TIDMPILR
RNS Number : 6803O
Pacific Industrial & Log REIT PLC
09 November 2016
9 November 2016
Pacific Industrial & Logistics REIT plc
("Pacific Industrial & Logistics", the "Company" or the
"Group")
Interim Results for the period ended 30 September 2016
Pacific Industrial & Logistics REIT plc (AIM:PILR), a Real
Estate Investment Trust focused on sub GBP10m lot size industrial
and logistics properties, is pleased to issue its interim financial
results following the close of the first reporting period to 30
September 2016.
HIGHLIGHTS
-- Adjusted NAV* up 24% to 123.87p from issue price of 100p
-- GBP29.9m valuation, a 10.7% uplift on the Company's portfolio
since acquisition (on purchase price of GBP27m)
-- Rental income of GBP1.0m, Operating profit of GBP3.1m for the period
*NAV at 30 September 2016 is 122.18p. Adjusted NAV is 123.87p
(adding back the fair-value movement of an interest rate swap).
Diluted NAV (adjusting for warrants in issue) is 116.47p and
Adjusted Diluted NAV is 117.78p.
Richard Moffitt, CEO of Pacific Industrial & Logistics,
commented:
"We are delighted to report that the Company has performed well
in the interim period to 30 September 2016, through upward-only
rent reviews and active asset management in a sector that continues
to benefit from strong fundamentals post-EU referendum".
For further information regarding Pacific Industrial &
Logistics REIT plc please call:
Pacific Industrial & Logistics
REIT Plc
Richard Moffitt +44 (0) 207 591
CEO 1600
finnCap - Nominated Adviser
and Broker
Stuart Andrews/ Grant Bergman/
Giles Rolls
Corporate Finance
Christian Hobart +44 (0)20 7220
Corporate Broking 0500
Chairman's Statement
Overview
The Company's IPO in April 2016 raised gross proceeds of
GBP12.2m. The Company's Ordinary Shares were admitted to trading on
the AIM Market of the London Stock Exchange on 13 April 2016.
In accordance with the Company's Investment Policy, the net
proceeds of the IPO were invested on 14 April 2016 in a portfolio
of smaller lot size industrial and logistics properties (single
let) situated across the Midlands, with an average lot size across
the portfolio of less than GBP10m. The purchase value of the
portfolio was GBP27.0m (excluding purchaser costs of GBP0.5m) on 14
April 2016 and had rental income of GBP2.0m (representing a Net
Initial Yield of 7.3%)
As at 30 September 2016, the Group's portfolio consisted of 11
properties, let to an array of SME tenants, all of whom have
continued to trade well following the result of the EU referendum.
The acquisition was funded from the proceeds of the IPO and the
drawdown of a senior debt facility (GBP15.5m) provided to the Group
by Santander.
The Group's portfolio has been independently valued by CBRE in
accordance with the RICS Valuation - Professional Standards (the
"Red Book"). As at 30 September 2016 the Group's portfolio had a
market value of GBP29.9m (up 10.7% from IPO).
The Group's investment manager, Pacific Capital Partners
Limited, has identified further opportunities to acquire high
yielding assets which meet the Group's investment criteria and the
Company will be exploring opportunities to raise additional equity
proceeds this year.
Financial Results
On an IFRS basis, operating profit for the Group for the period
from 13 April 2016 to 30 September 2016 was GBP3.1m, with total
comprehensive income of GBP2.6m. Net earnings per Share for the
period were 25.29 pence (basic), which includes the net valuation
gain recognised as a result of the revaluation of investment
property and derivative interest rate swaps. The unaudited Adjusted
Net Asset Value per share as at 30 September 2016 was up 24% to
123.87 pence per share from an issue price of 100.00 pence per
share.
Financing
As at 30 September 2016, the Group has raised GBP12.2m of
(gross) proceeds and signed a senior debt facility with Santander
totalling GBP50m (of which GBP15.3m remains drawn across the first
portfolio of assets which were acquired as a corporate
transaction). This facility has a term of 3 years and reflects a
current loan to value (LTV) of 51%.
In the medium term the Group's target LTV is 45% which is
allowed for in the facility.
Hedging
A significant portion (70%) of the Group's senior debt facility
has been hedged, with the Group entering into a three year interest
rate swap (fixed) effective from 14 April 2016. The fixed rate,
excluding lending margin of 235 bps, was 93bps. The Group's average
cost of borrowing on senior debt is approximately 318bps, including
the lending margin.
Outlook
The Company has performed well since IPO, delivering on its
stated initial objectives. The Board believes that by consolidating
a high quality logistics and industrial portfolio of smaller lot
sizes across established regions, the Group will offer investors
exposure to a sector that offers high yields and attractive
returns.
