Annual Financial Report
Secured Property Developments plc
Directors' report and financial statements
Registered number 2055395
For the Year ended 31 December 2012
Contents
Notice of meeting 1
Company information 2
Chairman's statement 3
Directors' report 5
Statement of directors' responsibilities in respect of the Directors'
Report and the financial statements 7
Independent auditor's report to the members of Secured Property Developments plc 8
Consolidated profit and loss account 10
Consolidated balance sheet 11
Company balance sheet 12
Consolidated cash flow statement 13
Consolidated Statement of Total Recognised Gains and Losses 14
Reconciliation of movements in shareholders' funds 15
Notes to the financial statements 16
Form of proxy for use at the annual general meeting on 23 August 2013 26
Notice of meeting
NOTICE IS HEREBY GIVEN that the Twenty second Annual General Meeting of
Secured Property Developments plc will be held at The Small Mall Room, The
Royal Automobile Club, 89 Pall Mall, London, SW1Y 5HS on Friday 23rd August
2013 at 10 a.m. for the following purposes:
1. To receive and adopt the financial statements for the year ended 31
December 2012, together with the reports of the Directors and Auditors
thereon.
2. To re-elect D.M.J.Duffield as a director (retires by rotation)
3. To re-elect R.A.Shane as a director (retires by rotation)
4. To authorise, by special resolution in accordance with s95 of the Companies
Act 2006, the Board to purchase up to 5% of the Company's own shares in the
open market at a minimum price of 20p per share and a maximum price of 60p per
share: such powers to expire at the AGM to be held in 2014, or on 23rd August
2014 if earlier.
5. To re-appoint as Auditors KPMG Audit Plc, and to authorise the Directors to
agree their remuneration, such powers to expire at the AGM held in 2014
6. To transact any other ordinary business of the Company.
By order of the board
I H Cobden Date: 30th July 2013
Secretary
Notes:
1 A member entitled to attend and vote at this meeting is entitled to appoint
a proxy to attend and vote in his stead. A proxy need not be a member of the
Company. Proxy forms must be lodged at the Registered Office not later than
forty-eight hours before the time fixed for the meeting.
2 We would draw the attention of members proposing to attend the meeting to
the RAC Club dress code, which requires men to wear a tailored jacket and
trousers, collared shirt and tie at all times and women to dress with
commensurate formality.
Company information
Directors R E France
G W Green
R A Shane
P R Stansfield
D Duffield
Secretary I H Cobden
Registered office Unit 6 Orchard Mews
42 Orchard Road
London
N6 5TR
Auditors KPMG Audit plc
8 Princes Parade
Liverpool
L3 1QH
Bankers
The Royal Bank of Scotland
Piccadilly Circus Branch
48 Haymarket
London
SW17 4SE
Solicitors Summers
22 Welbeck Street
London
W1G 8EF
Share Dealing The Company's Ordinary shares are
quoted on the ICAP Security and
Derivative Exchange (ISDX) and
persons can buy or sell shares
through their stockbroker.
Share Price The middle market price of the
Ordinary shares were quoted at 31
December 2012 on the ISDX (previously
the PLUS Market) at 12.5p pence per
share (2011: 17.5 pence per share)
Chairman's statement
2012 has been another year of difficult trading conditions. The retail
property market remains polarised with demand focused on the best high
streets, shopping centres and retail parks mainly in London and the South
East. However, despite the weakness in the market and the uncertainty of the
economic outlook, I am pleased to report the Company's portfolio is fully let.
The vacant unit at 11 Newborough, Scarboroughwas let to Eden Mobility Ltd, a
multiple retailer of equipment for the elderly and disabled, for a term of 9
years with no option to break subject to three yearly rent reviews. In
addition the lease of 12 Newborough was assigned and restructured with a
stepped rent increase subject to a further increase in 2018.
Turnover has increased to £175,118 compared with £126,996 in 2011 mainly due
to the recovery of a dilapidations claim. However operating profit is lower
due to higher cost of sales and administrative expenses being a combination of
reletting costs and professional fees relating to a swap agreement.
An independent valuation of the properties has been undertaken this year
leading to a corresponding reduction in fixed assets. This was undertaken by
Jones Lang La Salle who has valued the properties at £1,550,000 compared with
a historic cost of £1,448,139.
RBS Loan Facility/Swap
You will be aware that in June 2008 the Company entered into a 5 year loan
facility with Royal Bank of Scotland Plc (RBS) to repay its bank borrowings
and provide additional debt finance. The Company is now in negotiation with
the Bank to renew the loan for a further 5 years until June 2018. However, the
terms of these negotiations may be subject to the outcome of a mis-selling
complaint which is explained below.
