TIDMBRG
RNS Number : 1207U
Braemar Group PLC
18 June 2009
Braemar Group plc
18 June 2009
AUDITED FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2009
CHAIRMAN'S STATEMENT
I am pleased to report that the Group has made good progress in the year ended
31 March 2009, increasing the value of funds and properties under management,
with the consequential increase in recurring fee income.
Financial Overview
Group revenue for the year ended 31 March 2009 was GBP2,610,000 (2008:
GBP1,264,000). Divisional turnover for the year is made up of GBP1,513,000 from
corporate finance and fund management ("Braemar Securities") (2008: GBP776,000),
GBP1,080,000 from property management ("Braemar Estates") (2008: GBP475,000) and
GBP17,000 from property investment and trading (2008: GBP13,000).
The increase in revenue of the two principal divisions, excluding property
investment and trading, represents a doubling of revenue in the Group's core
businesses and has more than doubled the Group's gross profit to GBP1,688,000
(2008: GBP819,000). Crucially this increase has been based on the growth of
recurring income to GBP915,000 (2008: GBP343,000), which represents some 50% of
administrative expenses (2008: 26%).
The loss before tax for the year from continuing operations of GBP180,000 (2008:
GBP439,000 loss) reflects delays in the launch of planned investment products,
GBP42,000 abort costs from the cancellation of the launch of the planned Solar
Park Cell, and the deferral of property investments by our Coronation funds as a
result of the uncertainty in the property market, with the resultant deferral of
revenue.
Cash balances at the year-end were GBP206,000 (2008: GBP289,000), and total
equity at the year-end amounted to GBP2,545,000 (2008: GBP2,738,000).
Business Review
Strategy
Our strategy remains that of developing our property fund management business,
backed by the continued development of our support services in corporate finance
and residential property management. The medium-term aim of the Group is to
ensure that recurring income is sufficient to cover all administrative costs.
Braemar Securities
We have further diversified our range of funds to include Agricultural Land,
Student Accommodation and Ground Rents, the latter being launched early in the
new financial year. All three funds take the form of Guernsey registered Open
Ended Investment Companies (OEICs). This move, to list funds on the Channel
Islands Stock Exchange, has increased our funds under management markedly during
the last year. The funds under management in our three OEICs amounted to some
GBP18 million at 31 May 2009 and each one remains open for subscription on the
monthly dealing date. Income is derived from these funds through a blend of
initial and recurring annual management fees.
These investment products, which we have launched as public funds with unit
prices quoted by many financial information providers and in national
newspapers, are proving attractive to IFAs and other advisors who promote on our
behalf. Momentum has gained throughout the last 12 months, especially since the
launch of our Student Accommodation OEIC, which has reported an increase in net
assets per share of 26% since inception in November 2008.
Braemar UK Agricultural Land plc completed the purchase of its first farm in
October 2008 and, on 1 June 2009, published a prospectus and admission document
to raise up to GBP20 million, by way of an offer for subscription and
introduction to AIM, which closes on 22 July 2009.
Braemar Estates
Our property management division, now responsible for the management of
approximately GBP250m of assets, representing some 2,500 apartments, has proved
resilient during the wider property downturn, particularly as our activities are
limited to the management or refurbishment of assets we own, assets in funds we
manage and third party owned freeholds.
Growth in this business during the year was buoyed towards the end of the year
with the acquisition of Manchester Ground Rent Company Limited (MGRC), for a
cash consideration of GBP107,000 and the assumption of MGRC's debt of
GBP315,000. MGRC owns the long leasehold of Castlegate, a block of 84 apartments
in Castlefield, Manchester. As long leaseholder, MGRC is entitled to receive
ground rents amounting to approximately GBP25,200 per annum, is responsible for
arranging the insurance of the building and collects service charges out of
which it pays the maintenance costs of the common parts.
Current trading and prospects
The Directors are pleased that the above achievements are providing a more
stable footing for the Group. The growth in revenue, coupled with a more
balanced income profile throughout the year, and the increase in recurring
income has strengthened the Group's financial position.
The new financial year has started with the launch of the Ground Rents OEIC and
further fund raising for the farming business, Braemar UK Agricultural Land plc.
If the flotation on AIM of the farming business is successful, the outcome of
which is expected to be known by the end of July 2009, the Group will benefit
from the initial commission on funds raised and a recurring annual
administration fee. The Group also holds warrants to subscribe for equity in the
company.
The Directors continue to explore the possibility of creating funds for other
property assets, but expect the focus of the current year to be on building the
size of each existing fund to gain the benefit of economies of scale on the
performance of both the Group and each fund.
Martin Robinson
Chairman
18 June 2009
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2009
+----------------------------------------+--------+--------------+--------------+
| | | Year ended | Year ended |
| | | 31 March | 31 March |
| | | 2009 | 2008 |
+----------------------------------------+--------+--------------+--------------+
| | | GBP'000 | GBP'000 |
+----------------------------------------+--------+--------------+--------------+
| Revenue | | | |
+----------------------------------------+--------+--------------+--------------+
| Existing operations | 3 | 2,610 | 1,170 |
+----------------------------------------+--------+--------------+--------------+
| Acquisitions | 16 | - | 94 |
+----------------------------------------+--------+--------------+--------------+
| | | | |
+----------------------------------------+--------+--------------+--------------+
| Cost of sales | | (922) | (445) |
+----------------------------------------+--------+--------------+--------------+
| | | | |
+----------------------------------------+--------+--------------+--------------+
| Gross profit | | 1,688 | 819 |
+----------------------------------------+--------+--------------+--------------+
| Fair value adjustments to investment | 15 | (28) | 82 |
| properties | | | |
+----------------------------------------+--------+--------------+--------------+
| Administration expenses | | (1,840) | (1,340) |
+----------------------------------------+--------+--------------+--------------+
| Operating (loss)/profit from | | | |
| continuing operations | | | |
+----------------------------------------+--------+--------------+--------------+
| Existing operations | | (180) | (443) |
+----------------------------------------+--------+--------------+--------------+
| Acquisitions | | - | 4 |
+----------------------------------------+--------+--------------+--------------+
| | | (180) | (439) |
+----------------------------------------+--------+--------------+--------------+
| Investment income | 8 | 29 | 42 |
+----------------------------------------+--------+--------------+--------------+
| Finance costs | 9 | (59) | (53) |
+----------------------------------------+--------+--------------+--------------+
| Loss before taxation | | (210) | (450) |
+----------------------------------------+--------+--------------+--------------+
| Income tax income/(expense) | 10 | 8 | (23) |
+----------------------------------------+--------+--------------+--------------+
| Loss for the year from continuing | | (202) | (473) |
| operations | | | |
+----------------------------------------+--------+--------------+--------------+
| Loss for the year from discontinued | | - | (471) |
| operations | | | |
+----------------------------------------+--------+--------------+--------------+
| Loss for the year attributable to | | (202) | (944) |
| equity holders of parent | | | |
+----------------------------------------+--------+--------------+--------------+
| Loss per share - basic and diluted | | | |
+----------------------------------------+--------+--------------+--------------+
| from continuing operations | 11 | 0.12p | 0.31p |
+----------------------------------------+--------+--------------+--------------+
| from discontinued operations | 11 | - | 0.31p |
+----------------------------------------+--------+--------------+--------------+
| from continuing and discontinued | 11 | 0.12p | 0.62p |
| operations | | | |
+----------------------------------------+--------+--------------+--------------+
CONSOLIDATED BALANCE SHEET AT 31 MARCH 2009
+------------------------------------------+-------+--------------+--------------+
| | | 31 March | 31 March |
| | | 2009 | 2008 |
+------------------------------------------+-------+--------------+--------------+
| | Notes | GBP'000 | GBP'000 |
+------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------+-------+--------------+--------------+
| Non-current assets | | | |
+------------------------------------------+-------+--------------+--------------+
| Goodwill | 12 | 2,736 | 2,694 |
+------------------------------------------+-------+--------------+--------------+
| Other intangible assets | 13 | 99 | 101 |
+------------------------------------------+-------+--------------+--------------+
| Property, plant and equipment | 14 | 141 | 183 |
+------------------------------------------+-------+--------------+--------------+
| Investment properties | 15 | 607 | 225 |
+------------------------------------------+-------+--------------+--------------+
| Held-to-maturity investments | 17 | 59 | 18 |
+------------------------------------------+-------+--------------+--------------+
| Other financial assets | 18 | 67 | 37 |
+------------------------------------------+-------+--------------+--------------+
| Available-for-sale investments | 19 | 8 | 32 |
+------------------------------------------+-------+--------------+--------------+
| | | 3,717 | 3,290 |
+------------------------------------------+-------+--------------+--------------+
| Current assets | | | |
+------------------------------------------+-------+--------------+--------------+
| Trade and other receivables | 20 | 327 | 1,919 |
+------------------------------------------+-------+--------------+--------------+
| Cash and cash equivalents | 22 | 206 | 289 |
+------------------------------------------+-------+--------------+--------------+
| | | 533 | 2,208 |
+------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------+-------+--------------+--------------+
| Total assets | | 4,250 | 5,498 |
+------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------+-------+--------------+--------------+
| Equity and liabilities | | | |
+------------------------------------------+-------+--------------+--------------+
| Issued capital | 26 | 1,638 | 1,638 |
+------------------------------------------+-------+--------------+--------------+
| Share premium | 28 | 2,945 | 2,945 |
+------------------------------------------+-------+--------------+--------------+
| Accumulated loss | 28 | (2,038) | (1,845) |
+------------------------------------------+-------+--------------+--------------+
| Total equity | | 2,545 | 2,738 |
+------------------------------------------+-------+--------------+--------------+
| Non-current liabilities | | | |
+------------------------------------------+-------+--------------+--------------+
| Interest bearing loans and borrowings | 23 | 533 | 225 |
+------------------------------------------+-------+--------------+--------------+
| Obligations under finance leases | 23 | 11 | 29 |
+------------------------------------------+-------+--------------+--------------+
| Deferred tax | 24 | 40 | 23 |
+------------------------------------------+-------+--------------+--------------+
| | | 584 | 277 |
+------------------------------------------+-------+--------------+--------------+
| Current liabilities | | | |
+------------------------------------------+-------+--------------+--------------+
| Trade and other payables | 25 | 587 | 1,949 |
+------------------------------------------+-------+--------------+--------------+
| Interest bearing loans and borrowings | 23 | 512 | 512 |
+------------------------------------------+-------+--------------+--------------+
| Obligations under finance leases | 23 | 22 | 22 |
+------------------------------------------+-------+--------------+--------------+
| | | 1,121 | 2,483 |
+------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------+-------+--------------+--------------+
| Total liabilities | | 1,705 | 2,760 |
+------------------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------------------+-------+--------------+--------------+
| Total equity and liabilities | | 4,250 | 5,498 |
+------------------------------------------+-------+--------------+--------------+
The financial statements were approved and authorised for issue by the Board and
were signed on its behalf on 18 June 2009.
