THE CARDIFF PROPERTY PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2016
www.cardiff-property.com
Stock code: CDFF
Cardiff Property AR2016.indd 2
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:11
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 £39m, is primarily located to the
west of London, close to Heathrow Airport
and in Surrey and Berkshire.
OUR MISSION
The group seeks to enhance shareholder value by
developing its property portfolio and through strategic
acquisitions.
CONTENTS
01 Financial Highlights
02 Locations
03 Chairman’s Statement
and Property Review
06 Strategic Report
08 Financial Review
10 Directors and Advisers
11 Report of the Directors
13 Corporate Governance
16 Statement of Directors’
Responsibilities
17 Remuneration Report
19 Independent Auditor’s Report
21 Consolidated Income Statement
22 Consolidated Balance Sheet
23 Consolidated Cash
Flow Statement
24 Consolidated Statement of Comprehensive
Income and Expense
24 Consolidated Statement of Changes
in Equity
25 Notes to the Financial Statements
45 Company Balance Sheet
46 Statement of Changes in Equity
47 Notes to the Financial Statements continued
52 Notice of Annual General Meeting
55 Consolidated Five Year Summary
56 Financial Calendar
Cardiff Property AR2016.indd 3
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:11
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
01
“During the period prior to the UK
European Referendum vote the Thames
Valley commercial property market
enjoyed increased activity. The leave
vote brought about uncertainty with
commentators predicting falls in rental
levels and capital values. Despite
this, activity in the investment and
occupational markets has been higher
than expected with office, retail and
industrial rents in parts of the Thames
Valley showing small increases.”
J Richard Wollenberg
Chairman
FINANCIAL HIGHLIGHTS
Net Assets
Net Assets Per Share
Profit Before Tax
Earnings Per Share – Basic and diluted
Dividend Per Share
Gearing
£’000
pence
£’000
pence
pence
%
2016
23,839
1,876
2,673
195.3
14.0
Nil
2015
21,557
1,684
2,586
191.3
13.5
Nil
www.cardiff-property.com
Cardiff Property AR2016.indd 1
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:12
02
LOCATIONS
The group specialises
in property investment
and development in the
Thames Valley.
BRACKNELL
J21
M1
M25
M40
J4
J2
Burnham
Maidenhead
Reading
Windsor
M4
J10
Egham
Wokingham
Bracknell
J16
J1
Slough
J15
J1
J1
Central London
Heathrow
J1
J13
J12
10 miles
Basingstoke
M3
J4
Woking
J11
3
0
m
i
l
e
s
J10
2
0
miles
M25
J10
4
0
m
i
l
e
s
Farnham
Guildford
1-10 Market Street*
12 retail units on ground and first floors totalling 7,900 sq ft. Let
primarily to local businesses on short and medium term leases
producing £149,000 pa.
Alston House, 25 Market Street*
Building demolished. Planning permission granted for a new
development of 10 retail units on ground and first floor totalling 12,350
sq ft (1,148 sq m). A further planning application for 12 one and two
bedroom apartments on the 3rd and 4th floors have been submitted.
Brickfields*
16 business units and 1 office unit totalling 35,000 sq ft (4 units
sold). Tenants include Kingston Communications plc, Verizon UK,
Reeves Butchers and National Car Rental producing £286,000 pa.
Subsequent to the year-end Campmoss Property Company Limited
has exchanged contracts to sell the freehold at Brickfields, Bracknell
for a consideration of £3.7m. At 30 September 2016 Brickfields was
valued at £3.1m.
Gowring House Apartments*
New development of 18 one and two bedroom apartments over three
upper floors with lift access was completed end July 2015 of which
15 have now been sold and 2 of the remaining 3 apartments are let.
Gowring House is conveniently located for Bracknell railway station
with direct connections to London Waterloo and Reading. Within
walking distance of the town and Peel Shopping Centres and major
supermarkets.
Floors one and two have separately obtained planning and are now
being developed into a further 12 apartments, scheduled to complete
early in 2017.
Gowring House Commercial*
3 ground floor retail units let on medium term leases producing
£135,400 pa. As noted in Gowring House Apartments floors one and
two (previously commercial) are being converted to residential.
Westview*
Development, adjacent to Gowring House completed in 2015, of 8
retail units on ground and first floor totalling 10,500 sq ft. fully let
producing £181,500 pa.
EGHAM
Heritage Court
4 retail and office units (plus adjacent parts totalling 3,000 sq ft) producing
£68,000 pa.
Runnymede Road
Residential property adjacent to The White House. Let on Assured
Shorthold producing £13,800 pa.
Station Road
Company Head Office totalling 1,200 sq ft.
The White House
5 ground floor retail units with one floor of offices above totalling
12,000 sq ft. Tenants include Boots, Shaw Trust and Riven Associates,
producing £204,000 pa.
GUILDFORD
Worplesdon View, Worplesdon*
78 bedroom, 3 storey care home completed in 2012 and let on a long
lease to Barchester Healthcare Homes at £863,000 pa with annualised
RPI increases. Contracts exchanged for the freehold sale at £15.85m
completion due by August 2017.
MAIDENHEAD
Clivemont House*
Building demolished. Planning approval for new 49,000 sq ft net B1
office scheme. Agents appointed to seek a pre-letting. Available 2018.
Planning for residential development submitted.
Highway House*
Building demolished. Planning approval for a new 45,000 sq ft net B1
office scheme. Agents appointed to seek a pre-letting. Available 2018.
Let on short term lease for car parking at a rental of £8,500 pa.
Maidenhead Enterprise Centre
6 business units totalling 14,000 sq ft let to local businesses on short
and medium term leases producing £106,000 pa.
SLOUGH
Datchet Meadows*
Development of 37 apartments. All sold on long leases producing
ground rents of £16,550 pa.
BURNHAM
WINDSOR
The Priory*
26,000 sq ft headquarters office building. 9,000 sq ft used as a
business centre and three floors of adjacent offices. The new office
is fully let with part of the business centre available. Tenants include
Click Software, Protocall One Ltd and BEST producing income of
£420,000 pa.
CARDIFF
Mail Sorting Centre
14,650 sq ft let to The Royal Mail at £40,000 pa.
Windsor Business Centre
4 business units totalling 9,500 sq ft let on short term leases
producing rental of £153,000 pa. Tenants include Joyce Meyer
Ministries and ETAP.
WOKING
Britannia Wharf*
27,743 sq ft net office building partially let on short term leases.
Planning application has been submitted for a care home and
alternative residential scheme.
*Owned by joint venture
Cardiff Property AR2016.indd 2
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:12
M40
J4
J2
Burnham
Maidenhead
Reading
Windsor
M4
J10
Egham
Wokingham
Bracknell
J21
M1
M25
J1
J16
J1
Slough
J15
Heathrow
J1
J13
J12
J1
Central London
10 miles
Basingstoke
M3
J4
Woking
J11
3
0
m
i
l
e
s
J10
2
0
miles
M25
J10
4
0
m
i
l
e
s
Farnham
Guildford
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
03
CHAIRMAN’S STATEMENT
AND PROPERTY REVIEW
Dear Shareholder
During the period prior to the UK European Referendum
vote the Thames Valley commercial property market enjoyed
increased activity. The leave vote brought about uncertainty
with commentators predicting falls in rental levels and
capital values. Despite this, activity in the investment and
occupational markets has been higher than expected with
office, retail and industrial rents in parts of the Thames Valley
showing small increases.
Institutional and private investors continue to remain active,
assisted by low interest rates and the availability of funding.
Enquiries from occupiers who wish to purchase their own
freehold have noticeably increased.
Residential values in Surrey and Berkshire have in the main
retained increases achieved over the last few years with those
at the higher level experiencing some softening in demand.
Letting activity continues to indicate a stable market.
The group’s development programme is primarily directed
towards small retail units and 1, 2 and 3 bedroom apartments.
Although residential investors have encountered tax and
stamp duty changes, various government Help to Buy
schemes continue to assist first time home buyers.
FINANCIAL
For the year to 30 September 2016 the group profit before tax
was £2.67m (2015: £2.59m). This figure includes a revaluation
increase of £0.25m (2015: £0.18m) for the group and a profit
of £1.87m (2015: £1.92m) in respect of our after-tax profit
share of Campmoss Property Company Limited, our 47.62%
owned joint venture.
Revenue for the year which represented gross rental income,
excluding Campmoss, totalled £0.58m (2015: £0.58m).
The group’s share of revenue from Campmoss was £2.54m
(2015: £1.70m) represented by gross rental income of £1.23m
(2015: £1.39m) and property sales, as referred to later in
this report, of £1.31m (2015: £0.31m). These figures are not
included in group revenue.
The profit after tax attributable to shareholders for the financial
year, was £2.49m (2015: £2.49m) and the earnings per share
was 195.3p (2015: 191.3p).
At the year-end, the group’s commercial and residential
portfolio was valued by Cushman & Wakefield LLP and
Nevin & Wells totalling £4.88m (2015: £4.66m). This value
excludes own use freehold property, which is included under
property, plant and equipment in the balance sheet and held
at valuation.
Property when completed and held for re-sale is held as
stock at the lower of cost or net realisable value. At the year
end this represented commercial property at The Windsor
Business Centre.
www.cardiff-property.com
The group’s total property portfolio, including the Campmoss
investment and development portfolio, was valued at £39.1m
(2015: £37.5m). The company’s share of the net assets of
Campmoss was £13.03m (2015: £11.16m).
In view of the contracted sale of Worplesdon View, Guildford
at £15.85m, the directors of Campmoss increased the value
of this property at the half year to £13m. Further details of the
contracted sale are included in the Campmoss section of this
report.
The group’s net assets as at the year-end were £23.84m
(2015: £21.56m) equivalent to 1,876p per share (2015: 1,684p)
an increase of 11.4% over the year (2015: 13.0%). The group,
including Campmoss, has adequate financial facilities and
resources to complete works in progress and the proposed
development programme. Cash balances are held on short
term deposit. At the year end the company had nil gearing
(2015: nil). During the year, the company purchased and
cancelled 9,037 ordinary shares at a total cost of £136,066.
Your directors are proposing the annual renewal of their
authority to acquire shares and the approval of the Rule 9
Waiver. Both will be included in the resolutions being placed
before shareholders at the Annual General Meeting and
General Meeting respectively, both to be held on 19 January
2017. Full details of the Rule 9 Waiver are set out in the
document accompanying this report and are also available on
the company’s website www.cardiff-property.com.
Current IFRS accounting recommends that deferred tax is
chargeable on the difference between, the indexed cost of
properties and quoted investments and their current market
value. Campmoss has also adopted this policy as required
under FRS 102. However current IFRS accounting does
not require the same treatment in respect of the Group’s
unquoted investment in Campmoss Property our 47.62%
owned joint venture. The investment in Campmoss is a
substantial part of the company’s net assets and for indicative
purposes a disposal of this investment based on the value in
the company’s balance sheet at the year-end could generate
a tax liability that would equate to £2.34m (2015: £2.16m)
equivalent to 185p (2015: 169p) per share. This information
is provided to shareholders as an additional, non-statutory
disclosure.
Due to the withdrawal of UK GAAP accounting, the figures
for Campmoss as at the half year were based on Financial
Reporting Standard 101 (FRS 101). As Campmoss is not
required to produce consolidated group accounts, FRS 102
must now instead be adopted. There is no difference in
the results for Campmoss under FRS 101 or FRS 102 and a
reconciliation of the impact on the results from old UK GAAP
is set out in note 29.
Cardiff Property AR2016.indd 3
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:12
04
CHAIRMAN’S STATEMENT
AND PROPERTY REVIEW CONTINUED
Dividend per share
pence
Net assets per share
pence
Profit before tax
£’000
Earnings per share
pence
2016
2015
2014
2013
2012
13.50
12.95
12.55
12.30
14.00
1,876
1,684
1,490
2,673
2,586
195.3
191.3
3,218
236.5
1,277
1,205
1,319
435
94.2
26.5
DIVIDEND
The directors recommend a final dividend of 10.4p per share
(2015: 10p) making a total dividend for the year of 14p (2015:
13.5p) an increase of 3.7%. The final dividend will be paid on
16 February 2017 to shareholders on the register at 27 January
2017.
THE PROPERTY PORTFOLIO
The group continues to concentrate its property activities in
the Thames Valley primarily to the west of London close to
Heathrow Airport and in Surrey and Berkshire.
The Windsor Business Centre, Windsor, comprises 4 business
units totalling 9,500 sq. ft. All 4 units are let. Following
discussions with the local authority, planning has recently been
granted to increase the office area within one of the units and
discussions with the current tenant are in progress.
