Final Results

Secured Property Developments plc Directors' report and consolidated financial statements Registered number 2055395 31 December 2007 Contents Notice of meeting 1 Company information 2 Chairman's statement 3 Directors' report 4 Statement of directors' responsibilities in respect of the Directors' report and financial statements 7 Independent auditors' 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 Statement of total recognised gains and losses and reconciliation of movement in shareholders' funds 14 Notes 15 Form of proxy 28 Notice of meeting NOTICE IS HEREBY GIVEN that the Twentieth 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 21st May 2008 at 11 a.m. for the following purposes: 1. To receive and adopt the financial statements for the year ended 31 December 2007, together with the reports of the Directors and Auditors thereon. 2. To re-elect as Directors P Cottam and P R Stansfield 3. To approve a dividend of 1 penny per Ordinary Share, recommended by the Directors for payment to shareholders on the register at the close of business on 16th May 2008. 4. To authorise, by special resolution in accordance with s95 of the Companies Act 1985, 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 2009, or on 23rd May 2009 if earlier 5. To re-appoint as Auditors KPMG Audit Plc, and to authorise the Directors to agree their remuneration 6. To transact any other ordinary business of the Company. By Order of the Board R B DobrÃ©e Secretary Date: 21st April 2008 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 P Cottam (Chairman) R E France G W Green R A Shane P R Stansfield Secretary R B DobrÃ©e Registered office Rowlandson House 289/293 Ballards Lane London N12 8NP Auditors KPMG Audit plc St James' Square Manchester M2 6DS Bankers The Royal Bank of Scotland Piccadilly Circus Branch 48 Haymarket London SW17 4SE Solicitors Stephenson Harwood 1 St Paul's Churchyard London EC4M 8SH Share Dealing The Company's Ordinary shares are quoted on the PLUS market and persons can buy or sell shares through their stockbroker. Share Price The middle market price of the Ordinary shares were quoted at 31st December 2007 on the PLUS Market at 50 pence per share (2006: 66 pence per share) Chairman's statement The profit before tax in the year was Â£159,522 compared with Â£33,056 for 2006 and includes Â£139,789 in the form of interest from a project development loan. We have no similar loan arrangement at the moment, but would enter into similar loans in the future, should they be available to us. Last year the Board indicated it would like to see some return to shareholders in the form of an annual dividend. The directors have decided therefore to recommend the payment of a dividend at the rate of 5% of the ordinary share capital (1 penny per share), subject to approval at the forthcoming Annual General Meeting. In view of the unsettled property market due in no small measure to the "credit crunch", and the need to raise further resources to cover the repayment of loans becoming due for repayment during 2008, the directors felt it appropriate to commission a professional valuation of the group's properties. This has been carried out at 31st of March 2008 and shows a reduction of Â£590,000 in market value, which has been provided in the 2007 accounts. As a consequence of that provision group shareholders funds at the beginning of 2008 have reduced to Â£1,306,610 (1st January 2007 Â£1,766 130) The Board is also by resolution 5, which will be tabled as is a special resolution, extending its existing powers under section 95 of the Companies Act 1985 for the Company to purchase a maximum of 5% of its ordinary shares, should the time and price appear to be right: the powers will expire at the 2009 AGM and will permit the company to purchase shares in the market if the price is between 20p and 60p per share. The Board would take into account the best interest of shareholders and the effects on cash flow and retained earnings before utilising the powers. The Annual General Meeting will take place at the Royal Automobile Club, 89. Pall Mall, London SW1Y 5HS on Wednesday 21st May at 11 a.m., and the directors look forward to meeting those shareholders who can attend. Philip Cottam Chairman Date: 21st April 2008 Directors' report The directors present their annual report and the audited financial statements for the year ended 31 December 2007. Principal activity 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 medium-term borrowings. The group is due to repay term loans amounting to Â£969,537 no later