As a precondition of the 2008 loan RBS required the Company to hedge the
interest rate exposure through an interest rate hedging instrument (`Swap')
switching the variable rate of the loan to a fixed interest rate.
In 2012 the Company made a complaint to RBS about the mis-selling of the Swap.
This was followed by an announcement from the Financial Conduct Authority
(formally the Financial Services Authority) (FCA) in June 2012 that its
preliminary review into the sale of interest rate hedging products to small
and medium sized businesses had found serious failings by certain leading
banks including RBS. The FCA also announced that agreement had been reached
with RBS and the other major banks to participate in an independent past
business review (`FCA Review') and a redress exercise.
In August 2012 the Company received a letter from the Chief Executive of RBS
Corporate Banking Division confirming that the Bank would be taking part in
the FCA Review and the outcome should be known within 9 months ie. by May
2013. However, subsequently the Bank indicated that the process would be
delayed by a further 9 months. Given the uncertainty and timescale of the FCA
Review the Company has taken specialist legal advice, which confirmed that in
the opinion of leading counsel the Company has a strong claim against RBS for
mis-selling.
As stated above, the Company is now in negotiation with RBS to renew the loan
facility. However it is clear that due to the updated valuation of the
properties the loan will not be renewed at the current level. As a consequence
the Company will be looking at alternative ways of raising additional capital
or mezzanine finance including the possibility of a rights or loan note issue.
I shall report to the Shareholders separately on this as soon as the Board has
sufficient information to make a recommendation.
We continue to maintain a tight control of the Company's cash resources, which
we consider adequate to support current levels of expenditure, although we
keep them under constant review.
In current circumstances the Board considers it is not appropriate to
recommend the payment of a dividend for the year ending 31 December 2012.
Chairman's statement (continued)
The annual general meeting will take place at theRoyal Automobile Club, 89
Pall Mall London, SW1Y 5HS on Friday 23 August 2013 at 10 a.m., and the
directors look forward to meeting those shareholders, who can attend.
David Duffield
Chairman
Date: 30th July 2013
Directors' report
The directors present their directors' report and financial statements for the
year ended 31 December 2012.
Principal activities
The principal activity of Secured Property Developments plc is investment in
commercial property. The group comprises the holding company, a finance
company and a second property company.
Business review
The results for the year are set out on page 10 of these consolidated
financial statements.
The group's investment properties are let at rents commensurate with local
market conditions and on terms that include periodic upwards adjustment,
financed by bank borrowings. A review of the business is included in the
Chairman's Statement set out on page 3 and 4.
Going Concern
The directors have prepared the financial statements on a going concern basis
for the reasons set out in note 1 to the financial statements.
Derivatives and other financial instruments
The group's financial instruments comprise borrowings, some cash and liquid
resources, convertible unsecured loan stock and various items, such as trade
debtors and trade creditors, that arise directly from its operations. The main
purpose of these financial instruments is to raise finance for the group's
operations.
The main risks arising from the group's financial instruments are interest
rate risk and liquidity risk. The Board reviews and agrees policies for
managing each of these risks and they are summarised below.
Interest rate risk
The group finances its operations through bank borrowings. Currently the group
borrows at a rate of interest fixed by a swap agreement on all its borrowings.
The group's policy is to borrow at the lowest rates for periods that do not
carry excessive time premiums.
Liquidity risk
As regards liquidity, the group's policy has throughout the year been to
ensure that the group is able at all times to meet its financial commitments
as and when they fall due. The maturity dates of the various loans to the
group are set out in note 14 of these financial statements. The current status
of the negotiations in respect of the Group's financing facilities is set out
in the Chairman' Statement and note 1 to the financial statements.
Proposed dividend and transfer to reserves
The directors cannot recommend the payment of a dividend.
The loss for the year retained in the group is £67,851 (2011:£61,407).
Directors and directors' interests
The directors who held office during the year were as follows:
D Duffield
R E France
G W Green
R A Shane
P R Stansfield
Directors' report (continued)
Directors and directors' interests (continued)
The directors who held office at the end of the financial year had the
following interests in the shares and loan stock of the group companies as
recorded in the register of directors' share and debenture interests.
Interest at Interest at
Director Company Class 31 December 1 January
2012 2012
Number Number
D Duffield SPD plc* Ordinary shares - -
R E France SPD plc* Ordinary shares 88,888 88,888
G W Green SPD plc* Ordinary shares 90,000 90,000
Deferred shares 30,000 30,000
R A Shane SPD plc* Ordinary shares 574,456 574,456
Deferred shares 154,666 154,666
P R Stansfield SPD plc* Ordinary shares 6,250 6,250
* SPD plc is used above as an abbreviation for Secured Property Developments
plc.
