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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Eatonfield | LSE:EFD | London | Ordinary Share | GB00B1FQDQ64 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.20 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMEFD
RNS Number : 5689Y
Eatonfield Group plc
23 December 2010
24 December 2010
Eatonfield Group plc
("Eatonfield", "the Company" or "the Group")
Final Results for the year ended 30 June 2010
Eatonfield Group plc announces its final results for the year ended 30 June 2010.
Summary
-- Loss for the year: GBP13,812,005 (2009: Loss GBP4,352,555)
-- Net bank debt: GBP26,751,873 (2009: GBP28,679,317)
-- Negotiations continue for the structured disposal of a large part of the Group's residential land portfolio and agreement of follow-on house building contracts
-- Audit report disclaimer of opinion and going concern uncertainty covered in notes 2 and 3 of this announcement
Commenting on the results, Brian Corfe, Executive Chairman of the Group, said:
"Fundamental to the Group's ability to continue as a going concern is the finalisation of negotiations with the potential purchaser of the Welsh Sites, the agreement of the related follow-on house building contract as well as similar arrangements next year for the Corus and Birkwood sites, the likely equity fundraising required and the continuing support of the Group's banks. Whilst the Board acknowledges the ongoing challenges facing Eatonfield, we will continue to work very hard to secure a meaningful future for the Group."
For further information, please contact:
Eatonfield Group plc Tel: +44 (0)1829 261 910 Brian Corfe (Executive Chairman) Rob Lloyd (Group Chief Executive) Duncan Syers (Group Finance Director) Evolution Securities Tel: +44 (0)113 243 1619 Joanne Lake / Peter Steel Tel: +44 (0)203 137 1904 Optiva Securities Limited Jeremy King Threadneedle Communications Tel: +44 (0)207 653 9850 Graham Herring / John Coles
Chairman's statement
Introduction
It has been a very challenging year. Conditions in our core markets have remained problematic and the recent public sector spending cuts have contributed further to the uncertain outlook. Added to these difficulties, the Group has been under substantial cash flow pressure throughout.
The board announced on 20 December 2010 that the Group's existing financial resources will provide it with sufficient working capital funding until late January 2011. This was on the basis that the Group continues to defer payment of amounts due to certain of its senior lenders and trade creditors to a later date and that these creditors do not demand payment in the meantime. The ability of the Group to continue as a going concern beyond this date is dependent upon the continuing support of the Group's banks, the likely requirement to raise further equity funding within the next few months and the successful sale of certain of its land assets (all as previously announced) as well as agreement of related house building contracts.
Despite the aforementioned difficulties, the board and all of Eatonfield's employees remain focussed on seeking to stabilise the Company's financial position and securing its long-term commercial viability. To this extent, we can report that we are in negotiations for a structured disposal of seven sites from the Group's Welsh land portfolio ("the Welsh Sites"), the proceeds of which would be used to reduce the associated bank loans advanced to fund the Group's initial purchase of the Welsh Sites. As part of the arrangements for the proposed disposal, we are seeking to agree for the Group to be engaged as contractor to build over 200 houses on behalf of the purchaser of the Welsh Sites. We are also in early stage discussions to agree similar disposals and follow-on house building contracts for the Group's Corus site in Workington, Cumbria and its Birkwood site near Glasgow. All of these transactions would require the consent of Eatonfield's senior lenders. Initial discussions have also taken place with the Group's Joint Broker, Optiva Securities Limited, with a view to raising further equity funding. We will update shareholders on developments in each of these areas as appropriate.
Financial results
The loss for the year amounted to GBP13,812,005 (2009: GBP4,352,555); net bank debt at the year end amounted to GBP26,751,873 (2009: GBP28,679 317).
Overview
Despite the significant cuts made to the overhead and cost base in the spring of 2009, cash management was the key focus during the year. This has included raising additional equity, which has been vital to providing much needed working capital.
The placings undertaken in November 2009 and (on a much smaller scale) June 2010 raised, net of expenses, a total of just under GBP7.2 million. Access to further equity funding was provided through the agreement of an Equity Drawdown Facility with Jenard Properties Limited ("Jenard"), a company with whom the Group has enjoyed a close trading relationship in recent years. This facility was established in March 2010 and, by the end of the year, the Group had drawn down GBP900,000 of the facility to provide further working capital funding.
The support of both existing and new shareholders of the various equity fundraisings undertaken during the year is much appreciated by the board.
Aside from the focus on cash management, the Group's principle trading subsidiary, Eatonfield Developments Limited, built residential property under contract for two Housing Associations in South Wales. This work realised some encouraging gross returns and, because of standard monthly valuations, it has been cash efficient. The Group also undertook house building under contract for Jenard, which was also self-funded by monthly valuations.
Apart from these activities, the Group also sold 11 of the 22 completed flats on its development in Buckley, North Wales and its entire portfolio of completed apartments at Heathwood Road in Cardiff, South Wales. This realised a total value of approximately GBP2.6 million, which was used to repay the associated debt.
