Notification of Transfer to a Premium Listing
THIS ANNOUNCEMENT DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT AND NEITHER THIS ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE BASIS FOR ANY OFFER TO PURCHASE OR SUBSCRIBE FOR ANY SHARES OR OTHER SECURITIES IN THE COMPANY NOR SHALL IT FORM THE BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER.
29 May 2018
Harworth Group plc
Notification of Transfer to a Premium Listing
Harworth Group plc ("Harworth" or the "Company" and together with its subsidiaries, the "Group") announces that it is proposing to transfer the listing category of its ordinary shares (the "Ordinary Shares") from a Standard Listing to a Premium Listing on the Official List of the UK Listing Authority ("Official List") in accordance with Rule 5.4A of the Listing Rules issued by the Financial Conduct Authority (the "Transfer").
The provision of a minimum of 20 business days' notice (which period commenced by way of today's announcement) is required to effect the Transfer. No shareholder approval is required in connection with the Transfer. It is anticipated that the Transfer will take effect at 8.00 a.m. on 1 August 2018, conditional on the approval of the UK Listing Authority ("UKLA").
1. Background to and reasons for the Transfer
Harworth is a leading regenerator of land and property for development and investment that owns, develops and manages a portfolio of over 21,000 acres of land on around 140 sites located throughout the Midlands and the North of England. The Company specialises in the regeneration of former coalfield sites and other former industrial land into new residential developments and employment areas.
The Company's strategy is to create value for shareholders by finding long-term sustainable uses from its extensive landbank of former colliery and largely brownfield sites, as well as replenishing its asset base with strategic land acquisitions and attractive investment opportunities. The Company promotes, develops and manages its portfolio, to enhance net asset value and generate investment returns to meet the operating costs of the business.
The Company was admitted to the Standard Listing segment of the Official List and to trading on the Main Market of the London Stock Exchange on 24 March 2015, following completion of its acquisition of the remaining 75.1% of Harworth Estates Property Group Limited ("HEPGL") that it did not already own (the "Acquisition"). Since the Acquisition the Company's board of directors ("Board") has sought to maintain the most appropriate listing and trading facility for the Ordinary Shares.
The Company remains ambitious and growth-focussed. The Board believes that the Company has reached an appropriate stage in its development to undertake the Transfer at this point in time.
The Company has therefore requested that the UKLA approve the Transfer with effect from 8.00 a.m. on 1 August 2018. All Ordinary Shares in issue at such time shall be subject to the Transfer. As at 25 May 2018, the Company had 321,496,760 Ordinary Shares in issue.
2. Effect of the Transfer
No changes to the Company's business have been or are proposed to be made in connection with the Transfer.
The Board believes that the Transfer will bring with it a number of benefits to the Company and its shareholders and does not consider there to be any particular risk associated with the Transfer. In particular, the Board believes the Transfer will:
· provide an appropriate platform for the continued growth of the Company and further raise its profile and status;
· benefit its shareholders by making the Company's hitherto voluntary adherence to Premium listing standards of corporate governance, and regulatory and reporting compliance compulsory;
· afford increased protection for investors under the Listing Rules as a result of the higher standards placed on premium listed companies, including in relation to significant and related party transactions;
· place the Company in a position in which it could increase liquidity in its Ordinary Shares due to the larger number of institutional investors who regularly trade in ordinary shares of companies admitted to the Premium Segment of the Official List; and
· enable the Ordinary Shares to be considered for inclusion in the FTSE UK Index Series which are widely utilised investment benchmarks for institutional investors.
Following the Transfer certain additional provisions of the Listing Rules will formally apply to the Company. These provisions, which the Company so far has complied with on a voluntary basis to the extent appropriate and reasonably practicable and which are set out under Chapters 7-13 (inclusive) of the Listing Rules, relate to the following matters:
· the application of the Premium Listing Principles (Chapter 7);
· the requirement to appoint a sponsor in certain circumstances (Chapter 8);
· the requirement to comply with various continuing obligations including: requirements relating to further issues of shares, compliance with all relevant provisions of the UK Corporate Governance Code (or the provisions of an explanation for any non-compliance, if applicable, in its annual financial report) and requirements relating to notifications and contents of financial information (Chapter 9);
· the requirement to announce, or obtain shareholder approval for, certain transactions, depending on their size and nature, and for certain transactions with 'related parties' of the Company (Chapters 10 and 11);
· certain restrictions in relation to the Company dealing in its own securities and treasury shares (Chapter 12); and
· various specific contents requirements that will apply to circulars issued by the Company to its shareholders (Chapter 13).
3. Working capital
The Company is of the opinion that the Group has sufficient working capital for its present requirements and for at least the next 12 months from the date of publication of this Announcement.
4. Corporate Governance
The Board is committed to the highest standards of corporate governance. The annual report and accounts of the Group for the year ended 31 December 2017 describe how, throughout the financial year, the Company applied the principles of the current UK Corporate Governance Code.
The Board will be required to continue to report against the provisions of the UK Corporate Governance Code following the Transfer.
5. UK Takeover Code
As the Company has its registered office in the UK and its Ordinary Shares are admitted to trading on the Main Market of the London Stock Exchange, it is currently, and, following the Transfer will remain, subject to the UK Takeover Code, with which the Company complies.
6. Appointment of Sponsor
The Company has appointed Canaccord Genuity Limited ("Canaccord Genuity") to act as its Sponsor in relation to the Transfer. Canaccord Genuity is currently joint corporate broker to the Company.
7. Financial information incorporated by reference
The financial information listed below is incorporated by reference into this announcement and can be found in the annual report and financial statements of Harworth for the years ended 31 December 2015, 2016 and 2017 which can be viewed on the Company's website via the link www.harworthgroup.com. The parts of the annual report and financial statements of Harworth for the years ended 31 December 2015, 2016 and 2017 which are not incorporated are not relevant for the purposes of this announcement.
|
Information incorporated |
Reference document |
Page number in reference document |
|
Annual audited accounts of Harworth Group plc for the financial year ended December 2015 and the independent auditor's report thereon |
Directors' report |
Pages 49 |
|
Independent auditor's report |
Pages 56 |
|
|
Consolidated income statement |
Page 62 |
|
|
Consolidated statement of comprehensive income |
Page 63 |
|
|
Consolidated statement of changes in equity |
Page 65 |
|
|
Consolidated balance sheet |
Page 64 |
|
|
Consolidated cash flow statement |
Page 66 |
|
|
Notes to the consolidated financial statements |
Pages 67 |
|
|
Annual audited accounts of Harworth Group plc for the financial year ended December 2016 and the independent auditor's report thereon |
Directors' report |
Pages 86 |
|
Independent auditor's report |
Pages 92 |
|
|
Consolidated income statement |
Page 97 |
|
|
Consolidated statement of comprehensive income |
Page 98 |
|
|
Consolidated statement of changes in equity |
Page 100 |
|
|
Consolidated balance sheet |
Page 99 |
|
|
Consolidated cash flow statement |
Page 102 |
|
|
Notes to the consolidated financial statements |
Pages 103 |
|
|
Annual audited accounts of Harworth Group plc for the financial year ended December 2017 and the independent auditor's report thereon |
Directors' report |
Pages 92 |
|
Independent auditor's report |
Pages 98 |
|
|
Consolidated income statement |
Page 104 |
|
|
Consolidated statement of comprehensive income |
Page 105 |
|
|
Consolidated statement of changes in equity |
Page 107 |
|
|
Consolidated balance sheet |
Page 106 |
|
|
Consolidated cash flow statement |
Page 109 |
|
|
Notes to the consolidated financial statements |
Pages 110 |
8. Further financial information on the Group
In order to provide a three-year track record of the Group, as required by Chapter 6 of the Listing Rules, historical financial information for HEPGL, along with the independent accountant's report thereon, are set out below. This historical track record has been prepared in accordance with the basis of preparation which applies to predecessor and successor accounting as described in Annexure paras 56-57 of SIR 2000 (Investment Reporting Standard applicable to public reporting engagements on historical financial information) issued by the UK Auditing Practices Board.
Consequently, the historical financial information reflects the consolidated financial results for HEPGL for the year ended 31 December 2015 (along with the 2014 comparators) as opposed to the period covering 1 January 2015 to 24 March 2015 when HEPGL was acquired by the Company. Thereafter the historical financial information reflects the consolidated financial results of Harworth Group plc as incorporated by reference above.
9. FTSE eligibility and qualification
FTSE's Europe, Middle East and Africa (EMEA) Committee meets on a quarterly basis to review the constituents of the FTSE UK index series, incorporating the FTSE 100, FTSE 250 and FTSE SmallCap indices. It is anticipated that, subject to the Transfer becoming effective and other conditions being met, the Company will be eligible to be considered for inclusion into the FTSE UK Index Series, subject to the satisfaction of the inclusion criteria.
10. Consents
Canaccord Genuity has given and has not withdrawn its written consent to the inclusion of the reference to its name in the form and context in which it is included in this announcement.
PricewaterhouseCoopers LLP has given and not withdrawn its consent to the inclusion of its accountant's report on the consolidated financial information for Harworth Estates Property Group Limited for the year ended 31 December 2015 and the references to it in the form and context in which they are included in this announcement.
