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K&C REIT plc
ANNUAL REPORT
2017
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CONTENTS
Company Information
Chairman’s Statement
Group Strategic Report
Report of the Directors
Report of the Independent Auditor
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Statements of Cash Flows
Notes to the Financial Statements
Page
2
3
5
8
12
17
18
19
20
21
22
23
24
25
K&C REIT plc Annual Report 2017 1
Chairman
Chief executive
Property director
Finance director
Non-executive director
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COMPANY INFORMATION
DIRECTORS
SECRETARY
REGISTERED OFFICE
BUSINESS ADDRESS
M D M Davies
D A White
T M James
J A Cane
O J Vaughan
R J Roberts
82 St. John Street
London EC1M 4JN
44/48 Old Brompton Road
South Kensington
London SW7 3DY
REGISTERED NUMBER
09080097 (England and Wales)
INDEPENDENT AUDITOR
SOLICITOR
Moore Stephens LLP
150 Aldersgate Street
London EC1A 4AB
Fladgate LLP
16 Great Queen Street
London WC2B 5DG
NOMINATED ADVISER AND BROKER Arden Partners Plc
BANKERS
FINANCIAL PUBLIC RELATIONS
WEBSITE
125 Old Broad Street
London EC2N 1AR
Metro Bank plc
One Southampton Street
London WC1A 5HA
Barclays Bank plc
Level 25, 1 Churchill Place
Canary Wharf
London E14 SHP
Yellow Jersey PR Limited
7th floor, 22 Upper Ground
London SE1 9PD
www.kandc-reit.co.uk
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CHAIRMAN’S STATEMENT
for the year ended 30 June 2017
This is K&C REIT plc’s third Annual Report since its admission to AIM.
Market and strategy
The Group operates in the UK residential private rented sector (PRS). It seeks to acquire:
(cid:129) under-managed rented property assets and portfolios
The team’s considerable PRS expertise enables them to improve portfolios and, importantly, tenant experience at under-managed
properties, through asset and property management activity. This has resulted in higher rental and property values.
(cid:129) in lower price segments
The focus on lower price segments ensures that the portfolio is directed towards the highest area of tenant and buyer demand. This is
defensive in a downturn and shows strong growth in an upturn.
(cid:129) held within UK-incorporated companies
The REIT structure itself provides K&C with the opportunity to capitalise on the advantages afforded to REITs to provide an efficient exit
route for vendors of SPVs, in particular, managing deferred capital gains tax liabilities.
The residential sales market has slowed over the last year, particularly in higher price-band properties in Central London. The impact
of the Brexit vote, a more difficult economy, an inconclusive general election result and significant tax changes, particularly for ‘buy-
to-let’ landlords, all taking place within a relatively short period of time, have been difficult for the market to digest.
It is important to note that, across the UK as a whole, prices and rental values continue to rise, albeit at slower rates. Indeed, the
Group’s assets, which, on a unit basis, are all in the lower price bands (studio, one and two beds), have performed well.
The positive overall economic fundamentals in the residential sector – strong demand and shortage of supply – will, in our view,
deliver attractive rental and capital value performance across the UK over the medium term.
Investment and operations
Osprey has exceeded expectations, having significantly increased revenue from ground rents, sales commissions, lease extensions
and other management income. We have invested in the operations of the business and believe that Osprey is well positioned to
continue its strong performance in the future.
The Coleherne Road apartments have continued to perform well. The small size of the units (studio, one- and two-bed flats) is
exactly what the market is looking for. This has meant that occupancy has been maintained at close to 100 per cent and rents have
increased by eight per cent since acquisition in July 2015.
The Group considered a number of UK residential investment opportunities during the year. Post the year-end, the Group completed
the acquisition of three residential units at its freehold Heathside property in Hampstead for £935,000 (accepting the surrender of
67-year leasehold interests) using funds raised from the issue of convertible loan notes. The Company continues to implement its
value-adding asset-management plan at this property of creating ‘marriage value’ through the buy-in of leasehold units.
Financial
Income increased from £151,417 to £514,746 in the financial year. The Group reports a consolidated operating loss before separately
disclosed administrative items of £636,896, which includes abortive and ongoing acquisition costs of approximately £200,000. The
operating loss of £1,029,215 includes a non-cash share-based payment charge of £392,319.
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CHAIRMAN’S STATEMENT (continued)
for the year ended 30 June 2017
During the year, the Company issued £599,000 of new ordinary
shares at just over 10 pence per share and £350,000 of restricted
preference shares at 1p per share. The funds raised have been used
to maintain the Group’s property assets and cover working capital
requirements.
On 9 July 2017, the Company issued 6% Loan Notes in the total
sum of £1.35 million, a proportion of which are convertible into
ordinary shares. £950,000 had been received in advance at the
year-end. The loan notes are redeemable by the Company on
30 June 2020. This capital injection has been used primarily to
acquire and refurbish the three Heathside units referred to above.
The net asset value per share at 30 June 2017 is 8.57p. The post-balance sheet active asset management, acquisitions and light
refurbishment in the Osprey portfolio has crystallised further value in the portfolio of more than £400,000.
Portfolio valuation
The portfolio at year-end was valued at £7.24 million, an increase of £0.1 million compared to 30 June 2016.
Board changes
We were delighted that Dominic White joined the Board as chief executive in January 2017. His long background in property
investment has already proved of great value to the Company.
Christopher James, Tim Oakley and Patricia Farley stepped down from the board at the end of March. Christopher and Tim continue
to play important roles as members of the senior management team while Patricia’s property expertise and experience remains
available to the business. Oliver Vaughan became a non-executive director of the Company in May 2017.
Future prospects
During the year, the Group has raised capital, restructured its Board, and, since year-end, acquired valuable assets. It has continued to
build the positive momentum from the previous year.
The Company aims to deliver a strong and growing covered dividend from rental streams and net asset value growth through the
professional management of residential assets and the acquisition and management of SPVs with attractive and undervalued portfolios.
We have built a significant pipeline of potential UK residential investments that, if acquired, would deliver this outcome.
The Board continues to find and be shown interesting acquisition opportunities and I hope that I will be able to report further
positive developments to you before too long.
M D M Davies
Chairman
16 October 2017
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GROUP STRATEGIC REPORT
for the year ended 30 June 2017
The directors present the strategic report of K&C REIT plc (‘K&C’ or the ‘Company’) and its subsidiaries (together, the ‘Group’) for
the year ended 30 June 2017. The Company was incorporated in England and Wales on 10 June 2014.
Principal activity
The Group carries on the business of acquiring and managing residential property in the UK for letting to third parties on long and
short leases. At the year-end, the Group consisted of the Company and three subsidiaries.
1. K&C (Coleherne) Limited owns a freehold residential property in Chelsea, London
2. K&C (Osprey) Limited owns the freehold of several retirement properties let on long leases to residents and provides
management services in respect of these properties and to third party landlords
3. K&C (Newbury) Limited owns no property and is now effectively dormant.
Group strategy
The directors intend to build a significant presence in the residential letting market, primarily through the acquisition of UK-registered
special purpose vehicles that own residential property for letting to third parties.
Results
The Group reports an operating loss from operating activities of £1,029,215 for the year to 30 June 2017.
Review of business and financial performance
The Board has reviewed whether the Annual Report, taken as a whole, presents a fair, balanced and understandable summary of the
Group’s position and prospects, and believes that it provides the information necessary for shareholders to assess the Group’s
position, performance, and strategy.
Information on the financial position and development of the Group is set out in the Chairman’s Statement, the report of the
directors and the annexed financial statements.
Financial key performance indicators
The directors and management team review a variety of key performance indicators to monitor and improve Group performance,
including:
A. At property level
i. Rent per ft2 compared with comparable market data and with other units in the asset
ii. Vacancy rate in terms of number of units available and potential rental income
iii. Management costs as a percentage of rental income (including repairs and maintenance, insurance, cleaning, agents’ fees, legal
fees, utilities and council tax)
iv. Gross and net yield compared with target levels
v. Marginal increase in income as a percentage of capital expenditure
vi. Outstanding rents as a percentage of rental income
vii.
