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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Develop North Plc | LSE:DVNO | London | Ordinary Share | GB00BD0ND667 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 78.00 | 70.00 | 86.00 | 78.00 | 78.00 | 78.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Finance Services | 1.41M | 514k | 0.0191 | 40.84 | 21M |
From Apr 2022 to Apr 2024
TIDMDVNO
RNS Number : 6063V
Develop North PLC
10 August 2022
DEVELOP NORTH PLC
Interim Report & Financial Statements for the six months ending 31 May 2022
Announcement of Interim Results
LEI: 213800EXPWANYN3NEV68
This announcement contains regulated information.
Chairman's Statement
Highlights
-- Net Asset Value total return of 0.2%
-- Dividend distributions totalling 1.0p (2021: 1.0p) for the first quarter
-- Ordinary share mid-price equivalent to a premium of 1.1% as at 31 May 2022
-- Gearing facility with Shawbrook Bank Limited renewed to May 2023
-- Change of name to reflect more accurately the nature of the Company's activities
Background
The Company entered its sixth year of trading during the period under report, set against a continuing background of economic disruption, sharply rising inflation, upwards pressure on interest rates and a prolonging of the Covid-19 pandemic albeit at less virulent levels than during earlier phases.
In such circumstances the changes made to the Company's investment and lending policies a year or more ago, with the effect of reducing portfolio volatility and risk, while maintaining higher liquidity, have proved prudent. In short, the decision to target somewhat lower investment returns - in the nearer term, at least - and to "cherry pick" new investment opportunities continues to offer the best risk/reward trade off as the way forward clears.
Net Asset Value
The Company's Net Asset Value per share decreased from 83.9p to 83.1p over the six months ended 31 May 2022. Taking the effects of dividend distributions into account, this was equivalent to a NAV Total Return of 0.2%.
This figure may be placed into context by the total return figures over the same period of the Association of Investment Companies' (AIC 's) "Property-Debt" sector, of which Develop North is a component member, of -1.2% and of the AIC's "Debt- Loans" sector of 2.7%. Meanwhile in a much broader context the FTSE 100 and FTSE All-Share Indices increased respectively by 9.8% and 6.2% over the same interval.
Dividends
An interim dividend of 1 penny per share will be paid on 30 June 2022. As set out in the Annual Report the Company expects to pay dividends at a rate of 1 penny per share per quarter, equivalent to 4 pence per share per year in aggregate.
Depending on market conditions and the performance of the investment portfolio, a final balancing payment may be made at the end of the current financial year so as to at least fulfil the investment trust qualification requirements.
Investment Portfolio
The total value of the Company's portfolio now stands at GBP23.9m, from 19 live projects, following growth of GBP6.7m in the gross value of loans and receivables.
New Investments - the Company agreed two new loans during the period, including a GBP2.2m, nine month facility to fund the construction of four family homes in Morpeth, Northumberland, and a GBP1.9m facility to fund the construction of executive homes across two sites in Darras Hall, Ponteland and Stocksfield, Northumberland. Further details are provided in the Investment Adviser's report.
In addition, further funds were invested in facilities created during the second half of last year. This has led to a significant increase in the total size of the loan book and which will support portfolio revenues over future months and years.
Exits - there were no portfolio exits, bar a small number of partial redemptions, during the period.
Impairments - there continue to be historic loans within the portfolio, which predate the formation of the Company, against which provisions have already been taken. These projects have now almost reached their conclusion and the directors expect the level of impairments to continue to reduce as the overall quality of the portfolio increases. The Directors, in conjunction with the Investment Adviser, continue to monitor the performance of all loans, and certain adjustments to impairments made to investments have consequently been made (although none at the scale of previous periods).
The loan portfolio is discussed more fully in the Investment Adviser's review.
Gearing
The Company continues to benefit from a Gearing facility with Shawbrook Bank Limited, recently renewed for a further year until May 2023, with GBP2.7m drawn at the period end.
Outlook
Notwithstanding the testing backdrop described above, the Company is well positioned both to resist further economic headwinds and to deploy its considerable liquidity into the right projects at the right time.
