Final Results

RNS Number : 9512W

Braemar Group PLC

18 June 2008

 

Braemar Group plc

18 June 2008

AUDITED FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2008

CHAIRMAN'S STATEMENT

I am pleased to report that the Group has made good progress in the year ended 31 March 2008, increasing the amount of funds and properties under management, with the consequential increase in recurring fee income.

Financial overview

Group revenue for the year ended 31 March 2008 was £1,264,000 (2007: £2,365,000). Divisional revenue for the year is made up of £776,000 from corporate finance and fund management ('Braemar Securities') (2007: £390,000), £475,000 from property management ('Braemar Estates') (2007: £450,000) and £13,000 from property investment and trading (2007: £1,525,000).  

The increase in revenue of the two principal divisions, Braemar Securities and Braemar Estates, represents an aggregate increase of nearly 50% in revenue in the Group's core businesses. Property trading revenue of £1,525,000 in 2007 comprised the one-off sale of two properties.  

The loss before tax for the year from continuing operations of £450,000 (2007: £186,000 loss) reflects the continued expenditure on staff and systems during the year as we built the Group to handle an increase in business activity, which only materialised in the fourth quarter. We postponed the launch of our shared ownership Open Ended Investment Company ('OEIC') due to unfavourable sentiment to residential investment, and substituted this with two agricultural land investment vehicles. The result of this move means that the Group has carried a higher level of overhead during the year in preparation for product launches which were delayed or postponed. Consequently revenue which had been anticipated to occur during the year has been deferred until the current financial year. However, had the Group pursued the originally intended funds, the Directors believe that we would not have experienced the same level of demand and the cost-base would have been unsustainable. 

Financial performance has also been adversely affected by the trading losses of The Armchair Property Investor Limited ('Armchair'), the Group's property sourcing business. The 'credit crunch' made it increasingly difficult for private investors to fund the purchase of buy-to-let property, the mainstay of Armchair's business, resulting in the cancellation of transactions that had been previously committed and a significant fall in the level of new enquiries. Actions taken by the Directors in the second half to discontinue this activity arrested these losses before the year end, but the division has incurred a loss of £471,000 for the year, of which there was a one-off, non-cash write down of £279,000 in respect of the carrying value of the goodwill and intangible assets associated with this acquisition.

Cash balances at the year-end were £289,000 (2007: £767,000), although the cash balance at the end of May 2008 was £729,000, following the receipt of annual management fees associated with our funds and the commissions due on the new fund raisings that completed before the year end.  

Business review

Strategy

Our strategy remains that of developing our property fund management business, backed by the continued development of our support services in corporate finance and residential property management under the two brands Braemar Securities and Braemar Estates.  

Braemar Securities

The fees and commissions from our corporate finance business have increased during the year due to the successful launch of the new funds, partnerships and companies. Recurring income is expected to grow further as the annual management charges paid by each fund form part of the income of this division. 

We have diversified our range of investment products to now include agricultural land and farming, through the creation of two investment vehicles. The first, Braemar UK Agricultural Land plc, is an unquoted company, which will buy arable farmland to establish a farming business. The initial offer for subscription closed on 31 March 2008, having exceeded its minimum investment level and a second offer is underway, on the same terms as the original offer. The second vehicle, a Guernsey registered OEIC, was launched in February 2008. 

  The marketing of our Coronation funds has significantly accelerated, with three funds being promoted to high net worth individuals via their Financial Advisers. All three funds have now completed their fund raising. I am pleased to report that the inflow of funds into these products more than doubles existing Coronation funds under management. Nearly all the inflow of funds occurred before the year end, the revenue from which was recognised in the year ended 31 March 2008.

Braemar Securities Limited was granted authorisation by the Financial Services Authority in January 2008 to extend the scope of its permission to act as an Operator of collective investment schemes, an activity that had previously been outsourced to a third party. This activity is now being brought in house, further boosting recurring fee income.  

Braemar Estates 

Building on our property management expertise, we expanded the range of services during the latter part of 2006 to include block management, allowing us to service primarily the management needs of our residential funds and enabling us to secure a number of external mandates. The acquisition and successful integration of the block management business of Main and Main (Developments) Limited in November 2007 has increased the scale of this activity significantly, and provided an important counter-cyclical, recurring income stream, enhanced credibility in the market place (with over 2,000 apartments now under management) and a platform for growth in this and closely related businesses.  

Current trading and prospects

The current year has started well, with the first day of dealing in the Braemar UK Agricultural Land cell, on 30 May 2008, exceeding our initial expectations having raised £2.3 million since the year end, versus a required minimum of £500,000. As an OEIC, this fund can continue to take in new subscriptions on its monthly dealing days indefinitely. The fund will purchase tenanted arable farmland.   

Now that we have established the Guernsey company, known as Braemar Group PCC Limited, we can add further cells under its umbrella and are carrying out due diligence on a number of different asset classes, all of which are real estate related. The Directors hope to announce the launch of at least one further cell during the course of 2008.

Braemar UK Agricultural Land plc has now re-launched its offer for subscription, which is due to close in July 2008.

Overall, the Directors are pleased with the progress of the Group to date, particularly the early adoption of farmland investments replacing our more exposed real estate areas and the stability that residential property management offers. The Directors envisage further growth in the coming year.

