Commercial in confidence
Commercial in confidence
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
REAL ESTATE INVESTORS PLC
FINANCIAL STATEMENTS
For the year ended 31 December 2024
1
Commercial in confidence
Commercial in confidence
Company Registration Number:
05045715
Registered Office:
2nd Floor
75-77 Colmore Row,
Birmingham
B3 2AP
Directors:
W P Wyatt: Chairman
P London: Non-Executive Director
I M Stringer: Non-Executive Director
P P S Bassi CBE: Chief Executive
M H P Daly: Finance Director
Secretary:
M H P Daly
Auditor:
Cooper Parry Group Limited
Statutory Auditor
Sky View, Argosy Road
Castle Donington
Derby
DE74 2SA
Solicitor:
Gateley Plc
One Eleven
Edmund Street
Birmingham
B3 2HJ
Nominated Adviser:
Cavendish Capital Markets Limited
One Bartholomew Close
London
EC1A 7BL
Broker:
Panmure Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
Bankers:
National Westminster Bank plc
3rd Floor
2 St Philips Place
Birmingham
B3 2RB
Lloyds Banking Group plc
125 Colmore Row
Birmingham
B3 3SD
Registrar:
MUFG Corporate Markets (UK) Limited
Central Square
29 Wellington Street
Leeds
LS1 4DL
REAL ESTATE INVESTORS PLC
CONTENTS
For the year ended 31 December 2024
2
Commercial in confidence
Commercial in confidence
INDEX
PAGE
Chairman’s and Chief Executive’s report
3 - 6
Property Report
7 - 9
Finance Director’s report
10 - 12
Directors’ report
13 - 16
Group strategic report
17 - 18
Corporate governance report
19 - 24
Remuneration report
25 - 26
Independent auditor’s report
27 - 31
Consolidated statement of comprehensive income
32
Consolidated statement of changes in equity
33
Company statement of changes in equity
34
Consolidated statement of financial position
35 - 36
Company statement of financial position
37
Consolidated statement of cash flows
38
Company statement of cash flows
39
Notes to the financial statements
40 - 67
REAL ESTATE INVESTORS PLC
CHAIRMAN’S AND CHIEF EXECUTIVE’S REPORT
For the year ended 31 December 2024
3
Commercial in confidence
Commercial in confidence
Targeted Sales Above Book Value & Debt Reduction
•
Completed sales of £18.9 million (an aggregate uplift (pre-costs) of 6.95% above December 2023 valuations)
•
Disposal proceeds used to pay down £15.2 million of debt, reducing total debt to £39.2 million (FY 2023: £54.4
million)
•
Improved LTV (net of cash) to 26.4% (FY 2023: 32.4%)
•
Average cost of debt of 6.5% (FY 2023: 3.7%)
•
Revenue of £10.8 million (FY 2023: £11.5 million) with decrease predominantly due to loss of rent from sales
•
Underlying profit before tax of £3.4 million (FY 2023: £4.5 million)
•
EPRA** EPS of 1.9p (FY 2023: 2.6p)
•
Basic loss per share of (1.3p) (FY 2023: (5.4p)
•
Loss before tax of £2.4 million (FY 2023: loss of £9.4 million), primarily as a result of a revaluation deficit of £6.3
million on investment properties (FY 2023: £13.2 million revaluation deficit) (non-cash item)
•
EPRA** Net Tangible Assets (“NTA”) per share of 51.3p (FY 2023: 54.9p)
•
£6.9 million cash at bank as at 31 December 2024 (FY 2023: £8 million)
•
Gain in market value of hedging instrument of £282,000 (FY 2023: deficit of £499,000) (non-cash item)
Fully Covered Dividend
•
Final dividend of 0.4p per share, payable in April 2025 as an ordinary dividend
•
Total fully covered dividend for 2024 of 1.9p per share (FY 2023: 2.5p) reflecting a yield of 6.7% based on a mid-
market opening price of 28.5p on 24 March 2025. The level of dividend for 2025 will be subject to the pace of
further disposals
•
£53.9 million total declared/paid to shareholders since commencement of dividend policy in 2012
Diverse and Resilient Portfolio
•
Gross property assets of £124.6 million (FY 2023: £145.5 million) with 36 assets and 132 occupiers
•
Like-for-like portfolio valuation down by 4.93% to £122.2 million (FY 2023: £128.5 million)
•
Continued robust rent collection levels with overall rent collection for 2024 of 99.94%
•
Completed 47 lease events during the year
•
Improved WAULT*** of 5.76 years to break and 6.99 years to expiry (FY 2023: 5.24 years and 6.01 years)
•
Contracted rental income of £9.0 million p.a. (FY 2023: £10.9 million p.a.) net of disposals
•
Portfolio occupancy of 82.04% (FY 2023: 83.03%)
Post Year End Activity
•
Additional £1.6 million of completed and contracted sales since year end (an aggregate uplift, pre-costs, of 7.47%
above December 2023 valuations)
•
Sale agreed on Kingston House at £2.7 million, dependent upon planning permission which was granted on 13 March
2025, with expected completion by end of Q2 2025, which will materially reduce holding costs
•
Further £1 million of debt repaid since year end, resulting in reduced debt of £38.2 million
•
Healthy pipeline of new income to the portfolio of £230,110 p.a in legals
•
In March 2025, the Group extended the £12.6 million facility with Lloyds Banking Group Plc for a further 12 months
to 29 May2026 and the £24 million facility with National Westminster Bank Plc for a further 12 months to 1 June
2026. As with the previous refinancing in 2024, the facilities have each been extended on a short term basis to
reflect the Group’s intention to repay debt as a priority using disposal proceeds
REAL ESTATE INVESTORS PLC
CHAIRMAN’S AND CHIEF EXECUTIVE’S REPORT
For the year ended 31 December 2024
4
Commercial in confidence
Commercial in confidence
Financial and Operational Results
31 December 2024
31 December 2023
Revenue
£10.8 million
£11.5 million
Pre-tax loss
(£2.4 million)
(£9.4 million)
Underlying profit before tax*
£3.4 million
£4.5 million
Contracted rental income
£9.0 million
£10.9 million
EPRA EPS**
1.9p
2.6p
Basic loss per share
(1.3)p
(5.4p)
Dividend per share
1.9p
2.5p
Average cost of debt
6.5%
3.7%
Like-for-like rental income
£9.03 million
£9.49 million
31 December 2024
31 December 2023
Gross property assets
£124.6million
£145.5 million
EPRA NTA per share
51.3p
54.9p
Like-for-like capital value psf
£119.51 psf
£125.70 psf
Like-for-like valuation
£122.2 million
£128.5 million
Tenants
132
183
WAULT to break***
5.76 years
5.24 years
Total ownership (sq ft)
1.04 million sq ft
1.24 million sq ft
Net assets
£89.5 million
£95.6 million
Loan to value
32.0%
38.0%
Loan to value net of cash
26.4%
32.4%
Definitions
* Underlying profit before tax excludes profit/loss on revaluation and sale of properties and interest rate swaps
** EPRA = European Public Real Estate Association
*** WAULT = Weighted Average Unexpired Lease Term
REAL ESTATE INVESTORS PLC
CHAIRMAN’S AND CHIEF EXECUTIVE’S REPORT
For the year ended 31 December 2024
5
Commercial in confidence
Commercial in confidence
The year presented numerous challenges, including global conflicts, UK and US elections, persistent inflation, and
uncertainties around interest rates. Additionally, Q3 2024 was marked by heightened market disruption and subsequent
low investor confidence following a poorly received UK Budget.
Mindful of the above, as per our stated strategy in January 2024, we continued with our anticipated sales programme
targeted at private investors and owner occupiers which resulted in sales of £18.9 million during 2024. This was
achieved at an aggregate uplift of 6.95% above our 2023 year end valuations, plus post-period sales of £1.6 million,
making total sales since January 2024 of £20.5 million.
Using receipts from disposals during the period, we repaid £15.2 million of debt, resulting in reduced total debt of
£39.2 million (FY 2023: £54.4 million), representing a reduction of 27.9%. A post-period debt repayment of £1 million
has further reduced total debt to £38.2 million.
The portfolio saw a 4.93% valuation reduction on a like-for-like basis in 2024 which was a direct result of market
sentiment and challenges faced by the UK commercial property sector over the last 12 -18 months. We believe there
are positive prospects of recovering valuations through improved market conditions and reducing interest rates.
Our asset management team has focussed on enhancing the rental income and capital value of our remaining properties,
whilst preparing identified assets for future sales. With the benefit of an active occupier market, the team completed
47 lease transactions, representing £1.1 million per annum of new income to the portfolio and offsetting some of the
lost income due to asset sales.
Our robust portfolio continued to perform well, with 99.94% overall rent collection in 2024. At the year end contracted
rental income was £9.0 million per annum (FY 2023: £10.9 million per annum), with an improved portfolio WAULT of
5.76 years to break and 6.99 years to expiry and occupancy at 82.04%, all of which are in line with management’s
expectations due to disposals, known lease events and securing vacant possession for onward agreed sales during 2025.
Post-period, occupancy is now 82.74% and contracted rental income has reduced to £8.9 million (due to sales), with
WAULT now at 5.69 years to break and 6.97 years to expiry. We have sought full or part vacant possession on selected
assets with a view to completing specific asset management initiatives or to meet conditions of sale and we anticipate
that as these properties sell, our occupancy rate will improve and our void costs will substantially decrease. The
completion of lettings in our legal pipeline will also positively contribute to rental income and occupancy levels, subject
to the rate of our ongoing disposal programme.
Revenue for the year was £10.8 million (FY 2023: £11.5 million), with the reduction predominantly due to income loss
following the sale of properties. Underlying profit before tax was £3.4 million (FY 2023: £4.5 million) with a pre-tax
loss of £2.4 million, primarily due to a £6.3 million non-cash loss on property revaluations. A provision has been made
for the Company’s Shorter Term Incentive Plan (STIP) of £300,000 (announced in January 2024), although payment is
deferred until completion, as per the STIP rules.
Despite the loss of income from sales, the robust operational performance of the business resulted in an uninterrupted,
fully covered dividend of 1.9p per share for 2024. A total of £53.9 million has been paid/declared to shareholders
since the commencement of the dividend policy.
Whilst Q1 2025 has seen the continuation of weak market sentiment from 2024, expectations of falling interest rates
and sector rental growth should lead to market improvements. According to Colliers, investment volumes in 2025 are
forecasted to meet or exceed 2024 levels, potentially reaching between £45 billion and £50 billion. We have already
completed additional asset sales amounting to £1.6 million since the year end. In addition to sales completed this
year, we have a healthy pipeline of disposals currently in legals that are expected to complete in Q2 2025.
We remain optimistic about H2 2025 and expect some investors that have been absent to return to the market as
conditions slowly improve. Improved market activity and the emergence of larger institutional investors and funds
would allow us to accelerate our disposals programme by marketing our larger oven-ready assets for disposal with a
view to achieving stronger pricing. This would result in the Company’s debt being repaid more rapidly and the
fulfilment of the Company’s strategy.
Management are committed to leveraging positive market sentiment and continuing to deliver value for our
shareholders via our quarterly dividend, whilst remaining open to a portfolio or corporate transaction that aligns with
shareholder interests and accelerates the Company’s strategy.
REAL ESTATE INVESTORS PLC
CHAIRMAN’S AND CHIEF EXECUTIVE’S REPORT
For the year ended 31 December 2024
6
Commercial in confidence
Commercial in confidence
Dividend
Despite market uncertainty and significant disposals during 2024, the Company’s dividends remained uninterrupted.
The first three quarterly dividend payments in respect of 2024 were paid at a level of 0.5p per share and were fully
covered. Due to the level of disposals, the final dividend in respect of 2024 is confirmed at 0.4p per share, reflecting
a total, fully covered dividend payment for 2024 of 1.9p (FY 2023: 2.5p) (the basis for 2025 dividend to be
agreed/discussed, subject to the pace of further disposals) and a yield of 6.7% based on a mid-market opening price of
28.5p on 24 March 2025. The Board remains committed to paying a fully covered dividend, subject to business
performance and the pace of further disposals.
The proposed timetable for the final dividend, which will be an ordinary dividend, is as follows:
Ex-dividend date:
3 April 2025
Record date:
4 April 2025
Dividend payment date:
30 April 2025
Outlook for 2025
The Board remains firmly committed to maximising shareholder returns by implementing proactive asset management,
making targeted sales in an orderly manner, whilst prioritising the repayment of debt and returning capital to
shareholders in due course.
We are expecting market improvement ahead as interest rates gradually reduce, enabling us to expedite our sales
programme and sell larger corporate and institutional-grade assets as 2025 progresses, albeit the pace of the sales
programme is wholly dependent on investors returning to the market.
In the interim, we remain open to exploring corporate transactions, including the potential sale of the entire portfolio,
provided it aligns with the best interests of our shareholders.
Our Stakeholders
We sincerely thank our shareholders, advisers, tenants and staff for their ongoing support.
William Wyatt
Paul Bassi CBE D. Univ
Chairman
Chief Executive
24 March 2025
24 March 2025
REAL ESTATE INVESTORS PLC
PROPERTY REPORT
For the year ended 31 December 2024
7
Commercial in confidence
Commercial in confidence
UK Property Market Overview
Despite high interest rates, a change in UK government and a negative Autumn budget suppressing commercial property
investment activity throughout the year, UK commercial property rebounded in 2024. According to a report by Carter
Jonas, a total of over £40 billion of commercial property was traded in the year, an increase of 20% compared with
2023. The industrial sector attracted the most investment, followed by the retail and office sectors.
Capital growth performance varies considerably across the main commercial property sectors. Industrial and retail are
outperforming the all-property average, with annual growth in December 2024 standing at 3.9% and 3.0% respectively.
In contrast, office capital values are continuing to fall on an annual basis, at -5.7% over the 12 months to December
2024. During the period September to December 2024, industrial capital values rose by 2.3%, retail increased by 1.7%,
and the fall in the office sector was only -0.3%. Indeed, office capital values have now broadly levelled off, posting a
modest rise of +0.1% during December 2024.
The value of the REI portfolio reduced on a like for like basis by 4.93%, largely due to market sentiment towards the
office sector and reduced investor confidence. The consensus in today’s market is that valuations have now broadly
bottomed out and that investor confidence is returning.
Portfolio Disposals
As with last year, we capitalised on the ability to break up several of our portfolio assets and targeted the strong
private investor market and owner occupiers, to achieve premium pricing. During the year we disposed of 20
units/assets for a total of £18.9 million at an aggregate uplift of 6.95% (pre-costs) above our 2023 year end
valuations. Of these sales, 52.87% comprised break ups of retail units, 9.92% of entire retail assets, 8.46% drive-thru
units and 28.75% offices (office disposals were to owner occupiers).
Post Year End Disposals
Since the year end, we have capitalised on improving market sentiment and have disposed of a further £1.6 million of
assets. We have further completions expected before the conclusion of H1 2025 that are currently in legals. The
reduction in interest rates is expected to pave the way for buyers to return to the market and acquire larger lot sizes
in H2 2025.
The REI Portfolio
The REI portfolio, comprising of 36 assets with 132 occupiers, has a net initial yield of 6.92% and a reversionary yield
of 9.02%. Valuations have seen a decline of 4.93% on a like-for-like basis to £122.2 million (FY 2023: £128.5 million).
Management intend to continue with asset management initiatives to maximise income, occupancy and capital value.
The current portfolio sector weightings are:
Sector
Income by
Sector (£)
Income by
Sector (%)
Office
4,266,720
47.28
Traditional Retail
1,275,436
14.13
Discount Retail - Poundland/B&M etc
882,500
9.78
Medical and Pharmaceutical - Boots/Holland & Barrett etc
526,749
5.84
Restaurant/Bar/Coffee - Costa Coffee etc
284,286
3.15
Financial/Licences/Agency - Bank of Scotland etc
129,500
1.43
Food Stores - Co-op, Iceland etc
406,544
4.50
Other - Hotels (Vine Hotels etc), Leisure (Luxury Leisure), Car parks, AST
1,253,803
13.89
Total
9,025,538
100.00
REAL ESTATE INVESTORS PLC
PROPERTY REPORT
For the year ended 31 December 2024
8
Commercial in confidence
Commercial in confidence
Asset Management
Despite the business primarily focussing on sales, 2024 was a successful year for the asset management team,
completing 47 lease events and securing £1.1 million in new letting income. This activity resulted in improved WAULT
of 5.76 years to break and 6.99 years to expiry (FY 2023: 5.24 years and 6.01 years). Occupancy levels however reduced
to 82.04% from 83.03% at December 2023, largely driven by intentional decisions to secure vacant possession on some
assets such as Kingston House, West Bromwich to allow sales to complete.
