TIDMDVNO
RNS Number : 6063V
Develop North PLC
10 August 2022
DEVELOP NORTH PLC
Interim Report & Financial Statements for the six months
ending 31 May 2022
Announcement of Interim Results
LEI: 213800EXPWANYN3NEV68
This announcement contains regulated information.
Chairman's Statement
Highlights
-- Net Asset Value total return of 0.2%
-- Dividend distributions totalling 1.0p (2021: 1.0p) for the
first quarter
-- Ordinary share mid-price equivalent to a premium of 1.1% as
at 31 May 2022
-- Gearing facility with Shawbrook Bank Limited renewed to May
2023
-- Change of name to reflect more accurately the nature of the
Company's activities
Background
The Company entered its sixth year of trading during the period
under report, set against a continuing background of economic
disruption, sharply rising inflation, upwards pressure on interest
rates and a prolonging of the Covid-19 pandemic albeit at less
virulent levels than during earlier phases.
In such circumstances the changes made to the Company's
investment and lending policies a year or more ago, with the effect
of reducing portfolio volatility and risk, while maintaining higher
liquidity, have proved prudent. In short, the decision to target
somewhat lower investment returns - in the nearer term, at least -
and to "cherry pick" new investment opportunities continues to
offer the best risk/reward trade off as the way forward clears.
Net Asset Value
The Company's Net Asset Value per share decreased from 83.9p to
83.1p over the six months ended 31 May 2022. Taking the effects of
dividend distributions into account, this was equivalent to a NAV
Total Return of 0.2%.
This figure may be placed into context by the total return
figures over the same period of the Association of Investment
Companies' (AIC 's) "Property-Debt" sector, of which Develop North
is a component member, of -1.2% and of the AIC's "Debt- Loans"
sector of 2.7%. Meanwhile in a much broader context the FTSE 100
and FTSE All-Share Indices increased respectively by 9.8% and 6.2%
over the same interval.
Dividends
An interim dividend of 1 penny per share will be paid on 30 June
2022. As set out in the Annual Report the Company expects to pay
dividends at a rate of 1 penny per share per quarter, equivalent to
4 pence per share per year in aggregate.
Depending on market conditions and the performance of the
investment portfolio, a final balancing payment may be made at the
end of the current financial year so as to at least fulfil the
investment trust qualification requirements.
Investment Portfolio
The total value of the Company's portfolio now stands at
GBP23.9m, from 19 live projects, following growth of GBP6.7m in the
gross value of loans and receivables.
New Investments - the Company agreed two new loans during the
period, including a GBP2.2m, nine month facility to fund the
construction of four family homes in Morpeth, Northumberland, and a
GBP1.9m facility to fund the construction of executive homes across
two sites in Darras Hall, Ponteland and Stocksfield,
Northumberland. Further details are provided in the Investment
Adviser's report.
In addition, further funds were invested in facilities created
during the second half of last year. This has led to a significant
increase in the total size of the loan book and which will support
portfolio revenues over future months and years.
Exits - there were no portfolio exits, bar a small number of
partial redemptions, during the period.
Impairments - there continue to be historic loans within the
portfolio, which predate the formation of the Company, against
which provisions have already been taken. These projects have now
almost reached their conclusion and the directors expect the level
of impairments to continue to reduce as the overall quality of the
portfolio increases. The Directors, in conjunction with the
Investment Adviser, continue to monitor the performance of all
loans, and certain adjustments to impairments made to investments
have consequently been made (although none at the scale of previous
periods).
The loan portfolio is discussed more fully in the Investment
Adviser's review.
Gearing
The Company continues to benefit from a Gearing facility with
Shawbrook Bank Limited, recently renewed for a further year until
May 2023, with GBP2.7m drawn at the period end.
Outlook
Notwithstanding the testing backdrop described above, the
Company is well positioned both to resist further economic
headwinds and to deploy its considerable liquidity into the right
projects at the right time.
Only a short time ago the country was amidst full or partial
lockdown, characterised by deserted construction sites and empty
travel depots. In this situation the much-lauded "working from
home" initiative beloved of the UK public sector was quite useless
and where productivity was forced towards zero.
We now see building sites coming to life, cranes moving, old
projects re-starting and new schemes being placed on the drawing
board. Under its much more dynamic and appropriate new name of
Develop North PLC, the Company stands ready to move on to the next
phase of its life.
