TIDMWINV
RNS Number : 6404H
Worsley Investors Limited
26 March 2020
26 March 2020
Worsley Investors Limited
(the "Company")
Half Year Report for the six months ended 31 December 2019
The Company is pleased to announce the release its half year
report and unaudited consolidated financial statements for the six
months ended 31 December 2019 (the "Half Year Report"). A copy of
the Half Year Report will be posted to shareholders this week and
will be available to view on the Company's website shortly at:
www.worsleyinvestors.com
Enquiries:
For further information, please contact:
Worsley Associates LLP (Investment Advisor)
Blake Nixon
Tel: +44 (0) 203 873 2288
Shore Capital (Financial Adviser and Broker)
Robert Finlay / Anita Ghanekar / Hugo Masefield
Tel: +44 (0) 20 74080 4090
Praxis Fund Services Limited (Administrator and Secretary)
Matt Falla / Katrina Rowe
Tel: +44 (0) 1481 737600
LEI: 213800AF85VEZMDMF931
Performance Summary
31 December 30 June 2019
2019 % change
-----------------------------
Net Asset Value ("NAV") per
share 43.69p*# 46.14p (5.31)%
------------- -------------- ---------
Share price(1) 31.47p 31.85p (1.19)%
------------- -------------- ---------
Share price discount to NAV 28.0% 31.2% n.a.
------------- -------------- ---------
* Refer to Note 15 for reconciliation to previous NAV
announcement.
# Adjusted NAV for impact of recent capital raise: 37.64p.
Total return Six months Year ended
ended 30 June 2019
31 December
2019
NAV Total Return(2) (5.31)% 2.42%
------------- --------------
Share price Total Return
------------- --------------
- Worsley Investors Limited (1.19)% (19.57)%
------------- --------------
- FTSE All Share Index 5.48% 0.57%
------------- --------------
- FTSE Real Estate Investment
Trust Index 19.24% (5.2)%
------------- --------------
Worsley Associates LLP was appointed on 31 May 2019 as
Investment Advisor (the "Investment Advisor") to Worsley Investors
Limited (the "Company"). At an EGM held on 28 June 2019, an
ordinary resolution was passed to adopt the new Investment
Objective and Policy. Prior to that time, the Company had been in
managed wind-down. The new Investment Objective and Policy are set
out under note 16 below.
Past performance is not a guide to future performance.
(1) Mid-market share price (source: Shore Capital and Corporate
Limited).
(2) On a pro forma basis, which includes adjustments to add back
any prior NAV reductions from share redemptions.
Source : Worsley Associates LLP and Shore Capital and Corporate
Limited.
Foreign exchange rates:
Date GBP/EUR
31 December 2019 1.1825
--------
30 June 2019 1.1166
--------
Chairman's Statement
The six months to 31 December 2019 saw substantial progress
towards re-launching the Company as an influential investor in
smaller British quoted companies. Readers will recall that just
before the start of the period, on 28 June 2019, shareholders
overwhelmingly supported our proposals to change the investment
objective and policy of the Company. Rather curiously, although a
substantial majority voted also to change the name of the Company,
it was insufficient to meet the threshold required in law to change
the Company's name by special resolution and so we laboured on for
most of the period with the former name. This anomaly was finally
corrected at the AGM held on 11 December 2019 and so the Company is
now, "Worsley Investors Limited".
Results
The Company's performance is summarised above. In brief, the NAV
total return for the period was a GBP507,000 diminution, of which
by far the largest contribution was owing to foreign exchange
translation, given that the GBP/EUR exchange rate moved from 1.1166
to 1.1825 and our principal asset, the Curno cinema, is denominated
in Euros and accounted for some 89% of NAV as at 31 December 2019.
Excluding exchange rate movements, the Group essentially broke even
over the half year. This is broadly in line with the Board's
expectations given where we are in the development of the
Company.
The effect of changes to the Company's service providers and the
simplification of the group structure reduced our cost base
progressively through the half year, although this was partly
masked in these financial statements by one-off costs related to
the name change and transaction costs for the recent capital raise,
which was consummated after the period end. Given these factors are
now behind us, we expect the Company to be profitable going
forwards. The Company's financial strength was then augmented by a
net GBP3.63million injection of additional cash via the equity
raise after the period end. This is discussed further later in this
statement.
The adverse foreign exchange translation during the reporting
period has reversed subsequently, and moved further in the
Company's favour given that the GBP/EUR exchange rate has moved
from 1.1825 at the end of December to 1.0759 as at 24 March 2020,
being the latest practicable date prior to writing this report. The
local currency valuation of the property may well change as at the
end of the current quarter, but on a pro forma basis, this exchange
rate movement would add GBP882,000 to the sterling value of the
company or 2.61p per share, taking into account the increase in the
number of shares in issue during the current quarter.
Curno
Our largest exposure remains our legacy asset from the former
investment strategy, being the UCI cinema in Curno in northern
Italy. Further details are given in the Investment Advisor's report
as set out below. Trading during the period and into January and
February was much improved on prior periods and we felt that it was
likely to generate a useful additional amount of volume-related
rental in the remainder of the year and thereby demonstrate the
value potential inherent in the asset. Be that as it may, as a
result of the coronavirus outbreak in Italy, the Italian government
closed cinemas (and many other types of venue) on 3 March 2020. As
at the time of writing, this closure remains in place and it is not
at all clear when it will be lifted. Our disposal of this asset is
therefore currently on hold until the situation is clarified. The
base rental on the property is fixed and benefits from a
substantial parental guarantee, as described in the Investment
Advisor's report.
