TIDMDVNO
RNS Number : 1556H
Develop North PLC
26 July 2023
DEVELOP NORTH PLC
Interim Report & Financial Statements for the six months
ending 31 May 2023
Announcement of Interim Results
LEI: 213800EXPWANYN3NEV68
This announcement contains regulated information.
Chairman's Statement
Highlights
-- Dividends paid and declared of 2.0p per share (2022:
2.0p)
-- Ordinary share mid-price equivalent to a premium of 2.1% as
at 31 May 2023
-- Gearing facility with Shawbrook Bank Limited renewed for two
years to May 2025
-- Net Asset Value total return of 0.0%
Background
The Company entered its seventh year of trading during the
period under review, which has included continuing turmoil on the
world stage, steep levels of UK inflation that governmental
measures have thus far struggled to moderate and further increases
in interest rates. At the same time, the consensus of political
analysts is that the while UK economy may narrowly avoid a
technical recession, there will be a slowdown in economic activity
as businesses and consumers adjust to the rapid change in the
interest rate environment.
Net Asset Value
The Company's Net Asset Value per share decreased from 81.79p to
79.81p over the six months ended 31 May 2023. Taking the effects of
dividend distributions into account, this has resulted in a broadly
flat NAV Total Return (0.0%) for the period.
This figure may be placed into context by the total return
figures over the same period of the Association of Investment
Companies' (AIC's) "Property-Debt" sector, of which Develop North
is a component member, of +2.4% and of the AIC's "Debt-Loans"
sector of +1.7%.
Dividends
A quarterly dividend of 1 penny per share was paid on 30 June
2023. As set out in the Annual Report the Company expects to pay
dividends at a rate of 1 penny per share per quarter, equivalent to
4 pence per share per year in aggregate.
Depending on market conditions and the performance of the
investment portfolio, a final balancing payment may be made at the
end of the current financial year so as to at least fulfil the
investment trust qualification requirements.
Investment Portfolio
The total value of the Company's portfolio now stands at GBP23.7
million, from 17 live projects.
New Investments:
The Company agreed one new loan during period, a GBP1.13m
18-month facility to fund the acquisition of a hotel at Croft on
Tees, North Yorkshire. Shortly after period end the Company agreed
a GBP1.65m facility for two years to fund the development of 18
homes in Aberdeenshire, Aberdeen. Further details are provided in
the Investment Adviser's report.
Exits:
There were no portfolio exits during the period but there were
partial redemptions across four projects. Post period end, there
were two further exits.
Impairments:
As specified by the requirements of accountancy standard IFRS 9,
the Company has continued to reflect the more uncertain economic
conditions. While the general provision remained static at the
period end, the impairment charge for the period has increased,
largely due to adverse outcomes on legacy loans, i.e. those that
were acquired by the Company at incorporation. The Board believes
that the downside impact of these early loans is now fully
recognised in the net asset value.
The loan portfolio is discussed more fully in the Investment
Adviser's Review.
Gearing
The Company continues to benefit from a gearing facility with
Shawbrook Bank Limited, recently renewed for a further two years
until May 2025, with GBP2.9m drawn at the period end. At the time
of writing, the loan had been fully repaid.
Outlook
The UK economy and the real estate sector in particular appear
well placed to benefit as the effects of COVID disappear into the
rear view mirror, energy prices begin to fall and (given fair
winds) inflation and interest rates approach their peaks.
In the meantime, however, project finance costs remain high as
do the prices of raw materials and indeed of labour. It is helpful
in this regard that there is no shortage of high quality potential
borrowers approaching the Company for loans and who are prepared to
agree terms and interest rates appropriate to the prevailing market
conditions.
John Newlands
Chairman
25 July 2023
Investment Adviser's Review
REVIEW OF THE 6 MONTHS TO 31 MAY 2023
Investment Adviser's highlights:
-- NAV Total Return of 0.0% for the 6 months to 31 May 2023.
-- Funds deployed into one new project
-- Loan to Value (LTV) of portfolio reduced to 65.5%
-- Dividends totalling 2.0p per share paid or declared for the
six months to 31 May 2023, equivalent to an annualised dividend
yield of 4.91%.
This Interim Report covers the end of the sixth and the
beginning of the seventh year of performance of the Company, since
its listing in January 2017.
