REG - South African Prop. - Final Results - Part 2
30 Dec 2009
- Part 2: For the preceeding part double click [ID:nRSd8168Ea]
Other administration fees and expenses 6 (1,772) (1,395)
Administrative expenses (3,391) (2,669)
Operating loss (2,979) (2,669)
Foreign exchange gain/(loss) 9,452 (3,315)
Other income/(loss) 9,452 (3,315)
Finance income 1,538 3,227
Finance costs (176) (4)
Net finance income 1,362 3,223
Loss on partial disposal of subsidiary 9 (11) -
Share of (loss)/profit of associates 9 (322) 118
Profit/(loss) before income tax 7,502 (2,643)
Income tax expense 7 (19) 13
Profit/(loss) for the year 7,483 (2,630)
Attributable to:
Equity holders of the Company 7,482 (2,630)
Minority interest 1 -
7,483 (2,630)
Basic and diluted earnings/(loss) per share (pence) for profit/(loss) attributable to the equity holders of the Company during the year 8 12.01 (4.22)
The accompanying notes form an integral part of these financial statements
Consolidated Balance Sheet
Note As at 30 June 2009 As at 30 June 2008
P'000 P'000
Assets
Non-current assets
Intangible assets 10 1,376 31
Inventories 11 48,489 24,531
Investments in associates 9 6,707 5,469
Loans due from associates 9 8,465 -
65,037 30,031
Current assets
Loans due from associates 9 - 1,249
Trade and other receivables 12 1,689 2,804
Cash at bank and attorneys 13 14,972 27,269
16,661 31,322
Total assets 81,698 61,353
Equity
Capital and reserves attributable to equity holders of the Company:
Issued share capital 14 623 623
Share premium 15 61,943 61,943
Foreign currency translation reserve 2,643 (1,622)
Retained earnings/(deficit) 4,972 (2,510)
70,181 58,434
Minority interest 14 -
Total equity 70,195 58,434
Liabilities
Current liabilities
Loans from third parties 17 4,520 2,521
Trade and other payables 18 676 362
Current tax liabilities 65 36
Borrowings 19 6,242 -
11,503 2,919
Total liabilities 11,503 2,919
Total equity and liabilities 81,698 61,353
The financial statements were approved and authorised for issue by the Board of Directors on 30 December 2009 and signed on
its behalf by:
David Hunter David Saville
Director Director
The accompanying notes form an integral part of these financial statements
Company Balance Sheet
Note As at 30 June 2009 As at 30 June 2008
P'000 P'000
Assets
Non-current assets
Loans and receivables due from subsidiary 12 42,142 28,595
Investment in subsidiary 9 21,741 21,741
63,883 50,336
Current assets
Trade and other receivables 12 43 45
Cash and cash equivalents 13 11,944 12,974
11,987 13,019
Total assets 75,870 63,355
Equity
Capital and reserves attributable to equity holders of the Company:
Issued share capital 14 623 623
Share premium 15 61,943 61,943
Retained earnings 12,962 523
Total equity 75,528 63,089
Current liabilities
Trade and other payables 18 342 266
Total liabilities 342 266
Total equity and liabilities 75,870 63,355
The financial statements were approved and authorised for issue by the Board of Directors on 30 December 2009 and signed on
its behalf by:
David Hunter David Saville
Director Director
The accompanying notes form an integral part of these financial statements
Consolidated Statement of Changes in Equity
Attributable to equity holders of the Company
Share capital Share premium Foreign currency translation reserve Retained earnings/(deficit) Total Minority interest Total
P'000 P'000 P'000 P'000 P'000 P'000 P'000
Balance at 1 July 2007 623 61,943 (44) 120 62,642 - 62,642
Foreign exchange translation differences - - (1,578) - (1,578) - (1,578)
Loss for the year - - - (2,630) (2,630) - (2,630)
Total recognised expense for the year - - (1,578) (2,630) (4,208) - (4,208)
Balance at 30 June 2008 623 61,943 (1,622) (2,510) 58,434 - 58,434
Balance at 1 July 2008 623 61,943 (1,622) (2,510) 58,434 - 58,434
Disposal of shares in subsidiary to minority interest (note 9) - - - - - 11 11
Foreign exchange translation differences - - 4,265 - 4,265 2 4,267
Profit for the year - - - 7,482 7,482 1 7,483
Total recognised income for the year - - 4,265 7,482 11,747 14 11,761
