REG - Circle Property PLC - Interim Results
29/11/2021 07:00
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RNS Number : 7955T Circle Property PLC 29 November 2021
29 November 2021
Circle Property Plc
("Circle", the "Company" or the "Group")
Interim Results for the six months ended 30 September 2021
REGIONAL FOCUSED PORTFOLIO PROVIDES PLATFORM
FOR GROWTH IN ASSET VALUES AND SHAREHOLDER RETURNS
Circle Property Plc (AIM: CRC), which invests in, develops and actively
manages well-located regional office assets, is pleased to announce interim
results for the six months ended 30 September 2021.
John Arnold, Chief Executive of Circle Property Plc, said:
"Our regional office portfolio has performed resiliently in the period. As
increasing numbers of workers have returned to their offices, the importance
of having an environment to meet, collaborate, mentor and train employees is
clear. Whilst working patterns have changed, the office continues to play an
integral role for many businesses.
It has been a very active period for the Company in terms of asset management.
By the end of this calendar year we expect to have completed on the disposal
of One Castlepark in Bristol for a consideration of £20 million. With the
majority of the proceeds from this sale being allocated to debt repayment, our
degearing is well advanced. This, together with the increased interim dividend
ahead of 2019 and 2020 levels, shows the positive momentum made by the Company
during the period."
Financial Highlights: A solid performance against an improving backdrop
· Unaudited estimated Net Asset Value ("NAV") per share of £2.74
(FY 2021: £2.74 / H1 2020: £2.83). This figure includes the full impact of
disposals in the period
· On a like-for-like basis (excluding completed disposals) the
gross portfolio valuation as at 30 September 2021 was marginally down by 0.5%
to £130 million in the period
· Group LTV reflected 46.6% (excluding cash at bank) with a cash
balance of £8.6 million reflecting a net LTV of 40%. Group LTV expected to
reduce further following the completion of the disposal of One Castle Park in
December 2021.
· Operating profit after revaluation of investment properties of
£2.1 million (H1 2020: £0.146 million)
· Profit before tax of £1.3 million (H1 2020: loss £0.7 million)
· Earnings per share of 4 pence (H1 2020: 2 pence)
· Proposed interim dividend of 3.5p per share, ahead of 2020 and
2019 pay-outs (H1 2020: 2.5p / H1 2019: 3.3p)
· Rental income of £3.2 million (H1 2020: £3.9 million), down
largely due to disposals and corresponding loss of income
Operational Highlights: Active Portfolio Management delivered significant
gains
· Rent collection for the March, June and September 2021 quarters
was 93%, 91% and 80% respectively. Discussions continue around outstanding
rental arrears
· 84.02% of total portfolio (including K3 at Kents Hill, Milton
Keynes, a development in progress) is let and incoming producing
· Asset management projects:
o Refurbishment of K3 Kents Hill, Milton Keynes underway, with £2.2 million
planned development costs and completion scheduled for Summer 2022
o High-spec, modern fit-outs undertaken at Concorde Park, Maidenhead and 36
Great Charles Street, Birmingham
· 100% of the Company's portfolio is within the regional office
sector, including a regional conference centre, and 88.35% located in Milton
Keynes, Bristol, Birmingham and Maidenhead & is flexible in terms of
1-5,000sq.ft. with ability to be sub-divided.
Disposals during the period above book: A busy period for portfolio management
· August 2021: the Group exchanged contracts on the sale of One
Castle Park, Bristol to Boultbee Brooks (Castle Park) Limited c/o Boultbee
Brooks Real Estate, for a consideration of £20 million representing a 3.9%
increase on 31 March 2021 valuation of £19.25 million, with completion due in
December 2021
· September 2021: Sale of 135 Aztec West in Bristol to Assura
Aspire Limited. The sale price of £3.961 million represented a 156% increase
(pre-refurbishment cost) and a 62% increase (post refurbishment cost) on 31
March 2021 valuation of £1.55 million
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK version of the EU
Market Abuse Regulation (2014/596) which is part of UK law by virtue of the
European Union (Withdrawal) Act 2018, as amended and supplemented from time to
time.
