TOC PROPERTY BACKED LENDING TRUST

REPORT & FINANCIAL STATEMENTS

FOR THE YEAR TO 30 NOVEMBER 2019

CONTENTS

Strategic Report

Chairman's Statement
Investment Adviser's Review
Strategic Review
Directors' Report
Statement of Corporate Governance
Board of Directors
Directors' Remuneration Report
Statement of Directors' Responsibilities
Report of the Audit Committee
Independent Auditor's Report
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements

General Information

Notice of General Meeting
Shareholder Information
AIFMD Disclosures
Regulatory Disclosures
Glossary
Corporate Information

CHAIRMAN'S STATEMENT

JOHN NEWLANDS, CHAIRMAN

INTRODUCTION

I am pleased to report the Company's Report and Financial Statements for the financial year to 30 November 2019.

I refer below to the unprecedented market and macroeconomic turmoil that has followed the global COVID-19 outbreak that has swept the world in the first half of 2020, and to the effects of the ensuing industrial and domestic "lockdown" which has affected the Company's portfolio in recent months.

Before turning to such matters, it is worthy of note that since the financial year end, the TOC Property Backed Lending Trust PLC has passed the third anniversary of its launch. This occurred on 24 January 2020 and is a significant milestone in the history of any managed investment fund, not least the first London Stock Exchange Main Market-Listed investment company to be devised, launched and managed within yards of the former city walls of Newcastle upon Tyne.

OBJECTIVE: MANAGERIAL ARRANGEMENTS

The Company seeks to achieve its investment objective primarily through a diversified portfolio of fixed rate loans secured over UK property and land and managed by its Investment Adviser, Tier One Capital Ltd. The Investment Adviser's Report may be found on pages 8 to 11.

DIVIDEND RECORD SINCE INCEPTION

Notwithstanding its short life, the Company has generated a notable record of quarterly dividend distributions to date.

In early 2019, the Board made the decision, in the light of a slowdown in the property market and wider political uncertainties, to reduce quarterly distributions that had risen to 1.75 pence per share by the end of 2018 to 1.5 pence per quarter thereafter.

Despite this move, founding shareholders had received a total of 15 pence per share by the end of the financial year being reported and a further distribution of 1.5 pence per share, paid in early January 2020, for the first quarter of the new financial year. These are valuable investment income returns set against a backdrop of generally very low savings rates and relatively muted UK inflation figures.

It is also worthy of note that the Company passed a trading milestone in the fourth quarter of 2019 with net positive income, after the deduction of dividend payments, having been generated for the first time since launch.

There is no escaping the fact, however, that these encouraging figures have more recently been overshadowed by the increasingly serious effects of the Coronavirus pandemic, the suspension of virtually all housebuilding and development work and the decimation of business cash flows at virtually all levels. Emergency measures have also been introduced, including the permitted deferment of the publication of annual reports and accounts by a further two months from the normal requirement to publish within four months of a company's financial year end.

With the real estate sector at the heart of the Company's portfolio at a near standstill, therefore, the dividend outlook has, at least for the time being, been significantly altered, as will be described in more detail, below.

NET ASSET VALUE

The Report and Financial Statements for the year ended 30th November 2019 show the results of a maturing loan portfolio business. The Company's net

asset value ("NAV") per share at the year-end was 83.8 pence (2018: 94.3 pence). This equates to a net asset value total return for the financial year of approximately (5.3)%, taking into account dividends received.

IFRS 9

During the financial year, the Company adopted the principles of the IFRS 9 accountancy standard in full for the first time, in which most financial instruments are effectively measured at fair value, including making provision for future credit losses, even where it is highly likely that the asset will perform as expected. Some financial instruments are still measured at amortised cost.

In adopting the said fair value recognition and measurement across the portfolio, the Board has adopted a prudent stance in considering key projects where stresses are evident.

LOAN PORTFOLIO

Profit shares. As described in the Investment Adviser's Report, the Company is pleased to announce three successful profit share arrangements with regard to the Marley Hill, Springs and Newgate Street projects, recording gains to the benefit of the investment trust averaging some £46,000 per project. The Marley Hill gain has been realised following the completion of this project and is in addition to the £104,000 gain announced in the financial statements for the year ended November 2018. The Springs and Newgate Street gains are projected from the current trading position of both projects.

Impairments. Based on valuations performed by external RICS surveyors, and a thorough assessment of the portfolio, we have applied impairments to two legacy loans (being loans that were taken into the trust at its inception) Pendower Hall and West Auckland.

In the case of Pendower Hall, an initial impairment was made against the Company's original £2m loan of £0.2m in November 2018. Subsequently, the potential value of the site either completed or as a work in progress will be insufficient to repay the existing amounts lent (partially due to significant delays and refurbishment costs being substantially higher than original estimates) and as such the loan was restructured, with a corresponding impairment recognised.

A restructuring plan was initiated prior to the year end, and the relevant legal documentation was finalised post year end. This restructuring plan has been put in place to enable the Company to take receipt of additional collateral via an equity holding in a recently formed private start up business. This additional collateral is over and above the property security.

The Board and Investment Adviser are now working to appraise the value of this equity and will, informed by the results of this work, consider the merits of retaining the equity as a non-core holding or liquidating it, in full or in part, to reduce the exposure. Until such time as an accurate valuation can be established, the Board and Investment Adviser believe it appropriate to impair the loan by a further £0.84m to £0.96m, which does not ascribe any value to the equity holding. As such, the realisation of any return for these shares in due course would result in profit upside.

The West Auckland loan has previously not performed in line with expectations and the Board made an impairment of £0.14m in November 2018. Since then, challenges in trading on the first phases of development have created significant uncertainty regarding the viability of further stages, and thus of the value of underlying land associated with those further stages. A full assessment of this is being conducted, but in the meantime, given significant trading headwinds, the Board has elected to take a substantial impairment on this project.

Redemptions. Significant exits during the period were achieved from the repayment of a mature loan (£3.3m), together with a total of £3.6m partial repayments from four projects within the Company's development and run-off books.

Gearing. The Company continues to benefit from a gearing facility provided by Shawbrook Bank Limited. In May 2020 we extended the expiry date of this facility from October 2020 to May 2021. The facility continues to contribute positively to the Company's weighted average cost of capital.

RELATED PARTIES

I am pleased to confirm that since the year end, all Investment Adviser related parties in the projects have been removed. This is further evidence of the growing maturity of the Company's loan book and the achievement of another key milestone outlined at listing.

BOARD OF DIRECTORS

The only change to the Board of Directors during the financial year was the retirement of Stephen Coe, the outgoing Chairman, on 30 April 2019, with the effect of reducing the size of the Board from five to four Directors, with a commensurate saving in annualised costs.

SUMMARY: OUTLOOK

The portfolio at the financial year-end, post-impairments, totals some £25.2 million, spread across 17 different projects. The proportion of profit shares to which the Company is entitled in the event of successful investments has increased from seven projects to nine. It should be noted that the Board takes no account for any potential capital returns on such projects until there is strong visibility of a profitable outcome.

While uncertainty was moderated, moving into the New Year, by a clear-cut UK General Election result in December 2019, followed by the UK's formalised decision, ratified on 30 January 2020, to depart the European Union, the economic outlook remains, to put it mildly, far from certain.

Even before the onset of the global COVID-19 outbreak in late January 2020, market conditions had become extremely hard to call, particularly while the UK government remains in the early stages of protracted negotiations with the European Union.

The consequence of these events, as the crisis and ensuing lockdown have taken hold, has been a marked reluctance in the business community (including the developers we support) and households to make key business or financial transactions.

We note that, along with the share market in general, listed householders' share prices have fallen sharply

in recent weeks. This implies that the housebuilding sector, including the SME developers that make up c. 50% of the Company's loan book, will face serious challenges in 2020.

The Board and Investment Adviser are committed to working with the developers we support to navigate the impact of this crisis, both to protect shareholder value and, where it is possible, to minimise the wider potential impact of the crisis, such as protecting jobs.

DIVIDEND PROSPECTS

Taking all of the above factors into account and adding in the cuts in UK base rates totalling 0.6% announced as these accounts were being prepared, the Board is in the process of reviewing the prudent level of distributions to be made for the remainder of the financial year to 30 November 2020.

As part of this process the payment of the 1.5p dividend scheduled for payment in early April 2020 has been deferred to 1 June 2020. In addition, the level of subsequent dividend payments has yet to be decided and will be further reviewed over the coming months.

In the most extreme case, this could involve the dividend scheduled to be declared in June 2020 being suspended. Such a move would then require a final adjusting payment for the financial year to be declared in September 2020, so as to maintain UK investment trust status, which requires no more than 15% of net income to be retained as revenue reserves. The Board remains mindful that dividend income is of critical importance to many investors and the situation will remain under constant review as the coming months are played out.

BRICKS AND MORTAR

It would be easy to forget, against what for most investors must be "once in a lifetime" social and economic conditions, that good old "bricks and mortar" have been offering comfort to relatively risk-averse investors for generations. The prospect of an attractive and broadly predictable flow of dividend income is another significant and, admittedly with a longer term perspective, arguably calming plus point.

In the case of the TOC Property Backed Lending Trust PLC, the first phase of its life is over. The Company continues to strengthen and evolve, as legacy portfolio holdings are consigned to the past.

In the background the process of project refreshment has been under way, with the potential not just to introduce new profit share arrangements where appropriate but to improve average loan to value figures and other key metrics.

ANNUAL GENERAL MEETING AND GENERAL MEETING

In order to comply with the Companies Act 2006 requirement to hold the Annual General Meeting ("AGM") within 6 months of the Company's financial year end, the AGM is scheduled for 29 May 2020. The only resolutions being proposed at the AGM are the re-election of Directors.

As publication of the annual report and accounts for the financial year ended 30 November 2019 has been delayed owing to the COVID-19 pandemic a General Meeting ("GM") will be held on 11 August 2020 to receive the annual report and accounts and to seek approval of the associated resolutions. Full details of the business to be conducted at the meetings is included in the Notice of Meeting which can be found on pages 63 to 68 of this Annual Report.

In light of the current COVID-19 travel and public gathering restrictions and social distancing requirements, the GM will be run as a closed meeting and shareholders will not be able to attend in person. Shareholders attempting to attend the GM will be refused entry. However, the Board encourages shareholders to submit their votes by proxy, rather than attending in person. The Board welcomes questions from shareholders with regard to the resolutions being put to the GM or to any other matter relating to the Company. Given the unique circumstances prevailing this year, it is requested that any such questions be submitted ahead of the meeting, by email to [email protected].

JOHN NEWLANDS, CHAIRMAN

29TH MAY 2020

INVESTMENT ADVISER'S REVIEW

ABOUT THE ADVISER

Tier One Capital Ltd., is a Newcastle upon Tyne based wealth management firm, providing wealth management, investment management and fund management services to personal, charity and corporate clients.

INVESTMENT ADVISER'S REPORT

REVIEW OF THE 12 MONTHS TO 30 NOVEMBER 2019

In its third year of trading the majority of the portfolio continued to perform well in difficult trading conditions, posting a post impairment NAV total return of (5.3%) and maintaining its annual dividend at 1.5p per quarter for the year. The final quarter of 2019 also saw the first quarter where profit after tax, before impairment, was sufficient to service the quarterly dividend which is a real landmark in the maturity of the loan portfolio. With a view towards the medium term we continue to increase the number of profit shares which should benefit the Company in the coming years. We continue to be mindful of the ongoing challenges our borrowers are facing in a climate of political uncertainty, a weakening housing market and the as yet unknown implications of Brexit. The overall impact of the recent disruption caused by the global Coronavirus outbreak remains unknown, and we continue to monitor the situation closely.

In recognising the threats driven by those uncertainties, we have delivered the following structural and behavioural enhancements in the year:

added independence, knowledge and skills to the team. The Tier One Capital Ltd. Credit Committee now includes Wealth Management, Corporate Finance, Banking and Legal industry experience, which allows a range of views, opinions and challenges to be openly shared. The credit function is working well;
recognising professional partnerships are key to ensuring service resilience, we have refreshed the panel of advisers that support our property, legal and management due diligence. All new development facilities carry an independent quantity surveyor support reporting to the Investment Adviser;
continued to improve the underlying quality of the portfolio by ensuring new lending is to high quality management teams. We are particularly pleased to be supporting existing borrower, Bede Homes, alongside Esh Group who are new to the portfolio. Both have evidenced regular success in the industry over time.

The Company agreed four new facilities during the year:

£0.3m (£0.3m drawn at 30 Nov 2019) to Glenfarg Partnerships Ltd. A mezzanine only facility with interest paid quarterly, supporting the senior lender, RBS, in developing 12 high quality pre-retirement apartments near to Perth, Scotland;
£3.4m (£0.891m drawn at 30 Nov 2019) to Esh Homes Chilton Moor Ltd, an SPV owned by regional mid corporate construction group, Esh Group. A development of 34 detached 3 and 4 bed homes in County Durham, with prices starting from £159,000. Strong demand is seen with 16 of the units reserved off-plan. We are pleased to be funding this established housebuilder;
£3.05m (£0.5m drawn at 30 Nov 2019) to Bede and Cuthbert Developments Ltd. A development of 30 detached 3 and 4 bed homes in Bill Quay, Gateshead, only 4 miles from Newcastle upon Tyne city centre; and
the Company agreed the refinance of The Willows project for a further three years, with an increase of 0.48% to the interest rate.

There were further deployments of capital as follows:

Project	£'000
Springs	£2,150
Newgate Street	£1,350
West Auckland	£728
The Willows	£390
Pendower Hall	£287
Whitefield Farm	£280
Barley Croft, Bedlington	£250
Marley Hill	£190
Rare Earth Medburn	£160
Fernhill	£73
IHL	£14

In February 2019 the fourth successful exit within the Company's loan book occurred with the repayment of Bylaugh Hall. The £3.379m loan, at 8%, was to support the acquisition and development of a grade two listed building in Norfolk. The facility predated the formation of the Company and was brought into the Company on the date of listing. Pleasingly, this represented an IRR of 8.3%.

In December 2019, the fifth successful exit within the loan book occurred with the repayment of the Marley

Hill facility. The £3.605m loan, at 8%, was to support the development of a 20 unit development near Newcastle upon Tyne. This project has the added benefit of a successful profit share which has seen us recognise circa £0.142m profit.

In May 2020, the sixth exit within the loan book occurred with the repayment of the St Hils project. The £2.3m loan, at 8%, was to support the acquisition of an eight unit, 34 bed student accommodation in Durham. While not all the capital has been repaid, the project still generated an IRR of 3.9%.

During the year there were a number of partial redemptions including:

Partial Redemptions

Project	£'000
Marley Hill	£2,520
West Auckland	£600
IHL	£414
Charlton's Bonds	£271

As at 30 November 2018, we reported that three of the projects had not performed in line with expectations. The decision was made to recognise capital impairments at that time. The position with the Barley Croft, Bedlington project has improved, and we are now in a position to write back £0.09m of the impairment previously taken. With regard to Pendower Hall, the Company has agreed a restructuring of its loan facility to take receipt of additional collateral via equity in a private trading business. The Board and Investment Adviser are now working to appraise the value of this equity and will, informed by the results of this work, consider the merits of retaining the equity as a non-core holding or liquidating it, in full or in part, if possible, to reduce the exposure. Until such time as an accurate valuation can be established, the Board and Investment Adviser believe it appropriate to impair the loan by a further £0.842m to £0.958m constituting 3.67% of the loan portfolio. The West Auckland loan has previously not performed in line with expectations and the Board made an impairment against the interest of £0.139m in November 2018. Since then, due to ongoing trading difficulties, with sales rates slowing due to challenging economic conditions, the Board has decided to make a capital impairment against the £2.975m West Auckland loan of £1.654m, being a c.60% impairment to this loan, and representing 6.32% of the loan portfolio.

In October 2019, the Company refreshed a committed revolving credit facility with Shawbrook Bank. This facility, agreed in 2018 at £8.5m, supported activities within the last financial year. We took the opportunity to renew at a lower level of £6.0m reflecting our forecast deployment pipeline for the year ahead, and the maturity profile of the Company's loan book. Post year end, the decision was made to increase this facility to £6.5m and extend until May 2021 in order to provide a measure of additional liquidity and flexibility during the Covid 19 driven economic downturn.

At 30 November 2019, the Company had 17 live facilities, nine of which are a profit share arrangement for the benefit of the Company, with the deployment level sitting at £25.206m.

DEPLOYMENT

The portfolio continues to be deployed across the following property sectors: residential 65.9% (30 Nov 2018: 56%), commercial 23.4% (30 Nov 2018: 34%), sale and leaseback 8.6% (30 Nov 2018: 8%) and cash 2% (30 Nov 2018: 2%).

The current average interest rate being achieved on the combined loan book is 7.47% (Nov 2018: 8.38%), with the reduction due to the Barley Croft, Bedlington and West Auckland projects no longer contributing to the average interest rate being achieved as these are assessed for impairment. The average loan size has decreased from £1.87m at 30 November 2018 to £1.49m at 30 November 2019.

PROFIT SHARE PROJECTS

There are currently nine Profit Share projects in the portfolio (Nov 2018: seven).

Since the listing of the Company we have recognised an uplift in the equity value of three of the nine facilities (Nov 2018: 1), The remaining Profit Share holdings are recognised as nil value, given where we are in the lifecycle of each project. We monitor and review this on an ongoing basis.

PIPELINE

We continue to see strong deal flow, reflective of the lack of finance options available to developers in the regions. In addition to the new projects the Company funded, we are currently reviewing £19.3m of potential funding opportunities across 8 projects with 84.2% in the North East and the remainder across Scotland.

OUTLOOK

It's crucial that we acknowledge the outbreak of COVID-19 which has brought much of the world economy to a halt and the impact that will have on the

Continued

operations, financial performance and liquidity of the Company.

We have a robust pipeline of lending opportunities. However, there will be a reduction in lending through quarter two and quarter three of 2020 due both to the uncertainties of the duration and impact of COVID-19, and the practical challenges in executing lending decisions.

The company is committed to working with its borrowers to navigate the effects of this crisis. The ultimate impact of the crisis is impossible to predict; however, we anticipate that our borrowers may have a number of challenges. In particular, the time to sell properties may increase, property values may fall, there may be supply chain issues, and this may impact on the ability of lenders to meet their interest payment obligations on a timely basis, as well as the ultimate ability to repay the loan. Almost all construction sites were closed from March 2020 and while most sites have now re-opened on a limited basis, adhering to social distancing rules, there is no certainty when sites will become fully operational again.