The Company's investment objective is to provide debt finance to
the property sector. The Company also benefits from a small number
of equity positions attained at nil cost in six of the borrowing
entities which it supports. In addition, the Company benefits from
exit fees on redemption of other projects that additionally
contribute to the Senior and Profit lending type.
The first six months of the financial year have seen the base
rate increase to 5.0% at the time of writing (July 2023), with
expectations that they may exceed 6.0% by the end of 2023 and
remain at these levels until the second half of 2024. These rises
have been driven by the ongoing presence of core inflation which
the Bank of England has been attempting to bring under control for
the past twelve months. Recent economic analyses suggest that there
is risk of the UK entering a recession later this year, though some
commentators say it may be narrowly avoided.
2023 has seen house prices decline across the UK. This is
expected to continue for the rest of 2023 and all of 2024 (Source:
Savills & Knight Frank). These forecast declines would see
prices return to summer 2021 values. Build cost inflation and
labour shortages in the construction sector have stabilised but the
viability of new projects is still challenging.
We expect a bumpy ride for the economy for the remainder of
2023. The Company has used the first six months to reprice some of
the existing loan book and to deploy at higher rates for new
projects. There has been a continued focus on liquidity, including
the renewal of the gearing facility for a further two years in May
2023.
DEPLOYMENT
Despite the ongoing uncertainties, we are pleased to report an
active period for new transactions and deployments to existing
projects, together with full and partial exits:
The Company agreed one new facility during the period:
-- Croft, North Yorkshire - GBP1.13m 18-month facility
A further GBP1.65m was deployed into a new 2-year facility in
Aberdeen, Scotland in June 2023.
During the period a total of GBP1.67m was deployed into four
projects, including the Croft project mentioned above.
Portfolio Exits
There were no portfolio exits during the period. In June 2023,
there were two successful exits, bringing the number of exits to
seventeen since inception.
Partial Redemptions
During the period there was GBP3.04m of partial redemptions
across five of the portfolio projects.
Impairments
In accordance with IFRS 9 the Company recognises the gross
interest receivable on all its loans, and then recognises an
impairment charge if that interest is not paid by the borrower and
there is not a clear expectation that this can be recovered
subsequently. During the period, three projects were unable to meet
their interest obligations.
IFRS 9 also requires the Company to consider various credit loss
scenarios and assign a risk weighting to these. This calculation
generates a provision which is taken as a further impairment for
the period. In the six months ended 31 May 2023 the Company has set
the provision at GBP114,000. This is unchanged from the general
provision at 30 November 2022. This provision is based on forward
looking scenarios and is designed to withstand market-related
shocks, including those that may arise as a result of the current
inflationary environment.
Gearing
In May 2023, the Company renewed its committed revolving credit
facility with Shawbrook Bank for a further two years. Again, the
key driver was headroom and liquidity. This renewal for a sixth
year demonstrates the support that the Company has from its lender,
and the growing confidence in future deployment given the current
strength of pipeline.
Profit Share Projects
There are currently six Profit Share projects in the portfolio
(Nov 2022: six).
OUTLOOK
Economic Outlook
Residential
As at 31 May 2023, 61.3% (GBP14.45m) of deployed funds were
invested across 12 projects with a residential focus, with a
further GBP1.65m committed to live projects.
The housing market has declined during 2023, offsetting some but
not all of the past two years' increases. Estate agents Savills and
Knight Frank predict that house prices will decline by 10% and 5%
respectively in 2023. Capital Economics forecasts that house prices
in Q4 of 2023 will be 8.5% lower than in Q4 of 2022. The outlook
remains negative for 2024 before returning to growth
thereafter.
Mortgage availability has been significantly impacted. Rising
interest rates will challenge buyers on the affordability test as
interest payments will represent a significant proportion of
household income. Supply chain issues for both availability and
pricing of labour and materials have improved in 2023 and there are
anecdotal signs that they have returned to historic levels.
The Company's residential exposure is predominantly in the North
East (87.9%) and Scotland (12.1%). Both regions continue to have
amongst the best affordability, with loan to income ratios
remaining lower. We continue to appraise projects using the views
of market experts for sales values, build cost and delivery, with
all assumptions stress tested.
