RNS Number:4984A
Poole Investments PLC
19 July 2007
POOLE INVESTMENTS PLC
Chairman's Statement
Results for the year ended 31 May 2007
Operational results
The results for the year show operating profit of #264,000 (2006:#260,000). The
loss for the year after interest was #24,000 (2006: loss #22,000).
Our principle accounting policy, as set out in the Notes to the Accounts, states
that Investment Properties are accounted for in accordance with SSAP 19 such
that Investment Properties are revalued annually. The surplus or deficit on
revaluation is transferred to the revaluation reserve, and no depreciation is
provided for. The Directors consulted with their valuers and were informed that
the market value of the Investment Property has not significantly changed since
the last year end and so no surplus or deficit has been recognised in the year.
In the previous year an increase of #1,750,000 was made to the book value of the
Group's primary asset.
Strategy
The Group's primary asset is a 9.5 acre plot of land in Hamworthy on which
resides an investment property which provides rental income. This land forms
part of the area within the Poole "Full Sail Ahead" regeneration scheme. The
Borough of Poole submitted a Transport and Works Act and Town and Country
Planning Act Planning application seeking an Order to permit the building of the
"Twin Sails Bridge" and regenerate Hamworthy. The Inspector appointed to conduct
the enquiry into the Borough's application made an Order in August 2006 and
directed that planning permission, with regard to the development within the
Poole Harbour Opening Bridges Order, be deemed to be granted subject to certain
conditions.
Since the granting of the order in August 2006 the Borough of Poole, with the
aid of consultants, has been deciding how best to plan and progress
regeneration. Borough representatives have agreed with the Group that during the
remainder of the 2007 calendar year, a series of meetings would take place to
establish common ground that might enable the Group to support the regeneration
by way of a formal planning application. The Board needs to be satisfied that
that any such plan would be commercially viable. Crucial to this is an
understanding of the revenue and cost implications of mix usage within an
application between residential and commercial and an understanding of any need
for social housing. In conjunction with this it will be necessary to establish
an appropriate apportionment of any regeneration costs attributable to the
Group, as compared to other landowners within the regeneration area, taking into
account any variation in planning mix. It is somewhat frustrating that this
process is taking so long through no lack of endeavor on our part but the Group
remains committed to continue this process.
The Board has continued to receive enquiries from parties expressing an interest
either in purchase of the Investment Property or the Group. Due to an increase
in the Group's share price, the Board announced on 4th July 2007 that it had
received an approach which may or may not lead to an offer for the Group. It was
stated that any offer for the share capital of the Company was likely to
represent a price at or around 6 pence for each Poole Investments plc ordinary
share. On 12th July 2007 Inland plc made an announcement that discussions were
taking place with the Group that may lead to an offer. This offer was expected
to be solely for a cash consideration. These discussions are still ongoing and
the Board will make a further announcement as soon as possible.
The directors will continue, with its advisers, to evaluate any such interest so
as to maximize shareholder value.
H A Palmer
Chairman
18 July 2007
Consolidated Profit and Loss Account
for the year ended 31 May 2007
12 months ended 12 months ended
31 May 31 May
2007 2006
Total Total
Notes #'000 #'000
Turnover
Rental income 2 335 335
335 335
Administrative expenses (71) (75)
Operating profit: 264 260
Interest payable and similar charges 5 (288) (282)
Loss on ordinary activities before taxation 2&3 (24) (22)
Taxation 6 - -
Loss transferred to reserves 17 (24) (22)
Loss per ordinary share
- basic and diluted 8 (0.01)p (0.01)p
A statement of movements on reserves is set out in Note 18.