Given this, it may be difficult for a time to accurately value properties, and thus to assess our security value. The focus will remain on protecting shareholder value by working with the developers to ensure the best result, depending on the individual circumstances, for each development we support through our loans.

Residential

Our view, supported by various sources of market commentary, is that the following trends are likely:

UK house prices are likely to decline sharply and may fall by as much as 10% this year. With relatively lower cost housing within the Company's portfolio, then, on average, this equates to around £20k-£25k per house sale.
market fundamentals are very different to the Global Financial Crisis though and are expected to recover, fuelled by:
government intervention to underpin employment and salaries, which did not exist in the 2008 crash.
banks are better capitalised and mortgage availability is not expected to be disrupted in anything other than the lock-down period.
the majority of the Company's portfolio is in the North East of England, a market much less susceptible to extreme movements. Regional economics are overweight with Public Sector job

roles, meaning this area is well placed for a swift consumer lead recovery as majority of people are salaried.

nationally, Savill's predict that transaction volumes are expected to fall from 1.2m sales in 2019 to between 566k (47%) and 745k (62%). Therefore, there is a future tension between the rate that the site will be built-out, quicker to minimise prelim costs, with a build-phase that matches the sales rate, which will be less capital intensive but heavier on cost.
Savill's predict a "tick" shaped market recovery, with a return to full capability in 2022. They are confident that their pre-COVID-19 price growth predictions of 15% over 5 years remain valid. They have plotted two market impacts but both year-on-year recovery rate scenarios break-back to the same 15% answer, below:

Five year house price growth forecast

	2020	2021	2022	2023	2024	Cumulative
2019 forecast	1%	4.5%	3%	3%	3%	+15.3%
Scenario one	-5%	5%	8%	4%	14%	+15.4%
Scenario two	-10%	4%	12%	6.5%	3%	+15.0%

Source: Savills

We will continue to monitor the impact on each project with the following sensitised approach on the key variables:

Variable	Sensitivity
Build costs	5% increase in costs as standard unless prices are fixed, additional costs for remobilisation
Build phase	Standard build process to be increased by 10%
Sales prices	Reduce by 5% for remainder of 2020 for units not yet reserved/exchanged
Sales rates	Reduce forecasted rate to 60% of pre-COVID-19 level

Commercial

Our exposure to this sector is primarily in the leisure sector. At the time of writing, venues remain in complete lockdown, with the likelihood that social gatherings will be one of the last activities permitted when restrictions are lifted. Cashflows are disabled, meaning the prospect of clients servicing interest is completely reliant on having other, non-trading, sources of income. Alternative uses are few and far between. Encouragingly venue bookings are proving to be resilient with postponements preferred to cancellations. Therefore we are expecting a "v" shaped recovery once restrictions are lifted and operators are permitted to trade freely. Current government actions suggest an attempt to encourage a level of normal life

to resume while acknowledging that there will be a level of managed risk in doing so. Our view is that we will need to work most closely with our projects in this sector, taking a medium-term view to ensure full capital repayment.

Sale and Leaseback

Our exposure to this sector is in student accommodation. Typically student lets are booked up between 12 and 18 months in advance, meaning cashflows for Academic year 20/21 should be identifiable.

University tuition has been hit hard, with face-to-face time brought to an end in March 2020. Some re-invention to on-line teaching has been seen and it will be important to see how that develops into a more normalised curriculum after relaxation of lock-down rules.

Evidence coming back from clients so far:

the sector is not over-reacting to COVID-19. Most concern relates to future in-flows of overseas students.
there is no evidence of cancelling letting contracts for 2020/21. At this point, rental incomes remain robust.
the government remains fully supportive of Student Finance, meaning landlords are only under mild pressure to provide rental relief, but are not doing so.
consolidators remain active, but transactions tend to be on hold due to an inability to understand the impact of COVID-19 on valuations. Any views on valuation tend to be driven by perception rather than any real valuation evidence.

While this is an unprecedented time, with the priority being to ensure all of our stakeholders remain safe and well, we remain confident that our robust relationship led approach with our borrowers will give the Company the best opportunity to minimise disruption to daily operations. The Company's strategy of focusing on a smaller volume of higher valued loans allows us to stay close to the borrowers, and to remain in constant contact with them throughout this period. By ensuring that we maintain our regular communication with our borrowers, and by working together and building on the existing relationships we have with them, we are well placed to navigate through the coming months.

THE INVESTMENT PORTFOLIO AS AT 30 NOVEMBER 2019

Project	Sector	Maturity Date	Profit Share	Security	% of Portfolio	LTV* (Nov 19)	Loan Value (Nov 19) (£m)	Loan Value (Nov 18) (£m)
The Willows	Commercial	May 2022	No	Senior	17.2%	74.0%	4,448	4,058
Springs	Residential	June 2020	Yes – 25.1%	Senior	13.8%	70.3%	3,567	1,375
Newgate Street	Residential	Aug 2020	Yes – 25.1%	Senior	11.3%	96.0%	2,905	1,500
St Hilda	Sale & Leaseback	Feb 2020	Yes – 25.1%	Senior	8.6%	99.5%	2,237	2,300
Rare Earth Medburn	Residential	Nov 2019	No	Senior	7.2%	72.1%	1,865	1,840
Bedlington	Residential	June 2020	Yes – 25.1%	Senior	7.0%	109.7%	1,802	1,462
Whitefield Farm	Residential	Jan 2020	Exit fee taken	Senior	4.9%	104.9%	1,280	1,000
West Auckland	Residential	Mar 2020	No	Senior	4.6%	98.6%	1,182	2,709
IHL	Residential	Sep 2021	No	Subordinate	4.5%	71.8%	1,175	1,575
Pendower Hall	Commercial	Mar 2023	No	Senior	3.7%	100.9%	958	1,513
Chilton Moor	Residential	Aug 2021	Exit fee taken	Senior	3.4%	52.7%	891	-
Charlton's Bonds	Residential/Commercial	May 2020	No	Senior	2.7%	100.0%	697	967
Fernhill	Residential	Jul 2020	No	Subordinate	2.3%	79.3%	598	525
Gateshead Town Hall	Commercial	Mar 2020	Yes – 25.1%	Senior	2.1%	33.4%	550	550
Bill Quay	Residential	Feb 2022	Yes – 25.1%	Senior	1.9%	85.3%	500	-
Marley Hill	Residential	Jan 2020	Yes – 25.1%	Senior	1.7%	31.1%	438	2,729
Glenfarg	Residential	Oct 2020	No	Subordinate	1.2%	23.5%	300	-
Exits	Commercial							3,379
General Impairment							(187)	-
Cash					2.0%		523	606
Total/Weighted Average					100.0%	82.3%	25,729	28,088

*LTV has been calculated using the carrying value of the loans as at the balance sheet date

IAN MCELROY.

TIER ONE CAPITAL LTD

29TH MAY 2020

STRATEGIC REVIEW

The Directors present their Strategic Report for the year to 30 November 2019.

INVESTMENT OBJECTIVE

The Company's investment objective is to provide Shareholders with a consistent and stable income and the potential for an attractive total return over the medium to long term.

INVESTMENT POLICY

The Company seeks to achieve its investment objective through: (i) a diversified portfolio of fixed rate loans predominantly secured over land and/or property in the UK; and (ii) receiving, in many cases, the benefit of an associated Profit Share, usually obtained by acquiring a minority equity stake in the relevant borrower project development vehicle.

The Company attempts to reduce downside risk by focusing on secured debt with both quality collateral and contractual protection. The Company makes investments primarily through senior secured loans although other loans such as bridging loans, subordinated loans, selected loan financings and other debt instruments are considered if appropriate.

The typical loan term is between one and five years. The Company retains absolute discretion to make investments for either shorter or longer periods.

The Company's portfolio is appropriately diversified by sector and predominantly split between:

Regional residential house building across the UK, with a preliminary focus on non-London based property;
Small to medium commercial property development across the UK primarily focusing on small serviced office space, hotel developments and wedding and conferencing venues; and
Direct sale and leaseback vehicles primarily operating in the professional sectors of dentists, accountants, solicitors and finance professionals.

The Company has the benefit of an associated profit share arrangement with nine of the loans as at the year end. These arrangements have been put in place by taking a minority equity stake in the relevant borrower project development vehicle. Each Profit Share is with a particular borrowing team pursuant to which the Company has a right of first refusal to provide the financing for that borrowing team's next five projects via the relevant borrower project development vehicle. The Directors (as advised by the Investment Adviser) anticipate that the Company will have the benefit of associated Profit Shares for approximately 80 per cent. of its future loan advances. Investment

risk is spread by observance of detailed investment restrictions concerning loan to value ratios, geographic and sector concentrations.

No single investment can constitute 20% of the net asset value at the time of investment. No more than 20% of the net asset value can be exposed to one borrower.

The Company will not invest in other listed closed-ended investment companies.

The Company may use gearing if it believes it will enhance Shareholder returns over the longer term. On 22 October 2019 the Company entered into a one-year £6.0 million committed revolving facility with Shawbrook Bank Limited. £3.75 million was drawn down at the year end. It is intended to limit the Company's borrowings to 30% of the net asset value at the time of drawdown. At 30 November 2019 the Company's effective gearing was 16.6%. In May 2020, the facility was increased to £6.5m and extended until May 2021.

The Company may invest through derivatives for efficient portfolio management. In particular, the Company may engage in interest rate hedging or otherwise seek to mitigate the risk of interest rate increases as part of the Company's efficient portfolio management.

BUSINESS MODEL

The Company invests in accordance with the investment objective.

The Board is the Company's governing body and is collectively responsible to shareholders for the long term success of the Company. It is responsible for the overall strategy of the Company, including its investment objective and policy, decisions regarding corporate governance, asset allocation, risk and internal control assessment and determining the overall limits and restrictions for the portfolio. In addition, it appoints and monitors the performance of its service providers and seeks to secure the Company's success by engaging reputable third-party service suppliers with established track records to deliver its day to day operations.

The management of the Company's portfolio, is delegated to the Investment Adviser and there is a clear division of responsibilities between the Board and

the Investment Adviser. The Board maintains a close working relationship with the Investment Adviser as its principal service provider.

CULTURE AND VALUES

All the Directors seek to discharge their responsibilities and meet shareholder expectations in an open and transparent manner. The Board seeks to recruit Directors who have diverse working experience including managing the types of companies in which the Company invests. The industry experience on the Board ensures there is detailed knowledge and constructive challenge in the decision-making process. This helps the Company achieve its overarching aim of enhancing shareholder value. The Directors are mindful of costs and seek to ensure that the best value for money is achieved in managing the Company.

The Board seeks to employ third-party providers who share the Company's culture and importantly will work with the Directors openly and transparently to achieve the Company's aims. As mentioned in the Business Ethics section below, the Board expects and seeks assurance that the companies it works with adopt working practices that are of a very high standard.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICY

The Investment Adviser acquires, develops and manages properties on behalf of the Company. It is recognised that these activities have both direct and indirect environmental and social impacts.

The Investment Adviser actively seeks to invest in companies that adopt good ESG practices and, where possible, uses its influence to encourage companies to adopt best practice on environmental, social and corporate governance (ESG) matters.

BUSINESS ETHICS

The Company maintains a zero-tolerance policy towards the provision of illegal services, bribery and corruption in its business activities, including the facilitation of tax evasion. As the Company has no employees and the Company's operations are delegated to third-party service providers, the Board seeks assurances, at least annually, from its suppliers

Continued

that they comply with the provisions of the Modern Slavery Act 2015 and maintain adequate safeguards in keeping with the provisions of the Bribery Act 2010 and Criminal Finances Act 2017.

As an investment vehicle the Company does not provide goods or services in the normal course of business, and does not have customers. Accordingly, the Directors consider that the Company is not within the scope of the Modern Slavery Act 2015.

COMMUNITY, MODERN SLAVERY AND EMPLOYEE RESPONSIBILITIES

The Company has no employees and all the Directors are non-executive, therefore there are no disclosures to be made in respect of employees.

As an investment vehicle the Company does not provide goods or services in the normal course of business, and does not have customers. The Board considers that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. In relation to this matter the Company's supply chain is thought to be low risk by the Board.

Principal Risks and Uncertainties

There are a number of potential risks and uncertainties which could have a material effect on the Company's performance.

The Board of Directors has overall responsibility for risk management and internal control within the context of achieving the Company's objectives. The Board agrees the strategy of the Company taking into consideration the Company's risk appetite. The Company also maintains a risk register to monitor the perceived risks and their mitigation.

The Board has undertaken an assessment of the principal risks facing the Company and has carried out a review of the effectiveness of the internal controls as they operated during the year and up to the approval date of this Annual Report. The Board continues to keep the Company's system of risk management and internal controls under review to ensure these principal risks are appropriately managed. These principal risks are described below together with an explanation of how they are mitigated.

Investment and strategy risk

The Company's targeted returns are targets only and are based on estimates and assumptions about a variety of factors including, without limitation, yield and performance of the Company's investments, which are inherently subject to significant business, economic and market uncertainties and contingencies, all of which are beyond the Company's control and which may adversely affect the Company's ability to achieve its targeted returns. Accordingly, the actual rate of return achieved may be materially lower than the targeted returns, or may result in a partial or total loss, which could have a material adverse effect on the Company's profitability, the Net Asset Value and the price of Ordinary Shares.

Borrowers under the loans in which the Company invests may not fulfil their payment obligations in full, or at all, and/or may cause, or fail to rectify, other events of default under the loans.

The Board is responsible for setting the investment strategy to achieve the targeted returns and for monitoring the performance of the Investment Adviser and the implementation of the agreed strategy.

An inappropriate strategy could lead to poor capital performance and lower than targeted income yields.

This risk is mitigated through regular reviews and updates with the Investment Adviser, monitoring of the portfolio sectors against the investment restrictions on a quarterly basis and tracking of loan to value ratios of the underlying property projects.

Market risk

The Company's investment strategy relies in part upon local credit and real estate market conditions. Adverse conditions may prevent the Company from making investments that it might otherwise have made leading to a reduction in yield and an increase in the default rate.

The Company holds 100% of its assets in the United Kingdom. The Board considers there is a risk of a further downturn in the UK property market while the EU and the UK negotiate their future relationship. In addition, an unforeseeable global event has emerged, with the COVID-19 pandemic resulting in turmoil in the financial markets. Central banks are now engaged to assist, with recent interest rate cuts by the Bank of

England. During the forthcoming months it will be important to carefully monitor the impact of the spread of the virus on the residential property market.

To mitigate the market risks, the Board receives quarterly updates from the Investment Adviser containing information on the local market conditions and trends. This information is reviewed alongside the sector split of the portfolio to ensure the portfolio is aligned to meet future challenges.

Financial risk

The Company's activities expose it to a variety of financial risks that include interest rate risk, liquidity risk and credit risk. Further details on these risks and the way in which they are mitigated are disclosed in the notes to the financial statements.

Operational risk

The Company has no employees and relies upon the services provided by third parties. It is primarily dependent on the control systems of the Investment Adviser and Administrator who respectively maintain the assets and accounting records.

Failure by any service provider to carry out its obligation in accordance with the terms of their appointment could have a detrimental effect on the Company.

To mitigate these risks, the Board reviews the overall performance of the Investment Adviser and all other third party service providers on a regular basis and has the ability to terminate agreements if necessary. The business continuity plans of key third parties are subject to Board scrutiny.

Legal and Regulatory risk

In order to qualify as an investment trust, the Company must comply with section 1158 of the Corporation Tax Act 2010. The Company has been approved by HM Revenue & Customs as an investment trust. The Company is listed on the London Stock Exchange. Non-compliance with the taxes act or a breach of listing rules could lead to financial penalties and reputational loss.

These risks are mitigated by the Board review of quarterly financial information and the compliance with the relevant rules.

PROMOTING THE SUCCESS OF THE COMPANY

New regulations (The Companies (Miscellaneous Reporting) Regulations 2018 require that the Directors explain, more fully than in previous years, how they have discharged their duties under section 172(1) of the Companies Act 2006 in promoting the success of the Company for the benefit of its members as a whole.

The Board gives consideration to the likely long term consequences of all decisions with regard to the interests of its shareholders, stakeholders and the environment in which it operates.

The Board strives to maintain a reputation for high standards of business conduct and acting fairly between all members. The Company has no employees.

Stakeholder Group	Engagement in the year
Investors	Shareholders play an important role in monitoring and safeguarding the governance of the Company and have access to the Board via the Company Secretary throughout the year and are encouraged to attend the Annual General Meeting.
Stakeholder Group	Engagement in the year
---	---
Suppliers	Key suppliers report to the Board on a regular basis. The Company employs a collaborative approach and looks to build long term partnerships based on open terms of business and fair payment terms.
Borrowers	The Investment Adviser meets with the management of all companies to which the Company lends money and reports its findings to the Board on a quarterly basis.
Regulators	We ensure compliance with the necessary rules and regulations relevant to the Company in order to build trust and a good reputation in the market.

Factoring our Shareholders and Stakeholders into our Principal Decisions

We define principal decisions as both those that are material to the Company but also those that are significant to any of our key stakeholders as identified above. In making the following principal decisions, the Board considered the outcome from its stakeholder engagement as well as the need to maintain a reputation for high standards of business conduct and the need to act fairly between the members of the Company.

| Principal Decision 1 | Dividend Policy
We continue to operate a progressive dividend policy. |
| --- | --- |
| Principal Decision 2 | Lending Strategy
The Board's focus on the loans provided ensures that the sustainability of the Company and its ability to pay dividends is not compromised. |
| Principal Decision 3 | Share Capital
Methods to expand the shareholder base and grow the Company are regularly considered. |

VIABILITY STATEMENT

The Directors have assessed the viability of the Company over a period longer than the 12 months required by the 'Going Concern' provision (this provision is detailed below). The Board conducted this viability review for a period of three years. The Board considers the Company, with no fixed life, to be a long term investment vehicle but decided this is an appropriate time period over which to report, reflecting the long term objectives of the Company and the typical loan term whilst taking into account the impact of uncertainties in the markets.

The Board regularly considers a detailed cash flow model which does not indicate any matters which would give concern over the Company's longer term viability. The debt portfolio held by the Company is however not expected to remain unchanged over the longer term. The Investment Adviser is expected to provide new loans and receive repayments, in line with the Company's investment objective and policy,

throughout the year. At 30 November 2019 17 loans had been made with an average value of £1.493 million and average time to loan maturity of 1.2 years. The longer the time horizon which is considered, the higher the degree of uncertainty over the constituents of the Company's debt portfolio and, on balance, the Board considers that a period of three years is an appropriate length of time over which a detailed sensitivity analysis can be conducted whilst retaining a reasonable level of accuracy regarding forecast interest rate movements.

