TIDMPBLT

RNS Number : 6303K

TOC Property Backed Lendng Tst PLC

30 August 2019

TOC PROPERTY BACKED LING TRUST PLC

Half-Yearly Report for the six months to 31 May 2019

CHAIRMAN'S STATEMENT

I am pleased to be writing to you for the first time since I became Chairman on 30 April 2019 following Stephen Coe's retirement. Stephen oversaw the progress made throughout the first 27 months of the Company's life, and his wise counsel will be missed.

NET ASSET VALUE

The net asset value at 31 May 2019 was 93.39 pence per share, down 1.1% from 94.39 pence at 30 November 2018, giving a net asset value total return for the six month period of 2.36% when dividends are taken into account. The portfolio of loans remains focused on the North East of England and on Scotland, providing a measure of insulation against the economic vagaries of London and the South East.

DIVIDS

That said, reduced property transaction volumes and the slowdown in price increases of which my predecessor spoke in March have continued, as has the backdrop of political uncertainty. In such circumstances, a measure of prudence has been adopted, in the form of a quarter percent reduction in the quarterly dividends from 1.75 pence per share to 1.50 pence per share. As already announced, the third interim dividend is also expected to be 1.50 pence per share. The fourth interim dividend, scheduled for December 2019, is expected to be at least 1.50 pence per share and will be considered in the light of the circumstances then prevailing.

PORTFOLIO AND GEARING

The portfolio at today's date totals GBP24.9m of value (equivalent 2018 figure: GBP24.9m) representing 15 projects, of which the Company has a profit share agreement in seven. While these arrangements offer sound long-term potential, in terms of possible capital uplifts in due course, the Board does not account for any potential profits on such projects until there is sufficient clarity and visibility as to the projects eventual outcome visibility and certainty around such profits. No new unrealised profits have been recognised in the period.

During the period loans of GBP5.6m were repaid. Since the end of May a further GBP0.5m of loans were repaid, while further investment of GBP2.6m has been made.

At 31 May 2019, GBP0.7m of the Company's GBP8.5m committed revolving facility was drawn down. These arrangements expire on 24 October 2019 and negotiations to renew the facility are well advanced.

The Investment Adviser's report provides further details of the individual projects.

RELATED PARTIES

Three loans (Pendower Hall, Medburn and Charlton Bonds) to parties related to the Investment Adviser or its principals continue to be renewed on a short term basis while the Adviser arranges alternative financing for them. The sale of property units in Charlton Bonds remains in progress, with continuing repayments to the Company, but progress has been slower in relation to Pendower and Medburn. A further update will be given in due course. Interest payments are current on all three related party projects.

CONCLUSION

The Company's pipeline of potential new loans is strong and indeed growing so as it becomes more widely known and its track record becomes established this should cause both portfolio diversity to increase further and allow the very best opportunities to be taken up.

On a forward-looking basis, the third quarter was extremely encouraging, with more than GBP6 million of new money agreed at lending margins that should enhance net asset value returns over time.

JOHN NEWLANDS, CHAIRMAN

29 AUGUST 2019

INVESTMENT ADVISER'S REVIEW

ABOUT THE ADVISER

Tier One Capital Ltd, as Investment Adviser, provides bespoke wealth management, investment management and fund management services to high net worth (HNW) private clients, charities and institutions.

Tier One Capital Ltd currently has a team of 22 individuals with offices in London, Lausanne and its head office in Newcastle upon Tyne.

INVESTMENT ADVISER'S REPORT

REVIEW OF THE 6 MONTHS TO 31 MAY 2019

In its third year of trading the portfolio continued to perform well, posting a NAV total return of 2.36% and paying its annual dividend at 1.5p per quarter for the first two quarters of the year. We continue to be mindful of the ongoing challenges our borrowers are facing in a climate of rising interest rates, a weakening housing market and the ever-present shadow of Brexit. Our hands-on approach and the benefit of staying very close to all of our portfolio has helped us mitigate this risk to date.

The Company agreed one new facility of GBP300,000 with Glenfarg Partnership Ltd in April 2019 which has all been drawn down. This mezzanine loan will assist in the development of 13 retirement apartments in Perthshire, Scotland. The loan is at a 10% rate, with security being taken by a second charge over the development, behind a high street senior lender and a second ranking debenture. The borrowers have contributed a significant amount of their own funds and, with an LTV of 34.8%, our facility ensures there is enough funding to complete the project.

The Company agreed the refinance of The Willows project for a further three years, with an increase of 0.48% to the interest rate. The Company also agreed the refinance of Inveniam Home Loans for a further two years, three months with a higher interest rate of 10% until additional capital is repaid. There were further deployments of capital as follows:

Deployments of Capital

 
 Newgate Street    GBP650,000 
 West Auckland     GBP628,000 
                  ----------- 
 Springs           GBP625,000 
                  ----------- 
 Pendower Hall     GBP287,500 
                  ----------- 
 Barley Croft      GBP250,000 
                  ----------- 
 The Willows        GBP65,000 
                  ----------- 
 Whitefield Farm    GBP50,000 
                  ----------- 
 Fernhill           GBP30,861 
                  ----------- 
 Marley Hill and    GBP25,000 
  Medburn 
                  ----------- 
 

Post half year end, the Company entered into two new facilities on 16 August 2019. The first was a GBP3.4m facility with Esh Chilton Moor Ltd, a wholly owned subsidiary of Esh Investments Ltd. This two year loan at an 8% rate will provide finance to develop 34 three and four bed detached homes in Chilton Moor, County Durham. The Esh Group are a leading construction group of companies which operate across the North East of England, Yorkshire and Cumbria. This facility has the benefit of a profit share via an exit fee of 10%.

