during the period, raising gross proceeds of £19 million in
February 2016 and £60 million in
May 2016.
Cash flow generation
The Company held cash and cash equivalents of £66.3 million at
the end of the financial year. A total of £4.2 million of
operating cash flows were generated in relation to the Company’s
student accommodation portfolio. Total equity capital raised in the
year amounted to £79 million, which was used in part to fund
the acquisition of Water Lane Apartments. The remaining cash
outflows relate to the cost of servicing the Company’s debt
facility in addition to payment of dividends, resulting in a net
increase in cash and cash equivalents at the year end.
Debt financing
During the period, the Company successfully secured a £130
million debt facility with Pricoa Mortgage Capital, which replaced
its previous facility with Barclays Bank. The Pricoa facility,
matures in September 2024 and was
issued at a fixed rate of 3.07%. In order to facilitate the
drawdown of the facility, the Group was restructured. Further
information is given in note 15. The Company remains
conservatively positioned as regards to its borrowing levels, with
a loan-to-value of 26.6% as at 30 June 2016.
Asset performance
The Company experienced 4.5% year-on-year rental growth for the
2015/16 academic year and marginal yield compression. The valuation
of the Company’s property portfolio has increased by £58.9 million
or 16.1% since the Company’s IPO or its acquisition
of assets.
The portfolio was fully occupied for the 2015/16
academic year, on 51-week tenancies.
Net assets
Net assets attributable to equity holders at 30 June 2016 were £358.5 million, up from
£137.7 million at 30 June 2015. The increase in net assets
since the prior year end is primarily driven by the acquisition of
four further properties.
At 30 June 2016, there were
261,795,015 ordinary shares in issue, giving an EPRA NAV
(cum-income) per ordinary share of 136.93
pence.
Financial performance
Net assets
|
For
the
year ended
30 June 2016
£’000 |
For
the
year ended
30 June 2015
£’000 |
Assets |
|
|
Property |
424,787 |
177,220 |
Receivables |
7,682 |
18,991 |
Cash and cash
equivalents |
66,337 |
106,292 |
Total
assets |
498,806 |
302,503 |
|
|
|
Liabilities |
|
|
Payables |
(6,929) |
(5,341) |
Deferred income |
(5,235) |
(2,442) |
Senior loan |
(128,174) |
(39,569) |
Financial liabilities
at amortised cost |
— |
(117,422) |
Total
liabilities |
(140,338) |
(164,774) |
Net assets |
358,468 |
137,729 |
Number of
shares |
261,795,015 |
109,910,428 |
EPRA NAV per
share |
136.93p |
125.51p |
EPRA NNNAV per
share |
136.93p |
125.31p |
NAV and share
price performance
The Company’s ordinary shares have traded at an average premium
of 5.7% since IPO, with an average premium over the financial year
of 4.6%. The Company’s share price hit an all-time high of
141.00 pence per ordinary share on
2 November 2015. The Company’s
ordinary shares have persistently traded at a premium to their NAV
since IPO in 2013. However, as a consequence of the significant
market volatility arising in the immediate aftermath of the
‘Brexit’ vote on 23 June 2016, the
Company’s ordinary shares briefly traded at a discount to their
NAV. As at 30 June 2016 the Company’s
ordinary shares traded at a 3.6% discount to NAV.
The secondary market rating of the Company’s ordinary shares in
the period since the year end has recovered and as at 14 September 2016, this being the latest
practicable date prior to the publication the Company’s accounts,
its ordinary shares traded at a premium of 8.1% to the prevailing
NAV.
EPRA NAV (cum income) has increased from 125.51 pence as at 30 June 2015 to
136.93 pence per ordinary share as at
30 June 2016, a 9% increase
year-on-year. Dividends of 5.66 pence
per ordinary share were paid/declared to shareholders. At the Group
level, the annualised total return since IPO was 13.9%, which
exceeds the annualised target return of 8-10%.
COMPANY PERFORMANCE
Key performance indicators
|
2016 |
2015 |
|
|
|
Annualised shareholder
return since IPO |
13.9% |
18.1% |
|
|
|
EPRA NAV per ordinary
share |
136.93p |
125.51p |
|
|
|
Basic earnings per ordinary
share |
15.5p |
28.5p |
|
|
|
Loan-to-value |
26.6% |
22.5% |
|
|
|
Dividends per ordinary share for the
year |
5.66p |
5.60p |
|
|
|
Rental growth |
4.5% |
3.6% |
|
|
|
PROPERTY PORTFOLIO
Quality, design and brand
The Company’s property portfolio is made up of high-quality,
modern student accommodation focusing on international students,
postgraduates and domestic students alike. The living experience
forms a mainstay of each student’s university life and the Company
has put the quality, design, experience and performance of its
assets at the heart of its operational strategy. This is achieved
through the Company’s investment selection and its choice of
Asset and Facilities Managers.
Scape is the Asset and Facilities Manager for Scape East, Scape
Greenwich, Scape Surrey and Scape Shoreditch. The vision of the
Scape brand was to create a new kind of student accommodation; one
that was affordable but with modern design. By enlisting the
help of leading interior designers and top architects, Scape
continues to ensure that high standards of quality finishes and
service are met. Years of hard work and listening to student
feedback has resulted in some of the best student accommodation in
London.
Alongside the striking design features, the properties also
offer ample common space for students to socialise and study.
High-speed internet and wi-fi are available throughout each
location. Scape responds proactively to student feedback, which has
resulted in the provision of extra facilities and amenities, such
as additional private rooms for group study, recreational areas and
a gym.
During the year under review, CRM was the Asset and Facilities
Manager for The Pad and Pad 2. Scape will replace CRM as Asset and
Facilities Manager with effect from 1 September 2016.
Collegiate is the Asset and Facilities Manager for Water Lane
Apartments. Collegiate’s management philosophy is based on
enhancing the university experience for their residents. Collegiate
specialises in managing high-specification, design led schemes with
a focus on superior service quality. Collegiate’s team has
experience in managing a range of diverse student accommodation
assets, in over 20 cities, and across over 30 student blocks,
serving some 30,000 student tenants.
Scape East
450 Mile End Road, London E1
4GG
Scape East is a private student
residence located in Mile End,
London. It was completed in
June 2012 under the Scape brand.
Scape East is located directly opposite QMUL, which is a Russell
Group HEI and one of London’s leading universities with c.17,000
students. Approximately 87% of all Scape East’s direct let students
study at QMUL. The impressive building encompasses a double height
entrance and floor-to-ceiling glazed reception. Residents have
access to a private courtyard garden, free gym, TV and games
lounge, communal kitchen, study areas and two on-site
restaurants.
Additional rental income is generated through a 30-year FRI
lease with annual RPI uplifts of teaching facilities. This has
generated 6.5% of total revenues for Scape East for the 2015/16
academic year.
As at 30 June 2016, Scape East was
occupied by students from 25 different HEIs and of 67
different nationalities, with c.89% of tenants coming from outside
the UK.
Scape Shoreditch
45 Brunswick Place, London N1
6DX
Scape Shoreditch is located in a prime
London location in Shoreditch. The
property was acquired by the Company in September 2015.
The property is within a 15-minute walk of The City University
(c.18,000 students) and CASS Business School.
The building comprises 541 studio bedrooms and c.10,000 sq ft of
communal areas including a gym, dance studio, study lounge, games
room, cinema, communal kitchen, sun terrace and barbecue terrace.
The building also includes c.49,000 sq ft of
commercial facilities let to WeWork on a 15-year fully repairing
and insuring lease. The lease generates approximately 25% of total
revenues for Scape Shoreditch after expiry of the tenant’s
incentives.
At 30 June 2016, Scape Shoreditch
was occupied by students from 45 HEIs and of 59 different
nationalities, with c.94% of tenants coming from outside the
UK.
Scape Greenwich
Bear Point, 2 East Parkside, Greenwich SE1 0FQ
Scape Greenwich is a private student
residence located on the Greenwich Peninsula, London, which was acquired by the Company in
May 2014.
The property is situated in a prime London student residential location within 30
minutes of c.75% of London’s HEIs and in close proximity to
Ravensbourne College (with c.1,600 students), a leading specialist
digital media HEI, and to the University of Greenwich (with
c.26,000 students).
Designed by award-winning architects, AHMM, Scape Greenwich
comprises 280 studios and approximately 10,000 sq ft of
communal facilities, kitchens, study areas and
breakout rooms.
As at 30 June 2016, Scape
Greenwich was occupied by students from 20 different HEIs and
of 53 different nationalities, with c.43% of tenants coming from
outside the UK.
Scape Surrey
1 Kernel Court, Walnut Tree Close, Guildford GU1 4BJ
Scape Surrey is a private student residence located
in Guildford, which was acquired
by the Company in September 2015.
Scape Surrey is located in
Guildford within 100 metres of the
south gate to The University of Surrey (ranked 4th in the UK) and in close
proximity to the University of Law and the Academy of Contemporary
Music and five minutes to Guildford train station and town centre. The
building comprises 141 bedrooms (c.40% en-suite bedrooms and c.60%
studios) and c.2,000 sq ft of communal space including a games
room, private study area and a cinema room.
At 30 June 2016, Scape Surrey was
occupied by students from 5 HEIs and of 32 different nationalities,
with c.54% of tenants coming from outside the UK.
The Pad
71 Egham Hill, Egham TW20
0ER
The Pad is a private student residence
which was acquired by the Company in two phases, in December 2013 and September 2015 and is located adjacent to RHUL,
in Egham.
The Pad is the only purpose-built private student accommodation
within five miles of RHUL.
The building contains modern, purpose-built student
accommodation blocks. The Pad offers 220 rooms comprising of 119
studios and 101 en-suite rooms. The studios comprise
fully-furnished rooms with kitchenette and appliances provided and
en-suite shower room. Blocks in the main building are typically
three to six bedrooms, share a large fully-fitted kitchen and
living area and include fully-furnished study bedrooms with
en-suite shower rooms.
The property opens out onto a large leafy courtyard area with
patios, outdoor seating and gardens for students to break out in
the summer months.
As at 30 June 2016, The Pad was
occupied exclusively by students from RHUL, comprising 35 different
nationalities, with c.78% of tenants coming from outside the
UK.
Water Lane Apartments
Template Street, Bristol BS1
6WG
Water Lane Apartments is a private
student residence located in Bristol, which was acquired by the Company in
February 2016.
The University of the West of England, which has over 27,000 students, lies
to the North of Bristol
approximately six miles from the property. The University of
Bristol, which has over 22,000
students, is approximately one mile away from the
property.
The property comprises 153 studio beds, which are fully occupied
on 51-week lettings for the 2015/16 academic year, and associated
communal areas including a gym, common and study rooms, and
a cinema.
The site is located in central Bristol between Bristol Temple Meads train
station and the city centre. The property is located on Water Lane,
and has the ruins of The Temple or Holy Cross Church adjoining the
property.
As at 30 June 2016, Water Lane
Apartments was occupied by students of 34 nationalities, with c.54%
of tenants coming from outside the UK.
Acquisitions in the year
The Company acquired four modern student accommodation assets,
doubling the size of its property portfolio. The acquisitions were
financed by a combination of the proceeds from share issuance and
the new Pricoa debt facility.
Scape Surrey and The Pad 2 were
both acquired by way of forward purchase agreements, enabling the
Company to lock in a purchase price based on the yield at the time
of signing the agreements. Prior to purchase, yields compressed
which translated into an attractive acquisition price for
shareholders on both assets. Scape Shoreditch was acquired by
way of a corporate acquisition and was negotiated with the vendor
in an off-market transaction.
Water Lane Apartments was acquired by way of a property purchase
and was sourced and negotiated with the vendor in an off-market
transaction.
Future acquisitions
The Company has exchanged contracts, subject to planning, to
secure the acquisition of Apex House, a forward-funded development
asset located in Wembley, London.
The Company has also entered into a conditional forward purchase
agreement to acquire Podium, a high specification, purpose-built,
private student accommodation residence adjacent to RHUL.
Podium, Royal Holloway
Forward purchase agreement
The property is expected to be completed for the 2017/18
academic year providing approximately 170 beds in four buildings,
and is in the same locality as The Pad, which comprises two
buildings with c.220 beds currently owned by the Group. The Company
entered into the agreement to lock in a purchase price based on the
yield at the time of signing, providing visibility over future
acquisition cost.
Apex House, Wembley
Forward funding agreement
Apex House will provide high-specification, purpose-built
private student accommodation with c.580 modern studios and beds
with communal areas. The property is located adjacent to Wembley
Stadium and within short walking distance from Wembley Park Station
with travel times of eight minutes to Marylebone, 20 minutes to
Bond Street and 25 minutes to King’s Cross. The majority of
London’s universities are accessible within 30 minutes.
Apex House will be constructed and designed to specifications
set by the Group and Scape, who will oversee the development and be
appointed as the Asset and Facilities Manager upon completion. The
property is expected to be operational for the 2017/18 academic
year.
CORPORATE, SOCIAL AND ENVIRONMENTAL
RESPONSIBILITY
The Company’s aim is to operate a fully sustainable business
model with a low carbon footprint.
Sustainability
The Company’s environmental sustainability measures include the
use of highly-efficient combined heat and power systems, ground
source heat pumps and intelligent interior heating and lighting to
minimise GHG emissions. The Company’s property portfolio
incorporates green roof space, rainwater harvesting and sustainable
waste management, including diverting waste from landfill to
generate renewable electricity via the waste management process. In
the year to 30 June 2016, Scape
converted c.88% of property waste from Scape East, Scape Greenwich,
Scape Surrey and Scape Shoreditch into renewable energy, with an
additional 10% into national recycling schemes.
Environmental impact
The Company is committed to being both socially and
environmentally responsible and recognises the impact it has
on the environment. The Company has delegated the day-to-day
asset and facilities management to the Asset and Facilities
Managers, who are responsible for the provision of energy supplies,
including the procurement of renewable energy, managing the
Company’s waste schemes and raising general awareness of
environmental impact and waste reduction amongst the Group’s
employees and residents.
Details of the Company’s GHG emissions are given in the
Directors’ report in the full annual report.
Diversity and equality
The Company is committed to achieving a working environment
which provides equality of opportunity and freedom from unlawful
discrimination on the grounds of race, sex, pregnancy and
maternity, marital or civil partnership status, gender
reassignment, disability, religion or beliefs, age or sexual
orientation. The Company’s policy aims to remove unfair and
discriminatory practices and to encourage full contribution from
its diverse community. The Company is committed to actively
opposing all forms of discrimination and values diversity amongst
its workforce.
Further information on the Company’s diversity policy is
included in the corporate governance statement in the full annual
report.
