08 October 2024, 07:00

Source - LSE Regulatory

RNS Number : 2623H

PRS REIT PLC (The)

08 October 2024

PRSR.L

The PRS REIT plc

("PRS REIT" or "the REIT" or "the Company" or "the Group")

Audited Full Year Results

for the year ended 30 June 2024 & First Quarter Update

Portfolio very close to completion with 5,425 new homes built

Asset performance is excellent, and rental demand remains strong

Key points

Financial

	Year to 30 June 2024	Year to 30 June 2023	Change

Revenue	£58.2m	£49.7m	+17%
Net rental income	£47.3m	£40.2m	+18%
Operating profit	£111.7m	£58.9m	+90%
Profit after tax	£93.7m	£42.5m	+120%
Basic earnings per share	17.1p	7.7p	+122%
EPRA earnings per share^{^[1]}	3.7p	3.1p	+19%
Net assets at 30 June	£731m	£660m	+11%
IFRS NAV and EPRA NTA per share^{^[2]}	133.2p	120.1p	+11%

Operational

	At 30 Sept 2024	At 30 June 2024	At 30 June 2023	Year-on-year change
Number of completed homes	5,425	5,396	5,080	+6%
Estimated rental value ("ERV") per annum	£67.5m	£65.1m	£55.0m	+18%
Number of contracted homes	151	180	444	-59%
ERV per annum	£1.6m	£1.4m	£3.8m	-63%
Completed and contracted sites	72	72	71	+1%
ERV per annum of completed and contracted sites*	£69.1m	£66.5m	£58.8m	+13%
Rent collected (as a percentage of total rent invoiced for the period)	100%	99%	99%	-

* based on all completed units being occupied/income producing

●	Profit after tax up 120% to £93.7m (2023: £42.5m), and EPRA earnings per share up 19% to 3.7p (2023: 3.1p) - reflects significant rise in revenue and very strong portfolio management, including costs
●	An additional 316 new homes were added to the portfolio over the year taking it to 5,396 completed homes at 30 June 2024, up 6% year-on-year (2023: 294 new homes added; 5,080 completed homes)
	_			ERV of the 5,396 homes at 30 June 2024 was £65.1m p.a. (30 June 2023: 5,080 homes with ERV of £55.0m p.a.)
	_			a further 180 homes with an ERV of £1.4m p.a. were under way at 30 June 2024
●	Operating profit increased by 90% to £111.7m (2023: £58.9m), reflecting the higher gains of £73.4m from fair value adjustments on investment property compared to the prior year (2023: £25.4m)
	_			ERV continued to grow strongly in FY24
	_			yields softened slightly in FY24 to 4.59% from 4.47% (FY23: yields softened to 4.47% from 4.13%)
	_			the softening in yields in FY24 were more than offset by the increase in ERV
●	Another year of excellent portfolio performance:
	_	rent collection at 99% (2023: 99%);
	_	occupancy at 96% at 30 June 2024 (2023: 97%) c.50 units handed over on one site at the end of May have adversely affected this rate by 1% due to 40 of these units remaining unlet at 30 June. Including all homes where a letting had been agreed (with applicants passing referencing and having paid a rental deposit), but occupation had not taken place by 30 June 2024, occupancy was 98% (2023: 98%);
	_	gross arrears at £1.7m at 30 June 2024 (30 June 2023: £1.0m). As at 31 July 2024 gross arrears stood at £1.3 million;
	_	like-for-like blended rental growth^{^[3]} of c.12% over the year on stabilised sites (where all units were completed and either all, or nearly all, had been let at the end of the comparative period)
	_	-			re-lets to new tenants achieved c.15% rental growth (2023: c.12%);
	_	affordability (average rent as a proportion of gross household income) remains very strong at 23% as at 30 June 2024 (2023: 22%); and
	_	property costs continued to be well managed - the deduction from gross to net rent across the portfolio was 18.8% (2023: 19.1%).
●	Average net investment yield on the portfolio softened slightly to 4.59% (30 June 2023: 4.47%)
●	EPRA loan to value ('LTV') on portfolio continues to be low at 36% (2023: 37%)
●	Approx 82% of the current £427m of investment debt is fixed at an average interest rate of 3.8% over an average term of 16 years
●	Net asset value up 11% to £731m/133.2p per share at 30 June 2024 (2023: £660m/120.1p per share), driven by strong ERV growth
	_		as at 30 June 2024, ERV was estimated to be £5.4m higher than passing rent (2023: £5.1m higher), another indicator of strong rental demand
	_		EPRA NTA increased by 11% to 133.2p per share (2023: 120.1p)
●	Total dividends of 4.0p per share declared in FY24 (2023: 4.0p) with dividends covered on an EPRA run-rate basis from March 2024

Requisition event

●	A Requisition Notice, received on 29 August 2024, was withdrawn on 13 September 2024 following shareholder discussions and an agreement with the Requisitioning Shareholders, including on Board changes

Outlook

●	In light of the excellent results and rent collection, the Company is currently reviewing the target dividend for FY25, and expect to provide an update to the market in the Q1 Trading Update.
●	Current trading remains very strong Q1 FY25 (1 July - 30 September 2024)
	_	portfolio increased to 5,425 completed homes, with ERV of £67.5m p.a. at 30 September 2024
	_	a further 151 homes with an ERV of £1.6m p.a. were under way
	_	occupancy high at 98%
	_	rent collection very strong at 100%
	_	like-for-like rental growth on stabilised sites over the year to 30 September 2024 was c.12%
	_	affordability (average rent as a proportion of gross household income) remains very healthy at 24%
●	Once all the existing sites are completed and homes let, the portfolio will comprise c.5,600 homes, with ERV of £69.1m p.a.
	_	the majority of the 151 homes currently under way are expected to be completed by the end of the first calendar quarter in 2025
●	Prospects remain very positive
	_	structural shortage of quality family rental homes in the UK; the number of properties available to rent is at a 14-year low^{^[4]}
	_	under supply exacerbated by private landlords exiting rental market, weak sales market and rising rental demand
		-	Zoopla, a leading UK property website, stated in September 2024 in its Rental Market Report that high demand and a low supply of properties continue to keep rents high and that there are still 25% fewer properties available in 2024 compared to 2019. It anticipates that potential further tax changes will result in more landlords selling and that rents will continue to rise, with the supply/demand imbalance set to remain into 2025.

Steve Smith, Chairman of The PRS REIT plc, commented:

"These are truly excellent numbers reflecting the efficacy of the strategy and the hard work and commitment of the Board, our investment adviser, Sigma, our investors, banking and housebuilding partners, and local and central government supporters. To be in position to deliver a set of results of this quality after so many obstructions along the way, notably COVID and debt cost inflation, is a great achievement. The Company is perfectly poised for its next phase of growth; investors are in a very strong position, with multiple options and, on a personal note, I sincerely hope that investors grasp the opportunity to enable the business to achieve its full potential.

The Board remains confident about prospects, with affordability - average rent as a proportion of gross household income - and asset performance both very strong. In line with our announcement issued on 13 September, the newly-constituted Board intends to review the Company's strategy and will provide an update when appropriate. The Company is fully focused on maximising value for all shareholders."

For further information, please contact:

The PRS REIT plc
Steve Smith, Non-executive Chairman

Tel: 020 3178 6378

(c/o KTZ Communications)

Sigma PRS Management Limited
Graham Barnet, Mike McGill

Tel: 0333 999 9926

Singer Capital Markets Securities Limited
James Maxwell, Asha Chotai (Investment Banking)

Alan Geeves, James Waterlow, Sam Greatrex (Sales)

Tel: 020 7496 3000

Jefferies International Limited

Gaudi Le Roux, Tom Yeadon

Harry Randall, Ollie Nott

Tel: 020 7029 8000

G10 Capital Limited (AIFM and part of the IQ-EQ Group)

Maria Baldwin

Tel: 020 3745 2826

KTZ Communications

Katie Tzouliadis, Robert Morton

Tel: 020 3178 6378

NOTES TO EDITORS

About The PRS REIT plc www.theprsreit.com

The PRS REIT plc is a closed-ended real estate investment trust established to invest in the Private Rented Sector ("PRS") and to provide shareholders with an attractive level of income together with the potential for capital and income growth. The Company is investing over £1bn in a portfolio of high-quality homes for private rental across the regions, having raised a total of £0.56bn (gross) through its Initial Public Offering, on 31 May 2017 and subsequent fundraisings in February 2018 and September 2021. The UK Government's Homes England has supported the Company with direct investments. The Company is listed on the Closed-ended investment funds category of the FCA's Official List and its Ordinary Shares are traded on the London Stock Exchange's Main Market. It is a constituent of the FT250 Index. With 5,425 new rental homes as at 30 September 2024, the Company believes its portfolio is the largest build-to-rent single-family rental portfolio in the UK.

LEI: 21380037Q91HU97WZX58

About Sigma Capital Group Limited (formerly Sigma Capital Group plc) www.sigmacapital.co.uk

Sigma Capital Group Limited ("Sigma") is a build-to-rent ("BTR") regeneration specialist, with offices in Edinburgh, Manchester and London. The Company's principal focus is on the delivery of large-scale housing schemes for the private rented sector and Sigma is the UK's leading provider of BTR homes for the single family sector. The Company also has extensive experience in the delivery of multi-family apartment schemes and a well-established track record in assisting with property-related regeneration projects in the public sector, acting as a bridge between the public and private sectors.

Sigma has created an unrivalled property delivery and management platform, which has delivered or is in the process of delivering over 12,00 homes across the UK to date. The Company has a significant pipeline of development opportunities, which currently stands at over £3 billion in gross development cost. Sigma manages the letting of completed homes through its property platform, which includes its award-winning rental brand 'Simple Life'. The Company's subsidiary, Sigma PRS Management Ltd, is Investment Adviser to The PRS REIT plc.

About Sigma PRS Management Ltd

Sigma PRS Management Ltd is a wholly-owned subsidiary of Sigma Capital Group Limited and is Investment Adviser to The PRS REIT plc. It sources investments and operationally manages the assets of The PRS REIT plc and advises the Alternative Investment Fund Manager ("AIFM") and The PRS REIT plc on a day-to-day basis in accordance with The PRS REIT plc's Investment Policy. The AIFM is G10 Capital Limited. Sigma PRS Management Ltd is an appointed representative of G10 Capital Limited, which is authorised and regulated by the Financial Conduct Authority (FRN:648953).

Chairman's Statement

Introduction

I am pleased to present The PRS REIT plc's (the "PRS REIT", or the "Company" or the "Group") audited financial results for the year ended 30 June 2024. The Company's portfolio of rental homes continued to perform very strongly, and the Group is now over 99% through its current delivery programme. When completed, the portfolio is expected to comprise c.5,600 homes, with estimated rental value ("ERV") of £69.1 million p.a.

Largest portfolio of single-family rental homes in the UK

Over the financial year, 316 new rental homes were added successfully to the portfolio, taking it to 5,396 completed homes at 30 June 2024 (30 June 2023: 5,080 completed homes), a 6% increase. A further 180 homes were contracted at that date and were at varying stages of the construction process. We currently expect that most of these 180 homes will be completed by the end of the first quarter of calendar year 2025.

The ERV of the 5,396 completed homes is £65.1 million per annum (30 June 2023: £55.0 million per annum on 5,080 completed homes), an 18% rise year-on-year. The percentage increase in rental value over the year compared to the percentage increase in the number of completed homes over the same period mainly reflects rental growth over the period. The ERV of the additional 180 homes currently under way is £1.4 million per annum, taking the total ERV of the portfolio to around £66.5 million per annum.

The Company's homes are spread across 72 sites (2023: 71 sites), mainly in the major regions of England, including the North-West, North-East, Yorkshire, the Midlands, the South-East (excluding London) and East of England. One site is located in North Wales and another in Central Scotland.

Very strong asset performance

As expected, The PRS REIT's assets performed strongly over the financial year. Occupancy and rent collection (measured as rent collected relative to rent invoiced in a given period) remained very high, with rent collection at 99% (2023: 99%) and occupancy at 96% at 30 June 2024 (2023: 97%), with 5,181 homes occupied out of 5,396 completed homes. This rate was adversely affected by an additional tranche of c.50 units (c.1%) on one site that were made available at the end of May 2024. Of these, 40 were unoccupied at the end of June 2024. Including all homes where a letting had been agreed, with applicants passing referencing and having paid a rental deposit, but occupation had not taken place by 30 June 2024, occupancy was 98% (2023: 98%).

Like-for-like rental growth over the year on stabilised sites (where all units are completed and let, or nearly all let, at the end of the comparative period) was c.12%. This reflected a blended growth rate of c.15% on re-lets to new tenants and c.10% on renewals with existing tenants. Gross rent arrears remained modest despite the growth in the portfolio, standing at £1.7 million at 30 June 2024 (2023: £1.0 million). The 30 June 2024 arrears number was higher due to the year end falling on a weekend, as at 31 July 2024 gross arrears stood at £1.3 million.

An important statistic is the portfolio's affordability ratio, which is measured as average rent as a proportion of gross household income. This is currently at a very healthy level of 23% (2023: 22%) demonstrating a strong tenant base and wage increases. It is also well within the Office for National Statistics^{^[5]} guidance that rent should be less than 30% of tenants' gross household income.

Net rental income over the financial year increased by 18% to £47.3 million (2023: £40.2 million). The rise was driven by a combination of three factors: a full year's rental contribution from properties that had been completed and let part-way through the prior financial year; increased unit numbers; and rental growth.

The portfolio's excellent asset performance to date demonstrates the continuing need for high-quality family rental homes. Supply side issues have worsened over the year, with private landlords continuing to exit the market, while demand has been further fuelled by higher interest rates and general economic uncertainty. These factors have put further obstacles in place for potential homeowners.

In its latest Housing Insight Report, published in September 2024, Propertymark, the leading professional body for estate and letting agents, commercial agents, auctioneers, valuers and inventory providers, stated that overall demand continued to outstrip supply, with around 8 new applicants registered for each available property in July 2024, and that new instructions trended downward pointing to the potential for further supply constraints. Zoopla, a leading UK property website, reported in September 2024 in its Rental Market Report that while rental inflation had slowed to the lowest level in almost three years, it is cooling off a high base and still double pre-pandemic levels. Zoopla stated that high demand and a low supply of properties continue to keep rents high and that there are still 25% fewer properties available in 2024 compared to 2019. It also anticipates that potential further tax changes will result in more landlords selling and that rents will continue to rise, with the supply/demand imbalance set to remain into 2025.

