Preliminary Results for Year Ended 31 March 2016

PRELIMINARY RESULTS

For the financial year to 31 March 2016

24 May 2016

Hibernia REIT plc ("Hibernia", the "Company" or the "Group") today announces its preliminary results for the financial year to 31 March 2016. Highlights for the financial year:

Excellent financial performance

· EPRA NAV per share of 130.8 cent, up 17% since 31 March 2015

· EPRA profit of €10.0m (March 2015: €3.9m), helped by €4.9m surrender premium (March 2015: €2.4m)

· Profit before tax up 47% to €136.3m (March 2015: €92.9m) including revaluation surplus and gains on disposals of non-core assets

· Portfolio value of €927.7m (March 2015: €641.3m)

· Proposed final dividend of 0.8 cent per share bringing total for year to 1.5 cent (2015: 0.8 cent)

Disciplined investment activity enhancing portfolio

· €179m invested in nine acquisitions: seven off-market and seven related to central Dublin offices

· Office acquisitions all either with asset management opportunities (e.g. Central Quay, Hardwicke & Montague) or future development potential (e.g. Marine House, One Earlsfort Terrace)

· 50:50 joint arrangement formed with affiliate of Starwood Capital on Windmill Lane development

Development programme well-timed and making good progress

· Block 3, Wyckham Point completed ahead of schedule delivering profit on cost of more than 30%

· Refurbishments of One Dockland Central and SOBO Works completed since financial year end, both delivering profits on cost in excess of 30% at completion

· Currently four committed development schemes which are progressing well and will deliver 354,000 sq. ft. of high quality office space in 2016, 2017 and 2018 (c. 27% pre-let)

· Longer term pipeline expanded to six schemes totalling 610,0001 sq. ft. of office space post completion (Sept 2015: two schemes totalling 530,000 sq. ft.)

· Seeking vacant possession of Harcourt Square to commence redevelopment

Active year of lettings adding significantly to contracted rent roll with more to come

· Contracted rent roll now €39.0m, up 72% on 31 March 20152

· New lettings and rent reviews added €11.8m to contracted rent: includes major pre-lets to Twitter and Hubspot totalling 129,000 sq. ft. (Twitter pre-let extended by 16,500 sq. ft. for €0.7m extra rent) 

· "In-place" 3 Dublin Central Business District ("CBD") office average rents of €33psf (vs ERV at March 2016 of €44psf) and average period to earlier of rent review or expiry of 2 years

· Income producing "in-place"3 CBD office portfolio vacancy rate of 6% (Sept 2015: 1%)

Substantial, flexible funding in place

· Five year €400m revolving credit facility ("RCF") agreed in November 2015, replacing €100m RCF

· Three year €44.2m facility (Hibernia share: €22.1m) to fund Windmill Lane development entered

· Net debt at 31 March 2016 of €52.9m, LTV of 5.7% (March 2015: net cash of €139.0m)

· Cash and undrawn facilities of €369m; €265m net of committed development spend

Management structure simplified and team strengthened

· Internalisation of management team completed in November 2015

· Appointment of Director of Development, Mark Pollard, who joined in May 2016

Kevin Nowlan, Chief Executive Officer of Hibernia, said:

"We are delighted to report strong results, benefitting from our strategy of focusing on prime office assets in Dublin's city centre, the area we have consistently said would deliver superior rental growth and tenant take-up. We have continued to be disciplined in deploying our capital into selective acquisitions which we believe will enhance our portfolio and we grew our longer term pipeline of development projects substantially in the year. Our committed schemes, which will deliver 354,000 sq. ft. of high quality office space in Dublin's city centre, are progressing well and will be completed over the next 24 months when new supply is expected to be limited. 

"The strength of the domestic economy together with low vacancy rates in Dublin gives us confidence, given a benign global economic backdrop, in the prospects for further rental growth. Our portfolio is rich in opportunity and we have substantial undrawn facilities to move quickly on further acquisition opportunities, underpinning our confidence for the future."

Contacts:Hibernia REIT plc +353 1 536 9100Kevin Nowlan, Chief Executive OfficerTom Edwards-Moss, Chief Financial Officer

Murray ConsultantsDoug Keatinge: +353 86 037 4163, [email protected] Farrelly: +353 87738 6608, [email protected]

About Hibernia REIT plc

Hibernia REIT plc is an Irish Real Estate Investment Trust ("REIT") listed on the Irish and London Stock Exchanges. The principal activity of the Company is to acquire and hold investments in Irish property (primarily commercial property) with a view to maximising shareholder returns.

DisclaimerThis announcement contains forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Group or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements speak only as at the date of this Announcement. The Group will not undertake any obligation to release publicly any revision or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise except as required by law or by any appropriate regulatory authority.

Chief Executive Officer's Statement

We are delighted to report strong results: we have made good progress in all aspects of our business in this, our second full year since IPO. EPRA NAV per share grew 17% in the year, with our portfolio of properties delivering an increase in value of 19%4. Disciplined acquisitions adding to portfolio and development pipeline We invested €179m (incl. costs) in the year in nine acquisitions (seven excluding acquiring full ownership of Hardwicke House and Montague House), fully utilising the remaining cash raised in the second equity issue in November 2014. Seven of these acquisitions were related to our portfolio of central Dublin offices and all were consistent with our strategy of acquiring buildings with opportunities to exploit, whether through redevelopment, active asset management or rental reversion. Development programme timed to take advantage of cycle We completed the fit out of Block 3, Wyckham Point ahead of schedule, delivering a profit on cost of more than 30% in the 18 months from its purchase to completion. Since year end we have completed the refurbishment of One Dockland Central (formerly Commerzbank House) and the conversion of SOBO Works to office space, both of which have delivered profits on cost upon completion in excess of 30% in less than two years of ownership. We have expanded our committed programme of central Dublin office developments and refurbishments to four projects totalling 354,000 sq. ft. of office space, all of which are making good progress towards their completion dates in 2016, 2017 and 2018. We have also expanded our longer term development pipeline to six projects and 610,000 sq. ft. of space with the acquisitions of Marine House and One Earlsfort Terrace and the addition of the Hanover Building and a possible new block at the front of Cumberland House. Leasing activity New lettings and rent reviews added a total of €11.8m per annum to contracted rents. The largest lettings were the 101,500 sq. ft. pre-let in Cumberland House to Twitter (increased from 85,000 sq. ft. when originally agreed in September 2015) and the 27,500 sq. ft. pre-let in One Dockland Central to Hubspot, which together added a total €6.6m per annum to contracted rents. In addition, the letting of the 213 apartments in Block 3, Wyckham Point upon their completion added €3.7m of net rent. We agreed a lease surrender with Indeed Ireland Operations Ltd at Central Quay for their 22,000 sq. ft. space for a payment to the tenant of €0.3m and have let 11,000 sq. ft. of this space to Daqri International Limited at a rent of €52.50 per sq. ft., significantly ahead of the average rent Indeed was paying of €30 per sq. ft.. We expect to make further progress with leasing in the coming months. Experienced management team In November 2015 we completed the internalisation of the management team through the acquisition of WK Nowlan REIT Management Ltd, the Investment Manager, and its parent company and at year end the Company had a team of 17. The internalisation was an important step in the Company's progress and secures our talented and experienced team for the future. Upon completion, Thomas Edwards-Moss and I joined the Board of Directors. In early May 2016, Mark Pollard joined the team as Director of Development and will oversee the management and delivery of our substantial pipeline of developments. Flexible balance sheet with substantial capacity

With net debt of €52.9m and loan to value of 5.7% our leverage is low and we have available undrawn debt capacity of €369m (€265m after committed development spend), almost all of which is funded by a new €400m revolving credit facility which was agreed in the year. Positive outlook The strength of the domestic economy together with low vacancy rates and limited new supply in Dublin means prospects for further rental growth are good in the absence of macroeconomic shocks. We expect the volume of transactions in Dublin's investment market to remain above long term averages in the near term. Our portfolio is rich in opportunity and we have substantial undrawn facilities in place to move quickly on further acquisition opportunities, underpinning our confidence in the future.