Balance at 30 June 2009 623 61,943 2,643 4,972 70,181 14 70,195
The accompanying notes form an integral part of these financial statements
Company Statement of Changes in Equity
Share capital Share premium Retained earnings Total
P'000 P'000 P'000 P'000
Balance at 1 July 2007 623 61,943 399 62,965
Profit for the year - - 124 124
Balance at 30 June 2008 623 61,943 523 63,089
Balance at 1 July 2008 623 61,943 523 63,089
Profit for the year - - 12,439 12,439
Balance at 30 June 2009 623 61,943 12,962 75,528
The accompanying notes form an integral part of these financial statements
Consolidated Cash Flow Statement
Note Year ended 30 June 2009 Year ended 30 June 2008
P'000 P'000
Cash flows from operating activities
Profit/(loss) for the year before tax 7,502 (2,643)
Adjustments for:
Interest income (1,538) (3,227)
Interest expense 176 4
Loss on partial disposal of subsidiary 11 -
Share of loss/(profit) of associates 322 (118)
Foreign exchange (gain)/loss (9,452) 3,315
Operating loss before changes in working capital (2,979) (2,669)
Purchase of inventory (15,420) (22,434)
Decrease/(increase) in trade and other receivables 1,433 (2,133)
Increase in trade and other payables 265 126
Cash used in operations (16,701) (27,110)
Interest paid (9) (4)
Interest received 613 3,279
Net cash used in operating activities (16,097) (23,835)
Cash flows from investing activities
Investment in indirect subsidiary 10 (1,177) -
Acquisition of associates (211) (219)
Loans to associates (4,998) (34)
Movement in cash restricted by bank guarantees 5,969 (6,866)
Net cash used in investing activities (417) (7,119)
Cash flows from financing activities
Loans from third parties 1,039 1,420
Proceeds from bank loans 5,211 -
Net cash generated from financing activities 6,250 1,420
Net decrease in cash and cash equivalents (10,264) (29,534)
Cash and cash equivalents at beginning of the year 20,403 51,797
Foreign exchange gains/(losses) on cash and cash equivalents 3,033 (1,860)
Cash and cash equivalents at end of the year 13 13,172 20,403
The accompanying notes form an integral part of these financial statements
Company Cash Flow Statement
Note Year ended 30 June 2009 Year ended 30 June 2008
P'000 P'000
Cash flows from operating activities
Profit for the year 12,439 124
Adjustments for:
Interest income (5,224) (6,002)
Interest expense 4 4
Foreign exchange (gain)/loss (10,024) 3,697
Operating loss before changes in working capital (2,805) (2,177)
(Increase)/decrease in trade and other receivables (3) 2
Increase in trade and other payables 75 133
Cash used in operations (2,733) (2,042)
Interest paid (4) (4)
Interest received 372 2,336
Net cash (used in)/generated from operating activities (2,365) 290
Cash flows from investing activities
Loans advanced to subsidiary (805) (9,667)
Acquisition of subsidiary, net of cash received - (19,934)
Net cash used in investing activities (805) (29,601)
Net decrease in cash and cash equivalents (3,170) (29,311)
Cash and cash equivalents at beginning of the year 12,974 42,810
Foreign exchange gains/(losses) on cash and cash equivalents 2,140 (525)
Cash and cash equivalents at end of the year 13 11,944 12,974
The accompanying notes form an integral part of these financial statements
Notes to the Financial Statements
1 General information
South African Property Opportunities plc (the "Company") was incorporated and registered in the Isle of Man under the Isle
of Man Companies Acts 1931 to 2004 on 27 June 2006 as a public limited company with registered number 117001C. South
African Property Opportunities plc and its subsidiaries (the "Group") investment objective is to achieve capital growth
from an opportunistic portfolio of real estate assets in South Africa.
The Company's investment activities are managed by Proteus Property Partners Limited (the "Investment Manager"). The
Company's administration is delegated to Galileo Fund Services Limited (the "Administrator"). The registered office of the
Company is Third Floor Britannia House, St George's Street, Douglas, Isle of Man, IM1 1JE.
