PRSR.L
The PRS REIT
plc
("the Company" or "the PRS
REIT")
Interim
Results
for the six months ended 31
December 2023
Continued very strong asset
performance,
Portfolio now at over 5,300 completed
homes
Dividend fully covered on an annualised
run-rate basis from March 2024
Highlights
Financial
|
Six months
ended
31 December
2023
|
Six months
ended
31 December
2022
|
Change
|
|
|
|
|
Revenue
|
£28.1m
|
£24.2m
|
+16%
|
Net rental income
|
£22.9m
|
£19.6m
|
+17%
|
Adjusted earnings*
|
£18.7m
|
£16.9m
|
+11%
|
Operating profit
|
£39.2m
|
£22.7m
|
+73%
|
Profit before tax
|
£30.3m
|
£14.7m
|
+106%
|
Basic earnings per share
|
5.5p
|
2.7p
|
+104%
|
EPRA earnings per share
|
1.8p
|
1.6p
|
+13%
|
* Operating profit excluding
changes in the fair value of investment
properties
·
Profitability in line with management expectations; the
year-on-year change mainly reflected the difference in gains from
fair value adjustments on investment property between the two
periods, with £20.5m recognised in the period under review
("H1 2024") compared to
£5.8m in the comparative period ("H1 2023"). These movements are non-cash
items.
· Net asset value
per share increased to 123.6p (30 June 2023: 120.1p). This
reflected strong ERV growth, which offset a marginal softening in
the average net investment yield.
|
At 31 Dec
2023
|
At 30 Jun
2023
|
Change
|
|
|
|
|
Net assets
|
£679m
|
£660m
|
+3%
|
IFRS NAV and EPRA NTA per
share
|
123.6p
|
120.1p
|
+3%
|
Operational
Portfolio
delivery
|
At
31 Dec
2023
|
At
30 Jun
2023
|
At
31 Dec
2022
|
No. of completed homes
|
5,264
|
5,080
|
4,913
|
ERV per annum
|
£60.3m
|
£55.0m
|
£50.7m
|
No. of contracted homes
|
312
|
444
|
613
|
ERV per annum
|
£3.1m
|
£3.8m
|
£6.6m
|
Completed and contracted
sites
|
72
|
71
|
71
|
ERV per annum
|
£63.4m
|
£58.8m
|
£57.3m
|
No. of completed and
contracted homes
|
5,576
|
5,524
|
5,526
|
Portfolio
performance
|
At
31 Dec
2023
|
At
31 Dec
2022
|
Gross to net
|
18.5%
|
18.8%
|
Rent collection (rent
collected in H1 relative to rent invoiced in H1)
|
99%
|
98%
|
Like-for-like rental growth
(based on average rent per unit for stabilised sites)
|
11.1%
|
5.7%
|
Average yield on assets in
the portfolio
|
4.5%
|
4.3%
|
· Housing delivery
is in its final stages for the current portfolio, with 184 new
homes added to the Company's portfolio in H1 2024 (H1 2023: 127).
This included the acquisition of a fully completed and let
development site of 52 homes. A further 312 homes were under way at
31 December 2023 (31 December 2022: 613)
o portfolio total at 31 December 2023:
5,264 completed homes with an ERV of £60.3m p.a.
· Completed assets
performed strongly over the period:
o occupancy at
97% (or 98% including homes reserved for applicants who had passed
referencing and paid deposits) (H1 2022: 97% and 98%
respectively)
o rent collection
at 99% (H1 2023: 98%)
o like-for-like
rental growth for the year to 31 December 2023 was 11.1% (31
December 2022: 5.7%) - with renewals up by c.9% and re-lets to new
tenants up by c.16%
o total arrears
net of bad debt provision remained low at c.£1.0m at period end (31
December 2022: £0.7m) and reduced to £0.6m at 31 January
2024
o net rental
income increased by 17% to £22.9m (H1 2023: £19.6m)
o affordability
remained strong: average rent as a proportion of gross household
income was c.23% - significantly better than Homes England's
guidance limit of 35%
· Net asset value
per share increased to 123.6p (30 June 2023: 120.1p). This
reflected strong ERV growth, which offset a marginal softening in
the average net investment yield to 4.5% (30 June 2023:
4.47%)
o the Single
Family Rental sub-sector continues to deliver the most robust
performance in investment yields across the property sector,
reflecting the resilience of this category1
· Total housing
delivery currently anticipated at c.5,600 homes, with an ERV of
c.£64m p. a.*
Dividend
· Dividends amounting to 2.0p per share were
declared in H1 2024 (H1 2023: 2.0p). Total dividend target for FY
2024 remains 4.0p per share*
o the 4.0p
dividend target is fully covered on an annualised run-rate basis
from March 2024
Outlook
· Between 1 January
and 8 March 2024, 42 new homes were added to the portfolio, taking
it to 5,306 completed homes with an ERV of £61.7m p.a. A further
270 homes with an ERV of £2.5m were under construction at 8 March
2024
· Rental demand for
high-quality family homes remains very strong nationally and is
expected to grow against a background of structural under supply,
higher interest rates and continued cost-of-living
pressures
Steve Smith, Non-Executive Chairman of The PRS REIT plc,
said:
"The PRS
REIT's portfolio of high-quality, professionally managed,
build-to-rent family homes has delivered another strong
performance. Despite the continued pressure in the wider economy, I
am pleased to report that occupancy levels, rent collection,
affordability and demand have all remained at very high levels,
whilst arrears continued to stay low. These factors have helped to
drive the increase in cash generation and predictable income flows
achieved in the period as our portfolio moves closer to completion.
I am also pleased to report that the 4.0p target dividend for the
year is fully covered on an annualised run-rate basis from March
2024.
"On 8 March
2024, the portfolio reached 5,306 homes and we expect to achieve
c.5,600 completed units by early summer 2025*, if current progress
is maintained. Once delivery is fully complete, we anticipate that
the portfolio will have an estimated rental value of £64 million
per year.
"We operate in
a very robust segment of the property rental market - single family
rental - and macro factors remain very supportive of the business.
This reflects the structural lack of supply of homes in the UK, and
strong demand, which has been further fuelled by the adverse
effects of higher interest rates for prospective home buyers.
Industry forecasts anticipate further rental growth in 2024, which
concurs with our view. We have built a portfolio of high-quality
homes that are affordable for ordinary families across the country
and remain very confident of ongoing prospects for the PRS
REIT."
*These are targets only and not a forecast. There can be no
assurance that these targets will be met and they should not be
taken as an indication of the Company's expected future
results
Notes
1 CBRE UK Investment Yields Report (March 2023)
For
further information, please
contact:
The PRS REIT
plc
Steve Smith, Non-executive Chairman
|
Tel: 020
3178 6378
(c/o KTZ Communications)
|
Sigma PRS Management
Ltd
Graham Barnet, Mike McGill
|
Tel: 0333 999 9926
|
Singer Capital
Markets
James Maxwell, Asha Chotai (Investment Banking)
Alan Geeves, James Waterlow, Sam
Greatrex (Sales)
|
Tel: 020 7496 3000
|
Jefferies International Limited
Gaudi Le Roux, Tom Yeadon
Harry Randall, Ollie Nott
|
Tel: 020 7029 8000
|
G10
Capital Limited (part of IQ-EQ)
Maria Baldwin
|
Tel: 0207 397 5450
|
KTZ
Communications
Katie Tzouliadis, Robert
Morton
|
Tel: 020 3178 6378
|
NOTES TO EDITORS
About The PRS REIT
plc
www.theprsreit.com
The PRS REIT plc is a closed-ended
real estate investment trust established to invest in the Private
Rented Sector ("PRS") and to provide shareholders with an
attractive level of income together with the potential for capital
and income growth. The Company is investing over £1bn in a
portfolio of high-quality homes for private rental across the
regions, having raised a total of £0.56bn (gross) through its
Initial Public Offering, on 31 May 2017 and subsequent fundraisings
in February 2018 and September 2021. The UK Government's Homes
England has supported the Company with direct investments. On 2
March 2021, the Company transferred its entire issued share capital
to the premium listing segment of the Official List of the FCA and
to the London Stock Exchange's premium segment of the Main Market.
With over 5,200 new rental homes, the Company believes its
portfolio is the largest build-to-rent single-family rental
portfolio in the UK.
LEI:
21380037Q91HU97WZX58
About Sigma Capital Group Limited
(formerly Sigma Capital Group plc)
www.sigmacapital.co.uk
Sigma Capital Group Limited
("Sigma") is a PRS, residential development, and urban regeneration
specialist, with offices in Edinburgh, Manchester and London.
Sigma's principal focus is on the delivery of large-scale housing
schemes for the private rented sector. The Company has a
well-established track record in assisting with property-related
regeneration projects in the public sector, acting as a bridge
between the public and private sectors.
Sigma has created an excellent
property procurement and management platform, which sources sites
and brings together construction resource to develop them, enabling
Sigma to deliver an integrated solution to partners. As well as
sourcing sites and managing all stages of the planning and
development process, Sigma manages the rental of completed homes
through its award-winning rental brand 'Simple Life'. The Company's
subsidiary, Sigma PRS Management Ltd, is Investment Adviser to The
PRS REIT plc.
About Sigma PRS Management
Ltd
Sigma PRS Management Ltd is a
wholly-owned subsidiary of Sigma Capital Group Limited and is
Investment Adviser to The PRS REIT plc. It sources investments and
operationally manages the assets of The PRS REIT plc and advises
the Alternative Investment Fund Manager ("AIFM") and The PRS REIT
plc on a day-to-day basis in accordance with The PRS REIT plc's
Investment Policy. The AIFM is G10 Capital Limited. Sigma PRS
Management Ltd is an appointed representative of G10 Capital
Limited, which is authorised and regulated by the Financial Conduct
Authority (FRN:648953).
Chairman's Statement
Overview
I am pleased to present The PRS REIT plc's (the
"Company" or "PRS REIT") financial results for the
six months ended 31 December 2023.
The PRS REIT's current housing delivery
programme is in its final stages, with more than 95% of the
programme fulfilled. At 8 March 2024, the Company's portfolio stood
at 5,306 completed new homes, with a further 270 homes under way.
The portfolio continues to perform strongly and I am pleased to
report that the annual dividend target of 4.0p for the current
financial year is fully covered on an annualised run-rate basis
from March 2024.
