Final Results

23 October 2025

KCR Residential REIT Plc

("KCR" or the "Company")

Final Results  

KCR Residential REIT Plc is pleased to announce its annual results for the year ended 30 June 2025.

The Annual Report will shortly be available on the Company's website, www.kcrreit.com and will be distributed to shareholders in the coming days.

The 2025 financial year has seen continued implementation of the strategy applied since 2020 to deliver further growth of the business in an environment that has remained challenging.

Operational highlights -

§ Revenue for the financial year increased by 5% (to £1.89 million up from £1.80 million in 2024) - slowing in growth in core rental income primarily as a result of a softer December quarter at the Deanery Court property, some vacancies at Ladbroke Grove whilst repairs and maintenance were completed and refurbishment work completed on two of the flats at Heathside during the March and June quarters.

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§ Portfolio level occupancy has remained strong over the financial year with rental increases continuing to be achieved at renewals / re-lettings. The introduction of the Cristal Apartments operating model has resulted in more volatility in occupancy levels within properties operated on this basis, however this is offset by substantially improved overall rental income being generated.

§ Active focus on cost management resulted in administrative expenses increasing by just 2.7% to £1.36 million (up from £1.33 million in 2024). Given the ongoing cost pressure across the business as a whole this is a particularly pleasing result. Costs continued to be tightly controlled and whilst the current underlying inflationary environment continues to present challenges, a number of areas for cost savings have been identified and implementation commenced.

§ Cash used in operations increased to £117k (from £75k in 2024) which has increased due to the refurbishment costs of £203k and costs associated with refinancing of £74k. Excluding the impact of separately disclosed items, operating activity generated positive cashflow of £160k (compared to a deficiency of £7k in 2024). After allowing for financing charges, net cash used in operating activities was £800k (up from £659k in 2024).

The ongoing focus on improving operational performance and control of costs continues to minimise the cash burn from operating activities. Further improvements in operational performance over the 2026 financial year are expected to be sufficient to offset by the higher finance costs that are being incurred following the expiry of the prior Hodge Bank facilities. Whilst the increased finance costs has made achieving a cash neutral position more challenging, with continued improvement in operational performance and successfully achieving targeted cost savings, we consider this objective remains achievable. 

Deanery Court in particular is well positioned to deliver strong improvements in operational performance, both with revenue growth and reduced operating overheads which is expected to be a primary contributor to reducing the cash burn from operating activities over the course of the 2026 financial year. 

Core focus to drive value over the next financial year is:

§ optimising performance from existing assets by continuing to improve average occupancy under the Cristal Apartments operating model and ongoing focus on repricing rents as tenancies expire;

§ reducing operating costs associated with Deanery Court to further enhance the net contribution from this asset;

§ continuing to progress planning outcomes within the portfolio;

§ control of core running costs with targeted programme to achieve reductions in core costs where possible; and

§ acquisitions to increase scale (subject to pricing / value drivers).

KCR continues to make progress towards becoming cashflow positive and creating a stable platform that can be successfully scaled up. We look forward to delivering further improved performance from the existing portfolio over the course of the 2026 financial year.

The financial information set out below does not constitute the Company's statutory financial statements for the period ended 30 June 2025. The financial information for 2024 is derived from the statutory accounts for that period. The auditors, Grant Thornton Limited, have audited the 2024 and 2025 financial statements. Their reports were unqualified.

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

Notes to Editors:

KCR's objective is to build a substantial residential property portfolio that generates secure income flow for shareholders. The Directors intend that the group will acquire, develop and manage residential property assets in a number of jurisdictions including the UK.

For further information please contact:

 CHAIRMAN'S LETTER

 Dear Shareholder

This year we have continued to implement the strategy we have applied since 2020 to deliver further growth of the business in an environment that has remained challenging. Sustained higher interest rates, cost of living pressure and underlying cost escalation have presented ongoing challenges for the business. Following expiry of the Hodge Bank fixed rate facilities and refinance during the 2025 financial year, interest costs for the Group have increased by around £200k.

The impact of ongoing cost pressure and increased finance costs has kept the business cash constrained and made the objective of achieving a cash neutral position more challenging.

