TIDMPRSR
RNS Number : 1345I
PRS REIT PLC (The)
31 March 2020
31 March 2020
PRSR.L
The PRS REIT plc
("PRS REIT" or "the Company" or "the Group")
INTERIM RESULTS
for the six months ended 31 December 2019
Resilient business model in face of coronavirus crisis
KEY POINTS
Coronavirus Update
-- While there is considerable uncertainty as a result of the
coronavirus pandemic, the Board believes that the Company is well
positioned in the face of the crisis;
o delivery model substantially mitigates risk
o balance sheet is robust
o gearing is low at c. 21% and there is considerable headroom on
committed bank facilities
o scale and geographic spread of portfolio of family homes
reduces risk
o cost base is covered by net rental income
-- Dividends of 1.0p per ordinary share were paid for each of Q1
and Q2. The interim dividend in respect of Q3 will be deferred for
review in Q4 when the outlook is likely to be clearer
H1 Trading Summary
-- 444 new rental homes were completed in H1, taking completed
homes to 1,617 at period end, up 109% from a year ago and up 38% on
H2 2019
-- Annualised rental income up to GBP14.9m at period end, a 113%
rise year-on-year, reflecting increased rate of completions and
lettings
-- Completed assets performed well - rents 2% above budget,
confirming strong underlying demand
o 600 homes let or reserved between 1 January and 27 March
2020
Financial
H1 2020 H1 2019 Change
----------------------------- ------------------ ------------------ -------
Rental income (gross) GBP5.6m GBP2.3m +143%
Profit from operations GBP12.4m GBP7.3m +70%
Profit before tax GBP11.0m GBP7.5m +47%
Basic earnings per share 2.2p 1.5p +47%
Net assets at 31 December GBP470.4m GBP477.2m - 1%
IFRS and EPRA NAV per share 95.0p 96.3p
at (after dividends (after dividends
31 December of of 6.0p paid)
11.0p paid)
----------------------------- ------------------ ------------------ -------
Housing Delivery
At At Change
31 Dec 31 Dec %
2019 2018
Completed homes
Number of completed PRS units 1,617 775 +109%
Estimated rental value ("ERV") per
annum GBP14.9m GBP7.0m +113%
Contracted homes
Total number of contracted homes 3,328 2,800 +19%
ERV per annum GBP32.7m GBP26.2m +25%
Total number of sites (completed and
contracted) 62 43 +44%
Number of completed and contracted
units 4,945 3,575 38%
Gross development cost ("GDC") GBP771m GBP530m 45%
ERV per annum GBP47.6m GBP33.2m 43%
Uplift on development cost to market n/a
value, subject to vacant possession
(MV-VP) 15.4%
-------------------------------------- --------- --------- --------
Outlook
-- Full deployment of balance of funding, approximately GBP75m,
has been strategically deferred pending assessment of
opportunities, particularly for acquiring completed assets
-- At 27 March 2020, the completed homes total had risen to
1,947 and c.3,000 homes were underway - together nearly 5,000
family homes once fully completed
o 1,675 homes are let, generating GBP15.4m annualised rental
income
-- In response to the coronavirus crisis, construction work on
all sites has recently been temporarily suspended. Given the
Company's delivery model, which includes fixed price contracts,
there is little adverse cash flow implication for the Company
during this period of suspension
-- Family rental housing market in the UK remains critically
undersupplied. The trend underpins the Company's long term growth
prospects
-- Strong Central and Local Government support, including from Homes England
Steve Smith, Chairman, said:
"While the coronavirus pandemic has created significant
uncertainty in every walk of life, we believe that our business is
resilient. Our delivery model and processes substantially mitigate
the Company's exposure to construction and other operational risks,
and we have a robust balance sheet and low gearing, which are
unaffected by a pause in construction activity. Our customer base
is diversified and the underlying demand for good quality rental
housing is strong.
"Our priority is the welfare of our colleagues, tenants and
communities, and this remains our focus as we continue to adapt to
the changing conditions created by the coronavirus.
"We have added 444 new family rental homes in the first half of
this financial year and a further 330 since then, taking the PRS
REIT's portfolio to 1,947 completed homes across the regions of
England. We are targeting around 5,300 properties once the balance
of the Company's existing funds is fully deployed. Our deployment
approach has now strategically shifted to focus on the acquisition
of completed assets.
"In light of the coronavirus situation, a decision regarding the
payment of a dividend in respect of the third quarter will now be
taken in the fourth quarter of the current financial year, when the
outlook is likely to be clearer.
"Despite the current macro uncertainty, we continue to view
long-term prospects with confidence as we meet the critical need
for quality family houses in the UK."
For further information, please contact:
The PRS REIT plc Tel: 020 3178 6378 (c/o KTZ Communications)
Steve Smith, Non-executive Chairman
Sigma PRS Management Limited Tel: 0333 999 9926
Graham Barnet, Mike McGill
N+1 Singer Tel: 020 7496 3000
James Maxwell, James Moat, Ben
Farrow
G10 Capital Limited (part of the Tel: 020 3696 1302
IQEQ Group as AIFM)
Gerhard Grueter
KTZ Communications Tel: 020 3178 6378
Katie Tzouliadis, Dan Mahoney
NOTES TO EDITORS
About The PRS REIT plc
(www.theprsreit.com)
The PRS REIT is a closed-ended real estate investment trust
established to invest in the Private Rented Sector ("PRS") and to
provide shareholders with an attractive level of income together
with the potential for capital and income growth. It has raised a
total of GBP500m (gross) through its Initial Public Offering, on 31
May 2017, and a subsequent placing in February 2018. Both
fundraisings were supported by the UK Government's Homes England
with direct investments.
LEI: 21380037Q91HU97WZX58
About Sigma Capital Group plc
( www.sigmacapital.co.uk )
Sigma Capital Group plc ("Sigma"), quoted on AIM, is a PRS,
residential development, and urban regeneration specialist, with
offices in Edinburgh, Manchester and London. Sigma's principal
focus is on the delivery of large scale housing schemes for the
private rented sector. It has a well-established track record in
assisting with property-related regeneration projects in the public
sector, acting as a bridge between the public and private sectors.
Its subsidiary, Sigma PRS Management Limited, is Investment Adviser
to The PRS REIT plc. In April 2019, Sigma launched the Sigma
Scottish PRS Fund, the first dedicated vehicle to focus on the
creation of new rental homes for families in the private rented
sector in Scotland, and in October 2019, Sigma announced the
expansion of its build-to-rent activities in London.
About Sigma PRS Management Limited
Sigma PRS Management Limited is a wholly-owned subsidiary of
AIM-quoted Sigma Capital Group plc and is Investment Adviser to The
PRS REIT plc. It sources investments and operationally manages the
assets of The PRS REIT plc and advises the Alternative Investment
Fund Manager ("AIFM") and The PRS REIT plc on a day-to-day basis in
accordance with The PRS REIT plc's Investment Policy. The
Investment Manager is G10 Capital Limited. Sigma PRS Management Ltd
is an appointed representative of G10 Capital Limited, which is
authorised and regulated by the Financial Conduct Authority
(FRN:648953).