Capital Raise
The Investment Advisor during the period continued discussions
with existing and prospective shareholders with a view to expanding
the Company's equity capital base. The procedural aspects took
longer than anticipated with the consequence that the formal
announcement was not made until after the year end, the prospectus
publication on 10 February 2020, and the completion of an open
offer and a placement (the "Initial Issue") (together the "Capital
Raise") was on 17 March 2020. The open offer was made pre-emptively
to all shareholders on the register at the time of announcement,
with those shares not taken up by qualifying shareholders then
being offered to other investors under the Initial Issue. The new
shares were issued at 30 pence per share, a discount to the 31
December NAV of 43.69p per share. Those shareholders who chose not
to take up their entitlement will have been marginally diluted as a
consequence, but they will also benefit from the reduction in
corporate running costs per share and from the ability of the
Company to proceed with the new investment objective and policy.
Our capital raise took place against a difficult and worsening
market background and in that light, to issue 12,982,488 new
ordinary shares raising gross proceeds of GBP3.9 million (GBP3.63
million net of expenses) is a creditable result. On behalf of the
Board, I would like to thank all shareholders who subscribed.
By the end of December 2019, from the limited funds available
for investment, the Investment Advisor had made two initial
"preliminary" investments and in the short time since the Capital
Raise, a further two such holdings have been added. While the
results so far are modestly profitable, the more important point is
that implementation of the new investment policy and objective has
been initiated.
Future prospects
The dominant market theme for the moment is the economic impact
of the world-wide coronavirus pandemic. Quite rightly, from a
public policy and humanitarian perspective, governments have
focused on containing or at least slowing the spread of the disease
in the hope of ensuring that the peak infection can be brought
within the capacity of their health services to cope. Decisive
action by China, where the virus appears to have first emerged, has
borne fruit albeit after five months or so. Whether or not more
liberal countries with greater regard for individual freedoms will
be as effective so quickly remains to be seen. What is clear is
that, in closing down large swathes of the economy, there will be
significant economic damage and recession in most countries this
year at least.
Some sectors are more obviously exposed than others - air
transport, hotels and eateries are obvious candidates -- and we
have already seen failures by some of the weaker participants.
Notwithstanding pledges of U.K. government support, there will no
doubt be others. In constructing business plans and funding
structures, very few businesses will have contemplated scenarios
where their turnover would fall to zero in the space of weeks and
then stay there for an indeterminate number of months.
The unsurprising effect has been enormous turmoil in equity
markets with a wide dispersion in share price performances, most
pertinently in those in Britain where we plan to invest further. It
is usually the outcome that smaller companies' share prices are hit
at least as badly as larger companies (and often more) and they
take longer to recover as and when confidence returns to the
market. The other side of that coin is that exaggerated price
movements in the market create a rich pool of opportunities for a
skilled and experienced investor such as Worsley Associates LLP,
and Mr. Nixon in particular. Having the cash to deploy in such
circumstances is an exciting combination.
Taking into account the net cash raised and exchange movements
since period end, the Company's Net Asset Value on a pro forma
basis is now approximately GBP13.6 million, or 40.2 pence per
share. As the Company executes on its portfolio strategy and in due
course disposes of the Curno asset, the Board hopes that the
combination of organic returns and increasing size will make the
Company attractive to a growing universe of potential investors and
consequently, as circumstances permit, we shall look to raise
additional capital, the effects of which will include spreading the
operational costs of the company over a larger asset base and
increasing the size and number of potential investees where the
Company can bring influence to bear to improve shareholder
outcomes.
W. Scott
Chairman
25 March 2020
Investment Advisor's Report
Investment Advisor
The Investment Advisor is regulated by the FCA and is authorised
to provide investment management and advisory services.
During the period, the Investment Advisor's focus has been the
extensive preparatory work involved around the capital raising
launched in February 2020 and continuing to address remaining
legacy issues.
Curno Cinema Complex
The Group's Italian multiplex cinema complex, located in Curno,
on the outskirts of Bergamo, is let in its entirety to UCI Italia
S.p.A. (" UCI ").
The key rental terms of the lease are as follows:
Base Rent
Calendar 2020 - EUR830,000
Thereafter to be indexed to 100% of the Italian ISTAT Consumer
Index on an upwards-only basis.
Variable Rent
There will be an incremental rent of EUR1.50 per ticket sold
above a minimum threshold of 350,000 tickets per year up to 450,000
tickets per year, rising in 50,000 ticket stages above this level
up to EUR2.50 per extra ticket.
Tenant Guarantee
The lease benefits from a rental guarantee of EUR13m, reducing
over 15 years to EUR4.5m, given by a U.K. domiciled European
holding company for the UCI group, United Cinemas International
Acquisitions Limited, which as at 31 December 2018 had
shareholders' funds of GBP291.3m.
Trading
Paid ticket sales (i.e. excluding complimentaries) for calendar
2019 came in at 353,503, which is estimated to be up some 14% on
calendar 2018, and with the final quarter being particularly
strong.
The ticket overage produced supplementary rent for 2019 of
EUR5,255.
Calendar 2020 started well, with January sales up on 2019,
following the release on 1 January of an Italian blockbuster movie
, Tolo Tolo.
