TIDMCGA
RNS Number : 4440M
China Gateway International PLC
25 May 2010
For Immediate Release
7.00am 25 May 2010
CHINA GATEWAY INTERNATIONAL PLC
("CHINA GATEWAY", "CGI" or the "COMPANY")
AUDITED RESULTS FOR THE PERIOD ENDED 30 NOVEMBER 2009
NOTICE OF GENERAL MEETING
CHAIRMAN'S STATEMENT
I have pleasure in presenting our third annual report covering the year to 30
November 2009.This period covered the worst of the recession and my prediction
that we would be in a position to commence construction at Manston could not be
fulfilled due to the lack of any available development finance in the market
place.
However your directors have put into effect a plan to finance the venture
through the sale of "seats" to the Chinese end users of the development and the
terms of the contract for the first of these seat sales have been agreed as
China still enjoys the levels of annual growth that the West can only dream of
during these difficult times.
I would like to thank our Bankers and shareholders for their continued support
and also our executive directors for their hard work and extensive time and
travels within China that has brought about these developments and allowed the
project to move forward.
Robin Bolton
Chairman
21 May 2010
CHIEF EXECUTIVE'S REVIEW
Introduction
The Company has continued to develop its relationships in China. It is for this
reason that on 26 June 2009 the Company changed its name from Commercial Group
Properties plc to China Gateway International plc (CGI). The Company has since
its last annual review developed new strategies and concepts to deal with the
current difficult economic environment and the expiry of the Company's original
pre lease agreement. These strategies for the Company's future development of
'China Gateway' are set out below.
China
Despite difficult conditions internationally, China's economy continues to
maintain strong growth. The economy grew 8.7% in 2009 and the annual growth rate
for the first quarter of 2010 exceeded 11%. This continual and sustained rate of
growth further reinforces the government of China's policies of globalisation.
The Company continues to develop strong contacts and partnerships in China, with
such organisations as United Nations Industrial Development Organisation -
Investment and Trade Promotion Office, the China Peoples Association for
Friendship with Foreign Countries and the China Friendship Foundation.
Manston
The agreement to lease between 900,000 and 1,100,000 sq ft of business
accommodation on approximately 50 acres of the Company's Manston site which was
entered into on 22 June 2007 expired in May 2010. The continued global financial
downturn and the lack of available development funding resulted in the Company
being unable to commence construction of the business accommodation before the
pre lease agreement expired.
As a result, the strategy for the development of the Manston site has been
revised in line with a signed Memorandum of Understanding dated 19 May 2009 with
United Nations Industrial Development Organisation's (UNIDO) Investment and
Technology Promotion Office (ITPO) China, which represented a formal endorsement
of the 'China Gateway' program at Manston.
Following the endorsement of China Gateway by UNIDO-ITPO, the Company has
started to implement the revised strategy to develop the Euro-China Cultural &
Technology Industry Hub (E-CC&TIH) Project.
The Revised Strategy for 'China Gateway' at Manston
The E-CC&TIH project plans to attract up to 1800 businesses and commercial
organisations from China to purpose built Hubs at Manston Business Park. It is
the Company's intention to develop six Hubs at Manston, each focusing on a key
area of industry including pharmaceutical, aviation, culture and technology. The
Hubs will offer major cost savings and other administrative efficiencies to
Chinese businesses and other commercial organisations over conventional
exhibition facilities. There will be a range of ancillary services and
infrastructure on site to provide for areas such as warehousing, logistics and
general support services.
Chinese businesses and commercial organisations would use the Hubs by the
purchase of a 'seat' at the particular industry Hub facility and would
separately contribute to the annual running costs. The principle of seat sales
is that each seat holder would have the opportunity to promote two main
exhibitions a year alongside a 365 day presence for the marketing of their
company and services.
The Company would support and assist them with introductions in their key
sectors which would include Support agencies, International buyers, Trade
Associations and Governing bodies to help develop their business and grow
international trade with Europe.
Each Hub would be approximately 150,000 sq feet offering a tailored and focused
sales solution for the seat holder aimed directly at the sector buyer.
The maximum capacity for each Hub would be 300 seat owners who would pay an
initial capital sum to acquire the seat plus an ongoing annual service charge.
It is the intention of the Company to offer each seat holder the opportunity to
become a shareholder in the Company and the purchase of a seat may also entitle
the holder to rights over the respective building and land.
The initial funds, after deducting marketing costs and the subscription of
shares in the Company, received from seat purchasers will be held in escrow
until sufficient sales, estimated to be 50 seats, have been achieved to enable
the construction of the particular Hub to be commenced.
The Board has already engaged an active sales team in China, and with the
assistance of UNIDO-ITPO, they have extensively marketed the plan to various
organisations. The terms of the contract for the first seat sale have now been
agreed and the Board are confident that a number of other organisations who have
formally expressed their intention to purchase seats will proceed to contract in
due course
The Investment property has been revalued to incorporate the revised strategy.
The valuation at 30 November 2009 was carried out by the Directors. Mathews and
Goodman LLP, who provided the previous valuation report, have reviewed the
methodology used by the directors in the preparation of this valuation, and have
confirmed that, in their opinion, the Directors' approach is reasonable.
Further details of the valuation are included in Note 5.
As a result, the Board is optimistic about the revised strategy and consider
that the sale of 50 seats is achievable which would enable the Company to be in
a position where they can commence the construction of the first Hub during
2011.
On 4 September 2009 the Company entered into an 'in principle' agreement with
East Kent Opportunities (a joint venture between Kent County Council and Thanet
District Council) for the purchase of a further 5.5 acres of land (subject to
contract) at Manston Business Park adjacent to the Company's existing land
holdings. The Board believes that this potential acquisition will allow for
additional flexibility with regards to the long term development of the Manston
site.
The Company acknowledges the continued support of local agencies including the
South East England Development Agency, Locate in Kent and Thanet District
Council for their help and cooperation with the Manston project during the past
year.
Wigan
The Board has decided to put this project on hold whilst they are focusing on
the progress of the Manston project.
Dover
On 5 March 2010 the Company exchanged contracts for the disposal of its
properties at Great Farthingloe Farm and at Western Heights, Dover ('The Dover
Properties') to Dover Gateway Limited for a cash consideration of GBP5 million
before estimated costs of GBP30,000. Completion of the sale is due to take place
on 5 June 2010 and the proceeds will be used to reduce the Company's
indebtedness to Israel Discount Bank Limited.
Dover Gateway Limited (DGL) is owned 40% by CGI and 60% by Priory Land Limited.
Priory Land Limited is providing interest free loan finance to DGL both for the
initial purchase and for DGL's future expenditure. In effect, therefore, CGI
will have an interest in 40% of any further uplift in the net value of the Dover
properties after repaying Priory Land Limited's loan.
Trading Result
The carrying value of the Dover properties in the Financial Statements of CGI at
30 November 2008 was GBP2 million, so the uplift to reflect disposal proceeds
less subsequent costs is recognised in these Financial Statements. This has
enabled the Company to report a profit after taxation for the financial period
of GBP1,186,000.
Balance Sheet
The Company's net asset value has remained relatively stable and the Balance
Sheet on page 16 shows an increase from GBP22.4 million at 30 November 2008 to
GBP23.8 million at 30 November 2009. The position
regarding the funding of the Company's ongoing activities is detailed under
going concern on page 20 of the Financial Statements.
The Directors have had continued and successful negotiations with their
principal bankers and have achieved agreement in respect of the ongoing
facilities following the sale of the Dover properties, which will result in a
reduction in the Company's debt and extension of the loan facility to June 2011.
Further details are disclosed in the Directors Report and in the statement of
going concern within the accounting policies on page 20.
Outlook
The Board continues to believe that given its excellent relationships with China
combined with China's continued and sustained growth and its government's
commitment to globalisation, the Company is capable of increasing the value of
its investment property at Manston.
The Board acknowledges and thanks its principal lending bank (Israel Discount
Bank) for its continued support and also acknowledges and thanks its
shareholders for their further investments in the Company.
The Board continues to view the Company's future with significant optimism.