Implementation of property plans compared with target.
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GROUP STRATEGIC REPORT (continued)
for the year ended 30 June 2017
B. At Group level
i. Assets under management compared with target
ii. Overheads as a percentage of gross/net rental income compared with target.
No analysis of performance compared to these KPIs has been provided because the diverse nature of the assets owned by the
subsidiary companies, and the changes to the operating models initiated by the Group, make such analyses at this stage of their
ownership potentially misleading.
Risks and uncertainties
The Board regularly reviews the risks to which the Group is exposed and ensures through its meetings and regular reporting that
these risks are minimised as far as possible.
The principal risks and uncertainties facing the Group at this stage in its development are:
(cid:129) Financing and liquidity risk
The Company has an ongoing requirement to fund its activities through the equity markets and in future to obtain finance for
property acquisition and management. There is no certainty that such funds will be available when needed.
(cid:129) Financial instruments
Details of risks associated with the Group’s financial instruments are given in Note 21 to the financial statements.
(cid:129) Valuations
The valuation of the investment property portfolio is inherently subjective as it is made on the basis of assumptions made by the
valuer that may not prove to be accurate. The outcome of this judgment is significant to the Group in terms of its investment
decisions and results.
Internal controls and risk management
The directors are responsible for the Group’s system of internal control. Although no system of internal control can provide absolute
assurance against material misstatement or loss, the Group’s system is designed to provide reasonable assurance that problems are
identified on a timely basis and dealt with appropriately.
In carrying out their responsibilities, the directors have put in place a framework of controls to ensure as far as possible that ongoing
financial performance is monitored in a timely manner, that, where required, corrective action is taken and that risk is identified as
early as practically possible. The directors have reviewed the
effectiveness of internal control.
The Board, subject to delegated authority, reviews, among other
things, capital investment, property sales and purchases, additional
borrowing facilities, guarantees and insurance arrangements.
Bribery risk
The Group has adopted an anti-corruption policy and whistle-
blowing policy under the Bribery Act 2010. Notwithstanding this,
the Group may be held liable for offences under that Act
committed by its employees or subcontractors whether or not
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the Group or the directors have knowledge of the commission of
such offences.
Forward-looking statements
This Annual Report contains certain forward-looking statements
that have been made by the directors in good faith based on the
information available at the time of the approval of the annual
report and financial statements. By their nature, such forward-
looking statements involve risks and uncertainties because they
relate to events and depend on circumstances that will or may
occur in the future. Actual results may differ from those expressed
in such statements.
Outlook
The Group took significant steps forward through its admission to AIM, achieving REIT status and enhancing the performance of its
first two acquisitions. It now intends to build on these achievements through further purchases of high quality assets that will be able
to support an increasing income yield. The Group is currently investigating several potential acquisitions. To make further acquisitions,
the Group will be required to raise more capital and it is working closely with funding sources, both equity and debt providers, to
achieve this objective.
On behalf of the board:
James Cane
Director
16 October 2017
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REPORT OF THE DIRECTORS
for the year ended 30 June 2017
The directors present their report with the financial statements of the Company and the Group for the year ended 30 June 2017.
A review of the business, risks and uncertainties and future developments is included in the Chairman’s Statement, the Strategic
Report and in note 21 to the financial statements.
Dividends
The directors do not recommend payment of a dividend for the year (2016 – £nil).
Political donations
The Group made no political donations during the year (2016 – £nil).
Corporate governance statement
The Board is committed to maintaining high standards of corporate governance. The UK Corporate Governance Code, published
by the Financial Reporting Council, sets out standards of good practice in relation to board leadership and effectiveness, remuneration,
accountability and relations with shareholders, providing principles of good governance and a code of best practice for listed
companies. The UK Corporate Governance Code does not apply to AIM companies. However, shareholders expect companies in
which they invest to be properly governed.
The Company’s corporate governance procedures take due regard of the principles of good governance set out in the UK Corporate
Governance Code, having regard to the size and the stage of development of the Company. Nonetheless, the Company has not
formally adopted any specific corporate governance code.
The Company has established audit, AIM compliance and remuneration committees, with formally delegated duties and responsibilities.
Audit committee
The audit committee currently comprises James Cane and Michael Davies, the chairman. The committee is responsible for ensuring
the financial performance, position and prospects of the Group are properly monitored and reported on, and for meeting the auditor
and reviewing their reports relating to accounts and internal controls.
Directors
The following directors served during the year to 30 June 2017 and up to the date of approval of this Annual Report:
Name
Michael Davies
Dominic White
Timothy James
James Cane
Oliver Vaughan
Christopher James
Timothy Oakley
Patricia Farley
Christopher Bateman
Date of appointment
Date of resignation
1 January 2017
1 April 2017
31 March 2017
31 March 2017
31 March 2017
29 May 2017
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The beneficial interests of the directors holding office at 30 June 2017 in the issued share capital of the Company were as follows:
Name
Timothy James
Michael Davies
Oliver Vaughan
James Cane
Dominic White
Ordinary Shares
No.
Restricted Preference Shares
No.
3,275,000
1,240,000
675,000
10,000
–
9,600,000
–
8,100,000
300,000
5,000,000
Warrants
No.
175,000
–
175,000
10,000
–
Included in the total of Oliver Vaughan’s holdings above are 665,000 shares and 165,000 warrants held in the name of Grosmont
Investments Limited, a company that he controls.
Included in the total of Dominic White’s holdings above are 5,000,000 restricted preference shares held in the name of White Amba
Limited, a company that he controls.
Since the year-end, the holdings of directors have remained unchanged.
Substantial shareholdings
As at 11 October 2017, the directors had been notified that the following shareholders own a disclosable interest of three per cent
or more in the ordinary shares of the Company:
Name
Venaglass Limited
Michael Wellesley-Wesley
Christopher James
Timothy James
Susan Hards
5XM Finance
Forbes Ventures
Xiao Min
Simon Wharmby
Interest
%
18.96
7.85
6.35
6.21
5.69
5.21
4.74
4.21
3.83
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REPORT OF THE DIRECTORS (continued)
for the year ended 30 June 2017
Directors’ remuneration
The following directors received remuneration during the year:
Name
James Cane
Timothy Oakley
Timothy James
Oliver Vaughan
Dominic White
Patricia Farley
Christopher James
Total
Remuneration
£
Benefits-in-kind
£
44,500
32,500
15,000
15,000
12,500
9,375
3,500
132,375
–
–
–
–
–
–
–
–
In addition, during the year, the Group paid (i) Perry, Cane, a consultancy business owned by James Cane, fees of £25,000 plus VAT,
(ii) CD James (Property Consultants) Limited, a company owned by Christopher James, fees of £26,000 and (iii) DGS Capital Partners
LLP, a limited liability partnership of which Michael Davies is a member, fees of £41,600.
Directors’ indemnities and insurance
The Company has made qualifying third-party indemnity provisions for the benefit of its directors during the year and they remain
in force at the date of approval of this Annual Report.
Going concern
The directors have adopted the going concern basis in preparing the financial statements. This is further explained in the notes to
the financial statements.
Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law, the directors have elected
to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European
Union (“IFRS”). 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 Company and the Group and of the profit or loss of the Group for that period. In
preparing these financial statements, the directors are required to:
– select suitable accounting policies and then apply them consistently;
– make judgments and accounting estimates that are reasonable and prudent;
– state that the financial statements comply with IFRS;
– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue
in business.
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The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s and
the Group’s transactions and disclose with reasonable accuracy at
any time the financial position of the Company and the Group and
enable them to ensure that the financial statements comply with
the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and the Group and hence
for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Statement as to disclosure of information to the auditor
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of
which the Group’s auditor is unaware, and each director has taken all the steps that he or she ought to have taken as a director in
order to make himself or herself aware of any relevant audit information and to establish that the Group’s auditor is aware of that
information.
