Stenprop Limited
(Incorporated in Guernsey)
Registration number: 64865
BSX share code: STP.BH
JSE share code: STP
ISIN: GG00BFWMR296
Provisional Annual Results
for the year ended 31 March 2018
Highlights
GBP1.41
Diluted
EPRA NAV*
per share
9.09 pence
Diluted adjusted
EPRA earnings
per share
4.0 pence
Final dividend per
share declared
49.2%
Loan-to-value ratio
at year end
(2017: 51.6%)
Key Highlights
- Key strategic decisions have been taken to:
- establish Stenprop as the leading multi-let
industrial ('MLI') business in the UK;
- sell all, or substantially all, of its non-MLI assets
over the next few years, and utilise the sale
proceeds to build a focused UK MLI business; and
- reduce total borrowings to no more than 40%
of its gross asset value by 31 March 2020.
- Stenprop migrated its jurisdiction of incorporation
from Bermuda to Guernsey on 23 March 2018 and
converted to a UK REIT on 1 May 2018.
- Admission of all of Stenprop's shares to trade
on the Specialist Fund Segment of the London
Stock Exchange is scheduled to take place on
15 June 2018, following publication of the
Company's prospectus on its website on
8 June 2018. No new shares are being issued on
listing.
- A total investment of GBP147.8 million in MLI assets
has been made as at 31 March 2018, including
the GBP130.5 million strategic acquisition of the
industrials.co.uk portfolio and management
platform. A further GBP11.0 million of MLI assets
have been acquired since year end. This takes the
total MLI component to 23% of total assets.
- Disposals totalling GBP210.4 million, including
GBP41.7 million post year end, yielded proceeds of
GBP97.9 million to fund the Company's investment
in the MLI sector.
- In the nine months since the acquisition of the
MLI portfolio, 90 new lettings and lease renewals
have been entered into at an average rent which
is 17.7% above the passing rent previously payable
on those units.
Financial
- In line with guidance previously provided, a
final dividend was declared on 6 June 2018 of
4.0 pence per share which, together with the
interim dividend declared on 22 November 2017
of 4.0 pence per share, results in a total dividend
for the year ended 31 March 2018 of 8.0 pence per
share. This equates to a historic dividend yield of
7.0% on the share price of GBP1.14^ at 4 June 2018, or
5.7% on the diluted EPRA net asset value ('NAV')
of GBP1.41 at 31 March 2018. Subject to the receipt
of Regulatory approvals, a scrip alternative will
be offered, which the Directors intend to match
through the buyback of shares. The 2017 total
dividend was paid in Euros and amounted to
9.0 cents per share, which at the then prevailing
exchange rates would have equated to 7.8 pence
per share. The current total dividend represents
an increase of 2.5% over the previous year.
The diluted adjusted EPRA EPS* for the
year ended 31 March 2018 is 9.09 pence
(2017: 8.99 pence), an increase of 1.1%. This
equates to a historic earnings yield of 8.0%
on the share price of GBP1.14^ at 4 June 2018,
or 6.4% on the diluted EPRA NAV of GBP1.41 at
31 March 2018. Diluted IFRS EPS is 13.89 pence
(2017: 5.18 pence).
Diluted EPRA NAV per share is up 3.7% at GBP1.41
(2017: GBP1.36). Diluted IFRS NAV per share was
GBP1.36 per share (2017: GBP1.31).
FX rates in period
Average foreign exchange rates in the year: GBP1.00:EUR1.134;
GBP1.00:CHF1.287 (2017: GBP1.00:EUR1.190; GBP1.00:CHF1.290)
Year-end foreign exchange rates: GBP1.00:EUR1.137; GBP1.00:CHF1.337
(2017: GBP1.00:EUR1.169; GBP1.00:CHF1.250)
* 'EPRA' means European Public Real Estate Association. 'EPS'
means earnings per share. 'NAV' means net asset value.
^ JSE closing price on 4 June 2018 was ZAR19.12. ZAR:GBP rate
at the same date was 16.72:1.
Commentary
Stenprop Limited (the 'Company' and together with its subsidiaries the 'Group') is pleased to report its Group annual
financial statements for the year ended 31 March 2018.
Business strategy
Investment
Stenprop's objective is to deliver sustainable growing income to its investors. The Company's investment strategy
for achieving this objective has always been to identify and invest in sectors and assets that have positive growth
fundamentals and, where there is an opportunity, to add value and grow earnings through active asset management.
In early 2017, Stenprop identified UK MLI as a sector likely to deliver superior long-term growth in sustainable earnings,
as a result of a structural imbalance in supply and demand dynamics, with increasing tenant demand and static (and,
in some cases, reducing) supply that was likely to translate into higher rents over time. Stenprop also identified that,
in order to exploit opportunities in the UK MLI sector and deliver consistent returns, it required sufficient scale as well
as an excellent management team and operating platform.
The June 2017 Stenprop acquisition of the industrials.co.uk multi-let industrial portfolio and C2 Capital management
platform for GBP130.5 million achieved both of these objectives, positioning Stenprop to achieve its objective of becoming
the leading MLI business in the UK.
Following the successful integration of the C2 Capital team and the significant growth in earnings experienced from
the industrials.co.uk portfolio since acquisition, Stenprop took the strategic decision that its objective to deliver
sustainable, growing income to shareholders would be best achieved by becoming a specialised UK MLI property
company. This strategic repositioning means that Stenprop intends, over the next few years ('the transition period'),
to sell all, or substantially all, of its non-MLI assets and utilise the sale proceeds to build a focused UK MLI business.
In pursuit of this strategy, in January 2018 Stenprop completed the sale of its office building in Pilgrim Street, London,
via a sale of shares which valued the property at GBP79.9 million (2.4% above the valuation at 30 September 2017), and
in June 2018, it completed the sale of its 50% interest in its office building located in Argyll Street, London, via a sale of
shares which valued the property at GBP83.4 million (3.0% above the valuation at 30 September 2017). In the remaining
period to 31 March 2020, Stenprop has identified a further GBP350 million of non-MLI assets for disposal.
Following the acquisition of the industrials.co.uk portfolio and C2 Capital, Stenprop has completed the acquisition
of a further seven MLI estates, five prior to year end and two post year end, for an aggregate purchase price of
GBP32.6 million. In the remaining period to 31 March 2020, Stenprop aims to acquire a further GBP185 million of MLI assets.
Based on these goals, MLI assets are expected to comprise approximately 60% to 65% of Stenprop's total portfolio
of properties by 31 March 2020. In the three-year period following 31 March 2020, Stenprop intends to continue its
programme of disposals and acquisitions, with the aim of having a portfolio of properties made up entirely, or almost
entirely, of MLI assets and a target overall LTV ratio of no more than 40%.
Corporate
Following the decision to reposition Stenprop as the leading MLI business in the UK, the board of directors of the
Company (the 'Board' or the 'Directors') considered that it would be better placed to achieve this goal if it pursued
a listing of its shares on the London Stock Exchange. As a result, Stenprop announced its intention at the interim
stage to seek a listing on the Specialist Fund Segment (the 'SFS') of the London Stock Exchange ('LSE'), reasoning
that accessibility to additional investors including, in particular, UK investors focused on specialist income funds,
should improve liquidity in the Company's shares and provide further access to equity capital, both of which would be
beneficial to the strategic aims of the Company, and should add value to shareholders.
Alongside the decision to seek a listing on the SFS, a decision was taken by the Board to migrate the Company
from Bermuda to Guernsey and to convert to a UK REIT. Guernsey is one of the world's largest offshore centres,
with an efficient and flexible regulatory regime which is well regarded globally. Moreover, shareholders of Guernsey-
registered companies listed on the SFS will typically benefit from the protections of the UK City Code on Takeovers
and Mergers, which is designed principally to ensure that in a takeover situation, shareholders are treated fairly and
equally. Following approval of shareholders at the Special General Meeting held on 7 March 2018, the change in the
jurisdiction of incorporation of the Company from Bermuda to Guernsey took place on 23 March 2018.
The decision to convert to a UK REIT was driven by the changing tax environment in the UK, the fact that REITs
are recognised as tax-efficient structures for investment in real estate and have a proven track record of attracting
international capital, and that it will potentially improve after-tax returns for some shareholders. Stenprop acquired
UK REIT status on 1 May 2018, and, as a consequence, became UK tax resident. This required a number of changes in
the composition of the Board, and, as previously announced, resulted in the appointment of Julian Carey as executive
property director, Richard Grant as independent chairman, and Philip Holland as independent non-executive director
on 1 May 2018. At the same time, Guernsey residents Stephen Ball resigned as chairman and Neil Marais resigned as
executive director. Sarah Bellilchi was appointed as company secretary.
Admission of all of Stenprop's shares to trade on the SFS is expected to take place on 15 June 2018, following the
publication of the Company's prospectus on its website on 8 June 2018. Simultaneously with the new listing on the
LSE, the Company will delist from the Bermuda Stock Exchange. It will retain its primary listing on the Main Board of
the Johannesburg Stock Exchange ('JSE').
Active MLI portfolio management and product development
Stenprop has a highly-skilled and experienced in-house asset management team who intensively manage the MLI
properties on a day-to-day basis by way of ongoing interaction with tenants, service providers and property managers.
With the benefit of a permanent capital structure, Stenprop intends to develop a 'serviced' industrial model, which
will offer more flexibility to tenants and in return unlock additional income streams for Stenprop. The MLI platform
operates under the industrials.co.uk brand.
The key elements of Stenprop's product and asset management strategy include:
Getting 'Smart' about leasing
The traditional approach to leasing in the UK has tended to be inflexible and cumbersome, entailing lengthy lease
documentation which serves to transfer risk from the landlord to the tenant by way of imposing significant repairing,
maintenance, legal and time obligations on occupiers. As a general trend, but most dramatically in the office sector,
this approach has changed with the rise of serviced office and co-working concepts such as WeWork and Regus.
Stenprop believes that there is a huge opportunity to offer a similar approach in the MLI sector where our customer
base is similar and where customer service has historically been poor. Stenprop is currently rolling out a new 'Smart
Lease' that offers tenants the ability to make shorter-term commitments, with greater flexibility and no liability for
repairs and maintenance in return for a rental premium. As the owner, Stenprop is able to price for this risk at a
level which is attractive to our customers but also profitable for the Company. Stenprop also takes the view that
this approach will significantly shorten the leasing and tenant decision-making process, thereby reducing voids and
letting expenses. It eliminates significant work and time around service charge reconciliations and dilapidations claims,
enabling Stenprop to keep units in good condition and ready for immediate occupation. By offering a 'Smart Lease'
through the industrials.co.uk platform, the Company is building brand awareness and loyalty, which combined with
market leading technology solutions (set out below) will position the Company for long-term sustainable growth.
Using technology to deliver class leading customer service
Statistics indicate that across the MLI sector approximately 50% of tenants leave their units upon lease expiry. Stenprop
believes that the best way to reduce vacancy and increase rents is to deliver enhanced customer service to improve
tenant retention. If customers perceive they are getting value for money through a good service and appropriate levels
of communication, they will be less likely to leave upon expiry and will be less price sensitive upon renewal. Therefore,
customer service is at the core of Stenprop's approach to good estate management. Stenprop believes that the key to
success in delivering this on a scalable basis lies in implementing technology-driven solutions. Whilst personal visits to
estates and direct contact with tenants will always remain a critical part of the business model, the use of technology
provides the most effective method of servicing and communicating with a large number of tenants spread across
multiple assets in a wide geographical area.
Stenprop is currently implementing a number of technology based solutions:
- Onsite technology: Stenprop has installed high definition CCTV camaras with remote monitoring across 37% of
the MLI assets and is reviewing a portfolio-wide roll out of the technology. In addition, Stenprop is putting in
place security barriers with SMS and remote entry systems to enable tenants to control access for their staff and
customers. It is exploring options to install ultra-high speed fibre supplies at a number of estates, which will give
Stenprop an attractive and competitive offer to tenants. This will facilitate further enhanced security services to
tenants in the future.
- CRM system: Stenprop is currently rolling out an enhanced customer relationship management ('CRM') system. The
new system, which is synchronised with the Company's website and online leasing tool, will facilitate more effective
communications with tenants and enable real time interaction with a large number of users.
- Website: Stenprop is launching a new industrials.co.uk website in June 2018 which will form the basis for a significantly
enhanced platform. Not only will it list all available units and information on the assets owned, but it will also house
the online leasing tool described below, and provide a wide range of additional information for tenants. As part
of this initiative, the Company is also introducing a new 0800 number to field all tenant and prospective tenant
enquiries, which will ensure a consistent and efficient service when interacting with the industrials.co.uk team.
- Online leasing tool: Stenprop will launch an online leasing tool in June 2018 which will allow existing tenants to
renew their lease and/or take up additional space online. Using our new 'Smart Lease' tool will allow tenants to
rent space from six weeks to three years on inclusive terms at the click of a button. In time, this will extend to new
customers on all units and will also facilitate the offering of additional products and services which are key to our
'Serviced Industrial' model.
- PropTech partnerships: Stenprop's scale has enabled it to engage with a range of leading PropTech solutions
available in the marketplace. The integration of these systems is expected to significantly enhance operational
efficiencies when performing letting, lease management, portfolio management, acquisition and inspection
processes. Stenprop is working with a leading system integration consultant to ensure all third-party technology
partner systems integrate with existing property management, CRM and in-house systems.
- Tenant portal: A tenant portal is currently being developed which will provide real-time information to tenants,
including lease details, status of rental charges, online payments and more. In addition, the portal will provide a
communication forum between landlord and tenants, opening new value-add opportunities for trade and ensuring
that relationships remain dynamic and relevant. The intention is to make the portal available in both online and in
app form.
Active asset management
Stenprop is continually investigating ways to improve occupancy and increase rental income, particularly with the use
of technology solutions which can reduce void times. As part of this, Stenprop has centralised the vacant property
marketing function. This means that when a unit becomes available for rent, Stenprop can automate the process of
uploading full details, including ordering high resolution photographs and virtual tours for the unit and the estate, and
listing the property on high-traffic online letting sites without the need for formal leasing instructions or approvals. This
significantly cuts delays in marketing the unit to let and ensures that Stenprop assets are accurately and consistently
marketed across a wide variety of advertising spaces.
To ensure maximum occupancy and sustainable growth it is also important to continue to invest in the assets and
enhance their appeal. An active capital enhancement programme is in place across the portfolio, which includes
the refurbishment of c. 180,000 sq ft of space at Coningsby Park, Peterborough. As a rule, all vacant properties are
refurbished upon the tenant vacating to ensure that they are immediately available for occupation when a prospective
tenant is found at the best possible rental level.
In Stenprop's view, ensuring that the changing needs of customers are correctly analysed and dealt with is key to
building resilience into the portfolio. Maintaining active contact with tenants and constantly monitoring rent collection
statistics enables Stenprop to build resilience in the portfolio by addressing problem tenants before they become
an issue, and, where appropriate, upscaling or downsizing tenants during the term of their lease to ensure they are
occupying the optimum amount of space.
Debt management
Stenprop has been steadily reducing its total borrowings from above 54% of gross assets (its 'LTV' ratio) in October
2014 to an LTV ratio of 49.2% at 31 March 2018. The Company's LTV ratio temporarily increased at 30 September 2017
to approximately 55% as a result of the bridging finance used for the acquisition of the industrials.co.uk portfolio and
C2 Capital. As planned, the bridging finance was repaid in January 2018 out of the proceeds from the sale of Pilgrim
Street.
In view of its changed strategy, the Group is aiming to reduce its level of total borrowings (at a Group level) to
approximately 45% of its gross asset value by 31 March 2019 and 40% by 31 March 2020, by utilising part of the sale
proceeds of its existing portfolio. Thereafter, the Directors will employ a level of borrowing that they consider to be
prudent for the asset class, taking into account prevailing market conditions.
During the transition period when existing assets are being sold and the proceeds reinvested in MLI assets, depending
on the timing of such disposals and acquisitions, new acquisitions may be funded by drawing down on a GBP50 million
revolving credit facility ('RCF') from Investec Bank plc. It is intended that drawdowns under the Investec RCF will be
short term and will be replaced as soon as possible from a combination of disposal proceeds and longer term debt
finance at an average of 40% of the purchase price.
Management fee income from assets managed for third parties
With the focus of the business now on growing the MLI portfolio and actively embracing technology to improve
cost efficiencies and unlocking additional sustainable income streams, Stenprop intends to actively withdraw from
involvement in its historic fund management arm. Many of these managed funds are coming to a natural end, and, at
the year end, have delivered management fee income of GBP5.1 million (2017: GBP3.1 million). Further material fees may arise
during the next six to twelve months. Thereafter, management fee income is expected to decline to insignificant levels.
In future, guidance will be given to distinguish between EPRA earnings attributable to the property rental business and
those attributable to the historic fund management business.
Future distributions
As previously reported, Stenprop has historically pursued a distribution policy in terms of which it distributed at
least 85% of its EPRA earnings on a bi-annual basis. Following the successful conversion to UK REIT status on 1 May
2018 and the anticipated listing in London, Stenprop intends to distribute the amount necessary to comply with
REIT regulations, or at least 90% of its property-related EPRA earnings, whichever is the higher. Distribution of non
property-related earnings will be evaluated from time to time by the Board. Stenprop intends to pay dividends in cash
on a bi-annual basis, but may offer a scrip equivalent from time to time. Further discussion of future distributions can
be found under the Prospects section later in the commentary.
Business review
Portfolio Summary
As at 31 March 2018, including assets held for sale, the Company's real estate portfolio comprised an interest in
76 properties valued at GBP733.6 million1, with 48.5% by value in the United Kingdom, 38.8% in Germany and 12.7% in
Switzerland. The portfolio, which has a gross lettable area of approximately 415,1051 sq m and gross annual rent of
GBP44.0 million1, is currently in the office, retail and MLI sectors, which account for 35%, 26% and 24% respectively of
rental income. The MLI portfolio is expected to significantly increase over time as Stenprop pursues further acquisitions
in the MLI sector and makes disposals from other asset classes.
A table detailing the top six property investments in the portfolio can be found below. These six investments account
for 71% of the total portfolio asset value. The value of the two Central London properties (including Stenprop's share of
25 Argyll Street) accounts for 17% of the total portfolio asset value, although this reduced to 11% following completion
of the sale of Stenprop's joint venture share in Argyll Street on 4 June 2018. The value of the MLI portfolio accounts for
20% of the total portfolio asset value and the Berlin retail centre portfolio (comprising three centrally-located, daily-
needs shopping centres) accounts for 9%.
(1) Includes Stenprop's share of the properties held within joint venture investments.
Top six investments by value as at 31 March 2018
Annualised
Stenprop Proportion Gross Weighted
share of of Rental Average
Market market Stenprop Lettable (Stenprop unexpired
Value Ownership value portfolio area share) lease term
Property (GBPmillion) interest % (GBPmillion) % Sector (sq m) (GBPmillion) (years)
MLI portfolio, UK 147.8 100 147.8 20 MLI 215,299 10.4 3.1
Bleichenhof, Hamburg 130.8 94.9 124.2 17 Mixed use 19,320 4.6 4.7
Euston House, London 79.6 100 79.6 11 Office 10,204 4.0 4.5
Berlin daily-needs retail
centre portfolio 66.1 100 66.1 9 Retail 35.346 3.9 9.0
Trafalgar Court, Guernsey 59.9 100 59.9 8 Office 10,564 4.3 9.1
Argyll Street, London* 83.4 50 41.7 6 Office 6,134 2.1 1.8
Total 567.6 - 519.3 71 - 296,867 29.3 5.1
* Sale completed on 4 June 2018
MLI portfolio and management platform acquisitions
On 30 June 2017, Stenprop acquired 100% of a portfolio of 25 MLI estates situated across the United Kingdom,
operating as industrials.co.uk, based on a portfolio price of GBP127 million excluding costs. The portfolio comprised
properties with a gross lettable area of approximately 2 million sq ft and a contractual rent (including contractual
fixed uplifts) of approximately GBP9.1 million per annum representing an average rent of GBP5.15 /sq ft. There are more than
400 tenants creating a diversified base of earnings.
Also on 30 June 2017, Stenprop completed the acquisition of C2 Capital Limited, the management platform responsible
for aggregating and managing the portfolio, for a purchase consideration of GBP3.5 million settled by the issue to
Julian Carey, the founder and sole owner, of 3,270,500 Stenprop shares valued at EUR1.22 per share. By structuring the
acquisition in this way, Stenprop acquired a strategic portfolio of sufficient scale in the MLI sector together with a
specialist operating platform and team.
During the period of Stenprop ownership from 1 July 2017 to 31 March 2018, there have been 90 new lettings and lease
renewals on the acquired portfolio. The average increase in rents over the previous passing rents for these units was
17.7%, illustrating the significant growth achievable through investing in the sector.
MLI Acquisitions
Following the acquisition of the industrials.co.uk portfolio and C2 Capital, Stenprop has appraised more than
GBP1.2 billion of potential MLI acquisitions. With the capital available and the application of Stenprop's disciplined
investment criteria, to date Stenprop has completed the acquisition of a further seven MLI estates, five prior to the
financial year end and two post financial year end, for an aggregate purchase price of GBP32.6 million.
In three separate transactions concluded in December 2017, Stenprop acquired Souterhead Industrial Estate in Aberdeen
from M&G Real Estate, Venture Park in Peterborough from Catalyst Capital and Coningsby Park in Peterborough from
Thomas Cook for an aggregate price of GBP13.5 million. The three estates comprise 63 purpose-built, multi-let industrial
units and approximately 360,000 sq ft of lettable space. Souterhead and Venture Park are well-let, income-producing
estates in strong markets, with the prospect of excellent rental growth over time through active asset management.
Coningsby Park was originally built as an MLI estate before being fitted out as a call centre by Thomas Cook. It was
acquired for a purchase price which largely reflected vacant value and gave Stenprop the opportunity to reposition
the estate to its former MLI use.
