REG - Develop North PLC - Half-year Report
10/08/2022 15:15
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RNS Number : 6063V Develop North PLC 10 August 2022
DEVELOP NORTH PLC
Interim Report & Financial Statements for the six months ending 31 May
2022
Announcement of Interim Results
LEI: 213800EXPWANYN3NEV68
This announcement contains regulated information.
Chairman's Statement
Highlights
· Net Asset Value total return of 0.2%
· Dividend distributions totalling 1.0p (2021: 1.0p) for the first quarter
· Ordinary share mid-price equivalent to a premium of 1.1% as at 31 May
2022
· Gearing facility with Shawbrook Bank Limited renewed to May 2023
· Change of name to reflect more accurately the nature of the Company's
activities
Background
The Company entered its sixth year of trading during the period under report,
set against a continuing background of economic disruption, sharply rising
inflation, upwards pressure on interest rates and a prolonging of the Covid-19
pandemic albeit at less virulent levels than during earlier phases.
In such circumstances the changes made to the Company's investment and lending
policies a year or more ago, with the effect of reducing portfolio volatility
and risk, while maintaining higher liquidity, have proved prudent. In short,
the decision to target somewhat lower investment returns - in the nearer term,
at least - and to "cherry pick" new investment opportunities continues to
offer the best risk/reward trade off as the way forward clears.
Net Asset Value
The Company's Net Asset Value per share decreased from 83.9p to 83.1p over the
six months ended 31 May 2022. Taking the effects of dividend distributions
into account, this was equivalent to a NAV Total Return of 0.2%.
This figure may be placed into context by the total return figures over the
same period of the Association of Investment Companies' (AIC 's)
"Property-Debt" sector, of which Develop North is a component member, of -1.2%
and of the AIC's "Debt- Loans" sector of 2.7%. Meanwhile in a much broader
context the FTSE 100 and FTSE All-Share Indices increased respectively by 9.8%
and 6.2% over the same interval.
Dividends
An interim dividend of 1 penny per share will be paid on 30 June 2022. As set
out in the Annual Report the Company expects to pay dividends at a rate of 1
penny per share per quarter, equivalent to 4 pence per share per year in
aggregate.
Depending on market conditions and the performance of the investment
portfolio, a final balancing payment may be made at the end of the current
financial year so as to at least fulfil the investment trust qualification
requirements.
Investment Portfolio
The total value of the Company's portfolio now stands at £23.9m, from 19 live
projects, following growth of £6.7m in the gross value of loans and
receivables.
New Investments - the Company agreed two new loans during the period,
including a £2.2m, nine month facility to fund the construction of four
family homes in Morpeth, Northumberland, and a £1.9m facility to fund the
construction of executive homes across two sites in Darras Hall, Ponteland and
Stocksfield, Northumberland. Further details are provided in the Investment
Adviser's report.
In addition, further funds were invested in facilities created during the
second half of last year. This has led to a significant increase in the total
size of the loan book and which will support portfolio revenues over future
months and years.
Exits - there were no portfolio exits, bar a small number of partial
redemptions, during the period.
Impairments - there continue to be historic loans within the portfolio, which
predate the formation of the Company, against which provisions have already
been taken. These projects have now almost reached their conclusion and the
directors expect the level of impairments to continue to reduce as the overall
quality of the portfolio increases. The Directors, in conjunction with the
Investment Adviser, continue to monitor the performance of all loans, and
certain adjustments to impairments made to investments have consequently been
made (although none at the scale of previous periods).
The loan portfolio is discussed more fully in the Investment Adviser's review.
Gearing
The Company continues to benefit from a Gearing facility with Shawbrook Bank
Limited, recently renewed for a further year until May 2023, with £2.7m drawn
at the period end.
Outlook
Notwithstanding the testing backdrop described above, the Company is well
positioned both to resist further economic headwinds and to deploy its
considerable liquidity into the right projects at the right time.
Only a short time ago the country was amidst full or partial lockdown,
characterised by deserted construction sites and empty travel depots. In this
situation the much-lauded "working from home" initiative beloved of the UK
public sector was quite useless and where productivity was forced towards
zero.
