www.cardiff-property.com The Cardiff Property plc Annual Report and Accounts for the year ended 30 September 2009 www.cardiff-property.com The Cardiff Property plc The group, including Campmoss, specialises in property investment and development in the Thames Valley. The total portfolio under management, valued in excess of £31m, is primarily located to the west of London, close to Heathrow Airport and in Surrey and Berkshire. Tangley Place,Worplesdon (artist’s impression) Financial Highlights The Cardiff Property plc Annual Report 2009 The group seeks to enhance shareholder value by obtaining new planning permissions, managing its existing portfolio and keeping a watchful eye for acquisitions. Net Assets Net Assets Per Share Loss Before Tax Loss Per Share Dividend Per Share Gearing £’000 pence £’000 pence pence % 2009 2008 16,768 18,407 1,065 1,105 (656) (1,541) (57.7) (90.2) 12.30 12.30 Nil Nil Contents 1 Financial Highlights 2 Locations 3 Chairman’s Statement and Property Review 6 Financial Review 8 Directors and Advisers 9 Report of the Directors 11 Corporate Governance 13 Statement of Directors’ Responsibilities 14 Remuneration Report 16 Independent Auditors’ Report 17 Consolidated Income Statement 18 Consolidated Balance Sheet 19 Consolidated Cash Flow Statement 20 Other Primary Statements 21 Notes to the Financial Statements 37 Company Balance Sheet 38 Notes to the Financial Statements continued 43 Notice of Annual General Meeting 46 Consolidated Five Year Summary 47 Financial Calendar 16856CARDIFFP.indd 1 16856CARDIFFP.indd 1 16856 25/11/09 proof 4 1 1 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com Locations The group’s portfolio of investment property and development schemes are located in the important M4 corridor. BRACKNELL Brickfi elds* 12 business units and 1 offi ce unit totalling 35,000 sq ft.Tenants include Siemens Properties, Benefi cial Bank,Verizon UK, BSS Group and National Car Rental producing £370,000 pa. 1 unit vacant. Market Street* 25,000 sq ft offi ce building, plus 12 retail and part office units. Currently partly let producing gross income of £136,000 pa. Detailed planning application under discussion to replace with high grade offi ces, residential and retail. BURNHAM The Priory* 26,000 sq ft headquarters offi ce building. 9,000 sq ft used as a business centre.Tenants include Industri-Matematik, Ashley House, BEST and AviateQ producing gross income of £550,000 pa. 2,900 sq ft vacant. CARDIFF Mail Sorting Centre 14,650 sq ft let to The Royal Mail at £40,000 pa expiring 2019. EGHAM Station Road Company head offi ce totalling 1,200 sq ft. Heritage Court Retail and offi ce premises totalling 3,000 sq ft producing £54,000 pa. Runnymede Road Residential property adjacent to The White House. Let on short term tenancy producing £11,100 pa. Rusham Road Development of 4 houses, 3 sold and 1 under offer. The White House Offi ce and retail premises totalling 12,000 sq ft.Tenants include Royal Liver Assurance, Lunn Poly and Dollond & Aitchison, producing £224,500 pa. GUILDFORD Tangley Place,Worplesdon* Offi ce and laboratory buildings totalling 26,000 sq ft. Planning granted for a 92 bedroom care home of approximately 42,000 sq ft gross. MAIDENHEAD Clivemont House* Building demolished. Planning granted for new 49,000 sq ft net B1 offi ce scheme. Agents appointed to seek a pre-letting. 2 Highway House* 11,000 sq ft offi ce building arranged on 4 floors. Planning granted for a new 45,000 sq ft net B1 offi ce scheme. Agents appointed to seek a pre-letting. Maidenhead Enterprise Centre Development of 6 business units totalling 14,000 sq ft producing £44,500 pa. 3 units vacant. SLOUGH Datchet Meadows* Development of 37 apartments. 2 units sold and 24 (including 4 reservations) let on Assured Shorthold Tenancies. 11 units vacant. WINDSOR Windsor Business Centre 4 business units totalling 9,500 sq ft producing £145,000 pa. Tenants include Joyce Meyer Ministries (2 units) and ETAP. WOKING Britannia Wharf* 27,743 sq ft net offi ce building let to DB Apparel, Exchange FS and Indus International producing £609,000 pa. * Owned by jointly controlled entity. M40 J4 J2 Burnham Maidenhead Reading Windsor M4 J10 Egham M25 J16 J1 Slough J15 J13 J12 J21 M1 J1 J1 Central London Heathrow J1 Wokingham Bracknell 10 mile s Basingstoke J4 M3 Woking J11 3 0 m i l e s J10 2 0 m iles M25 J10 4 0 m i l e s Farnham Guildford 16856CARDIFFP.indd 2 16856CARDIFFP.indd 2 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 Chairman’s Statement and Property Review The Cardiff Property plc Annual Report 2009 The Thames Valley commercial property market continues to be adversely affected by low levels of occupier demand, falling rents, tenants exercising break clauses and empty property tax. DEAR SHAREHOLDER The Thames Valley commercial property market continues to be adversely affected by low levels of occupier demand, falling rents, tenants exercising break clauses and empty property tax. The reluctance of large corporates in the core technology and pharmaceutical sector to commit to new office space has led to the lowest level of letting activity since the early 1990’s. Approximately 13% of new and existing office space in the Thames Valley is currently vacant. Agents have reported some new enquiries and lettings, but the potential for further second hand office space being offered onto the market is holding back any recovery. Office rental levels including tenant incentives have probably fallen by as much as 25% over the year and in some secondary locations up to 50%. In view of these factors the commencement of new developments has almost ceased. It can take up to two years to complete a development scheme and in the current negative environment it is difficult to commit funds ahead of securing a rental stream. However, any sustained upturn in tenant demand for new offices will place those developers with existing office planning consents in a strong position. Residential values in the Thames Valley have seen a decline of up to 10% over the year. One or two transactions have defied this decline but overall volume has been low. Land values have fallen sharply and any significant increase in the number of houses being developed and competition to buy land with planning permission for new homes is unlikely in the short term. Although some major developers have strengthened their balance sheets through the raising of new equity there is as yet little evidence of this having any impact on the level of activity. A fragile return of confidence has certainly been noticed over the last few months but the continued difficulty in obtaining finance and tough lending criteria will hold back any sustained recovery. It is difficult to defy a falling market but your directors have followed a cautious approach in recent years.The overall decline of 12% in value of the group’s investment portfolio over the year compares favourably with the IPD total return index of a 19% decline for all property and 20% for office values. Financial Under accounting rules any reduction in the value of the group’s property portfolio is required to be taken through the consolidated income statement. The figures therefore as set out below take into account a revaluation deficit as well as the continuing underlying profitability of the group. For the year to 30 September 2009 the group’s loss before tax was £0.7m (2008: £1.5m). This figure includes revaluation deficits of £0.6m (2008: £1.1m) in respect of the group and £1.2m (2008: £1.3m) in respect of our after tax share of Campmoss Property Company Limited, our 47.62% jointly controlled entity. Revenue totalled £1.2m (2008: £0.6m) representing gross rental income of £0.6m (2008: £0.6m) and property sales of £0.6m (2008: nil). The group’s share of revenue of Campmoss amounted to £1.1m (2008: £0.8m) representing gross rental income of £0.8m (2008: £0.8m) and property sales of £0.3m (2008: nil). These latter figures are not included in group revenue under IFRS rules. A disposal of part of our quoted investment portfolio realised a profit of £0.05m (2008: nil). The loss after tax attributable to shareholders for the financial year, including the revaluation deficit referred to above, amounted to £0.9m (2008: £1.5m) and the loss per share was 57.7p (2008: 90.2p). The commercial and residential investment portfolio valued annually by Cushman & Wakefield LLP and Aitchison Rafferty respectively, totalled £4.0m (2008: £4.8m). This figure excludes property held for re-sale or under development which is held as stock on the balance sheet at the lower of cost and net realisable value and, in 2009, own use freehold property which is included in property, plant and equipment at fair value. The group’s property portfolio under management at the year end, including the Campmoss investment and development portfolio, was valued at £31.1m (2008: £34.0m). The company’s share of the net assets of Campmoss amounted to £6.5m (2008: £7.5m). Net assets were £16.8m (2008: £18.4m) equivalent to 1,065p per share (2008: 1,105p) a decrease of 3.6% over the year (2008: 7.1% decrease). The group, including Campmoss, has adequate facilities and resources to complete the current refurbishment and building programme. Cash balances held by Cardiff are placed on short term deposit. At the year end Cardiff had nil gearing (2008: nil). During the year the company purchased for cancellation 121,000 ordinary shares of 20 pence each (with a nominal value of £24,200) for a total consideration of £657,285. Your directors are proposing the annual renewal of their authority to acquire shares and of the approval of the Rule 9 waiver, both of which will be included in the resolutions to be placed before shareholders at the annual general meeting and general meeting respectively to be held on 14 January 2010. Full details of the Rule 9 waiver are set out in the document accompanying this report. 16856CARDIFFP.indd 3 16856CARDIFFP.indd 3 16856 25/11/09 proof 4 3 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com Chairman’s Statement and Property Review continued Rents and values have fallen dramatically over the past two years and it is natural that tenants considering relocation will be attracted to the more favourable terms available in the market place. However in my view it will be some time before a sustained recovery takes place. Dividend per share pence Net assets per share pence (Loss)/profit before tax £’000 (Loss)/earnings per share pence 2009 2008 2007 2006 2005 12.30 12.30 1,065 (656) 1,105 (1,541) (57.7) (90.2) 11.25 1,189 1,475 74.5 10.05 9.0 1,123 990 2,549 137.6 3,201 193.6 Dividend The directors are recommending a final dividend of 9p per share (2008: 9p) making an unchanged total dividend for the year of 12.3p (2008: 12.3p). The final dividend will be paid on 11 February 2010 to shareholders on the register at 22 January 2010. Investment and development portfolio The group’s investment portfolio comprises a range of office, industrial, residential and retail buildings primarily located to the West of London, close to Heathrow and in the counties of Surrey and Berkshire. In the first half of the year one of the freehold units at the Windsor Business Centre was sold to an occupier and the remaining 4 units are let on short to medium term leases. At Heritage Court, Egham, a vacant retail unit has recently been let on a 10 year lease.The remaining 3 units are let on short to medium term leases. The group retains 2 freehold houses in Egham, one of which is let on an Assured Shorthold Tenancy Agreement whilst the other is under offer for sale. Campmoss Property Company Limited During the year Campmoss has continued to upgrade its property portfolio and pursue planning applications.The company retains freehold office, industrial and residential property in Maidenhead, Bracknell,Woking, Worplesdon and Slough. At Clivemont House and Highway House, two separate development sites in Maidenhead, planning permissions for high-grade office schemes were granted last year for a total of just under 100,000 sq ft net.Works to improve the access at Highway House are expected to commence shortly but the Campmoss board’s current policy is to seek either a full or partial pre-letting before committing to significant construction works. At The White House, Egham, one of the ground floor retail units has also recently been let. The remaining 4 units are on medium term institutional leases. Egham town centre has recently received outline planning for an extensive development scheme including further retail space: a Waitrose supermarket; and a Travelodge managed hotel.This should, once completed, assist an uplift in rentals for the town as a whole. At Bracknell, discussions continue with the planning department and local users. An outline planning consent for The Bracknell Town Centre Scheme was granted in 2007. Our property at Market Street is included in this permission but will require a further detailed planning application, which is currently being prepared pending re-submission. Part of the existing retail and office space has been let on a short term basis. The Maidenhead Enterprise Centre, which comprises 6 business units totalling 14,000 sq ft, has proved disappointing with only 3 units currently let. The units are ideal for small businesses, with ground floor industrial or storage use and offices at first floor level and it is expected that as business confidence returns lettings will improve. At Britannia Wharf, Woking, agreement has been reached with one of the major tenants to extend their existing lease.The building totals 27,000 sq ft net. The remaining office space is let to 2 tenants and discussions are taking place to similarly extend their leases which currently expire in 2011 and 2016. 4 16856CARDIFFP.indd 4 16856CARDIFFP.indd 4 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 Outlook The number of enquiries for office and residential property has seen some increase over the last few months with a number of office lettings in Maidenhead and surrounding areas. Rents and values have fallen dramatically over the past two years and it is natural that tenants considering relocation will be attracted to the more favourable terms available in the market place. However in my view it will be some time before a sustained recovery takes place. In the meantime the group has a number of projects to manage, plan and finalise. If the market shows improvement the successful conclusion of these should enhance the value of the investment portfolio. I look forward to reporting progress to you at the half year stage. J Richard Wollenberg Chairman 25 November 2009 At Tangley Place,Worplesdon, planning permission for a 92 bedroom care home has recently been granted and discussions with a number of prospective tenants are taking place.The proposed new building totals approximately 42,000 sq ft gross. Our intention is to secure a pre-let and negotiate appropriate project finance before commencing construction. Datchet Meadows, located between Datchet and Slough, is a development of 37 apartments which was completed last year. 2 apartments have been sold and 24 (including 4 reservations) are currently let on Assured Shorthold Tenancies. Negotiations are in hand for 2 further leasehold sales. 