Social and community
The Company is committed to being socially responsible and the
Directors consider community involvement to be an important part of
that responsibility. The Company is indirectly involved with a
number of social and local community initiatives via the Asset and
Facilities Managers, such as local employment schemes and
initiatives to give back to the local area through student
bursaries, sponsorship and local events.
Human rights
The Company respects human rights and aims to provide assurance
to internal and external stakeholders that it will carry out its
affairs in accordance with the principles of the Universal
Declaration of Human Rights. No human rights concerns have arisen
within the Company’s operations or its supply chain during the year
ended 30 June 2016.
The Company is not within the scope of the Modern Slavery Act
2015 because it has not exceeded the turnover threshold and
therefore no further disclosure is required.
Employees
Scape has overall responsibility for the supervision and
provision of asset management services through oversight and
management of the employees of GCP Operations Limited, a subsidiary
of the Company, and has responsibility for the procurement and
supervision of the facilities management services on behalf of the
Company in connection with Scape East, Scape Greenwich, Scape
Surrey and Scape Shoreditch, and with effect from 1 September 2016, The Pad.
Gender breakdown
The gender breakdown of the Group’s Directors, senior management
and employees as at 30 June 2016 is
detailed below.
|
Male |
Female |
Directors |
3 (2015: 3) |
1 (2015: 1) |
Senior management |
3 (2015: 2) |
3 (2015: 2) |
Employees |
38 (2015: 33) |
30 (2015: 14) |
RISK MANAGEMENT
Role of the Board
The Directors have overall responsibility for risk management
and internal control within the Group. The Directors recognise that
risk is inherent in the operation of the Group and that effective
risk management is key to the success of the organisation. The
Directors have delegated responsibility for the assurance of the
risk management process and the review of mitigating controls to
the audit committee.
The Directors, when setting the risk management strategy, also
determine the nature and extent of the significant risks and its
risk appetite in implementing this strategy. A formal risk
identification and assessment process has been in place since IPO,
resulting in a risk framework document which summarises the key
risks and their mitigants.
The Directors undertake a formal risk review with the assistance
of the audit committee at least twice a year in order to assess the
effectiveness of the Group’s risk management and internal control
systems. During the course of such review, the Directors have not
identified, nor been advised of any failings or weaknesses which it
has determined to be of a material nature. The principal risks and
uncertainties which the Group faces are set out below.
Internal control review
The Board is responsible for the systems of internal controls
relating to the Group and the reliability of the financial
reporting process and for reviewing their effectiveness.
The Directors have reviewed and considered the guidance supplied
by the Financial Reporting Council on risk management, internal
control and related finance and business reporting and an ongoing
process has been established for identifying, evaluating and
managing the risks faced by the Group. This process, together with
key procedures established with a view to providing effective
financial control, was in place during the year under review and at
the date of the signing of this report. The internal control
systems are designed to ensure that proper accounting records are
maintained, that the financial information on which business
decisions are made and which are issued for publication is reliable
and that the assets of the Company are safeguarded. The risk
management process and Group systems of internal control are
designed to manage rather than eliminate the risk of failure to
achieve the Company’s objectives. It should be recognised that
such systems can only provide reasonable, not absolute, assurance
against material misstatement or loss.
The Directors have carried out a review of the effectiveness of
the systems of internal control as they have operated over the
period and up to the date of approval of the report and financial
statements.
There were no matters arising from this review that required
further investigation and no significant failings or weaknesses
were identified.
Internal control assessment
process
Regular risk assessments and reviews of internal controls are
undertaken in the context of the Company’s overall investment
objective. The Board, through the audit committee, has identified
risk management controls in the following key areas:
- investment objective and portfolio;
- investment strategy;
- operational risks (particularly in relation to preparation of
financial information);
- compliance with laws and regulations; and
- reliance on third party service providers and financial
risks.
In arriving at its judgement of what risks the Company faces,
the Board has considered the Company’s operations in the light of
the following factors:
- the nature and extent of risks which it regards as acceptable
for the Company to bear within its overall
business objective;
- the threat of such risks becoming reality;
- the Company’s ability to reduce the incidence and impact of
risk on its performance;
- the cost to the Company and benefits related to the review of
risk and associated controls of the Company; and
- the extent to which the third parties operate the relevant
controls.
A risk matrix has been produced against which the risks
identified and the controls in place to mitigate those risks can be
monitored. The risks are assessed on the basis of the likelihood of
them happening, the impact on the business if they were to occur
and the effectiveness of the controls in place to mitigate them.
This risk register is reviewed at least every six months by the
audit committee and at other times as necessary.
The Board reviews financial information produced by the
Investment Manager and the Administrator on a regular basis at each
Board meeting as part of the NAV and dividend approval process.
Most functions for the day-to-day management of the Company are
sub-contracted, and the Directors therefore obtain regular
assurances and information from key third party suppliers regarding
the internal systems and controls operated in their organisations.
In addition, each of the third parties is requested to provide a
copy of its report on internal controls each year, which is
reviewed by the audit committee.
Going concern
In assessing the Company’s ability to continue as a going
concern, the Directors have considered the Company’s investment
objective (detailed above), risk management policies (detailed
above), capital management (see note 28 to the financial
statements), its quarterly NAV and the nature of its portfolio and
expenditure projections. The Directors believe that the Company has
adequate resources, an appropriate financial structure and suitable
management arrangements in place to continue in operational
existence for the foreseeable future. In addition, the Board
has had regard to the Company’s investment performance, the price
at which the Company’s shares trade relative to the NAV, and
ongoing investor interest in the continuation of the Company
(including feedback from meetings and conversations with
shareholders by the Company’s advisers).
Based on their assessment and considerations, the Directors have
concluded that they should continue to prepare the financial
statements of the Company on a going concern basis and the
financial statements have been prepared accordingly.
Viability statement
The Directors have considered each of the Company’s principal
risks and uncertainties detailed below, in particular the risk
and impact of a downturn in the UK commercial property market or
the international student market which could materially affect the
valuation and cash flows of the Company’s investments, impacting
the viability of the Company. The Directors also considered the
Company’s policy for monitoring, managing and mitigating its
exposure to these risks.
This assessment involved an evaluation of the potential impact
on the Company of these risks occurring. Where appropriate, the
Company’s financial model was subject to a sensitivity analysis
involving flexing a number of key assumptions in the underlying
financial forecasts in order to analyse the effect on the Company’s
net cash flows and other key financial ratios including loan
covenants.
The Directors have assessed the prospects of the Company over a
longer period than the twelve months required by the going concern
provision. The Board has conducted this review for a period
covering the next five years as the Company does not have a fixed
life, it assumes long term hold periods for the assets in its
portfolio and analyses its financial model over a five-year
horizon.
The Company’s assets derive revenues considered to be dependable
due to the inherent supply demand imbalances of the market in which
the Company operates. Additionally the Company’s low leverage
comprises a fixed rate facility which matures beyond the five year
horizon. Therefore the Directors have a reasonable expectation that
the Company will be able to continue in operation and meet its
liabilities as they fall due over the five year period of their
assessment.
Principal financial risks
The principal financial risks, the Company’s policies for
managing these risks and the policy and practice with regard to
financial instruments are summarised in note 27 to the financial
statements.
The Directors have also identified the following additional
risks and uncertainties:
Risk |
How the risk is managed |
Investment
strategy |
Investment
objective |
There can be no guarantee that the
investment objective of the Company will be achieved. The Company’s
investment objective is to provide shareholders with
attractive total returns in the longer term through the potential
for modest capital appreciation and regular, sustainable, long-term
dividends with RPI inflation-linked income characteristics. |
The Company has acquired six assets
which meet the investment strategy. The Investment Manager and
Asset and Facilities Managers have significant experience in the
sector which should provide the Company with access to assets to
continue to meet its investment strategy going forward. |
Execution |
Availability of
suitable investments |
There can be no assurance that the
Investment Manager will be successful in sourcing suitable
investments or that the Company will make any further investments
in property assets. The availability of such future investment
opportunities will depend upon a number of factors including,
but not limited to, the availability of suitable assets for
acquisition within the Company’s investment objective and policy,
conditions in the UK student accommodation sector and the ability
of the Company to access appropriate funding. |
The Investment Manager has
significant relationships and experience in the sector which
provide the Group with access to an investment pipeline. The
Company has a high-quality broad shareholder base and an accordion
debt facility which minimises capital raising risk. |
Due
diligence |
Prior to entering into an agreement
to acquire any property, the Investment Manager will perform due
diligence, on behalf of the Company, on the proposed investment. To
the extent that the Investment Manager underestimates or fails to
identify risks and liabilities associated with the investment in
question, the Company may be subject to defects in title, to
environmental, structural or operational defects requiring
remediation, or may be unable to obtain necessary permits which may
materially and adversely impact the NAV and the earnings of the
Company. |
In addition to the due diligence
carried out by the Investment Manager, third party technical,
insurance and legal experts are engaged to advise on specific risks
to an acquisition, whether it be structured via a property owning
vehicle or a direct property acquisition. |
Portfolio |
|
General property and
investment market conditions |
The Company’s performance depends on
property values in the UK to a significant extent. An overall
downturn in the UK property market and the availability of credit
to the UK property sector may have a materially adverse effect upon
the value of the property owned by the Group and ultimately upon
the net asset value and the ability of the Company to generate
revenues. |
The Investment Manager continuously
monitors market conditions and provides the Board with quarterly
updates on the student accommodation market and senior debt market
to act as an early warning signal of any adverse market conditions
ahead. |
Property
valuation |
The valuation of the Group’s
property portfolio is inherently subjective, in part because all
property valuations are made on the basis of assumptions which may
not prove to be accurate, and because of the individual nature of
each property and limited transactional activity. Valuations of the
Company’s investments may not reflect actual sale prices, even
where any such sales occur shortly after the relevant
valuation date. |
The Company has entered into a
valuation agreement with Knight Frank LLP to provide quarterly
valuations. Knight Frank is one of the largest valuers of student
accommodation in the UK and therefore has access to the maximum
number of data points to support their valuations. In addition to
this, the Board of Directors has significant experience of property
valuation and its constituent elements. |
Development
risk |
The Company may invest in
development and forward-funded projects which have received
planning permission for student accommodation. Development
activities may involve a higher degree of risk than is associated
with operating properties and may be subject to delays or
disruptions which are outside of the Company’s control. |
The Company will engage third party
professional advisers to review and opine on development risk prior
to commitment. All contracts entered into will be guaranteed
maximum price contracts with a suitable contractor and significant
equity buffer. |
Scape Student Living
brand |
The Group’s success and
results are, to some extent dependent on the strength and
reputation of the Scape Student Living brand. The Scape Student
Living brand is vulnerable to adverse market perception as it
operates in an industry where integrity, customer trust and
confidence are paramount. Any damage to the Scape Student Living
brand could cause a decline in the demand for accommodation and/or
the rental rates that can be achieved at the properties owned by
the Group, the occurrence of which could have an adverse effect on
the Group’s revenue, performance, margins and asset values. |
The Investment Manager and Asset and
Facilities Manager, Scape, provide the Board with quarterly reports
which include any operational or performance-related issues which
could potentially have an impact on brand confidence or integrity.
The analysis provides the Board with the tools to address any
occurrence which could have an adverse effect on the Group’s
revenue, performance, margins and asset values. |
Concentration
risk |
Whilst it is the Board’s intention
for the Group to acquire additional property assets in the
future, there can be no certainty that it will be able to do so.
Substantially all of the Group’s assets are currently located in
and around London; as a result of this concentration, the Company
may be adversely affected by events which damage or diminish
London’s attractiveness to students (especially overseas students)
or London property values. Any circumstances which materially
affect the returns generated by the Group’s property portfolio
may materially and adversely impact the NAV and earnings of
the Company. |
The Company acquired four assets
during the year, which provides an increased level of
diversification across the portfolio. The Company is focused on the
London market because this is where the largest supply/demand
imbalance exists in the UK student accommodation market. The
Investment Manager and the Asset and Facilities Managers have
significant experience in the sector and continuously monitor the
market to act as an early warning signal of any adverse market
conditions ahead. |
Liquidity |
The Group invests in student
residential accommodation and teaching facilities. Such investments
are illiquid and may be difficult for the Company to sell and
the price achieved on any such realisation may be at a
discount to the prevailing valuation of the relevant
investments, which may materially and adversely impact the NAV and
earnings of the Company. |
Whilst the Company invests funds
with the aim of both capital appreciation and investment income, it
has no immediate plans to sell or realise the capital appreciation
(and so generate returns) from any increase in the value of its
investment properties, except by way of increased rental income.
Accordingly the Board considered that this risk is mitigated to a
suitably low level. |
Rental
income |
Rental income and property values
may be adversely affected by increased supply of student
accommodation and teaching facilities, the failure to collect
rents, periodic renovation costs and increased operating costs. A
decrease in rental income and/or in property values may materially
and adversely impact the NAV and earnings of the Company as well as
the ability to service interest on its debts in the longer
term. |
The Investment Manager will only
propose to the Board those assets which it believes are in the most
advantageous locations and benefit from large supply and demand
imbalances that can bear the entry of new competitors into the
market. In addition, the quality of assets that the Company
acquires will be amongst the best in class to minimise occupancy
risk. The Investment Manager monitors the performance of the Asset
and Facilities Managers to ensure that all rental income is
collected and that operating costs are within the parameters of the
approved budgets. The Investment Manager provides the Board with
performance reports on a quarterly basis. |
Occupancy
rates |
The ability of the Group to maintain
attractive occupancy levels (or to maintain such levels on
economically favourable terms) on its assets may be adversely
affected by a number of factors, including a fall in the
number of students, competing sites, any harm to the reputation of
the Group amongst universities, students or other potential
customers, or as a result of other local or national factors.
