DEVELOP NORTH PLC — Annual Report 2022

May 2, 2023

Annual Report 2022

Contents

• Strategic Review
• Chairman’s Statement
• Investment Adviser’s Report
• Strategic Report
• Board of Directors
• Directors’ Report
• Statement of Corporate Governance
• Audit Committee Report
• Directors’ Remuneration Report
• Management Report and Directors’ Responsibility Statement
• Independent Auditor’s Report
• Income Statement
• Statement of Financial Position
• Statement of Changes in Equity
• Cash Flow Statement
• Notes to the Financial Statements
  • General Information
• Notice of Annual General Meeting
• Shareholder Information
• Glossary
• Corporate Information

Chairman’s Statement

John Newlands, Chairman

Highlights

• Net Asset Value total return of 2.3% (2021: 4.8%)
• Increase in earnings per share from 3.1p to 3.7p
• Total dividends of 4 pence per share paid or payable for the year
• Loan facility with Shawbrook Bank Limited renewed to May 2023
• Change of name to reflect more accurately the nature of the Company’s activities

Introduction

I am pleased to present the Company’s results for the year ended 30 November 2022, during which the Company entered its sixth year of trading. Key themes during 2022 have been rising interest rates, soaring inflation, much of it driven by rising energy prices after Russia’s invasion of Ukraine and post- Covid supply chain issues. As to the real estate sector in which Develop North operates, potential property buyers are effectively being left with less money in their pockets just as mortgage rates have begun to rise. Meanwhile building supplies and building energy costs have gone up along with domestic product affecting the market place. Later in the year, the destabilising effects of a government U-turn, covering a broad range of policies from windfall tax to fracking were reversed within weeks, which seriously unsettled business confidence, including the financial and foreign exchange markets. This was the background against which Develop North continued to go about its business during the year, adding new and strongly financed project loans to the portfolio while managing older projects as they gradually exited.

Objective; Managerial Arrangements; company name

The Company seeks to achieve its investment objective through a diversified portfolio of fixed rate loans secured over land and/or property in the UK. During the financial year under review, the Company changed its name to Develop North PLC. The change of name took effect on 4 May 2022. The London Stock Exchange stock ticker symbol, previously PBLT, became DVNO with effect from 6 May 2022. The Company’s ISIN, SEDOL and LEI designations remain unchanged. The Directors believe that the new name reflects the Company’s refreshed investment strategy, existing portfolio exposure and regionally focused investment objective, while the underlying investment policy remains unchanged.

Performance; Revenue and Dividends

Despite the testing market conditions described above, the Company has adhered to the dividend policy established in 2021, namely to pay dividends at a rate of 1 penny per share per quarter, equivalent to 4 pence per share per year in aggregate. Depending upon the performance of the investment portfolio and considering broader market conditions, a final balancing payment may be made at the end of the financial year to ensure that the Company continues to comply with HMRC’s investment trust qualification criteria. Revenue for the year to 30 November 2022 increased to 3.68 pence per share (2021: 3.09 pence). The Board has declared and paid three quarterly interim dividends of 1.0 pence per share for the year ended 30 November 2022 and I am pleased to report that a fourth interim dividend of 1.0 pence per share has been declared. This dividend will be paid on 31 March 2023 to shareholders on the register at the close of business on 17 March 2023 (ex-dividend date 16 March 2023).

Net Asset Value

The Company’s net asset value (‘NAV’) fell to 81.8 pence per share as at 30 November 2022, having been 83.9 pence twelve months earlier. Taking into account dividends paid and declared for the period, this equates to a positive net asset value total return for the financial year of approximately 2.3% and after an impairment charge reflecting tougher economic conditions expected in the year ahead. This figure may be placed into context by comparison with the total return figures over the same period of the Association of Investment Companies’ (‘AIC’) ‘Property-Debt’ sector, of which the Company is a component member, of +5.2% and of the AIC’s ‘Debt-Loans’ sector of +6.6% (Source: AIC).

Gearing

Loan facilities during the year consisted of a £6.5 million credit facility with Shawbrook Bank Limited, with £4.0 million drawn down at the financial year end and £0.5 million repaid since the year end. The facility provided by Shawbrook Bank Limited was renewed to May 2023. The Directors understand from discussions with Shawbrook that the facility will be renewed and it is intended that this will take place in advance of its expiry date.

Investment Portfolio; New Investments; Project Impairments

The total value of the Company’s portfolio now stands at £25.5m, from 17 projects, an increase of £7.3m since last year.

New Investments

The Company agreed two new loans during the year, including a £2.2 million, nine month facility to fund the construction of four family homes in Morpeth, Northumberland, and a £1.9 million facility to fund the construction of executive homes across two sites in Darras Hall, Ponteland and Stocksfield, Northumberland.

Continued

In addition, further funds were invested in facilities created during the second half of the previous financial year. This has led to a significant increase in the total size of the loan book which will support portfolio revenues over future months and years. The change in interest rate environment is also being reflected in the net rates of interest on new and refinanced projects. This will help to mitigate the higher interest and higher inflation that the Company is facing.

Exits

There were three portfolio exits, bringing total exits to fifteen since inception. In addition, partial redemptions occurred for six other projects in the portfolio.

Impairments

As specified by the requirements of accountancy standard IFRS 9, the Company has reflected the more uncertain economic conditions resulting in an increased general provision at year end. All loans are written balancing risk and return, whereby contingencies are put in place, typically in the form of capital/equity in the projects subordinate to the Company’s loan. This arrangement protects the Company in the event that the underlying properties being supported do not realise the full expected value and/or that the return of capital could be delayed by sales taking longer. The Board and the Investment Adviser believe that this substantially mitigates the risks associated with the downturn. The Investment Adviser’s Report on pages 8 to 11 provides more detail on performance and the activity within the loan portfolio. This includes information on deployment of capital, progress on projects undertaken as well as any profit share received, impairments and uplifts on loans and loan redemptions.

Board of Directors

As described in last year’s annual report, new and slightly lower levels of remuneration for board members were put in place during the financial year. The revised scheme was put before shareholders at the 2022 Annual General Meeting (‘AGM’) and the Resolution was approved. In accordance with the requirements of the UK Corporate Governance Code all Directors will stand for re-appointment at the AGM.

Change of Auditor

The appointment by the Directors of MHA MacIntyre Hudson as the Company’s auditor last year was ratified at the 2022 AGM, together with their reappointment this year.

Annual General Meeting

The Company’s AGM will be held at The Grey Street Hotel, 2-12 Grey Street, Newcastle on Thursday, 27 April 2023 at 12 noon. The Board strongly encourages all shareholders to exercise their votes in respect of the meeting in advance, by completing and returning their proxy forms. This will ensure that the votes are registered. In addition, shareholders are encouraged to raise any questions in advance of the AGM with the Company Secretary via email to cosec@MaitlandGroup.com or by post to the Company Secretary at the address set out on page 74 of this report. Any questions received will be replied to by the Company after the AGM.

Outlook

While market conditions are clearly testing, there are signs on the horizon of improving markets. The British Chamber of Commerce (‘BCC’) recently estimated that core inflation, which passed 11% in the fourth quarter of 2022 should slow to 5% by the final quarter of 2023 and, optimistically, the BCC suggests inflation will return to the Bank of England’s target of 2% per annum by late 2024. Interest rates are also not expected to rise indefinitely. According to the Office of Budgetary Responsibility, the Bank Rate is expected to peak at 4.8% by the end of 2023 before falling back. While economic forecasts may remain challenging in the months ahead, Develop North will continue to seek out investment opportunities of the highest quality. We are pleased to have successfully delivered on last year’s aims of increasing deployment and investment income and by reducing the risk within the loan book. We expect more of the same in the year ahead.

John Newlands,
Chairman
30 MARCH 2023

Investment Adviser’s Report

INVESTMENT ADVISER’S REPORT: REVIEW OF THE 12 MONTHS TO 30 NOVEMBER 2022

Investment Adviser’s Highlights:

• Investment interest increased by 8% to £1.8m.
• £11m deployed into 6 projects, reflecting an increase of 40.9% in the size of the loan book by year end.
• NAV Total Return of 2.3% and an annualised dividend yield of 4.7% resulting in £1.1m of income distributed to shareholders.# Annual Report and Accounts

• Exits of three portfolio projects, bringing the number of exits since inception to fifteen.
• Loan to Value (LTV) has dropped to 66.8% from 71%, delivering on our strategy to build risk resilience and improve the credit quality of our loan book.
• 68% of funds deployed in North East England reflecting the Company’s ongoing commitment to focus operations on our chosen regional markets.

This Annual Report and Accounts covers the fifth full year of performance and sixth audit review of the Company since its listing in January 2017. The Company’s investment objective is to provide debt finance to the property sector. The Company also benefits from a small number of equity positions attained at nil cost in six of the borrowing entities which it supports. In addition, the Company benefits from exit fees on redemption of other projects that additionally contributes to the Senior and Profit lending type.

This financial year has seen the base rate increase above 1% for the first time since the global financial crisis of 2008. Market expectations see these increases continuing into 2023 with a peak of between 4% and 5%. These rises are the Bank of England’s response to the return of inflation in the UK which reached double digit percentages during 2022. As a result, the UK economy is likely to go into recession during 2023, but that is forecast to be shallower yet longer than initially feared prior to the November 2022 government Autumn statement. 2022 saw house prices in the UK grow sharply with the forecast for 2023 to be a reversal of some of those increases before a return to moderate price rises from 2024 onwards. Build cost inflation and labour shortages in the construction sector have placed significant strain on development budgets and project profitability. Build costs are expected to return to more stable levels in 2023 which will relieve some of the challenges developers are facing.

We expect the changes in the economy to provide challenges and opportunities for the Company over the next twelve months and beyond. Interest rate rises will increase the weighted average cost of capital of the Company but we are already taking the opportunity to increase the net income by charging higher rates on new loans and to the existing loan book. The high street banks have withdrawn further from development finance and the Company is taking the opportunity to win further business by providing finance to experienced developers with strong track records.

9 Deployment

The Company’s portfolio can be broken down as follows:

Despite the ongoing uncertainties faced, we are pleased to report an active year for new transactions, deployments to existing projects together with full and partial exits. The Company agreed two new facilities during the year:
• Fairmoor, North East England - £2.2m 9-month facility
• Moor Lane, North East England - £1.9m 18-month facility

During the year a total of £11.0m was deployed into six projects including the two new projects mentioned above. At the year-end, fund deployment totalled £25.5m, with 10.0% headroom for net growth. The quality of the underlying loan book continues to improve with the Loan to Value moving from 70.9% at 30 November 2021 to 66.8% at year end.

Portfolio Exits

Three loans were repaid during the year, bringing the number of exits in the portfolio to fifteen since inception.

Partial Redemptions

During the year there were £3.5m of partial redemptions across seven of the portfolio projects, including the three exits in the year.

Impairments

In accordance with IFRS 9, the Company recognises the gross interest receivable on all its loans and then recognises an impairment charge if that interest is not paid by the borrower and there is not a clear expectation that this can be recovered subsequently. During the year, there were two projects unable to meet their interest requirements in full. IFRS 9 also requires the Company to consider various credit loss scenarios and assign a risk weighting to these. This calculation generates a provision which is taken as a further impairment for the year. In this period the Company has increased the provision to £114,000 from the £33,000 that was in place at 30 November 2021. This provision is based on forward looking scenarios to withstand market-related shocks reflecting current economic uncertainties.

