REG - Develop North PLC - Annual Financial Report
12/03/2026 18:30
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RNS Number : 4850W Develop North PLC 12 March 2026
To: RNS
From: Develop North PLC
LEI: 213800EXPWANYN3NEV68
Date: 12 March 2026
Subject: Annual Financial Report
Chairman's Statement
Highlights
· Net Asset Value total return of 2.1% (2024: 6.3%)
· Annualised dividend yield of 5.9%, resulting in £1.0m of income
distributed to shareholders
· Increase in investment income to £2.22m, 14.6% higher than in
previous year
· Total dividends of 4 pence per share paid or payable for the year
· £9.5m deployed into nine projects and repayment of three
projects, bringing the number of exits to twenty six since inception
· 70.3% of funds deployed in the North East of England, reflecting
the Company's increased focus on selected regional markets
INTRODUCTION
I am pleased to present the Company's results for the year ended 30 November
2025, during which the Company entered its ninth full year of trading.
As in earlier years, the Company has made substantial investments in a range
of high-quality real estate projects, while managing the successful completion
and exit of older projects.
Over the year under report investment income increased to £2.22 million, a
14.6% uplift over the figure for the previous year. Importantly, and
reflecting the Company's decision to increase its focus on regional projects,
70.3% of funds deployed are now invested in the North East of England.
This strategic move is critical for two reasons. First, the economy of the
North East is very much on a roll. The region entered 2025 as one of the UK's
strongest-performing regional economies, with twelve consecutive months of
rising business activity and the highest increase in new business
registrations in the country. Manufacturing and service output continued to
climb, enhanced by infrastructure investment including major upgrades to the
A1 corridor, Tees Valley rail networks, and renewable-energy projects such as
the Eastern Green Link, strengthening the region's role as a national hub for
clean energy distribution.
The second reason is that as the Company's ninth year as a listed investment
company gathers pace, a major expansion of its operations is in the course of
being launched.
On 9 July 2025 the Company announced that the Board proposed to change the
Investment Policy and raise further capital to enhance shareholder value
through a broader, more diversified portfolio of investments, predominantly
focused in the North East of England. Further details of the planned expansion
of the Company and the 2026 fundraising initiative are described in the
Outlook section below.
ECONOMIC BACKDROP
In 2025 the UK economy was marked by slowing momentum after a strong start,
with GDP growth easing after some businesses "pulled forward" activity ahead
of changes to Stamp Duty and the likely imposition of economic tariffs.
Inflation remained a challenge throughout 2025, though it eased to 3.2% by
November, down from higher peaks earlier in the year. Core inflation also fell
to 3.2% towards the end of the year.
The Bank of England's Monetary Policy Committee (MPC) implemented four rate
cuts during 2025, bringing the base rate down to 3.75% in December, the lowest
since December 2022.
Turning to the labour market, UK unemployment had increased to 5.1% between
August and October 2025, the highest level since 2021. Government surveys by
the Treasury and the Bank of England both forecast that unemployment would
remain at around the 5% level until the fourth quarter of 2026.
UK house prices increased by 1.7% in the year to October 2025, while household
debt stood at 117% of disposable income by autumn 2025. Though at first sight
a sizeable figure, this is the lowest level of UK household debt since 2007-
pointing, it might be argued, towards better affordability in certain areas of
the housing market.
Savills revised its mainstream UK house price forecast downward to 1.0% growth
for 2025, reflecting geopolitical uncertainty, fluctuating buyer confidence
and volatility in monthly price movements.
Despite concerns over taxation at the higher end of the market, the medium
term outlook remains positive, with Savills projecting total growth of 24.5%
over the five years to 2029.
PERFORMANCE; NET ASSET VALUE
The Company's net asset value NAV decreased to 77.48 pence per share as at 30
November 2025, having been 79.81 pence per share twelve months earlier.
Taking into account dividends paid or declared for the period, this equates to
a NAV total return for the financial year of approximately 2.1%.
This figure may be placed into context by comparison with the total return
figures over the same period of the Association of Investment Companies' (AIC)
'Property-Debt' sector, of which the Company is a component member, of 1.4%
and of the AIC's 'Debt-Loans' sector of 6.84% (Source: Morningstar).
The total value of the Company's portfolio now stands at £24.7m.
REVENUE AND DIVIDENDS
The Company has adhered to the dividend policy established in 2021, namely to
pay dividends at a rate of 1 penny per share per quarter, equivalent to 4
pence per share per year in aggregate.
Depending upon the performance of the investment portfolio and considering
broader market conditions, a final balancing payment may be made at the end of
the financial year, while ensuring the Company continues to comply with the
investment trust qualification requirements as prescribed by HMRC in
accordance with Chapter 4 of Part 24 Corporation Tax Act 2010.
For the year to 30 November 2025, revenue decreased to 4.8 pence per share
(2024: 5.0 pence). The decrease in revenue per share is principally a result
of impairments being taken on two loans.
The Board has declared and paid three quarterly interim dividends of 1 penny
per share for the year ended 30 November 2025 and I am pleased to report that
a fourth interim dividend of 1 penny per share has been declared. This
dividend will be paid on 10 April 2026 to shareholders on the register at the
close of business on 13 March 2026 (ex-dividend date 12 March 2026).
SHARE BUYBACKS
The Company did not repurchase any of its Ordinary shares during the financial
year ending 30 November 2025 (November 2024: 1,256,024).
GEARING
Loan facilities during the year consisted of a £7 million credit facility
with Shawbrook Bank Limited. £6.78m was drawn under the loan facility as at
30 November 2025.
The Shawbrook loan facility runs until August 2026, thereby providing adequate
liquidity for the Investment Adviser to take advantage of lending
opportunities as they arise. Shawbrook has indicated that it remains
supportive of the Company and its objectives and expects to renew the loan
facility upon expiry.
INVESTMENT PORTFOLIO
The total value of the Company's portfolio now stands at £24.7m, from 16
projects, an increase of £3.6m since last year.
The quality of the underlying loan book continues to be maintained, while the
average loan to value (LTV) figure moved from c. 71.2% at 30 November 2024 to
c. 69.7% at the financial year end.
New Investments
During the year £9.5m was invested in nine projects. Of these four were new
loans, including a £2.4 million, eleven-month facility to fund the
construction of a roadside retail scheme in South Shields, a £2.375m two-year
facility to renovate a wedding venue in Co. Durham, a £2.35m eighteen month
facility to develop seven industrial units near Northallerton, and a £1.236m
eighteen month facility to complete a boutique smart hotel in Edinburgh.
Portfolio Exits
Three loans were repaid over the period, bringing the number of exits in the
portfolio to 26 since inception. There were also seven partial redemptions,
totalling £5.4m during the year including the three exits in the year.
As required under the stringent requirements of accountancy standard IFRS 9,
the Company recognises the gross interest receivable on all its loans and then
recognises an impairment charge when that interest is not paid by the
borrower, and there is not a clear expectation that this can be recovered
subsequently. During the year, there were two projects unable to meet their
interest requirements in full.
IFRS 9 also requires the Company to consider various credit loss scenarios and
assign a risk weighting to these. This calculation generates a provision which
is taken as a further impairment for the year. In this period the Company has
decreased the provision to £82,000 from the £49,000 that was in place at 30
November 2024. This provision is based on look-forward statements to withstand
market-related shocks reflecting current economic uncertainties.
Profit Share Projects
There are currently two profit share projects in the portfolio (November 2024:
four) reflecting further progress in our strategic aim to simplify and focus
on debt-only products.
The Investment Adviser's Report within the Annual Report and Accounts provides
further detail on performance and activity within the loan portfolio. This
includes information on deployment of capital, progress on projects
undertaken, any profit share received, impairments and uplifts on loans and
loan redemptions.
PERFORMANCE SINCE 2018
Since 1 June 2018, the company has provided £60m across 29 new projects.
These projects have generated an average Internal Rate of Return (IRR). This
is the annual rate of growth an investment is expected to generate, accounting
for the time value of money. It is the discount rate that makes the Net
Present Value (NPV) of all cash flows (both positive and negative) from a
project equal to zero. These projects have generated an average IRR of 9.13%
per annum, with only 0.1% of capital write offs, the latter more than covered
by associated exit and plot fees.
BOARD OF DIRECTORS
In accordance with the requirements of the UK Corporate Governance Code all
Directors will stand for re- appointment at the Company's annual general
meeting (AGM).
POST YEAR-END NOTE
I am delighted to report that Michelle Percy, FRICS, was appointed Chief
Executive Officer of Develop North PLC with effect from 26 January 2026.
