REG - Caledonian Trust PLC - Audited Results for the year ended 30 June 2017 <Origin Href="QuoteRef">CNN.L</Origin> - Part 3
22/12/2017 13:00
- Part 3: For the preceding part double click ID:nRSV2631Ab
Note £000 £000
Revenue
Revenue from development property sales 145 438
Gross rental income from investment properties 410 351
Total Revenue 5 555 789
Cost of development property sales (108) (391)
Property charges (232) (241)
Cost of Sales (340) (632)
Gross Profit 215 157
Administrative expenses (611) (635)
Other income 15 15
Net operating loss before investment property
disposals and valuation movements 5 (381) (463)
Gain on sale of investment propertiesValuation gains on investment properties 10 2591,200 99675
Valuation losses on investment properties 10 (25) (185)
Net gains on investment properties 1,434 589
Operating profit 1,053 126
Financial income 7 1 1
Financial expenses 7 (14) (22)
Net financing costs (13) (21)
Profit before taxation 1,040 105
Income tax 8 - -
Profit and total comprehensive income for the financial year attributable to equity holders of the parent Company 1,040 105
Profit per share
Basic and diluted profit per share (pence) 9 8.83p 0.89p
The notes on pages 39 - 59 form an integral part of these financial
statements.
Consolidated balance sheet as at 30 June 2017
2017 2016
Note £000 £000
Non-current assets
Investment property 10 12,080 10,905
Plant and equipment 11 10 15
Investments 12 1 1
Total non-current assets 12,091 10,921
Current assets
Trading properties 13 11,633 11,166
Trade and other receivables 14 396 153
Cash and cash equivalents 15 55 103
Total current assets 12,084 11,422
Total assets 24,175 22,343
Current liabilities
Trade and other payables 16 (835) (698)
Interest bearing loans and borrowings 17 (360) -
Total current liabilitiesNon-current liabilitiesInterest bearing loans and borrowings 17 (1,195) (3,925) (698) (3,630)
Total liabilities (5,120) (4,328)
Net assets 19,055 18,015
Equity
Issued share capital 21 2,357 2,357
Capital redemption reserve 22 175 175
Share premium account 22 2,745 2,745
Retained earnings 13,778 12,738
Total equity attributable to equity holders of the parent Company 19,055 18,015
NET ASSET VALUE PER SHARE 161.71p
152.88p
The financial statements were approved by the board of directors on 22
December 2017 and signed on its behalf by:
ID Lowe
Director
The notes on pages 39 - 59 form an integral part of these financial
statements.
Consolidated statement of changes in equity as at 30 June 2017
Share Capital Share Retained
capital redemption premium earnings Total
reserve account
£000 £000 £000 £000 £000
At 1 July 2015 2,357 175 2,745 12,633 17,910
Profit and total comprehensive income for the year - - - 105 105
______ ______ ______ ______ ______
At 30 June 2016 2,357 175 2,745 12,738 18,015
Profit and total comprehensive income for the year - - - 1,040 1,040
______ ______ ______ ______ ______
At 30 June 2017 2,357 175 2,745 13,778 19,055
====== ====== ====== ====== ======
Consolidated cash flow statement for the year ended 30 June 2017
2017 2016
£000 £000
Cash flows from operating activities
Profit for the year 1,040 105
Adjustments for :
Gain on sale of investment property (259) (99)
Net gains on revaluation of investment properties (1,175) (490)
Depreciation 7 11
Net finance expense 13 22
_______ _______
Operating cash flows before movements
in working capital (374) (451)
(Increase)/Decrease in trading properties (468) 252
(Increase) in trade and other receivables (243) (57)
Increase in trade and other payables 124 30
_______ _______
Cash absorbed by the operations (961) (226)
Interest received 1 1
_______ _______
Net cash outflow from operating activities (960) (225)
_______ _______
Investing activitiesProceeds from sale of investment property 266 199
Acquisition of property, plant and equipment (9) (2)
_______ _______
Cash flows generated from investing activities 257 197
_______ _______
Increase in borrowings 655_______ -_______
Cash flows generated from financing activities 655 -
_______ _______
Net decrease in cash and cash equivalents (48) (28)
Cash and cash equivalents at beginning of year 103 131
_______ _______
Cash and cash equivalents at end of year 55 103
Notes to the consolidated financial statements as at 30 June 2017
1 Reporting entity
Caledonian Trust PLC is a public company incorporated and domiciled in the
United Kingdom. The consolidated financial statements of the Company for the
year ended 30 June 2017 comprise the Company and its subsidiaries as listed in
note 8 in the parent Company's financial statements (together referred to as
"the Group"). The Group's principal activities are the holding of property
for both investment and development purposes. The registered office is St
Ann's Wharf, 112 Quayside, Newcastle upon Tyne, NE99 1SB and the principal
place of business is 61a North Castle Street, Edinburgh EH2 3LJ.