Continued Deployment by Region

Region	68%	32%	28%	66%
North East
Scotland

Lending type	0%	10%	20%	30%	40%	50%	60%	70%
Mezzanine
Senior & profit
Senior only

Lending type	£0	£250,000	£500,000	£750,000	£1,000,000	£1,250,000	£1,500,000	£1,750,000	£2,000,000	£2,500,000
Mezzanine
Senior & profit
Senior only

Lending type	Average loan size	Average returns by loan type
Mezzanine	£0.5m	11.0%
Senior & profit	£2.1m	7.9%
Senior only	£1.2m	7.5%

10 Gearing

In May 2022, the Company renewed its committed revolving credit facility with Shawbrook Bank for a further year. Again, the key driver was headroom and liquidity and its renewal for a fifth year demonstrates the support that the Company has from its lender, and the growing confidence in future deployment given the current strength of pipeline. As noted in the Chairman’s Statement on page 5, it is intended that the facility will be renewed in advance of its expiry.

Profit Share Projects

There are currently six Profit Share projects in the portfolio (November 2021: six).

Rebrand

In May 2022 the Company changed its name to Develop North PLC. The Investment Adviser supports the view that the new name reflects the Company’s refreshed investment strategy, existing asset base exposures and regionally focused investment objective.

OUTLOOK

Economic Outlook

Residential

As at 30 November 2022, 70.4% of deployed funds were invested across 12 projects with a residential focus, with a further £0.3m committed to live projects. The housing market has seen considerable increases over the past 12 months but the outlook from Savills is a reduction in house prices by some 8.5% in the North East and 9% in Scotland in 2023, ahead of growing 20% and 19% in the four years thereafter. That immediate decline is both lower than the UK average and is seen as a correction of steep rises in the post-Covid period, with house prices remaining significantly ahead of their 2016 to 2019 average. Mortgage availability and affordability is also important to consider. There was significant disruption and uncertainty during September and October 2022 as the markets reacted to the short premiership of the then new prime minister. Stability quickly returned by the year end, rates dropped and there is no evidence of a contraction in bank liquidity or in mortgage lenders seeking to exit the market in the North. Our view, based on experience from within the portfolio, is that the mortgage market is still robust. It is worth noting that around 50% of house transactions nationally, according to Nationwide, were bought with either cash or mortgages at less than 50% LTV suggesting limited pressure on affordability of mortgages. Turning to cost pressures, construction cost increases have been the biggest threat in the sector, with significant price rises absorbed by developers and contractors in the post-Covid recovery period across 2021 and 2022. Going forward, cost increases will remain, but at lower levels with BCIS forecasts for both materials and labour being far closer to the Bank of England target inflation rate of 2% in each of the next 5 years. The Company’s residential exposure is predominantly in the North East (90.5%). This will continue to be a key focus as this region continues to offer affordability for house buyers, despite the recent increase in prices. Projects are appraised using the views of market experts for sales values, build cost and delivery, with all assumptions stress tested.

Commercial

As at 30 November 2022, 29.6% of deployed funds were invested across five projects with a commercial focus. The new investment strategy implemented in 2021 allows the Company to be more selective in the level of exposure to commercial developments. We believe that a selective approach to the Company’s deployment in the commercial property sector will continue to create shareholder value. The sectors within the commercial property space that the Company currently has exposure to are:
• bereavement (crematorium);
• strategic land; and
• shared office space.
Each of the above sub-sectors offer downside protection in the current uncertain economic times. Our current pipeline offers further opportunities to increase our exposure to other sectors that we anticipate will be similarly resilient. We will continue to identify and support professional, experienced and reliable management teams who have a clear vision and robust plan.

11 PIPELINE

There is currently £2.5m at various stages of deployment across three projects with 47.0% in the North East. The quality and experience of each management team that we are in discussions with will continue to enhance the Company’s portfolio and strengthen its reputation in the market. This should lead to the creation of shareholder value that is sustainable in the longer term. With input cost stability predicted to emerge, relative confidence in property as an asset class, a continuing shortage in housing and an increasing ability to compete in debt markets, we are looking forward to growing fund deployment post the year end.# THE INVESTMENT PORTFOLIO AS AT 30 NOVEMBER 2022

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

Sector	% of Portfolio	LTV* (Nov 22)	Loan Value (Nov 22) £’000s	LTV* (Nov 21)	Loan Value (Nov 21) £’000s
Residential	67.8%	69.0%	17,111	73.7%	10,480
Commercial	29.7%	61.9%	7,508	66.7%	7,043
Cash	2.5%	–	638	–	4,545
General Impairment	–	–	(114)	–	(33)
Total/Weighted Average	100.0%	66.8%	25,143	70.9%	22,035

12 Strategic Report

STRATEGIC REPORT

The aim of the Strategic Report is to provide shareholders with the ability to assess how the Directors have performed their duty to promote the success of the Company during the year under review. The Strategic Report contains a summary of the Company’s business model, a statement of its objectives and policy, a review of performance and a description of the principal and emerging risks it faces. Please refer to the Chairman’s Statement and the Investment Adviser’s Report for an analysis of the Company’s performance during the financial year and a summary of the future prospects. Pages 22 to 29, together with the sections of this Annual Report and Accounts incorporated by reference, constitute a Strategic Report that has been prepared in accordance with Section 414A of the Companies Act 2006 (the ‘Act’).

PRINCIPAL ACTIVITY AND PURPOSE

The Company’s principal activity is that of an investment company, with a primary purpose providing debt finance to the property sector.

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 a diversified portfolio of fixed rate loans predominantly secured over land and/or property in the UK. 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 may be 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.

Loan to Value

The Company typically seeks to originate debt where the effective loan to real estate value ratio of any investment is between 40% and 100% at the time of origination. The Company typically seeks to achieve a blended loan to value (‘LTV’) across the portfolio of no more than 75% (based on the initial valuations at the time of loan origination) once fully invested.

The Directors present their Strategic Report for the year to 30 November 2022.

13 Sector

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

• Regional residential housebuilding 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.

INVESTMENT RESTRICTIONS

The Company observes the following investment restrictions:

• The Company derives its income from a portfolio of not less than five loans;
• No more than 100% of the Gross Asset Value will be exposed to the regional residential housebuilding sector, calculated at the time of investment;
• No more than 100% of the Gross Asset Value will be exposed to the small to medium commercial property development sector, calculated at the time of investment;
• No more than 30% of the Net Asset Value will be exposed to direct sale and leaseback vehicles, at the time of investment;
• No more than 50% of the Net Asset Value will be exposed to subordinated loans, calculated at the time of investment and/or subsequent subordination;
• No more than 50% of the Net Asset Value will be exposed to bridging loans, selected loan financings and other debt instruments, calculated at the time of investment;
• No more than 5% of the Net Asset Value will be exposed to unsecured loans, calculated at the time of investment;
• No single investment, or aggregate investments secured on a single property or group of properties or connected with related borrowers, will exceed 20% of the Net Asset Value, calculated at the time of investment;
• No more than 20% of the Net Asset Value will be exposed to any one borrower or related borrowers or developer or related developer entities calculated at the time of investment;
• No more than 10% of the Net Asset Value will be exposed to any sector other than regional residential housebuilding, small to medium commercial property development and direct sale and leasehold vehicles; and
• The Company will not invest in other listed closed-ended investment companies.

Borrowing

The Company may use gearing if it believes it will enhance shareholder returns over the longer term. It will limit the Company’s borrowings to a maximum of 30% of the Net Asset Value at the time of drawdown. In May 2022 the Company renewed its one-year £6.5 million committed revolving facility with Shawbrook Bank Limited until May 2023. At the year end the Company had drawn £4.0 million under this facility (2021: nil). The Company has repaid £0.5 million since the year end (2021: nil).

Cash Management

The Company may from time-to-time have surplus cash. It is expected that any surplus cash will be temporarily invested in cash or cash equivalents, money market instruments, bonds, commercial paper or other debt obligations with banks or other counterparties having a single-A (or equivalent) or higher credit rating as determined by an internationally recognised rating agency or gilts or otherwise approved by the Board.

Use of derivatives and hedging

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.

Continued 14

In accordance with the requirements of the FCA Listing Rules, any material changes in the principal investment policies and restrictions of the Company would only be made with the approval of Shareholders by ordinary resolution.

BUSINESS MODEL, CULTURE AND VALUES

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 culture of the Company is embodied in the Board of Directors whose values are trust and fairness. The management of the Company’s investments, is delegated to the Investment Adviser, Tier One Capital Ltd (‘TOC’), 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. 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. 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 values and importantly will work with the Directors openly and values transparently to achieve the Company’s aims. As mentioned below, the Board expects and seeks assurance at least annually that the companies it works with adopt working practices that are of a very high standard.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICY (‘ESG’)

The Company has no employees and all of its Directors are non-executive. The day to day activities are carried out by third parties. There are therefore no disclosures to be made in respect of social, community, employee or environmental matters. The Company has an investment advisory contract with Tier One Capital Ltd. In asking the Company’s Investment Adviser to deliver against set objectives, the Directors 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. 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 matters.# MODERN SLAVERY ACT 2015 (‘MSA’)

The MSA requires companies to prepare a slavery and human trafficking statement for each financial year. As the Company does not provide goods or services in the normal course of business, 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.

15 PRINCIPAL AND EMERGING RISKS

The Board of Directors has overall responsibility for risk management and internal control within the context of achieving the Company’s objectives. The Directors confirm that they have carried out a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity, as they operated during the year and up to the approval of the Annual Report. The Board agrees the strategy of the Company, taking into consideration the Company’s risk appetite. With the assistance of the Investment Adviser, the Board has drawn up a risk matrix, which identifies the key risks to the Company, as well as emerging risks. In assessing the risks and how they can be mitigated, the Board has given particular attention to those risks that might threaten the viability of the Company. These key risks fall broadly under the following categories:

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 Board has considered and continues to keep under review the political, economic and investment risks to the Company associated with the UK’s withdrawal from the EU at the beginning of 2021 and the UK’s future relations with the EU. This withdrawal might lead to a reduced or increased demand for the Company’s shares as a result of investor sentiment which may be reflected in a widening or narrowing of the discount. The Company holds 100% of its assets in the United Kingdom. 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 Continued 16 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’s review of quarterly financial information and the compliance with the relevant rules.

PROMOTING THE SUCCESS OF THE COMPANY

Under section 172(1) of the Companies Act 2006 the Directors have a duty to act in good faith and to promote the success of the Company for the benefit of its shareholders as a whole. This includes taking into consideration the likely consequences of their decisions over the long term and on the Company’s stakeholders, employees and suppliers, while acting fairly between shareholders. The Directors must also consider the impact on the community and its reputation for maintaining high standards of business conduct. Set out below is an explanation of engagement with stakeholders:

Stakeholder Group Engagement in the year

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. The Board engaged with shareholders during the year and was delighted to be able to welcome shareholders to the Annual General Meeting again for the first time since 2019.
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 Shareholders and Stakeholders into the 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

Change of Name

The Board believes that the new name reflects the Company’s refreshed investment strategy, existing portfolio exposure and regionally focused investment objective.

Principal Decision 2

Dividend Policy

Directors continue to pay a consistent and stable income. The dividend policy is set out in the Strategic Report on pages 12 to 18.

Principal Decision 3

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.

17 LONG TERM VIABILITY STATEMENT

In accordance with Provision 36 of the AIC Code the Directors are required to assess the prospect of the Company over a longer period than the twelve months referred to in the going concern guidance and statement. The Board conducted this viability review for a period of three years principally because it believes that any investment in the shares of the Company should be made on a medium to long-term basis. The Board considers the Company, with no fixed life, to be a long-term investment vehicle. It has 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 rise to any concerns 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 2022 17 loans had been made with an average value of £1.5m and average time to loan maturity of 0.82 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 the 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. The Directors have considered the potential and continuing impact of Covid-19, the current economic uncertainty and the ongoing conflict in Ukraine. The Board considers that the mitigation measures put in place by the Investment Adviser in relation to the Company and its loan portfolio, together with those in place at key service providers serve to maintain operational resilience. The Directors do not believe that these call into question the long term viability of the Company. Based on the Company’s processes for monitoring revenue and costs, together with the Investment Adviser’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.