A fall in occupancy levels may adversely affect the Group’s revenue
performance, margins and asset values. |
The Investment Manager and Asset and
Facilities Managers provide the Board with quarterly reports on
asset performance. The analysis provides both the Investment
Manager and Board with the tools to adjust the Company’s
operational strategy in order to maximise
shareholder value. |
Financial |
Borrowings and
interest rate hedging |
The Company’s investment strategy
may involve securing borrowing facilities to finance additions to
the Company’s portfolio. It is not certain that the Company
will be able to secure such facilities. Lack of access to debt
or the utilisation of debt on more expensive terms than anticipated
may adversely affect the Company’s investment returns. The use of
borrowings by the Company may increase the volatility of the NAV
per share and the Company’s ability to pay dividends to
shareholders. |
The Company’s borrowing policy
provides for the Company to have no more than 55% gearing in the
short term and 30% in the long term, thereby reducing the
volatility that changes in debt rates can have on the Company. In
addition to this, the Investment Manager provides the Board with a
quarterly update on the state of the senior debt market to ensure
debt facilities are renewed well in advance of expiration, and
interest rate derivatives are used where required to hedge
fluctuations in underlying interest rates. |
Taxation |
Any change in the Company’s tax
status or in taxation legislation in the UK (including a
change in interpretation of such legislation) could affect the
Company’s ability to achieve its investment objective or provide
favourable returns to shareholders. In particular, an increase in
the rates of stamp duty land tax could have a material impact on
the value of assets acquired. If the Company fails to remain a
REIT for UK tax purposes, its profits and gains will be
subject to UK corporation tax. |
The Board has ultimate
responsibility for ensuring adherence to the UK REIT regime and
monitors the compliance reports provided by the Investment Manager
on potential transactions to be undertaken, the Administrator on
asset levels and the Registrar on shareholdings. |
Other |
Compliance with laws
and regulations |
The Group and its operations are
subject to laws and regulations enacted by national and local
governments and government policy. Any change in the laws,
regulations and/or government policy affecting the Group may
have a material adverse effect on the ability of the Company to
successfully pursue its investment policy and meet its investment
objective and on the value of the Company and its shares. |
The Board has appointed Gowling WLG
(UK) LLP as legal counsel, Capita Company Secretarial Services
Limited as Company Secretary and Capita Sinclair Henderson Limited
as Administrator to ensure compliance with all relevant laws and
regulations. |
Reliance on third
party service providers |
The Group relies upon the
performance of third party service providers to perform its
executive functions that are integral to the Group’s operations and
financial performance. Failure by any service provider to
carry out its obligations in accordance with the terms of
its appointment, to exercise due care and skill, or to
perform its obligations to the Group at all as a result of
insolvency, bankruptcy or other causes could have a material
adverse effect on the Group’s performance and returns to
shareholders. The termination of the Group’s relationship with any
third party service provider or any delay in appointing a
replacement for such service provider could disrupt the
business of the Group materially and could have a
material adverse effect on the Group’s performance and returns
to shareholders. The misconduct or misrepresentations
by employees of the Group, the Investment Manager, the Asset
and Facilities Managers or other third party service providers
could cause significant losses to the Group. |
The performance of the Group’s
service providers is closely monitored by the management engagement
committee of the Company, which conducts review meetings with each
of the Group’s principal third party service providers on an annual
basis. The committee meets at least once a year to make formal
recommendations to the Board about the performance and continuing
appointment of these service providers; it also considers any
variation to the terms of service providers’ agreements, and
reports its findings to the Board. The audit committee reviews the
internal controls reports and other compliance and regulatory
reports of its service providers on an annual basis. The
performance of the employees within the Group is monitored by Scape
and considered by the board of GCP Operations Limited which meets
at least twice a year. |
Operational
risk |
The risk of a change in value caused
by inadequate or failed internal processes, people and
systems, or from external events (including legal risk). Events may
be manifested as direct financial losses or result in damage to
reputation causing longer-term financial consequences. |
The Company has sufficient defined
operational risk procedures and policies in place to manage and
mitigate operational risk across the Group. |
The strategic report has been approved by the Board and signed
on its behalf.
Robert Peto
Chairman
15 September 2016
BOARD OF DIRECTORS
Robert Peto - Chairman
Marlene Wood - Chair of the audit
committee
Peter Dunscombe – Senior Independent
Director and chair of the remuneration committee
Malcolm Naish - Chair of the
management engagement committee
All Directors are non-executive and independent of the
Investment Manager.
EXTRACTS FROM THE DIRECTORS’ REPORT
Share capital
At the general meeting held on 21 March 2013, the Company
was granted authority to allot ordinary shares up to an aggregate
nominal amount of £2,500,000 in accordance with statutory
pre-emption rights. Following the issue of new shares in
May 2014 and as at the date of this
report, the Company may allot ordinary shares up to an aggregate
nominal amount of £2,101,895.73 under this authority. This
authority will expire at the conclusion of the annual general
meeting to be held on 27 October 2016.
Pursuant to the admission to trading of 120 million C shares
with a nominal value of £1,200,000 at an issue price of
100 pence per share on 30 June 2015, the Company announced on
27 October 2015 that the C shares would be converted into
ordinary shares at a rate of 0.781044 ordinary shares for every C
share, resulting in 93,725,280 new ordinary shares. The remaining
26,274,720 C shares were redeemed by the Company on the same date
and cancelled. Accordingly, 93,725,280 new ordinary shares were
admitted to trading on the SFS from 28 October 2015.
At the annual general meeting held on 3
December 2015, the Company was granted authority to issue
ordinary shares up to an aggregate nominal value of £229,910 on a
non-pre-emptive basis, amounting to 22,991,000 shares. Pursuant to
an announcement on 3 February 2016 regarding its intention to
raise additional capital by way of a placing of new ordinary shares
(the “February Placing”), the Company announced on 10 February 2016 that the Board had resolved to
accept gross proceeds under the February Placing of £19,000,001
through the issuance of 14,074,075 ordinary shares at a price of
135 pence per ordinary share, with an
aggregate nominal value of £140,740.75. These shares were issued
under the placing to institutional investors and
professionally-advised investors and admitted to trading on the SFS
on 12 February 2016. Following the February Placing, and as at
the date of this report, the Company may allot ordinary shares
up to an aggregate nominal value of £89,169.25 under this
authority. This authority will expire at the conclusion of, and
renewal will be sought at, the annual general meeting to be held on
27 October 2016, to issue
ordinary shares up to an aggregate nominal value of
£261,795 on a non-pre-emptive basis, amounting to 26,179,500
shares.
At a general meeting held on 27 April 2016, the
Company was granted the authority to allot and to disapply
pre-emption rights in respect of a placing programme of up to
65 million ordinary shares (the “Placing Programme”). Pursuant
to the publication of a prospectus in respect of the Placing
Programme on 29 April 2016, the
Company announced on 20 May 2016 that
it had accepted applications in respect of a placing of 44,085,232
ordinary shares at a price of 136.10 pence per share, with an
aggregate nominal value of £440,852.32 raising gross proceeds of
£60 million for the Company (the “May Placing”). These shares were
issued under the placing to institutional investors and
professionally-advised private investors and admitted to trading on
the SFS on 24 May 2016. Following the
May Placing, and as at the date of this report, the Company may
allot up to a further 20,914,768 ordinary shares under this
authority. This authority will expire on 6 May 2017.
At the annual general meeting held on 3
December 2015, the Company was granted authority to purchase
up to 14.99% of the Company’s ordinary share capital in issue at
that date, amounting to 16,475,573 ordinary shares. No ordinary
shares have been bought back under this authority. This
authority will expire at the conclusion of, and renewal will be
sought at, the annual general meeting to be held on 27 October 2016.
Shares bought back by the Company may be held in treasury, from
where they could be re-issued at or above the prevailing NAV
quickly and cost effectively. This provides the Company with
additional flexibility in the management of its capital base. No
shares were held in treasury during the year or at the year
end.
At 30 June 2016 and as at the date of this report, the
Company’s issued share capital comprised 261,795,015 ordinary
shares.
At general meetings of the Company, ordinary shareholders are
entitled to one vote on a show of hands and on a poll, to one vote
for every ordinary share held. The total voting rights of
the Company at 30 June 2016, and
as at the date of this report, is 261,795,015.
Dividends
Dividends totalling 5.66 pence per
ordinary share have been paid in respect of the year ended
30 June 2016 as follows:
|
2016 |
2015 |
|
pence |
pence |
First interim
dividend |
1.41 |
1.40 |
Second interim
dividend |
1.41 |
1.40 |
Third interim
dividend |
1.41 |
1.40 |
Fourth interim
dividend |
1.43 |
1.40 |
No final dividend is being recommended.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
In respect of the annual report and financial statements
The Directors are responsible for preparing the annual report
and financial statements in accordance with applicable UK law and
IFRS as adopted by the EU.
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they present fairly the
financial position, financial performance and cash flows of the
Group for that year.
In preparing the financial statements, the Directors are
required to:
- select suitable accounting policies in accordance with IAS 8:
“Accounting Policies, Changes in Accounting Estimates and Errors”
and then apply them consistently;
- present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
- provide additional disclosures when compliance with specific
requirements in IFRS is insufficient to enable users to understand
the impact of particular transactions, other events and conditions
on the Group’s financial position and financial performance;
- state that the Group has complied with IFRS, subject to any
material departures disclosed and explained in the financial
statements; and
- make judgements and estimates that are reasonable and
prudent.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that the
financial statements comply with the Companies Act 2006 and Article
4 of the IAS Regulation. They are also responsible for safeguarding
the assets of the Group and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a strategic report, Directors’ report,
Directors’ remuneration report and corporate governance statement
that comply with that law and those regulations, and for ensuring
that the annual report includes information required by the
Disclosure Guidance and Transparency Rules of the UKLA. The Company
is voluntarily complying with certain of the listing rules of the
UKLA.
The financial statements are published on the Company’s website,
www.gcpuk.com/gcp-student-living-plc, which is maintained on behalf
of the Company by the Investment Manager. The work carried out by
the Auditor does not involve consideration of the maintenance and
integrity of this website and accordingly, the Auditor accepts no
responsibility for any changes that have occurred to the financial
statements since they were initially presented on the website.
Under the investment management agreement, the Investment Manager
is responsible for the maintenance and integrity of the corporate
and financial information included on the Company’s website.
Visitors to the website need to be aware that legislation in the UK
covering the preparation and dissemination of the financial
statements may differ from legislation in their jurisdiction.
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with IFRS as
adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit of the Group; and
- this annual report includes a fair review of the development
and performance of the business and the position of the Group
together with a description of the principal risks and
uncertainties that it faces.
The Directors consider that the annual report and financial
statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Company’s position and performance, business model
and strategy.
On behalf of the Board
Robert Peto
Chairman
15 September 2016
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the
Company's statutory accounts for the year ended 30 June 2016 or the year ended 30 June 2015 but is derived from those accounts.
Statutory accounts for the year ended 30
June 2015 have been delivered to the Registrar of Companies
and those for 2016 will be delivered in due course. The Auditor has
reported on those accounts; their report was (i) unqualified, (ii)
did not include a reference to any matters to which the Auditor
drew attention by way of emphasis without qualifying their report
and (iii) did not contain a statement under Section 498 (2) or (3)
of the Act. The text of the Auditor's report can be found in the
Company's full annual report and financial statements at
www.gcpuk.com/gcp-student-living-plc.
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
For the year ended 30 June
2016
|
|
30 June
2016 |
30 June 2015 |
Continuing
operations |
Notes |
£’000 |
£’000 |
Revenue |
4 |
22,482 |
11,505 |
Property operating
expenses |
5 |
(4,600) |
(2,529) |
Gross
profit |
|
17,882 |
8,976 |
Administration
expenses |
5 |
(5,712) |
(2,001) |
Operating profit
before gains on investment properties |
|
12,170 |
6,975 |
Fair value gains on
investment properties |
3 |
27,156 |
25,660 |
Operating
profit |
|
39,326 |
32,635 |
Finance income |
9 |
75 |
43 |
Finance expenses –
ongoing |
10 |
(3,441) |
(1,379) |
Finance expenses –
other |
10 |
(7,635) |
— |
Profit before
tax |
|
28,325 |
31,299 |
Tax credit/(charge) for
the year |
11 |
3 |
(18) |
Profit for the
year |
|
28,328 |
31,281 |
Other
comprehensive income to be reclassified to profit and loss in
subsequent years |
|
|
|
Net gains/(losses) on
the valuation of cash flow hedges |
20 |
214 |
(261) |
Total comprehensive
income for the year |
|
28,542 |
31,020 |
Earnings per share
(basic and diluted) (pps) |
14 |
15.48 |
28.46 |
|
|
|
|
|
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
|
|
30 June
2016 |
30 June 2015 |
|
Notes |
£’000 |
£’000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Investment
property |
3 |
424,787 |
177,220 |
Retention account |
|
815 |
308 |
|
|
425,602 |
177,528 |
Current
assets |
|
|
|
Cash and cash
equivalents |
16 |
66,337 |
106,292 |
Trade and other
receivables |
17 |
6,867 |
18,683 |
|
|
73,204 |
124,975 |
Total
assets |
|
498,806 |
302,503 |
Liabilities |
|
|
|
Non-current liabilities |
|
|
|
Interest-bearing loans
and borrowings |
19 |
(128,174) |
(39,569) |
Derivative financial
instruments |
20 |
— |
(214) |
Retention account |
|
(815) |
(308) |
|
|
(128,989) |
(40,091) |
Current
liabilities |
|
|
|
Trade and other
payables |
18 |
(6,114) |
(4,819) |
Deferred income |
18 |
(5,235) |
(2,442) |
Financial liabilities
at amortised cost |
21 |
— |
(117,422) |
|
|
(11,349) |
(124,683) |
Total
liabilities |
|
(140,338) |
(164,774) |
Net assets |
|
358,468 |
137,729 |
Equity |
|
|
|
Share capital |
22 |
2,618 |
1,099 |
Share premium |
23 |
239,653 |
39,946 |
Hedging reserve |
|
— |
(214) |
Special reserve |
24 |
58,371 |
65,223 |
Retained earnings |
24 |
57,826 |
31,675 |
Total
equity |
|
358,468 |
137,729 |
Number of shares in
issue |
|
261,795,015 |
109,910,428 |
EPRA NNNAV per share
(pps) |
25 |
136.93 |
125.31 |
EPRA NAV per share
(pps) |
25 |
136.93 |
125.51 |
These financial statements were approved by the Board of
Directors of GCP Student Living plc on 15
September 2016 and signed on its behalf by:
Robert Peto
Chairman
Company number: 08420243
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June
2016
|
Notes |
Share
capital
£’000 |
Share
premium
£’000 |
Hedging
reserve
£’000 |
Retained
earnings
£’000 |
Special
reserve
£’000 |
Total
£’000 |
Balance at 1 July
2015 |
|
1,099 |
39,946 |
(214) |
31,675 |
65,223 |
137,729 |
Profit for the
year |
|
— |
— |
— |
28,328 |
— |
28,328 |
Other
comprehensive income that may be
reclassified subsequently to profit and loss |
|
|
|
|
|
|
|
Fair value movement on
financial derivative |
|
— |
— |
214 |
— |
— |
214 |
Total comprehensive
income |
|
— |
— |
214 |
28,328 |
— |
28,542 |
Ordinary shares
issued |
|
1,519 |
201,251 |
— |
— |
— |
202,770 |
Share issue costs |
|
— |
(1,544) |
— |
— |
— |
(1,544) |
Dividends paid in
respect of the previous year |
13 |
— |
— |
— |
(1,005) |
(534) |
(1,539) |
Dividends paid in
respect of the current year |
13 |
— |
— |
— |
(1,172) |
(6,318) |
(7,490) |
Balance at 30 June
2016 |
|
2,618 |
239,653 |
— |
57,826 |
58,371 |
358,468 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June
2015
|
Notes |
Share
capital
£’000 |
Share
premium
£’000 |
Hedging
reserve
£’000 |
Retained
earnings
£’000 |
Special
reserve
£’000 |
Total
£’000 |
Balance at 1 July
2014 |
|
1,099 |
39,937 |
47 |
5,010 |
66,762 |
112,855 |
Profit for the
year |
|
— |
— |
— |
31,281 |
— |
31,281 |
Other
comprehensive income that may be
reclassified subsequently to profit and loss |
|
|
|
|
|
|
|
Net gains on the
valuation of cash flow hedges |
|
— |
— |
(261) |
— |
— |
(261) |
Total comprehensive
income |
|
— |
— |
(261) |
31,281 |
— |
31,020 |
Share issue
costs1 |
|
— |
9 |
— |
— |
— |
9 |
Dividends paid in
respect of the previous period |
13 |
— |
— |
— |
— |
(1,539) |
(1,539) |
Dividends paid in
respect of the current year |
13 |
— |
— |
— |
(4,616) |
— |
(4,616) |
Balance at 30 June
2015 |
|
1,099 |
39,946 |
(214) |
31,675 |
65,223 |
137,729 |
1. This represents a change in the estimated share issue costs
accrued at 30 June 2014.