The office and retail investment at The White House, Egham,
comprises 5 ground floor retail units with offices above. The
retail and office space are fully occupied on medium term
leases, three of the agreements include annual rental increases.
The Maidenhead Enterprise Centre, Maidenhead, comprises
6 business units totalling 14,000 sq. ft. Each unit comprises
industrial use on the ground floor with offices above. One unit
was let during the year and all are now occupied on either
short or medium term leases. Two leases expire during the
next 6 months and discussions are in hand with new tenants at
increased rental levels.
At Heritage Court, Egham, adjacent to the company’s offices,
the building comprises 4 retail units, 3 of which are let on
medium term leases. One lease is due to expire this year and
negotiations are in progress with the existing tenant at an
expected increased rent.
The company occupies its own freehold office in Egham and
retains a freehold residential property in Egham which is let
on an Assured Shorthold Tenancy Agreement. A planning
application has been submitted to extend the residential
property.
The property at Cowbridge Road, Cardiff, comprises a 14,650
sq. ft. commercial property on two floors and let on a medium
term lease to Royal Mail for use as a mail sorting centre.
At Tilehurst, Reading, discussions are taking place with the
Local Planning Authority to achieve residential use on part of
the site. The site is now owned by Thames Valley Retirement
Homes Limited following the lapse of a joint venture option.
CAMPMOSS PROPERTY COMPANY LIMITED AND SUBSIDIARIES
During the year, the Campmoss group completed works to
convert part of its office portfolio in Bracknell to residential
use, finalised a number of residential and commercial property
sales and negotiated several new commercial and residential
lettings. Following detailed discussions with the respective
planning authorities three residential planning applications
were submitted on existing commercial properties. The
group’s freehold investment portfolio includes office, retail and
residential property in Bracknell, Burnham, Slough, Maidenhead,
Woking and a care home in Worplesdon.
At Worplesdon View, Worplesdon, Guildford, the 78-bedroom
care home is let to Barchester Healthcare Homes on a 35-year
institutional lease with annualised RPI increases. During the
first half of this year contracts were exchanged with the tenant
for the freehold sale at a price of £15.85m. Rental income will
be received until completion which is expected to take place
by August 2017. Following completion of the sale Campmoss
will continue to own an adjacent 2-acre site which, subject to
planning, could be available for development.
At Gowring House, Bracknell conversion of the 3 upper floors
to 18 residential units has been completed and similar works
are now underway on the first and second floors to achieve a
further 12 residential units. Sales of 15 apartments have now
been completed of which 12 took place during the year. Of
the 3 remaining apartments, 2 are currently let. Works to the
first and second floors are anticipated to complete early next
year with the units being offered either for sale or letting. Three
commercial units on the ground floor are all let on medium term
leases.
Cardiff Property AR2016.indd 4
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:12
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
05
CHAIRMAN’S STATEMENT
AND PROPERTY REVIEW CONTINUED
At Westview, Market Street, Bracknell, adjacent to Gowring
House the development of 8 retail units on ground and first floor
has now been completed and all units have been let on medium
to long term leases.
Adjacent to Westview (to be known as Alston House) demolition
of the existing building was completed and planning permission
granted to construct 10 new retail units on the ground and first
floors. Following detailed discussions with the local authority
a further planning application has been submitted for 12
residential units on the third and fourth floors. Commencement
of any development will depend on the outcome of the planning
application.
At the north-eastern end of Market Street Bracknell the
company retains an investment in 12 retail units, 11 of which are
currently let to local businesses on medium term leases. One
unit was sub-divided during the year creating an additional unit
which was subsequently let, one unit remains available.
At Brickfields Industrial Park, Bracknell 16 business units and an
adjoining office unit are all let on short or medium term leases.
One unit was sold on a long leasehold basis during the early
part of the year making a total of 4 units now sold to owner
occupiers. Subsequent to the year-end Campmoss Property
Company Limited has exchanged contracts to sell the freehold
at Brickfields, Bracknell for a consideration of £3.7m. At 30
September 2016 Brickfields was valued at £3.1m.
At The Priory, Burnham, the 26,000 sq ft building comprises
new office premises on 3 floors totalling 17,000 sq ft and an
adjoining grade II Listed office building of 9,000 sq ft which is
used as a Business Centre. The new building is let to 3 tenants
on a medium-term lease whilst the Business Centre is partly
let on short term leases expiring over the next 3 years. Further
lettings at the Business Centre have recently been completed.
Planning applications have been submitted for the
re-development of Britannia Wharf, Woking for either a care
home or residential scheme. The building comprises four floors
of offices totalling 27,743 sq ft. Following negotiations and expiry
of leases, vacant possession of the whole building is anticipated
in early 2017. Comprehensive proposals from a number of care
home operators have been received and interest in the potential
residential scheme has been considerable. The outcome of our
planning applications is expected early next year.
Highway House and Clivemont House, Maidenhead are both
vacant sites with planning permissions to develop individual
office schemes. At Highway House a pre-letting continues to
be sought prior to the commencement of any development.
At Clivemont House a planning application for residential use
was submitted early in the year and discussions with the Local
Authority are in progress.
At the year end the investment portfolio was valued by the
directors of Campmoss, taking into account external advice
where available and assessed at a current market value of
£32.8m (2015: £29.95m). This figure includes property under
development but excludes stock.
Total revenue for Campmoss for the year amounted to £5.3m
(2015: £3.6m) representing gross rental income of £2.6m (2015:
£2.9m) and sales of property of £2.7m (2015: £0.7m). At the
year-end net borrowing amounted to £2.9m (2015: £5.8m) and
gearing was 11% (2015: 24%).
QUOTED INVESTMENTS
The company retains a small portfolio of quoted retail bonds and
equity investments comprising, The Renewables Infrastructure
Group Limited, A2D funding plc, ImmuPharma plc, Galileo
Resources plc and Aquila Services Group plc (formerly General
Industries plc). I remain a director of Galileo Resources plc and
Aquila Services Group plc. The value of the portfolio at the year-
end exceeds the original cost.
RELATIONSHIP AGREEMENT
The company has entered into a written and legally binding
relationship agreement with myself, its controlling shareholder,
to address the requirements of LR9.2.2AR of the Listing Rules.
MANAGEMENT AND TEAM
Following the retirement of David Whitaker, our Finance
Director, I would like to take this opportunity of welcoming
Karen Chandler as Finance Director and Company Secretary.
Karen together with the group’s small management team and
our joint venture partner have been extremely busy during the
year and I thank them all for their efforts, achievements and
support. The intensive day to day management of the group’s
portfolio remains essential in achieving continued success.
OUTLOOK
Progressing our residential programme together with exciting
projects in Bracknell and Woking should provide for a busy year
ahead. Completion of the contracted sale at Worplesdon and
the successful achievement of further planning permissions
will be important. The economic uncertainties surrounding
Brexit will influence the market, and whilst our properties and
most tenants are UK resident the precise impact of Brexit is
uncertain. However, I look forward to reporting further progress
at the half year stage.
Subsequent to the year-end Campmoss Property Company
Limited has exchanged contracts to sell the freehold at
Brickfields, Bracknell for a consideration of £3.7m. At
30 September 2016 Brickfields was valued at £3.1m.
J Richard Wollenberg
Chairman
29 November 2016
www.cardiff-property.com
Cardiff Property AR2016.indd 5
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:12
06
STRATEGIC REPORT
UNDERSTANDING OUR BUSINESS
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks currently faced by the group relate to:
• continuity of rental income;
• changes in planning legislation;
• value of property portfolio;
• changes in interest rates;
• availability of business finance; and
• government policies and taxation.
The group mitigates these risks by managing its portfolio of
investments with regard to appropriate pricing for rental and
monitoring the length of each lease in order to commence
discussions as the end of a lease term approaches.
The directors monitor available sources of information
regarding the value of property and level of rental yields. They
are also aware of potential changes in government policy
and the implication on planning legislation and take action
to reduce the risk to the group where possible. They have
external valuations of the portfolio within Cardiff Property
every year and the directors perform internal valuations of the
properties owned by Campmoss, the joint venture.
They have regular meetings with funding providers to discuss
availability of business finance should it be required.
Cash is deposited in fixed rate accounts to earn additional
interest and interest rates are monitored to determine the
appropriate length of time and level of funds to invest.
GENDER ANALYSIS
A split of our employees and directors by gender is shown
below:
Directors*
Employees
* includes non-executive director
Male
2
–
Female
1
2
The group specialises in property investment and
development in the Thames Valley. The total portfolio under
management, including the total value of properties owned
by our 47.62% joint venture, Campmoss Property Company
Limited (and its subsidiaries), is valued at the year-end in
excess of £39m, 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 and a care home, 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 by managing its existing freehold property portfolio
and rapid response to opportunities as they arise and is
focused on the long term.
The year under review has again achieved expectations with
the group’s underlying profitability remaining strong. The
group’s property portfolio has increased in value despite the
sales of twelve apartments at Gowring House and one unit
at Brickfields. The company returned a net profit before tax of
£2,673,000 (2015: £2,586,000) including our share of the after-
tax profits of Campmoss of £1,869,000 (2015: £1,922,000).
The effectiveness of the group’s strategy is reflected in
its performance over recent years. In the five years to 30
September 2014 net assets increased from 1,065p per share
to 1,500p per share despite the economic downturn causing a
slump in property prices in the early years. A further increase
of 12.3% to 1,684p was recorded to 30 September 2015
and a further 11.4% to 1,876p to 30 September 2016. The
group benefits from substantial cash deposits and ongoing
profitability. The dividend increased from 12.30p per share
to 13.5p per share over the period from September 2009 to
September 2015 and, for the current year, has been increased
by 3.7% to 14.0p per share.
The group is continuing to manage its portfolio, which
is now predominantly let. Campmoss has commenced
development of new residential apartments at Gowring
House, Bracknell and commercial units at Alston House,
Bracknell. For the longer term the group is well placed to take
advantage of any further upturn in the property market and
retains 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,
with existing planning consents for two seperate office
developments.
Cardiff Property AR2016.indd 6
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:13
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
07
STRATEGIC REPORT CONTINUED
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
effect 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 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
minimising 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.
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 five-year summary on
page 55.
J Richard Wollenberg
Chairman
29 November 2016
www.cardiff-property.com
Cardiff Property AR2016.indd 7
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:13
08
FINANCIAL REVIEW
INCOME STATEMENT
Revenue, being gross rents receivable, amounted to £580,000
(2015: £577,000).
In accordance with IAS 16 the group’s owner occupied office
building in Egham, valued at £260,000 on 30 September 2016
(2015: £235,000) is classified as property, plant and equipment
rather than as an investment property.
In the year to 30 September 2016 the group, not including
Campmoss, sold no development properties (2015: none).
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 either 2015 or 2016. Sales made by Campmoss are not
included in the group’s results under IFRS rules.
Earnings per share is 195.3p (2015: 191.3p).
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 an increase in the value of the group’s commercial
portfolio, including the group’s offices in Egham, of £245,000
(2015: £145,000) and an increase in the residential portfolio
of £nil (2015: £30,000). Movements on the valuation of
investment properties are taken to the Income Statement in
accordance with IFRS.
BALANCE SHEET
Total assets amount to:
Investment properties
Investment in joint venture
Property, plant and equipment
Other financial assets – investments
Deferred tax asset
Stock
Trade and other receivables
Loan to Joint Venture partner
Financial assets – deposits
Cash and cash equivalents
Total
2016
£’000
4,880
13,025
278
842
5
668
94
1,500
1,047
2,198
24,537
2015
£’000
4,660
11,156
238
744
5
668
132
–
1,050
3,579
22,232
In accordance with IAS 7 cash held on deposit with a term
greater than 90 days is shown separately from cash and cash
equivalents as financial assets.
During the year, the company purchased and cancelled 9,037
of its own shares (2015: 30,300) at a total cost (including
stamp duty and fees) of £136,066 (2015: £305,196).
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 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 £23.84m (2015: £21.56m) equivalent to
1,876p per share (2015: 1,684p), an increase of 11.4% over the
year.
These results relate entirely to continuing activities. There
were no acquisitions or disposals of businesses in either year.