Note of Historical Cost Profits and Losses
for the year ended 31 May 2007
12 months ended 12 months ended
31 May 2007 31 May 2006
#'000 #'000
Reported loss on ordinary activities before taxation (24) (22)
Historical cost loss on ordinary activities before taxation (24) (22)
Historical cost loss on ordinary activities after taxation and (24) (22)
dividends
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 May 2007
12 months ended 12 months ended
31 May 2007 31 May 2006
#'000 #'000
Loss for the financial year (24) (22)
Revaluation of Investment Property - 1,750
Total recognised gains and losses relating to the year (24) 1,728
Reconciliation of Group Shareholders' Funds
for the year ended 31 May 2007
12 months ended 12 months ended
31 May 2007 31 May 2006
#'000 #'000
Total recognised gains and losses (24) 1,728
Opening shareholder's funds 3,432 1,704
Shareholders' funds at 31 May 3,408 3,432
Balance Sheets
as at 31 May 2007
Group Company
31 May 31 May 31 May 31 May
2007 2006 2007 2006
Notes #'000 #'000 #'000 #'000
Fixed assets:
Tangible assets 9 6,500 6,500 6,500 6,500
Investments 10 _ _ _ _
6,500 6,500 6,500 6,500
Current assets:
Debtors 11 - 20 - 20
Cash at bank and in hand 17 15 17 14
Short-term deposits 147 145 147 145
164 180 164 180
Creditors:
Amounts falling due within one year 12 (544) (405) (544) (405)
Net current liabilities (380) (225) (380) (225)
Total assets less current liabilities 6,120 6,275 6,120 6,275
Creditors:
Amounts falling due after more than one year 13 (2,712) (2,843) (2,712) (2,843)
Net assets 2 3,408 3,432 3,408 3,342
Capital and reserves:
Called up share capital 16 9,247 9,247 9,247 9,247
Special reserve 17 13,130 13,130 13,130 13,130
Revaluation reserve 17 5,540 5,540 1,750 1,750
Profit and loss account 17 (24,509) (24,485) (20,719) (20,695)
Equity shareholders' funds 3,408 3,432 3,408 3,432
Signed on behalf of the Board
D J Booth
Director
18 July 2007
Consolidated Cash Flow Statement
for the year ended 31 May 2007
Year ended Year ended
31 May 2007 31 May 2006
#'000 #'000
Cash inflow from operating activities (Note 18) 257 245
Returns on investment and servicing of finance:
Interest paid (253) (255)
Net cash outflow from returns on investments and servicing of finance (253) (255)
Cash inflow/(outflow) before management of liquid resources and financing 4 (10)
Management of liquid resources:
(Increase)/decrease in short term deposits (2) 8
Net cash (outflow)/inflow from management of liquid resources (2) 8
Increase/(decrease) in cash (Note 18) 2 (2)
Notes to the Accounts
for the year ended 31 May 2007
1 Accounting policies
The principal accounting policies that have been adopted in the preparation of
the consolidated accounts of Poole Investments plc are given below.
Basis of accounting
The financial statements are prepared under the historical cost convention
modified to include the revaluation of freehold land and buildings. The
financial statements are prepared in accordance with applicable United Kingdom
accounting standards. The true and fair override provisions of the Companies
Act 1985 have been invoked, see 'Investment Property' below.
Basis of consolidation
The consolidated financial information includes the Company and all its
subsidiary undertakings. The results of subsidiary undertakings acquired or
disposed of are included in the consolidated profit and loss account from the
date of their acquisition or up to the date of their disposal. The purchase
consideration of subsidiary undertakings has been allocated to each class of
asset on the basis of fair value at the date of acquisition with goodwill being
the difference between the purchase consideration and the fair value of the net
separable assets.
No profit and loss account is presented for the Company as provided by Section
230 of the Companies Act 1985.
Investment Property
The Group's property at 31 May 2007 and 31 May 2006 is held for long-term
investment. The Investment Property is accounted for in accordance with SSAP 19
and is revalued annually. The surplus or deficit on revaluation is transferred
to the revaluation reserve unless a deficit below original cost, or its
reversal, on the Investment Property is expected to be permanent, in which case
it is recognised in the Profit and Loss account for the year.
Although the Companies Act would normally require the systematic annual
depreciation of fixed assets, the Directors believe that the policy of not
providing depreciation is necessary in order for the financial statements to
give a true and fair view, since the current value of investment properties, and
changes to that current value, are of prime importance rather than a calculation
of systematic annual depreciation. Depreciation is only one of the many factors
reflected in the annual valuation, and the amount which might otherwise have
been included cannot be separately identified or quantified.
Turnover
Turnover for the year represents gross rents receivable from investment
property. Operating lease income is spread over the lease term on a straight
line basis.