Martin Robinson

Chairman

17 June 2008

  CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2008

		Year ended 31 March 2008	Year ended 31 March 2007
		£'000	£'000
Revenue
Existing operations	4	1,170	2,365
Acquisitions	4,16	94	-
Cost of sales		(445)	(1,708)
Gross profit		819	657
Fair value adjustments to investment properties	18	82	-
Administration expenses		(1,340)	(823)
Operating (loss)/profit from continuing operations
Existing operations		(443)	(166)
Acquisitions		4	-
		(439)	(166)
Investment income	9	42	27
Finance costs	10	(53)	(47)
Loss before taxation		(450)	(186)
Income tax (expense)/income	11	(23)	4
Loss for the year from continuing operations		(473)	(182)
Loss for the year from discontinued operations	12	(471)	-
Loss for the year attributable to equity holders of parent		(944)	(182)
Loss per share - basic and diluted
from continuing operations	13	0.31p	0.16p
from discontinued operations	13	0.31p	-
from continuing and discontinued operations	13	0.62p	0.16p

  CONSOLIDATED BALANCE SHEET AT 31 MARCH 2008

		31 March 2008	31 March 2007
	Notes	£'000	£'000
Non-current assets
Goodwill	14	2,694	2,244
Other intangible assets	15	101	-
Property, plant and equipment	17	183	21
Investment properties	18	225	142
Held-to-maturity investments	19	18	4
Other financial assets	20	37	-
Available-for-sale investments	21	32	112
		3,290	2,523
Current assets
Trade and other receivables	22	1,919	246
Cash and cash equivalents	23	289	767
		2,208	1,013
Total assets		5,498	3,536
Equity and Liabilities
Issued capital	27	1,638	1,140
Share premium	29	2,945	1,957
Retained earnings	29	(1,845)	(840)
Total equity		2,738	2,257
Non-current liabilities
Obligations under finance leases	24	29	-
Interest bearing loans and borrowings	24	225	-
Deferred tax	25	23	-
		277	-
Current liabilities
Trade and other payables	26	1,949	389
Interest bearing loans and borrowings	24	512	887
Obligations under finance leases	24	22	3
		2,483	1,279
Total liabilities		2,760	1,279
Total equity and liabilities		5,498	3,536

The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 17 June 2008

  W M Robinson     J S Murphy

  Chairman             Director

  CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2008

		Year ended 31 March 2008	Year ended 31 March 2007
	Notes	£'000	£'000
Operating activities
Loss before tax from continuing operations		(450)	(186)
Loss before tax from discontinued operations		(471)	-
Adjustments to reconcile loss before tax to net cash flows for:
Depreciation of property, plant and equipment		22	6
Amortisation of intangible assets		9	-
Impairment of intangible assets		160	-
Goodwill impairment charge		119	-
Share option charge		19	-
Share-based income		(37)	(53)
Increase in fair value of investment properties		(82)	-
Interest income		(42)	(27)
Interest expense		53	47
(Increase)/decrease in trade and other receivables		(1,622)	270
Decrease in inventories		-	125
Increase in trade and other payables		1,444	153
Interest paid		(45)	(1)
Loss on sale of fixed assets		-	6
Income tax received		-	19
Cash (absorbed)/generated from operations		(923)	359
Cash flows from investing activities
Proceeds from the sale of property, plant and equipment		-	10
Interest received		41	27
Purchase of property, plant and equipment		(186)	(13)
Purchase of held-to-maturity investments		(14)	(2)
Purchase of available-for-sale investments		-	(29)
Purchase of investment property		(1)	(142)
Acquisition of subsidiary	16	(589)	-
Net cash used in investing activities		(749)	(149)
Cash flows from financing activities
Proceeds from issue of share capital		1,312	5
Transaction costs of issue of share capital		(16)	(5)
Proceeds from borrowings		283	-
Repayment of borrowings		(385)	-
Net cash from financing activities		1,194	-
Net (reduction)/increase in cash and cash equivalents		(478)	210
Cash and cash equivalents at 1 April		767	557
Cash and cash equivalents at 31 March		289	767

  CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

	Year ended 31 March 2008	Year ended 31 March 2007
	£'000	£'000
(Losses)/gains on available-for-sale investments taken to equity	(80)	30
(Expense)/net income recognised directly in equity	(80)	30
(Loss) for the period	(944)	(182)
Total recognised income and expense for the period	(1,024)	(152)

  NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 2008

1.  Basis of preparation

The Group's financial statements for the year ended 31 March 2008 have been prepared in accordance with IFRS as adopted by the European Union, and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. As a consequence a number of the accounting policies adopted in the preparation of these statements are different to those adopted in preparing the financial statements for the year ended 31 March 2007, which were prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP).

The Group has adopted IFRS from 1 April 2006, the date of transition. The Group is required to define its accounting policies under IFRS and then apply these policies retrospectively in determining the opening balance sheet under IFRS at the date of transition.

Reconciliations and descriptions of the effect of the transition from UK GAAP to IFRS on the Group's net income and equity are included in note 3 of these statements.

The parent company financial statements have been prepared under UK GAAP and have been presented separately at the end of the report.

The financial statements are prepared in accordance with IFRS's and Interpretations in force at the reporting date. The Group has not adopted any standards or interpretations in advance of the required implementation dates. It is not expected that adoption of standards or interpretations which have been issued by the International Accounting Standards Board but have not been adopted will have a material impact on the financial statements.

2.  Accounting policies

The principal accounting policies adopted by the Group are as follows.

2.1  Basis of consolidation

The consolidated income statement and balance sheet includes the financial statements of the Company and its subsidiary undertakings made up to 31 March 2008. The results of subsidiaries sold or acquired are included in the profit and loss account up to, or from, the date control passes. Intra-group sales and profits are eliminated fully on consolidation.

2.2  Revenue recognition

The revenue shown in the consolidated income statement comprises gross sale proceeds of trading properties, gross rentals, commissions and sundry income and the invoiced value of goods and services supplied by the Group net of VAT. Where amounts are due conditional on the successful completion of fund-raising for an investment vehicle revenue is recognised where, in the opinion of the Directors, there is a reasonable certainty that sufficient funds have been raised to enable the successful operation of that investment vehicle. Amounts due on an annual basis for the management of third party investment vehicles are recognised on a time apportioned basis. 

