Full Year Results

RNS Number : 4227D

Belvoir Lettings PLC

16 May 2012

 

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For immediate release	16 May 2012

BELVOIR LETTINGS PLC

(the "Company" or "Belvoir")

Full Year Results for Belvoir's operating business

Belvoir Lettings PLC (AIM: BLV), one of the UK's largest lettings franchises which recently listed on AIM, is pleased to announce full year results for the financial year ended 31 December 2011 of its principal operating subsidiary and its former holding company.

As part of Belvoir's IPO process, the Belvoir group underwent a reconstruction whereby Belvoir, a newly incorporated entity, became the new group holding company with effect from 16 February 2012. This statement contains extracts from the audited financial statements of Belvoir Property Management (UK) Limited ("BPML"), the sole Belvoir group operating subsidiary, for the period to 31 December 2011. In addition, the unaudited management accounts of Kilima Holdings Limited ("Kilima") are included as an appendix. Kilima was the relevant holding company for BPML prior to reorganisation ahead of the Company's IPO. As part of the IPO group reconstruction process, Kilima underwent a solvent liquidation and has therefore ceased trading.

Highlights

·          Successful IPO on AIM on 19 February 2012 raising £6.3m net of expenses

·          As part of the flotation, the Belvoir group underwent a reconstruction whereby Belvoir, a newly incorporated entity, became the new group holding company with effect from 16 February 2012

·          These results comprise the unaudited results of Kilima, the former group holding company, and extracts from the audited results of BPML, the sole Belvoir group operating subsidiary, in each case for the period to 31 December 2011 

·          All 2011 performance targets were either met or exceeded

·          142 franchise outlets at 31 December 2011 (2010: 136)

·          Revenue of £3.35m (2010: £3.26m)

·          Excluding an exceptional charge relating to the costs of the Belvoir group's Admission to AIM and a £63k share based payment charge, BPML's operating profit as a percentage of turnover increased by 7% to 55% driven by an increase in MSF income and strong cost control by management

·          Cash generated from operations in Kilima before flotation costs was £1.99m (2010: £1.63m)

·          Appointment of a new senior manager to strengthen and accelerate franchise recruitment

·          Rental market continued to grow with an estimated 3 million private rented properties in England, representing 14% of all households

·          Some 60% of private rental properties are believed to be owned by landlords who use lettings agents. Management expect this percentage to grow further

Current Trading and Outlook

Following Belvoir's successful IPO in February we have been pleased with our progress and we are in line with achieving our objectives for the year, supported by favourable market conditions. The rental market has continued to grow and we are encouraged by the opportunities that are available. In particular the buy to let market continues to gather pace and tenant demand remains strong.

In line with our stated strategy of growing the business further, we are due to expand from our 142 offices that are currently in operation by opening another three in the near future in Chelsea, Leeds South and Evesham and our pipeline has further opportunities ongoing.

Also to expand our network further, since the IPO 3 of our franchisees have acquired competing agencies  in St Helens, Wellingborough and Tunbridge Wells.

We look to forward to updating shareholders as we continue to develop the Belvoir brand.

Commenting on the results, Dorian Gonsalves, Managing Director, said:

"Belvoir lettings delivered a strong financial performance last year. During the period we grew the franchise business from 136 to 142 franchise outlets. Belvoir's debut on the AIM market of the London Stock Exchange in February this year will allow us to continue to expand the brand's national reach and strong market presence in the UK residential lettings market as we remain committed to providing a professional and personal service designed to exceed the expectations of landlords and tenants."

For further details:

Belvoir Lettings PLC Dorian Gonsalves, Managing Director Carl Chadwick, Finance Director	01476 584900
Seymour Pierce Guy Peters or Sarah Jacobs, Corporate Finance Jeremy Stephenson or Katie Ratner, Corporate Broking	020 7107 8000
Buchanan Charles Ryland, Suzanne Brocks, Catherine Breen	0207 466 5000

The following statement contains extracts from the audited financial statements of Belvoir Property Management (UK) Limited ("BPML"), the sole Belvoir group operating subsidiary, for the period to 31 December 2011.  In addition, the unaudited management accounts of Kilima Holdings Limited ("Kilima") are included as an appendix.  Kilima was the relevant holding company for BPML prior to reorganisation ahead of Belvoir's IPO.  As part of the IPO group reconstruction process, Kilima underwent a solvent liquidation and has therefore ceased trading.  