In addition to the building related activity undertaken during the year, we have continued to make efforts to identify ways of realising the value tied up in the Group's land and property portfolio, to enable the Company to repay the associated loans and interest. As described above, we are in negotiations to agree the structured disposal of the Welsh Sites and there is a possibility of a similarly structured sale of the land at the Group's Corus and Birkwood sites. The board believes that the follow-on house building contracts that the Group is seeking to agree as part of these arrangements would in the future provide Eatonfield with a more stable less volatile source of revenue and cash.
Board changes
I would like to thank my predecessor, Paul Williams, who stepped down as the Group's Executive Chairman during the year, for his contribution to the Group during a very difficult period in its history. I was appointed to the role of Executive Chairman on 1 June 2010. On the same day, Duncan Syers was appointed as Group Finance Director.
Eatonfield remains in a position where it has no non-executive directors. The board intends to initiate the process of recruiting one or more new non-executive directors once the Group's financial position has been stabilised and there is sufficient headroom to bear the associated costs.
Going concern and disclaimer of audit opinion
The following is an extract from the audit report of Baker Tilly UK Audit LLP ("Baker Tilly") in relation to the Group's financial statements for the year ended 30 June 2010:
"Opinion: disclaimer on view given by the financial statements
In forming our opinion on the financial statements, we have considered the adequacy of the disclosures made in the accounting policies to the financial statements concerning the following matters:
-- The successful outcome of the group negotiating an extension of its current facilities with certain of its banks;
-- The renewal of the group's facility with The Royal Bank of Scotland plc is dependent on the group securing the sale of certain of the group's land bank and agreement from the other banks that they are willing to consent for The Royal Bank of Scotland plc to obtain a floating charge over all the group's assets;
-- The renewal of the group's facility with Allied Irish Bank plc on similar lines to the one to be agreed with The Royal Bank of Scotland plc;
-- The uncertainty as to the ability of the company being able to obtain further equity investment to ensure adequacy of working capital.
The disclosures indicate the existence of material uncertainties which may cast significant doubt on the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern. Because of the potential significance, to the financial statements, of the combined effect of the four matters referred to in the paragraph above, we are unable to form an opinion as to whether:
-- 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 June 2010 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006."
The full text of Baker Tilly's audit report and the going concern accounting policies note to the financial statements has been reproduced in notes 2 and 3 respectively of this announcement.
Related party transactions and transactions with Directors
Details of related party transactions and transactions with Directors entered into during the year have been provided in notes 6 and 7 respectively to this announcement.
The future
Fundamental to the Group's ability to continue as a going concern is the finalisation of negotiations with the potential purchaser of the Welsh Sites, the agreement of the related follow-on house building contract as well as similar arrangements next year for the Corus and Birkwood sites, the likely equity fundraising required and the continuing support of the Group's banks. Whilst the Board acknowledges the ongoing challenges facing Eatonfield, we will continue to work very hard to secure a meaningful future for the Group.
Lastly, earlier in my statement the Board offered its thanks to the Company's shareholders for their ongoing support. I would like to take this opportunity to also thank the Group's banks for their continued cooperation and my fellow Directors and employees for their continued hard work in the face of considerable pressure and uncertainty.
Brian Corfe
Chairman
23 December 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2010
Hot Features
Premium
2010 2009
Notes GBP GBP
Revenue 5,710,359 8,455,643
Direct costs (6,857,461) (9,131,019)
Foreseeable losses on inventory
and asset held for sale (8,538,421) (3,800,237)
--------------- ---------------
Trading loss (9,685,523) (4,475,613)
Investment property revaluation
gain - 4,377,343
Administration expenses (2,872,461) (2,805,966)
--------------- ---------------
Loss from operations (12,557,984) (2,904,236)
Loss on disposal of plant and
equipment - (20,436)
Share of result from joint
venture (828,308) (55,185)
Other operating income 18,532 10,621
Finance income 754 51,009
Finance costs (2,067,993) (1,370,666)
Profit share relinquishment - (1,400,000)
--------------- ---------------
Loss before taxation (15,434,999) (5,688,893)
Income tax credit 1,622,994 1,336,338
--------------- ---------------
Total comprehensive Loss for the
year (13,812,005) (4,352,555)
--------------- ---------------
Loss for the year attributable
to:
Owners of the parent company (12,723,005) (4,352,555)
Non-controlling interests (1,089,000) -
--------------- ---------------
Loss attributable to equity
holders of the parent company (13,812,005) (4,352,555)