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 73.

Continued
18

• Dividends
  The payment of dividends is a key element of the Company’s investment objective. The Board monitors the Company’s ability to provide shareholders with a consistent and stable income on a continuing basis. Further details on the Board’s policy is set out in the Chairman’s Statement on page 5. Details of the dividends declared and paid are set out on page 54.

• 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 15.3% (2021: 12.7%) (including launch costs) as at 30 November 2022. The NAV total return for the year to 30 November 2022 was 2.3% (2021: 4.8%).

• Ongoing charges ratio (OCR)
  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 2022 was 2.8% (2021: 2.5%).

• 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 3.7% (2021: 1.8%).

CRIMINAL CORPORATE OFFENCE

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.

THE BRIBERY ACT

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

GREENHOUSE GAS EMISSIONS

The Company has no greenhouse gas emissions to report from its operations for the year ended 30 November 2022 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).

BOARD COMPOSITION

The Board comprises four male non-executive Directors. In accordance with best practice all Directors stand for re-election annually. The Board is mindful of the composition of the Board and the range of skills and expertise brought by each of the Directors. The Board is committed to ensuring that any vacancies are filled by the most qualified candidates and it recognises the merits of diversity in its composition. The FCA Listing Rules require companies to report on whether they have met the targets on board diversity set out in the Parker Review’s recommendations with respect to ethnic and cultural representation on UK boards. As at 30 November 2022 the Company had not met the gender diversity requirement that 40% of the individuals on the board are women, and that at least one of the senior positions on the board is woman. Nor had it met the requirement for at least one director from a minority ethnic background. With a small Board comprising solely non-executive Directors, and in light of the specialist nature of the Company, it is challenging to meet diversity targets when appointing new board members. As such, the Board does not consider it appropriate to set targets; however, it will ensure that diversity criteria are considered as part of any future succession planning.

On behalf of the Board
John Newlands, Chairman
30 MARCH 2023

19

20

Matthew Harris (‘Matt’)

Independent non-executive director and audit committee chairman

Matt is a Chartered Accountant, with a career background as an auditor and in the provision of due diligence advice to private equity firms and corporates. He has advised on numerous transactions across Europe and around the world. Matt started his career at Arthur Andersen in New Zealand, but has spent the majority of his career in London, including as a Partner in the KPMG Private Equity Group. He sits on a number of boards and provides deal related and ongoing advice to PE buyers and portfolio companies.

Shareholding as at 30 November 2021: 60,724 ordinary shares.
Shareholding as at 30 November 2022: 60,724 ordinary shares.
Date of appointment: 19 December 2016.

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 Deputy Chair 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 2021: 5,000 ordinary shares.
Shareholding as at 30 November 2022: 5,000 ordinary shares.
Date of appointment: 14 November 2017.

Board of Directors

21

Douglas Noble

Independent non-executive director

Douglas has over 30 years’ private banking experience. He is currently a Director of Jigsaw Lending and also holds the position of Consutant with Hallcroft Finance where he is assisting Hallcroft in launching their business in Scotland. 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 2021: 8,600 ordinary shares.
Shareholding as at 30 November 2022: 8,600 ordinary shares.
Date of appointment: 19 December 2016.

Ian McElroy

Non-independent non-executive director

Ian is one of the founding shareholders of Tier One Capital Ltd, establishing the business having spent many years in the wealth management industry. Ian initially trained and qualified as an investment manager with Gerrard Stockbrokers before moving into financial advice, corporate finance and credit structuring during senior roles with Barclays Wealth, Kleinwort Benson and Coutts. Over the last 20 years, Ian has worked closely with business owners and company directors, senior executives and professionals across many industries to help structure, preserve and achieve their financial objectives. Ian is a Chartered Fellow of the CISI and a Chartered Wealth Manager.

Shareholding as at 30 November 2021: 74,005 ordinary shares.
Shareholding as at 30 November 2022: 74,005 ordinary shares.
Date of appointment: 18 April 2018.

22

Directors’ Report

INFORMATION DISCLOSED IN THE STRATEGIC REPORT

The following matters required to be disclosed in this Report under the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 are covered in the Chairman’s Statement, Investment Adviser’s and the Strategic Report on pages 12 to 18: the Company’s objectives, policies and financial risk management, the Company’s exposure to risks and its prospects, as well as important events affecting the Company since the year end.# STATUS

The Company was incorporated 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’). The Company has been confirmed by HM Revenue & Customs as having approved investment trust status under the Investment Trusts (Approved Company) (Tax) Regulations 2011, subject to it continuing to comply with those regulations. The Directors conduct the affairs of the Company with a view to maintaining this approved investment trust status in order to preserve the Company’s exemption from UK capital gains tax. The Directors have no reason to believe that approval will not continue to be obtained. The Company is not a close company for taxation purposes.

MANAGEMENT OF THE COMPANY

The Investment Adviser is Tier One Capital Ltd (‘TOC’). TOC undertakes portfolio management services for the The Directors present their Annual Report and Financial Statements of the Company for the year to 30 November 2022. Oak Meadows, Middleton St George 23 Continued Company, subject to overall control and supervision by the Board. TOC is employed under a contract which can be terminated on 12 months’ notice. If the Company wishes to terminate the contract on shorter notice, the balance of remuneration is payable by way of compensation. TOC is entitled to receive from the Company an investment advisory fee which is calculated and paid quarterly in arrears at an annual rate of 0.25% per annum of the prevailing Net Asset Value if less than £100m, or 0.50% per annum of the prevailing Net Asset Value if £100m or more. The Board has reviewed the performance of the Investment Adviser and believes that its continued appointment is in the interests of the Company and shareholders. Such a review is carried out on an annual basis.

ALTERNATIVE INVESTMENT FUND MANAGER’S DIRECTIVE (‘AIFMD’)

The Company is registered with the FCA as a Small Registered Alternative Investment Fund Manager (‘AIFM’). The Alternative Investment Managers’ Directive requires certain disclosures to be made in respect of any remuneration policy of the AIFM, leverage, risk disclosures and pre-investment disclosures. The Board, as AIFM, receives no remuneration in this regard. The Company makes sufficient disclosures in relation to gearing and risk within the Annual Report. Changes to the investment policy and guidelines were approved at a General Meeting on 29 March 2021 and the current investment policy and guidelines are set out in this Strategic Report on pages 12 to 18. Therefore, no further separate disclosures are required.

INVESTMENT POLICY AND OBJECTIVE

Details of the Company’s Investment Policy and Objective are set out in the Strategic Report on pages 12 to 18.

RESULTS AND DIVIDENDS

The revenue return for the financial year ended 30 November 2022 after taxation amounted to £992,000 (2021: £832,000). An interim dividend of 1.0p per Ordinary share was declared and paid on 29 December 2022 and a further interim dividend has been declared, to be paid to shareholders on the register at the close of business on 31 March 2023 (ex- dividend date 16 March 2023). These dividends when added to the two quarterly interim dividends paid in 2022, made a total dividend for the year of 4 pence per share (2021: 4 pence). The post balance sheet events of the Company are described in detail in Note 18 on page 63.

FUTURE DEVELOPMENTS

The outlook for the Company is described in the Chairman’s Statement on page 7 and in the Investment Adviser’s Report on page 10.

USE OF FINANCIAL INSTRUMENTS

The Company’s use of financial instruments is disclosed in note 16 to the Financial Statements.

CAPITAL STRUCTURE AND VOTING RIGHTS

Capital Structure and Voting Rights

As at 30 November 2022 the Company’s share capital comprised 26,924,063 Ordinary shares of 1p each. There were no shares held in Treasury. The Ordinary shares have a premium listing on The London Stock Exchange.

Voting Rights in the Company’s shares

Details of the voting rights in the Company’s shares as at the date of this report are given in note (xvi) to the Notice of Meeting on page 68.

Substantial Interests in Voting Rights

As at the end of the financial year the following had a declared notifiable interest in the Company’s voting rights in accordance with the FCA’s Disclosure Guidance and Transparency Rules:

Number of Shares	% held*
1,638,000	6.1
1,700,000	6.3
1,433,790	5.3

*Based on 26,924,063 ordinary shares in issue as at 30 November 2022. No changes have been notified since the year end to the date of this report.

There are no restrictions on the transfers of securities in the Company; no special rights with regard to control attached to securities; no agreements between holders of securities regarding their transfer known to the Company; no agreements which the Company is party to that affect its control following a takeover bid; and no agreement between the Company and its Directors concerning compensation for loss of office.

DIRECTORS

Biographical details of the Directors who held office throughout the year can be found on pages 20 and 21. All are non-executive and, save for Ian McElroy, are independent of the Investment Adviser and the other service providers. The Directors have reviewed their independence by reference to the AIC Code. Details of the Directors’ beneficial shareholdings can be found on page 34. Mr McElroy has agreed to waive his Director’s fee for so long as he has an interest in the Company’s Investment Adviser. All Directors will retire at the forthcoming Annual General Meeting and, being eligible, will offer themselves for reappointment. The Board having considered their qualifications, performance and contribution to the Board and its committees, confirms that each Director continues to be effective and demonstrates commitment to the role and the Board recommends to shareholders that they be reappointed. The rules concerning the appointment, reappointment and replacement of Directors, amendment of the Articles of Association and powers to repurchase the Company’s shares are contained in the Articles of Association of the Company and the Companies Act 2006.

DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE AND INDEMNIFICATION

Directors’ and Officers’ liability insurance cover is maintained by the Company on behalf of the Directors. As permitted by the Company’s Articles of Association, each Director has the benefit of an indemnity which is a qualifying third party indemnity, as defined by Section 234 of the Companies Act 2006. These indemnities were in place during the year and as at the date of this Report.

CORPORATE GOVERNANCE

The Statement of Corporate Governance is set out on pages 27 to 29 and forms part of this Report.

EMPLOYMENT, SOCIAL, COMMUNITY AND HUMAN RIGHTS ISSUES

The Company has no employees and the day to day activities are carried out by third parties. There are therefore no disclosures to be made in respect of employees.

DISCLOSURE ON GREENHOUSE GAS EMISSIONS

The Company itself has no greenhouse gas emissions to report from its activities.

STREAMLINED ENERGY AND CARBON REPORTING

The Company is categorised as a lower energy user under the Streamlined Energy & Carbon Reporting Regulations and is therefore not required to make the detailed disclosures of energy and carbon information set out within the guidelines. The Company’s energy and carbon information is therefore not disclosed in this Report.

LISTING RULE 9.8.4R

Listing Rule 9.8.4R requires the Company to include certain information in a single identifiable section of the Annual Report or a cross reference table indicating where the information is set out. Other than Listing Rule 9.8.4 (10), under which Ian McElroy who is an employee of the Investment Adviser and is deemed to be interested in the Company’s investment advisory agreement, the Directors confirm that there are no disclosures to be made in respect of Listing Rule 9.8.4R.

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. The above confirmation is given and should be interpreted in accordance with the provision of section 418 (2) of the Companies Act 2006.

AUDITOR

The Independent Auditor’s Report can be found on pages 37 to 43. MHA MacIntyre Hudson has indicated its willingness to continue in office with the Company and a resolution will be proposed at the Annual General Meeting to re-appoint them (resolution 9).

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 2019 in accordance with the provisions of the Companies Act 2006. There have been no changes to the policy since that approval. It has been decided that the policy will be approved by shareholders annually. Resolution 3 seeks to approve the Directors’ Remuneration Policy.