W M Robinson J S Murphy
Chairman Director
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED
31 MARCH 2009
+-----------------------------------------+-------+---------------+---------------+
| | | Year ended | Year ended |
| | | 31 March 2009 | 31 March 2008 |
+-----------------------------------------+-------+---------------+---------------+
| | Notes | GBP'000 | GBP'000 |
+-----------------------------------------+-------+---------------+---------------+
| Cash absorbed by operations | 21 | (195) | (878) |
+-----------------------------------------+-------+---------------+---------------+
| Income taxes paid | | - | - |
+-----------------------------------------+-------+---------------+---------------+
| Interest paid | | (24) | (45) |
+-----------------------------------------+-------+---------------+---------------+
| | | | |
+-----------------------------------------+-------+---------------+---------------+
| Net cash outflow from operating | | (219) | (923) |
| activities | | | |
+-----------------------------------------+-------+---------------+---------------+
| | | | |
+-----------------------------------------+-------+---------------+---------------+
| Cash flows from investing activities | | | |
+-----------------------------------------+-------+---------------+---------------+
| Interest received | | 29 | 41 |
+-----------------------------------------+-------+---------------+---------------+
| Purchase of property, plant and | | (27) | (186) |
| equipment | | | |
+-----------------------------------------+-------+---------------+---------------+
| Purchase of held-to-maturity | | (41) | (14) |
| investments | | | |
+-----------------------------------------+-------+---------------+---------------+
| Purchase of investment property | | - | (1) |
+-----------------------------------------+-------+---------------+---------------+
| Acquisition of subsidiary | | (107) | (589) |
+-----------------------------------------+-------+---------------+---------------+
| Net cash used in investing activities | | (146) | (749) |
+-----------------------------------------+-------+---------------+---------------+
| | | | |
+-----------------------------------------+-------+---------------+---------------+
| Cash flows from financing activities | | | |
+-----------------------------------------+-------+---------------+---------------+
| Proceeds from issue of share capital | | - | 1,312 |
+-----------------------------------------+-------+---------------+---------------+
| Transaction costs of issue of share | | - | (16) |
| capital | | | |
+-----------------------------------------+-------+---------------+---------------+
| Proceeds from borrowings | | 308 | 283 |
+-----------------------------------------+-------+---------------+---------------+
| Repayment of borrowings | | (26) | (385) |
+-----------------------------------------+-------+---------------+---------------+
| Net cash from financing activities | | 282 | 1,194 |
+-----------------------------------------+-------+---------------+---------------+
| | | | |
+-----------------------------------------+-------+---------------+---------------+
| Net reduction in cash and cash | | (83) | (478) |
| equivalents | | | |
+-----------------------------------------+-------+---------------+---------------+
| Cash and cash equivalents at 1 April | | 289 | 767 |
+-----------------------------------------+-------+---------------+---------------+
| Cash and cash equivalents at 31 March | 22 | 206 | 289 |
+-----------------------------------------+-------+---------------+---------------+
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE YEAR ENDED 31
MARCH 2009
+------------------------------------------------+---------------+---------------+
| | Year ended | Year ended |
| | 31 March 2009 | 31 March 2008 |
+------------------------------------------------+---------------+---------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+---------------+---------------+
| Losses on available-for-sale investments taken | (3) | (80) |
| to equity | | |
+------------------------------------------------+---------------+---------------+
| Expense recognised directly in equity | (3) | (80) |
+------------------------------------------------+---------------+---------------+
| Loss for the period | (202) | (944) |
+------------------------------------------------+---------------+---------------+
| Total recognised income and expense for the | (205) | (1,024) |
| period | | |
+------------------------------------------------+---------------+---------------+
1.Basis of preparation
The Group's financial statements for the year ended 31 March 2009 have been
prepared in accordance with IFRS as adopted by the European Union, and with
those parts of the Companies Act 1985 applicable to companies reporting under
IFRS.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that effect the
application of policies and reported amounts in the financial statements. The
areas involving a higher degree of judgement or complexity, or areas where
assumptions or estimates are significant to the financial statements are
disclosed in note 2.
The parent company financial statements have been prepared under UK GAAP and
have been presented separately at the end of the report.
1.1 IFRS's effective in 2008/9 but not relevant
The following interpretations were mandatory for the Group's accounting period,
but not relevant to the operations of the Group:
* IFRIC 12 Service concession arrangements
* IFRIC 14 (IAS 19) The limit on a defined benefit asset, minimum funding
requirements and their interaction
* IAS 39 and IFRS 7 (amendment) Reclassification of financial instruments
1.2 EU adopted IFRS not yet applied
It is not expected that adoption of standards or interpretations which have been
issued by the International Accounting Standards Board but have not been adopted
will have a material impact on the financial statements.
The Group intends to apply these standards and interpretations when they become
effective.
2.Accounting policies
The principal accounting policies adopted by the Group are as follows:
2.1Basis of consolidation
The consolidated income statement and balance sheet includes the financial
statements of the Company and its subsidiary undertakings made up to 31 March
2009. The results of subsidiaries sold or acquired are included in the income
statement up to, or from, the date control passes. Intra-group revenue and
profits are eliminated fully on consolidation.
2.2Revenue recognition
The revenue shown in the consolidated income statement comprises gross sale
proceeds of trading properties, gross rentals, commissions and sundry income and
the invoiced value of goods and services supplied by the Group net of VAT. Where
amounts are due conditional on the successful completion of fund-raising for an
investment vehicle revenue is recognised where, in the opinion of the Directors,
there is a reasonable certainty that sufficient funds have been raised to enable
the successful operation of that investment vehicle. Amounts due on an annual
basis for the management of third party investment vehicles are recognised on a
time apportioned basis.
2.3Business combinations
Acquisitions are accounted for using the purchase method as required by IFRS 3
Business Combinations.
2.4Taxation
Current tax, including UK corporation tax, is provided on any amounts expected
to be paid (or recovered) using tax rates and laws that have been enacted by the
balance sheet date.
Deferred tax is provided in full in respect of taxation deferred by temporary
differences between the treatment of certain items for taxation and accounting
purposes. Deferred tax assets are recognised to the extent that it is regarded
as more likely than not that they will be recovered.
2.5Goodwill
Goodwill arising on the acquisition of subsidiary undertakings or businesses,
representing any excess of fair value of the consideration given over the fair
value of the identifiable assets and liabilities acquired, is recognised as an
asset. Goodwill is reviewed for impairment at least annually and any impairment
is to be recognised in the income statement and is not subsequently reversed.
Goodwill is carried at cost less accumulated impairment losses.
2.6Intangible assets
In accordance with IFRS 3 Business Combinations, an intangible asset acquired in
a business combination is deemed to have a cost to the Group of its fair value
at the acquisition date. The fair value of the intangible asset reflects the
probability that the future economic benefits embodied in the asset will flow to
the Group. Intangible assets are tested for impairment on an annual basis.
Separately identifiable intangible assets are recognised at their fair value and
amortised over their useful economic lives as follows:
Customer contracts - 5 years
Software - 4 years
2.7Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation and any
provision for impairment. Depreciation is calculated to write down the cost of
assets to their estimated residual values of each asset over their estimated
useful economic on a straight line basis, as follows:
+--------------------------------+---------------------------------------------+
| Long leasehold property | 50 years |
+--------------------------------+---------------------------------------------+
| Short leasehold improvements | Term of lease |
+--------------------------------+---------------------------------------------+
| Fixtures, fittings and office | 4 years |
| equipment | |
+--------------------------------+---------------------------------------------+
| Motor vehicles | 4 years |
+--------------------------------+---------------------------------------------+
2.8Investment properties
Investment property comprises non-owner occupied buildings held to earn rentals
and for capital appreciation. Investment property is carried at fair value and
is restated at each balance sheet date. Changes in fair values are recognised in
the income statement in the period in which the change arises.
2.9Financial instruments
The Group classifies financial instruments, or their component parts, on intial
recognition as a financial asset, a financial liability or an equity instrument
in accordance with the substance of the contractual arrangement.
Financial instruments are recognised on the balance sheet at fair value when the
Group becomes a party to the contractual provisions of the instrument.
2.10Held-to-maturity investments
Held-to-maturity investments are measured at amortised cost.
2.11Other financial assets
Other financial assets are recognised at their fair value. Movement in fair
values are taken directly to the income statement.
2.12Available for sale investments
Subsequent to initial recognition movements in the fair value of available for
sale investments are taken directly to equity. Fair values are based on prices
quoted in an active market if such a market is available. If an active market is
not available, the Group establishes the financial instrument's fair value by
using a valuation technique, mainly discounted cash flow analysis. Available for
sale investments are reviewed for impairment on an annual basis by the Directors
with particular emphasis on factors such as the published forecasts or
expectations for the investment or any indication of the risk of restricted
realisations. Any impairment loss is taken direct to the income statement to the
extent that it reflects the difference between acquisition cost and fair value,
with the balance taken direct to equity.
2.13Trade receivables
Trade and other receivables are stated at their original invoiced value, as the
interest that would be recognised from discounting future cash receipts over the
short credit period is not considered to be material. Trade receivables are
reduced by appropriate allowances for estimated irrecoverable amounts.
2.14Trade payables
Trade and other payables are stated at their original invoiced value, as the
interest that would be recognised from discounting future cash payments over the
short payment period is not considered to be material.
2.15Interest-bearing borrowings
Interest-bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in the income statement over
the period of the borrowings on an effective interest rate basis.
