5th Nov 2013 07:00
AUDAX PROPERTIES PLC
UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013
ENQUIRIES: | Matthew Oakeshott OLIM Property Limited, Property Investment Managers Tel: 0207 439 4400 Website: www.olimproperty.co.uk
Angela Lascelles OLIM Limited, Equity Investment Managers Tel: 0207 439 4400 Website: www.olim.co.uk
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INTERIM MANAGEMENT REPORT
Events during the period
At the Company's Annual General Meeting on 12 July 2013, all resolutions were passed.
Principal risks and uncertainties
The Directors have identified the principal risks and uncertainties which affect its business and these are detailed below along with the Directors' policies for managing the principal risks and uncertainties. These policies are considered equally applicable to the second half of the financial year as for the period under review.
Risk management
The Company's financial instruments comprise:
- non-equity investments that are held in accordance with the Company's investment objectives
- cash and liquid resources that arise directly from the Company's operations
- debenture stocks issued by the Company, the main purpose of which is to raise finance for the Company's operations.
The principal risks arising from the Company's financial instruments are gearing risk, credit risk and liquidity risk.
The Board of the parent company regularly reviews and agrees policies for managing each of these risks and these are summarised below. These policies have remained constant throughout the year under review.
Gearing risk
The Company's borrowings are on a secured basis and arranged with an appropriate maturity profile. There were no defaults or other breaches of financial covenants during the half-year.
Credit risk
The Company places funds with authorised deposit takers from time to time and is therefore potentially at risk from the failure of any such institution of which it is a creditor. The risk is not significant and is managed by holding funds only with reputable banks.
Liquidity risk
The Company's assets comprise investment properties which, by their nature, are not readily realisable.
Financial assets and liabilities
The Company's financial instruments comprise investment properties, cash balances, debenture stocks and debtors and creditors that arise directly from operations.
Additional risks include:
· Property Risk: The Company's commercial property portfolio is subject to both market and specific property risk. Since the UK commercial property market has been markedly cyclical for many years, it is prudent to expect that to continue. The price and availability of credit, real economic growth and the constraints on the development of new property are the main influences on the property investment market. Against that background, the specific risks to the income from the portfolio are tenants being unable to pay their rents and other charges, or leaving their properties at the end of their leases. All leases are on full repairing and insuring terms, with upward only rent reviews. None of the Company's financial assets is past due or impaired; and
· Regulatory Risk: The Company operates in a complex regulatory environment and faces a number of regulatory risks. In respect of the parent company, breaches of regulations, such as Sections 1158-1159 of Corporation Tax Act 2010, the UKLA Listing Rules and the Companies Act, could lead to a number of detrimental outcomes and reputational damage.
Going concern
In compliance with the UKLA's Listing Rules and with reference to the Financial Reporting Council's guidance on Going Concern and Liquidity Risk issued in October 2009, the Directors can report that, based on the Company's valuations of assets and liabilities, budgets and financial projections, they have satisfied themselves that the Company is a going concern. The Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future and, accordingly, that it remains appropriate to adopt the going concern basis in preparing the accounts.
Value and Income Trust
Audax Properties PLC is a wholly-owned subsidiary of Value and Income Trust PLC, an investment company under s.833 of Companies Act 2006.
Statement of Directors' Responsibilities
The Directors confirm that to the best of their knowledge:
· the condensed set of financial statements within the Half-Yearly Financial Report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'; and
· the Interim Management Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FCA's Disclosure and Transparency Rules.
For Audax Properties PLC
James Ferguson
Chairman
4 November 2013
STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2013
30 September | 30 September | 31 March | |
2013 | 2012 | 2013 | |
£ | £ | £ | |
Income | |||
Realised loss on disposal of investment properties | - | (15,250) | (368,674) |
Unrealised gain/(loss) on revaluation of investment properties | 75,000 | (1,175,238) | (1,645,410) |
Rental Income | 1,094,328 | 1,090,897 | 2,213,893 |
Interest on deposits | 419 | 1,116 | 1,786 |
___________ | ___________ | ___________ | |
1,169,747
| (98,475) | 201,595 | |
Expenses | |||
Administrative Expenses | (320,736) | (298,840) | (473,771) |
___________ | ___________ | ___________ | |
Operating profit/ (loss) | 849,011 | (397,315) | (272,176) |
Finance costs | |||
Interest payable | (825,000) | (825,000) | (1,650,000) |
___________ | ___________ | ___________ | |
Profit/ (loss) before taxation | 24,011 | (1,222,315) | (1,922,176) |
Taxation | - | 180,340 | 371,225 |
___________ | ___________ | ___________ | |
Profit/ (loss) for the period | 24,011 | (1,041,975) | (1,550,951) |
___________ | ___________ | ___________ | |
Earnings per share | |||
Basic and diluted | 0.48 | (20.84) | (31.02) |
___________ | ___________ | ___________ |
The accompanying notes are an integral part of the financial statements.
STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2013
At 30 September | At 31 March | At 30 September |
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2013 | 2013 | 2012 |
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Notes | £ | £ | £ | £ | £ | £ |
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Non Current Assets |
| |||||||
Investment properties | 28,450,000 | 28,375,000 | 29,175,000 |
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| ||||||||
Current Assets |
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Receivables | 127,864 | 35,303 | 30,524 |
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Cash and cash equivalents | 314,346 | 101,638 | 181,727 |
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__________ | __________ | __________ |
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442,210 | 136,941 | 212,251 |
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Current Liabilities |
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Payables | (903,526) | (547,268) | (704,335) |
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__________ | __________ | __________ |
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Net Current Liabilities | (461,316) | (410,327) | (492,084) |
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__________ | __________ | __________ |
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Total Assets less Current Liabilities | 27,988,684 | 27,964,673 | 28,682,916 |
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Non Current Liabilities |
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Debenture Stock | (15,000,000) | (15,000,000) | (15,000,000) |
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Deferred Tax | - | - | (209,267) |
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__________ | __________ | __________ |
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(15,000,000) | (15,000,000) | (15,209,267) |
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__________ | __________ | __________ |
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Net Assets | 12,988,684 | 12,964,673 | 13,473,649 |
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__________ | __________ | __________ |
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Equity attributable to Equity Holders | ||||||||
Ordinary share capital | 25,000 | 25,000 | 25,000 |
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Retained earnings | 2 | 12,963,684 | 12,939,673 | 13,448,649 |
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__________ | __________ | __________ |
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Total Equity | 12,988,684 | 12,964,673 | 13,473,649 |
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__________ | __________ | __________ |
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The accompanying notes are an integral part of the financial statements.
STATEMENT OF CHANGES IN EQUITY
for the half-year ended 30 September 2013 | |||
Share | Retained | ||
Capital | Earnings | Total | |
£ | £ | £ | |
Balance at 31 March 2013 | 25,000 | 12,939,673 | 12,964,673 |
Profit for the period | - | 24,011 | 24,011 |
___________ | ___________ | ___________ | |
Balance at 30 September 2013 | 25,000 | 12,963,684 | 12,988,684 |
___________ | ___________ | ___________ | |
Year ended 31 March 2013 | |||
Share | Retained | ||
Capital | Earnings | Total | |
£ | £ | £ | |
Balance at 31 March 2012 | 25,000 | 14,490,624 | 14,515,624 |
Loss for the period | - | (1,550,951) | (1,550,951) |
___________ | ___________ | ___________ | |
Balance at 31 March 2013 | 25,000 | 12,939,673 | 12,964,673 |
___________ | ___________ | ___________ | |
Half-year ended 30 September 2012 | |||
Share | Retained | ||
Capital | Earnings | Total | |
£ | £ | £ | |
Balance at 31 March 2012 | 25,000 | 14,490,624 | 14,515,624 |
Profit for the period | - | (1,041,975) | (1,041,975) |
___________ | ___________ | ___________ | |
Balance at 30 September 2012 | 25,000 | 13,448,649 | 13,473,649 |
___________ | ___________ | ___________ |
The accompanying notes are an integral part of the financial statements.
CASH FLOW STATEMENT
FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2013
30 September | 31 March | 30 September | ||||
2013 | 2013 | 2012 | ||||
£ | £ | £ | £ | £ | £ | |
Cash flows from operating activities | ||||||
Operating profit/ (loss) | 849,011 | (272,176) | (397,315) | |||
Gains/ (losses) on investment properties held at fair value | (75,000) | 2,014,084 | 1,190,488 | |||
Purchase of investment properties | - | (1,813,115) | (1,717,000) | |||
Sale of investment properties | - | 1,449,031 | 1,509,750 | |||
_________ | _________ | _________ | ||||
(314,084) | (207,250) | |||||
(Increase)/decrease in receivables | (92,561) | (34,149) | (29,370) | |||
(Decrease)/ increase in payables | (75,360) | (48,037) | 44,174 | |||
_________ | _________ | _________ | ||||
Net cash from operating activities before tax | 606,090 | 1,345,638 | 600,727 | |||
Tax paid | - | - | - | |||
_________ | _________ | _________ | ||||
Net cash from operating activities | 606,090 | 1,345,638 | 600,727 | |||
Cash flows from financing activities | ||||||
Interest paid | (825,000) | (1,650,000) | (825,000) | |||
Payment/ (repayment) of inter-company borrowings | 431,618 | (640) | (640) | |||
_________ | _________ | _________ | ||||
Net cash used in financing activities | (393,382) | (1,650,640) | (825,640) | |||
_________ | _________ | _________ | ||||
Net (decrease)/increase in cash and cash equivalents | 212,708 | (305,002) | (224,913) | |||
Cash and cash equivalents at 31 March 2013 | 101,638 | 406,640 | 406,640 | |||
_________ | _________ | _________ | ||||
Cash and cash equivalents at 30 September 2013 | 314,346 | 101,638 | 181,727 | |||
_________ | _________ | _________ | ||||
The accompanying notes are an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2013
1 | Accounting policies | |
(a) | Basis of accounting | |
