TIDMALNA

RNS Number : 1911K

Alina Holdings PLC

30 December 2020

FOR IMMEDIATE RELEASE.

30 December 2020

Alina Holdings PLC (the "Company")

Results for the six months ended 30 September 2020

Further to the Company's announcement dated 2 December 2020, the directors of Alina Holdings PLC are pleased to announce the Company's unaudited consolidated results for the six months ended 30 September 2020.

Enquiries:

Alina Holdings PLC

William A Heaney

Company Secretary

07712 868315

Management Report

Corporate Activity

During the period the directors reviewed the options open to the Company for its future strategy, in tandem with the aim of restoring trading in the Company's shares on the London Stock Exchange. This culminated in the publication, and subsequent approval by the Company's shareholders in September 2020, of proposals for the Company's new investment strategy (summarised above), in tandem with which the Company's largest shareholder at that time, Thalassa Holdings Ltd, distributed the majority of its shares in the Company to its own shareholders. This enabled the Company to apply to the Financial Conduct Authority for the restoration of trading in the Company's shares on the London Stock Exchange, which took place on 19 November 2020.

In accordance with the new investment strategy adopted by its shareholders, the Company changed its name to Alina Holdings PLC on 26 November 2020.

Economic Background & Market Conditions

Throughout the period reported on the Company operated under its previous investment strategy as a UK REIT specialising in local retail shopping assets. An element of the uncertainty that had overhung the property market for much of 2019 had to some extent been dissipated prior to the period reported on, following the general election in December 2019. Nevertheless, concerns over the potential impact of the UK's departure from the European Union and uncertainty over its future trading relationship with the bloc continued to influence property values and transaction volumes throughout the period. This situation was greatly compounded by the COVID-19 outbreak, confirmed as a global pandemic by the World Health Organisation immediately prior to the period, which impacted all owners and occupiers of commercial property. The effects of the pandemic, and the measures taken by Government to contain it, have been particularly severe in the retail and leisure segments. However, even during the most severe lockdown restrictions, those smaller local and convenience shops supplying essential items to their localities could continue to trade.

Financial Results

The Group made an IFRS loss before tax for the six-months period to 30 September 2020 of GBP0.652 million (or loss per share of 2.87p), compared with a profit of GBP0.026 million (or 0.03 pence per share) for the equivalent period in 2019 and a loss of GBP0.06 million (or 0.26 pence per share) for the six months period to 31 March 2020 and a loss of GBP1.90 million (or 2.37 pence per share) for the six-months period to 31 March 2019. The loss for the Group reflected the loss of income resulting from the disposal of property assets during the previous periods, the revaluation of the residual portfolio and the effect of currency market fluctuations on the Group's cash holdings.

Property Portfolio and Asset Management

At 30 September 2020 the Company's portfolio comprised six properties, with an annual gross rental income, after deducting head rent payments, of GBP0.45 million (30 September 2019: eight properties, gross rental income GBP0.48 million). The portfolio included 61 letting units (2019: 65 letting units). One of the property assets was considered to be held for sale.

Asset management activities during the period focused on maximising property occupancy and opportunities for rental growth, as well as a number of repair and maintenance projects. Marketing and letting activities continued, albeit with appropriate precautions to address lockdown requirements.

Portfolio Valuation

The fair value of the property portfolio of six assets held at 30 September 2020 was GBP2.795 million (30 September 2019: eight assets, GBP3.465 million; 31 March 2020: six assets, GBP3.120 million). The valuation was provided by Allsop LLP, a firm of independent chartered surveyors. In line with the Company's established valuation policy, two of the larger assets were subject to full RICS valuations, with the remainder subject to desktop updates of their previous full valuations provided by Allsop LLP in July 2019. The holding value of the property assets in the Company's accounts of the one remaining property considered to be held for sale took account of agreed pricing and potential transaction costs.

Cash

At 30 September 2020 the Company held GBP3.818 million in cash (31 March 2020: GBP4.023 million; 30 September 2019: GBP3.566 million).

Net Asset Value

The Net Asset Value at 30 September 2020 was GBP6.281 million or 27.67p per share (31 March 2020: GBP6.933 million, 30.55p per share; 30 September 2019: GBP6.992 million or 30.81p per share). The reduction in Net Asset Value reflected the reduction in the valuation of the Company's property portfolio, which in turn reflected general trends in the UK property market, together with the reduction in rental income as a result of property disposals in previous periods and the effect of currency market fluctuations on the Group's cash holdings.

Basis of Preparation of Financial Statements

The Company's financial statements at 31 March 2019 were prepared on a break-up basis in view of the progress with the property sales programme then in place. Following the decision of the new directors to suspend the property disposal programme in October 2019, the directors decided that it was appropriate for the Company's financial statements for 30 September 2019 onwards should be prepared on the going concern basis.

Financing

The Company did not utilise any external funding facilities during the period.

Taxation

As a result of the share buy-back offer concluded in October 2019, the Company no longer fulfilled the conditions of the UK REIT tax regime. It was subsequently agreed with HM Revenue & Customs, that the Group would be considered to remain in the REIT regime until 30 September 2020, at which time it would depart from the REIT regime unless it had fulfilled the relevant conditions by that date. However, in September 2020 the Company's shareholders adopted a new investment strategy, including the re-listing of the Company's shares on the Standard element of the Main Market of the London Stock Exchange and, in consequence, to leave the UK REIT tax regime. Under the UK REIT rules the Company is considered to have exited the REIT regime for the entirety of its financial year beginning 1 October 2018, being the beginning of the first tax year of the Company during which it did not fulfil all the REIT conditions. The Company is therefore deemed to be subject to corporation tax in the usual way from that date. However, in the light of the losses incurred during 2018-19, it is not anticipated that any corporation tax liability has arisen in respect of that year.