2.16Carried interest receivable
The Group earns a performance fee ("carried interest receivable") on funds it
manages on behalf of its investors. Carried interest receivable is recognised
where, at the balance sheet date, the performance criteria have been met based
on the valuations of the funds. Carried interest that has been earned, but where
the amounts are not yet due for payment, is discounted to its present value.
2.17Leasing and hire purchase
Assets obtained under hire purchase contracts and finance leases are capitalised
as property, plant and equipment and are depreciated over their useful economic
lives. Finance leases are those where substantially all of the benefits and
risks of ownership are assumed by the Group. Obligations under such agreements
are included in creditors net of the finance charge allocated to future periods.
The finance element of the rental payment is charged to the income statement so
as to produce a constant periodic rate of charge on the net obligation
outstanding in each period.
2.18Operating leases
Rentals under operating leases where substantially all of the benefits and risks
of ownership remain with the lessor are charged on a straight line basis over
the lease term.
2.19Pensions
The Group operates a defined contribution pension scheme and the pension costs
charged against profits represent the amount of contributions payable to the
scheme in the year. Differences between contributions payable and contributions
actually paid are shown as either accruals or prepayments in the balance sheet.
2.20Holiday pay
The Group recognises an asset or liability for holiday pay obligations at the
balance sheet date. Movements in the period are taken to the income statement.
2.21Share based payments
The Group issues equity-settled share-based payments to certain employees
(including Directors) and suppliers. The fair value of the services received
from suppliers is recognised as a charge. Equity-settled share-based payments
are measured at fair value at the grant date. The fair value determined at the
grant date of the equity-settled share-based payment is expensed on a
straight-line basis over the vesting period, together with a corresponding
increase in equity, based upon the Group's estimate of the shares that will
eventually vest.
Fair value is determined using the Black-Scholes pricing model. The expected
life used in the model has been adjusted, based on management's best estimate,
for the effects of non-transferability, exercise restrictions and behavioural
considerations.
Critical accounting policies and key sources of uncertainty
Estimates and accounting judgments are continually evaluated and are based on
historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. The preparation of
financial statements under IFRS requires management to make assumptions and
estimates about future events. The resulting accounting estimates will, by
definition, differ from the actual results. The following judgments, estimates
and assumptions have been made in preparing the financial statements.
Impairment of goodwill - determining whether goodwill is impaired requires an
estimation of the value in use of the cash-generating units to which goodwill
has been allocated. The value in use calculation requires the entity to estimate
the future cash flows expected to arise from the cash-generating unit and a
suitable discount rate in order to calculate present value. The selection of the
discount rate applied is a subjective judgment and a 1% movement in the discount
rate applied would represent approximately a GBP115,000 movement in the fair
value assessment for the goodwill arising from the acquisition of The Braemar
Group Limited, approximately a GBP36,000 movement in the fair value assessment
for the goodwill arising from the acquisition of the block management business
of Main & Main (Developments) Limited and approximately a GBP2,000 movement in
the fair value assessment for the goodwill arising from the acquisition of The
Manchester Ground Rent Company Limited.
Intangible assets - values calculated in respect of customer contracts and
relationships, in assessing the fair values of consideration for acquisitions,
are subject to assumptions on client retention rates and the estimated future
cash flows expected to arise from these contracts and relationships and a
suitable discount rate in order to calculate present value. The rate of
amortisation applied to these intangible assets requires an estimate of the
likely duration of the economic benefits to flow from these contracts and
relationships. The duration requires a subjective judgment and a movement in the
number of years applied by a single year would have an impact on the valuation
of approximately GBP10,000.
Discontinued operations - the classification of a discontinued operation
requires an assessment of whether the terminated activities represented a
material change in the nature and focus of the business and the business
activities represented a material and distinguishable area of activity.
Share option charges - the calculation of the share option charge requires an
estimate of the expected life of share options, volatility of shares, risk free
yield rate to maturity and expected dividend yield.
Investment property valuation - the estimated fair value of the Harrogate
investment property held by the Group as at 31 March 2009 has been based on the
value of the income stream arising from the property using a theoretical yield
to a potential acquirer that reflects current market conditions. This yield
assumption includes an element of subjective judgment and a 1% movement in the
yield assumption would account for approximately a GBP25,000 movement in the
valuation.
Classification of Convertible Loan Notes - the Convertible Loan Notes are
classified as a debt instrument as at the date of issue it was expected that the
loans would be held until the full-term of the loan agreement and then repaid in
full by the Group. An alternative assessment would require an apportionment of
the amounts owed between equity and debt, which given the materiality of the
amounts owed (GBP608,000 at 31 March 2009) could have a significant impact on
the presentation of the financial statements. There would be no impact on the
income statement.
3. Segmental reporting
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| | Securities | Estates | Property | Consolidated |
| | | | investment | |
| | | | and trading | |
+-------------------+-------------------+-------------------+-------------------+-------------------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Revenue | 1,513 | 776 | 1,080 | 475 | 17 | 13 | 2,610 | 1,264 |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Segment result | 318 | 37 | (73) | 115 | (11) | 75 | 234 | 227 |
| (EBITDA) | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Central costs | | | | | | | (357) | (635) |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| EBITDA | | | | | | | (123) | (408) |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Depreciation and | | | | | | | (57) | (31) |
| amortisation | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Operating loss | | | | | | | (180) | (439) |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Finance income | | | | | | | 29 | 42 |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Finance expense | | | | | | | (59) | (53) |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Loss before tax | | | | | | | (210) | (450) |
| from continuing | | | | | | | | |
| operations | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Discontinued | | | | | | | - | (471) |
| operations | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Loss before tax | | | | | | | (210) | (921) |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
There is no inter-group revenue between the segments recorded in the year.
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| | Securities | Estates | Property | Consolidated |
| | | | investment | |
| | | | and trading | |
+-------------------+-------------------+-------------------+-------------------+-------------------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Segment assets | 3,491 | 4,282 | 1,488 | 1,339 | 810 | 225 | 5,789 | 5,846 |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Unallocated | | | | | | | 308 | 380 |
| corporate assets | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Consolidation | | | | | | | (1,847) | (728) |
| adjustments | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Consolidated | | | | | | | 4,250 | 5,498 |
| total assets | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| | Securities | Estates | Property | Consolidated |
| | | | investment | |
| | | | and trading | |
+-------------------+-------------------+-------------------+-------------------+-------------------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Segment | 346 | 1,536 | 65 | 172 | 593 | 225 | 1,004 | 1,933 |
| liabilities | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Unallocated | | | | | | | 2,548 | 1,555 |
| corporate | | | | | | | | |
| liabilities | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Consolidation | | | | | | | (1,847) | (728) |
| adjustments | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Consolidated | | | | | | | 1,705 | 2,760 |
| total liabilities | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
The total revenue of the Group for the year has been derived wholly from
activity undertaken in the United Kingdom.
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| | Securities | Estates | Property | Consolidated |
| | | | investment | |
| | | | and trading | |
+-------------------+-------------------+-------------------+-------------------+-------------------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Depreciation and | - | - | 9 | 4 | - | - | 9 | 4 |
| amortisation | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Unallocated | | | | | | | 48 | 27 |
| depreciation and | | | | | | | | |
| amortisation | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Total | | | | | | | 57 | 31 |
| depreciation and | | | | | | | | |
| amortisation | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Capital | 2 | - | 9 | 205 | - | - | 11 | 205 |
| expenditure | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Unallocated | | | | | | | 16 | 249 |
| capital | | | | | | | | |
| expenditure | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Total capital | | | | | | | 27 | 454 |
| expenditure | | | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Impairment loss | 21 | - | - | - | 28 | - | 49 | - |
+-------------------+---------+---------+---------+---------+---------+---------+---------+---------+
4.Operating loss
The operating loss is stated after charging:
+---------------------------------------------------+------------+------------+
| | Year ended | Year ended |
| | 31 March | |
| | 2009 | 31 March |
| | | 2008 |
+---------------------------------------------------+------------+------------+
| | GBP'000 | GBP'000 |
+---------------------------------------------------+------------+------------+
| Amortisation of intangible assets | 28 | 9 |
+---------------------------------------------------+------------+------------+
| Depreciation of property, plant and equipment | 29 | 22 |
+---------------------------------------------------+------------+------------+
| Rentals under operating leases | 86 | 56 |
+---------------------------------------------------+------------+------------+
| Change in fair value of investment property | 28 | (82) |
+---------------------------------------------------+------------+------------+
| Change in fair value of available for sale | 21 | - |
| investments | | |
+---------------------------------------------------+------------+------------+
| Change in fair value of other financial assets | (30) | (37) |
+---------------------------------------------------+------------+------------+
| Employee costs | 1,195 | 1,072 |
+---------------------------------------------------+------------+------------+
5.Auditor's remuneration
+---------------------------------------------------+------------+------------+
| | Year ended | Year ended |
| | 31 March | |
| | 2009 | 31 March |
| | | 2008 |
+---------------------------------------------------+------------+------------+
| | GBP'000 | GBP'000 |
+---------------------------------------------------+------------+------------+
| Fees payable to the Group's auditor for the audit | 5 | 5 |
| of the Group's annual financial statements | | |
+---------------------------------------------------+------------+------------+
| Fees payable to the Group's auditor and its | | |
| associates for other services: | | |
+---------------------------------------------------+------------+------------+
| - the audit of the Group's | 20 | 11 |
| subsidiaries, pursuant to legislation | | |
+---------------------------------------------------+------------+------------+
| - other services relating to tax | 5 | 4 |
+---------------------------------------------------+------------+------------+
| | 30 | 20 |
+---------------------------------------------------+------------+------------+
6.Particulars of employees
+---------------------------------------------------+------------+------------+
| | 2009 | 2008 |
+---------------------------------------------------+------------+------------+
| | No. | No. |
+---------------------------------------------------+------------+------------+
| The average number of employees including | 33 | 24 |
| Directors during the year was: | | |
+---------------------------------------------------+------------+------------+
| | | |
+---------------------------------------------------+------------+------------+
| | 2009 | 2008 |
+---------------------------------------------------+------------+------------+
| The aggregate payroll costs of the above were: | GBP'000 | GBP'000 |
+---------------------------------------------------+------------+------------+
| Wages and salaries | 1,020 | 955 |
+---------------------------------------------------+------------+------------+
| Social security costs | 112 | 88 |
+---------------------------------------------------+------------+------------+
| Other pension costs | 51 | 10 |
+---------------------------------------------------+------------+------------+
| Share option charge | 12 | 19 |
+---------------------------------------------------+------------+------------+
| | 1,195 | 1,072 |
+---------------------------------------------------+------------+------------+
7.Directors' emoluments
The total amounts for Directors' remuneration and other benefits were as
follows:
+-----------------+------------+------------+---------------+------------+------------+
| | Salary | Bonus | Pension | 2009 | 2008 |
| | | | contributions | | |
+-----------------+------------+------------+---------------+------------+------------+
| Executive | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------+------------+------------+---------------+------------+------------+
| M J Duschenes | 111 | 3 | 28 | 142 | 124 |
+-----------------+------------+------------+---------------+------------+------------+
| W M Robinson | 95 | 2 | 11 | 108 | 95 |
+-----------------+------------+------------+---------------+------------+------------+
| J S Murphy | 90 | 10 | 10 | 110 | 85 |
+-----------------+------------+------------+---------------+------------+------------+
| Non executive | | | | | |
+-----------------+------------+------------+---------------+------------+------------+
| A B S McFarland | 23 | - | - | 23 | 21 |
+-----------------+------------+------------+---------------+------------+------------+
| | 319 | 15 | 49 | 383 | 325 |
+-----------------+------------+------------+---------------+------------+------------+
In addition to the above the charge to income in the year in respect of share
options for Directors was GBP10,000 (2008: GBP12,000).
