Share options have been granted to key management as set out in
Note 24. The cost of equity settled transactions is measured with
reference to the fair value at the date at which they were granted.
The Group accounts for the fair value of these options at grant
date over the vesting period in the Income Statement, with a
corresponding increase to the share-based payment reserve. The fair
value was calculated based on the Black Scholes Model using the
following inputs:
Share price GBP2.35 - GBP2.50
Exercise price GBP2.35 - GBP2.71
Expected volatility 25%* - 10%*
Risk free rate 1.39% - 2.60%
Expected dividends* 6% - 3%
* based on quoted property sector average (not NewRiver Retail
Limited's expected dividend).
ii Performance Shares
Performance shares have been granted to Executive staff and
Directors as set out in Note 24. These may only vest and be capable
of exercise in accordance with the Performance Share Plan ("PSP")
rules to the extent that the two performance conditions are
met.
(1) The compound annual total shareholder return ("Compound
TSR") for the Company must equal or exceed 10% over the period of 3
years commencing on the grant date; and
(2) the compound annual percentage growth in the adjusted EPRA
earnings per share ("EPS") of the Company must equal or exceed 4%
over the period of 3 years commencing on the first day of the
relevant financial year in which the grant date falls.
The Compound TSR condition has been valued using a Monte Carlo
valuation model. The Monte Carlo Option Pricing Model is a
stochastic model that uses probability analysis to calculate the
value of options subject to market vesting conditions.
The EPS condition has been valued using a Black-Scholes Model.
The cost of equity settled transactions is measured with reference
to the fair value at the date at which they were granted. The Group
accounts for the fair value of these options at grant date over the
vesting period in the Income Statement, with a corresponding
increase to the share-based payment reserve. The fair value was
calculated based on the Black-Scholes Model using the following
inputs:
Share price GBP2.01 - GBP2.13
Exercise price GBPN/A
Expected volatility 8% - 9.5%
Risk free rate 0.45% - 0.61%
Expected dividends 7.0% - 7.5%
iii. Treasury Shares
Own equity instruments which are reacquired (treasury shares)
are recognised at cost and deducted from equity. No gain or loss is
recognised in the Income Statement on the purchased, sale, issue or
cancellation of the Group's own equity instruments. Any difference
between the carrying amount and the consideration is recognised in
the reserves.
The Group has issued a number of shares to an Employee Benefit
Trust (EBT) as detailed in Note 24. As this EBT is controlled by
the Group, it is consolidated in these financial statements and
unallocated shares held by the EBT are shown as treasury
shares.
Provisions
Provisions for legal claims are recognised when:
-- The amount can be reliably estimated
-- The Group has a present legal or constructive obligation as a
result of past events:
-- It is probable that an outflow of resources will be required
to settle the obligation and
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognised as finance
costs.
Revenue recognition
i. Rental income
Rental income is recognised on an accruals basis. A rent
adjustment based on open market estimated rental value is
recognised from the rent review date in relation to unsettled rent
reviews. Where a rent-free period is included in a lease, the
rental income foregone is allocated evenly over the period from the
date of lease commencement to the expiry date of the lease.
Rental income from fixed and minimum guaranteed rent reviews is
recognised on a straight-line basis over the entire lease term.
Where such rental income is recognised ahead of the related cash
flow, an adjustment is made to ensure the carrying value of the
related property including the accrued rent does not exceed the
external valuation. Initial direct costs incurred in negotiating
and arranging a new lease are amortised on a straight-line basis
over the period from the date of lease commencement to the expiry
date of the lease.
Where a lease incentive payment, including surrender premiums is
paid to enhance the value of a property, it is amortised on a
straight-line basis over the period from the date of lease
commencement to the expiry date of the lease. Upon receipt of a
surrender premium for the early determination of a lease, the
profit, net of dilapidations and non-recoverable outgoings relating
to the lease concerned, is immediately reflected in income.
ii. Asset management fees
Management fees are recognised in the income statement on an
accruals basis.
iii. Promote payments
The Group is contractually entitled to receive a promote payment
should the returns from the joint venture to the joint venture
partner exceed a certain internal rate of return. This payment is
only receivable by the Group on disposal of underlying properties
held by the joint venture. Any entitlements under these
arrangements are only accrued for in the financial statements once
the Group believes that crystallisation of the fee is virtually
certain.
Dividends
Dividends to the Company's shareholders are recognised when they
become legally payable. In the case of interim dividends, this is
when paid. In the case of final dividends, this is when approved by
the Board.
Finance income and costs
Finance income and costs are recognised within the finance
income and finance costs in the Statement of Comprehensive Income
using the effective interest rate method. The effective interest
method is a method of calculating the amortised cost of a financial
asset or financial liability and of allocating the interest income
or interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future
cash payments or receipts throughout the expected life of the
financial instrument or a shorter period where appropriate to the
net carrying amount of the financial asset or financial
liability.
Service charge income and expense
Service income is recognised in the accounting period in which
the services are rendered and the related property expenses are
recognised in the period in which they are incurred.
Other expenses
Expenses include legal, auditing and other fees. They are
recognised in the Statement of Comprehensive Income in the period
in which they are incurred (on an accruals basis).
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based
on historical experience as adjusted for current market conditions
and other factors.
In the process of applying the Group's accounting policies,
management is of the opinion that any instances of application of
judgements did not have a significant effect on the amounts
recognised in the financial statements.
The preparation of financial statements requires management to
make estimates affecting the reported amounts of assets and
liabilities, of revenues and expenses, and of gains and losses. The
key assumptions concerning the future, and other key sources of
estimation uncertainty at the end of the reporting period, that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year, are discussed below.
i. Investment properties
As described above, the Group's investment properties are stated
at fair value, as accounted for by management based on an
independent external appraisal. The estimated fair value may differ
from the price at which the Group's assets could be sold at a
particular time, since actual selling prices are negotiated between
willing buyers and sellers. Also, certain estimates require an
assessment of factors not within management's control, such as
overall market conditions. As a result, actual results of
operations and realisation of net assets could differ from the
estimates set forth in these financial statements, and the
difference could be significant.
ii. Valuation of joint venture properties
The valuation of the Group's development property portfolio
contained within joint ventures is inherently subjective due to,
amongst other factors, the individual nature of each property,
forecast trading EBITDA, the status of planning consent, obtaining
vacant possession, development cost projections and the expected
future rental income, incorporating tenant credit risk. As a
result, the valuations the Group places on its development property
portfolio are subject to a degree of uncertainty and are made on
the basis of current relevant information available at the date of
valuation.
iii. Valuation of share-based payments
Management has relied on the services of external experts to
determine the fair value of share-based payments. This requires
significant estimates of a number of inputs which are used to model
that fair value.
iv. Valuation of Convertible Unsecured Loan Stock
Management was required to make estimates with the assistance of
external experts to conclude on the valuation of the Convertible
Unsecured Loan Stock at the date of issue. The issuance of the
compound instrument was between two knowledgeable parties at arms
length and at a market rate of 5.85% pa for 5 years. Management
have concluded that the value of the convertible option was
negligible and the value resided in the debt portion of the
instrument at the date of issue.
v. Impairment in investments and joint ventures
Grafico Azioni Newriver Reit (LSE:NRR)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Newriver Reit (LSE:NRR)
Storico
Da Lug 2023 a Lug 2024