Commercial
As at 31 May 2023, 35.3% of deployed funds were invested across
five projects with a commercial focus.
The Company continues to be selective in the level of exposure
to commercial developments. We believe our selective approach to
the Company's deployment in the commercial property sector will
continue to create shareholder value. The sectors within the
commercial property space that the Company currently has exposure
to are:
-- bereavement (crematorium);
-- weddings;
-- strategic land; and
-- shared office space.
Each of the above sub-sectors offer downside protection in the
current uncertain economic times, with the latter two also giving
flexibility for the borrowers as and when trends change. We will
continue to identify and support professional, experienced and
reliable management teams who have a clear vision and robust
plan.
PIPELINE
There is currently GBP9.2m at various stages of due diligence
across four projects, of which 82.0% is in the North East.
The quality and experience of each management team that we are
in discussions with will continue to enhance the Company's
portfolio and strengthen its reputation in the market. This should
lead to the creation of shareholder value that is sustainable in
the longer term.
Ian McElroy
Tier One Capital
25 July 2023
THE INVESTMENT PORTFOLIO AS AT 31 MAY 2023
Sector % LTV* (May Loan Value LTV* Loan Value
Portfolio 23) (May 23) GBP'000s (Nov 22) (Nov 22)
GBP'000s
Residential 61.3% 67.4% 14,451 69.0% 17,111
---------- ---------------------- ------------------------ --------- -----------------------
Commercial 35.3% 62.0% 8,321 61.9% 7,508
---------- ---------------------- ------------------------ --------- -----------------------
Cash 3.4% - 807 - 638
---------- ---------------------- ------------------------ --------- -----------------------
General Impairment - - (114) - (114)
---------- ---------------------- ------------------------ --------- -----------------------
Total/Weighted
Average 100.0% 65.5% 23,465 66.8% 25,143
---------- ---------------------- ------------------------ --------- -----------------------
*LTV has been calculated using the carrying value of the loans
as at the balance sheet date
Interim Management Report
The principal and emerging risks and uncertainties that could
have a material impact on the Company's performance have not
changed from those set out on pages 15 and 16 of the Company's
Annual Report for the year ended 30 November 2022.
The Directors consider that the Chairman's Statement and the
Investment Adviser's Review, the disclosure on related party
transactions and the Statement of Directors' Responsibilities
together constitute the Interim Management Report of the Company
for the six months ended 31 May 2023 and satisfy the requirements
of the Disclosure Guidance and Transparency Rules 4.2.3 to 4.2.11
of the Financial Conduct Authority.
The Interim Report has not been reviewed or audited by the
Company's Auditor.
The Directors believe, having considered the Company's
investment objectives, risk management policies, capital management
policies and procedures, the nature of the portfolio and
expenditure projections, that the Company has adequate resources,
an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the
foreseeable future and, more specifically, that there are no
material uncertainties pertaining to the Company that would prevent
its ability to continue in such operational existence for at least
twelve months from the date of the approval of this Interim Report.
For these reasons they consider that there is sufficient evidence
to continue to adopt the going concern basis in preparing the
accounts.
Directors' Responsibilities Statement
We confirm that to the best of our knowledge:
-- The condensed set of financial statements has been prepared
in accordance with FRS 104 'Interim Financial Reporting' and gives
a true and fair view of the assets, liabilities, financial position
and profit of the Company, as at 31 May 2023, as required by the
Disclosure Guidance and Transparency Rule 4.2.4R;
-- The Interim Report includes a fair review of the information
required by the Disclosure and Transparency Rule 4.2.7R, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements, and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
-- The Interim Report includes a fair review of the information
concerning related party transactions as required by Disclosure
Guidance and Transparency Rule 4.2.8R.