Michelle brings extensive experience in regeneration, investment and
stakeholder engagement, with a particular focus upon the North East of
England. Her appointment enhances the Company's capacity to deliver its growth
strategy.
My boardroom colleagues, as well as our management team at Tier One Capital
Ltd, look forward to working with Michelle over the months and years ahead.
ANNUAL GENERAL MEETING
The Company's AGM will be held at Gowling WLG (UK) LLP, 4 More London
Riverside, London, SE1 2AU on Thursday, 30 April 2026 at 12 noon. Visitors are
requested to arrive at the reception no later than 11:50 a.m.
The Board strongly encourages all shareholders to exercise their votes in
respect of the meeting in advance, by completing and returning their proxy
forms to the Company's registrar. This will ensure that the votes are
registered.
In addition, shareholders are encouraged to raise any questions in advance of
the AGM with the Company Secretary via email to cosec-uk@apexgroup.com or by
post to the Company Secretary at the address set out in the Annual Report and
Accounts.
Any questions received will be replied to by the Company after the AGM.
OUTLOOK; PLANNED EXPANSION OF THE COMPANY; FUNDRAISING INITIATIVE
Since its inception in 2017, Develop North PLC has successfully sought to
unlock investment, drive economic growth, support more jobs and deliver
regeneration in the North East of England. Over the succeeding eight years the
company has supported more than 43 projects with a combined gross development
value (GDV) of more than £280m and helped support an estimated 12,000 jobs.
To date, the Company has deployed c.£90m in capital, with 16 projects in its
current live portfolio.
We reported last year that near-record figures for business start-ups were
being reported across the region, as well as the formation of The North East
Combined Authority (NECA) approved by the Government on 18 March 2024.This
positive trend has continued. In addition, there has been a pick-up in inward
investment from countries and enterprises in the Middle East, aided at least
to some extent by the investment in Newcastle United Football Club by Saudi
and other business interests.
Building upon this success, beginning in spring 2026, the company plans to
transition from a property-backed lending fund to a broader investment
strategy, targeting an average NAV total return of 10-11% per annum over the
next seven years including 4 per cent. per annum capital uplift based on
forecast average value increases and a target dividend of 6-7% per annum of
NAV over the next seven years 1 (#_ftn1) . To this end a prospectus was
published on 16 January 2026, a copy of which can be found on the Company's
website.
The change in policy, which, by way of post year-end note, was approved by
shareholders on 18 February 2026, will enable the Company to allocate the
capital that it intends to raise across a wider range of asset classes while
continuing to focus on areas where the investment team has deep expertise and
strong regional insight. In support of these objectives, three specialist
asset managers have been appointed by the Company, subject to certain
conditions: Homes or Houses Limited (focused on residential real estate),
Broadoak Asset Management Limited (focused on commercial real estate) and Tier
One Capital FM Limited (focused on real estate lending).
The enlarged asset management team will bring regional insight and sector
expertise, enabling Develop North PLC to identify and execute investments that
align with its new investment objective and investment policy. Shareholders
will be kept fully informed as to progress regarding the proposed expansion of
the Company.
In summary these are exciting times for our Company, not to mention for the
North East region in which it is based. The time has come to build upon what
has been achieved and to apply the experience gained in operating the Company
over a range of testing economic conditions, not least through the COVID
pandemic, and target even greater goals.
John Newlands
Chairman
12 March 2026
Investment Adviser's RePORT:
REVIEW OF THE 12 MONTHS TO 30 NOVEMBER 2025
Investment Adviser's Highlights:
· NAV total return of 2.1% for the year to 30 November 2025 and an
annualised dividend yield of 5.9% resulting in £1.0m of income distributed to
shareholders
· £9.5m deployed into nine projects including four new projects
· Exits of three portfolio projects, bringing the number of exits since
inception to twenty six
· Increase in investment income to £2.22m, a 14.6% increase on last
year
· 70.3% of funds deployed in North East England reflecting the
Company's ongoing commitment to focus operations on our chosen regional
markets
This Annual Report and Accounts covers the eighth full year of performance of
the Company, since it's listing in January 2017.
The Company's primary purpose is to provide debt finance to the property
sector. The Company also benefits from exit fees on redemption of other
projects that additionally contributes to the senior and profit lending type.
Progress on the Company's Strategic Objectives:
· Weighted Average interest generated was 9.8% - maintained at the same
level as the prior year
· Portfolio value year on year size increased to the highest on record
· Portfolio LTV maintained at 69.7%
· Fund liquidity is being addressed with the issue of a new prospectus
in January 2026
· The Investment Policy has been expanded to include three distinct but
complementary strategies which positions Develop North to be a key operator in
the North East region
The Economic Backdrop and Outlook:
The UK's political and economic landscape continued to evolve throughout 2025
as the Labour government entered its first full year in office. The government
has faced a steep learning curve, prompting a more pragmatic dialogue with
businesses, particularly following National Insurance changes introduced early
in the year.
Economic conditions were mixed in 2025. UK GDP growth slowed compared with mid
2024 levels, despite having averaged around 1.5% year on year through much of
the previous year. Inflation, which had briefly fallen to 1.7% in September
2024, rose again to a post election peak of 3.8% across July-September 2025,
before easing slightly to 3.6% by October. The Bank of England judged
inflation to have peaked and forecast a fall toward 3.2% by March 2026.
The government's economic strategy continued to prioritise inflation reduction
and cost of living relief. The 2025 Budget highlighted measures such as a one
year freeze on regulated rail fares and prescription charges, reduced energy
bills starting April 2026, and additional investment in public services. The
UK economy outperformed earlier expectations, with GDP growth for 2025
upgraded to 1.5%, making the UK the second fastest growing G7 economy. Real
wages rose faster in 2025 than during the entire decade beginning in 2010.
House prices in 2025 experienced modest growth following a subdued start to
the year. Savills revised its mainstream UK house price forecast downward to
1.0% growth for 2025, reflecting geopolitical uncertainty, fluctuating buyer
confidence and volatility in monthly price movements. Mortgage rates
stabilised around 4%, with further reductions anticipated. Despite concerns
over taxation at the higher end of the market, the medium term outlook remains
positive, with Savills projecting total growth of 24.5% over the five years to
2029.
Construction sector cost trends in 2025 continued to be shaped by labour
pressures and stabilising materials prices. The Office for Budget
Responsibility's March 2025 Economic and Fiscal Outlook provided updated
forecasts for input costs, public spending and inflation, noting ongoing
uncertainty around policy driven cost impacts and wider economic fluctuations.
Challenges remain regarding labour availability, though materials cost
inflation has eased significantly since its 2022 peak.
The North East of England entered 2025 as one of the UK's strongest-performing
regional economies, with twelve consecutive months of rising business activity
and the highest increase in new business registrations in the country. Its
manufacturing and service output continued to climb, placing the region among
the top performers outside London, while sustained demand and rising inflows
of new business reflected robust underlying confidence. This momentum has been
reinforced by strategic infrastructure investment, including major upgrades to
the A1 corridor,Tees Valley rail networks, and transformative renewable-energy
projects such as the Eastern Green Link, strengthening the region's role as a
national hub for clean energy distribution.
At the same time, the region is benefitting from an inward investment of more
than £14 billion, showcasing 23 major development sites and opportunities
across clean energy, advanced manufacturing, digital industries, life sciences
and the creative sector. Significant projects, such as the £10 billion AI
data-centre complex in Northumberland promising more than 4,000 jobs, are
accelerating the region's transformation into a centre for innovation, skills
development and technology-driven growth. Combined with large-scale housing
regeneration and a long-term regional growth plan focused on inclusivity and
high-value sectors, the North East is exceptionally well-positioned for
sustained economic expansion in 2026 and beyond.
DEPLOYMENT
The Company's portfolio can be broken down as follows:
Despite the ongoing uncertainties faced, we are pleased to report an active
year for new transactions, deployments to existing projects together with full
and partial exits:
The Company agreed four new facilities during the year:
• Tyne and Wear - £2.40m 11 month facility
• Edinburgh - £1.236m 18 month facility
• North Yorkshire - £2.35m 18 month facility
• Co. Durham - £2.375m 24 month facility
During the year a total of £9.5m was deployed into nine projects including
the four new projects mentioned above.
At the year-end, fund deployment totalled £24.7m. The quality of the
underlying loan book continues to be maintained with LTV moving from 71.2% at
30 November 2024 to 69.7% at year end.
Portfolio Exits
There were three loans repaid during the year, bringing the number of exits in
the portfolio to twenty six since inception.
