REG - Develop North PLC - Half-year Report
31/07/2024 14:15
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RNS Number : 6337Y Develop North PLC 31 July 2024
DEVELOP NORTH PLC
Interim Report & Financial Statements for the six months ending 31 May
2024
Announcement of Interim Results
LEI: 213800EXPWANYN3NEV68
This announcement contains regulated information.
Chairman's Statement
Highlights
· Net Asset Value total return of 3.4% for the six months to 31 May 2024.
· Dividends of 2.0 pence per share paid or declared during the period,
equivalent to an annualised yield of 5.1%.
· Loan to value ("LTV") of the portfolio reduced to 63.3% (30 November 2023:
65.1%).
· One exit during the period.
· 1.3 million shares repurchased during the half-year, enhancing the NAV per
share for remaining shareholders by 0.4%.
· 74% of the portfolio now deployed in the North East of England.
· Ordinary share mid-price equivalent to a discount of 1.7% as at 31 May
2024.
Introduction
I am pleased to present the Company's results for the half year ended 31 May
2024, during which the Company entered its eighth year of trading. The period
has included a significant easing in UK inflation rates, while UK Gross
Domestic Product is estimated by the ONS to have increased by 0.7% in the
first quarter of 2024. Interest rates on the other hand have held at 5.25%,
perhaps unsurprisingly given the uncertainty surrounding not just the
persistence of the said low inflation but the likelihood, crystallised at the
time of writing in July 2024, of a change of UK government. House prices
meanwhile have held up better than some had forecast, average values
increasing by just over 1% over the first half of the year. These points are
described more fully in the Investment Adviser's Report.
Net Asset Value
The Company's Net Asset Value ('NAV') per share increased from 78.9p to 79.6p
over the six months ended 31 May 2024. Taking the effects of dividend
distributions into account, this has resulted in a NAV Total Return for the
period of 3.4%.
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 -2.6%
and of the AIC's 'Debt-Loans' sector of 5.4%.
Dividends
A quarterly dividend of 1 penny per share was paid on 28 June 2024 in respect
of the quarter ended 29 February 2024. 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.
Continuation Vote
Shareholders demonstrated their continuing support for the Company by voting
overwhelmingly in favour of the Continuation Vote put to shareholders at the
recent Annual General Meeting (AGM). The next Continuation Vote will be put to
the AGM in three years' time.
Share Buybacks
In December 2023 the Company announced the extension of the share buyback
programme which began in November 2023. A further 566,369 Ordinary shares were
purchased under this extension.
In April 2024 the Company announced a new share buyback programme to purchase
further Ordinary shares for up to a total maximum consideration of £500k. The
Company repurchased 689,655 Ordinary shares under the new programme.
All share repurchases have been undertaken at an average discount to NAV of
approximately 10%, resulting in an uplift in the NAV to remaining shareholders
of approximately 0.4%.
The authority to buy back shares was renewed at the recent AGM. The Board will
continue to monitor the discount to NAV at which the shares trade.
Investment Portfolio
The total value of the Company's portfolio now stands at £20.2 million, from
17 live projects.
New Investments:
The Company agreed one new facility during the period, a £0.6 million, six
month facility to fund the acquisition of land in Sunderland. Overall, the
quality of the loan book continues to improve, with the LTV ratio reducing
from 65.1% at 30 November 2023 to 63.3% at 31 May 2024.
Exits:
There was one portfolio exit during the period, bringing the number of exits
to nineteen since inception.
Impairments:
As specified by the requirements of accountancy standard IFRS 9, the Company
has continued to recognise an impairment charge should interest not be paid by
the borrower and there is not a clear expectation that this can be recovered
subsequently. During the period, two projects were unable to meet their
interest obligations in full. In the six months ended 31 May 2024 the Company
has set the provision at £146,000. This is unchanged from the general
provision as at 30 November 2023.
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, which was renewed for a period of two years in May 2023. At the
period end £1.125m had been drawn down under this facility.