The smaller lot size market has excellent fundamentals and
compared to other asset classes offers both income and capital
preservation. The sector that the Company operates in has shown
little change since the result of the EU referendum and we are
aware of a number of transactions recently closing at
pre-referendum valuations. We believe the sector remains robust as
consumers continue to migrate online and demand for last mile and
regional logistics remains high.
The Board and the manager has an identified pipeline of
attractive assets that are complementary to its existing portfolio
and located in attractive logistical locations. We are confident of
continuing to deliver excellent returns for our shareholders.
Jonathan Gray
Chairman
9 November 2016
Manager's Report
Overview
The industrial and logistics market in the UK continues to see
strong occupier demand outweighing available supply. This is due to
on-going under-investment in the sector which is principally due to
some substantial barriers to entry; namely, the cost of
replacement, availability of land, planning constraints, letting
risk and lack of available funding. This results in an ongoing
supply constraint regarding quality industrial and logistics assets
across the UK. Strong occupier demand, owing in particular to the
growth in e-commerce and investment by retailers and suppliers in
e-fulfilment supply chain capability, also means that there is
sustained low void across key locations. Amazon, for example,
acquired 15 buildings totalling 2.4m sq ft during 2015 as it
continued to expand it logistics business.
The Company's focus and Investment Policy is to invest in
well-located, fit-for-purpose last mile or regional logistics
facilities in the UK, which display appealing characteristics:
- A strong tenant financial covenant and evidence of commitment
(including fit-out, location and value within the tenant's
operation)
- Quality stock which may be mispriced by the market (leveraging
the experience and track record of the manager to drive a stock
selection strategy)
- Opportunity for rental growth and out-performance by way of
asset management, tenant mix and the re-gearing of leases
- Strong local occupational market
- Existing buildings, which are acquired at below replacement cost
- Property and location characteristics (building quality, age,
scale, site cover, internal operational efficiencies)
- Logistical access to main arterial roads
The manager's focus is on upward-only rent review leases, with
reviews typically taking place every 5 years and delivering an
increase in the rent at the relevant agreed growth rate, compounded
over the period.
Valuation
The Company's portfolio has been independently valued by CBRE in
accordance with the RICS Valuation - Professional Standards (the
"Red Book").
As at 30 September 2016, the Company's portfolio had a market
value of GBP29.9m as compared with the combined initial purchase
price of GBP27.0m (excluding purchaser costs of GBP0.5m), an
increase of GBP2.9m or 10.7%. This increase in valuation reflects a
combination of asset management conducted by the manager to date,
examples are included to the left, the prevailing supply and demand
imbalance which is applying upward pressure on rents, with yields
holding steady post-referendum, and the advantage gained by the
manager's stock selection and off-market transaction.
Financial Results
On an IFRS basis, underlying operating profit (before accounting
for changes in fair value on investment properties) for the interim
period was GBP0.7m. The main driver of this positive performance
was the strong rental income generated by the portfolio, which
equates to a running yield on book cost of 7.3% per annum.
The results were also impacted by the gain recognised on the
revaluation of investment properties of GBP2.4m, covering all costs
associated with the portfolio purchase.
Administrative and other costs, which includes Manager fees and
other costs attributable to the running of the Company, for the
period, were GBP0.2m, equivalent to 0.9% of the market value of the
portfolio as at 30 September 2016.
The total comprehensive income for the period was GBP2.6m, which
equates to an earnings per share (basic) of 25.29 pence.
Financing and Hedging
During the period, the Group drew down GBP15.5m with Santander
on a long term borrowing facility of GBP50m. The average margin
across these loans is 235bps (excluding lender margin).
The Group's medium term target is to reduce the LTV ratio from
its current 51% to a more conservative level of 45% against the
Group's gross asset value. The Company has GBP2m of redeemable
preference shares outstanding which were issued to affiliates of
Pacific Investments Limited. These are entitled to 6% cumulative
interest and are redeemable at anytime over a period of up to 18
months.
The facility includes an amortisation charge and is secured
against the properties of the portfolio. The manager is in
discussions with a view to broadening the Company's debt funding
relationships.
The Company's debt strategy is to minimise the effect of a
significant rise in underlying interest rates by utilising interest
rates swaps.
Market Outlook
The Board and the manager believe that a significant opportunity
exists for investment in the UK industrial and logistics market,
owing to strong tenant demand and limited stock supply.
The UK continues to be one of the fastest growing adaptors of
online retail and there is a requirement for tenants to develop
their e-fulfilment capability accordingly. As such, key geographic
regions across the UK are seeing improvements year-on-year in
leasing activity. Demand for lots has increased significantly and
is driven by manufacturing / distribution and the continued growth
in e-commerce. Parcel carriers, retailers and companies within the
UK manufacturing supply chain are all involved with the rise in
take-up of smaller format lots.