Cardiff Property AR2016.indd 8
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:13
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
09
FINANCIAL REVIEW CONTINUED
ANALYSIS OF GROUP PROPERTY PORTFOLIO
By Capital Value
(including development properties)
By Capital Value
(excluding development properties)
By Rental Income
(excluding development properties)
9.5
32.0
19.9
36.4
10.1
33.9
2.2
11.5
26.8
32.6
2.3
42.4
21.1
15.6
3.6
n Office n Residential n Retail n Care Home n Industrial
PROPERTY PORTFOLIO UNDER MANAGEMENT
JOINT VENTURE
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
LIQUIDITY
2016
£’000
4,880
260
668
2015
£’000
4,660
235
668
32,817
446
39,071
29,950
2,032
37,545
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 (2015: nil).
Our joint venture, Campmoss Property Company Limited,
including its wholly owned subsidiairies, Campmoss Property
Developments Limited and Campmoss Property (Tangley
Place) Limited, prepares its results under FRS 102 and these
are summarised as follows:
Turnover
Profit before tax
Net assets
Net borrowing
Gearing %
2016
£’000
5,332
4,775
27,353
2,893
11
2015
£’000
3,572
4,429
23,822
5,794
24
There are no differences between the results under FRS 102
and IFRS.
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. This evolution 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.
Whilst the group prepares its consolidated financial
statements under IFRS, the company has elected to prepare
its parent company financial statements in accordance with
FRS 101. Campmoss accounts are prepared under FRS 102.
K Chandler FCA
Finance director
29 November 2016
www.cardiff-property.com
Cardiff Property AR2016.indd 9
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:13
10
DIRECTORS AND ADVISERS
DIRECTORS
J Richard Wollenberg
Chairman and chief executive
Karen L Chandler FCA
Finance director
Nigel D Jamieson BSc, FCSI
Independent non-executive director
SECRETARY
Karen L Chandler 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
3 Assembly Square, Britannia Quay, Cardiff Bay, CF10 4AX
REGISTERED NUMBER
00022705
AUDITOR
KPMG LLP
Chartered Accountants
3 Assembly Square, Britannia Quay, Cardiff Bay, CF10 4AX
STOCKBROKERS AND FINANCIAL ADVISERS
Stockdale Securities Limited
Beaufort House, 15 St Botolph Street, London, EC3A 7BB
BANKERS
HSBC Bank Plc
2nd Floor, 62-76 Park Street, London, SE1 9DZ
SOLICITORS
Blake Morgan LLP
Bradley Court, Park Place, Cardiff, CF10 3DR
REGISTRAR AND TRANSFER OFFICE
Neville Registrars Limited
Neville House, 18 Laurel Lane, Halesowen B63 3DA
Telephone: 0121 585 1131
J RICHARD WOLLENBERG (AGED 68)
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 30 years’ experience in property investment and
development and has been actively involved in a number
of corporate acquisitions, flotations, mergers and capital
reorganisations of public and private companies. He is an
executive director of Campmoss Property Company Limited
and its subsidiaires. He is also a non-executive director of
Aquila Services Group plc (formally General Industries plc),
which is quoted on the London Stock Exchange and a non-
executive director of Galileo Resources plc, which is quoted
on AIM.
KAREN L CHANDLER (AGED 44)
Finance director
Was appointed a director of the company on 21 January 2016.
She is a chartered accountant having qualified with KPMG and
has previously served as CFO of AIM quoted Zenergy Power
(now Synety Group plc) and of a number of private companies.
NIGEL D JAMIESON BSC, FCSI (AGED 66)
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 has over 30 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.
NON-EXECUTIVE DIRECTOR OF WHOLLY OWNED SUBSIDIARY
FIRST CHOICE ESTATES PLC
DEREK M JOSEPH BCOM, FCIS (AGED 66)
Chairman of A2Dominion Housing Group. Consultant and
leading authority on the financing of affordable housing and
non-executive director of Altair Consultancy & Advisory
Services Ltd. Previously managing director of HACAS Group
Ltd, the leading housing association and local authority
housing consultancy. He is an executive director of a group of
companies holding and managing commercial properties as
well as software and internet businesses. A voluntary director
of Theatre Royal Stratford East and Homeless International. He
advises housing groups, property companies and government
departments on housing strategy. He is also a director of
Aquila Services Group plc (formally General Industries plc)
which is quoted on the London Stock Exchange.
Cardiff Property AR2016.indd 10
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:14
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
11
REPORT OF THE DIRECTORS
The directors submit their annual report and the audited
financial statements for the year ended 30 September 2016.
RESULTS
The results of the group for the year are set out in the audited
financial statements on pages 21 to 44.
DIVIDENDS
The directors recommend a final dividend for the year of 10.4p
per share (2015: 10p) payable on 16 February 2017. The total
dividend paid and proposed in respect of the year, including
the interim dividend of 3.6p per share, amounts to 14p per
share (2015: 13.5p).
PRINCIPAL ACTIVITY
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 Strategic
Report. Certain information that fulfils these requirements
and those of the UK Listing Authority Disclosure Rules and
Transparency Rules which requires a management report can
be found in the chairman’s statement and property review on
page 3 and the financial review on pages 8 to 9. A description
of corporate social responsibility activities is included in the
Strategic 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 26 on page 39.
DIRECTORS
The current directors of the company and the non-executive
director of a wholly owned subsidiary are listed on page 10.
All served throughout the financial year with the exception of
Karen Chandler who was appointed to replace David Whitaker
the former Finance Director who retired on 21 January 2016,
his intentions to retire were announced in the prior year
financial statements.
In accordance with the company’s articles of association,
Karen Chandler will retire by rotation at the Annual General
Meeting.
DIRECTORS’ INTERESTS
Directors’ and their immediate families’ interests in the
ordinary shares of the company were as follows:
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 2016 and
29 November 2016.
At 30 September 2016 Mr Wollenberg held 25,000 (2015:
25,000) ordinary shares of £1 each in Campmoss Property
Company Limited, a joint venture, representing 2.38% of the
issued share capital of that company.
DIRECTORS’ OPTIONS
No director held options at 30 September 2016 (2015: nil).
SUBSTANTIAL SHAREHOLDINGS
Other than one director referred to above who holds 44.17%,
the company has not been notified of any holdings of 3% or
more in the share capital of the company at 29 November
2016.
ADOPTION OF FINANCIAL REPORTING STANDARD (FRS) 101 –
REDUCED DISCLOSURE FRAMEWORK
As ordinary business at the Annual General Meeting, a
resolution to adopt FRS 101 – Reduced Disclosure Framework
was approved by 99.9% of votes cast with 0.1% voting
against the resolution.
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 £12,707, representing
5% of the present issued ordinary share capital of the
company.
At
30 September
2016
Beneficial
100
1,500
561,298
At
1 October
2015
Beneficial
–
1,500
561,298
K L Chandler
N D Jamieson
J R Wollenberg
www.cardiff-property.com
Cardiff Property AR2016.indd 11
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:14
12
REPORT OF THE DIRECTORS CONTINUED
PURCHASE OF OWN SHARES
PROVISION OF INFORMATION TO AUDITOR
At the Annual General Meeting held on 21 January 2016,
authority was renewed empowering your directors to make
market purchases of up to 191,833 of the company’s own
ordinary shares of 20p each. Under that authority, your
directors made market purchases of 4,537 shares (nominal
value £907) in May 2016 representing 0.35% of the issued
share capital at 21 January 2016 and 4,500 shares (nominal
value £900) in June 2016 representing 0.35% of the issued
share capital at 21 January 2016. These shares were
purchased for an aggregate value of £136,066 (including
stamp duty and charges) and cancelled. The number of shares
in issue following these transactions was 1,270,709.
The existing authority for the company to purchase its own
shares expires at the conclusion of the Annual General
Meeting to be held on 19 January 2017. The directors wish
to renew the authority and consent is therefore sought to
approve resolution 8 set out in the Notice of Meeting on
page 52 authorising the directors to purchase up to 190,479
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 2018 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.
DONATIONS
The company made no political donations during this year or
last.
AUDITOR
A resolution for the re-appointment of KPMG LLP as auditor
of the company and authorising the directors to determine
its remuneration is to be proposed at the forthcoming Annual
General Meeting.
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 auditor is unaware; and each director has taken
all the steps that they ought to have taken as a director to
make themselves aware of any relevant audit information
and to establish that the company’s auditor is aware of that
information.
GREENHOUSE GAS DISCLOSURES
The Cardiff Property plc has minimal greenhouse gas
emissions to report from its operations and does not have
responsibility for any other emissions producing sources
under the Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013, (including those within
our underlying investment portfolio).
DIRECTORS AND OFFICER’S 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.
DISCLOSURE AND TRANSPARENCY RULES
Details of the company’s share capital and share options are
given in notes 19 and 18 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 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 takeover bid and no agreements for
compensation for loss of office or employment that become
effective as a result of such a bid.
J Richard Wollenberg
Chairman
29 November 2016
Cardiff Property AR2016.indd 12
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:14
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
13
CORPORATE GOVERNANCE
The board is committed to maintaining appropriate standards
of corporate governance. The statement below, together
with the report on directors’ remuneration on pages 17 to
18, explains how the company has applied the principles
set out in The UK Corporate Governance Code (“the Code”)
and contains the information required by section 7 of the UK
Listing Authority’s Disclosure Rules and Transparency Rules.
Financial reporting
After discussion with both management and the external
auditor, the audit committee determined that the key risk
of misstatement of the group’s financial statements related
to property valuations in the context of current market
conditions. This includes the property held by the group’s joint
venture.
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 five 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
more than 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.
External auditor
The committee meets with the auditor at least twice a year
to consider the results, internal procedures and controls
and matters raised by the auditor. The audit committee met
twice 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 auditor reviewing the ratio
of audit to non-audit fees. It is a specific responsibility of the
audit committee to ensure that an appropriate relationship is
maintained between the group and its external auditor. The
group has a policy of controlling the provision of non-audit
services by the external auditor in order that their objectivity
and independence are safeguarded. This control is exercised
by ensuring non-audit projects where fees are expected to
exceed £5,000 (2015: £5,000) are subject to the prior approval
of the audit committee. At least one of the members has
relevant recent financial experience.
As part of the decision to recommend to the board the re-
appointment of the external auditor, the committee considers
the tenure of the auditor in addition to the results of its review
of the effectiveness of the external auditor and considers
whether there should be a full tender process. There are no
contractual obligations restricting the committee’s choice of
external auditor.
This issue was discussed with management during the year
and with the auditor at the time the committee reviewed
and agreed the auditor’s group audit plan and also at the
conclusion of the audit of the financial statements.
Property valuation
As further explained in note 2 to the financial statements,
our approach to valuing properties is to obtain an external
independent valuation of the properties each year. The
directors of the joint venture value its properties each year
considering yields on similar properties in the area, vacant
space and covenant strength. They also consider external
valuations and take external advice where necessary.
The audit committee is satisfied that the carrying value of
properties is appropriate based on the use of an external
independent valuer for The Cardiff Property portfolio and the
experience and knowledge of the directors in valuing the
properties of the joint venture.
The audit committee discusses the results of the valuations
with the directors who provide information on assumptions
used and provide appropriate explanation and evidence where
possible for such assumptions.
The auditor explained to the committee the work they
had conducted during the year in respect of property
valuation. Based on their audit work, the auditor reported
no misstatements that were material in the context of the
financial statements as a whole; and in our view this supports
the appropriateness of our methodology.
Misstatements
Management confirmed to the committee that they were
not aware of any material misstatements or immaterial
misstatements made intentionally to achieve a particular
presentation. The auditor reported to the committee
the misstatements that it had found in the course of its
work and no material amounts remain unadjusted. The
committee confirms that it is satisfied that the auditor has
fulfilled its responsibilities with diligence and professional
scepticism. After reviewing the presentations and reports
from management and consulting where necessary with
the auditor, the audit committee is satisfied that the financial
statements appropriately address the critical judgements
and key estimates (both in respect to the amounts reported
and the disclosures). The committee is also satisfied that
the significant assumptions used for determining the value
of assets and liabilities have been appropriately scrutinised,
challenged and are sufficiently robust.
www.cardiff-property.com
Cardiff Property AR2016.indd 13
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:14
14
CORPORATE GOVERNANCE CONTINUED
REMUNERATION COMMITTEE
INTERNAL CONTROL
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 once 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 Code,
during the year:
• the chairman is also the chief executive;
• a nominations committee has not been established;
• the audit committee consists of all board members, which
includes one non-executive director (the Code recommends
that the audit committee should comprise at least three,
or in the case of smaller companies, two non-executive
directors); and
• the remuneration committee also consists of all board
members (the 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 develops.
The 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 Code in relation to internal controls.
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:
• 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 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 UK Corporate
Governance Code (2014).