8. Investment income
+------------------------------------------------------+----------+------------+
| | 2009 | 2008 |
+------------------------------------------------------+----------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------------+----------+------------+
| Bank interest receivable | 15 | 42 |
+------------------------------------------------------+----------+------------+
| Interest receivable on government securities | 14 | - |
+------------------------------------------------------+----------+------------+
| | 29 | 42 |
+------------------------------------------------------+----------+------------+
9. Finance costs
+------------------------------------------------------+----------+------------+
| | 2009 | 2008 |
+------------------------------------------------------+----------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------------+----------+------------+
| Interest and other similar charges payable on bank | 18 | 12 |
| borrowings | | |
+------------------------------------------------------+----------+------------+
| Finance lease interest payable | 6 | 6 |
+------------------------------------------------------+----------+------------+
| Other | 35 | 35 |
+------------------------------------------------------+----------+------------+
| | 59 | 53 |
+------------------------------------------------------+----------+------------+
10.Income tax expense
+------------------------------------------------------+----------+------------+
| | 2009 | 2008 |
+------------------------------------------------------+----------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------------+----------+------------+
| Current tax: | | |
+------------------------------------------------------+----------+------------+
| UK Corporation tax | - | - |
+------------------------------------------------------+----------+------------+
| Adjustment in respect of prior year | - | - |
+------------------------------------------------------+----------+------------+
| | - | - |
+------------------------------------------------------+----------+------------+
| Deferred tax: | | |
+------------------------------------------------------+----------+------------+
| Origination and reversal of temporal differences | 8 | (23) |
+------------------------------------------------------+----------+------------+
| | 8 | (23) |
+------------------------------------------------------+----------+------------+
The differences between the total current tax shown above and the amount
calculated by applying the standard rate of UK corporation tax of 28% (2008:
30%) to the loss is as follows:
+------------------------------------------------------+----------+------------+
| | 2009 | 2008 |
+------------------------------------------------------+----------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------------+----------+------------+
| Loss for the year from continuing operations | (202) | (450) |
+------------------------------------------------------+----------+------------+
| Loss for the year from discontinued operations | - | (471) |
+------------------------------------------------------+----------+------------+
| Loss for the year from operations | (202) | (921) |
+------------------------------------------------------+----------+------------+
| Loss on ordinary activities multiplied by standard | (57) | (276) |
| rate of corporation tax in the UK of 28%/30% | | |
+------------------------------------------------------+----------+------------+
| Effects of: | | |
+------------------------------------------------------+----------+------------+
| | | |
+------------------------------------------------------+----------+------------+
| Expenses not deductible for tax purposes | 1 | 8 |
+------------------------------------------------------+----------+------------+
| Amortisation/impairment of intangible assets and | 6 | 86 |
| goodwill | | |
+------------------------------------------------------+----------+------------+
| Income not taxable | (9) | (58) |
+------------------------------------------------------+----------+------------+
| Movement in tax losses | 67 | 217 |
+------------------------------------------------------+----------+------------+
| | 8 | (23) |
+------------------------------------------------------+----------+------------+
No adjustment has been made to the financial statements to reflect a potential
deferred tax asset that would arise from future utilisation of the Group's
available losses for tax purposes, due to the uncertainty over the timing of
such utilisation. The potential deferred tax asset that would arise on full
utilisation would amount to approximately GBP466,897.
11.Loss per share
The calculation of loss per share is based on the following losses and numbers
of shares:
+------------------------------------------------------+-------------+-------------+
| | 2009 | 2008 |
+------------------------------------------------------+-------------+-------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------------+-------------+-------------+
| Loss for the year - continuing operations | 202 | 473 |
+------------------------------------------------------+-------------+-------------+
| Loss for the year - discontinued operations | - | 471 |
+------------------------------------------------------+-------------+-------------+
| Loss for the year - continuing and discontinued | 202 | 944 |
| operations | | |
+------------------------------------------------------+-------------+-------------+
| Weighted average number of ordinary shares | 163,786,903 | 150,392,492 |
+------------------------------------------------------+-------------+-------------+
| Loss per ordinary shares - continuing operations - | 0.12p | 0.31p |
| basic and diluted | | |
+------------------------------------------------------+-------------+-------------+
| Loss per ordinary shares - discontinued operations - | - | 0.31p |
| basic and diluted | | |
+------------------------------------------------------+-------------+-------------+
| Loss per ordinary shares - continuing and | 0.12p | 0.62p |
| discontinued operations - basic and diluted | | |
+------------------------------------------------------+-------------+-------------+
There are 34,536,586 potentially issuable shares that have not been included in
a diluted EPS calculation as they are anti-dilutive.
12.Goodwill
+------------------------------------------------+--------------+--------------+
| | 2009 | 2008 |
+------------------------------------------------+--------------+--------------+
| Net book value | GBP'000 | GBP'000 |
+------------------------------------------------+--------------+--------------+
| At 1 April | 2,694 | 2,244 |
+------------------------------------------------+--------------+--------------+
| Additions - current period acquisitions at | 42 | 569 |
| cost | | |
+------------------------------------------------+--------------+--------------+
| Impairment charge | - | (119) |
+------------------------------------------------+--------------+--------------+
| At 31 March | 2,736 | 2,694 |
+------------------------------------------------+--------------+--------------+
Goodwill was allocated for impairment testing purposes to cash generating units
which contained carrying amounts of goodwill allocated as follows:
+------------------------------------------------+--------------+--------------+
| | 2009 | 2008 |
+------------------------------------------------+--------------+--------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+--------------+--------------+
| Braemar Group Limited | 2,244 | 2,244 |
+------------------------------------------------+--------------+--------------+
| Block management division of Main & Main | 450 | 450 |
| (Developments) Limited | | |
+------------------------------------------------+--------------+--------------+
| The Manchester Ground Rent Company Limited | 42 | - |
+------------------------------------------------+--------------+--------------+
| | 2,736 | 2,694 |
+------------------------------------------------+--------------+--------------+
The recoverable amounts of the cash generating units noted above are determined
based on a value in use calculation using discounted cash flow forecasts. Cash
flow forecasts were prepared for each cash generating unit, based on the
financial projections included in the Group's forecasts to March 2010 and
extended to five years based on broadly consistent growth assumptions. The five
year cash flows were discounted at an assumed cost of capital of 14% based on an
assumed risk free rate of 4% and a risk premium of 10%.
13. Other intangible assets
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
| | Software | Software | Customer | Customer | Customer | Customer | Total | Total |
| | costs | costs | databases | databases | contracts | contracts | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Cost | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| At 1 April | - | - | 160 | - | 110 | - | 270 | - |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Reclassification | 24 | - | - | | - | - | 24 | - |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Additions | 6 | - | - | 160 | - | 110 | 6 | 270 |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Disposals | - | - | (160) | | - | | (160) | - |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| At 31 March | 30 | - | - | 160 | 110 | 110 | 140 | 270 |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Amortisation | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| At 1 April | - | - | 160 | - | 9 | - | 169 | - |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Reclassification | 4 | - | - | - | - | - | 4 | - |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Impairment | - | - | - | 160 | - | - | - | 160 |
| charge | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Charge for | 6 | - | - | - | 22 | 9 | 28 | 9 |
| the year | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Disposals | - | - | (160) | - | - | - | (160) | - |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| At 31 March | 10 | - | - | 160 | 31 | 9 | 41 | 169 |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Net book | | | | | | | | |
| value | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| At 31 March | 20 | - | - | - | 79 | 101 | 99 | 101 |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
Customer contracts
These are the customer contracts acquired as part of the acquisition of the
block management division of Main & Main (Developments) Limited.
Customer databases
These are the customer databases acquired as part of the acquisition of The
Armchair Property Investor Limited.
Software Costs
These are costs of acquisition and development of software utilised by companies
within the Group. Included within software costs are assets with a book value
of GBP11,000 subject to finance leases.