Partial Redemptions Update
During the year there was £5.4m of partial redemptions across seven of the
portfolio projects including the three exits in the year.
Impairments
The Company, in accordance with IFRS 9, recognises the gross interest
receivable on all its loans, and then recognises an impairment charge when
that interest is not paid by the borrower, and there is not a clear
expectation that this can be recovered subsequently. During the year, there
were two projects unable to meet their interest requirements in full. For
Stage 3 loans, interest income is calculated based on the net carrying amount,
which is the gross carrying amount of the financial asset less the calculated
impairment.
The ECL provision recognised as at 30 November 2025 has increased by £444k to
£1.207m compared to the previous year (2024: £584k). This increase in ECL
has been driven by movements in project and other provision movements
recognised during the year.
Gearing
In September 2025, the Company refreshed a committed revolving credit facility
with Shawbrook Bank for a further year. Again the key driver was headroom and
liquidity. This renewal demonstrates the support that the Company has from its
lender, and the growing confidence in future deployment given the current
strength of pipeline.
BUYBACK PROGRAMME
In November 2024, the Company announced the commencement of a share buyback
program. To date the Company has purchased 1,256,207 shares in the market.
These shares will be held as treasury shares on the Company's balance sheet.
OUTLOOK
Residential
As at 30 November 2025, 58.2% of deployed funds were invested across nine
projects with a residential focus.
This represented a 14.7% decrease over 2024.
Commercial
As at 30 November 2025, 40.9% of deployed funds were invested across seven
projects with a commercial focus.
This represented a 150.1% increase over 2024.
PERFORMANCE SINCE 2018
Since 1 June 2018, the company has provided £60.0m across 29 new projects.
These projects have generated an average IRR of 9.13% with only 0.1% of
capital write offs which have been more than covered by associated exit and
plot fees.
The quality and experience of each management team that we are in discussions
with will continue to enhance the Company's portfolio and strengthen its
reputation in the market. This should lead to the creation of shareholder
value that is sustainable in the longer term.
Ian McElroy
Tier One Capital Ltd
12 March 2026
THE INVESTMENT PORTFOLIO AS AT 30 NOVEMBER 2025
Sector % of LTV* Loan Value LTV* Loan Value
Portfolio (Nov 25) (Nov 25) (Nov 24) (Nov 24)
£'000s £'000s
Residential 58.2% 79.1% 14,499 75.3% 17,032
Commercial 40.9% 56.4% 10,208 53.9% 4,082
Cash 0.9% - 226 - 118
General Impairment - - (82) - (49)
Total/Weighted Average 100.0% 69.7% 24,851 71.2% 21,183
*LTV has been calculated using the carrying value of the loans as at the
balance sheet date
PRINCIPAL AND EMERGING RISKS
The Board of Directors has overall responsibility for risk management and
internal control within the context of achieving the Company's objectives.
The Board and the Investment Adviser seek to ensure that the Company's assets
are invested in such a way as to spread investment risk, whilst adhering to
its published investment policy. Further details of the management of the
Company's key risks are set out below.
The Directors confirm that they have carried out a robust assessment of the
principal and emerging risks facing the Company, including those that would
threaten its business model, future performance, solvency or liquidity, as
they operated during the year and up to the approval of the Annual Report.
The Board agrees the strategy of the Company, taking into consideration the
Company's risk appetite. With the assistance of the Investment Adviser, the
Board has drawn up a risk matrix, which identifies the key risks to the
Company, as well as emerging risks. In assessing the risks and how they can be
mitigated, the Board has given particular attention to those risks that might
threaten the viability of the Company. These key risks fall broadly under the
following categories:
· Investment and strategy risk
The Company's targeted returns are targets only and are based on estimates and
assumptions about a variety of factors including, without limitation, yield
and performance of the Company's investments, which are inherently subject to
significant business, economic and market uncertainties and contingencies, all
of which are beyond the Company's control and which may adversely affect the
Company's ability to achieve its targeted returns. Accordingly, the actual
rate of return achieved may be materially lower than the targeted returns, or
may result in a partial or total loss, which could have a material adverse
effect on the Company's profitability, the NAV and the price of Ordinary
shares.
Borrowers under the loans in which the Company invests may not fulfil their
payment obligations in full, or at all, and/or may cause, or fail to rectify,
other events of default under the loans.
The Board is responsible for setting the investment strategy to achieve the
targeted returns and for monitoring the performance of the Investment Adviser
and the implementation of the agreed strategy.
An inappropriate strategy could lead to poor capital performance and lower
than targeted income yields.
This risk is mitigated through regular reviews and updates with the Investment
Adviser, monitoring of the portfolio sectors against the investment
restrictions on a quarterly basis and tracking of loan to value ratios of the
underlying property projects.
· Market risk
The Company's investment strategy relies in part upon local credit and real
estate market conditions. Adverse conditions may prevent the Company from
making investments that it might otherwise have made, leading to a reduction
in yield and an increase in the default rate.
The Company holds 100% of its assets in the United Kingdom.
To mitigate the market risks, the Board receives quarterly updates from the
Investment Adviser containing information on the local market conditions and
trends.
This information is reviewed alongside the sector split of the portfolio to
ensure the portfolio is aligned to meet future challenges.
· Financial risk
The Company's activities expose it to a variety of financial risks that
include interest rate risk, liquidity risk and credit risk. Further details on
these risks and the way in which they are mitigated are disclosed in the notes
to the financial statements.
· Operational risk
The Company has no employees and relies upon the services provided by third
parties. It is primarily dependent on the control systems of the Investment
Adviser and Administrator who respectively maintain the assets and accounting
records.
Failure by any service provider to carry out its obligations in accordance
with the terms of their appointment could have a detrimental effect on the
Company.
To mitigate these risks, the Board reviews the overall performance of the
Investment Adviser and other key third-party service providers on a regular
basis and has the ability to terminate agreements if necessary. The business
continuity plans of key third-party service providers are subject to Board
scrutiny.
· Legal and Regulatory risk
In order to qualify as an investment trust, the Company must comply with
section 1158 of the Corporation Tax Act 2010. The Company has been approved by
HM Revenue & Customs as an investment trust. The Company is listed on the
London Stock Exchange. Non-compliance with the taxes act or a breach of
listing rules could lead to financial penalties and reputational loss.
These risks are mitigated by the Board's review of quarterly financial
information and compliance with the relevant rules.
Management Report and Directors' Responsibility Statement
Management report
Listed companies are required by the DTRs to include a management report in
their Financial Statements. The information is included in the Strategic
Report (together with the sections of the Annual Report and Accounts
incorporated by reference) and the Directors' Report within the Annual Report
and Accounts. Therefore, a separate management report has not been included.
Directors' responsibility statement
The Directors are responsible for preparing the Annual Report and financial
statements, in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with UK adopted International Financial
Reporting Standards (UK adopted IFRS) and with the Companies Act 2006, as
applicable to companies reporting under international accounting standards.
Under Company law the Directors must not approve the financial statements
unless they are satisfied that, taken as a whole, they are fair, balanced and
understandable and provide the information necessary for shareholders to
assess the Company's position and performance, business model and strategy and
that they give a true and fair view of the state of affairs of the Company and
of the total return or loss of the Company for that period. In order to
provide these confirmations and in preparing these financial statements, the
Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgments and estimates that are reasonable and prudent;
· state whether applicable UK adopted IFRS have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business and the Directors confirm that they have done so.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006, where applicable. They are responsible for taking such steps as are
reasonably open to them to safeguard the assets of the Company and to prevent
and detect fraud and other irregularities.
The financial statements are published on www. DevelopNorth.co.uk
(http://www.DevelopNorth.co.uk) which is a website maintained by the Company's
Investment Adviser. The Directors are responsible for the maintenance and
integrity of the corporate and financial information included on the Company's
website. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Under applicable UK law and regulations, the Directors are also responsible
for preparing a Strategic Report, a Directors' Report, Statement of Corporate
Governance and Directors' Remuneration Report that complies with that law and
those regulations.
Directors' confirmation statement
Each of the Directors, whose names and functions appear on pages 20 and 21,
confirm that to the best of their knowledge:
· the financial statements, prepared in accordance with UK adopted
IFRS and with the Companies Act 2006, as applicable to companies reporting
under international accounting standards, give a true and fair view of the
assets, liabilities and financial position and total return or loss of the
Company; and
· The Management Report, referred to herein, which comprises the
Chairman's Statement, the Investment Adviser's Report, Strategic Report
(including risk factors) and note 17 of the Financial Statements includes a
fair review of the development and performance of the business and position of
the Company, together with the principal risks and uncertainties that it
faces.
