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Interim Results

Published: 29/11/2021, 07:00

RNS Number : 7955T

Circle Property PLC

29 November 2021

Circle Property Plc

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

Interim Results for the six months ended 30 September 2021

REGIONAL FOCUSED PORTFOLIO PROVIDES PLATFORM FOR GROWTH IN ASSET VALUES AND SHAREHOLDER RETURNS

Circle Property Plc (AIM: CRC), which invests in, develops and actively manages well-located regional office assets, is pleased to announce interim results for the six months ended 30 September 2021.

John Arnold, Chief Executive of Circle Property Plc, said:

"Our regional office portfolio has performed resiliently in the period. As increasing numbers of workers have returned to their offices, the importance of having an environment to meet, collaborate, mentor and train employees is clear. Whilst working patterns have changed, the office continues to play an integral role for many businesses.

It has been a very active period for the Company in terms of asset management. By the end of this calendar year we expect to have completed on the disposal of One Castlepark in Bristol for a consideration of £20 million. With the majority of the proceeds from this sale being allocated to debt repayment, our degearing is well advanced. This, together with the increased interim dividend ahead of 2019 and 2020 levels, shows the positive momentum made by the Company during the period."

Financial Highlights: A solid performance against an improving backdrop

· Unaudited estimated Net Asset Value ("NAV") per share of £2.74 (FY 2021: £2.74 / H1 2020: £2.83). This figure includes the full impact of disposals in the period

· On a like-for-like basis (excluding completed disposals) the gross portfolio valuation as at 30 September 2021 was marginally down by 0.5% to £130 million in the period

· Group LTV reflected 46.6% (excluding cash at bank) with a cash balance of £8.6 million reflecting a net LTV of 40%. Group LTV expected to reduce further following the completion of the disposal of One Castle Park in December 2021.

· Operating profit after revaluation of investment properties of £2.1 million (H1 2020: £0.146 million)

· Profit before tax of £1.3 million (H1 2020: loss £0.7 million)

· Earnings per share of 4 pence (H1 2020: 2 pence)

· Proposed interim dividend of 3.5p per share, ahead of 2020 and 2019 pay-outs (H1 2020: 2.5p / H1 2019: 3.3p)

· Rental income of £3.2 million (H1 2020: £3.9 million), down largely due to disposals and corresponding loss of income

Operational Highlights: Active Portfolio Management delivered significant gains

· Rent collection for the March, June and September 2021 quarters was 93%, 91% and 80% respectively. Discussions continue around outstanding rental arrears

· 84.02% of total portfolio (including K3 at Kents Hill, Milton Keynes, a development in progress) is let and incoming producing

· Asset management projects:

o Refurbishment of K3 Kents Hill, Milton Keynes underway, with £2.2 million planned development costs and completion scheduled for Summer 2022

o High-spec, modern fit-outs undertaken at Concorde Park, Maidenhead and 36 Great Charles Street, Birmingham

· 100% of the Company's portfolio is within the regional office sector, including a regional conference centre, and 88.35% located in Milton Keynes, Bristol, Birmingham and Maidenhead & is flexible in terms of 1-5,000sq.ft. with ability to be sub-divided.

Disposals during the period above book: A busy period for portfolio management

· August 2021: the Group exchanged contracts on the sale of One Castle Park, Bristol to Boultbee Brooks (Castle Park) Limited c/o Boultbee Brooks Real Estate, for a consideration of £20 million representing a 3.9% increase on 31 March 2021 valuation of £19.25 million, with completion due in December 2021

· September 2021: Sale of 135 Aztec West in Bristol to Assura Aspire Limited. The sale price of £3.961 million represented a 156% increase (pre-refurbishment cost) and a 62% increase (post refurbishment cost) on 31 March 2021 valuation of £1.55 million

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the UK version of the EU Market Abuse Regulation (2014/596) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended and supplemented from time to time.

