TIDMSIPP
RNS Number : 2960G
Specialist Investment PropertiesPLC
26 May 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.
26 May 2017
Specialist Investment Properties plc
(the "Company" or "SIPP")
Final Results for the year ended 31 December 2016
Specialist Investment Properties plc is pleased to announce its
final results for the year to 31 December 2016.
For further information:
Specialist Investment Properties plc
John Le Poidevin / Lynn Bruce / Simon Clements
+44 (0) 1481 724222
Allenby Capital Limited (Nomad and Broker to the Company)
David Worlidge / James Thomas / Liz Kirchner
+44 (0) 20 7167 6433
Strategic Report
We take pleasure in reporting our first set of consolidated
annual results since Specialist Investment Properties plc ("SIPP"
or "the Group") began to implement its new investing policy.
The Group completed its initial fundraise in February 2016 and
has spent the remainder of the year deploying the capital raised
into its three identified asset classes of children's homes,
supported living accommodation and short term accommodation for
local authorities. Debt funding was secured during the year to
increase the pool of available capital for acquisition
opportunities. By the end of the year, we are pleased to report
that SIPP had reached a stabilised portfolio of high yielding and
profit generative assets.
It is evident that the sectors in which SIPP has chosen to
operate offer strong income returns as well as the potential for
future capital growth, and our Investment Adviser has identified a
number of investment opportunities available in the market. The
Group has, however, now used the majority of its available capital
and will not be able to achieve the critical mass it could do
without further raising and deployment of funds. Accordingly, SIPP
sought some months ago to raise additional equity capital. This did
not proceed because the small size of the company and the extent of
its investment pipeline limited the market capitalisation of the
company post fund-raising which diminished the attractiveness for
institutional investors (who were generally positive about the
investment strategy but were looking for a larger market
capitalisation).
As a suitable fundraising was not possible, the Board is now
considering the best options to realise value in the Group which
may include seeking shareholder approval for the cancellation of
the Company's ordinary shares from trading on AIM in order to
preserve shareholder value and/or a sale of the Group's assets.
Details regarding the assignment of two supported living properties
can be found below.
Financial Review
Following the adoption of the Group's new investing policy, SIPP
conducted a placing and open offer which raised GBP2.1m before
costs on 23 February 2016.
The Group made its first acquisitions of two properties on 1
March 2016 and continued to add to its portfolio throughout the
year. As a result, the revenue for the Group for the year does not
give a steady state picture. Total annualised rent for the
properties now held by the Group is GBP623,000.
As a consequence of the limited amount of time that the
properties acquired had been held for during the year and the low
yield on cash balances held for property purchases in the pipeline,
the Group incurred a loss before and after taxation of GBP136,000
for the year. The Group had reached monthly profitability by
December 2016.
The Group's balance sheet shows net assets of GBP2.2m, including
GBP6.2m gross value of investment properties, GBP0.4m of cash and
GBP4.3m of borrowings.
The key performance indicators of the business are considered to
be investment property valuations, net assets, rental yields and
profit.
Portfolio Summary
The Group's portfolio of GBP6.2m of investment properties at 31
December 2016 consisted of six former residential properties
operating as children's homes; two supported living homes
comprising twelve self-contained apartments and one three-bedroom
house; and sixteen residential units providing short term
accommodation to local authorities to allow them to meet their
statutory obligations. The children's homes and supported living
homes are leased to care operators and housing associations on long
term full repairing and insuring leases with inflation adjustment
for rent over the life of the lease.
The Group has acquired two further properties in its short-term
accommodation portfolio subsequent to the year end at attractive
indicative gross yields.
Units Purchase Passing Gross
price excl rent (GBP000s) yield
costs (GBP000s) %
Acquired during the year
Children's homes 6 2,160 213 9.9%
Supported Living
homes 15 1,468 136 9.2%
Short term accommodation 16 2,163 241 11.2%
As at 31 December
2016 37 5,791 590 10.2%
Acquired subsequent to the year end
Short term accommodation 2 262 33 12.6%
Current portfolio 39 6,053 623 10.3%
The gross rental yield for the current portfolio on purchase
costs after taking account of stamp duty, legal costs and fees is
9.5% p.a.
