TIDMBRG
RNS Number : 2055N
Braemar Group PLC
08 June 2010
Braemar Group plc
8 June 2010
Audited final results for the year ended 31 March 2010
Chairman's Statement
I am pleased to report that the Group has made good progress in the year ended
31 March 2010, once more 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 2010 was GBP2,593,000 (2009:
GBP2,610,000). Divisional turnover for the year is made up of GBP1,575,000 from
corporate finance and fund management ("Braemar Securities") (2009:
GBP1,513,000), GBP967,000 from property management ("Braemar Estates") (2009:
GBP1,097,000) and GBP51,000 of unallocated revenue (2009: GBPNil).
Recurring income has increased to GBP1,327,000 (2009: GBP915,000). With the
reduction in administration expenses to GBP1,747,000 (2009: GBP1,840,000),
recurring income for the period covered 76% of administration expenses (2009:
50%), demonstrating significant progress in management's medium term goal of
recurring income covering administration expenses in full. This will be
achieved by continuing to focus on building the size of each existing fund, on
which the Group earns recurring income in both divisions, and gaining the
benefit of economies of scale.
These factors have contributed to a reduction in the loss before tax for the
second half to GBP21,000 from the first half loss of GBP109,000, giving an
overall loss before tax for the year of GBP130,000 (2009: GBP210,000 loss).
Cash balances at the year-end were GBP303,000 (2009: GBP206,000) and total
equity of the Group stood at GBP2,657,000 (2009: GBP2,545,000). The increase in
total equity has arisen due to the issue of new ordinary shares in the year as
outlined in note 25.
Business Review
Strategy
Our strategy remains that of developing our fund management business, backed by
the continued development of our support services in corporate finance and
property management. The medium-term aim of the Group is to ensure that
recurring income is sufficient to cover all administrative costs and to build
profitability thereafter.
Braemar Securities
During the year, we diversified our range of Open Ended Investment Companies
("OEIC's") to include Ground Rents, launched during the summer of 2009, adding
to the existing UK Agricultural Land and Student Accommodation funds. Funds
under management have increased by more than 20% to over GBP44m.
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. In particular, the size of the Ground Rents fund
will be a key driver in the profitability of Braemar Estates.
Braemar Estates
When the Group joined the Alternative Investment Market ("AIM") in 2005, Braemar
Estates' business plan was to service the funds created and managed by Braemar
Securities, which remains the case. However, Braemar Estates has more recently
attracted business from external clients. We have, therefore, invested further
in personnel and systems to facilitate this growth.
On 1 April 2010, Braemar Estates took over as block and lettings manager for two
landmark properties, both known as the Beetham Tower, in Manchester (Europe's
tallest residential building) and in Birmingham. These appointments, together
with other contractual gains during the year, have increased the value of assets
under management by more than 100% to over GBP500m. As most of the increase came
at or close to the year end, the benefit of this increase will only begin to
show in the current financial year.
Current trading and prospects
The Directors are pleased that the above achievements, in particular the
increase in recurring income, are providing a stable financial footing for the
Group and a platform for solid profitable growth. Current trading is in line
with Directors' expectations.
Martin Robinson
Chairman
8 June 2010
Consolidated statement of comprehensive income for
the year ended 31 March 2010
+----------------------------------+-------+-----------+-----------+
| | | Year | Year |
| | | ended | ended |
| | | 31 March | 31 March |
| | | 2010 | 2009 |
+----------------------------------+-------+-----------+-----------+
| |Notes | GBP'000 | GBP'000 |
+----------------------------------+-------+-----------+-----------+
| Revenue | 3 | 2,593 | 2,610 |
+----------------------------------+-------+-----------+-----------+
| | | | |
+----------------------------------+-------+-----------+-----------+
| Cost of sales | | (919) | (922) |
+----------------------------------+-------+-----------+-----------+
| | | | |
+----------------------------------+-------+-----------+-----------+
| Gross profit | | 1,674 | 1,688 |
+----------------------------------+-------+-----------+-----------+
| Fair value adjustments to | 15 | - | (28) |
| investment properties | | | |
+----------------------------------+-------+-----------+-----------+
| Administrative expenses | | (1,747) | (1,840) |
+----------------------------------+-------+-----------+-----------+
| | | | |
| Operating loss | | (73) | (180) |
+----------------------------------+-------+-----------+-----------+
| | | | |
+----------------------------------+-------+-----------+-----------+
| Investment income | 8 | 5 | 29 |
+----------------------------------+-------+-----------+-----------+
| Finance costs | 9 | (62) | (59) |
+----------------------------------+-------+-----------+-----------+
| Loss before taxation | | (130) | (210) |
+----------------------------------+-------+-----------+-----------+
| Taxation | 10 | - | 8 |
+----------------------------------+-------+-----------+-----------+
| | | | |
| Loss for the year | | (130) | (202) |
+----------------------------------+-------+-----------+-----------+
| Other comprehensive expense | | | |
+----------------------------------+-------+-----------+-----------+
| Losses on investments available | | - | (3) |
| for sale | | | |
+----------------------------------+-------+-----------+-----------+
| Other comprehensive expense for | | - | (3) |
| the year | | | |
+----------------------------------+-------+-----------+-----------+
| Total comprehensive expense for | | (130) | (205) |
| the year | | | |
+----------------------------------+-------+-----------+-----------+
| Loss per share - basic and | 11 | (0.08p) | (0.12p) |
| diluted | | | |
+----------------------------------+-------+-----------+-----------+
All results derive from continuing operations.
Consolidated statement of financial position at 31 March 2010
+------------------------------------+-------+-----------+-----------+
| | | 31 March | 31 March |
| | | 2010 | 2009 |
+------------------------------------+-------+-----------+-----------+
| |Notes | GBP'000 | GBP'000 |
+------------------------------------+-------+-----------+-----------+
| Non-current assets | | | |
+------------------------------------+-------+-----------+-----------+
| Goodwill | 12 | 2,736 | 2,736 |
+------------------------------------+-------+-----------+-----------+
| Other intangible assets | 13 | 118 | 99 |
+------------------------------------+-------+-----------+-----------+
| Property, plant and equipment | 14 | 142 | 141 |
+------------------------------------+-------+-----------+-----------+
| Investment properties | 15 | 607 | 607 |
+------------------------------------+-------+-----------+-----------+
| Held-to-maturity investments | 16 | 9 | 59 |
+------------------------------------+-------+-----------+-----------+
| Other financial assets | 17 | - | 67 |
+------------------------------------+-------+-----------+-----------+
| Available for sale investments | 18 | - | 8 |
+------------------------------------+-------+-----------+-----------+
| | | 3,612 | 3,717 |
+------------------------------------+-------+-----------+-----------+
| | | | |
| Current assets | | | |
+------------------------------------+-------+-----------+-----------+
| Trade and other receivables | 19 | 200 | 327 |
+------------------------------------+-------+-----------+-----------+
| Held-to-maturity investments | 16 | 41 | - |
+------------------------------------+-------+-----------+-----------+
| Other financial assets | 17 | 56 | - |
+------------------------------------+-------+-----------+-----------+
| Cash and cash equivalents | 21 | 303 | 206 |
+------------------------------------+-------+-----------+-----------+
| | | 600 | 533 |
+------------------------------------+-------+-----------+-----------+
| | | | |
+------------------------------------+-------+-----------+-----------+
| Total assets | | 4,212 | 4,250 |
+------------------------------------+-------+-----------+-----------+
| | | | |
+------------------------------------+-------+-----------+-----------+
| Equity and liabilities | | | |
+------------------------------------+-------+-----------+-----------+
| Issued capital | 25 | 1,721 | 1,638 |
+------------------------------------+-------+-----------+-----------+
| Share premium | 27 | 3,092 | 2,945 |
+------------------------------------+-------+-----------+-----------+
| Accumulated loss | 27 | (2,156) | (2,038) |
+------------------------------------+-------+-----------+-----------+
| Total equity | | 2,657 | 2,545 |
+------------------------------------+-------+-----------+-----------+
| | | | |
| Non-current liabilities | | | |
+------------------------------------+-------+-----------+-----------+
| Interest bearing loans and | 22 | 308 | 533 |
| borrowings | | | |
+------------------------------------+-------+-----------+-----------+
| Obligations under finance leases | 22 | - | 11 |
+------------------------------------+-------+-----------+-----------+
| Deferred tax | 23 | 40 | 40 |
+------------------------------------+-------+-----------+-----------+
| | | 348 | 584 |
+------------------------------------+-------+-----------+-----------+
| | | | |
| Current liabilities | | | |
+------------------------------------+-------+-----------+-----------+
| Trade and other payables | 24 | 657 | 587 |
+------------------------------------+-------+-----------+-----------+
| Interest bearing loans and | 22 | 537 | 512 |
| borrowings | | | |
+------------------------------------+-------+-----------+-----------+
| Obligations under finance leases | 22 | 13 | 22 |
+------------------------------------+-------+-----------+-----------+
| | | 1,207 | 1,121 |
+------------------------------------+-------+-----------+-----------+
| | | | |
+------------------------------------+-------+-----------+-----------+
| Total liabilities | | 1,555 | 1,705 |
+------------------------------------+-------+-----------+-----------+
| | | | |
+------------------------------------+-------+-----------+-----------+
| Total equity and liabilities | | 4,212 | 4,250 |
+------------------------------------+-------+-----------+-----------+
The consolidated financial statements for Braemar Group plc (company number
5084921) were approved and authorised for issue by the Board and were signed on
its behalf on 8 June 2010.
