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Drum Income PlusREIT (DRIP)

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Wednesday 23 May, 2018

Drum Income PlusREIT

Half-year Report

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

 

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 £25 million 3 year revolving credit facility with Royal Bank of Scotland and has drawn down £22.8 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 £10.5bn of transactions in 2017, up from £8.2bn in 2016 and higher than the long term average of £10bn. 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 £2 million and £15 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 £16.50psf, 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 £600,000.

 

Lakeside 5500, Cheadle Royal Business Park, Cheadle

·    The Investment Adviser has agreed the outstanding Rent Review with Agilent at £310,000. This settlement reflects an uplift in rent of c £10,000 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 £108,000. 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 £50,000. 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 £100,000.

 

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 £25m 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                                                        

Six months ended

31 March 2018

(unaudited)

 

Six months ended

31 March 2017

(unaudited)

Year ended

30 September 2017

(audited)

Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total

Notes

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000










Held at fair value

-

264

264

-

745

745

-

(371)

(371)










Rental income

2,317

-

2,317

2,083

-

2,083

4,362

-

4,362










Income / expense

2,317

264

2,581

2,083

745

2,828

4,362

(371)

3,991




















Investment

Adviser's fees

2

(203)

-

(203)

(200)

-

(200)

(381)

-

(381)

Other expenses

(485)

-

(485)

(361)

-

(361)

(920)

-

(920)

(688)

-

(688)

(561)

-

(561)

(1,301)

-

(1,301)

Profit / (loss) before finance costs and taxation

264

1,893

     1,522

745

2,267

3,061

(371)

2,690










Interest receivable

-

-

-

-

-

-

-

-

-

Interest payable

(243)

-

(243)

(225)

-

(225)

(562)

-

(562)

1,386

264

1,650

1,297

745

2,042

2,499

(371)

2,129

Taxation

-

-

-

-

-

-

-

-

-

1,386

264

1,650

1,297

745

2,042

2,499

(371)

2,128

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. 

 

 

 

As at 31 March 2018



As at

31 March 2018

(unaudited)

As at

31 March 2017

(unaudited)

As at

30 September 2017

(audited)


Notes

£'000

£'000

£'000





Investment properties

5

58,700

49,225

58,225



58,700

49,225

58,225





Trade and other receivables


701

630

630

Cash and cash equivalents


1,201

2,620

647



1,902

3,250

1,277


60,602

52,475

59,502





Bank loan

6

(22,693)

(14,317)

-


(22,693)

(14,317)

-





Trade and other payables


(1,462)

(1,281)

(904)

Bank loan


-

-

(22,702)


(1,462)

(1,281)

(23,606)


36,447

36,877

35,896










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


36,447

36,877

35,896






 

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 

 

 

Share capital account

 

Share premium

Special distributable reserve

 

Capital reserve

 

Revenue reserve

 

Total

equity


£'000

£'000

£'000

£'000

£'000

£'000

As at 30 September 2017

3,820

5,335

24,340

(2,349)

4,750

35,896

-

-

-

264

1,386

1,650







Issue of ordinary share capital

-

-

-

-

-

-

Issue costs

-

-

-

-

-

-

Dividends paid

-

-

-

-

(1,099)

(1,099)

3,820

5,335

24,340

(2,085)

5,037

36,447

 

 

For the six months to 31 March 2017 (unaudited)

 

 

 

Share capital account

 

Share premium

Special distributable reserve

 

Capital reserve

 

Revenue reserve

 

Total

equity


£'000

£'000

£'000

£'000

£'000

£'000

As at 30 September 2016

3,659

3,921

26,840

(1,978)

1,785

34,227

-

-

-

745

1,297

2,042







Issue of ordinary share capital

161

1,446

-

-

-

1,607

Issue costs

-

(16)

-

-

-

(16)

Dividends paid

-

-

-

-

(983)

(983)

3,820

5,351

26,840

(1,233)

2,099

36,877

 


Six months ended

31 March 2018

(unaudited)

Six months ended

31 March 2017

(unaudited)

Year ended

30 September 2017

(audited)


£'000

£'000

£'000




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

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

2,116

1,927

3,040







Purchase of investment properties

-

-

(8,650)

Property capitalised costs

(211)

(316)

(1,766)

(211)

(316)

(10,416)







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)

(1,351)

291

7,304

554

1,902

(71)

Opening cash and cash equivalents

647

718

718

Closing cash and cash equivalents

1,201

2,620

647

 

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.

 

 


Six months ended

31 March 2018

Six months ended

31 March 2017

Year ended

30 September 2017


£'000

£'000

£'000

Investment Adviser's fee

203

200

381

203

200

381


The Investment Management fee is calculated as 1.15% per annum of the net assets of the Group up to £150 million and 1.00% per annum of the net assets of the Group over £150 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 ended

31 March 2018

Six months ended

31 March 2017

Year ended

30 September 2017


Pence per

Pence per

Pence per

£'000

share

£'000

share

£'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. DIVIDENDS

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.

 

 


As at

31 March 2018

As at

30 September 2017


£'000

£'000

58,225

48,238

Purchases

-

8,650

Capitalised costs

211

1,708

Revaluation movement

264

(371)

58,700

58,225

 

 


As at

31 March 2018

As at

30 September 2017


£'000

£'000

264

(371)

 

The properties were valued at £58,700,000 as at 31 March 2018 (31 March 2017: £49,225,000; 30 September 2017: £58,225,000) 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.

 


As at

31 March 2018

As at

31 March 2017

As at

30 September 2017


£'000

£'000

£'000

Principal amount outstanding

22,760

14,460

22,760

Set up costs

(67)

(143)

(58)

22,693

14,317

22,702

 

On 6 January 2017 the Group entered into a £25 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 £58,700,000 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 £36,447,000 (31 March 2017 £36,877,000; 30 September 2017 £35,896,000) and on 38,201,990 ordinary shares being the number of shares in issue at the period end.

 

 


Six months

to 31 March

2018

Year to

30 September 2017

Six months

to 31 March

2018

Year to

30 September 2017


Shares

Shares

£'000

£'000





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

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 £38,000 (six months ended 31 March 2017: £38,000; twelve months ended 30 September 2017: £75,000) of which £1,000 (31 March 2017: £7,000; 30 September 2017: £5,000) 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 £15,000 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 £150 million and 1.00% of net assets over £150 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 £203,000 in relation to the six months ended 31 March 2018 (six months ended 31 March 2017: £200,000; twelve months ended 30 September 2017: £381,000) of which £106,000 (31 March 2017: £100,000; 30 September 2017: £86,000) remained payable at the period end.

 

R&H Fund Services (Jersey) Limited received £8,000 in relation to the six months ended 31 March 2018 (six months ended 31 March 2017: £8,000; twelve months ended 30 September 2017: £15,000) of which £10,000 (31 March 2017: £11,000; 30 September 2017: £2,000) 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 [email protected] or visit www.rns.com.
 
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