Chairman's Statement
Overview
This interim report covers The PRS REIT plc's (the "Company" or
"PRS REIT") results and progress for the six months ended 31
December 2019. The Company made good progress over the period,
however, in recent weeks, the spread of the coronavirus in the UK
has caused unprecedented economic and social disruption. It is
difficult to predict accurately the full impact of the pandemic,
but we believe that the Company's business model and strategy are
resilient and we will adapt as the current situation evolves. Our
overriding priority remains the welfare of our colleagues, tenants
and communities.
The Company has a robust balance sheet, a diversified customer
base and a housing delivery model that limits construction risk.
The Company's cost base is covered by net rental income.
In the first half of the financial year, a further 444 new homes
were completed, which took the PRS REIT's portfolio to 1,617 homes
at the half year end (30 June 2019: 1,173 and 31 December 2018:
775), and housing construction spanned 62 sites across the regions
of England (31 December 2018: 43 sites).
Currently, all construction activity has been suspended across
all sites, a measure put in place by all major house builders in
response to the coronavirus. At present, it is not known when
activity will resume but there should be little adverse cash flow
or balance sheet effect during this period of suspension,
reflecting the Company's delivery model and our fixed price
contracts.
The latest data on our housing activity is at 27 March 2020,
when the number of completed homes stood at 1,947, an additional
330 since January 2020, with approximately 3,000 homes underway.
The number of homes let is 1,675, generating an annualised rental
income of GBP15.4m across six regions.
We reported in early January 2020 that the major part of the PRS
REIT's available funding (GBP900 million gross) had been contracted
and that the balance of approximately GBP75 million was expected to
be fully contracted by the end of March 2020. Given the changing
situation as a result of the coronavirus, we have strategically
deferred deployment of the balance in order to reassess
opportunities, particularly for the acquisition of completed
assets. We expect to contract the balance of funds by the end of
the third quarter of the calendar year, subject to the coronavirus
position. With full deployment, the PRS REIT's initial portfolio is
anticipated to constitute around 5,300 new rental properties,
yielding a potential GBP53.0 million in gross rental income per
annum once all the homes are completed and let.
The PRS REIT's growing portfolio of homes is establishing it as
a leading player in the build-to-rent sector, and the Company
remains the only quoted REIT to focus exclusively on the Private
Rented Sector ("PRS") in the UK and the first to focus on family
homes. This market continues to be underserved, with the majority
of build-to-rent activity concentrated on the development of city
centre flats. Long-term, demand for our family houses is expected
to be strong, reflecting the critical shortage of housing and the
attraction of our high quality, well-located,
professionally-managed homes.
We are pleased to have a strong governmental support, including
from Homes England, the public body sponsored by the Ministry of
Housing, Communities & Local Government.
Financial results
Revenue, which was all derived from rental income, increased by
143% to GBP5.6 million in the six months ended 31 December 2019 (31
December 2018: GBP2.3 million), reflecting the growth in assets in
the portfolio. After non-recoverable property costs, the net rental
income for the period increased by 137% to GBP4.5 million (31
December 2018: GBP1.9 million).
Profit from operations rose by 70% to GBP12.4 million over the
first half (31 December 2018: GBP7.3 million) after gains of
GBP10.9 million from fair value adjustments on investment property
(31 December 2018: GBP8.2 million) and total expenses of GBP2.9
million (31 December 2018: GBP2.8 million). Profit before tax for
the period increased by 47% to GBP11.0 million (31 December 2018:
GBP7.5 million) and basic earnings per share rose by 47% to 2.21p
(31 December 2018: 1.52p).
As at 31 December 2019, the PRS REIT's net assets totalled
GBP470.4 million (30 June 2019: GBP474.3 million). This represents
a net asset value ("NAV") per share of 95.0p, on both the
International Financial Reporting Standards ("IFRS") basis, as
adopted by the European Union, and the European Public Real Estate
Association ("EPRA") basis (30 June 2019: IFRS and EPRA NAV both
95.8p).
The movement in the NAV position, from 95.8p to 95.0p between 30
June 2019 and 31 December 2019, is after the payment of 3p per
share in total dividends (GBP14.9 million). These dividend payments
comprised a final dividend payment of 2.0p per share, relating to
the 2019 financial year, which was paid in August 2019, and a
dividend payment of 1.0p per share, relating to the first quarter
of the 2020 financial year, which was paid in November 2019.
We have reached an inflexion point given the growth of the
portfolio, where operating cash inflows now exceed operating
outflows and cover the Company's cost base.
Six months Six months Year
ended ended ended
31 December 31 December 30 June
KPI 2019 (unaudited) 2018 (unaudited) 2019 (audited)
IFRS EPS (pence per share) 2.21 1.52 2.90
------------------ ------------------ ----------------
EPRA EPS (pence per share) 0.02 (0.10) (0.20)
------------------ ------------------ ----------------
As at As at As at
31 December 31 December 30 June
KPI 2019 (unaudited) 2018 (unaudited) 2019 (audited)
IFRS NAV (pence per share) 95.0 96.3 95.8
------------------ ------------------ ----------------
EPRA NAV (pence per share) 95.0 96.3 95.8
------------------ ------------------ ----------------
Debt Facilities
As at 31 December 2019, the Company has GBP400 million of
committed debt facilities in place. The first GBP100 million has
been drawn, with the balance to be drawn over the next 18 months as
we finish the current phase of construction. The debt facilities
have an average term of 14.3 years and an average weighted cost of
2.72% once fully drawn. Our lending partners are Scottish Widows
(GBP250 million), Lloyds Banking Group plc (GBP50 million) and
Royal Bank of Scotland plc (GBP100 million), to whom we would like
to express our thanks for their support.
The Company's gearing is low at around 21% and it has
significant headroom in its covenants. Our revised strategy for the
balance of the deployment of our funds is focused on acquiring
completed assets, which should accelerate net rental income and
earnings growth.
Dividends
On 31 January 2020, the Board was pleased to declare a dividend
of 1.0p per ordinary share in respect of the second quarter of the
current financial year. The dividend was paid on 28 February 2020
to shareholders on the register as at 7 February 2020, and brought
total dividends paid to date since the Company's inception in May
2017, to 12.0p per share.
Given the current situation caused by the coronavirus crisis,
the Board will consider the payment of an interim dividend in
respect of the three months to 31 March 2020 in the fourth quarter
of the current financial year when the outlook is likely to be
clearer than at present.
Environmental, Social and Governance ("ESG") Practices
The PRS REIT is a member of the UK Association of Investment
Companies and applies its Code of Corporate Governance to ensure
best practice in governance.