14. Property, plant and equipment
+-----------------------+---------+---------+---------+---------+---------+---------+
| | Long leasehold | Fixtures, | Total |
| | property | fittings and | |
| | | office equipment | |
+-----------------------+-------------------+-------------------+-------------------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
+-----------------------+---------+---------+---------+---------+---------+---------+
| Cost | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------------+---------+---------+---------+---------+---------+---------+
| At 1 April | 91 | - | 118 | 25 | 209 | 25 |
+-----------------------+---------+---------+---------+---------+---------+---------+
| Reclassification | - | - | (24) | - | (24) | - |
+-----------------------+---------+---------+---------+---------+---------+---------+
| Additions | - | 91 | 21 | 93 | 21 | 184 |
+-----------------------+---------+---------+---------+---------+---------+---------+
| Disposals | - | - | (14) | - | (14) | - |
+-----------------------+---------+---------+---------+---------+---------+---------+
| At 31 March | 91 | 91 | 101 | 118 | 192 | 209 |
+-----------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+-----------------------+---------+---------+---------+---------+---------+---------+
| Depreciation | | | | | | |
+-----------------------+---------+---------+---------+---------+---------+---------+
| At 1 April | - | - | 26 | 4 | 26 | 4 |
+-----------------------+---------+---------+---------+---------+---------+---------+
| Reclassification | - | - | (4) | - | (4) | |
+-----------------------+---------+---------+---------+---------+---------+---------+
| Charge for the year | 2 | - | 27 | 22 | 29 | 22 |
+-----------------------+---------+---------+---------+---------+---------+---------+
| Disposals | - | - | - | - | - | - |
+-----------------------+---------+---------+---------+---------+---------+---------+
| At 31 March | 2 | - | 49 | 26 | 51 | 26 |
+-----------------------+---------+---------+---------+---------+---------+---------+
| Net book value | | | | | | |
+-----------------------+---------+---------+---------+---------+---------+---------+
| At 31 March | 89 | 91 | 52 | 92 | 141 | 183 |
+-----------------------+---------+---------+---------+---------+---------+---------+
The long leasehold property acquired in the year is a 996 year lease on office
premises in Reading. The premises are occupied by Braemar Estates (Residential)
Limited and are utilised as part of the Group's property management business.
Included within fixtures, fittings and office equipment are assets with a book
value of GBP14,000 subject to finance leases.
15. Investment properties
+------------------------------------------------------+-----------+-----------+
| | 2009 | 2008 |
+------------------------------------------------------+-----------+-----------+
| | GBP'000 | GBP'000 |
+------------------------------------------------------+-----------+-----------+
| | | |
+------------------------------------------------------+-----------+-----------+
| At 1 April | 225 | 142 |
+------------------------------------------------------+-----------+-----------+
| Additions | 410 | 1 |
+------------------------------------------------------+-----------+-----------+
| Fair value adjustments | (28) | 82 |
+------------------------------------------------------+-----------+-----------+
| At 31 March | 607 | 225 |
+------------------------------------------------------+-----------+-----------+
The Directors have estimated the fair value of the Harrogate investment property
at the balance sheet date. This property enjoys the benefit of a 15 year lease
to a tenant and the value has been estimated based on an effective yield
consistent with current conditions in the commercial property market.
The investment property acquired as part of the acquisition of The Manchester
Ground Rent Company Limited was valued in March 2009 by an independent
professionally qualified valuer, which was used as the basis for the Director's
estimate of fair value at the balance sheet date.
Property with a fair value of GBP607,000 has been pledged as collateral for
borrowings.
Amounts recognised in the income statement
+------------------------------------------------------+-----------+-----------+
| | 2009 | 2008 |
+------------------------------------------------------+-----------+-----------+
| | GBP'000 | GBP'000 |
+------------------------------------------------------+-----------+-----------+
| Rental income | 17 | 13 |
+------------------------------------------------------+-----------+-----------+
There are no material operating costs associated with the investment properties
in the year.
16. Acquisitions
On 6 March 2009 the company acquired the whole of the share capital of The
Manchester Ground Rent Company Limited.
This acquisition is summarised as follows:
+-------------------------------------------------------+-----+----------------+
| | | The Manchester |
| | | Ground Rent |
| | | Company |
| | | Limited |
| | | GBP'000 |
+-------------------------------------------------------+-----+----------------+
| Investment Property | | 410 |
+-------------------------------------------------------+-----+----------------+
| Loan outstanding | | (315) |
+-------------------------------------------------------+-----+----------------+
| Other payables | | (5) |
+-------------------------------------------------------+-----+----------------+
| Deferred tax | | (25) |
+-------------------------------------------------------+-----+----------------+
| Goodwill | | 42 |
+-------------------------------------------------------+-----+----------------+
| Consideration | | 107 |
+-------------------------------------------------------+-----+----------------+
| Comprising: | | |
+-------------------------------------------------------+-----+----------------+
| Cash | | 95 |
+-------------------------------------------------------+-----+----------------+
| Acquisition costs | | 12 |
+-------------------------------------------------------+-----+----------------+
| | | 107 |
+-------------------------------------------------------+-----+----------------+
| Purchase consideration settled in cash | | 107 |
+-------------------------------------------------------+-----+----------------+
| Cash and cash equivalents acquired | | - |
+-------------------------------------------------------+-----+----------------+
| Cash outflow on acquisitions | | 107 |
+-------------------------------------------------------+-----+----------------+
No income or expenses have been recognised in the income statement in relation
to this acquisition in the year to 31 March 2009.
17. Held to maturity investments
+------------------------------------------------+--------------+--------------+
| | 2009 | 2008 |
+------------------------------------------------+--------------+--------------+
| Cost | GBP'000 | GBP'000 |
+------------------------------------------------+--------------+--------------+
| At 1 April | 18 | 4 |
+------------------------------------------------+--------------+--------------+
| Additions | 41 | 14 |
+------------------------------------------------+--------------+--------------+
| At 31 March | 59 | 18 |
+------------------------------------------------+--------------+--------------+
Held to maturity investments represent holdings in investment schemes and
companies operated by the Group.
18. Other financial assets
+------------------------------------------------+--------------+--------------+
| | 2009 | 2008 |
+------------------------------------------------+--------------+--------------+
| Net book value | GBP'000 | GBP'000 |
+------------------------------------------------+--------------+--------------+
| At 1 April | 37 | - |
+------------------------------------------------+--------------+--------------+
| Movements in fair value | 30 | 37 |
+------------------------------------------------+--------------+--------------+
| At 31 March | 67 | 37 |
+------------------------------------------------+--------------+--------------+
Other financial assets represents the fair value of the warrant held by Braemar
Securities Limited, which entitles the holder to subscribe for 3% of the share
capital of Braemar UK Agricultural Land plc at par. The warrant has no expiry
date.
19.Available for sale investments
+------------------------------------------------+--------------+--------------+
| | 2009 | 2008 |
+------------------------------------------------+--------------+--------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+--------------+--------------+
| Net book value | | |
+------------------------------------------------+--------------+--------------+
| At 1 April | 32 | 112 |
+------------------------------------------------+--------------+--------------+
| Market value movements taken directly to | (3) | (80) |
| equity | | |
+------------------------------------------------+--------------+--------------+
| Impairment charge taken to income statement | (21) | - |
+------------------------------------------------+--------------+--------------+
| At 31 March | 8 | 32 |
+------------------------------------------------+--------------+--------------+
The available for sale investments represents 2,350,000 shares in Regenesis
Group plc, which represents a beneficial interest of 3.9% and is quoted on AIM,
though it will cease to be admitted to trading on AIM on 29 June 2009. Following
this announcement the Directors consider the asset to be impaired and have
valued the asset based on its net asset value rather than the market value of
its shares. The share price of Regenesis Group plc at 31 March 2009 was 0.375p.
20.Trade and other receivables
+------------------------------------------------+---------------+--------------+
| | 2009 | 2008 |
+------------------------------------------------+---------------+--------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+---------------+--------------+
| Trade receivables | 30 | 27 |
+------------------------------------------------+---------------+--------------+
| Related party receivables (see note 31) | 20 | 141 |
+------------------------------------------------+---------------+--------------+
| Prepayments and accrued income | 255 | 1,659 |
+------------------------------------------------+---------------+--------------+
| Other receivables | 22 | 92 |
+------------------------------------------------+---------------+--------------+
| | 327 | 1,919 |
+------------------------------------------------+---------------+--------------+
| | | |
+------------------------------------------------+---------------+--------------+
Trade receivables do not carry interest. There are no impaired trade receivables
(2008: GBPnil).
+------------------------------------------------+---------------+--------------+
| Ageing of past due but not impaired trade and | 2009 | 2008 |
| related party receivables: | GBP'000 | GBP'000 |
| | | |
+------------------------------------------------+---------------+--------------+
| 0-30 days past due | 15 | 150 |
+------------------------------------------------+---------------+--------------+
| 31-60 days past due | 1 | 1 |
+------------------------------------------------+---------------+--------------+
| Over 60 days past due | 34 | 17 |
+------------------------------------------------+---------------+--------------+
| | 50 | 168 |
+------------------------------------------------+---------------+--------------+
21. Reconciliation of operating loss to net cash flow from operations
+--------------------------------------------------------+----------+------------+
| | Year | Year ended |
| | ended | |
| | 31 March | 31 March |
| | | 2008 |
| | 2009 | |
+--------------------------------------------------------+----------+------------+
| | GBP'000 | GBP'000 |
+--------------------------------------------------------+----------+------------+
| Operating activities | | |
+--------------------------------------------------------+----------+------------+
| Loss before tax from continuing operations | (210) | (450) |
+--------------------------------------------------------+----------+------------+
| Loss before tax from discontinued operations | - | (471) |
+--------------------------------------------------------+----------+------------+
| Depreciation of property, plant and equipment | 29 | 22 |
+--------------------------------------------------------+----------+------------+
| Amortisation of intangible assets | 28 | 9 |
+--------------------------------------------------------+----------+------------+
| Impairment of intangible assets | - | 160 |
+--------------------------------------------------------+----------+------------+
| Impairment of available for sale assets | 21 | - |
+--------------------------------------------------------+----------+------------+
| Goodwill impairment charge | - | 119 |
+--------------------------------------------------------+----------+------------+
| Share option charge | 12 | 19 |
+--------------------------------------------------------+----------+------------+
| Share-based income | (29) | (37) |
+--------------------------------------------------------+----------+------------+
| Loss on sale of fixed assets | 9 | - |
+--------------------------------------------------------+----------+------------+
| Decrease/(increase) in fair value of investment | 28 | (82) |
| properties | | |
+--------------------------------------------------------+----------+------------+
| Interest income | (29) | (42) |
+--------------------------------------------------------+----------+------------+
| Interest expense | 59 | 53 |
+--------------------------------------------------------+----------+------------+
| Operating cash flows before movements in working | (82) | (700) |
| capital | | |
+--------------------------------------------------------+----------+------------+
| Decrease/(increase) in trade and other receivables | 1,593 | (1,622) |
+--------------------------------------------------------+----------+------------+
| (Decrease)/increase in trade and other payables | (1,706) | 1,444 |
+--------------------------------------------------------+----------+------------+
| Cash absorbed by operations | (195) | (878) |
+--------------------------------------------------------+----------+------------+
22. Cash and cash equivalents
+------------------------------------------------+------------------+------------+
| | 2009 | 2008 |
+------------------------------------------------+------------------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+------------------+------------+
| Cash and cash equivalents | 206 | 289 |
+------------------------------------------------+------------------+------------+
Cash and cash equivalents comprises short-term deposits, the effective rate of
interest earned on these deposits for the year ended 31 March 2009 was 3.15%.