Dividend

In line with the Group's current dividend distribution policy no interim dividend will be paid. The directors will continue to review the dividend policy in line with progress with the Company's new investment strategy.

Related Party

The Company has been internally managed since 24 November 2019, when its previous fund management contract with Principal Real Estate Limited terminated. During the period the Company had an arrangement with Thalassa Holdings Ltd, its then largest shareholder, for the provision of accountancy and registered office services. The services were supplied to the Company at cost, which was not considered to be material, and the directors did not consider the arrangement to amount to a related party transaction.

Principal Risks and Uncertainties for the Remaining Six Months of the Financial Period

The risks facing the Group for the foreseeable future remain consistent with those described in detail in the annual report for the year to 30 September 2019 (available on the Group's website: www.alina-holdings.com ) .

These centre on:

-- Changes in the macroeconomic environment, particularly those arising from the COVID-19 epidemic

   --    Higher than anticipated property maintenance costs 
   --    Changes to legal environment, planning law or local planning policy 
   --    Regulatory requirements in connection with the property portfolio 
   --    Information technology systems and data security 
   --    Non-payment of trade receivables by tenants, potentially exacerbated by the COVID-19 epidemic 
   --    Financial and property market conditions 
   --    Uncontrolled exit from the UK REIT regime 

The potential impact of a number of these risk areas on the Company is mitigated by the significant proportion of the Company's assets held in cash.

The Board was satisfied that its approach to macroeconomic risks supplied an appropriate response to the effects of the COVID-19 pandemic during the period.

The Group's exit from the UK REIT regime was the subject of consultation with HM Revenue and Customs the Company's tax advisers and was thus under control.

The Board will continue to review its risk management approach to ensure that it reflects the risk profile of the revised investment strategy recently approved by the Company's shareholders.

The Group does not speculate in derivative financial instruments.

The Group's exposure to the risk of non-payment of trade receivables by its tenants was considered to have been heightened during the period reported on as a direct result of the COVID-19 virus and the consequent lockdown imposed by the UK Government, which restricted the ability of the Group's tenants to trade in their properties. The lockdown has also impacted on the ability of the Company to refurbish, market and let vacant properties. The directors monitor the level of rent and service charge arrears, as well as progress with letting void properties, on a continual basis.

Auditors' Review

This interim financial report has been reviewed but not audited by auditors pursuant to the Financial Reporting Council guidance on Review of Interim Financial Information.

Responsibility Statement

We confirm that to the best of our knowledge that:

(a) the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU: and

(b) the Interim Management Report includes a fair review of the information required by:

DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the six months of the financial period and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining three months of the financial period; and

DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the six months of the current financial period and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Signed on behalf of the Board who approved the interim management report on 29 December 2020.

Duncan Soukup

Chairman

Condensed Consolidated Income Statement for the six months ended 30 September 2020

 
                                   Unaudited                                       Audited       Unaudited   Unaudited 
                                      Twelve       Unaudited     Unaudited          Twelve             Six         Six 
                                      months      Six months    Six months          months          months      months 
                                       ended           ended         ended           ended           ended       ended 
                                30 September    30 September      31 March    30 September    30 September    31 March 
                        Note            2020            2020          2020            2019            2019        2019 
                                     GBP000s         GBP000s       GBP000s         GBP000s         GBP000s     GBP000s 
 Gross rental income                     453             224           229             764             305         459 
--------------------- 
 Property operating 
  expenses               3             (133)            (88)          (45)           (695)            (23)       (672) 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 Net rental income                       320             136           184              69             282       (213) 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 Profit/Loss on 
  disposal 
  of investment 
  properties 
  held for sale          4                 1               -             1           (148)             (1)       (147) 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 (Loss)/Profit from 
  change in fair 
  value 
  of investment 
  properties             9             (325)           (325)             -           (258)              37       (295) 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 Administrative 
  expenses 
  including 
  non-recurring 
  items                  5             (428)           (273)         (155)         (1,580)           (319)     (1,261) 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 Operating 
  (loss)/profit 
  before net 
  financing 
  costs                                (432)           (462)            30         (1,917)             (1)     (1,916) 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 Financing income        6                 3               -             3              49              29          20 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 Financing expenses      6             (282)           (190)          (92)             (6)             (2)         (4) 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 (Loss)/profit before 
  tax                                  (711)           (652)          (59)         (1,874)              26     (1,900) 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 Taxation                7                 -                             -               -               -           - 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 (Loss)/profit for 
  the period from 
  continuing 
  operations                           (711)           (652)          (59)         (1,874)              26     (1,900) 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 (Loss)/profit for 
  the financial 
  period 
  attributable to 
  equity 
  holders of the 
  Company                              (711)           (652)          (59)         (1,874)              26     (1,900) 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 Basic and diluted 
  loss per share on 
  (loss)/profit for 
  the period             10          (3.13)p         (2.87)p       (0.26)p         (2.34)p           0.03p     (2.37)p 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 Basic and diluted 
  (loss)/profit per 
  share on operations 
  for the period         10          (3.13)p         (2.87)p       (0.26)p         (2.34)p           0.03p     (2.37)p 
---------------------  -----                  --------------  ------------  --------------  --------------  ---------- 
 

Condensed Consolidated Statement of Comprehensive Income for the six months ended 30 September 2020