--------------- ---------------
Loss per share - basic (p) 5 (7.63) (18.87)
Loss per share - diluted (p) 5 (7.63) (18.87)
--------------- ---------------
The results for the period are derived from continuing activities.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2010
2010 2009
GBP GBP
Assets
Non--current assets
Investment properties - 22,306,626
Property, plant and equipment 41,485 57,186
Investment in joint ventures:
Share in joint venture (1,043,658) (215,349)
Deferred taxation - 1,356,880
--------------- ---------------
(1,002,173) 23,505,343
Current assets
Inventories 15,271,890 19,307,394
Assets held for resale 19,931,493 976,154
Income taxation recoverable 15,000 104,005
Trade and other receivables 6,764,511 5,103,810
Cash and cash equivalents 1,393,481 1,815,376
--------------- ---------------
43,376,375 27,306,739
--------------- ---------------
Total assets 42,374,202 50,812,082
--------------- ---------------
Equity and liabilities
Equity
Issued capital 5,635,700 2,306,478
Share premium 15,627,669 8,218,939
Merger reserve (1,499,000) (1,499,000)
Share--based payment reserve 1,103,590 -
Retained earnings (9,385,853) 3,337,152
--------------- ---------------
Total equity attributable to equity
holders of the parent 11,482,106 12,363,569
Non controlling interests (1,089,000) -
--------------- ---------------
Total equity 10,393,106 12,363,569
Non--current liabilities
Deferred taxation - 3,068,879
Obligations under finance leases - 25,790
Financial liabilities - 1,123,570
Other liabilities - 400,000
--------------- ---------------
- 4,618,239
--------------- ---------------
Current liabilities
Financial liabilities 28,139,933 29,361,049
Trade and other payables 3,815,373 4,453,025
Obligations under finance leases 25,790 16,200
--------------- ---------------
31,981,096 33,830,274
--------------- ---------------
Total liabilities 31,981,096 38,448,513
--------------- ---------------
Total equity and liabilities 42,374,202 50,812,082
--------------- ---------------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2010
2010 2009
GBP GBP
Loss before taxation (15,434,999) (5,688,893)
Net finance costs 2,067,240 2,719,657
Loss on disposal of property, plant and
equipment - 20,436
Share of joint venture operating result 828,308 55,185
Share--based compensation 35,000 (15,859)
Depreciation and permanent diminution in
value 16,519 42,563
Investment property revaluation gains - (4,377,343)
Decrease in inventories and assets for
resale 7,492,773 8,179,553
(Increase) / decrease in trade and other
receivables (1,660,701) 953,774
Increase / (decrease) in trade and other
payables 2,030,382 (250,439)
--------------- ---------------
Net cash (used in) / generated from
operations (4,625,478) 1,638,634
Income taxation - 1,004,067
--------------- ---------------
Cash (used in) / generated from operating
activities (4,625,478) 2,642,701
--------------- ---------------
Investing activities
Increase in investment properties (105,982) (439,657)
Acquisition of property, plant and
equipment (818) -
Proceeds from the disposal of plant and
equipment - 65,217
Finance income received 754 51,009
--------------- ---------------
Cash used in investing activities (106,046) (323,431)
--------------- ---------------
Financing
Net proceeds from issue of ordinary
shares 7,935,501 -
Net movement in short term borrowings (1,221,116) 12,621,048
Net movement in long term borrowings (1,123,570) (13,786,349)
Finance costs paid (1,264,986) (1,058,377)
Repayment of finance leases (16,200) (14,913)
--------------- ---------------
Cash generated from / (used in) financing
activities 4,309,629 (2,238,591)
--------------- ---------------
(Decrease) / increase in cash and cash
equivalents (421,895) 80,679
Opening cash and cash equivalents 1,815,376 1,734,697
--------------- ---------------
Closing cash and cash equivalents 1,393,481 1,815,376
--------------- ---------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2010
Issued Share Merger Share--based Retained Non controlling Total
capital premium reserve compensation earnings interests equity
GBP GBP GBP GBP GBP GBP GBP
Balance at 1
July 2008 2,306,478 8,218,939 (1,499,000) 15,859 7,689,707 - 16,731,983
Loss for the
year - - - - (4,352,555) - (4,352,555)
Share based
compensation - - - (15,859) - - (15,859)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
Balance as at
30 June
2009 2,306,478 8,218,939 (1,499,000) - 3,337,152 - 12,363,569
Loss for the
year - - - - (12,723,005) (1,089,000) (13,812,005)
Issue of
shares 3,329,222 7,735,280 - - - - 11,064,502
Share based
compensation - (326,550) - 1,103,590 - - 777,040
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
Balance at 30
June 2010 5,635,700 15,627,669 (1,499,000) 1,103,590 (9,385,853) (1,089,000) 10,393,106
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
Issued capital
The issued capital account includes the par value for all shares issued.
Share premium account
This comprises the premium over nominal value on issued shares. The use of this reserve is restricted by the Companies Act 2006.
Merger reserve
The Group reconstruction before flotation in 2006 was accounted for in accordance with the principles of merger accounting.
Share-based compensation
This reflects the accumulated cost to the Company of granting options and share warrants that have not yet vested or awaiting exercise
.
Retained earnings
Retained earnings represent the loss generated by the Group since trading commenced.
Non controlling interest
The non controlling interests represent the value of the subsidiary owned outside the Group.