Largest portfolio of
single-family rental homes in the UK
The Company's portfolio of build-to-rent
("BTR") family homes is the
largest of its kind in the UK. It is geographically diverse, with
72 developments (31 December 2022: 71 sites) across the major
regions of England - in the North-West, North-East, Yorkshire, the
Midlands, East of England and South-East (excluding London) - and
single developments in Scotland and Wales.
The portfolio grew by an additional 184 homes in
the first six months of the financial year, which included the
acquisition of a completed development site of 52 new homes. This
took the total number of completed homes in the portfolio to 5,264
at 31 December 2023 (31 December 2022: 4,913 completed
homes).
The estimated rental value ("ERV") of the 5,264 completed homes was
£60.3 million per annum (31 December 2022: 4,913 homes and ERV of
£50.7 million). This reflects c.7% growth in the number of units
and c.12% growth in ERV over that time.
At 31 December 2023, a further 312 homes with an
ERV of £3.1 million per annum were under way, at varying stages of
the construction process.
The value of net assets at 31 December 2023
stood at £679 million, up by 6% year-on-year and 3% higher than at
30 June 2023 (31 December 2022: £643 million and 30 June 2023: £660
million). The net asset value ("NAV") per share is 123.6p.
We estimate that, when the current delivery
programme is complete, the portfolio will comprise some 5,600 homes
with an ERV of approximately £64 million per annum once fully
let.
Continued strong asset
performance
Occupancy and
rent collection
Occupancy and rent collection remained very
strong. Physical occupancy at 31 December 2023 stood at 97%,
with 5,087 of the 5,264 completed homes occupied (31 December 2022:
97%). A further 47 homes were reserved for applicants who had
passed referencing and paid rental deposits, giving a total
occupancy rate of 98% at the period end. Rent collection (measured
as rent collected relative to rent invoiced in the period) was 99%
(H1 2023 2022: 98%) with no discernible difference attributable to
prevailing economic conditions.
Affordability
and Arrears
Affordability, which is calculated as average
rent as a proportion of gross household income, continues to be
very healthy, with the ratio at approximately 23%. This is
significantly better than Homes England's 35% upper guidance limit
for what it views as affordable rent.
Total arrears net of bad debt provision remained
low at 31 December 2023 at £1.0 million on 5,264 completed units
(H1 2023: £0.7 million on 4,913 completed units) and reduced to
£0.6m at 31 January 2024 on 5,275 completed units.
Rental income
growth
The portfolio's growth and the strong
performance of its assets is reflected in the 17% increase in net
rental income to £22.9 million (H1 2023: £19.6 million).
Like-for-like rental growth on stabilised sites increased by 11.1%
over the twelve months to 31 December 2023 (12 months to 31
December 2022: 5.7%). Rental growth on lets to new tenants averaged
approximately 16%, and on renewals with existing tenants, rental
growth averaged approximately 9%.
The portfolio's excellent asset performance
reflected continued strong demand for high-quality family rental
homes, which remain undersupplied. Rightmove's Rental Trends
Tracker report for the last quarter of 20232 highlighted
a new record high in average advertised rent (outside of London).
The new peak of £1,280 per calendar month meant that the average
advertised rent (outside of London) was 9.2% higher than the prior
year. The report, which was published in January 2024 and is the
largest quarterly dataset of UK rental activity, also predicted
that average rents will continue to rise, although it also stated
that there are signs of more tenants hitting an affordability
ceiling. The average number of enquiries that agents were receiving
for every available rental property at the start of 2024 was 11.
This compares to an average of four in 2019, showing a continuing
imbalance between supply and demand.
The Investment Adviser's report provides further
commentary on housing delivery, asset performance and our ESG
activity over the year.
Financial
results
Revenue, which is derived entirely from rental
income, increased by 16% to £28.1 million against the same period
last year (H1 2023: £24.2 million). This reflected growth in the
number of completed and let homes as well as increased rental
levels. After non-recoverable property costs, the net rental income
for the period was £22.9 million, a 17% rise on the first half of
2023 (H1 2023: £19.6 million). Other income of £0.1 million (H1
2023: £1.3m) related to compensation payments arising from delayed
housing delivery across development sites.
Profit from operations increased by 73% to £39.2
million (H1 2023: £22.7 million), with the increase principally
reflecting the significant difference in gains from fair value
adjustment on investment property between the two periods, as well
as the maturity of the delivery programme. In H1 2024, there were
gains of £20.5 million from fair value adjustments on investment
property, which compared to gains of £5.8 million in H1 2023. These
non-cash items were mainly driven by the increased ERV given a
slight softening in average net investment yield. Profit from
operations is also stated after total expenses, which amounted to
£4.4 million (H1 2023: £4.1 million).
Profit before tax more than doubled to £30.3
million (H1 2023: £14.7 million), and similarly, basic earnings per
share more than doubled to 5.5p (H1 2023: 2.7p). Of this, 1.8p
represented recurring earnings per share in line with the European
Public Real Estate Association ("EPRA") definition and with dividends of
2.0p per share paid in the first half (H1 2023: 2.0p), on this
basis, actual dividend cover was 90%.
Net assets increased over the year by 6% to £679
million as at 31 December 2023 (31 December 2022: £643 million and
30 June 2023: £660 million). This equates to a NAV of 123.6p per
share on both an International Financial Reporting Standards
("IFRS") basis and on the
EPRA Net Tangible Asset ("NTA") basis (30 June 2023: IFRS and
EPRA NTA both 120.1p).
NAV movement:
|
Six months ended
31 December 2023
|
Six months ended
31 December 2022
|
Year
ended
30 June 2023
|
Opening NAV
|
120.1p
|
116.4p
|
116.4p
|
Valuation and
development
|
3.7p
|
1.1p
|
4.6p
|
Earnings
|
1.8p
|
1.6p
|
3.1p
|
Dividends paid
|
(2.0)p
|
(2.0)p
|
(4.0)p
|
Closing NAV
|
123.6p
|
117.1p
|
120.1p
|
The movement in the NAV position, from 120.1p to
123.6p between 30 June 2023 and 31 December 2023, is after total
dividend payments of 2.0p per share (£11.0 million).
Operating cash inflows continued to exceed
operating outflows and covered the Company's cost base.
|
Six months ended
31 December 2023 (unaudited)
|
Six months ended
31 December 2022 (unaudited)
|
Year
ended
30 June 2023 (audited)
|
IFRS EPS (pence per
share)
|
5.5p
|
2.7p
|
7.7p
|
EPRA EPS (pence per
share)
|
1.8p
|
1.6p
|
3.1p
|
|
As at
31 December 2023 (unaudited)
|
As at
31 December 2022 (unaudited)
|
As at
30 June 2023 (audited)
|
IFRS NAV (pence per
share)
|
123.6p
|
117.1p
|
120.1p
|
EPRA NTA (pence per
share)
|
123.6p
|
117.1p
|
120.1p
|
Dividends
Two dividend payments, each of 1.0p per ordinary
share, were made in the period. They related to the last quarter of
the financial year ended 30 June 2023 and the first quarter of the
current financial year and were paid on 1 September and 1 December
2023 respectively.
A dividend of 1.0p per ordinary share relating
to the second quarter of the current financial year was paid on 8
March 2024 to shareholders on the register at 16 February 2024.
This brought the total of dividends paid to date since the
Company's inception in May 2017 to 28.0p per share.
The Board presently expects to announce the
payment of an interim dividend for the third quarter of the current
financial year in April.
The Board continues to target a total dividend
of 4.0p per ordinary share for the current financial year. As at 31
December 2023, the 4.0p per share dividend was almost fully covered
(97%) by EPRA earnings on an run-rate basis. Dividend cover has
continued to increase as home completions and lettings have
advanced, and as we exit March 2024, earnings have reached a level
on an annualised run-rate basis that fully covers the target
dividend.
Debt
Facilities
As at 31 December 2023, the Company had £460
million of committed debt facilities available for utilisation.
This comprised £427 million of investment debt facilities and £33
million of development debt facilities. Our lending partners
are:
· Scottish Widows
(£250 million);
· Legal and General
Investment Management (£102 million);
· The Royal Bank of
Scotland plc (£75 million); and
· Barclays Bank PLC
(£33 million).
The Barclays Bank PLC debt facility is available
to be drawn as development debt, which enables a number of sites to
be developed simultaneously.
The debt facilities are subject to the maximum
gearing ratio of 45% of gross asset value, in line with the
Company's Investment Policy. Approximately £415 million of these
facilities have been drawn to date, with the remainder presently
forecast to be utilised over the next 12 months as we finish the
current phase of construction, completion and letting activity. The
fixed-interest, long-term investment debt facilities of £352
million have an average term of 16 years and an average weighted
cost of 3.8%. This compares favourably with the average net
investment yield of 4.53%. The short-term RBS investment debt
facility expires in July 2025, and the short-term Barclays
development debt facility is due to expire in August
2025.
Environmental. Social and
Governance ("ESG")
Practices
The PRS REIT is a member of the UK Association
of Investment Companies and applies its Code of Corporate
Governance to ensure best practice in governance.
The Board is responsible for determining the
Company's investment objectives and policy, and has overall
responsibility for the Company's activities, including the review
of investment activity and performance. The Board consists of five
independent non-executive directors, who bring significant and
complementary experience in the management of listed funds, equity
capital markets, public policy, operations and finance in the
property and investment funds sectors.
The Board delegates the day-to-day management
of the business, including the management of ESG matters, to the
Investment Adviser, Sigma PRS Management Ltd ("Sigma PRS"), which is a subsidiary of
Sigma Capital Group Limited ("Sigma") and a signatory and participant
of the United Nations Global Compact. Sigma is majority owned
by PineBridge Investments, a private global asset manager with
$157bn in assets under management as at December 2023.
Details of ESG policies and activities are
contained separately in the Investment Adviser's Report.
Gender diversity
The current male-to-female ratio of the Board of
Directors is 60:40 (H1 2023: 80:20). The Company is fully compliant
with the new Listing Rules LR 9.8.6R(9) and LR
14.3.33R(1).