2 Statement of Compliance
The Group financial statements have been prepared and approved by the
directors in accordance with International Financial Reporting Standards and
its interpretation as adopted by the EU ("Adopted IFRSs"). The Company has
elected to prepare its parent Company financial statements in accordance with
IFRS; these are presented on pages 60 to 78.
3 Basis of preparation
The financial statements are prepared on the historical cost basis except for
available for sale financial assets and investment properties which are
measured at their fair value.
The preparation of the financial statements in conformity with Adopted IFRSs
requires the directors to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets and
liabilities, income and expenses. The estimates and associated assumptions
are based on historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form the basis
of making the judgements about carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may differ from
these estimates.
These financial statements have been presented in pounds sterling which is the
functional currency of all companies within the Group. All financial
information has been rounded to the nearest thousand pounds.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chairman's
Statement on pages 2 to 22. The financial position of the Group, its cash
flows, liquidity position and borrowing facilities are described in Note 18 to
the consolidated financial statements.
In addition, note 18 to the financial statements includes the Group's
objectives, policies and processes for managing its capital; its financial
risk management objectives; details of its financial instruments and hedging
activities; and its exposures to credit risk and liquidity risk.
The Group and parent Company finance their day to day working capital
requirements through related party loans (see note 24). The related party
lender has indicated its willingness to continue to provide financial support
and not to demand repayment of its loan during 2018.
3 Basis of preparation (continued)
The Directors have prepared projected cash flow information for the period
ending twelve months from the date of their approval of these financial
statements. These forecasts assume the Group will make property sales in the
normal course of business to provide sufficient cash inflows to allow the
Group to continue to trade.
Should these sales not complete as planned, the directors are confident that
they would be able to sell sufficient other properties within a short
timescale to generate the income necessary to meet the Group's liabilities as
they fall due.
For these reasons they continue to adopt the going concern basis in preparing
the financial statements.
Areas of estimation uncertainty and critical judgements
Information about significant areas of estimation uncertainty and critical
judgements in applying accounting policies that have the most significant
effect on the amount recognised in the financial statements is contained in
the following notes:
Estimates
· Valuation of investment properties (note 10)
The fair value has been calculated by the directors taking account of third
party valuations provided by external independent valuers as at 30 June 2016
and adjusted for market movements in the period to 30 June 2017. The
independent valuations were based upon assumptions including future rental
income, anticipated void cost and the appropriate discount rate or yield. The
directors and independent valuers also take into consideration market evidence
for comparable properties in respect of both transaction prices and rental
agreements.
· Valuation of trading properties (note 13)
Trading properties are carried at the lower of cost and net realisable value.
The net realisable value of such properties is based on the amount the Group
is likely to achieve in a sale to a third party. This is then dependent on
availability of planning consent and demand for sites which is influenced by
the housing and property markets.
Judgements
· Deferred Tax (note 20)
The Group's deferred tax asset relates to tax losses being carried forward and
to differences between the carrying value of investment properties and their
original tax base. A decision has been taken not to recognise the asset on the
basis of the uncertainty that surrounds the availability of future taxable
profits.