BELVOIR PROPERTY MANAGEMENT (UK) LIMITED

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31 DECEMBER 2011

The directors present their report with the financial statements of the company for the year ended 31 December 2011.

BUSINESS REVIEW

2011 was a solid year for BPML, where all of the performance targets set in the previous year were met or exceeded. With the company's focus on the UK residential lettings market the company benefited from the steady growth in the numbers of properties being introduced to the market. It was recently estimated by industry experts that there are nearly three million private rented properties in England which represents 14% of all households. This is up by 40% from the same statistic 10 years ago and the Directors believe the percentage of households will grow to 20% over the next five years. It is further estimated by industry experts that approximately 60% of private rented properties are owned by landlords who use lettings agents and the Directors believe this will grow as the market becomes more government regulated. Although market conditions were buoyant for the 142 franchise lettings agents who make up the Belvoir network, competition was also intense. The total number of lettings agents in the UK increased to over 10,000 in 2011 largely as a result of estate agents turning to lettings to supplement low incomes from house sales. There were also an increased number of private lettings agents. Belvoir added six new franchisees to their network during the year.

The network of Belvoir lettings agents has steadily increased from the formation of the company 16 years ago in Grantham with the longest standing franchisees having been with the company from the outset. Some of the franchisees are recently started and overall this portfolio of agents succeeded in increasing their combined income by 9.24 %. In turn the management service fee (MSF) of BPML, which represents 12% of these sales rose by 9.24%.

The company's only owned outlet in Grantham had a relatively stable year with turnover decreasing by 5.35%. It has not been the absolute priority of management to grow the Grantham shop, since it is more important that it is used as a showcase for the company's systems, procedures and shop fit styles as part of the training for new franchisees. The Grantham shop does not enjoy the same catchment area as the franchise areas and therefore demonstrates that the Belvoir model can work well even when the available area is small.

During the year BPML strengthened the franchise recruitment department through the appointment of a new senior manager and in the senior management team a new Finance Director was taken on to ensure that the company floated successfully and raised further funds for expansion. Work on this commenced in August 2011 and the Company was successfully admitted to trading on AIM market in February of 2012. A significant reorganisation of the group was necessary in order to attract the tax incentivised investment that proved to be available. Pursuant to this reconstruction Belvoir Lettings PLC, a newly incorporated entity, became the new group holding company with effect from 16 February 2012. 

STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2011
				2011		2010
	Notes			£		£
CONTINUING OPERATIONS
Revenue	2			3,350,536		3,260,308
Administrative expenses				(1,573,682)		(1,704,664)
OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS				1,776,854		1,555,644
Flotation costs	3			(330,902)		-
OPERATING PROFIT				1,445,952		1,555,644
Finance income	5			13,227		5,928
PROFIT BEFORE TAX	6			1,459,179		1,561,572
Taxation	7			(466,505)		(402,982)
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR
				992,674		1,158,590

STATEMENT OF FINANCIAL POSITION

31 DECEMBER 2011

		2011		2010		2009
	Notes	£		£		£
ASSETS
NON-CURRENT ASSETS
Intangible assets		41,992		55,996		73,693
Property, plant and equipment		430,452		450,900		475,063
Trade and other receivables		86,254		51,955		69,529
		558,698		558,851		618,285
CURRENT ASSETS
Trade and other receivables		440,007		1,141,923		640,626
Cash and cash equivalents		857,357		593,942		576,689
		1,297,364		1,735,865		1,217,315
TOTAL ASSETS		1,856,062		2,294,716		1,835,600
EQUITY
SHAREHOLDERS' EQUITY
Share capital	9	242,000		242,000		242,000
Share premium		29,000		29,000		29,000
Share-based payments reserve		63,440		-		-
Other components of equity		214,835		214,835		214,835
Retained earnings		186,159		954,203		626,813
TOTAL EQUITY		735,434		1,440,038		1,112,648
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax		9,600		11,400		14,600
		9,600		11,400		14,600
CURRENT LIABILITIES
Trade and other payables		642,723		434,986		366,574
Tax payable		468,305		408,292		341,778
		1,111,028		843,278		708,352
TOTAL LIABILITIES		1,120,628		854,678		722,952
TOTAL EQUITY AND LIABILITIES		1,856,062		2,294,716		1,835,600

