TIDMDRIP
RNS Number : 1090A
Drum Income Plus REIT PLC
28 May 2021
28 May 2021
THIS ANNOUNCEMENT HAS BEEN DETERMINED TO CONTAIN INSIDE
INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU)
NO. 596/2014.
Drum Income Plus REIT plc
("Drum" or the "Company")
HALF YEAR RESULTS 31 MARCH 2021
Drum Income Plus REIT plc (LSE: DRIP) announces its half-year
results for the six months ended 31 March 2021.
The Company's half year results will shortly be available to
view on the Company's corporate website at
https://www.dripreit.co.uk and have also been submitted to the UK
Listing Authority and will be shortly available for inspection from
the National Storage Mechanism at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
LEI: 213800FG3PJGQ3KQH756
Enquiries:
Drum Real Estate Investment Management (Investment Manager)
Bryan Sherriff 0131 285 0050
Dickson Minto W.S. (Sponsor)
Douglas Armstrong 020 7649 6823
Weber Shandwick (Financial PR)
Nick Oborne 020 7067 0721
JTC (UK) Limited (Company Secretary)
Susan Fadil 020 3893 1005
Important information:
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via Regulatory Information Service
this inside information is now considered to be in the public
domain.
Chairman's Statement
INTRODUCTION
Drum Income Plus REIT was established in May 2015 to provide
investors with a regular dividend income, together with the
prospect of income and capital growth over the longer term, by
investing in regional real estate assets. I am pleased to present
this interim report for the six month period ended 31 March
2021.
The period under review has seen further economic and commercial
uncertainty as the global pandemic known as COVID-19 continues to
wreak a terrible havoc around the world. The vaccination programme
in the UK is no doubt helping to turn the tide, but any optimism
needs to be cautious at best, as, with regard to real estate in
particular, it is not yet fully understood exactly what long term
impacts the pandemic will have caused.
The Board's primary focus continues to be the health and
wellbeing of its many stakeholders, including our portfolio of 84
tenants, with whom our investment adviser has worked extremely hard
to work alongside, and provide financial support where appropriate,
whilst cognisant of the overriding duty to act in the best
interests of our shareholders.
The Group's Net Asset Value per share ('NAV') at 31 March 2021
was 68.97 pence per share, a fall of 5.5% since 30 September 2020.
This fall is the result of a reduction in the market value of the
investment portfolio.
Interim Dividends were suspended for the last 3 quarters of 2020
in order to preserve cash as a result of the economic and
commercial damage caused by the pandemic. I am pleased to report
that quarterly dividends have resumed in 2021 at the lower level of
0.75p per quarter, and the Board is confident that these dividend
levels can be supported for the foreseeable future, subject of
course to any additional business interruptions which might occur
should new strains of the virus result in further lockdowns.
In the six months under review, the Group collected circa 90% of
the rent and service charges due and payable, a very good outcome
in the most uncertain of circumstances, although the overall rent
receivable has fallen as a result both of the loss of a few tenants
who have been unable to continue trading and also by agreeing rent
concessions with those tenants who were willing to renegotiate
terms with us. As a result of such concessions, in some cases we
were able to remove break clauses and in others extend lease
periods.
In March, the Board announced a strategic review to consider the
future of the Company, including options to realise the value in
the Group's property portfolio, primarily as a result of the
continuing illiquidity in the Company's shares. The Board will
announce the outcome of the review as soon as it is concluded.
Hugh Little Chairman
26 May 2021
INVESTMENT ADVISER'S REPORT
MARKET VIEW
The impact of Covid-19 and the lockdown on the UK Commercial
property market is unprecedented and its effects will continue to
shape the market even once we exit lockdown. Going forward, we
expect COVID-19 uncertainty will continue to affect the market and
corresponding values over the next six to nine months with a return
to work and economic activity being a driver for values returning
to long term figures. The banking industry is also likely to have a
key role to play in market activity as they are a significant
aspect of providing liquidity to Real Estate.