John Newlands
Chairman
10 August 2022
Investment Adviser's Review
ABOUT THE ADVISER
Tier One Capital Ltd is a Newcastle upon Tyne based wealth
management and property lending specialist providing financial
advice services and bespoke tailored lending to the residential and
commercial property development market.
INVESTMENT ADVISER'S REPORT - REVIEW OF THE 6 MONTHS TO 31 MAY
2022
Investment Adviser's highlights:
-- NAV Total Return of 0.2% for the 6 months to 31 May 2022.
-- Loan book, including interest receivable, increased from
GBP18.1m at 30 November 2021 to GBP24.9m at 31 May 2021, an
increase of 37.6%.
-- Payment of dividends totalling 1.0p for the first quarter,
equivalent to an annualised dividend yield of 4.8%.
This Interim Report and Accounts covers the end of the fifth and
the beginning of the sixth year of performance of the Company,
since it's listing in January 2017.
The Company's primary purpose is to provide debt finance to the
property sector. The Company also benefits from a number of equity
positions attained at nil cost in a number of the borrowing
entities which it supports.
The first six months of the financial year have seen the base
rate increase above 1% for the first time since the global
financial crisis of 2008. Market expectations see these increases
continuing for the remainder of 2022 and into 2023 with some
economists expecting a peak of 3%. This has been driven by
inflation which reached 9.1% CPI for the twelve months to May 2022,
primarily because of housing, water, electricity, gas and other
fuels, transport and food and non-alcoholic beverages.
The Company used the first six months to protect shareholder
value, deploying funds into the most recent portfolio loans while
positioning some of the older loans for exit. There was a continued
focus on liquidity, with the gearing facility renewed for a further
twelve months in May 2022.
Despite the ongoing uncertainties, we are pleased to report an
active period for new transactions and deployments to existing
projects, together with full and partial exits:
The Company agreed two new facilities during the period:
-- Fairmoor, North East England - GBP2.2m 9-month facility
-- Moor Lane, North East England - GBP1.9m 18-month facility
During the year a total of GBP8.2m was deployed into six
projects including the two new projects mentioned above.
Portfolio Exits
There were no portfolio exits during the period, leaving the
number of exits since inception at twelve.
Partial Redemptions Update
During the period there were GBP1.6m of partial redemptions
across five of the portfolio projects.
Impairments
The Company, in accordance with IFRS 9, recognises the gross
interest receivable on all its loans, and then recognises an
impairment charge if that interest is not paid by the borrower and
there is not a clear expectation that this can be recovered
subsequently. During the year, three projects were unable to meet
their interest requirements.
IFRS 9 also requires the Company to consider various credit loss
scenarios and assign a risk weighting to these. This calculation
generates a provision which is taken as a further impairment. In
this period the Company has set the provision at GBP33,000, the
same amount in place as at 30 November 2021. This provision is
based on forward looking statements to withstand market-related
shocks including those caused by the ongoing Covid-19 pandemic.
Gearing
In May 2022, the Company renewed the committed revolving credit
facility with Shawbrook Bank for a further year. Again the key
driver was headroom and liquidity and its renewal for a fifth year
demonstrates the support that the Company has from its lender, and
the growing confidence in future deployment given the current
strength of pipeline.
Profit Share Projects
There are currently 6 Profit Share projects in the portfolio
(Nov 2021: 6).
OUTLOOK
Economic Outlook
Residential
As at 31 May 2022, 70.5% of deployed funds were invested across
14 projects with a residential focus with a further GBP1.9m
committed to live projects.
The housing market has continued to grow during 2022, continuing
the strong performance of 2021. There are now strong indications
that a slow down is coming with Savills' five year forecast,
updated in May 2022, suggesting increases across the UK of 12.9%, a
significantly slower rate of growth than the 20.5% over the five
years predicted in November 2021. The slower growth is largely
because stretched affordability, combined with interest rate rises,
will limit the capacity for further growth in property values. The
North East and Scotland are forecast to see rises of 17.4% and
15.7% respectively with London and the south of England falling
below the UK average. It's important to note that most of the
forecast growth is in 2022, with flat or even slightly negative
numbers in 2023 before a return to 2-3% growth in 2024-26.
