Annual Report 2016

Transcription

Annual Report 2016

Quintain Full Year Results 2015/16
Quintain Limited (formerly Quintain Estates and Development PLC)
Annual Report 2016
Company number: 2694983
1
Contents
Strategic report
02 Business Review
05 Finance Review
08 Responsibility Report
09 Key Performance Indicators
09 Risk Management
12 Major investment properties
Governance
13 Directors’ Report
17 Statement of directors’ responsibilities in respect of the annual report and the financial statements
18 Independent auditor’s report to the members of Quintain Limited only
Financial statements
22 Consolidated Income Statement
23 Consolidated Statement of Other Comprehensive Income
24 Consolidated Balance Sheet
25 Consolidated Statement of Changes in Equity
26 Consolidated Cashflow Statement
27 Notes to the accounts
2
Strategic Report
What we do
Quintain Limited, formerly Quintain Estates and Development PLC (‘Quintain’ or the ‘Company’) is a Londonfocused regeneration specialist.
The company is focused on transforming Wembley Park into London’s most exciting mixed-use destination
and newest residential neighbourhood.
Our strategic priorities
The strategic priorities, and the approach the Company is taking to achieve them, are outlined below:

To create a world class integrated Wembley Park estate and enhance Wembley Park’s reputation and
market profile as “a great place to live, work, visit and shop;”

To develop superior designed buildings linked by quality infrastructure and animated public realm;

To accelerate residential development and create a best in class private rental sector (‘PRS’) business of
scale; and

Active asset management initiatives in the non-core investment portfolio to enhance and capitalise
value.
Business review
Since the Company last reported in May 2015 there have been a number of major events and milestones
which will have a significant impact on its future direction:

On 25 September 2015, Bailey Acquisitions Limited, a vehicle indirectly controlled by Lone Star Real
Estate Fund IV (U.S.) L.P. and Lone Star Real Estate Fund IV (Bermuda) L.P. (together “Lone Star”)
acquired control over 76% of shares in Quintain, and announced the Company would be de-listed.
Subsequently the Company was delisted on 26 October 2015 and Bailey Acquisitions Limited acquired
100% of the shares on 1 February 2016.

In February 2016, the Company launched its new residential rental business at Wembley Park, Tipi, with
the first residents moving in to the newly completed Tipi buildings, Montana and Dakota. To date 57% of
units have been let and both buildings are on course to be fully let by the end of September 2016.

On 13 May 2016, Cedar House, the first private residential block of units for sale at Emerald Gardens
reached practical completion, with the remaining private and affordable units due to be completed by
October 2016.

These completions bring our first new residents to Wembley since the completion of Quadrant Court in
2010 and mark the start of a significant new residential development pipeline.

Supporting this pipeline, in May 2016 consent was granted by London Borough of Brent for a new 4,850
home Masterplan for Wembley Park, marking the next phase of transformation of the land around the
National Stadium to a thriving new London neighbourhood. The applications, with a pre-agreed
affordable housing quantum, will now pass to the GLA for confirmation.
Business model
Quintain applies the extensive experience of our high calibre team to identifying opportunities to transform
undervalued property and places in London into highly-attractive assets and locations. Following its
acquisition by Lone Star, Quintain has implemented a new business plan which has resulted in refocussed
priorities for the Group (Quintain Limited and consolidated subsidiaries). The Group aims to accelerate
development of its land holdings at Wembley Park and pursue a targeted programme of disposals of its noncore assets with the aim of maximising asset value.
Masterplan
3
The new Masterplan will deliver 4,850 new homes, more than a third of which will be affordable, and many
available for rent. This represents nearly 50% of Brent’s target for new homes delivery, and with up to 1
million sq ft of new high quality offices and start up workspaces, it will also create the opportunity for more
than 7,000 new jobs.
New outdoor spaces will transform the way people enjoy “Wembley”, both on event days and every day,
with an upgrade to the famous Olympic Way and a new seven‐acre park, equivalent in size to four Wembley
football pitches. With new multi‐use games areas and a lake, the aim is to create a new urban green space
for relaxation and play at the heart of this transforming north London district.
The redevelopment is providing £140 million of investment into new community infrastructure across
Wembley and Brent including a new three form entry primary school and nursery, a new GP surgery and
community meeting spaces.
The development will also see the creation of new car and coach parking facilities for use by Wembley
Stadium and SSE Arena visitors on event days.
Wembley development pipeline
The delivery of the Masterplan will see a significant increase in the volume of simultaneous construction
activity. The construction delivery team has been strengthened with a number of new hires and a contractor
framework panel has been put in place, as well as a site logistics plan, to ensure we are able to scale to this
delivery challenge, whilst maintaining the quality of the estate management.
North West Lands
The first development to be completed in this district is Emerald Gardens, seven buildings surrounding an
acre of landscaped gardens. The first three buildings, comprising 233 homes are now complete with the
remaining due for completion by October 2016. All bar 3 of the 284 homes for private sale have been sold to
date with an average selling price of £380,000, or £600 per square foot.
Construction is well underway on the adjacent development, Alto, which comprises 362 apartments. Of
these, 211 have been marketed for private sale and to date 74% have been sold at an average price of
£457,000 or £689 per square foot.
The Emerald Gardens and Alto developments have been developed in joint venture with subsidiaries of
Keystone Group Holding AG, a Swiss real estate and private equity family office. Both joint ventures were
established prior to the acquisition of Quintain by Lone Star. The above developments include 261 homes
which have been built specifically for our PRS business and have remained under direct ownership of
Quintain and sit outside the joint ventures.
Pre-construction works have commenced on plots NW07 and NW08, known as Moda, for which detailed
planning consent was received in March 2016. Moda is located to the east of Alto, across a public space
called Elvin Gardens. This development will deliver 361 further apartments, of which 66 will be affordable.
Combined, the development of these plots will deliver approximately 1,200 new homes in this district of
Wembley Park over the next three years and will be powered by a low carbon energy network.
In February and May 2016, Quintain completed two strategic land acquisitions adjacent to the existing North
West district which will further extend the development pipeline, potentially delivering a further 800 homes.
Detailed design work is underway for the first of these plots, and the second plot, known as the Stadium
Retail Park, is a longer term development opportunity and will be held as an investment asset in the
meantime.
South West Lands
4
Consent for a new masterplan for the South West Lands was received from Brent Council in May 2016 and
detailed design and enabling works are currently underway. This district will deliver approximately 800 new
homes, of which 30% will be affordable. The masterplan will now pass to the GLA for confirmation.
Western Core
Consent for a new Premier Inn hotel was also secured in May 2016 and work is expected to start on site in
the first quarter of 2017 for delivery in autumn 2018. The development will now pass to the GLA for
confirmation. We have also agreed terms for a pre-let of 50,000sqft or 50% of the office space of a plot
adjacent to the stadium.
Eastern and North Eastern Lands
The main focus of the new masterplan is to combine the 12.1 acres of the Eastern Lands (the Green Car Park,
which was included in the original 2004 masterplan consents), and the 12.4 acres of North Eastern Lands
(formerly Wembley Retail Park) to create an exciting and cohesive new residential district centred around a
seven acre park.
Outline consent for the scheme was achieved in May 2016 and detailed design is currently underway for the
main residential plots on the Eastern Lands, which together will deliver over 1,100 new homes, of which
around half will be either affordable or discounted market rental.
Tipi
During the year Quintain launched Tipi, its residential rental platform. In February 2016, Tipi took possession
of Montana, its first building at Wembley Park; Quintain have subsequently completed and handed over the
second building, Dakota. Montana and Dakota consist of 141 private rental units within the Emerald Gardens
development and these will be joined by a further 120 units in 2017 as part of the Alto development.
As of 7 June 2016, the two buildings were 57% let and 35% occupied. The team achieved this through strong
leasing conversion ratios and they continue to optimise rents, cost and occupancy to maximise net operating
income within this evolving market.
London Designer Outlet
London Designer Outlet (the LDO) is continuing to grow and attract new visitors to Wembley, with 6.5m
visitors during the financial year (2015: 5.6m). The centre is now 99% let or in solicitors hands with many new
brands, including Jack Wills, Ernest Jones, Levi’s, Sony, Franklin & Marshall, TM Lewin and Fiorelli, opening
since last year. Most leases comprise a base rent, a turnover-related component and a rent ratchet
mechanism, which enables Quintain to benefit financially as the centre’s turnover grows. The path towards
maturity of the centre is reflected in a 14% increase in footfall and a 31% increase in gross turnover for the
centre in the year ended 31 March 2016.
Non-core Investment Portfolio
During the reporting period, the non-core Investment Portfolio contributed £7.2m (2015: £5.0m) net rent to
the Group and was valued at 31 March 2016 at £150.7m (2015: £122.5m).
The current strategy for the investment portfolio is to maximise value through asset management activities,
including selected investment or divestment where appropriate.
WELPUT
Quintain has continued to act as strategic property adviser to the WELPUT fund. The £1.3bn asset fund
focuses on buying quality buildings in institutional locations with opportunities for improvement and during
the year achieved returns of 18.4%, generating asset management income for Quintain of £3.3m (2015:
£2.6m). Quintain is also an investor in WELPUT, with its holding increasing in value to £14.0m at the year end
(2015: £12.0m).
Finance Review
5
For the year under review, operating profit stood at £54.8m (2015: £41.4m). There have been a number of
one-off costs associated with the takeover which have affected performance for the year, these are
discussed further below. The takeover saw the repayment of all existing external debt, with the exception of
the overdraft facility, and its replacement with an intercompany loan with the Group’s new parent, Bailey
Acquisitions Limited.
1. Results for the year
Summary income statement
Turnover
Gross profit
Surplus on revaluation
Profit/(loss) on disposals
Share of profit/(loss) from joint ventures and associates
Net operating profit before administrative expenses
Administrative expenses
Operating profit
Net finance costs
Tax charge for the year
Profit/(loss) on discontinued operations
Profit after tax
31 March 2016
£m
61.4
26.1
31 March 2015
£m
57.7
18.2
48.2
8.6
2.0
84.9
(30.1)
54.8
(30.1)
(3.0)
21.7
41.2
(0.2)
(0.8)
58.4
(17.0)
41.4
(0.7)
(2.6)
(0.2)
37.9
The Group made a statutory post-tax profit for the year of £21.7m (2015: £37.9m). Profit before tax was
£24.7m (2015: £40.7m).
Gross profit has increased by £7.9m showing the strength of the underlying business. Growth at Wembley
Park from LDO and York House contributed £1.0m and the non-core investment portfolio contributed £2.4m.
Fees from asset and development management were boosted by the development of the Group’s NW01 and
Alto joint ventures at Wembley.
Administrative expenses increased by £13.1m, largely due to the takeover of the Group, discussed below.
During the year, £66.7m of capital was recycled through disposals to enable the further development of the
Group’s interests at Wembley Park. The disposals formed part of the Group’s non-core property disposal
programme, following the maximisation of individual asset value. A profit on disposal of £8.6m was realised
as a result of these transactions (2015: loss of £0.2m).
The Group recorded a profit from joint ventures and associates of £2.0m (2015: loss £0.8m). The net
revaluation deficit was £4.6m (2015: surplus £1.1m), largely from the Quercus associate.
On 3 July 2015 the Group disposed of its interest in its Hilton hotel joint venture, for a headline consideration
of £40.0m, to its previous joint venture partner, Oaktree Capital Management LP. During the year the
Quantum joint venture disposed of both of its investment properties realising a profit on disposal of £2.7m at
share.
On 12 May 2015 the Group increased its interest in Albemarle (a property fund), an associate investment, to
55.13% for nil consideration, making it a subsidiary undertaking. The significant assets and liabilities acquired
were investment properties valued at £25.6m, bank debt of £14.3m and a mezzanine loan fair valued at
£10.5m of which the Group holds £8.7m. During the year two investment properties were disposed of
enabling the bank debt to be repaid and post year end the final investment property was disposed of and the
fund will now be wound up.
6
Net finance expenses increased from £0.7m to £30.1m during the year reflecting one-off costs of £24.7m
incurred on the termination of the Bond and £2.4m in the accelerated write off of unamortised borrowing
costs.
The Income Statement shows a tax charge of £3.0m (2015: £2.6m) primarily arising from a deferred tax
charge relating to the valuation surplus, partially offset by revenue tax losses in the year.
2. Impact of the takeover
The takeover of the Group by Bailey Acquisitions Limited has resulted in the re-focusing of the Group towards
Wembley and accelerating its development plans there.
In the year under review there were a number of one-off costs associated with the takeover which impacted
performance in the short term. Professional fees of £9.2m were directly incurred as a result of the
transaction. In addition, the purchase of the Company’s entire share capital resulted in the settlement of
certain share based employee remuneration arrangements. This led to an incremental charge to the Income
Statement of £3.2m. Finally, the Group’s existing external debt was cancelled leading to the repayment of
bank loans and the bond. This resulted in a charge to the Income Statement of £24.7m and £2.4m came
from the accelerated write off of unamortised borrowing costs.
3. Analysis of rental income
Quintain conducts a proportion of its business through joint ventures and associates. The table below sets
out the combined net and gross rental income for continuing operations.
Rental income
Group net rental income(1)
Share of joint venture and associates net rental income
Combined net rental income
Gross rental income
Direct owned
Joint venture and associates properties
(1)
31 March 2016
£m
16.6
3.8
20.4
31 March 2015
£m
15.8
5.8
21.6
22.6
5.5
28.1
21.3
12.7
34.0
Includes £2.0 million (2015: £3.0m) net surrender premium income
The fall in joint venture rental income was caused by the Group’s disposal of its interest in the Hilton joint
venture.
4. Valuation
As at 31 March 2016, the valuation of the Group’s properties, including its share of gross assets in joint
ventures and associates, was £950.8m, an increase of £116.2m, including capital expenditure since 31 March
