Significant potential for income and capital growth

Palace Capital 3 December 2018 Update
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Palace Capital

Significant potential for income and capital growth

Interim results

Real estate

3 December 2018

Price

292p

Market cap

£135m

Net debt (£m) as at 30 September 2018

86.1

Net LTV as at 30 September 2018

30.3%

Shares in issue

45.8m

Free float

95.4%

Code

PCA

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(5.8)

(7.0)

(12.2)

Rel (local)

(3.8)

(0.1)

(7.4)

52-week high/low

364p

292p

Business description

Palace Capital is a UK property investment company listed on the Main Market of the LSE. It is not sector-specific and looks for opportunities where it can enhance the long-term income and capital value through asset management and strategic capital development in locations outside London.

Next event

Q219 interim DPS paid

28 December 2018

Analysts

Martyn King

+44 (0)20 3077 5745

Andrew Mitchell

+44 (0)20 3681 2500

Palace Capital is a research client of Edison Investment Research Limited

Palace Capital (PCA) has published its interim results for the six months to 30 September 2018 and has also exchanged contracts for the sale of 50 low-yielding, non-core residential units, acquired as part of last year’s RT Warren acquisition. After a year of significant developments at PCA, preparing the ground for the next stage of growth, H119 has been a period of consolidation, although the company has continued to deliver income and capital growth, generating a NAV total return of 4.0% in the period.

Year end

Net rental income (£m)

Adj. PBT*
(£m)

Adj. EPS*
(p)

EPRA NAV/
share (p)**

P/NAV
(x)

DPS
(p)

Yield
(%)

03/17

12.2

6.7

22.2

443

0.66

18.5

6.3

03/18

14.9

8.5

21.2

414

0.71

19.0

6.5

03/19e

16.2

9.2

17.1

416

0.71

19.0

6.5

03/20e

17.0

9.5

17.6

420

0.70

19.0

6.5

Note: *Adjusted earnings: in addition to EPRA adjustments for revaluation gains, profits or losses on disposals of investment properties and surrender gains on early lease terminations, this adjusts for share-based payments and Main Market listing costs. **EPRA NAV is fully diluted.

H119 results and developments

H119 income grew strongly compared with H118, driven by the RT Warren acquisition, and capital values continued to increase during the period. EPRA NAV increased to 421p and including dividends (unchanged at 9.5p) the total return was 4.0%. Adjusted EPS (7.7p) and dividend cover (84%) were depressed by cash drag from the October 2017 capital raise, but dividend policy is unchanged, with PCA expecting income to grow as a result of asset management initiatives and accretive acquisitions. Reinvestment of the £18.2m proceeds from the residential asset disposal into higher-yielding commercial assets will enhance earnings. Estimated rental value (ERV) is £21.1m, more than 20% above passing rent of £17.4m. Despite letting successes, the latter is below the March level, with occupancy slightly lower at 88% (March: 90%). This drives the c 5% reduction in our forecast FY19 adjusted PBT, and our DPS is now held flat in line with guidance.

Strong total return record

Palace is not a REIT and while it seeks to generate returns by growing recurring income, it also has a parallel focus on increasing capital values. It has built a strong track record of value creation over a number of years, primarily driven by corporate acquisitions, which additionally benefit from lower stamp duty and provide the potential to benefit from acquired tax losses and capital allowances. NAV total return in the five years from September 2013 (H114) to end-H119 is 126.1% or a compound 17.7% pa. Strong reversionary potential and a range of opportunities to further reposition and grow the portfolio are positive indicators for future returns.

Valuation

With a yield of 6.5% and a c 30% discount to EPRA NAV, the PCA valuation is below the peer group (Exhibit 8) even before factoring in the significant potential embedded in the current portfolio, including the significant Hudson Quarter development in York.