Auditor
The auditor, Messrs Moore Stephens LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.
On behalf of the board
James Cane
Director
16 October 2017
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REPORT OF THE INDEPENDENT AUDITOR TO THE
MEMBERS OF K&C REIT PLC
Our opinion
We have audited the financial statements of K&C REIT plc (the “Company”) and its subsidiaries (the “Group”) for the year ended
30 June 2017 which comprise:
(cid:129) the consolidated statement of comprehensive income;
(cid:129) the consolidated and company statements of financial position;
(cid:129) the consolidated and company statements of changes in equity;
(cid:129) the consolidated and company cash flow statements; and
(cid:129) the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.
The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and IFRS as
adopted by the European Union.
In our opinion, the Group financial statements (“the financial statements”):
(cid:129) give a true and fair view of the state of the Group’s and of the Company’s affairs as at 30 June 2017 and of the Group’s loss for
the year then ended;
(cid:129) have been properly prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European
Union; and
(cid:129) 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.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements
section of our report below. We are independent of the Group in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
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Conclusions relating to going concern
We have nothing to report in respect of the following matters in which the ISAs (UK) require us to report to you where:
(cid:129) the directors’ use of the going-concern basis of accounting in the preparation of the financial statements is not appropriate, or
(cid:129) the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt
about the Group’s or the Company’s ability to continue to adopt the going-concern basis of accounting for a period of at least
twelve months from the date when the financial statements are authorised for issue.
An overview of the scope of our audit
The Group operates through two trading subsidiary undertakings which were considered to be significant components for the
purposes of the Group financial statements. The financial statements consolidate these entities together with a non-trading subsidiary
undertaking. In establishing our overall approach to the Group audit, we determined the type of work that needed to be performed
in respect of each subsidiary. This consisted of us carrying out a full audit of the two trading subsidiaries as well as the Company.
We have designed our audit approach to identify possible fraud in relation to the associated fraud risk of the Group. We consider
the most likely areas where fraud might arise to be within the valuation of investment property and revenue recognition, our approach
to these areas have been addressed within the key risk section.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we
identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and
directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Valuation of investment properties
The Group holds investment properties which comprise properties owned by the Group held for capital appreciation, rental income
or both. Investment properties are revalued on acquisition by independent external valuers and then by the directors or independent
valuers annually thereafter. The Group’s investment property portfolio is valued at £7.2 million at the year-end. Due to the uncertainty
of the property market, there is a risk that the properties are incorrectly valued.
In this area, our audit procedures included:
(cid:129) Independent external valuations were carried out for £6.6 million of the total investment property value at the year-end. For
these valuations an assessment of the valuers’ qualifications, expertise and independence was performed to assess that these are
appropriate for the work carried out.
(cid:129) For the directors’ valuations of £0.6 million, we have reviewed the qualifications and expertise of the individual assigned to
undertake the valuations to assess that these are appropriate for the work carried out.
(cid:129) Where appropriate, investment property values have been compared with those in similar areas, to an external source.
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REPORT OF THE INDEPENDENT AUDITOR TO THE
MEMBERS OF K&C REIT PLC (continued)
Completeness of revenue
Revenue of the Group was derived mainly from its principal activity, being the letting to third parties of, and management of, property
assets owned by the Group. This income includes rental income, management fees and sales commissions. There is a risk that revenue
is received and not recorded and, therefore, a potential risk in terms of the completeness of the revenue being recognised.
Our approach to the audit of revenue was as follows:
(cid:129) We reviewed rental contracts and compared the total rental income expected per the contract to the rental income received
as per the accounting records to agree that this is in line with expectations. Total rental income was £155,000.
(cid:129) Management fee income of £84,000 has been reconciled to expected charges.
(cid:129) Sales commission income, on sales made by existing leaseholders, of £172,000 has been verified to commission rates charged
on the sale of properties.
(cid:129) Lease extension income of £97,000 has been verified with third party completion statements from relevant solicitors.
(cid:129) Other revenues amount to £19,000.
Our application of materiality
We set certain thresholds for materiality. These help us to establish transactions and misstatements that are significant to the financial
statements as a whole, to determine the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements,
both individually on balances and on the financial statements as a whole.
In establishing the audit strategy, it was determined that the level of uncorrected misstatements judged to be material for the financial
statements and our Group audit overall would be £167,000, approximately 2% of gross assets. Our materiality for each subsidiary
was also based on 2% of gross assets. This is the threshold above which missing or incorrect information in financial statements is
considered to have an impact on the decision making of users.
We reported to the Audit and Risk Committee all potential adjustments in excess of £8,350, being 5% of the materiality for the
financial statements as a whole.
Other information
The directors are responsible for the other information. The other information comprises the information included in the Annual
Report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information,
we are required to report that fact.
We have nothing to report in this regard.
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Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
(cid:129) the information given in the strategic report and the report of the directors for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
(cid:129) the strategic report and the report of the directors have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the parent company and its environment obtained in the course of the audit, we
have not identified material misstatements in the strategic report or the report of the directors.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
(cid:129) adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not
visited by us; or
(cid:129) the parent company financial statements are not in agreement with the accounting records and returns; or
(cid:129) certain disclosures of directors’ remuneration specified by law are not made; or
(cid:129) we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, set out on pages 10 and 11, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going-concern basis of accounting unless the directors either
intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs(UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities.
K&C REIT plc Annual Report 2017 15
247088 K&C REIT R&A pp01-pp16 20/10/2017 08:58 Page 16
REPORT OF THE INDEPENDENT AUDITOR TO THE
MEMBERS OF K&C REIT PLC (continued)
This description forms part of our auditor’s report.
Paul Fenner, Senior Statutory Auditor
For and on behalf of Moore Stephens LLP
Chartered Accountants and Statutory Auditor
150 Aldersgate Street
London EC1A 4AB
16 October 2017
K&C REIT plc Annual Report 2017 16
247088 K&C REIT R&A pp17-pp24 20/10/2017 09:56 Page 17
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2017
30 June 2017 30 June 2016
Notes £ £
Continuing operations
Revenue 3 514,746 151,417
Cost of sales (110,544) (60,240)
Gross profit 404,202 91,177
Administrative expenses (1,157,098) (513,367)
Revaluation on investment properties 13 116,000 250,000
Operating loss before separately disclosed items (636,896) (172,190)
Separately disclosed administrative items
Gain on bargain purchase 14 – 1,541,829
Share-based payments 20 (392,319) (212,655)
AIM admission costs 5 – (786,578)
Costs of acquisition of subsidiaries 5 – (469,848)
Operating loss (1,029,215) (99,442)
Finance costs 6 (195,361) (73,009)
Finance income 6 5 3,138
Loss before taxation 7 (1,224,571) (169,313)
Taxation 8 – 104,942
Loss for the year (1,224,571) (64,371)
Total comprehensive expense for the year (1,224,571) (64,371)
Loss attributable to owners of the parent (1,224,571) (64,371)
Loss per share expressed in pence per share 9
Basic (2.48) (0.15)
Diluted (2.48) (0.15)
The notes form part of these financial statements.