2015. The increase has arisen principally on three assets, first, the development land at Wembley Park which
has benefited from our extensive placemaking activity and the strength of the London residential market,
secondly, the NW01 PRS asset which has been enhanced by further development activity and finally
Wembley Retail Park, which is now valued as a potential development site and benchmarked against similar
land sales. The valuation surplus has been partially offset in part by the Group’s share of a deficit arising in
Quercus.
7
Wembley
Non-core
Quercus²
Total
Investment assets
Development land and PRS
assets
Investment assets,
development land
Long-term healthcare
31 March
2016
£m
214.7
551.2
31 March
2015
£m
272.9
395.7
%
Movement(1)
150.7
122.5
13.0
34.2
950.8
43.5
834.6
(12.8)
6.4
2.9
8.8
(1) Like for like growth, excluding capitalised interest
(2) Held as an associate investment with NAV of £25.7m (2015: £28.6m)
5. Non-current assets
Investment
properties
Joint ventures
Associates
Other non-current
assets
31 March
2015
£m
686.4
Additions
Disposals
Valuation
Other
£m
115.9
£m
(29.4)
£m
48.2
£m
-
31 March
2016
£m
821.1
60.6
30.5
28.1
11.0
1.0
(29.7)
(0.8)
(4.6)
2.0
0.9
2.1
(1.7)
42.8
28.0
28.6
805.6
127.9
(59.9)
45.6
1.3
920.5
The increase in investment properties is due to the revaluation gain and investment in development land at
Wembley. The joint ventures figure decreased due to the disposal of the Hilton joint venture.
6. Cash flow
Summary cash flow statement
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
Net decrease in cash
Net (increase)/decrease in loans
(Increase)/decrease in net debt
Debt summary
Cash
Bank loans and overdrafts < 1 year
Bank and other loans > 1 year
Net debt
31 March 2016
£m
15.7
(45.4)
31 March 2015
£m
12.7
(2.1)
27.9
(1.8)
(62.4)
(64.2)
(26.5)
(15.9)
24.0
8.1
£(5.9)m
£15.0m
£253.2m
£262.3m
£(7.2)m
£12.8m
£192.5m
£198.1m
The net cash inflow from operating activities was £15.7m (2015: £12.7m) of which £17.2m (2015: £21.1m)
relates to the disposal of trading properties. Investment in the development and purchase of investment
properties totalled £102.1m (2015: £97.3m) during the year, offset by disposals of £65.7m (2015: £112.6m).
7. Financing strategy and capital structure
The year to 31 March 2016 saw the repayment of the Group’s external loan and bond financing together with
their attendant derivative arrangements. These were replaced by an intercompany loan with Bailey
Acquisitions Limited, the Group’s new parent company, which has a margin of 5.0% over LIBOR and a term of
two years.
8
Responsibility Report
The Company’s Responsibility Policy deals with the approach to socio-economic and environmental issues
that impact the business or have an impact on its stakeholders.
A review of the external trends, technologies, activities of peers and other companies provides the starting
point for identifying the issues that may become material to Quintain in the future.
People & Place
The People aspect of the Responsibility Policy is the lens through which the Company assesses its interaction
with its stakeholders and the impact business activity has on them, including the Quintain employees. Place
addresses the physical infrastructure created to help deliver this and how spaces are used to deliver better
communities.
This year, activity has been focussed around community development in Wembley Park.
In 2018, a permanent community facility will open in one of the future residential buildings; in order to
identify how best to use this space, and to determine local demand, in October 2015, Quintain opened the
Yellow Pavilion – a temporary social space for local people. The project has been a huge success, and with the
help of the community engagement officer, residents, workers and businesses from in and around Wembley
Park have been empowered to lead their own activities, take part in regular and one-off events, and get to
know other people in the area. There are currently 21 regular activities and a number of one-off events in our
programme, including fitness, employment skills, arts and crafts, and even foraging, with circa 1,000
attendees per month.
Education, skills and employment are important aspects of the placemaking strategy. As a large local
employer, London Designer Outlet provides opportunities for local people to enter careers in an exciting
sector. By ensuring that retail assistants working at LDO have access to the best training in sales and service,
they are able to progress in their careers and deliver a great experience for every guest who visits. The first
cohort of students at our Retail Skills Academy, which opened its doors at the end of September 2015, has
gained City & Guilds qualifications in Service & Standards and Selling Skills in Retail. Space for the academy is
provided free-of-charge by Quintain, with management time provided by the managing agents for the centre,
Realm, and additional funding from the UK Commission for Employment and Skills.
The Company is now considering how to apply the academy model to construction activity, working with
contractors and local education providers to deliver skills-based training to improve the development of the
contractor workforces.
Property
The Property aspect of the Responsibility Policy is the lens through which the Company assesses the
environmental performance of its assets.
The most material environmental impacts relate to the operational energy and water performance of the
assets, particularly as the PRS business grows.
During 2015/16, an energy audit of the key assets was conducted to identify additional areas to reduce
energy consumption. The greatest potential saving relates to the optimisation of the energy centre serving
London Hilton Wembley, London Designer Outlet and Prodigy Student Living. The Company is currently
reviewing proposals to investigate this further.
At Wembley Park, greater activity and animation has led to an increase in absolute energy consumption
compared to our 2013/14 base-year – a trend that will persist as development continues to unfold. We have,
however, achieved a 7.5% reduction in like-for-like energy compared with 2014/15. This is in part due to
9
adjustments made to settings on the Building Management System in 2015 to reduce the running hours of
extracts and cooling systems.
External benchmarking and reporting can provide a useful indication to external stakeholders of performance
and the Company has previously used a number of such methods to demonstrate our performance in
environmental issues. In 2015/16 Quintain increased its score in the Carbon Disclosure Project index from
95C to 98C and achieved a Green Star in the Global Real Estate Sustainability Benchmark. Due to the burden
of reporting to multiple benchmarking and reporting standards however, the Company is taking a break from
this activity whilst it assesses the importance of such measures to its stakeholders.
Key Performance Indicators
Quintain takes a long term view of performance and following the change of ownership the Board are
reviewing the key performance indicators and going forward these are likely to include IRR, equity
requirements, yield on costs on development, rental growth, leasing velocity and cost efficiency in Tipi. The
following annual key performance indicators are applicable for the year under review:
Key Performance Indicators
Profit after tax
Net debt
Like For Like valuation movement
To maintain our absolute base-year emissions at our
2013/14 recalculated base-year level by the end of
2015/16.
March 2016
£21.7m
£262.3m
6.4%
7.0% increase in
Scope 1 and 2
emissions over
baseline
March 2015
£37.9m
£198.1m
7.1%
15.7% increase in
Scope 1 and 2
emissions over
baseline
Risk Management
In addition to general economic, security and regulatory risks that are part of the general commercial
environment and faced by a wide range of companies, we consider there to be a number of financial and
non-financial risks specific to our Company. In managing the business, the identification and monitoring of
risk is crucial to enable the Group to deliver its strategic objectives.
How we manage risk
The Board has overall responsibility for managing risk and regularly reviews principal risks and uncertainties.
Our approach has applied a consistent and robust methodology across the business to identify, assess,
manage, mitigate and report risk from the bottom up, establishing clear ownership of risk management.
Smaller, dedicated business risk forums meet at least annually to consider the key risks aligned to their
strategy and objectives.
A risk register is maintained for each business area: Wembley Park, Finance and Transactions, Operations,
Tipi and Non-core business (Investment Portfolio, Quercus, Regional). The most significant risks are reported
to the Board. In addition to the ‘bottom up’ operational and financial risks assessed by the risk forums, the
executive directors assess the ‘top down’ strategic risks facing the Group on a regular basis. This approach
ensures that all risks are fully considered in determining the risk appetite and strategy of the business.
All risks are recorded in a risk register and assessed for impact (using financial and non-financial measures)
and likelihood of occurrence on a gross (before controls), net (after controls) and target basis. Set out below
is management’s view of the current specific principal business risks and actions taken in mitigation.
Description and implication of risk
Mitigation
Development
The Group is exposed to risks associated with
This risk has inherently increased during the year due
10
Mitigation
development projects. For example:
− Delays in obtaining planning consents.
− Delays could occur for regulatory or funding
reasons.
− Counterparty risk: contractors may become
bankrupt or insolvent, or development partners
may fail to meet their obligations.
− Control of construction phasing and costs are
vital to prevent overspend or delay once
contractors are on site.
to the increased activity at Wembley Park. Quintain’s
planning and project management teams have been
strengthened and are key to managing development
risk by:
− Active engagement with Greater London, local
authorities and other stakeholders to ensure
development proposals are in accordance with
local policies and statutes.
− Transferring construction risk to contractors
where possible.
− Ongoing monitoring of development progress
against budget and schedule.
− SupplierPortal is an online portal and database
through which our suppliers are asked to submit
their key policies in respect of environment,
health and safety, labour, anti-bribery and
corruption and IT security. Upon a successful
transition through SupplierPortal each supplier
is awarded the status of ‘preferred supplier’,
renewable on a three year basis.
− Monitoring the level of committed future capital
expenditure of the Group’s development
programme relative to the available capital.
Market
The Group’s business is dependent on the macroeconomic and property market conditions in
London. Deterioration in residential and
commercial property markets could lead to a
decline in the value of the Group’s property
portfolio, tenant default and a reduction in income
from these properties.
Financial
Changes in the availability of financing and/or costs
of borrowing may adversely impact Quintain’s
ability to ensure sufficient liquidity is available to
deliver the business plan.
The property portfolio is led by an experienced asset
management team who are knowledgeable in
mitigating the impact of occupier failures, lease
breaks and expiries. Exposure to the residential
property market has increased this year due to the
accelerated delivery of Wembley park. However this
risk is partially mitigated by the decision to provide a
higher proportion of homes for rental as opposed to
sale.
This risk has increased in the year as the Group is
currently seeking to refinance. At 31 March 2016, the
Group has an intercompany loan agreement with its
parent company, Bailey Acquisitions Limited, which
expires on 13 November 2017. The Group is in
advanced discussions with lenders to replace the
bridge facility to Bailey Acquisitions Limited, expiring
on 31 August 2016, with a five year corporate facility.
The Company prepares detailed cash flow forecasts
to monitor whether its committed capital
expenditure and other outflows can be met from its
sources of liquidity.
Quintain’s financial modelling tool can forecast and
test different business scenarios (including
prospective transactions), analysing the impact on
liquidity and headroom.
Operational risks
11
Mitigation
As the Home Office’s international terrorism threat
level remains at severe, the Group has heightened
exposure to external events that threaten or
disrupt London’s status as a premier destination, in
particular Wembley Park.
Such events are often beyond Quintain’s control and
are an inherent risk in being focused on London.
However, the Group has various security measures in
place at Wembley Park and works closely with local
authorities to maximise the safety of visitors.
Inability to deliver budgeted PRS margins as a result
of cost inflation and inefficiency.
Tipi maintains strict cost control, uses good supplier
relationships and seeks to benefit from economies of
scale provided by critical mass at Wembley to
maintain a low cost base and to mitigate unexpected
cost fluctuations.
Poor service levels at Tipi would cause reputational
damage and increase voids and reduce gross
revenue.
Tipi seeks to respond to customer feedback and
create a culture to exceed customer expectation. It
offers industry standard training for all staff
dependent on their role and function to offer basic
training and continue professional development.
Personnel
The need to retain and develop staff and ensure
that high calibre people are recruited is essential to
the delivery of the business strategy.
Succession and resource planning is regularly
reviewed by the Board as appropriate.
Remuneration and benefits are considered
competitive, strongly linked to performance and are
regularly benchmarked with Quintain’s peers.
Regular formal staff meetings and informal events
enable staff to talk to senior management, and
weekly news updates on business developments and
successes allow all employees to understand key
activities around the Group.
Major investment properties at 31 March 2016
Area
Wembley Park,
London, HA9
Property description
London Designer Outlet
280,000 sq ft of retail and leisure units
Category
Retail
The SSE Arena, Wembley (formerly
Wembley Arena)
Iconic 1930s building fully renovated as a
21st Century music, sporting and family
entertainment venue
Multi-storey car park
9 storey, 724-space car park located
between
Wembley Stadium and the London
Designer Outlet
Leisure
Leisure
Principal tenants/occupier
Cine UK
Nike Retail BV
Marks & Spencer plc
C-Retail Ltd
Jack Wills Ltd
AEG Facilities (UK) Ltd
Visitors to London Designer
Outlet,
Stadium and Arena
12
London, EC4
London, E16
London, WC1
London, SW19
Birmingham
York House
14 storey, 106,000 sq ft office building
Emerald Gardens PRS
141 unit private residential rental asset
Aldermary House, Queen Street
62,000 sq ft of office space and retail units
Offices
West Silvertown, 12.5 acre landholding
held in jointly with the Greater London
Authority
Kingsbourne House, High Holborn
33,500 sq ft of commercial space with
retail units on the ground floor
Collingham House, Wimbledon
32,500 sq ft of retail and serviced offices
City Park Gate
Landholding in central Birmingham
Land
18 tenants, mainly
recruitment and financial
services
Leased for storage
Offices and
retail
Nine tenants, mainly
recruitment and media
Offices
and retail
Land
JD Weatherspoon plc
Evans Cycles (UK) Ltd
Excel Parking Services Ltd
PRS
Offices
and retail
c.40 tenants, mainly financial
services
Individual residential tenants
Board approval of strategic report
Our 2016 Strategic report, on page 2-12, has been reviewed and approved the Board of Directors on 16 June
2016.
Simon Carter
Finance Director
13
Governance
Directors’ Report
The directors present their report and the audited financial statements for the year ended 31 March 2016.
Strategic Report
The Company’s Strategic Report for the year ended 31 March 2016 on pages 2 to 12 contains the following
information, which is not included in this Report:

the Business Review, including the Company’s principal activities and future developments;

the risks and uncertainties facing the business; and

a Responsibility Report.
Ownership
Quintain is a wholly owned subsidiary of Bailey Acquisitions Limited (‘Bailey’), an investment vehicle
indirectly controlled by Lone Star.
The following changes to the Company’s ownership and status took effect during the year:
29 July 2015
Bailey announced a cash offer of 131 pence per share for the Company, which was
subsequently increased to 141 pence per share
25 September 2015
Bailey declared the offer unconditional having purchased or received acceptances in
respect of over 75% of the Company’s issued shares.
26 October 2015
Quintain shares were cancelled from the Official List of the London Stock Exchange.
1 February 2016
Bailey Acquisitions Limited was registered as holder of 100% of the issued shares in
Quintain.
9 February 2016
The Company was registered as a private limited company and renamed Quintain
Limited.
Board of Directors
The Board comprises the following shareholder-nominated directors:
Angus Dodd, Chairman
Olivier Brahin
Robert Calnan
John Herbert
James Riddell
and continuing executive directors:
Maxwell James, Chief Executive
Nigel Kempner, Investment Director
Simon Carter, Finance Director (from 26 May 2015).
The following non-executive directors resigned from the Board with effect from 25 September 2015:
William Rucker (Chairman), Christopher Bell, Charles Cayzer, Peter Dixon, Rosaleen Kerslake.
In addition, Simon Laffin served as a non-executive director to 20 July 2015 and Richard Stearn resigned as
Finance Director with effect from 3 April 2015. The appointment and replacement of directors is governed
by the Companies Act and the Company’s Articles of Association.
14
Directors’ biographies
Angus Dodd was appointed to the Board on 25 September 2015 and elected Chairman on 5 October 2015.
He is Senior Managing Director and Co-Head of European Real Estate of Lone Star Europe Acquisitions LLP.
Angus chairs the Nomination and Remuneration Committees and is a member of the Audit Committee.
Maxwell James joined Quintain as an executive director in July 2011 and was appointed Chief Executive in
May 2012. Max was Chief Executive of Lowndes Partners LLP a specialist real estate investment bank which
he founded in 2006. Previously, Max was Global Head of Real Estate at HSBC Investment Bank and a Director
of Lazard.
Nigel Kempner joined Quintain in February 2012, following the acquisition of Grafton Advisors, and was
appointed as an executive director in May 2012. Nigel was previously Chief Executive of Benchmark Group
PLC, a publicly quoted company, which was sold to GE Capital in 2004. In 2001, he created the West End of
London Property Unit Trust (WELPUT) with Schroders. Nigel is former Chairman of Westminster Property
Owners Association and Reading Real Estate Foundation.
Simon Carter joined the Board as Finance Director on 26 May 2015. Before joining Quintain, Simon was
Head of Strategy and a member of the Executive Committee at British Land, where other roles included Head
of Treasury and Capital Markets and Corporate Finance Executive. Previously, Simon worked for UBS in fixed
income and Arthur Andersen where he qualified as a Chartered Accountant.
Olivier Brahin was appointed to the Board on 25 September 2015. He is Senior Managing Director of Lone
Star Europe Acquisitions LLP.
Robert Calnan was appointed to the Board on 25 September 2015. He is Managing Director of Real Estate at
Hudson Advisors UK Ltd. Robert is a member of the Nomination and Remuneration Committees.
John Herbert was appointed to the Board on 25 September 2015. John recently retired as Global Head of
Real Estate at HSBC and now serves as non-executive director on various boards in the US and UK. John
chairs the Audit Committee and is a member of the Nomination and Remuneration Committees.
James Riddell was appointed to the Board on 25 September 2015. He is Managing Director at Lone Star
Europe Acquisitions LLP. James is a member of the Nomination and Audit Committees.
Board Governance and Committees
The Company had a premium listing on the London Stock Exchange until 25 October 2015 and throughout
that period it fully complied with the provisions of the UK Corporate Governance Code. During that period,
the Board comprised three executive directors, a minimum of four independent non-executive directors and
the Chairman. The Nomination, Remuneration and Audit Committees operated in accordance with published
terms of reference and the provisions of the Code.
Following the Company’s acquisition by Bailey, the Board appointed five shareholder-nominated directors (as
detailed above) and Angus Dodd was elected Chairman of the Board. The Board has approved revised terms
of reference for the Audit Committee, which will continue to meet and review the Company’s financial
statements, the external auditor’s work and risk management actions and controls. The Board approved the
current Committee members in November 2015:
15
Audit
John Herbert (Chairman)
Angus Dodd
James Riddell
Remuneration
Angus Dodd (Chairman)
John Herbert
Robert Calnan
Nomination
Angus Dodd (Chairman)
John Herbert
Robert Calnan
James Riddell
In addition, the Board has approved new Terms of Reference which set out matters requiring shareholder,
Board or Executive Committee approval. The Board Terms of Reference enables the effective day to day
management of the Company’s business whilst maintaining effective financial control and accountability to
its shareholder.
Directors’ Indemnity
The Company’s Articles of Association provide that, to the extent permitted by law, directors may be
indemnified out of the Company’s assets against any liability incurred by that director in connection with any
negligence, default, breach of duty or breach of trust in relation to the Company or an associated company.
The directors have purchased and maintain insurance, at the expense of the Company, for the benefit of any
relevant director in respect of any relevant loss.
Dividend
No dividend was proposed during the course of the year under review (2015: £nil).
Key contractual arrangements
The Group has a number of joint venture arrangements, as detailed in note 3.4 on page 40 of the financial
statements. The directors consider the joint venture arrangements with Keystone Holdings to be material to
the business.
Change of control provisions
The Companies Act 2006 requires the Company to identify those significant arrangements to which the
Company is party that take effect, alter or terminate upon a change of control of the Company following a
takeover bid, and the effects of any such agreements.
The Group’s debt facilities included provisions which required the Company to notify its bankers and Bond
holders in the event of a change of control. Thereafter, the banks could within 30 days cancel the Company’s
banking facilities and request the immediate repayment of all amounts due to them. Following the
Company’s acquisition by Bailey, change of control notices were served on the Company’s banks and Bond
holders and the Board subsequently elected to repay those facilities.
The property and asset management agreement between the Company and Quercus Healthcare Property
Partnership contains provisions which entitle the Partnership to terminate the agreement in the event that
more than 50% of the issued share capital of the Company is held by any person (or its associates) and 50%
or more of the executive directors of the Company (over the previous 12 months) cease to be executive
directors of the Company or another Quintain Group company.
Going concern
The Group financial statements have been prepared on a going concern basis, which assumes that the Group
will continue to meet its liabilities as they fall due. Based on the analysis set out in note 1.2 of the financial
statements, the directors believe it is appropriate to prepare the financial statements on a going concern
basis.
16
Auditor
KPMG LLP was reappointed as auditor for the year. Under section 487 (2) of the Companies Act 2006, KPMG
LLP are deemed to be reappointed as auditor.
Statement of disclosure to auditor
In accordance with Section 418 of the Companies Act 2006, each director at the date of this report confirms
that:
 so far as he or she is aware, there is no information, which would be needed by the Company’s auditor in
connection with preparing their audit report, of which the auditor is not aware; and

each director has taken all steps necessary to make him or herself aware of any such information and to
establish that the auditor is aware of it.
Directors’ Responsibility Statement
The directors’ responsibilities for the financial statements contained within this Annual Report are set out on
page 17.
By order of the Board
Sandra Odell
Company Secretary
16 June 2016
17
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL
STATEMENTS
The directors are responsible for preparing the Annual Report and the Group and parent Company financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent Company financial statements for each
financial year. Under that law they have elected to prepare the group financial statements in accordance
with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent Company
financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted
Accounting Practice), including FRS 101 Reduced Disclosure Framework.
Under company law the directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the group and parent company and of their profit or
loss for that period. In preparing each of the group and parent company financial statements, the directors
are required to:

select suitable accounting policies and then apply them consistently;

make judgements and estimates that are reasonable and prudent;

for the group financial statements, state whether they have been prepared in accordance with IFRSs as
adopted by the EU;

for the parent company financial statements, state whether applicable UK Accounting Standards have
been followed, subject to any material departures disclosed and explained in the financial statements;
and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the group and the parent company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the parent company’s transactions and disclose with reasonable accuracy at any time the financial
position of the parent company and enable them to ensure that its financial statements comply with the
Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the group and to prevent and detect 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 the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
18
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF QUINTAIN LIMITED ONLY
We have audited the financial statements of Quintain Limited for the year ended 31 March 2016 set out on
pages 20 to 69. The financial reporting framework that has been applied in the preparation of the group
financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by
the EU. The financial reporting framework that has been applied in the preparation of the parent company
financial statements is applicable law and UK Accounting Standards (UK Generally Accepted Accounting
Practice) including FRS 101 Reduced Disclosure Framework.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company and the company’s members, as a body, for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 17, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance
with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to
comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s
website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:

the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 31 March 2016 and of the group’s profit for the year then ended;

the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
EU;

the parent company financial statements have been properly prepared in accordance with UK Generally
Accepted Accounting Practice;

the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year
for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:

adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
19
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF QUINTAIN LIMITED ONLY continued

the parent company financial statements are not in agreement with the accounting records and returns;
or

certain disclosures of directors’ remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.
Bill Holland (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
Canary Wharf
E14 5GL
16 June 2016
20
Financial statements
Introduction
The notes to the financial statements have been grouped together under the following headings:








Preparation of financial statements
Performance for the year
Property assets, joint ventures and associates
Acquisitions and disposals
Other assets and liabilities
Funding
Staff costs, key management and employee benefits
Company balance sheet and notes
Accounting policies are set out in the relevant sections of the notes to the financial statements for relevance and ease of
reference, as are the key judgements and estimates used.
21
Table of content
Primary statements
Consolidated Income Statement
Consolidated Statement of Other Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cashflow Statement
Section 1: Preparation of financial statements
1.1
Basis of preparation
1.2
Going concern
1.3
Significant judgements, estimates and assumptions
1.4
Basis of consolidation
1.5
Newly effective accounting standards
Section 2: Performance for the year
2.1
Revenue, cost of sales and gross profit
2.2
2.3
Property revaluation movements
2.4
Net finance expenses
2.5
Taxation
2.6
Fees paid to auditors and their affiliates
2.7
Operating lease agreements – as lessor
Section 3: Property assets, joint ventures and associates
3.1
Investment properties
3.2
Capital commitments
3.3
Trading properties
3.4
Investments in joint ventures and associates
Section 4: Acquisitions and disposals
4.1
Discontinued operations
Section 5: Other assets and liabilities
5.1
Non-current receivables
5.2
Current trade and other receivables
5.3
Credit risk
5.4
Other payables (non-current)
5.5
Current trade and other payables
Section 6: Funding
6.1
Bank loans and other borrowings
6.2
Maturity of contractual cash flows of financial liabilities
6.3
Financial instruments
6.4
Financial risk factors
6.5
Share capital
6.6
Other reserves
Section 7: Staff costs, key management and employee benefits
7.1
Staff costs and numbers
7.2
Directors’ remuneration
7.3
Share-based compensation
Section 8: Company balance sheet and notes
8.1
Company balance sheet
8.2
Company statement of changes in equity
8.3
Profit for the year
8.4
Accounting policies
8.5
Fixed asset investments
8.6
Debtors
8.7
Creditors: amounts falling due within one year
8.8
Creditors: amounts falling after more than one year
8.9
Provision for liabilities and charges
8.10
Borrowings
8.11
Financial assets and liabilities
8.12
8.13
Share capital and reserves
8.14
Commitments
8.15
Directors’ benefits
8.16
Controlling party
8.17
First time adoption of FRS 101
22
Quintain Limited
Consolidated Income Statement
For the year ended 31 March 2016
Notes
Revenue
Cost of sales
Gross profit
Operating (loss)/profit before recognition of results from joint
ventures and associates, non-current asset sales and revaluation
Share of profit from joint ventures
Share of loss from associates
Operating (loss)/profit before non-current asset sales and
revaluation
Profit/(loss) from sale of non-current assets
Surplus on revaluation of investment properties
Operating profit
Finance income
Finance expenses
Profit before tax
Profit from continuing operations
2.1
2.1
2.2
3.4
3.4
2.3
2.4
2.4
2.5
2016
£m
61.4
(35.3)
26.1
(30.1)
(4.0)
2015
£m
57.7
(39.5)
18.2
(17.0)
1.2
2.4
(0.4)
(2.0)
1.9
(2.7)
0.4
8.6
48.2
54.8
0.6
(30.7)
24.7
(3.0)
21.7
(0.2)
41.2
41.4
1.9
(2.6)
40.7
(2.6)
38.1
-
0.3
0.9
(1.1)
0.1
0.1
(0.3)
-
(0.2)
21.7
37.9
21.7
21.7
37.9
37.9
Discontinued operations
Gross profit
Loss from sale of non-current assets
Operating profit
Finance income
Finance expenses
Profit before tax
Loss from discontinued operations
4.1
Profit for the financial year
Attributable to:
Equity shareholders
Non-controlling interest
The notes on pages 27 to 69 are an integral part of these consolidated financial statements.
23
Consolidated Statement of Other Comprehensive Income
Notes
Surplus on revaluation of other non-current investments
Fair value adjustment on cash flow hedges
Recycling of revaluation loss of available for sale financial asset
Share of other comprehensive income in joint ventures and
associates, net of tax
Tax on other comprehensive income
Other comprehensive income for the financial year – continuing
operations
Share of other comprehensive income in discontinued operations
Total comprehensive income for the year
5.1
2.4
2.4
2016
£m
21.7
2.0
0.6
-
2015
£m
37.9
1.4
0.1
1.4
3.4
2.5
(0.4)
(0.2)
(0.3)
2.2
23.9
2.4
40.3
23.9
23.9
40.3
40.3
Attributable to:
Equity shareholders
All other comprehensive income may be reclassified as profit and loss in the future.
24
Consolidated Balance Sheet
As at 31 March 2016
Non-current assets
Owner-occupied properties, plant and equipment
Intangible assets
Investment in joint ventures
Investment in associates
Non-current receivables
Total non-current assets
Current assets
Trading properties
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Current tax liability
Total current liabilities
Non-current liabilities
Obligations under finance leases
Other payables
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Other capital reserves
Cashflow hedge reserve
Retained earnings
Own shares reserve
Equity shareholders’ funds
Total equity
Notes
2016
£m
2015
£m
3.1
821.1
7.8
4.4
42.8
28.0
16.4
920.5
686.4
8.6
5.2
60.6
30.5
14.3
805.6
3.3
5.2
5.9
35.5
5.9
47.3
967.8
23.4
42.9
7.2
73.5
879.1
6.1
5.5
(15.0)
(24.7)
(1.4)
(41.1)
(12.8)
(26.2)
(1.4)
(40.4)
6.1
(253.2)
(1.1)
(1.8)
(5.7)
(261.8)
(302.9)
664.9
(192.5)
(1.3)
(3.2)
(2.3)
(199.3)
(239.7)
639.4
132.1
139.0
111.1
282.7
664.9
664.9
131.5
138.9
109.5
(0.6)
267.9
(7.8)
639.4
639.4
3.4
3.4
5.1
5.4
2.5
6.5
6.6
Approved by the Board of Directors on 16 June 2016 and signed on its behalf by:
SIMON CARTER
Director
25
Share
capital
Balance 1 April 2015
Profit for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
Costs relating to share-based
payment schemes
Issue of share capital
Vesting of share-based payment schemes
Balance as at 31 March 2016
Share Other capital
premium
reserves
£m
131.5
-
£m
138.9
-
£m
109.5
-
Cashflow
hedge
reserve
£m
(0.6)
-
Retained
earnings
Own shares
reserve
£m
267.9
21.7
£m
(7.8)
-
Equity
shareholders’
funds
£m
639.4
21.7
Noncontrolling
interest
£m
-
Total
equity
-
-
1.6
0.6
-
-
2.2
-
-
1.6
0.6
21.7
-
23.9
0.6
132.1
0.1
139.0
111.1
-
1.3
(8.2)
282.7
(0.4)
8.2
-
1.3
0.3
664.9
Share
capital
Share
premium
Other capital
reserves
Retained
earnings
Own shares
reserve
£m
137.3
-
£m
107.0
-
£m
229.2
37.9
£m
(7.8)
-
Equity
shareholders’
funds
£m
595.4
37.9
Noncontrolling
interest
£m
-
Total
equity
£m
130.2
-
Cashflow
hedge
reserve
£m
(0.5)
-
-
-
2.5
(0.1)
-
-
2.4
-
2.4
-
-
2.5
(0.1)
37.9
-
40.3
-
40.3
1.3
131.5
1.6
138.9
109.5
(0.6)
0.8
267.9
(7.8)
0.8
2.9
639.4
-
0.8
2.9
639.4
£m
639.4
21.7
2.2
-
23.9
1.3
0.3
664.9
-
Profit for the year
Other comprehensive income/(loss) for
the year, net of tax
Total comprehensive income/(loss) for
the year
payment schemes
£m
595.4
37.9
26
Consolidated Cashflow Statement
Operating activities
Adjustments for:
Depreciation of plant and equipment
Amortisation of intangible assets
Costs relating to share-based payment schemes
Net finance expenses
(Gain)/loss on sale of non-current assets
Surplus on revaluation of investment properties
Share of loss from associates
Loss on sale of plant and equipment
Tax charge
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Decrease in trading properties
Cash generated from operations
Interest paid
Interest received
Net cashflow from operating activities
Investing activities
Proceeds from sale of investment properties
Purchase and development of investment properties
Purchase of owner-occupied properties, plant and equipment
Purchase of other non-current investments
Proceeds from sale of other non-current investments
Proceeds from sale of joint ventures
Capital and loan payments advanced to joint ventures
Capital and loan repayments received from joint ventures
Distributions received from joint ventures
Net cashflow from investing activities
Financing activities
Proceeds from new borrowings
Parent company loan received
Parent company loan repaid
Repayment of borrowings – bank loans
Repayment of borrowings - bond
Payment of loan issue costs
Payment of finance lease liabilities
Net cashflow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
Cash is represented by:
Bank overdraft
2016
£m
2015
£m
21.7
37.9
1.1
0.8
1.6
30.1
(8.6)
(48.2)
(2.4)
0.4
0.6
3.0
0.1
7.9
0.2
17.2
25.4
(10.3)
0.6
15.7
0.8
0.8
1.0
0.7
1.3
(41.2)
(2.8)
2.7
2.9
4.1
(3.4)
1.4
21.1
23.2
(11.0)
0.5
12.7
28.9
(102.1)
(0.9)
(0.1)
36.8
(11.4)
1.6
1.8
(45.4)
4.8
(97.3)
(2.7)
(5.4)
3.1
104.7
(15.5)
2.5
3.7
(2.1)
54.0
251.3
(2.8)
(134.2)
(139.7)
(0.4)
(0.3)
27.9
(1.8)
(5.6)
(7.4)
(24.0)
(2.1)
(0.4)
(26.5)
(15.9)
10.3
(5.6)
5.9
(13.3)
(7.4)
7.2
(12.8)
(5.6)
27
Notes to the accounts
Section 1: Preparation of financial statements
1.1 Basis of preparation
The Board approved the Group financial statements on 16 June 2016. They have been prepared in accordance with
International Financial Reporting Standards and Interpretations issued by the International Financial Reporting
Interpretations Committee as adopted by the European Union (‘IFRS’) and those parts of the Companies Act 2006
applicable to companies reporting under IFRS. The financial statements are presented in Sterling and have been
prepared on a historical cost basis except that investment properties, other non-current investments and certain
financial instruments have been stated at fair value.
The principal accounting policies applied in the consolidated financial statements are set out in each note to the
financial statements. These policies have been consistently applied to all the years presented.
1.2 Going concern
The Group financial statements have been prepared on a going concern basis, which assumes that the Group will
continue to meet its liabilities as they fall due. At 31 March 2016, the Group has an intercompany loan agreement with
its parent company, Bailey Acquisitions Limited, which expires on 13 November 2017. The Company is dependent for
its working capital on funds provided to it by Bailey Acquisitions Limited. Bailey Acquisitions Limited has provided the
Company with an undertaking that for at least 12 months from the date of approval of these financial statements, it
will continue to make available such funds as are required by the Company and in particular will not seek repayment of
the amounts currently made available. The directors have considered the availability of finance in Bailey Acquisitions
Limited and are satisfied that the parent will have funds available to meet any requests for working capital made by
the Group. This should enable the Company to continue in operational existence for the foreseeable future by meeting
its liabilities as they fall due for payment. As with any company placing reliance on other group entities for financial
support, the directors acknowledge that there can be no certainty that this support will continue although, at the date
of approval of these financial statements, they have no reason to believe that it will not do so. Based on this
undertaking the directors believe that it remains appropriate to prepare the financial statements on a going concern
basis. The financial statements do not include any adjustments that would result from the basis of preparation being
inappropriate.
1.3 Significant judgements, estimates and assumptions
The preparation of financial statements under IFRS requires the Board to make judgements, estimates and
assumptions that affect the application of accounting policies, the reported amounts of assets and liabilities as at the
date of the financial statements and the reported amount of revenue and expenses during the reporting period. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to
be reasonable under the circumstances, the results of which form the basis of making the judgements that are not
readily apparent from other sources. However, the actual results may differ from these estimates. The key areas
where management has made significant judgements are around estimates regarding the valuation of properties on
the balance sheet and in joint ventures and associates. Other areas of estimation and uncertainty are included within
the accounting policies, the most significant being the continued capitalisation of interest. These judgements and
estimates are discussed in more detail in the relevant notes to these financial statements.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised.
1.4 Basis of consolidation
The Group’s financial statements consolidate those of the Company and its subsidiaries, together referred to as the
Group, and equity account for the Group’s interest in joint ventures and associates.
Subsidiaries are those entities controlled by the Group. Control exists when the Group has power, directly or indirectly,
to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The assessment of
control is performed on a continuous basis. In assessing control, potential voting rights that are currently exercisable
or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date it ceases.
28
continued
Section 1: Preparation of financial statements continued
1.4 Basis of consolidation continued
The acquisition or disposal of shares in subsidiaries and interests in joint ventures where properties constitute the only
or main asset are accounted for as property transactions unless the fair values attributed to other assets and liabilities
within the entity differ from their carrying values. The increase in the Group’s share of Albemarle (note 3.4) is
considered an asset acquisition.
1.5 Newly effective accounting standards
New standards adopted during the year
The following standards, amendments and interpretations endorsed by the EU are effective for the first time for the
Group’s 31 March 2016 year end:
-
Annual improvements to IFRSs 2010 – 2012 Cycle
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (amendments to IFRS 10 and
IAS 28)
None of the standards above has had a material impact on the Group.
Standards and interpretations in issue but not yet effective
The following standards, amendments and interpretations relevant to the Group have been issued but are not yet
effective. None of these standards or interpretations has been early adopted by the Group.
-
IFRS 9 ‘Financial Instruments’
IFRS 15 ‘Revenue from Contracts with Customers’
IFRS 16 ‘Leases’
Accounting for Acquisitions of Interest in Joint Operations (amendments to IFRS 11)
Clarification of Acceptable Methods of Depreciation and Amortisation (amendments to IAS 16 and IAS 38)
Equity Method in Separate Financial Statements (amendments to IAS 27)
Disclosure initiative (amendments to IAS 1)
Amendments regarding the recognition of deferred tax assets for unrealised losses (amendments to IAS 12)
Amendments regarding the consolidation exception amendment to IFRS 10 and IFRS 12
The Group has assessed the impact of these new standards on its financial reporting and does not believe they will
have a material impact on the Group’s existing operations.
29
continued
Section 2: Performance for the year
2.1 Revenue, cost of sales and gross profit
Accounting policy – Revenue, cost of sales and trading property sales
Revenue is stated net of VAT and comprises rental income, proceeds from sales of trading properties, fees, commissions
and other income.
Rental income from investment properties leased out under operating leases is recognised in the Consolidated Income
Statement on a straight-line basis over the term of the lease. Contingent rents, which comprise turnover rents, are
recognised as income in the periods in which they are earned. Rent reviews are recognised when such reviews have been
agreed with tenants. Surrender premiums received are considered a component of rental income and are recognised
over the remainder of the lease term.
Lease incentives are recognised as an integral part of the net consideration for use of the property and amortised on a
straight-line basis over term of lease, or the period to the first tenant break, if shorter, unless there is reasonable
certainty that the break will not be exercised.
Property operating costs are recognised on an accruals basis including any element of service charge expenditure not
recovered from tenants.
Sales of trading properties are recognised in the accounts on the date of unconditional exchange or, where an exchange
is conditional, on the date that conditions have been satisfied and where there is a confirmed date for completion.
Fees from asset and development management relate to base and performance fees receivable in respect of asset and
development management together with property procurement fees. Performance fees are recognised when it is
probable that performance criteria have been met. All other fees are recognised on a receivable basis.
Other income comprises commercialisation income, insurance commission, car parking receipts, property management
fees and miscellaneous income and is recognised on an accruals basis in accordance with the substance of the
transaction.
2016
Revenue
Rental income
Income from sale of
trading properties
Fees from asset
and development management
Intangible asset amortisation
Other income
£m
Cost of
sales
£m
22.6
(6.0)
Gross
profit/
(loss)
£m
16.6
18.9
(18.9)
8.8
11.1
61.4
(3.5)
(0.8)
(6.1)
(35.3)
2015
Revenue
£m
Cost of
sales
£m
21.3
(5.5)
Gross
profit/
(loss)
£m
15.8
-
22.9
(22.8)
0.1
5.3
(0.8)
5.0
26.1
5.5
8.0
57.7
(4.2)
(0.8)
(6.2)
(39.5)
1.3
(0.8)
1.8
18.2
Rental income includes £2.0m (2015: £3.0m) net surrender premium income from Wembley.
Intangible asset amortisation relates to the acquisition of Grafton Advisors (2006) LLP, which is being amortised over
ten years.
30
continued
Section 2: Performance for the year continued
2.1 Revenue, cost of sales and gross profit continued
Net rental income
Group net rental income
Share of joint venture and associates net rental income
Combined net rental income
2016
£m
16.6
3.8
20.4
2015
£m
15.8
5.8
21.6
2.2 Administrative expenses
The analysis of the Group’s administrative expenses was as follows:
Directors’ remuneration (note 7.2)
Administrative staff costs
Total administrative staff costs
Legal and other professional fees
Office and IT costs
