The investment objective of the Group is to generate a secure and

predictable income return, sustainable in real terms, whilst at least

maintaining capital values, in real terms, through investment in a

diversified portfolio of UK properties, predominantly within the

alternative and specialist sectors.

2. Accounting policies

2.1

Basis of preparation

These consolidated financial statements (the ‘financial statements’) are prepared and approved by the directors in accordance with UK adopted

International Financial Reporting Standards (‘IFRS’) and in accordance with the Companies Act 2006 as applicable to companies reporting

under those standards and Article 4 of the UK adopted International Accounting Standards (‘IAS’) Regulations.

These financial statements have been prepared under the historical cost convention, except for investment properties that have been measured

at fair value.

The financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£’000), except where otherwise

indicated.

Basis of consolidation

The financial statements incorporate the financial statements of the Company and its subsidiaries (the ‘Group’).

Subsidiaries are the entities controlled by the Company, being Alternative Income Limited and Alternative Income REIT Holdco Limited.

New standards, amendments and interpretations, and forthcoming requirements

The Group has applied the following new standards and amendments in this set of condensed consolidated financial statements:

•

Non-current liabilities with covenants – amendment to IAS 1 and classification of liabilities as current or non-current – amendment to IAS 1

(effective 1 January 2024)

•

Lease liability in a sale and leaseback – amendment to IFRS 16 (effective 1 January 2024)

•

Supplier finance arrangements – amendments to IAS 7 and IFRS 7 (effective 1 January 2024)

The new standards and amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to

significantly affect the current or future periods.

Certain new accounting standards and interpretations have been published that are not mandatory for annual periods beginning after

1 July 2023 and early application is permitted; however the Group has not early adopted the new or amended standards in preparing these

condensed consolidated financial statements:

•

Lack of exchangeability – amendment to IAS 21 (effective 1 January 2025)

•

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) (effective date

deferred indefinitely).

•

Presentation and Disclosure in Financial Statements – IFRS 18 (effective 1 January 2027)

•

Subsidiaries without Public Accountability: Disclosures – IFRS 19 (effective 1 January 2027)

2.2

Significant accounting judgements and estimates

In the application of the Group’s accounting policies the directors are required to make judgements, estimates and assumptions that affect

the reported amounts recognised in the financial statements. However, uncertainty about these assumptions and estimates could result

in outcomes that require a material adjustment to the carrying amount of the asset or liability in the future. The estimates and associated

assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next

financial year are outlined below:

Valuation of investment properties

The fair value of investment properties is determined by external property valuation experts to be the estimated amount for which a property

should exchange on the date of the valuation in an arm’s length transaction. The Group’s properties have been valued on an individual basis.

The valuation experts use recognised valuation techniques, applying the principles of both IAS 40 and IFRS13.

The valuations have been prepared in accordance with the Royal Institution of Chartered Surveyors (‘RICS’) Valuation. Factors include current

market conditions, annual rentals, the contractual terms of the leases and their lengths and location. The significant methods and assumptions

used by valuers in estimating the fair value of investment properties are set out in note 10.

Provision for expected credit losses (‘ECL’) of trade receivables

Rent collection rates since the start of the Group are in the region of 100%. As a result, the Group does not have the data to establish historical

loss rates for the expected credit loss analysis.

In determining the provision on a tenant by tenant basis, the Group considers both recent payment history and future expectations of

the tenant’s ability to pay or possible default, in order to recognise an expected credit loss allowance. The Group also considers the risk factors

associated by sector in which the tenant operates and the nature of the debt. Based on sector and rent receivable type a provision is provided

in addition to full provision for maximum risk tenants or known issues.

Principal versus agent considerations – services to tenants

The Group arranges for certain services to be provided to tenants. These arrangements are included in the contract the Group enters into as a

lessor. The Group has determined that it controls the services before they are transferred to tenants, because it has the ability to direct the use

of these services and obtain the benefits from them. The Group has determined that it is primarily responsible for fulfilling these services as it

directly deals with tenants’ complaints and is primarily responsible for the quality or sustainability of the services. In addition, the Group has

discretion in establishing the price that it charges to the tenants for the specified services.

Therefore, the Group has concluded that it is the principal in these contracts. In addition, the Group has concluded that it transfers control of

these services over time, as services are rendered by the third-party service providers, because this is when tenants receive and, at the same

time, consume the benefits from these services.