After the financial year end in July 2024, we extended the Company's Investment Advisory and Development Management Agreements with Sigma PRS Management Ltd ("Sigma PRS"), agreeing a reduced fee structure at the same time. The two Agreements have been extended by two and a half years from the end of their previous terms to 30 June 2029, but the reduced rates took effect from 1 July 2024, are expected to result in immediate cost savings on a pro forma basis of approximately 0.1 pence per annum on EPRA EPS, or c.£0.5 million per annum, based on the Company's Net Asset Value as at 30 June 2024. The Company's contractual arrangements with Sigma retain important and valuable contractual protections, including the Company's right of first refusal to acquire single family housing development opportunities introduced by Sigma PRS. Sigma PRS operates the largest build-to-rent platform in the UK and has established a leading position in the single family homes market. The Board believes that this provides the Company with significant operational benefits and that Sigma PRS's expertise and experience is evidenced in the performance of the portfolio and in particular the gross to net metric.

Financial results

Revenue, which is generated wholly from rental income, increased by 17% year-on-year to £58.2 million (2023: £49.7 million). This increase reflects a combination of strong rental growth, a full year's rental income from homes let part-way through the prior financial year, and the increase in completed homes. Non-recoverable property costs as a % of revenue decreased slightly to 18.8% of revenue (2023: 19.1%), benefiting from tight cost management by the Investment Adviser as well as rental income growth, which together more than offset higher costs and additional homes coming out of warranty. Net rental income for the financial year rose by 18% to £47.3 million (2023: £40.2 million).

Expenses in the year increased to £9.2 million (2023: £8.3 million), reflecting portfolio growth.

The gain from the fair value adjustment on investment property was £73.4 million (2023: £25.4 million), driven by the growth in ERV which was marginally offset by average net investment yield movements.

The independent valuer's assessment of ERV on completed and let properties at 30 June 2024 was approximately £5.4 million (2023: £5.1 million) higher than passing rent; it demonstrates strong market demand for the Company's product. The fair value of investment property is based on the valuer's estimate of ERV with a capital deduction from investment value where appropriate to reflect the difference between the passing rent and ERV.

Operating profit increased by 90% to £111.7 million (2023: £58.9 million), which reflected the increase in gains from fair value adjustments on investment property. These gains are non-cash items.

Finance costs were higher, as expected, at £18.2 million (2023: £16.5 million) reflecting the increased quantum of debt and change in interest rates compared to the previous year, as well as the Company's utilisation of the variable rate RBS investment debt facility during the year. The impact of the larger quantum of debt and higher interest rate on more recent debt issuance continues to be mitigated by the lower cost fixed rate investment debt with Scottish Widows. Finance income from short-term deposits in the year was £188,000 (2023: £49,000), reflecting the full year of increased interest rates.

Profit after taxation increased by £51.2 million or 120% to £93.7 million (2023: £42.5 million) while basic and diluted earnings per share increased by 122% to 17.1p (2023: 7.7p) on an IFRS basis.

The Group's IFRS net asset value ("NAV") per share and EPRA net tangible asset ("NTA") per share at 30 June 2024, both increased to 133.2p (31 December 2023: 123.6p and 30 June 2023: 120.1p). This is an 11% increase over the prior year and an 8% increase over the prior six months.

Net assets at 30 June 2024 were 11% higher year-on-year at £731 million (30 June 2023: £660 million). This is after paying dividends of £22.0 million in the year (2023: £22.0 million).

Debt facilities

As at the financial year-end on 30 June 2024, the Company had £460 million of committed debt facilities available for utilisation, of which nearly £420 million was drawn. This comprised £427 million of investment debt facilities and £33 million of development debt facilities.

Debt refinancing

At the beginning of the financial year in July 2023, the Company refinanced its £150 million revolving credit facility ("RCF") provided by The Royal Bank of Scotland plc ("RBS") and Lloyds Banking Group plc, agreeing a £102 million fixed-rate debt facility for 15 years with Legal and General Investment Management ("LGIM") and a £75 million floating-rate debt facility for two years with RBS.

This refinancing resulted in a number of significant benefits:

· it extended the proportion of the Company's overall debt covered by long-term facilities to approximately 82% (with the average term of the long-term facilities being 16 years). Before this, approximately 63% of the Company's overall debt was covered by long-term facilities (with their average term being 17 years).

· it lengthened the maturity of the Company's overall debt facilities, with the average term for all debt increased to 13.7 years at 30 June 2023, from 10.9 years at 31 December 2022; and

· it reduced future annual debt amortisation costs. This reflects the lower arrangement fees and a longer period of amortisation.

Following the refinancing, our lending partners across our £460 million of committed debt facilities are: Scottish Widows (£250 million - investment debt); Legal and General Investment Management (£102 million - investment debt); The Royal Bank of Scotland plc ("RBS") (£75 million - investment debt); and Barclays Bank PLC (£33 million - development debt). The majority of our debt (£427 million) is classed as investment debt, with the £33 million debt facility from Barclays Bank available to be drawn as development debt, enabling multiple sites to be developed simultaneously.

The PRS REIT has total fixed long-term debt facilities of £352 million, with an average blended interest rate of 3.8%. This compares favourably with the average net investment yield of 4.59% as at 30 June 2024. These long-term debt facilities account for approximately 82% of the Company's total investment debt of £427 million.

The portfolio's gearing remains low at 36% EPRA LTV (2023: 37%), and, in line with the Company's Investment Policy, the debt facilities are below the maximum gearing ratio of 45% of gross asset value.

Environmental, Social and Governance ("ESG") practices

The PRS REIT is a member of the UK Association of Investment Companies and applies the Association's Code of Corporate Governance to ensure best practice in governance.

The Board is responsible for determining the Company's investment objectives and policy and has overall responsibility for the Company's activities. This includes the review of investment activity and performance. The day-to-day management of ESG matters is delegated to the Investment Adviser, Sigma PRS. Sigma PRS is also a signatory and participant of the United Nations Global Compact.

As a landlord with thousands of homes across the UK, the Board is very aware of the Company's possible impact on people's lives and conscious of its societal responsibilities. The potential for our homes and activities to contribute very positively to the communities in which the Group operates is high. For this to be achieved, the core proposition must be right. First and foremost, the Group aims to provide high-quality, energy-efficient, well-located homes that are well-maintained and supported by high customer service levels. At the same time, the delivery of new homes and new developments have an impact on the environment, with the potential to be positive or negative. Environmental considerations are rightly becoming more and more important. In addition to these issues, the Board places a high priority on fostering a sense of community within developments and believes that the Company should play its role in promoting and encouraging strong community bonds.

This approach drives the Group's ESG activities and policies. The Investment Adviser's Report provides further details of these, and I am very pleased to highlight the steps we are continuing to take to generate environmental benefits, to deliver a high standard of customer care and ensure that people enjoy living in The PRS REIT's homes and feel a sense of community. The Board believes that the social activities that are regularly organised across developments and the links forged between charities, beneficiaries and the Company's tenants, all help to generate meaningful benefits both on an individual and social scale. The feedback received from both residents and beneficiaries is testimony to this and a number of examples are provided in the Investment Adviser's Report.

The Board aims to continue to widen the Company's ESG activities over the new financial year.

Requisition event and Board changes

As previously reported, the Board received a Requisition Notice on 29 August 2024 from Requisitioning Shareholders. The Requisition proposed Board changes, including the appointment of Robert Naylor and Christopher Mills as Non-executive Directors, with a view to the new Directors working with the remaining Board members to undertake a review of options to return value to shareholders.

Following a consultation process with both major shareholders and Requisitioning Shareholders, undertaken by a Sub-Committee of independent non-executive Directors not subject to the Requisition, the Company announced on 13 September 2024, that the Requisition Notice had been withdrawn and that the following changes would be taking place:

●	I will be stepping down as Non-executive Chairman of the Company at the forthcoming AGM. I am nearing the end of my term and the transition may help to facilitate near-term change;
●	Geeta Nanda, Senior Independent Director, will become Interim Chair at the AGM and lead the appointment process for a new permanent, independent, non-executive Chair;
●	the Board will launch the appointment process immediately, with support from external consultants to identify and appoint a non-executive Chair with relevant experience; and
●	Robert Naylor and Christopher Mills will be appointed to the Board as non-executive Directors and proposed for election at the AGM.

Steffan Francis will remain as a non-Executive Director, ensuring continuity of property experience. The succession plan for Steffan Francis and Rod MacRae, currently scheduled for 2025 with their tenure coming up to nine years of service, will be conducted in accordance with the AIC Code of Corporate Governance and will balance the appropriate skills required.

The Board had originally expected to provide an update on Strategy with these results. However, given the changes to the Board, the Strategy will now be reviewed by the newly-constituted Board and an update will be given when appropriate. Further details are set out in the 'Shareholder Engagement' section below.

As we stated previously on 13 September 2024, the Board believes the agreement and changes reflect a balance of the views of all shareholders. They also respect the principles of good governance in orderly succession planning, and help to ensure that a new independent Chair and any future Board directors have the appropriate blend of skills and expertise. In addition, the Board believes the agreement will allow the Company to move forward and focus on value maximisation for all shareholders.

Two Board changes took place earlier in the financial year. On 10 October 2023, Karima Fahmy was appointed as an Independent Non-Executive Director. Karima replaced Jim Prower, who retired as an Independent Non-Executive Director at the conclusion of the Annual General Meeting on 4 December 2023. Karima is a corporate lawyer with extensive experience of the UK property market, including the residential sector and urban regeneration. The Board takes this opportunity to thank Jim for his contribution to the Company during his tenure and wishes him a happy retirement.

Outlook

We have added 29 new homes to the portfolio in the first quarter of the new financial year, taking the portfolio to 5,425 completed homes at 30 September 2024, with a further 151 under way. The ERV of completed homes has risen to £67.5 million per annum (30 September 2023: 5,129 completed homes with an ERV of £57.6 million per annum).

The performance of the portfolio remains excellent. Rent collection in the first quarter was 100% (2023: 98%) and total occupancy at 30 September was at 98% (30 September 2023: 98%), with 5,303 homes occupied out of the total of 5,425. At that point, a further 86 homes were reserved for applicants who had passed referencing and paid rental deposits, but not yet taken occupancy. Total arrears at 30 September 2024 stood at £1.6 million (2023: £1.1 million). The like-for-like blended rental growth on stabilised sites over the year to 30 September 2024 was c.12% (2023: c.10%).

We remain confident that the majority of the balance of 151 still to be delivered will be completed by the end of this calendar year, with the balance delivered over the course of the first few months of calendar 2025. With this final tranche of homes, the portfolio will comprise approximately 5,600 homes with an ERV of £69.1 million per annum. Since March 2024, the annual 4p per share dividend has been fully covered on a run rate EPRA EPS basis. Dividend cover will continue to grow as construction, completions and lettings advance, and as rental growth continues. Reflecting our confidence in the ongoing performance of the portfolio, strong rental demand and orderly delivery of the remaining homes to be completed, we are currently reviewing the target dividend for FY25, and expect to provide an update to the market within the Q1 Trading Update. We expect to declare the interim dividend for the first quarter of the new financial year in November 2024.

Currently, 82% of the Company's long-term debt is fixed at an average weighted cost of 3.8% over an average term of 16 years. With interest rates now tracking more favourably, this gives the option to secure another fixed-rate, long-term investment debt facility in 2025 to replace the short-term RBS variable rate facility if the interest rate cycle continues to move favourably. In the meantime, the Company has entered into discussions for additional short-term debt facilities to ensure funding for the completion of the portfolio.

In this my last Annual Chairman's Statement and on behalf of my fellow Directors, I would like to express our appreciation to all those who have supported the establishment and growth of the PRS REIT. It has been a ground-breaking venture and with the support of investors, housebuilding partners, financiers, local and central government, we have created the largest portfolio of single family homes in the UK for the private rented market. In particular I wish to express our appreciation of the truly excellent contribution of our manager, Sigma. Sigma created the opportunity through its relationships within the UK housebuilding sector and industry best practices and have delivered excellent performance throughout my tenure as Chairman.

Our homes are high-quality, energy-efficient and professionally managed. They have been built for families and individuals up and down the country and have been designed to be attractive, long-term places in which to live, with a strong sense of community. As we near the end of the delivery phase of the portfolio, we are proud to have played a small part in alleviating the UK's acute need for housing, and for forging a new path in the still emerging build-to-rent sector.

The PRS REIT's business model remains firmly supported by market fundamentals. Population growth, changing household formations and low new housing volumes continue to drive demand. We expect our homes to continue to rent very well.

Steve Smith

Chairman

7 October 2024

* This is a target only and there can be no assurance that the target can or will be met and should not be taken as an indication of the Company's expected or actual future results. Accordingly, potential investors should not place any reliance on this target in deciding whether or not to invest in the Company or assume that the company will make any distributions at all and should decide for themselves whether or not the target dividend yield is reasonable or achievable.

IFRS and EPRA Performance Measures

Under the European Real Estate Association ("EPRA") best practice recommendations ("BPR") for financial disclosures by public real estate companies, three measures for reporting net asset value are available, EPRA Net Tangible Assets ("NTA"), EPRA Net Reinstatement Value ("NRV"), and EPRA Net Disposal Value ("NDV").

The Group considers EPRA NTA to be the most relevant measure for its operating activities, and has adopted this as the Group's primary measure of net asset value.

EPRA NRV is not considered an appropriate disclosure measure for the PRS REIT as the Group has acquired, constructed and developed the vast majority of assets and this would therefore equate to adjusted historic construction cost.

The valuation of the Group's assets is undertaken in accordance with RICS guidance. However, this does not include any adjustment to reflect the size and scale of the Group's overall portfolio of assets. The Board's view is that collective marketing of the portfolio would attract a higher valuation reflecting yield compression attributable to the size and scale of the overall portfolio. In the absence of comparable market evidence for such a portfolio, EPRA NDV is not considered an appropriate measure.