Pursuant to a prospectus dated 20 October 2006 there was an original placing of up to 50,000,000 Ordinary Shares. Following
the close of the placing on 26 October 2006 30,000,000 Shares were issued.
The Ordinary Shares of the Company were admitted to trading on the AIM Market of the London Stock Exchange ("AIM") on 26
October 2006 when dealings also commenced. On the same date the Shares of the Company were admitted to the Official List of
the Channel Islands Stock Exchange (the "CISX").
As a result of a further fund raising in May 2007 32,292,810 Ordinary Shares were issued, which were admitted to trading on
AIM on 22 May 2007.
The Company's agents and the Investment Manager perform all significant functions, other than those carried out by the
Board. The Company itself has two employees.
Financial Year End
The financial year end of the Company is 30 June in each year.
Company Profit
In accordance with the provisions of Section 3 of the Isle of Man Companies Act 1982, no separate income statement has been
presented for the Company. The amount of the Company's profit for the year recognised in the Consolidated Income Statement
is P12,439,150 (30 June 2008: P123,707).
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied to all years presented unless otherwise stated.
2.1 Basis of preparation
The financial statements of South African Property Opportunities plc have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union. The financial statements have been prepared under
the historical cost convention and the requirements of the Isle of Man Companies Acts 1931 to 2004. The preparation of
financial statements in conformity with IFRS requires the use of accounting estimates. It also requires management to
exercise its judgement in the process of applying the Company's accounting policies. The most significant area requiring
estimation and judgement by the Directors is the valuation of the inventory and the resulting calculation of the
performance fee liability (see note 5).
Standards, amendments and interpretations to existing standards, which are relevant to the Group, but are not yet effective
and have not been early adopted
The following standards, amendments and interpretations to existing standards have been published and are mandatory for the
company's accounting periods beginning on or after 1 January 2009 or later periods, but the Group has not early adopted
them:
*
IAS 23 (Amendment), 'Borrowing costs' (effective from 1 January 2009). The amendment requires an entity to capitalise
borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes
a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately
expensing those borrowing costs will be removed. This will not affect the Group significantly as the Group already
capitalises its borrowing costs. The Group will apply IAS 23 (Amendment) from 1 July 2009.
*
IFRS 8, 'Operating Segments' (effective from 1 January 2009). IFRS 8 replaces IAS 14 and aligns segment reporting with the
requirements of the US standard SFAS 131, 'Disclosures about segments of an enterprise and related information'. The new
standard requires a 'management approach', under which segment information is presented on the same basis as that used for
internal reporting purposes. The Group will apply IFRS 8 from 1 July 2009, resulting in segment reporting by
project/sector.
*
IAS 1 (Revised), 'Presentation of financial statements' (effective from 1 January 2009). The revised standard will prohibit
the presentation of items of income and expense (that is, 'non-owner changes in equity') in the statement of changes in
equity, requiring 'non-owner changes in equity' to be presented separately from owner changes in equity. All non-owner
changes in equity will be required to be shown in a performance statement, but entities can choose whether to present one
performance statement (the statement of comprehensive income) or two statements (the income statement and statement of
comprehensive income). Where entities restate or reclassify comparative information, they will be required to present a
restated balance sheet as at the beginning of the comparative period in addition to the current requirement to present
balance sheets at the end of the current period and comparative period. The Group will apply IAS 1 (Revised) from 1 July
2009 and will present two statements.
*
IFRS 3 (Revised), 'Business combinations' (effective from 1 July 2009). The revised standard continues to apply the
acquisition method to business combinations, with some significant changes. For example, all payments to purchase a
business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently
re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the
non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of
the acquiree's net assets. All acquisition-related costs should be expensed. The Group will apply IFRS 3 (Revised)
prospectively to all business combinations from 1 July 2009.
