Full Year Results for the year ending 31 Dec 2012
|
For Immediate Release |
26 March 2013 |
BELVOIR LETTINGS PLC
(the "Company" or "Belvoir")
Full Year Results for the year ending 31 December 2012
Belvoir Lettings PLC (AIM: BLV), one of the UK's largest lettings franchises, is pleased to announce full year results for the financial year ended 31 December 2012.
Financial Highlights
· Profit before tax and exceptional items of £1.9m (2011: £1.7m)
· Revenue of £4.0m, an increase of 20.8% (2011: £3.35m)
· Operating profit as a percentage of turnover was 47.4%. (Excluding costs relating to Group's admission to AIM)
· Final dividend of 2.9 p per share (2011: nil). Making a total for the year of 5.8 p per share
Operational Highlights
· Successful IPO on AIM on 21 February 2012 raising £6.2m net of expenses
· 149 franchise outlets at 31 December 2012. (At 31 December 2011 - 142)
· 5 significant acquisitions completed by Belvoir franchisees since IPO
· 3 acquisitions by company in Pimlico, Burton and Lichfield
· 11 new franchise contracts signed in this year, 3 further offices signed since year end
Current trading and market
· The total rental bill across the UK is expected to rise from £48 billion to £70 billion in 2016.
· Some 78% of private rental properties are owned by landlords who use lettings agents. Management expects this percentage to grow further
· Current trading in line with market expectations
Commenting on the results and the outlook, Dorian Gonsalves, CEO of Belvoir Lettings, said:
"2012 was an important year for Belvoir, where key strategic milestones were met and the successful flotation of the group was achieved. The group can now build on this strong base both by acquisition and organic growth through our franchisee network.
Belvoir Lettings has an exciting future ahead of us and the board is confident of continued, good progress and that we will remain one of the major players in the growing lettings market, our confidence is reflected in the final dividend of 2.9 pence announced today."
For further details:
|
Belvoir Lettings PLC Mike Goddard, Chairman Dorian Gonsalves, Chief Executive Officer Carl Chadwick, Finance Director |
01476 584900 |
|
Cantor Fitzgerald Europe Richard Thompson or Julian Erleigh, Corporate Finance Jeremy Stephenson or Katie Ratner, Corporate Broking |
0207 894 7000 |
|
|
|
|
Buchanan Charles Ryland, Gabriella Clinkard |
0207 466 5000 |
Chairman's Report
2012 has seen a major step forward for Belvoir. In our first year as an AIM listed company we not only achieved a successful IPO, but have followed it up by achieving our main budgetary targets. Our revenue of £4.0m was 20.8% up on 2011 and our operating profit (before exceptional items) was £1.9m, up 4.5% on 2011. And all this was achieved during a year of huge pressure on our senior staff who were involved with the IPO in February 2012.
We have been able to declare an interim dividend of 2.9p per share and have recently announced a final dividend of 2.9p, making a total of 5.8p per share for the year. In addition our shares have appreciated from 75p at IPO to 136p by the year end, and we were able to utilise some of the money raised at the flotation to accelerate our growth through a number of earnings enhancing acquisitions.
Despite the difficulty in new franchise owners obtaining adequate funding from the major banks, we continue to attract and recruit good quality new franchisees. Indeed, in 2012 we increased our franchised outlets from 142 to 149 and resold a number of territories, thus attracting even more fresh blood in to the Belvoir franchise network.
As the network grows I am constantly reminded of the high level of customer service that franchisees and employees provide to landlords and tenants, and it is this fundamental issues, so lacking in many lettings agencies, that distinguishes us from the rest. It enables us to attract new clients through word of mouth, to achieve good rent levels for our landlords, to attract good quality tenants, and to charge appropriate fees for our high quality service.
I continue to be immensely impressed by and thankful to my fellow board directors, Dorian Gonsalves our CEO, Carl Chadwick our Financial Director, and Karen Bach and Nick Leeming our Non-Executive Directors. They have all played a major part in our success during the year and you will be able to find more details of this in the Operating Review and Financial Review later in this Annual Report.
Belvoir continues to be a major player in both the UK property lettings market and in the franchising industry. Our CEO will focus, in the Operating Review, on the lettings industry, and I will expand here a little on the franchising aspects. Since the Belvoir business model has been built in the main on a business format franchise concept then it is important to be aware of how Belvoir has progressed its excellent reputation in the franchising world. As Chairman of Belvoir, I currently sit on the British Franchise Association board of directors and am their immediate past chairman. I also sit on the European Franchise Federation Policy Board, and am a member of the World Franchise Council.
These positions are prestigious and bring great franchising knowledge and gravitas to the Belvoir Brand.
Franchising is an increasingly well-known and proven business concept both in the UK and worldwide.
In the UK in the last 12 months franchising has seen a further expansion in spite of continuing economic pressures on the economy as a whole. In 2012 there was a net increase of 29 systems leading to a total of 929 franchises, a corresponding increase in the number of units by 4% up to 40,100, and a modest growth in full time employment in proportion to the increase in units in operation allied to a real increase in part time jobs; indicative of an industry kept sustainable by its flexible labour resource. All this has led to an overall contribution of £13.4 billion to the British economy. Belvoir is tapping into this increasing public and political awareness of franchising as providing a less risky route into self-employment than the traditional 'go it alone' route.
Although Belvoir does not (yet) trade on the world franchising stage, we do maintain a healthy and active interest in world franchising matters and note that Great Britain (partly due to my role on the European and World Franchising platform) is greatly admired and envied for its successful and ethical approach to business format franchising. Franchising is a mature and well proven model in many large countries (such as the USA, Australia, Canada, Germany and France) and is rapidly growing in many other areas such as the Far East and the Pacific Basin. We will continue to participate on the world stage as exemplified by a recent request for me to speak at the New Zealand Franchise Association's Annual Conference.
Looking to the future I see Belvoir's accelerating growth continuing, with more acquisition opportunities as the lettings market grows in volume yet consolidates in terms of numbers of agents, and more organic growth as we increase the number of outlets and capitalise on our increasing brand recognition.
Mike Goddard
Executive Chairman
Chief Executive Officer's Review
Overview
It gives me great pleasure to report that we achieved a 20.8% increase in revenue and a 8.5% increase in profit before tax and exceptional items to £1.9m.
Customer service and professionalism with a specialist approach remain at the very heart of what we do. Our clients, landlords or tenants all recognise our passion for letting and managing properties, a process which requires expertise not only with the technical and legal aspects of housing law but also when managing the on-going relationship with landlords or tenants.
From the perspective of the landlord, the private rented sector is a complex area requiring specialist knowledge and expertise. Our network of passionate and experienced franchise owners have the skill set to provide a quality service to all residential property landlords whether they be novice landlords looking to let a property for the first time or experienced landlords with larger property portfolios.
Our business model
Belvoir offers a specialist residential letting service to landlords and tenants across England, Scotland, Wales and Northern Ireland. We are well positioned to capitalise on the cultural shift towards renting a property rather than buying. Our 151 strong network of fully trained, motivated and committed franchise owners across the UK has helped to increase our market share nationally. Acting on behalf of mainly private landlords with small portfolios we currently, as a group, manage around 25,000 privately rented properties and this figure continues to increase each month.
Future potential of the rental market
(based on Savills and Rightmove Report March 2012):
• The total rental bill across the UK is expected to rise from £48 billion to £70 billion in 2016.
• The biggest challenge is supplying rising demand, forecast to rise to one in five households by 2016 requiring an additional 1.1 million homes in the sector.
• £200 billion investment is required over the next five years and only one quarter is expected to come from buy to let lending.
• A step change in institutional investment in new build rental accommodation is needed to boost supply and this needs to be recognised by the planning system.
• "The markets outside of London that show the highest potential returns are all located in the South East, where capital growth prospects are strongest".
• The report suggests "the average annual total return for residential property across the UK will be around 6.9% over the next 10 years. This rises to 8.2% in London and 7.7% in the South East. Large scale investors should be able to achieve higher double digit returns in these locations".
Trading review
At the time of our successful IPO on AIM on 21 February 2012 we raised £6.2m net of expenses. As part of the flotation, the Belvoir group underwent a reconstruction whereby Belvoir Lettings Plc, a newly incorporated entity, became the new group holding company with effect from 16 February 2012.
At the end of February 2013 the network comprised 151 Belvoir offices. Since then a number of additional offices have opened including offices in Bury, Lisburn and Thirsk and an additional three offices are due to open in the next few months in Ealing, Enfield and Haywards Heath.