 
                                Unaudited                                       Audited       Unaudited   Unaudited 
                                   Twelve       Unaudited     Unaudited          Twelve             Six         Six 
                                   months      Six months    Six months          months          months      months 
                                    ended           ended         ended           ended           ended       ended 
                             30 September    30 September      31 March    30 September    30 September    31 March 
                                     2020            2020          2020            2020            2019        2019 
                                  GBP000s         GBP000s       GBP000s         GBP000s         GBP000s     GBP000s 
------------------------   --------------  --------------  ------------  --------------  --------------  ---------- 
 Loss for the financial 
  period                            (711)           (652)          (59)         (1,874)              26     (1,900) 
-------------------------  --------------  --------------  ------------  --------------  --------------  ---------- 
 
 Total comprehensive 
  loss for the period               (711)           (652)          (59)         (1,874)              26     (1,900) 
-------------------------  --------------  --------------  ------------  --------------  --------------  ---------- 
 
 Attributable to: 
------------------------   --------------  --------------  ------------  --------------  --------------  ---------- 
 Equity holders of the 
  parent Company                    (711)           (652)          (59)         (1,874)              26     (1,900) 
-------------------------  --------------  --------------  ------------  --------------  --------------  ---------- 
 
 
 
 

Condensed Consolidated Balance Sheet as at 30 September 2020

 
                                            Unaudited                    Audited   Unaudited 
                                                as at     Unaudited     as at 30       as at 
                                         30 September      as at 31    September    31 March 
                                 Note            2020    March 2020         2019        2019 
                                              GBP000s       GBP000s      GBP000s     GBP000s 
                                -----  --------------  ------------  -----------  ---------- 
 Non-current assets 
                                -----  --------------  ------------  -----------  ---------- 
 Investment properties            9             2,814         3,139        3,139           - 
                                -----  --------------  ------------  -----------  ---------- 
 
                                                2,814         3,139        3,139           - 
                                -----  --------------  ------------  -----------  ---------- 
 Current assets 
                                -----  --------------  ------------  -----------  ---------- 
 Trade and other receivables                      243           192          378         844 
                                -----  --------------  ------------  -----------  ---------- 
 Investment properties held 
  for sale                        9               330           330          677       3,656 
                                -----  --------------  ------------  -----------  ---------- 
 Cash                                           3,818         4,023        3,566      22,755 
                                -----  --------------  ------------  -----------  ---------- 
                                                4,391         4,545        4,621      27,255 
                                -----  --------------  ------------  -----------  ---------- 
 Total assets                                   7,205         7,684        7,760      27,255 
                                -----  --------------  ------------  -----------  ---------- 
 
 Non-current liabilities 
                                -----  --------------  ------------  -----------  ---------- 
 Finance lease liabilities        9             (350)         (350)        (350)           - 
                                -----  --------------  ------------  -----------  ---------- 
                                                (350)         (350)        (350)           - 
                                -----  --------------  ------------  -----------  ---------- 
 Current liabilities 
                                -----  --------------  ------------  -----------  ---------- 
 Trade and other payables                       (574)         (401)        (418)     (1,402) 
                                -----  --------------  ------------  -----------  ---------- 
                                                (574)         (401)        (418)     (1,402) 
                                -----  --------------  ------------  -----------  ---------- 
 Total liabilities                              (924)         (751)        (768)     (1,402) 
                                -----  --------------  ------------  -----------  ---------- 
 
 Net assets                                     6,281         6,933        6,992      25,853 
                                -----  --------------  ------------  -----------  ---------- 
 
 Equity 
                                -----  --------------  ------------  -----------  ---------- 
 Issued capital                   2               319           319          319      18,334 
                                -----  --------------  ------------  -----------  ---------- 
 Capital redemption reserve       2               598           598          598       1,764 
                                -----  --------------  ------------  -----------  ---------- 
 Retained earnings                              5,364         6,016        6,075       5,755 
                                -----  --------------  ------------  -----------  ---------- 
 Total attributable to equity 
  holders of the Company                        6,281         6,933        6,992      25,853 
                                -----  --------------  ------------  -----------  ---------- 
 

Condensed Consolidated Statement of Cash Flows for the six months ended 30 September 2020