Outlook
There are indications that the UK economy is gradually turning a corner.
Following a technical recession in the second half of 2023, GDP growth resumed
in the first quarter of 2024, albeit at a modest level. Other positive
indicators are an increase in real disposable household income of c. 1%,
following cuts in National Insurance contributions, falling energy prices and
the fall in inflation. These factors should all bode well for the broader
property sector, while a nationwide shortage of housing is likely to maintain
upward pressure on prices, especially should mortgage rates begin to fall.
The main uncertainty at present is the extent to which the incoming Labour
administration will be able to achieve its objectives of regenerating economic
growth while seeking to spend more on clean energy, the NHS and other areas.
Hikes in both government borrowing and indirect taxation seem likely, though
their effects would take a considerable time to work through, giving plenty of
time for your Company to react if necessary.
John Newlands
Chairman
31 July 2024
Investment Adviser's Review
REVIEW OF THE 6 MONTHS TO 31 MAY 2024
Investment Adviser's highlights:
· NAV Total Return of 3.4% for the 6 months to 31 May 2024.
· Funds deployed into one new project
· One exit during the period
· Loan to Value of portfolio reduced to 63.3%
· Dividends totalling 2p per share paid or declared for the six months to 31
May 2024, equivalent to an annualised dividend yield of 5.1%.
· 73.9% of funds deployed in North East England reflecting the Company's
ongoing commitment to focus operations on our chosen regional markets.
This Interim Report covers the end of the seventh and the beginning of the
eighth year of performance of the Company, since it's listing in January 2017.
The Company's investment objective is to provide debt finance to the property
sector. The Company also benefits from a small number of equity positions
attained at nil cost in four of the borrowing entities which it supports. In
addition, the Company benefits from exit fees on redemption of other projects
that additionally contribute to the Senior and Profit lending type.
Progress on the Company's Strategic Objectives:
· Weighted Average interest generated was 9.4% - up from 8.2% at the prior
year end.
· Prudent cost control saw overheads maintained at last year's level - a
below inflation rise.
· Portfolio LTV improved at 63.3%.
· Fund liquidity further improved, with the continuation of the share
buyback exercise
Economic Backdrop and Outlook:
The first six months of the financial year have seen the base rate hold at
5.25% at the time of writing (July 2024). The Bank of England has been
understandably cautious as inflation has continued to persist and the job
market has remained tight for much of the period. The most recent minutes from
20 June 2024 suggest "indicators of inflation persistence had continued to
moderate" and many commentators are interpreting this as a sign that the Bank
is willing to cut rates as early as August 2024 if the data continues to trend
as expected.
2024 has seen house prices perform more strongly than many anticipated, with
average values increasing by 1.1%. Savills expect UK house prices to rise by
2.5% this year. Looking more specifically at the regions where we are most
active, both the North East and Scotland are expected to increase by 4.5% and
4.0% respectively during 2024, and for this to continue for the following
years. Analysts do not expect the change in government to have any lasting
impact on these forecasts.
Build cost inflation and labour in the construction sector have broadly
returned to normal levels with BICS all-in tender price index, which measures
the trend of contractors pricing levels in accepted tenders, showing annual
growth of 2.3% in the second quarter of this year.
The Company has used the first six months to reprice some of the existing loan
book and to deploy at higher rates for new projects.
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 one new facility during the period:
· Sunderland - £0.6m 6-month facility
During the period a total of £3.3m was deployed into four projects, including
the Sunderland project referred to above.
At the period end, fund deployment totalled £20.2m. The quality of the loan
book continues to improve with the Loan to Value moving from 65.1% at 30
November 2023 to 63.3% at 31 May 2024.
Portfolio Exits
There was one portfolio exit during the period, bringing the number of exits
to nineteen since inception.
Partial Redemptions Update
During the period there was £1.6m of partial redemptions across three of the
portfolio projects.
