TIDMPBLT
RNS Number : 9388G
TOC Property Backed Lendng Tst PLC
29 July 2021
TOC PROPERTY BACKED LING TRUST PLC
Interim Report & Financial Statements for the six months
ended 31 May, 2021
Announcement of Interim Results
LEI: 213800EXPWANYN3NEV68
Chairman's Statement
Highlights
Net Asset Value increase from 83.93 pence per share to 84.68
pence per share
Net Asset Value total return of 2.1%
Dividend distributions totalling 1.0p (2020: 1.5p) for the
period
Ordinary share mid-price equivalent to a premium of 1.5%, as at
31 May 2021
Gearing facility with Shawbrook Bank Limited renewed to May
2022
Background
At the beginning of the period covered by this report, the
Company entered the fifth year of trading since being listed on the
main market of the London Stock Exchange in January 2017.
Headlines have continued to be dominated by the Covid-19
pandemic throughout the period, paradoxically boosting certain
areas of the economy, notably digital commerce, e-learning and
virtual business systems but adversely affecting sectors including
travel, hospitality and high street retail outlets. Housebuilding,
on the other hand, has remained resilient, aided by the extension
of the UK Stamp Duty holiday scheme and underpinned by a fresh
surge in demand for home loans.
Net Asset Value
The Company's Net Asset Value per share increased from 83.93p to
84.68p over the six months ended 31 May 2021. Taking the effects of
dividend distributions into account, this was equivalent to a NAV
Total Return of 2.1%. 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 PBLT
is a component member, of 3.4% and of the AIC's "Debt - Direct
Lending" sector of 2.3%. Meanwhile in a much broader context the
FTSE 100 and FTSE All-Share Indices returned 14.1% and 15.2%,
respectively, on a total return basis over the same interval.
Dividends
A first quarterly dividend of 1 penny per share was paid on 30
June 2021. 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 GBP19.7
million, from 17 live projects, following a reduction of GBP3.2
million in the gross value of loans and receivables. This is the
result of repayment of loans by a number of borrowers and has
increased the Company's cash available for redeployment.
New Investments - the Company agreed three new facilities during
the period:
-- Horizon Cremation, Scotland - GBP3.8m 36-month facility -
funding to construct a modern, environmentally friendly crematorium
in East Renfrewshire, Glasgow, Scotland.
-- Bridge Street, Scotland - GBP1.05m 27-month facility -
mezzanine facility to support the development of 31 residential
apartments and three commercial units, working with experienced
developers in Paisley, Scotland.
-- Finnieston, Scotland - GBP320,000 12-month facility - a
bridging facility for a piece of land in the city of Glasgow which
is currently going through the planning process .Additionally,
since the period end, a new GBP4.5 million, 30 month facility, has
been agreed with Calmont (Oak Meadows) Ltd to support the
construction of 61 new homes at Middleton St George,
Darlington.
Exits - successful redemptions were concluded with Gateshead
Town Hall, Rare Earth Medburn and Chilton Moor, with the three
projects now fully exited with full loan and interest repayment.
These were repaid in December 2020, January 2021 and April 2021,
respectively and generated an Internal Rate of Return ('IRR') of
8.23%, 8.24% and 12.77%, respectively.
Impairments - as discussed in the 2020 Annual Report, two legacy
projects (Gatsby Homes and West Auckland) continued to be unable to
meet their interest obligations as the borrowers work towards
finalising the projects. Under IFRS 9 we are required to recognise
the interest income, and the offsetting impairment in the Statement
of Comprehensive Income. The Board and Investment adviser were
aware the interest was unlikely to be received in this period, and
liquidity has been planned accordingly. The underlying loans have
not been impaired during the period from the recoverable value
recorded in the Statement of Financial Position.
The loan portfolio is discussed more fully in the Investment
Adviser's review.
Gearing
The Company continued to benefit from a Gearing facility with
Shawbrook Bank Limited, the facility having been renewed for a
further year in May 2021. None was drawn at the period end. The
facility was renewed for a further year until May 2022. The
facility provides the company with the capacity to invest in a
wider range of loans, thus diversifying exposure and providing
operating leverage with respect to the cost base of the Company.
The period has been characterised by the winter Covid lockdown,
which has to some degree inhibited the ability to deploy the
capital available. However, as discussed more fully herein, the
Company continues to see a number of good quality lending
opportunities and anticipates putting more capital to work in the
coming months.