KPI	Explanation	Performance
KPI	Explanation	Year to 30 June 2024	Year to 30 June 2023
IFRS NAV (see note 9)	Unadjusted net asset value.	133.2p per share	120.1p per share
EPRA NTA (see note 9)	EPRA Net Tangible Asset is net asset value adjusted to include properties and other investment interests at fair value and to exclude certain items not expected to crystallise in a long-term property business model.	133.2p per share	120.1p per share
IFRS EPS (see note 5)	Unadjusted earnings per share.	17.1p per share	7.7p per share
EPRA EPS (see note 5)	Earnings per share excluding investment property revaluations, gains and losses on disposals, changes in the fair value of financial instruments and associated close-out costs and their related taxation.	3.7p per share	3.1p per share
EPRA Earnings (see note 5)	EPRA Earnings is a measure of operational performance and represents the net income generated from the operational activities excluding changes in value of investment properties.	£'000 20,263	£'000 17,099

Market Dynamics

The Build to Rent ("BtR") sector in the UK is playing an increasingly important part in overall housing delivery. Its value as an accelerant in the delivery of mixed-development sites (those including private for sale, private rental and affordable homes) is well recognised and BtR is adding thousands of extra new homes to overall UK housing delivery. The UK BtR market still remains relatively undeveloped, especially when compared to more mature markets such as the USA and Germany.

The growth of UK BtR is being driven by the structural problems of the owner-occupied and rental markets, both of which are impacted by a severe shortage of properties, leading to strong rental growth. Over the last 20 years rental growth has averaged 3.2% compared to earnings growth that has averaged 3.1% over this period.

The new Labour Government is intending to reintroduce annual home delivery targets through the National Planning Policy Framework and has increased the previously discarded target of 300,000 new dwellings per annum to 370,000 new dwellings per annum. We believe that BtR has the potential to be an important contributor in the new drive for new homes.

The BtR sector has grown strongly over the last year. According to data compiled by Savills for the British Property Federation's ("BPF") and published in July 2024, BtR completions in Q2 reached record levels, with the sector starting to make an appreciable difference to housing delivery across a growing number of locations within the UK. The total number of completed BtR units at the end of Q2 stood at 115,778 and the total number of BtR homes in planning was 57,000 homes, a near record level. However for the third quarter in a row the number of completions remained above the number of starts on sites. The continued slow-down in new starts is ascribed to ongoing sector challenges, including build cost inflation, cost of debt and the impact of economic and political uncertainty on investors. The British Property Federation called for more action to convert planning consents to starts on site and to bring forward new schemes through the planning proceed in order to service the huge rental demand.

There is a substantial shortage of properties in the UK for both the owner-occupied and rental sectors. CBRE, the global real estate adviser, reported that the UK's private rented residential sector has lost about 400,000 rental homes since 2016 due to growing cost pressures and higher mortgage costs. Private landlords in the buy-to-let sector are still the largest provider of rental properties in the UK. They have been under pressure from an increasingly unfavourable tax regime, growing regulatory burden as well as base rate rises, and this pressure is set to continue. According to a report by UK Finance, the banking trade body, the value of lending into the buy to let sector fell by 52% over the course of 2023 equating to a reduction in loans from 25,280 in the last quarter of 2022 to just over 12,000 at the same point in 2023. Savills also reported in August 2024 that sales of second homes and buy-to-let properties had risen by 34% in the period 2021-2024 compared to the preceding three years, with these sales accounting for one-in-six of all property disposals, compared to one-in-fifteen in 2013-2014.

Challenges in the home ownership market have also continued to fuel demand in the rental sector. The median house price to income ratio at the end of 2023 was 8.1, according to the Office for National Statistics, which although lower than the preceding year (8.3), is still at historic highs while mortgage rates have also risen sharply over the previous two years. The deposits required for most mortgages still remain beyond the reach of many. By comparison, the PRS REIT's homes remain very affordable. At 30 June 2024, the average household income of a PRS REIT tenant was £52,500 (30 September 2023: £51,000) and the average rent was £1,005 per calendar month (2023: £934), meaning that annual rent as a proportion of household income was 23% (2023: 22%). This reflects a combination of stronger wage inflation and the emergence of a wealthier cohort of potentially disenfranchised would-be home buyers who have entered the rental market.

The shortage of rental properties, with low stock levels and relatively low availability, remains evident. A report from TwentyCI and TwentyEA in early July 2024 stated that whilst some of the previous year's pressure in the rental market was easing, availability remained at historic lows and that demand is still outstripping supply. CBRE's Mid Year Market Outlook 2024 forecasts that stretched affordability will exert a downward pressure although this will take time to feed through, and as such forecasts strong rent growth of 6% in 2024 for the remainder of the year. A report from the Office for National Statistics, published in July 2024, noted that average UK private rents increased by 8.6% in the 12 months to June 2024.

In summary, it is clear that the market opportunity in BtR remains significant and that the sector remains an important means of fulfilling a social need and meeting demand for high-quality, well-managed rental housing in the UK.

Private Rented Sector Reform

The recently-elected Labour Government has introduced the Renters (Reform) Bill, which aims to change the law about rented homes. A key proposal is reform of the grounds for repossession, with the abolition of Section 21 "no fault" evictions, thereby removing a landlord's ability to evict tenants without reason. Other proposals include the abolition of fixed-term assured tenancies and assured shorthold tenancies, the strengthening of timeframes in which landlords are required to investigate and fix reported health hazards and a requirement for rental properties to have an EPC rating of C or above by 2030. These proposals are likely to put further pressure on private landlords to exit the sector.

In addition, the Government is targeting an increase in the number of new houses to be built every year and has set out a goal of 1.5 million new homes over the life of the Parliament. BtR homes will be central to that delivery.

We are in favour of proposals that support the rights of tenants to a decent home while also supporting responsible landlords. As a professional landlord, the PRS REIT is in the market for the long-term and does not view current proposals as likely to materially adversely impact the Company's operations.

Portfolio Analysis

As at 30 June 2024, the value of the Group's completed property portfolio was c.£1.1 billion (2023: c.£1.0 billion). The investment value of all sites was £1.2 billion on completion (2023: £1.1 billion). These valuations were arrived at independently by Savills, the global real estate services provider.

Property portfolio by regional split - at 30 June 2023

The portfolio is geographically diversified and the regional split by investment value at 30 June 2024 was as follows:

· North West 52% (2023: 51%);

· West Midlands 21% (2023: 21%);

· South East 11% (2023: 11%);

· Yorkshire 11% (2023: 11%);

· North East 2% (2023: 3%);

· Wales 2% (2023: 2%); and

· Scotland 1% (2023: 1%).

Other metrics - at 30 June 2023

· Gross-to-net: the deduction from gross to net rent across the portfolio for the year ended 30 June 2024 improved to 18.8% (2023: 19.1%).

· Rent roll: the rent roll at 30 June 2024 was £65.1 million (2023: £55.0 million) and the average rent was £12,060 per annum or £1,005 per month (2023: £10,831 per annum or £903 per month).

· Average size of site: the average size of site was 77 housing units (2023: 74 housing units).

· Properties by bedroom number: the split between 1, 2, 3 and 4-bedroom properties was approximately 3%, 26%, 62% and 9% respectively (2023: 3%, 26%, 62% and 9% respectively).

· Bad debt: bad debt expense for the year was £0.3 million (2023: £0.2 million) and the bad debt provision at the year-end was £0.7 million (2023: £0.5 million) reflecting a prudent approach in the current economic climate.

Age groupings

The largest age grouping across the customer base at the time of sampling on 30 June 2024 was 26-35 years. This age group represented 45% of the total customer base. It was also the largest grouping in 2023 although it accounted for a marginally higher proportion of the total customer base at 46%. All other age groups remained largely consistent with 2023, with the exception of the 36-45 age grouping, which is more strongly represented in 2024 compared to 2023. It is considered this grouping includes potential home buyers who have moved into the rented sector due to the difficulties in the for-sale sector.

Age	2024	2023
Under 25	22.0%	21.8%
26-35	45.5%	47.0%
36-45	20.9%	18.3%
46-55	7.0%	8.3%
56-65	3.0%	3.6%
65+	1.6%	0.95%

Household income bracket

Across the mid-ranges of household incomes, 2024 groupings are similar to 2023. The greatest changes between 2024 and 2023 are in the lowest and highest income brackets - with the most marked change in the, £65,000 plus gross income bracket, which has increased sharply year-on-year. This was also the case in the prior year. We have seen more households on lower incomes coming back into the portfolio although the average income as a whole across the portfolio has moved higher.

Annual Household Income	2024	2023
Under £25k	8.8%	12.3%
£25k-£35k	12.3%	15.8%
£35k-£45k	16.2%	15.2%
£45k-£55k	17.4%	16.5%
£55k-£65k	11.9%	13.5%
£65k+	33.4%	26.7%

Tenancies with children

Approximately 45% of households included children, which is broadly unchanged from last year. It is assumed that some in the 26-35 year-old group are moving into homes with the intention of starting a family, but the high volume of renters without children may indicate a tendency to defer or abandon family formation. The two largest groupings of tenants with children are those with two or four plus children. This is similar to the prior year.

Children	2024	2023
None	55.4%	60.2%
One child	5.6%	4.6%
Two children	18.8%	18.4%
Three children	2.4%	1.8%
Four+ children	17.8%	15.0%

Distance travelled

We record the distance travelled by tenants from their previous address to their new 'Simple Life'^{^[6]} home. The two largest categories are those travelling 'under 3 miles' and 'greater than 50 miles'. As the brand is nationwide, we believe that this shows increasing brand awareness and that our model of site selection in and around major conurbations is capturing residents moving for employment reasons.

Distance Travelled	2024	2023
<3 miles	49.2%	27.2%
3-10 miles	16.4%	22.6%
10-50 miles	15.3%	23.2%
>50 miles	19.1%	27.0%

The data for both years are based on new applicant, regional data collected for the Simple Life Homes brand.

Investment Strategy and Business Model

AWARDS

Over the course of the year, a number of developments have been shortlisted or won awards while Simple Life^{^[7]} has been recognised for its social impact as well as its technology. We are delighted to highlight the following:

· NE Insider Property Awards - Residential Development of the Year 2024 (Kirkleatham Green) - WINNER

· NW Insider Residential Property Awards - BTR Development of the Year 2024 (Brookfield Vale) - SHORTLISTED

· Love to Rent Awards- Tech in BTR 2023 ('MySimpleLife' mobile app) - SHORTLISTED

· Love to Rent Awards- Best BTR SFH Development 2023 (Stonefield Edge) - WINNER

· Love to Rent Awards - Social Impact in BTR 2023 (Simple Life Homes) - WINNER

· CityWire Investment Trust Awards - Best Specialist Trust Award 2023 (The PRS REIT plc) - WINNER

Business activities

The PRS REIT plc is a public limited company that was incorporated in England on 24 February 2017. Together with its subsidiaries, it is the only quoted Real Estate Investment Trust ("REIT") to focus purely on the Private Rented Sector ("PRS").

Investment objective, policy and business model

The PRS REIT is seeking to provide investors with an attractive level of income, together with the prospect of income and capital growth. It is delivering this through the establishment of a large-scale portfolio of newly-constructed residential rental homes for the private rented sector in or near towns and cities in the UK, excluding London.

The Company's scalable business model is able to deliver new homes across multiple regions and sites. It utilises the Investment Adviser's PRS property delivery and management platform (the "Platform").

The Company's portfolio of homes is targeted at the family market, which is the largest segment within the private rented sector. The Company has concentrated on traditional housing, with broad appeal, and its portfolio comprises differing house types, built to standardised specifications. They cater for most life stages, including smaller houses for young couples and retirees, and larger houses for growing families. The Company has also invested in some low-rise flats to broaden its rental offering.

The Company's homes are located across multiple sites in the UK, outside London, with the largest proportion sited in the Midlands and the North. Their locations have been carefully chosen for their accessibility to main road and rail links, good primary schooling, and proximity to centres of economic activity, which promote long-term employment prospects. The new-build nature of the assets means that they benefit from a 10-year building warranty, typically from the NHBC (National House Building Council), and manufacturers' warranties. Homes are let on Assured Shorthold Tenancies (as defined in the Housing Act 1988) to qualifying tenants. The sourcing of assets is undertaken by Sigma PRS and the Company has been building its portfolio in two ways.

· In the first instance, Sigma PRS selects suitable development sites, obtains detailed planning permission and agrees a fixed-price design & build contract with one of its construction partners. Thereafter, Sigma PRS manages the delivery process on behalf of the Company.

Assets are always acquired with detailed planning consent and fixed price design & build contracts, thereby minimising the Company's exposure to development risk. Construction risk has been further mitigated with standard fixed-price design & build contracts, containing liquidated damages clauses for non-performance, financial retentions for one year after completion, and a parent company guarantee ensuring the satisfactory performance by the contractor and an indemnity for losses incurred. Over 80% of the Company's assets have been sourced through this way.

· In the second instance, assets are acquired by entering into forward purchase agreements with Sigma Capital Group Limited ("Sigma"), the holding company of Sigma PRS. The assets are only acquired once fully completed and let. Typically, they have been constructed by the same construction partners and supply chain as other assets whose development is described above, thereby ensuring homogeneity of the Company's housing stock. Completed and stabilised developments may also be purchased from other third-parties using approved construction partners.

In both instances, assets are acquired at the valuation provided by an independent valuer. The PRS REIT retains the right-of-first-refusal to acquire and develop any sites sourced by Sigma PRS that meet the Company's investment objective and policy subject to the availability of funding.

Achieving scale and reducing risk

The Sigma PRS Platform

The Investment Adviser has been utilising Sigma's well-established PRS property delivery and management platform to scale the PRS REIT's portfolio and to minimise development and operational risks.

Dedicated Sigma teams manage legal due diligence, corporate debt provision, site identification, development management, accounting and financial reporting, brand representation, and leasing and property management.

The efficacy of the Platform is well established and its scale brings significant financial and operational benefits to the PRS REIT. These include the Platform's relationships with development partners, which support the identification and acquisition of new homes, the award-winning 'Simple Life' lettings brand, which has widespread consumer recognition, and the Platform's substantial economies of scale. These elements have helped to facilitate growth opportunities, and support income growth and cost control.

Dedicated finance team

Sigma has a dedicated PRS REIT accounting and financial reporting team, which covers all aspects of the Company's finances. This includes: site acquisition; funding; board, management and statutory reporting; performance monitoring; forecasting; debt covenant compliance; and taxation.