The second new facility was a GBP3.05m facility with Bede & Cuthbert Developments Ltd, the second project we have supported with this borrowing team. This two year, six month loan at an 8% rate, will provide finance to develop 30 three and four bed detached houses in Bill Quay, South Tyneside. This team is expected to deliver the Marley Hill project and repay all outstanding loans and interest as well as a level of profit share. We are therefore pleased to support the second development in a well-established residential area. This facility also has the benefit of a 25.1% profit share.

In February 2019 the fourth successful exit of the Company occurred with the repayment of Bylaugh Hall. The GBP3,379,000 loan, at 8%, was to support the acquisition and development of a grade two listed grand hall in Norfolk. The facility pre-dated the formation of the Company and was brought into the Company on the date of listing. This represented an IRR of 8.3%.

During the first six months of the year there were a number of partial redemptions including:

Partial Redemptions

 
 Marley Hill           GBP1,731,064 
 Charlton's Bonds        GBP270,680 
                      ------------- 
 Inveniam Home Loans     GBP197,395 
                      ------------- 
 

Post year end there were further partial redemptions for West Auckland and Inveniam Home Loans returning GBP400,000 and GBP138,176 of capital.

As at 30 November 2018, we reported that three of the projects, Barley Croft, West Auckland and Pendower Hall had not performed in line with expectations. The decision was made to recognise capital impairments at that time. While good progress has been made, we are not amending the impairment at this time and we will revisit this again when considering the 31 August 2019 NAV.

In October 2018, the Company agreed a committed revolving facility with Shawbrook Bank. This facility has already allowed the Company to achieve further growth with GBP0.7m of the facility being drawn at 31 May 2019 (GBP3m: 30 Nov 2019) and a further GBP1.55m drawn down post quarter end. The intention is to deploy this facility over the coming months.

At 31 May 2019, the Company had 15 live facilities, seven of which are a profit share arrangement for the benefit of the Company, with the deployment level sitting at GBP24,865,056.

DEPLOYMENT

The portfolio continues to be deployed across residential 62% (30 Nov 2018: 56%), commercial 26% (30 Nov 2018: 34%), sale and leaseback 9% (30 Nov 2018: 8%) and cash 3% (30 Nov 2018: 2%).

The current average interest rate being achieved on the combined loan book is 7.67% (Nov 2018: 8.38%), with the reduction due largely to the Bedlington project no longer earning interest, and a short term interest rate reduction on West Auckland to 6% from 8%. The average loan size has decreased from GBP1.87m at 30 November 2018 to GBP1.66m at 31 May 2019.

PROFIT SHARE PROJECTS

There are currently seven Profit Share projects in the portfolio (Nov 2018: seven).

Since the listing of the Company we have recognised an uplift in the equity value of one of the seven facilities (Nov 2018: one), The rest are recognised as nil, as we consider it prudent either because projects are at a relatively early stage of their lifecycle or the projects appear unlikely to result in a profit to the Company. We shall continue to monitor and review this on an ongoing basis.

PIPELINE

The Investment Adviser continues to see strong deal flow, reflective of the lack of finance options available to developers in the regions. There was GBP26.3m of potential funding opportunities across 8 projects split as follows:

Regional Allocation

Scotland: 84.52%

North East: 15.48%

Sector Allocation

Commercial: 84.52%

Residential: 15.48%

OUTLOOK

The Investment Adviser continues to see a greater balance of risk and return by providing loan facilities to high quality and experienced property development teams in the regions, as opposed to central London. The current geographical breakdown of the Company's deployment approach shows approximately 82% (Nov 2018: 74%) of the Company's loans being focused in the North East, reflecting the Investment Adviser's commitment to providing facilities based on a relationship led approach. The North East property market also provides protection against a decline in London property markets, as traditionally the region does not see the boom and bust dynamic created by significantly inflated property prices.

The regional Rightmove house price index for June 2019 shows the average price for a property in the North East at GBP153,806 which is an annual increase of 3.2% from last year. Considering the previous month, however, prices and average time to sell (77 days) remained flat.

In comparison, the average price for a property in Greater London now stands at GBP618,880 in June 2019 which is an annual decrease of 2.0% from the previous year and a decrease of 0.4% from the previous month. The average time to sell is slightly lower (72 days) compared to May. Dampened demand and Brexit uncertainty made the number of sales in London fall sharply over the last 5 years. Indeed, also in May, transaction volumes have continued their downward trend in London and the South, indicating some hesitancy to engage the market. Elsewhere, the number of transactions remained flat, highlighting again a marked north/south divide as all northern regions are selling better than those in the southern part of the UK.

