TIDMKCR

RNS Number : 5404U

KCR Residential REIT PLC

29 March 2023

29 March 2022

KCR Residential REIT plc

("KCR" or the "Company")

Interim Results

KCR Residential REIT plc, the residential REIT group, is pleased to announce its unaudited consolidated results for the six months to 31 December 2022.

The half year to 31 December 2022 has seen continued growth in the business in an operating environment that has been challenging with continuing interest rate increases, cost of living pressure and supply chain disruption.

Progress continues to be made to transition the business. The strategy, as outlined in last year's annual report, remains unchanged, to:

   --    improve the rental revenue from the existing properties; 
   --    upgrade the overall portfolio quality; 
   --    explore the development opportunity within the portfolio; and 
   --    focus on reducing costs. 

Revenue growth continues to be driven from the work done on repositioning the portfolio via completion of a holistic refurbishment programme to materially lift the standard of the rental product we are offering and implementation of the Cristal Apartments operating model.

Operational highlights

-- revenue for the half year increased 30% to GBP789k (2021: GBP605k), with revenue growth driven predominantly by Coleherne Road and the ongoing conversion of Deanery Court to the Cristal Apartments operating model; and

-- portfolio level occupancy has remained strong over the half year with rental increases continuing to be achieved at renewals / re-letting. As the Cristal Apartments operating model continues to be rolled out we expect more volatility in occupancy levels within the properties operated on this basis, however we envisage overall rental levels will be higher notwithstanding this.

We continue to make progress to create a stable platform that can be successfully scaled up.

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identi ed by their use of terms and phrases such as "believe", "could", "should" "envisage", "estimate", "intend", "may", "plan", "potentially", "expect", "will" or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements re ect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

For further information please contact:

 
            KCR Residential REIT plc                                                    info@kcrreit.com 
             Russell Naylor, Executive Director                                 Tel: +44 (0)20 7628 5582 
 
                          Cairn Financial Advisers LLP (Nomad)                  Tel: +44 (0)20 7213 0880 
                           James Caithie / James Lewis / Louise 
                           O'Driscoll 
                           Zeus Capital Limited (Broker)                        Tel: +44 (0)20 7614 5000 
                            Louisa Waddell 
 

CHAIRMAN'S STATEMENT

FOR THE SIX MONTHSED 31 DECEMBER 2022

 
 
 

KCR Residential REIT Plc ("KCR" or the "Company") and its subsidiaries (together the "Group") operate in the private rented residential investment market. The Company acquires properties that are rented to private tenants and also owns and operates a freehold portfolio of retirement living accommodation where most of the properties have been sold on long leases.

The half year to 31 December 2022 has seen continued growth in the business in an operating environment that has been challenging with continuing interest rate increases, cost of living pressure and supply chain disruption.

Fundamentals for UK residential property remain sound notwithstanding the impact of increasing interest rates. The Group continues to look for acquisitions on a disciplined basis and there are signs emerging that opportunities may arise over the next twelve months to make acquisitions on more attractive metrics than have been available recently.

The Group's overall objective remains to grow the size of its residential portfolio and optimise the performance from the existing assets whilst controlling costs to achieve the ability to pay dividends.

Progress continues to be made to transition the business. The strategy, as outlined in last year's Annual Report, remains unchanged, to:

-- improve the rental revenue from the existing properties;

-- upgrade the overall portfolio quality;

-- explore the development opportunity within the portfolio; and

-- focus on reducing costs.

Revenue growth for the half year has been driven by a combination of the work completed to date on modernising and improving the standard of the property portfolio and the conversion of the Deanery Court property to the Cristal Apartments operating model which commenced during the June 2022 quarter.

Occupancy rates across the portfolio during the period remained strong with rental increases being achieved in most instances at renewal.

Refurbishment works in respect of the two basement flats and all external areas at Coleherne Road are ongoing and are expected to be fully complete by the end of April 2023.

The conversion of the Deanery Court property to the Cristal Apartments operating model is progressing well and early operating results are promising. Full conversion to the Cristal Apartments "walk in walk out" operating model is on track to be completed this financial year.