Valuation
As at 31 December 2019, the Group's independent asset valuer,
Knight Frank LLP, fair valued the Curno cinema at EUR9.9 million
(GBP8.388 million), and this has been adopted in these
accounts.
In executing a new 15 year lease, UCI has made a substantial
commitment to the Bergamo cinema market. Given the excellent cash
flow generated by the asset, and the clear evidence of a major
turnaround in underlying trading, it remains the board's view that
it ought to be possible to realise a sum in excess of its current
carrying value.
In November CBRE commenced updating interested investors in
respect of the cinema's significantly improved trading profile. The
outbreak of coronavirus in Italy has inevitably led to a pause in
these discussions.
The Group will retain the Curno cinema until a disposal can be
effected at a price which the board believes properly reflects its
medium term prospects.
Investment Strategy
The Investment Advisor's strategy allies the taking of holdings
in British quoted securities priced at a deep discount to their
intrinsic value, as determined by a comprehensive and robust
research process. Most of these companies will have smaller to
mid-sized equity market capitalisations, which will in general not
exceed GBP600 million. It is intended to secure influential
positions in such British quoted securities, with the employment of
activism as necessary to drive highly favourable outcomes.
During the period, the Group took advantage of distressed prices
in two companies to buy its maiden "preliminary" (less than 2% of
Net Assets) holdings. Total cost of these was GBP124,000 and as at
31 December 2019, the combined market value was GBP127,000.
Two further positions have been initiated since 31 December
2019.
Name Change
At the 2019 Annual General Meeting held on 13 December 2019 the
shareholders voted by special resolution to change the name of the
Company to Worsley Investors Limited.
Results for the period
Cash revenue for the six months period to 31 December 2019 from
Curno was EUR409,000 (GBP360,000) (31 December 2018: EUR423,000
(GBP376,000)), which after allowance for the EUR5,255 ticket
overage (which is not budgeted), was in line with expectations.
Property expenses, mainly local Curno property taxes, of some
EUR77,000 (GBP68,000) (31 December 2018: EUR78,000 (GBP70,000)),
were incurred.
General and administrative expenses of GBP350,000 included
expenses which are not strictly first half trading items and fall
into three elements:
-- Items which were incurred before 30 June 2019 (GBP33,000);
-- Amortisation of the property disposal warranty insurance
entered into in May 2017 (GBP38,000), albeit a similar sum will be
amortised in the second half of the year; and
-- One-off charges, such as in connection with the Name Change
and the capital raising (GBP22,000).
The adjusted expense figure of GBP258,000 is reflective of the
very substantial reduction in the Group's ongoing Guernsey and
Luxembourg operating costs resulting from the changes in the
Group's service providers.
Taxation is payable on Italian income and in Luxembourg, and for
the period an amount of GBP42,000 was expensed. This was an
increase from 31 December 2018 (GBP12,000), the comparative having
benefited significantly from the tax advantages associated with the
rental incentives provided in the 2018 period to UCI in connection
with it entering the new lease.
The Group expects, excluding the costs of the capital raising,
to be profitable on a cash basis over the remainder of the
financial year.
Net Assets at 31 December 2019 were GBP9.07m, which compares
with the GBP9.58m contained in the 30 June 2019 audited accounts.
The decrease is almost entirely owing to a foreign exchange
translation loss over the period of GBP500,000 which reflects the
substantial impact of the strengthening of Pounds sterling on the
Group's predominantly Euro denominated asset base.
Financial Position
The Group's Statement of Financial Position as at 31 December
2019 was strong with GBP701,000 held in cash and no debt. Allied to
the current profitable trading, the financial position remains
secure.
Since 31 December 2019 this has been augmented with the
approximately GBP3.63m (net) secured in the Capital Raise, which
closed on 17 March 2020.
In due course these resources are expected to be supplemented by
funds produced by the sale of the Curno cinema.
Euro
After allowance for receipt of the Capital Raise moneys and
exchange movements since period end, approximately 72% of the
Group's pro forma 31 December 2019 Total Assets are denominated in
Euros, of which the Curno property was some 64%.
The Pounds sterling Euro cross rate will remain a substantial
influence on Group Net Assets until Curno's disposal.
Outlook
The coronavirus, which as widely reported has led to government
closures of cinemas in Italy, including the Group's, has little
direct impact on the Group - revenue from ticket overage was less
than 1% of 2019 rental revenue, with the remainder fixed and
guaranteed by a company of substantial net worth. Nonetheless, it
will, of necessity, delay the ultimate disposal of the Curno
cinema.
In the meantime, as noted previously, the Company's ongoing
strategy targets special situations. Equity markets have been
significantly impacted as a result of uncertainty created by the
coronavirus outbreaks, and within the British smaller
capitalisation stocks targeted by the Company share price falls in
some cases have been very substantial. This has thrown up numerous
situations worthy of consideration.
With a significant proportion of its assets held in cash as a
result of the capital raising, the Company is very well placed to
capitalise .
