TIDMSIPP
RNS Number : 9106F
Specialist Investment PropertiesPLC
02 August 2016
2 August 2016
Specialist Investment Properties Plc
("SIPP", the "Group", or the "Company")
Interim results for the six months ended 30 June 2016
Highlights
-- SIPP has started implementing its new strategy of investing
in properties in the social care sector generating attractive
yields;
-- An initial equity fund-raising of GBP2.1m completed in February 2016;
-- Five properties acquired before 30 June 2016 for a total cost
of GBP1.6m, a further one following the period end;
-- Initial gross rental yield of portfolio to date is 9.1% p.a.;
-- All completed and pipeline acquisitions are in the social
care sector, which offers high yields and rents indirectly funded
by the public purse, making them defensive investments with good
prospects of growth;
-- Loan facilities were put in place which, with the initial
equity, gave finance for property acquisitions of up to
cGBP6.5m;
-- The Board has approved in principle further purchases for
which exclusivity agreements have been agreed which would commit
all of SIPP's remaining available funding;
-- Further acquisitions beyond the resources available to the
Company at the period end have been identified and additional
borrowing facilities of GBP5.7m have therefore been agreed to
enable these to be funded pending a further equity
fund-raising.
John Le Poidevin, Director of SIPP, said:
"Having established a solid platform for executing its initial
investment strategy, the Board believes that the Company has made
very good progress to date. Completing the pipeline it has in legal
process and the additional deals identified will transform SIPP's
outlook and make it a high yielding investment for its shareholders
with both strong defensive characteristics and good prospects for
capital growth".
For further information:
Specialist Investment Properties plc
Lynn Bruce
+44 (0) 1481 724222
Puma Investment Management Limited (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.
In September 2015 the Company adopted a new investing policy to
become an investment property company acquiring and holding
freehold properties (and, in rare cases, long lease-hold
properties) in specialised sectors of the property market. The
initial focus is investing in residential properties to accommodate
children and young people requiring extensive support from social
services, and purpose-built homes for adults with learning
difficulties requiring support from carers (for example adults with
autism). More recently the Company is considering investment in
residential properties that provide short term accommodation to
local authorities to meet their obligations. The new Investing
Policy for the Company also allows it to invest in other specialist
areas such as wedding and conference centres, other leisure
facilities and, if sufficiently non-mainstream, residential or
commercial property.
Introduction
We take pleasure in reporting our first set of interim results
since the Company began to implement its new strategy. We are
pleased to report very good progress in building a portfolio of
social care properties, a sector offering high yields with rents
supported by the public purse. This should enable us to offer our
shareholders a sustainable income stream and prospects of capital
growth.
Financial Results
Following the adoption of the Company's new strategy, SIPP
conducted a placing and open offer which raised GBP2.1m before
costs on 23 February 2016.
The Company made its first acquisitions of two properties on 1
March 2016 and a further three properties were acquired later in
the period. As a result, the revenue for the Company for the six
months ended 30 June 2016 does not give a steady state picture.
Total annualised rent for the six properties now held is
GBP184,500.
As a consequence of the limited amount of time that the
properties acquired have been held for and the low yield on cash
balances held for property purchases in the pipeline, the Company
incurred a loss before and after taxation of GBP57,000 for the six
months to 30 June 2016. The Company's balance sheet shows net
assets of GBP2.3m, of which some GBP1.7m was held in cash at the
balance sheet date. Borrowings taken out to fund property purchases
were GBP1.0m at 30 June 2016.
The Company held GBP1.7m of investment properties at 30 June
2016, consisting of four former residential properties operating as
children's homes and one as a supported living home. These are
leased to care operators on long term full repairing and insuring
leases with inflation adjustment for rent over the life of the
lease.
Property Acquisitions
The Company acquired five properties in the period between
completing its fundraising and 30 June 2016. It acquired a sixth
property on 8 July 2016. All of the properties are let on full
repairing and insuring leases with a term of 25 years. Rent
increases are indexed to inflation.