GOING CONCERN

The Company does not have a fixed wind-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 addition, the Articles of Association require shareholders to approve a resolution to continue the Company at three yearly intervals.# At a General Meeting of the Company held on 29 March 2021 a resolution was approved by shareholders to continue the Company for a further three years. The Company has a strong balance sheet which is made up of realisable investments. The Investment Adviser monitors the Company’s cash balances continually and forecasts cash flows, including stress testing in respect of the timing of those cash flows. The Board reviews the Company’s liquidity, cash flow requirements and the associated assumptions at every meeting. In reaching its conclusion that the Company is a going concern, the Board takes comfort from the solid performance and improved cash generation over the past year, as well as the ongoing support of the Company’s lender. 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, including seeking confirmation from Shawbrook Bank Limited that the loan facility will be renewed upon its expiry, 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.

ANNUAL GENERAL MEETING

The notice of the Annual General Meeting of the Company to be held on 27 April 2023 is set out on pages 64 to 70. The full text of the resolutions is set out in the notice of meeting. Resolutions relating to the Continued 26 following items of special business will be proposed at the meeting:

(i) Dividend Policy (resolution 8)

Subject to market conditions and the Company’s performance, financial position and financial outlook it is the Directors’ intention to pay consistent and stable income to shareholders on a quarterly basis. The Company intends to continue to pay all dividends as interim dividends. 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 8). The Directors expect that this resolution to approve the Company’s dividend policy will continue to be approved annually. The Company intends to distribute at least 85% of its eligible income or such other percentage as may be prescribed by HMRC in accordance with Chapter 4 of Part 24 ICTA 2010.

(ii) Authority to allot new shares and to disapply pre-emption rights (resolution 11 and 12)

It is advantageous for the Company to be able to issue new shares for cash to investors when the Directors consider that it is in the best interests of shareholders to do so. The proceeds of any such issue will be available for investment in line with the Company’s investment policies. The Board is seeking authority to issue up to 20% of the Company’s issued share capital (excluding Treasury shares) in order to provide flexibility to issue shares at a premium and manage share price volatility to NAV. The authority to be conferred by Resolution 11 will expire on 27 July 2024 or, if earlier, at the conclusion of the Annual General Meeting to be held in 2024 unless renewed at a prior general meeting. Resolution 12 will enable the allotment of new ordinary shares, pursuant to Resolution 11 otherwise than by way of a pro-rata issue to existing shareholders. The authority will also expire on 27 July 2024 or, if earlier, at the conclusion of the Annual General Meeting to be held in 2024 unless renewed at a prior general meeting. The full text of resolutions 11 and 12 is set out in the Notice of Meeting on pages 64 and 65.

(iii) Authority to repurchase the Company’s shares (resolution 13)

The authority to repurchase up to 14.99% of the Company’s issued share capital will expire at the conclusion of the forthcoming Annual General Meeting unless renewed at that meeting. The Directors consider that the renewal is in the interests of shareholders as a whole, as the repurchase of shares at a discount to the underlying NAV enhances the NAV of the remaining shares. Resolution 13 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 13. The Company may either cancel any ordinary shares it purchases under this authority or hold them in Treasury. This authority 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 unless it is previously renewed, varied or revoked.

RECOMMENDATION

The Directors consider the passing of the Resolutions to be proposed at the Annual General Meeting to be in the best interests of the Company and its shareholders 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 less than 1% of the shares in issue.

On Behalf of the Board

John Newlands, Chairman
30 MARCH 2023

Statement of Corporate Governance

STATEMENT OF CORPORATE GOVERNANCE

The Company is committed to high standards 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 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. The Company has complied with the Principles and Provisions of the AIC Code; however, the Board has elected not 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 BOARD

Composition

The Board consists of four Directors. Three are independent non-executive Directors, including the Chairman John Newlands. These Directors are considered by the Board to be independent in character and judgment of 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. Biographical details of the Directors and their experience is disclosed on pages 20 and 21.

Induction and Training

On appointment, the Investment Adviser and Company Secretary provide all Directors with induction training. Thereafter, regular briefings are provided on changes in law and regulatory requirements that affect the Company and the Directors. Directors are encouraged to attend industry and other seminars covering issues and developments relevant to investment trust companies. Regular reviews of the Directors’ training needs are carried out by the Chairman by means of the Board and Committee evaluation process.

Role of the Board

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 Four Lane Ends - street scene Continued 28 strategy, investment and dividend policies, gearing and corporate governance procedures, are reserved for the approval of the Board.

Tenure and Reappointment of Directors

Directors are initially appointed until the following Annual General Meeting when, under the Articles of Association, they are required to be elected by shareholders. Although the Articles require that Directors submit themselves for re-election at least every three years the Board has resolved to adopt corporate governance best practice and all of the Directors are 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.

Meetings and Committees

The Board delegates certain responsibilities and functions to committees. Directors who are not members of committees may attend at the invitation of the Chairman of the relevant committee. Directors have attended scheduled Board and Committee meetings during the year ended 30 November 2022 as follows (with their eligibility to attend the relevant meeting in brackets):

	Board	AC	RC	NC	MEC
M Harris	4 (4)	3 (3)	1 (1)	1 (1)	1 (1)
I McElroy	4 (4)	N/A	1 (1)	N/A	N/A
J Newlands	4 (4)	3 (3)	1 (1)	1 (1)	1 (1)
D Noble	4 (4)	3 (3)	1 (1)	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, additional meetings were held to consider ad-hoc matters including borrowings, investment decisions and dividend payments. Full and timely information is provided to the Directors to enable the Board to function effectively and to discharge its responsibilities.# The Board also reviews the financial statements, performance and revenue budgets.

THE AUDIT COMMITTEE

Matthew Harris is the Chairman of the Company’s Audit Committee which comprises the three independent Directors. Mr Ian McElroy may attend Audit Committee meetings by standing invitation. The report of the Audit Committee is set out on pages 30 to 32.

THE MANAGEMENT ENGAGEMENT COMMITTEE

John Newlands is the Chairman of the Company’s Management Engagement Committee which comprises the three independent Directors. 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 Management Engagement Committee meets at least annually.

THE NOMINATION COMMITTEE

John Newlands is the Chairman of the Company’s Nomination Committee which comprises the three independent Directors. The Nomination Committee is responsible for Director appointments and succession planning. The Company’s affairs are overseen by a Board currently comprising four male non-executive Directors. 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 diversity will be a priority. The Directors have a wealth of 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. 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, the individual Directors and the Board Committees. This was conducted through completion of evaluation questionnaires. The evaluation includes an assessment of how cohesively the Board and its committees operate as a whole and in conjunction with its key service providers, as well as the effectiveness of the Chairman. The evaluation process is used as a mechanism to improve Board effectiveness, maximise strengths, ascertain any training needs and also to identify potential risks and strategic imperatives for the coming year.

REMUNERATION COMMITTEE

The Board has established a Remuneration Committee comprising all Directors for the purposes of considering the Directors’ remuneration. The committee is chaired by Douglas Noble and meets at least annually. The Company’s policy on remuneration is discussed in the Directors’ Remuneration Report on pages 33 to 35.

TERMS OF REFERENCE

The Audit Committee, Nomination Committee, Remuneration Committee and Management Engagement Committee all have written terms of reference which define clearly their respective responsibilities, copies of which are available for inspection on the Company’s website at www.DevelopNorth.co.uk on request at the Company’s registered office and at the Company’s Annual General Meeting.

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 Limited
30 MARCH 2023

30 Report of the Audit Committee

COMPOSITION OF THE AUDIT COMMITTEE

An Audit Committee (the ‘Committee’) has been established with written terms of reference and comprises three non-executive Directors, Matthew Harris (Chairman), Douglas Noble and John Newlands. The Committee meets on at least two occasions each year. In addition the Committee meets with the Auditors at least twice a year. The members of the Committee consider that they have the requisite skills and experience to fulfill the responsibilities of the Committee. As a Chartered Accountant the Committee Chairman has recent and relevant financial experience and the Committee, as a whole, has competence relevant to the sector.

ROLE OF THE AUDIT COMMITTEE

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

• To monitor and review the principles, policies, and practices adopted in the preparation and audit of the accounts of the Company;
• To review and monitor the effectiveness of 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 Adviser, the Company Secretary and Administrator;
• To meet with the external Auditor to review their proposed audit programme of work and their findings following completion of the audit. The Committee also uses 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.

31 FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING MATTERS

The Board of Directors is responsible for preparing the Annual Report and financial statements. The 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 Committee. Following discussion with the Investment Adviser, the 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 Committee considered and approved MHA MacIntyre Hudson’s plan for the audit of the financial statements for the year ended 30 November 2022. At the conclusion of the audit MHA MacIntyre Hudson did not highlight any issues to the Committee which would cause it to qualify its audit report nor did it highlight any fundamental internal control weaknesses. MHA MacIntyre Hudson issued an unqualified audit report which is included on pages 37 to 43.

Non-audit services

There were no fees paid to the auditor in respect of non-audit services during the year ended 30 November 2022 (2021: £nil).

Auditor Independence

As part of the review of auditor independence and effectiveness, MHA MacIntyre Hudson has confirmed that it is independent of the Company and has complied with relevant auditing standards. In evaluating MHA MacIntyre Hudson, 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 Investment Adviser and the Administrator, remains satisfied that MHA MacIntyre Hudson 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 to the financial statements. 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).

RISK MANAGEMENT AND INTERNAL CONTROLS

The Board is ultimately responsible for the Company’s systems of internal control and for reviewing its effectiveness. Following publication of the Financial Reporting Council’s Guidance on Risk Management, Internal Control and Related Financial and Business Reporting (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 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: Continued 32

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

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

• Maitland Administration Services Limited acts as Company Secretary and 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;
• 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, it has decided to place reliance on their systems and internal audit procedures.

At its March 2023 meeting, the Committee carried out an annual assessment of internal controls for the year ended 30 November 2022 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 at 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 Report on pages 15 to 16.

FAIR, BALANCED AND UNDERSTANDABLE

As a result of the work performed, the Committee has concluded that the Annual Report and Financial Statements for the year ended 30 November 2022, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy, and has reported on these findings to the Board. The Board’s conclusions in this respect are set out in the Statement of Director’s Responsibilities on page 36.

Matthew Harris
Chairman of Audit Committee
30 MARCH 2023

33

Directors’ Remuneration Report

The Board presents the Directors’ Remuneration Report for the year ended 30 November 2022, which has been prepared in accordance with the requirements of Section 421 of the Companies Act 2006. The law requires the Company’s Auditor to audit certain of the disclosures provided. Where disclosures have been audited, they are indicated as such. The Auditor’s opinion is included in their report on pages 37 to 43.

All of the Directors are non-executive. In late 2020 the Board established a Remuneration Committee with Douglas Noble as Chairman. This Committee reviews Director’s fees on a regular basis and makes recommendations to the Board as and when appropriate. The Remuneration Committee, completed an assessment of the level of Directors’ fees during the year. This assessment considered a number of factors, including external peer group analyses, increased regulatory responsibilities and inflationary trends. This review did not result in any changes to the Directors’ remuneration for the coming year.

The current level of fees is: Chairman of the Board, £29,000, Audit Committee Chair, £28,500, and non- executive Directors, £27,500.

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. The remuneration of Directors has been set at a level designed to attract individuals of a calibre appropriate to the future development of the Company. 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.

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 terms of Directors’ appointments provide that Directors should retire and be subject to election at the first Annual General Meeting after their appointment. Directors are subject to re-election 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.

The terms and conditions of Directors’ appointments are set out in formal letters of appointment which are available for review at the Company’s Annual General Meeting and the Company’s registered office. There is no notice period and no provision for compensation upon early termination of appointment. Details of the Board’s policy on tenure are set out on page 28.

Continued 34

ANNUAL REPORT ON DIRECTORS’ REMUNERATION

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

	2022	2021
John Newlands (Chairman)	£29,000	£30,000
Matthew Harris	£28,500	£30,000
Douglas Noble	£27,500	£30,000
Ian McElroy*	£nil	£nil
Total	£85,000	£90,000

*Ian McElroy is entitled to Directors fees of £27,500 per annum. He has waived this entitlement in respect of the years ended 30 November 2022 and 2021.