We now see building sites coming to life, cranes moving, old projects
re-starting and new schemes being placed on the drawing board. Under its much
more dynamic and appropriate new name of Develop North PLC, the Company stands
ready to move on to the next phase of its life.
John Newlands
Chairman
10 August 2022
Investment Adviser's Review
ABOUT THE ADVISER
Tier One Capital Ltd is a Newcastle upon Tyne based wealth management and
property lending specialist providing financial advice services and bespoke
tailored lending to the residential and commercial property development
market.
INVESTMENT ADVISER'S REPORT - REVIEW OF THE 6 MONTHS TO 31 MAY 2022
Investment Adviser's highlights:
· NAV Total Return of 0.2% for the 6 months to 31 May 2022.
· Loan book, including interest receivable, increased from £18.1m at
30 November 2021 to £24.9m at 31 May 2021, an increase of 37.6%.
· Payment of dividends totalling 1.0p for the first quarter,
equivalent to an annualised dividend yield of 4.8%.
This Interim Report and Accounts covers the end of the fifth and the beginning
of the sixth 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 a number of equity positions attained
at nil cost in a number of the borrowing entities which it supports.
The first six months of the financial year have seen the base rate increase
above 1% for the first time since the global financial crisis of 2008. Market
expectations see these increases continuing for the remainder of 2022 and into
2023 with some economists expecting a peak of 3%. This has been driven by
inflation which reached 9.1% CPI for the twelve months to May 2022, primarily
because of housing, water, electricity, gas and other fuels, transport and
food and non-alcoholic beverages.
The Company used the first six months to protect shareholder value, deploying
funds into the most recent portfolio loans while positioning some of the older
loans for exit. There was a continued focus on liquidity, with the gearing
facility renewed for a further twelve months in May 2022.
Despite the ongoing uncertainties, we are pleased to report an active period
for new transactions and deployments to existing projects, together with full
and partial exits:
The Company agreed two new facilities during the period:
· Fairmoor, North East England - £2.2m 9-month facility
· Moor Lane, North East England - £1.9m 18-month facility
During the year a total of £8.2m was deployed into six projects including the
two new projects mentioned above.
Portfolio Exits
There were no portfolio exits during the period, leaving the number of exits
since inception at twelve.
Partial Redemptions Update
During the period there were £1.6m of partial redemptions across five of the
portfolio projects.
Impairments
The Company, in accordance with IFRS 9, recognises the gross interest
receivable on all its loans, and then recognises an impairment charge if that
interest is not paid by the borrower and there is not a clear expectation that
this can be recovered subsequently. During the year, three projects were
unable to meet their interest requirements.
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. In this period the Company has set the
provision at £33,000, the same amount in place as at 30 November 2021. This
provision is based on forward looking statements to withstand market-related
shocks including those caused by the ongoing Covid-19 pandemic.
Gearing
In May 2022, the Company renewed the committed revolving credit facility with
Shawbrook Bank for a further year. Again the key driver was headroom and
liquidity and its renewal for a fifth year demonstrates the support that the
Company has from its lender, and the growing confidence in future deployment
given the current strength of pipeline.
Profit Share Projects
There are currently 6 Profit Share projects in the portfolio (Nov 2021: 6).
OUTLOOK
Economic Outlook
Residential
As at 31 May 2022, 70.5% of deployed funds were invested across 14 projects
with a residential focus with a further £1.9m committed to live projects.
The housing market has continued to grow during 2022, continuing the strong
performance of 2021. There are now strong indications that a slow down is
coming with Savills' five year forecast, updated in May 2022, suggesting
increases across the UK of 12.9%, a significantly slower rate of growth than
the 20.5% over the five years predicted in November 2021. The slower growth is
largely because stretched affordability, combined with interest rate rises,
will limit the capacity for further growth in property values. The North East
and Scotland are forecast to see rises of 17.4% and 15.7% respectively with
London and the south of England falling below the UK average. It's important
to note that most of the forecast growth is in 2022, with flat or even
slightly negative numbers in 2023 before a return to 2-3% growth in 2024-26.