4 Accounting policies
The accounting policies below have been applied consistently to all periods
presented in these consolidated financial statements.
Basis of consolidation
The financial statements incorporate the financial statements of the parent
Company and all its subsidiaries. Subsidiaries are entities controlled by the
Group. Control exists when the Group has the power to determine the financial
and operating policies of an entity so as to obtain benefits from its
activities. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until
the date it ceases.
Turnover
Turnover is the amount derived from ordinary activities, stated after any
discounts, other sales taxes and net of VAT.
Revenue
Rental income from properties leased out under operating leases is recognised
in the income statement on a straight line basis over the term of the lease.
Costs of obtaining a lease and lease incentives granted are recognised as an
integral part of total rental income and spread over the period from
commencement of the lease to the earliest termination date on a straight line
basis.
Revenue from the sale of trading properties is recognised in the income
statement on the date at which the significant risks and rewards of ownership
are transferred to the buyer with proceeds and costs shown on a gross basis.
Other income
Other income comprises income from agricultural land and other miscellaneous
income.
Finance income and expenses
Finance income and expenses comprise interest payable on bank loans and other
borrowings. All borrowing costs are recognised in the income statement using
the effective interest rate method. Interest income represents income on bank
deposits using the effective interest rate method.
Taxation
Income tax on the profit or loss for the year comprises current and deferred
tax. Income tax is recognised in the income statement except to the extent
that it relates to items recognised directly in equity, in which case the
charge / credit is recognised in equity. Current tax is the expected tax
payable on taxable income for the current year, using tax rates enacted or
substantively enacted at the reporting date, adjusted for prior years under
and over provisions.
Deferred tax is provided using the balance sheet liability method in respect
of all temporary differences between the values at which assets and
liabilities are recorded in the financial statements and their cost base for
taxation purposes. Deferred tax includes current tax losses which can be
offset against future capital gains. As the carrying value of the Group's
investment properties is expected to be recovered through eventual sale rather
than rentals, the tax base is calculated as the cost of the asset plus
indexation. Indexation is taken into account to reduce any liability but does
not create a deferred tax asset. A deferred tax asset is recognised only to
the extent that it is probable that future taxable profits will be available
against which the asset can be utilised.
4 Accounting policies (continued)
Investment properties
Investment properties are properties owned by the Group which are held either
for long term rental growth or for capital appreciation or both. Properties
transferred from trading properties to investment properties are revalued to
fair value at the date on which the properties are transferred. When the Group
begins to redevelop an existing investment property for continued future use
as investment property, the property remains an investment property, which is
measured based on the fair value model, and is not reclassified as property,
plant and equipment during the redevelopment.
The cost of investment property includes the initial purchase price plus
associated professional fees and historically also includes borrowing costs
directly attributable to the acquisition. Subsequent expenditure on
investment properties is only capitalised to the extent that future economic
benefits will be realised.
Investment property is measured at fair value at each balance sheet date.
External independent professional valuations are prepared at least once every
three years. The fair values are based on market values, being the estimated
amount for which a property could be exchanged on the date of valuation
between a willing buyer and a willing seller in an arms-length transaction
after proper marketing wherein the parties had each acted knowledgeably,
prudently and without compulsion.
Any gain or loss arising from a change in fair value is recognised in the
income statement.
Purchases and sales of investment properties
Purchases and sales of investment properties are recognised in the financial
statements at completion which is the date at which the significant risks and
rewards of ownership are transferred to the buyer.
Plant and other equipment
Plant and other equipment are stated at cost, less accumulated depreciation
and any provision for impairment. Depreciation is provided on all plant and
other equipment at varying rates calculated to write off cost to the expected
current residual value by equal annual instalments over their estimated useful
economic lives. The principal rates employed are:
Plant and other equipment - 20.0 per cent
Fixtures and fittings - 33.3 per cent
Motor vehicles - 33.3 per cent
Trading properties
Trading properties held for short term sale or with a view to subsequent
disposal in the near future are stated at the lower of cost or net realisable
value. Cost is calculated by reference to invoice price plus directly
attributable professional fees. Net realisable value is based on estimated
selling price less estimated cost of disposal.
