Movement in adjusted NAV
The year on year movement is illustrated in the table below:
| Movement in adjusted net asset value | Equity shareholders’ funds £m |
EPRA adjusted NAV per share |
|---|---|---|
| 1 April 2011 | 591.4 | 449.8 |
| Adjusted profit | 23.6 | 18.1 |
| Equity dividends paid | (12.2) | (9.3) |
| Revaluation movements (including share of BYLP) | (51.9) | (39.7) |
| Share buy back | (3.7) | 2.0 |
| Capital goods scheme adjustment (including share of BYLP) | 14.0 | 10.7 |
| Movement in purchaser’s cost adjustment | (2.0) | (1.5) |
| Other movements (eg share options) | 1.8 | (0.9) |
| 31 March 2012 | 561.0 | 429.2 |
Borrowings
We focus on improving our cash flows and we currently have healthy Group interest cover of 3.1 times (2011: 2.8 times) based on adjusted Group EBITDA against existing interest costs, allied to a relatively conservative debt structure secured principally against the freehold estate.
On 26 April 2012, we announced the completion of a £100 million 15 year fixed rate loan with Aviva Commercial Finance Limited. The loan is secured over a portfolio of 15 freehold self storage centres which were valued at £242.1 million at 29 February 2012 for the purposes of the drawdown. The annual fixed interest rate on the loan is 4.90%.
The loan amortises to £60 million over the course of the 15 years, consistent with the Group's medium term debt reduction strategy. The debt service is payable monthly based on fixed annual amounts. The loan outstanding on the fifth anniversary will be £89.8 million; £76.7 million outstanding on the tenth anniversary, with £60 million remaining at expiry in April 2027.
The new 15 year term loan has been deployed to repay and cancel £100 million of the Group's core bank debt facility, reducing it to £225 million, of which £190 million is currently drawn. At the same time as repaying the bank debt, we cancelled £100 million of interest rate derivatives at a cost of £9.2 million. In addition to the Aviva fixed rate loan, there is a residual £90 million interest rate swap in the core bank debt facility at 2.99% plus margin to September 2015, with the remaining £100 million of the core bank debt paying at floating rates plus margin. As a result of this transaction, we have repaid £100 million of bank debt which was costing 4.8% per annum, with a 15 year loan fixed at 4.9% per annum. The Group's proforma average cost of debt is 3.7%.
The Group’s existing bank facility, which is secured on the remainder of the Group's self storage centres, carries a margin of 1.125%, and expires in September 2013. The £100 million repayment and cancellation has been disproportionately applied against HSH Nordbank's commitment which has been reduced from £150 million to £65 million. The remainder of the loan is held by Lloyds TBS Bank plc, HSBC Bank plc and Santander. We intend to enter into discussions with our banking group, who continue to be supportive, with a view to refinancing the core bank debt facility in the current year.
The Group was comfortably in compliance with its banking covenants at 31 March 2012; see note 19 for details.
The Group wide covenants on the Aviva loan are in line with the covenants on the existing loan. There is also a minimum income cover covenant of 1.5x on the charged assets and a minimum debt service cover of 1.2x, and a loan to value covenant of 65% based on the valuation of the 15 assets charged to Aviva.
The Group has £51 million of cash and undrawn bank facilities and relatively conservative levels of gearing. The Group currently has a net debt to gross property assets ratio of 35%, and a net debt to adjusted net assets ratio of 49%.
Following the drawdown of the Aviva fixed rate loan, £90 million of the Group’s debt is hedged by way of interest rate swaps fixed at 2.99% (excluding margin), to September 2015, two years beyond the expiry of the current debt facility. The Group also has floating rate debt of £100 million, on which we are paying one month LIBOR plus applicable margin. The interest rate profile of the Group’s debt following the drawdown of the Aviva loan is shown in the table below:
| Proforma amount of debt £m |
Proforma weighted average interest cost |
Weighted average interest cost at 31 March 2011 |
|
|---|---|---|---|
| Aviva loan | 100 | 4.9% | – |
| Fixed bank debt | 90 | 4.1% | 4.5% |
| Variable bank debt | 100 | 1.9% | 1.7% |
| Total | 290 | 3.7% | 3.6% |
At 31 March 2012, the fair value on the Group’s interest rate derivatives was a liability of £15.7 million. A loss of £8.0 million has been charged to the statement of comprehensive income to reflect the movement from the prior year. On a proforma basis, the liability has fallen to £6.5 million following the cancellation of the interest rate derivatives referred to above. The Group does not hedge account its interest rate derivatives. As recommended by EPRA (European Public Real Estate Association), the fair value movements are eliminated from adjusted profit before tax, diluted EPRA earnings per share, and adjusted net assets per share.
Treasury continues to be closely monitored and its policy approved by the Board. We maintain a keen watch on medium and long term rates and the Group’s policy in respect of interest rates is to maintain a balance between flexibility and hedging of interest rate risk.
Cash deposits are only placed with approved financial institutions in accordance with the Group’s Treasury policy.
Share capital
The share capital of the Company totalled £13.1 million at 31 March 2012 (2011: £13.1 million), consisting of 131,393,041 ordinary shares of 10p each (2011: 131,060,522 shares).
Shares issued for the exercise of options during the year amounted to 332,519 at an average exercise price of 287p.
During the year, we acquired 1,418,750 shares in the Company at an average price of 260 pence. The Group holds these shares in treasury and 1,885,117 of its shares within an Employee Benefit Trust (“EBT”). These shares are shown as a debit in reserves and are not included in calculating net asset value per share.
| 2012 No. |
2011 No. |
|
|---|---|---|
| Opening shares | 131,060,522 | 130,990,837 |
| Shares issued for the exercise of options | 332,519 | 69,685 |
| Closing shares in issue | 131,393,041 | 131,060,522 |
| Shares held in EBT | (1,885,117) | (1,905,000) |
| Shares held in treasury | (1,418,750) | – |
| Closing shares for NAV purposes | 128,089,174 | 129,155,522 |
63,054,535 shares were traded in the market during the year ended 31 March 2012 (2011: 71,869,364). The average mid-market price of shares traded during the year was 284.9p with a high of 344.4p and a low of 218.0p.
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