Kevin Nowlan, Chief Executive Officer

Market update

General economy Ireland recorded GDP growth of 7.8% in 2015, five times the Euro area aggregate of 1.6% (source: Eurostat). Irish GDP growth is expected to remain strong in 2016 and 2017, with Goodbody forecasting 4.6% and 3.7%, respectively, and Davy forecasting 6.0% and 4.0%, respectively. Irish "core" domestic demand (which excludes aircraft leasing and R&D) provides a good indicator of underlying economic activity and is expected to grow by 5.0% in 2016 and 4.4% in 2017 following a 4.3% increase in 2015 (source: Goodbody). Unemployment continues to fall (down to 8.4% in April 2016 nationally) and was 7.8% in Dublin at December 2015 (source: CSO). Increasing employment, coupled with tax reductions announced in the most recent budget, lower oil prices and the first period of sustained wage growth since the recession began are having a positive impact on consumer spending, which in 2015 experienced its best year of growth since 2007. Growth in numbers in employment has been particularly strong in Dublin, where the workforce increased 24,000 in 2015, bringing total employment in Dublin to 608,000 (Source: CSO). Irish state finances are also improving; the debt to GDP ratio fell to 94.4% at the end of 2015 and is expected to fall to a mid-80% level by 2017 (source: Davy). With a new Irish Government now formed, albeit a minority one, the biggest near term risks facing the Irish economy are international and include the UK referendum on its EU membership. The UK accounts for 18% of Irish exports and 30% of imports (source: Davy) so a vote to leave could impact the Irish economy negatively. While a Brexit scenario could be incrementally positive to the Dublin office sector in the near term, the longer term implications are uncertain. Irish property investment marketThe MSCI Irish Property Index delivered a total return of 23.5% in the year to 31 March 2016. As expected, returns moderated slightly compared to the year to 31 December 2015, when a 25.0% return was delivered making it the best performer in the MSCI Global Index, which delivered 10.7% in 2015. Prime Dublin office yields have remained stable at 4.65% for three consecutive quarters according to CBRE, albeit there have been a handful of deals recorded closer to 4.5%. Capital values for prime Dublin offices are up 24% year on year to over €1,200 per sq. ft., primarily driven by rental growth. Investment volumes have reduced somewhat since the mass deleveraging in 2014 and 2015, when €4.6bn and €3.5bn of assets were traded (excluding debt) (source: CBRE). Investment volumes in Q1 2016 were €735m (source: CBRE), still considerably above long term run-rates, and we expect a gradual reversion towards more normalised levels. As the investment market matures, the investor profile is continuing to evolve towards those with a lower risk appetite, with 71% of sales in 2015 vs 36% in 2013 to longer-term investors (including REITs) (source: CBRE). Office occupational market The Dublin office market, particularly the prime office sector in the city centre, continues to be characterised by a shortage of available stock in the right locations to satisfy high demand from tenants, both domestic and international. Despite the lack of available stock, take-up in 2015 totalled 2.7m sq. ft., above the 20 year average of 1.8m sq. ft. per annum (source: CBRE). 2016 has also started strongly, with take-up in Q1 totalling 0.6m sq. ft., 37% higher than the same period last year (source: CBRE). Occupation has continued to be focused in central Dublin, with 69% of take-up in the CBD in 2015 (source: CBRE). The overall Dublin office vacancy rate is now 7.7% and 6.0% in the CBD. However, there are marked differences by area and quality of stock. In the IFSC, where 25% of Hibernia's portfolio is located, the Grade A vacancy rate is 2.4% while in D2/D4, where 59% of Hibernia's portfolio is located (including three key committed developments sites) the Grade A vacancy rate is 1.5% (source: CBRE). As a result of strong tenant demand and low vacancy rates, prime central Dublin office rents at the end of Q1 2016 were €57.50 per sq. ft. up from €47.50 per sq. ft. a year ago (source: CBRE). Most agents are expecting further rental growth in 2016. While the TMT sector has undoubtedly played an important part in Dublin's economic recovery, tenant demand has come from a wide range of sectors: TMT has accounted for 32% of occupier take-up in the 5 years to December 2015 (source: CBRE). Dublin continues to be an occupational market dominated by lettings of less than 50,000 sq. ft.: 72% of take-up in the past 5 years has been in this category (source: CBRE). Almost two thirds of the lettings agreed in Q1 2016 were to Irish companies (source: CBRE) highlighting the increasing importance of domestic demand in the Irish economy and the broadening of the economic recovery. Office development pipeline A handful of office refurbishment projects were delivered in Dublin in late 2015. 2016 will see the first new build office building delivered to the Dublin market in over 5 years. In total, 1.3m sq. ft. of new stock is expected to be delivered in 2016, 46% of which is already pre-let and against a backdrop of average 10 year take-up of 1.9 m sq. ft. and take-up of 2.4m and 2.7m sq. ft. in 2014 and 2015, respectively (source: CBRE).It takes c. 2.5 years to deliver an office building so one can forecast the supply pipeline to 2019 with reasonable certainty: we expect 5.3m sq. ft. will be delivered between now and the end of 2018 and that 8.3m sq. ft. will be delivered between now and the end of 2019. Availability of development finance remains scarce (particularly if a pre-let is not in place) which has resulted in the owners of key development sites in the CBD awaiting pre-lets before commencing development. Residential sector The Dublin residential market continues to show strong demand and insufficient supply. Housing completions in 2015 were 12,666 nationwide and just 2,900 in Dublin (source: Dept of Environment) and despite an expected rise in delivery levels in 2016 and 2017, the number of units are expected to be well below the estimated c.30,000 units required per annum nationwide (source: Goodbody). The Central Bank measures introduced in February 2015 to control mortgage ratios reduced the likelihood of another credit-fuelled price boom and price growth in the year to 31 March 2016 was a muted 3.9% in Dublin (source: CSO). Despite this, the Central Bank's quarterly survey of housing market participants revealed an expectation of price growth of 4% in Dublin in the 12 months to September 2016 (source: Goodbody). A side effect of the Central Bank measures has been that potential purchasers have remained in the rental market for longer, particularly in Dublin. According to Daft, the average rent in Dublin was up 8-9% in the year to 31 March 2016 against a backdrop of virtually zero inflation. The Dublin rental market does not have the adequate infrastructure to house these people appropriately and as a result, opportunities exist to deliver stock that matches these demands.

Business Review

Acquisitions We purchased nine properties in the year for a total investment of €179m (including acquisition costs).

In June 2015 we acquired Dundrum View, an 80 unit apartment complex in Dundrum, South Dublin for €28.1m. The property is situated close to Dundrum Town Centre, Ireland's leading shopping centre, and to our property at Block 3, Wyckham Point and together the two properties give us almost 300 residential units in the attractive Dundrum area.

In January 2016 we took direct ownership of Hardwicke House and Montague House, D2, two fully occupied office buildings totaling 88,500 sq. ft., for a net payment of €41.8m, bringing the total consideration paid to €60m (€64m including costs, or €725 per sq. ft.). Hibernia's initial interest in the buildings was via secured loans purchased in May 2014 for €18.2m with a put / call option arrangement allowing Hibernia to acquire full ownership up to mid-2016.

In February 2016 we exchanged contracts to acquire Central Quay, a 57,700 sq. ft. office building in the South Docks, for €51.3m (€890 per sq. ft.). At the time of acquisition the building, which was completed in 2007, was 88% let and the net initial yield was 4.5%, with opportunities to move this above 5.5% in the near term through letting the vacant space and upcoming lease events. Since the acquisition we have completed a lease surrender and signed a new lease which will assist us in increasing the yield.

In March 2016 we exchanged contracts to acquire Marine House, D2 for €26.5m (€640 per sq. ft.). The 41,000 sq. ft. office building is fully occupied off low average rents of €23 per sq. ft. and offers near term opportunities to enhance the net initial yield of 4.3% through light refurbishment and redevelopment potential in the longer term. 

Also in March 2016 we acquired One Earlsfort Terrace, D2, for €19.2m (€880 per sq. ft.). The 21,700 sq. ft. office building is let to international law firm Eversheds. Concurrently we agreed with the tenant that the rent will rise from €0.6m to €1.0m per annum (€45psf) at the next rent review in September 2016, taking the running yield to 5.3%. In the longer term there are opportunities to enhance the value of the building through refurbishment, extension or redevelopment.

During the financial year we also completed the acquisitions of three small buildings for a total consideration of €4.8m. These assets, 11 Lime Street, 35-37 Lower Camden Street and 39 Harcourt Street, were acquired to enhance the value and / or optionality within our portfolio.

DisposalsExcluding the continued sell-off of the Dorville non-core assets (see further details in the asset management section below), the only disposal in the year was the sale of a 50% interest in the Windmill Lane site for €4.9m. In August 2015 Starwood exercised their option to buy back into the Windmill Lane development as a 50:50 joint arrangement partner at the price the asset was sold to Hibernia for (€7.5m) and an annual return of 7%, plus costs incurred to date, leading to the creation of the Windmill Lane Partnership ("WLP"). The Hibernia Group is acting as asset manager and development manager.