Supply chain issues for both availability and pricing of labour and materials
reached unprecedented levels in 2021 and continued into 2022. There are now
anecdotal signs that the material availability issues for most products is
returning to normal but both pricing and labour shortage issues remain, and it
will take the rest of 2022 to stabilise.
The Company's residential exposure is predominantly in the North East (91.2%).
This region continues to have the best affordability with loan to income
ratios remaining lower allowing the potential for greater price growth in the
future. We continue to appraise projects using the views of market experts for
sales values and build cost and delivery, with all assumptions stress tested.
Commercial
As at 31 May 2022, 29.5% of deployed funds were invested across five projects
with a commercial focus.
The Company continues to be selective in the level of exposure to commercial
developments. We believe our selective approach to the Company's deployment in
the commercial property sector will continue to create shareholder value. The
sectors within the commercial property space that the Company currently has
exposure to are:
· bereavement (crematorium);
· strategic land; and
· shared office space.
Each of the above sub-sectors offer downside protection in the current
uncertain economic times with the latter two also giving flexibility for the
borrowers as and when trends change. We will continue to identify and support
professional, experienced, and reliable management teams who have a clear
vision and robust plan.
PIPELINE
There is currently £3.5m at various stages of due diligence across two
projects in the North East.
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
10 August 2022
THE INVESTMENT PORTFOLIO AS AT 31 MAY 2022
Sector % LTV* (May 22) Loan Value (May 22) £'000s LTV* Loan Value (Nov 21) £'000s
Portfolio (Nov 21)
Residential 66.0% 69.5% 15,947 73.7% 10,480
Commercial 33.1% 64.3% 8,005 66.7% 7,043
Cash 0.9% - 221 - 4,545
General Impairment - - (32) - (33)
Total/Weighted Average 100.0% 67.8% 24,141 70.9% 22,035
*LTV has been calculated using the carrying value of the loans as at the
balance sheet date
Interim Management Report
The principal and emerging risks and uncertainties that could have a material
impact on the Company's performance have not changed from those set out on
pages 15 and 16 of the Company's Annual Report for the year ended 30 November
2021.
The Directors consider that the Chairman's Statement and the Investment
Adviser's Review on pages 2 to 7 of this Interim Report, the above disclosure
on related party transactions and the Statement of Directors' Responsibilities
below, together constitute the Interim Management Report of the Company for
the six months ended 31 May 2022 and satisfy the requirements of the
Disclosure Guidance and Transparency Rules 4.2.3 to 4.2.11 of the Financial
Conduct Authority.
The Interim Report has not been reviewed or audited by the Company's Auditor.
The Directors believe, having considered the Company's investment objectives,
risk management policies, capital management policies and procedures, the
nature of the portfolio and expenditure projections, that the Company has
adequate resources, an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the foreseeable
future and, more specifically, that there are no material uncertainties
pertaining to the Company that would prevent its ability to continue in such
operational existence for at least twelve months from the date of the approval
of this Interim Report. For these reasons they consider that there is
sufficient evidence to continue to adopt the going concern basis in preparing
the accounts.
Directors' Responsibilities Statement
We confirm that to the best of our knowledge:
· The condensed set of financial statements has been prepared in accordance
with FRS 104 'Interim Financial Reporting' and gives a true and fair view of
the assets, liabilities, financial position and profit of the Company, as at
31 May 2022, as required by the Disclosure Guidance and Transparency Rule
4.2.4R;
· The Interim Report includes a fair review of the information required by
the Disclosure and Transparency Rule 4.2.7R, being an indication of important
events that have occurred during the first six months of the financial year
and their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the remaining six
months of the financial year; and
· The Interim Report includes a fair review of the information concerning
related party transactions as required by Disclosure Guidance and Transparency
Rule 4.2.8R.