4 Accounting policies (continued)
Financial assets
Trade and other receivables
Trade and other receivables are initially recognised at fair value and then
stated at amortised cost.
Financial instruments
Available for sale financial assets
The Group's investments in equity securities are classified as available for
sale financial assets. They are initially recognised at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition
they are measured at fair value and changes therein, other than Impairment
losses, are recognised directly in equity. The fair value of available for
sale investments is their quoted bid price at the balance sheet date. When an
investment is disposed of, the cumulative gain or loss in equity is recognised
in the income statement. Dividend income is recognised when the company has
the right to receive dividends either when the share becomes ex dividend or
the dividend has received shareholder approval.
Cash and cash equivalents
Cash includes cash in hand, deposits held at call (or with a maturity of less
than 3 months) with banks, and bank overdrafts. Bank overdrafts that are
repayable on demand and which form an integral part of the Group's cash
management are shown within current liabilities on the balance sheet and
included with cash and cash equivalents for the purpose of the statement of
cash flows.
Financial liabilities
Trade payables
Trade payables are non-interest-bearing and are initially measured at fair
value and thereafter at amortised cost.
Interest bearing loans and borrowings
Interest-bearing loans and bank overdrafts are initially carried at fair value
less allowable transactions costs and then at amortised cost.
Standards and interpretations in issue but not yet effective
The following Adopted IFRSs have been issued but have not been applied by the
Group in these financial statements:
IFRS 9 Financial Instruments (effective 1 January 2018)
IFRS 15 Revenue from Contracts with customers (effective 1 January 2018)
IFRS 16 Leases (effective 1 January 2019)
The Group has yet to assess the full impact of these new standards. Initial
indications are that they will not significantly impact the financial
statements of the Group.
4 Accounting policies (continued)
Operating segments
The Group determines and presents operating segments based on the information
that is internally provided to the Board of Directors ("The Board"), which is
the Group's chief operating decision maker. The directors review information
in relation to the Group's entire property portfolio, regardless of its type
or location, and as such are of the opinion that there is only one reportable
segment which is represented by the consolidated position presented in the
primary statements.
5 Operating profit 2017 2016
£000 £000
Revenue comprises:-
Rental income 410 351
Sale of properties 145 438
Interest 1 1
Other income 15 15
571 805
All revenue is derived from the United Kingdom
2017 2016
£000 £000
The operating profit is stated after charging:-
Depreciation 7 11
Amounts received by auditors and their associates in respect of:
- Audit of these financial statements (Group and Company) 13 12
- Audit of financial statements of subsidiaries pursuant to 7 6
legislation
6 Employees and employee benefits 2017 2016
£000 £000
Employee remuneration
Wages and salaries 338 373
Social security costs 35 39
Other pension costs 27 30
_______ _______
400 442
====== =======
Other pension costs represent contributions to defined contribution plans.
The average number of employees during the year was as follows:
No. No.
Management 2 2
Administration 4 3
Other 2 3
_______ _______
8 8
====== =======
2017 2016
Remuneration of directors £000 £000
Directors' emoluments 197 228
Company contributions to money purchase pension schemes 25 25
====== ======
Director Salary andFees Benefits PensionContributions 2017Total 2016Total
£000 £000 £000 e arrived at by reference to market evidence of transaction prices and completed lettings
for similar properties. The properties were valued individually and not as part of a portfolio and no allowance was made for
expenses of realisation or for any tax which might arise. They assumed a willing buyer and a willing seller in an arm's length
transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. The
valuations reflected usual deductions in respect of purchaser's costs, SDLT and LBTT as applicable at the valuation date. Local
comparable data was also adjusted to reflect the individual circumstances and unique characteristics of the valuation subjects
and the 2017 directors' valuations reflect changes in lettings and progress on the potential for redevelopment of certain
properties.The 'review of activities' within the Chairman's statement provides the current status of the Group's property
together with an analysis of the 'property prospects' for 2018 and beyond. The historical cost of investment properties held at
30 June 2017 is £9,521,406 (2016: £9,620,837). The cumulative amount of interest capitalised and included within historical
cost in respect of the Group's investment properties is £451,000 (2016: £476,000).