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Operating lease expense
General expenses
Onerous lease provision
Professional fees related to the takeover of the Group
2016
£m
8.0
5.9
13.9
1.7
2.5
0.7
0.6
0.9
0.6
9.2
30.1
2015
£m
3.8
5.5
9.3
2.9
2.5
0.5
0.7
0.6
0.5
17.0
Future minimum lease payments payable by the Group under non-cancellable operating leases, excluding the onerous
lease, are £7.3m (2015: £8.2m) payable evenly over the next nine (2015: ten) years.
2.3 Property revaluation movements
The revaluation movements on the Group’s investment properties whether held directly or through joint ventures and
the associates were as follows:
Surplus on revaluation of directly held investment properties
Surplus on revaluation of investment properties in joint ventures
Deficit on revaluation of investment properties in associates
2016
£m
48.2
(4.6)
43.6
2015
£m
41.2
3.6
(2.5)
42.3
31
continued
2.4 Net finance expenses
Accounting policy – Capitalisation of borrowing costs
Net borrowing costs in respect of capital expenditure on properties under development are capitalised. Interest is
capitalised using the Group’s weighted average cost of borrowing from the commencement of development work until
the date of practical completion. The capitalisation of finance costs is suspended if there are prolonged periods when
development activity is interrupted. Tax relief on interest capitalised on investment properties is reflected in the
Consolidated Income Statement. All other borrowing costs are recognised in the Consolidated Income Statement in the
period in which they are incurred.
Recognised in Income Statement:
Interest expense on bank debt and associated swaps
Interest on obligations under finance leases
Impairment of financial assets
Change in fair value of ineffective caps
Recycling of cashflow hedge reserve
Fair value adjustments from swaps
Cost arising from termination of bond
Write off of unamortised borrowing costs following repayment of debt
Interest capitalised
Finance expenses
Finance income: interest income on loans and receivables
Recognised in Other Comprehensive Income:
Net surplus in fair value of quoted investments
Effective portion of changes in fair value of cashflow hedges
Recycling of the cashflow hedge reserve
2016
£m
2015
£m
13.4
0.1
0.5
2.7
24.7
2.4
43.8
(13.1)
30.7
(0.6)
30.1
13.1
0.4
0.5
1.4
0.2
15.6
(13.0)
2.6
(1.9)
0.7
(2.0)
(0.1)
(0.5)
(2.6)
(1.4)
(0.1)
(1.4)
(2.9)
The interest capitalised relates to investment properties in the course of construction. The average rate of interest
used for capitalisation was 5.9% (2015: 6.4%).
32
continued
2.5 Taxation
Accounting Policy
Tax is recognised in the Consolidated Income Statement except to the extent that it relates to items recognised in Other
Comprehensive Income, in which case the related tax is recognised under that heading. Current tax is the expected tax
payable on the taxable income for the year using tax rates applicable at the balance sheet date.
Deferred tax is provided using the balance sheet liability method in respect of all temporary differences between the
carrying amount of assets and liabilities for financial reporting purposes and the amount used for tax purposes.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities at the relevant tax rates which have been substantively enacted at the balance sheet
date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised.
i) Tax charge for the year
UK current tax at 20% (2015: 21%)
2016
£m
-
2015
£m
(0.3)
Deferred tax:
Capital allowances
Creation of tax losses
Advanced Corporation Tax (‘ACT’) recognised
Change in tax rate
Other temporary differences
Total deferred tax charge
Tax charge
9.2
1.7
(6.6)
(1.3)
0.6
(0.6)
3.0
3.0
12.4
0.4
(2.2)
(7.1)
(0.6)
2.9
2.6
2016
£m
24.7
4.9
(0.4)
1.7
1.1
(1.8)
(1.3)
(1.2)
3.0
2015
£m
40.7
8.5
(3.8)
(7.1)
0.4
0.2
2.2
2.2
2.6
ii) Tax credit reconciliation
Profit before tax
Tax applied at UK corporation tax rate of 20% (2015: 21%)
Non-deductible expenses and non-taxable items
ACT recognised
Capital allowances
Tax charge taken to share of income from joint ventures and associates
Tax losses carried forward
Prior year adjustment
Change in tax rate
Other adjustments
Tax charge
33
continued
2.5 Taxation continued
iii) Deferred tax movements
Capital gains less capital losses
Capital allowances
Derivative financial instruments
ACT
Revenue tax losses
Capital gains less capital losses
Capital allowances
ACT
Revenue tax losses
Deferred tax (asset)/liability
1 April 2015
Recognised in
Income
Statement
Recognised in Other
Comprehensive
Income
31 March 2016
£m
8.5
5.9
(0.1)
1.2
(7.1)
(6.1)
2.3
£m
7.5
0.9
0.5
(0.6)
(5.3)
3.0
£m
0.4
0.4
£m
16.4
6.8
0.4
0.6
(7.1)
(11.4)
5.7
1 April 2014
Recognised in
Income
Statement
£m
12.4
0.4
(0.6)
(7.1)
(2.2)
2.9
Recognised in Other
Comprehensive
Income
£m
0.3
0.3
31 March 2015
£m
(4.2)
5.5
(0.1)
1.8
(3.9)
(0.9)
£m
8.5
5.9
(0.1)
1.2
(7.1)
(6.1)
2.3
The Group has measured the deferred tax assets and liabilities as at 31 March 2016 using the enacted rate of 18%
(2015: 20%).
There are no unrecognised losses at 31 March 2016 (2015: £nil).
34
continued
2.5 Taxation continued
iv) Total tax charge
The tax charge recognised in these financial statements was as follows:
Tax charge on continuing operations
Tax (credit)/charge on share of profit in joint ventures (note 3.4)
Tax credit on share of loss in associates (note 3.4)
Tax charge on income and expenses recognised in other comprehensive
income
Tax charge on profit from discontinued operations
2016
£m
3.0
(0.1)
(1.6)
2015
£m
2.6
1.5
(1.3)
0.4
1.7
0.3
0.3
3.4
2016
£000
155
2015
£000
165
50
4
66
30
2
-
2.6 Fees paid to auditors and their affiliates
Fees payable to the Company’s auditor for the audit of the Company’s annual report
Fees payable to the Company’s auditor and its associates for other services:
The audit of the Company’s subsidiaries pursuant to legislation
Review of the interim accounts
Taxation compliance services
Tax advisory services
2.7 Operating lease agreements – as lessor
Accounting Policy
Properties leased out to tenants under operating leases are included in investment properties in the Consolidated
Balance Sheet with rental income recognised on a straight-line basis over the lease terms.
The Group earns rental income by leasing its investment properties to tenants under non-cancellable operating leases.
Standard lease provisions include service charge recovery and upward only rent reviews every five years. On review,
rents are increased either by a contractual formula, mainly linked to RPI, or to current market rent (estimated rental
value or ERV). Typically, single let properties are leased on terms where the tenant is responsible for repair, insurance
and running costs while multi-let properties are leased on terms which include recovery of a share of service charge
expenditure and insurance. The Group also let tenancies on terms which include a turnover based element of £1.2m
(2015: £0.8m) during the year.
Future minimum lease payments receivable by the Group under such leases were as follows:
Within one year
From one to two years
From two to five years
After five years
2016
£m
11.3
12.8
26.6
85.8
136.5
2015
£m
14.9
10.8
24.0
84.8
134.5
In addition, the Group’s share of minimum lease payments receivable under non-cancellable operating leases contained
within the Group’s joint ventures and associates were £84.4m (2015: £99.5m).
35
continued
Section 3: Property assets, joint ventures and associates
3.1 Investment properties
Accounting policy
Investment properties are properties owned or leased by the Group which are held either for long term rental growth or
for capital appreciation or both. Investment property is initially recognised at cost including related transaction costs and
valued annually by professionally qualified external valuers and, in the case of some of the Group’s non-core assets, the
Directors. Any increases or decreases in value are taken directly to the Consolidated Income Statement in the year in
which they arise.
For leasehold properties that are classified as investment properties, the associated leasehold obligations are accounted
for as finance lease obligations. Properties held under operating leases are accounted for as investment properties as
short leasehold properties where the other criteria for recognition are met. Such operating leases are accounted for as if
they are finance leases.
Property additions
Additions to investment properties consist of costs of a capital nature and, in the case of investment properties under
development, capitalised interest.
Property disposals
Disposals of investment properties are recognised in the financial statements on the date of unconditional exchange or,
where an exchange is conditional, on the date that conditions have been satisfied.
Profits or losses arising on disposal are calculated by reference to the carrying value of the asset at the last revaluation,
adjusted for subsequent capital expenditure and selling costs.
Significant estimates and judgements
The fair value of the Group’s investment properties is the main area within the financial statements where the Board has
made significant estimates. The fair value of the Group’s property portfolio is based upon external valuations and
Directors’ valuations and is inherently subjective.
36
continued
Section 3: Property assets, joint ventures and associates continued
3.1 Investment properties continued
Freehold
Long leasehold
£m
519.0
2.1
42.0
13.0
(2.1)
(16.0)
30.4
588.4
16.5
25.2
13.1
(11.8)
20.7
652.1
£m
36.4
9.8
40.6
(9.6)
(4.6)
10.2
82.8
26.4
34.7
(17.6)
26.5
152.8
Balance 31 March 2014
Additions – capital expenditure
Additions – new property
Disposals
Transfer to trading property
Revaluation surplus – continuing operations
Revaluation surplus – discontinued operations
Additions – capital expenditure
Additions – new property
Disposals
Revaluation surplus - continuing operations
Short
leasehold
£m
14.6
0.6
15.2
1.0
16.2
Total
£m
570.0
11.9
82.6
13.0
(11.7)
(16.0)
(4.6)
41.2
686.4
42.9
59.9
13.1
(29.4)
48.2
821.1
Included with “Additions – new property” are £25.6m of assets related to Albemarle Retail Properties LLP which has
been consolidated during the year (classified as an associate in the prior year) following the change in classification to
a subsidiary undertaking.
The historical cost of the Group’s investment properties as at 31 March 2016 was £761.2m (2015: £682.9m), which
included capitalised interest of £113.5m (2015: £100.4m).
The average rate used for interest capitalisation is shown in note 2.4.
Investment properties are required to be analysed by level depending on the valuation method adopted, in
accordance with IFRS 13 Fair Value Measurement:
Level 1: valuation based on quoted market prices traded in active markets
Level 2: valuation based on inputs other than quoted prices included within Level 1 that maximise the use of
observable data either directly or from market prices or indirectly derived from market prices.
Level 3: where one or more inputs to valuation are not based on observable market data.
All investment property held by the Group is classified as Level 3 and there have been no transfers between levels of
the fair value hierarchy during the year.
The key assumptions made in the valuation of the Group’s development land at Wembley are:
- future development costs including construction cost inflation;
- future residential sales values including residential sales growth rates;
- the implementation strategy for the relevant plots;
- the timing and conditions of planning consent; and
- the discount rate applied.
37
continued
The following table shows the valuation technique in measuring the fair value of development land at Wembley, as
well as the significant unobservable inputs used.
Valuation technique
Significant unobservable inputs
The fair value is derived from the
estimated future rental income and
residential sales (in line with the valuer’s
growth forecasts) from which are
deducted future costs comprising base
construction, infrastructure and future
planning obligations. The net difference
is then discounted at an annual rate. This
is then cross checked against relevant
land sale transactions on a per acre basis,
residential land sales rates per sq. ft and
land value as a percentage of Gross
Development Value (‘GDV’).
Value of Wembley development land
£477.8m (2015: £351.1m)
Inter-relationship between key unobservable inputs
and fair value measurement
The estimated fair value would increase if there was:
Expected average private residential sales
price inflation 3.5% (2015: 3.9%).
Expected average private residential sales price
inflation was higher
Expected average private residential build
cost inflation 4.1% (2015: 4.3%).
Expected average private residential build cost
inflation was lower
Private residential sales value; £635 to £716
(2015: £620 to £698) per sq. ft NIA.
Private residential sales value was higher
Private residential direct build cost; £269 to
£382 (2015: £250 to £355) per sq. ft NIA.
Private residential direct build costs were lower
Future site-wide costs £150.6m (2015:
£141.7m)
Future site-wide costs are reduced
Risk adjusted discount rate of 13.5% (2015:
14.0%).
Risk adjusted discount rate was lower
The key assumptions made in the valuation of the Group’s investment properties are:
- the amount and timing of future income streams;
- anticipated maintenance costs and other landlord’s liabilities; and
- an appropriate yield.
The following table shows the valuation technique in measuring the fair value of the Wembley investment assets, as
well as the significant unobservable inputs used.
Valuation technique
Significant unobservable inputs
The valuations reflect the tenancy data
supplied by the Group along with
associated revenue costs and capital
expenditure. The fair value of the
commercial investment portfolio has
been derived from capitalising the future
estimated net income receipts at
capitalisation rates reflected by recent
arm’s length sales transactions.
Value of Wembley investment assets
£201.1m (2015: £227.2m)
Inter-relationship between key unobservable inputs
and fair value measurement
The estimated fair value would increase if there was:
Gross ERV: £18.3m (2015: £19.1m)
An increase in the Gross ERV
Net Initial Yield: 4.4% (0.0% - 14.7%) (2015:
4.8% (0.0% - 13.9%))
A decrease in the Net Initial Yield
Reversionary Yield: 6.4% (2.6% - 14.7%)
(2015: 7.4% (3.5% - 13.9%))
A decrease in the Reversionary Yield
Equivalent Yield: 5.8% (3% - 14.5%) (2015:
6.9% (5.0% - 14.0%))
A decrease in the Equivalent Yield
The relationship between the unobservable inputs and their impact on the fair value measurement is not certain.
Changes to the tenancies and/or income profile of an investment asset may also impact the fair value outside one or
more of the above inter-relationships according to individual circumstances.
38
continued
Most of the Group’s properties, including those in associates, were externally valued as at 31 March 2016 on the basis
of Market Value by external, professionally qualified valuers in accordance with the Royal Institution of Chartered
Surveyors (‘RICS’) Valuation Professional Standards. Such valuations are carried out every twelve months. The Group’s
land and property holdings at Wembley, Silvertown and Redhill have been valued by Savills Advisory Services Ltd.
Other properties have been valued by Cushman & Wakefield and the Quercus associate by CBRE Limited (2015: Savills
Advisory Services Limited). A Directors’ Valuation has been undertaken for the Group’s remaining non-core properties.
A reconciliation of the valuations carried out by the external valuers to the carrying values shown in the Balance Sheet
was as follows:
Per valuers’ reports
Savills Advisory Services Limited
Cushman & Wakefield
Other
Directors’ Valuation
Adjustment for properties held in joint ventures and associates and as trading
Investment properties at market value
Adjustment in respect of rent-free periods and other tenant incentives
Adjustment in respect of acquisition Stamp Duty
Adjustment in respect of minimum payments under head leases separately
included as a liability in the Balance Sheet
As shown in the Balance Sheet
2016
£m
2015
£m
722.6
98.3
34.2
29.5
884.6
(50.6)
834.0
(14.0)
-
679.6
81.4
14.2
2.7
777.9
(76.3)
701.6
(14.7)
(1.8)
1.1
821.1
1.3
686.4
3.2 Capital commitments
As at 31 March 2016, the Group had capital commitments of £40.0m (2015: £53.8m) in relation to development
properties.
The Group’s share of capital commitments in relation to its joint ventures was £40.9m (2015: £31.5m).
3.3 Trading properties
Accounting policy
Trading properties are properties acquired or developed and held for sale and are shown at the lower of cost or net
realisable value. The cost of trading properties are those costs directly associated with the acquisition and development
of a specific site. Net realisable value is the estimated selling price in the ordinary course of business less estimated
costs to completion and the estimated costs necessary to make the sale.
Investment properties are transferred to trading properties when there is a change of use evidenced by
commencement of development with a view to sale. The transferred amount is the fair value of the property at the
date of reclassification.
As at 31 March 2016, properties held for resale had a carrying value of £5.9m (2015: £23.4m), which includes
capitalised interest of £nil (2015: £0.7m).
During the year, property of £nil (2015: £16.0m) was transferred from investment properties to trading property and
the Group sold trading properties with carrying values of £17.1m (2015: £22.8m).
39
continued
3.4 Investments in joint ventures and associates
Accounting policy
A joint venture is an undertaking in which the Group has a long term interest and over which it exercises joint control.
An associate is an entity in which the Group has significant influence but not control over financial and operating
policies. The Group equity accounts for its share of net profit after tax of its joint ventures and associates through the