Over the last 12 months, there have been three completions of Company owned outlets in Pimlico, Lichfield and Burton. This exceeds our forecast of increasing company owned outlets by two new units per year. Further opportunities continue to present themselves, which we will assess on an individual basis.
Since the IPO there have been a number of significant franchisee acquisitions of competing agents including Tunbridge Wells, Newcastle upon Tyne, Wellingborough, St Helens and Crewe. Several additional franchisee acquisitions are in negotiation.
Innovation
We continue to invest in the development of new products for landlords. Research and development is viewed as a mutually beneficial partnership between franchisor and franchisee. We have a dedicated research and development committee comprising our staff as well as experienced and committed franchise owners.
Strategy
When Belvoir Lettings PLC floated in February 2012, we announced a number of key targets and projects. We shared our business plans with our new investors, the franchise network and of course our internal team, who we knew would be critical to the success and achievement of this plan. Our strategic focus for 2013 and beyond in abbreviated terms is as follows:
• Open 12 new franchised outlets in areas where we do not currently have a Belvoir Office.
• Increase the number of company owned outlets by two additional outlets in 2013 and two more each year for the next two years.
• Maintain our existing strong underlying growth in turnover from franchised outlets.
• Assist franchise owners acquire competing letting agencies and help integrate these businesses into existing Belvoir offices, thus substantially increasing turnover and profits for the franchise owners concerned and Belvoir Lettings PLC.
Operations
During 2012 we have increased our number of support staff by over 20% to cater for increased business levels and the management of additional company owned outlets. Several internal promotions now form a strong tier of middle management which will deliver all aspects of our sales, support and operational model. This carefully planned transition means Directors are now more free to focus on the strategic performance of Belvoir Lettings PLC as well as the performance of the network as a whole.
In February 2012 we were awarded a contract for the full management of 300 residential properties which form part of the Belvoir Estate owned by the Duke and Duchess of Rutland. Since being awarded this contract the Belvoir Estate has passed additional management duties to our team as the Trustees of the Estate have been extremely pleased with the integration of their portfolio and the specialist service we have delivered to date.
On 1 May 2012 Belvoir launched a long term nationwide rebranding programme that will eventually see all stores fully rebranded to a contemporary look and feel which reflects our high level of service standards and innovative product set available to landlords.
On 25 May 2012 Belvoir was recognised as the Best Lettings franchise at the Lettings Agency of the Year Awards in association with the Times and Sunday Times. This is the third year Belvoir has been awarded this prestigious accolade demonstrating our position in a highly competitive market.
Looking Forward
Belvoir Lettings has an exciting future ahead of us and we are confident that with the support of our franchise owners and the commitment put in by the whole network, we will remain as one of the major players in the growing lettings industry.
Dorian Gonsalves
Chief Executive Officer
Financial Review
Revenue
Group revenue for the financial year ended 31 December 2012 was £4.0m, an increase of £697k (up 20.8% on the prior year). This was driven by impressive growth of £251k(9.6%) in Management Service Fee Income which is the Group's main source of revenue, levied consistently at 12% on the turnover of the franchisees under the franchise agreements.
New franchise growth of £124k (90.5%), was a result of taking on 11 new franchisees compared to only 6 in the previous year at the current fee of £22,500.
The Group was also extremely pleased with the increase in Franchisee renewal revenue of £11k which is a 54.7% increase on the prior year. This was a result of 21 existing franchisees taking on new agreements, a higher rate than expected as they sought to maximise the length of their agreements following the flotation.
The acquisition plan commenced from flotation but although the number of acquisitions in the year was on target, the acquisitions were made later than hoped as the flotation was delayed from December 2011 to February 2012, therefore the acquisitions were only made in August and September when the original plan was June which meant that sales and profits falling into 2012 were below budget. Overall revenue from lettings income from head office owned outlets rose from £361k to £709k.
Operating profit
Operating profit before tax and exceptional items was £1.9m for the year ended 31 December 2012 compared to £1.7m for the previous year. Costs inevitably rose as a result of flotation, gearing the group for future growth and the acquisition programme, but were tightly controlled against budget.
Operating costs before exceptional items for the year were £2.1m (£1.5m prior year).
Wages and salaries for the year ended 31 December 2012 amounted to £966k which was under forecast for the year. Staff numbers at the end of the year were in line with the business plan but did not build in accordance with the budget as a result of the flotation being delayed.
Head office overheads have remained exceptionally well controlled in the year and amounted to £630k, which was 1.6% under budget.
Exceptional Items
Exceptional costs reported in the Group Statement of Comprehensive Income include flotation costs of £394k, which was correctly anticipated in the IPO documentation.
A share based payment charge of £108k was not anticipated at the flotation but arose as a result of the reorganisation that was necessary to introduce tax incentivised investors. The EMI share option scheme for directors had to be crystallised early as a result of the reorganisation, resulting in shares being taken up two years early.
This in turn, however, did generate significant relief from corporation tax which partially explains the lower taxation charge.
Taxation
The effective rate of corporation tax for year was 24.5% (2011: 26%).
The Group obtained a one off tax deduction which reduced Corporation Tax due for the year by £140k. This was in relation to the EMI scheme for the employee share options which were exercised in the year.
The cash paid out, during the year to HMRC exceeded the previous year's charge as the Group moved on to a pattern of quarterly payments for 2012 as well as paying the 2011 corporation tax charge in full in December. An over provision of £35k in respect of previous years was released.
Earnings per share
Earnings per share for the year were 6.3p (2011: 8.1p).
The value identified is extremely sensitive to the average number of shares in issue. During the year the number of shares in issue rose from 102 in Kilima (the previous holding company) to 20,666,667 shares in Belvoir Lettings Plc following flotation. The Group's earnings per share will become more meaningful next year when similar shares are in issue.
Dividends
The Board is proposing a final dividend for 2012 of 2.9p per share. Together with the interim dividend of 2.9p per share paid to shareholders on 12 September 2012, this equates to a total dividend for the financial year of 5.8p per share.
Subject to shareholders' approval on 18 April 2013, the dividend will be paid on 19 April 2013. The ex-dividend date will be 3 April 2013.
Cash flow and net debt
The net cash inflow from operations was £1,010k before flotation costs of £394k. It is important to realise here that the loans to franchisees are netted off the incoming cash flow. The cash generation prior to making the increase in loans to franchisees was £1.39m, very much in line with the adjusted post tax profit of £1.68m.
The cash inflow from the flotation prior to expenses was £2.58m.
Loans repaid to bank were £448k in the year.
Liquidity and capital resources
The Group had cash balances of £1.8m at 31 December 2012, compared with £0.9m at 31 December 2011.
Financial position
The Group stands on a robust financial platform and is strongly cash generative and this, together with the £2.58m raised at flotation, will enable the on-going funding of the acquisition programme.
Key performance indicators
The Group's key performance indicators include a range of financial and non-financial measures.
Management Service Fee Income
2012 £2.85m
2011 £2.60m
New franchises sold in the year
2012 11
2011 6
Total number of outlets
2012 149
2011 142
Number of owned outlets
2012 4
2011 1
The successful flotation of the Group onto AIM was a significant landmark achieved and all indications are that the Group can now build on this both by acquisition and organic growth in its strong franchisee base.