Circle Property Plc	+44 (0)207 930 8503
John Arnold, CEO Edward Olins, COO

Cenkos Securities	+44 (0) 207 397 8900
Katy Birkin Mark Connelly

Radnor Capital Partners	+44 (0) 203 897 1830
Joshua Cryer Iain Daly

Camarco	+44 (0) 203 757 4992
Ginny Pulbrook Rosie Driscoll Toby Strong

About Circle Property Plc

Circle focusses on acquiring assets in regional cities, many of which have significant office supply constraints, and on office assets with active management potential (refurbishment opportunities, under-rented or vacant properties or short leases), rather than just maximising initial rental yields.

Circle is not a Real Estate Investment Trust (REIT) and can actively recycle proceeds from asset sales into its refurbishment and redevelopment pipeline, as well as future investment opportunities, therefore targeting a broader range of returns for shareholders, which are primarily driven by NAV growth.

As well as already delivering substantial increases in NAV, the Company's portfolio has significant reversionary potential with current total estimated rental values of £10.92 million per annum, compared to contracted rent of £8.70 million at 31 March 2021. The Company has a portfolio of 12 regional commercial property investment and development assets in the UK valued at £130 million as at 30 September 2021.

Chief Executive's Statement

Notwithstanding the understandable caution in the lettings market associated with COVID-19, we have made good progress in the period. The Company achieved the sale of 135 Aztec West, Bristol, significantly above valuation at 62% above book, following the letting of the entire building to Fertility Bristol Limited, which alone has offset a 0.5% valuation downturn in the Company's total portfolio. All asset sales during the period have been ahead of their respective book values.

The development at K3 Kents Hill is proceeding well and we have already received strong tenant interest. The development will cost £2.2 million funded through the Company's cash resources and the project is now scheduled for completion in Summer 2022. This targeted spend will deliver an attractive space which we are confident will achieve a good rental income. Moreover, the completed high-spec, modern fit-outs at Concorde Park, Maidenhead and 36 Great Charles Street, Birmingham are beginning to register increasing levels of tenant interest with higher levels of viewings and requests for landlords letting proposals.

We have been able to maintain exceptionally high rental recovery in excess of 90% during the period. Conversations and negotiations around rental arrears continue and we are confident of a positive outcome, particularly as office attendance and usage increases. The majority of our tenants remain firmly of the view that the office plays a central part in the running of their respective businesses. Whilst having the flexibility to work some of the time from home can be advantageous in certain circumstances, dependent upon the individual and the nature of the work, the view remains that team building, collaboration, creativity, employee assessment, mentoring and training is most effective within an office environment. Given all of this, and reflected in our solid financial metrics, we remain of the view that whilst working patterns may adapt, the office is very much here to stay.

The Company's investment and development portfolio, which is almost entirely focused in the regional office sector with no exposure to retail (other than two public houses and one restaurant in Birmingham), was valued, on a like-for like basis (excluding completed disposals) at 30 September 2021 at £130 million. Net asset value per share ("NAV") has remained stable reflecting an unaudited estimated NAV per share of £2.74 (FY 2021: £2.74). This figure includes the full impact of disposals in the period.

The Company has a financing facility in place with RBS and HSBC for £100 million. The senior revolving facility is for £65 million (of which the Company has drawn £60.525 million) with an "accordion" option for a further £35 million. At 30 September 2021, the Group's LTV reflected 46.6% (excluding cash at bank) and the Group had a cash balance of £8.6 million reflecting a net LTV of 40%. Post period, on 18 October 2021, the Group made a repayment of £1.98 million against its financing facility. The Board expects the Group's LTV to reduce further following the completion of the disposal of One Castle Park which is expected in December 2021.

As previously announced, the Company is targeting a further reduction in gearing through targeted asset sales at valuations at or above book value and achieving lettings at estimated rental values (ERV). There are a number of assets that have benefited from our active management approach, with added value following redevelopment, lease restructures or renewals which we expect to be highly sought after, particularly as the office investment market improves post COVID-19 uncertainties.

The Board declares an interim dividend of 3.5p, which will be paid on 14 January 2022 to shareholders on the register on 10 December 2021, with an ex-dividend date of 9 December 2021. This dividend is an increase of 40% on 2020's COVID-19 impacted interim dividend of 2.5p and importantly, 6% ahead of 2019's interim dividend of 3.3p.