On Behalf of the Board
John Newlands
Chairman
10 August 2022
INCOME STATEMENT
Six months ended Six months ended Year ended
31 May 2022 (unaudited) 31 May 2021 (unaudited) 30 November 2021
(audited)
Note Revenue Capital Total Total Total
£'000 £'000 £'000 £'000 £'000
REVENUE
Investment interest 864 - 864 879 1,643
Total revenue 864 - 864 879 1,643
(Losses)/gains on investments held at fair value through profit or loss (38) (96) (134) (39) 54
Total net income 826 (96) 730 840 1,697
Expenditure
Investment adviser fee (34) - (34) (34) (68)
Impairments on investments held at amortised cost
7 (51) (44) (1) (208)
Other expenses (315) - (315) (198) (491)
Total expenditure (342) (51) (393) (233) (767)
Profit before finance costs and taxation
484 (147) 337 607 930
Finance costs
Interest payable (16) - (16) (1) (1)
Profit before taxation 468 (147) 321 606 929
Taxation - - - - -
Profit for the period/year 468 (147) 321 606 929
Basic earnings per share 3 1.74p (0.55p) 1.19p 2.25p 3.45p
The total column of this statement represents the Company's Statement of
Comprehensive Income, prepared in accordance with UK adopted International
Financial Reporting Standards ("UK adopted IFRS") in conformity with the
requirements of the Companies Act 2006. 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 As at
31 May 31 May 30 November
2022 2021 2021
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Non-current assets
Investments held at fair value 5 - 1,580 -
Loans at amortised cost 6 14,153 3,099 7,929
14,153 4,679 7,929
Current assets
Investments held at fair value 5 6,375 12,688 7,589
Loans at amortised cost 6 4,324 2,326 2,629
Other receivables and prepayments 17 7 27
Cash and cash equivalents 221 3,174 4,545
10,937 18,195 14,790
Total assets 25,090 22,874 22,719
Current liabilities
Loan facility (2,656) - -
Other payables and accrued expenses (67) (75) (135)
Total liabilities (2,723) (75) (135)
Net assets 22,367 22,799 22,584
Share capital and reserves
Share capital 7 269 269 269
Share premium 9,094 9,094 9,094
Special distributable reserve 12,849 13,093 13,093
Capital reserve (313) (166) (166)
Revenue reserve 468 509 294
Equity shareholders' funds 22,367 22,799 22,584
Net asset value per ordinary share 8 83.08p 84.68p 83.88p
The accompanying notes form an integral part of the financial statements.
The 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 10 August 2022.
They were signed on its behalf by:
John Newlands
Chairman
Statement of Changes in Equity
For the six months ending Special distributable
31 May 2022 Share capital Share premium reserve Capital reserve Revenue reserve Total
(unaudited) £'000 £'000 £'000 £'000 £'000 £'000
At beginning of the period 269 9,094 13,093 (166) 294 22,584
Total comprehensive profit for the period:
Profit for the period - - - (147) 468 321
transactions with owners recognised directly in equity
Dividends paid (note 4) - - (244) - (294) (538)
At 31 May 2022 269 9,094 12,849 (313) 468 22,367
For the six months ending Special distributable
31 May 2021 Share capital Share premium reserve Capital reserve Revenue reserve Total
(unaudited) £'000 £'000 £'000 £'000 £'000 £'000
At beginning of the period 269 9,094 13,497 (263) - 22,597
Total comprehensive profit for the period:
Profit for the period - - - 97 509 606
transactions with owners recognised directly in equity
Dividends paid (note 4) - - (404) - - (404)
At 31 May 2021 269 9,094 13,093 (166) 509 22,799
For the year ending Special distributable
30 November 2021 Share capital Share premium reserve Capital reserve Revenue reserve Total
(unaudited) £'000 £'000 £'000 £'000 £'000 £'000
At beginning of the period 269 9,094 13,497 (263) - 22,597
Total comprehensive profit for the period:
Profit for the period - - - 97 832 929
transactions with owners recognised directly in equity
Dividends paid (note 4) - - (404) - (538) (942)
At 30 November 2021 269 9,094 13,093 (166) 294 22,584
Condensed Cash Flow Statement
Six months to Six months to Year ending
31 May 31 May 30 November
2022 2021 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating activities
