Annual Report and Financial Statements for the Year Ended 31 … · 2019-05-24 · using the...

Annual Report and Financial Statementsfor the Year Ended 31 December 2018

COMPANY INFORMATION

V J Bannister D J Coleman (resigned 15 June 2018)K L Griffin J L Hytch (resigned 15 June 2018)D Mackie (resigned 15 June 2018)N Madan P E Savage L Scott S A Lawson (resigned 15 June 2018)M W Bentley (resigned 15 June 2018)N Emerson (appointed 15 June 2018)N A Heathcote (appointed 3 July 2018, resigned 7 November 2018)H R Herniman (appointed 3 July 2018, resigned 7 November 2018)

Arbon House6 Tournament CourtEdgehill DriveWarwickWarwickshireCV34 6LG

Grant Thornton UK LLPChartered Accountants & Statutory AuditorThe Colmore Building20 Colmore CircusBirminghamB4 6AT

DIRECTORS

REGISTERED OFFICE INDEPENDENT AUDITOR

REGISTERED NUMBER 00897907

3propertymark.co.uk

ANNUAL REPORT AND FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018

INTRODUCTION

Chairman’s Foreword

Agenda for the Twelfth Annual General Meeting, 14 June 2019

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PROPERTYMARK AGM REPORT AND EGM REPORT

Minutes of the Eleventh Annual General Meeting, 15 June 2018

Minutes of the Extraordinary Annual General Meeting, 27 July 2018

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CONSOLIDATED FINANCIAL STATEMENTS

Group Strategic Report

Consolidated Balance Sheet

Independent Auditor’s Report

Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Equity

Consolidated Statement of Comprehensive Income

Notes to the Financial Statements

Company Statement of Changes in Equity

Directors’ Report

Company Balance Sheet

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CONTENTS

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CHAIRMAN’S FOREWORD

The Propertymark brand is now well established and provides a strong, contemporary platform to promote member businesses to consumers. Our research shows increasing awareness amongst those consumers of what it means to use a Propertymark agent and we will continue to promote recognition and understanding of the essential protection that the brand provides when using the services of a Propertymark agent. Being part of Propertymark will enhance your reputation – reputation has a value and when the market is hard and business difficult (as it is now) agents can use that value to bring people to their doors. And whether your services are provided from start to finish on a face to face basis or leads are generated through a portal you need to be ready to assist buyers, sellers, tenants or landlords when needed.

In the last Annual Report, we identified the scale of adversity facing the sector, however the success of the brand can be evidenced by the consistency of membership during the year under report. NAEA Propertymark membership reduced marginally from 7,088 to 6,828 in the year to December 2018 whilst ARLA Propertymark has increased from 8,947 to 9,210. The organisation continues to engage with the sector across multiple channels including face-to-face and firmly believes there is a strong appetite for the services offered (and constantly under review)

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from their professional body. The pressure that letting agents have endured over recent years and most notably since the announcement of the ban of Tenant Fees in the Autumn Budget of 2016 and the resulting growth of membership, demonstrates that agents turn to their professional body for support in times of pressure and uncertainty.

For as long as I can remember, sales and lettings agents have been the source of negative comment in the media. It is a concern that such negativity will lead those at the start of their working careers to avoid entering the industry. Whilst Propertymark has many members of long-standing with vast amounts of experience we need to attract new people who will embrace technological applications and develop them to the benefit of businesses and consumer offerings. Propertymark Qualifications has a comprehensive suite of qualifications recognised by OFQUAL, Qualifications Wales and Council for the Curriculum, Examinations and Assessment as well as offering qualifications in the Scottish, Credit and Qualifications Framework. Alongside this, NAEA Propertymark and Propertymark Qualifications have led development and delivery of an Apprenticeship standard designed as a powerful foundation for new entrants to the sector. Together with a full programme of training courses, new starters and those established in the industry can choose from a wealth of learning and professional development opportunities.

Member education is a vital aspect of the work of Mark Hayward and David Cox as Chief Executives of NAEA and ARLA Propertymark respectively and between them they have travelled the country, speaking at 106 Propertymark events during the year in addition to countless sector and Government events, meeting members face to face and importantly hearing and understanding the concerns of those operating on the ‘High Street’. This approach has been particularly relevant during the past year as more legislation and consultations emanate from government and the two Chief Executives have been fully involved in contributing to the considerations of Minsters and the Civil Service. Member events aim to help you stay in business, provide guidance on what the legislation means for your business and how to adapt business processes to stay ahead.

Easily found on the internet is an interesting fact. Housing and Housing services, in other words the Property Sector, provides 17-18% of UK Gross Domestic Product, the same as the Manufacturing Industry! You are therefore playing a significant role in the economy of this country.

Christopher J HamerExecutive Chairman

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1. Welcome

2. Opening remarks by Christopher Hamer, Executive Chairman

3. Approval of minutes of the Eleventh Annual General Meeting, held on 15 June 2018 and approval of minutes of the Extraordinary General Meeting, held on 27 July 2018

4. Election of Vice Presidents and Propertymark Board Members, Mi-Voice

5. Financial update and approval of the annual accounts, Kate Hawkins ACA, Head of Finance

6. Appointment of auditors

7. Lauren Scott, President NAEA Propertymark

8. Philip Keddie, President, ARLA Propertymark

9. Communications and PR update

10. Any other business

AGENDA FOR THE TWELFTH ANNUAL GENERAL MEETING, 14 JUNE 2019

PROPERTYMARK AGM REPORT AND EGM REPORT

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Geoffrey L. AshworthJamie AsplandValerie BannisterMartyn BaumDawn BennettMark Bentley (MB)Chris BrownClive BucklandWilliam CarringtonJohn CoatesRichard CopusAngela DaveyNathan Emerson

Wendy Evans-ScottKirsty FinneyMaxine FothergillMatthew GrayKatie GriffinRussell GriffinRachel Hanniquet-BrookingRichard HairIan HarrisJonathan HudsonGill HuntJan Hÿtch

Phil KeddieSally LawsonToby LeekDavid MackieNik MadanCorelia Maskell-MoseleyChristopher MervynJackie QuinnDes RowsonBrian MoranJohn OakleyJohn PaulNeville Pedersen

