Alina Holdings PLC (ALNA) Alina Holdings PLC: AUDITED RESULTS
FOR THE YEARED 31 DECEMBER 2021 31-May-2022 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS
Group. The issuer is solely responsible for the content of this
announcement.
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Alina Holdings plc
(Reuters: ALNA.L, Bloomberg: ALNA:LN)
("ALNA" or the "Company")
AUDITED RESULTS FOR THE YEARED 31 DECEMBER 2021
Alina Holdings PLC (LSE: ALNA) today announces its audited
results for the year ended 31 December 2021.
The information set out below is extracted from the Company's
Report and Accounts for the year ended 31 December 2021, which will
be published today on the Company's website www.alina-holdings.com.
A copy will also be submitted to the National Storage Mechanism
where it will be available for inspection. Cross-references in the
extracted information below refer to pages and sections in the
Company's Report and Accounts for the year ended 31 December
2021.
Alina Holdings PLC ("Alina" or the "Company") is a company
registered on the Main Market of the London Stock Exchange.
In December 2020 the Company changed its accounting reference
date to 31 December in each year, giving rise to a fifteen-month
period. The period reported on in this document is for the 12
months to 31 December 2021, however the comparable figures are for
a fifteen-month period as per IAS 1.
Future financial statements will report on 12 months periods to
31 December.
Investment Strategy
The Company's investment strategy is to identify and acquire
interests in businesses, which, in the opinion of the directors,
are capable of delivering long term value for its shareholders. The
Company's initial strategy, as set out in its RNS of 28 September
2020, was to seek to acquire interests in companies in the European
leisure, hospitality and entertainment sectors. The extended impact
of Covid-19, rapidly followed by the war in Ukraine and excessive
valuations in many markets has resulted in the directors
researching and purchasing holdings, which the directors consider
to offer better value, outside of the travel and leisure
industries, whilst at the same time trying to mitigate market
exposure.
The directors will continue to actively manage the Company's
property portfolio and will sell properties only when the directors
consider it to be in the best interests of the Company's
shareholders to do so.
Chairman's Statement
Regarding Sock Market Manias
"I can calculate the movement of stars, but not the madness of
men."
Sir Isaac Newton commenting on the madness in the trading of the
South Sea Bubble.
Regarding the stupidity of War
"No-man's land under snow is like the face of the moon: chaotic,
crater ridden, uninhabitable, awful, the abode of madness."
Lieutenant Wilfred Owen, in a letter to his mother, January
1917
__________________
Given the war, destruction and suffering in Ukraine,
shareholders will, I hope, forgive me for not using the usual "I am
pleased to present the accounts ."
I am anything but pleased. In fact, it is with considerable
concern that I look to the future and present the Company's
accounts to 31 December 2021.
Notwithstanding substantial ambivalence, I fear that the war in
Ukraine will continue for some time and that if Western backed
Ukrainian forces inflict too much (without knowing what the
definition of 'too much' is) damage on Russian troops or assets, or
the Russian economy were to be near collapse, the likelihood of
Russia using tactical nuclear weapons becomes ever more likely. Add
to that and the ever-increasing likelihood that China may (will?)
attack Taiwan leaves me wondering why 'man' has learned nothing
about the futility of war.
Politics, Economics and the madness of men.
Following the 2020 spread of Covid-19, one could be forgiven for
thinking that the World would 'normalise' in 2021/ 2022.no such
luck. Central Bankers kept the proverbial interest rate spigot open
(far too long!) and investors, punters and stock jockeys responded
by driving meme stocks beyond any measure of 'value', which in turn
launched major indices from their March 2020 lows to all-time highs
in November/December 2021 or, in the case of the S&P500,
January 2022. As a result of belated Central Bank interest rate
tightening, and the invasion of Ukraine, markets have fallen
precipitously, but nonetheless, have probably further to fall.
On 6 May 2022, Lu Wang, Vildana Hajric and Isabelle Lee from
Bloomberg summed up the current market gyrations as follows -
First it was a rout in the stay-at-home names that surged in the
pandemic. Then speculative software makers with barely any earnings
went south. Now the giant technology names whose sway on benchmarks
has been decried by bears for years are dragging the market down.
Dizzying as the downdraft has been, you can't say you weren't
warned.
It's axiomatic in markets: you never see it coming. But this
selloff is an argument that sometimes you do. People have been
saying for months that inflation would surge, forcing the Federal
Reserve into action. Wall Street veterans like Charlie Munger spent
18 months lambasting the Robinhood crowd for its infatuation with
speculative flotsam. Warnings the market would bend under its
trillion-dollar tech monopolies have never been hard to find.
While the timing was often wrong, it's hard to say those views
aren't playing out now, with the S&P 500 falling for five
straight weeks, its longest retreat in a decade. The index has
slumped 14% from a record on the year's first trading day, wiping
about USD6 trillion from its value.
"The normal signs of excess have been out there for a while,
whether it be in valuation, whether it be in all the speculative
overshooting of some of these stock that have great stories but not
a real solid business underneath them," said Michael Ball, managing
director of Denver-based Weatherstone Capital Management. What
starts as a trickle "turns into a bigger outfall as everybody
starts to say, 'I need to take off risk' and nobody wants to take
the other side."
Saying the market is acting in a predictable way sounds crazy
after the week that just ended. Hawkish pronouncements by the Fed
on Wednesday were occasion for a 3.4% surge in the Nasdaq 100,
before the whole gain was unwound a day later. Treasury yields
buckled and jumped, making Thursday only the fourth time in 20
years that the main stock and bond ETFs both lost 2% at the same
time.
Through a broader lens, the results look a little less
disorderly. For the Nasdaq 100, which traded at almost 6 times
sales as recently as November, the bull market is over, its
five-month loss exceeding 23%. More speculative companies as
proxied by funds like Ark Innovation ETF (ticker ARKK) are nursing
losses of twice that. Faddy groups like special purpose acquisition
companies have suffered similar dents, while losses in the
older-school industries repped by the Dow Jones Industrial Average
are lower by a relatively tame 10%.
"In a lot of ways, it's following a typical playbook," said
Jerry Braakman, chief investment officer and president of First
American Trust in Santa Ana, California. "Market leadership is the
losing leadership. That's when the panic sets in." Of course, just
because it makes sense doesn't mean everyone was ready for it.
Dip-buyers were in evidence through the start of this month, with
bounces like Wednesday's giving bulls hopes. Until April, investors
had kept funnelling money into equity funds, sticking to their
dip-buying strategy. "Investors tend to say, 'this time is
different,'" said Sam Stovall, chief investment strategist at CFRA.
"Investors get tired and say, 'I'm not going to fight the tape,
because even with higher multiples, the market just wants to keep
going up.'" That's not what's happening now. The five tech giants,
Meta Platforms Inc., Apple Inc., Amazon.com Inc., Microsoft Corp.
and Alphabet Inc., at one point accounted for a quarter of the
S&P 500, boasting an influence that's greater than any
comparable group of stocks since at least 1980. Now that the group,
known as the Faangs, has seen their total value shaved by 23% from
the December peak, a drag that the market has no chance of shaking
off. The S&P 500 is mired in its second-longest correction
since the global financial crisis.
By the time shareholders read this Statement, Global Stock
Markets may have bottomed (but I doubt it), and we could be back in
a bull market. Sadly, I don't think that the next bull (-market) is
on the horizon, and the current bear may well roar for a while
.particularly if, as I do, you adhere to the Jeremy Grantham (JG)
point of view that we have not just been in a bubble, or 2 sigma
bubble, but are currently in only the fourth (3 sigma) 'Super
Bubble' in the past 100 years in the US. JG believes that the
S&P 500 will revert to the mean of its long-term growth trend,
as low as 2,500, from its current level of ±4,123 and a high of
±4,796. This would imply a 40% - 50% decline in the S&P 500
from its January 2022 high, and a further 39% decline from current
levels to around 2,550!
Jeremy Grantham's view of the world may cause some investors
more than a little nausea, but his writings, nonetheless, make for
compelling reading, even if you disagree with his conclusions.
https://www.gmo.com/globalassets/articles/viewpoints/2022/gmo_let-the-wild-rumpus-begin_1-22.pdf
Operational Review
Property Holdings
As stated in the 2 March 2022 trading statement, the Company's
objective continues to be to liquidate the current portfolio of
retail shopping and residential assets, which currently show a
Gross Initial Yield of more than 16%, but only if a sale can
achieve a sensible return in excess of the year end 2021 carrying
value of GBP2.45m.
In order to optimise the value of the Company's property assets,
there is a need to undertake selective improvements to enhance sale
values. This exercise is currently being undertaken and development
plans are being drawn up for the Company's properties in Hastings
and Bristol.
Hastings is currently yielding ±11% even though half empty. Once
the vacant units have been refurbished and the upper units
converted to residential, I am confident that the rental income
will more than double the current income of GBP90,000 and
substantially increase the current book value of GBP700,000.
Quoted Holdings
As at 6 May 2022, Alina currently has ±GBP2.68m of investment
holdings, of which ±GBP2.5m are long and ±GBP0.2m are short. The
company's most significant holdings are:
Dolphin Capital Investors (DCI LN)
DCI is an Eastern European (Greece, Cyprus, Croatia) focused
Leisure development company. Current NAV of DCI as of May 2022 is
15p vs 31 December 2021 valuation of 4.3p and current market price
of 3.6p. Alina currently owns just under 3% of DCI. As previously,
stated, I do not believe that DCI will return 15p per share to
shareholders in a liquidation, but consider 8p to 10p more
realistic. Part of the problem for DCI is, that having sold 50.25%
of Aristo to the Aristo CEO, it is now a minority shareholder in
Cyprus based Aristo Development with little or no ability to
influence or achieve a fair sale price. The situation is further
complicated by the war in Ukraine, which along with rampant
inflation and the possibility of slowing economic growth in Europe
will likely have a negative impact on sales of luxury leisure
properties.
and HEIQ plc
HEIQ is an innovative specialist materials chemical company with
a current market capitalisation of GBP130.9m (100p/ share) and 2021
Revenues of USD57.9m v 2020 Revenues of USD50.4m. The Company's
objective is to grow intermediate sales to USD300m. Many of the
Company's materials are used by leisure clothing manufacturers,
which was recently endorsed by the investment into HEIQ AEONIQ
(Cellulosic yarn made from seaweed) by Lycra, and the recently
reported USD5m investment, by Hugo Boss at an implied valuation of
USD200m for HEIQ's AEONIQ subsidiary.
Hedge Positions
The recent rapid sell off in most major stock markets hardly
came as a surprise to us and in anticipation of the correction we
had various hedges in place with the intention of mitigating the
potential for markdown in our long positions. Our objective, unlike
a hedge fund, is not to increase our risk exposure by leveraging
the company's balance sheet, but rather to use leverage built into
the instruments that we are using. Clearly there is risk associated
with these instruments, which we monitor closely to avoid the
potential for substantial potential losses. The strategy is
currently working effectively and has made, and continues to make,
making a positive contribution to the Company's results.
Conclusion
Madness is never usually here today and gone tomorrow..
Companies, when sensibly valued, should trade on reasonable
multiples of sustainable free cash flow. defined as, the amount of
cash that a company generates after allowance for maintenance
capital expenditure. During times of madness companies are valued
(for much longer than makes sense) on various metrics, such as hits
and clicks, as was the case during the dot com bubble, which saw
the NASDAQ rise 400% from 1995 to March 2000, before falling 78%.
This period of madness was followed by the US housing bubble which
blew up spectacularly in 2008, causing the Great Financial Crisis
(GFC). The collapse in US housing and US stocks caused the biggest
recession in the USA since the great depression of 1930 and spread
worldwide. To refresh memories, the housing bubble or
Collateralised Debt Obligations (CDO) or Mortgage-Backed Securities
(MBS) bubble was simply alchemy! Wall Street Investment Bankers,
with help from Rating Agencies, turned BBB mortgages into AAA MBSs
or, if one prefers, turned cigar butts into gold. Fool's Gold! I
won't retell the entire story but would instead recommend that
anyone interested should pick up a copy of Michael Lewis's book
'The Big Short', and/or watch the movie by the same name.
Which brings us to the current, bubble, created between 2009 and
2022. The current bubble, which include stocks, bonds and housing
has the potential to make the 1999 and 2008 bubbles appear
irrelevant by comparison. Why, because the 1999 Tech bubble was
just that, whilst the 2008 bubble was a two-tier bubble of housing
and stocks compared to the current three-tier bubble, which
includes stocks, bonds, and housing. The chances that the Federal
Reserve (FED) and the G7 Central Bankers can dance their way
through this bubble without a recession are probably somewhere
between 'Slim 'and his cousin 'None'.
It is my firm belief that the Fed has created a three headed
monster which, if they are seriously intent on combatting, can only
end in recession. Using monetary policy alone to control any
economy, is like using a sledgehammer to bang-in a tack (small
nail). Having said that, the speed of the current collapse in stock
prices might also be the Fed's saviour. Year to date, the DOW is
-10%, the S&P 500 -15%, and the NASDAQ -25%.
If the Fed gets lucky and consumption slows rapidly, inflation
should also slow, which should then allow a reduction in planned
rate-increases, thus avoiding a potential collapse in housing and a
recession. There are some including those in the Federal Open
Market Committee (FOMC) who are hoping or praying for this benign
outcome; there are others who don't give the Fed a snowball's
chance in hell of achieving a soft landing. Sadly, given the war in
Ukraine and the latest Covid-19 shut down in China, I am of the
opinion that US cannot avoid Stagflation.
Strategy
Given the above review and the probability for sustained
conflict in Ukraine, and its impact on food and energy prices, the
board is of the opinion that the current correction in financial
markets will increasingly present the Company with acquisition
opportunities on reasonable multiples of earnings, free cash flow
and book value. In other words, 'slow and steady will win the
race'.
Duncan Soukup
Chairman
Alina Holdings plc
26 May 2022
Strategic Report
The Strategic Report includes the Chairman's Statement on pages
6 to 9.