According to the register of directors' interests, no rights to subscribe for
shares in or debentures of the company or any other group company was granted
to any of the directors or their immediate families, or exercised by them,
during the financial year.
Substantial shareholding of ordinary shares of 20p each as at 31 December 2012
R E France 4.51%
G W Green 4.57%
R A Shane 29.15%
Political and charitable contributions
The group made no political or charitable donations during the year.
Disclosure of information to the auditor
The directors who held office at the date of approval of this directors'
report confirm that, so far as they are each aware, there is no relevant audit
information of which the Company's auditoris unaware; and each director has
taken all the steps that he ought to have taken as a director to make himself
aware of any relevant audit information and to establish that the Company's
auditoris aware of that information.
Auditor
In accordance with Section 489 of the Companies act 2006, a resolution for the
reappointment of KPMG Audit Plc as auditors of the company is to be proposed
at the forthcoming Annual General Meeting.
By order of the board
I H Cobden Unit 6 Orchard Mews
Secretary 42 Orchard Road
London
Date : 30th July 2013 N6 5TR
Registered number: 2055395
Statement of directors' responsibilities in respect of the Directors'
Reportand the financial statements
The directors are responsible for preparing the Directors' Report and the
group and parent company financial statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare group and parent company
financial statements for each financial year. Under that law they have elected
to prepare the group and parent company financial statements in accordance
with UK Accounting Standards and applicable law (UK Generally Accepted
Accounting Practice).
Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the group and parent company and of their profit or loss for that
period. In preparing each of the group and parent company financial
statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards have been followed, subject
to any material departures disclosed and explained in the financial
statements;
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the group and the parent company will continue
in business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent company's transactions and disclose
with reasonable accuracy at any time the financial position of the parent
company and enable them to ensure that its financial statements comply with
the Companies Act 2006. They have general responsibility for taking such steps
as are reasonably open to them to safeguard the assets of the group and to
prevent and detect fraud and other irregularities.
Independent auditor's report to the members of Secured Property
Developments plc
We have audited the financial statements of Secured Property Developments plc
for the year ended 31 December 2012 which comprise the Consolidated Profit and
Loss Account, the Consolidated and Company balance sheets, the Consolidated
Cash Flow Statement, the Reconciliation of Movements in Shareholders' Funds
and the related notes. The financial reporting framework that has been applied
in their preparation is applicable law and UK Accounting Standards (UK
Generally Accepted Accounting Practice).
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members, as
a body, for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities Statement set out
on page 7, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements
in accordance with applicable law and International Standards on Auditing (UK
and Ireland). Those standards require us to comply with the Auditing Practices
Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on
the Financial Reporting Council's web-site at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion the financial statements:
- give a true and fair view of the state of the group's and the parent
company's affairs as at 31 December 2012 and of the group's loss for the year
then ended;
- have been properly prepared in accordance with UK Generally Accepted
Accounting Practice; and
- have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter - going concern
In forming our opinion on the financial statements, which is not modified, we
have considered the adequacy of the disclosure made in note 1 to the financial
statements concerning the Group's and the Parent Company's ability to continue
as a going concern. The Group and Company are dependent on the successful
refinancing of a bank debt of £1.5m, which expired on 3 June 2013 but which
the lender has offered to extend during renegotiations. The lender has
indicated that it may not refinance the entire principal amount of the loan.
The Company will therefore need to seek further capital investment from
existing investors or alternative financing to cover the shortfall between any
proposed facility and the existing debt and, depending on the outcome of the
swap review explained in note 1, sufficient funding to make payments under the
swap going forward. These conditions, along with the other matters explained
in note 1 to the financial statements, indicate the existence of material
uncertainties which may cast significant doubt on the Group's and the Parent
Company's ability to continue as a going concern. The financial statements do
not include the adjustments that would result if the Group and the Parent
Company were unable to continue as a going concern.
Independent auditor's report to the members of Secured Property Developments
plc (continued)
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report for the
financial year for which the financial statements are prepared is consistent
with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
- the parent company financial statements are not in agreement with the
accounting records and returns; or
- certain disclosures of directors' remuneration specified by law are not
made; or
- we have not received all the information and explanations we require for
our audit.
Hywel Jones (Senior Statutory Auditor)
For and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
8 Princes Parade
Liverpool
L3 1QH
30 July 2013
Consolidated profit and loss account
for the year ended 31 December 2012
Note 2012 2011
£ £
Turnover 2 175,118 126,996
Cost of sales (10,226) (1,198)
Gross profit 164,892 125,798
Administrative expenses (132,228) (86,625)
Operating profit 32,664 39,173
Other interest receivable and 6 3,229 3,566
similar income
Interest payable and similar 7 (103,744) (104,146)
charges
Loss on ordinary activities 2-7 (67,851) (61,407)
before taxation
Taxation 8 - -
Loss on ordinary activities (67,851) (61,407)
after taxation and retained
for the financial year 18
Loss per share 10 (3.4)p (3.1)p
All income is from continuing operations.
