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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Drum Income Plus Reit Plc | LSE:DRIP | London | Ordinary Share | GB00BW4NWS02 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 50.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMDRIP
RNS Number : 9051Z
Drum Income Plus REIT PLC
23 May 2019
To: RNS From: Drum Income Plus REIT plc LEI: 213800FG3PJGQ3KQH756 Date: 23 May 2019
Unaudited results for the six months ended 31 March 2019
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 the interim report for the six months ended 31 March 2019.
FINANCIAL HIGHLIGHTS
The Group's net asset value (NAV) at 31 March 2019 was 91.7 pence per share. The NAV per share has declined by 2.3% since 30 September 2018. When the dividends paid during the period are taken into account the NAV total return for the six month period to 31 March 2019 is 0.95%.
As at 31 March 2019 the share price was 94.5 pence and represents a premium of 3.0% to the NAV on that date.
DIVIDS
The Company has declared two interim dividends of 1.5 pence per share in respect of the six month period. These dividends are the same as those paid in the comparative period in 2018. The dividends were fully covered by underlying earnings per share.
In the absence of unforeseen circumstances it is the Board's intention to pay dividends totaling 6.0 pence per share in respect of the 12 month period to 30 September 2019.
INVESTMENT ACTIVITY
Your Company has been fully invested and had drawn down the majority of its debt facilities throughout the period under review. No properties were purchased or sold in the period and therefore the investment activity in the six months related to asset management initiatives in respect of the existing portfolio.
I reported on the reduction in the value of a retail investment at Eastern Avenue, Gloucester due to the sitting tenant entering a Company Voluntary Arrangement (CVA) in September 2018. Your investment adviser is pursuing a number of initiatives in relation to this asset and, if successful, should result in the diminution in value being recouped to some extent. A tenant at the Industrial property in Aberdeen elected to terminate its lease in the fourth quarter of last year and this led to a reduction in the value applied to that property.
There has been activity elsewhere in the portfolio which has seen some valuation increases reflecting new lease terms and increased rents in a number of properties. These initiatives are covered in more detail in the Investment Adviser's report.
OUTLOOK
The political and economic uncertainty that I alluded to in my last statement is still with us and seems certain to remain so until late this calendar year. The Board and Investment Adviser continue to focus on the aspects of the Company that they can control and are actively pursuing the value enhancing opportunities that exist within the portfolio.
John Evans
Chairman
22 May 2019
Investment Adviser's Report
MARKET VIEW
The political and economic issues facing the UK currently are unfortunately having an impact on investor demand and therefore transactional levels for commercial property as investors sit on cash awaiting greater certainty. There will of course be opportunistic purchases amidst the uncertainty.
The last year has definitely seen the return of the bargain hunter to the UK commercial property market, driven both by the rise in yields and the prospects of further Brexit-related price or currency changes. However, finding real evidence of price falls (or yield rises) in the secondary, regional end of the market has been challenging.
Logically one would expect that if prime yields have risen by a certain amount, then secondary should have risen by more. However, neither the valuation-based indices, nor analyses by the likes of JLL or Savills of actual transactional evidence actually confirm this trend. Indeed, commentary from Savills is that the spread between the yield quartiles has actually narrowed over the last 15 months, rather than widened.
This could indicate a slightly worrying trend where investors who cannot or choose not to pay prime yields are convincing themselves that secondary is "almost as good as prime". This was very much the story in the 18 months running up to the global financial crisis, when the spread between the prime and secondary yield narrowed to a record low level. However, investors are approaching the secondary end of the market with a healthy degree of scepticism, and it is the comparative lack of transactions at that end of the market that is causing the tightening of the yield spread, not over-exuberance.
Consumer confidence remains fragile, and the latest national accounts data shows that the UK has been spending more than it earns for an unprecedented period. This started when real earnings growth was in negative territory, but has not corrected now that growth is positive. Part of this story can be attributed to structural changes, such as the rise of car leasing over ownership, and the overall data is not in itself particularly worrying when borrowing rates are low.