Impairments
In accordance with IFRS 9 the Company 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 period, two projects were unable to meet
their interest obligations 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 period. In the six months ended 31
May 2024 the Company has set the provision at £146,000. This is unchanged
from the general provision at 30 November 2023. This provision is based on
forward looking scenarios and is designed to withstand market-related shocks,
reflecting current economic uncertainties.
Gearing
The Company continues to utilise its gearing facility from Shawbrook Bank
which provides it with headroom and liquidity. The balance drawn as at 31 May
2024 was £1.125m (30 November 2023: £2.9m).
Profit Share Projects
There are currently four Profit Share projects in the portfolio (November
2023: 4).
Buyback Programme
In November 2023, the Company announced the commencement of a share buyback
programme. During the period, the Company purchased 1,256,024 shares in the
market. The shares are held in treasury.
Outlook
Residential
As at 31 May 2024, 72.6% of deployed funds were invested across 12 projects
with a residential focus, with a further £0.7m committed to live projects.
This represents a 2.6% increase since November 2023.
Commercial
As at 31 May 2024, 27.4% of deployed funds were invested across 5 projects
with a commercial focus.
This represents a 9.7% increase since November 2023.
Pipeline
There is currently £3.6m at various stages of due diligence across three
projects, with 62.6% in the North East.
Performance Since 2018
Since 1 June 2018, the Company has provided £44.3m of funding across twenty
two new projects. These projects have generated an average IRR of 9.3% with
only 0.2% of capital write offs which have been more than covered by
associated exit and plot fees. These projects have also been lower risk
projects with the LTVs lower than those of the historic projects.
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.
With input cost stability predicted to emerge, relative confidence in property
as an asset class, a continuing shortage in housing and an increasing ability
to compete in debt markets, the Investment Adviser is looking forward to
growing fund deployment over the coming months and years.
Ian McElroy
Tier One Capital
31 July 2024
THE INVESTMENT PORTFOLIO AS AT 31 MAY 2024
Sector % LTV* (May 24) Loan Value (May 24) £'000s LTV* Loan Value (Nov 23) £'000s
Portfolio (Nov 23)
Residential 71.8% 61.4% 14,611 61.3% 14,048
Commercial 68.2% 68.2% 5,495 75.9% 5,139
Cash - - 239 - 1,154
General Impairment - - (146) - (146)
Total/Weighted Average 100.0% 63.3% 20,199 65.2% 20,195
*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
2023.
The Directors consider that the Chairman's Statement and the Investment
Adviser's Review on pages 2 to 7 of this Interim Report, the disclosure on
related party transactions and the Statement of Directors' Responsibilities on
page 9 together constitute the Interim Management Report of the Company for
the six months ended 31 May 2024 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 2024, 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
31 July 2024
CONDENSED INCOME STATEMENT
Six months ended Six months ended Year ended
31 May 2024 (unaudited) 31 May 2023 (unaudited) 30 November 2023
(audited)
Note Revenue Capital Total Total Total
£'000 £'000 £'000 £'000 £'000
REVENUE
Investment interest 953 - 953 946 1,722
Total revenue 953 - 953 946 1,722
Losses on investments held at fair value through profit or loss 5 - - - (198) (203)
Amortisation of exit fees - - - 32 32
Total net income 953 - 953 780 1,551
Expenditure
Investment adviser fee (31) - (31) (33) (65)
Impairments on loans held at amortised cost 6
(29) (1) (30) (356) (557)
Other expenses (248) - (248) (240) (513)
Total expenditure (308) (1) (309) (629) (1,135)
Profit/(loss) before finance costs and taxation
645 (1) 644 151 416
Finance costs
Interest payable (39) - (39) (146) (155)
Profit/(loss) before taxation 606 (1) 605 5 261
Taxation - - - - -
Profit/(loss) for the period/year 606 (1) 605 5 261
Basic earnings per share 3 2.38p (0.00)p 2.38p 0.02p 0.97p
The notes form an integral part of the financial statements.