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June
2016
|
|
30 June
2016 |
30 June 2015 |
|
Notes |
£’000 |
£’000 |
Cash flows from
operating activities |
|
|
|
Operating profit |
|
39,326 |
32,635 |
Adjustments to
reconcile profit for the year to net cash flows: |
|
|
|
Gains from change in
fair value of investment properties |
|
(27,156) |
(25,660) |
Costs reclassified as
capital |
|
— |
(85) |
Corporation tax
refunds |
|
12 |
(158) |
Increase in other
receivables and prepayments |
|
(3,120) |
(560) |
(Increase)/decrease in
other payables and accrued expenses |
|
(4,891) |
184 |
Net cash flow
generated from operating activities |
|
4,171 |
6,356 |
Cash flows from
investing activities |
|
|
|
Acquisition of
investment properties |
|
(54,469) |
— |
Acquisition of
subsidiaries, net of cash acquired |
|
(156,092) |
— |
Net cash used in
investing activities |
|
(210,561) |
— |
Cash flows from
financing activities |
|
|
|
Proceeds from issue of
ordinary share capital |
|
79,000 |
— |
Share issue costs |
|
(1,538) |
(47) |
Proceeds from issue of
C shares |
|
16,195 |
103,805 |
C share issue
costs |
|
(2,490) |
(76) |
Bank loan drawn
down |
|
130,000 |
— |
Repayment of bank
loan |
|
(40,000) |
— |
Finance income |
|
75 |
10 |
Finance expenses |
|
(5,942) |
(1,240) |
Dividends paid in the
year |
|
(8,865) |
(6,145) |
Net cash flow
generated from financing activities |
|
166,435 |
96,307 |
Net
(decrease)/increase in cash and cash equivalents |
|
(39,955) |
102,663 |
Cash and cash
equivalents at start of the year |
|
106,292 |
3,629 |
Cash and cash
equivalents at end of the year |
16 |
66,337 |
106,292 |
The accompanying notes form an integral part of these financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June
2016
1. General information
GCP Student Living plc is a closed-ended investment company
incorporated in the UK on 26 February
2013. The registered office of the Company is located at 51
New North Road, Exeter EX4 4EP.
The Company’s shares are traded on the SFS of the Main Market of
the London Stock Exchange.
2. Basis of preparation
These financial statements are prepared in accordance with IFRS
issued by the IASB as adopted by the European Union. The financial
statements have been prepared under the historical cost convention,
except for investment property, investments in subsidiaries and
derivative financial instruments that have been measured at fair
value. The audited financial statements are presented in Pound
Sterling and all values are rounded to the nearest thousand pounds
(£’000), except when otherwise indicated.
On 30 June 2015, the Company
issued 120,000,000 C shares which were converted to ordinary shares
on 28 October 2015. Whilst in issue, the C shares are
recognised in the financial statements as a liability stated at
amortised cost which is equivalent to the net asset value of the C
shares. Therefore the net assets and profits shown in these
financial statements represent the assets and profits attributable
to the ordinary shareholders. Further details on the accounting
treatment of the C shares and the financial information
attributable to the C shares can be found below and in note 21 of
the financial statements.
These financial statements are for the year ended 30 June 2016. Comparative figures are for the
previous accounting period, the year ended 30 June 2015.
The Group has chosen to adopt the EPRA best practice guidelines
for calculating key metrics such as net asset value
and earnings, which are presented alongside the IFRS
measures.
2.1 Changes to
accounting standards and interpretations
The following new standards and amendments to existing standards
have been published and once approved by the EU, will be mandatory
for the Group’s accounting periods beginning after 1 July 2016 or later periods. The Group has
decided not to adopt them early.
- IAS 1 Presentation of Financial Statements – amendments
resulting from the disclosure initiative (effective for annual
periods beginning on or after 1 January
2016).
- Various standards – amendments resulting from September 2014 Annual Improvements to IFRS
(effective for annual periods beginning on or after 1 January 2016).
- IFRS 15 Revenue from Contracts (effective for annual periods
beginning on or after 1 January
2018).
- IFRS 9 Financial Instruments (effective for annual periods
beginning on or after 1 January
2018).
- IFRS 7 Financial Instruments: Disclosures – amendments
regarding additional hedge accounting disclosures (applies when
IFRS 9 is applied).
- IFRS 16 Leases (effective for annual periods beginning on or
after 1 January 2019).
The Group does not expect the adoption of new accounting
standards issued but not yet effective to have a significant impact
on its financial statements.
2.2 Significant
accounting judgements and estimates
The preparation of these financial statements in accordance with
IFRS requires the Directors of the Company to make judgements,
estimates and assumptions that affect the reported amounts
recognised in the financial statements. However, uncertainty about
these assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of the asset
or liability in the future.
Judgements
In the process of applying the Group’s accounting policies,
management has made the following judgements which have the most
significant effect on the amounts recognised in the consolidated
financial statements:
Operating lease commitments – Group
as lessor
The Group has entered into commercial property leases on its
investment property portfolio. The Group has determined, based on
evaluation of the terms and conditions of the arrangements, such as
the lease term not constituting a substantial portion of the
economic life of the commercial property, that it retains all the
significant risks and rewards of ownership of these properties and
accounts for the contracts as operating leases.
Valuation of property
The valuations of the Group’s investment property are at fair
value as determined by the external valuer on the basis of market
value in accordance with the internationally accepted RICS
Valuation – Professional Standards January
2014 (incorporating the International Valuation Standards)
and in accordance with IFRS 13.
C share liability
The Directors have considered whether the C share liability
should be valued in the financial statements at fair value or
stated at amortised cost.
The C shares were traded on the SFM (now the SFS). The amortised
cost value of the C share pool equates to the net asset value
of the C shares, which the Directors consider is the most
appropriate way to disclose the liability within the financial
statements.
Going concern
The Directors have made an assessment of the Group’s ability to
continue as a going concern and are satisfied that the Company has
the resources to continue in business for the foreseeable future.
Furthermore, the Directors are not aware of any material
uncertainties that may cast significant doubt upon the Company’s
ability to continue as a going concern. Therefore, the financial
statements have been prepared on the going concern basis.
2.3 Summary of
significant accounting policies
The principal accounting policies applied in the preparation of
these financial statements are stated in the notes to the financial
statements.
a) Basis of consolidation
As a real estate entity the Company does not meet the definition
of an investment entity and therefore does not qualify for the
consolidation exemption under IFRS 10. The consolidated financial
statements comprise the financial statements of the Group and its
subsidiaries as at 30 June 2016. Subsidiaries are
consolidated from the date of acquisition, being the date on which
the Group obtained control, and will continue to be consolidated
until the date that such control ceases. An investor controls an
investee when the investor is exposed, or has rights to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee. In
preparing these financial statements, intra-group balances,
transactions and unrealised gains or losses have been eliminated in
full. The subsidiaries all have the same year end as the Company.
Uniform accounting policies are adopted in the financial statements
for like transactions and events in similar circumstances.
As a real estate entity, the Company does not qualify for IFRS
10 and continues to consolidate its accounts in full.
b) Functional and presentation
currency
The overall objective of the Group is to generate returns in
Pound Sterling and the Group’s performance is evaluated in Pound
Sterling. Therefore, the Directors consider Pound Sterling as the
currency that most faithfully represents the economic effects of
the underlying transactions, events and conditions and have
therefore adopted it as the functional and presentation
currency.
c) Operating segments
All of the Group’s revenue and results are generated from
student accommodation provision (including ancillary restaurant and
teaching facilities) operating in the UK.
3. UK investment property
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
At the start of the
year |
177,220 |
151,560 |
Acquisitions arising
from business combinations |
166,100 |
— |
Acquisition of
property |
54,311 |
— |
Fair value gains on
revaluation of investment property |
27,156 |
25,660 |
Valuation at the end
of the year |
424,787 |
177,220 |
During the year, the Group purchased Scape Shoreditch by way of
the corporate acquisition of the company Old Street Acquisitions
Limited and its subsidiary companies. Details of the corporate
acquisition of Old Street Acquisitions Limited are shown in note
15.
The Group purchased three other properties, Scape Surrey, The
Pad 2 and Water Lane Apartments. Scape Surrey and The Pad 2 were purchased
directly by previously dormant subsidiary companies, GCP SG Limited
and GCP RHUL Limited. Water Lane Apartments was purchased by a
wholly owned subsidiary, GCP WL Limited which was incorporated in
the year.
During the year the Group entered into forward purchase and
forward funding arrangements in respect of two properties. Details
of these commitments can be found above.
Accounting policy
Investment property comprises property held to earn rental income
or for capital appreciation or both. Investment property is
measured initially at cost including transaction costs. Transaction
costs include transfer taxes and professional fees to bring the
property to the condition necessary for it to be capable of
operating. The carrying amount also includes the cost of replacing
part of an existing investment property at the time that cost is
incurred if the recognition criteria are met.
Subsequent to initial recognition, investment property is stated at
fair value. Gains or losses arising from changes in the fair
values are included in the income statement in the period in which
they arise under IAS 40 Investment Property.
The determination of the fair value of investment property requires
the use of estimates such as future cash flows from assets
(from lettings, tenants’ profiles, future revenue streams, capital
values of fixtures and fittings, plant and machinery, any
environmental matters and the overall repair and condition of the
property) and discount rates applicable to those assets.
Gains or losses on the disposal of investment property are
determined as the difference between net disposal proceeds and the
carrying value of the asset. |
4. Revenue
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Nomination rental
income |
3,688 |
2,963 |
Direct let rental
income |
16,623 |
7,823 |
Discounts |
(426) |
(46) |
Total student
income |
19,885 |
10,740 |
Teaching space
income |
471 |
452 |
Retail space
income |
1,747 |
38 |
|
22,103 |
11,230 |
Service charge
income |
264 |
124 |
Staff costs recharge
income |
115 |
151 |
Total |
22,482 |
11,505 |
The Group employs the staff of the Asset and Facilities Manager,
Scape. Staff costs recharge income above represents payroll costs
relating to staff time spent on the Group’s pipeline properties
which were already managed by Scape which had not yet been acquired
by the Group.
Accounting policy
Rental income including direct lets to students, leases to
universities and commercial tenants receivable under operating
leases is recognised on a straight-line basis over the term of the
lease, except for contingent rental income which is recognised when
it arises.
Incentives for lessees to enter into lease agreements are spread
evenly over the lease term, even if the payments are not made on
such a basis. The lease term is the non-cancellable period of the
lease together with any further term for which the tenant has the
option to continue the lease, where, at the inception of the lease,
the Directors are reasonably certain that the tenant will exercise
that option.
Service charges are recognised on an accruals basis and are
received to cover expenditure on hard and soft
facilities management. |
5. Property operating and
administration expenses
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Property operating
expenses |
|
|
Property operating
expense |
1,583 |
854 |
Utilities |
856 |
627 |
Insurance |
144 |
116 |
Sales and
marketing |
249 |
5 |
Property
maintenance |
38 |
112 |
Staff costs |
1,718 |
950 |
Ground rent |
234 |
— |
Ancillary income |
(222) |
(135) |
|
4,600 |
2,529 |
Investment management
fees |
3,026 |
1,286 |
Directors’
remuneration |
121 |
101 |
Other administration
expenses |
2,565 |
614 |
Administration
expenses |
5,712 |
2,001 |
Total |
10,312 |
4,530 |
Included within administration expenses are investment
management fees, as disclosed in note 29 and Directors’
remuneration as disclosed in note 6.
Ancillary income includes income received through such
activities as laundry, cleaning and vending machines. Ancillary
income is offset against amounts invoiced to the Company by
Scape.
Accounting policy
All property operating expenses and administration expenses are
charged to the income statement and are accounted for on an
accruals basis. |
6. Directors’ remuneration
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Robert Peto |
34 |
34 |
Peter Dunscombe |
28 |
31 |
Malcolm Naish |
28 |
28 |
Marlene Wood |
31 |
8 |
Total |
121 |
101 |
A summary of the Directors’ emoluments, including the
disclosures required by the Companies Act 2006 is set out in the
Directors’ remuneration report in the full annual report.
7. Staff costs
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Salaries |
1,702 |
938 |
Other benefits |
17 |
12 |
Total |
1,719 |
950 |
With the exception of the Directors, whose remuneration is shown
in the Directors’ remuneration report in the full annual report, as
at 30 June 2016 the Group employed 74 (2015: 51) members
of staff, with an average of 72 (2015: 39) employees during the
year.
Staff costs totalling £115,000 (2015: £151,000) have been
recharged to entities outside the Group. This amount is included
within revenue in note 4.
The Group operates a defined contributions pension scheme for
one (2015: two) of its employees. The costs for the year ended
30 June 2016 totalled £4,000
(2015: £5,000).
8. Auditor’s
remuneration
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Audit fee |
95 |
83 |
Other services |
255 |
184 |
Total |
350 |
267 |
The Company reviews the scope and nature of all proposed
non-audit services before engagement, to ensure that the
independence and objectivity of the Auditor are safeguarded. Audit
fees are comprised of the following items:
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Year end annual report
and financial statements |
26 |
26 |
Subsidiary accounts for
the year ended 30 June 2016 |
69 |
— |
Subsidiary accounts for
the year ended 30 June 2015 |
— |
38 |
Subsidiary accounts for
the period ended 30 June 2014 |
— |
19 |
Total |
95 |
83 |
The Auditor has provided tax advice, tax compliance services and
non-audit services. These fees are broken down as follows:
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Reporting accountant
services |
35 |
60 |
Tax advice |
18 |
17 |
Tax compliance services
for VAT |
30 |
37 |
Tax compliance services
for corporation tax returns |
119 |
70 |
Tax advice in respect
of aborted property purchases |
53 |
— |
Total |
255 |
184 |
Accordingly tax fees totalling £106,000 will be non-recurring.