Investment summary

The six months ending 30 September 2018 (H119) may be viewed as a period of consolidation, following a year of significant developments that have prepared PCA for its next stage of growth. Last October, PCA completed the £68m acquisition of RT Warren, its largest portfolio acquisition to date, and management says the most attractive portfolio available to it in several years. Funding was provided by a £70m equity issue, and with the share capital enlarged, a move to the Main Market of the London Stock Exchange followed in March 2018. In June 2018, the shares joined the FTSE Small Cap Index and the FTSE All Share Index. H119 income grew strongly compared with H118, driven by the RT Warren acquisition, and capital values continued to increase during the period. EPS and dividend cover were depressed as a result of cash drag from the capital raise midway through H218, with only modest transaction activity as management maintained a disciplined approach towards acquisitions. The company has signalled no change to dividend policy, expecting income growth to restore cover as a result of ongoing asset management initiatives, leasing events providing the opportunity to capture some of the strong reversionary potential in the portfolio, and accretive acquisitions, potentially made easier by the recent heightening of Brexit uncertainties.

Exhibit 1: Summary of interim results

£000s, unless stated otherwise

H119

H118

H119 v H118

2018

Adjusted earnings:

Rental and other income

9,210

7,138

29%

16,733

Non-recoverable property costs

(1,101)

(675)

(1,824)

Net rental income

8,109

6,463

25%

14,909

Administrative expenses

(1,872)

(1,387)

35%

(3,313)

Operating profit before gains/(losses) on property assets

6,237

5,076

23%

11,596

Finance costs

(1,942)

(1,354)

43%

(3,124)

Adjusted PBT

4,295

3,722

15%

8,471

Taxation

(637)

(507)

(1,072)

Adjusted net profit

3,658

3,215

14%

7,399

Share-based payments

(113)

(100)

(174)

Costs in respect of move to main market

0

0

(698)

EPRA earnings

3,545

3,115

14%

6,527

Gains on revaluation of investment properties

3,880

1,396

5,738

Profit/(loss) on disposal on non-current assets

211

(159)

274

Debt termination costs

0

0

(127)

Fair value loss on derivatives

77

0

(181)

Deferred tax relating to EPRA adjustments

(441)

0

299

IFRS net profit

7,272

4,352

67%

12,530

Basic adjusted EPS (p)*

8.0

12.8

-38%

21.2

Diluted EPRA EPS (p)*

7.7

12.4

18.7

Basic IFRS EPS (p)

15.9

17.3

35.8

DPS declared (p)

9.5

9.5

19.0

Dividend cover (adjusted earnings)

0.84

1.35

1.11

Diluted EPRA NAV per share (p)

421

451

414

IFRS NAV per share (p)

407

442

400

NAV total return

4.0%

4.1%

-2.1%

Investment portfolio (inc held for sale)**

283,333

202,840

40%

276,732

Net LTV

30.3%

41.9%

30.0%

Source: Palace Capital. Note: *adjusted earnings on a diluted basis: H119 7.7p; H118 12.4p; FY18 21.2p. **Differs from balance sheet value due to leasehold and lease incentive adjustments.

The portfolio fair value increased by 2.4% to £283.3m during H119 but was up a much larger c 40% compared to H118, primarily due to the RT Warren acquisition in H218. The like-for-like H119 increase was 1.7% and portfolio total return, on an ungeared basis including income, was 5.3% (MSCI IPD Quarterly Benchmark: 3.3%). The end-H119 net initial yield on the portfolio was 5.8% and the reversionary yield was 7.6%.

There was one disposal during the period, for £0.95m, 30.1% above the 31 March 2018 book value. A small, vacant office building in Fareham, adjacent to an existing property owned by PCA, was acquired for £0.75m. Management is evaluating its options on the site, with the existing property part-let until March 2019. Management continues to pursue accretive acquisitions but says that that it was difficult to find properties meeting its financial and operational investment criteria in the H119 investment market environment.

Since the end of H119, PCA has agreed the sale of 50 of the remaining 60 non-core, low-yielding residential assets acquired with RT Warren, to the London Borough of Barnet. The discount to book value is a modest 3% and will generate proceeds (before the costs of disposal) of £18.2m for redeployment in PCA’s core commercial activities, at a significantly higher yield.

Reflecting the increased portfolio scale, gross rental income increased c 29% to £9.2m. The increase in net rental income was a slightly lower c 25% (to £8.1m), reflecting an increase in non-recoverable property operating expenses.

There were 22 lease events in the period, across 140,000 sq ft of space, with lettings at an average 9% above ERV. Despite these positive letting gains, the end-H119 overall annualised contracted rental income was a little lower than in March 2018 (£17.4m versus £17.9m), with the losses spread broadly across the portfolio and sectors. Period-end EPRA occupancy was 88% compared with 90% in March. The reversionary potential embedded in the existing portfolio remains strong, with an ERV of £21.1m.