Enquiries
For further information:
|
Harworth Group plc Owen Michaelson, Chief Executive Andrew Kirkman, Finance Director Chris Birch, General Counsel and Company Secretary |
T: 0114 349 3131
|
|
Canaccord Genuity Limited Charlie Foster Andrew Buchanan Michael Reynolds |
T: 0207 523 8000
|
|
FTI Consulting Dido Laurimore Tom Gough Richard Gotla |
T: 020 3727 1000 |
NOTES TO EDITORS:
About Harworth Group
Listed on the main market of the London Stock Exchange, Harworth Group plc (LSE: HWG) ("Harworth") is a leading regenerator of land and property for development and investment that owns, develops and manages a portfolio of over 21,000 acres of land on around 140 sites located throughout the Midlands and the North of England. The Company specialises in the regeneration of former coalfield sites and other former industrial land into new residential developments and employment areas.
IMPORTANT NOTICE:
|
Disclaimer |
|
The contents of this announcement have been prepared by and are the sole responsibility of the Company. The Company is not offering any Ordinary Shares or other securities in connection with the proposals described in this announcement. This announcement does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities in the Company or securities in any other entity, in any jurisdiction, nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This announcement does not constitute a recommendation regarding any securities.
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "projects", "assumes", "expects", "intends", "may", "will", "would" or "should", or in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Group's result of operations, financial condition, prospects, growth strategies and the industries in which the Group operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including without limitation: conditions in the markets, market position, the Company's earnings, financial position, return on capital, anticipated investments and capital expenditures, changing business or other market conditions and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future.
Subject to the Company's regulatory obligations, including under the Listing Rules, the Disclosure Guidance and Transparency Rules, the EU Market Abuse Regulation and the Financial Services and Markets Act 2000 ("FSMA"), neither the Company nor Canaccord Genuity Limited undertakes any obligation to update publicly or revise any forward looking-statement whether as a result of new information, future events or otherwise. None of the statements made in this announcement in any way obviates the requirements of the Company to comply with its regulatory obligations.
The contents of the Company's website do not form part of this announcement.
Canaccord Genuity Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting for the Company and for no one else in connection with the Transfer and will not be responsible to any person other than the Company for providing the protections afforded to clients of Canaccord Genuity Limited, nor for providing advice in relation to the Transfer, the content of this announcement or any matter referred to in this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Canaccord Genuity Limited by the FSMA or the regulatory regime established thereunder, neither Canaccord Genuity Limited nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Canaccord Genuity Limited in connection with this announcement, any statement contained herein or otherwise, nor makes any representation or warranty, express or implied, in relation to, the contents of this announcement, including its accuracy, completeness or verification or for any other statement purported to be made by Canaccord Genuity Limited, or on behalf of Canaccord Genuity Limited in connection with the Company or the Transfer. Canaccord Genuity Limited accordingly disclaims to the fullest extent permitted by law all and any responsibility or liability to any person who is not a client of Canaccord Genuity Limited, whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this announcement or any such statement.
SECTION A - ACCOUNTANT'S REPORT ON THE HISTORICAL FINANCIAL INFORMATION FOR HARWORTH ESTATES PROPERTY GROUP LIMITED FOR THE YEAR ENDED 31 DECEMBER 2015
The Directors
Harworth Group plc
Advantage House
Poplar Way
Catcliffe
Rotherham
South Yorkshire
S60 5TR
Canaccord Genuity Limited (the "Sponsor")
88 Wood Street
London
EC2V 7QR
29 May 2018
Dear Sirs
Harworth Estates Property Group Limited
We report on the consolidated financial information of Harworth Estates Property Group Limited ("HEPGL" and together with its subsidiaries the "HEPGL Group") for the year ended 31 December 2015 set out in section B below (the "Financial Information Table"). The Financial Information Table has been prepared for inclusion in the Notification of Transfer to a Premium Listing dated 29 May 2018 (the "Transfer Announcement") of Harworth Group plc (the "Company") on the basis of the accounting policies set out in note 1 to the Financial Information Table. This report is required by item 20.1 of Annex I to the PD Regulation and is given for the purpose of complying with that Schedule and for no other purpose.
We have not audited or reviewed the financial information for the year ended 31 December 2014 which has been included for comparative purposes only, and accordingly do not express an opinion thereon.
Responsibilities
The Directors of the Company are responsible for preparing the Financial Information Table in accordance with the basis of preparation set out in note 1 to the Financial Information Table.
It is our responsibility to form an opinion as to whether the Financial Information Table gives a true and fair view, for the purposes of the Transfer Announcement and to report our opinion to you.
Save for any responsibility which we may have to those persons to whom this report is expressly addressed, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report.
Basis of opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. It also included an assessment of significant estimates and judgements made by those responsible for the preparation of the financial information and whether the accounting policies are appropriate to HEPGL Group's circumstances, consistently applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information is free from material misstatement whether caused by fraud or other irregularity or error.
Opinion
In our opinion, the Financial Information Table gives, for the purposes of the Transfer Announcement dated 29 May 2018, a true and fair view of the state of affairs of the HEPGL Group as at the dates stated and of its profits, cash flows and changes in equity for the period then ended in accordance with the basis of preparation set out in note 1 to the Financial Information Table.
Yours faithfully
PricewaterhouseCoopers LLP
Chartered Accountants
SECTION B - FINANCIAL INFORMATION RELATING TO HARWORTH ESTATES PROPERTY GROUP LIMITED FOR THE YEAR ENDED 31 DECEMBER 2015
Consolidated income statement
for the year ended 31 December 2015
|
|
Note |
Year ended |
Year ended |
|
Revenue |
2 |
16,737 |
13,934 |
|
Cost of sales |
|
(7,856) |
(5,201) |
|
Gross profit |
|
8,881 |
8,733 |
|
Other operating income and expenses |
|
|
|
|
Administrative expenses |
4 |
(5,981) |
(7,992) |
|
Increase in fair value of investment properties |
4 |
28,890 |
15,748 |
|
Profit on sale of investment properties |
4 |
8,298 |
7,904 |
|
Other gains |
4 |
3,208 |
- |
|
Other operating income |
4 |
176 |
- |
|
Operating profit before exceptional items |
|
43,472 |
24,393 |
|
Exceptional items |
5 |
(465) |
- |
|
Operating profit |
|
43,007 |
24,393 |
|
Finance income |
7 |
79 |
318 |
|
Finance costs |
8 |
(3,131) |
(3,822) |
|
Profit before tax |
|
39,955 |
20,889 |
|
Tax charge |
10 |
(4,474) |
(6,905) |
|
Profit for the financial year |
|
35,481 |
13,984 |
|
|
|
|
|
|
Profit per share from continuing operations attributable to the owners of the Parent
|
|
|
|
|
Earnings per share from operations |
Note |
£ |
£ |
|
Basic and diluted earnings per share |
11 |
1,472 |
580 |
Consolidated statement of comprehensive income
for the year ended 31 December 2015
|
|
|
Year ended |
Year ended |
|
Profit for the financial year |
|
35,481 |
13,984 |
|
Other comprehensive income |
|
- |
- |
|
Total other comprehensive income |
|
- |
- |
|
Total comprehensive income for the financial year |
|
35,481 |
13,984 |
|
|
|
|
|
Attributable to:
|
Owners of the Parent |
|
35,481 |
13,984 |
Balance sheet
as at 31 December 2015
|
|
Note |
As at |
As at |
|
|
ASSETS |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Other receivables |
12 |
650 |
650 |
|
|
Investment properties |
13 |
334,617 |
289,611 |
|
|
Investment in joint ventures |
14 |
768 |
1,223 |
|
|
|
|
336,035 |
291,484 |
|
|
Current assets |
|
|
|
|
|
Inventories |
15 |
1,092 |
142 |
|
|
Trade and other receivables |
16 |
19,967 |
17,760 |
|
|
Cash and cash equivalents |
17 |
20,677 |
17,296 |
|
|
Assets classified as held for sale |
18 |
9,128 |
- |
|
|
|
|
50,864 |
35,198 |
|
|
Total assets |
|
386,899 |
326,682 |
|
|
LIABILITIES |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
19 |
(24,251) |
(13,267) |
|
|
Borrowings |
20 |
(400) |
(51,088) |
|
|
Derivative financial instruments |
22 |
- |
(81) |
|
|
|
|
(24,651) |
(64,436) |
|
|
Net current assets/(liabilities) |
|
26,213 |
(29,238) |
|
|
Non-current liabilities |
|
|
|
|
|
Trade and other payables |
19 |
(2,280) |
- |
|
|
Borrowings |
20 |
(64,119) |
(6,223) |
|
|
Provisions for liabilities and charges |
21 |
(435) |
(564) |
|
|
Deferred income tax liabilities |
10 |
(11,379) |
(6,905) |
|
|
|
|
(78,213) |
(13,692) |
|
|
Total liabilities |
|
(102,864) |
(78,128) |
|
|
Net assets |
|
284,035 |
248,554 |
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
Called up share capital |
24 |
- |
- |
|
|
Share premium account |
25 |
222,161 |
222,161 |
|
|
Fair value reserve |
26 |
58,471 |
29,581 |
|
|
Retained earnings/(losses) |
|
3,403 |
(3,188) |
|
|
Total equity |
|
284,035 |
248,554 |
|
Consolidated statement of changes in equity
for the year ended 31 December 2015
|
|
|
Called up share |
Share |
Fair value |
Retained (losses) |
Total |
|
Balance at 1 January 2014 |
|
- |
222,161 |
16,011 |
(3,602) |
234,570 |
|
Profit for the financial year to 31 December 2014 |
|
- |
- |
- |
13,984 |
13,984 |
|
Total comprehensive income for the year |
|
- |
222,161 |
16,011 |
10,382 |
248,554 |
|
Fair value gain on revaluation of investment properties |
|
- |
- |
15,748 |
(15,748) |
- |
|
Transfer to accumulated losses on disposal |
|
|
|
|
|
|
|
of investment properties |
|
- |
- |
(2,178) |
2,178 |
- |
|
At 31 December 2014 |
|
- |
222,161 |
29,581 |