Mary-Louise PressNick SalmonPeter E. Savage (PS)Lauren ScottRichard SelwynPeter SpeakLinda SpelmanIan TerryLinda TravellaRobert UlphMatt WeilandIan Westerling

Minutes of an Annual General Meeting, held on Friday 15 June 2018 at 11.00amSt Martins Lane Hotel, 45 St Martins Lane, London WC2N 4HX

IN ATTENDANCE

Christopher Hamer (CJH) – Executive Chairman, PropertymarkMark Hayward (HMH) – Chief Executive, NAEA PropertymarkDavid Cox (DJC) – Chief Executive, ARLA PropertymarkSue Roberts-Smith – Head of OperationsPam Turner (PT) – Interim Head of FinanceSarah Turnbull – Head of HRSarah Davies – Commercial ManagerDaryl McIntosh – Strategic Development Officer for Scotland & NITanya Richards – Events Officer Stephanie Williams – Executive Assistant, NAEA PropertymarkMandy Tsang-Wetherald – Executive Assistant, ARLA PropertymarkRalph Jackson – LansonsRimmi Shah – LansonsJudy Ramella – National Association of RealtorsSimon Thompson – Mi-Voice

PRESENT

MINUTES OF THE ELEVENTH ANNUAL GENERAL MEETING, 15 JUNE 2018

PROPERTYMARK AGM REPORT FRIDAY 15 JUNE 2018

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APOLOGIES

Paul Bridgeman, Duncan Chambers, Kate Eales, Greg Tsuman, Guy Charrison.

1 . WELCOME

CJH welcomed members to the Eleventh Annual General Meeting of Propertymark, formerly National Federation of Property Professionals.

Simon Thompson, Mi-Voice, would announce the results of the Special Resolutions and Elections. Mi-Voice had independently conducted all of the election and voting process.

CJH advised of the apologies which had been received.

2. CHRISTOPHER HAMER, EXECUTIVE CHAIRMAN

The most significant development of 2017 was the rebrand to Propertymark.

Conversations had been held with College of Fellows members, regarding how the College could be aligned with the main governance structure.

A Memorandum of Understanding with Arbon Trust had been established.

The Special Resolutions passed at last year’s meeting, in relation to the constituency of the Board, would now come into effect.

The clause that restricted the President’s ability to speak at a Board meeting had been reviewed and it was proposed that the restriction be removed.

A regulatory regime, both for sales and lettings, would appear to be a strong government priority. This could result in a significant role for Propertymark. It was of great importance for the Chief Executives to remain at the forefront of these developments, liaising with government departments, appearing before Parliamentary Select Committees and participating in working groups to ensure Propertymark’s members’ voices were heard.

Communication with members remained a priority. During 2017, there were 90 Masterclasses and Regional meetings, 12 Regional Conferences and the NAEA and ARLA National Conferences. All events had been very well attended.

In order to continue to support members, two new member benefits were to be introduced; an HR employer helpline – available to all business owners and branch managers who were members of Propertymark. Also, a member helpline, offering a complete health and wellbeing programme, accessible 24/7.

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It was a matter of disappointment to the Board that finalised financial accounts were unable to be presented. The delay was due to the change of auditors, as agreed at the 2017 AGM, a change to the income recognition policy resulting in a prior year adjustment and updates and difficulties with software. CJH confirmed that Propertymark had been thoroughly audited and that the full and unqualified accounts would be presented at the EGM on 27 July 2018.

3. MINUTES OF THE TENTH ANNUAL GENERAL MEETING

In response to a question on whether a more detailed account of a conversation at the 2017 AGM, regarding the format and content of the Annual Report, should have been included in the minutes, it was advised that the minutes should not be expected to be a verbatim account of the meeting. CJH to correspond directly with the member regarding the comments raised.

A member commented that, in his view, the process used in relation to the Special Resolution was flawed and that, should members vote in favour of the minutes, it would make it difficult for them to subsequently contest the lawfulness of the resolutions.

The minutes were accepted as a true and accurate record of the meeting. Proposed by David Mackie, seconded by Lauren Scott, agreed by the majority. CJH declared the minutes approved.

4. SPECIAL RESOLUTION 1

Retrospectively that the name of the Company be changed from the National Federation of Property Professionals Ltd to Propertymark Ltd.Results, as announced by Simon Thompson of Mi-Voice:Votes in favour: 522Votes against: 86Abstentions: 3885.9% in favour – Resolution Passed


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That Article 33.4 of the Company’s Articles of Association be amended to read as follows: 33.4 With effect from the conclusion of the Annual General Meeting in 2018, the President of the Estate Agents’ Division and the President of the Residential Lettings’ Division shall be entitled to attend meetings of the Board but shall not be entitled to vote.Results, as announced by Simon Thompson of Mi-Voice:Votes in favour: 497Votes against: 49Abstentions: 9591.0% in favour – Resolution Passed


That the Board shall be permitted to seek the approval of the members to the accounts of the Company for the period ended on 31 December 2017 in an extraordinary general meeting to be convened on not less than 21 clear days’ notice and held no later than the end of July 2018, such accounts to be circulated to members or made available on the Company’s website before or at the same time as the giving of the notice of such meeting and that (for 2018 only) the provisions of Article 64 of the Company’s Articles of Association be waived accordingly.Results, as announced by Simon Thompson of Mi-Voice:Votes in favour: 406Votes against: 32Abstentions: 11692.7% in favour – Resolution Passed

7. ELECTION RESULTS, MI-VOICE

Successful candidates, as announced by Simon Thompson of Mi-Voice:ARLA Propertymark Vice President (2 positions): Phil Keddie and Richard SelwynNAEA Propertymark Vice President (1 position): Ian WesterlingPropertymark Board Director, NAEA (2 positions): Katie Griffin and Nathan EmersonPropertymark Board Director, ARLA (1 position): Nik Madan

CJH confirmed that James Emson had been appointed as Chairman of NAVA Propertymark, succeeding Clive Young.

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8. FINANCIAL UPDATE

PT presented the 2017 draft financial statements. The 2016 comparatives were the numbers as stated in the draft financial statements. The restatement was due to the change in the income recognition policy; it was advised that this was a timing difference and did not affect cash in the bank. The restatement would be explained in more detail at the EGM.

The audit had been completed and draft accounts circulated to the Board. The closing meeting with the auditors, Grant Thornton, had taken place and the audit report had been received. Signing of the accounts was expected to take place within the next few days.