Notwithstanding the ongoing impacts of the COVID-19 pandemic, we remain optimistic that the macroeconomic recovery, and in turn the regional office market, is heading in the right direction. Whilst the letting market is recovering more slowly, we believe that the flexibility offered by our assets and their inherently smaller floorplates (1,000-5,000 sq.ft) will be key in converting enquiries into lettings. The Board remain committed to maximising returns and delivering value to our shareholders.

Condensed consolidated statement of comprehensive income

for the 6 months ended 30 September 2021

		6 months to 30 September	6 months to 30 September	12 months to 31 March
	Note	2021 (unaudited)	2020 (unaudited)	2021 (audited)
		£	£	£
Rental income	4	3,233,143	3,919,307	7,657,830
Other income	4	983,509	1,010,022	2,233,842
		4,216,652	4,929,329	9,891,672
Property expenses	5	(1,219,063)	(1,269,188)	(2,356,221)
Net rental income		2,997,589	3,660,141	7,535,451
Administrative expenses	6	(944,649)	(978,840)	(2,615,926)
Operating profit		2,052,940	2,681,301	4,919,525
Gain on disposal of investment properties		599,446	-	263,446
Gain on asset held-for-sale	12	750,000	-	-
Loss on revaluation of investment properties	11	(1,300,804)	(2,534,903)	(6,224,003)
Operating profit/(loss) after revaluation of investment	properties	2,101,582	146,398	(1,041,032)
Finance income	7	26	2,083	2,094
Finance costs	8	(760,934)	(884,516)	(1,696,110)
Net finance costs		(760,908)	(882,433)	(1,694,016)
Profit/(loss) for the period before taxation		1,340,674	(736,035)	(2,735,048)
Taxation	9	(156,562)	113,714	199,729
Total comprehensive profit/(loss) for the year		1,184,112	(622,321)	(2,535,319)
Earnings/(loss) per share	10	0.04	(0.02)	(0.09)
NAV per share		2.74	2.83	2.74

There is no comprehensive income other than that included in the profit for the period. All of the profit for the period is attributable to the owners of the Company.

All items in the above statement derive from continuing operations.

Condensed consolidated statement of financial position

as at 30 September 2021

	Note	30 September	30 September	31 March
		2021 (unaudited)	2020 (unaudited)	2021 (audited)
		£	£	£
Non-current assets
Investment properties	11	99,243,539	127,111,883	121,289,149
Right of use assets		2,316	84,540	61,039
Property plant and equipment		52,940	55,118	54,410
Lease incentives and receivables	13	9,966,711	10,128,672	10,127,528
Deferred tax asset		1,191,464	1,298,659	1,291,615
		110,456,970	138,678,872	132,823,741
Current assets
Trade and other receivables	13	2,731,180	2,683,828	2,982,923
Assets held for sale	12	20,000,000	-	-
Cash and cash equivalents		8,566,762	4,543,692	7,522,804
		31,297,942	7,227,520	10,505,727
Total assets		141,754,912	145,906,392	143,329,468
Equity
Stated capital		42,542,179	42,542,179	42,542,179
Treasury share reserve		1,170,961	668,456	1,047,684
Retained earnings		33,866,695	37,000,805	33,814,453
Total equity		77,579,835	80,211,440	77,404,316
Non-current liabilities
Borrowings	14	60,249,656	61,822,537	61,922,684
Lease liabilities for right of use assets		-	47,504	28,601
Deferred tax liability		379,226	768,913	482,171
		60,628,882	62,638,954	62,433,456
Current liabilities
Trade and other payables	15	3,539,026	3,011,500	3,450,969
Lease liabilities for right of use assets		7,169	44,498	40,727
		3,546,195	3,055,998	3,491,696
Total liabilities		64,175,077	65,694,952	65,925,152
Total liabilities and equity		141,754,912	145,906,392	143,329,468

The condensed consolidated interim financial statements were approved by the Board of Directors on [26] November 2021.

