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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Real Estate Investors Plc | AQSE:RLE.GB | Aquis Stock Exchange | Ordinary Share | GB00B45XLP34 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 29.50 | 25.00 | 31.00 | 29.50 | 28.00 | 29.50 | 0.00 | 16:29:59 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Mar 2023 to Mar 2025
TIDMRLE
RNS Number : 4370N
Real Estate Investors PLC
25 September 2023
Real Estate Investors Plc
("REI" the "Company" or the "Group")
Half Year Results
For the six months ended 30 June 2023
ROBUST OPERATIONAL PERFORMANCE, CONTINUED SALES & DEBT REDUCTION
Real Estate Investors Plc (AIM: RLE), the UK's only Midlands-focused Real Estate Investment Trust (REIT) with a portfolio of commercial property across all sectors, is pleased to report its unaudited half year results for the six-month period ended 30 June 2023 ("H1 2023").
FINANCIAL
-- Disposals of GBP3.6 million, plus post-period disposals of GBP6.8 million - total disposals year to date of GBP10.4 million at an aggregate uplift of 8.7%, (pre-costs) to 31 December 2022 year end (FY 2022) book value (comprising of 18 retail units and a drive-thru pod development)
-- Disposal proceeds used to pay down GBP8.4 million of debt year to date 2023
-- Further pipeline of sales are in solicitors' hands to generate receipts in order to reduce portfolio debt and execute stated strategy
-- Underlying profit before tax* of GBP2.2 million (H1 2022: GBP2.9 million) due to sales
-- Loss before tax of GBP779,000 (H1 2022: GBP8.3 million profit) includes GBP4.1 million loss on property revaluations (non-cash item) representing a 2.4% portfolio valuation decline (H1 2022: GBP3.1 million gain), GBP737,000 profit on sale of investment property (H1 2022: GBP1 million profit) and GBP388,000 surplus on hedge valuation (H1 2022: GBP1.2 million surplus)
Hot Features
Premium
-- EPRA** Net Tangible Assets ("NTA") per share of 60.3p (FY 2022: 62.2p)
-- Revenue of GBP6.1 million (H1 2022: GBP7.2 million) reduction due to H2 2022 and H1 2023 sales
-- EPRA** EPS of 1.26p (H1 2022: 1.64p)
-- The Company will make a fully covered quarterly dividend payment of 0.625p per share in respect of Q2 2023 (Q2 2022: 0.8125p per share)
-- GBP48.5 million total declared/paid to shareholders since dividend policy commenced in 2012
OPERATIONAL
-- Strong rent collection for H1 2023 of 99.93% (H1 2022: 99.36%)
-- GBP169.2 million gross portfolio valuation (after asset disposals) (FY 2022: GBP175.4 million)
-- On a like for like basis the portfolio valuation has reduced by 2.4% on 31 December 2022 valuation to GBP166.8 million
-- Completed 46 lease events, with new lettings generating GBP385,438 p.a. of new income -- WAULT*** of 4.81 years to break/5.99 years to expiry (FY 2022: 4.98 years /6.29 years)
-- Contracted rental income of GBP12.5 million p.a. as at 30 June 2023 (H1 2022: GBP14 million p.a. / FY 2022: GBP12.6 million p.a.) due to portfolio disposals
-- Occupancy levels marginally higher at 85.04% (FY 2022: 84.54%)
BANKING & DEBT RELATED
-- Disposal proceeds used to pay down GBP8.4 million of debt in 2023 year to date
-- Total drawn debt of GBP67.9 million (H1 2022: GBP75.5 million), post period reduced to GBP63 million
-- Company's debt is 100% fixed, with a blended debt profile term of 18 months -- Refinancing negotiations with our bankers commenced in early H2 2023
-- Loan to Value (net of cash) of 35.9% (FY 2022: 36.8%) (management revised target LTV net of cash to 35% or below, previously 40% or below)
-- GBP8 million cash at bank - the Company is maximising returns on cash reserves, with monies on deposit now earning 4.5% on instant access
-- Average cost of debt maintained at 3.7% (FY 2022: 3.7%) -- Hedge facility has improved by GBP388,000 for half year to 30 June 2023
PAUL BASSI, CHIEF EXECUTIVE, COMMENTED:
"Throughout 2023 investment and sales activity has been at its lowest level since the 2008 financial crisis, with corporate and institutional investors remaining dormant. With a lack of available assets for purchase and against the backdrop of an inactive investment marketplace, the diverse nature of our portfolio has allowed us to break-up and sell individual units, taking advantage of the ongoing demand for smaller lot sizes from private investors and owner occupiers. We will continue with this approach until we see a normalised market. Since the start of 2021, we have operated a successful sales programme, with sales totalling GBP48.9 million and GBP38.3 million of debt repaid, with further pipeline sales in legals.