Deferred taxation
Deferred taxation is provided on all timing differences that have originated but
not reversed by the balance sheet date, calculated at the rate at which it is
anticipated the timing differences will reverse based on tax rates and laws
enacted or substantively enacted at the balance sheet date. This is subject to
deferred taxation assets only being recognised if it is considered more likely
than not that there will be suitable profits from which the future reversal of
the underlying timing differences can be deducted. Deferred taxation is not
provided on timing differences arising from the revaluation of fixed assets
where there is no commitment to sell the asset. Deferred tax assets and
liabilities are not discounted.
Interest-bearing loans and borrowings
All interest-bearing loans and borrowings are initially recognised at net
proceeds. After initial recognition debt is increased by the finance cost in
respect of the reporting period and reduced by payments made in respect of the
debts of the period. Finance costs of debt are allocated over the term of the
debt at a constant rate on the carrying amount.
Notes to the Accounts
for the year ended 31 May 2007
2 Segmental information
The analysis of turnover by business group and geographical area and of profit
or loss before taxation and net assets by business group is set out below:
(a) Analysis of turnover by destination
All turnover, including prior year, comprises rental income derived in the UK
from the Company's one tenant.
(b) Profit/(loss) before tax by business group
12 months ended 12 months ended
31 May 2007 31 May 2006
#'000 #'000
Investment Property 264 260
264 260
Interest payable and similar charges (288) (282)
Loss before taxation (24) (22)
All operating costs, including those of prior year, are derived in the UK.
(c) Net assets (all UK) by business group
31 May 2007 31 May 2006
#'000 #'000
Investment Property 6500 6,500
Corporate items (69) (75)
Net debt (3023) (2,993)
Net assets 3,408 3,432
All net assets, including those of prior year, are based in the UK.
3 Loss on ordinary activities before taxation
This is stated after charging: 12 months ended 12 months ended
31 May 2007 31 May 2006
#'000 #'000
Auditors' remuneration (all in respect of the Company) 8 8
Auditors' remuneration non audit fees: taxation services 5 5
4 Staff costs and Directors' remuneration
Average number of employees was nil (2006: nil). This excludes the Directors of
the Company.
Directors' remuneration
12 months 12 months
ended ended
31 May 2007 31 May 2006
Executive Total Total
# #
D J Booth 15,000 15,000
Non-executive
H A (Tony) Palmer - -
D Cicurel - -
15,000 15,000
Payments made to D J Booth relate to the provision of consultancy services
within areas of his individual expertise. As set out in note 19, H A (Tony)
Palmer and D Cicurel have agreed that Directors fees will not be due until sale
of the Company's Investment Property or an offer for the share capital of the
Company is received and recommended. No provision for this cost has been made.
Notes to the Accounts
for the year ended 31 May 2007
5 Interest payable and similar charges
12 months 12 months
ended ended
31 May 2007 31 May 2006
#'000 #'000
Interest on bank loan 213 214
Cost of deferring loan repayment 40 40
Interest on other loans 35 28
Total Interest payable and similar charges 288 282
6 Taxation on ordinary activities
a) Analysis of tax 2007 2006
#'000 #'000
Current tax - -
Deferred tax - -
Tax on profit/loss on ordinary activities - -
b) Analysis of difference between tax credit at standard rate and current 2007 2006
year tax
#'000 #'000
Loss on ordinary activities (24) (22)
Loss multiplied by the standard rate of corporation tax in the UK of 30% (7) (7)
(2006:30%)
Expenses not deductible for tax purposes 1 1
Increase in tax losses carried forward 6 6
Tax on loss on ordinary activities - -
c) Factors that may affect future tax charges
Tax losses carried forward within the Group and Company, relating to the costs
of managing the Group's investments are #295,000 (2006: #272,000). No deferred
tax asset has been recognised on these losses given the uncertainty of timing of
future profits. The unrecognised asset may be recoverable in future periods in
the event that an appropriate surplus arises against which the tax loss can be
offset. The Group and Company have not recognised a deferred tax asset in
respect of agreed capital losses of approximately #23.2m (2006:#23.2m) in
existence at the period end as no chargeable gains are forecast to arise in the
immediate future.
7 Loss attributable to members of the parent Company
As permitted by Section 230 of the Companies Act 1985, the Company's profit and
loss account has not been included in the accounts.