Key asset management initiatives undertaken during the year (and to the date of this announcement) include:
Kingston House, West Bromwich
Vacant possession was secured to facilitate the sale of this 43,000 sq ft office asset for residential conversion at £2.7
million. The sale is agreed dependent upon planning permission which was granted on 13 March 2025, with expected
completion by end of Q2 2025. This sale will materially reduce holding costs.
Birch House, Oldbury
Following the complete refurbishment of Birch House, DHU took occupation of the entire 35,749 sq ft building, at a
contracted rent of £625,608 p.a.
Peat House, Leicester
Fairfield School of Business took a new lease on the 4th floor at £145,120 p.a. The letting, that was in line with the
ERV, represented just under 25% of the building, which is now fully let, producing a total rent of £556,052 p.a.
Topaz Business Park, Bromsgrove
Following the news that Costa was opening a drive-thru at the site, a number of lettings totalling £76,774 p.a. were
completed. Further lettings in H1 2025 will see this asset fully let. The Costa unit has since been sold for £1.6 million.
Jasper Retail Park, Tunstall
McDonalds signed a new 20-year lease at £55,000 p.a. This was a positive letting and has enhanced the offer at the
scheme, leading to increased footfall for the other tenants.
Market Shopping Centre, Crewe
Following lengthy discussions, British Heart Foundation signed a 10-year lease at £57,500 p.a., taking just under 11,000
sq ft at the scheme.
Post Year End Activity and Sentiment
There are currently £230,110 p.a. of pipeline lettings that will improve our occupancy and contracted rental income
levels and will reduce void costs across the portfolio.
Portfolio Summary
Value (£)
Area (Sq ft)
Contracted
Rent (£)
ERV (£)
NIY (%)
EQY
(%)
RY (%)
Occupancy
(%)
Portfolio
122,200,000
1,037,965
9,025,538
11,769,356
6.92%
9.09%
9.02%
82.04%
Land*
2,403,962
Total
124,603,962
1,037,965
9,025,538
11,769,356
6.92%
9.09%
9.02%
82.04%
*Land holdings are excluded from the yield calculations
Environmental, Social and Governance (“ESG”)
Whilst managements’ primary focus is asset management, the sale of assets and debt repayment in line with the stated
strategy, the business continues to recognise the importance of incorporating ESG into the working practices at
REI. The ESG Committee, formed in 2021, continues to implement the ESG framework for the business.
The reduction of the portfolio’s carbon footprint remains a priority for the business. Working with Systemslink, we
can confirm an 18.24% reduction in carbon emissions for electricity and gas (for landlord-controlled areas only) between
1 January 2023 and 31 December 2024. This reduction is in part due to our tenants being more aware and conscientious,
proactive initiatives such as LED lamp replacement and boiler upgrades and, the fact that we have sought vacant
possession on some assets in readiness for sale. Going forward, as energy contracts expire, they are being replaced
with 100% green-only electricity contracts where possible.
REAL ESTATE INVESTORS PLC
PROPERTY REPORT
For the year ended 31 December 2024
9
Commercial in confidence
Commercial in confidence
*applies to 0.9 million sq ft of the portfolio that is classed as landlord-controlled areas
Portfolio Energy Performance Certification
REI continues to ensure our assets meet the UK statutory regulations for EPCs. We will continue to upgrade assets
when required. An overview of the asset EPC ratings across the portfolio is noted below:
% of portfolio (by sq ft)
EPC Rating
A
B
C
D
E
F
G
Total
31 Dec 2024
2.52
36.05
26.07
33.38
1.98
0
0
100
31 Dec 2023
2.25
36.88
22.71
35.13
3.03
0
0
100
31 Dec 2022
1.36
22.99
31.18
37.49
6.98
0
0
100
Carbon Emissions
1 Jan 2023 – 31 Dec 2023
1 Jan 2024 – 31 Dec 2024
Scope 1
475 MTCO2e*
367 MTCO2e*
Scope 2
753 MTCO2e*
637 MTCO2e*
Total Scope 1 & Scope 2
1,228 MTCO2e*
1,004 MTCO2e*
REAL ESTATE INVESTORS PLC
FINANCE DIRECTOR’S REPORT
For the year ended 31 December 2024
10
Commercial in confidence
Commercial in confidence
Commercial in confidence
FINANCIAL REVIEW
Overview
In line with the Company’s strategic objective of an orderly sale of the Company’s portfolio, we disposed of assets worth
£18.9 million, leading to a 24% decrease in underlying profit before tax to £3.4 million (FY 2023: £4.5 million). Investment
property sales during the year realised a surplus of £631,000 (FY 2023: £182,000 loss).
The loss before tax was £2.4 million (FY 2023: £9.4 million loss), impacted by a £6.3 million revaluation deficit on
investment properties (FY 2023: £13.2 million deficit), a non-cash item.
In line with our strategy, receipts from disposals were used to repay £15.2 million of debt. This reduced our total debt to
£39.2 million (FY 2023: £54.4 million), improving the loan-to-value (LTV) ratio (net of cash) to 26.4% (FY 2023: 32.4%).
REI continues to maintain relationships with three lenders, and continues to comfortably meet all banking covenants,
with headroom and cure facilities in place.
As anticipated, contracted rental income decreased to £9.0 million (FY 2023: £10.9 million), largely due to disposals and
some reduction from lease events across the portfolio. Occupancy levels remained strong at 82.04% (FY 2023: 83.03%).
The reduction in contracted rental income, although expected, contributed to a decrease in total revenue to £10.8 million
(FY 2023: £11.5 million). Our like-for-like rental income also dropped to £9.0 million per annum (FY 2023: £9.5 million
per annum).
Despite the reduction in revenue due to disposals, we maintained dividend payments throughout the year, with 0.5p per
share paid in Q1, Q2, and Q3, all fully covered. The final dividend for 2024 is confirmed at 0.4p per share, resulting in a
fully covered total dividend of 1.9p for the year (FY 2023: 2.5p).
31 December 2024
31 December 2023
Gross property assets
£124.6 million
£145.5 million
Underlying profit before tax
£3.4 million
£4.5 million
Pre-tax loss
(£2.4 million)
(£9.4 million)
Revenue
£10.8 million
£11.5 million
EPRA EPS
1.9p
2.6p
EPRA NTA per share
51.3p
54.9p
Net assets
£89.5 million
£95.6 million
Loan to value
32.0%
38.0%
Loan to value net of cash
26.4%
32.4%
Average cost of debt
6.5%
3.7%
Dividend per share
1.9p
2.5p
Like-for-like rental income
£9.03 million
£9.49 million
Like-for-like capital value psf
£119.51 psf
£125.70 psf
Like-for-like valuation
£122.2 million
£128.5 million
Results For the Year
The loss before tax for the year was £2.4 million (FY 2023: £9.4 million loss), primarily driven by a £6.3 million revaluation
deficit on investment properties (FY 2023: £13.2 million deficit), a £631,000 surplus on the sale of investment properties
(FY 2023: £182,000 loss), a provision for the STIP of £300,000 (FY 2023: £Nil), and a £282,000 gain in the market value of
our interest rate hedging instruments (FY 2023: £499,000 loss). Underlying profit decreased to £3.4 million (FY 2023: £4.5
million).
Revenues reduced to £10.8 million (FY 2023: £11.5 million), largely due to a loss of £1.9 million in rental income, primarily
from disposals and anticipated lease events.
Administrative and overhead costs were reduced to £2.3 million (FY 2023: £2.6 million). The overall reduction in overheads
was £600,000 mainly due to the reduction in executive salaries of £300,000 but then offset by a provision of £300,000 for
STIP costs (FY 2023: £Nil) which was introduced during the year, although payment is deferred until completion as per
the STIP rules.
The Group focused on using the proceeds from the sale of investment property to repay debt of £15.2 million during the
year. However, interest costs increased to £3.3 million (FY 2023: £2.4 million) as favourable fixed rates on the loan
facilities matured.
REAL ESTATE INVESTORS PLC
FINANCE DIRECTOR’S REPORT
For the year ended 31 December 2024
11
Commercial in confidence
Commercial in confidence
Commercial in confidence
(Loss)/earnings per share were:
Basic: (1.35)p (FY 2023: (5.4p))
Diluted:(1.35)p (FY 2023: (5.4p))
EPRA: 1.9p (FY 2023: 2.6p)
Shareholders’ funds decreased to £89.5 million at 31 December 2024 (FY 2023: £95.6 million) primarily as a result of the
loss on property portfolio revaluation.
Basic NAV: 51.3p (FY 2023: 55p)
EPRA NTA: 51.3p (FY 2023: 54.9p)
Finance & Banking
After achieving sales of £18.9 million in 2024 and repaying £15.2 million in debt, total debt as of 31 December 2024 stood
at £39.2 million (FY 2023: £54.4 million). This amount has been further reduced to £38.2 million following the year end.
As at 31 December 2024, the Group held £6.9 million in cash with three banking partners, continuing to comfortably meet
all banking covenants.
During the period, the cost of debt was maintained at 6.5% with 25% of the portfolio's debt fixed. Management are
encouraged by reducing interest rates and debt repayment remains management’s priority. At this time, it is prudent to
maintain a strong cash reserve in case the business needs to provide bank security in the form of cash. The Company
continues to maximise returns on its cash holdings, with £6.9 million in cash at the year end, most of which is on deposit
earning an interest rate of 4% with instant access. The LTV as at 31 December 2024 was 32.0% (FY 2023: 38%) and the
LTV (net of cash) was 26.4% (FY 2023: 32.4%). The Group’s hedge facility improved by £282,000 for the year to 31
December 2024.
Lender
Debt Facility (£m)
Debt Maturity
Amount Fixed (£m)
National Westminster Bank
24
June 2026
0
Lloyds Banking Group
12.6
May 2026
10
Barclays
2.6
June 2025
0
Refinancing
In March 2025, the Group extended the £12.6 million facility with Lloyds Banking Group Plc for a further 12 months to 29
May 2026 and the £24 million facility with National Westminster Bank Plc for a further 12 months to 1 June 2026. As with
the previous refinancing in 2024, the facilities have each been extended on a short term basis to reflect the Group’s intention
to repay debt as a priority using disposal proceeds.
Strategy
The Board concluded that it will conduct an orderly strategic sale of the Company’s portfolio over the next 3 years with
the objective of maximising the return of capital to shareholders (the “Disposal Strategy”). To achieve this outcome,
assets will be sold individually, as smaller portfolios or as a whole portfolio sale, with the initial priority to repay the
Company’s debt. The pace of disposals will be dictated by market conditions and management will look to secure disposals
at book value or higher, maximising returns to shareholders.
Shorter Term Incentive Plan (“STIP”)
To support the Disposal Strategy and the return of capital to shareholders, the Company implemented a new Shorter Term
Incentive Plan (“STIP”) in 2024. The STIP replaced the existing Long Term Incentive Plan (“LTIP”), and will help to retain
Paul Bassi, Chief Executive Officer and Marcus Daly, Finance Director (the “Executives”), and the wider management
team and incentivise them to achieve an orderly and timely disposal of the Company’s assets to maximise the capital
return to shareholders. The STIP has been implemented to compensate the Executives for the retrospective reduction in
awards and cancellation of future awards under the LTIP.
1. Under the STIP, the participants receive a proportion of a notional cash pool (the “Pool”) which was created from the
excess (“Gain”) of Total Shareholder Return (“TSR”) over the market value of the Company as at 31 December 2023.
2. TSR is cash per Ordinary Share returned to shareholders, excluding ordinary dividends.
3. To ensure the timely disposal of assets, the Gain attributable to the Pool will be reduced over time.
4. If the Company’s sell down strategy had been completed in 2024 then the Pool would have been calculated as 10% of
the Gain. If the strategy is completed in 2025 the Pool reduces to 7.5% and if by 2026, the Pool reduces to 5%.
5. Of the Pool, a minimum figure of £410k is ringfenced for the management team (excluding the Executives) equivalent
to a bonus of 100% salary.
REAL ESTATE INVESTORS PLC
FINANCE DIRECTOR’S REPORT
For the year ended 31 December 2024
12
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6. The STIP will pay out as soon as reasonably practicable after the earliest of (1) the sale of all the assets, (2) a takeover
of the Company or (3) when the Remuneration Committee determine that a sufficient proportion of the assets have
been sold and that the STIP has achieved its original purpose.
Revised Remuneration Policy (Effective 1 January 2024)
In addition, the Company’s Remuneration Committee has approved changes to the Executives’ remuneration to align the
policy with the wider Company strategy.
1.
Basic salary: Executive salaries were reduced by one third. New salaries – Paul Bassi, CEO reduced to £367k (previously
£550k) and Marcus Daly, CFO reduced to £229k (previously £344k) amounting to a cost saving of approximately £330k
(including National Insurance contributions). In addition, Non-Executive Directors’ fees were reduced by one third
2.
Annual discretionary bonus: The Executives’ bonus was reduced from up to a maximum of 100% of basic salary to a
maximum of 50% of the new reduced basic salary
3.
Executives’ service contracts: If contracts are to be paid up following a corporate transaction or equivalent, then
compensation under the Executives’ service contracts reverts to old salary levels
4.
LTIP Awards: The Executives’ entitlement to awards under the Company’s existing LTIP scheme have been amended
as follows:
•
Unvested awards granted re: FY2020 – to be reduced by one third
•
Unvested awards granted re: FY2021 – to be reduced by two thirds
•
Unvested awards granted re: FY2022 – to be cancelled
•
No further awards under the LTIP going forward
•
The approximate value in the reduction in the awards equates to approximately 4 million Ordinary Shares,
which at a share price of 30p equates to £1.2 million
5.
Shorter Term Incentive Plan (“STIP”): To compensate the Executives (albeit not to the same extent) for the
retrospective reduction in LTIPs in relation to FY2020 and FY2021, the cancelling of awards relating to FY2022 and
no further issuing of awards under the LTIP in relation to FY2023 or going forward, the Executives will be entitled to
participate in the STIP.
Going Concern
The consolidated financial statements for the Group have been prepared on a going concern basis (see Note 1 on page
40).
Taxation
The Group converted to a Real Estate Investment Trust (REIT) on 1 January 2015. Under REIT status the Group does not
pay tax on its rental income profits or on gains from the sale of investment properties. The Group continues to meet all
REIT requirements for REIT status.
Dividend
Under the REIT status the Group is required to distribute at least 90% of rental income taxable profits arising each financial
year by way of a Property Income Distribution. Quarterly dividends commenced in 2016.
Despite rental income reducing as our strategic disposal programme progressed, dividend payments continued without
interruption in 2024 due to a robust operational business performance. The first three quarterly dividends for 2024 were
paid at 0.5p per share, fully covered, with the final dividend for 2024 set at 0.4p per share. This results in a total, fully
covered, uninterrupted dividend payment of 1.9p for 2024 (FY 2023: 2.5p). Based on a mid-market opening price of 28.5p
on 24 March 2025, this equates to a yield of 6.7%. The dividend for 2025 will depend on the pace of further disposals.
The final 2024 dividend will be paid on 30 April 2025 as an ordinary dividend, to all shareholders on the register as at 4
April 2025 with an ex-dividend date of 3 April 2025. The Board remains committed to paying a fully covered dividend,
subject to the rate of disposal of assets.
Marcus Daly, Finance Director
24 March 2025
REAL ESTATE INVESTORS PLC
DIRECTORS’ REPORT
For the year ended 31 December 2024
13
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The directors present their report together with the audited consolidated financial statements for the year ended
31 December 2024.
Profit and dividend
The loss for the year before tax was £2.4 million (2023: £9.4 million).
The directors have recommended a final dividend of 0.4p per share, making a total dividend for the year of 1.9p
(2023: 2.5p).
Directors
The directors who served during the year and subsequently were as follows:
W P Wyatt
Chairman – Non-Executive Director
P London
Non-Executive Director
I M Stringer
Non-Executive Director
P P S Bassi
Chief Executive
M H P Daly
Finance Director
W P Wyatt and M H P Daly will retire and submit themselves for re-election at the forthcoming Annual General
Meeting.