K&C REIT plc Annual Report 2017 17
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2017
30 June 2017 30 June 2016
Notes £ £
Assets
Non-current assets
Property, plant and equipment 12 1,843 2,730
Investment properties 13 7,242,000 7,126,000
7,243,843 7,128,730
Current assets
Trade and other receivables 15 90,777 24,262
Cash and cash equivalents 16 1,023,752 250,650
1,114,529 274,912
Total assets 8,358,372 7,403,642
Equity
Shareholders’ equity
Share capital 17 877,518 467,856
Share premium 4,660,322 4,120,984
Capital redemption reserve 67,500 67,500
Retained earnings (1,083,179) (250,927)
Total equity 4,522,161 4,405,413
Liabilities
Non-current liabilities
Financial liabilities – borrowings
Interest-bearing loans and borrowings 19 1,560,756 2,690,108
Current liabilities
Trade and other payables 18 194,147 277,960
Financial liabilities – borrowings
Interest-bearing loans and borrowings 19 31,308 30,161
Other loans 19 2,050,000 –
2,275,455 308,121
Total liabilities 3,836,211 2,998,229
Total equity and liabilities 8,358,372 7,403,642
Net asset value per share (pence) 8.57 9.42
The financial statements were approved and authorised for issue by the Board of Directors on 16 October 2017 and were
signed on its behalf by:
James Cane
Director
The notes form part of these financial statements.
K&C REIT plc Annual Report 2017 18
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COMPANY STATEMENT OF FINANCIAL POSITION
30 June 2017
30 June 2017 30 June 2016
Notes £ £
Assets
Non-current assets
Property, plant and equipment 12 1,676 2,430
Investments 14 5,305,000 5,305,000
5,306,676 5,307,430
Current assets
Trade and other receivables 15 27,496 2,756
Cash and cash equivalents 16 989,583 233,494
1,017,079 236,250
Total assets 6,323,755 5,543,680
Equity
Shareholders’ equity
Share capital 17 877,518 467,856
Share premium 4,660,322 4,120,984
Capital redemption reserve 67,500 67,500
Retained earnings (3,292,562) (2,093,849)
Total equity 2,312,778 2,562,491
Liabilities
Non-current liabilities
Financial liabilities – borrowings
Interest-bearing loans and borrowings 19 1,560,756 2,690,108
Current liabilities
Trade and other payables 18 368,913 260,920
Financial liabilities – borrowings
Interest-bearing loans and borrowings 19 31,308 30,161
Other loans 19 2,050,000 –
2,450,221 291,081
Total liabilities 4,010,977 2,981,189
Total equity and liabilities 6,323,755 5,543,680
As permitted by Section 408 of the Companies Act 2006, the income statement of the Company is not presented as part of these
financial statements. The Company’s loss for the financial year was £(1,591,032) (2016 – £(1,978,502)).
The financial statements were approved and authorised for issue by the Board of Directors on 16 October 2017 and were signed
on its behalf by:
James Cane
Director
The notes form part of these financial statements.
K&C REIT plc Annual Report 2017 19
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2017
Capital
Share Share redemption Retained Total
capital premium reserve earnings equity
£ £ £ £ £
Balance at 1 July 2015 7,500 – 67,500 (399,211) (324,211)
Changes in equity
Issue of share capital 460,356 4,120,984 – – 4,581,340
Share-based payments – – – 212,655 212,655
Total comprehensive expense – – – (64,371) (64,371)
Balance at 30 June 2016 467,856 4,120,984 67,500 (250,927) 4,405,413
Changes in equity
Issue of share capital 409,662 539,338 – – 949,000
Share-based payments – – – 392,319 392,319
Total comprehensive expense – – – (1,224,571) (1,224,571)
Balance at 30 June 2017 877,518 4,660,322 67,500 (1,083,179) 4,522,161
The notes form part of these financial statements.
K&C REIT plc Annual Report 2017 20
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COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2017
Capital
Share Share redemption Retained Total
capital premium reserve earnings equity
£ £ £ £ £
Balance at 1 July 2015 7,500 – 67,500 (328,002) (253,002)
Changes in equity
Issue of share capital 460,356 4,120,984 – – 4,581,340
Share-based payments – – – 212,655 212,655
Total comprehensive expense – – – (1,978,502) (1,978,502)
Balance at 30 June 2016 467,856 4,120,984 67,500 (2,093,849) 2,562,491
Changes in equity
Issue of share capital 409,662 539,338 – – 949,000
Share-based payments – – – 392,319 392,319
Total comprehensive expense – – – (1,591,032) (1,591,032)
Balance at 30 June 2017 877,518 4,660,322 67,500 (3,292,562) 2,312,778
The notes form part of these financial statements.
K&C REIT plc Annual Report 2017 21
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CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2017
2017 2016
£ £
Cash flows from operating activities
Cash used in operations (902,338) (1,590,658)
Interest paid (195,361) (73,009)
Net cash used in operating activities (1,097,699) (1,663,667)
Cash flows from investing activities
Purchase of tangible fixed assets – (3,416)
Sale of investment properties – 715,254
Acquisition of subsidiaries – (4,630,000)
Interest received 5 3,138
Net cash generated from/(used in) investing activities 5 (3,915,024)
Cash flows from financing activities
Loan repayments in year (28,204) (874,000)
New loans in year 950,000 2,720,269
Shares issued 949,000 3,981,340
Net cash generated from financing activities 1,870,796 5,827,609
Increase in cash and cash equivalents 773,102 248,918
Cash and cash equivalents at beginning of year 250,650 1,732
Cash and cash equivalents at end of year 1,023,752 250,650
The notes form part of these financial statements.
K&C REIT plc Annual Report 2017 22
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COMPANY STATEMENT OF CASH FLOWS
for the year ended 30 June 2017
2017 2016
£ £
Cash flows from operating activities
Cash used in operations (920,558) (1,594,173)
Interest paid (194,149) (65,271)
Net cash used in operating activities (1,114,707) (1,659,444)
Cash flows from investing activities
Purchase of tangible fixed assets – (3,017)
Purchase of fixed asset investments – (4,630,000)
Sale of investment properties – 236,232
Interest received – 3,086
Net cash generated from/(used in) investing activities – (4,393,699)
Cash flows from financing activities
Loan repayments in year (28,204) (415,000)
New loans in year 950,000 2,720,269
Shares issued 949,000 3,981,340
Net cash generated from financing activities 1,870,796 6,286,609
Increase in cash and cash equivalents 756,089 233,466
Cash and cash equivalents at beginning of year 233,494 28
Cash and cash equivalents at end of year 989,583 233,494
The notes form part of these financial statements.
K&C REIT plc Annual Report 2017 23
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NOTES TO THE STATEMENTS OF CASH FLOWS
for the year ended 30 June 2017
Reconciliation of loss before taxation to cash used in operations
2017 2016
Group £ £
Loss before taxation (1,224,571) (169,313)
Depreciation charges 887 686
Profit on disposal of investment properties – (23,698)
Gain on bargain purchase – (1,541,829)
Revaluation of investment properties (116,000) (250,000)
Share-based payment charge 392,319 212,655
Finance costs 195,361 73,009
Finance income (5) (3,138)
(752,009) (1,701,628)
(Increase)/decrease in trade and other receivables (66,516) 221,708
Decrease in trade and other payables (83,813) (110,738)
Cash used in operations (902,338) (1,590,658)
2017 2016
Company £ £
Loss before taxation (1,591,032) (1,978,502)
Depreciation charges 754 587
Profit on disposal of investment properties – (17,874)
Share-based payment charge 392,319 212,655
Finance costs 194,149 65,271
Finance income – (3,086)
(1,003,810) (1,720,949)
(Increase)/decrease in trade and other receivables (24,741) 228,540
Increase/(decrease) in trade and other payables 107,993 (101,764)
Cash used in operations (920,558) (1,594,173)
The notes form part of these financial statements.
K&C REIT plc Annual Report 2017 24
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NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
1.
Presentation of financial statements
Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board and as adopted by the European Union.
Functional and presentation currency
These consolidated financial statements are presented in Pounds Sterling (‘£’), which is considered by the directors to be the
functional currency of the Group.
New standards and interpretations not yet adopted
As at 30 June 2017, certain standards and interpretations were in issue but not yet adopted by the EU.