ERV includes no contribution from Hudson House, where demolition is close to completion, and construction on the new Hudson Quarter development will begin in early 2019.

The year-on-year increase in administrative expenses reflects the growth in the company, including additions to the property management team. PCA believes that it is well placed to grow further with only a marginal impact on administrative costs.

Net finance costs increased year-on-year, reflecting portfolio growth/higher average debt and the increased average cost of debt associated with the interest rate hedging that has been put in place. The end-H119 average cost of debt was 3.5%, 70% fixed/hedged. The LTV was a conservative 30.3%.

Adjusted PBT (similar to EPRA earnings except that it also adjusts for share-based payments costs, £113k in the period) was up 15% compared to H118, to £4.3m. Adjusted net profit increased 14% to £3.7m. Diluted adjusted EPS (7.7p) was lower as a result of the October capital increase. Quarterly dividends have continued at a rate of 4.75p per quarter, or 9.5p in the period. The company is signalling no change to dividend policy, anticipating that the 84% dividend cover in the period will be materially improved by income growth resulting from the impact of asset management initiatives in capturing reversionary potential through letting activity, and accretive acquisitions. EPRA NAV total return was 4.0% in the period.

In a positive outlook statement, management points to the strong potential within the current portfolio to continue to extract value through income and capital growth. ERV is more than 20% above the current contracted rent roll. Heightened Brexit uncertainty may create additional opportunities to reinvest by cooling the investment markets, and meanwhile occupational demand appears robust. The regional office and industrial markets continue to benefit from supply and demand imbalances. The office sector (c 50% of the portfolio) is benefiting in many areas from continuing take-up, a lack of new development and the conversion of office space to residential use.

The Hudson Quarter development

After many years of negotiation, PCA received optimal planning consent in August 2017 for the redevelopment of its two-acre site in York, within the city walls and just a minute’s walk from the York railway station. The scheme comprises three residential buildings and an office building, and will provide 127 flats, 5,000 sq ft of retail/restaurant space, 34,500 sq ft of offices, and car parking. Demolition of the site is nearing completion with a view to commencing construction in February 2019. Construction is expected to take around two years, with marketing commencing around the middle of 2019 and a website for the project has recently been launched (www.hudsonquarteryork.com). The York office market is strong and the city was recently voted by The Sunday Times as the best place in the UK to live (2018).

PCA has agreed heads of terms with a leading bank to finance the construction element.

Hudson Quarter financial impact

Our base-case forecasts (extended out to end-FY21) capture the balance sheet impact of our estimate of the costs of development. For now, our base case estimates capture none of the capital or income uplift potential, although we provide a sensitivity analysis below.

Although PCA is yet to provide any firm guidance on the financial impact of the Hudson Quarter development, we feel it prudent to allow for our estimate of the costs of development that will be incurred over the next two years in our financial forecasts. Our assumptions for these costs, based on discussion with management, are shown in Exhibit 2 below. The existing site value, included within the current portfolio valuation, is c £16.8m, and we have allowed for construction costs of £35m. To fund the construction costs, we have assumed a development loan facility of similar size, to which we have applied a 4% margin over Libor to drawn amounts, and a 2% cost to undrawn amounts (to cover arrangement fees, facility fees, etc). We have assumed that development funding is drawn steadily over the two year construction period, with the interest costs capitalised.

Exhibit 2: Hudson Quarter development cost assumptions

£000s

Current site value

16,800

Construction costs

35,000

Capitalised interest

2,576

Total costs, including site costs

54,376

£000s

Current site value

Construction costs

Capitalised interest

Total costs, including site costs

16,800

35,000

2,576

54,376

Source: Edison Investment Research

The impact of our Hudson Quarter development assumptions on our base-case forecasts is to steadily increase the investment portfolio value (as development spending and capitalised interest are incurred) and the group LTV ratio including the development funding drawn. There is no impact on our income statement forecasts.

PCA is yet to disclose the development profit that it is targeting from the Hudson Quarter development, representing the gap between the expected post-completion market value (the gross development value, or GDV) and the total development costs (our estimate £54.4m). However, the potential positive impact on net asset value is significant. We expect PCA to retain the commercial building, and possibly some the residential assets, for the rental portfolio, with a positive impact on income earnings. The assets disposed of would crystallise any capital uplift and reduce gearing.

