RNS Number:1940I
Poole Investments PLC
29 August 2006
POOLE INVESTMENTS PLC
Chairman's Statement
Results for the year ended 31 May 2006
Operational results
The results for the year show operating profit of #260,000 (2005:#262,000).
Interest and similar costs increased as, under the banking facility
arrangements, deferment of loan repayments cost #40,000. This was a doubling of
cost compared to last year as there were four quarterly deferments required
instead of two last year. Expenditure on work relating to the proposed planning
applications was minimal whilst clarification was sought on the precise type of
application to be sought, as explained below under Strategy. The loss for the
year after interest was #22,000 (2005: profit #1,000).
Our accounting policy, as set out in the Notes to the Accounts, states that
Investment Properties are accounted for in accordance with SSAP 19 such that
Investment Properties are revalued annually. The surplus or deficit on
revaluation is transferred to the revaluation reserve, and no depreciation is
provided for. The Directors consulted with their advisers and were informed that
the market value of the Investment Property has increased since the last
valuation undertaken. Accordingly the directors requested a market valuation of
the Investment Property for accounting purposes and an increase in value of
#1,750,000 has been made to book value, as described in note 9.
Strategy
The Company's asset is a 9.5 acre plot of land in Hamworthy which provides
rental income. This land forms part of the area within the Poole "Full Sail
Ahead" regeneration scheme. The Borough of Poole submitted a Transport and Works
Act and Town and Country Planning Act Planning application seeking an Order to
permit the building of the "Twin Sails Bridge" and regenerate Hamworthy. An
Inspector was appointed to conduct an enquiry and consider this in autumn 2005.
Since the end of the last financial year work has been initiated with regard to
the proposed planning application for the site. Work was undertaken on
Environmental and Transport scoping reports to ascertain requirements in these
aspects within a planning application. During the second half of the financial
year, consultations were held with consultants acting on behalf of Poole Council
to consider the commercial viability of any application with regard to the type
of development undertaken (residential, commercial and affordable housing), to
the allocation between the landowners and to the infrastructure costs in
connection with the regeneration of Hamworthy. In August 2006 the Secretary of
State for Transport, after consideration of the Report of the Inspector
appointed to conduct the enquiry into the Borough of Poole's application,
decided to make an Order, with modifications, and to direct that planning
permission with regard to the development within the Poole Harbour Opening
Bridges Order, be deemed to be granted subject to certain conditions. The
decision of the Secretary of State can be seen on the Department of Transport
web site (www.dft.gov.uk) which also sets out the timescale for any challenge to
the Order.
Following the granting of this Order, further meetings can now be held with the
Council to agree the outline of any planning application that the Company may
decide to submit.
The Board from time to time has received enquiries from parties expressing an
interest either in purchase of the Investment Property or in these parties
assisting in the planning process. To date none of these have merited pursuing
beyond an initial consideration of the interest but the directors will continue,
with its advisers, to evaluate any such interest so as to maximize shareholder
value.
H A Palmer
Chairman 29 August 2006
Consolidated Profit and Loss Account
for the year ended 31 May 2006
12 months ended 12 months ended
31 May 2006 31 May 2005
Total Total
Notes #'000 #'000
Turnover
Rental income 2 335 337
2 335 337
External charges (75) (75)
Operating profit/(loss): 2 260 262
Interest payable and similar charges 5 (282) (261)
(Loss)/profit on ordinary activities before taxation 2&3 (22) 1
Taxation 6 - -
(Loss)/profit transferred to reserves 17 (22) 1
(Loss)/earnings per ordinary share
- basic and diluted 8 (0.01)p 0.00p
A statement of movements on reserves is set out in Note 17.