Condensed consolidated statement of changes in equity

for the 6 months ended 30 September 2021

	Stated capital	Treasury share capital	Share-based payment reserve	Retained earnings	Total
	£	£	£	£	£
As at 1 April 2020	42,162,178	380,001	516,048	37,623,126	80,681,353
Loss for the period	-	-	-	(622,321)	(622,321)
Share-based payments	-	-	152,408	-	152,408
As at 30 September 2020	42,162,178	380,001	668,456	37,000,805	80,211,440
Loss for the period	-	-	-	(1,912,998)	(1,912,998)
Share-based payments	-	-	379,228	-	379,228
Dividends	-	-	-	(1,273,354)	(1,273,354)
As at 31 March 2021	42,162,178	380,001	1,047,684	33,814,453	77,404,316
Profit for the period	-	-	-	1,184,112	1,184,112
Share-based payments	-	-	123,277	-	123,277
Dividends	-	-	-	(1,131,870)	(1,131,870)
As at 30 September 2021	42,162,178	380,001	1,170,961	33,866,695	77,579,835

Condensed consolidated statement of cash flows for the 6 months ended 30 September 2021
	6 months to	6 months to	12 months to
	30 September	30 September	31 March
	2021 (unaudited)	2020 (unaudited)	2021 (audited)
	£	£	£
Cash flows from operating activities
Profit/(loss)for the period before taxation	1,340,674	(736,035)	(2,735,048)
Adjustments for:
Finance income	(26)	(2,083)	(2,094)
Finance expense	760,934	884,516	1,696,110
Depreciation	7,785	7,145	14,167
Amortisation of right of use assets	18,700	23,502	47,005
Loss on revaluation of investment properties	1,300,804	2,534,903	6,224,003
Gain on disposal of investment properties	(599,446)	-	(263,446)
Gain on revaluation of assets held for sale	(750,000)	-	-
Share based payments	123,277	152,408	531,636
Increase in trade and other receivables	412,560	(852,315)	(1,150,266)
Increase/(decrease) in trade and other payables	(334,478)	(138,347)	185,615
Cash generated from operating activities	2,280,784	1,873,694	4,547,682
Interest and other finance costs paid	(655,725)	(858,649)	(1,578,755)
Interest received	26	2,083	2,094
Taxation paid	-	(116,773)	(151,475)
Net cash from operating activities	1,625,085	900,355	2,819,546
Cash flows from investing activities
Cost of refurbishment of investment properties	(1,084,488)	(311,312)	(1,459,489)
Proceeds from disposal of investment properties	3,436,621	-	3,513,446
Cost of additions of property plant and equipment	(6,315)	-	(6,314)
Net cash from/(used) in investing activities	2,345,818	(311,312)	2,047,643
Cash flows from financing activities
Repayment of borrowings	(1,775,000)	-	-
Payment of lease liabilities	(20,075)	(25,680)	(51,360)
Drawdown of borrowings	-	1,000,000	1,000,000
Dividends paid	(1,131,870)	-	(1,273,354)
Net cash (used in)/from financing activities	(2,926,945)	974,320	(324,714)
Net (decrease)/increase in cash and cash equivalents	1,043,958	1,563,363	4,542,475
Cash and cash equivalents at the beginning of the period	7,522,804	2,980,329	2,980,329
Cash and cash equivalents at the end of the period	8,566,762	4,543,692	7,522,804

Notes to the condensed consolidated interim financial statements

for the 6 months ended 30 September 2021

1 General information

These condensed consolidated interim financial statements are for Circle Property Plc ("the Company") and its subsidiary undertakings (together referred to as the "Group").

The Company's shares are admitted to trading on AIM, a market operated by the London Stock Exchange plc. The Company is domiciled and registered in Jersey, Channel Islands. The address of its registered office is 3rd Floor, Standard Bank House, 47- 49 La Motte Street, St Helier, Jersey, JE2 4SZ.

The nature of the Company's operations and its principal activities are that of property investment in the UK.

2 Principal accounting policies

Basis of preparation

The condensed consolidated interim financial statements are prepared under the historical cost convention and on a going concern basis and in accordance with International Financial Reporting Standards and IFRIC interpretations adopted for use in the European Union ("IFRS") and with those parts of the Companies (Jersey) Law, 1991 applicable to companies preparing their accounts under IFRS.