Only a short time ago the country was amidst full or partial lockdown, characterised by deserted construction sites and empty travel depots. In this situation the much-lauded "working from home" initiative beloved of the UK public sector was quite useless and where productivity was forced towards zero.
We now see building sites coming to life, cranes moving, old projects re-starting and new schemes being placed on the drawing board. Under its much more dynamic and appropriate new name of Develop North PLC, the Company stands ready to move on to the next phase of its life.
John Newlands
Chairman
10 August 2022
Investment Adviser's Review
ABOUT THE ADVISER
Tier One Capital Ltd is a Newcastle upon Tyne based wealth management and property lending specialist providing financial advice services and bespoke tailored lending to the residential and commercial property development market.
INVESTMENT ADVISER'S REPORT - REVIEW OF THE 6 MONTHS TO 31 MAY 2022
Investment Adviser's highlights:
-- NAV Total Return of 0.2% for the 6 months to 31 May 2022.
-- Loan book, including interest receivable, increased from GBP18.1m at 30 November 2021 to GBP24.9m at 31 May 2021, an increase of 37.6%.
-- Payment of dividends totalling 1.0p for the first quarter, equivalent to an annualised dividend yield of 4.8%.
This Interim Report and Accounts covers the end of the fifth and the beginning of the sixth year of performance of the Company, since it's listing in January 2017.
The Company's primary purpose is to provide debt finance to the property sector. The Company also benefits from a number of equity positions attained at nil cost in a number of the borrowing entities which it supports.
The first six months of the financial year have seen the base rate increase above 1% for the first time since the global financial crisis of 2008. Market expectations see these increases continuing for the remainder of 2022 and into 2023 with some economists expecting a peak of 3%. This has been driven by inflation which reached 9.1% CPI for the twelve months to May 2022, primarily because of housing, water, electricity, gas and other fuels, transport and food and non-alcoholic beverages.
The Company used the first six months to protect shareholder value, deploying funds into the most recent portfolio loans while positioning some of the older loans for exit. There was a continued focus on liquidity, with the gearing facility renewed for a further twelve months in May 2022.
Despite the ongoing uncertainties, we are pleased to report an active period for new transactions and deployments to existing projects, together with full and partial exits:
The Company agreed two new facilities during the period:
-- Fairmoor, North East England - GBP2.2m 9-month facility -- Moor Lane, North East England - GBP1.9m 18-month facility
During the year a total of GBP8.2m was deployed into six projects including the two new projects mentioned above.
Portfolio Exits
There were no portfolio exits during the period, leaving the number of exits since inception at twelve.
Partial Redemptions Update
During the period there were GBP1.6m of partial redemptions across five of the portfolio projects.
Impairments
The Company, in accordance with IFRS 9, recognises the gross interest receivable on all its loans, and then recognises an impairment charge if that interest is not paid by the borrower and there is not a clear expectation that this can be recovered subsequently. During the year, three projects were unable to meet their interest requirements.
IFRS 9 also requires the Company to consider various credit loss scenarios and assign a risk weighting to these. This calculation generates a provision which is taken as a further impairment. In this period the Company has set the provision at GBP33,000, the same amount in place as at 30 November 2021. This provision is based on forward looking statements to withstand market-related shocks including those caused by the ongoing Covid-19 pandemic.
Gearing
In May 2022, the Company renewed the committed revolving credit facility with Shawbrook Bank for a further year. Again the key driver was headroom and liquidity and its renewal for a fifth year demonstrates the support that the Company has from its lender, and the growing confidence in future deployment given the current strength of pipeline.
Profit Share Projects
There are currently 6 Profit Share projects in the portfolio (Nov 2021: 6).
OUTLOOK
Economic Outlook
Residential
As at 31 May 2022, 70.5% of deployed funds were invested across 14 projects with a residential focus with a further GBP1.9m committed to live projects.