Note of Historical Cost Profits and Losses
for the year ended 31 May 2006
12 months ended 12 months ended
31 May 2006 31 May 2005
#'000 #'000
Reported (loss)/profit on ordinary activities before taxation (22) 1
Historical cost (loss)/profit on ordinary activities before taxation (22) 1
Historical cost (loss)/profit on ordinary activities after taxation (22) 1
and dividends
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 May 2006
12 months ended 12 months ended
31 May 2006 31 May 2005
#'000 #'000
(Loss)/profit for the financial year (22) 1
Revaluation of Investment Property 1,750 -
Total recognised gains and losses relating to the year 1,728 1
Reconciliation of Group Shareholders' Funds
for the year ended 31 May 2006
12 months ended 12 months ended
31 May 2006 31 May 2005
#'000 #'000
Total recognised gains and losses 1,728 1
Opening shareholder's funds 1,704 1,703
Shareholders' funds at 31 May 3,432 1,704
Balance Sheets
as at 31 May 2006
Group Company
31 May 31 May 31 May 31 May
2006 2005 2006 2005
Notes #'000 #'000 #'000 #'000
Fixed assets:
Tangible assets 9 6,500 4,750 6,500 4,750
Investments 10 - - - -
6,500 4,750 6,500 4,750
Current assets:
Debtors 11 20 20 20 20
Cash at bank and in hand 15 17 15 17
Short term deposits 145 153 145 153
180 190 180 190
Creditors:
Amounts falling due within one year 12 (405) (392) (405) (392)
Net current liabilities
(225) (202) (225) (202)
Total assets less current liabilities
6,275 4,548 6,275 4,548
Creditors:
Amounts falling due after more than one year 13 (2,843) (2,844) (2,843) (2,844)
Net assets
2 3,432 1,704 3,342 1,704
Capital and reserves:
Called up share capital 16 9,247 9,247 9,247 9,247
Special reserve 17 13,130 13,130 13,130 13,130
Revaluation reserve 17 5,540 3,790 1,750 -
Profit and loss account 17 (24,485) (24,463) (20,695) (20,673)
Equity shareholders' funds 3,432 1,704 3,432 1,704
Consolidated Cash Flow Statement
for the year ended 31 May 2006
Year ended Year ended
31 May 2006 31 May 2005
#'000 #'000
Cash inflow from operating activities (Note 18) 245 141
Returns on investment and servicing of finance:
Interest paid (255) (236)
Net cash outflow from returns on investments and servicing of finance (255) (236)
Cash (outflow) before management of liquid resources and financing (10) (95)
Management of liquid resources:
Decrease/(increase) in short term deposits 8 (154)
Net cash inflow/(outflow) from management of liquid resources 8 (154)
Decrease in cash (Note 18) (2) (249)
Notes to the Accounts
for the year ended 31 May 2006
1 Accounting policies
The principal accounting policies that have been adopted in the preparation of
the consolidated accounts of Poole Investments plc are given below.
Basis of accounting
The financial statements are prepared under the historical cost convention
modified to include the revaluation of freehold land and buildings. The
financial statements are prepared in accordance with applicable United Kingdom
accounting standards. The true and fair override provisions of the Companies
Act 1985 have been invoked, see 'Investment Property' below.
Going Concern
Having made enquiries including consideration of cash flow forecast and
availability of funds, the Directors have a reasonable expectation that the
company has adequate resources to continue in operational existence for a period
of not less than twelve months from the date of approval of the financial
statements. For this reason, they continue to adopt the going concern basis in
preparing the financial statements.
Basis of consolidation
The consolidated financial information includes the Company and all its
subsidiary undertakings. The results of subsidiary undertakings acquired or
disposed of are included in the consolidated profit and loss account from the
date of their acquisition or up to the date of their disposal. The purchase
consideration of subsidiary undertakings has been allocated to each class of
asset on the basis of fair value at the date of acquisition with goodwill being
the difference between the purchase consideration and the fair value of the net
separable assets.
No profit and loss account is presented for the Company as provided by Section
230 of the Companies Act 1985.
