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 Quintain Limited (formerly Quintain Estates and Development PLC) 1 Quintain Full Year Results 2015/16 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 Quintain Limited (formerly Quintain Estates and Development PLC) 2 Quintain Full Year Results 2015/16 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 Quintain Limited (formerly Quintain Estates and Development PLC) 3 Quintain Full Year Results 2015/16 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 Quintain Limited (formerly Quintain Estates and Development PLC) 4 Quintain Full Year Results 2015/16 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 Quintain Limited (formerly Quintain Estates and Development PLC) 5 Quintain Full Year Results 2015/16 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. Quintain Limited (formerly Quintain Estates and Development PLC) 6 Quintain Full Year Results 2015/16 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. Quintain Limited (formerly Quintain Estates and Development PLC) 7 Quintain Full Year Results 2015/16 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. Quintain Limited (formerly Quintain Estates and Development PLC) 8 Quintain Full Year Results 2015/16 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 Quintain Limited (formerly Quintain Estates and Development PLC) 9 Quintain Full Year Results 2015/16 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 Quintain Limited (formerly Quintain Estates and Development PLC) 10 Quintain Full Year Results 2015/16 Description and implication of risk 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 Quintain Limited (formerly Quintain Estates and Development PLC) 11 Quintain Full Year Results 2015/16 Description and implication of risk 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 Quintain Limited (formerly Quintain Estates and Development PLC) 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 Quintain Full Year Results 2015/16 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 Quintain Limited (formerly Quintain Estates and Development PLC) 13 Quintain Full Year Results 2015/16 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. Quintain Limited (formerly Quintain Estates and Development PLC) 14 Quintain Full Year Results 2015/16 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: Quintain Limited (formerly Quintain Estates and Development PLC) 15 Quintain Full Year Results 2015/16 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. Quintain Limited (formerly Quintain Estates and Development PLC) 16 Quintain Full Year Results 2015/16 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 Quintain Limited (formerly Quintain Estates and Development PLC) 17 Quintain Full Year Results 2015/16 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. Quintain Limited (formerly Quintain Estates and Development PLC) 18 Quintain Full Year Results 2015/16 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 Quintain Limited (formerly Quintain Estates and Development PLC) 19 Quintain Full Year Results 2015/16 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 Quintain Limited (formerly Quintain Estates and Development PLC) 20 Quintain Full Year Results 2015/16 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. Quintain Limited (formerly Quintain Estates and Development PLC) 21 Quintain Full Year Results 2015/16 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 Administrative expenses 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 Financial instruments 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 Quintain Limited (formerly Quintain Estates and Development PLC) 22 Quintain Full Year Results 2015/16 Quintain Limited Consolidated Income Statement For the year ended 31 March 2016 Notes Revenue Cost of sales Gross profit Administrative expenses 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 Tax charge for the year 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 Share of profit from joint ventures Loss from sale of non-current assets Operating profit Finance income Finance expenses Profit before tax Tax charge for the year 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. Quintain Limited (formerly Quintain Estates and Development PLC) 23 Quintain Full Year Results 2015/16 Consolidated Statement of Other Comprehensive Income For the year ended 31 March 2016 Notes Profit for the financial year 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 Non-controlling interest All other comprehensive income may be reclassified as profit and loss in the future. The notes on pages 27 to 69 are an integral part of these consolidated financial statements. Quintain Limited (formerly Quintain Estates and Development PLC) 24 Quintain Full Year Results 2015/16 Consolidated Balance Sheet As at 31 March 2016 Non-current assets Investment properties 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 Bank loans and other borrowings Trade and other payables Current tax liability Total current liabilities Non-current liabilities Bank loans and other borrowings 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 Non-controlling interest 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 The notes on pages 27 to 69 are an integral part of these consolidated financial statements. Approved by the Board of Directors on 16 June 2016 and signed on its behalf by: SIMON CARTER Director Quintain Limited (formerly Quintain Estates and Development PLC) 25 Quintain Full Year Results 2015/16 Consolidated Statement of Changes in Equity For the year ended 31 March 2016 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 - Consolidated Statement of Changes in Equity For the year ended 31 March 2015 Balance 1 April 2014 Profit for the year Other comprehensive income/(loss) for the year, net of tax Total comprehensive