Supply chain issues for both availability and pricing of labour
and materials reached unprecedented levels in 2021 and continued
into 2022. There are now anecdotal signs that the material
availability issues for most products is returning to normal but
both pricing and labour shortage issues remain, and it will take
the rest of 2022 to stabilise.
The Company's residential exposure is predominantly in the North
East (91.2%). This region continues to have the best affordability
with loan to income ratios remaining lower allowing the potential
for greater price growth in the future. We continue to appraise
projects using the views of market experts for sales values and
build cost and delivery, with all assumptions stress tested.
Commercial
As at 31 May 2022, 29.5% of deployed funds were invested across
five projects with a commercial focus.
The Company continues to be selective in the level of exposure
to commercial developments. We believe our selective approach to
the Company's deployment in the commercial property sector will
continue to create shareholder value. The sectors within the
commercial property space that the Company currently has exposure
to are:
-- bereavement (crematorium);
-- strategic land; and
-- shared office space.
Each of the above sub-sectors offer downside protection in the
current uncertain economic times with the latter two also giving
flexibility for the borrowers as and when trends change. We will
continue to identify and support professional, experienced, and
reliable management teams who have a clear vision and robust
plan.
PIPELINE
There is currently GBP3.5m at various stages of due diligence
across two projects in the North East.
The quality and experience of each management team that we are
in discussions with will continue to enhance the Company's
portfolio and strengthen its reputation in the market. This should
lead to the creation of shareholder value that is sustainable in
the longer term.
Ian McElroy
Tier One Capital
10 August 2022
THE INVESTMENT PORTFOLIO AS AT 31 MAY 2022
Sector % LTV* (May Loan Value LTV* Loan Value
Portfolio 22) (May 22) GBP'000s (Nov 21) (Nov 21)
GBP'000s
Residential 66.0% 69.5% 15,947 73.7% 10,480
---------- ---------------------- ------------------------ --------- -----------------------
Commercial 33.1% 64.3% 8,005 66.7% 7,043
---------- ---------------------- ------------------------ --------- -----------------------
Cash 0.9% - 221 - 4,545
---------- ---------------------- ------------------------ --------- -----------------------
General Impairment - - (32) - (33)
---------- ---------------------- ------------------------ --------- -----------------------
Total/Weighted
Average 100.0% 67.8% 24,141 70.9% 22,035
---------- ---------------------- ------------------------ --------- -----------------------
*LTV has been calculated using the carrying value of the loans
as at the balance sheet date
Interim Management Report
The principal and emerging risks and uncertainties that could
have a material impact on the Company's performance have not
changed from those set out on pages 15 and 16 of the Company's
Annual Report for the year ended 30 November 2021.
The Directors consider that the Chairman's Statement and the
Investment Adviser's Review on pages 2 to 7 of this Interim Report,
the above disclosure on related party transactions and the
Statement of Directors' Responsibilities below, together constitute
the Interim Management Report of the Company for the six months
ended 31 May 2022 and satisfy the requirements of the Disclosure
Guidance and Transparency Rules 4.2.3 to 4.2.11 of the Financial
Conduct Authority.
The Interim Report has not been reviewed or audited by the
Company's Auditor.
The Directors believe, having considered the Company's
investment objectives, risk management policies, capital management
policies and procedures, the nature of the portfolio and
expenditure projections, that the Company has adequate resources,
an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the
foreseeable future and, more specifically, that there are no
material uncertainties pertaining to the Company that would prevent
its ability to continue in such operational existence for at least
twelve months from the date of the approval of this Interim Report.
For these reasons they consider that there is sufficient evidence
to continue to adopt the going concern basis in preparing the
accounts.
Directors' Responsibilities Statement
We confirm that to the best of our knowledge:
-- The condensed set of financial statements has been prepared
in accordance with FRS 104 'Interim Financial Reporting' and gives
a true and fair view of the assets, liabilities, financial position
and profit of the Company, as at 31 May 2022, as required by the
Disclosure Guidance and Transparency Rule 4.2.4R;
-- The Interim Report includes a fair review of the information
required by the Disclosure and Transparency Rule 4.2.7R, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements, and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
-- The Interim Report includes a fair review of the information
concerning related party transactions as required by Disclosure
Guidance and Transparency Rule 4.2.8R.