The following table sets out the gender and
ethnic diversity of the Board as at 31 December 2023 in accordance
with the Listing Rules:
Gender
Diversity
|
Number of Board
members
|
Percentage of the Board
%
|
Number of senior positions on
the Board3
|
Men
|
3
|
60
|
1
|
Women
|
2
|
40
|
1
|
Not specified / prefer not
to say
|
-
|
-
|
-
|
|
|
|
|
Ethnic
Diversity
|
|
|
|
White British or other White
(including minority white groups)
|
3
|
60
|
1
|
Mixed/ Multiple Ethnic
Groups
|
1
|
20
|
-
|
Asian/ Asian British
|
1
|
20
|
1
|
Black / African / Caribbean
/ Black British
|
-
|
-
|
-
|
Other ethnic group,
including Arab
|
-
|
-
|
-
|
Not specified / prefer not
to say
|
-
|
-
|
-
|
Outlook
Housing delivery progressed well and the
performance of the portfolio remains extremely strong across all
key measures. The latest portfolio data for 1 January to 8 March
2024 shows that another 42 new homes have been added to the
portfolio, taking it to 5,306 completed homes, with an ERV of £61.7
million. A further 270 homes were at varying stages of the
construction process with an ERV of £2.5m. Occupancy over this
period to 8 March stood at 96%, rent collection at 99% and total
arrears net of provision stood at £0.6 million. Like-for-like
blended rental growth on stabilised sites to the end of February
was 11.6%. Importantly, affordability also continues to be very
healthy with average rent as a proportion of gross household income
at 22%.
There are long-term drivers supporting the
private rented housing sector, most fundamentally lack of supply
and burgeoning demand, which is driven by many factors, especially
the affordability challenges of buying a home and population
growth.
These factors support the long-term prospects
for the PRS REIT, and we believe our homes will continue to rent
very well over the long-term. This reflects not only macroeconomic
factors, but also the attractions of our high-quality,
well-located, and professionally-managed homes, which have been
designed to be affordable for the typical family. The portfolio's
average rent as a proportion of household income is about 23%. It
is also relevant to note that a consistent and strong theme we
receive from residents' feedback is the greater peace of mind they
feel as renters because our homes are available to rent for the
long-term. We also place a great deal of importance on creating a
sense of community across all our estates, with regular social
events, amongst other initiatives designed to promote and encourage
community engagement.
The Board recognises the heightened risks
associated with current geopolitical tensions across the globe.
While there may be little it can do to influence these events, the
Board continuously monitors them and their potential impact on
market and economic conditions.
As we look across the remainder of the financial
year, we remain confident of housing delivery and continuing strong
asset performance. Industry forecasters are predicting continued
rental growth across the country over 2024 although not at the same
level as 2023. If current delivery schedules remain on track, we
expect the balance of housing delivery to be completed by early
summer 2025. This should take the portfolio to our estimated target
of 5,600 homes with an ERV in excess of c.£64 million per annum,
reinforcing the PRS REIT's position as market leader in the
provision of new single-family homes for the private rented
sector.
Our dividend target for the full year remains
4.0p per share, with this payment fully covered on an annualised
run-rate basis from March 2024.
Finally, I would like to thank our Investment
Adviser, Sigma PRS, and all our stakeholders, including our
investors, housebuilder partners and supporters in government. In
challenging times, together, we are creating a portfolio of energy
efficient and desirable rental homes for families across the UK and
playing a part in providing much needed social
infrastructure.
Steve Smith
Chairman
Notes
2
https://www.rightmove.co.uk/news/rental-price-tracker
3Senior positions include Chair and Senior Independent
Director
Investment adviser's report
Sigma PRS, a wholly-owned subsidiary of Sigma
Capital Group Limited, is the Company's Investment Adviser. It is
pleased to provide a report on the PRS REIT's activities and
progress for the six months to 31 December 2023. Sigma is majority
owned by PineBridge Investments, a private global asset manager
with over $157bn in assets under management.
Investment Objective, Policy and Business
Model
The PRS REIT is seeking to provide investors
with an attractive level of income, together with the prospect of
income and capital growth. It is delivering this through the
establishment of a large-scale portfolio of newly-constructed
residential rental homes in or near towns and cities in the UK for
the private rented sector.
The Company's scalable business model is able to
deliver new homes across multiple regions and sites. It utilises
the Investment Adviser's PRS property delivery and management
platform (the "Sigma PRS
Platform").
The Company's portfolio of homes is targeted at
the family market, which is the largest segment within the private
rented sector. The Company has concentrated on traditional housing,
with broad appeal across the demand spectrum, and its portfolio
comprises differing house types, built to standardised
specifications. They cater for different life stages, including
smaller houses for young couples and retirees, and larger houses
for growing families. The Company has also invested in some
low-rise flats in appropriate locations to broaden its rental
offering.
The Company's homes are located across multiple
sites in the UK, outside London. Sites are predominantly in the
Midlands and the North, with locations chosen for their
accessibility to main road and rail links, good primary schooling,
and proximity to centres of economic activity, which promote
long-term employment prospects. The new-build nature of the assets
means that they benefit from a 10-year building warranty, typically
from the NHBC (National House Building Council), and manufacturers'
warranties. Homes are let on Assured Shorthold Tenancies (as
defined in the Housing Act 1988) to qualifying tenants. The
sourcing of assets is undertaken by Sigma PRS and the Company has
been building its portfolio in two ways.
· In the first
instance, Sigma PRS has selected suitable development sites which
already have detailed planning permission and then agreed a fixed
price design & build contract with one of Sigma PRS's
construction partners. Sigma PRS then manages the delivery process
on behalf of the Company.
Assets are acquired with detailed planning
consent and fixed price design & build contracts, thereby
minimising the Company's exposure to development risk. Construction
risk has been further mitigated with standard fixed-price design
& build contracts, containing liquidated damages clauses for
non-performance, financial retentions for one year after
completion, and a parent company guarantee ensuring the
satisfactory performance by the contractor and an indemnity for
losses incurred. Over three-quarters of the Company's assets have
been sourced through this way.
· In the second
instance, assets have been acquired by entering into forward
purchase agreements with Sigma, the holding company of Sigma PRS.
The assets are acquired once fully completed and let. Typically,
they have been constructed by the same construction partners and
supply chain as other assets whose development is described above,
thereby ensuring homogeneity of the Company's housing stock.
Completed and stabilised developments may also be purchased from
other third-parties using approved construction
partners.
In both instances, assets are acquired at the
valuation provided by the PRS REIT's independent valuer. The PRS
REIT retains the right of first-refusal to acquire and develop any
sites sourced by Sigma PRS that meet the Company's investment
objective and policy subject to the availability of
funding.
Achieving Scale and Reducing Risk
The Sigma PRS Platform
The Investment Adviser has been
utilising Sigma's well-established PRS property delivery and
management platform ("the
Platform") to scale the PRS REIT's portfolio and to minimise
development and operational risks.
Dedicated Sigma teams manage legal
due diligence, corporate debt provision, site identification,
development management, accounting and financial reporting, brand
representation, and leasing and property management.
The efficacy of the Platform is well
established across multiple regions, geographic locations and
portfolios, and the scale of the Platform brings significant
financial and operational benefits to the PRS REIT. Benefits
include the Platform's relationships with development partners,
which support the identification and acquisition of new homes, the
award-winning 'Simple Life' brand, which has widespread consumer
recognition, and the Platform's economies of its scale. These
advantages help to facilitate growth opportunities, and support
income growth and cost control.
Dedicated Finance
Team
Sigma has a dedicated PRS REIT
accounting and financial reporting team, which cover all aspects of
the Company's finances. This includes site acquisition, funding,
board, management and statutory reporting, performance monitoring,
forecasting, debt covenant compliance and taxation.
In-house Debt and Legal
Team
The debt and legal teams at Sigma use
their extensive knowledge of the PRS REIT and leverage their
longstanding relationships with funders within the sector to secure
bespoke debt facilities with competitive pricing. These are used to
ensure sufficient ongoing support for assets throughout their
lifecycles. The legal teams have also built-up strong relationships
with funders' advisers and this helps to ensure a streamlined and
efficient legal process when transferring assets across debt pools,
which in turn drives optimum use of capital within the
business.
Development
Team
The Platform comprises relationships
with construction partners, central government, and local
authorities. Key construction partners include Vistry Group
including Countryside Partnerships, Kellen Homes, Springfield
Properties, Lovell, Telford Homes and Persimmon. Homes England, an
executive non-departmental public body sponsored by the Department
for Levelling Up, Housing and Communities, works closely with Sigma
in the common goal of accelerating new housing delivery in
England.
All development sites agreed through
the Platform on behalf of the PRS REIT have an appropriate
certificate of title, detailed planning consent and a fixed price
design & build contract with one of Sigma's housebuilding
partners.
Marketing
Team
The PRS REIT's homes are marketed
under Sigma's 'Simple Life' brand, which is widely recognised as a
leader in the single-family rental sector. The number of enquires
received from Simple Life's own marketing channels is now
consistently greater than those received from the traditional
property portals.
Lettings Management
Team
A specialist Sigma team of leasing
and property management professionals manage the pricing and the
release of new homes as well as the customer journey for all
properties. An award-winning, bespoke tenant app. also supports all
residents.
Asset Management
Team
The Asset Management Team is
responsible for detailed reviews of tenancies, income and asset
management, which are undertaken on a weekly basis. This underpins
an orderly process in the management of both tenancy renewals and
new lets, and supports optimal income predictability and
generation. The scale of Sigma's broader operations outside the PRS
REIT, means that the Platform has significant purchasing power and
its economies of scale benefit the PRS REIT, reducing costs and
providing greater long-term visibility of costs.
Operational
Review
Delivery and
pipeline
A total of 184 new homes were added to the PRS
REIT's portfolio in the first half of the current financial year.
This included the acquisition, from Sigma, of a fully-let new
development of 53 homes in Yorkshire. As with previous site
acquisitions, it was independently valued by Savills prior to
purchase. The site has an ERV of £0.5 million per annum.
The addition of these new homes took the total
number of completed homes in the Company's portfolio at 31 December
2023 to 5,264, a 7% increase period-on-period (31 December 2022:
4,913 homes). The portfolio's estimated rental value ("ERV") at the end of the first half was
£60.3 million per annum (31 December 2022: £50.7 million per
annum), a rise of £9.6 million from the same date in
2022.
Development costs of investment property over
the first half to 31 December 2023 totalled £15.5 million (H1 2023:
£30.5 million). The year-on-year reduction reflects the maturity of
the portfolio and the normal cycle of property development
expenditure, where expenditure is typically higher during the
earlier months of acquiring and developing a site, reducing as the
development completes.
The Company's gross funding of £983 million
(including investment debt) has been fully allocated.