*
IAS 23 (Amendment), 'Borrowing costs' (effective from 1 January 2009). The amendment is part of the International
Accounting Standards Board's annual improvements project published in May 2008. The definition of borrowing costs has been
amended so that interest expense is calculated using the effective interest method defined in IAS 39 'Financial
Instruments: Recognition and Measurement'. This eliminates the inconsistency of terms between IAS 39 and IAS 23. The Group
will apply the IAS 23 (Amendment) prospectively to the capitalisation of borrowing costs on qualifying assets from 1 July
2009. The Group will also ensure that transactional costs are accounted for using the effective interest method from 1 July
2009.
*
IAS 27 (Revised), 'Consolidated and separate financial statements', (effective from 1 July 2009). The revised standard
requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in
control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the
accounting treatment when control is lost. Any remaining interest in the equity is re-measured to fair value, and a gain or
loss is recognised in profit or loss. The Group will apply IAS 27 (Revised) prospectively to transactions with
non-controlling interests from 1 July 2009.
*
IAS 28 (Amendment), 'Investments in associates' (and consequential amendments to IAS 32, 'Financial Instruments:
Presentation', and IFRS 7, 'Financial instruments: Disclosures') (effective from 1 January 2009). The amendment is part of
the IASB's annual improvements project published in May 2008. An investment in associate is treated as a single asset for
the purposes of impairment testing. Any impairment loss is not allocated to specific assets included within the investment,
for example, goodwill. Reversals of impairment are recorded as an adjustment to the investment balance to the extent that
the recoverable amount of the associate increases. The Group will apply the IAS 28 (Amendment) to impairment tests related
to investments in associates and any related impairment losses from 1 July 2009.
2.2 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are
presented in Pound Sterling, which is the Company's functional and the Group's presentational currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the income statement.
(c) Group companies
The results and financial position of all the group entities that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:
(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the
date of that balance sheet;
(ii) income and expenses for each income statement are translated at average exchange rates; and
(iii) all resulting exchange differences are recognised as a separate component of equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entity and translated at the closing rate.
2.3 Revenue and expense recognition
Rental income is accounted for on an accruals basis in accordance with the substance of the relevant agreements.
Interest income is recognised in the financial statements on a time-proportionate basis using the effective interest
method.
Interest expense for borrowings is recognised in the financial statements using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and
of allocating the interest income or interest expense over the period.
Expenses are accounted for on an accruals basis.
2.4 Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the Group, as lessor, are
classified as operating leases. Operating lease income is recognised in the income statement on a straight-line basis over
the period of the lease.
2.5 Basis of consolidation
Subsidiaries
Subsidiaries are those entities controlled by the Group. Control exists where the Group has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The
financial statements of the subsidiaries are included in the consolidated financial statements from the date that control
effectively commences until the date that control effectively ceases.
Transactions and minority interest
The Group applies a policy of treating transactions with minority interest as transactions with parties external to the
Group. Losses applicable to the minority in a consolidated subsidiary may exceed the minority interest in the subsidiary's
equity. The excess, and any further losses applicable to the minority, are allocated against the majority interest except
to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.
If the subsidiary subsequently reports profits, such profits are allocated to the majority interest until the minority's
share of losses previously absorbed by the majority has been recovered.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains/losses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
Associates (equity accounted investees)
Associates are those entities in which the Group has a significant influence, but no control, over the financial and
operating policies generally, accompanying a shareholding of between 20% and 50% of the voting rights. Associates are
accounted for using the equity method (equity accounted investees) and are initially recognised at cost. The Group's
investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss. The
consolidated financial statements include the Group's share of the income and expenses of the equity accounted investees,
after adjustments to align the accounting policies with those of the Group, from the date that significant influence or
joint control commences until the date that significant influence or joint control ceases. When the Group's share of losses
exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term
investment) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has
an obligation to or has made payments on behalf of the investee.
Unrealised gains on transactions between the Group and its equity accounted investees are eliminated to the extent of the
Group's interest in the equity accounted investees. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies have been changed where necessary to ensure
consistency with the policies adopted by the Group.
2.6 Segmental reporting
The Group has one segment focusing on achieving capital growth through investing in the property market in South Africa. No
additional disclosure is included in relation to segment reporting, as the Group's activities are limited to one business
and geographical segment.
2.7 Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the identifiable
net assets (including intangible assets) of the acquired subsidiary. Goodwill is tested annually for impairment and carried
at cost less accumulated impairment losses.