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2011

									Other components of equity
							Share-based
		Share			Share		payments				Retained		Total
		capital			premium		reserve				Earnings		Equity
		£			£		£		£		£		£
Balance at 1 January 2010		242,000			29,000		-		214,835		626,813		1,112,648
Changes in equity
Dividends		-			-		-		-		(831,200)		(831,200)
Transaction with owners		242,000			29,000		-		214,835		(204,387)		(281,448)
Profit and total comprehensive income for the year		-			-		-		-		1,158,590		1,158,590
Balance at 31 December 2010		242,000			29,000		-		214,835		954,203		1,440,038
Changes in equity
Share-based payments charge		-			-		63,440		-		-		63,440
Dividends		-			-		-		-		(1,760,718)		(1,760,718)
Transaction with owners		-			-		63,440		-		(1,760,718)		(1,697,278)
Profit and total comprehensive income for the year		-			-		-		-		992,674		992,674
Balance at 31 December 2011		242,000			29,000		63,440		214,835		186,159		735,434

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2011

	Cashflow	2011		2010
	notes	£		£
Cash flows from operating activities
Cash generated from operations	1	2,419,198		1,182,572
Tax paid		(408,292)		(339,668)
Net cash from operating activities		2,010,906		842,904
Cash flows from investing activities
Purchase of property, plant and equipment		-		(379)
Interest received		13,227		5,928
Net cash from investing activities		13,227		5,549
Cash flows from financing activities
Equity dividends paid		(1,760,718)		(831,200)
Net cash used in financing activities		(1,760,718)		(831,200)
Increase in cash and cash equivalents		263,415		17,253
Cash and cash equivalents at beginning of
year	2	593,942		576,689
Cash and cash equivalents at end of year	2	857,357		593,942

BELVOIR PROPERTY MANAGEMENT (UK) LIMITED

NOTES TO THE STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2011

1.     RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS

						2011		2010
						£		£
	Profit before tax					1,459,179		1,561,572
	Depreciation and amortisation charges					34,452		42,239
	Share-based payments charge					63,440		-
	Finance income					(13,227)		(5,928)
						1,543,844		1,597,883
	Decrease/(increase) in trade and other receivables					667,617		(483,723)
	Increase in trade and other payables					207,737		68,412
	Cash generated from operations					2,419,198		1,182,572

2.      CASH AND CASH EQUIVALENTS

The amounts disclosed on the statements of cash flow in respect of cash and cash equivalents are in respect of these statements of financial position amounts:

	Year ended 31 December 2011
						31.12.11		1.1.11
						£		£
	Cash and cash equivalents					857,357		593,942
	Year ended 31 December 2010
						31.12.10		1.1.10
						£		£
	Cash and cash equivalents					593,942		576,689

NOTES TO THE FINANCIAL STATEMENTS - continued

FOR THE YEAR ENDED 31 DECEMBER 2011

1.      ACCOUNTING POLICIES

Basis of preparation

The financial information has been prepared under the historical cost convention and in accordance with International Financial Reporting Standards adopted by the European Union ("IFRSs") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.  These are the company's first financial statements prepared in accordance with IFRSs.  The following principal accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements.

The company has elected to use a previous revaluation of the freehold property before the date of transition as the deemed cost at the date of transition.  The buildings element of this cost is subsequently depreciated from this date.  The net book value of the property as at the date of transition was £375,892.

Standards, amendments and interpretations to existing standards that are not yet effective

The directors anticipate that the adoption of those standards and interpretations which, at the date of authorisation of these financial statements, were in issue but not yet effective will have little or no impact on the financial statements when they come into effect.

