Source - LSE Regulatory
RNS Number : 7955T
Circle Property PLC
29 November 2021
 

 

29 November 2021

Circle Property Plc

("Circle", the "Company" or the "Group")

 

Interim Results for the six months ended 30 September 2021

 

                REGIONAL FOCUSED PORTFOLIO PROVIDES PLATFORM FOR GROWTH IN ASSET VALUES AND SHAREHOLDER RETURNS

 

 

Circle Property Plc (AIM: CRC), which invests in, develops and actively manages well-located regional office assets, is pleased to announce interim results for the six months ended 30 September 2021.

 

John Arnold, Chief Executive of Circle Property Plc, said:

 

"Our regional office portfolio has performed resiliently in the period. As increasing numbers of workers have returned to their offices, the importance of having an environment to meet, collaborate, mentor and train employees is clear. Whilst working patterns have changed, the office continues to play an integral role for many businesses. 

 

It has been a very active period for the Company in terms of asset management. By the end of this calendar year we expect to have completed on the disposal of One Castlepark in Bristol for a consideration of £20 million. With the majority of the proceeds from this sale being allocated to debt repayment, our degearing is well advanced. This, together with the increased interim dividend ahead of 2019 and 2020 levels, shows the positive momentum made by the Company during the period."

 

 Financial Highlights: A solid performance against an improving backdrop

 

·      Unaudited estimated Net Asset Value ("NAV") per share of £2.74 (FY 2021: £2.74 / H1 2020: £2.83). This figure includes the full impact of disposals in the period

 

·      On a like-for-like basis (excluding completed disposals) the gross portfolio valuation as at 30 September 2021 was marginally down by 0.5% to £130 million in the period

 

·      Group LTV reflected 46.6% (excluding cash at bank) with a cash balance of £8.6 million reflecting a net LTV of 40%. Group LTV expected to reduce further following the completion of the disposal of One Castle Park in December 2021.

 

·      Operating profit after revaluation of investment properties of £2.1 million (H1 2020: £0.146 million)

 

·      Profit before tax of £1.3 million (H1 2020: loss £0.7 million)

 

·      Earnings per share of 4 pence (H1 2020: 2 pence)

 

·      Proposed interim dividend of 3.5p per share, ahead of 2020 and 2019 pay-outs (H1 2020: 2.5p / H1 2019: 3.3p) 

 

·      Rental income of £3.2 million (H1 2020: £3.9 million), down largely due to disposals and corresponding loss of income

 

Operational Highlights: Active Portfolio Management delivered significant gains

 

·      Rent collection for the March, June and September 2021 quarters was 93%, 91% and 80% respectively. Discussions continue around outstanding rental arrears

 

·      84.02% of total portfolio (including K3 at Kents Hill, Milton Keynes, a development in progress) is let and incoming producing

 

·      Asset management projects:

 

Refurbishment of K3 Kents Hill, Milton Keynes underway, with £2.2 million planned development costs and completion scheduled for Summer 2022

 

High-spec, modern fit-outs undertaken at Concorde Park, Maidenhead and 36 Great Charles Street, Birmingham

 

·      100% of the Company's portfolio is within the regional office sector, including a regional conference centre, and 88.35% located in Milton Keynes, Bristol, Birmingham and Maidenhead & is flexible in terms of 1-5,000sq.ft. with ability to be sub-divided.

 

Disposals during the period above book: A busy period for portfolio management

 

·      August 2021: the Group exchanged contracts on the sale of One Castle Park, Bristol to Boultbee Brooks (Castle Park) Limited c/o Boultbee Brooks Real Estate, for a consideration of £20 million representing a 3.9% increase on 31 March 2021 valuation of £19.25 million, with completion due in December 2021

 

·      September 2021: Sale of 135 Aztec West in Bristol to Assura Aspire Limited. The sale price of £3.961 million represented a 156% increase (pre-refurbishment cost) and a 62% increase (post refurbishment cost) on 31 March 2021 valuation of £1.55 million

 

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the UK version of the EU Market Abuse Regulation (2014/596) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended and supplemented from time to time.