 
                        National average asking prices 
------------------------------------------------------------------------------- 
Month               Avg. asking   Monthly change  Annual change       Index 
                        price 
------------------  ------------  --------------  --------------  ------------- 
    June 2019         GBP309,348            0.3%            0.0%          239.2 
------------------  ------------  --------------  --------------  ------------- 
     May 2019         GBP308,290            0.9%            0.1%          238.3 
------------------  ------------  --------------  --------------  ------------- 
               National average asking prices by market sector (excluding Inner 
                                                                        London) 
------------------------------------------------------------------------------- 
Sector                 June 2019        May 2019  Monthly change  Annual change 
------------------  ------------  --------------  --------------  ------------- 
First-time buyers     GBP191,364      GBP191,067            0.2%          -0.1% 
------------------  ------------  --------------  --------------  ------------- 
 Second-steppers      GBP277,757      GBP277,229            0.2%           0.9% 
------------------  ------------  --------------  --------------  ------------- 
Top of the ladder     GBP553,680      GBP553,243            0.1%          -0.5% 
------------------  ------------  --------------  --------------  ------------- 
 

We believe that the UK housing market should behave in line with the broader economy. House prices and transaction volumes are likely to remain close to current levels over the near term since Brexit uncertainty will remain a drag on market sentiment and economic activity. However, healthy labour market conditions and low interest rates should provide underlying support. We believe that once Brexit is resolved, housing will again become the main item on the government's agenda, and we feel that the Company is well placed to take advantage of this.

The Investment Adviser remains confident of being able to continue to implement the Company's investment policy, and to deliver the level of consistent quarterly income that many UK investors demand.

IAN MCELROY,

TIER ONE CAPITAL LTD

29 AUGUST 2019

THE INVESTMENT PORTFOLIO AS AT 31 MAY 2019

 
Project                  Sector     Region   Maturity   Rate  Profit     Security   % NAV     LTV           Loan           Loan 
                                                               Share                                       Value          Value 
                                                                                                            (May           (Nov 
                                                                                                    19) GBP'000s   18) GBP'000s 
                                                 Date      %                                 (May 
                                                                                              19) 
                                                                                                % 
The Willows*         Commercial      Essex   May 2022   7.48      No       Senior   16.16   74.02          4,123          4,058 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
West                                 North 
 Auckland           Residential       East   Mar 2020   6.00      No       Senior   13.07   95.61          3,336          2,709 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
                         Sale &      North 
St Hilds              Leaseback       East   Feb 2020   8.00   25.1%       Senior    9.01   99.82          2,300          2,300 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
Newgate                              North 
 Street             Residential       East   Aug 2020   8.00   25.1%       Senior    8.42  127.00          2,150          1,500 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
                                     North 
Springs             Residential       East   May 2020  10.00   25.1%       Senior    7.84   80.59          2,000          1,375 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
                                     North 
Medburn             Residential       East   Jul 2020   8.00      No       Senior    7.31   71.91          1,865          1,840 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
Pendower                             North 
 Hall                Commercial       East   Aug 2019  10.00      No       Senior    7.05   89.03          1,800          1,513 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
                                     North 
Bedlington          Residential       East   Dec 2019   0.00   25.1%       Senior    6.71   87.48          1,712          1,462 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
 Inveniam 
  Home                               North 
  Loans**           Residential       East   Sep 2021  10.00      No  Subordinate    5.40   68.11          1,378          1,575 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
                                                                Exit 
Whitefield                           North                       fee 
 Farm               Residential       East   Jan 2020  10.00   taken       Senior    4.11  113.70          1,050          1,000 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
                                     North 
Marley Hill         Residential       East   Jan 2020   8.00   25.1%       Senior    4.03   60.47          1,029          2,729 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
Charlton's        Residential/       North 
 Bonds             Commercial         East   May 2020   8.00      No       Senior    2.73  100.00            697            967 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
                                                                           Senior 
                                     North                                      & 
Fernhill***         Residential       East   Jul 2019  10.00      No  Subordinate    2.25   76.34            575            525 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
 Gateshead                           North 
  Town Hall          Commercial       East   Jun 2023   8.00     Yes       Senior    2.16   84.62            550            550 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
Glenfarg            Residential   Scotland   Apr 2020  10.00      No  Subordinate    1.18   34.68            300              - 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
Bylaugh 
 Hall                Commercial    Norfolk   Nov 2018   8.00      No  Subordinate       -       -              -          3,379 
              -----------------  ---------  ---------  -----  ------  -----------  ------  ------  -------------  ------------- 
Cash                                                                                 2.57                    657            606 
                                                       -----  ------  -----------  ------  ------  -------------  ------------- 
 Total / 
  Weighted 
  Average                                               8.40                       100.00   87.89         25,522         28,088 
                                                       -----  ------  -----------  ------  ------  -------------  ------------- 
 

*Client interest rate changed from 7% to 7.48% on 31 May 2019.

**Client interest rate changed from 8% to 10% on 1 May 2019.

***Client interest rate changed from 8% to 10% on 1 May 2019

STATEMENT OFDIRECTORS' RESPONSIBILITIES

STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES

The risks, and the way in which they are managed, are described in more detail under the heading 'Principal Risks and Uncertainties' within the Strategic Report in the Company's Annual Report and Accounts for the year ended 30 November 2018. The Company's principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remainder of the Company's financial year.

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE INTERIM REPORT

We confirm that to the best of our knowledge:

-- the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union and gives a true and fair view of the assets, liabilities, financial position and profit of the Company;

-- the Chairman's Statement and Investment Adviser's Review (together constituting the Interim Management Report) include a fair review of the information required by the Disclosure and Transparency Rules (DTR) 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;

-- the Statement of Principal Risks and Uncertainties above is a fair review of the information required by DTR 4.2.7R; and

-- the Chairman's Statement and Investment Adviser's Review together with the condensed set of financial statements include a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during the period, and any changes in the related party transactions described in the last Annual Report that could do so.