Growth in core rental revenue over the 2025 financial year slowed to 5%, this financial year, primarily as a result of a softer December quarter at the Deanery Court property, some vacancies within the Ladbroke Grove portfolio whilst repairs and maintenance works were completed and refurbishment works completed on two of the flats at Heathside during the March and June quarters.

As at the balance sheet date all planned works have been completed and 100% occupancy achieved for all flats not operated on a walk-in-walk out basis.

Pleasingly, notwithstanding the impact of the increased finance charges following expiry of the Hodge Bank fixed rates, continued improvement in operating performance resulted in further progress in reducing the cash burn within the business (before separately disclosed items).

Our ongoing focus on improving the operational performance at a property level resulted in a positive (non-cash) fair value movement of £1.162m. Whilst interest rates have started to fall, yields continued to ease in the property valuations which offset part of the gains from the improved performance. Pleasingly, however, notwithstanding the further easing in yields, positive revaluation movements unwound the impairment in the prior year and positively impacted both the profit and loss and the balance sheet.

Market conditions are improving and if interest rates continue to reduce over the medium term, we reasonably expect this will result in a tightening of yields which will have a further positive impact on future valuations.

Strategy and Operations

During the financial year, and as reported at the half year, we have been continuing to focus on optimising the performance of the existing assets whilst continuing to control costs aiming to achieve a cash neutral position. Solid progress has been made in this regard over the 2025 financial year and the strategy remains to:

• improve the rental revenue from the existing properties;

• progressively upgrade the overall portfolio quality;

• explore the development opportunities within the portfolio; and

• focus on controlling and reducing costs where possible.

Deanery Court has continued to perform well and is expected to be a key driver of additional growth in the current financial year.

Development opportunities within the existing portfolio continue to be explored, with costs associated with this being closely managed. Planning submission was made for two of the Ladbroke Grove properties during the financial year. Once planning outcomes are known we will formulate our approach with this asset.

Capital

The Hodge Bank facilities were refinanced during the financial year into a new 5-year, Sharia law compliant facility of £7.85m with Al Rayan Bank Plc. This facility has the equivalent of a fixed interest rate of 6.10% per annum. Details of this facility are set out in note 18 to the financial statements.

As announced and set out in the half year report, the current market interest rates are substantially higher than the legacy 3.50% fixed interest rate that was previously in place.

All group debt facilities are now on a fixed rate basis with no near-term repricing events. Market forecasts remain for interest rates to continue to reduce over the medium term, which, if accurate, should create a more favorable environment for future refinancing activity.

Market Conditions and Outlook for the Group

From a macro-economic perspective, sustained higher interest rates and cost of living pressures have continued to present ongoing challenges for the Group. Group operating performance has however, materially improved over the last 5 years. This has been driven by a combination of active management of the assets to improve revenue performance and a focus on operational efficiency to reduce costs. The Group is well positioned to deliver continued improvement in operational performance over the 2026 financial year.

Softer residential property market conditions flowing from the impact of sustained higher interest rates and tighter debt markets has seen continued expansion in yields. Positively, improved operational performance outstripped the impact of yield expansion with a positive impact on carrying values still being achieved.

Yield expansion is seen as cyclical however any tightening is expected to lag an improvement in property market conditions.

The rental market remains tight and we reasonably expect rents to continue to increase over the current financial year reflecting restricted supply and underlying cost pressure for landlords more generally.

Following completion of the first phase of the capital works programme at Heathside, the balance of the external works are planned to be completed during the current financial year. This will bring forward completion of all capital works for this site (balance of external works originally not planned to be completed until 2027). This works programme will be funded via the sinking fund and ongoing special levies. No major works outside of this are planned for the current financial year. Our focus is on optimising performance from the existing Group assets whilst controlling costs. Selective acquisitions at Heathside will also be considered given their accretive nature and strong market demand.

Existing portfolio performance remains strong, with continued growth being delivered over the 2025 financial year, and into the first quarter of 2026. Increased focus on the Cristal Apartments walk in walk out model has increased tenancy churn with more void periods. This is however compensated for via the substantially higher rentals being achieved overall. Nominal rental arrears have been experienced with no write offs incurred over the 2025 financial year.