Investment Property
The Group's property at 31 May 2006 and 31 May 2005 is held for long-term
investment. Investment Property is accounted for in accordance with SSAP 19 and
is revalued annually. The surplus or deficit on revaluation is transferred to
the revaluation reserve unless a deficit below original cost, or its reversal,
on the Investment Property is expected to be permanent, in which case it is
recognised in the Profit and Loss account for the year.
Although the Companies Act would normally require the systematic annual
depreciation of fixed assets, the Directors believe that the policy of not
providing depreciation is necessary in order for the financial statements to
give a true and fair view, since the current value of investment properties, and
changes to that current value, are of prime importance rather than a calculation
of systematic annual depreciation. Depreciation is only one of the many factors
reflected in the annual valuation, and the amount which might otherwise have
been included cannot be separately identified or quantified.
Turnover
Turnover for the year represents gross rents receivable from investment
property. Operating lease income is spread over the lease term on a straight
line basis.
Deferred taxation
Deferred taxation is provided on all timing differences that have originated but
not reversed by the balance sheet date, calculated at the rate at which it is
anticipated the timing differences will reverse based on tax rates and laws
enacted or substantively enacted at the balance sheet date. This is subject to
deferred taxation assets only being recognised if it is considered more likely
than not that there will be suitable profits from which the future reversal of
the underlying timing differences can be deducted. Deferred taxation is not
provided on timing differences arising from the revaluation of fixed assets
where there is no commitment to sell the asset. Deferred tax assets and
liabilities are not discounted.
Notes to the Accounts
for the year ended 31 May 2006
2 Segmental information
The analysis of turnover by business group and geographical area and of profit
or loss before taxation and net assets by business group is set out below:
(a) Analysis of turnover by destination
All turnover, including prior year, comprises rental income derived in the UK.
(b) Profit/(loss) before tax by business group
12 months ended 12 months ended
31 May 2006 31 May 2005
#'000 #'000
Property investment 260 262
260 262
Finance costs (282) (261)
Profit/(loss) before taxation (22) 1
All operating costs, including those of prior year, are derived in the UK.
(c) Net assets (all UK) by business group
12 months ended 12 months ended
31 May 2006 31 May 2005
#'000 #'000
Investment Property 6,500 4,750
Tax and other corporate items (75) (92)
Net debt (2,993) (2,954)
Net assets 3,432 1,704
All net assets, including those of prior year, are based in the UK.
3 Loss on ordinary activities before taxation
This is stated after charging: 12 months ended 12 months ended
31 May 2006 31 May 2005
#'000 #'000
Auditors' remuneration (all in respect of the Company) 8 8
4 Staff costs and Directors' remuneration
Average number of employees was nil (2005: nil). This excludes the Directors of
the Company.
Directors' remuneration
12 months 12 months
ended ended
31 May 2006 31 May 2005
Executive Total Total
# #
D J Booth 15,000 15,000
Non-executive
H A (Tony) Palmer - -
D Cicurel - -
15,000 15,000
Payments made to D J Booth relate to the provision of consultancy services
within areas of his individual expertise. As set out in note 19, H A (Tony)
Palmer and D Cicurel have agreed that Directors fees will not be due until sale
of the Company's Investment Property or an offer for the share capital of the
Company is received and recommended. No provision for this cost has been made.
5 Interest cost and similar charges
12 months 12 months
ended ended
31 May 2006 31 May 2005
#'000 #'000
Interest on bank loan 214 216
Cost of deferring loan repayment 40 20
Interest on other loans 28 25
Total Interest payable and similar charges 282 261
6 Tax on ordinary activities
a) Analysis of tax 2006 2005
#'000 #'000
Current tax - -
Deferred tax - -
Tax on profit/loss on ordinary activities - -
b) Analysis of difference between tax credit at standard rate and current 2006 2005
year tax
#'000 #'000
(Loss)/profit on ordinary activities (22) 1
(Loss)/profit multiplied by the standard rate of corporation tax in the UK of (7)
30% -
Expenses not deductible for tax purposes 1
-
Increase in tax losses carried forward 6 -
Tax on profit/(loss) on ordinary activities - -
c) Factors that may affect future tax charges
Tax losses carried forward within the Group and Company, relating to the costs
of managing the Group's investments are #272,000 (2005: #253,000). These are
trading losses, and are distinct from the capital losses of the group and
Company. No deferred tax asset has been recognised on these losses given the
minimal level of the losses and some uncertainty of timing of future profits.