11 apartments remain available either for sale or letting. At the year end the property portfolio has been valued by the directors taking into account external advice where available and assessed at a current market value of £26.1m (2008: £28.2m). Annualised rental income from the portfolio which is received from 63 tenants totalled £1.7m (2008: £1.8m). Net borrowings totalled £8.9m (2008: £8.7m) and gearing was 66% (2008: 55%). Quoted investments The company’s small equity portfolio includes holdings in Kiwara, ImmuPharma, Tribal Group and General Industries. During the year part of one of these holdings was sold realising a profit of £0.05m. I remain a director of Kiwara and General Industries quoted on AIM and PLUS Markets respectively. Management and staff Despite a difficult trading environment the group has achieved new lettings, re-negotiated existing leases and achieved a successful planning permission. This would not be possible without the dedicated support of the group’s small management team and our joint venture partner. On behalf of shareholders I wish to take this opportunity of thanking them for their support during the year. Shareholders telephone dealing service The company continues to offer its commission free share dealing service to those shareholders who wish to dispose of 1,000 shares or less. This facility is provided by our registrars, Computershare Investor Services, who can be contacted on 0870 703 0084. Shareholders should be aware that this service should not be construed as an encouragement to buy or sell the company’s shares. If in any doubt shareholders should contact their own financial advisers. 16856CARDIFFP.indd 5 16856CARDIFFP.indd 5 16856 25/11/09 proof 4 5 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com Financial Review Understanding our business The group specialises in property investment and development in the Thames Valley.The total portfolio under management, including our 47.62% jointly controlled entity, Campmoss Property Company Limited, is currently valued in excess of £31m and is primarily located to the west of London, close to Heathrow Airport and in Surrey and Berkshire and comprises a mix of high grade office developments, industrial and commercial units plus residential properties developed for sale.The group’s methodology is to acquire sites which, generally, have difficult planning considerations and use its expertise to add value by achieving planning and developing out the sites. The group’s strategy is to grow through active property management and rapid response to opportunities as they arise and is focused on the long term. The year under review has again been challenging, but the group’s underlying profitability remains strong. In line with the market place the group’s property portfolio has continued to suffer a decline in value and, as a result, under IFRS rules the reduction in the value of the portfolio, both in respect of the company and our share of Campmoss, has been taken to the Consolidated Income Statement. Eliminating the effect of the portfolio revaluation, the company returned a net profit before tax of £941,000 (2008: £740,000) and our share of the after tax profits of Campmoss was £193,000 (2008: £124,000). The effectiveness of the group’s strategy is reflected in its performance over recent years. In the five years from 30 September 2003 net assets increased from 777p per share (under UK GAAP) to 1,105p per share at 30 September 2008, despite the impact of IFRS. The reduction to 1,065p per share at 30 September 2009 represents a 4% decline. The group benefits from substantial cash deposits and ongoing profitability. Dividend increased from 7.1p per share to 12.3p per share over that same period and, for the current year, has been maintained at 12.3p per share. Going forward in the short term, the group is continuing to market its industrial development known as The Maidenhead Enterprise Centre and Campmoss is marketing its residential development in Slough. For the longer term the group is well placed to take advantage of any upturn in the property market, having substantial cash deposits giving it the ability to react quickly to opportunities as they arise. In addition Campmoss has a substantial development portfolio at Maidenhead, where planning consents for two office developments were granted some time ago, and Guildford, following the grant of planning permission for a 92 bedroom care home. Potential retail, office and residential developments exist at Bracknell subject to securing planning permission. Income statement Revenue amounted to £1.15m (2008: £0.61m).This can be analysed as: 2009 £’000 561 592 1,153 2008 £’000 609 — 609 Gross rents receivable Sales of development properties Total turnover 6 In the year to 30 September 2009 the group sold one industrial unit at The Windsor Business Centre.This was included in revenue as sales of development property. Sales of investment properties are treated as disposals of non-current assets and only the gain or loss on sale as measured against the valuation carried in the balance sheet is reflected in the income statement. No such sales were made during the year. The group’s rental income has reduced primarily reflecting the sale at The Windsor Business Centre. The loss before tax was £0.66m (2008: £1.54m) reflecting valuation deficits on investment properties in both the group and Campmoss. These results relate entirely to continuing activities. There were no acquisitions or disposals of businesses in either year. Loss per share is 57.7p (2008: 90.2p). Your board has again obtained independent valuations of the property portfolio (excluding those held by Campmoss which are based on directors’ valuations).These external valuations result in a decrease in the value of the group’s commercial portfolio, including the group’s offices in Egham, of £560,000 (2008: £1,135,000) and the residential portfolio of £15,000 (2008: £nil). The decrease of £575,000 (2008: £1,135,000) has been taken to the income statement in accordance with IFRS. Balance sheet Total assets amount to: Investment properties Investment in jointly controlled entity Property, plant and equipment Other financial assets Deferred tax asset Stock Trade and other receivables Cash and cash equivalents Total 2009 £’000 4,025 6,447 197 293 23 807 2,334 3,482 17,608 2008 £’000 4,790 7,469 4 320 23 992 2,368 3,255 19,221 During the year the directors reconsidered the classification of the group’s owner occupied property and concluded that this should be accounted for under IAS 16.Therefore, the company’s offices in Egham, valued at £190,000 on 30 September 2009 were transferred from investment property to property, plant and equipment. There was no change in the valuation of the property during the year. During the year the company purchased for cancellation 121,000 of its own shares at a cost of £657,285. In addition, options over 30,000 shares were exercised at an average price of 453p. The company may hold in treasury any of its own shares purchased. This gives the company the ability to reissue treasury shares and provides greater flexibility in the management of its capital base. Any shares purchased by the company not held in treasury will be cancelled and the number of shares in issue reduced accordingly.The company intends to continue its policy of purchasing its own shares, whether to be held 16856CARDIFFP.indd 6 16856CARDIFFP.indd 6 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 in treasury or to be cancelled, and a resolution renewing the directors’ authority will be placed before the forthcoming annual general meeting. This authority will only be exercised in circumstances where the directors regard such purchases to be in the best interests of shareholders as a whole and is subject to the waiver under Rule 9 of the Takeover Code being approved by shareholders as set out in the document accompanying this report. Net assets were £16.8m (2008: £18.4m) equivalent to 1,065p per share (2008: 1,105p), a decrease of 4% over the year. Property portfolio under management The total property portfolio under management represents the investment and development properties of the group and 100% of Campmoss and is made up as follows: Group Investment properties Own use freehold property Development properties (stock) Campmoss Investment properties Development properties (stock) Total 2009 £’000 4,025 190 807 20,200 5,865 31,087 Jointly controlled entity Our jointly controlled entity, Campmoss Property Company Limited, prepares its results under UK GAAP and these are summarised as follows: Turnover Profit before tax Net assets before net borrowing Net borrowing Gearing % 2009 £’000 2,250 549 22,488 8,948 66 2008 £’000 1,756 380 24,366 8,681 55 International Financial Reporting Standards (“IFRS”) Shareholders will note that IFRS continues to evolve and the corresponding volume of information presented in the annual report inevitably grows with it.The implementation of IFRS will continue for some time to come with a number of issues yet to be resolved by the various accounting standards bodies. As a result there is an ongoing programme refining the interpretations of the standards currently in operation. The company has elected to prepare its parent company financial statements in accordance with UK GAAP. Key performance indicators The key performance indicators used by the directors for monitoring the performance of the business are shown in the graphs on page 4 and the consolidated 5 year summary on page 46. Liquidity At the year end the group retained substantial cash deposits resulting from the sale of development properties during previous years.The group has not renegotiated a credit line due to the cost involved but has sufficient cash resources to complete the current development programme.The board will keep this position under review. Gearing at the year end was nil (2008: nil). Analysis of Group Property Portfolio David A Whitaker FCA Finance director 25 November 2009 By Capital Value (including development properties) By Capital Value (excluding development properties) By Rental Income (excluding development properties) 11.7 7.7 23.2 Office Residential Retail Industrial 17.3 57.4 9.7 71.4 1.6 18.5 9.1 0.8 71.6 16856CARDIFFP.indd 7 16856CARDIFFP.indd 7 16856 25/11/09 proof 4 7 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com Directors and Advisers Directors J Richard Wollenberg Chairman and chief executive David A Whitaker FCA Finance director Nigel D Jamieson BSc, MRICS, FSI Independent non-executive director Secretary David A Whitaker FCA Head office 56 Station Road, Egham TW20 9LF Telephone: 01784 437444 Fax: 01784 439157 E-mail: webmaster@cardiff-property.com Web: www.cardiff-property.com Registered office Marlborough House, Fitzalan Court, Fitzalan Road, Cardiff CF24 0TE Registered number 22705 Auditors KPMG Audit Plc Chartered Accountants Marlborough House, Fitzalan Court, Fitzalan Road, Cardiff CF24 0TE Stockbrokers and financial advisers Arbuthnot Securities Limited Arbuthnot House, 20 Ropemaker Street, London EC2Y 9AR Bankers HSBC Bank Plc 3 Rivergate, Bristol BS1 6ER Solicitors Morgan Cole Bradley Court, Park Place, Cardiff CF10 3DR Registrar and transfer office Computershare Investor Services Plc PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH Telephone: 0870 702 0001 Dealing line: 0870 703 0084 Non-executive director of wholly owned subsidiary First Choice Estates plc J Richard Wollenberg (aged 61) Chairman and chief executive Was appointed a director of the company in 1980, became chief executive in 1981 and chairman in 1989. Mr Wollenberg has over 25 years’ experience in property investment and development and has been actively involved in a number of corporate acquisitions and flotations. He is an executive director of Campmoss Property Company Limited and General Industries Plc, which is quoted on PLUS Markets and a non- executive director of Kiwara Plc quoted on AIM. Derek M Joseph BCom, FCIS, MIMC, MBIM (aged 59) Director of HACAS Group Ltd, the leading housing association and local authority housing consultancy, now part of the Tribal Group Plc. He is a non-executive director of a number of social housing development companies, an executive director of a group of companies holding and managing residential and commercial properties and of a quoted company specialising in enterprise development. He advises UK government departments and foreign governments on housing strategy. He is also non- executive director of General Industries Plc. David A Whitaker FCA (aged 60) Finance director Was appointed a director and secretary of the company in 1997. He is a Chartered Accountant and brings a wealth of experience of public companies. He also has extensive experience in contracting from a successful career in cable television. Nigel D Jamieson BSc, MRICS, FSI (aged 59) Independent non-executive director Was appointed to the board as a non-executive director in 1991 and is chairman of the company’s audit and remuneration committees. He is a Chartered Surveyor with over 25 years’ experience of the UK property market both as a general practice surveyor and as an investment analyst. He is an executive director of several independent property investment companies active in the London area and acts as an independent consultant to private clients on a range of property related matters. 