 

Circle Property Plc              

 +44 (0)207 930 8503

John Arnold, CEO

Edward Olins, COO

 

 

 

Cenkos Securities

+44 (0) 207 397 8900

Katy Birkin 

Mark Connelly

  

 

 

Radnor Capital Partners

+44 (0) 203 897 1830

Joshua Cryer

Iain Daly

 

 

 

Camarco

+44 (0) 203 757 4992

Ginny Pulbrook

Rosie Driscoll

Toby Strong

 

 

About Circle Property Plc

 

Circle focusses on acquiring assets in regional cities, many of which have significant office supply constraints, and on office assets with active management potential (refurbishment opportunities, under-rented or vacant properties or short leases), rather than just maximising initial rental yields.

 

Circle is not a Real Estate Investment Trust (REIT) and can actively recycle proceeds from asset sales into its refurbishment and redevelopment pipeline, as well as future investment opportunities, therefore targeting a broader range of returns for shareholders, which are primarily driven by NAV growth.

 

As well as already delivering substantial increases in NAV, the Company's portfolio has significant reversionary potential with current total estimated rental values of £10.92 million per annum, compared to contracted rent of £8.70 million at 31 March 2021. The Company has a portfolio of 12 regional commercial property investment and development assets in the UK valued at £130 million as at 30 September 2021.

 

 

 

Chief Executive's Statement

 

Notwithstanding the understandable caution in the lettings market associated with COVID-19, we have made good progress in the period. The Company achieved the sale of 135 Aztec West, Bristol, significantly above valuation at 62% above book, following the letting of the entire building to Fertility Bristol Limited, which alone has offset a 0.5% valuation downturn in the Company's total portfolio. All asset sales during the period have been ahead of their respective book values.

 

The development at K3 Kents Hill is proceeding well and we have already received strong tenant interest. The development will cost £2.2 million funded through the Company's cash resources and the project is now scheduled for completion in Summer 2022. This targeted spend will deliver an attractive space which we are confident will achieve a good rental income. Moreover, the completed high-spec, modern fit-outs at Concorde Park, Maidenhead and 36 Great Charles Street, Birmingham are beginning to register increasing levels of tenant interest with higher levels of viewings and requests for landlords letting proposals.

 

We have been able to maintain exceptionally high rental recovery in excess of 90% during the period. Conversations and negotiations around rental arrears continue and we are confident of a positive outcome, particularly as office attendance and usage increases. The majority of our tenants remain firmly of the view that the office plays a central part in the running of their respective businesses. Whilst having the flexibility to work some of the time from home can be advantageous in certain circumstances, dependent upon the individual and the nature of the work, the view remains that team building, collaboration, creativity, employee assessment, mentoring and training is most effective within an office environment. Given all of this, and reflected in our solid financial metrics, we remain of the view that whilst working patterns may adapt, the office is very much here to stay.

 

The Company's investment and development portfolio, which is almost entirely focused in the regional office sector with no exposure to retail (other than two public houses and one restaurant in Birmingham), was valued, on a like-for like basis (excluding completed disposals) at 30 September 2021 at £130 million. Net asset value per share ("NAV") has remained stable reflecting an unaudited estimated NAV per share of £2.74 (FY 2021: £2.74). This figure includes the full impact of disposals in the period.

 

The Company has a financing facility in place with RBS and HSBC for £100 million. The senior revolving facility is for £65 million (of which the Company has drawn £60.525 million) with an "accordion" option for a further £35 million. At 30 September 2021, the Group's LTV reflected 46.6% (excluding cash at bank) and the Group had a cash balance of £8.6 million reflecting a net LTV of 40%. Post period, on 18 October 2021, the Group made a repayment of £1.98 million against its financing facility. The Board expects the Group's LTV to reduce further following the completion of the disposal of One Castle Park which is expected in December 2021. 

 

As previously announced, the Company is targeting a further reduction in gearing through targeted asset sales at valuations at or above book value and achieving lettings at estimated rental values (ERV). There are a number of assets that have benefited from our active management approach, with added value following redevelopment, lease restructures or renewals which we expect to be highly sought after, particularly as the office investment market improves post COVID-19 uncertainties.

 

The Board declares an interim dividend of 3.5p, which will be paid on 14 January 2022 to shareholders on the register on 10 December 2021, with an ex-dividend date of 9 December 2021. This dividend is an increase of 40% on 2020's COVID-19 impacted interim dividend of 2.5p and importantly, 6% ahead of 2019's interim dividend of 3.3p.