The unrecognised asset may be recoverable in future periods in the event that an
appropriate surplus arises against which the tax loss can be offset. The Group
and Company have not recognised a deferred tax asset in respect of agreed
capital losses of approximately #22.5m (2005:#23m) in existence at the period
end as no chargeable gains are forecast to arise in the immediate future. The
decrease is due to the deferred tax impact of the revaluation of the Investment
Property.
7 Loss attributable to members of the parent Company
As permitted by Section 230 of the Companies Act 1985, the Company's profit and
loss account has not been included in the accounts.
The loss dealt with in the accounts of the parent Company was #22,000 (2005:
profit of #1,000).
8 Earnings/(loss) per ordinary share
The earnings per share figures are based on the result after taxation for the respective periods divided by
the weighted average number of shares in issue as follows:
2006 2005
Pence Pence
(Loss)/earnings per share (0.01) 0.00
#'000 #'000
The calculation of (loss)/earnings per share is based on:
(Loss)/profit on ordinary activities after taxation (22) 1
Weighted average number of shares used in basic earnings per share:
Thousands Thousands
Weighted average for the year 184,949 184,949
There are no outstanding share options and no dilutive shares.
9 Tangible fixed assets
Group and Company Freehold Investment
Property
#'000
As at 1 June 2005, valuation and net book value: 4,750
Revaluation of Investment Property 1,750
As at 31 May 2006, valuation and net book value: 6,500
All freehold property is stated at valuation.
The valuation of the Investment Property as at 31 May 2006 was performed by
Edward Symmons & Partners in August 2006 in accordance with the Appraisal and
Valuation Manual of The Royal Institution of Chartered Surveyors. Investment
Property continues to be held by the Group for long-term investment.
Accordingly, the property is recorded as an Investment Property and is valued on
an open market basis. The Investment Property is not depreciated.
The historical cost of Investment Properties at 31 March 2006 is #1,169,000
(2005: #1,169,000), and the net book value on the historical cost basis at 31
March 2006 is #960,000 (2005: #960,000).
10 Fixed asset investments
At 31 May 2005, the Company holds the entire share capital of Hamworthy
Investments Limited which is registered in England and Wales and has been
dormant since incorporation. Gross and net book value of this investment is #2.
11 Debtors: Amounts falling due within one year
Group and Company
31 May 2006 31 May 2005
#'000 #'000
Other debtors 20 20
20 20
12 Creditors: Amounts falling due within one year
Group and Company
31 May 2006 31 May 2005
#'000 #'000
Bank loans (Note 13) 310 281
Trade creditors 15 20
Deferred income 23 23
Other creditors and accruals 57 68
405 392
13 Creditors: Amounts falling due after more than one year.
Group and Company
31 May 2006 31 May 2005
#'000 #'000
Bank loan 2,540 2,569
Other loan 303 275
2,843 2,844
The bank loan is payable as follows:
Group and Company
31 May 2006 31 May 2005
#'000 #'000
Within one year 310 281
Between one and two years 372 336
Between two and five years 2,168 2,233
2,850 2,850
Less included within amounts due within one year (310) (281)
2,540 2,569
The Company has granted a fixed and floating charge over all assets to secure
the bank loans. The other loan is secured against the Investment Property and
is repayable in a single payment on the date on which the company disposes for
value to a third party the whole or part of its Investment Property. The other
loan bears interest at the higher of 10% or 5% above the bank's base lending
rate.