The housing market has continued to grow during 2022, continuing the strong performance of 2021. There are now strong indications that a slow down is coming with Savills' five year forecast, updated in May 2022, suggesting increases across the UK of 12.9%, a significantly slower rate of growth than the 20.5% over the five years predicted in November 2021. The slower growth is largely because stretched affordability, combined with interest rate rises, will limit the capacity for further growth in property values. The North East and Scotland are forecast to see rises of 17.4% and 15.7% respectively with London and the south of England falling below the UK average. It's important to note that most of the forecast growth is in 2022, with flat or even slightly negative numbers in 2023 before a return to 2-3% growth in 2024-26.
Supply chain issues for both availability and pricing of labour and materials reached unprecedented levels in 2021 and continued into 2022. There are now anecdotal signs that the material availability issues for most products is returning to normal but both pricing and labour shortage issues remain, and it will take the rest of 2022 to stabilise.
The Company's residential exposure is predominantly in the North East (91.2%). This region continues to have the best affordability with loan to income ratios remaining lower allowing the potential for greater price growth in the future. We continue to appraise projects using the views of market experts for sales values and build cost and delivery, with all assumptions stress tested.
Commercial
As at 31 May 2022, 29.5% of deployed funds were invested across five projects with a commercial focus.
The Company continues to be selective in the level of exposure to commercial developments. We believe our selective approach to the Company's deployment in the commercial property sector will continue to create shareholder value. The sectors within the commercial property space that the Company currently has exposure to are:
-- bereavement (crematorium);
-- strategic land; and
-- shared office space.
Each of the above sub-sectors offer downside protection in the current uncertain economic times with the latter two also giving flexibility for the borrowers as and when trends change. We will continue to identify and support professional, experienced, and reliable management teams who have a clear vision and robust plan.
PIPELINE
There is currently GBP3.5m at various stages of due diligence across two projects in the North East.
The quality and experience of each management team that we are in discussions with will continue to enhance the Company's portfolio and strengthen its reputation in the market. This should lead to the creation of shareholder value that is sustainable in the longer term.
Ian McElroy
Tier One Capital
10 August 2022
THE INVESTMENT PORTFOLIO AS AT 31 MAY 2022
Hot Features
Premium
Sector % LTV* (May Loan Value LTV* Loan Value
Portfolio 22) (May 22) GBP'000s (Nov 21) (Nov 21)
GBP'000s
Residential 66.0% 69.5% 15,947 73.7% 10,480
---------- ---------------------- ------------------------ --------- -----------------------
Commercial 33.1% 64.3% 8,005 66.7% 7,043
---------- ---------------------- ------------------------ --------- -----------------------
Cash 0.9% - 221 - 4,545
---------- ---------------------- ------------------------ --------- -----------------------
General Impairment - - (32) - (33)
---------- ---------------------- ------------------------ --------- -----------------------
Total/Weighted
Average 100.0% 67.8% 24,141 70.9% 22,035
---------- ---------------------- ------------------------ --------- -----------------------
*LTV has been calculated using the carrying value of the loans as at the balance sheet date
Interim Management Report
The principal and emerging risks and uncertainties that could have a material impact on the Company's performance have not changed from those set out on pages 15 and 16 of the Company's Annual Report for the year ended 30 November 2021.
The Directors consider that the Chairman's Statement and the Investment Adviser's Review on pages 2 to 7 of this Interim Report, the above disclosure on related party transactions and the Statement of Directors' Responsibilities below, together constitute the Interim Management Report of the Company for the six months ended 31 May 2022 and satisfy the requirements of the Disclosure Guidance and Transparency Rules 4.2.3 to 4.2.11 of the Financial Conduct Authority.
The Interim Report has not been reviewed or audited by the Company's Auditor.
The Directors believe, having considered the Company's investment objectives, risk management policies, capital management policies and procedures, the nature of the portfolio and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future and, more specifically, that there are no material uncertainties pertaining to the Company that would prevent its ability to continue in such operational existence for at least twelve months from the date of the approval of this Interim Report. For these reasons they consider that there is sufficient evidence to continue to adopt the going concern basis in preparing the accounts.