Two of the properties, both acquired on 1 March 2016, are in the
North West of England, one in the Manchester area and one in
Rochdale. The other four properties are in the West Midlands,
mostly in the suburbs of Birmingham.
The following table gives details of the purchase prices and
initial yields:
Property Acquisitions to Date
Initial gross
Purchase rental yield
price Annual Rent on purchase
GBP000s GBP000s %
Acquired by 30 June 2016
4 children's homes
and 1 supported
living home 1,503 147 9.7
Acquired in July 2016
1 children's home 385 38 9.9
Total purchases
to date 1,888 185 9.8
The initial gross rental yield for the six properties on
purchase costs after taking account of stamp duty, legal costs and
fees is 9.1% p.a.
Property Acquisitions Pipeline
The Company's Investment Adviser, Puma Investment Management
Limited ("Puma Investments"), has identified a number of properties
for acquisition which the Board has approved for purchase subject
to satisfactory due diligence. Exclusivity arrangements have been
entered into with the vendors and the acquisitions are now in legal
process.
These potential acquisitions are mostly of larger buildings
divided into individual flats primarily for those with physical or
mental difficulties. Some are completed, others are in
construction. The intention is to acquire these properties with a
long term full repairing and insuring lease in place to a care
operator or housing association. If the potential acquisitions in
the pipeline are all acquired, it would commit the entire residual
funding currently available to the Company after allowing for a
modest working capital buffer.
The Investment Adviser has also identified further acquisitions
which are available to be made but which would require more finance
than the Company currently has available. The Board has discussed
these opportunities and considers that it would be advantageous
also to proceed with these additional investments, The Board has
therefore discussed with its lender, Heritage Square Limited
("Heritage Square"), a new framework agreement under which the
Company can draw down additional bridging loans, up to a maximum of
GBP2.5m, to enable the Company to borrow up to 90% of the lower of
the acquisition price and the market value of a property ("the new
framework agreement"). Further details of this facility are set out
below.
The additional projects are currently in construction or about
to begin construction and would not be completed before the end of
2016 at the earliest. The extra facility from Heritage Square would
enable SIPP to exchange contracts to buy these projects on full
completion of construction as attested by an independent monitoring
surveyor. Simultaneously at exchange, an agreement for lease would
be signed with an appropriate tenant, typically a housing
association. The new framework agreement would give the Board
confidence that it has the finance to buy the projects at practical
completion in 2017. The Company is currently reviewing its options
for raising additional equity finance prior to the completion of
construction, which would mean that it would not need to draw on
this new facility.
Short Term Accommodation
The Investment Adviser has also identified opportunities to
invest in residential property to be used to supply short term
accommodation for local authorities to enable them to meet their
housing obligations. The Company has agreed in principle to work in
partnership in this area with an established operator with strong
local authority relationships and experience. Although individual
lettings might well be short term, demand is strong and occupancy
rates are high, with an expected gross income yield of over 10%
p.a.
The first acquisitions in this area are in the pipeline and the
Company has agreed an extension to its original Framework Facility
Agreement with Heritage Square. The extension is for up to a
further GBP3.2m to fund such acquisitions at an interest rate of
6.5% p.a. and on terms which are otherwise substantially the same
as the original Framework Facility Agreement.
Related Party Transactions
Puma Investments, which is the Company's Investment Adviser,
also acts as Trading Adviser to Heritage Square, a specialist
property lending company. Puma Investments is a subsidiary of the
Shore Capital group of companies, and another member of that group
is a substantial shareholder in the Company. Accordingly, Heritage
Square is deemed to be a related party under Rule 13 of the AIM
Rules. As a consequence, the entering into of the new framework
agreement and the extension of the original Framework Facility
Agreement are deemed to be related party transactions under Rule 13
of the AIM Rules.
