TIDMCRC
RNS Number : 7955T
Circle Property PLC
29 November 2021
29 November 2021
Circle Property Plc
("Circle", the "Company" or the "Group")
Interim Results for the six months ended 30 September 2021
REGIONAL FOCUSED PORTFOLIO PROVIDES PLATFORM FOR GROWTH IN ASSET
VALUES AND SHAREHOLDER RETURNS
Circle Property Plc (AIM: CRC), which invests in, develops and
actively manages well-located regional office assets, is pleased to
announce interim results for the six months ended 30 September
2021.
John Arnold, Chief Executive of Circle Property Plc, said:
"Our regional office portfolio has performed resiliently in the
period. As increasing numbers of workers have returned to their
offices, the importance of having an environment to meet,
collaborate, mentor and train employees is clear. Whilst working
patterns have changed, the office continues to play an integral
role for many businesses.
It has been a very active period for the Company in terms of
asset management. By the end of this calendar year we expect to
have completed on the disposal of One Castlepark in Bristol for a
consideration of GBP20 million. With the majority of the proceeds
from this sale being allocated to debt repayment, our degearing is
well advanced. This, together with the increased interim dividend
ahead of 2019 and 2020 levels, shows the positive momentum made by
the Company during the period."
Financial Highlights: A solid performance against an improving
backdrop
-- Unaudited estimated Net Asset Value ("NAV") per share of
GBP2.74 (FY 2021: GBP2.74 / H1 2020: GBP2.83). This figure includes
the full impact of disposals in the period
-- On a like-for-like basis (excluding completed disposals) the
gross portfolio valuation as at 30 September 2021 was marginally
down by 0.5% to GBP130 million in the period
-- Group LTV reflected 46.6% (excluding cash at bank) with a
cash balance of GBP8.6 million reflecting a net LTV of 40%. Group
LTV expected to reduce further following the completion of the
disposal of One Castle Park in December 2021.
-- Operating profit after revaluation of investment properties
of GBP2.1 million (H1 2020: GBP0.146 million)
-- Profit before tax of GBP1.3 million (H1 2020: loss GBP0.7 million)
-- Earnings per share of 4 pence (H1 2020: 2 pence)
-- Proposed interim dividend of 3.5p per share, ahead of 2020
and 2019 pay-outs (H1 2020: 2.5p / H1 2019: 3.3p)
-- Rental income of GBP3.2 million (H1 2020: GBP3.9 million),
down largely due to disposals and corresponding loss of income
Operational Highlights: Active Portfolio Management delivered
significant gains
-- Rent collection for the March, June and September 2021
quarters was 93%, 91% and 80% respectively. Discussions continue
around outstanding rental arrears
-- 84.02% of total portfolio (including K3 at Kents Hill, Milton
Keynes, a development in progress) is let and incoming
producing
-- Asset management projects:
o Refurbishment of K3 Kents Hill, Milton Keynes underway, with
GBP2.2 million planned development costs and completion scheduled
for Summer 2022
o High-spec, modern fit-outs undertaken at Concorde Park,
Maidenhead and 36 Great Charles Street, Birmingham
-- 100% of the Company's portfolio is within the regional office
sector, including a regional conference centre, and 88.35% located
in Milton Keynes, Bristol, Birmingham and Maidenhead & is
flexible in terms of 1-5,000sq.ft. with ability to be
sub-divided.
Disposals during the period above book: A busy period for
portfolio management
-- August 2021: the Group exchanged contracts on the sale of One
Castle Park, Bristol to Boultbee Brooks (Castle Park) Limited c/o
Boultbee Brooks Real Estate, for a consideration of GBP20 million
representing a 3.9% increase on 31 March 2021 valuation of GBP19.25
million, with completion due in December 2021
-- September 2021: Sale of 135 Aztec West in Bristol to Assura
Aspire Limited. The sale price of GBP3.961 million represented a
156% increase (pre-refurbishment cost) and a 62% increase (post
refurbishment cost) on 31 March 2021 valuation of GBP1.55
million
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the UK version of the EU Market Abuse Regulation (2014/596) which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended and supplemented from time to time.