Revenue recognition

Revenue represents income from the sale of franchise licences, provision of training and ongoing support of the franchisees.  Recharged income is recognised when costs are incurred.  Service fees are invoiced to individual franchisees on a monthly basis in relation to a percentage of their turnover for any given month.

Revenue also includes fees generated by franchises operated within the company.  These internal franchises invoice landlords on a monthly basis and so recognise the income during the period in which the work is carried out.

Initial franchise fees are recognised upon signing of the contract as it is at this point that the new franchisee has a legal obligation to make good the terms of the contract.  The initial fees are for the use of the brand along with initial training and support and promotion during the opening phase of the new office.  As such the company regard this as a separate initial transaction for which they have fulfilled their obligations.

National Promotional Fund recharge is invoiced to franchise owners on a monthly basis and is calculated based on a percentage of the turnover of individual franchises.  The fund is held internally (as agent for the franchise) for the purposes of promoting the brand to the benefit of all franchises.  An element of the National Promotional Fund is recognised as income each month in respect of management fees for promoting the brand. No other element of receipt is recognised as revenue.

Taxes                                                                                                                                                                      

Current tax is the tax currently payable based on the taxable profit for the year.

Deferred income taxes are calculated using the liability method on temporary differences.  Deferred tax is generally provided on the difference between the carrying amount of assets and liabilities and their tax bases.  However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.  Tax losses available to be carried forward as well as other income tax credits to the company are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided in full, with no discounting.  Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to offset against future taxable income.  Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statement of comprehensive income, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

Share-based employee remuneration

The group operates an equity-settled share-based remuneration plan for its senior management.  The fair value of awards to employees that take the form of shares or rights to shares in the parent company is recognised as an expense within this company, as the employer, with a corresponding increase in equity.  The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options.  The fair value of the options granted is measured using an option valuation model, taking into account the terms and conditions upon which the options were granted. 

2.      Revenue

As the chief operating decision maker reviews financial information for and makes decisions about the group's overall franchising business, the directors have identified a single operating segment, that of property lettings franchising.  Management do not report on a geographical basis and no customers represent greater than 10% of total revenue in any of the periods reported.  The directors believe there to be three material income streams which are split as follows:

									2011		2010
									£		£
	Management Service Fee								2,599,673		2,379,759
	Own operated franchises								360,709		446,055
	Initial fees and other income								390,154		434,494
									3,350,536		3,260,308

3.      FLOTATION COSTS

The costs represent the professional fees and associated costs incurred to 31 December 2011 in relation to the proposed listing of the group on the Alternative Investment Market following the year end.

4.      EMPLOYEES AND DIRECTORS

									2011		2010
									£		£
	Wages and salaries								718,667		763,746
	Social security costs								74,937		84,443
									793,604		848,189
	The average monthly number of employees during the year was as follows:
									2011		2010
									£		£
	Management and administration								29		27
									2011		2010
									£		£
	Directors' remuneration								218,911		268,384
	Key management personnel are defined as directors of the group.  Details of the remuneration of the key management personnel are shown below:
									Year to 31		Year to 31
									December 2011		December 2010
									Total		Total
									£		£
	Short term employee benefits:
	Salaries including bonuses								211,021		268,384
	Benefits in kind								7,890		-
	Social security costs								24,406		31,199
	Share-based payments								63,440		-
									306,757		299,583

								2011		2010
	Emoluments of the highest paid director were as follows:							£		£
	Short term employee benefits:
	Salaries including bonuses							73,611		116,900
	Benefits in kind							1,530		1,530
								75,141		118,430

5.      FINANCE INCOME

								2011		2010
								£		£
	Deposit account interest							3,041		111
	Other similar income							10,186		5,817
								13,227		5,928

6.      PROFIT BEFORE TAX

								2011		2010
	The profit before tax is stated after charging:							£		£
	Depreciation - owned assets							20,448		24,542
	Franchises and licences amortisation							14,004		17,697
	Auditors' remuneration
	audit							13,400		12,800
	tax and other advisory							7,116		6,614
	Operating lease expenditure							53,665		46,894