Directors' Responsibilities Statement
We confirm that to the best of our knowledge:
-- The condensed set of financial statements has been prepared in accordance with FRS 104 'Interim Financial Reporting' and gives a true and fair view of the assets, liabilities, financial position and profit of the Company, as at 31 May 2022, as required by the Disclosure Guidance and Transparency Rule 4.2.4R;
-- The Interim Report includes a fair review of the information required by the Disclosure and Transparency Rule 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 financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- The Interim Report includes a fair review of the information concerning related party transactions as required by Disclosure Guidance and Transparency Rule 4.2.8R.
On Behalf of the Board
John Newlands
Chairman
10 August 2022
INCOME STATEMENT
Six months Six months Year ended
ended ended
31 May 2022 31 May 2021 30 November
(unaudited) (unaudited) 2021
(audited)
Note Revenue Capital Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ----- --------- ---------- -------------- -------------- -------------
REVENUE
Investment interest 864 - 864 879 1,643
---------------------- ----- --------- ---------- -------------- -------------- -------------
Total revenue 864 - 864 879 1,643
---------------------- ----- --------- ---------- -------------- -------------- -------------
(Losses)/gains
on investments
held at fair value
through profit
or loss (38) (96) (134) (39) 54
---------------------- ----- --------- ---------- -------------- -------------- -------------
Total net income 826 (96) 730 840 1,697
---------------------- ----- --------- ---------- -------------- -------------- -------------
Expenditure
Investment adviser
fee (34) - (34) (34) (68)
Impairments on
investments held
at amortised cost 7 (51) (44) (1) (208)
Other expenses (315) - (315) (198) (491)
---------------------- ----- --------- ---------- -------------- -------------- -------------
Total expenditure (342) (51) (393) (233) (767)
---------------------- ----- --------- ---------- -------------- -------------- -------------
Profit before
finance costs
and taxation 484 (147) 337 607 930
---------------------- ----- --------- ---------- -------------- -------------- -------------
Finance costs
Interest payable (16) - (16) (1) (1)
---------------------- ----- --------- ---------- -------------- -------------- -------------
Profit before
taxation 468 (147) 321 606 929 ---------------------- ----- --------- ---------- -------------- -------------- ------------- Taxation - - - - - Profit for the period/year 468 (147) 321 606 929 ---------------------- ----- --------- ---------- -------------- -------------- ------------- Basic earnings per share 3 1.74p (0.55p) 1.19p 2.25p 3.45p ---------------------- ----- --------- ---------- -------------- -------------- -------------
The total column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with UK adopted International Financial Reporting Standards ("UK adopted IFRS") in conformity with the requirements of the Companies Act 2006. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations. There is no other comprehensive income as all income is recorded in the statement above.
Statement of Financial Position
As at As at As at
31 May 31 May 30 November
2022 2021 2021
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------------- ----- ------------ ------------ ------------
Non-current assets
Investments held at fair value 5 - 1,580 -
Loans at amortised cost 6 14,153 3,099 7,929
------------------------------------- ----- ------------ ------------ ------------
14,153 4,679 7,929
------------------------------------- ----- ------------ ------------ ------------
Current assets
Investments held at fair value 5 6,375 12,688 7,589
Loans at amortised cost 6 4,324 2,326 2,629
Other receivables and prepayments 17 7 27
Cash and cash equivalents 221 3,174 4,545
10,937 18,195 14,790
------------------------------------- ----- ------------ ------------ ------------
Total assets 25,090 22,874 22,719
------------------------------------- ----- ------------ ------------ ------------
Current liabilities
Loan facility (2,656) - -
Other payables and accrued expenses (67) (75) (135)
------------------------------------- ----- ------------ ------------ ------------
Total liabilities (2,723) (75) (135)
------------------------------------- ----- ------------ ------------ ------------
Net assets 22,367 22,799 22,584
------------------------------------- ----- ------------ ------------ ------------
Share capital and reserves
Share capital 7 269 269 269
Share premium 9,094 9,094 9,094
Special distributable reserve 12,849 13,093 13,093
Capital reserve (313) (166) (166)
Revenue reserve 468 509 294
------------------------------------- ----- ------------ ------------ ------------
Equity shareholders' funds 22,367 22,799 22,584
------------------------------------- ----- ------------ ------------ ------------
Net asset value per ordinary
share 8 83.08p 84.68p 83.88p
------------------------------------- ----- ------------ ------------ ------------
The accompanying notes form an integral part of the financial statements.