REIT status

The Group is a REIT and does not pay tax on its property income or gains on property sales, provided that at least 90% of the Group’s

property income is distributed as a dividend to shareholders, which becomes taxable in their hands. In addition, the Group has to meet certain

conditions such as ensuring the property rental business represents more than 75% of total profits and assets. Any potential or proposed

changes to the REIT legislation are monitored and discussed with HMRC. It is the Board’s intention that the Group will continue as a REIT for

the foreseeable future.

Classification of lease arrangements – the Group as lessor (note 14)

The Group has acquired investment properties that are leased to tenants. In considering the classification of lease arrangements, at inception

of each lease the Group considers the economic life of the asset compared with the lease term and the present value of the minimum lease

payments and any residual value compared with the fair value and associated costs of acquiring the asset as well as qualitative factors as

indicators that may assert to the risks and rewards of ownership having been substantially retained or transferred. The Group has determined

that it retains all the significant risks and rewards of ownership of its investment property and accounts for the lease arrangements as operating

leases.

2.3 Segmental information

Each property held by the Group is reported to the chief operating decision maker. In the case of the Group, the chief operating decision maker

is considered to be the Board of directors. The review process for segmental information includes the monitoring of key performance indicators

applicable across all properties. These key performance indicators include Net Asset Value, Earnings per Share and valuation of properties. All

asset cost and rental allocations are also reported by property. The internal financial reports received by the directors cover the Group and all

its properties and do not differ from amounts reported in the financial statements. The directors have considered that each property has similar

economic characteristics and have therefore aggregated the portfolio into one reportable segment under the provisions of IFRS 8.

2.4 Going concern

The financial statements have been prepared on a going concern basis.

The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the

Strategic Report. The robust financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the

financial statements and the accompanying notes. The financial statements also include the Group’s objectives, policies and processes for

managing its capital, its financial risk management objective and its exposures to market price risk, real estate risk, credit risk and liquidity risk.

The Investment Adviser on behalf of the Board has projected the Group’s cash flows for the period up to 30 September 2025, challenging and

sensitising inputs and assumptions to ensure that the cash forecast reflects a realistic outcome given the uncertainties associated with the

current economic environment. A longer-term projection had also been carried out up to 30 June 2027. The scenarios applied were designed

to be severe but plausible, and to take account of the availability of mitigating actions that could be taken to avoid or reduce the impact or

probability of the underlying risks.

The Group’s debt of £41 million matures on 20 October 2025 and the Group has reported full compliance with its loan covenants to date. Based

on cash flow projections, the directors expect the Group to continue to remain compliant. The headroom of the loan to value covenant is

significant and any reduction in property values that would cause a breach would be significantly more than any reduction currently envisaged.

The Board has commenced its debt refinancing plan given that the Group’s borrowings are due to be repaid on 20 October 2025. As part of

this, the Board has undertaken an interview process with a number of debt advisers with the expertise, knowledge and demonstrable potential

lender accessibility to secure refinancing for the Group. Following these discussions, the Board has a reasonable expectation to believe that the

Group can refinance its debt by 20 October 2025 at an aggregate finance cost and on terms acceptable to the Board, taking into account the

investment objective of the Company.

Based on the above, the Board believes that the Group has the ability and adequate resources to continue in operational existence for the

foreseeable future, being at least twelve months from the date of approval of the financial statements.

2.5

Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below.

a) Functional and presentation currency

These financial statements are presented in Sterling, which is the functional and presentational currency of the Group and its subsidiary

undertakings. The functional currency of the Group and its subsidiaries is principally determined by the primary economic environment in

which it operates. The Group did not enter into any transactions in foreign currencies during the period.

b) Revenue recognition

i) Rental income

Rental income under operating leases is recognised on a straight-line basis over the term of the lease, except for contingent rental income,

which is recognised when it arises. For leases, which contain fixed or minimum uplifts, the rental income arising from such uplifts is recognised

on a straight-line basis over the lease term.

Incentives for lessees to enter into lease agreements are spread evenly over the lease term, even if the payments are not made on such a basis.