The condensed consolidated interim financial statements contained in this document do not constitute statutory accounts under Companies (Jersey) Law 1991. In the opinion of the directors, the condensed consolidated interim financial statements for this period fairly presents the financial position, result of operations and cash flows for this period.

The condensed consolidated interim financial statements have not been audited, nor have they been reviewed by the Company's auditors in accordance with the International Standard on Review Engagements 2410 issued by the Auditing Practices Board.

Statutory financial statements for the year ended 31 March 2021 were approved by the Board of Directors on 6 July 2021. The report of the auditors on those financial statements was unqualified.

Statement of compliance

The Interim Report includes the consolidated interim financial statements which have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 March 2021, which have been prepared in accordance with IFRS as adopted by the European Union and applicable law.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief Executive's statement. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in these financial statements.

The Directors have assessed the Group's ability to continue as a going concern, including an assessment of the on-going impact of Covid-19. In making their assessment the Directors have modelled the Group's cash forecasts based on the circumstances of each tenant on an individual basis. Rental collections have been monitored on a weekly basis with ongoing communication with tenants in respect of the collection of rental arrears. Loan covenants have been stress tested taking into consideration a potential reduction in the valuation of the Group's property portfolio.

Based on these considerations the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they have adopted the going concern basis in preparing the financial statements.

New Standards adopted at 1 January 2021

There are no accounting pronouncements which have become effective from 1 January 2021 that have a significant impact on the Group's interim condensed consolidated financial statements.

Significant accounting policies

The accounting policies applied by the Group in these half-yearly results are the same as those applied by the Group in its consolidated financial information in its 2021 Annual Report and Accounts, with the exception of IFRS 5 - Non-current assets held-for-sale and discontinued operations.

IFRS 5 - Non-current assets held-for-sale and discontinued operations.

Assets are classified as held for sale when:

Ÿ Management is committed to a plan to sell

Ÿ The asset is available for immediate sale

Ÿ An active programme to locate a buyer is initiated

Ÿ The sale is highly probable, within 12 months of classification as held for sale

Ÿ The asset is being actively marketed for sale at a sales price reasonable in relation to its fair value

Ÿ Actions required to complete the plan indicate that it is unlikely that plan will be significantly changed or withdrawn

Investment properties classified as held for sale are measured at fair value in accordance with the measurement criteria of IAS40.

Assets held for sale are derecognised when significant risks and rewards attached to the asset have transferred from the group which is on completion of contracts.

Areas of estimates and judgement

In preparing these condensed consolidated interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

The judgements, estimates and assumptions applied in the Group's consolidated interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Group's last annual financial statements for the year ended 31 March 2021, with the exception of the asset reclassification under IFRS 5 - Non-current assets held-for-sale and discontinued operations.

3 Operating segments

During the period the Group operated in one geographical segment, which is the United Kingdom, and one reporting segment, which is investment in commercial property. Therefore no segmental reporting is required.

4 Revenue	6 months to 30 September	6 months to 30 September	12 months to 31 March
	2021 (unaudited)	2020 (unaudited)	2021 (audited)
	£	£	£
Rental income	3,337,533	3,290,782	6,906,571
Lease incentive adjustment	(104,390)	628,525	751,259
	3,233,143	3,919,307	7,657,830
Insurance recovery	100,268	71,130	142,762
Service charge income	798,241	856,174	1,633,071
Other income	85,000	82,718	458,009
	983,509	1,010,022	2,233,842
	4,216,652	4,929,329	9,891,672

5 Property expenses	6 months to 30 September	6 months to 30 September	12 months to 31 March
	2021 (unaudited)	2020 (unaudited)	2021 (audited)
	£	£	£
Property expenses	33,292	6,729	26,392
Property service charges	221,610	158,495	331,904
Property repairs and maintenance costs	28,753	89,832	94,556
Property insurance	75,048	79,630	168,330
Property rates	62,119	78,328	101,968
Recoverable service charge costs	798,241	856,174	1,633,071
	1,219,063	1,269,188	2,356,221