Assignment of two supported living properties
During the year, the Group exchanged contracts for the purchase
of two further supported living properties in St Helens, Merseyside
and Workington, Cumbria, details of which were announced on 2 and
15 September 2016 respectively. Both of these properties were under
construction at the year end. Subsequent to the year end, one of
these properties has now reached practical completion, with the
second expected to achieve this later this month.
In order to complete the purchases, the Group would be required
to either raise additional equity as part of a larger capital raise
or to draw down substantially on its debt facilities, including the
bridging facility in place with Heritage Square Limited. As stated
above, the Board has not been able to effect an equity raise. If
the Group were to draw down solely against the available debt
facilities the Board has concluded that the cost of additional debt
would mean that acquiring these properties would be earnings
dilutive for the Group and as such the Board has been investigating
alternative options. The Board is pleased to announce that it has
agreed terms for the assignment of these property purchases to Puma
Social Care Investments Limited ("PSCI") in a process that will
reimburse all of the Group's costs to date in relation to the two
prospective purchases and reflect any increase in value since the
exchange of contracts. An independent valuation of the properties
was obtained by the Board which indicated that the open market
value of the two properties, once developed, operating and with the
agreed lease in place, net of costs, was GBP3,335,000. The cash
consideration payable by PSCI is GBP121,100, which will result in
the Group achieving a profit on reassignment of GBP26,858 after
adjusting for construction monitoring fees of GBP31,950 and the
reimbursement of GBP62,292 of legal expenses incurred by the
Group.
PSCI is deemed to be a related party under Rule 13 of the AIM
Rules as it is one-third owned by Shore Capital Group Limited, the
majority shareholder of the Group's Investment Adviser, Puma
Investment Management Limited. Another member of the Shore Capital
group of companies is also a substantial shareholder in SIPP. Lynn
Bruce, a director the Group, is also a director of PSCI. As a
consequence, the assignment of the property purchases to PSCI is
deemed to be a related party transaction under Rule 13 of the AIM
Rules.
John Le Poidevin and Simon Clements, the independent directors
of the Group, having consulted with the Group's nominated adviser,
Allenby Capital Limited, consider that the terms of the assignment
are fair and reasonable insofar as shareholders are concerned.
Principal Risks and Uncertainties
The principal risks and uncertainties of the Group, together
with consideration of their management and mitigation, are
presented in note 14 to the financial information.
Outlook
Having established a stabilised and cash generative portfolio,
the Board is now considering the best options to realise value in
the Group.
Results and dividends
The results for the financial year are set out on page 10. The
Directors do not propose a final dividend.
Principal activities
The principal activity of the Group is that of owning and
renting out properties in the social care sector.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
2016 2015
Notes GBP'000 GBP'000
Revenue 3 174 -
Administrative
expenditure (229) (168)
Operating loss 4 (55) (168)
------------------------- ----------------------
Interest income 1 2
Finance costs 5 (82) -
Loss before taxation (136) (166)
------------------------- ----------------------
Taxation 6 - -
Loss for the year
and total comprehensive
expense (136) (166)
========================= ======================
Attributable to:
Equity holders
of the parent (136) (166)
Non-controlling - -
interests
(136) (166)
========================= ======================
Loss per share
Basic and diluted
(pence) 7 (1.16) (6.66)
All items in the above statement derive from continuing
operations.