The directors do not anticipate that the adoption of these revised standards and interpretations will have a significant impact
on the figures included in the financial statements in the period of initial application other than the following:
IFRS 9 – Financial Instruments
The standard makes substantial changes to the measurement of financial assets and financial liabilities. There will only be three
categories of financial assets whereby financial assets are recognised at either fair value through profit and loss, fair value through
other comprehensive income or measured at amortised cost. On adoption of the standard, the Group will have to re-determine
the classification of its financial assets based on the business model for each category of financial asset. This is not considered
likely to give rise to any significant adjustments other than reclassifications.
The standard is effective for periods beginning on or after 1 January 2018.
IFRS 15 – Revenue from contracts with customers
The standard has been developed to provide a comprehensive set of principles in presenting the nature, amount, timing and
uncertainty of revenue and cash flows arising from a contract with a customer. The standard is based around five steps in
recognising revenue:
1.
2.
Identify the contract with the customer;
Identify the performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price; and
5.
Recognise revenue when a performance obligation is satisfied.
On application of the standard, the disclosures are likely to increase. The standard includes principles on disclosing the nature,
amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, by providing qualitative and
quantitative information.
IFRS 16 – Leases
The standard has been developed to provide information to the users of the financial statements on the lease transactions
undertaken by the entity, in order for them to assess the amount, timing and uncertainty of cash flows arising from leases.
The standard is effective for periods beginning on or after 1 January 2019.
On application of the standard, the company will be required to recognise assets and liabilities for all leases with a term of
more than 12 months, unless the underlying asset is of low value.
K&C REIT plc Annual Report 2017 25
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2017
2. Accounting policies
Basis of preparation
The consolidated financial statements have been prepared on the historical cost basis with the exception of investment
properties that are held at fair value.
Going concern
After preparing detailed forecasts including the raising of new funds, the directors have formed a judgment that, as at the date
of approving the financial statements, there is reasonable expectation that the Group has adequate resources to continue in
operational existence in the foreseeable future.
For this reason, the directors have adopted the going concern basis in preparing the financial statements. The directors believe
that the Company and the Group will be able to meet its liabilities as they fall due.
Basis of consolidation
The financial statements include the financial statements of the Company and its subsidiary undertakings. The subsidiaries
included in the consolidated financial statements, from the effective date of acquisition, are K&C (Newbury) Limited, K&C
(Coleherne) Limited and K&C (Osprey) Limited.
Both K&C (Coleherne) Limited and K&C (Osprey) Limited were acquired in the previous year. Further details are shown in
Note 14.
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which
control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to
obtain benefit from its activities. In assessing control, the Group takes into consideration potential voting rights that currently
are exercisable.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection
with a business combination are expensed as incurred.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are
eliminated in preparing consolidated financial statements.
Investments
Investments in subsidiaries are valued at cost less provision for impairment.
Revenue recognition
Rental income from operating leases is recognised on an accruals basis. Rental income received in advance is recognised in
deferred income.
Revenue of the Group for the year was derived mainly from its principal activity, being the letting to third parties of, and
management of, property assets owned by the Group. This income includes rental income, management fees and sales
commissions.
Also included within income is management fee income derived from the management of property assets owned by third
parties.
K&C REIT plc Annual Report 2017 26
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2. Accounting policies (continued)
Separately disclosed administrative items
Separately disclosed administrative items are those that are deemed to be exceptional by size or nature in relation to the
activities of the Group. In the case of share-based payment charges, these are included because they represent a significant
non-cash item.
Finance costs
Finance costs comprise interest expense on borrowings.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are
recognised in profit or loss using the effective interest method.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation.
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.
Computer equipment
–
25% on cost
Investment properties
Investment properties comprise properties owned by the Group which are held for capital appreciation, rental income or both.
Investment properties are initially measured at cost, including expenditure that is directly attributable to the acquisition of the
asset. Investment properties are revalued on acquisition by independent external valuers and then by the directors or
independent valuers annually thereafter. Acquisitions and disposals are recognised on exchange of contracts. Any gain or loss
arising from a change in fair value is recognised in profit or loss.
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure
will flow to the Group. Ongoing repairs and maintenance are expensed as incurred.
Impairment
i.
Financial assets
A financial asset not classified as at fair value through profit or loss is assessed at each reporting date to determine whether
there is objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as
a result of one or more events that occurred after the initial recognition of the asset, and that event had an impact on the
estimated future cash flows of that asset that can be estimated reliably.
ii.
Financial assets measured at amortised cost
The Group considers evidence of impairment for financial assets measured at amortised cost (loans and receivables) at
both a specific asset and collective level. All individually significant assets are assessed for specific impairment. Those found
not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified.
Assets that are not individually significant are collectively assessed for impairment by grouping together assets with similar
risk characteristics.
K&C REIT plc Annual Report 2017 27
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2017
2. Accounting policies (continued)
In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of recoveries
and the amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit
conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its
carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest
rate. Losses are recognised in profit or loss and reflected in an allowance against loans and receivables. Interest on the
impaired asset continues to be recognised. When an event occurring after the impairment was recognised causes the
amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
iii. Non-financial assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. Goodwill
and indefinite-lived intangible assets are tested annually for impairment or when there is an indication of impairment. An
impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the
current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment
testing, the assets are grouped together into the smallest group of assets that generate cash inflows from continuing use
that are largely independent of the cash inflows of other assets.
Impairment losses are recognised in profit or loss.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss has been recognised.
Financial instruments
i.
Non-derivative financial assets
The Group initially recognises loans and receivables on the date that they are originated. All other financial assets are
recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of
the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers
the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership
of the financial assets are transferred.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position only when the
Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle
the liability simultaneously.
The Group’s non-derivative financial assets comprise loans and receivables.
K&C REIT plc Annual Report 2017 28
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2. Accounting policies (continued)
ii.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market.
Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment
losses.
Loans and receivables comprise trade and other receivables.
iii.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits, and other short-term (three months or less) highly
liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes
in their fair value. These are recorded at fair value.
iv. Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All
other financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.
The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are
recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial
liabilities are measured at amortised cost using the effective interest method.
Other financial liabilities comprise trade and other payables.
v.
Share capital
Ordinary shares are classified as equity. Costs directly attributable to the issue of ordinary shares are recognised as a
deduction from equity.
Taxation
Tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit or loss except to the extent
that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. As a REIT,
the Group is generally not liable to corporation tax.
Deferred tax would be recognised in respect a temporary difference between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is recognised for:
–
–
–
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination
and that affects neither the accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.
K&C REIT plc Annual Report 2017 29
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2017
2. Accounting policies (continued)
Taxation (continued)
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using
tax rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and
they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to
settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it
is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. 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 the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
Share-based payments
The Group allows certain individuals to acquire shares in the parent company. The grant date fair value of share-based payment
awards granted is recognised as an employee expense with a corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The fair value of the options granted is measured using an
option-pricing model, taking into account the terms and conditions upon which the options were granted. The fair value will be
charged as an expense in the income statement over the vesting period and the charge is adjusted each year to reflect the
expected and actual level of vesting. No adjustment is made to the charge after the vesting date.
Critical accounting estimates and judgments
The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income,
and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimates are revised and in any future years affected.
K&C REIT plc Annual Report 2017 30
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2. Accounting policies (continued)
Information about critical estimates and assumptions that have the most significant effect on the amounts recognised in the
consolidated financial statements and/or have a significant risk of resulting in a material adjustment within the next financial year
is as follows:
Investment properties
The Group’s investment properties are valued, on the basis of market value, on acquisition by independent external valuers
and then by the directors or independent valuers annually thereafter. The Group’s investment properties are valued at
£7,242,000.
The directors are of the opinion that the estimates and assumptions that they have used in the valuation of investment properties
are appropriate.
Share-based payments
The total amount to be expensed is determined by reference to the fair value of the options granted. In arriving at the charge
for the period, assumptions are made on the number of option likely to be exercised, the current market value of the shares
and the volatility of the market value of the shares.
Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-
financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the
following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in
the notes specific to that asset or liability.