8 16856CARDIFFP.indd 8 16856CARDIFFP.indd 8 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 Report of the Directors The Cardiff Property plc Annual Report 2009 The directors submit their annual report and the audited financial statements for the year ended 30 September 2009. Results The results of the group for the year are set out in the audited financial statements on pages 17 to 36. Dividends The directors recommend a final dividend for the year of 9.0p per share (2008: 9.0p) payable on 11 February 2010.The total dividend paid and proposed in respect of the year, including the interim dividend of 3.3p per share, amounts to 12.3p per share (2008: 12.3p). Principal activity and enhanced business review The principal activity of the group during the year continued to be property investment and development.The Companies Act 2006 requires the directors’ report to include a business review. Certain information that fulfils these requirements and those of the Transparency Rules which requires a management report can be found in the chairman’s statement and property review and the financial review on pages 3 to 7. A description of corporate social responsibility activities is included in this report. There are no persons with whom the company has contractual or other arrangements which are essential to the business of the company other than those included in the related party disclosures in note 27 on page 34. Directors The current directors of the company and the non-executive director of a wholly owned subsidiary are listed on page 8. All served throughout the financial year. In accordance with the company’s articles of association, Mr Whitaker will retire by rotation at the Annual General Meeting and, being eligible, will offer himself for re-election. Directors’ interests Directors’ and their immediate families’ interests in the ordinary shares of the company were as follows: At 30 September 2009 At 1 October 2008 Beneficial Under Beneficial Under option — — 30,000 option — 1,500 — 7,003 — 531,298 1,500 7,000 561,298 N D Jamieson D A Whitaker J R Wollenberg No director has any interest in the share capital of any other group company.There were no changes in the directors’ shareholdings as stated above between 1 October 2009 and 25 November 2009. At 30 September 2009 Mr Wollenberg held 25,000 (2008: 25,000) ordinary shares of £1 each in Campmoss Property Company Limited, a jointly controlled entity, representing 2.38% of the issued share capital of that company. Directors’ options Mr Wollenberg exercised options over 30,000 ordinary shares of 20p each during the year.The total amount payable by Mr Wollenberg was £136,000. No options were granted and none lapsed during the year. Following this exercise no director held options at 30 September 2009. Substantial shareholdings In addition to one director referred to above who holds 35.7%, the company has been notified of the following holdings of 3% or more in the share capital of the company at 25 November 2009. AXA Investment Managers UK Ltd Gartmore Fledgling Trust Plc Holdings 222,500 55,000 Percentage 14.1 3.5 Allotment of shares As special business at the Annual General Meeting, a resolution will be proposed to renew the power of your directors to allot equity securities, pursuant to section 551 of the Companies Act 2006, such power being limited to one-third of the issued share capital of the company.This authority may be renewed for five years but, in common with modern corporate governance practice, it is your directors’ intention that the resolution be limited to one year and that its renewal be proposed at each Annual General Meeting. Pre-emption rights As special business at the Annual General Meeting a resolution will be proposed to renew for a further year the power of your directors to allot equity securities for cash without first offering such securities to existing shareholders.The aggregate nominal amount of equity securities which may be allotted in this way shall not exceed £15,750, representing 5% of the present issued ordinary share capital of the company. Purchase of own shares At the Annual General Meeting held on 10 January 2008, authority was renewed empowering your directors to make market purchases of up to 260,163 of the company’s own ordinary shares of 20p each. Under that authority your directors made a market purchase of 97,000 shares (nominal value £19,400) in January 2009 representing 5.74% of the issued share capital at 10 January 2008. These shares were purchased for an aggregate value of £512,051 and cancelled. At the Annual General Meeting held on 15 January 2009, authority was renewed empowering your directors to make market purchases of up to 249,734 of the company’s own ordinary shares of 20p each. Under that authority your directors made a market purchase of 24,000 shares (nominal value £4,800) in May 2009 representing 1.44% of the issued share capital at 15 January 2009. These shares were purchased for an aggregate value of £145,234 and cancelled. The number of shares in issue following these transactions and the exercise of options over 30,000 shares was 1,575,007. The existing authority for the company to purchase its own shares 16856CARDIFFP.indd 9 16856CARDIFFP.indd 9 16856 25/11/09 proof 4 9 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com Report of the Directors continued expires at the conclusion of the Annual General Meeting to be held on 14 January 2010. The directors wish to renew the authority and consent is therefore sought to resolution 8 set out in the Notice of Meeting on page 43 authorising the directors to purchase up to 236,093 ordinary shares of 20p each (representing 14.99% of the present issued share capital), at a minimum price of 20p and a maximum price equal to 105% of the average of the middle market quotations for the ordinary shares of the company as derived from the Daily Official List of The London Stock Exchange for the ten business days before the relevant purchase is made.The authority will expire at the conclusion of the Annual General Meeting in 2011 and it is your directors’ intention that a resolution for its renewal will be proposed at each succeeding Annual General Meeting. The authority will only be exercised when the directors are satisfied that it is in the interests of the company so to do.The company may hold in treasury any of its own shares purchased under this authority.This would give the company the ability to reissue treasury shares and provides greater flexibility in the management of its capital base. Any shares purchased by the company not held in treasury will be cancelled and the number of shares in issue reduced accordingly. Supplier payment policy Whilst the group does not follow any standard code, it is its policy to negotiate terms with all its suppliers and to ensure that they know the terms on which payment will take place when the business is agreed. It is our policy to abide by these terms. In most instances this requires payment within 30 days of the date of invoice.The number of days’ purchases outstanding at the year end was 7 (company: 7 days). Donations The company made charitable donations of £25 (2008: £50) during the year.There were no political donations made in either this year or last. Auditor A resolution for the reappointment of KPMG Audit Plc as auditor of the company and authorising the directors to determine its remuneration is to be proposed at the forthcoming Annual General Meeting. Provision of information to auditors The directors who held office at the date of approval of this directors’ report confirm that, as 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. Corporate social responsibility Through the group’s acquisition, development and management of commercial and residential property, we aim to conduct our business with honesty, integrity and openness, respecting human rights and the interests of our shareholders and employees.We aim to provide timely, regular and reliable information on the business to all our shareholders and conduct our operations to the highest standards. We strive to create a safe and healthy working environment for the wellbeing of our staff and create a trusting and respectful environment, where all members of staff are encouraged to feel responsible for the reputation and performance of the company.We continue to establish a diverse and dynamic workforce with team players who have the experience and knowledge of the business operations and markets in which we operate.Through maintaining good communications, members of staff are encouraged to realise the objectives of the company and their own potential. Corporate environmental responsibility The group’s policy is to minimise the risk of any adverse affect on the environment associated with its development activities with a thoughtful consideration of such key areas as energy use, pollution, transport, land use, ecology, renewable resources, health and wellbeing.The group also aims to ensure that its contractors meet with their legislative and regulatory requirements and that codes of best practice are met and exceeded. The group is committed to maintaining high environmental standards in all its operations and to minimise the impact of its activities on the surrounding environment. The nature of the work that we are involved in means that the group has an opportunity, not only to minimise the negative impact on the environment but also to enhance and improve the environment in which we all live and work. Directors and officers indemnity insurance The directors of the company are covered to the amount of £500,000 in each loss per policy period, with a sub-limit of £250,000 in respect of defence costs for pollution. Takeovers directive Details of the company’s share capital and share options are given in notes 20 and 19 respectively. There are no restrictions on transfer or limitations on the holding of the ordinary shares. None of the shares carry any special rights with regard to the control of the company.There are no known arrangements under which the financial rights are held by a person other than the holder and no known agreements or restrictions on share transfers and voting rights. As far as the company is aware there are no persons with significant direct or indirect holdings other than the director and other significant shareholders as noted above. The provisions covering the appointment and replacement of directors are contained in the company’s articles, any changes to which require shareholder approval. There are no significant agreements to which the company is party that take effect, alter or terminate upon a change of control following a take over bid and no agreements for compensation for loss of office or employment that become effective as a result of such a bid. 10 16856CARDIFFP.indd 10 16856CARDIFFP.indd 10 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 Corporate Governance The Cardiff Property plc Annual Report 2009 The board is committed to maintaining appropriate standards of corporate governance.The statement below, together with the report on directors’ remuneration on pages 14 to 15, explains how the company has applied the principles set out in The 2008 Combined Code on Corporate Governance (“the Combined Code”) issued by the Financial Reporting Council and contains the information required by Section 7 of the Financial Services Authority Disclosure and Transparency Rules. Board of directors The board currently consists of two executive directors and one independent non-executive director. It meets regularly with senior staff throughout the year to discuss key issues and to monitor the overall performance of the group.The board has a formal schedule of matters reserved for its decision.The board met eight times during the year. The board, led by the independent non-executive director, evaluates the annual performance of the board and the chairman. A framework for the evaluation process has been agreed and the findings arising from the process discussed with the board. The board views the non-executive director as independent of the board, notwithstanding his tenure being in excess of 10 years, due to the range and depth of his external commitments and experience in the property sector. Audit committee The audit committee, which is chaired by the independent non-executive director, Nigel Jamieson, comprises all board members.The committee meets with the auditors at least once a year to consider the results, internal procedures and controls and matters raised by the auditors.The audit committee met once during the year.The audit committee considers auditor independence and objectivity and the effectiveness of the audit process. It also considers the nature and extent of the non-audit services supplied by the auditors reviewing the ratio of audit to non-audit fees. At least one of the members has relevant recent financial experience. Remuneration committee The remuneration committee also consists of all board members and is chaired by Nigel Jamieson. It meets when required to consider all aspects of directors’ and staff remuneration, share options and service contracts. The remuneration committee met twice during the year. Compliance statement The company has, other than where stated below, complied fully with the provisions set out in section 1 of the Combined Code, during the year: the chairman is also the chief executive; a nominations committee has not been established; l l l l the remuneration committee also consists of all board members (the Combined Code recommends that the remuneration committee should comprise solely of non-executive directors). The directors consider this structure to be a practical solution bearing in mind the company’s size and needs. However, it is intended to review this issue as the group expands. The Combined Code requires that the directors review the effectiveness of all internal controls, not only internal financial controls. This extends the requirement in respect of internal financial controls to cover all controls including financial, operational, compliance and risk management. The company has procedures established which enable it to comply with the requirements of the Combined Code in relation to internal controls. Internal control The directors confirm that they have reviewed the effectiveness of the group’s system of internal control for identifying, evaluating and managing the significant risks faced by the group and they acknowledge their responsibility for that system. Such a system is designed to manage risk and can, however, only provide reasonable but not absolute assurance against material misstatement or loss. The size of the group and the small number of employees necessarily involves the executive directors closely in the day-to-day running of the group’s affairs.This has the advantage of the executive directors becoming closely involved with all transactions and risk assessments. Conversely, the board is aware that its size also means that the division of functions to provide normal internal control criteria is problematic. The board believes, however, that its close involvement with the day- to-day management of the group eliminates, as far as possible, the risks inherent in its small size. Key features of the system of internal control include: l l l strategic planning – the board considers the group’s position in respect of its marketplace and likely trends in that marketplace which will necessitate a change or adjustment to that position; investment appraisal and monitoring – all capital projects, contracts, business and property holdings and acquisitions are reviewed in detail and approved by the chief executive or, if of a significant size, by the whole board; and financial monitoring – cash flow and capital expenditure are closely monitored and key financial information is reviewed by the board on a regular basis. the audit committee consists of all board members, which includes one non-executive director (the Combined Code recommends that the audit committee should comprise at least three, or in the case of smaller companies, two non-executive directors); and The board considers that there is an ongoing process for identifying, evaluating and managing the significant risks facing the group that has been in place during the year, which is regularly reviewed and accords with the Turnbull guidance. 