Consolidated Income Statement. The effective portion of changes in the fair value of cash flow hedges within joint
ventures less any related tax is recognised in Other Comprehensive Income. The Group’s interest in the net assets of
joint ventures and associates is included in the Consolidated Balance Sheet.
Where an asset is transferred to an existing joint venture or the Group disposes of an interest in a subsidiary to a joint
venture, the Group recognises a share of the profit equivalent to the interest it has sold to an external party. All such
transactions occur at fair value.
Accounting policy – Property valuations (joint ventures and associates)
Investment properties are held within Quercus, the Group's healthcare associate and were held within Quantum, the
Group’s science park fund joint venture. During the year the Group disposed of its interest in the Hilton hotel joint
venture and Quantum disposed of both of its investment properties.
The joint venture and associate investment properties are valued every year by professionally qualified valuers in
accordance with the Royal Institution of Chartered Surveyors (‘RICS’) Valuation Professional Standards. The Board must
ensure that it is satisfied that the valuation of the joint venture and associate properties is appropriate for the financial
statements. The principal valuer of the Quercus investment properties is CBRE Limited (2015: Savills).
The key assumptions made in the valuation of the Quercus investment properties are the expected normalised
operating profits, rental cover levels and an appropriate discount rate.
Accounting policy – Trading properties (joint ventures and associates)
Trading properties are properties acquired or developed and held for sale and are shown at the lower of cost or net
realisable value. The cost of trading properties are those costs directly associated with the acquisition and development
of a specific site. Net realisable value is the estimated selling price in the ordinary course of business less estimated
costs to completion and the estimated costs necessary to make the sale.
Sales of trading properties are recognised in the accounts on the date of unconditional exchange or where an exchange
is conditional, on the date that conditions have been satisfied and where there is a confirmed date for completion.
40
continued
3.4 Investments in joint ventures and associates continued
Investments in joint ventures and associates
a) The Group’s interest in its joint ventures as at 31 March 2016 was as follows:
Quintain Alto Holdco Limited (‘Quintain Alto’)
(acquired on 29 April 2015)
Quintain Keystone Holdco Limited (‘Quintain
Keystone’) (acquired 14 April 2014)
Quantum Unit Trust (‘Quantum’)
Crest Nicholson BioRegional Quintain LLP
(‘OneBrighton’)
% of
ownership
50.00
Country of
incorporation
United Kingdom
Joint venture
partners
Keystone Developers
50.00
United Kingdom
Keystone Developers
50.00
50.00
Channel Islands
United Kingdom
Aviva
Crest Nicholson
% of
ownership
11.73
Country of
incorporation
Channel Islands
Other members
50.00
United Kingdom
Aviva
The Group’s interest in its associates was as follows:
Quercus Healthcare Property Unit Trust
(‘Quercus’)
Aqua Trust (‘Aqua’)
Aviva
b) The movement in investment in joint ventures was as follows:
Opening balance
Additions
Amounts repaid
Transfers
Disposals
Reclassified as an associate
Distributions
Share of profit, net of tax
Closing balance
2016
£m
60.6
11.0
(0.1)
0.2
(29.7)
(1.6)
2.4
42.8
2015
£m
80.3
15.4
(2.5)
(34.3)
(0.2)
1.9
60.6
On 3 July 2015 the Group disposed of its interest in its Hilton joint venture, for a headline consideration of £40.0m, to
its previous joint venture partner, Oaktree Capital Management LP.
41
continued
The movements in investment in associates were as follows:
Opening balance
Reclassified from joint ventures
Share of loss, net of tax
Share of other comprehensive income, net of tax
Distributions
Closing balance
2016
£m
30.5
(0.4)
(2.1)
28.0
2015
£m
1.7
34.3
(2.7)
(0.2)
(2.6)
30.5
During the year, 14.5m units of the Quercus fund were retired resulting in the Group’s interest increasing from 11.22%
to 11.73%.
On 12 May 2015, the Group increased its interest in Albemarle Retail Properties LLP from 55.13% to 28.65%, making it
a subsidiary undertaking (previously an associate). The significant assets and liabilities acquired were investment
properties valued at £25.6m, bank debt of £14.3m and a mezzanine loan fair valued at £10.5m of which the Group
holds £8.2m and which eliminates upon consolidation.
c) The summarised results of its joint venture operations was as follows:
Summarised income statements for the year ended 31 March 2016
Quintain Quintain Quantum Group share of Group share
Keystone
Alto
individually
of other
material joint
joint
ventures
ventures
100%
100%
100%
50%
50%
£m
£m
£m
£m
£m
Rental income
1.7
0.9
Income from sale of trading
16.8
8.4
properties
Revenue
16.8
1.7
9.3
Cost of sales
(17.3)
(1.8)
(1.2)
(10.2)
Gross (loss)/profit
(0.5)
(1.8)
0.5
(0.9)
(0.1)
Operating (loss)/profit
(0.6)
(1.8)
0.5
(0.9)
Surplus on revaluation of
investment properties
Profit on disposal of
5.4
2.7
(Loss)/profit before net
(0.6)
(1.8)
5.9
1.8
finance expenses and tax
Finance income
1.0
0.5
Finance costs
(Loss)/profit before tax
(0.6)
(1.8)
6.9
2.3
Tax
0.4
0.2
(0.4)
0.1
(Loss)/profit after tax and
(0.2)
(1.6)
6.5
2.4
total comprehensive income
Group share
of joint
ventures
50%
£m
0.9
8.4
9.3
(10.2)
(0.9)
(0.9)
2.7
1.8
0.5
2.3
0.1
2.4
Interest costs of £1.4m (2015: £0.8m) in Quintain Keystone and £0.4m (2015: £nil) in Quintain Alto have been
capitalised in accordance with the accounting policy described in note 2.4.
42
continued
The summarised income statement for Quercus for the year ended 31 March 2016 was as follows. The other
associates’ results are not presented as they are immaterial and contributed a net profit after tax of £0.4m (2015:
£0.2m).
Quercus
Group share
100%
11.22-11.73%
£m
£m
Rental income
32.4
3.8
Cost of sales
(1.7)
(0.2)
Gross profit
30.7
3.6
(5.1)
(0.6)
Operating profit
25.6
3.0
Profit on disposal of investment properties
4.3
0.5
Deficit on revaluation of investment properties
(42.6)
(5.0)
Finance costs
(7.7)
(0.9)
Loss before tax
(20.4)
(2.4)
Tax
13.6
1.6
Loss after tax
(6.8)
(0.8)
Share of other comprehensive income:
Effective portion of changes in fair value of cashflow hedges,
net of tax
Summarised balance sheets as at 31 March 2016
Quintain Quintain Quantum Group share of
Keystone
Alto
individually
material joint
ventures
100%
100%
100%
50%
£m
£m
£m
£m
Current assets:
12.6
3.1
42.8
29.3
Trading properties
97.9
48.6
73.3
Other assets
1.7
1.2
0.7
1.8
Total assets
112.2
52.9
43.5
104.4
Current liabilities:
(25.6)
(20.1)
(2.0)
(23.9)
Non-current liabilities:
(0.6)
(0.3)
Non-current financial liabilities
(87.5)
(34.5)
(61.0)
Net (liabilities)/assets
(0.9)
(1.7)
40.9
19.2
Represented by:
Loans to JVs
Total investment
(0.9)
25.0
24.1
(1.7)
19.8
18.1
40.9
40.9
19.2
23.5
42.7
(0.2)
-
(7.0)
(0.8)
Group share
of other
joint
ventures
50%
£m
Group share
of joint
ventures
0.1
0.1
29.3
73.3
1.9
104.5
-
(23.9)
0.1
(0.3)
(61.0)
19.3
0.1
0.1
19.3
23.5
42.8
50%
£m
43
continued
The summarised balance sheet for Quercus was as follows. The other associate’s result is not presented as it is
immaterial and contributed Group share of net assets of £2.3m (2015: £1.9m).
Quercus
Group share
100%
11.73%
£m
£m
291.6
34.2
Deferred tax asset
52.9
6.2
25.6
3.0
Other assets
4.3
0.5
Bank loans and other borrowings (current)
(21.3)
(2.5)
(14.5)
(1.7)
Bank loans and other borrowings (non-current)
(119.4)
(14.0)
Net assets
219.2
25.7
Summarised income statements for the year ended 31 March 2015
Rental income
Income from sale of trading
properties
Revenue
Cost of sales
Gross (loss)/profit
Operating (loss)/profit
Surplus on revaluation of
(Loss)/profit before net
finance expenses and tax
Finance income
Finance costs
(Loss)/profit before tax
Tax
(Loss)/profit after tax and total
comprehensive income
Quintain
Keystone
Quantum
Hilton
Group share of Group share
individually
of other
material joint
joint
ventures
ventures
50%
50%
£m
£m
8.8
0.4
Group share
of joint
ventures
100%
£m
-
100%
£m
1.8
-
100%
£m
15.8
-
(1.9)
(1.9)
(0.1)
(2.0)
-
1.8
(1.2)
0.6
0.6
0.6
15.8
(6.5)
9.3
(6.3)
3.0
6.6
8.8
(4.8)
4.0
(3.2)
0.8
3.6
0.4
(0.4)
-
9.2
(5.2)
4.0
(3.2)
0.8
3.6
(2.0)
1.2
9.6
4.4
-
4.4
(2.0)
(2.0)
1.0
2.2
(0.3)
1.9
(3.0)
6.6
(2.7)
3.9
0.5
(1.5)
3.4
(1.5)
1.9
-
0.5
(1.5)
3.4
(1.5)
1.9
50%
£m
8.8
0.4
Interest costs of £0.8m in Quintain Keystone have been capitalised in accordance with the accounting policy described
in note 2.4
44
continued
The summarised income statement for Quercus for the year ended 31 March 2015 was as follows. The other
associates’ results are not presented as they are immaterial and contributed a net profit after tax of £0.2m
Quercus
Group share
100%
11.22%
£m
£m
Rental income
34.8
3.9
Income from sale of trading properties
5.3
0.6
Revenue
40.1
4.5
Cost of sales
(5.2)
(0.6)
Gross profit
34.9
3.9
(6.6)
(0.7)
Operating profit
28.3
3.2
Loss on disposal of investment properties
(30.3)
(3.4)
Deficit on revaluation of investment properties
(24.1)
(2.7)
Finance costs
(11.9)
(1.3)
Loss before tax
(38.0)
(4.2)
Tax
11.6
1.3
Loss after tax
(26.4)
(2.9)
Share of other comprehensive income:
Effective portion of changes in fair value of cashflow hedges,
net of tax
(1.5)
(0.2)
(27.9)
(3.1)
Summarised balance sheets as at 31 March 2015
Quintain Quantum
Keystone
Non-current assets:
Current assets:
Trading properties
Other assets
Total assets
Non-current financial liabilities
Represented by:
Loans to JVs
Total investment
100%
£m
100%
£m
100%
£m
Group share of
individually
material
joint ventures
50%
£m
-
13.1
62.3
37.7
0.1
37.8
1.3
53.5
1.1
55.9
2.8
23.0
38.9
2.2
2.5
67.0
3.1
26.8
13.3
80.9
0.1
0.2
3.1
26.8
13.4
81.1
(19.7)
(1.0)
(5.3)
(13.0)
-
(13.0)
(37.3)
(1.1)
(0.2)
37.7
(2.4)
(42.2)
17.1
(1.3)
(39.8)
26.8
0.2
(1.3)
(39.8)
27.0
(1.1)
25.0
23.9
37.7
37.7
17.1
42.2
59.3
26.8
33.6
60.4
0.2
0.2
27.0
33.6
60.6
Hilton
Group share
of other
joint
ventures
50%
£m
Group share
of joint
ventures
50%
£m
45
continued
The summarised balance sheet for Quercus was as follows. The other associates’ results are not presented as they are
immaterial and contributed Group share of net assets of £1.9m
Quercus
Group share
100%
11.22%
£m
£m
387.7
43.5
Deferred tax asset
41.9
4.7
21.1
2.4
Other assets
9.2
1.0
Bank loans and other borrowings (current)
(53.5)
(6.0)
(14.3)
(1.6)
Bank loans and other borrowings (non-current)
(137.2)
(15.4)
Net assets
254.9
28.6
During the year, the Group received the following fees in respect of services provided to its joint ventures and
associates:
2016
£m
Quercus
1.1
Quintain Alto
1.0
Quintain Keystone
2.4
4.5
2015
£m
1.3
0.8
2.1
During the year, the Group received the following interest on its loan notes to its former joint venture:
2016
£m
Hilton
0.4
2015
£m
1.5
46
continued
Section 4: Acquisitions and disposals
4.1 Discontinued operations
During the prior year the Group sold its 50% interest in iQ to its joint venture partner, Wellcome Trust. The sale
completed on 16 May 2014 and consideration consisted of £106.4m in cash.
Cash flows from discontinued operations
Net cash from operating activities
Net cash from investing activities
Net cash used in financing activities
Effect on cash flows
2016
£m
2015
£m
-
0.3
104.7
105.0
47
continued
Section 5: Other assets and liabilities
5.1 Non-current receivables
Accounting policy
Non-current receivables comprise loans and receivables due in more than one year and long term investments in
property related structures where the Group does not have control or significant influence. Loans and receivables are
held at amortised cost using the effective interest rate method. Property related investments are designated as available
for sale, shown at fair value. Adjustments to fair value are recognised in other comprehensive income except for
impairments which are reflected in the Consolidated Income Statement.
Impairment
The carrying values of the Group’s assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If such indication becomes evident, the asset’s recoverable amount is estimated and an
impairment loss recognised in the Consolidated Income Statement whenever the carrying amount of the asset exceeds
its recoverable amount.
The recoverable amount of an asset is the greater of its fair value less sale costs and its value-in-use. The value-in-use is
determined as the net present value of the future cash flows expected to be derived from the asset, discounted using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset.
The movement in other non-current receivables was as follows:
Investments at
fair value
Opening balance
Additions
Impairment
Disposals
Revaluation surplus
Closing balance
£m
14.3
0.1
2.0
16.4
2016
Total
£m
14.3
0.1
2.0
16.4
Loans at
amortised
cost
£m
2.9
(2.9)
-
Investments
at fair value
£m
8.1
5.3
(0.5)
1.4
14.3
2015
Total
£m
11.0
5.3
(0.5)
(2.9)
1.4
14.3
48
continued
Section 5: Other assets and liabilities continued
5.2 Current trade and other receivables
Accounting policy
Trade and other receivables are recognised at amortised cost. A provision for impairment of trade receivables is
established where there is objective evidence that the Group will not be able to collect all amounts due.
Trade receivables
Amounts due from related parties
Other receivables
Trade and other receivables
Prepayments and accrued income
Loans at amortised cost
2016
£m
7.8
1.4
12.6
21.8
13.7
35.5
2015
£m
7.0
4.5
9.4
20.9
13.8
8.2
42.9
The ageing of trade and other receivables and loans at amortised cost was as follows:
Trade and other receivables:
Not past due
Past due less than one month
Past due one to three months
Past due three to six months
Past due over six months
Loans at amortised cost:
Non-current
Current
Gross
£m
20.3
1.1
0.3
0.1
0.1
21.9
Impairment
£m
(0.1)
(0.1)
2016
Net
£m
20.3
1.1
0.3
0.1
21.8
Gross
£m
19.9
0.5
0.4
0.1
0.3
21.2
Impairment
£m
(0.1)
(0.2)
(0.3)
2015
Net
£m
19.9
0.5
0.4
0.1
20.9
21.9
(0.1)
21.8
10.7
31.9
(2.5)
(2.8)
8.2
29.1
The following amounts due from related parties, which are unsecured, are included in trade and other receivables:
2016
£m
Quercus
1.2
Quantum
Hilton
Quintain Keystone
0.2
1.4
2015
£m
1.0
0.4
3.0
0.1
4.5
49
continued
Section 5: Other assets and liabilities continued
5.3 Credit risk
The Group’s exposure to credit risk arises from potential financial loss if a tenant or counterparty to a financial
instrument fails to meet its contractual obligations. The credit rating of counterparties to financial instruments is kept
under review, particularly in the light of the current economic climate.
The Group's activities are focused exclusively in the United Kingdom and the Channel Islands. Within this geographical
area, its exposure to credit risk arising from trade and other receivables is influenced by the individual characteristics
of each tenant and debtor. As at 31 March 2016, the Group's 20 largest tenants within its directly held properties and
its joint ventures and associates accounted for 50.3% (2015: 40.4%) of passing rents.
The Group operates a policy whereby the creditworthiness of each tenant is assessed prior to lease or pre-lease terms
being agreed. The process includes seeking external ratings where available and reviewing financial information in the
public domain. In certain cases, the Group will require collateral to support these lease obligations. This usually takes
the form of a rent deposit, parent company guarantee or a bank guarantee.
Rent collection is outsourced to managing agents who report regularly on payment performance and provide the
Group with intelligence on the continuing financial viability of tenants. Arrears are monitored on a weekly basis by the
internal property management teams and a strategy for dealing with significant potential defaults is presented on a
timely basis by the property managers. Outstanding tenant balances are reviewed on a quarterly basis for impairment
with no further charge being made in the current year (2015: £nil).
The Group’s maximum exposure to the credit risk arising from non-current and current receivables amounts to £21.8m
(2015: £29.1m). The Board does not believe there is a significant credit risk in respect of those financial assets that are
not yet due and not impaired.
5.4 Other payables (non-current)
Unsecured loan notes
Interest rate swaps at fair value
Other creditors
2016
£m
1.1
0.7
1.8
2015
£m
1.4
0.1
1.7
3.2
The Company acquired Grafton Advisers (2006) LLP in February 2012 and, in addition to the cash consideration, the
Grafton management team was issued with Unsecured Loan Notes (‘loan notes’). During the current year these loan
notes were settled as a result of the Group’s acquisition by Lone Star. A total consideration of £1.5m was paid as a
result and of this £0.7m was paid to a director.
5.5 Current trade and other payables
Accounting policy
Non-derivative trade and other payables are non-interest bearing and are initially recognised at fair value and
subsequently measured at amortised cost.
Trade payables
Other payables
Accruals and deferred income
Interest rate swaps at fair value
2016
£m
1.1
2.7
19.3
1.6
24.7
2015
£m
3.7
0.4
21.7
0.4
26.2
50
continued
Section 6: Funding
6.1 Bank loans and other borrowings
Accounting policy – interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Borrowings are
subsequently stated at amortised cost with any difference between the amount initially recognised and the redemption
value being recognised in the Consolidated Income Statement over the period of the borrowings on an effective
interest rate basis.
Overdraft
Mezzanine loan
Bank loans
Bond
Parent company loan
Represented by:
Bank and other loans (including the Bond)
Unamortised borrowing costs
2016
£m
2015
£m
13.3
1.7
15.0
12.8
12.8
253.2
253.2
268.2
77.5
115.0
192.5
205.3
268.2
268.2
208.0
(2.7)
205.3
The bank loans and bond were settled following the Group’s acquisition by Lone Star Funds. These external loans were
replaced with intercompany debt, with a term of two years, payable to the Group’s parent, Bailey Acquisitions Limited.