Operating Review
Business Model
During the year, the business concentrated on helping tenants
through the problems caused by Covid-19 and on reviewing
refurbishment plans.
In line with the Company's investment strategy, the directors
have continued to review and analyse potential investment and
acquisition opportunities.
Financial Review
The financial statements contained in this report have been
prepared in accordance with UK Adopted International Accounting
Standards.
Result
The Group recorded an IFRS loss for the year to 31 December 2021
of GBP294,000, or 1.30 pps (12 months to 31 December 2020: loss
GBP490,000, or 2.05 pps).
Key Performance Indicators ("KPI's")
Throughout the reporting period the Group had no borrowings and
held cash reserves at 31 December 2021 of GBP1.767 million (31
December 2020: GBP4.073 million). The KPI's relating to Interest
Cover, Loan to Value and Gearing, shown in previous reports, are
therefore no longer applicable. The Net Asset Value per Share at 31
December 2021 was 27.5p (31 December 2020: 28.8p).
It is the directors' intention to introduce key performance
indicators more relevant to the revised investment policy as
investments are made under the new policy
Property Operating Expenses
Property operating expenses for the year to 31 December 2021
were GBP136,000 (12 months to 31 December 2020: GBP95,000). This is
predominantly caused by the property rates increases and the
vacancy of a larger floorspace in Hastings. There was a release of
bad debt provision in the comparable period which increases the
variance.
Administrative Expenses
Administrative expenses were GBP540,000 during the year to 31
December 2021 (12 months to 31 December 2020: GBP457,000). The
major increase was within consultancy costs for the ongoing
investment strategy.
Net Asset Value ("NAV")
The NAV at 31 December 2021 was GBP6.23 million or 27.5p per
share, based on 22.7 million shares in issue, excluding those held
in treasury (31 December 2020: GBP6.53 million, 28.8p per share,
based on 22.7 million shares in issues
At 31 December 2021 the Group held GBP1.767 million of cash (31
December 2020: GBP4.073 million). At 31 December 2021 the Group had
no banking debt (31 December 2020: GBPnil).
The reduction in Net Asset Value reflected the cost of
administering the Company's property portfolio, which in turn
reflected general trends in the UK property market, together with
the reduction in rental income as a result of property disposals in
previous periods and the effect of currency market fluctuations on
the Group's cash holdings.
For the Group as a whole, Allsop LLP, a firm of independent
chartered surveyors, valued the Group's property portfolio at 30
September 2019 and 30 September 2020. In view of the restrictions
imposed as a result of the COVID-19 epidemic, the directors have
adopted the valuations at 30 September 2020 for use in the 31
December 2021 financial statements after undertaking a review of
the current market conditions.
For 30 September 2019 Allsop LLP performed a desktop valuation
of the Group's properties, which comprised an update of the full
valuation (including site inspections) of the properties that they
had carried out in July 2019. The 30 September 2020 valuation
comprised a full valuation of two of the Group's larger properties
and a desktop valuation of the remainder.
One property considered to be held for sale at 31 December 2021
is valued in the Company's accounts at that date at its anticipated
sale price less sales costs.
The valuations were undertaken in accordance with the Royal
Institute of Chartered Surveyors Appraisal and Valuation Standards
on the basis of market value. Market value is defined as the
estimated amount for which a property should exchange on the date
of valuation between a willing buyer and a willing seller in an
arm's length transaction, after proper marketing wherein the
parties had each acted knowledgeably, prudently and without
compulsion.
The Directors have concluded that they will be maintaining the
valuation of the property portfolio at previous levels. The Board
is also of the opinion that the carrying values, based on the "Red
Book" valuation, do not reflect the real value of the
properties.
The Company's objective is still to liquidate the current
portfolio of shopping assets which currently show a Gross Initial
Yield of more than 16%, but only if a sale can achieve a sensible
return in excess of the year end 2021 carrying value of
GBP2.45m.
Financing
The Company had no borrowings during the reporting period.
Throughout the year the Company's operations were financed from its
property income.
During the reporting period the Company held some of its cash in
foreign currencies. These holdings generated a small unrealised
profit at the end of the period, principally from the reduction in
GBP value against USD across the period.. The risk associated with
foreign currency holdings is described in Note 15 to the financial
statements.
Taxation
As a result of the share buy-back offer finalised at the
beginning of the reporting period ending December 2020, the Company
no longer fulfilled the conditions of the UK REIT tax regime. It
was subsequently agreed with HM Revenue & Customs, that the
Group would continue to operate within the REIT regime until 30
September 2020 at which time it would depart from the REIT regime
unless it had fulfilled the relevant conditions by that date. In
the event, the Company's shareholders decided, during September
2020, to adopt a new investment strategy and re-list on the
Standard element of the Main Market of the London Stock Exchange
and, in consequence, leave the REIT regime. In consequence of this,
the Group is considered to have exited the REIT regime for the
entirety of its financial year beginning 1 October 2018, being the
first year during which the Company did not fulfil all the REIT
conditions and is deemed to be liable to corporation tax from that
date. However, in the light of the losses incurred since 1 October
2018 there is no anticipated corporation tax liability in respect
of the year ended 2021.
Dividend
In line with the Group's current dividend distribution policy no
dividend will be paid in respect of the reporting period. The
directors will continue to review the dividend policy in line with
progress with the Company's investment strategy.
Risk Management & Operational Controls
The directors recognise that commercial activities invariably
involve an element of risk. A number of the risks to which the
business is exposed, such as the condition of the UK domestic
economy and sentiment in the UK property market, are beyond the
Company's influence. However, such risk areas are monitored and
appropriate mitigating action, such as reviewing the substance and
timing of the Company's operational plans, is taken wherever
practicable in response to significant changes. The directors
consider the risk areas the Company is exposed to in the light of
prevailing economic conditions and the risk areas set out in this
section are subject to review.
In relation to asset management, the Company's approach to risk
reflects the Company's granular business model and position in the
market and involves the expertise of its directors, management and
third-party advisers. Operational progress and key investment and
disposal decisions are considered in regular management team
meetings as well as being subject to informal peer review.
Higher level risks and financial exposures are subject to
constant monitoring. Major investment and disposal decisions are
subject to review by the directors in accordance with a protocol
set by the Board.
The Board was satisfied that its approach to macroeconomic risks
supplied an appropriate response to the effects of the COVID-19
pandemic during the reporting period. The Board continues to review
its risk management approach to ensure that it reflects the risk
profile of the Company's revised investment strategy and the
challenges highlighted by the COVID-19 pandemic.
The Board's approach in this area is further explained in the
Governance section, under Risk & Internal Control.
Principal Risks and Uncertainties
Potential Risk Impact Mitigation
Property and Investment
Portfolio Performance
-- Actual and prospective voids and
rental arrears continually monitored.
-- Early identification of / discussions
with tenants in difficulties
-- Regular review of all properties for
lease terminations and tenant risk, with early
-- Tenant defaults action to take control of units as appropriate
-- Reduced rental income
-- Limited requirement for tenant
-- Increased void costs incentives within sub-sector
Effect of downturn in -- Close liaison with local agents
-- Reduction in Net Asset enables swift decisions on individual
macroeconomic environment Value and realisation value of properties
assets -- Tendency of small traders to take
early action in response to economic conditions
-- Diverse tenant base
-- Sustainable location and property use
-- Ensuring positions are sufficiently
hedged to ensure long and short positions are
in place to take advantage of the market
movements
Higher than anticipated -- Income insufficient to -- All material expenditure subject to
property cover costs authorisation regime
maintenance costs -- Decline in property value -- Capital expenditure subject to
regular review
-- Adverse impact on -- Monitoring of UK property environment
Changes to legal portfolio and regulatory proposals
environment, -- Loss of development -- Close liaison with agents and
opportunity advisers
planning law or local -- Reduction in realisation
planning policy value of assets -- Membership of and dialogue with
relevant industry bodies
-- Guidance on regulatory requirements
provided by managing agents and professional
Failure to comply with advisers
regulatory requirements in -- Tenant and third-party -- Individual properties monitored by
connection with claims resulting in financial loss asset managers and agents
-- Managing agents operate formal
property portfolio, regulatory certification process for
including health, -- Reputational damage residential accommodation
-- Ongoing programme of risk assessments
safety and environmental for key multi-tenanted sites
-- Key risks covered by insurance
policies
Corporate Governance &
Management
-- Impact on operations and
Non-availability of reporting ability
information technology -- Financial claims arising -- Provision of effective security
systems or failure of data from regime with automatic off-site data and systems
security back-up
-- leak of confidential
information
-- Insufficient finance
available at acceptable rates to
fulfil business plans -- The Group is debt-free and debt
-- Inability to execute finance has not been required.
investment property disposal -- Finance risks reduced with provision
Financial and property strategy owing to fall in property of cash reserve
market conditions market values
-- Financial impact of debt -- Impact of interest rates on property
interest yields monitored
-- Breach of banking
covenants
Operational Controls
During the year, the directors continued to recognise that the
Company's ability to operate successfully is largely dependent on
the maintenance of its straightforward approach to doing business
and its reputation for integrity. All those who act on the
Company's behalf are required to behave and transact business in
accordance with the highest professional standards. As well as
compliance with all relevant regulatory requirements, this extends
to customer care and external complaint guidelines. The Company has
adopted a Code, Policy and Procedures under the Market Abuse
Regulation. During the period the employee responsible for
operations reduced working hours and the majority of the operations
were contracted to Eddisons Property Management. Eddisons have
looked after the property management for previous years and include
the provision of all applicable compliance procedures. The
directors were satisfied that the governance procedures adopted by
Eddisons in relation to its clients were appropriate and protected
the Company's interests. The Company's corporate governance regime
is underpinned by a whistle-blowing procedure, enabling perceived
irregularities to be notified to members of the Board, principally
the senior independent non-executive director.
The Board has overall responsibility for the Company's internal
control systems and for monitoring its effectiveness. The Board's
approach is designed to manage rather than eliminate the risk of
failure to achieve business objectives and can only provide
reasonable assurance against material misstatements or loss. The
directors have not considered it appropriate to establish a
separate internal audit function, having regard to the Company's
size. The Board's approach to internal controls covers all
companies within the Group and there are no associate or joint
venture entities which it does not cover.
The principal foundations of the Company's internal control
framework during the reporting period were:
-- statements of areas of responsibility reserved to the
directors, with prescribed limits to executiveauthority to commit
to expenditure and borrowing;
-- effective committee structure with terms of reference and
reporting arrangements to the Board;
-- clear remits for the delegation of executive direction and
internal operational management functions;
-- framework for independent directors to provide advice and
support to executive directors on an individualbasis;
-- top-level risk identification, evaluation and management
framework;
-- effective systems for authorising capital expenditure and
significant revenue items and monitoring actualcost incurred;
-- ongoing reporting to the Board of operational activity and
results;
-- regular review of operational forecasts and consideration by
the directors;
-- ongoing reporting to the directors on health, safety and
environmental matters.
The Board reviews the effectiveness of the Company's risk
management systems against the principal risks facing the business
and their associated mitigating factors, taking account of the
findings and recommendations of the auditors at the Company's
half-year and year-end. Following its review of the auditors'
findings during the reporting period, the Board considers that the
Company's approach remains effective and appropriate for a business
of the Company's size and complexity.
Key Contracts
There are currently no contracts which require third party
approval for any change to the nature, constitution, management or
ownership of the business. The appointment agreements of directors
do not contain any provisions specifically relating to a change of
control.
Charitable and Political Donations
During the reporting period the Company made no donations for
charitable or political purposes (2020: nil)
Section 172 Companies Act 2006
The Directors acknowledge their duty under s.172 of the
Companies Act 2006 and consider that they have, both individually
and together, acted in the way that, in good faith, would be most
likely to promote the success of the Company for the benefit of its
members as a whole. In doing so, they have had regard (amongst
other matters) to:
-- the likely consequences of any decision in the long term. The
Group's long-term investment strategy isshown in the Chairman's
Report, with associated risks highlighted in the Strategic
report.
-- the interests of the Company's employees. Our employees are
fundamental to us achieving our long-termstrategic objectives.
-- the impact of the Company's operations on the community and
the environment. The Group operates honestlyand transparently. We
consider the impact on the environment on our day-to-day operations
and how we can minimisethis.
-- the desirability of the Company maintaining a reputation for
high standards of business conduct. Our intention is to behave in a
responsible manner, operating within the high standard of business
conduct and goodcorporate governance, as highlighted in the
Corporate Governance Statement on page 12
-- the need to act fairly as between members of the Company. Our
intention is to behave responsibly towardsour shareholders and
treat them fairly and equally so that they may benefit from the
successful delivery of ourstrategic objectives.
This Strategic Report was approved by the directors on 20 May
2022.
Duncan Soukup, Chairman
26 May 2022
Corporate Responsibility Statement
During the year we continued to focus on the three principal
contributors to the success of our business:
-- the talent and commitment of our executives;
-- our relationships with national and local advisers, partners
and clients; and
-- the well-being of the businesses that occupy our properties
and the communities in which they operate.
The directors remain conscious that the Company's ability to
operate effectively rests on our reputation for fairness and a
straightforward and honest approach to conducting business. We
therefore strive to transact business in accordance with the
highest professional standards and all those who act on our behalf
are expected to do the same. Besides complying with all relevant
legislation and professional guidelines, this includes customer
care and external complaint procedures.
We have again considered whether it is appropriate to report on
relevant human rights issues. In the context of our business and
the reduced size of our investment portfolio, we do not believe
that the provision of detailed information in this area would
provide any meaningful enhancement to the understanding of the
performance of our business. However, we are confident that our
approach to doing business does not contravene any human rights
principles or applicable legislation.
Our approach to corporate responsibility matters is underpinned
by a whistle-blowing procedure, enabling perceived irregularities
to be notified to directors, principally the senior independent
non-executive director.
Employees
The Company had two employees during the year (2020: one).
During the year the Company had two directors.
On 7 February 2022, Gareth Edwards resigned as a director and
was replaced by Tim Donell.
Diversity
The Company has a formal diversity and equal opportunities
policy in place and is committed a culture of equal opportunities
for all regardless of age, race or gender. The Board currently
comprises two male directors.