2.8 Financial assets and financial liabilities
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and
receivables, and available for sale. The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at initial recognition. At 30 June 2009 and 2008
the Group did not have any financial assets at fair value through profit or loss or available for sale. Loans and
receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date
which are classified as non-current assets. The Group's loans and receivables comprise 'trade and other receivables' and
cash at bank and attorneys in the balance sheet (notes 2.10 and 2.11).
The Group classifies its financial liabilities in the following categories: at fair value through profit or loss and other
liabilities. At 30 June 2009 and 2008 the Group did not have any financial liabilities at fair value through profit or
loss. Other liabilities are loans and trade payables which are included in "trade and other payables" and borrowings in the
balance sheet (notes 2.13 and 2.16).
2.9 Inventories
Land that is being developed for future sale is classified as inventory at its deemed cost, which is the carrying amount at
the date of classification. Land for development is subsequently carried at the lower of cost and net realisable value. Net
realisable value is the estimated selling price in the ordinary course of business less selling expenses.
2.10 Loans and receivables
Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment. A provision for impairment is established when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.
2.11 Trade and other receivables
Trade and other receivables are initially stated at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
2.12 Cash and cash equivalents
Cash and cash equivalents comprise cash deposited with banks, cash deposits with attorneys and other short-term highly
liquid investments with original maturities of three months or less.
2.13 Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently at amortised cost using the effective
interest method.
2.14 Taxation
The Company is resident for taxation purposes in the Isle of Man and is subject to income tax at a rate of zero %. The
Group is liable to tax in South Africa on the activities of its subsidiaries and associates.
The tax expense represents the sum of the tax currently payable, which is based on taxable profits for the year. The
Group's liability is calculated using tax rates applicable at the balance sheet date.
2.15 Deferred tax
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that
is not a business combination and that affects neither accounting nor taxable profit, and differences relating to
investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the
foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences
when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against
which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be realised.
2.16 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in
the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment
of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of
the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no
evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment
for liquidity services and amortised over the period of the facility to which it relates.
Borrowing costs directly attributable to assets in the course of construction are capitalised.
2.17 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
3 Risk management
The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest
rate risk), credit risk and liquidity risk. The financial risks relate to the following financial instruments: loans and
receivables, cash and cash equivalents and trade and other payables. The accounting policies with respect to these
financial instruments are described in Note 2.
Risk management is carried out by the Investment Manager under the direction of the Board of Directors.
Foreign exchange risk
Foreign exchange risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange
rates. The Group's operations are conducted in jurisdictions which generate revenue, expenses, assets and liabilities in
currencies other than Pound Sterling ("the functional currency of the Company"). As a result the Group is subject to the
effects of exchange rate fluctuations with respect to these currencies. The currency giving rise to this risk is the South
African Rand.
The Group's policy is not to enter into any currency hedging transactions.
The table below summarises the Group's exposure to foreign currency risk in respect of financial instruments:
30 June 2009 Monetary Assets Monetary Liabilities Total
P'000 P'000 P'000
South African Rand 13,181 (11,161) 2,020
13,181 (11,161) 2,020
30 June 2008 Monetary Assets Monetary Liabilities Total
P'000 P'000 P'000
South African Rand 18,349 (2,617) 15,732
18,349 (2,617) 15,732
The Investment Manager and the Board of Directors monitors and reviews the Group's currency position on a continuous basis
and acts accordingly.
At 30 June 2009, had the Pound strengthened/weakened by 5% against the South African Rand, with all other variables held
constant, the above financial instruments would have increased/decreased by P96,153 and P1,987 (30 June 2008: 10%,
P1,430,065 and P4,065) lower/higher respectively. The direct and indirect subsidiaries have the South African Rand as their
functional currency and on consolidation any effects of changes in foreign exchange rates will be included in the
translation reserve.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment
that it has entered into with the Group.
The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. This
relates also to financial assets carried at amortised cost.