In making this statement the Board carried out a robust assessment of the principal risks facing the Company including those that would threaten its business model, future performance, solvency or liquidity. These risks and their mitigations are set out above.

The principal risks identified as most relevant to the assessment of the viability of the Company were those relating to potential impairment of loans in the portfolio and its effect on capital value of the Company and its ability to pay dividends.

When considering the risk of under-performance, the Board carries out a series of stress tests to understand the effects of any substantial future increases in interest rates and future worsening of the property and development markets on the value of the underlying security leading to potential breaches of loan covenants by the borrowers.

The results of these stress tests have given the Board comfort over the viability of the Company and its ability to maintain capital value and dividend levels. The Board has also considered the impact of potential regulatory change for future periods and the controls in place surrounding significant third party providers, including the Investment Adviser.

Based on the Company's processes for monitoring revenue and costs and the Manager's compliance with the investment objective and policies, the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of three years from the date of approval of this Report.

GOING CONCERN

The Company does not have a fixed winding-up date and, therefore, unless shareholders vote to wind-up

the Company, shareholders will only be able to realise their investment through the market.

In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council. After making enquiries, and bearing in mind the nature of the Company's business and assets, the Directors consider that the Company has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of the financial statements. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

COVID-19

The Company has considered sensitivities to its near and mid - term cash flows from the potential adverse impact of the Covid-19 outbreak. While the timing and ultimate impact cannot be assessed with any precision at the time of writing, the Board has considered a scenario where the crisis has a materially detrimental impact on trading performance.

The Board considers the Company to be relatively lightly geared relative to the security provided by its property backed loans. The substantial capital buffer inherent in the Company's balance sheet gives the Board comfort that the going concern assumption remains valid, notwithstanding any impacts from the crisis i.e. any feasible impact on the value of our loans (caused by a reduction in the underlying security) would not be expected to impact the underlying solvency of the Company.

We anticipate that some of our borrowers may experience liquidity challenges through the crisis, potentially due to delays in the ability to sell properties, or a reduction in the sales value of those properties. The Company is committed to working through these challenges with developers, and this may involve agreeing revised payment schedules. The Directors consider that there are mitigants to any short term reduction in cash inflows that may result from a liquidity crunch. In particular, the operating expenses (including interest payments) are low relative to income i.e. this would thus need to drop very substantially in order to create a shortfall. Furthermore the Company has cash reserves on hand that could cover expenses for a prolonged period. Our biggest cash outflow is quarterly dividend payments to our shareholders. In

the event of a tightening of liquidity reducing dividend payments gives us significant flexibility in protecting the business and our shareholder's ultimate position. We believe the amount of capital employed in new loans will be limited for the duration of the crisis, both as a measure of practicality and prudence (i.e. the challenges in accurately assessing underlying security values) and of practicality.

The Company has capacity in its facility agreement with Shawbrook. We anticipate being in compliance with our covenants, and this provides additional liquidity to the Company, in particular when lending starts again in earnest. The facility was renewed in May 2020 to a repayment/renewal date of May 2021. Although the next renewal falls within 12 months of approval of the accounts, the Board has prepared stress tests which demonstrate that the Company would have sufficient liquidity to repay the loan if required on or before May 2021.

The Company has no employees, and is thus reliant on staff from the Investment Adviser and other outsourced suppliers (in particular Maitland). We believe that there is sufficient capacity within those organisations and other suppliers to ensure continuity on a business as usual basis, if (for example) certain key employees became unwell and were unable to work for a period of time.

KEY PERFORMANCE INDICATORS

The below key performance indicators (KPIs) are used by the Board to assess the Company's success in meeting its objectives. The KPIs and related Alternative Performance Measures are described in the Glossary on page 72.

DIVIDEND YIELD

The Board targets a 7% annualised dividend yield based on the 100p launch price whilst ensuring the Company does not retain more than 15% of its income, thus complying with s1158 CTA 2010 and keeping investment trust status.

Based on the 1.50p per share interim dividend for the quarter to 29 February 2020 declared on 27 February 2020 and now scheduled for payment on 1 June 2020, the prospective annualised dividend yield is 6.0% based on the 100p launch price.

NET ASSET VALUE TOTAL RETURN (NAV TOTAL RETURN)

The Board regards the growth of the Company's NAV total return as inherent to the successful delivery of value to the shareholders over the longer term.

Since listing in January 2017, the Company has generated a NAV total return of 1.8% (including launch costs) as at 30 November 2019, against a target of 12.25% since inception. The NAV total return for the year to 30 November 2019 was (5.3)%, against a target of 7.0%.

ONGOING CHARGES

The ongoing charges are a measure of the total expenses incurred by the Company expressed as a percentage of the average net assets over the year. The Board regularly reviews the ongoing charges. The Board seeks to ensure the expenses incurred by the Company are kept to a minimum whilst not impacting the services obtained.

The ongoing charges ratio as at 30 November 2019 was 2.4%.

DISCOUNT/PREMIUM TO NAV

The Board monitors the level of the Company's discount/premium to NAV. The annualised average premium to the NAV for the Company is 14.0%.

SOCIAL COMMUNITY, HUMAN RIGHTS, EMPLOYEE RESPONSIBILITIES AND ENVIRONMENTAL POLICY

The Directors recognise that their first duty is to act in the best financial interests of the Company's shareholders and to achieve good financial returns against acceptable levels of risk, in accordance with the objectives of the Company.

In asking the Company's Investment Adviser to deliver against these objectives, they have also requested that the Investment Adviser take into account the broader social, ethical and environmental issues of counterparties within the Company's portfolio, acknowledging that companies failing to manage these issues adequately run a long term risk to the sustainability of their businesses. More specifically, they expect companies to demonstrate ethical conduct, effective management of their stakeholder relationships, responsible management and mitigation of social and environmental impacts, as well as due regard for wider societal issues.

As an investment company with its current structure and no employees, the Company has no direct social, community, employee or environmental responsibilities of its own.

It does not provide goods or services in the normal course of business and does not have customers. Accordingly, the Directors consider that the Company does not fall within the scope of the Modern Slavery Act 2015 and it is not therefore, obliged to make a slavery and human trafficking statement. In any event, the Company considers its supply chains to be of low risk as its suppliers are typically professional advisers.

In line with the requirements of The Criminal Finances Act 2017, the Directors confirm that the Company has a commitment to zero tolerance towards the criminal facilitation of tax evasion.

In order to ensure compliance with the UK Bribery Act 2010, the Directors confirm that the Company has zero tolerance towards bribery and a commitment to carry out business openly, honestly and fairly.

The Company has no greenhouse gas emissions to report from its operations for the year ended 30 November 2019 nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013 (including those within the underlying investment portfolio).

At 30 November 2019 there were four male Directors. The Board believes that the current Directors have the appropriate range of skills and experience required by the Company. Diversity will continue to be considered as an important factor in any future appointments.

On behalf of the Board

JOHN NEWLANDS, CHAIRMAN
29TH MAY 2020

DIRECTORS' REPORT

The Old Registry, Morpeth

The Directors present their Report and Financial Statements of the Company for the year to 30 November 2019.

RESULTS

The results for the year are set out in the financial statements.

FUTURE DEVELOPMENTS

Details of likely future developments of the Company are discussed in the Strategic Report on pages 12 to 18.

CORPORATE GOVERNANCE

The Statement of Corporate Governance is set out on pages 23 to 25 and forms part of this Report.

PRINCIPAL ACTIVITY AND STATUS

The Company is registered in England and Wales as a public limited company under the Companies Act 2006 (number 10395804). It is an investment company as defined by Section 833 of the Companies Act 2006. The Company is a member of the Association of Investment Companies ('AIC').

SHARE CAPITAL

Following listing on 24 January 2017, 22,693,559 shares were issued. During 2018, 4,230,504 shares were issued. No further shares have been issued in the year. Details of the Company's share capital are shown in note 13 on page 57.

DIVIDEND

Details of dividends paid and payable in respect of the year are set out in note 6 on page 54.

GOING CONCERN

the date of approval of the financial statements. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

DIRECTORS

Biographical details of the Directors can be found on pages 26 and 27.

All of the Directors are non-executive and, save for Ian McElroy, are independent of the Investment Adviser and the other service providers.

DIRECTORS' AND OFFICERS' LIABILITY INSURANCE

Directors' and Officers' liability insurance cover is maintained by the Company on behalf of the Directors.

ALTERNATIVE INVESTMENT FUND MANAGER

In accordance with the Alternative Investment Fund Managers Directive (AIFMD) the Company is an Alternative Investment Fund (AIF).

The Company has appointed R&H Fund Services (Jersey) Limited to act as the Company's Alternative Investment Fund Manager (AIFM) for the purposes of AIFMD pursuant to the Investment Management Agreement.

INVESTMENT ADVISER

Tier One Capital Limited continues to act as the Company's Investment Adviser and undertakes discretionary portfolio management services for the Company, subject to the overall control and supervision of the Directors.

SUBSTANTIAL INTERESTS IN SHARE CAPITAL

The Company has received notification of the following holdings of voting rights (under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules):

NUMBER OF SHARES		% held*
Mr B Thompson	2,125,000	7.9
Preston Transport Ltd	1,700,000	6.3

*Based on 26,924,063 ordinary shares in issue as at 30 November 2019.

The Company has not been notified of any changes in respect of the above holdings, and no new holdings have been notified, since the year end.

DIRECTORS' REMUNERATION POLICY AND REPORT

It is mandatory for listed companies to put their Directors' Remuneration Report to an advisory shareholder vote on an annual basis. Resolution 2 seeks to approve the Directors' Remuneration Report.

The Company's remuneration policy was last approved by shareholders at the AGM in 2017. In accordance with the provisions of the Companies Act 2006, the remuneration policy will be put to shareholders at the forthcoming AGM. There have been no changes to the policy since it was approved in 2017.

Subject to approval at the AGM, the policy will remain in place until 2023, unless amended at an earlier date by an ordinary resolution put to shareholders at a general meeting.

CONTINUATION VOTE

In accordance with the Articles of Association, an ordinary resolution will be proposed at the fifth Annual General Meeting to continue the Company as an investment company, and at each third Annual General Meeting thereafter.

DIVIDEND POLICY

Subject to market conditions and the Company's performance, financial position and financial outlook it is the Directors' intention to pay an attractive level of dividend income to Shareholders on a quarterly basis. Whilst not forming part of the investment policy, the Company is targeting the payment of dividends at a net yield of 7% per annum on the 100p issue price of the shares at the Company's launch. The Company intends to continue to pay all dividends as interim dividends.

Continued

Recognising that this means that shareholders will not have the opportunity to vote on a final dividend, the Company will instead propose a resolution to approve the Company's dividend policy at the AGM (resolution 4). The Directors expect that this resolution to approve the Company's dividend policy will be approved annually.

The Company intends to distribute at least 85 per cent. of its eligible income or such other percentage which may be prescribed by HMRC in accordance with Chapter 4 of Part 24 ICTA 2010.

AUTHORITY TO MAKE MARKET PURCHASES OF ORDINARY SHARES

Given the Company is currently in an investment phase, it is unlikely that the Directors will buy back any ordinary shares in the short term. Thereafter any buy-back of ordinary shares will be subject to the Companies Act 2006 (as amended), the Listing Rules and within guidelines established by the Board from time to time (which take into account the income and cash flow requirements of the Company). Resolution 7 will be proposed as a special resolution and seeks to provide the Directors with the authority to purchase up to 4,035,917 ordinary shares or, if less, the number representing approximately 14.99 per cent. of the Company's ordinary shares in issue at the date of the passing of resolution 7. The Company may either cancel any ordinary shares it purchases under this authority or hold them in treasury. This authority will expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution unless it is previously renewed, varied or revoked.

DISCLOSURE OF INFORMATION TO THE AUDITOR

The Directors confirm that, so far as each of them are aware, there is no relevant audit information of which the Company's auditor is unaware and the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

AUDITOR

The Independent Auditor's Report can be found on pages 35 to 41. BDO LLP has indicated its willingness to continue in office with the Company and a resolution will be proposed at the General Meeting to re-appoint it (resolution 5).

STATEMENT REGARDING THE REPORT AND FINANCIAL STATEMENTS

Following a detailed review of the Report and Financial Statements by the Audit Committee, the Directors consider that taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Details of financial instruments risk can be found in Note 16.

The post balance sheet events of the Company are described in detail in Note 17.

As set out in the Strategic Review on page 18, the Company has no greenhouse emissions to report.

RECOMMENDATION

The Directors consider the passing of the Resolutions to be proposed at the General Meeting to be in the best interest of the Company and its shareholders as a whole and likely to promote the success of the Company for the benefit of its shareholders as a whole.

Accordingly, the Directors unanimously recommend that shareholders should vote in favour of the resolutions, as they intend to in respect of their own beneficial shareholders amounting to 143,560 ordinary shares.

On Behalf of the Board

JOHN NEWLANDS. CHAIRMAN

29TH MAY 2020

STATEMENT OF CORPORATE GOVERNANCE

Springs

STATEMENT OF CORPORATE GOVERNANCE

The Board has considered the Principles and Provisions of the AIC Code of Corporate Governance, published in February 2019 (AIC Code). The AIC Code addresses the Principles and Provisions set out in the UK Corporate Governance Code (the UK Code), as well as setting out additional Provisions on issues that are of specific relevance to the Company.

The Board considers that reporting against the Principles and Provisions of the AIC Code, which has been endorsed by the Financial Reporting Council provides more relevant information to shareholders.

The Company has complied with the Principles and Provisions of the AIC Code but the Board has not elected to designate a senior independent non-executive Director, as it considers that each Director has different strengths and qualities on which they may provide leadership.

The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the AIC Code adapts the Principles and Provisions set out in the UK Code to make them relevant for investment companies.

All of the Company's day to day administrative functions are outsourced to third parties, resulting in no requirement for a Chief Executive or executive Directors.

INDEPENDENCE

The Board consists of four Directors. Three are independent non-executive Directors, including the Chairman. They are considered by the Board to be independent in character and judgement of the Investment Manager and the Investment Adviser. Ian McElroy is considered not to be independent on the basis of his role at the Investment Adviser. The independence of the Directors is determined with reference to the AIC Code and is reviewed annually.

THE BOARD

Stephen Coe retired as a Director at the 2019 Annual General Meeting and John Newlands was appointed Chairman in his place.

Further information on the Directors and their experience is disclosed on pages 26 and 27.

New Directors receive an induction from the Investment Adviser, Company Secretary and

Administrator on joining the Board, and all Directors receive other relevant training as necessary.

The basis on which the Company agrees to generate value over the longer term is set out in its objective and investment policy as contained within the Strategic Review.

The Company has no executive Directors or employees. An Investment Management Agreement between the Company and its Investment Adviser sets out the matters over which the Investment Adviser has authority and the limits beyond which Board approval must be sought. All other matters, including strategy, investment and dividend policies, gearing and corporate governance procedures, are reserved for the approval of the Board.

Directors have attended scheduled Board and Committee meetings during the year ended 30 November 2019 as follows (with their eligibility to attend the relevant meeting in brackets):

	BOARD	AC	NC	MEC
M Harris	4 (4)	2 (2)	1 (1)	1 (1)
I McElroy	4 (4)	N/A	1 (1)	1 (1)
J Newlands	4 (4)	2 (2)	1 (1)	1 (1)
D Noble	4 (4)	2 (2)	1 (1)	1 (1)

The Board has a schedule of matters reserved to it for decision and the requirement for Board approval on these matters is communicated directly to the Investment Adviser. In addition to the scheduled meetings above, committee meetings were held to discuss matters including strategy, borrowings, investment decisions and dividend payments.

Full and timely information is provided to the Board to enable the Directors to function effectively and to discharge their responsibilities. The Board also reviews the financial statements, performance and revenue budgets.

The Board has put in place necessary procedures to conduct, on an annual basis, an appraisal of the Chairman of the Board as well as a performance evaluation of the Board as a whole, the individual Directors and the Board Committees. This was conducted through completion of evaluation questionnaires.

BOARD DIVERSITY

The Company's affairs are overseen by a Board currently comprising four non-executive Directors – all of whom are men. In terms of progress in achieving diversity, the Company is committed to ensuring that vacancies arising are filled by the best qualified candidates and recognises the value of diversity in the composition of the Board. When the Board goes through its next recruitment process, improving the Board's gender diversity will be a priority.

The Directors are broad in their experience, bringing knowledge of investment markets, business, financial services, accounting and regulatory expertise to discussions on the Company's business. The Directors regularly consider the leadership needs and specific skills required to achieve the Company's investment objective. While appointments are based on skills and experience, the Board is conscious of diversity of gender, social and ethnic backgrounds, cognitive and personal strengths and experience. All appointments are based on objective criteria and merit, and are made following a formal, rigorous and transparent process.

MANAGEMENT APPOINTMENT, RE-ELECTION AND REMUNERATION OF DIRECTORS

Directors are selected and appointed by the Nomination Committee. It is chaired by John Newlands and all Directors are members with the exception of Ian McElroy. The Nomination Committee is responsible for reviewing the size, structure and skills of the Board and considering whether any changes are required or new appointments are necessary to meet the requirements of the Company's business or to maintain a balanced Board.

Although the Articles require that Directors submit themselves for re-election at least every three years the Board has resolved that all of the Directors should be subject to re-election on an annual basis. In addition, the Board has agreed that any Director with more

than nine years' service will be required to stand for re-election at each annual general meeting.

Ian McElroy has agreed to waive his Director's fee, for so long as he has interest in the Company's Investment Adviser.

POLICY ON DIRECTORS' REMUNERATION

The Company's policy is discussed in the Directors' Remuneration Report on pages 28 to 30.

THE AUDIT COMMITTEE

Matthew Harris is the Chairman of the Company's Audit Committee which comprises all independent Directors. In discharging its responsibilities, the Audit Committee reviews the annual and half yearly accounts, the system of internal controls, and the terms of appointment and remuneration of the Auditor. It is also the forum through which the Auditor reports to the Board. The Audit Committee is expected to meet at least twice a year. The independence of the Auditor will be reviewed by the Audit Committee, which will also review the terms under which the external Auditor is appointed to perform non-audit services. The Audit Committee will review the scope and results of the audit and its cost effectiveness.

THE MANAGEMENT ENGAGEMENT COMMITTEE

John Newlands is the Chairman of the Company's Management Engagement Committee which comprises the full Board. The Management Engagement Committee reviews the appropriateness of the Investment Adviser's continuing appointment, together with the terms and conditions thereof on a regular basis.