Debt and legal teams

The debt and legal teams at Sigma use their extensive knowledge of the PRS REIT and their longstanding relationships with funders within the sector to secure bespoke, competitively priced debt facilities. These are used to ensure sufficient ongoing support for assets throughout their lifecycles. The legal teams have also built-up strong relationships with funders' advisers and this helps to ensure a streamlined and efficient legal process when transferring assets across debt pools, which drives optimum use of capital within the business.

Development team

Sigma has well-established relationships with construction partners, central government, and local authorities. Key construction partners include: Vistry Group including Countryside Partnerships; Kellen Homes; Springfield Properties; Lovell; Telford Homes; and Persimmon. Homes England, an executive non-departmental public body sponsored by the Department for Levelling Up, Housing and Communities, works closely with Sigma towards the common goal of accelerating new housing delivery in England.

Marketing team

The PRS REIT's homes are marketed under Sigma's 'Simple Life' brand, which is widely recognised as a leader in the single-family rental sector. The number of enquires received from Simple Life's marketing channels during lease up periods is now consistently greater than those received from traditional property portals.

Lettings management team

A specialist Sigma team of leasing and property management professionals manage the pricing and the release of new homes and oversee the customer experience across all properties. Sigma has also developed an award-winning, bespoke tenant app., which supports high customer service levels. It continues to be enhanced with new functionality.

Asset management team

The asset management team is responsible for detailed reviews of tenancies, and income and asset management, which are undertaken on a weekly basis. This underpins the orderly management of both tenancy renewals and new lets, supporting optimal income predictability and cash generation. The scale of Sigma's broader operations outside the PRS REIT, means that the Platform benefits from significant wider economies of scale, including considerable purchasing power, which reduce costs and provide greater long-term visibility of costs.

Geographic diversification

The PRS REIT's concentration risk has been reduced by creating assets across multiple locations and in different regions. Certain locations demonstrate higher yielding profiles (predominantly those in the North of England) while others provide greater potential for capital appreciation (often in the South of England). Proximity to good primary schools has remained a key requirement, reflecting the Company's focus on the single-family rental sector.

In addition, no investment has been made in any single completed PRS site or PRS development site that exceeds 10% of the aggregate value of the total assets of the Company at the time of commitment.

'Simple Life' brand

The PRS REIT's rental homes are marketed under the 'Simple Life' brand. The brand has created an identity for the PRS REIT's product and aims to represent a 'gold standard' in the private rented sector, by providing high-quality, sensibly-priced rental homes that are supported by high customer service standards.

The PRS REIT's long-term approach to the ownership of its assets also provides important reassurance to residents that their tenancies offer longevity. The Group also actively fosters initiatives that help to create a sense of community within the Group's developments.

Investment Restrictions

The Group observes the following investment restrictions:

·	the Group only invests in private rented residential houses and apartments located in the UK (predominantly in England);
·	the Group invests in assets that require development by means of the Group's forward funding model, (so long as when completed they fall within the Company's investment policy). However, it does not undertake development without planning consent being in place or if the gross committed (but unspent) construction costs to the Group of all such forward funded development exceeds 25% of the aggregate gross value of total assets of the Group at the time of commitment, as determined in accordance with the accounting principles adopted by the Group from time to time (the "gross asset value"). Any forward funded development will only be for investment purposes;
·	in order to further manage risk in the portfolio, no investment by the Group in any completed PRS site or PRS development site exceeds 10% of the aggregate value of the gross asset value of the Group at the time of commitment); and
·	the Group does not invest in other alternative investment funds or closed ended investment companies.

Equity and debt financing

As previously outlined, the PRS REIT has obtained funding via equity raises from the capital markets and Homes England and utilises gearing to enhance equity returns. The level of borrowing, raised from banks and other institutions, is prudent for the asset class, whilst maintaining flexibility in the underlying security requirements and the structure of both the PRS portfolio and the Group. The Company's Investment Policy requires the aggregate borrowings of the Group to be subject to an absolute maximum, calculated at the time of drawdown of the relevant borrowings, of not more than 45% of the gross asset value. Once the portfolio is fully stabilised, the Investment Adviser expects gearing to settle to around 40% of gross asset value. Further detail of the Company's debt facilities can be found in the Investment Adviser's Report.

Derivatives

The PRS REIT uses derivatives for efficient portfolio management. In particular, the Company may engage in full or partial interest rate hedging or otherwise seek to mitigate the risk of interest rate increases on borrowings incurred, in accordance with the Company's gearing limits as part of the management of the portfolio.

REIT Status

The Company will conduct its affairs so as to enable it to remain qualified as a REIT for the purposes of Part 12 of the Corporation Tax Act 2010 (and the regulations made thereunder).

Investment Adviser's Report

Sigma PRS Management Ltd ("Sigma PRS"), a wholly-owned subsidiary of Sigma Capital Group Limited, is the Company's Investment Adviser. It is pleased to provide a report on the PRS REIT's activities and progress for the year ended 30 June 2024 and to outline the portfolio's performance in the first quarter of the new financial year ending 30 June 2025.

Operational Review

Development activity and acquisitions

A total of 316 homes were added to the PRS REIT's portfolio in the financial year to 30 June 2024 (2023: 294 homes). This included the acquisition, from Sigma, of a new, fully-let development of 52 homes in Yorkshire. These new homes took the total number of completed homes in the portfolio at the end of June 2024 to 5,396, an increase of 6% on the same point last year (2023: 5,080).

The combined estimated rental value ("ERV") of the completed homes in the portfolio increased by 18% year-on-year to £65.1 million per annum (30 June 2023: £55.0 million per annum). The majority of these homes are in six of the eight major regions of England, with the remainder being a development in Wales and another development in Central Scotland.

There is a difference between ERV, used for valuation, and actual passing rent paid by tenants. As at 30 June 2024, ERV was estimated to be £5.4 million higher than passing rent (2023: £5.1 million higher). This reflects the strong demand for the Company's homes. The fair value of the Company's investment properties as at 30 June 2024 is based on ERV, with a capital deduction from investment value where appropriate to reflect the difference between the passing rent and ERV, with all estimates compiled independently by Savills.

The table below provides further information on development activity over the financial year, as well as comparative data for the financial year ended 30 June 2023 and data for the first quarter of the new financial year ending 30 June 2025.

	At 30 September 2024	At 30 June 2024	At 30 June 2023
Number of completed homes	5,425	5,396	5,080
ERV per annum of completed homes	£67.5m	£65.1m	£55.0m
Completed sites	68	68	63
Contracted sites	4	4	8
Number of contracted homes	151	180	444
ERV per annum of contracted homes	£1.6m	£1.4m	£3.8m

Construction resource

The construction resource provided by the Sigma PRS Platform has national reach, enabling the expansion of the Company into key population centres across the UK, primarily in England, and supporting the creation of a geographically diverse portfolio.

There are many benefits for our construction partners in partnering with us. These include strengthening their ability to bid for land with local councils and improving their operational efficiencies with their own housing delivery. This partnership approach works well and the model we operate - of using standard family house types, fixed price design & build contracts, together with standardised specification - helps to ensure that developments are built to budget. The standardisation of housing type also means that completed assets can be maintained and managed more efficiently.

Financial results

Income statement

The Group's revenue (which is wholly derived from rental income) increased by 17% over the year to £58.2 million (2023: £49.7 million). After the deduction of non-recoverable property costs, the net rental income was £47.3 million (2023: £40.2 million). Administration expenses were slightly higher at £9.2 million (2023: £8.3 million) reflecting portfolio growth.

The gain from the fair value adjustment on investment property was £73.4 million, significantly higher than last year (2023: £25.4 million). It continues to reflect a combination of higher ERV offset partially by the negative impact of slightly higher yields in the current and previous periods as asset values move inversely to yield. Operating profit increased to £111.7 million (2023: £58.9 million).

Finance costs for the year were higher at £18.2 million (2023: £16.5 million), which resulted from increased debt utilisation and associated costs during the year, as the portfolio was further built out, and higher interest rates. Finance income from short-term deposits was up sharply to £188,000 (2023: £49,000). The profit after taxation increased to £93.7 million (2023: £42.5 million).

The basic and fully diluted earnings per share on an IFRS basis for the year increased to 17.1p (2023: 7.7p).

Dividends

The total dividend for the financial year under review amounted to 4.0p (2023: 4.0p) per ordinary share, declared and paid quarterly as follows:

·	on 2 November 2023, the Company declared a dividend of 1.0 pence per Ordinary Share in respect of the period from 1 July 2023 to 30 September 2023, which was paid on 1 December 2023 to shareholders on the register as at 10 November 2023;
·	on 31 January 2024, the Company declared a dividend of 1.0 pence per Ordinary Share in respect of the period from 1 October 2023 to 31 December 2023, which was paid on 8 March 2024 to shareholders on the register as at 16 February 2024;
·	on 23 April 2024, the Company declared a dividend of 1.0 pence per Ordinary Share in respect of the period from 1 January 2024 to 31 March 2024, which was paid on 31 May 2024 to shareholders on the register as at 10 May 2024; and
·	on 1 August 2024, the Company declared a dividend of 1.0 pence per Ordinary Share in respect of the period from 1 April 2024 to 30 June 2024, which was paid on 30 August 2024 to shareholders on the register as at 9 August 2024.

Balance sheet

The principal items on the balance sheet are investment property of £1.1 billion (2023: £1.0 billion), cash and cash equivalents of £18.1 million (2023: £13.2 million), long-term loans of £385.1 million (2023: £248.4 million), short term loans of £31.8 million (2023: £126.7 million) and trade and other payables, accruals and deferred income of £16.3 million (2023: £20.1 million).

Investment property includes completed assets and assets under construction at fair value.

Debt financing

At 30 June 2024, the PRS REIT had the following debt facilities:

·	£100 million term loan of 15 years with Scottish Widows, fully drawn as at 30 June 2024 (2023: fully drawn) and maturing in June 2033. Interest is fixed at 3.1% and the loan is secured over assets allocated to Scottish Widows;
·	£150 million term loan of 25 years with Scottish Widows, fully drawn as at 30 June 2024 (2023: fully drawn) and maturing in June 2044. Interest is fixed at 2.8% and the loan is secured over assets allocated to Scottish Widows;
·	£102 million term loan of 15 years with Legal and General Investment Management, fully drawn as at 30 June 2024 (2023: £nil) and maturing in July 2038. Interest is fixed at 6.0% and the loan is secured over assets allocated to Legal and General Investment Management;
·	£75 million revolving credit facility ("RCF") with The Royal Bank of Scotland plc ("RBS") for an initial term of two years, to mid-July 2025. Interest was based on three-month Sterling Overnight Interbank Average Rate ("SONIA") plus applicable margin and the loan was secured over assets allocated to Lloyds Banking Group. As at 30 June 2024, £34.3 million had been drawn; and
·	£33 million (2023: £40 million) development debt facility with Barclays Bank PLC, maturing in August 2025. Interest is based on three-month SONIA plus applicable margin and the loan is secured over assets allocated to Barclays Bank PLC. As at 30 June 2024, £32.6 million had been drawn (2023: £15.2 million drawn).

Debt refinancing

At the beginning of July 2023, the Company refinanced its £150 million RCF provided by RBS and Lloyds Banking Group plc, replacing it with £102 million facility with Legal and General Investment Management, together with a £75 million floating-rate debt facility agreed with RBS; see table above. The floating-rate facility provides flexibility to refinance this element of debt at a potentially more favourable rate during the two-year term of the loan.

The Company immediately deployed approximately £115 million of these new facilities (i.e. the £102 million fixed-rate facility and £13 million of the floating-rate facility) to fund fully completed and stabilised sites. A further £21 million of floating-rate debt was drawn down to fund those sites still in the process of being completed and stabilised in the period to 30 June 2024. The remaining £41 million of these new facilities is expected to be drawn in the next 6 to 12 months.

In September 2023, the Barclays Bank PLC development debt facility was reduced from £40 million to £33 million.

Gearing on the portfolio remains low at 36% EPRA LTV (2023: 37%). Approximately 82% of the £427 million of investment debt is now fixed rate at an average of 3.8%, which compares favourably against the average net investment yield for valuation purposes of 4.59%.

The PRS REIT's aggregate borrowings will always be subject to an absolute maximum, calculated at the time of drawdown of the relevant borrowings, of not more than 45% of the value of the assets. Although the aggregate debt facilities total £460 million, the £33 million Barclays Bank PLC debt facility can be drawn as development debt. This enables a larger number of sites to be developed simultaneously. Once those sites that have been partially funded by development debt have been fully completed and homes let, the assets are refinanced using the Company's longer-term investment debt facilities. On this basis, total borrowings will not exceed the maximum gearing level of 45% highlighted above.

Key performance indicators

The Company's performance is tracked and the major key performance indicators ("KPIs") are shown below:

KPI	June 2024	June 2023	Change
Rental income (gross)	£58.2m	£49.7m	+17%
Average rent per month per tenant	£1,005	£903	+11%
Number of properties available to rent	5,396	5,080	+6%
Average net investment yield	4.6%	4.5%	+2%
Non-recoverable property costs as a percentage of gross rent (gross to net)	18.8%	19.1%	-2%
Fair value uplift on investment property	£73.4m	£25.4m	+186%
Operating profit	£111.7m	£58.9m	+119%
Earnings per share ('EPS')	17.1p	7.7p	+119%
EPRA EPS	3.7p	3.1p	+19%
Dividends declared per share in relation to the period	4.0p	4.0p	-
Dividends paid during the period	4.0p	4.0p	-

All the KPIs are in line with management expectations. Rental income increases, non-recoverable property costs, operating profit, and the number of properties available to rent reflect the increased size of the portfolio and the progression of development sites.

The valuation of the Group's property assets is based on five key drivers:

· land purchase;

· cost to build;

· ERV;

· gross to net income deductions; and

· yield.

Rental income, being passing rent rather than ERV, and gross to net income deductions or operating costs, are the key factors in determining net income. Small variations in these can have a material impact on the valuation of property or the net income levels. These drivers therefore form the basis of the key performance indicators measured and monitored by the Company. Other Special Assumptions applied in addition to the key drivers, and used since inception include: all individual site valuations have been treated assuming part of a larger portfolio (in excess of £50 million); and an indirect purchase of a special purpose vehicle holding title to the asset, so stamp duty is assessed on a share purchase basis rather than as property.