The table below provides a summary of
development activity and shows the cumulative number of PRS homes
that have been completed since the launch of the Company on 31 May
2017 and the ERV of homes under construction or
completed.
|
At 31 Dec 2023
|
At 30 Jun
2023
|
At 31 Dec
2022
|
No. of completed
homes
|
5,264
|
5,080
|
4,913
|
ERV per annum of
completed homes
|
£60.3m
|
£55.0m
|
£50.7m
|
No. of contracted
homes
|
312
|
444
|
613
|
ERV per annum of
contracted homes
|
£3.1m
|
£3.8m
|
£6.6m
|
Total number of sites
(completed and contracted)
|
72
|
71
|
71
|
No. of completed and
contracted homes
|
5,576
|
5,524
|
5,526
|
ERV per annum of
completed and contracted homes
|
£63.4m
|
£58.8m
|
£57.3m
|
The Company continues to work with one of its
principal house building partners to resolve a planning issue in
respect of one of its sites. The value of the site represents
approximately 2.3% of the balance sheet investment value of assets
as at the interim date. Further details can be found in Note
5.
Geographic
diversification
The number of sites in the Company's portfolio
stood at 72 on 31 December 2023 (31 December 2022: 71). Sites span
the major regions of England, with single sites in Wales and
central Scotland.
Based on Investment Value, approximately 51% of
homes in the portfolio, both completed and under development, are
located in the North West of England, 21% are sited in the
Midlands, and 14% are in Yorkshire and the North East. Of the
balance, approximately 11% of homes are in the South of England, 2%
in Wales, and the remaining 1% of homes are situated in central
Scotland. The wide geographical spread of homes has created a
diverse customer base, which helps to balance risk, especially
given current market and economic uncertainties.
As at 31 December 2023, 65 of the 72 development
sites were completed and income-producing, with the remaining seven
sites part-way through construction. Many of the
partially-completed sites are already producing rental income. This
is because sites are developed in such a way that batches of
completed homes can be released for letting while construction
continues on the remainder of a site, subject to health and safety
reviews. This approach enables development sites to become
income-generating relatively quickly.
Rental performance and key
performance measures
Demand for The PRS REIT's homes remains high,
and the portfolio continues to perform very strongly as it
grows.
· Increased rental income and
rental growth
The portfolio's annualised ERV (including
completed and contracted sites) as at 31 December 2023 increased by
11% year-on-year to £63.4 million (31 December 2022: £57.3 million)
and was 8% higher than at 30 June 2023 (£58.8 million). These
increases reflect buoyant demand and an increase in the number of
assets in the portfolio.
Like-for-like rental growth in the 12 months
to 31 December 2023 was 11.1% on stabilised sites.
· High occupancy
levels
Physical occupancy was at 97% at 31 December
2023 (31 December 2022: 97%). Including prospective tenants who had
passed referencing and paid their deposits, but not yet taken
occupation as at 31 December 2023, the occupancy rate was 98% (31
December 2022: 98%).
· Strong rent
collection
Rent collection remained strong at 99% (H1
2023: 98%). Rent collection is measured as rent invoiced in the
period relative to rent received in the same period. Rent arrears,
net of provision, continued to be low, at £1 million (H1 2023: £0.7
million) and reduced to £0.6 million as at 31 January
2024.
· Cost base
covered
The Company's cost base is covered, and
operating cash inflows have increased in the period as rental
income from completed and let homes has grown.
Non-recoverable property costs were 18.5% of
gross rental income during H1 2024 (H1 2023: 18.8%), reflecting a
combination of increasing rents and control over operating costs.
All other costs are in line with management's targets.
· Affordable
homes
Homes remain well within Homes England's
stated affordability upper guidance limit of 35%. The average rent
of PRS REIT homes as a proportion of average gross household income
is at c.23%.
Key performance
indicators
The Company's performance is tracked, and the
major key performance indicators ("KPIs") are shown below:
|
Six months ended 31 Dec
2023
|
Six months ended 31 Dec
2022
|
Rental income (gross)
|
£28.1m
|
£24.2m
|
Average rent per month per tenant
|
£955
|
£861
|
Number of properties available to rent
|
5,264
|
4,913
|
Average net
investment yield
|
4.5%
|
4.3%
|
Non-recoverable property
costs as a percentage of gross rent (gross to net)
|
18.5%
|
18.8%
|
Fair value uplift on investment property
|
£20.5m
|
£5.8m
|
Operating profit
|
£39.2m
|
£22.7m
|
Earnings per Share ("EPS")
|
5.5p
|
2.7p
|
EPRA EPS
|
1.8p
|
1.6p
|
Dividends declared per share in relation to the
period
|
2.0p
|
2.0p
|
Dividends paid during the
period
|
2.0p
|
2.0p
|
All the KPIs are in line with management
expectations. Gross and net rental income increases,
non-recoverable property costs, operating profit, and the number of
properties available to rent reflect the increased size of the
portfolio and the progression of development sites.
Latest data on delivery and
asset performance
Between 1 January and 8 March 2024, we delivered
a further 42 rental homes with an ERV of approximately £0.6 million
per annum. This has taken the Company's portfolio of completed
homes at 8 March 2024 to 5,306 homes, with an ERV of around £61.7
million per annum. A further 270 homes were under way at that
point.
Out of 5,306 completed homes, 5,119 homes were
let as at 8 March 2024, and a further 64 homes were reserved to
qualified applicants with rent deposits paid at that
date.
ESG
approach
The Company recognises that it is a long-term
stakeholder in the communities and neighbourhoods it creates and
takes this responsibility very seriously. It has delegated the
day-to-day management of ESG strategy to Sigma PRS. Sigma PRS takes
responsibility for how the Company's ESG priorities are managed at
both Company and asset level, and reports to the Company's Board
formally on a bi-annual basis and informally at every Board
meeting. In order to better achieve its ESG goals, Sigma PRS
engages with leading industry bodies that seek to promote high ESG
standards and best practice.
Sigma PRS is also a signatory of the United
Nations Global Compact ("UN Global
Compact"), which is a voluntary initiative designed to
encourage business leaders to implement universal sustainability
principles, particularly the UN Global Compact's Ten Principles.
These Ten Principles are derived from the Universal Declaration of
Human Rights, the International Labour Organisation's Declaration
on Fundamental Principles and Rights at Work, the Rio Declaration
on Environment and Development, and the United Nations Convention
Against Corruption.
In addition, Sigma PRS has committed to the SDG
Ambition Benchmark, which support the UN's goals. It is
particularly focusing on the UN's target of Land Degradation
Neutrality ("LDN") and its
LDN principles. Objectives include zero deforestation and enhanced
biodiversity through tree and wildflower planting
programmes.
The PRS REIT is committed to funding social
and charitable activities and these activities are now funded
through The PRS REIT ESG Community Fund. Its activities are
approved by the Board and managed by Sigma PRS. Between 1 July 2023
and 31 December 2023, approximately £130,000 was invested across a
variety of good causes across the Company's geographic
footprint.
Processes and strategies
As an industry leader in the provision of
private rental homes, the PRS REIT recognises both its
responsibilities regarding the environment and public
priorities.
As Sigma PRS continues to develop the Company's
ESG agenda, goals and strategy, the focus is on embedding best
practice, monitoring supply chain activity, and ensuring that
policies and activities comply with the PRS REIT's commitment to
the UN Global Compact.
Partnerships
Sigma PRS engages closely with all partners to
deliver the PRS REIT's ESG commitments. These partnerships are
prioritising the reduction of carbon emissions, the promotion of
biodiversity and the 'future-proofing' assets. Sigma PRS
maintains a regular dialogue with construction partners regarding
these priority areas, and in particular alternative heat provision
and energy efficiency. Alongside this, data gathering and 'impact'
measurement remains crucial and Sigma PRS seeks to maintain a
collaborative approach with partners.
As part of its biodiversity activities, Sigma
PRS has partnered with GreenTheUK Limited to deliver tree planting,
rewilding, wildflower and vegetable workshops and sessions to 26
schools close to the Company's developments. Sigma PRS also
supports other school and community nature and outdoor learning
projects under its Biodiversity Project. So far, this initiative
has reached over 300 children across four locations, and further
education days are planned for Spring 2024.
Maintenance Support
The repair and management app, FixFlo, implemented by the Investment
Adviser, continues to provide both a highly convenient way for
Simple Life4
customers either to self-fix, where appropriate, or to report and
monitor repair and maintenance issues. As well as being a useful
tool for residents, it enables maintenance services to be provided
more efficiently and reduces physical contractor visits, which
typically incur carbon emissions.
Energy Performance data
The Company's homes are energy efficient.
Approximately 87% of portfolio homes have an EPC rating in band A
or B (1% in band A and 86% in band B), with 13% rated in band
C.
This means that their energy performance is well
ahead of the both the Government's existing and future minimum
energy performance targets for rental properties. Currently, all
rental properties are required to reach a minimum EPC rating of E.
However, a new minimum EPC rating of C2 has recently been
introduced, with all rental properties expected to meet this new
minimum rating by 2028.
Charities
Sigma PRS continues to support its chosen
partner charities and, in the period, expanded the number of
charities with which it works. In providing support, Sigma PRS aims
to focus on building long-term partnerships, in particular with
charities and causes that have links and connections to the areas
in which the Company's developments are located. Sigma PRS also
encourages residents to participate by nominating good
causes.
In the period, residents put forward a number of
new sports clubs and local groups for the REIT to support.
Residents also participating in nominations for the 2023 Christmas
Donations fund. The fund was able to double its giving and 24
charities each received £1,000 over Christmas. To date, support,
both financial and practical, is being given to over 50 charities
across the country.
Projects
Over the course of the Summer 2023, the REIT
sponsored young people's engagement with The Outward Bound Trust's
courses at its Ullswater centre. Participants were drawn from the
Company's developments, charity partners and from the wider
community.
The REIT's partnership with Speed of Sight, a
charity providing driving experiences to the blind and
partially-sighted, supported three track days across the country,
enabling 60 people to enjoy the benefits of this activity. Plans
are in place for four track days in 2024.
Social events for residents
Sigma PRS's social events for residents remain
popular across the PRS REIT's communities. These events are geared
towards encouraging social interaction and engendering a greater
sense of community and neighbourliness. The PRS REIT places great
importance on the value of these events, which reflects its own
brand principles.
· Over the Summer,
Sigma PRS organised its 6th annual ice-cream event, and ice-cream
vans visited 52 communities over ten days, delivering over 4,600
ice creams to residents.
· In the Autumn,
Sigma PRS organised evening pizza events across 13 developments,
and an extended entertainment evening was held at the Empyrean
development. Over 1,600 pizzas were provided.