Interest of £3.2m has been charged on this debt. Bailey Acquisitions Limited has external debt with Wells Fargo Bank
N.A. As at 31 March 2016 the balance of this debt stood at £450.2m.
The maturity profile of the Group’s debt was as follows:
Within one year
After five years
2016
Drawn
debt
£m
15.0
253.2
268.2
2015
Drawn
debt
£m
12.8
80.2
115.0
208.0
2016
Undrawn
facilities
£m
6.7
6.7
2015
Undrawn
facilities
£m
7.2
160.0
167.2
51
continued
Section 6: Funding continued
6.1 Bank loans and other borrowings continued
The interest rate profile of the Group’s debt before interest rate swap arrangements at the Balance Sheet date was as
follows:
Percent
2016
£m
13.3
254.9
268.2
2.0 – 3.0
3.0 – 4.0
4.0 – 5.0
5.0 – 6.0
6.0 – 7.0
2015
£m
92.8
0.2
115.0
208.0
After taking account of interest rate swap arrangements, the risk profile of the Group’s borrowings was as follows:
2016
Total
Fixed
Capped
debt
Fixed
Capped
£m
£m
£m
£m
£m
Sterling
268.2
268.2
165.0
43.0
2015
Total
debt
£m
208.0
The weighted average interest rate and the weighted average period of the Group’s fixed rate debt were as follows:
2016
2015
2016
2015
%
%
years
years
Sterling
6.0
5.6
2
4
The maturity profile of the Group’s share of debt held within its joint ventures and associates was as follows:
2016
Less than one year
Quintain Alto
£m
7.4
7.4
2016
Quintain
Keystone
£m
31.3
31.3
2016
Quercus
£m
2.5
14.0
16.5
2015
Quintain
Keystone
£m
6.6
6.6
2015
Quercus
£m
6.0
15.4
21.4
The debt relating to the Quintain Keystone and Quintain Alto joint ventures are secured over the residential
developments.
The debt relating to Quercus is secured over the properties within the fund.
52
continued
6.2 Maturity of contractual cash flows of financial liabilities
As at 31 March 2016
Within one year
From five to 25 years
After 25 years
As at 31 March 2015
Within one year
From five to 25 years
After 25 years
Bank loans
Trade and
other
payables
Interest rate
swaps
£m
29.4
263.1
3.4
295.9
£m
3.8
3.8
£m
1.6
0.7
0.4
2.7
Bank loans
(including
the Bond
and interest)
£m
23.1
9.4
106.5
117.5
256.5
Trade and
other
payables
Interest rate
swaps
£m
4.1
4.1
£m
0.4
0.1
0.5
Obligations
under
finance
leases
£m
0.2
0.2
0.5
0.7
2.0
3.6
Non-current
liabilities:
Other
creditors
£m
0.7
0.7
Obligations
under
finance
leases
£m
0.2
0.2
0.5
1.0
2.1
4.0
Non-current
liabilities:
Other
creditors
£m
1.4
1.7
3.1
Total
£m
35.0
264.0
5.0
0.7
2.0
306.7
Total
£m
27.8
11.1
108.7
118.5
2.1
268.2
As at 31 March 2016 the fair values of the Group’s financial assets and liabilities were equal to their book values (2015:
negative fair value adjustment of £10.2m).
6.3 Financial instruments
Accounting policy
The Group uses derivative financial instruments to manage its interest rate risk. These financial instruments are
recognised initially at fair value and subsequently re-measured at fair value.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged
items, as well as its risk management objectives and strategy for undertaking various hedging transactions. When a
derivative is designated as the hedging instrument in a hedge of the variability in cashflows attributable to a particular
risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or
loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income
and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is
recognised immediately in the Consolidated Income Statement within finance income/expense. The amount
accumulated in equity is reclassified to the Consolidated Income Statement in the same period that the hedged item
affects profit or loss.
53
continued
6.3 Financial instruments continued
i) Interest rate swaps
As at 31 March 2016, the maturity profile of the Group’s interest rate swaps, which were designated as hedging
instruments in 2015 but not in 2016, with all fair value movements taken to profit and loss (2015: other
comprehensive income), was as follows:
2016
2015
£m
£m
Within one year
100.0
75.0
50.0
125.0
300.0
50.0
The weighted average contract rate was 1.15% (2015: 1.61%). The £115m seven year 6.5% Bond, settled during the year, is not
included in this analysis but represented a fixed rate instrument.
ii) Interest rate caps
As at 31 March 2016, the maturity profile of the Group’s interest rate caps, which were not designated as hedging
instruments with all fair value movements therefore taken to the Consolidated Income Statement, was as follows:
2016
2015
£m
£m
Within one year
150.0
150.0
The weighted average contract rate was nil (2015: 2.77%).
iii) Joint ventures and associates
As at 31 March 2016, the maturity profile of swaps within Quercus was as follows:
Within one year
2016
£m
75.0
75.0
2015
£m
100.0
100.0
The weighted average contract rate was 1.08% (2015: 1.08%).
6.4 Financial risk factors
The Group is exposed to the following types of risk from its use of financial instruments:
Credit risk (see note 5.3)
Liquidity risk
Market risk
This note presents information about the nature of the Group's exposure, its objectives, policies and processes for
measuring and managing risk and the Group's management of capital. Further quantitative disclosures are included
throughout these consolidated financial statements.
The Board has overall responsibility for the establishment and oversight of the Group's risk management framework as
described in the Risk Management section of the Annual Report.
54
continued
6.4 Financial risk factors continued
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. The Group, through its training and
management standards and procedures, aims to develop a disciplined and constructive control environment in which
all employees understand their roles and obligations.
The Group's Audit Committee oversees how management monitors compliance with the Group's risk management
policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by
the Group.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as these fall due.
Cash levels are monitored to ensure sufficient resources are available to meet the Group's operational requirements.
The Group has a £20m overdraft facility to manage day to day cash movements. Surplus cash is used to reduce the
overdraft.
The Group's policy is to finance its activities using equity and medium term debt, the proportions depending on the
profile of the operational and financial risks to the business.
Market risk
In relation to the Group, market risk arises mainly from the impact that changes in interest rates might have on the
Group’s cost of borrowing. Excluding amortisation of arrangement fees, the weighted average rate of interest relating
to the Group’s debt as at 31 March 2016 was 6.0% (2015: 4.9%).
The Group does not speculate in treasury products and only uses these to limit the impact of potential interest rate
fluctuations. For borrowings at floating rates of interest, financial instruments are used to hedge the exposure to
interest rate fluctuations. As at 31 March 2016, 100% (2015: 79.3%) of the Group’s net debt was fixed or covered by
interest rate swaps. Further information on the Group’s financial instruments is given in note 6.3.
As at the year end, the fair values of the Group’s outstanding derivative financial instruments, as shown in note 5.4 and
5.5 (2015: notes 5.2, 5.4 and 5.5), have been estimated by Wells Fargo Securities International Limited (2015: JC
Rathbone Associates Limited financial risk consultants), by calculating the present value of future cash flows, using
appropriate market discount rates, representing Level 2 fair value measurements as defined by IFRS 13, ‘Fair Value
Measurements’. The investments held at fair value as presented in note 5.1 consist of investments where quoted
prices are available but in markets that are not considered active; therefore these are considered Level 3 fair value
measurements. All other financial liabilities and assets are deemed to be Level 3.
The Group is also exposed to market rate risk through the activities of its joint ventures and associates, which borrow
at variable rates and use financial instruments to safeguard against market movements in rates. This is disclosed in
note 6.3 in respect of the Group’s interests in Quercus.
55
Continued
6.4 Financial risk factors continued
Summary of the impact of a movement of 50 basis points on the cost of Group debt:
i
Income Statement:
Interest expense on bank debt and shareholder
loans
Change in fair value of ineffective caps and
swaps
Increase/(decrease) in Group profit or loss
Other Comprehensive Income:
Effective portion of changes in fair value of
cashflow hedges
Increase/(decrease) in Group net assets
2016
Increase
£m
2016
Decrease
£m
2015
Increase
£m
2015
Decrease
£m
0.2
(0.2)
(0.1)
0.1
1.8
(1.8)
-
-
2.0
(2.0)
(0.1)
0.1
-
-
0.4
(0.4)
2.0
(2.0)
0.3
(0.3)
Capital management
The Board’s policy is to maintain a strong capital base to sustain the future development of the business. Capital
consists of ordinary shares, other capital reserves and retained earnings.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements other than
those referred to above in connection with the Group’s financing arrangements.
6.5 Share capital
Allotted, called up and fully paid:
In issue as at 31 March 2015
Issue of shares under shared-based payment schemes and loan note redemption
Number of
shares
m
Nominal
value
£m
526.1
2.4
528.5
131.5
0.6
132.1
The shares had a nominal value of £0.25. The Company has not acquired or held any of its own shares under a share
buyback arrangement during the year.
56
continued
6.5 Share capital continued
The movement in the year in the number and weighted average exercise price of outstanding options and awards was:
2015
Weighted
average
exercise
price
m
pence
m
pence
In issue as at 1 April
2.9
5.2
12.8
Issue of new awards
2.1
1.8
Options vested
(4.2)
Options exercised
(0.7)
(0.1)
25.0
Options lapsed
(0.1)
(4.0)
27.2
In issue as at 31 March
2.9
The weighted average exercise price at the date of exercise for share options exercised during the year was £nil (2015:
£0.25). The options and awards outstanding as at 31 March 2016 had an average remaining contingent life of nil years
(2015: 1.2 years).
Number of
shares
2016
Weighted average
exercise
price
Number of
shares
6.6 Other reserves
The analysis of other capital reserves was as follows:
Capital redemption reserve
Merger reserve
Revaluation reserve
2016
£m
2.1
106.0
3.0
111.1
2015
£m
2.1
106.0
1.4
109.5
The capital redemption reserve reflects the nominal value of shares purchased by the Group for cancellation.
Merger reserve
The merger reserve has arisen following corporate acquisitions where the Group’s equity has formed all or part of the
consideration and represents the premium on the shares issued less costs.
Revaluation reserve
The revaluation reserve comprises the movement in fair value on available for sale financial assets.
57
continued
Section 7: Staff costs, key management and employee benefits
7.1 Staff costs and numbers
Staff costs are included in both cost of sales and administrative expenses. Gross staff costs were as follows:
2016
£m
Wages and salaries
14.1
Less amount capitalised
(2.1)
Total costs relating to share-based payment schemes
2.2
Social security costs
2.1
Pension costs
0.7
Employment termination costs
0.2
Other employment costs
1.0
18.2
Cost of sales
4.4
13.8
18.2
2015
£m
10.3
(1.3)
1.0
1.1
0.8
1.4
13.3
4.0
9.3
13.3
Contributions to employees’ personal plans are charged to the Consolidated Income Statement as incurred.
The average number of persons employed by the Group during the year was as follows:
Total
1
2016
90
2015
88
1
Excluded from the total above are staff employed by Clifton Care Home Limited, a wholly owned subsidiary based in Jersey. During the year the
Group sold Clifton Care Home with the staff transferred under TUPE to the new owners as part of the transaction. Average number of persons
employed, up to the date of disposal was 41 (2015: 40).
Staff are allocated between cost of sales and administrative expenses as follows:
Cost of sales
2016
2015
25
72
97
25
63
88
7.2 Directors’ remuneration
The remuneration of the directors, who are the key management personnel of the Group, is set out below in aggregate
for each of the applicable categories specified in IAS 24, ‘Related Party Disclosures’.
2016
2015
£m
£m
Short-term employee benefits
5.8
2.8
2.0
0.8
Post-employment benefits
0.2
0.2
Directors’ remuneration included in administrative expenses (note 2.2)
8.0
3.8
The members of the Board are the only key management personnel as defined under IAS 24.
The total remuneration of the highest paid director was £2.4m (2015: £1.2m). The aggregate of remuneration and
amounts receivable under long term incentive schemes of the highest paid director was £2.3m (2015: £1.1m) and
company pension contributions of £0.1m (2015: £0.1m) were made to a money purchase scheme on his behalf.
58
continued
Section 7: Staff costs, key management and employee benefits continued
7.2 Directors’ remuneration continued
Number of directors
2016
2015
Retirement benefits are accruing to the following number of directors under:
Money purchase schemes
The number of directors in respect of whose qualifying services shares were received or
receivable under long term incentive schemes was
3
3
3
3
7.3 Share-based compensation
Accounting policy – share-based payment scheme
The fair value of equity rights is estimated using the Black Scholes and binomial models at the date of grant to directors
and staff and is dependent on factors such as the exercise price, expected volatility, option price and risk free interest
rate. The fair value is then amortised through the Consolidated Income Statement on a straight-line basis over the
vesting period. Expected volatility is determined based on the historic share price volatility (market price) for the
Company on the grant date over a period matched to the expected life of the awards.
The amount recognised as an expense is adjusted to reflect the actual number of share options that vest, except where
forfeiture is due only to the share price not achieving the threshold for vesting.
During the year all previous share-based payment arrangements were settled following the Group’s acquisition by
Lone Star.
59
continued
Section 8: Company balance sheet and notes
8.1 Company balance sheet
As at 31 March 2016
Fixed assets
Tangible fixed assets
Fixed asset investments
Current assets
Debtors
Cash at bank and in hand
Provisions for liabilities and charges
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Net assets
Capital and reserves
Called up share capital
Share premium account
Cashflow hedge reserve
Fair value reserve
Profit and loss account
Investment in own shares
Shareholders' funds
Notes
8.5
8.6
8.7
8.9
8.8
8.13
8.13
2016
£m
2015
£m
2.1
355.1
357.2
2.6
353.3
355.9
966.1
0.8
966.9
(579.2)
(0.2)
387.5
744.7
(254.4)
490.3
869.0
0.4
869.4
(644.2)
(2.6)
222.6
578.5
(80.1)
498.4
132.1
139.0
108.1
3.7
107.4
490.3
131.5
138.9
108.1
(0.5)
1.7
126.5
(7.8)
498.4
Approved by the Board of Directors on 16 June 2016 and signed on its behalf by:
SIMON CARTER
Director
Company registration no. 2694983
60
continued
Section 8: Company balance sheet and notes continued
8.2 Company Statement of Changes in Equity
Loss for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income/(loss) for the year
Vesting of share based payment scheme
Share
capital
Share
premium
Cashflow
hedge
reserve
£m
(0.5)
-
Fair value
reserve
Retained
earnings
Own shares
reserve
£m
138.9
-
Other
capital
reserves
£m
108.1
-
£m
1.7
-
£m
126.5
(12.5)
£m
(7.8)
-
Equity
shareholders’
funds
£m
498.4
(12.5)
£m
131.5
0.6
132.1
0.1
139.0
108.1
0.5
0.5
-
2.0
2.0
3.7
(12.5)
1.6
(8.2)
107.4
8.2
(0.4)
-
2.5
(10.0)
1.6
0.3
490.3
Share
capital
Share
premium
Retained
earnings
Own shares
reserve
£m
137.3
-
Cashflow
hedge
reserve
£m
(0.6)
-
Fair value
reserve
£m
130.2
-
Other
capital
reserves
£m
108.1
-
£m
(1.1)
-
£m
137.1
(11.4)
£m
(7.8)
-
Equity
shareholders’
funds
£m
503.2
(11.4)
-
-
-
0.1
2.8
-
-
2.9
-
-
-
0.1
2.8
-
(11.4)
-
(8.5)
1.3
131.5
1.6
138.9
108.1
(0.5)
0.8
126.5
(7.8)
0.8
2.9
498.4
Loss for the year
Other comprehensive income for
the year, net of tax
Total comprehensive income/(loss) for
the year
payment schemes
1.7
61
continued
8.3 Profit for the year
As permitted by section 408 of the Companies Act 2006, the profit and loss account and statement of other
comprehensive income of the Company is not presented as part of these financial statements. The result for the year
attributable to equity shareholders dealt within the financial statements was a loss of £12.5m (2015: loss £11.4m). The
Company had no employees in the year (2015: none).
Amounts paid to the Company’s auditor in respect of the services to the Company, other than as the auditor of the
Company’s financial statements, have not been disclosed as the information is required instead to be disclosed on a
consolidated basis in note 2.6 of the Group financial statements.
8.4 Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material
in relation to the financial statements:
i) Basis of preparation
The financial statements have been prepared in accordance with applicable accounting standards and under the
historical cost accounting rules except that other fixed asset investments and derivative financial instruments have
been stated at fair value. The financial statements have been prepared in compliance with United Kingdom
Accounting Standards, including Financial Reporting Standard 101 The Financial Reporting Standard applicable in the
United Kingdom and the Republic of Ireland (“FRS 101”). In the transition to FRS 101, the Company has applied IFRS 1
whilst ensuring that its assets and liabilities are measured in compliance with FRS 101. The impact of first time
adoption of FRS 101 is given in note 8.17.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the
following disclosures:
 A Cash Flow Statement and related notes;
 The effects of new but not yet effective IFRSs;
 Disclosures in respect of capital management;
 Disclosures in respect of transactions with wholly owned subsidiaries
As the consolidated financial statements include the equivalent disclosures, the Company has also taken advantage of