The Directors consider that the Annual Report and Accounts taken as a whole,
is fair, balanced and understandable and it provides the information necessary
to assess the Company's position and performance, business model and strategy.
On behalf of the Board
John Newlands, Chairman
12 March 2026
INCOME STATEMENT
Year ending Year ending
30 November 2025 30 November 2024
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
REVENUE 2 2,222 - 2,222 1,938 - 1,938
Investment interest 158 - 158 - - -
Plot fee income
Total revenue 2,380 - 2,380 1,938 - 1,938
Losses on investments held at fair value through profit or loss 8 - (187) (187) - (143) (143)
Amortisation of exit fees 8, 9 - 15 15 - 126 126
Total net income 2,380 (172) 2,208 1,938 (17) 1,921
Expenditure 3 (60) - (60) (61) - (61)
Investment adviser fee
Impairments on investments held 9 - (445) (445) (47) (75) (122)
at amortised cost
Other expenses 4 (590) (331) (921) (484) - (484)
Total expenditure (650) (776) (1,426) (592) (75) (667)
Profit/(loss) before finance costs and taxation 1,730 (948) 782 1,346 (92) 1,254
Finance costs (367) - (367) (84) - (84)
Interest payable
Profit/(loss) before taxation 1,363 (948) 415 1,262 (92) 1,170
Taxation 5 - - - - - -
Profit/(loss) for the year 1,363 (948) 415 1,262 (92) 1,170
Basic and diluted earnings per share 7 5.46p (3.80)p 1.66p 5.00p (0.36)p 4.64p
The accompanying notes form an integral part of the financial statements.
The total column of this statement represents the Company's Income Statement,
prepared in accordance with UK adopted IFRS. The supplementary revenue return
and capital return columns are both prepared under guidance published by the
Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing
operations.
There is no other comprehensive income as all income is recorded in the
statement above.
Statement of Financial Position
As at As at
30 November 2025 30 November 2024
Notes £'000 £'000
Non-current assets
Investments held at fair value through profit or loss 8 2,327 -
Loans at amortised cost 9 11,585 1,000
13,912 1,000
Current assets
Investments held at fair value through profit or loss 8 481 2,899
Loans at amortised cost 9 11,808 18,146
Other receivables and prepayments 10 4 17
Cash and cash equivalents 226 115
12,519 21,177
Total assets 26,431 22,177
Current liabilities
Loan facility 11 (6,779) (2,100)
Other payables and accrued expenses 12 (300) (141)
Total liabilities (7,079) (2,241)
Net assets 19,352 19,936
Share capital and reserves
Share capital 13 269 269
Share premium 9,094 9,094
Special distributable reserve 10,973 10,973
Capital reserve (2,110) (1,162)
Revenue reserve 1,126 762
Equity shareholders' funds 19,352 19,936
Net asset value per ordinary share 77.48p 79.81p
The accompanying notes form an integral part of the financial statements.
These financial statements were approved by the Board of Directors of Develop
North PLC (a public limited company incorporated in England and Wales with
company number 10395804) and authorised for issue on 12 March 2026. They were
signed on its behalf by:
John Newlands
Chairman
Statement of Changes in Equity
For the year ending 30 November 2025 Share capital Share premium Special distributable reserve Capital reserve Revenue reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
At beginning of the year 269 9,094 10,973 (1,162) 762 19,936
Total comprehensive income for the year:
(Loss)/profit for the year - - - (948) 1,363 415
Transactions with owners recognised directly in equity:
Dividends paid (Note 6) - - - - (999) (999)
At 30 November 2025 269 9,094 10,973 (2,110) 1,126 19,352
For the year ending 30 November 2024 Share capital Share premium Special distributable reserve Capital reserve Revenue reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
At beginning of the year 269 9,094 12,267 (1,059) 133 20,704
Total comprehensive income for the year:
Profit for the year - - - (92) 1,262 1,170
Transactions with owners recognised directly in equity:
Dividends paid (Note 6) - - (386) - (633) (1,019)
Repurchase of shares into treasury (Note 13)
- - (908) (11) - (919)
At 30 November 2024 269 9,094 10,973 (1,162) 762 19,936
Cash Flow Statement
Year ending Year ending
30 November 30 November
2025 2024
Notes £'000 £'000
Operating activities
Profit before taxation 415 1,170
Losses on investments held at fair value through profit and loss 187 143
Impairments on loans at amortised cost 445 75
Amortisation of exit fees (47) (126)
Interest expense 367 84
Changes in working capital
Increase in loan interest receivable on investments held at fair value through 8 (121) (84)
profit and loss
Increase in loan interest receivable on loans at amortised cost 9 (476) (152)
Decrease/(increase) in other receivables 10 13 (4)
Increase/(decrease) in other payables 12 159 (50)
Net cash inflow from operating activities after taxation 942 1,056
Investing activities
Loans given 9 (9,557) (9,151)
Loans repaid 8, 9 5,413 6,978
Net cash (OUTFLOW)/INFLOW from investing activities (4,144) (2,173)
Financing
Equity dividends paid 6 (999) (1,019)
Repurchase of shares into Treasury 13 - (919)
Bank loan drawn down 14 4,679 6,125
Repayment of bank loan 14 - (4,025)
Interest paid (367) (84)
Net cash INFLOW/(OUTFLOW) from financing 3,313 78
(DECREASE)/Increase in cash and cash equivalents 111 (1,039)
Cash and cash equivalents at the start of the year 115 1,154
Cash and cash equivalents at the end of the year 226 115
Notes to the Financial Statements
1. Accounting Policies
Significant Accounting Policies
(a) Basis of Preparation
The financial statements of Develop North PLC have been prepared in accordance
with UK adopted IFRS and with the Companies Act 2006, as applicable to
companies reporting under international accounting standards. The financial
statements were also prepared in accordance with the Statement of Recommended
Practice, Financial Statements of Investment Trust Companies and Venture
Capital Trusts (SORP) issued by the AIC (as issued in July 2022), where this
guidance is consistent with UK adopted IFRS.
The financial statements have been prepared on a going concern basis under the
historical cost convention, except for certain financial investments which are
measured at fair value.
The notes and financial statements are presented in pounds sterling (being the
functional currency and presentational currency for the Company) and are
rounded to the nearest thousand except where otherwise indicated.
The Company reviews forthcoming changes to UK adopted IFRS and does not
anticipate material changes as a result of these.
NEW STANDARDS OR AMENDMENTS FOR 2025 FOR FORTHCOMING REQUIREMENTS
The following amendments are effective for annual reporting periods beginning
on or after 1 January 2025:
•Lack of Exchangeability (Amendments to IAS 21)
The following amendments are effective for annual reporting periods beginning
on or after 1 January 2026:
•Amendments to IFRS 9 and IFRS 7 - Classification and Measurement of
Financial Instruments
IFRS 18 Presentation and Disclosure in Financial Statements is effective for
annual reporting periods beginning on or after 1 January 2027.
The Directors do not expect the above new standards and interpretations to
have a significant impact on the financial statements.
GOING CONCERN
The Financial Statements have been prepared on a going concern basis. The
disclosures on going concern within the Directors' Report form part of these
financial statements.
INTEREST INCOME
For financial instruments measured at amortised cost, the effective interest
rate method is used to measure the carrying value of a financial asset or
liability and to allocate associated interest income or expense over the
relevant period. The effective interest rate is the rate that discounts
estimated future cash payments or receipts over the expected life of the
financial instrument or, when appropriate, a shorter period, to the net
carrying amount of the financial asset or financial liability. In calculating
the effective interest rate, the cash flows are estimated considering all
contractual terms of the financial instrument but does not consider expected
credit losses. The calculation includes all fees received and paid and costs
borne that are an integral part of the effective interest rate.
On an ongoing basis the Investment Adviser assesses whether there is evidence
that a financial asset is impaired. The basis of calculating interest income
on the three stages of impairment (detailed below) are as follows:
Stage 1 Interest is calculated on the gross outstanding principal
Stage 2 Interest is calculated on the gross outstanding principal
Stage 3 Interest income is calculated based on the net carrying amount, which
is the gross carrying amount of the financial asset less the calculated
impairment
EXPENSES
Expenses are accounted for on an accruals basis. The Company's administration
fees, finance costs and all other expenses are charged through the Income
Statement and are charged to revenue. Fees incurred in relation to operational
costs of the loan portfolio, such as legal fees, are charged through the
Income Statement and are charged to capital.