Circle Property Plc +44 (0)207 930 8503
John Arnold, CEO
Edward Olins, COO
Cenkos Securities +44 (0) 207 397 8900
Katy Birkin
Mark Connelly
Radnor Capital Partners +44 (0) 203 897 1830
Joshua Cryer
Iain Daly
Camarco +44 (0) 203 757 4992
Ginny Pulbrook
Rosie Driscoll
Toby Strong
About Circle Property Plc
Circle focusses on acquiring assets in regional cities, many of which have
significant office supply constraints, and on office assets with active
management potential (refurbishment opportunities, under-rented or vacant
properties or short leases), rather than just maximising initial rental
yields.
Circle is not a Real Estate Investment Trust (REIT) and can actively recycle
proceeds from asset sales into its refurbishment and redevelopment pipeline,
as well as future investment opportunities, therefore targeting a broader
range of returns for shareholders, which are primarily driven by NAV growth.
As well as already delivering substantial increases in NAV, the Company's
portfolio has significant reversionary potential with current total estimated
rental values of £10.92 million per annum, compared to contracted rent of
£8.70 million at 31 March 2021. The Company has a portfolio of 12 regional
commercial property investment and development assets in the UK valued at
£130 million as at 30 September 2021.
Chief Executive's Statement
Notwithstanding the understandable caution in the lettings market associated
with COVID-19, we have made good progress in the period. The Company achieved
the sale of 135 Aztec West, Bristol, significantly above valuation at 62%
above book, following the letting of the entire building to Fertility Bristol
Limited, which alone has offset a 0.5% valuation downturn in the Company's
total portfolio. All asset sales during the period have been ahead of their
respective book values.
The development at K3 Kents Hill is proceeding well and we have already
received strong tenant interest. The development will cost £2.2 million
funded through the Company's cash resources and the project is now scheduled
for completion in Summer 2022. This targeted spend will deliver an attractive
space which we are confident will achieve a good rental income. Moreover, the
completed high-spec, modern fit-outs at Concorde Park, Maidenhead and 36 Great
Charles Street, Birmingham are beginning to register increasing levels of
tenant interest with higher levels of viewings and requests for landlords
letting proposals.
We have been able to maintain exceptionally high rental recovery in excess of
90% during the period. Conversations and negotiations around rental arrears
continue and we are confident of a positive outcome, particularly as office
attendance and usage increases. The majority of our tenants remain firmly of
the view that the office plays a central part in the running of their
respective businesses. Whilst having the flexibility to work some of the time
from home can be advantageous in certain circumstances, dependent upon the
individual and the nature of the work, the view remains that team building,
collaboration, creativity, employee assessment, mentoring and training is most
effective within an office environment. Given all of this, and reflected in
our solid financial metrics, we remain of the view that whilst working
patterns may adapt, the office is very much here to stay.
The Company's investment and development portfolio, which is almost entirely
focused in the regional office sector with no exposure to retail (other than
two public houses and one restaurant in Birmingham), was valued, on a like-for
like basis (excluding completed disposals) at 30 September 2021 at £130
million. Net asset value per share ("NAV") has remained stable reflecting an
unaudited estimated NAV per share of £2.74 (FY 2021: £2.74). This figure
includes the full impact of disposals in the period.
The Company has a financing facility in place with RBS and HSBC for £100
million. The senior revolving facility is for £65 million (of which the
Company has drawn £60.525 million) with an "accordion" option for a further
£35 million. At 30 September 2021, the Group's LTV reflected 46.6% (excluding
cash at bank) and the Group had a cash balance of £8.6 million reflecting a
net LTV of 40%. Post period, on 18 October 2021, the Group made a repayment of
£1.98 million against its financing facility. The Board expects the Group's
LTV to reduce further following the completion of the disposal of One Castle
Park which is expected in December 2021.