KCR continues to look for acquisitions on a disciplined basis and whilst softer market conditions are presenting better opportunities, tightness in debt markets and the higher cost of debt have made it challenging to support both the investment and the capital raising that would be required to complete a transaction.

The Group's overall long-standing objective remains to grow the size of its residential portfolio to deliver an increase in revenue and profitability against its central overhead base and achieve an ability to pay dividends. At present, while we continue to focus on growing net asset value per share, we anticipate that with improving cash characteristics and the potential for yield compression, we will be able to achieve this in the coming periods.

On behalf of the Board and our shareholders, I would like to thank everyone at KCR for their hard work and dedication over the past year.

James Thornton

Chairman

21 October 2025 

GROUP STRATEGIC REPORT

The Directors present the strategic report of KCR Residential REIT plc ('KCR' or the 'Company') and its subsidiaries (together, the 'Group') for the year ended 30 June 2025. 

PRINCIPAL ACTIVITY

The Group carries on the business of acquiring, developing and managing residential property predominantly for letting to third parties on long and short leases. At the year-end, the Group consisted of the Company, which is a public company limited by shares, and its wholly owned subsidiaries:

1. K&C (Coleherne) Limited owns a freehold residential property in Chelsea, London containing ten studio and one-bedroom flats;

2. K&C (Osprey) Limited owns eleven freehold apartments and the freehold of several retirement properties let on long leases to residents and provides management services in respect of these properties and to third-party landlords;

3. KCR (Kite) Limited owns three freehold residential properties in Ladbroke Grove, London (16 flats);

4. KCR (Southampton) Limited owns a long leasehold block of 27 two-bedroom apartments at Chapel Riverside, Southampton. The lease is a 999 lease for which the Company pays a peppercorn rent; and

5. K&C (Newbury) Limited owns no property and is now effectively dormant.

Throughout the year the Company remained a REIT and has complied with REIT rules throughout the period and since the balance sheet date.

GROUP STRATEGY

The Directors intend to build a significant presence in the residential letting market, primarily through the acquisition of existing residential property. Consideration will also be given to the acquisition of land with planning permission that will be developed into residential property. Assets are predominantly acquired with the purpose of letting to third parties.

RESULTS

The Group reports a consolidated profit of £327,641 for the year to 30 June 2025 (2024: £1,186,075). 

REVIEW OF BUSINESS AND FINANCIAL PERFORMANCE

The Board has reviewed whether the Annual Report, taken as a whole, presents a fair, balanced and understandable summary of the Group's position and prospects, and believes that it provides the information necessary for shareholders to assess the Group's position, performance, and strategy.

In reporting financial information, KCR presents alternative performance measures, "APMs", which are not defined or specified under the requirements of IFRS. For example, portfolio occupancy and percentage of rent arrears. The Company believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business. The Board reminds readers that these APMs are not GAAP measures, are not intended as a substitute for those measures, and that other companies may use different measures.

​Revenue in this financial year increased by 5% to £1,885,144 (2024: £1,796,106). Core portfolio revenue (relating to rentals) was the primary contributor to revenue growth with the Deanery Court property being a key driver.

​The Group recorded an operating profit before separately disclosed items of £1,266,836 (compared to an operating loss of £554,677 in 2024). Improvement against the prior year was due to valuation gains with a revaluation movement of £1,162,000 (compared to a negative revaluation movement of £679,000 in 2024). After allowing for separately disclosed items and finance costs, the profit before taxation was £327,641 (2024: £1,186,075 loss). The Group reports the operating result both before and after separately disclosed items as the costs associated with refinancing and refurbishment works are expected to vary significantly year-on-year.

​Total assets at 30 June 2025 increased to £27,310,839 (2024: £26,711,116). This increase was mainly due to the acquisition of an additional apartment at Heathside and an increase in the valuation of the investment properties

​Net assets increased to £12,650,767 (2024: £12,323,126) and net asset value per share increased to 30.36p (2024: 29.57p).

In carrying out their responsibilities, the Directors have put in place a framework of controls to ensure as far as possible that: (i) ongoing financial performance is monitored in a timely manner; (ii) where required, corrective action is taken; and (iii) risk is identified as early as practically possible. The Directors have reviewed the effectiveness of internal controls.