THE NOMINATION COMMITTEE

John Newlands is the Chairman of the Company's Nomination Committee which comprises the full Board except Ian McElroy and is responsible for Director appointments and succession planning.

RELATIONS WITH SHAREHOLDERS

The Directors place a great deal of importance on communication with shareholders. The Annual Report and Accounts are distributed to other parties who have an interest in the Company's performance. Shareholders and investors may obtain up to date information on the Company through the Investment Adviser's website. The Company responds to questions from shareholders on a wide range of issues.

A regular dialogue is maintained with the Company's shareholders.

The Notice of the General Meeting included within the Annual Report and Accounts is sent out 20 working days in advance of the meeting. The Company Secretary is available to answer general shareholder queries at any time throughout the year.

On Behalf of the Board

MAITLAND ADMINISTRATION SERVICES (SCOTLAND) LIMITED

29TH MAY 2020

BOARD OF DIRECTORS

JOHN NEWLANDS

NON-EXECUTIVE CHAIRMAN

John has served more than twenty years in the City, most recently with Brewin Dolphin Limited as Head of Investment Companies Research from 2007 to 2017. He was a member of the Association of Investment Companies Statistics' Committee from 2000 to 2017. He has an MBA from Edinburgh University Business School and is a Chartered Engineer. He is a member of the Investment Committee of Durham Cathedral. He has written four books about financial history, the most recent charting the history of Dunedin Income Growth Investment Trust. John is currently Director of Gabelli Merger Plus+ Trust PLC and CQS New City High Yield Fund Limited.

Shareholding as at 30 November 2018: 5,000 ordinary shares.

Shareholding as at 30 November 2019: 5,000 ordinary shares.

Date of appointment: 14 November 2017.

MATTHEW HARRIS ('MATT')

INDEPENDENT NON-EXECUTIVE DIRECTOR AND AUDIT COMMITTEE CHAIRMAN

Matt is a Chartered Accountant and an experienced M&A professional, who is a specialist in providing financial due diligence to Private Equity buyers and sellers. Matt was a partner at FTI Consulting (a US based, NASDAQ listed consulting firm), and prior to that was a partner in the Private Equity Group at KPMG, and began his career and qualified with Arthur Andersen. Matt has led due diligence on transactions across Europe and around the world, focusing on large and mid-sized transactions, and has led relationships with London and European based Private Equity funds. Matt has a Bachelor's degree in Economics and Finance from Auckland University, and an MBA from Manchester Business School.

Shareholding as at 30 November 2018: 50,000 ordinary shares.

Shareholding as at 30 November 2019: 50,000 ordinary shares.

Date of appointment: 19 December 2016.

IAN MCELROY

NON-INDEPENDENT NON-EXECUTIVE DIRECTOR

Ian is the Chief Executive of Tier One Capital Ltd, a wealth management company based in Newcastle upon Tyne and the Investment Adviser to the Company. Ian has a wealth of experience in financial services, with specific expertise in investment management, financial planning and credit structuring. Ian has worked within the high net worth investment market throughout his career, spending time at institutions including Barclays Wealth, Coutts and Kleinwort Benson. He is a Chartered Fellow of the CISI and a Chartered Wealth Manager.

Shareholding as at 30 November 2018: 37,660 ordinary shares.

Shareholding as at 30 November 2019: 38,660 ordinary shares.

Date of appointment: 18 April 2018.

DOUGLAS NOBLE

INDEPENDENT NON-EXECUTIVE DIRECTOR

Douglas has over 25 years' private banking experience. He is currently Senior Adviser to Weatherbys Private Bank and sits on Banks Scottish Advisory Board. Previous to this he has held Senior Executive roles in the Banking Industry including the Scottish Head of Private Banking for Barclays, Adam & Company and HBOS. He also launched Bank of Scotland's first ever private banking operation. Douglas holds a law degree from Dundee University, as well as achieving the PCIAM and IMC from the CFA. He is a member of the Chartered Institute of Bankers, Scotland and holds Chartered Banker status.

Shareholding as at 30 November 2018: 8,600 ordinary shares.

Shareholding as at 30 November 2019: 8,600 ordinary shares.

Date of appointment: 19 December 2016.

Other Directors who served during the year: Stephen Coe – resigned 30 April 2019

DIRECTORS' REMUNERATION REPORT

REMUNERATION COMMITTEE

Under the UK Listing Rules, where an investment company has only non-executive Directors, the Governance Code principles relating to Directors' remuneration do not apply. The full Board may act as the Remuneration Committee.

The remuneration of the Directors has been set in order to attract individuals of a calibre appropriate to the future development of the Company. The Company's policy on Directors' remuneration, together with details of the remuneration of each Director, is shown below.

The Board has prepared this report in accordance with the requirements of Section 421 of the Companies Act 2006. An ordinary advisory resolution for the approval of this report will be put to the members at the forthcoming General Meeting and a separate binding resolution will be proposed in relation to the Remuneration Policy.

POLICY ON DIRECTORS' REMUNERATION

The Company's policy is that the remuneration of the Directors should reflect the experience of the Board as a whole, the time commitment required, and be fair and comparable with that of other similar companies. Furthermore, the level of remuneration should be sufficient to attract and retain the Directors needed to oversee the Company properly and to reflect its specific circumstances. It is intended that this policy will continue up to the Annual General Meeting in 2021.

The fees for the Directors are determined within the limit set out in the Company's Articles of Association. The present limit is an aggregate of £400,000 per annum and may not be changed without seeking shareholder approval at a general meeting. Directors are not eligible for bonuses, pension benefits, share options long-term incentive schemes or other benefits. No element of the Directors' remuneration is performance-related.

It is the Board's policy that Directors do not have service contracts, but each new Director is provided with a letter of appointment. The term of Directors' appointments provide that Directors should retire and be subject to re-election at the first Annual General Meeting after their appointment annually thereafter.

Although the Company's Articles of Association provide that Directors shall not remain in office for longer than three years without submitting themselves for re-election, the Board has resolved that all of the Directors should be subject to re-election on an annual basis.

No Director past or present has any entitlement to pensions, and the Company has not awarded any share options or long-term performance incentives to any of the Directors.

Directors' and Officers' liability insurance cover is maintained by the Company on behalf of the Directors.

DATES OF APPOINTMENT

The terms of Directors' appointments provide that Directors should retire and be subject to re-election at the first Annual General Meeting after their appointment and at each Annual General Meeting thereafter. There is no notice period and no provision for compensation upon early termination of appointment.

ANNUAL REPORT ON DIRECTORS' REMUNERATION

The Directors who served in the year received the below fees:

	2019	2018
John Newlands (Chairman)	£30,000	£30,000
Matthew Harris	£30,000	£30,000
Douglas Noble	£30,000	£30,000
Stephen Coe*	£12,500	£30,000
Total	£102,500	£120,000

*Stephen Coe resigned on 30 April 2019.

RELATIVE IMPORTANCE ON SPEND ON PAY

The table below sets out in respect of the financial year ended 30 November 2019 and the preceding financial year:

a) the remuneration paid to Directors; and
b) the distribution made to shareholders by way of interest dividend

	2019	2018
	£'000	£'000
Total remuneration	102	120
Dividend	1,683	1,674
Expenses	598	1,296
National Insurance Contributions	7	9
Expenses	591	1,287

Directors' fees as a percentage of:

	2019	2018
	%	%
Dividend	6.1	7.2
Expenses	17.1	9.3

DIRECTORS' INTERESTS

The Directors, including connected parties who held office at the year end and their interests (all beneficial) in the Ordinary Shares of the Company were as follows:

	At 30 November 2019 Ordinary shares	At 30 November 2018 Ordinary Shares
John Newlands	5,000	5,000
Matthew Harris	50,000	50,000
Ian McElroy	38,660	37,660
Douglas Noble	8,600	8,600

Continued

COMPANY PERFORMANCE

Notwithstanding the significant impairment numbers reported in Q4 2019 described in this report, TOC Property Backed Lending Trust PLC has generated a positive Net Asset Value Total Return of 1.8%, including the effects of dividend reinvestment, over the reporting period from the fund's launch on 24 January 2017 to 30 November 2019.

Since the financial year end, not only has the COVID-19 virus required large swathes of the UK and global economies to be put on hold but the leading stock market indicators have suffered serious setbacks.

In addition, at the time of reporting, in excess of 80% of open-ended property investment funds have been suspended, because of the near-impossibility of such vehicles selling their underlying real estate holdings quickly so as to give exiting investors their money back. As a closed-end fund, the Company faces no such barriers, its underlying portfolio being unaffected by any purchases or sales of its shares, following the forces of supply and demand. In addition, the Company has no direct correlation either with leading share indices or with the share prices of other types of real estate companies, funds or the large listed property companies. Direct comparisons with, for example, the FTSE-100 Index are no longer valid in such a context.

In the present testing situation, this degree of separation from wider indices and events stands in the Company's favour, albeit that with much of the country in some form of isolation, the prospects for housebuilding and renovation, whether by large or smaller companies, must by necessity remain on hold.

VOTING AT AGM

At the Company's last Annual General Meeting, held on 30 April 2019, shareholders approved the Directors' Remuneration Policy and Report in respect of the year ended 30 November 2018. 100% of the votes cast were in favour of this resolution.

An ordinary resolution for the approval of this Directors' Remuneration Report will be put to an advisory shareholders vote at the forthcoming General Meeting.

APPROVAL

The Directors' Remuneration Report on pages 28 to 30 was approved by the Board of Directors and signed on its behalf on 29 May 2020.

JOHN NEWLANDS, CHAIRMAN

29TH MAY 2020

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Report and Financial Statements, in accordance with applicable law and International Financial Reporting Standards ('IFRS') as adopted by the EU.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with IFRS as adopted by the EU.

Under Company law the Directors must not approve the financial statements unless they are satisfied that they present a fair, balanced and understandable report and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.

In preparing these financial statements, the Directors are required to:

select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable International Financial Reporting Standards, as adopted by the EU, have been followed, subject to any material departures disclosed and explained in the financial statements.
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006, where applicable. They are responsible for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable UK law and regulations, the Directors are also responsible for preparing a Strategic Report and a Directors' Report that complies with that law and those regulations.

The financial statements are published on www.tocpropertybackedlendingtrust.co.uk which is a website maintained by the Company's Investment Adviser. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors confirm that to the best of our knowledge:

the financial statements, prepared in accordance with the applicable International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities and financial position of the Company;
in the opinion of the Directors, the Report and Financial Statements taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company's position and performance, business model and strategy.
so far as each Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

On Behalf of the Board

JOHN NEWLANDS, CHAIRMAN

29TH MAY 2020

REPORT OF THE AUDIT COMMITTEE

COMPOSITION OF THE AUDIT COMMITTEE

An Audit Committee has been established with written terms of reference and comprises three non-executive Directors, Matthew Harris (Chairman), Douglas Noble and John Newlands.

The Audit Committee members have recent and relevant financial experience. The terms of reference of the Audit Committee are reviewed and re-assessed for their adequacy on an annual basis and are available on the Company's website.

ROLE OF THE AUDIT COMMITTEE

A summary of the Committee's main audit review functions is shown below:

To review and monitor the internal control systems and risk management systems on which the Company is reliant;
To consider annually whether there is a need for the Company to have its own internal audit function;
To monitor the integrity of the half-yearly and annual financial statements of the Company by reviewing, and challenging where necessary,

the actions and judgements of the Investment Manager, the Investment Adviser, the Company Secretary and the Administrator;

To meet with the external Auditor to review their proposed audit programme of work and their findings. The Board shall also use this as an opportunity to assess the effectiveness of the audit process;
To make recommendations in relation to the appointment of the external Auditor and to approve the remuneration and terms of engagement of the external Auditor;
To monitor and review annually the external Auditor's independence, objectivity, effectiveness, resources and qualification; and
To consider and approve all non-audit services.

ANNUAL REPORT AND FINANCIAL STATEMENTS

The Board of Directors are responsible for preparing the Annual Report and financial statements. The Audit Committee advises the Board on the form and content of the Annual Report and financial statements, any issues which may arise and any specific areas which require judgement.

The valuation of investments in the form of loans and profit shares, the building projects given as guarantee for the loans, and the loan recoverability and interest receipt were areas of focus given their significance to the financial statements as a whole and these were specifically reviewed by the Audit Committee.

Following discussion with the Investment Adviser, the Audit Committee gained comfort over the valuation of the loans as included in the Annual Report and financial statements.

AUDITOR

As part of its review of the scope and results of the audit, during the year the Audit Committee considered and approved BDO's plan for the audit of the financial statements for the year ended 30 November 2019. At the conclusion of the audit BDO did not highlight any issues to the Audit Committee which would cause it to qualify its audit report nor did it highlight any fundamental internal control weaknesses. BDO issued an unqualified audit report which is included on pages 35 to 41.

There were no fees paid to the auditor in respect of non-audit services during the year ended 30 November 2019 (2018: £Nil).

As part of the review of auditor independence and effectiveness, BDO has confirmed that it is independent of the Company and has complied with relevant auditing standards. In evaluating BDO, the Audit Committee has taken into consideration the standing, skills and experience of the firm and the audit team. The Audit Committee, from direct observation and enquiry of the Manager and the Administrator, remains satisfied that BDO continues to provide effective independent challenge in carrying out its responsibilities.

The main areas of accounting risk considered by the Committee during the year in relation to the Company's financial statements were the valuation and ownership of investments held by the Company.

The valuation of investments is undertaken in accordance with the accounting policies as set out in note 1. Details of the fair value hierarchy are set out in note 8.

The Committee reviews detailed information on the loan book and its value on a quarterly basis. A full portfolio analysis is prepared for each Board meeting, including a detailed update on development works, collateral given and loan to value ratios, which is reviewed in detail and considered by the Directors.

The Company also receives regular reporting on internal controls (as detailed below).

INTERNAL CONTROLS

The Board is ultimately responsible for the Company's system of internal control and for reviewing its effectiveness. Following publication of the Financial Reporting Council's "Internal Control: Revised Guidance for Directors on the Combined Code" (the "FRC Guidance") the Board confirms that there is an on-going process for identifying, evaluating and managing the significant risks faced by the Company. This process has been in place for the year under review and up to the date of approval of this Annual Report and is regularly reviewed by the Board to ensure it and accords with the FRC Guidance.

The Board has reviewed the effectiveness of the system of internal control. In particular, it has reviewed and updated the process for identifying and evaluating the significant risks affecting the Company and policies by which these risks are managed. The significant risks faced by the Company are as follows:

Investment and strategy;
Financial;
Operational; and
Legal and regulatory

The key components designed to provide effective internal control are outlined below:

Maitland Administration Services (Scotland) Limited acts as Company Secretary and Maitland Administration Services Limited acts as Administrator and, together with the Investment Adviser, prepares forecasts and management accounts which allow the Board to assess the Company's activities and review its performance;

Continued

the Board and Investment Adviser have agreed clearly defined investment criteria, specified levels of authority and exposure limits. Reports on these issues, including concentration limits and loan to value ratios, are regularly submitted to the Board and there are meetings with the Investment Adviser in between as appropriate;
as a matter of course the Investment Adviser's Credit and Compliance teams continually review the Investment Adviser's operations and will report to the Board on any breaches;
written agreements are in place which specifically define the roles and responsibilities of the Investment Adviser, Company Secretary, Administrator and other third party service providers; and
the Board has considered the need for an internal audit function but, due to the compliance and internal control systems in place at the Investment Adviser, the Company Secretary and Administrator, has decided to place reliance on their systems and internal audit procedures.

At its March 2020 meeting, the Audit Committee carried out an annual assessment of internal controls for the year ended 30 November 2019 and subsequent events by considering documentation from the Investment Adviser, the Company Secretary and Administrator. The results of the assessment were reported to, and considered by, the Board its next meeting.

Internal control systems are designed to meet the Company's particular needs and the risks to which it is exposed. Accordingly, the internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and by their nature can only provide reasonable and not absolute assurance against mis-statement and loss.

The principal risks and uncertainties affecting the Company are disclosed in the Strategic Review on pages 12 to 18.

MATTHEW HARRIS
CHAIRMAN OF AUDIT
COMMITTEE
29TH MAY 2020

INDEPENDENT AUDITOR'S REPORT

Independent Auditor's Report to the Members of TOC Property Backed Lending Trust plc

OPINION

We have audited the financial statements of TOC Property Backed Lending Trust Plc (the 'Company') for the year ended 30 November 2019 which comprise the Statement of comprehensive income, Statement of financial position, Statement of changes in equity, Cash flow statement and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion, the financial statements:

give a true and fair view of the state of the Company's affairs as at 30 November 2019 and of its loss for the year then ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
have been prepared in accordance with the requirements of the Companies Act 2006.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

CONCLUSIONS RELATING TO PRINCIPAL RISKS, GOING CONCERN AND VIABILITY STATEMENT

We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) require us to report to you whether we have anything material to add or draw attention to:

Continued

the disclosures in the annual report that describe the principal risks and explain how they are being managed or mitigated;
the Directors' confirmation in the annual report that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity;
the Directors' statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements and the Directors' identification of any material uncertainties to the Company's ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;
whether the Directors' statement relating to going concern required under the Listing Rules in accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit; or
the Directors' explanation in the annual report as to how they have assessed the prospects of

the Company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter	How we addressed the key audit matter in the audit
Going concern:
(pages 16, 17, 20, 21 and Note 1 on page 46)

As detailed in note 1 of the financial statements, the going concern assumption requires Management judgement to ensure that the Company will continue in operation and meet its financial commitments over the next 12 months and has the necessary levels of liquidity and capital available to support their assessment and enable the Directors to prepare the financial statements on the going concern basis.

Included in managements stress test cash flow forecast, is the assumed repayment of the Company’s loan facility which was recently renewed until May 2021, as the next renewal falls within the subsequent 12 months.

As a consequence of the COVID-19 pandemic, we identified going concern as a key audit matter based on our assessment of the significance of the risk and the effect on our audit strategy. | In this area our audit work included, but was not restricted to, the following:
• We assessed the cash flow forecasts for the Company, which covered a period of at least 12 months from the date of approval of these financial statements by corroborating key input data where available. This included comparing the level of forecasted expenses to historical amounts to check the reasonableness thereof, checking for evidence of exchange of contracts on property sales and using our knowledge of the progress of property developments obtained during the course of the audit to challenge Management’s assumptions in respect of the timing and quantum of cash receipts and payments.
• We reviewed the latest loan agreement with the Company’s lender in order to assess the forecasted cash flows relating to the Company’s borrowings.
• We reviewed Management’s assessment of ongoing compliance with loan covenants.
• We reviewed the disclosures in respect of going concern to check that a comprehensive explanation of the potential impact of COVID-19 is provided and that this is consistent with our knowledge of the business.