The Directors made the decision to change tax advisers in
March 2016 from Ernst & Young
LLP, who are the Group’s Auditor, to Deloitte LLP. Further
information is given in the audit committee report in the full
annual report.
9. Finance
income
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Income from cash and
short-term deposits |
75 |
10 |
Amortisation of
financial liabilities |
— |
33 |
Total |
75 |
43 |
Accounting policy
Interest income is recognised on an effective interest rate basis
and shown within the income statement as finance income. |
10. Finance expenses
|
30 June
2016 |
30 June 2015 |
Ongoing
charges |
£’000 |
£’000 |
Swap interest |
10 |
177 |
Loan interest |
3,239 |
1,038 |
Loan commitment
fee |
15 |
12 |
Bank charges and other
interest |
6 |
9 |
Amortisation of loan
arrangement fees |
171 |
113 |
Amortisation of C share
issue costs |
— |
30 |
Total |
3,441 |
1,379 |
|
30 June
2016 |
30 June 2015 |
Other
charges |
£’000 |
£’000 |
Amortisation of loan
arrangement fees |
431 |
— |
Swap break fees |
255 |
— |
Loan cancellation
fees |
610 |
— |
Amortisation of C share
issue costs |
2,536 |
— |
Return on C shares |
3,803 |
— |
Total |
7,635 |
— |
Other finance charges have arisen from two items:
1. during the year, the Group entered into significantly
improved new financing arrangements. The total costs of repaying
and breaking the original bank borrowings and interest rate swap
was £1,296,000.
2. finance costs of £6,339,000 arising in the year from the
accounting treatment of the C shares as debt, this represents:
i. issue costs of £2,536,000 which on an equity raise would be
treated as a reduction to equity rather than a finance cost;
and
ii. the C shares issued last year represented contracts for
conversion into a variable number of ordinary shares and therefore
the C shares were classified as liabilities under IFRS.
The classification resulted in the issue costs and the return on
the C shares being presented as finance costs in the statement of
comprehensive income of the Group. The return on the C shares
represented an increase in the assets attributable to the C shares
over and above the funds raised from their issue.
Accounting policy
Any finance costs that are separately identifiable and directly
attributable to a liability which takes a period of time to
complete are amortised as part of the cost of the liability. All
other finance costs are expensed in the period in which they occur.
Finance costs consist of interest and other costs that an entity
incurs in connection with bank and other borrowings.
After initial recognition, C shares are subsequently measured at
amortised costs using the effective interest method. Amortisation
is credited or charged to finance income or finance costs in the
income statement. Transaction costs are amortised to the earliest
conversion period. |
11. Taxation
Corporation tax has arisen as follows:
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Corporation tax on
residual income for current year |
— |
11 |
Corporation tax on
residual income for prior periods |
(3) |
7 |
Total |
(3) |
18 |
Reconciliation of tax charge to profit before tax:
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Profit before tax |
28,325 |
31,299 |
Corporation tax at
20.00% (2015: 20.75%) |
5,665 |
6,495 |
Change in value of
investment properties |
(5,431) |
(5,324) |
Tax exempt property
rental business |
(2,107) |
(1,021) |
Amounts not deductible
for tax purposes |
1,367 |
(107) |
Capital allowances |
(318) |
(38) |
Excess management
expenses |
824 |
— |
Other |
(3) |
13 |
Total |
(3) |
18 |
Accounting policy
Corporation tax is recognised in the income statement except where
in certain circumstances corporation tax may be recognised in other
comprehensive income.
As a REIT, the Company 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.
Non-qualifying profits and gains of the Company (the residual
business) continue to be subject to corporation tax. Therefore,
current tax is the expected tax payable on the non-qualifying
taxable income for the year if applicable, using tax rates enacted
or substantively enacted at the balance sheet date. |
12. Operating leases
Leases are typically direct-let agreements with individual
students or higher education institutions for the academic year or
a shorter period. The Group also has a small number of commercial
leases on teaching and retail spaces and a number of nomination
agreements whereby blocks of beds are let out for a set number of
years.
Future minimum rentals receivable under non-cancellable
operating leases as at 30 June 2016
are as follows:
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Within one year |
26,912 |
7,323 |
Between one and five
years |
21,491 |
12,548 |
More than five
years |
41,647 |
22,647 |
Total |
90,050 |
42,518 |
13. Dividends
|
Pence |
30 June
2016 |
Pence |
30 June 2015 |
|
per share |
£’000 |
per share |
£’000 |
For the year ended 30
June 2016 |
|
|
|
|
First interim dividend
paid on 4 December 2015 |
1.41 |
1,549 |
1.40 |
1,538 |
Second interim dividend
paid on 4 March 2016 |
1.41 |
2,871 |
1.40 |
1,539 |
Third interim dividend
paid on 6 June 2016 |
1.41 |
3,070 |
1.40 |
1,539 |
Dividends paid during
the year |
4.23 |
7,490 |
4.20 |
4,616 |
Fourth interim dividend
paid on 5 September 20161 |
1.43 |
3,744 |
1.40 |
1,539 |
Total |
5.66 |
11,234 |
5.60 |
6,155 |
Paid as |
|
|
|
|
Property income
distributions |
5.31 |
10,849 |
3.70 |
4,067 |
Ordinary dividends |
0.35 |
385 |
1.90 |
2,088 |
Total |
5.66 |
11,234 |
5.60 |
6,155 |
1. The fourth interim dividend is paid after the year
end and is not accrued as a provision in the financial
statements.
As a REIT, the Company is required to pay PIDs equal to at least
90% of the property rental business profits of the Group.
A final PID for the year ended 30 June
2016 was paid on 5 September
2016.
Accounting policy
Dividends due to the Company’s shareholders are recognised when
they become payable. For interim dividends this is when they are
paid. |
14. Earnings per share
Basic EPS amounts are calculated by dividing profit for the year
attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares during the year. As
there are no dilutive instruments outstanding, basic and diluted
NAV per share are identical. The following reflects the net asset
and share data used in the basic and diluted NAV per share
computations:
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Group earnings for
EPS |
28,328 |
31,281 |
Fair value gains on
investment properties |
(27,156) |
(25,660) |
Group earnings for
EPRA EPS |
1,172 |
5,621 |
Group specific
adjustments: |
|
|
Finance costs – other
per note 10 |
7,635 |
— |
Other exceptional
items |
884 |
171 |
Group specific
adjusted earnings |
9,691 |
5,792 |
For the purpose of the Company’s internal reporting, 30% of the
investment management fee is charged to capital as opposed to
income as approximately 30% of the Company’s stated annual total
return target is generated through capitalised rental income.
|
30 June
2016 |
30 June 2015 |
|
Pence
per |
Pence per |
|
share |
share |
Basic Group EPS |
15.48 |
28.46 |
Basic Group EPRA
EPS |
0.64 |
5.11 |
Diluted Group EPS |
15.48 |
28.46 |
Diluted Group EPRA
EPS |
0.64 |
5.11 |
Group specific adjusted
EPS |
5.30 |
5.27 |
|
30 June
2016 |
30 June 2015 |
|
Number |
Number |
|
of shares |
of shares |
Weighted average number
of shares in issue |
183,007,508 |
109,910,428 |
Effects of dilution
from C shares |
— |
2,567 |
Weighted average number
of shares in issue adjusted for the effects of dilution |
183,007,508 |
109,912,995 |
A third EPS calculation has been made to show EPRA earnings
excluding the exceptional one-off finance costs arising in the
year. The costs have arisen from two items:
1. costs of repaying and breaking the original bank
borrowings and interest rate swap totalling £1,296,000; and
2. finance costs of £6,339,000 arising from the
accounting treatment of the C shares. For further details please
refer to note 10.
15. Business combinations and Group
structure
The fair value of the identifiable assets and liabilities of Old
Street Acquisitions Limited upon acquisition at 30 September 2015 were:
|
|
Fair
value of |
|
|
Initial |
further assets |
Identifiable
assets at |
|
valuation |
identified |
fair value |
|
£’000 |
£’000 |
£’000 |
Investment
properties |
166,100 |
- |
166,100 |
Trade receivables |
1,394 |
(130) |
1,264 |
Cash and cash
equivalents |
1,753 |
764 |
2,517 |
Trade payables |
(8,602) |
102 |
(8,500) |
Deferred rental
income |
(1,539) |
(724) |
(2,263) |
Retention
liability |
(507) |
- |
(507) |
Corporation tax
provision |
(2) |
- |
(2) |
|
158,597 |
12 |
158,609 |
|
|
|
|
Analysis of cash flows
on acquisition |
|
|
|
Cash consideration |
|
|
79,186 |
Repayment of
borrowings |
|
|
79,423 |
Fair value of
consideration paid |
|
|
158,609 |
Cash and cash
equivalents acquired |
|
|
(2,517) |
Net cash outflow
from acquisition |
|
|
156,092 |
Old Street Acquisitions Limited contributed £3,214,000 to
revenue and £12,209,000 to the Group’s profit in the period
between the date of the acquisition and the statement of
financial position date. Accordingly, had the acquisition taken
place at the beginning of the period, revenue contributed would
have been £3,529,000 and the contribution to the Group’s profit
would have been £12,385,000.
Subsidiaries
The financial statements comprise the financial statements of
the Company and its subsidiaries, GCP Topco Limited,
GCP Holdco Limited, GCP Scape East Limited, GCP Brunswick
Limited (formerly Ternion (Danehurst) Limited), GCP Operations
Limited, Leopard Guernsey Greenwich JV Limited, Leopard Guernsey
Greenwich Limited and Leopard Guernsey Greenwich 2 Limited, Old
Street Acquisitions Limited, Leopard Guernsey Old Street Limited,
Leopard Guernsey Old Street 2 Limited, GCP RHUL Limited, GCP SG
Limited and GCP WL Limited for the year ended 30 June 2016, and the comparative year for the
year ended 30 June 2015.
The Company also owns three dormant subsidiaries: GCP Brunswick
2 Limited, GCP Apex Limited and GCP RHUL 2 Limited which have not
yet commenced activities.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtained control,
and will continue to be consolidated until the date when such
control ceases. The financial statements of the subsidiaries are
prepared for the same reporting period as the parent company, using
consistent accounting policies. All intra-group balances,
transactions, unrealised gains and losses resulting from
intra-group transactions and distributions are eliminated in full.
The Company has a 100% beneficial interest in the issued share
capital of all subsidiaries.
On 27 August 2015 GCP Topco
Limited and GCP Holdco Limited were incorporated and were wholly
owned by GCP Student Living plc. These companies were
dormant until 30 September 2015.
GCP Holdco Limited on 30 September 2015
purchased 100% of the share capital of the following companies from
GCP Student Living plc: GCP Scape East Limited, GCP
Brunswick Limited, Leopard Guernsey Greenwich JV Limited, GCP SG
Limited, and GCP RHUL Limited.
On 30 September 2015, GCP Topco
Limited acquired GCP Holdco Limited from GCP Student Living
plc.
On 30 September 2015, the Group
obtained control of Old Street Acquisitions Limited by obtaining
100% of the issued share capital. The principal activity of this
company and its subsidiaries is the provision of student
accommodation in line with the Group’s investment strategy.
GCP SG Limited, incorporated 20 February
2014, was dormant until 7 September
2015 when it purchased Scape Surrey. The principal activity
of this company is the provision of student accommodation in line
with the Group’s investment strategy.
GCP WL Limited, incorporated 3 February
2016, was dormant until 15 February
2016 when it purchased Water Lane Apartments. The principal
activity of the company is the provision of student accommodation
in line with the Group’s investment strategy.
GCP RHUL Limited, incorporated 15
November 2013, was dormant until 21
September 2015 when it purchased The Pad 2. The principal
activity of this company is the provision of student accommodation
in line with the Group’s investment strategy.
GCP WL Limited, incorporated 3 February
2016, was dormant until 15 February
2016 when it purchased Water Lane Apartments. The principal
activity of the company is the provision of student accommodation
in line with the Group’s investment strategy.
On 17 May 2016 Ternion (Danehurst)
Limited changed its name to GCP Brunswick Limited.
Company |
Country of
registration,
incorporation
and operation |
Number and
class of
share held by
the Group |
Group holding |
Capital and
reserves at
30 June 2016
£’000 |
Profit after tax for the
year ended
30 June 2016
£’000 |
GCP Apex Limited |
UK |
2 ordinary shares |
100% |
— |
— |
GCP Brunswick
Limited1 |
UK |
1,046,728,191 ordinary
shares |
100% |
15,229 |
225 |
GCP Brunswick 2
Limited1 |
UK |
2 ordinary shares |
100% |
— |
— |
GCP Holdco
Limited1 |
UK |
5 ordinary shares |
100% |
286,775 |
36,013 |
GCP Operations
Limited |
UK |
2 ordinary shares |
100% |
69 |
53 |
GCP RHUL
Limited1 |
UK |
4 ordinary shares |
100% |
20,730 |
4,405 |
GCP RHUL 2 Limited |
UK |
2 ordinary shares |
100% |
— |
— |
GCP Scape East
Limited1 |
UK |
51,508,283 ordinary
shares |
100% |
89,527 |
15,751 |
GCP SG
Limited1 |
UK |
4 ordinary shares |
100% |
23,307 |
4,261 |
GCP Topco Limited |
UK |
4 ordinary shares |
100% |
286,761 |
35,999 |
GCP WL Limited |
UK |
3 ordinary shares |
100% |
18,744 |
(114) |
Leopard Guernsey
Greenwich Limited1 |
Guernsey |
102 ordinary
shares |
100% |
24,028 |
4,200 |
Leopard Guernsey
Greenwich 2 Limited1 |
Guernsey |
102 ordinary
shares |
100% |
215 |
91 |
Leopard Guernsey
Greenwich JV Limited1 |
Guernsey |
103 ordinary
shares |
100% |
(2,399) |
(26) |
Leopard Guernsey Old
Street Limited1 |
Guernsey |
100 ordinary
shares |
100% |
87,504 |
5,521 |
Leopard Guernsey Old
Street 2 Limited1 |
Guernsey |
100 ordinary
shares |
100% |
5,915 |
5,716 |
Old Street Acquisitions
Limited1 |
Guernsey |
450 A ordinary
shares |
100% |
(3,482) |
(588) |
|
|
550 B ordinary
shares |
|
|
|
1. Indirect subsidiaries.
Accounting policy
Where property is acquired, via corporate acquisitions or
otherwise, management considers the substance of the assets and
activities of the acquired entity in determining whether the
acquisition represents the acquisition of a business.