16856CARDIFFP.indd 11 16856CARDIFFP.indd 11 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 11 www.cardiff-property.com Corporate Governance continued Internal financial control Financial controls have been established so as to provide safeguards against unauthorised use or disposition of the assets, to maintain proper accounting records and to provide reliable financial information for internal use. Key financial controls include: l l l l l the maintenance of proper records; a schedule of matters reserved for the approval of the board; evaluation, approval procedures and risk assessment for acquisitions and disposals and for major capital expenditure; regular reporting and monitoring of development projects; and close involvement of the chief executive in the day-to-day operational matters of the group. The directors consider the size of the group and the close involvement of executive directors in the day-to-day operations makes the maintenance of an internal audit function unnecessary.The directors will continue to monitor this situation. Relations with shareholders Presentations are given to institutional investors by the chairman when requested, normally following the publication of the half year and full year results, when interim and annual reports are delivered to all shareholders. The results of meetings with investors, media and analysts are discussed with board members to assist them in understanding the views of investors and others. All directors attend the Annual General Meeting at which they have the opportunity to meet with shareholders. Going concern The directors have followed the guidance issued in making their statement on going concern. After making enquiries the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. Registered office: Marlborough House Fitzalan Court Fitzalan Road Cardiff CF24 0TE 25 November 2009 By order of the board David A Whitaker FCA Secretary 12 16856CARDIFFP.indd 12 16856CARDIFFP.indd 12 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 Statement of Directors’ Responsibilities in respect of the annual report and the financial statements The Cardiff Property plc Annual Report 2009 The directors are responsible for preparing the Annual Report and the group and parent company financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare group and parent company financial statements for each financial year. Under that law they are required to prepare the group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice). Under applicable law and regulations, the directors are also responsible for preparing a Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Responsibility statement The directors confirm that to the best of their knowledge: Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the group and parent company financial statements, the directors are required to: l select suitable accounting policies and then apply them consistently; l make judgements and estimates that are reasonable and prudent; l l for the group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU; The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities and financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and The directors’ report includes a fair view of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the parent company financial statements; and J Richard Wollenberg Chairman 25 November 2009 David A Whitaker FCA Finance director prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business. l l l The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities. 16856CARDIFFP.indd 13 16856CARDIFFP.indd 13 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 13 www.cardiff-property.com Remuneration Report Composition of the remuneration committee Nigel D Jamieson David A Whitaker J Richard Wollenberg independent non-executive director, chairman of the committee executive director executive director Remuneration policy is a matter for the board as a whole.The remuneration committee works within the agreed policy to set individual remuneration levels, although the executive directors do not participate in decisions regarding their own remuneration. The members of the remuneration committee have access to professional advice at the company’s expense, if necessary, in order to carry out their duties. No such advice was sought during the year. All members served throughout the year. Compliance In setting the company’s remuneration policy for directors, the remuneration committee has given full consideration to the best practice provisions annexed to The Financial Services Authority Listing Rules and the report has been prepared in accordance with Chapter 6 of the Companies Act 2006 and the Directors’ Remuneration Report Regulations 2002. Remuneration policies The remuneration policy is designed to attract, retain and motivate executive directors and senior management of a high calibre with a view to encouraging commitment to the development of the group and for long term enhancement of shareholder value. Remuneration packages take into account individual performance and the remuneration for similar jobs in other comparable companies where such companies can be identified. The committee believes that share ownership by executive directors and senior staff strengthens the link between their personal interests and those of shareholders. The main components of executive directors’ remuneration are: l l basic salary/fee — reviewed annually; annual performance bonus — members of staff (excluding directors) are eligible to participate in the company’s discretionary bonus scheme. Mr Wollenberg is eligible to receive a sum equal to 2.5 times the percentage increase in net asset value per share based upon current salary up to a maximum of 50% of that salary. Mr Whitaker is eligible to receive a sum equal to the percentage increase in net asset value per share based upon the current fee charged to the company up to a maximum of 50% of that fee; l l l taxable benefits — provision of health care for Mr Wollenberg; pension benefits — the company has no formal pension scheme. Annual contributions are made to Mr Wollenberg’s personal pension scheme currently at the rate of 20% (2008: 20%) of salary and bonuses; and share options — grants under the company’s approved share option scheme (approved by shareholders in general meeting) are set so that the aggregate option exercise price for each recipient may not be greater than four times annual salary and such grants are phased. Grants under the unapproved share option scheme (approved by shareholders in general meeting) are made by the remuneration committee upon the achievement of specified performance criteria. The criteria applicable to both schemes were chosen as being those most likely to provide enhanced shareholder value from the performance of executives.They are: l l on grant of an option, an increase in the average of the previous three years earnings per share of at least 3% more than the corresponding increase in the Retail Price Index over the same period; and on exercise of an option, an increase in the average of the previous three years net asset value per share of at least 3% more than the corresponding increase in the FT Real Estate Index over the same period. It is intended that these policies will be continued for the next year and subsequent years. 14 16856CARDIFFP.indd 14 16856CARDIFFP.indd 14 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 The Cardiff Property plc vs. FTSE Real Estate and FTSE Small Cap 250 200 150 100 50 0 Oct 04 Apr 05 Oct 05 Apr 06 Oct 06 Apr 07 Oct 07 Apr 08 Oct 08 Apr 09 Oct 09 Cardiff Property (Total Return) FTSE Small Cap (Total Return) FTSE Real Estate (Total Return) A graph showing the company’s total shareholder return relative to the FTSE Real Estate and FTSE Small Cap Indices is reproduced above.Total shareholder return is calculated to show the theoretical growth in the value of a shareholding over a specified period, assuming that dividends are reinvested to purchase additional shares. Company performance graphs are contained in the Chairman’s Statement on page 4. Directors’ remuneration and director’s options subject to audit Particulars of directors’ remuneration, including pensions and director’s options which, under the Companies Act 2006 are required to be audited, are given in note 7 to the financial statements on page 25 and in the report of the directors on page 9. Service contracts Mr Wollenberg has a service contract for a three-year rolling term. In the opinion of the committee the notice period is necessary in order to secure Mr Wollenberg’s services at the current terms of his employment. External appointments Executive directors are allowed to accept external appointments with the consent of the board, as long as these are not likely to lead to conflicts of interest. Executive directors are allowed to retain the fees paid. Mr Whitaker’s services are provided by Netpage Communications Limited, a company controlled by him, with whom the company has a service contract which can be terminated by either party upon giving three months’ notice in writing. Remuneration of non-executive director The remuneration of the non-executive director is decided by the board based upon comparable market levels.The non-executive director is not eligible for any other benefits. His services can be terminated by either party upon giving three months’ notice in writing. The remuneration report was approved by the board on 25 November 2009 and signed on its behalf by: Nigel D Jamieson BSc, MRICS, FSI Chairman of The Remuneration Committee 16856CARDIFFP.indd 15 16856CARDIFFP.indd 15 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 15 www.cardiff-property.com Independent Auditors’ Report KPMG Audit Plc Marlborough House Fitzalan Court Fitzalan Road Cardiff CF24 0TE United Kingdom Independent auditors’ report to the members of The Cardiff Property Public Limited Company We have audited the financial statements of The Cardiff Property Public Limited Company for the year ended 30 September 2009 set out on pages 17 to 42. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU.The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice). This report is made solely to the company’s members, as a body, in accordance with sections 495, 496 and 497 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditors’ 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 As explained more fully in the Directors’ Responsibilities Statement set out on page 13, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the APB’s web-site at www.frc.org.uk/apb/scope/UKP. Opinion on financial statements In our opinion: l l the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 30 September 2009 and of the group’s loss for the year then ended; the group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU; 16 l l the parent company financial statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the group financial statements, Article 4 of the IAS Regulation. Opinion on other matters prescribed by the Companies Act 2006 In our opinion: l l the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following: Under the Companies Act 2006 we are required to report to you if, in our opinion: l l l adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or l we have not received all the information and explanations we require for our audit. Under the Listing Rules we are required to review: l the directors’ statement, set out on page 12, in relation to going concern; and l the part of the Corporate Governance Statement relating to the company’s compliance with the nine provisions of the June 2008 Combined Code specified for our review. KA Maguire Senior Statutory Auditor for and on behalf of KPMG Audit Plc Statutory Auditor Chartered Accountants 25 November 2009 16856CARDIFFP.indd 16 16856CARDIFFP.indd 16 16856 25/11/09 proof 4 26/11/2009 19:54 26/11/2009 19:54 Consolidated Income Statement for the year ended 30 September 2009 The Cardiff Property plc Annual Report 2009 Revenue Cost of sales Gross profit Administrative expenses Other operating income Notes 3 Operating profit before gains/(losses) on investment properties and other investments 4 Profit on sale of fixed assets Profit on sale of other investments 2009 £’000 1,153 (296) 857 (406) 257 708 1 55 2008 £’000 609 (94) 515 (379) 253 389 — — Deficit on revaluation of investment properties 11 (575) (1,135) Operating profit/(loss) Financial income Share of results of jointly controlled entity Loss before taxation Taxation Loss for the financial year attributable to equity holders Loss per share on loss for the financial year – pence Basic Diluted Dividends Final 2008 paid 9.0p (2007: 8.25p) Reduction in 2008 final dividend following purchase of own shares Interim 2009 paid 3.3p (2008: 3.3p) Final 2009 proposed 9.0p (2008: 9.0p) 5 13 3–7 8 24 9 9 189 177 (1,022) (656) (267) (923) (57.7) (57.7) 150 (9) 52 193 142 (746) 351 (1,146) (1,541) 16 (1,525) (90.2) (90.2) 143 (3) 55 195 150 17 16856CARDIFFP.indd 17 16856CARDIFFP.indd 17 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com Consolidated Balance Sheet at 30 September 2009 Non-current assets Investment properties Investment in jointly controlled entity Property, plant and equipment Other financial assets Deferred tax asset Current assets Stock and work in progress Trade and other receivables Cash and cash equivalents Total assets Current liabilities Corporation tax Trade and other payables Non-current liabilities Provisions Deferred tax liability Total liabilities Net assets Capital and reserves Called up share capital Share premium account Other reserves Investment property revaluation reserve Retained earnings Shareholders’ funds attributable to equity holders Net assets per share 2009 2008 Notes £’000 £’000 £’000 £’000 11 13 12 13 18 14 15 16 17 17-18 20 21 22 23 24 10 4,025 6,447 197 293 23 10,985 6,623 17,608 4,790 7,469 4 320 23 12,606 6,615 19,221 992 2,368 3,255 (203) (484) (706) (687) (65) (62) 807 2,334 3,482 (261) (445) (65) (69) (134) (840) 16,768 315 5,076 2,338 1,404 7,635 16,768 1,065p (127) (814) 18,407 333 4,946 2,314 3,194 7,620 18,407 1,105p These financial statements were approved by the board of directors on 25 November 2009 and were signed on its behalf by: J Richard Wollenberg Director 18 16856CARDIFFP.indd 18 16856CARDIFFP.indd 18 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 Consolidated Cash Flow Statement for the year ended 30 September 2009 The Cardiff Property plc Annual Report 2009 Cash flows from operating activities Loss for the year Adjustments for: Depreciation Financial income Share of loss of jointly controlled entity Profit on sale of other investments Profit on disposal of fixed assets Deficit on revaluation of investment properties Taxation Cash flows from operations before changes in working capital Decrease in stock Decrease/(increase) in trade and other receivables (Decrease)/increase in trade and other payables Cash generated from operations Tax paid Net cash flows from operating activities Cash flows from investing activities Interest received Acquisition of property, investments and plant and equipment Proceeds of disposal of property, investments and plant and equipment Net cash flows from investing activities Cash flows from financing activities Exercise of options Purchase of own shares Dividends paid Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 2009 £’000 2008 £’000 (923) (1,525) 3 (177) 1,022 (55) (1) 575 267 711 185 34 (39) 891 (202) 689 177 (8) 83 252 136 (657) (193) (714) 227 3,255 3,482 2 (351) 1,146 — — 1,135 (16) 391 — (385) 2 8 (156) (148) 351 (24) 8 335 — (502) (195) (697) (510) 3,765 3,255 19 16856CARDIFFP.indd 19 16856CARDIFFP.indd 19 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com Other Primary Statements for the year ended 30 September 2009 Consolidated statement of recognised income and expense Net change in fair value of available for sale financial assets recognised directly in equity Loss for the financial year Total recognised income and expense for the year attributable to the equity holders of the parent company 2009 £’000 (2) (923) 2008 £’000 (12) (1,525) (925) (1,537) 20 16856CARDIFFP.indd 20 16856CARDIFFP.indd 20 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 Notes to the Financial Statements The Cardiff Property plc Annual Report 2009 1. International Financial Reporting Standards The consolidated results for the year ended 30 September 2009 and 2008 are prepared by the group under applicable International Financial Reporting Standards adopted by the EU (“adopted IFRS”) which have been adopted and incorporated into the principal accounting policies as set out in note 2. The company has elected to prepare its parent company financial