Key observation:
Our key observations are set out in the conclusions relating to principal risks, going concern and viability statement section of our audit report. |
| Valuation of loans:
(Notes 1, 8 and 9 on pages 47, 54 and 55 respectively)

Loans are held at amortised cost or fair value through profit or loss, depending on the loan classification in accordance with IFRS 9.

As such a key issue for the Company is estimating the expected credit losses on loans at amortised cost and estimating the fair value of loans at fair value through profit or loss.

In addition, judgement is required in determining the classification of loans under IFRS 9.

For properties under development there is an inherent uncertainty over the realisable value of the completed properties and of the final costs to develop the properties, and this in turn represents a risk to the ultimate repayment of the loan. | In this area our audit work included, but was not restricted to, the following:
• For all loans recognised at amortised cost we performed the following:
• checked the Board’s assessment of the classification of each loan by reviewing the terms of underlying loan agreements and any other evidence of contractual cash flows, such as profit share agreements;
• checked Management’s staging assessment including criteria for determining significant increase in credit risk and when a loan is considered to be credit impaired, to supporting documentation such as loan to value (‘LTV’) data, property valuation reports, interest payment history and progress reports on property developments;
• assessed and challenged the reasonableness of the key assumptions used to estimate 12 month ECL, such as probability of default and loss given default, with reference to industry data and the Company’s lending experience;
• assessed and challenged the reasonableness of the key assumptions used to estimate lifetime ECL, including forecasted value and timing of sales for the underlying development project; |

Key audit matter	How we addressed the key audit matter in the audit
For loans at amortised cost, management carry out an assessment of the staging of each loan under IFRS 9 by reference to whether there has been a significant increase in credit risk or whether the loan has become credit impaired.

Management then estimate either 12 months expected credit losses (“ECL”) or lifetime ECL according to the staging of each loan, with reference to matters such as the progress of the development and underlying value of the properties.

The assessment as to the staging of each loan and of the ECL involves a significant degree of management judgement and is therefore subject to management bias. Therefore, this was considered to be an area of focus for our audit.

For loans at fair through profit or loss, Management estimate the fair value of the loan using techniques such as estimating future cash flows and discounting them at an appropriate discount rate.

The estimation of future cash flows and the choice of discount rate involves a significant degree of management judgement and is therefore subject to management bias. Therefore, this was considered to be an area of focus for our audit. | ○ compared estimated sales values to actual sales to date, and agreed actual sales to underlying evidence;
○ performed a sensitivity analysis of the estimated impairment provision with reference to the key assumptions to assess the reasonableness thereof.

• For a selection of loans recognised at fair value through profit or loss we assessed the reasonableness of Management’s fair value assessment by performing the following:
○ assessed and challenged the reasonableness of the key assumptions in the DCF calculation, including the discount rate, build costs and forecasted timing and value of sales for the underlying development project;
○ compared estimated sales values to actual sales to date, and agreed actual sales to underlying evidence;
○ performed sensitivity analysis with reference to the key assumptions.

• For both loans at amortised cost and fair value through profit and loss we:
○ reviewed the most recent RJCS valuations of the underlying property as security for the loans;
○ for a selection of properties, held discussions with surveyors and challenged the key assumptions used in the valuation based on our expectation built up from knowledge of the industry and available benchmarks;
○ reviewed post balance sheet event disclosures relating to the impact of COVID-19 on the Company’s loans.

Key observation:
Based on the outcome of the above procedures, we have not identified any indicators that the valuation of loans is unreasonably estimated in consideration of the key assumptions and judgements made. |

Our application of materiality

We apply the concept of materiality in planning and performing our audit, and in evaluating the effect of misstatements and omissions on our audit and on the financial statements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

We determined materiality for the financial statements as a whole to be £330,000 (2018: £287,000) which was determined by reference to a benchmark of 1.25% (2018: 1%) of total assets. Total assets is considered the most appropriate benchmark given that the company's principal activity is to make loans and to generate returns from these loans.

Performance materiality for the financial statements as a whole was set at £214,000 (2018: £201,000), which was based on 65% (2018: 70%) of financial statement materiality. This lower level of materiality is applied in the performance of the audit when determining the extent of testing to be performed. In setting performance materiality, we had regard to our risk assessment and our assessment of the company's overall control environment.

A lower level of materiality, specific materiality, was used for performing testing of items that have an impact on revenue profit. This lower level was set at £72,000 (2018: £52,000), being based on a benchmark of 5.3% (2018: 5%) of revenue profit before tax.

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £9,000 (2018: £14,380) that we identified through the course of our audit, together with any qualitative matters that, in our view, warranted reporting.

AN OVERVIEW OF THE SCOPE OF OUR AUDIT

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of the valuation of loans which have a high level of estimation uncertainty involved in determining impairment provisions.

Capability of the audit to detect irregularities, including fraud

We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the company which were contrary to applicable laws and regulations, including fraud. These included but were not limited to compliance with Companies Act 2006, the FCA listing and DTR rules, the principles of the UK Corporate Governance Code, industry practice represented by the AIC SORP and IFRS as adopted by the EU. We also considered the company's qualification as an investment trust under UK tax legislation as any breach of this would lead to the company losing various deductions and exemptions from corporation tax.

We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion.

We focused on laws and regulations that could give rise to a material misstatement in the company financial statements. Our tests included, but were not limited to:

agreement of the financial statement disclosures to underlying supporting documentation;
enquiries of management;
review of minutes of Board meetings throughout the period; and
obtaining an understanding of the control environment in monitoring compliance with laws and regulations.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. We also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

OTHER INFORMATION

The Directors are responsible for the other information. The other information comprises the information included in the report and financial statements, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions:

Fair, balanced and understandable set out on page 22 – the statement given as to why the annual report does not include a statement by the Directors that they consider the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or
Audit committee reporting set out on pages 32 to 34 – the section describing the work of the audit committee does not appropriately address matters communicated by us to the audit committee; or
Directors' statement of compliance with the UK Corporate Governance Code set out on pages 23 to 25 – the parts of the Directors' statement required under the Listing Rules relating to the Company's compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code.

OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion, the part of the Directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

the information given in the strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements and the part of the Directors' remuneration report to be audited are not in agreement with the accounting records and returns; or
certain disclosures of Directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.

RESPONSIBILITIES OF DIRECTORS

As explained more fully in the Statement of Directors' responsibilities set out on page 31, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

OTHER MATTERS WHICH WE ARE REQUIRED TO ADDRESS

We were appointed as auditors for the year ending 30 November 16 and subsequent financial periods. The period of total uninterrupted engagement is 4 years, covering the years ended 30 November 2016 to 30 November 2019.

The non-audit services prohibited by the FRC's Ethical Standard were not provided to the Company and we remain independent of the Company in conducting our audit.

Our audit opinion is consistent with the additional report to the audit committee.

USE OF OUR REPORT

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

TIMOTHY WEST

SENIOR STATUTORY AUDITOR

FOR AND ON BEHALF OF BDO LLP

STATUTORY AUDITOR

150 ALDERSGATE STREET, LONDON EC1A 4AB

29TH MAY 2020

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

STATEMENT OF COMPREHENSIVE INCOME

	Notes	Year to 30 November 2019			Year to 30 November 2018
		Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
REVENUE
Investment interest	2	2,222	-	2,222	2,044	-	2,044
Total revenue		2,222	-	2,222	2,044	-	2,044
Unrealised gain on investments	8	-	136	136	-	104	104
Total income		2,222	136	2,358	2,044	104	2,148
EXPENDITURE
Investment adviser fee	3	-	-	-	-	-	-
Impairments	4	(206)	(2,651)	(2,857)	(317)	(429)	(746)
Other expenses	4	(567)	(30)	(597)	(550)	-	(550)
Total expenditure		(773)	(2,681)	(3,454)	(867)	(429)	(1,296)
Loss before finance costs and taxation		1,449	(2,545)	(1,096)	1,177	(325)	852
FINANCE COSTS
Interest payable		(86)	-	(86)	(14)	-	(14)
(Loss)/profit before taxation		1,363	(2,545)	(1,182)	1,163	(325)	838
TAXATION	5	-	-	-	-	-	-
(Loss)/profit for the year and total comprehensive profit for the year		1,363	(2,545)	(1,182)	1,163	(325)	838
Basic earnings per share	7	5.06p	(9.45)p	(4.39)p	4.54p	(1.27)p	3.27p

The total column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations.

There is no other comprehensive income as all income is recorded in the statement above.

STATEMENT OF FINANCIAL POSITION

	Notes	As at 30 November 2019	As at 30 November 2018
NON-CURRENT ASSETS
Investments held at fair value	8	1,441	104
Loans at amortised cost	9	5,623	8,238
		7,064	8,342
CURRENT ASSETS
Investments held at fair value	8	12,778	-
Loans at amortised cost	9	5,414	19,140
Other receivables and prepayments	10	618	473
Cash and cash equivalents		523	606
		19,333	20,219
TOTAL ASSETS		26,397	28,561
CURRENT LIABILITIES
Loan facility	11	(3,750)	(2,944)
Other payables and accrued expenses	12	(98)	(203)
TOTAL LIABILITIES		(3,848)	(3,147)
NET ASSETS		22,549	25,414
SHARE CAPITAL AND RESERVES
Share capital	13	269	269
Share premium	14	9,094	9,094
Special distributable reserve	14	16,455	16,455
Revenue reserve	14	(291)	29
Capital reserve	14	(2,978)	(433)
EQUITY SHAREHOLDERS’ FUNDS		22,549	25,414
Net asset value per ordinary share		83.75p	94.39p

The notes on pages 46 to 62 form an integral part of the financial statements.

The financial statements on pages 42 to 62 were approved by the Board of Directors of TOC Property Backed Lending Trust plc (a public limited company incorporated in England and Wales with company number 10395804) and authorised for issue on 29th May 2020. They were signed on its behalf by:

JOHN NEWLANDS
CHAIRMAN

STATEMENT OF CHANGES IN EQUITY

| For the year ending
30 November 2019 | Share capital
£'000 | Share premium
£'000 | Special distributable reserve
£'000 | Capital reserve
£'000 | Revenue reserve
£'000 | Total
£'000 |
| --- | --- | --- | --- | --- | --- | --- |
| AT BEGINNING OF THE YEAR | 269 | 9,094 | 16,455 | (433) | 29 | 25,414 |
| Total comprehensive loss for the year: | | | | | | |
| Loss for the year | - | - | - | (2,545) | 1,363 | (1,182) |
| TRANSACTIONS WITH OWNERS
RECOGNISED DIRECTLY IN EQUITY: | | | | | | |
| Dividends paid | - | - | - | - | (1,683) | (1,683) |
| At 30 November 2019 | 269 | 9,094 | 16,455 | (2,978) | (291) | 22,549 |
| For the year ending
30 November 2018 | Share capital
£'000 | Share premium
£'000 | Special distributable reserve
£'000 | Capital reserve
£'000 | Revenue reserve
£'000 | Total
£'000 |
| --- | --- | --- | --- | --- | --- | --- |
| AT BEGINNING OF THE YEAR | 227 | 5,152 | 16,455 | (108) | 540 | 22,266 |
| Total comprehensive profit for the year: | | | | | | |
| Profit for the year | - | - | - | (325) | 1,163 | 838 |
| TRANSACTIONS WITH OWNERS
RECOGNISED DIRECTLY IN EQUITY: | | | | | | |
| Ordinary shares issued | 42 | 4,188 | - | - | - | 4,230 |
| Share issue costs | - | (246) | - | - | - | (246) |
| Dividends paid | - | - | - | - | (1,674) | (1,674) |
| At 30 November 2018 | 269 | 9,094 | 16,455 | (433) | 29 | 25,414 |

CASH FLOW STATEMENT

| | Notes | Year ending
30 November
2019
£'000 | Year ending
30 November
2018
£'000 |
| --- | --- | --- | --- |
| OPERATING ACTIVITIES | | | |
| Loss after taxation | | (1,182) | 838 |
| Impairments | | 2,657 | 746 |
| Uplifts | | (136) | (104) |
| Increase in other receivables | | (145) | (174) |
| (Decrease)/increase in other payables | | (105) | 72 |
| Interest paid | | 86 | 14 |
| NET CASH INFLOW FROM OPERATING
ACTIVITIES BEFORE INTEREST AND
AFTER TAXATION | | 1,175 | 1,392 |
| NET CASH INFLOW FROM OPERATING
ACTIVITIES | | 1,175 | 1,392 |
| INVESTING ACTIVITIES | | | |
| Loans given | | (7,614) | (10,260) |
| Loans repaid | | 7,319 | 3,918 |
| NET CASH OUTFLOW FROM
INVESTING ACTIVITIES | | (295) | (6,342) |
| FINANCING | | | |
| Issue of ordinary shares | 13 | - | 3,984 |
| Equity dividends paid | | (1,683) | (1,674) |
| Bank loan drawn down | | 3,806 | 2,944 |
| Repayment of bank loan | | (3,000) | - |
| Interest paid | | (86) | (14) |
| NET CASH (OUTFLOW)/INFLOW FROM
FINANCING | | (963) | 5,240 |
| (DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS | | (83) | 290 |
| Cash and cash equivalents at the start of the year | | 606 | 316 |
| CASH AND CASH EQUIVALENTS AT
THE END OF THE YEAR | | 523 | 606 |

There are no non-cash changes arising from financing activities.

NOTES TO THE FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES (A) BASIS OF PREPARATION

The financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU"). The financial statements were also prepared in accordance with the Statement of Recommended Practice ("SORP") for investment trusts issued by the AIC (as issued in October 2019), where this guidance is consistent with IFRS.

The financial statements have been prepared on a going concern basis under the historical cost convention, except for investment valuations which are measured at fair value.

The notes and financial statements are presented in pounds sterling (being the functional currency and presentational currency for the Company) and are rounded to the nearest thousand except where otherwise indicated.

GOING CONCERN

In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council. After making enquiries, and bearing in mind the nature of the Company's business and assets, the Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future, a period not less than twelve months from the date of this report. Further detail is contained in the Strategic Review on pages 16 and 17 including the impact of COVID-19.

SEGMENTAL REPORTING

The decision maker is the Board of Directors. The Directors are of the opinion that the Company is engaged in a single segment of business, being the investment of the Company's capital in financial assets comprising loans. The Company derived revenue totalling £983k where the amounts from four individual borrowers each exceeded more than 10% of the Company's revenue. The individual amounts were £305k, £254k, £222k and £202k.

USE OF SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities as at the reporting date and the amounts reported for revenue and expenses during the year. The nature of the estimation means that actual outcomes could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

The following are areas of particular significance to the Company's financial statements and include the use of estimates or the application of judgement:

CRITICAL JUDGEMENTS AND ESTIMATES IN APPLYING THE COMPANY'S ACCOUNTING POLICIES – INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS:

The Company owns profit share holdings or has exit fees mechanism in relation to nine of the borrowers in place as at the year end. The loans held have been designated at fair value through profit and loss. The determination of the fair value requires the use of estimates. A sensitivity analysis is included in note 16

CRITICAL JUDGEMENTS AND ESTIMATES IN APPLYING THE COMPANY'S ACCOUNTING POLICIES – LOANS AMORTISED COST CLASSIFICATION AND IMPAIRMENTS:

The Company uses critical judgements to determine whether it accounts for its loans at either amortised cost using the effective interest rate method less impairment provisions or at fair value through profit and loss. The determination of the required impairment adjustment requires the use of estimates. See the following notes of IFRS 9 and Impairment for further details.

ACCOUNTING STANDARDS ADOPTED BY THE COMPANY

IFRS 9 – ‘Financial Instruments’

The Company adopted IFRS 9 with effect from 1 December 2018. IFRS 9 replaces IAS 39 ‘Financial Instruments: Recognition and Measurement’ and introduces new requirements for classification and measurement, impairment and hedge accounting. The accounting policies of the company have been updated to comply with the requirements of IFRS 9 for the purposes of preparing these financial statements. IFRS 9 is not applicable to items that had already been derecognised at 1 December 2018, the date of initial application.

The classification and measurement requirements of IFRS 9 have been adopted retrospectively as of the date of initial application on 1 December 2018. However, the company has chosen to take advantage of the option not to restate comparatives. Therefore, the 30 November 2018 figures are presented and measured under IAS 39.

Key requirements of IFRS 9

Classification and measurement of financial assets will be driven by the entity's business model for managing the financial assets and the contractual cash flow characteristic of those financial assets.

There are three principal classification categories for financial assets that are debt instruments:

amortised cost;
fair value through other comprehensive income; and
fair value through profit and loss.

Equity investments under IFRS 9 are measured at fair value with gains and losses recognised in profit and loss unless an irrevocable election is made to recognise gains or losses in other comprehensive income.

The Directors consider loan agreements are drawn with the Primary Purpose of seeking to collect interest and achieving repayment at the end of the contract. On this basis the company operates a Hold to Collect business model.

Therefore, the following considerations are taken into account.

The company considers that all loans within its portfolio fall under the scope of IFRS 9.
All loans are documented.
That all loans meet the Solely Payments of Principal and Interest Test (SPPI), unless the company benefits from a shareholding in the project against which loans are provided.

IFRS 9 also introduces a new expected credit loss impairment model, as opposed to the incurred credit loss model implemented under IAS 39. This requires entities to account for expected credit losses at initial recognition and changes to expected credit losses at each reporting date to reflect changes in credit risk since initial recognition.

Continued

IMPACT OF ADOPTION OF IFRS 9

Classification and measurement

Loan investments that are held solely for the collection of contractual cash flows, being interest, fees and payments of principal and also meet the Solely Payments of Principal and Interest Test (SPPI) continue to be held at amortised cost upon the application of IFRS 9.

Where the Company benefits from a shareholding or exit fee in the project against which loans are provided, these are now held as fair value through profit and loss upon the application of IFRS 9 as they fail the SPPI test. There are nine loans that are treated as fair value through profit and loss.

IFRS 9 largely retains the existing requirements in IAS 39 for the classification of financial liabilities.

Impairment of financial assets

Transition

IFRS 9 replaces the incurred loss model in IAS 39 with a forward-looking 'expected credit loss' model.

Cash and cash equivalents

Cash and cash equivalents are held at banks with a strong credit rating and are not subject to any period of notice.

The Company typically maintains a low value of cash and cash equivalents. There is no impact on values reported in the financial statements from adopting IFRS 9 in respect of credit losses.

