Walls & Futures, the Ethical Housing REIT, is pleased to announce its final results and the publication of its audited annual report and accounts for the year to 31 March 2018. A copy of the annual report and accounts can be viewed here:
Walls & Futures REIT plc is an Ethical Housing REIT providing homes for some of the most vulnerable people in society. Our strategy is to build a portfolio of high yielding residential properties let on long term leases, with rents increasing in line with inflation, to low risk tenants including Charities and Housing Associations.
Rather than acquire existing portfolios, we originate investments, dealing directly with Local Authorities, Housing Associations and Charities. This approach enables us to directly add capacity and ensure the quality of the homes delivered while creating immediate equity growth and higher yields.
Walls & Futures REIT plc do not have any involvement with care delivered within the properties, this is managed by care providers approved by Local Authorities.
Highlights:
- Revenue up by 126.6% to £102,901 (2017: £45,400)
- Profit before tax increased to £45,386 (2017: Loss of £314,716)
- Investment property value increased 9.22%
- Earnings per share 1.38p (2017: -17.07p)
- Net Asset Value per share 92p (2017: 90p)
- Delivered our first Supported Housing development, providing six new places
- Joined MSCI IPD UK Residential Index
- Portfolio performance for the calendar year 2017 delivered a total return of 11.5% against benchmark 7%
- Joined Social Stock Exchange/Impact Investment Network
- Named “Impact Company of the Year” at the 2018 NEX Exchange Small Cap Awards
- Raised £222,603 in new equity in the year, (with £80,080 raised after the year end in May 2018)
Further details of the Company’s financial results can be viewed below.
The Company also announces it has today posted the notice to shareholders of its Annual General Meeting “AGM”), which is to be held at 1.00 pm on Thursday 27 September 2018 at 3rdFloor, 111 Buckingham Palace Road, London, SW1W 0SR. A copy of the notice of AGM can also be viewed here:
A resolution will be proposed at the AGM to approve a new Management Incentive Plan (the “MIP”). The MIP will be a discretionary cash and share incentive plan operated by Walls & Futures for the benefit of its senior management for their contribution to the achievement of Walls & Futures annual company goals and objectives. It is designed so as to:
- align with the business strategy and the achievement of planned business goals;
- support the creation of sustainable long-term shareholder value; and
- provide an appropriate balance between remuneration elements that attract, retain and motivate the highest calibre of executive talent.
Further information on the MIP can be viewed in Appendix 1 of the notice of AGM.
Overview & Strategy
During the year the Group completed its first supported housing property, a freehold, detached grade two listed building, in the Cotswold market town of Stroud. The renovation and redevelopment successfully completed at the end of August to provide a high-quality home with specialist support for six adults with physical & learning disabilities.
The property is being let on a 25-year full repairing and insuring lease, with rents adjusted annually in line with inflation (CPI), to one of the UK’s leading care providers who has more than 50 years of experience and expertise in the sector and currently supports more than 2,500 adults nationwide.
In February 2018 we announced that we had joined MSCI IPD UK Residential Property Index. The index measures unleveraged total returns of directly held standing property investments. As of December 2016, it tracked the performance of 11,201 residential property investments, with a total capital value of £12.1 billion. Being part of the MSCI IPD UK Residential Property Index provides our shareholders with a transparent and meaningful method of comparing our absolute and relative performance with that of the index and our larger peers.
For the calendar year 2017, our portfolio delivered a total return of 11.5% against the MSCI IPD UK Residential index, which returned 7%. We believe this illustrates the performance benefit of our development strategy.
In March 2018, applications were received by the Company in respect of the new share offer. A total of 236,812 ordinary shares were issued, the gross proceeds received from this subscription were £222,603.28.
Post balance sheet events
On 22 May 2018 the Company issued a total of 85,192 Ordinary Shares of 5p at 94p each. The gross proceeds received by the Company from this subscription are £ 80,080.
On 1 June 2018, the Company appointed Allenby Capital Limited as its NEX Exchange Growth market Corporate Advisor.
On 14 June 2018, the Company was named “Impact Company of the Year” at the 2018 NEX Exchange Small Cap Awards. The annual event shines a light on the best companies and participants in the small and micro-cap community (sub £100m market capitalisation).
Principle Risks & Uncertainties
The Group portfolio is exclusively invested in the UK and therefore exposed to the risks and uncertainties of the UK economy.
The value of the properties are subject to fluctuating market conditions and may be affected by consumer confidence, the performance of the UK economy and liquidity in the market.
The Group does not currently have any borrowings and is therefore not currently exposed to interest rate risk. It does however have an ongoing requirement to fund its activities through the debt and/or equity markets and in the future to obtain finance for property acquisitions. There is no certainty that such funds will be available when needed and thus inhibit growth.
Risk management
The success of the Group is predicated on increasing the size of the portfolio, which would be at risk without further capital. In order to mitigate this, the directors will be engaged in regular fund raising.
Outlook
We have developed a pipeline of potential investments with a number of transactions currently under consideration and will be announced as they are finalised.
The directors will continue the same investment policies which have been successful since joining the NEX Exchange Growth Market.
Report of the Directors
The directors present their report with the financial statements of the company and the group for the year ended 31 March 2018.
Dividends
No dividends will be distributed for the year ended 31 March 2018.
Events since the end of the year
Information relating to events since the end of the year is given in the notes to the financial statements.
Directors
The directors shown below have held office during the whole of the period from 1 April 2017 to the date of this report.
J K McTaggart
D P White
P A Wylie
Statement of directors’ responsibilities
The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s and the group’s transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement as to disclosure of information to auditors
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group’s auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group’s auditors are aware of that information.
Auditors
The auditors, Kingston Smith LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.