Consolidated Statement of Financial Position
As at 31 December 2016
2016 2015
Notes GBP'000 GBP'000
Non-current assets
Investment Properties 10 6,223 -
Intangible assets 2 -
6,225 -
------------------- ------------------
Current assets
Trade and other receivables 11 159 8
Cash and cash equivalents 365 333
524 341
------------------- ------------------
Total assets 6,749 341
------------------- ------------------
Current liabilities
Trade and other payables 12 (192) (23)
Non-current liabilities
Loans due in over one
year 13 (4,295) -
Other payables 12 (31) -
------------------- ------------------
(4,326) -
------------------- ------------------
Total liabilities (4,518) ( 23)
------------------- ------------------
Net Assets 2,231 318
=================== ==================
Equity
Capital and Reserves
Share capital 16 2,599 2,491
Share premium 16 12,940 11,015
Retained earnings (13,324) (13,188)
------------------- ------------------
Equity attributable
to equity holders of
the parent 2,215 318
Non-controlling interest 17 16 -
Total equity 2,231 318
=================== ==================
Net Asset Value per
share (restated for
2015) 18 16.62p 12.77p
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
Cash flows from operating
activities
Operating loss for the
year (55) (168)
Increase in receivables (151) -
Increase/(decrease) in
payables 130 (2)
--------------------- ------------------------
Net cash flows used in
operating activities (76) (170)
--------------------- ------------------------
Investing activities
Purchase of investment (6,223) -
properties
Purchase of intangible (2) -
assets
--------------------- ------------------------
Net cash used in investing (6,225) -
activities
--------------------- ------------------------
Financing activities
Interest income 1 2
Finance costs (43) -
Net proceeds from issue 2,033 -
of share capital
Issue of preference shares 47 -
New loans received 4,295 -
--------------------- ------------------------
Net cash from financing
activities 6,333 2
--------------------- ------------------------
Net increase/(decrease)
in cash and cash equivalents
during the year 32 (168)
===================== ========================
Cash and cash equivalents
at beginning of period 333 501
--------------------- ------------------------
Cash and cash equivalents
at end of period 365 333
--------------------- ------------------------
Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Share Non-controlling
Share premium Retained interest
capital account earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2016 2,491 11,015 (13,188) - 318
Total comprehensive
loss for the year - - (136) - (136)
Issue of preference
shares - - - 16 16
Issue of share
capital 108 1,925 - - 2,033
At 31 December
2016 2,599 12,940 (13,324) 16 2,231
========= ========= ========== ================ ========
Share Non-controlling
Share premium Retained interest
capital account earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2015 2,491 11,015 (13,022) - 484
Total comprehensive
loss for the year - - (166) - (166)
At 31 December
2015 2,491 11,015 (13,188) - 318
========= ========= ========== ================ ========
Notes to the accounts
For the year ended 31 December 2016
1. General Information
Specialist Investment Properties plc is incorporated in the Isle
of Man under the Companies Acts 1931 to 2004. The nature of its
principal activities is set out in the Directors' Report. This
financial information is presented in pounds sterling because that
is the currency of the primary economic environment in which the
Group operates and is rounded to the nearest thousand pounds.
The financial information set out in the announcement does not
constitute the company's statutory accounts for the years ended 31
December 2016 or 2015. The annual report and financial statements
for the year ended 31 December 2016 were approved by the Board of
Directors on 26 May 2017 along with this preliminary announcement.
The auditor's report for on the statutory accounts for the year
ended 31 December 2016 and the previous auditor's report on the
statutory accounts for the year ended 31 December 2015 were both
unqualified.
2. Accounting Policies
Basis of preparation
This financial information is prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union.
Basis of accounting
The financial information has been prepared on the historical
cost basis, except for investment properties which are held at fair
value. The principal accounting policies adopted in the preparation
of the financial information are set out below.
Basis of consolidation
The consolidated financial information incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Where the
Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of the
following elements are present; power over the subsidiary;
exposure, or rights to, the variable returns from its involvement
with the subsidiary; and the ability to affect those returns
through its power over the subsidiary.
Non-controlling interests in the net assets of consolidated
subsidiaries are identified separately from the Group's equity
therein. Non-controlling interests consist of the amount of those
interests at the date of the original business combination and the
non-controlling interest's share of changes in equity since the
date of the combination.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group. All intra-group
transactions, balances, income and expenses are eliminated on
consolidation.
Adoption of new and revised standards
In the current year, there were no new and revised Standards and
Interpretations that were adopted.
Standards in issue but not yet effective
New standards and interpretations currently in issue but not
effective, based on EU mandatory effective dates, for accounting
periods commencing on 1 January 2016 are:
-- IFRS 15 Revenue from Contracts with Customers (EU effective date 1 January 2018)
-- IFRS 9 Financial Instruments (EU effective date 1 January 2018)
-- IFRS 16 Leases
The directors have assessed the impact of these standards, and
do not consider that there will be a material impact on the
financial information.
Going Concern
The Group continues to adopt the going concern basis in
preparing the financial information. Cash flow forecasts indicate
that the Group will have sufficient resources to continue for at
least twelve months from the date of signing this financial
information.
Judgements and key sources of estimation uncertainty
In preparing this financial information, the directors have made
the following judgements:
-- They have determined the fair value of the investment
properties as at 31 December 2016. In reaching this fair value,
they have considered the economic viability and expected future
financial performance of the assets.
-- They have estimated the level of provision required for both current and deferred tax.
Revenue recognition
Rental income arising from operating leases on investment
properties is accounted for on a straight line basis over the lease
term. 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.