Portfolio overview

At 31 March 2016 the property portfolio consisted of 25 investment properties valued at €928m, categorised as follows:

1. Includes capex in acquisition costs and assumes 100% of South Dock House held for rent

2. Excludes Harcourt Square as this is valued by CBRE on a residual/ development appraisal basis

3. Excludes all Dublin CBD Office Development/Refurbishment

4. South Docks excludes the value of space occupied by Hibernia

5. Incl. c.€70k of residential in Chancery

The "in-place" CBD office element of our portfolio had the following statistics at 31 March 2016:

· Average contracted rent: €33psf (vs ERV of €44psf)

· Weighted average period to earlier of rent review or lease expiry: 2.0 years

· WAULT to earlier of expiry or break: 4.3 years

· WAULT to expiry: 7.3 years

· Occupancy level: 94%

· 45% of leases with break / expiry beyond 2019

The in-place office portfolio occupancy level decreased to 94% from 99% at 30 September 2015, principally due to the acquisition of Central Quay and the asset management initiatives ongoing there as well as vacancy in the Chancery Building following a tenant exercising a break option (see further details below).

Developments and refurbishments With favourable conditions in the Dublin property market and limited new supply expected in the near term, the Group is active with a number of development and refurbishment projects which it believes will deliver attractive returns to shareholders. 

At the financial year end the Group had projects under way at five properties (the "committed schemes") which will deliver 340,000 sq. ft. of high quality new office space: two of these schemes completed shortly after the financial year end and one scheme, Guild House, was added bringing the current committed schemes to 354,000 sq. ft..

The Group has added significantly to its longer term pipeline of developments: this now totals six schemes (up from two in September 2015), which, if undertaken would deliver an estimated 610,000 sq. ft. of high quality office space when fully completed.

Schemes completed The fit-out of the 213 residential units in Block 3, Wyckham Point was completed in late July 2015, well ahead of schedule. The project was delivered within budget, generating a profit on cost in excess of 30% and an IRR of over 25% at completion. The units were fully let by the end of September 2015, and currently produce net rent of €3.7m per annum and a yield on cost of over 6%.

The refurbishment of One Dockland Central successfully completed on budget in May 2016, delivering a profit on cost of over 30%. 48% of the 57,500 sq. ft. being refurbished was pre-let to HubSpot and we are in advanced discussions with a tenant regarding the remaining vacant space.

SOBO Works (formerly known as the Observatory Live/Work units) was converted to c. 9,500 sq. ft. of office accommodation and 1,500 sq. ft. of retail with the works completing in April 2016. At completion the project had delivered a profit on cost in excess of 50%. A pre-let of all the space to a serviced office provider was agreed in the year at a rent of €0.4m per annum and the tenant is now fitting out their demise.

Committed development and refurbishment schemes

Following the successful refurbishment of One Dockland Central, a similar refurbishment of the adjoining Guild House (which is to be renamed Two Dockland Central) is now under way using the same contractors. Unlike One Dockland Central, many of the tenants remain in occupation in Guild House at present (all leases bar that of BNY Mellon expire by March 2017), with works expected to be completed towards the end of 2017.

Construction work at Windmill Lane ("1 WML") is progressing well and the structure is up to the second and third storeys: the project remains on budget and on schedule for completion in late 2017. The formal marketing campaign for 1 WML and 1 Sir John Rogerson's Quay ("1 SJRQ" and formerly known as 1-6 Sir John Rogerson's Quay) commenced in April 2016.

Having completed site preparation, a contractor has been selected for 1 SJRQ and construction works have commenced. The estimated capital expenditure has increased to €55m due to a higher specification building, increased council levies and some cost inflation. We continue to expect the project to complete in mid-2018.

Please see further details on the development schemes below:

Longer term development pipeline Four new schemes have been added to the longer term pipeline: two of the additions - Marine House and One Earlsfort Terrace - are buildings acquired in the year and two additions are from the existing portfolio. In the Hanover Building, the main tenant (BNY Mellon) has served notice to vacate in December 2016. We continue to assess our options but expect that the space will be improved ahead of re-letting. At Cumberland House, while our primary focus is the successful completion of the existing refurbishment programme, we are also assessing plans for a new office block at the front of the site. 

At Harcourt Square, where the four leases to the Office of Public Works ("OPW") have either expired or are due to expire during 2016, we are seeking to gain vacant possession for redevelopment. The OPW has applied to the Irish Circuit Court seeking statutory extension of the leases, which we will defend. We have planning permission for a first phase development of 134,000 sq. ft. Net Internal Area ("NIA") and an application for a second phase development of 152,000 sq. ft. NIA has received preliminary approval from Dublin City Council.

Please see further details on the development pipeline below:

Asset management

It has been a very active year with new leases and rent reviews agreed adding a total of €11.8m per annum to contracted rents and asset management initiatives under way at a number of buildings in the portfolio.

Summary of letting activity in the year

· Offices: Six new leases signed on 157,000 sq. ft. and one rent review together generating €7.8m of incremental new annual rent. The weighted average periods to break and lease expiry for the new leases were 11 years and 19 years, respectively

· Residential: 310 units now let5, generating €6.4m of annual rent (€5.4m net of costs) and including the 80 Dundrum View apartments acquired in June 2015: letting activity generated incremental new net annual rent of €4.0m during the year

· Industrial: restructuring of tenant leases at Gateway to maintain current passing rent and give landlord ability to gain vacant position upon 12 months' notice for any future redevelopment

Letting activity post year end As set out below, we are in discussions with potential tenants in a number of buildings where we have unlet space. Key asset management highlights See also developments and refurbishments section above for further details. Cumberland House, D2 In September 2015 we pre-let 85,000 sq. ft. to Twitter on a 20 year lease, with initial rent of c. €4.6m per annum (€50psf). Subsequently the agreement for lease has been extended to a further 16,500 sq. ft. generating additional net rental income of €0.7m per annum: 14,000 sq. ft. of this is additional space being created for Twitter and the remaining 2,500 sq. ft. relates to design efficiencies in the existing building. The total building area has increased from 112,000 sq. ft. to 135,000 sq. ft. The expected lease commencement is late 2016 upon completion of the refurbishment works, for which estimated capital expenditure is €27m (€11m spent at 31 March 2016). We have commenced the marketing of the remaining 33,000 sq. ft. of available space and are discussing terms with a number of interested parties. Central Quay, South Docks The 57,700 sq. ft. office building was acquired in February 2016 with some near term opportunities to drive rents through asset management. In March 2016 we agreed a lease surrender with Indeed Ireland Operations Ltd, occupier of 22,000 sq. ft. across the first and third floors, for a payment to the tenant of €0.3m. Indeed were paying a low average rent of €30psf. Simultaneously with the surrender, we agreed to lease the first floor (11,000 sq. ft.) to Daqri International Limited for ten years, with a break after three years, from April 2016 at a rent of €52.50psf. We are in discussions with a number of potential occupiers regarding the remaining 18,500 sq. ft. of available space in the building.

Chancery Building, D8 Webzen vacated all 11,500 sq. ft. previously occupied in March 2016 having exercised a break option. We are close to finalising terms with a tenant for one of the two floors vacated. We are also in the process of upgrading the common areas in the building, at a cost expected to be less than €0.1m. Forum Building, IFSC Terms have been agreed with Parkrite for a new 20 year lease from 14 May 2013 for the multi storey car park. The initial rent will be €0.5m with five yearly reviews. The lease is expected to be completed in Q2 2016.Guild House, IFSC In July 2015 FBD plc surrendered their leasehold interest for a total payment to Hibernia of €8.8m, covering surrender premiums, rental top-ups and dilapidations. The building was fully occupied and all nine of the former sub-tenants of FBD, with the exception of Bank of New York Mellon who occupy the entire first floor, have lease expiration dates prior to the end of Q1 2017. We have informed all tenants of our decision to undertake a full refurbishment of all common areas to the same standard as that recently completed in One Dockland Central and work is expected to commence shortly. We are in discussions with the existing tenants regarding new leases beyond Q1 2017: we expect certain tenants will agree new leases and remain in situ throughout the works. The building will be renamed Two Dockland Central on completion. One Dockland Central (formerly Commerzbank House), IFSC Of the 57,600 sq. ft. refurbished, 27,500 sq. ft. (two floors) and 14 car parking spaces were pre-let to Hubspot in November 2015 on a 20 year lease at a rent of €1.3m per annum (€45psf) after a six month rent free period from commencement: the lease commenced in February 2016. We are in advanced discussions with a potential occupier regarding the remaining 30,000 sq. ft. of available refurbished space. Other completed assets The other completed properties in the portfolio are close to full occupation with an average period to rent review or lease expiry for the "in-place" office portfolio of 2.0 years: the team is assessing options to maximise returns from the up-coming lease events and continues to carefully monitor the letting markets.Sale of non-core assets Good progress has been made in disposing of the remaining non-core assets acquired as part of the Dorville loan portfolio, which is substantially complete. As at 31 March 2016 the position was as follows:

(1) Figure excludes tax payable on net profits arising on disposal

Since the financial year end the sale which was agreed at year end but uncompleted has closed with funds received by Hibernia. In addition, the sale of a further seven units have been agreed with an aggregate gross sales value of €1.8m.