On Behalf of the Board
John Newlands
Chairman
10 August 2022
INCOME STATEMENT
Six months Six months Year ended
ended ended
31 May 2022 31 May 2021 30 November
(unaudited) (unaudited) 2021
(audited)
Note Revenue Capital Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ----- --------- ---------- -------------- -------------- -------------
REVENUE
Investment interest 864 - 864 879 1,643
---------------------- ----- --------- ---------- -------------- -------------- -------------
Total revenue 864 - 864 879 1,643
---------------------- ----- --------- ---------- -------------- -------------- -------------
(Losses)/gains
on investments
held at fair value
through profit
or loss (38) (96) (134) (39) 54
---------------------- ----- --------- ---------- -------------- -------------- -------------
Total net income 826 (96) 730 840 1,697
---------------------- ----- --------- ---------- -------------- -------------- -------------
Expenditure
Investment adviser
fee (34) - (34) (34) (68)
Impairments on
investments held
at amortised cost 7 (51) (44) (1) (208)
Other expenses (315) - (315) (198) (491)
---------------------- ----- --------- ---------- -------------- -------------- -------------
Total expenditure (342) (51) (393) (233) (767)
---------------------- ----- --------- ---------- -------------- -------------- -------------
Profit before
finance costs
and taxation 484 (147) 337 607 930
---------------------- ----- --------- ---------- -------------- -------------- -------------
Finance costs
Interest payable (16) - (16) (1) (1)
---------------------- ----- --------- ---------- -------------- -------------- -------------
Profit before
taxation 468 (147) 321 606 929
---------------------- ----- --------- ---------- -------------- -------------- -------------
Taxation - - - - -
Profit for the
period/year 468 (147) 321 606 929
---------------------- ----- --------- ---------- -------------- -------------- -------------
Basic earnings
per share 3 1.74p (0.55p) 1.19p 2.25p 3.45p
---------------------- ----- --------- ---------- -------------- -------------- -------------
The total column of this statement represents the Company's
Statement of Comprehensive Income, prepared in accordance with UK
adopted International Financial Reporting Standards ("UK adopted
IFRS") in conformity with the requirements of the Companies Act
2006. The supplementary revenue return and capital return columns
are both prepared under guidance published by the Association of
Investment Companies.
All revenue and capital items in the above statement derive from
continuing operations. There is no other comprehensive income as
all income is recorded in the statement above.
Statement of Financial Position
As at As at As at
31 May 31 May 30 November
2022 2021 2021
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------------- ----- ------------ ------------ ------------
Non-current assets
Investments held at fair value 5 - 1,580 -
Loans at amortised cost 6 14,153 3,099 7,929
------------------------------------- ----- ------------ ------------ ------------
14,153 4,679 7,929
------------------------------------- ----- ------------ ------------ ------------
Current assets
Investments held at fair value 5 6,375 12,688 7,589
Loans at amortised cost 6 4,324 2,326 2,629
Other receivables and prepayments 17 7 27
Cash and cash equivalents 221 3,174 4,545
10,937 18,195 14,790
------------------------------------- ----- ------------ ------------ ------------
Total assets 25,090 22,874 22,719
------------------------------------- ----- ------------ ------------ ------------
Current liabilities
Loan facility (2,656) - -
Other payables and accrued expenses (67) (75) (135)
------------------------------------- ----- ------------ ------------ ------------
Total liabilities (2,723) (75) (135)
------------------------------------- ----- ------------ ------------ ------------
Net assets 22,367 22,799 22,584
------------------------------------- ----- ------------ ------------ ------------
Share capital and reserves
Share capital 7 269 269 269
Share premium 9,094 9,094 9,094
Special distributable reserve 12,849 13,093 13,093
Capital reserve (313) (166) (166)
Revenue reserve 468 509 294
------------------------------------- ----- ------------ ------------ ------------
Equity shareholders' funds 22,367 22,799 22,584
------------------------------------- ----- ------------ ------------ ------------
Net asset value per ordinary
share 8 83.08p 84.68p 83.88p
------------------------------------- ----- ------------ ------------ ------------
The accompanying notes form an integral part of the financial
statements.
The financial statements were approved by the Board of Directors
of Develop North PLC (a public limited company incorporated in
England and Wales with company number 10395804) and authorised for
issue on 10 August 2022.