Health, Safety and Welfare
The directors were responsible for ensuring that the Company
discharged its obligations for health, safety and welfare during
the reporting period, including matters delegated to the Company's
managing agents and other contractors. No material health, safety
and welfare incidents were notified during the period. Our property
managers and contractors continued to be required to ensure that
property management, maintenance and construction activities
conform to all relevant regulations, with due consideration being
given to the welfare of occupants and neighbours.
Environmental, Social and Governance
We have always believed that our local asset model is by its
nature supportive of reducing the carbon impact of retail shopping.
Our past development activity has been aimed at returning to
profitable use redundant space that would otherwise remain vacant,
potentially relieving development pressure on greenfield sites
elsewhere. Any development activity undertaken is carried out in
accordance with applicable energy and resource saving standards,
noise impact reduction requirements, and, where relevant, the need
to preserve the character of buildings, including listed
properties. Our contractors are required to dispose of waste in
accordance with best practice. We continue to take action to
upgrade the energy performance of our letting units wherever
required.
It is our policy to seek to deal constructively with all
stakeholders in relation to any community issues that arise in
relation to our properties. Our policy is to prefer to use local
advisers, agents and contractors whenever appropriate to do so.
It is our intention to review our response to environmental,
social and governance factors in line with the development of our
investment policy to ensure that our policies are appropriate to
the revised strategy and operational profile. This review will take
account of related issues, such as modern slavery.
Anti-Corruption and Anti-Bribery
The Company has in place an Anti-Bribery and Anti-Corruption
Policy which the directors consider fulfils UK Government
guidelines for compliance with UK Bribery Act 2010 Governance
Regulatory Compliance
The Company is subject to, and seeks to comply with, the
Financial Conduct Authority's ("FCA") Listing Rules ("Listing
Rules"), the Market Abuse Regulation and the Disclosure Guidance
and Transparency Rules of the Financial Conduct Authority. The
Company is also subject to the UK City Code on Takeovers and
Mergers.
In the prior period the Company adopted the Corporate Governance
Code of the Quoted Companies Alliance (the "QCA Code"). The
directors consider that the QCA Code provides a corporate
governance framework proportionate to the risks inherent to the
size and complexity of the Company's operations. The directors
apply the QCA Code in the ways set out below.
Board Level Responsibility
The Company's directors are ultimately responsible for the
effective stewardship of the business, with the Chairman holding
specific responsibility for corporate governance and effective
leadership of the Board. In discharging this obligation, the
Chairman regularly consults the Company's Senior Independent
Non-Executive Director (who is qualified by background and
experience to assist in this sphere), as well as the Company's
legal advisers and the Company Secretary.
Conflicts of Interest
The Company's Articles of Association provide a framework for
directors to report actual or potential situational conflicts,
enabling the Board to give such situational conflicts appropriate
and early consideration. All directors are aware of the importance
of consulting the Company Secretary regarding possible situational
conflicts.
Board Leadership
The Company is led by its Board, which is responsible for
determining the strategy of the business and its effective
stewardship. All major strategic and investment decisions are taken
by the Board as a whole, which monitors the resources available to
the Company, to ensure that they are sufficient to enable its goals
to be achieved. The Board meets regularly to review the Company's
operations and progress with its strategy. The directors are in
regular liaison outside formal meetings. Risk management and
controls are reviewed in the light of advice from the external
auditors, who have access to all the directors.
The Board comprises an executive Chairman and an independent
non-executive director (who was also the senior independent
non-executive director), as set out below.
Duncan Soukup
Executive Chairman, aged 67
Duncan Soukup is the founder and Executive Chairman of Thalassa
Holdings Ltd ("Thalassa"), a company listed on the London Stock
Exchange, and has over 35 years of investment experience. Prior to
establishing Thalassa, Mr Soukup worked in investment banking for
10 years, including as managing director in charge of the non-US
equity business of Bear Sterns. Thereafter, he established the
AIM-listed investment management business Acquisitor plc.
As the executive chairman with a beneficial interest in the
Company's shares, Mr Soukup is not considered to be
independent.
Martyn Porter (Appointed May 2022)
Independent Non-Executive Director, aged 52
Martyn has over 25 years' experience in international banking
and financial services with the HSBC Group. He has held senior
leadership positions in the UK, Malta, the Philippines, Hong Kong,
Vietnam, Luxembourg and latterly Monaco, where he served as Chief
Executive Officer of the HSBC Private Bank and Asset Management
companies. As a board director and regulated officer of HSBC
companies in Ireland, Luxembourg and Monaco, Mr. Porter has
significant knowledge and understanding of corporate governance and
regulatory compliance. He also has a highly successful track record
in the leadership of businesses undergoing complex strategic change
and transformation. During his career, Mr. Porter has built a wide
and diverse network of business relationships, as well as
demonstrating strong values and business ethics.
Gareth Edwards (resigned February 2022)
Independent Non-Executive Director, aged 63
Gareth Edwards is a qualified solicitor and was formerly a
partner at international law firm Pinsent Masons LLP. He has
extensive experience as an adviser to boards and senior management
of a range of public, private and entrepreneurial companies on
their strategy and wider business and commercial issues. He is
Chairman of Honye Financial Services Limited, a company listed on
the Main Market of the London Stock Exchange. He is also a director
of the AIM-listed company Cornerstone FS Plc.
Tim Donell (Appointed February 2022)
Chief Financial Officer, aged 40
A certified chartered accountant, Tim has over 15 years'
experience in finance, accounting and management roles within
growth companies across travel, e-commerce and web technology and
has a demonstrated track record of developing and improving
financial processes to drive business performance.
Division of Responsibilities
The responsibilities of each director are set out clearly in the
director's letter of appointment, which is available for inspection
by members of the Company at its registered office during normal
office hours. All directors ensure that they provide sufficient
time to fulfil their obligations. All directors have access to the
advice and services of the Company Secretary and to independent
legal advice at the Company's expense.
During the reporting period the directors monitored the
Company's operational progress and the activities of the executive
management. The Chairman is responsible for ensuring that due
consideration is given to key items of business both at formal
meetings of the directors and liaison outside these. The
independent non-executive director provides a separate
communication channel for shareholders and other interested parties
and has a remit under the Company's "whistle-blowing"
arrangements.
Nomination, Audit and Remuneration Committees were in place
throughout the reporting period, with responsibility for specific
areas within the Company's overall corporate governance structure.
During the reporting period there was no requirement for either of
the Remuneration Committee or the Nomination Committee to meet.
Due to the transition period that the Company has been going
through over the last 18 months and the nature of the business, the
Board met and held discussions throughout the year. The frequency
of the meetings fluctuated as required but averaged out on a weekly
basis. The meetings consisted of discussion to agree strategy and
the handling of the assets. The majority of the meetings were on an
informal and operational basis with the conclusions appropriately
documented.
Aside from the meetings described above each director's
attendance record at Board and Committee meetings during the
reporting period is set out in the table below:
Director Board Audit Remuneration Nomination
Duncan Soukup n/a 1 n/a n/a
Gareth Edwards n/a 1 n/a n/a
Under the Company's Articles one-third of the directors are
subject to retirement at each Annual General Meeting. Additionally,
the Articles require that director appointments made by the Board
directors are ratified at the subsequent General Meeting of the
Company.
Arrangements are made to provide new directors with an induction
programme into the Company's activities. Non-executive directors
also meet with management on an informal basis. Arrangements are
made for directors to inspect investment properties.
Risk & Internal Control
In addressing its responsibilities in this area, the Board pays
particular attention to:
-- monitoring the integrity of the Company's financial
statements and formal announcements relating to itsfinancial
performance and reviewing significant financial reporting
judgements contained in them;
-- reviewing the adequacy and effectiveness of the Company's
internal financial controls, internal controland risk management
systems, fraud detection, regulatory compliance and whistle-blowing
arrangements;
-- making recommendations for the approval of shareholders on
the appointment, re- engagement or removal ofthe external Auditors
and approving the Auditors' terms of engagement and
remuneration;
-- overseeing the Company's relationship with the external
Auditors, reviewing and monitoring the Auditors'independence and
objectivity and effectiveness;
-- approving the annual audit plan and reviewing the Auditors'
findings and the effectiveness of the auditprogramme.
The Company's approach to risk management is set out on pages 12
and 13.
Directors' Remuneration Policy and Remuneration Implementation
Report
There was no requirement for the Remuneration Committee to meet
during the reporting period. The Company had no employee directors
during the year and no share-related incentive schemes were in
operation. Although it is not currently required, the remuneration
policy for employee directors summarised below was approved by
shareholders at the annual general meeting held in March 2020:
-- within a competitive market, enabling the recruitment and
retention of individuals whose talent matchesthe entrepreneurial
and leadership needs of the business, enabling the Company to
fulfil its investment objectivesfor its shareholders; and
-- placing emphasis on performance-related rewards and focusing
on incentive targets that are closelyaligned with the interests of
shareholders.
Base Salary To be pitched at market median for the role, with advice taken from independent consultants.
Termination Service contracts to be capable of termination at not more than one year's notice
Future scheme to be based on the achievement of
profitability and cash generation targets based on the Company's annual budget.
Annual Bonus Scheme
Individual awards to be capped at 100% of base salary.
Scheme to be based on the award of shares or cash equivalent.
Share Based Performance
Scheme
Awards to vest on the achievement of medium-term and long-term targets derived from the
Company's investment strategy.
Pension Company contribution to individuals' pension plans of up to 10% of base salary.
Health Plan Individuals may participate in private healthcare arrangements supplied by the Company.
In applying the remuneration policy, the Board will use its
discretion to provide a tailored mix of benefits that encourages
individuals to maximise their efforts in the best interests of
shareholders. In particular, the remuneration policy would be
subject to any special considerations that may arise in relation to
the execution of any revised investment policy approved by the
Company's shareholders.
Non-Executive Pay
The Company's policy has been to provide remuneration to its
non-executive directors commensurate with the need to attract and
retain individuals with levels of skill and experience appropriate
to the Company's needs. No non-executive directors have
participated in any bonus or share-based arrangements of the
Company.
Directors' Remuneration
The below table highlighted total directors' remuneration in the
period.
Director Salary Short term incentives Long term incentives Pension contributions Benefits in kind Total
Duncan Soukup** - - - - - -
Gareth Edwards** 10,000 - - - - 10,000
Total 10,000 - - - - 10,000
The aggregate directors' remuneration during the reporting
period was GBP10,000 (2020: GBP10,969).
Directors' Service Contracts
Date of initial Date of current
Non-executive directors
appointment appointment letter
Duncan Soukup 4 October 2019 4 October 2020
Gareth Edwards* 4 October 2019 4 October 2020
*Resigned 7 February 2022
At the Company's 2021 Annual General Meeting shareholders passed
a resolution approving the Remuneration Implementation Report for
2020, with 97.1% of votes cast in favour of the Remuneration
Implementation Report, 2.9% of votes against and 6,894 votes
withheld.
A similar resolution, on the remuneration of directors as set
out above, will be put to the Company's Annual General Meeting for
2022
Directors' Interests in the Company's Shares (audited)
The interests during the reporting period of the directors who
held office during the reporting period in the issued share capital
of the Company as at the date of this report are set out below:
Ordinary 1p Shares*
Director 2021 2020
Duncan Soukup 5,418,857 5,418,857
Gareth Edwards - -
In addition to the direct interest shown above, Duncan Soukup
has an indirect interest in 4,618,001 and 1,734 Ordinary Shares
arising from his interests in entities of Thalassa Discretionary
Trust, and Thalassa Holdings Ltd.
Directors' Indemnities and Insurance Cover
To the extent permitted by law, the Company indemnifies its
directors and officers against claims arising from their acts and
omissions related to their office. The Company also maintains an
insurance policy in respect of claims against directors.
Audit Committee Report
The Audit Committee, consisted of the independent non-executive
director. The key functions of the audit committee are for
monitoring the quality of internal controls and ensuring that the
financial performance of the Group is properly measured and
reported on and for reviewing reports from the Company's auditors
relating to the Company's accounting and internal controls, in all
cases having due regard to the interests of Shareholders. The
Committee has formal terms of reference.
The Committee paid particular attention to the significant areas
set out below, which were discussed in detail with the Auditors:
Valuation of Investment Properties: the methodology adopted and
valuations provided by Allsop LLP ("Allsop"), for both 30 September
2019 and 30 September 2020 and the directors' valuation as at 31
December 2021.
The financial statements attached to this report have been
prepared on the Going Concern basis. In deciding that the Going
Concern basis is appropriate, the directors reviewed projections of
future activity over the 12 months following the date of this
report. The Directors concluded that there were no identifiable
material uncertainties, and present cash reserves were sufficient
to meet all liabilities as they fall due, up to and beyond that
date.
The Committee also considered the following items:
-- ensuring that the format of the financial statements and the
information supplied meets the standards setby the International
Accounting Standards Board;
-- reviewing the accounting treatment of receivables and
ensuring effective co-ordination between theCompany's records and
those of its managing agents;
-- ensuring that the audit scope properly reflected the risk
profile of the business;
-- ensuring that the Company has in place appropriate tax advice
arrangements and that its exit from the UKREIT regime was
appropriately managed appropriately and so as to minimise the
Company's tax exposure;
-- ensuring that the Committee's terms of reference continued to
accord with regulatory requirements.
The Committee considered the independence of external auditors,
seeking to ensure that any non-audit services provided, by external
auditors do not impair the auditors' objectivity or independence.
The Company's auditors, Jeffreys Henry LLP, did not supply any
non-audit services to the Company during the period.
Having assessed the performance, objectivity and independence of
the auditors, as well as the audit process and approach taken, the
Committee recommended the re-appointment of Jeffreys Henry LLP at
the Company's annual general meeting in 2022.
Tim Donell
Executive Director acting as Audit Committee Chairman 26 May
2022
Directors' Report
The directors of Alina Holdings Plc ("the Company") present
their report and the audited financial statements of the Company
together with its subsidiary and associated undertakings ("the
Group") for the year ended 31 December 2021.