Ken Wills
CEO
21 May 2010
BALANCE SHEET
At 30 November 2009
+------------------------------------+-------+-------------+-------------+
| | Note | 2009 | 2008 |
+------------------------------------+-------+-------------+-------------+
| ASSETS | | GBP000 | GBP000 |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Non-current assets | | | |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Fixtures and fittings | 4 | 3 | 6 |
+------------------------------------+-------+-------------+-------------+
| Investment property | 5 | 55,900 | 55,650 |
+------------------------------------+-------+-------------+-------------+
| Deferred tax asset | 13 | 2,035 | 1,353 |
+------------------------------------+-------+-------------+-------------+
| | | _______ | _______ |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Total non-current assets | | 57,938 | 57,009 |
+------------------------------------+-------+-------------+-------------+
| | | _______ | _______ |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Current assets | | | |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Properties intended for sale | 6 | 4,970 | 2,000 |
+------------------------------------+-------+-------------+-------------+
| Trade and other receivables | 7 | 83 | 117 |
+------------------------------------+-------+-------------+-------------+
| Cash and cash equivalents | 8 | 95 | 33 |
+------------------------------------+-------+-------------+-------------+
| | | _______ | _______ |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Total current assets | | 5,148 | 2,150 |
+------------------------------------+-------+-------------+-------------+
| | | _______ | _______ |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| TOTAL ASSETS | | 63,086 | 59,159 |
+------------------------------------+-------+-------------+-------------+
| | | _______ | _______ |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| EQUITY AND LIABILITIES | | | |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Equity | | | |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Issued share capital | 9 | 210 | 210 |
+------------------------------------+-------+-------------+-------------+
| Share premium | 9 | 15,065 | 15,065 |
+------------------------------------+-------+-------------+-------------+
| Shares to be issued | 9 | 148 | - |
+------------------------------------+-------+-------------+-------------+
| Retained earnings | 10 | 8,342 | 7,156 |
+------------------------------------+-------+-------------+-------------+
| | | _______ | _______ |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Total equity | | 23,765 | 22,431 |
+------------------------------------+-------+-------------+-------------+
| | | _______ | _______ |
+------------------------------------+-------+-------------+-------------+
| Non-current liabilities | | | |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Deferred tax provision | 13 | 7,242 | 7,447 |
+------------------------------------+-------+-------------+-------------+
| | | _______ | _______ |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Total non-current liabilities | | 7,242 | 7,447 |
+------------------------------------+-------+-------------+-------------+
| | | _______ | ______ |
+------------------------------------+-------+-------------+-------------+
| Current liabilities | | | |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Trade and other payables | 11 | 643 | 952 |
+------------------------------------+-------+-------------+-------------+
| Interest bearing loans and | 12 | 31,436 | 28,329 |
| borrowings | | | |
+------------------------------------+-------+-------------+-------------+
| | | _______ | _______ |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Total current liabilities | | 32,079 | 29,281 |
+------------------------------------+-------+-------------+-------------+
| | | _______ | _______ |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| Total liabilities | | 39,321 | 36,728 |
+------------------------------------+-------+-------------+-------------+
| | | _______ | _______ |
+------------------------------------+-------+-------------+-------------+
| | | | |
+------------------------------------+-------+-------------+-------------+
| TOTAL EQUITY AND LIABILITIES | | 63,086 | 59,159 |
+------------------------------------+-------+-------------+-------------+
| | | _______ | _______ |
| | | | |
+------------------------------------+-------+-------------+-------------+
The Financial Statements were approved and authorised for issue by the Board of
Directors on 21 May 2010, and were signed on its behalf by:
K E Wills
INCOME STATEMENT
For the year ended 30 November 2009
+---------------------------------+----------+--------------+------------+
| | Note | 2009 | 2008 |
+---------------------------------+----------+--------------+------------+
| | | GBP000 | GBP000 |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| Continuing Operations: | | | |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| Revenue | | - | - |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| Administrative expenses | 15 | (1,098) | (1,290) |
+---------------------------------+----------+--------------+------------+
| Other operating income | 14 | 45 | 61 |
+---------------------------------+----------+--------------+------------+
| Writeback/(down) of properties | 6 | 2,970 | (9,600) |
| intended for sale | | | |
+---------------------------------+----------+--------------+------------+
| Fair value (losses)/gains on | 5 | (733) | 2,940 |
| investment property | | | |
+---------------------------------+----------+--------------+------------+
| | | _______ | _______ |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| Operating Profit/(Loss) | | 1,184 | (7,889) |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| Finance income | 18 | 1 | 4 |
+---------------------------------+----------+--------------+------------+
| Finance costs | 18 | (886) | (990) |
+---------------------------------+----------+--------------+------------+
| | | _______ | _______ |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| Profit/(Loss) before taxation | | 299 | (8,875) |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| Taxation | 19 | 887 | (170) |
+---------------------------------+----------+--------------+------------+
| | | _______ | _______ |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| Profit/(Loss) for the Financial | 3 | 1,186 | (9,045) |
| Period | | | |
+---------------------------------+----------+--------------+------------+
| | | _______ | _______ |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| Attributable to: | | | |
+---------------------------------+----------+--------------+------------+
| Equity holders of the Company | | 1,186 | (9,045) |
+---------------------------------+----------+--------------+------------+
| | | _______ | _______ |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| Earnings/(Loss) per Share from | | | |
| Continuing | | | |
| Operations Attributable to the | | | |
| Equity | | | |
| Holders of the Company during | | | |
| the Period | | | |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| Basic pence per share | 20 | | |
| | | 5.65p | (43.07)p |
+---------------------------------+----------+--------------+------------+
| | | _______ | _______ |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
| Diluted pence per share | 20 | | |
| | | 5.61p | (43.07p |
+---------------------------------+----------+--------------+------------+
| | | _______ | _______ |
+---------------------------------+----------+--------------+------------+
| | | | |
+---------------------------------+----------+--------------+------------+
STATEMENT OF CHANGES IN EQUITY
Year Ended 30 November 2009
+---------------------+----------+----------+---------+----------+---------+
| | Attributable to the Equity Holders of | |
| | the Company | |
| | | |
+---------------------+------------------------------------------+---------+
| | Share | Share | Shares | Retained | Total |
| | | | to | | |
+---------------------+----------+----------+---------+----------+---------+
| | Capital | Premium | be | Earnings | |
| | | | issued | | |
+---------------------+----------+----------+---------+----------+---------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
| | | | | | |
+---------------------+----------+----------+---------+----------+---------+
| | | | | | |
+---------------------+----------+----------+---------+----------+---------+
| At 1 December 2007 | 210 | 15,065 | - | 16,201 | 31,476 |
+---------------------+----------+----------+---------+----------+---------+
| | | | | | |
+---------------------+----------+----------+---------+----------+---------+
| Loss for the year | - | - | - | (9,045) | (9,045) |
+---------------------+----------+----------+---------+----------+---------+
| | _______ | _______ | _______ | _____ | _____ |
+---------------------+----------+----------+---------+----------+---------+
| | | | | | |
+---------------------+----------+----------+---------+----------+---------+
| At 30 November 2008 | 210 | 15,065 | - | 7,156 | 22,431 |
+---------------------+----------+----------+---------+----------+---------+
| | | | | | |
+---------------------+----------+----------+---------+----------+---------+
| Shares allocated | - | - | 148 | - | 148 |
| but not allotted | | | | | |
| (note 9) | | | | | |
+---------------------+----------+----------+---------+----------+---------+
| | | | | | |
+---------------------+----------+----------+---------+----------+---------+
| Profit for the year | - | - | - | 1,186 | 1,186 |
+---------------------+----------+----------+---------+----------+---------+
| | _______ | _______ | _______ | _______ | _______ |
+---------------------+----------+----------+---------+----------+---------+
| | | | | | |
+---------------------+----------+----------+---------+----------+---------+
| At 30 November 2009 | 210 | 15,065 | 148 | 8,342 | 23,765 |
+---------------------+----------+----------+---------+----------+---------+
| | _______ | _______ | _______ | _______ | _______ |
+---------------------+----------+----------+---------+----------+---------+
| | | | | | |
+---------------------+----------+----------+---------+----------+---------+
CASH FLOW STATEMENT
Year ended 30 November 2009
+------------------------------------------+----------+--------+----------+
| | 2009 | | 2008 |
+------------------------------------------+----------+--------+----------+
| | GBP000 | | GBP000 |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
| Cash Flows from Operating Activities | | | |
+------------------------------------------+----------+--------+----------+
| Profit/(Loss) before taxation | 299 | | (8,875) |
+------------------------------------------+----------+--------+----------+
| Adjustments for: | | | |
+------------------------------------------+----------+--------+----------+
| Depreciation | 3 | | 3 |
+------------------------------------------+----------+--------+----------+
| Fair value losses/(gains) of investment | 733 | | (2,940) |
| property | | | |
+------------------------------------------+----------+--------+----------+
| Interest income | (1) | | (4) |
+------------------------------------------+----------+--------+----------+
| Interest expense | 886 | | 990 |
+------------------------------------------+----------+--------+----------+
| Decrease/(increase) in trade and other | 78 | | (59) |
| receivables | | | |
+------------------------------------------+----------+--------+----------+
| (Increase)/decrease in properties | (2,970) | | 9,600 |
| intended for sale | | | |
+------------------------------------------+----------+--------+----------+
| (Decrease) in trade payables and other | (309) | | (43) |
| payables | | | |
+------------------------------------------+----------+--------+----------+
| | ________ | | ________ |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
| Cash used in Operations | (1,281) | | (1,328) |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
| Interest paid | (886) | | (990) |
+------------------------------------------+----------+--------+----------+
| | ________ | | ________ |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
| Net Cash used in Operating Activities | (2,167) | | (2,318) |
+------------------------------------------+----------+--------+----------+
| | ________ | | ________ |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
| Cash Flows from Investing Activities | | | |
+------------------------------------------+----------+--------+----------+
| Additions to investment property | (983) | | (1,810) |
+------------------------------------------+----------+--------+----------+
| Interest received | 1 | | 4 |
+------------------------------------------+----------+--------+----------+
| | ________ | | ________ |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
| Net Cash used in Investing Activities | (982) | | (1,806) |
+------------------------------------------+----------+--------+----------+
| | ________ | | ________ |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
| Cash Flows from Financing Activities | | | |
+------------------------------------------+----------+--------+----------+
| Receipts from shares allocated but not | 104 | | - |
| allotted | | | |
+------------------------------------------+----------+--------+----------+
| Proceeds from short-term borrowings | 3,107 | | 3,833 |
+------------------------------------------+----------+--------+----------+
| | ________ | | ________ |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
| Net Cash used in Financing Activities | 3,211 | | 3,833 |
+------------------------------------------+----------+--------+----------+
| | ________ | | ________ |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
| Net Increase/(Decrease) in Cash and Cash | 62 | | (291) |
| Equivalents | | | |
+------------------------------------------+----------+--------+----------+
| | ________ | | ________ |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
| Cash and Cash Equivalents at Beginning | 33 | | 324 |
| of Period | | | |
+------------------------------------------+----------+--------+----------+
| | ________ | | ________ |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
| Cash and Cash Equivalents at End of | 95 | | 33 |
| Period | | | |
+------------------------------------------+----------+--------+----------+
| | ________ | | ________ |
+------------------------------------------+----------+--------+----------+
| | | | |
+------------------------------------------+----------+--------+----------+
ACCOUNTING POLICIES
Year ended 30 November 2009
Summary of Significant Accounting Policies
The principal Accounting Policies applied in the preparation of these Financial
Statements are set out below. These Policies have been consistently applied to
all periods presented, unless otherwise stated.