+44 (0)207 930
Circle Property Plc 8503
John Arnold, CEO
Edward Olins, COO
+44 (0) 207 397
Cenkos Securities 8900
Katy Birkin
Mark Connelly
+44 (0) 203 897
Radnor Capital Partners 1830
Joshua Cryer
Iain Daly
+44 (0) 203 757
Camarco 4992
Ginny Pulbrook
Rosie Driscoll
Toby Strong
About Circle Property Plc
Circle focusses on acquiring assets in regional cities, many of
which have significant office supply constraints, and on office
assets with active management potential (refurbishment
opportunities, under-rented or vacant properties or short leases),
rather than just maximising initial rental yields.
Circle is not a Real Estate Investment Trust (REIT) and can
actively recycle proceeds from asset sales into its refurbishment
and redevelopment pipeline, as well as future investment
opportunities, therefore targeting a broader range of returns for
shareholders, which are primarily driven by NAV growth.
As well as already delivering substantial increases in NAV, the
Company's portfolio has significant reversionary potential with
current total estimated rental values of GBP10.92 million per
annum, compared to contracted rent of GBP8.70 million at 31 March
2021. The Company has a portfolio of 12 regional commercial
property investment and development assets in the UK valued at
GBP130 million as at 30 September 2021.
Chief Executive's Statement
Notwithstanding the understandable caution in the lettings
market associated with COVID-19, we have made good progress in the
period. The Company achieved the sale of 135 Aztec West, Bristol,
significantly above valuation at 62% above book, following the
letting of the entire building to Fertility Bristol Limited, which
alone has offset a 0.5% valuation downturn in the Company's total
portfolio . All asset sales during the period have been ahead of
their respective book values.
The development at K3 Kents Hill is proceeding well and we have
already received strong tenant interest. The development will cost
GBP2.2 million funded through the Company's cash resources and the
project is now scheduled for completion in Summer 2022. This
targeted spend will deliver an attractive space which we are
confident will achieve a good rental income. Moreover, the
completed high-spec, modern fit-outs at Concorde Park, Maidenhead
and 36 Great Charles Street, Birmingham are beginning to register
increasing levels of tenant interest with higher levels of viewings
and requests for landlords letting proposals.
We have been able to maintain exceptionally high rental recovery
in excess of 90% during the period. Conversations and negotiations
around rental arrears continue and we are confident of a positive
outcome, particularly as office attendance and usage increases. The
majority of our tenants remain firmly of the view that the office
plays a central part in the running of their respective businesses.
Whilst having the flexibility to work some of the time from home
can be advantageous in certain circumstances, dependent upon the
individual and the nature of the work, the view remains that team
building, collaboration, creativity, employee assessment, mentoring
and training is most effective within an office environment. Given
all of this, and reflected in our solid financial metrics, we
remain of the view that whilst working patterns may adapt, the
office is very much here to stay.
The Company's investment and development portfolio, which is
almost entirely focused in the regional office sector with no
exposure to retail (other than two public houses and one restaurant
in Birmingham), was valued, on a like-for like basis (excluding
completed disposals) at 30 September 2021 at GBP130 million. Net
asset value per share ("NAV") has remained stable reflecting an
unaudited estimated NAV per share of GBP2.74 (FY 2021: GBP2.74).
This figure includes the full impact of disposals in the
period.
The Company has a financing facility in place with RBS and HSBC
for GBP100 million. The senior revolving facility is for GBP65
million (of which the Company has drawn GBP60.525 million) with an
"accordion" option for a further GBP35 million. At 30 September
2021, the Group's LTV reflected 46.6% (excluding cash at bank) and
the Group had a cash balance of GBP8.6 million reflecting a net LTV
of 40%. Post period, on 18 October 2021, the Group made a repayment
of GBP1.98 million against its financing facility. The Board
expects the Group's LTV to reduce further following the completion
of the disposal of One Castle Park which is expected in December
2021.