As the majority of the property assets are now completed and let (with costs incurred), our primary focus has moved to rental income performance, operating expenses and average net investment yield. Levels of rental income are dependent on the number of completions and annual rent levels set at the time of renewals and re-lets. The portfolio's average rent at 30 June 2024 was £1,005 per calendar month, which reflects year-on-year growth of 11% (2023: £903 per calendar month) and is consistent with the like-for-like blended rental growth of c.12% on stabilised sites during the financial year.

The number of completed homes is the other key determinant of gross rental income. At the end of June 2024 the number of completed homes was 5,396, up by 316 (6%) from 5,080 at the same point in 2023. The delivery of the initial portfolio is nearing its end, with only a relatively small number of homes remaining to be delivered and the majority of assets completed and let.

Operating expenses determine the quantum of gross rental income that is converted into net rental income. This, in turn, determines the underlying profitability of the Group. In addition, the independent valuers utilise industry-standard assumptions on long-term sustainable operating expenses in performing their valuation work. Monitoring real-life operating expense levels against the industry-standard assumptions is therefore key in assessing overall asset performance and re-affirming the assumptions utilised by the independent valuers. The prevailing level of operating expenditure of 18.8% (2023: 19.1%) is lower than the long-term sustainable assumption and this reflects the still relatively young age of the assets in the portfolio.

Valuation of the Group's property assets, which is undertaken by independent valuers, represents the largest component of the balance sheet. Movements in the valuation between balance sheet dates are therefore essential in understanding profitability through the income statement and asset strength on the statement of financial position.

The valuation uplift during the year reflects a combination of the development surplus recognised on assets under construction together with the impact of the revaluation of the portfolio at the year end. The valuation uplift of £73.4 million (2023: £25.4 million) is the result of the combined impact of ERV and average net investment yield movements. Over the financial year, the ERV of completed homes grew to £65.1 million from £55.0 million, an 18% uplift, of which unit numbers account for only 6%, while the average net investment yield has softened from 4.47% to 4.59%. As asset values move inversely to yield, the ERV growth has more than offset the increase in net investment yield.

The portfolio's average rental affordability ratio (measured as rent paid as a proportion of gross household income) is very healthy at 23% in 2024 (2023: 22%). This is after like-for-like rental growth on stabilised sites of c.12% over the financial year (2023: c.8%). The like-for-like rental growth on stabilised sites is the annual rental growth on sites where all units have been completed and let/nearly all let.

Post period review

Over the first quarter of the new financial year, 29 new homes were added to the portfolio, taking the number of completed homes at 30 September 2024 to 5,425, and the cumulative ERV of completed homes to £67.5 million per annum. At the end of September 2024, there were an additional 151 homes, with a combined ERV of £1.6 million per annum, under way. The portfolio's total ERV of completed and not-yet-completed homes therefore amounted to £69.1 million at 30 September 2024. It is currently expected the majority of the remaining homes will be delivered by the end of the calendar year 2024.

The Company continues to work with one of its principal house building partners to resolve a planning issue in respect of one of its sites. Further details can be found in Note 7.

The table below provides further information of delivery activity over the first quarter of the new financial year.

	At 30 September 2024	At 30 June 2024
Number of completed PRS homes	5,425	5,396
ERV per annum of completed homes	£67.5m	£65.1m
Number of contracted homes	151	180
ERV per annum of contracted homes	£1.6m	£1.4m

Resident feedback

Understanding how happy residents are with their homes and with customer service is extremely important and we obtain and track resident feedback regularly. All tenants are sent a tenant satisfaction survey about one week into their tenancy and then again six months later. This helps us to understand tenants' experience from the outset, with our lettings and moving-in teams, and then once settled into their tenancies. We also seek to ask tenants to complete a survey when renewing their tenancies.

The following table provides a summary of our surveys conducted in the 12-month periods to 30 June 2024 and to 30 June 2023.

		Jul 2022 - Jun 2023	Jul 2023 - Jun 2024
	Percentage of tenants who responded that:
Welcome survey	- the team made it easy to apply	96%	96%
	- they were kept well-informed during the application process	89%	91%
	- they received all the information they required	91%	89%
	- the quality of their home met with their expectations	90%	87%
	- they would recommend 'Simple Life'	96%	96%
Six-month survey	- they were still happy with their home	98%	94%
	- they were happy with the service provided	89%	90%
	- they felt they had been kept well-informed	88%	86%
	- they felt that the Simple Life team has been responsive and that are satisfied with the service provided	89%	90%
	- the communal areas were well maintained	84%	88%
	- they feel part of a community	85%	89%
	- they felt their maintenance requests were fixed in a timely manner	77%	81%
	- they would recommend 'Simple Life'	95%	94%
Renewal survey	- they were happy with their 'Simple Life' experience so far	96%	97%
	- they renewed their tenancy because they love the property	58%	54%
	- they renewed their tenancy because they love the area	20%	28%
	- they renewed their tenancy because of the rent (value for money)	5%	4%
	- they renewed their tenancy because 'Simple Life' offers a better service than a 'one-off' landlord	17%	15%
	- they see themselves staying with 'Simple Life' for 4 years or more	58%	62%
	- they see themselves staying for 3 years or more	76%	78%
	- they would recommend 'Simple Life'	94%	94%

All results are based on responses on a range from "neutral" to "strongly agree". Tenants are given the option to respond on a range from "disagree" to "strongly disagree". These responses are not included in the results reported above. The total number of respondents to the three surveys for the 12 months ended June 2024 was as follows: 'Welcome' survey - 287 (2023: 281); Six-month survey - 246 (2023: 223); and Renewal survey - 660 (2023: 330).

Overall the results from the latest survey show a high level of tenant satisfaction, and that there is a strong level of consistency in tenant satisfaction between the two years.

The largest increases in tenant satisfaction between the two years is in the Six-month survey results, and related to the maintenance of communal areas, the timely resolution of maintenance requests, and feeling part of a community. There was a four percentage point rise in each of these categories.

It is encouraging to see that across the three surveys the proportion of tenants who stated that they would recommend Simple Life remained very high at between 94% and 96%.

The strength of the Simple Life brand has continued to grow.

· Over the calendar year 2023 (Jan-Dec) the Simple Life website received c.364,000 users to the website and over 16,500 enquiry submissions.

· The main sources of enquiry to the Simple Life website for information on newly-launched developments are: online search (26%), word-of-mouth recommendation (16%) and site signage (12%).

· The main sources of enquiry to the Simple Life website for information on all developments are: online search (26%), word-of mouth recommendation (21%), and portal listings (16%).

· Simple Life's following on Facebook, Instagram, YouTube at 31 July 2024 was 5,600+, 5,200+ and 1,100+ respectively. At the end of July 2024, Simple Life had 200+ followers on TikTok (the newest social media channel for the brand).

· Over 5,300 tenants have signed up to the Simple Life mobile app (74% of households) as at 31 July 2024.

Tenant initiatives

Affordability and energy calculator

As reported previously, an affordability calculator, based on the Investment Adviser's referencing criteria, is built into the Simple Life website. It is designed as an aid to assist prospective residents to determine how much monthly rent they can afford relative to their earnings and outgoings.

Following the energy efficiency modelling that Sigma undertook in 2022, the Simple Life website now offers an energy efficiency calculator against our most common property types. Users are able to input their usage habits and property details to obtain an energy bill estimate.

Rental availability

The Simple Life website lists the availability of rental homes in real-time. As well as giving potential renters a better service, it also facilitates a more efficient uptake of homes.

'My Simple Life' mobile app

The bespoke resident mobile app, 'My Simple Life', available on Google and Apple devices, provides a convenient and efficient 'one-stop shop' for residents' needs. It offers:

· easy access to all important documents, such as tenancy agreements, inventories, EPC, gas and EICR certificates;

· information on homes, including floorplans and measurements;

· information on home appliances, including manuals;

· access to statements of account, with certain payments enabled via the app;

· access to meter-readings, including 'push' notifications when a new reading is ready to view;

· access to an open forum, enabling residents on the same development to engage with each other;

· easy reporting of maintenance problems;

· exclusive affiliate offers and discounts;

· a dedicated health and wellbeing section;

· latest news;

· information on the local area; and

· a section for tenant feedback.

The app continues to be updated, adding new functionality and services. Over the period, this included:

· the ability to add images to forum topics and comments - particularly relevant for 'lost and found' enquiries and furniture swaps; and

· a diary function, allowing notifications to any upcoming neighbourhood events, competitions and other important memos.

There are further plans to expand and develop the app over the new financial year.

Affiliate offers

The range of affiliate offers available to tenants was broadened over the year. New offers agreed included discounts from Hello Fresh, Furniture Box, Blinds Direct, and byMATTER, the innovative cleaning and home products company. These offers supplement existing affiliate offers from Oddbox, Sky, Argos, Dunelm, Wayfair, AO, Pretty Little Thing, Appleyard London Florists, The Modern Milkman, ESPA, Virgin Wines, Simply Cook, Smol and many more.

Podcast

The 'Simple Life Chat' podcast, headed by Capital Radio presenter, Russ Morris, continues to explore topics of interest to residents, with experts and residents participating in discussions.

Online reviews

Simple Life is registered with Trustpilot, the review platform, and tenants are routinely invited to leave reviews. This helps the Investment Adviser to identify any areas that need improvement. There are over 960 reviews on Trustpilot and Simple Life achieved an overall rating of 3.5 stars out of 5.0. This compares to an average rating of 2.9 for the business category of Property Rental Agency. All reviews are monitored, with responses provided as appropriate.

Simple Life developments also feature on 'Home Views', a dedicated review website for housing developments. They have gained an average score of 4.29 out of 5.00 from approximately 793 resident reviews (with the BtR benchmark at 4.29).

Customer reviews

A selection of customer testimonials are below.

"Everything is great. Homes are lovely and everything is so simple living here. My house is open plan which is great, garden is massive! I've got 2 bedrooms which are nice and spacious. I've always felt really looked after here, the customer service is great. I've lived here now 4 years and I couldn't see myself living anywhere else. The views from the homes looking over the River Mersey are always a dream."

Jemma (Hollystone Bank Resident), Home Views

"The development is great with a lot of very friendly people who are great. Also the facilities is great too report a fault with my toilet it was fixed the same day …… amazing thank you simple life for allowing me to live in a beautiful home."

Sarah S (Pullman Green Resident), Home Views

"Great house and if you need help they're always there for you to fix any problems promptly. Amazing and the location of the property is perfect."

Ash (Charlton Gardens Resident), Home Views

"I live in the 2 bedroom irwell property, I love the open plan layout downstairs and all of the appliances being built in and hidden away. Lovely view of the back garden through the large French doors. The property management is so easy through the simple life app, the communication and customer service is excellent."

Jessica C (Brookfield Vale Resident), Home Views

"Amazing company throughout. Our home is stunning and we now have a home for life."

Michele, Trustpilot

"The house is a cosy one, with lots of modern facilities including the solar panel, smart meters, security and zoned heating system. The house is well equipped with an oven, a washing machine with the dryer, a dishwasher, a fridge. The management is efficient and we always get prompt responses."

Su, (Ashfield Park Resident), Home Views

"Just moved into my new Simple Life home and I can't wait for the journey!! They have been very friendly, very patient and understanding and I feel very lucky to be picked for one of these lovely homes, after searching for over 3yrs for a home."

Sasha, Trustpilot

"Simple Life Homes is leading the way how to manage rented accommodation. They have thought of everything and it's clear they have invested time, effort and money in making the process as smooth for the tenant as possible. They have a dedicated app and process to manage your property, report problems, seek help and much more. They have even included user manuals for all of your appliances in their app. That's pretty impressive. I would highly recommend!"

Nikola, Trustpilot

Summary and outlook

The performance of the portfolio over the year was excellent and its performance over the first quarter of the new financial year continues this trend. Occupancy and demand over the first quarter remained at very high levels and rent collection was extremely strong. Affordability, which is average rent as a proportion of gross household income, continued to track very well too, both in absolute terms and when measured against the guidance provided by the Office for National Statistics.

We expect the portfolio to continue perform strongly in the new financial year, since the factors driving demand remain unchanged. Higher mortgage rates and general economic uncertainty will also stimulate the rental market.

We are approaching the end of the initial phase of housing delivery for the PRS REIT. By the end of calendar 2024, we expect to have delivered the majority of the balance of homes that are still under construction. The remaining homes should be completed in the first half of calendar 2025. At that point, the PRS REIT's portfolio will comprise about 5,600 homes with an ERV of £69.1 million per annum, underscoring its leadership position in single-family rental homes in the UK.

We look to the future with confidence and continue to focus our efforts on steering through remaining delivery, providing residents with a high standard of customer care, and ensuring all developments remain attractive, environmentally sustainable, and neighbourly places in which to live.

Environmental, Social and Governance

ESG statement

The Company's Investment Adviser ("IA"), Sigma PRS, undertakes the day-to-day management of the PRS REIT plc's ESG strategy. Sigma PRS also takes responsibility for managing ESG priorities at Company level and at an asset level. All the Company's assets are managed under the 'Simple Life' brand, which is operated by Sigma PRS. The Investment Adviser reports on ESG matters to the PRS REIT's Board on a quarterly basis, and there are regular meetings between Sigma PRS and the Company on all matters of strategy, planning and direction.

Approach

Sigma PRS engages with leading industry bodies that seek to promote high ESG standards and best practice, and has signed up to the United National Global Compact ("UN Global Compact") as well as committing to the UN's Sustainable Development Goals ("SDG") and to SDG Ambition, which guides the UN's goals.

The UN Global Compact is the world's largest corporate sustainability initiative and a special initiative of the United Nations Secretary-General. It is designed to encourage business leaders to implement universal sustainability principles, in particular, the UN Global Compact's Ten Principles and so help to deliver the UN's SDG. The Ten Principles are derived from the Universal Declaration of Human Rights, the International Labour Organisation's Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention Against Corruption.

SDG Ambition is focused on the UN's target of Land Degradation Neutrality ("LDN") and its LDN principles. Objectives include zero deforestation and enhanced biodiversity through tree and wildflower planting programmes.

The PRS REIT is a member of European Public Real Estate Association ("EPRA"), a not-for-profit association that represents the publicly-traded European real estate sector. EPRA's mission is to promote, develop and represent the European public real estate sector by, amongst other things, providing better information to investors and stakeholders, actively engaging in public and political debate, and promoting best practices.