than the 20th of July 2008. The group has a committed funding offer, subject only to the completion of legal formalities, sufficient to more than repay these loans 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, 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. These policies have remained unchanged since the beginning of 2002. Interest rate risk The group finances its operations through bank borrowings. The group borrows at both the fixed and floating rates of interest 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 15 of these financial statements. Proposed dividend and transfer to reserves The directors recommend the payment of a dividend of 1 penny per share, payable on 23rd June 2008 to those on the register of shareholders at the close of business on 16th May 2008 The profit for the year retained in the group is Â£140,383.(2006: Â£31,499). Directors' report (continued) Directors and directors' interests The directors who held office during the year were as follows: P Cottam R E France G W Green R A Shane P R Stansfield 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 Company Class Interest at Interest at 1 April 1 April 2008 2007 P Cottam SPD plc # Ordinary 27,375 27,375 shares Deferred 4,000 4,000 shares R E France SPD plc # Ordinary 88,888 88,888 shares G W Green SPD plc # Ordinary 90,000 90,000 shares Deferred 30,000 30,000 shares R A Shane SPD plc # Ordinary 574,456 574,456 shares Deferred 154,666 154,666 shares P R Stansfield SPD plc # Ordinary 6,250 6,250 shares ______ ______ # SPD plc is used above as an abbreviation for Secured Property Developments plc. The interests of the directors shown above at 1 April 2008 and 1 April 2007 were held respectively at 31 December 2007 and 31 December 2006. 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 1 April 2008 R E France 4.51% G W Green 4.57% R A Shane 27.32% Directors' report (continued) Political and charitable contributions The group made no political or charitable donations during the year. Disclosure of information to auditors 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 auditors are 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 auditors are aware of that information. Auditors In accordance with Section 384 of the Companies Act 1985, a resolution for the re-appointment of KPMG Audit Plc as auditors of the Company is to be proposed at the forthcoming Annual General Meeting. By order of the board R B DobrÃ©e Date 21st April 2008 Rowlandson House Secretary 289/293 Ballards Lane London N12 8NP Statement of directors' responsibilities in respect of the Directors' report and the financial statements The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice). The financial statements are required by law to give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these 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; and - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that its financial statements comply with the Companies Act 1985. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities. ABCD KPMG Audit Plc St James' Square Manchester M2 6DS United Kingdom Independent auditors' report to the members of Secured Property Developments plc We have audited the group and parent company financial statements (the ``financial statements'') of Secured Property Developments plc for the year ended 31 December 2007 which comprise the Consolidated Profit and Loss Account, the Consolidated and Company Balance Sheets, the Consolidated Cash Flow Statement, the Consolidated Statement of Total Recognised Gains and Losses, the Reconciliations of Movements in Shareholders' Funds and the related notes. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the company's members, as a body, in accordance with section 235 of the Companies Act 1985. 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 auditors The directors' responsibilities for preparing the Directors' Report and the financial statements in accordance with applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice) are set out in the Statement of Directors' Responsibilities on page 7. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors' Report is consistent with the financial statements. In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and other transactions is not disclosed. We read the Directors' Report and consider the implications for our report if we become aware of any apparent misstatements within it. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the group's and company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit 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 statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Independent auditors' report to the members of Secured Property Developments plc (continued) Opinion In our opinion: - the financial statements give a true and fair view, in accordance with UK Generally Accepted Accounting Practice, of the state of the group's and the parent company's affairs as at 31 December 2007 and of the group's profit for the year then ended; - the financial statements have been properly prepared in accordance with the Companies Act 1985; and - the information given in the Directors' Report is consistent with the financial statements. KPMG Audit Plc [Date] Date: 21st April 2008 Chartered Accountants Registered Auditor Consolidated profit and loss account for the year ended 31 December 2007 Note 2007 2006 Â£ Â£ Turnover from continuing operations 2 290,929 160,954 Cost of sales - - Gross profit 290,929 160,954 Administrative expenses (64,213) (59,951) Operating profit from continuing 226,716 101,003 operations Other interest receivable and similar 6 2,995 777 income Interest payable and similar charges 7 (70,189) (68,724) Profit on ordinary activities before taxation 2-7 159,522 33,056 Tax on profit on ordinary activities 8 (19,139) (1,557) Profit on ordinary activities after taxation 18 140,383 31,499 and retained for the financial year Earnings per share 10 7.12p 1.60p Consolidated balance sheet at 31 December 2007 Note 2007 2006 Â£ Â£ Â£ Â£ Fixed assets Tangible assets 11 2,110,000 2,700,000 Current assets Debtors 13 7,759 38,980 Cash at bank and in hand 234,514 73,118 242,273 112,098 Creditors: amounts falling due within one year 14 (1,045,663) (80,531) Net current (liabilities) / (803,390) 31,567 assets Total assets less current 1,306,610 2,731,567 liabilities Creditors: amounts falling due after 15 - (965,437) more than one year Net assets 1,306,610 1,766,130 Capital and reserves Called up share capital 17 418,861 418,861 Share premium account 18 3,473 3,473 Revaluation reserve 18 661,861 1,251,861 Profit and loss account 18 222,415 91,935 Shareholders' funds 1,306,610 1,766,130 These financial statements were approved by the directors on 21st April 2008 and were signed on their behalf by: P Cottam R A Shane Director Director Company balance sheet at 31 December 2007 Note 2007 2006 Â£ Â£ Â£ Â£ Fixed assets Tangible assets 11 610,000 700,000 Investments 12 263,263 308,686 873,263 1,008,686 Current assets Debtors 13 28,443 44,422 Cash at bank and in hand 212,892 43,627 241,335 88,049 Creditors: amounts falling due within one year 14 (296,546) (19,214) Net current (liabilities) / (55,211) 68,835 assets Total assets less current 818,052 1,077,521 liabilities Creditors: amounts falling due after 15 - (280,094) more than one year Net assets 818,052 797,426 Capital and reserves Called up share capital 17 418,861 418,861 Share premium account 18 3,473 3,473 Revaluation reserve 18 198,763 288,763 Profit and loss account 18 196,955 86,330 Shareholders' funds 818,052 797,427 These financial statements were approved by the directors on 21st April 2008 and were signed on their behalf by: P Cottam R A Shane Director Director Consolidated cash flow statement for the year ended 31 December 2007 Note 2007 2006 Â£ Â£ Cash flow from operating activities 257,778 86,315 Returns on investments and servicing 20 (67,194) (67,947) of finance Taxation (1,557) - Dividends (9,903) - _______ _______ Cash inflow before financing 179,124 18,368 Financing 20 (17,728) (16,371) ______ ______ Increase/(Decrease) in cash in the 21 161,396 1,997 year Reconciliation of operating profit to operating cash flows for the year ended 31 December 2007 2007 2006 Â£ Â£ Operating profit 226,716 101,003 Decrease in debtors 31,221 3,691 Increase/(Decrease) in creditors (159) (18,379) _______ _______ Net cash inflow from operating 257,778 86,315 activities Reconciliation of net cash flow to movement in net debt for the year ended 31 December 2007 Notes 2007 2006 Â£ Â£ Increase in cash in the year 21 161,396 1,997 Cash outflow/(inflow) from 17,728 16,371 (decrease)/increase in debt _______ _______ Movement in net debt in the year 179,124 18,368 Net debt at beginning of the year 21 (914,147) (932,515) _______ _______ Net debt at end of the year 21 (735,023) (914,147) Statement of total recognised gains and losses for the year ended 31 December 2007 Group Company 2007 2006 2007 2006 Â£ Â£ Â£ Â£ Profit for the financial year 140,383 31,499 120,528 39,881 Unrealised loss on revaluation of (590,000) - (90,000) - properties _______ _______ _______ _______ Total recognised gains and losses (449,617) 31,499 30,528 39,881 Reconciliation of movements in shareholders' funds for the year ended 31 December 2007 Group Company 2007 2006 2007 2006 Â£ Â£ Â£ Â£ Profit for the financial year 140,383 31,499 120,528 39,881 Cost of Dividend paid out of 2006 (9,903) - (9,903) - Profits Loss on revaluation of properties (590,000) - (90,000) - _______ _______ _______ _______ Net (reduction in) / addition to (459,520) 31,499 20,625 39,881 shareholders' funds Opening shareholders' funds 1,766,130 1,734,631 797,427 757,546 _______ _______ _______ _______ Closing shareholders' funds 1,306,610 1,766,130 818,052 797,427 Notes (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 1985 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 2007. The going concern basis has been used in the preparation of these financial statements notwithstanding the deficiency of net current assets. The group has a committed funding offer, subject only to the completion of legal formalities, sufficient to more than repay the term loans across the group. 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 section 230(4) of the Companies Act 1985 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. 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 1985 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. Notes (continued) 1 Accounting policies (continued) 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: a) 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 b 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. 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 (see dividends policy), 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. Notes (continued) 2 Turnover and profit on ordinary activities before taxation 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: 2007 2006 Â£ Â£ Rental income from investment properties 149,500 140,105 Interest earned on loans (2006 including Â£18,726 arising from 141,429 20,849 full settlement of customer balance) 290,929 160,954 All turnover and pre-tax profit on ordinary activities before taxation was earned in the UK. 3 Profit on ordinary activities before taxation 2007 2006 Â£ Â£ Profit on ordinary activities before taxation is stated: after charging Auditors' remuneration Audit services 9,000 8,500 Other services - compliance tax work 1,550 1,400 The audit fee of the group of Â£9,000 includes Â£5,000 (2006: Â£8,500) in relation to the company. 4 Remuneration of directors The chairman received fees of Â£9,648 (2006: Â£12,548) and one other director received fees of Â£19,350 (2006: Â£18,960) which was paid to his employer in respect of his services (see note 22). Notes (continued) 5 Staff numbers and costs The average number of persons employed by the group (including directors) during the year, analysed by category, was as follows: Number of employees 2007 2006 Directors 5 5 There are no payroll costs other than those disclosed in note 4. 6 Other interest receivable and similar income 2007 2006 Â£ Â£ Bank interest receivable 2,995 777 7 Interest payable and similar charges 2007 2006 Â£ Â£ On bank loans 70,189 68,724 8 Taxation Analysis of charge in year 2007 2006 Â£ Â£ UK corporation tax Current tax on income 19,197 1,557 for the year Adjustment for prior (58) - years Tax on profit on 19,139 1,557 ordinary activities Notes (continued) 8 Taxation (continued) Factors affecting the tax charge for the current year The current tax charge for the year is lower (2006: lower) than the standard rate of corporation tax in the UK (30%, 2006: 30%). The differences are explained below. 2007 2006 Â£ Â£ Current tax reconciliation Profit on ordinary activities before tax 159,522 33,056 Current tax at 30% (2006: 30%) 47,856 9,917 Effects of: Expenses not deductible for tax purposes 121 - Utilisation of tax losses (18,820) (7,311) Lower tax rate relief (9,960) (1,049) Total current tax charge (see above) 19,197 1,557 9 Deferred tax An analysis of the unrecognised deferred taxation asset is set out below: Group Company 2007 2006 2007 2006 Â£ Â£ Â£ Â£ Deferred tax asset at (80,608) (26,135) (48,424) (784) beginning of year Under provision in prior year 14,780 (56,005) - (56,005) Deferred tax asset at beginning of year, as (65,828) (82,140) (48,424) (56,789) restated Utilisation of tax losses 18,820 1,532 35,789 8,365 Effect of change in tax rate 842 - 842 - Deferred tax asset at end of (46,166) (80,608) (11,793) (48,424) year The deferred tax asset has not been recognised on the basis that the timing differences may