Profit after taxation 321 606 929
Impairments on investments held at fair value through profit and loss 123 67 152
Impairments on loans at amortised cost 51 187 542
Uplifts on investments held at fair value through profit and loss (27) (107) (342)
Uplifts on loans at amortised cost - 244 (473)
(Increase)/decrease in loan interest receivable on investments held at fair (109) 4 30
value through profit and loss
Increase in loan interest receivable on loans at amortised cost (207) (50) (156)
Decrease/(increase) in other receivables 10 14 (6)
(Decrease)/increase in other payables (68) (56) 4
Interest paid 16 - 1
Net cash inflow from operating activities 110 421 681
Investing activities
Loans given (8,148) (2,697) (8,266)
Loans repaid 1,612 6,002 13,221
Net cash (outflow)/inflow from investing activities
(6,536) 3,305 4,955
Financing
Equity dividends paid (538) (404) (942)
Bank loan drawn down 2,656 - -
Repayment of bank loan - (1,150) (1,150)
Interest paid (16) - (1)
Net cash inflow/(outflow) from financing
2,102 (1,554) (2,093)
(Decrease)/Increase in cash and cash equivalents
(4,324) 2,172 3,543
Cash and cash equivalents at the start of the year 4,545 1,002 1,002
Cash and cash equivalents at the end of the period/year 221 3,174 4,545
Notes to the Condensed Financial Statements (unaudited)
1. INTERIM RESULTS
The condensed financial statements have been prepared in accordance with
International Accounting Standard 34 'Interim Financial Reporting' and the
accounting policies set out in the statutory accounts of the Company for the
year ended 30 November 2021. The condensed financial statements do not include
all of the information required for a complete set of financial statements and
should be read in conjunction with the financial statements of the Company for
the year ended 30 November 2021, which were prepared in accordance with UK
adopted International Financial Reporting Standards ("UK adopted IFRS") in
conformity with the requirements of the Companies Act 2006 as applicable to
companies reporting under international accounting standards. There have been
no significant changes to management judgements and estimates.
The condensed financial statements have been prepared on the going concern
basis. In assessing the going concern basis of accounting the Directors have
had regard to the guidance issued by the Financial Reporting Council. After
making enquiries, and bearing in mind the nature of the Company's business and
assets, the Directors consider that the Company has adequate resources to
continue in operational existence for the foreseeable future. For this reason
they continue to adopt the going concern basis in preparing these financial
statements.
2. INVESTMENT ADVISER
In its role as the Investment Adviser, Tier One Capital Ltd is 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 cent. per annum of the
prevailing Net Asset Value if less than £100m; or 0.50 per cent. per annum of
the prevailing Net Asset Value if £100m or more.
There is no balance accrued for the Investment Adviser for the period ended 31
May 2022 (31 May 2021: £nil; 30 November 2021: £nil).
There are no performance fees payable.
ALTERNATIVE INVESTMENT FUND MANAGER'S DIRECTIVE ('AIFMD')
The Company has been approved by the Financial Conduct Authority as a Small
Registered UK Alternative Investment Fund Manager ('AIFM').
3. EARNINGS PER SHARE
The revenue, capital and total return per ordinary share is based on each of
the profit after tax and on 26,924,063 ordinary shares, being the weighted
average number of ordinary shares in issue throughout the period.
Six months ended 31 May 2022 Six months ended 31 May 2021 Year ended 30 November 2021
£'000 Pence per share £'000 Pence per share £'000 Pence per share
Revenue earnings 468 1.74 509 1.89 832 3.09
Capital earnings (147) (0.55) 97 0.36 97 0.36
Total earnings 321 1.19 606 2.25 929 3.45
Average number of shares in issue 26,924,063 26,924,063 26,924,063
Earnings for the period to 31 May 2022 should not be taken as a guide to the
results for the year to 30 November 2022.