As previously announced, the Company is targeting a further reduction in
gearing through targeted asset sales at valuations at or above book value and
achieving lettings at estimated rental values (ERV). There are a number of
assets that have benefited from our active management approach, with added
value following redevelopment, lease restructures or renewals which we expect
to be highly sought after, particularly as the office investment market
improves post COVID-19 uncertainties.
The Board declares an interim dividend of 3.5p, which will be paid on 14
January 2022 to shareholders on the register on 10 December 2021, with an
ex-dividend date of 9 December 2021. This dividend is an increase of 40% on
2020's COVID-19 impacted interim dividend of 2.5p and importantly, 6% ahead of
2019's interim dividend of 3.3p.
Notwithstanding the ongoing impacts of the COVID-19 pandemic, we remain
optimistic that the macroeconomic recovery, and in turn the regional office
market, is heading in the right direction. Whilst the letting market is
recovering more slowly, we believe that the flexibility offered by our assets
and their inherently smaller floorplates (1,000-5,000 sq.ft) will be key in
converting enquiries into lettings. The Board remain committed to maximising
returns and delivering value to our shareholders.
Condensed consolidated statement of comprehensive income
for the 6 months ended 30 September 2021
6 months to 6 months to 12 months to
30 September 30 September 31 March
2021 2020 2021
Note (unaudited) (unaudited) (audited)
£ £ £
Rental income 4 3,233,143 3,919,307 7,657,830
Other income 4 983,509 1,010,022 2,233,842
4,216,652 4,929,329 9,891,672
Property expenses 5 (1,219,063) (1,269,188) (2,356,221)
Net rental income 2,997,589 3,660,141 7,535,451
Administrative expenses 6 (944,649) (978,840) (2,615,926)
Operating profit 2,052,940 2,681,301 4,919,525
Gain on disposal of investment properties 599,446 - 263,446
Gain on asset held-for-sale 12 750,000 - -
Loss on revaluation of investment properties 11 (1,300,804) (2,534,903) (6,224,003)
Operating profit/(loss) after revaluation of investment properties 2,101,582 146,398 (1,041,032)
Finance income 7 26 2,083 2,094
Finance costs 8 (760,934) (884,516) (1,696,110)
Net finance costs (760,908) (882,433) (1,694,016)
Profit/(loss) for the period before taxation 1,340,674 (736,035) (2,735,048)
Taxation 9 (156,562) 113,714 199,729
Total comprehensive profit/(loss) for the year 1,184,112 (622,321) (2,535,319)
Earnings/(loss) per share 10 0.04 (0.02) (0.09)
NAV per share 2.74 2.83 2.74
There is no comprehensive income other than that included in the profit for
the period. All of the profit for the period is attributable to the owners of
the Company.
All items in the above statement derive from continuing operations.
Condensed consolidated statement of financial position
as at 30 September 2021
Note 30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Non-current assets
Investment properties 11 99,243,539 127,111,883 121,289,149
Right of use assets 2,316 84,540 61,039
Property plant and equipment 52,940 55,118 54,410
Lease incentives and receivables 13 9,966,711 10,128,672 10,127,528
Deferred tax asset 1,191,464 1,298,659 1,291,615
110,456,970 138,678,872 132,823,741
Current assets
Trade and other receivables 13 2,731,180 2,683,828 2,982,923
Assets held for sale 12 20,000,000 - -
Cash and cash equivalents 8,566,762 4,543,692 7,522,804
31,297,942 7,227,520 10,505,727
Total assets 141,754,912 145,906,392 143,329,468
Equity
Stated capital 42,542,179 42,542,179 42,542,179
Treasury share reserve 1,170,961 668,456 1,047,684
Retained earnings 33,866,695 37,000,805 33,814,453
Total equity 77,579,835 80,211,440 77,404,316
Non-current liabilities
Borrowings 14 60,249,656 61,822,537 61,922,684
Lease liabilities for right of use assets - 47,504 28,601
Deferred tax liability 379,226 768,913 482,171
60,628,882 62,638,954 62,433,456
Current liabilities
Trade and other payables 15 3,539,026 3,011,500 3,450,969
Lease liabilities for right of use assets 7,169 44,498 40,727
3,546,195 3,055,998 3,491,696
Total liabilities 64,175,077 65,694,952 65,925,152
Total liabilities and equity 141,754,912 145,906,392 143,329,468
The condensed consolidated interim financial statements were approved by the
Board of Directors on 26 November 2021.