They were signed on its behalf by:
John Newlands
Chairman
Statement of Changes in Equity
For the six months ending Special
distributable
31 May 2022 Share Share reserve Capital Revenue Total
capital premium reserve reserve
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
At beginning of the period 269 9,094 13,093 (166) 294 22,584
Total comprehensive profit
for the period:
Profit for the period - - - (147) 468 321
transactions with owners
recognised directly in
equity
Dividends paid (note 4) - - (244) - (294) (538)
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
At 31 May 2022 269 9,094 12,849 (313) 468 22,367
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
For the six months ending Special
distributable
31 May 2021 Share Share reserve Capital Revenue Total
capital premium reserve reserve
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
At beginning of the period 269 9,094 13,497 (263) - 22,597
Total comprehensive profit
for the period:
Profit for the period - - - 97 509 606
transactions with owners
recognised directly in
equity
Dividends paid (note 4) - - (404) - - (404)
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
At 31 May 2021 269 9,094 13,093 (166) 509 22,799
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
For the year ending Special
distributable
30 November 2021 Share Share reserve Capital Revenue Total
capital premium reserve reserve
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
At beginning of the period 269 9,094 13,497 (263) - 22,597
Total comprehensive profit
for the period:
Profit for the period - - - 97 832 929
transactions with owners
recognised directly in
equity
Dividends paid (note 4) - - (404) - (538) (942)
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
At 30 November 2021 269 9,094 13,093 (166) 294 22,584
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
Condensed Cash Flow Statement
Six months Six months Year ending
to to
31 May 31 May 30 November
2022 2021 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------------- ------------ ------------ ------------
Operating activities
Profit after taxation 321 606 929
Impairments on investments held at
fair value through profit and loss 123 67 152
Impairments on loans at amortised
cost 51 187 542
Uplifts on investments held at fair
value through profit and loss (27) (107) (342)
Uplifts on loans at amortised cost - 244 (473)
(Increase)/decrease in loan interest
receivable on investments held at
fair value through profit and loss (109) 4 30
Increase in loan interest receivable
on loans at amortised cost (207) (50) (156)
Decrease/(increase) in other receivables 10 14 (6)
(Decrease)/increase in other payables (68) (56) 4
Interest paid 16 - 1
------------------------------------------- ------------ ------------ ------------
Net cash inflow from operating activities 110 421 681
------------------------------------------- ------------ ------------ ------------
Investing activities
Loans given (8,148) (2,697) (8,266)
Loans repaid 1,612 6,002 13,221
------------------------------------------- ------------ ------------ ------------
Net cash (outflow)/inflow from investing
activities (6,536) 3,305 4,955
------------------------------------------- ------------ ------------ ------------
Financing
Equity dividends paid (538) (404) (942)
Bank loan drawn down 2,656 - -
Repayment of bank loan - (1,150) (1,150)
Interest paid (16) - (1)
------------------------------------------- ------------ ------------ ------------
Net cash inflow/(outflow) from financing 2,102 (1,554) (2,093)
------------------------------------------- ------------ ------------ ------------
(Decrease)/Increase in cash and cash
equivalents (4,324) 2,172 3,543
------------------------------------------- ------------ ------------ ------------
Cash and cash equivalents at the
start of the year 4,545 1,002 1,002
------------------------------------------- ------------ ------------ ------------
Cash and cash equivalents at the
end of the period/year 221 3,174 4,545
------------------------------------------- ------------ ------------ ------------
Notes to the Condensed Financial Statements (unaudited)
1. INTERIM RESULTS
The condensed financial statements have been prepared in
accordance with International Accounting Standard 34 'Interim
Financial Reporting' and the accounting policies set out in the
statutory accounts of the Company for the year ended 30 November
2021. The condensed financial statements do not include all of the
information required for a complete set of financial statements and
should be read in conjunction with the financial statements of the
Company for the year ended 30 November 2021, which were prepared in
accordance with UK adopted International Financial Reporting
Standards ("UK adopted IFRS") in conformity with the requirements
of the Companies Act 2006 as applicable to companies reporting
under international accounting standards. There have been no
significant changes to management judgements and estimates.