Basis of Preparation of Financial Statements
The Financial Statements have been prepared in accordance with EU-endorsed
International Financial Reporting Standards (IFRS) and IFRIC interpretations and
the parts of the Companies Act 2006 applicable to companies reporting under
IFRS. The Financial Statements have also been prepared under the historical
cost convention, as modified by the carrying of investment property at fair
value.
Items included in the Financial Statements are measured using the currency of
the primary economic environment in which the entity operates (its "functional
currency"). The Financial Statements are presented in Pounds Sterling (GBP),
which is the Company's functional and presentation currency.
The preparation of Financial Statements in conformity with IFRS requires the use
of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the group's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated
Financial Statements are disclosed in Note 2.
Going Concern
In considering the Company's ability to continue operations for the foreseeable
future, the Directors have considered the Company's forecast operating cashflow
for the period up to the end of May 2011 and the development cashflow associated
with the Company's investment properties over periods appropriate to the
development in each case.
In the view of the directors the Company requires continued financial support in
order to continue as a going concern. These Financial Statements have been
prepared on a going concern basis in view of the continued support being
received from the Company's lending bank Israel Discount Bank and from its
shareholders and in view of the likelihood of funds being received and
subsequently released from escrow once sufficient seat sales, estimated to be
50, have been achieved during the period to 31 May 2011.
The support received from Israel Discount Bank takes the form of facilities
available subject to both specific and general conditions. The current facility
was made available on 26 February 2010 in the amount of GBP31.4 million.
As detailed in Note 22 to the Financial Statements in March 2010 the company
exchanged contracts on the disposal of its property interest in Dover. The
proceeds of this disposal will be utilised to reduce the Company's borrowing
from Israel Discount Bank and it is expected that the facility will be reduced
by an equivalent amount upon completion of the sale in June 2010.
The facility is repayable on demand however the bank have confirmed that,
subject to no breach of covenants, it is their present intention to continue to
make this facility available until at least 30 June 2011.
One of the covenants in Israel Discount Bank's facility letter dated 26 February
2010 was in respect of the sale of the Dover properties for a cash consideration
of GBP5 million less costs. The covenant stated that the proceeds would be used
to reduce the Company's indebtedness to Israel Discount Bank Limited upon
completion of the sale by 31 March 2010. The sales contract was signed in March
2010, and the completion date is 5 June 2010. This was contrary to one of the
covenants in Israel Discount Bank's facility letter dated 26 February 2010. On
12 May 2010, Israel Discount Bank confirmed that they have extended the
condition in respect of the sale of the Dover properties to be completed by the
end of June 2010 and that all other terms and conditions have been met and all
covenants are complied with to date.
The Directors have reviewed the relevant aspects of the company's forecasts and
the potential development position of the investment property for the period to
31 May 2011 and consider there should be no breaches of the covenants concerned
other than that in respect of the sale of the Dover Properties as referred to
above. The Directors believe that company will meet all of the specific and
general conditions associated with the facility going forward.
During the year to 30 November 2009 the company's shareholders invested further
funds totalling GBP148,000 and since the year end, have invested a further
GBP300,000 by way of private placements.
The shareholders have indicated that future requests for additional investment
to fund ongoing working capital for interest and overhead costs pending the
receipt of funds from seat sales will be considered favourably subject to
continuing bank support and satisfactory progress on seat sales.
After making enquiries and considering the matters described above, the
Directors have a reasonable expectation that the company has adequate resources
to continue in operational existence for the foreseeable future. For these
reasons they continue to adopt the going concern basis in the preparation of the
Annual Report and Financial Statements.
Standards and Interpretations in Issue but not yet Effective or not yet Endorsed
IFRS 9 "Financial Instruments" specifies how an entity should classify and
measure financial assets, including some hybrid contracts, with the aim of
improving and simplifying the approach to classification and measurement
compared with IAS 39 for annual periods beginning on or after 1 January 2013.
The expected impact of this improvement and simplification will be reviewed by
management once endorsed and where relevant the Company will apply the
improvements and simplifications onto their Financial Statements in the future.
A revised version of IAS 24 "Related Party Disclosures" simplifies the
disclosure requirements for government-related entities and clarifies the
definition of a related party for annual periods beginning on or after 1 January
2011. The expected impact of this revision is being assessed by management, and
where relevant, the Company will incorporate this revision into their Financial
Statements in the future.
Amendments to IFRS 2 "Share-based Payment" clarify the accounting for group
cash-settled share-based payment transactions for annual periods beginning on or
after 1 January 2010. These amendments are not expected to have an impact on
the Company's Financial Statements.
Further amendments to IAS 32 address the accounting for rights issues that are
denominated in a currency other than the functional currency of the issuer for
annual periods beginning on or after 1 February 2010. These amendments are not
expected to have an impact on the Company's Financial Statements.
IFRIC 19 "Extinguishing Financial Liabilities with Equity Instruments" clarifies
the treatment required when an entity renegotiates the terms of a financial
liability with its creditor, and the creditor agrees to accept the entity's
shares or other equity instruments to settle the financial liability fully or
partially for annual periods beginning on or after 1 July 2010. This IFROC is
not expected to have an impact on the Company's Financial Statements.
IAS 27 (revised) "Consolidated and Separate Financial Statements" (effective 1
July 2009). The revised standard requires the effects of all transactions with
non-controlling interests to be recorded in equity if there is no change in
control. Such transactions will no longer result in goodwill, or gains or
losses. The standard also specifies the accounting treatment when control is
lost. Any remaining interest in the entity is remeasured to fair value, and a
gain or loss is recognised in profit or loss. These amendments are not expected
to have an impact on the Company's Financial Statements.
Amendment to IAS 38 "Intangible Assets". The amendment is part of the IASB's
annual improvements project published in April 2009. It clarifies guidance on
measuring the fair value of an intangible asset acquired in a business
combination, and permits the grouping of intangible assets as a single asset if
each asset has a similar useful economic life. These amendments are not expected
to have an impact on the Company's Financial Statements.
Amendment to IFRS 5 "Non-Current Assets Held for Sale and Discontinued
Operations". The amendment is part of the IASB's annual improvements project
published in April 2009. The amendment provides clarification that IFRS 5
specifies the disclosures required in respect of non-current assets (or disposal
groups) classified as held for sale and discontinued operations. It also
clarifies that the general requirements of IAS 1 still apply, particularly
paragraphs 15 (to achieve a fair presentation) and 125 (sources of estimation
uncertainty). It is effective for periods on or after 1 January 2009 and is not
expected to have a material impact on the Company's Financial Statements.
Amendment to IAS 1 "Presentation of Financial Statements". The amendment is
part of the IASB's annual improvements project published in April 2009. The
amendment provides clarification that the potential settlement of a liability by
the issue of equity is not relevant to its classification as current or
non-current. By amending the definition of a current liability, the amendment
permits a liability to be classified as non-current (provided that the entity
has an unconditional right to defer settlement by transfer of cash or other
assets for at least 12 months after the balance sheet date) notwithstanding the
fact that the entity could be required by the counterparty to settle in shares
at any time. It is effective for periods on or after 1 January 2009 and is not
expected to have a material impact on the Company's Financial Statements.
Foreign Currencies
Transactions in foreign currencies are translated into the functional currency
at the exchange rate ruling at the date of the transaction. Monetary assets and
liabilities in foreign currencies are retranslated at the rates of exchange
ruling at the Balance Sheet date. Foreign exchange differences on retranslation
and settlement are recognised in the Income Statement.
Fixtures and Fittings
Fixtures and fittings are stated at cost, net of depreciation and any provision
for impairment. Cost includes expenditure that is directly attributable to the
acquisition of the items.
Depreciation is provided on fixtures and fittings at a rate calculated to write
off the cost or valuation, less estimated residual value, of each asset on a
straight-line basis over its expected useful life, estimated to be 4 years.
Investment Property
Investment property, comprising property to be developed, is not occupied by the
Company. It is intended that the Company will benefit from returns on this
investment property in the long term. Investment property is carried at fair
value, representing open market value determined annually. At 30 November 2009
the valuation was carried out by the Directors having previously been provided
by external valuers (see note 5). Fair value is based on active market data
adjusted, if necessary, for any difference in the nature, location or condition
of the specific asset. Changes in fair value are recorded in the Income
Statement.