The annual report to members was being finalised and would be issued shortly after signing. Members would be notified of the extraordinary general meeting, to take place in July, where the accounts would be formally presented. The delay was due to the amount of work required to calculate the prior year adjustment.

In preparing the financial statements for the current year, the Directors identified a number of errors in the prior year financial statement, which have been corrected by restating the Statement of Comprehensive Income and Balance Sheet. These were as a consequence of the group’s previous application of a revenue recognition policy which was not in line with FRS102 and previous UK GAAP. Further detail is given in note 2.3 of the Financial Statement. The Board accepted that this situation was not acceptable and, once identified, took immediate action. New resources, processes and controls had since been implemented within the business to manage any issues arising from previous years. An appropriate finance function, for a higher growth and ambitious business, was being introduced. PT advised that it would be inappropriate to comment on the approach of the previous Head of Finance or the previous auditors.

There was a request from a member for the accounts to be more transparent than in previous years, and to include explanatory statements. CJH confirmed that the accounts would meet with legal requirements. PT answered questions from members.



9. APPOINTMENT OF AUDITORS

CJH formally proposed the re-appointment of Grant Thornton as the Company’s auditors for 2018. Seconded by Peter E Savage, agreed by the majority. CJH declared the proposition carried.

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10. MARK BENTLEY, PRESIDENT NAEA PROPERTYMARK

MB was delighted and proud to take on the role of President of NAEA Propertymark. MB thanked Katie Griffin for the professional way in which she had carried out the role of President over the past year and for all of her energy, enthusiasm and dedication.

MB was delighted to be joined in his Presidential Year by PS, as President of ARLA Propertymark. MB and PS had worked well together over the past two years, both sitting as Directors of the Propertymark Board and assisting the Propertymark Senior Management Team.

MB had worked within the estate agency profession for 41 years and had been a member of NAEA for 36 years. He had been a Director of the Propertymark Board for the past three years. NAEA Propertymark had helped MB enormously by keeping him up to date with legislation, providing opportunities to network with fellow property professionals and keeping him informed of new services available to assist him in his profession, through the various regional events.It was expected that the government would announce an increase in property related legislation, including the possible regulation of estate agents, which NAEA Propertymark supported.

Discussions were taking place, looking at ways to speed up the property buying and selling process. NAEA Propertymark was actively involved in consultations.During his Presidency, MB would reassure members that estate agency was a worthwhile profession, encourage non-members to join membership, support the Arbon Trust and continue to raise funds for the President’s Charity.

MB thanked all members of staff at Arbon House, NAEA Propertymark Board members and the Propertymark Board Directors, as well as all those members in attendance at the AGM.

Mark BentleyPresident NAEA Propertymark



11 . ARLA PROPERTYMARK PRESIDENT’S UPDATE

PS thanked Sally Lawson for her hard work, commitment and motivational advice during her Presidential Term. PS congratulated MB, who he had enjoyed working alongside on various Board initiatives and tasks. He also congratulated Richard Selwyn and Phil Keddie on their appointment as ARLA Propertymark Vice Presidents and Nik Madan for retaining his seat as Director of the Propertymark Board.

PS was honoured to serve members for a second term. During his previous term, PS’s purpose was focused on the ‘Three Cs’; Corporate engagement, Cradle to grave support and Consumer engagement.

The industry continued to prepare for the introduction of the Tenant Fees Act. ARLA Propertymark’s engagement and continued lobbying had helped to mitigate some of the proposed changes.

The long campaign for full regulation had now been accepted by Government. It was vital to ensure that it was shaped in the best interests of the industry and the consumer. The Ministry for Housing, Communities and Local Government (MHCLG) had reached out to Propertymark, seeking its ongoing input into how the regulatory framework might look and operate in practice.

The relationship between ARLA Propertymark and Ministers and Civil Servants continued to grow, thanks to the relentless efforts of DJC, assisted by Tim Douglas, Senior Policy and Campaigns Officer, and other members of the highly effective Communications team, led by Rachel Hartley.

The main focus for the year ahead was continued monitoring and lobbying on the tenant fee ban.

ARLA Propertymark would continue to guide and assist members through future challenges, improve the benefits and tools offered to members and continue to grow membership; further raising the profile of ARLA Propertymark and building a stronger, more professional industry.

Peter E SavagePresident ARLA Propertymark

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12 . PUBLIC RELATIONS UPDATE – LANSONS

Ralph Jackson and Rimmi Shah provided an update on PR activity.

1 3 . ANY OTH ER BUS I N ESS

CJH provided the following responses to questions, submitted by members:It was not necessary to have a proxy vote process for the AGM because all members had access to the electronic voting system.

Following the revised constituency of the Board, all Directors would be required to make an appropriate declaration of interest. With regards to open access, further guidance was required, considering the recent GDPR obligations.

CEI had been absorbed by CEPI. Members should ensure they were using the relevant logo.

The link between Propertymark and the National Association of Realtors (NAR) was by means of a Memorandum of Understanding between the two organisations. There was no membership qualification and an individual would be required to be a member of NAR, to say that they were a member.

Information from government, regarding the proposed changes to qualifications, was not yet available.

CLOSI NG REMARKS

CJH thanked all for their attendance at the meeting and confirmed that a formal record of the meeting had been made.

CJH committed to responding to any outstanding queries.

Meeting closed at 12:00 p.m.