statements in accordance with UK GAAP. 2. Accounting policies Basis of preparation The following principal accounting policies have been applied consistently in dealing with items which are considered material in relation to the group’s financial statements. The financial statements have been prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: financial instruments classified as available for sale; investment properties; and own use freehold property. These accounting policies have been applied consistently across the group for the purposes of these consolidated financial statements. The financial statements have been prepared on a going concern basis, which assumes that the group will continue to meet its liabilities as they fall due. The group’s activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman’s Statement on pages 3 to 5. The financial position of the group, its property portfolio under management, asset base, liquidity and key performance indicators are described in the Financial Review on pages 6 to 7. In addition, note 20 includes the group’s objectives, policies and processes for managing its capital and note 28, its financial risk management objectives and details of its exposures to credit risk, liquidity risk and market risk. The group has sufficient financial resources to enable it to continue to trade and to complete the current maintenance and development programme. As a consequence, the directors believe that the group is well placed to manage its business risks successfully despite the current uncertain economic outlook. After making enquiries, the directors have a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements. Basis of consolidation The group’s financial statements consolidate those of the company and its subsidiaries and equity account for the interest in the jointly controlled entity. Subsidiary companies are those entities under the control of the company, where control means the power to govern the financial and operating policies of the entity so as to obtain benefit from its activities. The results of subsidiary undertakings acquired or disposed of in the year are included in the consolidated income statement from the date control is obtained or up to the date when control is lost. Intra-group transactions are eliminated on consolidation. Jointly controlled entities are those in whose activities the group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. The group’s investment in the jointly controlled entity is accounted for using the equity method, hence the group’s share of the gains and losses of the jointly controlled entity is included in the consolidated income statement and its interest in the net assets is included in investments in the consolidated balance sheet. Use of estimates and judgement The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The key areas in which estimates have been used and the assumptions applied are in valuing investment properties (see note below) and in the calculating of provisions (note 17). Investment properties Investment properties are properties which are held either to earn rental income or for capital appreciation or both. Investment properties are stated at fair value, which is based on market values, with any change therein recognised in the income statement, and transferred to the investment property revaluation reserve in the balance sheet. An external, independent valuer, having an appropriate recognised professional qualification and recent experience in the location and category of property being valued, values the company portfolio each year. The directors of the jointly controlled entity value its portfolio each year. All valuations take into account yields on similar properties in the area, vacant space and covenant strength. Design, construction and management expenses together with interest incurred in respect of investment properties in the course of initial development are capitalised until the building is effectively completed and available for letting along with the costs directly attributable to the initial letting of newly developed properties. Thereafter they are charged to the income statement. Whilst under development such properties are classified as assets in the course of construction within property, plant and equipment. These properties are revalued at the year end and surpluses or deficits are recognised in equity. 21 16856CARDIFFP.indd 21 16856CARDIFFP.indd 21 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com Notes to the Financial Statements continued 2. Accounting policies continued Investment properties continued Proceeds from the sale of investment properties are not included in revenue, but in profit on sale of investment property. The profit or loss on disposal is calculated with reference to the carrying amount in the balance sheet. Purchases and sales of investment properties are accounted for when exchanged contracts become unconditional. Property, plant and equipment and depreciation Property is stated at fair value on the same basis as investment properties described above. Plant and equipment are stated at cost less accumulated depreciation and impairment losses. Provision is made for depreciation so as to write off their cost on a straight line basis over their expected useful lives as follows: l property l motor vehicles l fixtures, fittings and equipment — 50 years — 4 years — 4 years Impairment The carrying amounts of the group’s assets, other than investment properties, own use freehold property and financial assets designated as available for sale which are measured at fair value, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated and an impairment loss recognised where the recoverable amount is less than the carrying value of the asset. Any impairment losses are recognised in the income statement. Stocks and work in progress Stocks, being properties under development intended for ultimate resale and properties held for sale, are stated at the lower of cost, including attributable overheads, and net realisable value. Revenue Revenue consists of rental income, earned under operating leases granted, from properties held for investment purposes, together with the proceeds from the sale of development properties. Rental income is recognised in the income statement on a straight line basis over the total lease period. Payments due on early terminations of lease agreements are recognised in the income statement within revenue. Financial assets Investments in equity securities are classified as assets available for sale and are stated at fair value with any resultant gain or loss being recognised directly in equity. When these investments are derecognised the cumulative gain or loss previously recognised in equity is recognised in the income statement. 22 Trade and other receivables Trade and other receivables are stated at cost (discounted if material) less impairment. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the group’s cash management are included as a component of cash and cash equivalents for the purpose only of the statement of cash flows. Equity Equity comprises issued share capital, share premium, other reserves, investment property revaluation reserve and retained earnings. Share based payments The share option programme allows group employees to acquire shares of the parent company; these awards are granted by the parent. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at the date of grant and spread over the period during which the employees become unconditionally entitled to the options using an option valuation model, taking into account the terms and conditions upon which options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is due only to share prices not achieving the threshold for vesting. Dividends Interim dividends are recorded in the financial statements when they are paid. Final dividends are recognised as a liability in the period in which they are approved by the company’s shareholders. Provisions A provision is recognised in the balance sheet when: the group has a present legal or constructive obligation as a result of a past event; it is probable that an outflow of economic benefit will be required to settle the obligation; and the outflow can be estimated reliably. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Taxation Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date and any adjustment to tax payable in respect of previous years. 16856CARDIFFP.indd 22 16856CARDIFFP.indd 22 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 2. Accounting policies continued Taxation continued Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Adopted IFRS not yet applied The following adopted IFRSs were available for early application but have not been applied by the group in these financial statements: l l IFRS 8 - Operating Segments, is effective for periods beginning on or after 1 January 2009. The group has elected not to early adopt IFRS 8. This IFRS introduces a management approach to segmental reporting under which the information reported would be that which management uses internally for evaluating the performance of operating segments. The group does not believe the adoption of this standard will have a significant effect on the consolidated results but may affect disclosures. The group will apply IFRS 8 from 1 October 2009. IAS 1 (Amendment) - Presentation of Financial Statements. A revised presentation is effective for periods beginning on or after 1 January 2009. The revised standard will impact on the presentation of the group financial statements requiring that all items of income and expense (including those currently recognised through equity) are presented either in a single statement (a ‘statement of comprehensive income’) or in two statements (a separate ‘income statement’ and ‘statement of comprehensive income’). In the limited circumstances where an accounting policy is retrospectively applied or an item is reclassified, an additional balance sheet (statement of financial position) for the beginning of the earliest comparative period will be required. The statement of changes in equity, currently presented as a note, will be presented as a separate financial statement. The group will apply IAS 1 (Amendment) from 1 October 2009. l l l l l IFRS 2 (Amendment) - Share Based Payments Vesting Conditions and Cancellations, is effective for periods beginning on or after 1 January 2009. The definition of vesting conditions has been amended to clarify that vesting conditions are limited to service conditions and performance conditions. Other conditions are considered non-vesting conditions. Accounting guidance is given for non-vesting conditions. The group does not anticipate this amendment will have a significant effect on the financial statements. IFRS 3 (Revised) - Business Combinations, is effective for periods beginning on or after 1 July 2009. This IFRS would impact the treatment of acquisition costs on any future acquisitions and would impact only in the event of future acquisition. Amendment to IFRS 1 and IAS 27 - Cost of an Investment in a Subsidiary, Jointly-controlled Entity or Associate, is effective for periods beginning on or after 1 January 2009. The Amendment addresses issues that have arisen in practice related to the accounting for the above in separate financial statements at cost in accordance with IAS 27 to allow first-time adopters relief from certain requirements of IAS 27. The group does not anticipate this amendment will have a significant effect on the financial statements. Amendment to IAS 40 - Investment Property, is effective for periods beginning on or after 1 January 2009. This will require properties that are being constructed for use as investment property to be accounted for under IAS 40. The group will apply the amendment from 1 October 2009. IFRIC 15 - Agreements for the Construction of Real Estate, is effective for periods beginning on or after 1 January 2010. It provides guidance on determining whether revenue from such agreements should be accounted for in accordance with IAS 11 or IAS 18, and the timing of revenue recognition. Where accounted for in accordance with IAS 11, revenue will be recognised by reference to the stage of completion of the contract activity. Again, the impact on the financial statements will depend upon the nature of future contracts entered into and in particular whether agreements meet the definition of a construction contract in accordance with IAS 11. The group will apply IFRIC 15 from 1 October 2010. No impact is expected from any other standards that are available for early adoption but that have not been early adopted. 16856CARDIFFP.indd 23 16856CARDIFFP.indd 23 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 23 www.cardiff-property.com Notes to the Financial Statements continued 3. Segmental analysis The primary format used for segmental analysis is by business segment, as the group operates in only one geographical segment. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. 2009 £’000 2008 £’000 Revenue (wholly in the United Kingdom): Property and other investment being gross rents receivable Property development being sale of development properties Loss before taxation: Property and other investment Property development Net operating assets: Assets Property and other investment Property development Eliminations Total assets Liabilities Property and other investment Property development Eliminations Total liabilities Net operating assets The group’s share of the results of its jointly controlled entity included above relate entirely to property investment. 4. Operating profit before gains/(losses) on investment properties and other investments Included are the following expenses/(income): Auditor’s remuneration: Fees payable to the company’s auditor for the audit of the annual accounts Audit of subsidiary undertakings pursuant to legislation Tax services Other services Depreciation of plant and equipment Management charges receivable 5. Financial income Bank and other interest receivable 24 561 592 1,153 (1,206) 550 (656) 16,632 3,534 (2,558) 17,608 2,962 436 (2,558) 840 16,768 609 — 609 (1,716) 175 (1,541) 18,059 3,048 (1,886) 19,221 2,354 346 (1,886) 814 18,407 2009 £’000 2008 £’000 23 3 6 3 3 (255) 23 3 6 3 2 (246) 2009 £’000 177 2008 £’000 351 16856CARDIFFP.indd 24 16856CARDIFFP.indd 24 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 6. Employees The average number of persons employed by the group and the company (including executive directors) during the year was: Management Administration The aggregate payroll costs of these persons were as follows: Wages and salaries Social security costs Other pension costs Number of employees 2008 3 2 5 2009 3 2 5 2009 £’000 268 21 24 313 2008 £’000 265 19 22 306 Other pension costs represents amounts paid by the group to a personal pension plan in respect of a director. 7. Emoluments of directors The emoluments of the directors were as follows: As executives J R Wollenberg, chairman D A Whitaker As non-executive N D Jamieson Salary/fee £ Benefits £ 117,576 39,252 156,828 12,000 168,828 9,327 — 9,327 — 9,327 2009 Total £ 126,903 39,252 166,155 12,000 178,155 2008 Total £ 125,652 39,252 164,904 12,000 176,904 2009 2008 Pension contributions £ £ 23,515 — 23,515 — 23,515 21,640 — 21,640 — 21,640 The information above is in respect of the company. In addition Mr Wollenberg received consultancy fees of £50,000 (2008: £50,000) from our jointly controlled entity, Campmoss Property Company Limited. Details of the company’s policy on directors’ remuneration is contained within the Remuneration Report on pages 14 to 15. Information on directors’ share options is shown in the report of the directors on page 9. Amounts in respect of emoluments for Mr Whitaker are paid to Netpage Communications Limited, a company which he controls. 