Consolidated Income Statement
For year ended 31 March 2018
| Year ended 31/3/18 | Period 18/3/16 to 31/3/17 | |
| GBP | GBP | |
| TURNOVER | 102,901 | 45,400 |
| Cost of sales | 26,717 | 15,461 |
| GROSS PROFIT | 76,184 | 29,939 |
| Administrative expenses | 229,223 | 112,342 |
| (153,039) | (82,403) | |
| Gain/loss on revaluation of tangible assets | 198,333 | (30,000) |
| OPERATING PROFIT/(LOSS) | 45,294 | (112,403) |
| Cost of fundamental reorganisation | – | 202,333 |
| 45,294 | (314,736) | |
| Interest receivable and similar income | 92 | 22 |
| 45,386 | (314,714) | |
| Interest payable and similar expenses | – | 2 |
| PROFIT/(LOSS) BEFORE TAXATION | 45,386 | (314,716) |
| Tax on profit/(loss) | – | (219) |
| PROFIT/(LOSS) FOR THE FINANCIAL YEAR | 45,386 | (314,497) |
| Profit/(loss) attributable to: Owners of the parent | 45,386 | (314,497) |
Consolidated Other Comprehensive Income
For year ended 31 March 2018
| Year ended 31/3/18 | Period 18/3/16 to 31/3/17 | |
| GBP | GBP | |
| PROFIT/(LOSS) FOR THE YEAR | 45,386 | (314,497) |
| OTHER COMPREHENSIVE INCOME | ||
| Gain on bargain purchase | – | 2,509 |
| Income tax relating to other comprehensive income | – | – |
| OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX | – | 2,509 |
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR | 45,386 | (311,988) |
| Total comprehensive income attributable to: Owners of the parent | 45,386 | (311,988) |
| Earnings per share expressed in pence per share: | ||
| Basic | 1.38p | (17.14)p |
| Diluted | 1.38p | (17.14)p |
Consolidated Statement of Financial Position
31 March 2018
| 2018 | 2017 | |||
| GBP | GBP | |||
| FIXED ASSETS | ||||
| Investments | – | |||
| Investment Property | 3,025,000 | 2,150,000 | ||
| 3,025,000 | 2,150,000 | |||
| CURRENT ASSETS | ||||
| Debtors | 195,995 | 4,749 | ||
| Cash at bank | 44,186 | 842,911 | ||
| 240,181 | 847,660 | |||
| CREDITORS | ||||
| Amounts falling due within one year | 18,955 | 19,423 | ||
| NET CURRENT ASSETS | 221,226 | 2,978,237 | ||
| TOTAL ASSETS LESS CURRENT LIABILITIES | 3,246,226 | 2,978,237 | ||
| CAPITAL AND RESERVES | ||||
| Called up share capital | 176,352 | 164,511 | ||
| Share premium | 3,336,476 | 3,125,714 | ||
| Revaluation reserve | 168,333 | – | ||
| Retained earnings | (434,935) | (311,988) | ||
| SHAREHOLDERS’ FUNDS | 3,246,226 | 2,978,237 |
Consolidated Statement of Charges in Equity
For The Year Ended 31 March 2018
| Called up Share Capital | Retained Earnings | Share Premium | Fair value reserve | Total Equity | |
| GBP | GBP | GBP | GBP | GBP | |
| Changes in equity | |||||
| Issue of share capital | 164,511 | – | 3,125,714 | – | 3,290,225 |
| Total comprehensive income | – | (311,988) | – | – | (311,988) |
| Balance at 31 March 2017 | 164,511 | (311,988) | 3,125,714 | – | 2,978,237 |
| Changes in equity | |||||
| Issue of share capital | 11,841 | – | 210,762 | . | 222,603 |
| Total comprehensive income | – | (122,947) | – | 168,333- | 45,386 |
| Balance at 31 March 2018 | 176,352 | (434,935) | 3,336,476 | 168,333 | 3,246,226 |
Consolidated Statement of Cash Flows
For The Year Ended 31 March 2018
| Year ended 31/3/18 | Period 18/3/16 to 31/3/17 | |
| GBP | GBP | |
| Cash flows from operating activities | ||
| Cash generated from operations | (152,517) | (268,115) |
| Interest paid | – | (2) |
| Tax paid | (562) | 781 |
| Net cash from operating activities | (153,079) | (267,336) |
| Cash flows from investing activities | ||
| Purchase of investment property | (676,667) | – |
| Interest received | 92 | 22 |
| Net cash from investing activities | (676,575) | 22 |
| Cash flows from financing activities | ||
| Proceeds from issues of shares | 30,929 | 1,110,225 |
| Net cash from financing activities | 30,929 | 1,110,225 |
| (Decrease)/increase in cash and cash equivalents | (798,725) | 842,911 |
| Cash and cash equivalents at beginning of year | 842,911 | – |
| Cash and cash equivalents at end of year | 44,186 | 842,911 |
About Walls & Futures REIT plc
Walls & Futures is an Ethical Housing REIT providing new homes for some of the most vulnerable people in society, including learning and physical disabilities, mental health needs, homelessness and extra care (housing with care for the elderly).
We collaborate with our customers, including charities and housing associations, to design, fund, build and deliver quality homes that are sustainable in terms of their environmental impact, energy efficiency and financially viability.
Our aim is to generate a measurable and beneficial social impact alongside a financial return, which isto deliver a long-term annual net return of 7-9% of which 3-4% will be paid in the form of a dividend.
Walls & Futures REIT plc was named “Impact Company of the Year” at the 2018 NEX Exchange Small Cap Awards.
Walls & Futures is quoted on the NEX Exchange Growth Market (Ticker: WAFR) and is a member of the Social Stock Exchange and Impact Investment Network.