The Board, subject to delegated authority, reviews, among other things, capital investment, property sales and purchases, additional borrowing facilities, guarantees and insurance arrangements.

Details of financial risk management are included within the Risks and Uncertainties section of the Group Strategic Report.

BRIBERY RISK

The Group has adopted an anti-corruption policy and whistle-blowing policy under the Bribery Act 2010. Notwithstanding this, the Group may be held liable for offences under that Act committed by its employees or subcontractors, whether or not the Group or the Directors had knowledge of the commission of such offences.

OTHER MATTERS

i. Environmental

The Group understands the importance of operating its business in a manner that minimises any risks to the environment. Its policies seek to ensure that it achieves this goal.

ii. Group employees

The Group considers its employees to be its most valuable assets and ensures that it deals with them fairly and constructively at all times.

iii. Social matters

The Group is aware that it has a responsibility to the communities in which it operates and seeks to respect them at all times.

iv. Respect for human rights

The Group always respects the human rights of its stakeholders.

v. Contributions to pension schemes

No pension scheme benefits are being accrued by the Directors.

DIRECTORS' INDEMNITIES AND INSURANCE

The Company has made qualifying third-party indemnity provisions for the benefit of its Directors during the year and they remain in force at the date of approval of this Annual Report.

GOING CONCERN

The Directors have adopted the going concern basis in preparing the financial statements.

The Directors consider, as at the date of approving the financial statements, that there is reasonable expectation that the Group has adequate financial resources to continue to operate, and to meet its liabilities as they fall due for payment, for at least twelve months following the approval of the financial statements.

The Company has undertaken procedures to ensure that the Company has sufficient cash resources and bank facilities and sufficient covenant margin to manage its business under going concern principles.

See note 2 to the financial statements for further details.

POST BALANCE SHEET EVENTS

Post balance sheet events are detailed further in the Chief Executive's letter and note 23 of the financial statements.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

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 international accounting standards in conformity with the requirements of the Companies Act 2006. Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Company and the Group for that period. In preparing these financial statements, the Directors are required to:

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's and the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE AUDITOR

So far as the Directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the Group's auditor is unaware, and each Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Group's auditor is aware of that information.

AUDITOR

In accordance with section 489 of the Companies Act 2006, a resolution to reappoint Grant Thornton Limited as auditor will be proposed at the forthcoming annual general meeting.

ON BEHALF OF THE BOARD

Russell Naylor

Executive Director

21 October 2025

REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF

KCR RESIDENTIAL REIT PLC

Opinion

We have audited the financial statements of KCR Residential REIT Plc (the 'Parent Company') and its Subsidiaries (the 'Group') for the year ended 30 June 2025 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Statements of Cash Flows and notes to the financial statements, including material accounting policy information. The financial reporting framework that has been applied in their preparation is applicable law and UK Adopted International Accounting Standards ("UK Adopted IASs").

In our opinion, the financial statements:

· give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 30 June 2025 and of the Group's profit for the year then ended;

· are in accordance with UK Adopted IASs; and

· have been prepared in accordance with the Companies Act 2006.

Basis for opinion

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

Conclusions relating to going concern

We are responsible for concluding on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's and the Parent Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor's opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern.

Our evaluation of the directors' assessment of the Group and the Parent Company's ability to continue to adopt the going concern basis of accounting included:

· Obtaining the 18-month going concern assessment as at yearend performed by management, including the assumptions and sensitivities prepared by management;

· Challenging the appropriateness of management's forecasts by:

o  checking the mathematical accuracy of the cash flow forecast;

o  assessing the key assumptions used in the going concern assessment based on our knowledge of the Group and the current economic climate; and

o  assessing whether management has taken into account the risks and uncertainties noted in the annual report.

· We determined whether there is a material uncertainty which casts significant doubt over the ability of the Group and the Parent Company to continue as a going concern; and

· We assessed the disclosures in the financial statements relating to going concern, to ensure they were in compliance with IAS 1.