Change of Auditor
Since the end of the period, following a competitive audit
tender process, the Company has agreed to appoint MHA MacIntyre
Hudson LLP as its auditors.
Outlook
Implementation of the Company's Strategic Review, as described
in the 2020 Annual Report, is now underway. A key component of this
strategy is the placing the Company's investment portfolio on a
less volatile, more stable basis, reducing the risk of its loans by
(typically) requiring a higher equity component from its borrowers.
This will have the effect of lowering interest earnings from the
loans - though still, in the current environment of extremely low
interest rates, particularly on savings products, potentially
generating an attractive dividend yield. The Company should
therefore be well positioned as the UK economy gradually recovers
and moves forward in the wake of the Covid crisis.
John Newlands, Chairman
29 July 2021
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
2021
This Interim Report and Accounts covers the end of the fourth
and the beginning of the fifth year of performance of the Company,
since its Listing in January 2017.
The Company's primary purpose is to provide debt finance to the
property development 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.
Investment Adviser's highlights:
The trading period covered by this report has been historically
unprecedented due to the ongoing impact of the Covid-19 pandemic
which has decimated certain sectors of the economy, most notably
travel and hospitality, and brought about what appear to be seismic
shifts in how people work and live. A second lockdown was entered
into at the beginning of 2021 and this slowed investment decisions
until the vaccine roll out gained real momentum towards the end of
Q1 2021. In addition to the pandemic, there remain uncertainties
following the UK formally exiting the European Union in December
2020. While positive features are seen, such as the improved UK
housing market, construction supply chain activity is disrupted and
subject to escalating cost pressures.
Measures introduced by the government, most notably the stamp
duty holiday, together with an increase in household discretionary
cash and a lack of supply saw the residential housing market
accelerate to new highs and forecasts expect these increases to be
consolidated over the remainder of the year and into 2022.
The Company used the first six months to protect shareholder
value, rebalance the portfolio to more conservative loans and reset
the Company's investment policy to ensure it is fit for purpose as
we enter the years ahead. We are pleased to report the investment
highlights below:
-- NAV Total Return of 2.1%.
-- Continued focus on liquidity, creating fund headroom of GBP9.7m at the period end.
-- Profitable exits of three significant portfolio projects,
bringing the number of exits since inception to ten.
-- Refreshed investment strategy allowing greater flexibility to
deploy in sectors forecasted to grow.
-- Redeployment of funds across the North East and Scotland,
meaning the Company is now focussed on regions and market economies
to which it is closest.
-- The collection of 78.12% of contractual Net Interest Income
due, despite exposure to non- performing sectors and assets. This
figure increases to 94.55% when impaired assets are excluded.
-- Payment of a dividend of 1p for the first quarter, equivalent
to an annualised dividend yield of 4.76%.
DEPLOYMENT
Despite the ongoing uncertainties faced, we are pleased to
report an active period for new transactions, deployments to
existing projects together with full and partial exits:
The Company agreed three new facilities during the period:
-- Horizon Cremation, Scotland - GBP3.8m 36-month facility
-- Bridge Street, Scotland - GBP1.05m 27-month facility
-- Finnieston, Scotland - GBP320,000 12-month facility
Further capital was also deployed to each of these projects in
accordance with agreed milestones.
There were further deployments of capital as follows:
Deployments of Capital Update
Project GBP'000
Horizon Cremation 1,085
=======
Bridge Street 481
=======
Bill Quay 350
=======
Finnieston 320
=======
Coalsnaughton 217
=======
IHL 194
=======
Springs 50
=======
Post period end, we were delighted to announce a GBP4.5m
facility with Calmont (Oak Meadows) Ltd. The 30 month facility will
facilitate the building of 61 new modern homes at Middleton St
George, Darlington. The borrower is backed by private equity firm
Maven Capital Partners LLP, and demonstrates the Company's ongoing
commitment to supporting both residential and commercial
developments.
Portfolio Exits
In December 2020, the eighth exit within the loan book occurred
with the repayment of the Gateshead Town Hall project. All capital
and interest was paid in full in December 2020 generating a
positive internal rate of return ('IRR') of 8.23% since June
2018.
The ninth exit occurred in January 2021. Rare Earth Medburn,
which has been in the portfolio since listing, repaid all of its
capital and interest, generating an IRR of 8.24%.
The tenth exit occurred in April 2021. Chilton Moor, which has
been in the portfolio since August 2019, repaid all of its capital
and interest, generating an IRR of 12.77%.