· At Christmas,
Sigma PRS arranged for Father Christmas and an accompanying band to
visit 56 sites across the country, reaching over 4,800
homes.
· In 2023, Simple
Lifestyle, a hub on the My Simple Life app, was launched. It
contains content designed to support a healthy lifestyle. Fashioned
on the highly successful Health and Wellbeing Series, it connects
residents to relevant facilities within their communities, and
promotes learning, healthy activity and general
wellbeing.
The Company's Environment, Social and Governance
initiatives and policies are detailed in its ESG Report 2023, which
can be obtained from the Company's website at
www.theprsreit.com.
Human Rights
The obligations under the Modern Slavery Act
2015 (the 'Act') are not
applicable to the Company given its size. However, to the best of
the Investment Adviser's and the Company's knowledge, principal
suppliers and advisors comply with the provisions of the Act. The
Company operates a zero-tolerance approach to bribery, corruption
and fraud.
Health and Safety
In order to maintain high standards of health
and safety for those working on sites, monthly checks by
independent project monitoring surveyors are commissioned to ensure
that all potential risks have been identified and mitigated. These
checks supplement those undertaken by development partners. The
data is reported to the Board on a quarterly basis in the event of
a nil return, and immediately in the event of an incident. There
were no reportable incidents over the year. All maintenance
operatives are trained on toolbox talks and no incidents have been
reported under the Reporting of Injuries, Diseases and Dangerous
Occurrences Regulations 2013 ("RIDDOR").
Governance
Appropriate and proportionate governance is
essential to ensure that risks are identified and managed, and that
accountability, responsibility, fairness and transparency are
maintained at all times. The Board reviews the skills and
experience of all Board members and undertakes a Board performance
review on an annual basis. In accordance with the AIC Code of
Corporate Governance, the Board has an externally facilitated
performance review every three years.
The Group is subject to statutory reporting
requirements and to rules and responsibilities prescribed by the
London Stock Exchange and the Financial Conduct Authority. The
Board has a balanced range of complementary skills and experience,
with independent Non-executive Directors who provide oversight, and
challenge decisions and policies as appropriate. The Board believes
in robust and effective corporate governance and is committed to
maintaining high standards and applying the principles of best
practice.
Risk
The Board has
established procedures to manage risk and oversee the internal
control framework. The PRS REIT's principal and emerging risks and
uncertainties are monitored closely by the Board on an ongoing
basis.
Current Trading and
Outlook
Prospects remain very encouraging. New housing
delivery is progressing well and the portfolio continues to perform
very strongly.
Between the beginning of the third quarter of
the financial year, 1 January 2024, and 8 March 2024, an additional
42 new homes have been completed, with a further 270 homes under
way at that point. This has expanded the PRS REIT's portfolio of
completed homes to 5,306 completed homes with an ERV of £61.7
million per annum.
Demand for the REIT's homes remains very high
and at 8 March 2024, 96% of completed homes were occupied.
Including those applicants who had paid deposits and passed the
qualification process although not yet taken physical residence,
the occupancy rate at 8 March was at 98%.
Between 1 January and 8 March 2024, rent
collection (which is measured as rent collected relative to rent
invoiced in the same period) was very strong at 99% and active
arrears remained low at £0.6 million. Like-for-like blended rental
growth on stabilised sites for the year to the end of February was
11.6% while affordability remained very healthy, with average rent
as a proportion of gross household income at 22%.
We expect these strong performance figures to be
maintained, especially against the backdrop of a severe lack of
supply of quality family rental homes in the UK, and continuing
mortgage affordability pressures, particularly for first-time
buyers in a higher-interest rate environment.
The interim dividend payment for the three
months to 31 March 2024 will be considered and declared in the
fourth quarter of the current financial year. The Board continues
to target* a total dividend of 4.0p per ordinary share for the
current financial year. We are very pleased to highlight that, this
level of dividend is fully covered by earnings on an annualised
run-rate basis from March 2024. Dividend cover should continue to
increase further as assets are completed and let, expanding rental
income.
Sigma PRS Management Ltd
19 March 2024
*These are targets only and not forecasts. There can be no
assurance that these targets will be met and they should not be
taken as an indication of the Company's expected future
results
Notes
4The PRS REIT's rental homes are
marketed under the 'Simple Life' brand
PRINCIPAL RISKS AND UNCERTAINTIES
The Audit Committee, which assists
the Board with its responsibilities for managing risk, considers
that the principal risks and uncertainties as presented on pages 54
to 57 of the Company's 2023 Annual Report were unchanged during the
period and will remain unchanged for the remaining six months of
the financial year.
DIRECTORS' RESPONSIBILITY
STATEMENT
In preparing the Interim Financial
Report for the six month period to 31 December 2023, the Directors
confirm that, to the best of their knowledge, this condensed set of
financial statements has been prepared in accordance with IAS 34
"Interim Financial Reporting" and that the Chairman's statement
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8 of the Disclosure and Transparency rules of the United
Kingdom's Financial Conduct Authority namely:
a)
|
the Interim Financial Report
includes a fair review of important events during the period and
their effect on the Financial Statements and a description of
specific risks and uncertainties for the remainder of the
accounting period;
|
b)
|
the Interim Financial Report gives
a true and fair view in accordance with IAS of the assets,
liabilities, financial position and of the results of the Company
for the period and complies with IAS and the Companies Act
2006;
|
c)
|
the Interim Financial Report
includes a fair review of related party transactions and changes
therein; and
|
d)
|
the Directors believe that the
Company has sufficient financial resources to manage its business
risks in the current uncertain economic outlook.
|
The Directors have reasonable
expectations that the Company has adequate resources to continue in
operational existence for at least the next 12 months, therefore
they continue to adopt the going concern basis of accounting in
preparing the financial statements.
Steve Smith
Chairman
CONDENSED CONSOLIDATED Statement of COMPREHENSIVE
INCOME
For
the six months ended 31 December 2023
|
Note
|
Six months ended
31 December 2023
(unaudited)
£'000
|
Six months ended
31 December 2022
(unaudited)
£'000
|
Year ended 30 June
2023
(audited)
£'000
|
|
|
|
|
|
Rental
income
|
|
28,148
|
24,171
|
49,701
|
Non-recoverable property costs
|
|
(5,208)
|
(4,548)
|
(9,551)
|
Net rental
income
|
|
22,940
|
19,623
|
40,150
|
|
|
|
|
|
Other
income
|
4
|
95
|
1,335
|
1,646
|
|
|
|
|
|
Administrative
expenses
|
|
|
|
|
Directors' remuneration
|
|
(110)
|
(85)
|
(180)
|
Investment advisory fee
|
|
(2,975)
|
(2,889)
|
(5,788)
|
Other administrative expenses
|
|
(1,299)
|
(1,112)
|
(2,300)
|
Total
expenses
|
|
(4,384)
|
(4,086)
|
(8,268)
|
|
|
|
|
|
Gain from fair value
adjustment on investment property
|
5
|
20,533
|
5,816
|
25,353
|
Operating
profit
|
|
39,184
|
22,688
|
58,881
|
|
|
|
|
|
Finance income
|
|
63
|
8
|
49
|
Finance costs
|
|
(8,969)
|
(7,983)
|
(16,478)
|
Profit before
taxation
|
|
30,278
|
14,713
|
42,452
|
|
|
|
|
|
Taxation
|
|
-
|
-
|
-
|
Profit after tax
|
|
30,278
|
14,713
|
42,452
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to the
equity holders of the Company:
|
|
|
|
|
Basic and diluted earnings per share
|
7
|
5.5p
|
2.7p
|
7.7p
|
EPRA earnings per share
|
|
1.8p
|
1.6p
|
3.1p
|
All of the Group activities are classed as
continuing and there were no comprehensive gains or losses in the
period other than those included in the statement of comprehensive
income.
CONDENSED CONSOLIDATED Statement of financial
position
As
at 31 December 2023
|
Note
|
As at 31 December 2023
(unaudited)
£'000
|
As at
31 December 2022
(unaudited)
£'000
|
As at
30 June
2023
(audited)
£'000
|
ASSETS
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Investment property
|
5
|
1,080,058
|
998,184
|
1,034,732
|
|
|
1,080,058
|
998,184
|
1,034,732
|
Current
assets
|
|
|
|
|
Trade and other receivables
|
|
7,855
|
8,567
|
7,066
|
Cash and cash equivalents
|
|
16,063
|
17,768
|
13,198
|
|
|
23,918
|
26,335
|
20,264
|
|
|
|
|
|
Total
assets
|
|
1,103,976
|
1,024,519
|
1,054,996
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
Accruals and deferred income
|
|
1,789
|
1,780
|
2,081
|
Interest bearing loans and borrowings
|
6
|
382,117
|
248,631
|
248,440
|
|
|
383,906
|
250,411
|
250,521
|
Current
liabilities
|
|
|
|
|
Trade and other payables
|
|
15,364
|
18,433
|
17,076
|
Provisions
|
|
433
|
-
|
934
|
Interest bearing loans and borrowings
|
6
|
25,259
|
112,709
|
126,745
|
|
|
41,056
|
131,142
|
144,755
|
|
|
|
|
|
Total
liabilities
|
|
424,962
|
381,553
|
395,276
|
|
|
|
|
|
Net
assets
|
|
679,014
|
642,966
|
659,720
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
Called up share capital
|
|
5,493
|
5,493
|
5,493
|
Share premium reserve
|
|
298,974
|
298,974
|
298,974
|
Capital reduction reserve
|
|
113,092
|
129,569
|
118,584
|
Retained earnings
|
|
261,455
|
208,930
|
236,669
|
Total equity attributable to the equity
holders of the Company
|
|
679,014
|
642,966
|
659,720
|
|
|
|
|
|
Net asset value per share
|
8
|
123.6p
|
117.1p
|
120.1p
|
|
|
|
|
|
As at 31 December 2023, there was no difference
between NAV per share and EPRA NTA per share.