Cardiff Property AR2016.indd 14
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:14
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
15
CORPORATE GOVERNANCE CONTINUED
INTERNAL FINANCIAL CONTROL
VIABILITY STATEMENT
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:
• 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 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
After making enquiries the directors have a reasonable
expectation that the company and the group have adequate
resources to continue in operational existence for at least
12 months from the date of this report. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements.
In accordance with provision C.2.2 of the 2014 revision of
the Code, the directors have assessed the prospect of the
company over a longer period than the 12 months required
by the ‘Going Concern’ provision. The board conducted this
review for a period of five years, which was selected for the
following reasons:
• the group’s strategic review covers a five-year period;
• for a major scheme five years is a reasonable approximation
of the maximum time taken from obtaining planning
permission to letting the property; and
• most leases contain a five-year rent review pattern and
therefore five years allows for the forecasts to include the
reversion arising from those reviews.
The five-year strategic review considers the group’s
cash flows, dividend cover and other key financial ratios
over the period. These metrics are subject to sensitivity
analysis which involves flexing a number of the main
assumptions underlying the forecast both individually and
in unison. Where appropriate, this analysis is carried out to
evaluate the potential impact of the group’s principal risks
actually occurring. The five-year review also makes certain
assumptions about the normal level of capital recycling likely
to occur and considers whether additional financing facilities
will be required.
In its assessment of the viability of the group, the directors
have considered each of the group’s principal risks and
uncertainties detailed on page 6 and in note 28, and in
particular the impact of a significant fall in the UK property
market on the value of the group’s investment property
portfolio. The directors have also considered the group’s
income and expenditure projections as well as potential
impacts from Brexit.
The directors confirm that their assessment of the principal
risks facing the group was robust. Based upon the robust
assessment of the principal risks facing the group as detailed
on page 6 and in note 28, and their stress-testing based
assessment of the group’s prospects as described above, the
directors have a reasonable expectation that the group will be
able to continue in operation and meet its liabilities as they fall
due over the five-year period of their assessment.
Registered office:
3 Assembly Square
Britannia Quay
Cardiff Bay
CF10 4AX
By order of the board
K Chandler FCA
Secretary
29 November 2016
www.cardiff-property.com
Cardiff Property AR2016.indd 15
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:14
16
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
Under applicable law and regulations, the directors are also
responsible for preparing a Strategic Report, 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 OF THE DIRECTORS IN RESPECT OF
THE ANNUAL FINANCIAL REPORT
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the company and the undertakings included in the
consolidation taken as a whole; and
• the strategic report/directors’ reports include a fair review of
the development and performance of the business and the
position of the issuer and the undertakings included in the
consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the group’s
position and performance, business model and strategy.
J Richard Wollenberg
29 November 2016
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, including FRS 101 Reduced Disclosure
Framework.
Under company law the directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the group and
parent company and of their profit or loss for that period. In
preparing each of the group and parent company financial
statements, the directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable and
prudent;
• for the group financial statements, state whether they have
been prepared in accordance with IFRSs as adopted by the
EU;
• 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
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and the
parent company will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent
company’s transactions and disclose with reasonable accuracy
at any time the financial position of the parent company
and enable them to ensure that its financial statements
comply with the Companies Act 2006. They have general
responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the group and to prevent and
detect fraud and other irregularities.
Cardiff Property AR2016.indd 16
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:14
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
17
REMUNERATION REPORT
ANNUAL STATEMENT
Composition of the remuneration committee (not subject
to audit)
Nigel D Jamieson
Karen L Chandler
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, except Karen L Chandler who joined on 21 January
2016. In setting directors’ remuneration, the committee has
regard to other employees of the company.
Compliance (not subject to audit)
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 Conduct
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.
POLICY REPORT
Remuneration policies (not subject to audit)
The remuneration policy was in effect from 1 October
2015 and prior and it is intended that these policies will be
continued for the next year and subsequent years.
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. This would also be taken into account on
appointment of any new directors. 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:
• basic salary – 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
www.cardiff-property.com
to a maximum of 50% of that salary. K Chandler is eligible
to receive a bonus as determined by the remuneration
committee, any such bonus not to exceed a maximum of
50% of that salary;
• taxable benefits – provision of health care for Mr
Wollenberg;
• pension benefits – the company has set up a work place
pension scheme which employees will be invited to
join following the staging date of March 2017. Annual
contributions are made to Mr Wollenberg’s personal pension
scheme currently at the rate of 20% (2015: 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 4 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:
• 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 FTSE Real
Estate Index over the same period.
No options have been granted in the current of previous
financial year and all previous options have lapsed.
Payments for loss of office would be determined by the
remuneration committee taking into account contractual
obligations.
It is intended that these policies will be continued for the next
year and subsequent years.
IMPLEMENTATION REPORT (NOT SUBJECT TO AUDIT)
A graph showing the company’s total shareholder return
relative to the FTSE Real Estate and FTSE Small Cap
Indices is reproduced below. 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.
Cardiff Property AR2016.indd 17
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:14
18
REMUNERATION REPORT CONTINUED
TOTAL SHAREHOLDER RETURN RELATIVE TO THE FTSE REAL ESTATE AND FTSE SMALL CAP INDICES
250
225
200
175
150
125
100
75
50
25
0
1
1
p
e
S
1
1
t
c
O
1
1
v
o
N
1
1
c
e
D
2
1
n
a
J
2
1
b
e
F
2
1
r
a
M
2
1
r
p
A
2
1
y
a
M
2
1
n
u
J
2
1
l
u
J
2
1
g
u
A
2
1
p
e
S
2
1
t
c
O
2
1
2
1
v
o
N
c
e
D
3
1
n
a
J
3
1
b
e
F
3
1
r
a
M
3
1
3
1
3
1
3
1
r
p
A
y
a
M
n
u
J
l
u
J
3
1
g
u
A
3
1
p
e
S
3
1
t
c
O
3
1
v
o
N
3
1
c
e
D
4
1
n
a
J
4
1
b
e
F
4
1
r
a
M
4
1
r
p
A
4
1
y
a
M
4
1
n
u
J
4
1
l
u
J
4
1
g
u
A
4
1
p
e
S
4
1
t
c
O
4
1
4
1
v
o
N
c
e
D
5
1
n
a
J
5
1
b
e
F
5
1
r
a
M
5
1
5
1
5
1
5
1
r
p
A
y
a
M
n
u
J
l
u
J
5
1
g
u
A
5
1
p
e
S
5
1
t
c
O
5
1
v
o
N
5
1
c
e
D
6
1
n
a
J
6
1
b
e
F
6
1
r
a
M
6
1
r
p
A
6
1
y
a
M
6
1
n
u
J
6
1
l
u
J
6
1
g
u
A
6
1
p
e
S
CARDIFF PROPERTY (Total Return)
FTSE SMALL CAP (Total Return)
FTSE REAL ESTATE (Total Return)
Source: Datastream
The remuneration paid to all employees and dividends paid
were as follows:
Total employee costs
Dividends
2016
£’000
418
174
2015
£’000
436
171
%
increase
(4.1)
1.8
The total remuneration (including pension contributions) paid
to the Chief Executive Officer as disclosed in note 7 was
£206,886 (2015: £216,854) representing a 4.6% decrease in
the year. Mr Wollenberg’s basic salary has remained the same.
VOTING RESULTS FROM PREVIOUS AGM (NOT SUBJECT TO AUDIT)
At the AGM held on 21 January 2016, 99.92% of votes were
cast for the remuneration report and 0.08% against with no
abstentions.
DIRECTORS’ REMUNERATION AND DIRECTORS’ OPTIONS
(SUBJECT TO AUDIT)
Particulars of directors’ remuneration, including pensions and
directors’ options which, under the Companies Act 2006 are
required to be audited, are given in note 7 to the financial
statements on page 30 and in the report of the directors on
page 11.
SERVICE CONTRACTS (NOT SUBJECT TO AUDIT)
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 (NOT SUBJECT TO AUDIT)
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.
K Chandler has a service contract which can be terminated by
either party upon giving three months’ notice in writing.
The remuneration report was approved by the board on
29 November 2016 and signed on its behalf by:
The contracts are available for inspection at the company’s
registered office.
REMUNERATION OF NON-EXECUTIVE DIRECTOR
(NOT SUBJECT TO AUDIT)
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.
Nigel D Jamieson BSc, FCSI
Chairman of the Remuneration Committee
Cardiff Property AR2016.indd 18
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:15
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
19
INDEPENDENT AUDITOR’S REPORT
market transactions. The surplus/deficit on revaluation
of investment properties is reflected in the consolidated
income statement for each financial year as is any
profit recognised on individual sales of a property. As a
consequence, the estimates about the carrying value of
each investment property will affect the timing of profit
recognition.
Freehold investment properties with a value of
£4,880,000 (2015: £4,660,000) were valued by external
valuers. In respect of the properties held by the joint
venture (the group’s share of which is included in the
investment in joint venture, and for which the risk is the
same as the directly owned investment properties), the
directors performed internal valuations having regard
to past valuations performed by external independent
valuers and updating where necessary.
Our response: For all properties, including those held
by the joint venture, we evaluated the competence,
capabilities and objectivity of the respective valuers. We
used our own valuation specialist to assist the audit team
in the challenge of the appropriateness of the external
and internal valuations and inherent assumptions by
comparing the group’s assumptions to externally derived
data as well as our own assessments in relation to yields
and market data assumptions, including consideration of
planning applications and realisable values.
We have also considered the adequacy of the group’s
disclosures of the carrying amount of freehold investment
properties and the investment in joint venture.
3.
OUR APPLICATION OF MATERIALITY AND AN OVERVIEW OF THE
SCOPE OF OUR AUDIT
The materiality for the group financial statements as a
whole was set at £245,000 (2015: £203,000), determined
with reference to a benchmark of group total assets,
of which it represents 1.0% (2015: 0.9%). We report
to the audit committee any corrected or uncorrected
misstatements exceeding £12,250 (2015: £10,000), in
addition to other identified misstatements that warranted
reporting on qualitative grounds.
Separate audits were performed of six (2015: six)
components including the joint venture by the group
audit team. These audits covered 100% (2015: 100%)
of total group revenue, 100% (2015: 100%) of group
profit before taxation and 100% (2015: 100%) of total
group assets. These audits were performed to individual
component materiality levels which ranged from £6,600
to £240,000 (2015: £6,800 to £200,000), having regard to
the mix of size and risk profile of the group across these
components.
KPMG LLP
Chartered Accountants
3 Assembly Square
Britannia Quay
Cardiff
CF10 4AX
United Kingdom
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE
CARDIFF PROPERTY PUBLIC LIMITED COMPANY ONLY
Opinions and conclusions arising from our audit
1. OUR OPINION ON THE FINANCIAL STATEMENTS IS UNMODIFIED
We have audited the financial statements of The Cardiff
Property Public Limited Company for the year ended
30 September 2016 set out on pages 21 to 51. In our
opinion:
• 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 2016 and of the group’s profit for
the year then ended;
• the group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards as adopted by the European
Union;
• the parent company financial statements have been
properly prepared in accordance with UK Accounting
Standards, including FRS 101 Reduced Disclosure
Framework; 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.
2. OUR ASSESSMENT OF RISK OF MATERIAL MISSTATEMENT
In arriving at our audit opinion above on the financial
statements the risk of material misstatement that had the
greatest effect on our audit (unchanged from 2015) was
as follows:
Carrying amount of freehold investment properties
(£20,507,000 (2015: £18,922,000), including £15,627,000
(2015: £14,262,000) of investment properties included
in “Investment in Joint Venture”) Risk vs 2015:
Refer to page 13 (Corporate Governance), page 26
(Accounting policy) and pages 32 to 35 (financial
disclosure).
The risk: Estimating the fair value carrying amounts of
freehold investment properties is a subjective process
and is impacted by uncertainty prevalent within the
property market, together with a low level of comparable
www.cardiff-property.com
Cardiff Property AR2016.indd 19
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:16
20
INDEPENDENT AUDITOR’S REPORT CONTINUED
4.
OUR OPINION ON OTHER MATTERS PRESCRIBED BY THE
COMPANIES ACT 2006 IS UNMODIFIED
Under the Companies Act 2006 we are required to report
to you if, in our opinion:
In our opinion:
• the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with
the Companies Act 2006;
• the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
• the information given in the Corporate Governance
Statement set out on pages 13 to 15 with respect
to internal control and risk management systems in
relation to financial reporting processes and about
share capital structures is consistent with the financial
statements.
5.
