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Company Announcements

Half-year Report

By LSE RNS

RNS Number : 3616Q
Specialist Investment PropertiesPLC
11 September 2017
 

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 ("MAR"). With the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

 

Specialist Investment Properties Plc

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

 

Interim results for the six months ended 30 June 2017

 

11 September 2017

 

 

Financial Results

 

The Company made an unaudited profit before and after taxation of £12,000 for the six months ended 30 June 2017 (2016: loss of £57,000).

 

The return of the Company to profitability has resulted from the establishment of a stable property portfolio, comprising thirteen assets, during the period. The Company made one small property acquisition in January 2017, but otherwise the portfolio has remained unchanged throughout the period.  Rent reviews for five properties took place during the period, recording uplifts in line with CPI.  As a result of the acquisition and rent reviews, total annualised rent for the property portfolio had reached £636,500 by 30 June 2017, representing a gross yield of 10.5%.

 

The Company's unaudited balance sheet at 30 June 2017 shows net assets of £2.2m, of which £0.2m was held in cash at the balance sheet date. Investment properties were carried at an aggregate value of £6.6m, with £4.5m of associated borrowings in place.

 

Property Portfolio

 

The Company held investment properties valued at £6.6m at 30 June 2017, consisting of seven children's homes, one supported living home and five properties rented out as short term accommodation to local authorities. The children's homes and supported living asset are leased to care operators on long term full repairing and insuring leases with annual index-linked uplifts. The short term accommodation is let for shorter periods to local authorities, with vacancy rates in the sector historically less than 1%. For the largest short term accommodation property, the Company has entered into a one year lease with the local authority.

 

The following table gives details of the purchase prices and gross yields on purchase price:

 

 

No.

Purchase price

£'000

Annual Rent

£'000

Gross rental yield

%

 

The gross rental yield for the thirteen properties on purchase costs after taking account of stamp duty, legal costs and fees is 9.7% p.a.

 

Future Plans

 

The Company is today announcing that it intends to seek Shareholder approval for the cancellation of admission of its Ordinary Shares to trading on AIM.  The background and rationale to this proposal will be set out in a further announcement published later today.

 

 

John Le Poidevin

Director

 

 

 

 

 

 

 

 

For further information:

 

Specialist Investment Properties plc

John Le Poidevin / Lynn Bruce / Simon Clements

+44 (0) 1481 724222

 

Puma Investments (Investment Adviser to the Company)

David Kaye

+44 (0) 20 7408 4050

 

Allenby Capital Limited (Nomad and Broker to the Company)

David Worlidge / James Thomas / Liz Kirchner

+44 (0) 20 3328 5656

 

 

 

Notes to Editors

 

The Company's shares are admitted to trading on AIM and it is registered in the Isle of Man with company number 111066C.

 

 

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2017

 

 

 

 

 

Six months ended 30 June 2017

(unaudited)

Six months ended 30 June 2016

(unaudited)

Year ended 31 December 2016

(audited)

 

Notes

 

 

 

 

 

£'000

£'000

£'000

 

 

 

 

 

Revenue

 

312

25

174 

 

 

 

 

 

Administrative expenditure

 

 (146)

 (72)

      (229)

 

 

 

 

 

Operating profit/(loss)

 

         166

         (47)

      (55)

 

 

 

 

 

Interest income

 

-

1

1

Finance costs

 

(154)

(11)

(82)

 

 

 

 

 

Profit/(loss) before taxation

 

12

         (57)

      (136)

 

 

 

 

 

Taxation

 

                        -  

                        -  

                     -  

 

 

 

 

 

Profit/(loss) after taxation and total comprehensive loss for the period

 

         12

         (57)

      (136)

 

 

 

 

 

Attributable to:

 

 

 

 

Equity holders of the parent

 

12

(57)

(136)

Non-controlling interests

 

      -

      -

      -

 

 

12

(57)

(136)

 

 

 

 

 

 

Earnings/(loss) per share

Basic and diluted

 

 

3

0.09p

(0.57)p

(1.16)p

 

 

 

 

 

 

 

 

Consolidated Statement of Financial Position

As at 30 June 2017 (unaudited)

 

 

 

Notes

As at 30 June 2017

(unaudited)

As at 30 June 2016

(unaudited)

As at 31 December 2016

(audited)

 

 

 

 

 

 

 

£'000

£'000

£'000

Non-current assets

 

 

 

 

Investment properties

4

      6,563

      1,673

6,223

Intangible assets

 

               2

               1

              2  

 

 

 

 

 

 

 

6,565

1,674

             6,225  

Current assets

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

179

16

159

Cash and cash equivalents

 

171

1,695

365

 

 

