Share Name Share Symbol Market Type Share ISIN Share Description
Spec Inves Prop LSE:SIPP London Ordinary Share IM00BZ97VJ22 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 16.00p 15.00p 17.00p - - - 0 05:00:01
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Travel & Leisure 0.2 -0.1 -1.2 - 2.11

Specialist Investment PropertiesPLC Half-year Report

11/09/2017 10:32am

UK Regulatory (RNS & others)


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RNS Number : 3616Q

Specialist Investment PropertiesPLC

11 September 2017

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

Specialist Investment Properties Plc

("SIPP", the "Group", or the "Company")

Interim results for the six months ended 30 June 2017

11 September 2017

Financial Results

The Company made an unaudited profit before and after taxation of GBP12,000 for the six months ended 30 June 2017 (2016: loss of GBP57,000).

The return of the Company to profitability has resulted from the establishment of a stable property portfolio, comprising thirteen assets, during the period. The Company made one small property acquisition in January 2017, but otherwise the portfolio has remained unchanged throughout the period. Rent reviews for five properties took place during the period, recording uplifts in line with CPI. As a result of the acquisition and rent reviews, total annualised rent for the property portfolio had reached GBP636,500 by 30 June 2017, representing a gross yield of 10.5%.

The Company's unaudited balance sheet at 30 June 2017 shows net assets of GBP2.2m, of which GBP0.2m was held in cash at the balance sheet date. Investment properties were carried at an aggregate value of GBP6.6m, with GBP4.5m of associated borrowings in place.

Property Portfolio

The Company held investment properties valued at GBP6.6m at 30 June 2017, consisting of seven children's homes, one supported living home and five properties rented out as short term accommodation to local authorities. The children's homes and supported living asset are leased to care operators on long term full repairing and insuring leases with annual index-linked uplifts. The short term accommodation is let for shorter periods to local authorities, with vacancy rates in the sector historically less than 1%. For the largest short term accommodation property, the Company has entered into a one year lease with the local authority.

The following table gives details of the purchase prices and gross yields on purchase price:

 
                                   Purchase    Annual    Gross rental 
                                     price      Rent         yield 
                             No.    GBP'000    GBP'000         % 
 
 Children's homes             7     2,378       238          10.0 
 Supported living 
  homes                       1     1,250       115          9.2 
 Short term accommodation     5     2,425       283          11.7 
                            ----  ---------  ---------  ------------- 
 Total portfolio             13     6,053       637          10.5 
                            ----  ---------  ---------  ------------- 
 

The gross rental yield for the thirteen properties on purchase costs after taking account of stamp duty, legal costs and fees is 9.7% p.a.

Future Plans

The Company is today announcing that it intends to seek Shareholder approval for the cancellation of admission of its Ordinary Shares to trading on AIM. The background and rationale to this proposal will be set out in a further announcement published later today.

John Le Poidevin

Director

For further information:

Specialist Investment Properties plc

John Le Poidevin / Lynn Bruce / Simon Clements

+44 (0) 1481 724222

Puma Investments (Investment Adviser to the Company)

David Kaye

+44 (0) 20 7408 4050

Allenby Capital Limited (Nomad and Broker to the Company)

David Worlidge / James Thomas / Liz Kirchner

+44 (0) 20 3328 5656

Notes to Editors

The Company's shares are admitted to trading on AIM and it is registered in the Isle of Man with company number 111066C.

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2017

 
                                                  Six months                 Six months 
                                                       ended                      ended              Year ended 
                                                     30 June                    30 June             31 December 
                                                        2017                       2016                    2016 
                                                 (unaudited)                (unaudited)               (audited) 
                            Notes 
                                                     GBP'000                    GBP'000                 GBP'000 
 
 Revenue                                                 312                         25                     174 
 
 Administrative 
  expenditure                                          (146)                       (72)                   (229) 
 
 Operating profit/(loss)                                 166                       (47)                    (55) 
                                   -------------------------  -------------------------  ---------------------- 
 
 Interest income                                           -                          1                       1 
 Finance costs                                         (154)                       (11)                    (82) 
 