condensed Consolidated statement of changes in
equity
For
the six months ended 31 December 2023
|
|
Share
capital
|
Share
premium
reserve
|
Capital reduction
reserve
|
|
Retained
earnings
|
Total equity
|
|
Note
|
£'000
|
£'000
|
£'000
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
At 1 July 2022
|
|
5,493
|
298,974
|
140,554
|
|
194,217
|
639,238
|
Transactions
with owners
|
|
|
|
|
|
|
|
Dividends paid
|
11
|
-
|
-
|
(10,985)
|
|
-
|
(10,985)
|
Comprehensive
income
|
|
|
|
|
|
|
|
Profit for the period
|
|
-
|
-
|
-
|
|
14,713
|
14,713
|
At 31 December 2022
|
|
5,493
|
298,974
|
129,569
|
|
208,930
|
642,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions
with owners
|
|
|
|
|
|
|
|
Dividends paid
|
|
-
|
-
|
(10,985)
|
|
-
|
(10,985)
|
Comprehensive
income
|
|
|
|
|
|
|
|
Profit for the period
|
|
-
|
-
|
-
|
|
27,739
|
27,739
|
At 30 June 2023
|
|
5,493
|
298,974
|
118,584
|
|
236,669
|
659,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions
with owners
|
|
|
|
|
|
|
|
Dividends paid
|
11
|
-
|
-
|
(5,492)
|
|
(5,492)
|
(10,984)
|
Comprehensive
income
|
|
|
|
|
|
|
|
Profit for the period
|
|
-
|
-
|
-
|
|
30,278
|
30,278
|
|
|
|
|
|
|
|
|
At 31
December 2023
|
|
5,493
|
298,974
|
113,092
|
|
261,455
|
679,014
|
condensed CONSOLIDATED STATEMENT OF Cash
Flows
For
the six months ended 31 December 2023
|
Note
|
Six months ended
31 December 2023
(unaudited)
£'000
|
Six months ended
31 December 2022
(unaudited)
£'000
|
Year
ended
30 June
2023
(audited)
£'000
|
|
|
|
|
|
Cash flows
from operating activities
|
|
|
|
|
Profit before tax
|
|
30,278
|
14,713
|
42,452
|
Finance income
|
|
(63)
|
(8)
|
(49)
|
Finance costs
|
|
8,969
|
7,983
|
16,478
|
Fair value adjustment on investment
property
|
5
|
(20,533)
|
(5,816)
|
(25,353)
|
Cash generated from operations
|
|
18,651
|
16,872
|
33,528
|
|
|
|
|
|
Decrease / (Increase)
in trade and other receivables
|
|
263
|
(2,123)
|
(578)
|
Decrease in trade and other
payables
|
|
(2,294)
|
(11,774)
|
(1,640)
|
|
|
|
|
|
Net cash generated from operating
activities
|
|
16,620
|
2,975
|
31,310
|
|
|
|
|
|
Cash flows
from investing activities
|
|
|
|
|
Purchase of
investment properties
|
|
(9,100)
|
-
|
-
|
Development
expenditure on investment properties
|
5
|
(15,528)
|
(30,453)
|
(47,458)
|
Decrease in capital
trade and other payables
|
|
-
|
-
|
(10,255)
|
Finance
income
|
|
63
|
8
|
49
|
Net cash used
in investing activities
|
|
(24,565)
|
(30,445)
|
(57,664)
|
|
|
|
|
|
Cash flows
from financing activities
|
|
|
|
|
Bank and other loans advanced
|
|
142,556
|
47,819
|
49,801
|
Bank and other loans repaid
|
|
(108,839)
|
(33,998)
|
(23,304)
|
Finance costs
|
|
(11,923)
|
(6,280)
|
(13,657)
|
Dividends paid
|
|
(10,984)
|
(10,985)
|
(21,970)
|
Net cash generated from / (used in)
financing activities
|
|
10,810
|
(3,444)
|
(9,130)
|
|
|
|
|
|
Net increase / (decrease) in cash and
cash equivalents
|
|
2,865
|
(30,914)
|
(35,484)
|
Cash and cash equivalents at beginning of
period
|
|
13,198
|
48,682
|
48,682
|
Cash and cash
equivalents at end of period
|
|
16,063
|
17,768
|
13,198
|
Notes to the Financial Statements
1. General Information
The PRS REIT plc (the "Company") is a public limited company
incorporated on 24 February 2017 in England and having its
registered office at Floor 3, 1 St. Ann Street, Manchester, M2 7LR
with company number 10638461.
The Company is quoted on the Premium Segment
of the Main Market of the London Stock Exchange.
This interim
condensed consolidated financial information was approved and
authorised for issue by the Board of Directors on 19
March 2024.
2. Basis of preparation and
changes to the Group's accounting policies
Basis of
preparation
The financial information for the period ended
31 December 2023 does not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. A copy of the statutory
accounts for the year ended 30 June 2023, has been delivered to the
Registrar of Companies. The auditor's report on those accounts was
not qualified, did not include a reference to matters to which the
auditor drew attention by way of emphasis without qualifying the
report, and did not contain statements under section 498(2) or (3)
of the Companies Act 2006.
The condensed consolidated interim financial
report for the six month reporting period to 31 December 2023 has
been prepared on a going concern basis using accounting policies
consistent with UK-adopted International Accounting Standards, in
accordance with IAS 34 Interim Financial Reporting. The current
period financial information presented in this document has not
been reviewed or audited.
The interim report does not include all of the
notes of the type normally included in an annual financial report.
Accordingly, this report is to be read in conjunction with the
annual report for the year ended 30 June 2023, which has been
prepared in accordance with UK-adopted International
Accounting Standards and the requirements of the Companies Act
2006. The Group's annual consolidated financial
statements are available on the Company's' website,
www.theprsreit.com.
Adoption of new and revised
standards
The accounting policies adopted in the
preparation of the interim condensed consolidated financial
statements are consistent with those followed in the preparation of
the Group's annual consolidated financial statements for the year
ended 30 June 2023, except for the adoption of new standards
effective as of 1 July 2023.
As at the date of authorisation of these
financial statements there were standards and amendments which were
in issue but which were not yet effective and which have not been
applied. The principal ones were:
· classification of
Liabilities as Current or Non-Current - Amendments to IAS
1
· disclosure of
Accounting Policies - Amendments to IAS 1 and IFRS Practice
Statement 2
· definition of
Accounting Estimates - Amendments to IAS 8
· deferred tax
related to Assets and Liabilities arising from a Single Transaction
- Amendments to IAS 12
The Directors do not expect the adoption of
these standards and amendments to have a material impact on the
financial statements.
In the current period, the following
amendments have been adopted which were effective for the periods
commencing on or after 1 January 2022:
· property, plant
and equipment: Proceeds before intended use - Amendment to IAS
16
· reference to the
Conceptual Framework - Amendments to IFRS 3
· onerous contracts
- Costs of Fulfilling a Contract - Amendment to IAS 37
· annual
improvements to IFRS Standards 2018 - 2020
The adoption of these amendments has not had a
material impact on the financial statements.
Significant accounting
estimates and assumptions
The preparation of the Group's financial
statements requires the Directors to make estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities at the
reporting date. However, uncertainty about these assumptions and
estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability
affected in future periods.
Estimates
In the process of applying the Group's
accounting policies, the Directors have made the following
estimates, which have the most significant effect on the amounts
recognised in the consolidated financial statements:
i. Fair
value of investment property
The fair value of any property, including
investment property under construction, is determined by an
independent property valuation expert to be the estimated amount
for which a property should exchange on the date of the valuation
in an arm's length transaction. The valuation experts use
recognised valuation techniques applying principles of both IAS40
and IFRS13.
The Group values its investment properties
using the investment approach to valuation. Principal assumptions
and management's underlying estimations that are used in the fair
value assessment of completed assets relate to estimated rental
value, net investment yield and gross to net deductions. Principal
assumptions and management's underlying estimations that are used
in the fair value assessment of assets under construction are
investment value on completion and gross development costs, taking
into account construction costs spent and forecast costs to
completion. There are inter-relationships between the valuation
inputs and they are primarily determined by market conditions. The
effect of an increase in more than one input could be to magnify
the impact on the valuation. However, the impact on the valuation
could be offset by the inter-relationship of two inputs moving in
opposite directions.
The valuations accord with the requirements of
IFRS 13 and the Royal Institution of Chartered Surveyors'
("RICS") Valuation - Global
Standards, effective from 31 January 2022, incorporating the IVSC
International Valuation Standards (the "RICS Red Book"). The valuations were
arrived at predominantly by reference to market evidence for
comparable property.
Critical judgements in applying the Group's accounting
policies
In the process of applying the Group's
accounting policies, the Directors have made the following
judgements which have the most significant effect on the amounts
recognised in the consolidated financial statements.
i.
Acquisition
of
subsidiaries - as a group of assets and
liabilities
During the period, the Group
acquired a property-owning special purpose vehicle. The Directors
considered whether this acquisition met the definition of the
acquisition of a business or the acquisition of a group of assets
and liabilities. Applying the Concentration test, it was concluded
that the acquisition did not meet the criteria for the acquisition
of a business as outlined in IFRS 3 as substantially all of the
fair value of the gross asset acquired was concentrated in a single
identifiable asset.
The Directors have reviewed the
fair value of the assets and liabilities as at the date of the
acquisition which were as follows:
|
|
|
Sigma PRS Investments
(Hexthorpe Phase 3) Limited
|
|
|
|
|
£'000
|
|
Investment properties
acquired
|
|
|
9,100
|
|
Other receivables
|
|
|
55
|
|
Other payables
|
|
|
(27)
|
|
Total consideration
paid
|
|
|
9,128
|
|
• Investment property is measured at fair value as at the date
of the acquisition of the subsidiary by an independent valuation
expert.
• Other
receivables are taken as being the value recorded in the accounts
of the Company acquired, being the best estimate of the amounts
actually recoverable.
• Other
payable balances are measured at the amounts actually
payable.
3. Going concern
The interim condensed consolidated financial
statements have been prepared on a going concern basis.
The Group had net current liabilities of £17.1 million as at
31 December 2023. The decrease in net current liabilities reflects
the LBG / RBS debt facility being refinanced on maturity in July
2023. In July 2023, the LBG / RBS variable rate investment debt
facility was amended to a 2-year facility of £75 million, of which
£13 million was immediately drawn. A new 15-year fixed rate
investment debt facility was taken out with LGIM of which £101.9
million was immediately drawn. The amounts drawn on these
facilities at 31 December 2023 were £32.8 million and
£101.9 million. The Company continues to review
options to replace the short term RBS facility with long term
investment debt which will further reduce the current liability
position. The Group's cash balances at 31 December
2023 were £16.1 million, of which £12.8 million was readily
available. The Group had debt borrowing as at 31 December 2023 of
£410.8 million (gross of unamortised arrangement fees), and has
secured further facilities of £49.2 million. Capital commitments
outstanding as at 31 December 2023 were £11.9 million. The Group's
ERV as at 31 December 2023 was £60.3 million from 5,264 completed
homes and has increased to £61.7 million from 5,306 homes as at 8
March 2024. This has increased the Company's recurring income and
at this level is more than sufficient to cover monthly cash costs
and to support dividend payments, thereby maintaining the Company's
REIT status. The Company has monitored and performed stress tests
and these have shown the Group to be in a strong position
throughout.