On Behalf of the Board

JOHN NEWLANDS, CHAIRMAN

29 AUGUST 2019

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

 
                                                                                       Year ended 
                                                                                      30 November 
                                                                                             2018 
                                              Six months                Six months 
                                                ended 31                  ended 31 
                                                May 2019                  May 2019 
                                             (unaudited)               (unaudited)      (audited) 
                         Notes    Revenue        Capital      Total          Total          Total 
                                  GBP'000        GBP'000    GBP'000        GBP'000        GBP'000 
----------------------  ------  ---------  -------------  ---------  -------------  ------------- 
 REVENUE 
 Investment 
  interest                          1,001              -      1,001            923          2,044 
 Total revenue                      1,001              -      1,001            923          2,044 
 Unrealised 
  gain on 
  investments                           -              -          -              -            104 
 Total income                       1,001              -      1,001            923          2,148 
 EXPITURE 
 Impairments                            -              -          -              -          (746) 
 Other expenses                     (324)           (30)      (354)          (239)          (550) 
 Total expenditure                  (324)           (30)      (354)          (239)        (1,296) 
 Profit before 
  finance 
  costs and 
  taxation                            677           (30)        647            684            852 
 NET FINANCE 
  COSTS 
 Interest 
  payable                            (41)              -       (41)              -           (14) 
 Profit before 
  taxation                            636           (30)        606            684            838 
 TAXATION                               -              -          -              -              - 
 Profit and 
  total comprehensive 
  profit for 
  the period/year                     636           (30)        606            684            838 
 Basic earnings 
  per share                  3      2.36p        (0.11)p      2.25p          2.74p          3.27p 
 

The total column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations. There is no other comprehensive income as all income is recorded in the statement above.

CONDENSED STATEMENT OF FINANCIAL POSITION

 
                                                                                As at 30 
                                        As at 31 May                            November 
                                                2019                                2018 
                                                                As at 31 
                                                                May 2018 
                                         (unaudited)         (unaudited)       (audited) 
                                 Notes       GBP'000             GBP'000         GBP'000 
-------------------------------  -----  ------------  ------------------  -------------- 
  NON-CURRENT ASSETS 
  Investments held at fair 
   value                             5             -                   -             104 
  Loans at amortised cost            6         8,000               8,703           8,238 
                                               8,000               8,703           8,342 
  CURRENT ASSETS 
  Loans at amortised cost            6        16,865              15,173          19,140 
  Other receivables and 
   prepayments                                   431                 382             473 
  Cash and cash equivalents                      657                 963             606 
                                              17,953              16,518          20,219 
  TOTAL ASSETS                                25,953              25,221          28,561 
  CURRENT LIABILITIES 
  Loan facility                                (675)                   -         (2,944) 
  Other payables and accrued 
   expenses                                    (133)               (224)           (203) 
  TOTAL LIABILITIES                            (808)               (224)         (3,147) 
  NET ASSETS                                  25,145              24,997          25,414 
  SHARE CAPITAL AND RESERVES 
  Share capital                      7           269                 256             269 
  Share premium                                9,094               7,924           9,094 
  Special distributable 
   reserve                                    16,455              16,455          16,455 
  Revenue reserve                              (210)                 470              29 
  Capital reserve                              (463)               (108)           (433) 
  EQUITY SHAREHOLDERS' 
   FUNDS                                      25,145              24,997          25,414 
 
  Net asset value per ordinary 
   share                             8        93.39p              97.57p          94.39p 
 

The notes form an integral part of the financial statements.

The financial statements were approved by the Board of Directors of TOC Property Backed Lending Trust plc (a public limited company incorporated in England and Wales with company number 10395804) and authorised for issue on 29 August 2019.

JOHN NEWLANDS

CHAIRMAN

CONDENSED STATEMENT OF CHANGES IN EQUITY

 
                                                                   Special 
   For the six months ending          Share          Share   distributable   Capital   Revenue 
   31 May 2019                      capital        premium         reserve   reserve   reserve      Total 
 (unaudited)                        GBP'000        GBP'000         GBP'000   GBP'000   GBP'000    GBP'000 
---------------------------------  --------  -------------  --------------  --------  --------  --------- 
  AT BEGINNING OF THE PERIOD 
   Total comprehensive income 
   for the period:                      269          9,094          16,455     (433)        29     25,414 
 
  Profit for the period 
   TRANSACTIONS WITH OWNERS 
   RECOGNISED DIRECTLY IN 
   EQUITY:                                -              -               -      (30)       636        606 
 Dividends paid                           -              -               -         -     (875)      (875) 
---------------------------------  --------  -------------  --------------  --------  --------  --------- 
 At 31 May 2019                         269          9,094          16,455     (463)     (210)     25,145 
                                                                   Special 
For the year ending                                          distributable   Capital   Revenue 
 30 November 2018             Share capital  Share premium         reserve   reserve   reserve    Total 
(audited)                           GBP'000        GBP'000         GBP'000   GBP'000   GBP'000  GBP'000 
  AT BEGINNING OF THE 
   YEAR 
   Total comprehensive 
   income for the period:               227          5,152          16,455     (108)       540   22,266 
  Profit for the year 
   TRANSACTIONS WITH 
   OWNERS RECOGNISED 
   DIRECTLY IN EQUITY:                    -              -               -     (325)     1,163      838 
 Ordinary shares issued                  42          4,188               -         -         -    4,230 
 Share issue costs                        -          (246)               -         -         -    (246) 
 Dividends paid                           -              -               -         -   (1,674)  (1,674) 
--------------------------  ---------------  -------------  --------------  --------  --------  ------- 
 At 30 November 2018                    269          9,094          16,455     (433)        29   25,414 
 