On Behalf of the Board
John Newlands
Chairman
25 July 2023
CONDENSED INCOME STATEMENT
Six months Six months Year ended
ended ended
31 May 2023 31 May 2022 30 November
(unaudited) (unaudited) 2022
(audited)
Note Revenue Capital Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ----- --------- ---------- -------------- -------------- -------------
REVENUE
Investment interest 946 - 946 864 1,787
------------------------- ----- --------- ---------- -------------- -------------- -------------
Total revenue 946 - 946 864 1,787
------------------------- ----- --------- ---------- -------------- -------------- -------------
Losses on investments
held at fair value
through profit
or loss - (198) (198) (134) (378)
Amortisation of
exit fees - 32 32 - -
------------------------- ----- --------- ---------- -------------- -------------- -------------
Total net income 946 (166) 780 730 1,409
------------------------- ----- --------- ---------- -------------- -------------- -------------
Expenditure
Investment adviser
fee (33) - (33) (34) (67)
Impairments on
loans at amortised
cost (13) (343) (356) (44) (148)
Other expenses (240) - (240) (315) (548)
------------------------- ----- --------- ---------- -------------- -------------- -------------
Total expenditure (286) (343) (629) (393) (763)
------------------------- ----- --------- ---------- -------------- -------------- -------------
Profit/(loss)
before finance
costs and taxation 660 (509) 151 337 646
------------------------- ----- --------- ---------- -------------- -------------- -------------
Finance costs
Interest payable (146) - (146) (16) (132)
------------------------- ----- --------- ---------- -------------- -------------- -------------
Profit/(loss)
before taxation 514 (509) 5 321 514
------------------------- ----- --------- ---------- -------------- -------------- -------------
Taxation - - - - -
------------------------- ----- --------- ---------- -------------- -------------- -------------
Profit/(loss)
for the period/year 514 (509) 5 321 514
------------------------- ----- --------- ---------- -------------- -------------- -------------
Basic earnings
per share 3 1.91p (1.89)p 0.02p 1.19p 1.90p
------------------------- ----- --------- ---------- -------------- -------------- -------------
The notes form an integral part of the financial statements.
The total column of this statement represents the Company's
Statement of Comprehensive Income, prepared in accordance with UK
adopted International Financial Reporting Standards ("UK adopted
IFRS") in conformity with the requirements of the Companies Act
2006. The supplementary revenue return and capital return columns
are both prepared under guidance published by the Association of
Investment Companies.
All revenue and capital items in the above statement derive from
continuing operations. There is no other comprehensive income as
all income is recorded in the statement above.
CONDENSED Statement of Financial Position
As at As at As at
31 May 31 May 30 November
2023 2022 2022
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------------- ----- ------------ ------------ ------------
Non-current assets
Loans at amortised cost 6 5,662 14,153 12,659
------------------------------------- ----- ------------ ------------ ------------
5,662 14,153 12,659
------------------------------------- ----- ------------ ------------ ------------
Current assets
Investments held at fair value
through profit or loss 5 3,908 6,375 4,874
Loans at amortised cost 6 14,145 4,324 7,948
Other receivables and prepayments 13 17 11
Cash and cash equivalents 807 221 638
------------------------------------- ----- ------------ ------------ ------------
18,873 10,937 13,471
------------------------------------- ----- ------------ ------------ ------------
Total assets 24,535 25,090 26,130
------------------------------------- ----- ------------ ------------ ------------
Current liabilities
Loan facility (2,900) (2,656) (4,000)
Other payables and accrued expenses (147) (67) (109)
------------------------------------- ----- ------------ ------------ ------------
Total liabilities (3,047) (2,723) (4,109)
------------------------------------- ----- ------------ ------------ ------------
Net assets 21,488 22,367 22,021
------------------------------------- ----- ------------ ------------ ------------
Share capital and reserves
Share capital 7 269 269 269
Share premium 9,094 9,094 9,094
Special distributable reserve 12,764 12,849 12,849
Capital reserve (1,153) (313) (644)
Revenue reserve 514 468 453
------------------------------------- ----- ------------ ------------ ------------
Equity shareholders' funds 21,488 22,367 22,021
------------------------------------- ----- ------------ ------------ ------------
Net asset value per ordinary
share 8 79.81p 83.08p 81.79p
------------------------------------- ----- ------------ ------------ ------------
The accompanying notes form an integral part of the financial
statements.
The financial statements were approved by the Board of Directors
of Develop North PLC (a public limited company incorporated in
England and Wales with company number 10395804) and authorised for
issue on 25 July 2023.