The Investment Adviser regularly monitors the changing legislative and reporting landscape, including the EU Sustainable Finance Disclosure Regulation ("SFDR"), the UN Principles of Responsible Investment ("PRI"), the Task Force on Climate-Related Financial Disclosures ("TCFD"), the Taskforce on Nature-related Financial Disclosures ("TNFD"), the EU's Corporate Sustainability Reporting Directive ("CSRD"), as well as national and city-level regulations, which are increasing.

National Government initiatives on biodiversity, including Biodiversity net gain, and energy are closely tracked and Sigma PRS has incorporated these and other ESG factors into investment advisory processes and operations. A summary of Sigma PRS's policy approaches in key areas is outlined below:

Opportunity review

· ESG risks are assessed, reviewed and monitored, and strategies are established, based on recognised frameworks such as climate change and social needs.

Investment advice

· ESG issues are listed and addressed in a summary investment paper, which informs decision-making at the Investment Adviser's Investment Committee approval stage.

· ESG costs, including those related to ongoing community involvement, are determined and factored into investment decision-making processes.

Asset management

· Appropriate governance structures are established.

· Relevant laws and regulations are adhered to.

· ESG issues are monitored and managed.

· Impacts on the natural habitat surrounding PRS assets are managed.

· Local community engagement and support plans are established, reviewed and developed.

· Due diligence is performed on third parties e.g. service providers.

· Policy reviews and updates are ongoing.

· Good practice is established.

· Carbon reduction opportunities are regularly researched and reviewed.

· Investment restrictions are screened to ensure ongoing compliance.

· The ability of investments to comply with ESG standards is assessed.

Processes and strategies

The PRS REIT recognises its responsibilities regarding the environment and also public priorities. The Government's '10 Point Plan for a Green Industrial Revolution', and "Net Zero Strategy: Build Back Greener" set out pathways to accelerate the UK's attainment of net zero carbon emissions and encompasses energy, production, transport, innovation and the natural environment, with 2050 set as the endpoint of its net zero goal.

In the real estate sector, there is a continuing need for action in areas such as energy and water consumption, non-fossil fuel heating provision and biodiversity. In developing the Company's ESG agenda, Sigma PRS has embedded best practices, and works closely with supply chain and construction partners to ensure that their policies and activities comply with the PRS REIT's commitment to legislative requirements and best practice.

The Investment Adviser aims to create residential environments that promote societal and individual well-being through the provision of:

· high-quality, well-designed, energy efficient homes;

· long-term tenancies;

· well-located developments which offer ready access to centres of employment, good local primary education, public transport and retail centres;

· professional repair and maintenance;

· high levels of customer service

· regular community events; and

· active engagement and support for local charities, clubs and groups.

Environmental impact and data

The Company is aware of the impact that its activities have on the environment and remains highly motivated about taking action to minimise and mitigate any negative aspects.

The energy efficiency of the portfolio's homes is an important aspect of their design and build. All the new homes added during the financial year ended 30 June 2024 achieved an Energy Performance Certificate ("EPC") rating of at least a B, and across the Company's portfolio 87% of homes are rated A or B. The balance have an EPC rating of C, which are typically the flatted developments.

The EPC data for the Company's homes as of 30 June 2024 is as follows:

EPC Rating	No. of Homes	%
A	47	1%
B	4,671	86%
C	678	13%
Total	5,396	100%

In line with goals to continually improve energy efficiency and futureproof assets in line with government targets and the Future Homes Standard, Sigma PRS is working closely with construction partners to install new technologies. This includes solar photovoltaic panels and electric vehicle ("EV") charging facilities where possible. Air Source Heat Pumps, District Heating Networks, and Wastewater Heat Recovery Systems are also considered for inclusion in design specifications.

Sigma PRS continues to work with its supply partners to monitor and track greenhouse gas emissions and waste produced in the construction and operation of homes. The data will help to direct future initiatives to reduce carbon emissions. Sigma PRS is in the process of undertaking a major carbon assessment project on 500 occupied homes. Data collation is not necessarily easy as there is no legal obligation on customers, or other third parties to provide information. The project is being conducted with arbnco Ltd, which assists businesses in the assessment, measurement and improvement of their ESG performance and the capture of 'real life' operational data will be immensely valuable in establishing energy and carbon calculations for the wider portfolio.

Scope 1 and 2 emissions are those owned or controlled by a company. Scope 3 emissions are a result of the activities of the company but occur from sources not owned or controlled by a company. Examples of Scope 1 include direct emissions from fuel combustion on site such as boilers and fleet vehicles. Scope 2 emissions relate to indirect emissions generated from purchased energy such as electricity, and Scope 3 emissions relate to emissions created by the products we buy from suppliers and that our customers use.

Additional information on the PRS REIT's environmental, social and governance activities can be found in its annual ESG Report, which is available on the Company's website at www.theprsreit.com.

Social engagement and impact

The Company places great importance on engaging with the communities in which its developments are sited. Over the last twelve months, the Company has supported over 40 charities, schools and clubs across the country, either financially or practically, through work undertaken by the Investment Adviser. Residents are often involved in selecting good causes to support.

A wide range of organisations and social initiatives are supported, ranging from local clubs, promoting participation for all, to national charities. Examples include: Smart Works, which operates in Edinburgh, Manchester, Birmingham and London and focuses on assisting women to secure employment and improve the trajectory of their lives; Embassy Village based in Manchester which aims to improve the lives of the homeless; Barnardo's Gap Homes Project, which supports young people at the point of leaving care; and Capability Scotland's Our Inclusive Community Project, which delivers care, support and education for disabled children and adults across Scotland.

The PRS REIT aims to build long-term productive relationships with its charity partners and good causes and to involve tenants as much as possible.

Large-scale engagements during the year included the Simple Life Schools and Communities Biodiversity Project, in partnership with Green the UK, and sponsorship of Speed of Sight track days. The Simple Life Schools and Communities Biodiversity Project is a countrywide project that involves communities and schools engaging in nature-related activities, including tree planting, vegetable cultivation, and wildflower cultivation. During the year, eight schools and 194 children benefited from nature-based activities and workshops. Speed of Sight is a charity that provides driving experiences across the country for children and adults with visual impairment or other physical challenges. Over 90 individuals enjoyed the four track days we sponsored, participating in an activity that might otherwise have been unavailable to them and stimulate their ideas of what they can achieve.

Examples of the feedback we have received from our social and charitable efforts are below.

Ashleigh Wood, Zoe's Place, Middlesbrough

"Our journey together [with Simple Life] has been an incredible display of staff engagement, commitment and passion for our cause, growing stronger with every endeavour. Their unwavering support speaks volumes about their commitment and values, enabling us to continue making every day special for the children and families we support."

Tommy Harrington, Zoe's Place Baby Hospice, Middlesbrough

"Our partnership with Simple Life Homes is invaluable… our joint thinking achieves fantastic engagement opportunities and shared success. Our most recent venture was in the form of a sponsored branded banner, a small item that has had a huge impact. In just five days, the newly-designed banner reached close to 100,000 views across our social media platforms, opening doors to new audiences. This simple gesture of support through sponsorship has not only reinforced our impact - and enabled us to reach more people who might want to get involved with our charity - but it may have also reached those who need the services our amazing hospice team provides."

Teacher, Dawley Primary School

"Not only did the children get a lot from the day and retain their learning, but the sense of community and togetherness that has come from bringing volunteers together is priceless and ongoing! I have had many compliments about the new border on the flower bed too. I feel like the 'hard work' put in by the children has been very beneficial and I have seen a difference in the children already this term. A heartfelt thank you for involving me and the kids in all the projects. An absolute pleasure!"

Robert, participant in a Speed of Sight track day

"It was mind-blowing and to a certain extent, one of the best days of my life. I never thought there would have been a possibility. Not with me being in a wheelchair, but with a combination of things, I didn't think I'd be able to do it."

John Galloway, Co-Founder Speed of Sight

"At Speed of Sight, we take immense pride in our partnership with Simple Life Homes and your dedication has significantly contributed to the success of our initiatives. Your commitment is truly aiding us in achieving the charitable aims and objectives of Speed of Sight."

David Hughes, Chair of Trustees, Atherton & Leigh Foodbank

"Once again may I thank you for your continued support. We have benefitted from both the donations to the Foodbank and also to the Financial Inclusion Hub. We are now officially more than a Foodbank and have a fulltime Citizens Advice worker with us and are in the process of appointing a Strategic Support Officer or Relationship Manager. Over this past year the work of our part time CAB Officer saw 225 people and recovered over £200,000 of debt. This was so successful that we have now extended it to a fulltime contract with CAB."

Kate Stephens, Smart Works CEO

"On behalf of everyone at Smart Works, thank you to Simple Life Homes for supporting our charity and the women we serve. We passionately believe that when our clients are equipped with a perfect high-quality interview outfit, expert one-to-one coaching and self-belief, they have the tools they need to get the job and transform their lives. As Smart Works celebrates its 10th anniversary, we want to double the number of women helped across the UK to 10,000 women a year by 2025. Thank you for joining our mission to empower all women who need help getting into work, at what could not be a more crucial or important time."

Ryan Doherty, Sundon Park Rangers U12 Football coach,

"The funding from Simple Life has enabled us to kit out the new team in full matchday kit & a training top. This takes some of the burden from the parents as they have to pay monthly / yearly subs. We have three to four boys that wouldn't have signed up for the season due to the additional cost of the kit as most families in the area are from an underprivileged background. To see the smile on the boys faces when I got to training and handed out the new kits is the reason I do this."

Gary Greener, Sutton Cricket Club Chairman, St Helens

"Sutton's junior section is entirely volunteer led. Equipment, kit, league fees and ground maintenance costs are all on the rise, and we are very lucky and grateful to be part of Simple Life Homes community sponsorship programme. This programme has allowed for the general playing conditions at Sutton to improve. The support we have received from Simple Life Homes is unwavering and we are very excited for our next crop of youngsters to bear the fruits of the new and improved junior section, with new and increased amounts of equipment, better facilities and more opportunities for those for whom Cricket may not have been an option previously."

Leah Etheridge, Women's team captain, Sutton Cricket Club, St Helens

"The support from Simple Life Homes has helped our team develop way above expectations. With their financial and social support, it has been possible to purchase more equipment which has allowed for much more structured training, as well as our numbers increasing enormously from the start of last season. We are very grateful for their support and look forward to a continued relationship in the coming seasons to allow Women's cricket to continue to flourish."

Resident focused initiatives

The Investment Adviser's report covers many of our resident-focused initiatives. They are designed to create specific opportunities for residents to engage with each other and to bring educational, social and other benefits. Two further initiatives are highlighted below.

Outward Bound Trust

Sigma PRS partnership with The Outward Bound Trust, 'Building for My Future', has grown and a larger number of young people have been able to participate in Outward Bound Trust's outdoor learning programmes, fully funded by Sigma Capital Group. Young people from schools and youth groups close to Simple Life homes as well as living in Simple Life Homes enjoyed a week of outdoor challenges and adventure. A selection of feedback from participants is below.

Rees -

"The camp wasn't like anything I have experienced, it is hard, really hard but it is totally worth it. The most memorable part of this experience was the hiking and the expedition. I have acrophobia, my legs would tremble and my heart will beat faster and faster. I have learnt the importance of resilience and discipline after this trip, only the resilient and hardworking people could enjoy the view after all the climbing!"

Laith -

"The Ullswater Centre and the activities was my escape from the city life. The 5 days I have spent there brought back memories, made memories and made me new friends. It taught me teamwork and how communication is effective when working with a team. The experience taught me to be humble and stay calm when things go the wrong way."

Chloe -

"Outward Bound was a once in a lifetime experience for me. I feel like the course helped me in so many ways, I got to meet new people and I stepped out my comfort zone in so many situations. One of my biggest challenges was abseiling as I have a fear of heights and I had to push myself to commit to the abseil, however once I had completed it, I was very proud of myself and this achievement. Outward Bound pushes you physically and mentally, I learned different skills and discovered new things about myself. One of those skills is being able to communicate and put my ideas forward. I also discovered that I'm a determined person and I like to encourage others to succeed."

12 Days of Christmas, December 2023ok Boxes and Guardians

In our 12 Days of Christmas 2023 campaign, residents were invited to nominate a local charity close to their hearts to receive a £1,000 donation over the 12 days of Christmas. We doubled our donation, enabling us to support 24 charities. We are delighted to highlight below some of the feedback both from charities and tenants following the campaign.

Helen, The Joshua Tree

"…the donation will support the vital work we do to support families affected by childhood cancers. What's even more brilliant is that I live in Simple Life homes myself so put forward the charity I work for."

Joseph Buckmaster

" I would like to nominate the charity Flat Pack Music of which I am Artistic Director. We are a north west based music charity focussed on changing the perception of and engagement with classical music and opera, fostering closer communities and helping with mental wellbeing. As a small charity securing micro grants like this are crucial to showing we can carry out the projects we aim to do. This in turn enables us to secure larger pots of funding. We have just started a project to bring professional musicians to Carehomes around the area. At no cost to the homes. £1000 would go a huge way to helping any of these projects."

Tracey Roberts founder and CEO of The Jade L Roberts Project

"I am absolutely delighted and overwhelmed. Your generosity means everything to us and to the community. We know you have a lot of choices when it comes to donating, and we are so grateful that you chose to donate to our cause."

Human Rights

The obligations under the Modern Slavery Act 2015 (the "Act") are not applicable to the Company given its size. However, to the best of its knowledge, the Group is satisfied that its principal suppliers and advisors comply with the provisions of the Act.

The Company operates a zero-tolerance approach to bribery, corruption and fraud.

Health and safety

In order to maintain high standards of health and safety for those working on sites, monthly checks by independent project monitoring surveyors are commissioned to ensure that all potential risks have been identified and mitigated. These checks supplement those undertaken by construction and development partners. The data is reported to the Board on a quarterly basis in the event of a nil return, and immediately in the event of an incident. There were no reportable incidents over the year (2023: none).

Governance

Strong governance is essential to ensuring that risks are identified and managed, and that accountability, responsibility, fairness and transparency are maintained at all times.

The Company is subject to statutory reporting requirements and to rules and responsibilities prescribed by the London Stock Exchange and the Financial Conduct Authority. The Board has a balanced range of complementary skills and experience, with independent Non-executive Directors who provide oversight, and challenge decisions and policies as they see fit. The Board believe in robust and effective corporate governance structures and are committed to maintaining high standards and applying the principles of best practice.