Condensed consolidated statement of changes in equity
for the 6 months ended 30 September 2021
Stated capital Treasury share capital Share-based Retained earnings
payment reserve
Total
£ £ £ £ £
As at 1 April 2020 42,162,178 380,001 516,048 37,623,126 80,681,353
Loss for the period - - - (622,321) (622,321)
Share-based payments - - 152,408 - 152,408
As at 30 September 2020 42,162,178 380,001 668,456 37,000,805 80,211,440
Loss for the period - - - (1,912,998) (1,912,998)
Share-based payments - - 379,228 - 379,228
Dividends - - - (1,273,354) (1,273,354)
As at 31 March 2021 42,162,178 380,001 1,047,684 33,814,453 77,404,316
Profit for the period - - - 1,184,112 1,184,112
Share-based payments - - 123,277 - 123,277
Dividends - - - (1,131,870) (1,131,870)
As at 30 September 2021 42,162,178 380,001 1,170,961 33,866,695 77,579,835
Condensed consolidated statement of cash flows
for the 6 months ended 30 September 2021
6 months to 6 months to 12 months to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Cash flows from operating activities
Profit/(loss)for the period before taxation 1,340,674 (736,035) (2,735,048)
Adjustments for:
Finance income (26) (2,083) (2,094)
Finance expense 760,934 884,516 1,696,110
Depreciation 7,785 7,145 14,167
Amortisation of right of use assets 18,700 23,502 47,005
Loss on revaluation of investment properties 1,300,804 2,534,903 6,224,003
Gain on disposal of investment properties (599,446) - (263,446)
Gain on revaluation of assets held for sale (750,000) - -
Share based payments 123,277 152,408 531,636
Increase in trade and other receivables 412,560 (852,315) (1,150,266)
Increase/(decrease) in trade and other payables (334,478) (138,347) 185,615
Cash generated from operating activities 2,280,784 1,873,694 4,547,682
Interest and other finance costs paid (655,725) (858,649) (1,578,755)
Interest received 26 2,083 2,094
Taxation paid - (116,773) (151,475)
Net cash from operating activities 1,625,085 900,355 2,819,546
Cash flows from investing activities
Cost of refurbishment of investment properties (1,084,488) (311,312) (1,459,489)
Proceeds from disposal of investment properties 3,436,621 - 3,513,446
Cost of additions of property plant and equipment (6,315) - (6,314)
Net cash from/(used) in investing activities 2,345,818 (311,312) 2,047,643
Cash flows from financing activities
Repayment of borrowings (1,775,000) - -
Payment of lease liabilities (20,075) (25,680) (51,360)
Drawdown of borrowings - 1,000,000 1,000,000
Dividends paid (1,131,870) - (1,273,354)
Net cash (used in)/from financing activities (2,926,945) 974,320 (324,714)
Net (decrease)/increase in cash and cash equivalents 1,043,958 1,563,363 4,542,475
Cash and cash equivalents at the beginning of the period 7,522,804 2,980,329 2,980,329
Cash and cash equivalents at the end of the period 8,566,762 4,543,692 7,522,804
Notes to the condensed consolidated interim financial statements
for the 6 months ended 30 September 2021
1 General information
These condensed consolidated interim financial statements are for Circle
Property Plc ("the Company") and its subsidiary undertakings (together
referred to as the "Group").
The Company's shares are admitted to trading on AIM, a market operated by the
London Stock Exchange plc. The Company is domiciled and registered in Jersey,
Channel Islands. The address of its registered office is 3rd Floor, Standard
Bank House, 47- 49 La Motte Street, St Helier, Jersey, JE2 4SZ.