The principal terms of the new framework agreement are as
follows:
-- GBP2.5m additional secured facility for 2 years, available to
be drawn only in the first 12 months;
-- Provides increased leverage on the existing facility (which
is up to 70% loan to value) to increase leverage on individual
loans up to 90% loan to value;
-- 1% one-off, non-refundable arrangement fee of GBP25,000 payable on signature;
-- Additional leverage (i.e. over 70%) attracts interest on following basis:
-- 1.0% per month for the first 6 months from date of
drawdown;
-- 1.25% per month for months 7 to 12;
-- 1.5% per month for months 13 to 18;
-- 1.75% per month for months 19 to 24.
John Le Poidevin, the sole independent director, having
consulted with the Company's nominated adviser, Allenby Capital
Limited, considers that the terms of the GBP2.5m new framework
agreement and of the GBP3.2m extension of the original Framework
Facility Agreement for Short Term Accommodation are fair and
reasonable insofar as shareholders are concerned.
Future Plans
The Company, together with its Investment Adviser, is developing
a strong flow of opportunities to buy properties in the social care
sector delivering relatively high yields and expects to be able to
continue to generate attractive investments in this space in a
larger programme of investment. For this reason, the Board is
contemplating a further equity fund raising in due course.
Outlook
Having established a solid platform for executing its initial
investment strategy, the Board is satisfied that the Company has
made very good progress to date. Completing the pipeline currently
in legal process as well as the additional deals identified will
transform SIPP's outlook, established it as a high yielding
investment for its shareholders with both strong defensive
characteristics and good prospects for capital growth.
John Le Poidevin
Director
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2016 (unaudited)
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
Notes
GBP'000 GBP'000 GBP'000
Revenue 25 - -
Administrative
expenditure (72) (66) (168)
Operating loss (47) (66) (168)
------------------------- ------------------------- ----------------------
Interest income 1 - 2
Finance costs (11) - -
Loss before taxation (57) (66) (166)
------------------------- ------------------------- ----------------------
Taxation - - -
Loss after taxation
and total comprehensive
loss for the period (57) (66) (166)
========================= ========================= ======================
Loss per share
Basic and diluted 3 (0.57)p (2.65)p (6.66)p
Consolidated Statement of Financial Position
As at 30 June 2016 (unaudited)
Notes As at As at As at
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Non-current assets
Investment properties 4 1,673 - -
Intangible assets 1 - -
1,674 - -
---------------- --------------- ---------------
Current assets
Trade and other
receivables 16 4 8
Cash and cash
equivalents 1,695 421 333
---------------
1,711 425 341
---------------- --------------- ---------------
Total assets 3,385 425 341
---------------- --------------- ---------------
Current liabilities
Trade and other
payables (64) (7) (23)
Non-current liabilities
Loans due after
more than one
year 5 (1,030) - -
Total liabilities (1,094) (7) (23)
---------------- --------------- ---------------
Net Assets 2,291 418 318
================ =============== ===============
Equity
Capital and Reserves
Called up share
capital 6 2,598 2,491 2,491
Share premium
account 12,938 11,015 11,015
Retained earnings (13,245) (13,088) (13,188)
---------------- --------------- ---------------
Total equity 2,291 418 318
================ =============== ===============
Net Asset Value
per share 17.35p 16.78p 12.77p
======= ================= =============
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2016 (unaudited)
Share
Share premium Retained
capital account earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2015 2,491 11,015 (13,022) 484
Loss for the period - - (66) (66)
At 30 June 2015 2,491 11,015 (13,088) 418
========= ========= ========== ========
Share
Share premium Retained
capital account earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2015 2,491 11,015 (13,088) 418
Loss for the period - - (100) (100)
At 31 December
2015 2,491 11,015 (13,188) 318
========= ========= ========== ========
Share
Share premium Retained
capital account earnings Total
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
========= ========= ========== ========
Consolidated Cash Flow Statement