The potential value creation is very material in the context of the group, but due to the options for post-completion hold/sell strategies, and the uncertainties about GDV and rental value, it remains too early to build this into our base forecasts.

In Exhibit 3, we show the impact on our FY21e EPRA NAV per share from a range of assumed development profit margins, applied to our estimated costs.

Exhibit 3: NAV sensitivity to assumed Hudson Quarter GDV

Development profit margin (%)

5%

10%

15%

20%

25%

30%

GDV

57,095

59,813

62,532

65,251

67,970

70,689

Uplift to diluted EPRA NAV per share (p)

6

12

18

24

30

36

Uplift to diluted EPRA NAV per share (%)

1%

3%

4%

6%

7%

8%

Source: Edison Investment Research. Note: Assumes no sales to trigger payment of deferred tax.

In Exhibit 4, we illustrate our thoughts on the income and valuation potential for the Hudson Quarter commercial space in current market conditions. We believe that PCA is likely to retain this post-completion, and we estimate a rent potential of c £963k pa and a potential GDV of £15.6m (a blended yield of 6.2%). Based on this estimate, the commercial space has the potential to lift our base case FY21e rental and other income of £19.3m by c 5% on an annualised basis.

Exhibit 4: Hudson Quarter – Edison illustration for commercial space

Commercial GLA (sq ft)

Retail/restaurant

5,000

Office

34,500

Total GLA

39,500

Rent (£ per sq ft)

Retail/restaurant

20

Office

25

Average rent per sq ft

24

Gross rental income (£000s)

Retail/restaurant

100,000

Office

862,500

Total rental income

962,500

Yield

Retail/restaurant

8.0%

Office

6.0%

Average yield

6.2%

Valuation

Retail/restaurant

1,250,000

Office

14,375,000

Total valuation

15,625,000

Commercial GLA (sq ft)

Retail/restaurant

Office

Total GLA

Rent (£ per sq ft)

Retail/restaurant

Office

Average rent per sq ft

Gross rental income (£000s)

Retail/restaurant

Office

Total rental income

Yield

Retail/restaurant

Office

Average yield

Valuation

Retail/restaurant

Office

Total valuation

5,000

34,500

39,500

20

25

24

100,000

862,500

962,500

8.0%

6.0%

6.2%

1,250,000

14,375,000

15,625,000

Source: Edison Investment Research

Notwithstanding the fact that PCA may choose to retain a part of the residential space, based on our estimates for the commercial GDV, and assuming a 20% overall development profit margin for the scheme (GDV £65.3m), a sale of all of the residential assets would reduce the base-case LTV for FY21 from 40.6% to c 29%. The proceeds from sale would allow for repayment of the development loan and an additional c £12m of bank debt. Exhibit 5 brings the impact of all of these assumptions on the base-case FY21e earnings and balance sheet together:

development profit of 20% and GDV of £65.3m;

retention of commercial space, adding £963k pa to income

sale of residential assets for £49.6m (the GDV less the retained value of the commercial asset);

payment of deferred tax on the realised gain (assumed 17%);

repayment of development loan and c £18m of additional borrowing; and

On this basis, we estimate a potential 14% increase in adjusted EPS, a 5% increase in EPRA NAV per share and an 11.6 percentage point reduction in LTV.

Exhibit 5: Illustrative impact of combined Hudson Quarter assumptions

£000s, unless stated otherwise

Pro-forma

Existing

Uplift

Income account

FY21e adjusted PBT

9,932

Add commercial income

963

Interest saving

427

PBT

11,321

9,932

Tax rate

15.0%

15.0%

Tax

(1,698)

(1,490)

Net adjusted earnings

9,623

8,442

Fully diluted adjusted EPS

20.9

18.4

14%

Balance sheet

Development profit

10,875

Deferred tax payment on part sale

(1,406)

EPRA NAV

205,292

195,823

Diluted EPRA NAV per share

447

427

5%

LTV

29.4%

40.6%

-11.3 ppt

Source: Edison Investment Research

Clearly, there are risks attached to our analysis and to development activity in general. We have been explicit about the assumptions that we have made, but the actual outcome could differ materially from what we have assumed, especially at planned completion in 2021, when market conditions may have shifted. Development activity runs risks of cost overrun or delay, and the development activity is being undertaken on a ‘speculative’ basis, although we expect PCA to target pre-sales of residential space and pre-letting of commercial space well ahead of completion.