11 Plant and equipment
MotorVehicles Fixtures and fittings Otherequipment Total
£000 £000 £000 £000
Cost
At 30 June 2015 18 14 65 97
Additions in year - - 2 2
At 30 June 2016 18 14 67 99
Depreciation
At 30 June 2015 13 13 47 73
Charge for year 3 1 7 11
At 30 June 2016 16 14 54 84
Net book value
At 30 June 2016 2 - 13 15
15
MotorVehicles Fixtures and fittings Otherequipment Total
£000 £000 £000 £000
Cost
At 30 June 2016 18 14 67 99
Additions in year - 2 - 2
At 30 June 2017 18 16 67 101
Depreciation
At 30 June 2016 16 14 54 84
Charge for year 2 1 4 7
At 30 June 2017 18 15 58 91
Net book value
At 30 June 2017 - 1 9 10
10
12 Investments
2017 2016
£000 £000
Available for sale financial assets 1 1
====== ======
13 Trading properties
2017 2016
£000 £000
At start of year 11,166 11,418
AdditionsSold in year 575(108) 139(391)
_________ _________
At end of year 11,633 11,166
======== ========
14 Trade and other receivables 2017 2016
£000 £000
Amounts falling due within one year
Other debtors 370 67
Prepayments and accrued income 26 86
_______ _______
396 153
====== ======
The Group's exposure to credit risks and impairment losses relating to trade receivables is given in note 18.
15 Cash and cash equivalents 2017 2016
£000 £000
Cash 55 103
====== ======
Cash and cash equivalents comprise cash at bank and in hand. Cash deposits are held with UK banks. The carrying amount of cash equivalents approximates to their fair values. The company's exposure to credit risk on cash and cash equivalents is regularly monitored (note 18).
16 Trade and other payables
2017 2016
£000 £000
Trade creditors 33 34
Other creditors including taxation 15 24
Accruals and deferred income 787 640
_______ _______
Accruals and other creditors 835 698
====== ======
The Group's exposure to currency and liquidity risk relating to trade payables is disclosed in note 18.
17 Other interest bearing loans and borrowings
The Group's interest bearing loans and borrowings are measured at amortised cost. More information about the Group's exposure to interest rate risk and liquidity risk is given in note 18.
Current liabilities
2017 2016
£000 £000
Unsecured development loan 360 -
======= ========
Non-current liabilitiesUnsecured loans 3,925 3,630
======= =======
17 Other interest bearing loans and borrowings (continued)
Terms and debt repayment schedule
Terms and conditions of outstanding loans were as follows:
2017 2016
Currency Nominal interest rate Fair value Carrying amount Fair value Carrying amount
£000 £000 £000 £000
Unsecured loan GBP Base +3% 3,825 3,825 3,530 3,530
Unsecured development loan Unsecured loan GBP GBP Base Base + 3% 360 100 360 100 - 100 - 100
4,285 4,285 3,630 3,630
The unsecured loan of £3,825,000 is repayable in 12 months and one day after
the giving of notice by the lender. Interest is charged at 3% over Bank of
Scotland base rate but the lender varied its right to the margin over base
rate until further notice.
The short term unsecured development loan of £360,000 is repayable after the
disposal of two properties, expected to be by 30 June 2018. Interest is
charged at Bank of Scotland base rate.
The unsecured loan of £100,000 is not repayable before 1 July 2018. Interest
is charged at a margin of 3% over Bank of Scotland base rate.
The weighted average interest rate of the floating rate borrowings was 3.3%
(2016: 3.5%). As set out above, a lender varied its right to the
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