Partial Redemptions Update
During the period there were a number of partial redemptions
including:
Project GBP'000
Bill Quay 600
=======
Springs 419
=======
Whitefield Farm 310
=======
Gatsby Homes 172
=======
IHL 170
=======
Newgate Street 164
=======
Newlands 50
=======
Impairments
The Company, in accordance with IFRS 9, recognises the gross
interest receivable on all its loans, and then recognises an
impairment charge when that interest is not paid by the borrower,
and there is not a clear expectation that this can be recovered
subsequently. During the period to 31 May 2021,and as anticipated
in the 2020 financial statements, the two projects unable to meet
their interest requirements were Gatsby Homes and West
Auckland.
We note that Gatsby Homes has repaid capital of GBP172,000
during the period, with further such repayments subsequent to year
end. We anticipate that the remainder of the properties in this
project will be sold during 2021, with a return of the residual
loan balance held on the balance sheet. As such, we anticipate that
the residual interest on this loan will be subject to impairment in
2021.
Post period end, West Auckland repaid GBP911,000 of capital and
we anticipate that the remainder of the residual loan balance
recognised on the balance sheet will be repaid before the end of
the financial year. Pleasingly, this includes a write back of
GBP243,000 to the loan in this reporting period as the recovery
strategy that was implemented has delivered.
Accordingly, no provision has been made for loan impairment to
the recoverable amount recorded in the Statement of Financial
Position.
IFRS 9 also requires the Company to consider various credit loss
scenarios and assign a risk weighting to these. This calculation
generates a provision which is taken as a further impairment for
the year. In this period the Company has increased the provision to
GBP448,000 from the GBP261,000 that was in place at 30 November
2020. This provision is based on look-forward statements to
withstand market-related shocks including those caused by the
ongoing Covid-19 pandemic.
Gearing
In May 2021, the Company refreshed a committed revolving credit
facility with Shawbrook Bank for a further year. Again the key
driver was headroom and liquidity and its renewal for a fourth year
demonstrates the support that the Company has from its lender, and
the growing confidence in future deployment given the current
strength of pipeline.
DEPLOYMENT
PROFIT SHARE PROJECTS
There are currently ten Profit Share projects in the portfolio
(Nov 2020: ten).
Since the listing of the Company we have recognised an uplift in
the equity value of seven projects (Nov 2020: five), The remaining
Profit Share holdings are recognised as nil value, given where we
are in the lifecycle of each project. We monitor and review this on
an ongoing basis.
REFRESHED INVESTMENT STRATEGY
In March 2021 the Company's shareholders voted overwhelmingly to
support a refreshed investment strategy for the Company. The key
changes are as follows:
-- Reposition the Company as a stretch senior lender which has
the benefit of reducing the risk of default. (as borrowers are
typically required to contribute equity).
-- Reduce sector constraints to give the Company greater
flexibility for deployment across residential and commercial.
OUTLOOK
Economic Outlook
Residential
As at 31 May 2021, 77.3% of deployed funds were invested across
12 projects with a residential focus.
The housing market has seen considerable growth, with Nationwide
House Price Index reporting 13.4% increase in the twelve months to
June 2021 across the UK. Within the North East and Scotland, these
figures were a more modest 11.2% and 7.1% respectively. In Scotland
the Stamp Duty holiday ended on 31 March 2021 which partially
explains the smaller increase.
The outlook amongst analysts for the rest of 2021 and 2022
continues to be positive. The Stamp Duty holiday has accelerated
transactions for the first half of the new year but underlying
demand is likely to remain in the near term as the economy unlocks.
The biggest driver of pricing for the rest of 2021 will be the
continued shortage of supply with the Royal Institute of Chartered
Surveyors (RICS) June 2021 report showing the number of properties
being listed falling for the third successive month. The report
goes on to say that "the latest feedback continues to signal a
clear excess of demand over supply". The report comments that there
is a strong belief that house prices "will increase further over
the next twelve months".
Turning to cost pressures, the past twelve months has seen
considerable price inflation on both materials and labour.
According to ISH Markit/CIPS UK Construction PMI, "construction
activity expanded at the fastest pace since June 1997...severe
shortages of construction products and materials resulted in a
survey record rise in purchasing prices in June". Specifically in
house building construction, the index increased at its fastest
pace since November 2003.
The Builders Merchants Federation and Construction Products
Association have warned that availability issues are expected to
worsen before they improve. The ongoing impact of the Covid-19
pandemic is a significant factor behind the shortages and price
increases. There are other factors including the imbalance between
global demand and supply for timber which is not likely to be
resolved quickly. Therefore cost pressures are here for the rest of
2021.