The Board and the Manager are taking every precaution to
safeguard the health and wellbeing of staff, occupiers, and
stakeholders. We are continually monitoring our assets in light of
the outbreak of Covid-19 and our primary focus through this
exceptionally challenging period has been to ensure that the
portfolio is well positioned to begin its recovery once the
COVID-19 "lockdown" restrictions are lifted, and our tenants can
begin to generate income again. We are focused on preserving the
long-term value and financial strength of the Company.
However, Covid-19 has had and will continue to have a material
impact upon the trading performance of the Company.
Our rental collection statistics of rents payable for the period
March 20 to March 21 are solid and average 95% at the time of
writing. We continue to work with our tenants and proactively
manage the costs of occupying premises to ensure tenants are able
to return to the premises safely and quickly.
The latest data confirms that investment transactions across the
majority of sectors in the UK are showing a downward trajectory
with the exception of Industrial assets where volumes reached the
third highest quarterly total in the last 20 years (Savills). With
the impact of Covid-19 rents are also under pressure as tenants try
to secure Government assistance, however, unemployment is rising
and this will undoubtedly have an impact on the affordability of
rents in due course.
The Government via various subsidies have provided assistance to
enterprise and as these subsidies come to an end the UK will
undoubtedly face a renewed challenge.
Social distancing is a new phenomenon, however, it is one we all
need to adapt to in order for the lockdown restrictions to be
removed safely. Occupiers and Landlords will have to continue to
work together to ensure buildings and occupied space are tenanted
safely.
Aside from many potential occupiers now taking a 'wait-and-see'
approach to acquiring space, the more physical aspect of not being
able to undertake viewings has put the majority of requirements on
hold, however, with the recent relaxation of restrictions we are
seeing viewings happening across the portfolio.
While some companies will use technology to enable employees to
work from home post-Covid-19, it is our belief that the office is
more important to people than ever for face-to-face meetings,
collaboration, and knowledge sharing. An office with an attractive
design and culture is also an important component for the
attraction and retention of staff.
Homeworking will continue, but we are sociable creatures, so
office life will, too. Many employees will look forward to getting
back to the sense of community and the increased social
interaction. The challenge lies in how to adapt workplaces. There
is going to be substantially more awareness and interest on the
part of employees, in terms of the quality of the spaces that
they're occupying.
Ultimately, occupiers will demand more flexibility, some
occupiers will require shorter leases and maybe we will see core
space on a more traditional lease whilst occupiers add extra floor
space on more flexible arrangements. Nothing is certain yet, and it
is only as we start to come out of lockdown and employees start to
return to the office, that we will really know to what extent
things have changed.
Below are some highlights of the portfolio performance
-- Following the letting to SDS at Monteith House Glasgow for a
period or 10 years, works have commenced for the extensive
refurbishment of the premises.
-- Following the vacation of a tenant at 3 Lochside Way,
Edinburgh we have undertaken a refurbishment of the suite which
will now be marketed by JLL and Knight Frank.
-- A refurbishment of a suite has also been undertaken at
Mayflower House, Gateshead where Knight Frank are about to market
the suite.
-- Gosforth continues to produce a strong rental income for the
Company but the value has been reduced due to the market sentiment
and lack of transactional evidence for Shopping Centres, albeit
almost 50% of the income at Gosforth is payable by Sainsbury's.
-- At Gosforth we have agreed two re-gears with Thompson
Opticians and Card Factory along with a new letting to Webster
& Carr which shows the resilience of this retail centre.
DIFFERENTIATED INVESTMENT STRATEGY
In terms of investment focus the Company will continue to invest
when funds are available in well located regional property where
the basic fundamentals of supply and demand are favourable. The
Company is stock selection driven, although the macro top-down
analysis will always be a feature of the investment process.
The Investment Adviser believes that income will remain a large
component of market return over the next few years.