The notes on pages 16 to 25 form part of these financial statements.
Consolidated balance sheet
at 31 December 2012
Note 2012 2012 2011 2011
£ £ £ £
Fixed assets
Tangible assets 11 1,550,000 2,110,000
Current assets
Debtors 13 88,185 78,742
Cash at bank and in hand 416,269 483,008
504,454 561,750
Creditors: amounts falling due 14 (1,601,788) (91,233)
within one year
Net current (liabilities)/assets (1,097,334) 470,517
Total assets less current 452,666 2,850,517
liabilities
Creditors: amounts falling due 15 - (1,500,000)
after more than one year
Net assets 452,666 1,080,517
Capital and reserves
Called up share capital 17 418,861 418,861
Share premium account 18 3,473 3,473
Revaluation reserve 18 101,861 661,861
Profit and loss account 18 (71,529) (3,678)
Shareholders' funds 452,666 1,080,517
The notes on pages 16 to 25 form part of these financial statements.
These financial statements were approved by the board of directors on 30th
July 2013 and were signed on its behalf by:
D Duffield R A Shane
Director Director
Registered number: 2055395
Company balance sheet
at 31 December 2012
Note 2012 2012 2011 2011
£ £ £ £
Fixed assets
Tangible assets 11 500,000 610,000
Investments 12 947,263 947,263
1,447,263 1,557,263
Current assets
Debtors 13 122,598 150,128
Cash at bank and in hand 402,143 468,882
524,741 619,010
Creditors: amounts falling due 14 (1,567,124) (64,147)
within one year
Net current (liabilities)/assets (1,042,383) 554,863
Total assets less current 404,880 2,112,126
liabilities
Creditors: amounts falling due 15 - (1,500,000)
after more than one year
Net assets 404,880 612,126
Capital and reserves
Called up share capital 17 418,861 418,861
Share premium account 18 3,473 3,473
Revaluation reserve 18 88,763 198,763
Profit and loss account 18 (106,217) (8,971)
Shareholders' funds 404,880 612,126
The notes on pages 16 to 25 form part of these financial statements.
These financial statements were approved by the board of directors on 30th
July 2013 and were signed on its behalf by:
D Duffield R A Shane
Director Director
Registered number: 2055395
Consolidated cash flow statement
for the year ended 31 December 2012
Note 2012 2011
£ £
Cash inflow/(outflow) from 33,776 (38,849)
operating activities
Returns on investments and 20 (100,515) (100,580)
servicing of finance
Taxation - -
Dividends - (9,853)
Cash inflow before financing (66,739) (149,282)
Financing - -
Decrease in cash in the year 21 (66,739) (149,282)
Reconciliation of operating profit to operating cash flows
for the year ended 31 December 2012
2012 2011
£ £
Operating profit 32,664 39,173
Increase in debtors (9,443) (56,958)
Increase/(decrease) in 10,555 (21,064)
creditors
Net cash inflow from 33,776 (38,849)
operating activities
Reconciliation of net cash flow to movement in net debt
for the year ended 31 December 2012
Note 2012 2011
£ £
Decrease in cash in the year 21 (66,739) (149,282)
Movement in net debt in the year (66,739) (149,282)
Net debt at beginning of the year 21 (1,016,992) (867,710)
Net debt at end of the year 21 (1,083,731) (1,016,992)
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 December 2012
2012 2011
£ £
Loss for the financial year (67,851) (61,407)
Unrealised deficit on revaluation of investment (560,000) -
properties
Total recognised gains and losses relating to the (627,851) (61,407)
financial year
Reconciliation of movements in shareholders' funds
for the year ended 31 December 2012
Group Company
2012 2011 2012 2011
£ £ £ £
Loss for the financial year (67,851) (61,407) (97,246) (48,979)
Dividends on shares classified - (9,854) - (9,854)
in shareholders' funds
Retained loss (67,851) (71,261) (97,246) (58,833)
Revaluation of investment (560,000) - (110,000) -
properties
Net reduction in shareholders' (627,851) (71,261) (207,246) (58,833)
funds
Opening shareholders' funds 1,080,517 1,151,778 612,126 670,959
Closing shareholders' funds 452,666 1,080,517 404,880 612,126
Notes to the financial statements
(forming part of the financial statements)
1 Accounting policies
The following accounting policies have been applied consistently in dealing
with items which are considered material in relation to the financial
statements, except as noted below.
