SECURED PROPERTY DEVELOPMENTS PLC - Final Results
Announcement provided bySecured Property Developments plc · SPD
Secured Property Developments plcDirectors' report and financial statements Registered number 2055395 For the Year ended 31 December 2013Notice of meeting NOTICE IS HEREBY GIVEN that the Twenty third Annual General Meeting of Secured Property Developments plcwill be held at The Small Mall Room, The Royal Automobile Club, 89 Pall Mall, London, SW1Y 5HS on Friday 11th July 2014at 10 a.m.for the following purposes: 1. To receive and adopt the financial statements for the year ended 31 December 2013together with the reports of the Directors and the Auditor thereon. 2. To re-elect R E France as a director (retires by rotation) 3. To re-elect G W Green as a director (retires by rotation) 4. To authorise, by special resolution in accordance with s95 of the Companies Act 2006, the Board to purchase up to 5% of the Company's own shares in the open market at a minimum price of 20p per share and a maximum price of 60p per share: such powers to expire at the AGM to be held in 2015, or on 11th July 2015if earlier. 5. To appoint as Auditors KPMG LLP, and to authorise the Directors to agree their remuneration, such powers to expire at the AGM held in 2015 6. To transact any other ordinary business of the Company. By order of the board I H Cobden Date: 6 June 2014 Secretary Notes: * A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company. Proxy forms must be lodged at the Registered Office not later than forty-eight hours before the time fixed for the meeting. * We would draw the attention of members proposing to attend the meeting to the RAC Clubdress code, which requires men to wear a tailored jacket and trousers, collared shirt and tie at all times and women to dress with commensurate formality. Company information Directors R E France G W Green R A Shane P R Stansfield D Duffield Secretary I H Cobden Registered office Unit 6 Orchard Mews 42 Orchard Road London N6 5TR Auditor KPMG Audit plc 8 Princes Parade Liverpool L3 1QH Bankers The Royal Bank of Scotland Plc Piccadilly Circus Branch 48 Haymarket London SW17 4SE Solicitors Summers 22 Welbeck Street London W1G 8EF Share Dealing The Company's Ordinary shares are quoted on the ICAP Security and Derivative Exchange (ISDX) and persons can buy or sell shares through their stockbroker. Share Price The middle market price of the Ordinary shares were quoted at 31 December 2013 on the ISDX (previously the PLUS Market) at 12.5p pence per share (2012: 12.5 penceper share) Chairman's statement As the UKeconomic recovery takes hold the prospects for the retail property market are now better than they have been for a number of years. Growth in consumer spending has led to increased sales and a boost to retailers. However to what extent this will benefit landlords invested in the retail sector is uncertain. The Company's portfolio remains fully let and the Company continues to service the interest on the loan facility/hedging instrument with Royal Bank of Scotland Plc ("RBS") pending any renewal/financial restructuring. Turnover has reduced to £131,003 compared with £175,118 in 2012 (which was higher last year due to the recovery of a dilapidations claim). The figure is similar to 2011 and previous years. The loss before and after taxation was £ 78,011 compared with £67, 851 in 2012. Despite potential opportunities to do so the Company's ability to grow turnover has been severely prejudiced by the delay and uncertainty of the outcome of the Financial Conduct Authority(FCA) review of interest rate hedging products. However I am now very pleased to report a favourable outcome to the FCA review and the receipt of a provisional determination basic redress offer from Royal Bank of Scotland PLC (see details below). RBS Loan Facility/Swap Background You will be aware that in June 2008the Company entered into a 5 year loan facility with RBS to repay its bank borrowings and provide additional debt finance. As a precondition of the loan RBS required the Company to hedge the interest rate exposure through an interest rate hedging instrument (`Swap') switching the variable rate of the loan to a fixed interest rate. In 2012 the Company made a complaint to RBS about the mis-selling of the Swap. This was followed by an announcement from the FCA in June 2012that its preliminary review into the sale of interest rate hedging products to small and medium sized businesses had found serious failings by certain leading banks including RBS. The FCA also announced that agreement had been reached with RBS and the other major banks to participate in an independent past business review (`FCA Review') and a redress exercise. FCA Review outcome On 19 May 2014the Company's legal representatives received a letter from RBS informing them of the outcome of the FCA review and making a provisional determination basic redress offer, of which the principal terms are:- * The provisional basic redress payment including interest will be £457,136.59 * The existing swap contract will be cancelled at nil cost to the Company * The Company will