The nature of the Company's operations and its principal activities are that
of property investment in the UK.
2 Principal accounting policies
Basis of preparation
The condensed consolidated interim financial statements are prepared under the
historical cost convention and on a going concern basis and in accordance with
International Financial Reporting Standards and IFRIC interpretations adopted
for use in the European Union ("IFRS") and with those parts of the Companies
(Jersey) Law, 1991 applicable to companies preparing their accounts under
IFRS.
The condensed consolidated interim financial statements contained in this
document do not constitute statutory accounts under Companies (Jersey) Law
1991. In the opinion of the directors, the condensed consolidated interim
financial statements for this period fairly presents the financial position,
result of operations and cash flows for this period.
The condensed consolidated interim financial statements have not been audited,
nor have they been reviewed by the Company's auditors in accordance with the
International Standard on Review Engagements 2410 issued by the Auditing
Practices Board.
Statutory financial statements for the year ended 31 March 2021 were approved
by the Board of Directors on 6 July 2021. The report of the auditors on those
financial statements was unqualified.
Statement of compliance
The Interim Report includes the consolidated interim financial statements
which have been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting'. The condensed interim financial statements
should be read in conjunction with the annual financial statements for the
year ended 31 March 2021, which have been prepared in accordance with IFRS as
adopted by the European Union and applicable law.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chief
Executive's statement. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described in these financial
statements.
The Directors have assessed the Group's ability to continue as a going
concern, including an assessment of the on-going impact of Covid-19. In making
their assessment the Directors have modelled the Group's cash forecasts based
on the circumstances of each tenant on an individual basis. Rental collections
have been monitored on a weekly basis with ongoing communication with tenants
in respect of the collection of rental arrears. Loan covenants have been
stress tested taking into consideration a potential reduction in the valuation
of the Group's property portfolio.
Based on these considerations the Directors have a reasonable expectation that
the Company and the Group have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they have adopted the going
concern basis in preparing the financial statements.
New Standards adopted at 1 January 2021
There are no accounting pronouncements which have become effective from 1
January 2021 that have a significant impact on the Group's interim condensed
consolidated financial statements.
Significant accounting policies
The accounting policies applied by the Group in these half-yearly results are
the same as those applied by the Group in its consolidated financial
information in its 2021 Annual Report and Accounts, with the exception of IFRS
5 - Non-current assets held-for-sale and discontinued operations.
IFRS 5 - Non-current assets held-for-sale and discontinued operations.
Assets are classified as held for sale when:
Ÿ Management is committed to a plan to sell
Ÿ The asset is available for immediate sale
Ÿ An active programme to locate a buyer is initiated
Ÿ The sale is highly probable, within 12 months of classification as held
for sale
Ÿ The asset is being actively marketed for sale at a sales price reasonable
in relation to its fair value
Ÿ Actions required to complete the plan indicate that it is unlikely that
plan will be significantly changed or withdrawn
Investment properties classified as held for sale are measured at fair value
in accordance with the measurement criteria of IAS40.
Assets held for sale are derecognised when significant risks and rewards
attached to the asset have transferred from the group which is on completion
of contracts.
Areas of estimates and judgement
In preparing these condensed consolidated interim financial statements,
management has made judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and
liabilities, income and expenses. Actual results may differ from these
estimates.
The judgements, estimates and assumptions applied in the Group's consolidated
interim financial statements, including the key sources of estimation
uncertainty, were the same as those applied in the Group's last annual
financial statements for the year ended 31 March 2021, with the exception of
the asset reclassification under IFRS 5 - Non-current assets held-for-sale and
discontinued operations.
3 Operating segments
During the period the Group operated in one geographical segment, which is the
United Kingdom, and one reporting segment, which is investment in commercial
property. Therefore no segmental reporting is required.