In consequence of the change in the Company's accounting
reference date to 31 December in each year, these financial
statements report on the 15 months to 31 December 2020, with
comparative figures for the year to 30 September 2019. As these two
periods are not of equal length, they are not directly comparative.
Future statements will report on 12 months periods to 31
December.
The following directors held office during the reporting
period:
Gareth Edwards (appointed 4 October 2019 and resigned 7 February
2022)
Duncan Soukup (appointed 4 October 2019)
Tim Donell (appointed 7 February 2022)
Martyn Porter (appointed 20 May 2022)
The Directors' Report also includes the information set out on
pages 5 to 25, together with the description of the Company's
investment policy and business model described on page 5.
Group Result and Dividend
The loss for the Group attributable to shareholders for the
period was GBP294,000 (2020: loss GBP465,000). In accordance with
the investment policy, no dividend has been or will be distributed
in respect of the financial year. The directors continue to keep
the dividend distribution policy under review.
Post Balance Sheet Events
No significant post-balance sheet events have been
identified.
Going Concern Basis
The financial statements attached to this report have been
prepared on the Going Concern basis. In deciding that the Going
Concern basis is appropriate, the directors reviewed projections of
future activity over the 12 months following the date of this
report. The Directors concluded that there were no identifiable
material uncertainties, and present cash reserves were sufficient
to meet all liabilities as they fall due, up to and beyond that
date.
Future Developments
This information has not been included in the Directors' Report
as it is shown in the Strategic Report, as permitted by Section 414
c (11) of the Companies Act 2006.
Share Capital
Details of the Company's issued share capital are set out in
note 17 to the financial statements. All of the Company's issued
shares are listed on the London Stock Exchange. The Company's share
capital comprises one class of Ordinary Shares of 1p each
(re-denominated from Ordinary Shares of 10p each on 29 August
2019). All issued shares are fully paid up and rank equally.
Certain of the Company's Articles impose requirements on
shareholders in relation to distributions and the size of
individual holdings, to ensure that the Company's adherence to the
rules of the UK REIT tax regime. As the Company is no longer
subject to the UK REIT these Articles no longer have effect and
there are no restrictions on the transfer of shares or the size of
holdings. The directors are not aware of any agreements between
shareholders in relation to the Company's shares.
Investment Policy and Listing on the London Stock Exchange
During the reporting period the directors reviewed the options
open to the Company for its future strategy following the approval
by the Company's shareholders in September 2020, of the directors'
proposals for the Company's new investment strategy, the change of
the Company's name and the transfer of the Company's listing on the
London Stock Exchange to a standard listing on Main List. In tandem
with this approval, the Company's then largest shareholder,
Thalassa Holdings Ltd, distributed the majority of its shares in
the Company to its own shareholders. This enabled the Company to
apply to the Financial Conduct Authority for the restoration of
trading in the Company's shares on the London Stock Exchange, which
took place on 19 November 2020.
In accordance with the new investment strategy adopted by its
shareholders, the Company changed its name to Alina Holdings PLC on
26 November 2020.
The Company has no rules in place in relation to the amendment
of its Articles in addition to statutory provisions.
Substantial Interests
As at 19 May 2022, the last practicable reporting date before
the production of this document, the Company's share register
showed the following major interests (of 3% or more, excluding
shares held in treasury) in its issued share capital:
Shareholder Ordinary Shares %
Vidacos Nominees Limited* 10,036,857 44.22
Vidacos Nominees Limited** 6,416,223 28.27
Ferlim Nominees Limited 1,220,000 5.38
*Included within Vidacos Nominees Limited are shares of
5,418,857 owned by C D Soukup and 4,618,001 held by Thalassa
Discretionary Trust.
**The Company has also been notified that 6,391,223 (28.16%)
shares are beneficially owned by Peter Gyllenhammar AB.
Independence
As a result of the share buy-back programme concluded in October
2019, for part of the period reported on, the Company had a
controlling shareholder, Thalassa Holdings Ltd ("Thalassa"). For
this part-period, the Company was required under the Listing Rules
to ensure that: (a) transactions and arrangements with the
controlling shareholder (and/or any of its associates) were
conducted at arm's length and on normal commercial terms; and (b)
neither the controlling shareholder nor any of its associates could
take any action that would have the effect of preventing the
Company from complying with its obligations under the Listing
Rules. The Financial Conduct Authority was notified by the Company
that it had a controlling shareholder as soon as the situation
arose the relevant Listing Rule requirements were followed in
practice. This situation was fully resolved when Thalassa
transferred the majority of its shares in the Company to its own
shareholders, following which Company no longer had a controlling
shareholder.
Investor Relations
Subject to regulatory constraints, the directors are keen to
engage with the Company's shareholders, placing considerable
emphasis on effective communications with the Company's investors.
Directors are happy to comply with shareholder requests for
meetings as soon as practicable, subject to regulatory constraints.
The Board is provided with feedback on such meetings, as well as
regular commentary from investors and the Company's bankers and
advisers. The Board provides reports and other announcements via
the regulatory news service in accordance with regulatory
requirements. Regulatory announcements and key publications can
also be accessed via the Company's website. The Company's Annual
General Meeting provides a further forum for investors to discuss
the Company's progress and the Board encourages shareholders to
attend. The Company complies with relevant regulatory requirements
in relation to convening the meeting, its conduct and the
announcement of voting on resolutions. The Annual Report and Notice
of the Annual General Meeting are sent to shareholders at least 20
working days prior to the meeting and are available on the
Company's website. The results of resolutions considered at the
Annual General Meeting are announced to the Stock Exchange and are
also published on the website and lodged with the National Storage
Mechanism. Investors may elect to receive communications from the
Company in electronic form and be advised by email that
communications may be accessed via the Company's website.
Whistleblowing Policy
The Group has in place a whistleblowing policy which sets out
the formal process by which an employee of the Group may in
confidence raise concerns about possible improprieties in the
Group's affairs, including financial reporting.
Emissions and Energy Consumption Reporting
The directors believe that the Company's outsourced business
model, which focusses on the employment of agents, advisers and
contractors who are local to our property assets, is inherently
environmentally friendly. However, the collection of consumption
data from such businesses is not practicable. It is also not
possible for our national agents and advisers to separately
identify such data in relation to the proportion of their work
devoted to the Company's activities, particularly given the
increase in staff working from home during the COVID-19 lockdown.
It is not possible to measure the energy consumed by the Company's
tenants (nor is this consumption within the Company's control). The
consumption of water, waste output and greenhouse gases other than
CO2 within the Company's control is negligible.
For previous reporting periods the Company has supplied
environmental reporting information focused on energy consumed by
the Company and its wholly owned subsidiaries through the
activities of its office base, shared facilities provided by the
Company within its property portfolio and activities within vacant
properties within the Company's control.
In relation to Scope 1 Carbon Emissions (consumption of gas and
fuel), since the termination of the Company's third-party
investment advisory agreement and the relocation of its registered
office it has not been possible to separately identify the energy
consumed on the Company's activities. An element of the Company's
administration activity is carried out at its registered office.
However, this is a de minimis element of the overall activity and
energy consumption at that site. Other activity is undertaken by
the Company's directors and management working at home. In both
cases, it has not been possible to separately identify the energy
consumed on the Company's activities at those locations. In
previous years, data has been supplied relating to fuel consumed on
journeys on Company activities. As the Company does not operate
company cars, all such journeys are made in employees' private
vehicles or on public transport. The reduction in the Company's
property portfolio has significantly reduced the requirement for
such journeys, which were then further restricted during the
reporting period by the COVID-19 lockdown regime. Accordingly, the
directors do not consider that any meaningful Scope 1 data can be
supplied.
Similar limitations apply to Scope 2 data, which in previous
reports comprised an estimate of consumption for vacant property
units for which the Company is responsible. The number of these and
the related energy consumption has been de minimis throughout the
reporting period. Similarly, it has not been practicable to measure
Scope 3 emissions.
The Company's direct usage and emissions of water is also
minimal. Although a small element of utility supply charges within
vacant premises relate to water and to gas, this largely relates to
standing charges and consumption is negligible.
In relation to The Companies (Directors' Report) and LLP
Partnerships (Energy and Carbon Report) Regulations 2018, the
Company consumes less than 40,000 kWh of energy per annum and
therefore qualifies as a low energy user and therefore does not
come within the scope of those regulations.
Statement of Disclosure to Auditors
The directors who were in office at the date of the approval of
the financial statements have confirmed that, as far as they are
aware, there is no relevant audit information of which the auditors
are unaware. Each of the directors has confirmed that they have
taken all necessary steps that they ought to have taken as
directors in order to make themselves aware of any relevant audit
information and to establish that this has been communicated with
the auditors.
This report was approved by the directors on 20 May 2022
Alasdair Johnston
Company Secretary 20 May 2022 Statement of Directors'
Responsibilities
The directors are responsible for preparing the Annual Report
and the Group and parent Company financial statements in accordance
with applicable law and regulations.
Company law requires the directors to prepare Group and parent
Company financial statements for each financial year. Under that
law they are required to prepare the Group financial statements in
accordance with UK Adopted International Accounting Standards and
applicable law and have elected to prepare the parent Company
financial statements in accordance with UK accounting standards,
including FRS 102 The Financial Reporting Standard applicable in
the UK.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and parent Company and of
their profit or loss for that period. In preparing each of the
Group and parent Company financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them
consistently;
-- make judgements and estimates that are reasonable, relevant,
reliable and prudent;
-- for the Group financial statements, state whether they have
been prepared in accordance with UK AdoptedInternational Accounting
Standards;
-- for the parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject to
any material departures disclosed and explained in the parent
company financial statements;
-- assess the Group and parent Company's ability to continue as
a going concern, disclosing, as applicable,matters related to going
concern; and
-- use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease
operations or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the parent Company and enable them
to ensure that its financial statements comply with the Companies
Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a Strategic Report, Directors' Report,
Directors' Remuneration Report and Corporate Responsibility
Statement that complies with that law and those regulations.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Responsibility statement of the directors in respect of the
annual financial report
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give atrue and fair view of
the assets, liabilities, financial position and profit or loss of
the company and the undertakings included in the consolidation
taken as a whole; and
-- the strategic report/directors' report includes a fair review
of the development and performance of thebusiness and the position
of the issuer and the undertakings included in the consolidation
taken as a whole, together with a description of the principal
risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the group's position and
performance, business model and strategy.
The foregoing reports were approved by the directors on 20 May
2022
Alasdair Johnston
Company Secretary 26 May 2022 Independent Auditors' Report to
the members of Alina Holdings PLC
Opinion
We have audited the financial statements of Alina Holdings Plc
(the 'parent company') and its subsidiaries (the 'group') for the
year ended 31 December 2021 which comprise the consolidated income
statement, the consolidated statement of comprehensive income, the
consolidated and company balance sheet, the consolidated statement
of cash flows, the consolidated statements of changes in equity and
notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in the preparation of the group financial
statements is applicable law and UK adopted International
Accounting Standards. The financial reporting framework that has
been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting
Standards, including Financial Reporting Standard 102 (United
Kingdom Generally Accepted Accounting Practice).
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parentcompany's affairs as at 31
December 2021 and of the group's loss for the period then
ended;
-- the group financial statements have been properly prepared in
accordance with UK adopted InternationalAccounting Standards ;
-- the parent company financial statements have been properly
prepared in accordance with United KingdomGenerally Accepted
Accounting Practice; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act2006. Basis for
opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to public listed entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the entity's ability to
continue to adopt the going concern basis of accounting included
reviews of expected cash flows for a period of 12 months, to
determine expected cash burn, which was compared to the liquid
assets held in the entity.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
In relation to the group's reporting on how it has applied the
UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors' statement in the
financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our approach to the audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgments, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group and the Company, the accounting processes and controls, and
the industry in which they operate.
The Group financial statements are a consolidation of six
reporting units, comprising the Group's operating businesses and
holding companies.
We performed audits of the complete financial information of the
Group and Parent Company of Alina Holdings Plc
We performed audits of the complete financial information of
Alina Holdings Plc, NOS 4 Ltd, NOS 5 Ltd and NOS 6 Ltd, which were
individually financially significant and accounted for 100% of the
Group's revenue and 100% of the Group's absolute profit before tax
(i.e. the sum of the numerical values without regard to whether
they were profits or losses for the relevant reporting units).
Specific reviews undertaken for NOS 7 Ltd and Gilfin Property
Holdings Ltd, as they were deemed to be insignificant
components.
The Group engagement team performed all audit procedures. Key
audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit.
Key audit matter How our audit addressed the key audit matter
We reviewed the recognition, capitalisation and fair
valuation of investment properties in conjunction with
IAS 40 Investment Property and IFRS 13 Fair Value
Measurement.
Valuation and presentation of investment property
We assessed the competence, capabilities, qualifications
The Group holds GBP2,784,000 (2020: GBP2,762,000) as at the year and objectivity of the external independent valuers
end as well as GBP330,000 (2020: GBP330,000) of assets held for employed by the Group.
sale.
We have critically evaluated managements methodologies in
Investment properties are held at fair value which represents reviewing valuations and adjusting the fair values of
a significant area of management judgment. Assets held for investment properties.
sale are held at net realisable value being expected sales
price less cost to sell. All properties that the Group were in the process of
selling were allocated as held for sale.
We found no issues with the valuations and presentations
of investment properties.
Value of parent investment in subsidiaries
The parent company held GBP3,105,000 (2020: GBP3,105,000) of
investments as at the year end. We reviewed the director's impairment review. An
impairment had been made against individual subsidiaries
to reduce the carrying value of the investments to that
of the net assets in the respective companies.
The directors are required to review the investments for
impairments on an annual basis. Impairments are based on This appears to be a reasonable estimate of recoverable
estimated recoverable amounts, which is based on estimates amount of the investment. The calculations have been
and judgments. reviewed as part of the audit.
We found no issues with the valuation of investments in
subsidiaries.