They were signed on its behalf by:
John Newlands
Chairman
CONDENSED Statement of Changes in Equity
For the six months ending Special
distributable
31 May 2023 Share Share reserve Capital Revenue Total
capital premium reserve reserve
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ---------- -------------------- ----------- ------------ ---------
At beginning of the period 269 9,094 12,849 (644) 453 22,021
Total comprehensive profit
for the period:
Profit for the period - - - (509) 514 5
transactions with owners
recognised directly in equity
Dividends paid (note 4) - - (85) - (453) (538)
-------------------------------- ------------ ---------- -------------------- ----------- ------------ ---------
At 31 May 2023 269 9,094 12,764 (1,153) 514 21,488
-------------------------------- ------------ ---------- -------------------- ----------- ------------ ---------
For the six months ending Special
distributable
31 May 2022 Share Share reserve Capital Revenue Total
capital premium reserve reserve
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ---------- -------------------- ----------- ------------ ---------
At beginning of the period 269 9,094 13,093 (166) 294 22,584
Total comprehensive profit
for the period:
Profit for the period - - - (147) 468 321
transactions with owners
recognised directly in equity
Dividends paid (note 4) - - (244) - (294) (538)
-------------------------------- ------------ ---------- -------------------- ----------- ------------ ---------
At 31 May 2022 269 9,094 12,849 (313) 468 22,367
-------------------------------- ------------ ---------- -------------------- ----------- ------------ ---------
For the year ending Special
distributable
30 November 2022 Share Share reserve Capital Revenue Total
capital premium reserve reserve
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ---------- -------------------- ----------- ------------ ---------
At beginning of the period 269 9,094 13,093 (166) 294 22,584
Total comprehensive profit
for the period:
Profit for the period - - - (478) 992 514
transactions with owners
recognised directly in equity
Dividends paid (note 4) - - (244) - (833) (1,077)
-------------------------------- ------------ ---------- -------------------- ----------- ------------ ---------
At 30 November 2022 269 9,094 12,849 (644) 453 22,021
-------------------------------- ------------ ---------- -------------------- ----------- ------------ ---------
Condensed Cash Flow Statement
Six months Six months Year ending
to to
31 May 31 May 30 November
2023 2022 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------------- ------------ ------------ ------------
Operating activities
Profit before taxation 5 321 514
Losses on investments held at fair
value through profit and loss 215 123 342
Impairments on loans at amortised
cost 378 51 136
Gains on investments held at fair
value through profit and loss (17) (27) -
Uplifts on loans at amortised cost (35) - -
Amortisation of exit fees (32) - -
Increase in loan interest receivable
on investments held at fair value
through profit and loss (53) (109) (147)
Increase in loan interest receivable
on loans at amortised cost (66) (207) (249)
Interest expense 146 16 132
Changes in working capital
(Increase)/decrease in other receivables (2) 10 16
Increase/(decrease) in other payables 38 (68) (26)
------------------------------------------- ------------ ------------ ------------
Net cash inflow from operating activities
AFTER TAXATION 577 110 718
------------------------------------------- ------------ ------------ ------------
Investing activities
Loans given (1.668) (8,148) (10,986)
Loans repaid 3,044 1,612 3,570
------------------------------------------- ------------ ------------ ------------
Net cash INFLOW/(outflow) from investing
activities 1,376 (6,536) (7,416)
------------------------------------------- ------------ ------------ ------------
Financing
Equity dividends paid (538) (538) (1,077
Bank loan drawn down - 2,656 4,251
Repayment of bank loan (1,100) - (251)
Interest paid (146) (16) (132)
------------------------------------------- ------------ ------------ ------------
Net cash (outflow)/inflow from financing (1,784) 2,102 2,791
------------------------------------------- ------------ ------------ ------------
Increase/(Decrease) in cash and cash
equivalents 169 (4,324) (3,907)
Cash and cash equivalents at the
start of the year 638 4,545 4,545
------------------------------------------- ------------ ------------ ------------
Cash and cash equivalents at the
end of the period/year 807 221 638
------------------------------------------- ------------ ------------ ------------
Notes to the Condensed Financial Statements (unaudited)
1. INTERIM RESULTS
The condensed financial statements have been prepared in
accordance with International Accounting Standard 34 'Interim
Financial Reporting' and the accounting policies set out in the
statutory accounts of the Company for the year ended 30 November
2022. The condensed financial statements do not include all of the
information required for a complete set of financial statements and
should be read in conjunction with the financial statements of the
Company for the year ended 30 November 2022, which were prepared in
accordance with UK adopted International Financial Reporting
Standards ("UK adopted IFRS") in conformity with the requirements
of the Companies Act 2006 as applicable to companies reporting
under international accounting standards. There have been no
significant changes to management judgements and estimates.