Substantial shareholdings
The Company has been notified of the following interests that represent 3% or more of the issued share capital of
the Company 3 March 2025:
Number
%
J O Hambro Capital Management
18,664,865
10.70
Harwood Capital
17,500,000
10.04
Hargreaves Lansdown Asset Management
17,432,905
10.00
P P S Bassi
17,000,000
9.75
Interactive Investor
10,726,905
6.15
Asset Value Investors
9,750,000
5.59
Aberdeen
7,481,259
4.29
A J Bell Securities
5,717,152
3.28
Lombard Odier Asset Management
5,577,540
3.20
Other matter
Financial risk management objectives and policies are included in note 15 to the financial statements.
Real Estate Investment Trust (REIT)
With effect from 1 January 2015, the Group converted to REIT status under which the Group is not liable to Corporation
Tax on its rental income or capital gains from qualifying activities.
REAL ESTATE INVESTORS PLC
DIRECTORS’ REPORT
For the year ended 31 December 2024
14
Commercial in confidence
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Directors’ responsibilities statement
The directors are responsible for preparing the Strategic Report, the Directors’ Report 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 prepared the Company and Group financial statements in accordance with UK-adopted international
accounting standards. 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 and the profit or loss of the Company and 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 UK-adopted international 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
and Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company's and Group’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and 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 Group and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The directors confirm that:
• so far as each director is aware, there is no relevant audit information of which the Company's and Group’s auditor
is unaware; and
• the directors have taken all the steps that they ought to have taken as directors in order to make themselves
aware of any relevant audit information and to establish that the Company’s and the Group’s auditor is aware of
that information.
The directors are responsible for preparing the annual report in accordance with applicable law and regulations. The
directors consider the annual report and the financial statements, taken as a whole, provides the information
necessary to assess the Company and Group performance, business model and strategy and is fair, balanced and
understandable.
The directors are responsible for the maintenance and integrity of the corporate and financial information included
on the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
To the best of our knowledge:
•
the Company and Group financial statements, prepared in accordance with UK-adopted international
accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss
of the company and the undertakings included in the consolidation taken as a whole; and
•
the Strategic Report and Directors’ Report include a fair review of the development and performance of the
business and the position of the Company and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they face.
Directors’ Section 172(1) statement
Below the Directors outline the matters they must consider in meeting the requirements of Section 172(1) of the
Companies Act 2006:
The likely consequences of any decision in the long term
Strategic and other long-term decisions made by the Board are made after Board, and where appropriate, senior
management discussion and in conjunction with supporting information, compiled by either senior management or
external advisers. The consideration outlined in the five points below form part of any decision that may have a
long-term impact.
REAL ESTATE INVESTORS PLC
DIRECTORS’ REPORT
For the year ended 31 December 2024
15
Commercial in confidence
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The interests of the Group’s employees
The Group values the interests of its employees, which are its biggest asset.
The need to foster the Group’s business relationships with suppliers, customers and others
The Board understands that long term success relies upon good relations with a range of different stakeholder
groups both internal (employees) and external (tenants, suppliers, banks, regulators and others). The Group is
dedicating significant time to understanding and acting on the needs and requirements of each of these groups via
meetings, feedback and appraisals.
The impact of the Group’s operations on the community and the environment
The Group continues to look to make improvements to the impact it may have on the environment and to this end
has set up an ESG committee to drive forward this responsibility.
The desirability of the Company maintaining a reputation for high standards of business conduct
As outlined in the Corporate Governance section of these financial statements, The Group has decided to apply, so
far as it is reasonable and practical, to do so given the size of the Group, the QCA code and its ten principles. In
addition to being guided by the QCA code, the Company has various policy and procedure documents in place to
ensure employee conduct is of a high standard.
The need to act fairly between members of the Group
The group regularly seeks the advice of its Nomad on matters relating to this point. The Board and Company
Secretary can be contacted by shareholders on matters of Governance and investor relations.
Going concern
The Group has prepared and reviewed forecasts and made appropriate enquiries which indicate that the Group has
adequate resources to continue in operational existence for the foreseeable future, being a period of 12 months
from the date of approval of these financial statements to 31 March 2026. These enquiries considered the following:
• the significant cash balances the Group holds and the low levels of historic and projected operating cash
outflows
• any property purchases will only be completed if cash resources or loans are available to complete those
purchases
• the Group’s bankers have indicated their continuing support for the Group.
• in March 2025 the Group extended the £12.6 million facility with Lloyds Banking Group Plc for a further 12
months to 29 May 2026.
• In March 2025 the Group extended the £24 million facility with National Westminster Bank PLC by a further 12
months to 1 June 2026.
• The directors have at the time of approving these financial statements, a reasonable expectation that the Group
has adequate resources to continue in operational existence for the foreseeable future being a period of not
less than 12 months from the date of approval of these financial statements.
Whilst the Company is on track with its 3 year strategic target, it is business as usual and the Group therefore
continues to adopt the going concern basis in preparing the consolidated financial statements.
Future developments
Details of future developments can be found in the Chairman’s and Chief and Executive’s statement on pages 3 to 6.
REAL ESTATE INVESTORS PLC
DIRECTORS’ REPORT
For the year ended 31 December 2024
16
Commercial in confidence
Commercial in confidence
Commercial in confidence
Post balance sheet events
In March 2025 the Group extended the £24 million facility with National Westminster Bank PLC for a further 12
months to 1 June 2026, and in March 2025 the Group extended the £12.6 million facility with Lloyds Banking Group
Plc for a further 12 months to 29 May 2026. With the exception of the hedge on £10 million of the Lloyds Bank
facility, the new facilities are all on variable rates, and following the multiple increases in interest rates by the
Bank of England, the new average rate of bank interest is 6.5%. It is the Group’s intention to prioritise the
repayment of debt from property sales proceeds.
Annual General Meeting
The Annual General Meeting will be held at 75-77 Colmore Row, Birmingham, B3 2AP on 22 May 2025 at 11.00 am.
Auditor
Cooper Parry Group Limited offers itself for re-appointment as auditor in accordance with Section 489 of the
Companies Act 2006.
BY ORDER OF THE BOARD
M H P Daly
Secretary
Date: 24 March 2025
Company No 05045715
REAL ESTATE INVESTORS PLC
GROUP STRATEGIC REPORT
For the year ended 31 December 2024
17
Commercial in confidence
Commercial in confidence
Review of business
Real Estate Investors PLC is a commercial property investment company specialising in the established and proven
markets of the greater Midlands area. The Group’s business model is based on generating rental and capital growth
from an active approach to the management and development of a portfolio of quality buildings, predominantly within
the office and retail sectors.
Recurring rental income from the portfolio underpins profits, which are supplemented by gains from the sale of
investment properties. Disposal proceeds are recycled into new acquisitions with better growth prospects, whilst
maintaining compliance with the terms of flexible secured bank finance.
The Group has built up a portfolio of good quality assets concentrated in these resilient established markets, without
reliance on one sector or location (see pages 3 to 9) for the review of the business which forms part of this Strategic
Report).
Principal risks and uncertainties
The directors consider the principal risks of the Group and the strategy to mitigate these risks, as follows:
Risk area
Investment portfolio
Mitigation
• Tenant default
• Change in demand for space
• Market pricing affecting value
• Inflation
• Not reliant on one single tenant or business sector
• Focussed on established business locations for investment
• Properties are valued externally twice per year, asset concentration
is monitored, the Company maintains a borrowing headroom should
there be a decline and all facilities have cure options
• Smaller lot size business model limits exposure to individual asset
values
• Portfolio diversification between office and retail properties
• Building specifications not tailored to one user
• Continual focus on current vacancies and expected changes
• Neighbourhood retail and not shopping centres
Financial
• Going concern
• Reduced availability or increased
cost of debt
• Interest rate sensitivity
• See going concern accounting policy on page 40
• Low gearing policy
• Fixed rate debt and hedging in place
• Existing facilities sufficient for spending commitments
• On-going monitoring and management of the forecast cash position
• Internal procedures in place to track compliance with bank
covenants
People
• Retention/recruitment
• Remuneration structure reviewed
• Regular assessment of performance
• Long term incentive plan
Corporate
• Reputational risk
• Legal and regulatory risk
• Health & safety
• IT/Cyber
• External investor and public relations consultancy
The Company employs experienced staff and external advisers to
provide guidance on regulatory requirements
• Management system and support from specialist external advisors
• IT systems and anti-virus software and firewalls
Taxation
• REI non compliance
• Throughout the period the Company complied with the regulations
and dividend distribution requirements
REAL ESTATE INVESTORS PLC
GROUP STRATEGIC REPORT
For the year ended 31 December 2024
18
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ESG
•
Failure to appropriately
manage the
environmental
performance of the
property portfolio
• The Company engaged specialist environmental consultants to
advise the Board on compliance and has set up a dedicated ESG
committee
Key performance indicators (“KPIs”)
The following KPIs are some of the tools used by management to monitor the performance of the Group against the
aim of creating sustainable long-term returns for shareholders:
Indicator
2024
2023
Loss before tax
(£2.4m)
(£9.4m)
EPRA earnings per share
1.9p
2.6p
Underlying profit before tax
£3.4m
£4.5m
Investment property valuation
£122m
£143m
Net assets
£90m
£96m
EPRA NTA per share
51p
55p
BY ORDER OF THE BOARD
M H P Daly
Secretary
Date: 24 March 2025
REAL ESTATE INVESTORS PLC
CORPORATE GOVERNANCE REPORT
For the year ended 31 December 2024
19
Commercial in confidence
2018 UK CORPORATE GOVERNANCE CODE
This report sets out how we have applied and complied with the QCA Corporate Governance Code (2018 edition) in
the financial year ended 31 December 2024.
• Culture – we have identified the need to articulate the company’s values to preserve and strengthen our
culture
• Understanding the views of all our stakeholders – bi-annually we meet with shareholders and analysts to
discuss the annual and half yearly results presentation
• Engaging with our employees – having a small number of employees in one location there is a high level of
employee engagement and communication
• Engaging with our shareholders – we believe that communication with our shareholders is key. In addition to
our bi-annual investor relations presentations we are always available to talk and meet with our shareholders
• Management of risk and opportunities – consideration of risk is an integral part of how the company operates
on a daily basis and is part of any transaction appraisal.
STATEMENT OF COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE
Introduction
On 28 September 2018, the board of REI decided to apply the QCA Corporate Governance Code (2018 edition) (the
QCA Code). The choice of code to adopt was important to us. We wanted to be sure that we would proactively
embrace whatever code we opted for and not end up with a code that could stifle us and result, on a comply or
explain basis, with us describing why certain requirements were not appropriate. We believe that the QCA Code
provides us with the right governance framework: a flexible but rigorous outcome-orientated environment in which
we can continue to develop our governance model to support our business.
Corporate governance principles applicable to REI
As a result of deciding to apply the QCA Code, the corporate governance principles which now apply to us are those
contained in the QCA Code. These are:
Corporate governance principles
•
Establish a strategy and business model which promote long-term value for shareholders
•
Seek to understand and meet shareholder needs and expectations
•
Take into account wider stakeholder and social responsibilities and their implications for long-term success
•
Embed effective risk management, considering both opportunities and threats, throughout the organisation
•
Maintain the board as a well-functioning, balanced team led by the chair
•
Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
•
Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
•
Promote a corporate culture that is based on ethical values and behaviours
•
Maintain governance structures and processes that are fit for purpose and support good decision-making by
the board
•
Communicate how the company is governed and is performing by maintaining a dialogue with shareholders
and other relevant stakeholders
Application of the QCA Code and required disclosures in our annual report or on our website
The correct application of the QCA Code requires us to apply the principles set out above and also to publish certain
related disclosures; these can appear in our annual report, be included on our website or we can adopt a combination
of the two approaches. Recommended locations for each disclosure are specified in the QCA Code; we have chosen
to follow these.
REAL ESTATE INVESTORS PLC
CORPORATE GOVERNANCE REPORT
For the year ended 31 December 2024
20
Commercial in confidence
Principle 1: Establish a strategy and business model which promote long-term value for shareholders
The company is a commercial property investment company specialising in the established and proven markets of the
greater Midlands area. The group’s business model is based on generating rental and capital growth from an active
approach to the management and development of a portfolio of quality buildings, predominantly within the office
and retail sector. Recurring rental income from the portfolio underpins profits, which are supplemented by gains from
the sale of investment properties. Disposal proceeds are recycled into new acquisitions with better growth prospects,
whist maintaining compliance with the terms of flexible secured bank finance. How the company creates value is
shown on pages 12 and 13 of the company’s 2018 financial statements.
The Board establishes the Company’s purpose, values and strategy and reviews these regularly. The Board monitors
and assesses the culture and there is a regular programme of the Board and list of committees. There is a clear
division of responsibilities between the leadership of The Board and the executive.
With effect from 1 January 2015 the group converted to Real Estate Investment Trust (REIT) status under which the
group is not liable to corporation tax on its rental income or capital gains from qualifying activities.
One of the company’s principal objectives is to deliver on a commitment to a progressive dividend policy, which is
underpinned by the company’s REIT status.
Principle 2: Seek to understand and meet shareholder needs and expectations
The company remains committed to listening and communicating openly with its shareholders to ensure that its
strategy, business model and performance are clearly understood. Understanding what analysts and investors think
about us, and in turn, helping these audiences understand our business, is a key part of driving our business forward
and we actively seek dialogue with the market. We do so via investor roadshows, attending investor conferences and
our regular reporting.
The AGM is the main forum for dialogue with retail shareholders and the Board. The Notice of Meeting is sent to
shareholders at least 21 days before the meeting. The chairs of the Board and all committees, together with all other
Directors, routinely attend the AGM and are available to answer questions raised by shareholders. For each vote, the
number of proxy votes received for, against and withheld is announced at the meeting. The results of the AGM are
subsequently published on the company’s corporate website.
Institutional shareholders
The Directors actively seek to build a relationship with institutional shareholders. Shareholder relations are managed
primarily by the Chief Executive Officer supported by the Finance Director. The Chief Executive Officer and Finance
Director make presentations to institutional shareholders and analysts each year immediately following the release
of the full-year and half-year results.
The Board as a whole is kept informed of the views and concerns of major shareholders by briefings from the Chief
Executive Officer & Finance Director. Any significant investment reports from analysts are also circulated to the
Board. The Non-Executive Chairman is available to meet with major shareholders if required to discuss issues of
importance to them.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term
success
Our business model which explains how we create value is set out on pages 12 and 13 of our 2018 Annual Report.
This business model has been in place for many years. As such, any of the key resources and relationships needed by
the group have now been in place for quite some time.
The group’s stakeholders include shareholders, members of staff, customers, suppliers, regulators, industry bodies
and creditors (including the group’s lending banks). The principal ways in which their feedback on the group is
gathered are via meetings and conversations. Following this feedback, the group has continued its clearly defined,
customer-focussed and people-led strategy and accompanying conservative approach to acquisitions and financing.
Engaging with our stakeholders strengthens our relationships and helps us make better business decisions to deliver
on our commitments. The Board is regularly updated on wider stakeholder engagement feedback to stay abreast of
stakeholder insights into the issues that matter most to them and our business, and to enable the Board to understand
and consider these issues in decision-making.
REAL ESTATE INVESTORS PLC
CORPORATE GOVERNANCE REPORT
For the year ended 31 December 2024
21
Commercial in confidence
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the
organisation
Audit, risk and internal control
The company has an established framework of internal financial controls, the effectiveness of which is regularly
reviewed by the Executive Management, the Audit Committee and the Board in light of an ongoing assessment of
significant risks facing the company.
The Board is responsible for reviewing and approving overall company strategy, approving revenue and capital
budgets and plans, and for determining the financial structure of the company including treasury, tax and
dividend policy.
The Audit Committee assists the Board in discharging its duties regarding the financial statements, accounting
policies and the maintenance of proper internal business, and operational and financial controls
There are comprehensive procedures for budgeting and planning, for monitoring and reporting to the Board
business performance against those budgets and plans, and for forecasting expected performance over the
remainder of the financial period. These cover profits, cash flows, capital expenditure and balance sheets.
Quarterly results are reported against budget and compared with the prior year, and forecasts for the current
financial year are regularly revised in light of actual performance.
The company has a consistent system of prior appraisal for investments, overseen by the Finance Director and
Chief Executive Officer, with defined financial controls and procedures.
The Board has ultimate responsibility for the group’s system of internal control and for reviewing its effectiveness.