23.Borrowings
+---------------------------------------------------+--------------+------------+
| | 2009 | 2008 |
+---------------------------------------------------+--------------+------------+
| Current | GBP'000 | GBP'000 |
+---------------------------------------------------+--------------+------------+
| Interest bearing loans and borrowings - | 512 | 512 |
| Convertible loan notes | | |
+---------------------------------------------------+--------------+------------+
| Obligations under finance leases | 22 | 22 |
+---------------------------------------------------+--------------+------------+
| | 534 | 534 |
+---------------------------------------------------+--------------+------------+
| Non-current | | |
+---------------------------------------------------+--------------+------------+
| Interest bearing loans and borrowings - from | 225 | 225 |
| Northern Rock plc | | |
+---------------------------------------------------+--------------+------------+
| Interest bearing loans and borrowings - from | 308 | - |
| Royal Bank of Scotland plc | | |
+---------------------------------------------------+--------------+------------+
| Obligations under finance leases | 11 | 29 |
+---------------------------------------------------+--------------+------------+
| | 544 | 254 |
+---------------------------------------------------+--------------+------------+
| Total borrowings | 1,078 | 788 |
+---------------------------------------------------+--------------+------------+
The convertible loan notes are redeemable on the earlier of the date on which
the Group has sufficient working capital to enable payment and five years from
the date of issue, subject to the approval of the holders of the loan notes. The
loan notes accrue interest at a fixed rate of 2% above bank base rate on the
date of issue, payable upon redemption or conversion of the loan notes. The loan
notes are convertible into ordinary shares at 3p per share at any time or before
the fifth anniversary of issue provided the holders of the loan notes and their
concert parties do not hold more than 29.99% of the entire issued share capital
of the Company. The option to convert to ordinary shares is at the discretion of
the holders of the loan notes.
The loan from Northern Rock plc is secured by a fixed charge on an investment
property for an amount of GBP225,000. The interest rate has been fixed at 7.05%
for the full five year term of the loan and the loan is repayable in full on the
fifth anniversary of the loan in October 2012.
The loan from the Royal Bank of Scotland plc is secured by a fixed charge on
investment property for an amount of GBP308,000. The loan is due for repayment
in full on the 13 January 2014 and the interest rate has been set at 2.75% p.a.
above the Royal Bank of Scotland plc's Base Rate.
23.1 Obligations under finance leases
Obligations under finance leases are as follows:
+------------------------------------------------+------------------+------------+
| | 2009 | 2008 |
+------------------------------------------------+------------------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+------------------+------------+
| Within one year | 22 | 22 |
+------------------------------------------------+------------------+------------+
| Between one and two years | 11 | 29 |
+------------------------------------------------+------------------+------------+
| | 33 | 51 |
+------------------------------------------------+------------------+------------+
Obligations under finance leases had an effective borrowing rate during the year
of 11.5%. Interest rates are fixed at the contract date. All finance lease
obligations are denominated in sterling and the value of the Group's obligations
are secured by the lessor's rights over the leased assets.
24. Deferred tax
Deferred tax liabilities comprise
+------------------------------------------------+------------------+------------+
| | 2009 | 2008 |
+------------------------------------------------+------------------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+------------------+------------+
| Fair value gains | 40 | 23 |
+------------------------------------------------+------------------+------------+
+------------------------------------------------+------------------+------------+
| | 2009 | 2008 |
+------------------------------------------------+------------------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+------------------+------------+
| At 1 April | 23 | - |
+------------------------------------------------+------------------+------------+
| Liability assumed following acquisitions | 25 | - |
+------------------------------------------------+------------------+------------+
| Recognised in the income statement | (8) | 23 |
+------------------------------------------------+------------------+------------+
| At 31 March | 40 | 23 |
+------------------------------------------------+------------------+------------+
25.Trade and other payables
+------------------------------------------------+------------------+------------+
| | 2009 | 2008 |
+------------------------------------------------+------------------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+------------------+------------+
| Trade payables | 52 | 159 |
+------------------------------------------------+------------------+------------+
| Taxes and social security costs | 72 | 119 |
+------------------------------------------------+------------------+------------+
| Accruals and deferred income | 450 | 1,664 |
+------------------------------------------------+------------------+------------+
| Other payables | 13 | 7 |
+------------------------------------------------+------------------+------------+
| | 587 | 1,949 |
+------------------------------------------------+------------------+------------+
26.Share capital
+------------------------------------------------+------------------+------------+
| | 2009 | 2008 |
+------------------------------------------------+------------------+------------+
| Authorised share capital: | GBP'000 | GBP'000 |
+------------------------------------------------+------------------+------------+
| 600,000,000 (2008: 600,000,000) ordinary | 6,000 | 6,000 |
| shares of 1p each | | |
+------------------------------------------------+------------------+------------+
+-----------------------------+-------------+-----------+--------+--------+------------+
| | 2009 | 2008 |
+-----------------------------+----------------------------------+---------------------+
| Issued capital: | No: | GBP'000 | No: | GBP'000 |
+-----------------------------+-------------+-----------+-----------------+------------+
| Ordinary shares of 1p each | 163,786,903 | 1,638 | 163,786,903 | 1,638 |
+-----------------------------+-------------+-----------+--------+--------+------------+
+------------------------------------------------+------------------+------------+
| | 2009 | 2008 |
+------------------------------------------------+------------------+------------+
| Issued capital: | GBP'000 | GBP'000 |
+------------------------------------------------+------------------+------------+
| At 1 April | 1,638 | 1,140 |
+------------------------------------------------+------------------+------------+
| Issued in the year: | | |
+------------------------------------------------+------------------+------------+
| Acquisitions | - | 61 |
+------------------------------------------------+------------------+------------+
| Fund raising | - | 437 |
+------------------------------------------------+------------------+------------+
| At 31 March | 1,638 | 1,638 |
+------------------------------------------------+------------------+------------+
27.Share options
Other than for the Directors, or disclosed in the Directors' report, no
performance criteria are in place for this scheme.
27.1Approved options
The Company operates an approved Company Share Option Plan.
+------------+-----------+-----------+-----------+-----------+-----------+----------+----------+--------+
| Date | Options | Options | Options | Options | Options | Exercise | Earliest | Expiry |
| options | held at | granted | exercised | lapsed | held at | Price | date for | date |
| granted | 1 April | during | during | during | 31 | | exercise | |
| | 2008 | the | the year | the | March | | | |
| | | year | | year | 2009 | | | |
+------------+-----------+-----------+-----------+-----------+-----------+----------+----------+--------+
| 13/06/2007 | 2,956,925 | - | - | (416,666) | 2,540,259 | 3.25p | Jun-10 | Jun-17 |
+------------+-----------+-----------+-----------+-----------+-----------+----------+----------+--------+
| 18/06/2008 | - | 2,405,165 | - | (205,000) | 2,200,165 | 1.25p | Jun-11 | Jun-18 |
+------------+-----------+-----------+-----------+-----------+-----------+----------+----------+--------+
| 06/11/2008 | - | 550,000 | - | (50,000) | 500,000 | 1.00p | Nov-11 | Nov-18 |
+------------+-----------+-----------+-----------+-----------+-----------+----------+----------+--------+
| | 2,956,925 | 2,955,165 | - | (671,666) | 5,240,424 | | | |
+------------+-----------+-----------+-----------+-----------+-----------+----------+----------+--------+
27.2Unapproved options
+------------+---------+-----------+-----------+---------+-----------+----------+----------+--------+
| Date | Options | Options | Options | Options | Options | Exercise | Earliest | Expiry |
| options | held at | granted | exercised | lapsed | held at | Price | date for | date |
| granted | 1 April | during | during | during | 31 | | exercise | |
| | 2008 | the | the year | the | March | | | |
| | | year | | year | 2009 | | | |
+------------+---------+-----------+-----------+---------+-----------+----------+----------+--------+
| 13/06/2007 | 568,975 | - | - | - | 568,975 | 3.25p | Jun-10 | Jun-17 |
+------------+---------+-----------+-----------+---------+-----------+----------+----------+--------+
| 18/06/2008 | - | 8,459,835 | - | - | 8,459,835 | 1.25p | Jun-11 | Jun-18 |
+------------+---------+-----------+-----------+---------+-----------+----------+----------+--------+
| | 568,975 | 8,459,835 | - | - | 9,028,810 | | | |
+------------+---------+-----------+-----------+---------+-----------+----------+----------+--------+
27.3Share option charges
Charges to the income statement are summarised as follows:
+------------------------------------------------+------------------+------------+
| | 2009 | 2008 |
+------------------------------------------------+------------------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+------------------+------------+
| Total | 12 | 19 |
+------------------------------------------------+------------------+------------+
Options are valued using the Black-Scholes option-pricing model and the
principal inputs into the model were as follows:
+------------------------------------------------+------------------+------------+
| | 2009 | 2008 |
+------------------------------------------------+------------------+------------+
| Weighted average exercise price | 3.25p | 3.25p |
+------------------------------------------------+------------------+------------+
| Expected volatility weighted average | 40% | 40% |
+------------------------------------------------+------------------+------------+
| Expected life weighted average | 3 years | 3 years |
+------------------------------------------------+------------------+------------+
| Risk-free rate | 5.75% | 5.75% |
+------------------------------------------------+------------------+------------+
| Expected dividend rate | nil | nil |
+------------------------------------------------+------------------+------------+
The volatility rate applied reflects the published industry norm for a financial
services company as recorded in widely available studies on market volatility.
Given the low level of volume in the Company's shares this is considered a more
statistically reliable benchmark than the actual volatility in the Company's
shares.