The condensed financial statements have been prepared on the
going concern basis. In assessing the going concern basis of
accounting the Directors have had regard to the guidance issued by
the Financial Reporting Council. After making enquiries, and
bearing in mind the nature of the Company's business and assets,
the Directors consider that the Company has adequate resources to
continue in operational existence for the foreseeable future. For
this reason they continue to adopt the going concern basis in
preparing these financial statements.
2. INVESTMENT ADVISER
In its role as the Investment Adviser, Tier One Capital Ltd is
entitled to receive from the Company an investment adviser fee
which is calculated and paid quarterly in arrears at an annual rate
of 0.25 per cent. per annum of the prevailing Net Asset Value if
less than GBP100m; or 0.50 per cent. per annum of the prevailing
Net Asset Value if GBP100m or more.
There is no balance accrued for the Investment Adviser for the
period ended 31 May 2023 (31 May 2022: GBPnil; 30 November 2022:
GBPnil).
There are no performance fees payable.
ALTERNATIVE INVESTMENT FUND MANAGER'S DIRECTIVE ('AIFMD')
The Company has been approved by the Financial Conduct Authority
as a Small Registered UK Alternative Investment Fund Manager
('AIFM').
3. EARNINGS PER SHARE
The revenue, capital and total return per ordinary share is
based on each of the profit after tax and on 26,924,063 ordinary
shares, being the weighted average number of ordinary shares in
issue throughout the period.
Six months Six months Year ended
ended 31 ended 31 30 November
May 2023 May 2022 2022
GBP'000 Pence per GBP'000 Pence per GBP'000 Pence per
share share share
--------------------- -------- ----------- -------- ----------- -------- -------------
Revenue earnings 514 1.91 468 1.74 992 3.68
Capital earnings (509) (1.89) (147) (0.55) (478) (1.78)
--------------------- -------- ----------- -------- ----------- -------- -------------
Total earnings 5 0.02 321 1.19 514 1.90
--------------------- -------- ----------- -------- ----------- -------- -------------
Average number
of shares in issue 26,924,063 26,924,063 26,924,063
Earnings for the period to 31 May 2023 should not be taken as a
guide to the results for the year to 30 November 2023.
4. DIVIDS
Six months Six months Year ended
ended 31 ended 31 30 November
May 2023 May 2022 2022
GBP'000 GBP'000 GBP'000
---------------------------------------- ----------- ----------- -------------
In respect of the prior year:
Interim dividend for the quarter ended
August, paid in December 269 269 269
Interim dividend for the quarter ended
November, paid in March 269 269 269
---------------------------------------- ----------- ----------- -------------
In respect of the current year:
Interim dividend for the quarter ended
February, paid in June - - 269
Interim dividend for the quarter ended
May, paid in September - - 270
Total 538 538 1,077
---------------------------------------- ----------- ----------- -------------
The Company intends to distribute at least 85% of its
distributable income earned in each financial year by way of
interest distribution. On 31 May 2023, the Company declared an
interim dividend of 1.00 pence per share for the quarter ended 28
February 2023, payable on 30 June 2023.
5. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
The Company's investment held at fair value through profit or
loss represents its profit share arrangements whereby the Company
owns at least 25.1% or has an exit fee mechanism for four
companies.