As previously announced, the Company is targeting a further
reduction in gearing through targeted asset sales at valuations at
or above book value and achieving lettings at estimated rental
values (ERV). There are a number of assets that have benefited from
our active management approach, with added value following
redevelopment, lease restructures or renewals which we expect to be
highly sought after, particularly as the office investment market
improves post COVID-19 uncertainties.
The Board declares an interim dividend of 3.5p, which will be
paid on 14 January 2022 to shareholders on the register on 10
December 2021, with an ex-dividend date of 9 December 2021. This
dividend is an increase of 40% on 2020's COVID-19 impacted interim
dividend of 2.5p and importantly, 6% ahead of 2019's interim
dividend of 3.3p.
Notwithstanding the ongoing impacts of the COVID-19 pandemic, we
remain optimistic that the macroeconomic recovery, and in turn the
regional office market, is heading in the right direction. Whilst
the letting market is recovering more slowly, we believe that the
flexibility offered by our assets and their inherently smaller
floorplates (1,000-5,000 sq.ft) will be key in converting enquiries
into lettings. The Board remain committed to maximising returns and
delivering value to our shareholders.
Condensed consolidated statement of comprehensive income
for the 6 months ended 30 September 2021
6 months to 6 months to 12 months
30 September 30 September to
31 March
------------------------------------
2021 2020 2021
Note (unaudited) (unaudited) (audited)
------------------------------------
GBP GBP GBP
------------------------------------ ---------- ------------- ------------- -----------
Rental income 4 3,233,143 3,919,307 7,657,830
Other income 4 983,509 1,010,022 2,233,842
------------------------------------ ---------- ------------- ------------- -----------
4,216,652 4,929,329 9,891,672
Property expenses 5 (1,219,063) (1,269,188) (2,356,221)
------------------------------------ ---------- ------------- ------------- -----------
Net rental income 2,997,589 3,660,141 7,535,451
Administrative expenses 6 (944,649) (978,840) (2,615,926)
------------------------------------ ---------- ------------- ------------- -----------
Operating profit 2,052,940 2,681,301 4,919,525
Gain on disposal of investment
properties 599,446 - 263,446
Gain on asset held-for-sale 12 750,000 - -
Loss on revaluation of investment
properties 11 (1,300,804) (2,534,903) (6,224,003)
------------------------------------ ---------- ------------- ------------- -----------
Operating profit/(loss) after
revaluation of investment properties 2,101,582 146,398 (1,041,032)
Finance income 7 26 2,083 2,094
Finance costs 8 (760,934) (884,516) (1,696,110)
------------------------------------ ---------- ------------- ------------- -----------
Net finance costs (760,908) (882,433) (1,694,016)
------------------------------------ ---------- ------------- ------------- -----------
Profit/(loss) for the period before
taxation 1,340,674 (736,035) (2,735,048)
Taxation 9 (156,562) 113,714 199,729
------------------------------------ ---------- ------------- ------------- -----------
Total comprehensive profit/(loss)
for the year 1,184,112 (622,321) (2,535,319)
------------------------------------ ---------- ------------- ------------- -----------
Earnings/(loss) per share 10 0.04 (0.02) (0.09)
------------------------------------ ---------- ------------- ------------- -----------
NAV per share 2.74 2.83 2.74
------------------------------------ ---------- ------------- ------------- -----------
There is no comprehensive income other than that included in the
profit for the period. All of the profit for the period is
attributable to the owners of the Company.
All items in the above statement derive from continuing
operations.