Carl Chadwick
Finance Director
Group Statement of Comprehensive Income
For the Financial Year ended31 December 2012
|
|
Notes |
2012 |
2011 |
|
|
|
£'000 |
£'000 |
|
Continuing operations |
|
|
|
|
Revenue |
2 |
4,048 |
3,351 |
|
Operating expenses excluding exceptional items |
|
(2,129) |
(1,515) |
|
Profit from operations before exceptional items |
|
1,919 |
1,836 |
|
Exceptional items |
3 |
|
|
|
Share based payment charge |
|
(108) |
(63) |
|
Operating profit |
4 |
1,417 |
1,442 |
|
Finance costs |
7 |
(75) |
(102) |
|
Finance income |
7 |
52 |
13 |
|
Profit before taxation |
|
1,394 |
1,353 |
|
Taxation |
8 |
(215) |
(466) |
|
Profit and total comprehensive income for the financial year |
|
1,179 |
887 |
|
|
|
|
|
|
Profit for the year attributable to the equity holders of the parent company. |
1,179 |
887 |
|
|
|
|
|
|
|
Earnings per share (basic and diluted) from continuing operations |
10 |
6.3p |
8.1p |
|
|
|||
Statements of Financial Position
As at 31 December 2012
|
|
|
Group |
Company |
||
|
|
Notes |
2012 |
2011 |
2012 |
2011 |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Assets |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Intangible assets |
11 |
857 |
42 |
- |
- |
|
Investments in subsidiaries |
12 |
- |
- |
12,450 |
- |
|
Property, plant and equipment |
13 |
482 |
430 |
- |
- |
|
Trade and other receivables |
14 |
583 |
87 |
- |
- |
|
|
|
1,922 |
559 |
12,450 |
- |
|
Current assets |
|
|
|
|
|
|
Trade and other receivables |
14 |
857 |
458 |
1,788 |
- |
|
Cash and cash equivalents |
15 |
1,843 |
872 |
1,437 |
- |
|
|
|
2,700 |
1,330 |
3,225 |
- |
|
Total assets |
|
4,622 |
1,889 |
15,675 |
|
|
Equity
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
|
Share capital |
20 |
207 |
109 |
207 |
- |
|
Share premium |
|
6,772 |
- |
6,772 |
- |
|
Share based payments reserve |
|
- |
63 |
- |
- |
|
Other components of equity |
|
162 |
162 |
(50) |
- |
|
Merger reserve |
|
(5,774) |
(5,774) |
8,101 |
- |
|
Retained earnings |
|
943 |
193 |
642 |
- |
|
Total equity |
|
2,310 |
(5,247) |
15,672 |
- |
|
Liabilities |
|
|
|
|
|
|
Non current liabilities |
|
|
|
|
|
|
Interest bearing loans and borrowings |
18 |
791 |
1,230 |
- |
- |
|
Deferred tax |
24 |
118 |
10 |
- |
- |
|
|
|
909 |
1,240 |
- |
|
|
Current liabilities |
|
|
|
- |
|
|
Trade and other payables |
16 |
769 |
669 |
3 |
- |
|
Payable in consideration for shares |
|
- |
4,289 |
- |
- |
|
Interest bearing loans and borrowings |
17 |
461 |
470 |
- |
- |
|
Tax payable |
|
173 |
468 |
- |
- |
|
|
|
1,403 |
5,896 |
3 |
- |
|
Total liabilities |
|
2,312 |
7,136 |
3 |
- |
|
Total equity and liabilities |
|
4,622 |
1,889 |
15,675 |
- |
Statements of Changes in Shareholders' equity
For the financial year ended 31 December 2012
|
Group |
|
|
|
|
|
|
|
|
|
Share capital |
Share |
Share based payment reserve |
Merger |
Other components of equity |
Retained |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 1 January 2011 |
109 |
- |
- |
(5,774) |
162 |
765 |
(4,738) |
|
Changes in equity |
|
|
|
|
|
|
|
|
Share based payments |
- |
- |
63 |
- |
- |
- |
63 |
|
Purchase of own shares |
- |
- |
- |
- |
- |
(904) |
(904) |
|
Dividends |
- |
- |
- |
- |
- |
(555) |
(555) |
|
Transactions with owners |
- |
- |
63 |
- |
- |
(1,459) |
(1,396) |
|
Profit and total comprehensive income for the financial year |
- |
- |
- |
- |
- |
887 |
887 |
|
Balance at 31 December 2011 |
109 |
- |
63 |
(5,774) |
162 |
193 |
(5,247) |
|
Share based payment release |
- |
- |
(171) |
- |
- |
171 |
- |
|
Share based payment |
- |
- |
108 |
- |
- |
|
108 |
|
Issue of equity share capital |
98 |
6,772 |
- |
- |
- |
- |
6,870 |
|
Dividends |
- |
- |
- |
- |
- |
(600) |
(600) |
|
Transactions with owners |
98 |
6,772 |
(63) |
- |
- |
(429) |
6,378 |
|
Profit and total comprehensive income for the financial year |
- |
- |
- |
- |
- |
1,179 |
1,179 |
|
Balance at 31 December 2012 |
207 |
6,772 |
- |
(5,774) |
162 |
943 |
2,310 |
Statements of Changes in Shareholders' equity
For the financial year ended 31 December 2012
|
Company |
|
|
|
|
|
|
|
|
|
Share capital |
Share |
Share based payment reserve |
Merger |
Other components of equity |
Retained |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Issue of equity share capital |
207 |
6,772 |
- |
8,101 |
(50) |
- |
15,030 |
|
Share based payment |
- |
- |
- |
- |
- |
- |
- |
|
Dividends paid |
- |
- |
- |
- |
- |
(600) |
(600) |
|
Transactions with owners |
207 |
6,772 |
- |
8,101 |
(50) |
(600) |
14,430 |
|
Profit and total comprehensive income for the financial year |
- |
- |
- |
- |
- |
1,242 |
1,242 |
|
Balance at 31 December 2012 |
207 |
6,772 |
- |
8,101 |
(50) |
642 |
15,672 |
Statements of Cash Flows
For the Financial Year ended31 December 2012
|
|
|
Group |
Company |
||
|
|
Notes |
2012 |
2011 |
2012 |
2011 |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Operating activities |
|
|
|
|
|
|
Cash generated from operating activities |
21 |
1,010 |
1,991 |
(1,820) |
- |
|
Tax paid |
|
(553) |
(408) |
- |
- |
|
|
|
457 |
1,583 |
(1,820) |
|
|
Investing activities |
|
|
|
|
|
|
Dividends received |
|
- |
- |
1,650 |
- |
|
Capital expenditure on property, plant and equipment |
|
(69) |
- |
- |
- |
|
Acquisitions |
|
(334) |
- |
- |
- |
|
Loan granted |
|
(199) |
|
|
|
|
Finance income |
|
52 |
13 |
20 |
- |
|
Net cash flows from investing activities |
|
(550) |
13 |
1,670 |
- |
|
Financing activities |
|
|
|
|
|
|
Finance costs |
|
(75) |
(102) |
- |
- |
|
Purchase of shares |
|
(4,289) |
- |
(4,289) |
- |
|
Flotation costs |
|
(394) |
(331) |
(394) |
- |
|
New loans in the period |
|
- |
1,700 |
- |
- |
|
Loan repayments in the period |
|
(448) |
(1,128) |
- |
- |
|
Proceeds from share issue |
|
6,870 |
- |
6,870 |
- |
|
Share buy back |
|
- |
(904) |
- |
- |
|
Equity dividends paid |
|
(600) |
(555) |
(600) |
- |
|
Net cash used in financing activities |
|
1,064 |
(1,320) |
1,587 |
- |
|
Net change in cash and cash equivalents |
|
971 |
276 |
1,437 |
- |
|
Cash and cash equivalents at the beginning of the financial year |
|
872 |
596 |
- |
- |
|
Cash and cash equivalents at the end of the financial year |
|
1,843 |
872 |
1,437 |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
1 Accounting policies
General information
Belvoir Lettings Plc is the ultimate parent company of the Group, whose principal activity during the year under review was that of selling, supporting and training residential lettings franchises.
Registered office
The address of the registered office and principal place of business of Belvoir Lettings Plc is The Old Courthouse, 60A London Road, Grantham, Lincolnshire, NG31 6HR.
Basis of preparation
The Group and Company only financial statements have been prepared under the historical cost convention. Being listed on the Alternative Investment Market of the London Stock Exchange, the company is required to present its consolidated financial statements in accordance with International Financial reporting Standards (IFRS) as adopted by the European Union. Accordingly, these financial statements have been prepared in accordance with the accounting policies set out below which are based on the IFRS in issue as adopted by the European Union (EU) and in effect at 31 December 2012. Belvoir Property Management (UK) Limited adopted IFRS in 2011 and presented transitional disclosures in its financial statements.
Going concern
After consideration of forecasts and making appropriate enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence, and execute its plan for acquisition growth, for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts. There are no material uncertainties, of which directors are aware, that may cast doubt on the entity's ability to continue as a going concern by reference to the guidance by the Financial Reporting Council on going concern assessment.
Standards, amendments and interpretations to existing standards that are not yet effective
At the date of authorisation of these financial statements, there were no new standards and interpretations in issue that were relevant to the Group.