(3,188) |
248,554 |
|
Comprehensive income for the year ended |
|
|
|
|
|
|
|
Profit for the financial year to 31 December 2015 |
|
- |
- |
- |
35,481 |
35,481 |
|
Fair value gain on revaluation of investment |
|
- |
- |
28,890 |
(28,890) |
- |
|
Total comprehensive profit for the year |
|
- |
- |
28,890 |
6,591 |
35,481 |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2015 |
|
- |
222,161 |
58,471 |
3,403 |
284,035 |
Statement of cash flows
for the year ended 31 December 2015
|
|
Note |
Year ended |
Year ended |
|
Cash flows from operating activities |
|
|
|
|
Profit/(loss) before tax for the financial year |
|
39,955 |
20,889 |
|
Net interest payable |
7 & 8 |
3,052 |
3,504 |
|
Fair value increase in investment properties |
13 |
(28,890) |
(15,748) |
|
Profit on disposal of investment properties |
4 |
(8,298) |
(7,904) |
|
Other gains |
4 |
(3,208) |
- |
|
Impairment of investment in joint venture |
5 |
465 |
- |
|
Decrease in provisions |
|
(129) |
(119) |
|
Operating cash inflow before movements in working capital |
|
2,947 |
622 |
|
Increase in inventories |
|
(950) |
(142) |
|
(Increase)/decrease in receivables |
|
(1,587) |
797 |
|
Increase/(decrease) in payables |
|
9,197 |
(6,824) |
|
Cash generated from/(used in) operations |
|
9,607 |
(5,547) |
|
Loan arrangement fees paid |
|
(152) |
(98) |
|
Interest paid |
|
(3,144) |
(3,408) |
|
Cash generated from/(used in) operating activities |
|
6,311 |
(9,053) |
|
Cash flows from investing activities |
|
|
|
|
Interest received |
|
79 |
149 |
|
Proceeds from disposal of investment properties and option |
|
39,053 |
31,260 |
|
Expenditure on investment properties |
|
(49,425) |
(21,932) |
|
Investment in joint ventures |
|
(10) |
- |
|
Loan granted to third party |
|
- |
(4,500) |
|
Cash (used in)/generated from investing activities |
|
(10,303) |
4,977 |
|
Cash flows from financing activities |
|
|
|
|
Proceeds from bank loans |
|
50,392 |
10,015 |
|
Proceeds from other loans |
|
16,548 |
- |
|
Repayment of bank loans |
|
(50,792) |
(8,664) |
|
Repayment of other loans |
|
(8,775) |
- |
|
Cash generated from/(used in) financing activities |
|
7,373 |
1,351 |
|
Increase/(decrease) in cash |
|
3,381 |
(2,725) |
|
|
|
|
|
|
Cash at 1 January |
|
17,296 |
20,021 |
|
Increase/(decrease) in cash |
|
3,381 |
(2,725) |
|
Cash at 31 December |
|
20,677 |
17,296 |
Notes to the financial information
for the year ended 31 December 2015
1. Accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
General information
Harworth Estates Property Group ("HEPGL") is a limited liability company incorporated and domiciled in the UK. The address of its registered office was AMP Technology Centre, Advanced Manufacturing Park, Brunel Way, Rotherham, South Yorkshire S60 5WG. HEPGL and its subsidiaries` (collectively "the HEPGL Group"), whose principal activity is through the Income Generation Segment, generating rental returns from the business park portfolio; generating rental returns and royalties from energy generation and from the environmental, technological and agricultural portfolio; and income generation streams from secondary coal products; and through the Capital Growth Segment, delivering value by developing the underlying portfolio.
The registered number of HEPGL is 08668336.
HEPGL was incorporated on 28 September 2012 as a 100 per cent subsidiary of UK Coal plc. On 10 December 2012 HEPGL acquired 100 per cent of the property group from UK Coal plc for a share consideration. On the same day HEPGL issued additional shares to the Industry Wide Coal Staff Superannuation Scheme and the Industry Wide Mine Workers Pension Scheme Pension Fund in return for a cash injection of £30 million. HEPGL also issued shares to UK Coal plc in consideration for receivables due from the property group and the release of debt due to UK Coal plc. As a result UK Coal plc (to be renamed Coalfield Resources Plc) retained a 24.9% ownership of the HEPGL Group.
On 24 March 2015 Coalfield Resources Plc (subsequently renamed Harworth Group plc) acquired the remaining 75.1% of the issued share capital of the HEPGL Group.
Basis of preparation
This consolidated historical financial information presents the financial track record of the HEPGL Group for the year ended 31 December 2015 along with the 2014 comparators. It has been prepared specifically for the purposes of providing relevant historical financial information for the proposed transfer from the standard segment to the premium segment of the official stock exchange list for Harworth Group plc (and its subsidaries). The accounting policies applied in this consolidated historical financial information are consistent with those of Harworth Group plc financial statements for the years ended 31 December 2015, 31 December 2016 and 31 December 2017 as disclosed in those annual financial statements.
This special purpose consolidated financial information has been prepared on a going concern basis and in accordance with EU adopted International Financial Reporting Standards ('IFRS'), IFRS 1C interpretations and the Companies Act 2006 applicable to companies reporting under IFRS and therefore complies with Article 4 of the EU IAS regulations. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties and financial assets and liabilities at fair value through profit or loss.
Going concern basis
This historical financial information is prepared on the basis that the HEPGL Group is a going concern. In forming its opinion as to going concern, the Board prepares cash flow forecasts based upon its assumptions with particular consideration to the key risks and uncertainties, as well as taking into account the available borrowing facilities shown in note 20.
The key factor that has been considered in this regard is:
The HEPGL Group has a £65m revolving credit facility ("RCF") with The Royal Bank of Scotland, for a term of five years, on a non-amortising basis. The facility is in the form of a debenture security whereby there is no charge on the individual assets of the HEPGL Group. The facility is subject to financial and other covenants.
The covenants are based upon gearing, tangible net worth, loan to property values and interest cover. Property valuations affect the loan to value covenants. Breach of covenants could result in the need to pay down in part some of these loans, additional costs, or a renegotiation of terms or, in extremis, a reduction or withdrawal of facilities by the banks concerned.
The Directors confirm their belief that it is appropriate to use the going concern basis of preparation for these financial statements.
Notes to the financial information
for the year ended 31 December 2015: continued
1. Accounting policies: continued
Accounting policies
The HEPGL Group did not early adopt any new or amended standards and does not plan to early adopt any standards issued but not yet effective. The following accounting policies are in place:
Revenue recognition
Revenue comprises rental and other land related income arising on investment properties and income from construction contracts. Rentals are accounted for on a straight-line basis over the lease term of ongoing leases.
Revenue from the sale of coal slurry is recognised at the point of despatch. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the HEPGL Group and the revenue can be reliably measured. All such revenue is reported net of discounts and value added and other sales taxes.
Construction contracts
Contracts for the construction of substantial assets are accounted for as construction contracts. Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion to recognise in a given period. The assessment of the stage of completion is dependent on the nature of the contract, but will generally be based on the estimated proportion of the total contract costs which have been incurred to date. If a contract is expected to be loss making, a provision is recognised for the entire cost.
Interest income and expense
Interest income and expense are recognised within 'finance income' and 'finance costs' in the income statement using the effective interest rate method. The effective interest rate method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or a shorter period where appropriate, to the net carrying amount of the financial asset or financial liability.
Other receivables (non-current)
Other receivables (non-current) relate to overages. An overage is the right to receive future payments following the sale of investment properties if specified conditions relating to the site are satisfied. The conditions may be the granting of planning permission for development on the site or practical completion of a development. Overages are initially recorded at fair value and are reviewed annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of overages is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense.
Inventories
Inventories comprise coal slurry that has been processed and is ready for sale. It is stated at the lower of cost and estimated net realisable value. Inventories comprise all the direct costs incurred in bringing the coal slurry to their present state.
Investments in joint ventures
Joint ventures are those entities over whose activities the HEPGL Group has joint control established by contractual agreement. Interests
in joint ventures through which the HEPGL Group carries on its business are classified as jointly controlled entities and accounted for using the equity method. This involves recording the investment initially at cost to the HEPGL Group and then, in subsequent years, adjusting the carrying amount of the investment to reflect the HEPGL Group's share of the joint venture's results less any impairment in carrying value and any other changes to the joint venture's net assets such as dividends.
Notes to the financial information
for the year ended 31 December 2015: continued
1. Accounting policies: continued
Investment properties
Investment properties are those properties which are not occupied by the HEPGL Group and which are held for long term rental yields, capital appreciation or both. Investment property also includes property that is being developed or constructed for future use as investment property. Investment properties comprise freehold land and buildings and are measured at fair value. At the end of a financial year the fair values are determined by obtaining an independent valuation prepared in accordance with the current edition of the Appraisal and Valuation Standards published by the Royal Institution of Chartered Surveyors. External, independent valuation firms having appropriate, recognised professional qualifications and recent experience in the location and category of property being valued are used.