Financials

Our revised estimates are shown in Exhibit 6. The reduction in H119 rent roll to £17.4m has a negative impact on our forecast gross rental income, which, together with slightly higher non-recoverable property operating costs, reduces our forecast net rental income for the current year (FY19). This is the main driver of the reduction in forecast FY19 adjusted PBT, although much of the impact on adjusted EPS is offset by lower expected effective tax rate. Forecast EPRA NAV per share is slightly increased as a result of the H119 performance. Management has signalled an unchanged dividend policy, which we interpret to mean an unchanged DPS for the current year, and is confident of future income growth that will restore cover. As noted below, our base-case forecasts conservatively reflect only a part of this potential and we show a flat DPS progression accordingly.

Exhibit 6: Estimate revisions

Net rental income (£m)

Adjusted PBT (£m)

Adjusted EPS (p)

EPRA NAV (p)

DPS (p)

Old

New

Chg (%)

Old

New

Chg (%)

Old

New

Chg (%)

Old

New

Chg (%)

Old

New

Chg (%)

03/19e

16.9

16.2

(3.8)

9.7

9.2

(5.3)

17.2

17.1

(0.8)

418

416

(0.6)

19.5

19.0

(2.6)

03/20e

17.5

17.0

(2.8)

10.2

9.5

(6.8)

18.1

17.6

(2.8)

422

420

(0.5)

19.5

19.0

(2.6)

03/21e

N/A

17.6

N/A

N/A

9.9

N/A

N/A

18.4

N/A

N/A

427

N/A

N/A

19.0

N/A

Source: Edison Investment Research

Our key forecasting assumptions are as follows:

Although management makes clear its intention to pursue accretive acquisitions, we have assumed only limited portfolio activity, allowing for completion of the sale of 50 residential assets as of end-FY19, and for reinvestment of a similar amount (£20m) at a notional 8% yield by end-Q120. The positive yield arbitrage between the residential assets and the assumed reinvestment yield is a main driver of FY20e growth.

We have allowed for 1% pa like-for-like rental growth through to end-FY20 only. Occupancy is assumed to improve by 1% to 89% by end-FY20, and to 90% by end-FY21. We note that this captures only a small part of the reversionary potential in the existing portfolio, with an ERV at 30 September 2018 of £21.1m, compared to the £17.4m contracted rent roll.

We have commented in the section above about the impact of the Hudson Quarter development on the base-case forecasts. The impact is primarily on LTV as a result of the development funding taken on during the construction phase, with no impact on forecast earnings as a result of the development loan interest being capitalised. In the section above, we also illustrate the potential for the development to lift adjusted earnings and NAV at completion, and lower LTV, although this is not reflected in our base-case forecasts.

The assumed revaluation gains reflect the impact of our assumed rental growth, with no assumption of market yield movements, either up or down.

The sales of the residential asset will crystallise a c £3m deferred tax liability assumed on acquisition. There is no impact on IFRS net assets, but the EPRA deferred tax add-back will reduce.

During the timeframe of our forecast period, we think it likely that PCA may bring forward other development projects from within the existing portfolio, although none is assumed. We would expect any commercial asset development to be balanced with the desire to maintain and grow core income.

Including unamortised loan facility costs, drawn debt at end-H119 was £99.2m. The group had unused loan facilities amounting to £15.0m. Our estimate gross drawn debt at end-FY21 assumes that this unused facility is drawn and also includes the assumed Hudson Quarter development loan facility discussed above. The 40.6% LTV shown includes no development gain from Hudson Quarter and no Hudson Quarter post completion divestment. Both factors have the potential to reduce LTV back to below 30%.

Valuation

Palace is not a REIT and while it seeks to generate returns by growing recurring income it also has a parallel focus on increasing capital values. It has built a strong track record of value creation over a number of years, primarily driven by corporate acquisitions that additionally benefit from lower stamp duty and provide the potential to benefit from acquired tax losses and capital allowances. NAV total return in the five years from September 2013 (H114) to end-H119 is 126.1% or a compound 17.7% pa. We have begun the analysis at H114 because this corresponds to the acquisition of the Sequel portfolio, Palace’s first transformational acquisition. The negative total return in FY18 resulted from the share issuance to fund the RT Warren portfolio and captures none of the future asset management-driven value creation that management hopes to achieve from this, its largest portfolio acquisition to date.