6 Administrative expenses	6 months to 30 September	6 months to 30 September	12 months to 31 March
	2021 (unaudited)	2020 (unaudited)	2021 (audited)
	£	£	£
Staff costs	506,001	536,032	1,657,273
Administration fees	153,200	152,311	305,540
Legal and professional fees	176,914	214,488	415,687
Audit fees	33,500	-	67,000
Accountancy fees	2,445	3,484	8,016
Rent, rates and other office costs	9,113	24,891	26,763
Other overheads	36,991	16,987	74,475
Depreciation of tangible fixed assets	7,785	7,145	14,167
Amortisation of right of use assets	18,700	23,502	47,005
	944,649	978,840	2,615,926

7 Finance income	6 months to 30 September	6 months to 30 September	12 months to 31 March
	2021 (unaudited)	2020 (unaudited)	2021 (audited)
	£	£	£
Bank interest	26	2,083	2,094
	26	2,083	2,094

8 Finance costs	6 months to 30 September	6 months to 30 September	12 months to 31 March
	2021 (unaudited)	2020 (unaudited)	2021 (audited)
	£	£	£
Loan interest	643,284	767,484	1,420,734
Loan commitment fees	17,739	12,479	22,670
Amortisation of lending costs	101,972	100,697	200,844
Annual agency fee	-	-	45,000
Interest on lease liabilities	(2,061)	3,856	6,862
	760,934	884,516	1,696,110

During the period, the Group has terminated a rental agreement lease for St James Place, with the termination date being the 30 June 2021.

This rental agreement termination required the de-recognition of the lease liability and right of use asset that was recognised in line with IFRS 16 - Leases.

The impact of the de-recognition has been included in the table above.

9 Taxation	6 months to	6 months to	12 months to
	30 September	30 September	31 March
	2021 (unaudited)	2020 (unaudited)	2021 (audited)
	£	£	£
Current tax	159,356	215,426	409,109
Deferred tax (credit) / charge	(2,794)	(329,140)	(608,838)
	156,562	(113,714)	(199,729)
10 Earnings per share

Basic earnings per share has been calculated on profit after tax attributable to ordinary shareholders for the period (as shown on the condensed consolidated statement of comprehensive income) and the weighted average number of ordinary shares in issue during the period.

6 months to

30 September

6 months to

30 September

12 months to

31 March

2021

(unaudited)

2020

(unaudited)

2021

(audited)

Profit/(loss) for the period

1,184,112

(622,321)

(2,535,319)

Weighted average number of shares (excluding treasury shares)

28,296,762

28,296,792

Earnings per ordinary share:

0.04

(0.02)

(0.09)

In the opinion of the Board, treasury shares held to satisfy share awards to management currently do not have any material value and hence do not have any dilutive effect. Therefore no diluted earnings per share has been presented.

11 Investment properties	30 September	30 September	31 March
	2021 (unaudited)	2020 (unaudited)	2021 (audited)
	£	£	£
Opening fair value per valuation report	132,150,000	139,450,000	139,450,000
Cost of refurbishment of investment properties	1,342,369	306,378	1,422,744
Cost of acquisition of investment property	-	-	-
Disposal of investment properties	(2,837,175)	-	(3,250,000)
Loss on revaluation of investment properties	(1,300,804)	(2,534,903)	(6,224,003)
Lease incentive amortisation	(104,390)	628,525	751,259
Reclassification of asset held for sale	(19,250,000)	-	-
Fair value of investment properties per valuation report	110,000,000	137,850,000	132,150,000
Unamortised lease incentives	(10,756,461)	(10,738,117)	(10,860,851)
Carrying value	99,243,539	127,111,883	121,289,149

The fair value of the Group's investment properties at 30 September 2021 has been arrived at on the basis of valuation carried out by Savills (UK) Limited. The valuation was carried out in accordance with the Practice Statements contained in the Appraisal and Valuation Standards as published by the RICS. In forming their opinion of the fair value, the independent valuer's had regard to the current best use of the property, its investment attributes and recent comparable transactions. The valuation was carried out using the "All Risks Yield" method taking into consideration both sales and rental evidence and formulating the opinion of market value taking into account the properties' locations, specifications and specific characteristics.