The subsidiaries have historically been loss making which is
a sign of impairment. Furthermore, as the companies have been
disposing of properties in the year the net assets of the
company have been falling on a year-on-year basis.
Our application of materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgment, we determined materiality
for the financial statements as a whole as follows:
Group financial statements Company financial statements
Overall GBP66,000 GBP65,000
materiality
How we 1% of group gross assets 1% of gross assets limited by Group materiality
determined it
Rationale for We believe that net assets are the primary measures We believe that net assets are the primary measures
benchmark used by shareholders in assessing the Group's used by shareholders in assessing the Company's
applied performance. It is considered a standard industry performance. It is considered a standard industry
benchmark. benchmark.
For each component in the scope of our Group audit, we allocated
a materiality that is less than our overall Group materiality. The
range of materiality allocated across components was between
GBP10,000 and GBP60,000.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above GBP3,300 for the
Group and GBP3,250 for the Company, as well as misstatements below
those amounts that, in our view, warranted reporting for
qualitative reasons. Other information
The other information comprises the information included in the
annual report other than the financial statements and our auditor's
report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard. Opinions on other
matters prescribed by the Companies Act 2006
In our opinion the part of the directors' remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006. In our opinion, based on the work undertaken in
the course of the audit:
. the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
. the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements. Matters
on which we are required to report by exception
In the light of the knowledge and understanding of the group and
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or the directors' report
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audithave not been received
from branches not visited by us; or
-- the parent company financial statements and the part of the
director's remuneration report to be auditedare not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by
law are not made; or
-- we have not received all the information and explanations we
require for our audit; or Responsibilities of directors
As explained more fully in the directors' responsibilities
statement set out on page 25, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and parent company's ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so. Auditor's responsibilities for
the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below.
The extent to which the audit was considered capable of
detecting irregularities including fraud
Our approach to identifying and assessing the risks of material
misstatement in respect of irregularities, including fraud and
non-compliance with laws and regulations, was as follows:
-- the senior statutory auditor ensured the engagement team
collectively had the appropriate competence,capabilities and skills
to identify or recognise non-compliance with applicable laws and
regulations;
-- we focused on specific laws and regulations which we
considered may have a direct material effect on thefinancial
statements or the operations of the company.
-- we assessed the extent of compliance with the laws and
regulations identified above through makingenquiries of management
and inspecting legal correspondence; and
-- identified laws and regulations were communicated within the
audit team regularly and the team remainedalert to instances of
non-compliance throughout the audit.
We assessed the susceptibility of the company's financial
statements to material misstatement, including obtaining an
understanding of how fraud might occur, by:
-- making enquiries of management as to where they considered
there was susceptibility to fraud, theirknowledge of actual,
suspected and alleged fraud;
-- considering the internal controls in place to mitigate risks
of fraud and non-compliance with laws andregulations.
To address the risk of fraud through management bias and
override of controls, we:
-- performed analytical procedures to identify any unusual or
unexpected relationships;
-- tested journal entries to identify unusual transactions;
-- assessed whether judgements and assumptions made in
determining the accounting estimates set out in Note1 were
indicative of potential bias;
-- investigated the rationale behind significant or unusual
transactions.
In response to the risk of irregularities and non-compliance
with laws and regulations, we designed procedures which included,
but were not limited to:
-- agreeing financial statement disclosures to underlying
supporting documentation;
-- reading the minutes of meetings of those charged with
governance;
-- enquiring of management as to actual and potential litigation
and claims;
-- Obtaining confirmation of compliance from the company's legal
advisors.
There are inherent limitations in our audit procedures described
above. The more removed that laws and regulations are from
financial transactions, the less likely it is that we would become
aware of non-compliance. Auditing standards also limit the audit
procedures required to identify non-compliance with laws and
regulations to enquiry of the directors and other management and
the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to
detect than those that arise from error as they may involve
deliberate concealment or collusion.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Other matters which we are required to address
We were re-appointed by the members of the Company on 8 July
2021 to audit the financial statements for the year ending 31
December 2021 and subsequent financial periods. The period of total
uninterrupted engagement is 3 years, covering the periods ended 30
September 2019 to 31 December 2021.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting our
audit.
Our audit opinion is consistent with the additional report to
the audit committee. Use of this report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Sanjay Parmar
Senior Statutory Auditor
For and on behalf of
Jeffreys Henry LLP (Statutory Auditors)
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
26 May 2022
Consolidated Statement of Income
For the year ended 31 December 2021
Year ended 31 December 15 months ended 31 December
2021 2020
Note GBP000 GBP000
Gross rental income 437 598
Property operating expenses 3 (136) (159)
Net rental income 301 439
Profit/Loss on disposal of investment properties 4 - 1
Loss from change in fair value of investment properties 10 - (325)
Administrative expenses including non-recurring items 5 (540) (489)
Operating loss before net financing costs (239) (374)
Depreciation 10 (3) -
Financing income 7 23 3
Financing expenses 7 (75) (94)
Loss before tax (294) (465)
Taxation 8 - -
Loss for the period from continuing operations (294) (465)
Loss for the year (294) (465)
Attributable to:
Equity shareholders of the parent (294) (465)
Non-controlling interest - -
(294) (465)
Earnings per share - GBP pence (using weighted average number
of shares)
Basic and Diluted - GBP pence 9 (1.30) (2.05)
The notes on pages 38 to 57 form an integral part of this
consolidated interim financial information. Consolidated Statement
of Comprehensive Income
For the year ended 31 December 2021
Year ended 31 December 2021 15 months ended 31 December 2020
GBP000 GBP000
Loss for the financial year (294) (465)
Other comprehensive income:
- -
Total comprehensive income (294) (465)
Loss for the period attributable to:
Equity shareholders (294) (465)
Total Comprehensive income (294) (465)
The notes on pages 38 to 57 form an integral part of this
consolidated interim financial information.
Consolidated Statement of Financial Position
As at 31 December 2021
Year Ended 31 December 2021 Year Ended 31 December 2020
Note GBP000 GBP000
Assets
Non-current assets
Investment properties 10 2,784 2,762
Total non-current assets 2,784 2,762
Current assets
Investment property held for sale 10 330 330
Available for sale financial assets 11 1,819 -
Trade and other receivables 12 255 228
Cash and cash equivalents 13 1,767 4,073
Total current assets 4,171 4,630
Liabilities
Current liabilities
Trade and other payables 14 398 566
Total current liabilities 398 566
Net current assets 3,773 4,065
Non-current liabilities
Finance lease liabilities 15 324 300
Total non-current liabilities 324 300
Net assets 6,233 6,527
Shareholders' Equity
Share capital 20 319 319
Capital redemption reserve 20 598 598
Retained earnings 5,316 5,610
Total shareholders' equity 6,233 6,527
The notes on pages 38 to 57 form an integral part of this
consolidated interim financial information.
These financial statements were approved by the board on 20 May
2022.
Signed on behalf of the board by: Duncan Soukup
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
Notes Year ended 31 December 15 months ended 31 December
2021 2020
GBP000 GBP000
Cash flows from operating activities
Profit/(Loss) for the year before taxation (239) (465)
Loss from change in fair value of investment properties 10 - 325
(Profit)/Loss from change in fair value of head leases 26 48
(Profit)/Loss on disposal of investment properties - (1)
Net financing loss/(income) (3) 91
Decrease/(Increase) in trade and other receivables 12 (27) 150
(Decrease)/Increase in trade and other payables 14 (168) 146
Loss on foreign exchange (44) (57)
Lease liability interest (22) (26)
Interest received - 3
Interest paid (6) (7)
Profit from change in fair value of investments held for (4) -
sale
Cash generated by operations (487) 207
Taxation - -
Net cash flow from operating activities (487) 207
Purchase of investments held for sale 11 (1,993) -
Sale of investments held for sale 11 200 -
Unrealised Gain or (Loss) on Investment - -
Net Proceeds from sale of investment properties - 348
Net cash flow in investing activities (1,793) 348
Cash flows from financing activities
(Increase)/reduction on head lease liabilities 15 (26) (48)
Net cash flow from financing activities - continuing (26) (48)
operations
Net increase in cash and cash equivalents (2,306) 507
Cash and cash equivalents at the start of the year 4,073 3,566
Effects of exchange rate changes on cash and cash - -
equivalents
Cash and cash equivalents at the end of the year 1,767 4,073
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Capital
Share Redemption Retained
Capital Reserves Reserves Earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000
Balance as at 30 September 2019 319 - 598 6,075 6,992
Total comprehensive income for the 15 month period to December 2020 - (465) (465)
Balance as at 31 December 2020 319 - 598 5,610 6,527
Total comprehensive income for the year - - - (294) (294)
Balance as at 31 December 2021 319 - 598 5,316 6,233
The notes on pages 38 to 57 form an integral part of this
consolidated interim financial information. Notes to the
Consolidated Financial Statements 1. General information
Alina Holdings PLC ("Alina" or the "Company") is a company
registered on the Main Market of the London Stock Exchange. It is
incorporated, domiciled and registered in England. The Company's
registered number is 05304743 and the address of its registered
office is Eastleigh Court, Bishopstrow, Warminster, BA12 9HW 2.
Significant Accounting policies
The Group prepares its accounts in accordance with applicable UK
Adopted International Accounting Standards.
The group financial statements consolidate those of the Company
and its subsidiaries (together referred to as the "Group"). The
parent company financial statements present information about the
Company as a separate entity and not about its group.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
group financial statements.
Judgements made by the directors, in the application of these
accounting policies that have significant effect on the financial
statements and estimates with a significant risk of material
adjustment in the next year are discussed later in this note under
the heading "Use of Estimates and Judgements".
The financial statements are prepared in pounds sterling. They
have been prepared under the historical cost convention except for
the following assets which are measured on the basis of fair value:
investment properties, and investment properties held for sale.
Segmental reporting
IFRS 8 requires operating segments to be identified on the basis
of internal reports that are regularly reported to the chief
operating decision maker to allocate resources to the segments and
to assess their performance. Since the strategy review in July 2013
the Group has identified one operation and one reporting segment,
being rental income in the UK, which is reported to the Board of
directors on a quarterly basis. The Board of directors is
considered to be the chief operating decision maker.
Basis of preparation
The consolidated financial statements include the financial
statements of the Company and all its subsidiary undertakings up to
31 December 2021. Subsidiaries are entities controlled by the
Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. In assessing control, the Group takes into
consideration potential voting rights. The acquisition date is the
date on which control is transferred to the acquirer. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the
date that control ceases. The financial statements of subsidiaries
are prepared using consistent accounting policies. Inter-company
transactions and balances are eliminated.
All intra-group transactions, balances, income and expenses are
eliminated in full on consolidation.
Going concern
The financial information has been prepared on the going concern
basis as management consider that the Group has sufficient cash to
fund its current commitments for the foreseeable future.
Investment Properties
Investment properties are those properties owned by the Group
that are held to earn rental income or for capital appreciation or
both and are not occupied by the Company or any of its
subsidiaries.
Since the Balance Sheet date, no properties have exchanged
contracts for sale, been sold at auction or have completed sale
following an exchange of contracts during the year other than those
held as available for sale.
Allsop LLP, a firm of independent chartered surveyors valued the
Group's property portfolio at 30 September 2018 and 31 March 2019.
On each of these dates Allsop LLP performed a full valuation of 25%
of the Group's properties (including site inspections) and a
desktop valuation of the remainder, such that all properties owned
by the Group are inspected and valued over the two-year period. The
valuations, using assumptions regarding yield rates, void levels
and comparable market transactions, were undertaken in accordance
with the Royal Institute of Chartered Surveyors Appraisal and
Valuation Standards on the basis of market value. Market value is
defined as the estimated amount for which a property should
exchange on the date of valuation between a willing buyer and a
willing seller in an arm's length transaction, after proper
marketing wherein the parties had each acted knowledgeably,
prudently and without compulsion.
In July 2019 Allsop LLP provided a full valuation (including
site visits) on all the properties then held by the Group. In the
light of that valuation, for the 30 September 2019 financial
statements the Company had desktop valuations prepared by Allsop
LLP for all the properties in the portfolio at that date, except
for three properties which were considered to be held for sale and
were therefore valued at their expected sale price less sales
costs.
During the six months' period to 31 March 2020 sales were
completed on two properties considered at 30 September 2019 to be
held for sale.
In view of the market uncertainty and the operational
restrictions arising from the COVID-19 outbreak, the directors did
not consider it appropriate to carry out a fresh valuation of the
property portfolio at 31 March 2020. The six properties contained
in the portfolio therefore continued to be recognised at 31 March
2020 in the financial statements at their holding value in the
Company's accounts at 30 September 2019.
The six property assets held at 30 September 2020 were valued at
that date by Allsop LLP. In line with the Company's established
valuation policy, two of the larger assets were subject to full
RICS valuations, including site inspections, with the remainder
subject to desktop updates of their previous carrying values.
In view of the proximity in time to the September valuations,
and the operational restrictions arising from the COVID-19
outbreak, the Directors did not consider it appropriate to carry
out a fresh valuation of the property portfolio at 31 December
2020. The properties contained in the portfolio therefore continue
to be recognised at 31 December 2020 at their holding value in the
Group's financial statements at 30 September 2020. Of the six
properties in the portfolio, one property is considered to be held
for sale and its holding value in the Company's accounts therefore
takes account of agreed pricing and sales costs.
The Directors are pleased to announce the completion of sale of
the Westcliff property held for sale as at 31 December 2020 and
2021, which was agreed under the previous board in 2019 and has
taken until now to finalise. The price (GBP330k) remained as agreed
in 2019 and recognized as for sale in the intervening accounting
periods.
The Directors have concluded that they will be maintaining the
valuation of the property portfolio at previous levels. The Board
is also of the opinion that the carrying values, based on the "Red
Book" valuation, do not reflect the real value of the
properties.
The Company's objective is still to liquidate the current
portfolio of shopping assets which currently show a Gross Initial
Yield of more than 16%, but only if a sale can achieve a sensible
return in excess of the year end 2021 carrying value of
GBP2.45m.