Transition

The following table shows the original measurement categories in accordance with IAS 39 and the new measurement categories under IFRS 9 for the Company's financial assets and financial liabilities as at 1 December 2018. There were no material adjustments to the carrying value of assets and liabilities as a result of the transition to IFRS 9 and so no impact on reserves as at 1 December 2018.

Each loan was assessed on an individual basis to determine whether there is any evidence of impairment. During the year, allowances for impairment losses amounting to £2,857,000 (2018: £746,000), were recognised in the statement of comprehensive income. The other loans are either close to repayment or refinancing; with, or close to, having value in the associated profit shares; or, at an early, ground breaking, stage.

	IAS 39 Classification	IAS 39 measurement	IFRS 9 Classification	IFRS 9 measurement
		£'000		£'000
Loans at amortised costs	Loans and receivables	27,378	Amortised cost	16,566
Investments at fair value through profits of loss (FVTPL)	Financial assets at FVPTL	104	FVPTL	10,916
Other receivables and payables	Loans and receivables	473	Amortised cost	473
Cash and cash equivalents	Loans and receivables	606	Amortised cost	606
Loan facility	Loans and receivables	(2,944)	Amortised cost	(2,944)
Other payables and accruals	Other financial liabilities	(203)	Amortised cost	(203)
Net assets		25,414		25,414

Continued

ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

IFRS 16 – Leases

IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. The Company has no leases as lessor or lessee so there will be no impact to the financial statements once adopted.

INTEREST INCOME

For financial instruments measured at amortised cost, the effective interest rate method is used to measure the carrying value of a financial asset or liability and to allocate associated interest income or expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments or receipts over the expected life of the financial instrument or, when appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. In calculating the effective interest rate, the cash flows are estimated considering all contractual terms of the financial instrument but does not consider expected credit losses. The calculation includes all fees received and paid and costs borne that are an integral part of the effective interest rate.

On an ongoing basis the Investment Adviser assesses whether there is evidence that a financial asset is impaired. The basis of calculating interest income on the three stages of impairment (detailed below) are as follows:

Stage 1 Interest is calculated on the gross outstanding principal
Stage 2 Interest is calculated on the gross outstanding principal
Stage 3 Interest is calculated on the principal amount less impairment

EXPENSES

Expenses are accounted for on an accruals basis. The Company's administration fees, finance costs and all other expenses are charged through the Statement of Comprehensive Income and are charged to revenue. Fees incurred in relation to operational costs of the loan portfolio, such as legal fees, are charged through the Statement of Comprehensive Income and are charged to capital.

DIVIDENDS TO SHAREHOLDERS

Dividends are accounted for in the period in which they are paid, except for dividends requiring shareholder approval which will be recognised when approved by shareholders.

TAXATION

Taxation on the profit or loss for the period comprises current and deferred tax. Taxation is recognised in the Statement of Comprehensive Income except to the extent that it relates to items recognised as direct movements in equity, in which case it is also recognised as a direct movement in equity.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the reporting date.

Deferred income tax is provided using the liability method on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which deductible temporary differences, carried forward tax credits or tax losses can be utilised. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities. Deferred income tax relating to items recognised directly in equity is recognised in equity and not in profit or loss.

FINANCIAL ASSETS AND FINANCIAL LIABILITIES

The financial assets and financial liabilities are classified at inception into the following categories:

Amortised cost:

Financial assets that are held for collection of contractual cash flows where those cash flows represent SPPI and that are not designated at fair value through profit and loss

are measured at amortised cost. The carrying amount of these assets is adjusted by any expected credit loss allowance as described in the impairment note below.

The Company's cash and cash equivalents, other receivables and payables, other payables and accruals, and the company's loan facility are included within this category.

Fair value through profit and loss:

The Company have a number of borrower facilities in which they received a minority equity stake or exit fee mechanism in conjunction with providing those loan facilities. These loans are recognised at fair value through profit and loss. The fair value of the contracts is monitored and reviewed quarterly using discounted cash flow forecasts based on the estimated cash flows that will flow through from the underlying development project. A sensitivity analysis is included in note 16.

IMPAIRMENT

Impairment

Policy effective from 1 December 2018.

IFRS 9 replaced the "incurred loss" model in IAS 39 with an "expected credit loss" model in the measurement of impairment loss. The overall effect of the change from IAS 39 to IFRS 9 is that the assessment of impairment loss is intended to be more forward looking under IFRS 9. At initial recognition, an impairment allowance is required for expected credit losses (ECL) resulting from possible default events within the next 12 months. When an event occurs that increases the credit risk, an allowance is required for ECL for possible defaults over the term of the financial instrument.

A financial asset is credit-impaired when one or more events that have occurred have a significant impact on the expected future cash flows of the financial asset. It includes observable data that has come to our attention regarding one or more of the following events:

delinquency in contractual payments of principal and interest;
cash flow difficulties experienced by the borrower;
initiation of bankruptcy proceedings;
the borrower being granted a concession that would otherwise not be considered;
observable data indicating that there is a measurable decrease in the estimated future cash flows from

a portfolio of assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio;and

a significant decrease in assets values held security.

Impairment of financial assets is recognised on a loan-by-loan basis in stages:

Stage 1: A general impairment covering what may happen within the next 12 months, based on the adoption of BIS standards as outlined below.
Stage 2: Significant increase in credit risk, where the borrower is in default, potentially in arrears, where full repayment is expected and the underlying asset value remains robust. The ECL calculation recognises the lifetime of the loan.
Stage 3: Credit impaired, where the borrower is in default of their loan contract, in arrears, full loan repayment is uncertain and there is a shortfall in underlying asset value. The ECL calculation recognises likely failure of the borrower.

As at 30 November 2019, there were seventeen loans in the portfolio. Nine of those projects supported included either an equity stake of 25.1% for Company or an exit fee mechanism. Please see note 8 for details on these nine projects.

The Board has deemed that four loans, Bedlington, Pendower Hall, St HILDs and West Auckland, are currently impaired and specific additional provisions have been made against Pendower, St HILDs and West Auckland facilities in these financial statements.

The other thirteen loans have been assessed as not impaired.

The Company's response to IFRS 9 requirements has been based on the Bank for International Settlements (BIS) Basel Supervisory Committee liquidity risk tool recommendations.

Policy effective before 1 December 2018

A financial asset was impaired when the recoverable amount was estimated to be less than its carrying amount. An impairment loss was recognised immediately in the Statement of Comprehensive Income, unless the relevant asset was carried at a revalued amount, in which case the reversal of the impairment was treated as a revaluation decrease.

FAIR VALUE HIERARCHY

Accounting standards recognise a hierarchy of fair value measurements for financial instruments which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I) and the lowest priority to unobservable inputs (Level 3). The classification of financial instruments depends on the lowest significant applicable input, as follows:

Level 1 – Unadjusted, fully accessible and current quoted prices in active markets for identical assets or liabilities. Examples of such instruments would be investments listed or quoted on any recognised stock exchange.
Level 2 – Quoted prices for similar assets or liabilities, or other directly or indirectly observable inputs which exist for the duration of the period of investment. Examples of such instruments would be forward exchange contracts and certain other derivative instruments.
Level 3 – External inputs are unobservable. Value is the Directors’ best estimate, based on advice from relevant knowledgeable experts, use of recognised valuation techniques and on assumptions as to what inputs other market participants would apply in pricing the same or similar instrument.

All loans are considered Level 3.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash in hand and short-term deposits in banks with an original maturity of three months or less.

OTHER RECEIVABLES

Other receivables do not carry interest and are short-term in nature. They are initially stated at their nominal value and reduced by appropriate allowances for estimated irrecoverable amounts, if deemed appropriate. There were no irrecoverable amounts accounted for at the year end or the prior period end.

RESERVES

SHARE PREMIUM

The surplus of net proceeds received from the issuance of new shares over their par value is credited to this account and the related issue costs are deducted from this account.

CAPITAL RESERVE

The following are accounted for in the capital reserve:

Capital charges;
Increases and decreases in the fair value of and impairments of loan capital held at the year end

As at year end the Capital Reserve comprises only unrealised gains and losses and so does not contain distributable reserves.

REVENUE RESERVE

The net profit/(loss) arising in the revenue column of the Statement of Comprehensive Income is added to or deducted from this reserve which is available for paying dividends.

SPECIAL DISTRIBUTABLE RESERVE

Created from the Court of Session cancellation of the initial launch share premium account and is available for paying dividends.

CAPITAL MANAGEMENT

The Company’s capital is represented by the Ordinary Shares, share premium, capital reserves, revenue reserve and special distributable reserve. The Company is not subject to any externally imposed capital requirements.

The capital of the Company is managed in accordance with its investment policy, in pursuit of its investment objective. Capital management activities may include the allotment of new shares, the buy back or re-issuance of shares from treasury, the management of the Company’s discount to net asset value and consideration of the Company’s net gearing level.

There have been no changes in the capital management objectives and policies or the nature of the capital managed during the year.

2. INCOME

	30 November 2019 £'000	30 November 2018 £'000
Interest from loans	2,222	2,044
Total income	2,222	2,044

3. INVESTMENT MANAGER'S AND INVESTMENT ADVISER'S FEES

INVESTMENT MANAGER

During the year R&H Fund Services (Jersey) Limited acted as the Company's alternative investment fund manager (AIFM) for the purposes of AIFMD pursuant to the Investment Management Agreement and accordingly the AIFM is responsible for providing discretionary portfolio management and risk management services to the Company, subject to the overall control and supervision of the Directors. The AIFM is entitled to receive fees from the Company of £15,000 per annum on total assets up to £100 million, or a fee from the Company of £20,000 per annum if total assets are over £100 million; however, in the year under review a reduced fee of £5,000 was agreed with the AIFM. There is a balance of £5,000 accrued for the Investment Manager for the year to 30 November 2019.

INVESTMENT ADVISER

The AIFM has appointed Tier One Capital Limited to act as the Company's investment adviser pursuant to which the AIFM has delegated discretionary portfolio management services to the Investment Adviser, subject to the overall control and supervision of the Directors.

The Investment Adviser is entitled to receive from the Company an investment adviser fee which is calculated and paid quarterly in arrears at an annual rate of 0.25 per cent. per annum of the prevailing Net Asset Value if less than £100m; or 0.50 per cent. per annum of the prevailing Net Asset Value if £100m or more. The Investment Adviser has agreed (unless otherwise decided by the Board) to waive its fee until the Net Asset Value is at least £50 million.

There are no performance fees payable.

4. OPERATING EXPENSES

	30 November 2019		30 November 2018
	Revenue	Capital	Revenue	Capital
	£'000	£'000	£'000	£'000
Legal & professional	17	30	44	-
Directors' fees	102	-	120	-
Audit fees related to the audit of the financial statements	85	-	67	-
Fund Administration and Company Secretarial	82	-	74	-
Brokers' fees	33	-	27	-
Marketing fees	77	-	59	-
Valuation fees	(4)	-	40	-
AIFM fee	(28)	-	18	-
Loan impairments	206	2,651	317	429
Other expenses	203	-	101	-
Total other expenses	773	2,681	867	429

All expenses are inclusive of VAT where applicable. Further details on Directors' fees can be found in the Directors' Remuneration Report on page 29.

5. TAXATION

As an investment trust the Company is exempt from corporation tax on capital gains. The Company's revenue income from loans is subject to tax, but offset by any interest distribution paid, which has the effect of reducing the corporation tax. The interest distribution may be taxable in the hands of the Company's shareholders.

	30 November 2019	30 November 2018
	£'000	£'000
Current corporation tax at 19% (2018: 19%)	-	-
Deferred taxation	-	-
Tax on profit on ordinary activities	-	-
RECONCILIATION OF TAX CHARGE
(Loss)/profit on ordinary activities before taxation	(1,182)	838
Taxation at standard corporation tax rate 19% (2018: 19%)	-	162
EFFECTS OF:
Expenses not deductible for tax purposes	-	142
Interest distributions	-	(304)
Tax charge for the year	-	-

6. ORDINARY DIVIDENDS

	30 November		30 November
	Pence per share	2019 £'000	Pence per share	2018 £'000
Interim dividend for the quarter ended 28 February 2019	1.50	404	1.75	415
Interim dividend for the quarter ended 31 May 2019	1.50	404	1.75	448
Interim dividend for the quarter ended 31 August 2019	1.50	404	1.75	471
Total dividends paid during and relating to the year		1,212		1,334
Interim dividend for the quarter ended 30 November 2019	1.50	404	1.75	471
Total dividend declared in relation to the year		1,616		1,805

The Company intends to distribute at least 85% of its distributable income earned in each financial year by way of interest distribution. On 15 December 2019, the Company declared an interim dividend of 1.50 pence per share for the quarter ended 30 November 2019, payable on 3 January 2020. On 21 February 2020 the Company declared an interim dividend of 1.50 pence per share for the quarter ended 28 February 2020, payable on 4 April 2020. Payment of this dividend was subsequently changed to 1 June 2020.

7. EARNINGS PER SHARE

The revenue, capital and total return per ordinary share is based on each of the profit after tax and on 26,924,063 ordinary shares, being the weighted average number of ordinary shares in issue throughout the year. During the year there were no dilutive instruments held, therefore the basic and diluted earnings per share are the same.

8. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

The Company's investment held at fair value through profit or loss represents its profit share arrangements whereby the Company owns 25.1% or has an exit fee mechanism for 9 companies.

	Loans at fair value through profit and loss
	30 November 2019 £'000	30 November 2018 £'000
Opening Balance	104	-
IFRS 9 transfer from Amortised cost	10,812	-
Loans deployed	5,611	-
Principal repayments	(2,520)	-
Uplifts/(impairments)	212	104
Total Loans at fair value through profit and loss	14,219	104
Split:
Non-current assets: Loans due for repayment after one year	1,441	104
Current assets: Loans due for repayment under one year	12,778	-

Please refer to note 16 for details of the approach to valuation and sensitivity analysis.

LOANS AT AMORTISED COST

	30 November 2019 £'000	30 November 2018 £'000
Opening balance	27,378	21,782
IFRS 9 transfer to fair value through profit and loss	(10,812)	-
Loans deployed	1,953	10,260
Principal repayments	(4,799)	(3,918)
Uplifts/(impairments)	(2,683)	(746)
Total loans at amortised cost	11,037	27,378
Split:
Non-current assets: Loans at amortised cost due for repayment after one year	5,623	8,238
Current assets: Loans at amortised cost due for repayment under one year	5,414	19,140

The Company's loans held at amortised cost are accounted for using the effective interest method. The carrying value of each loan is determined after taking into consideration any requirement for impairment provisions during the year, allowances for impairment losses amounted to £2,683,000 (2018: £746,000). Further details on impairment can be found within the accounting policies note on page 50.

Movements in allowances for impairment losses in the year

	Nominal value £'000
at 1 December 2018	338
Provisions for impairment losses	2,683
at 30 November 2019	3,021
Stage 1 provisions at 1 December 2018	-
Provisions for impairment losses	187
Stage 1 provisions at 30 November 2019	187
Stage 2 provisions at 1 December 2018	138
Provisions for impairment losses	(138)
Stage 2 provisions at 30 November 2019	-
Stage 3 provisions at 1 December 2018	200
Provisions for impairment losses	2,634
Stage 3 provisions at 30 November 2019	2,834

Stage 1, 2, and 3 are referenced in more detail on page 50.

10. RECEIVABLES

	30 November 2019 £'000	30 November 2018 £'000
Prepayments	42	8
Loan interest receivable	576	465
Total receivables	618	473

11. LOAN FACILITY

	30 November 2019 £'000	30 November 2018 £'000
Bank loan	3,750	2,944

On 22 October 2019 the Company entered into a £6.0 million committed revolving facility with Shawbrook Bank Limited, expiring on 22 October 2020, £3.8 million was drawn down at the year end. £0.6 million at an interest rate of 4.716% and £3.2 million at an interest rate of 4.698%. The facility is secured against a debenture over the assets of the Company. Post year end the facility was increased to £6.5m and extended until May 2021 on similar terms, after which it is anticipated that the Company will take out a new facility on comparable terms.

12. OTHER PAYABLES

	30 November 2019 £'000	30 November 2018 £'000
Accruals	98	203
Total other payables	98	203

Continued

13. SHARE CAPITAL

	Nominal value £'000	Number of Ordinary shares of 1p
At 30 November 2018	269	26,924,063
Issued and fully paid as at 30 November 2019	269	26,924,063

The ordinary shares are eligible to vote and have the right to participate in either an interest distribution or participate in a capital distribution (on a winding up).

14. RESERVES

	Share premium	Special distributable reserve	Capital reserve	Revenue reserve	Total
	£'000	£'000	£'000	£'000	£'000
At 30 November 2018	9,094	16,455	(433)	29	25,145
Loss for the year	-	-	(2,545)	1,363	(1,182)
Dividend paid	-	-	-	(1,683)	(1,683)
At 30 November 2019	9,094	16,455	(2,978)	(291)	22,280

15. RELATED PARTIES

The Directors are considered to be related parties. No Director has an interest in any transactions which are, or were, unusual in their nature or significant to the nature of the Company.

The Directors of the Company received £102k fees for their services during the year to 30 November 2019 (30 November 2018: £120k). £nil was payable at the period and prior year end.

Ian McElroy is Chief Executive of Tier One Capital Ltd and is a founding shareholder and Director of the firm.

Stephen Black is a founding shareholder of Tier One Capital Ltd and resigned as a Director of the firm on 28 September 2018. From 16 March 2020, Stephen Black is no longer involved with Tier One Capital Ltd.

Tier One Capital Ltd received no Investment Adviser's fee during the year and prior year and £nil was payable at the period and prior year end. Tier One Capital Ltd receive a 20% margin and arrangement fee for all loans it facilitates.

Stephen Black and Ian McElroy are shareholders owning 50% of Inveniam Corporate Finance Ltd to which was paid £nil for financial modelling to the 30 November 2019, (30 November 2018: £36k). There are various related party relationships in place with the borrowers as below:

Pendower Hall

Stephen Black and Ian McElroy are former Directors of Pendower Hall Ltd having resigned 15 June 2018. Pendower Hall Ltd is 100% owned by Inperpetuity Ltd. Inperpetuity Ltd is 100%

owned by Stephen Black and his spouse Jill Black. The loan amount outstanding as at 30 November 2019 was £1.8m (30 November 2018: £1.713m). Transactions in relation to loans made during the year amounted to £0.287m (30 November 2018: £0.480m). Interest due to be received as at 30 November 2019 was £0.084m (30 November 2018: £0.027m). Interest received during the year amounted to £0.202m (30 November 2018: £0.139m).

