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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 : 9169O
Drum Income Plus REIT PLC
23 May 2018
To: RNS From: Drum Income Plus REIT plc LEI: 213800FG3PJGQ3KQH756 Date: 23 May 2018
Unaudited results for the six months ended 31 March 2018
Chairman's Statement
Introduction
Drum Income Plus REIT was established in May 2015 to provide investors with a regular dividend income, together with the prospect of income and capital growth over the longer term, by investing in regional real estate assets. I am pleased to present this interim report for the six month period ended 31 March 2018.
Financial Highlights
The Group's net asset value (NAV) at 31 March 2018 was 95.4 pence per share, an increase of 1.5% since 30 September 2017. When the dividends paid during the period are taken into account, the NAV total return for the six months to 31 March 2018 is 4.7%
As at 31 March 2018 the share price was 95.5 pence, the same level as at 30 September 2017. The share price stands at 94.5 as I write, representing a 0.9% discount to the 31 March NAV.
Dividends
The Company has declared two interim dividends of 1.5 pence per share in respect of the six month period to 31 March 2018, representing an increase of 9.1% on the dividends paid in respect of the same period last year.
The dividends were fully covered by earnings per share of 3.63 pence for the period. In the absence of unforeseen circumstances, the Board expects to pay dividends totaling at least 6.0 pence per share in respect of the year ending 30 September 2018.
The prospective dividend yield on the Company's ordinary shares is 6.4% at the date of this Statement.
Investment Activity
The emphasis during the period under review has again been to deliver on asset management opportunities at the 10 property assets that make up the portfolio. The properties are all in strong regional locations and are occupied by 91 tenants. Further detail on the property portfolio is given in the Investment Adviser's Report.
The Company has now invested all of the proceeds of its equity raisings and utilised to the full its bank facilities. The Group has a GBP25 million 3 year revolving credit facility with Royal Bank of Scotland and has drawn down GBP22.8 million, representing a gearing percentage of 38.8% - in line with the level of long term gearing that was suggested in the Company's prospectuses.
Outlook
Your Company has been fully invested since May 2017, and I am pleased to say that the dividends paid to shareholders are ahead of those indicated in the prospectuses.
The Board believes that the prospects for the regional property market remain positive. The many asset management opportunities across the Company's 10 investment properties will deliver increased value for shareholders over the medium term.
John Evans
Chairman
22 May 2018
Investment Adviser's Report
Market View
Following three consecutive months of no movement in the Savills prime yield series, February saw a hardening of 2bps and the average yield reach 4.50%, it now stands just 19bps from the previous peak of 4.31% in 2007. This was driven by an inward movement of prime yields for the logistics sector which now stand at 4.25%, the lowest level ever experienced. Due to continued strong interest from investors in the M25 office sector we expect the average prime yield to see continued downward pressure into 2018.
Whilst the dominance of overseas investors is well documented, it has been pleasing to note that UK institutions have increased their purchases, accounting for GBP10.5bn of transactions in 2017, up from GBP8.2bn in 2016 and higher than the long term average of GBP10bn. All eyes will now turn towards global macroeconomic factors such as global interest rate rises, Brexit negotiations, US trade tariffs and other geopolitical issues such as North Korea and Russia and how they will impact the markets. With the Bank of England also suggesting that rates are expected to rise this could alter the spread between commercial real estate and risk free rate with UK 10 year gilts currently trading at 1.5%.
Regional markets remain in good health. The attraction of the regional towns and cities to both occupiers and investors continued in 2017 and DRIP REIT finds the regional commercial property markets to be in good health and increased tenant demand has been visible, although in some instances letting decisions are taking longer to execute. Office supply in regional markets remains low, with occupier take-up continuing to reduce availability, particularly of Grade A space, which should be a positive for occupier demand and rental growth in the good quality secondary space targeted by DRIP REIT.
Overall investment volumes in UK commercial property (including London) in 2017 were significantly higher than in 2016, with an increasing share taken by regional markets. Data for the office market suggests that regional offices continue to represent attractive yield compared with London, and that regional secondary office yields have room to tighten further versus prime.
As a result of investor demand, the average yield spreads between the regional and London offices has continued to narrow, but remains wider than it was before recovery took hold in the London market in 2009, and is similar to the longer-term average. As London recovered, the spread of secondary over prime yields narrowed steadily, while the recovery in the regions was later to take hold such that the regional spread of secondary over prime yields remains wide despite more recent tightening.