The Directors obtained pricing and yields of similar
transactions made within the accounting period and compared them to
the Gross Initial Yield stated above. In all cases the transactions
that were measured came in at a lower value than that currently
being achieved. As stated, although the data is below the Yield
being achieved it was felt prudent to leave the valuations as they
stand.
Investment properties are treated as acquired at the point the
Group assumes the significant risks and returns of ownership.
Subsequent expenditure is charged to the asset's carrying value
only when it is probable that future economic benefits associated
with the expenditure will flow to the Group and the cost of each
item can be reliably measured. All other repairs and maintenance
costs are charged to the Income Statement during the period in
which they are incurred.
Rental income from investment properties is accounted for as
described below.
Investment Properties Held for Sale
Investment properties held for sale are included in the Balance
Sheet at their fair value less estimated sales costs. In
determining whether assets no longer meet the investment criteria
of the Group, consideration has been given to the conditions
required under IFRS 5.
An investment property shall classify a non-current asset as
held for sale if its carrying amount will be recovered principally
through a sale transaction rather than through continuing use.
The asset must be available for immediate sale in its present
condition subject only to terms that are usual and customary for
sales of such assets and its sale must be highly probable as at the
year end.
The sale of the Westcliff property, the only asset held for sale
at 31 December 2021, was completed in February 2022.
Head Leases
Where a property is held under a head lease and is classified as
an investment property, it is initially recognised as an asset
based on the sum of the premium paid on acquisition and if the
remaining life of the lease at the date of acquisition is
considered to be material, the net present value of the minimum
ground rent payments. The corresponding rent liability to the
leaseholder was included in the Balance Sheet as a finance
obligation in current and non-current liabilities.
The payment of head rents has been expensed through the Income
Statement.
Trade and Other Receivables
Trade and other receivables are initially recognised at fair
value and subsequently held at amortised cost less impairment.
Impairment is made where it is established that there is objective
evidence that the Group will not be able to collect all amounts due
according to the original terms of the receivable. The impairment
is recorded in the Income Statement.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and deposits
held on call. Cash equivalents are short-term, highly liquid
investments with original maturities of three months or less.
Financial Assets
Financial assets are impaired when there is objective evidence
that the cash flows from the financial asset are reduced.
Financial Instruments
Financial assets and financial liabilities are initially
classified as measured at amortised cost, fair value through other
comprehensive income, or fair value through profit and loss when
the Company becomes a party to the contractual provisions of the
instrument. Financial assets are derecognised when the contractual
rights to the cash flows expire, or the Company no longer retains
the significant risks or rewards of ownership of the financial
asset. Financial liabilities are derecognised when the obligation
is discharged, cancelled or expires.
Financial assets are classified dependent on the Company's
business model for managing the financial and the cash flow
characteristics of the asset. Financial liabilities are classified
and measured at amortised cost except for trading liabilities, or
where designated at original recognition to achieve more relevant
presentation. The Company classifies its financial assets and
liabilities into the following categories:
Financial assets at amortised cost
The Company's financial assets at amortised cost comprise trade
and other receivables. These represent debt instruments with fixed
or determinable payments that represent principal or interest and
where the intention is to hold to collect these contractual cash
flows. They are initially recognised at fair value, included in
current and non-current assets, depending on the nature of the
transaction, and are subsequently measured at amortised cost using
the effective interest method less any provision for
impairment.
Impairment of trade and other receivables
In accordance with IFRS 9 an expected loss provisioning model is
used to calculate an impairment provision. We have implemented the
IFRS 9 simplified approach to measuring expected credit losses
arising from trade and other receivables, being a lifetime expected
credit loss. This is calculated based on an evaluation of our
historic experience plus an adjustment based on our judgement of
whether this historic experience is likely reflective of our view
of the future at the balance sheet date. In the previous year the
incurred loss model is used to calculate the impairment
provision.
Financial liabilities at amortised cost
Financial liabilities at amortised cost comprise loan
liabilities, including convertible loan note liability elements,
and trade and other payables. They are classified as current and
non- current liabilities depending on the nature of the
transaction, are subsequently measured at amortised cost using the
effective interest method. All convertible loan notes are held at
amortised cost and no election has been made to hold them as fair
value through profit and loss.
Financial assets at fair value through profit and loss
Financial assets at fair value are recognized and measured at
fair value using the most recent available market price with gains
and losses recognised immediately in the profit and loss.
The fair value measurement of the Company's financial and non-
financial assets and liabilities utilises market observable inputs
and data as far as possible. Inputs used in determining fair value
measurements are categorised into different levels based on how
observable the inputs used in the valuation technique utilised are
(the 'fair value hierarchy').
Level 1 - Quoted prices in active markets
Level 2 - Observable direct or indirect inputs other than Level
1 inputs
Level 3 - Inputs that are not based on observable market
data
Trade and Other Payables
Trade and other payables are initially recognised at fair value
and subsequently held at amortised cost.
Ordinary Share Capital
External costs directly attributable to the issue of new shares
are shown in equity as a deduction from the proceeds.
Shares which have been repurchased are classified as treasury
shares and shown in retained earnings. They are recognised at the
trade date for the amount of consideration paid, together with
directly attributable costs. This is presented as a deduction from
total equity. Shares held by the Employee Benefit Trust are treated
as being those of the Group until such time as they are distributed
to employees, when they are expensed in the profit and loss
account.
The nominal value of shares cancelled has been taken to a
capital redemption reserve.
Rental Income
Rental income from investment properties leased out under
operating leases is recognised in the Income Statement on a
straight-line basis over the term of the lease. When the Group
provides lease incentives to its tenants the cost of incentives are
recognised over the lease term, on a straight-line basis, as a
reduction to income.
Taxation
Corporation tax on the profit or loss for the year comprises
current and deferred tax. Corporation tax is recognised in the
Income Statement except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in
equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the balance sheet date and any adjustment to tax payable in respect
of previous years. Deferred tax is provided using the balance sheet
liability method. Provision is made for temporary differences
between the carrying amounts of assets and liabilities in the
financial statements for financial reporting purposes and the
amounts used for taxation purposes. Deferred income tax is
calculated after taking account of any indexation allowances and
capital losses on an undiscounted basis. The amount of deferred tax
provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities using
tax rates enacted or substantially enacted at the balance sheet
date. Deferred tax assets are recognised only to the extent that it
is probable that future profits will be available against which the
asset can be utilised. Deferred tax assets are reduced to the
extent that it is no longer probable that the related tax benefit
will be realised. Deferred tax assets and liabilities are only
offset if there is a legally enforceable right of set-off.
Pensions
The Company has contribution only pension arrangements in
operation for certain employees.
Use of Estimates and Judgements
To be able to prepare accounts according to generally accepted
accounting principles, management must make estimates and
assumptions that affect the asset and liability items and revenue
and expense amounts recorded in the financial statements. These
estimates are based on historical experience and various other
assumptions that management and the Board of directors believe are
reasonable under the circumstances. The results of these
considerations form the basis for making judgements about the
carrying value of assets and liabilities that are not readily
available from other sources.
The areas requiring the use of estimates and judgements that may
significantly impact the Group's earnings and financial position
include the estimation of the fair value of investment
properties.
The valuation basis of the Group's investment properties is set
out above.
Adoption of new and revised standards
Standards issued but not yet effective:
There were a number of standards and interpretations which were
in issue during the current period but were not effective at that
date and have not been adopted for these Financial Statements. The
Directors have assessed the full impact of these accounting changes
on the Company. To the extent that they may be applicable, the
Directors have concluded that none of these pronouncements will
cause material adjustments to the Group's Financial Statements.
They may result in consequential changes to the accounting policies
and other note disclosures. The new standards will not be early
adopted by the Group and will be incorporated in the preparation of
the Group Financial Statements from the effective dates noted
below.
The new standards include:
IFRS 16 Leases (amendments) 1 & 2
IAS 39 Financial instruments recognition and measurement 1
IFRS 9 Financial instruments (amendments) 1
IFRS 7 Financial instruments disclosures (amendments) 1
IFRS 4 Insurance contracts 1
IFRS 3 Business combinations 2
IAS 37 Provisions, contingent liabilities and contingent assets
2
IFRS 17 Insurance contracts 2
IAS 1 Presentation of financial statements 3
IAS 8 Accounting policies, changes in accounting estimates and
errors 3
1 Effective for annual periods beginning on or after 1 January
2021
2 Effective for annual periods beginning on or after 1 January
2022
3 Effective for annual periods beginning on or after 1 January
2023 3. Property Operating Expenses
Year ended 31 December 2021 15 months ended 31 December 2020
GBP000 GBP000
Bad debt charge (7) 1
Head rent payments (0) (37)
Head rent treated as interest (Note 5) - 26
Repairs (21) (27)
Business rates and council tax (35) (32)
Irrecoverable service charge 18 3
Utilities (2) 9
Insurance (0) (12)
Managing agent fees (26) (38)
Legal & professional (48) (36)
EPC amortisation, Abortives, and Misc (15) (16)
Total property operating expenses (136) (159) 4. Property Disposals
Year ended 31 December 2021 15 months ended 31 December 2020
Number Number
Number of Sales - 2
GBP000 GBP000
Average Value - 177
Sales
Total sales - 355
Carrying value - (347)
Profit/(Loss) on disposals before transaction costs - 8
Transaction costs
Legal fees - (4)
Agent fees, marketing and brochure costs - (3)
Total Transaction Costs (7)
Profit/(Loss) on disposals after transaction costs - 1
Transaction costs as percentage of sales value - 2% 5. Administrative Expenses
Year ended 31 December 2021 15 months ended 31 December 2020
GBP000 GBP000
Investment manager fees (0) (18)
Legal and professional (48) (163)
Tax and audit* (44) (42)
Remuneration Costs** (315) (179)
Other (117) (55)
Irrecoverable VAT on Administration expenses (16) (32)
Total administrative expenses (540) (489)
*Within the tax and audit figure are GBP30,000 (2020: GBP40,000)
accrued for auditors remuneration. It is estimated that the figures
will be GBP17,000 for the Parent Company and the balance for the
subsidiaries.
**During the period remuneration consisted of both employees and
contractors. From the end of the year ended 31 December 2021, there
were no employees. 6. Employees
Year ended 31 December 2021 15 months ended 31 December 2020
Admin 1 1
1 1 7. Net Financing (Loss)/Income
Year ended 31 December 2021 15 months ended 31 December 2020
GBP000 GBP000
Interest receivable 0 3
Unrealised Gain or (Loss) on Investment 23 -
Financing income 23 3
Interest paid (5) (7)
Loss on foreign exchange (44) (57)
Realised Gain or (Loss) on Investment (3) -
Finance lease depreciation (3) (4)
Head rents treated as finance leases (note 2) (23) (26)
Financing expenses (78) (94)
Net financing (loss)/income (55) (91) 8. Taxation
Year ended 31 December 2021 15 months ended 31 December 2020
GBP000 GBP000
Loss before tax (294) (465)
Corporation tax in the UK of 19% (2020: 20%) (56) (93)
Effects of:
Revaluation deficit and other non-deductible items - 65
Deferred tax asset not recognised 28 28
Total tax - -
Following the Company's adoption of its new investment policy in
September 2020, the Group is considered by HM Customs & Revenue
to have exited the REIT tax regime with effect from 1 October 2018
and, from that date, is fully subject to corporation tax.
However, the Board believes that the Group's activities since
then and the availability of tax losses means that the Company's
activities are unlikely to have generated any material corporation
tax liability for periods since 1 October 2018. Accordingly, no
provision for corporation tax has been made in these accounts. The
deferred tax asset not recognised relating to these losses can be
carried forward indefinitely. It is not anticipated that sufficient
profits from the residual business will be generated in the
foreseeable future to utilise the losses carried forward and
therefore no deferred tax asset has been recognised in these
accounts. 9. Earnings per share
The calculation of basic earnings per share was based on the
profit attributable to ordinary shareholders and a weighted average
number of ordinary shares outstanding
Year ended 31 December 15 months ended 31 December
2021 2020
GBP000 GBP000
The calculation of earnings per share is based on the loss and
number of shares:
Profit/(loss) for the period (GBP'000) (294) (465)
Weighted average number of shares of the Company ('000) 22,697 22,697
Earnings per share:
Basic and Diluted (GBP - pence) (1.30) (2.05) 10. Investment Properties
Freehold Leasehold
Investment Investment
Properties Properties Total
GBP000 GBP000 GBP000
At 30 September 2019 40 3,099 3,139
Fair value adjustment - head leases - (48) (48)
Depreciation - head leases - (4) (4)
Fair value adjustments - property - (325) (325)
At 31 December 2020 40 2,722 2,762
Fair value adjustment - head leases - 25 25
Depreciation - head leases - (3) (3)
At 31 December 2021 40 2,744 2,784
Allsop LLP, a firm of independent chartered surveyors valued the
Group's property portfolio at 30 September 2017, 31 March 2018, 30
September 2018 and 31 March 2019. On each of these dates Allsop LLP
performed a full valuation of 25% of the Group's properties
(including site inspections) and a desktop valuation of the
remainder, such that all properties owned by the Group have been
inspected and valued over the two-year period. The valuations,
using assumptions regarding yield rates, void levels and comparable
market transactions, were undertaken in accordance with the Royal
Institute of Chartered Surveyors Appraisal and Valuation Standards
on the basis of market value. Market value is defined as the
estimated amount for which a property should exchange on the date
of valuation between a willing buyer and a willing seller in an
arm's length transaction, after proper marketing wherein the
parties had each acted knowledgeably, prudently and without
compulsion
In July 2019 Allsop LLP carried out a full valuation (including
site visits) on all the properties held at that date. In the light
of that recent full valuation, for the 30 September 2019 financial
statements the Company had desktop valuations prepared by Allsops
for all the properties in the portfolio at that date, except for
three properties which were considered to be held for sale and were
therefore valued at their expected sale price less sales costs.