Increase in administration expenses during the half predominantly relate to:

-- higher operating costs associated with the conversion of Deanery Court to the Cristal Apartments operating model;

-- repairs and maintenance at Ladbroke Grove; and

-- increased depreciation expenses relating to the property, plant equipment, fixtures and fittings associated with operating the properties on a "walk in walk out" basis.

Whilst the majority of the Group debt remains on fixed rates, the Secure Trust facility is floating rate and consequently the comparatively higher finance costs incurred in the period reflect the effect of interest rate rises. In the near term it is likely financing costs for this facility will continue to increase.

Since the end of the period under review, the Group acquired an additional flat within Heathside. This will be refurbished with a target for completion by the end of June 2023. On completion this will deliver incremental revenue growth to the rental income generated from this property.

DIRECTOR'S REPORT

FOR THE SIX MONTHSED 31 DECEMBER 2022

We are pleased to report on the progress of the Group in the six-month period to 31 December 2022.

Revenue growth continues to be driven from the work done on repositioning the portfolio via completion of a holistic refurbishment programme to materially lift the standard of the rental product we are offering and implementation of the Cristal Apartments operating model.

Operational highlights

-- revenue for the half year increased 30% to GBP789k (2021: GBP605k), with revenue growth driven predominantly by Coleherne Road and the ongoing conversion of Deanery Court to the Cristal Apartments operating model; and

-- portfolio level occupancy has remained strong over the half year with rental increases continuing to be achieved at renewals / re-letting. As the Cristal Apartments operating model continues to be rolled out we expect more volatility in occupancy levels within the properties operated on this basis, however we envisage overall rental levels will be higher notwithstanding this.

Full completion of Coleherne Road works and the implementation of the Cristal Apartments operating model at Deanery Court are expected to continue to underpin revenue growth over the next 12 months.

Focus for the half year has been on progressing works at Coleherne Road and the implementation of the conversion of Deanery Court to the Cristal Apartments operating model.

As Deanery Court flats have been taken back they have been lightly refurbished and fully furnished in order to be let on a walk in, walk out basis. Full implementation is on track to be completed by June this year.

We continue to make progress to create a stable platform that can be successfully scaled up.

Property Portfolio

No acquisitions were completed during the half year.

Since the period end, an additional one- bedroom flat within Heathside has been acquired. As with all of the other acquisitions within this property, the flat is very tired and poorly presented. Full refurbishment of this flat is planned to be completed during the June quarter of 2023. Contractor availability and supply chain issues are expected to impact on the timing for completion of refurbishment works, however we believe completion during the June quarter is achievable.

Planning works for Ladbroke Grove continue to be progressed, an objective which is key to improving the operational performance for this asset. As outlined in the full year report, the tired condition of this property is resulting in increasing repairs and maintenance expenditure which is expected to continue, pending a more holistic refurbishment works programme.

KCR is continuing to progress the implementation of two operating lines, clearly identifiable by brand, property quality and letting strategy.

1. Cristal Apartments. Residential apartments, finished to a high modern specification, fully furnished and let on a Walk in Walk Out (WIWO) basis for a frictionless and flexible letting experience. Rental contracts may be from one week to multi-year; and

2. Osprey Retirement Living. 4* retirement living property rented on flexible letting packages customised to suit tenant needs. All rentals are on assured shorthold tenancies for a minimum period of six months.

   1.    Cristal Apartments (WIWO letting strategy) 

The repositioning of the Coleherne Road property into a modern, high quality, well presented product reflects the standard the Cristal brand represents. This product has been well received by the market and has been a core driver of revenue growth since the initial eight flats were completed and let up.

On full completion of all works Cristal branding will be added to the property and we expect let up of the last two flats to contribute to revenue growth during the June quarter of 2023 and the 2024 financial year.

Conversion of the Deanery Court property in Southampton to the Cristal Apartments model is ongoing. Whilst it is still early days, the initial signs are promising and we expect this property to be a key driver of further revenue growth over the next 12 months.

The intention is also to reposition the Ladbroke Grove portfolio as a Cristal branded product once planning outcomes have been finalised. This is expected to result in both improved revenue and a substantive reduction in ongoing repairs and maintenance.