W M Robinson J S Murphy
Chairman Director
Consolidated statement of cash flows for year ended 31 March 2010
+-----------------------------------+-------+------------+------------+
| | | Year ended | Year ended |
| | | 31 March | 31 March |
| | | 2010 | 2009 |
+-----------------------------------+-------+------------+------------+
| |Notes | GBP'000 | GBP'000 |
+-----------------------------------+-------+------------+------------+
| Cash generated/(absorbed) from | 20 | 188 | (195) |
| operating activities | | | |
+-----------------------------------+-------+------------+------------+
| Interest paid | | (35) | (24) |
+-----------------------------------+-------+------------+------------+
| Net cash inflow/(outflow) from | | 153 | (219) |
| operating activities | | | |
+-----------------------------------+-------+------------+------------+
| | | | |
+-----------------------------------+-------+------------+------------+
| Cash flows from investing | | | |
| activities | | | |
+-----------------------------------+-------+------------+------------+
| Interest received | | 5 | 29 |
+-----------------------------------+-------+------------+------------+
| Purchase of property, plant and | | (29) | (21) |
| equipment | | | |
+-----------------------------------+-------+------------+------------+
| Purchase of intangible assets | | (34) | (6) |
+-----------------------------------+-------+------------+------------+
| Purchase of held-to-maturity | | - | (41) |
| investments | | | |
+-----------------------------------+-------+------------+------------+
| Sale of available for sale | | 22 | - |
| investments | | | |
+-----------------------------------+-------+------------+------------+
| Acquisition of subsidiary | | - | (107) |
+-----------------------------------+-------+------------+------------+
| Net cash used in investing | | (36) | (146) |
| activities | | | |
+-----------------------------------+-------+------------+------------+
| | | | |
+-----------------------------------+-------+------------+------------+
| Cash flows from financing | | | |
| activities | | | |
+-----------------------------------+-------+------------+------------+
| Proceeds from issue of share | | - | - |
| capital | | | |
+-----------------------------------+-------+------------+------------+
| Transaction costs of issue of | | - | - |
| share capital | | | |
+-----------------------------------+-------+------------+------------+
| Proceeds from borrowings | | - | 308 |
+-----------------------------------+-------+------------+------------+
| Repayment of borrowings | | (20) | (26) |
+-----------------------------------+-------+------------+------------+
| Net cash (used)/from financing | | (20) | 282 |
| activities | | | |
+-----------------------------------+-------+------------+------------+
| | | | |
+-----------------------------------+-------+------------+------------+
| Net increase/(reduction) in cash | | 97 | (83) |
| and cash equivalents | | | |
+-----------------------------------+-------+------------+------------+
| Cash and cash equivalents at 1 | | 206 | 289 |
| April 2009 | | | |
+-----------------------------------+-------+------------+------------+
| Cash and cash equivalents at 31 | 21 | 303 | 206 |
| March 2010 | | | |
+-----------------------------------+-------+------------+------------+
Consolidated statement of changes in equity for the year ended 31 March 2010
+-----------------------+----------+----------+-------------+----------+
| | | | | |
+-----------------------+----------+----------+-------------+----------+
| | Ordinary | Share | Accumulated | Total |
| | Shares | Premium | loss | equity |
+-----------------------+----------+----------+-------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------------+----------+----------+-------------+----------+
| Balance at 1 April | 1,638 | 2,945 | (1,845) | 2,738 |
| 2008 | | | | |
+-----------------------+----------+----------+-------------+----------+
| Changes in equity for | | | | |
| the year ended 31 | | | | |
| March 2009 | | | | |
+-----------------------+----------+----------+-------------+----------+
| Total comprehensive | - | - | (202) | (202) |
| expenditure for the | | | | |
| year | | | | |
+-----------------------+----------+----------+-------------+----------+
| Available-for-sale | - | - | (3) | (3) |
| investments fair | | | | |
| value movement | | | | |
+-----------------------+----------+----------+-------------+----------+
| Credit arising on | - | - | 12 | 12 |
| share options | | | | |
+-----------------------+----------+----------+-------------+----------+
| Balance at 31 March | 1,638 | 2,945 | (2,038) | 2,545 |
| 2009 | | | | |
+-----------------------+----------+----------+-------------+----------+
| | | | | |
+-----------------------+----------+----------+-------------+----------+
| Changes in equity for | | | | |
| the year ended 31 | | | | |
| March 2010 | | | | |
+-----------------------+----------+----------+-------------+----------+
| Total comprehensive | - | - | (130) | (130) |
| expenditure for the | | | | |
| year | | | | |
+-----------------------+----------+----------+-------------+----------+
| Credit arising on | - | - | 12 | 12 |
| share options | | | | |
+-----------------------+----------+----------+-------------+----------+
| Issue of share | 83 | 147 | - | 230 |
| capital | | | | |
+-----------------------+----------+----------+-------------+----------+
| Balance at 31 March | 1,721 | 3,092 | (2,156) | 2,657 |
| 2010 | | | | |
+-----------------------+----------+----------+-------------+----------+
| | | | | |
+-----------------------+----------+----------+-------------+----------+
1. Basis of preparation
The Group's financial statements for the year ended 31 March 2010 have been
prepared in accordance with IFRS's as adopted by the European Union, and with
those parts of the Companies Act 2006 applicable to companies reporting under
IFRS's.
The preparation of financial statements in conformity with IFRS's requires
management to make judgements, estimates and assumptions that affect 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 adopted during the year
IAS 1 Presentation of Financial Statements (revised 2007)
The Group has adopted this standard in its consolidated financial statements,
which has been applied retrospectively. The adoption of the standard does not
affect the financial position or losses of the Group, but gives rise to
additional disclosures.
IFRS 8 Operating Segments
The Group has adopted this standard in its consolidated financial statements,
which has been applied retrospectively. The adoption of the standard does not
affect the financial position or losses of the Group, but gives rise to
additional disclosures. The Group has updated its accounting policy to comply
with this standard and its operating segments are now recognised based on
internal management reporting and not on geography or business type. The
revised operating segments are disclosed in note 3 and the comparative
information has been restated where appropriate.
1.2 IFRS's effective during the year but not relevant
The following interpretations were mandatory for the Group's accounting period,
but had no impact on the financial statements in the year:
IFRS 3 (revised) Business Combinations
IAS 27 (revised) Consolidated and separate financial statements
IAS 39 (Amended) Share based payments - Group cash-settled share-based payment
transactions
IFRIC 12 Service concession arrangements
1.3 EU adopted IFRS's 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 Group's financial statements.
2. Accounting policies
The principal accounting policies adopted by the Group are as follows:
2.1 Basis of consolidation
The consolidated statement of comprehensive income and consolidated statement of
financial position includes the financial statements of the Company and its
subsidiary undertakings made up to 31 March 2010. The results of subsidiaries
sold or acquired are included in the statement of comprehensive income up to, or
from, the date control passes. Intra-group revenue and profits are eliminated
fully on consolidation.