Basis of preparation
The financial statements have been prepared under the historical cost
accounting rules as modified by the revaluation of investment properties and
in accordance with applicable accounting standards. The financial statements
are in compliance with the Companies Act 2006 except that, as noted below,
investment properties are not depreciated.
Basis of consolidation
The group financial statements consolidate the financial statements of Secured
Property Developments plc and its subsidiary undertakings. These financial
statements are made up to 31 December 2012.
Unless otherwise stated, the acquisition method of accounting has been
adopted. Under this method, the results of subsidiary and associated
undertakings acquired or disposed of in the year are included in the
consolidated profit and loss account from the date of acquisition or up to the
date of disposal.
In accordance with s408 of the Companies Act 2006 Secured Property
Developments plc is exempt from the requirement to present its own profit and
loss account. The result for the financial year dealt with in the financial
statements of Secured Property Developments plc is disclosed in note 18 to
these financial statements.
Going concern
These financial statements have been prepared on the going concern basis of
accounting notwithstanding that the Group and Parent Company had net current
liabilities of £1,097,334 and £1,042,383 as at 31 December 2012, respectively,
and the Group recorded a loss of £67,851 and had a cash outflow of £66,739for
the year then ended.
The Company has a bank loan of £1,500,000 with the Royal Bank of Scotland
("RBS"), which had an original repayment date of 3 June 2013. The RBS banking
facility includes cross guarantees and security over all the assets of the
Group. The facility also includes an out of the money pay-variable
receive-fixed interest rate swap, which matures in 2018. The swap includes a
mandatory break clause exercisable on expiry of the loan. On 3 June 2013 the
amount of breakage costs payable by the Company was £360,000.
In 2012 the Company lodged a formal complaint to RBS in respect of the
interest rate swap. The complaint alleges that RBS has mis-sold this
instrument to the Company, and as such the Company should not be liable to pay
any breakage costs to RBS on termination of the instrument. Around the same
time the Financial Conduct Authority (formerly Financial Services Authority)
announced that an independent past business review and a redress exercise of
the sale of interest rate hedging products to small and medium sized
businesses (`the FCA Review') has been agreed with major banks. In August
2012, the Company received a letter from RBS confirming that RBS would be
taking part in the FCA Review. The outcome of this review is unknown and may
result in dismissal of the Company's claim or the elimination of the Company's
liability to RBS, which may or may not include compensation payable to the
Company for mis-selling of the swap.
RBS has offered to remove the mandatory break clause from the swap agreement
and to extend repayment of the loan until the earlier of 3 months after the
FCA review is completed or 12 months from the date that the extension of the
agreement is signed. Under the proposed arrangement only the Company can
early-terminate the swap, with any termination payment payable to RBS based on
the present value of the swap at termination. Signing of this agreement is
expected to be in the near future. In the meantime the loan and swap will
continue to be serviced as normal, and the Directors will progress the
refinancing negotiations with RBS and/or alternative sources of refinance
during this time.
Notes (continued)
1 Accounting policies(continued)
Presently, RBS has indicated that it may notrefinance the entire principal
amount of the loan. The Company will therefore needto seek further capital
investment from existing investors or alternative financing to cover the
shortfall between any proposed facility and the existing debt, and depending
on the conclusion of the FCA review, sufficient funding to cover payments
under the swap. The directors are working with the bank to identify all viable
options, as any shortfall financing will be dependent on the specifics of the
proposed refinancing facility.
The directors acknowledge that there can be no certainty that the replacement
facility will be agreed on satisfactory terms, that the FCA review will have a
favourable outcome and that sufficient funding necessary to cover the
shortfall and, depending on the outcome of the review, make payments under the
swap going forward will be secured.
The directors have prepared cash flow forecasts for a period of 12 months
following the approval of these financial statements. Taking into account the
amounts currently held in cash reserve funds the directors consider that the
Company will be able to meet its financial obligations (excluding the
substantial repayment of the bank loan and possible payment of the swap, as
discussed above) over the next 12 months, based on these cash flow forecasts.
The directors have concluded that the conditions set out above indicate the
existence of material uncertainties which may cast significant doubt on the
Group's and Company's ability to continue as a going concern and that they
may, therefore, be unable to realise their assets and discharge their
liabilities in the normal course of business. Nevertheless, after making
enquiries and considering the uncertainties described above, the directors
have a reasonable expectation that the Group and Company will have adequate
resources to continue in operational existence for the foreseeable future. For
these reasons, they continue to adopt the going concern basis in preparing the
annual financial statements. Accordingly, the financial statements do not
include the adjustments that would result if the Group and Company were unable
to continue as a going concern.
Investment properties
In accordance with SSAP 19, depreciation is not charged on investment
properties held by the group. This is a departure from the requirements of the
Companies Act 2006 which requires all properties to be depreciated. Such
properties are not held for consumption but for investment and the directors
consider that to depreciate them would not give a true and fair view.