 
                                 Unaudited                                       Audited 
                                    Twelve       Unaudited     Unaudited          Twelve       Unaudited     Unaudited 
                                    months      Six months    Six months          months      Six months    Six months 
                                     ended           ended         ended           ended           ended         ended 
                              30 September    30 September      31 March    30 September    30 September      31 March 
                      Note            2020            2020          2020            2019            2019          2019 
                                   GBP000s         GBP000s       GBP000s         GBP000s         GBP000s       GBP000s 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Operating 
 activities 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 (Loss)/Profit for 
  the period                         (711)           (652)          (59)         (1,874)              26       (1,900) 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Adjustments for: 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Loss/(Profit) from 
  change in fair 
  value 
  of investment 
  properties           9               325             325                           258            (37)           295 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Net financing 
  loss/(income)        6               279             190            89            (43)            (27)          (16) 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 (Profit)/Loss on 
  disposal 
  of investment 
  properties                           (1)               -           (1)             148               1           147 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Equity secured 
  share-based 
  payment expenses                       -                                            40              20            20 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
                                     (108)           (137)            29         (1,471)            (17)       (1,454) 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Decrease/ 
  (Increase) 
  in trade and 
  other 
  receivables                          135            (51)           186           3,963             466         3,497 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Decrease in trade 
  and other 
  payables                             156             173          (17)         (1,818)         (1,003)         (815) 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
                                       183            (15)           198             674           (554)         1,228 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Loss on foreign 
  exchange                           (282)           (190)          (92)               -               - 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Loan arrangement 
  fees 
  paid                                   -               -             -             (6)             (2)           (4) 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Interest received                       3               -             3              49              29            20 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Net cash 
  (outflow)/inflow 
  from operating 
  activities                          (96)           (205)           109             717           (527)         1,244 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 
 Investing 
 activities 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Net proceeds from 
  sale of 
  investment 
  properties                           348               -           348          18,468             246        18,222 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Acquisition and 
  improvements 
  to investment 
  properties           9                 -               -                           (4)             (1)           (3) 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Cash flows from 
  investing 
  activities                           348               -           348          18,464             245        18,219 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 
 Net cash flows 
  from 
  operating 
  activities 
  and investing 
  activities                           252           (205)           457          19,181           (282)        19,463 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 
 Financing 
 activities 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Repayment of                            -               -             -               -               -             - 
 borrowings 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Reduction in share 
  capital                                -                                      (18,907)        (18,907)             - 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Cash flows from 
  financing 
  activities                             -                                      (18,907)        (18,907)             - 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 
 Net decrease in 
  cash                                 252           (205)           457             274        (19,189)        19,463 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Cash at beginning 
  of period                          3,566           4,023         3,566           3,292          22,755         3,292 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 Cash at end of 
  period                             3,818           3,818         4,023           3,566           3,566        22,755 
                     -----  --------------  --------------  ------------  --------------  --------------  ------------ 
 

Condensed Consolidated Statement of Changes in Equity for the six months ended 30 September 2020

 
 
                                                            Capital 
-------------------------------- 
                                      Share              redemption   Retained 
-------------------------------- 
                                    capital   Reserves      reserve   earnings      Total 
                                     GBP000     GBP000       GBP000     GBP000     GBP000 
--------------------------------  ---------  ---------  -----------  ---------  --------- 
 At 30 September 2018                18,334      3,773        1,764      3,862     27,733 
                                  ---------  ---------  -----------  ---------  --------- 
 Total comprehensive expense 
                                  ---------  ---------  -----------  ---------  --------- 
 for the period 
                                  ---------  ---------  -----------  ---------  --------- 
 Loss for the period                      -          -            -    (1,900)    (1,900) 
                                  ---------  ---------  -----------  ---------  --------- 
 Transactions with owners, 
                                  ---------  ---------  -----------  ---------  --------- 
 recorded directly in 
  equity 
                                  ---------  ---------  -----------  ---------  --------- 
 Dividends                                -          -            -          -          - 
                                  ---------  ---------  -----------  ---------  --------- 
 Share based payments                     -          -            -         20         20 
                                  ---------  ---------  -----------  ---------  --------- 
 Total contributions by                   -          -            -          -          - 
  and 
                                  ---------  ---------  -----------  ---------  --------- 
 distributions to owners 
                                  ---------  ---------  -----------  ---------  --------- 
 Release of Gilfin acquisition 
  reserve to distributable 
  reserve                                 -    (3,773)            -      3,773          - 
                                  ---------  ---------  -----------  ---------  --------- 
 
 At 31 March 2019                    18,334          -        1,764      5,755     25,853 
                                  ---------  ---------  -----------  ---------  --------- 
 Total comprehensive loss 
  for the period 
                                  ---------  ---------  -----------  ---------  --------- 
 Profit for the period                    -          -            -         26         26 
                                  ---------  ---------  -----------  ---------  --------- 
 Transactions with owners 
  recorded directly in 
  equity 
                                  ---------  ---------  -----------  ---------  --------- 
 Dividends                                -          -            -          -          - 
                                  ---------  ---------  -----------  ---------  --------- 
 Share based payments                     -          -            -         20         20 
                                  ---------  ---------  -----------  ---------  --------- 
 Total contributions by                   -          -            -          -          - 
  and distributions to 
  owners 
                                  ---------  ---------  -----------  ---------  --------- 
 Capital reduction (Note 
  a) 
                                  ---------  ---------  -----------  ---------  --------- 
                                   (17,417)          -            -     17,417          - 
                                  ---------  ---------  -----------  ---------  --------- 
 Transfer capital reserves 
  to revenue (Note b)                     -          -      (1,764)      1,764          - 
                                  ---------  ---------  -----------  ---------  --------- 
 Cost of own shares acquired 
  (note c)                            (598)          -            -   (18,309)   (18,907) 
                                  ---------  ---------  -----------  ---------  --------- 
 Creation of Capital Redemption 
  Reserve (note d)                        -          -          598      (598)          - 
                                  ---------  ---------  -----------  ---------  --------- 
 At 30 September 2019                   319          -          598      6,075      6,992 
                                  ---------  ---------  -----------  ---------  --------- 
 Total comprehensive profit 
                                  ---------  ---------  -----------  ---------  --------- 
 for the period 
                                  ---------  ---------  -----------  ---------  --------- 
 Loss for the period                      -          -            -       (59)       (59) 
                                  ---------  ---------  -----------  ---------  --------- 
 Transactions with owners, 
                                  ---------  ---------  -----------  ---------  --------- 
 recorded directly in 
  equity 
                                  ---------  ---------  -----------  ---------  --------- 
 Dividends                                -          -            -          -          - 
                                  ---------  ---------  -----------  ---------  --------- 
 Share based payments                     -          -            -          -          - 
                                  ---------  ---------  -----------  ---------  --------- 
 Total contributions by                   -          -            -          -          - 
  and 
                                  ---------  ---------  -----------  ---------  --------- 
 distributions to owners 
                                  ---------  ---------  -----------  ---------  --------- 
 At 31 March 2020                       319          -          598      6,016      6,933 
                                  ---------  ---------  -----------  ---------  --------- 
 

During the six months period to 30 September 2019 the Company successfully applied to the High Court to undertake a capital restructuring in order to facilitate a share buy-back tender offer. Under this restructuring and buy-back:

(a) The nominal value of each Ordinary Share was reduced from 20p to 1p, resulting in GBP17.417m being released to retained earnings.