2.3  Business combinations

Acquisitions are accounted for using the purchase method as required by IFRS 3 Business Combinations.

The Group has elected not to apply IFRS Business Combinations retrospectively to business combinations completed prior to the date of transition. 

2.4  Taxation

Current tax, including UK corporation tax, is provided on any amounts expected to be paid (or recovered) using tax rates and laws that have been enacted by the balance sheet date.

Deferred tax is provided in full in respect of taxation deferred by temporary differences between the treatment of certain items for taxation and accounting purposes. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. 

2.5  Goodwill

Goodwill arising on the acquisition of subsidiary undertakings or businesses, representing any excess of fair value of the consideration given over the fair value of the identifiable assets and liabilities acquired, is recognised as an asset. Goodwill is reviewed for impairment at least annually and any impairment is to be recognised in the income statement and is not subsequently reversed. Goodwill is carried at cost less accumulated impairment losses.

2.6  Intangible assets

In accordance IFRS 3 Business Combinations, an intangible asset acquired in a business combination is deemed to have a cost to the Group of its fair value at the acquisition date. The fair value of the intangible asset reflects the probability that the future economic benefits embodied in the asset will flow to the Group.  Intangible assets are tested for impairment on an annual basis.  Separately identifiable intangible assets are recognised at their fair value and amortised over their useful economic lives as follows:

Customer contracts - five years

2.7  Property, plant and equipment 

Property, plant and equipment are stated at cost, net of depreciation and any provision for impairment. Depreciation is calculated to write down the cost of assets to their estimated residual values of each asset over their estimated useful economic on a straight line basis, as follows:

Long leasehold property                          50 years

Short leasehold improvements                 Term of lease

Fixtures, fittings and office equipment     4 years

Motor vehicles                                          4 years

2.8  Investment properties 

Investment property comprises non-owner occupied buildings held to earn rentals and for capital appreciation. Investment property is carried at fair value and is restated at each balance sheet date. Changes in fair values are recognised in the income statement in the period in which the change arises.  

Investment properties under development are stated at the lower of cost and net realisable value. Cost comprises purchase price, acquisition and development costs and interest that is directly attributable to the financing of the property.

2.9  Financial instruments

The Group classifies financial instruments, or their component parts, on intial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial instruments are recognised on the balance sheet at fair value when the Group becomes a party to the contractual provisions of the instrument.

2.10  Held-to-maturity investments

Held-to-maturity investments are measured at amortised cost.

2.11  Available for sale investments

Subsequent to initial recognition movements in the fair value of available for sale investments are taken directly to equity.  Fair values are based on prices quoted in an active market if such a market is available. If an active market is not available, the Group establishes the financial instrument's fair value by using a valuation technique, mainly discounted cash flow analysis. 

2.12  Trade receivables

Trade and other receivables are stated at their original invoiced value, as the interest that would be recognised from discounting future cash receipts over the short credit period is not considered to be material. 

2.13  Trade payables

Trade and other payables are stated at their original invoiced value, as the interest that would be recognised from discounting future cash payments over the short payment period is not considered to be material. 

2.14  Interest-bearing borrowings

Interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest rate basis.

2.15  Carried interest receivable

The Group earns a performance fee ('carried interest receivable') on funds it manages on behalf of its investors. Carried interest receivable is recognised where, at the balance sheet date, the performance criteria have been met based on the valuations of the funds. Carried interest that has been earned, but where the amounts are not yet due for payment is discounted to its present value.

2.16  Leasing and hire purchase

Assets obtained under hire purchase contracts and finance leases are capitalised as property, plant and equipment and are depreciated over their useful economic lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the Group. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the profit and loss account so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.

2.17  Operating leases    

Rentals under operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged on a straight line basis over the lease term.

2.18  Pensions    

The Group operates a defined contribution pension scheme and the pension costs charged against profits represent the amount of contributions payable to the scheme in the year. Differences between contributions payable and contributions actually paid are shown as either accruals or prepayments in the balance sheet.

2.19  Holiday pay    

The Group recognises an asset or liability for holiday pay obligations at the balance sheet date. Movements in the period are taken to the income statement.

2.20  Share based payments    

The Group issues equity-settled share-based payments to certain employees (including Directors) and suppliers.  The fair value of the services received from suppliers is recognised as a charge.  Equity-settled share-based payments are measured at fair value at the grant date. The fair value determined at the grant date of the equity-settled share-based payment is expensed on a straight-line basis over the vesting period, together with a corresponding increase in equity, based upon the Group's estimate of the shares that will eventually vest.

Fair value is determined using the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

2.21  Deferred consideration    

Deferred consideration is the amount, in the opinion of the Directors, of additional consideration that will be paid in cash or satisfied by the issue of shares in respect of acquisitions previously made. If the effect is material, deferred consideration is determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money.

Critical accounting policies and key sources of uncertainty

Estimates and accounting judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The preparation of financial statements under IFRS requires management to make assumptions and estimates about future events. The resulting accounting estimates will, by definition, differ from the actual results. The following judgments, estimates and assumptions have been made in preparing the financial statements.

Impairment of goodwill - determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The selection of the discount rate applied is a subjective judgment and a 1% movement in the discount rate applied would represent approximately an £80,000 movement in the fair value assessment for the goodwill arising from the acquisition of The Braemar Group Limited and approximately a £15,000 movement in the fair value assessment for the goodwill arising from the acquisition of the block management business of Main & Main (Developments) Limited.  

Intangible assets - values calculated in respect of customer contracts and relationships, in assessing the fair values of consideration for acquisitions, are subject to assumptions on client retention rates and the estimated future cash flows expected to arise from these contracts and relationships and a suitable discount rate in order to calculate present value. The rate of amortisation applied to these intangible assets requires an estimate of the likely duration of the economic benefits to flow from these contracts and relationships. The duration requires a subjective judgment and a movement in the number of years applied by a single year would have an impact on the valuation of approximately £10,000.  