Total Equity
This is the equity attributable to the members of the parent.
1. GENERAL INFORMATION
The financial information contained in this announcement does not constitute full accounts within the meaning of section 434 of the Companies Act 2006 but is derived from accounts for the years ended 30 June 2010 and 30 June 2009. These figures are audited. The preliminary announcement is prepared on the same basis as set out in the statutory accounts for the year ended 30 June 2010. The auditors have disclaimed their opinion highlighting the existence of multiple material uncertainties that casts doubt on the company's and group's ability to continue as a going concern. Further information is disclosed in the going concern paragraph below.
Statutory accounts for the year ended 30 June 2009 have been filed with the Registrar of Companies. The Auditors reported on those accounts; their report was unqualified, and did not contain a statement under Section 498 (2) or 498 (3) of the Companies Act 2006 but did draw attention to matters by way of emphasis without qualifying their report.
While the financial information included in this announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), this announcement does not in itself contain sufficient information to comply with IFRSs.
Eatonfield Group plc is incorporated and domiciled in the United Kingdom. The consolidated financial information of Eatonfield Group plc set out in this announcement is presented in Pounds Sterling (GBP), which is also the functional currency of the parent. The consolidated financial information has been approved for issue by the Board of Directors on 23 December 2010.
2. AUDIT REPORT
The following is the full text of Baker Tilly's audit report in relation to the Group's financial statements for the year ended 30 June 2010:
"We have audited the group and parent company financial statements ("the financial statements") which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Parent Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and the related notes. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
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.
Respective responsibilities of directors and auditors
As more fully explained in the Directors' Responsibilities Statement the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/UKNP.
Opinion: disclaimer on view given by the financial statements
In forming our opinion on the financial statements, we have considered the adequacy of the disclosures made in the accounting policies to the financial statements concerning the following matters:
-- The successful outcome of the group negotiating an extension of its current facilities with certain of its banks;
-- The renewal of the group's facility with The Royal Bank of Scotland plc is dependent on the group securing the sale of certain of the group's land bank and agreement from the other banks that they are willing to consent for The Royal Bank of Scotland plc to obtain a floating charge over all the group's assets;
-- The renewal of the group's facility with Allied Irish Bank plc on similar lines to the one to be agreed with The Royal Bank of Scotland plc;
-- The uncertainty as to the ability of the company being able to obtain further equity investment to ensure adequacy of working capital.
The disclosures indicate the existence of material uncertainties which may cast significant doubt on the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern. Because of the potential significance, to the financial statements, of the combined effect of the four matters referred to in the paragraph above, we are unable to form an opinion as to whether:
-- 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 June 2010 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-- 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 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
GRAHAM BOND FCA (Senior Statutory Auditor)
For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor
Chartered Accountants
3 Hardman Street
Manchester
M3 3HF
23 December 2010"
3. GOING CONCERN
The following is the full text of the Going Concern disclosure included within the Accounting policies note to the Group's financial statements for the year ended 30 June 2010:
"These accounts have been prepared on a going concern basis. The ability of the Group to continue as a going concern is dependent upon a number of factors including the continuing support of its banks, the likely raising of further equity in the short term and the success of the land sales and related build contracts which are reflected on in more detail within the body of the Chairman's Statement.
The directors are satisfied that the Group is a going concern based on the reasoning given in their Report to these financial statements and with due consideration having been given to the following.
Certain of the Group's banking facilities fell due for renewal on 30 September 2010. The Directors remain in constructive discussions with the Group's lenders and by way of the following reflect on the current position.
1 The Royal Bank of Scotland (RBS) has agreed in principle to grant a new GBP8.7 million three year facility (to 31 December 2013) with capital and interest repayments in respect there of coinciding with the land sale receipts from the disposal of the Group's seven Welsh land sites. In addition, the RBS has agreed that the balance of monies owed is to be repaid upon the disposal of the associated asset at any time up to 31 December 2013.
The formal granting of this new facility is expected to occur when the land sale contracts have been exchanged and after the Group is in receipt of formal confirmation from all the other Banks that they are willing to consent to the RBS taking a floating charge over all Group assets.
2 At this time detailed discussions continue with the Allied Irish Bank (AIB). The AIB has agreed in principle to extend the current GBP9.5 million facility until 28 February 2011 to give it and the Group time to agree a new term facility on similar lines (in terms of land sale receipts - in respect of the Corus, Workington and Birkwood, Lesmahagow sites - being used to fund capital and interest repayments) as the one agreed with the RBS. The Board is confident this can be achieved.
The new facility is also expected to include agreement for the repayment of the balance of monies owed upon the disposal of the associated assets. Being Driffield, Sheffield and Pen Y Bont, Mold. The Group is currently in discussions with parties interested in acquiring these two developments.
3 The Co-operative Bank has indicated that it would be prepared to extend the expiry date of the GBP4.5 million facility to 31 December 2011. Negotiations to that end are currently ongoing. The existing facility formally expired on 31 October 2009. The Board continues to work with the Bank and one of the Group's development partners to realise land sales proceeds which will then be used to repay the loan.