The loss dealt with in the accounts of the parent Company was #24,000 (2006:
loss of #22,000).
8 Loss per ordinary share
The earnings per share figures are based on the result after taxation for the respective periods divided by
the weighted average number of shares in issue as follows:
2007 2006
Pence Pence
Loss per share (0.01) (0.01)
#'000 #'000
The calculation of (loss)/earnings per share is based on:
Loss on ordinary activities after taxation (24) (22)
Thousands Thousands
Number of shares used in basic earnings per share: 184,949 184,949
There are no outstanding share options and no dilutive shares.
Notes to the Accounts
for the year ended 31 May 2007
9 Tangible fixed assets
Group and Company Freehold Investment
Property
#'000
As at 1 June 2006, valuation and net book value: 6,500
As at 31 May 2007, valuation and net book value: 6,500
All freehold property is stated at valuation.
The Investment Property was valued by Edward Symmons & Partners in August 2006
in accordance with the Appraisal and Valuation Manual of The Royal Institution
of Chartered Surveyors. Investment Property continues to be held by the Group
for long-term investment. Accordingly, the property is recorded as an
Investment Property and is valued on an open market basis. The Investment
Property is not depreciated.
The historical cost of Investment Properties at 31 March 2007 is #1,169,000
(2006: #1,169,000), and the net book value on the historical cost basis at 31
March 2007 is #960,000 (2006: #960,000).
10 Fixed asset investments
At 31 May 2007, the Company holds the entire share capital of Hamworthy
Investments Limited which is registered in England and Wales and has been
dormant since incorporation. Gross and net book value of this investment is #2.
11 Debtors: Amounts falling due within one year
Group and Company
31 May 2007 31 May 2006
#'000 #'000
Other debtors - 20
12 Creditors: Amounts falling due within one year
Group and Company
31 May 2007 31 May 2006
#'000 #'000
Bank loans (Note 13) 475 310
Trade creditors 10 15
Deferred income 23 23
Other creditors and accruals 36 57
544 405
Notes to the Accounts
for the year ended 31 May 2007
13 Creditors: Amounts falling due after more than one year.
Group and Company
31 May 2007 31 May 2006
#'000 #'000
Bank loan 2,375 2,540
Other loan 337 303
2,712 2,843
The bank loan is payable as follows:
Group and Company
31 May 2007 31 May 2006
#'000 #'000
Within one year 475 310
Between one and two years 475 372
Between two and five years 1,900 2,168
2,850 2,850
Less included within amounts due within one year (475) (310)
2,375 2,540
The Company has granted a fixed and floating charge over all assets to secure
the bank loans. The other loan is secured against the Investment Property and
is repayable in a single payment on the date on which the company disposes for
value to a third party the whole or part of its Investment Property. The other
loan bears interest at the higher of 15% or 5% above the bank's base lending
rate.
14 Derivatives and other financial instruments
The Group's strategy is to minimise its exposure to interest rate fluctuations
and has therefore fixed the rate on the majority of its borrowings for the next
year. The disclosures below exclude short term debtors and creditors.
Interest rate risk profile of financial liabilities.
The interest rate profile of the financial liabilities of the Group as at 31 May
was as follows:
Financial Floating rate Fixed rate
liabilities
#'000 #'000 #'000
31 May 2007:Total (all sterling) 3,187 337 2,850
31 May 2006:Total (all sterling) 3,153 303 2,850
The floating rate financial liabilities comprise sterling loans that bear
interest at rates based on bank base lending rate. Fixed rate liabilities at 31
May 2007 comprise the bank loan which has fixed interest at 7.75% until May 2008
after which it reverts to a floating rate based on bank base lending rate. Cash
balances not required to meet working capital requirements are held in 14 day
sterling deposit accounts.
As at 31 May 2007 the Group had no currency exposures (2006: nil).
The maturity profile of the Group's financial liabilities at 31 May was as
follows:
31 May 31 May
2007 2006
#'000 #'000
In one year or less, or on demand 475 310
In more than one year, but not more than two 475 372
In more than two years, but not more than five 2,237 2,471
3,187 3,153
Notes to the Accounts
for the year ended 31 May 2007
14 Derivatives and other financial instruments (continued)
Borrowing facilities
As at 31 May 2007 the Group has an undrawn overdraft facility available of
#150,000 (2006: #150,000) which is due for review on 30 September 2007.