Coleherne Road - this property comprises ten studio and one-bedroom flats. The property has been repositioned to a materially higher standard and works are now fully completed in eight of the ten flats. Works are ongoing to complete refurbishment of the last two flats and all external areas. The completed apartments have produced strong rental uplifts and have operated at close to 100% occupancy levels since letting up during the December 2021 quarter.

Ladbroke Grove - this portfolio comprises 16 one and two bedroom flats in three buildings which remain 100% occupied. The flats have been lightly refurbished as tenants vacate and then re-let in the private rental market. The overall tired condition of the property is reflected in ongoing and increasing repairs and maintenance expenditure. Planning works are being progressed and our intention is to complete a holistic refurbishment programme to reposition this product to the Cristal Apartments operating model.

Deanery Court (Southampton) - this property comprises 27 two bedroom residential apartments and is in the process of being converted to the Cristal Apartments operating model. As the apartments are taken back they are lightly refurbished and fully furnished and then marketed under the Cristal Apartments brand. As at 31 December 2022, 24 of the 27 apartments had been taken back with 21 of these fully converted. Full conversion of this property is on track to occur during the 2023 financial year. We expect rental growth from this property to be a key driver of revenue growth for the Group over the next 12 months.

   2.    Osprey retirement living (4* retirement apartments) 

The Osprey portfolio consists of 159 flats and 13 houses let on long leases in six locations, together with an estate consisting of 30 freehold cottages in Marlborough where Osprey delivers estate management and sales services.

The key asset in the portfolio is the freehold block at Heathside, Golders Green comprising 37 one and two bedroom apartments with 10 (nine as at 31 December 2022) of the apartments owned by the Group and 27 held on a long leasehold basis. The strategy to selectively acquire long leasehold apartments within the block, refurbish them to a high standard and let them on an assured tenancy basis has been successful and has delivered strong rental returns for the Group.

Financial Performance

The half year to 31 December 2022 reflects the outcome of strong revenue growth driven by Coleherne Road and conversion of the Deanery Court property to the Cristal Apartment operating model which commenced during the June 2022 quarter.

Cost of sales and administration expenses both increased during the half primarily due to higher costs associated with operating Deanery Court under the Cristal Apartment model, higher depreciation charges associated with the investment in plant, equipment, fixtures and fittings and ongoing and increasing repairs and maintenance at Ladbroke Grove.

-- Revenue for the half year increased 30% to GBP789k (2021: GBP605k)

-- Gross profit as a percentage of revenue reduced to 84.58% (2021: 96.88%) reflecting the higher costs associated with the Cristal Apartments operating model. In absolute terms overall gross profit increased by 13.8% to GBP667k (2021: GBP586k).

-- Operating loss before separately disclosed items of GBP31k (2021: Profit GBP136k). Prior year included a positive contribution from revaluations of GBP145k which primarily accounts for the negative variance for the comparative period. Balance relates to increases in depreciation charges, repairs and maintenance at Ladbroke Grove and higher operational costs associated with implementing the Cristal Apartments model.

-- Operating loss GBP184k (2021: Profit GBP102k) after refurbishment costs of GBP153k primarily relating to the Coleherne Road property.

-- Loss for the period was GBP451k (2021: GBP254k) and loss per share was 1.08p (2021: .77p).

The value of KCR's property portfolio was slightly higher than the comparative period at GBP24.6m (2021: GBP24.4m), reflecting an additional acquisition completed during the June 2022 half year. The Group's current assets reduced to GBP2.2m (2021: GBP2.9m) reflecting reduction in cash used to fund operating losses and support ongoing refurbishment work programmes. Secured bank borrowings increased marginally to GBP13.3m (2021: GBP13.2m) following completion of refinancing during the June 2022 half year.

Total assets reduced to GBP26.98m (2021: GBP27.3m) reflecting the reduction in cash used to support Group operating activities. Net assets per share reduced to 31.74p (2021: 33.03p). Following completion of the Coleherne Road works this property will be revalued.

The Group continues to be cashflow negative, however it is continuing to work towards achieving a cash neutral position from improving operating performance from the existing portfolio. Costs continue to be actively managed as we work towards building a stable platform that can be scaled up. At 31 December 2022, the Group had cash balances totalling GBP1.89m (2021: GBP2.8m).

Through the period the Company remained a REIT and has complied with REIT rules.