4 The Group's GBP3.2 million loan with the Anglo Irish Bank, which is secured on the Group's property at 1 Europa Drive, Sheffield, falls due for repayment on 31 December 2010. Negotiations over an extension of the repayment date are currently ongoing. The Bank has indicated that it would be prepared to continue to make the loan available until the proceeds from a sale of 1 Europa Drive are available to be used to repay the debt. The Board are in discussions with an interested party over a proposed sale at an indicative value of some GBP3.1 million.
5 The HSBC has agreed in principle to extend the existing facility, which currently stands at just over GBP1 million, until 31 August 2011. The existing facility formally expired on 30 September 2010. The loan remains secured on the Group's freehold properties in Mold and Buckley, Flintshire, North Wales.
6 The GBP350,000 loan facility with the Principality Building Society formally expired on 31 October 2010. Whilst negotiations with the Society to extend this facility are currently ongoing it has indicated a willingness to extend it until 31 December 2011.
It is clear that the historic support from shareholders and the continued cooperation of the Group's lenders has been central to the Group's ability to continue as a going concern.
As reflected on by the Directors under the Future Developments section of their Report and the Chairman's Statement to these financial statements the structured disposal of the Welsh land sites (and the related build contracts) and a successful outcome to the other opportunities the Group is hoping to exploit should see a long term move away from such a strong reliance on external funding and place the Group in a much stronger position to reduce debt and provide working capital resources.
Whilst the immediate future will continue to require very careful and prudent management, the continued cooperation and support of the Group's lenders, and a potential need to raise further equity funds in the short term, the longer term proposition is positive. The initial steps required to raise additional equity have been taken and these include preliminary discussions with the Groups Brokers, Optiva Securities Limited.
In further support of the directors view that the Group is a going concern they have prepared cash flow projections to the end of June 2012. Taking into account a realistic approach to income generation from the sources highlighted above, the continued control (and reduction to the extent possible) of costs, and the continued cooperation of the Group's lenders, the forecasts indicate that the Group should have sufficient working capital for that period.
The Company's Directors are aware of their obligation to consider whether it is appropriate to prepare the financial statements on the basis that the Group is a going concern. They acknowledge that the current uncertainties surrounding the financial and property markets, the Group's need to reduce its debt profile and maintain adequate working capital represent material uncertainties which could affect its ability to continue as a going concern. However, after making enquiries and considering the uncertainties outlined above, and having given due consideration to the strategic options currently open to the Group, the Directors have a reasonable expectation that it will have adequate resources to continue in operational existence for the foreseeable future."
4. SEGMENTAL REPORTING
The Group has one reportable segment, property development. This disclosure correlates with the information which is presented to the Group's Chief Decision Maker, the CEO. The Group's revenue, loss before taxation and net assets were all derived from its principal activities.
All operations are carried out in the United Kingdom.
5. LOSS PER SHARE
Losses and the number of shares used in the calculations of loss per share are set out below.
During the year the Company's capital was reorganised and the 2009 comparative figures disclosed below reflect losses per share based on the pre reorganisation capital structure. Full details of the effects of the reorganisation are given in note 19 to these financial statements.
2010 2009
GBP GBP
Loss for the year attributable to the
owners of the parent company (12,723,005) (4,352,555)
---------------- ---------------
2010 2009
Number Number
Weighted average number of shares in
issue:
For basic loss per share 166,763,137 23,064,775
Exercise of share options and
warrants - -
----------------- -----------------
For fully diluted loss per ordinary
share 166,763,137 23,064,775
----------------- -----------------
2010 2009
Pence Pence
Loss per share:
Basic (7.63) (18.87)
Diluted (7.63) (18.87)
The loss for the period and the weighted average number of ordinary shares for calculating the diluted loss per share for the year ended 30 June 2010 and year ended 30 June 2009 are identical to those for the basic loss per share. This is because the outstanding share options and warrants would have the effect of reducing the loss per ordinary share and would therefore not be dilutive under the terms of International Accounting Standard ("IAS") No 33.
6. RELATED PARTY TRANSACTIONS
Hawkesbury Properties Limited.
Amounts due from Hawkesbury Properties Limited at 30 June 2010 amounted to GBP81,495 (2009: GBP82,986). As at 30 June 2010 the Group provided in full against this debt. Transactions during the year included payments amounting to GBP31,918 (2009: GBP470,618) and receipts of GBP33,409 (2009: GBP580,654). The loss generated from Hawkesbury Properties Limited for the year ended 30 June 2010 amounted to GBP1,656,617 (2009: GBP110,370).
Progressive Land Limited.
Progressive Land Limited is a related party through a common Director and shareholder, R J W Lloyd. The balance at 30 June 2010 between the company and Group was GBP7,000 (2009: GBP7,000), which is included under Trade Payables. Transactions during the year included payments amounting to GBPNil (2009: GBPNil) and receipts of GBPNil (2009: GBP475,970).