INVESTMENT STRATEGY
The strategy continues to remain focussed on constructing and
managing a quality diversified portfolio of real estate assets
which offer the opportunity to increase rental value, income
security and capital value via the Investment Adviser's expertise
in entrepreneurial asset management and risk-controlled
development. The Investment Adviser targets commercial real estate
assets with the following characteristics:
-- sector agnostic - opportunity driven;
-- lot sizes of between GBP2 million and GBP15 million, in regional locations;
-- offer the opportunity to add value via the Investment Adviser's proactive asset management;
-- situated in significant regional conurbations that have scope
for physical improvement or improved asset management; and
-- which the Investment Adviser considers to be mispriced and/or
properties which are subject to substandard lease lengths and
voids.
RISK MANAGEMENT AND SUSTAINABILITY
The Investment Adviser considers and monitors risk through all
aspects of the investment process. Risks identified prior to the
acquisition of an asset are highlighted to the Board and considered
by the Directors prior to approval of the purchase. These risks are
then monitored by the Investment Adviser and reviewed at each
quarterly Board meeting of the Company.
Sustainable investment is relevant in considering suitable
investments for the Company and is a factor considered by the
Investment Adviser when analysing risk. The Investment Adviser
seeks to avoid depreciation in valuation caused by external
environmental factors and also seeks to be aware of the need for
buildings to deliver the future requirements of occupiers.
SECTOR WEIGHTINGS
The Company will not be benchmarked against IPD average sector
weightings for other funds or REITs but will seek a balance within
the portfolio to offer diversification without trending to the
average.
Market subsector performance is an important element to returns
but more importance is placed on the stock selection of the actual
buildings purchased. Current subsector weightings are shown below
illustrating the regional location bias of the portfolio.
GEOGRAPHIC CONCENTRATION by value at 31 March 2021
North East 12,175,000
Scotland 19,350,000
North West 14,800,000
South West 2,500,000
TOTAL GBP48,825,000
SECTOR CONCENTRATION BY VALUE AT 31 March 2021
Offices 25,825,000
Shopping Centres 10,000,000
Retail 11,500,000
Industrial 1,500,000
TOTAL GBP48,825,000
DEBT FINANCING
As previously reported, the Company has a GBP25 million, 3-year
revolving credit facility with the Royal Bank of Scotland plc and
have no need to refinance until 30 September 2022.
PERFORMANCE
For the six-month period commencing 1 October 2020, the
Company's NAV has reduced from 79.3p to 68.97p, a decrease of 13%,
resulting in a NAV total return of -5.5% for the period to 31 March
2021.
DIRECTORS' RESPONSIBILITIES
STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES
The risks, and the way in which they are managed, are described
in more detail under the heading 'Principal risks' within the
Strategic Report in the Group's Annual Report and Accounts for the
year ended 30 September 2020. The Group's principal risks and
uncertainties have changed materially since the date of that report
as a direct result of the global health crisis and the attendant
economic, social, financial and market crises and are expected to
remain heightened for a considerable period, including the rest of
the Group's financial year. This is having a significant impact on
capital values and income from the portfolio, as well as an impact
on the regulatory environment in which the Company operates. The
operational risks of the Company have also been exacerbated by the
health crisis and resilience is being examined on an ongoing basis
but has been sound to date both in the management of the portfolio
and of the Company.
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE
INTERIM REPORT
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting' as adopted
by the Financial Reporting Council and gives a true and fair view
of the assets, liabilities, financial position and profit of the
Group;
-- the Chairman's Statement and Investment Adviser's Review
(together constituting the Interim Management Report) include a
fair review of the information required by the Disclosure and
Transparency Rules ('DTR') 4.2.7R, being an indication of important
events that have occurred during the first six months of the
financial year and their impact on the condensed set of
consolidated financial statements;
-- the Statement of Principal Risks and Uncertainties above is a
fair review of the information required by DTR 4.2.7R; and
-- the Chairman's Statement and Investment Adviser's Review
together with the condensed set of consolidated financial
statements include a fair review of the information required by DTR
4.2.8R, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
Company during the period, and any changes in the related party
transactions described in the last Annual Report that could do
so.