 

Notwithstanding the ongoing impacts of the COVID-19 pandemic, we remain optimistic that the macroeconomic recovery, and in turn the regional office market, is heading in the right direction. Whilst the letting market is recovering more slowly, we believe that the flexibility offered by our assets and their inherently smaller floorplates (1,000-5,000 sq.ft) will be key in converting enquiries into lettings. The Board remain committed to maximising returns and delivering value to our shareholders.

 

 

 

 

Condensed consolidated statement of comprehensive income

for the 6 months ended 30 September 2021

 

 

 

6 months to

30 September

6 months to

30 September

12 months to

31 March

 

Note

2021

(unaudited)

2020

(unaudited)

2021

(audited)

 

£

£

£

 

Rental income

 

4

 

3,233,143

 

3,919,307

 

7,657,830

Other income

4

983,509

1,010,022

2,233,842

 

 

4,216,652

4,929,329

9,891,672

Property expenses

5

(1,219,063)

(1,269,188)

(2,356,221)

Net rental income

 

2,997,589

3,660,141

7,535,451

Administrative expenses

6

(944,649)

(978,840)

(2,615,926)

Operating profit

 

2,052,940

2,681,301

4,919,525

Gain on disposal of investment properties

 

599,446

-

263,446

Gain on asset held-for-sale

12

750,000

-

-

Loss on revaluation of investment properties

11

(1,300,804)

(2,534,903)

(6,224,003)

Operating profit/(loss) after revaluation of investment

properties

2,101,582

146,398

(1,041,032)

Finance income

7

26

2,083

2,094

Finance costs

8

(760,934)

(884,516)

(1,696,110)

Net finance costs

 

(760,908)

(882,433)

(1,694,016)

Profit/(loss) for the period before taxation

 

1,340,674

(736,035)

(2,735,048)

Taxation

9

(156,562)

113,714

199,729

Total comprehensive profit/(loss) for the year

 

1,184,112

(622,321)

(2,535,319)

 

Earnings/(loss) per share

 

10

 

0.04

 

(0.02)

 

(0.09)

 

NAV per share

 

 

2.74

 

2.83

 

2.74

 

There is no comprehensive income other than that included in the profit for the period. All of the profit for the period is attributable to the owners of the Company.

 

All items in the above statement derive from continuing operations.

Condensed consolidated statement of financial position

as at 30 September 2021

 

 

Note

30 September

30 September

31 March

 

2021

(unaudited)

2020

(unaudited)

2021

(audited)

 

£

£

£

Non-current assets

 

 

 

 

Investment properties

11

99,243,539

127,111,883

121,289,149

Right of use assets

 

2,316

84,540

61,039

Property plant and equipment

 

52,940

55,118

54,410

Lease incentives and receivables

13

9,966,711

10,128,672

10,127,528

Deferred tax asset

 

1,191,464

1,298,659

1,291,615

 

 

110,456,970

138,678,872

132,823,741

Current assets

 

 

 

 

Trade and other receivables

13

2,731,180

2,683,828

2,982,923

Assets held for sale

12

20,000,000

-

-

Cash and cash equivalents

 

8,566,762

4,543,692

7,522,804

 

 

31,297,942

7,227,520

10,505,727

Total assets

 

141,754,912

145,906,392

143,329,468

 

Equity

 

 

 

 

Stated capital

 

42,542,179

42,542,179

42,542,179

Treasury share reserve

 

1,170,961

668,456

1,047,684

Retained earnings

 

33,866,695

37,000,805

33,814,453

Total equity

 

77,579,835

80,211,440

77,404,316

Non-current liabilities

 

 

 

 

Borrowings

14

60,249,656

61,822,537

61,922,684

Lease liabilities for right of use assets

 

-

47,504

28,601

Deferred tax liability

 

379,226

768,913

482,171

 

 

60,628,882

62,638,954

62,433,456

Current liabilities

 

 

 

 

Trade and other payables

15

3,539,026

3,011,500

3,450,969

Lease liabilities for right of use assets

 

7,169

44,498

40,727

 

 

3,546,195

3,055,998

3,491,696

Total liabilities

 

64,175,077

65,694,952

65,925,152

 

 

Total liabilities and equity

 

 

 

141,754,912

 

 

145,906,392

 

 

143,329,468

 

The condensed consolidated interim financial statements were approved by the Board of Directors on [26] November 2021.