income/(loss) for the year Costs relating to share-based payment schemes Issue of share capital Balance as at 31 March 2015 £m 595.4 37.9 The notes on pages 27 to 69 are an integral part of these consolidated financial statements. Quintain Limited (formerly Quintain Estates and Development PLC) 26 Quintain Full Year Results 2015/16 Consolidated Cashflow Statement For the year ended 31 March 2016 Operating activities Profit for the financial year 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 profit from joint ventures 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: Cash and cash equivalents 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) The notes on pages 27 to 69 are an integral part of these consolidated financial statements. Quintain Limited (formerly Quintain Estates and Development PLC) 27 Quintain Full Year Results 2015/16 Notes to the accounts For the year ended 31 March 2016 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. Quintain Limited (formerly Quintain Estates and Development PLC) 28 Quintain Full Year Results 2015/16 Notes to the accounts 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 Annual improvements to IFRSs 2011 – 2013 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’ Annual improvements to IFRSs 2012 – 2014 Cycle 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. Quintain Limited (formerly Quintain Estates and Development PLC) 29 Quintain Full Year Results 2015/16 Notes to the accounts 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. Quintain Limited (formerly Quintain Estates and Development PLC) 30 Quintain Full Year Results 2015/16 Notes to the accounts 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 Quintain Limited (formerly Quintain Estates and Development PLC) 2016 £m 48.2 (4.6) 43.6 2015 £m 41.2 3.6 (2.5) 42.3 31 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 2: Performance for the year 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 Recycling of revaluation loss of available for sale financial asset 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 Recycling of revaluation loss of available for sale financial asset 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%). Quintain Limited (formerly Quintain Estates and Development PLC) 32 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 2: Performance for the year 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: Investment properties Capital allowances Creation of tax losses Advanced Corporation Tax (‘ACT’) recognised Change in tax rate Financial instruments 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 Quintain Limited (formerly Quintain Estates and Development PLC) 33 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 2: Performance for the year continued 2.5 Taxation continued iii) Deferred tax movements Capital gains less capital losses Capital allowances Derivative financial instruments Other temporary differences ACT Revenue tax losses Deferred tax liability Capital gains less capital losses Capital allowances Derivative financial instruments Other temporary differences 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). Quintain Limited (formerly Quintain Estates and Development PLC) 34 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 2: Performance for the year 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). Quintain Limited (formerly Quintain Estates and Development PLC) 35 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 3: Property assets, joint ventures and associates 3.1 Investment properties Accounting policy Investment properties 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. Quintain Limited (formerly Quintain Estates and Development PLC) 36 Quintain Full Year Results 2015/16 Notes to the accounts 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 Interest capitalised Disposals Transfer to trading property Revaluation surplus – continuing operations Revaluation surplus – discontinued operations Balance 31 March 2015 Additions – capital expenditure Additions – new property Interest capitalised Disposals Revaluation surplus - continuing operations Balance 31 March 2016 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. Quintain Limited (formerly Quintain Estates and Development PLC) 37 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 3: Property assets, joint ventures and associates continued 3.1 Investment properties 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. Quintain Limited (formerly Quintain Estates and Development PLC) 38 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 3: Property assets, joint ventures and associates continued 3.1 Investment properties 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). Quintain Limited (formerly Quintain Estates and Development PLC) 39 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 3: Property assets, joint ventures and associates 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. Quintain Limited (formerly Quintain Estates and Development PLC) 40 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 3: Property assets, joint ventures and associates 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. Quintain Limited (formerly Quintain Estates and Development PLC) 41 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 3: Property assets, joint ventures and associates continued 3.4 Investments in joint ventures and associates 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) Administrative expenses (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 investment properties (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. Quintain Limited (formerly Quintain Estates and Development PLC) 42 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 3: Property assets, joint ventures and associates continued 3.4 Investments in joint ventures and associates 