31 May 31 May 30 November
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------------------ -------- -------- -----------
Opening Balance 4,874 7,589 7,589
Loans deployed 59 80 80
Principal repayments (883) (1,307) (2,600)
Movements in interest receivable 53 147 183
Unrealised losses on investments held
at fair value through profit or loss (198) (134) (378)
Amortisation of exit fees 3 - -
------------------------------------------ -------- -------- -----------
Total investments held at fair value
through profit and loss 3,908 6,375 4,874
------------------------------------------ -------- -------- -----------
Split:
Non-current assets: Investments held at
fair value through profit and loss due
for repayment after one year - - -
Current assets: Investments held at fair
value through profit and loss due for
repayment under one year 3,908 6,375 4,874
6. LOANS AT AMORTISED COST
31 May 31 May 30 November
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------------------- -------- -------- -----------
Opening Balance 20,607 10,558 10,558
Loans deployed 1,609 8,068 10,906
Principal repayments (2,161) (305) (970)
Movements in interest receivable 79 200 261
Movement in impairments (356) (44) (148)
Amortisation of exit fees 29 - -
------------------------------------------- -------- -------- -----------
Total Loans at amortised cost 19,807 18,477 20,607
------------------------------------------- -------- -------- -----------
Split:
Non-current assets: Loans at amortised
cost due for repayment after one year 5,662 14,153 12,659
Current assets: Loans at amortised cost
due for repayment under one year 14,145 4,324 7,948
The Company's loans held at amortised cost are accounted for
using the effective interest method. The carrying value of each
loan is determined after taking into consideration any requirement
for impairment provisions during the year, allowances for
impairment losses amounted to GBP356,000 (May 2022: GBP44,000;
November 2022: GBP148,000).
7. SHARE CAPITAL
Number of
Nominal Value Ordinary shares
GBP'000 of 1p
----------------------------------------- ---------------- -----------------
Issued and fully paid as at 30 November
2022 269 26,924,063
----------------------------------------- ---------------- -----------------
Issued and fully paid as at 31 May 2023 269 26,924,063
----------------------------------------- ---------------- -----------------
The ordinary shares are eligible to vote and have the right to
participate in either an interest distribution or participate in a
capital distribution (on a winding up).
8. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per ordinary share is based on net assets of
GBP21,488,034 (31 May 2022: GBP22,367,422; 30 November 2022:
GBP22,021,367) and on 26,924,063 ordinary shares (31 May 2022:
26,924,063; 30 November 2022: 26,924,063), being the number of
ordinary shares in issue at the period/year end.
9. RELATED PARTIES
The Directors are considered to be related parties. No Director
has an interest in any transactions which are, or were, unusual in
their nature or significant to the nature of the Company.
The Directors of the Company received fees totalling GBP43,000
for their services during the period to 31 May 2023 (31 May 2022:
GBP43,000; 30 November 2022: GBP85,000). GBPnil was payable at the
period and prior year end.
Ian McElroy is Chief Executive of Tier One Capital Ltd and is a
founding shareholder and director of the firm.
Tier One Capital Ltd received GBP33,000 investment adviser's fee
during the period (31 May 2022: GBP34,000; 30 November 2022:
GBP67,000) and GBPnil was payable at the period end (31 May 2022:
GBPnil; 30 November 2022: GBPnil). Tier One Capital Ltd receives up
to a 20% margin and arrangement fee for all loans it
facilitates.
There are various related party relationships in place with the
borrowers as below:
The following related parties arise due to the opportunity taken
to advance the profit share contracts:
-- Thursby Homes (Springs)
The Company owns 25.1% of the borrower Thursby Homes (Springs)
Ltd. The loan amount outstanding as at 31 May 2023 was GBP705,000
(31 May 2022: GBP1.9m; 30 November 2022: GBP1.3m). Transactions in
relation to loans repaid during the period amounted to GBP626,000
(31 May 2022: GBP381,000; 30 November 2022: GBP918,000). Interest
due to be received as at 31 May 2023 was GBP209,000 (31 May 2022:
GBP226,000; 30 November 2022: GBP213,000). Interest received during
the period amounted to GBP27,000 (31 May 2022: GBP109,000; 30
November 2022: GBP157,000).
-- Northumberland
The Company owns 25.1% of the borrower Northumberland Ltd. The
loan amount outstanding as at 31 May 2023 was GBP69,000 (31 May
2022: GBP832,000; 30 November 2022: GBP356,000). Transactions in
relation to loans repaid during the period amounted to GBP258,000
(31 May 2022: GBP435,000; 30 November 2022: GBP911,000). Interest
due to be received as at 31 May 2023 was GBP2,000 (31 May 2022:
GBP15,000; 30 November 2022: GBP3,000). Interest received during
the period amounted to GBP3,000 (31 May 2022: GBP19,000; 30
November 2022: GBP32,000).
