7 December 2017 Circle Property Plc (Circle, Company or the Group) - PDF document

7 December 2017 Circle Property Plc (“Circle”, “Company” or the “Group”) Interim Results for the six months ended 30 September CONTINUED LEASING AND ASSET MANAGEMENT MOMENTUM DRIVES STRONG FINANCIAL PERFORMANCE Circle Property Plc (AIM: CRC), the specialist regional UK property investment, development and management company today announces its results for the six months to 30 September 2017. The results show continued strong operational performance driven by asset management translating to growth in portfolio valuation, NAV and rental income and leading to a proposed further increase in dividend. Financial Highlights  11.3% increase in portfolio valuation to £103.5 million (31 March 2017: £93 million), driven primarily by the Company’s ongoing asset management initiatives  15.3% increase in NAV per share to £2.11 (31 March 2017: £1.83) contributing to 40% growth in NAV since IPO in February 2016  26% increase in rental income to £2.9 million for the first six months to 30 September 2017 (30 September 2016: £2.3 million)  57% increase in net operating profit to £1.8 million which excludes gains on investment properties (six months to 30 September 2016: £1.1 million) leading to a 3.6% increase in profit before tax to £8.6 million (six months to 30 September 2016: £8.3 million)  Loan to value ratio reduced to 47% (31 March 2017: 49%)  6.9% increase in earnings per share to 31 pence (30 September 2016: 29 pence)  8.3% increase in interim dividend to 2.6 pence per share (30 September 2016: 2.4 pence) reflecting the Board’s ongoing confidence in the Company’s prospects and outlook. The dividend will be paid on 18 January 2018 to shareholders on the register on 15 December 2017, with an ex‐dividend date of 14 December 2017.  WAULT of 11.29 years to expiry, up from 7.39 years Operational Highlights  Building on the £648,300 of annualised rent which was signed over the second half of last year, three further significant lease contracts were secured during the period, adding £378,841 or 7.2% to the annualised rent roll and comprising: o Signing a new 20 year lease without break to Las Iguanas, the popular Latin American restaurant chain owned by Casual Dining Group Limited, for £220,000 per annum at one of our two newly developed restaurant units in Somerset House, Temple Street, Birmingham. o Securing Topps Tiles as a new tenant at the Baildon Bridge Retail Park in Shipley on a 10 year lease with a 5 year break option, at a rent of £52,585 per annum.

o Achieving full occupancy at the Group’s newly refurbished offices at Powerhouse in Milton Keynes by letting all 6,641 sq ft of the remaining space to Stephen Eagell Ltd, one of the UK’s leading Toyota dealerships, on a 10 year lease at a rent of £106,256 per annum, equating to a rent of £16 per square foot.  Further leasing progress has been made subsequent to the end of the first half year: o The second of the two restaurant units located in Somerset House, Birmingham, is now under offer. o Grant Thornton has removed its August 2018 break clause at 300 Pavilion Drive, Northampton Business Park, Northampton, which extends the lease by five years to 2023. o At the One Castlepark offices in Bristol, a 10 year lease renewal has been agreed on 13,143 sq ft of space on two equal leases at a rent of £22 per sq ft, with a five year break option. o In November, the Group completed a 1,350 sq ft letting of the 5 th floor at 141 Moorgate for five years at a rent of £59,444 per annum. o 5,500 sq ft in K2 at the Company’s Kents Hill Park business park, Milton Keynes, is now under offer. o At 36 Great Charles Street, Birmingham, following the rolling refurbishment of 25,000 sq ft of offices, one office suite is under offer at £18.50 per sq ft with another under negotiation. o Following Willis Towers Watson exercising its break clause and vacating Unit B at Chapel Lane, Great Blakenham, Nr Ipswich, in July 2017, the Company let both Units A&B at the end of November to Anchor Safety LLP, the long standing tenant of Unit A. Anchor has entered into a new five year lease without break on 45,319 sq ft at a rent of £154,500 per annum. o The remaining Unit 2 at Baildon Bridge Retail Park, Shipley, has been placed under offer at a similar rent to that achieved on Unit 3. o Following a £3.5 million refurbishment of the six office floors at Somerset House, Birmingham, the project is now nearing completion. The offices are to be formally launched into the market early in 2018. John Arnold, Chief Executive at Circle Property Plc, commented: “Although there is some degree of caution from tenants making leasing decisions against the backdrop of Brexit uncertainty, we continue to make good leasing progress across our portfolio. Since our IPO in February 2016, we have achieved a 40% increase in NAV and remain confident in our ability to deliver further growth from active asset management. We believe the level of demand for space in our assets is a direct reflection of the location and quality of our assets, as well as the standard of our refurbishments, which places us ahead of the competition. Furthermore, the great majority of our assets are highly reversionary so we have the flexibility to moderate rents or incentives and offer highly attractive terms to secure the tenant, whilst at the same time providing rental income growth for our shareholders. “We continue to look for new acquisition opportunities, whether of portfolios or single assets. Our appointment of Smith & Williamson with Radnor Capital is expected to generate a greater level of interest in Circle, as we consider options for enlarging the Company’s shareholder base in the New Year.” Circle Property Plc +44 (0)20 7930 8503 John Arnold, CEO

Edward Olins, COO Smith & Williamson +44 (0) 20 7131 4000 Azhic Basirov Katy Birkin Radnor Capital +44 (0) 20 3897 1830 Iain Daly Joshua Cryer FTI Consulting +44 (0)20 3727 1000 Richard Sunderland Giles Barrie Eve Kirmatzis Chief Executive’s statement I am pleased to present the Group’s results for the first six months of this year and to report that Circle has once again achieved significant asset valuation growth and that this has been driven primarily by our ongoing letting and refurbishments programme, demonstrating the importance of active management and stock selection. Our belief in the regional office markets remains steadfast, particularly as the supply continues to decline. This trend will be maintained for so long as the ongoing conversion of many less attractive office buildings to residential continues or if rents rise sufficiently to justify the ever increasing cost, as well as the associated risk, of constructing new product. At present, there is relatively little speculative new build office development being undertaken in the provinces and with build costs rising at, or above the rate at which office rents are rising, so our market remains favourable. Since admission to AIM in February 2016 we have been pleased to achieve over 40% growth in NAV, which does not include the full lettings potential of our entire stock, which on completion is expected to result in further significant uplift in NAV. However, in common with many other property companies, we are mindful of the discount in the share price and are focussing on generating more liquidity in the Company’s shares, as evidenced by our recent appointments of Smith & Williamson and Radnor Capital. Asset management Our development pipeline is now all but complete with less than £0.5m of further expenditure now required on our refurbishment at Somerset House, Temple Street Birmingham. New lettings in the investment portfolio have again improved the income profile, and should all the negotiations currently underway convert to lettings, the Company will be able to report that it has over £6 million of annualised rental income at the year‐end. Power House, our 21,400 sq ft office building in Milton Keynes, is now fully let following Stephen Eagell Ltd letting on a 10 year lease at a rent of £106,256 per annum. Following the completion of the letting of Unit 3 at Baildon Bridge in Shipley to Topps Tiles, Unit 2 is now under offer and, at completion, this 37,200 sq ft retail park will be fully let. In October 2017, we were pleased to secure a letting on both industrial units (45,000 sq ft) at Great Blakenham, Ipswich, to Anchor Safety. As previously reported our portfolio predominantly comprises high quality and well located regional offices with some “non‐core” properties in other sectors which we have marked for sale on an opportunistic basis.