28.Reserves
+------------------------------+------------+-------------+------------+-------------+
| | Share | Accumulated | Share | Accumulated |
| | premium | loss | premium | loss |
| | account | | account | |
+------------------------------+------------+-------------+------------+-------------+
| | 2009 | 2009 | 2008 | 2008 |
+------------------------------+------------+-------------+------------+-------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------------+------------+-------------+------------+-------------+
| Balance brought forward | 2,945 | (1,845) | 1,957 | (840) |
+------------------------------+------------+-------------+------------+-------------+
| Retained loss for the year | - | (202) | - | (944) |
+------------------------------+------------+-------------+------------+-------------+
| Issue of ordinary shares | - | - | 1,004 | - |
+------------------------------+------------+-------------+------------+-------------+
| Share issue costs | - | - | (16) | - |
+------------------------------+------------+-------------+------------+-------------+
| Credit arising on share | - | 12 | - | 19 |
| options | | | | |
+------------------------------+------------+-------------+------------+-------------+
| Available for sale | - | (3) | - | (80) |
| investments fair value | | | | |
| movement | | | | |
+------------------------------+------------+-------------+------------+-------------+
| Balance carried forward | 2,945 | (2,038) | 2,945 | (1,845) |
+------------------------------+------------+-------------+------------+-------------+
29.Operating leases
Operating lease costs incurred during the year were:
+------------------------------------------------+------------------+------------+
| | 2009 | 2008 |
+------------------------------------------------+------------------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+------------------+------------+
| Land and buildings | 81 | 50 |
+------------------------------------------------+------------------+------------+
| Plant and equipment | 5 | 5 |
+------------------------------------------------+------------------+------------+
At 31 March 2009 the Group had total commitments under non-cancellable operating
leases as set out below:
+---------------------------------+----------+----------+------------+------------+
| | Land and buildings | Plant and equipment |
+---------------------------------+---------------------+-------------------------+
| | 2009 | 2008 | 2009 | 2008 |
+---------------------------------+----------+----------+------------+------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------+----------+----------+------------+------------+
| Within one year | 77 | 76 | 3 | 3 |
+---------------------------------+----------+----------+------------+------------+
| Between two and five years | 251 | 195 | - | - |
| inclusive | | | | |
+---------------------------------+----------+----------+------------+------------+
At 31 March 2009 the Group had total amounts receivable under non-cancellable
operating leases as set out below:
+------------------------------------+----------------------+-----------+-----------+
| | Land and buildings |
+------------------------------------+----------------------------------------------+
| | 2009 | 2008 |
+-----------------------------------------------------------+-----------+-----------+
| | GBP'000 | GBP'000 |
+-----------------------------------------------------------+-----------+-----------+
| Within one year | 17 | 17 |
+-----------------------------------------------------------+-----------+-----------+
| Between two and five years inclusive | 69 | 69 |
+-----------------------------------------------------------+-----------+-----------+
| More than five years | 138 | 155 |
+------------------------------------+----------------------+-----------+-----------+
30.Capital commitments and contingent liabilities
The Group had no material capital commitments or contingent liabilities at 31
March 2009 (2008: GBPNil).
31.Related party transactions
The Group's wholly-owned subsidiaries, Coronation General Partner Limited,
Coronation II General Partner Limited, Coronation III General Partner Limited,
Coronation IV General Partner Limited, Coronation VI General Partner Limited,
ReGen General Partner Limited, OEG General Partner Limited and OEG II General
Partner Limited have a nominal holding in and managerial authority over certain
aspects of the operation of: Coronation Limited Partnership, Coronation II
Limited Partnership, Coronation III Limited Partnership, Coronation IV Limited
Partnership, Coronation V Limited Partnership, Coronation VI Limited
Partnership, ReGen Limited Partnership, OEG Limited Partnership and OEG II
Limited Partnership.
The value of transactions between the Group and the following limited
partnerships during the year and the amounts outstanding at the year-end were as
follows:
+------------------------------+------------+-------------+------------+-------------+
| | Revenue | Amounts | Revenue | Amounts |
| | | outstanding | | outstanding |
| | | at 31 March | | at 31 March |
+------------------------------+------------+-------------+------------+-------------+
| | 2009 | 2009 | 2008 | 2008 |
+------------------------------+------------+-------------+------------+-------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------------+------------+-------------+------------+-------------+
| Coronation Limited | 56 | - | 51 | 5 |
| Partnership | | | | |
+------------------------------+------------+-------------+------------+-------------+
| Coronation II Limited | 44 | - | 40 | 6 |
| Partnership | | | | |
+------------------------------+------------+-------------+------------+-------------+
| Coronation III Limited | 62 | - | 63 | 6 |
| Partnership | | | | |
+------------------------------+------------+-------------+------------+-------------+
| Coronation IV Limited | 94 | - | 225 | 90 |
| Partnership | | | | |
+------------------------------+------------+-------------+------------+-------------+
| Coronation V Limited | 88 | - | 57 | 7 |
| Partnership | | | | |
+------------------------------+------------+-------------+------------+-------------+
| Coronation VI Limited | 62 | - | 50 | 50 |
| Partnership | | | | |
+------------------------------+------------+-------------+------------+-------------+
| OEG Limited Partnership | 289 | - | 209 | 209 |
+------------------------------+------------+-------------+------------+-------------+
| OEG II Limited Partnership | 162 | - | - | - |
+------------------------------+------------+-------------+------------+-------------+
| ReGen Limited Partnership | 173 | - | 105 | 105 |
+------------------------------+------------+-------------+------------+-------------+
Braemar Securities Limited, a wholly-owned subsidiary of Braemar Group plc,
provides administrative and corporate finance services to Braemar UK
Agricultural Land plc. Martin Robinson and Marc Duschenes are both Directors of
Braemar UK Agricultural Land plc. During the year invoices were raised of
GBP153,000 (2008: GBP81,900) of which none (2008: GBP81,900) were outstanding at
the year-end.
Braemar Group plc provides administrative services and office space to Regenesis
Group plc. Martin Robinson and Marc Duschenes are both Directors of Regenesis
Group plc. During the year invoices were raised of GBP19,680 of which GBP19,680
were outstanding at the year-end. These amounts outstanding are shown as related
party receivables in note 20.
31.1Amounts owed to key management
Amounts outstanding to key management at the balance sheet date were GBP608,000
(2008: GBP573,000) in the form of loan notes and accrued interest arising from
the acquisition of The Braemar Group Limited in 2005. The terms of these loans
are set-out in note 23.
31.2Key management compensation
The remuneration of Directors, who are key management personnel of the Group, is
set out below in aggregate for each of the categories specified in IAS 24
"Related Party Disclosures". Further information about the remuneration of
individual Directors is provided in note 7 to the financial statements.
+------------------------------------------------+------------------+------------+
| | 2009 | 2008 |
+------------------------------------------------+------------------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+------------------+------------+
| Short term employee benefits | 334 | 316 |
+------------------------------------------------+------------------+------------+
| Post employment benefits | 49 | 9 |
+------------------------------------------------+------------------+------------+
| | 383 | 325 |
+------------------------------------------------+------------------+------------+
The charge to income in the year in respect of share options for key management
personnel was GBP10,000 (2008: GBP12,000).
32.Post balance sheet events
There have been no material events from the date of the balance sheet until the
date of this report.
33.Pensions
The Group provides pension arrangements to the majority of full-time employees
through a defined contribution scheme. The pension charge for the year was
GBP51,000 (2008: GBP10,000).
34.Financial instruments
The Group's financial instruments are summarised below.
34.1Financial assets
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | Assets at | Loans and | Held to | Available | Total |
| | fair value | receivables | maturity | for sale | |
| | through | | | | |
| | profit and | | | | |
| | loss | | | | |
+---------------+-------------------+-------------------+-------------------+-------------------+-------------------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Held to | - | - | - | - | - | - | 59 | 18 | 59 | 18 |
| maturity | | | | | | | | | | |
| investments | | | | | | | | | | |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Other | 67 | 37 | - | - | - | - | - | - | 67 | 37 |
| financial | | | | | | | | | | |
| assets | | | | | | | | | | |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Available for | - | - | - | - | - | - | 8 | 32 | 8 | 32 |
| sale | | | | | | | | | | |
| investment | | | | | | | | | | |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Trade | - | - | 50 | 168 | - | - | - | - | 50 | 168 |
| receivables | | | | | | | | | | |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Other | - | - | 186 | 1,689 | - | - | - | - | 186 | 1,689 |
| receivables | | | | | | | | | | |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | 67 | 37 | 236 | 1,857 | - | - | 67 | 50 | 370 | 1,944 |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
The Group's held to maturity investments include nominal stakes in unlisted
limited partnerships formed for the purposes of investment in residential
property and an investment in Braemar UK Agricultural Land plc which was formed
for the purposes of acquiring and farming agricultural land. These are not
traded and are intended to be held until the maturity of the investment, which
is in more than five years. Under IAS 39 (Financial Instruments: Recognition
and Measurement) as these are equity instruments they are required to be
classified as "Available for Sale" financial instruments.
The Group's other financial asset represents the warrant held by Braemar
Securities Limited, which entitles the holder to subscribe at par for up to 3%
of the share capital of Braemar UK Agricultural Land plc. This has been
recognised at fair value based on the value of shares in the recently launched
offer for subscription.
The cash at bank and in hand at the year-end was GBP206,000 (2008: GBP289,000),
which was all held in instant access variable interest bearing accounts linked
to bank base rate.
The available for sale investments represents 2,350,000 shares in Regenesis
Group plc, which is quoted on AIM, though it will cease to be admitted to
trading on AIM on 29 June 2009. Following the announcement of this the Directors
consider the asset to be impaired and have valued the asset based on its net
asset value rather than the market value of its shares.
Trade receivables represent amounts invoiced for services provided in accordance
with the Group's usual contractual arrangements. Other receivables represents
accrued income but not yet invoiced, recoverable VAT and other sundry amounts
due.