On behalf of the Board
Hugh Little
Chairman
26 May 2021
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 March 2021
Six months ended Six months ended Year ended
31 March 2021 31 March 2020 30 September
2020
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================= ===== ======= ======= ======= ======= ======= ========= ======= ======== =======
Capital gains/(losses)
on investments
======================= ===== ======= ======= ======= ======= ======= ========= ======= ======== =======
Held at fair value (2,291) (2,291) - (2,093) (2,093) - (5,518) (5,518)
======================= ===== ======= ======= ======= ======= ======= ========= ======= ======== =======
Revenue
Rental income 1,948 - 1,948 - - 2,088 4,145 - 4,145
======================= ===== ======= ======= ======= ======= ======= ========= ======= ======== =======
Total Income/ expense 1,948 (2,291) (343) 2,088 (2,093) (5) 4,145 (5,518) (1,373)
======================= ===== ======= ======= ======= ======= ======= ========= ======= ======== =======
Expenditure
Investment - - - - - - - - -
Adviser's fees 2 (99) - (99) (114) - (114) (205) - (205)
Property expenses (303) - (303) (360) - (360) (391) - (391)
Other expenses (265) - (265) (220) - (220) (863) - (863)
======================= ===== ======= ======= ======= ======= ======= ========= ======= ======== =======
Total expenditure (667) - (667) (694) - (694) (1,459) - (1,459)
======================= ===== ======= ======= ======= ======= ======= ========= ======= ======== =======
Profit / (loss) before
finance
costs and taxation 1,281 (2,291) (1,010) 1,394 (2,093) (699) 2,686 (5,518) (2,832)
============================== ======= ======= ======= ======= ======= ========= ======= ======== =======
Net finance costs
Interest receivable
- - - - - - - - -
Interest payable (245) - (245) (355) - (335) (592) - (592)
======================= ===== ======= ======= ======= ======= ======= ========= ======= ======== =======
Profit / (loss) before
taxation 1,036 (2,291) (1,255) 1,059 (2,093) (1,034) 2,094 (5,518) (3,424)
============================== ======= ======= ======= ======= ======= ========= ======= ======== =======
Taxation - - - - - - - - -
======================= ===== ======= ======= ======= ======= ======= ========= ======= ======== =======
Profit / (loss)
for the period 1,036 (2,291) (1,255) 1,059 (2,093) (1,034) 2,094 (5,518) (3,424)
======================= ===== ======= ======= ======= ======= ======= ========= ======= ======== =======
Total comprehensive
profit / (loss)
for the period 1,036 (2,291) (1,255) 1,059 (2,093) (1,034) 2,094 (5,518) (3,424)
======================= ===== ======= ======= ======= ======= ======= ========= ======= ======== =======
Basic and diluted
earnings per
ordinary share 2.71p (6.00)p (3.29)p 2.77p (5.48)p (2.71)p 5.48p (14.44)p (8.96)p
======================= ===== ======= ======= ======= ======= ======= ========= ======= ======== =======
The total column of this statement represents the Group's
Condensed Consolidated Statement of Comprehensive Income, prepared
in accordance with IFRS. There are no other gains or losses for the
period other than the total comprehensive profit reported
above.
The supplementary revenue return and capital return columns are
prepared under guidance published by the Association of Investment
Companies.
No operations were acquired or discontinued during the period.
All revenue and capital items in the above statement are derived
from continuing operations. The accompanying notes are an integral
part of these condensed consolidated interim financial
statements.