4. DIVIDENDS
Six months ended 31 May 2022 Six months ended 31 May 2021 Year ended 30 November 2021
£'000 £'000 £'000
In respect of the prior year:
Third interim dividend 269 - -
Fourth interim dividend 269 404 404
In respect of the current year:
First interim dividend - - 269
Second interim dividend - - 269
Third interim dividend - - -
Total 538 404 942
The Company intends to distribute at least 85% of its distributable income
earned in each financial year by way of interest distribution. On 31 May 2022,
the Company declared an interim dividend of 1.00 pence per share for the
quarter ended 28 February 2022, payable on 30 June 2022.
5. 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 six companies.
31 May 31 May 30 November
2022 2021 2021
£'000 £'000 £'000
Opening Balance 7,589 16,809 16,809
Loans deployed 80 2,183 904
Principal repayments (1,307) (4,760) (10,284)
Movements in interest receivable 147 75 106
Unrealised (losses)/gains on investments held at fair value through profit or (134) (39) 54
loss
Total investments held at fair value through profit and loss 6,375 14,268 7,589
Split:
Non-current assets: Investments held at fair value through profit and loss due - 1,580 -
for repayment after one year
Current assets: Investments held at fair value through profit and loss due for 6,375 12,688 7,589
repayment under one year
6. LOANS AT AMORTISED COST
31 May 31 May 30 November
2022 2021 2021
£'000 £'000 £'000
Opening Balance 10,558 6,046 6,046
Loans deployed 8,068 514 7,362
Principal repayments (305) (1,242) (2,937)
Movements in interest receivable 200 108 295
Movement in impairments (44) (1) (208)
Total Loans at amortised cost 18,477 5,425 10,558
Split:
Non-current assets: Loans at amortised cost due for repayment after one year 14,153 3,099 7,929
4,324 2,326 2,629
Current assets: Loans at amortised cost due for repayment 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
period; allowances for impairment losses amounted to £44,000 (May 2021:
£1,000; November 2021: £208,000).
7. SHARE CAPITAL
Number of
Nominal Value Ordinary shares
£'000 of 1p
Issued and fully paid as at 31 May 2021 269 26,924,063
Issued and fully paid as at 31 May 2022 269 26,924,063
The ordinary shares are eligible to vote and have the right to participate in
either an interest distribution or participate in a capital distribution (on a
winding up).
8. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per ordinary share is based on net assets of
£22,367,422 (31 May 2021: £22,798,683; 30 November 2021: £22,315,165) and
on 26,924,063 ordinary shares (31 May 2021: 26,924,063; 30 November 2021:
26,924,063), being the number of ordinary shares in issue at the period/year
end.
9. 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 fees totalling £43,000 for their
services during the period to 31 May 2022 (31 May 2021: £45,000; 30 November
2021: £90,000). £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 £34,000 investment adviser's fee during the
period (31 May 2021: £28,000; 30 November: £68,000) and £nil was payable at
the period end (31 May 2021: £nil; 30 November 2021: £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 25.1% profit share contracts:
· Gatsby Homes
The Company owns 25.1% of the borrower Gatsby Homes Ltd. The loan amount
outstanding as at 31 May 2022 was £13,000 (31 May 2021: £1.2m, 30 November
2021: £468,000). Transactions in relation to loans repaid during the year
amounted to £441,000 (31 May 2021: £172,000, 30 November: £797,000).
Interest due to be received as at 31 May 2022 was £nil (31 May 2021: £nil,
30 November 2021 £nil). Interest received during the period amounted to
£38,000 (31 May: £nil, 30 November 2021: £136,000).
· Bede and Cuthbert Developments
The Company owns 25.1% of the borrower Bede and Cuthbert Developments Ltd. The
loan amount outstanding as at 31 May 2022 was £80,000 (31 May 2021: £3.0m,
30 November 2021: £130,000). Transactions in relation to loans repaid during
the period amounted to £50,000 (31 May 2021: £250,000, 30 November 2021:
£3.2m). Interest due to be received as at 31 May 2022 was £nil (31 May 2021:
£41,000, 30 November 2021 £nil). Interest received during the year amounted
to £nil (31 May 2021: £127,000, 30 November 2021: £154,000).