However, it does imply a degree of fragility in household accounts that could rapidly correct in the face of future shocks. For example, a sudden swing towards precautionary saving (similar to that seen in the period soon after the global financial crisis) would have a dramatic negative effect on retail sales growth, and hence wider economic growth.
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 given the movement in capitalisation rates and as we approach a predicted period of slower growth. GDP is forecast at 1.4% in 2019 versus 1.9% in 2018.
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.
Asset Management Update
DELIVERING ASSET MANAGEMENT
Since 1 October 2018, the following Asset Management initiatives have been executed or are planned for the coming period:
3 Lochside Way, Edinburgh
-- New tenant now in occupation which maintains the building's occupancy at 100%. Rental on the new letting is GBP20 per sq. ft. which is a new level for the building.
Duloch Park, Dunfermline
-- CHAS have extended their occupation for a further 5 years with a break at year 3. The rent has increased to GBP33,150 per annum.
Gosforth Shopping Centre, Gosforth
-- The Company has undertaken a new letting to Savers Health & Beauty Limited for a 10-year lease with a tenant break in year 5 at a rent of GBP35,000 per annum. Gosforth Shopping Centre is now 100% let.
Arthur House, Manchester
-- A letting of c 3,500 sq. ft. to IJ Tours Limited on the fifth floor has been concluded at a level of GBP18.50 per sq. ft. for a period of 9 years with a break at the end of the 3rd and 6th years of the term.
-- The proposed refurbishment works to the sixth floor have been approved by the Board and these works have now been instructed. Completion will be in Q2 2019.
Burnside Industrial Estate, Aberdeen
-- Refurbishment works to one terrace have been instructed at a cost of c GBP300,000. This follows the successful lease renewal of unit 6 at GBP36,500 per annum for a 5-year term. Discussions are ongoing with other occupiers regarding renewals.
Eastern Avenue, Gloucester
-- An Agreement for Lease has been entered into with Home Bargains for the former Office Outlet unit on a subject to planning basis.
-- There is interest in the former Maplin unit from potential 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.
DEBT FINANCING
As previously reported, the Company has a GBP25 million, 3 year revolving credit facility with the Royal Bank of Scotland plc which is due for renewal in January 2020.
PERFORMANCE
For the six month period commencing 1 October 2018, the Company's NAV has decreased from 93.8p to 91.7p, a decrease of 2.3%, resulting in a NAV total return of 0.95% for the period to 31 March 2019.
Bryan Sherriff
Managing Director
Drum Real Estate Investment Management Limited
22 May 2019
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 2018. The Group's principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remainder of the Group's financial year.
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 European Union 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
John Evans
Chairman
22 May 2019
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 March 2019
Hot Features
Premium
Six months ended Six months ended Year ended
31 March 2019 31 March 2018 30 September 2018
(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 - (714) (714) - 264 264 - (427) (427)
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Revenue
Rental income 2,205 - 2,205 2,317 - 2,317 4,375 - 4,375
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Total
Income /
expense 2,205 (714) 1,491 2,317 264 2,581 4,375 (427) 3,948
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Expenditure
Investment
Adviser's fees 2 (192) - (192) (203) - (203) 384 - 384
Other expenses 3 (668) - (668) (485) - (485) 834 - 834
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Total
expenditure (860) - (860) (688) - (688) (1,218) - (1,218)
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Profit / (loss)
before finance
costs and
taxation 1,345 (714) 631 1,629 264 1,893 3,157 (427) 2,730
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Net finance
costs
Interest
receivable - - - - - - - - -
Interest
payable (298) - (298) (243) - (243) (561) - (561)
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Profit / (loss)
before
taxation 1,047 (714) 333 1,386 264 1,650 2,596 (427) 2,169
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Taxation - - - - - - - - -
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Profit / (loss)