Condensed Consolidated Statement of Financial Position
As at 31 March 2021
As at 31 As at 31 As at
March March 30 September
2021 2020 2020
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
================================= ====== =============== ======================== ==============
Non-current assets
Investment properties 5 47,365 52,870 49,569
================================= ====== =============== ======================== ==============
47,365 52,870 49,569
Current assets
------------------------------------------------------------------------------------ --------------
Trade and other receivables 2,796 2,282 3,003
--------------------------------- ------ --------------- ------------------------ --------------
Cash and cash equivalents 1,493 542 1,120
================================= ====== =============== ======================== ==============
4,289 2,824 4,123
================================= ====== =============== ======================== ==============
Total assets 51,654 55,695 53,692
================================= ====== =============== ======================== ==============
Non-current liabilities
Bank loan 6 (22,659) (22,592) (22,626)
================================= ====== =============== ======================== ==============
(22,659) (22,592) (22,626)
Current liabilities
------------------------------------------------------------------------------------ --------------
Trade and other payables (2,647) (2,822) (3,176)
--------------------------------- ------ --------------- ------------------------ --------------
Total liabilities (25,306) (25,414) (25,802)
================================= ====== =============== ======================== ==============
Net assets 26,348 30,280 27,890
================================= ====== =============== ======================== ==============
Equity and reserves
Called up equity share capital 8 3,820 3,820 3,820
Share premium 5,335 5,335 5,335
Special distributable reserve 20,694 21,840 20,694
Capital reserve (13,522) (7,806) (11,231)
Revenue reserve 10,021 7,091 9,272
================================= ====== =============== ======================== ==============
Equity shareholders' funds 26,348 30,280 27,890
================================= ====== =============== ======================== ==============
Net asset value per ordinary
share 7 68.97p 79.26p 73.01p
================================= ====== =============== ======================== ==============
The accompanying notes are an integral part of these condensed
consolidated interim financial statements. Company number:
9511797
The condensed consolidated interim financial statements on pages
12 to 21 were approved by the Board of Directors on 26 May 2021 and
were signed on its behalf by:
Hugh Little Chairman
Condensed Consolidated Statement of Changes in Equity
For the six months to
31
March 2021 (unaudited) Share Special
capital Share distributable Capital Revenue Total
account premium reserve reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================= ============= =============== ====================== ========== ============ ===========
As at 30 September 2020 3,820 5,335 20,694 (11,231) 9,272 27,890
======================= ============= =============== ====================== ========== ============ ===========
Profit and total
comprehensive
profit for the period: - - - (2,291) 1,036 (1,255)
======================= ============= =============== ====================== ========== ============ ===========
Transactions with
owners
recognised in equity:
Dividends paid - - - - (287) (287)
======================= ============= =============== ====================== ========== ============ ===========
As at 31 March 2021 3,820 5,335 20,694 (13,522) 10,021 26,348
======================= ------------- --------------- ---------------------- ---------- ------------ -----------
For the six months to
31
March 2020 (unaudited)
Share Special
capital Share distributable Capital Revenue Total
account premium reserve reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================= ============= =============== ====================== ========== ============ ===========
As at 30 September 2019 3,820 5,335 21,840 (5,713) 7,178 32,460
======================= ============= =============== ====================== ========== ============ ===========
Profit and total
comprehensive
profit for the period: - - - (2,093) 1,059 (1,034)
======================= ============= =============== ====================== ========== ============ ===========
Transactions with
owners
recognised in equity:
Dividends paid - - - - (1,146) (1,146)
======================= ============= =============== ====================== ========== ============ ===========
As at 31 March 2020 3,820 5,335 21,840 (7,806) 7,091 30,280
======================= ============= =============== ====================== ========== ============ ===========
Condensed Consolidated Cash Flow Statement
For the six months ended 31 March
2021 Six months Six months Year ended
ended 31 ended 31 30 September
March March
2021 2020 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
======================================== =============== ==================== =====================
Cash flows from operating activities
Profit/(Loss) before tax (1,255) (1,034) (3,424)
Adjustments for:
Interest payable 245 291 592
Amortised loan costs 21 32 42
Unrealised revaluation (loss) /
gain on property portfolio 2,291 2,053 5,518
======================================== =============== ==================== =====================