Therefore, the Directors believe the Group is
well placed to manage its business risks successfully. After making
enquiries, the Directors have a reasonable expectation that the
Group will have adequate resources to continue in operational
existence for the foreseeable future and for a period of at least
12 months from the date of the approval of the Group's interim
condensed consolidated financial statements for the six months
ended 31 December 2023. The Board is therefore of the opinion that
the going concern basis adopted in the preparation of the interim
condensed consolidated financial statements for the six months
ended 31 December 2023, is appropriate.
4. Other income
Other income represents amounts payable by
partners in respect of later than expected delivery of assets where
the delay is attributable to the partner.
5. Investment property
In accordance with IAS 40 Investment Property,
investment property has been independently valued at fair value by
Savills (UK) Limited, an accredited external valuer with a
recognised relevant professional qualification and with recent
experience in the locations and categories of the investment
properties being valued. The valuation basis conforms to
International Valuation Standards and is based on market evidence
of investment yields, expected gross to net income rates and actual
and expected rental values.
The valuations are the ultimate responsibility
of the Directors. Accordingly, the critical assumptions used in
establishing the independent valuations are reviewed by the
Board.
|
Completed assets
|
Assets under
construction
|
Total
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
As at 1 July
2022
|
840,355
|
121,560
|
961,915
|
Property
additions - subsequent expenditure
|
-
|
30,453
|
30,453
|
Change in
fair value
|
7,224
|
(1,408)
|
5,816
|
Transfers
to completed assets
|
57,885
|
(57,885)
|
-
|
As at 31 December
2022
|
905,464
|
92,720
|
998,184
|
|
|
|
|
Property
additions - subsequent expenditure
|
-
|
17,011
|
17,011
|
Change in
fair value
|
19,729
|
(192)
|
19,537
|
Transfers
to completed assets
|
22,534
|
(22,534)
|
-
|
As at 30 June
2023
|
947,727
|
87,005
|
1,034,732
|
|
|
|
|
Completed
properties acquired on acquisition of subsidiaries
|
9,100
|
-
|
9,100
|
Property
additions - subsequent expenditure
|
-
|
15,528
|
15,528
|
Change in
right of use asset
|
165
|
-
|
165
|
Change in
fair value
|
16,968
|
3,565
|
20,533
|
Transfers
to completed assets
|
12,580
|
(12,580)
|
-
|
As at 31 December
2023
|
986,540
|
93,518
|
1,080,058
|
|
|
|
|
The historic cost of completed assets and
assets under construction as at 31 December 2023 was £856.9 million
(30 June 2023: £831.8 million, 31 December 2022: £815.5
million).
Fair values
IFRS 13 sets out a three-tier hierarchy for
assets and liabilities valued at fair value. These are as
follows:
Level 1 quoted prices (unadjusted)
in active markets for identical assets and liabilities;
Level 2 inputs other than quoted
prices included in Level 1 that are observable for the asset or
liability, either directly or indirectly; and
Level 3 unobservable inputs for
the asset or liability.
Investment property falls within Level 3. The
investment valuations provided by the external valuation expert are
based on RICS Professional Valuation Standards, but include a
number of unobservable inputs and other valuation assumptions. The
significant unobservable inputs and the range of values used
are:
Completed assets:
Type
|
Range
|
ERV per property
|
£10k - £22k
|
Investment yield (net)
|
4.25% -
5.00%
|
Gross to net assumption
|
22.50% -
25.00%
|
The PRS REIT acquired a site at Coppenhall
Place, Crewe, with planning consent during the year ended 30 June
2019. At the same time, the Company also entered into a fixed
price design and build contract with one of its principal house
building partners to complete 131 units. This represented
approximately 50% of the entire Coppenhall Place site with the
balance being developed by the house builder as market for sale
units. The design and build contract contained standard
clauses making the house builder responsible for delivering the
site and doing so in compliance with the requirements of the
original planning consent.
Shortly after physical completion and letting
of more than 95% of the units on the site acquired by the PRS REIT,
a dispute arose between the respective Council and the house
builder regarding compliance with the original planning consent.
After consultation between these two parties, the house builder
submitted a further planning application with a view to resolving
the areas of dispute. The submission was recommended to the Elected
Council Members ("Members")
by the Council Executive but a decision was deferred at the hearing
in order that the Members could obtain additional information on
viability, a peer review to clarify on-site ventilation and
clarification on queries regarding potential soil contamination in
certain areas of the whole site. The Members are comfortable as
regards viability and ventilation. Work has been ongoing to ensure
that all parties are comfortable as regards the soil quality with
remedial action being undertaken where necessary. As at the
date of approval of these interim financial statements the house
building partner continues to work with the Council Executive to
address the final outstanding matters before reverting to the
Members for approval. The Investment Adviser is closely monitoring
progress. The Board of the PRS REIT is of the view that remaining
areas of work will be completed and the planning issues ultimately
finalised to the satisfaction of all parties, including the private
owners of the market for sale units.
The financial statements include an investment
value for the Coppenhall Place asset of £24.3 million as at 31
December 2023 on the assumption that the planning matters are
resolved. The value of the site represents approximately 2.3% of
the balance sheet investment value of assets as at the interim
date. Given the contractual protections, the risk of any potential
impact to the Group is considered highly unlikely, and given the
value of the site relative to the overall balance sheet, the risk
of any potential impact to the Group is considered to be
immaterial.
6. Interest bearing loans and
borrowings
|
|
|
|
Current liabilities
|
2023
£'000
|
|
2022
£'000
|
Bank loans at 1
July
|
126,745
|
|
99,941
|
Loans advanced in the
period
|
20,920
|
|
47,818
|
Loans repaid in the
period
|
(108,839)
|
|
(33,998)
|
Capitalised loan
costs
|
(13,599)
|
|
(1,084)
|
Bank loans at 31
December
|
25,227
|
|
112,677
|
|
|
|
|
Lease
liability
|
32
|
|
32
|
Total loans and
borrowings
|
25,259
|
|
112,709
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Bank loans at 1
July
|
247,432
|
|
245,684
|
Loans advanced in the
year
|
121,635
|
|
-
|
Capitalised loan
costs
|
11,830
|
|
1,943
|
Bank loans at 31
December
|
380,897
|
|
247,627
|
|
|
|
|
Lease
liability
|
1,220
|
|
1,004
|
Total loans and
borrowings
|
382,117
|
|
248,631
|
|
|
|
|
|
|
|
The Group's borrowing facilities are with
Scottish Widows, Legal & General Investment Management
('LGIM'), RBS plc and
Barclays Bank PLC. At 31 December 2023, these comprised the
following:
Lender
|
Loan facility
|
Balance drawn
31 Dec 2023
|
Loan period
|
Interest rate
(all in)
|
|
Maturity
|
Scottish Widows
|
£100 million
|
£100 million
|
15 years
|
3.14%
|
Fixed
|
June 2033
|
Scottish Widows
|
£150 million
|
£150 million
|
25 years
|
2.76%
|
Fixed
|
June 2044
|
LGIM
|
£102 million
|
£101.9 million
|
15 years
|
6.04%
|
Fixed
|
July 2038
|
RBS
|
£75 million
|
£32.8 million
|
2 years
|
6.79%
|
Variable
|
July 2025
|
Barclays Bank PLC
|
£33 million
|
£26.1 million
|
3 years
|
8.54%
|
Variable
|
August 2025
|
The loans are all compliant with
the bank covenant level of 55% loan to value and within the
Company's Investment Policy limit of a maximum 45% loan to
value.
7. Earnings per share
Earnings per share ("EPS") amounts are calculated by
dividing profit for the period attributable to ordinary equity
holders of the Company by the weighted average number of Ordinary
Shares in issue during the period. As there are no dilutive
instruments, only basic EPS are quoted below.
The calculation of basic and diluted earnings
per share is based on the following:
|
31 December
2023
|
31 December
2022
|
30 June
2023
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
Earnings per IFRS
income statement
|
30,278
|
14,713
|
42,452
|
|
|
|
|
Adjustments to
calculate EPRA Earnings:
|
|
|
|
Changes in value of
investment properties
|
(20,533)
|
(5,816)
|
(25,353)
|
EPRA
Earnings:
|
9,745
|
8,897
|
17,099
|
|
|
|
|
Weighted average
number of ordinary shares
|
549,251,458
|
549,251,458
|
549,251,458
|
IFRS EPS
(pence)
|
5.5p
|
2.7p
|
7.7p
|
EPRA EPS
(pence)
|
1.8p
|
1.6p
|
3.1p
|
|
|
|
|
8. Net Asset Value per share
EPRA Net Tangible Assets ("NTA"), is considered to be the most
relevant measure for the Group. The underlying assumption behind
the EPRA NTA calculation assumes entities buy and sell assets,
thereby crystallising certain levels of deferred tax liability. Due
to the PRS REIT's tax status, deferred tax is not applicable and
therefore there is no difference between IFRS NAV and EPRA
NTA.
Basic IFRS NAV per share is calculated by
dividing net assets in the Statement of Financial Position
attributable to ordinary equity holders of the parent by the number
of Ordinary Shares outstanding at the end of the period. As there
are no dilutive instruments, only basic NAV per share is quoted
below.
Net asset values have been calculated as
follows:
|
As at
31 December 2023
|
As at
31 December 2022
|
As at
30 June
2023
|
|
|
|
|
IFRS Net assets (£'000)
|
679,014
|
642,966
|
659,720
|
EPRA adjustments to NTA (£'000)
|
-
|
-
|
-
|
EPRA NTA (£'000)
|
679,014
|
642,966
|
659,720
|
|
|
|
|
Shares in issue at end of period
|
549,251,458
|
549,251,458
|
549,251,458
|
|
|
|
|
Basic IFRS NAV per share (pence)
|
123.6p
|
117.1p
|
120.1p
|
EPRA NTA per share (pence)
|
123.6p
|
117.1p
|
120.1p
|
|
|
|
|
|
|
|
|
|
|
|
The NTA per share calculated on an EPRA basis
is the same as the IFRS NAV per share for all period
ends.