KCR RESIDENTIAL REIT PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHSED 31 DECEMBER 2022 (unaudited)

 
 
                                                  Six months          Six months 
                                                    ended 31            ended 31             Year ended 
                                                    December            December                30 June 
                                                        2022                2021         2022 (audited) 
                                         Notes           GBP                 GBP                    GBP 
 
 Revenue                                   2         788,740             604,583              1,280,770 
 Cost of sales                                     (121,658)            (18,881)               (50,525) 
                                                ------------       -------------       ---------------- 
 
 Gross profit                                        667,082             585,702              1,230,245 
 
 Administrative expenses                           (702,371)           (599,322)            (1,232,932) 
 Other operating income                                3,920               4,900                      - 
 Fair value through profit and 
  loss - Revaluation of investment 
  properties                                               -             145,000                343,300 
 
 Operating (loss)/profit before 
  separately disclosed items                        (31,369)             136,280                340,613 
 
 
  Costs associated with refinancing        3               -                   -               (68,234) 
 Costs associated with refurbishment 
  of investment properties                 3       (152,925)            (34,682)              (101,670) 
                                                ------------       -------------       ---------------- 
 
 
 Operating (loss)/profit                           (184,294)             101,598                170,709 
 
 Finance costs                                     (268,383)           (355,866)              (512,811) 
 Finance income                                        1,354                   3                     21 
                                                ------------       -------------       ---------------- 
 
 Loss before taxation                              (451,323)           (254,265)              (342,081) 
 
 Taxation                                                  -                   -                      - 
                                                ------------       -------------       ---------------- 
 
 Loss for the period/year                          (451,323)           (254,265)              (342,081) 
                                                ------------       -------------       ---------------- 
 
 Total comprehensive expense for the 
  period/year                                      (451,323)           (254,265)              (342,081) 
                                                ============       =============       ================ 
 Loss per share expressed in pence         4 
  per share 
  Basic                                               (1.08)              (0.77)                 (0.85) 
  Diluted                                             (0.92)              (0.33)                 (0.41) 
                                                ============       =============       ================ 
 
 
 
 
 

KCR RESIDENTIAL REIT PLC (REGISTERED NUMBER: 09080097)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 DECEMBER 2022 (unaudited)

 
 
 
 
                                                                 31 
                                          31 December      December   30 June 2022 
                                                 2022          2021      (audited) 
                                  Notes           GBP           GBP            GBP 
 Non-current assets 
 Property, plant and equipment                210,896        14,477         54,954 
 Investment properties              5      24,605,300    24,407,000     24,605,300 
 
                                           24,816,196    24,421,477     24,660,254 
                                         ------------  ------------  ------------- 
 
 Current assets 
 Trade and other receivables                  277,746        67,805        185,532 
 Cash and cash equivalents                  1,886,225     2,807,282      2,519,346 
                                         ------------  ------------  ------------- 
 
                                            2,163,971     2,875,087      2,704,878 
                                         ------------  ------------  ------------- 
 
 Total assets                              26,980,167    27,296,564     27,365,132 
                                         ============  ============  ============= 
 
 Equity 
 Shareholders' equity 
 Share capital                      6       4,166,963     4,166,963      4,166,963 
 Share premium                             14,941,898    14,941,898     14,941,898 
 Capital redemption reserve                   344,424       344,424        344,424 
 Retained earnings                        (6,229,271)   (5,690,133)    (5,777,948) 
                                         ------------  ------------  ------------- 
 
 Total equity                              13,224,014    13,763,152     13,675,337 
                                         ------------  ------------  ------------- 
 
 Non-current liabilities 
 Interest bearing loans and 
  borrowings                               13,274,574    13,164,783     13,274,574 
                                         ------------  ------------  ------------- 
 
 Current liabilities 
 Trade and other payables                     481,579       368,629        415,221 
 Interest bearing loans and                         -             -              - 
  borrowings 
 
                                              481,579       368,629        415,221 
                                         ------------  ------------  ------------- 
 
 Total liabilities                         13,756,153    13,533,412     13,689,795 
                                         ------------  ------------  ------------- 
 
 Total equity and liabilities              26,980,167    27,296,564     27,365,132 
                                         ============  ============  ============= 
 