However, any such system of internal control can provide only reasonable, but not absolute, assurance against
material misstatement or loss. The Board considers that the internal controls in place are appropriate for the size,
complexity and risk profile of the group. The principal elements of the group’s internal control system include:
Close management of the day-to-day activities of the group by the Executive Directors
An organisational structure with defined levels of responsibility, which promotes entrepreneurial decision-
making and rapid implementation while minimising risks
A comprehensive annual budgeting process producing a detailed integrated profit and loss, balance sheet and
cash flow, which is approved by the Board
Detailed quarterly reporting of performance against budget
Central control over key areas such as capital expenditure authorisation and banking facilities.
The Board is responsible for continually reviewing the key risks to the business and assessing their likely impact on the
business. Significant areas under constant review are property, financial and corporate risks. Further detail of the
Company’s principal risks and uncertainties are detailed on pages 17 and 18.
Principle 5: Maintaining the Board as a well-functioning, balanced team led by the Chair
The Board comprises the Non-Executive Chairman, two Executive Directors and two Non-Executive Directors. The
Board considers that both the Non-Executive Directors are independent, in that they have no business or other
relationship with the Company that might influence their independence or judgement.
The Board is satisfied that it has a suitable balance between independence on the one hand, and knowledge of the
company on the other, to enable it to discharge its duties and responsibilities effectively. All Directors are encouraged
to use their independent judgement and to challenge all matters, whether strategic or operational. During 2024 four
Board meetings took place - all Board members attended all such meetings.
Audit Committee Meetings took place – all members attended such meetings. Remuneration Committee meetings took
place – all members attended such meetings.
Key Board activities this year included:
Input into the group corporate plan
Continued an open dialogue with the investment community
Considered our financial and non-financial policies
Discussed strategic priorities
Discussed the group’s capital structure and financial strategy, including capital investments, shareholder
returns and the dividend policy
Discussed internal governance processes
Reviewed feedback from shareholders post full and half year results.
REAL ESTATE INVESTORS PLC
CORPORATE GOVERNANCE REPORT
For the year ended 31 December 2024
22
Commercial in confidence
Directors’ conflict of interest
The company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of
the other commitments and interests of its Directors, and changes to these commitments and interests are reported
to and, where appropriate, agreed with the rest of the Board.
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and
capabilities
The Board is satisfied that, between the Directors, it has an effective and appropriate balance of skills and experience,
as detailed below:
•
Will Wyatt – finance and strategy (CEO of Caledonia)
•
P London – shareholder return (IFA)
•
I Stringer – property (Avison Young)
•
P P S Bassi – property and finance (property expertise)
•
M H P Daly – finance (qualified chartered accountant)
All Directors receive regular and timely information on the group’s operational and financial performance. Relevant
information is circulated to the Directors in advance of meetings. The business reports quarterly on its headline
performance against its agreed budget, and the Board reviews the quarterly update on performance and any
significant variances are reviewed at each meeting. Contracts are available for inspection at the company’s registered
office and at the Annual General Meeting (“AGM”).
The company does not provide formal training for the directors at present but may do so in the future. However, the
directors understand their duties as directors of a company quoted on AIM. The directors have access to the Company’s
Nominated Adviser, auditors, solicitors and other advisers as and when required. These advisers may provide formal
training to the Board from time to time. The directors are also able, at the Company’s expense to obtain advice from
external advisers if required.
All Directors retire by rotation at regular intervals in accordance with the company’s Articles of Association.
Appointment, removal and re-election of Directors
The Board makes decisions regarding the appointment and removal of Directors, and there is a formal, rigorous and
transparent procedure for appointments. The company’s Articles of Association require that one-third of the Directors
must stand for re-election by shareholders annually in rotation; that all Directors must stand for re-election at least
once every three years; and that any new Directors appointed during the year must stand for election at the AGM
immediately following their appointment.
Independent advice
All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at the
company’s expense. In addition, the Directors have direct access to the advice and services of the Finance Director.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous
improvement
Will Wyatt assesses the individual contributions of each of the members of the team to ensure that:
•
Their contribution is relevant and effective
•
That they are committed
•
Where relevant, they have maintained their independence
Succession planning is an ongoing process that identifies necessary competencies, and then works to assess what
would be required to ensure a continuity of leadership for all critical positions.
REAL ESTATE INVESTORS PLC
CORPORATE GOVERNANCE REPORT
For the year ended 31 December 2024
23
Commercial in confidence
Principle 8: Promote a culture that is based on ethical values and behaviours
The Board aims to lead by example and to do what is best in the interests of the company, its stakeholders and
employees and it is the Board’s responsibility to ensure that good standards of corporate governance are embraced
within the group. The Board sets clear standards concerning the group’s culture, values and behaviours. The
management team have regular meetings and updates with the executive directors, who firmly believe that
encouraging the right way of thinking and behaving reinforces our corporate governance culture.
The Board has overall responsibility for establishing the Company’s purpose and strategy and ensuring that these and
the Company’s culture are aligned. The Executive drives the embedding of the desired culture throughput the
company and ensures that expected values and beliefs are sufficiently understood. The Board remains focussed on
enabling an inclusive and enabling culture, driven by the need for the Directors and employees to work together. This
is achieved in many ways, from team meetings, personal assessments and reviews, discussions on Group strategy and
input to the strategic plan, and adherence to Group policies and compliance with corporate governance.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-
making by the Board
Board programme
The Board meets at least four times each year in accordance with its scheduled meeting calendar. The Board sets
direction for the company through a formal schedule of matters reserved for its decision. Prior to the start of each
financial year, a schedule of dates for that year’s Board meetings is compiled to align as far as reasonably practicable
with the company’s financial calendar.
The Board and its Committees receive appropriate and timely information prior to each meeting; a formal agenda is
produced for each meeting, and Board and Committee papers are distributed several days before meetings take place.
Any Director may challenge company proposals and decisions are taken democratically after discussion. Any Director
who feels that any concern remains unresolved after discussion may ask for that concern to be noted in the minutes
of the meeting, which are then circulated to all Directors. Any specific actions arising from such meetings are agreed
by the Board or relevant Committee and then followed up by the company’s management.
Roles of the Board, Chairman and Chief Executive Officer
The Board is responsible for the long-term success of the company. There is a formal schedule of matters reserved to
the Board. It is responsible for overall group strategy; approval of major investments; approval of the annual and
interim results; annual budgets; dividend policy; and Board structure. It monitors the exposure to key business risks
and reviews the strategic direction of the group. There is a clear division of responsibility at the head of the company.
The Chairman is responsible for running the business of the Board and for ensuring appropriate strategic focus and
direction. The Chief Executive Officer is responsible for proposing the strategic focus to the Board, implementing it
once it has been approved and overseeing the management of the company through the Executive Team.
All Directors receive regular and timely information on the group’s operational and financial performance. Relevant
information is circulated to the Directors in advance of meetings. The business reports quarterly on its headline
performance against its agreed budget, and the Board reviews the quarterly update on performance and any
significant variances are reviewed at each meeting. Senior executives below Board level attend Board meetings where
appropriate to present business updates.
Executive Team
The Executive Team consists of Paul Bassi and Marcus Daly with input from the management team. They are
responsible for formulation of the proposed strategic focus for submission to the Board, the day-to-day management
of the group’s businesses and its overall trading, operational and financial performance in fulfilment of that strategy,
as well as plans and budgets approved by the Board of Directors. It also manages and oversees key risks, management
development and corporate responsibility programmes. The Chief Executive Officer reports to the Board on issues,
progress and recommendations for change. The controls applied by the Executive Team to financial and non-financial
matters are set out earlier in this document, and the effectiveness of these controls is regularly reported to the Audit
Committee and the Board.
Board committees
The Board is supported by the Audit and Remuneration committees. Each committee has access to such resources,
information and advice as it deems necessary, at the cost of the company, to enable the committee to discharge its
duties. The terms of reference of each committee are available at www.reiplc.com.
REAL ESTATE INVESTORS PLC
CORPORATE GOVERNANCE REPORT
For the year ended 31 December 2024
24
Commercial in confidence
Audit Committee
Its primary focus is on corporate reporting (from an external perspective) and on monitoring the company’s internal
control and risk management systems (from an internal perspective).
Remuneration Committee
Its primary function is to determine, on behalf of the Board, the remuneration packages of the Executive Directors.
Principle 10: Communicate how the company is governed and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
The company communicates with shareholders through the Annual Report and Accounts, full-year and half-year
announcements, the Annual General Meeting (AGM) and one-to-one meetings with large existing or potential new
shareholders. A range of corporate information (including all company announcements and presentations) is also
available to shareholders, investors and the public on the company’s corporate website, www.reiplc.com.
The Board receives regular updates on the views of shareholders through briefings and reports from the Chief
Executive Officer, Finance Director and the company’s brokers. The company communicates with institutional
investors frequently through briefings with management. In addition, analysts’ notes and brokers’ briefings are
reviewed to achieve a wide understanding of investors’ views.
Marcus Daly
Finance Director
24 March 2025
REAL ESTATE INVESTORS PLC
REMUNERATION REPORT
For the year ended 31 December 2024
25
Commercial in confidence
Commercial in confidence
Remuneration Committee
As a company trading on AIM, the Company is not obliged to comply with the provisions of the Directors’ Remuneration
Reports Regulations. However, as part of its commitment to good corporate governance practice the Company provides
the following information.
The Remuneration Committee is made up of the three non-executive directors and the chief executive, by invitation.
The terms of reference of the committee are to review and make recommendations to the Board regarding the terms
and conditions of employment of the executive directors.
Service agreements
No director has a service agreement with a notice period that exceeds 12 months.
Policy on directors’ remuneration
The executive directors’ remuneration packages are designed to attract, motivate and retain directors of the high
calibre needed to help the Group successfully compete in its market place. The Group’s policies are to pay executive
directors a salary at market levels for comparable jobs in the sector whilst recognising the relative size of the Group.
The performance management of the executive directors and the determination of their annual remuneration package
is undertaken by the Remuneration Committee. No director plays a part in any decision about his own remuneration.
Annual bonuses will be paid at the discretion of the Remuneration Committee as an incentive and to reward
performance during the financial year pursuant to specific performance criteria. In exercising its discretion, the
committee will take into account (among other things) NAV growth, dividend growth, rental growth, management
performance and overall financial performance. The Remuneration Committee believes that incentive compensation
should recognise the growth and profitability of the business.
Directors’ remuneration (forming part of the financial statements and subject to audit)
The remuneration of directors for the year ended 31 December 2024 was as follows:
Salary
Salary in
lieu of
benefits
Bonus
Share -
based
payment
gain
Total
Employers'
national
insurance
contributions
2024
Total
2023
Total
Share
options
2024
Share
options
2023
£000
£000
£000
£000
£000
£000
£000
£000
Number
Number
P P S Bassi
293
74
-
90
457
49
506
841
371,308
899,836
M H P Daly
183
46
-
56
285
30
315
525
232,068
562,938
W Wyatt
29
-
-
-
29
3
32
49
-
-
P London
26
-
-
-
26
2
28
42
-
-
I Stringer
26
-
-
-
26
2
28
42
-
-
557
120
-
146
823
86
909
1,499
603,376
1,462,774
During the year P P S Bassi and M H P Daly exercised options on 264,264 (2023: 628,571) shares and 165,165 (2023:
392,857) shares respectively.
Policy on non-executive directors’ remuneration
The remuneration of the non-executive directors is determined by the Board and based upon independent surveys
of fees paid to non-executive directors of similar companies. The non-executive directors do not receive any benefits
apart from their salary and fees which are paid directly to the individual involved.
REAL ESTATE INVESTORS PLC
REMUNERATION REPORT
For the year ended 31 December 2024
26
Commercial in confidence
Commercial in confidence
REVISED REMUNERATION POLICY (EFFECTIVE 1 JANUARY 2024)
1.
Basic salary: Executive salaries were reduced by one third. New salaries – Paul Bassi, CEO reduced to £367k
(previously £550k) and Marcus Daly, CFO reduced to £229k (previously £344k) amounting to a cost saving of
approximately £330k (including National Insurance contributions). In addition, Non-Executive Directors’ fees
were reduced by one third
2.
Annual discretionary bonus: The Executives’ bonus was reduced from up to a maximum of 100% of basic
salary to a maximum of 50% of the new reduced basic salary
3.
Executives’ service contracts: If contracts are to be paid up following a corporate transaction or equivalent,
then compensation under the Executives’ service contracts reverts to old salary levels
4.
LTIP Awards: The Executives’ entitlement to awards under the Company’s existing LTIP scheme have been
amended as follows:
•
Unvested awards granted re: FY2020 – to be reduced by one third
•
Unvested awards granted re: FY2021 – to be reduced by two thirds
•
Unvested awards granted re: FY2022 – to be cancelled
•
No further awards under the LTIP going forward
•
The approximate value in the reduction in the awards equates to approximately 4 million Ordinary
Shares, which at a share price of 30p equates to £1.2 million
5.
Shorter Term Incentive Plan (“STIP”): To compensate the Executives (albeit not to the same extent) for the
retrospective reduction in LTIPs in relation to FY2020 and FY2021, the cancelling of awards relating to FY2022
and no further issuing of awards under the LTIP in relation to FY2023 or going forward, the Executives will be
entitled to participate in the STIP.
SHORTER TERM INCENTIVE PLAN
To support the Disposal Strategy and the return of capital to shareholders, the Company implemented a new Shorter
Term Incentive Plan (“STIP”) in 2024. The STIP replaced the existing Long Term Incentive Plan (“LTIP”), and will
help to retain Paul Bassi, Chief Executive Officer and Marcus Daly, Finance Director (the “Executives”), and the
wider management team and incentivise them to achieve an orderly and timely disposal of the Company’s assets to
maximise the capital return to shareholders.
The STIP has been implemented to compensate the Executives for the retrospective reduction in awards and
cancellation of future awards under the LTIP.
1. Under the STIP, the participants receive a proportion of a notional cash pool (the “Pool”) which was created
from the excess (“Gain”) of Total Shareholder Return (“TSR”) over the market value of the Company as at 31
December 2023.
2. TSR is cash per Ordinary Share returned to shareholders, excluding ordinary dividends.
3. To ensure the timely disposal of assets, the Gain attributable to the Pool will be reduced over time.
4. If the Company’s sell down strategy had been completed in 2024 then the Pool would have been calculated as
10% of the Gain. If the strategy is completed in 2025 the Pool reduces to 7.5% and if by 2026, the Pool reduces
to 5%.
5. Of the Pool, a minimum figure of £410k is ringfenced for the management team (excluding the Executives)
equivalent to a bonus of 100% salary.
6. The STIP will pay out as soon as reasonably practicable after the earliest of (1) the sale of all the assets, (2) a
takeover of the Company or (3) when the Remuneration Committee determine that a sufficient proportion of
the assets have been sold and that the STIP has achieved its original purpose.
In determining the revised remuneration policy and STIP, the Company’s Remuneration Committee has consulted with
REI’s largest institutional shareholders.
Long Term Incentive Plan
Based on the results 50% of the reduced options awarded in 2021 are likely to vest.
Approved by the Board of Directors
P London
Chairman, Remuneration Committee
Date:
24 March 2025
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
REAL ESTATE INVESTORS PLC
27
Commercial in confidence
Commercial in confidence
Independent auditor’s report to the members of Real Estate Investors plc
Opinion
We have audited the financial statements of Real Estate Investors plc (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 31 December 2024 which comprise the Consolidated Statement of Comprehensive Income,
the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes
in Equity, the Consolidated and Company Statement of Cash Flows and the related notes to the financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the group financial statements is
applicable law and UK adopted international accounting standards.
In our opinion the financial statements:
•
give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December
2024 and of the group’s loss for the year then ended;
•
have been properly prepared in accordance with UK adopted international accounting standards;
•
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the group and parent company in accordance with
the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Our approach to the audit
We adopted a risk-based audit approach. We gained a detailed understanding of the group’s business, the environment
it operates in and the risks it faces.
The key elements of our audit approach were as follows:
In order to assess the risks identified, the engagement team have Identified financial statements level risks and
considered the risk of material misstatement at the assertion level of the consolidated financial statements to
determine the planned audit responses based on a measure of materiality, calculated by considering component
performance materiality.
The group audit was scoped by obtaining an understanding of the group and its environment, including the group’s
system of internal control, and assessing the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of material misstatement.