Finance Costs
Transaction costs associated with loans are set off against the
total loan balance and amortised over the term of the loan
facility. Other finance costs are expensed in the period in which
they occur.
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax. The tax currently payable is based on
taxable profit for the year. Taxable profit differs from profit as
reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the Statement of
Financial Position date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial information and the corresponding tax bases used
in the computation of taxable profit, and is accounted for using
the Statement of Financial Position liability method. Deferred tax
liabilities are generally recognized for all taxable temporary
differences and deferred tax assets are recognized to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilized. Such assets
and liabilities are not recognized if the temporary difference
arises from goodwill or from the initial recognition of other
assets and liabilities in a transaction that is not a business
combination and affects neither the taxable profit nor the
accounting profit.
The carrying amount of deferred tax assets is reviewed at each
Statement of Financial Position date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realized. Deferred tax is charged or credited in profit or loss for
the period except when it relates to items charged or credited in
other comprehensive income or directly to equity, in which case the
deferred tax is also dealt with in other comprehensive income or
directly in equity.
Deferred tax arising as a consequence of investment property
carried at fair value is calculated on the basis that the property
will be recovered through a sale of the property in line with the
Group's business model which is to generate value in the form of
capital appreciation.
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 profit or loss 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 profit or loss during the year of
disposal.
Intangible assets
Intangible assets purchased are measured initially at purchase
cost, and then amortised on a straight line basis over their
estimated useful lives.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's Statement of Financial Position when the Group becomes a
party to the contractual provisions of the instrument. The
classification of the Group's financial assets and liabilities
depends on their nature and purpose and is determined at the time
of initial recognition.
Financial assets
Financial assets of the Group are all classified as 'loans and
receivables'.
Financial liabilities
Financial liabilities are classified as 'other financial
liabilities'.
Loans and receivables
Trade and other receivables which have fixed or determinable
payments which are not quoted in an active market are classified as
loans and receivables. Financial assets in this category are
measured at amortised cost using the effective interest method,
less any impairment.
Other financial liabilities
Other financial liabilities comprise bank loans, trade payables,
preference shares and other short-term monetary liabilities, which
are initially recognised at fair value and are subsequently carried
at amortised cost using the effective interest method.
Cash and Cash Equivalents
Cash comprises cash in hand which may be accessed without
penalty.
Equity
The following describes the nature and purpose of each reserve
within equity:
-- 'Share capital' represents the nominal value of equity shares;
-- 'Share premium' represents the excess over nominal value of
the fair value of consideration received for equity shares, net of
expenses of the share issue;
-- 'Retained earnings' represents retained profits.
-- 'Non-controlling interest' represents the equity element of the B preference shares.
3. Turnover
2016 2015
GBP'000 GBP'000
Rental income 174 -
======== ========
All turnover has arisen in the United Kingdom.
Certain of the Group's tenants individually contribute more than
10% of the Group's revenue. Tenants meeting this criteria
contributed GBP104,023 and GBP29,491 to revenue respectively during
the year.
4. Loss for the year
Loss for the year has been arrived at after charging:
2016 2015
GBP'000 GBP'000
Audit fees 28 19
Taxation services 18 -
46 19
===================================== ===========================
The prior year audit fees were payable to the previous auditors,
Crowe Morgan LLC. Taxation services in the current year are payable
to Deloitte LLP.
5. Finance costs
2016 2015
GBP'000 GBP'000
Amortisation of loan arrangement
fee 6 -
Interest payable 76 -
82 -
============================================== =====================
6. Taxation
Profits arising from property rentals are taxable in the UK via
corporation tax where the property is owned by a UK tax resident
company, and via the Non Resident Landlord Scheme where the
property is owned by an oversees company. Profits are currently
taxable at 20% under both schemes.
2016 2015
GBP'000 GBP'000
Loss for the year (136) (166)
Items not subject to taxation 61 -
(75) (166)
================================================ ==============================
Taxable at 20% (15) (33)
Tax losses carried forward
/ written off 15 33
Tax payable - -
================================================ ==============================
As at 31 December 2016, the Group had tax losses carried forward
of GBP75,000. No deferred tax asset has been recognised in respect
of these losses due to uncertainty over the timing of any
recovery.