Where such acquisitions are not judged to be an acquisition of a
business, they are not treated as business combinations. Rather,
the cost to acquire the corporate entity is allocated between the
identifiable assets and liabilities of the entity based on their
relative fair values at the acquisition date. Accordingly, no
goodwill or additional deferred taxation arises. Otherwise,
acquisitions are accounted for as business combinations.
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate of
the consideration transferred, measured at acquisition date fair
value and the amount of any non-controlling interest in the
acquiree.
For each business combination, the acquirer measures the
non-controlling interest in the acquiree at fair value of the
proportionate share of the acquiree’s identifiable net assets.
Acquisition costs (except for costs of issue of debt or equity) are
expensed in accordance with IFRS 3 Business Combinations.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition
date.
Contingent consideration is deemed to be equity or a liability in
accordance with IAS 32. If the contingent consideration is
classified as equity, it is not re-measured and its subsequent
settlement shall be accounted for within equity. If the contingent
consideration is classified as a liability, subsequent changes to
the fair value are recognised in the income statement. |
16. Cash and cash equivalents
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Cash and cash
equivalents |
57,565 |
103,821 |
Subsidiary cash and
cash equivalents |
8,772 |
2,471 |
Total |
66,337 |
106,292 |
Accounting policy
Cash and cash equivalents comprise cash at bank and short-term
deposits with banks and other financial institutions, with an
initial maturity of three months or less. |
17. Trade and other receivables
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Prepayments |
254 |
84 |
Rent receivable |
581 |
1,599 |
Amounts held on
deposit |
2,000 |
— |
Amounts receivable from
issue of C shares |
— |
16,195 |
Other receivables |
4,032 |
805 |
Total |
6,867 |
18,683 |
The amounts held on deposit is in relation to GCP Apex Limited
and is a deposit for the purchase of land in respect of the Apex
House forward funding project. A further £18 million is due upon
completion.
Accounting policy
Rent and other receivables are recognised at their original
invoiced value. An impairment provision is made when there is
objective evidence that the Group will not be able to recover
balances in full. Balances are written off when the probability of
recovery is assessed as being remote. |
18. Other payables and accrued expenses
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Property operating
expenses payable |
3,359 |
672 |
Finance expense
payable |
425 |
237 |
C share issue costs
payable |
— |
2,499 |
Other expenses
payable |
2,330 |
1,411 |
Trade and other
payables |
6,114 |
4,819 |
Deferred income |
5,235 |
2,442 |
Total |
11,349 |
7,261 |
Accounting policy
Trade and other payables are initially recognised at fair value and
subsequently held at amortised cost.
Deferred income is rental income received in advance during the
accounting period. The income is deferred and is unwound to revenue
on a straight-line basis over the period in which it is
earned. |
19. Interest-bearing loans and borrowings
|
30
June 2016 |
New
facility
£’000 |
Previous
facility
£’000 |
30
June 2015
£’000 |
Loans drawn down at the
start of the year |
— |
40,000 |
40,000 |
Repayment of initial
loan |
— |
(40,000) |
— |
Loan drawn down |
130,000 |
— |
— |
Total loans drawn
down |
130,000 |
— |
40,000 |
Loan arrangement
fees |
(1,997) |
(655) |
(655) |
Prior year
amortisation |
— |
224 |
|
Amortised in the
year |
171 |
431 |
224 |
Unamortised loan
arrangement fees |
(1,826) |
— |
(431) |
Loan balance less
unamortised loan arrangement fees |
128,174 |
— |
39,569 |
At 30 June 2016, the interest rate
on the loans was 3.07% (2015: 2.59%).
During the year, the Group’s £40 million loan with Barclays was
repaid and the Company entered into new financing arrangements with
a new lender, Pricoa Mortgage Capital. The Group has secured a
facility for up to £130 million of borrowings at a fixed rate
of 3.07% which is set to mature in September
2024. On 30 September 2015,
the Group drew down £130 million under the new facility to
finance the acquisition of Scape Shoreditch and refinance the
existing assets and Barclays facility.
The Group uses gearing to enhance returns over the long term.
The level of gearing is governed by careful consideration
of the cost of borrowing and the Group uses hedging or
otherwise seeks to mitigate the risk of interest rate increases.
Gearing, represented by borrowings as a percentage of gross assets,
will not exceed 55% at the time of investment. It is the Directors’
current intention to target gearing of less than 30% of gross
assets in the long term and to comply with the REIT condition
relating to the ratio between the Group’s ‘property profits’ and
‘property finance costs’.
The debt facility includes loan-to-value of and interest cover
covenants that are measured at a Group level and the Group has
maintained significant headroom against all measures throughout the
financial period. The Group is in full compliance with all loan
covenants at 30 June 2016.
For the purposes of the AIFMD, leverage is any method which
increases the Company’s exposure, including the borrowing of cash
and the use of derivatives. It is expressed as a ratio between the
Company’s exposure and its net asset value and is calculated under
the gross and commitment methods, in accordance with AIFMD.
The Company is required to state its maximum and actual leverage
levels, calculated as prescribed by the AIFMD as at 30 June
2016, figures are as follows:
Leverage
exposure |
Maximum limit |
Actual
exposure |
Gross method |
155% |
118.5% |
Commitment method |
155% |
137.5% |
Accounting policy
Loans and borrowings are initially recognised at the proceeds
received net of directly attributable transaction costs. Loans and
borrowings are subsequently measured at amortised cost with
interest charged to the income statement at the effective interest
rate, and shown within finance costs. Transaction costs are spread
over the term of loan. |
20. Financial derivatives and hedging
|
Hedged |
|
30 June
2016 |
30 June 2015 |
|
amount |
|
Total |
Total |
|
£’000 |
Maturity |
£’000 |
£’000 |
Interest rate swap at
fair value: |
20,000 |
02/05/2017 |
|
|
Fair value at start of
year |
|
|
(214) |
47 |
Change in
valuation |
|
|
— |
(261) |
Termination of swap
contract |
|
|
214 |
— |
Fair value of
financial derivatives |
|
|
— |
(214) |
Cash flow
hedges
On 30 September 2015 the Group
terminated its interest rate swap contract. Break costs of £214,000
were incurred and have been expensed within finance costs in the
consolidated statement of comprehensive income.
The Group’s interest rate swap was used to hedge the exposure to
the variable interest rate payments on the variable rate element of
the Company’s secured loans, which is no longer required.
Derivatives are classified in Level 2 in the fair value
hierarchy under IFRS 13.
Accounting policy
The Group uses interest rate swaps to hedge its risks associated
with interest rates. Such derivative financial instruments are
initially recognised at fair value on the date on which a
derivative contract is entered into and are subsequently
re-measured at fair value. Derivatives are recognised as an asset
when the fair value is positive and as a liability when the fair
value is negative. |
21. C shares: financial liability
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Value at start of
year |
117,422 |
— |
Proceeds from issue of
C shares |
— |
120,000 |
C share issue
costs |
9 |
(2,575) |
Amortisation of C share
issue costs |
2,536 |
30 |
Return on C share
liability |
3,803 |
(33) |
Extinguishment of C
share liability upon conversion to ordinary shares |
(123,770) |
— |
Value at end of the
year |
— |
117,422 |
On 25 June 2015, the Company
announced the issue of 120,000,000 C shares, issued at £1 per
share. The C shares are convertible redeemable preference shares.
The shares (when in issue) were listed on the SFM (now the SFS) and
dealing commenced on 30 June 2015.
After the conversion of the C shares to ordinary shares, the shares
were delisted on 28 October 2015.
The funds were raised in order to finance a number of property
acquisitions.
Whilst the C shares were in issue, the results, assets and
liabilities attributable to the C shares were accounted for in a
separate pool to the results, assets and liabilities of the
ordinary shares. A share of fund level expenses for the period the
C shares had been in issue was allocated to the C shares based on
the net assets of each share class pool.
On 28 October 2015 the C shares
were converted to ordinary shares on the basis of a conversion
ratio of 0.781044 C shares for every ordinary share which gives a
conversion rate of 781 ordinary shares for every 1,000 C shares
held.
The tables below give a summary of the results of the C share
pool up to the date of conversion and the value of the C share
pool assets on the date of conversion.
For the period from
issue to conversion |
£’000 |
Proceeds from issue of
C shares |
120,000 |
C share issue
costs |
(2,566) |
Net rental income |
87 |
Administration
expenses |
(946) |
Fair value gains on
investment properties |
7,879 |
Finance income |
64 |
Finance expenses |
(735) |
Tax charge on residual
income |
(13) |
Value of C shares on
conversion |
123,770 |
Represented by the
following assets and liabilities |
£’000 |
Investment
property |
209,430 |
Trade and other
receivables |
3,800 |
Cash and cash
equivalents |
14,342 |
Deferred income |
(4,161) |
Trade and other
payables |
(10,516) |
Retention
liabilities |
(507) |
Interest-bearing loans
and borrowings |
(88,618) |
Value of C shares on
conversion |
123,770 |
Accounting policy
C shares are convertible redeemable preference shares and under IAS
32 Financial Instruments: Presentation, meet the definition of a
financial liability. C shares are recognised on issue at fair value
less directly attributable transaction costs. After initial
recognition, C shares are subsequently measured at amortised cost
using the effective interest method. Amortisation is credited or
charged to finance income or finance costs in the income statement.
Transaction costs are amortised to the earliest conversion
period. |
22. Share capital
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Issued and fully
paid: |
|
|
At the start of the
year |
1,099 |
1,099 |
Shares issued on
conversion of C shares 93,725,280 ordinary shares of £0.01
each |
937 |
— |
Shares issued on 15
February 2016 14,074,075 ordinary shares of £0.01 each |
141 |
— |
Shares issued on 24 May
2016 44,085,232 ordinary shares of £0.01 each |
441 |
— |
Balance at the end
of the year |
2,618 |
1,099 |
On 28 October 2015, 93,725,280
ordinary shares were issued for the conversion of the C shares for
a consideration of £123,770,000 representing the value of the C
share asset pool, the balance of C shares were redeemed.
On 15 February 2016 and
24 May 2016, 14,074,075 and
44,085,232 ordinary shares were issued respectively.
The share capital comprises one class of ordinary shares. At
general meetings of the Company, ordinary shareholders are entitled
to one vote on a show of hands and on a poll, to one vote for every
share held. There are no restrictions on the size of a shareholding
or the transfer of shares, except for the UK REIT restrictions.
23. Share premium
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
At the start of the
year |
39,946 |
39,937 |
Shares issued on
conversion of C shares |
122,833 |
— |
Shares issued on 15
February 2016 |
18,859 |
— |
Shares issued on 24 May
2016 |
59,559 |
— |
Share issue costs |
(1,544) |
9 |
Balance at the end
of the year |
239,653 |
39,946 |
The credit of £9,000 in the prior year represents a change in
the estimated share issue costs accrued at 30 June 2014.
24. Capital and reserves
Share capital
Share capital is the nominal amount of the Company’s ordinary
shares in issue.
Share premium
Share premium relates to amounts subscribed for share capital in
excess of nominal value less associated issue costs of the
subscriptions. On 31 July 2013, the
Company by way of special resolution cancelled the then value of
its share premium account, by an Order of the High Court of
Justice, Chancery Division. As a result of this cancellation, £67.4
million was transferred from share premium to retained earnings in
the financial period ended 30 June
2014.
Share premium comprises the following cumulative amounts:
|
30 June 2016 |
30 June 2015 |
|
£’000 |
£’000 |
Issue of share
capital |
312,252 |
111,001 |
Share issue costs |
(5,241) |
(3,697) |
Share premium
cancelled |
(67,358) |
(67,358) |
Share premium |
239,653 |
39,946 |
Hedging
reserve
The hedge reserve comprises the effective portion of the
cumulative net change in the fair value of cash flow hedging
instruments.
Retained
earnings
Retained earnings represent the profits of the Group less
dividends paid from revenue profits to date. It should be noted
that unrealised gains on the revaluation of investment properties
contained within this reserve are not distributable until any gains
crystallise on the sale of the investment property.
Retained earnings comprise the following cumulative amounts:
|
30 June 2016 |
30 June 2015 |
|
£’000 |
£’000 |
Total unrealised gains
on investment properties |
57,826 |
30,670 |
Total revenue
profits |
9,492 |
8,320 |
Dividends paid from
revenue profits |
(9,492) |
(7,315) |
Retained earnings |
57,826 |
31,675 |
Special
reserve
The special reserve represents the cancelled share premium less
dividends paid from these reserves.
The special reserve comprises the following cumulative
amounts:
|
30 June 2016 |
30 June 2015 |
|
£’000 |
£’000 |
Cancelled share
premium |
67,358 |
67,358 |
Dividends paid from
reserves |
(8,987) |
(2,135) |
Special reserve |
58,371 |
65,223 |
25. Net asset value per share
Basic NAV per share amounts are calculated by dividing net
assets in the statement of financial position attributable to
ordinary equity holders of the Company by the number of ordinary
shares outstanding during the year. As there are no dilutive
instruments outstanding, basic and diluted NAV per share are
identical. The following reflects the net asset and share data used
in the basic and diluted NAV per share computations:
|
30 June 2016 |
30 June 2015 |
Net assets attributable
to ordinary shareholders (for calculation of EPRA NNNAV)
(£’000) |
358,468 |
137,729 |
Financial derivative
(£’000) |
— |
214 |
Adjusted net assets for
calculation of EPRA NAV (£’000) |
358,468 |
137,943 |
Number of shares in
issue |
261,795,015 |
109,910,428 |
EPRA NNNAV (pence per
share) |
136.93 |
125.31 |
EPRA NAV (pence per
share) |
136.93 |
125.51 |
26. Fair value
IFRS 13 defines fair value as the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The following methods and assumptions were used to estimate the
fair values.
The fair value of cash and short-term deposits, trade
receivables, trade payables, and other current liabilities
approximate their carrying amounts due to the short-term maturities
of these instruments.
Interest bearing loans and borrowings are disclosed at amortised
cost. The carrying value of the loans and borrowings approximate to
their fair value due to the contractual terms and conditions of the
loan.
During their existence the C shares actively traded on the SFM
(now the SFS). At 30 June 2015, their
share price was 105.25 pence per
share, giving a fair value (Level 1 in the fair value hierarchy) of
the C shares of £126,300,000 compared to the amortised cost value
of £117,422,000. As at 30 June 2015
the amortised cost value of the C share pool equated to the NAV of
the C shares which the Directors considered the most
appropriate way to disclose the liability within the
financial statements.
The fair values of the derivative interest rate swap contracts
are estimated by discounting expected future cash flows using
current market interest rates yield curves and performance risk
over the remaining term of the instrument.