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 Administrative expenses (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 Total comprehensive income 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: Cash and cash equivalents 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: Trade and other payables (25.6) (20.1) (2.0) (23.9) Non-current liabilities: Deferred tax liability (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: Net (liabilities)/assets Loans to JVs Total investment (0.9) 25.0 24.1 (1.7) 19.8 18.1 Quintain Limited (formerly Quintain Estates and Development PLC) 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 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 3: Property assets, joint ventures and associates continued 3.4 Investments in joint ventures and associates 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 Investment properties 291.6 34.2 Deferred tax asset 52.9 6.2 Cash and cash equivalents 25.6 3.0 Other assets 4.3 0.5 Bank loans and other borrowings (current) (21.3) (2.5) Trade and other payables (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 Administrative expenses Operating (loss)/profit Surplus on revaluation of investment properties (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 Quintain Limited (formerly Quintain Estates and Development PLC) 44 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 3: Property assets, joint ventures and associates continued 3.4 Investments in joint ventures and associates 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 Administrative expenses (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 Total comprehensive income (1.5) (0.2) (27.9) (3.1) Summarised balance sheets as at 31 March 2015 Quintain Quantum Keystone Non-current assets: Investment properties Current assets: Cash and cash equivalents Trading properties Other assets Total assets Current liabilities: Trade and other payables Non-current liabilities: Deferred tax liability Non-current financial liabilities Net (liabilities)/assets Represented by: Net (liabilities)/assets 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 Quintain Limited (formerly Quintain Estates and Development PLC) Hilton Group share of other joint ventures 50% £m Group share of joint ventures 50% £m 45 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 3: Property assets, joint ventures and associates continued 3.4 Investments in joint ventures and associates 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 Investment properties 387.7 43.5 Deferred tax asset 41.9 4.7 Cash and cash equivalents 21.1 2.4 Other assets 9.2 1.0 Bank loans and other borrowings (current) (53.5) (6.0) Trade and other payables (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 Quintain Limited (formerly Quintain Estates and Development PLC) 46 Quintain Full Year Results 2015/16 Notes to the accounts 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 Quintain Limited (formerly Quintain Estates and Development PLC) 2016 £m 2015 £m - 0.3 104.7 105.0 47 Quintain Full Year Results 2015/16 Notes to the accounts 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 Quintain Limited (formerly Quintain Estates and Development PLC) 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 Quintain Full Year Results 2015/16 Notes to the accounts 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 Quintain Limited (formerly Quintain Estates and Development PLC) 2015 £m 1.0 0.4 3.0 0.1 4.5 49 Quintain Full Year Results 2015/16 Notes to the accounts 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 Quintain Limited (formerly Quintain Estates and Development PLC) 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 Quintain Full Year Results 2015/16 Notes to the accounts 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. Current liabilities: Overdraft Mezzanine loan Non-current liabilities: 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 From one to two years From two to five years After five years Quintain Limited (formerly Quintain Estates and Development PLC) 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 Quintain Full Year Results 2015/16 Notes to the accounts 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 From one to two years From two to five years 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. Quintain Limited (formerly Quintain Estates and Development PLC) 52 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 6: Funding continued 6.2 Maturity of contractual cash flows of financial liabilities As at 31 March 2016 Within one year From one to two years From two to five years From five to 25 years After 25 years As at 31 March 2015 Within one year From one to two years From two to five years 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 Derivative financial instruments 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. Quintain Limited (formerly Quintain Estates and Development PLC) 53 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 6: Funding 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 From one to two years 75.0 50.0 From two to five years 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 From one to two years 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 From one to two years From two to five years 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. Quintain Limited (formerly Quintain Estates and Development PLC) 54 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 6: Funding 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. Quintain Limited (formerly Quintain Estates and Development PLC) 55 Quintain Full Year Results 2015/16 Notes to the accounts Continued Section 6: Funding 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 In issue as at 31 March 2016 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. Quintain Limited (formerly Quintain Estates