We are confident that normalised market conditions will return once the trajectory of interest rates settles, allowing us to sell further assets where asset management initiatives have been completed. It is our intention to accelerate our sales programme and we will consider the sale of assets either on an individual or collective basis, on terms that represent value for shareholders.
Subject to market conditions and our sales rate, the Company intends to repay bank debt and, in due course, consider a share buyback or other form of capital return. Management remains open to evaluating any corporate transaction that is in the best interests of shareholders and in the meantime, we will continue to pay a fully covered dividend."
FINANCIAL & OPERATIONAL RESULTS
30 June 2023 30 June 2022
Revenue GBP6.1 million GBP7.2 million
---------------- ---------------
Underlying profit before GBP2.2 million GBP2.9 million
tax*
---------------- ---------------
Contracted rental income GBP12.5 million GBP14.0 million
---------------- ---------------
EPRA EPS** 1.26p 1.64p
---------------- ---------------
Pre-tax (loss)/profit (GBP0.8 million) GBP8.3 million
---------------- ---------------
Dividend per share 1.25p 1.625p
---------------- ---------------
Average cost of debt 3.7% 3.5%
---------------- ---------------
Like for like rental income GBP12.5 million GBP12.4 million
---------------- ---------------
30 June 2023 31 December 2022
Gross property assets GBP169.2 million GBP175.4 million
---------------- ----------------
EPRA NTA per share** 60.3p 62.2p
---------------- ----------------
Like for like capital GBP122.44 psf GBP125.42 psf
value psf
---------------- ----------------
Like for like valuation GBP166.8 million GBP170.9 million
---------------- ----------------
Tenants 209 201
---------------- ----------------
WAULT to break*** 4.81 years 4.98 years
---------------- ----------------
Total ownership (sq ft) 1.36 million 1.37 million sq
sq ft ft
---------------- ----------------
Net assets GBP106.4 million GBP109 million
---------------- ----------------
Loan to value 40.7% 42.2%
---------------- ----------------
Loan to value (net of
cash) 35.9% 36.8%
---------------- ----------------
Definitions
* Underlying profit before tax excludes profit/loss on revaluation and sale of properties and interest rate swaps
** EPRA = European Public Real Estate Association *** WAULT = Weighted Average Unexpired Lease Term
Enquiries:
Real Estate Investors Plc Paul Bassi/Marcus Daly +44 (0)121 212 3446 Cavendish Securities (Nominated Adviser) Katy Birkin/Ben Jeynes +44 (0)20 7220 0500 Liberum (Broker) Jamie Richards/William King +44 (0)20 3100 2000
About Real Estate Investors Plc
Real Estate Investors Plc is a publicly quoted, internally managed property investment company and REIT with a portfolio of mixed-use commercial property, managed by a highly-experienced property team with over 100 years of combined experience of operating in the Midlands property market across all sectors. The Company's strategy is to invest in well located, real estate assets in the established and proven markets across the Midlands, with income and capital growth potential, realisable through active portfolio management, refurbishment, change of use and lettings. The portfolio has no material reliance on a single asset or occupier. On 1st January 2015, the Company converted to a REIT. Real Estate Investment Trusts are listed property investment companies or groups not liable to corporation tax on their rental income or capital gains from their qualifying activities. The Company aims to deliver capital growth and income enhancement from its assets, supporting its dividend policy. Further information on the Company can be found at www.reiplc.com .
CHAIRMAN'S & CHIEF EXECUTIVE'S STATEMENT
Despite the backdrop of market uncertainty and the lowest level of activity since the financial crisis of 2008, the diversity and flexibility of our portfolio has allowed us to attract interest from private investors and owner occupiers, enabling us to progress our sales programme and reduce debt in line with our stated strategy. At the half year, we had disposed of GBP3.6 million of assets and repaid GBP3.6 million of debt. Since the period end, we have disposed of a further GBP6.8 million of assets and repaid a further GBP4.8 million of debt, resulting in total sales year to date of GBP10.4 million and total debt repayment of GBP8.4 million. These sales are at an aggregate uplift of 8.7%, (pre-costs) to December 2022 year end book value (comprising of 18 retail units and a drive-thru pod development).