Worsley Associates LLP
25 March 2020
Condensed Unaudited Consolidated Statement of Comprehensive
Income
For the six months ended 31 December 2019
For the six For the
month period six month
to period to
31 December 31 December
2019 2018
(Unaudited) (Unaudited)
Notes GBP000s GBP000s
---- --------------------------------------------- ------ -------------- -------------
3
&
Gross property income 6 363 376
Property operating expenses 6 (68) (70)
Net property income 295 306
---------------------------------------------------- ------ -------------- -------------
Valuation gain on investment property 6 87 240
Valuation gain on investments at
fair value through profit or loss 7 3 -
Loss on liquidation of subsidiary - (43)
General and administrative expenses 4 (350) (463)
---- ---------------------------------------------- ------ -------------- -------------
Operating profit 35 40
---------------------------------------------------- ------ -------------- -------------
Net foreign exchange gain on liquidation
Foreign exchange loss - 4
Share in loss of joint venture - (14)
Net finance costs - (2)
---- ---------------------------------------------- ------ -------------- -------------
Profit before tax 35 28
---------------------------------------------------- ------ -------------- -------------
Income tax expense (42) (12)
(Loss)/profit for the period (7) 16
---------------------------------------------------- ------ -------------- -------------
Other comprehensive (loss)/income
Foreign exchange translation (loss)/gain (500) 135
--------------------------------------------------- ------ -------------- -------------
Total items that are or may be reclassified
to profit or loss (500) 135
---------------------------------------------------- ------ -------------- -------------
Total comprehensive (loss)/income
for the period (507) 151
---------------------------------------------------- ------ -------------- -------------
Basic and diluted (loss)/earnings
per ordinary share (pence) 5 (0.03) 0.07
---------------------------------------------------- ------ -------------- -------------
The accompanying notes form an integral part of these Financial
Statements
Condensed Unaudited Consolidated Statement of Changes in
Equity
For the six months ended 31 December 2019
Foreign
Revenue Distributable currency Total
reserve reserve reserve equity
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP000s GBP000s GBP000s GBP000s
----------------------------- ------------ -------------- ------------ ------------
Balance at 1 July 2019 (46,210) 43,653 12,134 9,577
Loss for the period (7) - - (7)
Other comprehensive loss - - (500) (500)
Balance at 31 December 2019 (46,217) 43,653 11,634 9,070
------------------------------ ------------ -------------- ------------ ------------
For the six months ended 31 December 2018
Foreign
Revenue Distributable currency Total
reserve reserve reserve equity
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP000s GBP000s GBP000s GBP000s
----------------------------- ------------ -------------- ------------ ------------
Balance at 1 July 2018 (46,315) 44,853 12,093 10,631
Profit for the period 16 - - 16
Other comprehensive income - - 135 135
Balance at 31 December 2018 (46,299) 44,853 12,228 10,782
------------------------------ ------------ -------------- ------------ ------------
The accompanying notes form an integral part of these Financial
statements
Condensed Unaudited Consolidated Statement of Financial
Position
As at 31 December 2019
31 December
2019 30 June 2019
(Unaudited) (Audited)
Notes GBP000s GBP000s
--------- ----------------------------- ------ ------------ -------------
Non-current assets
Investment property 6 8,087 8,476
Current assets
Investments at fair value
through profit or loss 7 127 -
Cash and cash equivalents 701 793
Trade and other receivables 8 43 162
Lease incentive 6 287 301
Tax receivable 115 96
Total assets 9,360 9,828
---------------------------------------- ------ ------------ -------------
Non-current liabilities
Provisions 43 45
Current liabilities
Trade and other payables 9 152 172
Tax payable 95 34
Total liabilities 290 251
---------------------------------------- ------ ------------ -------------
Total net assets 9,070 9,577
---------------------------------------- ------ ------------ -------------
Equity
Revenue reserve (46,217) (46,210)
Distributable reserve 43,653 43,653
Foreign currency reserve 11,634 12,134
Total equity 9,070 9,577
---------------------------------------- ------ ------------ -------------
Number of ordinary shares 20,758,441 20,758,441
Net asset value per ordinary share
(pence) 11 43.69 46.14
---------------------------------------- ------ ------------ -------------
The Financial statements were approved by the Board of Directors
and authorised for issue on 25 March 2020. They were signed on its
behalf by:
W. Scott
Director
The accompanying notes form an integral part of these Financial
statements
Condensed Unaudited Consolidated Statement of Cash Flows
For the sixth months ended 31 December 2019
31 December 31 December
2019 2018
(Unaudited) (Unaudited)
Notes GBP000s GBP000s
---------------------------------------- ---------- ------------ ------------
Operating activities
Profit before tax 35 28
Adjustments for:
Valuation gain on investment property 6 (87) (341)
Gains on i nvestments at fair value
through profit or loss 7 (3) -
Gain on financial instruments - (4)
Foreign exchange loss on investment
property 6 476 -
Share in loss of joint venture - 14
Decrease/(increase) in trade and
other receivables 75 (415)
Decrease in provisions (2) (56)
(Increase)/decrease in trade and
other payables (20) 25
Purchase of investments at fair (124) -
value through profit or loss
Net finance cost - 2
Net cash generated/(used in) from operations 350 (747)
----------------------------------------------------- ------------ ------------
Interest paid - (2)
Tax paid 58 (12)
Net cash inflow/(outflow) from operating
activities 408 (761)
----------------------------------------------------- ------------ ------------
Investing activities
Return of capital from joint ventures - 151
Net cash inflow from investing activities - 151
----------------------------------------------------- ------------ ------------
Effects of exchange rate fluctuations (500) 120
Decrease in cash and cash equivalents (92) (490)
----------------------------------------------------- ------------ ------------
Cash and cash equivalents at start
of the period 793 3,298
Cash and cash equivalents at the period
end 701 2,808
----------------------------------------------------- ------------ ------------
The accompanying notes on form an integral part of these
Financial statements
1. Operations
Worsley Investors Limited (formerly AXA Property Trust Limited)
(the "Company") is a limited liability, closed-ended investment
company incorporated in Guernsey. The Company historically invested
in commercial property in Europe which was held through
Subsidiaries. The Condensed Unaudited Consolidated Financial
Statements (the "Financial Statements") of the Company for the
period ended 31 December 2019 comprise the Financial Statements of
the Company and its Subsidiaries (together referred to as the
"Group").