 Net asset value per share 
  (pence)                                       31.74         33.03          32.82 
                                         ============  ============  ============= 
 

KCR RESIDENTIAL REIT PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHSED 31 DECEMBER 2022 (unaudited)

 
 
 
 
                                                            Capital 
                                                         redemption      Retained 
                        Share capital   Share premium       reserve      earnings   Other reserves   Total equity 
                                  GBP             GBP           GBP           GBP              GBP            GBP 
 Balance at 1 
  July 2021                 2,816,963      13,594,317       344,424   (5,435,868)                -     11,319,836 
 
 Changes in equity 
 Transactions 
  with owners: 
 Issue of share 
  capital                   1,350,000       1,347,581             -             -                -      2,697,581 
 Total transactions 
  with owners:              1,350,000       1,347,581             -             -                -      2,697,581 
                       --------------  --------------  ------------  ------------  ---------------  ------------- 
 Total comprehensive 
  expense                           -               -             -     (254,265)                -      (254,265) 
 Balance at 31 
  December 2021             4,166,963      14,941,898       344,424   (5,690,133)                -     13,763,152 
                       --------------  --------------  ------------  ------------  ---------------  ------------- 
 
 Changes in equity 
 Transactions 
  with owners: 
 Issue of share                     -               -             -             -                -              - 
  capital 
                       --------------  --------------  ------------  ------------  ---------------  ------------- 
 Total transactions                 -               -             -             -                - 
  with owners:                                                                                                  - 
                       --------------  --------------  ------------  ------------  ---------------  ------------- 
 Total comprehensive 
  expense                           -               -             -      (87,815)                        (87,815) 
                       --------------  --------------  ------------  ------------  ---------------  ------------- 
 Balance at 30 
  June 2022                 4,166,963      14,941,898       344,424   (5,777,948)                -     13,675,337 
                       --------------  --------------  ------------  ------------  ---------------  ------------- 
 
 Changes in equity 
 Transactions 
  with owners: 
 Issue of share                     -               -             -             -                -              - 
  capital 
                       --------------  --------------  ------------  ------------  ---------------  ------------- 
 Total transactions 
  with owners:                      -               -             -             -                -              - 
                       --------------  --------------  ------------  ------------  ---------------  ------------- 
 
 Total comprehensive 
  expense                           -               -             -     (451,323)                -      (451,323) 
                       --------------  --------------  ------------  ------------  ---------------  ------------- 
 Balance at 31 
  December 2022             4,166,963      14,941,898       344,424   (6,229,271)                -     13,224,014 
                       ==============  ==============  ============  ============  ===============  ============= 
 

KCR RESIDENTIAL REIT PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHSED 31 DECEMBER 2022 (unaudited)

 
 
 
 
                                                   Six months          Six months               Year 
                                                        ended               ended              ended 
                                                  31 December         31 December            30 June 
                                                         2022                                   2022 
                                                                             2021          (audited) 
                                                          GBP                 GBP                GBP 
 Cash flows from operating activities 
 Loss for the period/year from continuing 
  operations                                        (451,323)           (254,265)          (342,081) 
 Adjustments for 
 Depreciation charges                                  31,114               8,900             21,437 
 Loss on disposal of investment property                    -               5,000              5,000 
 Revaluation of investment properties                       -           (145,000)          (343,300) 
 Finance costs                                        268,383             355,866            512,811 
 Finance income                                       (1,354)                 (3)               (21) 
 Increase in trade and other receivables             (92,214)            (14,430)          (132,157) 
 Increase/(decrease) in trade and 
  other payables                                       66,358            (78,595)           (32,003) 
 Cash used in operations                            (179,036)           (122,527)          (310,314) 
 
 Interest paid                                      (268,383)           (355,866)          (512,811) 
 Net cash used in operating activities              (447,419)           (478,393)          (823,125) 
                                                -------------       -------------       ------------ 
 
 Cash flows from investing activities 
 Purchase of property, plant & equipment            (187,056)                   -           (53,013) 
 Purchase of investment properties 
  (including capital expenditure on 
  current properties)                                       -           (285,000)          (285,000) 
 Proceeds from sale of investment 
  properties                                                -             280,000            280,000 
 Interest received                                      1,354                   3                 21 
                                                -------------       -------------       ------------ 
 Net cash used in investing activities              (185,702)             (4,997)           (57,992) 
                                                -------------       -------------       ------------ 
 