Discontinued operations - the classification of a discontinued operation requires an assessment of whether the terminated activities represented a material change in the nature and focus of the business and the business activities represented a material and distinguishable area of activity.  

Share option charges - the calculation of the share option charge requires an estimate of the expected life of share options, volatility of shares, risk free yield rate to maturity and expected dividend yield.

Investment property valuation - the estimated fair value of the investment property held by the Group as at 31 March 2008 has been based on the value of the income stream arising from the property using a theoretical yield to a potential acquirer that reflects current market conditions. This yield assumption includes an element of subjective judgment and a 1% movement in the yield assumption would account for approximately a £25,000 movement in the valuation. 

3.  Explanation of transition to IFRS

This note sets out the changes in accounting policies which have arisen from the adoption of IFRS. The re-stated balance sheets as at 1 April 2006 and 31 March 2007 have been included, together with the re-stated income statement for the year ended 31 March 2007.

3.1  Differences between IFRS and UK GAAP

Goodwill amortisation - IFRS 3, Business Combinations

Goodwill is no longer amortised but is subject to regular impairment reviews. An adjustment has been made to remove the goodwill amortisation charge under UK GAAP.

Available-for-sale investments - IAS 39, Financial Instruments: Recognition and Measurement

Available-for-sale investments are included in the balance sheet at their fair value and any movement is taken directly to equity.

3.2  Reconciliation of consolidated balance sheet and equity at 1 April 2006

		UK GAAP Audited		Adjustments		IFRS Re-stated
		£’000		£’000		£’000
Non-current assets
Property, plant and equipment		31		-		31
Investment properties		-		-		-
Goodwill		2,244		-		2,244
Held-to-maturity investments		2		-		2
Available-for-sale investments		-		-		-
		2,277		-		2,277
Current assets
Inventories		125		-		125
Trade and other receivables		548		-		548
Cash and cash equivalents		557		-		557
		1,230		-		1,230
Total assets		3,507		-		3,507
Equity and Liabilities
Issued capital		1,138		-		1,138
Share premium		1,959		-		1,959
Retained earnings		(688)		-		(688)
Total equity		2,409		-		2,409
Non-current liabilities
Obligations under finance leases		-		-		-
Deferred consideration		-		-		-
		-		-		-
Current liabilities
Trade and other payables		211		-		211
Interest bearing loans and borrowings		637		-		637
Obligations under finance leases		-		-		-
Deferred consideration		250		-		250
Total liabilities		1,098		-		1,098
Total equity and liabilities		3,507		-		3,507

3.3  Reconciliation of consolidated balance sheet and equity at 31 March 2007

	UK GAAP Audited		Goodwill		Investments		IFRS Re-stated
	£’000		£’000		£’000		£’000
Non-current assets
Property, plant and equipment	21		-		-		21
Investment properties	142		-		-		142
Goodwill	2,130		114		-		2,244
Held-to-maturity investments	4		-		-		4
Available-for-sale investments	82		-		30		112
	2,379		114		30		2,523
Current assets
Inventories	-		-		-		-
Trade and other receivables	246		-		-		246
Cash and cash equivalents	767		-		-		767
	1,013		-		-		1,013
Total assets	3,392		114		30		3,536
Equity and Liabilities
Issued capital	1,140		-		-		1,140
Share premium	1,957		-		-		1,957
Retained earnings	(984)		114		30		(840)
Total equity	2,113		114		30		2,257
Non-current liabilities
Obligations under finance leases	-		-		-		-
Deferred consideration	-		-		-		-
	-		-		-		-
Current liabilities
Trade and other payables	389		-		-		389
Interest bearing loans and borrowings	887		-		-		887
Obligations under finance leases	3		-		-		3
Deferred consideration	-		-		-		-
	1,279		-		-		1,279
Total liabilities	1,279		-		-		1,279
Total equity and liabilities	3,392		114		30		3,536

3.4  Reconciliation of consolidated income for the year ended 31 March 2007

			Audited UK GAAP		Goodwill		IFRS Re-stated
			£’000		£’000		£’000
Revenue
Continuing operations			2,365		-		2,365
Acquisitions			-		-		-
Cost of sales			(1,708)		-		(1,708)
Gross profit			657		-		657
Other gains and losses			-		-
Administration Expenses			(937)		114		(823)
Operating loss
Continuing operations			(280)		114		(166)
Acquisitions			-		-		-
			(280)		114		(166)
Investment income			27		-		27
Finance costs			(47)		-		(47)
Loss on ordinary activities before taxation			(300)		114		(186)
Taxation			4		-		4
Loss attributable to equity holders of parent			(296)		114		(182)

4.  Segmental analysis

Revenue	Year ended 31 March 2008	Year ended 31 March 2007
	£'000	£'000
Braemar Securities	776	390
Braemar Estates	475	450
Property investment and trading	13	1,525
	1,264	2,365

Profit/(Loss) before tax	Year ended 31 March 2008	Year ended 31 March 2007
	£'000	£'000
Braemar Securities	37	38
Braemar Estates	111	110
Property investment and trading	75	55
Central costs	(662)	(369)
Finance income	42	27
Finance expense	(53)	(47)
Loss before tax for the year from continuing operations	(450)	(186)
Income tax (expense)/credit	(23)	4
Loss for the year from discontinued operations	(471)	-
Loss for the year attributable to equity shareholders of the parent	(944)	(182)

The total revenue of the Group for the year has been derived wholly from activity undertaken in the United Kingdom.  The Group has not disclosed assets and liabilities by segment as this is only monitored on a Group-wide basis as the Directors believe this is sufficient for a business of this size and complexity.  