Investment properties are revalued annually by the directors and periodic
external valuations are completed when considered necessary, usually over a
five year period. The aggregate surplus or deficit is transferred to a
revaluation reserve. The directors consider that this policy results in the
accounts giving a true and fair view.
Taxation
The charge for taxation is based on the profit for the year and takes into
account taxation deferred because of timing differences between the treatment
of certain items for taxation and accounting purposes. Deferred tax is
recognised without discounting, in respect of all timing differences between
the treatment of certain items for taxation and accounting purposes which have
arisen but not reversed by the balance sheet date, except as otherwise
required by Financial Reporting Standard 19.
Classification of financial instruments issued by the Group
Following the adoption of FRS 25, financial instruments issued by the Group
are treated as equity (i.e. forming part of shareholders' funds) only to the
extent that they meet the following two conditions:
1 they include no contractual obligations upon the Company (or Group as the
case may be) to deliver cash or other financial assets or to exchange
financial assets or financial liabilities with another party under conditions
that are potentially unfavourable to the Company (or Group); and
2 where the instrument will or may be settled in the Company's own equity
instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the Company's own equity instruments or is a
derivative that will be settled by the Company's exchanging a fixed amount of
cash or other financial assets for a fixed number of its own equity
instruments.
Notes (continued)
1 Accounting policies(continued)
To the extent that this definition is not met, the proceeds of issue are
classified as a financial liability. Where the instrument so classified takes
the legal form of the Company's own shares, the amounts presented in these
financial statements for called up share capital and share premium account
exclude amounts in relation to those shares.
Finance payments associated with financial liabilities are dealt with as part
of interest payable and similar charges. Finance payments associated with
financial instruments that are classified as part of shareholders' funds, are
dealt with as appropriations in the reconciliation of movements in
shareholders' funds.
Cash and liquid resources
Cash, for the purpose of the cash flow statement, comprises cash in hand and
deposits repayable on demand, less overdrafts payable on demand.
Turnover
Turnover represents the amounts (excluding value added tax) derived from
rental income from investment properties and from interest earned on loans
during the year.
2 Turnover
Turnover and profit on ordinary activities before taxation are attributable to
the principal activities of the group.
Turnover was derived from the activities of the group as follows:
2012 2011
£ £
Rental income from investment properties 175,118 126,996
175,118 126,996
All turnover and pre-tax profit on ordinary activities before taxation was
earned in the UK.
3 Profit on ordinary activities before taxation
2012 2011
£ £
Loss on ordinary activities before taxation is stated
after charging:
Auditor's remuneration
Audit services 11,000 10,250
Other services - compliance tax work - 2,830
The audit fee of the group of £11,000 includes £5,500 (2011: £5,125) in
relation to the company.
4 Remuneration of directors
The chairman received fees of £22,367 (2011: £12,621) and one other director
received fees of £17,528 (2011: £25,602) which was paid to his employer in
respect of his services (see note 21).
Notes (continued)
5 Staff numbers and costs
There are no other staff costs other than those disclosed in note 4. The
average number of persons employed by the Company (including directors) during
the year, analysed by category, was as follows:
Number of employees
2012 2011
Directors 5 5
6 Other interest receivable and similar income
2012 2011
£ £
Bank interest receivable 3,229 3,566
7 Interest payable and similar charges
2012 2011
£ £
On bank loans 103,744 104,146
8 Taxation
Analysis of charge in year
2011 2011
£ £
UK corporation tax
Current tax on income for the year - -
Total current tax - -
Tax on profit on ordinary activities - -
Factors affecting the tax charge for the current period
The current tax charge for the year is higher (2011: higher) than the standard
rate of corporation tax in the UK. The differences are explained below.
2012 2011
£ £
Current tax reconciliation
Loss on ordinary activities before tax (67,851) (61,407)
Current tax at 24.5% (2011: 26.5%) (16,623) (16,273)
Effects of:
Movement in tax losses 16,623 16,273
Total current tax charge (see above) - -
Notes (continued)
9 Deferred tax
An analysis of the unrecognised deferred taxation asset is set out below.
Group Company
2012 2011 2012 2011
£ £ £ £
Deferred tax asset at (60,351) (44,078) (52,825) (39,845)
beginning of year
Tax losses incurred in the (16,625) (16,273) (23,825) (12,980)
period
Change in tax rates 3,534 - 3,659
Deferred tax asset at end of (73,442) (60,351) (72,991) (52,825)
year
The deferred tax asset has not been recognised on the basis that the timing
differences and tax losses may not be recovered in the foreseeable future.