ANNUAL PERCENTAGE CHANGE IN DIRECTORS’ REMUNERATION

The annual percentage change in fees for each Director who served in the year under review is set out in the following table:

	Year to Nov 2022	Year to Nov 2021	Year to Nov 2020	Year to Nov 2019	Year to Nov 2018
John Newlands (Chairman)	-3.3%	0%	0%	0%	0%
................................................................................................
Matthew Harris	-5.0%	0%	0%	0%	0%
................................................................................................
Douglas Noble	-8.3%	0%	0%	0%	0%
................................................................................................
Ian McElroy	0%	0%	0%	0%	0%
................................................................................................

RELATIVE IMPORTANCE OF DIRECTORS’ FEES

The table below sets out in respect of the financial year ended 30 November 2022 and the preceding financial year:

a) the remuneration paid to Directors;
b) the distribution made to shareholders by way of dividend; and
c) expenses paid by the Company.

	2022 (£’000)	2021 (£’000)
Total remuneration	85	90
Dividend	1,077	1,076
Expenses	615	559
National Insurance Contributions	3	5
Directors’ fees as a percentage of:
Dividend	7.9%	8.4%
Expenses	13.8%	16.1%

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 2022	At 30 November 2021
	Ordinary shares	Ordinary Shares
John Newlands	5,000	5,000
Matthew Harris	60,724	60,724
Ian McElroy	74,005	74,005
Douglas Noble	8,600	8,600

The Company has no employees.

35

Total Shareholder Return

The graph below illustrates the total shareholder return for a holding in the Company’s shares as compared to the FTSE 250 for the period from Listing to 30 November 2022. The Company considers this to be an appropriate index against which to measure the Company’s performance, in the absence of a meaningful benchmark index.

VOTING AT AGM

At the Company’s General Meeting, held on 28 April 2022, shareholders approved the Directors’ Remuneration Policy and Report in respect of the year ended 30 November 2021. 100% of the votes cast were in favour of these resolutions. Ordinary resolutions for the approval of the Directors’ Remuneration Policy and Report will be put to a shareholder vote at the forthcoming Annual General Meeting.

For and on behalf of the Board

Douglas Noble,
Chairman
30 MARCH 2023

36

Management Report and Directors’ Responsibility Statement

Management report

Listed companies are required by the DTRs to include a management report in their Financial Statements. The information is included in the Strategic Report on pages 12 to 18 inclusive (together with the sections of the Annual Report and Accounts incorporated by reference) and the Directors’ Report on pages 22 to 26. Therefore, a separate management report has not been included.

Directors’ responsibility statement

The Directors are responsible for preparing the Annual Report and Financial Statements, in accordance with applicable law and regulations.# Company Law Requirements and Directors' Responsibilities

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 UK adopted International Financial Reporting Standards (“UK adopted IFRS”) and with the Companies Act 2006, as applicable to companies reporting under international accounting standards.

Under Company law the Directors must not approve the financial statements unless they are satisfied that, taken as a whole, they are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s position and performance, business model and strategy and that they give a true and fair view of the state of affairs of the Company and of the total return or loss of the Company for that period.

In order to provide these confirmations and 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 UK adopted IFRS have been followed, subject to any material departures disclosed and explained in the financial statements; and
* prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business and the Directors confirm that they have done so.

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 the 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.

The financial statements are published on www.DevelopNorth.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.

Under applicable UK law and regulations, the Directors are also responsible for preparing a Strategic Report, a Directors’ Report, Statement of Corporate Governance and Directors’ Remuneration Report that complies with that law and those regulations.

Directors’ Confirmation Statement

Each of the Directors, whose names and functions appear on pages 20 and 21, confirm that to the best of their knowledge:
* the financial statements, prepared in accordance with UK adopted IFRS and with the Companies Act 2006, as applicable to companies reporting under international accounting standards, give a true and fair view of the assets, liabilities and financial position and total return or loss of the Company; and
* The Management Report, referred to herein, which comprises the Chairman’s Statement, the Investment Adviser’s Report, Strategic Report (including risk factors) and note 17 of the Financial Statements includes a fair review of the development and performance of the business and position of the Company, together with the principal risks and uncertainties that it faces.

The Directors consider that the Annual Report and Accounts 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.

On Behalf of the Board

John Newlands, Chairman

30 MARCH 2023

37

Independent Auditor’s Report

For the purpose of this report, the terms “we” and “our” denote MHA MacIntyre Hudson in relation to UK legal, professional and regulatory responsibilities and reporting obligations to the members of Develop North plc. For the purposes of the table on pages 38 to 40 that sets out the key audit matters and how our audit addressed the key audit matters, the terms “we” and “our” refer to MHA MacIntyre Hudson. The “Company” is defined as Develop North plc. The relevant legislation governing the Company is the United Kingdom Companies Act 2006 (“Companies Act 2006”).

OPINION

We have audited the financial statements of Develop North plc for the year ended 30 November 2022. The financial statements that we have audited comprise:
* the Income Statement
* the Statement of Financial Position
* the Statement of Changes in Equity
* the Cash Flow Statement
* Notes 1 to 18 of the financial statements, including the significant accounting policies.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and UK adopted International Financial Reporting Standards (“UK Adopted IFRS”).

In our opinion the financial statements
* give a true and fair view of the state of the Company’s affairs as at 30 November 2022 and its profit for the year then ended
* have been properly prepared in accordance with applicable law and UK adopted International Financial Reporting Standards (“UK Adopted IFRS”); and
* have been prepared in accordance with the requirements of the Companies Act 2006.

Our opinion is consistent with our reporting to the Audit Committee.

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 ethical responsibilities in accordance with those requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

CONCLUSIONS RELATING TO GOING CONCERN

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the entity’s ability to continue to adopt the going concern basis of accounting included:
* The consideration of inherent risks to the Company’s operations and specifically its business model.
* The evaluation of how those risks might impact on the Company’s available financial resources.
* Review of the mathematical accuracy of the cashflow forecast model prepared by

Independent Auditor’s Report to the Members of Develop North PLC Continued
38
management and corroboration of key data inputs to supporting documentation for consistency of assumptions used with our knowledge obtained during the audit.
* Challenging management for reasonableness of assumptions in respect of the timing and values of cash receipts and payments included in the cash flow model.
* Holding discussions with management regarding future financing plans, corroborating these were necessary and assessing the impact on the cash flow forecast.
* Performing sensitivity analysis and reverse stress tests on key inputs to the cash flow forecast, including the timing of capital repayments, quantum of interest revenue and dividends.
* Obtaining a signed comfort letter from the Company’s lender to confirm both the facility maximum and their intention to renew the facility for another period of 12 months from its renewal date of 26 May 2023, at existing levels.
* Viability assessment including consideration of current investments and future business plans.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

KEY AUDIT MATTERS

Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those matters 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 and as required for public interest entities, our results from those procedures. 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.

OVERVIEW OF OUR AUDIT APPROACH

Materiality

	2022	2021
Company	£261,000	£227,000
	1% of gross assets (2021: 1% of gross assets)	1% of gross assets (2021: 1% of gross assets)
	£13,050	£11,350
	Threshold for reporting to those charged with governance	Threshold for reporting to those charged with governance

Key Audit Matters

The scope of our audit Recurring
* Valuation of Loan Portfolio

Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal control, and assessing the risks of material misstatement in the financial statements.# AUDITORS' REPORT TO THE MEMBERS OF [COMPANY NAME]

Opinion

In our opinion, the financial statements of [Company Name] (the "Company") for the year ended 31 December 2022 present fairly, in all material respects, the financial position of the Company as at 31 December 2022, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the United Kingdom.

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 "Auditors' Responsibilities for the Audit of the Financial Statements" section of this 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, and we have fulfilled our other ethical responsibilities in accordance with the Ethical Standard. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement of those financial statements. We have determined there are no key audit matters to communicate in our report.

Our Application of Materiality

Materiality

The definition of materiality we used in planning and performing our audit is that misstatements, including omissions, are material if individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

We agreed with the Audit Committee that we would report to them all identified misstatements, whether corrected or uncorrected, that exceed £13,050 (2021: £11,350), together with any uncorrected misstatements representing less than £13,050 (2021: £11,350) where we believe that, due to their nature, it is appropriate to report them.

Performance Materiality

We set an appropriate level of performance materiality under ISAs (UK) which is less than our materiality for the financial statements as a whole. This is to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements in the financial statements exceeds materiality. Performance materiality was £182,700 (2021: £136,200), which represents 70% (2021: 60%) of the overall materiality.

Scope of the Audit

We have also audited the condensed interim financial statements for the six months ended 30 June 2022 on which we expressed an unmodified opinion on 21 September 2022.

Our audit was scoped by obtaining an understanding of the Company and its environment, including its system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the directors that may have represented a risk of material misstatement.

The Control Environment

We evaluated the design and implementation of those internal controls of the Company, including the Parent Company, which are relevant to our audit, such as those relating to the financial reporting cycle.

Key Audit Matter Description

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 based on the business model for managing the financial assets. Management undertake an assessment regarding the staging of each loan held under amortised cost by determining if there has been a significant increase in credit risk or whether the loan is deemed to be credit impaired. Expected credit losses (ECL’s) are then estimated based on the various loan stages, the underlying property value and the progress of the particular development. The calculation of the ECL involves a significant amount of judgement and therefore may be subject to a degree of management bias. This has therefore been a key area of audit focus. For loans held at fair value through profit or loss, the management estimate lies in the fair value calculation for the relevant loans. Management calculate this using techniques such as estimating future cash flows and discounting them at the appropriate discount rate. The potential for management bias therefore lies in the consideration of discount rate used and also the future cash flows. This was also considered to be a key area of audit focus.

How the Scope of Our Audit Responded to the Key Audit Matter

We have reviewed Management’s assessment of the classification of each loan by reviewing the terms of the underlying loan agreements and any other evidence of contractual cash flows, such as profit share agreements as well as the entity’s business model for managing financial assets. We have reviewed management’s assessment of the ageing of each loan against its underlying agreement and information available at the balance sheet date, including considering the classification of amounts between current and non-current. We have reviewed Management’s staging assessment including criteria for determining significant increases 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. We have assessed and challenged the reasonableness of key assumptions used to estimate 12 month ECL’s, such as probability of default and loss given default, with reference to industry data and the Company’s lending experience.

We have 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. We have compared estimated sales values to actual sales to date where relevant and agreed actual sales to underlying evidence. We have performed sensitivity analysis of the estimated impairment provision with reference to the key assumptions to assess the reasonableness thereof. In respect of loans held at fair value, we have challenged key inputs into the discounted cash flow models with regard to quantum and timing of cashflows. For both loans at amortised cost and fair value through profit or loss we have reviewed, where available, the most recent RICs valuations of the underlying property as security for the loans. From the audit procedures completed over the valuation of the loan portfolio, we are satisfied that these are materially accurate and complete.

Valuation of Loan Portfolio

40

Our Application of Materiality

Our definition of materiality considers the value of error or omission on the financial statements that, individually or in aggregate, would change or influence the economic decision of a reasonably knowledgeable user of those financial statements. Misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Materiality is used in planning the scope of our work, executing that work and evaluating the results. Materiality in respect of the Company was set at £261,000 (2021: £227,000) which was determined on the basis of 1% (2021: 1%) of the Company’s gross assets. This was deemed to be the appropriate benchmark for the calculation of materiality given that the Company’s principal activity is to make loans and generate returns from these loans. Therefore, this is a key area of the financial statements with which the users of the financial statements are principally concerned. Performance materiality is the application of materiality at the individual account or balance level, set at an amount to reduce, to an appropriately low level, the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. Performance materiality for the Company was set at £182,700 (2021: £136,200) which represents 70% (2021: 60%) of the above materiality levels. The determination of performance materiality reflects our assessment of the risk of undetected errors existing, the nature of the systems and controls and the level of misstatements arising in previous audits. We agreed to report any corrected or uncorrected adjustments exceeding £13,050 (2021: £11,350) to the Audit Committee as well as differences below this threshold that in our view warranted reporting on qualitative grounds.