The Board of Directors is responsible for determining the
Company's investment objectives and policy, and has overall
responsibility for the Company's activities including the review of
investment activity and performance. The Board consists of four
independent non-executive directors, all of whom bring significant
and complementary experience in the management of listed funds,
equity capital markets, public policy, operations and finance in
the property and investment funds sectors.
The Board delegates the day-to-day management of the business,
including the management of ESG matters, to the Investment Adviser,
Sigma PRS Management Limited ("Sigma PRS"). Sigma PRS is a
specialist in the sourcing, development and management of PRS
assets, with in excess of GBP1 billion under management. It is also
a signatory and participant of the United Nations Global
Compact.
Full details of ESG policies and activities are contained
separately in the Investment Adviser's Report.
Outlook
The coronavirus crisis is evolving and changing rapidly, and its
full effect on the macro environment in the UK and globally is not
easy to predict. We have taken both operational and financial
measures to guide the Company through this difficult period, and
will continue to assess our plans as the situation changes. We
believe that our business model is resilient and that we have the
financial and operational capacity and capability to navigate
challenges successfully while responding to opportunities. Our
partners are well-established and supportive.
The key performance indicators for our completed assets are
encouraging and demonstrate the strength of our delivery model and
the strong underlying demand for our homes. Approximately 600 homes
were let or reserved between 1 January and 27 March 2020.
The Company will continue to roll-out its new houses across the
English regions as soon as on-site construction activity resumes.
In this market, we expect greater potential for acquisitions of
completed assets, and have revised our execution strategy
accordingly. Housing remains a major political and social priority,
and support for our activities from Central and Local Government is
strong as we meet a fundamental societal need in the communities
and local economies in which we operate.
We are fully focused on completing the full deployment of funds
and delivering an estimated 5,300 homes. Despite current
uncertainties caused by the coronavirus, the Board continues to
view the Company's long term prospects very positively.
Steve Smith
Chairman
30 March 2020
Investment adviser's report
Sigma PRS Management Limited ("Sigma PRS"), the Investment
Adviser to the PRS REIT and a wholly-owned subsidiary of Sigma
Capital Group plc ("Sigma"), is pleased to report on the Company's
progress for the six months to 31 December 2019. Our view of the
unfolding coronavirus crisis is in the Summary section of this
report.
We are pleased with our progress in the period. With the volume
of qualifying sites identified and secured, we are in a position to
deploy the balance, approximately GBP75 million, of the Company's
GBP900 million of gross funding. However, in light of the
disruption in the market place, we have taken the strategic
decision to defer deployment in order to reassess opportunities,
particularly for the acquisition of completed assets.
Very recently, reacting to the coronavirus situation in the UK,
national house builders have taken the decision to suspend all work
on construction sites, a move we support, and, therefore work on
all of the Company's sites has ceased. Given our housing delivery
model and the fixed price nature of our contractual agreements,
there is little resultant adverse effect on the Company's cash
flows and balance sheet, and its exposure to construction activity
will only resume when construction recommences.
Investment objective and strategy
The Company is addressing a significant opportunity to create a
large portfolio of newly constructed rental stock that meets
existing demand in the UK for well-located, high quality,
professionally managed rental homes.
In doing so, the Company seeks to provide investors with an
attractive level of income, together with the prospect of income
and capital growth.
The PRS REIT's main focus is on establishing PRS sites composed
of multiple individual family homes, with these homes let under the
'Simple Life' brand to qualifying tenants. The aim is to create a
geographically diverse portfolio of properties that have easy
access to the main road and rail infrastructure and are close to
large employment centres and local amenities. Proximity to good
quality primary education is of particular importance and a major
attraction for families with children. While the Company is focused
on family houses, it will also invest in some low rise flats in
appropriate locations.
The PRS REIT is building its portfolios in two ways:
-- by acquiring undeveloped sites sourced by Sigma PRS. Their
subsequent development is managed by Sigma PRS (or another member
of the Sigma Group as development manager), and the completed PRS
units are let under the 'Simple Life' brand.
The PRS REIT aims to fund a minimum of two-thirds of the new
properties this way. Pre-development risks are identified and
underwritten by Sigma and its partners, and sites will have an
appropriate certificate of title, detailed planning consent and a
fixed price design and build contract with one of Sigma's
housebuilding partners prior to acquisition by the Company. During
the construction phase, many of the properties are pre-let and
subsequently occupied as they complete.
-- by acquiring completed PRS sites from Sigma (and/or one of
its subsidiaries), or from third parties. A pre-requisite is that
these stabilised developments must accord with the PRS REIT's
investment objectives and satisfy both return and occupancy
hurdles. The Company can fund up to a maximum of one third of new
properties in this manner. To date this route represents 15% of the
Company's asset allocation.
The Investment Adviser's parent company, Sigma, has a
well-established PRS delivery platform, which plays a central role
in sourcing and developing investment opportunities. The PRS REIT
has first right of refusal over sites within Sigma's platform
assuming they meet its criteria and it has capital to fund the
opportunities.
The platform comprises well-established relationships with
construction partners, particularly Countryside Properties PLC
("Countryside Properties") but also Engie Regeneration Limited,
Seddon Construction Limited and Vistry Partnerships Limited
(formerly Galliford Try Partnerships Limited), and local
authorities. These relationships enable Sigma to identify, source
and deliver land and properties on behalf of the Company in the
target geographies. Homes England, an executive non-departmental
public body sponsored by the Ministry of Housing, Communities &
Local Government, has been extremely supportive of Sigma, with both
parties sharing the common goal of accelerating new housing
delivery in England.
Delivery progress
Significant progress was made over the first half of the
financial year, and we have identified the remainder of the sites
required to invest the Company's funding of GBP900 million (gross)
when full gearing is included. However, given market flux, we are
reviewing opportunities, and will be looking especially closely at
acquiring completed assets, which has the potential to accelerate
net rental growth and the overall delivery of the portfolio.
The table below provides a summary of development activity,
including the number of PRS units that have been completed since
the launch of the Company on 31 May 2017, the gross development
cost ("GDC") of sites and the estimated rental value ("ERV") of
homes under construction or completed.
At At At At
31 Dec 30 Sept 30 June 31 Dec
2019 2019 2019 2018
Completed homes
--------- --------- --------- ---------
Number of completed PRS units 1,617 1,361 1,173 775
--------- --------- --------- ---------
Rental income per annum GBP14.9m GBP12.3m GBP10.7m GBP7.0m
--------- --------- --------- ---------
Contracted homes
--------- --------- --------- ---------
Total number of contracted homes 3,328 3,422 3,196 2,800
--------- --------- --------- ---------
ERV per annum GBP32.7m GBP33.7m GBP30.3m GBP26.2m
--------- --------- --------- ---------
Total number of sites (completed
and contracted) 62 60 54 43
--------- --------- --------- ---------
Number of completed and contracted
units 4,945 4,783 4,369 3,575
--------- --------- --------- ---------
GDC GBP771m GBP740m GBP661m GBP530m
--------- --------- --------- ---------
ERV per annum GBP47.6m GBP46.0m GBP41.0m GBP33.2m
--------- --------- --------- ---------
By 31 December 2019, the Company's portfolio of completed homes
stood at 1,617, an increase of 109% on the same point in 2018 when
775 homes had been completed, and a 38% increase since 30 June
2019. This has driven a 113% increase in ERV on completed homes to
GBP14.9 million per annum at the half year end, up from GBP7.0
million a year ago and a 39% increase from GBP10.7 million at 30
June 2019.