The Company's residential exposure is predominantly in the North
East (93.3%). This will continue to be a key focus as this region
continues to offer affordability for house buyers, despite the
recent increase in prices. Projects are appraised using the views
of market experts for sales values and build cost and delivery,
with all assumptions stress tested.
Commercial
As at 31 May 2021, 23.7% of deployed funds were invested across
five projects with a commercial focus.
The new investment strategy allows the Company to be more
selective in the level of exposure to commercial developments. We
believe that a 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
In addition to the GBP4.5m project that was supported in June
2021, there is GBP10.7m at various stages of deployment across
three residential projects with 100% 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 Ltd
29 July 2021
THE INVESTMENT PORTFOLIO AS AT 31 MAY 2021
Project Sector Maturity Profit Security % LTV* (May Loan Value Loan Value
Share 21) (May 21) (Nov 20)
Date Portfolio % GBP'000s GBP'000s
============ =================== ======= ============ ========== ================ ==================
Yes -
Bill Quay Residential Feb 2022 25.1% Senior 13.7 63.2 3,046 3,236
============ =================== ======= ============ ========== ================ ================== ==================
Yes -
Springs Residential Nov 2021 25.1% Senior 11.5 78.9 2,559 2,952
============ =================== ======= ============ ========== ================ ================== ==================
West Auckland Residential Jun 2022 No Senior 8.5 102.4 1,892 1,649
============ =================== ======= ============ ========== ================ ================== ==================
Yes -
Coalsnaughton Commercial Jul 2021 25.1% Senior 8.4 123.9 1,867 1,688
============ =================== ======= ============ ========== ================ ================== ==================
Yes -
Newgate Street Residential Aug 2020 25.1% Senior 8.0 100.0 1,771 1,941
============ =================== ======= ============ ========== ================ ================== ==================
Yes -
Gatsby Homes Residential Nov 2021 25.1% Senior 5.2 101.5 1,161 1,333
============ =================== ======= ============ ========== ================ ================== ==================
Pendower Hall Commercial Mar 2023 No Senior 5.2 88.3 1,150 1,150
============ =================== ======= ============ ========== ================ ================== ==================
Exit
Whitefield Farm Residential Jan 2020 fee Senior 5.1 75.1 1,140 1,450
============ =================== ======= ============ ========== ================ ================== ==================
Horizon Exit
Cremation Commercial Dec 2023 fee Senior 4.9 43.6 1,085 -
============ =================== ======= ============ ========== ================ ================== ==================
IHL Residential Sep 2021 No Subordinate 3.6 67.6 800 776
============ =================== ======= ============ ========== ================ ================== ==================
Charlton's Bonds Residential Nov 2021 No Senior 2.8 100.0 628 628
============ =================== ======= ============ ========== ================ ================== ==================
Exit
Bridge Street Residential Aug 2023 fee Subordinate 2.2 32.0 481 -
============ =================== ======= ============ ========== ================ ================== ==================
Yes -
Oswald Street Commercial Feb 2022 25.1% Senior 1.7 64.9 382 382
============ =================== ======= ============ ========== ================ ================== ==================
Finnieston Residential May 2022 No Senior 1.4 30.5 320 -
============ =================== ======= ============ ========== ================ ================== ==================
Exit
Newlands Commercial Mar 2022 fee Senior 1.3 56.6 300 330
============ =================== ======= ============ ========== ================ ================== ==================
Glenfarg Residential Oct 2020 No Subordinate 1.3 25.0 300 300
============ =================== ======= ============ ========== ================ ================== ==================
Fernhill Residential Jul 2020 No Subordinate 2.7 38.1 598 598
============ =================== ======= ============ ========== ================ ================== ==================
Chilton Moor Exit
** Residential Exited fee Senior 0.2 N/a 49 2,459
============ =================== ======= ============ ========== ================ ================== ==================
Yes -
Marley Hill*** Residential Exited 25.1% Senior 0.0 N/a 3 60
============ =================== ======= ============ ========== ================ ================== ==================
Exits - 1,622
========== ================ ================== ==================
General Impairment (2.0) (448) (261)
========== ================ ================== ==================
Cash 14.3 3,174 1,002
========== ================ ================== ==================
Total/Weighted
Average 100.0 80.9 22,258 23,295
========== ================ ================== ==================
*LTV has been calculated using the carrying value of the loans
as at the balance sheet date
** Completed in January 2021; plot fees held on the balance
sheet.