9. Capital commitments
The Group has entered into contracts with
unrelated parties for the construction of residential housing with
a total value of £712.5 million (30 June 2023: £712.5
million, 31 December 2022: £712.6 million). As at 31
December 2023, £11.9 million (30 June 2023: £27.3
million, 31 December 2022: £44.6 million) of such
commitments remained outstanding.
10. Transactions with Investment
Adviser
On 31 March 2017, Sigma PRS was appointed as
the Investment Adviser of the Company. A new Investment Adviser
Agreement with Sigma PRS was signed in January 2021
For the period from 1 July 2023 to 31 December
2023, fees of £3.0 million (1 July 2022
to 31 December 2022: £2.9 million) were incurred and payable to
Sigma PRS in respect of asset management fees. At 31 December 2023,
£0.5 million remained unpaid (30 June
2023: £0.5 million, 31 December 2022: £0.5 million).
For the period from 1 July 2023 to 31 December
2023, development management fees of £0.6 million (1
July 2022 to 31 December 2022: £1.3 million) were
incurred and payable to Sigma PRS. At 31 December 2023,
£0.1 million (30 June 2023: £0.2 million, 31 December
2022: £0.1 million) remained unpaid.
For the period from 1 July 2023 to 31 December
2023, administration and secretarial services of £35,000 (2022:
£35,000) were incurred and payable to Sigma Capital Property Ltd, a
fellow subsidiary of the ultimate holding company of the Investment
Adviser. At 31 December 2023, £9,000 (2022: £9,000) remained
unpaid.
Sigma PRS's shareholding as at 31 December
2023 was 5,889,852 (2022: 5,889,852), which represents 1.07% (2022:
1.07%) of the issued share capital in the Company. All the shares
acquired were in accordance with the Development Management
Agreement between the Company and Sigma PRS.
For the period ended 31 December 2023, Sigma
PRS received dividends from the Company of £118,000 (2022:
£118,000).
During December 2023, the Group acquired Sigma
PRS Investments (Hexthorpe Phase 3) Limited, a subsidiary from
Sigma Capital Group Limited, for consideration of £9.1
million.
11. Dividends paid and proposed
|
Six months ended
31 December 2023 (unaudited)
|
Six months ended
31 December 2022 (unaudited)
|
Year
ended
30 June
2023 (audited)
|
|
£'000
|
£'000
|
£'000
|
Dividends on ordinary shares declared and
paid:
|
|
|
|
3 months to 30 June 2022: 1.0p per share
|
-
|
5,493
|
5,493
|
3 months to 30 September 2022: 1.0p per share
|
-
|
5,492
|
5,492
|
3 months to 31 December 2022: 1.0p per share
|
-
|
-
|
5,492
|
3 months to 31 March 2023: 1.0p per share
|
-
|
-
|
5,493
|
3 months to 30 June 2023: 1.0p per share
|
5,492
|
-
|
-
|
3 months to 30 September 2023: 1.0p per share
|
5,492
|
-
|
-
|
|
10,984
|
10,985
|
21,970
|
|
|
|
|
Proposed dividends
on ordinary shares:
|
|
|
|
3 months to 31 December 2022: 1.0p per share
|
-
|
5,492
|
-
|
3 months to 30 June 2023: 1.0p per share
|
-
|
-
|
5,493
|
3 months to 31 December 2023: 1.0p per share
|
5,492
|
-
|
-
|
|
5,492
|
5,492
|
5,493
|
The proposed dividend was paid on 8 March
2024, to shareholders on the register at 16 February
2024.
12. Post balance sheet events
Dividends
On 31 January 2024, the Company declared a
dividend of 1.0p per ordinary share in respect of the second
quarter of the current financial year.
The dividend was paid on 8 March 2024, to shareholders on the
register as at 16 February 2024.
SUPPLEMENTARY INFORMATION
I. EPRA
PERFORMANCE MEASURES SUMMARY
|
|
|
|
|
|
|
|
|
31 December
2023
|
|
31 December 2022
|
|
30 June
2023
|
|
EPRA earnings per
share
|
1.8p
|
|
1.6p
|
|
3.1p
|
|
EPRA net tangible
asset value (EPRA NTA)
|
123.6p
|
|
117.1p
|
|
120.1p
|
|
EPRA cost ratio
(including vacant property expenses)
|
34.1%
|
|
35.7%
|
|
35.9%
|
|
EPRA cost ratio
(excluding vacant property expenses)
|
33.8%
|
|
35.5%
|
|
35.6%
|
|
EPRA Net Initial
Yield ("NIY")
|
4.2%
|
|
4.2%
|
|
4.1%
|
|
EPRA Loan to Value
("LTV")
|
37.1%
|
|
35.6%
|
|
36.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group considers EPRA NTA to be the most
relevant measure for its operating activities and has therefore
adopted this as the Group's primary measure of net asset
value.
II. INCOME
STATEMENT
|
31 December
2023
|
|
31 December
2022
|
|
30 June
2023
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
Rental income
|
28,148
|
|
24,171
|
|
49,701
|
Non-recoverable property costs
|
(5,208)
|
|
(4,548)
|
|
(9,551)
|
Net rental income
|
22,940
|
|
19,623
|
|
40,150
|
Other
income
|
95
|
|
1,335
|
|
1,646
|
Administrative
expenses
|
(4,384)
|
|
(4,086)
|
|
(8,268)
|
Operating profit before interest and
tax
|
18,651
|
|
16,872
|
|
33,528
|
Net finance
costs
|
(8,906)
|
|
(7,975)
|
|
(16,429)
|
Profit before taxation
|
9,745
|
|
8,897
|
|
17,099
|
Taxation on EPRA
earnings
|
-
|
|
-
|
|
-
|
EPRA earnings
|
9,745
|
|
8,897
|
|
17,099
|
|
|
|
|
|
|
Weighted average
number of Ordinary Shares
|
549,251,458
|
|
549,251,458
|
|
549,251,458
|
|
|
|
|
|
|
EPRA earnings per
share
|
1.8p
|
|
1.6p
|
|
3.1p
|
|
|
|
|
|
|
|
III. STATEMENT OF FINANCIAL
POSITION
|
|
31 December
2023
|
|
31 December
2022
|
|
30 June
2023
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
Investment properties
|
1,080,058
|
|
998,184
|
|
1,034,732
|
Other net assets
|
6,332
|
|
6,122
|
|
173
|
Borrowings
|
(407,376)
|
|
(361,340)
|
|
(375,185)
|
Total shareholders'
equity
|
679,014
|
|
642,966
|
|
659,720
|
Adjustments to
calculate EPRA NTA:
|
|
|
|
|
|
|
-
|
|
-
|
|
-
|
EPRA net tangible
assets
|
679,014
|
|
642,966
|
|
659,720
|
|
|
|
|
|
|
Ordinary Shares in
issue at year end
|
549,251,458
|
|
549,251,458
|
|
549,251,458
|
|
|
|
|
|
|
EPRA NTA per share
|
123.6p
|
|
117.1p
|
|
120.1p
|
IV. EPRA COST RATIO
|
|
31 December
2023
|
|
31 December
2022
|
|
30 June
2023
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
Property operating
expenses
|
5,208
|
|
4,548
|
|
9,551
|
Administrative expenses
|
4,384
|
|
4,086
|
|
8,268
|
EPRA costs (including vacant property
expenses) (A)
|
9,592
|
|
8.634
|
|
17,819
|
|
|
|
|
|
|
Vacant property
costs
|
(67)
|
|
(61)
|
|
(114)
|
|
|
|
|
|
|
EPRA costs (excluding vacant property
expenses) (B)
|
9,525
|
|
8,573
|
|
17,705
|
|
|
|
|
|
|
Gross Rental Income
(C)
|
28,148
|
|
24,171
|
|
49,701
|
|
|
|
|
|
|
EPRA Cost Ratio (including vacant
property expenses) (A/C)
|
34.1%
|
|
35.7%
|
|
35.9%
|
|
|
|
|
|
|
EPRA Cost Ratio (excluding vacant
property expenses) (B/C)
|
33.8%
|
|
35.5%
|
|
35.6%
|
V. EPRA NET INITIAL YIELD
("NIY")
|
|
31 December
2023
|
|
31 December
2022
|
|
30 June
2023
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
Total investment property
|
1,080,032
|
|
998,184
|
|
1,034,732
|
Less: development properties
|
(93,481)
|
|
(92,720)
|
|
(87,043)
|
Less: right of use asset
|
(1,205)
|
|
(1,036)
|
|
(1,040)
|
Completed property
portfolio
|
985,346
|
|
904,428
|
|
946,649
|
Allowance for
estimated purchasers' costs
|
22,663
|
|
20,802
|
|
21,773
|
Gross up completed property portfolio
valuation (B)
|
1,008,009
|
|
925,230
|
|
968,422
|
|
|
|
|
|
|
Annualised cash
passing rental income
|
54,588
|
|
50,013
|
|
51,264
|
Property
outgoings
|
(12,282)
|
|
(11,253)
|
|
(11,534)
|
|
|
|
|
|
|
Annualised net rents
(A)
|
42,306
|
|
38,760
|
|
39,730
|
Add: notional rent
expiration of rent free periods or other lease
incentives
|
-
|
|
-
|
|
-
|
Topped-up net annualised rent
(C)
|
42,306
|
|
38,760
|
|
39,730
|
|
|
|
|
|
|
EPRA NIY (A/B)
|
4.2%
|
|
4.2%
|
|
4.1%
|
EPRA 'topped up' NIY
(C/B)
|
4.2%
|
|
4.2%
|
|
4.1%
|
|
|
|
|
|
|
VI. EPRA LOAN TO VALUE
("LTV")
|
|
31 December
2023
|
|
31 December
2022
|
|
30 June
2023
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
Borrowings (net)
|
406,124
|
|
360,304
|
|
374,145
|
Net payables
|
10,983
|
|
12,682
|
|
14,065
|
|
|
|
|
|
|
Less: Cash and cash equivalents
|
(16,063)
|
|
(17,768)
|
|
(13,198)
|
Net debt (A)
|
401,044
|
|
355,218
|
|
375,012
|
|
|
|
|
|
|
Investment properties
at fair value
|
1,080,058
|
|
998,184
|
|
1,034,732
|
Total property value
(B)
|
1,080,058
|
|
998,184
|
|
1,034,732
|
|
|
|
|
|
|
|
|
|
|
|
|
EPRA LTV (A/B)
|
37.1%
|
|
35.6%
|
|
36.2%
|