10 Earnings per share
The calculation of the earnings per share figure is based on the following:
2012 2011
Loss after tax 67,851 61,407
Weighted average number of ordinary shares 1,970,688 1,970,688
Loss per share (3.4)p (3.1)p
Notes (continued)
11 Tangible fixed assets
Group Investment
properties
£
Cost or valuation
At beginning of year 2,110,000
Revaluation (560,000)
Net book value
At 31 December 2012 1,550,000
At 31 December 2011 2,110,000
2012 2011
£ £
Historical cost of revalued assets 1,448,139 1,448,139
Historical cost net book value of revalued assets 1,448,139 1,448,139
Company Investment
Properties
£
Cost or valuation
At beginning and end of year 610,000
Revaluation (110,000)
Net book value
At 31 December 2012 500,000
At 31 December 2011 610,000
2012 2011
£ £
Historical cost of revalued assets 411,237 411,237
Historical cost net book value of revalued assets 411,237 411,237
Group and company
The investment properties were valued as at 31 December 2012 by Jones Lang
LaSalle. The external valuation was completed in accordance with the current
edition of the Practice Statements and Guidance Notes of the Appraisal and
Valuation Standards prepared by the Royal Institution of Chartered Surveyors.
The Directors believe this valuation to be appropriate.
Notes (continued)
12 Investments
Company Loans to Shares in
subsidiaries Subsidiaries Total
£ £ £
Cost
At beginning and end of year 947,259 4 947,263
Provisions for diminution in
value
At beginning and end of the - - -
year
Net book value
At 31 December 2012 947,259 4 947,263
At 31 December 2011 947,259 4 947,263
Shares in group undertakings represent the company's investment in SPD
Discount Limited and Secured Property Developments (Scarborough) Limited. At
31st December 2012 and 2011 the company held 100% of the ordinary share
capital of each of the subsidiary undertakings.
Both subsidiary undertakings are registered in England and Wales. SPD Discount
Limited was trading as a finance company but has not traded in the year, and
the principal activity of Secured Property Developments (Scarborough) Limited
is property investment.
13 Debtors
Group Company
2012 2011 2012 2011
£ £ £ £
Amounts owed by subsidiary - - 106,297 103,786
undertakings
Prepayments and accrued 88,185 78,742 16,301 46,342
income
88,185 78,742 122,598 150,128
All amounts fall due within one year.
14 Creditors: amounts falling due within one year
Group Company
2012 2011 2012 2011
£ £ £ £
Bank loans and overdrafts 1,500,000 - 1,500,000 -
Taxes and social security 1,875 3,695 1,924 1,924
Other creditors 6,130 9,515 31,557 26,636
Accruals and deferred income 93,783 78,023 33,643 35,587
1,601,788 91,233 1,567,124 64,147
The bank loan is secured by a fixed charge on the properties
of Secured Property Developments (Scarborough) Limited and of
the Company. It was due for repayment on 3 June 2013 (see note
1). As at 31 December 2012 there was anopen interest rate
swap. The fair value of the interest rate swap has not been
recognised in the financial statements as the group has not
adopted FRS 26.
Notes (continued)
15 Creditors: amounts falling due after more than one year
Group Company
2012 2011 2012 2011
£ £ £ £
Bank loan - 1,500,000 - 1,500,000
Analysis of bank loan
Group Company
2012 2011 2012 2011
£ £ £ £
Amounts falling due:
Less than one year 1,500,000 - 1,500,000
Between one and two years - 1,500,000 - 1,500,000
16 Derivatives and other financial instruments
The group's policies with regard to financial instruments are set in note 1.
Short term debtors and creditors have been omitted from all disclosures.
Financial assets
The group has £416,269 (2011: £483,008) held in cash as financial assets as
well as short term debtors.
Financial liabilities
The interest rate profile of the group's financial liabilities as at 31
December 2012 was:
Fixed rate Weighted Financial
weighted average liabilities
Fixed rate average period for on which no
financial interest which rate interest is
Total liabilities rate is fixed charged
£ £ % Years £
31 December 2012 1,500,000 1,500,000 6.92 0.4 -
Maturity of financial liabilities
The maturity profile at 31 December 2012 of the group's financial liabilities,
other than short term creditors such as trade creditors and accruals is set
out in note 14.
Fair values of the group's financial asset and liabilities
There is no material difference between the fair value and the book value of
the group's financial assets and liabilities which have been recognised. The
interest rate swap which is due to expire in 2018 has not been recognised as
the Group does not apply FRS 26 (see note 13).