7.     TAXATION

					2011		2010
					£		£
Current tax					468,305		406,182
Deferred tax					-(1,800)		-(3,200)
Total tax charge in the statement of comprehensive income					466,505		402,982

The tax assessed for the period is higher than the standard rate of corporation tax in the UK. The difference is explained below:

							2010
					2011
					£		£
Profit on ordinary activities before tax					1,459,179		1,561,572
Profit on ordinary activities multiplied by the standard
rate of corporation tax in the UK of 26% (2010 - 28%)					379,387		437,240
Effects of:
Expenses not deductible for tax purposes					106,764		5,659
Tax chargeable at different rates					-		-(689)
Depreciation in excess of (less than) capital allowances					1,775		-(2,024)
Adjustment in respect of prior periods					-		-(2,110)
Amortisation not deductible for tax purposes					-		2,340
Group relief					-(27,517)		-(37,434)
Effect of change in tax rate					6,096		-
Total tax charge in income statement					466,505		402,982

8.      DIVIDENDS

								2011		2010
								£		£
	Ordinary shares of £1 each
	Interim							1,760,718		831,200
	Interim dividends per share were paid as follows:							Dividend		Dividend per
										share
	Date:							£		£
	31 January 2011							167,498		0.692
	28 April 2011							67,499		0.279
	30 June 2011							20,001		0.083
	31 July 2011							100,002		0.413
	29 September 2011							300,000		1.240
	29 September 2011							900,001		3.719
	23 December 2011							205,717		0.850
								1,760,718

At the time of payment of each dividend, the directors reviewed the financial performance and position of the company in order to satisfy themselves that there were sufficient distributable reserves at the time of distribution of the above dividends.

The directors recommend that no final dividend be paid.

9.      CALLED UP SHARE CAPITAL

	Authorised:
	Number:	Class:		Nominal				2011		2010		2009
				value:				£		£		£
	1,000,000	Ordinary shares		£1				1,000,000		1,000,000		1,000,000
	Allotted issued and fully paid:
	Number:	Class:		Nominal				2011		2010		2009
				value:				£		£		£
	242,000	Ordinary shares		£1				242,000		242,000		242,000

10.    RELATED PARTY DISCLOSURES

During the period the company paid sponsorship fees of £4,800 (2010 - £4,800) to James Goddard, son of M J S Goddard, company director.  At the period end £Nil (2010 - £Nil) remained outstanding.

During the period the company paid professional fees of £79,806 (2010 - £Nil) to Sunaxis Limited, a company wholly owned by company director Carl Chadwick.  At the period end £Nil (2010 - £Nil) remained outstanding.

During the year dividends amounting to £1,760,718 were paid to Kilima Holdings Limited, the parent company. The year end balance owing by that company was £Nil (2010: £761,718 owing by Kilima).

11.    SHARE BASED EMPLOYEE REMUNERATION

Enterprise Management Incentive Share Option Scheme ("EMI")

During the year to 31 December 2011, the company's parent (Kilima Holdings Limited) implemented an Enterprise Management Incentive ("EMI") scheme which will be settled in equity.  Although the obligation to settle the share options lies with Kilima Holdings Limited, a charge has been recognised in Belvoir Property Management (UK) Limited income statement as it relates to employees of this company.  The EMI is part of the remuneration package of the company's senior management.  Options granted under the EMI Share Option Scheme have no performance conditions, however certain criteria, as set out in the scheme must be met.

The criteria are based on the Group successfully listing on the Alternative Investment Market and allow the option to be exercised at a placing after listing or during the exercise period which is from the second anniversary of listing to the end of the option period.  There were options in respect of 7 ordinary shares, granted during the year to 31 December 2011 and 2 of these have no vesting period and are not reliant upon listing therefore their fair value is taken to profit and loss immediately.

The maximum term of the options granted under the EMI Scheme is 10 years from the grant date.  Upon vesting, each option allows the holder to purchase one ordinary share at a discounted exercise price of £28,500.