not be recovered in the foreseeable future. Notes (continued) 9 Deferred tax (continued) The elements of deferred taxation are as follows: Group Company 2007 2006 2007 2006 Â£ Â£ Â£ Â£ Other timing differences (46,166) (61,788) (11,793) (47,008) Tax Losses - (18,820) - (1,417) Deferred tax asset at end of (46,166) (80,608) (11,793) (48,424) year 10 Earnings per share The calculation of the earnings per share figure is based on the following: 2007 2006 Profit after tax Â£140,383 Â£31,499 Weighted average number of ordinary 1,970,688 1,970,688 shares Earnings per share 7.12p 1.60p 11 Tangible fixed assets Investment Group properties Â£ Cost or valuation At beginning of year 2,700,000 Decrease in valuation at 31 December (590,000) 2007 _________ At end of year 2,110,00 Net book value At 31 December 2007 2,110,000 At 31 December 2006 2,700,000 Notes (continued) 11 Tangible fixed assets (continued) 2007 2006 Â£ Â£ Historical cost of revalued assets 1,448,139 1,448,139 Historical cost net book value of 1,448,139 1,448,139 revalued assets Company Â£ Cost or valuation At beginning of the year 700,000 Decrease in valuation at 31 December (90,000) 2007 _________ At end of the year 610,000 Net book value At 31 December 2007 610,000 At 31 December 2006 700,000 2007 2006 Â£ Â£ Historical cost of revalued assets 411,237 411,237 Historical cost net book value of 411,237 411,237 revalued assets Group and company The directors revalued the investment properties of the Group on 31st December 2007. This resulted in a reduction of Â£590,000 from the previously shown value of Â£2,700,000. The revaluation took account of a professional revaluation of both the Scarborough and York property by Chartered Surveyors Atis Real UK Ltd , as at 31st March 2008. Both external valuations were 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. Notes (continued) 12 Investments Company Loans to Shares in subsidiaries subsidiaries Total Â£ Â£ Â£ Cost At beginning and end of 465,374 4 465,378 year Reduction during the (159,998) - (159,998) year At the end of the year 305,376 4 305,380 Provisions for diminution in value At beginning of the year 156,692 - 156,692 Reduction during the (114,575) - (114,575) year At the end of the year 42,117 - 42,117 Net book value At 31 December 2007 263,259 4 263,263 At 31 December 2006 308,682 4 308,686 Shares in group undertakings represent the company's investment in SPD Discount Limited and Secured Property Developments (Scarborough) Limited. At 31 December 2007 and 2006 the company held 100% of the ordinary share capital of each of the subsidiary undertakings. Both subsidiary undertakings are registered in England and Wales. The principal activity of SPD Discount Limited is that of a finance company and that of Secured Property Developments (Scarborough) Limited is property investment. 13 Debtors Group Company 2007 2006 2007 2006 Â£ Â£ Â£ Â£ Trade debtors 5,224 37,896 - - Amounts owed by subsidiary - - 16,264 42,905 undertakings Prepayments 2,535 1,084 2,768 1,517 Taxes & Social Security - - 9,411 - ________ ________ ______ ______ 7,759 38,980 28,443 44,422 All amounts fall due within one year. Notes (continued) 14 Creditors: amounts falling due within one year Group Company 2007 2006 2007 2006 Â£ Â£ Â£ Â£ Bank loans (see note 15) 969,537 21,828 280,095 - Corporation tax 19,197 1,557 390 - Taxes and social security 7,419 5,769 1,933 1,872 Other creditors 4,692 4,899 4,258 3,952 Accruals and deferred 44,818 46,478 9,870 13,390 income ________ ________ ________ ________ 1,045,663 80,531 296,546 19,214 15 Creditors: amounts falling due after more than one year Group Company 2007 2006 2007 2006 Â£ Â£ Â£ Â£ Bank loan - 685,343 - - Morgan Stanley Dean Witter - 280,094 - 280,094 Bank Ltd _______ _______ _______ _______ - 965,437 - 280,094 The Bank Loan is secured by a Fixed and floating charge on the assets of Secured Property Developments (Scarborough) Limited. The interest rate is fixed at 6.5% until 29 February 2008. It is repayable by quarterly instalments of Â£5,457 and in full in May 2008. The loan from Morgan Stanley Dean Witter Bank Ltd is secured by way of a first charge on 14 St Sampson's Square, York. From 20 July 2001 the loan was converted to an interest only loan at the rate of 7.16% pa. until 20 July 2008. The group has a committed funding offer, subject only to the completion of legal formalities, sufficient to more than repay these loans Analysis of other Group Company loans: 2007 2006 2007 2006 Â£ Â£ Â£ Â£ Amounts falling due: In one year or less, or 969,537 21,828 280,094 - on demand Between