have the opportunity to submit a claim for the recovery of any consequential loss and any additional tax liability which may arise as a result of receiving the basic redress payment After taking specialist legal advice the Company has accepted the redress offer subject to any potential claims for consequential loss and additional tax liability The Company remains in negotiation with RBS to renew the loan facility. However it is clear that due to the present value of the properties the loan will not be renewed at the current level. As a consequence the Company is looking at alternative sources of finance including the possibility of a rights or loan note issue. I shall report to the shareholders on this as soon as the Board has sufficient information to make a recommendation. Chairman's statement (continued) We continue to maintain a tight control of the Company's cash resources, which we consider adequate to support current levels of expenditure, although we keep them under constant review. In current circumstances the Board is unable to recommend the payment of a dividend for the year ended 31 December 2013. The annual general meeting will take place at the Royal Automobile Club, 89 Pall Mall, London, SW1Y 5HS on Friday 11 July 2014at 10 a.m., and the directors look forward to meeting those shareholders who can attend. David DuffieldChairman Strategic report Principal Activities The principal activity of Secured Property Developments plcis investment in commercial property. The group comprises the holding company, a finance company and a second property company. Business Model At Secured Property Developments, we focus on maximising the return from our portfolio of properties whilst looking for new acquisitions where we can by development increase value and thereby create value for shareholders. We create value by :- Acquiring Properties. We seek to acquire properties and unlock value. Optimise Income. Optimising income by development and carrying out improvements and good estate management. Employ our knowledge of occupiers' needs to let to high quality tenants from a wide range of businesses and to minimise the level of voids in our portfolio. Collecting our rental income on due date. Recycle Capital. Identify properties for disposal where value has been optimised and dispose of those which do not fit the Group's long-term plans. Maintain robust and flexible financing. Negotiate flexible financing and retain a healthy level of interest cover and gearing Business Review The results for the year are set out on page 12 of these consolidated financial statements. The group's investment properties are let at rents commensurate with local market conditions and on terms that include periodic upwards adjustment, financed by bank borrowings. A review of the business is included in the Chairman's Statement set out on page 3 and 4. Principal Risks and Uncertainties Going Concern The directors have prepared the financial statements on a going concern basis for the reasons set out in note 1 to the financial statements. Derivatives and other financial instruments The group's financial instruments comprise borrowings, some cash and liquid resources, convertible unsecured loan stock and various items, such as trade debtors and trade creditors, that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the group's operations. The main risks arising from the group's financial instruments are interest rate risk and liquidity risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. Strategic report (continued) Interest rate risk The group finances its operations through bank borrowings. Currently the group borrows at a rate of interest fixed by a swap agreement on all its borrowings. The group's policy is to borrow at the lowest rates for periods that do not carry excessive time premiums. Liquidity risk As regards liquidity, the group's policy has throughout the year been to ensure that the group is able at all times to meet its financial commitments as and when they fall due. The maturity date of the loan to the group are set out in note 14 of these financial statements. The current status of the negotiations in respect of the Group's financing facilities is set out in the Chairman' Statement and note 1 to the financial statements. Future Developments With the impending settlement of the "swap" situation, the Directors will now be able to actively consider opportunities that may arise including alternative sources of financing. Signed on behalf of the Board R A Shane Dated: 6 June 2014 Director Directors' report Proposed dividend and transfer to reserves The directors cannot recommend the payment of a dividend. The loss for the year retained in the group is £78,011 (2012:£67,851). Directors and directors' interests The directors who held office during the year were as follows: D Duffield R E France G W Green R A Shane P R Stansfield The directors who held office at the end of the financial year had the following interests in the shares and loan stock of the group companies as recorded in the register of directors' share and debenture interests. Director