*** Completed in December 2019; equity shares held on the
balance sheet.
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 in the Company's Annual Report for the
year ended 30 November 2020.
The Directors consider that the Chairman's Statement and the
Investment Adviser's Review in 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
2021 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 these 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' Responsibility 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 2021, as required by the
Disclosure Guidance and Transparency Rule 4.2.4R;
-- The Interim Management 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 Management 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
29 July 2021
Condensed Statement of Comprehensive Income
Six months Six months Year ended
ended 31 ended 31 30 November
May 2021 May 2020 2020 (audited)
(unaudited) (unaudited)
Note Revenue Capital Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----- --------- --------- ------------- ------------- ----------------
Revenue
Investment interest 879 - 879 1,290 2,346
----- --------- --------- ------------- ------------- ----------------
Total revenue 879 - 879 1,290 2,346
----- --------- --------- ------------- ------------- ----------------
Losses on investments
held at fair value
through profit
of loss (79) 40 (39) - (452)
----- --------- --------- ------------- ------------- ----------------
Total income 800 40 840 1,290 1,894
----- --------- --------- ------------- ------------- ----------------
Expenditure
Investment adviser
fee (34) - (34) (24) (57)
----- --------- --------- ------------- ------------- ----------------
Impairments on
investments held
at amortised cost (58) 57 (1) (611) (237)
----- --------- --------- ------------- ------------- ----------------
Other expenses (198) - (198) (256) (513)
----- --------- --------- ------------- ------------- ----------------
Total expenditure (290) 57 (233) (891) (807)
----- --------- --------- ------------- ------------- ----------------
Profit before
finance costs
and taxation 510 97 607 399 1,087
----- --------- --------- ------------- ------------- ----------------
Finance costs
----- --------- --------- ------------- ------------- ----------------
Interest payable (1) - (1) (134) (231)
----- --------- --------- ------------- ------------- ----------------
Profit before
taxation 509 97 606 265 856
----- --------- --------- ------------- ------------- ----------------
Taxation - - - - -
----- --------- --------- ------------- ------------- ----------------
Profit and total
comprehensive
profit for the
period/year 509 97 606 265 856
----- --------- --------- ------------- ------------- ----------------
Basic earnings
per share 3 1.89p 0.36p 2.25p 0.98p 3.18p
----- --------- --------- ------------- ------------- ----------------
The total column of this statement represents the Company's
Statement of Comprehensive Income, prepared in accordance with
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 30
As at 31 As at 31 November
May
2021 May 2020 2020
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
===================================== ===== ======== ======== ===============
Non-current assets
Investments held at fair value 5 1,580 4,388 3,948
Loans at amortised cost 6 3,099 6,771 2,799
4,679 11,159 6,747
Current assets
Investments held at fair value 5 12,688 10,776 12,861
Loans at amortised cost 6 2,326 4,523 3,247
Other receivables and repayments 7 26 21
Cash and cash equivalents 3,174 1,672 1,002
18,195 16,997 17,131
Total assets 22,874 28,156 23,878
Current liabilities
Loan facility - (6,000) (1,150)
Other payables and accrued expenses (75) (150) (131)
Total liabilities (75) (6,150) (1,281)
Net assets 22,799 22,006 22,597
Share capital and reserves
Share capital 7 269 269 269
Share premium 9,094 9,094 9,094
Special distributable reserve 13,093 16,455 13,497
Revenue reserve 509 (711) -
Capital reserve (166) (3,101) (263)
Equity shareholders' funds 22,799 22,006 22,597
Net asset value per ordinary
share 8 84.68p 81.73p 83.93p
The notes below form an integral part of the financial
statements.
The financial statements were approved by the Board of Directors
of TOC Property Backed Lending Trust plc (a public limited company
incorporated in England and Wales with company number 10395804) and
authorised for issue on 29 July 2021.