Properties Intended for Sale
Properties intended for sale are classified under current assets and are stated
at the lower of cost and net realisable value.
Cost comprises land cost and development costs including attributable borrowing
costs and charges allocated during the development period.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand, demand deposits,
and short term highly liquid investments that are readily convertible into known
amounts of cash and are subject to an insignificant risk of changes in value.
Financial Liabilities
Financial liabilities are recognised when the Company becomes a party to the
contractual provisions of the instrument. Financial liabilities are measured
initially at fair value, net of direct issue costs, and subsequently at
amortised cost.
A financial liability is derecognised only when the obligation is extinguished,
that is, when the obligation is discharged, is cancelled, or expires.
Taxation
Current tax is the tax currently payable based on the taxable profit for the
year.
Deferred tax is provided in full, using the liability method, on temporary
differences between the carrying amounts of assets and liabilities and their tax
bases, except when, at the initial recognition of the asset or liability, there
is no effect on accounting or taxable profit or loss. Deferred tax is
determined using tax rates and laws that have been substantially enacted by the
Balance Sheet date, and that are expected to apply when the temporary difference
reverses.
Tax losses available to be carried forward and other tax credits are recognised
as deferred tax assets to the extent that it is probable that there will be
future taxable profits against which the temporary differences can be utilised.
Changes in deferred tax assets or liabilities are recognised as a component of
the tax expense in the Income Statement, except where they relate to items that
are charged or credited directly to equity, in which case the related deferred
tax is also charged or credited directly to equity.
Share Capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Revenue Recognition
Revenue comprises the fair value of the consideration received or receivable by
the Company for income arising in the ordinary course of the Company's
activities from its property interests, excluding VAT.
Borrowing Costs
The Company has adopted a policy of capitalising borrowing costs in respect of
qualifying assets. Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset are capitalised as
part of the cost of that asset.
The amount of borrowing costs eligible for capitalisation is determined by
calculating the weighted average of the borrowing costs applicable to the
qualifying asset that are outstanding during the period other than borrowings
made specifically for the purposes of obtaining a qualifying asset.Borrowing
costs are not capitalised during extended periods when development activity is
suspended.
Segmental Information
The Company operates solely in the United Kingdom and its principal activity is
property investment and development.
1. Financial Risk Management and Financial Instruments
Financial Risk Factors
The Company's activities expose it to a variety of financial risks. The main
risks are identified as being the availability of sufficient liquidity to
continue operations and risks associated directly with the value of the
Company's property interests.
Liquidity Risk
The Company has borrowed to finance the acquisition and development of its
sites. Israel Discount Bank, which has provided the finance to the Company, has
reserved the right to demand repayment of all advances made by it to the Company
at any time. However, provided the Company does not breach any covenants, the
facility is expected to be available until 30 June 2011 subject to any reduction
arising from the sale of the Company's Dover property interests as detailed in
Note 22 to the financial statements.
The Directors maintain a close relationship with Israel Discount Bank and keep
them fully informed of all aspects of the company's affairs so that ongoing
facilities and funding can be agreed in advance.
The Company's primary liquidity risk therefore relates to the completion of
sufficient seat sales to fund the ongoing development of the cultural Hub at
Manston as well as the continuing working capital requirements of the company.
Significant progress has been achieved in this respect and the directors are
safeguarding against this risk by continued and extensive negotiation with a
wide variety of potential customers and the appointment of agents experienced in
property sales to the Company's priority market in China.
During the year the Company has received further support from its major
shareholders who have also indicated their willingness to provide additional
funding pending the availability of income from seat sales to cover working
capital requirements for interest and overhead costs as required, subject to
continuing bank support and satisfactory progress on seat sales.
Credit Risk
Where debt finance is utilised, this is subject to pre-approval by the Board of
Directors, and such approval is limited to financial institutions with a proven
track record. The amount of exposure to any individual counterparty is not a
specified limit but is reassessed annually by the Board.
Interest Rate Risk
The Company has both interest bearing assets and liabilities. Interest-bearing
assets are only cash balances, all of which earn interest at a fixed rate. The
Company has a policy of negotiating competitive interest rates with its bankers
on an ongoing basis. The Directors will revisit the appropriateness of this
policy should the Company's operations change in size or nature.
Capital Risk Management
The Companys objectives when managing capital are to safeguard the Companys
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders, and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure the Company may adjust the
amount of dividends paid to shareholders, return capital to shareholders, issue
new shares or sell assets to reduce debt.
Fair Value Estimation
The carrying value less impairment for trade receivables and payable is assumed
to approximate to their fair values, due to their short term nature. Investment
property is carried at fair value representing open market value determined
annually by the directors or by external valuers.
2. Critical Accounting Estimates, Judgements and Assumptions
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectation of future events that are
believed to be reasonable under the circumstances.
The Company makes estimates, judgements and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom equal the related
actual results. The assumptions and judgements that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities
within the financial statements are detailed below.
a) Seat sales
The principle of seat sales is that each seat holder would have rights of
occupation with regard to a particular "Hub" at Manston. It is the Company's
intention to develop six Hubs at Manston, each focusing on a key area of
industry including pharmaceutical, aviation, culture and technology. A seat
owner will have a dedicated office space available to them for six weeks per
year over a period between 10 and 20 years. There will be a range of ancillary
services and infrastructure on site to provide for areas such as warehousing,
logistics and general support services.
The maximum capacity for each Hub would be 300 seat owners who would pay an
initial capital sum to acquire the seat plus an ongoing annual service charge.
It is the intention to offer each seat holder the opportunity to be a
shareholder of the Company.
After marketing costs, the funds received from seat purchasers will be held in
escrow until sufficient sales, estimated to be 50 seats, have been achieved to
enable the development of the Hub concerned.
The primary assumption made in relation to seat sales is that sufficient sales
will be achieved in order to finance the ongoing development of the site and to
justify the judgements and assumptions made within the directors' valuation of
the Manston site.
b) Working capital and development finance
Note 12 to the Financial Statements details the position with regard to the
Company's banking facilities and judgements made with regard to the going
concern basis are detailed on page 20 of the Financial Statements.
Following the extension of the bank facility in February 2010, one of the
conditions imposed was in relation to the sale of the Dover Properties where the
net proceeds from the sale will be used to reduce the facility. As explained in
note 12 subject to other bank covenants not being breached, the Company's
principal bankers have agreed to make the facility available until 30 June 2011.
It is further assumed that additional funds will be made available from private
share placements to provide the ongoing working capital requirement in respect
of interest and overhead costs of the Company pending receipts from seat sales
which will provide the necessary development finance.
Should these assumptions prove to be incorrect the Company will need to
investigate alternative sources of funding to enable it to continue operations.
It is the Directors' belief that their continued good relationship with the
Company's lending bank and with its major shareholders will enable the working
capital requirement to be met until such time as seat sale income is received.
c) Investment property valuation
The Company's investment property at Manston was valued by the Directors as at
30 November 2009. Various judgements, estimates and assumptions were made in
coming to the value at which the property has been included in these financial
statements. The most important are as follows:
Seat sales
As detailed in a) above the successful marketing of seat sales is critical to
the future of the Manston development. It has been assumed within the valuation
that a total of between 300 and 360 sales will be achieved out of a capacity of
900 seats in 3 Hubs or 1,200 seats in 4 Hubs.
Yield
Ongoing income will be derived from seat sales by way of service charges net of
operating costs. The income levels achieved have then been utilised to
calculate the capital value of the income stream concerned. This involves
estimating future investment property yields. The Directors have utilised a
yield of 6.75% in arriving at the investment value element of the valuation
based on the assumed seat sales detailed above.
Planning
The valuation assumes an expectation that all relevant planning consents will be
granted in relation to the development of the Hubs at Manston.
Residual site value appraisal
In accordance with normal valuation practice the current value has been
calculated by assessing the value of the completed development and deducting the
various costs of development insofar as they can be best estimated.
Should any or all of the above judgements, estimates and assumptions prove to be
incorrect then the carrying value of investment property could be misstated.
Should this be sufficiently misstated to reduce the value to a figure where bank
lending exceeds 55% of the property value then a banking covenant would be
breached and the Company may need to seek alternative sources of funding.
d) Deferred tax asset
Included in the balance sheet is a deferred tax asset of GBP2.035 million (2008
GBP1.353 million). As detailed in the taxation accounting policy this relates
to tax losses recognised to the extent that there will be future taxable profits
against which the losses can be utilised. In recognising this deferred tax
asset the Company is assuming that such future profits will arise. The creation
of such profits from its main activities is the Company's primary objective and
the Directors are confident that the objective will be achieved. Should this
assumption prove to be incorrect then the deferred tax asset would be written
down to nil.
e) General economic uncertainty
In preparing the Financial Statements and in planning for the future
development of the Company's trading activities the Directors have had to make
judgements regarding general economic conditions and the uncertainties arising
from the worldwide recession. The Directors have actively discussed these
issues with senior business and political figures in both China and the UK and
are of the opinion that the Company's Manston project is well placed to benefit
from any subsequent upturn in the global economy.