Where the development of investment property commences with a view to sale, the property is transferred from investment properties to inventories at fair value, which is then considered to represent deemed cost.
At each subsequent reporting date, investment properties are re-measured to their fair value. Movements in fair value are included in the income statement.
Where specific investment properties have been identified as being for sale within the next twelve months, a sale is considered highly probable and the property is immediately available for sale, their fair value is shown under assets classified as held-for-sale within current assets, measured in accordance with the provisions of IAS 40 'Investment Property'.
Profit or loss on disposal of investment properties
Disposals are accounted for when legal completion of the sale has occurred or there has been an unconditional exchange of contracts. Profits or losses on disposal arise from deducting the asset's net carrying value and where appropriate a proportion of future costs attributable to the development of the overall land area from the net proceeds (being net purchase consideration less any clawback liability arising on disposal) and is recognised in the income statement. Net carrying value includes valuation in the case of investment properties.
In the case of investment properties, any fair value reserve, for the property disposed of is treated as realised on disposal of the property and transferred to retained earnings.
Properties in the course of development
Directly attributable costs incurred in the course of developing a property are capitalised as part of the cost of the property. Development costs on investment properties are capitalised and any resultant change in value is therefore recognised through the next revaluation.
Financial assets
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current.
Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the HEPGL Group has transferred substantially all risks and rewards of ownership.
Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss are presented in the income statement within 'other gains' in the period in which they arise.
Provisions
Provisions are recognised when:
· The HEPGL Group has a present legal or constructive obligation as a result of past events;
· It is probable that an outflow of resources will be required to settle the obligation; and
· The amount can be reliably estimated.
Notes to the financial information
for the year ended 31 December 2015: continued
1. Accounting policies: continued
Share-based payments
Equity-settled share-based payment to employees of the Company and its subsidiary undertakings are measured at fair value of the equity instruments at the date of grant and are expensed on a straight line over the vesting period in the consolidated income statement. The fair value of the equity instruments is determined at the date of grant taking into account any market based vesting conditions attached to the award. Non-market based vesting conditions are taken into account in estimating the number of awards likely to vest. The estimate of the number of awards likely to vest is reviewed regularly and the expense charged adjusted accordingly.
Operating segments
Management has determined the operating segments based upon the operating reports reviewed by the Executive Board of Directors that are used to assess both performance and strategic decisions. Management has identified that the Executive Board of Directors is the Chief Operating Decision Maker in accordance with the requirements of IFRS 8 'Operating Segments'.
The HEPGL Group is now organised into two operating segments: Income Generation and Capital Growth. Group costs are not a reportable segment. However information about them is considered by the Executive Board in conjunction with the reportable segments.
The Income Generation segment focuses on generating rental returns from the business park portfolio, rental returns and royalties from energy generation, environmental technologies and the agricultural portfolio, and income generating streams from recycled aggregates and secondary coal products. The Capital Growth segment focuses on delivering value by developing the underlying portfolio, and includes planning and development activity, value engineering, proactive asset management and strategic land acquisitions.
All operations are carried out in the United Kingdom.
Segmental operating profit represents the profit earned by each segment excluding the profit on sale and revaluation of investment properties and is consistent with the measures reported to the Executive Board for the purpose of the assessment of the performance of each segment.
Consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the HEPGL Group has control. The HEPGL Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the HEPGL Group. They are deconsolidated from the date that control ceases.
The HEPGL Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the HEPGL Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The HEPGL Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.
Inter-company transactions, balances and unrealised gains on transactions between HEPGL Group companies are eliminated. Unrealised losses are also eliminated.
Notes to the financial information
for the year ended 31 December 2015: continued
1. Accounting policies: continued
Exceptional items
Exceptional items are material non-recurring items excluded from management's assessment of profit because by their nature they could distort the HEPGL Group's underlying quality of earnings. These are excluded to reflect performance in a consistent manner and in line with how the business is managed and measured on a day to day basis.
Share capital and reserves
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Where shares are issued in direct consideration for acquiring shares in another company, and following which the HEPGL Group holds at least 90% of the nominal share capital of that company, any premium on the shares issued as consideration is included in a merger reserve rather than share premium.
Changes in accounting policy and disclosures
a) New standards and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual years beginning after 1 January 2015, and have not been applied in preparing these consolidated financial statements. These have been set out below:
IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value through P&L. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the 'hedged ratio' to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted subject to EU endorsement. The impact of IFRS 9 has been assessed on the financial instruments of the HEPGL Group. At present, based on these assessments, management do not believe that any significant adjustments are required.
IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11 'Construction contracts' and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted subject to EU endorsement. The HEPGL Group has performed a detailed assessment of the impact of IFRS 15 on existing revenue streams and policies. This review has highlighted that revenues relating to the sales of development properties, particularly where revenue involves a deferred element or conditions subsequent exist, are specifically affected by the standard. The HEPGL Group expects the impact of implementing this standard on revenue to amount to a decrease of £2.1m for the financial year ended 31 December 2017.
Notes to the financial information
for the year ended 31 December 2015: continued
1. Accounting policies: continued
Changes in accounting policy and disclosures (continued)
IFRS 16, 'Leases', replaces the current guidance in IAS 17. IFRS 16 defines a lease as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. Under IFRS 16 lessees have to recognise a lease liability reflecting future lease payments and a 'right-of-use asset' for almost all lease contracts. In the income statement lessees will have to present interest expense on the lease liability and depreciation on the right-of-use asset. As under IAS 17, the lessor has to classify leases as either finance or operating, depending on whether substantially all of the risk and rewards incidental to ownership of the underlying asset have been transferred. For both lessees and lessors IFRS 16 adds significant new, enhanced disclosure requirements. IFRS 16 is effective for annual reporting periods beginning on or after 1 January 2019. Earlier application is permitted, subject to EU endorsement, but only in conjunction with IFRS 15, 'Revenue from contracts with customers'.
Estimates and judgements
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these financial statements, the significant judgements made by management in applying the HEPGL Group's accounting policies and the key sources of estimation uncertainty are as follows:
Estimation of fair value of Investment Property
The fair value of investment property reflects, amongst other things, rental income from our current leases, assumptions about rental income from future leases and the possible outcome of planning applications, in the light of current market conditions. The valuation has been arrived at primarily after consideration of market evidence for similar property, although in the case of those properties where fair value is based on their ultimate redevelopment potential, development appraisals have been undertaken to estimate the residual value of the landholding after due regard to the cost of, and revenue from the development of the property.
The HEPGL Group has also estimated the extent to which existing mining tenants on investment property owned by the HEPGL Group would perform their obligations to remediate land at the conclusion of mining activity, and therefore the impact of any restoration obligations which may revert to the HEPGL Group.
The values reported are based on significant assumptions and a change in fair values could have a material impact on the HEPGL Group`s results. This is due to the sensitivity of fair value to the assumptions made as regards to variances in development costs compared
to Management`s own estimates.
Investment properties are disclosed in note 13.
Notes to the financial information
for the year ended 31 December 2015: continued
2. Segment information
31 December 2015
|
|
Capital Growth £000 |
Income Generation £000 |
Unallocated costs £000 |
Total |
|
Revenue |
1,336 |
15,401 |
- |
16,737 |
|
Operating (loss)/profit before other income and expenses and exceptional items |
(1,928) |
8,325 |
(3,497) |
2,900 |
|
Impairment of investment |
(465) |
- |
- |
(465) |
|
Increase in fair value of investment properties |
18,403 |
10,487 |
- |
28,890 |
|
Profit on sale of investment properties |
7,089 |
1,209 |
- |
8,298 |
|
Other gains |
- |
3,208 |
- |
3,208 |
|
Other operating income |
- |
47 |
129 |
176 |
|
Operating profit/(loss) |
23,099 |
23,276 |
(3,368) |
43,007 |
|
Finance income |
|
|
|
79 |
|
Finance costs |
|
|
|
(3,131) |
|
Profit before tax |
|
|
|
39,955 |
|
Other information |
|
|
|
|
|
Investment property additions: |
|
|
|
|
|
Direct acquisitions |
14,939 |
9,349 |
- |
24,288 |
|
Subsequent expenditure |
22,325 |
6,798 |
- |
29,123 |
Segmental assets
|
|
Capital Growth £000 |
Income Generation £000 |
Unallocated costs £000 |
Total |
|
Total investment properties |
210,004 |
124,613 |
- |
334,617 |
|
Assets held for sale |
30 |
9,098 |
- |
9,128 |
|
Inventories |
- |
1,092 |
- |
1,092 |
|
Other receivables |
650 |
- |
- |
650 |
|
Investments in joint ventures |
768 |
- |
- |
768 |
|
|
211,452 |
134,803 |
- |
346,255 |
|
Unallocated assets: |
|
|
|
|
|
Trade and other receivables |
- |
- |
19,967 |
19,967 |
|
Cash |
- |
- |
20,677 |
20,677 |
|
Total assets |
211,452 |
134,803 |
40,644 |
386,899 |
Financial liabilities are not allocated to the reporting segments as they are managed and measured on a HEPGL Group basis.