The Scope of Our Audit

Our audit was scoped by obtaining an understanding of the Company and its environment, including its system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the directors that may have represented a risk of material misstatement.

The Control Environment

We evaluated the design and implementation of those internal controls of the Company, including the Parent Company, which are relevant to our audit, such as those relating to the financial reporting cycle.

How the Scope of Our Audit Responded to the Key Audit Matter

Key Observations

We have 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. We have compared estimated sales values to actual sales to date where relevant and agreed actual sales to underlying evidence. We have performed sensitivity analysis of the estimated impairment provision with reference to the key assumptions to assess the reasonableness thereof. In respect of loans held at fair value, we have challenged key inputs into the discounted cash flow models with regard to quantum and timing of cashflows. For both loans at amortised cost and fair value through profit or loss we have reviewed, where available, the most recent RICs valuations of the underlying property as security for the loans. From the audit procedures completed over the valuation of the loan portfolio, we are satisfied that these are materially accurate and complete.

41

Climate-Related Risks

In planning our audit and gaining an understanding of the company, we considered the potential impact of climate-related risks on the business and its financial statements. We obtained management’s climate-related risk assessment, along with relevant documentation and reports relating to management’s assessment and held discussions with management to understand their process for identifying and assessing those risks. We have agreed with managements’ assessment that climate-related risks are not material to these financial statements except on statutory disclosures.

Reporting on Other Information

The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of 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 this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Strategic Report and Directors’ Report

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;
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements;

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.

Directors’ Remuneration Report

Those aspects of the directors’ remuneration report which are required to be audited have been prepared in accordance with applicable legal requirements.

Corporate Governance Report

We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the entity’s compliance with the provisions of the UK Corporate Governance. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:

• Directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified as seen on page 26.# OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006

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

• the information about internal control and risk management systems in relation to financial reporting processes and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency Rules sourcebook made by the Financial Conduct Authority (the FCA Rules), is consistent with the financial statements and has been prepared in accordance with applicable legal requirements; and
• information about the company’s corporate governance code and practices and about its administrative, management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

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 by branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns; or
• we have not received all the information and explanations we require for our audit; or
• a corporate governance statement has not been prepared by the company.

RESPONSIBILITIES OF DIRECTORS

As explained more fully in the directors’ responsibilities statement, 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud is detailed below:

• Obtaining an understanding of the legal and regulatory frameworks that the Company operates in, focusing on those laws and regulations that had a direct effect on the financial statements.
• Enquiry of management to identify any instances of non-compliance with laws and regulations.
• Reviewing legal fees incurred during the year in order to assess potential for unrecorded contingent liabilities
• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
• Enquiry of management around actual and potential litigation and claims.
• Enquiry of management to identify any instances of known or suspected instances of fraud.
• Discussing among the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
• Reviewing minutes of meetings of those charged with governance.
• Reviewing the control systems in place and gaining an understanding of these.
• Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business, and reviewing accounting estimates for bias; and
• Challenging assumptions and judgements made by management in their significant accounting estimates.

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

OTHER REQUIREMENTS

We were appointed by the Directors on 16 September 2021. Therefore, this is our second year of the audit engagement. We did not provide any non-audit services which are prohibited by the FRC’s Ethical Standard to the Company, and we remain independent of the company in conducting our audit.

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.

As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these financial statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on the National Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard ((‘ESEF RTS’). This auditor’s report provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS.

Andrew Moyser FCA FCCA
Senior Statutory Auditor
for and on behalf of MHA MacIntyre Hudson
Statutory Auditor
London
United Kingdom
30 MARCH 2023

Income Statement

	Year ending 30 November 2022			Year ending 30 November 2021
	Revenue £’000	Capital £’000	Total £’000	Revenue £’000	Capital £’000	Total £’000
Revenue
Investment interest	1,787	–	1,787	1,643	-	1,643
Total revenue	1,787	–	1,787	1,643	-	1,643
(Losses)/gains on investments held at fair value through profit or loss		(36)	(342)	(378)	(136)	190
Total net income	1,751	(342)	1,409	1,507	190	1,697
Expenditure
Investment adviser fee	(67)	–	(67)	(68)	-	(68)
Impairments on investments held at amortised cost		(12)	(136)	(148)	(139)	(69)
Other expenses	(548)	–	(548)	(467)	(24)	(491)
Total expenditure	(627)	(136)	(763)	(674)	(93)	(767)
Profit/(loss) before finance costs and taxation	1,124	(478)	646	833	97	930
Finance costs
Interest payable	(132)	–	(132)	(1)	-	(1)
Profit/(loss) before taxation	992	(478)	514	832	97	929
Taxation	–	–	–	-	-	-
Profit/(loss) for the year	992	(478)	514	832	97	929
Basic earnings per share	3.68p	(1.78)p	1.90p	3.09p	0.36p	3.45p

The total column of this statement represents the Company’s Income Statement, prepared in accordance with UK adopted 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
£’000 | £’000
---|---
Non-current assets |
Loans at amortised cost (9) | 12,659 | 7,929
| 12,659 | 7,929
Current assets |
Investments held at fair value through profit or loss (8) | 4,874 | 7,589
Loans at amortised cost (9) | 7,948 | 2,629
Other receivables and prepayments (10, 11) | 27 |
Cash and cash equivalents | 638 | 4,545
| 13,471 | 14,790
Total assets | 26,130 | 22,719

Current liabilities |
Loan facility (11) | (4,000) | –
Other payables and accrued expenses (12) | (109) | (135)
Total liabilities | (4,109) | (135)
Net assets | 22,021 | 22,584

Share capital and reserves |
Share capital (13) | 269 | 269
Share premium | 9,094 | 9,094
Special distributable reserve | 12,849 | 13,093
Capital reserve | (644) | (166)
Revenue reserve | 453 | 294
Equity shareholders’ funds | 22,021 | 22,584

Net asset value per ordinary share | 81.79p | 83.88p

As at 30 November 2022 | As at 30 November 2021

The notes on pages 48 to 63 form an integral part of the financial statements.
The financial statements on pages 44 to 47 were approved by the Board of Directors of Develop North plc (a public limited company incorporated in England and Wales with company number 10395804) and authorised for issue on 30 March 2023. They were signed on its behalf by:

John Newlands
Chairman

Statement of Changes in Equity

Share capital	Share premium	Special distributable reserve	Capital reserve	Revenue reserve	Total
£’000	£’000	£’000	£’000	£’000	£’000
At beginning of the year	269	9,094	13,093	(166)	294
Total comprehensive profit for the year:
Profit for the year	–	–	–	(478)	992
Transactions with owners recognised directly in equity:
Dividends paid	–	–	(244)	–	(833)
At 30 November 2022	269	9,094	12,849	(644)	453

Share capital	Share premium	Special distributable reserve	Capital reserve	Revenue reserve	Total
£’000	£’000	£’000	£’000	£’000	£’000
At beginning of the year	269	9,094	13,497	(263)	-
Total comprehensive profit for the year:
Profit for the year	-	-	-	97	832
Transactions with owners recognised directly in equity:
Dividends paid	-	-	(404)	-	(538)
At 30 November 2021	269	9,094	13,093	(166)	294

For the year ending 30 November 2022 | For the year ending 30 November 2021

Cash Flow Statement

£’000	£’000
Operating activities
Profit before taxation	514
Losses on investments held at fair value through profit and loss	342
Impairments on loans at amortised cost	136
Gains on investments held at fair value through profit and loss	–
Uplifts on loans at amortised cost	–
(Increase)/decrease in loan interest receivable on investments held at fair value through profit and loss	(147)
Increase in loan interest receivable on loans at amortised cost	(249)
Changes in working capital
Decrease/(increase) in other receivables	16
(Decrease)/increase in other payables	(26)
Net cash inflow from operating activities after taxation	718
Investing activities
Loans given	(10,986)
Loans repaid	3,570
Net cash (outflow)/inflow from investing activities	(7,416)
Financing
Equity dividends paid	(1,077)
Bank loan drawn down (14)	4,251
Repayment of bank loan (14)	(251)
Interest paid	(132)
Net cash inflow/(outflow) from financing	2,791
(Decrease)/increase in cash and cash equivalents	(3,907)
Cash and cash equivalents at the start of the year	4,545
Cash and cash equivalents at the end of the year	638

Year ending 30 November 2022 | Year ending 30 November 2021
Interest expense | 132 | 1

Notes to the Financial Statements

1. ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PREPARATION

The financial statements of Develop North plc have been prepared in accordance with UK adopted International Financial Reporting Standards (“UK adopted IFRS”) and with the Companies Act 2006, as applicable to companies reporting under international accounting standards. The financial statements were also prepared in accordance with the Statement of Recommended Practice, Financial Statements of Investment Trust Companies and Venture Capital Trusts (“SORP”) issued by the AIC (as issued in July 2022), where this guidance is consistent with UK adopted IFRS.

The financial statements have been prepared on a going concern basis under the historical cost convention, except for certain 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.

The Company reviews forthcoming changes to UK adopted IFRS and does not anticipate material changes as a result of these.

NEW STANDARDS OR AMENDMENTS FOR 2022 FOR FORTHCOMING REQUIREMENTS

New standards, interpretations and amendments issued which are not yet effective and applicable for the periods beginning on or after 1 December 2022:

• IAS 1 Amendments to improve accounting policies disclosure
  Effective date accounting periods on or after 1 January 2023
• IAS 12 Amendments to deferred tax related assets and liabilities arising from a single transaction
  Effective date accounting periods on or after 1 January 2023

New standards, interpretations and amendments issued which are not yet effective and not applicable for the periods beginning on or after 1 December 2022:

• IFRS 17 Replacing IFRS 4 – Insurance contracts
  Effective date accounting periods on or after 1 January 20 23
• IFRS 16 Amendment to the accounting for the sale of leases and leaseback transactions
  Effective date accounting periods on or after 1 January 2024
• IAS 1 Amendments to accounting for non-current liabilities with covenants
  Effective date accounting periods on or after 1 January 2024

GOING CONCERN

The financial statements have been prepared on a going concern basis. The disclosures on going concern on page 25 of the Directors’ Report form part of these financial statements.

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 Income Statement and are charged to revenue. Fees incurred in relation to operational costs of the loan portfolio, such as legal fees, are charged through the Income Statement and are charged to capital.

DIVIDENDS TO SHAREHOLDERS

Interim dividends declared during the year are recognised when they are paid. Any final dividends declared are recognised when they are approved by the Shareholders at the Annual General Meeting.

TAXATION

Taxation on the profit or loss for the period comprises current and deferred tax. Taxation is recognised in profit or loss except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case it is also recognised in other comprehensive income or directly in equity respectively. Current tax is the expected tax payable on the taxable income for the period, using tax rates and laws enacted or substantively enacted at the reporting date. Deferred income taxes are calculated using rates and laws that are enacted or substantivity are expected to apply as or when the associated temporary differences reverse. 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 is recognised in profit or loss unless it relates to a transaction recorded in other comprehensive income or equity, in which case it is also recognised in other comprehensive income or directly in equity respectively.

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 (‘solely payment of principal and interest’) and that are Continued
  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, other payables and accruals, and the Company’s loan facility are included within this category.# Fair value through profit and loss:

The Company has a number of borrower facilities in which it 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. Any values attributed to the equity stakes of these borrowers are incorporated into the overall loan valuation.