Condensed consolidated statement of financial position
as at 30 September 2021
Note 30 September 30 September 31 March
---------------------------------
2021 2020 2021
(unaudited) (unaudited) (audited)
---------------------------------
GBP GBP GBP
--------------------------------- ---- ------------- ------------- -------------
Non-current assets
Investment properties 11 99,243,539 127,111,883 121,289,149
Right of use assets 2,316 84,540 61,039
Property plant and equipment 52,940 55,118 54,410
Lease incentives and receivables 13 9,966,711 10,128,672 10,127,528
Deferred tax asset 1,191,464 1,298,659 1,291,615
--------------------------------- ---- ------------- ------------- -------------
110,456,970 138,678,872 132,823,741
Current assets
Trade and other receivables 13 2,731,180 2,683,828 2,982,923
Assets held for sale 12 20,000,000 - -
Cash and cash equivalents 8,566,762 4,543,692 7,522,804
--------------------------------- ---- ------------- ------------- -------------
31,297,942 7,227,520 10,505,727
Total assets 141,754,912 145,906,392 143,329,468
--------------------------------- ---- ------------- ------------- -------------
Equity
Stated capital 42,542,179 42,542,179 42,542,179
Treasury share reserve 1,170,961 668,456 1,047,684
Retained earnings 33,866,695 37,000,805 33,814,453
--------------------------------- ---- ------------- ------------- -------------
Total equity 77,579,835 80,211,440 77,404,316
Non-current liabilities
Borrowings 14 60,249,656 61,822,537 61,922,684
Lease liabilities for right
of use assets - 47,504 28,601
Deferred tax liability 379,226 768,913 482,171
--------------------------------- ---- ------------- ------------- -------------
60,628,882 62,638,954 62,433,456
Current liabilities
Trade and other payables 15 3,539,026 3,011,500 3,450,969
Lease liabilities for right
of use assets 7,169 44,498 40,727
--------------------------------- ---- ------------- ------------- -------------
3,546,195 3,055,998 3,491,696
Total liabilities 64,175,077 65,694,952 65,925,152
--------------------------------- ---- ------------- ------------- -------------
Total liabilities and equity 141,754,912 145,906,392 143,329,468
--------------------------------- ---- ------------- ------------- -------------
The condensed consolidated interim financial statements were
approved by the Board of Directors on [26] November 2021.
Condensed consolidated statement of changes in equity
for the 6 months ended 30 September 2021
Stated capital Treasury share Share-based Retained
capital payment reserve earnings
Total
----------------------
GBP GBP GBP GBP GBP
---------------------- -------------- -------------- ---------------- ----------- -----------
As at 1 April 2020 42,162,178 380,001 516,048 37,623,126 80,681,353
Loss for the period - - - (622,321) (622,321)
Share-based payments - - 152,408 - 152,408
---------------------- -------------- -------------- ---------------- ----------- -----------
As at 30 September
2020 42,162,178 380,001 668,456 37,000,805 80,211,440
Loss for the period - - - (1,912,998) (1,912,998)
Share-based payments - - 379,228 - 379,228
Dividends - - - (1,273,354) (1,273,354)
---------------------- -------------- -------------- ---------------- ----------- -----------
As at 31 March 2021 42,162,178 380,001 1,047,684 33,814,453 77,404,316
Profit for the period - - - 1,184,112 1,184,112
Share-based payments - - 123,277 - 123,277
Dividends - - - (1,131,870) (1,131,870)
---------------------- -------------- -------------- ---------------- ----------- -----------
As at 30 September
2021 42,162,178 380,001 1,170,961 33,866,695 77,579,835
---------------------- -------------- -------------- ---------------- ----------- -----------
Condensed consolidated statement of cash
flows
for the 6 months ended 30 September 2021
6 months to 6 months to 12 months
to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
------------------------------------------------ ------------ ------------ -----------
Cash flows from operating activities
Profit/(loss)for the period before taxation 1,340,674 (736,035) (2,735,048)
Adjustments for:
Finance income (26) (2,083) (2,094)
Finance expense 760,934 884,516 1,696,110
Depreciation 7,785 7,145 14,167
Amortisation of right of use assets 18,700 23,502 47,005
Loss on revaluation of investment properties 1,300,804 2,534,903 6,224,003
Gain on disposal of investment properties (599,446) - (263,446)
Gain on revaluation of assets held for
sale (750,000) - -
Share based payments 123,277 152,408 531,636
Increase in trade and other receivables 412,560 (852,315) (1,150,266)
Increase/(decrease) in trade and other
payables (334,478) (138,347) 185,615
------------------------------------------------ ------------ ------------ -----------
Cash generated from operating activities 2,280,784 1,873,694 4,547,682
Interest and other finance costs paid (655,725) (858,649) (1,578,755)
Interest received 26 2,083 2,094
Taxation paid - (116,773) (151,475)