The six property assets held at 30 September 2020 were valued at
that date by Allsop LLP. In line with the Company's established
valuation policy, two of the larger assets were subject to full
RICS valuations, including site inspections, with the remainder
subject to desktop updates of their previous carrying values. In
view of the market uncertainty and the operational restrictions
arising from the COVID-19 outbreak, the directors did not consider
it appropriate to carry out a fresh valuation of the property
portfolio at the half-year. The six properties contained in the
portfolio therefore continue to be recognised in the financial
statements at their holding value in the Company's accounts at 30
September 2020. One property is considered to be held for sale and
its holding value in the Company's accounts therefore takes account
of agreed pricing and sales costs. There were no sales during the
period.
The Directors are pleased to announce the completion of sale of
the Westcliff property held for sale as at 31 December 2020 and
2021, which was agreed under the previous board in 2019 and has
taken until now to finalise.
The Directors have concluded that they will be maintaining the
valuation of the property portfolio at previous levels. The Board
is also of the opinion that the carrying values, based on the "Red
Book" valuation, do not reflect the real value of the
properties.
The Company's objective is still to liquidate the current
portfolio of shopping assets which currently show a Gross Initial
Yield of more than 16%, but only if a sale can achieve a sensible
return in excess of the year end 2021 carrying value of
GBP2.45m.
The Directors obtained pricing and yields of similar
transactions made within the accounting period and compared them to
the Gross Initial Yield stated above. In all cases the transactions
that were measured came in at a lower value than that currently
being achieved. As stated, although the data is below the Yield
being achieved it was felt prudent to leave the valuations as they
stand.
The outbreak of the Coronavirus (COVID-19), declared by the
World Health Organization as a "Global Pandemic" on 11 March 2020,
has impacted global financial markets and global economy. Despite
the easing of restrictions, the future impact that COVID-19 might
have on the real estate market gives that less certainty should be
attached to the valuation than would normally be the case. A
reconciliation of the portfolio valuation at 31 December 2021 to
the total value for investment properties given in the Consolidated
Balance Sheet is as follows:
As at 31 December 2021 As at 31 December 2020
GBP000 GBP000
Portfolio valuation 2,775 2,775
Investment properties held for sale (330) (330)
Head leases treated as investment properties per IFRS 16 339 317
Total 2,784 2,762 11. Available for sale financial assets
The Group classifies the following financial assets at fair
value through profit or loss (FVPL):-
Year ended 31 December 2021 15 months ended 31 December 2020
GBP000 GBP000
Available for sale investments
At the beginning of the period - -
Additions 1,957 -
Unrealised gain/(losses) 23 -
Disposals (197) -
Total 1,783 -
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Year ended 31 December 2021 15 months ended 31 December 2020
GBP000 GBP000
Current assets
Available for sale financial assets* 1,783 -
Portfolio Holdings** 36 -
Total 1,819 -
*These assets are formed of equity instruments held on quoted
markets globally, they comprise both long and short positions as
per the disclosures in the Strategic Report.
**These holdings comprise foreign currency balances held for
short periods from the sale and purchase of financial assets
through the broker
AFS investments have been valued incorporating Level 1 inputs in
accordance with IFRS7. They are a combination of cash and
securities held with the listed broker.
Financial instruments require classification of fair value as
determined by reference to the source of inputs used to derive the
fair value. This classification uses the following three-level
hierarchy:
-- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- Level 2 - inputs other than quoted prices included within
level 1 that are observable for the asset orliability, either
directly (i.e., as prices) or indirectly (i.e., derived from
prices);
-- Level 3 - inputs for the asset or liability that are not
based on observable market data (unobservableinputs). 12. Trade and
Other Receivables
As At 31 December 2021 As At 31 December 2020
GBP000 GBP000
Trade receivables 145 147
Other receivables 9 8
Corporation tax - -
Prepayments 101 73
Total trade and other receivables 255 228 13. Cash and cash equivalents
Year ended 31 December 2021 15 months ended 31 December 2020
GBP000 GBP000
Cash in the Statement of Cash Flows 1,767 4,073 14. Trade and Other Payables
As At 31 December 2021 As At 31 December 2020
GBP000 GBP000
Trade payables 25 60
Other taxation and social security - 7
Other payables (note 1) 188 157
Accruals and deferred income 163 221
Head lease liabilities 23 21
Due to associated company - 100
Total trade and other payables 398 566 15. Lease liabilities
Minimum
Finance lease liabilities on head rents are payable as follows: Lease
Payment Interest Principal
GBP000 GBP000 GBP000
At 30 September 2019 3,074 (2,705) 369
Movement in value (340) 292 (48)
At 31 December 2020 2,734 (2,413) 321
Annual head lease payment increase 317 (292) 25
Movement in value (22) 23 0
At 31 December 2021 3,029 (2,682) 346
In the above table, interest represents the difference between
the carrying amount and the contractual liability/ cash flow. All
leases expire in more than five years. 16. Financial Instruments
and Risk Management
The Board of directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework.
As described in the Corporate Governance report, this
responsibility has been assigned to the executive directors with
support and feedback from the Audit Committee. The Audit Committee
oversees how management monitors compliance with the Group's risk
management policies and procedures and reviews the adequacy of the
risk management framework in relation to the risks faced by the
Group.
The Group has identified exposure to the following financial
risks from its use of financial instruments: capital management
risk, market risk, credit risk and liquidity risk.
Capital Management Risk
The Group's capital consists of cash and equity attributable to
the shareholders. The Board do not consider there is any material
capital management risk exposure.
Market Risk
Market risk is the risk that changes in market conditions, such
as interest rates, foreign exchange rates and equity prices, will
affect the Group's profit or loss and cash flows.
Equity risk is mitigated using a combination of long and short
positions to ensure that fluctuations in the market are hedged
against.
As at As at
31 Dec 21 31 Dec 20
GBP000 GBP000
Market Risk on Available for Sale Investments
Increase by 1% 18 -
Decrease by 1% (18) -
Increase by 5% 89 -
Decrease by 5% (89) -
Sensitivity Analysis
IFRS 7 requires an illustration of the impact on the Group's
financial performance of changes in interest rates. The following
sensitivity analysis has been prepared in accordance with the
Group's existing accounting policies and considers the impact on
the Income Statement and on equity of an increase of 100 basis
points (1%) in interest rates. As interest rates were below 1% in
the current and previous year, it has not been possible to consider
the impact of a decrease of 100 basis points on interest income and
expense as it would result in a negative rate of interest.
Therefore, the impact of a fall in interest rates has been
restricted to a floor of 0%. All other variables remain the same
and any consequential tax impact is excluded.
Actual results in the future may differ materially from these
assumptions and, as such, these tables should not be considered as
a projection of likely future gains and losses.
As at As at
31 Dec 21 31 Dec 20
GBP000 GBP000
Interest Rate Risk
Increase by 1% 29 40
Decrease by 0% - -
Increase by 5% 146 201
Decrease by 0% - -
Fair value measurements recognised in the statement of financial
position
Investment properties and Investment properties held for sale
are measured subsequent to initial recognition at fair value and
have been group as Level 3 (2019: level 3) based on the degree to
which fair value is observable.
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets foridentical assets and
liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included withinLevel 1 that are observable
for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e.derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for theasset or liability
that are not based on observable market data (unobservable
inputs).
Investment properties have been valued using the investment
method which involves applying a yield to rental income
streams.
Inputs include equivalent yield, tenancy information, and
leasing assumptions. Valuation reports are based on both
information provided by the Company e.g. tenancy information
including current rents, which are derived from the Company's
financial and property management systems and are subject to the
Company's overall control environment, and assumptions applied by
the valuers e.g. ERVs, and yields. These assumptions are based on
market observation and the valuers' professional judgement.
An increase/decrease in equivalent yields will decrease/increase
valuations, and an increase or decrease in rental values will
increase or decrease valuations. Other inputs include ERVs, and
likely void and rent-free periods. There are interrelationships
between these inputs as they are determined by market conditions.
The valuation movement in a period depends on the balance of those
inputs.
Below is a sensitivity analysis of the impact of a 1% increase
or decrease in equivalent yields on income and equity. Actual
results may differ materially from these assumptions and, as such,
these tables should not be considered as a projection of likely
future gains and losses
As at As at
31 Dec 21 31 Dec 20
GBP000 GBP000
Interest Rate Risk
Increase by 1% 28 28
Decrease by 1% (28) (28)
Below is a sensitivity analysis of the impact of a 1% increase
or decrease in foreign exchange rates on income and equity. Actual
results may differ materially from these assumptions and, as such,
these tables should not be considered as a projection of likely
future gains and losses.
As at As at
31 Dec 21 31 Dec 20
GBP000 GBP000
Foreign Exchange Risk
Increase by 1% 23 39
Decrease by 1% (46) (84)
Credit Risk
Credit risk is the risk of financial loss to the Group if a
tenant, bank or counterparty to a financial instrument fails to
meet its contractual obligations and arises principally from the
Group's receivables from tenants, cash and cash equivalents held by
the Group's bankers and derivative financial instruments entered
into with the Group's bankers.
Trade and Other Receivables
The Group's exposure to credit risk is influenced mainly by the
individual characteristics of each tenant. At 31 December 2021 the
Group had over 60 letting units in six properties. There is no
significant concentration of credit risk due to the large number of
small balances owed by a wide range of tenants who operate across
all retail sectors. There is no concentration of credit risk in any
one geographic area of the UK. The level of arrears is monitored
monthly by the Group on a tenant by tenant basis.
Cash, Cash Equivalents and Derivative Financial Instruments
The banking services used by the Group are split between a major
UK bank and a Swiss private banking corporation for deposit
purposes.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity risk is to ensure, as far as
possible, that it will always have adequate resources to meet its
liabilities when they fall due for both the operational needs of
the business and to meet planned future investments. This position
is formally reviewed on a quarterly basis or more frequently should
events require it.
The Group's financial liabilities are classified and are shown
with their fair value as follows: 31 December 2021
At Amortised Total Carrying At
Cost Amount Fair Value
GBP0 GBP0 GBP0
Finance lease liabilities 346 346 346
Trade payables 25 25 25
Other payables 188 188 188
Due to associated company 0 0 0
Accruals 163 163 163
722 722 722
31 December 2020
At Amortised Total Carrying At
Cost Amount Fair Value
GBP0 GBP0 GBP0
Finance lease liabilities 321 321 321
Trade payables 60 60 60
Other payables 164 164 164
Due to associated company 100 100 100
Accruals 221 221 221
866 866 866
For all classes of financial liabilities, the carrying amount is
a reasonable approximation of fair value.
The maturity profiles of the Group's financial liabilities are
as follows:
31 December 2021
Carrying Contractual Within One One to Two Two to Three Three to Four Four to Five Over Five
Value Cash Flows Year Years Years Years Years Years
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Finance lease
liabilities
346 3,073 23 23 23 23 23 2,960
Trade payables 25 25 25
Other payables 188 188 188
Due to associated 0 0 0
company
Accruals 163 163 163
722 3,448 398 23 23 23 23 2,960 31 December 2020
Carrying Contractual Within One One to Two Two to Three Three to Four Four to Five Over Five
Value Cash Flows Year Years Years Years Years Years
GBP0 GBP0 GBP0 GBP0 GBP0 GBP0 GBP0 GBP0
Finance lease
liabilities
321 3,055 19 19 19 19 19 2,960
Trade payables 60 60 60
Other payables 164 164 164
Due to associated 100 100 100
company
Accruals 221 221 221
866 3,600 564 19 19 19 19 2,960
Contractual cash flows include the undiscounted committed
interest cash flows and, where the amount payable is not fixed, the
amount disclosed is determined by reference to the conditions
existing at the year end 17. Operating Lease as Lessor
Year ended 31 December 2021 15 months ended 31 December 2020
GBP000 GBP000
Within one year 309 320
After one year but not more than five years 762 870
More than five years 369 478
1,440 1,668 18. Capital Commitments
No capital expenditure was planned at the balance sheet date.
19. Related party balances and transactions
Transactions with Key Management Personnel
The only transactions with key management personnel relate to
remuneration which is set out in the Remuneration Report.
The key management personnel of the Group for the purposes of
related party disclosures under IAS 24 comprise all executive and
non-executive directors.
As at the year end the Group owed GBPNil (2019: GBP99,700) to
Thalassa Holdings Limited ("Thalassa"), a company under common
directorship. During the year services amounting to GBP123,619
(2020: GBP99,700) were charges from Thalassa.
The bulk of this sum related to administration fees settled by
Thalassa but payable by the Group. The remained related to
accounting and registered office services supplied to the Group by
Thalassa at cost.
The company was invoiced and paid GBP215,000 (2020:Nil), to
Fleur De Lys Ltd, a company owned and controlled by the Chairman
Duncan Soukup, for consultancy and administration services. 20.
Share capital
As at As at
31 Dec 21 31 Dec 20
GBP GBP
Allotted, issued and fully paid:
22,697,000 ordinary shares of GBP0.01 each 226,970 226,970
9,164,017 treasury shares of GBP0.01 each 91,640 91,640
Total Share Capital 318,610 318,610
During the year to 30 September 2019, the Company underwent a
Court approved restructure of capital and buy back of shares. Under
this action the issued 20p shares were converted to 1p; capital
reserves were transferred to distributable reserves; 59,808,456
shares were repurchased, and a new Capital Redemption Reserve of
GBP0.598m was established.
Investment in Own Shares
At the year-end, 9,164,017 shares were held in treasury
(December 2020: 9,164,017). 21. Group Entities
All the below companies are incorporated in the United Kingdom:
-
Effective
Share holding
Name of subsidiary Place of incorporation 2021 2020
NOS 4 Limited** United Kingdom 100% 100%
NOS 5 Limited** United Kingdom 100% 100%
NOS 6 Limited** United Kingdom 100% 100%
NOS 7 Limited ** (Dissolved on 21 Sep 2021) United Kingdom 100% 100%
Gilfin Property Holding Limited*** United Kingdom 100% 100%
NOS Holdings Limited** United Kingdom 100% 100%
** Registered office: Eastleigh Court, Bishopstrow, Warminter, Wiltshire BA12 9HW
***In liquidation - Registered office: No 2 Lochrin Square, 96 Fountainbridge, Edinburgh,EH3 9QA 22. Contingent Liabilities
There are currently two potential repair obligations at two
separate Company properties currently under investigation,
including the extent to which the relevant group company may be
required to underwrite such costs as may arise and the extent to
which the tenants or former tenants of the properties are liable to
contribute to such costs under the terms of their tenancy
agreements. 23. Subsequent events
The property held for sale at the year end completed the
transaction of sale in February 2022 at the value stated in the
financial statements. 24. Controlling Party and copies of the
Financial Statements
At 30 September 2019 the ultimate group in which the results
were consolidated was Thalassa Holdings Limited, which was also the
controlling party of the Company.