16856CARDIFFP.indd 25 16856CARDIFFP.indd 25 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 25 www.cardiff-property.com Notes to the Financial Statements continued 8. Taxation Current tax UK corporation tax on the result for the year Adjustments in respect of prior periods Total current tax Deferred tax Origination and reversal of temporary differences Adjustments in respect of prior periods Total deferred tax Taxation 2009 £’000 261 (1) 260 7 — 7 267 2008 £’000 203 8 211 (227) — (227) (16) Factors affecting the tax charge/(credit) for the year The tax charge/(credit) for the year is higher (2008: lower) than the standard rate of corporation tax in the UK of 28% (2008: 28%). The differences are explained below. Tax reconciliation Loss before taxation Loss before taxation multiplied by standard rate of corporation tax in the UK of 28% (2008: 28%) Effects of: Expenses not deductible for tax purposes Other non-taxable income Jointly controlled entity Small companies relief Unrecognised deferred tax Adjustments in respect of prior periods Taxation 2009 £’000 (656) (184) 6 — 286 (1) 161 (1) 267 2008 £’000 (1,541) (431) 3 (1) 322 — 83 8 (16) 26 16856CARDIFFP.indd 26 16856CARDIFFP.indd 26 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 9. Loss per share Loss per share has been calculated in accordance with IAS 33 - Earnings Per Share using the loss after tax for the financial year of £923,000 (2008: £1,525,000) and the weighted average number of shares as follows: Basic Adjustment to basic for bonus element of shares to be issued on exercise of options Diluted basis Weighted average number of shares 2009 2008 1,599,949 1,690,199 4,410 1,604,359 10,948 1,701,147 Under IAS 33.41, diluted earnings per share where a loss is recorded cannot be less than the basic earnings per share. 10. Net assets per share Based on shares in issue at 30 September 2009 of 1,575,007 (2008: 1,666,007) 11. Freehold investment properties Group and company At beginning of year Additions at cost Transfer to property, plant and equipment Deficit on revaluation At end of year 2009 Pence per share 1,065 2008 Pence per share 1,105 2009 £’000 4,790 — (190) (575) 4,025 2008 £’000 5,905 20 — (1,135) 4,790 The company’s freehold commercial investment properties have been valued by external valuers, Cushman & Wakefield LLP, and its residential property by Aitchison Raffety, as at 30 September 2009. These external valuations have been prepared as Regulated Purpose Valuations in accordance with the Practice Statements contained in the RICS Appraisal and Valuation Standards published by the Royal Institution of Chartered Surveyors in May 2003 (as amended). The bases of valuation were Market Value and Existing Use Value, as appropriate. The aggregate values attributed to these investment properties are as follows: Cushman & Wakefield LLP Aitchison Raffety The historical cost of the investment properties was: Group and company At 30 September 2009 At 30 September 2008 The cumulative amount of interest capitalised at 30 September 2009 was £90,000 (2008: £90,000). 30 September 2009 £’000 3,820 205 4,025 £’000 3,719 3,921 27 16856CARDIFFP.indd 27 16856CARDIFFP.indd 27 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com Notes to the Financial Statements continued 12. Property, plant and equipment Cost or valuation At 30 September 2007 Additions Disposals At 30 September 2008 Additions Transfer from investment properties Disposals At 30 September 2009 Depreciation At 30 September 2007 Charge for year On disposals At 30 September 2008 Charge for year On disposals At 30 September 2009 Net book value At 30 September 2009 At 30 September 2008 At 30 September 2007 Own use freehold property £’000 Fixtures, fittings and equipment £’000 Motor vehicles £’000 Total £’000 — — — — — 190 — 190 — — — — — — — 190 — — 63 — — 63 2 — — 65 61 — — 61 1 — 62 3 2 2 9 4 (9) 4 6 — (4) 6 9 2 (9) 2 2 (2) 2 4 2 — 72 4 (9) 67 8 190 (4) 261 70 2 (9) 63 3 (2) 64 197 4 2 Own use freehold property, which was transferred from investment properties during the year at valuation, was valued by Cushman & Wakefield LLP at market value as at 30 September 2009. The historic cost of the property is £202,000. 13. Investments At beginning of year Disposals Revaluation Share of loss of jointly controlled entity At end of year Shares in jointly controlled entity £’000 7,469 — — (1,022) 6,447 Unlisted investments £’000 Listed investments £’000 12 — — — 12 308 (25) (2) — 281 Total £’000 7,789 (25) (2) (1,022) 6,740 Listed investments These include minority stakes in Tribal Group Plc, listed on The London Stock Exchange, Kiwara Plc and ImmuPharma Plc, both listed on AIM, and General Industries Plc, listed on PLUS Markets and are designated as available for sale financial assets. Jointly controlled entity The group owns 47.62% (2008: 47.62%) of the total issued ordinary share capital of £1,050,000 of Campmoss Property Company Limited incorporated in England and Wales. 28 16856CARDIFFP.indd 28 16856CARDIFFP.indd 28 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 13. Investments continued The group’s share of the results of Campmoss Property Company Limited and its subsidiary undertaking for the year ended 30 September 2009 has been incorporated in the consolidated financial statements. The following figures have been derived from the financial statements of Campmoss Property Company Limited and those of its subsidiary undertaking for the year ended 30 September 2009. The group’s share of the consolidated income, expenses, revaluations, tax and loss after tax was: Income Expenses Taxation on ordinary activities Revaluation of investment properties Deferred taxation on revaluation of properties Loss after tax 2009 £’000 1,075 (814) (68) (1,215) — (1,022) The group’s share of the consolidated net assets of Campmoss Property Company Limited and its subsidiary undertaking was: 2009 £’000 Non-current assets Investment properties Deferred tax asset Current assets Stock and work in progress Trade and other receivables Cash and cash equivalents Total assets Current liabilities Bank overdraft Loans Corporation tax Trade and other payables Non-current liabilities Loans Provisions Deferred tax liability Total liabilities Net assets Investment properties are included at fair value based on directors’ valuations as at 30 September 2009. Loans are secured on certain investment properties. Loans due after more than one year are repayable as follows: 1-2 years 2-5 years After more than 5 years 9,620 6 9,626 2,793 273 187 3,253 12,879 (116) (1,319) (57) (1,584) (3,076) (3,012) (50) (294) (3,356) (6,432) 6,447 2009 £’000 124 2,888 — 3,012 2008 £’000 837 (655) (58) (1,608) 338 (1,146) 2008 £’000 10,786 6 10,792 2,622 205 227 3,054 13,846 — (1,231) (32) (1,651) (2,914) (3,130) (50) (283) (3,463) (6,377) 7,469 2008 £’000 117 334 2,679 3,130 29 16856CARDIFFP.indd 29 16856CARDIFFP.indd 29 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com Notes to the Financial Statements continued 14. Stock and work in progress This comprises work in progress on development properties intended for ultimate resale and properties held for sale. 15. Trade and other receivables Trade receivables Amounts owed by jointly controlled entity Other receivables Prepayments and accrued income 16. Trade and other payables Rents received in advance Trade creditors Other taxes and social security Other creditors Accruals and deferred income 17. Non-current liabilities At beginning of year Movements in the year At end of year 2009 £’000 41 2,213 56 24 2,334 2009 £’000 88 17 23 169 148 445 Provisions for resolving claims £’000 65 — 65 Deferred tax liability £’000 62 7 69 2008 £’000 73 2,203 74 18 2,368 2008 £’000 117 18 31 197 121 484 Total £’000 127 7 134 Provisions include the directors’ best estimate of the cost of resolving claims made against the group in respect of property developments. The directors are defending such claims in the company’s interests and the ultimate costs will depend upon the outcome of ongoing discussions and actions. Provisions are not expected to be utilised within the next 12 months. 30 16856CARDIFFP.indd 30 16856CARDIFFP.indd 30 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 18. Deferred taxation Provision has been made for deferred taxation as follows: Difference between accumulated depreciation and amortisation and capital allowances Other temporary differences Net deferred tax liability Deferred tax asset Deferred tax liability (see note 17) Net deferred tax liability 2009 £’000 (69) 23 (46) 23 (69) (46) 2008 £’000 (62) 23 (39) 23 (62) (39) The above deferred tax asset included within non-current assets in the group accounts relates to short term differences and is not anticipated to be recoverable within the next 12 months. A deferred tax asset of £99,000 (2008: £38,000) in respect of property revaluations has not been recognised due to uncertainty regarding its recoverability. 19. Share based payments In accordance with the transitional provisions in IFRS 1 and IFRS 2, the recognition and measurement principles in IFRS have not been applied to grants made prior to 7 November 2002. For grants subsequent to this date the fair values of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the option, which is spread over the vesting period, is measured based on a Black–Scholes model (with the contractual life of the option and expectations of early exercise built into the model). The option vests after a period of 3 years and in addition, the average of the previous three years net asset value per share must exceed the corresponding increase in the FT Real Estate Index over the same period, by at least 3%. The terms and conditions of outstanding share options granted in previous years are as follows: Date granted 8 December 2006 Amount paid £1 No. of ordinary shares 500 Option price per share 1,105p Exercisable between 2009-2016 The principal assumptions used in assessing the fair value of the above options are as follows: l l l l l share price — 1,105p; exercise price — 1,105p; option life — 10 years; expected dividends — 1.4%; and risk free interest rate — 4.3%. During the year options over 30,000 ordinary shares of 20p each were exercised at an average price of 453p. The weighted average price during the period was 585p. 16856CARDIFFP.indd 31 16856CARDIFFP.indd 31 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 31 www.cardiff-property.com Notes to the Financial Statements continued 20. Share capital Authorised 4,500,000 (2008: 4,500,000) ordinary shares of 20 pence each Allotted, called up and fully paid At 30 September 2008 – 1,666,007 (2007: 1,735,580) ordinary shares of 20 pence each Issued during the year – 30,000 (2008: nil) ordinary shares of 20 pence each Cancelled during the year – 121,000 (2008: 69,573) ordinary shares of 20 pence each At 30 September 2009 - 1,575,007 (2008: 1,666,007) ordinary shares of 20 pence each 2009 £’000 2008 £’000 900 333 6 (24) 315 900 347 — (14) 333 During the year a total of 121,000 ordinary shares of 20 pence each (with a nominal value of £24,200) were purchased and cancelled thereby reducing share capital. The nominal value was credited to capital redemption reserve and the total amount paid of £657,285, including costs, charged directly to retained earnings as required by section 733 of the Companies Act 2006. There were no share options held by directors. At 30 September 2009 there were outstanding the following options for senior executives and employees to purchase ordinary shares of 20 pence each: Date granted 8 December 2006 Amount paid £1 No. of ordinary shares 500 Option price Exercisable between 2009-2016 per share 1,105 The total number of ordinary shares under option is 500 (2008: 30,500). Capital management The board’s objectives when managing capital are to maintain a balance between providing shareholders with an adequate return by means of a progressive dividend policy whilst ensuring the security of the group supported by a sound capital structure. In order to maintain the optimal capital structure, the group may adjust its dividend policy, issue new shares or return capital to shareholders. 21. Share premium account Group and company At beginning of year On exercise of share options At end of year 22. Other reserves At beginning of year Nominal value of shares repurchased (note 20) At end of year Capital redemption reserve £’000 415 24 439 Capital reserve £’000 30 — 30 Merger reserve £’000 1,869 — 1,869 £’000 4,946 130 5,076 Total £’000 2,314 24 2,338 The capital redemption reserve arises from the transfer from share capital of the nominal value of shares purchased for cancellation and is not available for distribution. The capital and merger reserves arise from the acquisition of subsidiaries and are not available for distribution. 32 16856CARDIFFP.indd 32 16856CARDIFFP.indd 32 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 23. Investment property revaluation reserve At beginning of year Transfer from retained earnings on revaluation in the year At end of year 2009 £’000 3,194 (1,790) 1,404 2008 £’000 5,365 (2,171) 3,194 The investment property revaluation reserve represents surpluses and deficits arising on revaluation of the group’s properties, including our share of Campmoss Property Company Limited, our 47.62% jointly controlled entity. This reserve comprises unrealised profits and losses and is not available for distribution until realised through sale. 24. Retained earnings At beginning of year Loss for the financial year Dividends paid Transfer to investment property revaluation reserve on revaluation in the year Own shares purchased in year Deficit on revaluation of other investments At end of year 25. Commitments Expenditure on development and investment properties There were no commitments under contract at 30 September 2009 (2008: nil). 2009 £’000 7,620 (923) (193) 1,790 (657) (2) 7,635 2008 £’000 7,683 (1,525) (195) 2,171 (502) (12) 7,620 26. Operating leases Operating leases granted The group leases out its investment properties under operating leases. The future aggregate minimum rentals receivable under non-cancellable operating leases are as follows: Within one year Years two to five More than five years Total 2009 £’000 435 789 400 1,624 2008 £’000 500 1,235 291 2,026 Operating leases taken Neither the group nor the company had any material commitments under non-cancellable operating leases at 30 September 2009 (2008: nil). 