Notes to the financial information
for the year ended 31 December 2015: continued
2. Segment information: continued
31 December 2014
|
|
Capital Growth £000 |
Income Generation £000 |
Unallocated costs £000 |
Total |
|
Revenue |
176 |
13,758 |
- |
13,934 |
|
Operating (loss)/profit before other income and expenses |
(1,405) |
7,659 |
(5,513) |
741 |
|
Increase in fair value of investment properties |
15,695 |
53 |
- |
15,748 |
|
Profit on sale of investment properties |
7,309 |
595 |
- |
7,904 |
|
Operating profit/(loss) |
21,599 |
8,307 |
(5,513) |
24,393 |
|
Finance income |
|
|
|
318 |
|
Finance costs |
|
|
|
(3,822) |
|
Profit before tax |
|
|
|
20,889 |
|
Other information |
|
|
|
|
|
Investment property additions: |
|
|
|
|
|
Direct acquisitions |
100 |
3,168 |
- |
3,268 |
|
Subsequent expenditure |
21,598 |
1,666 |
- |
23,264 |
Segmental assets
|
|
Capital Growth £000 |
Income Generation £000 |
Unallocated costs £000 |
Total |
|
Total investment properties |
178,055 |
111,556 |
- |
289,611 |
|
Inventories |
- |
142 |
- |
142 |
|
Other receivables |
650 |
- |
- |
650 |
|
Investments in joint ventures |
1,223 |
- |
- |
1,223 |
|
|
179,928 |
111,698 |
- |
291,626 |
|
Unallocated assets: |
|
|
|
|
|
Trade and other receivables |
- |
- |
17,760 |
17,760 |
|
Cash |
- |
- |
17,296 |
17,296 |
|
Total assets |
179,928 |
111,698 |
35,056 |
326,682 |
Financial liabilities are not allocated to the reporting segments as they are managed and measured on a HEPGL Group basis.
3. Operating profit
|
|
Note |
Year ended |
Year ended |
|
Operating profit before tax is stated after charging: |
|
|
|
|
Staff costs |
6 |
4,262 |
3,859 |
Notes to the financial information
for the year ended 31 December 2015: continued
4. Other operating income and expenses
|
|
Year ended |
Year ended |
|
Administrative expenses |
(5,981) |
(7,992) |
|
Other operating income |
176 |
- |
|
Other gains |
3,208 |
- |
|
Profit on sale of investment properties |
8,298 |
7,904 |
|
Increase in fair value of investment properties |
28,890 |
15,748 |
|
Other operating income and expenses |
34,591 |
15,660 |
Other gains in 2015 represents a gain on the sale of an option (see note 28 for further information relating to this gain). Other operating income in 2015 represents the re-measurement of the Blenkinsopp Scheme and other items.
5. Exceptional items
Operating profit is stated after charging exceptional items of:
|
|
Year ended |
Year ended |
|
Write down of investment in joint venture |
(465) |
- |
|
Exceptional items |
(465) |
- |
Write down of investment relates to the write down of a joint venture investment held by the HEPGL Group at 31 December 2015 (note 14).
6. Employee information
The monthly average number of persons (including Executive Directors) employed by the HEPGL Group during the year was:
|
|
Year ended |
Year ended |
|
Administration |
46 |
42 |
|
Total |
46 |
42 |
ere:
|
Staff costs (including the Board of Directors) |
|
|
Year ended |
Year ended |
|
Wages and salaries |
|
|
3,606 |
3,270 |
|
Social security costs |
|
|
393 |
342 |
|
Other pension costs |
|
|
263 |
247 |
|
|
|
|
4,262 |
3,859 |
Directors` and key management remuneration
Remuneration details for Directors` and key management of the HEPGL Group is detailed below:
|
|
Year ended |
Year ended |
|
Short term employee benefits |
2,052 |
1,669 |
|
Post-employment benefits |
123 |
136 |
|
|
2,175 |
1,805 |
Notes to the financial information
for the year ended 31 December 2015: continued
7. Finance income
|
|
Year ended |
Year ended |
|
|
|
|
|
Bank interest |
38 |
80 |
|
Other loan interest receivable |
41 |
69 |
|
Gain on interest rate swap |
- |
169 |
|
Finance income |
79 |
318 |
8. Finance costs
|
|
Year ended |
Year ended |
|
|
|
|
|
Bank interest |
(1,483) |
(2,606) |
|
Facility fee amortisation |
(1,191) |
(875) |
|
Other interest |
(451) |
(341) |
|
Loss on interest rate swap |
(6) |
- |
|
Finance costs |
(3,131) |
(3,822) |
9. Auditors' remuneration
During the year the HEPGL Group obtained the following services from its auditors, PricewaterhouseCoopers LLP, at costs as detailed below:
|
|
Year ended |
Year ended |
|
Audit services |
|
|
|
Fees payable to the Company auditors and its associates for the audit of the parent company and the |
65 |
72 |
|
Fees payable to the Company auditors and its associates for other services: |
|
|
|
- The audit of the Company's subsidiaries pursuant to legislation |
85 |
- |
|
- Audit related assurance services |
15 |
- |
|
- Tax advisory services |
98 |
5 |
|
- Tax compliance services |
33 |
25 |
|
|
296 |
102 |
From time to time, the HEPGL Group employs PricewaterhouseCoopers LLP on assignments additional to their statutory audit duties where their expertise and experience are important. They are awarded assignments on a competitive basis. The Audit Committee reviews non-audit assignments quarterly, and approves all assignments above a predetermined cost threshold.
Notes to the financial information
for the year ended 31 December 2015: continued
10. Tax charge
|
Analysis of tax charge in the year |
Year ended |
Year ended |
|
Deferred tax |
4,474 |
6,905 |
|
Tax charge |
4,474 |
6,905 |
The tax for the year is different to the standard rate of corporation tax in the UK of 20.25% (2014: 21.5%). The differences are explained below:
|
|
Year ended |
Year ended |
|
Profit before tax on continuing operations |
39,955 |
20,889 |
|
Profit before tax multiplied by rate of corporation tax in the UK of 20.25% (2014: 21.5%) |
8,091 |
4,491 |
|
Effects of: |
|
|
|
Non taxable income |
(5,781) |
(5,085) |
|
Adjustments in respect of prior periods |
(824) |
- |
|
Expenses not deducted for tax purposes |
81 |
237 |
|
Previously unrecognised tax losses |
- |
(4,246) |
|
Revaluation gains |
5,888 |
6,905 |
|
Chargeable gains |
(2,330) |
4,603 |
|
Change in tax rates |
(651) |
- |
|
Total tax charge |
4,474 |
6,905 |
Deferred tax
The analysis of deferred tax liabilities is as follows:
|
|
Year ended |
Year ended |
|
No more than twelve months after the reporting period |
- |
- |
|
More than twelve months after the reporting period |
11,379 |
6,905 |
|
|
11,379 |
6,905 |
The gross movement on the deferred income tax account is as follows:
|
|
Year ended |
Year ended |
|
At 1 January |
6,905 |
- |
|
Income statement charge |
4,474 |
6,905 |
|
At 31 December |
11,379 |
6,905 |
Notes to the financial information
for the year ended 31 December 2015: continued
10. Tax charge: continued
Deferred tax: continued
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 18% (2014: 20%). A reduction in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017), and further reductions to 18% (effective from 1 April 2020) were enacted as part of the Finance Act 2015. The deferred tax liabilities are shown at 18% being the rate expected to apply to the reversal of the liability.
The deferred tax charge of £4,474,000 for the year ended 31 December 2015 (2014: £6,905,000) is in respect of property revaluation gains where tax is expected to arise when the property is sold.
Deferred tax assets and liabilities are offset when there is a legally enforced right to offset current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority.
Deferred tax assets have not been recognised owing to the uncertainty as to their recoverability. If these deferred tax assets were recognised, the total asset would be £3,380,000 (2014: £200,000) as set out below:
|
|
As at 31 December 2015 Total amount recognised £000 |
As at 31 December 2015 Total potential asset £000 |
As at 31 December 2014 Total amount recognised £000 |
As at 31 December 2014 Total potential asset £000 |
|
Accelerated capital allowances |
- |
- |
- |
61 |
|
Temporary differences on provisions |
- |
- |
- |
132 |
|
Tax losses |
- |
3,380 |
- |
- |
|
Net deferred tax asset |
- |
3,380 |
- |
193 |
11. Earnings per share
Earnings per share has been calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of shares in issue and ranking for dividend during the year.
|
|
Year ended |
Year ended |
|
Profit from continuing operations attributable to owners of the parent (£`000) |
35,481 |
13,984 |
|
Weighted average number of shares used for basic earnings per share calculation |
24,096 |
24,096 |
|
Basic and diluted profit per share (£) |
1,472 |
580 |
12. Other receivables
The benefit of overages is recorded as a non-current receivable as shown below:
|
|
Year ended |
Year ended |
|
Overages |
650 |
650 |
Notes to the financial information
for the year ended 31 December 2015: continued
13. Investment properties
Investment property at 31 December 2015 and 2014 has been measured at fair value. The HEPGL Group holds five categories of investment property being agricultural land, natural resources, major developments, strategic land and business parks in the UK, which sit within the operating segments of Capital Growth and Income Generation.