In the final quarter of the 2018 financial year Stenprop also completed the acquisition of two further industrial
estates. Globe Park, Rochdale, a modern and well located industrial estate near Manchester comprising 17 units and
38,000 sq ft of industrial space, was acquired on 16 January 2018 for GBP2.2 million. Ellis Hill, Huddersfield, is a
six unit scheme, comprising 76,140 sq ft of modern industrial space, on a busy main road and occupied by St Gobain,
Sicame and Mercedes and VW dealerships, and was acquired on 12 March 2018 for GBP5.8 million.
After the financial year end, Stenprop acquired a further two MLI estates for an aggregate price of GBP11.0 million.
Greenwood Industrial Estate in Shrewsbury, acquired on 24 April 2018 for GBP2.9 million, comprises a 30-unit scheme,
totalling 44,611 sq ft, and is fully let to a number of local and national tenants.
A further acquisition of a multi-let industrial estate in Kirkstall, Leeds for GBP8.1 million completed on 1 June 2018. The
estate comprises 14 units totalling 111,081 sq ft of industrial space.
Disposals
As a consequence of the repositioning of its portfolio, Stenprop intends, during the transition period, to sell all, or
substantially all, of its non-MLI assets and utilise the sales proceeds to build a focused UK MLI business. During the
financial year under review, and in the subsequent period to date, Stenprop has completed a number of disposals,
which are detailed further below.
In June 2017, an associate in which Stenprop has a 28.42% interest, disposed of a shopping centre known as Nova
Eventis, situated near Leipzig in Germany. The shopping centre was sold at a valuation of EUR208.5 million.
Stenprop has previously announced its intention to dispose of its Swiss portfolio. In July 2017, Stenprop completed
the sale of the Swiss property in Granges Paccot at its valuation of CHF20.0 million and, in October 2017, it disposed
of a property in Cham at its valuation of CHF14.2 million. Seven of the eight remaining Swiss properties based in
in Arlesheim, Chiasso, Sissach, Altendorff, Baar, Vevey and Montreux, with a combined valuation at 31 March 2018
of CHF103.2 million, are currently being marketed for sale. They are expected to be sold by the end of 2018. The
remaining property in Lugano is currently undergoing substantial repositioning by the tenant, which is expected to be
completed by October 2018. It will be marketed separately once all the works are complete and trading in the premises
has been established.
In August 2017, Stenprop sold an office block in Uxbridge, West London, at a sale price of GBP3.4 million, an uplift of 13.3%
from the 31 March 2017 valuation of GBP3.0 million. In December 2017, Stenprop sold an office property in Worthing, West
Sussex, for GBP3.7 million, an uplift of 12.7% from the 31 March 2017 valuation of GBP3.2 million.
On 11 January 2018, Stenprop sold its office building located in Pilgrim Street, London, by way of a share sale. The
consideration valued the property at GBP79.9 million (2.4% above the valuation of GBP78.0 million at 30 September 2017)
and released cash proceeds of GBP42.1 million (after sales costs and repayment of external debt). On 4 June 2018,
Stenprop completed the sale of its 50% interest in the office building located in Argyll Street at a price which valued
the property at GBP83.4 million, 3% higher than the September 2017 valuation, and released proceeds of GBP22.8 million.
Stenprop has commenced a sale process of its Aldi portfolio of 14 stores located in Germany, valued at EUR32.8 million as at
31 March 2018. The sale process is progressing in line with expectations and is expected to complete prior to
30 September 2018.
Stenprop has identified for future sale its investment in Euston House, London, which was valued at 31 March 2018 at
GBP79.6 million. This office building, with a lettable area of 10,204 sq m, occupies an island site of 0.45 acres opposite
Euston Station. With Kings Cross St Pancras approximately 500 m to the east, it is located between two significant
nodes of regeneration. Marketing is expected to commence in the first quarter of 2019, subject to the number of MLI
acquisitions made over the remainder of 2018.
Financial Review
Earnings
The basic earnings attributable to ordinary shareholders for the year ended 31 March 2018 were GBP39.4 million
(2017: GBP14.7 million). This equates to a diluted IFRS EPS of 13.89 pence (2017: 5.18 pence). The variance compared
with the prior year is the result of positive property valuation movements which, including Stenprop's share of joint
ventures and associates, amounted to GBP21.2 million.
Net rental income from continuing operations (excluding Switzerland) increased by 29.0% over the prior year
to GBP32.9 million, of which 20.2% is due to net rents from the industrials.co.uk portfolio and 1.7% due to different
average exchange rates. Goodwill of GBP3.5 million attaching to the acquisition of the C2 Capital management platform
was written off during the period. The increase in finance charges of 58.2% to GBP9.5 million was driven by the
industrials.co.uk portfolio bank debt interest (28.5%) and the interest and costs associated with the bridging finance
used to acquire the industrials portfolio (36.3%).
In accordance with reporting standards widely adopted across the real estate industry in Europe, the Board feels it is
appropriate and useful, in addition to providing the IFRS disclosed earnings, to also disclose EPRA2 earnings. Adjusted
EPRA earnings attributable to shareholders were GBP25.8 million (2017: GBP25.5 million), equating to a diluted adjusted
EPRA EPS of 9.09 pence (2017: 8.99 pence) representing a 1.1% increase. Readers are referred to note 14 where this is
calculated.
The diluted adjusted EPRA EPS attributable to the property rental business amounts to 7.29 pence per share, with the
remaining amount of 1.80 pence being attributable to the management fee income.
Stenprop has considered the adoption of further EPRA metrics and in line with best practice believes it useful to
disclose the EPRA cost ratio (including direct vacancy costs). The EPRA cost ratio includes all administrative and
operating expenses in the IFRS statements (including share of joint ventures). The EPRA cost ratio (including direct
vacancy costs) at 31 March 2018 was 28.0% (2017: 25.6%).
Management fee income totals GBP5.1 million for the period (2017: GBP3.1 million) and relates to fees earned by the
management companies on management and administration services provided to certain managed property
syndicates and funds. Included in the total are management fees of GBP1.8 million which relate to a managed syndicate
which holds the WestendGate property in Frankfurt. This asset is currently being marketed for sale, and may result in
a performance fee being earned by Stenprop.
Dividends
On 6 June 2018, the directors declared a final dividend of 4.0 pence per share (2017: 3.9 pence) which, together with
the interim dividend of 4.0 pence per share (2017: 3.9 pence) declared on 22 November 2017, results in a total dividend
for the year ended 31 March 2018 of 8.0 pence share (2017: 7.8 pence). For the avoidance of doubt, the final dividend
comprises 100% ordinary dividend with no Property Income Distribution ('PID') component.
Subject to the receipt of Regulatory approvals, the directors intend to offer shareholders the option to receive, in
respect of all or part of their Stenprop shareholding, either a scrip dividend by way of an issue of new Stenprop shares,
or a cash dividend. An announcement containing details of the dividend, the timetable and the scrip dividend will be
made on 10 July 2018. It is expected that shares will commence trading ex-dividend on 25 July 2018 on the JSE and on
26 July 2018 on the LSE. The record date for the dividend is expected to be 27 July 2018 and the dividend payment
date 17 August 2018.
In respect of this dividend, given the Company's share price, which is at a discount relative to net asset value, the
Directors intend to match the scrip alternative through the buyback of shares to mitigate the dilutive effect that would
otherwise occur through the issuance of new ordinary shares.
Net asset value
The IFRS basic and diluted NAV per share at 31 March 2018 were GBP1.37 and GBP1.36 respectively (2017: basic and diluted
GBP1.31).
With regard to the disclosure of EPRA earnings, the Directors feel that it is appropriate and useful, in addition to
IFRS NAV, to also disclose EPRA NAV3. The diluted EPRA NAV per share at 31 March 2018 was GBP1.41 (2017: GBP1.36). This
represents a 3.7% increase on the diluted EPRA NAV per share of GBP1.36 at 31 March 2017 and is driven by the increase
in property valuations reported at the year end.
(2) The European Public Real Estate Association ('EPRA') issued Best Practices Policy Recommendations in November 2016,
which provide guidelines for performance measures relevant to real estate companies. Their recommended reporting
standards are widely applied across this market, aiming to bring consistency and transparency to the sector.
The EPRA earnings measure is intended to show the level of recurring earnings from core operational activities with
the purpose of highlighting the Group's underlying operating results from its property rental business and an indication
of the extent to which current dividend payments are supported by earnings. The measure excludes unrealised changes in
the value of investment properties, gains or losses on the disposal of properties and other items that do not provide
an accurate picture of the Group's underlying operational performance. The measure is considered to accurately capture
the long-term strategy of the Group, and is an indication of the sustainability of dividend payments.
(3) The objective of the EPRA NAV measure is to highlight the fair value of net assets on an ongoing, long-term basis.
EPRA NAV is used as a reporting measure to better reflect underlying net asset value attributable to shareholders.
Assets and liabilities that are not expected to crystallise in normal circumstances such as the fair value of
financial derivatives and deferred taxes on property valuation surpluses are therefore excluded. The EPRA measure
thus takes into account the fair value of assets and liabilities as at the balance sheet date, other than fair value
adjustments to financial instruments, deferred tax and goodwill. As the Group has adopted fair value accounting for
investment property per IAS 40, adjustments to reflect the EPRA NAV include only those relating to the revaluation
of financial instruments and deferred tax.
Change in presentation currency
Effective 1 April 2017, the Company changed its presentation currency from Euros to Pounds Sterling ('GBP'). This
represents a change from the previous year end and has been applied to reflect the relatively larger weighting of
Stenprop's UK portfolio and Stenprop's entry into the UK multi-let industrial asset class. It is also better
suited to the proposed Stenprop listing on the London Stock Exchange, an update of which is given in this report.
Accordingly, all results and comparatives have been reported in GBP.
Foreign exchange
At 31 March 2018, approximately 39% of Stenprop's NAV and 35% of its net rents are denoted in Euros. Consequently,
the GBP:EUR exchange rate has a material impact on reported GBP earnings and NAVs. At the start of April 2017, the
GBP:EUR rate was GBP1.00:EUR1.169 and the Euro strengthened over the year by 3.1% to GBP1.00:EUR1.134 as at 31 March 2018.
Stenprop matches the currency of borrowings to the underlying asset. Where the timing and amount of a liability has
been determined, and where it will be met from the proceeds of a sale which is also known in terms of timing and
amount, the currency risk is managed through hedging instruments.
Stenprop's diversification across the UK, Germany and Switzerland (until the Swiss portfolio is sold) continues to
provide a natural spread of currencies and it remains our policy not to hedge this natural spread, thereby maintaining
a multi-currency exposure.
Portfolio valuation
Including the Company's share of associates and joint ventures, its investment properties were valued at GBP733.6 million
(31 March 2017: GBP725.5 million), of which GBP163.5 million were classified as assets held for sale at 31 March 2018
(31 March 2017: GBP133.4 million). Assets held for sale consist of the remainder of the Swiss portfolio, the German Aldi
portfolio and Stenprop's joint venture share of the office building in the centre of London known as Argyll Street.
On a like-for-like basis, excluding the impact of additions and disposals in the period, the valuation of the portfolio
since the prior year end increased by 3.9% of which 0.2% resulted from currency movements. The German and Swiss properties
have been translated to GBP at a rate of GBP1.00:EUR1.13 and GBP1.00:CHF1.34 respectively. This compares with exchange
rates of GBP1.00:EUR1.17 and GBP1.00:CHF1.25 at 31 March 2017.
Market Annualised Net inital
value gross yield WAULT
Portfolio 31 March rental 31 March (by rental
by market 2018 Area income 2018 income)
Properties / portfolio value (%) (GBPm) Properties (sq m) (GBPm) (%) (years)
UK non-MLI 22.7 166.4 10 50,280 10.9 5.76 6.0
UK MLI 20.1 147.8 30 215,299 10.4 6.50 3.1
Germany 30.2 221.3 9 72,674 10.4 4.16 6.1
Held for sale 16.6 121.8 22 54,455 7.8 4.90 7.6
Total 89.6 657.3 71 392,708 39.5 5.23 5.6
Share of Joint Ventures and
Associates (JV&A) 4.7 34.6 4 19,330 2.4 5.95 11.4
Share of JV&A -
held for sale 5.7 41.7 1 3,067 2.1 4.61 1.8
Total 100.0 733.6 76 415,105 43.9 5.23 5.7
United Kingdom
The UK portfolio (excluding Stenprop's joint venture share of 25 Argyll Street) was independently valued at
GBP314.2 million at the end of the reporting period. On a like-for-like basis, after excluding the sales of Pilgrim Street,
Worthing and Uxbridge, and the acquisition of the Industrials portfolio as well as the six acquisitions during the year,
the valuation of the UK portfolio decreased by GBP0.9 million, or 0.6%, from the valuation at 31 March 2017. Although
virtually flat in total, the variance is made up of a GBP1.9 million increase at Euston House (2.4%) and a downward valuation
of GBP2.7 million (4.3%) at the Trafalgar Court property in Guernsey, driven by a softening of yields on the island.
On 30 June 2017, the 25 estates comprising the industrials.co.uk portfolio were acquired at a cost of GBP127.0 million
as a corporate transaction. In line with accounting standards and the RICS Red Book valuation guide, these accounts
are required to value these assets on an individual basis. This valuation was undertaken by third-party valuer, JLL,
and at 30 September 2017 was GBP122.4 million. The 31 March 2018 valuation of the same assets was GBP125.6 million, an
increase of 2.6% over the six-month period. JLL also provided a like-for-like portfolio valuation as at 31 March 2018
which valued the industrial portfolio as a whole at GBP157.5 million, an increase of 6.6% on the acquisition valuation of
GBP147.8 million.
Stenprop acquired five further MLI estates between December 2017 and March 2018 for a combined purchase price
(excluding costs) of GBP21.5 million. At 31 March 2018, these five estates were valued by JLL at GBP22.2 million, an increase
of 3.3% since acquisition.
Germany
The German portfolio (excluding associates and joint ventures) was independently valued at EUR284.6 million. This
represents a like-for-like increase of 11.1% on the year-end valuation of EUR256.1 million. The increase of EUR28.5 million
was driven by a EUR21.3 million (16.7%) uplift at Stenprop's Bleichenhof property in central Hamburg, an asset which
is benefiting from positive market development seen in core assets in prime cities and from decreasing vacancy
and increased market rents. The asset management work being done to reposition this asset in conjunction with
the adjacent city centre redevelopment is now reaping rewards. Elsewhere, it is pleasing to report higher valuations
at the three central Berlin retail centres which experienced a combined uplift of EUR3.9 million and are now valued at
EUR75.2 million, an increase of 5.5% on the prior year.
Switzerland
The Swiss portfolio was valued at CHF124.2 million compared with the like-for-like 2017 year-end valuation of
CHF129.9 million (excluding the sales of Granges Paccot and Cham during the year for a combined sales price of
CHF34.2 million). The decrease in valuation has been driven by a weakening of market rents over the period. As
previously reported, following a decision to sell these lower yielding and more mature assets, the Swiss portfolio has
been classified as held for sale in the financial statements. All remaining properties are being marketed for sale and are
at various stages in the sale process.
Joint ventures and associates
The Care Homes portfolio in Germany was independently valued at EUR39.3 million, an increase of 11.0% on the 31 March
2017 valuation of EUR35.4 million.
Stenprop's 50% interest in 25 Argyll Street, a property located in the heart of London's West End, was externally
valued at GBP41.7 million, an increase of GBP1.2 million from that at 31 March 2017. The interest was sold on 4 June by way of
a share sale at a price which valued the property at its 31 March 2018 valuation of GBP83.4 million.
Following the disposal of the Nova Eventis shopping centre by Stenham European Shopping Centre Fund Limited on
22 June 2017, Stenprop no longer holds any direct property interests through associate investments.
UK industrial portfolio update
At the reporting date, Stenprop owned 30 MLI estates comprising 2.3 million sq ft of space, housing 489 tenants and
generating a rent of GBP10.4 million per annum. As at year end, the portfolio has seen the signing of 56 new leases and
the renewal of 34 existing leases. On average these leases have been signed up/renewed at rental levels which are
17.7% ahead of the previous passing rent for each respective unit. This rental growth will in due course translate into
higher earnings, NAV and total shareholder return.
The integration of the C2 Capital management team with the existing Stenprop team is proceeding smoothly and
synergies are emerging. A significant focus is to build on the industrials.co.uk platform using technology to increase
efficiency and reduce costs. Stenprop is confident that investment in cutting-edge technology together with the
Company's ability to offer tenants increasingly flexible terms and enhanced customer service will result in long-term
sustainable earnings growth from the portfolio.
The Company continues to seek appropriate additional acquisition opportunities in the multi-let space. As a result of
the long established relationships and networks of the industrials.co.uk team, subsequent to year end, the Company
has acquired a further two estates and is under offer on a number of others. The industrials.co.uk team also benefits
from a steady pipeline of further opportunities. In the first quarter of 2018, the sector saw more than 40 transactions
with a deal volume of approximately GBP400 million.
Debt management
The value of the property portfolio as at 31 March 2018, including the Group's share of joint venture properties and
assets held for sale, was GBP733.6 million. Senior bank debt at the same date was GBP360.9 million resulting in an average
loan-to-value ratio of 49.2% (31 March 2017: 51.6%). The Group's short term bridge funding of EUR39 million was repaid
in January 2018 with part of the net sales proceeds received from the sale of the property at Pilgrim Street in the City
of London.
The weighted average debt maturity stood at 2.9 years at 31 March 2018 compared with 2.4 years at 31 March 2017.
Excluding the Swiss debt facilities, which are expected to be repaid in the near term, the weighted average debt
maturity at 31 March 2018 stands at 3.4 years.
Excluding the Swiss portfolio, annual amortisation payments are GBP3.7 million (31 March 2017: GBP1.2 million). The
increase since prior year relates to the Trafalgar Court loan facility, and will be removed once the additional
amount of GBP6.1 million, used in the acquisition of the Industrial portfolio in June 2017, has been repaid.
The all-in contracted weighted average cost of debt was 2.44% at year end, down from 2.53% at 31 March 2017.
The Swiss portfolio is being marketed for sale; consequently, loans secured against these assets amounting to
CHF57.9 million were refinanced as a three month rolling credit facility, and loans amounting to CHF7.8 million were
refinanced with a one year term until 31 March 2019.
The Care Homes bank facility with Deutsche Postbank totalled EUR22.1 million at year end and was refinanced on
31 March 2018 until December 2023. The new margin of 1.25% and a swap of 0.52% gives an all-in rate of 1.77% and
there are annual combined amortisation payments of EUR549,000. The facility covers all four care homes, with the new
terms for two of the loans not commencing until 1 January 2019, when they are due to mature. All four loans now
have a coterminous maturity date. The all-in rate prior to this refinance was 2.61% per annum.
The bank facility relating to the five German Bikemax properties was refinanced in December 2017 to EUR12.6 million,
with the existing lender for a new five-year facility maturing in December 2022, at a margin of 1.55%. The current LTV
ratio of the loan is 46% and, as part of the refinancing, annual amortisation of EUR400,000 has been removed. An interest
rate cap was purchased in order to provide flexibility over future disposals while also allowing Stenprop to benefit from
the current low interest rate environment.
As mentioned above, in view of its changed strategy, Stenprop is targeting a reduced level of total borrowings (at a
Group level) to approximately 45% of its gross asset value by 31 March 2019, and 40% by 31 March 2020, by utilising
part of the proceeds of disposals of its existing non-MLI portfolio. Thereafter, the Directors will employ a level of
borrowing that they consider to be prudent for the asset class, taking into account prevailing market conditions.
The Group mitigates interest rate risk through the use of derivative instruments such as interest rate swaps or interest
rate caps in respect of at least 75% of its interest rate exposure. The Group utilises derivative instruments solely for the
purposes of efficient portfolio management.
REIT conversion
As previously mentioned, the Company converted to UK REIT status on 1 May 2018.
Update on London Stock Exchange ('LSE') listing
The Company's entire issued ordinary share capital is currently admitted to trading on the Main Board for listed
securities of JSE. Assisted by Numis Securities Limited, acting as financial adviser, an application will be made to the
LSE for all of the ordinary shares of the Company to be admitted to trading on the SFS. Admission to trading on the
LSE constitutes admission to trading on a regulated market. It is expected that UK Admission will become effective
and that unconditional dealings will commence in the ordinary shares on the LSE at 8.00 a.m. on 15 June 2018,
following publication of the Company's prospectus on its website on 8 June 2018. Simultaneously with the new listing
on the LSE, the Company will delist from the Bermuda Stock Exchange. It will retain its primary listing on the Main
Board of the JSE.
Ultimately, Stenprop's intention is to list on the Premium Segment of the Main Market of the LSE.
Migration of the Company to Guernsey
As previously reported, as a consequence of the intended listing and following approval at the special general meeting
held on 7 March 2018, Stenprop migrated its jurisdiction of incorporation from Bermuda to Guernsey on 23 March 2018.
Board appointments and resignations
Following the conversion of the Company to REIT status on 1 May 2018, there have been a number of changes to the
Board. With effect from the date of conversion, the independent non-executive chairman, Stephen Ball, and executive
director, Neil Marais, resigned from the Board. With effect from the same date, Julian Carey was appointed as executive
property director, Richard Grant was appointed as independent non-executive chairman and Philip Holland was
appointed as Independent non-executive director and chairman of the audit committee of Stenprop.
On 28 February 2018, Mandy Yachad resigned from the Board as an independent non-executive director and on
5 April 2017, Warren Lawlor was appointed as a non-executive director.
Subsequent events
On 4 June 2018, Stenprop completed the sale of its joint venture interest in Argyll Street in London's West End by way
of a sale of shares. The sale valued the property at GBP83.4 million and generated net proceeds of GBP22.8 million.
As detailed earlier in this report, on 24 April 2018 Stenprop completed the acquisition of a fully-let industrial
estate in Shrewsbury for GBP2.9 million. The estate comprises 24 units, totalling 44,611 sq ft of industrial space. On
1 June 2018, Stenprop completed the acquisition of a multi-let industrial estate in Kirkstall, Leeds for GBP8.1 million. The
estate comprises 14 units totalling 111,081 sq ft of industrial space.