Investment properties
The fair value of investment properties is based either on independent professional valuations in accordance with the Royal
Institution of Chartered Surveyors’ Appraisal and Valuation Standards 2014 as amended or by the directors, based on market
prices for similar items.
3. Revenue
The Group is involved in UK property ownership, management and letting and is considered to operate in a single geographical
and business segment.
The total revenue of the Group for the year was derived from its principal activities, being the letting to third parties of, and
management of, property assets owned by the Group, and, in certain cases, the management of property assets owned by
third parties.
K&C REIT plc Annual Report 2017 31
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2017
4.
Employees and directors
2017 2016
£ £
Wages and salaries 276,538 264,971
Social security costs 17,431 2,332
Pension costs 599 –
294,568 267,303
The average monthly number of employees during the year was as follows:
2017 2016
Directors and management 7 8
Administration 2 1
9 9
2017 2016
£ £
Directors’ remuneration (as per Report of the Directors) 132,375 23,000
The directors are considered to be key management personnel.
Certain directors and others have also received share options in the Company, further details of which are contained in note
20 of the financial statements
5.
Separately disclosed items
On 3 July 2015, the Group was admitted to AIM. The costs involved totalled £786,578. It is considered that the size and nature
of these costs are such that they should be disclosed on the face of the Consolidated Statement of Comprehensive Income.
On 3 July 2015, the Group acquired K&C (Coleherne) Limited and on 27 May 2016, the Group acquired K&C (Osprey) Limited.
The costs to the Group of acquiring these entities totalled £469,848. It is considered that the size and nature of these costs
are such that they should be disclosed on the face of the Consolidated Statement of Comprehensive Income.
Further information on the gain on bargain purchase and the share-based payments, which are shown on the face of the
Consolidated Statement of Comprehensive Income, can be found in note 14 and note 20 respectively.
K&C REIT plc Annual Report 2017 32
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6.
Finance income and costs
2017 2016
£ £
Finance income:
Deposit account interest 5 3,138
Finance costs:
Loan interest 195,361 73,009
7.
Loss before taxation
The loss before taxation is stated after charging/(crediting):
2017 2016
£ £
Hire of plant and machinery 2,018 1,487
Other operating leases 12,840 2,493
Depreciation – owned assets 887 686
Profit on disposal of investment properties – (23,698)
Auditors’ remuneration for the Group – audit services for parent company 20,000 15,000
– audit services for subsidiaries 15,000 12,500
– taxation advisory services 12,000 5,000
– other non-audit services – 80,000
8. Taxation
Analysis of tax
2017 2016
£ £
Current tax:
UK corporation tax – 2,788
Deferred tax – (107,730)
Total tax – (104,942)
K&C REIT plc Annual Report 2017 33
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2017
8. Taxation (continued)
Factors affecting the tax expense
The tax assessed for the year is higher (2016 – higher) than the standard rate of corporation tax in the UK. The difference is
explained below:
2017 2016
£ £
Loss on ordinary activities before taxation (1,224,571) (169,313)
Loss on ordinary activities multiplied by the standard rate of corporation tax in
the UK of 19.75% (2016 – 20%, 2015 – 20.75%)) (241,853) (33,863)
Effects of:
– Losses not subject to taxation due to REIT status 241,853 36,651
– Reversal of deferred tax on revaluation of properties in subsidiary – (107,730)
Tax credit – (104,942)
9.
Loss per share
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the year.
Fully diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion
of all dilutive potential ordinary shares.
In the opinion of the directors, all of the outstanding share options and warrants are anti-dilutive and, hence, basic and fully
diluted loss per share are the same.
2017
Weighted
average Per-share
number amount
Loss £ of shares pence
Loss attributable to ordinary shareholders (1,224,571) 49,455,237 (2.48)
Effect of dilutive securities – – –
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9.
Loss per share (continued)
2016
Weighted
average Per-share
number amount
Loss £ of shares pence
Loss attributable to ordinary shareholders (64,371) 43,711,358 (0.15)
Effect of dilutive securities – – –
10. Future minimum lease payments receivable
The Group leases residential units within certain of its investment properties under operating leases. The future minimum lease
payments receivable under non-cancellable leases are as follows:
30 June 30 June
2017 2016
£ £
Within one year 13,367 33,769
Between one and five years 84,125 125,558
Total 97,492 159,327
Lease revenue is generated from properties owned by K&C (Coleherne) Limited that are let on short-term tenancy agreements.
11. Leasing agreements
Minimum lease payments, under non-cancellable operating leases, fall due as follows:
30 June 30 June
2017 2016
£ £
Within one year 10,740 12,840
K&C REIT plc Annual Report 2017 35
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2017
12. Property, plant and equipment
Group
Computer
equipment
£
Cost
At 1 July 2016 3,416
At 30 June 2017 3,416
Depreciation
At 1 July 2016 686
Charge for year 887
At 30 June 2017 1,573
Net book value
At 30 June 2017 1,843
At 30 June 2016 2,730
Company
Computer
equipment
£
Cost
At 1 July 2016 3,017
At 30 June 2017 3,017
Depreciation
At 1 July 2016 587
Charge for year 754
At 30 June 2017 1,341
Net book value
At 30 June 2017 1,676
At 30 June 2016 2,430
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13.
Investment properties
Group
Notes Total
£
Cost
At 1 July 2016 7,126,000
Revaluations 116,000
At 30 June 2017 7,242,000
Net book value
At 30 June 2017 7,242,000
At 30 June 2016 7,126,000
The investment properties were procured upon acquisition of subsidiaries.
The properties were valued by professionally qualified independent external valuers at the date of acquisition and were recorded
at the values that were attributed to the properties at acquisition date. In September 2017, certain properties were valued
again by professionally qualified independent external valuers in accordance with the Royal Institution of Chartered Surveyors’
Appraisal and Valuation Standards 2014 as amended, resulting in a revaluation to £6,612,000. The remaining properties were
valued at £630,000 by the directors as at 30 June 2017. The fair values used are considered to be level 3 inputs under IFRS13.
The revenue earned by the Group from its investment properties and all direct operating expenses incurred on its investment
properties are recorded in the Consolidated Statement of Comprehensive Income.
The total rental income in relation to investment properties for the Group equated to £154,903 (2016 – £133,113). The total
rental expenses in relation to investment properties for the Group equated to £53,101 (2016 – £52,673).
14.
Investments
Company
Shares in
Group
undertakings
£
Cost
At 1 July 2016 5,305,000
At 30 June 2017 5,305,000
Net book value
At 30 June 2017 5,305,000
At 30 June 2016 5,305,000
K&C REIT plc Annual Report 2017 37
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2017
14.
Investments (continued)
The Company’s investments comprise the following:
Subsidiaries
K&C (Coleherne) Limited
Registered office: UK
Nature of business: Property letting
Class of shares:
Ordinary
K&C (Osprey) Limited
Registered office: UK
%
holding
100.00
Nature of business: Property letting and property management
Class of shares:
Ordinary
K&C (Newbury) Limited
Registered office: UK
%
holding
100.00
Nature of business: Property letting (the company currently owns no property assets), dormant
Class of shares:
Ordinary
%
holding
100.00
KCR Residential REIT Limited previously known as Newton Horner Property Limited (subsidiary of K&C (Osprey) Limited)
Nature of business: Dormant
Class of shares:
Ordinary
%
holding
100.00
K&C REIT plc Annual Report 2017 38
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14.
Investments (continued)
Acquisition of K&C (Coleherne) Limited
On 3 July 2015, the Company acquired the entire issued share capital of K&C (Coleherne) Limited (formerly Silcott Properties
Limited) for £3,630,000, satisfied by cash of £3,330,000 and the issuance of ordinary shares to the value of £300,000. In the
director’s opinion, the net assets of K&C (Coleherne) Limited, consisting solely of an investment property in London that was
independently valued on 22 July 2015 at £4 million, were worth in excess of the amount paid and hence gave rise to negative
goodwill.