Worsley Associates LLP was appointed on 31 May 2019 as
Investment Advisor to the Company.
At an EGM held on 28 June 2019, an ordinary resolution was
passed to adopt a new Investment Objective and Policy. Please refer
to the Investment Policy set out under note 16 below for further
details.
2. Significant accounting policies
Basis of preparation
These Financial Statements have been prepared in accordance with
International Accounting Standard ("IAS") 34 'Interim Financial
Reporting' as required by DTR 4.2.4R, the Listing Rules of the
London Stock Exchange and applicable legal and regulatory
requirements. They do not include all the information and
disclosures required in Annual Financial Statements and should be
read in conjunction with the Company's last Annual Report and
Audited Consolidated Financial Statements for the year ended 30
June 2019.
The same accounting policies and methods of computation are
followed in the Interim Financial Report as compared with the most
recent Annual Financial Statements (30 June 2019).
Going concern
Following the adoption of a new Investment Objective and Policy,
the Financial Statements have been prepared on a going concern
basis reflecting the current transition stage of the Company. The
Directors, at the time of approving the Financial Statements, have
a reasonable expectation that the Group has adequate resources to
continue in operational existence for the next 12 months. The lease
income generates enough cash flows to pay on-going expenses. The
Directors have considered the cash position and performance of the
current invested capital made by the Group and concluded that it is
appropriate to adopt the going concern basis in the preparation of
these Financial Statements. Since 31 December 2019, this has been
augmented with the approximately GBP3.63m (net) secured in the
Capital Raise, which closed on 17 March 2020.
3. Gross property income
Gross property income for the period ended 31 December 2019
amounted to GBP0.363 million ((31 December 2018: GBP0.376 million).
The Group leases out its investment property under an operating
lease which is structured in accordance with local practices in
Italy.
As a result of the ongoing discussions with the tenant at the
Curno property, the previous investment manager entered into
negotiations in early 2018 with the aim of negotiating overall
terms which would improve liquidity and maximise potential pricing.
As a result, a new lease was signed in December 2018 summarised as
follows:
- Term
15 years fixed, from 1 January 2019 until 31 December 2033, with
an automatic nine-year extension unless cancelled by the tenant
with a minimum 12-month notice period.
- Base Rent
Year 1 - EUR800,000
Year 2 (i.e. from January 2020) - EUR830,000, and thereafter to
be indexed to 100% of the ISTAT Consumer Index on an upwards-only
basis.
As part of the overall negotiation package an amount of
EUR330,329 lease incentive was paid in December 2018 to the tenant.
The new lease has been treated as backdated with an effective
commencement date of 1 July 2018. A further amount of EUR330,329
was granted to the tenant as a discount on rent which adjusted the
rental income received from 1 July 2018 to 31 December 2018 to be
in line with that receivable under the new lease agreement. Please
refer to note 6 for further details.
- Variable Rent
There will be an incremental rent of between EUR1.50 and EUR2.50
per ticket sold above a minimum threshold of 350,000 tickets per
year. Variable rent earned in the period ended 31 December 2019 was
EUR5, 255 (31 December 2018: Nil).
4. General and administrative expenses
31 December 31 December
2019 2018
(Unaudited) (Unaudited)
GBP000s GBP000s
------------------------------------- --- ------------ ------------
Administration fees 55 132
General expenses 41 16
Audit fees 30 91
Legal and professional fees 38 96
Directors' fees
(note 13) 26 29
Insurance fees 61 31
Corporate Broker fees 23 13
Investment management fees - 55
Investment advisor fees (note 13) 76 -
Total 350 463
------------------------------------------- ------------ ------------
5. Basic and diluted loss/profit per Share
The basic and diluted gain or loss per share for the Group is
based on the net loss for the period of GBP0.007 million (31
December 2018: net profit of GBP0.016 million) and the weighted
average number of Ordinary Shares in issue during the period of
20,758,441 (31 December 2018: 23,402,881). There are no instruments
in issue which could potentially dilute earnings or loss per
Ordinary Share.
6. Investment property
31 December
2019 30 June 2019
(Unaudited) (Audited)
GBP000s GBP000s
----------------------------------------------------- ------------ -------------
Value of investment property before lease incentive
adjustment
at beginning of period/year 8,777 7,871
Fair value adjustment 87 799
Foreign exchange translation (476) 107
Independent external valuation 8,388 8,777
Adjusted for: Lease incentive (note 3) * (287) (301)
Foreign exchange translation (14) -
Fair value of investment property at the end
of the period/year 8,087 8,476
------------------------------------------------------- ------------ -------------
Investment property is carried at fair value. The fair value
adjustment has been adjusted with carrying amount of the lease
incentive.