Operating cash flows before working
capital changes 1,302 1,342 2,728
Decrease/( Increase) in trade and
other receivables 207 361 (360)
(Decrease)/ increase in trade
and other payables (526) (192) 615
======================================== =============== ==================== =====================
Net cash inflow from operating
activities 983 1,511 2,983
======================================== =============== ==================== =====================
Cash flows from investing activities
Rent free debtor movement - 40 -
Property capitalised costs (108) (83) (437)
======================================== =============== ==================== =====================
Net cash outflow from investing
activities (108) (43) (437)
======================================== =============== ==================== =====================
Cash flows from financing activities
Bank loan drawn down net of arrangement - -
fees
Issue of ordinary share capital - -
Interest received - -
Interest paid (215) (291) (790)
Equity dividends paid (287) (1,145) (1,146)
======================================== =============== ==================== =====================
Net cash (outflow) / inflow from
financing activities (502) (1,436) (1,936)
======================================== =============== ==================== =====================
Net increase / (decrease) in cash
and cash equivalents 373 32 610
Opening cash and cash equivalents 1,120 510 510
======================================== =============== ==================== =====================
Closing cash and cash equivalents 1,493 542 1,120
======================================== =============== ==================== =====================
1. INTERIM RESULTS
The condensed consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards ('IFRS') and IAS 34 'Interim Financial Reporting' as
adopted by the European Union and the accounting policies set out
in the statutory accounts of the Group for the year ended 30
September 2020. The condensed consolidated financial statements do
not include all of the information required for a complete set of
IFRS financial statements and should be read in conjunction with
the financial statements of the Group for the year ended 30
September 2020, which were prepared under IFRS as adopted by the
European Union. There
have been no significant changes to management judgements and estimates.
The condensed consolidated financial statements have been
prepared on the going concern basis. In assessing the going concern
of accounting the Directors have had regard to the guidance issued
by the Financial Reporting Council. After making enquiries, and
bearing in mind the nature of the Group's business and assets, the
Directors consider that the Group has adequate resources to
continue in operational existence for the foreseeable future. For
this reason, they continue to adopt the going concern basis in
preparing the financial statements .
2. INVESTMENT ADVISER'S
FEE
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2021 2020 2020
GBP'000 GBP'000 GBP'000
======================== ========== ========== ============
Investment Adviser's
fee 99 114 205
======================== ========== ========== ============
Total 99 114 205
======================== ========== ========== ============
The Investment Management fee is calculated as 0.7% per annum of
the net assets of the Group. The Investment Management Agreement
may be terminated by either party by giving not less than 12
months' notice.
3. EARNINGS PER SHARE
Year ended
Six months ended Six months ended 30 September
31 March 2021 31 March 2020 2020
Pence per Pence per Pence per
GBP'000 Share GBP'000 share GBP'000 share
Revenue earnings 1,036 2.71 1,059 2.77 2,094 5.48
Capital earnings (2,291) (6.00) (2,093) (5.48) (5,518) (14.44)
Total earnings (1,255) (3.29) (1,034) (2.71) (3,424) (8.96)
Weighted average
number of shares
in issue 38,201,990 38,201,990 38,201,990
Earnings for the period to 31 March 2021 should not be taken as
a guide to the results for the period to 30 September 2021.
4. DIVIDS
A first interim dividend of 0.75p in respect of the quarter
ended 31 December 2020 was paid on 26 February 2021 to shareholders
on the register on 11 February 2021. A second interim dividend of
0.75p in respect of the quarter ended 31 March 2021 is due for
payment at the end of May 2021 based on shareholders on the
register on 6 May 2021.
5. INVESTMENT PROPERTIES
As at As at As at
31 March 31 March 30 September
2021 2020 2020
GBP'000 GBP'000 GBP'000
========================================= ======== ======== ============
Opening fair value 49,569 54,880 54,880
Purchases - - -
Capitalised costs 108 129 250
Amortisation of lease costs (21) (21) (43)
Revaluation movement (2,291) (2,118) (5,518)
========================================= ======== ======== ============
Closing fair value 47,365 52,870 49,569
========================================= ======== ======== ============
Changes in the valuation of investment
properties As at As at As at
31 March 31 March 30 September
2021 2020 2020
GBP'000 GBP'000 GBP'000
========================================= ======== ======== ============
Unrealised gain / (loss) on revaluation
of investment properties (2,291) (2,093) (5,518)
========================================= ======== ======== ============
The properties were valued at GBP48,825,000 as at 31 March 2021
(31 March 2020: GBP53,300,000; 30 September 2020:GBP51,050,000) by
Savills (UK) Limited ('Savills'), in their capacity as external
valuers.