At the date of authorisation of these financial statements the following new standards and interpretations have been issued but are not yet effective and have not been applied in these financial statements:
IFRS 9 Financial instruments (effective 1 January 2015)
IFRS 10 Consolidated Financial Statements (effective 1 January 2013)
IFRS 11 Joint Arrangements (effective 1 January 2013)
IFRS 12 Disclosure of Instruments in Other Entities (effective 1 January 2013)
IFRS 13 Fair Value Measurement (effective 1 January 2013)
IAS 1 (amended) Presentation of Financial Statements, presentation of other comprehensive income (effective 1 July 2012)
IAS 12 (amended) Income Taxes, recovery of underlying assets (IASB effective date 1 January 2012 but EU adopted from 1 January 2013)
IAS 27 (revised) Separate Financial Statements (effective 1 January 2013)
Amendments to IAS 32 and IFRS 7, Financial Instruments, on asset and liability offsetting (effective 1 January 2014 for IAS 32 and 1 January 2013 for IFRS7)
At this point in time it is not expected that these standards will have a significant impact on the Group financial statements. However management will continue to review their potential effect on an ongoing basis.
Basis of consolidation
The Group financial statements include those of the parent company and its subsidiaries, drawn up to 31 December 2012. Subsidiaries are entities over which the Group obtains and exercises control through voting rights. Income, expenditure, unrealised gains and intra-group balances arising from transactions within the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The acquisition of its principal subsidiaries by the Group was a common control business combination, which falls outside the scope of IFRS 3 and we have therefore developed an accounting policy based on the pooling of interest method. Under this method, the financial statements of the parties to the combination are aggregated and presented as though the combining entities had always been part of the same Group.
Subsequent acquisitions of subsidiaries are dealt with by the acquisition method. The acquisition method involves recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition.
Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Acquisition related transaction costs are recorded as an expense in the Statement of Comprehensive Income.
Goodwill is capitalised and reviewed annually for impairment. Goodwill is carried at cost less accumulated impairment losses. Negative goodwill (where the fair value of the assets acquired exceeds the purchase price) is recognised immediately after the acquisition in the Statement of Comprehensive Income.
The Group 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.
Revenue recognition
Revenue represents income from the sale of franchise licences, provision of training and ongoing support of the franchisees. Service fees are invoiced to individual franchisees on a monthly basis in relation to a percentage of their turnover for any given month, they are recognised at the point of invoice.
Revenue also includes fees generated by franchises operated within the Group. 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 Group 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.
Exceptional Items
Exceptional items are those which by reason of their size or nature are considered by the directors to be necessary to be disclosed separately so as to inform users of the financial statements.
Intangible assets
In accordance with 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 market expectations about the probability that the future economic benefits embodied in the asset will flow to the group.
Amortisation charges are included as adjusting items in operating costs in the income statement. Amortisation begins when the intangible asset is first available for use and is provided at rates calculated to write off the cost of each intangible asset over its expected useful life, as follows:
Customer contracts - Between 10 and 25 years
Subsequent to initial recognition, intangible assets are stated at deemed cost less accumulated amortisation and impairment charges.
Property, plant and equipment
Property, plant and equipment is stated at cost, net of depreciation and any provision for impairment.
Depreciation is calculated so as to write off the cost or revaluation of an asset, less its estimated residual value, over the useful economic life of that asset as follows:
Freehold Property - 2% Straight line on cost
Plant & Machinery - 20% on written down value
Fixtures & Fittings - 20% on written down value
Equipment - 20% on written down value
Material residual value estimates and expected useful lives are updated as required but at least annually.
Impairment testing of goodwill, other intangible assets and property, plant and equipment.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash flows (cash generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which the management monitors goodwill.
Cash generating units to which goodwill has been allocated are tested for impairment at least annually. All other individual assets or cash generating units are tested whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or cash generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on estimated future cash flows from each cash-generating unit, discounted at a suitable rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures is directly linked to the Group's latest approved budgets, adjusted as necessary to exclude any future restructuring to which the Group is not yet committed. Discount rates are determined individually for each cash generating unit and reflect their respective risk profiles as assessed by the directors.
Impairment losses for cash generating units reduce first the carrying value of any goodwill allocated to that cash generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. Impairment charges are included in operating costs in the Statement of Comprehensive Income.
Taxation
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.
Cash and cash equivalents
Cash and cash equivalents are defined as cash balances in hand and in the bank (including short term cash deposits).
Operating lease commitments
Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged to the statement of comprehensive income on a straight line basis over the period of the lease.
Financial assets
The Group has only financial assets classified as loans and receivables. The Group's loans and receivables as stated in the statements of financial position comprise trade and other receivables and cash and cash equivalents.
Cash and cash equivalents include cash in hand and deposits held at call with banks.
Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the Notes to the Financial Statements provision of services to franchisees (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net; such provisions are recorded in a separate allowance account with the loss being recognised within operating expenses in the income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. From time to time, the Group elects to renegotiate the terms of trade receivables due from franchisees. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and, in consequence, where material the new expected cash flows are discounted at the original effective interest rate.
Financial liabilities
Financial liabilities comprise trade payables, borrowings and other short-term monetary liabilities, which are initially recognised at fair value net of transaction costs and subsequently carried at amortised cost using the effective interest method.
Share-based employee remuneration
Prior to The Group's listing on AIM on 19 February 2012, it operated an EMI scheme for employee share options, all of which were exercised prior to the Group reorganisation and flotation.
The Group intends to operate an equity-settled share-based remuneration plan for its senior management. The planned scheme is an HMRC approved Company Share Ownership Plan intended to issue shares equivalent to 1% of the fully diluted share capital of Belvoir Lettings Plc The fair value of awards to employees that take the form of shares or rights to shares in the parent company will be recognised as an expense within this Group, as the employer, with a corresponding increase in equity. The fair value will be 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 will be measured using an option valuation model; taking into accounts the terms and conditions upon which the options are proposed to be were granted.
In addition to the above noted planned scheme for staff there is an unapproved share option scheme which allows Dorian Gonsalves to take up 161,812 shares at the float price of 75p. No value attaches to this option for the purposes of the employee share based remuneration rules.
There are currently no other share option schemes for the Directors.
Equity
Equity comprises the following:
- share capital represents the nominal value of equity share
- share premium represents the excess over nominal value of the fair value of consideration received for shares, net of expenses of the share issue
- share based payments reserve represents the reserve arising from the fair value of the share options charge
- merger reserve represents the reserve arising in the Group accounts following the application of merger accounting in the treatment of the reorganisation and flotation of the Group
- other components of equity represents the revaluation reserve, being the accumulated net surplus on revaluation of property assets
- retained earnings represents retained profits and losses
Significant judgements and key sources of estimation uncertainty
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Useful lives of intangible assets
Customer contracts are amortised over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue and are periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged to the statement of comprehensive income in specific periods.
Useful lives of property, plant and equipment
Property, plant and equipment are depreciated over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue and are periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged to the statement of comprehensive income in specific periods.
Revenue recognition
Initial franchise fees are recognised upon signing of the contract as it is at this point 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 of the new office. The directors therefore believe that the benefits are transferred upon signing the contract and so revenue is recognised at this point. Future benefits from the contract are dealt with in the Accounting Policies continued monthly MSF fee which is spread across the term of the franchise agreement.
Basis of consolidation
The acquisition of its principal subsidiaries by the Group was a common control business combination, which falls outside the scope of IFRS 3 and we have therefore developed an accounting policy based on the pooling of interest method. Under this method, the financial statements of the parties to the combination are aggregated and presented as though the combining entities had always been part of the same Group.
Share options
The charge for equity-settled share-based payment is calculated in accordance with various estimates and assumptions which are described in note 27.
The option valuation model used requires highly subjective assumptions to be made including the future volatility of the Parent's share price, expected dividend yields and risk free interest rates. The directors draw upon a variety of external sources to aid them in the determination of the appropriate data to use in such calculations. The scheme has now closed out and no further options are available to the Directors at this time.
2 Segmental information
The Board, as the chief operating decision maker reviews financial information for and makes decisions about the Group's overall franchising business and has 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 either of the periods reported.
The segmental information is, therefore, the same as that set out in the consolidated statement of comprehensive income. The directors do not consider the presentation of gross profit within the Group statement of comprehensive income to reflect a true position of the Group's activities and core operations, which is that of a property letting franchisor. Therefore, the directors disclose operating profit as the key performance measure. The reported segment is consistent with the Group's internal reporting for performance measurement and resources allocation.
The directors believe there to be three material income streams which are split as follows:
|
|
|
|
|
|
2012 |
2011 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Management service fee |
2,851 |
2,600 |
|
Own operated franchises |
709 |
361 |
|
Initial fees and other income |
488 |
390 |
|
|
4,048 |
3,351 |
3 Exceptional items
Flotation costs
The costs represent the professional fees and associated costs incurred in relation to the listing of the Group on the Alternative Investment Market.