WE HAVE NOTHING TO REPORT ON THE DISCLOSURES OF
PRINCIPAL RISKS
Based on the knowledge we acquired during our audit,
we have nothing material to add or draw attention to in
relation to:
• the directors’ viability statement on page 15, concerning
the principal risks, their management, and, based on
that, the directors’ assessment and expectations of the
group’s continuing in operation over the five years to
30 September 2021; or
• the disclosures in note 2 of the financial statements
concerning the use of the going concern basis of
accounting.
6.
WE HAVE NOTHING TO REPORT IN RESPECT OF THE MATTERS
ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
Under ISAs (UK and Ireland) we are required to report to
you if, based on the knowledge we acquired during our
audit, we have identified other information in the annual
report that contains a material inconsistency with either
that knowledge or the financial statements, a material
misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
• we have identified material inconsistencies between
the knowledge we acquired during our audit and the
directors’ statement that they consider that the annual
report and financial statements taken as a whole is
fair, balanced and understandable and provides the
information necessary for shareholders to assess the
group’s position and performance, business model and
strategy; or
• the Audit Committee section of the Corporate
Governance Report on pages 13 to 15 does not
appropriately address matters communicated by us to
the audit committee.
• 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
• we have not received all the information and
explanations we require for our audit or,
• a Corporate Governance Statement has not been
prepared by the company.
Under the Listing Rules we are required to review:
• the directors’ statements, set out on page 15, in
relation to going concern and longer-term viability; and
• the part of the Corporate Governance Statement on
page 14 relating to the company’s compliance with the
eleven provisions of the 2014 UK Corporate Governance
Code specified for our review.
We have nothing to report in respect of the above
responsibilities.
SCOPE AND RESPONSIBILITIES
As explained more fully in the Directors’ Responsibilities
Statement set out on page 16, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view. A description
of the scope of an audit of financial statements is provided
on the Financial Reporting Council’s website at www.frc.
org.uk/auditscopeukprivate. This report is made solely
to the company’s members as a body and is subject to
important explanations and disclaimers regarding our
responsibilities, published on our website at www.kpmg.com/
uk/auditscopeukco2014a, which are incorporated into this
report as if set out in full and should be read to provide an
understanding of the purpose of this report, the work we have
undertaken and the basis of our opinions.
Jeremy Thomas (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
3 Assembly Square,
Britannia Quay,
Cardiff,
CF10 4AX
United Kingdom
29 November 2016
Cardiff Property AR2016.indd 20
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:16
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
21
CONSOLIDATED INCOME STATEMENT
for the year ended 30 September 2016
Revenue
Cost of sales
Gross profit
Administrative expenses
Other operating income
Operating profit before gains on investment properties and other properties
Surplus on revaluation of investment properties
Surplus on revaluation of other properties
Operating profit
Financial income
Share of results of joint venture
Profit before taxation
Taxation
Profit for the financial year attributable to equity holders
Earnings per share on profit for the financial year – pence
Basic
Diluted
Dividends
Final 2015 paid 10p (2014: 9.55p)
Interim 2016 paid 3.6p (2015: 3.5p)
Final 2016 proposed 10.4p (2015: 10p)
Notes
3
4
11
5
13
3-7
8
23
9
9
2016
£’000
580
(47)
533
(526)
473
480
220
25
725
79
1,869
2,673
(179)
2015
£’000
577
(31)
546
(540)
406
412
150
25
587
77
1,922
2,586
(96)
2,494
2,490
195.3
195.3
191.3
191.3
128
46
174
132
125
46
171
128
These results relate entirely to continuing operations. There were no acquisitions or disposals in either year.
www.cardiff-property.com
Cardiff Property AR2016.indd 21
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:16
22
CONSOLIDATED BALANCE SHEET
at 30 September 2016
Non-current assets
Freehold investment properties
Investment in joint venture
Property, plant and equipment
Other financial assets
Deferred tax asset
Current assets
Stock and work in progress
Trade and other receivables
Financial assets
Cash and cash equivalents
Total assets
Current liabilities
Corporation tax
Trade and other payables
Non-current liabilities
Deferred tax liability
Total liabilities
Net assets
Equity
Called up share capital
Share premium account
Other reserves
Investment property revaluation reserve
Retained earnings
Total equity
Net assets per share
2016
2015
Notes
£’000
£’000
£’000
£’000
11
13
12
13
17
14
15
16
17
19
20
21
22
23
10
668
1,594
1,047
2,198
(103)
(461)
4,880
13,025
278
842
5
19,030
5,507
24,537
(564)
(134)
(698)
23,839
254
5,076
2,669
3,749
12,091
23,839
668
132
1,050
3,579
(99)
(516)
4,660
11,156
238
744
5
16,803
5,429
22,232
(615)
(60)
(675)
21,557
256
5,076
2,544
2,158
11,523
21,557
1,876p
1,684p
These financial statements were approved by the board of directors on 29 November 2016 and were signed on its behalf by:
J Richard Wollenberg
Director
Company number: 00022705
Cardiff Property AR2016.indd 22
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:16
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
23
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2016
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation
Financial income
Share of profit of joint venture
Surplus on revaluation of investment properties
Surplus on revaluation of other properties
Taxation
Cash flows from operations before changes in working capital
Decrease in trade and other receivables
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 investments and property, plant and equipment
Decrease in held to maturity deposits
Net cash flows from investing activities
Cash flows from financing activities
Purchase of own shares
Dividends paid
Loan to Joint Venture
Net cash flows from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2016
£’000
2015
£’000
2,494
2,490
2
(79)
(1,869)
(220)
(25)
179
482
38
(57)
463
(97)
366
77
(17)
3
63
(136)
(174)
(1,500)
(1,810)
(1,381)
3,579
2,198
1
(77)
(1,922)
(150)
(25)
96
413
632
19
1,064
(96)
968
77
(1)
1,154
1,230
(305)
(171)
–
(476)
1,722
1,857
3,579
www.cardiff-property.com
Cardiff Property AR2016.indd 23
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:16
24
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE
AND CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
AND EXPENSE
Profit for the financial year
Other items recognised directly in equity
Net change in fair value of available for sale financial assets
Total comprehensive income and expense for the year attributable to the equity holders
of the parent company
Notes
2016
£’000
2,494
2015
£’000
2,490
13
98
19
2,592
2,509
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
At 1 October 2014
Profit for the year
Other comprehensive income – revaluation of
investments
Transactions with equity holders
Dividends
Purchase of own shares
Total transactions with equity holders
Realisation of investment reserve
Transfer on revaluation of investment properties
Transfer on revaluation of other properties
At 30 September 2015
Profit for the year
Other comprehensive income – revaluation of
investments
Transactions with equity holders
Dividends
Purchase of own shares
Total transactions with equity holders
Realisation of investment reserve
Transfer on revaluation of investment properties
Transfer on revaluation of other properties
At 30 September 2016
Share
capital
£’000
262
–
Share
premium
account
£’000
5,076
–
Investment
property
revaluation
reserve
£’000
577
–
Other
reserves
£’000
2,494
–
Retained
earnings
£’000
11,115
2,490
Total
equity
£’000
19,524
2,490
–
–
(6)
(6)
–
–
–
256
–
–
–
(2)
(2)
–
–
–
254
–
19
–
–
19
–
–
–
–
–
–
5,076
–
–
6
6
–
–
25
2,544
–
–
–
–
(41)
1,622
–
2,158
–
(171)
(305)
(476)
41
(1,622)
(25)
11,523
2,494
(171)
(305)
(476)
–
–
–
21,557
2,494
–
98
–
–
98
–
–
–
–
–
–
5,076
–
2
2
–
–
25
2,669
–
–
–
(41)
1,632
–
3,749
(174)
(136)
(310)
41
(1,632)
(25)
12,091
(174)
(136)
(310)
–
–
–
23,839
Cardiff Property AR2016.indd 24
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:16
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
25
NOTES TO THE FINANCIAL STATEMENTS
1.
INTERNATIONAL FINANCIAL REPORTING STANDARDS
The consolidated results for the year ended 30 September 2016 and 2015 are prepared by the group under applicable
International Financial Reporting Standards adopted by the EU (“adopted IFRS”) and those parts of the Companies Act
2006 applicable to companies reporting under IFRS and have been 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 FRS 101 (Reduced
Disclosure Framework) and these are presented on pages 45 to 51.
The Campmoss companies have prepared their accounts in accordance with FRS 102 and an explanation of the impact of
the transition is set out in note 29.
2. ACCOUNTING POLICIES
Basis of preparation
The following principal accounting policies have been applied 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.
Going concern
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 and Property Review 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 8 to 9.
In addition, note 19 includes the group’s objectives, policies and processes for managing its capital and note 27, its financial
risk management objectives and details of its exposures to credit risk, liquidity risk, market risk, currency risk and interest
rate 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 joint venture. Subsidiary companies are those entities under the control of the company, where control means
the power to direct relevant activities of the entity so as to obtain benefit from these 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.
Joint ventures 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 joint venture is accounted
for using the equity method, hence the group’s share of the gains and losses of the joint venture is included in the
consolidated income statement and its interest in the net assets is included in investments in the consolidated balance
sheet.
www.cardiff-property.com
Cardiff Property AR2016.indd 25
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:16
26
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. ACCOUNTING POLICIES (CONTINUED)
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. These estimates are discussed in further detail in note 28.
Investment properties
Investment properties are properties which are held either to earn rental income or for capital appreciation or both.
Investment properties are initially recognised at cost, including related transaction costs and annually revalued at fair value,
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 joint venture value its portfolio each year having regard to past valuations performed by external
independent valuers. 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. Thereafter
they are charged to the income statement. Whilst under development such properties are classified either as inventory if
being developed with a view to sale and are recorded at cost, or retained within investment properties and revalued at the
year end and surpluses or deficits are recognised in equity.
Proceeds from the sale of investment properties are not included in revenue, but in profit or loss 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, or in the event a
notice to complete is required, on the receipt of such notice where the notice period is a period of less than 120 days.
Property, plant and equipment and depreciation
Property is stated at fair value using valuations prepared on the same basis as investment properties described above.
Any surplus arising on the revaluation is recognised in other comprehensive income except to the extent that it reverses a
previous revaluation deficit on the same asset recognised in profit and loss. Any deficit on revaluation is recognised in profit
and loss except to the extent that it reverses a previous revaluation surplus on the same asset. 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:
• property
• motor vehicles
• fixtures, fittings and equipment
— 50 years
— 4 years
— 4 years
Cardiff Property AR2016.indd 26
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:17
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
27
2. ACCOUNTING POLICIES (CONTINUED)
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.
Capitalisation of borrowing costs
Net borrowing costs in respect of capital expenditure on acquisition, development or refurbishment of qualifying assets
are capitalised. Interest is capitalised using the group’s weighted average cost of borrowing from the commencement of
development work until the date of practical completion. The capitalisation is suspended if there are prolonged periods
when development activity is interrupted. All other borrowing costs are recognised in the Income Statement in the period
in which they are incurred.
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 properties held in stock. Sales of such property are recognised on the date of
unconditional exchange of contracts or, if conditional, on the date that the conditions have been satisfied. 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. Lease incentives are recognised as an
integral part of the net consideration for the use of the property and amortised on a straight-line basis over the term of the
lease.
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 in other comprehensive income. When these investments are derecognised the cumulative
gain or loss previously recognised in equity is recognised in the Income Statement. Current financial assets comprise held
to maturity deposits where the call date is greater than 90 days from the date of deposit. They are included in investing
activities in the cash flow.
Trade and other receivables
Trade and other receivables are stated at amortised cost 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 on a straight line basis over the
vesting period 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 and is dependent on factors such as exercise
price, expected volatility, option price and risk free interest rate. 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.
www.cardiff-property.com
Cardiff Property AR2016.indd 27
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:17
28
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. ACCOUNTING POLICIES (CONTINUED)
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 the Consolidated
Statement of Comprehensive Income and Expense.
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.
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 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.
IFRS
The following accounting standards and interpretations, issued by the IASB and endorsed by the EU or International
Financial Reporting Interpretations Committee (IFRIC), are effective for the first time in the current financial year and have
been adopted by the group with no significant impact on the consolidated results or financial position:
• IFRS 14 Regulatory Deferral Accounts
• Accounting for Acquisitions of Interests in Joint Operations – Amendments to IFRS 11
• Clarification of Acceptable Methods of Depreciation and Amortisation – Amendments to IAS 16 and IAS 38
• Agriculture: Bearer Plants – Amendments to IAS 16 and IAS 41
• Equity Method in Separate Financial Statements – Amendments to IAS 27
• Sale or Contribution of Assets between an Investor and its Associate or Joint Venture – Amendments to IFRS 10 and IAS 28
• Annual Improvements to IFRSs – 2012-2014 Cycle
• Investment entities: Applying the Consolidation Exception – Amendments to IFRS 10, IFRS 12 and IAS 28
• Disclosure Initiative – Amendments to IAS 1
None of these standards and interpretations, when applied, are expected to have a material impact upon the consolidated
results of financial position of the group (other than in relation to disclosures or presentation), except for IFRS16 “Leases”.
