REG - Caledonian Trust PLC - Audited Results for the year ended 30 June 2017 <Origin Href="QuoteRef">CNN.L</Origin> - Part 4
22/12/2017 13:00
- Part 4: For the preceding part double click ID:nRSV2631Ac
margin of
interest above base rate until further notice and so the rate of interest
charged in the year is 0.27% (2016: 0.5%).
18 Financial instruments
Fair valuesFair values versus carrying amountsThe fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:
2017 2016
Fair value Carrying Fair value Carrying
amount amount
£000 £000 £000 £000
Trade and other receivables 370 370 145 145
Cash and cash equivalents 55 55 103 103
425 425 248 248
Loans from related parties 4,285 4,285 3,630 3,630
Trade and other payables 835 835 698 698
5,120 5,120 4,328 4,328
Estimation of fair valuesThe following methods and assumptions were used to estimate the fair values shown above:Available for sale financial assets - as such assets are listed, the fair value is determined at the market price.Trade and other
receivables/payables - the fair value of receivables and payables with a remaining life of less than one year is deemed to be the same as the book value.Cash and cash equivalents - the fair value is deemed to be the same as the carrying amount due to the
short maturity of these instruments.Other loans - the fair value is calculated by discounting the expected future cashflows at prevailing interest rates.
Overview of risks from its use of financial instrumentsThe Group has exposure to the following risks from its use of financial instruments:· credit risk· liquidity risk· market riskThe Board of Directors has overall responsibility for the
establishment and oversight of the Company's risk management framework and oversees compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
18 Financial instruments (continued)
The Board's policy is to maintain a strong capital base so as to cover all
liabilities and to maintain the business and to sustain its development.
The Board of Directors also monitors the level of dividends to ordinary
shareholders.
There were no changes in the Group's approach to capital management during the
year.
Neither the Company nor any of its subsidiaries are subject to externally
imposed capital requirements.
The Group's principal financial instruments comprise cash and short term
deposits. The main purpose of these financial instruments is to finance the
Group's operations.
As the Group operates wholly within the United Kingdom, there is currently no
exposure to currency risk.
The main risks arising from the Group's financial instruments are interest
rate risks and liquidity risks. The board reviews and agrees policies for
managing each of these risks, which are summarised below:
Credit riskCredit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations and arises principally from the Group's receivables from customers, cash held at banks and
its available for sale financial assets.Trade receivablesThe Group's exposure to credit risk is influenced mainly by the
individual characteristics of each tenant. The majority of rental payments are received in advance which reduces the Group's
exposure to credit risk on trade receivables.Other receivablesOther receivables consist of amounts due from tenants and
purchasers of investment property along with a balance due from a company in which the Group holds a minority investment.
Available for sale financial assetsThe Group does not actively trade in available for sale financial assets. Bank facilitiesAt
the year end the Company had no bank loan facilities available (2016: Nil).Exposure to credit riskThe carrying amount of
financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
Carrying value 2017 2016 £000 £000 Available for sale investments 1 1 Other receivables 370 67 Cash and cash equivalents 55 103
________ ________ 426 171 ======= =======
2017
2016
£000
£000
Available for sale investments
1
1
Other receivables
370
67
Cash and cash equivalents
55
103
________
________
426
171
=======
=======
18 Financial instruments (continued) Credit risk (continued)The Group made an allowance for impairment on trade receivables of £33,000 (2016: Nil) based on specific
experience with three tenants. As at 30 June 2017, trade receivables of £30,000 were past due but not impaired. These are long standing tenants of the Group and the
indications are that they will meet their payment obligations for trade receivables which are recognised in the balance sheet that are past due and unprovided. The
ageing analysis of these trade receivables is as follows: 2017 2016 Number of days past due date £000 £000 Less than 30 days 1 9 Between 30 and 60 days 5 1 Between 60 and
90 days - 3 Over 90 days 24 36 ________ ________ 30 49 ======= ======= Credit risk for trade receivables at the reporting date was all in relation to property tenants in
United Kingdom. The Group's exposure is spread across a number of customers and sums past due relate to 6 tenants (2016: 8 tenants). One tenant accounts for 67% (2016:
67%) of the trade receivables past due by more than 90 days.
Liquidity riskLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity
is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due without incurring unacceptable losses or risking damage
to the Group's reputation. Whilst the directors cannot envisage all possible circumstances, the directors believe that, taking account of reasonably foreseeable adverse
movements in rental income, interest or property values, the Group has sufficient resources available to enable it to do so.
Number of days past due date
£000
£000
Less than 30 days
1
9
Between 30 and 60 days
5
1
Between 60 and 90 days
-
3
Over 90 days
24
36
________
________
30
49
=======
=======
Credit risk for trade receivables at the reporting date was all in relation to
property tenants in United Kingdom. The Group's exposure is spread across a
number of customers and sums past due relate to 6 tenants (2016: 8 tenants).
One tenant accounts for 67% (2016: 67%) of the trade receivables past due by
more than 90 days.
Liquidity riskLiquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's approach to
managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due without incurring
unacceptable losses or risking damage to the Group's reputation. Whilst the
directors cannot envisage all possible circumstances, the directors believe
that, taking account of reasonably foreseeable adverse movements in rental
income, interest or property values, the Group has sufficient resources
available to enable it to do so.