In our evaluation of the directors' conclusions, we considered the inherent risks associated with the Group's and the Parent Company's business model, we assessed and challenged the reasonableness of estimates made by the directors and the related disclosures and analysed how those risks might affect the Group's and the Parent Company's financial resources or ability to continue operations over the going concern period. 

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 Group's and the Parent 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.

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 approach to the audit

Key audit matters

In the graph below, we have presented the key audit matters, significant risks and other risks relevant to the audit.

Our application of materiality

We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion in the auditor's report.

Materiality was determined as follows:

The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential uncorrected misstatements.

FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential uncorrected misstatements

An overview of the scope of our audit

We performed a risk-based audit that requires an understanding of the Group's and the Parent Company's business and in particular matters related to:

Understanding the Group, its components, and their environments, including Group-wide controls

· We obtained an understanding of the Group and its environment, including Group-wide controls, and assessed the risks of material misstatement at the Group level;

Identifying significant components

· We evaluated the identified components to assess their significance and determined the planned audit response based on a measure of materiality. The measure of materiality used was based upon net assets or total assets as appropriate.

Type of work to be performed on financial information of parent and other components (including how it addressed the key audit matters)

· We undertook substantive testing on significant transactions, balances and disclosures, the extent of which was based on various factors such as our overall assessment of the control environment, the effectiveness of controls over individual systems and the management of specific risks; and

· For subjective estimates made by management on the valuation of the investment properties, we performed independent searches to confirm the appropriateness of the valuation methodology used in consideration of the comparable properties, market assumptions and other inputs used.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report set out on pages 1 to 26, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

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 given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

· the strategic report and the directors' report have been prepared in accordance with the applicable legal requirements.

Matters on which we are required to report by under the Companies Act 2006

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

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:

· proper accounting records have not been kept; or

· the financial statements are not in agreement with the accounting records; or

· we have not obtained all the information and explanations, which to the best of our knowledge and belief, are necessary for the purposes of our audit.

Responsibilities of directors for the financial statements

As explained more fully in the directors' responsibilities statement set out on page 26 of the financial statements, the directors are responsible for the preparation of the financial statements which give a true and fair view in accordance with IFRSs, 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 Group's and the Parent 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 Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

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. Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK).

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following: 

· We obtained an understanding of the legal and regulatory frameworks applicable to the Group and the Parent Company in which it operates. We determined that the following laws and regulations were most significant: the Companies Act 2006, and the Real Estate Investment Trust (REIT) status section 1158 of the Corporation Tax Act 2010.

· We understood how the Group and the Parent Company are complying with those legal and regulatory frameworks by making inquiries to management including those responsible for compliance procedures. We corroborated our inquiries through our review of board meetings and review of key regulatory requirements. We identified areas of the above laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience and through discussion with management.

· We assessed the susceptibility of the Group and the Parent Company's financial statements to material misstatement, including how fraud might occur, by evaluating management's incentives and opportunities for manipulation of the financial statements. This included the evaluation of the risk of management override of controls. We determined that the principal risks were in relation to valuation of investment properties and revenue transactions.

· In assessing the potential risks of material misstatement, we obtained an understanding of:

- the entity's operation, including the nature of its revenue sources and of its objectives and strategies to understand the classes of transactions, account balances, expected financial statement disclosures and business risks that may result in risks of material misstatement.

- the applicable statutory provisions

- the entity's control environment.

Our audit procedures involved:

- identifying and assessing the design and implementation of controls management has in place to prevent and detect fraud.

- understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process; and

- identifying and testing journal entries, in particular any journal entries in respect of valuation of investment properties.

· We communicated relevant laws and regulations and potential fraud risks to all engagement team members, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit;

· The Engagement Leader assessed the appropriateness of the collective competence and capabilities of the engagement team including consideration of the engagement teams:

- Understanding of, and practical experience with audit engagements of a similar nature and complexity through appropriate training and participation.

- Knowledge of industry in which the client operates; and

- Understanding of the legal and regulatory requirements specific to the entity including the provisions of the Companies Act 2006 and the Real Estate Investment Trust (REIT) status section 1158 of the Corporation Tax Act 2010.