In May 2018, an amount of GBP8.4 million was drawn down from The Royal Bank of Scotland plc, secured against the MLI
properties located in Shrewsbury, Leeds and Huddersfield, with a term of five years and an interest rate equal to three
month LIBOR plus a margin of 2.25 per cent per annum.
Subsequent to the year end, a EUR14.8 million loan with DGHyp was refinanced. The loan, relating to the Aldi portfolio,
was extended until 30 April 2020. Loan interest is calculated at 1.85% per annum over the 3-month-euribor and the
terms of the facility allow the borrower to benefit from negative interest rates. At the date of refinance this reduced
the all-in interest rate for the first three-month interest period to 1.52%.
On 6 June 2018, the Directors declared a final dividend of 4.0 pence per share. The final dividend will be payable in
cash or as a scrip dividend by way of an issue of new Stenprop shares. An announcement containing details of the
dividend and the timetable will be made in due course.
Prospects
Stenprop remains confident in its strategic decision that its objective to deliver sustainable growing income to
shareholders is best achieved by transforming the business into a focused UK MLI property company. This strategic
repositioning means that Stenprop, over the next few years, intends to sell all, or substantially all of its non-MLI assets
and utilise the sale proceeds to build a focused UK MLI business and to target a reduced leverage ratio of no more than
40% by 31 March 2020. Simultaneously, Stenprop will also exit from its third-party management activity.
Whilst Stenprop is confident that its increasing investment in the MLI sector will, over time, position it to achieve
its core objective of delivering sustainable growing income to its shareholders, the full impact on its earnings and
distributions during the transition period will depend on a number of factors. These include the timing and commercial
terms of acquisitions and disposals, and the implementation of its deleveraging strategy. Fluctuations from changes
in exchange rates resulting from its holdings in Germany and Switzerland will diminish and eventually be eliminated.
As a result of its strategic repositioning, the Board has taken a decision to rebase the level of distributions going forward
in order to ensure that they are fully covered by property-related earnings only. Distribution of non property-related
earnings will be evaluated from time to time, but these are more likely to be utilised for additional MLI investment.
This approach aligns the dividend policy with the more predictable contractual rental income streams derived from
the properties owned by Stenprop, rather than the less predictable management fee income from third-party fund
management activities. It also takes into account the Board's view that, with yields on income producing property
having contracted over the past 12 months, reflecting the low interest rate environment and increasing competition for
income producing property, yields on MLI property may contract further as the Company transitions into a focused
MLI specialist. This reflects Stenprop's view of the MLI property fundamentals and the likelihood of further strong
rental growth materialising in the sector. If Stenprop is to remain competitive in the market place for acquisitions of
additional MLI property and to pay a sustainable and growing dividend, it is necessary to rebase the dividend.
Stenprop will no longer provide guidance on its earnings; instead it will provide guidance on its anticipated distributions
per share. Assuming that current trading conditions will prevail and based on average exchange rates of EUR1.13:GBP1.00
and CHF1.30:GBP1.00 for the year ended 31 March 2019, Stenprop is targeting to pay a total dividend of 6.75 pence per
share, a 15.6% reduction over the 8 pence total dividend paid in respect of the year ended 31 March 2018. This target
can be evaluated against the diluted adjusted EPRA EPS attributable to the property rental business of 7.29 pence
per share for the year ended 31 March 2018, with a further amount of 1.80 pence per share attributable to the non
property-related earnings.
The Company intends to pay an interim dividend of 3.375 pence per share in January 2019 and the remainder by way
of a final dividend in late July or early August 2019. A 6.75 pence dividend would represent a dividend yield of 5.9% on
the current share price of GBP1.14 or a dividend yield of 4.8% on the Company's diluted EPRA NAV per share at 31 March
2018 of GBP1.41. Part of the distributions will be a Property Income Distribution (known as a PID) which, subject to certain
exemptions, will attract UK withholding tax.
This general forecast has been based on the Group's forecast and has not been reported on by the external auditors.
There can be no assurance that these targets will be met or that the Company will make any distributions at all.
Given the nature of its business, Stenprop has adopted distribution per share as its key performance measure, as this
is considered more relevant than earnings or headline earnings per share.
Statement of directors' responsibilities
The directors are responsible for preparing the consolidated financial statements in accordance with applicable law
and regulations.
The Companies (Guernsey) Law, 2008 (as amended) requires the directors to prepare financial statements for each
financial year. Under that law the directors are required to prepare the group financial statements in accordance with
International Financial Reporting Standards ('IFRS'). The financial statements are required to give a true and fair view
of the state of affairs of the Group and of the profit or loss of the Group for that period. In preparing these financial
statements, the directors are required to:
- properly select and apply accounting policies;
- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
- provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable
users to understand the impact of particular transactions, other events and conditions on the entity's financial
position and financial performance; and
- make an assessment of the Company's ability to continue as a going concern.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any
time the financial position of the Group and to enable them to ensure that the financial statements comply with the
Companies (Guernsey) Law, 2008. 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.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Company's website. Legislation in Guernsey governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Responsibility statement
To the best of the directors' knowledge, the consolidated financial statements, prepared in accordance with IFRS; give
a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole.
Statement as to disclosure of information to auditors
So far as the directors are aware, there is no relevant audit information of which the Group's auditors are unaware, and
each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any
relevant audit information and to establish that the Group's auditors are aware of that information.
Approval of annual financial statements
The consolidated annual financial statements of Stenprop Limited were approved by the Board of Directors on
6 June 2018 and are signed on their behalf by:
Paul Arenson Patsy Watson
Chief Executive Officer Chief Financial Officer
Consolidated statement of comprehensive income
for the year ended 31 March 2018
31 March *31 March
2018 2017
Note GBP'000 GBP'000
Net rental income 6 32,861 25,468
- Rental Income 42,349 34,028
- Property expenses (9,488) (8,560)
Management fee income 5,092 3,109
Operating costs 7 (8,290) (5,019)
Net operating income 29,663 23,558
Fair value movement of investment properties 16 20,223 2,431
Gain/(loss) from associates 18 292 (9,838)
Income from joint ventures 19 7,624 3,430
Loss on disposal of subsidiaries 29 (26) -
Profit from operations 57,776 19,581
Net gain from fair value of derivative financial instruments 26 2,453 489
Interest receivable 356 245
Finance costs 9 (9,843) (6,241)
Net foreign exchange (loss)/gain (492) 274
Gain on disposal of property 16 1,046 -
Goodwill impairment 27 (3,500) -
Profit for the year before taxation 47,796 14,348
Current tax 10 (563) (970)
Deferred tax 10 (4,286) (1,282)
Profit for the year from continuing operations 42,947 12,096
Discontinued operations
(Loss)/profit for the year from discontinued operations 20 (2,712) 2,814
Profit for the year 40,235 14,910
Profit attributable to:
Equity holders 39,357 14,687
Non-controlling interest derived from continuing operations 878 223
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation reserve (154) 16,827
Total comprehensive profit for the year 40,081 31,737
Total comprehensive profit attributable to:
Equity holders 39,203 31,514
Non-controlling interest 878 223
Earnings per share Pence Pence
From continuing operations
IFRS EPS 14 14.94 4.20
Diluted IFRS EPS 14 14.85 4.19
From continuing and discontinued operations
IFRS EPS 14 13.98 5.20
Diluted IFRS EPS 14 13.89 5.18
* The comparatives have been restated to reflect the change in presentational currency. See note 1.
Consolidated statement of financial position
as at 31 March 2018
31 March *31 March *31 March
2018 2017 2016
Note GBP'000 GBP'000 GBP'000
ASSETS
Investment properties 16 535,509 470,603 576,757
Investment in associates 18 303 17,863 31,057
Investment in joint ventures 19 14,660 31,435 29,731
Other debtors 21 13,617 11,634 5,853
Derivative financial instruments 26 712 - -
Total non-current assets 564,801 531,535 643,398
Cash and cash equivalents 22 24,549 25,202 29,093
Trade and other receivables 21 8,208 4,069 5,032
Assets classified as held for sale 20 147,408 135,373 -
Total current assets 180,165 164,644 34,125
Total assets 744,966 696,179 677,523
EQUITY AND LIABILITIES
Capital and reserves
Share capital and share premium 12 315,551 310,141 305,999
Equity reserve (8,453) (8,976) 353
Retained earnings 57,947 40,945 48,021
Foreign currency translation reserve 22,286 22,440 5,613
Total equity attributable to equity shareholders 387,331 364,550 359,986
Non-controlling interest 2,939 2,051 1,685
Total equity 390,270 366,601 361,671
Non-current liabilities
Bank loans 24 256,697 216,047 141,236
Derivative financial instruments 26 699 2,853 3,298
Other loan and interest 25 - - 9
Deferred tax 30 9,379 5,794 7,670
Total non-current liabilities 266,775 224,694 152,213
Current liabilities
Bank loans 24 2,800 13,004 149,198
Derivative financial instruments 26 - 119 1,398
Taxes payable 2,792 2,294 1,403
Accounts payable and accruals 23 14,622 13,266 11,640
Liabilities directly associated with assets classified
as held for sale 20 67,707 76,201 -
Total current liabilities 87,921 104,884 163,639
Total liabilities 354,696 329,578 315,852
Total equity and liabilities 744,966 696,179 677,523
GBP GBP GBP
IFRS net asset value per share 15 1.37 1.31 1.27
*The comparatives have been restated to reflect the change in presentational currency. See note 1.
Consolidated statement of changes in equity
for the year ended 31 March 2018
Share Foreign
capital currency Attributable Non-
and share Equity Retained translation to equity controlling Total
premium reserve earnings reserve shareholders interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2017 310,141 (8,976) 40,945 22,440 364,550 2,051 366,601
Issue of share capital 5,410 (16) - - 5,394 - 5,394
Credit to equity for equity-
settled share-based payments - 539 - - 539 - 539
Total comprehensive profit/
(loss) for the year - - 39,357 (154) 39,203 888 40,091
Ordinary dividends - - (22,355) - (22,355) - (22,355)
Balance at 31 March 2018 315,551 (8,453) 57,947 22,286 387,331 2,939 390,270
- - - - - - -
Balance at 1 April 2016 305,999 353 48,021 5,613 359,986 1,685 361,671
Issue of share capital 4,142 (11) - - 4,131 - 4,131
Credit to equity for equity-
settled share-based payments - 268 - - 268 - 268
Repurchase of own shares - (9,586) - - (9,586) - (9,586)
Total comprehensive profit for
the year - - 14,687 16,827 31,514 366 31,880
Ordinary dividends - - (21,763) - (21,763) - (21,763)
Balance at 31 March 2017 310,141 (8,976) 40,945 22,440 364,550 2,051 366,601
Consolidated statement
of cash flows
for the year ended 31 March 2018
31 March 31 March
2018 2017
Note GBP'000 GBP'000
Operating activities
Profit from operations from continuing operations 57,776 19,581
(Loss)/profit from operations from discontinued operations (2,127) 4,254
55,649 23,835
Share of (gain) /loss from associates (292) 9,838
Increase in fair value of investment property (14,305) (1,573)
Share of profit in joint ventures (7,624) (3,430)
Loss on disposal of subsidiaries 26 -
Exchange rate (gains)/losses (492) 274
Increase in trade and other receivables (416) (83)
(Decrease)/Increase in trade and other payables (594) 3,338
Interest paid (9,098) (7,781)
Interest received 976 1,090
Net tax paid (855) (865)
Net cash from operating activities 22,975 24,643
Contributed by: Continuing operations 20,552 22,354
Discontinued operations 2,423 2,289
Investing activities
Dividends received from joint ventures 563 1,521
Asset acquisitions 27 (57,858) -
Purchases of investment property 16 (22,831) -
Capital expenditure (5,553) (1,641)
Proceeds on disposal of investment property 16 35,850 5,346
Acquisition of investment in joint venture 1 -
Proceeds on disposal of investment in associate 18,345 5,745
Disposal of subsidiary 29 42,608 -
Net cash disposed of in subsidiary (1,831) -
Net cash from investing activities 9,294 10,971
Financing activities
New bank loans raised 20,703 -
New third party loans raised 25 34,080 -
Dividends paid (22,355) (21,763)
Repayment of borrowings (29,509) (7,680)
Repayment of third party loans 25 (34,591) -
Repurchase of shares - (9,586)
Financing fees paid (1,247) (169)
Payments made on swap break - (84)
New loan advances - (1,045)
Repayment of loan advances - 210
Net cash used in financing activities (32,919) (40,117)
Net decrease in cash and cash equivalents (650) (4,503)
Effect of foreign exchange rate changes 110 1,237
Cash and cash equivalents at beginning of the period 25,827 29,093
Cash and cash equivalents at end of the period 25,287 25,827
Contributed by: Continuing operations 24,549 25,202
Discontinued operations and assets held for sale 738 625
Notes to the consolidated
financial statements
for the year ended 31 March 2018
1. General Information
Stenprop Limited (the 'Company' and together with its subsidiaries the 'Group') was registered in Guernsey with
effect from 23 March 2018 (Registration number 64865) and has adopted new articles of incorporation. The registered
address of the Company is Kingsway House, Havilland Street, St Peter Port, GY1 2QE, Guernsey. The Company was
formerly registered in Bermuda under number 47031. With effect from 1 May 2018, the Company converted to a UK
real estate investment trust ('REIT').
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards ('IFRS's) as issued by the IASB, the requirements of IAS 34: Interim Financial Reporting, the JSE Listings
Requirements and applicable Guernsey law. The consolidated financial statements have been prepared on the historical
cost basis, except for the revaluation of investment properties and financial instruments that are measured at fair values
at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on
the fair value of the consideration given in exchange for goods and services. The principal accounting policies, which
are consistent with those applied in the previous annual financial statements, are set out below.
This summarised report is extracted from audited information, but is itself not audited. The board of directors (the
'Board' or the 'Directors') take full responsibility for the preparation of the provisional report and that the financial
information has been correctly extracted from the underlying consolidated financial statements. The auditors, Deloitte,
have reported on the audited consolidated financial statements and their report was unqualified. A copy is available
upon written request from the Company's registered office.
The consolidated financial statements are presented in GBP (Pounds Sterling).
Going concern
At the date of signing these consolidated financial statements, the Group has positive operating cash flow forecasts
and positive net assets. Management have reviewed the Group's cash flow forecasts for the 18 months to 30 September
2019 and, in light of this review and the current financial position, they are satisfied that the Company and the Group
have access to adequate resources to meet the obligations and continue in operational existence for the foreseeable
future, and specifically the 12 months subsequent to the signing of these financial statements.
The remaining Swiss portfolio is currently being marketed for sale (note 20) and are at various stages in the sale
process. As such, the loans at 31 March 2018, were refinanced on a short-term basis as a rolling credit facility or will
mature on 31 March 2019. Should a decision be taken not to sell the properties for any reason, or if the sale process is
delayed, the directors anticipate that, given the quality of the properties and the strong and proven relationships with
Swiss lenders, a refinancing can be secured on favourable terms where necessary.
The directors believe that it is therefore appropriate to prepare the accounts on a going concern basis.
Note 31 to the consolidated financial statements includes the Group's objectives, policies and procedures for managing
its market, interest and liquidity risk.
Change in presentation currency
From 1 April 2017, the Group changed its presentation currency to Pounds Sterling ('GBP'). This represents a change
from the prior period and has been applied to reflect the relatively larger weighting of Stenprop's UK portfolio following
implementation of the acquisition and sales strategy and Stenprop's entry into the multi-let industrial estate asset
class.
Comparative information has been restated in GBP in accordance with the guidance defined in IAS 21, specifically:
- Assets and liabilities for each statement of financial position presented have been translated at the closing rate at
the date of that statement of financial position;
- Income and expenses for each statement of comprehensive income presented have been translated at average
exchange rates for the period; and
- All resulting exchange differences have been recognised in other comprehensive income.
Adoption of new and revised standards
At the date of approval of these consolidated financial statements, the Group has not applied the following new and
revised standards that have been issued but are not yet effective:
- IAS 7 (amendments) Disclosure Initiative
- IAS 12 (amendments) Recognition of Deferred Tax Assets for Unrealised Losses
- IAS 40 (amendments) Transfers of investment property
- IFRS 2 (amendments) Classification and Measurement of Share-based Payment Transactions
- IFRS 4 (amendments) Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
- IFRS 9 Financial Instruments
- IFRS 14 Regulatory Deferral Accounts
- IFRS 15 Revenue from Contracts with Customers
- IFRS 16 Leases
- IFRIC 22 Foreign Currency Transactions and Advance Consideration
Impact assessment of adopting new accounting standards
Management are in the process of assessing these standards and do not expect that the adoption of the standards
listed above will have a material impact on the financial statements of the Group in future periods.
IFRS 9: Financial instruments is effective for financial years commencing on or after 1 January 2018. This standard
replaces the guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 outlines an impairment
model which reflects expected credit losses. This differs from IAS 39 which only recognised those credit losses which
have been incurred. The new impairment model will apply to the Group's financial assets including trade and other
receivables and cash and cash equivalents. The Directors will apply a simplified approach to recognise expected
credit losses for these current assets. The Directors do not expect there to be any material impact on the adoption of
IFRS 9. The Directors note that there will be no change in the accounting for financial liabilities as derivative financial
instruments continue to qualify for designation as at fair value through profit and loss under IFRS 9.
IFRS 15: Revenue from Contracts with Customers is effective for financial years commencing on or after 1 January
2018. The standard combines a number of previous standards, setting out a five-step model for the recognition of
revenue as well as establishing principles for reporting useful information to users of financial statements about the
nature, amount, timing and uncertainty of revenue. The standard applies to service charge income, car park income
and asset management income. The Directors do not consider that its adoption will have a material impact on the
financial statements.
IFRS 16: Leases is effective for financial years commencing on or after 1 January 2019 and requires lessees to recognise a
right-of-use asset and related obligation to make lease payments. Related interest and depreciation will be recognised
in the statement of comprehensive income. The Group does not anticipate that the adoption of this standard will have
a material impact on the financial statements.
3. Significant accounting policies
Basis of consolidation
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group
loses control of the subsidiary. Specifically, the results of the subsidiaries acquired or disposed of during the period
are included in the consolidated statement of comprehensive income from the date the Company gains control until
the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company
and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of
the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit
balance.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies
used in line with the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the
members of the Group are eliminated on consolidation.
When the Group loses control of a subsidiary, the gain or loss on disposal recognised in profit or loss is calculated
as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of
any retained interest, and (ii) the previous carrying amount of the assets (including goodwill), less liabilities of the
subsidiary and any non-controlling interests.
All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if
the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or
transferred to another category of equity as specified/permitted by applicable IFRS). The fair value of any investment
retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for
subsequent accounting under IAS 39 Financial instruments: recognition and measurement or, when applicable, the
costs on initial recognition of an investment in an associate or jointly controlled entity.
Investments in associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest
in a joint venture. Significant interest is the power to participate in the financial and operating policy decisions of the
investee but is not control or joint control over those policies.
The results, assets and liabilities of associates are incorporated in these consolidated financial statements using the
equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for
in accordance with IFRS 5 Non-current Assets Held for Sale and discontinued operations. Under the equity method, an
investment in associate is initially recognised in the consolidated statement of financial position at cost and adjusted
thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate.
Joint ventures
The Group's investment properties are typically held in property-specific special purpose vehicles ('SPVs'), which
may be legally structured as joint ventures. In assessing whether a particular SPV is accounted for as a subsidiary or
joint venture, the Group considers all of the contractual terms of the arrangement, including the extent to which the
responsibilities and parameters of the venture are determined in advance of the joint venture agreement being agreed
between the two parties. The Group will then consider whether it has the power to govern the financial and operating
policies of the SPV, so as to obtain benefits from its activities, and the existence of any legal disputes or challenges
to this control in order to conclude on the classification of the SPV as a joint venture or subsidiary undertaking. The
Group considers this position with the evidence available at the time.
The consolidated financial statements account for interests in joint ventures using the equity method of accounting
per IFRS 11.
Business combinations and asset acquisitions
Business combinations are accounted for using the acquisition method and any excess of the purchase consideration
over the fair value of the next assets acquired is initially recognised as goodwill and reviewed for impairment. Any
discount received and/or acquisition costs are recognised in the consolidated income statement. Where an acquisition
of properties held within a corporate structure is not judged to be an acquisition of a business, the transaction is
accounted for as if the Group had acquired the underlying properties directly.
Revenue recognition
The Group earns returns from investments in direct property assets and management fees. Revenue is recognised
when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount
of revenue can be measured reliably.
Revenue includes amounts receivable in respect of property rental income and service charges earned in the normal
course of business, net of sales-related taxes.
Rental income from operating leases is recognised on an accruals basis. A rent adjustment based on open
market estimated rental value is recognised from the rent review date in relation to unsettled rent reviews. Where
a significant rent free period is included in a lease, the rental income forgone is allocated evenly over the period
from the date of lease commencement to the expiry date of the lease.
Rental income from fixed and minimum guaranteed rent reviews is recognised on a straight-line basis over the entire
lease term. Where such rental income is recognised ahead of the related cash flow, an adjustment is made to ensure
the carrying value of the investment property, including the accrued rent, does not exceed the external valuation.
Initial significant direct costs incurred in negotiating and arranging a new lease are amortised on a straight-line basis
over the period from the date of lease commencement to the expiry date of the lease.
Where a lease incentive payment, or surrender premium is paid to enhance the value of a property, it is amortised on a
straight-line basis over the period from the date of lease commencement to the expiry date of the lease. Upon receipt
of a surrender premium for the early determination of a lease, the profit, net of dilapidations and non recoverable
outgoings relating to the lease concerned, is immediately reflected in income.
Contingent rents, such as turnover rents, rent reviews and indexation, are recorded as income in the periods in which
they are earned.