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). These comprise standards and interpretations approved by the International Accounting Standards Board (IASB) together with interpretations of the International Accounting Standards Committee (IASC) that remain in effect, and to the extent that they have been adopted by the European Union. | ||
The functional and reporting currency of the Company is pounds sterling because that is the currency of the primary economic environment in which the Company operates. | ||
The financial statements have been prepared on a going concern basis and under the historical cost convention, modified to include the revaluation of investment properties. | ||
The interim accounts have been prepared using the same accounting policies as the preceding annual accounts. | ||
(b) | Critical accounting judgements and key sources of estimation uncertainty | |
The preparation of financial statements requires the Directors to make judgements, estimates and assumptions that may affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. These judgements, estimates and assumptions are based on historical experience and other relevant factors and are reviewed on a continual basis. | ||
The critical judgements, estimates and assumptions that have a material effect on the amounts recognised in the financial statements for both the current and the next financial years are discussed below: | ||
- reliance upon the work undertaken at 30 September 2013 by an independent professional qualified valuer in assessing the fair value of the Company's investment properties. | ||
- consideration of the potential risks and rewards of ownership in accordance with IAS 17 ''Leases' for all properties leased to tenants. The Directors have determined that all such leases are operating leases. | ||
- an assessment of the likelihood that potential historic tax liabilities will arise in determining the deferred tax liabilities and charge to the Statement of Comprehensive Income. | ||
(c) | Taxation | |
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. | ||
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Statement of Comprehensive Income except where it relates to items charged or credited directly to equity in which case the deferred tax is also dealt with in equity. | ||
(d) | Investment Properties | |
The Company leases out all of its properties on operating leases. A property held under an operating lease is classified and accounted for as an investment property. | ||
An investment property is a property that is held to generate rental income, capital appreciation or both. | ||
Freehold investment properties are initially recognised at cost, being the fair value of the consideration given, including transaction costs associated with the acquisition of the investment property. After initial recognition, they are measured at fair value, with movements in the unrealised gains and losses included in the Statement of Comprehensive Income and ultimately recognised in the Revaluation Reserve. Fair values are established by half-yearly professional valuation on an open market basis by Jones Lang LaSalle Ltd., Chartered Surveyors and Valuers and in accordance with the RICS Valuation Standards. The determination of fair value by Jones Lang LaSalle is supported by market evidence. It is not more heavily based on other factors because of the nature of the properties and the availability of comparable market data. | ||
2 | Retained earnings | |||
At 30 September | At 31 March | At 30 September | ||
2013 | 2013 | 2012 | ||
£ | £ | £ | ||
Balance at 31 March 2013 | 12,939,673 | 14,490,624 | 14,490,624 | |
Profit/ (loss) for the period | 24,011 | (1,550,951) | (1,041,975) | |
___________ | ___________ | ___________ | ||
Balance at 30 September 2013 | 12,963,684 | 12,939,673 | 13,448,649 | |
___________ | ___________ | ___________ |
At 30 September | At 31 March | At 30 September | ||||||||
2013 | 2013 | 2012 | ||||||||
Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | ||
£ | £ | £ | £ | £ | £ | £ | £ | £ | ||
Balance at 31 March 2013 | 5,720,363 | 7,219,310 | 12,939,673 | 5,646,837 | 8,843,787 | 14,490,624 | 5,646,837 | 8,843,787 | 14,490,624 | |
Profit/ (loss) for the period | (50,989) | 75,000 | 24,011 | 73,526 | (1,624,477) | (1,550,951) | (31,827) | (1,010,148) | (1,041,975) | |
__________ | __________ | __________ | __________ | __________ | __________ | __________ | __________ | __________ | ||
Balance at 30 September 2013 | 5,669,374 | 7,294,310 | 12,963,684 | 5,720,363 | 7,219,310 | 12,939,673 | 5,615,010 | 7,833,639 | 13,448,649 | |
__________ | __________ | __________ | __________ | __________ | __________ | __________ | __________ | __________ | ||
3 | Related Party Transactions |
Angela Lascelles is a director of OLIM Limited which has an agreement with the Company to provide investment management services. OLIM Limited received an investment management fee of £149,745 (half year to 30 September 2012: £114,531 and year to 31 March 2013: £231,807). At the period end, the balance owed by the Company to OLIM Limited was £22,937 (31 March 2013: £19,069). | |
Matthew Oakeshott is a director of OLIM Property Limited which has an agreement with the Company to provide investment property management services. OLIM Property Limited received an investment management fee of £58,263 (half year to 30 September 2012: £55,776 and year to 31 March 2013: £114,414). At the period end, the balance owed by the Company to OLIM Property Limited was £8,700 (31 March 2013: £9,535). |
4 | The financial information in this report comprises non-statutory accounts within the meaning of Sections 434-436 of the Companies Act 2006. The financial information for the six months ended 30 September 2013 and 2012 has not been audited.
The information for the year ended 31 March 2013 has been extracted from latest published audited financial statements that have been filed with the Registrar of Companies and on which the report of the independent auditor was unqualified under section 498 (2), (3) or (4) of the Companies Act 2006. |
5 | The Half-Yearly Financial Report was approved by the Board on 4 November 2013. |
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