for the period 1,047 (714) 333 1,386 264 1,650 2,596 (427) 2,169
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Total
comprehensive
profit /
(loss)
for the period 1,047 (714) 333 1,386 264 1,650 2,596 (427) 2,169
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Basic and
diluted
earnings per
ordinary
share 4 2.74p (1.87)p 0.87p 3.63p 0.69p 4.32p 6.80p (1.22)p 5.68p
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
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 2019
As at As at As at
30 September
31 March 2019 31 March 2018 2018
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Investment properties 6 56,771 58,700 57,351
----------------------------- ------ --------------- --------------- --------------
56,771 58,700 57,351
----------------------------- ------ --------------- --------------- --------------
Current assets
----------------------------- ------ --------------- --------------- --------------
Trade and other receivables 2,378 701 2,649
----------------------------- ------ --------------- --------------- --------------
Cash and cash equivalents 1,060 1,201 1,139
----------------------------- ------ --------------- --------------- --------------
3,438 1,902 3,788
----------------------------- ------ --------------- --------------- --------------
Total assets 60,209 60,602 61,139
----------------------------- ------ --------------- --------------- --------------
Non-current liabilities
Bank loan 7 - (22,693) -
- (22,693) -
----------------------------- ------ --------------- --------------- --------------
Current liabilities
----------------------------- ------ --------------- --------------- --------------
Trade and other payables (2,463) (1,462) (2,606)
----------------------------- ------ --------------- --------------- --------------
Bank loan (22,731) - (22,712)
----------------------------- ------ --------------- --------------- --------------
Total liabilities (25,194) (1,462) (25,318)
----------------------------- ------ --------------- --------------- --------------
Net assets 35,015 36,447 35,821
----------------------------- ------ --------------- --------------- --------------
Equity and reserves
Called up equity share capital 9 3,820 3,820 3,820 Share premium 5,335 5,335 5,335 Special distributable reserve 21,840 24,340 21,840 Capital reserve (3,294) (2,085) (2,580) Revenue reserve 7,314 5,037 7,406 ----------------------------- ------ --------------- --------------- -------------- Equity shareholders' funds 35,015 36,447 35,821 Net asset value per ordinary share 8 91.66p 95.41p 93.77p ----------------------------- ------ --------------- --------------- --------------
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Company number: 9511797
The condensed consolidated interim financial statements were approved by the Board of Directors on 22 May 2019 and were signed on its behalf by:
John Evans,
Chairman
Condensed Consolidated Statement of Changes in Equity
For the six months to 31 March 2019 (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 2018 3,820 5,335 21,840 (2,580) 7,406 35,821
-------------------------------- --------- ---------- --------------- ---------- ---------- ---------
Profit and total comprehensive
profit for the period: - - - (714) 1,047 333
-------------------------------- --------- ---------- --------------- ---------- ---------- ---------
Transactions with owners
recognised in equity:
Issue of ordinary share
capital - - - - - -
Issue costs - - - - - -
Dividends paid - - - - (1,139) (1,139)
As at 31 March 2019 3,820 5,335 21,840 (3,294) 7,314 35,015
-------------------------------- --------- ---------- --------------- ---------- ---------- ---------
For the six months to 31 March 2018 (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 2017 3,820 5,335 24,340 (2,349) 4,750 35,896
-------------------------------- --------- ---------- --------------- ---------- ---------- ---------
Profit and total comprehensive
profit for the period: - - - 264 1,386 1,650
-------------------------------- --------- ---------- --------------- ---------- ---------- ---------
Transactions with owners
recognised in equity:
Issue of ordinary share
capital - - - - - -
Issue costs - - - - - -
Dividends paid - - - - (1,099) (1,099)
As at 31 March 2018 3,820 5,335 24,340 (2,085) 5,037 36,447
-------------------------------- --------- ---------- --------------- ---------- ---------- ---------
Condensed Consolidated Cash Flow Statement
For the six months ended 31 March 2019
Six months Six months