and Development PLC) 56 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 6: Funding 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 Other capital 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 Capital redemption reserve 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. Quintain Limited (formerly Quintain Estates and Development PLC) 57 Quintain Full Year Results 2015/16 Notes to the accounts 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 Administrative expenses 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 Administrative expenses 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 Costs relating to share-based payment schemes 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. Quintain Limited (formerly Quintain Estates and Development PLC) 58 Quintain Full Year Results 2015/16 Notes to the accounts 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. Quintain Limited (formerly Quintain Estates and Development PLC) 59 Quintain Full Year Results 2015/16 Notes to the accounts 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 Creditors: amounts falling due within one year 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 Other capital reserves 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 Quintain Limited (formerly Quintain Estates and Development PLC) 60 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 8: Company balance sheet and notes continued 8.2 Company Statement of Changes in Equity For the year ended 31 March 2016 Balance 1 April 2015 Loss for the year Other comprehensive income for the year, net of tax Total comprehensive income/(loss) for the year Costs relating to share-based payment schemes Vesting of share based payment scheme Issue of share capital Balance as at 31 March 2016 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 Consolidated Statement of Changes in Equity For the year ended 31 March 2015 Balance 1 April 2014 Loss for the year Other comprehensive income for the year, net of tax Total comprehensive income/(loss) for the year Costs relating to share-based payment schemes Issue of share capital Balance as at 31 March 2015 Quintain Limited (formerly Quintain Estates and Development PLC) 1.7 61 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 8: Company balance sheet and notes 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. Quintain Limited (formerly Quintain Estates and Development PLC) 62 Quintain Full Year Results 2015/16 Notes to the accounts Continued Section 8: Company balance sheet and notes 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: amounts falling due within one year 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. Quintain Limited (formerly Quintain Estates and Development PLC) 63 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 8: Company balance sheet and notes continued 8.4 Accounting policies continued viii) Financial instruments continued Derivative financial instruments 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 Balance 1 April 2015 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. Quintain Limited (formerly Quintain Estates and Development PLC) 64 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 8: Company balance sheet and notes 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 (No.7) Limited Chesterfield (No.9) Limited Chesterfield (No.29) Limited Chesterfield (No.30) Limited Chesterfield (No.40) Limited Chesterfield (No.41) 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% Quintain Limited (formerly Quintain Estates and Development PLC) 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 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 8: Company balance sheet and notes continued 8.5 Fixed asset investments 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 (No.12) Limited Quintain (No.18) Limited Quintain (No.19) Limited Quintain (No.49) 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 Quintain Limited (formerly Quintain Estates and Development PLC) % 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 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 8: Company balance sheet and notes continued 8.5 Fixed asset investments continued i) Subsidiaries 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 W05 (Groundlease) Limited Quintain W06 (Groundlease) Limited Quintain W07 (Groundlease) Limited Quintain W08 (Groundlease) Limited Quintain W10 (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 Quintain Limited (formerly Quintain Estates and Development PLC) % 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 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 8: Company balance sheet and notes continued 8.5 Fixed asset investments continued i) Subsidiaries 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). Quintain Limited (formerly Quintain Estates and Development PLC) 68 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 8: Company balance sheet and notes 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. Quintain Limited (formerly Quintain Estates and Development PLC) 69 Quintain Full Year Results 2015/16 Notes to the accounts continued Section 8: Company balance sheet and notes 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: In issue as at 31 March 2015 Issue of shares under shared-based payment schemes and loan note redemption In issue as at 31 March 2016 Other capital reserves The analysis of other capital reserves was as follows: Capital redemption reserve Merger reserve Balance as at 31 March 2016 £m 2.1 106.0 108.1 2015 £m 2.1 106.0 108.1 Capital redemption reserve 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). Quintain Limited (formerly Quintain Estates and Development PLC) 70 Quintain Full Year Results 2015/16 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. Quintain Limited (formerly Quintain Estates and Development PLC) 71