Company Class Interest Interest at at at 31 at 1 December January 2013 2013 Number Number D Duffield SPD plc* Ordinary shares - - R E France SPD plc* Ordinary shares 88,888 88,888 G W Green SPD plc* Ordinary shares 90,000 90,000 Deferred shares 30,000 30,000 R A Shane SPD plc* Ordinary shares 574,456 574,456 Deferred shares 154,666 154,666 P R Stansfield SPD plc* Ordinary shares 6,250 6,250 * SPD plcis used above as an abbreviation for Secured Property Developments plc. According to the register of directors' interests, no rights to subscribe for shares in or debentures of the company or any other group company was granted to any of the directors or their immediate families, or exercised by them, during the financial year. Substantial shareholding of ordinary shares of 20p each as at 31 December 2013R E France 4.51% G W Green 4.57% R A Shane 29.15% Disclosure of information to the auditor The directors who held office at the date of approval of this directors' report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware; and each director has taken all the steps that he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information. Directors' report (continued) Auditor KPMG Audit Plchave notified the Company that they are not seeking reappointment due to the wind up of KPMG Audit Plcand the transfer of audit services to KPMG LLP. It is therefore proposed that KPMG LLPbe appointed auditor of the Group to hold office from the conclusion of the Annual General Meeting to be held on 11 July 2014until the conclusion of the next General Meeting at which accounts laid before the Group. By order of the board I H Cobden Unit 6 Orchard Mews Secretary 42 Orchard Road Date : 6 June 2014 London Registered number: 2055395 N6 5TR Statement of directors' responsibilities in respect of the Strategic Report, the Directors' Report and the financial statements The directors are responsible for preparing the Strategic Report and the Directors' Report and the group and parent company financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare group and parent company financial statements for each financial year. Under that law they have elected to prepare the group and parent company financial statements in accordance with UKAccounting Standards and applicable law ( UKGenerally Accepted Accounting Practice). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the group and parent company financial statements, the directors are required to: * select suitable accounting policies and then apply them consistently; * make judgments and estimates that are reasonable and prudent; * state whether applicable UKAccounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; * prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company's transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities. ABCD Independent auditor's report to the members of Secured Property Developments PlcWe have audited the financial statements of Secured Property Developments plcfor the year ended 31 December 2013set out on pages 12 to 27. The financial reporting framework that has been applied in their preparation is applicable law and UKAccounting Standards ( UKGenerally Accepted Accounting Practice). This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the Directors' Responsibilities Statement set out on page 9, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing ( UKand Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's web-site at www.frc.org.uk/ auditscopeukprivate. Opinion on financial statements In our opinion the financial statements: * give a true and fair view of the state of the group's and the parent company's affairs as at 31 December 2013and of the group's loss for the year then ended; * have been properly prepared in accordance with UKGenerally Accepted Accounting Practice; and * have been prepared in accordance with the requirements of the Companies Act 2006. Emphasis of matter - going concern In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 1 to the financial statements concerning the Group's and the Parent Company's ability to continue as a going concern. The Group and Companyare dependent on the successful refinancing of a bank debt of £1.5m which expired on 3 June 2013. The lender has indicated that it may not refinance the entire principal amount of the loan. The Company may need to seek further capital investment from existing investors or alternative financing to cover the shortfall between any proposed facility and the existing debt. These conditions, along with the other matters explained in note 1 to the financial statements, indicate the existence of material uncertainties which may cast significant doubt on the Group's and the Parent Company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group and the Parent Company were unable to continue as a going concern. Independent auditor's report to the members of Secured Property Developments plc(continued) Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: * adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or * the parent company financial statements are not in agreement with the accounting