The valuation report was undertaken in accordance with the RICS
Valuation - Professional Standards VPS4 (1.5) Fair Value and VPGA1
Valuations for Inclusion in Financial Statements, which adopt the
definition of Fair Value adopted by the International Accounting
Standards Board.
Fair value is based on an open market valuation (the price that
would be received to sell an asset, or paid to transfer a
liability, in an orderly transaction between market participants at
the measurement date), provided by Savills on a quarterly basis,
using recognised valuation techniques as set out in the accounting
policies and note 9 of the consolidated financial statements of the
Group for the year ended 30 September 2020. There were no
significant changes to the valuation process, assumptions or
techniques used during the period.
6. BANK LOAN
As at As at As at
31 March 31 March 30 September
2021 2020 2020
GBP'000 GBP'000 GBP'000
============================= ================================= ==================== ====================
Principal amount outstanding 22,760 22,760 22,760
============================= ================================= ==================== ====================
Set up costs (101) (168) (201)
============================= ================================= ==================== ====================
Total 22,659 22,592 22,559
============================= ================================= ==================== ====================
On 30 September 2019 the Group entered into a GBP25 million
secured 3 year revolving credit facility agreement with the Royal
Bank of Scotland ("the Bank"). The interest rate on the facility is
1.75% plus LIBOR per annum.
As part of the loan agreement the Bank has a standard security
over properties currently held by the Group, with an aggregate
value of GBP48,825,000 at 31 March 2020. The fair value of
investments held as security adjusted for lease incentives of
GBP1,460,011 was GBP47,364,989.
Under the financial covenants related to this loan, the Group
has to ensure that for Drum Income Plus Limited:
-- the interest cover, being the rental income as a percentage
of finance costs, is at least 250%;
-- the loan to value ratio, being the value of the loan as a
percentage of the aggregate market value of the relevant
properties, must not exceed 50%.
Breach of the financial covenants, subject to various cure
rights, may lead to the loans falling due to repayment earlier than
the final maturity date stated above. The Group has complied with
all the loan covenants during the period.
7. NET ASSET VALUE
The Group's net unit value per ordinary share of 68.97 pence (31
March 2020 79.26 pence; 30 September 2020 73.01 pence) is based on
equity shareholders' funds of GBP26,348,000 (31 March 2020
GBP30,280,000; 30 September 2020 GBP27,890,000) and on 38,201,990
ordinary shares being the number of shares in issue at the period
end.
8. SHARE CAPITAL
Six months
to 31 March Year to Six months Year to
2021 30 September to 30 September
2020 31 March 2020
2021
Shares Shares GBP'000 GBP'000
===================== ============== ============== ============ ================
Issued and fully
paid
Opening total issued
ordinary shares
of 10p each 38,201,990 38,201,990 3,820 3,820
Issued during the - - - -
period
===================== ============== ============== ============ ================
Closing total issued
ordinary shares 38,201,990 38,201,990 3,820 3,820
===================== ============== ============== ============ ================
There is one class
of share.
9. INVESTMENT IN SUBSIDIARY
The Group's results consolidate those of Drum Income Plus
Limited, a wholly owned subsidiary of Drum Income Plus REIT plc,
incorporated in England & Wales (Company Number: 09515513).
Drum Income Plus Limited was incorporated on 28 March 2015,
acquired on 19 August 2015 and began trading on 19 January 2016,
when it transferred in the ownership of the entirety of the Group's
property portfolio. Drum Income Plus Limited continues to hold all
the investment properties owned by the Group and is also the party
which holds the Group's borrowings.