These audit procedures were designed to provide reasonable assurance that the consolidated financial statements were free from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further removed non-compliance with laws and regulations from events and transactions reflected in the consolidated financial statements, the less likely we would become aware of it.

Use of our report

This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Jeremy Ellis

Senior Statutory Auditor

for and on behalf of Grant Thornton Limited

Statutory Auditor, Chartered Accountants

St Peter Port, Guernsey Dated: 22 October 2025

The notes form part of the financial statements

The financial statements were approved and authorised for issue by the Board of Directors on 21 October 2025 and were signed on its behalf by:

Russell Naylor

Executive Director

The notes form part of the financial statements

As permitted by Section 408 of the Companies Act 2006, the income statement of the Company is not presented as part of these financial statements. The Company's loss for the financial year was £558,279 (2024: £560,362 loss).

The financial statements were approved and authorised for issue by the Board of Directors on 21 October 2025 and were signed on its behalf by:

Russell Naylor

Executive Director

The notes form part of the financial statements

The notes form part of the financial statements

The notes form part of the financial statements

NOTES TO THE STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2025

1) RECONCILIATION OF LOSS BEFORE TAXATION TO CASH USED IN OPERATIONS

1) PRESENTATION OF FINANCIAL STATEMENTS

General information

KCR Residential REIT plc is a public company limited by shares incorporated in the United Kingdom and registered in England and Wales. The address of the registered office and company registration number is given in the Company Information on page 1 of the financial statements. The nature of the Group's principal activities are given in the Group Strategic Report on page 8 of the financial statements.

Statement of compliance

The consolidated financial statements have been prepared in accordance with UK Adopted IASs.

Functional and presentation currency

These consolidated financial statements are presented in Pounds Sterling ('£'), which is considered by the Directors to be the functional currency of the Group and rounded to the nearest £.

Changes in accounting policies

Adoption of new and revised standards

The following accounting pronouncements and standards became effective from 1 January 2024 and have been adopted but did not have a significant impact on the Company's financial results or position:

· Amendments to IFRS 16 - Leases on sale and leaseback

· Amendments to IAS 1 - Non-current liabilities with covenants

· Amendments to IAS 1 - Classification of liabilities as current or non-current

· Amendments to IFRS 7 and IAS 7 - Supplier finance arrangements

New standards in issue but not yet effective

As at 30 June 2025, the Company has not applied the following new and revised standards that have been issued but are not effective until accounting periods beginning on or after 1 January 2025:

· Lack of exchangeability - Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates

· Amendments to the Classification and Measurement of Financial Instruments - Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures

· Annual Improvements to IFRS Accounting Standards - Amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10 and IAS7

· Contracts Referencing Nature-dependent Electricity - Amendments to IFRS 9 and IFRS 7

· IFRS 18 Presentation and Disclosure in Financial Statements

· IFRS 19 Subsidiaries without Public Accountability: Disclosures

The Directors do not anticipate that the adoption of the above amendments will have a significant impact on the financial statements of the Company in future periods.

2) ACCOUNTING POLICIES

Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis other than as set out in the following policies.

Going concern

The financial statements have been prepared on a going concern basis. This requires the Directors to consider, as at the date of approving the financial statements, that there is reasonable expectation that the Group has adequate financial resources to continue to operate, and to meet its liabilities as they fall due for payment, for at least twelve months following the approval of the financial statements.

The Group has undertaken procedures to ensure that the Group has sufficient cash resources and bank facilities and with sufficient covenant margin to manage the business under going concern principles. These procedures included the following:

· reviewing and establishing that cash balances and bank facilities are sufficient to cover at least twelve months of operations;

· review of financial covenant ratios and the Group's ability to meet the covenants for a period of at least twelve months of operation; and

· reviewing cash flow forecast scenarios. Any decision on property acquisitions and developments in the next twelve months will be taken following review of revised cash flow forecasts.

Having reviewed the Company's current position and cash flow projections, including the confirmation that the Company's subsidiaries, which are also creditors as at the year-end will provide such financial support as is required for a period of at least 12 months from the date of signing of these financial statements, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing these financial statements.

The Company has also provided an undertaking to its subsidiaries that no intra-group amounts owed to the Company will be called for repayment for a period of at least 12 months from the date of approval of these financial statements unless the subsidiary is in a position to make payments without adversely affecting their ability to continue to trade and settle any future obligations.