Financial results and position

The key drivers of EPRA NAV per share, which increased 19.0 cent from 31 March 2015 were:

- 18.2 cent per share from the revaluation of the property portfolio, including 8.2 cent per share in relation to development properties

- 1.5 cent per share from EPRA earnings for the financial year

- Payment of dividends, which decreased NAV by 1.2 cent per share

- Gains on sales of non-core assets, which increased NAV by 0.5 cent per share

EPRA profits for the financial year were €10.0m, up 153% since 31 March 2015. The key driver of the increase was the 85% increase in rental income, excluding surrender premia, due to further acquisitions made in the past 12 months, full periods of ownership for a number of assets and new lettings made (e.g. Block 3, Wyckham Point). In addition, property income was positively impacted by the surrender premium from FBD in relation to their lease on Guild House: this amounted to a one-off gain to property income of €4.9m (31 March 2015: €2.4m from surrender premia). 

Net profit for the financial year was €136.8m, an increase of 48% over the same period last year. In addition to the increase in property income, revaluation gains and losses to 31 March 2016 amounted to €125m, considerably higher than the prior financial year figure of €80.8m (the March 2015 figure was €90.9m including gain made on recognition of Block 3, Wyckham Point as an investment property) and assisted, in particular, by the valuation uplift in Cumberland House following the pre-let of the majority of the building to Twitter.

Financing and hedging At 31 March 2016 Group net debt was €52.9m, a loan to value ratio (LTV) of 5.7%, having moved from a net cash position of €139.0m at 31 March 2015 as capital expenditure on acquisitions and developments significantly outweighed inflows from the sale of non-core assets, Starwood affiliates' buy-in to the Windmill Lane development and undistributed rental income.

In November 2015 the Group entered a new five year €400m RCF with Bank of Ireland, Barclays and Ulster Bank, replacing the existing €100m facility and providing flexible funding for the development pipeline and future acquisitions. In December 2015 the Windmill Lane Partnership ("WLP"), the Group's 50:50 joint arrangement with Starwood entities, entered a non-recourse, three year debt facility with Deutsche Bank of €46.7m (Hibernia share: €23.4m) to fund the development of the Windmill Lane site. At the request of WLP, this was subsequently reduced to €44.2m (Hibernia share: €22.1m). If both facilities were fully drawn at 31 March 2016 this would have resulted in a LTV of 32.5%. Given the nature of our portfolio and the development exposure within it, we expect the through-cycle gearing to be in the range of 20-30% LTV.

The Group has a policy of fixing or hedging the interest rate risk on the majority of its drawn debt. Consequently it has entered into interest rate caps and swaptions with 1% strike rates (reference 3m Euribor) covering €100m of the RCF. The interest rate exposure of the Windmill Lane facility has been hedged using an interest rate cap with a 1% strike rate (reference 3m Euribor). 

Internalisation of management team

The Group completed the internalisation of its management team in November 2015, following approval by shareholders in late October 2015. The transaction was effected through the acquisition of WK Nowlan REIT Management Ltd (the "Investment Manager") and its parent company, Nowlan Property Limited ("NPL"), on terms representing no anticipated material additional cost to the Group when compared to the estimated costs of retaining the external structure until the expiry of the initial term of the Investment Management Agreement in November 2018. Under the terms agreed, the transaction was structured to take effect from 1 April 2015.

Initial consideration paid of €21.1m comprised €14.2m in respect of base management fees and €6.9m in respect of the net assets of the Investment Manager and NPL (which were principally the performance fee payable to the Investment Manager for the year to March 2015 and cash). The initial consideration was settled through the payment of €8.3m of cash and the issue of 10.9m of new ordinary shares. Following completion, the Directors and senior management hold c. 2% of the issued share capital of the Company and the free float is c. 98%.

Upon completion Kevin Nowlan (CEO) and Thomas Edwards-Moss (CFO) joined the Board of Directors, which continues to have a majority of independent non-executive directors and remains in compliance with the relevant requirements and procedures set out in the Irish, UK and AIC Corporate Governance Codes. Further information can be found in Note 5 to the financial statements.

DividendThe Board has proposed a final dividend of 0.8 cent per share (2015: 0.5 cent) which, subject to approval at the Company's AGM, will be paid in August 2016. All of this final dividend will be a Property Income Distribution ("PID") in respect of the Group's tax exempt property business. 

Together with the interim dividend of 0.7 cent, the total dividend for the year will be 1.5 cent (2015: 0.8 cent). This represents over 87% of realised profits received in the financial year. As the portfolio income stabilises, we intend that the interim dividend declared will usually be in the region of 30-50% of the total regular dividends paid in respect of the prior financial year.

Hibernia introduced a Dividend Reinvestment Plan ("DRIP") last year: this allows shareholders to instruct Capita, the Company's registrar, to reinvest dividend payments by the purchase of shares in the Company. The terms and conditions of the DRIP and information on how to apply are available on the Group's website.

Selected portfolio information

1. Top 10 in-place office occupiers by contracted rent and % of contracted in place office rent roll

1 Deloitte is a tenant of Hardwicke House, which is an investment property of the Group. Deloitte were in situ when the Group acquired its interest in the building and all lease arrangements are at arm's length.

2. In-place office contracted rent by business sector

3. Portfolio by location

150% of 1WML included

2CBD Office Development/Refurbishment, Residential, Industrial

4. Contracted in-place office portfolio rent by time to the earlier of the next review or expiry date of the lease

Principal Risks and Uncertainties

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance and could cause actual results to differ materially from expected and historical results. A description of these risks and the steps which the Group has taken to manage these risks is set out below

Consolidated Income Statement

The notes on pages 26 to 74 form an integral part of these consolidated financial statements

Consolidated statement of comprehensive income

The notes on pages 26 to 74 form an integral part of these consolidated financial statements.

Consolidated Statement of Financial Position

As at 31 March 2016

The notes on pages 26 to 74 form an integral part of these consolidated financial statements.

Consolidated statement of changes in equity

The notes on pages 26 to 74 form an integral part of these consolidated financial statements.

Consolidated Statement of Cash Flows

The notes on pages 26 to 74 form an integral part of these consolidated financial statements.

Notes Forming Part of the financial statements

Hibernia REIT plc, the "Company", together with its subsidiary and associated undertakings as detailed in Note 31 (the "Group"), is engaged in property investment (primarily commercial) in the Irish (primarily Dublin) market with a view to maximising its shareholders' returns.

The Company is a public limited company and is incorporated and domiciled in Ireland. The address of the Company's registered office is South Dock House, Hanover Quay, Dublin D02 XW94, Ireland. The Company was incorporated on 13 August 2013 and registered as a public limited company on 8 November 2013. The registered number of the Company is 531267.

The Ordinary Shares of the Company are listed on the primary listing segment of the Official List of the Irish Stock Exchange (the ''Irish Official List'') and the premium listing segment of the Official List of the UK Listing Authority (the ''UK Official List'' and, together with the Irish Official List, the ''Official Lists'') and are traded on the regulated markets for listed securities of the Irish Stock Exchange and the London Stock Exchange plc (the ''London Stock Exchange'').

a. Statement of compliance

These consolidated financial statements of Hibernia REIT plc are non-statutory consolidated financial statements. The Auditors have not completed their audit but the Directors expect that there will be no changes to the financial information between these non-statutory consolidated financial statements and the statutory financial statements that will be contained in the Annual Report. The Annual report of the Group will be issued at the end of June 2016. The consolidated financial statements of Hibernia REIT plc have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, which comprise standards and interpretations approved by the International Accounting Standards Board (IASB), and the Companies Act 2014. IFRS as adopted by the EU differ in certain respects from IFRS as issued by the IASB.