The financial statements were approved by the Board of Directors of Develop North PLC (a public limited company incorporated in England and Wales with company number 10395804) and authorised for issue on 10 August 2022.
They were signed on its behalf by:
John Newlands
Chairman
Statement of Changes in Equity
For the six months ending Special
distributable
31 May 2022 Share Share reserve Capital Revenue Total
capital premium reserve reserve
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
At beginning of the period 269 9,094 13,093 (166) 294 22,584
Total comprehensive profit
for the period:
Profit for the period - - - (147) 468 321
transactions with owners
recognised directly in
equity
Dividends paid (note 4) - - (244) - (294) (538)
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
At 31 May 2022 269 9,094 12,849 (313) 468 22,367
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
For the six months ending Special
distributable
31 May 2021 Share Share reserve Capital Revenue Total
capital premium reserve reserve
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
At beginning of the period 269 9,094 13,497 (263) - 22,597
Total comprehensive profit
for the period:
Profit for the period - - - 97 509 606
transactions with owners
recognised directly in
equity
Dividends paid (note 4) - - (404) - - (404)
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
At 31 May 2021 269 9,094 13,093 (166) 509 22,799
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
For the year ending Special
distributable
30 November 2021 Share Share reserve Capital Revenue Total
capital premium reserve reserve
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
At beginning of the period 269 9,094 13,497 (263) - 22,597
Total comprehensive profit
for the period:
Profit for the period - - - 97 832 929
transactions with owners
recognised directly in
equity
Dividends paid (note 4) - - (404) - (538) (942)
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
At 30 November 2021 269 9,094 13,093 (166) 294 22,584
----------------------------- ------------ -------------- -------------------- ----------- ----------- ---------
Condensed Cash Flow Statement
Six months Six months Year ending
to to
31 May 31 May 30 November
2022 2021 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------------- ------------ ------------ ------------
Operating activities
Profit after taxation 321 606 929
Impairments on investments held at
fair value through profit and loss 123 67 152
Impairments on loans at amortised
cost 51 187 542
Uplifts on investments held at fair
value through profit and loss (27) (107) (342)
Uplifts on loans at amortised cost - 244 (473)
(Increase)/decrease in loan interest
receivable on investments held at
fair value through profit and loss (109) 4 30
Increase in loan interest receivable
on loans at amortised cost (207) (50) (156)
Decrease/(increase) in other receivables 10 14 (6)
(Decrease)/increase in other payables (68) (56) 4
Interest paid 16 - 1
------------------------------------------- ------------ ------------ ------------
Net cash inflow from operating activities 110 421 681
------------------------------------------- ------------ ------------ ------------
Investing activities
Loans given (8,148) (2,697) (8,266)
Loans repaid 1,612 6,002 13,221
------------------------------------------- ------------ ------------ ------------
Net cash (outflow)/inflow from investing
activities (6,536) 3,305 4,955
------------------------------------------- ------------ ------------ ------------
Financing
Equity dividends paid (538) (404) (942)
Bank loan drawn down 2,656 - -
Repayment of bank loan - (1,150) (1,150)
Interest paid (16) - (1)
------------------------------------------- ------------ ------------ ------------
Net cash inflow/(outflow) from financing 2,102 (1,554) (2,093)
------------------------------------------- ------------ ------------ ------------
(Decrease)/Increase in cash and cash
equivalents (4,324) 2,172 3,543
------------------------------------------- ------------ ------------ ------------
Cash and cash equivalents at the
start of the year 4,545 1,002 1,002
------------------------------------------- ------------ ------------ ------------
Cash and cash equivalents at the
end of the period/year 221 3,174 4,545
------------------------------------------- ------------ ------------ ------------
Notes to the Condensed Financial Statements (unaudited)
1. INTERIM RESULTS
The condensed financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and the accounting policies set out in the statutory accounts of the Company for the year ended 30 November 2021. The condensed financial statements do not include all of the information required for a complete set of financial statements and should be read in conjunction with the financial statements of the Company for the year ended 30 November 2021, which were prepared in accordance with UK adopted International Financial Reporting Standards ("UK adopted IFRS") in conformity with the requirements of the Companies Act 2006 as applicable to companies reporting under international accounting standards. There have been no significant changes to management judgements and estimates.