5.  Operating loss 

    The operating loss is stated after charging:

	Year ended  31 March 2008	Year ended  31 March 2007
	£'000	£'000
Amortisation of intangible assets	9	-
Depreciation of property, plant and equipment	22	6
Rentals under operating leases	56	31
Change in fair value of investment property	82	-
Employee costs	1,072	512

6.  Auditor's remuneration

	Year ended   31 March 2008	Year ended  31 March 2007
	£'000	£'000
Fees payable to the Group's auditor for the audit of the Group's annual financial statements	5	5
Fees payable to the Group's auditor and its associates for other services:
- the audit of the Group's subsidiaries, pursuant to legislation	11	7
- other services relating to tax	4	3
	20	15

7.  Particulars of employees

	2008	2007
	No.	No.
The average number of employees including Directors during the year was:	24	12
	2008	2007
The aggregate payroll costs of the above were:	£'000	£'000
Wages and salaries	956	449
Social security costs	88	51
Other pension costs	10	12
Share option charge	18	-
	1,072	512

8.  Directors' emoluments 

    The total amounts for Directors' remuneration and other benefits were as follows:

	Salary	Pension contributions	2008	2007
Executive	£'000	£'000	£'000	£'000
M J Duschenes	120	4	124	109
W M Robinson	92	3	95	82
J S Murphy	83	2	85	51
D G Maclean	-	-	-	12
Non executive
A B S McFarland	21	-	21	20
	316	9	325	274

In addition to the above the charge to income in the year in respect of share options for Directors was £12,000 (2007: £nil).

9.  Investment income    

	2008	2007
	£'000	£'000
Bank interest receivable	42	27

10.  Finance costs    

	2008	2007
	£'000	£'000
Interest and other similar charges payable on bank borrowings	12	1
Hire purchase interest payable	6	-
Other	35	46
	53	47

11.  Income tax expense

		2008	2007
		£'000	£'000
Current tax:
UK Corporation tax		-	-
Adjustment in respect of prior year		-	4
		-	4
Deferred tax:
Origination and reversal of temporal differences	(23)		-
	(23)		-

The differences between the total current tax shown above and the amount calculated by applying the standard rate of UK corporation tax of 30% (2007: 30%) to the profit and loss is as follows

	2008	2007
	£'000	£'000
Loss for the year from continuing operations	(450)	(186)
Loss for the year from discontinued operations	(471)	-
Loss for the year from operations	(921)	(186)
		-
Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 30%	(276)	(56)
Effects of:
Expenses not deductible for tax purposes	7	5
Amortisation/impairment of intangible assets and goodwill	86	-
Income not taxable	(35)	-
Capital allowances in excess of depreciation	1	3
Movement in tax losses	217	33
Adjustment re: prior year	-	4
Other short-term timing differences	-	15
	-	4

No adjustment has been made to the financial statements to reflect a potential deferred tax asset that would arise from future utilisation of the Group's available losses for tax purposes, due to the uncertainty over the timing of such utilisation. The potential deferred tax asset that would arise on full utilisation would amount to approximately £460,000.

12.  Discontinued operations

On 2 July 2007 the Group acquired the whole of the share capital of The Armchair Property Investor Limited for an initial consideration of £219,000 payable in 6,080,000 ordinary shares at a value of 3.25p and acquisition expenses of £29,000. The results of the business would have been recorded within the property management division. The business suffered adverse trading conditions during the year and was closed down in February 2008.

The results of the discontinued operations which have been included in the consolidated income statement were as follows: 

		2008
		£'000
Revenue		199
Cost of sales		(141)
Gross profit		58
Administrative expenses		(249)
Impairment charge		(279)
Operating loss from discontinued operations		(470)
Investment income
Finance costs		(1)
Loss for discontinued operations		(471)

Analysis of cash flow movements:

		2008
		£'000
Operating		(235)
Investing		(5)
Financing		(1)

Analysis of assets and liabilities:

		2008
		£'000
Property plant and equipment		1
Other receivables		6
Cash and cash equivalents		17
		24
Current liabilities		17
		17

13.  Loss per share

  The calculation of loss per share is based on the following losses and numbers of shares:

	2008	2007
	£'000	£'000
Loss for the year - continuing operations	473	182
Loss for the year - discontinued operations	471	-
Loss for the year - continuing and discontinued operations	944	182
Weighted average number of ordinary shares	150,392,492	113,795,978
Loss per ordinary shares - continuing operations - basic and diluted	0.31p	0.16p
Loss per ordinary shares - discontinued operations - basic and diluted	0.31p	-
Loss per ordinary shares - continuing and discontinued operations - basic and diluted	0.62p	0.16p

There are 22,621,092 potentially issuable shares that have not been included in a diluted EPS calculation as they are anti-dilutive.

14.  Goodwill 

	2008	2007
Cost and net book value	£'000	£'000
At 1 April	2,244	2,244
Additions - current period acquisitions	569	-
Impairment charge	(119)	-
At 31 March	2,694	2,244

Goodwill was allocated for impairment testing purposes to cash generating units which contained carrying amounts of goodwill allocated as follows:

	2008	2007
	£'000	£'000
Braemar Group Limited	2,244	2,244
Block management division of Main & Main (Developments) Limited	450	-
	2,694	2,244

The recoverable amounts of the cash generating units noted above are determined based on a value in use calculation using discounted cash flow forecasts. Cash flows forecasts were prepared for each cash generating unit, based on the financial projections included in the Group's forecasts to March 2009 and extended to five years based on broadly consistent growth assumptions. The five year cash flows were discounted at an assumed cost of capital of 10% based on an assumed risk free rate of 5% and a risk premium of 5%.

In respect of The Armchair Property Investor Limited the recoverable amount of goodwill was estimated as £nil and so an impairment charge has been recognised in the year's income statement.