------------------------------------------------ ------------ ------------ -----------
Net cash from operating activities 1,625,085 900,355 2,819,546
------------------------------------------------ ------------ ------------ -----------
Cash flows from investing activities
Cost of refurbishment of investment properties (1,084,488) (311,312) (1,459,489)
Proceeds from disposal of investment properties 3,436,621 - 3,513,446
Cost of additions of property plant and
equipment (6,315) - (6,314)
------------------------------------------------ ------------ ------------ -----------
Net cash from/(used) in investing activities 2,345,818 (311,312) 2,047,643
------------------------------------------------ ------------ ------------ -----------
Cash flows from financing activities
Repayment of borrowings (1,775,000) - -
Payment of lease liabilities (20,075) (25,680) (51,360)
Drawdown of borrowings - 1,000,000 1,000,000
Dividends paid (1,131,870) - (1,273,354)
------------------------------------------------ ------------ ------------ -----------
Net cash (used in)/from financing activities (2,926,945) 974,320 (324,714)
------------------------------------------------ ------------ ------------ -----------
Net (decrease)/increase in cash and cash
equivalents 1,043,958 1,563,363 4,542,475
Cash and cash equivalents at the beginning
of the period 7,522,804 2,980,329 2,980,329
------------------------------------------------ ------------ ------------ -----------
Cash and cash equivalents at the end of
the period 8,566,762 4,543,692 7,522,804
------------------------------------------------ ------------ ------------ -----------
Notes to the condensed consolidated interim financial
statements
for the 6 months ended 30 September 2021
1 General information
These condensed consolidated interim financial statements are
for Circle Property Plc ("the Company") and its subsidiary
undertakings (together referred to as the "Group").
The Company's shares are admitted to trading on AIM, a market
operated by the London Stock Exchange plc. The Company is domiciled
and registered in Jersey, Channel Islands. The address of its
registered office is 3rd Floor, Standard Bank House, 47- 49 La
Motte Street, St Helier, Jersey, JE2 4SZ.
The nature of the Company's operations and its principal
activities are that of property investment in the UK.
2 Principal accounting policies
Basis of preparation
The condensed consolidated interim financial statements are
prepared under the historical cost convention and on a going
concern basis and in accordance with International Financial
Reporting Standards and IFRIC interpretations adopted for use in
the European Union ("IFRS") and with those parts of the Companies
(Jersey) Law, 1991 applicable to companies preparing their accounts
under IFRS.
The condensed consolidated interim financial statements
contained in this document do not constitute statutory accounts
under Companies (Jersey) Law 1991. In the opinion of the directors,
the condensed consolidated interim financial statements for this
period fairly presents the financial position, result of operations
and cash flows for this period.
The condensed consolidated interim financial statements have not
been audited, nor have they been reviewed by the Company's auditors
in accordance with the International Standard on Review Engagements
2410 issued by the Auditing Practices Board.
Statutory financial statements for the year ended 31 March 2021
were approved by the Board of Directors on 6 July 2021. The report
of the auditors on those financial statements was unqualified.
Statement of compliance
The Interim Report includes the consolidated interim financial
statements which have been prepared in accordance with
International Accounting Standard 34 'Interim Financial Reporting'.
The condensed interim financial statements should be read in
conjunction with the annual financial statements for the year ended
31 March 2021, which have been prepared in accordance with IFRS as
adopted by the European Union and applicable law.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chief Executive's statement. The financial
position of the Group, its cash flows, liquidity position and
borrowing facilities are described in these financial
statements.
The Directors have assessed the Group's ability to continue as a
going concern, including an assessment of the on-going impact of
Covid-19. In making their assessment the Directors have modelled
the Group's cash forecasts based on the circumstances of each
tenant on an individual basis. Rental collections have been
monitored on a weekly basis with ongoing communication with tenants
in respect of the collection of rental arrears. Loan covenants have
been stress tested taking into consideration a potential reduction
in the valuation of the Group's property portfolio.
Based on these considerations the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they have adopted the going concern basis in preparing
the financial statements.