The condensed financial statements have been prepared on the going concern basis. In assessing the going concern basis 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 Company's business and assets, the Directors consider that the Company 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 these financial statements.
2. INVESTMENT ADVISER
In its role as the Investment Adviser, Tier One Capital Ltd is entitled to receive from the Company an investment adviser fee which is calculated and paid quarterly in arrears at an annual rate of 0.25 per cent. per annum of the prevailing Net Asset Value if less than GBP100m; or 0.50 per cent. per annum of the prevailing Net Asset Value if GBP100m or more.
There is no balance accrued for the Investment Adviser for the period ended 31 May 2022 (31 May 2021: GBPnil; 30 November 2021: GBPnil).
There are no performance fees payable.
ALTERNATIVE INVESTMENT FUND MANAGER'S DIRECTIVE ('AIFMD')
The Company has been approved by the Financial Conduct Authority as a Small Registered UK Alternative Investment Fund Manager ('AIFM').
3. EARNINGS PER SHARE
The revenue, capital and total return per ordinary share is based on each of the profit after tax and on 26,924,063 ordinary shares, being the weighted average number of ordinary shares in issue throughout the period.
Six months Six months Year ended
ended 31 ended 31 30 November
May 2022 May 2021 2021
GBP'000 Pence per GBP'000 Pence per GBP'000 Pence per
share share share
--------------------- -------- ----------- -------- ----------- -------- -------------
Revenue earnings 468 1.74 509 1.89 832 3.09
Capital earnings (147) (0.55) 97 0.36 97 0.36
--------------------- -------- ----------- -------- ----------- -------- -------------
Total earnings 321 1.19 606 2.25 929 3.45
--------------------- -------- ----------- -------- ----------- -------- -------------
Average number
of shares in issue 26,924,063 26,924,063 26,924,063
Earnings for the period to 31 May 2022 should not be taken as a guide to the results for the year to 30 November 2022.
4. DIVIDS
Six months Six months Year ended
ended 31 ended 31 30 November
May 2022 May 2021 2021
GBP'000 GBP'000 GBP'000
--------------------------------- ----------- ----------- -------------
In respect of the prior year:
Third interim dividend 269 - -
Fourth interim dividend 269 404 404
--------------------------------- ----------- ----------- -------------
In respect of the current year:
First interim dividend - - 269
Second interim dividend - - 269
Third interim dividend - - -
--------------------------------- ----------- ----------- -------------
Total 538 404 942
--------------------------------- ----------- ----------- -------------
The Company intends to distribute at least 85% of its distributable income earned in each financial year by way of interest distribution. On 31 May 2022, the Company declared an interim dividend of 1.00 pence per share for the quarter ended 28 February 2022, payable on 30 June 2022.
5. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
The Company's investment held at fair value through profit or loss represents its profit share arrangements whereby the Company owns 25.1% or has an exit fee mechanism for six companies.
31 May 31 May 30 November
2022 2021 2021
GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- -------- -----------
Opening Balance 7,589 16,809 16,809
Loans deployed 80 2,183 904
Principal repayments (1,307) (4,760) (10,284)
Movements in interest receivable 147 75 106
Unrealised (losses)/gains on investments
held at fair value through profit or loss (134) (39) 54
-------------------------------------------- -------- -------- -----------
Total investments held at fair value
through profit and loss 6,375 14,268 7,589
-------------------------------------------- -------- -------- ----------- Split: Non-current assets: Investments held at fair value through profit and loss due for repayment after one year - 1,580 - Current assets: Investments held at fair value through profit and loss due for repayment under one year 6,375 12,688 7,589
6. LOANS AT AMORTISED COST
31 May 31 May 30 November
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------------------- -------- -------- -----------
Opening Balance 10,558 6,046 6,046
Loans deployed 8,068 514 7,362
Principal repayments (305) (1,242) (2,937)
Movements in interest receivable 200 108 295
Movement in impairments (44) (1) (208)
------------------------------------------- -------- -------- -----------
Total Loans at amortised cost 18,477 5,425 10,558
------------------------------------------- -------- -------- -----------
Split:
Non-current assets: Loans at amortised
cost due for repayment after one year 14,153 3,099 7,929
Current assets: Loans at amortised cost
due for repayment under one year 4,324 2,326 2,629
The Company's loans held at amortised cost are accounted for using the effective interest method. The carrying value of each loan is determined after taking into consideration any requirement for impairment provisions during the period; allowances for impairment losses amounted to GBP44,000 (May 2021: GBP1,000; November 2021: GBP208,000).