The fair values of options granted were determined using the Black-Scholes option pricing model which takes into account factors specific to share incentive plans, such as the vesting period.  The following principal assumptions were used in the valuation:

		Grant date				28.09.11
		Vesting period ends				31.12.13
		Share price at grant date				£28,500
		Volatility				11.70%
		Option life				10 years
		Dividend yield				6.37%
		Risk free interest rate				0.55%
		Exercise price				£28,500

The underlying expected volatility was determined by reference to the historical data of a similar listed company. In total, £63,440 of employee remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in the statement of total comprehensive income and credited to equity.

	Movements in the number of share options were as follows:									2011		2010
	Number of share options:
	Outstanding at the beginning of the year									-		-
	Granted									7		-
	Forfeited									-		-
	Exercised									-		-
	Expired									-		-
	Outstanding at the end of the year									7		-
	Exercisable at the end of the year									2		-
	Weighted average exercise price*
	Outstanding at the beginning of the year									-		-
	Granted									£28,500		-
	Forfeited									-		-
	Exercised									-		-
	Expired									-		-
	Outstanding at the end of the year									£28,500		-
	Exercisable at the end of the year									£28,500		-

* The exercise price specified is the price of shares in the parent company, Kilima Holdings Limited.

The following table summarises information relating to options outstanding and exercisable under all share option plans at 31 December 2011, together with their exercise prices and dates:

Normal dates of vesting and exercise (based on calendar years):

Exercise price per share

Number of outstanding options

Number of exercisable options

Year ended 31 December 2011

£28,500

7

2

The weighted average contractual life remaining at 31 December 2011 was 10 years, but all of the above options were exercised after the balance sheet date.

12.    CONTINGENT LIABILITIES

Belvoir Property Management (UK) Limited and its parent undertaking, Kilima Holdings Limited, have a cross company guarantee, which creates a fixed and floating charge on the assets of each company.  As at 31 December 2011, the outstanding contingent liability under this agreement amounted to £1,747,767 (2010 - £1,143,279).

13.    POST BALANCE SHEET EVENTS

Following the year end, Kilima Holdings Limited (the parent undertaking) was voluntarily wound up, and the entire company's share capital distributed to Belvoir Property Solutions Limited.  Belvoir Property Solutions Limited is a 100% subsidiary of Belvoir Lettings Plc, the ultimate controlling party.  Belvoir Lettings Plc is a company registered in England and Wales and trades on the Alternative Investment Market.

Immediately prior to the voluntary wind up of Kilima Holdings Limited, both Carl Chadwick and Dorian Gonsalves exercised their share options.  The exercise price for each of the share options was £28,500 per ordinary share in Kilima.  The option exercise monies paid by Carl Chadwick and Dorian Gonsalves totalled £199,500.

KILIMA HOLDINGS LIMITED

UNAUDITED MANAGEMENT ACCOUNTS

The financial information set out in these consolidated management accounts of Kilima Holdings Limited for the year ended 31 December 2011 and the comparative figures for the twelve months ended 31 December 2010 are unaudited.  They have been prepared taking into account the requirements of International financial reporting standards (IFRS).  They do not contain all the information required for full annual financial statements.

The financial information for the year ended 31 December 2011 set out in these unaudited management accounts does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  The company's statutory financial statements for the year ended 31 December 2010 have been filed with the Registrar of Companies.  The auditor's report on those financial statements was unqualified and did not contain statements under section 498 of the Companies Act 2006.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Year Ended				Year Ended
		31.12.11				31.12.10
	Notes	£				£
CONTINUING OPERATIONS
Revenue		3,350,536				3,260,308
Administrative expenses		(1,577,602)				(1,713,302)
OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS		1,772,934				1,547,006
Flotation costs		(330,902)				-
OPERATING PROFIT		1,442,032				1,547,006
Finance costs		(101,918)				(125,054)
Finance income		13,227				5,928
PROFIT BEFORE TAX		1,353,341				1,427,880
Taxation		(466,505)				(402,982)
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR		886,836				1,024,898
Profit attributable to:
Owners of the parent		886,836				1,024,898
Total comprehensive income attributable to:
Owners of the parent		886,836				1,024,898