In order to address the audit risks described in the Key audit matters section which were identified during our planning
process, we performed a full-scope audit of the financial statements of the parent company, Real Estate Investors plc.
The operations that were subject to full-scope audit procedures made up 97% of consolidated revenues and 95% of
consolidated net assets. Tailored audit procedures were performed over specific balances within remaining
components of the group, focusing our audit approach on the applicable risks within each entity and the consideration
of the risk of material misstatement of these risks for the group consolidated financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current year and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit
strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
REAL ESTATE INVESTORS PLC
28
Commercial in confidence
Commercial in confidence
Risk of fraud in revenue recognition
Matter
Under ISA (UK) 240 there is a presumed risk that revenue is misstated due to fraud. Revenue is represented by rental
income recognised at a point in time and from tenancy contracts recognised over time. There is relatively little
judgement involved in determining the timing and value of the amount to be recognised. We therefore assess the
significant risk to be specifically with respect to manual journals posted to revenue in respect of lease incentives, rent
concessions and deferred income.
Response
Our procedures in response to the risk included:
•
We assessed accounting policies for consistency and appropriateness with the applicable financial
reporting framework and reviewed for the consistency of application of the accounting policies;
•
We obtained an understanding of the processes through which the business initiates, records, processes
and reporting revenue transactions;
•
We performed walkthroughs of the processes as set out by management, to ensure controls appropriate
to the size and nature of operations were designed and implemented correctly throughout the transaction
cycle;
•
We obtained a complete listing of journals posted to revenue nominal codes and reviewed the listing for
any unexpected entries. These were then tested to supporting evidence;
•
We held discussions with management over a sample of properties to understand if any new lease
incentives or concessions were given to tenants during the year and considered the impact this has had on
manual adjustments posted to revenue;
•
We performed testing over a sample of lease incentives, rent free periods, or other incentives to ensure
that these have been correctly accounted for;
•
We tested a sample of deferred income to ensure that the expected deferred income amount is in line
with expectations per the contract;
•
We performed a proof in total on a sample of investment properties to ensure revenue is being recognised
in line with signed contracts. Further to this testing, we performed a recalculation of any deferred revenue
balances to ensure correct cut off is being applied.
Our procedures did not identify any material misstatements in the revenue recognised during the year.
Valuation of investment properties
Matter
We identified the valuation of investment properties as a key audit matter due to the significant levels of judgement
applied in the valuation. In determining a property’s valuation, the valuers consider specific property information such
as the current tenancy agreement and rental income. Assumptions are then applied for yields and estimated market
rents, which are influenced by prevailing market yields and comparable market transactions to arrive at the final
valuation. In view of the judgements involved, we consider this to be an area giving rise to a significant risk of material
misstatement in the financial statements.
Response
Our procedures in response to the risk included:
•
We obtained an understanding of the relevant controls in relation to the valuation process;
•
We obtained year end valuations for each property from management’s valuation expert, ensuring that the
valuation approach for each valuation is appropriate and in line with Royal Institute of Chartered Surveyors
(‘RICS’) – Professional Standards as required by IAS 40, Investment Property, and has been recorded
appropriately in the general ledger;
•
We obtained the source information provided by management to the valuation expert and tested a sample
of this to source data such as lease agreements;
•
We discussed the valuation process with management’s valuation expert to gain a further understanding of
the key assumptions ensuring that the valuations have been prepared in accordance with IAS 40 and fair
value is measured in accordance with the criteria of IFRS 13, Fair Value Measurement;
•
We assessed the valuers’ qualifications and expertise and read their terms of engagement with the Group to
determine whether there were any matters that might have affected their objectivity or may have imposed
scope limitations upon their work in accordance with auditing standards;
•
We analysed year-on-year valuation movements and discussed significant fluctuations with both management
and the management’s valuation expert;;
•
We benchmarked the assumptions used in the valuations to comparable market data; and
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
REAL ESTATE INVESTORS PLC
29
Commercial in confidence
Commercial in confidence
•
We agreed the information provided by management to the valuer and testing the integrity of this
information.
Based on our audit work performed, the judgements and assumptions used in the valuation are considered to be
reasonable and in line with market data.
Our application of materiality
We apply the concept of materiality in planning and performing our audit, in determining the nature, timing and extent
of our audit procedures, in evaluating the effect of any identified misstatements, and in forming our audit opinion.
The materiality for the group financial statements as a whole was set at £1,339,000. This has been determined with
reference to the benchmark of the group’s total assets which we consider to be an appropriate measure for a group
of companies such as these. Materiality represents 1% of group’s total assets. Performance materiality has been set at
80% of group materiality.
We have determined a lower level of materiality for testing revenue and expenditure which has been determined with
reference to the benchmark of the group’s total revenue which equates to £107,000. Materiality has been set at 1% of
revenue and performance materiality has been set at 80% of this figure, which equates to £85,000.
The materiality for the parent company financial statements as a whole was set at £1,071,000. This has been
determined with reference to the benchmark of the parent company’s total assets which we consider to be an
appropriate measure for a parent company such as this. Materiality has been capped to 80% of group materiality.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the entity’s ability to continue to adopt the going concern basis of
accounting included:
•
Reviewing management’s cash flow forecasts for a period of at least 12 months from the date of approval of
these financial statements;
•
Challenging management on key assumptions included in their forecast scenarios;
•
Considering the potential impact of various scenarios on the forecasts;
•
Obtaining the latest loan facilities and renewal documentation;
•
Reviewing results post year end to the date of approval of these financial statements and assessing them
against original budgets;
•
Reviewing management’s forecasting accuracy by comparing the prior year budgets to actual results; and
•
Reviewing management’s disclosures in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group's ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
REAL ESTATE INVESTORS PLC
30
Commercial in confidence
Commercial in confidence
Other information
The other information comprises the information included in the annual report, other than the financial statements
and our auditor’s report thereon. The directors are responsible for the other information included in the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to
read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine whether there
is a material misstatement in the financial statements or a material misstatement of the other information. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
•
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report or the directors’
report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us
to report to you if, in our opinion:
•
adequate accounting records have not been kept, or returns adequate for our audit have not been received
from branches not visited by us; or
•
the parent company financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 14, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do
so.
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are
instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below:
Our assessment focused on key laws and regulations the company has to comply with and areas of the financial
statements we assessed as being more susceptible to misstatement. These key laws and regulations included but were
not limited to compliance with the Companies Act 2006, UK adopted international accounting standards, United
Kingdom Generally Accepted Accounting Practice (UK GAAP) and relevant tax legislation.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
REAL ESTATE INVESTORS PLC
31
Commercial in confidence
Commercial in confidence
We are not responsible for preventing irregularities. Our approach to detecting irregularities included, but was not
limited to, the following:
•
obtaining an understanding of the legal and regulatory framework applicable to the entity and how the
entity is complying with that framework;
•
obtaining an understanding of the entity’s policies and procedures and how the entity has complied with
these, through discussions and sample testing of controls;
•
obtaining an understanding of the entity’s risk assessment process, including the risk of fraud;
•
designing our audit procedures to respond to our risk assessment; and
•
performing audit testing over the risk of management override of controls, including testing of journal
entries and other adjustments for appropriateness, evaluating the business rationale of significant
transactions outside the normal course of business and reviewing accounting estimates for bias, particularly
over the valuation of non-current assets.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those
leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases
the more that compliance with law or regulation is removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of non-compliance. The risk is also greater regarding
irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion,
omission or misrepresentation. We are not responsible for preventing non-compliance and cannot be expected to
detect non-compliance with all laws and regulations.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
Use of our report
This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the parent company and the parent
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Melanie Hopwell (Senior Statutory Auditor)
For and on behalf of Cooper Parry Group Limited
Statutory Auditor
Sky View
Argosy Road
East Midlands Airport
Castle Donington
Derby
DE74 2SA
24 March 2025
REAL ESTATE INVESTORS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2024
32
Commercial in confidence
Commercial in confidence
Note
2024
2023
£000
£000
Revenue
2
10,772
11,513
Cost of sales
(2,220)
(2,232)
Gross profit
8,552
9,281
Administrative expenses
(2,312)
(2,616)
Gain/(deficit) on sale of investment properties
631
(182)
Deficit in fair value of investment properties
9
(6,334)
(13,197)
Profit/(loss) from operations
537
(6,714)
Finance income
5
163
177
Finance costs
5
(3,339)
(2,371)
Gain/(deficit) on financial liabilities at fair value through profit and loss
16
282
(499)
Loss before taxation
3
(2,357)
(9,407)
Income tax charge
6
-
-
Net loss after taxation and total comprehensive expense
(2,357)
(9,407)
Total and continuing earnings per ordinary share
Basic
7
(1.35)p
(5.44)p
Diluted
7
(1.35)p
(5.44)p
The results of the Group for the current and prior year related entirely to continuing operations.
The accompanying notes form an integral part of these financial statements.
REAL ESTATE INVESTORS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2024
33
Commercial in confidence
Commercial in confidence
Share
capital
Share
premium
account
Capital
redemption
reserve
Share-based
payment
reserve
Retained
Earnings
Total
£000
£000
£000
£000
£000
£000
At 1 January 2023
17,266
51,829
1,463
759
37,648
108,965
Share issue
119
215
-
(334)
-
-
Dividends
-
-
-
-
(4,000)
(4,000)
Transactions with owners
119
215
-
(334)
(4,000)
(4,000)
Loss for the year and total
comprehensive income
-
-
-
-
(9,407)
(9,407)
At 31 December 2023
17,385
52,044
1,463
425
24,241
95,558
Share issue
54
129
-
(183)
-
-
Dividends
-
-
-
-
(3,702)
(3,702)
Transactions with owners
54
129
-
(183)
(3,702)
(3,702)
Loss for the year and total
comprehensive expense
-
-
-
-
(2,357)
(2,357)
At 31 December 2024
17,439
52,173
1,463
242
18,182
89,499
The accompanying notes form an integral part of these financial statements.
REAL ESTATE INVESTORS PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2024
34
Commercial in confidence
Share
capital
Share
premium
account
Capital
redemption
reserve
Share –
based
payment
reserve
Retained
Earnings
Total
£000
£000
£000
£000
£000
£000
At 1 January 2023
17,266
51,829
1,463
759
33,788
105,105
Share issue
119
215
-
(334)
-
-
Dividends
-
-
-
-
(4,000)
(4,000)
Transactions with owners
119
215
-
(334)
(4,000)
(4,000)
Loss for the year and total
comprehensive income
-
-
-
-
(9,702)
(9,702)
At 31 December 2023
17,385
52,044
1,463
425
20,086
91,403
Share issue
54
129
-
(183)
-
-
Dividends
-
-
-
-
(3,702)
(3,702)
Transactions with owners
54
129
-
(183)
(3,702)
(3,702)
Loss for the year and total
comprehensive income
-
-
-
-
(2,789)
(2,789)
At 31 December 2024
17,439
52,173
1,463
242
13,595
84,912
The accompanying notes form an integral part of these financial statements.
REAL ESTATE INVESTORS PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2024
35
Commercial in confidence
Note
2024
2023
£000
£000
Assets
Non-current
Intangible assets
8
-
-
Investment properties
9
122,200
143,105
Property, plant and equipment
10
1
2
122,201
143,107
Current
Inventories
12
2,404
2,395
Trade and other receivables
13
2,444
2,550
Cash and cash equivalents
6,876
7,981
11,724
12,926
Total assets
133,925
156,033
Liabilities
Current
Bank loans
15
(39,196)
(54,407)
Trade and other payables
14
(5,081)
(5,637)
(44,277)
(60,044)
Non-current
Derivative financial liabilities
16
(149)
(431)
(149)
(431)
Total liabilities
(44,426)
(60,475)
Net assets
89,499
95,558
The accompanying notes form an integral part of these financial statements.
REAL ESTATE INVESTORS PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
At 31 December 2024
36
Commercial in confidence
Note
2024
2023
£000
£000
Equity
Share capital
18
17,439
17,385
Share premium account
52,173
52,044
Capital redemption reserve
1,463
1,463
Share-based payment reserve
242
425
Retained earnings
18,182
24,241
Total Equity
89,499
95,558
Net assets per share
51.3p
55.0p
These financial statements were approved and authorised for issue by the Board of Directors on 24 March 2025.
Signed on behalf of the Board of Directors
W Wyatt – Chairman
M H P Daly – Finance Director
Company No 05045715
The accompanying notes form an integral part of these financial statements.
REAL ESTATE INVESTORS PLC
COMPANY STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2024
37
Commercial in confidence
Note
2024
2023
Assets
£000
£000
Non-current
Investment properties
9
122,200
140,255
Property, plant and equipment
10
1
2
Investments
11
-
-
122,201
140,257
Current assets
Inventories
12
2,404
2,395
Trade and other receivables
13
2,398
2,395
Cash and cash equivalents
6,874
7,980
11,676
12,770
Total assets
133,877
153,027
Liabilities
Current
Bank loans
15
(39,196)
(54,407)
Trade and other payables
14
(9,620)
(6,786)
Net current liabilities
(48,816)
(61,193)
Non-current
Derivative financial liabilities
16
(149)
(431)
(149)
(431)
Total liabilities
(48,965)
(61,624)
Net assets
84,912
91,403
Equity
Ordinary share capital
18
17,439
17,385
Share premium account
52,173
52,044
Capital redemption reserve
1,463
1,463
Share-based payment reserve
242
425
Retained earnings
13,595
20,086
Total Equity
84,912
91,403
The company loss for the year was £2,789,000 (2023: £9,702,000).
These financial statements were approved by the Board of Directors on 24 March 2025.
Signed on behalf of the Board of Directors
W Wyatt – Chairman
M H P Daly – Finance Director
Company No 05045715
The accompanying notes form an integral part of these financial statements.
REAL ESTATE INVESTORS PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
For the year ended 31 December 2024
38
Commercial in confidence
2024
2023
£000
£000
Cash flows from operating activities
Loss after taxation
(2,357)
(9,407)
Adjustments for:
Depreciation
1
1
Net deficit on valuation of investment property
6,334
13,197
(Gain)/deficit on sale of investment property
(631)
182
Finance income
(163)
(177)
Finance costs
3,339
2,371
(Gain)/loss on financial liabilities at fair value through profit and loss
(282)
499
Increase in inventories
(9)
(6)
Decrease in trade and other receivables
106
560
Decrease in trade and other payables
(359)
(624)
5,979
6,596
Cash flows from investing activities
Expenditure on investment properties
(3,109)
(733)
Proceeds from sale of investment properties
18,311
17,279
Interest received
163
177
15,365
16,723
Cash flows from financing activities
Interest paid
(3,339)
(2,371)
Equity dividends paid
(3,900)
(3,721)
Payment of bank loans
(15,210)
(17,064)
(22,449)
(23,156)
Net (decrease)/increase in cash and cash equivalents
(1,105)
163
Cash and cash equivalents at beginning of year
7,981
7,818
Cash and cash equivalents at end of year
6,876
7,981
NOTES:
Cash and cash equivalents consist of cash in hand and balances with banks only.
The accompanying notes form an integral part of these financial statements.
REAL ESTATE INVESTORS PLC
COMPANY STATEMENT OF CASHFLOWS
For the year ended 31 December 2024
39
2024
2023
£000
£000
Cash flows from operating activities
Loss after taxation
(2,789)
(9,702)
Adjustments for:
Depreciation
1
1
Impairment of investment in subsidiaries
-
241
Net deficit on valuation of investment property
6,334
13,147
(Gain)/deficit on sale of investment property
(325)
182
Finance income
(163)
(177)
Finance costs
3,339
2,371
(Gain)/deficit on financial liabilities at fair value through profit and loss
(282)
499
Increase in inventories
(9)
(6)
(Increase)/decrease in trade and other receivables
(3)
569
Increase/(decrease) in trade and other payables
3,032
(4,108)
9,135
3,017
Cash flows from investing activities
Expenditure on investment properties
(3,109)
(733)
Proceeds from sale of investment properties
15,154
17,279
Interest received
163
177
12,208
16,723
Cash flows from financing activities
Interest paid
(3,339)
(2,371)
Equity dividends paid
(3,900)
(3,721)
Payment of bank loans
(15,210)
(13,484)
(22,449)
(19,576)
Net (decrease)/increase in cash and cash equivalents
(1,106)
164
Cash and cash equivalents at beginning of year
7,980
7,816
Cash and cash equivalents at end of year
6,874
7,980
NOTES
Cash and cash equivalents consist of cash in hand and balances with banks only.