The Group has not early adopted any forthcoming IASB standards. Note 3 sets out details of such upcoming standards.

b. Functional and presentation currency

These consolidated financial statements are presented in Euro, which is the Company's functional currency and the Group's presentation currency.

c. Basis of accounting

The consolidated financial statements have been prepared on a going concern basis, in accordance with IFRS and the IFRS Interpretations Committee (IFRIC) interpretations as adopted by the European Union and the Companies Act 2014. The Group financial statements therefore comply with Article 4 of the EU IAS Regulation.

The consolidated financial statements have been prepared on the historical cost basis, except for the revaluation of investment properties, owner occupied buildings and financial instruments that are measured at fair value at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

d. Assessment of going concern

The consolidated financial statements have been prepared on a going concern basis. The Directors have performed an assessment of going concern for a minimum period of 12 months from the date of this statement and are satisfied that the Group is appropriately capitalised. The Group has a cash balance as at 31 March 2016 of €23m (31 March 2015: €139m), is generating positive operating cash‑flows and, as discussed in Note 25, has in place a revolving credit facility with an undrawn balance of €325m at 31 March 2016 (31 March 2015: €100m). The Group has assessed its liquidity position and there are no reasons to expect that the Group will not be able to meet its liabilities as they fall due for the foreseeable future.

e. Basis of consolidation

The financial statements incorporate the consolidated financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is assessed based on the Company's:

- power over the investee;

- exposure to variable return from its involvement with the investee; and

- ability to use its powers to affect returns.

When the Company has less than a majority of the voting rights of an investee, it considers that it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.

 The results of subsidiaries and joint arrangements acquired or disposed of during the financial year are included from the effective date of acquisition or to the effective date of disposal. The accounting policies of all consolidated entities are consistent with the Group's accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Business combinations 

Acquisitions of subsidiaries and businesses are accounted for under the acquisition method. The consideration transferred in a business combination is measured at fair value. The assets and liabilities acquired in the business combination are recognised at their fair value with the exception of deferred tax assets or liabilities related to employee benefit arrangements (measured according to IAS 12 and IAS 19) and assets that are classified as held for sale (measured according to IFRS 5). Acquisition related costs are expensed as incurred.  

Where the consideration transferred by the Group includes a contingent asset or liability, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in a business combination. The subsequent accounting for changes in the measurement of these contingent assets or liabilities depends on the classification of the contingency. For example, contingent fees recognised under acquired contracts would be measured as a change in the value of the trade receivable or payable and the movement recognised in profit and loss.  

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. 

Joint arrangements 

A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is established when no one entity has control of the arrangement on its own; all of the entities involved in the arrangement control it collectively. The Group enters into such arrangements to facilitate joint development of properties in its portfolio of investment properties. The arrangements are bound by contractual agreements and may be accounted for as either a joint venture or joint operation. These arrangements are reviewed at each accounting period to ensure that control continues to be joint and that, where entities are involved, reclassification into subsidiary or associate companies is not required.  

A joint arrangement is classified as a joint venture when the Group has rights to the net assets of the arrangement rather than to the individual assets and liabilities, revenues and expenses. Otherwise the joint arrangement is classified as a joint operation. This classification is based upon an assessment of the structure and legal form of the arrangement.  

The Group accounts for joint ventures using the equity method, the Groups share of the joint venture is initially recognised at cost and adjusted thereafter for the post-acquisition change in the investor's share of the investee's net assets. The Group's share of profit or loss includes its share of the investee's profit or loss and the Group's other comprehensive income includes its share of the investee's other comprehensive income. 

Where the joint arrangement is recognised as a joint operation, the Group recognises its share of assets and liabilities held jointly as well as its share of revenues and expenses according to the IFRS applicable to the items being recognised.  

f. Significant judgements

The preparation of the financial statements may require Management to exercise judgement in applying the Group's accounting policies. The following are the significant judgements:

Classification of Starwood joint arrangement

Hibernia REIT plc has entered into a joint arrangement to develop the Windmill Lane site. The site is co-owned through its subsidiary, Hibernia REIT Holding Company Limited, and the development is managed through a jointly owned development company, the Windmill Lane Development Company Limited. The Directors have examined the overall arrangements and concluded that as the joint arrangement is not structured through a separate legal vehicle and that the parties have rights to the specific assets and liabilities of the arrangement, it should be accounted for as a joint operation. Accordingly, the Group has recognised its share of the assets, liabilities, income and expenditure.

Internalisation of the Investment Manager 

On 5 November 2015, the Company completed the internalisation of the Investment Manager. The internalisation has occurred by the acquisition of the entire issued share capital of the parent company of the Investment Manager, Nowlan Property Limited, and the Investment Manager held otherwise than by the parent company. As part of the agreement, the Company assumed the expenses of the Investment Manager for the period from 1 April 2015 to completion of the internalisation.

The main components of the transaction were:

A. A payment for the fair value of the net assets of the acquired companies, the "Acquirees";

B. A payment calculated by reference to the base fee due under the Investment Management Agreement; and

C. Payments in future periods which reference performance related fees, NAV increases and joint venture fees payable under the Investment Management Agreement.

Part A has been determined to be a business combination and has been accounted for under the acquisition method.

88.75% of the payments under B and C above are conditional on the completion of service by vendors remaining part of the Management Team of the Company until November 2018, with one third of payments vesting annually on the anniversary of the deal completion. The remaining 11.25% relates to payments to vendors that are not part of the Management Team.

The Directors have considered the accounting for these payments and determined that B and C substantially represent a transaction separate to the acquisition of WK Nowlan REIT Management Limited and Nowlan Property Limited, together the "Acquirees", as they remunerate employees and contractors who were former owners for future services. This decision is based on the provisions included in the share purchase agreement that require those owners subject to these conditions to continue to provide services to the Group until expiration of the agreement in November 2018. Failure to comply with these provisions will result in clawback of the payments. This clawback is reduced by one third on each anniversary of the agreement until November 2018.

The amount paid under part B which the Directors have identified as for future services, €13.4m, is therefore treated as a prepayment in the financial statements and recognised over the period during which the services it is dependent on are provided. These services will be provided from the completion date (5 November 2015) to November 2018. €1.8m has been recognised in the income statement for the financial year ended 31 March 2016. The balance paid to vendors who are not obliged to provide services, €1.7m, was recognised immediately as an expense, and is included in other gains and losses.

Payments made in subsequent periods under part C are recognised over the period that the Group receives the benefit of the services to which they relate. Amounts not relating to services provided will be expensed as incurred.

As a material item, the accounting for this transaction constitutes a significant judgement by the Directors. Further details can be found in Note 5 to these financial statements.

There were no other items of significant judgement that might have a material impact on the consolidated financial statements at 31 March 2016.

g. Key estimates

The preparation of financial information requires the use of certain critical accounting estimates. Although these estimates are based on the Board's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. The following are the key estimates which were made in respect of this financial information.

Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share based transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date

- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability either directly or indirectly

- Level 3 inputs are unobservable inputs for the asset or liability.

Valuation of investment properties

The Group's investment properties are held at fair value and were revalued at 31 March 2016 by the external valuer, CBRE Limited, a firm employing qualified valuers in accordance with the Royal Institution of Chartered Surveyors Valuation - Standards (January 2015) (the "Red book"). Further information on the valuations and the sensitivities is given in Note 17.

The Board conducts a detailed review of each property valuation to ensure that appropriate assumptions have been applied. Property valuations are complex and involve data which is not publically available and a degree of judgement. The valuation is based upon the key assumptions of estimated rental values and market based yields. The approach to developments and refurbishments is on a residual basis and factors such as the assumed timescale, the assumed future development cost and an appropriate finance and/or discount rate are used to determine the property value together with market evidence and recent comparable properties where appropriate. In determining fair value, the valuers make reference to market evidence and recent transaction prices for similar properties.

The Directors must be satisfied that the valuation of the Group's properties is appropriate for inclusion in the accounts. The fair value of the Group's properties is based on the valuation provided by CBRE. This valuation is based on future cashflows from rental income both for the current lease period and future estimated rental values. In accordance with the Group's policy on lease incentives, the valuation provided by CBRE is adjusted by the fair value of the rental income accruals ensuing from the recognition of these incentives. The total reduction in the external valuers' investment property valuation in respect of these adjustments was €2.6m (31 March 2015: €2.2m). No further adjustments were required for the financial year ended 31 March 2016.

There were no other key estimates that might have a material impact on the consolidated financial statements at 31 March 2016.

Adoption of new standards

The following standards are effective for the first time in the current financial year, due to changes in the business structure, and have been adopted:

· IFRS 11 Joint Arrangements

· IAS 16 Property, Plant and Equipment

· IAS 19 Employee Benefits (2011)

Prospective Accounting changes

The following standards and interpretations to existing standards have been published by the International Accounting Standards Board ("IASB") and, to the extent indicated, have been adopted by the European Union ("EU") and will be mandatory for future accounting periods. The Company has not early adopted these standards or interpretations.