2.2 Revenue recognition
The revenue shown in the consolidated statement of comprehensive income
comprises 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 investment vehicles
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.
2.3 Business combinations
Acquisitions are accounted for using the purchase method as required by IFRS 3
(revised) Business Combinations.
2.4 Operating segments
Operating segments are identified in line with the internal management
information reporting to the chief operating decision maker. The Directors
consider the chief operating decision maker to be the Board collectively and as
such have adopted the reporting as included in monthly board meeting papers for
the purposes of segmental reporting.
2.5 Taxation
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.
2.6 Goodwill
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 recognised in the statement of comprehensive income and is not subsequently
reversed. Goodwill is carried at cost less accumulated impairment losses.
2.7 Intangible 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 on a straight line basis as follows:
Customer contracts 20 years
Software 4 years
2.8 Property, 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 life on a straight line basis, as follows:
Long leasehold property 50 years
Short leasehold improvements Term of lease
Fixtures, fittings and office equipment 4 years
Motor vehicles 4 years
2.9 Investment 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 statement of comprehensive income in the period in which the change arises.
2.10 Financial instruments
The Group classifies financial instruments, or their component parts, on initial
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.
2.11 Held-to-maturity investments
Held-to-maturityinvestments are measured at amortised cost.
2.12 Other financial assets
Other financial assets are recognised at their fair value. Movement in fair
values are taken directly to the statement of comprehensive income.
2.13 Available 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 statement of
comprehensive income to the extent that it reflects the difference between
acquisition cost and fair value, with the balance taken direct to equity.
2.14 Cash and cash equivalents
Cash comprises cash in hand and cash on demand deposits which may be accessed
without penalty. Cash equivalents comprise short term highly liquid investments
with a maturity of less than three months from the date of acquisition.
2.15 Trade 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.
2.16 Trade 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.
2.17 Interest-bearing borrowings
Interest-bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in the statement of
comprehensive income over the period of the borrowings on an effective interest
rate basis. Transaction costs are amortised, as a finance cost, over the
expected term of the facility, using the effective interest rate method.
Borrowings are classified as either current or non-current liabilities,
dependent on the maturity date and terms of the loan.
2.18 Carried 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.
2.19 Leasing 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 statement of
comprehensive income so as to produce a constant periodic rate of charge on the
net obligation outstanding in each period.
2.20 Operating 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.
2.21 Pensions
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.
2.22 Holiday 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 statement of
comprehensive income.
2.23 Share 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's 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 GBP83,000 movement in the
fair value assessment for the goodwill arising from the acquisition of The
Braemar Group Limited, approximately a GBP25,000 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 GBP5,000.
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 2010 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 (GBP435,000 at 31 March 2010) could have a significant impact on
the presentation of the financial statements. There would be no impact on the
statement of comprehensive income.
3. Segmental reporting
For management purposes the Group is organised into two divisions: corporate
finance and fund management (Braemar Securities) and property management
(Braemar Estates). These divisions are the basis on which the Group reports its
major income generating and cash flow results to its chief operating decision
maker. This has resulted in a reduction of operating segments from three to two
and all comparative financial information has been restated.
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| | Securities | Estates | Unallocated | Consolidated |
+---------------+-------------------+-------------------+-------------------+-------------------+
| | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Revenue | 1,575 | 1,513 | 967 | 1,097 | 51 | - | 2,593 | 2,610 |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Segment | 200 | 318 | (85) | (73) | 42 | (11) | 157 | 234 |
| result | | | | | | | | |
| (EBITDA) | | | | | | | | |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Central costs | | | | | | | (187) | (357) |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| EBITDA | | | | | | | (30) | (123) |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Depreciation | (3) | - | (9) | (9) | (31) | (48) | (43) | (57) |
| and | | | | | | | | |
| amortisation | | | | | | | | |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Operating | | | | | | | (73) | (180) |
| loss | | | | | | | | |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Investment | | | | | | | 5 | 29 |
| income | | | | | | | | |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Finance costs | | | | | | | (62) | (59) |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Loss before | | | | | | | (130) | (210) |
| tax | | | | | | | | |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
There is no inter-group revenue between the segments recorded in the year.
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| | Securities | Estates | Unallocated | Consolidated |
+---------------+-------------------+-------------------+-------------------+-------------------+
| | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Segment | 1,496 | 1,246 | 811 | 847 | 1,905 | 2,157 | 4,212 | 4,250 |
| assets | | | | | | | | |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Segment | 363 | 346 | 1,055 | 974 | 137 | 385 | 1,555 | 1,705 |
| liabilities | | | | | | | | |
+---------------+---------+---------+---------+---------+---------+---------+---------+---------+
The total revenue of the Group for the year has been derived wholly from
activity undertaken in the United Kingdom. Therefore a geographical segmental
analysis is not appropriate. No one customer accounts for more than 10% of
Group revenue.
4. Operating loss
The operating loss is stated after charging:
+--------------------------------------------+----------+----------+
| | Year | Year |
| | ended | ended |
| | 31 March | 31 March |
| | 2010 | 2009 |
+--------------------------------------------+----------+----------+
| | GBP'000 | GBP'000 |
+--------------------------------------------+----------+----------+
| Amortisation of other intangible assets | 15 | 28 |
+--------------------------------------------+----------+----------+
| Depreciation of property, plant and | 28 | 29 |
| equipment | | |
+--------------------------------------------+----------+----------+
| Rentals under operating leases | 81 | 86 |
+--------------------------------------------+----------+----------+
| Change in fair value of investment | - | 28 |
| property | | |
+--------------------------------------------+----------+----------+
| Change in fair value of available for sale | (6) | 21 |
| investments | | |
+--------------------------------------------+----------+----------+
| Change in fair value of held to maturity | 9 | - |
| investments | | |
+--------------------------------------------+----------+----------+
| Change in fair value of other financial | 11 | (30) |
| assets | | |
+--------------------------------------------+----------+----------+
| Employee costs | 1,251 | 1,195 |
+--------------------------------------------+----------+----------+
5. Auditor's remuneration
+--------------------------------------------+----------+----------+
| | Year | Year |
| | ended | ended |
| | 31 March | 31 March |
| | 2010 | 2009 |
+--------------------------------------------+----------+----------+
| | GBP'000 | GBP'000 |
+--------------------------------------------+----------+----------+
| Fees payable to the Group's auditor for | | |
| the audit of the Group's annual financial | 5 | 5 |
| statements | | |
+--------------------------------------------+----------+----------+
| Fees payable to the Group's auditor and | | |
| its associates for other services: | | |
+--------------------------------------------+----------+----------+
| - the audit of the Group's | 15 | 20 |
| subsidiaries, pursuant to legislation | | |
+--------------------------------------------+----------+----------+
| - other services relating to tax | 5 | 5 |
+--------------------------------------------+----------+----------+
| | 25 | 30 |
+--------------------------------------------+----------+----------+
6. Particulars of employees
+--------------------------------------------+----------+----------+
| | 2010 | 2009 |
+--------------------------------------------+----------+----------+
| The average number of employees including | No. | No. |
| Directors during the year was: | | |
+--------------------------------------------+----------+----------+
| Securities | 4 | 3 |
+--------------------------------------------+----------+----------+
| Estates | 19 | 18 |
+--------------------------------------------+----------+----------+
| Unallocated | 11 | 12 |
+--------------------------------------------+----------+----------+
| | 34 | 33 |
+--------------------------------------------+----------+----------+
| | | |
+--------------------------------------------+----------+----------+
| | 2010 | 2009 |
+--------------------------------------------+----------+----------+
| The aggregate payroll costs of the above | GBP'000 | GBP'000 |
| were: | | |
+--------------------------------------------+----------+----------+
| Wages and salaries | 1,094 | 1,020 |
+--------------------------------------------+----------+----------+
| Social security costs | 110 | 112 |
+--------------------------------------------+----------+----------+
| Pension costs | 35 | 51 |
+--------------------------------------------+----------+----------+
| Share option charge | 12 | 12 |
+--------------------------------------------+----------+----------+
| | 1,251 | 1,195 |
+--------------------------------------------+----------+----------+
7. Directors' emoluments
The total amounts for Directors' remuneration and other benefits were
as follows:
+---------------+---------+---------+---------------+---------+---------+
| | Salary | Bonus | Pension | 2010 | 2009 |
| | | | contributions | | |
+---------------+---------+---------+---------------+---------+---------+
| Executive | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+---------+---------+---------------+---------+---------+
| M J | 119 | - | 13 | 132 | 142 |
| Duschenes | | | | | |
+---------------+---------+---------+---------------+---------+---------+
| W M Robinson | 95 | - | 10 | 105 | 108 |
+---------------+---------+---------+---------------+---------+---------+
| J S Murphy | 95 | - | 10 | 105 | 110 |
+---------------+---------+---------+---------------+---------+---------+
| Non-executive | | | | | |
+---------------+---------+---------+---------------+---------+---------+
| A B S | 23 | - | - | 23 | 23 |
| McFarland | | | | | |
+---------------+---------+---------+---------------+---------+---------+
| | 332 | - | 33 | 365 | 383 |
+---------------+---------+---------+---------------+---------+---------+
Details of the Directors' emoluments can be found in the Directors' Report on
page 7. The section of the report that is subject to audit by
PricewaterhouseCoopers LLP is indicated with an asterisk (*). This information
includes executive share options.