The lease term is the non-cancellable period of the lease together with any further term for which the tenant has the option to continue the

lease, where, at the inception of the lease, the directors are reasonably certain that the tenant will exercise that option.

Lease modifications, such as lease extensions and rent reductions, are accounted for either as a separate lease or not a separate lease.

A modification will only be treated as a separate lease if it involves the addition of one or more underlying assets at a price that is

commensurate with the standalone price of the increase in scope. All other modifications are not treated as a separate lease.

If a modification is a separate lease, a lessee applies the requirements of IFRS 16 to the newly added asset, due as a result of the modification,

independently of the original lease. The accounting for the original lease continues unchanged.

If a modification is not a separate lease, the accounting reflects that there is a linkage between the original lease and the modified lease. The

existing lease liability is remeasured with a corresponding adjustment to the right-of-use asset on the effective date of the modification.

ii) Service charges and direct recharges

Revenue from service charges is recognised in the accounting period in which the service is rendered. For certain service contracts, revenue is

recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided because

the customer receives and uses the benefits simultaneously.

iii) Deferred income

Deferred income is rental income received in respect of future accounting periods.

(iv) Dilapidation and lease surrender premium

Amounts received from tenants to terminate leases or to compensate for dilapidations are recognised in the Consolidated Statement of

Comprehensive Income when the right to receive them arises.

c) Financing income and expenses

Financing income comprises interest receivable on funds invested. Financing expenses comprise interest and other costs incurred in connection

with the borrowing of funds. Interest income and interest payable are recognised in profit or loss as they accrue, using the effective interest

method which is significantly the same as the contracted interest.

d) Investment property

Property is classified as investment property when it is held to earn rentals or for capital appreciation or both. Investment property is measured

initially at cost including transaction costs. Transaction costs include transfer taxes and professional fees to bring the property to the condition

necessary for it to be capable of operating. The carrying amount also includes the cost of replacing part of an existing investment property at

the time that cost is incurred if the replacement of that part will prolong or improve the life of the asset.

Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in the fair values are included

in profit or loss.

Investment properties are valued by the external valuer. Any valuation of investment properties by the external valuer must be undertaken in

accordance with the current issue of RICS Valuation – Professional Standards (the ‘Red Book’).

The determination of the fair value of investment property requires the use of estimates such as future cash flows from assets (such as lettings,

tenants’ profiles, future revenue streams, capital values of fixtures and fittings, plant and machinery, any environmental matters and the overall

repair and condition of the property) and yield applicable to those cash flows.

For the purposes of the financial statements, the assessed fair value is:

•

reduced by the carrying amount of any accrued income resulting from the spreading of lease incentives; and

•

increased by the carrying amount of leasehold obligations.

Investment property is derecognised when it has been disposed of or permanently withdrawn from use and no future economic benefit is

expected after its disposal or withdrawal.

The profit on disposal is determined as the difference between the net sales proceeds and the carrying amount of the asset at the

commencement of the accounting period plus capital expenditure in the period. Any gains or losses on the retirement or disposal of investment

property are recognised in profit or loss in the year of retirement or disposal.

e) Cash and cash equivalents

Cash and short-term deposits in the Consolidated Statement of Financial Position comprise cash at bank and short-term deposits with an

original maturity of three months or less.

f) Receivables and prepayments

Rent and other receivables are initially recognised at fair value and subsequently at amortised cost. Impairment provisions are recognised based

on the processed as described in note 2.2. Any adjustment is recognised in profit or loss as an impairment gain or loss.

g) Other payables and accrued expenses

Other payables and accrued expenses are initially recognised at fair value and subsequently held at amortised cost.

h) Interest bearing loans and borrowings

All loans and borrowings are initially recognised at fair value less directly attributable transaction costs. After initial recognition, interest bearing

loans and borrowings are subsequently measured at amortised cost using the effective interest method. Borrowing costs are amortised over

the lifetime of the facilities through profit or loss.

i) Provisions

A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present legal or constructive obligation

as a result of a past event that can be reliably measured and is probable that an outflow of economic benefits will be required to settle the

obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.

j) Dividend payable to shareholders

Dividends due to the Company’s Shareholders are recognised when they become legally payable, as a reduction in the Consolidated Statement

of Changes in Equity. Interim equity dividends are recognised when paid. Final equity dividends will be recognised when approved by

Shareholders at an AGM. The Directors consider the aggregate of distributable reserves in considering the recommendation and payment of a

dividend.

k) Share issue costs

The costs of issuing or reacquiring equity instruments (other than in a business combination) are accounted for as a deduction from equity.

l) Lease obligations

Lease obligations relate to the head rent of investment property and are capitalised at the lease commencement, at the lower of fair value of

the property and present value of the minimum lease payments and held as a liability within the Consolidated Statement of Financial Position.