Between 1 January and 27 March 2020, a further 330 rental homes
were completed with an ERV of approximately GBP3 million per annum.
This has taken the Company's portfolio of completed homes to 1,947
homes, with an ERV of around GBP17.9m. Since the beginning of 2020,
600 properties were let or reserved, a record amount to date. At 27
March 2020, 1,675 homes were let across six regions, generating a
rental income of GBP15.4m per annum.
The number of sites and geographical distribution continued to
expand and stood at 62 sites at 31 December 2019 (31 December 2018:
43). To date, 21 of these sites are now fully complete and
producing income, and 12 are partially complete, with some homes
already let and income-producing.
Construction work on any development site is planned such that
as tranches of homes complete, they can be released for letting
while work continues elsewhere on the site. This means that
development sites are capable of becoming income-generating
relatively quickly and before they are fully completed.
Looking across the portfolio of existing and planned homes,
approximately 60% are in the North West, with the Midlands
accounting for approximately 17%, and Yorkshire and the North East
representing around 15%. The number of homes in the South of
England has increased to 381 from 248 homes at the same point last
year and make up 8% of current completed and planned sites. The
wide geographical spread of our sites across the regions and our
diversified customer base help to mitigate risk, particularly in
the current situation brought on by the coronavirus.
Rental performance and key performance measures
The Company's completed properties continued to perform well,
with rental income 2% higher than management budget across the let
properties. The re-letting average, when a vacancy arose, was a
little over 8 days, which confirms strong underlying demand.
Overall rental income has grown by 143% to GBP5.6 million
(gross) year-on-year, reflecting the increase in asset delivery and
good demand.
The Company's cost base is covered, with operating cash inflows
expected to increase as rental income from the completed homes
comes on stream. Any acquisition of completed assets should
accelerate this growth.
Legislative change, in the form of the Tenant Fees Act 2019,
which came into force on 1 June 2019, has added additional cost to
the lettings process, and contributed to an increase in overall
running costs. However, this cost will be partially offset by a
reduction in agency fees, which reduce as the portfolio grows.
Currently, costs are at 1.2% over the target 17% of gross rent
during the development phase. However, the Gross to Net deduction
during the development phase is well below published averages, at
18.2%, reflecting the benefits of our model. All other costs are in
line with management's targets.
At stabilisation we are targeting the Gross to Net deduction to
be 22.5%, under the sector average of 25%.
The table below summarises key performance measures on completed
assets as at 31 December 2019:
Average gross yields on completed assets 6.2%
Average capital uplift on completed assets
to Investment Value 6.1%
-----------------
Average capital uplift on completed assets
to Vacant Possession Value 15.4%
-----------------
Cost management of Gross to Net during development
phase 18.2%
-----------------
Re-letting period 8.3 days average
-----------------
Rents 2% above budget
-----------------
The Investment Valuation completed in December 2019 showed an
average uplift in the value of completed assets over the costs of
delivery of 6.1%. Benchmarked against vacant possession value, the
average uplift in the value was 15.4%. Both of these uplifts
provide significant headroom between cost and value, underlining
the benefits of the PRS REIT's model.
ESG statement
The PRS REIT delegates the day-to-day management of ESG matters
to the Investment Adviser, who assesses how ESG should be managed
and integrated at Company and asset level on an ongoing basis. ESG
information is reported on a quarterly basis to the PRS REIT's
Board.
We recognise that the Company's, and our activities, have an
impact on the environment and can also affect the lives of tenants
and the wider community. We therefore wish to incorporate
environmental, social and governance factors into decision-making
processes and the way in which we operate. In order to better
direct our ESG efforts, we have signed up to the UN Global Compact,
and committed to its 10 principles, based on human rights, labour,
environment and anti-corruption. We deploy a robust management
structure to manage ESG issues effectively throughout the lifecycle
of PRS assets. This is summarised below.
Opportunity review
-- ESG risks are assessed, based on commitment, capacity, track
record and features of the site
-- Mitigation plans are identified
Investment decision
-- ESG issues are listed and addressed in a summary investment
paper that informs decision-making at the Investment Committee
stage
-- ESG costs, including ongoing community and charitable
involvement, continue to be determined and factored in to the
investment decision process
Asset management
-- Appropriate governance structures are established
-- Relevant laws and regulations are adhered to
-- Ongoing monitoring and management of ESG issues is established
-- Impacts on the natural habitat surrounding PRS assets are managed
-- Local community engagement and support plans are established
-- Due diligence is performed on third parties
-- Anti-corruption and money-laundering policies are established
-- Best practice is established
-- Carbon reduction opportunities are sought
-- Investment restrictions are screened
-- Investment's ability to comply with the ESG standards is assessed
Environmental
Processes and strategies
Whilst the Company's activities do not directly impact the
environment, the Company takes account of the potential impact of
its key business partners. We therefore work with partners who
share our values and can demonstrate a commitment to working
sustainably. We require all of our delivery partners to have
policies on the management and origination of their supply chain,
usage of resources and approach to biodiversity, and to integrate
effective design into the houses and developments they build on the
Company's behalf.
Countryside Properties, with whom we work most closely, has a
strong track record in sustainable development. In its last
reporting year, Countryside Properties diverted 99.4% of its waste
away from landfill. As a result of its approach to ESG, it features
in the FTSE4Good Index Series, which measures the performance of
companies demonstrating strong ESG practices.
Physical environment
Sigma PRS planted 1,000 trees over the course of 2019 and
intends to plant a further 1,000 trees over the course of 2020. The
initiative makes a positive environmental contribution as well as
enhancing our developments and the local neighbourhood. We are also
working with landscapers to commence a programme of wildflower
planting in our developments that will promote a greater volume of
invertebrate life, which will support the wild bird population and
greater overall biodiversity.
An exciting development in 2019 was the opening of Countryside's
new modular panel factory in Warrington. At full capacity, the
factory will be capable of manufacturing up to 1,500 homes per
year. The homes are produced with sustainable timber, from
certified forests, and as the homes are constructed in a factory
setting, tracking and quality control processes are more efficient.