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 2021 Share Share reserve Capital Revenue Total
capital premium reserve reserve
(unaudited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 six months ending Special
distributable
31 May 2020 Share Share reserve Capital Revenue Total
capital premium reserve reserve
(unaudited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================== ============= ============= ====================== =========== ============ =======
At beginning of the
period 269 9,094 16,455 (2,978) (291) 22,549
Total comprehensive
profit
for the period:
Profit for the period - - - (123) 388 265
Transactions with owners
recognised directly in
equity:
Dividends paid (note 4) - - - - (808) (808)
========================== ============= ============= ====================== =========== ============ =======
At 31 May 2020 269 9,094 16,455 (3,101) (711) 22,006
Condensed Statement of
Changes in Equity
Total
Special Revenue
Share Share distributable Capital reserve
For the year ending capital premium reserve reserve
30 November 2020 (audited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================== ============= ============= ====================== =========== ============ =======
At beginning of the year 269 9,094 16,455 (2,978) (291) 22,549
Total comprehensive
profit
for the year:
Profit for the year - - - (170) 1,026 856
Transfer of realised loss
on loans - - (2,885) 2,885 - -
Transactions with owners
recognised directly in
equity:
Dividends paid (note 4) - - (73) - (735) (808)
========================== ============= ============= ====================== =========== ============ =======
At 30 November 2020 269 9,094 13,497 (263) - 22,597
Condensed Cash Flow Statement
Six months Six months Year ending
to to
31 May 31 May 30 November
2021 2020 2020
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
=========================================== ========= ======= =========
Operating activities
Profit after taxation 606 265 856
Impairments 254 61 121
Fair value uplifts (351) - (14)
(Increase)/decrease in loan interest
receivable (46) 61 14
Decrease in other receivables 14 15 21
(Decrease)/increase in other payables (56) 52 33
Interest paid - 134 227
Net cash inflow from operating activities
before interest and after taxation 421 588 1,258
Investing activities
Loans given (2,697) (3,933) (8,455)
Loans repaid 6,002 3,186 11,311
Net cash inflow/(outflow) from investing
activities 3,305 (747) 2,856
Financing
Equity dividends paid (404) (808) (808)
Bank loan drawn down - 2,250 3,050
Repayment of bank loan (1,150) - (5,650)
Interest paid - (134) (227)
Net cash (outflow)/inflow from financing (1,554) 1,308 (3,635)
Increase in cash and cash equivalents 2,172 1,149 479
Cash and cash equivalents at the start
of the period / year 1,002 523 523
Cash and cash equivalents at
the end of the period/year 3,174 1,672 1,002
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
2020. 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 2020, which were prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006. 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 GBP100m; or 0.50 per cent. per annum of the prevailing
Net Asset Value if GBP100m or more.
There is no balance accrued for the Investment Adviser for the
period ended 31 May 2021 (31 May 2020: GBPnil; 30 November 2020:
GBPnil).
There are no performance fees payable.
ALTERNATIVE INVESTMENT FUND MANAGER'S DIRECTIVE ('AIFMD')
During the year it has been decided that the Company should
become a Small Registered UK Alternative Investment Fund Manager
AIFM ('AIFM') replacing R & H Fund Services (Jersey) Ltd. In
the course of reviewing the arrangements, it came to the Company's
attention that, although the Company has been operating in effect
as an internally managed AIFM, an application to apply to become
the AIFM still had to be made. An AIFM application has now been
made to the FCA.
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 Six months Year ended
ended 31 ended 31 30 November
May 2021 May 2020 2020
GBP'000 Pence per GBP'000 Pence per GBP'000 Pence per
share share share
-------- ----------- -------- ----------- -------- -------------
Revenue earnings 509 1.89 388 1.44 1,026 3.81
-------- ----------- -------- ----------- -------- -------------
Capital earnings 97 0.36 (123) (0.46) (170) (0.63)
-------- ----------- -------- ----------- -------- -------------
Total earnings 606 2.25 265 0.98 856 3.18
-------- ----------- -------- ----------- -------- -------------
Average number
of shares in issue 26,924,063 26,924,063 26,924,063
-------- ----------- -------- ----------- -------- -------------
Earnings for the period to 31 May 2021 should not be taken as a
guide to the results for the year to 30 November 2021.
4. DIVIDS
Six months Six months Year ended
ended 31 May ended 31 30 November
2021 May 2020 2020
GBP'000 GBP'000 GBP'000
In respect of the prior year:
Fourth interim dividend 404 404 404
-------------- ----------- -------------
In respect of the current year:
-------------- ----------- -------------
First interim dividend - 404 404
-------------- ----------- -------------
Second interim dividend - - -
-------------- ----------- -------------
Third interim dividend - - -
-------------- ----------- -------------
Total 404 808 808
-------------- ----------- -------------
A first interim dividend for the year ending 30 November 2021,
of 1.00 pence per share, was paid on 30 June 2021 to shareholders
on the register on 11 June 2021.
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 ten companies.