Share based payment charge
Details of the share based payment charge are included at note 27 to these financial statements
4 Operating profit
Operating profit is stated after charging:
|
|
2012 |
2011 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Depreciation - owned assets |
35 |
20 |
|
Amortisation of customer contracts
|
21 |
14 |
|
Auditors remuneration |
|
|
|
- Audit of company's annual accounts |
13 |
- |
|
- Tax and other advisory - Reporting accountant work - Statutory audit of subsidiaries |
1 17 |
7 - 13 |
|
Operating lease expenditure |
|
|
|
- Land and property - Other |
22 43
|
19 35 |
|
|
|
|
Profit for the financial year
The parent company has taken advantage of section 408 of the Companies Act 2006 and has not included its own Statement of Comprehensive income in these financial statements. The profit on ordinary activities after taxation of the company for the year was £1,242,150 (2011: £nil).
5 Employees
|
|
Group |
|
|
|
2012 |
2011 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Wages and salaries |
873 |
719 |
|
Social security costs |
91 |
75 |
|
Pension costs |
2 |
- |
|
Share based payment charge |
108 |
63 |
|
|
1,074 |
857 |
The average monthly number of employees during the year was as follows:
|
Management and administration |
40 |
29 |
6 Emoluments of directors and key management personnel
Key management personnel are defined as directors of the Group. Details of the remuneration of key management personnel are shown below.
Details of directors' emoluments are disclosed in the Directors Remuneration Report on page 16.
Remuneration in respect of the directors was as follows:
Total directors' emoluments
|
|
2012 |
2011 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Directors' emoluments |
298 |
211 |
|
Social security costs |
32 |
23 |
|
Directors' pension contributions |
- |
- |
|
Share based payment charge |
108 |
63 |
|
|
438 |
297 |
|
|
2012 £'000 |
2011 £'000 |
|
|
|
|
|
Executive directors |
416 |
297 |
|
Non-executive directors |
22 |
- |
|
|
438 |
297 |
During the year two directors (2011: no directors) exercised share options.
|
Employees and directors |
|
|
Emoluments of the highest paid director were as follows:
|
|
2012 £'000 |
2011 £'000 |
|
Short term employee benefits: |
|
|
|
Salary including bonuses |
111 |
74 |
|
Benefits in kind |
17 |
1 |
|
Share based remuneration |
61 |
- |
|
|
189 |
75 |
7 Finance income and costs
|
Finance costs |
2012 |
2011 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Bank interest |
75 |
102 |
|
|
75 |
102 |
|
Finance income |
2012 |
2011 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Deposit account interest |
26 |
3 |
|
Other similar income |
26 |
10 |
|
|
52 |
13 |
8 Taxation
|
|
2012 |
2011 |
|
|
£'000 |
£'000 |
|
UK Corporation tax at 24.5% (2011: 26%) |
|
|
|
Current taxation |
215 |
467 |
|
Deferred taxation |
- |
(1) |
|
|
|
|
|
Total tax charge in the statement of comprehensive income |
215 |
466 |
|
Factors affecting the tax charge for the year: |
|
|
|
|
2012 |
2011 |
|
|
£ |
£ |
|
|
|
|
|
Profit before taxation |
1,394 |
1,353 |
|
|
|
|
|
Profit before taxation multiplied by the standard rate of corporation tax in the UK of 24.5% (2011: 26%) |
342 |
359 |
|
|
|
|
|
Effects of: |
|
|
|
Expenses not deductible for tax purposes |
48 |
107 |
|
EMI scheme deduction |
(140) |
- |
|
Depreciation in excess of capital allowances |
- |
2 |
|
Effect of change in tax rate |
- |
(2) |
|
Adjustment in respect of prior year |
(35) |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total tax charge in statement of comprehensive income |
215 |
466 |
9 Dividends
|
|
2012 |
2011 |
|
|
£ |
£ |
|
|
|
|
|
|
|
|
|
Interim dividends paid on ordinary shares of £0.01 each in the current year |
600 |
555 |
|
|
|
|
|
Interim dividend per share paid in the year was as follows: |
Dividend per share |
Dividend |
|
|
£ |
£'000 |
|
28 September 2012 |
0.029 |
600 |
|
Interim dividends per share paid in 2011 were as follows: |
|
|
|
|
Dividend per share |
Dividend |
|
|
|
|
|
Interim dividend paid on 95 ordinary shares of £1 in Kilima Holdings Limited |
£5,842.11 |
555 |
|
|
|
|
|
|
|
|
Comparative information relates to the former Group holding company prior to the reorganisation and flotation of the Group.
The directors will propose a final dividend 2.9p per share amounting to £600,000 for payment on 19 April 2013. As this remains conditional on shareholders' approval, provision has not been made in these financial statements.
A technical issue has arisen in respect of the interim dividend of 2.9 pence per share paid on 28 September 2012. When the company paid the interim dividend, relevant accounts as defined in the Companies Act 2006 showing the requisite level of distributable profits had inadvertently not been filed at Companies House, as required by the Act. As a result the interim dividend was paid in technical infringement of the Act.
The Company has been advised that it may have theoretical claims against past and present shareholders who were recipients of an interim dividend to recover the amount paid by way of the relevant dividend. Similarly, the Company may also have theoretical claims against those directors who participated in the meetings of the Board of Directors at which the decisions were taken to pay the interim dividends. However, the Company has been advised that these claims are theoretical and it is unlikely to be able to recover any sums from shareholders in respect of the interim dividends. Moreover, it is clearly not the intention of the Company that any such claim should be made against either its Shareholders or its Directors.
This matter can be remedied by the shareholders passing a resolution which puts Shareholders and Directors into the position in which they were always intended to be. A special resolution to ratify the appropriation of profits to the payment of the interim dividend, to waive any rights of the Company against the Directors in respect of the interim dividend and to approve the Company entering into deeds of release in favour of such Shareholders and Directors, will be put to the forthcoming Annual General Meeting.
10 Earnings per share
Earnings per share is calculated by dividing the profit for the financial year by the weighted average number of ordinary shares during the year. Earnings per ordinary share have been calculated by dividing the profit after tax for the year, by the weighted average number of shares deemed to be in issued in the year under the pooling of interests method of accounting.
|
|
|
2012 |
|
|
|
£'000 |
|
Profit for the financial year |
|
1,179 |
|
Exceptional losses |
|
502 |
|
|
|
|
|
Weighted average number of ordinary shares |
|
18,776,528 |
|
Earnings per share |
|
6.3p |
|
Adjusted earnings per share (excluding exceptional items) |
|
8.9p |
|
|
|
2011 |
|
|
|
£'000 |
|
Profit for the financial year |
|
887 |
|
Exceptional losses |
|
394 |
|
|
|
|
|
Weighted average number of ordinary shares |
|
10,947,713 |
|
|
|
|
|
Earnings per share |
|
8.1p |
|
Adjusted earnings per share (excluding exceptional items) |
|
11.7p |
|
|
|
|
The value identified for earnings per share is very sensitive to the average number of shares in issue. Until there are comparable periods with the same shares in issue, this statistic cannot be expected to be meaningful when compared to the prior year.
11 Intangible assets
|
|
|
|
|
|
||
|
|
Goodwill |
Customer contracts |
Total |
|||
|
|
£'000 |
£'000 |
£'000 |
|||
|
Group and company
|
|
|
|
|||
|
Gross carrying amount |
|
|
|
|||
|
At January 2011 and 31 December 2011 |
- |
323 |
323 |
|||
|
Additions |
289 |
547 |
836 |
|||
|
As at 31 December 2012 |
289 |
870 |
1,159 |
|||
|
|
|
|
|
|||
|
Amortisation and impairment |
|
|
|
|||
|
At January 2011 |
- |
267 |
267 |
|||
|
Amortisation for the year |
- |
14 |
14 |
|||
|
As at 31 December 2011 |
- |
281 |
281 |
|||
|
Amortisation for the year |
- |
21 |
21 |
|||
|
As at 31 December 2012 |
- |
302 |
302 |
|||
|
|
|
|
|
|||
|
Net Book Value |
|
|
|
|||
|
At 31 December 2012 |
289 |
568 |
857 |
|||
|
At 31 December 2011 |
- |
42 |
42 |
|||
|
At 1 January 2011 |
- |
56 |
56 |
|||
|
|
|
|
|
|
||
Goodwill
The goodwill arising in 2012 relates to the acquisitions of Aldine Honey & Co. Limited, Staffordshire Estates Lettings Limited and certain assets and the trade of businesses in Burton and Lichfield.