• IAS 1 Presentation of Financial Statements amendments remove certain impediments to preparers in exercising their judgement in presenting their financial reports and is effective for annual periods beginning on or after 1 January 2016.

• IAS 7 Statement of Cashflows amendments to clarify disclosures and is effective for annual periods beginning on or after 1 January 2017. (Subject to EUR endorsement)

• IFRS 9 Financial Instruments was issued in July 2014 and will replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes a revised classification and measurement model, a forward looking 'expected credit loss' impairment methodology and modifies the approach to hedge accounting. Unless early adopted, the standard is effective for accounting periods beginning 1 January 2018. (Subject to EU endorsement)

• IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities, and IAS 28 Investment in Associates and Joint Ventures are amended for accounting periods beginning on or after 1 January 2016 to clarify the treatment of the sale or contribution of assets from an investor to its associate or joint venture. (EU endorsement currently halted)

• IFRS 11 Accounting for Acquisitions of Interests in Joint Operations amends IFRS 11 to require an acquirer of an interest in a joint operation in which the activity constitutes a business (as defined in IFRS 3 Business Combinations) to apply all the of the business combinations principles of IFRS 3 except where they conflict with guidance in IFRS 11 and disclose the information required by IFRS 3 and other IFRS for business combinations. This is effective for accounting periods beginning on or after 1 January 2016.

• IAS 12 Income taxes, amendments to deferred tax recognition. Effective for periods beginning on or after 1 January 2017. (Subject to EU endorsement)

• IFRS 14 Regulatory Deferral Accounts, applies to an entity's first annual IFRS financial statements for a period beginning on or after 1 January 2016, permits an entity which is a first-time adopter of International Financial Reporting Standards to continue to account, with some limited changes, for 'regulatory deferral account balances' in accordance with its previous GAAP, both on initial adoption of IFRS and in subsequent financial statements. (Will not be EU endorsed)

• IFRS 15 Revenue from Contracts with Customers, provides a single, principles based five-step model to be applied to all contracts with customers and is applicable to an annual reporting period beginning on or after 1 January 2018. (Subject to EU endorsement)

• IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets, which are effective for accounting periods beginning on or after 1 January 2016, clarify acceptable methods of depreciation and amortisation. IAS 16 Property, Plant and Equipment and IAS 41 Agriculture are amended for accounting periods starting on or after 1 January 2016 to include and define "bearer plants" within property, plant and equipment.

• IFRS 16: Leases, sets out the principles for the recognition, measurement, presentation and disclosure of leases. It is effective for annual periods commencing on or after 1 January 2019 and supersedes IAS 17: Leases and SIC 15: Operating leases - Incentives. (Subject to EU endorsement)

• IAS 27 Separate Financial Statements is amended to permit investments in subsidiaries, joint ventures and associates to be optionally accounted for using the equity method in separate financial statements for accounting periods beginning on or after 1 January 2016.

• Investment entities: applying the consolidation exception (amendments to IFRS 10 and 12 and IAS 28) addresses issues in applying the consolidation exception for investment entities and is effective for period commencing on or after 1 January 2016.

• Annual Improvements to IFRS: 2012-2015 cycle (effective for accounting periods beginning on or after 1 July 2016);

IFRS 15 may have a future impact on revenue recognition and related. Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied. The Group's main source of revenue is from the leasing of properties and revenue is recognised in accordance with IAS 17: Leases and SIC 15: Operating Leases-Incentives. It is therefore expected that there will be no material impact from the adoption of IFRS 15.

IFRS 16: Leases will apply to the operating leases applicable to the Group's Investment property but is not expected to materially change the Group's accounting in relation to these items.

The reminder of these amendments are not expected to have a material impact on the Group's consolidated financial statements.

a) Revenue recognition

Revenue consists of rental income on the Group's investment properties and interest income on loans and receivables.

Revenue is recognised in the Consolidated Income Statement when it meets the following criteria:

- It is probable that any future economic benefit associated with the item of revenue will flow to the Group; and

- The amount of revenue can be measured with reliability.

Rental Income

Rental income arises on properties which are included as investment properties in the Consolidated Statement of Financial Position and which are leased out under operating leases. Rental income from operating leases is recognised in the Consolidated Income Statement on an accrual basis as revenue on a straight line basis over the lease term. Rent received in advance is deferred in the Consolidated Statement of Financial Position and recognised in the period to which it relates to.

Rental income also arises on the Group's non-current assets classified as held for sale. This income is an immaterial and decreasing amount as the Group continues its programme of selling these assets in the short term and is therefore seeking vacant possession where possible. This income is included in the "Other" segment for reporting purposes.

Where adjustments to rent or a review under a lease is unsettled at the reporting date, these are included in income based on a reasonable estimate of the expected settlement amount and then adjusted to the actual amount when settlement is reached. Surrender payments for early lease terminations are reflected, net of any costs such as dilapidation or legal costs relating to the lease, in the accounting period in which the surrender took place.

Service charges and other sums receivable from tenants are recognised on an accrual basis by reference to the stage of completion of the relevant service or transactions at the reporting date. These services generally relate to a 12‑month period.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Rental income from operating leases is recognised on a straight-line basis over the term of the lease. Therefore when the Group provides incentives to its tenants the incentives are recognised over the lease term on a straight line basis. These incentives can be a rent free period at the commencement of the lease, a reduced rent for a period, an assumption of lessee costs or other incentives negotiated. All such incentives are recognised as an integral part of the net consideration agreed for the use of the leased asset, irrespective of the incentive's nature or form. The aggregate cost of such incentives is recognised as a reduction of rental income on a straight-line basis over the lease term. The lease term is either the period to the expiry date of the lease or to the next break point, i.e. where there is a legal right for the tenant to break the lease. The value of the resulting accrual is included within the respective property value in the Consolidated Statement of Financial Position.

Details on all aspects of rental payments and concessions under leases are provided to the external valuers at each reporting date for their consideration in assessing the fair value of the properties concerned.

b) Direct property costs

Direct costs comprise service charges and other costs directly recoverable from tenants and non-recoverable costs directly attributable to investment properties and other revenue streams.

c) Foreign currencies transactions and balances

Transactions in currencies other than Euro are recognised at the rates of exchange prevailing on the dates of the transactions. At the end of each period, monetary amounts denominated in foreign currencies are re‑translated at the rates prevailing at that date. Non‑monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing when the fair value was determined. Non‑monetary items carried at historical cost are reported using the exchange rate at the date of the transaction.

Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.

d) Finance income and expense

Interest income and expense is recognised in the Consolidated Income Statement. Income for all interest‑bearing financial instruments is recognised using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability (or group of financial assets or financial liabilities) and of allocating the interest income, interest expense and fees paid and received over the relevant period.

e) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of investment properties which take a considerable length of time to get ready for rental to tenants, are added to the costs of those properties until such time as the properties are substantially ready for use. All other borrowing costs are recognised in the profit and loss account as they occur.

f) Employee Benefits

Retirement benefit costs and termination benefits

Payments to the Group's defined contribution retirement benefits plan are recognised as an expense when employees have rendered the service which entitles them to the contribution. A liability for termination payments is recognised at the earlier of when the Group can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.

Short term and long term employee benefits

A liability is recognised for benefits accruing to employees in respect of all elements of remuneration, annual leave, and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.

Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid for the related service.

Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made for the Group in respect of services provided by the employees up to the reporting date.

g) Provisions

A provision is recognised if, as a result of a past event, the Group has a present obligation (legal or constructive) that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows (in most cases, the risk free rate) at a pre‑tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a finance cost. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third‑party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

h) Expenses

Expenses are recognised in the Consolidated Income Statement on an accrual basis.

i) Share based payments

A share-based payment is a transaction in which the entity receives goods or services either as consideration for its equity instruments or by incurring liabilities for amounts based on the price of the entity's shares or other equity instruments of the entity. Equity-settled share based payments are measured at the fair value of the equity instruments on the grant date. Details regarding the determination of the fair value of equity-settled share based transactions are set out in Note 11. The fair value determined at the grant date of the equity-settled share based payment is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the number of equity instruments which will vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee share benefits reserve. Fair value movements between the grant and issue date are recognised at each accounting date.