IMPAIRMENT

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. The key inputs into the measurement of ECL are probability of default (‘PD’), loss given default (‘LGD’), and exposure at default (‘EAD’). These inputs are then considered and applied against residential and commercial facilities in the loan book. ECL are calculated by multiplying the PD by LGD and EAD. PD has been determined by considering the local market where the underlying assets are situated, economic indicators including inflationary pressures on build costs, government policy, and market sentiment. For residential loans this has been further broken down into two scenarios; where only sales risk is still present, and where both construction risk and sales risk still exist. LGD is the magnitude of the likely loss if there is a default. The LGD models consider the structure, collateral, seniority of the claim, and recovery costs of any collateral that is integral to the financial asset. LTV ratios are a key parameter in determining LGD. LGD estimates are recalibrated for different economic scenarios and, for lending collateralised by property, to reflect possible changes in property prices. EAD represents the expected exposure in the event of a default. The Company derives the EAD from the current exposure to the borrower. The EAD of a financial asset is its gross carrying amount at the time of default. EAD for residential facilities has been further broken down into two scenarios; where the build is complete, and where construction is ongoing.

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 as 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 2022, there were sixteen loans in the portfolio. Four of those projects supported included either an equity stake of at least 25.1% for the Company 51 or an exit fee mechanism. Please see note 8 for details on these six projects. The Board has deemed that five projects (2021: five); are currently impaired and specific additional provisions have been made against these facilities in these financial statements. The other twelve 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.

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 1) 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 from inception.

OTHER RECEIVABLES

Other receivables do not carry interest and are short-term in nature. 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 Income Statement 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.

SEGMENTAL REPORTING

The Chief Operating 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. All loan income is derived from the UK. The Company derived revenue totalling £978,000 (2021: £488,000) where the amounts from four (2021: two) individual borrowers each exceeded 10% or more of the Company’s revenue. The individual amounts were £282,000, £256,000, £243,000 and £196,000 (2021: £260,000, £228,000).

Continued 52

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 key driver to determine whether loans are classified as fair value through profit or loss or amortised cost is if the facility has an exit fee or equity stake attached. Where these are present the loan is classified as fair value through profit or loss. 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 6 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. The key uncertainties are around the timings and amounts of both drawdown and repayments as these are determined by construction progress and the timing of sales.

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. The key uncertainties are around the timings and amounts of both drawdown and repayments as these are determined by construction progress and the timing of sales. See notes 8 and 9 on pages 54 and 55 of Impairment for further details.# 2. INCOME

	30 November 2022 £’000	30 November 2021 £’000
Interest from loans	1,787	1,643
Total income	1,787	1,643

3. INVESTMENT ADVISER’S FEES

INVESTMENT ADVISER

In its role as the Investment Adviser, Tier One Capital Ltd 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. There is no balance accrued for the Investment Adviser for the period ended 30 November 2022 (year to 30 November 2021: £nil). There are no performance fees payable.

	30 November 2022 £’000	30 November 2021 £’000
Investment Adviser fee	67	68

	Revenue Capital (restated) £’000	Revenue Capital £’000	£’000	£’000
Legal & professional	13	-	28	24
Directors’ fees	85	-	90	-
Audit fees related to the audit of the financial statements	57	-	41	-
Fund Administration and Company Secretarial	85	-	82	-
Brokers’ fees	30	-	30	-
Marketing fees	18	-	-	-
AIFM fee	17	-	(12)	-
Impairments on loans amortised at cost*	12	136	139	542
Uplifts on loans amortised at cost*	-	-	-	(473)
Losses/(gains) on investments held at fair value through profit or loss*	36	342	136	(190)
Other expenses	243	-	208	-
Total other expenses	596	478	742	(97)

*Loan impairments consist of impairments to interest on loans of £48,000 (2021: £275,000) and a capital impairment on the loan of £478,000 (2021: £542,000). Loan uplifts consist of a capital uplift on the loans of £nil (2021: £663,000). All expenses are inclusive of VAT where applicable. Further details on Directors’ fees can be found in the Directors’ Remuneration Report on page 34.

4. OPERATING EXPENSES

30 November 2022

	30 November 2022 £’000	30 November 2021 £’000
Current corporation tax at 19% (2021:19%)	–	-
Deferred taxation	–	-
Tax on profit on ordinary activities	–	-

Reconciliation of tax charge

		30 November 2022 £’000	30 November 2021 £’000
Profit on ordinary activities before taxation		514	929
Taxation at standard corporation tax rate 19% (2021: 19%)		98	176
Effects of:
Income not subject to tax		91	(18)
Interest distributions		(205)	(153)
Utilisation of losses not recognised for deferred tax purposes		16	(5)
Tax charge for the year		–	-

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.

5. TAXATION Continued

There is an unrecognised deferred tax asset on losses of £230,408 (2021: £135,727) calculated at the relevant deferred tax rate of 25%.

6. ORDINARY DIVIDENDS

	30 November 2022 Pence per share	30 November 2022 £’000	30 November 2021 Pence per share (Restated)	30 November 2021 £’000
Dividends paid in the year relating to previous year:
Interim dividend for the quarter ended August, paid in December	1.0	269	–	–
Interim dividend for the quarter ended November, paid in April	1.0	269	1.5	404
Dividends paid during and relating to the year:
Interim dividend for the quarter ended February, paid in June	1.0	269	1.0	269
Interim dividend for the quarter ended May, paid in September	1.0	270	1.0	269
Total dividends paid in the year		1,077		942

Of the dividends paid in the year, £244,000 has been paid from the Special distributable reserve. The Company intends to distribute at least 85% of its distributable income earned in each financial year by way of interest distribution. A third interim dividend of 1.00 pence per share was declared on 17 November 2022, payable on 29 December 2022. On 9 March 2023, the Company declared an interim dividend of 1.0 pence per share for the quarter ended 30 November 2022, payable on 31 March 2023.

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 at least 25.1% or has an exit fee mechanism for four companies.

	30 November 2022 £’000	30 November 2021 £’000
Opening Balance	7,589	16,809
Loans deployed	80	904
Principal repayments	(2,600)	(10,284)
Movements in interest receivable	183	106
Unrealised (losses)/gains on investments held at fair value through profit or loss	(378)	54
Total investments held at fair value through profit and loss	4,874	7,589

Split:
Non-current assets: Investments held at fair value through profit or loss due for repayment after one year – –
Current assets: Investments held at fair value through profit or loss due for repayment under one year 4,874 7,589

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

9. LOANS AT AMORTISED COST

	30 November 2022 £’000	30 November 2021 £’000
Opening balance	10,558	6,046
Loans deployed	10,906	7,362
Principal repayments	(970)	(2,937)
Movements in interest receivable	261	295
Movement in impairments	(148)	(208)
Total loans at amortised cost	20,607	10,558

Split:
Non-current assets: Loans at amortised cost due for repayment after one year 12,659 7,929
Current assets: Loans at amortised cost due for repayment under one year 7,948 2,629

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 £148,000 (2021: £208,000). Further details on impairment can be found within the accounting policies note on pages 48 to 52.

Movements in allowances for impairment losses in the year Continued

	Nominal value £’000 at 1 December 2021	Provisions for impairment losses at 30 November 2022	Stage 1 provisions at 1 December 2021	Provisions for impairment losses Stage 1 at 30 November 2022	Stage 2 provisions at 1 December 2021	Provisions for impairment losses Stage 2 at 30 November 2022	Stage 3 provisions at 1 December 2021	Provisions for impairment losses Stage 3 at 30 November 2022
Total	3,090	3,227	33	114	–	–	3,057	3,113

Stage 1, 2, and 3 are referenced in more detail on page 49.

10. RECEIVABLES

	30 November 2022 £’000	30 November 2021 £’000
Prepayments	11	27
Total receivables	11	27

11. LOAN FACILITY

On 27 May 2022 the Company entered into a £6.5m committed revolving facility with Shawbrook Bank Limited, expiring on 26 May 2023. £4.0m was drawn down at the year end, at an interest rate of 7.31%. The facility is secured against a debenture over the assets of the Company.

	30 November 2022 £’000	30 November 2021 £’000
Bank loan	4,000	–

12. OTHER PAYABLES

	30 November 2022 £’000	30 November 2021 £’000
Accruals	109	135
Total other payables	109	135

13. SHARE CAPITAL

	Nominal value £’000	Number of Ordinary shares of 1p
At 30 November 2021	269	26,924,063
Issued and fully paid as at 30 November 2022	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. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

	At 30 November 2021 £’000	Cash flows £’000	Non-cash flows £’000	At 30 November 2022 £’000
Short term borrowings	–	4,000	–	4,000
Total liabilities from financing activities	–	4,000	–	4,000

	At 30 November 2020 £’000	Cash flows £’000	Non-cash flows £’000	At 30 November 2021 £’000
Short term borrowings	1,150	(1,150)	-	-
Total liabilities from financing activities	1,150	(1,150)	-	-

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 £85,000 fees for their services during the year to 30 November 2022 (30 November 2021: £90,000). £nil was payable at the year end (30 November 2021: £nil).

Ian McElroy is Chief Executive of Tier One Capital Ltd and is a founding shareholder and director of the firm. Tier One Capital Ltd received £67,000 investment adviser’s fee during the year (30 November 2021: £68,000) and £nil was payable at the year end (30 November 2021: £nil). Tier One Capital Ltd receives up to a 20% margin and arrangement fee for all loans it facilitates.

There are various related party relationships in place with the borrowers as below: The following related parties arise due to the opportunity taken to advance the profit share contracts:

• Gatsby Homes
  The Company owns 25.1% of the borrower Gatsby Homes Ltd which was disposed of during the year. The loan amount outstanding as at 30 November 2022 was £nil (30 November 2021: £468,000). Transactions in relation to loans repaid during the year amounted to £441,000 (30 November 2021: £797,000). Interest due to be received as at 30 November 2022 was £nil (30 November 2021: £nil). Interest received during the year amounted to £36,000 (30 November 2021: £136,000).

• Thursby Homes (Springs)
  The Company owns 25.1% of the borrower Thursby Homes (Springs) Ltd. The loan amount outstanding as at 30 November 2022 was £1.3m (30 November 2021: £2.4m). Transactions in relation to loans repaid during the year amounted to £918,000 (30 November 2021: £502,000). Interest due to be received as at 30 November 2022 was £213,000 (30 November 2021: £209,000). Interest received during the year amounted to £157,000 (30 November 2021: £261,000).

• Northumberland
  The Company owns 25.1% of the borrower Northumberland Ltd.## 16. 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 2022, with impairments amounting to £148,000 (30 November 2021: £208,000). Our maximum exposure to credit risk as at 30 November 2022 was £26,130,000 (30 November 2021: £22,719,000).

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. Further details on the exposure to, and management of, credit risk by the Company is included in both the Investment Advisor’s report and the Strategic Report on pages 12 to 18 respectively.

