surpluses reflected in retained earnings are not distributable until realised on sale. In making its judgement
over the valuation of properties, the Company considers valuations performed by the independent valuers in
determining the fair value of its investment properties. The valuers make reference to market evidence of
transaction prices for similar properties. The valuations are based upon assumptions including future rental
income, anticipated maintenance costs and appropriate discount rates. In response to the COVID-19 pandemic, 31
March 2020 valuations were subject to a 'material uncertainty' clause in line with RICS guidance. Valuation
assumptions also include, for certain assets occupied by tenants currently not trading or with trade significantly
curtailed at the year end, a three-month rental void and a yield increase of 10-75bps.
Estimates
Areas where accounting estimates are significant to the financial statements are: ? Doubtful debt provisioning - the approach to providing for 'expected credit losses' is detailed in Note 12 and uses
estimates within a matrix of how much the credit risk of trade receivables has increased since initial recognition
based on a number of days overdue, taking into account qualitative and quantitative supportable information. Due
to the impact of the COVID-19 pandemic on collection rates, there has been a significant increase in assessed
credit risk during the year. Each individual property rental receivable is reviewed to assess whether there is a
probability of default and expected credit loss given the Investment Manager's knowledge of the specific tenant
over and above the provision calculated from the matrix. 3. Earnings per ordinary share
Basic EPS amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the net profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. There are no dilutive instruments in issue. Shares issued after the year end are disclosed in Note 20.
The Company is a FTSE EPRA/NAREIT index series constituent and EPRA performance measures have been disclosed to facilitate comparability with the Company's peers through consistent reporting of key performance measures. EPRA has issued recommended bases for the calculation of EPS which the Directors consider are better indicators of performance.
Year Year ended ended 31 March 31 March 2021 2020 Net profit and diluted net profit attributable to equity holders of the Company (GBP000) 3,749 2,123 Net loss on investment property (GBP000) 19,925 26,550 EPRA net profit attributable to equity holders of the Company (GBP000) 23,674 28,673 Weighted average number of ordinary shares: Issued ordinary shares at start of the year (thousands) 420,053 398,203 Effect of shares issued during the year (thousands) - 11,508 Basic and diluted weighted average number of shares (thousands) 420,053 409,711 Basic and diluted EPS (p) 0.9 0.5 EPRA EPS (p) 5.6 7.0 4. Revenue Year Year ended ended 31 March 31 March 2021 2020 GBP000 GBP000 Gross rental income from investment property 38,664 40,022 Income from recharges to tenants 914 881 39,578 40,903 5. Operating profit
Operating profit is stated after (crediting)/charging:
Year Year ended ended 31 March 31 March 2021 2020 GBP000 GBP000 (Profit)/loss on disposal of investment property (393) 101 Investment property valuation decrease 20,318 26,449 Fees payable to the Company's auditor and its associates for the audit of the Company's annual financial statements 106 96 Fees payable to the Company's auditor and its associates for other services 20 26 Administrative fee payable to the Investment Manager 416 434 Directly incurred operating expenses of vacant rental property 822 910 Directly incurred operating expenses of let rental property 1,142 600 Increase in doubtful debt provision, write offs due to tenant business failure and rent concessions 3,591 336 Amortisation of right-of-use asset 7 7
Fees payable to the Company's auditor, Deloitte LLP, are further detailed in the Audit and Risk Committee report. 6. Finance income
Year Year ended ended 31 March 31 March 2021 2020 GBP000 GBP000 Bank interest 28 36 Finance income 33 - 61 36 7. Finance costs Year ended Year ended 31 March 31 March 2021 2020 GBP000 GBP000 Amortisation of arrangement fees on debt facilities 347 286 Other finance costs 287 200 Bank interest 4,269 4,235 4,903 4,721 8. Income tax
The tax charge assessed for the year is lower than the standard rate of corporation tax in the UK during the year of 19.0%. The differences are explained below:
Year ended Year ended 31 March 31 March 2021 2020 GBP000 GBP000 Profit before income tax 3,749 2,123 Tax charge on profit at a standard rate of 19.0% (2020: 19.0%) 712 403 Effects of: REIT tax exempt rental profits and gains (712) (403) Income tax expense - - Effective income tax rate 0.0% 0.0%
The Company operates as a REIT and hence profits and gains from the property investment business are normally exempt from corporation tax. 9. Dividends
Year Year ended ended 31 March 31 March 2021 2020 GBP000 GBP000 Group and Company Interim dividends paid on ordinary shares relating to the quarter ended: Prior year - 31 March 2020: 1.6625p (2019: 1.6375p) 6,983 6,521 Current year - 30 June 2020: 0.95p (2019: 1.6625p) 3,990 6,786 - 30 September 2020: 1.05p (2019: 1.6625p) 4,411 6,828 - 31 December 2020: 1.25p (2019: 1.6625p) 5,251 6,867 20,635 27,002
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