The factory does not generate any landfill, with 96.4% of waste
recycled and the remainder used as refuse-derived fuel in power
generation. By the end of the first half of the financial year, the
Company had taken delivery of over 350 of these modular homes,
which are quicker to construct once on site and require less labour
than a traditionally built home. They also create fewer vehicular
movements, reducing greenhouse gas emissions.
Clothes banks
We have initiatives in place to encourage tenants to act
sustainably. Notably, we are establishing clothes banks on each
completed development, with collected garments either redistributed
to good causes or recycled. We also include reusable shopping bags
and water flasks in the 'Welcome' boxes provided to new
tenants.
Promotion of electric cars and transport policy
During 2020, we plan to introduce a subsidised electric vehicle
car policy to encourage staff to switch away from fossil fuels, and
all our contractor partners have agreed to the adoption of targets
to electrify their workforce transport.
Social
Strong social values underpin the Company's engagement with
tenants and the local communities in which the Company's
developments are situated. These values include integrity, trust
and respect for others. We intend the Simple Life brand to
represent a new, higher standard of rental experience, and our aim
is for tenants to feel secure in their tenancy and enjoy their home
and neighbourhood with total piece of mind.
We also believe in investing in the wider community. During the
current financial year, we are funding projects across ten schools
that are close to a number of our developments. Over GBP66,000 has
been provided to equip these schools with facilities, including
sensory rooms, playground landscaping, ponds, fitness and play
equipment. We look forward to assisting further schools and
projects in due course.
We continue to support a range of charities, including: Park
Palace Ponies, a charity that enables young children in Liverpool
to experience horse riding; Loaves and Fishes, a homeless charity
based in Salford; and The Big Help Project, an anti-poverty charity
based in Knowsley. We also support three food banks, in the North
West and the Midlands, and various local sports clubs near our
developments, including The Albert Tennis Club in Wolverhampton,
Sale Rugby Club U18's and Sale United Football Club.
Our calendar of events for our customers is growing and this
year our pizza nights, Easter egg hunts, ice cream dashes and
visits from Santa Claus and his reindeer will reach over 3,000
households across over 30 sites. These activities foster friendly
and engaged neighbourhoods, and promote social interaction across
the age ranges.
Health and Safety
In order to maintain high standards of health and safety for
those working on our sites, we commission monthly checks by
independent project monitoring surveyors to ensure that all
potential risks are identified and mitigated. These checks
supplement those undertaken by our development partners. The data
is reported to the Board on a quarterly basis in the event of a nil
return, and immediately in the event of an incident. We are pleased
to announce that there have been no reportable incidents in the
period.
Equality
As an employer, Sigma PRS and its parent company, Sigma, aim to
provide a collaborative and supportive working environment for all
of their employees. Equality of opportunity is a core value and we
wish to ensure that the best person for any role has the
opportunity to apply for and excel in it.
Governance
Strong governance is essential to ensuring that risks are
identified and managed, and enabling the delivery of returns in
line with expectations whilst protecting the interests of
shareholders.
Sigma and the Company are subject to statutory reporting
requirements and to rules and responsibilities prescribed by the
London Stock Exchange. The Boards of both Companies have
independent non-executive directors who provide oversight, and
challenge decisions and policies as they see fit. Both Boards
believe in robust and effective corporate governance
structures.
Summary
Progress over the first half of the PRS REIT's current financial
year was pleasing, and the PRS REIT's portfolio now stands at 1,947
completed homes.
We have reached a point where the growth in the Company's rental
income has resulted in net operating cash inflows. The shift in
focus to deploy the balance of the Company's funding on the
acquisition of completed assets should help to accelerate net
operating cash generation.
We continue to carefully monitor the coronavirus situation and
are responding appropriately. Our partnership with Countryside
Properties, as well as preparations for Brexit, means that we had
already undertaken significant advance bulk-purchasing of building
materials before the current crisis, which will help to ensure cost
stability and supply. Countryside Properties' new factories,
producing modular homes, also improves efficiencies in the delivery
process. The delivery model, including fixed price contracts, also
substantially reduces the PRS REIT's exposure to development risk.
During construction suspension, the Company bears little cash flow
exposure.
The Company's completed assets have increased in number and
performed well to date, supported by strong rental demand across
the portfolio. Its scale and geographic spread also reduces risk.
Between 1 January and 27 March 2020, we recorded our highest months
of lettings and reservations, a very encouraging indication of the
attraction of our homes. Our letting brand, Simple Life, aims to
set a new, higher standard of customer experience in the private
rental market.
While there is no doubt that we are operating in an uncertain
macro environment due to the coronavirus crisis, we have a
resilient model and financial stability. We therefore feel
confident about our ability to navigate the current market
disruption, and safely steer the successful delivery of the
Company's housing plans.
The Board will consider the payment of an interim dividend in
respect of the three months to 31 March 2020 in the fourth quarter
of the current financial year when the outlook is likely to be
clearer than at present.
Sigma PRS Management Limited
30 March 2020
DEFINITIONS
The following terms shall have the meanings specified below:
"Average capital uplift on completed assets to investment value"
means the difference between investment value and gross development
cost divided by gross development cost.
"Average capital uplift on completed assets to vacant possession
value" means the difference between vacant possession value and
gross development cost divided by gross development cost.
"Average gross yields on completed assets" means current
expected rental value divided by gross development cost
"Committed" means development sites that have been approved or
are under formal appraisal by the Investment Adviser, and where
planning consent is being sought, and/or are in the process of
being acquired.
"Contracted" means sites under construction (under a design and
build contract), which have been purchased by the PRS REIT or the
PRS REIT's Investment Adviser (forward sold to the PRS REIT).
"EPRA NAV" means net asset value adjusted to include properties
and other investment interests at fair value and to exclude certain
items not expected to crystallise in a long terms property business
model.
"EPS" means unadjusted earnings per share.
"EPRA EPS" means earnings per share excluding investment
property revaluations, gains and losses on disposals, changes in
the fair value of financial instruments and associated close out
costs and their related taxation
"IFRS NAV" means unadjusted net asset value.
"Pipeline" means sites that have been identified as being
suitable for appraisal. These sites are typically sourced from
Sigma's PRS Platform, and are typically under a Framework Agreement
or Collaboration Agreement with a construction partner.
CONDENSED CONSOLIDATED Statement of COMPREHENSIVE INCOME
For the six months ended 31 December 2019
Six months Six months Year ended
ended ended 30 June
31 December 31 December
2019 2018 2019
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Rental income 5,607 2,320 5,970
Non-recoverable property costs (1,140) (376) (1,054)
------------- ------------- -----------
Net rental income 4,467 1,944 4,916
Administrative expenses
Directors' remuneration (70) (61) (123)
Investment advisory fee (2,164) (2,195) (4,402)
Administrative expenses (680) (552) (1,354)
------------- ------------- -----------
Total expenses (2,914) (2,808) (5,879)
Gain from fair value adjustment
on investment property 4 10,867 8,157 15,609
------------- ------------- -----------
Operating profit 12,420 7,293 14,646
Finance income 188 488 789
Finance costs (1,651) (246) (864)
------------- ------------- -----------
Profit before taxation 10,957 7,535 14,571
Taxation - - -
------------- ------------- -----------
Total comprehensive income for the
period / year attributable to the
equity holders of the Company 10,957 7,535 14,571
============= ============= ===========
Earnings per share attributable
to the equity holders of the Company:
Basic IFRS earnings per share 6 2.2p 1.5p 2.9p
All of the Group activities are classed as continuing and there
were no comprehensive gains or losses in the period other than
those included in the statement of comprehensive income.