Financial assets as at 30 November 2022

	In one year £’000	In two or more years £’000	Total £’000
Cash and cash equivalents	638	–	638
Loans at amortised cost	7,948	12,659	20,607
Investments held at fair value	4,874	–	4,874
Total	13,460	12,659	26,119

Loans held at amortised cost as at 30 November 2022

	Total £’000
Stage 1	20,000
Stage 2	378
Stage 3	229
Total	20,607

Loans held at amortised cost as at 30 November 2021

	Total £’000
Stage 1	9,456
Stage 2	378
Stage 3	724
Total	10,558

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 drawdowns on the live facilities 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 liabilities as at 30 November 2022

	In one year £’000	In two or more years £’000	Total £’000
Bank loan	4,000	–	4,000
Total	4,000	–	4,000

Financial assets as at 30 November 2021

	In one year £’000	In two or more years £’000	Total £’000
Cash and cash equivalents	4,545	-	4,545
Loans at amortised cost	2,629	7,929	10,558
Investments held at fair value	7,589	–	7,589
Total	14,763	7,929	22,692

Financial liabilities as at 30 November 2021

	In one year £’000	In two or more years £’000	Total £’000
Bank loan	-	-	-
Total	-	-	-

as at 30 November 2022

	Fixed rate Financial Assets £’000	Variable rate financial net assets £’000	Total £’000
Other receivables and prepayments	11	–	11
Loan Interest receivable	976	–	976
Other payables and accrued expenses	(109)	–	(109)
Cash and cash equivalents	–	638	638
Loan facility	–	(4,000)	(4,000)
Investments held at fair value through profit and loss	–	4,329	4,329
Loans at amortised cost	–	20,176	20,176
Total	878	20,176	22,021

INTEREST RATE RISK

The interest rate profile of the Company was as follows:

Shawbrook provide a working capital facility which is capped at 30% of the Net Asset value of the Company. Using forward looking SONIA figures as at November 2022, the forecast increases in interest rates will see an additional £188k of finance costs over the next twelve months assuming an average drawn balance of £3.6m in the year. These additional costs are and will be mitigated by an increase in the rates charged on new facilities written and a repricing of the back book. Since year end, the outlook for interest rate rises has eased. Sensitising the equity discount rate has immaterial impact on the loans held at fair value.

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. The inputs into the DCF models are the forecast monthly cashflows including sales values and build costs, the discount rate which is the imputed interest rate at the time the facility was entered into adjusted for any movements in the risk free rate as at current year end, and a 30% (2021: 30%) discount rate for the equity element to reflect the higher level of uncertainty. Any changes in market conditions will directly affect the profit and loss reported through the Income Statement. 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 £330,000 as at 30 November 2022 (30 November 2021: £387,907). 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.

VALUATION OF FINANCIAL INSTRUMENTS

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 1) and the lowest priority to unobservable inputs (Level 3).# 63

The classification of financial instruments depends on the lowest significant applicable input, as follows:

30 November 2021

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	27	-	-
Loan Interest receivable	657	-	-
Other payables and accrued expenses	(135)	-	-
Cash and cash equivalents	-	-	4,545
Loan facility	-	-	-
Investments held at fair value through profit and loss	-	7,191	-
Loans at amortised cost	-	10,299	-
Total	549	17,490	4,545

• 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.

17. 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.

18. POST BALANCE SHEET EVENTS

On 26 January 2023, a new loan was issued to Modnarway 2 Ltd with an initial drawdown of £1.13m.

30 November 2022

	Level 1 £’000	Level 2 £’000	Level 3 £’000	Total £’000
Investments held at fair value through profit and loss	–	–	4,874	4,874
Total	–	–	4,874	4,874

30 November 2021

	Level 1 £’000	Level 2 £’000	Level 3 £’000	Total £’000
Investments held at fair value through profit and loss	-	-	7,589	7,589
Total	-	-	7,589	7,589

A reconciliation of fair value measurements in Level 3 is set out in the following table:

	30 November 2022 £’000	30 November 2021 £’000
Opening Balance	7,589	16,809
Loans deployed	80	904
Principal repayments	(2,600)	(10,284)
Movements in interest receivable	183	106
Unrealised (losses)/gains on investments held at fair value through profit or loss	(378)	54
Closing Balance	4,874	7,589

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Notice is hereby given that the annual general meeting (“AGM”) of Develop North PLC (the “Company”) will be held on Thursday 27 April 2023 at 12 noon at the Grey Street Hotel, 2-12 Grey Street, Newcastle, NE1 6AE for the purposes of considering and, if thought fit, passing the resolutions below. Resolutions 1 to 11 (inclusive) will be proposed as ordinary resolutions and resolutions 12 to 14 will be proposed as special resolutions.

ORDINARY BUSINESS

Ordinary Resolutions

1. To receive the Company’s annual report and accounts for the financial year ended 30 November 2022 (the “Annual Report and Accounts”), together with the Directors’ report and the auditors’ report on those accounts.
2. To approve the Directors’ Remuneration Report (excluding the Directors’ remuneration policy) for the year ended 30 November 2022.
3. To approve the Directors’ Remuneration Policy.
4. To re-elect Ian McElroy as a Director of the Company.
5. To re-elect Matthew Harris as a Director of the Company.
6. To re-elect John Newlands as a Director of the Company.
7. To re-elect Douglas Noble as a Director of the Company.
8. To approve the dividend policy of the Company.
9. To re-appoint MHA MacIntyre Hudson as the Company’s Auditor to hold office until the conclusion of the next Annual General Meeting of the Company.
10. To authorise the Audit Committee to determine the Auditor’s remuneration.

SPECIAL BUSINESS

1. Authority to allot shares
   THAT, in accordance with section 551 of the Companies Act 2006 (the “CA 2006”), the board of directors of the Company (or a duly constituted committee of the directors of the Company) (the “Directors”) be generally and unconditionally authorised to allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of £53,848 provided that this authority shall, unless renewed, varied or revoked by the Company, expire on 27 July 2024 or, if earlier, the date of the next annual general meeting of the Company save that the Company may, before such expiry, make offers or agreements which would or might require shares in the Company to be allotted or rights to subscribe for or to convert any security into shares in the Company to be granted and the Directors may allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired. This resolution revokes and replaces all unexercised authorities previously granted to the Directors to allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company but without prejudice to any allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such authorities.

Special Resolutions

1. Disapplication of pre-emption rights
   THAT, subject to the passing of resolution 11 and in accordance with section 570 of the CA 2006, the Directors be authorised to allot equity securities (as defined in section 560 of the CA 2006) for cash under the authority conferred by resolution 11 and/or to sell ordinary shares of one pence each in the capital of the Company held by the Company as treasury shares as if section 561 of the CA 2006 did not apply to any such allotment or sale, provided that such authority shall be limited to the allotment of equity securities or sale of treasury shares up to an aggregate nominal amount of £53,848. The authority granted by this resolution will, unless renewed, varied or revoked by the Company, expire at the conclusion of the

65

Company’s next annual general meeting after this resolution is passed or, if earlier, at the close of business on 27 July 2024, save that the Company may, before such expiry make offers or agreements which would or might require equity securities to be allotted (or treasury shares to be sold) after the authority expires and the Directors may allot equity securities (or sell treasury shares) in pursuance of any such offer or agreement as if the authority had not expired. This resolution revokes and replaces all unexercised powers previously granted to the Directors to allot equity securities or sell treasury shares as if section 561 of the CA 2006 did not apply but without prejudice to any allotment of equity securities or sale of treasury shares already made or agreed to be made pursuant to such authorities.

1. 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.

2. 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 Limited
Company Secretary

Registered office:
Hamilton Centre, Rodney Way,
Chelmsford, Essex CM1 3BY

30 MARCH 2023

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Notes

These notes should be read in conjunction with the notes on the Form of Proxy. Only shareholders on the Register of Members (the “Register”) at close of business on 25 April 2023 are entitled to vote at the AGM in respect of the number of Ordinary Shares registered in their name at such time. In the event of any adjournment of the AGM, 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 AGM is the 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 AGM 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 AGM, 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 to be received as soon as possible and in any event by not later than 12 noon on 25 April 2023. 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 AGM 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 67 someone else appointed, as a proxy for the AGM. 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 AGM. (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 AGM 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 AGM 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 he has a notifiable obligation under the Disclosure Guidelines and Transparency Rules, the Chairman will make the necessary notifications to the Company and the Financial Continued 68 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 AGM may be asked at the AGM by anyone permitted to speak at the AGM. 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 AGM, unless, (i) answering the question would interfere unduly with the preparation for the AGM 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 AGM 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 AGM 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 AGM. 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 AGM. 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 AGM. (xiii) In order to be able to exercise the shareholders’ right to require the Company to publish audit concerns in accordance with note (xii) above, the relevant request must be made by: (i) a shareholder or shareholders having a right to vote at the AGM and holding at least 5 per cent. of total voting rights in the Company (please see note (xvi) below in relation to total voting rights); or (ii) at least 100 shareholders having a right to vote at the AGM 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 (xii) 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 Limited; or (b) a request which states the shareholder or shareholders’ full name and address(es), and sent by email to CoSec@maitlandgroup.com. Please state “Develop North AGM” in the subject line of the e-mail. (xv) Further information regarding the AGM 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.DevelopNorth. co.uk. (xvi) As at 29 March 2023 (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. 69 (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 11 (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

Resolutions 12 to 14 (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.

1. Resolution 1 – The Directors are required to lay before the meeting the Audited Financial Statements of the Company for the year ended 30 November 2022 including the Strategic Report, Report of the Directors, the Independent Auditor’s report and the Director’s Remuneration Report.
2. Resolution 2 – The shareholders are asked to approve the Directors’ Remuneration Report for the year ended 30 November 2022, as set out on pages 33 to 35 of the Annual Report. The vote is advisory and does not affect the remuneration payable to any individual Director.
3. Resolution 3 – Is a resolution subject to a binding vote. The Company is seeking approval for its remuneration policy as set out on page 33 of the Directors’ Remuneration Report. The 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.
4. Resolutions 4 to 7 – the Directors to be reappointed.
5. Resolution 8 – 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.
6. Resolutions 9 and 10 – Shareholders are required to approve the appointment of the Company’s auditor each year and to give the Audit Committee Continued 70 the authority to determine the auditor’s remuneration. MHA MacIntyre Hudson have indicated their willingness to continue in office. Resolution 9 covers their re-appointment for the year ending 30 November 2023 and resolution 10 authorises the Audit Committee to determine their remuneration.
7. Resolution 11 – allotment of shares
8. Resolution 12 – disapplication of pre-emption rights
9. Resolution 13 – 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 approximately 14.99 per cent. of the issued Ordinary Share capital of the Company as at 29 March 2023 (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.
10. Resolution 14 – 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.

71

Share Register Enquiries

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

Share Capital and General Information

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

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.developnorth.co.uk

Provisional Financial Calendar

Date	Event
March 2023	Payment of interim dividend
27 April 2023	Annual General Meeting
31 May 2023	Interim period end
July 2023	Payment of interim dividend
September 2023	Payment of interim dividend
30 November 2023	Year end
December 2023	Payment of interim dividend
March 2024	Year end results announced
April 2024	Payment of interim dividend

Shareholder Information

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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.

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.

Investment Trust Qualification

The Investment Trust (Approved Company) Tax Regulations 2011 (SI 2011/2999) set out requirements for investment trust approval, amongst which is that an investment trust must not retain in respect of an accounting period an amount which is greater than 15% of its income for the accounting period.

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 in the Financial Statements on pages 48 to 52 divided by the number of shares in issue. This is the number disclosed at the foot of the Statement of Financial Position on page 45.

NAV Total Return

The growth in NAV plus dividends reinvested. This is expressed as a percentage of NAV per share at the start of the year.

Glossary

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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.

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

DIRECTORS

Name	Role
John Newlands	Chairman
Matthew Harris	Chairman of the Audit Committee
Ian McElroy	Douglas Noble
Chairman of the Remuneration Committee

REGISTERED OFFICE

Hamilton Centre
Rodney Way
Chelmsford
Essex CM1 3BY

INVESTMENT ADVISER

Tier One Capital Ltd
Eagle House
Asama Court
Newcastle-upon-Tyne NE4 7YD

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

ADMINISTRATOR AND SECRETARY

Maitland Administration Services Limited
Hamilton Centre
Rodney Way
Chelmsford
Essex CM1 3BY

INDEPENDENT AUDITOR

MHA Macintyre Hudson
Chartered Accountants & Statutory Auditor
2 London Wall Place
London EC2Y 5AU

REGISTRAR

Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ

WEBSITE

www.developnorth.co.uk

Corporate Information

75 76 DEV ELOP NORTH