Smaller lots
Yields on smaller lots (sub-GBP10m) are historically c. 1.0%
higher than those of larger lots as investors and real estate
investment funds are almost unilaterally focussed on lot sizes in
excess of GBP10m. Smaller lots therefore trade at a discount to
more institutional grade assets due to the reduced weight of money
targeting this stock. There is also a less active debt market for
smaller companies and investors in this lot size, which can be seen
as a hangover from the 2008 financial crisis.
Online
The growth in online retail has been a key driver of the
increase in logistics facilities. According to research by Goldman
Sachs (2015), online sales are expected to grow by 15% CAGR over
the next five years in the UK.
Supply
Supply levels for logistics property peaked in 2009 following a
period of speculative development in the run up to the economic
downturn. Following strong occupational demand resulting from the
recent economic recovery there is now a significant shortage.
Whilst there have been recent tentative steps towards the
speculative development of smaller floorplate buildings, this has
yet to result in availability matching the requirement for take-up
across the UK. Indeed, supply is more than a third lower than the
peak post-recession in 2009.
Supply remains low by historical standards and there remains a
lack of land earmarked for warehouse development.
Demand
Demand for smaller lot size warehouses in recent years has been
strong. The underlying driver being a lack of new building
availability and high replacement cost. According to CBRE's United
Kingdom Logistics - The Property Perspective H1 2016 report, demand
for logistics warehousing has been exceptionally strong in H1 2016,
with take-up of 13.5m sq ft compared to 9.5m sq ft in H1 2015. CBRE
also note that whilst theoretically the referendum result may
influence the market there is little evidence to suggest this is
the case and that the "changes hitting the logistics sector at
present, and the growth of key sectors including online retail will
... continue to be the biggest influence on occupier demand and
[this] has not been changed by the referendum result". The Midlands
was the most active location in H1 with 42% of the UK take-up.
Rents
According to CBRE's Monthly Index (August 2016), industrial and
logistics was the best performing commercial property sub-sector
year-on-year. This strong performance has continued through 2016
with positive rental growth and total return, whilst rental values
have held steady post-referendum.
Acquisitions
The focus on the manager will be to continue acquiring
attractive assets with the potential for rental growth in light of
the current market dynamic of diminishing supply and increasing
occupier demand.
The manger is focussed on maintaining and building existing
tenant relationships with a view to extending the Company's
reputation as a leader in the smaller lot size market.
Richard Moffitt and Christopher Turner
9 November 2016
Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 September 2016
30 September
2016
(unaudited)
Note GBP'000
------------------------------------ ---- -------------------------
Rental income 988
Cost of sales (10)
Gross income 978
Administrative and other expenses (234)
Long-term investment plan charge 8 (17)
------------------------------------ ---- -------------------------
Operating profit before changes
in fair value of
investment properties and interest
rate derivatives 727
Changes in fair value of investment
property 9 2,383
------------------------------------ ---- -------------------------
Operating profit 3,110
Finance expense 5 (327)
Changes in fair value of interest
rate derivatives (174)
------------------------------------ ---- -------------------------
Profit before taxation 2,609
------------------------------------ ---- -------------------------
Tax credit/(charge) for the period -
------------------------------------ ---- -------------------------
Profit and total comprehensive income
(attributable to the shareholders) 2,609
------------------------------------------ -------------------------
Earnings per share - basic 7 25.29p
Earnings per share - diluted 7 25.07p
Condensed Consolidated Statement of Financial Position
As at 30 September 2016
30 September
2016
(unaudited)
Note GBP'000
---------------------------------- ---- -----------------------
Non-current assets
Investment property 9 29,900
---------------------------------- ---- -----------------------
Total non-current assets 29,900
Current assets
Trade and other receivables 181
Cash and cash equivalents 1,890
---------------------------------- ---- -----------------------
Total current assets 2,071
---------------------------------- ---- -----------------------
Total assets 31,971
---------------------------------- ---- -----------------------
Current liabilities
Trade and other payables (1,530)
Deferred rental income (513)
---------------------------------- ---- -----------------------
Total current liabilities (2,043)
Non-current liabilities
Redeemable preference share 13 (2,000)
Interest rate derivatives 12 (174)
Bank borrowings 11 (15,147)
---------------------------------- ---- -----------------------
Total non-current liabilities (17,321)
---------------------------------- ---- -----------------------
Total liabilities (19,364)
---------------------------------- ---- -----------------------
Total net assets 12,607
---------------------------------- ---- -----------------------
Equity
Share capital 13 103
Share premium 14 9,787
Share warrant reserve 91
Other reserves 17
Retained earnings 2,609
---------------------------------- ---- -----------------------