Basis of consolidation

Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

The subsidiaries included in the consolidated financial statements, from the effective date of acquisition, are K&C (Newbury) Limited, K&C (Coleherne) Limited, K&C (Osprey) Limited, KCR (Kite) Limited and KCR (Southampton) Limited.

The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

Transaction costs, other than those of a capital nature and those associated with the issue of debt or equity securities that the Group incurs in connection with a business combination are expensed as incurred.

Investments

Investments in subsidiaries are held at cost less provision for impairment.

Revenue recognition

Revenue of the Group for the year was derived mainly from its principal activity, being the letting to third parties of, and management of, property assets owned by the Group. This income includes rental income, management fees and sales commissions.

Revenue from contracts with customers is recognised when control of the services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those services net of discounts, VAT and other sales-related taxes. The Group concludes that it is the principal in its revenue arrangements, because it typically controls the services before transferring them to the customer. Contracts with customers do not contain a financing component or any element of variable consideration.

In accordance with IFRS 16, rental income from operating leases is recognised periodically in line with the time for which the property is rented. Rental income received in advance is recognised in deferred income.

Management fees derived from the management of property assets owned by third parties are recognised as the services are provided.

Revenue from sales commissions is recognised at the point in time when control of the asset is transferred from the vendor to the buyer.

Revenue derived from management fees and sales commissions are recognised in accordance with the 5 step approach in IFRS 15.

Separately disclosed items

Separately disclosed items are those that are deemed to be exceptional by size or nature in relation to the activities of the Group. Further information can be found in note 6 of the financial statements.

Finance costs

Finance costs comprise interest expense on borrowings.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss as incurred.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation.

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Investment properties

Investment properties comprise properties owned by the Group which are held for capital appreciation, rental income or both. Investment properties are initially measured at transaction price, including expenditure that is directly attributable to the acquisition of the asset. Investment properties are revalued on acquisition by independent external valuers and then by the directors or independent valuers annually thereafter. Acquisitions and disposals are recognised on completion. Any gain or loss arising from a change in fair value is recognised in profit or loss.

Further details of the investment property valuation methodology are contained in note 12 of the financial statements.

Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow to the Group. Ongoing repairs and maintenance are expensed as incurred.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and balances held with banking institutions.

Financial assets

Recognition and derecognition

Financial assets are recognised initially on the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial assets are transferred.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position only when the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Classification and initial recognition of financial assets

Except for investment properties, which are measured at fair value through profit or loss, and trade receivables that do not contain a significant financing component, which are measured at the transaction price in accordance with IFRS 9, all financial assets are initially measured at amortised cost.

Financial assets are classified into the following categories:

- Amortised cost

- Fair value through profit or loss (FVTPL)

- Fair value through other comprehensive income (FVOCI)

The classification is determined by both:

- The entity's business model for managing the asset

- The contractual cash flow characteristics of the financial asset

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within administrative expenses.

Subsequent measurement of financial assets

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

- they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and

- the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where its effect is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall into this category. 

Investment properties are designated as FVTPL.

Financial assets which are designated as FVTPL are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined with reference to active market transactions or using a valuation technique where no active market exists.

The Group do not have any financial assets which are designated as FVOCI.

Impairment of financial assets

IFRS 9's impairment requirements use forward looking information to recognise expected credit losses - the 'expected credit loss (ECL) method'. Recognition of credit losses is no longer dependent on first identifying a credit loss event, but considers a broader range of information in assessing credit risk and credit losses including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

In applying this forward looking approach, a distinction is made between:

- Financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk ('stage 1') and

- Financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low ('stage 2').

Stage 3 would cover financial assets that have objective evidence of impairment at the reporting date. 

12 month expected credit losses are recognised for the first category while lifetime expected credit losses are recognised for the second category. Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial asset.

The Group makes use of a simplified approach in accounting for trade and other debtors and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses.

Financial liabilities

Financial liabilities are recognised initially on the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

Financial liabilities are recognised initially at fair value adjusted for directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

'Other financial liabilities' comprise trade and other payables and other short-term monetary liabilities.