There have been no impairment charges in 2012. Goodwill is tested annually for impairment by reference to the value in use of the relevant cash generating units, which are the group's business segments. This is calculated on the basis of projected cash flows for the following five years derived from detailed budgets for the ensuing year based on past experience, with subsequent years including modest nominal rates of sales and cost growth of 10% per annum and generally steady levels of overhead. These cash flows are adjusted to present day values at a discount rate based on a weighted average cost of capital of 10% per annum, calculated by reference to year-end data on equity values and interest, dividend and tax rates. The residual value at the end of the five years, computed by reference to projected year six cash flows and discounted, is also included. There was no requirement for any impairment provision at 31 December 2012.
The directors have considered the sensitivity of the key assumptions and have concluded that any possible changes that may be reasonably contemplated in these key assumptions would not result in the value in use falling below the carrying value of goodwill, given the amount of headroom available.
Intangibles - customer contracts
The additions during 2012 relate to the acquisitions of Aldine Honey & Co. Limited, Staffordshire Estates Lettings Limited and the trade of businesses in Lichfield and Burton.
|
|
|
12 Investments
Investments in subsidiaries
|
|
Company |
|
|
£'000 |
|
|
|
|
Cost |
|
|
At 1 January 2011 and 31 December 2011 |
- |
|
Additions in year |
12,450 |
|
and 31 December 2012 |
12,450 |
|
Amortisation |
|
|
As at t January 2011 and 31 December 2011 |
- |
|
Amortisation for the year |
- |
|
As at 31 December 2012 |
- |
|
|
|
|
Net Book Value |
|
|
At 31 December 2012 |
12,450 |
|
At 31 December 2011 |
- |
|
At 1 January 2011 |
- |
As at 31 December 2012 the company owns 100% of the ordinary share capital and voting rights of the following companies:
|
|
|
|
||
|
Subsidiary |
Country of incorporation |
|
Principal Activity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Belvoir Property Solutions Limited |
England & Wales |
|
Holding Company |
|
|
Belvoir Property Management (UK) Limited |
England & Wales |
|
Property letting franchising |
|
|
Aldine Honey Limited * |
England & Wales |
|
Letting agency |
|
|
Staffordshire Estates Lettings Limited * |
England & Wales |
|
Letting agency |
|
Belvoir Property Management (UK) Limited is a subsidiary of Belvoir Property Solutions Limited.
*Purchased in the year by subsidiary Belvoir Property Management (UK) Limited. For details of the acquisitions, see note 26.
The carrying value of the investment has been considered for impairment. As the market capitalisation of the Group is considerably in excess of the cost of investment, and the trade of the Group is solely attributable to the trading subsidiaries, no impairment has been recognised in the year.
13 Property, plant and equipment
|
|
Freehold property |
Plant and machinery |
Fixtures and fittings |
Office equipment |
Total |
|
Group |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
At 1 January 2011 and 31 December 2011 |
385 |
181 |
62 |
12 |
640 |
|
Acquisitions |
- |
- |
18 |
- |
18 |
|
Additions |
- |
23 |
46 |
- |
69 |
|
As at 31 December 2012 |
385 |
204 |
126 |
12 |
727 |
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
At 1 January 2011 |
14 |
130 |
42 |
4 |
190 |
|
Charge for the year |
5 |
10 |
4 |
1 |
20 |
|
As at 31 December 2011 |
19 |
140 |
46 |
5 |
210 |
|
Charge for the year |
4 |
11 |
19 |
1 |
35 |
|
As at 31 December 2012 |
23 |
151 |
65 |
6 |
245 |
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
As at 31 December 2012 |
362 |
53 |
61 |
6 |
482 |
|
As at 31 December 2011 |
366 |
41 |
16 |
7 |
430 |
|
As at 1 January 2011 |
371 |
51 |
20 |
8 |
450 |
14 Trade and other receivables
|
|
Group |
Company |
||
|
|
2012 |
2011 |
2012 |
2011 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
Current |
|
|
|
|
|
Trade receivables |
247 |
84 |
- |
- |
|
Amounts owed by Group undertakings |
- |
- |
1,762 |
- |
|
Loans to franchisees due in less than one year |
171 |
85 |
- |
- |
|
Other debtors |
59 |
- |
5 |
- |
|
Prepayments and accrued income |
380 |
289 |
21 |
- |
|
|
857 |
458 |
1,788 |
- |
|
|
Group |
Company |
||
|
|
2012 |
2011 |
2012 |
2011 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
Loans to franchisees and employees due in more than one year |
583 |
87 |
- |
- |
Trade receivables are stated net of bad debt provisions of £nil (2011: £nil).
Loans to franchisees are spread across varying terms and the agreements do not include any collateral on behalf ofthe franchisees.
Ageing of trade receivables
Some of the unimpaired trade receivables are past due at the reporting date. Information on financial assets past due not impaired is as follows:
|
|
Group |
Company |
||
|
|
2012 |
2011 |
2012 |
2011 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
Of which: |
|
|
|
|
|
Not more than three months |
132 |
35 |
- |
- |
|
More than three months but not more than six months |
24 |
11 |
- |
- |
|
More than six months but not more than one year |
4 |
30 |
- |
- |
|
More than one year |
5 |
8 |
- |
- |
|
|
165 |
84 |
- |
- |
Other debtors and loans to franchisees do not contain impaired assets.
Movement in bad debt provision
|
|
Group |
Company |
||
|
|
2012 |
2011 |
2012 |
2011 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 1 January |
- |
10 |
- |
- |
|
Utilised in the year |
- |
(10) |
- |
- |
|
Balance carried forward |
- |
- |
- |
- |
15 Cash and cash equivalents
|
|
Group |
Company |
||
|
|
2012 |
2011 |
2012 |
2011 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
Bank accounts |
1,843 |
872 |
1,437 |
- |
|
|
|
|
|
|
|
Cash and cash equivalents |
1,843 |
872 |
1,437 |
- |
16 Trade and other payables
|
|
Group |
Company |
||
|
|
2012 |
2011 |
2012 |
2011 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Current |
|
|
|
|
|
Trade payables |
141 |
75 |
3 |
- |
|
Other taxes and social security |
207 |
153 |
- |
- |
|
Accruals and deferred income |
421 |
441 |
- |
- |
|
|
769 |
669 |
3 |
- |
Included withinaccruals and deferred income is a balance of £143,688 (2011: £175,193) relating to the National Promotional Fund (NPF) for the promotion of the Belvoirbrand. The business collects the funds on
a monthly basis from the franchises based on a percentage of their turnoverand takes the balance directly to the statement of financial position. Any subsequent expenditure in relation to promoting the company is
offset against this pool of funds. Each month, a management charge of 20% of that month's total NPF is recognised as revenue in the company.
17 Current portion of long term borrowings
|
|
Group |
Company |
||
|
|
2012 |
2011 |
2012 |
2011 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Current |
|
|
|
|
|
Bank loans ( mortgage ) |
46 |
45 |
- |
- |
|
Bank loans ( term loan ) |
415 |
425 |
- |
- |
|
|
461 |
470 |
- |
- |
All amounts are short term and their carrying values are considered reasonable approximations of fair value.
18 Long term borrowings
|
|
Group |
Company |
||
|
|
2012 |
2011 |
2012 |
2011 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Long term |
|
|
- |
|
|
Bank loans ( mortgage ) |
67 |
112 |
- |
- |
|
Bank loans ( term loan) |
724 |
1,118 |
- |
- |
|
|
791 |
1,230 |
- |
- |
Borrowings comprise £1,252,150 secured on assets of the Group. The repayment profile of borrowings is as set out in note 19.
The term loan is repayable in quarterly instalments over the period ending September 2015 and bears interest at 4.5% above LIBOR related rates.
The mortgage is repayable in monthly instalments over the period ending May 2015 and bears interest at 2.35% over bank base rate
19 Maturity of borrowings and net debt
|
|
|
2012 |
|
|
|
Bank Loan 1 |
Bank Loan 2 |
Total |
|
31 December 2012 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
|
Repayable in less than six months |
25 |
233 |
258 |
|
Repayable in months seven to twelve month |
25 |
229 |
254 |
|
Current portion of long term borrowings |
50 |
462 |
512 |
|
|
|
|
|
|
Repayable in years one to five |
71 |
758 |
829 |
|
Repayable after five years |
- |
- |
- |
|
Total borrowings |
121 |
1,220 |
1,341 |
|
Less: interest included |
(8) |
(81) |
(89) |
|
Total net debt |
113 |
1,139 |
1,252 |
|
|
|
2011 |
|
|
|
Bank Loan 1 |
Bank Loan 2 |
Total |
|
31 December 2011 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
|
Repayable in less than six months |
25 |
236 |
261 |
|
Repayable in months seven to twelve month |
25 |
226 |
261 |
|
Current portion of long term borrowings |
50 |
472 |
522 |
|
|
|
|
|
|
Repayable in years one to five |
122 |
1,198 |
1,320 |
|
Repayable after five years |
- |
- |
- |
|
Total borrowings |
172 |
1,670 |
1,842 |
|
Less: interest included |
(15) |
(127) |
(142) |
|
Total net debt |
157 |
1,513 |
1,700 |
Bank loans and overdrafts are secured with a fixed and floating charge over the Group assets. The loans are being repaid over four years in equal instalments. Interest is charged monthly on the outstanding amount of the loans at rates which track 2.35% 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 terms of the loans.