The accompanying notes form an integral part of these financial statements.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
40
1.
Accounting policies
Basis of preparation
The consolidated financial statements of the Group and the financial statements of the Company comprise the results
of Real Estate Investors PLC (the company) and its subsidiary undertakings. The company is a public limited company,
limited by shares, incorporated in England and Wales. The financial statements are for the year ended 31 December
2024 (2023: year ended 31 December 2023) and have been prepared in the Group’s functional currency, GBP £ and
rounded to the nearest thousand.
The financial statements have been prepared under the historical cost convention, except for the revaluation of
properties and financial instruments held at fair value through profit and loss, and in accordance with UK adopted
international accounting standards in conformity with the requirements of the Companies Act 2006.
The principal accounting policies of the Group are set out below and are consistent with those applied in the prior
year financial statements, except where new standards have been issued and applied retrospectively. Further details
of these standards and their application by the Group are set out on page 46.
Going concern
The Group has prepared and reviewed forecasts and made appropriate enquiries which indicate that the Group has
adequate resources to continue in operational existence for the foreseeable future, being a period of 12 months from
the date of approval of these financial statements to 31 March 2026. These enquiries considered the following:
• the significant cash balances the Group holds and the low levels of historic and projected operating cash outflows
• any property purchases will only be completed if cash resources or loans are available to complete those purchases
• the Group’s bankers have indicated their continuing support for the Group.
• In March 2025 the Group extended the £12.6 million facility with Lloyds Banking Group Plc for 12 months to 29
May 2026.
• In March 2025 the Group extended the facility of £24 million with National Westminster Bank PLC by 12 months to
1 June 2026.
• With the exception of the hedge on £10 million of the Lloyds Bank facility, the new facilities are all on variable
rates, following the multiple increases in interest rates by the Bank of England, the new average rate of bank interest
is 6.5%. It is the Group’s intention to prioritise the repayment of debt from property sales proceeds.
• The directors have at the time of approving these financial statements, a reasonable expectation that the Group
has adequate resources to continue in operational existence for the foreseeable future being a period of not less
than 12 months from the date of approval of these financial statements.
Thus, for these reasons, the Group continues to adopt the going concern basis in preparing the consolidated financial
statements.
Business combinations
Subsidiaries are all entities over which the Group has control. The Group obtains and exercises control through voting
rights. The consolidated financial statements of the Group incorporate the financial statements of the parent
Company as well as those entities controlled by the Group by full consolidation.
Acquired subsidiaries are subject to application of the acquisition method. The consideration transferred by the Group
to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of the assets transferred,
liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability
arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.
The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of
whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets
acquired and liabilities assumed are generally measured at their acquisition-date fair values.
Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum
of the fair value of consideration transferred, the recognised amount of any non-controlling interest in the acquiree
and the acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values
of identifiable net assets. If the fair values of the identifiable net assets exceed the sum calculated above, the excess
amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
41
1.
Accounting policies (continued)
Intra-group balances and transactions, and any unrealised gains or losses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
No statement of comprehensive income is presented for the Company as permitted by Section 408 of the Companies
Act 2006. The Company's loss for the financial year was £2,789,000 (2023: loss £9,702,000).
Investments
Investments in subsidiary undertakings are recorded at cost less provision for impairment.
Income recognition
Revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and the revenue
can be reliably measured. Revenue is measured at the fair value of the consideration receivable, excluding discounts,
rebates, VAT and other sales taxes or duties. The following criteria must be met before income is recognised:
Rental income
As a lessor the Group classifies its leases as operating leases. A lease is classified as a finance lease if it transfers
substantially all the risks and rewards incidental to ownership of the underlying asset, and classified as an operating
lease if it does not.
Rental income arising from operating leases and/or profit share arrangements on properties owned by the Group is
accounted for on a straight-line basis over the period commencing on the later of the start of the lease or acquisition
of the property by the Group, and ending on the end of the lease, unless it is reasonably certain that the break option
will be exercised. Rent reviews are recognised in the period to which they relate. Any incentive for lessees to enter
into a lease agreement and any costs associated with entering into the lease are spread over the same period.
Sale of properties
Income from the sale of properties held as inventory is recognised when the significant risks and rewards of ownership
of the properties have passed to the buyer, usually when legally binding contracts which are irrevocable and
unconditional are completed, which is when legal title passes to the purchaser, on completion.
Investment properties
Investment properties are properties held to earn rentals and/or for capital appreciation.
Investment properties are initially recognised at cost including direct transaction costs.
Investment properties are subsequently valued externally or by the directors on an open market basis at the balance
sheet date and recorded at valuation. Any gain or deficit arising on revaluing investment properties is recognised in
profit or loss in the period in which they arise. The valuations exclude prepaid or accrued operating lease income,
because it is recognised as a separate liability or asset.
Dilapidation receipts are held in the balance sheet and offset against subsequent associated expenditure. Any ultimate
gains or shortfalls are recognised in profit or loss, offset against any directly corresponding movement in fair value of
the investment property to which they relate.
Gain or deficit on sale of investment properties is recognised when legally binding contracts which are irrevocable and
unconditional are completed and when legal title passes to the purchaser on completion.
Deferred income
Deferred income represents rent invoiced related to a period after the Group year end and is recognised under the
terms of the lease and in accordance with IFRS 16.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
42
1.
Accounting policies (continued)
Leasehold improvements and office equipment
Leasehold improvements and office equipment are carried at acquisition cost less subsequent depreciation and
impairment losses. Depreciation is charged on the cost of these assets less their residual value on a straight-line basis
over the estimated useful economic life of each asset, by equal annual instalments over the following periods:
Leasehold improvements
-
length of lease
Office equipment
-
five years
Residual values and useful lives are reassessed annually.
Inventories
Inventories are held at the lower of cost and net realisable value. Cost includes all fees relating to the purchase of the
property and improvement expenses. Net realisable value is based on estimated selling price less future costs expected
to be incurred to sale. Any provisions to impair inventories below cost are reversed in future periods if market
conditions subsequently support a higher fair value but only up to a maximum of the original cost.
Operating leases
Group company is the lessor
Properties leased out to tenants under operating leases are included in investment properties in the statement of
financial position when all the risks and rewards of ownership of the property are retained by the Group.
Taxation
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to
the current or prior reporting period, that are unpaid at the year end date. They are calculated according to the tax
rates and tax laws enacted and substantively enacted at the year end date, based on the taxable profit for the year.
The Group elected for Real Estate Investment Trust (REIT) status with effect from 1 January 2015. As a result, providing
certain conditions are met, the Group’s profits from property investment are exempt from United Kingdom corporation
tax. Therefore, for 2024 there is no income tax payable on the Group’s property investment transactions and no
provision for deferred tax arising on the revaluation of properties or on unused trading losses, substantially all of which
relate to property investment.
Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison
of the carrying amounts of relevant assets and liabilities in the consolidated financial statements with their respective
tax bases. However, in accordance with the rules set out in IAS 12, no deferred taxes are recognised on the initial
recognition of goodwill, or on initial recognition of an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit. This applies also to temporary differences associated with shares in
subsidiaries if reversal of these temporary differences can be controlled by the Group and it is probable that reversal
will not occur in the foreseeable future.
Deferred tax liabilities are provided for in full. Deferred tax assets are recognised to the extent that it is probable that
they will reverse. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected
to apply to their respective period of realisation, provided that they are enacted or substantively enacted at the
balance sheet date.
Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statement of
comprehensive income. Only changes in deferred tax assets or liabilities that relate to a change in the value of assets
or liabilities that is charged directly to other comprehensive income are charged or credited directly to other
comprehensive income.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
43
1.
Accounting policies (continued)
Financial assets
The Group’s financial assets include cash and cash equivalents and trade and other receivables.
All financial assets are initially recognised at fair value plus transaction costs, when the Group becomes party to the
contractual provisions of the instrument.
The Group’s financial assets are all classified as financial assets held at amortised cost. This classification is determined
by both the entity’s business model for managing the financial asset and the contractual cash flow characteristics of
the financial asset.
The Group’s financial assets were all classified as loans and receivables under IAS 39.
Financial assets held at amortised cost are measured subsequent to initial recognition at amortised cost using the
effective interest method, less provision for impairment.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance
costs or finance income, except for impairment of trade receivables which is presented within administrative expenses.
A financial asset is derecognised only where the contractual rights to the cash flows from the asset expire or the
financial asset is transferred and that transfer qualifies for derecognition.
A financial asset is transferred if the contractual rights to receive the cash flows of the asset have been transferred or
the Group retains the contractual rights to receive the cash flows of the asset but assumes a contractual obligation to
pay the cash flows to one or more recipients. A financial asset that is transferred qualifies for derecognition if the
Group transfers substantially all the risks and rewards of ownership of the asset.
Impairment of financial assets
IFRS 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the
‘expected credit loss (ECL) model’.
Instruments within the scope of the requirements include trade and other receivables as well as amounts due from
subsidiary undertakings.
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead, the Group
considers a broader range of information when assessing credit risk and measuring expected credit losses, including
past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the
future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have
low credit risk (‘Stage 1’) and;
• financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit
risk is not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are
recognised for the second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the
expected life of the financial instrument.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
44
1. Accounting policies (continued)
Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand.
Equity
• Share capital represents the nominal value of equity shares that have been issued.
• Share premium represents the excess over nominal value of the fair value of the consideration received for equity
shares, net of expenses of the share issue.
• The capital redemption reserve represents the nominal value of shares cancelled on the purchase of own shares in
order to maintain the capital base of the Group.
• Share based payment reserves represent the provision for expected share-based payment gain.
• Retained earnings include all current and prior period results as disclosed in the statement of comprehensive
income.
• Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been
approved in a general meeting prior to the reporting date.
Defined contribution pension scheme
Contributions to the Company’s defined contribution scheme are charged to the Statement of Comprehensive Income in
the year to which they relate.
Financial liabilities
The Group’s financial liabilities include bank loans and overdrafts, trade and other payables and liabilities at fair value
through profit and loss. Additionally, the parent company’s financial liabilities include amounts owed to subsidiary
undertakings.
Financial liabilities are recognised when the Group becomes a party to the contractual agreement of the instrument.
All interest related charges are recognised as an expense in “finance costs” in the statement of comprehensive income
using the effective interest method.
Bank overdrafts are raised for support of the short-term funding of the Group’s operations.
Bank loans are raised for support of the long-term funding of the Group’s operations. They are recognised initially at
fair value, net of direct issue costs and subsequently measured at amortised cost using the effective interest method,
with interest-related charges recognised as an expense in finance costs in the statement of comprehensive income.
Finance charges, including premiums payable on settlement or redemption and direct issue costs, are recognised in
profit or loss on an accruals basis using the effective interest method and are added to the carrying amount of the
instrument to the extent that they are not settled in the period in which they arise.
Trade and other payables are recognised initially at their fair value and subsequently measured at amortised cost less
settlement payments.
All derivative financial instruments are valued at fair value through profit and loss. No derivative financial instruments
have been designated as hedging instruments. All interest related charges are included within finance costs or finance
income. Changes in an instrument's fair value are disclosed separately in the statement of comprehensive income. Fair
value is determined by reference to active market transactions or using a valuation technique where no active market
exists.
A financial liability is derecognised only when the obligation is extinguished, that is when the obligation is discharged
or cancelled or expires.
A substantial modification of the terms of an existing financial liability or a part of it is accounted for as an
extinguishment of the original financial liability and the recognition of a new financial liability.
Classification as equity or financial liability
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements
entered into.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
45
1.
Accounting policies (continued)
A financial liability exists where there is a contractual obligation to deliver cash or another financial asset to another
entity or to exchange financial assets or financial liabilities under potentially unfavourable conditions. In addition,
contracts which result in the entity delivering a variable number of its own equity instruments are financial liabilities.
Shares containing such obligations are classed as financial liabilities.
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all
of its liabilities. Dividends and distributions relating to equity instruments are debited directly to equity.
Reserves
•
Share capital represents the nominal value of the issued share capital
•
Share premium represents any consideration received in excess of nominal value of the share issued
•
Capital redemption reserve represents the nominal value of the Company’s own shares that have been
repurchased and cancelled
•
Share based payments represent the provision for share based payments
•
Profit and loss represents the cumulative profit or loss position less dividend distributions
Share warrants and share options
All goods and services received in exchange for the grant of any share-based payment are measured at their fair values.
Where employees are rewarded using share-based payments, the fair values of employees’ services are determined
indirectly by reference to the fair value of the instrument granted to the employee. This fair value is appraised at the
grant date and excludes the impact of non-market vesting conditions (for example, profitability and sales growth
targets).
All equity-settled share-based payments are ultimately recognised as an expense in the statement of comprehensive
income with a corresponding credit to other reserves.
Upon exercise of share warrants or share options the proceeds received net of attributable transaction costs are
credited to share capital, and where appropriate share premium.
When the share warrants or share options have vested and then lapsed, the amount previously recognised in other
reserves is transferred to retained earnings.
Share based payments
The company has a Long-Term Incentive Plan for certain of its employees. Employee services received, and the
corresponding increase in equity, are measured by reference to the fair value of the equity instruments at the date of
grant, excluding the impact of any non-market vesting conditions. The fair value of share options is estimated on the
date of grant using a binomial valuation model, according to the characteristics of the option, and is based on certain
assumptions. Those assumptions include, among others, the dividend growth rate, expected volatility, and the
expected life of the options. Management then apply the fair value to the number of options expected to vest. The
resulting fair value is amortised through the statement of comprehensive income on a straight-line basis over the
vesting period with a corresponding credit to other reserves. The charge is reversed if it is likely that any non-market-
based criteria will not be met. If a category of share options is cancelled, this is accounted for as an acceleration of
vesting and any remaining fair value is recognised in full at the date of cancellation.
Segmental reporting
An operating segment is a distinguishable component of the Group that engages in business activities from which it
may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group’s chief operating
decision maker to make decisions about the allocation of resources and assessment of performance and about which
discrete financial information is available.
As the chief operating decision maker reviews financial information for and makes decisions about the Group’s
investment properties and properties held for trading as a portfolio, the directors have identified a single operating
segment, that of investment in and trading of commercial properties.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
46
1.
Accounting policies (continued)
New standards adopted for the year ended 31 December 2024
The Group has not adopted any new standards or interpretations in these financial statements.
Standards, amendments and Interpretations to existing Standards that are not yet effective and have not been
adopted early by the Group
At the date of authorisation of these financial statements, several new, but not yet effective, Standards, amendments
to existing Standards, and Interpretations have been published by the IASB. None of these Standards, amendments or
Interpretations have been adopted early by the Group.
Management anticipate that all relevant pronouncements will be adopted for the first period beginning on or after
the effective date of the pronouncement. New standards, amendments and interpretations not adopted in the current
year have not been disclosed as they are not expected to have a material impact on the Group’s financial statements.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next accounting year are as follows:
Investment property valuation
The Group uses the valuations performed by its independent valuers or the directors as the fair value of its investment
properties. The valuation is based upon assumptions including future rental income, anticipated maintenance costs,
the appropriate discount rate and post year end sales values. The valuer and directors also make reference to market
evidence of transaction prices for similar properties. The impact of changes in property yields used to ascertain the
valuation of investment properties are considered (see notes 15 and 16).
Critical judgements in applying the Group’s accounting policies
The Group makes judgements in applying the accounting policies. The critical judgements that have been made are as
follows:
Investment entity status
The directors believe that despite having REIT status, the Parent company is not an investment entity as defined under
IFRS 10. The directors have considered all facts and circumstances and have assessed that the Parent company is not
an investment company as defined under IFRS 10 based on the following circumstances:
•
the Parent company’s business purpose is not to invest solely for capital appreciation, investment income
(such as dividends, interest or rental income) or both. The parent Company has a separate substantial business
activity that involves the active management of its property portfolio, including lease negotiations,
refurbishments and development activities, and marketing of properties to provide benefits other than capital
appreciation and/or investment income
•
the Parent company’s investment plans do not include specified exit strategies for its investments; as such, it
intends to hold its investments to maturity (that is, the directors have no intention to sell these assets in the
near future and realise capital appreciation from substantially all of its equity investments and non-financial
asset investments)
•
although the investment properties are reported at fair value under IAS 40, the fair value is not the primary
measurement attribute used by the directors to evaluate the performance of its investments. Other
performance indicators are used to evaluate performance and make investment decisions.