15.  Other intangible assets 

	2008 Customer databases	2007 Customer databases	2008 Customer contracts	2007 Customer contracts	2008 Total	2007 Total
	£'000	£'000	£'000	£'000	£'000	£'000
Cost
At 1 April	-	-	-	-	-	-
Additions	160	-	110	-	270	-
At 31 March	160	-	110	-	270	-
Amortisation
At 1 April 2007	-	-	-	-	-	-
Impairment charge	160	-	-	-	160	-
Charge for the year	-	-	9	-	9	-
At 31 March	160	-	9	-	169	-
Net Book Value
At 31 March	-	-	101	-	101	-

Customer contracts

These are the customer contracts acquired as part of the acquisition of the block management division of Main & Main (Developments) Limited.  

Customer databases

These are the customer databases acquired as part of the acquisition of The Armchair Property Investor Limited.  

16.  Acquisitions

During the year, the Company acquired the whole of the share capital of The Armchair Property Investor Limited and the business and assets of the block management division of Main & Main (Developments) Limited.

These acquisitions may be summarised as follows:

	Block management division of Main & Main (Developments) Limited	The Armchair Property Investor Limited	Total
	£'000	£'000	£'000
Non-current assets	-	-	-
Current assets	-	-	-
Trade and other payables	-	(60)	(60)
Net liabilities acquired	-	(60)	(60)
Other intangible assets	110	160	270
Goodwill	450	119	569
Consideration	560	219	779
Comprising:
Cash	525	-	525
Shares issued	-	190	190

Acquisition costs	35	29	64
	560	219	779
Purchase consideration settled in cash	560	29	589
Cash and cash equivalents acquired	-	-	-
Cash outflow on acquisitions	560	29	589

17.  Property, plant and equipment 

	Long leasehold property		Fixtures, fittings and office equipment		Total
	2008	2007	2008	2007	2008	2007
Cost	£'000	£'000	£'000	£'000	£'000	£'000
At 1 April	-	-	25	34	25	34
Additions	91	-	93	12	184	12
Disposals	-	-	-	(21)	-	(21)
At 31 March	91	-	118	25	209	25
Depreciation
At 1 April	-	-	4	3	4	3
Additions	-	-	22	6	22	6
Disposals	-	-	-	(5)	-	(5)
At 31 March	-	-	26	4	26	4
Net book value
At 31 March	91	-	92	21	183	21

The long leasehold property acquired in the year is a 996 year lease on office premises in Reading. The premises are occupied by Braemar Estates (Residential) Limited and are utilised as part of the Group's property management business.

Included within fixtures, fittings and office equipment are assets with a book value of £43,000 subject to finance leases.

18.  Investment properties

	2008	2007
	£'000	£'000
At 1 April	142	-
Additions	1	142
Fair value adjustments	82	-
At 31 March	225	142

The Directors have estimated the fair value of the investment property at the balance sheet date. The property enjoys the benefit of a 15 year lease to a tenant and the value has been estimated based on an effective yield consistent with current conditions in the commercial property market. Property with a fair value of £225,000 has been pledged as collateral for borrowings.  

Amounts recognised in the income statement

	2008	2007
	£'000	£'000
Rental income	13	-

19.  Held to maturity investments

	2008	2007
Cost	£'000	£'000
At 1 April	4	2
Additions	14	2
At 31 March	18	4

Held to maturity investments represent holdings in investment schemes and companies operated by the Group.

20.  Other financial assets

	2008	2007
Net book value	£'000	£'000
At 1 April	-	-
Additions at fair value	37	-
At 31 March	37	-

Other financial assets represents the fair value of the warrant held by Braemar Securities Limited, which entitles the holder to subscribe for 3% of the share capital of Braemar UK Agricultural Land plc at par. The warrant has no expiry date.

21.  Available for sale investments

	2008	2007
	£'000	£'000
Net book value
At 1 April	112	-
Additions	-	29
Market value movements taken directly to equity	(80)	83
At 31 March	32	112

Available for sale investments represents a holding of 2,350,000 ordinary shares of 0.025p in Regenesis Group plc. This shareholding represents a beneficial interest of 3.9% and was valued on a market value basis at the balance sheet date. The share price of Regenesis Group plc at 31 March 2008 was 1.375p.  

22.  Trade and other receivables    

	2008	2007
	£'000	£'000
Trade receivables	27	97
Related party receivables (see note 32)	141	63
Prepayments and accrued income	1,659	49
Other receivables	92	37
	1,919	246

Trade receivables do not carry interest. There are no impaired trade receivables (2007 £nil). 

Ageing of past due but not impaired receivables:	2008	2007
	£'000	£'000
0-30 days past due	9	86
31-60 days past due	1	9
Over 60 days past due	17	2
	27	97

23.  Cash and cash equivalents

	2008	2007
	£'000	£'000
Cash and cash equivalents	289	767

Cash and cash equivalents comprises short-term deposits, the effective rate of interest for the year ended 31 March 2008 was 5.78 %.

24.  Borrowings

	2008	2007
Current	£'000	£'000
Convertible loan notes	512	887
Hire purchase obligations	22	3
	534	890
Non-current
Loan from Northern Rock plc	225	-
Hire purchase obligations	29	-
	254	-
Total borrowings	788	890

The convertible loan notes are redeemable on the earlier of the date on which the Group has sufficient working capital to enable payment and five years from the date of issue, subject to the approval of the holders of the loan notes. The loan notes accrue interest at a fixed rate of 2% above bank base rate on the date of issue, payable upon redemption or conversion of the loan notes. The loan notes are convertible into ordinary shares at 3p per share at any time or before the fifth anniversary of issue provided the holders of the loan notes and their concert parties do not hold more than 29.99% of the entire issued share capital of the Company. The option to convert to ordinary shares is at the discretion of the holders of the loan notes.