In addition to the above the charge to income in the year in respect of share
options for Directors was GBP10,000 (2009: GBP10,000).
8. Investment income
+----------------------------------------------+---------+---------+
| | 2010 | 2009 |
+----------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+----------------------------------------------+---------+---------+
| Bank interest receivable | 5 | 15 |
+----------------------------------------------+---------+---------+
| Interest receivable on government securities | - | 14 |
+----------------------------------------------+---------+---------+
| | 5 | 29 |
+----------------------------------------------+---------+---------+
9. Finance costs
+----------------------------------------------+---------+---------+
| | 2010 | 2009 |
+----------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+----------------------------------------------+---------+---------+
| Interest and other similar charges payable | 26 | 18 |
| on bank borrowings | | |
+----------------------------------------------+---------+---------+
| Finance lease interest payable | 4 | 6 |
+----------------------------------------------+---------+---------+
| Interest on loan notes | 27 | 35 |
+----------------------------------------------+---------+---------+
| Other | 5 | - |
+----------------------------------------------+---------+---------+
| | 62 | 59 |
+----------------------------------------------+---------+---------+
10. Income tax expense
+----------------------------------------------+---------+---------+
| | 2010 | 2009 |
+----------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+----------------------------------------------+---------+---------+
| Current tax: | | |
+----------------------------------------------+---------+---------+
| On profit for the year | - | - |
+----------------------------------------------+---------+---------+
| Adjustment in respect of prior year | - | - |
+----------------------------------------------+---------+---------+
| | - | - |
+----------------------------------------------+---------+---------+
| Deferred tax: | | |
+----------------------------------------------+---------+---------+
| Origination and reversal of temporal | - | 8 |
| differences | | |
+----------------------------------------------+---------+---------+
| | - | 8 |
+----------------------------------------------+---------+---------+
The differences between the total current tax shown above and the amount
calculated by applying the standard rate of UK corporation tax of 28% (2009:
28%) to the loss are as follows:
+----------------------------------------------+---------+---------+
| | 2010 | 2009 |
+----------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+----------------------------------------------+---------+---------+
| Loss for the year from operations | (130) | (202) |
+----------------------------------------------+---------+---------+
| Loss on ordinary activities multiplied by | (36) | (57) |
| the standard rate of corporation tax in the | | |
| UK of 28% (2009:28%) | | |
+----------------------------------------------+---------+---------+
| | | |
| Effects of: | | |
+----------------------------------------------+---------+---------+
| | | |
+----------------------------------------------+---------+---------+
| Expenses not deductible for tax purposes | 18 | 57 |
| | | |
+----------------------------------------------+---------+---------+
| Income not taxable | - | (9) |
+----------------------------------------------+---------+---------+
| Tax losses not recognised | 18 | 17 |
+----------------------------------------------+---------+---------+
| | - | 8 |
+----------------------------------------------+---------+---------+
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 GBP483,000 (2009: GBP467,000).
11. Loss per share
The calculation of loss per share is based on the following losses and
numbers of shares:
+-----------------------------------------+-------------+-------------+
| | 2010 | 2009 |
+-----------------------------------------+-------------+-------------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+-------------+-------------+
| Loss for the year | 130 | 202 |
+-----------------------------------------+-------------+-------------+
| Weighted average number of ordinary | 169,881,136 | 163,786,903 |
| shares | | |
+-----------------------------------------+-------------+-------------+
| Loss per ordinary shares- basic and | 0.08p | 0.12p |
| diluted | | |
+-----------------------------------------+-------------+-------------+
There are 28,788,884 potentially issuable shares that have not been included in
a diluted EPS calculation as they are anti-dilutive.
12. Goodwill
+-----------------------------------------+-----------+-----------+
| | 2010 | 2009 |
+-----------------------------------------+-----------+-----------+
| Net book value | GBP'000 | GBP'000 |
+-----------------------------------------+-----------+-----------+
| At 1 April | 2,736 | 2,694 |
+-----------------------------------------+-----------+-----------+
| Additions - current period acquisitions | - | 42 |
| at cost | | |
+-----------------------------------------+-----------+-----------+
| At 31 March | 2,736 | 2,736 |
+-----------------------------------------+-----------+-----------+
Goodwill was allocated for impairment testing purposes to cash generating units
which contained carrying amounts of goodwill allocated as follows:
+-----------------------------------------+-----------+-----------+
| | 2010 | 2009 |
+-----------------------------------------+-----------+-----------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+-----------+-----------+
| The Braemar Group Limited | 2,244 | 2,244 |
+-----------------------------------------+-----------+-----------+
| Block management division of Main & | 450 | 450 |
| Main (Developments) Limited | | |
+-----------------------------------------+-----------+-----------+
| The Manchester Ground Rent Company | 42 | 42 |
| Limited | | |
+-----------------------------------------+-----------+-----------+
| | 2,736 | 2,736 |
+-----------------------------------------+-----------+-----------+
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 2013 and
extended to five years based on a growth rate assumption of 3% (2009: 0%). The
five year cash flows were discounted at an assumed cost of capital of 12% (2009:
15%) based on an assumed risk free rate of 4% (2009: 4%) and a risk premium of
8% (2009: 11%).
13. Other intangible assets
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| | 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 | 30 | - | - | 160 | 110 | 110 | 140 | 270 |
| | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Reclassification | | 24 | - | - | - | - | - | 24 |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Additions | 34 | 6 | - | - | - | - | 34 | 6 |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Disposals | | - | - | (160) | - | - | - | (160) |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| At 31 | 64 | 30 | - | - | 110 | 110 | 174 | 140 |
| March | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Amortisation | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| At 1 April | 10 | - | - | 160 | 31 | 9 | 41 | 169 |
| | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Reclassification | - | 4 | - | - | | - | | 4 |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Impairment | - | - | - | - | | - | | - |
| charge | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Charge for | 12 | 6 | - | - | 3 | 22 | 15 | 28 |
| the year | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Disposals | - | - | - | (160) | | - | | (160) |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| At 31 | 22 | 10 | - | - | 34 | 31 | 56 | 41 |
| March | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| Net book | | | | | | | | |
| value | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
| At 31 | 42 | 20 | - | - | 76 | 79 | 118 | 99 |
| March | | | | | | | | |
+------------------+----------+----------+-----------+-----------+-----------+-----------+---------+---------+
At 31 March 2010 the average remaining useful economic life for software costs
was 2.6 years (2009: 2.7 years) and for customer contracts was 17 years (2009: 4
years). During the year the annual review of the useful economic life of the
assets identified that customer contracts were being retained for a
significantly longer period than the previous accounting policy of 5 years. As
a result a detailed analysis has been performed and a revised estimated useful
economic life of 20 years has now been adopted. This is subject to annual
review.