Total equity 12,607
---------------------------------- ---- -----------------------
Net Asset Value per share basic 16 122.18p
Net Asset Value per share diluted 16 116.47p
Condensed Consolidated Cash Flow Statement
For the period ended 30 September 2016
30 September
2016
(unaudited)
Note GBP'000
-------------------------------------- ---- -------------------------
Cash flows from operating activities
Profit for the period (attributable
to equity shareholders) 2,609
Less: changes in fair value
of investment property (2,383)
Add: changes in fair value
of interest rate derivatives 174
Add: finance expense 327
Long-term investment plan 17
Increase in trade and other
receivables (159)
Increase in trade and other
payables 582
-------------------------------------- ---- -------------------------
Cash generated from operations 1,167
Net cash flow generated from
operating activities 1,167
-------------------------------------- ---- -------------------------
Investing activities
Acquisition of a subsidiary,
net of cash acquired 10 (26,135)
-------------------------------------- ---- -------------------------
Net cash flow used in investing
activities (26,135)
-------------------------------------- ---- -------------------------
Financing activities
Proceeds from issue of ordinary
share capital 10,177
Proceeds from issue of preference
shares 2,000
Cost of share issue (196)
Bank borrowings drawn 15,525
Bank borrowings repaid (175)
Loan arrangement fees paid (240)
Interest paid (233)
-------------------------------------- ---- -------------------------
Net cash flow generated from
financing activities 26,858
-------------------------------------- ---- -------------------------
Net increase in cash and cash equivalents
for the period 1,890
-------------------------------------------- -------------------------
Cash and cash equivalents at
start of period -
-------------------------------------- ---- -------------------------
Cash and cash equivalents at
end of period 1,890
-------------------------------------- ---- -------------------------
Condensed Consolidated Statement of Changed in Equity
For the period ended 30 September 2016
Share
Share Share warrant Other Retained
capital premium reserves reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
1 April 2016 - - - - - -
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Profit for the
period - - - - 2,609 2,609
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total
comprehensive
income - - - - 2,609 2,609
Long term
incentive
plan - - - 17 - 17
Issue of
Ordinary
Shares 103 9,983 91 - - 10,177
Share issue
costs - (196) - - - (196)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
30 September
2016
(unaudited) 103 9,787 91 17 2,609 12,607
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
1. General information
Pacific Industrial & Logistics REIT plc (the "Company") and
its subsidiaries (the "Group") carry on the business of property
asset management throughout the United Kingdom. The Company is a
public limited company incorporated and domiciled in England and
Wales and listed on the AIM Market of The London Stock Exchange.
The registered office address is 124 Sloane Street, London, SW1X
9BW.
2. Basis of preparation
The condensed consolidated financial statements for the Group
for the period ended 30 September 2016 have been reviewed by the
Company's Auditor for issue on 4 November 2016.
The Group's financial information has been prepared on a
historical cost basis, except for investment property and
derivative interest rate caps which have been measured at fair
value.
The functional currency of the Group is considered to be pounds
sterling as this is the currency of the primary environment in
which the company operates.
Going concern
The directors have made an assessment of the Group's ability to
continue as a going concern and are satisfied that the Group has
sufficient resources to continue in business for the foreseeable
future, a period of not less than twelve months from the date of
this report. For this reason, the directors adopt the going concern
basis of accounting in preparing these consolidated interim
financial statements.
Statutory accounts
Financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
Companies Act 2006 ("the Act"). The first set of statutory accounts
the company will file with the Registrar of Companies will be for
the period ended 31 March 2017.
The information for the period ended 30 September 2016 is
unaudited.
3. Significant accounting judgements, estimates and
assumptions
The preparation of the financial statements in conformity with
the generally accepted accounting practices requires management to
make estimates and judgements that affect the reported amounts of
assets and liabilities as well as the disclosure of contingent
assets and liabilities at the statement of financial position date
and the reported amounts of revenue and expenses during the
reporting period.
Business combinations
The Group acquires subsidiaries that own real estate. At the
time of acquisition, the Group considers whether each acquisition
represents the acquisition of a business or the acquisition of an
asset. The Group accounts for an acquisition as a business
combination where an integrated set of activities is acquired in
addition to the property.
Where such acquisitions are not judged to be the acquisition of
a business, they are not treated as business combinations. Rather
the cost to acquire the corporate entity is allocated between
identifiable assets and liabilities of the entity based upon their
relative fair values at the acquisition date. Accordingly, no
goodwill or additional deferred tax arises.