10. RELATED PARTY TRANSACTIONS AND FEES PAID TO DRUM REAL ESTATE INVESTMENT MANAGERS
The Directors are considered to be related parties. No Director
had an interest in any transactions which are, or were, unusual in
their nature or significant to the nature of the Group.
The Directors of the Group received fees for their services.
Total fees for the six months ended 31 March 2021 were GBP35,000
(six months ended 31 March 2020: GBP35,000; twelve months ended 30
September 2020: GBP75,000) of which GBPnil (31 March 2020: GBPnil;
30 September 2020: GBPnil) remained payable at the period end.
Under the terms of the agreements amongst the Group, R&H
Fund Services (Jersey) Limited (the "AIFM") and Drum Real Estate
Investment Management Limited (the "Investment Adviser"), the Group
paid the AIFM a fixed fee of GBP15,000 per annum and the Investment
Advisor a management fee of 0.7% per annum of the net assets of the
Group. The Group also paid the Investment Advisor a fixed fee of
GBP40,000 for administration services.
The AIFM and the Investment Advisors are considered to be
related parties.
The management agreements are terminable by any party on 12
months' written notice, provided that such notice shall expire no
earlier than the fourth anniversary of Admission.
R&H Fund Services (Jersey) Limited received GBP4,000 in
relation to the six months ended 31 March 2021 (six months ended 31
March 2020: GBP8,000; twelve months ended 30 September 2020:
GBP15,000) of which GBP19,000 (31 March 2020: GBP32,000; 30
September 2020: GBP47,000) remained payable at the period end.
11. COMMITMENTS
The Group did not have any contractual commitments to refurbish,
construct or develop any investment property, or for repair,
maintenance or enhancements as at 31 March 2021 (31 March 2020:
nil; 30 September 2020: nil).
12. OPERATING SEGMENTS
The Board has considered the requirements of IFRS 8 'Operating
Segments'. The Board is of the view that the Group is engaged in a
single unified business, being property investment, and in one
geographical area, the United Kingdom, and that therefore the Group
has no segments. The Board of Directors, as a whole, has been
identified as constituting the chief operating decision maker of
the Group. The key measure of performance used by the Board to
assess the Group's performance is the total return on the Group's
net asset value. As the total return on the Group's net asset value
is calculated based on the IFRS net asset value per share as shown
at the foot of the Consolidated Statement of Financial Position,
the key performance measure is that prepared under IFRS. Therefore,
no reconciliation is required between the measure of profit or loss
used by the Board and that contained in the financial
statements.
13. FAIR VALUE MEASUREMENTS
The fair value measurements for assets and liabilities are
categorised into different levels in the fair value hierarchy based
on the inputs to valuation techniques used. These different levels
have been defined as follows:
Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Group can access at the
measurement date.
Level 2 - inputs, other than quoted prices included within Level
1, that are observable for the asset or liability, either directly
or indirectly.
Level 3 - unobservable inputs for the asset or liability.
Value is the Directors' best estimate, based on advice from
relevant knowledgeable experts, use of recognised valuation
techniques and on assumptions as to what inputs other market
participants would apply in pricing the same or similar instrument.
All investment properties are included in Level 3.
There were no transfers between levels of the fair value
hierarchy during the year ended 31 March 2021.
14. INTERIM REPORT STATEMENT
The Company's auditor has not audited or reviewed the Interim
Report to 31 March 2021 pursuant to the Auditing Practices Board
guidance on 'Review of Interim Financial Information'. These are
not full statutory accounts in terms of Section 434 of the
Companies Act 2006 and are unaudited. Statutory accounts for the
year ended 30 September 2020, which received an unqualified audit
report and which did not contain a statement under Section 498 of
the Companies Act 2006, have been lodged with the Registrar of
Companies. No full statutory accounts in respect of any period
after 30 September 2020 have been reported on by the Company's
auditor or delivered to the Registrar of Companies.
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END
IR BIGDURBDDGBR
(END) Dow Jones Newswires
May 28, 2021 02:00 ET (06:00 GMT)
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