7. Loss per share
2016 2015
GBP'000 GBP'000
Losses for the purposes of
basic earnings per share being
net loss attributable to owners
of the Group (136) (166)
=========== ==========
2016 2015
Number of Shares No. No.
Weighted average number of
ordinary shares for the purpose
of basic and diluted loss per
share 11,678,518 2,490,953
=========== ==========
Loss per share - continuing
operations
Basic and diluted (pence) (1.16) (6.66)
=========== ==========
The loss per share for the year ended 31 December 2015 has been
restated to take account of the share reorganisation in the year
(see note 16). The calculation for the current year also assumes
that the share reorganisation was in place from 1 January 2016.
8. Emoluments of the Directors of the Company
The remuneration of the Directors of the Company, who are the
key management personnel, is set out below:
2016 2015
GBP'000 GBP'000
David Craine (resigned) 8 14
Derek Short (resigned) 3 24
John Le Poidevin 8 -
Elizabeth Lynn Bruce 4 -
Simon Clements 2 -
25 38
=================================== ========
9. Dividends
The Directors do not propose a final dividend in relation to the
year ended 31 December 2016 (2015: GBPnil).
10. Investment properties
2016 2015
GBP'000 GBP'000
At 1 January - -
Additions 6,223 -
At 31 December 6,223 -
============ ============================
There has been no movement in the valuation during the year to
31 December 2016.
The different valuation method levels are defined below.
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs)
These levels are specified in accordance with IFRS 13 Fair Value
Measurement. Our property valuation approach and process is set out
below. Property valuations are inherently subjective as they are
made on the basis of assumptions made by the valuer which may not
prove to be accurate. For these reasons we have classified the
investment property valuations as Level 3 as defined by IFRS
13.
There have been no transfers between the fair value hierarchy
levels during the period.
At 31 December 2016 there were no restrictions on the
realisability of investment property or the remittance of income
and proceeds of disposal (2015: GBPnil).
At 31 December 2016 the Group had a contractual obligation to
purchase two properties on practical completion. Further details
are outlined in note 22.
Valuation and sensitivity
The property portfolio is subject to annual valuations by the
Directors and was valued at 31 December 2016 on the basis of fair
value in accordance with the RICS Valuation Professional Standards,
which takes account of the properties' highest and best use.
The Directors valued the properties with reference to rental
income and yields. Rental income varies from GBP15,600 per annum to
GBP210,000. The Directors have applied yields between 8.3% and
10.85%.
10. Trade and other receivables
2016 2015
GBP'000 GBP'000
Trade debtors 29 -
Prepayments and accrued income 130 8
159 8
======================= ============================
All amounts included in trade and other debtors fall due for
payment within one year. The carrying value of trade and other
receivables classified as loans and receivables approximates fair
value.
11. Trade and other payables
Due in less than one year
2016 2015
GBP'000 GBP'000
Other payables 46 -
Accrued interest 33 -
Accruals and deferred
income 113 23
192 23
======================== ============================
The carrying value of trade and other payables classified as
other financial liabilities measured at amortised cost approximates
fair value.
Due in more than one year
2016 2015
GBP'000 GBP'000
Other payables 31 -
======================= ============================
Other payables of GBP31,360 (2015: GBPnil) are preference
shares. See note 17 for further information.
12. Loans due in over one year
As at 31 December 2016, the Group had drawn loans totaling
GBP4,297,500 from loan facilities advanced in the year by Heritage
Square Limited, a related entity to whom the Group's Investment
Adviser, Puma Investment Management Limited, acts as Trading
Adviser. Costs of GBP3,686 were set off against this loan balance
which are being released over the loan term, resulting in a loan
balance at 31 December 2016 of GBP4,294,920.
Under a GBP7.4m principal loan facility, interest is payable on
drawn funds at a fixed rate of 6% - 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 year end
GBP4,017,500 had been drawn from this principal loan facility.
In addition the Group has signed a GBP2.5m 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. This will
then step 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 is only able to draw down on the facility
until the earlier of reaching the GBP2.5m limit or 30 June 2017. As
at the year end GBP280,000 had been drawn from this loan
facility.