DIVIDENDS TO SHAREHOLDERS
Interim dividends declared during the year are recognised when they are paid.
Any final dividends declared are recognised when they are approved by the
Shareholders at the Annual General Meeting.
TAXATION
Taxation on the profit or loss for the period comprises current and deferred
tax. Taxation is recognised in profit or loss except to the extent that it
relates to items recognised in other comprehensive income or directly in
equity, in which case it is also recognised in other comprehensive income or
directly in equity respectively.
Current tax is the expected tax payable on the taxable income for the period,
using tax rates and laws enacted or substantively enacted at the reporting
date.
Deferred income taxes are calculated using rates and laws that are enacted or
substantivity are expected to apply as or when the associated temporary
differences reverse. Deferred income tax is provided using the liability
method on all temporary differences at the reporting date between the tax
bases of assets and liabilities and their carrying amounts for financial
reporting purposes. Deferred income tax assets are recognised only to the
extent that it is probable that taxable profit will be available against which
deductible temporary differences, carried forward tax credits or tax losses
can be utilised. The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of assets and
liabilities. Deferred income is recognised in profit or loss unless it relates
to a transaction recorded in other comprehensive income or equity, in which
case it is also recognised in other comprehensive income or directly in equity
respectively.
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The financial assets and financial liabilities are classified at inception
into the following categories:
Amortised cost:
Financial assets that are held for collection of contractual cash flows where
those cash flows represent SPPI ('solely payment of principal and interest')
and that are not designated at fair value through profit and loss are measured
at amortised cost. The carrying amount of these assets is adjusted by any
expected credit loss allowance as described in the impairment note below.
The Company's cash and cash equivalents, other receivables, other payables and
accruals, and the Company's loan facility are included within this category.
Fair value through profit and loss:
The Company has a number of borrower facilities in which it received a
minority equity stake or exit fee mechanism in conjunction with providing
those loan facilities. These loans are recognised at fair value through profit
and loss. The fair value of the contracts is monitored and reviewed quarterly
using discounted cash flow forecasts based on the estimated cash flows that
will flow through from the underlying development project. A sensitivity
analysis is included in Note 16.
Any values attributed to the equity stakes of these borrowers are incorporated
into the overall loan valuation.
Exit fees:
Some of the financial assets measured at amortised costs have an exit fee.
There are two types of exit fees; those recognised at the end of the term of
the financial asset once it has been repaid, and those recognised during the
term of the financial instrument where here they are linked to specific events
such as plot sales.
IMPAIRMENT
At initial recognition, an impairment allowance is required for ECL resulting
from possible default events within the next 12 months. When an event occurs
that increases the credit risk, an allowance is required for ECL for possible
defaults over the term of the financial instrument.
The key inputs into the measurement of ECL are probability of default (PD),
loss given default (LGD), and exposure at default (EAD). These inputs are then
considered and applied against residential and commercial facilities in the
loan book. ECL are calculated by multiplying the PD by LGD and EAD.
PD has been determined by considering the local market where the underlying
assets are situated, economic indicators including inflationary pressures on
build costs, government policy, and market sentiment. For residential loans
this has been further broken down into two scenarios; where only sales risk is
still present, and where both construction risk and sales risk still exist.
LGD is the magnitude of the likely loss if there is a default. The LGD models
consider the structure, collateral, seniority of the claim, and recovery costs
of any collateral that is integral to the financial asset. LTV ratios are a
key parameter in determining LGD. LGD estimates are recalibrated for different
economic scenarios and, for lending collateralised by property, to reflect
possible changes in property prices. EAD represents the expected exposure in
the event of a default. The Company derives the EAD from the current exposure
to the borrower. The EAD of a financial asset is its gross carrying amount at
the time of default. EAD for residential facilities has been further broken
down into two scenarios; where the build is complete, and where construction
is ongoing.
A financial asset is credit-impaired when one or more events that have
occurred have a significant impact on the expected future cash flows of the
financial asset. It includes observable data that has come to our attention
regarding one or more of the following events:
· delinquency in contractual payments of principal and interest;
· cash flow difficulties experienced by the borrower;
· initiation of bankruptcy proceedings;
· the borrower being granted a concession that would otherwise not
be considered;
· observable data indicating that there is a measurable decrease in
the estimated future cash flows from a portfolio of assets since the initial
recognition of those assets, although the decrease cannot yet be identified
with the individual financial assets in the portfolio; and
· a significant decrease in assets values held as security.
Impairment of financial assets is recognised on a loan-by-loan basis in
stages:
· Stage 1: A general impairment covering what may happen within the next 12
months, based on the adoption of BIS standards as outlined below.
· Stage 2: Significant increase in credit risk, where the borrower is in
default, potentially in arrears, where full repayment is expected and the
underlying asset value remains robust. The ECL calculation recognises the
lifetime of the loan.
· Stage 3: Credit impaired, where the borrower is in default of their loan
contract, in arrears, full loan repayment is uncertain and there is a
shortfall in underlying asset value. The ECL calculation recognises likely
failure of the borrower.
As at 30 November 2025, there were sixteen loans (November 2024: sixteen in
the portfolio. Two of those projects supported included either an equity stake
of at least 25% for the Company. Please see Note 8 for details on these
twoprojects.
The Board has deemed that five projects (November 2024: seven); are currently
impaired and specific additional provisions have been made against these
facilities in these financial statements.
The other eleven loans have been assessed as not impaired.
The Company's response to IFRS 9 requirements has been based on the Bank for
International Settlements (BIS) Basel Supervisory Committee liquidity risk
tool recommendations.
FAIR VALUE HIERARCHY
Accounting standards recognise a hierarchy of fair value measurements for
financial instruments which gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level 1) and the
lowest priority to unobservable inputs (Level 3). The classification of
financial instruments depends on the lowest significant applicable input, as
follows:
· Level 1 - Unadjusted, fully accessible and current quoted prices in
active markets for identical assets or liabilities. Examples of such
instruments would be investments listed or quoted on any recognised stock
exchange.
· Level 2 - Quoted prices for similar assets or liabilities, or other
directly or indirectly observable inputs which exist for the duration of the
period of investment. Examples of such instruments would be forward exchange
contracts and certain other derivative instruments.
· Level 3 - External inputs are unobservable. Value is the Directors'
best estimate, based on advice from relevant knowledgeable experts, use of
recognised valuation techniques and on assumptions as to what inputs other
market participants would apply in pricing the same or similar instrument.
All loans are considered Level 3.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash in hand and short-term deposits in
banks with an original maturity of three months or less from inception.
OTHER RECEIVABLES
Other receivables do not carry interest and are short-term in nature. There
were no irrecoverable amounts accounted for at the year end or the prior
period end.
RESERVES SHARE PREMIUM
The surplus of net proceeds received from the issuance of new shares over
their par value is credited to this account and the related issue costs are
deducted from this account.
CAPITAL RESERVE
The following are accounted for in the capital reserve:
· Capital charges and costs relating to the issuance of the new
Prospectus;
· Increases and decreases in the fair value of and impairments of loan
capital held at the year end
As at year end the Capital Reserve comprises both realised and unrealised
gains and losses and so does not contain distributable reserves.
REVENUE RESERVE
The net profit/(loss) arising in the revenue column of the Income Statement is
added to or deducted from this reserve which is available for paying
dividends.
SPECIAL DISTRIBUTABLE RESERVE
Cancellation of the initial launch share premium account created a reserve
that is available for paying dividends and the repurchase of shares. The
Special Distributable reserve is used to prevent the revenue reserve going
into a negative position when paying distributions.
REPURCHASE OF SHARES TO HOLD IN TREASURY
The cost of repurchasing ordinary shares to hold in Treasury is charged to the
Special Distributable reserve and the related stamp duty and transaction cost
is charged to the 'Capital reserve' and dealt with in the Statement of Changes
in Equity. Share repurchase transactions are accounted for on a trade date
basis.
SEGMENTAL REPORTING
The Chief Operating Decision Maker is the Board of Directors. The Directors
are of the opinion that the Company is engaged in a single segment of
business, being the investment of the Company's capital in financial assets
comprising loans. All loan income is derived from the UK. The Company derived
revenue totalling £948,000 (November 2024: £789,000) where the amounts from
three (November 2024: two) individual borrowers each exceeded 10% or more of
the Company's revenue. The individual amounts were £353,000, £344,000 and
£251,000 (November 2024: £429,000 and £360,000).