Operationally, the REI portfolio remains stable with robust rent collection levels of 99.93% for H1 2023. Revenue as at 30 June 2023 was GBP6.1 million (H1 2022: GBP7.2 million) with the reduction due to H2 2022 and H1 2023 disposals. Underlying profit at the half year was GBP2.2 million (H1 2022: GBP2.9 million) with a loss before tax of GBP779,000, driven predominantly by a GBP4.1 million non-cash loss on property revaluations which is reflective of market sentiment towards the office sector and a lack of transactional evidence. Of the GBP4.1 million valuation reduction, 51.2% was across offices.
There remains a risk of downward pressure on future valuations due to rising interest rates and an inactive investment market, however, our active asset management approach and diversified portfolio offer some protection against this. Contracted rents at the half year were GBP12.5 million p.a. (H1 2022: GBP14 million p.a.) reflecting loss of rent from sales in H2 2022 and H1 2023. At the period end, WAULT was 4.81 years to break and 5.99 years to expiry, with occupancy sitting at 85.04%. Post period lettings that are expected to complete in H2 2023, will also add to our revenues and occupancy going forward, along with the potential to add further capital appreciation and further sales stock.
The business remains well insulated from rising rates with low gearing of 35.9% (net of cash) and 100% fixed debt at an average cost of 3.7%, with a blended debt maturity of 18 months at the half year. Management have engaged in refinancing discussions with lenders to ensure that sensible gearing levels are maintained in line with management's revised objective to operate gearing at sub 35%, as we are actively repaying debt from sales proceeds (previous gearing target 40%).
SALES STRATEGY
Presently, there is little or no demand from our normal buyer pool of property companies, REITs, UK funds, pension funds, overseas or private equity buyers and the only known investor demand is from private investors for smaller lot sizes, owner occupiers, government and public bodies, plus special purchasers.
Our diverse portfolio has no material reliance on any one sector, asset or occupier, and has enabled us to withstand significant headwinds of the financial crisis, a global pandemic and inflation, whilst enabling us to continue paying a covered dividend. It has also allowed us to identify properties that can be sold to a private investor market whilst most other investors remain inactive. However, attracting a buyer for the whole or large parts of the portfolio is more difficult as most buyers have a specialised strategic approach and therefore are not seeking assets of a diverse, regional nature which require focused asset management and local expertise. Management have therefore focused efforts on capitalising on private investor demand and reducing the portfolio size by disposing of assets individually, with sales year to date of GBP10.4 million.
We have identified a further 20% of our portfolio that can satisfy this known demand, some of which is already under offer and in legals. This will provide us with a reduced portfolio, which assuming a more normalised marketplace, may attract a corporate or portfolio buyer. Ongoing sales will allow us to reduce our debt further and, subject to market conditions, consider a share buyback or other form of capital return, all whilst continuing to pay a covered dividend.
BANKING & FINANCING
In March 2023, the Group extended the GBP20 million facility with Lloyds Banking Group Plc for 6 months to 31 May 2024 and the GBP31 million facility with National Westminster Bank Plc for 3 months to June 2024, with a view to formalising new facilities when long-term rates have stabilised.
As at 30 June 2023, 100% of the Company's debt was fixed, with a blended debt profile term of 18 months and an average cost of debt of 3.7% (FY 2022: 3.7%).
Management are mindful of the ongoing inflationary pressures on interest rates and proactively entered refinancing negotiations with our bankers in early H2 2023 in relation to banking facilities that are due for renewal in 2024. These discussions are ongoing and management are confident of securing competitive banking facilities for the business but, notwithstanding the continuing repayment of debt from sales, interest costs will increase next year.
The business remains multi-banked with debt spread across 4 lenders and all banking covenants (a combination of interest cover against rental income and LTV against asset value measurements) continue to be met with headroom available and cure facilities if necessary:
As at 30 June 2023
Lender Debt Facility Debt Maturity Hedging
--------------- --------------- --------
Lloyds Bank GBP20.0m May 2024 100%
--------------- --------------- --------
National Westminster
Bank GBP32.5m June 2024 100%
--------------- --------------- --------
Barclays GBP7.6m December 2024 100%
--------------- --------------- --------
Aviva GBP8.2m 2027 & 2030 100%
--------------- --------------- --------
Following a successful period of sales in H1 2023 and with management firmly focused on reducing gearing levels via debt repayment, GBP3.6 million of debt was repaid using disposal proceeds during the first half of the year. Since the period end, a further sum of GBP4.8 million has been repaid, reducing total drawn debt to GBP63.4 million (H1 2022: GBP75.5 million).