Condensed consolidated statement of changes in equity

for the 6 months ended 30 September 2021

 

 

Stated capital

Treasury share capital

Share-based

payment reserve

Retained earnings

 

 

Total

£

£

£

£

£

As at 1 April 2020

42,162,178

380,001

516,048

37,623,126

80,681,353

Loss for the period

-

-

-

(622,321)

(622,321)

Share-based payments

-

-

152,408

-

152,408

As at 30 September 2020

42,162,178

380,001

668,456

37,000,805

80,211,440

Loss for the period

-

-

-

(1,912,998)

(1,912,998)

Share-based payments

-

-

379,228

-

379,228

Dividends

-

-

-

(1,273,354)

(1,273,354)

As at 31 March 2021

42,162,178

380,001

1,047,684

33,814,453

77,404,316

Profit for the period

-

-

-

1,184,112

1,184,112

Share-based payments

-

-

123,277

-

123,277

Dividends

-

-

-

(1,131,870)

(1,131,870)

As at 30 September 2021

42,162,178

380,001

1,170,961

33,866,695

77,579,835

Condensed consolidated statement of cash flows

for the 6 months ended 30 September 2021

 

 

6 months to

6 months to

12 months to

 

30 September

30 September

31 March

 

2021

(unaudited)

2020

(unaudited)

2021

(audited)

 

£

£

£

 

Cash flows from operating activities

 

 

 

Profit/(loss)for the period before taxation

1,340,674

(736,035)

(2,735,048)

Adjustments for:

 

 

 

Finance income

(26)

(2,083)

(2,094)

Finance expense

760,934

884,516

1,696,110

Depreciation

7,785

7,145

14,167

Amortisation of right of use assets

18,700

23,502

47,005

Loss on revaluation of investment properties

1,300,804

2,534,903

6,224,003

Gain on disposal of investment properties

(599,446)

-

(263,446)

Gain on revaluation of assets held for sale

(750,000)

-

-

Share based payments

123,277

152,408

531,636

Increase in trade and other receivables

412,560

(852,315)

(1,150,266)

Increase/(decrease) in trade and other payables

(334,478)

(138,347)

185,615

Cash generated from operating activities

2,280,784

1,873,694

4,547,682

Interest and other finance costs paid

(655,725)

(858,649)

(1,578,755)

Interest received

26

2,083

2,094

Taxation paid

-

(116,773)

(151,475)

Net cash from operating activities

1,625,085

900,355

2,819,546

 

Cash flows from investing activities

 

 

 

Cost of refurbishment of investment properties

(1,084,488)

(311,312)

(1,459,489)

Proceeds from disposal of investment properties

3,436,621

-

3,513,446

Cost of additions of property plant and equipment

(6,315)

-

(6,314)

Net cash from/(used) in investing activities

2,345,818

(311,312)

2,047,643

 

Cash flows from financing activities

 

 

 

Repayment of borrowings

(1,775,000)

-

-

Payment of lease liabilities

(20,075)

(25,680)

(51,360)

Drawdown of borrowings

-

1,000,000

1,000,000

Dividends paid

(1,131,870)

-

(1,273,354)

Net cash (used in)/from financing activities

(2,926,945)

974,320

(324,714)

 

Net (decrease)/increase in cash and cash equivalents

 

1,043,958

 

1,563,363

 

4,542,475

Cash and cash equivalents at the beginning of the period

7,522,804

2,980,329

2,980,329

Cash and cash equivalents at the end of the period

8,566,762

4,543,692

7,522,804

Notes to the condensed consolidated interim financial statements

for the 6 months ended 30 September 2021

 

1 General information

These condensed consolidated interim financial statements are for Circle Property Plc ("the Company") and its subsidiary undertakings (together referred to as the "Group").

 

The Company's shares are admitted to trading on AIM, a market operated by the London Stock Exchange plc. The Company is domiciled and registered in Jersey, Channel Islands. The address of its registered office is 3rd Floor, Standard Bank House, 47- 49 La Motte Street, St Helier, Jersey, JE2 4SZ.

 

The nature of the Company's operations and its principal activities are that of property investment in the UK.

 

2 Principal accounting policies

 

Basis of preparation

The condensed consolidated interim financial statements are prepared under the historical cost convention and on a going concern basis and in accordance with International Financial Reporting Standards and IFRIC interpretations adopted for use in the European Union ("IFRS") and with those parts of the Companies (Jersey) Law, 1991 applicable to companies preparing their accounts under IFRS.