CONDENSED CONSOLIDATED Statement of financial position
As at 31 December 2019
Notes As at
As at 30 June
As at 31
December 31 December
2019 2018 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Investment property 4 519,870 269,232 362,275
------------- ------------- -----------
519,870 269,232 362,275
------------- ------------- -----------
Current assets
Trade receivables 227 56 89
Other receivables 2,718 5,024 5,379
Cash and cash equivalents 74,962 230,295 229,946
------------- ------------- -----------
77,907 235,375 235,414
------------- ------------- -----------
Total assets 597,777 504,607 597,689
------------- ------------- -----------
LIABILITIES
Non-current liabilities
Accruals and deferred income 2,976 2,475 2,954
Interest bearing loans and borrowings 96,807 - 100,000
------------- ------------- -----------
99,783 2,475 102,954
Current liabilities
Trade and other payables 27,570 24,937 20,410
------------- ------------- -----------
27,570 24,937 20,410
Total liabilities 127,353 27,412 123,364
------------- ------------- -----------
Net assets 470,424 477,195 474,325
============= ============= ===========
EQUITY
Called up share capital 5 4,953 4,953 4,953
Share premium account 245,005 245,005 245,005
Capital reduction reserve 191,701 216,465 206,559
Retained earnings 28,765 10,772 17,808
------------- ------------- -----------
Total equity attributable to
the equity holders of the Company 470,424 477,195 474,325
============= ============= ===========
IFRS net asset value per share 7 95.0p 96.3p 95.8p
As at 31 December 2019, there was no difference between IFRS NAV
per share and the EPRA NAV per share.
condensed Consolidated statement of changes in equity
For the six months ended 31 December 2019
Share Capital
Share premium reduction Retained Total
capital account reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2018 4,943 244,025 233,800 3,237 486,005
Share capital issued
in the period 10 961 - - 971
Share capital issue
costs paid - 19 - - 19
Dividend paid - - (17,335) - (17,335)
Profit for the period - - - 7,535 7,535
At 31 December 2018 4,953 245,005 216,465 10,772 477,195
--------- --------- ----------- ---------- ---------
Dividend paid - - (9,906) - (9,906)
Profit for the period - - - 7,036 7,036
At 30 June 2019 4,953 245,005 206,559 17,808 474,325
--------- --------- ----------- ---------- ---------
Dividend paid - - (14,858) - (14,858)
Profit for the period - - - 10,957 10,957
At 31 December 2019 4,953 245,005 191,701 28,765 470,424
--------- --------- ----------- ---------- ---------
condensed CONSOLIDATED STATEMENT OF Cash Flows
For the six months ended 31 December 2019
Year
ended
Six months Six months
ended ended 30 June
31 December 31 December
2019 2018 2019
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 10,957 7,535 14,571
Finance income (188) (488) (789)
Finance costs 1,651 246 864
Fair value adjustment on investment
property 4 (10,867) (8,157) (15,609)
-----------
Cash generated from / (used
in) operations 1,553 (864) (963)
Increase in trade and other receivables (1,730) (1,367) (1,684)
(Decrease) / Increase in trade
and other payables (3,634) 1,218 3,026
Net cash (used in) / generated
from operating activities (3,811) (1,013) 379
------------- ------------- -----------
Cash flows from investing activities
Acquisition of subsidiaries 4 (8,170) (21,980) (34,665)
Purchase of investment property (126,328) (103,173) (181,627)
Finance income 221 507 823
------------- ------------- -----------
Net cash used in investing activities (134,277) (124,646) (215,469)
------------- ------------- -----------
Cash flows from financing activities
Bank and other loans - - 100,000
Finance costs (2,038) (1,864) (2,877)
Issue of shares - 971 971
Cost of share issue - (157) (156)
Dividends paid (14,858) (17,335) (27,241)
------------- ------------- -----------
Net cash (used in) / generated
from financing activities (16,896) (18,385) 70,697
------------- ------------- -----------
Net decrease in cash and cash
equivalents (154,984) (144,044) (144,393)
Cash and cash equivalents at
beginning of period 229,946 374,339 374,339
------------- ------------- -----------
Cash and cash equivalents at
end of period 74,962 230,295 229,946
============= ============= ===========
Notes to the Financial Statements
1. General Information
The PRS REIT plc (the "Company") is a public limited company
incorporated on 24 February 2017 in England and having its
registered office at Floor 3, 1 St. Ann Street, Manchester, M2 7LR
with company number 10638461.
The Company is quoted on the Specialist Fund Segment of the Main
Market of the London Stock Exchange.
This interim condensed consolidated financial information was
approved and authorised for issue by the Board of Directors on 30
March 2020.
2. Basis of Preparation and changes to the Group's accounting policies
Basis of preparation
The interim condensed consolidated financial statements for the
six months ended 31 December 2019 have been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU.
The interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual
financial statements, and should be read in conjunction with the
Group's annual consolidated financial statements as at 30 June 2019
which have been prepared in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the EU. The Group's
annual consolidated financial statements are available on the
Company's' website, www.theprsreit.com .
Adoption of new and revised standards
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 30 June 2019,
except for the adoption of new standards effective as of 1 July
2019. A number of new standards and amendments to standards and
interpretations have been issued but are not yet effective for the
current accounting period. None of these are expected to have a
material impact on the consolidated financial statements of the
Group. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
IFRS 16 Leases
IFRS 16 supersedes IAS 17 Leases. The new standard results in
almost all leases held as lessee being recognised on the balance
sheet, as the distinction between operating and finance leases is
removed. IFRS 16 applies to leases previously classified as
operating leases where the Group is lessee. IFRS 16 has not
impacted operating leases held by the Group where the Group is
lessor, therefore the standard does not have a material impact on
the Group. The accounting for lessors has not significantly
changed.
The Group adopted IFRS 16 using the modified retrospective
method of adoption with the date of initial application of 1 July
2019. Under this method, the standard is applied retrospectively
with the cumulative effect of initially applying the standard
recognised at the date of initial application.
The Group has entered into ground leases on some of its sites.
The impact of IFRS 16 is a GBP1 million increase in investment
property and a corresponding increase in liabilities of GBP1
million.