-- Coalsnaughton
The Company owns 40.17% of the borrower Kudos Partnership. The
loan amount outstanding as at 31 May 2023 was GBP2.0m (31 May 2022:
GBP2.3m; 30 November 2022: GBP2.2m). Transactions in relation to
loans made during the period amounted to GBP15,000 (31 May 2022:
GBP80,000; 30 November 2022: GBP80,000). Interest due to be
received as at 31 May 2023 was GBP378,000 (31 May 2022: GBP257,000;
30 November 2022: GBP324,000). Interest received during the period
amounted to GBP54,000 (31 May 2022: GBP129,000; 30 November 2022:
GBP196,000).
-- Oswald Street
The Company owns 25.1% of the Riverfront Property Limited
Partnership. The loan amount outstanding as at 31 May 2023 was
GBP447,000 (31 May 2022: GBP382,000; 30 November 2022: GBP388,000).
Transactions in relation to loans made during the period amounted
to GBP59,000 (31 May 2022: GBPnil; 30 November 2022: GBPnil).
Interest due to be received as at 31 May 2023 was GBP8,000 (31 May
2022: GBP5,000; 30 November 2022: GBP5,000). Interest received
during the period amounted to GBP22,000 (31 May 2022: GBP15,000; 30
November 2022: GBP31,000).
10. OPERATING SEGMENTS
The Board has considered the requirements of IFRS 8 'Operating
Segments'. The Board is of the view that the Company is engaged in
a single unified business, being the investment of the Company's
capital in financial assets comprising loans and joint venture
equity contracts and in one geographical area, the United Kingdom,
and that therefore the Company has no segments. The Board of
Directors, as a whole, has been identified as constituting the
chief operating decision maker of the Company. The key measure of
performance used by the Board to assess the Company's performance
is the total return on the Company's net asset value. As the total
return on the Company's net asset value is calculated based on the
IFRS net asset value per share as shown at the foot of the
Consolidated Statement of Financial Position, the key performance
measure is that prepared under IFRS. Therefore no reconciliation is
required between the measure of profit or loss used by the Board
and that contained in the financial statements.
11. FAIR VALUE HIERARCHY
Accounting standards recognise a hierarchy of fair value
measurements for financial instruments which gives the highest
priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority
to unobservable inputs (Level 3). The classification of financial
instruments depends on the lowest significant applicable input, as
follows:
-- Level 1 - Unadjusted, fully accessible and current quoted
prices in active markets for identical assets or liabilities.
Examples of such instruments would be investments listed or quoted
on any recognised stock exchange.
-- Level 2 - Quoted prices for similar assets or liabilities, or
other directly or indirectly observable inputs which exist for the
duration of the period of investment. Examples of such instruments
would be forward exchange contracts and certain other derivative
instruments.
-- Level 3 - External inputs are unobservable. Value is the
Directors' best estimate, based on advice from relevant
knowledgeable experts, use of recognised valuation techniques and
on assumptions as to what inputs other market participants would
apply in pricing the same or similar instrument.
All loans are considered Level 3.
12. POST BALANCE SHEET EVENTS
-- The Shawbrook loan facility was fully repaid in June
2023.
-- On 9 June 2023, a new loan was issued to Churchill Homes
(Aberdeen) Limited with an initial drawdown of GBP358,000.
13. INTERIM REPORT STATEMENT
These are not full statutory accounts in terms of Section 434 of
the Companies Act 2006 and are unaudited. Statutory accounts for
the year ended 30 November 2022, which received an unqualified
audit report and which did not contain a statement under Section
498 of the Companies Act 2006, have been lodged with the Registrar
of Companies. No full statutory accounts in respect of any period
after 30 November 2022 have been reported on by the Company's
auditor or delivered to the Registrar of Companies.
For further information please contact:
Apex Fund Administration Services (UK) Limited, Secretary
25 July 2023
ENDS
Interim Report 2023
The Interim Report will shortly be available on the Company's
website ( www.developnorth.co.uk ) or in hard copy format from the
Company's Registered Office.
A copy of the Interim Report will be submitted to the FCA's
National Storage Mechanism and will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
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END
IR SELFIIEDSESW
(END) Dow Jones Newswires
July 26, 2023 02:00 ET (06:00 GMT)
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