At 30 September 2021, the fair value of the Group's investment properties per the valuation report amounted to£110,000,000 (2020: £137,850,000). The difference between the fair value of the investment properties per the valuation report and the fair value per the balance sheet of £10,756,461 (2020: £10,738,117) relates to unamortised lease incentives which are recorded in the financial statements within non-current and current assets.

The Group has pledged all of its investment properties to secure banking facilities granted to the Group as detailed in note 14.

12 Assets held for sale	30 September	30 September	31 March
	2021	2020	2021
	(unaudited) £	(unaudited) £	(audited) £
Opening balance	-	- -
Reclassification of One Castle Park, Bristol	19,250,000	- -
Gain on revaluation of asset held for sale	750,000	- -
Closing balance	20,000,000	- -

On 31 August 2021, the Group exchanged contracts on the sale of One Castle Park, Bristol to Boultbee Brooks (Castle Park) Limited c/o Boultbee Brooks Real Estate for a consideration of £20,000,000.

Completion is anticipated to take place on or around 16 December 2021. 13 Lease incentives and receivables	30 September	30 September	31 March
	2021 (unaudited)	2020 (unaudited)	2021 (audited)
	£	£	£
Non-current Lease incentives	9,966,711	10,128,672	10,127,528
Current
Lease incentives	789,750	609,445	733,323
Amounts due from property agents	51,586	532,692	-
Tenant deposits	272,662	271,017	272,824
Amounts due from tenants	1,379,759	1,124,020	1,695,925
Other receivables	237,423	146,654	280,851
	2,731,180	2,683,828	2,982,923

14 Borrowings	30 September	30 September	31 March
	2021 (unaudited)	2020 (unaudited)	2021 (audited)
	£	£	£
Brought forward	61,922,684	60,721,840	60,721,840
Loan repayments	(1,775,000)	-	-
Loan drawdowns	-	1,000,000	1,000,000
Amortisation of lending costs	101,972	100,697	200,844
Total borrowings	60,249,656	61,822,537	61,922,684

The Group is party to a revolving facility, with NatWest and HSBC. The facility is a £60,000,000 revolving facility with an accordion option of up to £40,000,000, of which £5,000,000 had been committed at the period end. The facility has a four year term, repayable on 13 February 2023. The rate of interest is the aggregate of the margin 2.05% and LIBOR and is payable quarterly. A commitment fee is payable at a rate of 0.82% on the undrawn facility and in relation to the accordion facility.

The Group paid an arrangement fee of 0.875% for the facility, which along with other costs of arranging the facility including legal costs have been amortised and will be written off over the 4 year term.

The facility is secured by a first and only legal charge over the Group's investment properties, an assignment of rental income, charges over specified bank accounts of the Group and a floating charge granted over all assets of the Group.

The facility's financial covenants are 60% loan to value, 2.00:1 interest cover looking both forward and backward, the Group shall ensure that the total market value of the charged properties does not fall below £50,000,000 at any time and that no single tenant represents more than 25% of the total contracted rents.

At 30 September 2021 £60,525,000 (2020: £62,300,000) of the total facility had been drawndown and the undrawn facility was £4,475,000 (2020: £2,700,000).

On 18 October 2021, a repayment of £1,980,731 was made against the facility.

15 Trade and other payables	30 September	30 September	31 March
	2021 (unaudited)	2020 (unaudited)	2021 (audited)
	£	£	£
Trade payables	47,200	26,782	50,467
Property improvement costs	285,314	59,242	27,433
Wages and salaries	26,223	27,902	338,664
Deferred income	1,752,940	1,749,920	1,745,607
Rental deposit accounts	272,662	271,017	272,968
Finance costs	279,467	285,834	274,169
VAT - Payable	195,485	257,742	170,918
Valuation fee	13,200	18,000	30,000
Audit fee	33,500	-	67,000
Administration fees	-	363	64
Current taxation	633,035	314,698	473,679
	3,539,026	3,011,500	3,450,969

16 Subsequent events

On 18 October 2021, following the sale of 135 Aztec West, a repayment of £1,980,731 was made against the loan facility detailed in note 14.

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