The Group does not meet the definitions of an investment entity and as such it remains appropriate to consolidate all
of the subsidiaries.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
47
1. Accounting policies (continued)
Surrender premiums
The Group is required to judge whether amounts due under lease surrenders are sufficiently irrevocable that income
can be accrued. Judgement is also required in establishing whether income relates to an exit fee for terminating the
leased asset (recognised immediately), or whether it represents accelerated rental income (recognised over the
remaining lease term). Surrender premiums received during the year are shown in note 2.
REIT status
The Group and Company elected for Real Estate Investment Trust (REIT) status with effect from 1 January 2015. As a
result, providing certain conditions are met, the Group and Company's profit from property investment and gains are
exempt from UK corporation tax. In the Directors' opinion the Group and Company have met these conditions.
2. Segmental information
The segmental information is provided to the Chief Executive, who is the chief operating decision maker.
Investment in and trading of
properties
2024
2023
£000
£000
Segment revenues – Rental income
10,237
10,919
- Surrender premiums
535
594
10,772
11,513
Cost of sales – Direct costs
(2,220)
(2,232)
8,552
9,281
Administrative expenses
(2,312)
(2,616)
Gain/(deficit) on disposal of investment property
631
(182)
Deficit on valuation of investment properties
(6,334)
(13,197)
Segment operating profit/(loss)
537
(6,714)
Segment assets
133,925
156,033
Segment liabilities
(44,426)
(60,475)
The segmental information provided to the Chief Executive also includes the following:
2024
2023
£000
£000
Finance income
163
177
Finance costs
(3,339)
(2,371)
Depreciation
(1)
(1)
Revenue from external customers and non-current assets arises wholly in the United Kingdom. All revenue for the year
is attributable to the principal activities of the Group. Revenue from the largest customer represented 7% (2023: 4%)
of the total rental income revenue for the year.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
48
3. Loss before taxation
Loss before taxation is stated after:
2024
2023
£000
£000
Fees payable to the Company’s auditor for the audit of the Company’s annual
accounts
76
70
Fees payable to the Company’s auditor for other services
1
-
Depreciation of owned property and equipment
1
1
4. Directors and employees
Staff costs during the year (including directors) were as follows:
2024
2023
£000
£000
Wages and salaries
1,139
1,435
Social security costs
139
226
Shorter Term Incentive Plan expense
300
-
1,578
1,661
The highest paid director received £457,000 (2023: £726,000).
The average number of employees (including executive directors) of the Group and the Company during the period
was seven (2023: seven), all of whom were engaged in administration. The executive and non-executive directors are
also the key management personnel of the Group and the Company and details of their remuneration are included
within the directors' remuneration report on pages 25 and 26.
5. Finance income/finance costs
2024
2023
£000
£000
Finance income:
Interest receivable
163
177
Finance costs:
Interest payable on bank loans
(3,339)
(2,371)
6. Income tax charge
2024
2023
£000
£000
Loss for the year before tax
(2,357)
(9,407)
Tax rate
25%
23.5%
Expected tax charge
(589)
(2,210)
REIT exempt income and gains
589
2,210
Actual tax charge
-
-
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
49
7. Earnings per share
The calculation of earnings per share is based on the result for the year after tax and on the weighted average number
of shares in issue during the year.
Reconciliations of the earnings and the weighted average numbers of shares used in the calculations are set out below.
2024
2023
Earnings
Average
number of
shares
Earnings per
Share
Earnings
Average
number of
shares
Earnings
per share
£000
£000
Basic loss per share
(2,357) 174,181,683
(1.35)p
(9,407) 172,909,757
(5.44)p
Dilutive effect of share
options
-
-
-
-
-
-
Diluted loss per share
(2,357) 174,181,683
(1.35)p
(9,407) 172,909,757
(5.44)p
The European Public Real Estate Association indices below have been included in the financial statements to allow
more effective comparisons to be drawn between the Group and other businesses in the real estate sector.
EPRA EPS per share
2024
2023
Earnings
Shares
Earnings
per share
Earnings
Shares
Earnings
per share
£000
No
p
£000
No
P
Loss per share
(2,357)
174,181,683
(1.35)
(9,407)
172,909,757
(5.44)
Net deficit on valuation of
investment properties
6,334
13,197
(Gain)/deficit on disposal
of investment properties
(631)
182
STIP provision
300
-
(Gain)/loss in fair value of
derivatives
(282)
499
EPRA earnings per share
3,364
174,181,683
1.93
4,471
172,909,757
2.68
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
50
7. Earnings per share (continued)
NET ASSET VALUE PER SHARE
The Group has adopted the new EPRA NAV measures which came into effect for accounting periods starting 1
January 2020. EPRA issued new best practice recommendations (BPR) for financial guidelines on its definitions
of NAV measures. The new NAV measures as outlined in the BPR are EPRA net tangible assets (NTA), EPRA net
reinvestment value (NRV) and EPRA net disposal value (NDV).
The Group considered EPRA Net Tangible Assets (NTA) to be the most relevant NAV measure for the Group and
we are now reporting this as our primary NAV measure, replacing our previously reported EPRA NAV and EPRA
NNNAV per share metrics. EPRA NTA excludes the intangible assets and the cumulative fair value adjustments
for debt-related derivatives which are unlikely to be realised.
The adjustments made to get to the EPRA NAV measures above are as follows:
• Real estate transfer tax: Gross value of property portfolio as provided in the Valuation Certificate (i.e. the
value prior to any deduction of purchasers’ costs).
• Fair value of derivatives: Exclude fair value financial instruments that are used for hedging purposes where
the company has the intention of keeping the hedge position until the end of the contractual duration.
31 December 2024
EPRA NTA
EPRA NRV
EPRA NDV
£'000
£’000
£’000
Net assets
89,499
89,499
89,499
Fair value of derivatives
149
149
-
Real estate transfer tax
-
6,110
-
EPRA NAV
89,648
95,758
89,499
Number of ordinary shares issued for diluted and
EPRA net assets per share
174,738,511
174,738,511
174,738,511
EPRA NAV per share
51.3p
54.8p
51.2p
31 December 2023
EPRA NTA
EPRA NRV
EPRA NDV
£'000
£’000
£’000
Net assets
95,558
95,558
95,558
Fair value of derivatives
431
431
-
Real estate transfer tax
-
8,586
-
EPRA NAV
95,989
104,575
95,558
Number of ordinary shares issued for diluted and
EPRA net assets per share
174,702,476
174,702,476
174,702,476
EPRA NAV per share
54.9p
59.8p
54.7p
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
51
7.
Earnings per share (continued)
8. Intangible assets
Goodwill
£000
Gross carrying amount
Cost
At 1 January 2024 and 31 December 2024
171
Accumulated impairment losses
At 1 January 2024 and 31 December 2024
171
Net book amount at 31 December 2024
-
Net book amount at 31 December 2023
-
31 December 2024
No. of shares
31 December 2023
No. of shares
Number of ordinary shares issued at end of period
174,381,971
173,844,434
Dilutive impact of options
356,540
858,042
Number of ordinary shares issued for diluted and EPRA net
assets per share
174,738,511
174,702,476
Net assets per ordinary share
EPRA NTA
51.3p
54.9p
EPRA NRV
54.8p
59.8p
EPRA NDV
51.2p
54.7p
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
52
9. Investment properties
Group
Investment properties are those held to earn rentals and for capital appreciation.
The carrying amount of investment properties for the periods presented in the consolidated financial statements is
reconciled as follows:
£000
Carrying amount at 1 January 2023
173,030
Additions – subsequent expenditure
733
Disposals
(17,461)
Change in fair value
(13,197)
Carrying amount at 31 December 2023
143,105
Additions – subsequent expenditure
3,109
Disposals
(17,680)
Change in fair value
(6,334)
Carrying amount at 31 December 2024
122,200
The figures stated above for the gross carrying amount include valuations as follows:
2024
2023
£000
£000
At professional valuation
122,200
143,105
If investment properties had not been revalued, they would have been included on the historical cost basis at the
following amounts:
2024
2023
£'000
£'000
Cost and net book amount at 31 December
146,885
172,345
Investment properties with a value of £107,660,000 (2023: £110,505,000) have been pledged as security against bank
loans.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
53
9. Investment properties (continued)
Company
£000
Carrying amount at 1 January 2023
170,130
Additions – subsequent expenditure
733
Disposals
(17,461)
Change in fair value
(13,147)
Carrying amount at 31 December 2023
140,255
Additions – subsequent expenditure
3,109
Disposals
(14,830)
Change in fair value
(6,334)
Carrying amount at 31 December 2024
122,200
The figures stated above for cost or valuation include valuations as follows:
2024
2023
£000
£'000
At professional valuation
122,200
140,255
If investment properties had not been revalued, they would have been included on the historical cost basis at the
following amounts:
2024
2023
£000
£000
Cost and net book amount at 31 December
146,885
170,600
Investment properties are either leased to third parties on operating leases or are vacant. Rental income from
investment properties in the year ended 31 December 2024 was £10,772,000 (2023: £11,513,000) and direct operating
expenses in relation to those properties were £2,190,000 (2023: £2,197,000). Direct operating expenses in relation
to those properties which did not generate rental income in the period were £30,000 (2023: £35,000).
All of the Group and Company’s investment properties are held as either freehold or long leasehold and are held for
use in operating leases. The Group and Company uses the fair value model for all of their investment properties.
The valuation at 31 December 2024 has been carried out by Colliers, independent professional valuers. The
professional valuers have recent experience in the location and type of properties held. Directors’ valuations are
reflected at values as per sales agreements or recent purchases. An insignificant level of the portfolio is
unencumbered.
Although the risks associated with rights that the group retains in underlying assets are not considered to be
significant, the Group employs strategies to further minimise these risks, for example, it ensures lease contracts
include clauses requiring the lessee to compensate the Group when a property has been subjected to excess wear
and tear during the lease term.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
54
10. Property, plant & equipment
Group and Company
Leasehold
Improvements
Office
Equipment
Total
£000
£000
£000
Cost
At 31 December 2023
112
85
197
At 31 December 2024
112
85
197
Depreciation and Impairment
At 31 December 2023
112
83
195
Charge for the year
-
1
1
At 31 December 2024
112
84
196
Net book carrying amount
At 31 December 2024
-
1
1
At 31 December 2023
-
2
2
11.
Interests in subsidiaries
£000
Cost
At 31 December 2024 and 31 December 2023
4,223
Impairment
At 1 January
4,223
Charge for the year
-
At 31 December
4,223
Net book carrying amount
At 31 December 2024
-
At 31 December 2023
-
At 31 December 2024 and 31 December 2023 the Company wholly owned the following subsidiaries:
Name
Principal activity
Country of incorporation
3147398 Limited
Property investment
England and Wales
Southgate Derby Retail Limited
Property investment
England and Wales
Real Homes One Limited
Dormant
England and Wales
The Group has control over each of these subsidiaries by virtue of its 100% shareholding in each.
The provision for impairment is a result of the underlying property asset in the subsidiary being disposed of and therefore
the carrying value of the investment is reduced to reflect the underlying net assets.
The Directors have taken advantage of the exemption available under Section 479A of the Companies Act 2006 relating
to the requirement for the audit of the individual accounts for these subsidiaries with a parental guarantee.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
55
12. Inventories
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
Land held for trading
2,404
2,395
2,404
2,395
All land held for trading is included at the lower of cost and net realisable value, being their fair value less costs to
sell. No inventory (2023: £Nil), is pledged as security for bank loans.
13. Trade and other receivables
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
Trade receivables
20
300
10
289
Other receivables
509
280
473
243
Accrued income
1,610
1,593
1,610
1,513
Prepayments
305
377
305
350
2,444
2,550
2,398
2,395
All of the Group’s trade and other receivables have been reviewed for indicators of impairment. Certain trade
receivables were found to be impaired and a provision of £141,000 (2023: £91,000) has been recorded accordingly.
Expected credit loss is recognised when there no reasonable expectation of recovery of receivables. The movement in
the provision for impairment during the year is as follows:
Group and Company
2024
2023
£000
£000
At 1 January
91
91
Increase in provisions
50
-
Utilisation of provisions
(-)
(-)
At 31 December
141
91
In addition, some of the trade receivables not impaired are past due as at the reporting date. The age of financial
assets past due but not impaired is as follows:
Group and Company
2024
2023
£000
£000
Not more than three months past due
20
256
More than three months but no more than six months past due
-
13
20
269
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
56
13. Trade and other receivables (continued)
Financial assets by category
The categories of financial assets included in the balance sheet and the headings in which they are included are as
follows:
Group
2024
2023
Financial
assets at
amortised
cost
Non
financial
assets
Balance
sheet total
Financial
assets at
amortised
Cost
Non
financial
Assets
Balance
sheet total
£000
£000
£000
£000
£000
£000
Trade receivables
20
-
20
300
-
300
Other receivables
509
-
509
280
-
280
Accrued income
-
1,610
1,610
-
1,593
1,593
Prepayments
-
305
305
-
377
377
Cash and cash equivalents
6,876
-
6,876
7,981
-
7,981
7,405
1,915
9,320
8,561
1,970
10,531
Company
2024
2023
Financial
assets at
amortised
cost
Non
financial
assets
Balance
sheet total
Financial
assets at
amortised
cost
Non
financial
assets
Balance
sheet total
£000
£000
£000
£000
£000
£000
Trade receivables
10
-
10
289
-
289
Other receivables
473
-
473
243
-
243
Accrued income
-
1,610
1,610
-
1,513
1,513
Prepayments
-
305
305
-
350
350
Cash and cash equivalents
6,874
-
6,874
7,980
-
7,980
7,357
1,915
9,272
8,512
1,863
10,375
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
57
14. Trade and other payables
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
Trade payables
619
608
619
608
Amounts owed to subsidiary
undertakings
-
-
4,579
1,225
Other payables
309
405
275
368
Social security and taxation
1,501
1,625
1,495
1,614
Deferred income
1,321
1,523
1,321
1,495
Accruals
557
504
557
504
Dividend payable
774
972
774
972
5,081
5,637
9,620
6,786
Financial liabilities by category
The categories of financial liabilities included in the balance sheet and the headings in which they are included are as
follows:
Group
2024
2023
Financial
liabilities
at fair
value
through
profit and
loss
Other
financial
liabilities
at
amortised
cost
Non-
financial
liabilities
Balance
sheet
total
Financial
liabilities
at fair
value
through
profit and
loss
Other
financial
liabilities
at
amortised
cost
Non-
financial
liabilities
Balance
sheet total
£000
£000
£000
£000
£000
£000
£000
£000
Current
Bank loans
-
39,196
-
39,196
-
54,407
-
54,407
Trade payables
-
619
-
619
-
608
-
608
Other payables
-
309
-
309
-
405
-
405
Social security
and taxation
-
-
1,501
1,501
-
-
1,625
1,625
Deferred
income
-
-
1,321
1,321
-
-
1,593
1,593
Accruals
-
557
-
557
-
504
-
504
Dividend payable
-
774
-
774
-
972
-
972
-
41,455
2,822
44,277
-
56,896
3,218
60,114
Non-current
Derivative
financial
liabilities
149
-
-
149
431
-
-
431
149
-
-
149
431
-
-
431
149
41,455
2,822
44,426
431
56,896
3,218
60,545
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
58
14. Trade and other payables (continued)
Company
2024
2023
Financial
liabilities
at fair
value
through
profit and
loss
Other
financial
liabilities
at
amortised
cost
Non-
financial
liabilities
Balance
sheet
total
Financial
liabilities at
fair value
through
profit and
loss
Other
financial
liabilities at
amortised
cost
Non-
financial
liabilities
Balance
sheet
total
£000
£000
£000
£000
£000
£000
£000
£000
Current
Bank loans
-
39,196
-
39,196
-
54,407
-
54,407
Trade payables
-
619
-
619
-
608
-
608
Amounts owed to
subsidiary
undertakings
4,579
-
4,579
-
1,225
-
1,225
Other payables
-
275
-
275
-
368
-
368
Social security and
taxation
-
-
1,495
1,495
-
-
1,614
1,614
Deferred income
-
-
1,321
1,321
-
-
1,495
1,495
Accruals
-
557
-
557
-
504
-
504
Dividend payable
-
774
-
774
-
972
-
972
-
46,000
2,816
48,816
-
58,084
3,109
61,193
Non-current
Derivative
financial
instruments
149
-
-
149
431
-
-
431
149
-
-
149
431
-
-
431
149
46,000
2,816
48,965
431
58,084
3,109
61,624
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
59
15. Financial risk management objectives and policies
The Group and Company's financial instruments are bank borrowings, cash, bank deposits, interest rate swap
agreements and various items such as short-term receivables and payables that arise from its operations. The main
purpose of these financial instruments is to fund the Group and Company's investment strategy and the short-term
working capital requirements of the business.