the exemptions available under FRS 101 in respect of the disclosures required by IFRS 7 Financial Instrument
Disclosures and IFRS 13 Fair Value Measurement.
ii) Going concern
The Company’s financial statements have been prepared on a going concern basis which assumes that the Company
will continue to meet its liabilities as these fall due. As the Company is party to the loan arrangements of the Group
similar risks and uncertainties apply and therefore the going concern paragraphs on page 27 of the Group financial
statements are equally relevant to the Company.
iii) Turnover and cost of sales
Turnover is stated net of VAT and comprises fees and commissions receivable from participating interests. Fees from
asset and development management relate to base and performance fees receivable in respect of asset management
and procurement fees. Performance fees are recognised when it is certain that performance criteria have been met.
iv) Tangible fixed assets
These assets comprise long leasehold property, fixtures, fittings & equipment and are carried at cost less accumulated
depreciation and impairment.
Depreciation is charged on fixtures, fittings and equipment on a straight-line basis over the useful life of these assets
estimated at between three and ten years.
62
Continued
8.4 Accounting policies continued
v) Investments
Investments in subsidiaries, joint ventures and associates are held in the Company balance sheet at cost and reviewed
for impairment.
Other investments are shown at fair value. Revaluation movements are recognised through equity, unless the
investment is impaired and revaluation movements are recognised in the income statement.
vi) Impairment of non-financial assets
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount.
vii) Taxation
The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing
differences between the treatment of certain items for taxation and accounting purposes.
Deferred taxation is recognised, without discounting, for all timing differences between the treatment of certain items
for taxation and accounting purposes which have arisen but not reversed by the balance sheet date. Deferred tax
assets are recognised to the extent that they are considered recoverable.
viii) Financial instruments
Debtors
Debtors are recognised at invoiced values less provisions for impairment. A provision for impairment of debtors is
established where there is objective evidence that the Company will not be able to collect all amounts due according
to the agreed terms of the receivables concerned.
Cash at bank and in hand
Cash at bank and in hand consists of cash in hand, deposits with banks and other short term, highly liquid investments
with original maturities of three months or less.
Creditors due within one year, other than bank loans and overdrafts, are non-interest bearing and are recognised at
invoiced amounts.
Creditors: amounts falling due after more than one year
These creditors consist of interest bearing borrowings, which are recognised initially at fair value less attributable
transaction costs. Borrowings are subsequently stated at amortised cost with any difference between the amount
initially recognised and the redemption value being recognised in the income statement over the period of the
borrowings on an effective interest rate basis.
63
continued
8.4 Accounting policies continued
viii) Financial instruments continued
The Company uses derivative financial instruments to help manage its interest rate risk. These derivative financial
instruments are recognised initially at fair value and subsequently re-measured. The gain or loss on re-measurement to
fair value is recognised immediately in the income statement, unless the derivatives qualify for hedge accounting as
cashflow hedges in which case the effective element of the gain or loss is recognised directly through reserves in a
hedging reserve.
The fair value of derivative financial instruments is the estimated amount that the Company would receive or pay to
terminate the instrument at the balance sheet date, taking account of current interest rates and the current
creditworthiness of the counterparties.
The Company’s derivative financial instruments are shown in these accounts at fair value as derived by Wells Fargo
Securities International Limited (2015: JC Rathbone Associates Limited, financial risk consultants), based on market
prices, estimated future cashflows and forward rates as appropriate.
ix) Share-based payments
The fair value of equity rights is estimated using the Black Scholes and binomial models at the date of grant to the
directors and staff and is dependent on factors such as the exercise price, expected volatility, option price and risk free
interest rate. The fair value is then amortised to the income statement on a straight-line basis over the vesting period.
Expected volatility is determined based on the historical share price volatility (market price) for the Company on the
grant date over a period matched to the expected life of the awards.
x) Guarantees
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of obligations of its
subsidiaries, the guarantee contract is treated as a contingent liability until such time as it becomes probable that the
guarantor will be required to make payments under the guarantee.
8.5 Fixed asset investments
Valuation
Impairment
Revaluation gain
Balance at 31 March 2016
Shares in
subsidiary
undertakings
£m
Shares in
associates
Other
Total
£m
£m
£m
339.8
(0.2)
339.6
0.1
0.1
13.4
2.0
15.4
353.3
(0.2)
2.0
355.1
All investments are held at cost except for other investments which are held at fair value.
64
continued
8.5 Fixed asset investments continued
i) Subsidiaries
Principal activity
Incorporated in the United Kingdom:
Albemarle Egham Limited Liability Partnership
Albemarle Property Opportunities Limited Liability
Partnership
Albemarle Retail Properties Limited Liability Partnership
Albemarle Stafford A3 Limited Liability Partnership
Albemarle Sussex Limited Liability Partnership
Albion Property Investments Limited
Arrow Valley Management Company Limited
Basepraise Limited
BQL Limited
BQL Brighton Limited
BQL (Gallions Limited)
BQL (Middlesbrough) Limited
Cherry Tree Investments Wembley Limited
Chesterfield Investments (No.1) Limited
Chesterfield Investments (No.5) Limited
Chesterfield (Neathouse) Limited
Chesterfield (No.6) Limited
Chesterfield Properties Limited
Chestergrove Limited
Comchester Properties Limited
Comgrove Properties Limited
CLE Residential Limited
Croydon Land Limited
Croydon Land (Holdings) Limited
Croydon Land No.2 Limited
Croydon Properties Limited
Disknote Limited
Emersons Green Development Company Limited
English & Overseas Investments Limited
English & Overseas Properties Limited
Epic Commercial Properties Limited
Estates Property Investment Company Limited
Estates Property Investment Company (Holdings) Limited
Factory Holdings Group Limited
Flatplate Limited
Fulton Road Limited
GCT (North Finchley) Limited
Gideon 1 Limited
Gideon 2 Limited
Gideon 3 Limited
Gideon 4 Limited
Giltvote Limited
GPRL Development Company Limited
% of share
capital held by:
Company
Subsidiary
Property investment
55.71%
Property investment
Property investment
Property investment
Property investment
Investment holding
Dormant
Investment holding
Property investment
Property investment
Property investment
Property investment
Investment holding
Property investment
Property investment
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Property investment
Dormant
Dormant
Dormant
Dormant
Dormant
Investment holding
Dormant
Dormant
Dormant
Dormant
Investment holding
Property investment
Dormant
Investment holding
Dormant
Dormant
Investment holding
Property investment
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
55.71%
55.71%
55.71%
55.71%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
85%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
65
continued
i) Subsidiaries continued
Principal activity
GPRL GP Retail Limited
Grafton Advisors (2006) LLP
Grange 31 Warrington (61) (No.1) Limited
Grange 31 Warrington (61) (No.2) Limited
Greenwich Peninsula N0204 Block B GP Holdings Limited
Greenwich Peninsula Retail LLP
HHW Hotel 1 Limited
HHW Hotel 2 Limited
HHW Hotel 3 Limited
HHW Hotel 4 Limited
Institutional Property Consultants Limited
iQ (Investor 1) Limited
Keswick Estates Limited
Keswick Holdings Limited
Letterbag Limited
Listed Offices Limited
London Designer Outlet Limited Partnership
One Russell Road Limited
Orderthread Limited
Permitobtain Limited
Portman Lime Tree Limited
Q-Court LLP
Qoin Limited
Quintain Finance Limited
Quintain (Beverley) Limited
Quintain (Chesterwood) Limited
Quintain (Clifton Jersey) Limited
Quintain (Holdings) Limited
Quintain (Juniper Close) Limited
Quintain (Kingston) Limited
Quintain (Manchester) Limited
Quintain (N0204 A) Investor Limited
Quintain (N0204 B) Investor Limited
Quintain (No.8) Limited
Quintain (Oxford) Limited
Quintain (Stadium Retail Park) Limited
Quintain (Signal Two) Limited
Quintain (Swansea) Limited
Quintain (Walworth Road) Unitholder A Limited
Quintain (Walworth Road) Unitholder B Limited
Quintain (Wembley) Limited
Quintain (Wembley Retail Park) Limited
Quintain (Wembley Retail LP) Limited
Quintain (York) Limited
Dormant
Asset Management
Dormant
Dormant
Dormant
Dormant
Property investment
Property investment
Property investment
Property investment
Dormant
Dormant
Dormant
Dormant
Property investment
Property investment
Property investment
Property investment
Dormant
Property investment
Property investment
Property investment
Property investment
Funding
Dormant
Dormant
Property investment
Investment holding
Property investment
Investment holding
Property investment
Dormant
Dormant
Property Investment
Property investment
Property investment
Dormant
Dormant
Dormant
Dormant
Dormant
Investment holding
Dormant
Dormant
Dormant
Property investment
Dormant
Dormant
% of share
capital held by:
Company
Subsidiary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
66
continued
Principal activity
Quintain Alto Limited
Quintain Alto Investor Limited
Quintain Alto Investment Holdco Limited
Quintain Alto Investment Company Limited
Quintain Birmingham Limited
Quintain City Park Gate Birmingham Limited
Quintain Development Management Services Limited
Quintain DM Limited
Quintain Fund Management Limited
Quintain Investments (No. 2) Limited
Quintain Investments (04) Limited
Quintain Investments (Allen House) Limited
Quintain LDO (No.1) Limited
Quintain LDO (No.2) Limited
Quintain LDO (General Partner) Limited
Quintain LDO (Nominee) Limited
Quintain LDO (Unitholder) Limited
Quintain London Limited
Quintain North West Lands Limited
Quintain North West Lands Lettings Limited
Quintain NW01 Limited
Quintain NW01 Investment Holdco Limited
Quintain NW01 Investment Company Limited
Quintain NW01 Investor Limited
Quintain Regional Partnerships Limited
Quintain Services Limited
Quintain W03 (Groundlease) Limited
Quintain Wembley (Holdings) Limited
Quintain Wembley Arena Limited
Quintain Wembley Hotel Properties Limited
Quintain Wembley Hotel Trading Limited
Quintain Wembley Trading Estates Limited
Quintain Wembley W11 Limited
Quintessential Homes (Wembley) LLP
Quocumque Limited
Quondam Estates Limited
Quondam Estates II Limited
Quondam Estates Investments Limited
Quondam Properties Limited
Quo Vadis Estates Limited
Signal Investments Two Limited Liability Partnership
Signal Property Investments Two Limited Liability
Partnership
South East Properties (Redhill) Limited
Timberlaine Limited
Property investment
Property investment
Property investment
Property investment
Investment holding
Property investment and trading
Management
Dormant
Dormant
Property investment
Property investment
Asset Management
Investment holding
Investment holding
Investment holding
Investment holding
Investment holding
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Dormant
Management
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Dormant
Dormant
Property investment
Property investment
Property investment
Property investment
Property investment
Investment holding
Dormant
Property investment
Dormant
Investment holding
Investment holding
Dormant
Dormant
Dormant
Property investment
% of share
capital held by:
Company
100%
Subsidiary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
67
continued
Principal activity
Tipi Properties Holdco Limited
Tipi Properties NW01 Limited
Two Gladstone Road Limited
Wembley (Red House) Limited
Wembley Park Limited
Wembley Park (Residential Sales & Lettings) Limited
Wembley Park Estate Management Company Limited
Wembley Park Parking Limited
Wembley Park Residential Limited
Wembley Park Residential Management Company
Limited
Wembley Park Sustainable Initiatives Company Limited
Woolwich Investment Company Limited
Incorporated in Guernsey:
Quintain (Guernsey) Limited
Incorporated in Jersey:
Aldermary House Unit Trust
Property investment
Property investment
Property investment
Property investment
Property investment
Dormant
Management
Dormant
Management
Dormant
% of share
capital held by:
Company
Subsidiary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Dormant
Dormant
100%
100%
Property investment
100%
Property investment
100%
Shares in associate
The Company’s interest in its associate undertakings was as follows:
Aqua Trust
% of equity
held
50.00
Other
members
2016
£m
0.3
954.8
0.6
1.7
8.7
966.1
2015
£m
1.0
857.2
1.9
0.7
8.2
869.0
Aviva
8.6 Debtors
Trade debtors
Amounts due from subsidiary undertakings
Other taxation and social security
Prepayments and accrued income
Loans: due within one year
The Company previously granted unsecured loans totaling £10.7m to Albemarle Retail Properties LLP which carry a
coupon of 10% per annum. The carrying amount of this loan is £8.7m (2015: £8.2m) and no interest has been accrued
in the year (2015: £nil).
68
continued
8.7 Creditors: amounts falling due within one year
Bank loans and overdrafts
Trade creditors
Other creditors
Amounts due to Group undertakings
Corporate tax
Accruals and deferred income
Interest rate swaps
Deferred tax
2016
£m
13.3
0.1
1.5
558.7
1.2
1.7
1.6
1.1
579.2
2015
£m
12.8
1.0
3.1
623.9
1.2
1.8
0.4
644.2
2016
£m
253.1
0.2
1.1
254.4
2015
£m
78.4
1.6
0.1
80.1
2016
£m
0.2
2015
£m
2.6
8.8 Creditors: amounts falling after more than one year
Bank and other loans (secured)
Other creditors
Interest rate swaps
8.9 Provisions for liabilities and charges
Provisions for liabilities and charges
The provisions for liabilities and charges include £0.2m (2015: £0.7m) relating to an onerous lease charge and £nil
(2015: £1.9m) relating to a provision in respect of potential issues in the management of the Quercus Fund.
8.10 Borrowings
Due within one year
Between one and two years
Between two and five years
Amortised borrowing costs
2016
£m
13.3
253.1
266.4
266.4
2015
£m
12.8
80.0
92.8
(1.6)
91.2
The Company’s borrowings due within one year are secured by floating rate charges over the assets of its subsidiaries.
8.11 Financial assets and liabilities
All financial assets and liabilities have the same book value and fair value, except property related investments are
designated as available for sale, shown at fair value and derivatives are held at fair value. Details of financial assets
and liabilities are shown in section 5.
8.12 Financial instruments
Details of the Company’s interest rate swaps and caps are given in note 6.3 sections i and ii.
69
continued
8.13 Share capital and reserves
Share capital
Number of
shares
m
Nominal
value
£m
526.1
2.4
528.5
131.5
0.6
132.1
Allotted, called up and fully paid:
Issue of shares under shared-based payment schemes and loan note redemption
The analysis of other capital reserves was as follows:
Merger reserve
Balance as at 31 March
2016
£m
2.1
106.0
108.1
2015
£m
2.1
106.0
108.1
The capital redemption reserve reflects the nominal value of shares purchased by the Group for cancellation.
Merger reserve
The merger reserve has arisen following corporate acquisitions where the Group’s equity has formed all or part of the
consideration and represents the premium on the shares issued less costs.
8.14 Commitments
The Company had no material operating lease or other commitments at 31 March 2016 (2015: £nil).
8.15 Directors’ benefits
Details of the directors’ emoluments, pension contributions and entitlements to share options and rights are set out in
Note 7.2.
8.16 Controlling party
On 25 September 2015, the Company was acquired by Bailey Acquisitions Limited, an investment vehicle indirectly
controlled by Lone Star Real Estate Fund IV (U.S.) L.P. and Lone Star Real Estate Fund IV (Bermuda) L.P. The only group
in which the results of the Company are consolidated is that headed by Quintain Limited.
8.17 First time adoption of FRS 101
As stated in note 8.4, these are the Company’s first financial statements prepared in accordance with FRS 101.
The accounting policies set out in note 8.4 have been applied in preparing the Company financial statements for the
year ended 31 March 2016, the comparative information presented in these financial statements is for the year ended
31 March 2015. On transition to FRS 101 there have been no material adjustments to the comparative results or
balance sheets reported previously in financial statements prepared in accordance with the Company’s old basis of
accounting (old UK GAAP).
70
43-45 Portman Square, London, W1H 6LY | T: +44(0)20 3219 2200
www.quintain.co.uk | @QuintainLtd
Quintain Limited | Registered office: 43-45 Portman Square, London, W1H 6LY.
Registered in England and Wales. Registered number 2694983.
71

Annual Report 2016

Transcription

Similar documents

I`m helping to end MS by participating in the 2016 Jayman BUILT MS

The Board of Directors of Qatar Fuel (WOQOD) is pleased to invite

5 `S` Training Program at ABV-IIITM, Gwalior on 21.07.2016

Porky Expo Flyer

Sept 30-Oct 2, 2016 Nov 4-6, 2016 @Camp Tadmor

4 star ALOE HOTEL, PAPHOS

the Guidelines for the registration on

Ticket plus hotel packages for the Chelsea Flower Show 2016

loyola institute for ministry on-campus open house thursday, may 12

HALF OFF - Bavarian Inn