Rare Earth Medburn
Stephen Black and Ian McElroy are former Directors of Rare Earth Medburn Ltd, having resigned on 15 June 2018. Rare Earth Medburn Ltd was formerly 100% owned by Stephen Black and his spouse Jill Black, having previously been owned by Inperpetuity Ltd. The shares in the company were transferred to an unconnected third party on 4 October 2019. The loan amount outstanding as at 30 November 2019 was £1.8m (30 November 2018: £1.8m). Transactions in relation to loans made during the year amounted to £0.025m (30 November 2018: £0.210m). Interest due to be received as at 30 November 2019 was £0.025m (30 November 2018: £0.025m). Interest received during the year amounted to £0.151m (30 November 2018: £0.141m).
Thursby Homes (Charlton's Bonds)
Tier One Capital Ltd sold 25.1% of Thursby Homes Ltd on the 20 March 2019. The loan amount outstanding as at 30 November 2019 was £0.697m (30 November 2018: £0.967m). Transactions in relation to loans repaid during the year amounted to £0.271m (30 November 2018: £0.975m). Interest due to be received as at 30 November 2019 was £0.009m (30 November 2018: £0.013m). Interest received during the year amounted to £0.061m (30 November 2018: £0.099m).

The following related parties arise due to the opportunity taken to advance the 25.1% profit share contracts:

Ryka Developments
The Company owns 25.1% of the borrower Ryka Developments Ltd. Stephen Black is a former Director of Ryka Developments Ltd, having resigned on 21 September 2018. The loan amount outstanding as at 30 November 2019 was £2.3m (30 November 2018: £2.3m). Transactions in relation to loans made during the year amounted to £nil (30 November 2018: £nil). Interest due to be received as at 30 November 2019 was £83k (30 November 2018: £31k). Interest received during the year amounted to £184k (30 November 2018: £184k).
Gatsby Homes
The Company owns 25.1% of the borrower Gatsby Homes Ltd. TIC Nominees Ltd is a former Director of Gatsby Homes Ltd, having resigned on 5 October 2018. TIC Nominees Ltd is owned by Stephen Black and Ian McElroy who are Directors. The loan amount outstanding as at 30 November 2019 was £1.8m (30 November 2018: £1.9m). Transactions in relation to loans made during the year amounted to £0.3m (30 November 2018: £1.1m). Interest due to be received as at 30 November 2019 was £nil (30 November 2018: £31k). Interest received during the year amounted to £nil (30 November 2018: £100k).
Bede and Cuthbert Developments
The Company owns 25.1% of the borrower Bede and Cuthbert Developments Ltd. Stephen Black and Ian McElroy are former Directors of Bede and Cuthbert Developments Ltd, having resigned on 24 October 2018. The loan amount outstanding as at 30 November 2019 was £0.9m (30 November 2018: £2.6m). Transactions in relation to loans (repaid)/made during the year amounted to (£1.8m) (30 November 2018: £1.6m). Interest due to be received as at 30 November 2019 was £16k (30 November 2018: £35k). Interest received during the year amounted to £108k (30 November 2018: £146k).

Thursby Homes (Springs)
The Company owns 25.1% of the borrower Thursby Homes (Springs) Ltd. The loan amount outstanding as at 30 November 2019 was £3.53m (30 November 2018: £1.4m). Transactions in relation to loans made during the year amounted to £2.15m (30 November 2018: £1.4m). Interest due to be received as at 30 November 2019 was £81k (30 November 2018: £18k). Interest received during the year amounted to £222k (30 November 2018: £54k).
Northumberland
The Company owns 25.1% of the borrower Northumberland Ltd. The loan amount outstanding as at 30 November 2019 was £2.85m (30 November 2018: £1.5m). Transactions in relation to loans made during the year amounted to £1.35m (30 November 2018: £1.5m). Interest due to be received as at 30 November 2019 was £47k (30 November 2018: £30k). Interest received during the year amounted to £166k (30 November 2018: £41k).
Dinosauria
The Company owns 25.1% of the borrower Dinosauria Ltd. The loan amount outstanding as at 30 November 2019 was £0.6m (30 November 2018: £0.6m). Transactions in relation to loans made during the year amounted to £nil (30 November 2018: £0.6m). Interest due to be received as at 30 November 2019 was £7k (30 November 2018: £7k). Interest received during the year amounted to £44k (30 November 2018: £19k).

The total value of loan impairment charge relating to loans to related parties is £0.680m (2018: £0.608m 2018).

FINANCIAL INSTRUMENTS
Consistent with its objective, the Company holds a diversified portfolio of fixed rate loans secured with collateral in the form of; land or property in the UK, charges held over bank accounts and personal or corporate guarantees. The benefit of a related profit share or exit fee mechanism may also be agreed. In addition, the Company's financial instruments comprise cash and receivables and payables that arise directly from its operations. The Company does not have exposure to any derivative instruments.

The Company is exposed to various types of risk that are associated with financial instruments. The most important types are credit risk, liquidity risk, interest rate risk and market price risk. There is no foreign currency risk as all assets and liabilities of the Company are maintained in pounds sterling.

The Board reviews and agrees policies for managing the Company's risk exposure. These policies are summarised below:

CREDIT RISK
Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Company.

In the event of default by a borrower if it is in financial difficulty or otherwise unable to meet its obligations under the agreement, the Company will suffer an interest shortfall and potentially a loss of capital. This potentially will have a material adverse impact on the financial condition and performance of the Company and/or the level of dividend cover. The Board receives regular reports on concentrations of risk and the performance of the projects underlying the loans, using loan to value percentages to help monitor the level of risk. The Investment Adviser monitors such reports in order to anticipate, and minimise the impact of, default.

There were financial assets which were considered impaired at 30 November 2019, with impairments amounting to £2,857,000 (30 November 2018: £746,000).

All of the Company's cash is placed with financial institutions with a long-term credit rating of A or better. Bankruptcy or insolvency of such financial institutions may cause the Company's ability to access cash placed on deposit to be delayed or limited. Should the credit quality or the financial position of the banks currently

employed significantly deteriorate, cash holdings would be moved to another bank.

LIQUIDITY RISK

Liquidity risk is the risk that the Company will encounter difficulties in realising assets or otherwise raising funds to meet financial commitments. The Company's investments comprise loans.

Property and property-related assets in which the Company invests via loans are not traded in an organised public market and are relatively illiquid assets, requiring individual attention to sell in an orderly way. As a result, the Company may not be able to liquidate

quickly its investments in these loans at an amount close to their fair value in order to meet its liquidity requirements.

The Company's liquidity risk is managed on an ongoing basis by the Investment Adviser and monitored on a quarterly basis by the Board. In order to mitigate liquidity risk the Company has a comprehensive three-year cash flow forecast that aims to have sufficient cash balances, taking into account projected receipts for rental income and property sales, to meet its obligations for a period of at least 12 months. At the reporting date, the maturity of the financial assets and liabilities was:

Financial assets as at 30 November 2019

	In one year £'000	In two or more years £'000	Total £'000
Cash and cash equivalents	523	–	523
Loans at amortised cost	5,414	5,623	11,037
Investments at fair value	12,778	1,441	14,219
Loan interest receivable	576	–	576
	19,291	7,064	26,355

Financial assets as at 30 November 2018

	In one year £'000	In two or more years £'000	Total £'000
Cash and cash equivalents	606	–	606
Loans at amortised cost	20,640	6,738	27,378
Investments at fair value	104	–	104
Loan interest receivable	464	–	464
	21,814	6,738	28,552

Financial liabilities as at 30 November 2019

	In one year £'000	In two or more years £'000	Total £'000
Bank loan	3,750	–	3,750
	3,750	–	3,750

Financial liabilities as at 30 November 2018

	In two or more
	In one year £'000	years £'000	Total £'000
Bank loan	2,944	–	2,944
	2,944	–	2,944

INTEREST RATE RISK

The interest rate profile of the Company was as follows:

as at 30 November 2019

	Financial net assets on which no interest is paid £'000	Fixed rate Financial Assets £'000	Variable rate financial net assets £'000	Total £'000
Other receivables and prepayments	618	–	–	618
Other payables and accrued expenses	(98)	–	–	(98)
Cash and cash equivalents	–	–	523	523
Loan facility	–	–	(3,750)	(3,750)
Investments held at fair value	–	14,219	–	14,219
Loans at amortised cost	–	11,037	–	11,037
Total	520	25,256	(3,227)	22,549

as at 30 November 2018

	Financial net assets on which no interest is paid £'000	Fixed rate Financial Assets £'000	Variable rate financial net assets £'000	Total £'000
Other receivables and prepayments	473	–	–	473
Other payables and accrued expenses	(203)	–	–	(203)
Cash and cash equivalents	–	–	606	606
Loan facility	–	–	(2,944)	(2,944)
Investments held at fair value	–	104	–	104
Loans at amortised cost	–	27,378	–	27,378
Total	270	27,482	(2,338)	25,414

MARKET PRICE RISK

The management of market price risk is part of the investment management process and is typical of an investment company. The portfolio is managed with an awareness of the effects of adverse valuation movements through detailed and continuing analysis, with an objective of maximising overall returns to shareholders. Investments in property and property-related assets are inherently difficult to value due to the individual nature of each property. As a result, valuations are subject to substantial uncertainty. There is no assurance that the estimates resulting from the valuation process will reflect the actual sales price even where such sales occur shortly after the valuation date. Such risk is minimised through the appointment of external property valuers. The basis of valuation of the loan portfolio is set out in detail in the accounting policies. Any changes in market conditions will directly affect the profit and loss reported through the Statement of Comprehensive Income. Details of the Company's investment portfolio held at the balance sheet date are disclosed in the Investment Adviser's Review on page 11. A 10% fall in the sales value of the residential development projects and a 10% reduction in asset value of commercial and investment property assets for those loans held at fair value would have resulted in a further impairment to the portfolio of £839,123 as at 30 November 2019. The calculations are based on the property valuations at the respective balance sheet date and are not representative of the year as a whole, nor reflective of future market conditions.

17. POST BALANCE SHEET EVENTS

On 12 December 2019, Marley Hill repaid its loan in full to the amount of £0.4m.
On 12 December 2019, £1.7m was borrowed from Shawbrook Bank. A further £0.6m was borrowed on 18 January 2020, utilising the remainder of the £6m facility.
On 3 January 2020, a dividend of 1.50 pence per ordinary share was paid.
On 21 February 2020, a dividend of 1.50p was declared with an xd date of 5 March 2020, record date of 6 March 2020 and a payment date of 10 April 2020. Payment of this dividend was subsequently changed to 1 June 2020.
On 16 March 2020, Stephen Black disposed of his shares in the Investment Adviser. This removes the related parties for Pendower Hall, Medburn, and Inveniam Corporate Finance.
On 16 March 2020, the Pendower Hall facility restructure was finalised, resulting in a waiver of £1m loan plus unpaid interest. This has been disclosed in these financial statements.
In May 2020, the gearing facility with Shawbrook was increased to £6.5m and extended until May 2021.
Post year end the COVID-19 virus outbreak occurred. Please see the Chairman's Statement, Investment Adviser Report and Strategic Review for an assessment of the potential impact on the Company. COVID-19 is considered to be a non-adjusting post balance sheet event and so has not been taking into account in determining the carrying values of assets and liabilities.

NOTICE OF GENERAL MEETING

Notice is hereby given that a general meeting ("GM") of TOC Property Backed Lending Trust PLC (the "Company") will be held at Tier One Capital, Keel House, Garth Heads, Newcastle-upon-Tyne NE1 2JE on 11 August 2020 at 12 noon for the purposes of considering and, if thought fit, passing the resolutions below. Resolutions 1 to 6 (inclusive) will be proposed as ordinary resolutions and resolutions 7 and 8 will be proposed as special resolutions.

In light of the current COVID-19 pandemic and the associated restrictions on travel and public gatherings the GM will be run as a closed meeting and shareholders will not be able to attend in person.

ORDINARY BUSINESS

Ordinary Resolutions

To receive the Company's annual report and accounts for the financial year ended 30 November 2019 (the "Annual Report and Accounts"), together with the Directors' report and the auditors' report on those accounts.
To approve the Directors' Remuneration Report (excluding the Directors' remuneration policy) for the year ended 30 November 2019 set out on pages 28 to 30 of the Annual Report and Accounts.
To approve the Directors' Remuneration Policy as set out on pages 28 and 29.
To approve the dividend policy of the Company to continue to pay interim dividends.
To re-appoint BDO LLP as the Company's Auditor to hold office until the conclusion of the next Annual General Meeting of the Company
To authorise the Audit Committee to determine the Auditor's remuneration.

SPECIAL BUSINESS

Special Resolutions

That the Company be authorised generally and unconditionally, in accordance with Section 701 of the Companies Act 2006 (the "Act"), to make market purchases (within the meaning of Section 693(4) of the Act) of ordinary shares of £0.01 each ("Ordinary Shares") provided that:

a. the maximum number of Ordinary Shares authorised to be purchased is 4,035,917;
b. the minimum price which may be paid for an Ordinary Share is £0.01; and
c. the maximum price which may be paid for an Ordinary Share must not be more than the higher of: (i) 5 per cent. above the average of the mid-market value of the Ordinary Shares for the five business days before the purchase is made; or (ii) the higher of the last independent trade and the highest current independent bid for Ordinary Shares.

The authority conferred by this resolution will expire on the earlier of the conclusion of the next Annual General Meeting of the Company and 15 months from the passing of this resolution save that the Company may, before the expiry of the authority granted by this resolution, enter into a contract to purchase Ordinary Shares which will or may be executed wholly or partly after the expiry of such authority.

That a general meeting of the Company, other than an Annual General Meeting, may be called on not less than 14 clear days' notice.

BY ORDER OF THE BOARD

MAITLAND ADMINISTRATION SERVICES

(SCOTLAND) LIMITED

COMPANY SECRETARY

REGISTERED OFFICE:

KEEL HOUSE, GARTH HEADS

NEWCASTLE-UPON-TYNE NE1 2JE

29TH MAY 2020

NOTES

These notes should be read in conjunction with the notes on the Form of Proxy.

Please note that in light of the current COVID-19 pandemic and the associated restrictions on travel and public gatherings the GM will be run as a closed meeting and shareholders will not be able to attend in person. Shareholders attempting to attend the AGM will be refused entry.

Only shareholders on the Register of Members (the "Register") at close of business on 7 August 2020 are entitled to vote at the GM in respect of the number of Ordinary Shares registered in their name at such time. In the event of any adjournment of the GM, the time by which a person must be entered on the Register in order to have the right to attend and vote at the adjourned GM is close of business. 48 hours (excluding non-business days) before the time of the adjourned meeting. Such shareholders can vote in respect of the number of shares registered in their names at that time, but any subsequent changes to the Register shall be disregarded in determining rights to attend and vote

(i) A member entitled to attend and vote at the GM is entitled to appoint one or more proxies to exercise all or any of the rights of the member to attend and speak and vote in his place. A proxy need not be a member of the Company.

If a member appoints more than one proxy to attend the GM, each proxy must be appointed to exercise the rights attached to a different share or shares held by the member.

(ii) To appoint a proxy you may use the Form of Proxy enclosed with this notice. To be valid, the Form of Proxy, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of the same, must be completed and returned in accordance with the instructions printed thereon to Computershare Investor Services PLC at The Pavilions, Bridgwater Road, Bristol BS99 6ZY delivered by hand during office hours only to the same address to be received as soon as possible and in any event by not later than 12 noon on 7 August 2020. You can only appoint a proxy using the procedures set out in these notes and the notes to the Form of Proxy.

(iii) Completion of the Form of Proxy will not prevent you from attending and voting in person.

(iv) Any person receiving a copy of this notice as a person nominated by a member to enjoy information rights under section 146 of the Act (a "Nominated Person") should note that the provisions in note (ii) above concerning the

appointment of a proxy or proxies to attend the GM in place of a member, do not apply to a Nominated Person as only shareholders have the right to appoint a proxy. However, a Nominated Person may have a right under an agreement between the Nominated Person and the member by whom he or she was nominated to be appointed, or to have someone else appointed, as a proxy for the GM. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may have a right under such an agreement to give instructions to the member as to the exercise of voting rights at the GM.

(v) Nominated Persons should also remember that their main point of contact in terms of their investment in the Company remains the member who nominated the Nominated Person to enjoy information rights (or perhaps the custodian or broker who administers the investment on their behalf). Nominated Persons should continue to contact that member, custodian or broker (and not the Company) regarding any changes or queries relating to the Nominated Person's personal details and interest in the Company (including any administrative matter). The only exception to this is where the Company expressly requests a response from a Nominated Person.

(vi) In the case of joint holders, the vote of the senior holder who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the other joint holders and, for this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the relevant joint holding.

(vii) Shareholders who hold their Ordinary Shares electronically may submit their votes through CREST, by submitting the appropriate and authenticated CREST message so as to be received by the Company's registrar not later than 48 hours before the start of the meeting. Instructions on how to vote through CREST can be found by accessing the following website:

www.euroclear.com/CREST. Shareholders are advised that CREST is the only method by which completed proxies can be submitted electronically.

(viii) If you are a CREST system user (including a CREST personal member) you can appoint one or more proxies or give an instruction to a proxy by having an appropriate CREST message transmitted. To appoint one or more proxies or to give an instruction to a proxy (whether previously appointed or otherwise) via the CREST system, CREST messages must be received by Computershare Investor Services PLC (ID number 3RA50) not later than 48 hours before the time appointed for holding the GM excluding non-business days. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp generated by the CREST system) from which Computershare Investor Services PLC is able to retrieve the message. CREST personal members or other CREST sponsored members should contact their CREST sponsor for assistance with appointing proxies via CREST. For further information on CREST procedures, limitations and system timings please refer to the CREST Manual. The Company may treat as invalid a proxy appointment sent by CREST in the circumstances set out in regulation 35(5) (a) of the Uncertificated Securities Regulations 2001.

(ix) Any corporation which is a member may appoint one or more corporate representative(s) who may exercise on its behalf all of its powers as a member provided that, if it is appointing more than one corporate representative, it does not do so in relation to the same shares. It is, therefore, no longer necessary to nominate a designated corporate representative. Representatives should bring to the GM evidence of their appointment, including any authority under which it is signed.