ended ended Year ended
31 March 31 March 30 September
2019 2018 2018
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------------- ------------- ------------- --------------
Cash flows from operating activities
Profit before tax 333 1,650 2,169
Adjustments for:
Interest payable 306 243 561
Interest receivable - - -
Unrealised revaluation (loss) /
gain on property portfolio 714 (264) 427
Operating cash flows before working
capital changes 1,353 1,629 3,157
Increase / (decrease) in trade and
other receivables 320 163 147
Increase in trade and other payables (155) 324 166
------------------------------------------- ------------- ------------- --------------
Net cash inflow from operating activities 1,518 2,116 3,470
------------------------------------------- ------------- ------------- --------------
Cash flows from investing activities
Rent free debtor movement 20 - -
Purchase of investment properties - - -
Property capitalised costs (171) (211) (292)
------------------------------------------- ------------- ------------- --------------
Net cash outflow from investing
activities (151) (211) (292)
------------------------------------------- ------------- ------------- --------------
Cash flows from financing activities
Bank loan drawn down net of arrangement
fees - - -
Issue of ordinary share capital - - -
Interest received - - -
Interest paid (306) (253) (533)
Equity dividends paid (1,140) (1,098) (2,153)
Net cash (outflow) / inflow from
financing activities (1,446) (1,351) (2,686)
------------------------------------------- ------------- ------------- --------------
Net increase / (decrease) in cash
and cash equivalents (79) 554 492
Opening cash and cash equivalents 1,139 647 647
------------------------------------------- ------------- ------------- --------------
Closing cash and cash equivalents 1,060 1,201 1,139
------------------------------------------- ------------- ------------- --------------
Notes to the Condensed Interim Financial Statements
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 2019. 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 2018, 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 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 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 30 September
31 March 2019 31 March 2018 2018
GBP'000 GBP'000 GBP'000
-------------------------- --------------- --------------- --------------
Investment Adviser's fee 192 203 384
-------------------------- --------------- --------------- --------------
Total 192 203 384
The Investment Management fee is calculated as 1.15% per annum of the net assets of the Group up to GBP150 million and 1.00% per annum of the net assets of the Group over GBP150 million. The Investment Management Agreement may be terminated by either party by giving not less than 12 months' notice which can be served at any time following the fourth anniversary of admission. The Company's shares were admitted to trading in May 2015.
3. OTHER EXPENSES
Prior to 30 September 2018 an unsolicited approach was made by a potential purchaser with a view to acquiring the entire share capital of the Company. The initial terms discussed were deemed by both parties to be acceptable and diligence was instructed by both parties in October 2018.
Following a period of extensive due diligence, satisfactory final terms could not be agreed between the parties and the transaction was aborted in November 2018. Included in other expenses are costs of GBP252,000 which were incurred by the Company in the period October to November 2018 in relation to the aborted transaction.
4. EARNINGS PER SHARE
Six months Six months Year ended
ended ended 30 September
31 March 2019 31 March 2018 2018
Pence per Pence per Pence per
GBP'000 share GBP'000 share GBP'000 share
------------------------- -------- ------- --------- ------ -------- -------
Revenue earnings 1,047 2.74 1,386 3.63 2,596 6.80
Capital earnings (714) (1.87) 264 0.69 (427) (1.12)
Total earnings 1,650 0.87 1,650 4.32 2,169 5.68
Weighted average number
of shares in issue 38,201,990 38,201,990 38,201,990
Earnings for the period to 31 March 2019 should not be taken as a guide to the results for the period to 30 September 2019.
5. DIVIDS
A first interim dividend of 1.5p in respect of the quarter ended 31 December 2018 was paid on 22 February 2019 to shareholders on the register on 7 February 2019.
A second interim dividend of 1.5p in respect of the period ended 31 March 2019 will be paid on 24 May 2019 to shareholders on the register on 10 May 2019.