Management fees are recognised in the income statement on an accruals basis.
Service charge income is recognised in the accounting period in which the services are rendered and the related
property expenses are recognised in the period in which they are incurred.
Foreign currencies
The individual financial statements of each Group company are presented in the currency of the primary economic
environment in which it operates (its functional currency). For the purpose of the consolidated financial statements,
the results and financial position are expressed in GBP Sterling, which is the functional currency of the Company and
the presentational currency for the Group.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the
transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies
are translated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are
recognised in profit or loss for the period in which they arise.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign
operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are
translated at the average exchange rates for the period. Exchange differences arising are recognised in other
comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate).
Borrowing costs
Interest costs are recognised in the consolidated statement of comprehensive income using the effective interest rate
method.
Borrowing costs directly attributable to arranging finance are amortised over the facility term in the consolidated
statement of comprehensive income.
Current tax
Tax currently payable is based on taxable profit for the year. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable
that taxable profits will be available against which those deductible temporary differences can be utilised. Such
deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries
and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets
arising from deductible temporary differences associated with such investments and interests are only recognised to
the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the
temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the
period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted
or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group
intends to settle its current tax assets and liabilities on a net basis.
Non-controlling interest
Non-controlling interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately
from the Group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the
original business combination and the non-controlling interests' share of the changes in equity since the date of the
combination. Total comprehensive income is attributed to non-controlling interests even if this results in the non-
controlling interests having a deficit balance.
Investment properties
Properties held to earn rental income and/or for capital appreciation are classified as investment properties. Investment
properties comprise both freehold and leasehold land and buildings.
Investment properties are recognised as assets when:
- it is probable that the future economic benefits that are associated with the investment property will flow
to the Group;
- there are no material conditions precedent which could prevent completion; and
- the cost of the investment property can be measured reliably.
Investment properties are measured initially at cost, including related transaction costs. After initial recognition,
investment properties are carried at fair value, determined by the directors and/or based on independent external
appraisals.
The Group uses the valuations prepared by its independent valuers as the fair value of its investment properties. These
valuations are undertaken in accordance with the appropriate sections of the current Practice Statements contained in
the Royal Institution of Chartered Surveyors Valuation - Professional Standards ('Red Book'). This is an internationally
accepted basis of valuation. The valuations are based upon assumptions including contractual and estimated rental
values, future rental income, anticipated maintenance costs, future development costs and appropriate discount rates.
The valuers also make reference to market evidence of transaction prices for similar properties.
The difference between the fair value of a property at the reporting date and its carrying amount prior to
re-measurement is included in the consolidated statement of comprehensive income as a valuation surplus or deficit.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and short-term deposits with an original
maturity of three months or less.
Expenditure
Expenses are accounted for on an accrual basis.
Financial instruments
A financial instrument is a contract that gives rise to a financial asset to one entity and a financial liability or equity
instrument to another. The classification of financial assets and financial liabilities depends on the nature and purpose
of the instrument and is determined at the time of initial recognition.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities (other than financial assets at fair value through
profit or loss ('FVTPL') are added to or deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition.
Transactions costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are
recognised immediately in the statement of comprehensive income.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as follows:
Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date.
Level 2 - Inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability,
either directly or indirectly.
Level 3 - Inputs are unobservable inputs for the asset or liability.
Financial assets
The Group classifies its financial assets as either at fair value through profit and loss or as loans and receivables.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. They include current assets with maturities or terms greater than 12 months after the reporting dates
which are classified as non-current assets.
Loans and receivables, including those relating to the purchase of Stenprop shares (note 21), are measured at
amortised cost using the effective interest method, less impairment losses which are recognised in the statement of
comprehensive income. In the case of short-term trade receivables and payables, the impact of discounting is not
material and cost approximates amortised costs.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset have expired
or have been transferred and the Group has transferred substantially all risk and rewards of ownership of the asset to
another entity.
Financial assets, specifically accounts receivable and other debtors, are assessed for indicators of impairment at the
end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that,
as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future
cash flows of the investments have been affected.
Objective evidence of impairment could include:
- significant financial difficulty of the issuer or counterparty; or
- breach of contract, such as a default or delinquency in interest or principal payments; or
- it becoming probable that the borrower will enter bankruptcy or financial reorganisation.
For financial assets carried at amortised cost, the amount of the impairment loss is measured as the difference between
the asset's carrying amount and present value of the estimated future cash flows, discounted at the financial asset's
original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets, with the
exception of trade receivables, where the carrying amount is reduced through the use of a provision account. When
a trade receivable is considered uncollectable, it is written off against the provision account. Changes in the carrying
amount of the provision account are recognised in the statement of comprehensive income in the period.
For financial assets measured at amortised cost if, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event occurring after the impairment was recognised,
the previously recognised impairment loss is reversed through the statement of comprehensive income to the
extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what
the amortised cost would have been had the impairment not been recognised.
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance
of the contractual agreement.
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all its
liabilities. Ordinary shares are classed as equity. Equity instruments issued by the Group are recorded at the proceeds
received, net of direct issue costs.
The Group's financial liabilities comprise interest-bearing borrowings, loans and payables and trade payables. Financial
liabilities are recognised when the Group becomes party to the contractual provisions of the instrument. Financial
liabilities are measured at amortised cost using the effective interest method.
The Group derecognises financial liabilities when the Group's obligations are discharged, cancelled or they expire.
Interest rate swaps have been initially recognised at fair value, and subsequently re-measured at fair value in accordance
with IAS 39, Financial Instruments: Recognition and Measurement. They have been entered into in order to hedge
against the exposure to variable interest rate loans as described in note 26. They have been valued by an independent
valuer in line with internationally accepted practice.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value
is recognised as a financial liability. A derivative is presented as a non-current asset or non-current liability if the
remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within
12 months. It is Group policy not to hedge account. Other derivatives are presented as current assets or current
liabilities.
Trade and other receivables
These are valued at their nominal value (less accumulated impairment losses) as the time value of money is immaterial
for these current assets. Impairment losses are estimated at the year end by reviewing amounts outstanding and
assessing the likelihood of recoverability.
Trade and other payables
Trade and other payables are valued at their nominal value as the time value of money is immaterial for these current
liabilities.
Dividends
Dividends to the Group's ordinary shareholders are recognised when they are declared. This is when they are approved
by the board.
Earnings/(loss) per share
Earnings per share is calculated on the weighted average number of shares in issue in respect of the current period
and is based on the profit attributable to the ordinary shareholders.
Share-based payments
Deferred Share Bonus Plan and Long term incentive plans
Share options are granted to key management. The cost of equity settled transactions is measured with reference to
the fair value at the date at which they were granted. The Company accounts for the fair value of these options on a
straight-line basis over the vesting period in the income statement, with a corresponding increase to the share-based
payment reserve in Equity. The cost to the Company is based on the Company's best estimate of the number of equity
instruments that will ultimately vest.
Readers are referred to note 13: Share-based payments, where share-based payments are further disclosed.
Share Purchase Plan
As part of the Group's previous remuneration policy, the Company awarded shares to qualifying participants,
funded through the advance of loans to the participants. Loans advanced under the share purchase plan are
interest-bearing at a rate equal to the average interest rate incurred by the Group from time to time. Interest is
payable six monthly in arrears. Loans are repayable within 30 days of cessation of employment (unless the
participant ceases employment in circumstances beyond his or her control, in which case the loan is repayable
within 12 months), and must in all circumstances be repaid in ten years. All dividends received by such employees
(or his or her nominee) by virtue of their shareholding must first be utilised to discharge any interest outstanding
in terms of the loan advanced in terms of the Share Purchase Plan.
The loans have full recourse to the participants and as such fall outside of the scope of IFRS 2 and are accounted
for as financial instruments under IAS. The participants must charge their shares by way of security for the loan. The
loans have full recourse to the participants who waive all rights to compensation for any loss in relation to the Plan. No
further awards will be made under the Share Purchase Plan.
Repurchase of share capital (Own Shares)
Where share capital recognised as equity is repurchased, the amount of the consideration paid, including directly
attributable costs, is recognised as a deduction from equity. Such shares may either be held as Own Shares
(treasury shares) or cancelled. Where Own Shares are subsequently re-sold from treasury, the amount received
is recognised as an increase in equity.
4. Critical accounting judgements and key sources of estimation uncertainty
The preparation of the consolidated financial statements in accordance with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise judgement in the process of applying the Group's
accounting policies. Although the estimates are based on management's best knowledge of the amount, events or
actions, actual results may ultimately differ from those estimates.
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the
reporting year, that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are discussed below.
Significant estimates
Investment properties
The Group's investment properties are stated at estimated fair value, determined by directors, based on an independent
external appraisal. The valuation of the Group's property portfolio is inherently subjective due to a number of factors
including the individual nature of each property, its location and the expectation of future rentals. As a result, the
valuations placed on the property portfolio are subject to a degree of uncertainty and are made on the basis of
assumptions that may not prove to be accurate particularly in years of volatility or low transaction flow in the market.
The estimated market value may differ from the price at which the Group's assets could be sold at a particular time,
since actual selling prices are negotiated between willing buyers and sellers. As a result, if the assumptions prove to
be false, actual results of operations and realisation of net assets could differ from the estimates set forth in these
financial statements, and the difference could be significant.
Deferred tax assets and liabilities
Tax liabilities are recognised when it is considered probable that there will be a future outflow of funds to a taxing authority.
In such cases, provision is made for the amount that is expected to be settled, where this can be reasonably estimated.
This requires the application of judgement as to the ultimate outcome, which can change over time depending on facts
and circumstances. A change in estimate of the likelihood of a future outflow and/or in the expected amount to be settled
would be recognised in income in the period in which the change occurs. Deferred tax assets are recognised only to the
extent it is considered probable that those assets will be recoverable. This involves an assessment of when those assets are
likely to reverse, and a judgement as to whether or not there will be sufficient taxable profits available to offset the assets
when they do reverse. This requires assumptions regarding future profitability and is therefore inherently uncertain. To the
extent assumptions regarding future profitability change, there can be an increase or decrease in the amounts recognised
in respect of deferred tax assets as well as in the amounts recognised in income in the period in which the change occurs.
Deferred tax assets and liabilities are presented in note 30.
Significant judgements
Assets held for sale
The directors have disclosed a number of properties which met the criteria defined in IFRS 5 as Assets held for sale.
In the case of the Swiss Porfolio the directors consider the exceptions permitted by IFRS 5:9 to apply in respect to
the one-year requirement within which a sale should complete. This is due to the fact that during the initial one-year
period, circumstances arose that were previously considered unlikely. As a result, the properties which were previously
classified as held for sale were not sold; however:
(i) during the initial one-year period the entity took action necessary to respond to the change in circumstances;
(ii) the properties are still being actively marketed at a price that is reasonable, given the change in circumstances,
and
(iii) all other criteria in paragraphs 7 & 8 of IFRS 5 are met.
The value of the Assets held for sale are estimated at fair value, determined by the directors, based on an independent
external appraisal.
Business combinations and asset acquisitions
In accounting for the acquisitions of the Industrials portfolio and C2 Capital Limited, both of which completed on
30 June 2017, Stenprop has considered whether each of the transactions represented a business combination as
defined by IFRS 3, or an asset acquisition. When management conclude that processes and inputs are being acquired
in addition to the property then the transaction is accounted for as a business combination. When there are no such
items, the transaction is treated as an asset acquisition. Management concluded that the acquisition of Industrials
portfolio was an asset acquisition and the acquisition of C2 Capital Limited was a business combination.
5. Operating segments
The Group is focused on real estate investment in well-developed, large economies with established real estate markets.
The investment portfolio is primarily geographically diversified across Germany, the United Kingdom and Switzerland,
with a further sub-division within the UK between industrial and non-industrial. Each segment derives its revenue from
the rental of investment properties in the respective geographical regions.
Relevant financial information is set out below:
i) Information about reportable segments
Discontinued
Continuing operations operations
UK Non UK
Multi-let Multi-let
Germany Industrial Industrial Switzerland Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the year ended 31 March 2018
Net rental income 11,589 14,628 6,644 - 32,861
Fair value movement of investment
properties 23,969 448 (4,194) - 20,223
Net gain from fair value of financial
liabilities 346 1,370 737 - 2,453
Income from associates 292 - - - 292
Income from joint ventures 4,678 2,880 - - 7,558
Loss on disposal of subsidiaries - (26) - - (26)
Net finance costs (2,081) (5,403) (1,713) - (9,197)
Operating costs (735) (853) (342) - (1,930)
Net foreign exchange loss (25) (321) - - (346)
Other gains - 1,046 - - 1,046
Loss for the year from discontinued
operations (see note 20) - - - (2,712) (2,712)
Taxation (4,325) 156 (570) - (4,739)
Total profit/(loss) per reportable
segment 33,708 13,925 562 (2,712) 45,483
As at 31 March 2018
Investment properties 221,354 166,400 147,755 - 535,509
Investment in associates 303 - - - 303
Investment in joint ventures 14,617 - - - 14,617
Cash 12,074 4,460 5,853 - 22,387
Other 15,091 1,724 2,331 - 19,146
Assets classified as held for sale
(see note 20) 28,987 23,546 - 94,875 147,408
Total assets 292,426 196,130 155,939 94,875 739,370
Borrowings - bank loans 110,889 70,800 77,808 - 259,497
Other 13,289 5,676 5,238 - 24,203
Liabilities directly associated with
assets classified as held for sale
(see note 20) 14,063 - - 53,644 67,707
Total liabilities 138,241 76,476 83,046 53,644 351,407
Discontinued
Continuing operations operations
UK Non UK
Multi-let Multi-let
Germany Industrial Industrial Switzerland Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the year ended 31 March 2017
Net rental income 10,470 14,998 - - 25,468
Fair value movement of investment
properties 4,928 (2,496) - - 2,431
Net gain from fair value of financial
liabilities 363 127 - - 489
Loss from associates (9,838) - - - (9,838)
Income from joint ventures 2,270 854 - - 3,124
Net finance costs (2,349) (3,655) - - (6,004)
Operating costs (656) (140) - - (795)
Net foreign exchange gain 54 - - - 54
Profit for the year from discontinued
operations (see note 20) - - - 2,814 2,814
Taxation (1,319) (812) - - (2,131)
Total profit per reportable segment 3,923 8,876 - 2,814 15,612
As at 31 March 2017
Investment properties 219,057 251,546 - - 470,603
Investment in associates 17,863 - - - 17,863
Investment in joint venture 10,283 21,115 - - 31,398
Cash 11,693 12,280 - - 23,973
Other 12,999 2,347 - - 15,346
Assets classified as held for sale 2,541 - - 132,832 135,373
Total assets 274,436 287,288 - 132,832 694,556
Borrowings - bank loans 122,898 106,153 - - 229,051
Other 11,365 11,245 - - 22,610
Liabilities directly associated with
assets classified as held for sale
(see note 20) - - - 76,201 76,201
Total liabilities 134,263 117,398 - 76,201 327,862
ii) Reconciliation of reportable segment profit or loss
31 March 31 March
2018 2017
GBP'000 GBP'000
Rental income
Net rental income for reported segments 32,861 25,468
Profit or loss
Fair value movement of investment properties 20,223 2,431
Net gain from fair value of financial liabilities 2,453 489
Gain/(loss) from associates 292 (9,838)
Income from joint ventures 7,558 3,124
Loss on disposal of subsidiaries (26) -
Net finance costs (9,197) (6,004)
Operating costs (1,930) (795)
Net foreign exchange (loss)/gain (346) 54
Other gains 1,046 -
Profit for the year from discontinued operations (see note 20) (2,712) 2,814
Taxation (4,739) (2,131)
Total profit per reportable segments 45,483 15,612
Other profit or loss - unallocated amounts
Management fee income 5,092 3,109
Income from joint ventures 66 305
Net finance income (290) 8
Tax, legal and professional fees (295) (200)
Audit fees (194) (223)
Administration fees (764) (216)
Investment advisory fees (73) -
Non-executive directors costs (405) (133)
Staff remuneration costs (3,375) (2,284)
Other operating costs (1,255) (1,166)
Net foreign exchange (loss)/gain (145) 220
Other losses (3,500) -
Taxation (110) (122)
Consolidated profit before taxation 40,235 14,910
iii) Reconciliation of reportable segment financial position
31 March 31 March
2018 2017
GBP'000 GBP'000
ASSETS
Investment properties 535,509 470,603
Investment in associates 303 17,863
Investment in joint venture 14,617 31,398
Cash 22,387 23,973
Other 19,146 15,346
Assets classified as held for sale (see note 20) 147,408 135,373
Total assets per reportable segments 739,370 694,556
Other assets - unallocated amounts
Investment in joint ventures 43 37
Cash 2,162 1,229
Other 3,391 357
Total assets per consolidated statement of financial position 744,965 696,179
LIABILITIES
Borrowings - bank loans 259,497 229,051
Other 24,203 22,610
Liabilities directly associated with assets classified as
held for sale (see note 20) 67,707 76,201
Total liabilities per reportable segments 351,407 327,862
Other liabilities - unallocated amounts
Other 3,289 1,716
Total liabilities per consolidated statement of financial position 354,696 329,578
6. Net rental income
31 March 31 March
2018 2017
GBP'000 GBP'000
Rental income 40,293 34,863
Other income - tenant recharges 7,413 6,558
Other income 806 98
Discontinued Operations Adjustment (note 20) (6,163) (7,491)
Rental Income 42,349 34,028
Direct property costs (11,262) (10,499)
Discontinued Operations Adjustment (note 20) 1,774 1,939
Property expenses (9,488) (8,560)
Total net rental income 32,861 25,468
7. Operating costs
31 March 31 March
2018 2017
GBP'000 GBP'000
Tax, legal and professional fees 2,402 655
Audit fees 226 248
Interim review fees 30 31
Administration fees 553 338
Investment advisory fees 431 429
Non-executive directors costs 405 133
Staff remuneration costs 3,375 2,284
Other operating costs 1,466 1,341
Discontinued Operations Adjustment (note 20) (598) (440)
8,290 5,019
The increase in Tax, legal and professional fees is driven by the costs associated with the London listing (GBP488,000)
and the selling costs and fees associated with the share sale of Normanton Properties Ltd (Pilgrim Street) of GBP593,000.
8. Employees' and directors' emoluments
The Group had 20 employees at 31 March 2018 (2017: 11). The aggregate remuneration paid to employees during the
period, including that to executive directors, was:
31 March 31 March
2018 2017
GBP'000 GBP'000
Wages and salaries (including key management) 2,760 1,742
Social security costs 201 184
Pension costs 137 92
Share-based payments 277 266
3,375 2,284
As at 31 March 2018, the Group had six directors (2017: six). The directors of the Company during the financial year and
at the date of this report were as follows:
Non-executive directors Appointed Change in appointment
S Ball 2/10/2014 resigned 1/05/2018
M Yachad 10/12/2014 resigned 28/02/2018
P Miller 14/09/2016
W Lawlor 5/04/2017
R Grant 1/05/2018
P Holland (chairman) 1/05/2018
Executive directors Appointed Change in appointment
P Arenson (CEO) 2/10/2014
P Watson (CFO) 2/10/2014
N Marais 2/10/2014 resigned 1/05/2018
J Carey 1/05/2018
Emoluments paid to executive and non-executive directors are summarised below:
Total
Vested remuneration
Basic Other Cash share 31 March
salary Pension benefits^ bonus options 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Executive directors
P Arenson 260 26 1 118 40 445
P Watson 250 25 - 95 32 402
N Marais 130 13 2 32 12 189
640 64 3 245 84 1,036
Total
Vested remuneration
Basic Other Cash share 31 March
salary Pension benefits^ bonus options 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Executive directors
P Arenson 253 25 2 118 144 542
P Watson 202 20 - 95 115 432
N Marais 126 13 2 32 16 189
581 58 4 245 275 1,163
^ Other benefits relates to the provision of private medical insurance.
31 March 31 March
2018 2017
GBP'000 GBP'000
Non-executive directors
S Ball-paid to Sphere Management Limited 50 38
M Yachad-paid to Peregrine SA Holdings Proprietary Limited
(resigned 28 February 2018) 21 15
P Miller 44 23
W Lawlor-paid to Ferryman Capital Partners (Pty) Limited (appointed 5 April 2017) 28 -
G Leissner (passed away 16 December 2016) - 21
M Fienberg (resigned 14 September 2016) - 18
J Keyes (resigned 23 November 2016) - 11
P Hughes (resigned 23 November 2016) - 7
Share-based payments 262 -
405 133
The above non-executive fees include all management, consulting, technical or other fees paid for such services
rendered, including payments to management companies.
The Group's share-based payments comprise the Deferred Share Bonus Plan ('STIP') and the Long-Term Incentive Plan
('LTIP') for executive directors and senior management respectively, and various share option schemes.
The Company measures the fair value of these options at grant date and accounts for the cost over the vesting
period in the income statement, with a corresponding increase to the share-based payment reserve. The cost is
based on the quantity of shares that are likely to vest taking into account expected performance against the relevant
performance targets, where applicable, and service periods. Share-based awards and the respective vesting dates are
further detailed in note 13.
On 6 June 2018, the board of directors, on the recommendation of the remuneration committee, approved the following:
Bonuses in respect of the year ended 31 March 2018
Deferred Number LTIP for Number
Cash Share Bonus of share executive of share
bonus Plan options directors options
Executive directors GBP'000 GBP'000 (estimated) GBP'000 (estimated)
P Arenson 156 125 113,800 536 487,100
P Watson 150 120 109,400 515 468,200
N Marais 33 20 18,400 83 75,500
339 265 241,600 1,134 1,030,800
On 24 January 2018, the board of directors, on the recommendation of the remuneration committee, approved the
following:
Share incentives in respect of
the year ended 31 March 2017
LTIP for
executive
directors Number of
Executive directors GBP'000 share options
P Arenson 520 484,623
P Watson 500 465,804
1,020 950,427
On 7 June 2017, the board of directors, on the recommendation of the remuneration committee, approved the following:
Bonuses in respect of the year ended
31 March 2017 Share Purchase Plan^
Deferred
Cash Share Bonus Number Number
bonus Plan of share Loans of share
Executive directors GBP'000 GBP'000 options GBP'000 options
P Arenson 118 - - 916 881,897
P Watson 95 - - 733 705,517
N Marais 32 12 11,024 84 80,855
245 12 11,024 1,733 1,668,269
^ Loans advanced under the share purchase plan are interest-bearing at a rate equal to the average interest rate
incurred by the Group from time to time. Interest is payable six-monthly in arrears. Loans are repayable within
30 days of cessation of employment (unless the participant ceases employment in circumstances beyond his or her
control, in which case the loan is repayable within 12 months), and must in all circumstances be repaid in ten years.