The main risks arising from the Group and Company's financial instruments are credit risk, liquidity risk, interest rate
risk and property yield risk. The Board reviews and agrees policies for managing each of these risks and they are
summarised below. These policies have remained unchanged throughout the period.
Credit risk
The Group and Company's principal financial assets are bank balances and trade and other receivables. The Group and
Company's credit risk is primarily attributable to its trade and other receivables. The amounts presented in the balance
sheet are net of allowance for doubtful receivables. An allowance for impairment is made where there is objective
evidence that the Group or Company will not be able to collect all amounts due according to the original terms of the
receivables concerned. The credit risk for liquid funds is considered negligible, since the counterparties are reputable
banks with high quality external credit ratings.
The Group and Company’s exposure to credit risk is limited to the carrying amount of financial assets recognised at
the balance sheet date, as summarised below:
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
Cash and cash equivalents
6,876
7,981
6,874
7,980
Trade receivables
20
590
10
532
6,896
8,571
6,884
8,512
The Group and Company continuously monitors defaults of tenants and other counterparties, identified either
individually or by group, and incorporates this information into its credit risk controls. External credit ratings and/or
reports on tenants and other counterparties are obtained and used. The policy is to deal only with credit worthy
counterparties.
The Group and Company’s management consider that all the above financial assets that are not impaired for each of
the reporting dates under review are of good credit quality, including those that are past due. In respect of trade and
other receivables, the Group or Company are not exposed to any significant risk exposure to any single counterparty
or any group of counterparties having similar characteristics.
Liquidity risk
The Group and Company seek to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable
needs and to invest cash assets safely and profitably. The Group and Company do this by taking out loans with banks
to build up cash resources to fund property purchases.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
60
15. Financial risk management objectives and policies (continued)
Bank loans
The Group and Company borrowings analysis (all of which are undiscounted) at 31 December 2024 is as follows:
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
In less than one year:
Bank borrowings
39,347
54,569
39,347
54,569
Deferred arrangement costs
(151)
(162)
(151)
(162)
39,196
54,407
39,196
54,407
Financial instruments*
149
431
149
431
39,345
54,838
39,345
54,838
*Disclosed as financial liabilities at fair value through profit or loss.
The changes in the Group’s and Company’s liabilities arising from financing activities can be classified as follows:
Group
2024
2024
2023
2023
£000
Current
liabilities
£000
Non-current
liabilities
£000
Current
liabilities
£000
Non-current
liabilities
At 1 January
54,407
-
20,325
51,146
Reclassification
-
-
34,407
(34,407)
Repayment of bank loans
(15,211)
-
(325)
(16,739)
At 31 December
39,196
-
54,407
-
Company
2024
2024
2023
2023
£000
Current
liabilities
£000
Non-current
liabilities
£000
Current
liabilities
£000
Non-current
liabilities
At 1 January
54,407
-
20,280
47,611
Reclassification
-
-
34,407
(34,407)
Repayment of bank loans
(15,211)
-
(280)
(13,204)
At 31 December
39,196
-
54,407
-
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
61
15. Financial risk management objectives and policies (continued)
Maturity of financial liabilities
The gross contractual cashflows relating to non-derivative financial liabilities are as follows:
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
In less than one year:
Trade payables
619
608
619
608
Amount owed to subsidiary
undertakings
-
-
4,579
1,225
Other payables
309
405
275
368
Accruals
557
504
557
504
Dividend
774
972
774
972
Bank borrowings
40,359
56,987
40,359
56,987
42,618
59,476
47,163
60,664
42,618
59,476
47,163
60,664
The Group and Company has entered into an interest rate swap agreement to cover £10 million of its bank borrowings
with Lloyds Banking Group. The contract is considered by management to be part of economic hedge arrangements
but has not been formally designated. The effect of the agreement is to fix the interest payable on a notional £10
million at a rate of 4.75%. The agreement expires in February 2028. At 31 December 2024 the fair value of this
arrangement based on a valuation provided by the Group's bankers was a liability of £149,000 (2023: £431,000 asset).
Borrowing facilities
The Group and Company has undrawn committed borrowing facilities at 31 December 2024 of £Nil (2023: £Nil).
Market risk
Interest rate risk
The Group and Company finance their operations through retained profit, cash balances and the use of medium-term
borrowings. When medium term borrowings are used either fixed rates of interest apply or where variable rates apply,
interest rate swap arrangements are entered into. When the Group or Company places cash balances on deposit, rates
used are fixed in the short term and for sufficiently short periods that there is no need to hedge against implied risk.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
62
15. Financial risk management objectives and policies (continued)
The interest rate exposure of the financial liabilities of the Group and Company at 31 December 2024 was:
Bank loans
Group
Company
Expiry
2024
2023
2024
2023
Interest %
Date
£000
£000
£000
£000
Fixed until
December 2023
3.20
May 2024
-
10,000
-
10,000
Fixed until
December 2023
2.20
December 2023
-
6,754
-
6,754
Fixed until March
2024
2.35
June 2024
-
27,815
-
27,815
Fixed until
January 2028
4.75
January 2028
10,000
10,000
10,000
10,000
Variable rate
29,347
-
29,347
-
39,347
54,569
39,347
54,569
Loan arrangement fees
(151)
(162)
(151)
(162)
39,196
54,407
39,196
54,407
The Directors consider the fair value of the loans not to be significantly different from their carrying value.
The following table illustrates the sensitivity of the net result after tax and equity to a reasonably possible change in
interest rates of + half a percentage point (2023: + half a percentage point) with effect from the beginning of the year:
2024
2023
£000
£000
Decrease in result after tax and equity
146
173
The interest rate change above will not have a material impact on the valuation of the interest rate swap.
Property yield risk
The valuation of investment properties is dependent on the assumed rental yields. However, the impact on the net
result after tax and equity is difficult to estimate as it inter relates with other factors affecting investment property
values.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
63
15. Financial risk management objectives and policies (continued)
Capital risk management
The Group and Company’s objectives when managing capital are:
• to safeguard the ability to continue as a going concern, so that they continue to provide returns and benefits for
shareholders;
• to ensure that key bank covenants are not breached
• to maintain sufficient facilities for operating cashflow needs and to fund future property purchases
• to support the Group and Company’s stability and growth;
• to provide capital for the purpose of strengthening the risk management capability;
• to provide capital for the purpose of further investment property acquisitions; and
• to provide an adequate return to shareholders.
The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and
equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency,
prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected
strategic investment opportunities. Management regards total equity as capital and reserves, for capital management
purposes.
16. Fair value disclosures
The methods and techniques used for the purpose of measuring fair value are unchanged compared to the previous
reporting period.
Fair value measurement of financial instruments
Financial assets and financial liabilities measured at fair value in the consolidated and company statements of financial
position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability
of significant inputs to the measurement, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities
Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly
(ie as prices) or indirectly (ie derived from prices) and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level within which the financial asset or liability is classified is determined based on the lowest level of significant
input to the fair value measurement.
The financial instruments measured at fair value on a recurring basis in the statement of financial position, which relate
to interest rate swaps, are grouped into the fair value hierarchy as follows:
Level 1
Level 2
Level 3
Total
£000
£000
£000
£000
Interest rate swap agreements:
At 1 January 2023 – asset
-
68
-
68
Income statement – loss
-
(499)
-
(499)
At 3I December 2023
-
(431)
-
(431)
Income statement – gain
-
282
-
282
At 31 December 2024
-
(149)
-
(149)
The fair value of the Group and Company’s interest rate swap agreements has been determined using observable interest
rates corresponding to the maturity of the instrument. The effects of non-observable inputs are not significant for these
agreements.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
64
16. Fair value disclosures (continued)
Measurement of other financial instruments
The measurement methods for financial assets and liabilities accounted for at amortised cost are described below:
Trade and other receivables, cash and cash equivalents and trade and other payables
The carrying amount is considered a reasonable approximation of fair value due to the short duration of these
instruments.
Bank loans and overdrafts
Fair values are considered to be equivalent to book value as loans and overdrafts were obtained at market rates.
Fair value measurement of non-financial assets
The following table shows the levels within the hierarchy of non-financial assets measured at fair value on a recurring
basis at 31 December 2024:
Level 1
Level 2
Level 3
Total
£000
£000
£000
£000
Investment property:
Group - held to earn rentals and for capital appreciation
-
-
122,200
122,200
Company – held to earn rentals and for capital
appreciation
-
-
122,200
122.200
The reconciliation of the carrying value of non-financial assets classified within level 3 are as follows:
Investment properties
Group
Company
£000
£000
At 1 January 2024
143,105
140.255
Acquired during the year
3,109
3,109
Disposals during the year
(17,680)
(14,830)
Deficit recognised in profit and loss
-
decrease in fair value
(6,334)
(6,334)
At 31 December 2024
122,200
122,200
Fair value of the Group and Company’s property assets is estimated based on appraisals performed by independent,
professionally qualified property valuers on certain properties and the directors on the remaining properties. The
significant inputs and assumptions are developed in close consultation with management. The valuation processes and
fair value changes are reviewed by the directors and audit committee at each reporting date.
Measurement of fair value of investment property held to earn rentals and for capital appreciation
Properties valued by external valuers are valued on an open market basis based on active market prices adjusted for
any differences in the nature, location or condition of the specified asset such as plot size, encumbrances and current
use. Properties valued by the directors use the same principles as the external valuers. If this information is not
available, alternative valuation methods are used such as recent prices on less active markets, or discounted cashflow
projections. The significant unobservable input is the adjustment for factors specific to the properties in question. The
extent and direction of this adjustment depends on the number and characteristics of the observable market
transactions in similar properties that are used as the starting point for the valuation. Although this input is a subjective
judgement, management consider that the overall valuation would not be materially altered by any reasonable
alternative assumptions.
The market value of the investment properties has been supported by comparison to that produced under income
capitalisation techniques applying a key unobservable input, being yield. The range of yield applied is 7.5% to 11.0%.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
65
16. Fair value disclosures (continued)
The fair value of an investment property reflects, among other things, rental income from current leases and
assumptions about future rental lease income based on current market conditions and anticipated plans for the property.
17. Deferred taxation
No temporary differences resulting from investments in subsidiaries or interests in joint ventures qualified for
recognition as deferred tax assets or liabilities. Under the current fiscal environment, these entities are exempt from
capital gains taxes. See note 6 for information on the Group’s tax expense.
18. Share capital
2024
2024
2023
2023
Number of
Shares
£000
Number of
Shares
£000
Allotted, issued and fully paid:
Ordinary shares of 10p
174,381,971
17,439
173,844,434
17,385
During the year 537,537 shares were issued with a nominal value of 10p each for 34p on 16 May 2024, generating a
share premium of £129,009. P P S Bassi and M H P Daly exercised options on 264,264 (2023: 628,571) shares and 165,165
(2023: 392,857) shares respectively. These options were satisfied by the issue of shares during the year.
To support the Disposal Strategy and the return of capital to shareholders, the Company implemented a new Shorter
Term Incentive Plan (“STIP”) in 2024. The STIP replaced the existing Long Term Incentive Plan (“LTIP”), and will help
to retain Paul Bassi, Chief Executive Officer and Marcus Daly, Finance Director (the “Executives”), and the wider
management team and incentivise them to achieve an orderly and timely disposal of the Company’s assets to maximise
the capital return to shareholders.
SHORTER TERM INCENTIVE PLAN
The STIP has been implemented to compensate the Executives for the retrospective reduction in awards and cancellation
of future awards under the LTIP.
1. Under the STIP, the participants receive a proportion of a notional cash pool (the “Pool”) which was created from
the excess (“Gain”) of Total Shareholder Return (“TSR”) over the market value of the Company as at 31 December
2023. TSR is cash per Ordinary Share returned to shareholders, excluding ordinary dividends.
2. To ensure the timely disposal of assets, the Gain attributable to the Pool will be reduced over time.
3. If the Company’s sell down strategy had been completed in 2024 then the Pool would have been calculated as 10%
of the Gain. If the strategy is completed in 2025 the Pool reduces to 7.5% and if by 2026, the Pool reduces to 5%.
4. Of the Pool, a minimum figure of £410k is ringfenced for the management team (excluding the Executives)
equivalent to a bonus of 100% salary.
5. The STIP will pay out as soon as reasonably practicable after the earliest of (1) the sale of all the assets, (2) a
takeover of the Company or (3) when the Remuneration Committee determine that a sufficient proportion of the
assets have been sold and that the STIP has achieved its original purpose.
During the year a provision of £Nil was made (2023: £Nil) as an employee remuneration expense, all of which relates to
equity-settled share-based payment transactions, and has been included in profit or loss and credited to retained
earnings. Based on the results and the share price 50% of the reduced options granted in 2021 are likely to vest.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
66
19. Leases
The Group as lessee
The Group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months
or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis. At 31
December 2024 the Group was committed to short term leases and the total commitment at that date was £71,000
(2023: £71,000).
At 31 December 2024 and 31 December 2023 the Group had lease commitments on two long leasehold properties within
its portfolio. These are held as investment properties and measured and disclosed within these financial statements in
accordance with IAS 40 (see note 9). The Group pays peppercorn rents on these properties and under IFRS 16, the
associated lease liability is not material and as such the more extensive disclosures required by that Standard are not
presented as they are not material.
The Group as lessor
Non-cancellable operating lease commitments receivable:
2024
2023
£000
£000
Within one year
7,628
9,286
Later than one year but not later than five years
17,792
19,344
Later than five years
27,636
29,058
53,056
57,688
Rent receivable by the Group under current leases from tenants is from commercial and retail property held.
Although the risks associated with rights the Group retains in underlying assets are not considered to be significant, the
Group employs strategies to further minimise these risks. For example, ensuring all contracts include clauses requiring
the lessee to compensate the Group when a property has been subjected to excess wear and tear during the lease term.
The lessee does not have an option to purchase the property at the expiry of the lease period.
20. Contingent liabilities
There were no contingent liabilities at 31 December 2024 or at 31 December 2023.
21. Capital commitments
Capital commitments authorised at 31 December 2024 were £Nil (2023: £1,500,000).
22. Pension scheme
The Group has signed up to the government auto enrolment pension scheme.
23. Post balance sheet events
In March 2025 the Group extended the £24 million facility with National Westminster Bank PLC for a further 12 months
to 1 June 2026, and in March 2025 the Group extended the £12.6 million facility with Lloyds Banking Group Plc for a
further 12 months to 29 May 2026. With the exception of the hedge on £10 million of the Lloyds Bank facility, the new
facilities are all on variable rates, and following the multiple increases in interest rates by the Bank of England, the
new average rate of bank interest is 6.5%. It is the Group’s intention to prioritise the repayment of debt from property
sales proceeds.
REAL ESTATE INVESTORS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2024
67
24. Related party transactions
The Group's related parties are its key management personnel and certain other companies which are related to certain
directors of the Group. The Company's related parties are its key management personnel, certain other companies which
are related to certain directors of the Group and its subsidiary undertakings.
The executive and non-executive directors are also the key management personnel and details of their remuneration
are included within the directors' remuneration report on pages 25 and 26.
During the period the Company and Group incurred agency fees of £180,270 (2023: £289,700) in respect of professional
services and rent, service and support charges of £96,000 (2023: £120,000) to Bond Wolfe Limited, a business in which
P P S Bassi has an interest. Amounts outstanding owed to Bond Wolfe at the year end were £300 (2023: £16,600). During
the year the Company and the Group incurred £74,200 (2023: £81,400) in respect of property management fees to CBGA
Robson, a business in which P P S Bassi and M H P Daly have an interest. Amounts outstanding to CBGA Robson at the
year end were £17,500 (2023: £28,400).
During the period the Company’s transactions with subsidiary companies related to inter-company dividends and
repayment of loans. Details of amounts outstanding at 31 December 2024 are shown in notes 13 and 14.
During the period the Company paid dividends to its directors in their capacity as shareholders, as follows:
2024
2023
£000
£000
W P Wyatt
7
7
P London
6
5
I M Stringer
2
2
P P S Bassi
377
340
M H P Daly
91
75