4 Revenue 6 months to 6 months to 12 months to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Rental income 3,337,533 3,290,782 6,906,571
Lease incentive adjustment (104,390) 628,525 751,259
3,233,143 3,919,307 7,657,830
Insurance recovery 100,268 71,130 142,762
Service charge income 798,241 856,174 1,633,071
Other income 85,000 82,718 458,009
983,509 1,010,022 2,233,842
4,216,652 4,929,329 9,891,672
5 Property expenses 6 months to 6 months to 12 months to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Property expenses 33,292 6,729 26,392
Property service charges 221,610 158,495 331,904
Property repairs and maintenance costs 28,753 89,832 94,556
Property insurance 75,048 79,630 168,330
Property rates 62,119 78,328 101,968
Recoverable service charge costs 798,241 856,174 1,633,071
1,219,063 1,269,188 2,356,221
6 Administrative expenses 6 months to 6 months to 12 months to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Staff costs 506,001 536,032 1,657,273
Administration fees 153,200 152,311 305,540
Legal and professional fees 176,914 214,488 415,687
Audit fees 33,500 - 67,000
Accountancy fees 2,445 3,484 8,016
Rent, rates and other office costs 9,113 24,891 26,763
Other overheads 36,991 16,987 74,475
Depreciation of tangible fixed assets 7,785 7,145 14,167
Amortisation of right of use assets 18,700 23,502 47,005
944,649 978,840 2,615,926
7 Finance income 6 months to 6 months to 12 months to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Bank interest 26 2,083 2,094
26 2,083 2,094
8 Finance costs 6 months to 6 months to 12 months to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Loan interest 643,284 767,484 1,420,734
Loan commitment fees 17,739 12,479 22,670
Amortisation of lending costs 101,972 100,697 200,844
Annual agency fee - - 45,000
Interest on lease liabilities (2,061) 3,856 6,862
760,934 884,516 1,696,110
During the period, the Group has terminated a rental agreement lease for St
James Place, with the termination date being the 30 June 2021.
This rental agreement termination required the de-recognition of the lease
liability and right of use asset that was recognised in line with IFRS 16 -
Leases.
The impact of the de-recognition has been included in the table above.
9 Taxation
6 months to 6 months to 12 months to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Current tax 159,356 215,426 409,109
Deferred tax (credit) / charge (2,794) (329,140) (608,838)
156,562 (113,714) (199,729)
10 Earnings per share
Basic earnings per share has been calculated on profit after tax attributable
to ordinary shareholders for the period (as shown on the condensed
consolidated statement of comprehensive income) and the weighted average
number of ordinary shares in issue during the period.
6 months to 6 months to 12 months to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Profit/(loss) for the period 1,184,112 (622,321) (2,535,319)
Weighted average number of shares (excluding treasury shares) 28,296,762 28,296,762 28,296,792
Earnings per ordinary share: 0.04 (0.02) (0.09)
In the opinion of the Board, treasury shares held to satisfy share awards to
management currently do not have any material value and hence do not have any
dilutive effect. Therefore no diluted earnings per share has been presented.
11 Investment properties 30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Opening fair value per valuation report 132,150,000 139,450,000 139,450,000
Cost of refurbishment of investment properties 1,342,369 306,378 1,422,744
Cost of acquisition of investment property - - -
Disposal of investment properties (2,837,175) - (3,250,000)
Loss on revaluation of investment properties (1,300,804) (2,534,903) (6,224,003)
Lease incentive amortisation (104,390) 628,525 751,259
Reclassification of asset held for sale (19,250,000) - -
Fair value of investment properties per valuation report 110,000,000 137,850,000 132,150,000
Unamortised lease incentives (10,756,461) (10,738,117) (10,860,851)
Carrying value 99,243,539 127,111,883 121,289,149
The fair value of the Group's investment properties at 30 September 2021 has
been arrived at on the basis of valuation carried out by Savills (UK) Limited.
The valuation was carried out in accordance with the Practice Statements
contained in the Appraisal and Valuation Standards as published by the RICS.