Differentiated Investment Strategy
In terms of investment focus the Company will continue to invest 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.
Income is likely to be a larger component of market return over the next few years given the movement in capitalisation rates that has already occurred.
Investment Strategy
The strategy remains focussed on constructing a good 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;
-- that 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 2017, the following Asset Management initiatives have been executed or are planned for the coming period:
Eastern Avenue, Gloucester
-- Discussions continue with retailers regarding the recent demise of Maplin. Discussions are at a sensitive stage and once documents are signed we will make an announcement.
Gosforth Shopping Centre, Gosforth
-- Tenant interest remains strong and the long term vacancy rate is low. We continue to market the centre and engage with the local community, having recently undertaken an Easter campaign for children which was very well received.
Kew Retail Park, Southport
-- The asset management strategy remains in place and the currently vacant unit is being marketed by Edgerly Simpson Howe & Partners.
Arthur House, Manchester
-- We have recently agreed a simultaneous surrender and re-grant of a new lease to Manchester City Council for c 1,500sqft at GBP16.50psf, along with the letting of 2 further suites within the building.
-- A new marketing campaign is about to be launched and aligned to this is the appointment of JLL as joint letting agents.
-- In the next quarter we expect to instruct the refurbishment of the 2nd, 5th and 6th floors at a total cost of c GBP600,000.
Lakeside 5500, Cheadle Royal Business Park, Cheadle
-- The Investment Adviser has agreed the outstanding Rent Review with Agilent at GBP310,000. This settlement reflects an uplift in rent of c GBP10,000 per annum and will be backdated to March 2017. This settlement figure is ahead of the Business Plan at acquisition.
Burnside Industrial Estate, Aberdeen
-- We have successfully agreed the surrender of unit 5 and received a surrender premium of GBP108,000. This surrender premium is to be utilised to refurbish the external of units 1-3 in the summer of 2018.
-- Work to provide the tenants with their own utility meters was undertaken late last year and we will now undertake some common part refurbishment work including new estate signage.
3 Lochside Way, Edinburgh
-- Following a period of intense letting action, the building is currently fully let, we are about to undertake a common parts refurbishment of c GBP50,000. The refurbishment will include new cycle racks, increased shower provision a refresh of the reception area and redecoration of common parts.
Monteith House, Glasgow
-- We continue to invest in this asset and with potential marketing opportunities in 2019 we are about to undertake a refurbishment of the common parts including new reception area, revised signage at a cost of c GBP100,000.
Duloch Park, Dunfermline
-- Due to the strength of trade on the park Greggs and Subway both decided not to serve tenant only break options.
Lease Profile
This recent activity has improved income security across the portfolio during the period.
As at the period end the weighted average unexpired lease term to the earlier of lease expiries or breaks was 5.3 years over the Company's portfolio.
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
The Group has in place a GBP25m 3 year revolving credit facility with the Royal Bank of Scotland plc which matures in January 2020.
Performance
For the six month period commencing 1 October 2017, the Company's NAV has increased from 94.0p to 95.4p, an increase of 1.5%, resulting in a NAV total return of 4.6% for the period to 31 March 2018.
Bryan Sherriff
Drum Real Estate Investment Management Limited
22 May 2018
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 2016. 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 2018
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 March 2018
Hot Features
Premium
Six months ended Six months ended Year ended
31 March 2018 31 March 2017 30 September 2017
(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 - 264 264 - 745 745 - (371) (371)
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Revenue
Rental income 2,317 - 2,317 2,083 - 2,083 4,362 - 4,362
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Total
Income /
expense 2,317 264 2,581 2,083 745 2,828 4,362 (371) 3,991
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Expenditure
Investment
Adviser's fees 2 (203) - (203) (200) - (200) (381) - (381)
Other expenses (485) - (485) (361) - (361) (920) - (920)
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Total
expenditure (688) - (688) (561) - (561) (1,301) - (1,301)
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Profit / (loss)
before finance
costs and
taxation 1,629 264 1,893 1,522 745 2,267 3,061 (371) 2,690
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Net finance
costs
Interest
receivable - - - - - - - - -
Interest
payable (243) - (243) (225) - (225) (562) - (562)
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Profit / (loss)
before
taxation 1,386 264 1,650 1,297 745 2,042 2,499 (371) 2,129
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Taxation - - - - - - - - -
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Profit / (loss)
for the period 1,386 264 1,650 1,297 745 2,042 2,499 (371) 2,128
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Total
comprehensive
profit /
(loss)
for the period 1,386 264 1,650 1,297 745 2,042 2,499 (371) 2,128
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
Basic and
diluted
earnings per
ordinary
share 3 3.63p 0.69p 4.32p 3.51p 2.02p 5.53p 6.65p (0.99p) 5.66p
---------------- ------ ---------- -------- -------- ---------- -------- -------- -------- -------- --------
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 2018
As at As at As at
31 March 2018 31 March 2017 30 September
2017
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Investment properties 5 58,700 49,225 58,225