The lease payments are discounted using the interest rate implicit in the lease. Where the Group is exposed to potential future increases

in variable lease payments based on an index or rate, these are not included in the lease liability until they take effect. Lease payments are

allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant

periodic rate of interest on the remaining balance of the liability for each period.

m) Taxes

Corporation tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is

recognised in equity.

As a REIT, the Group is exempt from corporation tax on the profits and gains from its investments, provided it continues to meet certain

conditions as per REIT regulations.

Taxation on the profit or loss for the period not exempt under UK REIT regulations comprises current and deferred tax. Current tax is expected

tax payable on any non-REIT taxable income for the year, using tax rates applicable in the year.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes

and the amounts used for taxation purposes. The amount of deferred tax that is provided is based on the expected manner of realisation or

settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the period end date.

n) Non-current assets held for sale

Non-current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction

and a sale is considered highly probable. Investment properties classified as such are measured at fair value.

o) European Public Real Estate Association

The Group has adopted the European Public Real Estate Association (‘EPRA’) best practice recommendations, which it expects to broaden the

range of potential institutional investors able to invest in the Company’s Ordinary Shares. For the year ended 30 June 2024, audited EPS and

NAV calculations under EPRA’s methodology are included in note 8 and further unaudited measures are included on page 82.

p) Capital and reserves

Share capital

Share capital is the nominal amount of the Company’s Ordinary Shares in issue, and is non-distributable.

Capital reserve

The capital reserve represents the cancelled share premium less dividends paid from this reserve’; it is a distributable reserve. The share

premium account was cancelled in 2017 by Court Order and distributions can be made from this reserve in accordance with the Companies Act

2006, including by way of dividends or share buy backs.

Retained earnings

Retained earnings represent the cumulative net gains and losses recognised in the Consolidated Statement of Comprehensive Income less

dividends paid from this reserve. This reserve is distributable, except for any unrealised gains on investment properties.

2.6 Fair value measurement

The Group measures financial and non-financial assets such as investment properties at fair value at each reporting date.

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets

and liabilities. Fair value is defined in IFRS 13 Fair Value Measurement as the price that would be received to sell an asset or paid to transfer a

liability in an orderly transaction between market participants at the measurement date. Fair values have been determined for measurement

and/or disclosure purposes based on methods described below. Where applicable, further information about the assumptions made in

determining fair values is disclosed in the notes specific to that asset or liability.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value,

maximising the use of relevant observable inputs and minimising the use of unobservable inputs significant to fair value measurement as a

whole:

Fair value hierarchy:

Level 1:

Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or

indirectly (i.e. derived from prices).

Level 3:

Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group determines whether

transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the

fair value measurement as a whole) at the end of each reporting period.

There were no transfers between any of the levels during the year.

Investment property

The valuation of investment property by valuers engaged by the Group who are independently appointed and have the relevant professional

qualifications and with recent experience in the location and category of the investment property being valued. Further information in relation

to the valuers is provided in note 10.

Property valuations are inherently subjective as they are made on the basis of assumptions made by the valuer which may not prove to be

accurate. For these reasons, and consistent with EPRA’s guidance, we have classified the valuations of our property portfolio as Level 3 as

defined by IFRS 13. The inputs to the valuations are defined as ‘unobservable’ by IFRS 13 and these are analysed in note 10.

3. Rental and other income

	2024	2023
	£’000	£’000
Gross rental income	7,331	7,429
Spreading of minimum contracted future rent – indexation	74	423
Spreading of tenant incentives – rent free periods	(49)	(58)
Other property income	2	294
Gross rental income (adjusted)	7,358	8,088
Service charges and direct recharges (see note 4)	542	572
Total rental and other income	7,900	8,660

All rental, service charges, direct recharges and other income are derived from the United Kingdom.