The condensed financial statements have been prepared on the
going concern basis. In assessing the going concern basis of
accounting the Directors have had regard to the guidance issued by
the Financial Reporting Council. After making enquiries, and
bearing in mind the nature of the Company's business and assets,
the Directors consider that the Company has adequate resources to
continue in operational existence for the foreseeable future. For
this reason they continue to adopt the going concern basis in
preparing these financial statements.
2. INVESTMENT ADVISER
In its role as the Investment Adviser, Tier One Capital Ltd is
entitled to receive from the Company an investment adviser fee
which is calculated and paid quarterly in arrears at an annual rate
of 0.25 per cent. per annum of the prevailing Net Asset Value if
less than GBP100m; or 0.50 per cent. per annum of the prevailing
Net Asset Value if GBP100m or more.
There is no balance accrued for the Investment Adviser for the
period ended 31 May 2022 (31 May 2021: GBPnil; 30 November 2021:
GBPnil).
There are no performance fees payable.
ALTERNATIVE INVESTMENT FUND MANAGER'S DIRECTIVE ('AIFMD')
The Company has been approved by the Financial Conduct Authority
as a Small Registered UK Alternative Investment Fund Manager
('AIFM').
3. EARNINGS PER SHARE
The revenue, capital and total return per ordinary share is
based on each of the profit after tax and on 26,924,063 ordinary
shares, being the weighted average number of ordinary shares in
issue throughout the period.
Six months Six months Year ended
ended 31 ended 31 30 November
May 2022 May 2021 2021
GBP'000 Pence per GBP'000 Pence per GBP'000 Pence per
share share share
--------------------- -------- ----------- -------- ----------- -------- -------------
Revenue earnings 468 1.74 509 1.89 832 3.09
Capital earnings (147) (0.55) 97 0.36 97 0.36
--------------------- -------- ----------- -------- ----------- -------- -------------
Total earnings 321 1.19 606 2.25 929 3.45
--------------------- -------- ----------- -------- ----------- -------- -------------
Average number
of shares in issue 26,924,063 26,924,063 26,924,063
Earnings for the period to 31 May 2022 should not be taken as a
guide to the results for the year to 30 November 2022.
4. DIVIDS
Six months Six months Year ended
ended 31 ended 31 30 November
May 2022 May 2021 2021
GBP'000 GBP'000 GBP'000
--------------------------------- ----------- ----------- -------------
In respect of the prior year:
Third interim dividend 269 - -
Fourth interim dividend 269 404 404
--------------------------------- ----------- ----------- -------------
In respect of the current year:
First interim dividend - - 269
Second interim dividend - - 269
Third interim dividend - - -
--------------------------------- ----------- ----------- -------------
Total 538 404 942
--------------------------------- ----------- ----------- -------------
The Company intends to distribute at least 85% of its
distributable income earned in each financial year by way of
interest distribution. On 31 May 2022, the Company declared an
interim dividend of 1.00 pence per share for the quarter ended 28
February 2022, payable on 30 June 2022.
5. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
The Company's investment held at fair value through profit or
loss represents its profit share arrangements whereby the Company
owns 25.1% or has an exit fee mechanism for six companies.
31 May 31 May 30 November
2022 2021 2021
GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- -------- -----------
Opening Balance 7,589 16,809 16,809
Loans deployed 80 2,183 904
Principal repayments (1,307) (4,760) (10,284)
Movements in interest receivable 147 75 106
Unrealised (losses)/gains on investments
held at fair value through profit or loss (134) (39) 54
-------------------------------------------- -------- -------- -----------
Total investments held at fair value
through profit and loss 6,375 14,268 7,589
-------------------------------------------- -------- -------- -----------
Split:
Non-current assets: Investments held at
fair value through profit and loss due
for repayment after one year - 1,580 -
Current assets: Investments held at fair
value through profit and loss due for
repayment under one year 6,375 12,688 7,589
6. LOANS AT AMORTISED COST
31 May 31 May 30 November
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------------------- -------- -------- -----------
Opening Balance 10,558 6,046 6,046
Loans deployed 8,068 514 7,362
Principal repayments (305) (1,242) (2,937)
Movements in interest receivable 200 108 295
Movement in impairments (44) (1) (208)
------------------------------------------- -------- -------- -----------
Total Loans at amortised cost 18,477 5,425 10,558
------------------------------------------- -------- -------- -----------
Split:
Non-current assets: Loans at amortised
cost due for repayment after one year 14,153 3,099 7,929
Current assets: Loans at amortised cost
due for repayment under one year 4,324 2,326 2,629
The Company's loans held at amortised cost are accounted for
using the effective interest method. The carrying value of each
loan is determined after taking into consideration any requirement
for impairment provisions during the period; allowances for
impairment losses amounted to GBP44,000 (May 2021: GBP1,000;
November 2021: GBP208,000).