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		As at				As at
		31.12.11				31.12.10
	Notes	£				£
ASSETS
NON-CURRENT ASSETS
Goodwill	1	999,591				999,591
Intangible assets		41,992				55,996
Property, plant and equipment		430,452				450,900
Trade and other receivables		86,254				51,955
		1,558,289				1,558,442
CURRENT ASSETS
Trade and other receivables		457,894				386,872
Cash and cash equivalents		872,004				595,777
		1,329,898				982,649
TOTAL ASSETS		2,888,187				2,541,091
EQUITY
SHAREHOLDERS' EQUITY
Share capital	2	95				100
Share-based payments reserve		63,440				-
Capital redemption reserve		5				-
Retained earnings		(13,989)				558,675
TOTAL EQUITY		49,551				558,775
LIABILITIES
NON-CURRENT LIABILITIES
Financial liabilities - borrowings
Interest bearing loans and borrowings	3	1,229,725				632,139
Deferred tax		9,600				11,400
		1,239,325				643,539
CURRENT LIABILITIES
Trade and other payables		661,482				434,986
Financial liabilities - borrowings
Interest bearing loans and borrowings	3	469,524				495,499
Tax payable		468,305				408,292
		1,599,311				1,338,777
TOTAL LIABILITIES		2,838,636				1,982,316
TOTAL EQUITY AND LIABILITIES		2,888,187				2,541,091

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

			Share-based		Capital
	Share		payments		redemption		Retained		Total
	capital		reserve		reserve		earnings		equity
	£		£		£		£		£
Balance at 1 January 2010	100		-		-		264,977		265,077
Profit and total comprehensive income	-		-		-		1,024,898		1,024,898
Dividends	-		-		-		(731,200)		(731,200)
Balance at 31 December 2010	100		-		-		558,675		558,775
Profit and total comprehensive income	-		-		-		886,836		886,836
Reserve credit for equity-settled
share-based payment	-		63,440		-		-		63,440
Dividends	-		-		-		(555,000)		(555,000)
Purchase of own shares	(5)		-		5		(904,500)		(904,500)
Balance at 31 December 2011	95		63,440		5		(13,989)		49,551

CONSOLIDATED STATEMENT OF CASH FLOWS

		Year Ended				Year Ended
		31.12.11				31.12.10
		£				£
Operating activities
Profit before income tax		1,353,341				1,427,880
Depreciation and amortisation charges		34,452				42,239
Share-based payments charge		63,440				-
Finance costs		101,918				125,054
Finance income		(13,227)				(5,928)
Operating cash inflow before changes in working capital		1,539,924				1,589,245
(Increase)/Decrease in trade and other receivables		(105,321)				(26,728)
(Decrease)/Increase in trade and other payables		226,496				68,412
Cash generated from operations		1,661,099				1,630,929
Interest paid		(101,918)				(108,134)
Tax paid		(408,292)				(339,668)
Net cash from operating activities		1,150,889				1,183,127
Cash flows from investing activities
Purchase of property, plant and equipment		-				(379)
Interest received		13,227				5,928
Net cash from investing activities		13,227				5,549
Cash flows from financing activities
New loans in the period		1,700,000				-
Loan repayments in the period		(1,128,389)				(467,496)
Share buyback		(5)				-
Share buyback		(904,495)				-
Equity dividends paid		(555,000)				(731,200)
Net cash used in financing activities		(887,889)				(1,198,696)
Increase (decrease) in cash and cash equivalents		276,227				(10,020)
Cash and cash equivalents at beginning of
period		595,777				605,797
Cash and cash equivalents at end of period		872,004				595,777

KILIMA HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION

1.      GOODWILL

	Group
												£
	COST
	At 1 January 2010, 31 December 2010 and 31 December 2011											999,591
	NET BOOK VALUE
	At 31 December 2010											999,591
	At 31 December 2011											999,591