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Geoffrey L. AshworthValerie BannisterMark BentleyDavid BrevittNathan EmersonKatie GriffinRussell GriffinSusan Hughes-ThomasPeter E. SavageLauren ScottPeter SpeakIan Westerling

Keith BakerJoseph BickleyChris BrownDuncan ChambersJenny ClarkeMegan DaviesKate EalesKirsty FinneyMatthew GrayRichard HairChristopher HallIan HarrisRoss JezzardMichael Jones

Phil KeddieNik MadanJohn OakleyJohn PaulNeville PedersenMary-Louise PressSue Roberts-SmithDes RowsonRichard SelwynIan Terry Linda TravellaSarah TurnbullRobert UlphDavid Waterhouse

Minutes of an Extraordinary General Meeting, held on Friday 27 July 2018 at 12.00pmHilton Hotel Warwick, Stratford Road, Warwick, CV34 6RE

IN ATTENDANCE

Christopher Hamer – Executive ChairmanMark Hayward – Chief Executive, NAEA PropertymarkDavid Cox – Chief Executive, ARLA PropertymarkPam Turner – Interim Head of FinanceHelen Herniman – Non-Executive DirectorNicky Heathcote – Non-Executive DirectorSarah Davies – Commercial ManagerStephanie Williams – Executive Assistant, NAEA PropertymarkMandy-Tsang Wetherald – Executive Assistant, ARLA PropertymarkRalph Jackson – LansonsRimmi Shah – Lansons

PRESENT

APOLOGIES

MINUTES OF THE EXTRAORDINARY GENERAL MEETING, 27 JULY 2018

PROPERTYMARK EGM REPORT FRIDAY 27 JULY 2018



1 . WELCOME

Christopher Hamer (CJH), welcomed members to the Extraordinary General Meeting of Propertymark, which had been called following approval of a Special Resolution at the AGM in June 2018, on which members voted to allow the Board to present final accounts of the organisation at a later date. The meeting had been convened in accordance with Article 12 of the Memorandum and Articles of Association and was mandated only for the purpose of approving the accounts.

The Special Resolution had allowed for the presentation of full and unqualified accounts at the EGM.

Following agreement at the 2017 AGM, the Board had investigated a change of auditors. After due process, the Board appointed Grant Thornton and moved to a more rigid accounting structure. CJH confirmed that the accounts had now been thoroughly audited.

2. ACCOUNTS

PT presented the accounts, as audited by Grant Thornton.PT responded to the question raised at the 2018 AGM, regarding the Arbon Trust. It had been queried by members why the c.£113k had not been transferred to the Arbon Trust.

A letter dated 2015 was produced at the AGM, authorising the transfer. PT confirmed that she had not been in receipt of the letter before the AGM and did not feel that it was appropriate to action the transfer immediately. The matter had been put to the Propertymark Board, in order to be formally approved and minuted. Approval of the Board had been communicated to the Chairman of the Arbon Trust and funds would be transferred in due course.

It was noted that there was an error on page 28 of the annual report, regarding the signing date of the accounts. It was stated as 28 June 2018 but should read 4 July 2018. The annual report on the website would be amended.

3. MEMBER QUESTIONS

PT answered questions submitted by members of Propertymark.

The Board thanked PT for her diligence in preparing the accounts.

4. RESULTS OF THE VOTE

The proposal that the accounts for the year ended 31 December 2017, in respect to Propertymark Ltd and Propertymark Qualifications Ltd be approved and adopted was proposed by Peter Savage, seconded by Mark Bentley and agreed by the following margins:

24 votes in favour (10 in the room / 14 by proxy)8 votes against (1 in the room / 7 by proxy)

CJH declared the proposition carried.

Meeting closed at 12:40 p.m.



GROUP STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2018

The directors present their Strategic Report of the company and the group for the year ended 31 December 2018.

PRINCIPAL ACTIVITY

The business of the group is to represent its members to the public, Parliament and other relevant stakeholders; and to promote unity and understanding amongst sales agents, letting agents and other property professionals. Its core objectives are to raise standards in the industry and to protect the consumer.

The focus on improving standards and enhancing the consumers’ experience of using a Propertymark member is achieved by liaising closely with those government departments that have responsibilities to the Housing sector; with active participation in industry groups and working parties and through the provision of a comprehensive programme of training courses backed up by recognised qualifications. Members of Propertymark are required to adhere to a detailed Code of Conduct relating to every aspect of their business operation including maintaining client money accounts and cover where relevant. Members must also afford consumers access for resolution of disputes through an Approved Redress Scheme.

Propertymark is the largest professional association for sales and letting agents in the UK and supports its members by lobbying and responding to government consultations with a co ordinated voice. Membership

numbers remained steady despite considerable challenges facing the sector and stood at 17,057 on 31 December 2018 (2017: 17,130). These numbers include the ARLA Inventories division, National Association of Valuers and Auctioneers division and Propertymark Commercial.

PRINCIPAL RISKS AND UNCERTAINTIES

The industry faces challenging times. A difficult market and widely reported uncertainty over Brexit have stunted sales. The lettings sector, although an increasingly important facility for providing accommodation for all sections of society, has seen and will continue to be subject to major changes in legislation. The consequences of these factors are difficult to assess although there is evidence to suggest that consolidation within the industry and closure of businesses will be a possible result.

That potentially could have a knock on effect on Propertymark membership. 2018 has seen a small decrease in membership numbers and again it remains unclear as to whether this will be a trend over coming years resulting from less people working in the industry and potentially therefore less subscribers to the professional association. However, membership of Propertymark could be influenced in a more positive way by other aspects of forthcoming legislation. Propertymark covers, we estimate, 60% of the potential market for members and with new legislation requiring compulsory Client Money Protection cover (obtainable only through government approved suppliers, a status which Propertymark has attained)

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and likely industry wide regulation, there is the potential for greater numbers of new members to seek membership and the benefits of advice and support that Propertymark offers.

At this point Propertymark can only continue to be alert to the risks, maintain its influence with government and be ready to meet the changes.

OPERATIONAL REVIEW

To ensure financial stability for the future and recognising the potential pressures on Group income the organisation continues to review its operating procedures and to ensure resources are applied in an effective and economic manner in order to be better equipped to serve members and meet future potential developments. The current IT system was implemented 8 years ago and although has served the organisation adequately and remains stable for current business use it is reaching the end of its effective life and a project to replace it with greater functionality continues with a view to implementation in early 2020.

Regular contact with members is maintained through the main ARLA Propertymark and NAEA Propertymark Conferences with attendance at both events measurable in hundreds; through 12 Regional Conferences and 84 Masterclasses/ Regional Meetings in the year. The aim of these events is to provide consistent and robust advice and guidance to members about forthcoming legislation and its likely impact on their businesses. Training courses relating to relevant law, business skills and

complaints handling were attended by 3,961 members and non members. Propertymark Qualifications is a recognised provider of OFQUAL, Qualifications Wales, CCEA and SCQF (Scotland) accredited qualifications. 2,286 accredited qualifications were awarded during the year under report.