The Group's exposure to liquidity risk is given below
30 June 2017 £'000 Carrying amount Contractual cash flows 6 months or less 6-12 months 2-5 years
Unsecured loan Unsecured development loan Unsecured loan 3,825 360 100 3,858 361 111 28 1 9 5 360 - 3,825 - 102
Trade and other payables 835 835 835 - -
30 June 2016 £'000 Carrying amount Contractual cash flows 6 months or less 6-12 months 2-5 years
Unsecured loan Unsecured loan 3,530 100 3,548 107 9 2 9 2 3,530 103
Trade and other payables 698 698 698 - -
Market riskMarket risk is the risk that changes in market prices, such as interest rates, will affect the company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.Interest rate riskThe Group borrowings are at floating rates of interest based on LIBOR or Base Rate.The interest rate profile of the Group's borrowings as at the year end
was as follows:
2017 2016
£000 £000
Unsecured loanUnsecured loan 3,825360 3,530-
Unsecured loan 100 100
======= =======
A 1% movement in interest rates would be expected to change the Group's annual net interest charge by £48,850 (2016: £36,300).
19 Operating leases
Leases as lessorsThe Group leases out its investment properties under operating leases. The future minimum receipts under non-cancellable operating leases are as follows:
2017 2016
£000 £000
Less than one year 201 221
Between one and five years 181 418
Greater than five years 167 216
_____ _____
549 855
===== =====
The amounts recognised in income and costs for operating leases are shown on
the face of the income statement. Leases are generally repairing leases.
20 Deferred tax
At 30 June 2017, the Group has a potential deferred tax asset of £929,000
(2016: £971,000) of which £27,000 (2016: £74,000) relates to differences
between the carrying value of investment properties and the tax base. In
addition the Group has tax losses which would result in a deferred tax asset
of £902,000 (2016: £897,000). This has not been recognised due to the
uncertainty over the availability of future taxable profits.
Movement in unrecognised deferred tax asset
Balance1 July 15at 18% Additions/reductions Balance30 June 16at 18% Additions/reductions Balance30 Jun 17at 17%
£000 £000 £000 £000 £000
Investment properties 153 (79) 74 (47) 27
Tax losses 818 79 897 5 902
_____ ______ _____ ______ _____
Total 971 - 971 (42) 929
_____ ______ _____ ______ _____
21 Issued share capital 30 June 2017 30 June 2016
No £000 No. £000
Authorised share capitalOrdinary shares of 20p each 20,000,000 4,000 20,000,000 4,000
======== ======= ======== =======
Issued and
fully paid
Ordinary shares of 20p each 11,783,577 2,357 11,783,577 2,357
======== ======= ======== =======
Holders of ordinary shares are entitled to dividends declared from time to
time, to one vote per ordinary share and a share of any distribution of the
Company's assets.
22 Capital and reserves
The capital redemption reserve arose in prior years on redemption of share capital. The reserve is not distributable.
The share premium account is used to record the issue of share capital above par value. This reserve is not distributable.
23 Ultimate controlling party
The ultimate controlling party is Mr ID Lowe.
24 Related parties
Transactions with key management personnel
Transactions with key management personnel consist of compensation for
services provided to the Company. Details are given in note 6.
Lowe Dalkeith Farm, a business wholly owned by ID Lowe, used land at one of
the Group's investment properties as grazings for its farming operation. No
rent was charged as the cost of maintaining the land without livestock would
exceed the grazing rent.
Other related party transactions
The parent Company has a related party relationship with its subsidiaries.
The Group and Company has an unsecured loan due to Leafrealm Limited, a
company of which ID Lowe is the controlling shareholder. The balance due to
this party at 30 June 2017 was £3,825,000 (2016: £3,530,000) with interest
payable at 3% over Bank of Scotland base rate per annum. Leafrealm Limited
varied its right to the margin of interest over base rate until further
notice. Interest charged in the year amounted to £9,967 (2016: £17,698).
The Group and Company also has an unsecured development loan due to Leafrealm
Limited, a company of which ID Lowe is the controlling shareholder. The
balance due to this party at 30 June 2017 was £360,000 (2016: £Nil) with
interest payable at base rate. Interest charged in the year amounted to £414
(2016: £Nil).
24 Related parties (continued)
The Group and Company has an unsecured loan from Mrs V Baynham, the wife of a
director. This is on normal commercial terms. The balance due to this party
at 30 June 2017 was £99,999 (2016: £99,999) with interest payable at 3% over
Bank of Scotland base rate per annum. Interest charged in the year amounted
to £3,274 (2016: £4,382). The loan is not due to be repaid before 1 July
2018.
Contracting work on certain of the Group's development and investment property
sites has been undertaken by Leafrealm Land Limited, a company under the
control of ID Lowe. The value of the work done by Leafrealm Land Limited
charged in the accounts for the year to 30 June 2017 amounts to £61,897 (2016:
£44,627) at rates which do not exceed normal commercial rates. The balance
payable to Leafrealm Land Limited in respect of invoices for this work at 30
June 2017 was £106,524 (2016: £Nil).
For a full listing of investments and subsidiary undertakings please see Note
8 of the parent Company financial statements.
-ENDS-
This information is provided by RNS
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