 Profit/(loss) before 
  taxation                                                12                       (57)                   (136) 
                                   -------------------------  -------------------------  ---------------------- 
 
 Taxation                                                  -                          -                       - 
 
 Profit/(loss) after 
  taxation and total 
  comprehensive loss 
  for the period                                          12                       (57)                   (136) 
                                   =========================  =========================  ====================== 
 
 Attributable to: 
 Equity holders 
  of the parent                                           12                       (57)                   (136) 
 Non-controlling                                           -                          -                       - 
  interests 
                                   -------------------------  -------------------------  ---------------------- 
                                                          12                       (57)                   (136) 
                                   =========================  =========================  ====================== 
 
 
   Earnings/(loss) 
   per share 
   Basic and diluted           3                       0.09p                    (0.57)p                 (1.16)p 
                                   =========================  =========================  ====================== 
 
 

Consolidated Statement of Financial Position

As at 30 June 2017 (unaudited)

 
                              Notes                               As at                As at 
                                             As at 30           30 June          31 December 
                                            June 2017              2016                 2016 
                                          (unaudited)       (unaudited)            (audited) 
 
                                              GBP'000           GBP'000              GBP'000 
 Non-current assets 
 Investment properties          4               6,563             1,673                6,223 
 Intangible assets                                  2                 1                    2 
 
                                                6,565             1,674                6,225 
                                     ----------------  ----------------  ------------------- 
 Current assets 
 
 Trade and other 
  receivables                                     179                16                  159 
 Cash and cash equivalents                        171             1,695                  365 
                                                       ---------------- 
                                                  350             1,711                  524 
                                     ----------------  ----------------  ------------------- 
 Total assets                                   6,915             3,385                6,749 
                                     ----------------  ----------------  ------------------- 
 
   Current liabilities 
 Trade and other 
  payables                                      (140)              (64)                (192) 
 Loans due in less 
  than one year                 5             (1,033)                 -                    - 
                                                       ---------------- 
                                              (1,173)              (64)                (192) 
                                     ----------------  ----------------  ------------------- 
 
 
 Non-current liabilities 
 Loans due after 
  more than one year            5             (3,459)           (1,030)              (4,295) 
 Other payables                                  (37)                 -                 (31) 
                                     ----------------  ----------------  ------------------- 
 Total liabilities                            (4,669)           (1,094)              (4,518) 
                                     ----------------  ----------------  ------------------- 
 
 Net Assets                                     2,246             2,291                2,231 
                                     ================  ================  =================== 
 
 Equity 
 Capital and Reserves 
 Called up share 
  capital                       6               2,599             2,598                2,599 
 Share premium account                         12,940            12,938               12,940 
 Retained earnings                           (13,312)          (13,245)             (13,324) 
                                     ----------------  ----------------  ------------------- 
 Equity attributable 
  to equity holders 
  of the parent                                 2,227             2,291                2,215 
                                     ----------------  ----------------  ------------------- 
 
 Non-controlling 
  interest                                         19                 -                   16 
 Total equity                                   2,246             2,291                2,231 
                                     ================  ================  =================== 
 
 
 Net Asset Value 
  per share          16.71p             17.35p         16.62p 
                    =======  =================  ============= 
 

Consolidated Statement of Changes in Equity

For the six months ended 30 June 2017 (unaudited)

 
                                      Share 
                           Share    premium    Retained   Non-controlling 
                         capital    account    earnings          interest     Total 
 
                         GBP'000    GBP'000     GBP'000           GBP'000   GBP'000 
 
 At 1 January 2016         2,491     11,015    (13,188)                 -       318 
 
 Loss for the period           -          -        (57)                 -      (57) 
 Issue of share 
  capital                    107      1,923           -                 -     2,030 
 
 At 30 June 2016           2,598     12,938    (13,245)                 -     2,291 
                       =========  =========  ==========  ================  ======== 
 
 
 
                                      Share 
                           Share    premium    Retained   Non-controlling 
                         capital    account    earnings          interest     Total 
 
                         GBP'000    GBP'000     GBP'000           GBP'000   GBP'000 
 
 At 1 July 2016            2,598     12,938    (13,245)                 -     2,291 
 