MEMBER BENEFITS

Propertymark has continued to enhance the benefits available to members throughout 2018. The company has launched Propertymark Connect which helps our members access their benefits all in one place. As well as a host of brand new benefits, like the ready to use employer helpline and personalised health assessment, our members can access their current membership benefits through the app so that they can be accessed wherever they go.

STRATEGIC REVIEW AND FUTURE PROSPECTS

During the year under report Propertymark has continued to be a significant contributor to government considerations and consultations on developing legislation. Our strategy to equip Propertymark as a major player in future regulation of the industry and as a ready advisory resource for government has already now shown positive results through being recently approved by MHCLG as a provider of Client Money Protection cover (the risks being placed through external insurers). Propertymark will continue to be a regular presence at government working groups specifically, amongst other aspects, on Regulation and Anti Money Laundering controls.




At its launch it was emphasised that the consumer would be better protected by using a Propertymark agent. The brand has become well known in government and industry, but we will do more to ensure that consumers have a greater awareness and understanding of how using a Propertymark agent can give confidence and support through the process to buyers, sellers, landlords and tenants.

KEY PERFORMANCE INDICATORS

Membership numbers were steady this year at 17,057 (2017:17.130). Profit for the group was £962k compared to the 2017 result of £118k. The increase in turnover, measured on a like for like basis, was 12% demonstrating strong performance in a particularly challenging environment. The turnover was further boosted by a release of prior year deferred income amounting to £1,387k. Cost of sales remained consistent with prior year. Administrative expenses for the group was £5,369k (2017: £3,926k) reflecting a provision made for indirect taxes and increased IT and staffing costs. Cash and bank have reduced slightly to £4,091k (2017: £4,705k) which is consistent given the increase in administrative expenses. Net assets increased by £962k to £3,348k (2017: £2,386k) as a result of the current year surplus.

CORPORATE GOVERNANCE

The group currently has a Senior Management Team made up of the Chairman, two Chief Executives, Head of Operations, Head of Finance and Head of Human Resources. The Propertymark Board currently meets 5 times per year. Following agreed changes to the Articles of Association in 2017 the Board now consists of the Chairman, 3 representatives from Lettings (elected from within ARLA Propertymark membership), 3 representatives from Sales (elected from within NAEA Propertymark membership) and two independent Non Executive Directors appointed after open competition. Supporting the Board is an Audit, Risk and Remuneration Committee.


This report was approved by the board on 20 May 2019and signed on its behalf.

N Emerson, Director

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The directors who served during the year were:

V J Bannister D J Coleman (resigned 15 June 2018)K L Griffin J L Hytch (resigned 15 June 2018)D Mackie (resigned 15 June 2018)N Madan P E Savage L Scott S A Lawson (resigned 15 June 2018)M W Bentley (resigned 15 June 2018)N Emerson (appointed 15 June 2018)N A Heathcote (appointed 3 July 2018, resigned 7 November 2018)H R Herniman (appointed 3 July 2018, resigned 7 November 2018)

DIRECTORS’ RESPONSIBILITIES STATEMENT

The directors are responsible for preparing the Group Strategic Report, the Directors’ Report and the consolidated 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law, including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’). 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 and 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 judgements and accounting estimates that are reasonable and prudent;• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2018

The directors present their report and the financial statements for the year ended 31 December 2018.



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 Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

QUALIFYING THIRD PARTY INDEMNITY PROVISIONS

The company has provided qualifying third party indemnity provisions in respect of the board of directors which were in force during the year and at the date of this report.

MATTERS COVERED IN THE STRATEGIC REPORT

The strategic review and future prospects, principal risks and uncertainties, and the financial key performance indicators are included in the Group Strategic Report.

DISCLOSURE OF INFORMATION TO AUDITOR

The directors confirm that:• so far as each director is aware, there is no relevant audit information of which the company and the Group’s auditor is unaware, and• the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the company and the Group’s auditors aware of that information.

AUDITOR

The auditor, Grant Thornton UK LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2018

This report was approved by the board on 20 May 2019and signed on its behalf.

N Emerson, Director

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF PROPERTYMARK LTD

OPINION

We have audited the financial statements of Propertymark Ltd (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2018, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Balance Sheets, the Consolidated and Company Statement of Changes in Equity, the Consolidated Statement of Cash Flow and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

• give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 31 December 2018 and of the Group’s profit for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and• have been prepared in accordance with the requirements of the Companies Act 2006.

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. 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, 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.

CONCLUSIONS RELATING TO GOING CONCERN

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:• the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group’s or the parent 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.




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 our 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 this other information, we are required to report that fact.

We have nothing to report in this regard.

OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion, based on the work undertaken in the course of the audit:• the information given in the Group Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and• the Group Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.

MATTER ON WHICH WE ARE REQUIRED TO REPORT BY THE COMPANIES ACT 2006

In the light of the knowledge and understanding of the Group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors’ Report.

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MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006requires 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 we require for our audit.

RESPONSIBILITIES OF DIRECTORS FOR THE FINANCIAL STATEMENTS

As explained more fully in the Directors’ Responsibilities Statement on page 5, 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 and the parent company’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 Group or the parent 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 the 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. This description forms part of our Auditor’s Report.

USE OF OUR REPORT

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.

Natalie Gladwin BSc FCASenior Statutory Auditorfor and on behalf of Grant Thornton UK LLPStatutory Auditor, Chartered AccountantsBirminghamDate: 20 May 2019

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2018

Note 2018 £ 2017 £

Turnover 4 7,307,794 5,301,237

Cost of sales (2,161,005) (2,199,352)

GROSS SURPLUS 5,146,789 3,101,885

Administrative expenses (5,368,722) (3,926,449)

Other operating income 5 1,173,829 937,464

OPERATING SURPLUS 6 951,896 112,900

Interest receivable and similar income 10 20,399 29,999

SURPLUS BEFORE TAXATION 972,295 142,899

Tax on surplus 11 (10,243) (24,614)

SURPLUS FOR THE FINANCIAL YEAR 962,052 118,285

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 962,052 118,285

SURPLUS FOR THE YEAR ATTRIBUTABLE TO:

Non‑controlling interests (33,760) -

Owners of the parent company 995,812 118,285

All of the activities of the Group are classified as continuing.The notes on pages 37 to 55 form part of these financial statements.



CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2018

Note 2018 £ 2017 £

FIXED ASSETS

Tangible assets 12 1,840,054 1,805,295

1,840,054 1,805,295

CURRENT ASSETS

Debtors: amounts falling due within one year

14 1,191,541 1,175,218

Cash at bank and in hand 15 4,090,586 4,705,365

5,282,127 5,880,583

Creditors: amounts falling due within one year

16 (3,094,650) (5,299,586)

NET CURRENT ASSETS 2,187,477 580,997

TOTAL ASSETS LESS CURRENT LIABILITIES

4,027,531 2,386,292

PROVISIONS FOR LIABILITIES

Other provisions (679,187) ‑

(679,187) ‑

NET ASSETS 3,348,344 2,386,292

CAPITAL AND RESERVES

Profit and loss account 19 3,382,104 2,386,292

EQUITY ATTRIBUTABLE TO OWNERS OF THEPARENT COMPANY

3,382,104 2,386,292

Non‑controlling interests (33,760) -

The financial statements were approved and authorised for issue by the board and were signed on its behalf on 20 May 2019. N Emerson, Director

The notes on pages 37 to 55 form part of these financial statements.

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COMPANY BALANCE SHEETAS AT 31 DECEMBER 2018

Note 2018 £ 2017 £

FIXED ASSETS

Tangible assets 12 1,840,054 1,805,295

1,840,054 1,805,295

CURRENT ASSETS

Debtors: amounts falling due within one year 14 1,051,727 996,502

Cash at bank and in hand 15 4,060,445 4,655,957

5,112,172 5,652,459

Creditors: amounts falling due within one year 16 (5,494,079) (7,594,898)

NET CURRENT LIABILITIES (381,907) (1,942,439)

TOTAL ASSETS LESS CURRENT LIABILITIES 1,458,147 (137,144)

PROVISIONS FOR LIABILITIES

Other provisions (679,187) ‑

(679,187) ‑

NET ASSETS/(LIABILITIES) 778,960 (137,144)

CAPITAL AND RESERVES

Profit and loss account brought forward (137,144) (296,485)

Surplus for the year 916,104 99,341

Transfer between reserves ‑ 60,000

Profit and loss account carried forward 778,960 (137,144)

Surplus/(Deficit) attributable to members of the company

778,960 (137,144)


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 20 May 2019. N Emerson, Director



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2018

Profit and loss account

£

Non‑controlling interests

£Total equity

£

At 1 January 2018 2,386,292 ‑ 2,386,292

COMPREHENSIVE INCOME FOR THE YEAR

Surplus/(deficit) for the year 995,812 (33,760) 962,052

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 995,812 (33,760) 962,052

AT 31 DECEMBER 2018 3,382,104 (33,760) 3,348,344

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017

Otherreserves

£

Profit andloss account

£Total equity

£

At 1 January 2017 60,000 2,208,007 2,268,007


Surplus for the year ‑ 118,285 118,285

TOTAL COMPREHENSIVE INCOME FOR THE YEAR ‑ 118,285 118,285

Transfer to/from profit and loss account (60,000) 60,000 ‑

TOTAL TRANSACTIONS WITH OWNERS (60,000) 60,000 ‑

AT 31 DECEMBER 2017 ‑ 2,386,292 2,386,292




Otherreserves

£


£Total equity

£

At 1 January 2017 60,000 (296,485) (236,485)


Surplus for the year ‑ 99,341 99,341

TOTAL COMPREHENSIVE INCOME FOR THE YEAR ‑ 99,341 99,341

Transfer to/from profit and loss account (60,000) 60,000 ‑

AT 31 DECEMBER 2017 ‑ (137,144) (137,144)


COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2018

COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017


£Total equity

£

At 1 January 2018 (137,144) (137,144)


Surplus for the year 916,104 916,104

AT 31 DECEMBER 2018 778,960 778,960

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CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2018

2018 £ 2017 £

CASH FLOWS FROM OPERATING ACTIVITIES

Surplus for the financial year 962,052 118,285

ADJUSTMENTS FOR:

Depreciation of tangible assets 64,135 124,997

Interest receivable (20,399) (29,999)

Taxation charge 10,243 24,614

(Increase) in debtors (14,662) (242,666)

(Decrease) in creditors (2,218,027) (13,383)

Increase in provisions 679,187 -

Corporation tax paid (5,128) (32,008)

NET CASH GENERATED FROM OPERATING ACTIVITIES (542,599) (50,160)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of tangible fixed assets (132,184) (62,534)

Sale of tangible fixed assets 33,290 -

Interest received 20,399 29,999

NET CASH FROM INVESTING ACTIVITIES (78,495) (32,535)

NET (DECREASE) IN CASH AND CASH EQUIVALENTS (621,094) (82,695)

Cash and cash equivalents at beginning of year 4,705,365 4,788,061

CASH AND CASH EQUIVALENTS AT THE END OF YEAR 4,084,271 4,705,366

CASH AND CASH EQUIVALENTS AT THE END OF YEAR COMPRISE:

Cash at bank and in hand 4,090,586 4,705,366

Bank overdrafts (6,315) -

4,084,271 4,705,366





NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018

1 . GENERAL INFORMATION

Propertymark Ltd is a private company limited by guarantee and incorporated in England and Wales. Its registered head office is located at Arbon House, 6 Tournament Court, Edgehill Drive, Warwick, Warwickshire, CV34 6LG.

The principal activity of the company and group are detailed in the Group Strategic Report.

The financial statements are presented in Sterling (“£”).

2. ACCOUNTING POLICIES

2.1 Basis of preparation of financial statements The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group’s accounting policies (see note 3).

The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.

The following principal accounting policies have been applied:

2.2 Basis of consolidation The consolidated financial statements present the results of the company and its own subsidiaries (“the group”) as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Where the group owns less than 50% of the voting power of an entity but controls the entity by virtue of an agreement with other investors which give it control of the financial and operating policies of the entity, it accounts for the entity as a subsidiary and recognises a non-controlling interest.

2.3 Turnover Turnover is recognised to the extent that it is probable that the economic benefits will flow to the group and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

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Membership fees are included in the Statement of Comprehensive Income, in the period to which they relate to. Advanced payments in respect of membership fees are deferred and recognised over the course of the membership term.

Education and training, publications, seminars and events along with all other income (including entrance fees, conferences and events, CPD training and book sales) are recognised in the Statement of Comprehensive Income in the period in which the services or goods are provided.