7. SHARE CAPITAL
Number of
Nominal Value Ordinary shares
GBP'000 of 1p
----------------------------------------- ---------------- -----------------
Issued and fully paid as at 31 May 2021 269 26,924,063
----------------------------------------- ---------------- -----------------
Issued and fully paid as at 31 May 2022 269 26,924,063
----------------------------------------- ---------------- -----------------
The ordinary shares are eligible to vote and have the right to participate in either an interest distribution or participate in a capital distribution (on a winding up).
8. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per ordinary share is based on net assets of GBP22,367,422 (31 May 2021: GBP22,798,683; 30 November 2021: GBP22,315,165) and on 26,924,063 ordinary shares (31 May 2021: 26,924,063; 30 November 2021: 26,924,063), being the number of ordinary shares in issue at the period/year end .
9. RELATED PARTIES
The Directors are considered to be related parties. No Director has an interest in any transactions which are, or were, unusual in their nature or significant to the nature of the Company.
The Directors of the Company received fees totalling GBP43,000 for their services during the period to 31 May 2022 (31 May 2021: GBP45,000; 30 November 2021: GBP90,000). GBPnil was payable at the period and prior year end.
Ian McElroy is Chief Executive of Tier One Capital Ltd and is a founding shareholder and director of the firm.
Tier One Capital Ltd received GBP34,000 investment adviser's fee during the period (31 May 2021: GBP28,000; 30 November: GBP68,000) and GBPnil was payable at the period end (31 May 2021: GBPnil; 30 November 2021: GBPnil). Tier One Capital Ltd receives up to a 20% margin and arrangement fee for all loans it facilitates.
There are various related party relationships in place with the borrowers as below:
The following related parties arise due to the opportunity taken to advance the 25.1% profit share contracts:
-- Gatsby Homes
The Company owns 25.1% of the borrower Gatsby Homes Ltd. The loan amount outstanding as at 31 May 2022 was GBP13,000 (31 May 2021: GBP1.2m, 30 November 2021: GBP468,000). Transactions in relation to loans repaid during the year amounted to GBP441,000 (31 May 2021: GBP172,000, 30 November: GBP797,000). Interest due to be received as at 31 May 2022 was GBPnil (31 May 2021: GBPnil, 30 November 2021 GBPnil). Interest received during the period amounted to GBP38,000 (31 May: GBPnil, 30 November 2021: GBP136,000).
-- Bede and Cuthbert Developments
The Company owns 25.1% of the borrower Bede and Cuthbert Developments Ltd. The loan amount outstanding as at 31 May 2022 was GBP80,000 (31 May 2021: GBP3.0m, 30 November 2021: GBP130,000). Transactions in relation to loans repaid during the period amounted to GBP50,000 (31 May 2021: GBP250,000, 30 November 2021: GBP3.2m). Interest due to be received as at 31 May 2022 was GBPnil (31 May 2021: GBP41,000, 30 November 2021 GBPnil). Interest received during the year amounted to GBPnil (31 May 2021: GBP127,000, 30 November 2021: GBP154,000).
-- Thursby Homes (Springs)
The Company owns 25.1% of the borrower Thursby Homes (Springs) Ltd. The loan amount outstanding as at 31 May 2022 was GBP1.9m (31 May 2021: GBP2.6m, 30 November 2021: GBP2.4m). Transactions in relation to loans repaid during the period amounted to GBP381,000 (31 May 2021: GBP369,000, 30 November 2021: GBP502,000). Interest due to be received as at 31 May 2022 was GBP226,000 (31 May 2021: GBP185,000, 30 November 2021: GBP209,000). Interest received during the period amounted to GBP109,000 (31 May 2021: GBP131,000, 30 November 2021: GBP261,000).