In forming their opinion of the fair value, the independent valuer's had
regard to the current best use of the property, its investment attributes and
recent comparable transactions. The valuation was carried out using the "All
Risks Yield" method taking into consideration both sales and rental evidence
and formulating the opinion of market value taking into account the
properties' locations, specifications and specific characteristics.
At 30 September 2021, the fair value of the Group's investment properties per
the valuation report amounted to£110,000,000 (2020: £137,850,000). The
difference between the fair value of the investment properties per the
valuation report and the fair value per the balance sheet of £10,756,461
(2020: £10,738,117) relates to unamortised lease incentives which are
recorded in the financial statements within non-current and current assets.
The Group has pledged all of its investment properties to secure banking
facilities granted to the Group as detailed in note 14.
12 Assets held for sale 30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Opening balance - - -
Reclassification of One Castle Park, Bristol 19,250,000 - -
Gain on revaluation of asset held for sale 750,000 - -
Closing balance 20,000,000 - -
On 31 August 2021, the Group exchanged contracts on the sale of One Castle
Park, Bristol to Boultbee Brooks (Castle Park) Limited c/o Boultbee Brooks
Real Estate for a consideration of £20,000,000.
Completion is anticipated to take place on or around 16 December 2021.
13 Lease incentives and receivables 30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Non-current
Lease incentives 9,966,711 10,128,672 10,127,528
Current
Lease incentives 789,750 609,445 733,323
Amounts due from property agents 51,586 532,692 -
Tenant deposits 272,662 271,017 272,824
Amounts due from tenants 1,379,759 1,124,020 1,695,925
Other receivables 237,423 146,654 280,851
2,731,180 2,683,828 2,982,923
14 Borrowings 30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Brought forward 61,922,684 60,721,840 60,721,840
Loan repayments (1,775,000) - -
Loan drawdowns - 1,000,000 1,000,000
Amortisation of lending costs 101,972 100,697 200,844
Total borrowings 60,249,656 61,822,537 61,922,684
The Group is party to a revolving facility, with NatWest and HSBC. The
facility is a £60,000,000 revolving facility with an accordion option of up
to £40,000,000, of which £5,000,000 had been committed at the period end.
The facility has a four year term, repayable on 13 February 2023. The rate of
interest is the aggregate of the margin 2.05% and LIBOR and is payable
quarterly. A commitment fee is payable at a rate of 0.82% on the undrawn
facility and in relation to the accordion facility.
The Group paid an arrangement fee of 0.875% for the facility, which along with
other costs of arranging the facility including legal costs have been
amortised and will be written off over the 4 year term.
The facility is secured by a first and only legal charge over the Group's
investment properties, an assignment of rental income, charges over specified
bank accounts of the Group and a floating charge granted over all assets of
the Group.
The facility's financial covenants are 60% loan to value, 2.00:1 interest
cover looking both forward and backward, the Group shall ensure that the total
market value of the charged properties does not fall below £50,000,000 at any
time and that no single tenant represents more than 25% of the total
contracted rents.
At 30 September 2021 £60,525,000 (2020: £62,300,000) of the total facility
had been drawndown and the undrawn facility was £4,475,000
(2020: £2,700,000).
On 18 October 2021, a repayment of £1,980,731 was made against the facility.
15 Trade and other payables 30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£ £ £
Trade payables 47,200 26,782 50,467
Property improvement costs 285,314 59,242 27,433
Wages and salaries 26,223 27,902 338,664
Deferred income 1,752,940 1,749,920 1,745,607
Rental deposit accounts 272,662 271,017 272,968
Finance costs 279,467 285,834 274,169
VAT - Payable 195,485 257,742 170,918
Valuation fee 13,200 18,000 30,000
Audit fee 33,500 - 67,000
Administration fees - 363 64
Current taxation 633,035 314,698 473,679
3,539,026 3,011,500 3,450,969
16 Subsequent events
On 18 October 2021, following the sale of 135 Aztec West, a repayment of
£1,980,731 was made against the loan facility detailed in note 14.
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