14 Derivatives and other financial instruments
The Group's strategy is to minimise its exposure to interest rate fluctuations
and has therefore fixed the rate on the majority of its borrowings for the next
year. The disclosures below exclude short term debtors and creditors.
Interest rate risk profile of financial liabilities.
The interest rate profile of the financial liabilities of the Group as at 31 May
was as follows:
Financial Floating rate Fixed rate
liabilities
#'000 #'000 #'000
31 May 2006:Total (all sterling) 3,153 303 2,850
31 May 2005:Total (all sterling) 3,125 275 2,850
The floating rate financial liabilities comprise sterling loans that bear
interest at rates based on bank base lending rate. Fixed rate liabilities at 31
May 2006 comprise the bank loan which has fixed interest at 7.6% until May 2007
after which it reverts to a floating rate based on bank base lending rate. Cash
balances not required to meet working capital requirements are held in 14 day
sterling deposit accounts.
As at 31 May 2006 the Group had no currency exposures (2005: nil).
The maturity profile of the Group's financial liabilities at 31 May was as
follows:
31 May 31 May
2006 2005
#'000 #'000
In one year or less, or on demand 310 281
In more than one year, but not more than two 372 336
In more than two years, but not more than five 2,471 2,508
3,153 3,125
Borrowing facilities
As at 31 May 2006 the Group has an undrawn overdraft facility available of
#150,000 (2005: #150,000) which is due for review on 30 September 2006 for a
further six months.
Fair values of financial assets and financial liabilities.
A comparison of the fair values of all primary financial instruments and their
carrying amounts is as follows:
31 May 2006 31 May 2005
Fair value Carrying value Fair value Carrying value
#'000 #'000 #'000 #'000
Borrowings (2,856) (3,153) (3,125) (3,125)
Cash 160 160 170 170
The fair values of borrowings are assumed to be the discounted amount of future
cash flows using the Group's current incremental rate of borrowing for a similar
liability.
The Group has no derivatives.
15 Pensions
The Company has no pension scheme. Prior to the disposal of its former operating
subsidiaries, the Company participated in the Pilkington's Tiles Limited Pension
Scheme ('the Scheme"). Until 31 August 2003 the Scheme provided final salary
benefits for some employees and money purchase for some other employees. From 1
September 2003 the accrual of final salary benefits stopped and former final
salary members were given the option to continue as money purchase members. The
Company ceased to participate in the Scheme on 28th May 2004 when the Group
disposed of Pilkington's Tiles Limited. The Scheme continues to be funded by
Pilkington's Tiles Limited. The Company has taken legal advice and has been
advised that it has no liability to the Scheme other than in the event of a
winding up of the scheme or the insolvency of Pilkington's Tiles Limited, the
Scheme's principal employer. In either case, the Company will be liable for a
proportionate share of the cost of securing the liabilities of the Scheme
pertaining only to its seven former employees.
16 Called-up share capital
2006 2005 2006 2005
Number Number #'000 #'000
Authorised: Ordinary shares of 5p each 264,800,000 264,800,000 13,240 13,240
Allotted, called-up and fully paid: Ordinary shares of 5p each 184,948,954 184,948,954 9,247 9,247
There are no Share Options.
17 Reserves
Group Special Revaluation Profit & Loss
Reserve Reserve account
#'000 #'000 #'000
At beginning of year 13,130 3,790 (24,463)
Revaluation of Investment Property - 1,750 -
Loss for the financial year - - (22)
At end of year 13,130 5,540 (24,485)
Company Special Revaluation Profit & Loss
Reserve Reserve account
#'000 #'000 #'000
At beginning of year 13,130 - (20,673)
Revaluation of Investment Property - 1,750 -
Loss for the financial year - - (22)
At end of year 13,130 1,750 (20,695)