The total column of this statement represents the Company's Statement of
Comprehensive Income, prepared in accordance with UK-adopted International
Accounting Standards 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.
CONDENSED Statement of Financial Position
As at As at As at
31 May 31 May 30 November
2024 2023 2023
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Non-current assets 6 3,064 5,662 6,208
Loans at amortised cost
3,064 5,662 6,208
Current assets
Investments held at fair value through profit or loss 5 3,056 3,908 3,024
Loans at amortised cost 6 14,759 14,145 10,496
Other receivables and prepayments 16 13 13
Cash and cash equivalents 239 807 1,154
18,070 18,873 14,687
Total assets 21,134 24,535 20,895
Current liabilities
Loan facility (1,125) (2,900) -
Other payables and accrued expenses (138) (147) (191)
Total liabilities (1,263) (3,047) (191)
Net assets 19,871 21,488 20,704
Share capital and reserves
Share capital 7 269 269 269
Share premium 9,094 9,094 9,094
Special distributable reserve 10,973 12,764 12,267
Capital reserve (1,071) (1,153) (1,059)
Revenue reserve 606 514 133
Equity shareholders' funds 19,871 21,488 20,704
Net asset value per ordinary share 8 79.55p 79.81p 78.92p
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 31 July 2024.
They were signed on its behalf by:
John Newlands
Chairman
CONDENSED Statement of Changes in Equity
For the six months ending Special distributable
31 May 2024 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 12,267 (1,059) 133 20,704
Total comprehensive profit for the period:
Profit for the period - - - (1) 606 605
transactions with owners recognised directly in equity
Dividends paid (note 4) - - (386) - (133) (519)
Repurchase of shares into treasury - - (908) (11) - (919)
At 31 May 2024 269 9,094 10,973 (1,071) 606 19,871
For the six months ending Special distributable
31 May 2023 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 12,849 (644) 453 22,021
Total comprehensive profit for the period:
Profit for the period - - - (509) 514 5
transactions with owners recognised directly in equity
Dividends paid (note 4) - - (85) - (453) (538)
At 31 May 2023 269 9,094 12,764 (1,153) 514 21,488
For the year ending Special distributable
30 November 2023 Share capital Share premium reserve Capital reserve Revenue reserve Total
(unaudited) £'000 £'000 £'000 £'000 £'000 £'000
At beginning of the YEAR 269 9,094 12,849 (644) 453 22,021
Total comprehensive profit for the year:
Profit for the year - - - (411) 672 261
transactions with owners recognised directly in equity
Dividends paid (note 4) - - (85) - (992) (1,077)
Repurchase of shares into treasury - - (497) (4) - (501)
At 30 November 2023 269 9,094 12,267 (1,059) 133 20,704
Condensed Cash Flow Statement
Six months to Six months to Year ending
31 May 31 May 30 November
2024 2023 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating activities
Profit before taxation 605 5 261
Losses on investments held at fair value through profit and loss - 215 213
Impairments on loans at amortised cost 1 378 592
Gains on investments held at fair value through profit and loss - (17) (10)
Uplifts on loans at amortised cost - (35) (35)
Amortisation of exit fees - (32) (32)
Interest expense 39 146 155
Changes in working capital
Increase in loan interest receivable on investments held at fair value through (53) (109) (147) (35) (53) (93)
profit and loss
Increase in loan interest receivable on loans at amortised cost (66) (207) (249)
Increase in other receivables
(238) (66) (133)
(3) (2) (2)
(Decrease)/increase in other payables (53) 38 82
Net cash inflow from operating activities AFTER TAXATION 316 577 998
Investing activities
Loans given (3,291) (1.668) (3,369)
Loans repaid 2,412 3,044 8,620
Net cash (OUTFLOW)/INflow from investing activities (879) 1,376 5,251
Financing
Equity dividends paid (519) (538) (1,077)
Repurchase of shares into Treasury (919) - (501)
Bank loan drawn down 2,325 - -
Repayment of bank loan (1,200) (1,100) (4,000)
Interest paid (39) (146) (155)
Net cash outfloW from financing (352) (1,784) (5,733)