 

CONDENSED STATEMENT OF CHANGES IN EQUITY

 
For the six months                                    Special 
 ending 31 May 2018           Share     Share   distributable   Capital   Revenue 
 (unaudited)                capital   premium         reserve   reserve   reserve    Total 
                            GBP'000   GBP'000         GBP'000   GBP'000   GBP'000  GBP'000 
-------------------------  --------  --------  --------------  --------  --------  ------- 
 AT BEGINNING OF THE 
  PERIOD 
 Total comprehensive 
  income for the period:        227     5,152          16,455     (108)       540   22,266 
 Profit for the period            -         -               -         -       684      684 
 TRANSACTIONS WITH 
  OWNERS 
 RECOGNISED DIRECTLY 
  IN 
 EQUITY: 
 Ordinary shares issued          29     2,896               -         -         -    2,925 
 Share issue costs                -     (124)               -         -         -    (124) 
 Dividends paid                   -         -               -         -     (754)    (754) 
-------------------------  --------  --------  --------------  --------  --------  ------- 
 At 31 May 2018                 256     7,924          16,455     (108)       470   24,997 
 

CONDENSED CASH FLOW STATEMENT

 
                                                   Six months          Six months        Year ending 
                                                    to 31 May           to 31 May        30 November 
                                             2019 (unaudited)    2018 (unaudited)     2018 (audited) 
                                    Notes             GBP'000             GBP'000            GBP'000 
---------------------------------  ------  ------------------  ------------------  ----------------- 
  OPERATING ACTIVITIES 
  Profit after taxation                                   636                 684                838 
  Impairments                                               -                   -                746 
  Unrealised gain on investments                            -                   -              (104) 
  Decrease/(increase) in 
   other receivables                                       42                (84)              (174) 
  (Decrease)/increase in 
   other payables                                        (70)                  83                 72 
  NET CASH INFLOW FROM 
  OPERATING ACTIVITIES 
   BEFORE                                                 608                 683              1,378 
  INTEREST AND AFTER TAXATION 
  Interest paid                                            41                                     14 
  NET CASH INFLOW FROM 
  OPERATING ACTIVITIES                                    649                 683              1,392 
  INVESTING ACTIVITIES 
  Loans given                                         (3,096)             (3,300)           (10,260) 
  Loans repaid                                          5,713               1,206              3,918 
  NET CASH INFLOW/(OUTFLOW) 
  FROM INVESTING ACTIVITIES                             2,617             (2,094)            (6,342) 
  FINANCING 
  Issue of ordinary shares                                  -               2,812              3,984 
  Equity dividends paid                                 (875)               (754)            (1,674) 
  Bank loan drawn down                                    701                   -              2,944 
  Interest paid                                          (41)                   -               (14) 
  Repayment of loan                                   (3,000)                   - 
  NET CASH (OUTFLOW)/INFLOW 
  FROM FINANCING                                      (3,215)               2,058              5,240 
  INCREASE IN CASH AND 
   CASH 
  EQUIVALENTS                                              51                 647                290 
 Cash and cash equivalents 
  at the start of the period 
  / year                                                  606                 316                316 
  CASH AND CASH EQUIVALENTS 
   AT 
  THE OF THE PERIOD 
   / YEAR                                                 657                 963                606 
 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

1. INTERIM RESULTS

The condensed financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') and International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union and the accounting policies set out in the statutory accounts of the Company for the year ended 30 November 2018. The condensed financial statements do not include all of the information required for a complete set of IFRS financial statements and should be read in conjunction with the financial statements of the Company for the year ended 30 November 2018, which were prepared under IFRS as adopted by the European Union. There have been no significant changes to management judgements and estimates.

The condensed financial statements have been prepared on the going concern basis. In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council. After making enquiries, and bearing in mind the nature of the Company's business and assets, the Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing these financial statements.

2. INVESTMENT MANAGER'S AND INVESTMENT ADVISER'S FEES

INVESTMENT MANAGER

The Company has appointed R&H Fund Services (Jersey) Limited to act as the Company's alternative investment fund manager (AIFM) for the purposes of AIFMD pursuant to the Investment Management Agreement and accordingly the AIFM is responsible for providing discretionary portfolio management and risk management services to the Company, subject to the overall control and supervision of the Directors. The AIFM is entitled to receive fees from the Company of GBP15,000 per annum on total assets up to GBP100 million, or a fee from the Company of GBP20,000 per annum if total assets are over GBP100 million. There is a balance of GBP42,288 accrued for the Investment Manager for the period ended 31 May 2019 (Year to 30 November 2018: GBP18,000).

INVESTMENT ADVISER

The AIFM has appointed Tier One Capital Ltd to act as the Company's investment adviser pursuant to which the AIFM has delegated discretionary portfolio management services to the Investment Adviser, subject to the overall control and supervision of the Directors.

The Investment Adviser is entitled to receive from the Company an investment adviser fee which is calculated and paid quarterly in arrears at an annual rate of 0.25 per cent. per annum of the prevailing Net Asset Value if less than GBP100m; or 0.50 per cent. per annum of the prevailing Net Asset Value if GBP100m or more. The Investment Adviser has agreed (unless otherwise decided by the Board) to waive its fee until the Net Asset Value is at least GBP50 million.