(b) The capital redemption reserves and other reserves were transferred to retained earnings as part of the Court approved capital restructuring.

(c) 59,808,456 ordinary 1p shares were purchased, representing 72.5% of total share capital at the time, at a price of 31.33p each and then cancelled, the total cost comprising:

 
                                                                             GBP000s 
            59,808,456 shares               1p nominal value 
             purchased at                    of each share                       598 
                                -------------------------------  ------------------- 
             plus premium 
              30.33p on each 
              share                                                           18,140 
 -------------------------------  -----------------------------  ------------------- 
                                                                              18.738 
  -------------------------------------------------------------  ------------------- 
             legal costs 
              of restructuring 
              and buy back                                                       169 
 -------------------------------  -----------------------------  ------------------- 
                                                                              18,907 
  -------------------------------------------------------------  ------------------- 
 

(d) A new capital redemption reserve of GBP0.598m was created to replace the nominal value of shares bought.

Notes to the interim report for the six months ended 30 September 2020

 
 
   1. Accounting policies 
 
   Basis of preparation 
 
 The condensed unaudited set of financial statements has 
  been prepared in accordance with IAS 34 "Interim Financial 
  Reporting" as adopted by the EU. 
 
 The annual financial statements of the Group are prepared 
  in accordance with International Financial Reporting Standards 
  (IFRSs) as adopted by the EU. As required by the Disclosure 
  and Transparency Rules of the Financial Services Authority, 
  the condensed set of financial statements has been prepared 
  applying the accounting policies and presentation that 
  were applied in the preparation of the Company's published 
  consolidated financial statements for the year ended 30 
  September 2019 (with which they should be read in conjunction). 
  The independent auditor's report on the 2019 financial 
  statements was not qualified. 
 
  The Group adopted IFRS 15 Revenue from Contracts with 
  Customers, IFRS 9 Financial Instruments and IFRS 16 Leases 
  from 1 January 2019. None of these standards has a material 
  effect on the Group's financial statements. 
 
 
  The financial statements are prepared on a going concern 
  basis, as were the financial statements for the year ended 
  30 September 2019. The financial statements for the six 
  months ended 31 March 2019 were prepared on a break-up 
  basis. 
 
   2. Segmental reporting 
 
 IFRS 8 requires operating segments to be identified on 
  the basis of internal reports that are regularly reported 
  to the chief operating decision maker to allocate resources 
  to the segments and to assess their performance. 
 
  The Group has identified one operation and one reporting 
  segment which is reported to the Board on a quarterly 
  basis. The Board of directors is considered to be the 
  chief operating decision maker. 
 
 3. Property Operating Expenses 
                    Unaudited   Unaudited                 Audited   Unaudited 
                       Twelve         Six   Unaudited      Twelve         Six 
                       months      months         Six      months      months    Unaudited 
                        ended       ended      months       ended       ended   Six months 
                           30          30       ended          30          30        ended 
                    September   September    31 March   September   September     31 March 
                         2020        2020        2020        2019        2019         2019 
                       GBP000      GBP000      GBP000      GBP000      GBP000       GBP000 
                               ----------  ----------  ----------  ----------  ----------- 
   Bad debt 
    charge                 13           4           9         108         134         (26) 
                   ----------  ----------  ----------  ----------  ----------  ----------- 
   Head rent 
    payments             (21)        (13)         (8)        (11)         (8)          (3) 
  ---------------              ----------  ----------  ----------  ----------  ----------- 
   Repairs               (25)        (13)        (12)       (211)         (2)        (209) 
  ---------------              ----------  ----------  ----------  ----------  ----------- 
   Business rates 
    and 
    council tax          (24)        (10)        (14)        (25)        (23)          (2) 
  ---------------              ----------  ----------  ----------  ----------  ----------- 
   Irrecoverable 
    service 
    charge                  3         (5)           8        (39)           2         (41) 
  ---------------              ----------  ----------  ----------  ----------  ----------- 
   Utilities                9           3           6       (109)        (15)         (94) 
  ---------------              ----------  ----------  ----------  ----------  ----------- 
   Insurance             (12)         (5)         (7)        (36)        (25)         (11) 
  ---------------              ----------  ----------  ----------  ----------  ----------- 
   Managing agent 
    fees                 (32)        (14)        (18)       (123)        (24)         (99) 
  ---------------              ----------  ----------  ----------  ----------  ----------- 
   Letting and 
    review 
    fees                    -           -           -        (36)         (4)         (32) 
  ---------------              ----------  ----------  ----------  ----------  ----------- 
   Legal & 
    professional         (28)        (22)         (6)       (113)        (39)         (74) 
  ---------------              ----------  ----------  ----------  ----------  ----------- 
   EPC 
    amortisation, 
    Abortives, 
    and Misc             (16)        (13)         (3)       (100)        (19)         (81) 
  ---------------              ----------  ----------  ----------  ----------  ----------- 
 
   Total property 
    operating 
    expenses            (133)        (88)        (45)       (695)        (23)        (672) 
  ---------------              ----------  ----------  ----------  ----------  ----------- 
 

In common with many property organisations, the Company's portfolio is a mix of residential, opted and non-opted properties for VAT. In the above table the applicable VAT which is not recovered has been included directly in the cost.