At the reporting date, the Group's financial assets exposed to credit risk amounted to the following:
30 June 2009 30 June 2008
P'000 P'000
Loans due from associates 8,465 1,249
Trade and other receivables 1,689 2,804
Cash and cash equivalents 14,972 27,269
25,126 31,322
The Group manages its credit risk by monitoring the creditworthiness of counterparties regularly. Cash transactions and
balances are limited to high-credit-quality financial institutions (at least an Aa2 credit rating). Loans due from
associates and trade and other receivables relate mostly to project investments in land and the Investment Manager and the
Board of Directors do not expect any losses from non-performance by these counterparties. All investment opportunities are
analysed objectively prior to Board approval, including a financial and business due diligence investigation of each
potential project.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its obligations as they fall due. The Group currently
manages its liquidity risk by maintaining sufficient cash (maturing on a weekly and monthly basis). The Group's liquidity
position is monitored by the Investment Manager and the Board of Directors.
The residual undiscounted contractual maturities of financial liabilities are as follows:
30 June 2009 Less than 1 month 1-3 months 3 months to 1 year 1-5 years Over 5 years No stated maturity
P'000 P'000 P'000 P'000 P'000 P'000
Financial liabilities
Loans from third parties - - - - - 4,520
Trade and other payables 676 - - - - -
Borrowings - - 6,242 - - -
676 - 6,242 - - 4,520
30 June 2008 Less than 1 month 1-3 months 3 months to 1 year 1-5 years Over 5 years No stated maturity
P'000 P'000 P'000 P'000 P'000 P'000
Financial liabilities
Trade and other payables 362 - - - - 2,521
362 - - - - 2,521
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest
rates. The Group is exposed to interest rate risk from the cash held in interest bearing accounts at floating rates or
short term deposits of one month or less, on loans from associates and on borrowings. The Company's Investment Manager and
Board of Directors monitor and review the interest rate fluctuations on a continuous basis and act accordingly.
At 30 June 2009 should interest rates have increased/decreased by 10 basis points (0.10%), with all other variables held
constant, the shareholders' equity and profit for the year would have been P21,000 (2008: 100 basis points, P395,000)
higher/lower.
Capital risk management
The Group's primary objective when managing its capital base is to safeguard the Company's ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders.
Gearing may be employed by the Group with the aim of enhancing shareholder returns. This would be in the form of bank
borrowings secured on the investment portfolio. The overall level of borrowings on the Group's portfolio, at the date on
which any borrowing is incurred, is not expected to exceed 70% (loan to value). Gearing levels are kept constantly under
review to take into account market factors.
Group capital comprises share capital, share premium and reserves.
No changes were made in respect of the objectives, policies or processes in respect of capital management during the years
ended 30 June 2008 and 2009.
4 Operating leases
The group leases its property under operating leases. The future minimum lease payments under non-cancellable leases are as
follows:
Year ended 30 June 2009P'000 Year ended 30 June 2008P'000
Less than one year 81 -
Between one and five years - -
More than five years - -
81 -
5 Investment Manager's fees
Annual fees
The Investment Manager receives a management fee of 2% per annum of the net asset value of the Group from Admission,
payable quarterly in advance.
The Company has adopted the net asset value of the Group as calculated in accordance with customary accountancy or industry
practices relating to the Company but valuing the Group's property assets on an open market basis for the purposes of
calculating the Investment Manager's fee.
The Investment Manager is also entitled to recharge to the Group all and any costs and disbursements reasonably incurred by
it in the performance of its duties including costs of travel save to the extent that such costs are staff costs or other
internal costs of the Investment Manager. Accordingly, the Company is responsible for paying all the fees and expenses of
all valuers, surveyors, legal advisers and other external advisers to the Company in connection with any investments made
on its behalf. All amounts payable to the Investment Manager by the Company are paid together with any value added tax, if
applicable.
Annual management fees payable for the year ended 30 June 2009 amounted to P1,618,673 (30 June 2008: P1,273,516).
Performance fees
The Investment Manager is entitled to a performance fee which is payable by reference to the increase in net asset value
per Ordinary Share. The net asset value used is the net asset value of the Group as calculated in accordance with customary
accountancy or industry practices relating to the Company but valuing the Group's property assets on an open market basis.
The Investment Manager is entitled to a performance fee in respect of the period from Admission to 30 June 2009 and any
subsequent financial period at the end of which the net asset value per Ordinary Share is above the performance fee hurdle.