USE OF SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of financial statements requires management to make estimates
and assumptions that affect the amounts reported for assets and liabilities as
at the reporting date and the amounts reported for revenue and expenses during
the year. The nature of the estimation means that actual outcomes could differ
from those estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimates are revised and in any future periods affected.
The key driver to determine whether loans are classified as fair value through
profit or loss or amortised cost is if the facility has an exit fee or equity
stake attached. Where these are present the loan is classified as fair value
through profit or loss.
The following are areas of particular significance to the Company's financial
statements and include the use of estimates or the application of judgement:
CRITICAL JUDGEMENTS AND ESTIMATES IN APPLYING THE COMPANY'S ACCOUNTING
POLICIES - INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS:
The Company owns profit share holdings or has exit fees mechanism in relation
to two of the borrowers in place as at the year end. The investments held have
been designated at fair value through profit and loss. The determination of
the fair value requires the use of estimates. A sensitivity analysis is
included in Note 16. The key uncertainties are around the timings and amounts
of both drawdown and repayments as these are determined by construction
progress and the timing of sales.
As at 30 November 2025 the Company holds two investments that are classified
and measured at fair value through profit or loss. In determining the fair
value of these loans, a key source of estimation uncertainty is the expected
sales price of the underlying exposure.
The estimated sales price is based on management's assessment at the reporting
date, taking into account available market information and, where appropriate,
external evidence such as independent risk valuations and third-party pricing
information. The valuation therefore involves judgement and estimation,
particularly where observable market inputs are limited.
A sensitivity analysis demonstrating the impact of changes in key assumptions
on the fair value of the investments measured at fair value through profit or
loss is set out in Note 8.
CRITICAL JUDGEMENTS AND ESTIMATES IN APPLYING THE COMPANY'S ACCOUNTING
POLICIES - LOANS AMORTISED COST CLASSIFICATION AND IMPAIRMENTS:
The Company uses critical judgements to determine whether it accounts for its
loans at either amortised cost using the effective interest rate method less
impairment provisions or at fair value through profit and loss. The
determination of the required impairment adjustment requires the use of
estimates. The key uncertainties are around the timings and amounts of both
drawdown and repayments as these are determined by construction progress and
the timing of sales. See Note 9 for further details.
CLASSIFICATION OF FVPL AND AMORTISED COST LOANS AS CURRENT OR NON-CURRENT
The classification of loans as current or non-current is based on the
directors' assessment of the expected timing of realisation or settlement of
each loan.
Loans classified as current are those which the directors expect to complete
or be settled within twelve months of the reporting date. This assessment is
based on the contractual terms of the loan agreements, including stated
maturity dates, together with information known and available at the reporting
date regarding the borrower's position and expected exit or repayment profile.
Loans are classified as non-current where the directors do not expect
settlement within twelve months of the reporting date or have a maturity date
which is more than 12 months from 30 November 2025.
Each loan agreement includes a contractual maturity circumstances of the loan,
including ongoing negotiations, repayment history and expected recovery
strategy, in order to determine whether classification as current or
non-current remains appropriate.
2. REVENUE
30 November 2025 30 November 2024
£'000 £'000
Interest from loans 2,213 1,938
Other income 9 -
Total income 2,222 1,938
3. Investment Adviser's Fees
Investment Adviser
During the reporting period, in its role as the Investment Adviser, Tier One
Capital Ltd was entitled to receive from the Company an investment adviser fee
which is calculated and paid quarterly in arrears at an annual rate of 0.25%
per annum of the prevailing NAV if less than £100m; or 0.50% per annum of the
prevailing NAV if £100m or more. From 18 February 2026, the fee was set at
a flat annual rate of 0.35% of NAV.
There is no balance accrued for the Investment Adviser for the period ended 30
November 2025 (year to 30 November 2024: £nil).
There are no performance fees payable.
30 November 2025 30 November 2024
£'000 £'000
Investment Adviser fee 60 61
4. Operating expenses
30 November 2025 30 November 2024
Revenue Capital Revenue Capital
£'000 £'000 £'000 £'000
Legal and professional 3 - 3 -
Directors' fees 121 - 85 -
Audit fees related to the audit of the financial statements 84 - 72 -
Fund Administration and Company Secretarial 89 - 101 -
Brokers' fees 32 - 30 -
Marketing fees 153 - 10 -
AIFM fee 6 - 18 -
Other expenses 102 331 165 -
Total other expenses 590 331 484 -
* Other expenses within capital arose from the costs associated with the issue
of the Prospectus and Company's fundraise and these are considered exceptional
for the year ending 30 November 2025. This also includes £48k of non‑audit
fees for the year, which relate to reporting accountant work provided as part
of non‑audit services..
All expenses are inclusive of VAT where applicable. Further details on
Directors' fees can be found in the Directors' Remuneration Report within the
Annual Report.
5. Taxation
As an investment trust the Company is exempt from corporation tax on capital
gains. The Company's revenue income from loans is subject to tax, but offset
by any interest distribution paid, which has the effect of reducing the
corporation tax. The interest distribution may be taxable in the hands of the
Company's shareholders.
30 November 2025 30 November 2024
£'000 £'000
UK corporation tax at 25% (November 2024:25%) - -
Deferred taxation - -
Tax on profit on ordinary activities - -
Reconciliation of tax charge
Profit on ordinary activities before taxation 415 1,170
Taxation at standard corporation tax rate 25% (November 2024: 25%) 104 293
Effects of:
Expenses/(Income) not subject to tax 198 23
Interest distributions (250) (255)
Utilisation of losses not recognised for deferred tax purposes (52) (61)
Tax charge for the year - -
There is an unrecognised deferred tax asset not recognised on losses of
£209,107 (November 2024: £265,833) calculated at the relevant deferred tax
rate of 25%. There is no expiry date for the recognition of the unrecognised
deferred tax asset.
6. Ordinary dividends
30 November 2025 30 November 2024
Pence per Pence
share per
£'000 share £'000
Dividends paid in the year relating to previous year:
Interim dividend for the quarter ended August, paid in December 1.0 250 1.0 262
Interim dividend for the quarter ended November, paid in April 1.0 250 1.0 257
Dividends paid during and relating to the year:
Interim dividend for the quarter ended February, paid in June 1.0 250 1.0 250
Interim dividend for the quarter ended May, paid in October 1.0 249 1.0 250
Total dividends paid in the year 999 1,019
Of the dividends paid in the year, £nil (November 2024: £386,000) has been
paid from the Special distributable reserve. This is to ensure the Revenue
reserve does not go into a negative position.
The Company intends to distribute at least 85% of its distributable income
earned in each financial year in the form of dividends. A third interim
dividend of 1.0 pence per share was declared on 8 December 2025, payable on 12
January 2026. On 26 February 2026, the Company declared a fourth interim
dividend of 1.0 pence per share for the quarter ended 30 November 2024,
payable on 10 April 2026.
7. Earnings per share
The revenue, capital and total return per ordinary share is based on each of
the profit after tax and on 24,978,201 ordinary shares (2024: 25,246,760),
being the weighted average number of ordinary shares in issue (excluding
shares held in Treasury of 1,945,862 (2024: 1,945,862) throughout the year.
During the year there were no dilutive instruments held, therefore the basic
and diluted earnings per share are the same.
8. Investments held at fair value through profit or loss
The Company's investment held at fair value through profit or loss represents
its profit share arrangements whereby the Company owns 25.1% or has an exit
fee mechanism for four companies.
30 November 30 November
2025 2024
£'000 £'000
Opening balance 2,899 3,024
Principal repayments (25) (66)
Movements in interest receivable 121 84
Unrealised (losses)/gains on investments held at fair value through profit or (187) (143)
loss
Total investments held at fair value through profit and loss 2,808 2,899
Split:
Non-current assets: Investments held at fair value through profit and loss due 2,327 -
for repayment after one year
Current assets: Investments held at fair value through profit and loss due for 481 2,899
repayment under one year
Please refer to note 16 for details of the approach to valuation and
sensitivity analysis.
The investments held at fair value through profit or loss comprise loans with
associated profit share arrangements. As described in Note 1 (Critical
judgements and estimates in applying the company's accounting policies -
investments at fair value through profit or loss), the fair value of these
instruments is determined using discounted cash flow models.
A key unobservable input within these models is the estimated sales price of
the underlying development assets. The sales price assumption has a direct
impact on forecast cash flows and therefore on the resulting fair value of the
investments. Management considers this to be a significant judgement in the
valuation process.
In order to assess valuation uncertainty, the Company has performed
sensitivity analysis on the sales price assumption for both investments
measured at fair value through profit or loss.
