2016

Annual Results for year ended 30 June 2016

22 December 2016

Annual results show an NAV per share of 9.4p at 30 June 2016. Also announced today are a share subscription for £500,000 by Gravity Investment Group at 10p per share and the appointment of a chief executive

This announcement contains inside information

K&C REIT plc (AIM: KCR), the residential real estate investment trust group, announces that the Board: will be appointing a new director, has accepted a share subscription, has published its annual results and has made other related changes.

 

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Highlights:

  • NAV per share of 9.4p at 30 June 2016.
  • Both corporate entities acquired in the year have integrated well and are trading satisfactorily.
  • The appointment on 1 January 2017 of Mr Dominic White as a director, and to the role of chief executive of the Group, conditional on the admission to trading on AIM of the 2,500,000 new ordinary shares of £0.01 issued at 10p per share ("Admission"), as referred to below.
  • Share subscription for £500,000 for a holding of approximately 9.66 per cent:
    • Gravity Investment Group Limited ("Gravity") has agreed to subscribe for a total of 5,000,000 ordinary shares in the Company (the "Subscription") at 10p per share, which will be issued in two separate tranches of 2,500,000 shares each.
    • Upon Admission (which is expected to take place on 23 December 2016), the Company will receive a total of £250,000, which is currently held in escrow.
    • Gravity will acquire the second tranche of 2,500,000 ordinary shares in the Company, also at 10p per share, on or before 6 January 2017.
    • After the Subscription, Gravity will hold approximately 9.66 per cent. of the enlarged share capital.

1. Appointment of chief executive

The Board has agreed that Mr Dominic White will be appointed chief executive of the Group, effective from 1 January 2017, conditional upon Admission. He will receive a salary of £75,000 per annum with effect from 1 January 2017.

In addition, on 21 December 2016, the Company has entered into an agreement (the "WAL Agreement") with White Amba Limited ("WAL"). Mr White is an appointed representative of Vicarage Capital Limited (which is authorised and regulated in the United Kingdom by the Financial Conduct Authority) and he operates through WAL, which is a company that he owns and controls. The WAL Agreement provides that the Company will pay WAL a fee of £25,000 (representing five per cent of the amount to be subscribed by Gravity pursuant to the Subscription). In addition, the Company will pay WAL a further fee of five per cent (up to a maximum of a further £50,000) in respect of further subscriptions for shares in the Company, in exchange for cash, properties or other assets, where the subscribers for such shares have been introduced by WAL provided that (i) the shares are issued at the higher of (a) 10p per share and (b) the average middle-market closing price in the 15 dealing days prior to the date of issue of such shares; and (ii) such shares are issued prior to the first anniversary of the date of the WAL Agreement. The WAL Agreement also provides that the Company shall pay a fee of £25,000 (plus VAT if applicable) for advice given relating to the negotiating and structuring of the Subscription. It is expressly agreed that if it is proposed that WAL provides services/advice to the Company pursuant to the WAL Agreement, Mr White should (i) declare his interest; and (ii) not take part in any consideration or decision of the board of directors of the Company in relation to the provision of such services.

2. Details about Dominic White

Dominic Andrew White (age 44) is a member of the Institute of Chartered Financial Analysts and is a Chartered Surveyor who has more than 24 years' experience in the investment sector, working in private equity, real estate investment fund management and real estate advisory businesses in both the private and listed markets. During his career, he has held senior investment positions at international institutions such as Security Capital European Realty, Henderson Global Investors and Cordea Savills Investment Management. In addition, he has held chief executive and non-executive roles at public companies, including Limitless Earth plc and, currently, as chief executive of Energiser Investments plc (AIM:ENGI) ("Energiser").

Present directorships / partnerships Former directorships / partnerships held over past five years
Energiser Investments plc Limitless Earth plc
eMed Pharma Group Limited Silverhawk Investments Limited
Beet Plus Limited White Panther Capital Limited
Ovio Wellness Limited Clear Leisure plc
White Amba Investments LLP Lakestar Capital LLP
White Amba Limited

The directors of K&C have considered Dominic White's role as chief executive of Energiser. The directors do not consider that his involvement with Energiser will significantly affect Mr White's ability fully to perform his duties as chief executive of K&C, nor does the board consider the operations of Energiser and K&C to be in conflict.

No further information relating to Mr White is required to be disclosed pursuant to Schedule 2 paragraph (g) of the AIM Rules.

3. General meeting to receive the accounts to 30 June 2016, adopt new Articles of Association and to approve the issue of Restricted Preference Shares to certain persons

It is proposed to create a new long-term executive share incentive scheme based upon restrictive preference shares ("Restricted Preference Shares"). Implementing this new share incentive scheme will require the Company to convene a general meeting, which will be held prior to 31 January 2017. The meeting will receive the audited accounts of the Company to 30 June 2016 and to adopt new Articles of Association to create and set out the rights of the Restricted Preference Shares, which are intended to be fully paid up at their par value of £0.01. It will be proposed that an aggregate of sixty million Restricted Preference Shares at a subscription price of £0.01 per share will be created, generating proceeds for the Company (if all issued) of £600,000, although the current holders of executive share options in K&C will not be offered the opportunity to subscribe for these shares while their options remain outstanding.

The Restricted Preference Shares would vest as (i) the gross assets under management (AUM) of the Group (i.e. the gross value of the investment properties of the Group) exceed certain values and (ii) the Net Asset Value (NAV) per share of the Group exceeds certain values. These vested Restricted Preference Shares will be convertible into ordinary shares of the Company on a one-for-one basis. Further details of this proposal, which will require the approval of a special resolution of the Company's shareholders, will be announced in due course.

4. Payments made to executive directors and others

Except for James Cane and Christopher James, the executive directors have not received any salary or fees since the Company was admitted to trading on AIM.

Following Admission, certain executive directors and an employee of the Company will each become entitled to £25,000 (of which £15,000 will be dependent on the Company receiving further equity funding of at least £500,000) in satisfaction of all funds due to them from the Company and all remuneration up to 31 December 2016, including, in some cases, the reimbursement of various out-of-pocket expenses incurred by those individuals since 2014 that have not been reimbursed to date. The total of these payments (including the contingent element) will be £150,000, excluding any employer's national insurance contributions and/or value added tax that are payable.

The Board announces its intention to make salary payments, at rates equal to or less than the amounts stated in their service contracts, to all existing executive directors and an employee of the Company with effect from 1 January 2017.

Commenting on the results, Michael Davies, Chairman of K&C REIT, commented:

"In a year that has so far been dominated by political and economic uncertainty, K&C REIT has delivered good performance via its acquisitions of two special purpose vehicles, which integrated well and traded satisfactorily in the year under review, with NAV per share at year-end of 9.4p. K&C's progress has been further supported by today's announcement of a share subscription of £500,000 at 10p per share and the appointment of Dominic White as our new chief executive, which we believe will lead to a strong and exciting pipeline of opportunities. We are looking forward to 2017 with confidence."

 

Contacts:

K&C REIT [email protected]
Tim James, Managing Director +44 (0) 7768 833 029
www.kandc-reit.co.uk
Stockdale Securities +44 (0) 20 7601 6115
Robert Finlay
Yellow Jersey PR +44 (0) 7768 534 641
Charles Goodwin/Clare Glynn

 

Notes to Editors:

K&C's objective is to build a substantial residential property portfolio that generates secure income flow for shareholders through the acquisition of SPVs (Special Purpose Vehicles) with inherent historical capital gains. The Directors intend that the group will acquire, develop and manage residential property assets in Central London and other key residential areas in the UK.