The property has been valued on the basis of fair value, being
the price which would be received if the asset were sold in an
orderly transaction between market participants at the measurement
date. Quarterly valuations are carried out at 31 March, 30 June, 30
September and 31 December by Knight Frank LLP, external independent
valuers.
* The Lease incentive is classified as a separate item within
the Consolidated Statement of Financial Position and hence to avoid
double counting has been deducted from the Independent property
valuation to arrive at fair value for accounting purposes.
The resultant fair value of investment property is analysed
below by valuation method, according to the levels of the fair
value hierarchy. The different levels have been defined as
follows:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
which are observable for asset or liability, either directly (i.e.
as prices) or indirectly (i.e. derived from prices);
Level 3: inputs for the asset or liability which are not based
on observable market data (unobservable inputs).
The investment property (Curno) is classified as Level 3.
The significant assumptions made relating to its independent
valuation are set out below:
Significant assumptions 31 December 2019 30 June 2019
(Unaudited) (Audited)
---------------------------------------------------- ----------------- -------------
Gross estimated rental value per square metre p.a. 125.00EUR 125.00EUR
True equivalent yield 8.39% 8.61%
An increase/decrease in ERV (Estimated Rental Value) will
increase/decrease valuations, while an increase/decrease to yield
decreases/increases valuations. The table below sets out the
sensitivity of the independent property valuation to changes of 50
basis points in Fair Value.
The external valuer has carried out its valuation using the
comparative and investment methods. The external valuer has made
the assessment on the basis of a collation and analysis of
appropriate comparable investment and rental transactions. The
market analysis has been undertaken using market knowledge,
enquiries of other agents, searches of property databases, as
appropriate and any information provided to them. The external
valuer has adhered to the RICS Valuation - Professional
Standards.
Movement 31 December 2019 30 June 2019
(Unaudited) (Audited)
--------------- ------------------- ------------------- -------------------
Increase of 50 Property valuation Decrease of EUR0.6 Decrease of EUR0.6
basis points million million
Decrease of 50 Property valuation Increase of EUR0.6 Increase of EUR0.6
basis points million million
Property assets are inherently difficult to value due to the
individual nature of each property. As a result, valuations are
subject to uncertainty. There is no assurance that estimates
resulting from the valuation process will reflect the actual sales
price even where a sale occurs shortly after the valuation date.
Rental income and the market value for properties are generally
affected by overall conditions in the local economy, such as growth
in Gross Domestic Product ("GDP"), employment trends, inflation and
changes in interest rates. Changes in GDP may also impact
employment levels, which in turn may impact the demand for
premises. Furthermore, movements in interest rates may affect the
cost of financing for real estate companies.
Both rental income and property values may be affected by other
factors specific to the real estate market, such as competition
from other property owners, the perceptions of prospective tenants
of the attractiveness, convenience and safety of properties, the
inability to collect rents because of the bankruptcy or the
insolvency of tenants, the periodic need to renovate, repair and
release space and the costs thereof, the costs of maintenance and
insurance, and increased operating costs. The Investment Advisor
addresses market risk through a selective investment process,
credit evaluations of tenants, ongoing monitoring of tenants and
through effective management of the property.
The amounts recognised in the Statement of Comprehensive Income
of the Group in relation to the investment property are as
follows:
Property income
31 December 31 December
2019 2018
GBP000s GBP000s
(Unaudited) (Unaudited)
---------------------------------------------------- ------------ ------------
Property income received (net of lease incentives) 360 376
Straight-lining of lease incentives 3 -
---------------------------------------------------- ------------ ------------
Property income 363 376
---------------------------------------------------- ------------ ------------
Expense from services to tenants, other property operating and
administrative expenses
31 December 31 December
2019 2018
GBP000s GBP000s
(Unaudited) (Unaudited)
------------------------------------------- ------------ ------------
Property expenses arising from investment
property which generates income 68 70
------------------------------------------- ------------ ------------
Total property operating expenses 68 70
------------------------------------------- ------------ ------------
There were no p roperty expenses arising from investment
property which did not generate income.
7. Investments at fair value through profit or loss
("FVTPL")
31 December 2019 30 June 2019
GBP000s GBP000s
(Unaudited) (Audited)
Fair value of investments at FVTPL at beginning of period/year - -
Purchases 124 -
Unrealised gains 3 -
--------------------------------------------------------------------- ----------------- ---------------
Total investments at FVTPL 127 -
--------------------------------------------------------------------- ----------------- ---------------
The fair value of investments at FVTPL are analysed below by
valuation method, according to the levels of the fair value
hierarchy. The different levels have been defined as follows:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
which are observable for asset or liability, either directly (i.e.
as prices) or indirectly (i.e. derived from prices);
Level 3: inputs for the asset or liability which are not based
on observable market data (unobservable inputs).
As at 31 December 2019, the investments at FVTPL are classified
as Level 1.
8. Trade and other receivables
31 December
2019 30 June 2019
GBP000s GBP000s
(Unaudited) (Audited)
----------------------------------------- ------------ -------------
Other receivables 3 21
VAT receivable 8 65
Prepayments 32 69
Subsidiary company liquidation proceeds - 7
Total 43 162
------------------------------------------- ------------ -------------
The carrying values of trade and other receivables are
considered to be approximately equal to their fair value.
Rent receivable is non-interest bearing and typically due within
30 days.