 Loss for the period           -          -        (79)                 -      (79) 
 Issue of preference 
  shares                       -          -           -                16        16 
 Issue of share 
  capital                      1          2           -                 -         3 
 At 31 December 
  2016                     2,599     12,940    (13,324)                16     2,231 
                       =========  =========  ==========  ================  ======== 
 
 
 
                                      Share 
                           Share    premium    Retained   Non-controlling 
                         capital    account    earnings          interest     Total 
 
                         GBP'000    GBP'000     GBP'000           GBP'000   GBP'000 
 
 At 1 January 2017         2,599     12,940    (13,324)                16     2,231 
 
 Profit for the 
  period                       -          -          12                 -        12 
 Issue of preference 
  shares                       -          -           -                 3         3 
 
 At 30 June 2017           2,599     12,940    (13,312)                19     2,246 
                       =========  =========  ==========  ================  ======== 
 
 

Consolidated Cash Flow Statement

For the six months ended 30 June 2017

 
                                             Six months           Six months 
                                                  ended                ended          Year ended 
                                                30 June              30 June         31 December 
                                                   2017                 2016                2016 
                                            (unaudited)          (unaudited)           (audited) 
 
                                                GBP'000              GBP'000             GBP'000 
 
 Profit/ (loss) from operations                     166                 (47)                (55) 
 Increase in receivables                           (20)                  (8)               (151) 
 (Decrease)/increase in 
  payables                                         (55)                   30                 130 
 
 Cash flows from operating 
  activities                                         91                 (25)                (76) 
                                  ---------------------  -------------------  ------------------ 
 
 Investing activities 
 Purchase of investment 
  properties                                      (340)              (1,673)             (6,223) 
 Purchase of intangible 
  assets                                              -                  (1)                 (2) 
                                  ---------------------  -------------------  ------------------ 
 Net cash used in investing 
  activities                                      (340)              (1,674)             (6,225) 
                                  ---------------------  -------------------  ------------------ 
 
 Financing activities 
 Proceeds from issue of 
  share capital                                       -                2,030               2,033 
 Issue of preference shares                           3                    -                  47 
 Interest income                                      -                    1                   1 
 Interest paid                                    (145)                    -                (43) 
 New loans received                                 197                1,030               4,295 
                                  ---------------------  -------------------  ------------------ 
 Net cash generated from 
  financing activities                               55                3,061               6,333 
                                  ---------------------  -------------------  ------------------ 
 
   Net (decrease)/increase 
   in cash and cash equivalents 
   during the period                              (194)                1,362                  32 
 
 Cash and cash equivalents 
  at beginning of period                            365                  333                 333 
                                  ---------------------  -------------------  ------------------ 
 
   Cash and cash equivalents 
   at end of period                                 171                1,695                 365 
                                  =====================  ===================  ================== 
 

Notes to the Interim Financial Report

For the six months ended 30 June 2017 (unaudited)

1. Financial information

Basis of preparation and publication

The annual financial statements of Specialist Investment Properties Plc are prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

The information for the year ended 31 December 2016 does not constitute statutory accounts. The Annual Report and Accounts of the Group were issued on 26 May 2017. The auditor's report on those accounts was not qualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report.

Copies of this announcement are available on the Company's website www.specialistinvestmentproperties.com

Going concern

The directors have considered the adequacy of the disclosures made in the financial statements concerning the company's ability to continue as a going concern and the basis on which the financial statements have been prepared. As it is the directors' intention to sell the company's assets and liabilities in the normal course of business and then to wind up the company in an orderly manner, the financial statements have not been prepared on a going concern basis. It should be noted that the company continues to be solvent and will meet its liabilities as they fall due. The decision to wind up the company does not impact the measurement of its assets and liabilities.

Accounting policies

The accounting policies adopted are consistent with those of the previous financial year.

Investment properties

The Group's investment properties are held for long term investment. Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value based on market data and a valuation made as of each reporting date. The fair value of investment property does not reflect future capital expenditure that will improve or enhance the property and does not reflect future benefits from this future expenditure.