Exhibit 7: Strong NAV total return record

H214

FY15

FY16

FY17

FY18

H119

H214–H119

Opening EPRA NAV per share (p)

218

341

388

414

443

414

218

Closing EPRA NAV per share (p)

341

388

414

443

414

421

421

Dividend per share paid (p)

2.5

8.50

14.00

18.00

19.00

9.50

72

NAV total return (p)

126

55

41

46

(9)

16

275

NAV total return (%)

57.8%

16.0%

10.5%

11.2%

-2.1%

4.0%

126.1%

Compound annual average total return (%)

17.7%

Source: Palace Capital, Edison Investment Research

Exhibit 8 shows summary valuation and performance data for PCA and a peer group of UK commercial real-estate investment companies with a strong regional focus. There has been a tendency for the share prices of those companies with a strong focus on income returns to show greater resilience over the past 12 months, particularly where dividend cover is also above average. The market’s valuation of capital-based returns has shown a tendency to weaken. PCA shares now yield more than 6%, among the highest in the group, and the P/NAV discount is also well above the peer group average. Given the strong track record of total return generation and the potential to drive further strong returns from the existing portfolio and through accretive acquisitions, the valuation appears particularly undemanding. Increasing investor awareness of PCA’s plans for the Hudson Quarter, its ability to fund the required investment and the scale of potential upside may serve as a catalyst for a re-rating of the shares.

Exhibit 8: Peer comparison

Price
(p)

Market cap
(£m)

P/NAV
(x)

Yield
(%)

Share price performance

1M

3M

12M

From 12M high

Circle Property

199

56

0.72

2.8

0%

-3%

29%

-22%

Custodian REIT

115

454

1.06

5.6

-2%

-4%

0%

-6%

Mucklow

512

324

0.92

4.4

-2%

-4%

0%

-11%

Picton

84

453

0.91

4.2

-3%

-9%

-2%

-10%

Real Est Inv

55

103

0.78

6.4

1%

-4%

-9%

-11%

Regional REIT

98

365

0.86

8.1

-2%

3%

-6%

-6%

Schroder REIT

55

285

0.80

4.5

-7%

-18%

-9%

-18%

UK Commercial Property Trust

83

1073

0.88

4.5

-4%

-8%

-7%

-10%

F&C Com Prop

138

1100

0.97

4.4

3%

-8%

-3%

-11%

F&C UK Real Est Inv

88

212

0.82

5.7

-7%

-12%

-16%

-19%

Average

0.87

5.1

-2%

-7%

-2%

-13%

Median

0.87

4.5

-2%

-6%

-4%

-11%

Palace Capital

294

135

0.71

6.5

0%

-9%

-11%

-20%

UK property index

1,705

3.0

-4%

-9%

-5%

-13%

FTSE All-Share Index

3,853

1.7

0%

-8%

-5%

-11%

Source: Palace Capital, Edison Investment Research. Note: *last reported EPRA NAV per share and trailing 12-month DPS declared. Prices as at 29 November 2018.

Exhibit 9: Financial summary

Year end 31 March

£'000s

2014

2015

2016

2017

2018

2019e

2020e

2021e

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Rental & other income

 

 

3,252

8,637

14,593

14,266

16,733

17,932

18,685

19,252

Non-recoverable property costs

(648)

(1,200)

(1,624)

(2,055)

(1,824)

(1,701)

(1,713)

(1,613)

Net rental income

 

 

2,604

7,437

12,969

12,211

14,909

16,231

16,972

17,639

Administrative expenses

(649)

(1,439)

(2,048)

(2,915)

(4,185)

(3,485)

(3,590)

(3,697)

Operating Profit (before capital items)

 

 

1,955

5,998

10,921

9,296

10,724

12,746

13,382

13,941

Revaluation of investment properties

19,501

9,769

3,620

3,101

5,738

5,181

2,768

3,173

Costs of acquisitions/profits on disposals

270

(461)