records and returns; or * certain disclosures of directors' remuneration specified by law are not made; or * we have not received all the information and explanations we require for our audit. Hywel Jones(Senior Statutory Auditor) For and on behalf of KPMG Audit Plc, Statutory Auditor Chartered Accountants 8 Princes Parade Liverpool L3 1QH 9 June 2014 Consolidated profit and loss account for the year ended 31 December 2013Note 2013 2012 £ £ Turnover 2 131,003 175,118 Cost of sales (3,439) (10,226) Gross profit 127,564 164,892 Administrative expenses (104,476) (132,228) Operating profit 23,088 32,664 Other interest receivable 6 2,701 3,229 and similar income Interest payable and 7 (103,800) (103,744) similar charges Loss on ordinary 2-7 (78,011) (67,851) activities before taxation Taxation 8 - - Loss for the financial 18 (78,011) (67,851) year Loss per share 10 (3.9)p (3.4)p All income is from continuing operations. The notes on pages 18 to 27 form part of these financial statements. Consolidated balance sheet at 31 December 2013 Note 2013 2013 2012 2012 £ £ £ £ Fixed assets Tangible assets 11 1,550,000 1,550,000 Current assets Debtors 13 69,807 88,185 Cash at bank and in hand 379,697 416,269 449,504 504,454 Creditors: amounts 14 (1,624,849) (1,601,788) falling due within one year Net current (1,175,345) (1,097,334) (liabilities)/assets Total assets less 374,655 452,666 current liabilities Creditors: amounts 15 - - falling due after more than one year Net assets 374,655 452,666 Capital and reserves Called up share capital 17 418,861 418,861 Share premium account 18 3,473 3,473 Revaluation reserve 18 101,861 101,861 Profit and loss account 18 (149,540) (71,529) Shareholders' funds 374,655 452,666 The notes on pages 18 to 27 form part of these financial statements. These financial statements were approved by the board of directors on 6 June 2014and were signed on its behalf by: D Duffield R A Shane Director Director Registered number: 2055395 Company balance sheet at 31 December 2013 Note 2013 2013 2012 2012 £ £ £ £ Fixed assets Tangible assets 11 500,000 500,000 Investments 12 947,263 947,263 1,447,263 1,447,263 Current assets Debtors 13 125,889 122,598 Cash at bank and in hand 365,571 402,143 491,460 524,741 Creditors: amounts 14 (1,607,651) (1,567,124) falling due within one year Net current (1,116,191) (1,042,383) (liabilities)/assets Total assets less 331,072 404,880 current liabilities Creditors: amounts 15 - - falling due after more than one year Net assets 331,072 404,880 Capital and reserves Called up share capital 17 418,861 418,861 Share premium account 18 3,473 3,473 Revaluation reserve 18 88,763 88,763 Profit and loss account 18 (180,025) (106,217) Shareholders' funds 331,072 404,880 The notes on pages 18 to 27 form part of these financial statements. These financial statements were approved by the board of directors on 6 June 2014and were signed on its behalf by: D Duffield R A Shane Director Director Registered number: 2055395 Consolidated cash flow statement for the year ended 31 December 2013Note 2013 2012 £ £ Cash inflow from operating 64,527 33,776 activities Returns on investments and 20 (101,099) (100,515) servicing of finance Taxation - - Dividends - - Cash inflow before (36,572) (66,739) financing Financing - - Decrease in cash in the 21 (36,572) (66,739) year Reconciliation of operating profit to operating cash flows for the year ended 31 December 20132013 2012 £ £ Operating profit 23,088 32,664 Decrease / (increase) in 18,378 (9,443) debtors Increase in creditors 23,061 10,555 Net cash inflow from 64,527 33,776 operating activities Reconciliation of net cash flow to movement in net debt for the year ended 31 December 2013Note 2013 2012 £ £ Decrease in cash in the year 21 (36,572) (66,739) Movement in net debt in the (36,572) (66,739) year Net debt at beginning of the 21 (1,083,731) (1,016,992) year Net debt at end of the year 21 (1,120,303) (1,083,731) Consolidated Statement of Total Recognised Gains and Losses for the year ended 31 December 20132013 2012 £ £ Loss for the financial year (78,011) (67,851) Unrealised deficit on revaluation of investment - (560,000) properties Total recognised gains and losses relating to the (78,011) (627,851) financial year Reconciliation of movements in shareholders' funds for the year ended 31 December 2013Group Company 2013 2012 2013 2012 £ £ £ £ Loss for the financial year (78,011) (67,851) (73,808) (97,246) Dividends on shares - - - - classified in shareholders' funds Retained loss (78,011) (67,851) (73,808) (97,246) Revaluation of investment - (560,000) - (110,000) properties Net reduction in (78,011) (627,851) (73,808) (207,246) shareholders' funds Opening shareholders' funds 452,666 1,080,517 404,880 612,126 Closing shareholders' funds 374,655 452,666 331,072 404,880 Notes to the financial statements (forming part of the financial statements) 1 Accounting policies The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements, except as noted below. Basis of preparation The financial statements have been prepared under the historical cost accounting rules as modified by the