· Thursby Homes (Springs)
The Company owns 25.1% of the borrower Thursby Homes (Springs) Ltd. The loan
amount outstanding as at 31 May 2022 was £1.9m (31 May 2021: £2.6m, 30
November 2021: £2.4m). Transactions in relation to loans repaid during the
period amounted to £381,000 (31 May 2021: £369,000, 30 November 2021:
£502,000). Interest due to be received as at 31 May 2022 was £226,000 (31
May 2021: £185,000, 30 November 2021: £209,000). Interest received during
the period amounted to £109,000 (31 May 2021: £131,000, 30 November 2021:
£261,000).
· Northumberland
The Company owns 25.1% of the borrower Northumberland Ltd. The loan amount
outstanding as at 31 May 2022 was £832,000 (31 May 2021: £1.8m, 30 November
2021: £1.3m). Transactions in relation to loans repaid during the period
amounted to £435,000 (31 May 2021: £164,000, 30 November 2021: £683,000).
Interest due to be received as at 31 May 2022 was £15,000 (31 May 2021:
£26,000, 30 November 2021: £10,000). Interest received during the period
amounted to £19,000 (31 May 2021: £78,000, 30 November 2021: £123,000).
· Coalsnaughton
The Company owns 40.17% (31 May 2021: 25.1%, 30 November 2021: 25.1%) of the
borrower Kudos Partnership. The loan amount outstanding as at 31 May 2022 was
£2.3m (31 May 2021: £1.9m, 30 November 2021: £2.3m). Transactions in
relation to loans made during the period amounted to £80,000 (31 May 2021:
£217,00015, 30 Novembr 2021: £404,000). Interest due to be received as at 31
May 2022 was £257,000 (31 May 2021: £128,000, 30 November 2021: £170,000).
Interest received during the period amounted to £129,000 (31 May 2021:
£110,000, 30 November 2021: £228,000).
· Oswald Street
The Company owns 25.1% of the Riverfront Property Limited Partnership. The
loan amount outstanding as at 31 May 2022 was £382,000 (31 May 2021:
£408,000, 30 November 2021: £10,000). Transactions in relation to loans made
during the period amounted to £nil (31 May 2021: £nil, 30 November 2021:
£nil). Interest due to be received as at 31 May 2022 was £5,000 (31 May
2021: £5,000, 30 November 2021: £5,000). Interest received during the period
amounted to £15,000 (31 May 2021: £15,000, 30 November 2020: £31,000).
10. OPERATING SEGMENTS
The Board has considered the requirements of IFRS 8 'Operating Segments'.
The Board is of the view that the Company is engaged in a single unified
business, being the investment of the Company's capital in financial assets
comprising loans and joint venture equity contracts and in one geographical
area, the United Kingdom, and that therefore the Company has no segments. The
Board of Directors, as a whole, has been identified as constituting the chief
operating decision maker of the Company. The key measure of performance used
by the Board to assess the Company's performance is the total return on the
Company's net asset value. As the total return on the Company's net asset
value is calculated based on the IFRS net asset value per share as shown at
the foot of the Consolidated Statement of Financial Position, the key
performance measure is that prepared under IFRS. Therefore no reconciliation
is required between the measure of profit or loss used by the Board and that
contained in the financial statements.
11. 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.
12. POST BALANCE SHEET EVENTS
There are no post balance sheet events to report.
13. INTERIM REPORT STATEMENT
These are not full statutory accounts in terms of Section 434 of the Companies
Act 2006 and are unaudited. Statutory accounts for the year ended 30 November
2021, which received an unqualified audit report and which did not contain a
statement under Section 498 of the Companies Act 2006, have been lodged with
the Registrar of Companies. No full statutory accounts in respect of any
period after 30 November 2021 have been reported on by the Company's auditor
or delivered to the Registrar of Companies.
For further information please contact:
Maitland Administration Services Limited, Secretary
10 August 2022
ENDS
Interim Report 2022
The Interim Report will be posted to shareholders and will shortly be
available on the Company's website (www.developnorth.co.uk
(http://www.tocpropertybackedlendingtrust.co.uk) ) or in hard copy format from
the Company's Registered Office.
A copy of the Interim 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
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
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