 

The condensed consolidated interim financial statements contained in this document do not constitute statutory accounts under Companies (Jersey) Law 1991. In the opinion of the directors, the condensed consolidated interim financial statements for this period fairly presents the financial position, result of operations and cash flows for this period.

 

 

The condensed consolidated interim financial statements have not been audited, nor have they been reviewed by the Company's auditors in accordance with the International Standard on Review Engagements 2410 issued by the Auditing Practices Board.

 

Statutory financial statements for the year ended 31 March 2021 were approved by the Board of Directors on 6 July 2021. The report of the auditors on those financial statements was unqualified.

 

Statement of compliance

The Interim Report includes the consolidated interim financial statements which have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 March 2021, which have been prepared in accordance with IFRS as adopted by the European Union and applicable law.

 

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief Executive's statement. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in these financial statements.

 

The Directors have assessed the Group's ability to continue as a going concern, including an assessment of the on-going impact of Covid-19. In making their assessment the Directors have modelled the Group's cash forecasts based on the circumstances of each tenant on an individual basis. Rental collections have been monitored on a weekly basis with ongoing communication with tenants in respect of the collection of rental arrears. Loan covenants have been stress tested taking into consideration a potential reduction in the valuation of the Group's property portfolio.

 

Based on these considerations the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they have adopted the going concern basis in preparing the financial statements.

New Standards adopted at 1 January 2021

There are no accounting pronouncements which have become effective from 1 January 2021 that have a significant impact on the Group's interim condensed consolidated financial statements.

 

Significant accounting policies

The accounting policies applied by the Group in these half-yearly results are the same as those applied by the Group in its consolidated financial information in its 2021 Annual Report and Accounts, with the exception of IFRS 5 - Non-current assets held-for-sale and discontinued operations.

 

IFRS 5 - Non-current assets held-for-sale and discontinued operations.

Assets are classified as held for sale when:

 

Ÿ Management is committed to a plan to sell

Ÿ The asset is available for immediate sale

Ÿ An active programme to locate a buyer is initiated

Ÿ The sale is highly probable, within 12 months of classification as held for sale

Ÿ The asset is being actively marketed for sale at a sales price reasonable in relation to its fair value

Ÿ Actions required to complete the plan indicate that it is unlikely that plan will be significantly changed or withdrawn

 

Investment properties classified as held for sale are measured at fair value in accordance with the measurement criteria of IAS40.

 

Assets held for sale are derecognised when significant risks and rewards attached to the asset have transferred from the group which is on completion of contracts.

 

Areas of estimates and judgement

In preparing these condensed consolidated interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

 

The judgements, estimates and assumptions applied in the Group's consolidated interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Group's last annual financial statements for the year ended 31 March 2021, with the exception of the asset reclassification under IFRS 5 - Non-current assets held-for-sale and discontinued operations.

 

3 Operating segments

 

During the period the Group operated in one geographical segment, which is the United Kingdom, and one reporting segment, which is investment in commercial property. Therefore no segmental reporting is required.

 

 

4 Revenue

6 months to

30 September

6 months to

30 September

12 months to

31 March

 

2021

(unaudited)

2020

(unaudited)

2021

(audited)

 

£

£

£

 

Rental income

 

3,337,533

 

3,290,782

 

6,906,571

Lease incentive adjustment

(104,390)

628,525

751,259

 

3,233,143

3,919,307

7,657,830

Insurance recovery

100,268

71,130

142,762

Service charge income

798,241

856,174

1,633,071

Other income

85,000

82,718

458,009

 

983,509

1,010,022

2,233,842

 

4,216,652

4,929,329

9,891,672

5 Property expenses

6 months to

30 September

6 months to

30 September

12 months to

31 March

 

2021

(unaudited)

2020

(unaudited)

2021

(audited)

 

£

£

£

 

Property expenses

 

33,292

 

6,729

 

26,392

Property service charges

221,610

158,495

331,904

Property repairs and maintenance costs

28,753

89,832

94,556

Property insurance

75,048

79,630

168,330

Property rates

62,119

78,328

101,968

Recoverable service charge costs

798,241

856,174

1,633,071

 

1,219,063

1,269,188

2,356,221

 

 