2021 2022 2023 to date Total
Sales GBP17.6m GBP20.9m GBP10.4m GBP48.9m
--------- --------- ------------- --------
Debt Repaid GBP11.9m GBP18m GBP8.4m GBP38.3m
--------- --------- ------------- --------
Total Drawn GBP89.4m GBP71.4m GBP63m GBP63m
Debt
--------- --------- ------------- --------
Loan to value (net of cash) at the half year was 35.9% (FY 2022: 36.8%). Our hedge facility improved by GBP388,000 for the half year to 30 June 2023. Whilst management focuses on debt repayment, it is prudent to keep cash reserves at a healthy level, should the business be required to provide bank security in the form of cash. The Company continues to maximise its returns on cash reserves, with GBP8 million cash at bank at the half year with the majority on deposit earning 4.5% on an instant access basis.
COST SAVINGS & EMPLOYEE LTIPS
Identified savings of GBP300,000 per annum and cost cutting remain on track for the year end 2023 and further savings of up to GBP500,000 have been identified for 2024. The sales of some vacant and part-vacant assets will also reduce void holding costs going forward, such was the case with the sale of part-vacant York House in July 2023 which was sold to a college and provided us with significant savings in void costs.
Management and employee LTIPs are the subject of a comprehensive review and, upon a conclusion of the review, a further announcement will be made. Any changes will be directly aligned to the stated strategy and it is anticipated that a new LTIP scheme will be adopted for the new financial year.
DIVID
Subject to the acceleration of our ongoing sales programme, along with the businesses' operational performance, the Board remains committed to paying a covered dividend. The Board is pleased to announce a Q2 2023 fully covered dividend of 0.625p reflecting a yield of 9.1% based on a mid-market opening price of 27.50p on 22 September 2023. A total of GBP48.5 million has been declared/paid to shareholders since the Company's dividend policy commenced in 2012. The proposed timetable for the dividend, which will be paid as an ordinary dividend, is as follows:
Ex-dividend date: 5 October 2023
Record date: 6 October 2023
----------------
Dividend payment date: 27 October 2023
----------------
ASSET MANAGEMENT & OCCUPANCY
The portfolio remains operationally robust with strong rent collection levels during H1 2023 of 99.93%. Q1 2023 saw a strong start to the year with occupier interest and demand for space continuing from the previous year. The occupational market in the retail sector (neighbourhood and convenience) has remained resilient. We have disposed of all our Central Business District assets, with the exception of our own Head Office in Birmingham. Our non-city centre occupier demand is stable and we are achieving our ERV levels. However, there is a notable slowing down of decision making and completions in H2 2023.
In H1 2023, we effected 46 lease events, to include 6 lease renewals, 5 breaks removals and 19 new lettings with new lettings generating GBP385,438 p.a. of new income to the portfolio, more than offsetting the GBP184,500 p.a. of lost income associated with sales. Contracted rental income was GBP12.5 million per annum as at 30 June 2023, due to disposals (FY 2022: GBP12.6m).
The portfolio occupancy at the period end was 85.04% (FY 2022: 84.54%) and the WAULT was 4.81 years to break and 5.99 years to expiry. There are a significant number of lettings in the pipeline that, once completed, will continue to improve the WAULT and occupancy across the portfolio (subject to sales and other unforeseen lease events). The lettings will also reduce the associated void costs across the portfolio and support the Company's underlying profit and covered dividend payments.
Example key lease events year to date include:
-- AFH Financial Group Limited took out a new lease for 11.5 years at the passing rent of GBP396,077 per annum (at ERV) with no break, now occupying all 25,000 sq ft at Avon House, Bromsgrove
-- Walsall - Luxury Leisure took 9,500 sq ft on a 10-year lease at GBP60,000 per annum at ERV, removing a void unit and associated costs
-- Walsall - Superdrug renewed on a 5-year lease at GBP110,900 per annum, therefore retaining a national retailer in the unit at ERV and ensuring no void costs whilst maintaining rental income to a strong covenant
-- Wolverhampton - SGS UK Limited took 5,500 sq ft at GBP90,500 per annum on a 10-year lease at Venture Court at ERV, maximising occupancy at the property
-- Bromsgrove - detailed planning consent secured for letting to Costa Coffee on a new straight 15-year lease at GBP85,000 per annum, without the usual Costa terms of a break at 10 years
-- Nuneaton - Poundland, new 5-year lease in their existing unit at a rent of GBP90,000 per annum
-- Acocks Green - Poundstretcher, new 10-year lease at GBP60,000 per annum
Following the recent publicity relating to Wilkos closures, we can confirm that we only have one unit in Crewe which is already the subject of discussions with other operators, representing 2% of our rental income.