Employee diversity - gender and ethnicity

Directors of The PRS REIT Plc	2024	2023
Men	60%	80%
Women	40%	20%
Not specified / prefer not to say	-	-

Directors of The PRS REIT Plc	2024	2023
White British or other White (including minority white groups)	60%	80%
Mixed/ Multiple Ethnic Groups	20%	-
Asian / Asian British	20%	20%

FINANCIAL STATEMENTS

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2024

	Note	30 June 2024 £'000	30 June 2023 £'000


Rental income		58,231	49,701
Non-recoverable property costs		(10,940)	(9,551)
Net rental income		47,291	40,150

Other income		194	1,646

Administrative expenses
Directors' remuneration		(213)	(180)
Investment advisory fee		(6,051)	(5,788)
Other administrative expenses		(2,921)	(2,300)
Total administrative expenses		(9,185)	(8,268)

Gain from fair value adjustment on investment property	7	73,412	25,353
Operating profit		111,712	58,881

Finance income		188	49
Finance cost		(18,225)	(16,478)
Profit before taxation		93,675	42,452

Taxation	4	-	-
Profit after tax and Total comprehensive income for the year attributable to the equity holders of the Company		93,675	42,452

Earnings per share attributable to the equity holders of the Company:
IFRS earnings per share (basic and diluted)	5	17.1p	7.7p

All of the Group activities are classed as continuing and there were no comprehensive gains or losses in the period other than those included in the statement of comprehensive income.

Consolidated Statement of Financial Position

Company No. 10638461

As at 30 June 2024

	Note	30 June 2024 £'000	30 June 2023 £'000
ASSETS
Non-current assets
Investment property	7	1,139,823	1,034,732
		1,139,823	1,034,732
Current assets
Trade and other receivables		6,817	7,066
Cash and cash equivalents		18,053	13,198
		24,870	20,264

Total assets		1,164,693	1,054,996

LIABILITIES
Non-current liabilities
Accruals and deferred income		1,073	2,081
Interest bearing loans and borrowings	8	385,003	248,441
		386,076	250,522
Current liabilities
Trade and other payables		15,182	17,076
Provisions		77	934
Interest bearing loans and borrowings	8	31,933	126,745
		47,192	144,755

Total liabilities		433,268	395,276

Net assets		731,425	659,720

EQUITY
Called up share capital		5,493	5,493
Share premium account		298,974	298,974
Capital reduction reserve		113,092	118,584
Retained earnings		313,866	236,669
Total equity attributable to the equity holders of the Company		731,425	659,720

IFRS net asset value per share (basic and diluted)	9	133.2p	120.1p

As at at 30 June 2024, there is no difference between IFRS NAV per share and the EPRA NTA per share.

Consolidated Statement of Changes in Equity

For the year ended 30 June 2024

Attributable to equity holders of the Company

	Share capital	Share premium account	Capital reduction reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000

At 30 June 2022	5,493	298,974	140,554	194,217	639,238
Comprehensive income
Profit for the year	-	-	-	42,452	42,452
Transactions with owners
Dividends paid	-	-	(21,970)	-	(21,970)
At 30 June 2023	5,493	298,974	118,584	236,669	659,720

Comprehensive income
Profit for the year	-	-	-	93,675	93,675
Transactions with owners
Dividends paid	-	-	(5,492)	(16,478)	(21,970)
At 30 June 2024	5,493	298,974	113,092	313,866	731,425

Consolidated Statement of Cash Flows

For the year ended 30 June 2024

	Note	30 June 2024 £'000	30 June 2023 £'000

Cash flows from operating activities
Profit before tax		93,675	42,452
Finance income		(188)	(49)
Finance costs		18,225	16,478
Fair value adjustment on investment property		(73,412)	(25,353)
Cash generated by operations		38,300	33,528

Increase in trade and other receivables		(8)	(578)
Decrease in trade and other payables		(3,117)	(1,640)

Net cash generated from operating activities		35,175	31,310

Cash flows from investing activities
Purchase of investment property	7	(9,100)	-
Development expenditure on investment properties*		(22,084)	(47,458)
Decrease in capital trade and other payables		-	(10,255)
Finance income		188	49
Net cash used in investing activities		(30,996)	(57,664)

Cash flows from financing activities
Bank and other loans advanced	8	151,957	49,801
Bank and other loans repaid	8	(110,229)	(23,304)
Finance costs*		(19,082)	(13,657)
Dividends paid	6	(21,970)	(21,970)
Net cash generated from / (used in) financing activities		676	(9,130)

Net increase / (decrease) in cash and cash equivalents		4,855	(35,484)
Cash and cash equivalents at beginning of year		13,198	48,682

Cash and cash equivalents at end of year		18,053	13,198

The accompanying notes are an integral part of this cash flow statement.

Total interest paid in the year was £16.6 million (2023: £12.0 million).

* Includes capitalised interest of £1.9 million (2023: £0.9 million).

Notes to the Financial Statements

1. General information

This final results announcement was approved for issue by a duly appointed and authorised committee of the Board of Directors on 7 October 2024.

2. Basis of preparation

The financial information set out in this announcement does not constitute statutory financial statements for the year ended 30 June 2024 and year ended 30 June 2023. The financial information in this announcement has been derived from the statutory accounts for the year ending 30 June 2024 and year ending 30 June 2023. The report of the auditor on the statutory financial statements for the year ended 30 June 2024 and year ended 30 June 2023 was (i) unqualified; (ii) did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006. The statutory financial statements for the year ended 30 June 2024 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The statutory accounts for the year ending 30 June 2023 have been delivered to the Registrar of Companies.

3. Going concern

The consolidated and Company financial statements have been prepared on a going concern basis. The Directors have reviewed the current and projected financial position of the Group, making reasonable assumptions about future trading performance with sensitivity testing undertaken to replicate plausible downside scenarios related to the principal risks and uncertainties associated with the business. As interest rate exposure has largely been mitigated with 82% of the investment debt in the portfolio at fixed rates, the Directors paid particular attention to the risk of a deterioration in the forecast rental growth over the review period which would have a negative impact on both forecast valuations and cashflows. The outcome of this stress testing indicated that covenants on existing facilities would not be breached. As part of the review, the Group has considered its cash balances, and its debt maturity profile, including undrawn facilities. The Group had net current liabilities of £22.3 million as at 30 June 2024 (2023: net current liabilities £124.5 million). The decrease in net current liabilities reflects the refinancing of the LBG / RBS debt facility (refinanced on maturity in July 2024), and the new LGIM long term investment debt facility (£101.9 million). The current drawn Barclays development loan of £32.6 million is expected to be repaid within the next 12 months as longer term investment debt is drawn against completed sites reducing net current liabilities further. The Group's cash balances at 30 June 2024 were £18.1 million (2023: £13.2 million), of which £4.2 million was restricted but released within 3 months. The Group had debt borrowing as at 30 June 2024 of £415.3 million (2023: £374.1 million). A portion of the development debt facilities were utilised subsequent to the year-end to enable the Group to continue to develop assets to completion and enabling the letting of these to tenants. Following stabilisation on a site, which comprises practical completion and substantial letting, investment debt is drawn down to replace the development debt facilities utilised.

Capital commitments outstanding as at 30 June 2024 were £6.4 million (2023: £27.3 million). The Group's current ERV as at 30 June 2024, was £65.1 million from 5,396 homes and has increased to £67.5 million from 5,425 homes as at 30 September 2024. This has increased the Company's recurring income which at this level is more than sufficient to cover monthly cash costs. Based on the prevailing run-rate of monthly cash costs and average rent levels, approximately 2,800 homes are required to generate income to cover monthly cash outlays.

The current market volatility is being monitored by the Board however, the strong income performance and high proportion of fixed rate debt puts the Group in a good position.

Therefore, the Directors believe the Group and Company are well placed to manage their business risks successfully. After making enquiries, the Directors have a reasonable expectation that the Group and Company will have adequate resources to continue in operational existence for the foreseeable future and for a period of at least 12 months from the date of the approval of the Group's consolidated financial statements and the Company's financial statements for the year ended 30 June 2024.

4. Taxation

As a UK REIT, the Group is exempt from corporation tax on the profits and gains from its property investment business, provided it meets certain conditions as set out in the UK REIT regulations. For the current year and prior year, the Group did not have any non-qualifying profits and accordingly there is no tax charge in the period. If there were any non-qualifying profits and gains, these would be subject to corporation tax.

It is assumed that the Group will continue to be a UK REIT for the foreseeable future, such that deferred tax has not been recognised on temporary differences relating to the property rental business. No deferred tax asset has been recognised in respect of the unutilised residual current period losses from non-qualifying activities as it is not anticipated that sufficient residual profits will be generated from these in the future.

5. Earnings per share

Earnings per share ("EPS") amounts are calculated by dividing profit for the period attributable to ordinary equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period. As there are no dilutive instruments, basic and diluted earnings per share are the same for both the current and prior periods.

The calculation of basic and diluted earnings per share is based on the following:

	2024	2023
	£'000	£'000

Earnings per IFRS income statement	93,675	42,452

Adjustments to calculate EPRA Earnings:
Changes in value of investment properties (Note 7)	(73,412)	(25,353)
EPRA Earnings	20,263	17,099


Weighted average number of ordinary shares (Note 9)	549,251,458	549,251,458
IFRS EPS (pence)	17.1	7.7
EPRA EPS (pence)	3.7	3.1

6. Dividends

The following dividends were paid during the current year and prior year:

	2024	2023
	£'000	£'000
Dividends on ordinary shares declared and paid:
Dividend of 1.0p for the 3 months to 30 June 2022	-	5,493
Dividend of 1.0p for the 3 months to 30 September 2022	-	5,493
Dividend of 1.0p for the 3 months to 31 December 2022	-	5,492
Dividend of 1.0p for the 3 months to 31 March 2023	-	5,492
Dividend of 1.0p for the 3 months to 30 June 2023	5,492	-
Dividend of 1.0p for the 3 months to 30 September 2023	5,493	-
Dividend of 1.0p for the 3 months to 31 December 2023	5,493	-
Dividend of 1.0p for the 3 months to 31 March 2024	5,492	-
	21,970	21,970

Proposed dividends on ordinary shares:
3 months to 30 June 2023: 1.0p per share	-	5,493
3 months to 30 June 2024: 1.0p per share	5,493	-
	5,493	5,493

7. Investment property

The freehold/heritable, leasehold and part freehold part leasehold interests in the properties held within the PRS REIT were independently valued as at 30 June 2024 by Savills (UK) Limited, acting in the capacity of External Valuers as defined in the RICS Red Book (but not for the avoidance of doubt as an External Valuer of the PRS REIT as defined by the Alternative Investment Fund Managers Regulations 2013). The valuations accord with the requirements of IFRS 13 and the Royal Institution of Chartered Surveyors' ("RICS") Valuation - Global Standards, incorporating the IVSC International Valuation Standards effective from 31 January 2022, together, where applicable, with the UK National Supplement effective 14 January 2019, (together the "RICS Red Book"). The valuations were arrived at predominantly by reference to market evidence for comparable property.

Savills (UK) Limited are an accredited External Valuer with recognised and relevant professional qualifications and recent experience of the location and category of the investment property being valued.

The valuations are the ultimate responsibility of the Directors. Accordingly, the critical assumptions used in establishing the independent valuation are reviewed by the Board.

	Completed Assets	Assets under Construction	Total
	£'000	£'000	£'000

At 30 June 2022	840,355	121,560	961,915
Property additions - subsequent expenditure	-	47,464	47,464
Change in fair value	26,963	(1,600)	25,353
Transfers to completed assets	80,419	(80,419)	-
At 30 June 2023	947,727	87,005	1,034,732

Properties acquired on acquisition of subsidiaries	9,100	-	9,100
Property additions - subsequent expenditure	-	22,083	22,083
Right of use asset movement during the year	496	-	496
Change in fair value	68,095	5,317	73,412
Transfers to completed assets	58,660	(58,660)	-
At 30 June 2024	1,084,078	55,745	1,139,823

The historic cost of completed assets and assets under construction as at 30 June 2024 was £863.8 million (2023: £831.8 million).

The carrying amount of investment property pledged as security as at 30 June 2024 was £1.1 billion (2023: £952.5 million).

The Group has recognised a right-of-use ("ROU") asset within investment property in relation to ground rents payable on certain investment property sites. The net book value of the ROU asset was £1.5 million as at 30 June 2024 (2023: £1.0 million).

The PRS REIT acquired a site at Coppenhall Place, Crewe, with planning consent during the year ended 30 June 2019. At the same time, the Company also entered into a fixed price design and build contract with one of its principal house building partners to complete 131 units. This represented approximately 50% of the entire Coppenhall Place site with the balance being developed by the house builder as market for sale units. The design and build contract contained standard clauses making the house builder responsible for delivering the site and doing so in compliance with the requirements of the original planning consent.

Shortly after physical completion and letting of more than 95% of the units on the site acquired by the PRS REIT, a dispute arose between the respective Council and the house builder regarding compliance with the original planning consent. After consultation between these two parties, the house builder submitted a further planning application with a view to resolving the areas of dispute. The submission was recommended to the Elected Council Members ("Members") by the Council Executive but a decision was deferred at the hearing in order that the Members could obtain additional information on viability, a peer review to clarify on-site ventilation and clarification on queries regarding potential soil contamination in certain areas of the whole site. As at the date of approval of these financial statements the house building partner continues to work with the Council Executive to address outstanding matters before reverting to the Members for approval. The Investment Adviser is closely monitoring progress. The Board of the PRS REIT is of the view that remaining areas of work will be completed and the planning issues ultimately finalised to the satisfaction of all parties, including the private owners of the market for sale units. The house builder continues to have dialogue with the Council Executive and is currently hopeful of going back to the Members for approval in November 2024.

The financial statements include an investment value for the Coppenhall Place asset of £25.4 million as at 30 June 2024 on the assumption that the planning matters are resolved. The value of the site represents approximately 2.2% of the balance sheet investment value of assets as at the year-end date. Given the contractual protections, the risk of any potential impact to the Group is considered highly unlikely, and given the value of the site relative to the overall balance sheet, the risk of any potential impact to the Group is considered to be immaterial.

Fair values

IFRS 13 sets out a three-tier hierarchy for assets and liabilities valued at fair value. These are 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 or indirectly; and

Level 3 unobservable inputs for the asset or liability.

Investment property falls within Level 3.