revaluation of investment properties and in accordance with applicable accounting standards. The financial statements are in compliance with the Companies Act 2006 except that, as noted below, investment properties are not depreciated. Basis of consolidation The group financial statements consolidate the financial statements of Secured Property Developments plcand its subsidiary undertakings. These financial statements are made up to 31 December 2013. Unless otherwise stated, the acquisition method of accounting has been adopted. Under this method, the results of subsidiary and associated undertakings acquired or disposed of in the year are included in the consolidated profit and loss account from the date of acquisition or up to the date of disposal. In accordance with s408 of the Companies Act 2006 Secured Property Developments plcis exempt from the requirement to present its own profit and loss account. The result for the financial year dealt with in the financial statements of Secured Property Developments plcis disclosed in note 18 to these financial statements. Going concern These financial statements have been prepared on the going concern basis of accounting notwithstanding that the Group and Parent Company had net current liabilities of £1,175,345 and £1,116,191 as at 31 December 2013respectively, and the Group recorded a loss of £78,011 and had a cash outflow of £36,572 for the year then ended. The Company has a bank loan of £1,500,000 with the Royal Bank of Scotland ("RBS"), which had an original repayment date of 3 June 2013. The RBS banking facility includes cross guarantees and security over all the assets of the Group. The facility also includes an out of the money pay-variable receive-fixed interest rate swap, which was due to mature in 2018. The swap included a mandatory break clause exercisable on expiry of the loan (see below). In 2012 the Company lodged a formal complaint to RBS in respect of the interest rate swap. The complaint alleged that RBS had mis-sold this instrument to the Company, and as such the Company should not be liable to pay any breakage costs to RBS on termination of the instrument. Around the same time the Financial Conduct Authority(formerly Financial Services Authority) announced that an independent past business review and a redress exercise of the sale of interest rate hedging products to small and medium sized businesses (`the FCA Review') has been agreed with major banks. In August 2012, the Company received a letter from RBS confirming that RBS would be taking part in the FCA Review. As set out in note 23, subsequent to the year end, the Company has accepted an offer from RBS which includes the termination of the interest rate swap at £nil cost to the Company and a compensation payment of £457,136. RBS has indicated that the loan would not become repayable until after the FCA review is completed. As the FCA review is reaching conclusion the loan will become repayable and so the Directors are progressing with the refinancing negotiations with RBS and/or alternative sources of refinance. Notes (continued) 1 Accounting policies (continued) Presently, RBS has indicated that it may not refinance the entire principal amount of the loan. The Company may need to seek further capital investment from existing investors or alternative financing to cover any substantial shortfall between any proposed facility and the existing debt. The directors are working with the bank to identify all viable options, as any shortfall financing will be dependent on the specifics of the proposed refinancing facility. The directors acknowledge that there can be no certainty that the replacement facility will be agreed on satisfactory terms and that sufficient funding necessary to cover the shortfall will be secured. The directors have prepared cash flow forecasts for a period of 12 months following the approval of these financial statements. Taking into account the amounts currently held in cash reserve funds and the future receipt of the compensation payment of £457,136 from the FCA review, the directors consider that the Company will be able to meet its financial obligations (excluding the substantial repayment of the bank loan) for at least the next 12 months, based on these cash flow forecasts. The directors have concluded that the conditions set out above indicate the existence of material uncertainties which may cast significant doubt on the Group's and Company's ability to continue as a going concern and that they may, therefore, be unable to realise their assets and discharge their liabilities in the normal course of business. Nevertheless, after making enquiries and considering the uncertainties described above, the directors have a reasonable expectation that the Group and Company will have adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the annual financial statements. Accordingly, the financial statements do not include the adjustments that would result if the Group and Company were unable to continue as a going concern. Investment properties In accordance with SSAP 19, depreciation is not charged on investment