6. INVESTMENT PROPERTIES
As at
As at 30 September
31 March 2019 2018
GBP'000 GBP'000
---------------------- --------------- --------------
Opening fair value 57,351 57,489
Purchases - -
Capitalised costs 133 312
Revaluation movement (713) (450)
---------------------- --------------- --------------
Closing fair value 56,771 57,351
---------------------- --------------- --------------
Changes in the valuation of investment properties
As at As at
31 March 30 September
2019 2018
GBP'000 GBP'000
----------------------------------------- ---------- --------------
Unrealised gain / (loss) on revaluation
of investment properties (713) (427)
----------------------------------------- ---------- --------------
The properties were valued at GBP57,300,000 as at 31 March 2019 (31 March 2018: GBP58,700,000; 30 September 2018: GBP57,950,000) 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 2018. There were no significant changes to the valuation process, assumptions or techniques used during the period.
7. BANK LOAN
As at As at
31 March As at 30 September
2019 31 March 2018 2018
GBP'000 GBP'000 GBP'000
------------------------------ ---------- --------------- --------------
Principal amount outstanding 22,760 22,760 22,760
------------------------------ ---------- --------------- --------------
Set up costs (29) (67) (48)
------------------------------ ---------- --------------- --------------
Total 22,731 22,693 22,712
------------------------------ ---------- --------------- --------------
On 6 January 2017 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 and has a maturity date of 6 January 2020.
As part of the loan agreement the Bank has a standard security over properties currently held by the Group, with an aggregate value of GBP57,300,000 at 31 March 2019.
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.
8. NET ASSET VALUE
The Group's net asset value per ordinary share of 91.7 pence (31 March 2018: 95.41 pence; 30 September 2018: 93.77 pence) is based on equity shareholders' funds of GBP35,015,000 (31 March 2018: GBP36,447,000; 30 September 2018: GBP35,821,000) and on 38,201,990 ordinary shares being the number of shares in issue at the period end.
9. SHARE CAPITAL
Six months Year to Six months Year to
to 31 March 30 September to 31 March 30 September
2019 2018 2019 2018
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.
10. 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 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.
11. 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 2019 were GBP38,000 (six months ended 31 March 2018: GBP38,000; twelve months ended 30 September 2018: GBP75,000) of which GBPnil (31 March 2018: GBP1,000; 30 September 2018: GBPnil) remained payable at the period end.
Mr Alan Robertson, a Director of the Company, assumed the role of Consultant with Drum Property Group during the
six months ended 31 March 2019 and is working with them on the asset management and redevelopment of a number of property investments. As a result, Mr Robertson, although non-executive, is no longer considered independent. The majority of the Board continued to be non-executive and independent Directors.
Under the terms of the agreements amongst the Group, R&H Fund Services (Jersey) Limited (the "AIFM") and Drum Real Estate Investment Management Limited ("DREIM"), the Group paid the AIFM a fixed fee of GBP15,000 and paid DREIM an annual portfolio management fee of 1.15% of the Group's net assets. The agreements are terminable by any party on 12 months written notice.
DREIM received GBP193,000 in relation to the six months ended 31 March 2019 (six months ended 31 March 2018: GBP203,000; twelve months ended 30 September 2017: GBP384,000) of which GBPnil (31 March 2018: GBP106,000; 30 September 2018: GBP32,000) remained payable at the period end.
R&H Fund Services (Jersey) Limited received GBPnil in relation to the six months ended 31 March 2019 (six months ended 31 March 2018: GBP8,000; twelve months ended 30 September 2018: GBP15,000) of which GBPnil (31 March 2018: GBP10,000; 30 September 2018: GBP17,000) remained payable at the period end.
12. 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 2019 (31 March 2018: GBPnil, 30 September 2018: GBPnil).
13. 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.
14. 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 six months ended 31 March 2019.
15. INTERIM REPORT STATEMENT
The Company's auditor has not audited or reviewed the Interim Report to 31 March 2019 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 2018, 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 2018 have been reported on by the Company's auditor or delivered to the Registrar of Companies.
16. CHANGE OF ADMINISTRATOR
As of 1 April 2019, Maitland Administration Services (Scotland) Limited ("Maitland") ceased to be the Administrator.
Maitland continue to act as Company Secretary. As of 1 April 2019, Drum Real Estate Investment Management Limited was appointed as Administrator.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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(END) Dow Jones Newswires
May 23, 2019 02:00 ET (06:00 GMT)
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