New Standards adopted at 1 January 2021
There are no accounting pronouncements which have become
effective from 1 January 2021 that have a significant impact on the
Group's interim condensed consolidated financial statements.
Significant accounting policies
The accounting policies applied by the Group in these
half-yearly results are the same as those applied by the Group in
its consolidated financial information in its 2021 Annual Report
and Accounts, with the exception of IFRS 5 - Non-current assets
held-for-sale and discontinued operations.
IFRS 5 - Non-current assets held-for-sale and discontinued
operations.
Assets are classified as held for sale when:
Management is committed to a plan to sell
The asset is available for immediate sale
An active programme to locate a buyer is initiated
The sale is highly probable, within 12 months of classification
as held for sale
The asset is being actively marketed for sale at a sales price
reasonable in relation to its fair value
Actions required to complete the plan indicate that it is
unlikely that plan will be significantly changed or withdrawn
Investment properties classified as held for sale are measured
at fair value in accordance with the measurement criteria of
IAS40.
Assets held for sale are derecognised when significant risks and
rewards attached to the asset have transferred from the group which
is on completion of contracts.
Areas of estimates and judgement
In preparing these condensed consolidated interim financial
statements, management has made judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and
expenses. Actual results may differ from these estimates.
The judgements, estimates and assumptions applied in the Group's
consolidated interim financial statements, including the key
sources of estimation uncertainty, were the same as those applied
in the Group's last annual financial statements for the year ended
31 March 2021, with the exception of the asset reclassification
under IFRS 5 - Non-current assets held-for-sale and discontinued
operations.
3 Operating segments
During the period the Group operated in one geographical
segment, which is the United Kingdom, and one reporting segment,
which is investment in commercial property. Therefore no segmental
reporting is required.
4 Revenue 6 months 6 months 12 months
to to to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
--------------------------- ------------- ------------- -----------
Rental income 3,337,533 3,290,782 6,906,571
Lease incentive adjustment (104,390) 628,525 751,259
--------------------------- ------------- ------------- -----------
3,233,143 3,919,307 7,657,830
Insurance recovery 100,268 71,130 142,762
Service charge income 798,241 856,174 1,633,071
Other income 85,000 82,718 458,009
--------------------------- ------------- ------------- -----------
983,509 1,010,022 2,233,842
--------------------------- ------------- ------------- -----------
4,216,652 4,929,329 9,891,672
--------------------------- ------------- ------------- -----------
5 Property expenses 6 months 6 months to 12 months
to 30 September to
30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
--------------------------------------- ------------- ------------- ----------
Property expenses 33,292 6,729 26,392
Property service charges 221,610 158,495 331,904
Property repairs and maintenance costs 28,753 89,832 94,556
Property insurance 75,048 79,630 168,330
Property rates 62,119 78,328 101,968
Recoverable service charge costs 798,241 856,174 1,633,071
--------------------------------------- ------------- ------------- ----------
1,219,063 1,269,188 2,356,221
--------------------------------------- ------------- ------------- ----------
6 Administrative expenses 6 months 6 months to 12 months
to 30 September to
30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
-------------------------------------- ------------- ------------- -----------
Staff costs 506,001 536,032 1,657,273
Administration fees 153,200 152,311 305,540
Legal and professional fees 176,914 214,488 415,687
Audit fees 33,500 - 67,000
Accountancy fees 2,445 3,484 8,016
Rent, rates and other office costs 9,113 24,891 26,763
Other overheads 36,991 16,987 74,475
Depreciation of tangible fixed assets 7,785 7,145 14,167
Amortisation of right of use assets 18,700 23,502 47,005
-------------------------------------- ------------- ------------- -----------
944,649 978,840 2,615,926
-------------------------------------- ------------- ------------- -----------
7 Finance income 6 months 6 months to 12 months
to 30 September to
30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
----------------- ------------- ------------- ----------
Bank interest 26 2,083 2,094
----------------- ------------- ------------- ----------
26 2,083 2,094
----------------- ------------- ------------- ----------
8 Finance costs 6 months 6 months 12 months
to to to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
------------------------------ ------------- ------------- -----------
Loan interest 643,284 767,484 1,420,734
Loan commitment fees 17,739 12,479 22,670
Amortisation of lending costs 101,972 100,697 200,844
Annual agency fee - - 45,000
Interest on lease liabilities (2,061) 3,856 6,862
------------------------------ ------------- ------------- -----------
760,934 884,516 1,696,110
------------------------------ ------------- ------------- -----------
During the period, the Group has terminated a rental agreement
lease for St James Place, with the termination date being the 30
June 2021.