Bank and other borrowings are initially recognised at the fair value of the amount advanced net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense in this context includes initial transaction costs and premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Discounting is not applied if the impact is not material.

Share capital

Ordinary Shares are classified as equity. Costs directly attributable to the issue of Ordinary Shares are recognised as a deduction from equity.

Leasing

The Group applies IFRS 16 Leases.

The Group has an operating lease concerning office premises. IFRS 16 provides an exemption for short term operating leases and leases of low value. The Company has taken advantage of the exemptions rather than establishing a right to use asset.

The costs of leases of low value items and those with a short term at inception are recognised as incurred.

The Group has no finance leases.

Taxation

Tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. As a REIT, the Group is generally not liable to corporation tax.

Deferred tax would be recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is recognised for:

· temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither the accounting nor taxable profit or loss;

· temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and

· taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it 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 current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

Critical accounting estimates and judgments

The preparation of the consolidated financial statements in conformity with UK adopted IASs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these 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 years affected.

Information about critical estimates and assumptions that have the most significant effect on the amounts recognised in the consolidated financial statements and/or have a significant risk of resulting in a material adjustment within the next financial year is as follows:

§  Determination of fair values

The Group's accounting policies and disclosures require the determination of fair value for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods.

When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Investment properties

The Group's investment properties are valued on the basis of market value. The fair value of investment properties is based either on independent professional valuations in accordance with the Royal Institution of Chartered Surveyors' Appraisal and Valuation Standards or by the directors based on market prices for comparable properties and current market conditions. The Group's investment properties were valued at 30 June 2025 at £26,528,300. See note 12 for further details.

The Directors are of the opinion that the estimates and assumptions that they have used in the valuation of investment properties are appropriate. Further details of the valuation methodology are contained in note 12 of the financial statements.

3) REVENUE

The Group is involved in UK property ownership, management and letting and is considered to operate in a single geographical and business segment.

The total revenue of the Group for the year was derived from its principal activities, being the letting to third parties of, and management of, property assets owned by the Group, and, in certain cases, the management of property assets owned by third parties.

The Group's investment property consists of residential housing for the private rented sector and therefore has multiple tenants and as a result does not have any significant customers.

4) EMPLOYEES AND DIRECTORS

Group

The Group Directors are considered to be key management personnel.

Company

5) FINANCE COSTS AND INCOME

6) LOSS BEFORE TAXATION

The loss before taxation is stated after charging:

Separately disclosed items

The Group undertook substantial refurbishment work to investment properties owned by K&C (Coleherne) Limited and K&C (Osprey) Limited. The costs incurred in the 2025 financial year amounted to £184,244 (2024: £67,867). Also during the year, KCR (Kite) Limited began the process of applying for planning permission in respect of intended works to take please, these costs amounted to £18,885 (2024: £nil).

Also, during the year, the Group obtained new financing from Al Rayan Bank, in order to repay the loans held with Hodge Bank. The costs of refinancing the loans, borrowed by K&C (Coleherne) Limited and KCR (Kite) Limited totalled £73,694 (2024: £nil).

It is considered that the size and nature of these costs are such that they should be disclosed on the face of the Consolidated Statement of Comprehensive Income.

7) TAXATION

Factors affecting the tax expense

The tax assessed for the year is different to the standard rate of corporation tax in the UK. The difference is explained below:

In April 2023, the UK government increased the standard corporate tax rate from 19% to 25% for companies with profits in excess of £250,000. As the Group made less than £50,000 taxable profit in 2024, the small profits rate of 19% was used in the above reconciliation.

The Group has remained under the REIT regime throughout the year and since the statement of financial position date.

8) LOSS PER SHARE AND NET ASSET VALUE

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of Ordinary Shares outstanding during the year.

Fully diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential Ordinary Shares.

Diluted loss per share

The weighted average number of shares used to calculate the diluted profit/(loss) per share includes share options in issue during the financial year. No share options were in issue during the 2024 or 2025 financial year.

The net asset value is calculated by dividing the equity attributable to ordinary shareholders by the number of Ordinary Shares in issue at the statement of financial position date.