13. Financial Instruments
Details of the significant accounting policies and methods
adopted (including the criteria for recognition, the basis of
measurement and the basis for recognition of income and expenses)
for each class of financial asset and liability are disclosed in
note 2. Categories of financial instruments are as follows:
2016 2015
GBP'000 GBP'000
Cash and cash equivalents 365 333
Loans and receivables 159 8
Other financial liabilities 4,518 23
Capital risk management
The Group manages its capital to ensure that the Group will be
able to continue as a going concern. This is achieved by
maintaining sufficient liquid resources to meet ongoing liabilities
as they fall due, including payment of dividends, while maximising
the return to stakeholders through the optimisation of the debt and
equity balance.
The capital structure of the Group consists of cash and cash
equivalents and equity attributable to equity holders of the Group,
comprising issued capital, share premium and retained losses. The
Group does not have a target gearing ratio.
The Group is not subject to any externally imposed capital
requirements. Equity includes all capital and reserves of the Group
that are managed as capital.
Credit risk
At the end of the reporting year, there are no significant
concentrations of credit risk for loans and receivables. The
carrying amount reflected above represents the Group's maximum
exposure to credit risk for such loans and receivables.
Financial risk management objectives
The Board of Directors monitor and manage financial risks,
relating to the operation of the Group, through periodic assessment
of its exposure to them. These risks include credit risk, cash flow
interest rate risk and liquidity risk.
Market risk
The Group's exposure to market risks has changed due to its new
investment policy. It is now exposed to movements in the property
market in the United Kingdom. This is both for the residential
property market and also for properties that are held for
investment purposes. The Board of Directors monitor these risks
through assessment of its exposure to them in Board meetings. All
loans have a fixed interest rate so there is no exposure to risk
regarding variable rate instruments.
Foreign currency risk management
All assets and liabilities are denominated in sterling. As a
result the Group has no exposure to foreign currency risk.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with
the Group's Board of Directors, which has established an
appropriate liquidity risk management framework for the management
of the Group's short, medium and long-term funding and liquidity
management requirements. The Group manages liquidity risk by
maintaining adequate reserves and by continuously monitoring
forecast and actual cash flows.
The following table sets out the contractual maturities of
financial liabilities:
At 31 Between Between Between
December Up to 3 and 1 and 2 and Over 5
2016 3 months 12 months 2 years 5 years years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and
other
payables 192 - - - -
Loans - - 4,295 - -
Interest
payable 71 212 200 - -
263 212 4,495 - -
===================== ===================== ===================== ===================== =====================
At 31 Between Between Between
December Up to 3 and 1 and 2 and Over 5
2015 3 months 12 months 2 years 5 years years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and
other
payables 23 - - - -
=================== ===================== ===================== ===================== =====================
B Preference shares of GBP31,360 (see note 17) are entitled to
an 8% dividend each year if there are sufficient profits, after
amounts due to the A preference shareholders have been settled.
14. Investments
Information on the principal subsidiaries of the Company is as
follows:
Subsidiary Country of Activity Portion of
registration ordinary shares
and voting
rights held
---------------------- --------------- ---------------------- -----------------
SIPP Holdings Intermediate holding
Limited Isle of Man co. 100%
Intermediate holding
Secta Limited* Isle of Man co. 70%
Intermediate holding
EA Capital Limited** Isle of Man co. 75%
Secta Properties Holds investment
Limited* Isle of Man properties 70%
SL Boathouse England and Holds investment
Limited Wales properties 100%
SL Workington England and Holds investment
Limited Wales properties 100%
England and Holds investment
EA Bedford Limited** Wales properties 75%
EA Northampton England and Holds investment
Limited** Wales properties 75%
* The Company owns 70% of the equity in Secta Limited, which is
the 100% shareholder of Secta Properties Limited.
** The Company owns 75% of the equity in EA Capital Limited,
which is the 100% shareholder of EA Bedford Limited and EA
Northampton Limited.
15. Called Up Share Capital
The total number of ordinary shares in issue at the start of the
year was 49,819,050 at a par value of GBP0.05 per share. There was
no movement in this number of shares during 2015. On 24 February
2016, these shares were reorganised such that the number of shares
was reduced by a ratio of 1:20, reducing the number of shares to
2,490,953 at a par value of GBP0.01. On the same date, 10,713,142
new ordinary shares were issued for net proceeds (after transaction
costs of GBP99,083) of GBP2.03m.
In April 2016, 125,795 shares were issued for net proceeds of
GBP20,756. A further 416 shares were issued in August 2016 for net
proceeds of GBP69.