+--+-------------------------------------------------+---------+---------+
| 3.| Auditors' Remuneration | 2009 | 2008 |
+--+-------------------------------------------------+---------+---------+
| | | GBP000 | GBP000 |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | Fees payable to the Company's auditor for the | 20 | 27 |
| | audit of the accounts for the year | | |
+--+-------------------------------------------------+---------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | The fees paid to the auditors in respect of | | |
| | other services are as follows: | | |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | Other fees | 12 | 11 |
+--+-------------------------------------------------+---------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+---------+---------+
+--+-------------------------------------------------+----------+---------+
| 4.| Fixtures and Fittings | Fixtures | |
+--+-------------------------------------------------+----------+---------+
| | | and | |
+--+-------------------------------------------------+----------+---------+
| | | fittings | Total |
+--+-------------------------------------------------+----------+---------+
| | | GBP000 | GBP000 |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
| | Cost | | |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
| | At 1 December 2007 and 30 November 2008 and | 12 | 12 |
| | 2009 | | |
+--+-------------------------------------------------+----------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
| | Depreciation | | |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
| | At 1 December 2007 | 3 | 3 |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
| | Charge for the year | 3 | 3 |
+--+-------------------------------------------------+----------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
| | At 30 November 2008 | 6 | 6 |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
| | Charge for the year | 3 | 3 |
+--+-------------------------------------------------+----------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
| | At 30 November 2009 | 9 | 9 |
+--+-------------------------------------------------+----------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
| | Net Book Value | | |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
| | At 30 November 2009 | 3 | 3 |
+--+-------------------------------------------------+----------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
| | At 30 November 2008 | 6 | 6 |
+--+-------------------------------------------------+----------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
| | At 30 November 2007 | 9 | 9 |
+--+-------------------------------------------------+----------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+----------+---------+
| | | | |
+--+-------------------------------------------------+----------+---------+
A depreciation charge of GBP3,153 is included in administrative expenses in the
Income Statement.
+--+-------------------------------------------------+---------+---------+
| 5.| Investment Property | 2009 | 2008 |
+--+-------------------------------------------------+---------+---------+
| | | GBP000 | GBP000 |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | Beginning of year | 55,650 | 50,900 |
+--+-------------------------------------------------+---------+---------+
| | Additions | 983 | 1,810 |
+--+-------------------------------------------------+---------+---------+
| | Fair value (losses)/gains | (733) | 2,940 |
+--+-------------------------------------------------+---------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | End of year | 55,900 | 55,650 |
+--+-------------------------------------------------+---------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
The Company's land and buildings were re-valued as at 30 November 2009 by the
Directors. This valuation has been reviewed by external valuers who have
confirmed that the methodology and assumptions utilised within the valuation are
reasonable.
The valuation has been prepared on the assumption that sufficient seat sales are
achieved in order to allow for the development of the Hubs at the Manston site.
The valuation assumes between 300 and 360 seat sales, representing 30% to 33% of
maximum occupancy in 3 or 4 of the proposed 6 Hubs. Each seat owner will
contribute an initial capital sum to acquire the seat and an ongoing annual
service charge of GBP20,000. The valuation is based on the income which will be
derived from seat sales by way of a service charge net of operating costs and
the capital value of the initial seat contribution by the purchaser of the seat.
A yield of 6.75% has been used in calculating the investment value element of
the net service income.
The major assumptions used in the Directors appraisal of the residual site value
include build costs of GBP70 per sq ft, infrastructure costs of GBP1.275m per
Hub, finance costs of 3% above LIBOR and an assumed profit margin for the
contractor of 15%. The directors have applied a further 20% discount factor to
reflect the uncertainty surrounding seat sales pending the completion of the
initial seat sales target to commence the construction of the Hub and have
included land not utilised in this phase of the development at agricultural
value only.
The revised strategy envisages in certain circumstances that some of the seat
contracts may entitle the holder to rights over the respective building and
land. Depending on the individual contracts the value of the land and buildings
may need to reflect these rights.
Further details of the critical accounting estimates, judgements and assumptions
in relation to investment property valuation can be found in note 2 to the
financial statements.
Included in additions to investment property is interest of GBP828,993
(2008 GBP1,145,186) relating to the finance costs directly attributable to this
asset.
Total bank borrowings of GBP31,435,638 (2008 GBP28,328,747) are secured
by way of a legal charge against the investment property noted above.
Direct operating expenses arising from investment property and included
within administrative expenses in the income statement amounted to GBP8,598
(2008 GBP200).
+--+-------------------------------------------------+---------+---------+
| 6.| Properties intended for sale | 2009 | 2008 |
+--+-------------------------------------------------+---------+---------+
| | | GBP000 | GBP000 |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | Properties intended for sale | 4,970 | 2,000 |
+--+-------------------------------------------------+---------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | | 4,970 | 2,000 |
+--+-------------------------------------------------+---------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
Part of the total bank borrowings of GBP31,435,638 (2008 - GBP28,328,747) are
secured by way of a legal charge against the properties intended for sale
detailed above.
The increase in value of these properties reflects the sale price achieved upon
exchange of contracts in March 2010 as detailed in Note 22. This reflects the
partial reversal of a previous impairment which amounted to GBP9.6m which
reflected the market at the time.
+--+-------------------------------------------------+---------+---------+
| 7.| Trade and Other Receivables | 2009 | 2008 |
+--+-------------------------------------------------+---------+---------+
| | | GBP000 | GBP000 |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | Trade receivables | - | 5 |
+--+-------------------------------------------------+---------+---------+
| | Prepayments | 10 | 71 |
+--+-------------------------------------------------+---------+---------+
| | VAT recoverable | 13 | 29 |
+--+-------------------------------------------------+---------+---------+
| | Other receivables | 60 | 12 |
+--+-------------------------------------------------+---------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | | 83 | 117 |
+--+-------------------------------------------------+---------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | Included in other receivables is GBP44,000 in respect of shares |
| | subscribed for but not allotted. |
+--+-------------------------------------------------+---------+---------+
+--+-------------------------------------------------+---------+---------+
| 8.| Cash and Cash Equivalents | 2009 | 2008 |
+--+-------------------------------------------------+---------+---------+
| | | GBP000 | GBP000 |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | Cash at bank and in hand | 95 | 33 |
+--+-------------------------------------------------+---------+---------+
| | | _______ | _______ |
+--+-------------------------------------------------+---------+---------+
| | | | |
+--+-------------------------------------------------+---------+---------+
| | Bank balances at 30 November 2009 are all held | | |
| | at Barclays Bank Plc. | | |
+--+-------------------------------------------------+---------+---------+
+--------+------------+---------+----------+-----------+---------+---------+
| 9. | Called-Up | | | | | |
| | Share | | | | | |
| | Capital | | | | | |
+--------+------------+---------+----------+-----------+---------+---------+
| | | | | | | |
+--------+------------+---------+----------+-----------+---------+---------+
| | Authorised | | | | 2009 | 2008 |
+--------+------------+---------+----------+-----------+---------+---------+
| | | | | | GBP | GBP |
+--------+------------+---------+----------+-----------+---------+---------+
| | | | | | | |
+--------+------------+---------+----------+-----------+---------+---------+
| | 50,000,000 | | | | 500,000 | 500,000 |
| | Ordinary | | | | | |
| | shares of | | | | | |
| | GBP0.01 | | | | | |
+--------+------------+---------+----------+-----------+---------+---------+
| | | | | | _______ | _______ |
+--------+------------+---------+----------+-----------+---------+---------+
| | | | | | | |
+--------+------------+---------+----------+-----------+---------+---------+
| | | Number | Ordinary | Allocated | Share | |
| | | | | | | |
+--------+------------+---------+----------+-----------+---------+---------+
| | | of | shares | but | Premium | Total |
| | | shares | | not | | |
| | | | | allotted | | |
+--------+------------+---------+----------+-----------+---------+---------+
| | | 000 | GBP000 | GBP000 | GBP'000 | GBP000 |
+--------+------------+---------+----------+-----------+---------+---------+
| | | | | | | |
+--------+------------+---------+----------+-----------+---------+---------+
| | At 1 | 21,000 | 210 | - | 15,065 | 15,275 |
| | December | | | | | |
| | 2007 and | | | | | |
| | 30 | | | | | |
| | November | | | | | |
| | 2008 | | | | | |
+--------+------------+---------+----------+-----------+---------+---------+
| | Shares | - | - | 148 | - | 148 |
| | to be | | | | | |
| | issued | | | | | |
+--------+------------+---------+----------+-----------+---------+---------+
| | | _______ | _______ | _______ | _______ | _______ |
+--------+------------+---------+----------+-----------+---------+---------+
| | | | | | | |
+--------+------------+---------+----------+-----------+---------+---------+
| | At 30 | 21,000 | 210 | 148 | 15,065 | 15,423 |
| | November | | | | | |
| | 2009 | | | | | |
+--------+------------+---------+----------+-----------+---------+---------+
| | | _______ | _______ | _______ | _______ | _______ |
+--------+------------+---------+----------+-----------+---------+---------+
Pursuant to a signed subscription agreement, dated 30 October 2009, which
created an obligation at the balance sheet date, the Company allotted 1,570,283
shares at 9.45 pence per share on 22 December 2010 for a total consideration of
GBP148,000 for ongoing working capital. GBP104,000 was received before the year
end and GBP25,000 was received after the year end before the shares were
allotted. The balance of GBP19,000, which includes a balance of GBP14,000 in
respect of shares subscribed for by Omega Properties Limited, was received after
the shares were allotted.
10. Retained Earnings
Included within retained earnings are surpluses arising from the open
market valuation of investment property amounting to GBP25.9 million (2008 -
GBP26.6 million) which are unrealised and not distributable.