Quarterly valuations of investment property are performed by
Knight Frank LLP, an accredited external valuer
with recognised and relevant professional qualifications and
recent experience of the location and category of the investment
property being valued, however the valuations are the ultimate
responsibility of the Directors, who appraise these
quarterly.
The valuation of the Company’s investment property at fair value
is determined by the external valuer on the basis of market value
in accordance with the internationally accepted RICS Valuation –
Professional Standards (incorporating the International Valuation
Standards).
The determination of the fair value of investment property
requires the use of estimates such as future cash flows from assets
(such as lettings, tenants’ profiles, future revenue streams,
capital values of fixtures and fittings, plant and machinery, any
environmental matters and the overall repair and condition of the
property) and discount rates applicable to those assets.
The following tables show an analysis of the fair values of
financial instruments recognised in the statement of financial
position by level of the fair value hierarchy1:
|
30 June
2016 |
|
Level 1 |
Level 2 |
Level 3 |
Total |
Assets and liabilities
measured at fair value |
£’000 |
£’000 |
£’000 |
£’000 |
Investment
properties |
— |
— |
424,787 |
424,787 |
Total |
— |
— |
424,787 |
424,787 |
|
30 June
2015 |
|
Level 1 |
Level 2 |
Level 3 |
Total |
Assets and liabilities
measured at fair value |
£’000 |
£’000 |
£’000 |
£’000 |
Investment
properties |
— |
— |
177,220 |
177,220 |
Financial
derivatives |
— |
(214) |
— |
(214) |
Financial
liability |
— |
— |
(117,422) |
(117,422) |
Total |
— |
(214) |
59,798 |
59,584 |
1.
Explanation of the fair value hierarchy:
- Level 1 – quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the
measurement date;
- Level 2 – use of a model with inputs (other than quoted prices
included in Level 1) that are directly or indirectly observable
market data; and
- Level 3 – use of a model with inputs that are not based on
observable market data.
Sensitivity analysis to significant changes in unobservable
inputs within Level 3 of the hierarchy
The significant unobservable inputs used in the fair value
measurement categorised within Level 3 of the fair value hierarchy
of the Group’s portfolio of investment property are:
- ERV;
- rental growth;
- tenancy period;
- sundry income;
- facilities management cost; and
- initial yield.
Significant increases/(decreases) in the ERV (per sq ft p.a.)
and rental growth p.a. in isolation would result in a significantly
higher/(lower) fair value measurement. Significant
increases/(decreases) in the long-term vacancy rate and discount
rate (and exit or yield) in isolation would result in a
significantly lower/(higher) fair value measurement.
Generally, a change in the assumption made for the ERV (per sq
ft p.a.) is accompanied by:
- a similar change in the rent growth p.a. and discount rate (and
exit yield); and
- an opposite change in the long-term vacancy rate.
The following table analyses:
- the fair value measurements at the end of the reporting
period;
- a description of the valuation techniques applied;
- the inputs used in the fair value measurement, including the
ranges of rent charged to different units within the same building;
and
- for Level 3 fair value measurements, quantitative information
about significant unobservable inputs used in the fair value
measurement.
Class |
Fair
value |
Valuation
technique |
Key
unobservable
inputs |
Range |
Student
property
30 June 2016 |
£424,787,000 |
Income
capitalisation |
ERV –
2015/16
Rental growth
Tenancy period
Sundry income
Facilities management cost
Initial yield |
£164.50 - £430 per week
2.5% - 3.0%
51 weeks
£50 - £100 per bed per annum
£1,950 - £2,150 per bed per annum
4.75% - 5.75% blended (4.75% - 7.50%) |
Student
property
30 June 2015 |
£177,220,000 |
Income
capitalisation |
ERV –
2014/15
Rental growth
Tenancy period
Sundry income
Facilities management cost
Initial yield |
£180 –
£340 per week
2.5% – 3.0%
51 weeks
£100 per bed per annum
£1,800 – £2,000 per bed per annum
5.12% – 5.75% blended (4.85% – 7.50%) |
Gains and losses recorded in profit or loss for recurring fair
value measurements categorised within Level 3 of the fair value
hierarchy amount to £27,156,000 (2015: £25,660,000) and are
presented in the consolidated statement of comprehensive income in
line item ‘fair value gains on investment properties’.
All gains and losses recorded in profit or loss for recurring
fair value measurements categorised within Level 3 of the fair
value hierarchy are attributable to changes in unrealised gains or
losses relating to investment property held at the end of the
reporting period.
The carrying amount of the Company’s assets and liabilities,
except for the liability to the C shareholders in the prior period,
is considered to be the same as their fair value.
27. Financial risk management
objectives and policies
The Company’s principal financial liabilities, other than
derivatives, are liabilities due to the C shareholders, loans and
borrowings. The main purpose of the Company’s loans and borrowings
is to finance the acquisition of the Company’s property portfolio.
The Company has trade and other receivables, trade and other
payables and cash and short-term deposits that arise directly from
its operations.
The Company is exposed to market risk, interest rate risk,
credit risk and liquidity risk. The Board of Directors reviews and
agrees policies for managing each of these risks which are
summarised below.
Market risk
Market risk is the risk that future values of investments in
property and related investments will fluctuate due to changes in
market prices. The total exposure at the statement of financial
position date is £424,787,000 and to manage this risk, the Group
diversifies its portfolio across a number of assets. For more
information on this please refer to the risk management section of
the report.
Market risk is also the risk that the fair values of financial
instruments will fluctuate because of changes in market prices. The
derivative financial instruments that were held by the Company in
the prior period, were all fixed terms at fixed rates with the
floating elements hedged on 50% of total borrowings. The Company’s
exposure to market risk was limited to the remaining 50% which was
not hedged.
Interest rate
risk
Interest rate risk is the risk that the future cash flows of a
financial instrument will fluctuate because of changes in market
interest rates. The Company’s exposure to the risk of changes in
market interest rates relates is minimal as it has taken out a
fixed rate bank loan.
Credit risk
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risk
from its leasing activities and its financing activities, including
deposits with banks and financial institutions and derivatives.
Credit risk is managed by requiring tenants to pay rentals in
advance. The credit quality of the tenant is assessed at the time
of entering into a lease agreement. Outstanding tenants’
receivables are regularly monitored. The maximum exposure to credit
risk at the reporting date is the carrying value of each class of
financial asset.
The following table analyses the Group’s exposure to credit
risk:
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Deposit account |
815 |
308 |
Cash and cash
equivalents |
66,337 |
106,292 |
Trade and other
receivables |
6,867 |
18,683 |
Total |
74,019 |
125,283 |
The deposit account, cash and cash equivalents are held with
Barclays which holds an A credit rating.
Liquidity risk
Liquidity risk is defined as the risk that the Group will
encounter difficulty in meeting obligations associated with
financial liabilities that are settled by delivering cash or
another financial asset. Exposure to liquidity risk arises because
of the possibility that the Group could be required to pay its
liabilities earlier than expected. The Group’s objective is to
maintain a balance between continuity of funding and flexibility
through the use of bank deposits and loans.
The table below summarises the maturity profile of the Group’s
financial liabilities based on contractual
undiscounted payments:
|
Less |
Three |
|
|
|
|
|
than three |
to twelve |
One to |
Two to |
More than |
|
|
months |
months |
two years |
five years |
five years |
Total |
Year ended 30 June
2016 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Interest-bearing
loans |
|
|
|
|
|
|
and borrowings |
1,006 |
2,985 |
3,941 |
11,984 |
145,975 |
165,891 |
Trade and other
payables |
774 |
5,340 |
— |
— |
— |
6,114 |
Retention account |
— |
— |
815 |
— |
— |
815 |
Total |
1,780 |
8,325 |
4,756 |
11,984 |
145,975 |
172,820 |
|
Less |
Three |
|
|
|
|
|
than three |
to twelve |
One to |
Two to |
More than |
|
|
months |
months |
two years |
five years |
five years |
Total |
Year ended 30 June
2015 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Interest-bearing
loans |
|
|
|
|
|
|
and borrowings |
259 |
771 |
1,028 |
41,855 |
— |
43,913 |
Trade and other
payables |
2,866 |
1,953 |
— |
— |
— |
4,819 |
Retention account |
— |
— |
308 |
— |
— |
308 |
Derivative financial
instruments |
44 |
131 |
146 |
— |
— |
321 |
Total |
3,169 |
2,855 |
1,482 |
41,855 |
— |
49,361 |
The disclosed amounts for financial derivatives in the above
table are the net undiscounted cash flows.
28. Capital management
The Group’s capital is represented by share capital, reserves
and borrowings.
The primary objective of the Group’s capital management is to
ensure that it remains within its quantitative banking covenants
and maintains a strong credit rating. No changes were made in the
objectives, policies or processes during the period.
The Group may use gearing to enhance returns over the long term.
The level of gearing will be governed by careful consideration of
the cost of borrowing and the Group may use hedging or otherwise
seek to mitigate the risk of interest rate increases. Gearing,
represented by borrowings as a percentage of gross assets, will not
exceed 55% at the time of investment. It is the Directors’ current
intention to target gearing of less than 30% of gross assets in the
long term and to comply with the REIT condition relating to the
ratio between the Group’s property profits and property finance
costs. As at the year end, the Group was operating with a
property loan-to-value of 26.6% (30 June
2015: 22.5%).
During the year, the Group did not breach any of its loan
covenants, nor did it default on any other of its obligations under
its loan agreement.
29. Related party transactions
Directors
The Directors (all non-executive Directors) of the Company and
subsidiaries are considered to be the key management personnel of
the Group. Directors’ remuneration for the year totalled £121,000
and at 30 June 2016, a balance of
£13,000 (2015: £11,000) was outstanding. Further information is
given in note 6.
Investment
Manager
The Company is party to an investment management agreement with
the Investment Manager, pursuant to which the Company has appointed
the Investment Manager to provide investment management services
relating to the respective assets on a day-to-day basis in
accordance with their respective investment objectives and
policies, subject to the overall supervision and direction by the
Board of Directors.
For its services to the Company, the Investment Manager receives
an annual fee at the rate of 1.0% of the NAV of the Company (or
such lesser amount as may be demanded by the Investment Manager at
its own absolute discretion).
The Investment Manager has committed additional resource in
providing its client funds, including the Company, a more
comprehensive service which strengthens the level of transaction
and marketing support for the Company, in a cost efficient manner.
The Investment Manager receives a fee of 0.30% of the aggregate
gross proceeds from any issue of new shares in consideration for
the provision of marketing and investor introduction services. The
Investment Manager has appointed Highland Capital Partners Limited
to assist it with the provision of such services and pays all fees
due to Highland Capital Partners Limited out of the fees it
receives from the Company.
During the year, the Group incurred £3,354,000 (2015:
£1,286,000) in respect of investment management fees, marketing
fees and transaction management and documentation services,
£3,029,000 which is included within administration expenses in the
consolidated income statement and £325,000 included within the
share issue costs relating to shares issued during the year. As at
30 June 2016 £897,000 (2015: £368,000) was outstanding.
With effect from 22 July 2014, the
Company’s Investment Manager was authorised as an AIFM by the FCA
under the AIFMD regulations. The Company has provided disclosures
on its website, www.gcpuk.com/gcp-student-living-plc, incorporating
the requirements of the AIFMD regulations.
Subsidiaries
GCP Student Living plc as at 30 June
2016 owns a 100% controlling stake in GCP Topco Limited, GCP
Holdco Limited, GCP Scape East Limited, GCP Brunswick Limited
and GCP Brunswick 2 Limited, GCP Operations Limited, Leopard
Guernsey Greenwich JV Limited, Leopard Guernsey Greenwich Limited,
Leopard Guernsey Greenwich 2 Limited, Old Street Acquisitions
Limited, Leopard Guernsey Old Street Limited and Leopard Guernsey
Old Street 2 Limited, GCP RHUL Limited and GCP RHUL 2 Limited, GCP
WL Limited, GCP Apex Limited and GCP SG Limited
respectively.
The tables below disclose the transactions and balances between
the Company and subsidiary entities:
|
30 June
2016 |
30 June 2015 |
Transactions |
£’000 |
£’000 |
Recharges of fund
level expenses to: |
|
|
GCP Scape East
Limited |
285 |
384 |
GCP Brunswick
Limited |
20 |
39 |
Leopard Guernsey
Greenwich JV Limited |
138 |
192 |
GCP SG Limited |
51 |
— |
GCP RHUL Limited |
74 |
— |
Old Street Acquisitions
Limited |
340 |
— |
GCP WL Limited |
21 |
|
GCP Topco Limited |
5 |
5 |
GCP Holdco Limited |
5 |
|
GCP Operations
Limited |
17 |
17 |
Share capital issued
in exchange for repayment of loans: |
|
|
GCP Scape East
Limited |
— |
51,508 |
GCP Brunswick
Limited |
— |
10,467 |
|
30 June
2016 |
30 June 2015 |
Balances |
£’000 |
£’000 |
Loan balances
included within book cost: |
|
|
Leopard Guernsey
Greenwich Limited |
— |
962 |
Leopard Guernsey
Greenwich 2 Limited |
— |
637 |
Leopard Guernsey
Greenwich JV Limited |
— |
29,846 |
Other intercompany
balances due from/(to): |
|
|
GCP Topco Limited |
4,182 |
— |
GCP Scape East
Limited |
— |
(721) |
GCP Brunswick
Limited |
— |
(23) |
Leopard Guernsey
Greenwich 2 Limited |
— |
304 |
Leopard Guernsey
Greenwich JV Limited |
— |
(1,602) |
GCP Operations
Limited |
41 |
11 |
GCP WL Limited |
468 |
— |
The loans for Leopard Guernsey Greenwich Limited, Leopard
Guernsey Greenwich 2 Limited and Leopard Guernsey Greenwich JV
Limited were capitalised in the year.
On 30 September 2015, on a
share-for-share basis, GCP Holdco Limited acquired the following
subsidiaries from GCP Student Living plc. GCP Topco Limited then
acquired GCP Holdco Limited from GCP Student Living plc.
Company |
£’000 |
GCP Scape East
Limited |
76,448 |
GCP Brunswick
Limited |
15,003 |
Leopard Guernsey
Greenwich JV Limited |
47,324 |
GCP SG Limited |
19,047 |
GCP RHUL Limited |
16,288 |
Total purchased from
GCP Student Living plc: |
174,110 |
Purchased directly
from third party: |
|
Old Street Acquisitions
Limited |
76,652 |
Total |
250,762 |
30. Events after the reporting
period
On 14 September 2016, the Company
announced that applications have been made to the UK Listing
Authority and London Stock Exchange for listing on the Official
List and a transfer to trading from the Specialist Fund Segment to
the Premium Segment of the Main Market of the London Stock Exchange
in respect of 261,795,015 ordinary shares. The admission is
expected to occur with effect from 8.00am on 16 September
2016.