Long-term investment plan
In determining the fair value of equity settled share based
awards and the related charge to the statement of comprehensive
income, the group makes assumptions about future events and market
conditions.
In particular, judgement must be formed as to the likely number
of shares that will vest, and the fair value of each award
granted.
The fair value is determined using a valuation model which is
dependent on a number of assumptions of the group's future dividend
policy and the future volatility in the price of the group's
shares. Such assumptions are based on publicly available
information and reflects market expectation. Different assumptions
about these factors to those made by the group could materially
affect the reported value of long-term investment plan.
Details of the group's long-term investment plan can be found in
note 8.
Fair value of investment property
The market value of investment property is determined by real
estate valuation experts, to be the estimated amount for which a
property should exchange on the date of the valuation in an arm's
length transaction. Each property has been valued on an individual
basis. The valuation experts use recognised valuation techniques
and the principles of IFRS 13.
The valuations have been prepared in accordance with RICS
Valuation - Professional Standards January 2014 (the "Red Book").
Factors reflected include current market conditions, annual
rentals, lease lengths and location. The significant methods and
assumptions used by the valuers in estimating the fair value of
investment property are set out in note 9.
4. Principal accounting policies
The principal accounting policies applied in the preparation of
these interim financial statements are set out below. These
policies, which are also applicable to the financial statements of
the Company, have been consistently applied to all the years
presented.
Basis of consolidation
The financial statements consolidate the accounts of the Company
and all subsidiary undertakings drawn up to the same year end.
Subsidiaries
Subsidiaries are entities which the Group has the power to
govern the financial and operating policies generally accompanying
a shareholding of more than 50% of the voting rights. The existence
and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether
the Group controls another entity.
Subsidiary entities are consolidated from the date on which
control is transferred to the Group and are deconsolidated from the
date on which control ceases. In respect of subsidiaries,
inter-company transactions and unrealised gains on intra-group
transactions are eliminated on consolidation.
The financial information of the subsidiaries is prepared for
the same reporting periods as the parent company, using consistent
accounting policies.
Borrowing costs
Borrowing costs in relation to interest charges on bank
borrowings are expensed in the period to which they relate. Fees
incurred in relation to the arrangement of bank borrowings are
capitalised and expensed on a straight line basis over the term of
the loan.
Segmental reporting
IFRS 8 requires operating segments to be identified on the basis
of internal reports that are regularly reported to the chief
operating decision maker to allocate resources to the segments and
to assess their performance. Following the strategic review, the
directors consider there to be only one reportable segment, being
the investment in the United Kingdom in medium size industrial
warehouses.
Investment properties
Investment properties comprises completed property that is held
to earn rentals or for capital appreciation or both.
Investment properties are initially recognised at cost including
transactions costs. Transaction costs include transfer taxes and
professional fees for legal services. Subsequent to initial
recognition investment properties are carried at fair value, as
determined by real estate valuation experts. Gains or losses
arising from change in fair value is recognised in the statement of
comprehensive income in the period in which they arise.
On disposal of an investment property, the difference between
the disposal proceeds and the carrying amount is recognised in the
statement of comprehensive income.
Revenue recognition
Revenue comprises rental income from operating leases on
investment property (net of any incentives given to the lessees)
and is recognised on a straight line basis over the term of the
lease.
Long-term investment plan
The fair value of long-term investment plan is calculated at the
grant date using the Monte Carlo Model.
The resulting cost is charged to the Condensed Statement of
Comprehensive Income over the vesting period. The value of the
charge is adjusted to reflect expected and actual levels of
vesting.
Financial instruments
Financial assets and financial liabilities are recognised in the
Statement of Financial Position when the Group becomes a party to
the contractual provisions of the instrument.
Financial assets
Trade and other receivables are initially recognised at fair
value and subsequently measured at amortised cost, using the
effective interest rate method.
A provision is established for irrecoverable amounts when there
is objective evidence that amounts due under the original payment
terms will not be collected. The amount of any provision is
recognised in the statement of comprehensive income.
Cash and cash equivalents are recognised initially at fair value
and subsequently measured at amortised cost. Cash and cash
equivalents comprise cash in hand, deposits held with banks and
other short-term, highly liquid investments with original
maturities of three months or less.
Financial liabilities
Financial liabilities and equity instruments issued by the Group
are classified in accordance with the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument. An equity instrument is any
contract that evidences a residual interest in the assets of the
Group after deducting all of its liabilities. Equity instruments
issued by the Group are recorded at the proceeds received, net of
direct issue costs.
Trade and other payables are initially measured at fair value,
and are subsequently measured at amortised cost using the effective
interest rate method.