Equity settled share based transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be measured reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

The fair value of the relevant services is recognised as an expense over the accounting period in which they are incurred. 

j) Taxation

Hibernia REIT plc elected for Real Estate Investment Trust (REIT) status on 11 December 2013. As a result, the Company will not pay Irish corporation tax on the profits and gains from qualifying rental business in Ireland provided it meets certain conditions. Corporation tax is still payable as normal in respect of income and gains from the Group's residual business (generally any non-investment property rental business). The Group is also liable to pay other taxes such as VAT, capital gains tax, relevant contracts tax, local property tax, property rates, payroll taxes and foreign taxes as normal.

Current tax

Current tax is the expected tax payable on the taxable income or loss for the period, using tax rates enacted or substantially enacted at the reporting date, and any adjustment in taxes payable in respect of the previous periods.

Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse using tax rates enacted or substantially enacted at the reporting date.

k) Joint arrangements

A joint arrangement is an arrangement over which two or more parties have joint control. Joint control is established when no one entity has control of the arrangement on its own; all of the entities involved in the arrangement control it collectively. The Group enters into such arrangements to facilitate joint development of properties in its portfolio of investment properties. The arrangements are bound by contractual agreements and may be accounted for as either a joint venture or joint operation. These arrangements are reviewed at each accounting period to ensure that control continues to be joint and that, where entities are involved, reclassification into subsidiary or associate companies is not required. 

A joint arrangement is classified as a joint venture when the Group has rights to the net assets of the arrangement rather than to the individual assets and liabilities, revenues and expenses. Otherwise the joint arrangement is classified as a joint operation. This classification is based upon an assessment of the structure and legal form of the arrangement.

The Group accounts for joint ventures using the equity method, the Groups share of the joint venture is initially recognised at cost and adjusted thereafter for the post-acquisition change in the investor's share of the investee's net assets. The Group's share of profit or loss includes its share of the investee's profit or loss and the Group's other comprehensive income includes its share of the investee's other comprehensive income.

Where the joint arrangement is recognised as a joint operation, the Group recognises its share of assets and liabilities held jointly as well as its share of revenues and expenses according to IFRS applicable to the items being recognised.

l) Investment properties

Investment properties are properties held to earn rental income and/or for capital appreciation (including property under construction for such purposes). Properties are treated as acquired at the point at which the Group assumes the significant risks and rewards of ownership. This occurs when:

(1) It is probable that the future economic benefits that are associated with the investment property will flow to the Group;

(2) There are no material conditions which could affect completion of the acquisition; and

(3) The cost of the investment property can be measured reliably.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value. Gains and losses arising from changes in the fair value of investment properties are included in the Consolidated Income Statement in the period in which they arise.

Investment properties and properties under development are professionally valued on a twice yearly basis or as required by qualified external valuers using inputs that are observable either directly or indirectly for the asset in addition to unobservable inputs and are therefore classified at level 3. The valuation of investment properties is further discussed above under Note 2.

The valuations of investment properties and investment properties under development are prepared, as recommended by the Society of Chartered Surveyors, in accordance with the RICS-Valuation-Professional Standards (January 2015) (the Red Book).

When the Group begins to redevelop an existing investment property, or property acquired as an investment property, for future use as an investment property, the property remains an investment property and is accounted for as such. Expenditure on investment properties is capitalised only when it increases the future economic benefits associated with the property. All other expenditure is charged to the Consolidated Income Statement. Interest and other outgoings, less any income, on properties under development are capitalised. Borrowing costs, that is interest and other costs incurred in connection with borrowing funds, are recognised as part of the costs of an investment property where directly attributable to the purchase or construction of that property. Interest capitalised is calculated on development outgoings using the cost of funds specifically borrowed for a particular development or the weighted average cost of general Group borrowings. Fair value for investment properties under development is based on the Group's external professional valuers' assessment of future value, with an appropriate adjustment for the costs of completion and remaining risk, based on market conditions at the reporting date.

In accordance with the Group's policy on revenue recognition (Note 4.a), the value of accruals in relation to the recognition of lease incentives under operating leases over the term of the lease is included in the fair value assessment of the investment property to which the accrual relates.

Where amounts are received from departing tenants in respect of "dilapidation ", i.e. compensation for works that the tenant was expected to carry out at the termination of a lease but the tenant, in agreement with the Group, pays a compensatory sum in lieu of carrying out this work, the Group applies these amounts to the cost of the property. The value of the work to be done is therefore reflected in the fair value assessment of the property when it is assessed at the end of the period.

An investment property is de‑recognised on disposal, i.e. when the significant risks and rewards are transferred outside the Group's control, or when the investment property is permanently removed from use and no future economic benefits are anticipated from the disposal. Any gain or loss arising on de‑recognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Consolidated Statement of Comprehensive Income in the period in which the property is de‑recognised.

m) Property, plant and equipment

Owned property which is occupied by the Group for its own purposes is de-recognised as investment property at the date occupation commenced and at the fair value at that date. Property used for administration purposes is stated in the consolidated statement of financial position at its revalued amount, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amounts do not differ from materially from those that would be determined using fair values at the end of each accounting period.

Any revaluation increase from this property is recognised in other comprehensive income and accumulated in equity, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to the profit or loss to the extent of the decrease previously expensed. A decrease in the carrying amount of this property arising on revaluation is recognised in profit or loss to the extent that it exceeds the balance, if any, held in the properties revaluation reserve relating to a previous revaluation of that asset.

Depreciation on revalued property is recognised in profit or loss. On the subsequent sale or retirement of a revalued property, the attributable revaluation reserve is transferred directly to retained earnings.

Fixtures and fittings are stated at costs less accumulated depreciation and impairment losses.

Depreciation is recognised so as to write off the cost or value of assets less their residual value over their useful lives. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

The estimated useful lives for the main asset categories are:

Land and buildings 50 years

Fixtures and fittings/ Leasehold improvements 5 years

Office and computer equipment 3 years

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. Where there is no reasonable expectation that ownership will be retained at the end of the lease term, then they are depreciated over the shorter of the lease term or their useful life.

An item of property, plant or equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the use of the asset. Any gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

n) Non-current assets classified as held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use as an investment property. Non-current assets are treated as acquired at the point at which the Group assumes the significant risks and rewards of ownership. This occurs when:

- It is probable that the future economic benefits that are associated with the asset will flow to the Group;

- There are no material conditions which could affect completion of the acquisition; and

- The cost of the asset can be measured reliably.

Assets fall into this category only when the sale is highly probable and the asset is available for immediate sale in its present condition. The Group must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets classified as held for sale are measured at the lower of their acquisition cost and fair value less costs to sell.

o) Financial instruments

Financial assets and liabilities are recognised when a Group entity becomes a party to the contractual provisions of the instruments.

Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and liabilities (other than financial assets or liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or liabilities, as appropriate, on initial recognition. Transaction costs attributable to the acquisition of financial assets or liabilities at fair value through profit or loss are recognised immediately in the Consolidated Statement Income.

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal, or in its absence, the most advantageous market to which the Group has access at that date. Quoted prices are used where possible. If these cannot be observed, then valuation techniques which maximise the use of relevant observable inputs are used. The valuation techniques used incorporate the factors that market participants would take into account in pricing a transaction; for example, recent market evidence from similar instruments, pricing models, discounted cash flow analysis or other commonly used valuation techniques.

Where the Group enters into a written option, i.e., an option that is written into a contract with no net settlement (i.e. it will be settled with a non-financial asset, an investment property) the relevant investment property will be included at its full fair value while the fair value of the written option is classified as a payable.

Financial assets and liabilities

Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss (FVTPL)', 'held‑to‑maturity investments', 'available‑for‑sale' (AFS) financial assets and 'loans and receivables'. Financial assets 'at fair value through profit or loss' has two subcategories which are determined at initial recognition:

- Designated. This includes any financial asset to be measured at fair value with fair value changes in profit or loss.

- Held for trading. The second category includes financial assets that are held for trading.

Purchases and sales of financial assets in a regular way, i.e. within timeframes established by regulation or convention in the marketplace, are recognised and de‑recognised on a trade date basis.

Effective interest method: The Group uses the effective interest method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Loans and receivables: Loans and receivables are non‑derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans are recorded at fair value plus transaction costs when acquired. They are subsequently accounted for at amortised cost using the effective interest method.

Impairment allowances for loans and receivables are created if there is objective evidence that it will not be possible for the entire amount which is due under the original contractual arrangements to be recovered. Allowances for loans and receivables are calculated where there is objective evidence with regard to loan defaults, the structure and quality of the loan portfolio as well as macroeconomic parameters, on an individual basis. Losses expected as a result of future events, no matter how likely, are not recognised.

Individual loans: Impairment allowance is calculated as the difference between the carrying value of the asset and the present value of the expected future cash flows using the original effective interest rate. The increase in the present value of an adjusted receivable which occurs over time is shown as interest income.