(DEcrease)/INcrease in cash and cash equivalents
(915) 169 516
Cash and cash equivalents at the start of the year 1,154 638 638
Cash and cash equivalents at the end of the period/year 239 807 1,154
Increase in other receivables
(35)
(53)
(93)
(238)
(66)
(133)
(3)
(2)
(2)
(Decrease)/increase in other payables
(53)
38
82
Net cash inflow from operating activities AFTER TAXATION
316
577
998
Investing activities
Loans given
(3,291)
(1.668)
(3,369)
Loans repaid
2,412
3,044
8,620
Net cash (OUTFLOW)/INflow from investing activities
(879)
1,376
5,251
Financing
Equity dividends paid
(519)
(538)
(1,077)
Repurchase of shares into Treasury
(919)
-
(501)
Bank loan drawn down
2,325
-
-
Repayment of bank loan
(1,200)
(1,100)
(4,000)
Interest paid
(39)
(146)
(155)
Net cash outfloW from financing
(352)
(1,784)
(5,733)
(DEcrease)/INcrease in cash and cash equivalents
(915)
169
516
Cash and cash equivalents at the start of the year
1,154
638
638
Cash and cash equivalents at the end of the period/year
239
807
1,154
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 2023. 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 2023, which were prepared in accordance with
UK-adopted International Accounting Standards 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 2024 (31 May 2023: £nil; 30 November 2023: £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 25,515,318 ordinary shares, being the weighted
average number of ordinary shares in issue throughout the period.
Six months ended 31 May 2024 Six months ended 31 May 2023 Year ended 30 November 2023
£'000 Pence per share £'000 Pence per share £'000 Pence per share
Revenue earnings 606 2.38 514 1.91 672 2.5
Capital earnings (1) 0.00 (509) (1.89) (411) (1.53)
Total earnings 605 2.38 5 0.02 261 0.97
Average number of shares in issue 25,515,318 26,924,063 26,907,053
Earnings for the period to 31 May 2024 should not be taken as a guide to the
results for the year to 30 November 2024.
4. DIVIDENDS
Six months ended 31 May 2024 Six months ended 31 May 2023 Year ended 30 November 2023
£'000 £'000 £'000
In respect of the prior year:
Interim dividend for the quarter ended August, paid in December 262 269 269
Interim dividend for the quarter ended November, paid in March 257 269 269
In respect of the current year:
Interim dividend for the quarter ended February, paid in June - - 269
Interim dividend for the quarter ended May, paid in September - - 270
Total 519 538 1,077
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 2024,
the Company declared an interim dividend of 1.00 pence per share for the
quarter ended 28 February 2024, paid on 28 June 2024.
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 at least 25.1% or has
an exit fee mechanism for four companies.
31 May 31 May 30 November
2024 2023 2023
£'000 £'000 £'000
Opening Balance 3,024 4,874 4,874
Loans deployed - 59 59
Principal repayments (2) (883) (1,802)
Movements in interest receivable 34 53 93
Unrealised losses on investments held at fair value through profit or loss - (198) (203)
Amortisation of exit fees - 3 3
Total investments held at fair value through profit and loss 3,056 3,908 3,024
Split:
Non-current assets: Investments held at fair value through profit and loss due - - -
for repayment after one year
Current assets: Investments held at fair value through profit and loss due for 3,056 3,908 3,024
repayment under one year
6. LOANS AT AMORTISED COST
31 May 31 May 30 November
2024 2023 2023
£'000 £'000 £'000
Opening Balance 16,704 20,607 20,607
Loans deployed 3,291 1,609 3,310
Principal repayments (2,410) (2,161) (6,818)
Movements in interest receivable 268 79 133
Movement in impairments (30) (356) (557)
Amortisation of exit fees - 29 29
Total Loans at amortised cost 17,823 19,807 16,704
Split:
Non-current assets: Loans at amortised cost due for repayment after one year 3,064 5,662 6,283
14,759 14,145 10,421
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
year, allowances for impairment losses amounted to £30,000 (May 2023:
£356,000; November 2023: £557,000).