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. They were written off in full in the prior
year following this business being discontinued.
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 GBP5,000 subject to finance leases.
14. Property, plant and equipment
+-------------------+---------+---------+---------+---------+---------+---------+
| | Property | Plant and | Total |
| | | equipment | |
+-------------------+-------------------+-------------------+-------------------+
| | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
+-------------------+---------+---------+---------+---------+---------+---------+
| Cost | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+---------+---------+---------+---------+---------+---------+
| At 1 April | 91 | 91 | 101 | 118 | 192 | 209 |
+-------------------+---------+---------+---------+---------+---------+---------+
| Reclassification | - | - | - | (24) | - | (24) |
+-------------------+---------+---------+---------+---------+---------+---------+
| Additions | - | - | 29 | 21 | 29 | 21 |
+-------------------+---------+---------+---------+---------+---------+---------+
| Disposals | - | - | - | (14) | - | (14) |
+-------------------+---------+---------+---------+---------+---------+---------+
| At 31 March | 91 | 91 | 130 | 101 | 221 | 192 |
+-------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+
| Depreciation | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+
| At 1 April | 2 | - | 49 | 26 | 51 | 26 |
+-------------------+---------+---------+---------+---------+---------+---------+
| Reclassification | - | - | - | (4) | - | (4) |
+-------------------+---------+---------+---------+---------+---------+---------+
| Charge for the | 2 | 2 | 26 | 27 | 28 | 29 |
| year | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+
| Disposals | - | - | - | - | - | - |
+-------------------+---------+---------+---------+---------+---------+---------+
| At 31 March | 4 | 2 | 75 | 49 | 79 | 51 |
+-------------------+---------+---------+---------+---------+---------+---------+
| Net book value | | | | | | |
+-------------------+---------+---------+---------+---------+---------+---------+
| At 31 March | 87 | 89 | 55 | 52 | 142 | 141 |
+-------------------+---------+---------+---------+---------+---------+---------+
Property comprises a long leasehold interest in 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 plant and equipment are assets with a book value of GBP11,000
subject to finance leases.
15. Investment properties
+----------------------------------------------+---------+---------+
| | 2010 | 2009 |
+----------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+----------------------------------------------+---------+---------+
| | | |
+----------------------------------------------+---------+---------+
| At 1 April | 607 | 225 |
+----------------------------------------------+---------+---------+
| Additions | - | 410 |
+----------------------------------------------+---------+---------+
| Fair value adjustments | - | (28) |
+----------------------------------------------+---------+---------+
| At 31 March | 607 | 607 |
+----------------------------------------------+---------+---------+
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 of 8.5%
(2009: 8.5%), which is 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 2010 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 statement of comprehensive income
+-----------------------------------------------+---------+---------+
| | 2010 | 2009 |
+-----------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------------------+---------+---------+
| Rental income | 60 | 17 |
+-----------------------------------------------+---------+---------+
There are no material operating costs associated with the investment properties
in the year.
16. Held-to-maturity investments
+-----------------------------------------+-----------+-----------+
| Current | 2010 | 2009 |
+-----------------------------------------+-----------+-----------+
| Net book value | GBP'000 | GBP'000 |
+-----------------------------------------+-----------+-----------+
| At 1 April | - | - |
+-----------------------------------------+-----------+-----------+
| Additions | - | - |
+-----------------------------------------+-----------+-----------+
| Reclassification | 50 | - |
+-----------------------------------------+-----------+-----------+
| Fair value adjustment | (9) | - |
+-----------------------------------------+-----------+-----------+
| At 31 March | 41 | - |
+-----------------------------------------+-----------+-----------+
| | | |
+-----------------------------------------+-----------+-----------+
| Non current | | |
+-----------------------------------------+-----------+-----------+
| At 1 April | 59 | 18 |
+-----------------------------------------+-----------+-----------+
| Additions | - | 41 |
+-----------------------------------------+-----------+-----------+
| Reclassification | (50) | - |
+-----------------------------------------+-----------+-----------+
| At 31 March | 9 | 59 |
+-----------------------------------------+-----------+-----------+
Held-to-maturity investments represent holdings in investment schemes and
companies operated by the Group.
The fair value adjustment and reclassification relates to the 50,000 GBP1 shares
held by the Group in Braemar UK Agricultural Land plc, which is expected to
enter into a solvent members' voluntary liquidation. The fair value adjustment
reflects the amount expected to be received and the classification as current
reflects the likely timing of the receipt.
17. Other financial assets
+-----------------------------------------+-----------+-----------+
| Current | 2010 | 2009 |
+-----------------------------------------+-----------+-----------+
| Net book value | GBP'000 | GBP'000 |
+-----------------------------------------+-----------+-----------+
| At 1 April | - | - |
+-----------------------------------------+-----------+-----------+
| Additions | - | - |
+-----------------------------------------+-----------+-----------+
| Reclassification | 67 | - |
+-----------------------------------------+-----------+-----------+
| Fair value adjustment | (11) | - |
+-----------------------------------------+-----------+-----------+
| At 31 March | 56 | - |
+-----------------------------------------+-----------+-----------+
| | | |
+-----------------------------------------+-----------+-----------+
| Non current | | |
+-----------------------------------------+-----------+-----------+
| At 1 April | 67 | 37 |
+-----------------------------------------+-----------+-----------+
| Additions | - | 30 |
+-----------------------------------------+-----------+-----------+
| Reclassification | (67) | - |
+-----------------------------------------+-----------+-----------+
| At 31 March | - | 67 |
+-----------------------------------------+-----------+-----------+
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. The fair value adjustment reflects the amount expected to be received and
the classification as current reflects the likely timing of the exercising of
the warrant and the resultant receipt.
18. Available for sale investments
+-----------------------------------------+-----------+-----------+
| | 2010 | 2009 |
+-----------------------------------------+-----------+-----------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+-----------+-----------+
| Net book value | | |
+-----------------------------------------+-----------+-----------+
| At 1 April | 8 | 32 |
+-----------------------------------------+-----------+-----------+
| Additions | 8 | - |
+-----------------------------------------+-----------+-----------+
| Market value movements taken directly | - | (3) |
| to equity | | |
+-----------------------------------------+-----------+-----------+
| Fair value adjustment | 6 | (21) |
+-----------------------------------------+-----------+-----------+
| Disposal | (22) | - |
+-----------------------------------------+-----------+-----------+
| At 31 March | - | 8 |
+-----------------------------------------+-----------+-----------+
The available for sale investments represented shares in Regenesis Group
Limited, which was liquidated during the year with gross proceeds of GBP22,000.
19. Trade and other receivables
+-----------------------------------------+------------+-----------+
| | 2010 | 2009 |
+-----------------------------------------+------------+-----------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+------------+-----------+
| Trade receivables | 102 | 30 |
+-----------------------------------------+------------+-----------+
| Related party receivables (see note 30) | 4 | 20 |
+-----------------------------------------+------------+-----------+
| Prepayments and accrued income | 94 | 255 |
+-----------------------------------------+------------+-----------+
| Other receivables | - | 22 |
+-----------------------------------------+------------+-----------+
| | 200 | 327 |
+-----------------------------------------+------------+-----------+
| | | |
+-----------------------------------------+------------+-----------+
Trade receivables do not carry interest. There are no impaired trade receivables
(2009: GBPnil).