|
|
Income Generation |
|
Capital Growth |
|
|
|||
|
|
Agricultural land |
Natural resources |
Business parks |
|
Major developments |
Strategic land |
|
Total £000 |
|
At 31 December 2014 |
22,720 |
17,430 |
71,406 |
|
135,000 |
43,055 |
|
289,611 |
|
Direct acquisitions |
- |
2,072 |
7,277 |
|
1,366 |
13,573 |
|
24,288 |
|
Subsequent expenditure |
604 |
362 |
5,832 |
|
20,104 |
2,221 |
|
29,123 |
|
Increase in fair value |
2,477 |
1,375 |
6,635 |
|
15,375 |
3,028 |
|
28,890 |
|
Transfer to assets held for sale |
(6,013) |
(3,085) |
- |
|
- |
(30) |
|
(9,128) |
|
Disposals |
(3,025) |
(1,200) |
(254) |
|
(14,256) |
(9,432) |
|
(28,167) |
|
At 31 December 2015 |
16,763 |
16,954 |
90,896 |
|
157,589 |
52,415 |
|
334,617 |
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
21,394 |
21,204 |
68,551 |
|
117,463 |
48,128 |
|
276,740 |
|
Direct acquisitions |
285 |
- |
2,883 |
|
- |
100 |
|
3,268 |
|
Subsequent expenditure |
845 |
382 |
439 |
|
19,813 |
1,785 |
|
23,264 |
|
Transfers |
4,993 |
(4,993) |
- |
|
4,291 |
(4,291) |
|
- |
|
Increase in fair value |
(4,538) |
1,058 |
3,533 |
|
17,388 |
(1,693) |
|
15,748 |
|
Disposals |
(259) |
(221) |
(4,000) |
|
(23,955) |
(974) |
|
(29,409) |
|
At 31 December 2014 |
22,720 |
17,430 |
71,406 |
|
135,000 |
43,055 |
|
289,611 |
Valuation process
The properties were valued in accordance with the Royal Institute of Chartered Surveyors ("RICS") Valuation - Professional Standards (the 'Red Book'), by BNP Paribas Real Estates and Savills both independent firms acting in capacity of external valuers with relevant experience of valuations of this nature. The valuations are on the basis of Market Value as defined with the Red Book, which RICS considers meets the criteria for assessing Fair Value under International Reporting Standards. The valuations are based on what is determined to be the highest and best use. When considering the highest and best use a valuer will consider, on a property by property basis, its actual and potential uses which are physically, legally and financially viable. Where the highest and best use differs from the existing use, the valuer will consider the cost and the likelihood of achieving and implementing this change in arriving at its valuation. Most of the HEPGL Group's properties have been valued on the basis of their development potential which differs from their existing use.
At each financial year end, Management:
· verifies all major inputs to the independent valuation report;
· assesses property valuation movements when compared to the prior year valuation report; and
· holds discussions with the independent valuer.
The different valuation levels are defined as:
Level 1: valuation based on quoted market prices traded in active markets.
Level 2: valuation based on inputs other than quoted prices included within Level 1 that maximise the use of observable data either directly or from market prices or indirectly derived from market prices.
Notes to the financial information
for the year ended 31 December 2015: continued
13. Investment properties: continued
Valuation process: continued
Level 3: where one or more inputs to valuation are not based on observable market data.
The Directors determine the applicable hierarchy that each investment property falls into by assessing the level of unobservable inputs used in the valuation technique. As a result of the specific nature of each investment property, valuation inputs are not based on directly observable market data and therefore all investment properties were determined to fall into Level 3.
The HEPGL Group's policy is to recognise transfers into and out of fair value hierarchy levels as at the date of the event or change in circumstance that caused the transfer. There were no transfers between hierarchy in the year ended 31 December 2015.
Valuation techniques underlying management's estimation of fair value
Agricultural land
Most of the agricultural land is valued using the market comparison basis, with an adjustment made for the length of remaining term on the tenancy and the estimated cost to bring the land to its highest and best use. Where the asset is subject to a secure letting,
this is valued on a yield basis, based upon sales of similar types of investment.
Natural resources
Natural resource sites in the portfolio are valued based on a discounted cashflow for the operating life of the asset.
Major developments
Major development sites are generally valued using residual development appraisals, a form of discounted cash flow which estimates the current site value from future cash flows measured by observable current land and/or completed built development values, observable or estimated development costs, and observable or estimated development returns.
Where possible development sites are valued by direct comparison to observable market evidence with appropriate adjustment
for the quality and location of the property asset, although this is generally only a reliable method of measurement for the smaller development sites.
Strategic land
Strategic land is valued on the basis of discounted cash flows, with future cash flows measured by current land values adjusted to reflect the quality of the development opportunity, the potential development costs estimated by reference to observable development costs on comparable sites, and the likelihood of securing planning consent. The valuations are then benchmarked against observable land values reflecting the current existing use of the land, which is generally agricultural and where available, observable strategic land values.
Business parks
The business parks are valued on the basis of market comparison with direct reference to observable market evidence including rental values, yields and capital values and adjusted where required for the estimated cost to bring the property to its highest and best use. The evidence is adjusted to reflect the quality of the property assets, the quality of the covenant profile of the tenants and the reliability/volatility of cash flows.
|
At 31 December 2015
|
|
|
Agricultural land |
Natural resources |
Major developments |
Strategic land |
Business parks |
|
Reversionary rental yield % |
weighted average |
|
- |
- |
- |
- |
10.54 |
|
|
low |
|
- |
- |
- |
- |
5.12 |
|
|
high |
|
- |
- |
- |
- |
16.95 |
|
|
|
|
|
|
|
|
|
|
Land value per acre £000 |
weighted average |
|
3 |
6 |
71 |
18 |
41 |
|
|
low |
|
1 |
1 |
24 |
1 |
2 |
|
|
high |
|
11 |
89 |
330 |
500 |
250 |
|
|
|
|
|
|
|
|
|
|
Cost report totals* |
£000 |
|
- |
- |
99,430 |
56,368 |
19,630 |
* Cost report totals represent the estimated cost to bring investment properties to their highest and best use.
Notes to the financial information
for the year ended 31 December 2015: continued
13. Investment properties: continued
Valuation techniques underlying management's estimation of fair value: continued
|
At 31 December 2014
|
|
|
Agricultural land |
Natural resources |
Major developments |
Strategic land |
Business parks |
|
Reversionary rental yield % |
weighted average |
|
- |
- |
- |
- |
11.0 |
|
|
low |
|
- |
- |
- |
- |
8.8 |
|
|
high |
|
- |
- |
- |
- |
18.1 |
|
|
|
|
|
|
|
|
|
|
Land value per acre £000 |
weighted average |
|
3 |
7 |
55 |
16 |
30 |
|
|
low |
|
1 |
1 |
6 |
1 |
3 |
|
|
high |
|
33 |
71 |
150 |
449 |
254 |
|
|
|
|
|
|
|
|
|
|
Cost report totals* |
£000 |
|
2,334 |
- |
107,693 |
56,837 |
19,407 |
* Cost report totals represent the estimated cost to bring investment properties to their highest and best use.
The table below shows some possible sensitivities to the key valuation metrics and the resultant changes to the valuations.
|
At 31 December 2015
|
|
|
|
|
|
|
|
|
|
Valuation metric |
|
+/- change |
|
+/- effect on valuation |
||||
|
|
|
|
|
Agricultural land |
Natural resources |
Major developments |
Strategic land |
Business parks |
|
Value per acre |
|
5% |
|
1,237 |
904 |
7,879 |
2,623 |
4,545 |
|
Rental |
|
5% |
|
- |
- |
- |
- |
2,697 |
|
Yield (e.g. 11% to 10%) |
|
1% |
|
- |
- |
- |
- |
6,255 |
|
Cost report totals |
|
5% |
|
- |
- |
4,972 |
2,818 |
982 |
|
At 31 December 2014
|
|
|
|
|
|
|
|
|
|
Valuation metric |
|
+/- change |
|
+/- effect on valuation |
||||
|
|
|
|
|
Agricultural land |
Natural resources |
Major developments |
Strategic land |
Business parks |
|
Value per acre |
|
5% |
|
1,136 |
872 |
6,750 |
2,153 |
3,570 |
|
Rental |
|
5% |
|
- |
- |
- |
- |
1,735 |
|
Yield (e.g. 11% to 10%) |
|
1% |
|
- |
- |
- |
- |
2,451 |
|
Cost report totals |
|
5% |
|
117 |
- |
5,385 |
2,842 |
970 |
The property rental income earned by the HEPGL Group from its occupied investment property, all of which is leased out under operating leases amounted to £6,406,000 (2014: £6,708,300). Direct operating expenses arising on investment property generating rental income in the year amounted to £3,853,900 (2014: £3,599,700). Direct operating expenses arising on the investment property which did not generate rental income during the year amounted to £116,700 (2014: £392,400).
Notes to the financial information
for the year ended 31 December 2015: continued
14. Investments In joint ventures
| £000 | |
|
At 31 December 2013 and 31 December 2014 |
1,223 |
|
Investment in joint venture |
10 |
|
Impairment of investment in joint venture |
(465) |
|
At 31 December 2015 |
768 |
The HEPGL Group holds 50% of the issued ordinary shares of Bates Regeneration Limited, a joint venture with Banks Property Limited for the development of an investment property at Blyth, Northumberland. At the end of the year the carrying value of the investment was reviewed, the result of which was an impairment of £465k which has been taken through the income statement and disclosed as an exceptional item given its one-off nature.