2.4 Going concern The Group’s business activities, together with the factors likely to affect its future development and position, are set out in the Strategic review and future prospects section of the Group Strategic report on pages 21 to 23.

After reviewing the group’s forecasts and projections, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.

2.5 Other operating income Other operating income represents Client Money Protection (CMP) income. This is in relation to fees received from customers in order to demonstrate that they are Propertymark Protected. This is accounted for in the period to which they relate.

2.6 Tangible fixed assets Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Leasehold property - 2% or 10% Fixtures and fittings - 25%

The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Statement of Comprehensive Income.






2.7 Valuation of investments Investments in subsidiaries are measured at cost less accumulated impairment.

2.8 Debtors Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

2.9 Cash and cash equivalents Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management.

2.10 Financial instruments The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in the case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated Statement of Comprehensive Income.

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For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset’s carrying amount and the present value of estimated cash flows discounted at the asset’s original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset’s carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the balance sheet date.

Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

2.11 Creditors Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

2.12 Operating leases: the group as lessee Rentals paid under operating leases are charged to the Consolidated Statement of Comprehensive Income on a straight line basis over the lease term.

2.13 Pensions Defined contribution pension plan The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

The contributions are recognised as an expense in the Consolidated Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Group in independently administered funds.

2.14 Interest income Interest income is recognised in the Consolidated Statement of Comprehensive Income using the effective interest method.




2.15 Provisions for liabilities Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.

Provisions are charged as an expense to the Consolidated Statement of Comprehensive Income in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.

When payments are eventually made, they are charged to the provision carried in the Balance Sheet.

2.16 Taxation Tax is recognised in the Consolidated Statement of Comprehensive Income, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the company and the Group operate and generate income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet date, except that: • The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; • Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and • Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.


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3. JUDGEMENTS IN APPLYING ACCOUNTING POLICIES AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Preparation of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made include:

Trade debtors provision:Trade debtors consist of amounts due from customers. An allowance for doubtful debts is maintained for estimated losses resulting from the inability of the group’s customers to make required payments. The allowance is based on the group’s regular assessment of the credit worthiness and financial condition of customers.

Client Money Protection (CMP) provision:A provision is made in respect of management’s best estimate of the likely exposure in relation to client money protection.

Control of Money Shield Ltd:Propertymark Ltd holds 51% of the voting rights of Money Shield Ltd, but has control over operating and financial policies and day to day activities of the company and therefore the directors consider that this demonstrates that the group controls Money Shield Ltd and has therefore accounted for it as a subsidiary.

Provision for indirect and other taxes:Management have recognised a provision representing their best estimate, of the likely exposure resulting from a review of historical indirect tax procedures and compliance.




2018£

2017£

Client Money Protection income 1,173,829 937,464

5. OTHER OPERATING INCOME

4. TU RNOVER

An analysis of turnover by class of business is as follows:

2018£

2017£

Depreciation of tangible fixed assets 64,135 124,997

Other operating lease rentals 68,617 68,297

6. OPERATING SURPLUS

The operating surplus is stated after charging:

2018£

2017£

Membership fees 4,781,428 2,823,423

Education and training 1,543,549 1,566,817

Publications 129,287 296,394

Seminars and events 891,992 607,194

Other (38,462) 7,409

7,307,794 5,301,237

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2018£

2017£

Fees payable to the Group's auditor and its associates for the audit of the Group's annual financial statements

43,300 51,000

FEES PAYABLE TO THE GROUP’S AUDITOR AND ITS ASSOCIATES IN RESPECT OF:

Taxation compliance services 6,000 5,000

Taxation advisory 36,000 6,000

Other accounting services 700 4,500

42,700 15,500

7. AUDITOR’S REMUNERATION

Group 2018

£

Group 2017

£

Company 2018

£

Company 2017

£

Wages and salaries 1,727,690 1,714,591 1,727,690 1,714,591

Social security costs 159,123 166,685 159,123 166,685

Cost of defined contribution scheme 56,776 52,014 56,776 52,014

1,943,589 1,933,290 1,943,589 1,933,290

Group 2018 No.

Group 2017 No.

Company 2018 No.

Company 2017 No.

Administration 55 59 55 59

8. EMPLOYEES

Staff costs were as follows:

The average monthly number of employees, including the directors, during the year was as follows:




2018£

2017£

CORPORATION TAX

Current tax on surplus for the year 10,243 24,614

10,243 24,614

TOTAL CURRENT TAX 10,243 24,614

DEFERRED TAX

TOTAL DEFERRED TAX ‑ -

TAXATION ON SURPLUS ON ORDINARY ACTIVITIES 10,243 24,614

11 . TAXATION

2018£

2018£

Other interest receivable 20,399 29,999

9. DIRECTORS’ REMUNERATION There was no director remuneration in the year (2017: £nil).

10. INTEREST RECEIVABLE

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2018£

2017£

Surplus on ordinary activities before tax 972,295 142,899

Surplus on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2017 ‑ 19.25%)

184,736 27,508

EFFECTS OF:

Expenses not deductible for tax purposes 122 802

Income not taxable (209,540) (29,288)

Deferred tax not recognised 33,514 (7,171)

Other differences leading to an increase (decrease) in the tax charge 1,411 32,763

TOTAL TAX CHARGE FOR THE YEAR 10,243 24,614

Factors that may affect future tax charges

A reduction in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017 until 31 March 2020) was substantively enacted in October 2015 and received Royal Assent on 18 November 2015. A further reduction to 17% (effective from 1 April 2020) received Royal Assent on 15 September 2016.