properties held by the group. This is a departure from the requirements of the Companies Act 2006 which requires all properties to be depreciated. Such properties are not held for consumption but for investment and the directors consider that to depreciate them would not give a true and fair view. Investment properties are revalued annually by the directors and periodic external valuations are completed when considered necessary, usually over a five year period. The aggregate surplus or deficit is transferred to a revaluation reserve. The directors consider that this policy results in the accounts giving a true and fair view. Taxation The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by Financial Reporting Standard 19. Classification of financial instruments issued by the Group Following the adoption of FRS 25, financial instruments issued by the Group are treated as equity (i.e. forming part of shareholders' funds) only to the extent that they meet the following two conditions: * they include no contractual obligations upon the Company (or Group as the case may be) to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company (or Group); and * where the instrument will or may be settled in the Company's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Company's own equity instruments or is a derivative that will be settled by the Company's exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments. Notes (continued) 1 Accounting policies (continued) To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Company's own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares. Finance payments associated with financial liabilities are dealt with as part of interest payable and similar charges. Finance payments associated with financial instruments that are classified as part of shareholders' funds, are dealt with as appropriations in the reconciliation of movements in shareholders' funds. Cash and liquid resources Cash, for the purpose of the cash flow statement, comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand. Turnover Turnover represents the amounts (excluding value added tax) derived from rental income from investment properties. 2 Turnover Turnover and profit on ordinary activities before taxation are attributable to the principal activities of the group. Turnover was derived from the activities of the group as follows: 2013 2012 £ £ Rental income from investment properties 131,003 175,118 131,003 175,118 All turnover and pre-tax profit on ordinary activities before taxation was earned in the UK. 3 Profit on ordinary activities before taxation 2013 2012 £ £ Loss on ordinary activities before taxation is stated after charging: Auditor's remuneration Audit services 11,000 11,000 Other services - compliance tax work 2,000 - The audit fee of the group of £11,000 includes £5,500 (2012: £5,500) in relation to the company. 4 Remuneration of directors The chairman received fees of £16,482 (2012: £22,367) and one other director received fees of £32,000 (2012: £17,528) which was paid to his employer in respect of his services (see note 22). Notes (continued) 5 Staff numbers and costs There are no other staff costs other than those disclosed in note 4. The average number of persons employed by the Group (including directors) during the year, analysed by category, was as follows: Number of employees 2013 2012 Directors 5 5 6 Other interest receivable and similar income 2013 2012 £ £ Bank interest receivable 2,701 3,229 7 Interest payable and similar charges 2013 2012 £ £ On bank loans 103,800 103,744 8 Taxation Analysis of charge in year 2013 2012 £ £ UK corporation tax Current tax on income for the year - - Total current tax - - Tax on profit on ordinary activities - - Factors affecting the tax charge for the current period The current tax charge for the year is higher (2012: higher) than the standard rate of corporation tax in the UK. The differences are explained below. 2013 2012 £ £ Current tax reconciliation Loss on ordinary activities before tax (78,011) (67,851) Current tax at 23.25% (2012: 24.5%) (18,138) (16,623) Effects of: Movement in tax losses 18,138 16,623 Total current tax charge (see above) - - Notes (continued) 9 Deferred tax An analysis of the unrecognised deferred taxation asset is set out below. Group Company 2013 2012 2013 2012 £ £ £ £ Tax Losses (33,305) (73,442) (32,465) (72,991) The deferred tax asset has not been recognised on the basis that the timing differences and tax losses may not be recovered in the foreseeable future. Tax losses for which a deferred tax asset has not been recognised as at 31 December 2013are £nil. 10 Earnings per share The calculation of the earnings per share figure is based on the following: 2013 2012 Loss after tax 78,011 67,851 Weighted average number of ordinary shares 1,970,688 1,970,688 Loss per share (3.9)p (3.4)p Notes (continued) 11 Tangible fixed assets Group Investment properties £ Cost or valuation At beginning of year 1,550,000 Revaluation - Net book value At 31 December 2013 1,550,000 At 31 December 2012 1,550,000 2013 2012 £ £ Historical cost of revalued assets 