In assessing the need for impairment on loans and receivables, the Group takes into account the expected cash flows from the realisation of collateral.

Derecognition: When the cash flows from a loan are considered to have expired, or where no further cash flows are expected to be received on the loan in the case where the underlying property asset has been recognised as an investment property or non-current assets classified as held for sale, the original asset is derecognised and a new asset is recognised, initially measured at fair value. Any difference between the carrying value of the original asset and the fair value of the new asset on initial recognition is recognised within other gains and losses in the Consolidated Income Statement.

p) Derivatives

The Group utilises derivative financial instruments to hedge interest rate exposures. Derivatives designated as hedges against interest risks are accounted for as cash flow hedges. Hedge relationships are documented at inception. This documentation identifies the hedge, the item being hedged, the nature of the risks being hedged and how the effectiveness is measured during its duration. Hedges are measured for effectiveness at each accounting date and the accounting treatment of changes in fair value revised accordingly.

The Group's cashflow hedges are against variability in interest costs and the effective portion is recognised in equity in the hedging reserve, with the ineffective portion being recognised in profit or loss within finance costs. The time value of option contracts at recognition is recorded as a financial asset and amortised to profit or loss over the period hedged.

q) Financial liabilities

The Group has borrowing facilities in place both as general facilities and secured on specific projects. These borrowings are measured initially at fair value, after taking into account transaction costs, and carried at amortised cost, with all attributable costs either charged to profit or loss or capitalised into investment property costs as appropriate. All costs are based on the effective interest rate method.

r) Trade receivables and payables

Trade receivables and payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method. Where there is objective evidence of loss, appropriate allowances for any irrecoverable amounts are recognised in the consolidated income statement.

s) Cash and cash equivalents

Cash and cash equivalents includes cash at banks in current accounts, deposits held at call with banks and other highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

t) Equity and share issue costs

The equity of the Company consists of ordinary shares issued. Shares issued are recorded at the date of issuance. The par value of the issued shares is recorded in the share capital account. The excess of proceeds received over the par value is recorded in the share premium account. Direct issue costs in respect of the issue of shares are accounted for in the retained earnings reserve, net of any related tax deduction. Direct issue costs include:

Costs of preparing the prospectus

Accounting, tax and legal expenses

Underwriting fees

Valuation fees in respect of the shares and of other assets

Costs that relate to the listing itself (e.g. stock exchange registration costs) are not directly attributable to the share issue and are expensed.

u) Dividends

Interim dividends are recognised as a liability of the Company when the Board of Directors resolves to pay the dividend and the shareholders have been notified in accordance with the Company's Articles of Association. Final dividends of the Company are recognised as a liability when they have been approved by the Company's shareholders.

v) Net Asset Value (NAV)

The IFRS NAV is calculated as the value of the Group's assets less the value of its liabilities based on IFRS measures. EPRA NAV is calculated in accordance with the European Public Real Estate Association (EPRA) Best Practice Recommendations: December 2015.

The EPRA Net Asset Value per share includes investment property, other non-current asset investments and trading properties at fair value. For this purpose, non-current assets classified as held for sale are included at fair value. It excludes the fair value of movement financial instruments and deferred tax and related good will.

Acquisition of the Investment Manager, WK Nowlan REIT management Limited (the "Internalisation")

On 27 October 2015 at an extraordinary general meeting of the Company, the shareholders approved the acquisition of the Investment Manager, WK Nowlan REIT Management Limited. On 5 November 2015 the Company completed this acquisition by acquiring the entire share capital (100% of voting equity) of WK Nowlan REIT Management Limited and its parent, Nowlan Property Limited (together "the Acquirees"). This transaction was carried out in order to internalise the investment management function. Under the terms agreed and as per the share purchase agreement, the transaction was structured to take effect from 1 April 2015 and consequently no base fees were payable under the Investment Management Agreement from that date and the Company assumed the expense of the Investment Manager from 1 April 2015. The income statement has been presented on this basis.

Total payments in cash and shares made relating to the internalisation totalled €21.1m (fair value €22.6m). The composition of these amounts is explained below. 

This transaction is also discussed under Note 2.f Significant judgements.

The internalisation was completed in three separate parts: Amounts paid to related parties are included in Note 32.

A. Business Acquisition

On 5 November 2015 the Company acquired 100% of the share capital of the Acquirees as described in Note 2.(f). The purpose of this business combination was to internalize the investment management of the Group. €0.1m profit has been consolidated in relation to these entities since acquisition.

B. Remuneration for future services

The second part of the internalisation transaction was the payment of €14.2m, the "Initial payment", 50% by way of ordinary shares and 50% by way of cash. The fair value of this payment was €15.1m due to the movement in the share price that is disclosed in Note 11. The cash impact was €7.1m with the balance paid by the issue of 6m shares.

This payment was made subject to clawback arrangements for those vendors who remain tied to the Company by employment or service contracts. These payments vest by one third on each anniversary of the acquisition date until November 2018. €13.4m was recognised as prepaid remuneration of which €1.8m was recognised in the consolidated income statement in the financial year ended 31 March 2016 and €11.6m is included in trade receivables (Note 20). The balance of the payment, €1.7m was recognised in expenses in the financial year ended 31 March 2016.

C. Future performance payments

The third element of consideration for internalisation was the payment of performance fees due under the original Investment Management Agreement and other top-up amounts, by an equivalent payment annually to the vendors of the Investment Manager, contingent for the majority of vendors on the fulfilment of service obligations.

The performance fee due for 2016 is €6.1m. Under arrangements made at the time of the internalisation, 85% of this is due to the vendors, representing €5.1m (the remainder being used to incentivise non vendor staff). Together with top up payments due of €0.3m the total due to vendors is €5.4m.

The payments at B and C above, while remuneration in nature due to the existence of clawback and vesting conditions, are not under the discretion of the Remuneration Committee but were determined in the share purchase agreement for the acquisition of the Investment Manager and were approved by the shareholders of the Company at the Extraordinary General Meeting of the Company held on 27 October 2015.

The Group is organised into six business segments, against which the Group reports its segmental information, being "Office assets", "Industrial assets", "Residential assets", "Development assets", "Other Assets" (non-core assets) and "Central assets and costs". The segment "Central assets and costs" has been added for the financial year ended 31 March 2016 to reflect the new operating structure post internalisation of the Investment Manager and includes the previously unallocated assets and items of income and expenditure as well as the operating segment which was previously external in the Investment Manager. All of the Group's operations are in the Republic of Ireland. Operating segments are reported in a manner consistent with the reporting to the Board of Directors of the Company which is the chief operating decision maker of the Group.

Central assets include cash and cash equivalents, tax refundable and administration expenses paid in advance. In addition, cash received in advance in relation to rental receipts on properties and rental income accrued have been allocated from receivables and cash and cash equivalents to the appropriate segment.

The Group's key measure of underlying performance of a segment is total income after revaluation gains and losses which comprises revenue (rental and interest income), property outgoings, revaluation of investment properties and other gains and losses. Total income after revaluation gains and losses includes rental income which is used as the basis to report key measures such as EPRA Net Initial Yield ("NIY") and EPRA "Topped‑ Up" NIY, which measure the cash passing rent returns on market value of investment properties before and after an adjustment for the expiration of rent free period or other lease incentives respectively.

Group Consolidated Segment Analysis 

For the financial year ended 31 March 2016

Group Consolidated Segment Analysis 

For the financial year ended 31 March 2015

Rental income arises from the Group's investment properties. Interest income arises from the recognition of the effective interest rate on the loans and receivables in accordance with the accounting policy described in Note 4(d). Rental income includes €1.3m in relation to the spreading of lease incentives (31 March 2015: €1.4m).

Surrender premia relate to the surrender of a lease in Guild House for a total payment of €8.8m. €4.9m is included in surrender premia as above. €2.3m related to top-up amounts for sub-leases and is included in deferred income. It will be released to profit or loss over the term of the relevant sub-leases, all of which terminate by the end of March 2017. €0.7m has been recognised in the financial year ended 31 March 2016. The remaining €1.6m related to dilapidations payable on Guild House and is included as part of the development and refurbishment expenditure in Note 17.

Other gains and losses includes a €2.4m charge relating to the internalisation of the Investment Manager comprising approximately €1.7m relating to payments to vendors relating to the base management fee buyout which were not restricted as discussed in Note 5 and amounts relating to the recognition of the difference between the fair value of assets acquired and the fair value of shares issued.

Operating profit for the financial year has been stated after charging/ (crediting):