Net assets acquired were as follows:
£
Investment property 4,000,000
Trade and other receivables 366,118
Cash and cash equivalents 8,339
Trade and other payables (10,767)
Financial liabilities – borrowings (489,200)
Taxation payable (9,944)
Net assets 3,864,546
Gain on bargain purchase – taken to Statement of Comprehensive Income (364,784)
Total Consideration (includes deduction of £130,238 loan repayment) 3,499,762
Satisfied by cash 3,199,762
Net cash outflow arising on acquisition:
Cash consideration (3,199,762)
Bank and cash balances acquired 8,339
(3,191,423)
K&C REIT plc Annual Report 2017 39
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2017
14.
Investments (continued)
Acquisition of K&C (Osprey) Limited
On 27 May 2016, the Company acquired the entire issued share capital of K&C (Osprey) Limited (formerly The Osprey
Management Company Limited) satisfied by cash of £1,300,000 and the issuance of ordinary shares to the value of £300,000.
In the director’s opinion, the net assets of K&C (Osprey) Limited, consisting of various developments in England that have been
valued (independently or by the directors) at £2,876,000, were worth in excess of the amount paid and hence gave rise to
negative goodwill.
Net assets acquired were as follows:
£
Investment property 2,876,000
Non-current assets – Equipment 311
Investment in subsidiary 1
Trade and other receivables 25,615
Cash and cash equivalents 19,526
Trade and other payables (36,678)
Provisions (80)
Net assets 2,884,695
Fair value adjustment to deferred taxation (107,650)
Gain on bargain purchase – taken to Statement of Comprehensive Income (1,177,045)
Total consideration 1,600,000
Satisfied by cash 1,300,000
Net cash outflow arising on acquisition:
Cash consideration (1,300,000)
Bank and cash balances acquired 19,526
(1,280,474)
15. Trade and other receivables
Group
Company
2017 2016 2017 2016
£ £ £ £
Trade debtors 960 – – –
Other debtors 63,334 16,976 5,918 –
VAT 427 – – –
Prepayments 26,056 7,286 21,578 2,756
90,777 24,262 27,496 2,756
The Group and Company’s exposure to credit risk is disclosed in Note 21.
There is no material difference between the fair value of trade and other receivables and their book value.
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16. Cash and cash equivalents
Group
Company
2017 2016 2017 2016
£ £ £ £
Cash in hand 40 300 – –
Bank accounts 1,023,712 250,350 989,583 233,494
1,023,752 250,650 989,583 233,494
17. Share capital
Allotted, issued and fully paid:
Number:
52,751,813
35,000,000
30 June 30 June
Class: Nominal 2017 2016
value: £ £
Ordinary £0.01 527,518 467,856
Restricted preference £0.01 350,000 –
877,518 467,856
At 1 July 2016, the Company had 46,785,623 Ordinary shares of £0.01 in issue.
On 23 December 2016, the Company issued 2,500,000 Ordinary shares of £0.01 each. The shares were issued at a premium
of £0.09 per share.
Between 6 January and 30 January 2017, the Company issued 2,750,000 Ordinary shares of £0.01 each. The shares were issued
at a premium of £0.09 per share.
Between 22 February and 1 March 2017, the Company issued 716,190 Ordinary shares of £0.01 each, 240,000 of which were
issued as payment for professional services by Peterhouse Corporate Finance. 476,190 of the shares were issued at a premium
of £0.095 per share and 240,000 of the shares were issued at a premium of £0.09 per share.
Between 22 February and 1 March 2017, the Company issued 16,400,000 Restricted Preference shares of £0.01 each at par.
On 26 April 2017, the Company issued 18,600,000 Restricted Preference shares of £0.01 each at par.
The restricted preference shares carry no voting or dividend rights.
On a winding up or a return of capital, the holders of the preference shares shall rank pari passu with the holders of the
Ordinary shares save that, on a distribution of assets, the amount to be paid to the holder shall be limited to the nominal capital
paid up or credited as paid up.
K&C REIT plc Annual Report 2017 41
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2017
18. Trade and other payables
Group
Company
2017 2016 2017 2016
£ £ £ £
Trade creditors 76,006 185,287 74,770 184,593
Amounts owed to group undertakings – – 224,640 –
Other taxes and social security 10,138 9,040 9,898 3,432
Other creditors 16,756 16,205 – 30,156
Accruals and deferred income 91,247 67,428 59,605 42,739
194,147 277,960 368,913 260,920
The Group’s and Company’s exposure to liquidity risk related to trade and other payables is disclosed in Note 21.
There is no material difference between the fair value of trade and other payables and their book value.
Amounts owed to group undertakings are repayable on demand.
19. Financial liabilities – borrowings
Group
Company
2017 2016 2017 2016
£ £ £ £
Current:
Bank loans 31,308 30,161 31,308 30,161
Other loans 2,050,000 – 2,050,000 –
2,081,308 30,161 2,081,308 30,161
Non-current:
Bank loans 1,560,756 1,590,108 1,560,756 1,590,108
Other loans – 1,100,000 – 1,100,000
1,560,756 2,690,108 1,560,756 2,690,108
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19. Financial liabilities – borrowings (continued)
Terms and debt repayment schedule
Group
1 year or More than
less 1-2 years 2-5 years 5 years Totals
£ £ £ £ £
Bank loans 90,336 90,336 271,008 2,052,387 2,504,067
Other loans 2,050,000 – – – 2,050,000
2,140,336 90,336 271,008 2,052,387 4,554,067
Company
1 year or More than
less 1-2 years 2-5 years 5 years Totals
£ £ £ £ £
Bank loans 90,336 90,336 271,008 2,052,387 2,504,067
Other loans 2,050,000 – – – 2,050,000
2,140,336 90,336 271,008 2,052,387 4,554,067
Details of the principal loans are as follows:
1) A 25-year bank loan of £1,592,064 (2016 – £1,620,269) repayable by 300 monthly instalments of £7,528 and a final
instalment of £418,811. All the payments itemised above include both capital repayments and interest at 3.25% above
Base Rate. The loan is secured by a first debenture over all assets and undertakings of the Company, a cross guarantee
from K&C (Coleherne) Limited over the freehold property known as 25 Coleherne Road and a debenture over the assets
and undertakings of K&C (Coleherne) Limited. The loan is also secured by a pledge of shares of K&C (Coleherne) Limited.
2) A loan of £1,100,000, commencing on 27 May 2016, which is repayable in full no later than 27 May 2018 and is secured
on the assets of the Company and the assets of K&C (Osprey) Limited. Interest is charged at 12% per annum and is
payable quarterly in arrears.
3) A loan of £950,000 was received on 29 June 2017, with no payment terms or interest. Following the year-end, these loans
were reclassified as convertible loan notes. These loan notes attract interest at a rate of 6% per annum, payable quarterly,
and will be redeemed on 30 June 2020.
K&C REIT plc Annual Report 2017 43
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2017
20. Share-based payment transactions
During the year ended 30 June 2017, the Company had several share-based payment arrangements in place, which are described
below:
Executive Non-executive Restricted White
share share preference Amba share Founder Allenby
options options shares options warrants warrants Warrants
Outstanding at 30 June 2016 3,000,000 144,493 – – 750,000 437,856 1,500,000
Granted during the year – 460,000 35,000,000 10,000,000 – – –
Forfeited during the year (3,000,000) (144,493) – – – – –
Outstanding at 30 June 2017 – 460,000 35,000,000 10,000,000 750,000 437,856 1,500,000
Executive share options:
Following the passing of the resolution to issue restricted preference shares at the General Meeting on 20 February 2017 and
the subscription by the existing executives for preference shares in February and April 2017, the Executive Option Arrangements
were cancelled.
Non-executive share options:
Non-executive share options were granted to certain non-executive directors and others on admission to trading on AIM, or
subsequently, at £0.10 per share. There are no vesting conditions. The non-executive share options do not have any performance
criteria attached to them and may be exercised at any time during the period commencing one year from the date of admission
to trading on AIM and ending on the date immediately preceding the date of the tenth anniversary of the date of admission to
trading on AIM.