The analysis assumes:
• A 10% decrease in forecast sales prices; and
• A 10% increase in forecast sales prices,
with all other variables, including timing of cash flows and discount rates,
held constant.
Scenario Fair value (£m) Movement (£m)
Reported fair value at 30 November 2025 2.81 -
10% decrease in sales prices 2.55 (0.26)
10% increase in sales prices 3.08 0.27
A 10% reduction in forecast sales prices would decrease the fair value of the
portfolio by approximately £0.26 million. Conversely, a 10% increase in
forecast sales prices would increase the fair value by approximately £0.27
million.
The relationship between sales prices and fair value is broadly linear in
nature for the range of scenarios tested. The sensitivity analysis does not
reflect the interdependence of assumptions, and actual outcomes may differ. In
practice, changes in sales prices may also be accompanied by changes in build
costs, absorption rates, or discount rates, which could either mitigate or
amplify the impact on fair value.
9. Loans at amortised cost
30 November 30 November
2025 2024
£'000 £'000
Opening balance 19,146 16,704
Loans deployed 9,557 9,151
Principal repayments (5,388) (6,912)
Movements in interest receivable 476 152
Movement in impairments (445) (75)
Amortisation of exit fees 47 126
Total loans at amortised cost 23,393 19,146
Split: 11,585 1,000
Non-current assets: Loans at amortised cost due for repayment after one year
Current assets: Loans at amortised cost due for repayment 11,808 18,146
under one year
The Company's loans held at amortised cost are accounted for using the
effective interest method. The carrying value of each loan is determined after
taking into consideration any requirement for impairment provisions during the
year, allowances for impairment losses amounted to £445,000 (November 2024:
£75,000).
Movements in allowances for impairment losses in the year
Nominal value
£'000
at 1 December 2024 762
Provisions for impairment losses 445
at 30 November 2025 1,207
Stage 1 provisions at 1 December 2024 49
Provisions for impairment losses 33
Stage 1 provisions at 30 November 2025 82
Stage 2 provisions at 1 December 2024 15
Provisions for impairment losses (15)
Stage 2 provisions at 30 November 2025 -
Stage 3 provisions at 1 December 2024 699
Increase in ECL 411
Movement from stage 2 15
Stage 3 provisions at 30 November 2025 1,125
Stage 1, 2, and 3 are referenced in more detail below.
10. Receivables
30 November 30 November
2025 2024
£'000 £'000
Prepayments 4 17
Total receivables 4 17
11. loan facility
30 November 30 November
2025 2024
£'000 £'000
Bank loan 6,779 2,100
The Company increased its loan facility with Shawbrook Bank Limited to £7m,
expiring in August 2026. £6.78m was drawn down at the year end.
The facility is secured against a debenture over the assets of the Company.
12. Other Payables
30 November 30 November
2025 2024
£'000 £'000
Other payables and accruals 300 141
Total other payables 300 141
13. Share Capital
2025 2024
Allotted, issued and fully paid £'000 £'000
24,978,201 (November 2024: 24,978,201) ordinary shares of 1p each* 250 250
1,945,862 (November 2024: 1,945,862) ordinary shares of 1p held in Treasury 19 19
26,924,063 (November 2024: 26,924,063) total ordinary shares of 1p each 269 269
* The Ordinary Shares (excluding shares held in Treasury) are eligible to vote
and have the right to participate in either an interest distribution or
participate in a capital distribution (on winding up).
No shares were issued by the Company during the year (November 2024: nil).
No shares were bought back by the Company during the year (November 2024:
1,256,024 at a cost of £919,000).
There were no shares bought back between 1 December 2025 and 10 March 2026.
14. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
At 30 November 2024 Cash Non-cash At 30 November
£'000 flows flows 2025
£'000 £'000 £'000
Short term borrowings 2,100 4,679 - 6,779
Total liabilities from financing activities 2,100 4,679 - 6,779
At 30 November 2023 Cash Non-cash At 30 November
£'000 flows flows 2024
£'000 £'000 £'000
Short term borrowings - 2,100 - 2,100
Total liabilities from financing activities - 2,100 - 2,100
15. Related Parties
The Directors are considered to be related parties. No Director has an
interest in any transactions which are, or were, unusual in their nature or
significant to the nature of the Company.
The Directors of the Company received £120,730 fees for their services during
the year to 30 November 2025 (30 November 2024: £85,000). £nil was payable
at the period and prior year end.
Ian McElroy is Chief Executive of Tier One Capital Ltd and is a founding
shareholder and director of the firm.
Tier One Capital Ltd received £59,954 investment adviser's fee during the
year (30 November 2024: £60,613) and £nil was payable at the year end (30
November 2024: £nil). Tier One Capital Ltd receives up to a 20% margin and
arrangement fee for all loans it facilitates.
There are various related party relationships in place with the borrowers as
below:
The following related parties arise due to the opportunity taken to advance
the profit share contracts:
· Coalsnaughton
Develop North PLC owns 40.1% of the borrower Kudos Partnership. The loan
amount outstanding as at 30 November 2025 was £1.71m (30 November 2024:
£1.97m). Transactions in relation to loans made during the year amounted to
£nil (30 November 2024: £nil). Interest due to be received as at 30 November
2025 was £621,000 (30 November 2024: £513,000). Interest received during the
year amounted to £nil (30 November 2024: £20,000).
· Oswald Street
Develop North PLC owns 25.1% of the Riverfront Property Limited Partnership.
The loan amount outstanding as at 30 November 2025 was £448,000 (30 November
2024: £448,000). Transactions in relation to loans made during the year
amounted to £nil (30 November 2024: £nil). Interest due to be received as at
30 November 2025 was £21,000 (30 November 2024: £8,000). Interest received
during the year amounted to £49,000 (30 November 2024: £49,000).
16. Financial Instruments
Consistent with its objective, the Company holds a diversified portfolio of
fixed rate loans secured with collateral in the form of; land or property in
the UK, charges held over bank accounts and personal or corporate guarantees.
The benefit of a related profit share or exit fee mechanism may also be
agreed. In addition, the Company's financial instruments comprise cash and
receivables and payables that arise directly from its operations. The Company
does not have exposure to any derivative instruments.
The Company is exposed to various types of risk that are associated with
financial instruments. The most important types are credit risk, liquidity
risk, interest rate risk and market price risk. There is no foreign currency
risk as all assets and liabilities of the Company are maintained in pounds
sterling.
The Board reviews and agrees policies for managing the Company's risk
exposure. These policies are summarised below:
CREDIT RISK
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Company.
In the event of default by a borrower if it is in financial difficulty or
otherwise unable to meet its obligations under the agreement, the Company will
suffer an interest shortfall and potentially a loss of capital. This
potentially will have a material adverse impact on the financial condition and
performance of the Company and/or the level of dividend cover. Management
determines concentrations of risk by assessing the characteristics of each
borrower and including these in the underwriting process. The most applicable
of these are the geographical location of the projects and the economic sector
the borrowers operate in. The Board receives regular reports on concentrations
of risk and the performance of the projects underlying the loans, using loan
to value percentages to help monitor the level of risk. The Investment Adviser
monitors such reports in order to anticipate, and minimise the impact of,
default.
There were financial assets which were considered impaired at 30 November
2025, with impairments amounting to £1,207,000 (30 November 2024: £762,000).
Our maximum exposure to credit risk as at 30 November 2025 was £26,431,000
(30 November 2024: £22,177,000).
All of the Company's cash is placed with financial institutions with a
long-term credit rating of A or better. Bankruptcy or insolvency of such
financial institutions may cause the Company's ability to access cash placed
on deposit to be delayed or limited. Should the credit quality or the
financial position of the banks currently employed significantly deteriorate,
cash holdings would be moved to another bank.
The carrying amount for investments held at fair value through profit or loss
best represents the maximum exposure to credit risk. The Company holds assets
as collateral against loans issued. The loan portfolio with carrying value of
£26.2m has been pledged as security.
Further details on the exposure to, and management of, credit risk by the
Company is included in both the Investment Advisor's report and the Strategic
Report within the Annual Report.
Loans held at amortised cost as at 30 November 2025
Total
£'000
Stage 1 16,053
Stage 2 7,065
Stage 3 275
23,393
Loans held at amortised cost as at 30 November 2024
Total
£'000
Stage 1 9,821
Stage 2 9,050
Stage 3 275
19,146
LIQUIDITY RISK
Liquidity risk is the risk that the Company will encounter difficulties in
realising assets or otherwise raising funds to meet financial commitments. The
Company's investments comprise loans.