16856CARDIFFP.indd 33 16856CARDIFFP.indd 33 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 33 www.cardiff-property.com Notes to the Financial Statements continued 27. Related party transactions During the year the company entered into the following transactions with related parties: Party Nature of transaction Value Balance owed by related party at 30 September 2009 £’000 2008 £’000 2009 £’000 2008 £’000 Campmoss Property Company Limited Loans made by the company to acquire and develop properties Loans repaid to the company Loan interest received by the company Management fees received by the company Consultancy fees received by J R Wollenberg (director) Netpage Communications Ltd Consultancy fees in respect of the services of D A Whitaker (director) D M Joseph Director’s salary paid 1,167 2,171 2,161 10 — 74 850 129 237 234 50 39 3 50 39 3 — 14 28 — — 3 — 40 2 — — — Campmoss Property Company Limited is a jointly controlled entity of the company. The amount due from Campmoss Property Company Limited at 30 September 2009 of £2,171,000 (2008: £2,161,000) represents the outstanding balance on the revolving credit drawdown facility of £2,200,000 provided to Campmoss Property Company Limited by the company at an interest rate of base plus 2%. The loans are secured on certain investment properties. Campmoss Property Company Limited is a company in which Mr Wollenberg is a director and both he and the company are shareholders. Mr D M Joseph is a non-executive director of First Choice Estates plc, a wholly owned subsidiary of the company. Details relating to the shareholdings and remuneration of key management personnel are set out in the Directors’ Report on page 9 and note 7 on page 25. All transactions were carried out at arms length. 34 16856CARDIFFP.indd 34 16856CARDIFFP.indd 34 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 28. Financial instruments The group has exposure to credit risk, liquidity risk and market risk. This note presents information about the group’s exposure to these risks, along with the group’s objectives, processes and policies for managing the risks. Credit risk Credit risk is the risk of financial loss for the group if a client or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the group’s receivables from clients, amounts due from the jointly controlled entity, available for sale financial assets and monies on deposit with financial institutions. The group has a credit policy in place and credit risk is monitored by the board on an ongoing basis. Credit evaluations are carried out on all new clients before credit is granted above certain thresholds. There is a spread of risks among a number of clients with no significant concentration of risk with any one customer. The group establishes an allowance for impairment in respect of trade receivables where there is any doubt over recoverability. The group has significant monies on deposit at the year end, largely in short term treasury deposits. The group’s policy is to maximise interest income on these cash deposits whilst credit risk is mitigated through placing cash with leading international highly-rated financial institutions. The carrying amount of financial assets represents the maximum exposure to credit risk as follows: Cash and cash equivalents Trade and other receivables Amounts due from jointly controlled entity Available for sale financial assets 2009 £000 3,482 121 2,213 293 6,109 2008 £000 3,255 165 2,203 320 5,943 At 30 September 2009 the group had £3,482,000 (2008: £3,255,000) deposited with banks and financial institutions of which: £1,403,000 is available for withdrawal in less than 30 days; £400,000 is available for withdrawal in 30-60 days; and £1,588,000 is available for withdrawal in 90 days with the remainder available immediately. The amounts due from the jointly controlled entity at 30 September 2009 are repayable on demand and are secured upon certain investment properties owned by the jointly controlled entity. None of these amounts are overdue. All financial assets are sterling denominated. The ageing of trade and other receivables along with the associated provision at the year end was: Not past due Past due 0-30 days Past due 31-90 days Past due more than 91 days 2009 2008 Gross £000 122 5 — 11 138 Provision £000 1 5 — 11 17 Gross £000 162 — — 12 174 Provision £000 — — — 9 9 16856CARDIFFP.indd 35 16856CARDIFFP.indd 35 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 35 www.cardiff-property.com Notes to the Financial Statements continued 28. Financial instruments continued Liquidity risk Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s approach to managing liquidity is to ensure, as far as possible, that it will always have adequate liquidity to meet its liabilities as they fall due, without incurring unacceptable losses or risking damage to the group’s reputation. In respect of cash deposits, the carrying value approximates to fair value because of the short maturity of the deposits. Interest rates are floating and based on LIBOR. There is also no difference between the fair value of other financial and financial liabilities and their carrying value in the balance sheet. The group’s financial liabilities comprise trade creditors and other creditors amounting to £445,000 (2008: £484,000) and are all repayable within one year. Banking facilities The company does not have loan or overdraft facilities. Sufficient cash resources are available to the group to complete the current development programme. The board will keep this position under review. Market risk Market risk is the risk that changes in market prices such as currency rates and interest rates, will affect the group’s results. The group’s objective is to manage and control market risk within suitable parameters. Currency risk All of the group’s transactions are denominated in sterling. Accordingly, the group has no direct exposure to exchange rate fluctuations. Furthermore, the group does not trade in derivatives. Interest rate risk The group does not undertake any hedging activity in this area. The main element of interest rate risk involves sterling deposits which are placed on a floating LIBOR based rate. Parent company risks In accordance with FRS 29, the company has taken advantage of the exemption in the Standard not to disclose information about the parent company’s exposure to financial instrument risks. 36 16856CARDIFFP.indd 36 16856CARDIFFP.indd 36 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 Company Balance Sheet at 30 September 2009 The Cardiff Property plc Annual Report 2009 2009 2008 Notes £’000 £’000 £’000 £’000 Fixed assets Tangible assets: Investment properties Other Investments Current assets Debtors Cash at bank and in hand 11 32 33 34 2,305 3,482 5,787 Creditors: amounts falling due within one year 35 (2,925) Net current assets Total assets less current liabilities Provisions for liabilities Net assets Capital and reserves Called up share capital Share premium account Investment property revaluation reserve Other reserves Profit and loss account Shareholders’ funds — equity 36 20 21 37 38 39 40 2,316 3,247 5,563 (2,293) 4,025 197 4,222 4,115 8,337 2,862 11,199 (69) 11,130 315 5,076 293 2,308 3,138 11,130 These financial statements were approved by the board of directors on 25 November 2009 and were signed on its behalf by: J Richard Wollenberg Director 4,790 4 4,794 4,142 8,936 3,270 12,206 (62) 12,144 333 4,946 868 2,284 3,713 12,144 37 16856CARDIFFP.indd 37 16856CARDIFFP.indd 37 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com Notes to the Financial Statements continued 29. Accounting policies The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the company’s financial statements. Basis of preparation The financial statements have been prepared under the historical cost convention, modified by the revaluation of properties and certain investments, and in accordance with applicable accounting standards and with the Companies Act 2006 except as noted below under investment properties. Under FRS 1, the company is exempt from the requirement to prepare a cash flow statement on the grounds that a parent undertaking includes the company in its own published consolidated financial statements. Investment properties Design, construction and management expenses together with interest incurred in respect of investment properties in the course of development are capitalised until the building is effectively completed and available for letting along with the costs directly attributable to the initial letting of newly developed properties. Thereafter they are charged to the profit and loss account. Whilst under development such properties are classified as assets in the course of construction and any accumulated revaluation surpluses or deficits are transferred from the investment property revaluation reserve to a separate revaluation reserve. These properties are also revalued at the year end and surpluses or deficits transferred to that revaluation reserve. As assets in the course of construction are not in use they are not depreciated. When completed, these properties are transferred back to investment properties and accumulated revaluation surpluses or deficits transferred back to the investment property revaluation reserve. In accordance with Statement of Standard Accounting Practice No. 19: l investment properties are revalued annually and surpluses or deficits are transferred to a revaluation reserve unless a deficit on an individual property is considered permanent. In this case the deficit is charged to the profit and loss account and any subsequent reversal is credited to the profit and loss account in the period in which it arises; and l no depreciation is provided in respect of freehold investment properties. This treatment, as regards certain of the company’s investment properties, may be a departure from the requirements of the Companies Act 2006 concerning depreciation of fixed assets. However, these properties are not held for consumption but for investment and the directors consider that systematic annual depreciation would be inappropriate. The accounting policy adopted 38 is therefore necessary for the financial statements to give a true and fair view. Depreciation is only one of the many factors reflected in the annual valuation and the amount which might otherwise have been shown cannot be separately identified or quantified. Independent professional valuations for the company’s investment properties are obtained by the directors annually. The most recent such valuations were obtained as at 30 September 2009. Tangible fixed assets — other Tangible fixed assets — other, comprise property, motor vehicles and fixtures, fittings and equipment. Property is stated at valuation. An independent professional valuation for the company’s freehold property is obtained by the directors annually. The most recent valuation was at 30 September 2009. Surpluses or deficits arising are transferred to a revaluation reserve with the exception of permanent deficits, which do not reverse previous surpluses, which are recognised in the profit and loss account. Motor vehicles, plant and equipment are stated at cost less accumulated depreciation. Provision is made for depreciation so as to write off their cost on a straight line basis over their expected useful life as follows: l property l motor vehicles l fixtures and fittings — 50 years — 4 years — 4 years Investments Investments in equity securities are classified as assets available for sale and are stated at fair value. Investments in subsidiary undertakings and joint ventures are stated at cost less any impairment. Share based payments Information relating to the accounting policy and disclosure of share based payments is included in notes 2 and 19 respectively. Taxation Provision is made for corporation tax payable at current rates on the result for the period as adjusted for tax 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 FRS 19 — Deferred Tax. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the timing difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the tax benefit will be received. 16856CARDIFFP.indd 38 16856CARDIFFP.indd 38 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 30. Administrative expenses Auditor’s remuneration: Fees payable to the company’s auditor for the audit of the annual accounts Tax services Other services Depreciation of plant and equipment Details of employee numbers and costs in respect of the company are given in note 6. 31. Profit for the financial year of the company The profit for the financial year dealt with in the financial statements of the company is as follows: Profit for the financial year 2009 £’000 2008 £’000 23 4 3 3 23 6 3 2 2009 £’000 275 2008 £’000 394 In accordance with the provisions of Section 408 of the Companies Act 2006 the company has not published a separate profit and loss account. The parent company’s profit and loss account was approved by the board on 25 November 2009. 32. Tangible fixed assets – other Cost or valuation At 30 September 2008 Additions Transfer from investment properties Disposals At 30 September 2009 Depreciation At 30 September 2008 Charge for year On disposals At 30 September 2009 Net book value At 30 September 2009 At 30 September 2008 Own use freehold property £’000 Fixtures, fittings and equipment £’000 Motor vehicles £’000 Total £’000 — — 190 — 190 — — — — 190 — 63 2 — — 65 61 1 — 62 3 2 4 6 — (4) 6 2 2 (2) 2 4 2 67 8 190 (4) 261 63 3 (2) 64 197 4 Own use freehold property, which was transferred from investment properties during the year at valuation, was valued by Cushman & Wakefield LLP at market value as at 30 September 2009. The historical cost of the property is £202,000. 16856CARDIFFP.indd 39 16856CARDIFFP.indd 39 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 39 www.cardiff-property.com Notes to the Financial Statements continued 33. Investments At beginning of year Disposals Revaluation At end of year Shares in Shares in group joint venture undertakings undertakings £’000 £’000 Listed investments £’000 3,289 — — 3,289 545 — — 545 308 (25) (2) 281 Total £’000 4,142 (25) (2) 4,115 Group undertakings The company’s investments in group undertakings, all of which are incorporated in England and Wales, are as follows: First Choice Estates plc Thames Valley Retirement Homes Limited Village Residential plc Cardiff Property (Construction) Limited Wadharma Holdings Limited Land Bureau Limited Issued share capital held 100% 100% 100% 100% 100% 100% Type of shares held Ordinary shares of £1 each Ordinary shares of £1 each Ordinary shares of 10p each Ordinary shares of £1 each Ordinary shares of £1 each Ordinary shares of £1 each Activity Property development Property development Property development Dormant Dormant Dormant All of the above undertakings have been included within the consolidated financial statements. Further information on listed investments and our joint venture undertaking, Campmoss Property Company Limited, is included in note 13. 34. Debtors Trade debtors Amounts owed by subsidiary undertakings Amounts owed by joint venture undertaking Other debtors Prepayments and accrued income Deferred tax asset (note 36) All debtors are due within one year. 2009 £’000 70 25 2,171 14 20 5 2,305 2008 £’000 104 25 2,161 6 15 5 2,316 40 16856CARDIFFP.indd 40 16856CARDIFFP.indd 40 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 35. Creditors Rents received in advance Trade creditors Amounts owed to subsidiary undertakings Corporation tax Other taxes and social security Other creditors Accruals and deferred income 36. Provisions for liabilities At beginning of year Charge for the year in the profit and loss account At end of year Deferred taxation Provision has been made for deferred taxation as follows: Difference between accumulated depreciation and amortisation and capital allowances Other timing differences Net deferred tax liability Deferred tax asset (note 34) Deferred tax liability (see above) Net deferred tax liability 2009 £’000 88 15 2,512 108 24 53 125 2,925 2008 £’000 99 13 1,810 160 27 66 118 2,293 Deferred tax liability £’000 62 7 69 2009 £’000 (69) 5 (64) 5 (69) (64) 2008 £’000 (62) 5 (57) 5 (62) (57) The above deferred tax asset included within current assets relates to short term timing differences and is anticipated to be recoverable within the next 12 months. 