The carrying amount of goodwill relates entirely to one cash generating unit, which arose on the purchase of Belvoir Property Management (UK) Limited and reflects the difference between the fair value of consideration transferred and the fair value of assets and liabilities purchased.  Goodwill is assessed for impairment by comparing the carrying value to value in use calculations.  Values have been estimated using cash flow projections based on detailed budgets and four year forecasts.  The budgets/forecasts are based on historical data and the past experience of the directors in this sector as well as the future plans of the business.  The discount rate applied was 13% (2010 - 10%), which the directors deem to be the weighted average cost of capital.  The directors do not consider goodwill to be impaired.  The directors believe that no reasonably possible change assumptions will cause the value in use to fall below the carrying value and hence impair the goodwill. 

2.      CALLED UP SHARE CAPITAL

	Authorised:
	Number:	Class:			Nominal						31.12.11		31.12.10
					value:						£		£
	100	Ordinary shares			£1						100		100
	Allotted issued and fully paid:
	Number:		Class:		Nominal						31.12.11		31.12.10
					value:						£		£
	95 (2010: 100)		Ordinary shares		£1						95		100
	In the year to 31 December 2011 a shareholder of the company made his shareholding available for purchase.  As a result of this the company acquired 5 £1 Ordinary shares, representing 5% of all issued share capital, for consideration totalling £900,000 plus costs totalling £4,495.

3.      FINANCIAL LIABILITIES - BORROWINGS

	Group
							31.12.11		31.12.10
	Current:						£		£
	Bank loans						469,524		495,499
							469,524		495,499
	Non-current:
	Bank loans						1,229,725		632,139
							1,229,725		632,139
	Terms and debt repayment schedule:
	Group
							31.12.11		31.12.10
							£		£
	In less than one year:
	Bank borrowings						469,524		495,499
	In more than one year but less than two years:
	Bank borrowings						470,793		538,294
	In more than two years but less than five years:
	Bank borrowings						807,450		109,486
	In more than five years:
	Bank borrowings						-		-
							1,747,767		1,143,279
	Deferred arrangement costs						-(48,518)		-(15,641)
							1,699,249		1,127,638

The bank loans and overdrafts are secured with fixed and floating charges over the group assets.  The loans are being repaid over varying periods between 4 and 14 years, in equal instalments.  Interest is charged monthly on the outstanding amount of the loans, at rates which track 2.3% - 2.5% above Bank of England base rate and 4.5% above LIBOR.  The bank loans are shown net of associated loan arrangement costs which are being amortised over the term of the loans.  In the event of a change of control, sale or flotation, the bank have the right to demand full repayment of the loans.

4.      SHARE BASED EMPLOYEE REMUNERATION

Enterprise Management Incentive Share Option Scheme ("EMI")

During the year to 31 December 2011, the group implemented an Enterprise Management Incentive ("EMI") scheme which will be settled in equity.  The EMI is part of the remuneration package of the Group's senior management.  Options granted under the EMI Share Option Scheme have no performance conditions, however certain criteria, as set out in the scheme must be met.

The criteria are based on the Group succesfully listing on the Alternative Investment Market and allow the option to be exercised at a placing after listing or during the exercise period which is from the second anniversary of listing to the end of the option period.  There were options in respect of 7 ordinary shares, granted during the year to 31 December 2011 and 2 of these have no vesting period and are not reliant upon listing therefore their fair value is taken to profit and loss immediately.

The maximum term of the options granted under the EMI Scheme is 10 years from the grant date.  Upon vesting, each option allows the holder to purchase one ordinary share at a discounted exercise price of £28,500.

The fair values of options granted were determined using the Black-Scholes option pricing model which takes into account factors specific to share incentive plans, such as the vesting period.  The following principal assumptions were used in the valuation:

Grant date			28.09.11
Vesting period ends			31.12.13
Share price at grant date			£28,500
Volatility			11.70%
Option life			10 years
Dividend yield			6.37%
Risk free interest rate			0.55%
Exercise price at grant date			£28,500

The underlying expected volatility was determined by reference to the historical data of a similar listed company.

In total, £63,440 of employee remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in profit or loss and credited to equity.

 

END

 

 

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