As recorded in note 32 four loan notes were redeemed on 10 April 2007 for a total consideration of £406,000.

The loan from Northern Rock plc is secured by a fixed charge on an investment property for an amount of £225,000. The interest rate has been fixed at 7.05% for the full five year term of the loan and the loan is repayable in full on the fifth anniversary of the loan in October 2012.

24.1  Hire purchase obligations

Amounts due under hire purchase obligations are as follows:

	2008	2007
	£'000	£'000
Within one year	22	3
Between one and two years	29	-
	51	3

The hire purchase obligations had an effective borrowing rate during the year of 11.5%. Interest rates are fixed at the contract date. All lease obligations are denominated in sterling and the value of the Group's obligations are secured by the lessor's rights over the leased assets.

25.  Deferred tax

25.1  Deferred tax liabilities

Deferred tax liabilities comprise

	2008	2007
	£'000	£'000
Fair value gain	23	-

	2008	2007
	£'000	£'000
At 1 April	-	-
Recognised in the income statement	23	-
At 31 March	23	-

26.  Trade and other payables    

	2008	2007
	£'000	£'000
Trade payables	159	131
Taxes and social security costs	119	34
Accruals and deferred income	1,664	214
Other payables	7	10
	1,949	389

27.  Share capital

	2008	2007
Authorised share capital:	£'000	£'000
600,000,000 (2007: 200,000,000) ordinary shares of 1p each	6,000	2,000

	2008			2007
Allotted, called up and fully paid:	No:	£'000	No:		£'000
Ordinary shares of 1p each	163,786,903	1,638	113,973,571		1,140

Allotted, called up and fully paid:	2008	2007
	£'000	£'000
At 1 April	1,140	1,138
Issued in the year:
Acquisitions	61	-
Fund raising	437	-
Share based expenses	-	2
At 31 March	1,638	1,140

On 2 July 2007 as consideration for the acquisition of The Armchair Property Investor Limited 6,080,000 ordinary shares of 1p were allotted for a total value of £190,000.

On 13 July 2007 43,733,332 ordinary 1p shares were allotted for a total cash value of £1,312,000.

28.  Share options

28.1  Approved options

The Company operates an approved Company Share Option Plan.

The following ordinary share options have been granted to date:

Date options granted	Exercise price	Earliest date for exercise	Expiry date	Number of options outstanding
				2008	2007
13/06/2007	3.25p	June 2010	June 2017	2,956,925	-
				2,956,925	-

28.2  Unapproved options

During the year ended 31 March 2008 568,975 unapproved options were granted at 3.25p per share. 

28.3  Share option charges

Charges to the income statement are summarised as follows:

	2008	2007
	£'000	£'000
Total	19	-

Options are valued using the Black-Scholes option-pricing model and the principal inputs into the model were as follows:

	2008	2007
Weighted average exercise price	3.25p	-
Expected volatility weighted average	40%	-
Expected life weighted average	3 years	-
Risk-free rate	5.75%	-
Expected dividend rate	nil	-

29.  Reserves

	Share premium account	Retained earnings	Share premium account	Retained earnings
	2008	2008	2007	2007
	£'000	£'000	£'000	£'000
Balance brought forward	1,957	(840)	1,959	(688)
Retained loss for the year	-	(944)	-	(182)
Issue of ordinary shares	1,004	-	3	-
Share issue costs	(16)	-	(5)	-
Credit arising on share options	-	19	-	-
Available for sale investments fair value movement	-	(80)	-	30
Balance carried forward	2,945	(1,845)	1,957	(840)

30.  Operating leases

Operating lease costs incurred during the year were:

	2008	2007
	£'000	£'000
Land and buildings	50	26
Plant and equipment	5	5

At 31 March 2008 the Group had annual commitments under non-cancellable operating leases as set out below:

	Land and Buildings		Plant and equipment
	2008	2007	2008	2007
	£'000	£'000	£'000	£'000
Within one year	76	26	3	5
Between two and five years inclusive	195	45	-	-

31.  Capital commitments and contingent liabilities 

The Group had no material capital commitments or contingent liabilities at 31 March 2008 (2007: £Nil).

32.  Related party transactions 

The Group's wholly-owned subsidiaries, Coronation General Partner Limited, Coronation II General Partner Limited, Coronation III General Partner Limited, Coronation IV General Partner Limited, Coronation VI General Partner Limited, ReGen General Partner Limited and OEG General Partner Limited have a nominal holding in and managerial authority over certain aspects of the operation of: Coronation Limited Partnership, Coronation II Limited Partnership, Coronation III Limited Partnership, Coronation IV Limited Partnership, Coronation V Limited Partnership, Coronation VI Limited Partnership, ReGen Limited Partnership and OEG Limited Partnership.

The value of transactions between the Group and the following limited partnerships during the year and the amounts outstanding at the year-end were as follows:

	Revenue	Amounts outstanding at 31 March 2008
	£'000	£'000
Coronation Limited Partnership	51	5
Coronation II Limited Partnership	40	6
Coronation III Limited Partnership	63	6
Coronation IV Limited Partnership	225	90
Coronation V Limited Partnership	57	7
Coronation VI Limited Partnership	50	50
OEG Limited Partnership	209	209
ReGen Limited Partnership	105	105

Amounts outstanding to the above related parties are included within related party receivables where invoiced and accrued income where not yet invoiced at the balance sheet date (see note 22). 

During the year Braemar Securities Limited, a wholly-owned subsidiary of Braemar Group plc, entered into a contract to promote an offer for subscription in shares for Braemar UK Agricultural Land plc. Martin Robinson and Marc Duschenes are both Directors of Braemar UK Agricultural Land plc. Under the terms of this contract there were amounts due to Braemar Securities Limited of £81,900 which remained unpaid at 31 March 2008.