As at 31 December 2016, the total number of ordinary shares in
issue was 13,330,306. In addition 2,490,953 deferred shares were in
issue. The deferred shares are effectively valueless as they do not
carry any rights to vote or dividend rights. In addition, holders
of deferred shares are only entitled to a payment on a return of
capital or on a winding up of the Company after each of the holders
of ordinary shares have received a payment of GBP10,000,000 on each
such share.
Authorised:
Number GBP'000
Ordinary shares of 1p each 153,395,703 1,534
Deferred shares of 99p each 2,490,953 2,466
As at 31 December 2016 155,886,656 4,000
============ ========
Issued and fully paid:
Number GBP'000
Ordinary shares of 1p each 13,330,306 133
Deferred shares of 99p each 2,490,953 2,466
As at 31 December 2016 15,821,259 2,599
============ ========
16. Non-controlling interest
25% of the ordinary equity in EA Capital Limited is owned by
non-controlling interests. The non-controlling interests have also
invested GBP47,040 through Class B preference shares issued by EA
Capital Limited. These shares have a right to a fixed dividend of
8% per annum. GBP31,360 of the preference shares has been
classified as a liability (see note 12), with the remainder of
GBP15,680 classified as non-controlling interest within equity.
No dividends were paid to non-controlling interests in the
year.
17. Net asset value per share
2016 2015
GBP'000 GBP'000
Net assets attributable to
equity shareholders of the
parent 2,215 318
=========== ==========
No. No.
Number of shares 13,330,306 2,490,953
=========== ==========
Net asset value per share (pence) 16.62 12.77
=========== ==========
The net asset value per share for the year ended 31 December
2015 has been restated to take account of the share reorganisation
in the year (see note 16).
18. Related party transactions
During the year the Group entered into the following related
party transactions.
It entered into two facility agreements with Heritage Square
Limited, a related entity to whom the Group's Investment Adviser,
Puma Investment Management Limited ("PIML"), acts as Trading
Adviser. Further details of these facilities are included in note
13. Interest of GBP76,180 was payable to Heritage Square Limited
during the year (GBP32,936 of which is accrued at the reporting
period). Arrangement fees of GBP25,000 were payable to Heritage
Square Limited during the year, all of which were accrued at the
end of the reporting period.
PIML is entitled to receive an advisory fee payable at an annual
rate of 0.5% of the total investment assets, to be calculated at
the end of each accounting period. During the year the fee totalled
GBP37,340 including VAT, all of which was accrued at year end.
Key management personnel are considered to be the directors of
the Company. See note 8 for details of emoluments made to the key
management personnel.
19. Intermediate and Ultimate Controlling Party
In the opinion of the Directors there is no immediate and
ultimate controlling party.
20. Operating lease commitments
The Group lets properties under non-cancellable operating lease
agreements to third parties. All leases have a 25 year term and
annual upward only rent reviews based on CPI.
The future aggregate minimum lease receipts under
non-cancellable operating leases for the Group's properties are as
follows:
2016 2015
GBP'000 GBP'000
Due in less than
one year 774 -
Due later than one year and
not later than five years 2,292 -
Due later than five
years 11,382 -
21. Post Balance Sheet Events
Subsequent to the year end, the Company has purchased two
further properties as part of its short term accommodation
portfolio for a total of GBP0.3m.
At 31 December 2016, the Company was committed to purchase two
further supporting living properties for a price of GBP3.06m before
acquisition costs. The properties were under construction at the
year end and the purchases were due to complete on practical
completion of the build. Since the year end the Company has agreed
terms for the assignment of these property purchases to Puma Social
Care Investments Limited ("PSCI") in a process that will cover all
of the Company's costs to date in relation to the two prospective
purchases. PSCI is deemed to be a related party under Rule 13 of
the AIM Rules as it is one-third owned by Shore Capital Group
Limited, the majority shareholder of the Company's Investment
Adviser, Puma Investment Management Limited. An independent
valuation of the properties was obtained by the Board which
indicated that the open market value of the two properties, once
developed, operating and with the agreed lease in place, net of
costs, was GBP3,335,000. The cash consideration payable by PSCI is
GBP121,100, which will result in the Group achieving a profit on
reassignment of GBP26,858 after adjusting for construction
monitoring fees of GBP31,950 and the reimbursement of GBP62,292 of
legal expenses incurred by the Group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKPDDFBKDQPB
(END) Dow Jones Newswires
May 26, 2017 02:00 ET (06:00 GMT)
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