This rental agreement termination required the de-recognition of
the lease liability and right of use asset that was recognised in
line with IFRS 16 - Leases.
The impact of the de-recognition has been included in the table
above.
9 Taxation
6 months to 6 months to 12 months
to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
------------------------------- ------------- ------------- -----------
Current tax 159,356 215,426 409,109
Deferred tax (credit) / charge (2,794) (329,140) (608,838)
------------------------------- ------------- ------------- -----------
156,562 (113,714) (199,729)
------------------------------- ------------- ------------- -----------
10 Earnings per share
Basic earnings per share has been calculated on profit after tax
attributable to ordinary shareholders for the period (as shown on
the condensed consolidated statement of comprehensive income) and
the weighted average number of ordinary shares in issue during the
period.
6 months 6 months to 12 months
to 30 September to
30 September 31 March
-----------------------------------------------
2021 2020 2021
(unaudited) (unaudited) (audited)
-----------------------------------------------
GBP GBP GBP
----------------------------------------------- ------------- ------------- -------------
Profit/(loss) for the period 1,184,112 (622,321) (2,535,319)
----------------------------------------------- ------------- ------------- -------------
Weighted average number of shares (excluding
treasury shares) 28,296,762 28,296,762 28,296,792
----------------------------------------------- ------------- ------------- -------------
Earnings per ordinary share: 0.04 (0.02) (0.09)
----------------------------------------------- ------------- ------------- -------------
In the opinion of the Board, treasury shares held to satisfy
share awards to management currently do not have any material value
and hence do not have any dilutive effect. Therefore no diluted
earnings per share has been presented.
11 Investment properties 30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
----------------------------------------------- -------------- -------------- --------------
Opening fair value per valuation report 132,150,000 139,450,000 139,450,000
Cost of refurbishment of investment properties 1,342,369 306,378 1,422,744
Cost of acquisition of investment property - - -
Disposal of investment properties (2,837,175) - (3,250,000)
Loss on revaluation of investment properties (1,300,804) (2,534,903) (6,224,003)
Lease incentive amortisation (104,390) 628,525 751,259
Reclassification of asset held for sale (19,250,000) - -
----------------------------------------------- -------------- -------------- --------------
Fair value of investment properties per
valuation report 110,000,000 137,850,000 132,150,000
----------------------------------------------- -------------- -------------- --------------
Unamortised lease incentives (10,756,461) (10,738,117) (10,860,851)
----------------------------------------------- -------------- -------------- --------------
Carrying value 99,243,539 127,111,883 121,289,149
----------------------------------------------- -------------- -------------- --------------
The fair value of the Group's investment properties at 30
September 2021 has been arrived at on the basis of valuation
carried out by Savills (UK) Limited. The valuation was carried out
in accordance with the Practice Statements contained in the
Appraisal and Valuation Standards as published by the RICS. In
forming their opinion of the fair value, the independent valuer's
had regard to the current best use of the property, its investment
attributes and recent comparable transactions. The valuation was
carried out using the "All Risks Yield" method taking into
consideration both sales and rental evidence and formulating the
opinion of market value taking into account the properties'
locations, specifications and specific characteristics.
At 30 September 2021, the fair value of the Group's investment
properties per the valuation report amounted toGBP110,000,000
(2020: GBP137,850,000). The difference between the fair value of
the investment properties per the valuation report and the fair
value per the balance sheet of GBP10,756,461 (2020: GBP10,738,117)
relates to unamortised lease incentives which are recorded in the
financial statements within non-current and current assets.
The Group has pledged all of its investment properties to secure
banking facilities granted to the Group as detailed in note 14.