Notes (continued)
17 Called up share capital
2012 2011
£ £
Authorised
18,863,846 ordinary shares of 20p each 3,772,769 3,772,769
1,236,154 deferred shares of 2p each 24,723 24,723
3,797,492 3,797,492
Allotted, called up and fully paid
1,970,688 ordinary shares of 20p each 394,138 394,138
1,236,154 deferred shares of 2p each 24,723 24,723
418,861 418,861
The respective rights of the shareholders are as follows:
Ordinary shares
The ordinary shares have the right to all available capital and distributable
profits subject only to any right available to the deferred shares on winding
up.
Deferred shares
The deferred shares have no rights to vote, receive notices, or attend general
meetings, nor to any income. On the return of capital on a winding-up or
otherwise the deferred shares have no entitlement until the sum of £100,000
per ordinary share shall have been distributed.
18 Reserves
Group Share Revaluation Profit and
premium Reserve loss
account Account
£ £ £
At beginning of year 3,473 661,861 (3,678)
Loss for the financial year - - (67,851)
Revaluation of investment - (560,000) -
properties
At end of year 3,473 101,861 (71,529)
Company Share Revaluation Profit and
premium Reserve loss
account Account
£ £ £
At beginning of year 3,473 198,763 (8,971)
Loss for the financial year - - (97,246)
Revaluation of investment - (110,000) -
properties
At end of year 3,473 88,763 (106,217)
Notes (continued)
19 Commitments
Neither the group nor the company had any contractual commitments at the year
end (2011: £nil).
20 Analysis of items netted in the cash flow statement
2011 2011
£ £
Return on investments and servicing of finance
Interest paid (103,744) (104,146)
Interest received 3,229 3,566
Net cash outflow from returns on investments and (100,515) (100,580)
servicing of finance
21 Analysis of changes in net debt
31 December 31 December
2011 Cash flows 2012
£ £ £
Cash in hand and at bank 483,008 (66,739) 416,269
Debt due after one year (1,500,000) - (1,500,000)
(1,016,992) (66,739) (1,083,731)
22 Related party transactions
St James's Property Services Limited of which R A Shane is a director and
shareholder has received £17,258 (2011: £36,875) from the holding company in
respect of management services, including directors' fees of £17,258 (2011:
£25,602). The amount outstanding at the year end is £2,000 (2011: nil).
Guildhall Brokers and Consultants Limited of which R A Shane is a director and
shareholder has received £6,866(2011: £5,848) for insurance premiums. The
amount outstanding at the year end is £nil (2011: £5,942). D. Duffield has
received fees amounting to £22,367 (2011:£ 12,621) from the holding company in
respect of professional fees. The amount outstanding at the year end is
£22,367 (2011: £12,621).
Form of proxy for use at the annual general meeting on 23 August 2013
I/We
______________________________________________________________________________
_
(Please insert full name in BLOCK CAPITALS)
of
______________________________________________________________________________
___
(Please insert address in BLOCK CAPITALS)
being (a) member(s) of the above named Company HEREBY APPOINT the Chairman of
the meeting (see note 6)
______________________________________________________________________________
to act as my/our proxy at the Annual General Meeting of the Company to be held
on Friday 23rd August 2013 and at any adjournment thereof, and to vote on
my/our behalf as indicated below:
Resolution No. For Against
1 To adopt the directors' report and financial
statements for the year ended 31 December 2012
2 To re-elect D.M.J Duffield as a director
3 To re-elect R.A.Shaneas a director
4 To authorise the Board to purchase up to 5% of the
company's own shares in the open market at a minimum
price of 20p per share and a maximum price of 60p per
share, such powers to expire at the AGM to be held in
2014 or on 23rd August 2014, if
earlier
5 To appoint KPMG Audit Plc as auditors and to
authorise the Board to agree their remuneration, such
powers to expire at the AGM held in 2014.
Please indicate with an "X" in the space provided how you wish your votes to
be cast on a poll. Should this form be returned duly completed and signed, but
without a specific direction, the proxy will vote or abstain at his
discretion.
Dated ______________________________ 2013 Signature
__________________________________
Notes
7. A proxy need not be a Member of the Company.
8. In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, will be accepted to the exclusion of the votes
of the other joint holders. For this purpose seniority is determined by the
order in which the names stand in the Register of Members.
9. In the case of a corporation this proxy must be given under its Common Seal
or be signed on its behalf by an officer, attorney or other person duly
authorised.
10. To be valid this proxy must be deposited at the Company's Registered
Office not later than 48 hours before the time appointed for holding the
Meeting together, if appropriate, with the power of attorney or other
authority under which is a signed or a potentially certified copy of such
power or authority.
11. Any alterations made on this form should be initialled.
12. If it is desired to appoint as a proxy any person other than the Chairman
of the Meeting, his/her name and address should be inserted in the relevant
place, reference to the Chairman deleted and the alteration initialled.
Secured Property Developments plc.
Unit 6 Orchard Mews
42 Orchard Road
London
N6 5TR
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