31 May 31 May 30 November
2021 2020 2020
GBP'000 GBP'000 GBP'000
Opening Balance 16,809 14,499 14,219
Loans deployed 2,183 3,833 7,805
Principal repayments (4,760) (3,106) (5,516)
Prior year interest repayments (428) (280) -
Interest receivable 503 320 753
Unrealised losses on investments held at fair value through
profit or loss (39) (102) (452)
Total Loans at fair value through profit
and loss 14,268 15,164 16,809
Split:
Non-current assets: Investments held at fair value through profit
and loss due for repayment after one year 1,580 4,388 3,948
Current assets: Investments held at fair
value through profit and
loss due for repayment under one year 12,688 10,776 12,861
6. LOANS AT AMORTISED COST
Opening Balance 6,046 11,333 11,037
Loans deployed 514 100 670
Principal repayments (1,242) (80) (5,795)
Prior year interest repayments (134) (296) -
Interest receivable 242 196 371
Movement in impairments (1) 41 (237)
Total Loans at amortised cost 5,425 11,294 6,046
Split:
Non-current assets: Loans at amortised cost due for repayment
after one year 3,099 6,771 2,799
Current assets: Loans at amortised cost
due for repayment under
one year 2,326 4,523 3,247
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 GBP1,000 (May 2020: gains of
GBP41,000; November 2020: losses of GBP237,000).
7. SHARE CAPITAL
Nominal value Number of Ordinary
GBP'000 shares of 1p
Issued and fully paid as at
30 November 2020 269 26,924,063
--------------------- --------------------------
Issued and fully paid as at
31 May 2021 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
GBP22,798,683 (31 May 2020: GBP22,005,858; 30 November 2020:
GBP22,597,279) and on 26,924,063 ordinary shares (31 May 2020:
26,924,063; 30 November 2020: 26,924,063), being the number of
ordinary shares in issue at the period/year end.
9. RELATED PARTIES
Fees payable during the year to the Directors and their
interests in shares of the Company are considered to be related
party transactions and are disclosed within the Directors'
Remuneration Report on pages 37 to 38 of the Annual Report. The
balance of fees due to Directors at the year end was GBPnil (31 May
2020 GBPnil; 30 November 2020 GBPnil).
The Company has an agreement with Tier One Capital Ltd for the
provision of investment advisory services and details of that
agreement are set out in the Directors' Report on pages 26 and 27
of the Annual Report.
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 GBP28,000 (excluding VAT)
investment adviser's fee during the period (31
May 2020: GBP20,000 (excluding VAT); 30 November 2020: GBP47,000
(excluding VAT)) and GBPnil was payable at the period end (31 May
2020: GBP20,000 (excluding VAT); 30 November 2020: GBPnil). 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:
Thursby Homes (Charlton's Bonds)
Tier One Capital Ltd sold 25.1% of Thursby Homes Ltd on 20 March
2019. The loan amount outstanding as at 31 May 2021 was GBP628,000
(31 May 2020: GBP697,000; 30 November 2020: GBP628,000).
Transactions in relation to loans repaid during the period amounted
to GBPnil (31 May 2020: GBPnil; 30 November 2020: GBP68,000).
Interest due to be received as at 31 May 2021 was GBP21,000 (31 May
2020: GBP9,000; 30 November 2020: GBP8,000). Interest received
during the period amounted to GBP25,000 (31 May 2020: GBP28,000; 30
November 2020: GBP54,000).
The following related parties arise due to the opportunity taken
to advance the 25.1% profit share contracts:
ï Gatsby Homes
The Company owns 25.1% of the borrower Gatsby Homes Ltd. The
loan amount outstanding as at 31 May 2021 was GBP1.2m (31 May 2020:
GBP1.6m; 30 November 2020: GBP1.3m). Transactions in relation to
loans (repaid)/made during the year amounted to GBP(172,000) (31
May 2020: GBP225,000; 30 November 2020: GBP(474,000)). Interest due
to be received as at 31 May 2021 was GBPnil (31 May 2020: GBPnil;
30 November 2020: GBPnil). Interest received during the year
amounted to GBPnil (31 May 2020: GBPnil; 30 November 2020:
GBPnil)
- 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 2021 was
GBP3.0m (31 May 2020: GBP921,000; 30 November 2020: GBP3.2m).
Transactions in relation to loans (repaid)/made during the period
amounted to GBP(250,000) (31 May 2020: GBPnil; 30 November 2020:
GBP2.5m). Interest due to be received as at 31 May 2021 was
GBP41,000 (31 May 2020 GBP10,000; 30 November 2020: GBP36,000).