+--------+----------+--------+--------+---------+---------+
| 11. | Trade | | | 2009 | 2008 |
| | and | | | | |
| | Other | | | | |
| | Payables | | | | |
+--------+----------+--------+--------+---------+---------+
| | | | | GBP000 | GBP000 |
+--------+----------+--------+--------+---------+---------+
| | | | | | |
+--------+----------+--------+--------+---------+---------+
| | Trade | | | 68 | 197 |
| | payables | | | | |
+--------+----------+--------+--------+---------+---------+
| | Other | | | 2 | 2 |
| | payables | | | | |
+--------+----------+--------+--------+---------+---------+
| | Social | | | 3 | 2 |
| | security | | | | |
| | and | | | | |
| | other | | | | |
| | taxes | | | | |
+--------+----------+--------+--------+---------+---------+
| | Accrued | | | 570 | 751 |
| | expenses | | | | |
+--------+----------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+----------+--------+--------+---------+---------+
| | | | | | |
+--------+----------+--------+--------+---------+---------+
| | | | | 643 | 952 |
+--------+----------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+----------+--------+--------+---------+---------+
| | | | | | |
+--------+----------+--------+--------+---------+---------+
All the trade and other payables are due within one year.
+--------+------------+--------+--------+---------+---------+
| 12. | Borrowings | | | 2009 | 2008 |
+--------+------------+--------+--------+---------+---------+
| | | | | GBP000 | GBP000 |
+--------+------------+--------+--------+---------+---------+
| | Current | | | | |
+--------+------------+--------+--------+---------+---------+
| | Bank | | | 36 | - |
| | overdraft | | | | |
+--------+------------+--------+--------+---------+---------+
| | Interest | | | 31,400 | 28,329 |
| | bearing | | | | |
| | loans | | | | |
| | and | | | | |
| | borrowings | | | | |
+--------+------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+------------+--------+--------+---------+---------+
| | | | | | |
+--------+------------+--------+--------+---------+---------+
| | | | | 31,436 | 28,329 |
+--------+------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+------------+--------+--------+---------+---------+
| | | | | | |
+--------+------------+--------+--------+---------+---------+
Bank borrowings are repayable on demand. However the bank has
indicated their intention to make the facility available until 30 June 2011. The
borrowings bear interest at LIBOR plus 3%.
Total bank borrowings of GBP31,435,638 (2008 - GBP28,328,747) are secured by way
of a legal charge against the investment property and properties intended for
sale.
The fair value of the borrowings is as stated above.
+--------+--------------+--------+--------+---------------+---------------+
| 13. | Deferred | | | 2009 | 2008 |
| | Tax | | | | |
+--------+--------------+--------+--------+---------------+---------------+
| | | | | GBP000 | GBP000 |
+--------+--------------+--------+--------+---------------+---------------+
| | | | | | |
+--------+--------------+--------+--------+---------------+---------------+
| | Deferred | | | | |
| | tax | | | | |
| | assets: | | | | |
+--------+--------------+--------+--------+---------------+---------------+
| | - to | | | (2,035) | (1,353) |
| | be | | | | |
| | recovered | | | | |
| | after | | | | |
| | more than | | | | |
| | 12 months | | | | |
+--------+--------------+--------+--------+---------------+---------------+
| | | | | | |
+--------+--------------+--------+--------+---------------+---------------+
| | Deferred | | | | |
| | tax | | | | |
| | liabilities: | | | | |
+--------+--------------+--------+--------+---------------+---------------+
| | - to | | | 7,242 | 7,447 |
| | be | | | | |
| | settled | | | | |
| | after | | | | |
| | more | | | | |
| | than 12 | | | | |
| | months | | | | |
+--------+--------------+--------+--------+---------------+---------------+
| | | | | _______ | _______ |
+--------+--------------+--------+--------+---------------+---------------+
| | | | | | |
+--------+--------------+--------+--------+---------------+---------------+
| | Net | | | 5,207 | 6,094 |
| | deferred | | | | |
| | tax | | | | |
| | liability | | | | |
+--------+--------------+--------+--------+---------------+---------------+
| | | | | _______ | _______ |
+--------+--------------+--------+--------+---------------+---------------+
| | | | | | |
+--------+--------------+--------+--------+---------------+---------------+
The deferred tax asset represents Schedule A losses carried forward which are
expected to be offset against future income from the Manston development. The
deferred tax liability represents the surplus arising from the fair value gain
on the investment property.
The gross movement on the deferred tax account is:
+--------+-----------------+--------+--------+-----------------+-----------------+
| | Income | | | | 823 |
| | statement | | | - | |
| | debit | | | | |
+--------+-----------------+--------+--------+-----------------+-----------------+
| | Income | | | (887) | (653) |
| | statement | | | | |
| | credit | | | | |
+--------+-----------------+--------+--------+-----------------+-----------------+
| | | | | _______ | _______ |
+--------+-----------------+--------+--------+-----------------+-----------------+
| | | | | | |
+--------+-----------------+--------+--------+-----------------+-----------------+
| | Net | | | (887) | 170 |
| | (credit)/charge | | | | |
| | to Income | | | | |
| | Statement | | | | |
+--------+-----------------+--------+--------+-----------------+-----------------+
| | | | | | |
+--------+-----------------+--------+--------+-----------------+-----------------+
| | At | | | 6,094 | 5,924 |
| | start | | | | |
| | of | | | | |
| | year | | | | |
+--------+-----------------+--------+--------+-----------------+-----------------+
| | | | | _______ | _______ |
+--------+-----------------+--------+--------+-----------------+-----------------+
| | | | | | |
+--------+-----------------+--------+--------+-----------------+-----------------+
| | At end | | | 5,207 | 6,094 |
| | of | | | | |
| | year | | | | |
+--------+-----------------+--------+--------+-----------------+-----------------+
| | | | | _______ | _______ |
+--------+-----------------+--------+--------+-----------------+-----------------+
| | | | | | |
+--------+-----------------+--------+--------+-----------------+-----------------+
+--------+-------------+--------+--------+---------+---------+
| | | | | Tax | |
+--------+-------------+--------+--------+---------+---------+
| | | | | losses | Total |
+--------+-------------+--------+--------+---------+---------+
| | Deferred | | | GBP000 | GBP000 |
| | tax | | | | |
| | assets | | | | |
+--------+-------------+--------+--------+---------+---------+
| | | | | | |
+--------+-------------+--------+--------+---------+---------+
| | At 1 | | | 700 | 700 |
| | December | | | | |
| | 2007 | | | | |
+--------+-------------+--------+--------+---------+---------+
| | Charged | | | 653 | 653 |
| | directly | | | | |
| | to | | | | |
| | income | | | | |
| | statement | | | | |
+--------+-------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+-------------+--------+--------+---------+---------+
| | | | | | |
+--------+-------------+--------+--------+---------+---------+
| | At 30 | | | 1,353 | 1,353 |
| | November | | | | |
| | 2008 | | | | |
+--------+-------------+--------+--------+---------+---------+
| | | | | | |
+--------+-------------+--------+--------+---------+---------+
| | Credited | | | 682 | 682 |
| | directly | | | | |
| | to | | | | |
| | income | | | | |
| | statement | | | | |
+--------+-------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+-------------+--------+--------+---------+---------+
| | | | | | |
+--------+-------------+--------+--------+---------+---------+
| | At 30 | | | 2,035 | 2,035 |
| | November | | | | |
| | 2009 | | | | |
+--------+-------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+-------------+--------+--------+---------+---------+
| | | | | | |
+--------+-------------+--------+--------+---------+---------+
| | | | | Other | Total |
+--------+-------------+--------+--------+---------+---------+
| | Deferred | | | GBP000 | GBP000 |
| | tax | | | | |
| | liabilities | | | | |
+--------+-------------+--------+--------+---------+---------+
| | | | | | |
+--------+-------------+--------+--------+---------+---------+
| | At 1 | | | 6,624 | 6,624 |
| | December | | | | |
| | 2007 | | | | |
+--------+-------------+--------+--------+---------+---------+
| | Charged | | | 823 | 823 |
| | directly | | | | |
| | to | | | | |
| | income | | | | |
| | statement | | | | |
+--------+-------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+-------------+--------+--------+---------+---------+
| | | | | | |
+--------+-------------+--------+--------+---------+---------+
| | At 30 | | | 7,447 | 7,447 |
| | November | | | | |
| | 2008 | | | | |
+--------+-------------+--------+--------+---------+---------+
| | | | | | |
+--------+-------------+--------+--------+---------+---------+
| | Credited | | | (205) | (205) |
| | directly | | | | |
| | to | | | | |
| | income | | | | |
| | statement | | | | |
+--------+-------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+-------------+--------+--------+---------+---------+
| | | | | | |
+--------+-------------+--------+--------+---------+---------+
| | At 30 | | | 7,242 | 7,242 |
| | November | | | | |
| | 2009 | | | | |
+--------+-------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+-------------+--------+--------+---------+---------+
| | | | | | |
+--------+-------------+--------+--------+---------+---------+
+--------+--------+--------+--------+---------+---------+
| 14. | Other | | | 2009 | 2008 |
| | Income | | | | |
+--------+--------+--------+--------+---------+---------+
| | | | | GBP000 | GBP000 |
+--------+--------+--------+--------+---------+---------+
| | | | | | |
+--------+--------+--------+--------+---------+---------+
| | Rental | | | 45 | 61 |
| | income | | | | |
+--------+--------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+--------+--------+--------+---------+---------+