There are no performance fees payable

3. EARNINGS PER SHARE

The revenue, capital and total return per ordinary share is based on each of the profit after tax and on 26,924,063 ordinary shares, being the weighted average number of ordinary shares in issue throughout the period.

 
                       Six months ended 31       Six months ended          Year ended 30 
                                  May 2019            31 May 2018          November 2018 
                                                            Pence                  Pence 
               GBP'000     Pence per share   GBP'000    per share   GBP'000    per share 
-----------  ---------  ------------------  --------  -----------  --------  ----------- 
 Revenue 
  earnings         636                2.36       684         2.74     1,163         4.54 
 Capital 
  earnings        (30)              (0.11)         -            -     (325)       (1.27) 
 Total 
  earnings         606                2.25       684         2.74     (838)         3.27 
-----------  ---------  ------------------  --------  -----------  --------  ----------- 
 Average number 
  of shares in 
  issue                         26,924,063             24,997,360             25,593,773 
 

Earnings for the period to 31 May 2019 should not be taken as a guide to the results for the year to 30 November 2019.

4. DIVIDS

 
                                     Six months    Six months           Year ended 
                                          ended         ended          30 November 
                                    31 May 2019   31 May 2018                 2018 
                                        GBP'000       GBP'000              GBP'000 
---------------------------------  ------------  ------------  ------------------- 
 In respect of the prior year: 
 First interim dividend                       -             -                  415 
 Second interim dividend                      -             -                  448 
 Third interim dividend                     471           340                  340 
---------------------------------  ------------  ------------  ------------------- 
 In respect of the current year: 
 First interim dividend                     404           414                  471 
 Total                                      875           754                1,674 
 

A second interim dividend for the year ending 30 November 2019, of 1.50 pence per share, was paid on 4 July 2019 to shareholders on the register on 14 June 2019.

5. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

The Company's investment held at fair value through profit or loss represents its profit share arrangements whereby the Company owns 25.1% of the following companies:

Bede and Cuthbert Developments Ltd

Dinosauria Ltd

Gatsby Homes Ltd

Northumberland Ltd

Northumberland (Whitefield Farm) Ltd

Ryka Developments Ltd

Thursby Homes (Springs) Ltd

The valuation of these interim period and prior period assets requires critical judgement. The projects remain at a very early stage and no equity value could currently be expected to be recovered should they not complete. As the projects move closer to completion, the Board and Investment Adviser will utilise financial and market data to judge the fair value of the profit shares.

IFRS 13 requires the Company to classify its financial instruments held at fair value using a hierarchy that reflects the significance of the inputs used in the valuation methodologies. These are as follows:

-- Level 1 - Unadjusted, fully accessible and current quoted prices in active markets for identical assets or liabilities.

-- Level 2 - Quoted prices for similar assets or liabilities, or other directly or indirectly observable inputs which exist for the duration of the period of investment.

-- Level 3 - External inputs are unobservable. Value is the Directors' best estimate, based on advice from relevant knowledgeable experts, use of recognised valuation techniques and on assumptions as to what inputs other market participants would apply in pricing the same or similar instrument.

All investments are considered Level 3. There have been no movements between levels during the period.

6. LOANS AT AMORTISED COST

 
                                                 31 May    31 May  30 November 
                                                   2019      2018         2018 
                                                GBP'000   GBP'000      GBP'000 
---------------------------------------------  --------  --------  ----------- 
 Opening balance                                 27,378    21,678       21,678 
 Unrealised gain on investments                     104       104          104 
 Loans deployed                                   3,096     3,300       10,260 
 Principal repayments                           (5,713)   (1,206)      (3,918) 
 Impairments                                          -         -        (746) 
 Total loans at amortised cost                   24,865    23,876       27,378 
 Split: 
 Non-current assets: Loans due for repayment 
  after one year                                  8,000     8,703        8,238 
 Current assets: Loans due for repayment 
  under one year                                 16,865    15,173       19,140 
 

The Company's loans are accounted for using the effective interest method. The carrying value of each loan is determined after taking into consideration any requirement for impairment provisions. As at 31 May 2019 the Board agreed, after consideration of the economic climate, the loan to value ratios and prior credit loss experience of the borrowers, that there is no requirement for impairment. No impairment was required in the prior year/period.

7. SHARE CAPITAL

 
                           Nominal value                  Number of 
                                 GBP'000            Ordinary shares 
                                                              of 1p 
-------------------------  -------------  ------------------------- 
At 30 November 2017                  227                 22,693,559 
Issue 7 December 2017                 10                    958,257 
Issue 2 March 2018                     5                    617,216 
Issue 5 April 2018                    14                  1,350,000 
Issue 18 June 2018                    13                  1,305,031 
Issued and fully paid as 
 at 30 November 2018                 269                 26,924,063 
Issued and fully paid as 
 at 31 May 2019                      269                 26,924,063 
 

The ordinary shares are eligible to vote and have the right to participate in either an interest distribution or participate in a capital distribution (on a winding up).

   8.   NET ASSET VALUE PER ORDINARY SHARE 

The net asset value per ordinary share is based on net assets of GBP25,144,488 (31 May 2018: GBP24,997,201; 30 November 2018: GBP25,413,868) and on 26,924,063 ordinary shares (31 May 2018: 25,619,032; 30 November 2018: 26,924,063), being the number of ordinary shares in issue at the period/year end.