31. Ultimate controlling party
It is the view of the Directors that there is no ultimate
controlling party.
COMPANY STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
|
|
30 June
2016 |
30 June 2015 |
|
Notes |
£’000 |
£’000 |
Assets |
|
|
|
Non-current
assets |
|
|
|
Investment in
subsidiary companies |
3 |
305,574 |
140,492 |
|
|
305,574 |
140,492 |
Current
assets |
|
|
|
Cash and cash
equivalents |
4 |
57,565 |
103,821 |
Trade and other
receivables |
5 |
2,040 |
16,216 |
Total
assets |
|
365,179 |
260,529 |
Liabilities |
|
|
|
Current
liabilities |
|
|
|
Trade and other
payables |
6 |
(6,711) |
(5,378) |
Financial liabilities
at amortised cost |
|
— |
(117,422) |
Total
liabilities |
|
(6,711) |
(122,800) |
Net assets |
|
358,468 |
137,729 |
Equity |
|
|
|
Share capital |
|
2,618 |
1,099 |
Share premium |
|
239,652 |
39,946 |
Retained earnings |
|
116,198 |
96,684 |
Total equity |
|
358,468 |
137,729 |
Number of shares in
issue |
|
261,795,015 |
109,910,428 |
NAV per share
(pps) |
7 |
136.93 |
125.31 |
These financial statements were approved by the Board of
Directors of GCP Student Living plc on 15
September 2016 and signed on its behalf by:
Robert Peto
Chairman
Company number: 08420243
The accompanying notes form an integral part of these Company
financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June
2016
|
Share |
Share |
Retained |
|
|
capital |
premium |
earnings |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
Balance at 1 July
2015 |
1,099 |
39,946 |
96,684 |
137,729 |
Profit for the
year |
— |
— |
28,543 |
28,543 |
Other comprehensive
income |
— |
— |
— |
— |
Total comprehensive
income |
— |
— |
28,543 |
28,543 |
Ordinary shares
issued |
1,519 |
201,251 |
— |
202,770 |
Share issue costs |
— |
(1,545) |
— |
(1,545) |
Dividends |
— |
— |
(9,029) |
(9,029) |
Balance at 30 June
2016 |
2,618 |
239,652 |
116,198 |
358,468 |
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June
2015
|
Share |
Share |
Retained |
|
|
capital |
premium |
earnings |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
Balance at 1 July
2014 |
1,099 |
39,937 |
71,819 |
112,855 |
Profit for the
year |
— |
— |
31,020 |
31,020 |
Other comprehensive
income |
— |
— |
— |
— |
Total comprehensive
income |
— |
— |
31,020 |
31,020 |
Share issue costs |
— |
9 |
— |
9 |
Dividends |
— |
— |
(6,155) |
(6,155) |
Balance at 30 June
2015 |
1,099 |
39,946 |
96,684 |
137,729 |
The accompanying notes form an integral part of these Company
financial statements.
COMPANY STATEMENT OF CASH FLOWS
For the year ended 30 June
2016
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Cash flows from
operating activities |
|
|
Operating profit |
34,811 |
31,023 |
Adjustments to
reconcile profit for the year to net cash flows: |
|
|
Gains from change in
fair value of subsidiary companies |
(34,237) |
(32,642) |
Dividends received from
subsidiary companies |
(2,671) |
— |
Costs reclassified as
capital |
— |
(145) |
Corporation tax
paid |
— |
(7) |
Recharges made to
subsidiary companies |
(955) |
(631) |
(Increase)/decrease in
other receivables and prepayments |
(2,035) |
154 |
Increase in other
payables and accrued expenses |
1,018 |
420 |
Net cash flow used
in operating activities |
(4,069) |
(1,828) |
Cash flows from
investing activities |
|
|
Acquisition of
subsidiaries, net of cash acquired |
(130,492) |
349 |
Net cash (used
in)/generated from investing activities |
(130,492) |
349 |
Cash flows from
financing activities |
|
|
Proceeds from issue of
ordinary share capital |
79,000 |
— |
Share issue costs |
(1,538) |
(47) |
Proceeds from the issue
of C shares |
16,195 |
103,805 |
C share issue
costs |
(2,490) |
(76) |
Cash received from
subsidiary companies |
5,933 |
7,613 |
Finance income |
71 |
2 |
Finance expenses |
(1) |
(1) |
Dividends paid in the
year |
(8,865) |
(6,145) |
Net cash flow
generated from financing activities |
88,305 |
105,151 |
Net
(decrease)/increase in cash and cash equivalents |
(46,256) |
103,672 |
Cash and cash
equivalents at start of the year |
103,821 |
149 |
Cash and cash
equivalents at end of the year |
57,565 |
103,821 |
The accompanying notes form an integral part of these Company
financial statements.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 30 June
2016
1. General information
GCP Student Living plc is a closed-ended investment company
incorporated in the UK on 26 February
2013. The registered office of the Company is located at 51
New North Road, Exeter EX4 4EP.
The Company’s shares trade on the SFS.
2. Basis of preparation
These financial statements are prepared in accordance with IFRS
issued by the IASB as adopted by the European Union. The financial
statements have been prepared under the historical cost convention,
except for investment property, investments in subsidiaries and
derivative financial instruments that have been measured at fair
value. The audited financial statements are presented in Pound
Sterling and all values are rounded to the nearest thousand pounds
(£’000), except when otherwise indicated.
These financial statements are for the year ended 30 June 2016. Comparative figures are for the
previous accounting period, the year ended 30 June 2015.
The Company has taken advantage of the exemption in section 408
of the Companies Act 2006 not to present its own income statement
or statement of comprehensive income.
The financial statements of the Company follow the accounting
policies laid out above.
3. Investment in subsidiary
companies
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
At the beginning of the
year |
140,492 |
129,020 |
Investment in
subsidiary companies |
130,845 |
— |
Reduction in purchase
costs |
— |
(864) |
Total acquisitions |
130,845 |
(864) |
Fair value gains on the
revaluation of subsidiary companies |
34,237 |
12,336 |
Total |
305,574 |
140,492 |
The reduction in purchase costs represents a reduction in the
purchase cost as agreed with the vendors and return of escrow
balances.
Investments in and
transfers of subsidiary companies
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Investments in
subsidiary companies |
|
|
GCP SG Limited |
19,047 |
— |
GCP RHUL Limited |
16,288 |
— |
GCP Holdco Limited |
76,652 |
— |
GCP WL Limited |
18,858 |
— |
|
130,845 |
— |
Cash items included
in cashflow |
|
|
GCP Holdco Limited |
76,446 |
— |
GCP SG Limited |
18,888 |
— |
GCP RHUL Limited |
16,300 |
— |
GCP WL Limited |
18,858 |
— |
Total |
130,492 |
— |
The difference between the acquisition of the subsidiaries are
in respect of non-cash items being movements in intercompany loan
balances.
On 30 September 2015, on a
share-for-share exchange, GCP Holdco Limited acquired 100% of the
share capital of the companies below for £174 million. An
investment of £77 million was made in GCP Holdco Limited. GCP
Student Living plc acquired 100% of the shares in GCP Topco Limited
in exchange for 100% share capital of GCP Holdco Limited at a value
of £251 million.
Company |
£’000 |
GCP Scape East
Limited |
76,448 |
GCP Brunswick
Limited |
15,003 |
Leopard Guernsey
Greenwich JV Limited |
47,324 |
GCP SG Limited |
19,047 |
GCP RHUL Limited |
16,288 |
Total purchased from
GCP Student Living plc |
174,110 |
Accounting policy
Investments in subsidiary companies which are all 100% owned by the
Company are valued at NAV, which is equivalent to fair
value.
Changes in fair value of investments and gains on the sale of
investments are recognised as they arise in the Company
statement of comprehensive income. |
4. Cash and cash equivalents
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Cash and cash
equivalents |
57,565 |
103,821 |
Total |
57,565 |
103,821 |
Accounting policy
Cash and cash equivalents comprise cash at bank and short-term
deposits with banks and other financial institutions, with an
initial maturity of three months or less. |
5. Trade and other receivables
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
Prepayments and other
receivables |
40 |
10 |
Amounts held on
deposit |
2,000 |
— |
Amounts receivable from
issue of C shares |
— |
16,195 |
Amounts receivable from
subsidiary companies |
— |
11 |
Total |
2,040 |
16,216 |
6. Other payables and accrued
expenses
|
30 June
2016 |
30 June 2015 |
|
£’000 |
£’000 |
C share issue costs
payable |
— |
2,499 |
Amounts due to
subsidiary companies |
4,691 |
2,042 |
Other expenses
payable |
2,020 |
837 |
Total |
6,711 |
5,378 |
7. NAV per share
Basic NAV per share amounts are calculated by dividing net
assets in the statement of financial position attributable to
ordinary equity holders of the Company by the number of ordinary
shares outstanding during the year. As there are no dilutive
instruments outstanding, basic and diluted NAV per share are
identical. The following reflects the net asset and share data used
in the basic and diluted NAV per share computations:
|
30 June
2016 |
30 June 2015 |
Net assets attributable
to ordinary shareholders (£’000) |
358,468 |
137,729 |
Number of shares in
issue |
261,795,015 |
109,910,428 |
NAV (pence per
share) |
136.93 |
125.31 |
8. Fair value
IFRS 13 defines fair value as the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The following methods and assumptions were used to estimate the
fair values.
The fair value of cash and short-term deposits, trade
receivables, trade payables, interest loans and borrowings, and
other current liabilities approximate their carrying amounts due to
the short-term maturities of these instruments.
Interest-bearing loans and borrowings are disclosed at amortised
cost.
Quarterly valuations of subsidiaries are based on NAV. The NAV
of the subsidiaries are based on fair values of the
assets held by the subsidiary. However the valuations are the
ultimate responsibility of the Directors, who
appraise these quarterly.
The following tables show an analysis of the fair values of
financial instruments recognised in the statement of financial
position by level of the fair value hierarchy1:
|
30
June 2016 |
|
Level 1 |
Level 2 |
Level 3 |
Total |
Assets and
liabilities measured at fair value |
£’000 |
£’000 |
£’000 |
£’000 |
Investment in
subsidiaries |
— |
— |
305,574 |
305,574 |
Total |
— |
— |
305,574 |
305,574 |
|
30 June
2015 |
|
Level 1 |
Level 2 |
Level 3 |
Total |
Assets and
liabilities measured at fair value |
£’000 |
£’000 |
£’000 |
£’000 |
Investment in
subsidiaries |
— |
— |
140,492 |
140,492 |
Total |
— |
— |
140,492 |
140,492 |
1. Explanation of the fair value
hierarchy:
- Level 1 – quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the
measurement date;
- Level 2 – use of a model with inputs (other than quoted prices
included in Level 1) that are directly or indirectly observable
market data; and
- Level 3 – use of a model with inputs that are not based on
observable market data.
9. Events after the reporting
period
On 14 September 2016, the Company
announced that applications have been made to the UK Listing
Authority and London Stock Exchange for listing on the Official
List and a transfer to trading from the Specialist Fund Segment to
the Premium Segment of the Main Market of the London Stock Exchange
in respect of 261,795,015 ordinary shares. The admission is
expected to occur with effect from 8.00am on 16 September
2016.
ANNUAL GENERAL MEETING
The Company's Annual General Meeting will be held at the offices
of Gowling WLG (UK) LLP, 4 More London Riverside, London SE1 2AU at 12.00 noon on
Thursday, 27 October 2016.
The notice of this meeting will be circulated to shareholders
with the full annual report and financial statements and will also
available at www.gcpuk.com/gcp-student-living-plc.
NATIONAL STORAGE MECHANISM
A copy of the annual report and financial statements will be
submitted shortly to the National Storage Mechanism ("NSM") and
will be available for inspection at the NSM, which is situated at
www.morningstar.co.uk/uk/NSM.
GLOSSARY OF KEY TERMS
AIC
Association of Investment Companies
AIC
Code
AIC Code of Corporate Governance
AIC
Guide
AIC Corporate Governance Guide for Investment Companies
AIFM
Alternative Investment Fund Manager
AIFMD
Alternative Investment Fund Managers’ Directive
BARCLAYS
Barclays Bank PLC
Collegiate Collegiate
AC Limited – Asset and Facilities Manager for Water Lane
Apartments, Bristol
COMPANY
GCP Student Living plc
COST OF
BORROWING
Cost of borrowing expressed as a percentage weighted according to
period drawn down
CRM
Corporate Residential Management Limited – Asset and Facilities
Manager for The Pad until 31 August 2016
C
SHARES
Convertible redeemable preference shares of one pence each in the capital of
the Company
CTA
Corporation Tax Act 2010
EPRA
European Public Real Estate Association
EPRA
EPS
Recurring earnings from core operational activities excluding
movements relating to revaluation of investment
properties and interest rate swaps and the related tax
effects, divided by the number of shares in issue
EPRA NAV PER
SHARE
EPRA NAV – includes all property at market value but excludes the
mark to market of interest rate swaps
EPRA NNNAV PER
SHARE
As EPRA NAV but includes interest rate swaps carried at
market value
EPS
Earnings per share
ERV
Estimated rental value
EU
European Union
FRI
Full repairing and insuring
GHG
Greenhouse gas
GROUP
GCP Student Living plc and its subsidiaries
HEI
Higher education institution
HMRC
HM Revenue & Customs
IASB
International Accounting Standards Board
IFRS
International Financial Reporting Standards
IPO
Initial public offering
LOAN-TO-VALUE
Net debt expressed as a percentage of net assets excluding property
value
NAV Net
asset value
NON-PID
Non-property income distribution
OECD
Organisation for Economic Co-operation and Development
PID
Property income distribution
PORTFOLIO TOTAL
RETURN
Unleveraged weighted capital and income return of the investment
portfolio weighted by net rental income
PPS
Pence per share
QMUL
Queen Mary University of London
REIT
Real estate investment trust
RHUL
Royal Holloway, University of
London
RICS
Royal Institution of Chartered Surveyors
RPI
Retail price index
SCAPE
Scape Student Living Limited – Asset and Facilities Manager for
Scape Shoreditch, Scape East, Scape Greenwich,
Scape Surrey and The Pad (with effect from 1
September 2016)
SFS
Specialist Fund Segment of the Main Market of the London Stock
Exchange (formerly SFM or Specialist Fund Market)
TOTAL SHAREHOLDER RETURN
Share price growth with dividend deemed to be reinvested on the
dividend date
UCAS
Universities and Colleges Admissions Service
UKLA United
Kingdom Listing Authority
UK
CODE UK
Code of Corporate Governance
ENDS
Neither the contents of GCP Student Living plc's website nor the
contents of any website accessible from hyperlinks on the website
(or any website) is incorporated into, or forms part of, this
announcement.