Derivative financial instruments
Derivative financial instruments, comprising interest rate caps
and swaps for hedging purposes, are initially recognised at cost
and are subsequently measured at fair value being the estimated
amount that the Group would receive or pay to terminate the
agreement at the period end date, taking into account current
interest rate expectations and the current credit rating of the
Group and its counterparties. The gain or loss at each fair value
measurement date is recognised in the statement of comprehensive
income. Premiums payable under such arrangements are initially
capitalised into the statement of financial position, subsequently
they are remeasured and held at their fair values.
Preference shares
Preference shares issued by the Company are classified in
accordance with the contractual arrangements entered into. Issued
preference shares that pay a fixed dividend or have a mandatory
redemption features at a future date are recognised within
liabilities.
5. Finance expense
30 September
2016
(unaudited)
For the six months ended GBP'000
---------------------------------- -----------------------
Interest on bank borrowings 233
Amortisation of loan arrangement
fees 37
Interest on preference shares 57
----------------------------------- -----------------------
327
---------------------------------- -----------------------
Changes in fair value of interest
rate derivative 174
----------------------------------- -----------------------
174
---------------------------------- -----------------------
6. Taxation
As a REIT, the Group is exempt from corporation tax on the
profits and gains from its property investment business, provided
it continues to meet certain conditions as per REIT regulations.
For the period ending 30 September 2016, the Group did not have any
non-qualifying profits and accordingly there is no tax charge in
the period. Any non-qualifying profits and gains however will
continue to be subject to corporation tax.
7. Earnings per share
The calculation of the basic earnings per share (EPS) was based
on the profit attributable to ordinary shareholders and a weighted
average number of ordinary shares outstanding during the
period.
This calculation is as follows:
30 September
2016
For the six months ended (unaudited)
------------------------------------- --------------------
Profit attributable to Ordinary
Shareholders
Total comprehensive income (GBP'000) 2,609
-------------------------------------- --------------------
Weighted average number of Ordinary
Shares in issue 10,317,910
-------------------------------------- --------------------
Basic earnings per share (pence) 25.29p
-------------------------------------- --------------------
Number of diluted shares under
warrant 90,810
Weighted average number of Ordinary
Shares for the purpose of dilutive
earnings per share 10,408,720
-------------------------------------- --------------------
Diluted earnings per share (pence) 25.07p
-------------------------------------- --------------------
The calculation of diluted earnings per share assumes conversion
of all potentially dilutive Ordinary Shares, which arise from
warrants. A calculation is performed to determine the number of
warrants that are potentially dilutive based on the number of
shares that could have been acquired at fair value, considering the
monetary value of the subscription rights attached to outstanding
warrants.
8. Long-term investment plan (LTIP)
Under the terms of the Company's Long Term Investment Plan
(LTIP), accounted for as an equity settled share based payment, at
30 September 2016 Pacific Industrial LLP, an affiliate of Pacific
Investments Limited, has subscribed for 1,000 A Ordinary Shares of
GBP0.01 each and 1,000 B Ordinary Shares of GBP0.01 each issued in
Pacific Industrial & Logistics Limited, a subsidiary of the
Company, as detailed
Charge
Fair Value for the
at Grant Period
Class
Date granted of Share Number GBP'000 GBP'000
------------- ----------- -------------------- ---------- ----------------------
April 2016 A Ordinary 1,000 76 13
April 2016 B Ordinary 1,000 43 4
1. The Company is obliged to acquire the A Ordinary Shares and B
Ordinary Shares on the third and fifth anniversary of Admission
respectively (or on a change of control of the Company) in return
for Ordinary Shares (at the prevailing market value) or, at the
election of the Company for cash.
2. On the third anniversary of Admission the holders of the A
Ordinary Shares shall receive, in aggregate the greater of: (i)
GBP10 multiplied by the number of A Ordinary Shares in issue; and
(ii) 20 per cent. of the increase in market value of an Ordinary
Share (adjusted to take dividends and other distributions into
account) above the Issue Price increased by an 8 per cent.
Compounding hurdle from Admission multiplied by the number of
Ordinary Shares in issue.
3. On the fifth anniversary of the IPO, the Company will acquire
the second class of incentive shares from Pacific LLP. The price
that the Company will acquire these incentive shares will be an
amount equal to 20 per cent. of the increase in the price of an
Ordinary Share since the higher of: (i) the IPO above an 8 per
cent. compounding hurdle from Admission; and (ii) the third
anniversary of Admission (again adjusted to take dividends and
other distributions into account), above an 8 per cent. compounding
hurdle from the third anniversary multiplied by the number of
Ordinary Shares then in issue.