Fair values of financial assets and financial liabilities.
A comparison of the fair values of all primary financial instruments and their
carrying amounts is as follows:
31 May 2007 31 May 2006
Fair value Carrying value Fair value Carrying value
#'000 #'000 #'000 #'000
Borrowings (2,885) (3,187) (2,856) (3,153)
Cash 165 165 160 160
The fair values of borrowings are assumed to be the discounted amount of future
cash flows using the Group's current incremental rate of borrowing for a similar
liability.
The Group has no derivatives.
The main liquidity risks to the Group are the sustainability of the rental
income and also the financing provided by the Group's bankers. The rental income
is guaranteed through use of a 2-year agreement with the present tenant company.
The financing of the company depends on the facility in place with the Company's
bankers with whom a good relationship is maintained.
15 Pensions
The Company has no pension scheme. Prior to the disposal of its former operating
subsidiaries, the Company participated in the Pilkington's Tiles Limited Pension
Scheme ('the Scheme"). Until 31 August 2003 the Scheme provided final salary
benefits for some employees and money purchase for some other employees. From 1
September 2003 the accrual of final salary benefits stopped and former final
salary members were given the option to continue as money purchase members. The
Company ceased to participate in the Scheme on 28th May 2004 when the Group
disposed of Pilkington's Tiles Limited. The Scheme continues to be funded by
Pilkington's Tiles Limited. The Company has taken legal advice and has been
advised that it has no liability to the Scheme other than in the event of a
winding up of the scheme or the insolvency of Pilkington's Tiles Limited, the
Scheme's principal employer. In either case, the Company will be liable for a
proportionate share of the cost of securing the liabilities of the Scheme
pertaining only to its seven former employees.
16 Called-up share capital
2007 2006 2007 2006
Number Number #'000 #'000
Authorised: Ordinary shares of 5p each 264,800,000 264,800,000 13,240 13,240
Allotted, called-up and fully paid: Ordinary shares of 5p each 184,948,954 184,948,954 9,247 9,247
There are no Share Options.
17 Reserves
Group Special Revaluation Profit & Loss
Reserve Reserve account
#'000 #'000 #'000
At beginning of year. 13,130 5,540 (24,845)
Revaluation of Investment Property
Loss for the financial year - - (24)
At end of year 13,130 5,540 (20,509)
Company Special Revaluation Profit & Loss
Reserve Reserve account
#'000 #'000 #'000
At beginning of year 13,130 1,750 (20,695)
Revaluation of Investment Property
Loss for the financial year - - (24)
At end of year 13,130 1,750 (20,719)
Notes to the Accounts
for the year ended 31 May 2007
17 Reserves (continued)
Court approval was received on 27 September 2002 for the cancellation of a share
premium account. The court was asked only to approve the transfer of sufficient
of the share premium account to Profit and Loss to clear the deficit existing at
27 September 2002. The balance was transferred to a Special Reserve.
18 Cash flow information
(a) Reconciliation of operating profit to net cash inflow from operating 12months ended 12months ended
activities: 31 May 2007 31 May 2006
#'000 #'000
Operating profit 264 260
Decrease in debtors 20 -
Decrease in creditors (27) (15)
Net cash inflow from operating activities 257 245
(b) Reconciliation of net cash flow to movement in net debt:
12 months 12 months
ended ended
31 May 2007 31 May 2006
#'000 #'000
Increase/(decrease) in cash in the period 2 (2)
Increase/(decrease) in short term deposits in the period 2 (8)
Change in net debt resulting from cashflows 4 (10)
Other non-cash movements (34) (28)
Movement in net debt in the period (30) (38)
Opening net debt (2,993) (2,955)
Net debt at 31 May (3,023) (2,993)
(c) Analysis of net debt: Opening Cash flows Other Closing
#'000 #'000 #'000 #'000
Cash 15 2 - 17
Short term deposits 145 2 - 147
Term Loans (3,153) - (34) (3,187)
Total (2,993) 4 (34) (3,023)
Notes to the Accounts
for the year ended 31 May 2007
19 Guarantees and other financial commitments
(a) Capital Commitments:
The Group has no capital commitments (2006: nil).