Other property income for the year ended 30 June 2023 mainly relates to the allocation to revenue of £219,000 arising from a settlement of the

litigation in respect of replacement of defective cladding for Travelodge, Swindon. Further detail is provided in note 15.3.

4. Expenses

	2024	2023
	£’000	£’000
Property operating expenses	138	177
Service charges and direct recharges (see note 3)	542	572
Movement on provision for impairment of trade receivables	–	6
Property operating expenses	680	755
Investment adviser fee	360	371
Auditor’s remuneration	85	87
Operating costs*	508	481
Directors’ remuneration (note 5)	113	110
Other operating expenses	1,066	1,049
Total operating expenses	1,746	1,804
Total operating expenses (excluding service charges and direct recharges)	1,204	1,232

*Included in the Operating Costs were abortive costs of £61,500.

	2024	2023
	£’000	£’000
Audit
Statutory audit of Annual Report and Accounts	73	76*
Statutory audit of Subsidiary Accounts	12	11
Total fees due to auditor	85	87

*Includes £6,000 fees relating to year ended 30 June 2022.

Moore Kingston Smith LLP has not provided any non-audit services to the Group.

5. Directors’ remuneration

	2024	2023
	£’000	£’000
Directors’ fees	102	99
Tax and social security	11	11
Total fees	113	110

A summary of the director’s remuneration is set out in the Directors’ Remuneration Report on page 43.

The Group had no employees during the year.

6. Finance expenses

	2024	2023
	£’000	£’000
Interest payable on loan (note 13)	1,304	1,307
Amortisation of finance costs (note 13)	104	104
Other finance costs	4	14
Total	1,412	1,425

7. Taxation

	2024	2023
	£’000	£’000
Tax charge comprises:
Analysis of tax charge in the year
Profit/(loss) before tax	2,357	(5,240)
Theoretical tax charge/(refund) at UK corporation tax standard rate of 25.00% (2023: 20.50%)	589	(1,074)
Effects of tax-exempt items under the REIT regime	(589)	1,074
Total	–	–

The Group maintained its REIT status and as such, no deferred tax asset or liability has been recognised in the current year.

Factors that may affect future tax charges

Due to the Group’s status as a REIT and the intention to continue meeting the conditions required to retain approval as a REIT in the foreseeable

future, the Group has not provided deferred tax on any capital gains or losses arising on the revaluation or disposal of investments.

8. Earnings per share (‘EPS’)/(loss per share) and Net Asset Value (NAV) per share

	2024	2023
EPS:
Total comprehensive income/(loss) (£’000)	2,357	(5,240)
Weighted average number of shares (number)	80,500,000	80,500,000
EPS/(loss per share) (basic and diluted)	2.93p	(6.51p)
EPRA EPS (£’000):
Total comprehensive income/(loss)	2,357	(5,240)
Adjustment to total comprehensive income:
Change in fair value of investment properties	2,983	10,671
Gain on disposal of investment property	(598)	–
EPRA earnings (basic and diluted) (£’000)	4,742	5,431
EPRA EPS (basic and diluted)	5.89p	6.75p
Adjusted EPS:
EPRA earnings (basic and diluted) (£’000) – as above	4,742	5,431
Adjustments (£'000):
Rental income recognised in respect of guaranteed fixed rental uplifts (note 3)	(74)	(423)
Rental income recognised in respect of rent free periods (note 3)	49	58
Amortisation of loan finance costs (note 6)	104	104
Write-off of rent	–	16
Reversal of provision for impairment of trade receivables	–	(10)
Adjusted earnings (basic and diluted) (£’000)	4,821	5,176
Adjusted EPS (basic and diluted)*	5.99p	6.43p

*

Adjusted EPS is a measure used by the Board to assess the level of the Group’s dividend payments. This metric adjusts EPRA earnings for non-cash items in arriving

at an adjusted EPS as supported by cash flows.

Earnings per share are calculated by dividing profit/(loss) for the year attributable to ordinary equity holders of the Company by the weighted

average number of Ordinary Shares in issue during the year.