All dividends paid to such employees (or his or her nominee) by virtue of their shareholding must first be utilised
to discharge any interest outstanding in terms of the loan advanced in terms of the Share Purchase Plan.
Directors' Interests - Beneficial direct and indirect holdings in the Company
As at 31 March 2018:
Direct Indirect Number of
number of number of % of shares in share
shares % of shares shares issue options held % of shares
S Ball (Chairman) - - 250,000 0.09 - -
P Arenson (CEO) - - 12,523,096 4.29 959,531 0.33
P Watson (CFO) - - 4,364,027 1.50 887,722 0.30
N Marais - - 280,600 0.10 12,632 0.00
W Lawlor - - 1,154,100 0.40 2,000,000 0.69
P Miller - - 21,898 0.01 - -
The above Directors' interests have not changed from 31 March 2018 to the date of the signing of these financial
statements.
As at 31 March 2017:
Direct Indirect Number of
number of number of % of shares in share
shares % of shares shares issue options held % of shares
S Ball (Chairman) - - 250,000 0.09 - -
M Yachad - - 150,000 0.06 - -
P Miller - - 21,898 0.01 - -
P Arenson (CEO) - - 9,955,994 3.47 474,908 0.17
P Watson (CFO) - - 3,658,510 1.28 412,918 0.14
N Marais - - 219,663 0.08 15,345 0.01
9. Finance costs
31 March 31 March
2018 2017
GBP'000 GBP'000
Bank interest payable (9,443) (7,838)
Amortisation of facility costs (1,087) (399)
Discontinued Operations Adjustment (note 20) 687 1,996
Net finance costs (9,843) (6,241)
10. Taxation
(i) Tax recognised in statement of comprehensive income
31 March 31 March
2018 2017
GBP'000 GBP'000
Income tax in respect of current year 1,354 1,227
Deferred tax (see note 30) 3,260 1,714
Discontinued Operations Adjustment (see note 20) 235 (689)
Total tax expense 4,849 2,252
The Company converted to UK REIT status on 1 May 2018.
No tax was recognised on other comprehensive income during the period (2017: Nil).
- Germany 15.825%
- United Kingdom 19%
- Switzerland (depending on the district in which the property is situated). Average rate of 19.6%.
(ii) Reconciliation of tax charge for the year
31 March 31 March
2018 2017
Continuing operations GBP'000 GBP'000
Profit for the year before taxation 47,796 14,348
Tax provided at applicable rate in Bermuda and Guernsey - -
Current tax charge in respect of other jurisdictions (563) (970)
Deferred tax charge in respect of other jurisdictions (4,286) (1,282)
Profit for the year after taxation 42,947 12,096
31 March 31 March
2018 2017
For discontinued operations GBP'000 GBP'000
(Loss)/profit for the year before taxation (2,947) 3,503
Tax provided at applicable rate in Bermuda and Guernsey - -
Tax charge in respect of other jurisdictions 235 (689)
(Loss)/Profit for the year after taxation (2,712) 2,814
11. Dividends
31 March 31 March
2018 2017
GBP'000 GBP'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the prior year 11,047 11,266
Interim dividend for the current year 11,308 10,496
Total dividends 22,355 21,762
On 18 July 2017, the directors of the Company declared a final dividend of 3.95 pence per share in respect of the year
ended 31 March 2017 equating to GBP11,047,000 (2016: GBP11,266,000). This was paid in cash on 1 August 2017. An interim
dividend of 4.00 pence per share equating to GBP11,308,000 (2017: GBP10,496,000) was declared on 23 November 2017
and paid in cash on 26 January 2018.
The directors declared a final dividend on 6 June 2018, for the year ended 31 March 2018, of 4.00 pence per share,
which is detailed in note 35.
12. Share capital
Authorised
1,000,000,000 ordinary shares with a par value of EUR0.000001258 each
31 March 31 March
2018 2017
Issued share capital (no. shares) (no. shares)
Opening balance 286,681,880 282,984,626
Issue of new shares 5,036,596 3,697,254
Closing number of shares issued 291,718,476 286,681,880
GBP'000 GBP'000
Authorised share capital
Share capital 1 1
Share premium 317,781 312,371
Less: Acquisition/transaction costs (2,231) (2,231)
Total share capital and share premium 315,551 310,141
There were no changes made to the number of authorised shares of the Company during the period under review.
Stenprop Limited has one class of share; all shares rank equally and are fully paid.
The Company has 291,718,476 (March 2017: 286,681,880) ordinary shares in issue at the reporting date. On 8 June
2017, 1,752,359 and 13,737 new ordinary shares were issued on the JSE and the BSX at an issue price of EUR1.22 per share
in respect of the Share Purchase Plan and Deferred Share Bonus Plan respectively. On 7 July 2017, 3,270,500 new
ordinary shares were issued on the JSE and the BSX at an issue price of EUR1.22 per share in order to fund the acquisition
of C2 Capital Limited (refer to note 27). The total cost of issuing the 5,036,596 shares was GBP5,410,000.
As at 31 March 2018, the Company held 9,026,189 treasury shares (March 2017: 9,026,189).
13. Share-based payments
The Group operates share incentive plans which are used to attract and retain high-calibre employees to help grow the
business. All awards are considered by the remuneration committee and are subject to board approval.
The Group recognised a total share-based expense of GBP539,000 in the year (2017: GBP268,000) in relation to the
share option schemes. As at 31 March 2018, the Equity Reserve held GBP1,133,000 in relation to share-based payment
transactions (2017:GBP610,000).
The incentive plans are discussed in more detail below.
Deferred Share Bonus Plan
The Board may grant an award to an eligible employee following a recommendation from the remuneration committee
over such number of shares that have an aggregate value equal to the deferred bonus. Such share options vest in
three equal tranches; the first tranche vests on the date of grant with subsequent tranches vesting at the first and
second anniversaries of the relevant year end. Share options may be exercised until the tenth anniversary of the grant
date, after which time they will lapse.
The fair value of this nil-cost option is determined using the Black-Scholes model. The key inputs used in determining
the award granted on 7 June 2017 are shown below:
Share price at date of grant GBP1.08
Expected option life in years 2
Risk free rate 1.50%
Standard Deviation (annualized) 11%
Value per option GBP1.08
Movement in options granted in terms of this plan are detailed below:
Fair Exercise dates
Value
At Outstanding Exercisable at Grant
1 April Dividend at 31 March at 31 March date in
Date of grant 2017 Granted equivalents Exercised 2018 2018 GBP From To
10 June 2015 395,590 - 31,464 (4,780) 422,274 422,274 GBP1.08 10 June 10 June
2015 2025
8 June 2016 269,031 - 12,888 (5,282) 276,637 276,637 GBP1.05 8 June 8 June
2016 2026
7 June 2017 - 41,970 762 (3,675) 39,057 25,067 GBP1.08 7 June 7 June
2017 2027
LTIP for senior management
Such share options vest in three equal tranches; the first tranche vests on the first anniversary of year end, with
subsequent tranches vesting at the second and third anniversaries of the relevant year ends. Share options may be
exercised until the tenth anniversary of the grant date, after which time they will lapse.
The fair value of this award is determined using the Black-Scholes model. The key inputs used in determining the
award granted 24 January 2018 are shown below:
Share price at date of grant GBP1.13
Exercise price at grant date GBP1.07
Expected option life in years 10
Risk free rate 1.50%
Expected volatility 29.01%
Value per option GBP0.47
Fair Exercise dates
At Outstanding Exercisable Value
1 April Dividend at 31 March at 31 March at Grant
Date of grant 2017 Granted equivalents Exercised 2018 2018 date From To
24 January 31 March 24 January
2018 - 142,887 - - 142,887 47,629 GBP0.47 2018 2028
LTIP for executive directors
Such share options vest on the third anniversary of grant date subject to pre-determined vesting conditions being
met. All options not vesting on the vesting date will automatically lapse and once vested may not be exercised for two
years. The fair value of these nil-cost options is determined by external valuers using an intrinsic model. The key inputs
used in determining the award granted 24 January 2018 are shown below:
Share price GBP1.07
Exercise price at grant date GBP0.00
Expected option life in years 3 2
Discount applied for two year lock-in period 10%
Value per option GBP0.68
Fair Exercise dates
At Outstanding Exercisable Value
1 April Dividend at 31 March at 31 March at Grant
Date of grant 2017 Granted equivalents Exercised 2018 2018 date From To
24 January 8 June 8 June
2018 - 1,416,231 - - 1,416,231 - GBP0.68 2022* 2027
* lock-in period of two years applies after vesting.
Other share options
On 30 March 2017, the Company agreed to grant to Ferryman Capital Partners Limited, a company in which Warren
Lawlor, a non-executive director, has a one-third beneficial interest, an option to subscribe for two million Stenprop
shares. The exercise price was GBP1.31 (EUR1.53), with a seven month vesting period. The full cost of this option was
therefore recognised in the current year. The option lapses should the individual cease to be a director, or after five
years, whichever is sooner. The option only has a dilutive effect when the average market price of ordinary shares exceeds
the exercise price of the options. The share price at year end was GBP1.07, which was below the exercise price. The
fair value of this award is determined using the Black-Scholes model. The key inputs used in determining the award
granted 30 March 2017 are shown below:
Share price GBP1.08
Exercise price at grant date GBP1.31
Expected option life in years 5
Risk free rate 1.50%
Expected volatility 31.31%
Expected dividend yield 5%
Value per option GBP0.13
Fair Exercise dates
At Outstanding Exercisable Value
1 April at 31 March at 31 March at Grant
Date of grant 2017 Granted Exercised 2018 2018 date From To
30 March 2017 2,000,000 - - 2,000,000 2,000,000 GBP0.13 30 December 30 March
2017 2022
Share Purchase Plan
Loans advanced under the share purchase plan are interest-bearing at a rate equal to the average interest rate
incurred by the Group from time to time. Interest is payable six monthly in arrears. Loans are repayable within
30 days of cessation of employment (unless the participant ceases employment in circumstances beyond his
or her control, in which case the loan is repayable within 12 months), and must in all circumstances be repaid in
10 years. All dividends received by such employees (or his or her nominee) by virtue of their shareholding must
first be utilised to discharge any interest outstanding in terms of the loan advanced in terms of the Share Purchase
Plan. The loans have full recourse to the participants who must charge their shares by way of security for the loans.
The table below summarises the position at year end in terms of loans advanced and the number of shares to which
they relate. Loans relating to the Share Purchase Plan issued to executive directors are disclosed in more detail in
note 8.
31 March 31 March
2018 2017
Brought forward at start of year (number of shares) 8,656,219 5,209,109
Share Purchase Plan shares issued in year (number of shares) 1,752,358 3,687,191
Share Purchase Plan shares redeemed (number of shares) (197,432) (240,081)
Carried forward at end of year (number of shares) 10,211,145 8,656,219
Stock price at advancement (EUR) 1.24 1.41
Share Purchase Plan loans advanced (including
accrued interest) (GBP'000) 12,536 10,590
Other share purchase loan
On 30 March 2017, a EUR1.22 million loan was advanced from Stenprop Germany Limited to Ferryman Capital Partners
Limited, a company in which Warren Lawlor, a non-executive director, has a one-third beneficial interest, to purchase
one million Stenprop shares in the market. The loan advanced is interest-bearing at a rate equal to the average interest
rate incurred by the Group from time to time. Interest is payable six monthly in arrear. The loan has full recourse to the
participant who must charge their shares by way of security for the loans.
31 March 31 March
2018 2017
Brought forward at start of year (number of shares) 1,000,000 -
Shares issued in year (number of shares) - 1,000,000
Shares redeemed (number of shares) - -
Carried forward at end of year (number of shares) 1,000,000 1,000,000
Stock price at advancement (EUR) - 1.22
Loan advanced (including accrued interest) (GBP'000) 1,081 1,044
14. Earnings per ordinary share
31 March 31 March
2018 2017
GBP'000 GBP'000
Reconciliation of profit for the period to adjusted EPRA(1) earnings
Earnings per IFRS income statement attributable to shareholders 39,357 14,687
Adjustment to exclude profit/(loss) from discontinued operations 2,712 (2,814)
Earnings per IFRS income statement from continuing operations attributable to
shareholders 42,069 11,873
Earnings per IFRS income statement attributable to shareholders 39,357 14,687
Adjustments to calculate EPRA earnings, exclude:
Changes in fair value of investment properties (14,305) (1,573)
Changes in fair value of financial instruments (2,453) (1,734)
Deferred tax in respect of EPRA adjustments 3,728 3,084
Goodwill impairment 3,500 -
Profit on disposal of properties (507) -
Cost associated with disposal of property company 679 -
Adjustments above in respect of joint ventures and associates
Changes in fair value (5,802) 10,908
Deferred tax in respect of EPRA adjustments 800 (638)
EPRA earnings attributable to shareholders 24,997 24,734
Further adjustments to arrive at adjusted EPRA earnings
Straight-line unwind of purchased swaps 239 767
Cost associated with group listing and REIT conversion 528 -
Adjusted EPRA earnings attributable to shareholders 25,764 25,502
Weighted average number of shares in issue (excluding treasury shares) 281,494,114 282,644,639
Share-based payment award 1,796,978 956,185
Diluted weighted average number of shares in issue 283,291,092 283,600,824
Earnings per share from continuing operations pence pence
IFRS EPS 14.94 4.20
Diluted IFRS EPS 14.85 4.19
Earnings per share pence pence
IFRS EPS 13.98 5.20
Diluted IFRS EPS 13.89 5.18
EPRA EPS 8.88 8.75
Diluted EPRA EPS 8.82 8.72
Adjusted EPRA EPS 9.15 9.02
Diluted adjusted EPRA EPS 9.09 8.99
(1) The European Public Real Estate Association (EPRA) issued Best Practices Policy Recommendations in November
2016, which provide guidelines for performance measures relevant to real estate companies. Their recommended
reporting standards are widely applied across this market, aiming to bring consistency and transparency to the sector.
The EPRA earnings measure is intended to show the level of recurring earnings from core operational activities with the
purpose of highlighting the Group's underlying operating results from its property rental business and an indication of
the extent to which current dividend payments are supported by earnings. The measure excludes unrealised changes
in the value of investment properties, gains or losses on the disposal of properties and other items that do not provide
an accurate picture of the Group's underlying operational performance. The measure is considered to accurately
capture the long-term strategy of the Group, and is an indication of the sustainability of dividend payments.
As at 31 March 2018, the Company held 9,026,189 treasury shares (March 2017: 9,026,189).
Straight-line unwind of purchased swaps
A further adjustment was made to the EPRA earnings attributable to shareholders relating to the straight-line unwind
of the value as at 1 April 2014 of the swap contracts in the property companies acquired. When the property companies
were acquired by Stenprop with effect from 1 April 2014, it also acquired the bank loans and swap contracts which
were in place within these property companies. As a result, Stenprop took over loans with higher swap interest rates
than would have been the case had new loans and swaps been put in place at 1 April 2014. To compensate for this,
the value of the swap break costs was calculated at 1 April 2014 and the purchase consideration for the property
companies was reduced accordingly to reflect this liability.
Costs associated with Group Listing and REIT conversion
A further adjustment was made to the EPRA earnings attributable to shareholders relating to the costs associated
with converting to REIT status and the planned listing on the Special Funds Segment of the London Stock Exchange.
Both costs are specifc to non-recurring activities and are not relevant to the underlying net income performance of
the Group.
Reconciliation of profit for the period to headline earnings
31 March 31 March
2018 2017
GBP'000 GBP'000
Earnings per IFRS income statement from continuing operations
attributable to shareholders 39,357 14,687
Adjustments to calculate headline earnings, exclude:
Changes in fair value of investment properties (14,305) (1,573)
Deferred tax in respect of headline earnings adjustments 3,675 2,834
Goodwill impairment 3,500 -
Cost associated with disposal of property company 679 -
Adjustments above in respect of joint ventures and associates
Changes in fair value of investment properties (4,857) 13,655
Deferred tax 757 (696)
Headline earnings attributable to shareholders 28,806 28,906
Earnings per share pence pence
Headline EPS 10.23 10.23
Diluted headline EPS 10.17 10.19
15. Net asset value per ordinary share
31 March *31 March *31 March
2018 2017 2016
GBP'000 GBP'000 GBP'000
Net assets attributable to equity shareholders 387,331 364,550 359,986
Adjustments to arrive at EPRA net asset value:
Derivative financial instruments (13) 2,972 5,885
Deferred tax 13,276 10,138 11,192
Adjustments above in respect of non-controlling interests 1,641 1,573 2,243
EPRA net assets attributable to shareholders 402,235 379,233 379,306
Number of shares in issue (excluding treasury shares) 282,692,287 277,655,691 282,984,626
Share-based payment award 1,796,978 956,185 647,806
Diluted number of shares in issue 284,489,265 278,611,876 283,632,432
Net asset value per share (basic and diluted) GBP GBP GBP
IFRS net asset value per share 1.37 1.31 1.27
Diluted IFRS net asset value per share 1.36 1.31 1.27
EPRA net asset value per share 1.42 1.37 1.34
Diluted EPRA net asset value per share 1.41 1.36 1.34
*The comparatives have been restated to reflect the change in presentational currency. See note 1.
As at 31 March 2018, the Company held 9,026,189 treasury shares (March 2017: 9,026,189).
16. Investment property
The fair value of the consolidated investment properties at 31 March 2018 was GBP535,508,774 (31 March 2017:
GBP470,603,000). This excludes an amount of GBP121,763,592 (31 March 2017: GBP133,645,000) for properties which have
been classified classified as Held for Sale, including the entire Swiss portfolio, the German Aldi Properties and the UK
joint venture, Stenprop Argyll Limited. The carrying amount of investment property is the fair value of the property
as determined by registered independent appraisers having an appropriate recognised professional qualification and
recent experience in the location and category of the property being valued ('valuers').
The fair value of each of the properties for the period ended 31 March 2018 was assessed by the valuers in accordance
with the Royal Institution of Chartered Surveyors ('RICS') standards and IFRS 13. Valuers are qualified for purposes of
providing valuations in accordance with the 'Appraisal and Valuation Manual' published by RICS.
The valuations performed by the independent valuers are reviewed internally by senior management. This includes
discussions of the assumptions used by the external valuers, as well as a review of the resulting valuations.
Discussions of the valuations process and results are held between the senior management and the external valuers
on a bi-annual basis. The audit committee reviews the valuation results and, provided the committee is satisfied with
the results, recommends them to the board for approval.
The valuation techniques used are consistent with IFRS 13 and use significant 'unobservable' inputs. Investment
properties are all at level 3 in the fair value hierarchy and valuations represent the highest and best use of the properties.
There have been no changes in valuation techniques since the prior year.
There are interrelationships between all these unobservable inputs as they are determined by market conditions. An
increase in more than one unobservable input would magnify the impact on the valuation. The impact on the valuation
would be mitigated by the interrelationship of two unobservable inputs moving in opposite directions e.g. an increase
in rent may be offset by an increase in yield, resulting in no net impact on the valuation. Expected vacancy rates
may impact the yield with higher vacancy rates resulting in higher yield. All revenue is derived from the underlying
tenancies given on the investment properties.
All investment properties are mortgaged, details of which can be seen in note 24. As at the date of signing this report,
there are no restrictions on the realisability of any of the underlying investment properties, nor on the remittance of
income and disposal proceeds.
The key unobservable inputs used in the valuation of the Group's investment properties at 31 March 2018 are detailed
in the table below:
Combined
Portfolio Portfolio Market Net initial
(including by value Annualised yield Market
share of jointly market 31 March gross rental (Weighted Voids by rent range
controlled value 2018 Properties Area income average) area per month
entities) (%) (GBP million) (number) (sq m) (GBP million) (%) (%) (GBP/sq m)
UK non multi-let
Industrial 22.7 166.4 10 50,280 10.9 5.76 1.6 3.0-60.6
UK multi-let
Industrial 20.1 147.8 30 215,299 10.4 6.50 15.3 3.6-9.0
Germany 30.2 221.3 9 72,674 10.4 4.16 7.8 4.4-66.0
Assets Held for
Sale 16.6 121.8 22 54,455 7.8 4.90 3.0 5.0-26.2
89.6 657.3 71 392,708 39.5 5.23 10.5 -
Share of joint
ventures and
associates 4.7 34.6 4 19,330 2.4 5.95 0.0 7.0-14.1
Share of joint
ventures and
associates Held for
Sale 5.7 41.7 1 3,067 2.1 4.61 0.0 20.2-67.3
Total 100.0 733.6 76 415,105 44.0 5.23 9.9 -
31 March 31 March
2018 2017
GBP'000 GBP'000
Opening balance 470,603 576,757
Properties acquired 149,831 -
Capitalised expenditure 5,549 1,643
Disposals through the sale of property (34,946) (5,346)
Disposals through the sale of subsidiary (see note 29) (79,900) -
Foreign exchange movement in foreign operations (1,814) 29,621
Net fair value gain on investment property - continuing operations 20,223 2,431
Net fair value loss on investment property - discontinued operations (note 20) (5,918) (858)
Assets Held for Sale (note 20) 11,881 (133,645)
Closing balance 535,509 470,603
31 March 31 March
2018 2017
GBP'000 GBP'000
Acquisitions
UK
Stenprop Industrials 1 2 Limited 25 properties 127,000 -
Stenprop Industrials 3 Limited 4 properties 16,715 -
Stenprop Industrials 4 Limited 1 property 6,116 -
Total 149,831 -
Disposals
Germany
Hermann (Burger King) (2,931) -
Swiss
Kantone (Granges-Paccot) (15,414) -
David (Cham) (10,711) -
Clint (Interlaken) - (5,346)
UK
GGP1 - Uxbridge (3,000) -
GGP1 - Worthing (2,890) -
Disposals through the sale of property (34,946) -
Normanton - Pilgrim Street (79,900) -
Disposals through the sale of subsidiary (79,900) -
Total (114,846) (5,346)
Gain on disposal of property
Foreign
Sales Disposal Net Sales Carrying exchange Gain/(loss)
proceeds costs proceeds value movement on disposal
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing Operations
Dolphin Bridge House,
Uxbridge, UK 3,400 (64) 3,336 (3,000) - 336
Wicker House & Studios,
Worthing, UK 3,650 (50) 3,600 (2,890) - 710
7,050 (114) 6,936 (5,890) - 1,046
Discontinued Operations
Granges-Paccot, Switzerland 15,953 (581) 15,372 (15,414) (3) (45)
Cham, Switzerland 10,783 (167) 10,616 (10,711) (1) (96)
Burger King, Germany 2,931 - 2,931 (2,931) - -
29,667 (748) 28,919 (29,056) (4) (141)
17. Subsidiaries, associates and joint ventures
The Group consists of a parent company, Stenprop Limited, incorporated in Guernsey (formerly Bermuda) and a
number of subsidiaries, associates and joint ventures held directly and indirectly by Stenprop Limited which operate
and are incorporated around the world.