Property and property-related assets in which the Company invests via loans
are not traded in an organised public market and are relatively illiquid
assets, requiring individual attention to sell in an orderly way. As a result,
the Company may not be able to liquidate quickly its investments in these
loans at an amount close to their fair value in order to meet its liquidity
requirements.
The Company's liquidity risk is managed on an ongoing basis by the Investment
Adviser and monitored on a quarterly basis by the Board. In order to mitigate
liquidity risk the Company has a comprehensive three-year cash flow forecast
that aims to have sufficient cash balances, taking into account projected
drawdowns on the live facilities to meet its obligations for a period of at
least 12 months. At the reporting date, the maturity of the financial assets
and liabilities was:
Financial assets as at 30 November 2025
In one year In two or more Total
£'000 years £'000
£'000
Cash and cash equivalents 226 - 226
Loans at amortised cost 11,808 11,585 23,393
Investments held at fair value 481 2,327 2,808
Total 12,515 13,912 26,427
Financial assets as at 30 November 2024
In one year In two or more Total
£'000 years £'000
£'000
Cash and cash equivalents 115 - 115
Loans at amortised cost 18,146 1,000 19,146
Investments held at fair value 2,899 - 2,899
Total 21,160 5,117 22,160
Financial liabilities as at 30 November 2025
In one year In two or more Total
£'000 years £'000
£'000
Bank loan 6,779 - 6,779
Total 6,779 - 6,779
Financial liabilities as at 30 November 2024
In one year In two or more Total
£'000 years £'000
£'000
Bank loan 2,100 - 2,100
Total 2,100 - 2,100
INTEREST RATE RISK
The interest rate profile of the Company was as follows:
as at 30 November 2025
Financial net assets on which no interest is paid Variable rate financial net assets
£'000 Fixed rate Financial Assets £'000
£'000 Total
£'000
Other receivables and prepayments 4 - - 4
Loan interest receivable 1,576 - - 1,576
Other payables and accrued expenses (300) - - (300)
Cash and cash equivalents 226 - - 226
Loan facility - - (6,779) (6,779)
Investments held at fair value through profit and loss - 2,166 - 2,166
Loans at amortised cost - 22,459 - 22,459
Total 1,506 24,625 (6,779) 19,352
as at 30 November 2024
Financial net assets on which no interest is paid Variable rate financial net assets
£'000 Fixed rate Financial Assets £'000
£'000 Total
£'000
Other receivables and prepayments 17 - - 17
Loan interest receivable 979 - - 979
Other payables and accrued expenses (141) - - (141)
Cash and cash equivalents 115 - - 115
Loan facility - - (2,100) (2,100)
Investments held at fair value through profit and loss
- 2,378 - 2,378
Loans at amortised cost - 18,688 - 18,688
Total 970 21,066 (2,100) 19,936
Shawbrook provide a working capital facility which is capped at 35% of the NAV
of the Company.
Sensitising the equity discount rate has immaterial impact on the loans held
at fair value.
MARKET PRICE RISK
The management of market price risk is part of the investment management
process and is typical of an investment company. The portfolio is managed with
an awareness of the effects of adverse valuation movements through detailed
and continuing analysis, with an objective of maximising overall returns to
shareholders. Investments in property and property-related assets are
inherently difficult to value due to the individual nature of each property.
As a result, valuations are subject to substantial uncertainty. There is no
assurance that the estimates resulting from the valuation process will reflect
the actual sales price even where such sales occur shortly after the valuation
date. Such risk is minimised through the appointment of external property
valuers. The basis of valuation of the loan portfolio is set out in detail in
the accounting policies. The inputs into the DCF models are the forecast
monthly cashflows including sales values and build costs, the discount rate
which is the imputed interest rate at the time the facility was entered into
adjusted for any movements in the risk free rate as at current year end, and a
30% (November 2024: 30%) discount rate for the equity element to reflect the
higher level of uncertainty. Any changes in market conditions will directly
affect the profit and loss reported through the Income Statement. Details of
the Company's investment portfolio held at the balance sheet date are
disclosed in the Investment Adviser's Review within the Annual Report and
Accounts. A 10% fall in the sales value of the residential development
projects and a 10% reduction in asset value of commercial and investment
property assets for those loans held at fair value would have resulted in a
further impairment to the portfolio of £439,000 as at 30 November 2025 (30
November 2023: £439,000). The calculations are based on the property
valuations at the respective balance sheet date and are not representative of
the year as a whole, nor reflective of future market conditions.
VALUATION OF FINANCIAL INSTRUMENTS
Accounting standards recognise a hierarchy of fair value measurements for
financial instruments which gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level 1) and the
lowest priority to unobservable inputs (Level 3). The classification of
financial instruments depends on the lowest significant applicable input, as
follows:
· Level 1 - Unadjusted, fully accessible and current quoted prices in
active markets for identical assets or liabilities. Examples of such
instruments would be investments listed or quoted on any recognised stock
exchange.
· Level 2 - Quoted prices for similar assets or liabilities, or other
directly or indirectly observable inputs which exist for the duration of the
period of investment. Examples of such instruments would be forward exchange
contracts and certain other derivative instruments.
· Level 3 - External inputs are unobservable. Value is the Directors'
best estimate, based on advice from relevant knowledgeable experts, use of
recognised valuation techniques and on assumptions as to what inputs other
market participants would apply in pricing the same or similar instrument.
30 November 2025
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Investments held at fair value through profit and loss - - 2,808 2,808
Total - - 2,808 2,808
30 November 2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Investments held at fair value through profit and loss - - 2,899 2,899
Total - - 2,899 2,899
A reconciliation of fair value measurements in Level 3 is set out in the
following table:
30 November 2025 30 November 2024
£'000 £'000
Opening Balance 2,899 3,024
Loans deployed - -
Principal repayments (25) (67)
Movements in interest receivable 121 85
Unrealised losses on investments held at fair value through profit or loss
(187) (143)
Amortisation of exit fees - -
Closing Balance 2,808 2,899
17. CAPITAL MANAGEMENT
The Company's capital is represented by the Ordinary Shares, share premium,
capital reserves, revenue reserve and special distributable reserve. The
Company is not subject to any externally imposed capital requirements.
The capital of the Company is managed in accordance with its investment
policy, in pursuit of its investment objective. Capital management activities
may include the allotment of new shares, the buy back or re-issuance of shares
from treasury, the management of the Company's discount to NAV and
consideration of the Company's net gearing level.
18. Post Balance Sheet Events
· Since the year end £200,000 has been drawndown and
£500,000 repaid on the Shawbrook loan facility.
· On 8 December 2025, a third interim dividend of 1.0 pence
per share was declared, paid on 12 January 2026.
· On 26 February 2026, a fourth interim dividend of 1.0 pence
per share was declared, payable on 10 April 2026.
· Subsequent to the year end, the Company commenced a
fundraise expected to complete in April 2026. The proceeds are intended to
support the Company's revised investment strategy adopted on 18 February
2026.The revised policy introduces formal allocation ranges across asset
classes and will apply fully once the Company's NAV reaches £100 million.
· The Company also adopted new Articles of Association in
connection with these changes.
· Michelle Percy was appointed as CEO of the Company on 26
January 2026.
These events occurred after the reporting date and have not been reflected in
the financial statements.
For further information regarding the Company (Ticker: DVNO) (LEI:
213800EXPWANYN3NEV68) please call:
Tier One Capital Ltd (Investment Adviser) +44 (0) 191 222 0099
Ian McElroy/Brendan O'Grady
Cavendish Capital Markets Ltd (Financial Adviser and Broker) +44 (0) 207 220 0500
Andrew Worne
Apex Fund Administration Services (UK) Limited (Secretary) +44 (0) 1245 398950
ENDS
Annual Report and Financial Statements
The Annual Report and Financial Statements will be posted to shareholders and
will shortly be available on the Company's website (www.DevelopNorth.co.uk
(http://www.DevelopNorth.co.uk) ) or in hard copy format from the Company's
Registered Office.
A copy of the annual report will be submitted to the FCA's National Storage
Mechanism and will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
1 (#_ftnref1) The total return and dividend figures are targets only and are
based on a number of assumptions (including the Company raising money pursuant
to future fundraises, which is not guaranteed). There can be no assurance that
these targets will be met and should not be taken as an indication of the
Company's expected future results. The total return and dividend figures are
also based on the Company utilising higher levels of leverage across the
commercial and residential strategies than has historically been utilised for
the real estate lending portfolio.
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. END FR JTMPTMTBBBJF
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