+-----------------------------------------+------------+-----------+
| Ageing of past due but not impaired | 2010 | 2009 |
| trade and related party receivables: | GBP'000 | GBP'000 |
+-----------------------------------------+------------+-----------+
| 0-30 days past due | 26 | 15 |
+-----------------------------------------+------------+-----------+
| 31-60 days past due | 1 | 1 |
+-----------------------------------------+------------+-----------+
| Over 60 days past due | 7 | 34 |
+-----------------------------------------+------------+-----------+
| | 34 | 50 |
+-----------------------------------------+------------+-----------+
20. Reconciliation of operating loss to net cash flow from operations
+------------------------------------------------+---------+---------+
| | Year | Year |
| | ended | ended |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+------------------------------------------------+---------+---------+
| Loss before tax | (130) | (210) |
+------------------------------------------------+---------+---------+
| Depreciation of property, plant and equipment | 28 | 29 |
+------------------------------------------------+---------+---------+
| Amortisation of intangible assets | 15 | 28 |
+------------------------------------------------+---------+---------+
| Impairment of available for sale assets | - | 21 |
+------------------------------------------------+---------+---------+
| Share option charge | 12 | 12 |
+------------------------------------------------+---------+---------+
| Share based payments | 31 | - |
+------------------------------------------------+---------+---------+
| Share-based expense/(income) | 6 | (29) |
+------------------------------------------------+---------+---------+
| Loss on sale of fixed assets | - | 9 |
+------------------------------------------------+---------+---------+
| Decrease in fair value of investment | - | 28 |
| properties | | |
+------------------------------------------------+---------+---------+
| Interest income | (5) | (29) |
+------------------------------------------------+---------+---------+
| Interest expense | 62 | 59 |
+------------------------------------------------+---------+---------+
| Operating cash inflow/(outflow) before | 19 | (82) |
| movements in working capital | | |
+------------------------------------------------+---------+---------+
| Decrease in trade and other receivables | 127 | 1,593 |
+------------------------------------------------+---------+---------+
| Increase/(decrease) in trade and other | 42 | (1,706) |
| payables | | |
+------------------------------------------------+---------+---------+
| Cash generated/(absorbed) by operations | 188 | (195) |
+------------------------------------------------+---------+---------+
21. Cash and cash equivalents
+-----------------------------------------+--------------+---------+
| | 2010 | 2009 |
+-----------------------------------------+--------------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+--------------+---------+
| Cash and cash equivalents | 303 | 206 |
+-----------------------------------------+--------------+---------+
Cash and cash equivalents comprises short-term deposits, the effective rate of
interest earned on these deposits for the year ended 31 March 2010 was 1.22%
(2009: 3.15%).
22. Borrowings
+--------------------------------------------+-----------+---------+
| | 2010 | 2009 |
+--------------------------------------------+-----------+---------+
| Current | GBP'000 | GBP'000 |
+--------------------------------------------+-----------+---------+
| Interest bearing loans and borrowings - | 312 | 512 |
| Convertible loan notes | | |
+--------------------------------------------+-----------+---------+
| Interest bearing loans and borrowings - | 225 | - |
| from Northern Rock plc | | |
+--------------------------------------------+-----------+---------+
| Obligations under finance leases | 13 | 22 |
+--------------------------------------------+-----------+---------+
| | 550 | 534 |
+--------------------------------------------+-----------+---------+
| Non-current | | |
+--------------------------------------------+-----------+---------+
| Interest bearing loans and borrowings - | - | 225 |
| from Northern Rock plc | | |
+--------------------------------------------+-----------+---------+
| Interest bearing loans and borrowings - | 308 | 308 |
| from Royal Bank of Scotland plc | | |
+--------------------------------------------+-----------+---------+
| Obligations under finance leases | - | 11 |
+--------------------------------------------+-----------+---------+
| | 308 | 544 |
+--------------------------------------------+-----------+---------+
| Total borrowings | 858 | 1,078 |
+--------------------------------------------+-----------+---------+
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 fifth anniversary of the loan notes and the final date for their repayment
is December 2010. The Group has received an irrevocable undertaking from all
the holders of the loan notes that in the event that they are not repaid prior
to this date then they will be extended for a further five years on the same
terms as are currently in place.
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 has been classified as
current as the market value of the property has been estimated at below the
level that would constitute a breach under the terms of the loan. The Group has
not received any notification from the lender in this regard.
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.
Obligations under finance leases Obligations under finance leases are as
follows:
+-----------------------------------------+--------------+---------+
| | 2010 | 2009 |
+-----------------------------------------+--------------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+--------------+---------+
| Within one year | 13 | 22 |
+-----------------------------------------+--------------+---------+
| Between one and two years | - | 11 |
+-----------------------------------------+--------------+---------+
| | 13 | 33 |
+-----------------------------------------+--------------+---------+
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.
23. Deferred tax
Deferred tax liabilities comprise
+-----------------------------------------+--------------+---------+
| | 2010 | 2009 |
+-----------------------------------------+--------------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+--------------+---------+
| Fair value gains | 40 | 40 |
+-----------------------------------------+--------------+---------+
+-----------------------------------------+--------------+---------+
| | 2010 | 2009 |
+-----------------------------------------+--------------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+--------------+---------+
| At 1 April | 40 | 23 |
+-----------------------------------------+--------------+---------+
| Liability assumed following | - | 25 |
| acquisitions | | |
+-----------------------------------------+--------------+---------+
| Recognised in the statement of | - | (8) |
| comprehensive income | | |
+-----------------------------------------+--------------+---------+
| At 31 March | 40 | 40 |
+-----------------------------------------+--------------+---------+
24. Trade and other payables
+-----------------------------------------+--------------+---------+
| | 2010 | 2009 |
+-----------------------------------------+--------------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+--------------+---------+
| Trade payables | 258 | 52 |
+-----------------------------------------+--------------+---------+
| Taxes and social security costs | 64 | 72 |
+-----------------------------------------+--------------+---------+
| Accruals and deferred income | 335 | 450 |
+-----------------------------------------+--------------+---------+
| Other payables | - | 13 |
+-----------------------------------------+--------------+---------+
| | 657 | 587 |
+-----------------------------------------+--------------+---------+
25. Issued capital
+-----------------------------------------+--------------+---------+
| | 2010 | 2009 |
+-----------------------------------------+--------------+---------+
| Authorised share capital: | GBP'000 | GBP'000 |
+-----------------------------------------+--------------+---------+
| 600,000,000 (2009: 600,000,000) | 6,000 | 6,000 |
| ordinary shares of 1p each | | |
+-----------------------------------------+--------------+---------+
+--------------------------+-------------+----------+---+---------+-------------+
| | 2010 | 2009 |
+--------------------------+----------------------------+-----------------------+
| Issued capital: | No: | GBP'000 | No: | GBP'000 |
+--------------------------+-------------+----------+-------------+-------------+
| Ordinary shares of 1p | 172,126,380 | 1,721 | 163,786,903 | 1,638 |
| each | | | | |
+--------------------------+-------------+----------+-------------+-------------+
| | | | | | |
+--------------------------+-------------+----------+---+---------+-------------+
+-----------------------------------------+--------------+---------+
| | 2010 | 2009 |
+-----------------------------------------+--------------+---------+
| Issued capital: | GBP'000 | GBP'000 |
+-----------------------------------------+--------------+---------+
| At 1 April | 1,638 | 1,638 |
+-----------------------------------------+--------------+---------+
| Issued in the year: | 83 | - |
+-----------------------------------------+--------------+---------+
| At 31 March | 1,721 | 1,638 |
+-----------------------------------------+--------------+---------+
On 8 July 2009 the Group agreed with Marc Duschenes, a Director, to convert
GBP200,000 of the convertible loan notes issued to him as part of the
consideration of the acquisition of The Braemar Group Limited into equity at a
price of 2.75 pence per share, which resulted in 7,272,727 new ordinary shares
of 1 pence each being issued to Marc Duschenes.
On the same day pursuant to an agreement with a supplier, who had been promoting
the Group's funds, a further 1,066,750 new ordinary shares of 1 pence each were
issued at a price of 2.875p per share.
26. Share options
Other than for the Directors, or disclosed in the Directors' report, no
performance criteria are in place for this scheme.