Details of the Group's subsidiaries as at 31 March 2018 are as follows:
Place of % equity owned by
Name incorporation Principal activity Company Subsidiary
BVI
Davemount Properties Limited BVI Property Investment 100.00
Laxton Properties Limited BVI Property Investment 100.00
Loveridge Properties Limited BVI Dormant 100.00
Ruby Red Holdings Limited BVI Management 100.00
SP Corporate Services Limited BVI Management 100.00
SP Nominees Limited BVI Management 100.00
SP Secretaries Limited BVI Management 100.00
Stenprop Management Holdings Limited BVI Holding Company 100.00
Stenprop (UK) Limited BVI Holding Company 100.00
Leatherback Property Holdings Limited BVI Holding Company 100.00
Stenprop Hermann Limited BVI Property Investment 100.00
Stenprop Victoria Limited BVI Property Investment 100.00
Stenprop Industrials 1 Limited BVI Holding Company 100.00
Stenprop Industrials 2 Limited BVI Holding Company 100.00
Stenprop Industrials 3 Limited BVI Property Investment 100.00
Stenprop Industrials 4 Limited BVI Property Investment 100.00
Curacao
Anarosa Holdings N.V. Curacao Holding Company 94.90
C.S. Property Holding N.V. Curacao Holding Company 94.90
Lakewood International N.V. Curacao Holding Company 89.00
T.B. Property Holdings N.V. Curacao Holding Company 100.00
Guernsey
APF1 Limited (in liquidation) Guernsey Dormant 100.00
Bernina Property Holdings Limited Guernsey Holding Company 100.00
GGP1 Limited Guernsey Property Investment 100.00
Kantone Holdings Limited Guernsey Property Investment 100.00
KG Bleichenhof Grundtuscksverwaaltung
GmbH & Co. KG Germany Property Investment 94.90
LPE Limited Guernsey Property Investment 100.00
Stenprop Advisers Limited Guernsey Management 100.00
Stenprop (Germany) Limited Guernsey Holding Company 100.00
Stenprop (Swiss) Limited Guernsey Holding Company 100.00
Stenprop Trafalgar Limited Guernsey Holding Company 100.00
Stenprop Arsenal Limited Guernsey Dormant 100.00
Place of % equity owned by
Name incorporation Principal activity Company Subsidiary
Stenprop (Guernsey) Limited Guernsey Dormant 100.00
Jersey
Industrials Investment Unit Trust Jersey Holding Company 100.00
Luxembourg
Algy Properties S.a.r.l. Luxembourg Property Investment 100.00
Bruce Properties S.a.r.l. Luxembourg Property Investment 100.00
Clint Properties S.a.r.l. Luxembourg Property Investment 100.00
David Properties S.a.r.l. Luxembourg Property Investment 100.00
Jimmy Investments S.a.r.l. Luxembourg Holding Company 100.00
Spike Investments S.A. Luxembourg Holding Company 100.00
Netherlands
Century 2 BV Netherlands Property Investment 94.90
Century BV Netherlands Property Investment 94.90
Isabel Properties BV Netherlands Property Investment 94.90
Mindel Properties BV Netherlands Holding Company 94.50
Isle of Man
Stenham Beryl Limited IoM Property Investment 100.00
Stenham Crystal Limited IoM Property Investment 100.00
Stenham Jasper Limited IoM Property Investment 100.00
Gemstone Properties Limited (formerly
Stenham Properties (Germany) Limited) IoM Holding Company 100.00
Switzerland
Polo Property GmbH Switzerland Property Investment 100.00
United Kingdom
Stenprop Management Limited England Management 100.00
C2 Capital Limited England Management 100.00
Stenprop Limited England Dormant 100.00
United States
Industrials UK GP LLC United States Holding Company 100.00
Industrials UK LP United States Property Investment 100.00
Details of the Group's investments in associates and joint ventures are disclosed in note 18 and note 19 respectively.
18. Investment in associates
Details of the Group's associates at the end of the reporting period are as follows:
Place of Principal % equity owned
Name incorporation activity by subsidiary
Stenham European Shopping Centre Fund Limited ('SESCF') Guernsey Fund 28.42*
* 28.16% of the investment in the underlying property was held through SESCF, and 0.26% of the property investment
was held via a wholly-owned subsidiary, Leatherback Property Holdings Limited, a company incorporated in the British
Virgin Islands.
During the period, both SESCF and Leatherback Property Holdings Limited disposed of their investment in the
underlying property.
During the period the Group sold its investment in Stenham Berlin Residential Fund Limited in which it had held a
5.24% holding at 31 March 2017.
Associates are accounted for using the equity method in these consolidated financial statements as set out in the
Group's accounting policies.
Summarised financial information in respect of each of the Group's associates is set out below:
Stenham Stenham
European Berlin
Shopping Residential
Centre Fund
Fund Limited Limited Total
GBP'000 GBP'000 GBP'000
31 March 2018
Non-current assets - - -
Assets Held for Sale - - -
Current assets 1,298 - 1,298
Non-current liabilities - - -
Current liabilities (523) - (523)
Equity attributable to owners of the Company 775 - 775
Revenue 3,415 21,351 24,766
Profit from continuing operations and total
comprehensive income 786 1,568 2,354
31 March 2017
Non-current assets 141 - 141
Assets Held for Sale 177,637 16,865 194,502
Current assets 6,725 19,317 26,042
Non-current liabilities - - -
Current liabilities (128,328) (498) (128,826)
Equity attributable to owners of the Company 56,175 35,684 91,859
Revenue 15,984 50,230 66,214
(Loss)/Profit from continuing operations and total
comprehensive income (42,506) 19,598 (22,908)
18. Investment in associates
Reconciliation of the above summarised financial information to the carrying amount of the interest in the associates
recognised in the financial statements:
Stenham Stenham
European Berlin
Shopping Residential
Centre Fund
Fund Limited Limited Total
GBP'000 GBP'000 GBP'000
31 March 2018
Opening balance as at 1 April 2017 15,994 1,869 17,863
Share of associates' profit * 221 71 292
Share in associates disposed of during the period (16,353) (1,992) (18,345)
Distribution received from associates - - -
Foreign exchange movement in foreign operations 441 52 493
Closing balance 303 - 303
31 March 2017
Opening balance as at 1 April 2016 26,095 4,962 31,057
Share of associates' (loss)/profit * (12,041) 2,203 (9,838)
Associate balance sheet adjustment 16 - 16
Share in associates disposed of during the year - (5,745) (5,745)
Distribution received from associates (6) - (6)
Foreign exchange movement in foreign operations 1,930 449 2,379
Closing balance 15,994 1,869 17,863
* The share of associates' profit includes the fair value movement in the underlying investments for the period.
This is covered in the subsequent paragraphs.
Stenham European Shopping Centre Fund Limited ('SESCF')
SESCF, in which the Group has a 28.42% interest, completed the sale of its investment in the Nova Eventis Shopping
Centre on 22 June 2017. The sale price of the property was EUR208.5 million less selling costs (equivalent to the value
at 31 March 2017) and any fair value movement in the underlying investment is reflective of the movement in the net
asset value of SESCF and the property company which was sold. There are no restrictive conditions on the distribution
of the remaining balance due subsequent to release of the final amount in escrow.
Stenham Berlin Residential Fund Limited ('SBRF')
At 31 March 2017, SBRF's sole investment was its remaining holding of 623,868 shares in ADO Properties Limited. All
of these shares were sold by 31 May 2017 and monies subsequently distributed to the SBRF shareholders by way of
a share buyback in June 2017. SBRF's share price at 31 March 2017 was EUR1.85. This had risen to EUR1.92 at the date of
share buyback in June 2017. Stenprop Germany Limited disposed of its entire shareholding of 1,180,251 shares at EUR1.92
per share realising EUR2,268,002. This represented a gain of EUR82,687 for the year to 31 March 2018. The 'rounded' GBP
equivalent thereof, as shown above, is GBP71k.
19. Investment in joint ventures
Details of the Group's joint ventures at the end of the reporting period are as follows:
% equity
Place of owned by
Name incorporation Principal activity subsidiary
Luxembourg
Elysion S.A. Luxembourg Holding company 50.00
Elysion Braunschweig S.a.r.l Luxembourg Property company 50.00
Elysion Dessau S.a.r.l Luxembourg Property company 50.00
Elysion Kappeln S.a.r.l Luxembourg Property company 50.00
Elysion Winzlar S.a.r.l Luxembourg Property company 50.00
Guernsey
Stenpark Management Limited Guernsey Management company 50.00
BVI
Stenprop Argyll Limited BVI Holding company 50.00
Regent Arcade House Holdings Limited BVI Property company 50.00
Republic of Ireland
Ardale Industrials Limited Republic of Ireland Management company 50.00
Summarised consolidated financial information in respect of the Group's joint ventures is set out below. Where
applicable, these represent the consolidated results of the respective holding companies.
Stenpark Ardale
Elysion Management Stenprop Industrials
S.A. Limited Argyll Limited Limited Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 March 2018
Investment property 34,878 - 83,400 - 118,278
Current assets 607 151 5,751 18 6,527
Assets 35,485 151 89,151 18 124,805
Bank loans (19,454) - (37,373) - (56,827)
Shareholder loan (13,463) - - - (13,463)
Deferred tax (1,104) - - - (1,104)
Financial liability (137) - (453) - (590)
Current liabilities (172) (82) (4,235) (1) (4,490)
Liabilities (34,330) (82) (42,061) (1) (76,474)
Net assets of joint ventures 1,155 69 47,090 17 48,331
Net assets of joint ventures
excluding shareholder loans 14,618 69 47,090 17 61,777
Group share of net assets 14,618 34 23,545 8 38,205
Net assets directly associated with
assets classified as held for sale
adjustment (see note 20) - - (23,545) - (23,545)
Group share of joint ventures' net
assets 14,618 34 - 8 14,660
Revenue 2,450 381 4,794 35 7,660
Interest payable (1,795) - (1,115) - (2,910)
Tax expense (713) - - - (713)
Profit from continuing operations
and total comprehensive income
excluding interest due to Group 4,678 101 5,760 30 10,569
Share of joint ventures' profit due to
the Group 4,678 51 2,880 15 7,624
Stenpark Ardale
Elysion Management Stenprop Industrials
S.A. Limited Argyll Limited Limited Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 March 2017
Investment property 30,385 - 80,997 - 111,382
Current assets 450 258 3,826 - 4,534
Assets 30,835 258 84,823 - 115,916
Bank loans (19,393) - (37,313) - (56,706)
Shareholder loan (12,435) - - - (12,435)
Deferred tax (453) - - - (453)
Financial liability (502) - (1,236) - (1,738)
Current liabilities (202) (186) (4,046) - (4,434)
Liabilities (32,985) (186) (42,595) - (75,766)
Net (liabilities)/assets of joint
ventures (2,150) 72 42,228 - 40,150
Net assets of joint ventures
excluding shareholder loans 10,285 72 42,228 - 52,585
Group share of net assets 10,285 36 21,114 - 31,435
Revenue 2,313 822 4,509 - 7,644
Interest payable (1,676) - (1,114) - (2,790)
Tax expense (327) - - - (327)
Profit from continuing operations
and total comprehensive income
excluding interest due to Group 2,270 611 1,708 - 4,589
Share of joint ventures profit due to
the Group 2,270 306 854 - 3,430
Elysion S.A.
Stenprop owns 100% of the shares and shareholder loans in Bernina Property Holdings Limited (Bernina). Bernina in
turn owns 50% of the issued share capital and 100% of the shareholder loans of Elysion S.A., a company incorporated
in Luxembourg which is the beneficial owner of the Care Home portfolio. The remaining 50% of Elysion S.A. is owned
by a joint venture partner who manages the portfolio.
The acquired shareholder loans have attracted, and continue to attract, a 10% compounded interest rate since inception
in 2007. The outstanding shareholder loan, which is wholly-owned by Stenprop, has been valued at the recoverable
balance which is deemed equal to the net assets of the joint venture excluding the shareholder loan.
Reconciliation of the above summarised financial information to the carrying amount of the interest recognised in the
consolidated financial statements:
Stenpark Ardale
Elysion Management Stenprop Industrials
S.A. Limited Argyll Limited Limited Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 March 2018
Opening balance 10,283 37 21,115 - 31,435
Share in associates acquired during
the period - - - (1) (1)
Share of joint venture profit 4,678 51 2,880 15 7,624
Distribution received from joint
venture (613) (54) (450) (6) (1,123)
Foreign exchange movement in
foreign operations 270 - - - 270
Transfer to Assets Held for Sale
(note 20) - - (23,545) - (23,545)
Closing balance 14,618 34 - 8 14,660
31 March 2017
Opening balance 8,163 32 21,536 - 29,731
Share of joint venture profit 2,270 306 854 - 3,430
Distribution received from joint
venture (864) (301) (1,275) - (2,440)
Foreign exchange movement in
foreign operations 714 - - - 714
Closing balance 10,283 37 21,115 - 31,435
20. Assets held for sale and discontinued operations
Management consider 23 properties (the entire Swiss portfolio, the Aldi portfolio and the joint venture interest in
Argyll Street, London) to meet the conditions relating to Assets Held for Sale, as per IFRS 5: Non-current Assets Held
for Sale. The properties are expected to be disposed of during the next 12 months. As part of the Swiss portfolio,
the property at Lugano, which is valued at year end at CHF20.9 million (GBP15.7 million) is classified as held for sale.
Although the sale may not complete within 12 months, Stenprop is committed to the disposal of the asset in line with
its strategy to exit the Swiss market. Accordingly, Stenprop has disclosed the asset as Held For Sale. The fair values of
all assets Held for Sale have been determined by a third party valuer, Jones Lang LaSalle.
The fair value of these properties, and their comparatives are shown in the table below:
31 March 31 March
2018 2017
GBP'000 GBP'000
Investment properties 121,764 133,646
Investment in joint ventures 23,545 -
Cash and cash equivalents 738 625
Trade and other receivables 1,361 1,102
Total assets classified as held for sale 147,408 135,373
Bank loans 62,225 70,783
Derivative financial instruments 14 -
Deferred tax 3,897 4,344
Accounts payable and accruals 1,571 1,074
Liabilities directly associated with assets classified as held for sale 67,707 76,201
Nine properties (the entire Swiss portfolio) have been recognised as discontinued operations in accordance
with IFRS 5.32.
The results of the discontinued operations were as follows:
31 March 31 March
2018 2017
GBP'000 GBP'000
Net rental income 4,389 5,552
- Rental income 6,163 7,491
- Property expenses (1,774) (1,939)
Operating costs (598) (440)
Net operating income 3,791 5,112
Fair value movement of investment properties (5,918) (858)
(Loss)/Profit from operations (2,127) 4,254
Loss on disposal of property (141) -
Net gain from fair value of derivative financial instruments - 1,245
Net finance costs (687) (1,996)
Net foreign exchange gains 8 -
(Loss)/Profit for the year before taxation (2,947) 3,503
Taxation 235 (689)
(Loss)/Profit for the year from discontinued operations (2,712) 2,814
Disposals
On 1 July 2017, the Group disposed of the Kantone Holdings Limited properties known as Grange Paccot 1 and Grange
Paccot 2, Switzerland, for CHF20 million (equating to CHF19.9 million after disposal costs). At disposal, there was a
loss of CHF0.1 million to the Group equating to the disposal costs, as the property was already held at a fair value
equivalent to the sale price.
On 30 October 2017, the Group disposed of the property known as Cham which was the sole property owned by
David Properties S.a.r.l for CHF14.2million (equating to CHF14.1 million after disposal costs). At disposal, there was a
loss of CHF0.1 million to the Group equating to the disposal costs, as the property was already held at a fair value
equivalent to the sale price.
21. Trade and other receivables
31 March 31 March
2018 2017
Non-current receivables GBP'000 GBP'000
Other debtors 13,617 11,634
13,617 11,634
Non-current other debtors includes GBP12.52 million (2017: GBP10.59 million) of loans advanced under the Share Purchase
Plan (see note 13; share-based payments) and a GBP1.1 million (2017: GBP1.04 million) loan advanced on 30 March 2017 used
to purchase one million Stenprop shares in the market by Ferryman Capital Partners Limited, a company in which
Warren Lawlor, a non-executive director, has a one-third beneficial interest.
31 March 31 March
2018 2017
Current receivables GBP'000 GBP'000
Accounts receivable* 7,089 4,149
Other debtors 1,755 507
Prepayments 725 515
Transfer to assets held for sale (see note 20) (1,361) (1,102)
8,208 4,069
* Included in this balance are provisions for doubtful debts of GBP260,918 (2017: GBP232,677).
22. Cash and cash equivalents
31 March 31 March
2018 2017
GBP'000 GBP'000
Cash at bank 25,287 25,827
Transfer to assets held for sale (see note 20) (738) (625)
24,549 25,202
Restricted cash
At year end funds totalling GBP11.1 million (2017: GBP12.4 million) were restricted. Tenant deposits of GBP2.58 million
(2017: GBP2.4 million) are included in this amount as are net rents held in bank accounts which are secured by the lenders
for the purposes of debt repayments and redevelopment, including GBP8.0 million (2017: GBP9.4 million) for the redevelopment of
Bleichenhof. As the Group is in compliance with all the terms and conditions of its loans as at the date of signing these
financial statements, there are no further restrictions, and any surplus will flow to the Group.
23. Accounts payable and accruals
31 March 31 March
2018 2017
GBP'000 GBP'000
Accruals 4,745 2,885
Deferred income 4,883 4,930
Other payables 6,565 6,525
Liabilities directly associated with assets classified as held for sale adjustment
(see note 20) (1,571) (1,074)
14,622 13,266
24. Borrowings
31 March 31 March
2018 2017
GBP'000 GBP'000
Opening balance 229,051 290,434
Loan repayments (60,808) (4,143)
New loans 89,703 -
Amortisation of loans (5,751) (3,536)
Capitalised borrowing costs (505) (161)
Amortisation of transaction fees 401 392
Foreign exchange movement in foreign operations (1,152) 16,848
Adjustment for liabilities directly associated with assets classified as Held for Sale
adjustment (see note 20) 8,558 (70,783)
Total borrowings 259,497 229,051
Amount due for settlement within 12 months 65,025 83,787
Amount due for settlement between one to three years 76,258 79,265
Amount due for settlement between three to five years 180,439 136,782
Liabilities directly associated with assets classified as Held for Sale adjustment
(see note 20) (62,225) (70,783)
259,497 229,051
Non-current liabilities
Bank loans 256,697 216,047
Total non-current loans and borrowings 256,697 216,047
The maturity of non-current borrowings is as follows:
Amount due for settlement between one to three years 76,258 79,265
Amount due for settlement between three to five years 180,439 136,782
256,697 216,047
Current liabilities
Bank loans 65,025 83,787
Liabilities directly associated with assets classified as Held for Sale adjustment
(see note 20) (62,225) (70,783)
Total current loans and borrowings 2,800 13,004
Total loans and borrowings 259,497 229,051
24. Borrowings continued
The facilities are secured by legal charges over the properties to which they correspond. There is no cross-collaterisation
of the facilities. The terms and conditions of outstanding loans are as follows:
Nominal value Carrying value*
Loan 31 March 31 March 31 March 31 March
interest Maturity 2018 2017 2018 2017
Entity Note Amortising rate Currency date GBP'000 GBP'000 GBP'000 GBP'000
United Kingdom
Laxton Properties
Limited No LIBOR 1.4% GBP 8/05/2020 27,540 27,540 27,410 27,348
Normanton
Properties Limited No LIBOR 1.4% GBP 25/03/2019 - 37,050 - 36,958
Davemount
Properties Limited No LIBOR 2.25% GBP 26/05/2021 4,000 4,000 3,975 3,967
LPE Limited 1 Yes LIBOR 2.5% GBP 31/03/2020 34,708 30,000 34,317 29,620
GGP1 Limited No LIBOR 2.25% GBP 26/05/2021 5,175 8,360 5,099 8,260
Industrials UK 2 No LIBOR 2.25% GBP 2/06/2022 77,984 - 77,808 -
Switzerland
Algy Properties
S.a.r.l. 3 Yes LIBOR 2.47% CHF 31/03/2019 2,310 2,590 2,310 2,590
Bruce Properties
S.a.r.l. 3 No LIBOR 1.35% CHF 29/03/2019 3,557 3,804 3,557 3,804
David Properties
S.a.r.l. 3 Yes LIBOR 1.4% CHF 31/03/2018 - 6,181 - 6,181
Kantone Holdings
Limited 3 Yes LIBOR 1.15% CHF Note 1 26,296 39,205 26,296 39,205
Polo Property GmbH 3 Yes LIBOR 1.15% CHF Note 1 17,019 19,002 17,020 19,003
Germany
Century BV Yes Euribor 1.55% EUR 31/12/2022 7,290 8,254 7,205 8,238
Century 2 BV Yes Euribor 1.55% EUR 31/12/2022 3,791 3,573 3,742 3,567
Century 2 BV Yes Euribor 1.65% EUR 31/12/2022 - 748 - 746
Stenham Beryl
Limited Yes Euribor 1.85% EUR 30/04/2018 4,565 4,599 4,565 4,599
Stenham Crystal
Limited Yes Euribor 1.85% EUR 30/04/2018 3,812 3,841 3,812 3,841
Stenham Jasper
Limited Yes Euribor 1.85% EUR 30/04/2018 4,665 4,700 4,665 4,700
Isabel Properties BV No Euribor 2.32% EUR 30/12/2021 7,915 7,699 7,915 7,699
Bleichenhof GmbH &
Co. KG No 1.58% EUR 28/02/2022 74,694 72,655 74,694 72,655
Stenprop Hermann
Ltd No Euribor 1.13% EUR 30/06/2020 8,293 8,066 8,274 8,042
Stenprop Victoria Ltd No Euribor 1.28% EUR 31/08/2020 9,058 8,811 9,058 8,811
322,672 300,678 321,722 299,834
* The difference between the nominal and the carrying value represents unamortised facility costs.