Factors affecting tax charge for the year

The tax assessed for the year is lower than (2017 - lower than) the standard rate of corporation tax in the UK of 19% (2017 - 19.25%). The differences are explained below:

11 . TAXATION (CONTINUED)




Leaseholdproperty

£

Fixtures and fittings

£Total

£

COST

At 1 January 2018 2,583,238 707,402 3,290,640

Additions ‑ 132,184 132,184

Disposals ‑ (687,399) (687,399)

At 31 December 2018 2,583,238 152,187 2,735,425

DEPRECIATION

At 1 January 2018 859,704 625,641 1,485,345

Charge for the year on owned assets 9,631 54,504 64,135

Disposals ‑ (654,109) (654,109)

At 31 December 2018 869,335 26,036 895,371

NET BOOK VALUE

At 31 December 2018 1,713,903 126,151 1,840,054

At 31 December 2017 1,723,534 81,761 1,805,295

12 . TANGIBLE FIXED ASSETS

Group

48 01926 496 800



Freeholdproperty

£

Fixtures and fittings

£Total

£

COST

At 1 January 2018 2,583,238 707,402 3,290,640

Additions ‑ 132,184 132,184

Disposals ‑ (687,399) (687,399)

At 31 December 2018 2,583,238 152,187 2,735,425

DEPRECIATION

At 1 January 2018 859,704 625,641 1,485,345

Charge for the year on owned assets 9,631 54,504 64,135

Disposals ‑ (654,109) (654,109)

At 31 December 2018 869,335 26,036 895,371

NET BOOK VALUE

At 31 December 2018 1,713,903 126,151 1,840,054

At 31 December 2017 1,723,534 81,761 1,805,295

12 . TANGIBLE FIXED ASSETS

Company




13. FIXED ASSET INVESTMENTS

Subsidiary undertakingsThe following were subsidiary undertakings of the company:

Name Class of shares Holding Principal activityPropertymark Qualifications Ltd Limited by guarantee 100% Awarding bodyMoney Shield Ltd Ordinary 51% Client money protection

Propertymark Ltd has been the sole member of its subsidiary company Propertymark Qualifications Limited, a company limited by guarantee, since incorporation in November 2006, and as such hold no share capital.

In the event of winding up, every member of the company undertakes to contribute to the assets of the company such an amount as may be required not exceeding £10.

Joint venturePropertymark Limited holds a 50% interest in the voting rights of The Dispute Service Limited, however is not entitled to receive financial benefit as a result of its holding and as such there is no impact on the consolidated results of Propertymark Limited.

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Group 2018

£

Group 2017

£

Company 2018

£

Company 2017

£

Trade debtors 583,536 921,073 499,960 762,032

Amounts owed by group undertakings ‑ - 123,984 -

Other debtors 201,235 199,251 201,201 179,581

Prepayments and accrued income 405,108 54,894 226,582 54,889

Tax recoverable 1,662 - ‑ -

1,191,541 1,175,218 1,051,727 996,502

Amounts owed by group undertakings are unsecured, not subject to interest and are repayable on demand.

14. DEBTORS




Group 2018

£

Group 2017

£

Company 2018

£

Company 2017

£

Cash at bank and in hand 4,090,586 4,705,366 4,060,445 4,655,957

Less: bank overdrafts (6,315) - (6,315) -

15. CASH AND CASH EQUIVALENTS

Group 2018

£

Group 2017

£

Company 2018

£

Company 2017

£

Bank overdrafts 6,315 - 6,315 -

Trade creditors 38,642 308,039 37,706 305,610

Amounts owed to group undertakings ‑ - 2,530,779 2,610,423

Corporation tax 31,390 24,614 31,390 19,462

Other taxation and social security 120,076 51,325 120,076 51,325

Other creditors 57,682 195,405 11,922 124,740

Accruals and deferred income 2,840,545 4,720,203 2,755,891 4,483,338

3,094,650 5,299,586 5,494,079 7,594,898

16. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Amounts owed to group undertakings are unsecured, not subject to interest and are repayable on demand.

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Group 2018

£

Group 2017

£

Company 2018

£

Company 2017

£

FINANCIAL ASSETS

Cash and cash equivalents 4,090,586 4,705,366 4,060,445 4,655,957

Financial assets that are debt instrumentsmeasured at amortised cost

1,004,267 1,120,324 932,332 941,613

5,094,853 5,825,690 4,992,777 5,597,570

FINANCIAL LIABILITIES

Financial liabilities measured at amortised cost

(342,502) (1,082,790) (2,743,164) (3,333,254)

17. FINANCIAL INSTRUMENTS

Financial assets that are debt instruments measured at amortised cost comprise trade debtors, other debtors, accrued income and amounts owed by group undertakings.

Financial liabilities measured at amortised cost comprise trade creditors, other creditors, accruals, bank overdrafts and amounts owed to group undertakings.




Provision for indirect and other taxes

£Total

£

Charged to profit or loss 679,187 679,187

AT 31 DECEMBER 2018 679,187 679,187

Provision for indirect and other taxes

£Total

£

Charged to profit or loss 679,187 679,187

AT 31 DECEMBER 2018 679,187 679,187

18. PROVISIONS

Group

Company

Management have recognised a provision representing their best estimate, of the likely exposure resulting from a review of historical indirect tax procedures and compliance.

54 01926 496 800



19. RESERVES

Profit and loss account

The profit and loss account includes all current and prior year retained profits and losses.

20. COMPANY STATUS

The company is a private company limited by guarantee and consequently does not have share capital. Each of the members is liable to contribute an amount not exceeding £10 towards the assets of the company in the event of liquidation.

21 . PENSION COMMITMENTS

The group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund and amounted to £56,776 (2017: £52,014). Contributions totalling £208 (2017: £7,487) were payable to the fund at the balance sheet date and are included in creditors.

22. COMMITMENTS UNDER OPERATING LEASES

At 31 December 2018 the Group and the company had future minimum lease payments under non-cancellable operating leases as follows:

Group 2018

£

Group 2017

£

Company 2018

£

Company 2017

£

Not later than 1 year 80,536 64,462 80,536 64,462

Later than 1 year and not later than 5 years 90,576 129,012 90,576 129,012

171,112 193,474 171,112 193,474




23. RELATED PARTY TRANSACTIONS

During the year, M Bentley, a director of the group, provided consultancy services amounting to £nil through his company, Paul Carr Estate Agents (2017: £3,000).

During the year, P Savage, a director of the group, provided consultancy services amounting to £nil (2017: £4,711).

During the year, N Emerson, a director of the group, provided consultancy services amounting to £3,115 (2017: £nil).

During the year, a total of key management personnel compensation of £451,030 (2017: £401,840) was paid.

24. CONTROLLING PARTY

The group is controlled by its board of directors as shown in the directors’ report.

Arbon House6 Tournament CourtEdgehill DriveWarwick CV34 6LG

01926 496 [email protected]

Annual Report and Financial Statements for the Year Ended 31 … · 2019-05-24 · using the...

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