7. SHARE CAPITAL
Number of
Nominal Value Ordinary shares
GBP'000 of 1p
----------------------------------------- ---------------- -----------------
Issued and fully paid as at 31 May 2021 269 26,924,063
----------------------------------------- ---------------- -----------------
Issued and fully paid as at 31 May 2022 269 26,924,063
----------------------------------------- ---------------- -----------------
The ordinary shares are eligible to vote and have the right to
participate in either an interest distribution or participate in a
capital distribution (on a winding up).
8. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per ordinary share is based on net assets of
GBP22,367,422 (31 May 2021: GBP22,798,683; 30 November 2021:
GBP22,315,165) and on 26,924,063 ordinary shares (31 May 2021:
26,924,063; 30 November 2021: 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 fees totalling GBP43,000
for their services during the period to 31 May 2022 (31 May 2021:
GBP45,000; 30 November 2021: GBP90,000). 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.
Tier One Capital Ltd received GBP34,000 investment adviser's fee
during the period (31 May 2021: GBP28,000; 30 November: GBP68,000)
and GBPnil was payable at the period end (31 May 2021: GBPnil; 30
November 2021: GBPnil). Tier One Capital Ltd receives up to a 20%
margin and arrangement fee for all loans it facilitates.
There are various related party relationships in place with the
borrowers as below:
The following related parties arise due to the opportunity taken
to advance the 25.1% profit share contracts:
-- Gatsby Homes
The Company owns 25.1% of the borrower Gatsby Homes Ltd. The
loan amount outstanding as at 31 May 2022 was GBP13,000 (31 May
2021: GBP1.2m, 30 November 2021: GBP468,000). Transactions in
relation to loans repaid during the year amounted to GBP441,000 (31
May 2021: GBP172,000, 30 November: GBP797,000). Interest due to be
received as at 31 May 2022 was GBPnil (31 May 2021: GBPnil, 30
November 2021 GBPnil). Interest received during the period amounted
to GBP38,000 (31 May: GBPnil, 30 November 2021: GBP136,000).
-- Bede and Cuthbert Developments
The Company owns 25.1% of the borrower Bede and Cuthbert
Developments Ltd. The loan amount outstanding as at 31 May 2022 was
GBP80,000 (31 May 2021: GBP3.0m, 30 November 2021: GBP130,000).
Transactions in relation to loans repaid during the period amounted
to GBP50,000 (31 May 2021: GBP250,000, 30 November 2021: GBP3.2m).
Interest due to be received as at 31 May 2022 was GBPnil (31 May
2021: GBP41,000, 30 November 2021 GBPnil). Interest received during
the year amounted to GBPnil (31 May 2021: GBP127,000, 30 November
2021: GBP154,000).
-- Thursby Homes (Springs)
The Company owns 25.1% of the borrower Thursby Homes (Springs)
Ltd. The loan amount outstanding as at 31 May 2022 was GBP1.9m (31
May 2021: GBP2.6m, 30 November 2021: GBP2.4m). Transactions in
relation to loans repaid during the period amounted to GBP381,000
(31 May 2021: GBP369,000, 30 November 2021: GBP502,000). Interest
due to be received as at 31 May 2022 was GBP226,000 (31 May 2021:
GBP185,000, 30 November 2021: GBP209,000). Interest received during
the period amounted to GBP109,000 (31 May 2021: GBP131,000, 30
November 2021: GBP261,000).
-- Northumberland
The Company owns 25.1% of the borrower Northumberland Ltd. The
loan amount outstanding as at 31 May 2022 was GBP832,000 (31 May
2021: GBP1.8m, 30 November 2021: GBP1.3m). Transactions in relation
to loans repaid during the period amounted to GBP435,000 (31 May
2021: GBP164,000, 30 November 2021: GBP683,000). Interest due to be
received as at 31 May 2022 was GBP15,000 (31 May 2021: GBP26,000,
30 November 2021: GBP10,000). Interest received during the period
amounted to GBP19,000 (31 May 2021: GBP78,000, 30 November 2021:
GBP123,000).