350

1,711

524

Total assets

 

6,915

3,385

6,749

 

Current liabilities

 

 

 

 

Trade and other payables

 

         (140)

         (64)

       (192)

Loans due in less than one year

5

         (1,033)

-

-

 

 

(1,173)

(64)

(192)

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

Loans due after more than one year

5

       (3,459)

       (1,030)

            (4,295) 

Other payables

 

(37) 

(31) 

Total liabilities

 

       (4,669)

       (1,094)

       (4,518)

 

 

 

 

 

Net Assets

 

2,246

2,291

2,231

 

 

 

 

 

Equity

 

 

 

 

Capital and Reserves

 

 

 

 

Called up share capital

6

      2,599

      2,598

    2,599

Share premium account

 

    12,940

    12,938

  12,940

Retained earnings

 

   (13,312)

   (13,245)

 (13,324)

Equity attributable to equity holders of the parent

 

       2,227

       2,291

       2,215

 

 

 

 

 

Non-controlling interest

 

19

-

16

Total equity

 

2,246

2,291

       2,231

 

Net Asset Value per share

 

16.71p

           17.35p

       16.62p

 

 

 

 

Consolidated Statement of Changes in Equity

For the six months ended 30 June 2017 (unaudited)

 

 

 

Share capital

Share premium account

Retained earnings

Non-controlling interest

Total

 

 

 

 

 

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

At 1 January 2016

2,491

11,015

(13,188)

-

318

 

 

 

 

 

 

Loss for the period

 

-

-

(57)

-

(57)

Issue of share capital

107

1,923

-

-

2,030

 

 

 

 

 

 

At 30 June 2016

2,598

12,938

(13,245)

-

2,291

 

 

 

 

 

 

 

 

Share capital

Share premium account

Retained earnings

Non-controlling interest

Total

 

 

 

 

 

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

At 1 July 2016

2,598

12,938

(13,245)

-

2,291

 

 

 

 

 

 

Loss for the period

 

-

-

(79)

-

(79)

Issue of preference shares

 

-

-

-

16

16

Issue of share capital

1

2

-

-

3

 

At 31 December 2016

2,599

12,940

(13,324)

16

2,231

 

 

 

 

 

 

 

 

 

Share capital

Share premium account

Retained earnings

Non-controlling interest

Total

 

 

 

 

 

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

At 1 January 2017

2,599

12,940

(13,324)

16

2,231

 

 

 

 

 

 

Profit for the period

 

-

-

12

-

12

Issue of preference shares

-

-

-

3

3

 

 

 

 

 

 

At 30 June 2017

2,599

12,940

(13,312)

19

2,246

 

 

 

 

 

 

 

 

 

Consolidated Cash Flow Statement

For the six months ended 30 June 2017

 

 

 

 

Six months ended 30 June 2017

(unaudited)

Six months ended 30 June 2016

(unaudited)

Year ended 31 December 2016

(audited)

 

 

 

 

 

£'000

£'000

£'000

 

 

 

 

Profit/ (loss) from operations

166

(47)

(55)

Increase in receivables

(20)

(8)

(151)

(Decrease)/increase in payables

(55)

30

130

 

 

 

 

Cash flows from operating activities

              91

              (25)

       (76)

 

 

 

 

Investing activities

 

 

 

Purchase of investment properties

          (340)

          (1,673)

       (6,223)

Purchase of intangible assets

                -

                (1)

             (2)  

Net cash used in investing activities

          (340)

          (1,674)

           (6,225)

 

 

 

 

Financing activities

 

 

 

Proceeds from issue of share capital

-

           2,030

        2,033

Issue of preference shares

                 3

-

              47

Interest income

-

1

             1

Interest paid

                (145)

-

(43)

New loans received

197

1,030

4,295

Net cash generated from financing activities

           55

           3,061

            6,333

 

Net (decrease)/increase in cash and cash equivalents during the period

           (194)

           1,362

          32

 

 

 

 

Cash and cash equivalents at beginning of period

              365

              333

           333

 

Cash and cash equivalents at end of period

           171

           1,695

365

 

 

 

Notes to the Interim Financial Report

For the six months ended 30 June 2017 (unaudited)

 

1.  Financial information

 

Basis of preparation and publication

 

The annual financial statements of Specialist Investment Properties Plc are prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

 

The information for the year ended 31 December 2016 does not constitute statutory accounts.  The Annual Report and Accounts of the Group were issued on 26 May 2017. The auditor's report on those accounts was not qualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report. 