The performance fee test for the period ending 30 June 2009 is based on the issue price per Ordinary Share increased at a
rate of 12% per annum, on an annual compounding basis up to the end of the period but adjusted so as to exclude any
dividends paid during the period.
If the performance hurdle is met the performance fee payable will be an amount equal to 20% of the amount of the increase
in the net asset value per Ordinary Share, since inception or (if later) the end of the last financial period by reference
to which a performance fee was earned, multiplied by the time weighted average of the number of Ordinary Shares in issue
during the relevant period.
Any performance fee will be payable as follows:
a) 75% of the performance fee will be paid to the Investment Manager in cash within ten business days of the
publication of the audited financial statements for the relevant period end; and
b) 25% of the performance fee shall be satisfied within ten business days of the publication of the audited financial
statements for the relevant performance period end by the allotment and issue to the Investment Manager of such number of
Ordinary Shares which, when multiplied by the Net Asset Value per Ordinary Share on the date of issue, results in a value
equal to that of 25% of the performance fee.
Performance fees payable for the year ended 30 June 2009 amounted to Pnil (30 June 2008: Pnil).
6 Other administration fees and expenses
Group Year ended 30 June 2009P'000 Year ended 30 June 2008P'000
Audit - current year 127 110
Audit - prior years 80 90
Directors' remuneration 210 95
Directors' insurance cover 10 64
Nominated Adviser and broker fees 33 30
Administrator and Registrar fees 71 72
Custodian fees 6 7
Sponsor fees 2 2
Strategic Adviser fees (65) 40
Professional fees 290 117
Property expenses 254 45
Broker commission 35 86
Silex management fees (note 21) 394 387
Other expenses 325 250
Administration fees and expenses 1,772 1,395
Included within other administration fees and expenses are the following:
Nominated Adviser and Broker fees
As Nominated Adviser and Broker to the Company for the purposes of the AIM Rules, the Nominated Adviser and Broker receives
a Nominated Adviser fee of P17,500 per annum and a Broker fee of P17,500 per annum, both fees payable half-yearly in
advance. Matrix Corporate Capital was appointed on these terms as Broker from 26 November 2008 and as Nominated Adviser
from 30 January 2009. Prior to those dates Teathers Limited was the Nominated Adviser and Broker and received a Nominated
Adviser fee of P15,000 per annum and a Broker fee of P15,000 per annum, both fees payable half-yearly in advance.
Nominated adviser fees paid for the year ended 30 June 2009 amounted to P33,283 (30 June 2008: P30,412).
Custodian fees
The Custodian receives a fee of 3 basis points (0.03%) of the value of the non real-estate assets held by the Company
subject to a minimum annual fee of P5,000, payable quarterly in arrears.
Custodian fees payable for the year ended 30 June 2009 amounted to P5,781 (30 June 2008: P7,305).
Administrator and Registrar fees
The Administrator receives a fee of 10 basis points of the net assets of the Company (0.1%) between P0 and P50 million; 8.5
basis points per annum of the net assets of the Company (0.085%) between P50 and P100 million and 7 basis points per annum
of the net assets of the Company (0.07%) in excess of P100 million, subject to a minimum monthly fee of P3,750 and a
maximum monthly fee of P10,000 payable quarterly in arrears.
The Administrator assists in the preparation of the financial statements of the Group for which it receives a fee of P1,750
per set.
The Administrator provides general secretarial services to the Group for which it receives a minimum annual fee of P5,000.
Additional fees based on time and charges will apply where the number of Board meetings exceeds four per annum. For
attendance at meetings not held in the Isle of Man, an attendance fee of P350 per day or part thereof will be charged.
The Administrator utilises the services of a CREST accredited registrar for the purposes of settling share transactions
through CREST. The cost of this service will be borne by the Group. Crest service provider fees payable for the year ended
30 June 2009 amounted to P12,375 (30 June 2008: P10,803).
Administration fees payable for the year ended 30 June 2009 amounted to P71,223 (30 June 2008: P72,282).
Sponsor fees
The Sponsor receives a fee for the listing of the shares on the Channel Islands Stock Exchange. The Sponsor is paid an
annual fee
- More to follow, for following part double click [ID:nRSd8168Ec]