Court approval was received on 27 September 2002 for the cancellation of a share
premium account. The court was asked only to approve the transfer of sufficient
of the share premium account to Profit and Loss to clear the deficit existing at
27 September 2002. The balance was transferred to a Special Reserve.
18 Cash flow information
(a) Reconciliation of operating profit to net cash inflow from operating 12months ended 12months ended
activities: 31 May 2006 31 May 2005
#'000 #'000
Operating profit 260 262
Decrease in debtors - 322
Decrease in creditors (15) (443)
Net cash inflow from operating activities 245 141
(b) Reconciliation of net cash flow to movement in net debt:
12 months 12 months
ended ended
31 May 2006 31 May 2005
#'000 #'000
Decrease in cash and short term deposits in the period (10) (95)
Change in net debt resulting from cashflows (10) (95)
Other non-cash movements (28) (25)
Movement in net debt in the period (38) (120)
Opening net debt (2,955) (2,835)
Net debt at 31 May (2,993) (2,955)
(c) Analysis of net debt: Opening Cash flows Other Closing
#'000 #'000 #'000 #'000
Cash 16 (1) - 15
Short term deposits* 154 (9) - 145
Term Loans (3,125) - (28) (3,153)
Total (2,955) (10) (28) (2,993)
19 Guarantees and other financial commitments
(a) Capital Commitments:
The Group has no capital commitments (2005 nil).
(b) Contingent Liabilities:
The Company has the following contingent liabilities:
The Company has the following contingent liabilities:
a) Upon the sale of the Investment Property, fees will be payable to Ernst
& Young LLP in respect of the tax advice given in relation to the establishment
and utilization of capital losses. The level of fee is related to the ultimate
tax saving achieved and is calculated as 7.5% of that saving.
b) Upon the sale of the Investment Property, a payment of #300,000 is due
to K Whitely, one of the parties to the sale of subsidiaries companies for the
Group sold on 28 May 2004.
c) Upon the sale of the Investment Property, the directors will be liable
to pay between 1.75% and 2.55% of the ultimate sale price to their property
advisors.
d) Upon realisation of investment properties, an agreed amount out of
rental paid from 28 May 2004, at a rate of #50,000 per annum apportioned on a
daily basis, will be repayable to the existing tenant.
e) The Company made arrangements to insure the Company's potential
liabilities under the warranties and indemnities necessarily given in order to
effect the disposal of its former operating subsidiaries on 28 May 2004. The
objective of this insurance was to limit future exposure to an aggregate
deductible on any claim to #50,000 as compared to the warranty limit agreed on
disposal of #1m. From 28 May 2005, the potential insured liability was in any
event restricted to certain tax warranties given, no claims having been notified
to the Company by the expiry date for claims relating to all other Warranties
given.
f) The Company's contingent liability in respect of the Pilkington's Tiles
Limited Pension Scheme is described in Note 15.
g) H A Palmer and D E Cicurel have agreed to defer the payment of any
directors' fees until a sale of the Company's Investment Property or an offer
for the share capital of the Company being received and recommended. In that
event, the Company would have to pay H A Palmer and D E Cicurel the amount of
the outstanding fees based on the number of their completed months of service.
These directors receive no other payments or benefits for their services. For
the period of liability, which is for the 24 months to 31 May 2006, the cost of
this would be #70,000. In addition under the same circumstances all directors
would be entitled to one year's notice at a total cost of #50,000, and D J Booth
to a #15,000 bonus.
No provision has been made in these financial statements in respect of these
contingent liabilities.
Copies of the 2006 Annual Report will be despatched to shareholders on Friday.
They will also be available at the following address:
Unit 19
21 Charlwoods Road
East Grinstead
West Sussex
RH19 2HL
For further information please contact:
Kevin Wilson, Zeus Capital Limited Tel: 0161 831 1512
David Booth, Poole Investments plc Tel: 07973 820 492
This information is provided by RNS
The company news service from the London Stock Exchange
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