26.1 Approved 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 | |
| | 2009 | the | the year | the | March | | | |
| | | year | | year | 2010 | | | |
+------------+-----------+---------+-----------+-----------+-----------+----------+----------+--------+
| 13/06/2007 | 2,540,259 | - | - | - | 2,540,259 | 3.25p | Jun-10 | Jun-17 |
+------------+-----------+---------+-----------+-----------+-----------+----------+----------+--------+
| 18/06/2008 | 2,200,165 | - | - | (165,000) | 2,035,165 | 1.25p | Jun-11 | Jun-18 |
+------------+-----------+---------+-----------+-----------+-----------+----------+----------+--------+
| 06/11/2008 | 500,000 | - | - | (60,000) | 440,000 | 1.00p | Nov-11 | Nov-18 |
+------------+-----------+---------+-----------+-----------+-----------+----------+----------+--------+
| 13/08/2009 | - | 400,000 | - | - | 400,000 | 2.75p | Aug-12 | Aug-19 |
+------------+-----------+---------+-----------+-----------+-----------+----------+----------+--------+
| | 5,240,424 | 400,000 | - | (225,000) | 5,415,424 | | | |
+------------+-----------+---------+-----------+-----------+-----------+----------+----------+--------+
26.2 Unapproved 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 | |
| | 2009 | the | the year | the | March | | | |
| | | year | | year | 2010 | | | |
+------------+-----------+---------+-----------+---------+-----------+----------+----------+--------+
| 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 |
+------------+-----------+---------+-----------+---------+-----------+----------+----------+--------+
| | 9,028,810 | - | - | - | 9,028,810 | | | |
+------------+-----------+---------+-----------+---------+-----------+----------+----------+--------+
26.3 Share option charges
Charges to the statement of comprehensive income are summarised as follows:
+-----------------------------------------+--------------+---------+
| | 2010 | 2009 |
+-----------------------------------------+--------------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+--------------+---------+
| Total | 12 | 12 |
+-----------------------------------------+--------------+---------+
Options are valued using the Black-Scholes option-pricing model and the
principal inputs into the model were as follows:
+-----------------------------------------+--------------+---------+
| | 2010 | 2009 |
+-----------------------------------------+--------------+---------+
| Weighted average exercise price | 2.75p | 3.25p |
+-----------------------------------------+--------------+---------+
| Expected volatility weighted average | 40% | 40% |
+-----------------------------------------+--------------+---------+
| Expected life weighted average | 3 years | 3 years |
+-----------------------------------------+--------------+---------+
| Risk-free rate | 4% | 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.
27. Reserves
+-------------------------+---------+-------------+---------+-------------+
| | Share | Accumulated | Share | Accumulated |
| | premium | loss | premium | loss |
| | account | | account | |
+-------------------------+---------+-------------+---------+-------------+
| | 2010 | 2010 | 2009 | 2009 |
+-------------------------+---------+-------------+---------+-------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+---------+-------------+---------+-------------+
| Balance brought forward | 2,945 | (2,038) | 2,945 | (1,845) |
+-------------------------+---------+-------------+---------+-------------+
| Retained loss for the | - | (130) | - | (202) |
| year | | | | |
+-------------------------+---------+-------------+---------+-------------+
| New shares issued | 147 | - | - | - |
+-------------------------+---------+-------------+---------+-------------+
| Credit arising on share | - | 12 | - | 12 |
| options | | | | |
+-------------------------+---------+-------------+---------+-------------+
| Available for sale | | | | |
| investments fair value | - | - | - | (3) |
| movement | | | | |
+-------------------------+---------+-------------+---------+-------------+
| Balance carried forward | 3,092 | (2,156) | 2,945 | (2,038) |
+-------------------------+---------+-------------+---------+-------------+
28. Operating leases
Operating lease costs incurred during the year were:
+-----------------------------------------+--------------+---------+
| | 2010 | 2009 |
+-----------------------------------------+--------------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+--------------+---------+
| Land and buildings | 77 | 81 |
+-----------------------------------------+--------------+---------+
| Plant and equipment | 4 | 5 |
+-----------------------------------------+--------------+---------+
At 31 March 2010 the Group had total commitments under non-cancellable operating
leases as set out below:
+----------------------------+---------+---------+---------+---------+
| | Land and | Plant and |
| | buildings | equipment |
+----------------------------+-------------------+-------------------+
| | 2010 | 2009 | 2010 | 2009 |
+----------------------------+---------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------+---------+---------+---------+---------+
| Within one year | 77 | 77 | 4 | 3 |
+----------------------------+---------+---------+---------+---------+
| Between two and five years | 180 | 251 | - | - |
| inclusive | | | | |
+----------------------------+---------+---------+---------+---------+
At 31 March 2010 the Group had total amounts receivable under non-cancellable
operating leases as set out below:
+--------------------------------+-------------------+---------+----------+
| | Land and buildings |
+--------------------------------+----------------------------------------+
| | 2010 | 2009 |
+----------------------------------------------------+---------+----------+
| | GBP'000 | GBP'000 |
+----------------------------------------------------+---------+----------+
| Within one year | 17 | 17 |
+----------------------------------------------------+---------+----------+
| Between two and five years inclusive | 69 | 69 |
+----------------------------------------------------+---------+----------+
| More than five years | 121 | 138 |
+----------------------------------------------------+---------+----------+
| | | | |
+--------------------------------+-------------------+---------+----------+
29. Capital commitments and contingent liabilities
The Group had no material capital commitments or contingent liabilities at 31
March 2010 (2009: GBPNil).
30. 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 |
+-------------------------+---------+-------------+---------+-------------+
| | 2010 | 2010 | 2009 | 2009 |
+-------------------------+---------+-------------+---------+-------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+---------+-------------+---------+-------------+
| Coronation Limited | 50 | - | 56 | - |
| Partnership | | | | |
+-------------------------+---------+-------------+---------+-------------+
| Coronation II Limited | 38 | - | 44 | - |
| Partnership | | | | |
+-------------------------+---------+-------------+---------+-------------+
| Coronation III Limited | 58 | - | 62 | - |
| Partnership | | | | |
+-------------------------+---------+-------------+---------+-------------+
| Coronation IV Limited | 162 | 2 | 94 | - |
| Partnership | | | | |
+-------------------------+---------+-------------+---------+-------------+
| Coronation V Limited | 34 | - | 88 | - |
| Partnership | | | | |
+-------------------------+---------+-------------+---------+-------------+
| Coronation VI Limited | 85 | - | 62 | - |
| Partnership | | | | |
+-------------------------+---------+-------------+---------+-------------+
| OEG Limited Partnership | 223 | 1 | 289 | - |
+-------------------------+---------+-------------+---------+-------------+
| OEG II Limited | 70 | 1 | 162 | - |
| Partnership | | | | |
+-------------------------+---------+-------------+---------+-------------+
| ReGen Limited | 215 | - | 173 | - |
| Partnership | | | | |
+-------------------------+---------+-------------+---------+-------------+
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
GBP43,000 (2009: GBP153,000) of which none (2009: none) were outstanding at the
year-end.
Braemar Group plc provides administrative services and office space to Regenesis
Group Limited. Martin Robinson and Marc Duschenes are both Directors of
Regenesis Group Limited. During the year invoices were raised of GBP26,000
(2009: GBP20,000) of which none (GBP2009: GBP20,000) were outstanding at the
year-end.
30.1 Amounts owed to key management
Amounts outstanding to key management at the balance sheet date were GBP435,000
(2009: GBP608,000) 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 22.
30.2 Key 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.
+-----------------------------------------+--------------+---------+
| | 2010 | 2009 |
+-----------------------------------------+--------------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+--------------+---------+
| Short term employee benefits | 332 | 334 |
+-----------------------------------------+--------------+---------+
| Post employment benefits | 33 | 49 |
+-----------------------------------------+--------------+---------+
| | 365 | 383 |
+-----------------------------------------+--------------+---------+
The charge to income in the year in respect of share options for key management
personnel was GBP10,000 (2009: GBP10,000).
31. Post balance sheet events
There have been no material events from the date of the balance sheet until the
date of this report.
32. 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
GBP35,000 (2009: GBP51,000).
33. Financial instruments
The Group's financial instruments are summarised below.