 Cash flows from financing activities 
 Loan repayments in period                                  -         (3,443,777)        (5,020,248) 
 New loans in period                                        -           3,969,953          5,656,215 
 Proceeds from share issue                                  -           2,697,581          2,697,581 
                                                -------------       -------------       ------------ 
 Net cash from financing activities                         -           3,223,757          3,333,548 
                                                -------------       -------------       ------------ 
 
 (Decrease)/increase in cash and cash 
  equivalents                                       (633,121)           2,740,367          2,452,431 
                                                -------------       -------------       ------------ 
 
 Cash and cash equivalents at beginning 
  of period/year                                    2,519,346              66,915             66,915 
                                                =============       =============       ============ 
 
 Cash and cash equivalents at end 
  of period/year                                    1,886,225           2,807,282          2,519,346 
                                                =============       =============       ============ 
 
 
 
 
 

KCR RESIDENTIAL REIT PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHSED 31 DECEMBER 2022 (unaudited)

 
 
 
   1.           Basis of preparation 

The Company is registered in England and Wales. The consolidated interim financial statements for the six months ended 31 December 2022 comprise those of the Company and subsidiaries. The Group is primarily involved in UK property ownership and letting.

Statement of compliance

This consolidated interim financial report has been prepared in accordance with the recognition and measurement principles of UK adopted International Accounting Standards. AIM-quoted companies are not required to comply with IAS 34 Interim Financial Reporting and the Group has taken advantage of this exemption. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial performance and position of the Group since the last annual consolidated financial statements for the year ended 30 June 2022. This consolidated interim financial report does not include all the information required for full annual financial statements prepared in accordance with International Financial Reporting Standards. The financial statements are unaudited and do not constitute statutory accounts as defined in section 434(3) of the Companies Act 2006.

A copy of the audited annual report for the year ended 30 June 2022 has been delivered to the Registrar of Companies. The auditor's report on these accounts was unqualified and did not contain statements under s498(2) or s498(3) of the Companies Act 2006.

This consolidated interim financial report was approved by the Board of Directors on 28 March 2023.

Significant accounting policies

The accounting policies applied by the Group in this consolidated interim financial report are the same as those applied by the Group in its consolidated financial statements for the year ended 30 June 2022.

Basis of consolidation

The interim financial statements include the financial statements of the Company and its subsidiary undertakings. The subsidiaries included within the consolidated financial statements, from their effective date of acquisition, are K&C (Newbury) Limited, K&C (Coleherne) Limited, K&C (Osprey) Limited, KCR (Kite) Limited and KCR (Southampton) Limited.

Going Concern

The Directors have adopted the going-concern basis in preparing the interim financial statements.

The Directors have concluded that it remains appropriate to prepare these interim financial statements on a going concern basis.

    2.         Operating segments 

The Group is involved in UK property ownership and letting and is considered to operate in a single geographical and business segment.

Revenue analysed by class of business:

 
                                 Six months     Six months 
                                      ended          ended        Year ended 
                                31 December    31 December           30 June 
                                       2022           2021    2022 (audited) 
                                        GBP            GBP               GBP 
 Rental income                      590,503        422,219           933,475 
 Management fees                     53,434         42,194            89,801 
 Resale commission                   61,778         56,075           102,055 
 Ground rents                        10,405         10,595            13,314 
 Leasehold extension income          72,620         73,500           133,500 
 Other income                             -              -             8,625 
                              -------------  -------------  ---------------- 
                                    788,740        604,583         1,280,770 
                              =============  =============  ================ 
 
   3.          Operating (loss)/profit 

The (loss)/profit before taxation is stated after charging:

 
                                           Six months     Six months 
                                                ended          ended        Year ended 
                                          31 December    31 December           30 June 
                                                 2022           2021    2022 (audited) 
                                                  GBP            GBP               GBP 
 Costs associated with refinancing                  -              -            68,234 
 Costs of refurbishment of investment 
  properties                                  152,925         34,682           101,670 
 Depreciation of property, plant 
  and equipment                                31,114          8,900            21,437 
 Directors' remuneration                       76,500         73,624           182,125 
 

During the six months ended 31 December 2022, the Group incurred costs of GBP152,925 (GBP34,682 - December 2021) (GBP101,670 - June 2022) relating to major refurbishment of properties at Coleherne Road, London and Ladbroke Grove, London.