32.1  Amounts owed to key management

Amounts outstanding to key management at the balance sheet date were £573,000 (2007: £942,000) in the form of loan notes arising from the acquisition of The Braemar Group Limited in 2005. The terms of these loans are set-out in note 24.  On 10 April 2007 in accordance with the terms of these loan notes four convertible loan notes were redeemed at par for a total consideration of £406,000. 

32.2  Key management compensation

The remuneration of Directors, who are key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 'Related Party Disclosures'. Further information about the remuneration of individual Directors is provided in note 8 to the financial statements.

	2008	2007
	£'000	£'000
Short term employee benefits	316	263
Post employment benefits	9	11
	325	274

The charge to income in the year in respect of share options for key management personnel was £12,000 (2007: £nil).

33.  Post balance sheet events 

There have been no material events from the date of the balance sheet until the date of this report.

34.  Pensions 

The Group provides pension arrangements to the majority of full-time employees through a defined contribution scheme. The pension charge for the year was £10,000 (2007: £12,000).

35.  Financial instruments 

The Group's financial instruments comprise borrowings, fixed asset investments and cash at bank and various items such as receivables and payables that arise directly from its operations. The main risks arising from the Group's financial instruments are interest rate and liquidity risk. 

The principal borrowings relate to convertible loan notes, which are redeemable on the earlier of the date on which the Group has sufficient working capital to enable payment and five years from the date of issue, subject to the approval of the holders of the loan notes. The loan notes accrue interest at a fixed rate of 2% above bank base rate on the date of issue, payable upon redemption or conversion of the loan notes. The loan notes are convertible into ordinary shares at 3p per share at any time or before the fifth anniversary of issue provided the holders of the loan notes and their concert parties do not hold more than 29.99% of the entire issued share capital of the Company. The option to convert to ordinary shares is at the discretion of the holders of the loan notes. 

Interest due on these notes is accrued and paid on redemption or conversion. The value of the loan notes including accrued interest outstanding, which are all at a fixed rate, at the year-end was £573,000 (2007: £943,000).

The cash at bank and in hand at the year-end was £289,000 (2007: £767,000), which was all held in variable interest bearing accounts linked to bank base rate.

The Group's fixed asset investments include nominal stakes in unlisted limited partnerships formed for the purposes of investment in residential property and an investment in Braemar UK Agricultural Land plc which was formed for the purposes of acquiring and farming agricultural land. These are not traded and are intended to be held until the maturity of the investment, which is in more than five years.

The Group's other financial asset represents the warrant held by Braemar Securities Limited, which entitles the holder to subscribe at par for up to 3% of the share capital of Braemar UK Agricultural Land plc. This has been recognised at fair value based on the recently completed offer for subscription price per share.

The available for sale investments represents 2,350,000 shares in Regenesis Group plc, which is quoted on AIM and the fair value is based on the market value of the shares.  

There is limited currency risk as the Group trades only in Sterling, with the exception of one non-material transaction denominated in Euros during the year.

The fair value of the Group's financial instruments is deemed to be equal to the book value.

Liquidity risk

The Group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the Group has sufficient liquid resources to meet the operating needs of the business.  

The Group's liabilities have contractual maturities summarised as follows:

	Within 6 months	6 to 12 months	1 to 5 years	Within 6 months	6 to 12 months	1 to 5 years
	2008	2008	2008	2007	2007	2007
	£'000	£'000	£'000	£'000	£'000	£'000
Bank loans	-	-	225	-	-	-
Hire purchase obligations	12	10	29	3	-	-
Other loans	512	-	-	887	-	-
Trade payables	1,949	-	-	389	-	-
	2,473	10	254	1,279	-	-

Trade payables due represents a significant cash outflow in the first six months of the new financial year. It should be noted that trade receivables due is in excess of this balance and proceeds from trade receivables will be used to meet the above liability.

Other loans comprise convertible loan notes, the terms of which are disclosed above. There is no fixed repayment term for these notes and as a result they have been analysed as due within six months. It should be noted that the Company has not received notification from the holders that they intend to redeem them in this timeframe. Any repayment is subject to the Group having sufficient working capital to meet its ongoing requirements for the next 12 months following repayment.

Interest rate risk 

The Group is exposed to interest rate risk on its surplus cash available for short-term investment. All borrowings are on a fixed rate basis.

Interest rate sensitivity

The following table illustrates the sensitivity of the net results for the year and equity to a reasonably possible change in interest rates of +0.5% and -0.75% with effect from the beginning of the year. The calculations are based on the Group financial instruments held at the balance sheet date. All other variables are assumed to be constant.

	2008	2007
	£'000	£'000
	+0.5%	-0.75%
Net result for the year	1	(1)
Equity	1	(1)

Credit risk

Investments of cash surpluses are made through banks that the Board considers a suitable credit risk. The Group invested surplus cash balances in the year through The Royal Bank of Scotland plc and Anglo-Irish Bank plc.

All customers who wish to trade on current terms are subject to credit verification procedures and trade receivables are reviewed on a regular basis and credit control procedures are in place to minimise the risk of non-recovery.

36.  Capital management

The Group manages its capital to ensure the entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group does not seek to maintain any particular debt to equity ratio but reviews the funding for investment opportunities on their merits and funds them in the most effective manner. This strategy remains unchanged from 2007.

Notes

Copies of the Audited Accounts for the Year to 31 March 2008 and a notice of the AGM will be posted to shareholders in due course.

For further information please contact:

Marc Duschenes, Chief Executive, Braemar Group plc  

Tel: [phone]

Alex Clarkson, Zeus Capital Limited  

Tel: [phone]

END

 

END

 

 

FR FRMRTMMTBBMP