1. On 2 June 2017, LPE Limited entered into an amendment agreement with RBSI to extend their facility by a further
GBP6.1 million. Per the amended facility agreement the full loan is repayable in March 2020. The margin on the debt
increased by 0.5% to 2.5% for the period until the extended debt is repaid. The all-in rate on this facility is 3.85%
(including a swap of 1.35%). Finance costs associated with this transaction amounted to GBP189,000.
2. On 2 June 2017, an amount of GBP69.1 million was lent to Industrials UK by RBS for a period of five years, until
2 June 2022. GBP60.375 million of the loan is covered by means of a swap at an all-in interest rate of 3.2% per annum
(the balance incurs interest at LIBOR a margin of 2.25% per annum). On 16 January 2018, this loan facility was
increased to GBP77,984,375 with the margin and the amount covered by the swap remaining unchanged.
3. All of the bank loans in respect of the Swiss properties were due for expiry on 31 March 2017. Given that all of the
properties in the Swiss portfolio were held for sale at this date, the loans were re-financed on a short-term basis as follows:
- Algy Properties S.a.r.l extended its loan with Credit Suisse in the sum of CHF3,237,500, for a period of one
year from 1 April 2017 at a loan interest rate of LIBOR 1.5 % and no swap (previous facility: LIBOR 1.3%
0.91% swap). The loan was extended for a further period of one year from 1 April 2018 at an interest rate of
LIBOR 2.47% with no swap.
- Bruce Properties S.a.r.l extended its loan with Credit Suisse in the sum of CHF4,755,000, for a period of one
year from 1 April 2017 at a loan interest rate of LIBOR 1.35 % and no swap (previous facility: LIBOR 1.25%
1.90% swap). The loan was extended for a further period of one year from 30 March 2018 at an interest rate of
LIBOR 1.35% with no swap.
- David Properties S.a.r.l sold its sole property, Cham, in October 2017 and repaid its loan at that time. In the
prior year it had extended its loan with Credit Suisse in the sum of CHF7,725,000, for a period of one year from
1 April 2017 at a loan interest rate of LIBOR 1.4 % and no swap.
- Kantone Holdings Limited entered into a rolling credit facility with its existing lender, Union Bank of Switzerland
('UBS'). The credit facility was for CHF 49,000,000 at a loan interest rate of LIBOR 1.05 % and no swap
(previous facility: LIBOR 1.05% 0.7% swap). As each property within the Kantone portfolio is sold, partial
repayments of the loan are to be made. In December 2017, a supplemental agreement was entered into whereby
the revised loan amount was amended to CHF 36,000,000 at an interest rate of LIBOR 1.15% with no swap.
Amortisation was reduced from CHF 500,000 per quarter to CHF 425,000 per quarter.
- Polo Properties GmbH entered into a rolling credit facility with its existing lender, Union Bank of Switzerland
('UBS'). The credit facility was for CHF 23,750,000 at a loan interest rate of LIBOR 1.15 % and no swap.
25. Other loans
31 March 31 March
2018 2017
GBP'000 GBP'000
Loans 34,080 -
Loan repayments including foreign exchange movement (34,591) -
Foreign exchange movement 518 -
Interest 1,503 -
Interest repayments including foreign exchange movement (1,510) -
- -
On 2 June 2017 and 23 June 2017 the Group secured a bridging loan of EUR31 million from Bellerive SPV5 Limited, which
attracted interest at 7% per annum. The loan was subject to a Group loan-to-value covenant of 65% and was repaid in
full on 17 January 2018. A further 12 month facility of EUR8 million was secured at an interest rate of 7% per annum from
Peregrine Direct Limited. Drawdown was on 23 June 2017 and the loan was repaid in full on 24 January 2018.
During the period a GBP50 million revolving credit facility ('RCF') was agreed with Investec Bank plc at an all-in interest
rate of 7% 1 month LIBOR. It is intended that drawdowns under the Investec RCF will be short term in nature to fund
new acquisitions and will be repaid as soon as possible from a combination of disposal proceeds and longer term debt
finance. As at year end, the facility was undrawn.
26. Derivative financial instruments
In accordance with the terms of the borrowing arrangements and Group policy, the Group has entered into interest
rate swap agreement which are entered into by the borrowing entities to convert the borrowings from floating to fixed
interest rates and are used to manage the interest rate profile of financial liabilities and eliminate future exposure to
interest rate fluctuations. It is the Group's policy that no economic trading in derivatives is undertaken by the Group.
In the current year, the Group recognised a total net profit in fair value of financial instruments from continuing and
discontinuing operations of GBP2,453,000 (2017: GBP489,000 loss) and GBPnil (2017: GBP1,245,000) respectively.
The following table sets out the interest rate swap agreements at 31 March 2017 and 31 March 2018.
Notional Fair Notional Fair
value value value value
31 March 31 March 31 March 31 March
Effective Maturity Swap 2018 2018 2017 2017
Entity date Date rate % GBP'000 GBP'000 GBP'000 GBP'000
UK
Laxton Properties Limited 14/04/2014 8/05/2020 1.62 27,540 (361) 27,539 (945)
Normanton Properties Limited 1/04/2014 25/03/2019 1.50 - - 37,049 (825)
LPE Limited 26/03/2015 31/03/2020 1.35 30,000 (207) 29,999 (746)
Industrials UK LP 2/06/2017 2/06/2022 0.95 60,375 691 - -
Germany
Century BV 31/12/2017 30/12/2022 2.50 7,156 14 8,254 (81)
Century 2 BV 31/12/2017 30/12/2022 2.50 3,924 7 3,573 (38)
Century 2 BV 1/04/2014 29/12/2017 1.85 - - 748 -
Stenham Beryl Limited 1/04/2014 30/04/2018 0.83 4,565 (5) 4,568 (56)
Stenham Crystal Limited 1/04/2014 30/04/2018 0.83 3,812 (4) 3,814 (46)
Stenham Jasper Limited 1/04/2014 30/04/2018 0.83 4,665 (5) 4,667 (57)
Isabel Properties BV 30/01/2015 30/12/2021 0.48 7,915 (131) 7,699 (178)
Adjustment for liabilites directly associated with assets classified
as Held for Sale adjustment (see note 20) 14 -
Total swaps 149,952 13 127,910 (2,972)
Liabilities maturing within 12 months - (119)
Assets maturing after 12 months 712 -
Liabilities maturing after 12 months (699) (2,853)
Derivative financial instruments - on balance sheet 13 (2,972)
Swaps included in investments in associates and joint ventures
Regent Arcade House Holdings Ltd 20/05/2015 20/05/2020 1.57 37,500 (453) 37,499 (1,236)
Elysion Braunschweig S.a.r.l 1/04/2014 29/03/2018 2.43 - - 5,101 (98)
Elysion Dessau S.a.r.l 1/04/2014 29/03/2018 2.43 - - 4,929 (94)
Elysion Kappeln S.a.r.l 1/04/2014 31/12/2018 2.80 5,346 (82) 5,348 (186)
Elysion Winzlar S.a.r.l 1/04/2014 31/12/2018 2.80 3,564 (55) 3,565 (124)
Derivative financial instruments - associates and joint ventures 46,410 (590) 56,442 (1,738)
27. Aqcuisitions of subsidiaries (business combinations and asset aqcuisition)
Business combinations
On 30 June 2017, the Group acquired 100% of the share capital of C2 Capital Limited which is the management platform
that, amongst other mandates, provides asset management and portfolio services to Industrials LP, the partnership
which owns 25 multi-let industrial estates across the UK. Stenprop acquired the shares in C2 Capital Limited for
GBP3.5 million, which was settled by the issue of 3,270,500 Stenprop shares valued at EUR1.22 per share.
Details of the assets and liabilities acquired and goodwill arising are as follows:
Attributed
fair value
GBP'000
Investment in joint venture (1)
Cash and cash equivalents 89
Trade and other receivables 52
Trade and other payables (138)
Fair value of acquired interest in net assets of subsidiary 2
Goodwill 3,500
Total purchase consideration 3,502
Goodwill of GBP3.5 million arising as a result of the acquisition of C2 Capital Limited has subsequently been impaired in
full during the period.
C2 Capital Limited's revenue for the period from acquistion, being 30 June 2017 to 31 March 2018 was GBP0.2 million
with a net loss of GBP0.3 million. C2 Capital Limited's revenue for the period from 1 April 2017 to 31 March 2018 was
GBP0.6 million with a net loss of GBP0.6 million.
Asset acquisitions
On 30 June 2017, the Group acquired 100% of the interests in Industrials UK LP which owns a portfolio of multi-let
industrial properties (the 'MLI Portfolio'). The MLI Portfolio is made up of 25 separate multi-let industrial estates
situated in or near densely populated nodes across the United Kingdom. The acquisition was effected through the
acquisition of a Jersey unit trust (Industrials Investment Unit Trust) and a general partner (Industrials UK GP LLC) who
together held 100% of the limited partnership.
The total purchase consideration for the acquisition was calculated with reference to the net asset value of the three
entities as at 30 June 2017 and which valued the properties at GBP127 million. The acquisition was financed by a loan of
GBP69 million, proceeds from the sale of Prejan Enterprises Limited (Nova Eventis Shopping Centre) and bridging loan
facilities.
Industrials Total
Investment Industrials Industrials attributed
Unit Trust UK GP LLC UK LP fair value
GBP'000 GBP'000 GBP'000 GBP'000
Investment property - - 127,000 127,000
Cash and cash equivalents 23 6 2,954 2,983
Trade and other receivables 52 - 1,208 1,260
Trade and other payables (14) (4) (4,234) (4,252)
External debt - - (69,133) (69,133)
Total purchase consideration settled in cash 61 2 57,795 57,858
Costs incurred in the acquisition of the MLI Portfolio amounted to GBP1.65 million. These acquisition costs were capitalised
to the cost of the asset. At 31 March 2018, the investment was stated at fair value, and any movement was recognised
as fair value movement in the Statement of Comprehensive Income.
28. Acquisition of subsidiaries and joint ventures
During the year the Group incorporated the following companies:
Net assets
Incorporation Cost acquired
Name Jurisdiction date GBP'000 GBP'000
Acquisition of Industrials UK LP (refer to note 27):
Stenprop Industrials 1 Limited BVI 11/05/2017 - -
Stenprop Industrials 2 Limited BVI 11/05/2017 - -
Acquisition of industrial properties -
Stenprop Industrials 3 Limited BVI 17/10/2017 - -
Stenprop Industrials 4 Limited BVI 16/01/2018 - -
No companies were incorporated in the prior year.
29. Disposal of subsidiaries
Normanton
On 11 January 2018, the Group disposed of its 100% shareholding in Normanton Properties Limited for a consideration
of GBP42,607,525. Normanton Properties Limited owned the property Pilgrim Street, London. The impact of the disposal
on the Group is shown below:
31 March
2018
GBP'000
Carrying value of net assets at disposal date
Investment property 79,900
Trade and other receivables 205
Cash and cash equivalents 1,831
Borrowings (37,608)
Trade and other payables (1,694)
Net assets disposed 42,634
Cash consideration 42,608
Loss on disposal of subsidiaries (26)
There were no disposals of subsidiaries made in the prior year.
30. Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during
the current and prior reporting period.
31 March 31 March
2018 2017
GBP'000 GBP'000
Opening balance (5,794) (7,670)
Deferred tax recognised on investment properties (3,675) (2,834)
Deferred tax recognised on revaluation of financial liabilities (53) (250)
Deferred tax on tax losses 590 615
Adjustment for liabilities directly associated with assets classified as held for sale
adjustment (see note 20) (447) 4,345
Closing balance (9,379) (5,794)
Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. The following is
the analysis of the deferred tax balances (after offset) for financial reporting purposes:
31 March 31 March
2018 2017
GBP'000 GBP'000
Deferred tax liabilities (18,040) (14,361)
Deferred tax assets 4,764 4,223
Adjustment for liabilities directly associated with assets classified as held for sale
adjustment (see note 20) 3,897 4,344
Closing balance (9,379) (5,794)
Deferred tax opening balance 10,139 7,670
Exchange movements (123) 754
Deferred tax liability closing balance (13,276) (10,138)
Movement in deferred tax (3,260) (1,714)
31. Financial Risk Management (i)
The Group is exposed to a variety of financial risks including market risk, credit risk and liquidity risk. The overall risk
management strategy seeks to minimise the potential adverse effects on the Group's financial performance. Certain
risk exposures are hedged via the use of financial derivatives.
This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies
and processes for measuring and managing these risks, and the Group's management of capital. Further quantitative
disclosures are included throughout these audited financial statements where relevant. The Group's Board has overall
responsibility for the establishment and oversight of the Group's risk management framework.
During the reporting period, the Risk Committee, established by the Board, assumed responsibility for developing
and monitoring the Group's risk management policies. With effect from 1 May 2018, the Risk Committee was replaced
with a combined Audit and Risk Committee. The committee participates in management's process of formulating and
implementing the risk management plan and it reports on the plan adopted by management to the Board.
The objective of risk management is to identify, assess, manage and monitor the risks to which the business is exposed,
including, but not limited to, information technology risk. The Board is responsible for ensuring the adoption of
appropriate risk management policies by management. The Group's risk management policies are established to
identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and
adherence to limits. Risk management policies are reviewed regularly to reflect changes in market conditions and
the Group's activities. The Board will also ensure that there are processes in place between itself and management
enabling complete, timely, relevant, accurate and accessible risk disclosure to shareholders.
To enable the Audit and Risk Committee to meet its responsibilities, terms of reference were adopted by the Board.
These include appropriate standards, the implementation of systems of internal control and an effective risk-based
internal audit which comprises policies, procedures, systems and information to assist in:
- safeguarding assets and reducing the risk of loss, error, fraud and other irregularities;
- ensuring the accuracy and completeness of accounting records and reporting;
- preparing timely, reliable financial statements and information in compliance with relevant legislation and
generally accepted accounting policies and practices; and
- increasing the probability of anticipating unpredictable risk.
The committee oversees how management monitor compliance with the Group's risk management policies and
procedures and reviews the adequacy of the risk management framework in relation to risks faced by the Group.
Credit risk
The Group's principal financial assets are cash and cash equivalents as well as trade and other receivables. The credit
risk arising from deposits with banks is managed through a policy of utilising only independently rated banks with
acceptable credit ratings.
The credit quality of cash and cash equivalents can be assessed by reference to external credit ratings of the
counterparty where the account or deposit is placed. A summary of the European financial institutions credit ratings
for the six banks in which 80% of the Group's cash is held, are as follows:
31 March 31 March
2018 2017
- ABN AMRO Bank NV A A
- Barclays Private Clients International Limited A A-
- Berliner Sparkasse A AA-
- Deustche Bank AG`` A- A-
- HSBC Bank plc AA- AA-
- Royal Bank of Scotland Group plc BBB BBB-
- Santander UK plc A A
- UBS AG A A
The directors are satisfied as to the creditworthiness of the banks where the remaining cash is held.
At the time of acquisition of a property, and from time to time thereafter, the Company reviews the quality of the
contracted tenants to ensure that the tenants meet acceptable covenants. Trade receivables are presented in the
statement of financial position net of allowances for doubtful receivables. An allowance for impairment is made where
there is an indefinable loss event, which based on previous experience, may give risk to a non recovery of a receivable.
The carrying amount of financial assets represents the maximum credit exposure at the reporting date.
At 31 March 2018, trade and other receivables and cash and cash equivalents amounts to GBP32,757,000 (March 2017:
GBP29,271,000) as shown in the statement of financial position.
31. Financial Risk Management (ii)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash resources, the availability of funding through
appropriate and adequate credit lines and managing the ability of tenants to settle within lease obligations. Through the
forecasting and budgeting of cash requirements the Group ensures that adequate committed resources are available.
By its nature, the market for investment property is not immediately liquid therefore, the Group's ability to vary its
portfolio in a timely fashion and to receive a fair price in response to changes in economic and other conditions may be
limited. Furthermore, where the Group acquires investment properties for which there is not a readily available market,
the Group's ability to deal in any such investment or obtain reliable information about the value of such investment or
risks to which such property investment is exposed may be limited. The Group's short term liquidity risk is secured by
the existence of cash balances, through the fact that rental income exceeds the Group's cost structures and through
ensuring that facilities are managed within debt covenants.
The following table details the contractual maturity date of the Group's financial liabilities. The table has been compiled
based on the undiscounted contractual maturities of the financial liabilities, including interest that will accrue to those
liabilities, except where the Group is entitled and intends to repay the liability before its maturity. The discount column
represents the possible future cash flows included in the maturity analysis, such as future interest or potential payments
that have not been included in the carrying amount of the financial liability. The table also includes a reconciliation to
the carrying value in the statement of financial position.
Less than One to Three to
one three twelve One to five Over five
month months months years years Discount Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Interest-bearing loans 56,358 - 8,667 76,261 180,436 - 321,722
Loan interest 825 1,912 5,509 15,684 - (23,076) 854
Financial liabilities 14 - - 699 - - 713
Deferred tax - - 3,898 9,379 - - 13,277
Other payables (incl. Tax) - 2,177 7,180 - - - 9,357
Accruals - - 3,891 - - - 3,891
Deferred income - 4,883 - - - - 4,883
Liabilities directly
associated with assets
classified as held for sale (56,405) (286) (11,016) - - - (67,707)
As at 31 March 2018 792 8,686 18,129 102,023 180,436 (23,076) 286,990
Less than One to Three to
one three twelve One to five Over five
month months months years years Discount Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Interest-bearing loans - - 83,783 216,051 - - 299,834
Loan interest 492 1,668 4,798 12,079 - (18,507) 530
Financial liabilities - - 119 2,853 - - 2,972
Deferred tax - - 4,344 5,795 - - 10,139
Other payables (incl. Tax) - 3,614 5,204 - - - 8,818
Accruals - - 2,355 - - - 2,355
Deferred income - 4,930 - - - - 4,930
Liabilities directly
associated with assets
classified as held for sale - (659) (76,344) - - 802 (76,201)
As at 31 March 2017 492 9,553 24,259 236,778 - (17,705) 253,377
31. Financial Risk Management (iii)
Fair value of financial instruments
The following table summarises the Group's financial assets and liabilities into categories required by IFRS 7 Financial
instruments disclosures. The directors consider that the carrying amounts of financial assets and financial liabilities
recorded at amortised cost in the financial statements approximate their fair values.
Held at fair Total carrying
value through Held at amount
profit and amortised 31 March
loss cost 2018
GBP'000 GBP'000 GBP'000
Financial assets
Cash and cash equivalents - 24,549 24,549
Derivative financial instruments 712 - 712
Accounts receivable - 7,089 7,089
Other debtors - 15,372 15,372
31 March 2018 712 47,010 47,722
Financial liabilities
Bank loans - 259,497 259,497
Derivative financial instruments 699 - 699
Accounts payable and accruals - 17,414 17,414
31 March 2018 699 276,911 277,610
Held at fair Total carrying
value through Held at amount
profit and amortised 31 March
loss cost 2017
GBP'000 GBP'000 GBP'000
Financial assets
Cash and cash equivalents - 25,202 25,202
Accounts receivable - 4,149 4,149
Other debtors - 15,372 15,372
31 March 2017 - 44,723 44,723
Financial liabilities
Bank loans - 229,051 229,051
Derivative financial instruments 2,972 - 2,972
Accounts payable and accruals - 15,560 15,560
31 March 2017 2,972 244,611 247,583
31. Financial Risk Management (iv)
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises three types of risk: foreign currency risk, interest rate risk and price risk. The
objective of market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising returns to shareholders.
Investment in property is subject to varying degrees of risk. The main factors which affect the value of the investment
in property include:
- changes in the general economic climate;
- local conditions in respective markets, such as oversupply, or a reduction in demand, for commercial space in a
specific area;
- competition from other available properties; and
- government regulations, including planning, environmental and tax laws.
While a large number of these factors are outside the control of the management, market and property specific factors
relevant to maintain a sustainable income stream within the Group's yield parameters are considered as part of the
initial due diligence. Properties and tenant leases are actively managed.