During the six month period, the Company paid Naylor Partners, a business owned by Russell Naylor, fees of GBP24,000 (December 2021 - GBP24,000).

The directors are considered to be key management personnel.

   4.         Basic and diluted loss per share 

Basic

The calculation of loss per share for the six months to 31 December 2022 is based on the loss for the period attributable to ordinary shareholders of GBP451,323 divided by a weighted average number of ordinary shares in issue.

The weighted average number of shares used for the six months ended 31 December 2022 was 41,669,631 (June 2022 - 40,196,318) (December 2021 - 33,012,022).

Diluted

The calculation of loss per share for the six months to 31 December 2022 is based on the loss for the period attributable to ordinary shareholders of GBP451,323 divided by a weighted average number of ordinary shares in issue, adjusted for dilutive share options held by Torchlight. The Torchlight share options lapsed in August 2022.

The weighted average number of shares used for the six months ended 31 December 2022 was 48,888,653 (June 2022 - 82,882,619) (December 2021 - 77,569,631).

   5.           Investment properties 
 
                            Six months   Six months 
                              ended 31     ended 31        Year ended 
                              December     December           30 June 
                                  2022         2021    2022 (audited) 
                                   GBP          GBP               GBP 
 At start of period/year    24,605,300   24,262,000        24,262,000 
 Additions                           -      285,000           285,000 
 Disposals                           -    (285,000)         (285,000) 
 Revaluations                        -      145,000           343,300 
                           -----------  -----------  ---------------- 
 
 At end of period/year      24,605,300   24,407,000        24,605,300 
                           ===========  ===========  ================ 
 
 

Investment properties were valued by professionally qualified independent external valuers at the date of acquisition and were recorded at the values that were attributed to the properties at acquisition date. The investment properties were independently valued at, or within three months of the financial year ended 30 June 2022. The Directors have further considered the values as at 31 December 2022 and concluded that they remain appropriate.

   5.               Investment properties - continued 

Fair value is based on current prices in an active market for similar properties in the same location and condition. The current price is the estimated amount for which a property could be exchanged between a willing buyer and willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

Valuations are based on a market approach which provides an indicative value by comparing the property with other similar properties for which price information is available. Comparisons have been adjusted to reflect differences in age, size, condition, location and any other relevant factors.

The fair value for investment properties has been categorised as a Level 3 inputs under IFRS 13.

The valuation technique used in measuring the fair value, as well as the significant inputs and significant unobservable inputs are summarised in the following table -

 
 Fair Value    Valuation Technique      Significant      Significant Unobservable 
  Hierarchy                              Inputs Used              Inputs 
   Level      Income capitalisation   Adopted gross           3.50% - 6.50% 
      3        and or capital value    yield                 GBP336 - GBP1,355 
               on a per square foot    Adopted rate 
               basis                   per square foot 
             ----------------------  -----------------  ------------------------- 
 
   6.          Share capital 
 
                                        31 December          31           30 June 
                                               2022    December    2022 (audited) 
 Allotted, issued and fully paid:                          2021 
                             Nominal 
 Number:        Class:        value:            GBP         GBP               GBP 
 41,669,631     Ordinary     GBP0.10      4,166,963   4,166,963         4,166,963 
 
                                          4,166,963   4,166,963         4,166,963 
                                       ============  ==========  ================ 
 

At 1 July 2022, the Company had 41,669,631 Ordinary shares of GBP0.10 each in issue. The Ordinary shares carry no rights to fixed income.

   7.          Related Party Transactions 

Details of remuneration and fees paid to directors are disclosed at note 3 of these interim financial statements.

   8.          Post Balance Sheet Events 

Since the balance sheet date, the Group has purchased a further flat at Heathside, London for GBP287,500.

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END

IR BCGDXUXDDGXI

(END) Dow Jones Newswires

March 29, 2023 02:00 ET (06:00 GMT)

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