| | | | | | |
+--------+--------+--------+--------+---------+---------+
| | | | | 45 | 61 |
+--------+--------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+--------+--------+--------+---------+---------+
| | | | | | |
+--------+--------+--------+--------+---------+---------+
+--------+---------------+--------+--------+---------+---------+
| 15. | Expenses | | | 2009 | 2008 |
| | by | | | | |
| | Nature | | | | |
+--------+---------------+--------+--------+---------+---------+
| | | | | GBP000 | GBP000 |
+--------+---------------+--------+--------+---------+---------+
| | | | | | |
+--------+---------------+--------+--------+---------+---------+
| | Staff | | | 436 | 479 |
| | costs | | | | |
+--------+---------------+--------+--------+---------+---------+
| | Depreciation | | | 3 | 3 |
+--------+---------------+--------+--------+---------+---------+
| | Establishment | | | 77 | 88 |
| | expenses | | | | |
+--------+---------------+--------+--------+---------+---------+
| | Operating | | | 20 | 77 |
| | expenses | | | | |
+--------+---------------+--------+--------+---------+---------+
| | Legal | | | 168 | 174 |
| | and | | | | |
| | professional | | | | |
| | fees | | | | |
+--------+---------------+--------+--------+---------+---------+
| | Other | | | 394 | 469 |
| | costs | | | | |
+--------+---------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+---------------+--------+--------+---------+---------+
| | | | | | |
+--------+---------------+--------+--------+---------+---------+
| | Total | | | 1,098 | 1,290 |
| | Expenses | | | | |
+--------+---------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+---------------+--------+--------+---------+---------+
| | | | | | |
+--------+---------------+--------+--------+---------+---------+
+--------+----------------+--------+--------+---------+---------+
| 16. | Employees | | | 2009 | 2008 |
+--------+----------------+--------+--------+---------+---------+
| | | | | GBP000 | GBP000 |
+--------+----------------+--------+--------+---------+---------+
| | Staff | | | | |
| | Costs | | | | |
| | (including | | | | |
| | Directors) | | | | |
+--------+----------------+--------+--------+---------+---------+
| | Wages | | | 409 | 444 |
| | and | | | | |
| | salaries | | | | |
+--------+----------------+--------+--------+---------+---------+
| | Social | | | 27 | 35 |
| | security | | | | |
| | costs | | | | |
+--------+----------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+----------------+--------+--------+---------+---------+
| | | | | | |
+--------+----------------+--------+--------+---------+---------+
| | | | | 436 | 479 |
+--------+----------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+----------------+--------+--------+---------+---------+
| | | | | | |
+--------+----------------+--------+--------+---------+---------+
| | | | | 2009 | 2008 |
+--------+----------------+--------+--------+---------+---------+
| | Average Number of | No | No. |
| | Employees (including | | |
| | executive Directors) | | |
+--------+----------------------------------+---------+---------+
| | | | | | |
+--------+----------------+--------+--------+---------+---------+
| | Administrative | | | 6 | 8 |
+--------+----------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+----------------+--------+--------+---------+---------+
| | | | | | |
+--------+----------------+--------+--------+---------+---------+
| | | | | 6 | 8 |
+--------+----------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+----------------+--------+--------+---------+---------+
| | | | | | |
+--------+----------------+--------+--------+---------+---------+
+--------+--------------+--------+--------+---------+---------+
| 17. | Directors' | | | 2009 | 2008 |
| | Remuneration | | | | |
+--------+--------------+--------+--------+---------+---------+
| | | | | GBP000 | GBP000 |
+--------+--------------+--------+--------+---------+---------+
| | | | | | |
+--------+--------------+--------+--------+---------+---------+
| | Emoluments | | | 340 | 352 |
+--------+--------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+--------------+--------+--------+---------+---------+
| | | | | | |
+--------+--------------+--------+--------+---------+---------+
| | | | | 340 | 352 |
+--------+--------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+--------------+--------+--------+---------+---------+
| | | | | | |
+--------+--------------+--------+--------+---------+---------+
| | Highest | | | 120 | 127 |
| | paid | | | | |
| | director | | | | |
+--------+--------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+--------------+--------+--------+---------+---------+
| | | | | | |
+--------+--------------+--------+--------+---------+---------+
+--------+---------+--------+--------+---------+---------+
| 18. | Finance | | | 2009 | 2008 |
| | Income | | | | |
| | and | | | | |
| | Costs | | | | |
+--------+---------+--------+--------+---------+---------+
| | | | | GBP000 | GBP000 |
+--------+---------+--------+--------+---------+---------+
| | | | | | |
+--------+---------+--------+--------+---------+---------+
| | Finance income - | 1 | 4 |
| | Interest income on | | |
| | short-term bank deposits | | |
+--------+---------------------------+---------+---------+
| | | | | _______ | _______ |
+--------+---------+--------+--------+---------+---------+
| | | | | | |
+--------+---------+--------+--------+---------+---------+
| | Finance costs - Interest | 886 | 990 |
| | expense on bank | | |
| | borrowings | | |
+--------+---------------------------+---------+---------+
| | | | | _______ | _______ |
+--------+---------+--------+--------+---------+---------+
| | | | | | |
+--------+---------+--------+--------+---------+---------+
+--------+-----------------+--------+--------+---------+---------+
| 19. | Taxation | | | 2009 | 2008 |
+--------+-----------------+--------+--------+---------+---------+
| | | | | GBP000 | GBP000 |
+--------+-----------------+--------+--------+---------+---------+
| | Analysis | | | | |
| | of | | | | |
| | Charge | | | | |
| | in Year | | | | |
+--------+-----------------+--------+--------+---------+---------+
| | | | | | |
+--------+-----------------+--------+--------+---------+---------+
| | Current | | | | |
| | tax: | | | | |
+--------+-----------------+--------+--------+---------+---------+
| | UK | | | - | - |
| | corporation | | | | |
| | tax on | | | | |
| | profits of | | | | |
| | the year | | | | |
+--------+-----------------+--------+--------+---------+---------+
| | Deferred | | | (887) | 170 |
| | taxation | | | | |
| | (credit)/charge | | | | |
+--------+-----------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+-----------------+--------+--------+---------+---------+
| | | | | | |
+--------+-----------------+--------+--------+---------+---------+
| | | | | (887) | 170 |
+--------+-----------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+-----------------+--------+--------+---------+---------+
| | | | | | |
+--------+-----------------+--------+--------+---------+---------+
Factors affecting tax charge for year
The tax assessed for the period on the Company's loss before tax differs on the
theoretical amount that would arise using the rate of corporation tax applicable
in the UK of 28% (2008 - 28%).The differences are explained below:
+--------+---------------+--------+--------+---------+---------+
| | | | | 2009 | 2008 |
+--------+---------------+--------+--------+---------+---------+
| | | | | GBP000 | GBP000 |
+--------+---------------+--------+--------+---------+---------+
| | | | | | |
+--------+---------------+--------+--------+---------+---------+
| | | | | | |
+--------+---------------+--------+--------+---------+---------+
| | Profit/(Loss) | | | 299 | (8,875) |
| | on ordinary | | | | |
| | activities | | | | |
| | before tax | | | | |
+--------+---------------+--------+--------+---------+---------+
| | | | | _______ | _______ |
+--------+---------------+--------+--------+---------+---------+
| | | | | | |
+--------+---------------+--------+--------+---------+---------+
| | Profit/Loss on ordinary | | |
| | activities multiplied by | (84) | 2,485 |
| | applicable rate | | |
| | of corporation tax | | |
| | applicable in the UK of | | |
| | 28% (2008 - 28%) | | |
+--------+---------------------------------+---------+---------+
| | | | |
+--------+---------------------------------+---------+---------+
| | Effects of | | |
+--------+---------------------------------+---------+---------+
| | Permanent differences | (19) | (1) |
+--------+---------------------------------+---------+---------+
| | Fair value | (205) | 823 |
| | (deficit)/surplus | | |
+--------+---------------------------------+---------+---------+
| | Loan interest | 232 | 321 |
| | capitalised | | |
+--------+---------------------------------+---------+---------+
| | Schedule A tax losses | (627) | (741) |
| | available to carry | | |
| | forward | | |
+--------+---------------------------------+---------+---------+
| | Schedule DI tax losses | 703 | (2,887) |
| | available to carry | | |
| | forward | | |
+--------+---------------------------------+---------+---------+
| | Deferred Tax (note 13) | (887) | 170 |
+--------+---------------------------------+---------+---------+
| | | _______ | _______ |
+--------+---------------------------------+---------+---------+
| | | | |
+--------+---------------------------------+---------+---------+
| | Total tax charge for | (887) | 170 |
| | year | | |
+--------+---------------------------------+---------+---------+
| | | _______ | _______ |
+--------+---------------------------------+---------+---------+
| | | | |
+--------+---------------------------------+---------+---------+
| | The weighted average | | |
| | applicable tax rate was | | |
| | 28%. | | |
+--------+---------------+--------+--------+---------+---------+
No deferred tax asset has been included in respect of schedule DI tax losses of
GBP7,920,000 (2008 GBP10,625,000) as it is not probable
that the Company will make such taxable profits in the short term.