7. SHARE CAPITAL
Allotted, issued and fully paid:
31 May 2024 31 May 2023 30 November 2023
£'000 £'000 £'000
24,978,201 (May 2023: 26,924,063; November 2023: 26,234,225) ordinary shares 249 269 262
of 1p each
1,945,862 (May 2023: nil; November: 689,838) ordinary shares of 1p held in 20 - 7
Treasury
269 269 269
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).
8. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per ordinary share is based on net assets of £19,870,979
(31 May 2023: £21,488,034; 30 November 2023: £20,703,963) and on 24,978,201
ordinary shares (31 May 2023: 26,924,063; 30 November 2023: 26,234,225), 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 2024 (31 May 2023: £43,000; 30 November
2023: £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 £31,000 investment adviser's fee during the
period (31 May 2023: £33,000; 30 November 2023: £65,000) and £nil was
payable at the period end (31 May 2023: £nil; 30 November 2023: £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:
· Thursby Homes (Springs)
The Company owns 25.1% of the borrower Thursby Homes (Springs) Ltd. The loan
amount outstanding as at 31 May 2024 was £36,000 (31 May 2023: £705,000; 30
November 2023: £36,000). Transactions in relation to loans repaid during the
period amounted to £nil (31 May 2023: £626,000; 30 November 2023: £1.5).
Interest due to be received as at 31 May 2024 was £nil (31 May 2023:
£209,000; 30 November 2023: £1,000). Interest received during the period
amounted to £1,000 (31 May 2023: £27,000; 30 November 2023: £33,000).
· Northumberland
The Company owns 25.1% of the borrower Northumberland Ltd. The loan amount
outstanding as at 31 May 2024 was £40,000 (31 May 2023: £69,000; 30 November
2023: £42,000). Transactions in relation to loans repaid during the period
amounted to £nil (31 May 2023: £258,000; 30 November 2023: £288,000).
Interest due to be received as at 31 May 2024 was £3,000 (31 May 2023:
£2,000; 30 November 2023: £2,000). Interest received during the period
amounted to £4,000 (31 May 2023: £3,000; 30 November 2023: £3,000).
· Coalsnaughton
The Company owns 40.17% (31 May 2023: 40.17%; 30 November 2023: 40.17%) of the
borrower Kudos Partnership. The loan amount outstanding as at 31 May 2024 was
£2.0m (31 May 2023: £2.0m; 30 November 2023: £2.0m). Transactions in
relation to loans made during the period amounted to £nil (31 May 2023:
£15,000; 30 November 2023: £nil). Interest due to be received as at 31 May
2024 was £459,000 (31 May 2023: £378,000; 30 November 2023: £424,000).
Interest received during the period amounted to £54,000 (31 May 2023:
£54,000; 30 November 2023: £108,000).
· Oswald Street
The Company owns 25.1% of the Riverfront Property Limited Partnership. The
loan amount outstanding as at 31 May 2024 was £448,000 (31 May 2023:
£447,000; 30 November 2023: £448,000). Transactions in relation to loans
made during the period amounted to £nil (31 May 2023: £59,000; 30 November
2023: £59,000). Interest due to be received as at 31 May 2024 was £8,000 (31
May 2023: £8,000; 30 November 2023: £8,000). Interest received during the
period amounted to £25,000 (31 May 2023: £22,000; 30 November 2023:
£47,000).
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. 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
2023, 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 2023 have been reported on by the Company's auditor
or delivered to the Registrar of Companies.
For further information please contact:
Apex Fund Administration Services (UK) Limited, Secretary
31 July 2024
ENDS
Interim Report 2024
The Interim Report 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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