1,448,139 1,448,139 Historical cost net book value of revalued assets 1,448,139 1,448,139 Company Investment Properties £ Cost or valuation At beginning and end of year 500,000 Revaluation - Net book value At 31 December 2013 500,000 At 31 December 2012 500,000 2013 2012 £ £ Historical cost of revalued assets 411,237 411,237 Historical cost net book value of revalued assets 411,237 411,237 Group and company The investment properties were valued in July 2013by Jones Lang LaSalle. The external valuation was completed in accordance with the current edition of the Practice Statements and Guidance Notes of the Appraisal and Valuation Standards prepared by the Royal Institution of Chartered Surveyors. The Directors believe this valuation still to be appropriate as at 31 December 2013. Notes (continued) 12 Investments Company Loans to Shares in subsidiaries Subsidiaries Total £ £ £ Cost At beginning of year 947,259 4 947,263 Net book value At 31 December 2013 947,259 4 947,263 At 31 December 2012 947,259 4 947,263 Shares in group undertakings represent the company's investment in SPD Discount Limitedand Secured Property Developments (Scarborough) Limited. At 31 December 2013and 2012 the company held 100% of the ordinary share capital of each of the subsidiary undertakings. Both subsidiary undertakings are registered in Englandand Wales. SPD Discount Limitedwas trading as a finance company but has not traded in the current or prior year, and the principal activity of Secured Property Developments (Scarborough) Limitedis property investment. 13 Debtors Group Company 2013 2012 2013 2012 £ £ £ £ Amounts owed - - 111,569 106,297 by subsidiary undertakings Prepayments 69,807 88,185 14,320 16,301 and accrued income 69,807 88,185 125,889 122,598 All amounts fall due within one year. 14 Creditors: amounts falling due within one year Group Company 2013 2012 2013 2012 £ £ £ £ Bank loans 1,500,000 1,500,000 1,500,000 1,500,000 and overdrafts Taxes and 8,594 1,875 2,634 1,924 social security Amounts due - - 13,259 - to group undertakings Other 25,242 29,009 25,242 31,557 creditors Accruals and 91,013 70,904 66,516 33,643 deferred income 1,624,849 1,601,788 1,607,651 1,567,124 The bank loan is secured by a fixed charge on the properties of Secured Property Developments (Scarborough) Limitedand of the Company. It was due for repayment on 3 June 2013(see note 1). As at 31 December 2013there was an open interest rate swap (see note 23). The fair value of the interest rate swap has not been recognised in the financial statements as the group has not adopted FRS 26. Notes (continued) 15 Creditors: amounts falling due after more than one year Group Company 2013 2012 2013 2012 £ £ £ £ Bank loan - - - - Analysis of bank loan Group Company 2013 2012 2013 2012 £ £ £ £ Amounts falling due: Less than one year 1,500,000 1,500,000 1,500,000 1,500,000 Between one and two years - - 16 Derivatives and other financial instruments The group's policies with regard to financial instruments are set in note 1. Short term debtors and creditors have been omitted from all disclosures. Financial assets The group has £379,697 (2012: £416,269) held in cash as financial assets as well as short term debtors. Financial liabilities The interest rate profile of the group's financial liabilities as at 31 December 2013was: Total Fixed rate Fixed rate Weighted Financial financial weighted average liabilities liabilities average period for on which no interest which rate interest is rate is fixed charged £ £ % Years £ 31 December 2013 1,500,000 1,500,000 6.92 - - Maturity of financial liabilities The maturity profile at 31 December 2013of the group's financial liabilities, other than short term creditors such as trade creditors and accruals is set out in note 15. Fair values of the group's financial asset and liabilities There is no material difference between the fair value and the book value of the group's financial assets and liabilities which have been recognised. The interest rate swap which is due to expire in 2018 has not been recognised as the Group does not apply FRS 26 (see note 23). Notes (continued) 17 Called up share capital 2013 2012 £ £ Allotted, called up and fully paid 1,970,688 ordinary shares of 20p each 394,138 394,138 1,236,154 deferred shares of 2p each 24,723 24,723 418,861 418,861 The respective rights of the shareholders are as follows: Ordinary shares The ordinary shares have the right to all available capital and distributable profits subject only to any right available to the deferred shares on winding up. Deferred shares The deferred shares have no rights to vote, receive notices, or attend general meetings, nor to any income. On the return of capital on a winding-up or otherwise the deferred shares have no entitlement until the sum of £100,000 per ordinary share shall have been distributed. 