Rob Lloyd Racing Limited (RLRL)
RLRL is a related party through common Director and shareholder R J W Lloyd.
RLRL operates out of Haycroft Farm and during the year the Group made recharges of utility costs it had incurred relating to RLRL's use thereof. The maximum outstanding during the year was GBP40,216. The Group provided in full against this debt at 30 June 2010.
Utility charges aside, other transactions between the Group and RLRL passed through the Group's accounts during the year. The total amount outstanding to RLRL at the year end was GBP173,357 (2009: GBP765,074) following receipts of GBP1,559,502 (2009: GBP1,202,085) and payments of GBP2,151,219 (2009: GBP437,011). Interest on this loan totalling GBP43 773 (2009: GBP64,414) was paid during the year. Whilst no fixed repayment dates are attached to this debt it is expected to be repaid within twelve months. No further interest is payable.
At 30 June 2009 an amount of GBP1.4 million was reflected under Accruals and Deferred Income in relation to the surrender of a profit share arrangement with RLRL relating to the Group's sites at Ystalyfera, Corus and Birkwood. During November 2009 this profit share was satisfied in exchange for the issuing of 28,000,000 ordinary shares at a price of 5p. This was transacted at the time of the 2009 placing when RLRL formally agreed to forego its profit share for a consideration of GBP1.4 million payable by Eatonfield Developments Limited (EDL) to RLRL. At this time a loan account of the same amount was created between EDL and RLRL. RLRL subsequently entered into a deed of assignment with the Group pursuant to which RLRL assigned the benefit of the loan account with EDL to the Group for GBP1.4 million consideration. The Group then issued the 28,000 000 shares and the loan account between the Group and EDL was increased by the same amount.
Jenard Properties Limited (JPL)
JPL, an organisation with whom the Group has enjoyed a close trading relationship in recent years entered into an Equity Drawdown Facility with the Group during the year. This facility was initially established in March 2010 and at that time committed JPL to an aggregate of GBP1 million which the Group was able to draw upon in exchange for equity (issued at the par value of 1p per share). In April 2010 this arrangement was varied to the extent of increasing the aggregate commitment to GBP1.25 million.
By the end of the year the Group had called on GBP900,000 of the facility for use as working capital. At 30 June 2010 JPL held 25.5% of the Group shares in issue as a direct result of draws made under this facility.
At 30 June the Group owed JPL GBP400,000 (2009: GBP400,000) in respect of a loan advanced in 2008. The loan is due to be repaid from amounts otherwise due to the Group arising under a profit share arrangement attached to the Ystalyfera development in South Wales. The end date for repayment in full is 5 January 2011. No interest has been charged on this loan.
At 30 June JPL owed the Group GBP41,405 (2009: GBPNil) in respect of amounts expended by the Group on its behalf on the Ystalyfera development in South Wales. Within accrued income there is an amount of GBP4,772,822 due from JPL.
7. TRANSACTIONS WITH DIRECTORS
Material transactions during the year involving directors have been detailed below:
1. At the time of the placing undertaken in November 2009 R J W Lloyd entered into a deed of assignment with the Company pursuant to which R J W Lloyd assigned the benefit of GBP1.63 million of his loan account with Eatonfield Developments Limited (EDL) to the Company for GBP1.63 million consideration. The Company then, on R J W Lloyd's direction, capitalised the consideration due to him and issued 32,600,000 ordinary shares to him, his connected parties, certain other members of his family, Paul Williams (then EDL and Group Director), Keith Mather (serving EDL Director) and two other senior employees of the Group. At the placing price of 5p per share. The loan account between the Company and EDL was increased by an amount equal to the loan assigned to the Company.
Further, R J W Lloyd entered into a binding commitment to subscribe for 16,000,000 placing shares for cash, which was funded by a redemption of a loan account with the EDL. As a result of this subscription, the loan account between R J W Lloyd and EDL was reduced by GBP800,000 and the intra group debt owed by EDL to the Company increased by the same amount.
2. During the year Eatonfield Developments Limited (EDL) acquired an interest in EDL Nominee LLP (LLP) (registration number: OC348928). LLP is owned jointly but not equally by EDL and R J W Lloyd. Both parties became designated members thereof on 24 September 2009 when EDL acquired a 1% interest in the profit / loss and capital and 99% interest in voting rights. At 30 June 2010 LLP owed EDL GBP3,300,000.
On 7 October 2009 R J W Lloyd sold his leasehold interest in Haycroft Farm, Peckforton Hall Lane, Spurstow to EDL and under clause 2 of the Sale Agreement (dated 28 September 2009) EDL had the right to call for the lease to be granted to a nominee limited liability partnership by giving notice to that effect to R J W Lloyd prior to the completion date of 7 October 2009.
This call was duly made and a lease dated 7 October 2009 was consequently set up between R J W Lloyd and LLP.