9. RELATED PARTIES

The Directors are considered to be related parties. No Director has an interest in any transactions which are, or were, unusual in their nature or significant to the nature of the Company.

The Directors of the Company received GBP62k fees for their services during the six months to 31 May 2019 (six months to 31 May 2018: GBP64k; to 30 November 2018: GBP129k). GBPnil was payable at the period and prior year end.

Ian McElroy is Chief Executive of Tier One Capital Ltd and is a founding shareholder and director of the firm. Stephen Black is a founding shareholder of Tier One Capital Ltd and resigned as a director of the firm on 28 September 2018.

Tier One Capital Ltd received no investment adviser's fee during the period and prior year and GBPnil was payable at the period and prior year end. Tier One Capital Ltd receive a 20% margin and arrangement fee for all loans it facilitates.

Stephen Black and Ian McElroy are shareholders owning 50% of Inveniam Corporate Finance Ltd to which the Company paid GBPnil for financial modelling to the 31 May 2019, (30 November 2018: GBPnil, 31 May 2018: GBP36k). There are various related party relationships in place with the borrowers as below:

-- Pendower Hall

Stephen Black and Ian McElroy are former directors of Pendower Hall Ltd having resigned on 15 June 2018. Pendower Hall Ltd is 100% owned by Inperpetuity Ltd. Inperpetuity Ltd is 100% owned by Stephen Black and his spouse Jill Black. The loan amount outstanding as at 31 May 2019 was GBP2.0m (30 November 2018: GBP1.713m, 31 May 2018: GBP1.2m). Transactions in relation to loans made during the period amounted to GBP0.475m (30 November 2018: GBP0.480m, 31 May 2018: GBPNil). Interest due to be received as at 31 May 2019 was GBP0.033m (30 November 2018: GBP0.027m, 31 May 2018: GBP0.021m). Interest received during the period amounted to GBP0.139m (30 November 2018: GBP0.139m, 31 May 2018: GBP0.061m).

-- Rare Earth Medburn

Stephen Black and Ian McElroy are former directors of Rare Earth Medburn Ltd, having resigned on 15 June 2018. Rare Earth Medburn Ltd is 100% owned by Stephen Black and his spouse Jill Black, having previously been owned by Inperpetuity Ltd. The loan amount outstanding as at 31 May 2019 was GBP1.8m (30 November 2018: GBP1.8m, 31 May 2018: GBP1.6m). Transactions in relation to loans made during the period amounted to GBP0.025m (30 November 2018: GBP0.210m, 31 May 2018: GBPNil). Interest due to be received as at 31 May 2019 was GBP0.025m (30 November 2018: GBP0.025m, 31 May 2018: GBP0.022m). Interest received during the period amounted to GBP0.63m (30 November 2018: GBP0.141m, 31 May 2018: GBP0.065m).

-- Thursby Homes (Charlton Bonds)

Tier One Capital Ltd sold its full shareholding of 25.1% of Thursby Homes Ltd on the 20 March 2019. The loan amount outstanding as at 31 May 2019 was GBP0.697m (30 November 2018: GBP0.967m, 31 May 2018: GBP1.2m). Transactions in relation to loans repaid during the period amounted to GBP0.271m (30 November 2018: GBP0.975m, 31 May 2018: GBP0.8m). Interest due to be received as at 31 May 2019 was GBP0.009m (30 November 2018: GBP0.013m, 31 May 2018: GBP0.027m). Interest received during the period amounted to GBP0.033m (30 November 2018: GBP0.099m, 31 May 2018: GBP0.071m).

The following related parties arise due to the opportunity taken to advance the 25.1% profit share contracts

-- Ryka Developments

The Company owns 25.1% of the borrower Ryka Developments Ltd. Stephen Black is a former director of Ryka Developments Ltd, having resigned on 21 September 2018. The loan amount outstanding as at 31 May 2019 was GBP2.3m (30 November 2018: GBP2.3m, 31 May 2018: GBP2.3m). Transactions in relation to loans made during the period amounted to GBPnil (30 November 2018: GBPnil, 31 May 2018: GBPnil). Interest due to be received as at 31 May 2019 was GBP31k (30 November 2018: GBP31k, 31 May 2018: GBP31k). Interest received during the period amounted to GBP92k (30 November 2018: GBP184k, 31 May 2018: GBP92k).

-- Gatsby Homes

The Company owns 25.1% of the borrower Gatsby Homes Ltd. T1C Nominees Ltd is a former director of Gatsby Homes Ltd, having resigned on 5 October 2018. T1C Nominees Ltd is owned by Stephen Black and Ian McElroy who are directors. The loan amount outstanding as at 31 May 2019 was GBP1.7m (30 November 2018: GBP1.9m, 31 May 2018 GBP1.2m). Transactions in relation to loans made during the period amounted to GBP0.2m (30 November 2018: GBP1.1m, 31 May 2018: GBP0.4m). Interest due to be received as at 31 May 2019 was GBP31k (30 November 2018: GBP31k, 31 May 2018: GBP19). Interest received during the period amounted to GBPnil (30 November 2018: GBP100k, 31 May 2018: GBP41k).