9. Trade and other payables
31 December 2019 30 June 2019
GBP000s GBP000s
(Unaudited) (Audited)
------------------------------------ ----------------- -------------
Investment Advisor fee (note 13) 11 13
Administration fees 22 10
Legal and professional fees - 10
Audit fee 23 40
Director fees payable (note 13) - 5
Broker fees 19 6
Other 77 88
Total 152 172
------------------------------------ ----------------- -------------
Trade and other payables are non-interest bearing and are
normally settled on 30-day terms.
The carrying values of trade and other payables are considered
to be approximately equal to their fair value.
10. Share capital
31 December 2019 30 June 2019
Number of shares Number of shares
(Unaudited) (Audited)
Shares of no par values issued and fully paid
Balance at the start of the period/year 20,758,441 23,402,881
Share redemptions - (2,644,440)
----------------------------------------------- ----------------- -----------------
Balance at the end of the period/year 20,758,441 20,758,441
----------------------------------------------- ----------------- -----------------
11. Net asset value per ordinary share
The Net Asset Value per Ordinary Share at 31 December 2019 is
based on the net assets attributable to the ordinary shareholders
of GBP9.070 million (30 June 2019: GBP9.577 million) and on
20,758,441 (30 June 2019: 20,758,441) ordinary shares in issue at
the Consolidated Statement of Financial Position date.
12. Financial risk management
The Company's financial risk management objectives and policies
are consistent with those disclosed in the Company's Audited Annual
Financial Statements for the year ended 30 June 2019.
13. Related party transactions
The Directors are responsible for the determination of the
Company's investment objective and policy and have overall
responsibility for the Group's activities including the review of
investment activity and performance.
Mr Nixon, a Director of the Company, is also Founding Partner
and a Designated Member of Worsley Associates LLP ("Worsley"). The
total charge to the Consolidated Income Statement during the period
in respect of Investment Advisor fees to Worsley was GBP76,464 (31
December 2018: GBPnil) of which GBP10,768 (30 June 2019: GBP12,500)
remained payable at the period end.
Upon appointment of Worsley as Investment Advisor (31 May 2019),
Mr Nixon waived his future Director fee as he is a member of the
Investment Advisor.
As at 31 December 2019, Mr Nixon held 29.81% of the shares in
the Company (30 June 2019: 29.81%).
All the above transactions were undertaken at arm's-length.
The aggregate remuneration and benefits in kind of the Directors
(and directors of the Subsidiaries) in respect of the Company's
period ended 31 December 2019 amounted to GBP25,965 (31 December
2018: GBP29,250) of which GBPnil (30 June 2019: GBP4,610) remained
payable at the period end.
For details on Director dealing please refer to Note 16.
14. Commitments and contingent liability
As at 31 December 2019 the Company has no commitments (30 June
2019: no commitments).
Disposal of the Curno property may, depending on the terms,
incur Italian taxes which would be material in the context of
shareholders' Funds. As at the 31 December 2019 and up to the date
of approval, no disposal was in discussion. As a result, no
provision has been included in these Financial Statements.
15. NAV reconciliation
The following is a reconciliation of the NAV per share
attributable to ordinary shareholders as presented in these
Financial Statements to the unaudited NAV per share reported to the
London Stock Exchange.
NAV per
Ordinary
NAV Share
31 December 2019 GBP000s GBP
NAV reported to London Stock Exchange (unaudited) 9,084 43.76p
Adjustment to lease incentive (14) (0.07)p
NAV to shareholders per Financial Statements (unaudited) 9,070 43.69p
-------------------------------------------------------------- -------- ---------
16. Subsequent events
On 10 February 2020, the Company published a new prospectus with
the intention to raise up to GBP6.2 million through an offer of
20,758,441 new ordinary shares at an issue price of 30 pence per
new ordinary share (the Capital Raise). The Company received valid
applications from qualifying shareholders and other investors for a
total of 12,982,488 Ordinary Shares at the price of 30 pence per
share, raising gross proceeds of some GBP3.9 million.
On 11 February 2020, Mr Scott purchased 50,000 shares of the
Company for GBP15,500.
On 24 February 2020, Mr Scott purchased 100,000 shares of the
Company for GBP29,500.
On 17 March 2020, under the Capital Raise Mr Scott purchased
250,000 shares of the Company for GBP75,000 and Mr Nixon purchased
3,894,746 shares of the Company for GBP1,168,424.
The Directors' total interest in issued share capital following
admission of new Ordinary Shares is as follows:
Name of Director Ordinary Shares to be held Total interest in issued share
following Admission of New capital following Admission
Ordinary Shares of New Ordinary Shares
Mr Nixon 10,083,126 29.88%
---------------------------- -------------------------------
Mr Scott 400,000 1.19%
---------------------------- -------------------------------
As a result of the coronavirus outbreak in Italy, the Italian
government closed cinemas (and many other types of venue) on 3
March 2020. As at the time of writing, this closure remains in
place and it is not clear when it will be lifted. The disposal of
this asset is therefore unlikely before the situation is clarified.
The base rental on the property is fixed and benefits from a
parental guarantee, as described in the Investment Advisor's
report.
The Board will work closely with the Investment Advisor to
consider and to manage the position as events unfold.
There were no other post period end events which require
disclosure in these Financial Statements.
Investment Policy
Investment Objective and Policy Change
At an EGM held on 28 June 2019, an ordinary resolution was
passed to adopt a new Investment Objective and Policy.