	2024	2023
NAV per share:
Net assets (£'000)	65,121	67,750
Ordinary Shares (Number)	80,500,000	80,500,000
NAV per share	80.90p	84.16p

EPRA Net Reinvestment Value (‘NRV’), EPRA Net Tangible Assets (‘NTA’) and EPRA Net Disposal Value (‘NDV’)

	EPRA NRV	EPRA NTA and EPRA NDV
At 30 June 2024
Net assets value (£'000)	65,121	65,121
Estimated purchasers' cost (£'000)	6,672	–
Break cost on bank borrowings (£'000)	–	–
	71,793	65,121
Ordinary Shares (Number)	80,500,000	80,500,000
Per share measure	89.18p	80.90p
At 30 June 2023
Net assets value (£'000)	67,750	67,750
Estimated purchasers’ cost (£'000)	6,957	–
Break cost on bank borrowings (£'000)	–	–
	74,707	67,750
Ordinary Shares (Number)	80,500,000	80,500,000
Per share measure	92.80p	84.16p

9. Dividends

All dividends were paid as PIDs	Quarter Ended	Rate	2024 £’000	2023 £’000
Dividends in respect of year ended 30 June 2022
4th dividend	30-Jun-22	1.600p	–	1,288
Dividends in respect of year ended 30 June 2023
1st dividend	30-Sep-22	1.375p	–	1,107
2nd dividend	31-Dec-22	1.375p	–	1,107
3rd dividend	31-Mar-23	1.375p	–	1,107
4th dividend	30-Jun-23	1.920p	1,545	–
Dividends in respect of year ended 30 June 2024
1st dividend	30-Sep-23	1.425p	1,147	–
2nd dividend	31-Dec-23	1.425p	1,147	–
3rd dividend	31-Mar-24	1.425p	1,147	–
Total dividends paid			4,986	4,609*
4th dividend**	30-Jun-22	1.600p	–	(1,288)
4th dividend**	30-Jun-23	1.920p	(1,545)	1,545
4th dividend**	30-Jun-24	1.625p	1,308	–
Total dividends payable in respect of the year			4,749	4,866
Total dividends per share payable in respect of the year			5.90p	6.045p

* Dividends paid per Consolidated Statement of Cash Flows amount to £4,692,000, the difference between the amount disclosed above is due to withholding tax.

** Dividends declared after the year end are not included in the financial statements as a liability.

10. Investment properties

			2024	2023
	Freehold Investment properties £’000	Leasehold Investment properties £’000	Total £’000	Total £’000
At the beginning of the year	73,825	33,200	107,025	117,905
Acquisition during the year	5,304	–	5,304	–
Reduction in acquisition costs (note 15.3)	–	–	–	(606)
Disposal during the year	(6,784)	–	(6,784)	–
Change in value of investment properties	(1,295)	(1,600)	(2,895)	(10,274)
Valuation provided by Knight Frank LLP	71,050	31,600	102,650	107,025
Adjustment to fair value for minimum rent indexation of lease income (note 11)			(3,567)	(3,542)
Adjustment for lease obligations			-	364
Total investment properties			99,083	103,847
Change in fair value of investment properties
Change in fair value before adjustments for lease incentives and lease obligations			(2,895)	(10,274)
Movement in lease obligations			(63)	(32)
Adjustment to spreading of contracted future rent indexation and tenant incentives			(25)	(365)
			(2,983)	(10,671)

Disposal and acquisition of investment property

In the year, two property transactions were completed. The first was the sale of Mercure Hotel in Glasgow which was disposed of on 8 August 2023

for £7.5 million. The gain recognised on disposal is shown in the Consolidated Statement of Comprehensive Income; the gain on disposal includes

changes in fair value of the investment property and minimum rent indexation spreading recognised in previous periods.

	2024	2023
	£’000	£’000
Gross proceeds on disposal	7,500	–
Selling costs	(118)	–
Net proceeds on disposal	7,382	–
Carrying value	(6,784)	–
Gain on disposal of investment property	598	–

On 18 December 2023, the Group acquired the Virgin Active in Streatham for £5.3 million.

Valuation of investment properties

Valuation of investment properties is performed by Knight Frank LLP, an accredited external valuer with recognised and relevant professional

qualifications and recent experience of the location and category of the investment property being valued. The valuation of the Group’s investment

properties at fair value is determined by the external valuer on the basis of market value in accordance with the internationally accepted RICS

Valuation – Professional Standards (incorporating the International Valuation Standards).