34.2Financial liabilities
+------------------------------------------------+--------------+--------------+
| |Other financial liabilities |
+------------------------------------------------+-----------------------------+
| | 2009 | 2008 |
+------------------------------------------------+--------------+--------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+--------------+--------------+
| Interest bearing loans and borrowings | 533 | 225 |
+------------------------------------------------+--------------+--------------+
| Convertible Loan Notes - principal | 512 | 512 |
+------------------------------------------------+--------------+--------------+
| Convertible Loan Notes -accrued interest | 96 | 61 |
+------------------------------------------------+--------------+--------------+
| Obligations under finance leases | 33 | 45 |
+------------------------------------------------+--------------+--------------+
| Trade payables | 52 | 159 |
+------------------------------------------------+--------------+--------------+
| Other payables | 413 | 1,990 |
+------------------------------------------------+--------------+--------------+
| | 1,639 | 2,992 |
+------------------------------------------------+--------------+--------------+
The Group's interest bearing loans and borrowings comprise a loan of GBP225,000
from Northern Rock plc and a loan of GBP308,000 from the Royal Bank of Scotland
plc.
The loan from Northern Rock plc is secured by a fixed charge on an investment
property. The interest rate has been fixed at 7.05% for the full five year term
of the loan and the loan is repayable in full on the fifth anniversary of the
loan in October 2012.
The loan from the Royal Bank of Scotland plc is secured by a fixed charge on an
investment property. The loan is due for repayment in full on the 13 January
2014 and the interest rate has been set at 2.75% p.a. above the Royal Bank of
Scotland plc's Base Rate.
The Convertible Loan Notes are redeemable on the earlier of the date on which
the Group has sufficient working capital to enable payment and December 2010,
subject to the approval of the holders of the loan notes. The loan notes accrue
interest at a fixed rate of 2% above bank base rate on the date of issue,
payable upon redemption or conversion of the loan notes. The loan notes are
convertible into ordinary shares at 3p per share at any time or before the fifth
anniversary of issue provided the holders of the loan notes and their concert
parties do not hold more than 29.99% of the entire issued share capital of the
Company. The option to convert to ordinary shares is at the discretion of the
holders of the loan notes.
Interest due on these notes is accrued and paid on redemption or conversion. The
value of the loan notes including accrued interest outstanding, which are all at
a fixed rate, at the year-end was GBP608,000 (2008: GBP573,000).
The Convertible Loan Notes have been classified as a debt instrument as at the
date of issue it was expected that the loans would be held until the full-term
of the loan agreement and then repaid in full by the Group.
Obligations under finance leases comprise various leases used to fund the
acquisition of office equipment and software used by the Group. These leases are
all on fixed interest rates, with an average effective interest rate of 11.5%
and will be fully repaid by December 2010.
Trade payables represents amounts invoiced for services received in the ordinary
course of business. Other payables represents accruals, VAT and employment taxes
payable and other sundry amounts payable.
34.3Fair Value of Financial Instruments
The fair value of the Group's financial instruments is summarised below:
Financial assets
+------------------------------+------------+------------+------------+------------+
| | Carrying | Fair value | Carrying | Fair value |
| | amount | | amount | |
+------------------------------+------------+------------+------------+------------+
| | 2009 | 2009 | 2008 | 2008 |
+------------------------------+------------+------------+------------+------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------------+------------+------------+------------+------------+
| Held to maturity investments | 59 | 59 | 18 | 18 |
+------------------------------+------------+------------+------------+------------+
| Other financial assets | 67 | 67 | 37 | 37 |
+------------------------------+------------+------------+------------+------------+
| Available for sale | 8 | 8 | 32 | 32 |
| investments | | | | |
+------------------------------+------------+------------+------------+------------+
| Trade receivable | 50 | 50 | 168 | 168 |
+------------------------------+------------+------------+------------+------------+
| Other receivables | 186 | 186 | 1,689 | 1,689 |
+------------------------------+------------+------------+------------+------------+
| Total | 370 | 370 | 1,944 | 1,944 |
+------------------------------+------------+------------+------------+------------+
Financial liabilities
+------------------------------+------------+------------+------------+------------+
| | Carrying | Fair value | Carrying | Fair value |
| | amount | | amount | |
+------------------------------+------------+------------+------------+------------+
| | 2009 | 2009 | 2008 | 2008 |
+------------------------------+------------+------------+------------+------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------------+------------+------------+------------+------------+
| Interest bearing loans and | 533 | 555 | 225 | 225 |
| borrowings | | | | |
+------------------------------+------------+------------+------------+------------+
| Convertible Loan Notes - | 512 | 549 | 512 | 512 |
| principal | | | | |
+------------------------------+------------+------------+------------+------------+
| Convertible Loan Notes - | 96 | 96 | 61 | 61 |
| accrued interest | | | | |
+------------------------------+------------+------------+------------+------------+
| Obligations under finance | 33 | 33 | 45 | 45 |
| leases | | | | |
+------------------------------+------------+------------+------------+------------+
| Trade payables | 52 | 52 | 159 | 159 |
+------------------------------+------------+------------+------------+------------+
| Other payables | 413 | 413 | 1,990 | 1,990 |
+------------------------------+------------+------------+------------+------------+
| Total | 1,639 | 1,698 | 2,992 | 2,992 |
+------------------------------+------------+------------+------------+------------+
34.4Risk Management for Financial Instruments
The main risks arising from the Group's financial instruments are credit risk
and liquidity risk.There is limited currency risk as the Group trades only in
Sterling, with the exception of one non-material transaction denominated in
Euros during the year.
Liquidity risk
The Group manages its cash and borrowing requirements in order to maximise
interest income and minimise interest expense, whilst ensuring the Group has
sufficient liquid resources to meet the operating needs of the business. In the
current credit constrained environment the Group's primary focus has been on
maximising the liquidity for the Group.
The Group's liabilities have contractual maturities summarised as follows:
+--------------------+----------+----------+----------+----------+----------+----------+
| | Within 6 | 6 to 12 | 1 to 5 | Within 6 | 6 to 12 | 1 to 5 |
| | months | months | years | months | months | years |
+--------------------+----------+----------+----------+----------+----------+----------+
| | 2009 | 2009 | 2009 | 2008 | 2008 | 2008 |
+--------------------+----------+----------+----------+----------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------+----------+----------+----------+----------+----------+----------+
| Bank loans | - | - | 533 | - | - | 225 |
+--------------------+----------+----------+----------+----------+----------+----------+
| Hire purchase | 12 | 10 | 11 | 12 | 10 | 29 |
| obligations | | | | | | |
+--------------------+----------+----------+----------+----------+----------+----------+
| Other loans | 512 | - | - | 512 | - | - |
+--------------------+----------+----------+----------+----------+----------+----------+
| Trade payables | 52 | - | - | 1,949 | - | - |
+--------------------+----------+----------+----------+----------+----------+----------+
| | 576 | 10 | 544 | 2,473 | 10 | 254 |
+--------------------+----------+----------+----------+----------+----------+----------+
Other loans comprise Convertible Loan Notes, the terms of which are disclosed
above. There is no fixed repayment term for these notes and as a result they
have been analysed as due within six months. It should be noted that the Company
has not received notification from the holders that they intend to redeem them
in this timeframe. Any repayment is subject to the Group having sufficient
working capital to meet its ongoing requirements for the next 12 months
following repayment.
Interest rate risk
The Group is exposed to interest rate risk on its surplus cash available for
short-term investment and its borrowings to finance the acquisition of The
Manchester Ground Rent Company Limited. All other borrowings are on a fixed rate
basis.
Interest rate sensitivity
The following table illustrates the sensitivity of the net results for the year
and equity to a reasonably possible change in interest rates of +5% and -0.5%
with effect from the beginning of the year. The calculations are based on the
Group financial instruments held at the balance sheet date. All other variables
are assumed to be constant.
+------------------------------------------------+------------------+------------+
| | 2009 | 2009 |
+------------------------------------------------+------------------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+------------------+------------+
| | -0.5% | +5% |
+------------------------------------------------+------------------+------------+
| Net result for the year | 1 | (5) |
+------------------------------------------------+------------------+------------+
| Equity | 1 | (5) |
+------------------------------------------------+------------------+------------+
Credit risk
Investments of cash surpluses are made through banks that the Board considers a
suitable credit risk. The Group invested surplus cash balances in the year
through the Royal Bank of Scotland plc and Anglo-Irish Bank plc, both of which
are fully supported by their respective national Governments. During the year,
and at the height of the uncertainty that existed in the banking sector, the
Directors invested some of the Group's funds in UK long-dated Gilts. These were
all sold by the year-end.
All customers who wish to trade on current terms are subject to credit
verification procedures and trade receivables are reviewed on a regular basis
and credit control procedures are in place to minimise the risk of non-recovery.
The level of risk suffered in relation to trade receivables is relatively low
for the Group as the majority of its transactions are with related companies and
funds where the Group either has control over the payments of that entity or has
full financial information on that entity.
The Group's maximum exposure to credit risk, without taking into account any
collateral held or other credit enhancements, is as follows:
+------------------------------------------------+------------------+------------+
| | 2009 | 2008 |
+------------------------------------------------+------------------+------------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+------------------+------------+
| Held to maturity investments | 59 | 18 |
+------------------------------------------------+------------------+------------+
| Other financial assets | 67 | 37 |
+------------------------------------------------+------------------+------------+
| Available for sale investments | 8 | 32 |
+------------------------------------------------+------------------+------------+
| Trade receivables | 50 | 168 |
+------------------------------------------------+------------------+------------+
| Other current assets | 186 | 1,689 |
+------------------------------------------------+------------------+------------+
| Cash and cash equivalents | 206 | 289 |
+------------------------------------------------+------------------+------------+
35. Capital management
The Group manages its capital to ensure that the entities in the Group will be
able to continue as a going concern while maximising the return to stakeholders
through the optimisation of the debt and equity balance. The Group does not seek
to maintain any particular debt to equity ratio, but reviews the funding for
investment opportunities on their merits and funds them in the most effective
manner. In the year to March 2009, this approach resulted in the use of debt for
the partial funding of the acquisition of The Manchester Ground Rent Company
Limited, but at a level that left a substantial surplus for projected income
over projected interest costs. Other levels of borrowings have been reduced in
accordance with their agreed payment profiles. The limited amount of capital
expenditure committed during the year was funded from cash resources given the
relatively high costs of finance lease credit given the current low interest
rate environment.
Notes
Copies of the Audited Accounts for the Year to 31 March 2009 and a notice of the
AGM will be posted to shareholders in due course.
For further information please contact:
Marc Duschenes, Chief Executive, Braemar Group plc
Tel: 0161 929 4969
Alex Clarkson, Zeus Capital Limited
Tel: 0161 831 1512
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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