 

Copies of this announcement are available on the Company's website www.specialistinvestmentproperties.com   

 

Going concern

 

The directors have considered the adequacy of the disclosures made in the financial statements concerning the company's ability to continue as a going concern and the basis on which the financial statements have been prepared.  As it is the directors' intention to sell the company's assets and liabilities in the normal course of business and then to wind up the company in an orderly manner, the financial statements have not been prepared on a going concern basis.  It should be noted that the company continues to be solvent and will meet its liabilities as they fall due.  The decision to wind up the company does not impact the measurement of its assets and liabilities.

 

Accounting policies

 

The accounting policies adopted are consistent with those of the previous financial year.

 

Investment properties

The Group's investment properties are held for long term investment. Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value based on market data and a valuation made as of each reporting date. The fair value of investment property does not reflect future capital expenditure that will improve or enhance the property and does not reflect future benefits from this future expenditure.

 

Gains or losses arising from changes in the fair value of investment properties are included in the Group Statement of Comprehensive Income in the year in which they arise.

 

Investment properties are recognised for accounting purposes upon completion of contract, when the risks and rewards of ownership are transferred to the Group.  Investment properties cease to be recognised when they have been disposed of. Any gains and losses arising are recognised in the Group Statement of Comprehensive Income in the year of disposal.

 

Net rental income

Rental income arising from operating leases on investment properties is accounted for on a straight line basis over the lease term. An adjustment to rental income is recognised from the rent review date of each lease in relation to unsettled rent reviews. For leases which contain fixed or minimum deemed uplifts, the rental income is recognised on a straight line basis over the lease term. Incentives for lessees to enter into lease agreements are spread evenly over the lease terms, even if the payments are not made on such a basis. Rental income is measured at the fair value of the consideration receivable, excluding discounts, rebates, VAT and other sales taxes or duty.

 

Bank loans and borrowings

All loans and borrowings are initially measured at fair value less directly attributable transaction costs. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest method.

 

 

Borrowing costs

Borrowing costs that are separately identifiable and directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs the Group incurs in connection with the borrowing of funds. 

 

 

2.  Dividends

 

The Directors do not recommend the payment of an interim dividend in respect of the six months ended 30 June 2017 (30 June 2016: £nil, 31 December 2016: £nil).

 

 

3. Earnings/(loss) per share

 

 

Six months ended 30 June 2017

(unaudited)

Six months ended 30 June 2016

(unaudited)

Year ended 31 December 2016

(audited)

 

 

£'000

£'000

£'000

 

Earnings/(loss) for the period

 

 12

(57)

              (136)

 

 

 

 

 

 

 

Six months ended 30 June 2017

(unaudited)

Six months ended 30 June 2016

(unaudited)

Year ended 31 December 2016

(audited)

 

 

No.

No.

No.

Weighted average number of ordinary shares for the purpose of basic and diluted loss per share

 

      13,330,306

9,966,607

 

      11,678,518

 

 

 

 

 

Earnings/(loss) per share (pence)

 

 

 

 

 

 

 

 

 

Basic and diluted

 

0.09

(0.57)

(1.16)

 

 

 

4. Investment properties

 

 

£'000

At 1 January 2017

6,223

 

Additions in the period

 

340

At 30 June 2017

6,563

 

 

5. Loans

 

As at 30 June 2017, the Group had drawn loans totaling £4,493,340 from loan facilities advanced by Heritage Square Limited, a related entity to whom the Group's Investment Adviser, Puma Investment Management Limited, acts as Trading Adviser.  Costs of £3,686 were set off against this loan balance and are being released over the loan term, resulting in a net loan balance at 30 June 2017 of £4,492,037.  As at 30 June 2017, loans totaling £1,033,000 were payable in less than one year and loans totaling £3,460,340 were due in more than one year.

 

Under a £7.4m principal loan facility, interest is payable on drawn funds at a fixed rate of 6.0% - 6.5% per annum and loans are repayable two years after the date of drawdown.  Loans are used to fund the purchase of investment properties and are secured on those properties by way of a first charge. As at the period end £4,213,340 had been drawn down under this principal loan facility.

 

In addition, the Group has a further £2.5m bridging facility with Heritage Square Limited, whereby interest is payable on drawn funds at a rate of 1% per month for the first six months, stepping up to 1.25% per month between seven months from drawdown and twelve months from drawdown, 1.5% per month between thirteen months from drawdown and eighteen months from drawdown and 1.75% per month between nineteen months from drawdown and twenty-four months from drawdown. Loans are repayable two years after the date of drawdown.  The Group was only able to draw down on the facility until the earlier of reaching the £2.5m limit or 30 June 2017. As at the period end £280,000 had been drawn from this loan facility.

 

 

6. Share Capital

 

The total number of Ordinary shares in issue at the start and end of the period was 13,330,306.


This information is provided by RNS
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