The determination of the fair value of investment properties requires the use of estimates such as future cash flows from assets (such as lettings,

tenants’ profiles, future revenue streams, capital values of fixtures and fittings, plant and machinery, any environmental matters and the overall repair

and condition of the property) and yield applicable to those cash flows.

The right of use asset is valued at future lease payments discounted using the net equivalent yield on the relevant asset.

Sensitivity analysis to significant changes in unobservable inputs within Level 3 of the fair value hierarchy

The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy of the entity’s portfolios

of investment properties are:

1.

Estimated Rental Value (‘ERV’)

2. Net Initial Yield

Increases/(decreases) in the ERV (per sq. ft per annum) in isolation would result in a higher/(lower) fair value measurement. Increases/(decreases) in

the yield in isolation would result in a lower/(higher) fair value measurement.

The significant unobservable inputs used in the fair value measurement, categorised within Level 3 of the fair value hierarchy of the portfolio of

investment property and investments are:

Class	Fair value £’000	Valuation technique	Significant unobservable inputs	Range
30 June 2024
Investment Properties*	102,650	Income capitalisation	ERV Net Initial yield	£4.50 – £21.96 3.59% – 8.64%**
30 June 2023
Investment Properties*	107,025	Income capitalisation	ERV Net Initial yield	£4.39 – £21.97 4.70% – 10.25%**

* Valuation per Knight Frank LLP

**Hotels, petrol stations, residential & healthcare are excluded from this range

Sensitivity analysis below.

				2024
	Change in ERV		Change in net initial yield
	£’000	£’000	£’000	£’000
Sensitivity Analysis	+10%	-10%	+10%	-10%
Resulting fair value of investment properties	105,152	100,042	97,041	109,391

				2023
	Change in ERV		Change in net initial yield
	£’000	£’000	£’000	£’000
Sensitivity Analysis	+10%	-10%	+10%	-10%
Resulting fair value of investment properties	109,412	104,542	101,214	114,027

11. Receivables and prepayments

	2024	2023
	£’000	£’000
Receivables
Trade debtor	252	122
Less: Provision for impairment of trade receivables	(2)	(2)
Other debtors*	2,428	326
Total receivables and prepayments	2,678	446
Spreading of minimum contracted future rent indexation	3,205	3,132
Spreading of tenant incentives – rent free periods	362	410
	3,567	3,542
Tenant deposit asset (note 12)	118	118
Other prepayments	101	87
	219	205
Total receivables and prepayments	6,464	4,193

* Other debtors at 30 June 2024 includes £2,155,000 (2023: £112,000) of net proceeds from the sale of properties. This is held by the external lender, Canada Life

Investments.

The aged debtor analysis of receivables which are past due but not impaired is as follows:

	2024	2023
	£’000	£’000
Less than three months due	2,672	464
Between three and six months months due	6	(18)
	2,678	446

12. Payables and accrued expenses

	2024	2023
	£’000	£’000
Deferred income	1,665	1,568
Trade creditors	21	24
Accruals	401	374
Tenant deposit liability (note 11)	118	118
Loan interest payable (note 13)	256	258
Other creditors	429	409
	2,890	2,751

13. Interest bearing loans and borrowings

	2024	2023
	£’000	£’000
Facility drawn	41,000	41,000
Unamortised finance costs brought forward	(276)	(380)
Amortisation of finance costs (note 6)	104	104
At end of year	40,828	40,724
Repayable between 1 and 2 years	–	–
Repayable between 2 and 5 years	41,000	41,000
Repayable in over 5 years	–	–
Total at end of the year	41,000	41,000

At 30 June 2024, the Group had utilised all of its £41 million fixed interest loan facility with Canada Life Investments and was geared at a loan to

Gross Asset Value (‘GAV’) of 37.7% (2023: 36.8%). The weighted average interest cost of the Group’s facility is 3.19% and the facility is repayable on

20 October 2025. Interest expense incurred during the year amounted to £1.31 million (2023: £1.31 million), £0.26 million of which is outstanding as at

30 June 2024 (2023: £0.26 million).

	2024	2023
	£’000	£’000
Reconciliation to cash flows from financing activities
At beginning of the year	40,724	40,620
Non-cash changes
Amortisation of loan issue costs	104	104
Total at end of the year	40,828	40,724