----------------------------- ------ --------------- --------------- --------------
58,700 49,225 58,225
----------------------------- ------ --------------- --------------- --------------
Current assets
----------------------------- ------ --------------- --------------- --------------
Trade and other receivables 701 630 630
----------------------------- ------ --------------- --------------- --------------
Cash and cash equivalents 1,201 2,620 647
----------------------------- ------ --------------- --------------- --------------
1,902 3,250 1,277
----------------------------- ------ --------------- --------------- --------------
Total assets 60,602 52,475 59,502
----------------------------- ------ --------------- --------------- --------------
Non-current liabilities
Bank loan 6 (22,693) (14,317) -
(22,693) (14,317) -
----------------------------- ------ --------------- --------------- --------------
Current liabilities
----------------------------- ------ --------------- --------------- --------------
Trade and other payables (1,462) (1,281) (904)
----------------------------- ------ --------------- --------------- --------------
Bank loan - - (22,702)
----------------------------- ------ --------------- --------------- --------------
Total liabilities (1,462) (1,281) (23,606)
----------------------------- ------ --------------- --------------- --------------
Net assets 36,447 36,877 35,896
----------------------------- ------ --------------- --------------- --------------
Equity and reserves
Called up equity share
capital 8 3,820 3,820 3,820
Share premium 5,335 5,351 5,335
Special distributable
reserve 24,340 26,840 24,340
Capital reserve (2,085) (1,233) (2,349)
Revenue reserve 5,037 2,099 4,750
----------------------------- ------ --------------- --------------- --------------
Equity shareholders'
funds 36,447 36,877 35,896
Net asset value per
ordinary share 7 95.41p 96.53p 93.96p
----------------------------- ------ --------------- --------------- --------------
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 2018 and were signed on its behalf by:
John Evans,
Chairman
Condensed Consolidated Statement of Changes in Equity
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
-------------------------------- --------- ---------- --------------- ---------- ---------- ---------
For the six months to 31 March 2017 (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 2016 3,659 3,921 26,840 (1,978) 1,785 34,227
-------------------------------- --------- ---------- --------------- ---------- ---------- ---------
Profit and total comprehensive
profit for the period: - - - 745 1,297 2,042
-------------------------------- --------- ---------- --------------- ---------- ---------- ---------
Transactions with owners
recognised in equity:
Issue of ordinary share
capital 161 1,446 - - - 1,607
Issue costs - (16) - - - (16)
Dividends paid - - - - (983) (983)
As at 31 March 2017 3,820 5,351 26,840 (1,233) 2,099 36,877
-------------------------------- --------- ---------- --------------- ---------- ---------- ---------
Condensed Consolidated Cash Flow Statement
For the six months ended 31 March 2018
Six months Six months Year ended
ended ended
31 March 31 March 30 September
2018 2017 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------------- ------------- ------------- --------------
Cash flows from operating activities
Profit before tax 1,650 2,042 2,129
Adjustments for:
Interest payable 243 225 562
Interest receivable - - -
Unrealised revaluation (loss) /
gain on property portfolio (264) (745) 371
Operating cash flows before working
capital changes 1,629 1,552 3,061
Increase / (decrease) in trade and
other receivables 163 (242) (242)
Increase in trade and other payables 324 647 220
------------------------------------------- ------------- ------------- --------------
Net cash inflow from operating activities 2,116 1,927 3,040
------------------------------------------- ------------- ------------- --------------
Cash flows from investing activities
Purchase of investment properties - - (8,650)
Property capitalised costs (211) (316) (1,766)
------------------------------------------- ------------- ------------- --------------
Net cash outflow from investing
activities (211) (316) (10,416)
------------------------------------------- ------------- ------------- --------------
Cash flows from financing activities
Bank loan drawn down net of arrangement
fees - - 8,300
Issue of ordinary share capital - 1,592 1,575
Interest received - - -
Interest paid (253) (245) (464)
Equity dividends paid (1,098) (1,056) (2,106)
Net cash (outflow) / inflow from
financing activities (1,351) 291 7,304
------------------------------------------- ------------- ------------- --------------
Net increase / (decrease) in cash
and cash equivalents 554 1,902 (71)
Opening cash and cash equivalents 647 718 718
------------------------------------------- ------------- ------------- --------------
Closing cash and cash equivalents 1,201 2,620 647
------------------------------------------- ------------- ------------- --------------
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 2017. 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 2017, 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
ended ended Year ended
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
-------------------------- ----------- ----------- --------------
Investment Adviser's fee 203 200 381
-------------------------- ----------- ----------- --------------
Total 203 200 381
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. EARNINGS PER SHARE
Six months Six months Year ended
ended ended 30 September
31 March 2018 31 March 2017 2017
Pence per Pence per Pence per
GBP'000 share GBP'000 share GBP'000 share
------------------------- --------- ------ --------- ------ -------- -------
Revenue earnings 1,386 3.63 1,297 3.51 2,499 6.65
Capital earnings 264 0.69 745 2.02 (371) (0.99)
Total earnings 1,650 4.32 2,042 5.53 2,128 5.66
Weighted average number
of shares in issue 38,201,990 36,903,956 37,554,751
Earnings for the period to 31 March 2018 should not be taken as a guide to the results for the period to 30 September 2018.