This standard requires lessees to recognise a lease liability reflecting future lease payments and a “right-of-use asset”
for virtually all lease contracts. For lessors, the accounting stays almost the same. However, as the IASB has updated the
guidance on the definition of a lease (as well as the guidance on the combination and separation of contracts), lessors
will also be affected by the new standard. At the very least, the new accounting model for lessees is expected to impact
negotiation between lessors and lessees. The group has not yet assessed the full impact of this standard.
Cardiff Property AR2016.indd 28
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:17
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
29
3. SEGMENTAL ANALYSIS
The group manages its operations in two segments, being property and other investment and property development. The
results of these segments are regularly reviewed by the board as a basis for the allocation of resources, in conjunction with
individual site investment appraisals, and to assess their performance. Information regarding the results and net operating
assets for each reportable segment are set out below:
Revenue (wholly in the United Kingdom):
Property and other investment being gross rents receivable
Property development being sales of development properties
Profit 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
2016
£’000
2015
£’000
580
–
580
2,511
162
2,673
23,783
4,033
(3,279)
24,537
(3,760)
(217)
3,279
(698)
23,839
577
–
577
2,455
131
2,586
21,472
3,919
(3,159)
22,232
(3,602)
(232)
3,159
(675)
21,557
Of the group’s share of the profit in its joint venture of £1,869,000 (2015: £1,922,000), £450,000 (2015: £167,000) relates
to property development and £1,419,000 (2015: £1,755,000) relates to property investment. The interest income of £4,000
(2015: £2,000) relates entirely to property investment. Of the income tax expense of £395,000 (2015: £187,000), £282,000
(2015: £146,000) relates to property investment and £113,000 (2015: £41,000) to property development. Due to the
reportable segments being accounted for in separate legal entities it is possible to directly allocate the group results and
net assets to the reportable segments.
4. OPERATING PROFIT BEFORE GAINS ON INVESTMENT PROPERTIES AND OTHER PROPERTIES
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
2016
£’000
2015
£’000
25
4
6
3
2
(499)
23
3
6
3
1
(392)
www.cardiff-property.com
Cardiff Property AR2016.indd 29
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:17
30
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5.
FINANCIAL INCOME
Bank and other interest receivable
6.
EMPLOYEES
2016
£’000
79
2015
£’000
77
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
2016
3
2
5
2016
£’000
338
39
41
418
2015
3
2
5
2015
£’000
357
35
44
436
Other pension costs represent amounts paid by the group to a personal pension plan in respect of J R Wollenberg.
7.
EMOLUMENTS OF DIRECTORS
The emoluments of the directors were as follows:
As executives
J R Wollenberg
K Chandler
D A Whitaker
As non-executive
N D Jamieson
Salary
£
Bonus
£
Benefits
£
Total
2016
£
Total
2015
£
117,576
41,667
35,000
194,243
12,000
206,243
33,509
–
–
33,509
–
33,509
15,188
–
–
15,188
166,273
41,667
35,000
242,940
172,933
–
61,938
234,871
–
15,188
12,000
254,940
12,000
246,871
Pension
contributions
2016
£
2015
£
40,613
–
–
40,613
–
40,613
43,921
–
–
43,921
–
43,921
The above table includes bonuses which are based on the results for the year to 30 September 2016 and are payable in
December 2016. Bonuses of £39,094 for Mr Wollenberg and £7,980 for Mr Whitaker in respect of the year to 30 September
2015 were paid in December 2015.
The information above is in respect of the company. In addition, Mr Wollenberg received consultancy fees of £60,000 (2015:
£50,000). Details of the company’s policy on directors’ remuneration are contained within the remuneration report on pages
17 to 18. Until 1 March 2015 amounts in respect of emoluments for Mr Whitaker were paid to Netpage Communications
Limited, a company which he controls. Benefits relates to the provision of health care to Mr Wollenberg.
The directors are considered to be the only key management personnel of the group.
Cardiff Property AR2016.indd 30
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:17
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
31
8.
TAXATION
Current tax
UK corporation tax on the result for the year
Total current tax
Deferred tax
Origination and reversal of timing differences
Total deferred tax
Taxation (all recognised in the profit and loss account)
Reconciliation of effective tax rate:
Tax reconciliation
Profit before taxation
Profit before taxation multiplied by standard rate of corporation tax in the UK of 20% (2015: 20.5%)
Effects of:
Joint venture
Effect of different tax rates
Permanent differences on investment properties
Total tax expense
2016
£’000
2015
£’000
105
105
74
74
179
2016
£’000
2,673
535
(374)
(14)
32
179
95
95
1
1
96
2015
£’000
2,586
530
(405)
(9)
(20)
96
Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and 20% (effective from 1 April
2015) were substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18%
(effective 1 April 2020) were substantively enacted on 26 October 2015. An additional reduction to 17% (effective from
1 April 2020) was announced in the Budget on 16 March 2016, this was substantially enacted on 15 September 2016. This
will reduce the company’s future current tax charge accordingly and reduce the deferred tax balances at 30 September
2016 (which have been calculated based on the rate of 19%).
9.
EARNINGS PER SHARE
Earnings per share has been calculated in accordance with IAS 33 - Earnings Per Share using the profit after tax for the
financial year of £2,494,000 (2015: £2,490,000) and the weighted average number of shares as follows:
Basic and diluted basis
Weighted average
number of shares
2016
2015
1,276,736 1,301,461
www.cardiff-property.com
Cardiff Property AR2016.indd 31
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:17
32
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
10. NET ASSETS PER SHARE
Based on shares in issue at 30 September 2016 of 1,270,709 (2014: 1,279,746)
11. FREEHOLD INVESTMENT PROPERTIES
Group and company
At beginning of year
Surplus on revaluation in year
At end of year
2016
Pence per
share
1,876
2015
Pence per
share
1,684
2016
£’000
4,660
220
4,880
2015
£’000
4,510
150
4,660
The fair value of investment property was determined by external, independent property valuers, having appropriate
recognised professional qualifications and recent experience in the location and category of the property being valued.
The independent valuers provide the fair value of the Group’s investment property portfolio every year.
The company’s freehold commercial investment properties (total value: £4,550,000) have been valued by Cushman &
Wakefield LLP, and its residential property (total value: £330,000) by Nevin & Wells as at 30 September 2016.
All valuations have been prepared in accordance with the RICS Valuation – Professional Standards (the “Red Book”) and the
International Valuation Standards on the basis of Market Value.
All of the commercial investment properties have been categorised as a Level 3 fair value in both years, based on the inputs
to the valuation technique used. The residential property has been categorised as a Level 2 fair value in both years.
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Valuation technique and significant unobservable inputs
The valuation technique used in measuring the fair value of investment property is a discounted cash flow using the
following significant inputs: net rental income and occupancy.
Fair value using unobservable inputs (Level 3)
Opening fair value
Gains and losses recognised in income statement (surplus on revaluation of investment properties)
Closing fair value
2016
£’000
4,330
220
4,550
2015
£’000
4,210
120
4,330
Cardiff Property AR2016.indd 32
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:17
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
33
11. FREEHOLD INVESTMENT PROPERTIES (CONTINUED)
Quantitative information about fair value measurements using unobservable inputs (Level 3)
The fair value referred to above of £4,550,000 (2015: £4,330,000) is based on the unobservable inputs of net rental income
and discount rate (yield).
The net rental income ranged between £40,000 and £202,000, and the discount rate ranged between 8.25% and 9.45%.
A decrease in net rental income or estimated future rent will result in a decrease in the fair value, whereas a decrease in
the discount rate (yield) will result in an increase in fair value. There are interrelationships between these rates as they are
partially determined by market rate conditions. Due to the judgemental nature or property valuations it is not possible to
precisely determine the impact a change in yield has on valuation.
The historical cost of the investment properties was:
Group and company
At 30 September 2016
At 30 September 2015
The cumulative amount of interest capitalised at 30 September 2016 was £90,000 (2015: £90,000).
12. PROPERTY, PLANT AND EQUIPMENT
£’000
3,735
3,735
Company and Group
Cost or valuation
At 30 September 2014
Additions
Revaluation
At 30 September 2015
Additions
Revaluation
At 30 September 2016
Depreciation
At 30 September 2014
Charge for year
At 30 September 2015
Charge for year
At 30 September 2016
Net book value
At 30 September 2016
At 30 September 2015
At 30 September 2014
Own use
freehold
property
£’000
Fixtures,
fittings
and
equipment
£’000
Motor
vehicles
£’000
Total
£’000
210
–
25
235
–
25
260
–
–
–
–
–
260
235
210
68
1
–
69
–
–
69
65
1
66
1
67
2
3
3
6
–
–
6
17
–
23
6
–
6
1
7
16
–
–
284
1
25
310
17
25
352
71
1
72
2
74
278
238
213
Own use freehold property was valued by Cushman & Wakefield LLP at market value as at 30 September 2016. The historic
cost of the property is £202,000 (2015: £202,000).
www.cardiff-property.com
Cardiff Property AR2016.indd 33
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:17
34
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
13.
INVESTMENTS
At beginning of year
Net change in fair value of available for sale financial assets
Share of profit of joint venture
At end of year
Shares
in joint
venture
£’000
11,156
–
1,869
13,025
Unlisted
investments
£’000
8
–
–
8
Listed
investments
£’000
736
98
–
834
Total
£’000
11,900
98
1,869
13,867
Listed investments
These include minority stakes in The Renewables Infrastructure Group Limited, A2D Funding plc and Aquila Services Group
Plc (formerly General Industries plc) listed on The London Stock Exchange, ImmuPharma Plc and Galileo Resources plc,
listed on AIM, and are designated as available for sale financial assets.
Joint venture
The group owns 47.62% (2015: 47.62%) of the total issued ordinary share capital of £1,050,000 of Campmoss Property
Company Limited, incorporated in England and Wales.
The group’s share of the results of Campmoss Property Company Limited and its subsidiary undertakings for the year
ended 30 September 2016 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 undertakings
for the year ended 30 September 2016. Whilst these accounts have been prepared under FRS 102, there are no material
differences to IFRS.
The group’s share of the consolidated income, expenses, revaluations, tax and profit after tax was:
Income
Expenses
Other income
Surplus on revaluation of investment properties
Interest payable
Taxation on ordinary activities
Profit after tax
2016
£’000
2,539
(1,661)
63
1,412
(89)
(395)
1,869
2015
£’000
1,701
(1,064)
–
1,472
–
(187)
1,922
Cardiff Property AR2016.indd 34
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:17
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
35
13.
INVESTMENTS (CONTINUED)
The group’s share of the consolidated net assets of Campmoss Property Company Limited and its subsidiary undertakings
was:
Non-current assets
Investment properties
Plant and equipment
Current assets
Stock and work in progress
Trade and other receivables
Cash and cash equivalents
Net current assets
Total assets
Current liabilities
Loans and overdraft
Corporation tax
Trade and other payables
Net current liabilities
Non-current liabilities
Deferred taxation
Total liabilities
Net assets
2016
£’000
2015
£’000
15,627
1
15,628
212
487
1,612
14,262
2
14,264
968
115
1,345
2,311
2,428
17,939
16,692
(2,865)
(128)
(1,049)
(4,104)
(112)
(691)
(4,042)
(4,907)
(872)
(629)
4,914)
13,025
(5,536)
11,156
At the year end, Campmoss had £2.5m outstanding of a loan facility of £5m at 2.5% over 3 month LIBOR with Barclays
Bank, in addition to an overdraft facility of £2m both of which are in place for a period of two years from November 2015.
Investment properties are included at fair value based on directors’ valuations as at 30 September 2016.