The investment valuations provided by the external valuation expert are based on RICS Professional Valuation Standards but include a number of unobservable inputs and other valuation assumptions. The significant unobservable inputs and the range of values used are:

Type	Range	Average	Range	Average
	2024	2024	2023	2023
ERV per unit	£11k - £23k	£13k	£10k - £22k	£12k
Investment yield	4.25% to 5.25%	4.59%	4.10% to 5.00%	4.47%
Gross to net assumption	22.5% to 25.0%	22.9%	22.5% to 25.0%	22.9%

The following descriptions and definitions relate to key unobservable inputs made in determining fair values:

· ERV (Estimated Rental Value) per unit: the estimated annual market rental value that could be earned on a unit basis annually;

· Investment yield: the net income earned as a percentage of the investment value; and

· Gross to net assumption: the non-recoverable property costs expected to be incurred on a rental property as a percentage of rental income.

Development assets are valued based on total development cost plus expected final uplift in valuation multiplied by % of site development completed. The range of % completions as at 30 June 2024, was from 29% to 97% (2023: 29% to 99%). The final investment value uses the assumptions stated above. An increase of 2% in the gross development cost would reduce the fair valuation of these assets by c.£1.1 million.

Other Special Assumptions applied in addition to the key unobservable inputs identified above, and used since inception include:

· All individual site valuations have been treated assuming part of a larger portfolio (in excess of £50 million); and

· An indirect purchase of a special purpose vehicle holding title to the asset, so stamp duty is assessed on a share purchase basis rather than as property.

The impact of changes to the significant unobservable inputs for completed and development assets are:

	2024 Impact on statement of comprehensive income	2024 Impact on statement of financial position	2023 Impact on statement of comprehensive income	2023 Impact on statement of financial position
	£'000	£'000	£'000	£'000

Improvement in ERV by 5%	57,821	57,821	52,650	52,650
Worsening in ERV by 5%	(56,595)	(56,595)	(51,303)	(51,303)
Improvement in yield by 0.125%	32,232	32,232	30,078	30,078
Worsening in yield by 0.125%	(30,560)	(30,560)	(28,407)	(28,407)
Improvement in gross to net by 1%	15,486	15,486	14,192	14,192
Worsening in gross to net by 1%	(14,153)	(14,153)	(12,738)	(12,738)

The rates of sensitivity reflected in the above table have been selected as being reflective of movements experienced in ERV, yields and gross to net expenses.

8. Interest bearing loans and borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.

	Group 2024	Company 2024	Group 2023	Company 2023
	£'000	£'000	£'000	£'000
Current liabilities
Bank loans at 1 July	126,713	-	99,941	-
Loans advanced in the year	28,859	-	49,801	-
Loans repaid in the year	(110,225)	-	(23,304)	-
Loan term extended	(13,101)	-	-	-
Capitalised loan costs	(345)	-	275	-
Bank loans at 30 June	31,901	-	126,713	-

Lease liability	32	-	32	-
Total loans and borrowings	31,933	-	126,745	-

Non-current liabilities
Bank loans at 1 July	247,432	-	245,684	-
Loans advanced in the year	123,098	-	-	-
Loan term extended	13,101	-	-	-
Capitalised loan costs	(273)	-	1,748	-
Bank loans at 30 June	383,358	-	247,432	-

Lease liability	1,645	-	1,008	-
Total loans and borrowings	385,003	-	248,440	-

The fair value of loans and borrowings at year end totalled £349.7 million (2023: £300.2 million).

Bank loans

Through its subsidiaries the Company has granted fixed and floating charges over certain investment property assets to secure the loans.

The Group's borrowing facilities are with Scottish Widows, Legal and General Investment Management, RBS plc and Barclays Bank PLC. At 30 June 2024, these comprised the following:

Lender	Loan facility	Balance drawn 30 June 2024	Loan period	Interest rate (all in)		Maturity
Scottish Widows	£100 million	£100 million	15 years	3.14%	Fixed	June 2033
Scottish Widows	£150 million	£150 million	25 years	2.76%	Fixed	June 2044
Legal and General Investment Management	£102 million	£102 million	15 years	6.04%	Fixed	July 2038
RBS	£75 million	£34 million	2 years	6.95%	Variable	July 2025
Barclays Bank PLC	£33 million	£33 million	3 years	8.55%	Variable	September 2025

As determined by the Company's Investment Policy, the Group's maximum loan to value ratio can be no more than 45%. As at 30 June 2024 the Group's EPRA loan to value was 36% (2023: 37%).

Reconciliation of movements of borrowings to cash flows arising from financing activities:

	2024	2023
	£'000	£'000

Balance as at 1 July	374,145	345,625
Cash movements
Proceeds from borrowings	151,957	49,801
Borrowings repaid	(110,225)	(23,304)
Interest paid	(16,640)	(11,957)
Non-utilisation fees paid	(439)	(703)
Arrangement and commitment fees paid	(3,529)	(932)
Non-Cash movements
Finance costs	19,989	15,615
Balance as at 30 June	415,258	374,145

Debt refinancing

At the beginning of July 2023, the Company completed the refinancing of its £150 million revolving credit facility ("RCF") provided by RBS and Lloyds Banking Group plc. The Group secured a £102 million facility of fixed-rate debt for 15 years with Legal and General Investment Management, together with a further £75 million of floating-rate debt agreed for two years with RBS.

9. Net Asset Value

EPRA NTA is considered to be the most relevant measure for the Group. The underlying assumption behind the EPRA NTA calculation assumes entities buy and sell assets, thereby crystallising certain levels of deferred tax liability. Due to the PRS REIT's tax status, deferred tax is not applicable and therefore there is no difference between IFRS NAV and EPRA NTA.

Basic IFRS NAV per share is calculated by dividing net assets in the Statement of Financial Position attributable to ordinary equity holders of the parent by the number of Ordinary Shares outstanding at the end of the year. As there are no dilutive instruments, only basic NAV per share is quoted below.

Net asset values have been calculated as follows:

	2024	2023

IFRS Net assets at 30 June (£'000)	731,425	659,720
EPRA adjustments to NTA	-	-
EPRA NTA at 30 June	731,425	659,720

Shares in issue at end of year	549,251,458	549,251,458

Basic IFRS NAV per share (pence)	133.2	120.1
EPRA NTA per share (pence)	133.2	120.1

The NTA per share calculated on an EPRA basis is the same as the IFRS NAV per share for the year ended 30 June 2024 and the year ended 30 June 2023.

10. Transactions with Investment Adviser

On 31 March 2017, Sigma PRS was appointed the Investment Adviser of the Company. A new Investment Adviser Agreement with Sigma PRS was signed in July 2024 (see Note 11 for further information).

For the year ended 30 June 2024, fees of £6.1 million (2023: £5.8 million) were incurred and payable to Sigma PRS in respect of asset management fees. At 30 June 2024, £0.5 million (2023: £0.5 million) remained unpaid.

For the year ended 30 June 2024, development management fees of £0.8 million (2023: £1.8 million) were incurred and payable to Sigma PRS. At 30 June 2024, £0.03 million (2023: £0.2 million) remained unpaid. Development management fees were capitalised as development costs during the year and prior year.

For the year ended 30 June 2024, administration and secretarial services of £70,000 (2023: £70,000) were incurred and payable to Sigma Capital Property Ltd, a fellow subsidiary of the ultimate holding company of the Investment Adviser. At 30 June 2024, £18,000 (2023: £9,000) remained unpaid.

Sigma PRS's shareholding as at 30 June 2024 was 5,889,852 (2023: 5,889,852), which represents 1.07% (2023: 1.07%) of the issued share capital in the Company. All the shares acquired were in accordance with the Development Management Agreement between the Company and Sigma PRS.

For the year ended 30 June 2024, Sigma PRS received dividends from the Company of £236,000 (2023: £236,000).

During December 2023, the Group acquired Sigma PRS Investments (Hexthorpe Phase 3) Limited, a subsidiary from Sigma Capital Group Limited, for consideration of £9.1 million.

11. Post balance sheet events

Dividends

On 1 August 2024, the Company declared a dividend of 1.0p per ordinary share in respect of the fourth quarter of the current financial year. The dividend was paid on 30 August 2024, to shareholders on the register as at 9 August 2024.

Related party transaction

Investment Advisory & Development Management Agreements - new terms signed

At the beginning of July 2024, the Company extended its existing Investment Advisory Agreement and Development Management Agreement (together, the "Agreements") with Sigma PRS Management Ltd, the Company's Investment Adviser and Development Manager (together, the "Investment Adviser"). At the same time, it agreed improved fee structures in both the Agreements. The contract changes apply from 1 July 2024. Both Agreements were extended to 30 June 2029, an extension of 2.5 years from the end of the previous term, and the revised fee rates are set out below and, as stated, take effect from 1 July 2024.

Extension of Agreements

The Agreements took effect from 1 January 2021 and provided for a minimum contracted term of five years to 31 December 2026 (inclusive of a one-year notice period). In connection with the reduction in the Investment Adviser and Development Management fees, the contracted term for the Agreements has been extended by 2.5 years, to 30 June 2029 (inclusive of a one-year notice period).

Revised Investment Adviser & Development Management Fees

(a) The Investment Adviser fee has been revised as follows and remains payable monthly in arrears:

(i)	0.90 per cent. (previously 1.00%) per annum of the Adjusted Net Asset Value up to, and including, £250 million;
(ii)	0.85 per cent. (previously 0.90%) per annum of the Adjusted Net Asset Value in excess of £250 million and up to, and including, £500 million;
(iii)	0.70 per cent. (previously 0.75%) per annum of the Adjusted Net Asset Value in excess of £500 million and up to, and including, £1 billion;
(iv)	0.40 per cent. (previously 0.50%) per annum of the Adjusted Net Asset Value in excess of £1 billion and up to, and including, £2 billion; and
(v)	0.30 per cent. (previously 0.40%) per annum of the Adjusted Net Asset Value in excess of £2 billion.

(b) The Development Management fee has been reduced to 3% on land and to 3.5% on construction (previously 4% on both land and construction) components of the Development Cost. The fee remains payable monthly in arrears, with 50% of the fee used to subscribe for ordinary shares in the Company bi-annually as previously.

The Company's contractual arrangements retain important and valuable contractual protections, including the Company's right of first refusal to acquire single family housing development opportunities introduced by Sigma. They result in immediate cost savings and the Board believed the terms of the contract extension provided appropriate incentivisation for Sigma to continue to deliver for the Company. Sigma has delivered and manages a highly granular portfolio for the Company, which the Board considers to be best-in-class.

Requisition event and board changes

●	Steve Smith will step down as Non-executive Chairman at the Company's forthcoming AGM. Steve is nearing the end of his term and this change helped to facilitate a near-term resolution;
●	Geeta Nanda, Senior Independent Director, will become Interim Chair at the AGM and lead the appointment process for a new permanent, independent, non-executive Chair;
●	the Board will launch the appointment process immediately, with support from external consultants to identify and appoint a non-executive Chair with relevant experience; and
●	Robert Naylor and Christopher Mills will be appointed to the Board as non-executive Directors and proposed for election at the AGM.

The Board had originally expected to provide an update on Strategy with these results. However, given the above changes to the Board, the Strategy will now be reviewed by the newly-constituted Board and an update will be given when appropriate.

As we stated previously on 13 September 2024, the Board believes the agreement and changes announced reflect a balance of the views of all shareholders. They also respect the principles of good governance in orderly succession planning, and help to ensure that a new independent Chair and any future Board directors have the appropriate blend of skills and expertise. In addition, the Board believes the agreement will allow the Company to move forward and focus on value maximisation for all shareholders.

12. Availability of statutory financial information

Copies of the full statutory financial statements are available on the Company's website at www.theprsreit.com.

13. Annual General Meeting

The Annual General Meeting of the Company will be held at the offices of Dentons UK and Middle East LLP, One Fleet Place, London EC4M 7RA on Tuesday 3 December 2024 commencing at 2 pm.

^{^[1]} A full reconciliation between IFRS profit and EPRA earnings can be found in note 5 of the Financial Statements

^{^[2]} A reconciliation of IFRS NAV to EPRA NTA can be found in note 9 of the Financial Statements

^{^[3]} Like-for-like blended rental growth on investment property stabilised sites is defined as the annual rental growth on sites where all units have been completed and either all or nearly all have been let

[4] TwentyCi https://www.twentyci.co.uk/resources/

[5] https://www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/privaterentalaffordabilityengland/2022

^{^[6]} 'Simple Life' - The PRS REIT's rental homes are marketed under the 'Simple Life' brand.

^{^[7]} 'Simple Life' - The PRS REIT's rental homes are marketed under the 'Simple Life' brand.

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Full Year Results

Key points

About Sigma Capital Group Limited (formerly Sigma Capital Group plc) www.sigmacapital.co.uk

About Sigma PRS Management Ltd

Chairman's Statement

Introduction

Largest portfolio of single-family rental homes in the UK

Very strong asset performance

Financial results

Debt facilities

Debt refinancing

Environmental, Social and Governance ("ESG") practices

Requisition event and Board changes

Outlook

IFRS and EPRA Performance Measures

Market Dynamics

Private Rented Sector Reform

Portfolio Analysis

Property portfolio by regional split - at 30 June 2023

Other metrics - at 30 June 2023

Age groupings

Household income bracket

Tenancies with children

Distance travelled

Investment Strategy and Business Model

AWARDS

Business activities

Investment objective, policy and business model

Achieving scale and reducing risk

The Sigma PRS Platform

Dedicated finance team

Geographic diversification

'Simple Life' brand

Investment Restrictions

Equity and debt financing

Derivatives

REIT Status

Investment Adviser's Report

Operational Review

Development activity and acquisitions

Construction resource

Financial results

Income statement

Dividends

Balance sheet

Debt financing

Debt refinancing

Key performance indicators

Post period review

Resident feedback

Summary and outlook

Environmental, Social and Governance

ESG statement

Approach

Opportunity review

Investment advice

Asset management

Processes and strategies

Environmental impact and data

Social engagement and impact

Resident focused initiatives

Outward Bound Trust

12 Days of Christmas, December 2023ok Boxes and Guardians

Human Rights

Health and safety

Governance

Employee diversity - gender and ethnicity

FINANCIAL STATEMENTS

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Fair values

Bank loans

Dividends

Related party transaction

Investment Advisory & Development Management Agreements - new terms signed

Related Charts

Prs Reit (The) PLC (PRSR)

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