9. Investment property
In accordance with IAS 40 "Investment Property", the carrying
value of investment property at its fair value as determined by an
external valuer. This valuation has been conducted by CBRE and has
been prepared as at 30 September 2016, in accordance with the RICS
Valuation - Professional Standards January 2014 (the "Red
Book").
The valuations have been prepared in accordance with those
recommended by the International Valuation Standards Committee and
are consistent with the principles in IFRS 13.
Investment Investment
properties properties
freehold long leasehold Total
GBP'000 GBP'000 GBP'000
--------------------- ------------------------- ------------------------- -----------------------
As at 1 April 2016 - - -
Property additions 25,270 2,247 27,517
Change in fair value
during the period 2,151 232 2,383
---------------------- ------------------------- ------------------------- -----------------------
As at 30 September
2016 27,421 2,479 29,900
---------------------- ------------------------- ------------------------- -----------------------
10. Business combinations
On 14 April 2016 the Group obtained sole control of Alanchoice
Limited, through the acquisition of the entire issued share capital
in the company. The acquisition increased the Group's owned
property portfolio by GBP27.5m (including purchaser costs of
GBP0.5m), comprising 11 assets.
Any associated fees in arranging the bank borrowings that are
unamortised as at the period end are offset against amounts drawn
on the facilities as shown in the table below.
Fair
Book Value
Value Adjustments Total
GBP'000 GBP'000 GBP'000
-------------------------- --------------------- ------------------------- -----------------------
Investment properties 27,000 517 27,517
Cash 1,382 - 1,382
Other receivables 247 (225) 22
Other liabilities (1,660) 256 (1,404)
--------------------------- --------------------- ------------------------- -----------------------
Total 26,969 548 27,517
--------------------------- --------------------- ------------------------- -----------------------
Net cash outflow arising
on acquisition:
Total consideration 27,517
Cash and cash equivalents
acquired (1,382)
--------------------------- --------------------- ------------------------- -----------------------
Cash consideration
net of cash acquired 26,135
--------------------------- --------------------- ------------------------- -----------------------
11. Bank borrowings
Any associated fees in arranging the bank borrowings that are
unamortised as at the period end are offset against amounts drawn
on the facilities as shown in the following table.
30 September
2016
(unaudited)
GBP'000
---------------------------------- --------------------
Bank borrowings drawn: due in
more than one year 15,350
Less: unamortised costs (203)
----------------------------------- --------------------
Total bank borrowings per the
Condensed Consolidated Statement
of Financial Position 15,147
----------------------------------- --------------------
12. Interest rate derivatives
The Group has used interest rate swaps to mitigate exposure to
interest rate risk. The total fair value of these contracts are
recorded in the statement of financial position. The interest rate
derivatives are marked to market by the relevant counterparty banks
on a quarterly basis in accordance with IAS 39. Any movement in the
fair value of the interest rate derivatives are taken to finance
costs in the statement of comprehensive income.
30 September
2016
(unaudited)
GBP'000
------------------------------------ --------------------
Non-current liabilities: derivative
interest rate swaps (174)
------------------------------------- --------------------
13. Share capital
30 September 30 September
2016 2016
(unaudited) (unaudited)
Number GBP'000
---------------------------- ------------------------- -------------------------
Issued and fully paid up
Ordinary shares at 1p each 10,317,910 103
----------------------------- ------------------------- -------------------------
At beginning of period - -
Issued and fully paid -
8 December 2015 1 -
Redeemed at par value -
13 April 2016 (IPO) (1) -
Issued and fully paid -
13 April 2016 (IPO) 10,317,910 103
----------------------------- ------------------------- -------------------------
At 30 September 2016 10,317,910 103
----------------------------- ------------------------- -------------------------
The Company has two million redeemable GBP1 preference shares
outstanding which were issued at par to affiliates of Pacific
Investments Limited. These are entitled to 6% cumulative interest
and are redeemable over a period of up to 18 months and accordingly
have been accounted for as a liability.
On winding-up of the Company, the preference shares will convert
into Ordinary shares on a one-for-one basis in accordance with the
Articles, and such Ordinary shares will rank pari passu with
existing Ordinary shares.
At 30 September 2016, there were 3,027,000 warrant shares in
issue. Each warrant holder has the right to subscribe for new
Ordinary shares on the basis of one new Ordinary share for each
warrant held at a strike price of 97.00 pence per Ordinary
share.
14. Share premium
30 September
2016
(unaudited)
GBP'000
------------------------------ -------------------------
Balance at the beginning of
the period -
Share premium on the issue of
Ordinary shares 9,983
Share issue costs (196)
------------------------------- -------------------------
9,787
------------------------------ -------------------------
15. Related party transactions
Transactions between the Company and its subsidiaries are in the
normal course of business. Such transactions are eliminated on
consolidation.