The adoption of IFRS 16 has an immaterial impact on net assets
and underlying profit before tax. Therefore, the adoption of IFRS
16 will have an immaterial impact on alternative performance
measures.
Summary of new accounting policies
Set out below are the new accounting policies of the Group upon
adoption of IFRS 16, which have been applied from the date of
initial application, 1 July 2019:
-- Right-of-use ("ROU") assets
The Group recognises ROU assets at the commencement date of the
lease. ROU assets are measured at fair value. The cost of ROU
assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received.
-- Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments less any lease incentives receivable and variable lease
payments that depend on an index or a rate. The variable lease
payments that do not depend on an index or a rate are recognised as
expense in the period on which the event or condition that triggers
the payment occurs. In calculating the present value of lease
payments, the Group uses the incremental borrowing rate at the
lease commencement date if the interest rate implicit in the lease
is not readily determinable. After the commencement date, the
amount of lease liabilities is increased to reflect the accretion
of interest and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured if there is
a modification, a change in the lease term, or a change in the
in-substance fixed lease payments.
Critical judgements in applying the Group's accounting
policies
In the process of applying the Group's accounting policies, the
Directors have made the following judgements which have the most
significant effect on the amounts recognised in the consolidated
financial statements.
Acquisition of subsidiaries - as a group of assets and
liabilities
During the period, the Group acquired a further five property
owning special purpose vehicles. The Directors considered whether
these acquisitions met the definition of the acquisition of a
business or the acquisition of a group of assets and liabilities.
It was concluded that the acquisitions did not meet the criteria
for the acquisition of a business, as outlined in IFRS 3, because
they did not have an integrated set of activities and assets that
were capable of being conducted and managed for the purpose of
providing a return in the form of dividends, lower costs or other
economic benefits directly to investors. Furthermore, a business
consists of inputs and process applied to those inputs that have
the ability to create outputs. All assets acquired and liabilities
assumed in acquisition of a group of assets and liabilities are
measured at acquisition date fair value. The Directors have
reviewed the fair value of the assets and liabilities as at the
date of the acquisitions which were as follows:
Sigma PRS
Investments Sigma PRS
Sigma PRS (Houghton Investments Sigma PRS
Investments Regis (Houghton Sigma PRS Investments
(Houghton Parcel Regis Investments (Owens
Regis II) 8A II) Parcel (Brackenhoe) Farm II)
Limited Limited 8 II) Limited Limited Limited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment properties
acquired 5,360 4,954 1,405 2,757 8,170
Other receivables - - - - -
Other payables - - - - -
Total consideration
paid 5,360 4,954 1,405 2,757 8,170
============= ============= =============== ============== =============
Sigma PRS Investments (Owens Farm II) Limited was acquired from
Sigma in December 2019 as a stabilised asset meeting with the PRS
REIT's investments objectives, satisfying both return and occupancy
hurdles. The acquisition is therefore shown separately within the
Condensed Consolidated Statement of Cash Flows as an Acquisition of
subsidiary.
-- Investment property is measured at fair value as at the date
of the acquisition of the subsidiary by an independent valuation
expert.
-- Other receivables are taken as being the value recorded in
the accounts of the Company acquired, being the best estimate of
the amounts actually recoverable.
-- Other payable balances are measured at the amounts actually payable.
3. Going concern
The interim condensed consolidated financial statements have
been prepared on a going concern basis. The Group's cash balances
at 31 December 2019 were GBP75 million of which GBP43 million was
readily available. The Group had debt borrowing as at 31 December
2019, of GBP100 million, and has secured further facilities of
GBP300 million. Capital commitments outstanding as at 31 December
2019 were GBP189 million. Due to the coronavirus crisis,
construction has temporarily halted on all of our sites. We will
work closely with our delivery partners in the efficient deployment
of capital and resources when construction recommences. The Group's
ERV as at 31 December 2019, was GBP14.9 million from 1,617 homes
and has increased to GBP17.9 million from 1,947 homes as at 27
March 2020. This has increased the Company's recurring income and
at this level is more than sufficient to cover monthly cash costs.
However, we will keep this under review over the next few months in
light of the coronavirus crisis and the potential impact on our
customers.
Therefore, the Directors believe the Group is well placed to
manage its business risks successfully. After making enquiries, the
Directors have a reasonable expectation that the Group will have
adequate resources to continue in operational existence for the
foreseeable future and for a period of at least 12 months from the
date of the approval of the Group's interim condensed consolidated
financial statements for the period ended 31 December 2019. The
Board is therefore of the opinion that the going concern basis
adopted in the preparation of the interim condensed consolidated
financial statements for the period ended 31 December 2019 is
appropriate.
4. Investment property
In accordance with International Accounting Standard, IAS 40
Investment Property, investment property has been independently
valued at fair value by Savills (UK) Limited, an accredited
external valuer with a recognised relevant professional
qualification and with recent experience in the locations and
categories of the investment properties being valued. The valuation
basis conforms to International Valuation Standards and is based on
market evidence of investment yields, expected gross to net income
rates and actual and expected rental values.
The valuations are the ultimate responsibility of the Directors.
Accordingly, the critical assumption used in establishing the
independent valuations are reviewed by the Board.
Completed Assets under
assets construction Total
GBP'000 GBP'000 GBP'000
As at 1 July 2018 43,635 77,474 121,109
Properties acquired on acquisition
of subsidiaries 21,980 11,787 33,767
Property additions - subsequent
expenditure - 106,199 106,199
Change in fair value 1,534 6,623 8,157
Transfers to completed assets 35,657 (35,657) -
---------- -------------- --------
As at 31 December 2018 102,806 166,426 269,232
Properties acquired on acquisition
of subsidiaries 12,685 - 12,685
Property additions - subsequent
expenditure - 72,906 72,906
Change in fair value 71 7,381 7,452
Transfers to completed assets 37,363 (37,363) -
---------- -------------- --------
As at 30 June 2019 152,925 209,350 362,275
Properties acquired on acquisition
of subsidiaries 8,170 14,476 22,646
Property additions - subsequent
expenditure 9 123,073 123,082
Right-of-use assets on transition 1,000 - 1,000
Change in fair value 1,373 9,494 10,867
Transfers to completed assets 48,765 (48,765) -
---------- -------------- --------
As at 31 December 2019 212,242 307,628 519,870
========== ============== ========
The historic cost of completed assets and assets under
construction as at 31 December 2019 was GBP486.9 million (30 June
2019: GBP341.2 million).
Fair values
IFRS 13 sets out a three-tier hierarchy for financial assets and
liabilities valued at fair value. These are as follows:
Level 1 quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2 inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly or
indirectly; and
Level 3 unobservable inputs for the asset or liability.