A deferred tax asset has been included in respect of Schedule A tax losses as
disclosed in Note 13.
20. Profit/(Loss) per Share
Basic
Basic profit/(loss) per share is calculated by dividing the
profit/(loss) attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the period.
+--------+---------------+--------------+----------------+
| | | 2009 | 2008 |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
| | Profit/(Loss) | GBP1,186,000 | (GBP9,045,000) |
| | attributable | | |
| | to equity | | |
| | holders of | | |
| | the Company | | |
+--------+---------------+--------------+----------------+
| | | __________ | __________ |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
| | Weighted | 21,000,000 | 21,000,000 |
| | average | | |
| | number | | |
| | of | | |
| | ordinary | | |
| | shares | | |
| | in issue | | |
+--------+---------------+--------------+----------------+
| | | __________ | __________ |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
| | Basic | 5.65p | (43.07)p |
| | profit/(loss) | | |
| | per share | | |
| | (pence per | | |
| | share) | | |
+--------+---------------+--------------+----------------+
| | | __________ | __________ |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
Diluted
Diluted profit/(loss) per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares.
Persuant to a signed subscription agreement, dated 30 October 2009, the Company
allotted 1,570,283 shares on 22 December 2010. The signed subscription agreement
created an obligation before the year ended 30 November 2009 and the number of
dilutive potential ordinary shares is calculated assuming the shares were
allotted.
+--------+---------------+--------------+----------------+
| | | 2009 | 2008 |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
| | Profit/(Loss) | GBP1,186,000 | (GBP9,045,000) |
| | attributable | | |
| | to equity | | |
| | holders of | | |
| | the Company | | |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
| | Adjustments | - | - |
+--------+---------------+--------------+----------------+
| | | __________ | __________ |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
| | Profit/(Loss) | GBP1,186,000 | (GBP9,045,000) |
| | used to | | |
| | determine | | |
| | diluted | | |
| | earnings per | | |
| | share | | |
+--------+---------------+--------------+----------------+
| | | __________ | __________ |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
| | Weighted | 21,000,000 | 21,000,000 |
| | average | | |
| | number | | |
| | of | | |
| | ordinary | | |
| | shares | | |
| | in issue | | |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
| | Adjustments: | 130,857 | - |
| | allotment of | | |
| | shares | | |
+--------+---------------+--------------+----------------+
| | | __________ | __________ |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
| | Weighted | 21,130,857 | 21,000,000 |
| | average | | |
| | number | | |
| | of | | |
| | ordinary | | |
| | shares | | |
| | for | | |
| | diluted | | |
| | earnings | | |
| | per | | |
| | share | | |
+--------+---------------+--------------+----------------+
| | | __________ | __________ |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
| | Diluted | 5.61p | (43.07)p |
| | profit/(loss) | | |
| | per share | | |
| | (pence per | | |
| | share) | | |
+--------+---------------+--------------+----------------+
| | | __________ | __________ |
+--------+---------------+--------------+----------------+
| | | | |
+--------+---------------+--------------+----------------+
21. Related Party Transactions
During the year, the Company received the following amounts on an arm's length
basis from related parties:
Licence income, which is included as part of other income, of
GBP12,000 (2008 - GBP22,000) from Kentish Barn Weddings Limited, a company of
which K E Wills is a director and shareholder. At the year end GBPnil (2008 -
GBP2,350) was outstanding.
During the year, the Company paid the following amounts on an arm's length basis
to related parties:
Administration fees of GBP32,328 (2008 - GBP30,625), property
maintenance costs of GBP31,740 (2008 - GBP34,033) and reimbursement of fees for
helicopter flights and travel costs of GBP9,704 (2008 - GBP12,357) and public
relations expenses of GBP4,582 (2008 - GBP4,791) to Summit Engineering Limited,
a company of which K E Wills is a director and shareholder. An amount of
GBP1,848 (2008 - GBP720) was outstanding at the year end.
Property maintenance costs of GBPnil (2008 - GBP8,737) to Commercial
Group Contractors Limited, a company of which K E Wills is a director and
shareholder. No amounts were outstanding with this Company at the year end (2008
- GBPNil).
Rent of GBP6,234 (2008: GBP10,200) to Heli-Charter Limited, a company
of which K E Wills is a director and shareholder. No amounts were outstanding
with this Company at the year end (2008 - GBPnil).
Consultancy fees of GBPnil (2008 - GBP10,000) to Westmere Limited, a
company of which Chris Seymour-Prosser is a director and shareholder. No
amounts were outstanding with this Company at the year end (2008 - GBPnil).
The directors' fees paid to C Seymour-Prosser were paid in accordance
with an agreement with Apsley Holdings Limited. The fees during the year were
GBP120,000 (2008 - GBP126,923). At the year end GBP40,000 (2008 - GBP10,000) was
outstanding.
The directors have agreed to defer the payment of their remuneration from 1
August 2009 until such a time as the Company has achieved sufficient seat sales
to further progress the 'China Gateway' project at Manston.At the balance sheet
date, the accrued fees and salaries deferred were GBP40,000 in respect of C
Seymour-Prosser, GBP40,000 in respect of K E Wills, GBP16,667 in respect of J A
Wing, GBP8,333 in respect of R C Bolton, and GBP8,333 in respect of B M Moritz.
Pursuant to a signed subscription agreement, dated 30 October 2009, the Company
allotted 1,570,283 shares at 9.45 pence per share on 22 December 2010 for a
total consideration of GBP148,000. This included 1,076,190 shares to Directors
or companies where the some of the Directors have an interest.
22. Events after the Balance Sheet Date
The bank facility with Israel Discount Bank was extended in February 2010. One
of the conditions imposed was in relation to the sale of the Dover Properties
where the net proceeds from the sale will be used to reduce the facility.
Subject to other bank covenants not being breached, it is the intention of the
Company's Principal bankers to make the facility available until 30 June 2011 as
explained in note 12.
In March 2010 the Company exchanged contracts for the disposal of its
properties, included as current assets and intended for sale, at Western Heights
and Farthingloe, Dover, ("the Dover Properties") to Dover Gateway Limited for
cash consideration of GBP5 million less costs. The proceeds will be used to
reduce the Company's indebtedness to Israel Discount Bank Limited upon
completion which is scheduled for 5 June 2010.
Dover Gateway Limited (DGL) is owned 40% by China Gateway International plc and
60% by Priory Land Limited, which company is providing interest free loan
finance to DGL both for the initial purchase and for DGL's future expenditure.
As a result of this transaction, China Gateway International plc will have an
interest of 40% of any profit that DGL achieves on any subsequent disposal of
the Dover Properties.
In March 2010 the Company received further funding
totalling GBP300,000 by way of private placements.
As detailed in the Chief Executive's Review and the notes to the financial
statements, the Company is progressing the Manston project by way of seat sales.
Formal terms for the first seat sale were agreed in May 2010.
23. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling party.
24. Commitments
There were no capital commitments at 30 November 2008 or 30 November 2009.
Notes to the announcement:
1. Copies of the Preliminary Audited Results are available from the Company's
website as required by AIM Rule 26 which can be found at www.cgi-plc.com.
2. Copies of the Audited Results are being posted to Shareholders on 28 May
2010.
3. The above financial information comprises non-statutory accounts within the
meaning of section 435 of the Companies Act 2006. The financial information for
the year ended 30 November 2009 has been extracted from published accounts for
the year ended 30 November 2009 that will be delivered to the Registrar of
Companies and on which the report of the auditors was unqualified and did not
contain statements under section 498 (2) or (3) of the Companies Act 2006. The
audited report contained the following Emphasis of Matter
'Emphasis of matter
Going concern
In forming our opinion on the Financial Statements, which is not qualified, we
have considered the adequacy of the disclosure made in the statement on going
concern on page 20 of the Financial Statements which relates to the obtaining of
adequate seat sales and subsequent funding by the major shareholders. The
matters detailed in the disclosures indicate the existence of a material
uncertainty which may cast significant doubt on the Company's ability to
continue as a going concern. The Financial Statements do not include the
adjustments that would result if the Company was unable to continue as a going
concern.
Property valuation
In forming our opinion on the Financial Statements, which is not qualified, we
draw attention to the fact that the valuation of the investment property is a
directors' valuation rather than one by an independent third party. The details
are disclosed in Note 5 to the Financial Statements. If any of the key
assumptions included in the directors' valuation prove to be incorrect, it may
result in a material amendment to the carrying value of the property in the
balance sheet and a consequent effect on the profit or loss for the year. It is
not possible to quantify the potential effect.'
4. The Company has also posted a Notice of General Meeting along with
the Accounts. The General Meeting is to be held at the offices of Sprecher Grier
Halberstam LLP, 5th Floor, One America Square, Crosswall, London EC3N 2SG on
Thursday 1st July 2010 at 11.00a.m.
For further information, please contact:
+-------------------------------+-------------------------------+
| Commercial Group Properties | |
| PLC | +44 (0) 1843 822882 |
| Ken Wills | |
| | |
+-------------------------------+-------------------------------+
| | |
+-------------------------------+-------------------------------+
| Beaumont Cornish Limited | |
| Roland Cornish | +44 (0) 20 7628 3396 |
| | |
+-------------------------------+-------------------------------+
| | |
+-------------------------------+-------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Grafico Azioni China Gateway (LSE:CGA)
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Grafico Azioni China Gateway (LSE:CGA)
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