The consideration for the sale of the leasehold interest was GBP3,300 000, a value established on 26 March 2009 by independent Chartered Surveyors Mason Owen. Within the accounts of LLP the value of the leasehold interest was written down by GBP1,100,000 to reflect what the designated members consider to be a fair open market value.
The consideration on sale to EDL by R J W Lloyd (after mortgage redemption) was credited to R J W Lloyd's loan account in EDL.
Under the terms of the lease R J W Lloyd has an option to re-acquire within a period of ten years commencing on 7 October 2009. The option price payable being equal to market value at the time it is exercised.
In a related transaction, using Haycroft Farm as security the Group took out a GBP2.2 million loan with Natwest Bank. This loan was advanced on the understanding it would be used to (i) pay Bridging Finance Limited (BFL) in order to procure the release by BFL of the security that it held over Haycroft Farm when owned by R J W Lloyd; (ii) make a permanent reduction in the Group's overdraft with the Natwest and (iii) bolster the Group's working capital funds.
8. SHARE CAPITAL
2010 2009
Number of shares GBP Number of shares GBP
Authorised
Ordinary shares
of 10p each - - 30,000,000 3,000,000
Ordinary shares
of 1p each 389,267,025 3,892,670 - -
Deferred shares
of 9p each 23,414,775 2,107,330 - -
---------------- ---------------- ---------------- ----------------
6,000,000 3,000,000
---------------- ----------------
Issued
Ordinary shares
of 10p each:
At the
beginning of
the year 23,064,775 2,306,478 23,064,775 2,306,478
Allotments in
the year 350,000 35,000 - -
Capital
reorganisation (23,414,775) (2,341,478) - -
---------------- ---------------- ---------------- ----------------
At the end of
the year - - 23,064,775 2,306,478
---------------- ---------------- ---------------- ----------------
Ordinary shares
of 1p each:
At the
beginning of
the year - - - -
Capital
reorganisation 23,414,775 234,148 - -
Allotments in
the year 329,422,150 3,294,222 - -
---------------- ---------------- ---------------- ----------------
At the end of
the year 352,836,925 3,528,370 - -
---------------- ---------------- ---------------- ----------------
Deferred shares
of 9p each:
At the
beginning of
the year - - - -
Capital
reorganisation 23,414,775 2,107,330 - -
Allotments in
the year - - - -
---------------- ---------------- ---------------- ----------------
At the end of
the year 23,414,775 2,107,330 - -
---------------- ---------------- ---------------- ----------------
5,635,700 2,306,478
---------------- ----------------
On 14 September 2009 the Company issued 350,000 ordinary shares of 10p each at an effective price of 10p per share to two former non executive directors in consideration of services provided to the Company in respect of their former roles.
On 19 November 2009, the Company undertook a Capital Reorganisation, whereby each ordinary share of 10p each of the Company was subdivided and converted into one new ordinary share of 1p each and one deferred share of 9p each. Authorised but unissued ordinary shares were also subdivided into 10 new ordinary shares of 1p each. Each new ordinary share of 1p has the same rights (including voting and dividend rights and rights on a return of capital) as each ordinary share of 10p had prior to the Capital Reorganisation. The deferred shares of 9p created under the Capital Reorganisation have no voting or dividend rights and, on a return of capital, will have the right to receive the amount paid up thereon only after the holders of the ordinary shares of 1p have received, in aggregate, the amount paid up thereon together with the sum of GBP10,000,000 per ordinary share.
On the same date, by way of a placing, 207,820,000 ordinary shares of 1p were issued at a price of 5p, raising GBP6.9 million net of costs. As a result of the placing, warrants were issued to the Company's brokers over 6,531,000 new ordinary shares of 1p at a price of 5p per share. These warrants are valid until 18 November 2011. In addition, on the same date, warrants to subscribe for 11,835,461 ordinary shares of 1p were issued to West Register (Investments) Limited at a price of 5p per share. These warrants are valid until 14 September 2014.
Also on 19 November 2009, 1,000,000 ordinary shares of 1p were issued to Evolution Securities Limited in consideration for advice in connection with the placing and warrants to subscribe for up to 700,000 ordinary shares of 1p at a price of 15p were issued to Paul Brett and Leslie Allen-Vercoe as part of the joint venture agreement entered into on 17 September 2009. These warrants are valid until 18 November 2010.
On the same date, the authorised share capital was increased by GBP3,000 000 by the creation of a further 300,000,000 ordinary shares of 1p each.
During the second half of the year, under an Equity Drawdown Facility provided by Jenard Properties Limited, 90,000,000 ordinary shares of 1p each were issued at par.
On 30 June 2010, by way of a placing, 30,000,000 ordinary shares of 1p each were issued at par, raising GBP0.289 million net of costs. As a result of the placing the Company issued the placees with, in aggregate, 15,000,000 warrants to subscribe for ordinary shares of 1p. These warrants are valid until 30 June 2013.