The HEPGL Group's share of the assets and liabilities are:
|
2015 |
Country of incorporation |
|
Assets |
|
Liabilities |
|
Interest held |
|
Bates Regeneration Limited |
England and Wales |
|
1,213 |
|
(445) |
|
50 |
|
2014 |
Country of incorporation |
|
Assets |
|
Liabilities |
|
Interest held |
|
Bates Regeneration Limited |
England and Wales |
|
2,050 |
|
(827) |
|
50 |
The risks associated with this investment are as follows:
· Decline in the availability and or an increase in the cost of credit for residential and commercial buyers
· Decline in market conditions and values.
The HEPGL Group also owns a number of other joint ventures whose value is minimal.
15. Inventories
|
|
|
|
|
|
As at |
As at |
|
Raw materials |
- |
- |
|
Work in progress |
114 |
- |
|
Finished goods |
978 |
142 |
|
Total inventories |
1,092 |
142 |
Finished goods inventories comprises coal slurry that has been processed and is ready for sale. The cost of inventory is recognised as an expense within cost of sales in the year of £1,083,000.
Notes to the financial information
for the year ended 31 December 2015: continued
16. Trade and other receivables
|
|
As at |
As at |
|
Trade receivables |
1,564 |
1,901 |
|
Less: provision for impairment of trade receivables |
(121) |
(383) |
|
Net trade receivables |
1,443 |
1,518 |
|
Other receivables |
16,234 |
15,816 |
|
Prepayments and accrued income |
1,159 |
426 |
|
Amounts receivable from Harworth Group Plc |
550 |
- |
|
Amounts recoverable on construction contracts |
581 |
- |
|
|
19,967 |
17,760 |
The carrying amount of trade and other receivables approximate to their fair value due to the short time frame over which the assets are realised. All of the HEPGL Group's receivables are denominated in sterling.
Other receivables include a £2.0m (2014: £2.5m) loan to UK Coal Production Limited, a £1.0m (2014: £2.0m) loan to UK Coal Surface Mining Restoration Limited and £6.7m (2014: £6.1m) of cash held in escrow accounts in respect of the disposal of plots for housing and commercial development. In addition a balance of £2.2m (2014: £3.1m) is included within other receivables relating to restricted cash balances for performance bonds and £4.0m (2014: £nil) is held in an account that RBS has control over until 13 February 2016.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables as disclosed in note 22. The HEPGL Group and Company do not hold any collateral as security.
Movements on the HEPGL Group provisions for impairment of trade receivables are as follows:
|
|
|
|
|
|
2015 |
2014 |
|
At the beginning of the year |
(383) |
(827) |
|
Released to profit and loss account |
262 |
444 |
|
At the end of the year |
(121) |
(383) |
The other classes of assets within trade and other receivables contain impaired assets of £1,055,000; against which a provision of £262,000 is held.
As at 31 December 2015, trade receivables of £1,120,000 (2014: £1,014,000) were past due but not impaired. These mainly relate to customers for whom the arrears are being collected through agreed payment plans or where cash has been collected in 2016.
The ageing of these was as follows:
|
|
|
|
|
|
2015 |
2014 |
|
Up to 3 months |
1,095 |
986 |
|
Over 3 months |
25 |
28 |
|
At the end of the year |
1,120 |
1,014 |
Notes to the financial information
for the year ended 31 December 2015: continued
16. Trade and other receivables (continued)
As at 31 December 2015, trade receivables of £121,000 (2014: £828,000) were impaired. The ageing analysis of the impaired trade receivables was as follows:
|
|
|
|
|
|
2015 |
2014 |
|
Up to 3 months |
- |
103 |
|
Over 3 months |
121 |
725 |
|
At the end of the year |
121 |
828 |
Provision for impairment charged to the income statement in the year was £nil (2014: £12,000).
17. Cash
|
|
|
|
|
|
As at |
As at |
|
Cash |
20,677 |
17,296 |
18. Assets classified as held for sale
|
|
|
|
|
|
As at |
As at |
|
Investment properties |
9,128 |
- |
|
Total |
9,128 |
- |
The assets classified as held for sale at the year end relate to investment properties which are expected to be sold within twelve months.
Notes to the financial information
for the year ended 31 December 2015: continued
19. Trade and other payables
Current liabilities
|
|
|
|
|
|
As at |
As at |
|
Current |
|
|
|
Trade payables |
856 |
3,883 |
|
Taxation and social security |
1,317 |
2,070 |
|
Other creditors |
2,910 |
- |
|
Accruals and deferred income |
11,865 |
7,314 |
|
Amounts owed to Harworth Group plc |
7,303 |
- |
|
|
24,251 |
13,267 |
The amounts owed to Harworth Group plc are payable on demand and attract interest at LIBOR plus 2%.
Non-current liabilities
|
|
|
|
|
|
As at |
As at |
|
Non-current |
|
|
|
Other creditors |
2,280 |
- |
|
|
2,280 |
- |
Non-current creditors relate to deferred consideration due on land purchases after one year.
Notes to the financial information
for the year ended 31 December 2015: continued
20. Borrowings
|
|
|
|
|
|
As at |
As at |
|
Bank loans |
|
|
|
Current: |
|
|
|
Secured - bank loans and overdrafts |
- |
(49,651) |
|
Secured - other loans |
(400) |
(1,437) |
|
|
(400) |
(51,088) |
|
Non-current: |
|
|
|
Secured - bank loans |
(48,968) |
- |
|
Secured - other loans |
(15,151) |
(6,223) |
|
|
(64,119) |
(6,223) |
At 31 December 2015, the HEPGL Group had bank borrowings of £50.0m (2014: £49.7m), £15.7m (2014: £7.7m) of infrastructure loans offset by £1.2m of capitalised loan fees which resulted in total borrowings of £64.5m (2014: £57.3m). The bank borrowings are part of a £65.0m RCF facility from The Royal Bank of Scotland. The facility is repayable on 13 February 2020 (five year term) on a non-amortising basis and is subject to financial and other covenants. At 31 December 2014 the bank borrowings included facilities from Lloyds Banking Group amounting to £38.2m and from Barclays Bank amounting to £12.2m, each repayable within one year, and capitalised loan fees of £0.7m.
The infrastructure loans of £15.7m (2014: £7.7m) are provided by public bodies in order to promote the development of major sites. They comprise a £1.2m loan from Leeds LEP in respect of the Prince of Wales site (2014: £1.6m), £10.9m from the Homes and Community Agency in respect of Waverley (2014: £5.1m), £3.6m from Sheffield City Region JESSICA Fund for Rockingham (2014: £nil). At 31 December 2014 there was also a loan of £1.0m from Greater Manchester Investment Fund In respect of Logistics North.
The loans are drawn as work on the respective sites is progressed and they are repaid on agreed dates or when disposals are made from the sites.
Current loans are stated after deduction of unamortised borrowing cost of £nil (2014: £741,000). Non-current bank and other loans are stated after deduction of unamortised borrowing costs of £1,236k (2014: £nil). The bank loans and overdrafts are secured by way of fixed charges over certain assets of the HEPGL Group.
21. Provisions for liabilities and charges
|
|
|
|
|
|
As at |
As at |
|
At 1 January |
564 |
683 |
|
Released in the year |
(129) |
(119) |
|
At 31 December |
435 |
564 |
Harworth Estates Mines Property Limited (a subsidiary of the HEPGL Group) provided a guarantee to Coalfield Resources plc, capped at £3,100,000 should the mining business fail to meet its obligation to fund Coalfield Resources plc`s Blenkinsopp pension scheme liability. Due to the uncertainty surrounding the mining business the HEPGL Group recognised a liability and charged the income statement accordingly. On an IAS 19 (Revised) 'Employee benefits' basis the liability at 31 December 2015 is £435,000 (2016: £564,000).
Notes to the financial information
for the year ended 31 December 2015: continued
22. Financial instruments and derivatives
The HEPGL Group's principal financial instruments during the year included trade and other receivables, cash, interest bearing borrowings, trade and other payables and derivative financial instruments.
Other financial assets and liabilities
|
|
31 December 2015 |
31 December 2014 |
||
|
|
Book value |
Fair value |
Book value |
Fair value |
|
Assets |
|
|
|
|
|
Cash and cash equivalents |
20,677 |
20,677 |
17,296 |
17,296 |
|
Trade and other receivables |
19,267 |
19,267 |
16,846 |
16,846 |
|
Liabilities |
|
|
|
|
|
Bank and other borrowings |
64,519 |
64,519 |
57,311 |
57,311 |
|
Derivative financial instruments |
- |
- |
81 |
81 |
|
Trade and other payables |
23,551 |
23,551 |
11,824 |
11,824 |
In accordance with IAS 39, the HEPGL Group classifies the assets and liabilities in the analysis above as 'loans and receivables' and 'other financial liabilities', respectively. At the 2015 and 2014 year ends, this Group did not have any 'held to maturity' or 'available for sale' financial assets or 'held for trading' financial assets and liabilities as defined by IAS 39.
The fair value of bank and other borrowings equals their carrying amount, as the impact of discounting is not significant. The fair values are within Level 2 of the fair value hierarchy.
23. Financial risk management
The HEPGL Group's overall risk management programme focuses on credit and liquidity risks to minimise potential adverse effects on this Group's financial performance.