During the period the rate of rent collection improved, enabling a reduction in the bad debt provision.

4. Property disposals

 
                          Unaudited                                Audited 
                             Twelve    Unaudited                    Twelve    Unaudited 
                             months   Six months    Unaudited       months   Six months           Unaudited 
                              ended        ended   Six months        ended        ended          Six months 
                                 30           30        ended           30           30               ended 
                          September    September     31 March    September    September            31 March 
                               2020         2020         2020         2019         2019                2019 
                             Number       Number       Number       Number       Number              Number 
 
 
       Number of sales            2            -            2           66            1                  65 
      ----------------               -----------  -----------  -----------  -----------  ------------------ 
 
                             GBP000       GBP000       GBP000       GBP000       GBP000              GBP000 
      ----------------               -----------  -----------  -----------  -----------  ------------------ 
       Average value            177                       177          287          260                 288 
      ----------------  ===========  ===========  ===========  ===========  ===========  ================== 
       Sales 
      ----------------               -----------  -----------  -----------  -----------  ------------------ 
       Total sales              355            -          355       18,955          260              18,695 
      ----------------               -----------  -----------  -----------  -----------  ------------------ 
       Carrying value         (347)            -        (347)     (18,616)        (247)            (18,369) 
      ----------------               -----------  -----------  -----------  -----------  ------------------ 
       Profit/(Loss) 
        on disposals 
        before 
        transaction 
        costs                     8            -            8          339           13                 326 
      ================  ===========  ===========  ===========  ===========  ===========  ================== 
 
       Transaction 
       costs 
      ----------------               -----------  -----------  -----------  -----------  ------------------ 
       Legal fees               (4)            -          (4)        (210)          (9)               (201) 
      ----------------               -----------  -----------  -----------  -----------  ------------------ 
       Agent fees, 
        marketing 
        and brochure 
        costs                   (3)            -          (3)        (240)          (2)               (238) 
      ----------------               -----------  -----------  -----------  -----------  ------------------ 
       Disbursements              -            -            -          (8)          (2)                 (6) 
      ----------------               -----------  -----------  -----------  -----------  ------------------ 
       Non recoverable 
        VAT (on 
        non-opted and 
        residential 
        elements)                 -            -            -         (29)          (1)                (28) 
      ----------------               -----------  -----------  -----------  -----------  ------------------ 
 
       Total 
        transaction 
        costs                   (7)            -          (7)        (487)         (14)               (473) 
      ================  ===========  ===========  ===========  ===========  ===========  ================== 
 
       Profit/(Loss) 
        on disposals 
        after 
        transaction 
        costs                     1            -            1        (148)          (1)               (147) 
      ----------------               -----------  -----------  -----------  -----------  ------------------ 
 
 
       Transaction 
        costs as 
        percentage of 
        sales value            2.0%         0.0%         2.0%         2.6%         5.4%                2.5% 
      ----------------               -----------  -----------  -----------  -----------  ------------------ 
 
 
 5. Administrative expenses 
                     Unaudited   Unaudited               Audited     Unaudited 
                     Twelve      Six         Unaudited   Twelve      Six         Unaudited 
                     months      months      Six         months      months       Six 
                     ended       ended       months      ended       ended        months 
                     30          30          ended       30          30           ended 
                     September   September   31 March    September   September    31 March 
                     2020        2020        2020        2019        2019         2019 
                     GBP000      GBP000      GBP000      GBP000      GBP000      GBP000 
  ----------------              ----------  ----------  ----------  ----------  ---------- 
   Investment 
    manager 
    fees             (9)         (1)         (8)         (320)       (88)        (232) 
  ----------------              ----------  ----------  ----------  ----------  ---------- 
   Legal and 
    professional     (167)       (147)       (20)        (1,177)     (292)       (885) 
  ----------------              ----------  ----------  ----------  ----------  ---------- 
   Tax and audit     (66)        (29)        (37)        (96)        (47)        (49) 
  ----------------              ----------  ----------  ----------  ----------  ---------- 
   Remuneration 
    Costs*           (138)       (77)        (61)        (134)       (65)        (69) 
  ----------------              ----------  ----------  ----------  ----------  ---------- 
   Other             (20)        (13)        (7)         14          (15)        29 
  ----------------              ----------  ----------  ----------  ----------  ---------- 
   Irrecoverable 
    VAT on 
    Administration 
    expenses **      (28)        (6)         (22)        (92)        (37)        (55) 
  ----------------              ----------  ----------  ----------  ----------  ---------- 
   Provision for 
    liquidators' 
    fees             -           -           -           225         225         - 
  ----------------              ----------  ----------  ----------  ----------  ---------- 
 
   Total 
    administrative 
    expenses         (428)       (273)       (155)       (1,580)     (319)       (1,261) 
  ----------------              ----------  ----------  ----------  ----------  ---------- 
 
 
 
  * Remuneration costs for the each of the two six months periods to 
  30 September 2020 include GBPnil (six months to 30 September 2019: 
  GBP20,000; six months to 31 March 2019 GBP20,000) in respect of the 
  expensing of employee share options which were capable of vesting 
  in 2018 onwards. This amount has a corresponding entry in equity and 
  has no impact on the Company's net assets now or in the future. 
 