14. STOCK AND WORK IN PROGRESS
This comprises development properties held for sale.
www.cardiff-property.com
Cardiff Property AR2016.indd 35
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:18
36
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
15. TRADE AND OTHER RECEIVABLES
Trade receivables
Amounts owed by joint venture
Other receivables
Prepayments and accrued income
16. TRADE AND OTHER PAYABLES
Bank overdraft
Rents received in advance
Trade creditors
Other taxes and social security
Other creditors
Accruals and deferred income
17. DEFERRED TAXATION
At beginning of year
Charge for the year in the income statement
At end of year
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
Disclosed as:
Deferred tax asset
Deferred tax liability
Net deferred tax liability
2016
£’000
37
1,500
26
31
1,594
2016
£’000
–
86
44
53
195
83
461
2016
£’000
(55)
(74)
(129)
2016
£’000
(54)
(75)
(129)
5
(134)
(129)
2015
£’000
58
–
46
28
132
2015
£’000
8
119
18
39
252
80
516
2015
£’000
(54)
(1)
(55)
2015
£’000
(54)
(1)
(55)
5
(60)
(55)
The above deferred tax asset included within non-current assets in the group accounts relates to timing differences and is
not anticipated to be recoverable within the next 12 months.
No deferred tax asset in respect of the net deficits on property revaluations has been recognised in either year due to
uncertainty regarding its recoverability.
Cardiff Property AR2016.indd 36
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:18
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
37
18. SHARE BASED PAYMENTS
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%.
During the year options over nil shares lapsed (2015: 500). There were no options granted or exercised during the year. As a
result, there were no options outstanding at the end of the year.
19. SHARE CAPITAL
Authorised
4,500,000 (2015: 4,500,000) ordinary shares of 20 pence each
Allotted, called up and fully paid
At 30 September 2015 1,279,746 (2014: 1,310,046) ordinary shares of 20 pence each
Cancelled during the year 9,037 (2015: 30,300) ordinary shares of 20 pence each
At 30 September 2016 – 1,270,709 (2015: 1,279,746) ordinary shares of 20 pence each
The total number of ordinary shares under option is nil (2015: nil).
2016
£’000
2015
£’000
900
900
256
(2)
254
262
(6)
256
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 what the directors consider is the optimal capital structure, the group may adjust its dividend
policy, issue new shares or return capital to shareholders.
20. SHARE PREMIUM ACCOUNT
Group and company
At beginning and end of year
2016
£’000
5,076
www.cardiff-property.com
Cardiff Property AR2016.indd 37
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:18
38
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21. OTHER RESERVES
At beginning of year
Purchase of own shares
Transfer from retained earnings on
revaluation of other properties
Net change in fair value
At end of year
Available
for sale
reserve
£’000
147
–
Capital
redemption
reserve
£’000
498
2
Capital
reserve
£’000
30
–
Merger
reserve
£’000
1,869
–
25
98
270
–
–
500
–
–
30
–
–
1,869
Total
£’000
2,544
2
25
98
2,669
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.
22.
INVESTMENT PROPERTY REVALUATION RESERVE
At beginning of year
Transfer from retained earnings on revaluation in the year
Realisation of investment reserve
At end of year
2016
£’000
2,158
1,632
(41)
3,749
2015
£’000
577
1,622
(41)
2,158
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% joint venture. This reserve comprises
unrealised profits and losses and is not available for distribution until realised through sale.
23. RETAINED EARNINGS
At beginning of year
Profit for the financial year
Dividends paid
Transfer to investment property revaluation reserve on revaluation in the year
Realisation of investment reserve
Transfer to other reserves on revaluation of available for sale assets
Own shares purchased in year
At end of year
24. COMMITMENTS
Expenditure on development and investment properties
There were nil commitments under contract at 30 September 2016 (2015: nil).
2016
£’000
11,523
2,494
(174)
(1,632)
41
(25)
(136)
12,091
2015
£’000
11,115
2,490
(171)
(1,622)
41
(25)
(305)
11,523
Cardiff Property AR2016.indd 38
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:18
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
39
25. 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
2016
£’000
517
1,382
546
2,445
2015
£’000
476
1,114
436
2,026
Operating leases taken
Neither the group nor the company had any material commitments under non-cancellable operating leases at 30
September 2016 (2015: nil).
26. RELATED PARTY TRANSACTIONS
During the year the company entered into the following transactions with related parties:
Party
Campmoss Property
Company Limited
Nature of transaction
Loans made by the company to acquire and
develop properties
Loans repaid to the company
Loan interest received by the company
2016
£’000
1,500
–
23
Management fees received by the company
499
375
Consultancy fees received by J R Wollenberg
(director)
D M Joseph
Director’s salary paid
58
3
63
3
Value
2015
£’000
Balance owed by
related party
at 30 September
2015
£’000
2016
£’000
–
1,500
500
–
–
8
30
30
–
–
–
–
5
25
–
Campmoss Property Company Limited is a joint venture of the company. The amount due from Campmoss Property
Company Limited at 30 September 2016 was £1,500,000 (2015: £nil) representing the outstanding balance on the revolving
credit drawdown facility of £2,000,000 (2015: £2,000,000) provided to Campmoss Property Company Limited by the
company at an interest rate of 3 month LIBOR plus 2.5%. 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 11 and note 7 on page 30.
All transactions were carried out at arm’s length.
www.cardiff-property.com
Cardiff Property AR2016.indd 39
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:18
40
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
27. 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 joint venture
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 client. 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
Financial assets
Trade and other receivables
Amounts due from joint venture
2016
£’000
2,198
1,047
94
1,500
4,839
2015
£’000
3,579
1,050
132
–
4,761
At 30 September 2016, the group had £3,245,000 (2015: £4,629,000) deposited with banks and financial institutions of
which: £698,000 is available for withdrawal in less than 30 days; £1,000,000 is available for withdrawal in 30-60 days;
£500,000 is available for withdrawal in 60-90 days; and £1,047,000 is available for withdrawal in 90-180 days. As shown in
the table above, the amounts available for withdrawal in over 90 days are classed as financial assets.
The amounts due from the joint venture at 30 September 2016 are repayable on demand and are secured upon certain
investment properties owned by the joint venture. None of these amounts are overdue.
All financial assets are sterling denominated.
The ageing of trade receivables, prepayments and other receivables along with the associated provision at the year-end
was:
Not past due
Past due 31-90 days
Past due more than 90 days
The movement in the provision during the year was as follows:
At beginning of year
Amounts written back
Provided in year
At end of year
2016
2015
Gross
£’000
109
1
5
115
Provision
£’000
18
–
3
21
Gross
£’000
130
4
17
151
Provision
£’000
–
2
17
19
19
(5)
7
21
16
(16)
19
19
Cardiff Property AR2016.indd 40
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:18
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
41
27. 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, by preparing and regularly reviewing cash flow forecasts, that as far as possible, there
will always be 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 assets
and financial liabilities and their carrying value in the balance sheet.
The group’s financial liabilities comprise trade creditors and other creditors amounting to £461,000 (2015: £516,000) and are
all repayable within one year and are non-interest bearing.
Banking facilities
The company does not have loan or overdraft facilities. Sufficient cash resources are available to the group to complete the
current maintenance and 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, interest rates and stock market prices 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 fixed rate deposit.
28. ACCOUNTING ESTIMATES AND JUDGEMENTS
The key accounting judgements include the investment property valuations, which while supported by third party valuations
are by their nature subjective. All property owned by the group has an independent third party valuation annually. The
properties owned by Campmoss group are valued by the directors with regard to independent third party information and
valuations when available. The deferred taxation provision uses these investment property valuations to calculate the gain
or loss and hence deferred taxation liability. Provision has been made for any tenant’s debts where there is considered a
reasonable risk of non-payment.
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: 1) in valuing investment properties and properties in the joint
venture, all property owned by the group is valued by an external valuer whilst all properties held by Campmoss are valued
internally by the directors; 2) in valuing available for sale assets; 3) in classifying properties as investment properties or
stock. Properties are generally held as investment properties as they are held for capital appreciation and rental income,
properties are reclassified as stock where they are being actively marketed for sale and the group no longer intend to hold
once a suitable sale can be negotiated; and 4) in calculating provisions due to their subjective nature.
www.cardiff-property.com
Cardiff Property AR2016.indd 41
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:18
42
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
29. EXPLANATION OF TRANSITION TO FRS 102 FOR THE CAMPMOSS GROUP
As stated in note 1 Campmoss Property Company Limited and its subsidiaries have adopted Financial Reporting Standard
102 (FRS 102) for statutory accounts purposes. The impact on the group results of the investment in the joint venture which
relates to the recognition of the deferred tax liability on the difference between indexed cost and valuation is set out below.
Revenue
Cost of sales
Gross profit
Administrative expenses
Other operating income
Operating profit before gains on investment properties and
other investments
Surplus on revaluation of investment properties
Surplus on revaluation of other properties
Operating profit
Financial income
Share of results of joint venture
Profit before taxation
Taxation
Profit for the period attributable to equity holders
Earnings per share on profit for the period – pence
Basic and diluted
Year Ended
30 September
2015
Old UK GAAP
£’000
577
(31)
Year Ended
30 September
2015
Effect of
transition to
FRS 102
£’000
–
–
Year Ended
30 September
2015
FRS 102
£’000
577
(31)
546
(540)
406
412
150
25
587
77
1,976
2,640
(96)
2,544
–
–
–
–
–
–
–
–
(54)
(54)
–
(54)
546
(540)
406
412
150
25
587
77
1,922
2,586
(96)
2,490
195.5
(4.2)
191.3
Cardiff Property AR2016.indd 42
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:18
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
43
29. EXPLANATION OF TRANSITION TO FRS 102 FOR THE CAMPMOSS GROUP (CONTINUED)
Non-current assets
Freehold investment properties
Investment in joint venture
Property, plant and equipment
Other financial assets
Deferred tax asset
Total non-current assets
Current assets
Stock and work in progress
Trade and other receivables
Financial assets
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Corporation tax
Trade and other payables
Total current liabilities
Non-current liabilities
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
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
30 September
2015
Old UK GAAP
£’000
30 September
2015
Effect of
transition to
FRS 102
£’000
30 September
2015
FRS 102
£’000
4,660
11,344
238
744
5
16,991
668
132
1,050
3,579
5,429
22,420
(99)
(516)
(615)
(60)
(60)
(675)
–
(188)
–
–
–
(188)
–
–
–
–
–
(188)
–
–
–
–
–
–
4,660
11,156
238
744
5
16,803
668
132
1,050
3,579
5,429
22,232
(99)
(516)
(615)
(60)
(60)
(675)
21,745
(188)
21,557
256
5,076
2,544
2,158
11,711
21,745
£16.99
–
–
–
–
(188)
(188)
£(0.15)
256
5,076
2,544
2,158
11,523
21,557
£16.84
www.cardiff-property.com
Cardiff Property AR2016.indd 43
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:19
44
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
29. EXPLANATION OF TRANSITION TO FRS 102 FOR THE CAMPMOSS GROUP (CONTINUED)
Non-current assets
Freehold investment properties
Investment in joint venture
Property, plant and equipment
Other financial assets
Deferred tax asset
Total non-current assets
Current assets
Stock and work in progress
Trade and other receivables
Financial assets
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Corporation tax
Trade and other payables
Total current liabilities
Non-current liabilities
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
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
30. POST BALANCE SHEET EVENT
30 September
2014
Old UK GAAP
£’000
30 September
2014
Effect of
transition to
FRS 102
£’000
30 September
2014
FRS 102
£’000
4,510
9,368
213
725
5
14,821
668
764
2,204
1,857
5,493
20,314
(100)
(497)
(597)
(59)
(59)
(656)
–
(134)
–
–
–
(134)
–
–
–
–
–
(134)
–
–
–
–
–
–
4,510
9,234
213
725
5
14,687
668
764
2,204
1,857
5,493
20,180
(100)
(497)
(597)
(59)
(59)
(656)
19,658
(134)
19,524
262
5,076
2,494
577
11,249
19,658
£15.00
–
–
–
–
(134)
(134)
£(0.10)
262
5,076
2,494
577
11,115
19,524
£14.90
Subsequent to the year-end Campmoss Property Company Limited has exchanged contracts to sell the freehold at
Brickfields, Bracknell for a consideration of £3.7m. At 30 September 2016 Brickfields was valued at £3.1m.