Investment Objective
The Company's investment objective is to provide shareholders
with an attractive level of absolute long-term return, principally
through the capital appreciation and exit of undervalued
securities. The existing real estate asset of the Company will be
realised in an orderly manner, that is with a view to optimising
the disposal value of such asset.
Investment Policy
The Company aims to meet its objectives through investment
primarily, although not exclusively, in a diversified portfolio of
securities and related instruments of companies listed or admitted
to trading on a stock market in the British Isles (defined as (i)
the United Kingdom of Great Britain and Northern Ireland; (ii) the
Republic of Ireland; (iii) the Bailiwicks of Guernsey and Jersey;
and (iv) the Isle of Man). The majority of such companies will also
be domiciled in the British Isles. Most of these companies will
have smaller to mid-sized equity market capitalisations (the
definition of which may vary from market to market, but will in
general not exceed GBP600 million). It is intended to secure
influential positions in such British quoted securities with the
deployment of activism as required to achieve the desired
results.
The Company, Property Trust Luxembourg 2 SARL and Multiplex 1
SRL ("the Group") may make investments in listed and unlisted
equity and equity-related securities such as convertible bonds,
options and warrants. The Group may also use derivatives, which may
be exchange traded or over-the-counter.
The Group may also invest in cash or other instruments including
but not limited to: short, medium or long term bank deposits in
Pound sterling and other currencies, certificates of deposit and
the full range of money market instruments; fixed and floating rate
debt securities issued by any corporate entity, national
government, government agency, central bank, supranational entity
or mutual society; futures and forward contracts in relation to any
other security or instrument in which the Group may invest; put and
call options (however, the Group will not write uncovered call
options); covered short sales of securities and other contracts
which have the effect of giving the Group exposure to a covered
short position in a security; and securities on a when-issued basis
or a forward commitment basis.
The Group pursues a policy of diversifying its risk. Save for
the Curno Asset until such time as it is realised, the Group
intends to adhere to the following investment restrictions:
-- not more than 30 per cent. of the Gross Asset Value at the
time of investment will be invested in the securities of a single
issuer (such restriction does not, however, apply to investment of
cash held for working capital purposes and pending investment or
distribution in near cash equivalent instruments including
securities issued or guaranteed by a government, government agency
or instrumentality of any EU or OECD Member State or by any
supranational authority of which one or more EU or OECD Member
States are members);
-- the value of the four largest investments at the time of
investment will not constitute more than 75 per cent of Gross Asset
Value;
-- the value of the Group's exposure to securities not listed or
admitted to trading on any stock market will not exceed in
aggregate 35 per cent. of the Net Asset Value;
-- the Group may make further direct investments in real estate
but only to the extent such investments will preserve and/or
enhance the disposal value of its existing real estate asset. Such
investments are not expected to be material in relation to the
portfolio as a whole but in any event will be less than 25 per
cent. of the Gross Asset Value at the time of investment. This
shall not preclude Property Trust Luxembourg 2 SARL and Multiplex 1
SRL (the "Subsidiaries") from making such investments for
operational purposes;
-- the Company will not invest directly in physical commodities,
but this shall not preclude its Subsidiaries from making such
investments for operational purposes;
-- investment in the securities, units and/or interests of other
collective investment vehicles will be permitted up to 40 per cent.
of the Gross Asset Value, including collective investment schemes
managed or advised by the Investment Advisor or any company within
the Group; and
-- the Company must not invest more than 10 per cent. of its
Gross Asset Value in other listed investment companies or listed
investment trusts, save where such investment companies or
investment trusts have stated investment policies to invest no more
than 15 per cent. of their gross assets in other listed investment
companies or listed investment trusts.
The percentage limits above apply to an investment at the time
it is made. Where, owing to appreciation or depreciation, changes
in exchange rates or by reason of the receipt of rights, bonuses,
benefits in the nature of capital or by reason of any other action
affecting every holder of that investment, any limit is breached by
more than 10 per cent., the Investment Advisor will, unless
otherwise directed by the Board, ensure that corrective action is
taken as soon as practicable.
Borrowing and Leverage
The Group may engage in borrowing (including stock borrowing),
use of financial derivative instruments or other forms of leverage
provided that the aggregate principal amount of all borrowings
shall at no point exceed 50 per cent. of Net Asset Value. Where the
Group borrows, it may, in order to secure such borrowing, provide
collateral or security over its assets, or pledge or charge such
assets.
Corporate Information
Directors (All non-executive) Registered Office
W. Scott (Chairman) Sarnia House
R. H. Burke Le Truchot
B. A. Nixon St Peter Port
Guernsey, GY1 1GR
Investment Advisor Administrator and Secretary
Worsley Associates LLP Praxis Fund Services Limited
First Floor Sarnia House
Barry House Le Truchot
20 - 22 Worple Road St Peter Port
Wimbledon, SW19 4DH Guernsey, GY1 1GR
United Kingdom
Financial Adviser Corporate Broker
Shore Capital and Corporate Limited Shore Capital Stockbrokers Limited
Cassini House Cassini House
57 St James's Street 57 St James's Street
London, SW1A 1LD London SW1A 1LD
United Kingdom United Kingdom
Independent Auditor Registrar
BDO Limited Computershare Investor Services
Place du Pre (Guernsey) Limited
Rue du Pre 1(st) Floor
St Peter Port Tudor House
Guernsey, GY1 3LL Le Bordage
St Peter Port
Guernsey, GY1 1DB
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DDGDXUUDDGGU
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