Share capital
The below table details the share transactions of related
parties over the period.
No. of
Name How related shares Transaction Date
--------------- -------------- ---------------------- ------------ ---------
Richard Non-executive Share 13 April
Moffitt director 250,000 purchase 2016
Jonathan Non-executive Share 13 April
Gray director 20,000 purchase 2016
Non-executive Share 13 April
Bruce Anderson director 10,000 purchase 2016
--------------- -------------- ---------------------- ------------ ---------
Long-term investment plan
Under the terms of the Company's long-term investment plan, at
30 September 2016 Pacific Industrial LLP, an affiliate of Pacific
Investments Limited has subscribed for shares in Pacific Industrial
& Logistics Limited. Further details have been provided in note
8.
16. Net asset value per share (NAV)
Basic NAV per share is calculated by dividing net assets in the
Consolidated Statement of Financial Position attributable Ordinary
shareholders by the number of Ordinary shares outstanding at the
end of the period.
Net Asset Values have been calculated as follows:
30 September
2016
(unaudited)
------------------------------------------- --------------------
Net assets per Condensed Consolidated
Statement of Financial Position (GBP'000) 12,607
-------------------------------------------- --------------------
Ordinary shares:
Weighted average number of Ordinary
Shares in issue 10,317,910
-------------------------------------------- --------------------
Basic Net Asset Value per share
(pence) 122.18p
-------------------------------------------- --------------------
At 30 September 2016, there were 3,027,000 warrant shares in
issue. Each warrant holder has the right to subscribe for new
Ordinary shares on the basis of one new Ordinary share for each
warrant held at a strike price of 97.00 pence per Ordinary
share.
30 September
2016
(unaudited)
------------------------------------------- --------------------
Net assets per Condensed Consolidated
Statement of Financial Position (GBP'000) 12,607
Add: cash received from issued
share warrants (GBP'000) 2,936
-------------------------------------------- --------------------
Diluted Net Asset Value (GBP'000) 15,543
-------------------------------------------- --------------------
Ordinary shares:
Weighted average number of Ordinary
shares for the purpose of dilutive
Net Asset Value per share 13,344,910
-------------------------------------------- --------------------
Diluted Net Asset Value per share
(pence) 116.47p
-------------------------------------------- --------------------
The adjusted NAV is seen as a fairer reflection of the Group's
financial position. This is calculated by adding back the
derivative interest rate swap to the net assets as at 30 September
2016 per the Condensed Consolidated Statement of Financial
Position.
Net asset values have been calculated as follows:
30 September
2016
(unaudited)
------------------------------------------- ----------------------
Net assets per Condensed Consolidated
Statement of Financial Position (GBP'000) 12,607
Add back: derivative interest
rate swaps (GBP'000) 174
-------------------------------------------- ----------------------
Adjusted Net Asset Value (GBP'000) 12,781
-------------------------------------------- ----------------------
Ordinary shares:
Weighted average number of Ordinary
Shares in issue 10,317,910
-------------------------------------------- ----------------------
Adjusted basic Net Asset Value
per share (pence) 123.87p
-------------------------------------------- ----------------------
30 September
2016
(unaudited)
------------------------------------ --------------------
Adjusted Net assets per Condensed
Consolidated Statement of
Financial Position (GBP'000) 12,781
Add: cash received from issued
share warrants (GBP'000) 2,936
------------------------------------- --------------------
Adjusted diluted Net Asset Value
(GBP'000) 15,717
------------------------------------- --------------------
Ordinary shares:
Weighted average number of Ordinary
Shares for the purpose of dilutive
Net Asset Value per share 13,344,910
------------------------------------- --------------------
Adjusted diluted Net Asset Value
per share (pence) 117.78p
------------------------------------- --------------------
A copy of the interim financial results is available on the
Company's website - www.pacificil.com
Copies of the Interim Report for the six months ended 30
September 2016 will be available, free of charge, for a period of
one month from the registered office of the Company - 124 Sloane
Street, London, SW1X 9BW
For further information regarding Pacific Industrial &
Logistics REIT plc please call:
Pacific Industrial & Logistics
REIT Plc
Richard Moffitt +44 (0) 207 591
CEO 1600
finnCap - Nominated Adviser
and Broker
Stuart Andrews/ Grant Bergman/ +44 (0)20 7220
Giles Rolls 0500
Corporate Finance
Christian Hobart
Corporate Broking
Radnor Capital Partners -
Capital Advisory +44 (0)20 7073
Tom Durie / Joshua Cryer 7860
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BVLLBQFFEFBV
(END) Dow Jones Newswires
November 09, 2016 02:00 ET (07:00 GMT)
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