  ** The Company's portfolio contains residential elements and commercial 
  properties not opted for VAT. Accordingly, VAT on overheads is not 
  fully recoverable. 
 
  6. Net financing (loss)/income 
                    Unaudited   Unaudited               Audited     Unaudited 
                    Twelve      Six         Unaudited   Twelve      Six          Unaudited 
                    months      months       Six        months      months        Six 
                    ended       ended        months     ended       ended         months 
                    30          30           ended      30          30            ended 
                    September   September    31 March   September   September     31 March 
                    2020        2020         2020       2019        2019          2019 
                    GBP000      GBP000      GBP000      GBP000      GBP000       GBP000 
                   ----------  ----------  ----------  ----------  -----------  ---------- 
   Interest 
    receivable      3           -           3           49          29           20 
                   ----------  ----------  ----------  ----------  -----------  ---------- 
 
   Financing 
    income          3           -           3           49          29           20 
                   ----------  ----------  ----------  ----------  -----------  ---------- 
 
   Bank facility 
    fees            -                       -           (6)         (2)          (4) 
                   ----------  ----------  ----------  ----------  -----------  ---------- 
   Loss on 
    foreign 
    exchange        (282)       (190)       (92) 
                   ----------  ----------  ----------  ----------  -----------  ---------- 
   Financing 
    expenses        (282)       (190)       (92)        (6)         (2)          (4) 
                   ----------  ----------  ----------  ----------  -----------  ---------- 
 
   Net financing 
    (loss)/income   (279)       (190)       (89)        43          27           16 
                   ----------  ----------  ----------  ----------  -----------  ---------- 
 
 
  Funds held in non-sterling accounts are revalued at the prevailing 
  exchange rate at each period end. These revaluation gains and losses 
  and those which have crystalised in the period are reflected in the 
  Income Statement. 
 
  At 30 September 2020 the Company held $US4.248m (GBP3.300m). At 31 
  March 2020 the Company held EUR3.948m (GBP3.509m). 
 
  7. Taxation 
 
  From 11 May 2007, the Group elected to join the UK REIT tax regime. 
  As a result, the Group was exempt from corporation tax on the profits 
  and gains from its investment business from this date, provided it 
  met certain conditions. Non-qualifying profits and gains of the Group 
  (the residual business) continued to be subject to corporation tax. 
  The directors consider that all the rental income post 11 May 2007 
  originates from the Group's tax-exempt business whilst it participated 
  in the UK REIT tax regime. 
 
 
   From the first closing date of the Company's share buy-back offer 
   on 16 September 2019, the Group no longer fulfilled certain of the 
   REIT tax regime conditions, principally owing to the proportion of 
   the Company's issued share capital that had thereby come to be held 
   by Thalassa Holdings Ltd. As a consequence of this and the Company's 
   adoption of its new investment policy in September 2020, it is considered 
   that the Group had exited the REIT regime with effect from 1 October 
   2018 and is from that date fully subject to corporation tax. However, 
   the Board believes that the Group's activities since then and the 
   availability of tax losses means that the Company's activities are 
   unlikely to have generated any material corporation tax liability 
   for periods since 1 October 2018 and no provision for corporation 
   tax has been made in these financial statements. 
 
   8. Dividends 
 
   No dividends have been paid since December 2012. 
 
 

9. Investment properties

Allsop LLP, a firm of independent chartered surveyors valued the Group's property portfolio at 30 September 2018 and 31 March 2019. On each of these dates Allsop LLP performed a full valuation of 25% of the Group's properties (including site inspections) and a desktop valuation of the remainder, such that all properties owned by the Group are inspected and valued over the two-year period. The valuations, using assumptions regarding yield rates, void levels and comparable market transactions, were undertaken in accordance with the Royal Institute of Chartered Surveyors Appraisal and Valuation Standards on the basis of market value. Market value is defined as the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

In July 2019 Allsop LLP provided a full valuation (including site visits) on all the properties then held by the Group. In the light of that valuation, for the 30 September 2019 financial statements the Company had desktop valuations prepared by Allsop LLP for all the properties in the portfolio at that date, except for three properties which were considered to be held for sale and were therefore valued at their expected sale price less sales costs.

During the six months' period to 31 March 2020 sales were completed on two properties considered at 30 September 2019 to be held for sale.

In view of the market uncertainty and the operational restrictions arising from the COVID-19 outbreak, the directors did not consider it appropriate to carry out a fresh valuation of the property portfolio at 31 March 2020. The six properties contained in the portfolio therefore continued to be recognised at 31 March 2020 in the financial statements at their holding value in the Company's accounts at 30 September 2019.

The six property assets held at 30 September 2020 were valued at that date by Allsop LLP. In line with the Company's established valuation policy, two of the larger assets were subject to full RICS valuations, including site inspections, with the remainder subject to desktop updates of their previous carrying values.

One property is considered to be held for sale and its holding value in the Company's accounts therefore takes account of agreed pricing and sales costs.

Material valuation uncertainty

The outbreak of the Coronavirus (COVID-19), declared by the World Health Organization as a "Global Pandemic" on 11 March 2020, significantly impacted the global economy, including the UK property market. Given the unknown future impact that COVID-19 might have on the real estate market, less certainty should be attached to the valuation than would normally be the case.