Restricted preference shares:
Restricted preference shares have been granted to certain directors and other senior managers on 2 February 2017 and
24 April 2017. Upon the achievement by the Group of certain milestones, the restricted preference shares may be converted
into ordinary shares at £0.01 each.
White Amba share options:
Share options have been granted to a company owned by a director of K&C REIT plc, to acquire 10,000,000 restricted
preference shares at £0.01 per share. The share options do not have any performance criteria attached to them and may be
exercised at any time from the date of grant to 30 June 2018.
Founder warrants
On 8 September 2014, 750,000 warrants were issued to shareholders to subscribe for one ordinary share at £0.10 per share
at any time before 31 December 2018.
Allenby warrants
On admission to trading on AIM, the Company granted to Allenby Capital Limited a warrant to acquire 437,856 ordinary shares
at £0.10 per share, within five years of admission, namely by 3 July 2020.
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20. Share-based payment transactions (continued)
Warrants
On 24 May 2016, 1,500,000 warrants were issued to several potential lenders to the Company to subscribe for one ordinary
share at £0.10 per share at any time before 24 May 2021.
The estimated fair value of each share option granted is as follows:
Executive Non-executive Restricted White
share share preference Amba share Founder Allenby
options options shares options warrants warrants Warrants
Fair value of share 0.0340 – 0.0691 –
option/warrant (£) 0.0907 0.0385 0.0787 0.0767 0.0318 0.0340 0.013
The fair values were estimated using the Black-Scholes valuation model. The following table lists the inputs to the model used:
Executive Non-executive Restricted White
share share preference Amba share Founder Allenby
options options shares options warrants warrants Warrants
Share price at grant date (£) 0.10 0.10 0.08-0.09 0.09 0.10 0.10 0.07
Exercise price (£) 0.01 0.10 0.01 0.01 0.10 0.10 0.10
Dividend yield (%) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Expected volatility (%) 50.00 50.00 – 51.69 63.79 61.75 50.00 50.00 43.21
Risk-free interest rate (%) 0.950 0.535 0.88 0.88 0.535 0.535 0.27
Expected life of share
options/warrants (years) 5.00 2.00 – 3.00 5.3 1.33 2.60 3.00 3.00
The expected lives of the share options and warrants are based on historical data and current expectations and are not
indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility of
comparator companies over the period similar to the life of the share options is indicative of future trends, which may not
necessarily be the actual outcome.
The expense recognised during the year is shown in the following table:
30 June 30 June
2017 2016
£ £
Expense arising from share options 198,482 155,065
Expenses arising from restricted preference shares 193,837 –
Expense arising from warrants – 57,590
Total expense from share-based payments 392,319 212,655
K&C REIT plc Annual Report 2017 45
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2017
20. Share-based payment transactions (continued)
The directors’ interests in Executive share options were as follows:
Balance at Exercised or Balance at
30 June 2016 forfeited 30 June 2017
No. No. No.
James Cane 180,000 (180,000) –
Timothy James 810,000 (810,000) –
Oliver Vaughan 810,000 (810,000) –
1,200,000 Executive share options were in issue to other staff members at the beginning of the year and were cancelled during
the year.
The interests of directors and past directors in Non-Executive share options are as follows:
Balance at Granted on Forfeited Balance at
30 June 2016 11 July 2016 in the year 30 June 2017
No. No. No. No.
Michael Davies – – – –
Patricia Farley 144,493 – (144,493) –
George Rolls – 460,000 – 460,000
There have been no changes to the director’s interest in Non-executive share options since the year-end.
The directors’ interests in Restricted Preference shares at the year-end can be seen in Note 22 to the financial statements.
The interest of directors in Founder Warrants at 30 June 2017 were as follows:
No.
Michael Davies –
Dominic White –
Timothy James 175,000
James Cane 10,000
Oliver Vaughan 175,000
There have been no changes to the directors’ interests in Founder Warrants since the year-end.
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21. Financial risk management
The Company’s directors have overall responsibility for the establishment and oversight of the Group’s risk management
framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate
risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed
regularly to reflect the changes in market conditions and the Group’s activities. The Group, through its training and management
standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand
their roles and obligations.
The Group has exposure to the following risks arising from financial instruments:
–
–
credit risk
liquidity risk
– market risk
Capital risk management
The Group and Company’s objective when managing capital is to safeguard its accumulated capital in order to provide an
adequate return to shareholders by maintaining a sufficient level of funds, in order to support continued operations.
The Group considers its capital to comprise equity capital less accumulated losses.
The share premium reserve includes premiums received on the issue of share capital during the year.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations.
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and
customers.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk is as
reported in the statement of financial position.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group’s reputation.
The contractual maturities of financial liabilities are disclosed in Note 19.
K&C REIT plc Annual Report 2017 47
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2017
21. Financial risk management (continued)
Market risk
Market risk is the risk that changes in market prices, such as interest rates and equity prices, will affect the Group and the
Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage
and control market risk exposure within acceptable parameters, while optimising the return.
Sensitivity
Interest rate sensitivity:
At 30 June 2017, if interest rates had been 0.5 percentage points higher and all other variables were held constant, it is estimated
that the Group’s loss before tax would increase to £1,238,246 (2016 – £570,735). This is attributable to the Group’s exposure
on its borrowings and is based on the change taking place at the beginning of the financial year and held constant throughout
the reporting period.
22. Related parties
During the previous year, the Group repaid a loan totalling £215,000 which was received from Christopher James, a director,
in the previous period. The loan was subject to an interest charge for the period from receipt to redemption of 17.5% of the
principal amount, payable in full at the earlier of admission to AIM or 31 July 2016. The loan was repaid by converting the loan
into ordinary shares of the Company at par. Following admission to AIM on 3 July 2015, gross interest of £37,625 was paid to
Mr James.
During the previous year, the Group repaid a loan totalling £125,000 which was received from Oliver Vaughan, a director, in the
previous period. The loan was subject to an interest charge for the period from receipt to redemption of 17.5% of the principal
amount, payable in full at the earlier of admission to AIM or 31 July 2016. The loan was repaid in full during the year. Gross
interest of £23,523 was paid to Mr Vaughan.
During the year, fees of £50,000 plus VAT were paid to White Amba Limited, a company controlled by the director, Dominic
White.
At the balance sheet date, current liabilities included £100,000 received from a director, Timothy James, and his wife. These
monies were reclassified into convertible loan notes after the balance sheet date.
During the year, the Group paid (i) Perry, Cane, a consultancy business owned by James Cane, fees of £25,000 excluding VAT,
(ii) CD James (Property Consultants) Limited, a company owned by Christopher James, fees of £26,000 and (iii) DGS Capital
Partners LLP, an LLP in which Michael Davies is a member, fees of £38,000 excluding VAT.
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22. Related parties (continued)
At the balance sheet date, the following directors held restricted preference shares:
Restricted Preference
Shares
Name No.
Dominic White 5,000,000
Timothy James 9,600,000
James Cane 300,000
Oliver Vaughan 8,100,000
Included in the total of Mr Vaughan’s holdings above are 665,000 shares and 165,000 warrants held in the name of Grosmont
Investments Limited, a company that he controls.
Included in the total of Mr White’s holdings above are 5,000,000 restricted preference shares held in the name of White Amba
Limited, a company that he controls.
Since the year-end, the holdings of directors have remained unchanged.
23. Post balance sheet events
On 7 July 2017, monies disclosed as Other loans of £950,000 at the balance sheet date were reclassified to convertible loan
notes when the Company issued £1,350,000 6% convertible loan notes.
Post year-end, the Group purchased three properties for £935,000, excluding costs, within its freehold development at Heathside,
London, using part of the proceeds from the issuance of the convertible loan notes.
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