Investment property falls within Level 3. The investment
valuations provided by the external valuation expert are based on
RICS Professional Valuation Standards, but include a number of
unobservable inputs and other valuation assumptions. The
significant unobservable inputs and the range of values used
are:
Completed assets:
Type Range
Investment yield 4.15% - 4.85%
(net)
Gross to net assumption 22.50% - 25.00%
5. Share capital
No. of Shares Share Capital
GBP'000
Balance as at 31 December 2017 250,000,000 2,500
Shares issued in relation to management
contract 445,578 4
Shares issued in relation to Placing Programme 243,902,440 2,439
-------------- --------------
Balance as at 30 June 2018 494,348,018 4,943
Shares issued in relation to management
contract 929,276 10
-------------- --------------
Balance as at 31 December 2018 495,277,294 4,953
============== ==============
Balance as at 30 June 2019 495,277,294 4,953
============== ==============
Balance as at 31 December 2019 495,277,294 4,953
============== ==============
6. IFRS Earnings per share
Earnings per share ("EPS") amounts are calculated by dividing
profit for the period attributable to ordinary equity holders of
the Company by the weighted average number of ordinary shares in
issue during the period. As there are no dilutive instruments, only
basic earnings per share is quoted below.
The calculation of basic earnings per share is based on the
following:
Net profit
attributable Weighted average
to ordinary number of Earnings
shareholders Ordinary Shares per share
GBP'000 Number Pence
For the period ended 31 December
2019 10,957 495,277,294 2.21
For the year ended 30 June 2019 14,571 495,180,547 2.90
For the period ended 31 December
2018 7,535 495,085,378 1.52
-------------- ----------------- -----------
7. IFRS Net Asset Value per share
Basic Net Asset Value ("NAV") per share is calculated by
dividing net assets in the condensed consolidated statement of
financial position attributable to ordinary equity holders of the
parent by the number of ordinary shares outstanding at the end of
the period. As there are no dilutive instruments, only basic NAV
per share is quoted below.
Net asset values have been calculated as follows:
As at As at As at
31 December 31 December 30 June
2019 2018 2019
Net assets at end of period (GBP'000) 470,424 477,195 474,325
Shares in issue at end of period
(number) 495,277,294 495,277,294 495,277,294
Basic IFRS NAV per share (pence) 95.0 96.3 95.8
============= ============= ============
The NAV per share calculated on an EPRA basis is the same as the
Basic IFRS NAV per share.
8. Capital commitments
The Group has entered into contracts with unrelated parties for
the construction of residential housing with a total value of
GBP478.0 million (30 June 2019: GBP 525.8 million) . As at 31
December 2019, GBP189.0 million (30 June 2019: GBP 260.2 million)
of such commitments remained outstanding.
9. Transactions with Investment Adviser
On 31 March 2017, Sigma PRS Management Limited ("Sigma PRS") was
appointed as the Investment Adviser ("IA") of the Company.
For the period from 1 July 2019 to 31 December 2019, fees of GBP
2.2 million (1 July 2018 to 31 December 2018: GBP2.2 million) were
incurred and payable to Sigma PRS in respect of investment advisory
services. At 31 December 2019, GBP 0.4 million remained unpaid (30
June 2019: GBP0.4 million).
For the period from 1 July 2019 to 31 December 2019, development
fees of GBP 5.3 million (1 July 2018 to 31 December 2018: GBP4.5
million) were incurred and payable to Sigma PRS. At 31 December
2019, GBP 1.9 million (30 June 2019: GBP0.7 million) remained
unpaid.
During the period from 1 July 2019 to 31 December 2019, Sigma
PRS acquired 750,000 shares in the Company, increasing the total
shares held by Sigma PRS in the Company to 4,389,852, which
represents 0.89% of the issued share capital in the Company. The
shares were acquired in the market at an average price of 94.9
pence per share. All the shares acquired to date were in accordance
with the Development Management Agreement between the Company and
Sigma PRS.
During the period from 1 July 2019 to 31 December 2019, the
Company acquired the following subsidiaries from Sigma Capital
Group plc, the ultimate holding company of the IA:
Name of Entity Consideration
Sigma PRS Investments (Houghton Regis II) GBP5.36 million
Limited
------------------
Sigma PRS Investments (Houghton Regis Parcel GBP1.41 million
8 II) Limited
------------------
Sigma PRS Investments (Houghton Regis Parcel GBP4.95 million
8A II) Limited
------------------
Sigma PRS Investments (Brackenhoe) Limited GBP2.76 million
------------------
Sigma PRS Investments (Owens Farm) Limited
& GBP8.17 million
Sigma PRS Investments (Owens Farm II) Limited
------------------
10. Dividends paid and proposed
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2019 (unaudited) 2018 (unaudited) 2019 (audited)
GBP'000 GBP'000 GBP'000
Dividends on ordinary shares
declared and paid:
3 months to 30 June 2018: 2.5p
per share - 12,382 12,382
3 months to 30 September 2018:
1.0p per share - 4,953 4,953
3 months to 31 December 2018:
1.0p per share - - 4,953
3 months to 31 March 2019: 1.0p
per share - - 4,953
3 months to 30 June 2019: 2.0p 9,905 - -
per share
3 months to 30 September 2019: 4,953 - -
1.0p per share
------------------ ------------------ ----------------
14,858 17,335 27,241
================== ================== ================
Proposed dividends on ordinary
shares:
3 months to 31 December 2019: 4,953 - -
1.0p per share
3 months to 30 June 2019: 2.0p
per share - - 9,905
3 months to 31 December 2018: - 4,953 -
1.0p per share
------------------ ------------------ ----------------
4,953 4,953 9,905
================== ================== ================
The proposed dividend was paid on 28 February 2020, to
shareholders on the register at 7 February 2020.
11. Post balance sheet events
Dividends
On 31 January 2020, the Company declared a dividend of 1.0p per
ordinary share in respect of the second quarter of the current
financial year. The dividend was paid on 28 February 2020 to
shareholders on the register as at 7 February 2020.
Coronavirus
Subsequent to the year end, the COVID-19 pandemic has led to
uncertainty in all walks of life. The impact on the Company and how
it is placed is discussed throughout these interim financial
statements. The Directors believe that the business is resilient,
the delivery model and processes substantially mitigate the
Company's exposure to construction and other operational risks, and
we have a robust balance sheet and low gearing. Our customer base
is diversified and the underlying demand for good quality rental
housing is strong.
The Directors continue to carefully monitor the coronavirus
situation and are responding appropriately. Our partnership with
Countryside Properties, as well as preparations for Brexit, means
that we had already undertaken significant advance bulk-purchasing
of building materials before the current crisis, which will help to
ensure cost stability and supply. Countryside Properties' new
factories, producing modular homes, also improves efficiencies in
the delivery process. The delivery model, including fixed price
contracts, also substantially reduces the PRS REIT's exposure to
development risk. During construction suspension, the Company bears
little cash flow exposure with spend being tied to work undertaken
and independently certified.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SDDEFSESSELD
(END) Dow Jones Newswires
March 31, 2020 02:00 ET (06:00 GMT)
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