4. DIVIDS
A first interim dividend of 1.5p in respect of the quarter ended 31 December 2017 was paid on 23 February 2018 to shareholders on the register on 9 February 2018.
A second interim dividend of 1.5p in respect of the period ended 31 March 2018 was paid on 25 May 2018 to shareholders on the register on 11 May 2018.
5. INVESTMENT PROPERTIES
As at
As at 30 September
31 March 2018 2017
GBP'000 GBP'000
---------------------- --------------- --------------
Opening fair value 58,225 48,238
Purchases - 8,650
Capitalised costs 211 1,708
Revaluation movement 264 (371)
---------------------- --------------- --------------
Closing fair value 58,700 58,225
---------------------- --------------- --------------
Changes in the valuation of investment properties
As at As at
31 March 30 September
2018 2017
GBP'000 GBP'000
----------------------------------------- ---------- --------------
Unrealised gain / (loss) on revaluation
of investment properties 264 (371)
----------------------------------------- ---------- --------------
The properties were valued at GBP58,700,000 as at 31 March 2018 (31 March 2017: GBP49,225,000; 30 September 2017: GBP58,225,000) 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 2017. There were no significant changes to the valuation process, assumptions or techniques used during the period.
6. BANK LOAN
As at As at
31 March As at 30 September
2018 31 March 2017 2017
GBP'000 GBP'000 GBP'000
------------------------------ ---------- --------------- --------------
Principal amount outstanding 22,760 14,460 22,760
------------------------------ ---------- --------------- --------------
Set up costs (67) (143) (58)
------------------------------ ---------- --------------- --------------
Total 22,693 14,317 22,702
------------------------------ ---------- --------------- --------------
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 new 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 GBP58,700,000 at 31 March 2018.
Under the financial covenants related to this loan, the Group has to ensure that for Drum Income Plus Limited:
- the interest cover, being the rental income as a percentage of finance costs, is at least 250%;
- the loan to value ratio, being the value of the loan as a percentage of the aggregate market value of the relevant properties, must not exceed 50%.
Breach of the financial covenants, subject to various cure rights, may lead to the loans falling due to repayment earlier than the final maturity date stated above. The Group has complied with all the loan covenants during the period.
7. NET ASSET VALUE
The Group's net unit value per ordinary share of 95.41 pence (31 March 2017 96.53 pence; 30 September 2017 93.96 pence) is based on equity shareholders' funds of GBP36,447,000 (31 March 2017 GBP36,877,000; 30 September 2017 GBP35,896,000) and on 38,201,990 ordinary shares being the number of shares in issue at the period end.
8. SHARE CAPITAL
Six months Year to Six months Year to
to 31 March 30 September to 31 March 30 September
2018 2017 2018 2017
Shares Shares GBP'000 GBP'000
------------------------------- ------------- -------------- ------------- --------------
Issued and fully paid
Opening total issued ordinary
shares of 10p each 38,201,990 36,594,900 3,820 3,659
Issued during the period - 1,607,090 - 161
------------------------------- ------------- -------------- ------------- --------------
Closing total issued ordinary
shares 38,201,990 38,201,990 3,820 3,820
------------------------------- ------------- -------------- ------------- --------------
There is one class of share.