(525)

3,191

274

(689)

0

0

Operating Profit

21,725

15,306

14,016

15,588

16,736

17,238

16,150

17,114

Net Interest expense

(573)

(1,398)

(2,264)

(3,011)

(3,432)

(3,786)

(4,105)

(4,236)

Profit Before Tax

 

 

21,153

13,909

11,752

12,577

13,304

13,452

12,045

12,878

Taxation

81

107

(953)

(3,191)

(773)

(1,800)

(1,426)

(1,490)

Profit After Tax (FRS 3)

21,234

14,015

10,799

9,386

12,531

11,652

10,619

11,389

EPRA adjustments:

Revaluation of investment properties

(19,501)

(9,769)

(3,620)

(3,101)

(5,738)

(5,181)

(2,768)

(3,173)

Costs of acquisitions/profits on disposals

(270)

461

525

(3,191)

(274)

689

0

0

Deferred tax charge

0

0

0

2,200

(299)

441

0

0

Other adjustments

0

0

0

155

308

0

0

0

EPRA earnings

1,463

4,707

7,704

5,449

6,528

7,601

7,852

8,216

Adjusted for:

Non-recurring items

0

0

(3,172)

0

698

0

0

0

Share-based payments

12

114

110

237

174

226

226

226

Adjusted earnings

1,475

4,821

4,642

5,686

7,400

7,827

8,078

8,442

Company adjusted PBT

1,394

4,714

5,595

6,677

8,472

9,186

9,503

9,932

Average fully diluted number of shares (000s)

5,264

17,489

24,618

25,738

34,980

45,932

45,951

45,951

Basic EPS - FRS 3 (p)

 

 

403.4

80.1

43.9

36.5

35.8

25.4

23.1

0.0

Fully diluted EPRA EPS (p)

 

 

29.1

26.9

31.3

21.2

18.7

16.5

17.1

17.9

Fully diluted adjusted EPS (p)

 

 

31.4

28.3

18.9

22.2

21.2

17.1

17.6

18.4

Dividend per share declared (p)

4.5

13.0

16.0

18.5

19.0

19.0

19.0

19.0

EPRA dividend cover (x)

6.47

2.07

1.96

1.14

0.98

0.87

0.90

0.94

BALANCE SHEET

Fixed Assets

 

 

60,086

104,470

175,738

183,959

253,984

265,627

310,891

335,598

Investment properties

59,440

102,988

174,542

183,916

253,863

265,524

310,788

335,495

Goodwill

6

6

0

0

0

0

0

0

Other non-current assets

640

1,475

1,196

43

121

103

103

103

Current Assets

 

 

7,060

15,653

11,903

13,692

24,584

32,280

18,534

14,774

Debtors

1,937

3,375

3,327

2,511

5,551

4,873

5,193

5,306

Cash

5,123

12,279

8,576

11,181

19,033

27,407

13,341

9,468

Current Liabilities

 

 

(4,171)

(3,487)

(9,048)

(8,197)

(11,520)

(15,058)

(15,644)

(15,853)

Creditors

(2,971)

(3,087)

(6,815)

(6,161)

(8,834)

(8,934)

(9,520)

(9,729)

Short term borrowings

(1,200)

(400)

(2,233)

(2,036)

(2,686)

(6,124)

(6,124)

(6,124)

Long Term Liabilities

 

 

(18,599)

(36,620)

(71,778)

(79,895)

(105,276)

(97,401)

(107,701)

(108,001)

Long term borrowings

(17,384)

(35,407)

(69,711)

(75,758)

(97,157)

(91,842)

(102,142)

(102,442)

Deferred tax

0

0

0

(2,187)

(6,531)

(3,972)

(3,972)

(3,972)

Other long-term liabilities

(1,215)

(1,214)

(2,067)

(1,950)

(1,588)

(1,587)

(1,587)

(1,587)

Net Assets

 

 

44,376

80,016

106,815

109,559

161,772

185,449

206,080

226,519

EPRA net assets

 

 

44,370

80,010

106,924

111,759

190,011

190,783

192,919

195,823

Basic NAV/share (p)

357

396

414

436

400

408

412

419

Diluted EPRA NAV/share (p)

341

388

414

443

414

416

420

427

CASH FLOW

Operating Cash Flow

 

 