6 Administrative expenses

6 months to

30 September

6 months to

30 September

12 months to

31 March

 

2021

(unaudited)

2020

(unaudited)

2021

(audited)

 

£

£

£

 

Staff costs

 

506,001

 

536,032

 

1,657,273

Administration fees

153,200

152,311

305,540

Legal and professional fees

176,914

214,488

415,687

Audit fees

33,500

-

67,000

Accountancy fees

2,445

3,484

8,016

Rent, rates and other office costs

9,113

24,891

26,763

Other overheads

36,991

16,987

74,475

Depreciation of tangible fixed assets

7,785

7,145

14,167

Amortisation of right of use assets

18,700

23,502

47,005

 

944,649

978,840

2,615,926

 

 

7 Finance income

6 months to

30 September

6 months to

30 September

12 months to

31 March

 

2021

(unaudited)

2020

(unaudited)

2021

(audited)

 

£

£

£

 

Bank interest

 

26

 

2,083

 

2,094

 

26

2,083

2,094

 

 

8 Finance costs

6 months to

30 September

6 months to

30 September

12 months to

31 March

 

2021

(unaudited)

2020

(unaudited)

2021

(audited)

 

£

£

£

 

Loan interest

 

643,284

 

767,484

 

1,420,734

Loan commitment fees

17,739

12,479

22,670

Amortisation of lending costs

101,972

100,697

200,844

Annual agency fee

-

-

45,000

Interest on lease liabilities

(2,061)

3,856

6,862

 

760,934

884,516

1,696,110

During the period, the Group has terminated a rental agreement lease for St James Place, with the termination date being the 30 June 2021.

 

This rental agreement termination required the de-recognition of the lease liability and right of use asset that was recognised in line with IFRS 16 - Leases.

 

The impact of the de-recognition has been included in the table above.

 

 

9 Taxation

 

 

 

6 months to

 

 

 

6 months to

 

 

 

12 months to

 

30 September

30 September

31 March

 

2021

(unaudited)

2020

(unaudited)

2021

(audited)

 

£

£

£

 

Current tax

 

159,356

 

215,426

 

409,109

Deferred tax (credit) / charge

(2,794)

(329,140)

(608,838)

 

156,562

(113,714)

(199,729)

 

 

10 Earnings per share

 

 

 

 

Basic earnings per share has been calculated on profit after tax attributable to ordinary shareholders for the period (as shown on the condensed consolidated statement of comprehensive income) and the weighted average number of ordinary shares in issue during the period.

 

6 months to

30 September

6 months to

30 September

12 months to

31 March

2021

(unaudited)

2020

(unaudited)

2021

(audited)

£

£

£

 

Profit/(loss) for the period

 

1,184,112

 

(622,321)

 

(2,535,319)

 

Weighted average number of shares (excluding treasury shares)

 

28,296,762

 

28,296,762

 

28,296,792

 

Earnings per ordinary share:

 

0.04

 

(0.02)

 

(0.09)

 

In the opinion of the Board, treasury shares held to satisfy share awards to management currently do not have any material value and hence do not have any dilutive effect. Therefore no diluted earnings per share has been presented.

 

 

11 Investment properties

30 September

30 September

31 March

 

£

£

£

 

Opening fair value per valuation report

 

132,150,000

 

139,450,000

 

139,450,000

Cost of refurbishment of investment properties

1,342,369

306,378

1,422,744

Cost of acquisition of investment property

-

-

-

Disposal of investment properties

(2,837,175)

-

(3,250,000)

Loss on revaluation of investment properties

(1,300,804)

(2,534,903)

(6,224,003)

Lease incentive amortisation

(104,390)

628,525

751,259

Reclassification of asset held for sale

(19,250,000)

-

-

Fair value of investment properties per valuation report

110,000,000

137,850,000

132,150,000

 

Unamortised lease incentives

 

(10,756,461)

 

(10,738,117)

 

(10,860,851)

Carrying value

99,243,539

127,111,883

121,289,149

The fair value of the Group's investment properties at 30 September 2021 has been arrived at on the basis of valuation carried out by Savills (UK) Limited. The valuation was carried out in accordance with the Practice Statements contained in the Appraisal and Valuation Standards as published by the RICS. In forming their opinion of the fair value, the independent valuer's had regard to the current best use of the property, its investment attributes and recent comparable transactions. The valuation was carried out using the "All Risks Yield" method taking into consideration both sales and rental evidence and formulating the opinion of market value taking into account the properties' locations, specifications and specific characteristics.