one and two - 965,437 - 280,094 years Between two and five - - - - years 969,537 987,265 280,094 280,094 Notes (continued) 16 Derivatives and other financial instruments The group's policies with regard to financial instruments are set out on page 4. Short term debtors and creditors have been omitted from all disclosures. Financial assets The group has Â£234,514. (2006: Â£73,118) 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 2007 was: Total Fixed rate Fixed Weighted Financial financial rate average liabilities liabilities weighted period on average for which no interest which interest is rate rate is charged fixed Â£ Â£ % Years Â£ 2007 969,537 969,537 6.69 0.28 nil 2006 997,265 997,265 6.69 1.28 nil 2005 1,003,636 1,003,636 6.68 2.46 nil Maturity of financial liabilities The maturity profile at 31 December 2007 of the group's financial liabilities, other than short term creditors such as trade creditors and accruals is set out in note 15. 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. 17 Called up share capital 2007 2006 Â£ Â£ 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 Notes (continued) 17 Called up share capital (continued) 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 Â£100,000 per ordinary share shall have been distributed. 18 Reserves Share Revaluation Profit and premium reserve loss account account Group Â£ Â£ Â£ At beginning of year 3,473 1,251,861 91,935 Profit for the financial year - - 140,383 Loss on revaluation of properties - (590,000) - 3,473 661,861 232,318 Dividend paid during the year - - (9,903) At end of year 3,473 661,861 222,415 Company At beginning of year 3,473 288,763 86,330 Profit for the financial year - - 120,528 Loss on revaluation of property (90,000) 3,473 198,763 206,858 Dividend paid during the year - - (9,903) At end of year 3,473 198,763 196,955 The proposed dividend payable on 16th June 2008 has not been charged to the Profit & Loss Account as it is subject to approval in Annual General Meeting. 19 Commitments Neither the group nor the company had any contractual commitments at the year end (2006: Â£nil). Notes (continued) 20 Analysis of items netted in the cash flow statement 2007 2006 Â£ Â£ Return on investments and servicing of finance Interest paid (70,189) (68,724) Interest received 2,995 777 Net cash outflow from returns on investments and (67,194) (67,947) servicing of finance Financing Loan refinancing less repayments (17,728) (16,371) Net cash (outflow)/ inflow from (17,728) (16,371) financing 21 Analysis of changes in net debt 31 December 31 December 2006 Cash flows 2007 Â£ Â£ Â£ Cash in hand and at bank 73,118 161,396 234,514 Debt due within 1 year (21,828) (947,709) (969,537) Debt due after 1 year (965,437) 965,437 - (914,147) 179,124 (735,023) The cash flows during the year include Â£965,437 reclassified from debt due after more than one year to debt due within one year. 22 Related party transactions St James Property Services Limited of which R A Shane is a director and shareholder has received Â£21,943 (2006: Â£20,034) from the holding company in respect of management services, including directors' fees of Â£19,350 (2006: Â£18,960). The amount outstanding at the year end is Â£nil (2006: Â£nil). P Cottam has received fees amounting to Â£9,648 (2006:Â£12,548) from the holding company in respect of professional fees. The amount outstanding at the year end is Â£nil (2006: Â£nil). Intentionally left blank Form of Proxy for use at the Annual General Meeting on 21st May 2008 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 21st May 2008 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 2007. 2. To re-elect P Cottam as a director. 3. To re-elect P R Stansfield as a director 4. To approve a dividend of 1 penny per Ordinary Share, recommended by the Directors for payment to shareholders on the register at the close of business on 16th May 2008 5. 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 2009, or on 23rd May 2009 if earlier. 6. To appoint KPMG Audit Plc as Auditors and to authorise the Board to agree their remuneration. 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 ______________________________ 2008 Signature Notes 1. A proxy need not be a Member of the Company. 2. 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 3. 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. 4. 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. 5. Any alterations made on this form should be initialled. 6. 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.

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