-- Coalsnaughton
The Company owns 40.17% (31 May 2021: 25.1%, 30 November 2021:
25.1%) of the borrower Kudos Partnership. The loan amount
outstanding as at 31 May 2022 was GBP2.3m (31 May 2021: GBP1.9m, 30
November 2021: GBP2.3m). Transactions in relation to loans made
during the period amounted to GBP80,000 (31 May 2021: GBP217,00015,
30 Novembr 2021: GBP404,000). Interest due to be received as at 31
May 2022 was GBP257,000 (31 May 2021: GBP128,000, 30 November 2021:
GBP170,000). Interest received during the period amounted to
GBP129,000 (31 May 2021: GBP110,000, 30 November 2021:
GBP228,000).
-- Oswald Street
The Company owns 25.1% of the Riverfront Property Limited
Partnership. The loan amount outstanding as at 31 May 2022 was
GBP382,000 (31 May 2021: GBP408,000, 30 November 2021: GBP10,000).
Transactions in relation to loans made during the period amounted
to GBPnil (31 May 2021: GBPnil, 30 November 2021: GBPnil). Interest
due to be received as at 31 May 2022 was GBP5,000 (31 May 2021:
GBP5,000, 30 November 2021: GBP5,000). Interest received during the
period amounted to GBP15,000 (31 May 2021: GBP15,000, 30 November
2020: GBP31,000).
10. OPERATING SEGMENTS
The Board has considered the requirements of IFRS 8 'Operating
Segments'. The Board is of the view that the Company is engaged in
a single unified business, being the investment of the Company's
capital in financial assets comprising loans and joint venture
equity contracts and in one geographical area, the United Kingdom,
and that therefore the Company has no segments. The Board of
Directors, as a whole, has been identified as constituting the
chief operating decision maker of the Company. The key measure of
performance used by the Board to assess the Company's performance
is the total return on the Company's net asset value. As the total
return on the Company's net asset value is calculated based on the
IFRS net asset value per share as shown at the foot of the
Consolidated Statement of Financial Position, the key performance
measure is that prepared under IFRS. Therefore no reconciliation is
required between the measure of profit or loss used by the Board
and that contained in the financial statements.
11. FAIR VALUE HIERARCHY
Accounting standards recognise a hierarchy of fair value
measurements for financial instruments which gives the highest
priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority
to unobservable inputs (Level 3). The classification of financial
instruments depends on the lowest significant applicable input, as
follows:
-- Level 1 - Unadjusted, fully accessible and current quoted
prices in active markets for identical assets or liabilities.
Examples of such instruments would be investments listed or quoted
on any recognised stock exchange.
-- Level 2 - Quoted prices for similar assets or liabilities, or
other directly or indirectly observable inputs which exist for the
duration of the period of investment. Examples of such instruments
would be forward exchange contracts and certain other derivative
instruments.
-- Level 3 - External inputs are unobservable. Value is the
Directors' best estimate, based on advice from relevant
knowledgeable experts, use of recognised valuation techniques and
on assumptions as to what inputs other market participants would
apply in pricing the same or similar instrument.
All loans are considered Level 3.
12. POST BALANCE SHEET EVENTS
There are no post balance sheet events to report.
13. INTERIM REPORT STATEMENT
These are not full statutory accounts in terms of Section 434 of
the Companies Act 2006 and are unaudited. Statutory accounts for
the year ended 30 November 2021, 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 2021 have been reported on by the Company's
auditor or delivered to the Registrar of Companies.
For further information please contact:
Maitland Administration Services Limited, Secretary
10 August 2022
ENDS
Interim Report 2022
The Interim Report will be posted to shareholders and will
shortly be available on the Company's website (
www.developnorth.co.uk ) or in hard copy format from the Company's
Registered Office.
A copy of the Interim Report will be submitted to the FCA's
National Storage Mechanism and will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR SFUFDSEESEIA
(END) Dow Jones Newswires
August 10, 2022 10:04 ET (14:04 GMT)
Develop North (LSE:DVNO)
Historical Stock Chart
From Apr 2024 to May 2024
Develop North (LSE:DVNO)
Historical Stock Chart
From May 2023 to May 2024