-- Northumberland
The Company owns 25.1% of the borrower Northumberland Ltd. The loan amount outstanding as at 31 May 2022 was GBP832,000 (31 May 2021: GBP1.8m, 30 November 2021: GBP1.3m). Transactions in relation to loans repaid during the period amounted to GBP435,000 (31 May 2021: GBP164,000, 30 November 2021: GBP683,000). Interest due to be received as at 31 May 2022 was GBP15,000 (31 May 2021: GBP26,000, 30 November 2021: GBP10,000). Interest received during the period amounted to GBP19,000 (31 May 2021: GBP78,000, 30 November 2021: GBP123,000).
-- Coalsnaughton
The Company owns 40.17% (31 May 2021: 25.1%, 30 November 2021: 25.1%) of the borrower Kudos Partnership. The loan amount outstanding as at 31 May 2022 was GBP2.3m (31 May 2021: GBP1.9m, 30 November 2021: GBP2.3m). Transactions in relation to loans made during the period amounted to GBP80,000 (31 May 2021: GBP217,00015, 30 Novembr 2021: GBP404,000). Interest due to be received as at 31 May 2022 was GBP257,000 (31 May 2021: GBP128,000, 30 November 2021: GBP170,000). Interest received during the period amounted to GBP129,000 (31 May 2021: GBP110,000, 30 November 2021: GBP228,000).
-- Oswald Street
The Company owns 25.1% of the Riverfront Property Limited Partnership. The loan amount outstanding as at 31 May 2022 was GBP382,000 (31 May 2021: GBP408,000, 30 November 2021: GBP10,000). Transactions in relation to loans made during the period amounted to GBPnil (31 May 2021: GBPnil, 30 November 2021: GBPnil). Interest due to be received as at 31 May 2022 was GBP5,000 (31 May 2021: GBP5,000, 30 November 2021: GBP5,000). Interest received during the period amounted to GBP15,000 (31 May 2021: GBP15,000, 30 November 2020: GBP31,000).
10. OPERATING SEGMENTS
The Board has considered the requirements of IFRS 8 'Operating Segments'. The Board is of the view that the Company is engaged in a single unified business, being the investment of the Company's capital in financial assets comprising loans and joint venture equity contracts and in one geographical area, the United Kingdom, and that therefore the Company has no segments. The Board of Directors, as a whole, has been identified as constituting the chief operating decision maker of the Company. The key measure of performance used by the Board to assess the Company's performance is the total return on the Company's net asset value. As the total return on the Company'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.
11. FAIR VALUE HIERARCHY
Accounting standards recognise a hierarchy of fair value measurements for financial instruments which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The classification of financial instruments depends on the lowest significant applicable input, as follows:
-- Level 1 - Unadjusted, fully accessible and current quoted prices in active markets for identical assets or liabilities. Examples of such instruments would be investments listed or quoted on any recognised stock exchange.
-- Level 2 - Quoted prices for similar assets or liabilities, or other directly or indirectly observable inputs which exist for the duration of the period of investment. Examples of such instruments would be forward exchange contracts and certain other derivative instruments.
-- Level 3 - External inputs are unobservable. 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 loans are considered Level 3.
12. POST BALANCE SHEET EVENTS
There are no post balance sheet events to report.
13. INTERIM REPORT STATEMENT
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 November 2021, 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 November 2021 have been reported on by the Company's auditor or delivered to the Registrar of Companies.
For further information please contact:
Maitland Administration Services Limited, Secretary
10 August 2022
ENDS
Interim Report 2022
The Interim Report will be posted to shareholders and will shortly be available on the Company's website ( www.developnorth.co.uk ) or in hard copy format from the Company's Registered Office.
A copy of the Interim Report will be submitted to the FCA's National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
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END
IR SFUFDSEESEIA
(END) Dow Jones Newswires
August 10, 2022 10:04 ET (14:04 GMT)
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