(b) Contingent Liabilities:
The Company has the following contingent liabilities:
a) Upon the sale of the Investment Property, fees will be payable to Ernst
& Young LLP in respect of the tax advice given in relation to the establishment
and utilization of capital losses. The level of fee is related to the ultimate
tax saving achieved and is calculated as 7.5% of that saving. In the event the
transaction aborts for any reason other than failure of the tax planning, or the
Company is taken over, merges or there is a reverse takeover and the planning is
no longer required, Ernst & Young will be paid a non- refundable fee of 50% of
costs to the date of the abort/ takeover/merger, provided the Investment
Property is not sold prior to a sale of the company. Ernst & Young have
indicated this fee would be in the order of #104,000.
b) Upon the sale of the Investment Property, a payment of #300,000 is due
to K Whitely, one of the parties to the sale of subsidiary companies for the
Group sold on 28 May 2004.
c) Upon the sale of the Investment Property, the Company will be liable to
pay 1.75% of the ultimate sale price to their property advisors. Additional
incentive payments would become due to advisers on incremental values being
achieved above agreed threshold values. On sale of the share capital of the
Company payments will become due to these advisers based, either on a cost
incurred basis, or based on the market capitalization of the Group calculated
using the offer price. In aggregate these payments as at 31 May 2007 would be
expected to represent a cost equal to approximately 1.2% of market
capitalization of the Company.
d) Upon realisation of the Investment Property, an agreed amount out of
rental paid from 28 May 2004, at a rate of #50,000 per annum apportioned on a
daily basis, will be repayable to the existing tenant.
e) The Company made arrangements to insure the Company's potential
liabilities under the warranties and indemnities necessarily given in order to
effect the disposal of its former operating subsidiaries on 28 May 2004. The
objective of this insurance was to limit future exposure to an aggregate
deductible on any claim to #50,000 as compared to the warranty limit agreed on
disposal of #1m. From 28 May 2005, the potential insured liability was in any
event restricted to certain tax warranties given, no claims having been notified
to the Company by the expiry date for claims relating to all other Warranties
given. The expiry date for claims to be received relating to tax warranties
given is 31 March 2011.
f) The Company's contingent liability in respect of the Pilkington's
Tiles Limited Pension Scheme is described in Note 15.
g) H A Palmer and D E Cicurel have agreed to defer the payment of any
directors' fees until a sale of the Company's Investment Property or an offer
for the share capital of the Company is received and recommended. Only upon the
occurrence of either event, the Company would have to pay H A Palmer and D E
Cicurel the amount of the outstanding fees based on the number of their
completed months of service. These directors receive no other payments or
benefits for their services. For the period of liability, which is for the 36
months to 31 May 2007, the cost of this would be #105,000. In addition under the
same circumstances all directors would be entitled to one year's notice at a
total cost of #50,000, and D J Booth to a #15,000 bonus.
h) In the event of an offer for the share capital of the Company being
made and accepted by shareholders payments would be due to the Companies
Financial and Legal Advisers. The cost of these payments in aggregate would be
expected to be approximately 1.5% of the market capitalization of the Company.
No provision has been made in these financial statements in respect of these
contingent liabilities.
20 Post Balance Sheet events
The Board announced on 4th July 2007 that it had received an approach which may
or may not lead to an offer for the Group. It was stated that any offer for the
share capital of the Company was likely to represent a price at or around 6
pence for each Poole Investments plc ordinary share. On 12th July 2007 Inland
plc made an announcement that discussions were taking place with the Group that
may lead to an offer. This offer was expected to be solely for a cash
consideration. These discussions are still ongoing and the Board will make a
further announcement as soon as possible.
In the event that the Company is sold a number of contingent liabilities would
become payable. These are explained in note 19.
Copies of the 2007 Annual Report will be despatched to shareholders in July
2007.
They will also be available at the following address:
Unit 19
21 Charlwoods Road
East Grinstead
West Sussex
RH19 2HL
For further information please contact:
Kevin Wilson/Nick Cowles, Zeus Capital Limited Tel: 0161 831 1512
David Booth, Poole Investments plc Tel: 07973 820 492
This information is provided by RNS
The company news service from the London Stock Exchange
END
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