20 Called up share capital
|
|
2012 |
2011 |
||
|
|
Number |
£'000 |
Number |
£'000 |
|
|
|
|
|
|
|
Group Authorised, allotted, issued and fully paid Ordinary shares of 1p each |
20,666,667 |
207 |
10,947,713 |
109 |
|
|
|
|
|
|
|
Company Authorised, allotted, issued and fully paid Ordinary shares of 1p each |
20,666,667 |
207 |
- |
- |
|
|
|
Group Number |
Company Number |
|
As at 1 January 2011 |
|
|
|
|
Issued in the year |
|
|
|
|
Redenomination & shares issued at fair value to acquire Belvoir Property Solutions Limited |
|
5,947,713 |
- |
|
Initial allotment |
|
5,000,000 |
- |
|
|
|
|
|
|
As at 31 December 2011 (under pooling of interests method) |
|
10,947,713 |
- |
|
|
|
|
|
|
Issued in the year |
|
|
|
|
Redenomination & shares issued at fair value to acquire Belvoir Property Solutions Limited |
|
- |
5,947,713 |
|
Initial allotment |
|
- |
5,000,000 |
|
First admission (21 February 2012 - share price 75p) |
|
4,000,000 |
4,000,000 |
|
Second admission (22 February 2012 - share price 75p) |
|
5,718,954 |
5,718,954 |
|
As at 31 December 2012 |
|
20,666,667 |
20,666,667 |
The new shares issued in the year were as a result of the Company listing on the Alternative Investment Market (AIM) in the year.
21 Reconciliation of profit before taxation to cash generated from operations
|
Group |
2012 |
2011 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Profit before taxation |
1,394 |
1,353 |
|
Depreciation and amortisation charges |
56 |
34 |
|
Share based payment charge |
108 |
63 |
|
Flotation costs |
394 |
331 |
|
Finance costs |
75 |
102 |
|
Finance income |
(52) |
(13) |
|
|
1,975 |
1,870 |
|
Increase in trade and other receivables |
(650) |
(105) |
|
(Increase)/decrease in trade and other payables |
(315) |
226 |
|
Cash generated from operations |
1,010 |
1,991 |
|
Company |
2012 |
2011 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Profit before taxation |
1,242 |
- |
|
Flotation costs |
394 |
- |
|
Dividend received |
(1,650) |
- |
|
Finance income |
(20) |
- |
|
|
(34) |
- |
|
(Increase)/decrease in trade and other receivables |
(1,789) |
- |
|
Increase in trade and other payables |
3 |
- |
|
Cash generated from operations |
(1,820) |
- |
22 Operating lease commitments
|
|
2012 |
2011 |
|
|
£'000 |
£'000 |
|
Operating lease payments expensed during the year:
|
|
|
|
Land and property |
22 |
19 |
|
Motor vehicles |
41 |
33 |
|
Other |
2 |
2 |
|
|
65 |
54 |
|
Minimum operating lease commitments falling due: |
|
|
|
Within one year Land and property Motor vehicles Other |
17 47 3 |
17 32 1 |
|
Between one and five years Land and Property Motor Vehicles Other |
67
4 34 3 |
50
- 42 - |
|
|
41 |
42 |
|
Total commitment |
108 |
92 |
Land and property leases comprise sites in Grantham. The earliest exits to these leases fall due during 2014.
23 Financial instruments
Capital management policy
The Group manages its capital to ensure its operations are adequately provided for as described below. The principal risks faced by the Group are detailed below. The Group's objective when managing capital is to safeguard its ability to continue as a going concern and so provide returns for shareholders; The Group is meeting its objective by aiming to achieve growth which will generate regular and increasing returns to the shareholder.
The capital structure of the Group consists of cash and cash equivalents and equity attributable to the shareholder comprising issued capital, reserves and retained earnings as disclosed in the statement of changes in equity.
Financial instruments - Risk Management
The Group is exposed through its operations to the following financial risks:
- Interest rate risk
- Credit risk
- Liquidity risk
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the company's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.
Principal financialinstruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are included in the summary below.
Summary of financial assets and financial liabilities by category:
|
|
Group |
Company |
||
|
|
2012 |
2011 |
2012 |
2011 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Financial assets |
|
|
|
|
|
Trade receivables |
247 |
84 |
- |
- |
|
Other receivables |
439 |
271 |
1,762 |
- |
|
Loans to franchisees and employees |
754 |
171 |
- |
- |
|
Cash and cash equivalents |
1,843 |
857 |
1,437 |
- |
|
|
3,283 |
1,383 |
3,199 |
- |
|
|
Group |
Company |
||
|
|
2012 |
2011 |
2012 |
2011 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Financial liabilities |
|
|
|
|
|
Financial liabilities measured at amortised cost |
|
|
|
|
|
Other financial liabilities |
|
|
|
|
|
Trade payables |
141 |
75 |
3 |
- |
|
Other payables |
- |
(7) |
- |
- |
|
Loans and borrowings |
1,252 |
1,700 |
- |
- |
|
Accruals |
411 |
240 |
- |
- |
|
|
1,804 |
2,008 |
3 |
- |
|
Maturity analysis of financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
In less than one year: |
|
|
|
|
|
Trade payables |
141 |
75 |
3 |
- |
|
Other payables |
- |
(7) |
- |
- |
|
Loans and borrowings |
461 |
470 |
- |
- |
|
Accruals |
411 |
240 |
- |
- |
|
|
1,013 |
778 |
3 |
- |
|
In more than one year: |
|
|
|
|
|
Long term borrowings |
791 |
1,230 |
- |
- |
|
|
791 |
1,230 |
- |
- |
All of the financial assets and liabilities above are carried in the statement of financial position at amortised cost. The above amounts reflect the contractual undiscounted cash flows, including future interest charges, which may differ from carrying values of the liabilities at the reporting date.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the company's finance function. The Board receives monthly reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:
Interest rate risk
Interest rate risk arises from the Group's management of interest bearing assets and liabilities.
The Group does not use hedging products to manage interest rate risk but uses treasury products for deposits until such time as required for acquisitions as part of the Group's acquisition strategy.
Credit risk
Credit risk is the risk of financial loss to the Group if a franchisee or a counterpart to a financial instrument fails to meet its contractual obligations. It is Group policy to assess the credit risk of new franchisees before entering contracts.
The highest risk exposure is in relation to loans to franchises and their ability to service their debt. The directors have established a credit policy under which each new franchisee is analysed individually for creditworthiness before a franchise is offered. The company's review includes external ratings, when available, and in some cases bank references. The Group does not consider that it has significant concentration of credit risk.
Liquidity risk
Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the company will encounter difficulty in meeting its financial obligations as they fall due,
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the Group monitors forecast cash inflows and outflows on a monthly basis.
Fair values of financial instruments
The fair value of financial assets and liabilities is considered the same as the carrying values.
24 Deferred taxation
|
|
Group |
Company |
||
|
|
2012 |
2011 |
2012 |
2011 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
Balance at 1 January |
10 |
11 |
- |
- |
|
Acquisition in the year |
2 |
- |
- |
- |
|
Acquisition in the year - attributable to intangible assets |
106 |
- |
- |
- |
|
Movement during the year |
- |
(1) |
- |
- |
|
Balance at 31 December |
118 |
10 |
- |
- |
|
|
2012 |
2011 |
2012 |
2011 |
|
Deferred taxation has been provided as follows: |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
Attributable to intangible assets |
106 |
- |
- |
- |
|
Accelerated capital allowances |
12 |
10 |
- |
- |
|
|
118 |
10 |
- |
- |
Amounts provided in respect of deferred tax are computed at 23% (2011:25%)
25 Related party disclosures
During the year the Group paid sponsorship fees of£4,800 (2011: £4,800) to James Goddard, son of MikeJ Goddard, company director. At the period end £nil (2011: £nil) remained outstanding.