Risk management is carried out centrally under policies approved by the Board of Directors. The Board discusses and agrees courses of action to cover material risk management areas, including credit risk and investment of excess liquidity.
Credit risk
The HEPGL Group is subject to credit risk arising from outstanding receivables and committed cash and cash equivalents and deposits with banks and financial institutions. This Group's policy is to manage credit exposure to trading counterparties within defined trading limits.
The HEPGL Group is exposed to counterparty credit risk on cash and cash equivalent balances. The HEPGL Group and Company hold all of their cash deposits with their principal bankers.
Interest rate risk
The HEPGL Group's interest rate risk arises from external borrowings which are charged at LIBOR plus 2%.
Liquidity risk
The HEPGL Group is subject to the risk that it will not have sufficient liquid resources to fund its on-going business. The HEPGL Group manages its liquidity requirements with the use of both short and long-term cash flow forecasts.
The HEPGL Group had net debt at 2015 of £43,842,000; (2014: £40,015,000). The HEPGL Group used cash from operating activities and investing activities for the year of £3,992,000 (2014: £4,076,000).
Notes to the financial information
for the year ended 31 December 2015: continued
23. Financial risk management : continued
The table below analyses the HEPGL Group's financial liabilities which will be settled on a net basis into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the gross contractual undiscounted cash flows.
|
|
Less than 1 year |
Between 1 and 2 years £000 |
Between |
|
At 31 December 2015 |
|
|
|
|
Trade and other payables (including deferred income) |
23,551 |
2,280 |
- |
|
Interest payable on borrowings |
- |
- |
345 |
|
Bank and other borrowings |
400 |
3,000 |
60,774 |
|
At December 2014 |
|
|
|
|
Trade and other payables (including deferred income) |
13,267 |
- |
- |
|
Bank and other borrowings |
37,842 |
- |
- |
Capital risk management
The HEPGL Group is subject to the risk that its capital structure will not be sufficient to support the growth of the business. The HEPGL Group's objectives when managing capital are:
· to safeguard the HEPGL Group's ability to continue as a going concern and have the resources to provide returns for shareholders and benefits for other stakeholders;
· to maximise returns to shareholders by allocating capital across the business based upon the expected level of return and risk; and
· to maintain an optimal capital structure to reduce the cost of capital.
The HEPGL Group manages and monitors its cash balances to ensure it has sufficient capital to manage and maintain its business activities. Cash balances are disclosed in note 17.
In order to maintain or adjust the capital structure, the HEPGL Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The HEPGL Group monitors capital on the basis of net debt to equity. Net debt is total debt less cash and cash equivalents and at 31 December 2015 this was £43.8m (2014: £40.0m).
The HEPGL Group has in place a £65.0m RCF from The Royal Bank of Scotland ('RBS'). The facility is a five year term facility which ends in February 2020. It is on a non-amortising basis and is subject to financial and other covenants.
The facility provided by RBS is subject to covenants over loan to market value of investment properties, gearings, and minimum consolidated net worth.
The HEPGL Group comfortably operated within its requirements throughout the year.
24. Called up share capital
|
|
|
2015 |
2014 |
||
|
|
|
Number |
|
Number |
|
|
Authorised share capital |
|
|
|
|
|
|
At the start and end of the year |
|
|
|
|
|
|
Ordinary shares of £0.001 each |
|
Unlimited |
Unlimited |
Unlimited |
Unlimited |
|
Issued and fully paid |
|
|
|
|
|
|
Ordinary shares of £0.001 each |
|
|
|
|
|
|
1 January |
|
24,096 |
24 |
24,096 |
24 |
|
31 December |
|
24,096 |
24 |
24,096 |
24 |
Notes to the financial information
for the year ended 31 December 2015: continued
25. Share premium account
|
|
|
|
|
|
2015 |
2014 |
|
At 1 January |
|
|
|
|
222,161 |
222,161 |
|
At 31 December |
|
|
|
|
222,161 |
222,161 |
26. Fair value reserve
|
|
|
|
|
2015 |
2014 |
|
At 1 January |
|
|
|
29,581 |
16,011 |
|
Fair value gain on revaluation of investment properties |
|
|
|
28,890 |
15,748 |
|
Transfer to accumulated losses on disposal of investment property |
|
|
|
- |
(2,178) |
|
At 31 December |
|
|
|
58,471 |
29,581 |
The fair value reserve does not represent realised reserves.
27. Capital and other financial commitments
Capital expenditure contracted for at 31 December 2015 is £nil (2014: £nil).
28. Related party transactions
Directors and key management compensation
The remuneration of the Directors and key management is disclosed in note 6
Peel
The HEPGL Group relinquished an option to purchase 50% of the share capital of Peel Wind Farms (Blue Sky Forest) Limited in return for £4.4m from Peel Holdings Wind Farms (IOM) Limited. This has resulted in a gain of £3.2m shown in the consolidated income statement within other gains.
Harworth Group plc (formerly Coalfield Resources plc)
A Management recharge was paid to Harworth Group Plc of £0.4m (2014: £1.5m) and the balance outstanding at 31 December 2015 was £0.6m (2014: £0.3m).
Interest of £78,000 (2014: £nil) was incurred on the loan provided from Harworth Group plc to the Group. The amount outstanding at 31 December 2015 was £7.7m (2014: £nil).
Harworth Estates Mines Property Limited (a subsidiary of the Group) provided a guarantee to Harworth Group plc, capped at £3,100,000 should the mining business fail to meet its obligation to fund Harworth Group plc`s Blenkinsopp pension scheme liability.
Notes to the financial information
for the year ended 31 December 2015: continued
29. Operating lease commitments
The Group leases a number of vehicles, office equipment and office facilities under operating leases. The leases run between one year and three years.
a) Future minimum lease payments
The future minimum lease payments under non-cancellable leases were payable as follows:
|
|
As at |
As at |
|
|
|
|
|
Less than one year |
33 |
33 |
|
Between one and five years |
30 |
50 |
|
|
|
|
|
|
63 |
83 |
|
|
|
|
|
Amounts recognised in the income statement |
|
|
|
|
|
|
|
Lease cost |
25 |
22 |
|
|
|
|
b) Future minimum lease receipts
As set out in note 13 property rental income earned during the year was £6.4m (2014: £6.7m).
The HEPGL Group had contracted with tenants for the following future minimum lease receipts:
|
|
As at |
As at |
|
|
|
|
|
|
|
Less than one year |
5,142 |
4,331 |
|
|
Between one and five years |
15,916 |
14,959 |
|
|
More than five years |
27,386 |
28,839 |
|
|
|
|
|
|
|
|
48,444 |
48,129 |
|
|
|
|
|
|
30. Subsequent events
Financing
On 21 June 2016 the HEPGL Group entered into a four year swap with RBS to fix £30m of borrowings at an all-in rate of 2.955%, including fees. The swap is hedge accounted with any unrealised movements going through reserves.
On 19 August 2016 the HEPGL Group completed a planned extension of its RCF, increasing the limit to £75m and extending the term by a further year to expiry in February 2021.
On 13 February 2018 the HEPGL Group extended the term of its £75m RCF by two years such that it now expires in February 2023 and on 30 April 2018 Santander UK Plc provided an additional £25m of funding to the RCF to sit alongside the existing £75m commitment from The Royal Bank of Scotland.
Property portfolio
On 14 March 2016 the HEPGL Group purchased a 50% share of The Aire Valley Land LLP from Keyland Developments Limited for a consideration of £8.5m plus costs of £0.5m. The Aire Valley Land LLP is a joint venture company. It controls 165 acres of land in Leeds that abuts an existing landholding of the Group on the former Skelton Grange power station site.
The HEPGL Group acquired two income generating sites in Lancashire; a 10.75 acre site in Chorley known as Moorland Gate Business Park for £4.5m (November 2016) and a 19.4 acre site in Preston, Four Oaks Business Park for £13.2m (December 2016). Also in December 2016 the HEPGL Group sold 43.71 acres at Logistics North to Lidl UK for £22.5m to build its North West Distribution Centre.
On 26 April 2017, the HEPGL Group entered into a joint venture agreement with Lancashire County Pension Fund to establish Multiply Logistics North Holdings Limited to develop part of the site at Logistics North, near Bolton.
Notes to the financial information
for the year ended 31 December 2015: continued
30. Subsequent events (continued)
In June 2017 £77.7m of investment property was re-categorised to development property (disclosed within inventory) following the maturity and evolvement of the business model. A further £151.4m of investment property was re-categorised to development as at 31 December 2017 with further evolution of the business model and conclusion of the policy. The HEPGL Group policy now is to categorise all properties which have received planning permission as development properties.
On 1 May 2018 the HEPGL Group acquired a 112 acre site at Wyke, Bradford for £32.45m plus acquisition costs.
Directors
The changes in the Directors of HEPGL from 1 January 2016 are as follows:
P. Wilson (appointed 19/01/2016)
I. Ball (appointed 19/01/2016)
A. Kirkman (appointed 19/01/2016)
M. Richardson (resigned 29/02/2016)
J. Cox (resigned 03/11/2016)
C. Birch (appointed 03/11/2016)
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
Latest directors dealings
- 24 minutes ago Auction Technology Group
- 54 minutes ago Wise Class A
- 1 hour ago Sage Group
- 1 hour ago On The Beach Group
- 1 hour ago MJ Gleeson