-- Bede and Cuthbert Developments

The Company owns 25.1% of the borrower Bede and Cuthbert Developments Ltd. Stephen Black and Ian McElroy are former directors of Bede and Cuthbert Developments Ltd, having resigned on 24 October 2018. The loan amount outstanding as at 31 May 2019 was GBP1.0m (30 November 2018: GBP2.6m, 31 May 2018: GBP1.9m). Transactions in relation to loans (repaid)/made during the period amounted to GBP(1.7m) (30 November 2018: GBP1.6m, 31 May 2018: GBP0.9m). Interest due to be received as at 31 May 2019 was GBP21k (30 November 2018: GBP35k, 31 May 2018: GBP26k). Interest received during the period amounted to GBP78k (30 November 2018: GBP146k, 31 May 2018: GBP43k).

-- Thursby Homes (Springs)

The Company owns 25.1% of the borrower Thursby Homes (Springs) Ltd. The loan amount outstanding as at 31 May 2019 was GBP2.0m (30 November 2018: GBP1.4m, 31 May 2018: GBP1.3m). Transactions in relation to loans made during the period amounted to GBP0.6m (30 November 2018: GBP1.4m, 31 May 2018: GBP1.3m). Interest due to be received as at 31 May 2019 was GBP33k (30 November 2018: GBP18k, 31 May 2018: GBPnil). Interest received during the period amounted to GBP63k (30 November 2018: GBP54k, 31 May 2018: GBPnil).

-- Northumberland

TOC Property Backed Lending Trust plc owns 25.1% of the borrower Northumberland Ltd. The loan amount outstanding as at 31 May 2019 was GBP2.2m (30 November 2018: GBP1.5m, 31 May 2018: GBPnil). Transactions in relation to loans made during the period amounted to GBP0.7m (30 November 2018: GBP1.5m, 31 May 2018: GBPnil). Interest due to be received as at 31 May 2019 was GBP26k (30 November 2018: GBP30k, 31 May 2018: GBPnil). Interest received during the period amounted to GBP61k (30 November 2018: GBP41k, 31 May 2018: GBPnil).

-- Dinosauria

TOC Property Backed Lending Trust plc owns 25.1% of the borrower Dinosauria Ltd. The loan amount outstanding as at 31 May 2019 was GBP0.6m (30 November 2018: GBP0.6m, 31 May 2018: GBPnil). Transactions in relation to loans made during the period amounted to GBPnil (30 November 2018: GBP0.6m, 31 May 2018: GBPnil). Interest due to be received as at 31 May 2019 was GBP7k (30 November 2018: GBP7k, 31 May 2018: GBPnil). Interest received during the period amounted to GBP22k (30 November 2018: GBP19k, 31 May 2018: GBPnil).

10. OPERATING SEGMENTS

The Board has considered the requirements of IFRS 8 'Operating Segments'. The Board is of the view that the Company is engaged in a single unified business, being the investment of the Company's capital in financial assets comprising loans and joint venture equity contracts and in one geographical area, the United Kingdom, and that therefore the Company has no segments. The Board of Directors, as a whole, has been identified as constituting the chief operating decision maker of the Company. The key measure of performance used by the Board to assess the Company's performance is the total return on the Company's net asset value. As the total return on the Company's net asset value is calculated based on the IFRS net asset value per share as shown at the foot of the Consolidated Statement of Financial Position, the key performance measure is that prepared under IFRS. Therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements.

11. FAIR VALUE MEASUREMENTS

The fair value measurements for assets and liabilities are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. These different levels have been defined as follows:

-- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

-- Level 2 - inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.

-- Level 3 - unobservable inputs for the asset or liability. Value is the Directors' best estimate, based on advice from relevant knowledgeable experts, use of recognised valuation techniques and on assumptions as to what inputs other market participants would apply in pricing the same or similar instrument. All investment properties are included in Level 3.

All investments are considered Level 3. There were no movements of any assets between levels and no transfers into and out of Level 3 during the six months ending 31 May 2019 and the year to 30 November 2018.

12. POST BALANCE SHEET EVENTS

On 6 June 2019, an interim dividend was declared of 1.5p with an ex-dividend date of 13 June 2019 and a payment date of 4 July 2019.

On 16 August 2019, a new loan of GBP500k was advanced to Esh Chilton Moor Ltd in relation to a development of 34 three and four bed houses in Chilton Moor, County Durham. This is part of a two year GBP3.4m facility.

On 16 August 2019, a new loan of GBP275k was advanced to Bede & Cuthbert Developments Ltd in relation to a development of 20 three and four bed houses in Bill Quay, Gateshead. This is part of a two year, six month GBP3.05m facility.

13. INTERIM REPORT STATEMENT

The Company's auditor, BDO LLP, has not audited or reviewed the Interim Report to 31 May 2019 pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information'. These are not full statutory accounts in terms of Section 434 of the Companies Act 2006 and are unaudited. Statutory accounts for the year ended 30 November 2018, which received an unqualified audit report and which did not contain a statement under Section 498 of the Companies Act 2006, have been lodged with the Registrar of Companies. No full statutory accounts in respect of any period after 30 November 2018 have been reported on by the Company's auditor or delivered to the Registrar of Companies.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

IR BIGDIGXDBGCC

(END) Dow Jones Newswires

August 30, 2019 02:00 ET (06:00 GMT)

Grafico Azioni Develop North (LSE:DVNO)
Storico
Da Feb 2024 a Mar 2024 Clicca qui per i Grafici di Develop North
Grafico Azioni Develop North (LSE:DVNO)
Storico
Da Mar 2023 a Mar 2024 Clicca qui per i Grafici di Develop North