Interest received during the year amounted to GBP127,000 (31 May
2020: GBP23,000; 30 November 2020: GBP100,000).
ï Thursby Homes (Springs)
The Company owns 25.1% of the borrower Thursby Homes (Springs)
Ltd. The loan amount outstanding as at 31 May 2021 was GBP2.56m (31
May 2020: GBP3.74m; 30 November 2020: GBP2.95m). Transactions in
relation to loans (repaid)/made during the period amounted to
GBP(369,000) (31 May 2020: GBP175,000; 30 November 2020:
GBP(58,000)). Interest due to be received as at 31 May 2021 was
GBP185,000 (31 May 2020: GBP138,000; 30 November 2020: GBP168,000).
Interest received during the period amounted to GBP131,000 (31 May
2020: GBP189,000; 30 November 2020: GBP365,000).
ï Whitefield Farm
TOC Property Backed Lending Trust plc owns 25.1% of the borrower
Northumberland Ltd. The loan amount outstanding as at 31 May 2021
was GBP1.77m (31 May 2020: GBP3.16m; 30 November 2020: GBP1.94m).
Transactions in relation to loans (repaid)/made during the period
amounted to GBP(164,000) (31 May 2020: GBP25,000; 30 November 2020:
GBP(910,000)). Interest due to be received as at 31 May 2021 was
GBP26,000 (31 May 2020: GBP62,000. 30 November 2020: GBP27,000).
Interest received during the period amounted to GBP78,000 (31 May
2020: GBP111,000; 30 November 2020: GBP209,000).
ï Dinosauria
TOC Property Backed Lending Trust plc owns 25.1% of the borrower
Dinosauria Ltd. The loan amount outstanding as at 31 May 2021 was
GBPnil (31 May 2020: GBP550,000; 30 November 2020: GBP550,000).
Transactions in relation to loans repaid during the period amounted
to GBP550,000 (31 May 2020: GBPnil; 30 November 2020: GBPnil).
Interest due to be received as at 31 May 2021 was GBPnil (31 May
2020: GBP7,000; 30 November 2020: GBP18,000). Interest received
during the period amounted to GBP2,000 (31 May 2020: GBP22,000; 30
November 2020: GBP44,000).
ï Coalsnaughton
TOC Property Backed Lending Trust plc owns 25.1% of the borrower
Kudos Partnership. The loan amount outstanding as at 31 May 2021
was GBP1.87m (31 May 2020: GBP1.8m; 30 November 2020: GBP1.69m).
Transactions in relation to loans made during the period amounted
to GBP217,000 (31 May 2020: GBP1.8m; 30 November 2020: GBP1.69m).
Interest due to be received as at 31 May 2021 was GBP128,000 (31
May 2020: GBP57,000; 30 November 2020: GBP88,000). Interest
received during the period amounted to GBP110,000 (31 May 2020:
GBP95,000; 30 November 2020: GBP194,000).
ï Oswald Street
TOC Property Backed Lending Trust plc owns 25.1% of the
Riverfront Property Limited Partnership. The loan amount
outstanding as at 31 May 2021 was GBP382,000 (31 May 2020: GBPnil;
30 November 2020: GBP382,000). Transactions in relation to loans
made during the period amounted to GBPnil (31 May 2020: GBPnil; 30
November 2020: GBP382,000). Interest due to be received as at 31
May 2021 was GBP5,000 (31 May 2020: GBPnil; 30 November 2020:
GBP5,000). Interest received during the period amounted to
GBP15,000 (31 May
2020: GBPnil; 30 November 2020: GBP9,000).
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
-- The loan facility with Shawbrook Bank was extended for a
further year to May 2022 on 5 June 2021.
-- On 30 June 2021, a new facility of GBP4.5m was entered into
with Calmont Homes (Oak Meadows) Ltd with an initial drawdown of
GBP300,000.
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 2020, 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 2020 have been reported on by the Company's
auditor or delivered to the Registrar of Companies.
For further information please contact:
Faith Pengelly
For and on behalf of Maitland Administration Services Limited,
Secretary
29 July 2021
ENDS
Interim Report 2021
The Interim Report will be posted to shareholders and will
shortly be available on the Company's website (
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
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END
IR BGGDRUUDDGBC
(END) Dow Jones Newswires
July 29, 2021 07:00 ET (11:00 GMT)
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