A reconciliation of the portfolio valuation at 30 September 2020 to the total value for investment properties given in the Consolidated Balance Sheet is as follows:

 
                               30 September   31 March   30 September   31 March 
                                       2020       2020           2019       2019 
                                    GBP000s    GBP000s        GBP000s    GBP000s 
                              -------------  ---------  -------------  --------- 
 
 Portfolio valuation *                2,775      3,100          3,447      3,656 
 Investment properties 
  held for sale                       (330)      (330)          (677)    (3,656) 
 
 Head leases treated as 
  investment properties 
  held under finance leases 
  in accordance with IFRS 
  16                                    369        369            369          - 
 
 
 Total per consolidated 
  Balance Sheet                       2,814      3,139          3,139          - 
 
 

* Revalued assets and held for sale at net realisable value

10. Earnings per share and basic earnings per share

The calculation of basic earnings per share was based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding, calculated as follows:

 
                                Unaudited                                       Audited 
                                   Twelve       Unaudited     Unaudited          Twelve       Unaudited     Unaudited 
                                   months      Six months    Six months          months      Six months    Six months 
                                    ended           ended         ended           ended           ended         ended 
                             30 September    30 September      31 March    30 September    30 September      31 March 
                                     2020            2020          2020            2019            2019          2019 
                                   GBP000          GBP000        GBP000          GBP000          GBP000        GBP000 
 
 (Loss)/profit for 
  the period (GBP'000)              (711)           (652)          (59)         (1,874)              26       (1,900) 
-------------------------                  --------------  ------------  --------------  --------------  ------------ 
 
 Weighted average 
  number of shares 
  (000s)                           31,861          31,861        31,861          31,861          31,861        91,670 
-------------------------                  --------------  ------------  --------------  --------------  ------------ 
 
 Treasury shares (000s)           (9,164)         (9,164)       (9,164)         (9,164)         (9,164)       (9,164) 
-------------------------                  --------------  ------------  --------------  --------------  ------------ 
 
 Effective weighted 
  average number of 
  shares (000s)                    22,697          22,697        22,697          80,231          80,231        82,506 
-------------------------                  --------------  ------------  --------------  --------------  ------------ 
 
 Earnings/(loss) per 
  share (pence)                    (3.13)          (2.87)        (0.26)          (2.34)            0.03        (2.30) 
-------------------------                  --------------  ------------  --------------  --------------  ------------ 
 
 Diluted earnings/(loss) 
  per share (pence)                (3.13)          (2.87)        (0.26)          (2.34)            0.03        (2.30) 
-------------------------                  --------------  ------------  --------------  --------------  ------------ 
 

Note: The aggregate of the two six months periods to 30 September 2019 do not equal the total for the year owing to different weighted average number of shares in each period. The weighted aggregate number of shares in the six months period to September 2020 is the same as the equivalent figure for the six months period to 31 March 2020.

11. Net asset value (NAV)

 
                                  30 September   31 March   30 September   31 March 
                                          2020       2020           2019       2019 
                                       GBP000s    GBP000s        GBP000s    GBP000s 
 Number of shares in issue              31,861     31,861         31,861     91,670 
 Less: shares held in Treasury         (9,164)    (9,164)        (9,164)    (9,164) 
-------------------------------                 ---------  -------------  --------- 
 
 Weighted average number of             22,697     22,697         22,697     82,506 
-------------------------------                 ---------  -------------  --------- 
 
                                  30 September   31 March   30 September   31 March 
                                          2020       2020           2019       2019 
                                       GBP000s    GBP000s        GBP000s    GBP000s 
 Net assets per Consolidated 
  Balance Sheet                          6,281      6,933          6,992     25,853 
 
 Net asset value per share             GBP0.28    GBP0.31        GBP0.31    GBP0.31 
-------------------------------                 ---------  -------------  --------- 
 
 

12. Related parties

There have been no transactions with related parties which have materially affected the financial position or performance of the Group during the current or previous period nor have there been any changes in related party transactions which could have a material effect on the financial position or performance of the Company during the six months of the current financial period. Following the termination of the investment advisory agreement between the Company and Principal Real Estate Europe Limited on 24 November 2019, including the period reported on, Thalassa Holdings Ltd, a significant shareholder of the Company, has provided management accounting and registered office facilities to the Company. Those services have been supplied at cost, the value of which is not regarded as material, and it is not considered that the arrangement comprised a related party transaction.

 
 
   13. Significant contracts 
 
         The management agreement between the Company and Principal Real 
         Estate Europe Limited ("Principal") was terminated on 24 November 
         2019. Under this agreement the Company had paid to Principal: 
 
         1. an annual management fee of 0.70% of the gross asset value of 
         the Company, subject to a minimum fee of GBP1m in each of the first 
         two years, GBP0.95m for the third year and GBP0.9m for the fourth 
         year. This minimum fell away in July 2018; 
 
         2. an annual performance fee of 20% of the recurring operating 
         profits above a pre-agreed target recurring profit; 
 
         3. fees for property sales, as follows: 
 
         up to GBP50m: nil 
         GBP50m - GBP150m: 0.5% of sales 
         over GBP150m: 1% of sales. 
 
         The Company paid no fees to Principal in respect of the six months 
         period to 30 September 2020. For the six months period to 31 March 
         2020 fees paid to Principal totalled GBP8,000 (6 months to 31 March 
         2019: GBP232,000; 12 months to 30 September 2020: GBP320,000). 
 

ENDS

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Following the publication of this announcement, this inside information is now considered to be in the public domain.

LEI: 213800SOAIB9JVCV4D57

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END

IR FLFEEFILIVII

(END) Dow Jones Newswires

December 30, 2020 10:54 ET (15:54 GMT)

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