PORTFOLIO MIX TABLE
GBP per
Sector annum % by income
Office Office 5,398,868 43.17%
-------------------------------------------- ----------- ------------
TR Traditional Retail 2,027,790 16.22%
-------------------------------------------- ----------- ------------
Discount Retail - Poundland/B&M
DR /Poundstretcher etc 1,472,350 11.77%
-------------------------------------------- ----------- ------------
Medical and Pharmaceutical -
M&P Boots/Holland & Barrett etc 759,049 6.07%
-------------------------------------------- ----------- ------------
Restaurant/Bar/Coffee - Costa
RBC Coffee 531,251 4.25%
-------------------------------------------- ----------- ------------
Financial/Licences/Agency -
FIN Bank of Scotland 346,125 2.77%
-------------------------------------------- ----------- ------------
Food Stores - Lidl, Co-op, Iceland
FS etc 406,545 3.25%
-------------------------------------------- ----------- ------------
Other - Hotels (Travelodge),
Leisure (The Gym Group), Car
Other parking, AST , (Education) School/College 1,563,606 12.50%
-------------------------------------------- ----------- ------------
Total 12,505,584 100%
----------------------------------------------------- ----------- ------------
PORTFOLIO SUMMARY TABLE
Value Area Contracted ERV NIY EQY RY Occupancy
(GBP) (sq ft) Rent (GBP) (GBP) (%) (%) (%) (%)
Portfolio 166,800,000 1,373,631 12,505,584 15,066,920 7.02% 8.38% 8.46% 85.04%
------------ ---------- ------------ ----------- ------ ------ ------ ----------
Land* 2 ,393,390 - - - - - -
------------ ---------- ------------ ----------- ------ ------ ------ ----------
Total 169,193,390 1,373,631 12,505,584 15,066,920 7.02% 8.38% 8.46% 85.04%
------------ ---------- ------------ ----------- ------ ------ ------ ----------
*Our land holdings are excluded from the yield calculations
ENVIRONMENTAL & SOCIAL GOVERNANCE ("ESG")
REI continues to work with leading professionals to collect, track and report carbon emissions data across landlord-controlled areas. The reduction of the portfolio's carbon footprint is an ongoing priority for the business.
In accordance with government guidelines, REI also continues to ensure our assets meet the UK statutory regulations and timeframes for Energy Performance Certificates ("EPCs"). An overview of the asset EPC ratings across the portfolio is noted below, showing the progress since 31 December 2022 to date:
% of portfolio (by sq ft)
EPC Rating
A B C D E F G Total
----- ------ ------ ------ ----- ---- ---- --------
31 Dec
2022 1.36 22.99 31.18 37.49 6.98 0 0 100.00
----- ------ ------ ------ ----- ---- ---- --------
22 Sep
2023 2.08 37.19 22.96 34.52 3.25 0 0 100.00
----- ------ ------ ------ ----- ---- ---- --------
ONGOING STRATEGY & OUTLOOK
In the absence of any consolidation opportunities within the real estate sector that align with the best interests of shareholders and the backdrop of poor market conditions, management have focused efforts on an opportunistic and targeted sales programme with a view to significantly reducing debt and leverage and returning capital to shareholders.
Maximum flexibility will be maintained when considering all future options, including share buybacks or another form of capital return, with the view to maximising shareholder returns.
The Company will consider sales of assets either on an individual or collective basis, subject to market conditions that represent value for shareholders. Management remain open to evaluating any corporate transaction that is in the best interests of shareholders.
OUR STAKEHOLDERS
Our continued thanks to our shareholders, advisors, occupiers and staff for their ongoing support and assistance.
CHANGE OF NAME OF NOMINATED ADVISER
The Company also announces that its nominated adviser has changed its name to Cavendish Securities plc (formerly Cenkos Securities plc) following completion of its own corporate merger.