33.1 Financial assets
+------------------+---------+---------+---------+---------+-------------+---------+---------+---------+---------+---------+
| | Assets | Loans | Held-to-maturity | Available | Total |
| | at fair | and | | for sale | |
| | value | receivables | | | |
| | through | | | | |
| | profit | | | | |
| | and | | | | |
| | loss | | | | |
+------------------+-------------------+-------------------+-----------------------+-------------------+-------------------+
| | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
+------------------+---------+---------+---------+---------+-------------+---------+---------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------+---------+---------+---------+---------+-------------+---------+---------+---------+---------+---------+
| Held-to-maturity | - | - | - | - | - | - | 50 | 59 | 50 | 59 |
| investments | | | | | | | | | | |
+------------------+---------+---------+---------+---------+-------------+---------+---------+---------+---------+---------+
| Other | 56 | 67 | - | - | - | - | - | - | 56 | 67 |
| financial | | | | | | | | | | |
| assets | | | | | | | | | | |
+------------------+---------+---------+---------+---------+-------------+---------+---------+---------+---------+---------+
| Available | - | - | - | - | - | - | - | 8 | - | 8 |
| for sale | | | | | | | | | | |
| investments | | | | | | | | | | |
+------------------+---------+---------+---------+---------+-------------+---------+---------+---------+---------+---------+
| Trade | - | - | 106 | 50 | - | - | - | - | 106 | 50 |
| receivables | | | | | | | | | | |
+------------------+---------+---------+---------+---------+-------------+---------+---------+---------+---------+---------+
| Other | - | - | 34 | 186 | - | - | - | - | 34 | 186 |
| receivables | | | | | | | | | | |
+------------------+---------+---------+---------+---------+-------------+---------+---------+---------+---------+---------+
| | 56 | 67 | 140 | 236 | - | - | 50 | 67 | 246 | 370 |
+------------------+---------+---------+---------+---------+-------------+---------+---------+---------+---------+---------+
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. 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, which has been estimated
from the most recent management accounts available for Braemar UK Agricultural
Land plc.
The cash at bank and in hand at the year-end was GBP303,000 (2009: GBP206,000),
which was all held in instant access variable interest bearing accounts linked
to bank base rate.
The available for sale investments at 31 March 2009 represented 2,350,000 shares
in Regenesis Group Limited, which have been realised in full during the year.
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.
33.2 Financial liabilities
+-----------------------------------------+----------+----------+
| | Other financial |
| | liabilities |
+-----------------------------------------+---------------------+
| | 2010 | 2009 |
+-----------------------------------------+----------+----------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+----------+----------+
| Interest bearing loans and borrowings | 533 | 533 |
+-----------------------------------------+----------+----------+
| Convertible Loan Notes - principal | 312 | 512 |
+-----------------------------------------+----------+----------+
| Convertible Loan Notes -accrued | 123 | 96 |
| interest | | |
+-----------------------------------------+----------+----------+
| Obligations under finance leases | 13 | 33 |
+-----------------------------------------+----------+----------+
| Trade payables | 258 | 52 |
+-----------------------------------------+----------+----------+
| Other payables | 381 | 413 |
+-----------------------------------------+----------+----------+
| | 1,620 | 1,639 |
+-----------------------------------------+----------+----------+
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 GBP435,000 (2009: GBP608,000).
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.
33.3 Fair value of financial instruments
The fair value of the Group's financial instruments is summarised below:
Financial assets
+-------------------------+----------+---------+----------+---------+
| | Carrying | Fair | Carrying | Fair |
| | amount | value | amount | value |
+-------------------------+----------+---------+----------+---------+
| | 2010 | 2010 | 2009 | 2009 |
+-------------------------+----------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+----------+---------+----------+---------+
| Held-to-maturity | 50 | 50 | 59 | 59 |
| investments | | | | |
+-------------------------+----------+---------+----------+---------+
| Other financial assets | 56 | 56 | 67 | 67 |
+-------------------------+----------+---------+----------+---------+
| Available for sale | - | - | 8 | 8 |
| investments | | | | |
+-------------------------+----------+---------+----------+---------+
| Trade receivable | 106 | 106 | 50 | 50 |
+-------------------------+----------+---------+----------+---------+
| Other receivables | 34 | 34 | 186 | 186 |
+-------------------------+----------+---------+----------+---------+
| Total | 246 | 246 | 370 | 370 |
+-------------------------+----------+---------+----------+---------+
Financial liabilities
+-------------------------+----------+---------+----------+---------+
| | Carrying | Fair | Carrying | Fair |
| | amount | value | amount | value |
+-------------------------+----------+---------+----------+---------+
| | 2010 | 2010 | 2009 | 2009 |
+-------------------------+----------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+----------+---------+----------+---------+
| Interest bearing loans | 533 | 537 | 533 | 555 |
| and borrowings | | | | |
+-------------------------+----------+---------+----------+---------+
| Convertible Loan Notes | 312 | 319 | 512 | 549 |
| - principal | | | | |
+-------------------------+----------+---------+----------+---------+
| Convertible Loan Notes | 123 | 121 | 96 | 96 |
| - accrued interest | | | | |
+-------------------------+----------+---------+----------+---------+
| Obligations under | 13 | 13 | 33 | 33 |
| finance leases | | | | |
+-------------------------+----------+---------+----------+---------+
| Trade payables | 258 | 258 | 52 | 52 |
+-------------------------+----------+---------+----------+---------+
| Other payables | 381 | 381 | 413 | 413 |
+-------------------------+----------+---------+----------+---------+
| Total | 1,620 | 1,629 | 1,639 | 1,698 |
+-------------------------+----------+---------+----------+---------+
33.4 Risk 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.
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 to | 1 to | Within | 6 to | 1 to |
| | 6 | 12 | 5 | 6 | 12 | 5 |
| | months | months | years | months | months | years |
+----------------+---------+---------+---------+---------+---------+---------+
| | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 |
+----------------+---------+---------+---------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+---------+---------+---------+---------+---------+---------+
| Bank loans | 225 | - | 308 | - | - | 533 |
+----------------+---------+---------+---------+---------+---------+---------+
| Hire purchase | 10 | 3 | - | 12 | 10 | 11 |
| obligations | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+
| Other loans | 312 | - | - | 512 | - | - |
+----------------+---------+---------+---------+---------+---------+---------+
| Trade payables | 258 | - | - | 52 | - | - |
+----------------+---------+---------+---------+---------+---------+---------+
| | 805 | 3 | 308 | 576 | 10 | 544 |
+----------------+---------+---------+---------+---------+---------+---------+
Other loans comprise Convertible Loan Notes, the terms of which are disclosed
above. 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 and as a result they have been analysed as due within six months. The
Group has received an irrevocable undertaking from all the holders of the loan
notes that in the event that they are not repaid prior to this date then they
will be extended for a further five years on the same terms as are currently in
place.
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.
+-----------------------------------------+--------------+---------+
| | 2010 | 2010 |
+-----------------------------------------+--------------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+--------------+---------+
| | -0.5% | +5% |
+-----------------------------------------+--------------+---------+
| Net result for the year | - | - |
+-----------------------------------------+--------------+---------+
| Equity | - | - |
+-----------------------------------------+--------------+---------+
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, Anglo-Irish Bank plc and Investec plc.
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:
+-----------------------------------------+--------------+---------+
| | 2010 | 2009 |
+-----------------------------------------+--------------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+--------------+---------+
| Held-to-maturity investments | 50 | 59 |
+-----------------------------------------+--------------+---------+
| Other financial assets | 56 | 67 |
+-----------------------------------------+--------------+---------+
| Available for sale investments | - | 8 |
+-----------------------------------------+--------------+---------+
| Trade receivables | 106 | 50 |
+-----------------------------------------+--------------+---------+
| Other current assets | 34 | 186 |
+-----------------------------------------+--------------+---------+
| Cash and cash equivalents | 306 | 206 |
+-----------------------------------------+--------------+---------+
34. 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. 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 2010 will be posted to
shareholders today.
For further information please contact:
Marc Duschenes, Chief Executive, Braemar Group plc 0161 929 4969
Martin
Robinson, Chairman, Braemar Group plc 0161 929 4969
Julie
Serrage, Investor Relations, Braemar Group plc 0161 929 4969
Alex
Clarkson/Nick Cowles, Zeus Capital Limited 0161 831 1512
This information is provided by RNS
The company news service from the London Stock Exchange
END
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