 

At 30 September 2021, the fair value of the Group's investment properties per the valuation report amounted to£110,000,000 (2020: £137,850,000). The difference between the fair value of the investment properties per the valuation report and the fair value per the balance sheet of £10,756,461 (2020: £10,738,117) relates to unamortised lease incentives which are recorded in the financial statements within non-current and current assets.

 

The Group has pledged all of its investment properties to secure banking facilities granted to the Group as detailed in note 14.

 

 

12 Assets held for sale

30 September

30 September

31 March

 

2021

2020

2021

 

(unaudited)

£

(unaudited)

£

(audited)

£

 

Opening balance

 

-

 

-                             -

Reclassification of One Castle Park, Bristol

19,250,000

-                             -

Gain on revaluation of asset held for sale

750,000

-                             -

Closing balance

20,000,000

-                             -

 

On 31 August 2021, the Group exchanged contracts on the sale of One Castle Park, Bristol to Boultbee Brooks (Castle Park) Limited c/o Boultbee Brooks Real Estate for a consideration of £20,000,000.

 

Completion is anticipated to take place on or around 16 December 2021.

 

13 Lease incentives and receivables

 

 

30 September

 

 

30 September

 

 

31 March

 

£

£

£

 

Non-current

Lease incentives

 

 

9,966,711

 

 

10,128,672

 

 

10,127,528

 

Current

 

 

 

Lease incentives

789,750

609,445

733,323

Amounts due from property agents

51,586

532,692

-

Tenant deposits

272,662

271,017

272,824

Amounts due from tenants

1,379,759

1,124,020

1,695,925

Other receivables

237,423

146,654

280,851

 

2,731,180

2,683,828

2,982,923

 

 

14 Borrowings

30 September

30 September

31 March

 

£

£

£

 

Brought forward

 

61,922,684

 

60,721,840

 

60,721,840

Loan repayments

(1,775,000)

-

-

Loan drawdowns

-

1,000,000

1,000,000

Amortisation of lending costs

101,972

100,697

200,844

Total borrowings

60,249,656

61,822,537

61,922,684

The Group is party to a revolving facility, with NatWest and HSBC. The facility is a £60,000,000 revolving facility with an accordion option of up to £40,000,000, of which £5,000,000 had been committed at the period end. The facility has a four year term, repayable on 13 February 2023. The rate of interest is the aggregate of the margin 2.05% and LIBOR and is payable quarterly. A commitment fee is payable at a rate of 0.82% on the undrawn facility and in relation to the accordion facility.

 

The Group paid an arrangement fee of 0.875% for the facility, which along with other costs of arranging the facility including legal costs have been amortised and will be written off over the 4 year term.

 

The facility is secured by a first and only legal charge over the Group's investment properties, an assignment of rental income, charges over specified bank accounts of the Group and a floating charge granted over all assets of the Group.

 

The facility's financial covenants are 60% loan to value, 2.00:1 interest cover looking both forward and backward, the Group shall ensure that the total market value of the charged properties does not fall below £50,000,000 at any time and that no single tenant represents more than 25% of the total contracted rents.

 

At 30 September 2021 £60,525,000 (2020: £62,300,000) of the total facility had been drawndown and the undrawn facility was £4,475,000 (2020: £2,700,000).

 

On 18 October 2021, a repayment of £1,980,731 was made against the facility.

 

 

15 Trade and other payables

30 September

30 September

31 March

 

£

£

£

 

Trade payables

 

47,200

 

26,782

 

50,467

Property improvement costs

285,314

59,242

27,433

Wages and salaries

26,223

27,902

338,664

Deferred income

1,752,940

1,749,920

1,745,607

Rental deposit accounts

272,662

271,017

272,968

Finance costs

279,467

285,834

274,169

VAT - Payable

195,485

257,742

170,918

Valuation fee

13,200

18,000

30,000

Audit fee

33,500

-

67,000

Administration fees

-

363

64

Current taxation

633,035

314,698

473,679

 

3,539,026

3,011,500

3,450,969

 

16 Subsequent events

On 18 October 2021, following the sale of 135 Aztec West, a repayment of £1,980,731 was made against the loan facility detailed in note 14.

 

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