Gains or losses arising from changes in the fair value of investment properties are included in the Group Statement of Comprehensive Income in the year in which they arise.

Investment properties are recognised for accounting purposes upon completion of contract, when the risks and rewards of ownership are transferred to the Group. Investment properties cease to be recognised when they have been disposed of. Any gains and losses arising are recognised in the Group Statement of Comprehensive Income in the year of disposal.

Net rental income

Rental income arising from operating leases on investment properties is accounted for on a straight line basis over the lease term. An adjustment to rental income is recognised from the rent review date of each lease in relation to unsettled rent reviews. For leases which contain fixed or minimum deemed uplifts, the rental income is recognised on a straight line basis over the lease term. Incentives for lessees to enter into lease agreements are spread evenly over the lease terms, even if the payments are not made on such a basis. Rental income is measured at the fair value of the consideration receivable, excluding discounts, rebates, VAT and other sales taxes or duty.

Bank loans and borrowings

All loans and borrowings are initially measured at fair value less directly attributable transaction costs. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest method.

Borrowing costs

Borrowing costs that are separately identifiable and directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs the Group incurs in connection with the borrowing of funds.

2. Dividends

The Directors do not recommend the payment of an interim dividend in respect of the six months ended 30 June 2017 (30 June 2016: GBPnil, 31 December 2016: GBPnil).

3. Earnings/(loss) per share

 
                                       Six months     Six months           Year ended 
                                            ended          ended          31 December 
                                          30 June        30 June                 2016 
                                             2017           2016 
                                      (unaudited)    (unaudited)            (audited) 
                                          GBP'000        GBP'000              GBP'000 
 
   Earnings/(loss) for 
   the period                                  12           (57)                (136) 
                                 ================  =============  =================== 
 
                                       Six months     Six months           Year ended 
                                            ended          ended          31 December 
                                          30 June        30 June                 2016 
                                             2017           2016 
                                      (unaudited)    (unaudited)            (audited) 
                                              No.            No.                  No. 
 Weighted average number 
  of ordinary shares for 
  the purpose of basic 
  and diluted loss per 
  share                                13,330,306      9,966,607           11,678,518 
                                 ================  =============  =================== 
 
 Earnings/(loss) per 
  share (pence) 
 
 Basic and diluted                           0.09         (0.57)               (1.16) 
                                 ================  =============  =================== 
 

4. Investment properties

 
                              GBP'000 
 At 1 January 2017              6,223 
 
   Additions in the period        340 
                             -------- 
 At 30 June 2017                6,563 
                             ======== 
 
 

5. Loans

As at 30 June 2017, the Group had drawn loans totaling GBP4,493,340 from loan facilities advanced by Heritage Square Limited, a related entity to whom the Group's Investment Adviser, Puma Investment Management Limited, acts as Trading Adviser. Costs of GBP3,686 were set off against this loan balance and are being released over the loan term, resulting in a net loan balance at 30 June 2017 of GBP4,492,037. As at 30 June 2017, loans totaling GBP1,033,000 were payable in less than one year and loans totaling GBP3,460,340 were due in more than one year.

Under a GBP7.4m principal loan facility, interest is payable on drawn funds at a fixed rate of 6.0% - 6.5% per annum and loans are repayable two years after the date of drawdown. Loans are used to fund the purchase of investment properties and are secured on those properties by way of a first charge. As at the period end GBP4,213,340 had been drawn down under this principal loan facility.

In addition, the Group has a further GBP2.5m bridging facility with Heritage Square Limited, whereby interest is payable on drawn funds at a rate of 1% per month for the first six months, stepping up to 1.25% per month between seven months from drawdown and twelve months from drawdown, 1.5% per month between thirteen months from drawdown and eighteen months from drawdown and 1.75% per month between nineteen months from drawdown and twenty-four months from drawdown. Loans are repayable two years after the date of drawdown. The Group was only able to draw down on the facility until the earlier of reaching the GBP2.5m limit or 30 June 2017. As at the period end GBP280,000 had been drawn from this loan facility.

6. Share Capital

The total number of Ordinary shares in issue at the start and end of the period was 13,330,306.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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