Cardiff Property AR2016.indd 44
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:19
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
45
COMPANY BALANCE SHEET
at 30 September 2016
Fixed assets
Tangible assets:
Investment properties
Property, plant and equipment
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
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
2016
2015
Notes
£’000
£’000
£’000
£’000
11
12
34
35
36
37
19
20
38
39
40
41
1,596
3,245
4,841
(3,626)
4,880
278
5,158
4,118
9,276
1,215
10,491
(134)
10,357
254
5,076
1,144
2,620
1,263
10,357
101
4,629
4,730
(3,515)
4,660
238
4,898
4,570
9,468
1,215
10,683
(60)
10,623
256
5,076
924
2,495
1,872
10,623
These financial statements were approved by the board of directors on 29 November 2016 and were signed on its behalf by:
J Richard Wollenberg
Director
www.cardiff-property.com
Cardiff Property AR2016.indd 45
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:19
46
STATEMENT OF CHANGES IN EQUITY
Balance at 1 October 2014
Profit for the financial year
Other comprehensive income
Total comprehensive income for the
financial year
Purchase of own shares
Dividends
Total contributions by and distributions
to owners
Transfer on revaluation of investment
properties
Transfer on revaluation of other properties
Balance at 30 September 2015
Balance at 1 October 2015
Loss for the financial year
Other comprehensive income
Total comprehensive expenses for the
financial year
Purchase of own shares
Dividends
Total transactions with equity holders
Transfer on revaluation of investment
properties
Transfer on revaluation of other properties
Balance at 30 September 2016
Called up
Share
capital
£’000
262
–
–
Share
Premium
Account
£’000
5,076
–
–
Investment
property
revaluation
reserve
£’000
774
–
–
Other
reserves
£’000
2,445
–
19
Profit
and loss
account
£’000
1,909
614
–
–
(6)
–
(6)
–
–
256
–
–
–
–
–
–
5,076
–
–
–
–
150
–
924
Called up
Share
capital
£’000
256
–
–
Share
Premium
Account
£’000
5,076
–
–
Investment
property
revaluation
reserve
£’000
924
–
–
–
(2)
–
(2)
–
–
254
–
–
–
–
–
–
5,076
–
–
–
–
220
–
1,144
19
6
–
6
–
25
2,495
Other
reserves
£’000
2,495
–
98
98
2
–
2
–
25
2,620
614
(305)
(171)
(476)
(150)
(25)
1,872
Profit
and loss
account
£’000
1,872
(54)
–
(54)
(136)
(174)
(310)
(220)
(25)
1,263
Total
equity
£’000
10,466
614
19
633
(305)
(171)
(476)
–
–
10,623
Total
equity
£’000
10,623
(54)
98
44
(136)
(174)
(310)
–
–
10,357
Cardiff Property AR2016.indd 46
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:19
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
47
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
31. ACCOUNTING POLICIES
The Cardiff Property plc (the “Company”) is a company incorporated and domiciled in the UK.
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (“FRS 101”). The amendments to FRS 101 (2014/15 Cycle) issued in July 2015 and effective immediately have
been applied.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements
of International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), but makes amendments where
necessary in order to comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure
exemptions has been taken.
In the transition to FRS 101 from Adopted IFRS, the Company has made no measurement and recognition adjustments.
In the transition to FRS 101, the Company has applied IFRS 1 whilst ensuring that its assets and liabilities are measured in
compliance with FRS 101.
In these financial statements, the company has applied the exemptions available under FRS 101 in respect of the following
disclosures:
• a Cash Flow Statement and related notes;
• Comparative period reconciliations for share capital and tangible fixed assets;
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs;
• Disclosures in respect of the compensation of Key Management Personnel; and
• Disclosures of transactions with a management entity that provides key management personnel services to the
company.
The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next financial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in
these financial statements and in preparing an opening FRS 101 IFRS balance sheet at 1 October 2014 for the purposes of
the transition to FRS 101.
Judgements made by the directors, in the application of these accounting policies that have significant effect on the
financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 28.
Measurement convention
The financial statements have been prepared under the historical cost accounting rules and in accordance with applicable
accounting standards and with the Companies Act 2006. The financial statements are prepared on the historical cost basis
except that investment properties are stated at their fair value.
Going concern
The company remains profitable and cash generative and has a strong balance sheet. Accordingly, the directors consider it
appropriate to continue to prepare the financial statements on a going concern basis.
www.cardiff-property.com
Cardiff Property AR2016.indd 47
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:19
48
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
31. ACCOUNTING POLICIES (CONTINUED)
Investment properties
Investment properties are properties which are held either to earn rental income or for capital appreciation or for both.
Investment properties are stated at fair value.
In applying the fair value model in IAS 40 Investment Property:
i. investment properties are held at fair value. Any gains or losses arising from changes in the fair value are recognised in
profit or loss in the period that they arise; and
ii. no depreciation is provided in respect of investment properties applying the fair value model.
Any gain or loss arising from a change in fair value is recognised in profit or loss. Rental income from investment property is
accounted for as described in the revenue accounting policy in note 1.
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 2016.
Property, plant and equipment
Property, plant and equipment – other, comprises 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 2016. Surpluses or deficits arising are recognised in
other comprehensive income.
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:
• property
• motor vehicles
50 years
4 years
• fixtures, fittings and equipment 4 years
Investments
Listed investments are stated at fair value.
Investments in subsidiary undertakings and joint ventures are stated at cost less any impairment.
Cash at bank and in hand
Cash comprises cash in hand and deposits repayable in line with notice periods determined by the company, less overdrafts
payable on demand.
Dividends
Dividends unpaid at the balance sheet date are only recognised as a liability to the extent that they are appropriately
declared and authorised and are no longer at the discretion of the company. Unpaid dividends that do not meet this criteria
are disclosed in the Directors’ Report.
32. 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.
2016
£’000
2015
£’000
25
6
3
2
23
5
3
1
Cardiff Property AR2016.indd 48
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:19
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
49
33. 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:
(Loss)/Profit for the financial year (after dividends)
2016
£’000
(228)
2015
£’000
443
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 29 November 2016.
34.
INVESTMENTS
At beginning of year
Revaluation of investments
At end of year
Shares
in group
undertakings
£’000
3,289
(550)
2,739
Shares in
joint venture
undertaking
£’000
545
–
545
Listed
investments
£’000
736
98
834
Total
£’000
4,570
(452)
4,118
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
Campmoss Property Company Limited
Campmoss Property Developments Limited
Campmoss Property (Tangley Pace) Limited
Issued share
capital held
100%
100%
100%
100%
100%
100%
47.62%
47.62%
47.62%
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
Ordinary shares of £1 each
Ordinary shares of £1 each
Ordinary shares of £1 each
Activity
Property development
Property development
Dormant
Dormant
Dormant
Dormant
Property investment
Property development
Property investment
All of the above undertakings have been included within the consolidated financial statements.
Further information on listed investments and our joint venture, Campmoss Property Company Limited, is included in note 13.
35. DEBTORS
Trade debtors
Amounts owed by subsidiary undertakings
Amounts owed by joint venture undertaking
Other debtors
Prepayments and accrued income
Deferred tax asset (note 37)
2016
£’000
35
25
1,500
4
27
5
1,596
2015
£’000
40
25
–
4
27
5
101
www.cardiff-property.com
Cardiff Property AR2016.indd 49
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:19
50
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
36. CREDITORS
Bank overdraft
Rents received in advance
Trade creditors
Amounts owed to subsidiary undertakings
Corporation tax
Other taxes and social security
Other creditors
Accruals and deferred income
37. PROVISIONS FOR LIABILITIES
Deferred taxation
At beginning of year
(Charge) for the year in the profit and loss account
At end of year
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
Disclosed as:
Deferred tax asset (note 35)
Deferred tax liability
Net deferred tax liability (see above)
The above deferred tax asset is not anticipated to be recoverable within the next 12 months.
38.
INVESTMENT PROPERTY REVALUATION RESERVE
2016
£’000
–
85
41
3,204
71
45
127
53
3,626
2016
£’000
(55)
(74)
(129)
2016
£’000
(54)
(75)
(129)
5
(134)
(129)
At beginning of year
Revaluation in year
At end of year
39. OTHER RESERVES
At beginning of year
Revaluation of property held for own use
Revaluation of investments
Purchase of own shares
At end of year
Revaluation
reserve
£’000
128
25
98
–
251
Capital
redemption
reserve
£’000
498
–
–
2
500
Merger
reserve
£’000
1,869
–
–
–
1,869
2015
£’000
8
99
12
3,083
72
33
134
74
3,515
2015
£’000
(54)
(1)
(55)
2015
£’000
(54)
(1)
(55)
5
(60)
(55)
£’000
924
220
1,144
Total
£’000
2,495
25
98
2
2,620
Cardiff Property AR2016.indd 50
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:20
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
51
40. PROFIT AND LOSS ACCOUNT
At beginning of year
(Loss)/Profit for the financial year
Revaluation of investment properties – transfer to revaluation reserve
Revaluation of other property – transfer to other reserve
Dividends paid
Own shares purchased in year
At end of year
41. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
Opening shareholders’ funds
(Loss)/Profit for the financial year
Dividends paid
Revaluation of investments
Own shares purchased
Closing shareholders’ funds
2016
£’000
1,872
(54)
(220)
(25)
(174)
(136)
1,263
2016
£’000
10,623
(54)
(174)
98
(136)
10,357
2015
£’000
1,909
614
(150)
(25)
(171)
(305)
1,872
2015
£’000
10,466
614
(171)
19
(305)
10,623
www.cardiff-property.com
Cardiff Property AR2016.indd 51
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:20
52
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the one hundred and twenty ninth Annual General Meeting of The Cardiff Property Public Limited
Company will be held at 56 Station Road, Egham, Surrey TW20 9LF on Thursday 19 January 2017 at 12 noon, for the following
purposes:
Ordinary business
1. To receive the reports of the directors and auditor and the financial statements for the year ended 30 September 2016.
2. To approve the remuneration report for the year ended 30 September 2016, including the remuneration policy.
3. To declare a dividend to be paid on 16 February 2017.
4. To re-elect as a director, Karen L Chandler who retires by rotation.
5. To re-appoint KPMG LLP 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 £84,714;
and
(b) shall expire at the end of the next Annual General Meeting of the company 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
(a) to the allotment (otherwise than pursuant to subparagraph (a) above) of equity securities up to an aggregate nominal
amount of £12,707 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 190,479 representing 14.99% of the
present issued share capital of the company;
(b) the minimum price which may be paid for such shares is 20 pence per share which amount shall be exclusive of
expenses;
Cardiff Property AR2016.indd 52
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:20
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
53
(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 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:
3 Assembly Square
Britannia Quay
Cardiff Bay
CF10 4AX
By order of the board
K Chandler FCA
Secretary
29 November 2016
NOTES
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.
www.cardiff-property.com
Cardiff Property AR2016.indd 53
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:20
54
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
8. As at 16:00 hours on 28 November 2016, the company’s issued share capital comprised 1,270,709 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 28 November 2016 is 1,209,709.
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.
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 auditor 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.
Cardiff Property AR2016.indd 54
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:20
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
55
CONSOLIDATED FIVE YEAR SUMMARY
Income statement items
Revenue being gross rental income
2016
2015
2014
2013
2012
£’000
580
577
534
493
523
Profit before taxation
Dividends paid and proposed in respect of the year*
Dividend cover
Dividend per share
Earnings per share
Balance sheet items
Total assets
Total liabilities
Net assets
Number of shares in issue at 30 September
Net assets per share attributable to shareholders
Gearing
£’000
£’000
times
pence
pence
£’000
£’000
£’000
‘000
pence
per cent
2,673
178
15.01
14.0
195.3
2,586
174
14.86
13.5
191.3
24,537
(698)
23,839
1,271
1,876
nil
22,232
(675)
21,557
1,280
1,684
nil
3,218
167
19.3
12.95
236.5
20,180
(656)
19,524
1,310
1,490
nil
1,319
166
7.9
12.55
94.2
17,448
(559)
16,889
1,322
1,277
nil
435
165
2.6
12.3
26.5
16,511
(571)
15,940
1,322
1,205
nil
* Dividends represent the interim paid and the final declared in any one financial year.
www.cardiff-property.com
Cardiff Property AR2016.indd 55
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:20
56
FINANCIAL CALENDAR
30 November 2016
Results announced for the year ended 30 September 2016
19 January 2017
26 January 2017
27 January 2017
16 February 2017
May 2017
July 2017
Annual General Meeting/General Meeting
Ex-dividend date for the final dividend
Record date for the final dividend
Final dividend to be paid
Interim results for 2017 to be announced
Interim dividend for 2017 to be paid
30 September 2017
Year end
Cardiff Property AR2016.indd 56
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:20
THE CARDIFF PROPERTY plc
Annual Report and Financial Statements for the year ended 30 September 2016
Stock code: CDFF
Cardiff Property AR2016.indd 4
25179.02 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:20
The Cardiff Property plc
56 Station Road, Egham
Surrey TW20 9LF
Tel: 01784 437444
Fax: 01784 439157
www.cardiff-property.com
Cardiff Property AR2016.indd 1
25179.04 28 November 2016 4:29 PM Proof 5
28/11/2016 16:36:20