For the six months ended 30 June 2016 (unaudited)
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Loss from operations (47) (66) (168)
(Increase)/decrease in
receivables (8) 4 -
Increase/(decrease) in
payables 30 (18) (2)
Cash flows from operating
activities (25) (80) (170)
Investing activities
Interest received 1 - 2
Purchase of investment (1,673) - -
properties
Purchase of intangible (1) - -
assets
------------------- ------------------ ---------------
Net cash (used in)/generated
from investing activities (1,673) - 2
------------------- ------------------ ---------------
Financing activities
Proceeds from issue of 2,030 - -
share capital
New loans received 1,030 - -
------------------- ------------------ ---------------
Net cash generated from 3,060 - -
financing activities
------------------- ------------------ ---------------
Net increase/(decrease)
in cash and cash equivalents
during the period 1,362 (80) (168)
=================== ================== ===============
Cash and cash equivalents
at beginning of period 333 501 501
------------------- ------------------ ---------------
Cash and cash equivalents
at end of period 1,695 421 333
------------------- ------------------ ---------------
Notes to the Interim Financial Report
For the six months ended 30 June 2016 (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
condensed set of financial statements included in this interim
financial report for the period ended 30 June 2016 has been
prepared in accordance with International Accounting Standard 34
"Interim Financial Reporting", as adopted by the European
Union.
The information for the year ended 31 December 2015 does not
constitute statutory accounts. The Annual Report and Accounts of
the Group were issued on 5 April 2016. 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
Accounting policies
The accounting policies adopted are consistent with those of the
previous financial year, with the exception of the following new
accounting policies which have been adopted by the Group during the
period:
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 month period to 30 June 2016 (30
June 2015: GBPnil, 31 December 2015: GBPnil).
3. Loss per share
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
GBP'000 GBP'000 GBP'000
Loss for the period (57) (66) (166)
================ ================ ===================
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
No. No. No.
Weighted average number
of ordinary shares for
the purpose of basic
and diluted loss per
share 9,966,607 2,490,953 2,490,953
================ ================ ===================
Loss per share (pence)
Basic and diluted (0.57) (2.65) (6.66)
================ ================ ===================
The loss per share for the six months ended 30 June 2015 and the
year ended 31 December 2015 has been restated to take account of
the share reorganisation in the period (see note 6).
4. Investment properties
GBP'000
At 1 January 2016 -
Additions in the period 1,673
--------
At 30 June 2016 1,673
========
Investment properties purchased during the period totalled
GBP1,673,000 including stamp duty land tax and other associated
fees and costs. The properties are carried at their acquisition
cost at the period end as this is considered to be a reasonable
approximation for open market value.
5. Loans due after more than one year
As at 30 June 2016, the Group had drawn loans totalling
GBP1,030,000 from a GBP4.2m loan facility advanced in the period by
Heritage Square Limited, a related entity to whom the Company's
Investment Adviser, Puma Investments, acts as Trading Adviser.
Under the loan facility, interest is payable on drawn funds at a
rate of 6% 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.
6. Share Capital
The total number of Ordinary shares in issue at the start of the
period was 49,810,050. On 24 February 2016, these shares were
reorganised such that the number of shares was reduced by a ratio
of 1:20. On the same date, 10,713,142 new Ordinary shares were
issued for net proceeds (after costs) of GBP2.03m.
On 1 April 2016, 316 new Ordinary shares were issued for net
proceeds of GBP52. As at 30 June 2016, the total number of Ordinary
shares in issue was 13,204,411.
The company news service from the London Stock Exchange
END
IR KFLFBQVFBBBX
(END) Dow Jones Newswires
August 02, 2016 02:01 ET (06:01 GMT)
Spec Inves Prop (LSE:SIPP)
Historical Stock Chart
Von Mai 2024 bis Jun 2024
Spec Inves Prop (LSE:SIPP)
Historical Stock Chart
Von Jun 2023 bis Jun 2024