(x) If the Chairman, as a result of any proxy appointments, is given discretion as to how the votes of those proxies are cast and the voting

rights in respect of those discretionary proxies, when added to the interests in the Company's securities already held by the Chairman, result in the Chairman holding such number of voting rights that she has a notifiable obligation under the Disclosure Guidelines and Transparency Rules, the Chairman will make the necessary notifications to the Company and the Financial Conduct Authority. As a result, any member holding 3 per cent or more of the voting rights in the Company who grants the Chairman a discretionary proxy in respect of some or all of those voting rights and so would otherwise have a notification obligation under the Disclosure Guidelines and Transparency Rules, need not make a separate notification to the Company and the Financial Conduct Authority

(xi) Any question relevant to the business of the GM may be asked at the GM by anyone permitted to speak at the GM. A holder of shares may alternatively submit a question in advance by a letter addressed to the Company's registered office. Under section 319A of the Act, the Company must answer any question a shareholder asks relating to the business being dealt with at the GM, unless, (i) answering the question would interfere unduly with the preparation for the GM or involve the disclosure of confidential information; (ii) the answer had already been given on a website in the form of an answer to a question; or (iii) it is undesirable in the interests of the Company or the good order of the GM that the question be answered.

(xii) Under section 527 of the Act, a shareholder or shareholders meeting the criteria set out in note (xiv) below, have the right to request the Company to publish on its website a statement setting out any matter that such shareholders propose to raise at the GM relating to the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the GM. Where the Company is required to publish such a statement on its website: (i) it may not require the shareholder making the request to

pay any expense incurred by the Company in complying with the request; (ii) it must forward the statement to the Company's auditors no later than the time the statement is made available on the Company's website; and (iii) that statement may be dealt with as part of the business of the GM. The request: (a) may be in hard copy form or in electronic form; (b) either set out the statement in full or, if supporting a statement sent by another shareholder, clearly identify the statement which is being supported; (c) must be authenticated by the person or persons making it; and (d) be received by the Company at least one week before the GM.

(xiii) In order to be able to exercise the shareholders' right to require the Company to publish audit concerns in accordance with note (xiii) above, the relevant request must be made by: (i) a shareholder or shareholders having a right to vote at the GM and holding at least 5 per cent. of total voting rights in the Company (please see note (xvii) below in relation to total voting rights); or (ii) at least 100 shareholders having a right to vote at the GM and holding, on average, at least £100 of paid up share capital.

(xiv) Where a shareholder or shareholders wishes to request the Company to publish audit concerns in accordance with note (xiii) above, such request must be made by either sending: (a) a hard copy request which is signed by the relevant shareholder or shareholders, states such persons' full name(s) and address(es) and sent to the Company Secretary, Maitland Administration Services (Scotland) Limited; or

(b) a request which states the shareholder or shareholders' full name and address(es), and sent by email to [email protected]. Please state "TOC GM" in the subject line of the e-mail.

(xv) Further information regarding the GM which the Company is required by section 311A of the Act to publish on a website in advance of the GM can be accessed at www.tocpropertybackedlendingtrust.co.uk.

(xvi) As at 29 May 2020 (being the latest practicable date prior to the printing of this notice) the Company's issued share capital consisted of 26,924,063 Ordinary Shares carrying one vote each.

(xvii) You may not use any electronic address provided either in this notice or any related documents (including the Form of Proxy) to communicate with the Company for any purpose other than those expressly stated.

(xviii) A copy of the letters of appointment of the Directors will be available for inspection during normal business hours at the Company's registered office and at the place of the meeting from at least 15 minutes prior to the meeting until the end of the meeting.

EXPLANATION OF RESOLUTIONS

Resolutions 1 to 6 (inclusive) are proposed as ordinary resolutions. This means that for each of those resolutions to be passed, more than half of the votes cast must be in favour of the resolution. Resolutions 7 and 8 (inclusive) are to be proposed as special resolutions. This means that for the resolutions to be passed, at least three-quarters of the votes cast must be in favour of the resolutions.

Resolution 1 – The Directors are required to lay before the meeting the Audited Financial Statements of the Company for the year ended 30 November 2019 including the Strategic Report, Report of the Directors, the Independent Auditor's report and the Director's Remuneration Report.
Resolution 2 – The shareholders are asked to approve the Directors' Remuneration Report for the year ended 30 November 2019, as set out on pages 28 to 30 of the Annual Report. The vote is advisory and does not affect the remuneration payable to any individual Director.
Resolution 3 – Is a resolution subject to a binding vote. The Company is seeking approval for its remuneration policy as set out on pages 28 and 29 of the Directors' Remuneration Report. The

Continued

remuneration policy will take effect immediately on approval by shareholders and will continue to apply for the next three years, unless amended by the Company in general meeting at an earlier date.

Resolution 4 – The Directors' present the Company's dividend policy on an annual basis recognising that shareholders will not have the opportunity to vote on a final dividend.
Resolution 5 and 6 – Shareholders are required to approve the appointment of the Company's auditor each year and to give the Audit Committee the authority to determine the auditor's remuneration. BDO LLP have indicated their willingness to continue in office. Resolution 5 covers their reappointment for the year ending 30 November 2020 and resolution 6 authorises the Audit Committee to determine their remuneration.
Resolution 7 – The Directors are requesting authority for the Company to make market purchases of Ordinary Shares up to a maximum nominal amount of £4,035,917 (representing 14.99 per cent. of the issued Ordinary Share capital of the Company as at 29 May 2020 (the latest practicable date prior to the publication of this document)). There is no present intention to exercise such general authority. Any repurchase of Ordinary Shares will be made subject to the Act and within guidelines established from time to time by the Directors (which will take into account the income and cash flow requirements of the Company) and will be at the absolute discretion of the Directors, and not at

the option of shareholders. Subject to shareholder authority for the proposed repurchases, general purchases of the Ordinary Shares in issue will only be made through the market. Such purchases may only be made provided the price to be paid is not more than the higher of: (i) five per cent. above the average of the middle market quotations for the Ordinary Shares for the five Business Days before the purchase is made; or (ii) the higher of the price of the last independent trade and the highest current independent bid at the time of purchase.

Resolution 8 – The Act provides that the notice period required for general meetings of the Company must be at least 21 clear days unless shareholders approve a shorter notice period, which cannot be less than 14 clear days (annual general meetings will continue to be held on at least 21 clear days' notice). This resolution seeks shareholder approval to hold general meetings after giving notice of 14 or more clear days. The approval will be effective until the next annual general meeting, when it is intended that a similar resolution will be proposed. The Act provides that, in order to be able to call a general meeting on less than 21 clear days' notice, the Company must make a means of electronic voting available to all shareholders for that meeting.

SHAREHOLDER INFORMATION

Share Register Enquiries

For shareholder enquiries, please contact the registrar, Computershare +44 (0) 370 702 0000.

Share Capital and Net Asset Value Information

Ordinary £0.01 Shares 26,924,063
SEDOL Number BD0ND66
ISIN Number GB00BD0ND667
Ticker PBLT

Share Prices

The Company’s shares are listed on the London Stock Exchange.

Annual and Interim Reports

Copies of the Annual and Interim Reports are available from the Company Secretary on telephone 01245 398950 and are also available on the Company’s website www.tocpropertybackedlendingtrust.co.uk.

Provisional Financial Calendar

29 May 2020 Annual General Meeting
31 May 2020 Interim period end
1 June 2020 Payment of interim dividend
July 2020 Payment of interim dividend
11 August 2020 General Meeting
October 2020 Payment of interim dividend
August 2020 Interim period end results
30 November 2020 Year end
January 2021 Payment of interim dividend

AIFMD DISCLOSURES

In accordance with the AIFMD, Tier One Capital Limited and the Company are required to make certain disclosures available to investors in relation to the Company's leverage and the remuneration of the Company's AIFM. In accordance with the Directive, the AIFM's remuneration policy is available from Maitland Administration Services Limited on request and the numerical remuneration disclosures in relation to the AIFM's first relevant accounting period will be made available in due course. The Company's maximum and average actual leverage levels at 30 November 2019 are shown below:

Leverage exposure

Limit	Gross Method	Commitment Method
Maximum	30.0%	30.0%
Actual	16.6%	16.6%

For the purposes of the AIFMD, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a percentage of the Company's net asset value and is calculated on both a gross and commitment method.

The leverage limits are set by the AIFM and approved by the Board and are in line with the maximum leverage levels permitted in the Company's Articles. The AIFM is also required to comply with the gearing parameters set by the Board in relation to borrowings. Detailed regulatory disclosures to investors in accordance with the AIFMD are contained on the Company's website.

The AIFM has sufficient capital and liquid assets to meet the requirements under AIFMD.

The periodic disclosures as required under the AIFMD to investors are made below:

pages 14 and 15 and note 16 to the financial statements set out the risk profile and risk management systems in place. There have been no changes to the risk management systems in place in the period under review and no breaches of any of the risk limits set, with no breach expected;
information on the investment strategy, geographic and sector investment focus and stock exposures is included on pages 8 to 13; and
none of the Company's assets are subject to special arrangements arising from their illiquid nature.

REGULATORY DISCLOSURES

Information to be disclosed in accordance with Listing Rule 9.8.4

The disclosures below are made in compliance with the requirements of Listing Rule 9.8.4.

9.8.4 (1) The Company has not capitalised any interest in the year under review.

9.8.4 (2) The Company has not published any unaudited financial information in a class I circular or prospectus or any profit forecast or profit estimate.

9.8.4 (3) This provision has been deleted.

9.8.4 (4) The Company does not have any long term incentive schemes in operation.

9.8.4 (5) and (6) Ian McElroy, has waived or agreed to waive any current or future emoluments from the Company so long as he has an interest in the Company's Investment Adviser.

9.8.4 (7) During the year to 30 November 2019, the Company has not issued shares.

9.8.4 (8) and 9.8.4 (9) are not applicable.

9.8.4 (10) As an employee of the Investment Adviser, Ian McElroy is deemed to be interested in the Company's investment management agreement. There were no other contracts of significance subsisting during the year under review to which the Company is a party and in which a Director of the Company is or was materially interested; or between the Company and a controlling shareholder.

9.8.4 (11) This provision is not applicable to the Company.

9.8.4 (12) and (13) There were no arrangements under which a shareholder has waived or agreed to waive any dividends or future dividends.

9.8.4 (14) This provision is not applicable to the Company.

GLOSSARY

AIC Association of Investment Companies

This is the trade body for Closed-end Investment Companies (www.theaic.co.uk).

AIFMD Alternative Investment Fund Managers Directive

Issued by the European Parliament in 2012 and 2013, the Directive requires the Company to appoint an Alternative Investment Fund Manager (AIFM). The Board of Directors of a Closed-ended Investment Company, nevertheless, remains fully responsible for all aspects of the Company's strategy, operations and compliance with regulations.

AIFM Alternative Investment Fund Manager

The entity that provides portfolio management and risk management services to the Company and which ensures the Company complies with the AIFMD. The Company's AIFM is R&H Fund Services (Jersey) Limited.

Basic Total Earnings per Share Total profit after taxation divided by the weighted average number of Ordinary Shares in issue during the period.

C share This is a class of share issued by investment trusts. It allows the increase in number of shares in issue and funds under management without reducing the value of the existing ordinary shares. 'C' shares are quoted separately from the ordinary shares until the money raised from their issue has been fully invested. After that, they are converted to ordinary shares at a value based on the trust's net asset value.

Closed-end Investment Company

A company with a fixed issued ordinary share capital which is traded on a stock exchange at a price not necessarily related to the Net Asset Value of the company and where shares can only be issued or bought back by the company in certain circumstances.

Discount (or Premium) of Share Price to NAV

If the share price is less than the Net Asset Value per share, the shares are trading at a discount. If the share price is greater than the Net Asset Value per share, the shares are trading at a premium. The discount (or premium) is calculated by reporting the difference between the Net Asset Value per share and the Share Price as a percentage of the Net Asset Value per share.

Dividend Yield

Calculated using the annual dividend as a percentage of the share price at the year end.

Dividends per Share

Dividends declared for the year.

Gearing

Total Assets less all cash divided by shareholders' funds.

Increase/decrease in NAV

The movement in NAV in the period, shown in total and as a movement per share. Expressed in whole numbers and as a percentage.

Loan to Value

Debt outstanding and drawn at the period end, net of any cash held in the Lender deposit account, expressed as a percentage of the market value of all property assets.

Net Assets (or Shareholders' Funds)

This is calculated as the value of the investments and other assets of an Investment Company, plus cash and debtors, less borrowings and any other creditors. It represents the underlying value of an Investment Company at a point in time.

Net Asset Value (NAV) per Ordinary Share

This is calculated as the net assets of the Company calculated under its accounting policies as set out on pages 46 to 51 divided by the number of shares in issue. This is the number disclosed at the foot of the Statement of Financial Position on page 43.

NAV Total Return

The growth in NAV plus dividends reinvested, and this can be expressed as a percentage of NAV per share at the start of the year.

Ongoing Charges

All operating costs incurred by the Company, expressed as a proportion of its average Net Assets over the reporting year.

Share Price Total Return

The percentage change in the Share Price assuming dividends are reinvested to purchase additional Ordinary Shares at the prevailing share price.

SORP

Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ issued by the AIC.

Total Assets

This is calculated as the value of the investments and other assets of the Company, plus cash and debtors.

Total Return

The return to shareholders calculated on a per share basis by adding dividends paid in the period to the increase or decrease in the Share Price or NAV. The dividends are assumed to have been reinvested in the form of Ordinary Shares or Net Assets.

UK Corporate Governance Code

A code issued by the Financial Reporting Council which sets out standards of good practice in relation to Board leadership and effectiveness, remuneration, accountability and relations with shareholders. All companies with a Premium Listing of equity shares in the UK are required under the Listing Rules to report on how they have applied the Code in their annual report and accounts.

Alternative Performance Measures (APMs)

The Company uses the following APMs (as described in the glossary) to present a measure of profitability which is aligned with the requirements of our investors and potential investors, to draw out meaningful data around revenues and earnings to provide additional information not required for disclosure under accounting standards. All APMs relate to past performance.

Dividend yield
Increase / decrease in NAV
Loan to value
NAV total return
Ongoing charges
Share price total return

CORPORATE INFORMATION

DIRECTORS

JOHN NEWLANDS
Chairman

MATTHEW HARRIS
Chairman of the Audit Committee

IAN MCELROY

DOUGLAS NOBLE

REGISTERED OFFICE

Keel House
Garth Heads
Newcastle-upon-Tyne NE1 2JE

INVESTMENT ADVISER

TIER ONE CAPITAL LTD
Keel House
Garth Heads
Newcastle-upon-Tyne NE1 2JE

BROKER AND FINANCIAL ADVISER

FINNCAP LTD
60 New Broad Street
London EC2M 1JJ

SOLICITOR

GOWLING WLG (UK) LLP
4 More London
Riverside
London SE1 2AU

AIFM

MAITLAND ADMINISTRATION SERVICES (SCOTLAND) LIMITED
22 Forth Street
Edinburgh
EH1 3LH

ADMINISTRATOR AND SECRETARY

MAITLAND ADMINISTRATION SERVICES LIMITED
Hamilton Centre
Rodney Way
Chelmsford
Essex CM1 3BY

AUDITORS

BDO LLP
55 Baker Street
London
W1U 7EU

REGISTRAR

COMPUTERSHARE INVESTOR SERVICES PLC
The Pavillions
Bridgwater Road
Bristol
BS99 6ZZ

WEBSITE

www.tocpropertybackedlendingtrust.co.uk

TOC PROPERTY BACKED LENDING TRUST

AI assistant

DEVELOP NORTH PLC — Annual Report 2019

4965_10-k_2020-07-10_984d1e1e-251f-4ac3-a91a-dbb5f358c439.pdf

REPORT & FINANCIAL STATEMENTS

Strategic Report

General Information

INTRODUCTION

OBJECTIVE: MANAGERIAL ARRANGEMENTS

DIVIDEND RECORD SINCE INCEPTION

NET ASSET VALUE

IFRS 9

LOAN PORTFOLIO

RELATED PARTIES

BOARD OF DIRECTORS

SUMMARY: OUTLOOK

DIVIDEND PROSPECTS

BRICKS AND MORTAR

ANNUAL GENERAL MEETING AND GENERAL MEETING

ABOUT THE ADVISER

INVESTMENT ADVISER'S REPORT

REVIEW OF THE 12 MONTHS TO 30 NOVEMBER 2019

Partial Redemptions

DEPLOYMENT

PROFIT SHARE PROJECTS

PIPELINE

OUTLOOK

Residential

Commercial

Sale and Leaseback

INVESTMENT OBJECTIVE

INVESTMENT POLICY

BUSINESS MODEL

CULTURE AND VALUES

ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICY

BUSINESS ETHICS

COMMUNITY, MODERN SLAVERY AND EMPLOYEE RESPONSIBILITIES

Principal Risks and Uncertainties

Investment and strategy risk

Market risk

Financial risk

Operational risk

Legal and Regulatory risk

PROMOTING THE SUCCESS OF THE COMPANY

Factoring our Shareholders and Stakeholders into our Principal Decisions

VIABILITY STATEMENT

GOING CONCERN

COVID-19

KEY PERFORMANCE INDICATORS

DIVIDEND YIELD

NET ASSET VALUE TOTAL RETURN (NAV TOTAL RETURN)

ONGOING CHARGES

DISCOUNT/PREMIUM TO NAV

SOCIAL COMMUNITY, HUMAN RIGHTS, EMPLOYEE RESPONSIBILITIES AND ENVIRONMENTAL POLICY

RESULTS

FUTURE DEVELOPMENTS

CORPORATE GOVERNANCE

PRINCIPAL ACTIVITY AND STATUS

SHARE CAPITAL

DIVIDEND

GOING CONCERN

DIRECTORS

DIRECTORS' AND OFFICERS' LIABILITY INSURANCE

ALTERNATIVE INVESTMENT FUND MANAGER

INVESTMENT ADVISER

SUBSTANTIAL INTERESTS IN SHARE CAPITAL

DIRECTORS' REMUNERATION POLICY AND REPORT

CONTINUATION VOTE

DIVIDEND POLICY

AUTHORITY TO MAKE MARKET PURCHASES OF ORDINARY SHARES

DISCLOSURE OF INFORMATION TO THE AUDITOR

AUDITOR

STATEMENT REGARDING THE REPORT AND FINANCIAL STATEMENTS

RECOMMENDATION

STATEMENT OF CORPORATE GOVERNANCE

STATEMENT OF CORPORATE GOVERNANCE

INDEPENDENCE

THE BOARD

BOARD DIVERSITY

MANAGEMENT APPOINTMENT, RE-ELECTION AND REMUNERATION OF DIRECTORS

POLICY ON DIRECTORS' REMUNERATION

DEVELOP NORTH PLC Annual Report 2019