Foreign currency risk
The Group's functional currency is Sterling. Foreign currency risk is the risk that the fair value or future cash flows of
a financial instrument will fluctuate because of changes in foreign currency or exchange rates. At the reporting date,
the following table summarises the Group's exposure to foreign currency risk in respect of assets and liabilities held in
EUR (Germany) and CHF (Switzerland).
31 March 31 March
2018 2017
GBP'000 GBP'000
Assets
CHF 94,875 132,832
EUR 292,426 274,436
Liabilities
CHF 53,644 76,201
EUR 138,241 134,263
Foreign currency sensitivity analysis
The sensitivity analysis measures the impact on the Group's exposure in Sterling (based on a change in the reporting
date spot rate) and the impact on the Group's Sterling profitability, given a simultaneous change in the foreign
currencies to which the Group is exposed at the reporting date.
A 10% strengthening in the Sterling exchange rate against the following currencies at year end would have decreased
equity and profits by the amounts shown below. The 10% threshold was selected as a reasonable, worst-case scenario
and is considered a prudent threshold. This analysis assumes that all other variables remain constant. For a 10%
weakening of Sterling, there would be an equal but opposite impact on the profit and equity and the balance would
be positive.
Equity Profit or loss
GBP'000 GBP'000
CHF impact (4,123) 248
EUR impact (15,418) (3,371)
(19,542) (3,123)
The following exchange rates against GBP were applied during the year:
Effective
average rate
for twelve
months to Period end
31 March 31 March
2018 2018
CHF 0.7599 0.7481
EUR 0.8859 0.8794
Interest rate risk
The Group's interest rate risk is associated with cash and cash equivalents, on the one hand, and interest-bearing
borrowings, on the other. If the interest is variable, it presents the Group with a cash flow interest rate risk. Interest
rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. As stated in note 24, borrowings from credit institutions are protected against movements in
interest rates. The Company uses interest rate swaps to manage its interest rate exposure.
31. Financial Risk Management (v)
Fair value hierarchy
The table below analyses the Group's financial instruments carried at fair value, by valuation method. The different
levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Total
financial
instruments
recognised at Designated at fair value
fair value Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000 GBP'000
31 March 2018
Assets
Derivative financial instruments 712 - 712 -
Total assets 712 - 712 -
Liabilities
Derivative financial instruments 699 - 699 -
Total liabilities 699 - 699 -
31 March 2017
Liabilities
Derivative financial liabilities 2,972 - 2,972 -
Total liabilities 2,972 - 2,972 -
Details of changes in valuation techniques
There have been no significant changes in valuation techniques during the period under review.
Significant transfers between Level, 1 Level 2 and Level 3
There have been no significant transfers during the period under review.
Unobservable inputs
Unobservable inputs for Level 3 investment properties are disclosed in note 16.
Capital risk management
The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 24, cash and cash
equivalents and equity attributable to ordinary shareholders of the Company, comprising issued capital, reserves and
retained earnings as disclosed in the statement of changes in equity. Stenprop's average loan-to-value ratio ('LTV')
ratio at 31 March 2018 was 49.2% (March 2017: 51.6%), including joint ventures and associates and the Group is not
subject to any external capital requirements. The Group strategy is to maintain a debt to equity ratio and LTV to ensure
that property performance is translated into an enhanced return for shareholders while at the same time ensuring that
it will be able to continue as a going concern through changing market conditions. The directors are of the opinion
that a 50% LTV in respect of secured external borrowings is an appropriate target for the Group, given the current
market conditions.
32. Related party transactions
Parties are considered related if one party has control, joint control or significant influence over the other party in
making financial and operating decisions. Transactions with related parties are made on terms equivalent to those that
prevail in an arm's length transaction.
Other than those further referred to below, there were no other related party transactions during the period ended
31 March 2018.
Until his resignation on 2 August 2017, P Arenson a director of the Company, was also a director of Stenham Limited
which at his resignation had an indirect beneficial interest of 4.76% in Stenprop Limited through its wholly-owned
subsidiary, Stenham Group Limited (March 2017: 4.85%).
At 31 March 2018, P Arenson held no interest in the share capital of Stenham Limited (March 2017: 1.13%). His interest
in Stenprop Limited is seperately disclosed in note 8.
M Yachad was a non-executive director of the Company until his resignation on 28 February 2018. During the period
he was also a non-executive director of Sandown Capital Limited ('SCL'), owned by Sandown Capital International
Limited ('SCIL'). He resigned from the board of SCL on 29 November 2017 at which time SCIL had a direct beneficial
interest of 6.93% in the shares of the Company (March 2017: 5.98% direct and indirect beneficial interest via Peregrine
Holdings Limited on whose board M Yachad sat).
33. Minimum lease payments
The Group earns rental income by leasing its investment properties to tenants under non-cancellable operating leases.
At the balance sheet date the Group had contracted with tenants for the following future minimum lease payments
on its investment properties:
31 March 31 March
2018 2017
GBP'000 GBP'000
Continuing operations
Within one year 30,006 32,536
Between one and two years 26,849 30,531
Between two and five years 57,087 76,284
After five years 42,336 63,304
156,278 202,656
Discontinuing operations
Within one year 7,086 9,210
Between one and two years 6,516 8,282
Between two and five years 17,779 20,792
After five years 27,621 30,030
59,002 68,314
34. Contingent liabilities and commitments
As at 31 March 2018. the Group was contractually committed to CHF2.45 million (GBP1.83 million). This reflects a
contribution towards capital expenditure in respect of an investment property in Switzerland.
35. Events after the reporting period
(i) Disposal of Argyll Street
On 4 June 2018, Stenprop completed the sale of its joint venture interest in Argyll Street in the West End of
London by way of a sale of shares. The sale valued the property at GBP83.4 million and generated net proceeds of
GBP22.8 million.
(ii) MLI Acquisitions
On 24 April 2018, Stenprop completed the acquisition of a fully-let industrial estate in Shrewsbury for
GBP2.9 million. The estate comprises 30 units totalling 44,611 sq ft of industrial space.
On 1 June 2018, Stenprop completed the acquisition of a multi-let industrial estate in Kirkstall, Leeds for
GBP8.1 million. The estate comprises 14 units totalling 111,081 sq ft of industrial space.
(iii) Refinancing
Subsequent to the year end, the EUR14.8 million loan with DGHyp was refinanced. The loan, relating to the Aldi
portfolio, was extended until 30 April 2020. Loan interest is calculated at 1.85% p.a. over the three month Euribor
and the terms of the facility allow the borrower to benefit from negative interest rates. At the date of refinance
this reduced the all-in interest rate for the first three month interest period to 1.52%.
In May 2018, an amount of GBP8.4 million was drawn down from The Royal Bank of Scotland plc, secured against
the MLI properties located in Shrewsbury, Leeds and Huddersfield, with a term of five years and an interest rate
equal to three month LIBOR plus a margin of 2.25 per cent per annum.
(iv) REIT conversion and changes to the board of directors
The Company converted to a UK REIT on 1 May 2018. Following the conversion there have been a number of
changes to the board of directors. With effect from the date of conversion, the independent non-executive
chairman, Stephen Ball, and executive director, Neil Marais resigned from the board of directors of Stenprop.
With effect from the same date, Julian Carey was appointed as executive group property director, Richard Grant
was appointed as independent non-executive chairman and Philip Holland was appointed as independent non-
executive director and chairman of the audit committee of Stenprop.
(v) Declaration of dividend
On 6 June 2018, the Board declared a final dividend of 4.0 pence per share. The final dividend will be payable in
cash or as a scrip dividend by way of an issue of new Stenprop shares. An announcement containing details of
the dividend and the timetable will be made in due course.
(vi) Share incentive awards
On 6 June 2018, the Board, on the recommendation of the remuneration committee, approved share-based
awards in relation to the Long Term Incentive Plan and the Deferred Share Bonus Plan. Details of awards made
to executive directors can be seen in Note 8.
Property summary
(unaudited)
Annual W.A.
Asset Asset Gross gross WAULT rental
value value lettable Occupancy rental (by WAULT (per
GBPm as % of area (by area) income revenue) (by area) sq m)
portfolio sq m % GBPm Years Years GBP/sq m
UK Office 153.0 20.9% 28,289 97.2% 9.4 6.6 6.2 333
MLI 147.8 20.1% 215,299 84.7% 10.4 3.1 3.1 48
Retail 6.6 0.9% 7,678 100.0% 0.9 2.4 2.4 119
Other Industrial 6.8 0.9% 14,313 100.0% 0.6 2.4 2.4 40
Total 314.2 42.8% 265,579 87.3% 21.2 4.6 3.4 80
Germany Retail 103.2 14.1% 56,543 96.9% 6.0 7.1 7.2 107
Office 58.4 8.0% 15,040 75.6% 2.2 4.7 5.1 145
Nursing Homes 34.6 4.7% 19,330 100.0% 2.4 11.4 11.1 124
Other 59.7 8.1% 1,090 75.6% 2.2 4.7 5.1 2,043
Total 255.9 34.9% 92,003 93.8% 12.8 7.1 7.7 140
Held for Office 71.4 9.7% 15,430 96.3% 4.0 3.1 3.4 257
sale Retail 70.0 9.5% 33,433 97.1% 4.6 6.4 7.5 136
Other 22.1 3.0% 8,659 99.1% 1.3 16.2 16.7 153
Total 163.5 22.3% 57,522 97.2% 9.8 6.4 7.8 171
Total Office 282.8 38.6% 58,759 91.4% 15.5 5.4 5.2 265
MLI 147.8 20.1% 215,299 84.7% 10.4 3.1 3.1 48
Retail 179.8 24.5% 97,654 97.2% 11.5 6.5 7.0 118
Other Industrial 6.8 0.9% 14,313 100.0% 0.6 2.4 2.4 40
Nursing Homes 34.6 4.7% 19,330 100.0% 2.4 11.4 11.1 124
Other 81.8 11.2% 9,749 96.5% 3.6 9.0 15.4 364
Total 733.6 100.0% 415,105 90.1% 43.9 5.7 4.9 106
Rental Escalation profile
Stenprop operates in countries with low inflation rates. The annual inflation rate during the 2017 calendar year was
2.9% for the UK, 1.6% for Germany and nil for Switzerland. Rental escalation clauses vary across the portfolio. In the UK,
a majority of leases are subject to periodic upwards-only rent reviews, at different stages of the tenancy. Leases in the
German and Swiss properties are generally adjusted for CPI with a hurdle rate before an increase can be applied, with
the exception of the Aldi portfolio, which sees increases of 1.66% annually. Rental escalation clauses within leases, as
in previous years, currently have a minor impact on rents. Rental growth is rather driven by lease events such as new
lettings and regears when passing rent realigns with estimated rental value.
Portfolio analysis
(unaudited)
Portfolio Market Annualised Net Initial
by value Gross Yield WAULT
market 31 March Rental 31 March (by Voids Rental
Property/ value 2018 Area Income 2018 rental) (by area) per sq m
Portfolio (%) (GBPm) Properties (sq m) (GBPm) (%) (years) (%) (GBP/sq m)
UK non-MLI 22.7% 166.4 10 50,280 10.9 5.76% 6.0 1.6% 217
UK MLI 20.1% 147.8 30 215,299 10.4 6.50% 3.1 15.3% 48
Germany 30.2% 221.3 9 72,674 10.4 4.16% 6.1 7.8% 144
Held for sale 16.6% 121.8 22 54,455 7.8 4.90% 7.6 3.0% 143
Total 89.6% 657.3 71 392,708 39.5 5.23% 5.6 10.5% 101
Share of Joint
Ventures and
Associates
(JV&A) 4.7% 34.6 4 19,330 2.4 5.95% 11.4 0.0% 124
Share of JV&A
- held for sale 5.7% 41.7 1 3,067 2.1 4.61% 1.8 0.0% 671
Total 100.0% 733.6 76 415,105 43.9 5.23% 5.7 9.9% 106
Note: The German portfolio includes the minority interest in Bleichenhof
Tenant profile
Stenprop's tenants are classified into three groups as follows:
Tenant profile by annual rent Tenant profile by lettable area
A 50% A 39%
B 20% B 19%
C 30% C 42%
Type A: Large tenants with a national presence or multi-national tenants, government and major franchisees.
Type B: Nationally recognised tenants, listed tenants, franchisees, and medium to large professional firms.
Type C: 477 other tenants.
* includes Stenprop's share of joint ventures and associates
Consolidated portfolio
(unaudited)
Net
Market Annualised Initial Rental
value Gross Yield WAULT Voids per
Ownership 31 March Rental 31 March (by (by sq m
Property/ interest 2018 Area Income 2018 rental) area) (GBP/sq
Company Portfolio % (GBPm) Properties (sq m) (GBPm) (%) (years) (%) m)
UK MLI
Stenprop
Industrials Industrials 100.0% 147.8 30 215,299 10.4 6.50% 3.1 15.3% 48
UK non-MLI
Davemount
Properties
(BVI) Davemount 100.00% 6.6 3 7,678 0.9 11.38% 2.4 0.0% 119
Laxton
Properties
Ltd (BVI) Euston 100.00% 79.6 1 10,204 4.0 3.94% 4.5 7.4% 392
GGP1
Limited
(Guernsey) GGP1 100.00% 20.4 5 21,835 1.7 7.71% 3.5 0.0% 76
LPE Ltd
(Guernsey) Trafalgar 100.00% 59.9 1 10,564 4.3 6.90% 9.1 0.3% 410
Total UK
non-MLI 166.4 10 50,280 10.9 5.76% 6.0 1.6% 217
Germany
Anarosa
Holdings N.V
(Curacao) BikeMax 100.00% 24.4 5 18,007 1.7 6.33% 3.4 0.0% 92
KG
Bleichenhof
GmbH Bleichenhof 94.90% 130.8 1 19,320 4.9 3.33% 4.7 24.4% 253
Isabel
Properties
B.V Isabel 100.00% 19.3 1 13,365 1.2 5.37% 7.0 0.0% 87
Stenprop
Hermann Hermann 100.00% 20.8 1 8,272 1.3 5.23% 6.2 2.7% 155.18
Stenprop
Victoria Victoria 100.00% 26.1 1 13,710 1.5 4.57% 13.0 5.5% 107
Total
Germany 221.3 9 72,674 10.4 4.16% 6.1 7.8% 144
Assets Held for sale
(unaudited)
Net
Market Annualised Initial Rental
value Gross Yield WAULT per
Ownership 31 March Rental 31 March (by Voids sq m
Property/ interest 2018 Area Income 2018 rental) (by area) (GBP/
Company Portfolio % (GBPm) Properties (sq m) (GBPm) (%) (years) (%) sq m)
Germany
Stenham Aldi 100.0% 28.9 14 18,843 1.9 5.97% 8.9 0.0% 101
Gemstone
Ltd
Switzerland Switzerland
Credit Credit
Suisse Suisse
Bruce Chiasso 100.00% 6.5 1 4,183 0.4 4.07% 1.5 10.8% 107
Properties
S.a.r.l. (Lux)
Algy Sissach 100.00% 2.9 1 1,694 0.2 2.62% 3.2 52.0% 97
Properties
S.a.r.l. (Lux)
Total Credit Total Credit 9.3 2 5,877 0.6 3.63% 1.9 22.7% 104
Suisse Suisse
Polo Polo
Polo Property Altendorf 100.00% 19.8 1 8,228 1.2 5.35% 8.7 0.0% 147
GmbH
(Swiss)
Polo Property Arlesheim 100.00% 9.5 1 4,834 0.8 6.54% 5.5 0.0% 163
GmbH
(Swiss)
Total Polo Total Polo 29.3 2 13,062 2.0 5.74% 7.4 0.0% 153
Kantone Kantone
Kantone Baar 100.00% 15.3 1 3,995 1.1 4.77% 0.8 2.0% 279
Holdings Ltd
(Guernsey)
Kantone Lugano 100.00% 15.7 1 6,974 1.0 4.38% 19.5 0.0% 145
Holdings Ltd
(Guernsey)
Kantone Montreux 100.00% 18.9 1 4,198 0.9 3.70% 5.3 4.6% 218
Holdings Ltd
(Guernsey)
Kantone Vevey 100.00% 4.4 1 1,506 0.2 2.47% 2.1 0.9% 149
Holdings Ltd
(Guernsey)
Total Total 54.3 4 16,673 3.3 4.10% 7.9 1.7% 196
Kantone Kantone
Total Total 92.9 8 35,612 5.9 4.57% 7.1 4.6% 165
Switzerland Switzerland
Total held Total held 121.8 22 54,455 7.8 4.90% 7.6 3.0% 142.80
for sale for sale
Total Total 657.3 71 392,708 39.5 5.23% 5.6 10.5% 100.50
Wholly- Wholly-
Owned Owned
Portfolio Portfolio
Jointly controlled entities
(unaudited)
Net
Market Annualised Initial Rental
value Gross Yield WAULT Voids per
Ownership 31 March Rental 31 March per (by sq m
Property/ interest 2018 Area Income 2018 valuations area) (GBP/
Company Portfolio % (GBPm) Properties (sq m) (GBPm) (%) (by rental) (%) sq m)
Germany Germany
Elysion S.a.r.l. Carehomes 100.00% 34.6 4 19,330 2.4 5.95% 11.4 0.0% 124
Total Germany 34.6 4 19,330 2.4 5.95% 11.4 0.0% 124
Held for sale
UK UK
Stenprop Argyll 50.0% 83.4 1 6,134 4.1 4.61% 1.8 0.0% 671
Argyll
Limited
Total Jointly 118.0 5 25,463 6.5 5.00% 5.4 0.0% 256
Owned
Interests
(100%)
Total Jointly 76.3 5 22,397 4.5 5.22% 7.0 0.0% 199
Owned
Interests
(Stenprop
share)
Analysis of shareholders
(unaudited)
Number of Number of
Shareholder spread shareholdings % shares %
1 - 1,000 shares 445 16.63 168,950 0.06
1,001- 10,000 shares 1,001 37.41 4,095,985 1.40
10,001- 100,000 shares 780 29.15 30,601,230 10.49
100,001- 1,000,000 shares 403 15.06 112,164,042 38.45
1,000,001 shares and over 47 1.76 144,688,269 49.60
Totals 2,676 100.00 291,718,476 100.00
Number of Number of
Distribution of shareholders shareholdings % shares %
Banks/Brokers 59 2.20 42,845,626 14.69
Close Corporations 30 1.12 724,703 0.25
Control Account 2 0.07 254,592 0.09
Endowment Funds 15 0.56 1,245,881 0.43
Individuals 1,736 64.87 58,188,811 19.95
Insurance Companies 14 0.52 2,344,446 0.80
Investment Companies 5 0.19 20,964,632 7.19
Medical Scheme 1 0.04 1,604 0.00
Mutual Funds 81 3.03 28,559,196 9.79
Other Corporations 10 0.37 279,771 0.10
Private Companies 183 6.84 44,112,569 15.12
Public Companies 40 1.49 21,997,625 7.54
Retirement Funds 19 0.71 5,842,190 2.00
Treasury Stock 1 0.04 9,026,189 3.09
Trusts 480 17.94 55,330,641 18.97
Totals 2,676 100.00 291,718,476 100.00
Number of Number of
Public/Non-public Shareholders shareholdings % shares %
Non - Public Shareholders 13 0.49 27,598,781 9.46
Directors and Associates of the Company holdings 12 0.45 18,572,592 6.37
Treasury Stock 1 0.04 9,026,189 3.09
Public Shareholders 2,664 99.55 273,145,884 93.63
Totals 2,676 100.00 291,718,476 100.00
Major Shareholders
As at the financial year end there were 2,676 shareholders in the Company. As at 31 March 2018 Sandown Capital
Limited held a direct and indirect interest of 6.93% in the issued share capital of the Company. The Company does not
know of any other shareholder which has beneficial interest of greater than 5% of the Company's issued share capital
as at 31 March 2018.
Shareholder diary
Financial year end 31 March
Integrated Annual Report posted July
Annual general meeting September
Announcement of results
Interim November
Annual June
Dividends Declared Paid
Interim November January
Annual June July/August
Corporate information
STENPROP LIMITED
(Incorporated in Guernsey)
Registration number: 64865
BSX share code: STP.BH
JSE share code: STP
ISIN: GG00BFWMR296
Registered office of the
Company
Stenprop Limited
(Registration number 64845)
Kingsway House
Havilland Street
St Peter Port, GY1 2QE
Guernsey
Postal address of the
Company
180 Great Portland Street
London, W1W 5QZ
United Kingdom
Company secretary
Sarah Bellilchi
(Stenprop Head of Legal)
JSE sponsor
Java Capital Trustees and Sponsors
Proprietary Limited
(Registration number
2006/005780/07)
6A Sandown Valley Crescent
Sandown
Sandton, 2196
South Africa
(PO Box 522606, Saxonwold, 2132)
SA transfer secretaries
Computershare Investor Services
Proprietary Limited
(Registration number
2004/003647/07)
Rosebank Towers, 15 Biermann
Avenue,
Rosebank, Johannesburg, 2196,
South Africa
Correspondence address
PO Box 61051
Marshalltown, 2107
South Africa
Legal advisors
Bryan Cave Leighton Paisner LLP
Adelaide House
London Bridge
London, EC4R 9HA
United Kingdom
South African corporate
advisor
Java Capital Proprietary Limited
(Registration number
2012/089864/07)
6A Sandown Valley Crescent
Sandown
Sandton, 2196
South Africa
(PO Box 522606, Saxonwold, 2132)
BSX sponsor
Estera Securities (Bermuda) Limited
(Registration number 25105)
Canon's Court
22 Victoria Street
Hamilton, HM12, Bermuda
(Postal address the same as the
physical address above)
Guernsey registrars
Computershare Investor Services
(Guernsey) Limited
1st Floor, Tudor House
Le Bordage
St Peter Port
Guernsey
GY1 1DB
Correspondence address
2nd Floor, Queensway House
Hilgrove Street
St. Helier
Jersey
JE1 1ES
Channel Islands
Auditors
Deloitte LLP
Regency Court
Glategny Esplanade
St Peter Port
GY1 3HW
Guernsey
Channel Islands