37. Investment property revaluation reserve At beginning of year On revaluation in the year At end of year £’000 868 (575) 293 41 16856CARDIFFP.indd 41 16856CARDIFFP.indd 41 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com Notes to the Financial Statements continued 38. Other reserves At beginning of year Nominal value of shares repurchased (note 20) At end of year 39. Profit and loss account At beginning of year Profit for the financial year Dividends paid Own shares purchased in year At end of year 40. Reconciliation of movements in shareholders’ funds Opening shareholders’ funds Profit for the financial year Dividends paid Revaluation of investment properties Share premium on exercise of options Shares issued on exercise of options Own shares purchased Closing shareholders’ funds Capital redemption reserve £’000 415 24 439 Merger reserve £’000 1,869 — 1,869 2009 £’000 3,713 275 (193) (657) 3,138 2009 £’000 12,144 275 (193) (575) 130 6 (657) 11,130 Total £’000 2,284 24 2,308 2008 £’000 4,016 394 (195) (502) 3,713 2008 £’000 13,582 394 (195) (1,135) — — (502) 12,144 42 16856CARDIFFP.indd 42 16856CARDIFFP.indd 42 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 Notice of Annual General Meeting The Cardiff Property plc Annual Report 2009 Notice is hereby given that the one hundred and twenty third Annual General Meeting of The Cardiff Property Public Limited Company will be held at 56 Station Road, Egham, Surrey TW20 9LF on Thursday 14 January 2010 at 12 noon, for the following purposes: Ordinary business 1. To receive the reports of the directors and auditors and the financial statements for the year ended 30 September 2009. 2. To approve the remuneration report for the year ended 30 September 2009. 3. To declare a dividend to be paid on 12 February 2010. 4. To re-elect as a director, David A Whitaker who retires by rotation. 5. To reappoint KPMG Audit Plc as auditor of the company and to authorise the directors to determine its remuneration. Special business To consider and, if thought fit, to pass resolution 6 as an ordinary resolution and resolutions 7 and 8 as special resolutions. 6. That the directors be generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 to exercise all the powers of the company to allot, grant options over or otherwise deal with or dispose of the unissued share capital of the company provided that the authority hereby given: (a) shall be limited to unissued shares in the share capital of the company having an aggregate nominal value of £105,000; and (b) shall expire at the end of the next Annual General Meeting of the company to be held in 2011 unless previously renewed or varied save that the directors may, notwithstanding such expiry, allot, grant options over or otherwise deal with or dispose of any shares under this authority in pursuance of an offer or agreement so to do made by the company before the expiry of this authority. Special resolutions 7. Subject to the passing of the preceding ordinary resolution the directors be and they are hereby empowered pursuant to section 570 and section 573 of the Companies Act 2006 to allot equity securities (as defined in section 560 of that Act) for cash pursuant to the authority conferred in that behalf by the preceding ordinary resolution, as if section 561(1) of that Act did not apply to any such allotment, provided that this power shall be limited: (a) to the allotment of equity securities in connection with a rights issue in favour of ordinary shareholders where the equity securities respectively attributable to the interests of all ordinary shareholders are proportionate (as nearly as may be) to the respective numbers of ordinary shares held by them subject only to such exclusions or other arrangements as the directors may deem necessary or expedient to deal with fractional entitlements; and (b) to the allotment (otherwise than pursuant to subparagraph (a) above) of equity securities up to an aggregate nominal amount of £15,750 representing 5% of the present issued share capital of the company; and shall expire on the date of the next Annual General Meeting of the company or 15 months from the passing of this resolution, whichever is the earlier, save that the company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the board may allot equity securities in pursuance of such an offer or agreement as if the power conferred hereby had not expired. 8. Pursuant to article 12(2) of the company’s articles of association that the company be and is hereby unconditionally and generally authorised to make market purchases (as defined in section 693(4) of the Companies Act 2006) of ordinary shares of 20 pence each in the capital of the company, provided that: (a) the maximum number of ordinary shares hereby authorised to be acquired is 236,093 representing 14.99% of the present issued share capital of the company as at 25 November 2009; (b) the minimum price which may be paid for such shares is 20 pence per share which amount shall be exclusive of expenses; (c) the maximum price which may be paid for such shares is, in respect of a share contracted to be purchased on any day, an amount (exclusive of expenses) equal to 105% of the average of the middle market quotations for an ordinary share of the company taken from the Daily Official 43 16856CARDIFFP.indd 43 16856CARDIFFP.indd 43 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 www.cardiff-property.com List of The London Stock Exchange on the ten business days immediately preceding the day on which the share is contracted to be purchased; (d) the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting or fifteen months from the passing of this resolution, whichever is the earlier; and (e) the company may make a contract to purchase its own shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiry of such authority, and may make a purchase of its own shares in pursuance of any such contract. Registered office: Marlborough House Fitzalan Court Fitzalan Road Cardiff CF24 0TE 25 November 2009 Notes By order of the board David A Whitaker FCA Secretary 1. A member entitled to attend and vote at the above meeting is entitled to appoint a proxy to exercise all or any of their rights to attend, speak and vote on his/her behalf at the meeting. A proxy need not be a member of the company. 2. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy you may photocopy the form of proxy. Please indicate the proxy holder’s name and the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the proxy instruction is one of multiple instructions being given. All forms must be signed and should be returned together in the same envelope. 3. A form of proxy accompanies this notice. Forms of proxy, to be valid, must be delivered to the company’s offices at 56 Station Road, Egham, Surrey TW20 9LF in accordance with the instructions printed thereon, not less than 48 hours before the time appointed for the holding of the meeting. 4. If you are not a member of the company but you have been nominated under section 146 of the Companies Act 2006 (the ‘Act’) by a member of the company to enjoy information rights, you do not have the rights of members in relation to the appointment of proxies set out in notes 1, 2 and 3. The rights described in those notes can only be exercised by members of the company. 5. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If you either select the “Withheld” option or if no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting. 6. Information regarding the meeting, including the information required by section 311A of the Act, is available from www.cardiff-property.com. 7. As provided by Regulation 41 of the Uncertificated Securities Regulations 2001, only those members registered in the register of members of the company 48 hours before the time set for the meeting shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time. Changes to entries on the relevant register of securities after that time shall be disregarded in determining the rights of any person to attend or vote at the meeting. 8. As at 16:00 hours on 25 November 2009, the company’s issued share capital comprised 1,575,007 ordinary shares of 20 pence each. Each ordinary share carries the right to one vote at a general meeting of the company and, therefore, the total number of voting rights in the company at 16:00 hours on 25 November 2009 is 1,575,007. 9. Under section 319A of the Act, the company must answer any question you ask relating to the business being dealt with at the meeting unless (a) answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the company or the good order of the meeting that the question be answered. 44 16856CARDIFFP.indd 44 16856CARDIFFP.indd 44 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc Annual Report 2009 10. If you are a person who has been nominated under section 146 of the Act to enjoy information rights (a ‘Nominated Person’), you may have a right under an agreement between you and the member of the company who has nominated you to have information rights (a ‘Relevant Member’) to be appointed or to have someone else appointed as a proxy for the meeting. If you either do not have such a right or if you have such a right but do not wish to exercise it, you may have a right under an agreement between you and the Relevant Member to give instructions to the Relevant Member as to the exercise of voting rights. Your main point of contact in terms of your investment in the company remains the Relevant Member (or, perhaps, your custodian or broker) and you should continue to contact them (and not the company) regarding any changes or queries relating to your personal details and your interest in the company (including any administrative matters). The only exception to this is where the company expressly requests a response from you. 11. Members satisfying the thresholds in section 338 of the Act may require the company to give, to members of the company entitled to receive notice of the Annual General Meeting, notice of a resolution which those members intend to move (and which may properly be moved) at the Annual General Meeting. A resolution may properly be moved at the Annual General Meeting unless (i) it would, if passed, be ineffective (whether by reason of any inconsistency with any enactment or the company’s constitution or otherwise); (ii) it is defamatory of any person; or (iii) it is frivolous or vexatious. The business which may be dealt with at the Annual General Meeting includes a resolution circulated pursuant to this right. A request made pursuant to this right may be in hard copy or electronic form, must identify the resolution of which notice is to be given, must be authenticated by the person(s) making it and must be received by the company not later than 6 weeks before the date of the Annual General Meeting. 12. Members satisfying the thresholds in section 338A of the Act may request the company to include in the business to be dealt with at the Annual General Meeting any matter (other than a proposed resolution) which may properly be included in the business at the Annual General Meeting. A matter may properly be included in the business at the Annual General Meeting unless (i) it is defamatory of any person or (ii) it is frivolous or vexatious. A request made pursuant to this right may be in hard copy or electronic form, must identify the matter to be included in the business, must be accompanied by a statement setting out the grounds for the request, must be authenticated by the person(s) making it and must be received by the company not later than 6 weeks before the date of the Annual General Meeting. 13. Members satisfying the thresholds in section 527 of the Act can require the company to publish a statement on its website setting out any matter relating to (i) the audit of the company’s accounts (including the Auditor’s report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstances connected with an Auditor of the company ceasing to hold office since the last Annual General Meeting, which the members propose to raise at the meeting. The company cannot require the members requesting the publication to pay its expenses. Any statement placed on the website must also be sent to the company’s Auditors no later than the time it makes its statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the company has been required to publish on its website pursuant to this right. 14. Copies of the directors’ service contracts will be available for inspection at the registered office of the company during usual business hours from the date of this notice until the date of the Annual General Meeting, and also during and at least fifteen minutes before the beginning of the Annual General Meeting. 15. The company may hold in treasury any of its own shares purchased under the authority conferred by resolution 8 above. This would give the company the ability to reissue treasury shares and provides greater flexibility in the management of its capital base. Any shares purchased by the company not held in treasury will be cancelled and the number of shares in issue reduced accordingly. 16856CARDIFFP.indd 45 16856CARDIFFP.indd 45 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 45 www.cardiff-property.com Consolidated Five Year Summary Income statement items Revenue Gross rental income Sales of development properties Total (Loss)/profit before taxation £’000 £’000 £’000 £’000 Dividends paid and proposed in respect of the year £’000 Dividend cover Dividend per share (Loss)/earnings per share - basic Balance sheet items Total assets Total liabilities Net assets times pence pence £’000 £’000 Number of shares in issue at 30 September ‘000 Net assets per share attributable to shareholders pence Gearing per cent 2009 2008 2007 2006 2005 561 592 1,153 (656) 194 (3.4) 12.30 (57.7) 17,608 (840) 16,768 1,575 1,065 nil 609 — 609 (1,541) 210 (7.3) 12.30 (90.2) 19,221 (814) 18,407 1,666 1,105 nil 504 196 700 1,475 195 7.6 11.25 74.5 21,624 (983) 20,641 1,735 1,189 nil 515 1,927 2,442 2,549 175 14.6 10.05 137.6 20,706 (1,150) 19,556 1,741 1,123 nil 559 1,113 1,672 3,201 163 19.6 9.00 193.6 19,132 (1,556) 17,576 1,775 990 nil Dividends represent the interim paid and final declared in any one financial year. 46 16856CARDIFFP.indd 46 16856CARDIFFP.indd 46 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 Financial Calendar The Cardiff Property plc Annual Report 2009 26 November 2009 Results announced for the year ended 30 September 2009 14 January 2010 20 January 2010 22 January 2010 11 February 2010 May 2010 July 2010 30 September 2010 Annual General Meeting Ex dividend date for final dividend Record date for final dividend Final dividend to be paid Interim results for 2010 to be announced Interim dividend for 2010 to be paid Year end 16856CARDIFFP.indd 47 16856CARDIFFP.indd 47 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 47 www.cardiff-property.com 48 16856CARDIFFP.indd 48 16856CARDIFFP.indd 48 16856 25/11/09 proof 4 26/11/2009 09:34 26/11/2009 09:34 The Cardiff Property plc 56 Station Road, Egham Surrey, TW20 9LF Tel: 01784 437444 Fax: 01784 439157 www.cardiff-property.com