18 Reserves Group Share premium Revaluation Profit and loss account Reserve Account £ £ £ At beginning of year 3,473 101,861 (71,529) Loss for the financial - - (78,011) year Revaluation of investment - - - properties At end of year 3,473 101,861 (149,540) Company Share premium Revaluation Profit and loss account Reserve Account £ £ £ At beginning of year 3,473 88,763 (106,217) Loss for the financial year - - (73,808) Revaluation of investment - - - properties At end of year 3,473 88,763 (180,025) Notes (continued) 19 Commitments Neither the group nor the company had any contractual commitments at the year end (2012: £nil). 20 Analysis of items netted in the cash flow statement 2013 2012 £ £ Return on investments and servicing of finance Interest paid (103,800) (103,744) Interest received 2,701 3,229 Net cash outflow from returns on investments and (101,099) (100,515) servicing of finance 21 Analysis of changes in net debt 31 December 31 December 2012 Cash flow 2013 £ £ £ Cash in hand and at bank 416,269 (36,572) 379,697 Debt due (1,500,000) - (1,500,000) (1,083,731) (36,572) (1,120,303) 22 Related party transactions St James's Property Services Limitedof which R A Shane is a director and shareholder has received £32,000 (2012: £17,258) from the holding company in respect of management services, including directors' fees of £32,000 (2012: £ 17,258). The amount outstanding at the year end is £32,000 (2012: £2,000). Guildhall Brokersand Consultants Limitedof which R A Shane is a director and shareholder has received £3,439 (2012: £6,866) for insurance premiums. The amount outstanding at the year end is £ nil (2012: nil). D. Duffieldhas received fees amounting to £16,482 (2012:£ 22,367) from the holding company in respect of professional fees. The amount outstanding at the year end is £16,482 (2012: £22,367) 23 Post Balance Sheet events Subsequent to the year end, the Directors have been offered and have accepted a settlement in respect of the "swap" agreement referred to in note 1. The terms of the agreement are that the company will receive £457,136 by way of compensation, the existing swap contract will be terminated at nil cost to the company and that the company is enabled to claim for consequential loss (including further tax liabilities) which has yet to be quantified. This is a non-adjusting post balance sheet event. Form of proxy for use at the annual general meeting on 11 July 2014I/We _______________________________________________________________________________ (Please insert full name in BLOCK CAPITALS) of _________________________________________________________________________________ (Please insert address in BLOCK CAPITALS) being (a) member(s) of the above named Company HEREBY APPOINT the Chairman of the meeting (see note 6) ___________________________________________________________________________________ to act as my/our proxy at the Annual General Meeting of the Company to be held on 11 July 2014and at any adjournment thereof, and to vote on my/our behalf as indicated below: Resolution No. For Against 1 To adopt the directors' report and financial statements for the year ended 31 December 20132 To re-elect R E France as a director 3 To re-elect G E Green as a director 4 To authorise the Board to purchase up to 5% of the company's own shares in the open market at a minimum price of 20p per share and a maximum price of 60p per share, such powers to expire at the AGM to be held in 2014 or on 11th July 2015, if earlier 5 KPMG Audit Plchave notified the company that they are not seeking reappointment. It is proposed that KPMG LLPbe and are hereby appointed auditors of the company and will hold office from the conclusion of this meeting until the conclusion of the next general meeting at which accounts are laid before the company, and that their remuneration be fixed by the Directors. Please indicate with an "X" in the space provided how you wish your votes to be cast on a poll. Should this form be returned duly completed and signed, but without a specific direction, the proxy will vote or abstain at his discretion. Dated ______________________________ 2014 Signature __________________________________ Notes 7. A proxy need not be a Member of the Company. 8. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other joint holders. For this purpose seniority is determined by the order in which the names stand in the Register of Members. 9. In the case of a corporation this proxy must be given under its Common Seal or be signed on its behalf by an officer, attorney or other person duly authorised. 10. To be valid this proxy must be deposited at the Company's Registered Office not later than 48 hours before the time appointed for holding the Meeting together, if appropriate, with the power of attorney or other authority under which is a signed or a potentially certified copy of such power or authority. 11. Any alterations made on this form should be initialled. 12. If it is desired to appoint as a proxy any person other than the Chairman of the Meeting, his/her name and address should be inserted in the relevant place, reference to the Chairman deleted and the alteration initialled. Second fold along this line Secured Property Developments plc. Unit 6 Orchard Mews 42 Orchard Road London N6 5TR First fold along this line Finally fold along this line and tuck in
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