During the year the company paid £1,000 (2011: £nil) to Leeming Investments, a company controlled by Nick Leeming, a director of the Group.
During the year the Group paid professional fees of £63,567 (2011: £79,806) to Sunaxis Limited,a company wholly ownedby company director Carl Chadwick. At the period end £2,644 (2011: £nil) remained outstanding.
During the year the Group paid professional fees of £6,820 (2011: £nil) to McGregors Corporate Limited, a company in which Carl Chadwick is also a director. At the period end £480 (2011: £nil) remained outstanding.
During the year the Group charged £110,000 (£2011: £nil) in management fees to Belvoir Financial Services Limited, a company in which Mike Goddard, Carl Chadwick and Dorian Gonsalves are also directors. At the period end £4,622 (2011:£nil) remained outstanding.
During the year Carl Chadwick was granted a loan of £85,500 to enable him to exercise his share options. Interest is charged at the Government Official Rate of Interest (4% at 8 February 2012). The loan is repayable in full after 5 years.
During the year Dorian Gonsalves was granted a loan of £114,000 to enable him to exercise his share options. Interest is charged at the Government Official Rate of Interest (4% at 8 February 2012). The loan is repayable in full after 5 years
26 Acquisitions
During the year Belvoir Property Management (UK) Limited, a wholly owned subsidiary of Belvoir Lettings Plc, acquired two companies based in the UK and the trade and certain assets of two unincorporated businesses, as part of the Group's acquisition strategy as follows:
On 3 September 2012 the Group acquired 100% of the equity instruments of Aldine Honey and Co. Limited (Aldine Honey), a company incorporated in England and Wales, therefore obtaining control. The acquisition was made to enhance the Group's position in the London retail rental markets.
On 25 September 2012 the Group acquired 100% of the equity instruments of Staffordshire Estates Lettings Limited (Staffordshire Lettings), a company incorporated in England and Wales, therefore obtaining control. The acquisition was made to enhance the Group's position in the Litchfield and Burton retail rental markets.
On 2 July 2012 and 21 September 2012 the Group acquired the trade and certain assets of two unincorporated businesses previously run by franchisees in Lichfield and Burton.
The details of the business combinations in aggregate are as follows:
|
|
Pre-acquisition carrying amount |
Adjustment to fair value |
Recognised at acquisition date |
|
|
£,000 |
£,000 |
£,000 |
|
Fair value of consideration transferred |
|
|
|
|
Amount settled in cash |
792 |
- |
792 |
|
Fair value of contingent consideration |
220 |
- |
220 |
|
Total |
1,012 |
- |
1,012 |
|
|
|
|
|
|
Recognised amounts of identifiable net assets |
|
|
|
|
Plant and equipment |
18 |
- |
18 |
|
Customer contracts |
- |
547 |
547 |
|
Total non-current assets |
18 |
547 |
565 |
|
|
|
|
|
|
Trade and other receivables |
46 |
- |
46 |
|
Cash and cash equivalents |
458 |
- |
458 |
|
Total current assets |
504 |
- |
504 |
|
|
|
|
|
|
Deferred tax liabilities |
(2) |
(106) |
(108) |
|
Total non-current liabilities |
(2) |
(106) |
(108) |
|
|
|
|
|
|
Trade and other payables |
(238) |
- |
(238) |
|
Total current liabilities |
(238) |
- |
(238) |
|
|
|
|
|
|
Identifiable net assets |
282 |
441 |
723 |
|
|
|
|
|
|
Goodwill on acquisition |
|
|
289 |
|
Consideration transferred settled in cash |
|
|
792 |
|
Cash and cash equivalents acquired |
|
|
(458) |
|
|
|
|
|
|
Net cash paid relating to acquisitions |
|
|
334 |
The goodwill arising on the acquisitions can be attributed to the strengthening of the Belvoir brand in new locations
The contingent consideration included above is stated at fair value at the acquisition date. It is linked to the lettings income of Aldine Honey & Co. Limited for 12 months post acquisition and to the lettings income of the Burton business. Any variation arising may lead to an adjustment to goodwill in the next year's financial statements.
27 Share based employee remuneration
Options Granted to the Directors
(a) On 28 September 2011, Carl Chadwick was granted an EMI option over three ordinary shares in Kilima Holdings Limited and Dorian Gonsalves was granted an EMI option over four ordinary shares in Kilima Holdings Limited.
(b) In accordance with the rules of the EMI option scheme, immediately prior to the voluntary wind up of Kilima Holdings Limited pursuant to the Reconstruction Agreement, Carl Chadwick exercised his options over three ordinary shares in Kilima Holdings Limited and Dorian Gonsalves exercised his options over four ordinary shares in Kilima Holdings Limited.
(c) The exercise price for each of Carl Chadwick's options and Dorian Gonsalves' options was £28,500 per ordinary share in Kilima Holdings Limited.
Details of Company Share Ownership Plan (CSOP)
The Directors believe that the Company's success is highly dependent on the quality and loyalty of its Directors and of its future directors and employees. The Directors consider that to assist in the recruitment, retention and motivation of high quality staff, as necessary, the Company must have an effective remuneration strategy and that an important part of this remuneration strategy is the ability to award equity incentives and, in particular, share options.
The Company also intends to grant options to employees during the three years following Admission if approved by the Remuneration Committee. Options granted under such an employee share option scheme would not exceed, in aggregate, 1 per cent of the issued share capital of the Company. Future options granted will have an exercise price not less than the market value of an Ordinary Share at the date of grant and will require the satisfaction of such performance or other exercise conditions as the Board (or, if one is in place, the Remuneration Committee) considers appropriate in each case. The Directors intend that the total number of shares subject to options will not exceed 2 per cent of the issued share capital of the Company from time to time.
Enterprise Management Incentive Share Option Scheme (" EMI")
During the year to 31 December 2011 the company implemented an Enterprise Management Incentive (" EMI") scheme which was settled in equity. The EMI was part of the remuneration package of the company's senior management. Options granted under the EMI Share Option Scheme had no performance conditions, however certain criteria, as set out in the scheme were met.
The criteria were based on the Group successfully listing on the Alternative Investment Market and allowed 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 seven ordinary shares, granted during the year to 31 December 2011 and two of these had no vesting period and were not reliant upon listing therefore their fair value was taken to profit and loss immediately.
The maximum term of the options granted under the EMI Scheme was ten years from the grant date. Upon vesting, each option allowed 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 |
28.09.2011 |
|
Vesting period ends |
31.12.2013 |
|
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, £108,000 (2011: £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.
|
Movement in the number of share options were as follows: |
2012 |
2011 |
|
|
|
|
|
Number of share options |
|
|
|
Outstanding at the beginning of the year |
7 |
- |
|
Granted |
- |
7 |
|
Fortfeited |
- |
- |
|
Exercised |
7 |
- |
|
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 |
£28,500 |
- |
|
Granted |
|
£28,500 |
|
Fortfeited |
- |
- |
|
Exercised |
£(28,500) |
- |
|
Expired |
- |
- |
|
Outstanding at the end of the year |
- |
£28,500 |
|
|
|
|
|
Exercisable at the end of the year |
- |
£28,500 |
28 Contingent liabilities
Belvoir Lettings Plc and its subsidiaries have a cross company guarantee, which creates a fixed and floating charge on the assets of each company. As at 31 December 2012 the outstanding contingent liability under this agreement amounted to £1,252,150 (2011: £1,747,767).
29 Pooling of interests method
As noted in the accounting policies, the pooling of interests method has been used for the business combination arising on reorganisation of the group before flotation.
As a result of the pooling of interests method, a number of accounting adjustments arose. The parent company Statement of Financial Position shows a merger reserve of £8,101k and an investment of £12,450k. On a group basis, the investment by Belvoir Lettings Plc in Belvoir Property Solutions Limited and the investment by Belvoir Property Solutions Limited in Belvoir Property Management (UK) Limited were restated at the nominal value of shares issued and cash paid rather than at fair value. This results in a merger reserve with a debit balance of £5,774k in the Group Statement of Financial Position.
As a result of the pooling of interests method being used and therefore recognising group transactions as if the group had always been in existence, a balance of £4,289k payable in consideration for shares is therefore shown in the Statement of Financial Position as at 31 December 2011 which relates to amounts owed to a director of Kilima Holdings Limited to purchase their shareholding. This is shown in the cash flow in the financial statements to 31 December 2012.
This information is provided by RNS
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