9. INVESTMENT IN SUBSIDIARY
The Group's results consolidate those of Drum Income Plus Limited, a wholly owned subsidiary of Drum Income Plus REIT plc, incorporated in England & Wales (Company Number: 09515513). Drum Income Plus Limited was incorporated on 28 March 2015, acquired on 19 August 2015 and began trading on 19 January 2016, when it transferred the ownership of the entirety of the Group's property portfolio. Drum Income Plus Limited continues to hold all the investment properties owned by the Group and is also the party which holds the Group's borrowings.
10. RELATED PARTY TRANSACTIONS AND FEES PAID TO DRUM REAL ESTATE INVESTMENT MANAGERS
The Directors are considered to be related parties. No Director had an interest in any transactions which are, or were, unusual in their nature or significant to the nature of the Group.
The Directors of the Group received fees for their services. Total fees for the six months ended 31 March 2018 were GBP38,000 (six months ended 31 March 2017: GBP38,000; twelve months ended 30 September 2017: GBP75,000) of which GBP1,000 (31 March 2017: GBP7,000; 30 September 2017: GBP5,000) remained payable at the period end.
The Investment Manager, Investment Adviser and Economic Adviser are considered to be related parties.
Under the terms of the agreements amongst the Group, R&H Fund Services (Jersey) Limited (the "AIFM"), Drum Real Estate Investment Management Limited (the "Investment Adviser") and Turcan Connell Asset Management Limited (the "Economic Adviser"), the Group paid to the AIFM a fixed fee of GBP15,000 per annum plus annual portfolio management fee of 0.80% of the net assets of the Group an economic advisory fee of 0.45% of the net assets of the Group. The AIFM agreed that the annual portfolio management fee and economic advisory fee would be paid to the Investment Adviser and Economic Adviser respectively, in accordance with the terms of the agreements.
With effect from 1 January 2016, the total management fee was reduced to 1.15% per annum of the Group's net assets up to GBP150 million and 1.00% of net assets over GBP150 million. All of this amount is due to the Investment Adviser.
The management agreements are terminable by any party on 12 months' written notice, provided that such notice shall expire no earlier than the fourth anniversary of Admission.
Drum Real Estate Investment Management Limited received GBP203,000 in relation to the six months ended 31 March 2018 (six months ended 31 March 2017: GBP200,000; twelve months ended 30 September 2017: GBP381,000) of which GBP106,000 (31 March 2017: GBP100,000; 30 September 2017: GBP86,000) remained payable at the period end.
R&H Fund Services (Jersey) Limited received GBP8,000 in relation to the six months ended 31 March 2018 (six months ended 31 March 2017: GBP8,000; twelve months ended 30 September 2017: GBP15,000) of which GBP10,000 (31 March 2017: GBP11,000; 30 September 2017: GBP2,000) remained payable at the period end.
11. COMMITMENTS
The Group did not have any contractual commitments to refurbish, construct or develop any investment property, or for repair, maintenance or enhancements as at 31 March 2018 (31 March 2017: nil, 30 September 2017: nil).
12. OPERATING SEGMENTS
The Board has considered the requirements of IFRS 8 'Operating Segments'. The Board is of the view that the Group is engaged in a single unified business, being property investment, and in one geographical area, the United Kingdom, and that therefore the Group has no segments. The Board of Directors, as a whole, has been identified as constituting the chief operating decision maker of the Group. The key measure of performance used by the Board to assess the Group's performance is the total return on the Group's net asset value. As the total return on the Group's net asset value is calculated based on the IFRS net asset value per share as shown at the foot of the Consolidated Statement of Financial Position, the key performance measure is that prepared under IFRS. Therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements.
13. FAIR VALUE MEASUREMENTS
The fair value measurements for assets and liabilities are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. These different levels have been defined as follows:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.
Level 2 - inputs, other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 - unobservable inputs for the asset or liability.
Value is the Directors' best estimate, based on advice from relevant knowledgeable experts, use of recognised valuation techniques and on assumptions as to what inputs other market participants would apply in pricing the same or similar instrument. All investment properties are included in Level 3.
There were no transfers between levels of the fair value hierarchy during the six months ended 31 March 2018.
14. INTERIM REPORT STATEMENT
The Company's auditor has not audited or reviewed the Interim Report to 31 March 2018 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 2017, 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 2017 have been reported on by the Company's auditor or delivered to the Registrar of Companies.
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.
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May 23, 2018 02:00 ET (06:00 GMT)
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