12 Assets held for sale 30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
-------------------------------------------- ------------ ------------ ---------
Opening balance - - -
Reclassification of One Castle Park, Bristol 19,250,000 - -
Gain on revaluation of asset held for sale 750,000 - -
-------------------------------------------- ------------ -----------------------
Closing balance 20,000,000 - -
-------------------------------------------- ------------ -----------------------
On 31 August 2021, the Group exchanged contracts on the sale of
One Castle Park, Bristol to Boultbee Brooks (Castle Park) Limited
c/o Boultbee Brooks Real Estate for a consideration of
GBP20,000,000.
Completion is anticipated to take place
on or around 16 December 2021.
30 September 30 September 31 March
13 Lease incentives and receivables
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
---------------------------------------- -------------- -------------- ------------
Non-current
Lease incentives 9,966,711 10,128,672 10,127,528
---------------------------------------- -------------- -------------- ------------
Current
Lease incentives 789,750 609,445 733,323
Amounts due from property agents 51,586 532,692 -
Tenant deposits 272,662 271,017 272,824
Amounts due from tenants 1,379,759 1,124,020 1,695,925
Other receivables 237,423 146,654 280,851
---------------------------------------- -------------- -------------- ------------
2,731,180 2,683,828 2,982,923
---------------------------------------- -------------- -------------- ------------
14 Borrowings 30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
------------------------------ ------------ ------------ ------------
Brought forward 61,922,684 60,721,840 60,721,840
Loan repayments (1,775,000) - -
Loan drawdowns - 1,000,000 1,000,000
Amortisation of lending costs 101,972 100,697 200,844
------------------------------ ------------ ------------ ------------
Total borrowings 60,249,656 61,822,537 61,922,684
------------------------------ ------------ ------------ ------------
The Group is party to a revolving facility, with NatWest and
HSBC. The facility is a GBP60,000,000 revolving facility with an
accordion option of up to GBP40,000,000, of which GBP5,000,000 had
been committed at the period end. The facility has a four year
term, repayable on 13 February 2023. The rate of interest is the
aggregate of the margin 2.05% and LIBOR and is payable quarterly. A
commitment fee is payable at a rate of 0.82% on the undrawn
facility and in relation to the accordion facility.
The Group paid an arrangement fee of 0.875% for the facility,
which along with other costs of arranging the facility including
legal costs have been amortised and will be written off over the 4
year term.
The facility is secured by a first and only legal charge over
the Group's investment properties, an assignment of rental income,
charges over specified bank accounts of the Group and a floating
charge granted over all assets of the Group.
The facility's financial covenants are 60% loan to value, 2.00:1
interest cover looking both forward and backward, the Group shall
ensure that the total market value of the charged properties does
not fall below GBP50,000,000 at any time and that no single tenant
represents more than 25% of the total contracted rents.
At 30 September 2021 GBP60,525,000 (2020: GBP62,300,000) of the
total facility had been drawndown and the undrawn facility was
GBP4,475,000 (2020: GBP2,700,000).
On 18 October 2021, a repayment of GBP1,980,731 was made against
the facility.
15 Trade and other payables 30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
---------------------------- ------------ ------------ ----------
Trade payables 47,200 26,782 50,467
Property improvement costs 285,314 59,242 27,433
Wages and salaries 26,223 27,902 338,664
Deferred income 1,752,940 1,749,920 1,745,607
Rental deposit accounts 272,662 271,017 272,968
Finance costs 279,467 285,834 274,169
VAT - Payable 195,485 257,742 170,918
Valuation fee 13,200 18,000 30,000
Audit fee 33,500 - 67,000
Administration fees - 363 64
Current taxation 633,035 314,698 473,679
---------------------------- ------------ ------------ ----------
3,539,026 3,011,500 3,450,969
---------------------------- ------------ ------------ ----------
16 Subsequent events
On 18 October 2021, following the sale of 135 Aztec West, a
repayment of GBP1,980,731 was made against the loan facility
detailed in note 14.
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END
IR FLFSALALRFIL
(END) Dow Jones Newswires
November 29, 2021 02:00 ET (07:00 GMT)
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