William Wyatt Paul Bassi CBE D.UNIV
Chairman Chief Executive
22 September 2023 22 September 2023
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
For the 6 months ended 30
June 2023
Six months Six months
to to Year ended
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
Note GBP'000 GBP'000 GBP'000
Revenue 6,056 7,165 13,293
Cost of sales (1,285) (1,170) (2,489)
------------ ------------ -------------------------------
Gross profit 4,771 5,995 10,804
Administrative expenses (1,359) (1,483) (3,252)
Gain on sale of investment
properties 737 1,001 948
(Loss)/gain in fair value
of investment properties (4,073) 3,149 3,152
------------ ------------ -------------------------------
Profit from operations 76 8,662 11,652
Finance income 51 26 49
Finance costs (1,294) (1,600) (2,981)
Gain on financial liabilities
held at fair value 388 1,238 2,214
------------ ------------ -------------------------------
(Loss)/profit on ordinary
activities before taxation (779) 8,326 10,934
Income tax charge - - -
------------ ------------ -------------------------------
Net (loss)/profit after taxation
and total comprehensive income (779) 8,326 10,934
------------ ------------ -------------------------------
Basic earnings per share 6 Nil 4.64p 6.33p
------------ ------------ -------------------------------
Diluted earnings per share 6 Nil 4.56p 6.25p
------------ ------------ -------------------------------
EPRA earnings per share 6 1.26p 1.64p 2.68p
------------ ------------ -------------------------------
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
for the 6 months ended 30 June 2023
Share Share Capital Other Retained Total
Capital Premium Redemption Reserves Earnings
Account Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December 2021 17,938 51,721 749 759 33,855 105,022
Share based payment - - - 75 - 75
Dividends - final
2021 - - - - (1,457) (1,457)
Dividends - interim
2022 - - - - (1,458) (1,458)
-------- ------------------ ----------- --------- --------- --------
Transactions with
owners - - - 75 (2,915) (2,840)
-------- ------------------ ----------- --------- --------- --------
Profit for the period
and total comprehensive
income - - - - 8,326 8,326
At 30 June 2022 17,938 51,721 749 834 39,266 110,508
Share based payment - - - 75 - 75
Share buyback (714) - - - (1,296) (2,010)
Transfer re capital - - 714 - (714) -
Share issue 42 108 - (150) - -
Dividends - interim
2022 - - - - (2,216) (2,216)
-------- ------------------ ----------- --------- --------- --------
Transactions with
owners (672) 108 714 (75) (4,226) (4,151)
-------- ------------------ ----------- --------- --------- --------
Profit for the period
and total comprehensive
income - - - - 2,608 2,608
At 31 December 2022 17,266 51,829 1,463 759 37,648 108,965
Share based payment - - - 75 - 75
Dividends - final
2022 - - - - (755) (755)
Dividends - interim
2023 - - - - (1,079) (1,079)
-------- ------------------ ----------- --------- --------- --------
Transactions with
owners - - - 75 (1,834) (1,759)
-------- ------------------ ----------- --------- --------- --------
Loss for the period
and total comprehensive
income - - - - (779) (779)
At 30 June 2023 17,266 51,829 1,463 834 35,035 106,427
======== ================== =========== ========= ========= ========
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
as at 30 June
2023
31 December
30 June 2023 30 June 2022 2022
(Unaudited) (Unaudited) (Audited)
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Investment properties 5 166,800 187,875 173,030
Property, plant and
equipment 2 4 3
166,802 187,879 173,033
----------------- -------------------------------------- -----------------
Current assets
Inventories 2,393 2,387 2,389
Trade and other receivables 2,882 3,757 3,110
Derivative financial
asset 456 - 68
Cash and cash equivalents 8,010 8,268 7,818
13,741 14,412 13,385
----------------- -------------------------------------- -----------------
Total assets 180,543 202,291 186,418
================= ====================================== =================
Liabilities
Current liabilities
Bank loans (52,915) (379) (20,325)
Trade and other payables (6,205) (7,078) (5,982)
(59,120) (7,457) (26,307)
----------------- -------------------------------------- -----------------
Non-current liabilities
Bank loans (14,996) (83,418) (51,146)
Derivative financial
liabilities - (908) -
(14,996) (84,326) (51,146)
----------------- -------------------------------------- -----------------
Total liabilities (74,116) (91,783) (77,453)
================= ====================================== =================
Net assets 106,427 110,508 108,965
================= ====================================== =================
Equity
Ordinary share capital 17,266 17,938 17,266
Share premium account 51,829 51,721 51,829
Capital redemption
reserve 1,463 749 1,463
Other reserves 834 834 759
Retained earnings 35,035 39,266 37,648
----------------- -------------------------------------- -----------------