1,297

4,388

12,287

10,294

9,899

13,221

13,875

14,262

Net Interest

(390)

(1,593)

(3,421)

(2,516)

(2,704)

(3,380)

(3,805)

(3,936)

Tax

(13)

(15)

(158)

(1,047)

(395)

(3,713)

(1,426)

(1,490)

Net cash from investing activities

2,532

(2,922)

(50,012)

(3,352)

(67,725)

12,061

(41,500)

(20,042)

Ordinary dividends paid

0

(1,766)

(3,221)

(4,617)

(6,744)

(8,710)

(8,710)

(8,710)

Debt drawn/(repaid)

(21,266)

(10,600)

21,272

6,467

7,066

(739)

27,500

16,042

Proceeds from shares issued

23,009

19,664

19,114

29

67,651

0

0

0

Other cash flow from financing activities

(84)

(2)

(2)

(2,897)

0

(30)

0

0

Net Cash Flow

5,085

7,155

(4,141)

2,361

7,048

8,709

(14,066)

(3,874)

Opening balance sheet cash

 

 

39

5,123

12,278

8,576

10,937

17,985

26,695

12,629

Restricted cash

0

0

0

244

1,048

713

713

713

Other items (including cash assumed on acquisition)

0

0

439

0

0

0

0

0

Closing balance sheet cash

 

 

5,123

12,278

8,576

11,181

19,033

27,408

13,342

9,468

Closing balance sheet debt

18,294

35,807

71,944

77,794

99,843

99,511

128,307

146,142

Unamortised debt costs

239

399

734

936

1,107

1,239

939

639

Closing net debt/(cash)

 

 

12,931

23,130

62,634

65,677

79,703

70,865

114,027

136,035

Net LTV (exc restricted cash & adjusted for unamortised debt costs)

23.0%

23.3%

37.0%

36.9%

30.0%

27.4%

37.0%

40.6%

Source: Palace Capital, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Tyman and prepared and issued by Edison, in consideration of a fee payable by Tyman. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the Edison analyst at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2018 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Neither this Communication nor any copy (physical or electronic) of it may be (i) taken or transmitted into the United States of America, (ii) distributed, directly or indirectly, in the United States of America or to any US person (within the meaning of regulations Regulation S made under the US Securities Act 1933, as amended), (iii) taken or transmitted into or distributed in Canada, Australia, the Republic of Ireland or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws, (iv) taken or transmitted into or distributed in Japan or to any resident thereof for the purpose of solicitation or subscription or offer for sale of any securities or in the context where the distribution thereof may be construed as such solicitation or offer, or (v) or taken or transmitted into any EEA state other than the United Kingdom. Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this Communication in or into other jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

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Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

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US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Palace Capital and prepared and issued by Edison, in consideration of a fee payable by Palace Capital. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the Edison analyst at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2018 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Neither this Communication nor any copy (physical or electronic) of it may be (i) taken or transmitted into the United States of America, (ii) distributed, directly or indirectly, in the United States of America or to any US person (within the meaning of regulations Regulation S made under the US Securities Act 1933, as amended), (iii) taken or transmitted into or distributed in Canada, Australia, the Republic of Ireland or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws, (iv) taken or transmitted into or distributed in Japan or to any resident thereof for the purpose of solicitation or subscription or offer for sale of any securities or in the context where the distribution thereof may be construed as such solicitation or offer, or (v) or taken or transmitted into any EEA state other than the United Kingdom. Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this Communication in or into other jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Tyman and prepared and issued by Edison, in consideration of a fee payable by Tyman. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the Edison analyst at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2018 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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United Kingdom

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US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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United Kingdom

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United States

Neither this Communication nor any copy (physical or electronic) of it may be (i) taken or transmitted into the United States of America, (ii) distributed, directly or indirectly, in the United States of America or to any US person (within the meaning of regulations Regulation S made under the US Securities Act 1933, as amended), (iii) taken or transmitted into or distributed in Canada, Australia, the Republic of Ireland or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws, (iv) taken or transmitted into or distributed in Japan or to any resident thereof for the purpose of solicitation or subscription or offer for sale of any securities or in the context where the distribution thereof may be construed as such solicitation or offer, or (v) or taken or transmitted into any EEA state other than the United Kingdom. Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this Communication in or into other jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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