Movement in adjusted NAV
The year on year movement is illustrated in the table below:
| Equity shareholders’ funds £m |
EPRA adjusted NAV per share |
|
|---|---|---|
| 1 April 2012 | 559.0 | 427.7 |
| Equity raising | 35.8 | (5.0) |
| 1 April 2012 (proforma) | 594.8 | 422.7 |
| Adjusted profit | 25.5 | 18.0 |
| Equity dividends paid | (13.5) | (9.5) |
| Revaluation movements (including share of BYLP) | (1.7) | (1.2) |
| Refinancing costs (including swap cancellations) | (14.8) | (10.4) |
| Movement in purchaser’s cost adjustment | 0.1 | 0.1 |
| Other movements (eg share schemes) | 4.1 | (0.5) |
| 31 March 2013 | 594.5 | 419.2 |
Borrowings
We focus on improving our cash flows and we currently have healthy Group interest cover of 3.3 times (2012: 3.1 times) based on adjusted Group EBITDA against existing interest costs, allied to a relatively conservative debt structure secured principally against the freehold estate.
In April 2012, we completed 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 was deployed to repay and cancel £100 million of the Group's core bank debt facility. At the same time as repaying the bank debt, we cancelled £100 million of interest rate derivatives at a cost of £9.2 million.
On 5 October 2012 the Group entered into a new £190 million 4 year bank facility with Lloyds TSB, HSBC and Santander, expiring in September 2016. £140 million of the facility is term loan with the balance of £50 million revolving. In February 2013, the Group repaid and cancelled £35 million of the bank facility following the placing carried out in January 2013, providing a facility amount of £155 million. £120 million of this facility is term loan with the balance of £35 million revolving.
This facility replaced the Group's existing £225 million facility, expiring in September 2013, which was provided by the same three banks and HSH Nordbank, who were fully repaid following completion of this refinancing.
The facilities attract a ratcheted margin over LIBOR based on interest cover. The Group is currently paying a blended 2.4% margin, the lowest margin on the ratchet, which is effective for asset income cover of greater than 3 times.
The Group had an historic interest rate derivative of £90 million fixed at 2.99% plus margin until September 2015. As part of the bank refinancing in October 2012, we cancelled £20 million of this interest rate derivative at a cost of £1.3 million. The remaining £70 million interest rate derivative was extended to September 2016 at a fixed rate of 2.8% plus margin. The balance of the bank debt drawn accrues interest at variable rates based on one month LIBOR plus margin.
The Group's average cost of debt at 31 March 2013 is shown in the table below.
| Amount of debt £m |
Weighted average interest cost |
|
|---|---|---|
| Aviva loan | 98.3 | 4.9% |
| Fixed bank debt | 70.0 | 5.3% |
| Variable bank debt | 70.0 | 2.8% |
| Total | 238.3 | 4.4% |
The Group was in compliance with its banking covenants at 31 March 2013; see note 19 for details.
The Group has £22.9 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 30%, and a net debt to adjusted net assets ratio of 39%.
At 31 March 2013, the fair value on the Group’s interest rate derivatives was a liability of £5.5 million. There is no charge in respect of the cost of cancelling the derivatives in the current year income statement, as it had been recognised in prior years through the fair value movement on derivatives. 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 £14.3 million at 31 March 2013 (2012: £13.1 million), consisting of 142,639,647 ordinary shares of 10p each (2012: 131,393,041 shares).
Shares issued for the exercise of options during the year amounted to 0.4 million at an average exercise price of 319p.
The Group holds 1.4 million shares in treasury and 1.5 million 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.
| 2013 No. |
2012 No. |
|
|---|---|---|
| Opening shares | 131,393,041 | 131,060,522 |
| Shares issued for the placing | 10,000,000 | – |
| Shares issued to EBT | 876,671 | – |
| Shares issued for the exercise of options | 369,935 | 332,519 |
| Closing shares in issue | 142,639,647 | 131,393,041 |
| Shares held in EBT | (1,500,000) | (1,885,117) |
| Shares held in treasury | (1,418,750) | (1,418,750) |
| Closing shares for NAV purposes | 139,720,897 | 128,089,174 |
45,430,167 shares were traded in the market during the year ended 31 March 2013 (2012: 63,054,535). The average mid-market price of shares traded during the year was 326.1p with a high of 387.5p and a low of 274.5p.
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