Total equity 106,427 110,508 108,965
----------------- -------------------------------------- -----------------
CONSOLIDATED STATEMENT OF CASHFLOWS
for the 6 months ended 30 June 2023
Six months Six months
to to Year ended
30 June 31 December
2023 30 June 2022 2022
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cashflows from operating activities
(Loss)/profit after taxation (779) 8,326 10,934
Adjustments for:
Depreciation - 1 2
Gain on sale of investment property (737) (1,001) (948)
Net valuation loss/(gain) 4,073 (3,149) (3,152)
Share based payment 75 75 150
Finance income (51) (27) (49)
Finance costs 1,294 1,600 2,981
Gain on financial liabilities
held at fair value (388) (1,238) (2,214)
Increase in inventories (4) (3) (5)
(Increase)/decrease in trade
and other receivables 231 (169) 478
Decrease in trade and other
payables (164) (618) (1,051)
3,550 3,797 7,126
==================== =================== ========================
Cash flows from investing activities
Expenditure on investment properties (425) (723) (609)
Purchase of property, plant
and equipment (-) (1) (1)
Proceeds from sale of property,
plant and equipment 3,318 5,483 20,164
Interest received 51 27 49
2,944 4,786 19,603
==================== =================== ========================
Cash flow from financing activities
Interest paid (1,294) (1,600) (2,981)
Share buyback - - (2,010)
Equity dividends paid (1,448) (2,904) (5,783)
Repayment of bank loans (3,560) (5,647) (17,973)
(6,302) (10,151) (28,747)
==================== =================== ========================
Net increase/(decrease) in cash
and cash equivalents 192 (1,568) (2,018)
Cash and cash equivalents at
beginning of period 7,818 9,836 9,836
Cash and cash equivalents at
end of period 8,010 8,268 7,818
==================== =================== ========================
NOTES TO THE INTERIM FINANCIAL INFORMATION
for the 6 months ended 30 June 2023
1. BASIS OF PREPARATION
Real Estate Investors Plc, a Public Limited Company, is incorporated and domiciled in the United Kingdom.
The interim financial report for the period ended 30 June 2023 (including the comparatives for the year ended 31 December 2022 and the period ended 30 June 2022) was approved by the board of directors on 22 September 2023.
It should be noted that accounting estimates and assumptions are used in preparation of the interim financial information. Although these estimates are based on management's best knowledge and judgement of current events and action, actual results may ultimately differ from these estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the interim financial information are set out in note 3 to the interim financial information.
The interim financial information contained within this announcement does not constitute statutory accounts within the meaning of the Companies Act 2006. The full accounts for the year ended 31 December 2022 received an unqualified report from the auditor and did not contain a statement under Section 498 of the Companies Act 2006.
2. ACCOUNTING POLICIES
The interim financial information has been prepared under the historical cost convention.
The principal accounting policies and methods of computation adopted to prepare the interim financial information are consistent with those detailed in the 2022 financial statements approved by the Board on 27 March 2023.
Some accounting pronouncements which have become effective from 1 January 2023 and have therefore been adopted do not have a significant impact on the Group's financial results or position.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are as follows:
Investment property revaluation
The Group uses the valuations performed by its independent valuers or the directors as the fair value of its investment properties. The valuation is based upon assumptions including future rental income, anticipated maintenance costs, anticipated purchaser costs and the appropriate discount rate. The valuer and the directors also make reference to market evidence of transaction prices for similar properties.
Interest rate swap valuation
The Group carries the interest rate swap as a liability at fair value through the profit or loss at a valuation. This valuation has been provided by the Group's bankers.
Critical judgements in applying the Group's accounting policies
The Group makes critical judgements in applying accounting policies. The critical judgement that has been made is as follows:
REIT Status
The Group elected for REIT status with effect from 1 January 2015. As a result, providing certain conditions are met, the Group's profit from property investment and gains are exempt from UK corporation tax. In the Directors' opinion the Group have met these conditions.
4. SEGMENTAL REPORTING
Primary reporting - business segment
The only material business that the Group has is that of investment in commercial properties. Revenue relates entirely to rental income from investment properties.