In addition, on the same date, 602,150 ordinary shares of 1p were issued at the closing middle market price on 30 April 2010 of 2.325 p as part of an arrangement for the settlement of a trade debt.
Share options
At 30 June 2010 the Company had 28,000 ordinary shares under option (2009: 28,000) under the Company's share option schemes, details of which are included below:
Number of
shares
Subscription for which Period over which
price per rights options are
Grant date share exercisable exercisable
24 October 2009 to 24
25 October 2006 67p 28,000 October 2016
----------
Total share options
in issue 28,000
----------
2010 2009
Weighted
average Weighted
exercise average
Number price Number exercise price
Outstanding at 1
July 28,000 0.67 229,000 106.90
Granted - - - -
Forfeited - - (201,000) 1.32
Lapsed - - - -
Exercised - - - -
---------- ---------- ---------- ----------
Outstanding at
30 June 28,000 0.67 28,000 0.67
---------- ---------- ---------- ----------
Exercisable at
30 June 28,000 0.67 - -
---------- ---------- ---------- ----------
The Group has a charge of GBP35,000 (2009: GBP15,859 credit) to the income statement in relation to share-based payment transactions.
The options outstanding at 30 June 2010 had a weighted average exercise price of 67p (2009:67p), and a weighted average remaining contractual life of 0.27 years (2009: 0.3 years).
Expected volatility was based upon the historical volatility of the Company's share price. The expected life is based upon historical data and has been adjusted based on management's best estimates for the effects of non transferability, exercise restrictions and behavioural considerations. The fair value of options granted under the scheme is measured by use of the Black Scholes model.
Share warrants
At 30 June 2010 the Company had issued a total of 42,001,569 warrants over ordinary shares details of which are included below:
Number of
shares
Subscription for which Period over which
Date of Warrant price per rights Warrants are
Instrument share exercisable exercisable
15 September 2009 -
15 September 2009 5p 18,665,569 14 September 2014
17 September 2009 -
17 September 2009 15p 700,000 18 November 2010
19 November 2009 -
27 October 2009 5p 6,531,000 18 November 2011
30 June 2010 - 30
24 June 2010 1p 15,000,000 June 2013
30 June 2010 - 30
24 June 2010 1p 1,105,000 June 2012
----------------
Total share warrants
in issue 42,001,569
----------------
Share warrants issued during the year to the RBS have been valued using the Black Scholes model rather than the direct method which in this case would have been based on an assessment of the fair value of the support given to the Group by the RBS with regard to the November equity issue and the maintenance of facilities. The directors believe that the Black Scholes model produces a fairer valuation.
Warrants issued during the year as a consequence of the November 2009 and June 2010 equity placings have been valued using a direct method equating value to the services provided by the brokers used in the placing process.
Share based payments to directors
On 14 September 2009, 175,000 10p ordinary shares were each issued to Sir Leslie Young and Suki Kalirai in consideration of services provided to the Company in their respective former roles as non executive directors of the Company. This consideration being valued at the nominal value of the shares issued which equates to GBP17,500 per person.
9. EVENTS AFTER THE REPORTING DATE
On 12 July 2010 the Board granted Brian Corfe (Executive Chairman) and Duncan Syers (Group Finance Director) options over ordinary shares of 1 p each in the issued share capital of the Company. The options were granted for GBPNil consideration and are capable of exercise between 12 July 2013 and 12 July 2020. The options can be exercised subject to the appreciation in the Company's share price between grant and exercise date exceeding the growth in the retail price index over the same period. The options have an exercise price of 1 p per ordinary share. Both Brian Corfe and Duncan Syers were granted 3,000,000 options each under the Approved Scheme and 7,000,000 options each under the Unapproved Scheme.
On 18 October 2010 the Company undertook a Capital Reorganisation whereby each ordinary share of 1p was sub-divided and converted into one new ordinary share of 0.1 p and one deferred A share of 0.9p. Further, the deferred shares were reclassified into deferred B shares. Each new ordinary share of 0.1p has the same rights (including voting and dividend rights and rights on a return of capital) as each ordinary share of 1p had prior to the Capital Reorganisation. The deferred B shares have the same rights as the deferred shares of 9p had prior to the Capital Reorganisation. Namely, they have no voting or dividend rights and on a return of capital will have the right to receive the amount paid thereon only after the holders of the ordinary shares have received, on aggregate the amount paid thereon, together with a sum of GBP10,000,000 per ordinary share.
10. basis of the announcemenT
The board of directors of Eatonfield Group plc approved the Results on 23 December 2010.
The statutory accounts for the year ended 30 June 2010 will be delivered to the Registrar of Companies before the Annual General Meeting ("AGM"). Further copies will be available to the public, free of charge, at the Company's registered office, Haycroft Farm, Peckforton Hall Lane, Spurstow, Tarporley CW69TF. A copy will also be made available to view on the Company's website at www.eatonfield.com from the date of this announcement.
The statutory accounts will be posted to shareholders today. The AGM will be held at 11.00 a.m. on 31 December 2010 at the Company's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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