In October 2020 The Local Shopping REIT plc resolved to change
its name to Alina Holdings PLC and shortly thereafter Thalassa
Holdings Limited disposed of its controlling interest in Alina
Holdings PLC.
Accordingly, as at 31 December 2021 the Company had no ultimate
controlling party.
The consolidated financial statements of Alina Holdings PLC are
available to the public and may be obtained from the Company's
website: www.alina-holdings.com.
Company Balance Sheet as at 31 December 2021 with comparatives
as at 31 December 2020
31 December 2021 31 December 2020
Note GBP000 GBP000
Assets
Non-current assets
Investments C2 3,105 3,105
Total non-current assets 3,105 3,105
Current assets
Trade and other receivables C3 5 262
Available for sale financial assets C4 1,819 -
Cash and cash equivalents 1,313 3,575
Total current assets 3,137 3,837
Liabilities
Current liabilities
Trade and other payables C5 112 462
Total current liabilities 112 462
Net current assets 3,025 3,375
Net assets 6,130 6,480
Shareholders' Equity
Share capital C6 319 319
Capital redemption reserve C6 598 598
Retained earnings C6 5,213 5,563
Total shareholders' equity 6,130 6,480
The Company has taken advantage of Section 408 of the Companies
Act 2006 and has not included its own profit and loss account in
these financial statements. The Company's loss for the period was
GBP0.35m (15 months to 31 December 2020: GBP0.51m).
These financial statements were approved by the Board of
directors on 20 May 2022 and were signed on its behalf by:
C D Soukup
Director
The registered number of the Company is 05304743.
Notes to the Financial Statements C1. Accounting Policies
These financial statements were prepared in accordance with
Financial Reporting Standard 102 The Financial Reporting Standard
applicable in the UK ("FRS 102") as issued in March 2018. The
presentation currency of these financial statements is sterling.
All amounts in the financial statements have been rounded to the
nearest GBP1,000.
The consolidated financial statements of Alina Holdings PLC are
prepared in accordance with UK Adopted Accounting Standards (IFRS)
and are available to the public. In these financial statements, the
company is considered to be a qualifying entity (for the purposes
of this FRS) and has applied the exemptions available under FRS 102
in respect of the following disclosures:
-- Reconciliation of the number of shares outstanding from the
beginning to end of the period;
-- Cash Flow Statement and related notes; and
-- Key Management Personnel compensation.
As the consolidated financial statements include the equivalent
disclosures, the Company has also taken the exemptions under FRS
102 available in respect of the following disclosures:
-- Certain disclosures required by FRS 102.26 Share Based
Payments; and,
-- The disclosures required by FRS 102.11 Basic Financial
Instruments and FRS 102.12 Other FinancialInstrument Issues in
respect of financial instruments not falling within the fair value
accounting rules ofParagraph 36(4) of Schedule 1.
The Company proposes to continue to adopt the reduced disclosure
framework of FRS 102 in its next financial statements.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
financial statements.
There were no judgements made by the directors, in the
application of these accounting policies that have significant
effect on the financial statements, with a significant risk of
material adjustment in the next year. Measurement convention
The financial statements are prepared on the historical cost
basis. Classification of financial instruments issued by the
Company
In accordance with FRS 102.22, financial instruments issued by
the Company are treated as equity only to the extent that they meet
the following two conditions: a. they include no contractual
obligations upon the company to deliver cash or other financial
assets or to exchange financial assets or financial liabilities
with another party under conditions that are
potentiallyunfavourable to the company; and b. where the instrument
will or may be settled in the company's own equity instruments, it
is either anon-derivative that includes no obligation to deliver a
variable number of the company's own equity instruments oris a
derivative that will be settled by the company's exchanging a fixed
amount of cash or other financial assetsfor a fixed number of its
own equity instruments.
To the extent that this definition is not met, the proceeds of
issue are classified as a financial liability. Where the instrument
so classified takes the legal form of the company's own shares, the
amounts presented in these financial statements for called up share
capital and share premium account exclude amounts in relation to
those shares. Basic financial instruments
Trade and other creditors are recognised initially at
transaction price plus attributable transaction costs. Subsequent
to initial recognition, they are measured at amortised cost, less
any impairment losses in the case of trade debtors. If the
arrangement constitutes a financing transaction, for example if
payment is deferred beyond normal business terms, then it is
measured at the present value of future payments discounted at a
market rate of instrument for a similar debt instrument.
Investments in subsidiaries
These are separate financial statements of the company.
Investments in subsidiaries are carried at cost less impairment.
Judgements and Estimates
In testing for impairment, management assesses the recoverable
amount of investments and inter-company debtors by reference to the
subsidiaries' net assets and their ability to recover these assets.
Provisions
A provision is recognised in the balance sheet when the Company
has a present legal or constructive obligation as a result of a
past event, that can be reliably measured and it is probable that
an outflow of economic benefits will be required to settle the
obligation. Provisions are recognised at the best estimate of the
amount required to settle the obligation at the reporting date.
Where the Company enters into financial guarantee contracts to
guarantee the indebtedness of other companies within its group, the
company treats the guarantee contract as a contingent liability
until such time as it becomes probable that the company will be
required to make a payment under the guarantee. Interest receivable
and Interest payable
Interest payable and similar charges include interest payable,
finance charges on shares classified as liabilities and finance
leases recognised in profit or loss using the effective interest
method, unwinding of the discount on provisions, and net foreign
exchange losses that are recognised in the profit and loss account
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the profit and loss account
except to the extent that it relates to items recognised directly
in equity or other comprehensive income, in which case it is
recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Deferred tax is provided on timing differences which arise from
the inclusion of income and expenses in tax assessments in periods
different from those in which they are recognised in the financial
statements. The following timing differences are not provided for:
differences between accumulated depreciation and tax allowances for
the cost of a fixed asset if and when all conditions for retaining
the tax allowances have been met; and differences relating to
investments in subsidiaries to the extent that it is not probable
that they will reverse in the foreseeable future and the reporting
entity is able to control the reversal of the timing difference.
Deferred tax is not recognised on permanent differences arising
because certain types of income or expense are non-taxable or are
disallowable for tax or because certain tax charges or allowances
are greater or smaller than the corresponding income or
expense.
Deferred tax is measured at the tax rate that is expected to
apply to the reversal of the related difference, using tax rates
enacted or substantively enacted at the balance sheet date.
Deferred tax balances are not discounted.
Unrelieved tax losses and other deferred tax assets are
recognised only to the extent that is it probable that they will be
recovered against the reversal of deferred tax liabilities or other
future taxable profits.
C2. Fixed Assets Investments
Shares in Group
Undertakings Total
GBP000 GBP000
Cost
At 31 December 2020 108,605 108,605
Disposals - -
At 31 December 2021 108,605 108,605
Provisions
At 31 December 2020 105,500 105,500
Impairment charge period - -
Disposals - -
At 31 December 2021 105,500 105,500
Net book value
At 31 December 2021 3,105 3,105
At 31 December 2020 3,105 3,105
An impairment review of the carrying value of the Company's
investments in its subsidiary undertakings has been performed. In
carrying out this review, the directors had due regard to the
nature of the property investments held, which is commensurate with
the funding arrangements in place. On the basis of this review
which included a review of the underlying assets of the individual
subsidiaries the directors have not written down the value of
investments in subsidiary undertakings. This was concluded due to
the underlying assets being undervalued as per the valuation
exercise undertaken within the Group.
The companies in which the Company's interests at the period end
were more than 20% are as follows:
Effective
Share holding
Name of subsidiary Place of 2021 2020
incorporation
NOS 4 Limited** United Kingdom 100% 100%
NOS 5 Limited** United Kingdom 100% 100%
NOS 6 Limited** United Kingdom 100% 100%
NOS 7 Limited ** (Dissolved on 21 Sep 2021) United Kingdom 100% 100%
Gilfin Property Holding Limited*** United Kingdom 100% 100%
NOS Holdings Limited** United Kingdom 100% 100%
** Registered office: Eastleigh Court, Bishopstrow, Warminter, Wiltshire BA12 9HW
***In liquidation - Registered office: No 2 Lochrin Square, 96 Fountainbridge, Edinburgh,EH3 9QA
C3. Trade and other receivables
31 December 2021 31 December 2020
GBP000 GBP000
Amounts owed by Group undertakings* - 260
Other debtors 3 -
Prepayments 2 2
5 262
Amounts owed by group undertakings are interest free and
repayable on demand
C4. Available for sale financial assets
Year ended 31 December 2021 15 months ended 31 December 2020
GBP000 GBP000
Current assets
Available for sale financial assets* 1,783 -
Investments in associated entities** - -
Portfolio Holdings 36 -
At 31 December 1,819 -
*These assets are formed of equity instruments held on quoted
markets globally, they comprise both long and short positions as
per the disclosures in the Strategic Report.
**These holdings comprise foreign currency balances held for
short periods from the sale and purchase of financial assets
through the broker
AFS investments have been valued incorporating Level 1 inputs in
accordance with IFRS7. They are a combination of cash and
securities held with the listed broker.
Financial instruments require classification of fair value as
determined by reference to the source of inputs used to derive the
fair value. This classification uses the following three-level
hierarchy:
-- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- Level 2 - inputs other than quoted prices included within
level 1 that are observable for the asset orliability, either
directly (i.e., as prices) or indirectly (i.e., derived from
prices);
-- Level 3 - inputs for the asset or liability that are not
based on observable market data (unobservableinputs).
C5. Trade and other payables
31 December 2021 31 December 2020
GBP000 GBP000
Trade creditors 12 36
Amounts owed to Group undertakings 14 225
Amounts owed to related party - 100
Other creditors 4 1
Accruals 82 100
112 462
Amounts owed to group undertakings are interest free and
repayable on demand C6. Reconciliation of Shareholders' Funds
Share Capital
31 December 2021 31 December
2020
Number Amount Number Amount
000 GBP000 000 GBP000
Allotted, called up and fully paid 31,861 319 31,861 319
31,861 319 31,861 319
Investment in Own Shares
At the year-end, 9,164,017 shares were held in treasury (2020:
9,164,017), and at the date of this report 9,164,017 were held in
treasury.
Statement of Changes in Equity for the 12 months ended 31
December 2021
Capital
Share Redemption Retained
Capital Reserves Reserves Earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000
Balance as at 30 September 2019 319 - 598 6,073 6,990
Total comprehensive income for the 15 month period to December 2020 - - (510) (510)
Balance as at 31 December 2020 319 - 598 5,563 6,480
Total comprehensive income for the year - - - (350) (350)
Balance as at 31 December 2021 319 - 598 5,213 6,130 C7. Controlling Party Please refer to note 24 in the Group Financial Statements Glossary
Earnings Per Share ("EPS")
EPS is calculated as profit attributable to shareholders divided
by the weighted average number of shares in issue in the year.
Equivalent Yield
Equivalent yield is a weighted average of the initial yield and
reversionary yield and represents the return a property will
produce based upon the timing of the income received. In accordance
with usual practice, the equivalent yields (as determined by the
Group's external valuers) assume rent received annually in arrears
and on gross values including prospective purchasers' costs
(including stamp duty, and agents' and legal fees). Head Lease
A head lease is a lease under which the Group holds an
investment property. Initial Yield
Initial yield is the annualised net rent generated by a property
expressed as a percentage of the property valuation. In accordance
with usual practice the property value is grossed up to include
prospective purchasers' costs. Like-for-like Market Rent
This is the Market Rent for the Group's investment properties at
the end of the financial year compared with the Market Rent for the
same properties at the end of the prior year, i.e. excluding the
Market Rent of those properties disposed of during the interim
period. Like-for-like rental income
This is the rental income for the Group's investment properties
at the end of the financial year compared with the rental income
for the same properties at the end of the prior year, i.e.
excluding rental income of those properties disposed of during the
interim period. Market Value
Market value is the estimated amount for which a property should
exchange on the date of valuation between a willing buyer and
willing seller in an arm's length transaction after proper
marketing wherein the parties had each acted knowledgeably,
prudently and
without compulsion. Market Rent
Market rent is the estimated amount for which a property should
lease on the date of valuation between a willing lessor and a
willing lessee on appropriate lease terms, in an arm's length
transaction, after proper marketing wherein the parties had each
acted knowledgeably, prudently and without compulsion. Net Asset
Value ("NAV") per share
NAV per share is calculated as shareholders' funds divided by
the number of shares in issue at the year-end excluding treasury
shares. Real Estate Investment Trust ("REIT")
A REIT is a listed property company which qualifies for and has
elected to join the UK REIT tax regime, which exempts qualifying UK
property rental income and gains on investment property disposals
from corporation tax. The Group converted to REIT status on 11 May
2007 and left the REIT tax regime on 1 October 2018 Reversionary
Yield
Reversionary yield is the annualised net rent that would be
generated by a property if it were fully let at market rent
expressed as a percentage of the property valuation. In accordance
with usual practice the property value is grossed up to include
prospective purchasers' costs
END
Investor Enquiries:
Alina Holdings Ltd
Duncan Soukup, Chairman +33 (0)6 78 63 26 89
www.alina-holdings.com
-----------------------------------------------------------------------------------------------------------------------
ISIN: GB00B1VS7G47
Category Code: ACS
TIDM: ALNA
LEI Code: 213800SOAIB9JVCV4D57
OAM Categories: 1.1. Annual financial and audit reports
Sequence No.: 165062
EQS News ID: 1364525
End of Announcement EQS News Service
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