5. INVESTMENT PROPERTIES
The carrying amount of investment properties for the periods presented in the interim financial information is reconciled as follows:
GBP'000
Carrying amount at 31 December 2021 188,485
Additions 723
Disposals (4,482)
Revaluation 3,149
-----------------
Carrying amount at 30 June 2022 187,875
Additions (114)
Disposals (14,734)
Revaluation 3
-----------------
Carrying amount at 31 December 2022 173,030
Additions 425
Disposals (2,582)
Revaluation (4,073)
Carrying amount at 30 June 2023 166,800
=================
6. EARNINGS AND NAV PER SHARE
The calculation of the basic earnings per share is based on the profit attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. The calculation of the diluted earnings per share is based on the basic earnings per share adjusted to allow for all dilutive potential ordinary shares.
The calculation of the basic NAV per share is based on the balance sheet net asset value divided by the weighted average number of shares in issue during the period. The calculation of the diluted NAV per share is based on the basic NAV per share adjusted to allow for all dilutive potential ordinary shares.
The European Public Real Estate Association ("EPRA") earnings and NAV figures have been included to allow more effective comparisons to be drawn between the Group and other businesses in the real estate sector.
EPRA EPS per share
30 June 2023 30 June 2022
Earnings Shares Earnings per share Earnings Shares Earnings per share
GBP'000 No P GBP'000 No P
Basic (loss)/earnings per
share (779) 172,651,577 Nil 8,326 179,377,898 4.64
Fair value of investment
properties 4,073 (3,149)
Gain on disposal of
investment properties (737) (1,001)
Change in fair value of
derivatives (388) (1,238)
EPRA Earnings 2,169 172,651,577 1.26 2,938 179,377,898 1.64
========= ============ =================== ========= ============ ===================
NET ASSET VALUE PER SHARE
The Group has adopted the new EPRA NAV measures which came into effect for accounting periods starting 1 January 2020. EPRA issued new best practice recommendations (BPR) for financial guidelines on its definitions of NAV measures. The new NAV measures as outlined in the BPR are EPRA net tangible assets (NTA), EPRA net reinvestment value (NRV) and EPRA net disposal value (NDV).
The Group considered EPRA Net Tangible Assets (NTA) to be the most relevant NAV measure for the Group and we are now reporting this as our primary NAV measure, replacing our previously reported EPRA NAV and EPRA NNNAV per share metrics. EPRA NTA excludes the intangible assets and the cumulative fair value adjustments for debt-related derivatives which are unlikely to be realised.
30 June 2023
EPRA NTA EPRA NRV EPRA NDV
GBP'000 GBP'000 GBP'000
Net assets 106,426 106,426 106,426
Fair value of derivatives (456) (456) -
Real estate transfer tax - 1 0,842 -
EPRA NAV 105,970 1 16,812 106,426
------------ ------------ ------------
Number of ordinary shares issued for diluted and EPRA net assets per share 175,749,795 175,749,795 175,749,795
EPRA NAV per share 60.3p 66.5p 60.6p
============ ============ ============
The adjustments made to get to the EPRA NAV measures above are as follows:
-- Real estate transfer tax: Gross value of property portfolio as provided in the Valuation Certificate (i.e. the value prior to any deduction of purchasers' costs).
-- Fair value of derivatives: Exclude fair value financial instruments that are used for hedging purposes where the company has the intention of keeping the hedge position until the end of the contractual duration.
31 December 2022
EPRA NTA EPRA NRV EPRA NDV
GBP'000 GBP'000 GBP'000
Net assets 108,965 108,965 108,965
Fair value of derivatives (68) (68) -
Real estate transfer tax - 11,245 -
-----------------------------------------------------------------------
EPRA NAV 108,897 120,142 108,965
----------------------------------------------------------------------- -------------- --------------- ------------
Number of ordinary shares issued for diluted and EPRA net assets per
share 174,964,252 174,964,252 174,964,252
EPRA NAV per share 62.2p 68.7p 62.3p
======================================================================= ============== =============== ============
30 JUNE 2023 31 DECEMBER 2022
No of Shares No of Shares
Number of ordinary shares issued at end of period 172,651,577 172,651,577
Dilutive impact of options 3,098,218 2,312,675
Number of ordinary shares issued for diluted and EPRA net assets per share 175,749,795 174,964,252
----------------------------------------------------------------------------- ------------------ -------------------
Net assets per ordinary share
Basic 60.3p 62.2p
Diluted 66.5p 68.7p
EPRA NTA 60.6p 62.3p
============================================================================= ================== ===================
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